Relevant Extracts | Memorandum Explaining Provisions of the Finance Bill, 2021
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Memorandum Explaining Provisions
of the Finance Bill, 2021
(Relevant Extracts)
** ** **
EXCISE
Note:
- “Basic Excise Duty” means the excise duty set forth in the Fourth Schedule to the Central Excise Act, 1944.
- “Road and Infrastructure Cess” means the additional duty of central excise levied under section 112 of the Finance Act, 2018.
- “Special Additional Excise Duty” means a duty of excise levied under section 147 of the Finance Act, 2002.
- “NCCD” means National Calamity Contingency Duty levied under Finance Act, 2001, as a duty of excise on specified goods at rates specified in seventh schedule to Finance Act, 2001
- Clause Nos. in square brackets [ ] indicate the relevant clause of the Finance Bill, 2021.
- Amendments carried out through the Finance Bill, 2021 come into effect on the date of its enactment, unless otherwise specified.
I. AMENDMENT IN THE FOURTH SCHEDULE
| S.No. | Amendment | Clause [ ] of the Finance Bill, 2021 |
| 1. | Amendment in Fourth Schedule made by Notification No. 08/2019-CE (T) dated 31.12.2019 shall be made effective w.e.f. 01.01.2020, retrospectively. | [98] |
| 2. | New tariff items [2404 11 00] and [2404 19 00] inserted in Chapter 24 in the fourth Schedule of the Central Excise Act, 1944 accordance with upcoming Harmonised System 2022 Nomenclature and to prescribe tariff rate of 81% on these tariff items with effect from 01.01.2022. | [96 (ii)] |
II. Retrospective amendment in Chapter 27 of the Fourth Sche-dule to the Central Excise Act, 1944.
| No. | Amendment | Clause of the Finance Bill, 2021 |
| 1. | (i) It is proposed to specify correct IS “17076” against the tariff item 27101249 and made effective from 01.01.2020, retrospectively. | [97(i)] |
| 2. | (ii) It is proposed that tariff rate of 14%+ Rs. 15.00 per litre against tariff item 2710 20 10 and 2710 20 20 may be prescribed and made effective from 01.01.2020, retrospectively. | [97(ii) and 97 (iii)] |
III. Amendment in Chapter 27 of the Fourth Schedule to the Central Excise Act, 1944.
Tariff items 2709 10 00, 2709 20 00, and the entries are being substituted relating thereto as under: [to be made effective from 01.04.2021] [Clause [96(i)] of the Finance Bill, 2021]
| Tariff Item | Description of goods | Unit | Rate of duty |
| 2709 | Petroleum oils and oils obtained from bituminous minerals, crude | ||
| 2709 00 10 | petroleum crude | Kg. | Nil |
| 2709 00 20 | other | Kg. | ….. |
IV. IMPOSITION OF AGRICULTURE INFRASTRUCTURE AND DEVELOPMENT CESS (AIDC) ON PETROL AND DIESEL
An Agriculture Infrastructure and Development Cess (AIDC) as an additional duty of excise has been proposed on Petrol and High speed diesel vide Clause [116] of the Finance Bill, 2021. This cess shall be used to finance the improvement of agriculture infrastructure and other development expenditure. The details of the cess are as under:
| S. No. | Commodity | Rate of AIDC [Clause [116] of the Finance Bill, 2021]* |
| 1 | Motor spirit commonly known as petrol | Rs. 2.5 per litre |
| 2 | High speed diesel | Rs. 4 per litre |
*Will come into effect immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931.
V. CHANGE IN EFFECTIVE RATE OF BASIC EXCISE DUTY AND SPECIAL ADDITIONAL EXCISE DUTY ON PETROL AND DIESEL [to be effective from 02.02.2021]
Consequent to imposition of AIDC, the Basic Excise Duty (BED) and Special Additional Excise Duty (SAED) on Petrol and High-speed diesel is being reduced so that consumer does not have to bear any additional burden on account of imposition of AIDC. The revised duty structure on petrol and HSD shall be as follows.
