Customs duty changes keep Make-in-India in focus: CBIC chairman

The growth in indirect tax collections is “intricately linked” to nominal GDP growth, so the buoyancy of 1.1 in GST mop-up in the next financial year is “realistic,” Central Board of Indirect Taxes and Customs (CBIC) Chairman Sanjay Kumar Agarwal told FE on Friday.

“On a 10.5% nominal GDP growth assumption, if the GST tax-mop up has a buoyancy above 1, it means the compliances are improving, and formalisation of the economy is happening,” Agarwal told FE in an interview.

The interim Budget has projected GST collections – including Central GST and cess – to grow 11.6% in FY25 as compared to 12.7% growth assumed in the revised estimate for FY24.

On retaining the existing custom duties, Agarwal said that the full Budget, set to be unveiled in July, shall review the existing duties and decide whether they need to be changed or not.

He mentioned that certain customs duty notifications have an end-date of March 31, beyond which the existing duties would lapse. In many such notifications, the end-date has been extended to September 30, 2024, said CBIC Chairman.

He also said that customs duty is now calibrated keeping in mind the various flagship programmes of the Centre, such as the phased manufacturing programme. “We want to encourage the manufacturing industry with (cheaper) input goods, and deepen the value-chain.”

On the introduction of an amnesty scheme to settle long-pending customs disputes, the CBIC Chairman said that “no such amnesty scheme is under consideration.” Experts say that an amnesty scheme, along the lines of ‘Sabka Vishwas’ and ‘Vivaad se Vishwas’, would help in ending long-drawn litigation under the Customs laws, and will particularly help small businesses to get rid of their past baggage of disputes.

An estimated 30,000 cases of customs are pending in various courts, involving an amount of more than Rs 40,000 crore, which may reduce substantially with the operationalisation of an amnesty scheme, thereby increasing revenue for the government and providing much-needed relief to businesses, say experts.

The interim Budget has also assumed a 5% growth in excise duty collections in FY25. In the current year, however, the revised estimate peg a 4.8% contraction in mop-up, while the Budget estimate had assumed a 6.3% growth.

“We’re factoring in a higher consumption of fuel next year. We believe the consumption will rise by 5% in FY25, and thus assume a similar growth rate,” Agarwal said. He also said that FY24 excise collections have been lower due to a cut in excise duties, in May 2022, which had a spillover effect in the current, and a lower windfall tax rate.

“In FY24, the international oil prices rates have been substantially lower as compared to last year, and that’s why windfall tax mop-up has been lower from FY23, by about 56%,” Agarwal said.

Last year, windfall tax collections were about Rs 24,000 crore, and this year, it has come down to about Rs 10,000 crore. The FY25 excise duty mop-up estimate doesn’t take into account windfall tax collections, as it is a minor share in overall excise duty collections, said Agarwal.

Source: FINANCIAL EXPRESS