Abhishek Jain, Partner and Head, Indirect Tax, KPMG in India
The Budget adopts a calibrated, sector-specific approach to Make in India, including a near doubling of the outlay for electronics component manufacturing alongside targeted support across areas such as semiconductors, critical minerals, container manufacturing, R&D, design capabilities and textiles. In a challenging global environment, this approach signals policy resolve and could meaningfully influence long-term investment decisions and India’s positioning within global manufacturing value chains”
The Budget’s amendment to the place of supply provisions for intermediary services is a long-awaited relief for the services export sector, as facilitation services earning foreign exchange will now qualify for zero-rating instead of suffering an embedded 18% GST cost. Equally important, it should put to rest prolonged disputes where non-intermediary support and back-end services were incorrectly questioned as intermediary services, thereby reducing litigation, unlocking refunds, and improving overall ease of doing business for service exporters.
”The Budget reflects a calibrated, sector-specific approach to manufacturing, deploying tailored avenues across priority and emerging areas such as electronics components, semiconductors, critical minerals, R&D, design capabilities and textiles. On the customs front, the alignment with the Digital India vision through a more integrated customs system, wider access to deferred duty payment, technology-led and non-intrusive clearance processes, along with selective rate rationalisation for strategic sectors such as nuclear energy, batteries and energy storage systems, should support manufacturing competitiveness, while measures like electronic sealing for exports further strengthen trade facilitation. From a GST perspective, the amendment to the place of supply for intermediary services provides long-awaited relief to services exporters by enabling zero-rating of foreign exchange earning facilitation services and reducing prolonged classification disputes”