Budget 2022: Key Highlights on Indirect Tax
Written by Abhinandan Kumar & Anshul Singh. Dt. February 11th, 2022
Amendment in Goods and Services Tax Act, 2017
GST has been a landmark reform of independent India showcasing the spirit of cooperative federalism. While aspirations were high, there were huge challenges too. These challenges were overcome deftly and painstakingly under the guidance and oversight of the GST Council. The Indian GST regime is fully IT driven and fulfilled the cherished dream of India as one market. The Amendments carried out in the Finance Bill 2022, will come into effect on the date of its enactment.
Additional Condition for availment of ITC u/s 16(2):
ITC can be availed only, if the same is reflected in GSTR-2B. This additional condition introduce in budget 2022. Provided that assessee must fulfill the condition of Section 38 of CGST Act, 2017.
Amendment on Issue of Debit Note/ Credit Note, GSTR-1/ 3B Return Filing, availment of Input Credit to be 30th November from earlier 30th September of succeeding Financial Year:
Time-limit to issue of Debit Note/ Credit Note, rectification in error of GSTR-1/ 3B and availment of Input Credit is now 30 November of succeeding financial year. Earlier this time limit was 30 September of succeeding financial year. This move provides assessee two additional months to avail GST Input Credit and changes made in GSTR-1/ 3B of relevant financial year.
Composition dealer registration cancellation dependent on non- filing of GST returns:
Section 10 Composition Tax Payer’s Registration can be cancelled suo-moto in Section 29 of CGST Act 2017, if they have not furnished their GSTR-4 return beyond 3 months from the due date of filing of Return. Earlier GST authority takes such type of action, if Tax Payer not furnishes three consecutive GSTR-4. This will bring parity between Composition & Non- Composition Tax Payer in terms of non filig period of GST Return for GST Registration Cancelation.
Amendment in Due Date for NR Taxable Person:
The due date for filing return by non-resident taxable person is now 13th day of next month in GSTR-5. Earlier this date was 20th day of next month.
Amendment in Section 41:
Section 41 of the CGST Act is being substituted so as to do away with the concept of “claim” of ITC on a “provisional” basis.
Omission of Section 42, 43 & 43A:
Sections 42, 43 and 43A of the CGST Act are being omitted so as to do away with two-way communication process in return filing.
Late Fee on TCS Return:
Section 47 of the CGST Act is being amended, so as to provide for levy of late fee for delayed filing of TCS returns under section 52.
ITC availment on self-assessment basis:
- Section 49, of the CGST Act is being amended, so as to provide for prescribing restrictions for utilizing the amount available in the electronic credit ledger.
- Section 49, of the CGST Act is being amended so as to allow transfer of amount available in electronic cash ledger under the CGST Act of a registered person to the electronic cash ledger under the said Act or the IGST Act of a distinct person.
- Section 49 of the CGST Act is being amended so as to provide for prescribing the maximum proportion of output tax liability which may be discharged through the electronic credit ledger.
- Section 54 of CGST Act, 2017 is amended to facilitate the claim of any refund of any balance in the electronic cash ledger.
- The time limit to claim refund by UN agencies, u/s 55 of the CGST Act, 2017, is now 2 years from the last day of quarter when supply was received instead of six months (earlier).
Interest to be levied on ITC wrongly availed and utilized:
If ITC not utilized, then interest will not be levied. Section 50(3) substituted retrospectively wef 01.07.2017.
Amendment in refund procedure u/s 54 and time limit u/s 55:
GST portal www.gst.gov.in notified:
Notified retrospectively as the common portal for all the functions provided under CGST Rules 2017 except for E-way bill generation and for generation of invoices under Rule 48(4) of CGST Rules.
The record collection of GST revenue of Rs. 1,40,986/- Crs. in January 2022, was the highest since GST roll out.
