Tariff amendment: retrospective validation of a prior Fourth Schedule change and insertion of new harmonised tariff items with prescribed duty. The document amends the Fourth Schedule: a prior notification amending the Schedule is made effective retrospectively from the start of the stated year; new tariff items are inserted in Chapter 24 to align with the upcoming Harmonised System nomenclature and a prescribed tariff rate is imposed on those items effective from the commencement of the new nomenclature year.
Retrospective tariff amendment clarifies classification and prescribes increased excise duty rates effective retrospectively from budget measures. Retrospective amendments to Chapter 27 of the Fourth Schedule to the Central Excise Act correct the Indian Standard for tariff item 27101249 to IS 17076 and prescribe a combined ad valorem and specific per litre excise duty for tariff items 2710 20 10 and 2710 20 20, all effective from 01.01.2020, as proposed in the Finance Bill, 2021.
Tariff amendment revises Chapter 27 classifications for petroleum oils, altering excise duty treatment effective next fiscal year. Amendment substitutes entries in Chapter 27 of the Fourth Schedule to the Central Excise Act, 1944 revising tariff items for petroleum oils: petroleum crude is classified under tariff item 2709 00 10 assessed per kilogram with a nil excise duty, and a substituted entry for other petroleum oils appears under 2709 00 20 assessed per kilogram with the duty entry not specified in the extract; the amendment is linked to the Finance Bill and is stated to take effect from the next fiscal year.
Agriculture Infrastructure and Development Cess on petrol and diesel imposed for agriculture infrastructure funding, effective immediately. An additional duty of excise, the Agriculture Infrastructure and Development Cess, is proposed on motor spirit (petrol) and high speed diesel by the Finance Bill, 2021 to finance agriculture infrastructure and related development expenditure. The proposal sets fixed per litre cess rates for each fuel and declares the levy effective immediately through the provisional tax collection mechanism, thereby earmarking cess proceeds for agriculture infrastructure and development spending.
Excise duty adjustment: reductions in basic and special additional excise duties offset the new AIDC to protect consumers. A new AIDC on petrol and high speed diesel takes effect from 02.02.2021, with concurrent reductions in Basic Excise Duty and Special Additional Excise Duty so consumers do not face additional burden. Revised per litre compositions: petrol unbranded BED 1.4, SAED 11, AIDC 2.5; petrol branded BED 2.6, SAED 11, AIDC 2.5; diesel unbranded BED 1.8, SAED 8, AIDC 4; diesel branded BED 4.2, SAED 8, AIDC 4.
Exemptions for blended fuels: cesses and surcharges waived for M-15 and E-20 where inputs are duty paid. Exemptions align excise cesses and surcharges for M-15 and E-20 with existing treatment for lower blends, provided the blended fuels are produced from duty-paid inputs; amendments to central excise notifications extend tax relief to higher-percentage blends on the same eligibility condition tied to the duty status of upstream inputs.
NCCD on newly inserted tobacco tariff items imposed under the finance measure, becoming chargeable upon HS 2022 implementation. Two new tariff items, inserted to align with the HS 2022 nomenclature, are added to Schedule VII of the Finance Act, 2001 and made subject to National Calamity Contingent Duty; the prescribed NCCD rate applies to these tariff entries with effect from the implementation date of HS 2022.
Commencement of GST amendments: Finance Bill measures effective on notification and aligned with state enactments. Amendments to the Goods and Services Tax framework introduced in the Finance Bill, 2021 will come into effect only when they are notified, and, insofar as practicable, will be notified concurrently with corresponding amendments enacted by States and Union Territories having legislatures; the Bill treats the CGST Act, 2017 and the IGST Act, 2017 as the governing central and integrated GST enactments.
CGST amendments tighten taxation of related party supplies and revise returns, credit, interest, enforcement and appeal rules. Finance Bill, 2021 amends the CGST Act to: tax supplies between non individuals and members retrospectively; limit input tax credit to supplier reported outward supplies; replace mandatory audited reconciliation and account audits with self certified annual returns; charge interest on net cash liability retrospectively; separate seizure/confiscation from tax recovery; make provisional attachment valid through proceedings and one year after order; condition certain appeals on payment of part of penalty; clarify self assessed tax includes outward supplies omitted from returns; expand information calling powers while preserving a hearing requirement.
Zero-rating of supplies to SEZs limited to authorised operations; zero-rating on payment restricted to notified taxpayers, refund linked to forex. Amendments narrow zero-rated supplies to Special Economic Zone developers or units to transactions for authorised operations; restrict zero-rating on payment of integrated tax to notified classes of taxpayers or notified supplies; and connect export refund entitlement to actual foreign exchange remittance, thereby conditioning refunds on realization documentation.
