building a resilient and confident india...03 building a resilient and confident india direct tax...

Building a Resilient and Confident India

INDIA BUDGET 2021-22

Building a Resilient and Confident India Direct Tax 01-0701


DIRECT TAXat a glance



Non-Corporate Assessee Income tax basic exemption limit and slab rates

remain unchanged.

No exemption u/s 10(11) & 10(12) shall be available to interest income accrued on contribution made to provident fund exceeding H 2,50,000 in any previous year, on or after 01-04-2021 and computed in such manner as may be prescribed.

Resident Senior Citizens of the age of 75 years or above deriving only pension income in a specified bank and interest income only from such specified bank where pension income is received, have been exempted from filing return of income w.e.f. AY 2021-22. Such income shall be subject to TDS after allowing deduction under Chapter VIA and rebate u/s 87A based on declaration furnished to bank.

In view of Covid pandemic, Sec. 10(5) has been amended only for AY 2021-22 to provide exemption for cash allowance, being lower of H 36,000 per person or one third of the specified expenditure, in lieu of applicable LTC in the Block Year 2018-21. Specified expenditure refers to actual expenditure incurred during the period 12-10-2020 to 31-03-2021, by individual or member of the family on goods or services liable to GST @ 12% or above. Press release dated 29-10-2020 has now been enacted by above amendment.

Any sum received under a Unit Linked Insurance Policy/Policies issued on or after 01-02-2021 shall not be exempt u/s 10(10D), if annual premium/aggregate premium of such policies exceeds H 2.5 lacs in any of the Previous Years. The income on redemption of such policy will be taxable as capital gain at a concessional tax rate of 15% [u/s 111A] or 10% [u/s 112A] as applicable.

Time limit for sanction of loan from any financial institution extended from 31-03-2021 to 31-03-2022 for the purposes of claiming additional deduction of interest upto H 1.5 lacs on loan taken for affordable housing u/s 80EEA.

W.e.f. AY 2021-22, due date for filing return of income extended for following persons:

Partner of a firm liable to furnish report u/s 92E - from 31st October to 30th November and

Where Sec. 5A is applicable to Spouse (governed by Portuguese Civil Code, 1980) of a partner of a firm liable to Tax Audit - from 31st July to 31st October

Corporate Assessee Corporate Tax Rates remain unchanged @ 30%.

Tax rate for domestic companies having annual turnover or gross receipts ≤ H 400 Crs. in FY 2019-20 shall be 25%. Tax rate for Companies opting taxation u/s 115BAA or 115BAB remains unchanged at 22% and 15% respectively.

Sec. 44DB provides specified deduction [Sec. 32, 35D, 35DD & 35DDA] in case of business reorganisation of co-operative bank. The scope of Sec. 44DB is now proposed to be extended in case of conversion of a primary co-operative bank to a banking company. Necessary amendments has also been made in Sec. 47(vica) & (vicb) to exempt transfer of a capital asset and allotment of shares as a result of such conversion.

Sec. 72A allowing carry forward of losses and unabsorbed depreciation on amalgamation extended to amalgamation of all public sector companies with other public sector companies instead of only public sector company which is engaged in the business of operation of aircraft.

Sec. 72A also extended to amalgamation of an erstwhile public sector company with other companies after strategic disinvestment by the Government (where share purchase agreement under strategic disinvestment restricts immediate amalgamation). Post disinvestment, amalgamation must be carried out within 5 years from end of the previous year in which restriction of amalgamation in the agreement ends. However, accumulated losses and unabsorbed depreciation available to amalgamated company shall not be more than the amount at the time of strategic disinvestment.

Reconstruction or splitting up of a public sector company into separate companies shall be deemed to be demerger u/s 2(19AA), if the same has been made to transfer any asset of the demerged company and the resultant company is a public sector company on appointed date, subject to fulfillment of other conditions as may be notified by Central Government.



Sec. 115JB amended w.e.f. AY 2021-22 to provide that if income of any earlier year(s) is included in the books of accounts of current year on account of Advance Pricing Agreement u/s 92CC or Secondary Adjustment u/s 92CE, then the Book Profit of such earlier year(s) and tax payable thereon shall be re-computed by the AO in the current year if an application is made by the assessee. Further, period of 4 years for determining time limit u/s 154(7) shall be reckoned from the end of Financial Year in which such application is received by AO.

