Budget 2022: Key indirect tax amendments industry seeks

The Union Budget 2022-23 to be announced on February 1, 2022, is expected to announce measures to boost the domestic manufacturing industry with a focus to promote the 'Make in India' programme, expand the tax base and streamlining as well as providing certainty to schemes and initiatives announced over the last one year.

Some of the key expectations from the Union Budget 2022-23 from an indirect tax perspective are as follows:-

There are not many changes expected from the GST standpoint as the same falls under the GST council's purview. However, the government is expected to announce the policy intent and broad direction of reform to rationalise the GST rates and likely expansion of the e-invoicing mandate by reducing the annual turnover threshold.  

From a customs standpoint, there may be some movement in duty rates to incentivise not only make in India but also value addition in India and correct inverted duty structures.

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The government may further review the customs duty rate for the import of inputs/raw materials with the objective of increasing the competitiveness of final products manufactured in India. 

The sectors where the customs duty may be rationalised include auto components specially for the EV sector, telecom equipment especially for 5G rollouts and other critical sectors where the government through its PLI scheme has incentivised manufacture in India and looks to create the entire ecosystem for sustained growth. 
The government is also likely to continue to review and rationalise the existing exemptions under customs.

The introduction of a one-time dispute resolution/settlement scheme under customs law may also be considered.  
With the continuous emphasis on creating opportunities for domestic businesses and industry and promoting the 'AtmaNirbhar Bharat' movement, it is expected that the government will continue to focus more on incentive schemes. 

At present, the PLI covers 13 sectors, and it is expected that the PLI scheme is further expanded to include more sectors. It is also expected that procedural rationalisation and clarifications for RoDTEP may be announced. 

Further, the CAROTAR regulation has been causing procedural issues and financial burden to the industry due to lack of proper guidance on the documentation and procedural aspects.

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It is expected that the necessary amendments/clarifications in CAROTAR, 2020 are introduced to streamline the procedural aspects including documentation requirements. 

The government may also announce procedural rationalisation/clarification on MOOWR, 2019 to provide clarity and facilitate ease of doing business. 

From regulatory standpoint, as per the recent public statement of the commerce secretary, B V R Subrahmanyam, the government may also announce amendments to SEZ Act to reduce compliance burden and promote ease of doing business. Overall, the industry expects the budget to iron out sectoral issues and increase the ease of doing business in India. 

(The author is Tax Partner - Indirect Tax Services, EY.)