1. Union Budget 2017: Nothing much on indirect tax front from FM Arun Jaitley; all eyes now on GST

Union Budget 2017: Nothing much on indirect tax front from FM Arun Jaitley; all eyes now on GST

Expectations were never really high from the Budget on the indirect tax front in view of the forthcoming introduction of Goods and Service Tax from July 1, 2017 (more realistic date).

Updated: February 1, 2017 5:28 PM
Budget 2017 GST, Union Budget 2017, Goods and Services Tax Union Budget 2017 lacked any explicit confirmation on the GST implementation date. (File PTI Photo)

Expectations were never really high from the Budget on the indirect tax front in view of the forthcoming introduction of Goods and Service Tax from July 1, 2017 (more realistic date). The budget was relatively populist and focused on digitisation of economy, promotion of renewable energy and promoting Make in India. The Finance Minister, keeping in mind promotion of digital economy, has extended customs and excise duty exemptions on key devices used for digital transactions such as Point of Sale Devices, Card Readers, Finger Print Readers and Iris Scanners and parts and components for their manufacture.

Further, to promote further value addition on manufacturing of mobile phones in India, 2% duty has been reintroduced on Populated PCB’s used for manufacture of mobile phones. The same was introduced in the previous budget as well, however was rolled back due to Industry demands. There has also been an additional allocation of funds to EDF and MSIPS promoting manufacture of electrical and electronic goods in India.

From the perspective of power sector, benefit of reduced customs duty has been extended to import of certain products like Liquefied Natural Gas, and machinery used for generation of energy through renewable sources.

While addressing the long pending demand of real estate sector, the budget provides for exclusion of value of land for payment of service tax on construction. Whereas, for banking sector, specified amendments have been made in cenvat credit rules rationalising the credit availment.

Talking about GST, the Finance Minister confirmed readiness of IT infrastructure being the backbone of GST regime. It was also mentioned that the Council has finalised its recommendations on almost all issues over GST based on consensus. The Government shall also start an extensive effort for GST awareness starting April 1.

While the Union budget was in line with government’s intention to not make any significant changes in the current Indirect tax regime; however, it lacked any explicit confirmation on the GST implementation date.

(Authored by Kunal Chaudhary, Partner, Indirect Tax, EY)

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