UNION BUDGET

[Jasbir Uppal]

                                                                  UNION BUDGET

INDIA'S FIRST BUDGET

The Budget was first introduced in India on April 7, 1860 when Scottish economist and politician James Wilson from East India Company presented it to the British Crown. Independent India's first budget was presented on November 26, 1947 by the then Finance Minister R K Shanmukham Chetty.
Definition of 'Union Budget'

Definition: According to Article 112 of the Indian Constitution, the Union Budget of a year, also referred to as the annual financial statement, is a statement of the estimated receipts and expenditure of the government for that particular year.

Description: Union Budget keeps the account of the government's finances for the fiscal year that runs from 1st April to 31st March. Union Budget is classified into Revenue Budget and Capital Budget.

Revenue budget includes the government's revenue receipts and expenditure. There are two kinds of revenue receipts - tax and non-tax revenue. Revenue expenditure is the expenditure incurred on day to day functioning of the government and on various services offered to citizens. If revenue expenditure exceeds revenue receipts, the government incurs a revenue deficit.

Capital Budget includes capital receipts and payments of the government. Loans from public, foreign governments and RBI form a major part of the government's capital receipts. Capital expenditure is the expenditure on development of machinery, equipment, building, health facilities, education etc. Fiscal deficit is incurred when the government's total expenditure exceeds its total revenue.

MOST NUMBER OF BUDGETS

Former Prime Minister Moraraji Desai holds the record of presenting the most number of budgets in the history of the country. He had presented 10 budgets during his stint as finance minister during 1962-69, followed by P Chidambaram (9), Pranab Mukherjee (8), Yashwant Sinha (8) and Manmohan Singh (6). 

PAPERLESS 

Covid-19 pandemic turned the Budget for 2021-22 was paperless - a first in Independent India.

Finance Minister Nirmala Sitharaman Tuesday 1^st Feb. 2022  presented the Union Budget 2022-23 in Parliament. In five big infrastructure projects, the government has proposed expanding highways in the country by 25,000 kilometres, allocating ₹ 60,000 crore to the Nal se Jal scheme, five river link projects across various states, an additional ₹ 48,000 crore in the PM housing scheme, and boosting infrastructure development in the North East.

Highlights of Budget 2022

Income Tax

1	Provision for filing ‘Updated Income Tax returns’ within 2 years from end of         relevant AY.
2	Reduced AMT rates for Co-operatives from 18.5% to 15%.
3	Reduced surcharge for Co-operatives with total income of 1cr to 10Cr
4	Tax relief for persons with disability: Allow annuity payment to differently abled dependents when parents attaining age of 60 years
5	Deduction for National Pension Scheme for State Government employees u.s 80CCC made at par with Central Govt. Report this ad
6	Start-ups established before 31.03.2023 (earlier – 31.03.2022; now extended by 1 year) will be provided tax breaks Report this ad
7	Last date for commencement of manufacturing for claiming lower tax regime under Section 115BAB to be 31.03.2024 (earlier 31.03.2023
8	Virtual digital assets (Cryptocurrency): Income from transfer of virtual digital assets to be taxed at 30% No deduction for expenses other than cost of acquisition; No set off of losses TDS @ 1% on consideration above specific threshold Report this ad Gift to be taxed u.s 56(2)(x)
9	No repetitive appeals for common question of laws
10	Off-shore banking units/ IFSC income to be provided exemptions
11	Surcharge of certain AOPs to be capped at 15%
12	Surcharge on Long Term Capital Gains on any assets to be capped at 15%
13	Health and education cess not allowable as business expenditure u/s 37
14	No set off of losses against undisclosed income detected during search.

Key-highlights of GST Proposals in Finance Bill 2022

1	Time-limit to avail ITC u/s 16(4) extended till 30th November of next year from 30th September.
2	Additional Condition for availment of ITC u/s 16(2)- ITC can be availed only if the same is not restricted in GSTR-2B.
3	Composition Tax Payer’s Registration can be cancelled suo-moto if they have not filed their GSTR-4 return beyond 3 months from the due date.
4	Credit Notes in respect of supply made in a financial year can be issued by 30th November of next financial year (currently allowed till 30th September)
5	Any rectification of error in GSTR-1/ GSTR-3B is now permitted till 30th November of next financial year (currently allowed till 30th September).
6	The two-way communication process in filing GST returns is scrapped.
7	The due date for filing return by non-resident taxable person is prescribed as 13th day of next month
8	Section 41 of the CGST Act is being substituted so as to do away with the concept of “claim” of ITC on a “provisional” basis.
9	Section 47 of the CGST Act is being amended so as to provide for levy of late fee for delayed filing of TCS returns.
10	Section 49 of the CGST Act is being amended so as to provide for restrictions for utilizing the amount available in the electronic credit ledger.
11	Section 49 of the CGST Act is being amended so as to allow transfer of amount available in E- cash ledger of a registered person to the E- cash ledger of a distinct person;
12	Section 49 of the CGST Act is being amended so as to provide for prescribing the maximum proportion of output tax liability which may be discharged through the electronic credit ledger
13	Section 50(3) of the CGST Act is being substituted retrospectively, with effect from the 1st July, 2017, so as to provide for levy of interest on input tax credit wrongly availed and utilized. (Meaning  thereby Interest will not be levied if ITC is not utilized)
14	Refund claim of any balance in the electronic cash ledger shall be made available.
15	Rate of Interest u/s 50(3) prescribed as 18% in all cases.

Exemption of amount received for medical treatment and on account of death due to COVID-19 - Amendment of section 17 and section 56 of Income tax Act

Section 56 Clause (x) of sub-section (2) of the Income-tax Act, 1961 provides that where any person receives, in any previous year, from any  person or persons any sum of money, without consideration, the aggregate value of  which exceeds fifty thousand rupees, the whole of the aggregate value of such sum  shall be the income of the person receiving such sum. However, certain exceptions  have been provided in the clause for transaction specified therein - Clause (2) of section 17 of the Act, inter alia, provides the definition of  “perquisite”. 

In a press statement The Finance Ministry dated: 25.06.2021 announced that income-tax shall not be charged on the amount received by a taxpayer for medical treatment from employer or from any person for treatment of  COVID-19 during FY 2019-20 and subsequent years .

Also in lieu of proving benefit to family members of such taxpayer, income-tax exemption  shall be provided to ex-gratia payment received by family members of a person from  the employer of such person or from other person on the death of the person on account of COVID-19 during FY 2019-20 and subsequent years. Also, as stated that the exemption shall be allowed without any limit for the amount received from the employer and the exemption shall be limited to ₹ 10 lakh in aggregate for the amount  received from any other persons.  

RECLASSIFICATION NOT SUSTAINABLE UNLESS PROPOSED IN SHOW CAUSE NOTICE

In taxation matters the Adjudicating Authority, while making assessment in respect of doubted cases, issues a show cause notice to the assessee indicating the nature of non compliance of provisions of Act and Rules.  The show cause notice will also stipulate the date within which the reply should be filed by the assessee.  The assessee is to give reply within the time fixed as last date in the show cause notice along with the documents he relied on.  On receipt of the reply to the show cause notice, the Adjudicating Authority will adjudicate the case after giving reasonable opportunity of being heard.  The Adjudicating Authority cannot travel beyond the show cause notice. This principle is also applicable to the customs matter in reclassification of imported materials.