Budget Updates – 2021

As per the Finance Bill, 2021
Date of implementation to be notified.

 

GST

GST introduced on Club or Association service with retrospective effect from 01.07.2017.

Matching of ITC – ITC allowed only if details of invoice/debit notes are uploaded by supplier in his GSTR-1.

Audited GST Reconciliation Statement omitted. Annual return to be filed on self-certification basis.

Interest for late payment to be levied only on payment from cash ledger. This is effective from 01-07-2017.

Recovery proceedings u/s 79 can be initiated in cases where outward supply declared in GSTR-1 but not in GSTR 3B. Section 73 and 74 procedures not applicable.

Provisional attachment to remain valid for the entire period starting from the initiation of any proceeding under Chapter XII, Chapter XIV or Chapter XV till the expiry of a period of one year from the date of order made thereunder.

For appeal against seizure and detention u/s 129, 25% of penalty has to be pre-deposited.

Seizure and detention of goods in transit – provisions made more stringent.

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

  • zero rate the 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; and
  • link the foreign exchange remittance in case of export of goods with refund.
INCOME TAX

No ITR for senior citizens over 75 years of age having only interest and pension income.

Time-limit for re-opening of assessment reduced to 3 years from the current 6 years. Re-opening up to 10 years to be allowed only if there is evidence of undisclosed income of Rs.50 lakh or more for a year.

The time allowed to file belated or revised ITR has now been reduced by three months. The deadline is now 31st December and not 31st March.

Advance-tax liability on dividend income shall arise only after the declaration of dividend.

A Dispute Resolution Committee to be constituted. A taxpayer having taxable income up to Rs. 50 lakh and disputed income up to Rs.10 lakh would be eligible. Consequently, the Settlement Commission shall be discontinued from 01.02.2021.

Income Tax Appellate Tribunal to become faceless and jurisdiction-less.

Limit for tax audit for persons who are undertaking 95% of their transactions digitally increased from Rs. 5 crore to Rs. 10 crore.

Penalty proceedings initiated for fake invoice/sham transactions of more than Rs. 2 crore shall also be eligible for provisional attachment of assets.

Late deposit of employees’ contribution by the employer shall not be allowed as deduction to the employer.

TDS of 0.1% on a purchase transaction exceeding Rs. 50 lakh in a year; responsibility of deduction shall lie on the persons whose turnover exceeds Rs. 10 crores.

Tax holiday for startups has been extended by one more year up to 31st March 2022.

Higher Rate of TDS/TCS for Non-Filers of Returns.

Compliance burden on small charitable trusts running educational institutions and hospitals reduced by increasing threshold limit on annual receipts to Rs. 5 crores.

New tax exemption proposed for notified Affordable Rental Housing Projects.

CUSTOMS

Few of the items on which Customs Duty Rates are revised are as follows:

  • Reduced BCD on copper scrap from 5% to 2.5%;
  • Increased BCD on solar inverters from 5% to 20%;
  • Increased BCD on solar lanterns from 5% to 15%;
  • Exemption removed on solar power plant equipments and components;
  • Exemption removed on cotton and cotton waste;
  • BCD reduced on iron scrap and steel products;
  • BCD on gold and silver reduced; SWS @ 10% of BCD introduced; AIDC introduced on gold and silver.
  • The department will rationalise duty on textile, chemicals and other products;
  • The revised rates will be applicable from 2nd February 2021 onwards.

Agriculture and Infrastructure Development Cess (AIDC) introduced with effect from 02.02.2021. BCD rates have been simultaneously lowered on items on which cess is being imposed.

With effect from 02.02.2021, AIDC of Rs.2.5 per litre has been imposed on petrol and Rs.4 per litre on diesel. Accordingly, Basic Excise Duty and the Special Additional Excise Duty have been calibrated so that there would be no additional burden.

Conditional exemptions to have a life period of two years.

Bills of entry to be filed before the end of day preceding the day of arrival of goods.

Pre-show cause notice investigation to be completed within 2 years; further extension of one year can be granted by Commissioner.

Penalty upto five times the refund claimed on fake invoices-ITC scam related exports.

Any goods entered for exportation making a wrongful claim of remission or refund shall be liable for confiscation.

Order, summons, notice, etc. may be served by making it available on the common portal.

Section 110 of the Customs Act is proposed to be amended to revise the procedure for pre-trial disposal of seized gold for expediting such disposals.

Facility to carry out specified amendments by importer/exporter himself on the common portal.

Common portal to be introduced for registration, filing of bills of entry, shipping bills, any other document or form, payment of duty and for carrying out such other functions and for such purposes as may be specified.