Budget 2021 Detailed analysis of Impact on Indirect Taxes

1. Amendments in Goods and Service Tax

1.1. Introduction:

1.1.1. A King/Ruler is the one who creates and acquires wealth, protects and distributes it for common good – is the opening statement for Part B of the Budget Speech. The instant changes are replica of the same. The changes have assured a full stop to those who are motivated with fraud and guilty mind. Further, the changes have also assured reduced compliance cost and enhanced governance with a view to have first-hand interaction with assesse.

1.2. Change in Scope of Supply:

1.2.1. The term scope of supply¹ has been expanded with retrospective effect from 01.07.2017 to include all activities or transactions between a person other than individual and its members or constituents for cash, deferred payments or other valuable consideration by undertaking suitable amendments.

KSAA Comments:

1.2.2. Supply of goods by an unincorporated association or body of persons to its member for cash, deferred payment or other valuable consideration were considered as supply². The said entry did not include supply of services. The instant amendment has been brought to make all activities including supply of services under the ambit of GST. Recently, Supreme Court in case of Calcutta Club³, held that for any amount to be identified as “surplus” the identity of contributors contributing any amount and that of participants receiving such amount should be different which is not in the case of a society and hence the principles of mutuality hits them and accordingly there are no two separate persons in the transaction. With the said amendment, the legislature intends to tax the same with effect from 01.07.2017.

1.3. Mandatory mapping of inwards in GSTR 2A:

1.3.1. Presently, there are 4 criteria’s for availing ITC. An additional criteria is being prescribed by way of an amendment⁴ to state that ITC of a particular invoice/debit note is available only when the same is furnished by the supplier in his statement of outward supply i.e. FORM GSTR-1 and it has been communicated to the recipient in the prescribed manner i.e. in FORM GSTR-2A.

KSAA Comments:

1.3.2. From 09.10.2019, a new rule⁵ was introduced which allowed ITC of only such invoices which are being uploaded by the supplier in his respective FORM GSTR-1 subject to certain conditions. Several writ petitions were filed to challenge the said rule on the concept that since the section allows ITC of such invoices, such rule so introduced is ultra vires. However, the instant provision so introduced negates the argument and strengthens the very root of the rule. Further, the applicability of the rule for the period prior to the implementation of the instant provision will always be subject to litigation.

1.4. Defacing GST Audit:

1.4.1. Any person having turnover exceeding Rs. 5 Crore is mandated to get his accounts audited and file the annual return⁶ (i.e. Form GSTR-9) along with reconciliation statement (i.e. Form GSTR-9C) certified by Chartered Accountant or Cost Accountant. The requirement for audit has been omitted and accordingly all the registered person would only be required to file annual return along with self-certified reconciliation statement⁷.

KSAA Comments:

1.4.2. The said change is a bold move. Going forward from notified date, the company would have to prepare annual return along with the reconciliation statement on their own. Accordingly, the burden of certifying the transaction executed by company from the perspective of GST would solely lie on the tax payer himself. Thus, a chartered accountant is absolved from the liability of certification. Accordingly, the tax payer would himself be liable for all the transactions executed and the risk of true & correct view would be of the tax payer.

1.5. Interest on delayed payment of liability

1.5.1. The provision of interest has been retrospectively amended⁸ from 01.07.2017 so as to state that interest is calculated on unpaid net liability (Net Liability = Gross Liability (-) Input Tax Credit Utilized).

KSAA Comments

1.5.2. The said amendment⁹ was already introduced in the Finance Act, 2019 but its application was prospective¹⁰ in nature. Further, as per press release dated 26.08.2020, it was assured that there shall be no recovery of interest on delayed payment of tax through input tax credit for past period by the GST department. The present proviso addresses to the situation by making retrospective changes however it also categorically states that if any returns are filed after issuance of Show Cause Notice u/s 73 or 74 of the CGST Act, 2017 then interest has to be calculated on gross liability. Thus, all the cases will have to be analysed in light of this proposed amendment.

Procedural Changes

1.6. Assessments:

1.6.1. Appropriate amendments¹¹ have been proposed to make seizure and confiscation of goods and conveyances in transit a separate proceeding from recovery of tax.

1.6.2. Appropriate amendments¹² have been proposed to clarify that “self-assessed tax” shall include transactions declared as tax payable on any outward supplies in respective statements [i.e. FORM GSTR-1] but actually not paid [i.e. in FORM GSTR-3B].

