SNAPSHOT OF CHANGES IN INDIRECT TAX INCLUDING CUSTOMS AND GST
INDIRECT TAXES – BUDGET UPDATES 2021--22
SNAPSHOT OF SALIENT CHANGES IN GST ACTS
CGST
SCOPE OF SUPPLY
The scope of supply as set out in CGST Act, 2017, is sought to be enlarged. A new sub clause (aa) is to be added to sub section 1 of section 7, so as to bring any transaction involving supply of goods or services, by any person other than an individual to its members or constituents or vice-versa, for cash, deferred payment, or other valuable consideration, as exigible to tax.
Consequent to this change, Para 7 of schedule II of the CGST Act, 2017 shall deemed to have been omitted, retrospectively with effect from 1st July 2017.
ON INPUT TAX CREDIT (ITC)
Clause (aa) to sub section 2 of section 16 of the CGST Act, 2017, is being inserted to include mandatory furnishing of the details of such invoices, debit notes by the supplier, in the statement of their outward supplies and such details to be communicated to the recipient of such invoice or debit note to provide for availment of input tax credit on the same.
ATTESTATION FOR GST AUDIT WAIVED
Attestation for GST audit certification is being waived off. The mandatory requirement of auditing and attesting the annual accounts is being waived off with the new requirement being filing of annual return and reconciliation statement to be self-certified. This is being done with sub section 5 of section 35 of the CGST Act, 2017 being rescinded and substitution of section 44 of the CGST Act, 2017.
INTEREST LIABILITY
In adherence to many of the observations made by various courts, the legislative change is sought to be made for payment of interest, wherever there has been a delayed payment of the tax, only on that portion of the tax, which has been paid from the electronic cash ledger. This legislative change, in a very refreshing way, has been made retrospectively, with effect from 1st of July 2017. This has been made applicable by substitution of the proviso to sub section 1 of section 50 of CGST Act, 2017.
CLARITY ON SELF ASSESSED TAX
An explanation is sought to be inserted to include the tax payable in respect of outward supplies which are not included in the return furnished under section 39.
POWER TO CALL INFORMATION
The power to call information, which was earlier, forming two limbs, is sought to be consolidated and by virtue of substituting section 151, the Commissioner or an officer, authorized by him, may, by an order, direct any person to furnish information relating to any matter dealt with in connection with the CGST Act, 2017, within the manner specified.
On the same lines, any information so collected, shall not be used for any purposes of any proceedings under this act, without giving an opportunity of being heard to the person concerned.
MISCELLANEOUS
For the purposes of filing an appeal a sum equal to 25% of the penalty is mandated to be paid by the appellant (Sub section 6 to section 107)
IGST
SUPPLIES TO SEZ/UNITS
Section 16 of the IGST Act, 2017 has sought to restrict the zero rating on the supply of goods or services or both to a Special Economic Zone or SEZ unit only in relation to Authorized Operations.
FOREX REMITTENCE FOR REFUND CLAIMS AGAINST EXPORT OF GOODS
In furtherance, under section 16, for sub section 3, few changes are sought to be made. Where a registered person making a Zero rated supply shall be eligible to claim refund of utilized input tax credit on the supply of goods or services or both without payment of the integrated tax, the Provision makes it a mandate for the registered person making Zero rated supply of goods shall in case of non-realization of sale proceeds be liable to deposit the refund so received along with the applicable interest within thirty days after the expiry of the time limit prescribe under the Foreign Exchange Management Act 1999.
SNAPSHOT OF SALIENT CHANGES IN CUSTOMS ACT AND ALLIED LAW
A new harmonized system of nomenclature 2022, is to usher in changes to the First Schedule of the Customs Tariff Act with effect from 01/01/2022. At this point of time 351 amendments are proposed to the existing HSN covering a wide range of goods. This would facilitate recognition of new product streams, facilitating the changing nature of commodities being traded, embracing the digital age with the advent of new technologies, all with an intention of ‘ease of business’.
AGRICULTURE INFRASTRUCTURE AND DEVELOPMENT CESS (AIDC)
For the purpose of financing agricultural infrastructure and development expenditure, a Cess, namely AIDC is being imposed on following items at specified rates as set out below. It is pertinent to note that the Basic Customs duty (BCD) on such items where AIDC is being levied is to be reduced. The Social welfare surcharge (SWC) shall be levied on AIDC, barring Gold and Silver.
