GST Compendium - February 2023

Key highlights of the publication

• The Finance Minister presented the Union Budget 2023 focusing on seven priorities - inclusive development, reaching the last mile, infra and investment, unleashing the potential, green growth, youth power, and the financial sector. The budget lays emphasis on capital expenditure, infrastructure development, and stimulating growth and development. The relief provided to individual taxpayers is a welcome move, including the reduction in the highest effective tax rate. For businesses, largely consistency has been maintained on the tax front, with changes being brought in mainly to plug revenue leakages.
• Key judicial pronouncements: In a recent ruling, the Supreme Court has distinguished between modernisation and diversification. It has held that manufacturing goods using advanced technology having the same utility cannot be construed as ‘diversification’ for claiming exemption under the state industrial policy. The products manufactured post-diversification should be different from the goods manufactured before diversification.
• Important developments in direct taxes: The Central Board of Direct Taxes (CBDT) has done away with the threshold for reporting interest income in Statement of Financial Transactions. Furthermore, considering the hardship taxpayers face on account of the pandemic, the CBDT has again extended the timeline for undertaking compliances to claim an exemption under sections 54 to 54GB of the Act.