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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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Social Welfare Surcharge exemption withdrawn; notification amended to remove specified tariff entries in certain chapters.
Exemption from the Social Welfare Surcharge previously applicable to specified imported goods is being withdrawn by amendment to the governing customs notification, which omits certain table entries so those goods no longer attract the earlier surcharge exemption.
News Bills
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Social Welfare Surcharge exemption on specified imported goods announced, covering foodstuffs, stone products and complete commercial vehicles.
Social Welfare Surcharge is exempted on a specified list of imported goods identified by HS codes and descriptions, including dairy products (whey, cheese), live plants, nuts (almonds, walnuts), cereals (wheat, maize), chewing gum, infant food preparations, various forms of orange juice, selected marble and calcareous stone products (tiles, blocks, monumental stone), and all commercial vehicles (including electric vehicles) imported as completely built units.
News Bills
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Customs tariff amendments tighten concession eligibility and harmonise BCD entries while removing redundant provisions.
Amendments to customs tariff notifications revise BCD entries by omitting redundant listings, consolidating inconsistent tariff provisions, and narrowing ambiguous item scope so concessions apply only to intended end uses. Procedural and eligibility changes include imposing an actual user condition on a bamboo import concession, aligning technical conditions for satellite testing equipment and scientific instruments, clarifying assistive device coverage for disabled users, and removing the techno economic clearance requirement for a fertilizer renovation concessional BCD.
News Bills
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Health cess on imported medical devices imposes an additional customs duty, excluding BCD exempt items and manufacturing inputs.
A Health Cess is proposed as an ad valorem customs duty on imported medical devices (HS headings 9018-9022) measured by import value under the Customs Act; export promotion scrips cannot be used for payment. Devices exempt from basic customs duty and inputs/parts used in manufacture are exempt from the Cess, and proceeds are to fund health infrastructure.
News Bills
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Customs duty exemptions withdrawn as obsolete; several notifications rescinded or consolidated into updated customs notifications.
Several earlier customs duty exemption notifications are being withdrawn as no longer relevant, including exemptions for Commonwealth Games imports, power-project imports, Advance Customs Clearance Permit imports, SAARC preferential trade, goods produced in Nepal, wool/woollen fabrics and paper money by humanitarian entities, preferential tariff items, and water-supply projects under Project Imports; certain entries have been merged or superseded and some exemptions are now available through notification No. 50/2017-Customs.
News Bills
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BCD exemption withdrawal removes concessional customs treatment for numerous listed import goods, restoring standard basic customs duty.
Review under the Finance Bill 2020 withdraws concessional basic customs duty exemptions by omitting specified entries from Notification No. 50/2017-Customs, thereby removing concessional BCD treatment for a broad list of listed imports - including agricultural and food products, oils, sugars, raw materials, polymers, films, chemicals, specified machinery and project-tied imports - with several entries subject to quantitative caps or conditional provisos.
News Bills
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Customs duty revisions reshape tariffs to protect domestic manufacturing while exempting inputs and conditioning concessional rates.
Proposed revision of basic customs duty rates reallocates protection by increasing duties on finished consumer and automotive imports while reducing or exempting inputs and designated end-use materials to promote domestic manufacturing. Concessional rates and exemptions are conditional on specified end-uses and registrations, such as RNI registration for newsprint; electronic and mobile-phone components face staged duty increases with effective dates; defense-related imports by specified public sector undertakings are exempted subject to listed items.

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Review of concessional rates of BCD prescribed in notification no. 50/2017 - Customs dated 30.62017: The BCD exemption hitherto available on certain goods are being withdrawn by omitting following entries of notification No. 50/2017-Customs dated 30.6.2017.

3 February, 2020

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Budget 2020-21 + FINANCE BILL, 2020

S. No.

S. No. of Notification No 50/2017-customs

Description

1.

5

Tuna bait [0303]

2.

7

Goods upto an aggregate of ten thousand metric tonnes of total imports of Milk and cream, in powder, granules or other solid form in a financial year. [0402 10, 0402 21 00]

3.

7A

Whey, concentrated, evaporated or condensed, liquid or semi-solid [0404 10 10]

4.

