Highlights of Union Budget w.r.t GST & Income Tax

Changes under Income Tax – Union Budget 2021:

1. No Changes in Income Tax Slab rates.

2. Income Tax Return need not be filed by Senior citizens provided that:

• He is Resident of India and of the age 75 years or more during the previous year
• He has only Pension and/or Interest Income
• He shall be required to furnish declaration to the bank in such form and such manner as may be prescribed.(w.e.f 01.04.2021)

3. Threshold limit for Tax audit has been increased from 5 Cr to 10 Cr provided that:

• Aggregate of all cash receipts during the year does not exceed 5% of total receipts and
• Aggregate of all cash payments during the year does not exceed 5% of total payments.

i.e., 95% of all the transactions should be other than in cash. (Applicable from AY 2022-23)

4. Time limit for filing the belated / revised return has been reduced to 3 months.

For Ex: due date to file revised return for AY 2021-22 is 31^st March 2022, Now the revised due date is 31^st December 2021.

5. The time limit for processing of ITR under 143(1) and completing the assessment under section 143(3) is reduced by 3 months.(i.e., 12 months from the end of AY to 9 months).

Ex: For AY 2021-22, the time limit to complete the assessment is 31^st December 2022.

6. Now the delayed payments of Employers PF contribution of Employee share to respective funds will no longer be allowed as deduction.

7. No Advance tax liability on Dividend Income. (Interest under Section 234C is not levied on Dividend income).

8. As per Section 80IBA, if the Assessee is engaged in the business of developing and building the affordable housing project, then 100% of such profits are allowed as deduction subject to the fulfillment of certain conditions. One of such conditions is that the project should be approved after 01.06.2016 but before 31.03.2021. Now this time period has been extended for 1 one more year. (i.e., the project should be approved before 31.03.2022.)

9. Section 80 EEA provides deduction of interest up to Rs.1,50,000 in respect of loan taken for purchase of residential house property provided that:

• Loan should be taken after 01.04.2019 but before 31.03.2021, now this time period has been extended upto 31.03.2022.
• The stamp duty value of the property should not exceed Rs.45Lakhs.

10. The exemption limit of annual receipts under section 10(23C)(iiiad) and 10(23)(iiiae)[for University/educational institutions and Hospital/Institutions] has been increased from Rs.1Cr to Rs.5Cr.

11. The Interest on PF Contribution above 2,50,000 will be taxable.

12. TDS on purchase of goods under Section 194Q (w.e.f 01.07.2021).

Abstract of the section is as follows:

Any person, being a buyer who is responsible for paying any sum to any resident (hereafter in this section referred to as the seller) for purchase of any goods of the value or aggregate of such value exceeding fifty lakh rupees in any previous year, shall, at the time of credit of such sum to the account of the seller or at the time of payment thereof by any mode, whichever is earlier, deduct an amount equal to 0.1 % of such sum exceeding Rs.50L as income-tax. 

Analysis:

Applicability:

• To the buyer whose Gross sales/ Receipts/ Turnover in the preceeding financial year exceed Rs.10 Cr and
• Aggregate amount of Purchases from such particular buyer in the financial year exceeds Rs.50L

Non Applicability:

The Provisions of this newly inserted section is not applicable when

• The transaction on which tax is deductable under any provisions of the Act
• The transaction covered by TCS under 206C.

(However it is applicable to the transaction covered under 206C (1H) TCS on sale of goods)

If the transaction on which TCS is required to be collected under Section 206C (1H) and TDS is required to be deducted under Section 194Q, then the provisions of Section 194Q will prevail.

Rate of TDS:

	Rate
Seller having PAN	0.1%
Seller not having PAN	5%

Illustration:

Seller’s Turn-over of last year (In Cr)	Buyer’s Turn-over of last year (In Cr)	Receipt(sale)/ Payment (purchase) in the current year(In Lakhs)	Amount for TDS/ TCS(In Lakhs)	TDS	TCS
9	9	57	7	NA as the turnover is less than 10 Cr	NA as the turnover is less than 10 Cr
11	9	57	7	NA as the turnover is less than 10 Cr	Applicable@0.1% on 7L under 206C(1H)
9	11	57	7	Applicable@0.1% on 7L under 194Q	NA as the turnover is less than 10 Cr
11	11	57	7	Applicable@0.1% on 7L under 194Q	Not applicable because if the transaction is covered under TDS provisions then TCS need not be collected.

