Chokshi Group Keeping you ahead - MSI Global Alliance
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Chokshi Group Keeping you ahead…
TABLE OF CONTENTS
I. FOREWORD .................................................................................................. 4
II. BUDGET AT A GLANCE ........................................................................... 5
III. SECTORAL HIGHLIGHTS ...................................................................... 7
1. Aspirational India i. Agriculture, Irrigation and Rural Development .... 8
ii. Wellness, Water & Sanitation ...................................................................... 9
iii. Education and Skills ................................................................................... 10
2. Economic Development i. Industry, Commerce and Investment ........... 11
ii. Infrastructure ............................................................................................... 12
iii. New Economy .............................................................................................. 12
3. Caring Society i. Women, Child and Social Welfare ................................ 13
ii. Environment & Climate Change ................................................................ 13
iii. Tourism........................................................................................................ 13
4. Governance ................................................................................................... 14
5. Financial Sector i. Financial Markets ........................................................ 14
ii. Infrastructure Financing............................................................................. 15
iii. Disinvestment .............................................................................................. 15
6. Fiscal Management ...................................................................................... 16
IV. DIRECT TAXATION ............................................................................... 18
V. INDIRECT TAXATION ............................................................................ 25
Customs Act, 1962 ............................................................................................ 25
2
Customs Tariff Act, 1975 ................................................................................ 25
The Central Excise Act, 1944 .......................................................................... 28
Goods and Service Tax Law............................................................................ 28
VI. OTHER ACTS ........................................................................................... 31
The Companies Act, 2013 ................................................................................ 31
Miscellaneous.................................................................................................... 31
VII. ANNEXURES ........................................................................................... 32
Annexure I ........................................................................................................ 32
Annexure II....................................................................................................... 34
Annexure III ..................................................................................................... 35
3
I. FOREWORD
Reiterating the pledge given to the people of India, to give this nation an honest, clean and
transparent Government and to build a strong, confident New India, Honorable, Smt. Nirmala
Sitharaman, our Finance Minister, provided the Budget today.
Laying a vision for AatmaNirbhar Bharat, the Finance Minister said this is an expression of
130 crore Indians who have full confidence in their capabilities and skills. She said that
Budget proposals will further strengthen the Sankalp of Nation First, Doubling Farmer’s
Income, Strong Infrastructure, Healthy India, Good Governance, Opportunities for youth,
Education for All, Women Empowerment, and Inclusive Development among others.
The Budget proposals for 2021-22 rest on 6 pillars:
! Health and Wellbeing
! Physical & Financial Capital, and Infrastructure
! Inclusive Development for Aspirational India
! Reinvigorating Human Capital
! Innovation and Research & Development
! Minimum Government and Maximum Governance
Faith is the bird that feels the light when the dawn is still dark.
This moment in history is the dawn of a new era, where India is poised to be
the land of hope and promise.
- Smt. Nirmala Sitharaman
4
II. BUDGET AT A GLANCE
5
6
III. SECTORAL HIGHLIGHTS
Summary
7
1. Aspirational India
i. Agriculture, Irrigation and Rural Development
! Proposed increase in agriculture credit target and the MSP regime to assure price that is
atleast 1.5 times the cost of production:
! Creation of the Micro Irrigation Fund under NABARD with a corpus of Rs 5000 crores.
! The scope of ‘Operation Green Scheme’ enlarged to include 22 perishable products.
! 1000 more mandis to be integrated with e-NAM.
! The Agriculture Infrastructure Fund to be made available to APMCs for augmenting
their infrastructure facilities.
! Development of modern fishing harbours and fish landing centres, Multipurpose
Seaweed Park.
AtmaNirbhar Bharat Abhiyan
8
ii. Wellness, Water & Sanitation
! Introduction of the PM AtmaNirbhar Swasth Bharat Yojana for primary, secondary
and tertiary healthcare; Mission Poshan 2.0 for nutritional content and Jal Jeevan
Mission (Urban), for universal water supply.
9
iii. Education and Skills
102. Economic Development
i. Industry, Commerce and Investment
! NCLT framework to be strengthened.
! Rs 1,500 crore scheme proposed to promote digital payments.
! Proposal to make dividend payments to REIT (Real Estate Investment Trusts) and
InvITs (Infrastructure Investment Trusts) exempt from TDS.
! Infrastructure debt funds to be made eligible to raise funds by way of tax efficient
zero-coupon bonds.
11ii. Infrastructure
! The National Infrastructure Pipeline expanded to 7,400 projects.