Sec. 115JB amended w.e.f. AY 2021-22 to align treatment of dividend income in case of foreign companies with that of capital gains on transfer of securities, interest, royalty and fee for technical services. Hence, net dividend income is to be reduced in cases where such dividend income is taxed at lower than MAT rate due to DTAA.

International Taxation and Transfer Pricing

Sec. 2(29A) inserted w.e.f. AY 2021-22 to define the expression ‘liable to tax’ to mean that there is a liability of tax on that person under the law of any country and will include a case where subsequent to imposition of such tax liability, exemption has been provided.

In order to make location in International Financial Services Centre (IFSC) more attractive, it is proposed to provide various incentives as under w.e.f. AY 2022-23:-

Sec. 9A(8A) inserted to provide that any or more of the conditions for eligible investment fund and its eligible fund manager shall not apply or shall apply with such modifications as may be specified by notification, if the fund manager is located in an IFSC and has commenced operations on or before 31-03-2024;

Sec. 10(4D) amended to provide exemption to a specified fund in respect of income specified therein to the extent such income is attributable to the investment division of an offshore banking unit located in an IFSC and which has commenced operation on or before 31-03-2024;

Sec. 10(4E) inserted to exempt any income accrued or arisen to, or received by a non-

resident as a result of transfer of non-deliverable forward contracts entered into with an offshore banking unit of an IFSC which commenced operations on or before 31-03-2024 and fulfils prescribed condition;

Sec. 10(4F) inserted to exempt any income of a non-resident by way of royalty on account of lease of an aircraft in a Previous Year paid by a unit of an IFSC, if the unit is eligible for deduction under Sec. 80LA for that Previous Year and has commenced operation on or before 31-03-2024;

Sec. 10(23FF) inserted to exempt any capital gains, arising or received by a non-resident, on account of transfer of share of a resident company by the resultant fund (fund established or incorporated in India, registered and regulated under SEBI and located in an IFSC which fulfils prescribed conditions) and such shares were transferred from the original fund (fund established or incorporated or registered outside India which fulfils prescribed conditions) to the resultant fund in relocation, if capital gains on such shares were not chargeable to tax had that relocation not taken place;

Sec. 47(viiac) inserted to provide that any transfer, in relocation, of a capital asset by the original fund to the resultant fund shall not be considered as transfer for capital gain tax purpose;

Sec. 47(viiad) inserted to provide that any transfer by a shareholder or unit holder or interest holder, in a relocation, of a capital asset being a share or unit or interest held by him in the original fund in consideration for the share or unit or interest in the resultant fund shall not be considered as transfer for capital gain tax purpose;

Sec. 80LA(1A) amended to provide that deduction under said section is also available to a unit of an IFSC if it is registered under the IFSC Authority Act, 2019 and thereby removing the earlier requirement of obtaining permission under any other relevant law;

Sec. 80LA(2)(d) inserted to provide that the income arising from transfer of an asset, being an aircraft or aircraft engine, which was leased by a unit of an IFSC to a



domestic company engaged in the business of operation of aircraft, before such transfer shall also be eligible for 100% deduction subject to condition that the unit has commenced operation on or before 31-03-2024;

Sec. 115AD amended to make the provisions of the said section applicable to investment division of an offshore banking unit in the same manner as it applied to specified fund;

Sec. 10(23FE) amended w.e.f. AY 2021-22 to rationalize the provisions relating to Sovereign Wealth Fund (SWF) and Pension Fund (PF) by proposing the following amendments:-

SWF/PF may invest in Category-I and Category-II Alternate Investment Fund (AIF) even if AIF invests upto 50% in non-eligible investments;

SWF/PF may also invest in the following subject to specified conditions being satisfied:

- Investment through domestic holding company which invest in minimum 75% eligible investments;

- Investments in NBFC – Infrastructure debt fund/Infrastructure finance company which lends minimum 90% to eligible entities;

Exemption to SWF/PF to be proportionate in case of less than 100% investments or lending. Further, in case, SWF/ PF has loans or borrowings for making investments in India, such fund shall not be eligible for exemption;

SWF/PF shall not participate in day to day operations of the investee;

PF to be eligible if PF is liable to tax but exemption from taxation for all its income has been provided by the foreign country under whose laws it is created or established;

Rules for computation of investment/ lending threshold shall be notified;

Sec. 89A inserted w.e.f. AY 2022-23 to provide relief and for addressing mismatch in taxation of income of specified person from overseas retirement fund maintained in a country (to be notified).

