Budget 2020: These indirect tax changes can give a fillip to ‘Make in India’ programme

Incentives should be the way forward to promote manufacturing and developing the necessary ecosystems. Tariffs will continue to be used for protecting the domestic market to promote local manufacture. Accordingly, we shall see duties being imposed or increased on certain products to create disabilities for the importers and promote local manufacturers to become more competitive. There has been a lot of discussion in the media on restricting the import of non-essential imports like furniture, toys, etc. A number of these items are being imported at very low prices and hence making the domestic industry unviable.

While are measures like anti-dumping duty and countervailing duty, it is difficult to apply these, especially in non-standardised products like furniture. These items shall see higher customs duties or greater controls on the ability of the importers to import in this budget. The idea is to again provide impetus to the domestic industry to manufacture these products. On the other hand, some of the ingredients used in the manufacture of products in India may see a reduced customs duty. Examples could be the chemicals used in the making of fertilisers, among other items.

The Sabka Vishwas (Legacy Dispute Resolution) Scheme introduced in the budget of 2019 has been reasonably successful in reducing pending litigations and also gathering the much-needed revenue for the central government. The government may look to explore such schemes in other taxes, specifically customs, given that the appellate mechanisms continue to be served by the same tribunal and courts as central excise and service tax and continue to be plagued by huge pendency.

On the GST front, there are a number of measures that will see the light of the day, given that they have been pending the enactment of the necessary law. GST is currently facing its biggest challenge given that the revenue has not increased commensurate to the expectations. Given the restricted tax base, the pressure is on the government to plug leakages and align the GST structure with minimal exemptions. While all of this may not happen in the budget itself, the government may lay down its strategy for the coming months. The e-invoicing and the new GST return format is set to see the light of day from April 1 this year and may find their place in the budget regulations.

Gone are the days when the Budget was awaited with huge expectations and the indirect tax changes impacted the economy substantially. In the present context, the government continues to make changes to the law and structure of the relevant indirect taxes, during the year, to achieve the desired policy. Yet, while direct tax changes are expected to rule the budget, the industry continues to hope for the required indirect tax changes to give a boost to the economy.