Refund entitlement for unutilised input tax credit limited to credits from input goods under inverted duty structure. The document contrasts two high court approaches to refund of unutilised input tax credit under an inverted duty structure: one holding that Net ITC for refund must include credits on inputs and input services and striking down a rule excluding input services as ultra vires; the other upholding the proviso that limits refund to credit accumulated because tax on input goods exceeds tax on output supplies, finding an amended rule that excludes input services to be intra vires and a valid legislative classification.
Advance Ruling System can reduce tax litigation and provide binding certainty for taxpayers, urging reform and institutional strengthening. Recommend comprehensive reform of the Advance Ruling regime to reduce tax litigation by improving AAR capacity and timeliness, lowering the high resident eligibility threshold, and creating an institutional council modeled on Swedish and New Zealand systems so advance rulings become a practicable, binding, and transparent mechanism to provide tax certainty and narrow further challenges.
Supersession of regulations: new Transportation of Goods rules clarify governing instrument and resolve prior regulatory confusion. CBIC issued the Transportation of Goods (Through Foreign Territory), Regulations, 2020, expressly superseding the 1965 Regulations; prior notifications had temporarily purported to supersede and then restore the 1965 Regulations, creating stakeholder confusion about governing instruments until the 2020 regulations clarified the supersession.
Retrospective GST amendments change exemption and levy rules and bar refunds on paid GST in specified goods. Amendments give retrospective effect to changes in GST treatment for specified goods: fishmeal exemption is limited with no refunds for paid GST; reduced levy treatment for certain pulley and wheel parts used in agricultural machinery is applied retrospectively, also without refunds; and refunds of accumulated compensation cess credit on tobacco products arising from an inverted duty structure are disallowed retrospectively.
Removal of difficulties orders extended under GST compensation law to allow continued issuance for an additional statutory period. Amendment to Section 14 of the Goods and Services Tax (Compensation to States) Act, 2017 expands the temporal scope for issuing removal of difficulties orders, enabling the grant of such orders for an additional two-year period and thereby extending authority to issue orders until five years from the Act's commencement.
Removal of difficulties orders extended to permit issuance beyond the original timeframe, enabling continued administrative corrections. The UTGST Act is amended by modifying Section 26 to extend the statutory authority to issue removal of difficulties orders, permitting continuation of those orders beyond the Act's initial transitional window and thereby lengthening the period during which administrative corrections and clarifications may be made under the Act.
Extension of removal of difficulties orders: continuation permitted for two years under amended IGST Act provision. The amendment to Section 25 extends the authority to issue removal of difficulties orders for an additional two years, allowing such orders to be made up to five years from the date of commencement of the IGST Act, thereby prolonging the administrative mechanism to address implementation issues.
Composition scheme exclusions expanded, affecting service suppliers and inter state service supplies and tightening input tax credit rules. Amendments revise the definition of Union territory, narrow the composition scheme to exclude specified categories of service supplies, delink debit note date from invoice date for input tax credit, prescribe manner and time limits for transitional credit, and strengthen registration, procedural and enforcement provisions including cancellation and revocation rules, invoice issuance for services, removal of TDS certificate obligations, and enhanced penalties and cognizable treatment for fraudulent availment of input tax credit.
Excise duty increase and higher NCCD rates on tobacco products raise tax incidence and apply immediately. Amendment increases excise and NCCD rates for specified tobacco and tobacco substitute tariff items in the Seventh Schedule to the Finance Act, 2001, listing revised unit and ad valorem rates by tariff heading and measurement unit. The changes take effect on enactment and are applied immediately under the Provisional Collection of Taxes Act, 1931.
Anti-circumvention measures expanded to enable investigations into circumvention of anti-dumping and countervailing duties. Amendments broaden Anti-Dumping Rules to strengthen anti-circumvention measures and clarify investigation scope for dumping that injures domestic industry; corresponding changes add an explicit investigatory mechanism in Countervailing Duty Rules to address circumvention of countervailing duties and clarify procedural scope. The instrument also revokes specified anti-dumping duties on purified terephthalic acid originating from certain trading partners.
Related-person tests broadened to include relatives' concerns and donor-threshold triggers, expanding scrutiny over non-profit transactions. Section 355 defines terms governing registered non-profit organisations and related actors, including anonymous donation, approval, donation, commercial ... Summary
Related-person tests broadened to include relatives' concerns and donor-threshold triggers, expanding scrutiny over non-profit transactions.
Section 355 defines terms governing registered non-profit organisations and related actors, including anonymous donation, approval, donation, commercial activity, registration, registered non-profit organisation, related person, relative, residual income, specified asset, specified person, specified provision, substantial interest and value. The definitions establish donor-based related-person thresholds, treat fee-for-service activities as commercial activity irrespective of income application, set a twenty-percent threshold for substantial interest in companies and concerns, and attribute specified assets based on acquisition source and timing, with certain carve-outs and cross-references to other Act provisions.
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