Budget is visionary, will boost Make in India & Atmanirbhar Bharat plans

In the sophomore year of a paperless budget, honorable Finance Minister rolled out the Union Budget 2022 amid vast expectations from India Inc. and abiding to strengthen the sankalp of nation first, strong Infrastructure, promoting Atmanirbhar Bharat, good governance, opportunities for youth, women empowerment along with inclusive development among others.

Christened as blueprint to steer the economy over the Amrit Kaal for next 25 years, Union budget proposed in the Lok Sabha has assured to be an impetus for growth, bolster sharp rebound, bring back ardor in the economy while being in consonance with vison for India @100 as set-out by the Prime Minister during Independence Day address.

Indirect tax policy, in continuation with the trend of last few budgets, has been focused to promote three main agendas – bolstering domestic manufacturing, reviewing tax effects and compliance processes, and plugging evasion. Albeit high expectations and varied challenges faced since its introduction, FM duly recognized the persistent efforts and guidance of GST council to fulfil the cherished dream of India as one market- one tax.  In its current anatomy, GST law has developed as fully technology driven progressive tax regime.

At full capacity, technology solutions have the potential to address various issues such as identification of players within shadow economy, reduction in level of informal activity, operational revolutionization and efficient interaction between taxpayers and tax authorities thereby improving taxpayer morale and restoring trust in the system. Putting ease of doing business and tax automation at the forefront, GST reform has paved the way from front which is visible through buoyancy in GST revenues.

Government has worked to augment revenue base by proposing amendments in the interest of the taxpayers such as introduction of necessary amendments in GST provisions to do-way with two-way communication process in filing of GST returns, time extension for availing ITC, reporting of credit notes issued during a financial year and rectification of error in GSTR-1/ GSTR-3B. Furthermore, the budget has allowed transfer of amount available in e-cash ledger of a registered person to the e-cash ledger of a distinct person, introduced standard interest rate of 18 per cent for delayed tax payments as well as proposed retrospective amendment for levy of interest on input tax credit wrongly availed and utilized.

In line with Commerce Secretary's announcement, prior to Union Budget, the Finance Minister has announced revamping of SEZ laws by replacing existing legislation with a new legislation. Automation and ease of doing business being key objectives, it has been proposed that SEZs would be completely automated with partnership with Customs Administration through ICEGATE portal. While detailed roadmap for implementation is yet to be seen, these changes would go long way in boosting Indian economy and making India a competitive market for exports globally.

Customs administration has reinvented itself over the years through liberalized procedures and infusion of technology. In line with past two budgets, the Finance Minister has now proposed to do away with over 350 exemption entries, phasing out concessional rates in capital goods as well as project import scheme which would be critical in providing much needed push to India's pursuit in ease of doing business as well as a boost to 'Make in India' and 'Atmanirbhar Bharat' initiatives. Along with domestic capacity creation and enhancing ease of doing business, reforms under Customs would also act as enabler for other policy initiatives such as PLIs and phased manufacturing.

Overall, Union Budget 2022 seems to be a visionary and simplified budget showcasing the long term focus of the government to take India @75 to India@100 with tweaking of GST provisions and rejigging of Customs duty structure to further boost the ease of doing business, make in India and Atmanirbhar Bharat policy initiatives.

While the new measures introduced under Indirect taxes showcase that overnment has heard and tended to industry expectations, however, there is still a long way to go to further smoothen the roadblocks under GST. It is now to be seen how unaddressed issues are countered in the upcoming meetings by GST council.

Disclaimer: Krishan Arora, and Karan Kakkar are Partners at  Grant Thornton Bharat LLP.

Contributed by: Devika Dixit (Associate Director), Pragya Sharma (Associate Director) and Vasu Aggarwal (Assistant Manager) at Grant Thornton Bharat LLP. Views are personal