Sec. 196D amended w.e.f. 01-04-2021 to extend the benefit of lower rates as per respective Double Taxation Avoidance Agreement to Financial Institutional Investors in respect of withholding tax on income from securities as specified on furnishing of a valid Tax Residency Certificate.

Provisions relating to Equalisation Levy (2.0) amended retrospectively w.e.f. AY 2021-22:-

Sec. 163 of Finance Act, 2016 amended to exclude from the scope of ‘Equalisation Levy’, the consideration received/receivable in respect of Royalty or Fees for Technical Services income taxable in India. Corresponding amendment in Sec. 10(50) to clarify that exemption shall not be available in respect of such income.

Sec. 164 of Finance Act, 2016 amended to provide that online sale of goods/ online provision of services shall include one or more activities such as placing of order, acceptance of offer, acceptance of purchase order or payment of consideration.

Sec. 165A of Finance Act, 2016 amended to provide that for the purpose of charging Equalisation Levy, consideration received or receivable from e-commerce supply or services shall include consideration for sale of goods/ services irrespective of whether e-commerce operator owns such goods or provides or facilitates such services.

Sec. 10(50) amended to provide that the exemption shall be available in respect of income arising from any e-commerce supply or services made or provided or facilitated on or after 01-04-2020 instead of 01-04-2021.

Other Relevant Proposals Sec. 32 read with Sec. 2(11) amended w.e.f.

AY 2021-22 to exclude Goodwill from ambit of intangible assets on which depreciation is allowable. Sec. 55 also amended to provide that cost of acquisition of Goodwill would be the purchase price as reduced by the depreciation availed till AY 2020-21. Manner for computation of capital gain u/s 50 on such Goodwill shall be prescribed.

W.e.f. AY 2021-22, definition of ‘Slump sale’ u/s 2(42C) amended to include transfer of one



or more undertakings by any means including exchange, relinquishment etc. as provided in Sec. 2(47).

Threshold limit for Tax Audit u/s 44AB enhanced from H 5 Crs. to H 10 Crs. for person carrying on business, if his receipts and payments in cash during the year does not exceed 5% of total receipts and payments respectively.

W.e.f. AY 2021-22, employee’s contribution to provident, superannuation or any other welfare funds shall be allowed as deduction u/s 36(1)(va) only if it is deposited on or before the due date as specified under relevant laws. Benefit of such allowance on depositing within due date of filing return of income as provided in Sec. 43B has been done away with.

New procedure of reassessment prescribed by substituting present Sec. 147, 148, 149 & 151 with new provisions w.e.f. 01-04-2021. The major amendments, among others, includes the following

AO is now mandatorily required to have information either as per risk management strategy flagged by the Board or on the basis of objection raised by CAG for initiating any re-assessment proceedings u/s 147.

Sec. 149 amended to reduce timeline for issuing notice u/s 148 to a period of 3 years instead of 4 years/6 years in general cases. Further, time limit of 10 years has been prescribed if income escaping assessment, represented in the form of asset is likely to exceed H 50 lacs or more for the relevant year. Separate provisions of reopening till 16 years, where income in relation to asset located outside India has escaped assessment has been deleted.

Cases of Search u/s 132 or 132A, Survey u/s 133A, or requisition cases initiated or conducted, on or after 01-04-2021 shall now also be covered under re-assessment proceedings u/s 148. Sec. 153A & 153C has been amended so as to apply only in relation to search initiated u/s 132 or books of accounts requisitioned u/s 132A on or before 31-03-2021.

W.e.f. AY 2021-22, due date for filing belated and revised return of income for all assessees modified to 31st December from existing due

date of 31st March of the relevant Assessment Year.

W.e.f. 01-04-2021, time limit for issuing intimation u/s 143(1) has been reduced from 12 months to 9 months from the end of the FY in which return of income is furnished.

Sec. 143(1) has been expanded to make adjustment for increase in income

reported in tax audit report but not considered in computing total income and

make disallowance of deduction under any provisions of part C of Chapter VI-A if the return of income has been furnished beyond the due date specified u/s 139(1).