KSAA Comments:

1.6.3. This proposed amendment is a big sigh of relief as it clarifies that no penalty is payable for any liability arising on account difference between FORM GSTR-1 vs. FORM GSTR-3B.

1.7. Power to attach properties:

1.7.1. Power to attach properties have been amended¹³ to state that the provisional attachment shall remain valid for the entire period starting from the initiation of any proceedings till the expiry of a period of one year from the date of order made. Further, the scope of attachment is expanded so as to state that the commissioner can provisionally attach property, including bank account, of not only of the taxable person but also of the person who retains benefits of the transaction and at whose instance the transaction is conducted.

KSAA Comments:

1.7.2. The proposed amendment plans to attach properties of even such persons who avails and/or utilizes ITC pertaining to fake invoices. The same draconian and can have huge effects if not executed under wise instructions.

1.8. Filing of Appeals

1.8.1. The tax payer is required to pay 10% as pre-deposit of the disputed tax liability subject to maximum of Rs 25 cr before filing any appeal before the appellate authority. Appropriate amendments¹⁴ has been proposed wherein the taxpayer is required to pay 25% of the penalty as pre-deposit in cases where an appeal is filed for cases pertaining to detention or seizure of goods or conveyance.

1.9. Proceedings with respect to detention, seizure and release

1.9.1. Appropriate amendments¹⁵ have been proposed to delink the proceedings pertaining to detention, seizure and release of goods and conveyances in transit from proceedings relating to confiscation of goods or conveyances and levy of penalty.

1.10. Power to collect information

1.10.1. Appropriate amendments¹⁶ have been made so as to empower the jurisdictional commissioner to call for information from any person relating to any matter dealt with in connection with the Act.

1.11. Bar on disclosure of Information¹⁷

1.11.1. No information shall be published without obtaining a previous written consent by the concerned officer or his authorized officer. This information shall cannot be used for the purpose of any proceedings under this Act without giving an opportunity to such person.

1.12. Provisions relating to Zero Rated Supply:

1.12.1. The term zero-rated supply¹⁸ has been amended to state that zero rated supply of goods or services or both means such supplies provided for authorised operations to a Special Economic Zone developer or a Special Economic Zone unit.

1.12.2. The mechanism for claiming refund of zero-rated supplies of goods has been amended¹⁹ to state that refund claimed u/r 89 of the CGST Rules, 2017 is linked to the time limit prescribed under FEMA Act, 1999. In case of non-realization of export proceeds the said refund should be deposited alongwith applicable interest.

1.12.3. The Government may notify such class of taxpayers who may make zero rated supply on payment of integrated tax and claim refund of tax.

1.12.4. The Government may notify such goods or services which may be exported on payment of integrated tax and the supplier of such goods or services may claim refund of tax so paid.

KSAA Comments:

1.12.5. Supply provided by way of goods or services to SEZ would qualify as zero rated supplies provided that the same is being supplied towards authorised operations of SEZ which was not a pre-condition earlier. Accordingly, not all supplies provided to SEZ units would be considered as zero-rated supplies. Accordingly, all the circulars, notification and instructions issued in the past would be subject to verification in light of the concept of provision of supplies towards authorised operation.

1.12.6. Further, it can be said that any supply provided to SEZ units which do not qualify as authorised operation would be subject to GST.

1.12.7. The facility for refund of ITC by opting the option of exporting goods with payment of integrated tax towards zero-rated supply of goods or services would be restricted to a notified class of taxpayers and the same would not be applicable to all.

1.12.8. In case of zero rated supply of goods or services or both under LUT or bond without payment of tax, the supplier will be mandated to recover the export proceeds from the foreign customers. In case of any non-recovery of sale proceeds in convertible foreign currency within time limit prescribed under FEMA Act, 1999 the tax payer will be required to deposit the refund with applicable interest within 30 days of the expiry of such time limit. The said provisions strengthen the very foundation²⁰ of Rule 96B of the CGST Rules, 2017 which prescribes the same.

AMENDMENTS IN CUSTOMS

2.1. Rate Change:

2.1.1. There is no change in the rate of basic customs duty. However, for some products the rate has been changed including the relaxations granted by way of exemption which is enumerated in subsequent paras as Annexure-1.