! A National Banking for Financing Infrastructure and Development to be set up.
! NHAI and PGCIL to set up infrastructure investment trust to attract global funds.
! Railways to monetise dedicated freight corridors.
! Central funding for public buses, transport and Metro Projects.
! Consumers allowed to choose from more than one power Distribution Company.
! Gas pipeline project to be taken up in Jammu &Kashmir.
! Free cooking gas LPG scheme, Ujjwala, to be extended to 1 crore beneficiaries.
! Allocation to rural infrastructure development to be increased.
! Five Operational roads to be transferred to NHAI InvIT.
! A sharp increase (34%) in capital expenditure to Rs 5.54 lakh crore for FY 2021-22.
! To provide more than Rs 2 lakh crore for states for their capital expenditure.
iii. New Economy
! Hydrogen Energy Mission for generating hydrogen from green power sources.
123. Caring Society
i. Women, Child and Social Welfare
! Women to be allowed to work across all categories, and in all shifts.
! Proposal to introduce the National Nursing and Midwifery Commission Bill.
! The age of a girl entering motherhood and nutrition to be looked into.
! Reduction of margin money requirements from 25% to 15% to facilitate credit flow
under Stand Up India for SCs, STs, and Women.
Migrant Workers and Labourers
ii. Environment & Climate Change
! The Vehicle Scrapping Policy has been announced to phase out old and unfit vehicles.
! The Urban Swachh Bharat Mission 2.0 with capital outlay INR 1,41,678 crores for
waste management.
! Capital outlay to tackle the burgeoning problem of air pollution.
! A Deep Ocean Mission proposed to ensure deep-sea biodiversity conservation.
iii. Tourism
! Introduction of the aesthetically designed Vista Dome coach on tourist routes to give a
13better travel experience to passengers.
! Proposal to establish an Indian Institute of Heritage and Conservation under the
Ministry of Culture to have the status of a deemed University.
! Five archaeological sites to be developed as iconic sites with on- site Museums.
4. Governance
! It is proposed to have a governance mechanism - clean, corruption-free, policy driven
and good in intent and most importantly trusting in faith.
! Introduction of a ‘Taxpayers Charter’ to ensure ease of compliance.
! It is proposed to introduce criminal liability for acts that are civil in nature.
! A National Recruitment Agency (NRA) to be set up as an independent body for
recruitment to Non-Gazetted government posts and a robust mechanism for
appointment and direct recruitment to Tribunals and specialized bodies.
! Strengthening the legal framework for Contracts in the business environment.
! The proposed new National Policy on Official Statistics to use latest technology
including Artificial Intelligence for real time data monitoring.
! Funds to be allocated for hosting the G20 Presidency, 2022 wherein the country
would drive the global economic and development agenda.
! Funding and development of the Northeast region, Ladakh and Jammu & Kashmir.
5. Financial Sector
i. Financial Markets
! Categories of Government securities to be opened fully for non-resident investors.
! Limit for FPI (foreign portfolio investment) in corporate bonds, currently at 9% of
outstanding stock, will be increased to 15%.
! To improve investors’ confidence and to expand the scope of credit default swaps, a
mechanism to be provided for netting of financial contracts.
! Expansion of the Debt-based Exchange Traded Fund (ETF), including floating a new
Debt-ETF consisting primarily of government securities for improved access.
! Formulation of a Partial Credit Guarantee scheme for NBFCs.
14! Consolidation of the provisions of SEBI Act, Depositories Act, Securities Contracts
(Regulation) Act, and Government Securities Act, into one Securities Markets Code.
! Establishment of a system of regulated gold exchanges.
! Introduction of an Investor Charter.
! The Treasury Single Announcement System to be extended universally.
! A separate administrative structure for development of Multi State Co-operatives.
! Steps towards funding and support for the MSME sector.
ii. Infrastructure Financing
! Funding to be increased by:
• Creating institutional structures
• Asset monetization
• Enhancing the share of capital expenditure in central and state budgets.
! Launch of National Monetization Pipeline of brownfield infrastructure assets.
! GIFT City to set up an International Bullion exchange(s) for global trade.
! Further measures to permit trading in Rupee derivatives at IFSC.
! Relaxation of some of the conditions relating to prohibition on private funding,
restriction on commercial activities, and direct investment in infrastructure.
! Tax Benefits: Tax holiday for capital gains earned by aircraft leasing companies, tax
exemption for aircraft lease rentals paid to foreign lessors; tax incentive for relocating
foreign funds in IFSC; and tax exemption to the investment division of foreign banks
located in IFSC.
iii. Disinvestment
! LIC to be opened for an Initial Public Offer (IPO).