New Sec. 194Q has been inserted to provide for TDS @ 0.1% w.e.f. 01-07-2021 on purchase of goods of value or aggregate value exceeding H 50 lacs in a Previous Year by the buyer whose total sales/turnover from business exceed H 10 Crs. during the preceding year. Consequently, TCS provisions u/s 206C(1H) shall not be applicable on transactions subject to TDS u/s 194Q.

W.e.f. AY 2021-22, no interest u/s 234C on shortfall in advance tax due to under estimation of dividend income except deemed dividend referred in Sec. 2(22)(e) provided appropriate advance tax is paid in subsequent instalments.

Sec. 2(48) defining zero coupon bond amended to enable Infrastructure Debt Fund notified u/s 10(47) to issue such bonds. Income from such bonds not liable to TDS u/s 194A.

Exemption u/s 10(23C)(iiiad) & (iiiae) is available provided that the annual receipts of any exempt institution did not exceed H 1 Cr. In order to provide benefit to small trusts and institutions, it has been proposed that the exemption shall be available, if annual receipts of the person claiming exemption from all institutions specified in Sec.10(23C) (iiiad) & (iiiae) does not exceed H 5 Crs. in aggregate.

To avoid double counting while calculating application or accumulation of income in case of a charitable trust u/s 11 & 12 and institutions referred to in sub-clause (iiiad) & (iiiae) of clause in Sec.10(23C), among others, it has been proposed that :



Voluntary contributions for corpus shall be exempt, only if invested or deposited in prescribed modes maintained specifically for such corpus.

Application out of above voluntary contributions for corpus shall not be considered as application of income. If the above applied corpus is replenished out of income in subsequent year by way of investment or deposit in prescribed modes maintained specifically for corpus, same would be treated as application of income.

Application out of loans and borrowings to be allowed as application of income in the year of repayment if repayment is out of income of that year.

Calculation of income to be applied or accumulated during the year shall be made without set off of any excess application of income for earlier year.

Dividend distributed by a Special Purpose Vehicle to a business trust, being exempt u/s 10(23FC), excluded from purview of TDS u/s 194. Central Government authorized to notify other persons not liable to TDS on dividend received.

Safe harbour limit in respect of sale of residential unit by real estate developers u/s 43CA enhanced from 10% to 20% w.e.f. AY 2021-22, provided sale is made as part of first time allotment to any person during 12-11-2020 to 30-06-2021 and consideration does not exceed H 2 Crs. Safe harbour limit also enhanced in Sec. 56(2)(x) for providing benefit to the buyers. Press release dated 13-11-2020 has been enacted by above amendment.

Hitherto, Sec. 45(4) provided for capital gain on transfer of ‘capital asset’ at the time of dissolution or reconstitution of the firm, AOP or BOI. Now, Sec. 45(4) has been substituted w.e.f. AY 2021-22 to charge capital gain on distribution of capital asset which represents capital account balance. Further new Sec. 45(4A) has been inserted to charge capital gain also on transfer of money or any asset other than capital asset in excess of capital account balance. Further, while computing capital gain, capital account balance of the partner(s) shall exclude any revaluation or self-generated asset including goodwill.

Eligible start-up incorporated between 01-04-2016 to 31-03-2021 were eligible for Tax holiday u/s 80-IAC. Such period for incorporation has been extended by one more year to 31-03-2022. To incentivise investment in eligible start-up, time limit for capital gain exemption u/s 54GB has also been extended by one year from 31-03-2021 to 31-03-2022.

Tax holiday u/s 80-IBA to be available for affordable housing projects approved by the competent authority upto 31-03-2022 instead of 31-03-2021. Further, Sec. 80-IBA amended w.e.f. AY 2022-23 to expand its scope to cover affordable rental housing projects as well to be notified by CG.

Notice u/s 142(1) requiring furnishing of return of income or any information or production of documents issued by AO only can now be issued in automated manner by any income tax authority

W.e.f. 01-04-2021, time limit for issuing notice u/s 143(2) has been reduced from 6 months to 3 months from the end of the FY in which return of income is furnished. Time limit u/s 153 for completion of scrutiny assessment [u/s 143(3)] and best judgement assessment [u/s 144] for AY 2021-22 onwards reduced to 9 months from existing 12 months from the end of relevant Assessment Year.