2.2. Imposition of Agriculture Infrastructure & Development Cess:

2.2.1. Clause 115 of Finance Bill, 2021 has proposed Agriculture Infrastructure and Development Cess (AIDC) on import of specified goods. The amount so collected in the nature of cess shall be used to finance the improvement of agriculture infrastructure and other development expenditure. To ensure that imposition of cess does not lead to additional burden in most of these items on the consumer, the Basic Customs Duty has been lowered. The list of such items is enumerated in subsequent paras as Annexure-2.

2.3. Introduction of Common Customs Electronic Portal:

2.3.1. The CBIC board may notify²¹ a common portal to be termed as Common Customs Electronic Portal for facilitating registration, filing of bill of entry, shipping bills, other documents and forms prescribed under the act. Further, even order, summons, notices, etc. would be made available on the said common portal. At presently, majority of the functions specified are being done under ICE GATE Portal. The instant move will ensure effective sharing and use of information.

2.4. Time limit of conditional exemption:

2.4.1. Any conditional exemption issued in public interest will be valid²² till 31^st March falling immediately two years after the date of such grant or variation. All existing conditional exemptions in force as on the date on which the Finance Bill 2021 receives the assent of the President unless having a prescribed end date, shall come to an end on 31^st March, 2023 (if not specifically extended/ rescinded earlier) on review

KSAA Comments:

2.4.2. The instant provision would bring a new check on all the unilateral exemptions granted till date on BCD, IGST and the same would be subject to review periodically. Further, a company would have to plan its imports in the said manner. The same is a remarkable change which has been witnessed for the first time under Customs Act where all the exemptions granted so far till date are subject to review.

2.5. Time limit for adjudication:

2.5.1. A two year limit²³ has been attached for concluding the proceedings from the date of initiation of audit, search, seizure or summons. Further, the Principal Commissioner of Customs on sufficient cause and for reasons recorded in writing may increase the said time limit by a further period of one year.

2.5.2. Further, the said time limit of 1 year shall exclude the following –

(i) Period during which stay was granted by an order

(ii) Period seeking information from an overseas authority through a legal process

2.6. Time limit for filing bill of entry:

2.6.1. The time limit²⁴ for filing bill of entry has been amended so as to mandate filing of bill of entry before the end of the day preceding the day (including holidays) of arrival of goods.

2.7. Cases before Commissioner (appeals):

2.7.1. The relevant provisions²⁵ have been amended so as to empower the Commissioner (Appeals) to adjudicate applications made by a proper officer in relation to seizure of gold for the purpose of certifying the correctness of the seized gold, taking photographs and certifying the same and carrying out such other procedures as prescribed, before the disposal of the gold in a manner as may be determined by the Central Government.

2.8. Confiscation of goods:

2.8.1. To strengthen the economy and to discourage IGST refund frauds goods confiscation provisions have been amended²⁶ so as to provide for the confiscation of any goods entered for exportation under claim of remission or refund of any duty or tax or levy, so as to make a wrongful claim which is in contravention of the Customs Act, 1962 or any other law for the time being in force..

KSAA Comments:

2.8.2. For ease of business, the Government introduced schemes of speedy refund against export of goods. Accordingly, ITC was refunded alongwith drawback by the Customs authorities in cases where goods were exported. The instant scheme was wrongly explored and many exporters claimed ITC refund of such invoices for which the duty was not deposited with the Central Government and as a consequence of which government suffered heavy losses. Accordingly, many measures were taken to recover such money and to curb it. Further, even certain instances were drawn whereby the drawback was being wrongly claimed. It seems that after due consultation the Government felt the need for introduction of the instant provision whereby an exporter would be discouraged to export goods and claim undue refund of IGST, drawback as the goods so exported will carry the risk of confiscation.

2.9. Specific penalty:

2.9.1. Any person who has obtained any invoice by fraud, collusion, willful misstatement or suppression of facts to utilize Input Tax Credit on the basis of such invoice for discharging any duty or tax on goods that are entered for exportation under claim of refund of any duty or tax would be liable for penalty not exceeding five times²⁷ the refund claim.

KSAA Comments:

2.9.2. The government is very serious on the issue of refund on account of fake invoices and the same can be understood from the series of amendments wherein provisions have been amended to introduce rejection of refund, recovery of such refund granted, confiscation of goods and lastly penalty for claiming such refund which would be 5 times of the refund amount.

2.10. Rectification of Documents:

2.10.1. Rectification of documents can be done through the customs automated system on the basis of risk evaluation through appropriate selection criteria. Further, certain amendments²⁸, as may be specified by the Board, may be done by the importer or exporter on the common portal.

