Budget Synopsis 2022

Posted: 4 years ago

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We have taken all steps to ensure that the information contained herein has been obtained from reliable sources and that this publication is accurate. However, this publication is not intended to give legal, tax, accounting or other professional advice. We recommend appropriate advice be taken prior to initiating action on specific issues.

 

INDEX

Rupee Movement........................................................................................................................................ 4

In Brief.......................................................................................................................................................... 6

Proposals...................................................................................................................................................... 9

Direct Taxes………………….............................................................................................................................. 12

Indirect Taxes............................................................................................................................................... 15

Changes in BCD…………................................................................................................................................  17

About US ………………..................................................................................................................................... 23

 

 

 

IN BRIEF

Budget Statement

DIRECT TAXES

• Virtual Digital Assets brought under tax net
• Extended period to submit updated tax       return
• Surcharge on LTCG tax capped at 15 per cent
• Period extended to avail concessional tax rate of 15 per cent

               Faceless assessment scheme modified

INDIRECT TAXES

• Limitation period for claim of input tax    credit extended
• Provisions introduced for restricting claim of input tax credit
• Duty free import scheme introduced for bonafide exporters
• Valuation of imports subject to greater scrutiny

COMMERCE & TRADE

• In focus - Infrastructure, logistics, environment and social protection.
• Multimodal Logistics Parks to be developed through PPP mode.

• Digital Rupee to be introduced by RBI
• Spectrum auctions to facilitate rollout of 5G mobile services

SOCIAL FOCUS

• ‘Kisan Drones’ to be promoted
• 150,000 post offices to be integrated with core banking system
• e-Passports to be rolled out in FY 2022-23

COMMERCE & TRADE

• Kisan Drones for crop assessment, land records, spraying of insecticides expected to drive a wave of technology in agri sector
• 400 new generation Vande Bharat trains with better efficiency to be brought in during the next 3 years; 100 PM Gati Shakti Cargo terminals to be developed during next 3 years and implementation of innovative ways for building metro system

 

ECONOMIC INDICATORS

• GDP increases by 9.2 per cent in FY 2021-22
• WPI based inflation at 12.5 per cent
• Foreign exchange reserves at US$ 633.6 billion
• Increase in production of core industries including coal, natural gas, refinery products, steel,     cement and electricity

 

BUDGET PROPOSALS

This section summarises the significant proposals on Direct and Indirect taxes made by the Finance Minister on February 1, 2022. The direct tax provisions in the Finance Bill, 2022 would ordinarily apply to the Financial Year commencing on April 1, 2022 (Assessment Year 2022-23) whereas the indirect tax provisions would apply with immediate effect, unless otherwise specified. Finance Minister is likely to propose further amendments through separate Bills.

The proposals contained in the Finance Bill are subject to

ratification by the Parliament

 

DIRECT TAXES

1. Basic tax slabs for individual and HUF remains unchanged i.e.

INCOME RANGE	EXISTING  (%)	OPTIONAL  (%)
Upto 250,000	Nil	Nil
250,001 – 500,000	5	5
500,001 – 750,000	20	10
750,001 – 1,000,000		15
1,000,001 – 1,250,000	30	20
1,250,001 – 1,500,000		25
1,500,001 and above		30

• Exemption limit for individuals reaching 60 and 80 years remains  unchanged at `300,000 and `500,000 respectively
• Deductions, exemptions and carried forward losses restricted, with certain  conditions
• Surcharge remains unchanged

 

1. Corporate tax rates remains unchanged i.e.

COMPANY	RATE (%)
Domestic
MSME / New enterprise	25%
Others	30%
Foreign	40%

 

 

• Surcharge remains at 7 per cent and 12 per cent where income exceeds 10 million and `100 million respectively
• The benefit of lower rate of tax is applicable to companies with turnover  or gross receipts up to `4 billion during financial year 2020-21  3Surcharge remains at 2 per cent and 5 per cent where income exceeds `10  million and `100 million respectively

1. Concessional Tax Scheme

COMPANY	RATE (%)
Domestic
New enterprise	15%
Others	22%

 

• Deductions under respective provisions of chapter VIA restricted for availing concessional tax rate. Surcharge at 10 per cent and education cess at 4 per cent will be applicable
• Benefit extended to companies registered on or after October 1, 2019 and commencing manufacturing (including electricity generation) on or before March 31, 2024 with certain conditions

 

INDIRECT TAX

CUSTOMS DUTY

Basic Customs Duty (‘BCD’) maintained at 10 per cent  

HIGHLIGHTS

       Amendments

• Tariff simplification brought in. Rates prescribed through multiple notifications now included into the Tariff Schedule.
• Gradual phasing out of more than forty concessions and exmptions on capital goods and project imports for specified sectors.
• Duty-free imports scheme introduced for bonafide exporters based on end-use monitoring and subject to export of goods within six months. Exemptions and concessions towards Social Welfare Surcharge ('SWS’) done away with on specified goods.
• Clarifications provided on applicability of exemption on Electric Vehicle kits.

