The government is likely to address the issue of inverted duty structure for certain products in the forthcoming Budget to boost domestic manufacturing, an official said. Inverted duty structure refers to taxation of inputs at higher rates than finished products that result in the build-up of credits and cascading costs.
The official said that the Commerce and Industry Ministry has shared a list of 13-14 products with the finance ministry to look at the inverted duty structure issues.
“The ministry always shares such list of goods, where customs duties on components are higher than the finished products, We have given our inputs to the finance ministry to look at that. Inverted duty structure is not economically efficient,” the official said.
Inverted duty structure impacts the domestic industry as manufacturers have to pay a higher price for raw materials in terms of duty, while the finished products land at lower duty and cost.
Finance Minister Nirmala Sitharaman is scheduled to present the Union Budget on February 1, 2024.