Budget 2023 | Customs Duty tweaks likely to make mobile phones, TVs cheaper; toys, bicycles, automobiles dearer
The Hindu
Plan to reduce number of Basic Customs Duty rates on goods, other than textiles and agriculture, from 21 to 13: Finance Minister
With an eye on promoting exports, boosting domestic manufacturing and enhancing value addition, Union Budget 2023-24 has proposed number of changes to Customs Duty regime that is likely to make mobile phones and televisions cheaper and certain class of automobiles, including EVs, as well as toys and bicycles dearer.
Presenting her Indirect Tax proposals, which also are aimed at encouraging green energy and mobility, Finance Minister Nirmala Sitharaman said “a simplified tax structure with fewer tax rates helps in reducing compliance burden and improving tax administration. I propose to reduce the number of Basic Customs Duty (BCD) rates on goods, other than textiles and agriculture, from 21 to 13.”
Consequently, there would be “minor changes in BCD, cesses and surcharges on some items, including toys, bicycles, automobiles and naphtha,” she said.
A reduction in mobile phone prices is likely on account of BCD on camera lens and its inputs/parts, used in manufacture of camera module of mobile phone, made nil from existing 2.5%. It has been decided to continue concessional duty on lithium-ion cells for batteries for another year. “The proposals are aimed at deepening domestic value addition in manufacture of mobile phones,” Ms. Sitharaman said, adding how government initiatives had led to mobile phone production in India, increasing from 5.8 crore units valued at about ₹18,900 crore in 2014-15 to 31 crore units valued at over ₹2,75,000 crore in the last financial year.
“Similarly, to promote value addition in manufacture of televisions, I propose to reduce BCD on parts of open cells of TV panels to 2.5% [from the existing 5%],” she said.
In another Indirect Tax proposal, she said towards rectifying inversion of duty structure and encouraging manufacturing of electric kitchen chimneys, BCD on electric kitchen chimney was being increased to 15% from 7.5%, while the levy on heat coils for the appliance is getting reduced from 20% to 15%.
Toys, bicycles and some automobiles, including electric vehicles, as well as naphtha figure in a list of items that are likely to turn dearer with the Budget increasing the tariff rate. For bicycles, the new rate is 35% as against existing 30%; for toys and parts of toys, other than parts of electronic toys, it will be 70% (60%). BCD on naphtha has been increased from 1% to 2.5%. The duty on Styrene and Vinyl Chloride is being increased from 2 to 2.5%.
The decline in India’s net foreign direct investment (FDI) inflows, which have dropped almost 31% to $25.5 billion over the first ten months of 2023-24, is in line with the slowdown in such investments to developing countries, the Finance Ministry has said, while holding out hope for an uptick in investments this year.