 

 ●    Customs (Import of Goods at Concessional Rate of Duty)

       Rules, 2017 amended to cover:

• • End to end automation of entire process
  • Standardization and notification of various forms
  • Submission of monthly statement by importer on Common Portal

 

● The Board is empowered to prescribe additional obligations on the importer in respect of valuation    of imports of  specified class of goods.

 

●    Advance Ruling processes amended, including:

 

• Extension of time limit to withdraw the application till pronouncement of the ruling

• Advance Ruling to be valid upto 3 years from the date of pronouncement of ruling or change in law, whichever is  earlier

 

●    The Class of Officers of Customs and their powers, rationalized with retrospective effect.

●    Change in BCD rates of certain industries

 

INDUSTRY		RATE (%)
		From		↑↓		To
ELECTRICAL AND ELECTRONIC ITEMS
Smart Meters (w.e.f. April 01,  2022)		15		↑		25
Printed Circuit Board  Assembly of Smart Meters  (w.e.f. April 01, 2022)		7.5		↑		20
Camera lens for use in  manufacture of Camera  Module for Cellular Mobile  Phone		10/15		↓		2.5
Specified parts for use in  manufacture of transformers  of chargers/adapters		10/15		↓		5
Copper/Aluminium based  copper clad laminate for  use in manufacture of PCB/  MCPCB		5/7.5		↓		0
X-Ray grid, Multi Leaf  Collimator/Iris and Static User  Interface used in manufacture  of X-ray items		5		↑		10
X-Ray Machines		7.5		↑		10
SOLAR ENERGY
Solar Cells (other than those  exclusively used with ITA-1  items) (w.e.f. April 01, 2022)	0		↑		25
Solar Modules (other than  those exclusively used with  ITA-1 items) (w.e.f. April 01, 2022)	0		↑		40
FUELS, CHECMICALS AND PLASTICS
Fuel Oil, Straight run fuel oil	5		↓		2.5
Low sulphur wax residue,  Vacuum residue, Slurry and  Vacuum gasoil	5		↓		2.5
Sodium cyanide	7.5		↑		10
PAPER
Recovered (waste and scrap)  paper or paperboard for use  in manufacturing of paper,  paperboard or newsprint	0		↑		2.5

INDUSTRY	RATE (%)
GEMS AND JEWELLERY
Cut and Polished Diamonds  and Natural Gemstones	7.5	↓	5
CAPITAL GOODS
S.G. Ingot Castings used in  manufacturing of Plastic  Processing Machinery	10	↓	7.5
Ball Screw and Linear Motion  Guide used in manufacturing  of Plastic Processing  Machinery	7.5	↓	5
Bushing (made up of platinum  and rhodium alloy, imported  in exchange of worn-out  bushing exported for  refurbishment)	10	↓	7.5
Coffee roasting, brewing  or vending machineries for use in the manufacturing or  processing of coffee	10	↓	7.5

 

 

 

 

EXCISE DUTY

 

 Effective October 01, 2022, additional duty of `2 per litre

imposed on unblended Petrol and High Speed Diesel sold to

retail consumers.

 

GOODS AND SERVICES TAX

 Amendments

 

•  Introduction of an auto generated statement containing

    details of Input Tax Credit (‘ITC’) available / restricted to

    the taxpayer.

•  ITC to be availed only if it is not restricted in the auto

    generated statement.

 

● Limitation period extended upto November 30 of the  subsequent financial year in respect of:

•  Claim of ITC relating to a financial year
•  Adjustment of tax liability due to issue of credit note towards any supply in a financial year

•  Rectification of any error made in filing of any return of a tax period in a financial year

 

●   ITC availed to be reversed, along with interest, if   supplier has not paid the said tax; reclaim permitted upon payment by supplier.

●   Provisions introduced for:

•  Specifying maximum proportion of tax liability which may be discharged through ITC utilization

•  Imposing restrictions towards utilization of balance in electronic credit ledger

 

●   Cancellation of registration provisions amended:

•  In case of Composition Dealers, if return for a financial  year is not filed beyond 3 months from the due date; and

•  In case of normal taxpayers, if returns are not filed for a continuous tax period as may be prescribed

 

●   Restriction on filing of:

•  GSTR-1 return for a tax period, if past returns are not  filed

• GSTR-3B return for a tax period, if GSTR-1 return is due

 

● ‘Two way’ communication process in return filing between supplier and customer done away with.

●  Late fee introduced for late filing of return for tax  collected at source by e-commerce operators.

●  Transfer of balance in electronic cash ledger to own branches permitted.

●    Limitation period for claim of refund for any quarter by  Embassies, Consulates, agency of United      Nations Organisations or other specified taxpayers extended from 6 months to 2 years.

 

●     Retrospective Amendments

•  Effective July 01, 2017, interest on wrong availment and utilization of ITC to be levied at the rate of 18  per cent, in the manner to be prescribed.

 

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