• Who We Are
• What We Do
  • Finance & Taxation
    • Indirect Taxes
      • GST
      • Customs
      • Central Excise
      • Legacy Issues
    • Direct Taxes
    • International Trade
    • Trade Remedies
    • Intellectual Property Rights
    • Environment Law
    • Competition Law
  • Corporate Social Responsibility
    • Sustainable Development
    • Women Empowerment
    • Rural and Urban Development
    • Child Development
    • Water & Sanitation
    • Environment
    • Renewable Energy
    • Agriculture
    • Poverty Alleviation
    • Health Services
    • Cottage Industries
    • Pollution Emission Control
  • Core Services
    • Advisory Services
    • Consultancy Services
    • Compliance & Review Services
• News & Updates
• Publications
• Working With Us
• Contact Us
• Important Links
  • www.cbic.gov.in
  • www.incometaxindia.gov.in
  • www.dgft.gov.in
  • www.supremecourtofindia.nic.in
  • www.cestatnew.gov.in
• Ask Us
  • GST Seva Desk
  • Corporate Social Responsibility

An analysis of Indirect Tax changes in Budget 2019.

The Hon’ble Prime Minister has announced an ambitious plan of bringing India to a 5 trillion dollar economy. Clearly GST has included various businesses under the formal economy and would continue to support the country’s economy to grow by rationalisation of taxation regime. The ease of trading across borders is also an important factor in ease of doing business which in turn will help in boosting trade and economic activity.Several measures proposed in  the fine print of Budget 2019 through amendments in the Acts and insertion of provisions is aimed at this.

Following are the gist of indirect taxation announcements in the Union Budget 2019.

Goods and Services Tax

A Proviso has been inserted to clarify that interest for late payment of tax shall be levied only on that portion of tax which has been paid by debiting the electronic cash ledger. Earlier there was confusion among taxpayers on this issue whether such interest would be charged on gross tax liability or only on net tax liability.

However, there is one exception to this rule wherein interest shall be levied on gross tax liability. Where returns are filed subsequent to initiation of any proceedings under GST Act, the interest shall be levied on the gross tax liability.

Now every registered person has to authenticate, or furnish proof of possession of Aadhaar number. If an Aadhaar number is not assigned to the registered person, such person will be offered an alternate and viable means of identification. In case of failure to undergo authentication or furnish proof of possession of Aadhaar number or furnish alternate and viable means of identification, registration allotted to such person shall be deemed to be invalid.

Now a registered person can transfer any amount of tax, interest, penalty, fee or any other amount available in the electronic cash ledger to the electronic cash ledger for Integrated Tax, Central Tax, State Tax, Union Territory Tax or Cess through a new Form PMT-09 subject to the conditions and restrictions prescribed under GST Act. Such transfer shall be deemed to be a refund from the electronic cash ledger.

The Central Government has been authorized to pay the amount of refund towards State taxes to the taxpayers.

The Government will be setting up  an Authority ‘National Appellate Authority for Advance Ruling (NAAAR)’ for hearing appeals. It has been mandated to  pass an order within 90 days from the date of filing of appeal.

The value of exempt supply of services provided by way of extending deposits, loans or advances (where consideration is received in form of interest or discount) shall not be considered for determining turnover under Composition Scheme. This means that interest will be charged only on the net cash tax liability.

Simplified return forms to be implemented soon. Composition registered dealers are required to pay tax quarterly and file return on annual basis. Now there is an option under Composition Scheme to service providers, by increasing the thresh hold limit from Rs.20 lakhs to Rs.40 lakhs.

The Budget also retrospectively exempted service tax on liquor licenses, long term courses of IIMs and upfront amount paid towards long term lease of plots for development of infrastructure for financial business.

The Budget has also provided for dispute resolution cum amnesty scheme, for legacy cases of Central Excise, Service Tax and Cess. The provisions of this scheme, called “Sabka Viswas Legacy Dispute Resolution Scheme” 2019 will be effective from a notified date later.

Customs Act and levy of duties.

On the Customs duty front many changes have been incorporated .From the amendments which has been passed by the Parliament it appears that the focus is on trade facilitation, rates rationalisation, “Make In India” initiative, defence sector and promotion of environment friendly auto industry.

India has some of the most polluted cities in the world. Metros like Delhi, Mumbai etc has been reeling under pollution. In order to curb vehicular emissions which is one of the major reasons for pollution and to incentivise and promote the electric vehicles, the basic customs duty has been reduced to nil. To boost the “Make in India” initiative, in addition, basic customs duty has been increased on certain rubber, plastic and chemicals under Chapters28,29,38,39 and 40.Customs duty has also been increased on auto parts like mirrors, intake filters,horns,lighting equipments,CCTV cameras, optical fibres, split ACs etc.

Export duties Scheduled rate of Additional Duty of Customs (Road and Infra Cess) levied on imported Motor Spirit (Petrol) and High Speed Diesel Oil has been increased from Rs.8 per litre to Rs.10 per litre.

On EI tanned leather has been reduced to nil from 155 and from 60% to 40% on hides, skins and leather items under chapter 41.

Nominal Excise duty has been imposed on tobacco products and crude petroleum. These products attract levy of NCCD which in certain cases were disputed in Cestat and Courts on the ground that Basic duty is nil. Government appears to have made these changes to ensure that there is no scope for litigation. However past cases may continue to be disputed.

Other than the rate rationalisation undertaken as mentioned above, other significant changes are amendments to the Customs Act 1962, for facilitating trade, improving compliance and reducing litigation. Now a person other than the person in charge of conveyance can also furnish departure manifest, aadhar verification of any person, empowering the proper officer to scan a person who has secreted goods liable for confiscation inside his body, provision for arrest of an offender outside India, power to provisionally attach bank account, levying penalty for payment of duty by using any instrument obtained by fraud and certain offences have been made cognizable and non bailable Further, now, waiver of fine in lieu of confiscation for cases covered under deemed closure proceedings. This is part of Government’s initiative to reduce litigation.

India has long suffered disadvantage because of lack of specific tariff lines to exclusively describe home grown products. Now the First Schedule to the Customs Tariff Act 1975 has been amended so as to create specific tariff lines for specific products, so as to reduce the possibility or inevitability of classifying several products description as “others” and align ourselves with the HSN classification of advanced countries.

Overall the Finance Minister has tried to position Indian economy in a sustainable growth trajectory. Let’s hope the steps and measures announced will be implemented in right earnest by the executive and help the industry tide over the impending global gloom.