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.

Income Tax Payment in Advance – Schedule & Operating Model!

Income Tax Payment in Advance – Schedule & Operating Model

Advance tax means income tax should be paid in advance instead of lump sum payment at year-end.
Advance Tax should be calculated by estimating the current year income then applying tax rates.

TDS/ TCS & MAT credit shall be deducted to arrive at Advance Tax Liab.

Adv. Tax payments have to be made in instalments as per due dates as follows:-

  • 15% of Tax Liab. – 15 June (PY)
  • 45% of Tax Liab. – 15 Sept (PY)
  • 75% of Tax Liab. – 15 Dec (PY)
  • 100% of Tax Liab. – 15 Mar (PY)

Note: Tax Paid up to 31st Mar (PY) is treated as advance tax.

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Who Shall Pay Adv. Tax?

The advance tax applies to all taxpayers whether salaried or in business.

If your total tax liability >= Rs 10,000/- in a PY, you have to pay advance tax.

If Assessee opts for S-44AD/ 44ADA (Presumptive PGBP) then the due date of Advance Tax is 15th Mar (PY) [only 1 Installment].

Resident Sr citizens (>=60y age) who do not run a business, are exempt from paying advance tax.

How do I make an advance tax payment?

Advance tax payment is made using Challan 280 just like any other regular tax payment. You may read our detailed article on online payment of income tax.

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Consequences of Delay Payment/ Short payment?

S-234C- Interest for deferment of Advance Tax Installments. No Interest if the assessee has paid adv. Tax up to 12% in 1st Installment, up to 36% in 2nd Installment.

S-234B – Interest imposed for short payment of advance tax. (Not applicable if assessee paid 90% or more of Adv. Tax payable)

Note: If there is a change in Income due to Processing of Return u/s 143(1) or Assessment, then tax as per 143(1)/ Assessed Tax shall be taken instead of tax as per ROI. (Applicable for S-234B)

For further clarification, please refer to the link below:-https://www.incometaxindia.gov.in/tutorials/31.%20provisions%20on%20pymt%20of%20adv.%20tax.pdf

Should I opt for Composition Scheme under GST for FY 2020-21 ??

Form GST CMP – 02 is required to avail the process of filing under the Composition Scheme for the YR 2020-21.

Eligibility Criteria

Who can avail this Composition scheme:-

  • Assesses who do not want an ITC Credit & having aggregate turnover (at PAN level) below Rs. 1.5 Crore in the previous financial year can apply to the above scheme

Process –

  • To Apply on the GST Portal for the composition scheme for the financial year, 2020-21
  • Businesses or Individuals being already in composition scheme in the previous financial year are not required to re-apply for composition again for FY 2020-2021.
  • FORM GST CMP-02 for the application up needs to be filed on or before 31st March 2020 on the common portal.

Navigate on the GST Portal is as follows:

  • Log-in>Services > Registration > Application to opt for Composition
  • Levy>filing form GST CMP-02>file application under DSC/EVC.
  • A composition scheme will be available w.e.f. 1st April 2020. to the taxpayer once the application is done on the portal.

Transition:-

For the compliance till date, taxpayers as regular assesses in the  previous financial year & opting-in composition scheme for 2020-21 must file ITC-03 for reversal of ITC credit on stocks of Inputs, semi-finished goods and finished goods as per records within a period as prescribed.

Return /Payment

Businesses opting for composition shall file FORM GST CMP-08 quarterly & are required to pay GST.

They are also required to file GSTR-4 annually.

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