The ongoing Budget session of Parliament recommenced its second phase from 9th March, 2021. However, it is likely to conclude early ahead of state polls which are from 27th March, 2021. Finance Bill, 2021 was debated in Parliament on 22.03.2021 in Lok Sabha and 24.03.2021 in Rajya Sabha which has been passed by both the houses. It is likely to be enacted soon thereafter.
In India, many economic indicators are signaling a robust recovery but Covid and few state’s investments may pose a challenges as 60% of infra spends comes from states. While vaccination programme will help boost economy, V-shaped recovery may also be possible. Our vaccine management is one of the best. GST collections, investment sentiment, capital market performance, higher capital expenditure are some positive indicators. Our FM says, India’s growth is definitely on the higher growth bench mark and also a sustained one.
The Organization for Economic Cooperation and Development (OECD) has opined that India may see a GDP growth of 12.6% in financial year 2022 in the backdrop of vaccination drive. With this, it may be fastest growing economy in the world. Rating agency, CRISIL is of the view that India’s GDP growth may rebound to 11% in financial year 2022 resulting from base effect lifting in first half and broad based growth in second half. The reasonings given for this projection are such as people accepting the new normal, flattening of Covid curve, roll out of vaccination and investment based Government spending. But recovery is not going to be easy. However, in 2021-21, corporate recovery and growth has witnessed a ‘V’ shaped trend. With infrastructure expansion, growth is bound to happen.
15th Finance Commission has retained share of tax devolution to states @ 41%, of the divisible tax pool for the period 2021-22 to 2025-26 keeping in mind the narrowing of fiscal space due to Covid pandemic. It opted for continuity and predictability.
In view of the economic recovery, e-invoicing, strict compliances and hammering on tax evaders, it is expected that March, 2021 GST collections may be even higher in the range of Rs. 1.30 lakh crore. Till now, the highest GST collection was reported in January, 2021 at Rs. 1.19 lakh crore. The higher collection would only endorse economic revival and recovery. In the present circumstances, no B2B transactions are possible due to stringent measures taken by tax administration. Also, withholding of refunds and March being last month of financial year also adds to this collection.
So far as GSTs contribution is concerned, indirect tax often narrates the story of the economy better. Unlike direct tax, for which one need to wait till the end of the year, indirect tax is based on consumption and thus one can see the outcome immediately. GST collection is at a historic high. The numbers in the recent months are better then those in the pre-covid days. A good part of the present GST growth comes from our economic recovery. Another reason for the growth is better compliances .
Gujarat High Court has recently in its order dated 09.03.2021 in the case of Deepak Print v. Union of India has (special civil application 18157/2019) allowed rectification in GSTR-3B in the return submitted but not filed.
Notification No.4/2021-CT dated 28.02.2021 has extended the last date for filing annual returns to 31st March, 2021. Vide Notification No.5/2021-CT dated 08.03.2021 CBIC has lowered the threshold limit for mandatory e invoicing from Rs. 100 crore to Rs. 50 crore. Such e-invoicing for turnover more than Rs. 50 crore shall be effective from 1st April, 2021. Guidelines for provisional attachment of property under section 83 of CGST law have also been issued.
CBIC has issued clarifications in respect of refund claim of tax paid by recipient of deemed export supply since the system is not allowing them to file refund claim under the aforesaid category unless the claimed amount is debited in the electronic credit ledger. It is clarified that for the purpose of Rule 89(4), the value of export/ zero-rated supply of goods to be included while calculating “adjusted total turnover” will be same as being determined as per the amended definition of “Turnover of zero-rated supply of goods” in the said sub-rule.
CBIC has issued an advisory dated 20.03.2021 for taxpayers. It has alerted taxpayers against unauthorized means of communication such as phone calls, messages, whatsapp etc from tax officers to discharge ‘maximum tax liability’ in ‘cash’ so that targets for GST revenue collection for the financial year are achieved.
There is a growing demand of bringing petroleum products under GST net, besides reducing taxes and cesses thereon. There is a need to revisit indirect taxes on fuel. In fact, overall there are still 35 cesses being collected today also. It is stated that fuel prices have fetched over Rs. 3.40 lakh crore during January, 2020- January, 2021 from Central Excise duty alone, something which is more than 2 months GST collection. It also appears that there is no plan to change tax structure in near future, what to talk of bringing it under GST. Recently it has been reported that it may take 8-10 years to bring petroleum products into the GST net.