CBIC extends customs duty and integrated GST exemptions till March 31, 2022

The Central Board of Indirect Taxes and Customs (CBIC) Wednesday extended the basic customs duty and integrated goods and service tax exemptions for export oriented units, by a year till March 31, 2022.

The Board also made it mandatory for a GST taxpayer having turnover of more than Rs 5 crore in the preceding financial year,to furnish 6 digits HSN Code on invoices issued for supplies.

The change has been made effective from April 1, 2021.

The Board also extended the exemption from integrated tax and compensation cess on goods imported against authorisations under Advance Authorisation and export promotion capital goods (EPCG) schemes, till March 31, 2022. In another notification, it continued health cess exemption on specified parts of x-ray machines as per the phased manufacturing program of x-ray machines. This will also come into effect from April 1.

"BCD and IGST exemption for EOU’s extension is a good news for all EOU’s as the upfront exemption is proceduraly simple and easy to avail and has a positive impact on the cashflows," said Abhishek Jain, tax partner at EY.

The Board has introduced a six digit Harmonised System of Nomenclature Code or HSN Code and Service Accounting Code from April 1, 2021 on the invoices issued for supplies of taxable goods and services.

A taxpayer having turnover of upto Rs 5 crore in the preceding financial year is required to mandatorily furnish 4 digits HSN code on B2B invoices.

Earlier, the requirement was 4 digits and 2 digits respectively. Codes prescribed in the Customs tariff are used for the GST purposes too since
common HSN codes apply to Customs and GST and manufacturers, importers and exporters have been commonly using them.

"Traders would mostly be using HSN codes furnished in the invoices issued to them by the manufacturer or importer suppliers. As such, a large number of GST taxpayers are already furnishing HS codes/SAC at 6/8 digits on voluntary basis on the invoices, e -way bills and GSTR 1 returns," the Board said.

Experts said that industry needs to ensure that all requisite changes have been made and the ERP system is geared up to generate invoices with 6 digit HSNs, else the businesses will carry an exposure of being non-compliant and will not be able to generate e-invoices or face difficulties while filing GST returns.