KSAA Comments:

2.10.2. The instant provision has cleared major difficulty of such cases which qualify for amendment of bill of entry, shipping bill or bill of export already generated on Customs automated system i.e. ICEGATE Portal and the goods have been cleared for home consumption or shipped for export. The formal instructions regarding implementation of the same would be very much awaited for its correct application.

2.11. Other Changes under Tariff including Anti-dumping duties:

2.11.1. Customs Tariff (Identification, Assessment and Collection of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 provide for manner and procedure for investigation into dumping of goods that cause injury to domestic industry. Changes are being made in the Rules, to provide that with effect from 01.07.2021, to provide that final findings are to be issued by the designated authority, in review cases, at least three months prior to expiry of the ADD under review. The ADD Rules are also being amended to provide for provisional assessment in cases of anti-circumvention investigation. Certain other changes are being made for bringing clarity in the scope of these rules.

2.11.2. Customs Tariff (Identification, Assessment and Collection of Countervailing Duty on Subsidized Articles and for Determination of Injury) Rules, 1995 provide for manner and procedure for causing investigation into the cases of imports of subsidized goods that cause injury to domestic industry. Changes are being made in the Rules to provide that with effect from 01.07.2021, the final findings are to be issued by the designated authority, in review cases, at least three months prior to expiry of the CVD under review. The CVD Rules are also being amended to provide for provisional assessment in cases of anti-circumvention investigation. Certain other changes are being made for bringing clarity in the scope of these rules.

2.11.3. Customs Tariff (Identification and Assessment of Safeguard Duty) Rules, 1997 (Safeguard Duty being changed to Safeguard Measures) provide for manner and procedure for causing investigation into the cases of imports in increased quantity that cause injury to domestic industry. Changes in the rules are being proposed to elaborate in detailed manner the modalities of implementation of safeguard measure, along with technical modifications consequent to the changes made earlier in section 8B of the Customs Tariff Act vide Finance Act, 2020.

2.11.4. Notification No. 12/2018-Customs, dated 02.02.2018 prescribing effective rates of 3% on certain items, including gold and silver, is being rescinded.

2.11.5. Social Welfare Surcharge is also being rescinded on goods falling under heading 2515 11 and 2515 12.

2.11.6. Social Welfare Surcharge is being exempted on the value of AIDC imposed on gold and silver. Accordingly, these items would attract SWS, at normal rate, only on value plus basic customs duty.

2.11.7. Anti-Dumping duty is being temporarily revoked for the period commencing from 2.2.2021 till 30.09.2021, on imports of the following-

> Straight Length Bars and Rods of alloy-steel, originating in or exported from People’s Republic of China, imposed vide notification No. 54/2018-Cus (ADD) dated 18.10.2018;

> High Speed Steel of Non-Cobalt Grade, originating in or exported from Brazil, People’s Republic of China and Germany, imposed vide notification No. 38/2019-Cus (ADD) dated 25.09.2019;

> Flat rolled product of steel, plated or coated with alloy of Aluminium or Zinc, originating in or exported from People’s Republic of China, Vietnam and Korea RP, imposed vide notification No. 16/2020-Cus (ADD) dated 23.06.2020.

2.11.8. Countervailing duty is being temporarily revoked for the period commencing from 2.2.2021 till 30.09.2021, on imports of Certain Hot Rolled and Cold Rolled Stainless Steel Flat Products, originating in or exported from People’s Republic of China, imposed vide notification No. 1/2017-Cus (CVD) dated 07.09.2017.

2.11.9. Provisional Countervailing duty is being revoked on imports of Flat Products of Stainless Steel, originating in or exported from Indonesia, imposed vide notification No. 2/2020-Customs (CVD) dated 9.10.2020.

2.11.10. In Sunset Review, anti-dumping duty on Cold-Rolled Flat Products of Stainless Steel of width 600 mm to 1250 mm and above 1250 mm of non bonafide usage originating in or exported from People’s Republic of China, Korea RP, European Union, South Africa, Taiwan, Thailand and United States of America has been discontinued upon expiry of the anti-dumping duty hitherto leviable vide notifications no. 61/2015-Customs (ADD) dated 11th December, 2015 and 52/2017-Customs (ADD) dated 24th October, 2017.