! Amendment of the Insurance Act, 1938 to increase the permissible FDI limit:
49% 74%
15! Further recapitalization of Rs. 20,000 crores of PSBs proposed.
! BPCL, Air India, Shipping Corporation of India, Container Corporation of India, IDBI
Bank, BEML, Pawan Hans, Neelachal Ispat Nigam limited, among others to be
opened to the private sector.
! Other than IDBI Bank, the privatization of two Public Sector Banks and one General
Insurance Company proposed to be taken up.
! AtmaNirbhar Package for Strategic Sale Of Disinvestment:
• Obtaining help from National Institute for Transforming India (NITI)
• Incentives to States in the form of funding.
• Idle assets to not contribute. Monetizing of surplus land (non-core asset)
• Creating new investment space for private sector.
! Mechanism to provide for timely closure of sick or loss making Central Public Sector
Enterprises.
6. Fiscal Management
! The aim being to spur growth impulses in the economy.
! Transfer to the GST Compensation Fund limited to collection by way of cess.
! An overhaul of Centrally Sponsored Schemes and Central Sector Schemes proposed.
! Details of Central Government debt, servicing of interests and repayment provided.
! The estimates of receipt and expenditure are as follows:
16(Rs. in lakh crore)
FY FY 2020-21
2019-20 considering nominal growth of GDP @10%
Receipts 19.32 22.46
Expenditure 26.99 30.42
[On account of the increased capital expenditure (21%)]
[Revised estimate (RE) 34.50]
! The estimate of fiscal deficit is 3.8% in RE 2019-20 and 3.5% for Budget Estimates
(BE) 2020-21. The net market borrowings for the year 2019-20 would be Rs. 4.99
lakh crore and for the year 2020-21 would be Rs. 5.36 lakh crore.
17IV. DIRECT TAXATION
Section 2
! Unit Linked Insurance Policy which is not exempted u/s. 10(10D) has now been
covered under the definition of Capital Asset.
Section 10
! Exemption u/s. 10(11) & 10(12) shall not apply to the income by way of interest
accrued during the year to the extent it relates to the amount or the aggregate of
amounts of contribution made by the person exceeding Rs. 2, 50,000/- in any previous
year in that specified provident fund.
! The receipts for claiming exemption u/s. 10(23C) for such universities or educational
institution has been increased from Rs. 1cr to 5cr.
! The receipts for claiming exemption u/s. 10(23C) for such hospital or institution has
been increased from 1cr to 5cr.
Section 11
! Exemption to donation received towards Corpus fund will now be subject to deposit in
modes prescribed u/s 11(5).
! Amount of Corpus fund will be treated as application in year of investment in modes
prescribed u/s 11(5) and not in year when expenditure is incurred from such fund.
! Amount incurred from loan will be treated as application in previous year in which
loan is repaid and not in year when expenditure is incurred from such loan.
! Excess application from preceding years will not be eligible for Set off or deduction in
current year.
Section 36 & 43B
! In order to ensure that employees’ contributions are deposited on time, the late deposit
of employee’s contribution by the employer will not be allowed as deduction to the
employer and corresponding amendment has been brought about in Section 43B
wherein even if such payments are made before the due date of filing return the same
would not be allowable.
18Section 43CA
! For the purpose of capital gains, sale consideration received shall be the treated as full
value of consideration if the variation in the stamp duty value is not more than 20% of
the sale consideration (earlier the variance limit was 10%) subject to following
conditions;
(i) the transfer of such residential unit takes place during the period beginning
from the 12th day of November, 2020 and ending on the 30th day of June,
2021;
(ii) such transfer is by way of first time allotment of the residential unit to any
person; and
(iii) the consideration received or accruing as a result of such transfer does not
exceed two crore rupees.’;
Corresponding amendment has been brought about in Section 56(2)(x).
Section 44AB
! The threshold limit to conduct tax audit has been increased from Rs.5 crore to Rs.10
crore subject to following conditions:
• aggregate of receipts in cash during the previous year does not exceed 5% of all the
receipts; and
• aggregate of payments in cash during the previous year does not exceed 5% of all
payments.
! The threshold limit for audit for professionals is not changed and continues to be Rs. 50
lakhs.
Section 44ADA
! The section specifically now defined following assessee:
a) Individual
b) HUF
c) Partnership firms (other than LLP)
Section 45
! Any sum received under unit linked insurance policy (which is exempt under clause
10D of section 10) including bonus shall be chargeable to Capital gains in the year of
receipt in the manner prescribed.
