The fiscal deficit has reached a four-year low of Rs 5.26 lakh crore or 35% of budget expectations.

The fiscal deficit has reached a four-year low of Rs 5.26 lakh crore or 35% of budget expectations

At the end of the first half of FY22, the central government’s fiscal deficit fell to a four-year low of Rs 5.26 lakh crore, or 35 percent of the budget predictions, thanks to strong tax revenues.

The fiscal deficit was Rs 9.1 lakh crore, or 114.8 percent of budget forecasts, at the same point last year.

According to data released Friday, the government collected more than 60% of the planned revenue receipts in the first six months of the fiscal year ending in September, the highest H1 collection ever.

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The government’s strong financial position is likely to keep bond yields low and allow the government to spend freely to help the economy recover.

Revenues nearly quadrupled to Rs 10.8 lakh crore in the first six months of this fiscal year, beating a 10% increase in expenditure and helping to reduce the budget deficit. The current fiscal year’s first-half fiscal deficit is even smaller than the pre-covid period of Rs. 6.5 lakh crore in H1 FY2020.

“Despite a dimming of the favourable base, the government of India’s gross tax receipts increased by 50% in September 2021, owing to solid advance taxes and the formalisation of the economy,” Aditi Nayar, ICRA’s chief economist, stated.

Tax receipts were Rs 9.2 lakh crore, or 60% of BE, while non-tax receipts were Rs 1.6 lakh crore, or 66% of BE.

With corporation tax, central goods and services tax, customs and excise duty collections exceeding half of the FY2022 BE in H1 FY2022, and rising vaccinations likely to boost confidence and spending in H2 FY2022, gross tax revenues could exceed the FY2022 Budget Estimate (BE) by at least Rs 2 lakh crore, according to Nayar. “A solid tax collection is gradually allowing the government to enhance expenditures by increasing expenditure,” India Ratings’ D K Pant and Paras Jasrai said.

In 1HFY22, revenue spending increased by 6.33 percent over FY21 and 7.35 percent over FY20. It was worth Rs 13.96 lakh crore, or 47.7% of BE. Capex increased to Rs 2.29 lakh crore, accounting for 41.4 percent of BE. The total outlay was Rs 16.26 lakh crore, or 46.7 percent of BE.

Special provision for the full value of consideration in certain cases.

“At the end of September 2021, the government still had an INR1.81 trillion cash surplus with the RBI (end-March 2021: INR1.82 trillion). With such a large cash surplus at the Reserve Bank of India, the government is in a good position to either increase spending or cut market borrowing “Pant and Jasrai agreed.

“In FY2022, we predict the Government of India’s fiscal deficit to be Rs. 13.8-14.8 trillion, or 6.0-6.5 percent of GDP, as opposed to the budgeted Rs. 15.1 trillion,” Nayar added.

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Certicom Updates

1. Income Tax: Infosys recognizes the ongoing challenges faced by some users and has engaged with more than 1,200 taxpayers directly to better understand their concerns. The company is focused on rapidly resolving these challenges while working closely with the Chartered Accountant community.

2. ITAT Mumbai has held that minimizing tax liabilities through lawful means is not illegal. The Assessing Officer cannot disregard a transaction just because it results in a tax advantage to the assessee. In the matter of Michael E Desa. Minimizations of the tax liability, as long as it is through legitimate tax planning and without using colourable devices, is not illegal at all,

3. CBDT releases ITR 6 Schema Changes for AY 2021-22

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4. CBIC has asked field offices to draw up an action plan so that no case of GST evasion is pending investigation beyond one year. In instruction to field formations, the CBIC has also asked GST officers to speed up investigation and issue show-cause notices in evasion cases, so that enough time is left with adjudicating authority to pass orders.

5. FSSAI: Wef 1.10.21, mentioning of FSSAI Registration no. on bills, cash memos etc. is mandatory in the case of food businesses.

6. ICAI Members who are entitled to vote at a Polling Booth in India but have gone abroad before 31st August 2021 and are unable to return to India may now exercise their vote (to be held on 3rd & 4th December 2021) by applying for Postal Voting Facility.

One Person Company Annual Filing- Due Dates!

E-Form AOC-4: Within 180 Days of the close of Financial Year. [Reference: Section 137(1) of Companies Act, 2013]

  • Eg. F.Y. 2020-21: The due date for Form AOC-4 shall be 27th September 2021. If we count 180 days from 1st April 2021.

Are you a freelancer? Key points to know about GST payment

E-Form MGT-7: Within 60 days from the date of AGM. [Reference: Section 92(4) of Companies Act, 2013]

  • Eg.: F.Y. 2020-21, If AGM is on 30/09/2021 then the due date of Form MGT-7 would be 28th November 2021. As we know, OPC does not require to hold AGM, yet the due date for filing shall be 60 days from the completion of 6 months from the end of the Financial Year, which means the due date shall be 28th November 2021.

The Finance Ministry distributes Rs 13,386 crore to 25 states as an RLB award.

The Finance Ministry distributes Rs 13,386 crore to 25 states as an RLB award.

On Tuesday, the Finance Ministry said that it has allocated Rs 13,386 crore to 25 states for grants to rural local bodies (RLBs).

RLBs get tethered funding to improve two services: sanitation and maintaining open-defecation-free (ODF) status, as well as drinking water supply, rainfall harvesting, and water recycling.

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“The Ministry of Finance’s Department of Expenditure issued a sum of Rs 13,385.70 crore to 25 States on Monday for giving funds to Rural Local Bodies,” the ministry said in a statement.

This is the first instalment of Tied grants for the fiscal year 2021-22. The grants were distributed in accordance with the 15th Finance Commission’s recommendations.

FSDC meeting on September 3; to assess the economy and financial industry.

Tied grants are intended to ensure that rural local governments have access to additional money beyond the monies granted by the Centre and states for sanitation and drinking water under Centrally Sponsored Schemes.

The states are obligated to deliver the grants to rural local governments within 10 working days, and the grants must be released with interest.

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