Annexure – 1

1. Amendments in the First Schedule to the Customs Tariff Act, 1975

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A.	Tariff rate changes for Basic Customs Duty [to be effective from 02.02.2021, unless otherwise specified] * [Clause [95 (i) ] of the Finance Bill, 2021]		Rate of Duty
S. No.	Heading	Commodity	From	To
		Chemicals
1.	2803 00 10	Carbon Black	5%	7.5%
		Plastic items
2.	3925	Builder’s ware of Plastics	10%	15%
		Gems and Jewellery Sector
3.	7104	Cut and Polished Synthetic stones, including Cut and Polished Cubic Zirconia	10%	15%
		Electrical and Electronics Sector
4.	8414 30 00	Compressors equipment of a kind used in refrigerating	12.5%	15%
5.	8414 80 11	Compressors of a kind used in air-conditioning equipment	12.5%	15%
6.	8504 90 90	Printed Circuit Board Assembly [PCBA] of charger or adapter (All goods under this tariff item, other than above, will continue to attract the existing effective rate of BCD at 10%)	10%	15%
		Parts of Automobiles
7.	7007	Safety glass, consisting of toughened (tempered) or laminated glass. (All goods under this heading, other than those used with motor vehicles, will continue to attract the existing effective rate of BCD at 10%)	10%	15%
8.	8512 90 00	Parts of Electrical lighting and signaling equipment, windscreen wipers, defrosters and demisters, of a kind used for cycles or motor vehicles.	10%	15%
9.	8544 30 00	Ignition wiring sets and other wiring sets of a kind used in vehicles, aircraft or ships	10%	15%
0.	9104 00 00	Instrument Panel Clocks and Clocks of a similar type for vehicles, Aircraft, Spacecraft or Vessels	10%	15%
B.	Tariff rate changes (without any change in the effective rates of		Rate of Duty
	Basic Customs Duty)
1.	8414 40	Air compressors mounted on a wheeled chassis for towing	7.5%	15%
2.	8414 80 (except 8414 80 11)	Gas Compressors (other than of a kind used in air- conditioning equipment), free-piston generators for gas turbine, turbo charger and other compressors	7.5%	15%
3.	8501 10 to 8501 53	Electric Motors	10%	15%
4.	8536 41 00 and	Relays	10%	15%
	8536 49 00
5.	8537	Boards, panels, consoles, etc. for electric control or distribution of electricity	10%	15%
6.	9031 80 00	Other instruments, appliances and machines	7.5%	15%
7.	9032 89	Electronic automatic regulators and other controlling instruments or apparatus	10%	15%
C.	New entries added to the First Schedule [Clause 95 (ii) and 95 (iii) of the Finance Bill, 2021]
1.	Harmonizing the Customs Tariff Act 1975 with the HSN 2022 a) Changes to the first schedule to the Customs Tariff Act are being proposed that are to come into effect from 01.01.2022. This is in accordance with HSN 2022, which proposes 351 amendments to the existing harmonized nomenclature, covering a wide range of goods moving across borders. b) The amendments are necessary to adapt to the current trade through the recognition of new product streams, the changing nature of commodities being traded, advent of
2.	new technologies and addressing the environmental and social issues of global concern- all with a prime focus on the larger goal of ease of doing business and trade facilitation.

# Will come into effect on 1.4.2021.

* Will come into effect immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931.

II. Other Proposals Involving Changes in Basic Customs Duty Rates in respective notifications [with effect from 2.2.2021, unless specified otherwise]

