BOOST FOR DOMESTIC MANUFACTURING

The Budget assists the government's commitment to reduce tax burden and move towards a framework based on trust.

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The government's Viksit Bharat vision is reflected in the Union Budget with a persistent focus on 'Make in India', export promotion, and trade facilitation. In the Budget speech, the Finance Minister emphasised the tax department's commitment to 'trust first, scrutinise later', which if applied efficiently, can ease the doing of business in India and help in creating certainties for foreign businesses.

India is emerging as a growing market for Global Capability Centers, which makes it even more crucial for the Indian government to adopt simple and minimal tax practices to attract more foreign investment. Despite the geopolitical uncertainties around the world, the finance minister displayed utmost confidence in India's potential and introduced several tax reforms that support the government's pledge to reduce the tax burden and move towards a trust-based tax framework.

The Goods and Services Tax (GST) collections have made a significant contribution to the total tax receipts of the government. The Economic Survey for FY25 has highlighted that for 23 States, GST was the main source of revenue among Own Revenue Receipts with the highest reliance in Manipur and Nagaland at 78 per cent and 72 per cent, respectively. To provide continuous relief to the taxpayers, the GST Council has met fifty-five times in the tenure of seven years to make recommendations with respect to GST rate changes, streamlining compliances in GST, and measures for facilitation of trade, among others. The Union Budget has echoed these recommendations by proposing the necessary amendments in the Finance Bill.

The customs tariff structure has been rationalised by removing seven tariff rates which will not only strengthen domestic manufacturing but also encourage exports.