19Section 50
! Special provision for computation of capital gains in case of depreciable assets where
Goodwill of a business or profession forms part of a block of assets will be as per the
provisions of Section 55 of the Act.
Section 72A
! In view of Privatisation of PSUs, provisions relating to carry forward and set off of
accumulated loss and unabsorbed depreciation allowance in amalgamation or demerger,
etc. is now extended to all Public sector company.
Section 80EEA
! Deduction in respect of interest on loan taken for certain house property has been
extended for further period of 1 year upto March 2022.
Section 80IAC
! Deduction in respect of eligible Start-up has been extended for further period of 1 year
upto March 2022.
Section 80-IBA
! 100% Deductions in respect of profits and gains from housing projects has been
extended for further period of 1 year upto March 2022.
Section 80 LA
! Instead of the general approval under any other law, the specific permission is to be
obtained under the IFSC Authority Act, 2019
! In case of activities from leasing of aircraft or aircraft engine engaged in operation of
aircrafts will be eligible for deduction if activities commences before 31st march, 2024.
Section 89A
! A specified person being resident in India has income from specified account in the
specified country, being a retirement benefit account, where tax is levied at the time of
withdrawal or redemption by such other notified country, it shall be taxed in manner
prescribed.
20Section 112A
! Units of ULIP to which exemption under clause 10D of Section 10 does not apply, the
same shall be eligible for the benefit of provisions of section 112A.
Section 115JB
! Dividend if credited to profit and loss account, shall be deducted from Book Profits
Section 139
! "due date" for spouse of partner to whom section 5A (Apportionment of income
between spouses governed by Portuguese Civil Code) applies, shall be 31st day of
October of the assessment year;
! Due date for partner of a firm covered under Section 92E will be extended to 30th
November of the assessment year
! Time limit to file belated return u/s. 139(4) and revised return u/s. 139(5) has been
changed to 31st December of the Assessment year instead of 31st March of the
Assessment Year.
Section 143
! The time limit to issue Intimation u/s. 143(1) has been reduced from 1 year to 9 months.
! Not Intimation can be served on the assesse after expiry of 3 months from the end of
the financial year in which return is furnished.
Section 148A
! Before issuance of notice the Assessing Officer shall conduct enquiries, if required, and
provide an opportunity of being heard to the assessee. After considering the reply, the
Assessing Office shall decide, by passing an order, whether it is a fit case for issue of
notice under section 148 and serve a copy of such order along with such notice on the
assessee.
! This procedure of enquiry, providing opportunity and passing order, before issuing
notice under section 148 of the Act, shall not be applicable in search or requisition
cases.
Section 149 – Time Limit for notice
! The time limit for re-opening of assessments is reduced to 3 years from the relevant
assessment year. However, in serious tax evasion cases where the assessing officer has
the evidence to prove that there is concealment of income and the amount of such
21concealment is Rs.50 Lakhs or more, the assessment can be reopened for 10 years after
the approval of the Principal Chief Commissioner.
! No notice for re-opening shall be issued for the assessment year beginning on or before
01-04-2021, if the time limit to issue is time barred.
! No notice for re-opening shall be issued where a notice has been issued under search
cases.
! The period of limitation shall not include the time or extended time allowed to the
assesse as per the show-cause notice issued u/s. 148A or the period for which the
proceedings under section 148A is stayed by an order or injunction of any court.
! If after excluding the period referred in aforesaid point, the period available with
assessing officer to pass an under section 148A is less than 7 days, it is extended to 7
days.
Section 151
Sanction for issue of notice by the higher authority under section 148
Period Authorised Authority
Less than 3 years Principal Commissioner or Principal Director or Commissioner
or Director
More than 3 years Principal Chief Commissioner or Principal Director General or
Chief Commissioner or Director General
Section 153 – Time limit for completion of assessment or reassessment
! Assessment order relating to assessment year commencing on or after 01-04-2021 shall
be issued within 9 months from the end of the assessment year in which the income was
first assessable.
Section 153A and 153C – Assessment in case of search or requisition
! The provision of section 153A and 153C is applicable where search initiated under
section 132 or books of account, other documents or any assets is requisitioned under
section 132A after 31-05-2003 but on or before 31-03-2021.
Section 194
! Deduction of TDS u/s 194 will not be applicable on dividend income earned by a
business trust from a Special Purpose Vehicle will not be applicable.
