The Banking Sector Wants GST Relaxation in Budget 2022

The Banking Sector Wants GST Relaxation in Budget 2022

Expectations for the 2022 Budget: Different industries’ expectations of the government are coming to light ahead of Budget Day. It’s the same in the financial business. Finance Minister Nirmala Sitharaman, who will deliver the Union Budget 2022 on February 1, next week, has a long list of requests for the industry. The banking sector wants the government to pay attention to it during this year’s Budget session, in terms of tax relief and additional perks.

On February 1, when Sitharaman unveils the 256th Budget, it will be obvious whether the government will heed to their demands.

“With digital payments, the next focus should be on digital banking, as many of the accounts opened under the JAN DHAN YOJNA are inactive. On a larger scale, technology should assist the government in realising its goal of transforming India into a digital economy “On Budget 2022, Archana Elapavuluri, Founder of Pickright Technologies, said.

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“By diminishing the use of cash in economic transactions and ensuring people have access to improved financial services and credit, this reform is vital to improve the country’s overall economic efficiency,” she added.

The abolition of GST and TDS on financial services through business correspondents announced in the Union Budget 2022, according to Ram Shriram, founder of BharatATM, will provide seamless services.

“Gentle taxes for self-serviced digital clients has resulted in the growth and adoption of the digital payments sector,” he stated.

“To guarantee that the same benefits are available to residents who are less tech-savvy, our government could consider lowering the GST and TDS for financial inclusion services provided by Business Correspondent (BC) stores across India. The elimination of GST and TDS will assist the industry in lowering the cost of providing seamless financial services “Shriram contributed to the conversation.

Tax breaks and incentives for the banking industry are also likely, according to experts. “Incentives to the banking industry include reimbursement of specific costs or tax subsidies in the form of weighted deductions or 100% depreciation,” Divam Sharma, founder of Green Portfolio, a SEBI licenced portfolio management service provider, explained.

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The Reserve Bank of India (RBI) has established an internal fintech department to focus on the country’s rapidly changing financial sector.

Apart from GST waivers and tax exemptions, experts called for KYC regulations and an NPA perspective in the Budget, which might assist banks mitigate risks.

“To increase efficiency, the regulatory framework and implementation of electronic and video KYC onboarding of customers should be highlighted. To develop a CKYCR (Central KYC registry), a repository of consumer KYC information, technological advancements must be made “Alea Consulting’s founder and CEO, Deepak Bhawnani, stated.

“To increase efficiency, the regulatory framework and implementation of electronic and video KYC onboarding of customers should be highlighted. To develop a CKYCR (Central KYC registry), a repository of consumer KYC information, technological advancements must be made “Alea Consulting’s founder and CEO, Deepak Bhawnani, stated.

Budget forecasts include changes to the GST and the reduction of import tariffs.

Budget forecasts include changes to the GST and the reduction of import tariffs.

Everyone is looking forward to the Union budget 2022 on February 1st, as they are every year. This becomes even more critical in the context of the pandemic’s third wave.

There is no doubt that the changes suggested in the Budget will affect everyone in this country, whether they are wealthy or poor, employers or employees, sellers or consumers. The policies and framework enacted in the Budget serve as the economy’s road map for at least the next fiscal year.

India’s indirect taxation system is no exception. While changes to GST rates and procedures occur throughout the year as a result of GST Council meetings, changes to the statutes are only suggested through the Finance Bill, which is announced during the Parliament’s Budget session. Similarly, considerable tariff and non-tariff revisions to Customs and Central Excise rules are envisaged, which would undoubtedly have a significant impact on the growing urge for indigenous manufacturing towards a self-sufficient or Atmanirbharat economy.

Changes in the Goods and Services Tax that are expected

Despite the fact that the GST law has been in place in India for four years, there are a slew of concerns that need to be addressed, many of which have been highlighted by experts, economists, and industry insiders. Reforms that are in line with current economic challenges and scenarios are also essential.

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With the repeal of GST, it is envisaged that changes in the auto sector will be implemented. Compensation cess on the sale of two-wheelers, as well as a reduction in the tax rate from 28 percent to 18 percent. Because two-wheelers are widely used, particularly in rural regions, they should be taxed as efficiently as possible. Furthermore, in the light of the current epidemic, health insurance has become a must-have, and a premium drop from 18 percent to 5% will benefit the insurance business significantly. Further, as a long-standing demand of industry, particularly textiles and fertilisers, a provision allowing refund of input services in the event of an inverted duty structure may be on the Finance Minister’s agenda.

