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Budget 2019 – 7 Key points from indirect tax perspective
By CA Vaishali Kharde [Sr. Manager with CA Pritam Mahure and Associates]
Jul 06, 2019

UNION Budget 2019 was the first budget of second term of the Modi Government presented by H'ble Finance Minister Nirmala Sitharaman. The Budget has proposed certain changes from Indirect Tax perspective as discussed below:

1. Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (LDRS)

H'ble Finance Minister during her Budget Speech highlighted that more than 3.75 lakh crore is blocked in the litigations of Service Tax and Excise. Thus, to address the pending issues of pre-GST period and expediate the closure of pending litigation LDRS is introduced by the Finance Bill, 2019.

[refer Clause 119 to 134 of Finance Bill, 2019]

2. New Return methodology is prescribed

The transition of new GST returns was discussed in the earlier GST Council meetings [refer Press Release dated 11th June 2019]. As per said Press Release, new GST Return are expected to be applicable, on trial basis, from July 2019 and in-phased manner, from October 2019. Thus, the CGST Act is amended to accommodate provisions pertaining to the proposed New GST return process.

[refer Clause 96 of Finance Bill, 2019].

3. Liability paid under one head can be transferred to another head

Earlier, in case of payment of tax in incorrect head (say in penalty head instead of Late fees) then the taxpayer was unable to adjust the same and was required to undergo the tedious process of refund.

Now, it is proposed that the taxpayers can transfer / inter-change the amounts within the heads such as , interest, penalty, fee etc in the electronic cash ledger under the Act to the electronic cash ledger for Integrated tax, Central tax, State tax or Union territory tax or Cess by following prescribed process. Further, if any amount has been transferred to the electronic cash ledger as per said provisions then such amounts shall be deemed to be deposited in the said ledger only.

[refer Clause 98 of Finance Bill, 2019].

4.Interest is payable on net amount instead gross amount

Recently, the Hon'ble Telangana High Court held that interest will be leviable on the gross amount instead of net amount (i.e. gross liability less ITC available) [refer Writ Petition No.44517 of 2018].

Now, Section 50 of the CGST Act, is proposed to be amended to include proviso that in case of delay in filing of GST return interest is to be levied on the portion of the tax that is paid by debiting the electronic cash ledger. However, this relief will not be available in case the return is furnished after commencement of proceeding under section 73/ 74 of CGST Act.

[refer Clause 99 of Finance Bill, 2019].

5.Increasing the threshold limit for registration under GST from 20 lakhs to 40 lakhs

Section 2 of the CGST Act, is amended to increase the turnover limit from INR 20 lakhs to INR 40 lakhs in case of supplier who is engaged exclusively in the supply of ‘goods' subject to the prescribed conditions.

[refer Clause 93 of Finance Bill, 2019].

6.Constitution of National Appellate Authority for Advance Ruling

It is proposed to constitute the National Appellate Authority for Advance Ruling so as to address the challenge of conflicting Advance Rulings as given by the separate Advance Ruling Authorities of States. [refer Clause 101A and 101B of Finance Bill, 2019].

7. Certain rate related changes in the Central Excise and Custom Act

The Excise rate and custom rates for certain commodities are undergo a change. Like BCD on Cashew Kernel, Marble Slabs is increased.

Additionally, there are certain other changes under Indirect tax like option of composition scheme is now available to service provider under GST subject to certain condition, retrospective exemption of service tax prescribed for liquor license upfront amount paid towards long term lease etc.

In the year of continuous changes in GST everyone was expecting there could be minimal changes under indirect tax in Budget. However, many changes are announced in Budget, thus, it appears that the momentum of change will continue!

[Author has Co-authored two books on GST, Views expressed are strictly personal]