W.e.f. 01-07-2021, for all assessees (excluding non-resident not having PE in India) having TDS and TCS of H 50,000 or more in each of two preceding previous years and not filed their return of income shall be subject to TDS/TCS rates being higher of 5% or twice the applicable TDS/TCS rate under newly inserted Sec. 206AB and Sec. 206CCA respectively. In case such assessee is not having PAN, TDS would be @20% as per Sec. 206AA.

Provisional attachment u/s 281B can be made by the AO also during the pendency of proceedings for imposition of penalty u/s 271AAD for false entry or entry omitted in the books where likely aggregate penalty exceeds H 2 Crs.

General and Administrative Hitherto, assessment and appellate proceedings

before CIT(Appeals) were under faceless



mechanism. Such scheme has been extended to appellate proceedings before Income Tax Appellate Tribunal (ITAT) as well. National Faceless Income-tax Appellate Tribunal Centre shall be set up. Wherever personal hearing is needed, it shall be done through video conferencing.

Income-Tax Settlement Commission (ITSC) is proposed to be discontinued w.e.f. 01-02-2021 and consequently, one or more Interim Boards is proposed to be constituted for settlement of pending applications. CG to notify a new scheme for settlement of pending applications by Interim Board to eliminate the interface between the Board and assessee to the extent technologically feasible.

Authority for Advance Ruling (AAR) shall be replaced by the ‘Board for Advance Rulings’ from a notified date. Unlike rulings pronounced by the AAR, the rulings by the Board for Advance Rulings shall not be binding on the applicant or the Department. Appeals can be filed both by the assessee and Department before HC.

Dispute Resolution Committee u/s 245MA constituted to resolve disputes, to reduce

or waive penalty and grant immunity from prosecution in case of small and medium taxpayers whose returned income is H 50 lacs or less and aggregate amount of variation proposed in the order is H 10 lacs or less. Same shall not apply to assessees in respect to whom order of detention, prosecution has been passed under specified laws or where such order pertains to search and survey cases.

Competent authority u/s 5(1) of Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 has now been appointed as the Adjudicating authority for Prohibition of Benami Property Transactions Act, 1988 [PBPT Act]. Time limit for passing order by Adjudicating authority has also been extended to 30-09-2021 where such time limit is expiring during the period from 01-07-2021 to 29-09-2021.

W.r.e.f. 01-06-2016, under Income Declaration Scheme, 2016, there shall be no interest granted to assessee on the refund amount.

Direct Tax Vivad se Vishwas Act, 2020 amended w.r.e.f. 17-03-2020 to exclude cases arising out of or pursuant to order passed by Settlement Commission from its ambit.

Building a Resilient and Confident India Indirect Tax 08-1208


INDIRECT TAXat a glance



Goods and Services TaxAmendments proposed in the Central Goods & Services Tax Act, 2017 (CGST Act) and Integrated Goods & Services Tax Act, 2017 (IGST Act)(Effective date to be notified coinciding with amendments in SGST Acts.)

Amendments relating to the definition of Supply (retrospectively w.e.f. 01-07-2017)

A person and its members or constituents to be deemed as two separate persons and the activities or transactions, by a person, other than an individual, to its members or constituents or vice-versa, for a consideration to be considered as supply. [Sec. 7(1)(aa)]

Supply of goods by any unincorporated association or body of persons to a member thereof to be omitted from Schedule II to give effect to the amendment in the definition of supply.

Amendment relating to Input Tax Credit (ITC) ITC in respect of an invoice or debit note

to be available only when the details of the invoice or debit note has been furnished by the supplier in their statement of outward supply (GSTR-1) and such details have been communicated to the recipient. [Sec. 16(2)(aa)]

Amendments relating to Annual Return and Reconciliation Statement

The mandatory requirement of getting annual accounts audited by a chartered accountant or a cost accountant proposed to be omitted. [Sec. 35(5)]

Annual Return may include a self-certified reconciliation statement, reconciling the value of supplies declared in the return furnished for the Financial Year, with the audited annual financial statement. [Sec. 44]

Departments of Central Government or a State Government or Local Authority, whose books of account are subject to audit by CAG or an auditor appointed for auditing the accounts of local authorities under any law for the time being in force, will not be required to furnish Annual Return. [Sec. 44]

Amendment in Interest Provision (retrospectively w.e.f. 01-07-2017)

The proviso to Section 50 to be amended retrospectively w.e.f. 01-07-2017 to charge interest only on that portion of the tax which is paid by debiting the Electronic Cash Ledger.