| A | Item | BED (Rs/Ltr) | SAED (Rs/Ltr) | AIDC (Rs/Ltr) |
| 1 | Petrol (unbranded) | 1.4 | 11 | 2.5 |
| 2 | Petrol (branded) | 2.6 | 11 | 2.5 |
| 3 | High speed diesel (unbranded) | 1.8 | 8 | 4 |
| 4 | High speed diesel (branded) | 4.2 | 8 | 4 |
VI. EXEMPTIONS FOR M-15, E-20 AND OTHER BLENDED FUELS
| S. No. | Amendment to central excise notifications |
| 1. | Exemptions from cesses and surcharges on the lines of other blended fuels (like E-5 and E-10) if these blended fuels are made of duty paid inputs |
VII. Amendments in the Schedule VII of the Finance Act, 2001 (NCCD Schedule)
| 1. | New tariff items [2404 11 00] and [2404 19 00] inserted in accordance with upcoming HS 2022 Nomenclature and prescribe NCCD of 25% on these tariff items with effect from 01.01.2022. |
Goods and Services Tax
Note:
- CGST Act, 2017 means Central Goods and Services Tax Act, 2017
- IGST Act, 2017 means Integrated Goods and Services Tax Act, 2017
Amendments carried out in the Finance Bill, 2021 will come into effect from the date when the same will be notified, as far as possible, concurrently with the corresponding amendments to the similar Acts passed by the States and Union territories with Legislature.
I. AMENDMENTS IN THE CGST ACT, 2017:
| S. No. | Amendment | Clause of the Finance Bill, 2021 |
| 1. | A new clause (aa) in sub-section (1) of Section 7 of the CGST Act is being inserted, retrospectively with effect from the 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. | [99] |
| 2. | A new clause (aa) to sub-section (2) of the section 16 of the CGST Act is being inserted to provide that input tax credit on invoice or debit note may be availed only when the details of such invoice or debit note have been furnished | [100] |
| by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note. | ||
| 3. | Sub-section (5) of section 35 of the CGST Act is being omitted so as to remove the mandatory requirement of getting annual accounts audited and reconciliation statement submitted by specified professional. | [101] |
| 4. | Section 44 of the CGST Act is being substituted so as to remove the mandatory requirement of furnishing a reconciliation statement duly audited by specified professional and to provide for filing of the annual return on self-certification basis. It further provides for the Commissioner to exempt a class of taxpayers from the requirement of filing the annual return. | [102] |
| 5. | Section 50 of the CGST Act is being amended, retrospectively, to substitute the proviso to sub-section (1) so as to charge interest on net cash liability with effect from the 1st July, 2017. | [103] |
| 6. | Section 74 of the CGST Act is being amended so as make seizure and confiscation of goods and conveyances in transit a separate proceeding from recovery of tax. | [104] |
| 7. | An explanation to sub-section (12) of section 75 of the CGST Act is being inserted to clarify that “self-assessed tax” shall include the tax payable in respect of outward supplies, the details of which have been furnished under section 37, but not included in the return furnished under section 39. | [105] |
| 8. | Section 83 of the CGST Act is being amended so as to provide that provisional attachment shall remain valid for the entire period starting from the initiation of any proceeding under Chapter XII, Chapter XIV or Chapter XV till the expiry of a period of one year from the date of order made thereunder. | [106] |
| 9. | A proviso to sub-section (6) of section 107 of the CGST Act is being inserted to provide that no appeal shall be filed against an order made under sub-section (3) of section 129, unless a sum equal to twenty-five per cent of penalty has been paid by the appellant. | [107] |
| 10. | Section 129 of the CGST Act is being amended to delink the proceedings under that section relating to detention, seizure and release of goods and conveyances in transit, from the proceedings under section 130 relating to confiscation of goods or conveyances and levy of penalty. | [108] |
| 11. | Section 130 of the CGST Act is being amended to delink the proceedings under that section relating to confiscation of goods or conveyances and levy of penalty from the proceedings under section 129 relating to detention, seizure and release of goods and conveyances in transit. | [109] |
| 12. | Section 151 of the CGST Act is being substituted to empower the jurisdictional commissioner to call for information from any person relating to any matter dealt with in connection with the Act. | [110] |
| 13. | Section 152 of the CGST Act is being amended so as to provide that no information obtained under sections 150 and 151 shall be used for the purposes of any proceedings under the Act without giving an opportunity of being heard to the person concerned. | [111] |
| 14. | Section 168 of the CGST Act is being amended to enable the jurisdictional commissioner to exercise powers under section 151 to call for information. | [112] |
| 15. | Consequent to the amendment in section 7 of the CGST Act paragraph 7 of Schedule II to the CGST Act is being omitted retrospectively, with effect from the 1st July, 2017. | [113] |
II. AMENDMENTS IN THE IGST ACT, 2017:
| S. No. | Amendment | Clause of the Finance Bill, 2021 |
| 1. | Section 16 of the IGST Act is being amended so as to:
(i) zero rate the supply of goods or services to a Special Economic Zone developer or a Special Economic Zone unit only when the said supply is for authorised operations; (ii) restrict the zero-rated supply on payment of integrated tax only to a notified class of taxpayers or notified supplies of goods or services; and (iii) link the foreign exchange remittance in case of export of goods with refund. |
[114] |
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