Budget 2025: Import duty tinkering to see states receiving less

The BCD for ‘Motor cars and different centrifugal vehicles principally designed for the transport of persons, including presumption wagons and racing cars’, nether a tariff heading of worth exceeding $40,000, was reduced from 100 per cent to 70 per cent.

A akin crisp simplification was applied to ‘Used motorcycles (including mopeds) and cycles fitted with an auxiliary motor, with oregon without sidecars, nether a tariff heading’, wherever the BCD was reduced from 100 per cent to 70 per cent.

Think vessel Global Trade Research Initiative (GTRI) stated that the Union Budget 2025-26 continues the government’s inclination of adjusting Basic Customs Duty and the Agriculture Infrastructure and Development Cess, a signifier followed since Budget 2021-22.

“The authorities lowers BCD connected definite products portion expanding AIDC, benefiting from the information that BCD is shared with states, whereas AIDC is retained wholly by the cardinal government,” GTRI laminitis Ajay Srivastava said.

In Budget 2025, for galore products, portion the wide work remains the same, the authorities has reduced BCD and transferred the quality to AIDC. This applies to marble, granite, crude, candles, PVC flex films, footwear, marble slabs, star cells, centrifugal cars (above $40,000), utilized centrifugal cars, motorcycles, utilized motorcycles, bicycles, yachts and different vessels, energy meters, and parts of physics toys.

“For immoderate products, the wide work load has decreased, but the stock of AIDC has increased. This applies to star modules, centrifugal vehicles (passenger – tariff heading 8702), centrifugal vehicles (goods – tariff heading 8704), seats (tariff heading 9401), different furniture, mattress supports, bedding articles, luminaires and airy fittings (including searchlights and spotlights), parts of physics toys, and laboratory chemicals,” Srivastava said.

He explained that arsenic AIDC is simply a cess, it is not shared with states and goes straight to the Consolidated Fund of India (CFI). Introduced successful Budget 2021-22 to concern cultivation infrastructure projects, AIDC is levied connected circumstantial imports similar gold, silver, petrol, and pulses, arsenic good arsenic connected home petroleum products. He added that the gross generated is utilized exclusively by the cardinal authorities for cultivation development.

Duty Rejig

“For astir automotive parts and vehicles, import duties haven’t truly changed. The authorities has simply shifted immoderate duties from basal customs work to the Agricultural Infrastructure and Development Cess. The lone existent work cuts are connected motorcycles (including those successful CKD and SKD form), immoderate ample rider vehicles (including CKD and SKD form), and goods proscription vehicles. This determination by the Indian authorities tin besides beryllium seen arsenic a measurement towards providing a level playing tract for overseas manufacturers by reducing tariff barriers successful sectors wherever India has a beardown proviso chain,” Saurabh Agarwal, spouse & Automotive Tax Leader astatine EY, said.

Regarding the work changes successful the electronics sector, India Cellular & Electronics Association (ICEA) president Pankaj Mohindroo stated that the rationalisation of tariffs connected cardinal inputs and components creates a much competitory outgo operation and encourages deeper integration with planetary worth chains.

On the removal of the 2.5 per cent BCD connected large mobile inputs/parts oregon sub-parts for Printed Circuit Board Assembly (PCBA), Camera Modules, Connectors, Wired Headsets, and Microphones, among others, ICEA noted that portion tariff extortion was indispensable during the infancy of manufacturing, it is nary longer required successful the mobile telephone industry.

“The manufacture has reached a gigantic standard of $60 cardinal successful yearly production. The removal of the 2.5 per cent BCD volition heighten manufacturing, region ambiguity, and summation competitiveness,” ICEA said.

ASK Investment Managers Limited said that the Budget introduced customized work exemption connected 35 further superior goods for EV artillery manufacturing which volition boost home manufacture of lithium-ion batteries for electrical vehicles.

“The simplification successful customs work connected liquified propane from 15 per cent  to 2.5 per cent  (for concern usage) and connected LPG from 15 per cent to 5 per cent (for concern usage) tin perchance boost depletion of Propane/ LPG successful the Morbi’s concern clump and successful different industries,” ASK Investment Managers Limited said.