22Section 194A
! Deduction of TDS u/s 194A will not be applicable on interest paid by Infrastructure
debt fund in relation to a zero coupon bond issued on or after the 1st day of June, 2005.
Section 194-IB
! TDS deduction u/s 194-IB on rent paid by individual or HUF should not exceed the
amount of rent payable for the last month of the previous year or the last month of the
tenancy in cases covered under sec 206AB.
Section 194P
! In case of interest paid by bank to a specified senior citizen, TDS shall be deducted on
total income after giving effect to deduction under Chapter VI-A and rebate u/s 87A.
! Specified senior citizen means a resident individual who is of seventy-five years or
more and is earning income only in nature of interest and pension.
! The specified individual need not file return of income but will have to file a declaration
with the bank.
Section 194Q (w.e.f 01.07.2021)
! Any sum paid by a buyer to a resident seller for purchases of value exceeding INR 50
Lakh in a previous year will be liable to TDS at 0.1% of sum exceeding INR 50 Lakh.
! Buyer means person whose total sales/gross receipts/turnover exceeds INR 10 Crore
during the financial year.
! This section shall not apply where TCS u/s 206C(1H) or TDS under any other section is
applicable.
! In case PAN is not furnished, rate u/s 206AA will be 5%.
Section 196D
! Benefit of TDS at rates given in treaty is now given for specified payments to FIIs u/s
196D.
Sec 206AB and Sec 206CCA
! TDS/TCS shall be at higher of following rate on specified payments, where payee has
not filed ITR for 2 years and TDS/TCS in each year is INR 50,000 or more:
• Twice the rate specified or
23• Rate of 5 %
Section 245 - Income Tax Settlement Commission
! Income-tax Settlement Commission (“ITSC”) so constituted shall cease on or after
01.02.2021 and No Application can be filed u/s. 245C of the Act on or after 01.02.2021
! An Interim Board has been defined in replacement of the Income Tax Settlement
Commission Bench u/s. 245A of the Act for all the pending applications before ITSC.
! All the powers of ITSC shall be exercised by the Interim Board on or after 01.02.2021
Dispute Resolution Committee (“DRC”) (Chapter XIX-AA)
! The DRC shall be constituted by the Central Government to settle disputes of specified
persons arising from any variation with respect to a specified order (Refer Note 1) who
fulfils the specified conditions (Refer Note 2).
! The DRC, subject to conditions, shall have the powers to reduce or wave any penalty
imposed under the Act.
! The Central Government (“CG”) may make a scheme by notification in Official Gazette
to impart greater efficiency, transparency and accountability.
! The CG shall issue directions with respect to exceptions, modifications and adaptations
to the notification issued in the Official Gazatte till 31-03-2023.
! Note 1: Specified Order means- the amount of Disputed Income does not exceed INR
50Lakhs and the amount of disputed tax does not exceed INR 10 Lakhs.
! Note 2: Specified Condition means a person who fulfils the conditions as prescribed.
! A new board called “Board for Advance Ruling” has been substituted in case of
Authority in order to give effect for orders issued under the chapter.
! No application shall be made for disputes under Chapter III-A of the Central Excise
Act, 1944 or Chapter V-A of Finance Act, 1994 under this chapter.
! The CG may by way of notification in Official Gazette make a scheme in order to
dispose of the appeal by the Appellate Tribunal.
24V. INDIRECT TAXATION
Customs Act, 1962
! Powers of Commissioner (Appeals) to summon persons to give evidence and produce
documents and for seizure of goods, documents and things have been extended.
! All conditional exemptions shall come to an end on 31st March immediately 2 years
after such grant and the existing ones which receive the assent of the President, shall
come to an end on 31st March,2023
! For completing any proceeding under the Act which would culminate in issuance of
notice, a 2 year time limit has been prescribed which can further be extendable by one
year by the Commissioner
! It is mandatory to file bill of entry before the end of the day preceding the day
(including holidays) of arrival of goods
! Procedure for pre-trial disposal of seized gold has been amended
! Penalty not exceeding 5 times the refund claimed - New section 114AC has been
introduced and accordingly where any person has obtained any invoice by fraud,
collusion, willful misstatement or suppression of facts to utilize input tax shall be
imposed with penalty.
! A common portal has been introduced that shall that shall facilitate registration, filing
of bill of entries, shipping bills, payment of duty etc.
Customs Tariff Act, 1975
! When countervailing duty is revoked temporarily, such revocation shall be for a period
not exceeding one year at a time and countervailing duty shall be imposed on review
for a period not exceeding 5 years at a time.