Tabulation Commodities where AIDC are levied
| Sl. No. | Heading, sub-heading, tariff item | Commodity | BCD | AIDC |
|---|---|---|---|---|
| 1 | 0808 10 00 | Apples | 15% / 35%* | 35% |
| 2 | 1511 10 00 | Crude Palm Oil | 15% | 17.50% |
| 3 | 1507 10 00 | Crude Soya-bean oil | 15% | 20% |
| 4 | 1512 11 10 | Crude Sunflower seed oil | 15% | 20% |
| 5 | 0713 10 | Peas (Pisum sativum) | 10% | 40% |
| 6 | 0713 20 10 | Kabuli Chana | 10% | 30% |
| 7 | 0713 20 20 | Bengal Gram (desichana) | 10% | 50% |
| 8 | 0713 20 90 | Chick Peas (garbanzos) | 10% | 50% |
| 9 | 0713 40 00 | Lentils (Mosur) | 10% / 30%* | 20% |
| 10 | 2204 | All goods (Wine) | 50% | 100% |
| 11 | 2205 | Vermouth and other wine of fresh grapes, flavoured | 50% | 100% |
| 12 | 2206 | Other fermented beverages for example, Cider, Perry, Mead, Sake, mixture of fermented beverages or fermented beverages and non-alcoholic beverages | 50% | 100% |
| 13 | 2208 | All goods (Brandy, Bourbon whiskey, Scotch etc.) | 50% | 100% |
| 14 | 2701 | Various types of coal | 1% | 1.50% |
| 15 | 2702 | Lignite, whether or not agglomerated | 1% | 1.50% |
| 16 | 2703 | Peat, whether or not agglomerated | 1% | 1.50% |
| 17 | 3102 10 00 | Urea | Nil | 5% |
| 18 | 3102 30 00 | Ammonium nitrate | 2.50% | 5% |
| 19 | 31 | Muriate of potash, for use as manure or for the production of complex fertilisers | Nil | 5% |
| 20 | 3105 30 00 | Diammonium phosphate, for use as manure or for the production of complex fertilisers | Nil | 5% |
| 21 | 5201 | Cotton (not carded or combed) | 5% | 5% |
| 22 | 7106 | Silver (including imports by eligible passengers) | 7.50% | 2.50% |
| 23 | 7106 | Silver Dore | 6.10% | 2.50% |
| 24 | 7108 | Gold (including imports by eligible passengers) | 7.50% | 2.50% |
| 25 | 7108 | Gold Dore | 6.90% | 2.50% |
The computation for AIDC shall be on the import value under section 14 of the Customs Act, 1962. The goods imported under Free Trade Agreement (FTA) and under Advance Authorization Scheme under EOU stands exempted from AIDC.
TRADE FACILITATION MEASURES
Crystallized Timelines for completion
With the introduction of a new section 28BB, a definitive period of 2 years (extendable by 1 year) is being prescribed for completion of investigation.
Any conditional exemption to have a validity of two years unless provided otherwise. All existing conditional exemptions in force as on the date of the finance bill receives a presidential assent shall come to an end on 31 March 2023, if not provided for otherwise.
TIMELINES FOR BILL OF ENTRY
Sub-section 3 of section 46 of the Customs Act, 1962, to mandate filing of bill of entry before the end of the day (including holidays) preceding the day of arrival of goods.
Other timelines with regard to presentation of BOE in certain cases are sought to be introduced.
PRESCRIPTION OF PENALTY/CONFISCATION
Sub Section (ja) to be added to section 113 of the Customs Act, 1962, to provide for confiscation of any goods that are entered for the purpose of exportation under claim of remission or refund of any duty or tax or levy against a wrongful claim that is in contravention of the provisions.
Prescription of penalty in specific cases where any person has obtained any invoice by fraud/ collusion/ wilful misstatement or suppression of facts for the purpose of utilizing Input Tax Credit on the basis of such invoice. The same to be introduced vide Section 114AC.
CUSTOMS COMMUNICATION
A common portal for facilitating various customs measures is to be notified.
A service of order, summons, notices, etc. is to be treated as a valid service by making it available on the common portal. Section 153 of the Customs Act, 1962 shall be amended to insert this vide clause (ca).
IMPORT OF GOODS AT CONCESSIONAL RATE OF DUTY
Far reaching changes in customs (import of goods at concessional rate of duty) Rules 2017 are being amended to allow job work of the materials imported under concessional rate of duty, to allow 100% outsourcing for manufacture of goods on job work and to allow imported capital goods that are being used for specific purpose to be cleared on payment of differential duty along with interest on the depreciated value.
TARIFF CHANGES
The changes in relation to BCD as well as the details of the new products that have been inserted and the relevant BCD on the same have been set out as Annexure to the snapshot.
SNAPSHOT OF SALIENT CHANGES IN EXCISE ACT
There are certain new items in relation to products containing tobacco inserted in Chapter 24 in the fourth Schedule of the Central Excise Act, 1944. Such similar changes have been effected in relation to crude petroleum oil.
AIDC has been imposed on petrol and high-spirit diesel and simultaneously basic excise duty and special additional excise duty on the two goods are being recalibrated.
Exemptions from special additional excise duty and road and infrastructure cess are also being provided to certain category of blended fuels.