7 Stringent Provisions in Budget 2021 that will change the way you do Business!

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7 Stringent Provisions in Budget 2021 that will change the way you do Business!
Feb, 2021
By Vikash Dhanania

Namaskar!

I would like to start by quoting the phrase, "I do what I say, but I definitely do what I don't say."

This saying applies aptly to what we have witnessed in the Union Budget announced by the Finance Minister. The changes in tax laws as announced by the Govt. will surely make the life of Businessmen and people associated with Businesses, challenging to say the least!

Do you often wonder that the Govt intends to simplify, rationalise and reduce disputes in the Business world?

I am sure that you will think otherwise after reading about these changes. Without any further ado, let's understand the most stringent provisions made in Budget 2021.

 

The 1st Stringent Provision

Attachment of Property

Sec. 83

It has been proposed in Section 281B of the Income Tax and Section 83 (1) of the CGST that in cases of tax evasion due to bogus bill, non-existent vendor, circular trading etc., the tax officer now has the power to attach the assets of the company including the bank account.

Besides that, the officer can also provisionally attach property and bank accounts of company directors, partners, company secretary, employees, Managers, CA, CS, Cost Accountants, the associated Auditors, advisors and Advocates or any other person at whose instance such transaction is conducted.

It is critical because here, the department is being empowered to make decisions based on inference and not based on evidence. The further opportunity of personal hearing is being given after the issuance of the Order of Attachment.

Do you think this is a step forward in promoting ease of Business?

Can you justify this Law with any kind of explanation?

Is there any reason not to term this as an Anti-Business law?

 

The 2nd Stringent Provision

Name and Shame

Sec. 151 and 152

On one hand, the Govt. has proposed to decrease the time limit to open a case in the Income Tax Department from 6 years to 3 years (this does not apply to cases in which the accused tried to evade not more than Rs. 50 Lakhs in a year).

At the same time, under GST, the Law gives powers under section 151 of the CGST Act 2017 to the Commissioner or an Officer authorised by him to direct any person to furnish information relating to any matter in connection with this Act. No time limit is defined for exercising these powers.

Non-only that, but also such information may be published in the public domain if the Commissioner has an opinion that such publication is desirable in the public interest.

This will indirectly result in more number of cases, more number of disputes, businesses will get less time to represent themselves because everything will be based on third party documents.

   

The 3rd Stringent Provision

Retrospective Amendment

Sec. 7

Under Income Tax, only retired judges of the High Courts and Supreme Court of India were part of the Authority for Advance Ruling under Income Tax Act. The proposed changes allow the Department's Chief Commissioner level officers to be members of the Authority for Advance Ruling. This will raise direct questions on the fairness of this body while pronouncing judgements in various cases as happened in GST.

Further, due to the proposed retrospective amendment in Section 7 of the CGST Act 2017, the fairness of the GST officer will also become a challenge as the Officer will issue notices largely to the club or association to pay tax on the amount collected from the member with effect from July 2017 by accusing them of willful tax evasion.

 

The 4th Stringent Provision

Adverse Consequences in case of Delay in Deposit of Tax

Sec. 129 and 130

As per the practice before the proposed changes, every Business had an option to deposit the PF of employees with some delay. After the PF was deposited, reduction in spending was allowed.

As per the proposed changes, not only will you be restricted from requesting for a reduction in spending, but the late submission of PF will be treated as extra income.

This is what you call double Taxation for Businesses.

Why are Businesses getting punished with extra taxes and recovery notice even in case of unavoidable circumstances of delaying the deposit of tax?

Similarly, in GST, in case the transporter or owner fails to pay the amount of penalty within 15 days of the issuance of MOV 6 / MOV 7, the goods or conveyance so detained or seized shall be liable to be sold or disposed of to recover the penalty.

 

The 5th Stringent Provision

Mismatch, in return, may lead to recovery or cancellation

Sec. 75

As per the proposed changes, committing a mistake in calculating excess tax under section 75 (12) of GST will result in the Department charging it as self-assessment tax without issuing any show cause tax notice.

Similarly, the tax officer can even cancel your registration if he/she finds out a difference between the figures of GSTR 1 and 3B.

You now have no scope for error and will be punished even if the mistake is caused by human error.

Are we heading toward a more straightforward Tax system or making them more complicated?

We are pondering over this question after reading through the proposed changes in the Budget.

  

The 6th Stringent Provision

ITC will be allowed to avail only if reflected in GSTR 2A

Sec. 16

Input Tax credit for buyers will now only be available after the supplier properly files the return and the same is reflected in his GSTR 2A.

This means that the Tax Invoice of Vendors is nothing more than pieces of paper.

This clearly shows the Govt's intention, which only wishes to allow ITC only in case of matched and availed Invoices. 

 

The 7th stringent provision

Minor ignorance will cause big trouble and expense.

Sec. 129

This proposed change states in cases of seizure of goods, the accused Business must deposit penalty equal to 200% instead of 100% of the tax payable in case of taxable goods.

As practised earlier, Businesses could get the refund of taxes paid at such times after it is proved that the due taxes were already paid. But, small offences like the E-way bill getting expired are considered big (in the eyes of officials). Businesses are penalised with fines for these offences also.

This happens even in cases where the seized truck has the appropriate documents and no indication of the intention of avoiding taxes. Now, facing this for Businesses will be as hard as it can get in any scenario!

 

What we see in Media VS the reality

The Finance Minister and the CBIC Chief promote ease of doing business in India in every meeting that we get to see.

The Finance Minister talks about making the Taxation processes simpler, but in actuality, we can see that efforts are being made by the Govt. to introduce stringent provisions which will make life difficult for Businessmen and women.

If the Finance Minister was hesitant to mention these provisions in the Budget speech, then how can we not doubt the intentions of the Govt.?

 

We humbly request everyone in the Business community to stand against these provisions.

Because at present, about 95% of the people in India are those whose turnover is less than 5 crores and are not capable enough to take the services of GST Professional like CA, CS, CMA or Advocates etc. as they charge substantial fees. Therefore, adopting modern technology is nothing short of a storm for them, and they need time to adapt.

 

We request for these provisions to be disregarded before the Honourable President stamps them and they become Laws!!!

 

Further, At GST DOST, it is our endeavour to help you to stay out of trouble which is why we share preventive measures with you. However, should you be looking for an expert to take remedial actions for you, or to even help you even file and reconcile GST Returns, we are here to help. 

Call us on

T: 908883000

E: support@gstdost.com

to get answers to your questions.

GST DOST is one of the most faithful and trusted GST advisors in India. And we intend to keep our trust in you alive the same way.

Regards 

GST DOST