S. No	Chapter Heading	Commodity	From (%)	To (%)
		Agricultural Products and By Products
1	2207 20 00	Denatured Ethyl  Alcohol (ethanol) for use in manufacture of excisable goods	2.50	5
2	23	All goods except dog and cat food and shrimp larvae feed	Nil/ 5/ 10/ 15/ 20/,30	15
		Minerals
3	2528	Natural borates and concentrates thereof	Nil/5	2.50
		Fuels, Chemicals and Plastics
4	2710	Naphtha	4	2.50
5	2907 23 00	Bis-phenol A	Nil	7.50
6	2910 30 00	Epichlorohydrin	2.50	7.50
7	2933 71 00	Caprolactam	7.50	5
8	3907 40 00	Polycarbonates	5	7.50
9	3908	Nylon chips	7.50	5
10	3920 99 99	Other plates, sheets, films, etc. of other plastics	10	15
		Leather
11	41	Wet blue chrome tanned leather, crust leather, finished leather of all kinds, including splits and sides of the aforesaid	Nil	10
		Textiles
12	5002	Raw Silk (not thrown)	10	15
13	5004, 5005, 5006	Silk yarn, yarn spun from silk waste (whether or not put up for retail sale)	10	15
14	5201	Raw Cotton	Nil	5 + 5 AIDC*
15	5202	Cotton waste (including yarn waste or garneted stock)	Nil	10
16	5402, 5403, 5404, 5405 00 00, 5406, 5501 to 5510	Nylon Fibre and Yarn	7.50	5
		Gems and Jewellery Sector
17	7106	Silver	12.5.	7.5+ 2.5 AIDC*
18	7106	Silver Dore	11	6.1 + 2.50 AIDC*
19	7108	Gold	12.50	7.5+ 2.5 AIDC*
20	7108	Gold Dore	11.85	6.9+ 2.5 AIDC*
21	7107 00 00, 7109 00 00, 7111 00 00	Base metals or precious metals clad with precious metals	12.50	10
22	7110	Other precious metals like Platinum, Palladium, etc.	12.50	10
23	7112	Waste and scrap of precious metals or metals clad with precious metals	12.50	10
24	7112	Spent catalyst or ash containing precious metals	11.85	9.17
25	7113	Gold or Silver Findings	20	10
26	7118	Coin	12.50	10
		Metals
27	7204	Iron and steel scrap, including stainless steel scrap [up to 31.03.2022]	2.50	Nil
28	7206 and 7207	Primary/Semi-finished products of non-alloy steel	10	7.50
29	7208, 7209, 7210, 7211, 7212, 7225 (except 7225 11 00) and 7226 (except 7226 11 00) 7213,7214,7215 ,	Flat products of non-alloy and alloy steel	10/12.5	7.50
30	7216,7217,7221 , 7222,7223,7227 , 7228	Long product of non-alloy, stainless and alloy steel	10	7.50
31	7225	Raw materials for use in manufacture of CRGO steel [up to 31.03.2023]	2.50	Nil
32	7404	Copper Scrap	5	2.50
33	7318	Screw, bolts, nuts, etc. of iron and steel	10	15
		Capital Goods
34	8430	Tunnel boring machines	Nil	7.50
35	8431	Parts and components for manufacture of tunnel boring machines with actual-user condition	Nil	2.50
		IT, Electronics and Renewable
36	8544 (other than 8544 70 and 8544 30 00)	Specified insulated wires and cables	7.50	10
37	39, 74 and 85	Former, bases, bobbins, brackets; CP wires; P.B.T.; Phenol resin moulding powder; Lamination/ El silicon steel strips for use in manufacture of transformers (entry at S.No. 198 of 25/1999- Customs)	Nil	Applicable rate
38	Any Chapter	Inputs or parts for manufacture of Printed Circuit Board Assembly (PCBA) of cellular mobile phone (w.e.f. 1.4.2021)	Nil	2.50
39	Any Chapter	Inputs or parts for manufacture of camera module of cellular mobile phone (w.e.f. 1.4.2021)	Nil	2.50
40	Any Chapter	Inputs or parts for manufacture of connectors of cellular mobile phone(w.e.f. 1.4.2021)	Nil	2.50
41	Any Chapter	Inputs or raw material for manufacture of specified parts like back cover, side keys etc. of cellular mobile phone(w.e.f. 1.4.2021)	Nil	2.50
42	Any Chapter	Inputs or raw material (other than PCBA and moulded plastics) for manufacture of charger or adapter of cellular mobile phones	Nil	10
43	8504 90 90 Or 3926 90 99	Moulded plastics for manufacture of charger or adapter	10	15
44	Any Chapter	Inputs or parts of Printed Circuit Board Assembly of charger or adapter of cellular mobile phones	Nil	10
45	Any Chapter	Inputs or parts of Moulded Plastic of charger or adapter of cellular mobile phones	Nil	10
46	Any Chapter	Inputs or raw materials (other than Lithium-ion cell and PCBA) of Lithium-ion battery or battery pack (w.e.f. 1.4.2021)	Nil	2.50
47	Any Chapter	Parts or components of PCBA of Lithium-ion battery or battery pack (w.e.f. 1.4.2021)	Nil	2.50
48	Any Chapter	Inputs or raw materials of following goods: –	Nil	2.50
		(i)   Other machines capable of connecting to an automatic data processing machine or to a network (8443 32 90) (ii) Ink cartridges, with print head assembly (8443 99 51) (iii)    Ink cartridges, without print head assembly (8443 99 52) (iv)Ink spray nozzle (8443 99 53) (w.e.f. 1.4.2021)
49	Any Chapter	Inputs and parts of LED lights or fixtures including LED Lamps	5	10
50	Any Chapter	Inputs for use in the manufacture of LED driver or MCPCB (Metal Core Printed Circuit Board) for LED lights or fixtures including LED Lamps	5	10
51	9405 50 40	Solar lanterns or solar lamps	5	15
52	8504 40	Solar Inverters	5	20
53	9503	Parts of Electronic Toys for manufacture of electronic toys	5	15
		Aviation Sector
54	Any Chapter	Components or parts, including engines, for manufacture of aircrafts or parts of such aircrafts, by Public Sector Units under Ministry of Defence subject to condition specified.	2.50	0
		Medical devices
55	9018-9022	Medical Devices imported by International Organization and Diplomatic Missions	Health Cess @ 5	Health Cess @ Nil
		Goods imported under Project Import Scheme
56	9801	High Speed Rail Projects being brought under project imports	Applicable Rate	5
57	8714 91 00, 8714 92,8714 93, 8714 94 00, 8714 95, 8714 96 00, 8714 99	All goods other than Bicycle parts and components	10	15