Amendments relating to assessments Amount of tax payable in respect of details of

outward supplies furnished in Form GSTR-1, but not furnished in Form GSTR-3B to be included in Self-assessed tax [Sec. 75(12)]

Government may attach provisionally, any property, including bank account, belonging to the taxable person or any person specified under Section 122(1A) after initiation of any proceeding under Chapter XII, Chapter XIV or Chapter XV of the CGST Act. [Sec. 83(1)]

Appeal against order specifying tax and penalty, issued in cases of detention or seizure of goods, to be filed only after prior payment of 25% of penalty by the appellant. [Sec. 107(6)]

Section 74 of the CGST Act to be amended to make detention and seizure of goods a separate proceeding from recovery of tax.

Amendments relating to detention, seizure and release of goods under Section 129 of the CGST Act

Goods detained to be released upon payment of penalty equal to 200% of the tax payable on such goods or in case of exempted goods 2% of the value of goods or H 25,000/-, whichever is less or upon furnishing a security equivalent to the amount payable in cases where the owner of the goods comes forward for payment of penalty.

Where the owner of the goods does not come forward for payment of penalty, goods detained to be released upon payment of penalty equal to 50% of the value of goods or 200% of the tax payable on such goods, whichever is higher or in case of exempted goods 5% of the value of goods or H 25,000/-, whichever is less or upon furnishing a security equivalent to the amount payable.



Time limits of 7 days from date of detention or seizure of goods specified for issuance of notice and 7 days from the date of service of notice specified for issuance of order.

Recovery Proceedings to be initiated on failure of payment of penalty - Where the person transporting any goods or the owner of such goods fails to pay the amount of penalty payable within 15 days from the date of receipt of the copy of the order, the goods or conveyance so detained or seized shall be liable to be sold or disposed of, to recover the amount of penalty payable.

The conveyance seized may also be released on payment of penalty specified above or one lakh rupees, whichever is less by the transporter.

Amendments relating to Confiscation of Goods Section 130 of the CGST Act to be amended

to delink the proceedings relating to confiscation of goods or conveyances from levy of penalty under Section 129 relating to detention, seizure and release of goods and conveyances in transit.

Other amendments in CGST Act The Commissioner or an officer authorised by

him is being empowered to direct any person to furnish information relating to any matter dealt with in this act, as may be specified therein. [Sec. 151]

Section 152 of the CGST Act to be amended to provide that no information obtained under Sections 150 and 151 shall be used for any proceedings under the Act without giving an opportunity of being heard to the person concerned.

Amendment in Section 16 of the IGST Act A supply of goods or services to a Special

Economic Zone developer or a Special Economic Zone unit shall be zero-rated only when the said supply is for authorised operations.

A registered person making zero rated supply shall be eligible to claim refund of unutilised input tax credit, subject to the condition that the registered person making such supply shall, in case of non-realisation

of sale proceeds, deposit the refund so received along with the applicable interest within 30 days after the expiry of the time limit prescribed under the Foreign Exchange Management Act, 1999 for receipt of foreign exchange remittances.

The Government may notify: (a) the class of persons who may make zero rated supply on payment of integrated tax and claim refund of the tax and, (b) a class of goods or services which may be exported on payment of integrated tax.

Central Excise (Non – GST Items) Amendments in the Fourth Schedule of the

Central Excise Act 1944 In Chapter 27, description of goods under

Tariff item 2709 (petroleum oils and oils obtained from bituminous minerals, crude) has been amended.

In the headings of Section IV and Chapter 24 shall be substituted with “Tobacco and manufactured tobacco substitutes; products, whether or not containing nicotine, intended for inhalation without combustion; other nicotine containing products intended for the intake of nicotine into the human body”.

Tariff item 2404 has been added in Chapter 24 for charging duty on the abovementioned tobacco items.

