Robust kickoff to FY22 marred by anxieties over Covid resurgence

Last week, a lot of good news came on the economic front. The Goods and Services Tax (GST) collection exceeded Rs 1.23 trillion in March 2021, an increase of 27 per cent over March 2020. Exports touched $34 billion last month, powered by robust demand abroad, an increase of 58 per cent year-on-year (YoY). Imports also rose over $48 billion, an increase of 58 per cent YoY. Auto companies reported over 100 per cent growth in sales over the same month last year. These numbers are impressive despite a very low base of last March when seven days of economic activity was lost due to the lockdown and the pandemic had already started affecting growth.
 

There was plenty of action on the regulatory front too. The Finance Act, 2021 came into effect last Monday. The Commerce Ministry extended the Foreign Trade Policy 2015-20 till end-September this year. The Finance Ministry brought many new changes in the administration of GST. Sections 108 to 123 of the Finance Act, 2021 will come into effect from a date to be notified later. So, the legislative changes in the Central GST Act, 2017 (CGST Act) and Integrated GST Act, 2017 (IGST Act) will not come into effect immediately. To that extent, status quo prevails.
 

Sections 88 to 107 (except Section 95(i)) of the Finance Act, 2021 relating to the changes in the Customs and Central Excise laws have come into effect from March 28. These include provisions relating to filing bill of entry before arrival of conveyance, limiting the validity of exemption notifications, time limit for completing investigations, disposal of seized goods, confiscation of export goods, amendment of bill of entry and shipping bill, common customs electronic portal, some punitive provisions and so on.
 

With the extension of the Foreign Trade Policy 2015-20 by six months, the required amendments have been made in the Foreign Trade Procedures 2015-20 too. The Finance Ministry also amended relevant notifications extending IGST exemption on imports under advance authorisation, Export Promotion Capital Goods (EPCG) authorisation and those by Export Oriented Units (EOU). Specified items of copper and aluminium have been brought under compulsory pre-import registration under the Non-Ferrous Metal Import Monitoring System (NFMIMS). Implementation of track and trace system for export of drugs and pharmaceuticals has been postponed till April 1, 2022.
 

Under the GST laws, e-invoicing is now mandatory for taxpayers with an aggregate turnover of Rs 50 crore and above.

Exporters and suppliers of specified items have to now adopt 8-digit classification. Others, with turnover above Rs 5 crore have to adopt a 6-digit classification. Taxpayers opting-in for composition scheme for 2021-22, must file form GST ITC-03 for reversal of input tax credit on the stock of inputs, semi-finished goods and finished goods available with them within 60 days from the date of opting-in. The waiver of penalty for not mentioning QR Code in e-invoice has been extended from March 31 to June 30.
 

Overall, the financial year 2021-22 has started well, except that the anxieties due to the spread of coronavirus in India and abroad have increased. Hopefully, they too shall pass.
 

Email: tncrajagopalan@gmail.com