7B

Other Whey [0404 90 00)

5.

8

Butter Ghee, Butter Oil [0405]

6.

9

Other cheese [0406 90 00)

7.

10

Pancreas (Products of animal origin, not elsewhere specified) (Chapter 5]

8.

11

Conch shell [0508 00]

9.

18

Bulbs or tubers, other live plants [0601 or 0602]

10.

36

All goods other than meslin or wheat [1001]

11.

38

Meslin [1001]

12.

40

Maize upto an aggregate of five lakh metric tonnes of total imports of such goods in a financial year [1005 90]

13.

47

Sugar beet seeds [1209 10 00)

14.

56

Edible oils [1508, 1512, 1513, 1514, 1515 or 1511 10]

15.

58

Refined vegetable oils of edible grade, in loose or bulk form (other than palm oil) [chapter 15]

16.

59

Vegetable oils of edible grade, in loose or bulk form (other than those specified against S. No. 58 and palm oil), imported for the manufacture of oil commonly known as “Vanaspati” or for refining.

Explanation. -The expression “Vegetable oil” means-

(a) in the case of cottonseed oil, oil having a free fatty acid content of at least 0.2%; and

(b) in the case of any other vegetable oil. oil with free fatty acid content of at least 0.5%. [15]

17.

68

Crude sunflower seed or safflower oil upto an aggregate of one lakh and fifty thousand metric tonnes of total imports of such goods in a financial year [1512 11]

18.

69

Crude sunflower seed or safflower oil other than those specified against S. No. 68 [1512 11]

19.

72

Refined rape, colza or mustard oil upto an aggregate of one lakh and fifty thousand metric tonnes of total imports of such goods in a financial year (1514 19 or 1514 99]

20.

78

Margarine, animal or vegetable oils of edible grade [1517 or 1518]

21.

83

Glycerol, crude; glycerol waters and glycerol lyes, (other than crude glycerin) [1520 00 00]

22.

88A

Raw Sugar upto an aggregate of three lakh metric tonnes of total imports of such goods. Provided that the import of raw sugar in physical form is completed within sixty (60) days from the date of issue Of the Tariff Rate Quota Allocation Certificate or license by Directorate General of Foreign Trade (DGFT) to the importer. Provided further that the importer shall convert the raw sugar into white/ refined sugar within a period, not exceeding thirty (30) days, from the date of filing of bill of entry or the date of entry inwards, whichever is later [1701]

23.

89

Dextrose Monohydrate [1702)

24.

92

Molasses resulting from extraction or refining of sugar [1703]

25.

93

Chewing gum whether or not sugar coated [1704 10 00]

26.

94

Food preparations, for infant use and put up for retail sale, of-

(i) goods of headings 0401 to 0404, containing cocoa calculated on a totally defatted basis, in a proportion by weight of 5% or more but less than 10%; or

(ii) flour, meal, starch or malt extract containing cocoa calculated on a totally defatted basis, in a proportion by weight of 40% or more but less than 50% [1806 90)

27.

95

Preparations for infant use put up for retail sale [1901 10]

28.

98

preserved potatoes [2004 10 00]

29.

99

Peanut Butter [2008 11 00]

30.

105

Wine, for use as sacramental wine [22]

31.

108

Angostura bitters [2208]

32.

113

Fin fish feed [2301 20, 2309 90 32, 2309 90 39]

33.

115

Dietary soya fibre [2304]

34.

148

Naphtha, when imported by Ratnagiri Gas and Power Private Limited (RGPPL), for use in generation of electricity in the power plants of Ratnagiri Gas and Power Private Limited (RGPPL) at Dabhol, District Ratnagiri, Maharashtra [2710]

35.

149

Naphtha, when imported for generation of electrical energy by a generating company as defined in section 2(28) of the Electricity Act, 2003 (36 of 2003) to supply electrical energy-or to engage in the business of supplying electrical energy [2701]

36.

152

Propane, Butane [2711 12 00, 2711 13 00]

37.

160

Electrical energy [ 2716 00 00]

38.

170

Phosphoric acid, for the manufacture of fertilizers(28]

39.

212

Japanese Encephalitis (JE) vaccine, imported by the Andhra Pradesh Government through UNICEF [30]

40.