GST has recently been chastised for its onerous compliance requirements and tight timeframes. It is interesting to add that presently, any rectifications in GSTR-3B may only be performed by way of rectification in GSTR-3B of succeeding months, which eventually makes compliances laborious. As a result, an enabling clause allowing GSTR-3B amendment up to a particular point in time within the same month will bring relief to all Indian enterprises.

Also, the requirement set in the GST Act providing for six-month time limit for issuance of credit note needs to be reassessed in view of the demands raised by specific industries, particularly those dealing into educational and stationery products whose majority sales take place during the fourth quarter of a financial year or in case of long commercial disputes. Due to the restriction, tax adjustments on sales returns after September are impossible to pass on. As a result, this period should be extended at least until the annual return filing deadline.

In some cases, conflicting rulings by advanced ruling authorities and courts have resulted in ambiguity. The validity of input tax credit on CSR expenses is one such problem, where the words “in the course or furtherance of business” have been interpreted differently.

A second advance judgement has been issued on the question of GST responsibility for the use of common services by the head office and other branches/units. Such ambiguity is causing doubt on important topics and has become a source of frustration for enterprises with a presence across India. It’s past time for the Finance Bill to clearly define the scope of activities and put the matter to rest. Another related issue is the imposition of GST on mining lease royalty payments.

A second advance judgement has been issued on the question of GST responsibility for the use of common services by the head office and other branches/units. Such ambiguity is causing doubt on important topics and has become a source of frustration for enterprises with a presence across India. It’s past time for the Finance Bill to clearly define the scope of activities and put the matter to rest. Another related issue is the imposition of GST on mining lease royalty payments.

Budget 2022: Expected deductions and benefits for salaried workers

It is also envisaged that appropriate decisions on the establishment of the GST Appellate Tribunal will be made in the Budget, particularly in light of the high courts’ overburdening with GST-related matters. The Supreme Court has already ordered the government to begin steps toward establishing the authority, which has managed to elude the lawmakers’ objectives.

Changes in Customs that have been proposed

Aside from GST, adjustments are expected in the form of a reduction in the rate of duty on imported items. Basic Customs duty on copper ores and concentrates is scheduled to be decreased from 2.5 percent to nil. This will bring relief to the country’s iron and steel industry. Customs Spare parts used in the manufacture of medical equipment, which are now reeling under an inverted duty structure, should also have their duty decreased. Similarly, the rate of duty on crucial raw materials used by aluminium manufacturers is likely to reduce. Gold’s basic customs charge is also scheduled to be decreased from 7.5 percent to 4%.

The current ICEGATE, DGFT, and SEZ online portals should be combined into a shared digital platform that provides all services to users under a single canopy to make customs compliance easier. In the coming budget, a strategy to meet this expectation could be established.

In light of this, it will be fascinating to see how the Budget unfolds and sets the tone for the future of the sector. It should try to strike a balance between focusing on gross collections and striving to revive the economy, which is on the mend but is undoubtedly still suffering from the pandemic’s negative impacts.

In GSTR-3B, GST Portal has added a new interest calculator feature.

In GSTR-3B, GST Portal has added a new interest calculator feature.

A new interest calculator functionality is being launched in GSTR-3B as a convenience measure for taxpayers and to aid taxpayers in doing a correct self-assessment. This feature will arrive in the system as computed interest based on the taxpayers’ declared tax liability amounts. The interest due, if any, on the tax liability declared in the GSTR-3B for a given tax period will be calculated after the GSTR-3B has been filed. The interest values estimated by the system will be auto-populated in Table-5.1 of the GSTR-3B for the following tax period. The facility would work in a similar way to how late fees for GSTR-3Bs filed after the Due Date are collected and posted in the next period’s GSTR-3B.

This feature provides a user-friendly interface that tells taxpayers about the method used by the system to calculate interest values for each tax-head. This feature also helps taxpayers calculate interest correctly for any past-due liability declared in the GSTR-3B for the current tax period, based on the information they provide on the portal.

This feature will make it even easier to file a GST return, lowering the compliance burden for taxpayers even more.

This functionality will be communicated to taxpayers as soon as it becomes accessible on the GST Portal.