Union Budget 2019 - An Overview Of The Budget And Analysis Of The Proposed Amendments To The Goods And Services Tax Laws
Budget 2019 : Overview of the Union Budget 2019 :
On 5th July 2019. the Union Budget for the Financial Year 2019-2020 was presented by Hon’ble Finance Minister Smt Nirmala Sitharaman ji. The overall focus of the budget is to give a push to progress, towards a larger goal set to make India a 5 Trillion Dollar Economy.
Following are the areas which were the pick of the budget session.
- Reforms for bringing a paradigm shift in the allowable Foreign Direct Investments in Non Banking Finance Companies, Financial institutions, Insurance Intermediaries.
- A boost to the innovative entrepreneurs willing to establish Start-ups and attracting foreign Investors. On the front of Angel Investors for start-ups, Income tax department will only E-verify and provide necessary clearances, scrutiny process not to be resorted. Also capital gain relief for investment of Capital Gains into start-ups.
- Measures to further boost “Make-in-India” initiative. Strengthening the MSME sector by providing quick debt funding subject to eligibility. Introduction of advanced skill training programs for youths to make them eligible for high skill jobs on global level.
- A brain drain reversal by promoting “Learn-in-India” to promote foreign students to take up education in India.
- Boost and promotion of the E-vehicle usage in the country by providing reliefs on taxation fronts in both Direct and Indirect Taxes.
- Benefits under direct taxes for home buyers under affordable housing scheme. A pinch to pocket of high income earners with increase in surcharge rates.
Proposed Amendments to the GST Law and Its Analysis :
Amendment to Section 2(4) read with section 101A and 101B of the CGST Act 2017 :National Appellate Authority for Advance Ruling” to be set up and included as a part of exclusions from the definition of Adjudicating Authorities. It was observed that conflicting rulings have been given by “Appellate Authority of advance rulings” across two or more states for the same person being registered in such states. Any registered distinct person or officer authorized by commissioner, aggrieved by such conflicting orders can prefer an appeal to the National Appellate Authority of Advance rulings.
Amendment to Section 10 of the CGST Act 2017 :Composition levy under GST has been continuously undergoing changes ever since the introduction of the GST Law. In addition to the existing composition levy, a different form of composition levy has been introduced for the registered persons, who are not eligible for opting to pay tax under the composition levy due to the stringent conditions affiliated with it. The newly inserted provisions would empower the service providers not covered by the existing composition levy, if they are registered and their aggregate turnover in the immediately preceding financial year was less than or equal Rs 50,00,000. The tax payable by such person would be @ 3% of turnover in state or union territory. However the other conditions as envisaged in existing sub section 2 of section 10, continue to remain applicable.
Amendment to Section 22 of the CGST Act 2017 :Prior to amendments every person whose aggregate turnover exceeded Rs 20,00,000 was liable to get registered in every state from where he makes a taxable supply. It is now proposed to enhance the aggregate turnover limit to an amount, not exceeding Rs 40,00,000/- in respect of a suppliers exclusively engaged in supply of goods. Thus any supplier who is exclusively engaged in supply of goods will be liable to be registered only on aggregate turnover crossing Rs 40,00,000/.
Also for the purpose of this act, a person will be deemed to be exclusively engaged in supply of goods, even if he is also engaged in supply of services by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount.
Amendment to Section 25 of the CGST Act 2017 :Every person, registered under the GST Law, should possess a valid “Aadhaar” number and must furnish the within such time limit and in such form and manner . If however the same is not available, he must possess any alternative identity proof as prescribed by Government. Failing to comply with the provision would lead to cancellation of registration, otherwise validly granted. Even where, a person is willing to apply for registration, the provisions in respect of furnishing of “Aadhaar card or alternatively the other validly approved identity documents prescribed by Government.
Amendment to Section 31 of the CGST Act 2017 :A new Section 31A has been inserted to make specified supplier, liable to provide requisite digital payment options to the recipient. The idea would be to bring a control on cash purchases and encourage of digital payments platform.
Amendment to Section 39 of the CGST Act 2017 :Every person other than Input service distributor or person paying tax under section 10, under Section 51 or 52 or a non resident taxable person, shall instead of filing multiple monthly GST return, to file a single return, reporting the inward and outward supplies, Input tax credit availed and tax paid. For specified category of persons, the government may prescribe a quarterly return instead of monthly return. The tax payment after considering the Input tax credit for the period shall also be made on monthly basis for both persons filing returns monthly or quarterly.
Every person liable to pay tax under Section10 of the CGST Act ie person opting to pay tax as a Composition levy shall be liable to file a yearly return. However the tax payment needs to be done or quarterly basis considering the liability on basis of turnover and on the basis of inward supplies on which tax is required to be paid under Reverse charge basis.
Amendment to Section 49 of the CGST Act 2017 :There have been many instances reported over past two years, where the amounts paid under the cash ledger of late fees/penalty was lying idle after the right to collect the same was waived. This created a fund blockage for business. The amendment under this section effects, any amount in the Electronic cash ledger under the head tax, interest, penalty or fees etc, will be allowed to be transferred to specific head of (IGST/CGST/SGST/UTGST or Cess) cash ledgers.
However the reverse transfers from specific (IGST/CGST/SGST/UTGST or Cess) to electronic cash ledgers of tax, interest, penalty has not been allowed in the proposed amendments. The amounts so transferred would be in accordance with specified conditions. The allowable transfer will be deemed to be a refund under this act.
Amendment to Section 50 of the CGST Act 2017 :In one of the most discussed and debated provisions of the CGST Act 2017, a definite direction has been given by this amendment. The interest liability on any tax payable in respect of any supplies made during the tax period shall be calculated only on the portion of tax that is paid through debit to the electronic cash ledger. Earlier the debate was if the interest is leviable on the Gross amount of tax payable ie (Tax paid through debit to Electronic credit ledger + Tax paid through debit to cash ledger) or only on the amount paid through debit to cash ledger. The same will now be put to rest. This comes as a relief measure putting to rest some litigations. However if the interest is payable on the tax determined as a part of recovery initiated under Section73 or 74, the interest liability would be on basis of gross amount of tax as mentioned above.
Amendment to Section 171 of the CGST Act 2017 :In relation to the proceedings under the Anti-Profiteering provisions, subsection 3A is inserted. The authority examining the accrual of profiteered benefits would be entitled to levy penalty @ 10% of the profiteered amount. However where the person deposits the amount determined by the authority within 30 days of passing the order, no penalty would be imposed.
CA Aumkar Gadgil
- Disclaimer: The views expressed by us in the above note on Union Budget 2019 is on the basis of our understanding of the GST Laws, Rules and regulations. The adjudicating or the judicial authorities may or may not be in agreement to this view.