The Customs Act, 1962 [to be effective from the date of enactment of the Bill]:

Introduction of Common Customs Electronic Portal

CBIC empowered to notify a common portal to be called the Common Customs Electronic Portal for facilitating registration, filing of bill of entry, shipping bill, other documents and forms, payment of duty and for such other purposes as may be specified. [Sec. 154C]

Online facility shall now be made available to amend documents electronically through the customs automated system and to enable certain amendments on the common portal. [Sec. 149]



To enable service of order, summons, notice or any other communication under the said Act on the said common portal. [Sec. 153]

Validity for conditional exemption under customs restricted upto 31st day of March falling immediately after two years from the date of such exemption, unless otherwise specified. The period of two years for existing exemption in force as on the date on which the Finance Bill 2021 receives assent shall be reckoned from 01-02-2021. [Sec. 82]

Specific time lines provided for completion of inquiry or investigation culminating into issuance of show cause notice, being two years from the date of initiation of such audit, search, seizure or summons, which may further be extended by a period of one year. For computing time limit of two years, period of stay involved should be excluded. [Sec. 28BB]

Amendment proposed for mandatory filing of bill of entry in advance, i.e. before the day of arrival (including holidays) of conveyance.[Sec. 46]

CBIC empowered to provide different time limits for presentation of bill of entry in such cases, to ensure faster clearance. [Sec. 46]

Procedure proposed for disposal of seized gold upon application to Commissioner (Appeals) and to carry out various procedures in this regard. Commissioner (Appeals) empowered to discharge duties conferred or imposed on an officer of customs. [Sec. 110]

Amendment proposed for confiscation of goods which has entered for exportation under claim of remission or refund of any duty or tax on account of any contravention of the provisions of the Act [Sec. 113]

Penal provision proposed for fraudulent utilisation of input tax credit for discharging any duty or tax on goods entered for exportation under claim of refund with penalty upto five times of the refund claim [Sec. 114AC]

Inventories, photographs and lists certified by the Commissioner (Appeals) to be included under the definition of ‘documents’ which may be produced as an evidence. [Sec. 139]

Central Sales Tax Act, 1956 [to be effective from the date of enactment of the Bill]

Section 8(3)(b) of the Central Sales Tax Act, 1956 is proposed to be amended to restrict inter-state purchase of goods at concessional rate of 2% (against issue of Form ‘C’) in case where the registered person uses the said goods for manufacture or processing of goods for sale of specific goods i.e. petroleum crude, diesel, Motor spirit, natural gas, aviation turbine fuel] and alcoholic liquor]

The Customs Tariff Act, 1975 [to be effective from the date of enactment of the Bill]

Amendments introduced relating to Anti-dumping duty and Countervailing Duty to provide anti-absorption provisions and other safeguard measures

Procedural changes and other amendments made in Customs Tariff (Identification, Assessment and Collection of Countervailing Duty on Subsidised Articles and for Determination of Injury) Rules, 1995 & Custom Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on dumped Articles and for Determination of Injury) Rules, 1995 [to be effective from 02-02-2021]

Changes in Rates of Customs [to be effective from 02-02-2021]

Electronic and Mobile Phone Industry Withdrawal of few exemptions on parts of

chargers and sub-parts of mobiles.

The rate of Basic Custom Duty (in short ‘BCD’) on some parts of mobiles will change from ‘nil’ rate to 2.5%(w.e.f 01-04-2021)

Iron and Steel Reduction in BCD to 7.5% on primary/semi-

finished product of iron or non-alloy steel, flat and long product of iron or non-alloy, alloy steel and stainless steels

Exempting BCD on scrap of iron or steel for a period up to 31st March, 2022



Revoking Anti-Dumping Duty and Countervailing Duty on certain steel products for the period 02-02-2021 to 30-09-2021

Reducing BCD on copper waste and scrap from 5% to 2.5%

Textile Reduction in the BCD rates on caprolactam,

nylon chips and nylon fiber & yarn from 7.5% to 5%

Chemicals Reduction in BCD on Naphtha from 4% to

2.5%.

Gold and Silver Reduction in BCD on gold and silver products

Renewable Energy Increase in BCD on solar invertors from 5% to

20% and on solar lanterns from 5% to 15%.

Capital Equipment and Auto Parts Withdrawal of exemptions on tunnel boring

machine. Consequently it shall attract BCD of 7.5%; and its parts and components BCD of 2.5%

Increase in BCD on specified auto parts (other than Bicycle parts and components) from 10% to 15%

Others Products Increase in BCD on cotton from nil to 5% and

on raw silk and silk yarn from 10% to 15%.

Introduction of Agriculture Infrastructure and Development Cess (AIDC)

On imported goods [w.e.f 02.02.2021] Enabling provisions introduced for levy

of AIDC on imported goods at a rate not exceeding custom duty on said goods.

