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Budget Synopsis 2022
Posted on: 18 February, 2022
For use by clients and firm personnel only
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
- 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
- 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
- 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.
