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Budget 2022-2023 Highlights

GENERAL

  1. GST collection for the month of Jan 2022 at 1.40 Lakh crores, which is the highest since inception. In the background of robust economic recovery and buoyant tax collection, Finance Minister Nirmala Sitharaman presented a futuristic and development-oriented Budget for the fiscal year 2022-23. In spite of immediate elections in the Key State of UP, The Hon’ble Finance Minister has refrained from presenting a populist budget distributing freebies or announcing projects for the states going to election.
  2.  The entire budget is focused on growth and infrastructure development which is necessary for employment generation and increasing demand and supply of Goods & Services in the Country. The government is promoting technology-enabled development with very strong participation of the private sector. PM GATI SHAKTI dealing with the development of roads, railways, airports, waterways are core of infrastructure development.
  3. Post Office Branches are being inducted into the core banking system, where the money transfer from the Post Office Account to Bank Account and vice versa shall be enabled, which will lead to financial inclusion of people of far-flung rural areas.


    Changes in Income Tax

  4. A time limit of 2 years has been prescribed to file an updated return for correcting errors in Returns initially filed. There are no changes in the Income Tax slab or rates of taxation for individuals or companies. However minimum alternate tax (MAT) rate has been reduced to 15% from the current 18% for cooperatives to bring them at par with MAT of Companies.
  5. Gain from the transfer of virtual assets including cryptocurrency shall be taxed in a separate head at 30%.

    GST Law: Important Changes

  6. A new condition has been added for availment of Input Tax Credit (ITC) in Section 16. The ITC restricted as per the communication received under Section 38 of the act cannot be claimed by the recipient of supplies. Further details and modalities of credit restricted under Section 38 are yet to be prescribed.
  7. The time limit for the following action has been extended up to 30th November of the subsequent Financial Year. (Earlier this was up to the due date for filing of return for the month of September of the subsequent financial year.)a. Time limit to avail the ITC with respect to invoices issued.
    b. Time limit for issuance of Credit Note for adjustment in output tax liability
    c. Time limit to revise GSTR-1
    d. Time limit to revise GSTR-3B
    e. Time limit to revise TCS statement under Section 52.
  8. Section 50 amended retrospectively w.e.f. 01.07.2017: a. Interest is payable only when “ITC is wrongly availed and utilized”. Thus, no interest is payable where even though ITC is wrongly availed but not utilised and ITC is reversed before utilization. b. Further rate of appliable interest for “ITC wrongly availed and utilized” has also been notified at 18% and has been made at par with interest applicable on tax on outward supplies.
  9. The substituted Section 41 provides for reversal of ITC with interest where the supplier has not paid the tax to the Government. The ITC can be re-availed on payment of tax by the supplier to Govt. However, there is no specific provision for reclaiming the credit of Interest, an area of dispute.
  10. Section 49: Balance in Electronic CASH Ledger can be transferred to Distinct Person i.e. GST registered entities with the same PAN as the transferor, subject to the condition that there is no unpaid liability in Electronic Liability Ledger of the transferor.
  11. Section 54: Time limit for claiming a refund in case of supplies made to SEZ Unit shall be counted from the due date of filing GSTR-3B in respect of such supplies.
  12. Section 49 is being amended to provide legal backing to Rule 86B for restricting the utilization of ITC in excess of 99% of total output tax liability in a particular month so that at least 1 % of total output tax liability in every month is collected in cash from every registered person. However, Rule 86B shall not be applicable to persons satisfying the criteria provided therein for its non-applicability.
  13. Non-operative matching provisions under Sections 42, 43, and 43A have been omitted and consequential amendments are also being made in other provisions of the GST Law.


    Customs Law: Important Changes

    Customs Act, 1962

  14. The officers of DRI, Audit, and preventive formation are being included as the class of officers of customs to perform various functions under the Customs Act, 1962. This amendment is being made effective as if it had been in force at all material times in the past. This change is being brought to annul the judgment of the Hon’ble Apex Court in the case of M/s Canon India Pvt Ltd. Vs Commissioner of Customs, [Civil Appeal Nos. 1827, 1875, 1832 & 3213 of 2018] wherein it was held that DRI officers are not the proper officer under the Customs Act, 1962 for issuance of SCN under Section 28.
  15. Section 14 of the Customs Act is being amended to cast extra responsibility on importers in respect of imported goods that may be undervalued.
  16. Section 28J: The operation of the advance ruling pronounced by the authority shall have now a limited life of three years even if there is neither any change of law nor of facts. This will actually make the forum redundant as no business entity will seek an Advance ruling just for three years.
  17. Section 110AA is being inserted for transfer of the case to the officer having original jurisdiction of assessment and refunds for issuance of SCN and adjudications subsequent to any kind of inquiry, investigation, or audit.
  18. Section 135AA is being inserted for making the publication of information related to exported or imported goods a punishable offense unless such publication is authorised under any law.


    Customs Tariff Act, 1975

  19. The Tariff rate of 25% on Solar Cells falling under Tariff entry 85414200 and 40% on Solar modules falling under Tariff entry 85414300 is being introduced with effect from 1.4.2022. The existing exemption on these products with few exceptions is also being withdrawn with effect from 1.4.2022.
  20. The procedure under Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 shall be end to end automated and shall move on digital platform w.e.f., 01.03.2022. Amendments have been proposed in the First Schedule to Customs Tariff Act, 1975 to align with the HSN 2022 introduced by World Customs Organisation.
  21. (1) Anti-dumping duty on Straight Length Bars and Rods of Alloy Steel, High-Speed Steel of Non-Cobalt Grade, Flat-rolled product of steel, plated or coated with an alloy of Aluminium and Zinc and (2) Definitive Countervailing duty on the imports of “Certain Hot Rolled and Cold Rolled Stainless Steel Flat Products” imported from China PR; has been rescinded in PUBLIC INTEREST exercising government discretionary powers.


    Central Excise

  22. Notification No. 49/2008-CE (NT) has been superseded by notification 01/2022 dated 1.2.2022 which provides MRP-based valuation with 55% abatement under Section 4A of Central Excise Act 1944 for certain tobacco products falling under the Fourth Schedule of the act. The abatement prescribed under 1/2022 continues to be arbitrary and is unable to absorb the incidence of all taxes and thus is liable to be quashed by courts.


    Miscellaneous

  23. Special Economic Zones Act 2005 shall be replaced with new legislation which will be IT-driven and shall be implemented on the Customs platform with only risk-based checks.
Profile photo of Adv. Pawan Arora Adv. Pawan Arora

Adv. Pawan Arora, Partner at Athena Law Associates Experience of Advisory and Litigation of GST, VAT, and Service Tax to more than 25 Reputed Real Estate and Infrastructure Construction Companies. 10 Years of relentless and steady experience of Advisory and Litigation in GST and other Indirect Taxes and handled matters of clients from diverse industries and field of specialization is Indirect Taxes.

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