Budget 2022 – Indirect Tax Alterations

Budget 2022 has brought in the following key alterations to the Indirect Tax 

  1. Goods & Service Tax (GST) 
  • ITC can be availed only if the same is not restricted under Section 38 – as per the details communicated to the purchaser in GSTR-2B.
  • The time limit to avail ITC under section 16(4) has been extended from 30 September to 30 November next year.
  • Composition Tax Payer’s Registration can be canceled suo-moto if they have not filed their return beyond 3 months from the due date.
  • Credit Notes in respect of a supply made in a financial year can be issued by 30th November of next financial year. It has been extended as currently it was allowed till 30 September.
  • GST outward supply process to be amended and accordingly Section 38 of the CGST Act is being substituted for prescribing the manner as well as conditions and restrictions for communication of details of inward supplies and input tax credit to the recipient by means of an auto-generated statement and to do away with two-way communication process in return filing.
  • Rectification of error in GSTR-1/GSTR-3B is permitted till November of the next financial year. It is extended from 30 September currently.
  • The due date for filing a return by a non-resident taxable person is prescribed as the 13th day of next month or within seven days after the last day of the period of registration whichever is earlier.
  • Section 41 of the CGST ACT is being substituted so as to do away with the concept of avail of ITC on a provisional basis.
  • Section 42, 43, and 43A of the CGST has been amended to do away with the two-way communication process in return filing.
  • Levy of late fees for delayed filing of TCS return and for that Section 47 of CGST Act is being amended.
  • Section 49 of CGST Act is being amended :
  1. To provide restrictions for utilizing the amount available in the Electronic credit ledger
  2. To 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.
  3. To provide for prescribing the maximum proportion of output tax liability which may be discharged through the electronic credit ledger.
  • If ITC is not utilized, then interest will not be levied and for this Section 50(3) of the CGST Act is being substituted retrospectively w.e.f. 01.07.2017.
  • A refund claim of any balance lying in the Electronic Cash ledger under Section 54 is available.
  • Rate of Interest u/s 50(3) prescribed as 18% in all cases.
  • Retrospective exemption from central tax in respect of the supply of unintended waste generated during the production of fish meal, except for fish oil, during the period from the 1st day of July 2017 up to the 30th day of September 2019 (both days inclusive). No refund shall be made of the said tax which has already been collected.
  1. Special Economic Zones

Customs administration to be fully IT driven in SEZs and will function on the Customs National Portal with a focus on higher facilitation and with only risk-based checks. This will be implemented by 30th September 2022; which in turn will support the ease of doing business in India.

  1. Project imports and capital goods

It is proposed to phase out the concessional rates in capital goods and project imports gradually and apply a moderate tariff of 7.5 percent. Certain exemptions for advanced types of machinery that are not manufactured within the country shall continue which shall ensure that growth and development are not harnessed in any manner.

  1. Gems and Jewelry

To give a boost to the Gems and Jewelry sector, Customs duty on cut and polished diamonds and gemstones is reduced to 5 percent. Simply sawn diamond would attract nil customs duty rates. Also, a simplified regulatory framework will be implemented by June this year to facilitate the export of jewelry through e-commerce. Further, customs duty of at least Rs 400 per kg will have to be paid on imitation jewelry import to disincentive import of undervalued imitation jewelry.

  1. Chemicals
    Custom duty on certain critical chemicals namely methanol, acetic acid, and heavy feedstocks for petroleum refining being reduced. Duty is being raised on sodium cyanide.
  1. Review of customs exemptions and tariff simplification

Several concessional rates are being incorporated in the Customs Tariff Schedule itself instead of prescribing them through various notifications. This comprehensive review will simplify the Customs rate and tariff structure particularly for sectors like chemicals, textiles, and metals, and minimize disputes.

  1. MSME

Duty on umbrellas is being raised to 20 percent. Exemption to parts of umbrellas is being withdrawn. Customs duty exemption given to steel scrap last year is being extended for another year to provide relief to MSME secondary steel producers.

  1. Exports

To incentivize exports, exemptions are provided on some items like trimming, lining material, furniture fittings, specified leather, and packaging boxes. Also, duty is being reduced on certain inputs required for shrimp aquaculture so as to promote its exports.

  1. Customs
  • Section 3 of the Customs Act is substituted so as to specify the classes of officers of customs, including the officers of the Directorate of Revenue Intelligence, Officers of Customs (Preventive), and audit officers for various purposes, as the board may specify.
  • Section 28H of the Customs Act is amended to provide that fee for application for advance ruling shall also be prescribed and to provide that an applicant for an advance ruling may withdraw his application at any time before a ruling is pronounced.
  • Section 28J(2) of the Customs Act is substituted so as to provide that advance ruling shall remain valid for a period of three years or till there is a change in law or facts on the basis of which advance ruling has been pronounced, whichever is earlier. The said period of three years shall be reckoned from the date on which the said Finance Bill receives the assent of the President.
  • New section 135AA in the Customs Act is inserted, so as to make punishable the publishing of information relating to the value or classification or quantity of goods entered for export from India, or import into India, or the details of the exporter or importer of such goods unless required so to do under any law for the time being in force.


Need more on taxes?

Let us know at info@taxreturnwala.com