Finance Minister Nirmala Sitharaman, while presenting Union Budget 2021 quoted Rabindranath Tagore and said that ‘faith is the bird that feels the light and sings when the dawn is still dark’. As another union budget announce ment is fast approach ing, the market and the citizens continue to keep the faith and await budget announcements with bated breath, in the shadow of another wave of the pandemic.

GST Amnesty Scheme

As far as Goods and Services Tax (GST) related amendments are concerned, the announcements had been subdued given the role played by the GST council, by periodic issuance of notifications and circulars. It is laudable the way the government has been engaging in public consultations to proactively address the concerns of businesses at large. While several issues have been addressed, there are still myriad issues that need expeditious resolution, both from the GST and customs standpoint. 

On the ‘ease of doing business’ front, Indian tax legislations continue to pull the overall rankings down given the complexities that continue to exist. For instance, something as basic as the updation of the director’s details in the GST portal periodically. While it may seem simple, the administrative machinery required by the business to manage end-to-end GST compliances is significant.

Relaxation in ITC eligibility

Another area under the GST law that requires profound consideration is the conditions/restrictions on availment and utilisation of Input tax credits (ITC) under Sections 16 and 17 of the Central Goods and Services Tax Act, 2017 read along with relevant rules.

Further, the law appears to encroach upon the eligibility of ITC not only for non-payment of tax but also for nonpayment of consideration to the supplier, which is the basis of the commercial understanding between the parties.

GST Appellate Tribunal

On the assessment/litigation front, the GST Appellate Tribunal is the need of the hour to save the High Court from engaging in routine GST litigations. The Government should also consider centralised adjudication of all open assessments of a taxpayer to avoid divergent positions adopted across locations by different officers, along with standardisation of the practice and procedures to be followed for audit, investigation or recovery.

Customs' Expectations

From a customs standpoint, the Manufacturing and Other Operation in Warehouse Regulation (MOOWR) had been relaunched, providing ease of compliance as compared to Export Oriented Units (EOUs) which enjoy almost similar benefits. However, the industry expects the budget to allow a one-time option to transition EOUs into MOOWR units without any duty implications.

It is also expected that the benefit of depreciation on capital goods (CG) while computing duty liability on the removal of CG from MOOWR units, is allowed. Further, the other major lacunae in MOOWR is the administrative hassle in discharging liability of customs duty saved on inputs, with each clearance. A comparatively easier mechanism of repayment of duty on periodical intervals could make the scheme procedurally easier and contain less time, effort and transaction costs.

Importantly, while the FM had announced the introduction of a new SEZ bill in the last budget, expeditious introduction of the bill (DESH) and new Foreign Trade Policy will give impetus to investments from within and outside the country, which have been kept on hold now.