Direct Tax Services
Select Your Location
In the last budget proposals, clause 115(1) of the Finance Bill 2021 introduced the Agriculture Infrastructure and Development Cess on goods specified in the first schedule to Customs Tariff Act, 1975 imported into India. Further, in clause wise explanation in the Memorandum, it was clarified that to avoid additional burden due to the imposition of AIDC, the basic customs duty rates are lowered on products on which cess is imposed.
Table of Contents
The AIDC is a tax that the government imposes on the commercial production of the agricultural produce. The charge rate depends upon the production capacity. The money collected by the government through the AID Cess will be utilized for the infrastructure development in agriculture across the country.
In simple words, the government requires funds in order to develop infrastructure and to carry out different projects. The government collects these funds from commercial production across the country in the form of tax or cess.
The importance of levy of the new AIDC comes from its usage and implication. This cess would be used for a specific purpose that is to improve infrastructure development in agriculture across the country by enhancing production and by protecting this sector from undue competition, and also by enhancing its output competently.
With an urgent need of developing the agricultural infrastructure, the introduction of AIDC comes at a time where the Centre has sent a message to the farmers to improve their condition.
States are not amused because, with this cess, their revenues will take a hit due to the restructuring of taxes announced in the budget. It is worth mentioning here that the collection from the Agriculture Infrastructure and Development Cess will not form a part of the divisible central and is out of their reach. The impact of this levy would be offset by an equivalent or more reduction in other central levies, for states, this set off means that they would lose out on shares in central revenue.
For instance, the AIDC of 2.5 rupees per litre is imposed on petrol, the basic excise duty and special additional excise duty on the same is lowered to the same effect. Consequently, while states could have got 41% of the said amount of petrol sold in case of duties levied, now centre has the same amount, i.e. 2.5 rupees per litre for its sole discretion.
Likewise, adjustment has been made for alcohol that presently attracts 150% basic customs duty that has been reduced to 50% to nullify the impact of 100% levy of the AIDC.
Therefore instead of consumers, it is states who are concerned over the levy of the new cess as they would get less money in line with the devolution formula. However, the centre assured that the amounts lost to states won’t be sizeable, and in fact, states would benefit through levy of this cess as the spending would be earmarked for the states.
There would be no additional burden on the consumers as Finance Minister Nirmala Sitharaman, in her budget presentation, proposed to reduce Basic Customs Duty on these items. Therefore the amount levied as AIDC on petrol and diesel would be counter balanced by an equal reduction in Basic Excise Duty and Special Additional Excise Duty to the same extent, thereby ensuring zero impact on fuel.
The AIDC cess would be levied on other items such as Gold and silver dore bars, crude palm oil, crude soyabean oil, Kabuli chana, apples, Bengal gram etc. All these items are those that might not majorly impact a huge part of population. There could be customized hike on cotton to 10% and on uncooked silk and silk yarn to 15%. In the price range, the end use based concession on denatured ethyl alcohol stands withdrawn. Custom charges are uniformly introduced as much as rice bran oil cake and animal feed components. The Finance Minister stated that the levies are on a small set of things, and care has been taken to ensure that the impact is minimal.
With a view to improve the agricultural infrastructure, the finance minister introduced the Agriculture Infrastructure and Development Cess this year. However, the FM stated that there won’t be any additional burden on consumers as the basic customs duty rates have been reduced on some items.
Read our article: All about the Amendments in Custom Duty in the Budget 2021-22
Ashish M. Shaji has done his graduation in law (BA. LLB) from CCS University. He has keen interests in doing extensive research and writing on legal subjects especially on corporate law. He is a creative thinker and has a great interest in exploring legal subjects.
The Reserve Bank of India, in its press release dated June 8, 2023, issued Statement on Develop...
RBI released a developmental and regulatory policy statement on June 8, 2023. The objective of...
Financial Institutions called Asset Reconstruction Companies ("ARCs") reconstruct and securitis...
Any person booked for an offence under the Criminal Procedure Code (CrPc) / the Code would be r...
The Reserve Bank of India regulates Non-Banking Financial Companies in India, and they are subj...
The Reserve Bank of India regulates Non-banking Financial Companies in accordance with the RBI...
Incorporation of a Limited Liability Company (LLC) is an attractive choice for small business o...
The Reserve Bank of India (the Bank) issued Non-Banking Financial Companies Acceptance of Publi...
A few years ago, investing in traditional investment categories like shares, bonds, real estate...
Compared to other organisations, the corporate governance of Non-Banking Financial Companies is...
Are you human?: 3 + 3 =
Easy Payment Options Available No Spam. No Sharing. 100% Confidentiality
Until the beginning of this year, the process of KYC (Know Your Customer) mandated in-person visits as per the regu...
13 Oct, 2020
In the current online world, digital marketing is crucial. Regardless of the niche or company size, online marketin...
19 Feb, 2019
Red Herring Top 100 Asia enlists outstanding entrepreneurs and promising companies. It selects the award winners from approximately 2000 privately financed companies each year in the Asia. Since 1996, Red Herring has kept tabs on these up-and-comers. Red Herring editors were among the first to recognize that companies such as Google, Facebook, Kakao, Alibaba, Twitter, Rakuten, Salesforce.com, Xiaomi and YouTube would change the way we live and work.
Researchers have found out that organization using new technologies in their accounting and tax have better productivity as compared to those using the traditional methods. Complying with the recent technological trends in the accounting industry, Enterslice was formed to focus on the emerging start up companies and bring innovation in their traditional Chartered Accountants & Legal profession services, disrupt traditional Chartered Accountants practice mechanism & Lawyers.
Stay updated with all the latest legal updates. Just enter your email address and subscribe for free!
Chat on Whatsapp
Hey I'm Suman. Let's Talk!