CBIC Chairman Says Part Shifting Customs Duty To Agriculture Infra Will Have Minor Effect On States
Sanjay Kumar Agarwal, Chairman Of The Central Board Of Indirect Taxes & Customs And Special Secretary To The Government Of
CBIC Chairman Says Part Shifting Customs Duty To Agriculture Infra Will Have Minor Effect On States
Strap – In the Union Budget 2025, Finance Minister Nirmala Sitharaman had removed seven tariffs
Sanjay Kumar Agarwal, Chairman of the Central Board of Indirect Taxes & Customs (CBIC) and Special Secretary to the Government of India, has stated that part shifting of the basic customs duty (BCD) to the Agriculture Infrastructure and Development Cess (AIDC), will have a marginal impact on transfers to states.
He explained that it was because the sum involved would be Rs.4,000 crore across 30 states.
In the Union Budget 2025, Finance Minister Nirmala Sitharaman removed seven tariffs. This was over and above the rates removed in the previous budget.
The government has rationalized basic customs duty rates, slashing the number of levies to eight. However, it kept the effective duty rates on most items the same, adjusting the cess to ease in doing business.
Commenting on the move, the economic think tank Global Trade Research Initiative (GTRI) said the budget reinforced a fiscal strategy, which the government followed since 2021-22, reducing the BCD while increasing the AIDC.
The shift allows the government to retain more revenue, as BCD is shared with states, but AIDC is not.
The Special Secretary stated, "Of the total customs duty collection, the shift from BCD to AIDC is not huge. In a particular state, the impact will not be much, as Rs.4,000 crore will be shifted from BCD to AIDC. Since the amount will be for 30 states, the impact for each state would be Rs.20-30 crore.”
Recently, the Chairman had expressed that India significantly reduced its average customs duty rate to 10.66 percent from 11.65 percent. It was moving towards levels prevalent in the Southeast Asian countries.
He added that the rate rationalization was carried out for making the structure simple, ensuring the competitiveness of Indian industry and simplifying the tax module.