The Central Board of Indirect Taxes and Custom (CBIC) has invited suggestions from its field offices on duties, procedures and exemptions etc for Union Budget 2021-22. The Union Budget for FY-22 is likely to be presented in January/February, 2021, a departmental letter signed by Vivek Johri, Special Secretary & Member of CBIC, said.

“The suggestions inter-alia may relate to changes in duty rates/rationalisation of duty rates of specific commodities, scope of notifications and conditions relating thereto, implementation aspects and the issues in disputes/audit objections, issues of interpretation and other matters concerning law and procedures,” the letter said.

In an interaction with an industry chamber on Monday, Johri said that there has been a feedback loop created on how to make reforms an ongoing exercise, and an institutional mechanism to support the same. There has been a crowdsourcing of ideas for Budget 2021 for overhaul of the customs law and an emphasis on the use of technology to make customs faceless, paperless and contactless, he mentioned.

Exemptions under indirect taxes

Meanwhile, there are indications that some exemptions under indirect taxes may be phased out. “The utility of certain continuing exemptions may also be identified and forwarded to the board along with your suggestions,” the letter said.

It may be noted that many exemptions available under erstwhile Central Excise (barring that levied on petroleum products) and service tax have been done away and replaced with refund system Under GST. It means first pay the tax and of one is eligible for concession, he will get his money back. Now, efforts are to prune list of exemptions under Custom Duty.

In the last Budget, Finance Minister Nirmala Sitharaman had focussed on exemptions under direct taxes and based on that a new but optional tax regime without exemptions was announced.

“It was surprising to know that currently more than one hundred exemptions and deductions of different nature are provided in the Income-tax Act. I have removed around 70 of them in the new simplified regime. We will review and rationalise the remaining exemptions and deductions in the coming years with a view to further simplifying the tax system and lowering the tax rate,” she had said.

‘GST suggestions welcomed’

Post introduction of GST with effect from July 1, 2017, it is GST Council which takes a call on rates, procedures etc while Union Budget provides platform for changes in statutory arrangement in taxation laws for GST if required. The DO letter said that GST related changes are not examined as part of Annual Budget Exercise. “However,suggestions related to GST issues are also welcomed. These would be examined at appropriate stage,” the letter said.

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