Exemption from AIDC granted to all items except specific goods including gold and silver

AIDC to be computed on the import value in the same manner as the value of goods for the purpose of custom duty - Exemption from AIDC granted where goods exempted from BCD

Social Welfare Surcharge (SWS) to be levied on AIDC, however exemption from SWS on AIDC granted to imports of gold and silver

Exemption to AIDC granted on goods availing exemptions under FTA, EOU and advance authorization scheme

On Petrol and High Speed diesel as additional duty of excise [w.e.f 02.02.2021]

Levy of AIDC at Rs. 2.5 per litre has been imposed on petrol and Rs. 4 per litre on diesel as an additional duty of excise

Basic Excise Duty and the Special Additional Excise Duty have been calibrated accordingly to ensure no additional burden on consumer


Building a Resilient and Confident India13

Contact usTo know more about Baker Tilly DHC, please visit www.bakertilly.in or any of our offices as mentioned below:

Corporate Office:701, Leela Business Park, Andheri Kurla Road, Andheri (E), Mumbai - 400 059, Tel: +91 (22) 6672 9999

Constantia, “B” Wing, 7th floor, 11, Dr. U.N. Brahmachari Street, Kolkata - 700 017, Tel: +91 (33) 4002 1485

Ahmedabad407-A, Pinnacle Business Park,Corporate Road, Prahlad Nagar,Ahmedabad – 380 015Tel: +91 (079) 4899 2768

BengaluruNo. 45, 1st Floor, 2nd Main, Sankey Road, (Above Indian Bank) Lower Palace Orchards,Bengaluru - 560 003Tel: +91 (80) 6454 2545/6454 2546

No. 202, 2nd Floor, Spearhead Towers, No. 50-56, Margosa Road, Malleswaram,Bengaluru – 560 055Tel. No: +91 (80) 2346 7914/15

Chennai5B, A Block, 5th Floor, Mena Kampala Arcade,New No 18 & 20, Thiagaraya Road, T. Nagar,Chennai – 600 017Tel: +91 (44) 2815 4192

GurugramDCT # 231, 2nd Floor, DLF City Court, Sikanderpur, Gurgaon - 122 002Tel.: +91 (124) 428 7244

Hyderabad1st Floor, Plot No. 47, Above Indian BankVittal Rao Nagar, Madhapur,Hyderabad – 500081Tel: +91 (40) 4200 7771/0

JaipurOffice No. 42-43, 6th Floor,Mahima Triniti, Swage Farm, New Sanganer RoadJaipur – 302 021Tel: +91 (0141) 2356 935

KolkataBagrodia Niket, 1st floor,19C, Sarat Bose Road,Kolkata – 700 020Tel: +91 (33) 4603 3014/16

Devarati, 1st Floor,8. Dr. Rajendra Road,Kolkata – 700 020Tel: +91 (33) 2474 6303+91 (33) 4037 2700

Mumbai42, Free Press House,Nariman Point,Mumbai – 400 021Tel: +91 (22) 2287 1099/807/808

7th Floor. 701 & 702, C- Wing,Sree Ramdev Commercial Complex,Kandivali (West), Mumbai – 400 067Tel: +91 (22) 2809 0752/56

New Delhi3rd floor, 52-B, Okhla Industrial Estate Phase III, New Delhi - 110 020Tel: +91 (11) 4711 9999

PuneOffice No.301, Third floor ,Lalwani Icon, Viman Nagar,Pune – 411 045Tel: +91 20 2661 3737

For more information or for any queries, write to us at [email protected]


Building a Resilient and Confident India14

DisclaimerThis publication is brought to you by Baker Tilly DHC Pvt. Ltd.

Baker Tilly DHC Pvt. Ltd. is an independent member of Baker Tilly International. Baker Tilly International Limited is an English Company. Baker Tilly International provides no professional services to clients. Each member firm is a separate and independent legal entity and each describes itself as such. Baker Tilly DHC Pvt. Ltd. is not Baker Tilly International’s agent and does not have the authority to bind Baker Tilly International or act on Baker Tilly International’s behalf. None of Baker Tilly International, Baker Tilly DHC Pvt. Ltd nor any other member firm has a right to exercise management control over any other member firm.

This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact Baker Tilly DHC Pvt. Ltd to discuss these matters in the context of your particular circumstances. Baker Tilly DHC Pvt. Ltd, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based.

building a resilient and confident india...03 building a resilient and confident india direct tax...

Documents