220

Kyanite salts, in a form indicative of their use for manurial purpose [31]

41.

243

Isolated soya protein [3504]

42.

244

Colour positive unexposed cinematographic film in jumbo rolls and colour negative unexposed cinematographic film in rolls of 400 feet and 1000 feet [37]

43.

245

Instant print film [3701 20 00 or 3702]

44.

246

Cinematographic films, exposed but not developed [3704]

45.

247

Promotional material (like Trailers, making of film etc.) imported in the form of electronic promotion kits (EPK)/ beta cams (Any Chapter)

46.

263

The following polymers of ethylene, namely: -

(i) Cow density polyethylene (LDPE),

(ii) Linear low-density polyethylene (LLDPE),

(iii) High density polyethylene (HDPE),

(iv) Linear medium density polyethylene (LMDPE),

(v) Linear high-density polyethylene (LHDPE) [3901]

47.

264

All goods other than poly 'so-butylene [39021

48.

266

All goods [3903]

49.

274

Compostable polymer or bio-plastic used in the manufacture of bio degradable agro mulching films, nursery plantation pots and flower pots [3913 90 90]

50.

275

Water blocking tape for use in the manufacture of insulated Wires and cables falling under heading 8544 (except sub-heading 8544 11) [3919 90 90]

51.

278

Subbed polyester base, imported by M/s. Hindustan Photo Films Manufacturing Company Limited, Udhagamandalam for the manufacture of medical or industrial X-ray films and graphic art films [39201

52.

286

Patent leather [4114 20 10]

53.

287

Raw furskins [4301). tanned and dried furskins [4302]

54.

386

Lead bars. rods. profiles and wire [7806]

55.

388

Zinc tubes, pipes and tube or pipe fittings [7907]

56.

389

Tin plates, sheets and strip, of a thickness exceeding 0.2 mm; tin foil (whether or not printed or backed with paper, paperboard, plastics or similar backing materials), of a thickness (excluding any backing) not exceeding 0.2 mm; tin powders and flakes [8007]

57.

398

Parts and components of the goods specified in List 10 required for use in high voltage power transmission project (Any chapter]

58.

401

All items of equipment including machinery and rolling stock, procured by or on behalf of Delhi Metro Rail Corporation Ltd. for use in-

(i) Delhi MRTS Project Phase-I, and

(ii) Specified corridors of Delhi MRTS Project Phase-Il, comprising of the following, namely: -

(a) Vishwavidyalaya- Jahangirpuri;

(b) Central Secretariat-Qutab Minar (via All India Institute of Medical Sciences);

(c) Shahdara- Dilshad Garden;

(d) Indraprastha-New Ashok Nagar;

(e) Yamuna Bank-Anand Vihar-lnter State Bus Terminus; and

(f) Kirti Nagar-Mundka (along with operational Link to Shahdara- Rithala corridor) (Any Chapter)

59.

412

Goods specified in List 15 required for construction of roads [84 or any other chapter]

60.

447

The following goods required for manufacture of Optical disk drives (ODD), namely: -

(i) Pick up assembly

(ii) Digital signature procession integrated circuit

(iii) DC motor

(iv) LDO voltage regulator [84 or Any other Chapter]

61.

456

The following goods, namely: -

(a) Sprinklers and drip irrigation systems for agricultural and horticultural purposes;

(b) Micro Irrigation equipment [8424]

62.

457

Poultry incubators and brooders [8436 21 00]

63.

459

Parts for manufacture of printers falling under sub heading 8443 32 (except 8443 99 51, 8443 99 52, 8443 99 53) [8443]

64.

465

CD -Writers (8471]

65.

474

MP3 or MP4 or MPEG 4 player with or without radio or video reception facility [85]

66.

483

One set of pre-recorded cassettes accompanying books for learning languages and essential complement to such books, [85]

67.

484

Audio cassettes, if recorded with material from books, newspaper or magazines, for the blind [85]

68.

515

Colour television picture tubes for use in the manufacture of cathode ray televisions [8540 11]

 

 


Full Text:

Budget 2020-21 + FINANCE BILL, 2020

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Acts Income Tax