! When anti-dumping duty is revoked temporarily, such revocation shall be for a period
not exceeding one year at a time and the same shall be imposed on review for a period
not exceeding 5 years at a time.
25Change in Rates
Amendments in rates in the first schedule to the Customs Tariff Act, 1975 have been made.
These shall be effective from 02.02.2021 unless otherwise specified. The same have been
attached herewith as Annexure I.
! From 1st April, 2021, new tariff lines under the heading 2709 have been introduced and
accordingly, for petroleum oils and oils obtained from bituminous minerals, crude and
others, the rate shall be 5%.
! Import of goods at concessional rate of duty rules, 2017 have been amended and will
provide following facilities:
• To allow job-work of the materials (except gold and jewellery and other precious
metals) imported under concessional rate of duty
• Allow 100% out sourcing for manufacture of goods on job-work
• To allow imported capital goods that have been used for the specified purpose to be
cleared on payment of differential duty, along with interest, on the depreciated
value.
! There have been change in rates for various sectors that includes agricultural products
and by products, minerals, fuels, chemicals and plastics, leather, textiles, gems and
jewellery sector, metals, capital goods, electronics and renewables, aviation sector,
medical devices, goods imported under project import scheme etc. Some of the sector
wise changes are as under:
• Electronic and Mobile phone industry: Few exemptions have been withdrawn and
some parts of mobile will move from “nil” rate to a moderate rate of 2.5%
• Iron and Steel: Custom duty reduced uniformly to 7.5% on semis, flat and long
products of non-alloy, alloy and stainless steel. To provide relief to metal re-cyclers,
mostly MSME’s, duty on steel scrap upto 31st March,2022 has been exempted. Duty
on copper scrap reduced from 5% to 2.5%.
• Textile: Basic custom duty rates on caprolactum, nylon chips, nylon fibre and yarn
reduced to 5%.
26• Chemicals: Apart from other items, custom duty on naphtha reduced to 2.5%...0
• Gold & silver: Rates of duty on gold and silver are being rationalized
• Renewable energy: Duty on solar invertors raised from 5% to 20% and on solar
lanterns from 5% to 15%
• Capital Equipment and Auto parts: Exemptions on tunel boring machine have
been withdrawn. Custom duty on certain auto parts raised to 15% to bring them on
par with general rate on auto parts
• MSME products: Duty increased to 15% on steel screws, plastic builder wares and
prawn feed. Exemption on import of duty free items rationalized as an incentive to
exporters of garments, leather and handicraft items.
• Agriculture Products: To benefit farmers, custom duty on cotton raised from nil to
10% and on raw silk and silk yarn from 10% to 15%. Rates are being uniformly
calibrated to 15% on items like maize,bran,rice bran oil cake and animal feed
additives.
! High speed rail projects are now included in list of projects to which Project Imports
Scheme is applicable and National High Speed Rail Corporation is being nominated as
the “Sponsoring Authority” under Project Import Regulations, 1986
! Exemption from basic custom duty has been provided on certain goods by omitting
them from notification no.50/2017-Customs dated 30.06.2017
! Notifications which granted exemption to all items of machinery, instruments,
appliances, components or auxiliary equipment for initial setting up of solar power
generation project or facility, goods imported for organizing FIFA under 17-world cup,
2017, tags or labels or printed bags etc have been rescinded.
! Agriculture Infrastructure and Development Cess (AIDC) will be imposed on import of
certain items and will be effective from 02.02.2021 to finance the improvement of
agriculture infrastructure and other development expenditure.
! Social welfare surcharge is being exempted on value of AIDC imposed on gold and
silver and so these items would attract social welfare surcharge only on value plus basic
27customs duty.
! Some changes are made pertaining to anti-dumping duty to provide for provisional
assessment in cases of anti-circumvention investigation. Further, on some specified
items, it is being temporarily revoked. Also, it is provided that final findings are to be
issued by the designated authority, in review cases, at least three months prior to expiry
of anti-dumping duty under review.
The Central Excise Act, 1944
! New tariff items have been inserted in chapter 24 of the Act which consists of rate of
duties on tobacco, cigarattes and substitutes and accordingly, tariff rate of 81% shall
be levied with effect from 01.01.2022
! There have been change in rates in case of chapter 27 which mentions about
petroleum oils, motor spirit, crude, oil obtained from bituminous minerals, light diesel
oil, superior kerosene oil, aviation turbine fuel etc
! An agricultural infrastructure and development cess as an additional duty of excise
has been proposed on Petrol and High speed diesel at the rate of Rs.2.5 per litre on
motor spirit (petrol) and at the rate of Rs. 4 per litre on high speed diesel..