 Agriculture Infrastructure and Development Cess

III. Pruning and review of customs duty concessions/ exemptions:

IV. Review of concessional rates of BCD prescribed in notification No. 50/2017 – customs dated 30.6.2017:

The BCD exemption hitherto available on certain goods are being withdrawn by omitting following entries of notification No. 50/2017-Customs dated 30.6.2017.

S. No.	S. No. of Notfn	Description/ CTH
1.	209	Diphenylmethane 4, 4-diisocyanate (MDI) for use in the manufacture of spandex yarn
2.	230	Ink cartridges, ribbon assembly, ribbon gear assembly, ribbon gear carriage, for use in printers for computers
3.	229 [w.e.f 1.4.2021]	71 items like wax items, wood polish materials, prints for photo frames, velvet fabric/paper, handles/blades for cutlery, jigat, wine tools etc.
4.	311 [w.e.f 1.4.2021]	35 items like fasteners, zippers, shoulder pads, buckles, rivets, Velcro tape, toggles, stud, elastic cloth and band, bobbin, hooks, anglets etc.
5.	312 [w.e.f 1.4.2021]	42 items like buckles, buttons, stamping foil, sewing thread, Loop rivets, Glove Liners, shoe laces, inlay cards etc.
6.	313 [w.e.f 1.4.2021]	18 items like lace, Velcro tape, curtain hooks, Tassel, Beads, Sequins, sewing threads, poly wadding materials, quilted wadding materials etc.

A. Customs duty exemptions, including those which have been granted through certain other stand­alone notifications, have also been reviewed by rescinding the notification:

S. No.	Notification No.	Subject
1.	1/2011-Customs, dated the 6.1.2011	Exemption to all items of machinery, instruments, appliances, components or auxiliary equipment for initial setting up of solar power generation project or facility
2.	34/2017-Customs dated 30th June, 2017	This notification provided exemption to tags or labels (whether made of paper, cloth, or plastic), or printed bags (whether made of polyethene, polypropylene, PVC, high  molecular or high density polyethene) imported for fixing on articles for export or for the packaging of such articles. Similar exemption exists at S. No.257 of notification No. 50/2017-Cus. These have been merged in the said S. No.257 and notification No 34/2017-Cus has been omitted.
3.	75/2017- Customs dated 13th September, 2017	Exemption for goods imported for organizing FIFA Under-17 World Cup, 2017.

