Finance Minister Nirmala Sitharaman Announces Tax Cuts to Boost Jobs and Trade
New Delhi [India], August 7: Finance Minister Nirmala Sitharaman addressed questions on indirect taxes in the Finance Bill, highlighting transformational changes aimed at growth and employment. These measures simplify international trade processes, reduce costs, and enhance domestic production and export competitiveness.
New customs duty rates are proposed for various commodities, including life-saving medicines and rare earth minerals, to promote domestic production and job creation. Sitharaman emphasized that these cuts lower raw material prices, making domestic production more cost-effective.
Specifically, rate cuts on inputs for labor-intensive industries like leather and textiles aim to boost job creation and resolve duty inversion issues. Exemptions and reductions on 27 critical minerals, such as lithium and cobalt, support strategic autonomy and emerging sectors like electronics and renewable energy.
Reductions in duties on precious metals like gold and silver aim to promote the gems and jewelry sector, which is export-oriented and job-creating. Customs duties on gold and silver have been reduced from 15% to 6%, and on platinum from 15.4% to 6.4%, enhancing domestic value addition.
To support the marine industry, particularly aqua farming, fish feed is exempted from customs duty to boost seafood exports. These cuts ensure high standards for marine exports, especially shrimp, despite limited domestic capacity.
Sitharaman also announced a comprehensive review of the tax structure over the next six months to develop a simplified tax regime for the entire country.
Doubts Revealed
Finance Minister -: The Finance Minister is a person in the government who is responsible for managing the country’s money and economy. In India, this person is Nirmala Sitharaman.
Nirmala Sitharaman -: Nirmala Sitharaman is an important leader in India who helps make decisions about the country’s money and economy. She is the Finance Minister.
Tax Cuts -: Tax cuts mean that the government is reducing the amount of money people or businesses have to pay in taxes. This can help people save money and encourage businesses to grow.
Customs Duty -: Customs duty is a tax that the government charges on goods coming into the country. Changing these rates can make it cheaper to bring in certain items.
Domestic Production -: Domestic production means making goods within the country. Promoting it helps create jobs and supports local businesses.
Export Competitiveness -: Export competitiveness means how well a country can sell its goods to other countries. Making exports more competitive can help businesses grow and create jobs.
Labor-Intensive Industries -: Labor-intensive industries are types of businesses that need a lot of people to work, like making clothes or shoes. Helping these industries can create more jobs.
Textiles -: Textiles are materials like cloth or fabric that are used to make clothes and other items. The textile industry is important for jobs and the economy.
Leather -: Leather is a material made from animal skin, used to make things like shoes, bags, and jackets. The leather industry also provides many jobs.
Exemptions -: Exemptions mean that certain items do not have to pay a tax. This can make those items cheaper to buy or produce.
Critical Minerals -: Critical minerals are important materials needed for making things like batteries and electronics. Examples include lithium and cobalt.
Lithium -: Lithium is a metal used in batteries for things like mobile phones and electric cars. It is very important for modern technology.
Cobalt -: Cobalt is a metal used in making batteries and other electronic devices. It helps these devices work better and last longer.
Precious Metals -: Precious metals are valuable metals like gold and silver. They are often used in jewelry and as investments.
Fish Feed -: Fish feed is food given to fish in fish farms. Reducing the cost of fish feed can help the marine industry grow.
Gems and Jewelry -: Gems and jewelry are valuable items made from precious stones and metals. This industry is important for India’s economy and exports.
Marine Industries -: Marine industries involve businesses related to the sea, like fishing and fish farming. Supporting these industries can create jobs and provide food.
Comprehensive Tax Review -: A comprehensive tax review means looking at all the different taxes to see if they need to be changed. This helps make sure the tax system is fair and effective.
