Indirect Tax Changes in Budget 2023

What is Indirect Tax?

Indirect tax is generally levied on goods and services before they reach consumers. This tax can be passed on to another individual or entity. Indirect tax is not levied directly on the income of an individual. The individual has to pay this tax along with the goods and services the seller brings.

In short, the person paying the tax and the person bearing the liability to pay the tax to the government are two different individuals. For example-Excise Duty, Customs Duty, Entertainment Tax, Service Tax, Sales Tax, Gross Receipts Tax, and Value-Added Tax (VAT) are examples of Indirect taxes.

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How many types of indirect taxes are there?

Service Tax- This tax applies to the services availed by the customer.
Value added Tax (VAT)-This tax applies to the value addition in price during the sales of the goods.

• Custom duty-Paid on the goods imported and exported from India.
• Stamp duty- Imposed on the sale of immovable property.
• Entertainment tax-Paid on all transactions related to entertainment.
• Excise Duty- Levied on the manufacturing of goods.

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What are the amendments made under the Indirect Tax in budget 2023?

The notable changes under the Income Tax are as follows:-

• Changes in Custom Duty
  
  1. The custom duties are revised under budget 2023 to promote domestic value addition and boost green energy and mobility.
  2. Items for which customs duty is revised are:-
     • Imported mobile camera lens
     • Imported capital goods for lithium-ion battery manufacturing
     • Denatured Ethyl Alcohol
     • Seeds for manufacturing lab-grown diamonds
  3. The Customs duty rate on compounded rubber is increased to 25 percent from 10 percent or 30 per kg, whichever is lower.
  4. Enhancement of the concessional Basic Customs Duty on copper scrap, Primary inputs for making shrimp feed
  5. National Calamity Contingent Duty (NCCD) on some cigarettes is increased
  6. Enhancement in the custom duty or importing silver dore, bars, and articles.
  7. Basic customs duty reduced on acid grade fluorspar (containing by weight more than 97 percent of calcium fluoride) to 2.5 percent from 5 percent.
  8. Custom duty on electric chimneys has been increased
  9. Custom duty has been reduced on parts of open cells of TV panels.
  10. Exemption on excise duty on GST-paid compressed bio-gas used in blended compressed natural gas.
  11. Some small changes are carried out in the BCD, cesses, and surcharges on certain consumables imported, such as bicycles, automobiles, toys, naphtha, etc.
• GST changes
  
  1. Taxpayers can now opt into the composition scheme even if they supply goods through e-commerce operators where TCS is collected under Section 52.
  2. Recipient taxpayers must pay interest computed under Section 50 if they fail to pay their supplier invoice value, including GST, within 180 days from the date of issue of the invoice.
  3. Expenditure on CSR initiatives for corporates is now included in ineligible ITC under Section 17(5).
  4. High sea sales and similar transactions are considered exempt; hence, ITC proportional to such sales cannot be claimed under revised Section 17(3).
  5. Taxpayers are restricted from filing GSTR-1, GSTR-3B, GSTR-9, and GSTR-8 for a tax period after the expiry of three years from the due date.
  6. Penalties of Rs.10,000 or an amount equivalent to the amount of tax, whichever is higher, will be charged for e-commerce operators who allow unregistered persons to supply goods or services or both through them, except where such a person is exempted from GST registration.
  7. Certain offenses have been decriminalized, and the limits for compounding offenses have been changed:-
     
     • If a person obstructs or prevents an officer from discharging their duties under the CGST Act, 2017.
     • If a person tampers with or destroys material evidence or documents.
     • If a person fails to supply information required under the CGST Act or Rules or supplies false information, they can be penalized under section 122(1)(i) of the CGST Act, 2017.
• Compounding of offenses limits have been changed to 25% of the tax involved up to a maximum amount of 100% of the tax involved.
• A new section 158A has been inserted in the CGST Act to allow businesses to share GST data digitally with consent.
• To enable unregistered suppliers to make the intra-state supply through E-Commerce Operators (ECOs).

To know about more highlights of Budget 2023. Read here.

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