Annexure – 2

Imposition of Agriculture Infrastructure and Development Cess on Import of Specified Items [To Be Effective From 02.02.2021]

The list of items on which cess has been imposed and the applicable duty and AIDC on them would be as follows:

S.N	Heading	Commodity	BCD (%)	AIDC (%)
1.	0808 10 00	Apples	15	35
2.	1511 10 00	Crude Palm Oil	15	17.5
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	20
0.	2204	All goods (Wine)	50	100
1.	2205	Vermouth and other wine of fresh grapes, flavoured	50	100
2.	2206	Other fermented beverages for example, Cider, Perry, Mead,   sake,     mixture     of    fermented     beverages     or fermented beverages and nonalcoholic beverages	50	100
3.	2208	All goods (Brandy, Bourbon whiskey, Scotch etc.)	50	100
4.	2701	Various types of coal	1	1.5
5.	2702	Lignite,       whether     or       not agglomerated	1	1.5
6.	2703	Peat,       whether      or         not agglomerated	1	1.5
7.	3102 10 00	Urea	Nil	5
8.	3102 30 00	Ammonium nitrate	2.5	5
9.	31	Muriate of potash, for use as manure or for the production of complex fertilisers	Nil	5
10.	3105 30 00	Diammonium phosphate, for use as manure or for the production of complex fertilisers	Nil	5
11.	5201	Cotton       (not      carded       or combed)	5	5
12.	7106	Silver (including imports by eligible passengers)	7.5	2.5
13.	7106	Silver Dore	6.1	2.5
14.	7108	Gold (including imports by eligible passengers)	7.5	2.5
15.	7108	Gold Dore	6.9	2.5

Notes:

^1. Section 7(1) (aa) of the CGST Act, 2017 introduced vide clause 99 of Finance Bill, 2021

^2. Entry 7 of Schedule II to Section 7 of the CGST Act, 2017 which is deleted vide clause 113 of Finance Bill,2021

3.  State of West Bengal vs Calcutta Club Limited 2019 (29) GSTL 545 [SC]

4. Section 16(aa) of the CGST Act, 2017 introduced vide clause 100 of Finance Bill, 2021

5.Rule 36(4) of the CGST Rules, 2017 introduced vide notification 49/2019 dated 09.10.2019

6. Section 35(5) of the CGST Act, 2017 which is omitted vide clause 101 of Finance Bill, 2021

7. Section 44(1) of the CGST Act, 2017 amended vide clause 102 of Finance Bill, 2021

8. Proviso to Section 50 of the CGST Act, 2017 introduced vide clause 103 of Finance Bill, 2021

9. Old proviso to Section 50 of the CGST Act, 2017 introduced vide Finance Bill, 2019

10. Effective from 01.09.2020 vide Notification No 63/2020 (CT) dated 25.08.2020

11. Explanation 1 to Section 74 of the CGST Act, 2017 vide clause 104 of Finance Bill, 2021

12. Explanation to Section 75(12) of the CGST Act, 2017 vide clause 105 of Finance Bill, 2021

13. Section 83(1) of the CGST Act, 2017 vide clause 106 of Finance Bill, 2021

14. Section 107(6) of the CGST Act, 2017 amended vide clause 107 of the Finance Bill, 2021

15. Section 129 of the CGST Act, 2017 amended vide clause 108 of the Finance Bill, 2021

17. Section 151 of the CGST Act, 2017 amended vide clause 110 of the Finance Bill, 2021

18. Section 152 of the CGST Act, 2017 amended vide clause 111 of the Finance Bill, 2021

19. Section 16(1) of the IGST Act, 2017 amended vide clause 114 of the Finance Bill, 2021

20. Section 16(3) of the IGST Act, 2017 amended vide clause 114 of the Finance Bill, 2021

21. Notification 16/2020 –CT Dated 23.03.2020

22. Section 2(7B) & 154C of the Customs Act, 1962 introduced vide clause 80 & 91 of the Finance Bill, 2021

23. Section 25(4A) of the Customs Act, 1962 introduced vide clause 82 of the Finance Bill, 2021

24. Section 28BB of the Customs Act, 1962 introduced vide clause 83 of the Finance Bill, 2021

25. Section 46 of the Customs Act, 1962 amended vide clause 84 of the Finance Bill, 2021

26. Section 110(1D) & Section 139 of the Customs Act, 1962 amended vide clause 85 & 88 of the Finance Bill, 2012 respectively

27. Section 113 of the Customs Act, 1962 amended vide clause 86 of the Finance Bill, 2021

28. Section 114AC of the Customs Act, 1962 amended vide clause 87 of the Finance Bill, 2021

29. Section 149 of the Customs Act, 1962 amended vide clause 89 of the Finance Bill, 2021

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Disclaimer: This document summarizes the indirect tax proposals of the Union Budget 2021 as also certain other amendments. The information provided in this document is intended for informational purposes only and does not constitute legal opinion or advice. Readers are requested to seek formal legal advice prior to acting upon any of the information provided herein.