Proposed Amendment in Custom Act, 1962
Customs administration has reinvented itself over the years through liberalised procedures and infusion of technology. Faceless Customs has been fully established. During Covid-19 pandemic, Customs formations have done exceptional frontline work against all odds displaying agility and purpose. Customs reforms have played a very vital role in domestic capacity creation, providing level playing field to our MSMEs, easing the raw material supply side constraints, enhancing ease of doing business and being an enabler to other policy initiatives such as PLIs and Phased Manufacturing Plans.
Customs administration to be fully IT driven in SEZs:
In current budget our Government proposes reforms in SEZs, Customs Administration of SEZs and it shall henceforth be fully IT driven and function on the Customs National Portal with a focus on higher facilitation and with only risk-based checks. This will ease doing business by SEZ units considerably. This reform shall be implemented by 30th September 2022.
Phasing out concessional rates in capital goods and project imports gradually and apply a moderate tariff of 7.5% goods:
However, several duty exemptions, even extending to over three decades in some cases, have been granted to capital goods for various sectors like power, fertilizer, textiles, leather, footwear, food processing and fertilizers. These exemptions have hindered the growth of the domestic capital goods sector. Similarly, project import duty concessions have also deprived the local producers of a level playing field in areas like coal, mining projects, power generation, transmission or distribution projects, railway and metro projects.
It is proposed to phase out the concessional rates in capital goods and project imports gradually and apply a moderate tariff of 7.5 per cent. Certain exemptions for advanced machineries that are not manufactured within the country shall continue. A few exemptions are being introduced on inputs, like specialized castings, ball screw and linear motion guide, to encourage domestic manufacturing of capital goods. Review of customs exemptions and tariff simplification
More than 350 exemption entries (for which sufficient domestic capacity exists) are proposed to be gradually phased out. These include exemption on certain agricultural produce, chemicals, fabrics, medical devices and drugs and medicines. Further, as a simplification measure, several concessional rates are being incorporated in the Customs Tariff Schedule itself instead of prescribing them through various notifications.
Customs duty rates are being calibrated to provide a graded rate structure to facilitate domestic electronics manufacturing:
Electronic manufacturing has been growing rapidly. Customs duty rates are being calibrated to provide a graded rate structure to facilitate domestic manufacturing of wearable devices, hearable devices and electronic smart meters. Duty concessions are also being given to parts of transformer of mobile phone chargers and camera lens of mobile camera module and certain other items. This will enable domestic manufacturing of high growth electronic items.
Gems and Jewellery:
To give a boost to the Gems and Jewellery sector, Customs duty on cut and polished diamonds and gemstones is being reduced to 5 per cent. Simply sawn diamond would attract nil customs duty. To facilitate export of jewellery through e-commerce, a simplified regulatory framework shall be implemented by June this year.
Customs duty on certain critical chemicals namely methanol, acetic acid and heavy feed stocks for petroleum refining are being reduced, while duty is being raised on sodium cyanide for which adequate domestic capacity exists. These changes will help in enhancing domestic value addition.
Extension of customs duty exemption to Steel Scrap:
Customs duty exemption given to steel scrap last year is being extended for another year to provide relief to MSME secondary steel producers. Certain Anti- dumping and CVD on stainless steel and coated steel flat products, bars of alloy steel and high-speed steel are being revoked in larger public interest considering prevailing high prices of metals. Further, duty on umbrellas is being raised to 20 per cent. Exemption to parts of umbrellas is being withdrawn. Exemption is also being rationalised on implements and tools for agri-sector which are manufactured in India.
Reduction of duty on certain inputs required for shrimp aquaculture:
Duty is being reduced on certain inputs required for shrimp aquaculture so as to promote its exports. To incentivise exports, exemptions are being provided on items such as embellishment, trimming, fasteners, buttons, zipper, lining material, specified leather, furniture fittings and packaging boxes that may be needed by bonafide exporters of handicrafts, textiles and leather garments, leather footwear and other goods.
Unblended fuel shall attract additional differential excise duty:
Blending of fuel is a priority of our Indian Government. To encourage the efforts for blending of fuel, unblended fuel shall attract an additional differential excise duty of Rs. 2/- liter from the 1st day of October 2022.
India have all time high Forex Reserve:
Abhinandan Kumar & Anshul Singh.