13. The definition of Small Companies has been revised as follows:

• Paid up share capital not exceeding 2 Cr from existing Rs.50L
• Turnover not exceeding Rs.20 Cr from existing Rs. 2 Cr.

14. Dispute Resolution Committee has been constituted for the taxpayers whose returned Income is upto Rs. 50 L and disputed tax is upto Rs. 10L.

15. Faceless income Tax Appellate Tribunal is to be established to reduce the cost of Compliance for tax payers.

Changes under GST vide Union Budget 2021

1. Definition of Supply under Section 7 has been amended as follows:

the activities or transactions, by a person, other than an individual, to its members or constituents or vice- versa, for cash, deferred payment or other valuable consideration.

(i.e., AOP,/Trust/Club etc.. and its members are considered as separate persons for the purpose of GST)

2. Section 16(2)(aa) has been inserted:

That the input tax credit on invoice or debit note may be availed only when the details of such invoice or debit note have been furnished by the supplier in the statement of outward supplies u/s 37 and such details have been communicated to the recipient of such invoice or debit note.

3. Section 35(5) of the CGST Act, 2017 is being omitted so as to remove the mandatory requirement of getting annual accounts audited and reconciliation statement submitted by specified professional.(GSTR-9C) to be notified later.

4. Section 44 of the CGST Actis being substituted so as to remove the mandatory requirement of furnishing a reconciliation statement duly audited (GST Audit) by specified professional and to provide for filing of the annual return on self-certification basis.

5. Section 50(1) of the CGST Act is being substituted, retrospectively, so as to charge interest on net cash liability with effect from the 1st July, 2017.

6. Section 74 of the CGST Act, 2017 is being amended so as make seizure and confiscation of goods and conveyances in transit a separate proceeding from recovery of tax.

(Proceedings u/s 129 and 130 shall not be deemed to be concluded even if the proceeding has been concluded against the main person.)

7. An explanation to sub-section (12) of section 75 of the CGST Act, 2017 is being inserted to clarify that “self-assessed tax” shall include the tax payable in respect of outward supplies, the details of which have been furnished under section 37, but not included in the return furnished under section 39.

8. Section 83 of the CGST Act,2017 is being amended so as to provide that provisional attachment shall remain valid for the entire period starting from the initiation of any proceeding till the expiry of a period of one year from the date of order made thereunder.

9. A proviso to sub-section (6) of section 107 of the CGST Act is being inserted to provide that no appeal shall be filed against an order made under sub-section (3) of section 129, unless a sum equal to 25% of penalty has been paid by the appellant.

As per the law, the pre-deposit prior to this amendment was only to the extent of 10% of Tax Liability in case of dispute which is now proposed to be 25% of the penalty amount in case of sec 129 i.e detention and seizure of conveyance and goods during transit.

10. Section 129(3) of CGST Act, 2017, is substituted as The proper officer detaining or seizing goods or conveyance shall issue a notice within seven days of such detention or seizure, specifying the penalty payable, and thereafter, pass an order within a period of seven days from the date of service of such notice, for payment of penalty under clause (a) or clause (b) of subsection (1).(In Earlier Law, no time limit was prescribed for notice.)

11. Section 129(4) of CGST Act, 2017, is substituted as No penalty shall be determined under sub-section (3) without giving the person concerned an opportunity of being heard.

12. Section 151 of the CGST Act, 2017 is being substituted to empower the jurisdictional commissioner to call for information from any person relating to any matter dealt with in connection with the Act.

13. Section 16 of the IGST Act is being amended so as to:

• zero rated  supply of goods or services to a Special Economic Zone developer or a Special Economic Zone unit only when the said supply is for authorised operations.
• restrict the zero-rated supply on payment of integrated tax only to a notified class of taxpayers or notified supplies of goods or services;

now only notified class of taxpayer or notified class of goods/services will be eligible for claiming refund of IGST paid on zero-rated supplies, unlike present provision which allows both the options to all persons subject to Rule 96(10) of the CGST Rules.