Technology Budget 2024: Customs Duty Cuts and Strategic Measures to Boost IT & Electronics

Finance Minister Nirmala Sitharaman revealed important steps meant to develop India's electronics and information technology sectors in her seventh consecutive Union Budget presentation for the fiscal year 2024-25. Effective from July 24, 2024, these changes are meant to improve value addition, increase export competitiveness, correct inverted duty structures, and support home industry. This is a closer view of the important announcements together with their expected influence.

Reductions in Customs Duties

The Budget 2024's reduction in customs taxes across several components used in the production of cellular mobile phones and related accessories is among its most important features. This calculated action seeks to reduce manufacturer input costs, therefore promoting a more competitive market.

Cellular Mobile Phones:The customs duty has dropped from 20% to 15%. This drop is expected to make mobile phones more reasonably priced for customers and inspire producers to boost national output.

Chargers/Adapters for Mobile Phones : The responsibility on chargers and adapters for mobile phones has also been reduced from 20% to 15%. This shift is probably going to lower the cost of several basic accessories, so mobile phones will become more reasonably priced overall.

Printed Circuit Board Assembly (PCBA): Originally 20%, the customs duty on a vital component in mobile phones, PCBAs, has dropped to 15%. Anticipated to increase local mobile phone manufacture and assembly, this decrease supports the government's 'Make in India' campaign.

Specified Goods for Connector Manufacturing : Customs duty has been lowered from 5-7.5% to $0 for specified products used in the fabrication of connectors. Aimed at lowering the production costs of connectors, which are essential for many different electrical products, this exemption

Oxygen-Free Copper for Resistor Manufacturing: Used in the production of resistors, oxygen-free copper carries customs duty of 5% instead of 0%. This action is supposed to lower the resistive production costs, which are fundamental parts of electronic circuits.

Impact on the IT and Electronics Sectors

These reductions in customs duties are expected to have a multifaceted impact on the IT and electronics sectors in India:

Cost Reduction and Competitive Pricing: Reducing manufacturing input costs will help businesses to provide more reasonably priced goods by means of cost reduction and competitive pricing. Increased demand and more sales volumes could follow from this.

Boost to Local Manufacturing: The cut in responsibilities is probably meant to inspire greater domestic electrical product manufacture and assembly. This fits the government's aim of turning India into a major worldwide manufacturing base.

Enhanced Export Competitiveness: Reduced manufacturing costs may help Indian-made electronic goods to be more competitive in the global market, thereby perhaps raising export quantities.

Correction of inverted duty structures: The reforms seek to correct inverted duty systems, whereby completed goods get smaller duties than their raw ingredients or components. A fair and balanced tax system supporting local manufacturers depends on this rectification.

Other Major Announcements in Budget 2024

Apart from the policies for the industries of IT and electronics, the Finance Minister also revealed major modifications to the income tax system. These alterations comprise:

The standard deduction for salaried workers has been raised from ₹50,000 to ₹75,000. This change is meant to help salaried people more and improve disposable wages.

The deduction for family pensions has been increased from ₹15,000 to ₹25,000, therefore providing more financial help to households depending on pension incomes.

With income up to ₹3 lakh free and progressive rates rising to 30% for income above ₹15 lakh, the new tax system incorporates changed slabs. Though no changes were done to the former tax system, these adjustments are designed to streamline the tax structure and give relief to taxpayers.

Financial Implications

It is estimated that the income tax structural changes would cause a net revenue loss of over ₹7,000 crore yearly. The government expects, therefore, that over time the favorable effects on consumer spending and economic activity would balance this loss.

Comparos Says

The Budget 2024 of Finance Minister Nirmala Sitharaman presents targeted actions meant to support India's IT and electronics industries as well as major tax relief for citizens. Reducing customs taxes is supposed to cut manufacturing costs, improve competitiveness, and boost home industry. Coupled with the updated income tax bands and higher deductions, these changes seek to assist the government's objective of a technologically advanced and economically strong India by boosting economic growth.