Goods and Service Tax Law
CGST Act, 2017: Central Goods and Service Tax Act, 2017
Section 7: A new clause is being inserted retrospectively with effect from 1st July, 2017 so as
to ensure levy of tax on activities or transactions involving supply of goods or services by any
person, other than an individual to its members or constituents or vice-versa for cash,
deferred payment or other valuable consideration .
Section 16: Input tax credit on invoice or debit note may be availed only when details of such
28invoice or debit note have been furnished by the supplier in statement of outward supplies
and such details have been communicated to the recipient of such invoice or debit note.
Section 35(5): This Section was pertaining to the requirement to get the annual accounts
audited and submission of reconciliation statement. This mandatory requirement to get the
accounts audited and submission of reconciliation statement has now been omitted.
Section 44: This section pertains to the requirement of furnishing the annual return. As
section 35(5) pertaining to audit has been omitted, section 44 has been amended to mention
that the persons who were earlier required to file their annual returns shall now furnish the
same which may include a self-certified reconciliation statement, reconciling the value of
supplies declared in the return furnished for the financial year with the audited financial
statement for every financial year electronically within such time and manner as may be
prescribed. This shall not apply to Central government or state government or local authority
whose accounts are subject to audit by the Comptroller and auditor general of India.
Section 50: This section pertains to interest on delayed payment of tax and is amended
retrospectively and accordingly interest will be charged only on net cash liability with effect
from 1st July, 2017
Section 75: Self assessed tax shall include the tax payable in respect of outward supplies, the
details of which have been furnished under section 37 that deals with GSTR-1 returns, but not
included in the return furnished under section 39 which deals with GSTR-3B returns.
Section 107: In certain cases, the proper officer may detain or seize goods or conveyances
and shall issue a notice specifying the tax and penalty payable and thereafter pass an order for
payment of the same. As per the amendment made, no appeal shall be made for any order
passed by the proper officer unless a sum equal to twenty-five percent of penalty has been
paid by the appellant.
Section 129&130: The proceedings under section 129 relating to detention, seizure, and
release of goods and conveyances in transit have been delinked from proceedings under
section 130 that deals with confiscation of goods or conveyances and levy of penalty.
29IGST Act, 2017: Integrated Goods and Services Tax Act, 2017
Section 16: It has been amended to provide that:
1. A supply shall be considered as a zero rated supply to a Special Economic Zone
developer or a Special Economic Zone unit only when the said supply is for
authorized operations,
2. It shall restrict the zero rated supply on payment of integrated tax only to a notified
class of taxpayers or notified supplies of goods or services
3. It shall link the foreign exchange remittance in case of export of goods with refund.
A summary of the tax provisions have been attached herewith as Annexure II.
30VI. OTHER ACTS
The Companies Act, 2013
! Definition of Small Companies under The Companies Act 2013 amended by
increasing their thresholds for paid up capital from “not exceeding INR 50 Lakh” to
“not exceeding INR 2 Crore” and turnover from “not exceeding INR 2 Crore” to “not
exceeding INR 20 Crore”.
! One Person Companies (OPCs) would be allowed to grow without any restrictions on
paid up capital and turnover, can convert into any other type of company at any time,
the residency limit for an Indian citizen to set up an OPC is reduced from 182 days to
120 days and Non Resident Indians (NRIs) are also permitted to incorporate OPCs in
India. These measures shall benefit Start-ups and Innovators.
! MCA Version 3.0: To ensure faster resolution of cases, NCLT framework will be
strengthened, e-Courts system shall be implemented and alternate methods of debt
resolution and special framework for MSMEs shall be introduced.
A detailed summary of the same has been provided herewith as Annexure III.
Miscellaneous
! An Asset Reconstruction Company Limited and Asset Management Company would
be set up to consolidate and take over the existing stressed debt of public sector banks
and then manage and dispose of the assets to Alternate Investment Funds and other
potential investors for eventual value realization.
! To improve credit discipline while continuing to protect the interest of small
borrowers, for NBFCs with minimum asset size of INR 100 crores, the minimum loan
size eligible for debt recovery under the SARFAESI Act, 2002 is proposed to be
reduced from the existing level of INR 50 lakhs to INR 20 lakhs.
