February, 2022 – Issue No. I

Significant Budget changes proposed:

ITC with respect to a supply can be availed only if such credit has not been restricted in the GSTR-2A.

Extended time for availing ITC under Section 16(4) – Upto 30th November of the following year.

Extended time for issuance of credit notes – upto 30th November of the following year.

Rectification of GSTR-1 and GSTR-3B – upto 30th November of the following year.

New changes brought in GSTR-1 provision to communicate details to recipients.

Old Section 38 containing GSTR-2 to be replaced with new Section in line with GSTR-2A and 2B.

GSTR-1 is being made mandatory for filing GSTR-3B.Section 49 of the CGST Act is being amended so as to:

a. provide for prescribing restrictions for utilizing the amount available in the electronic credit ledger;

b. allow transfer of amount available in electronic cash ledger under the CGST Act of a registered person to the electronic cash ledger under the said Act or the IGST Act of a distinct person;

c. provide for prescribing the maximum proportion of output tax liability which may be discharged through the electronic credit ledger.

Section 50 – Interest to be levied for wrong utilization of ITC. Mere availment without utilization will not attract interest.

Section 54 of the CGST Act is being amended so as to:

a. explicitly provide that refund claim of any balance in the electronic cash ledger shall be made in such form and manner as may be prescribed;

b. provide the time limit for claiming refund of tax paid on inward supplies of goods or services or both under section 55 as two years from the last day of the quarter in which the said supply was received;

c. extend the scope of withholding of or recovery from refunds in respect of all types of refund;

d. provide clarity regarding the relevant date for filing refund claim in respect of supplies made to a Special Economic Zone developer or a Special Economic Zone unit.

Section 41 of the CGST Act is being substituted so as to do away with the concept of “claim” of eligible input tax credit on a “provisional” basis.

Two way communication for detection of defaulting party to be done away with – Sections 42, 43 and 43A are omitted.

Cancellation of registration for composition dealer – non-filing of returns for a continuous period of three months.


Significant Budget changes proposed:

Tax deduction limit increased to 14% on employers contribution to NPS account of State Govt employees.

No set-off losses against undisclosed income.

Health and Education cess shall not be allowed as business expenses under Section 37.

Tax incentives for start-ups extended. Date of incorporation extended upto 31.03.2023.

Income from transfer of virtual digital assets (Cryptocurrency and NFTs) chargeable to tax @ 30%. TDS at 1%. No set-off for any loss incurred.

For co-operative societies, the rate of alternate minimum tax has been reduced from 18.5% to 15%.

Newly incorporated manufacturing entities will be incentivized under concessional tax regime for one more year. Date of commencement of manufacturing extended to 31.03.2024.

AOPs  – Surcharge capped at 7% and Minimum Alternate tax capped at 15%.

Tax incentives introduced for IFSC units.

Income tax relief on Covid -19 treatment expenses and compensation allowed.

Exemptions regimes relating to charitable institutions to be made stricter.

Updated return can be filed by paying additional tax.

Provisions relating to deduction/collection made stricter by reducing time period of non-filing from two years to one year.


Significant Budget changes:

Customs duty exemption on certain capital goods to be withdrawn gradually.

350 Exemptions are being withdrawn.

Revised Import of Duty on Concessional Rate of Duty Rules and Forms notified. To be effective from 01.03.2022.

Graded import duty rate structure to be notified to operationalise Phased Manufacturing Program for wearable and hearable devices, smart meters and parts, sub-parts and assemblies thereof – Electronics Manufacturing.

Certain exemptions are being introduced for duty free import of specified goods by bonafide exporter of items like handicraft, apparel, leather goods. The value added export goods shall be exported in six months and exporter shall follow IGCR Rules.

Custom tariff structure is being simplified by moving the unconditional concessional rates from existing exemption notifications to the First Schedule of Customs Tariff Act. As a result, applicable BCD rates on sectors such as textiles, chemicals, metals etc. will operate almost entirely through tariff. Effective date – 01.05.2022.

Social Welfare Surcharge exemption withdrawn on certain textile items.

Certain actions by DRI officers of Customs, taken in past, are being validated through the Finance Bill, 2022.

Customs duty on cut & polished diamonds, gems to be reduced to 5%.

Effective rate notified for certain Textile items upto 30.04.2022.

Countervailing duty imposed on imports of “Certain Hot Rolled and Cold Rolled Stainless Steel Flat Products” from China PR rescinded.

Anti-dumping duty imposed on imports of “Flat rolled product of steel, plated or coated with alloy of Aluminum or Zinc” from China PR, Vietnam and Korea RP rescinded.

Anti-dumping duty imposed on imports of “Straight Length Bars and Rods of alloy-steel” from China rescinded.

Anti-dumping duty imposed on imports of “High Speed Steel of Non-Cobalt Grade” from Brazil, China PR and Germany rescinded.


28.02.2022 – The last date of submitting applications under MEIS, SEIS, ROSCTL, ROSL and 2% additional ad hoc incentive which was earlier notified to be 31.01.2022 has been extended to 28.02.2022.

The export policy of all kinds of syringes falling under HS code as mentioned above or falling under any other HS code has been made ‘Free’ with immediate effect.

The Indian Tax Advisors