Honourable F.M. Mrs. Nirmala Sitharaman unveiled the budget 2021-22 and also issued Finance Bill covering various tax proposals. Overall, our view is that it is a balanced and a progressive budget presented by the government which will go a long way in the overall development especially the physical and the health infrastructure of our country. However, in so far as the tax provisions are concerned, we have noticed excessive regulatory control by the government. More and more powers are being given to the administrative authorities tightening things too much. Power to attach bank accounts at the drop of the hat is making businesses highly vulnerable.
Here is a brief overview of tax proposals pertaining to GST, Customs and CST Act as enumerated in the Finance Bill, 2021 as introduced in Lok Sabha.
Here are the government’s direct and indirect tax proposals announced in this year’s budget and special attention to GST:
Direct tax proposals:
1. For senior citizens above 75 years who only have an interest and pension income are exempt from filing income tax.
2. Banks and agencies will deduct the necessary income tax directly.
3. Reopening of assessments reduced to 3 years from 6 years other than cases of serious tax evasion. In serious tax evasion cases of concealment of 50 lakh or more in a year, reopening can be done up to 10 years as at present.
4. Tax audit limit increased from Rs 5 crore to Rs 10 crore.
5. Budget Proposes to increase the threshold for tax audit to Rs 10 cr as against Rs 5 cr for those transacting 95% digitally.
6. Advance tax liability on dividend income shall arrive only after the declaration of payment of dividends.
7. Startups get one more year of the tax holiday. Capital Gain exemption for investment in Start-ups gets increased by one more year.
8. Propose to constitute a dispute resolution committee for small taxpayers. Anyone with a taxable income of up to Rs 50 lakh, disputed income of up to Rs 10 lakh eligible to approach dispute resolution committee.
9. Govt to extend eligibility of erstwhile tax sop on home loan up to the year 2022.
10. Finance Minister Sitharaman proposes policies to make it easy for foreign investors to invest in India’s infrastructure projects.
11. Propose to make dividend payments to REIT (estate investment trusts) and Invit’s (Infrastructure investment trusts) exempt from TDS.
To further ease filing of IT returns, details of capital gains and interest from banks, post offices, etc will be pre-filled.
12. Details of capital gains from listed securities, dividend income, and interest income to also be pre-filled in tax forms.
13. To extend the eligibility of provision for an additional deduction of Rs 1.5 lakh for loans taken to purchase affordable housing by one more year.
14. To ensure employees’ contribution to retirement schemes is done on time, late payment of such contributions by employers will not be allowed.
Indirect Tax proposals
1. Reducing customs duty uniformly to 7.5% on semi, flat and products of non-alloy, alloy and stainless steel.
2. Exempting duty on steel scrap till March 2022.
3. To provide relief to copper recyclers, reducing duty on copper scrap from 5% to 2.5%.
4. To rationalise customs duty gold and silver Raising customs duty on some auto parts to 15%.
5. To raise customs duty on cotton from 0% to 10%, on raw silk and silk yarn from 10% to 15%.
6. Agri Infrastructure Development Cess on a small number of items, to not put additional burden on consumers on most items.
AMENDMENTS PROPOSED IN GST
1. Members clubs & mutual associations
1. Uploading of invoices by the supplier made mandatory for claiming ITC
2. Businesses would feel it more difficult because the recipient can have no control over the supplier
3. Availing ITC is be becoming more difficult in the hands of recipients even after paying tax
3. Audit under GST
4. Annual Return
6. Closure of cases against co-noticees
7 . Recovery of tax reflected in GSTR-1
8. Widest powers to executive: tax terrorism
Bank accounts becoming the easiest target
8. Pre-deposit in appeals
9. Penalty in cases of detention
9. Fine print of section 129
10. Redemption fine
10. Power to call for information
S. 16 IGST Act