31VII. ANNEXURES
Annexure I
Sr. Chapter Tariff Item Description of Sector Rate of Proposed
No No. Goods Duty Rate of
(before) Duty
1 28 2803 00 10 Carbon blacks Chemicals 5% 7.5%
2 39 All tariff items- Builders ware of Plastic 10% 15%
3925 plastic not Items
elsewhere specified
or included
3 70 All tariff items- Safety glass Automobile 10% 15%
7007 consisting of parts
toughened
(tempered or
laminated glass)
4 71 71049090 Cut and Polished Gems and 10% 15%
Synthetic Stones, Jewellery
including cut and sector
polished cubic
zirconia
5 84 84143000 Compressors of a Electronic 12.5% 15%
kind used in sector
refrigerating
6 84 All tariff items Air compressors Electronic 12.5% 15%
841440 mounted on a sector
wheeled chassis for
towing
7 84 All tariff items Gas compressors Electronic 7.5% 15%
32841480 sector
8 85 85049090/8544300 Printed circuit Electronic 10% 15%
0/850110 to board assembly of sector
850153/85364100 charger or adapter,
and 85364900/8537 parts of electrical
lighting and
signaling, ignition
wiring sets and
other wiring sets,
electric motors,
relays, boards,
panels, consoles etc
9 90 90318000 Other instruments, Electronic 7.5% 15%
appliances and sector
machines for
measuring or
checking
instruments,
appliances and
machines not
specified or
included elsewhere
in this chapter,
profile projectors.
10 90 903289-all tariff Electronic Electronic 10% 15%
items automatic sector
regulators
11 91 91040000 Instrumental panel Automobile 10% 15%
clocks and clocks parts
of similar type for
vehicles, aircraft,
spacecraft or
vessels.
33Annexure II
34Annexure III
Existing definition under Companies Act, Changes proposed in Union Budget 2021
2013 for Small Company for definition of Small Company
“Small company" means a company, other It is proposed to revise definition of Small
than a public company,— Company under Companies Act, 2013, by
increasing thresholds; for paid up capital
(i) paid-up share capital of which does not from “not exceed fifty lakh rupees” to “not
exceed fifty lakh rupees or such higher exceed two crore rupees” and for turnover
amount as may be prescribed which shall not from ““not exceed two crore rupees” to “not
be more than ten crore rupees]; and exceed twenty crore rupees”.
(ii) turnover of which as per profit and loss This will benefit more than two lakh
account for the immediately preceding Companies in easing their compliance
financial year does not exceed two crore requirements.
rupees or such higher amount as may be
prescribed which shall not be more than one
hundred crore rupees
Provided that nothing in this clause shall
apply to—
(A) a holding company or a subsidiary
company;
(B) a company registered under section 8; or
(C) a company or body corporate governed
by any special Act;
Existing provisions under Companies Act, Changes proposed in Union Budget 2021
2013 for One Person Company for One Person Company
Only a natural person who is an Indian Incentivize the incorporation of One Person
citizen and resident in India- Company by reducing the residency limit for
an Indian Citizen to set up a One Person
(a) shall be eligible to incorporate a One Company from one hundred and eighty two
Person Company; days (182 days) to one hundred and twenty
days (120 days) and also allow Non-Resident
(b) shall be a nominee for the sole member of Indians to incorporate One Person Company
a One Person Company. in India.
[Explanation For the purposes of this rule, Also it is proposed to allow One Person
35the term "resident in India" means a person Company to grow without any restrictions on
who has stayed in India for a period of not Paid up capital and turnover, allowing their
less than one hundred and eighty two days conversion into any other type of Company at
(182 days) during the immediately preceding any time.
financial year.
Where the paid up share capital of a One
Person Company exceeds fifty lakh rupees
and its average annual turnover during the
*relevant period exceeds two crore rupees, it
shall cease to be entitled to continue as a One
Person Company.
Such One Person Company shall be required
to convert itself, within six months of the
date on which its paid up share capital is
increased beyond fifty lakh rupees or the last
day of the relevant period during which its
average annual turnover exceeds two crore
rupees as the case may be, into either a
private company with minimum of two
members and two directors or a public
company with at least of seven members and
three directors in accordance with the
provisions of Section 18 of the Companies
Act, 2013.
*Explanation.-For the purposes of this rule,-
"relevant period" means the period of
immediately preceding three consecutive
financial years.
36Chokshi Group is located at:
• Mumbai
• Delhi
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• Bengaluru
• Chennai
• Kolkata
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Highlights is not a substitute for such professional advice or services, and it should not be
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Whilst every effort has been made to ensure the accuracy of the information contained in
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