Union Budget 2019: Finance Minister Nirmala Sitharaman was not hesitant in acknowledging the incessant hitches faced by the tax payers post implementation of the Goods and Services Tax (‘GST’).
By Kunal Chaudhary
Budget 2019-20 is largely based on a three-pronged approach of the Government of achieving a digital economy, ease of doing business and building a competent manufacturing base. With the recent success tasted by the Government in setting up the electronics sector, it aims to replicate the same in the sunrise and advance technology areas which include solar photo voltaic cells, lithium storage batteries and electric vehicles.
Thus, the intent with the present budget has largely been on reviving the manufacturing sector, it has still not completely dispensed in acknowledging the importance of the start-up space as well. The Government with a view of attaining its primary objectives of cashless economy and ‘Make in India’ has announced a slew of measures from the indirect tax perspective. The changes range from introducing protectionist measures for domestic manufacturers inter alia increase in customs duty on electronic equipment and parts, vinyl flooring, tiles to further incentivize domestic manufacturing of defense equipment and e-mobility by reduction in the applicable customs duty.
Numerous incentives from both indirect tax and direct tax perspective have been extended to provide an impetus to the ‘Make in India’ Policy. Increase in customs duty on import of parts and sub-parts for the manufacturing of electronic items has been in line with the ‘Phased Manufacturing Programme’ and is a welcome move to attract investors into India to boost the economy at large.
Finance Minister Nirmala Sitharaman was not hesitant in acknowledging the incessant hitches faced by the tax payers post implementation of the Goods and Services Tax (‘GST’). Though the changes regarding GST are in the domain of the all-powerful GST Council, nonetheless, GST was visualised as a regime of reduced compliance and minimal physical interaction with the authorities. The GSTR-2A reconciliation and the e-way bill continues to be a holdup thereby drawing harassment from the tax authorities due to minor technical glitches.
WATCH: Budget 2019: Companies get tax relief, barely
Needless to state, the present Government has gone forward with a plethora of changes to fine tune the anomalies faced with the introduction of the colossal tax reform. It has now intended to move to a simplified return process, fully automated refund process and unified tax ledgers to achieve the agenda of ease of doing business.
Finality, of the proposal for shifting to an electronic invoicing system to curb the issue of bogus invoicing along with an intent to auto populate the details with the GST return of the tax payer is a welcome step in easing the compliance burden on the tax payer. However, the implementation and stability of the system would only be tested in the forthcoming time. Moreover, requirement of e-way bill would be extinguished with such e-invoices which would prove to be major game changer in the seamless movement of goods.
Relief has also been provided in redressal mechanism, for instance, the GST regime was regrettably falling prey to the federal mechanism of our Constitution due to multiple decisions of the advance rulings authority. A National Appellate Authority for Advance Ruling has been constituted at a national level to remove the ambiguities of multiple judgements from various states.
With numerous states announcing VAT amnesty schemes, the Government has notified the Sabka Vikas Legacy Dispute Resolution Scheme for settlement of legacy disputes of central excise and service tax. The scheme is expected to fulfill the dual task of putting an end to the humongous 3.75 lakh crore litigation of the erstwhile laws as well as filling up the coffers of the treasury.
Introduction of redressal mechanism coupled with anti-abuse provision being strictly introduced in the foreign trade policy would curb the unfair trade practices being adopted to avail export related incentives and concessions.
The maiden budget of NDA 2.0 is expected to be a mini-stimulus to the sluggish economy which has been on an all-time low. Though, the Government has provided various measures to benefit the tax payers at large and promoted the ‘Make in India’ Policy, however a more focused approach should be intended on the actual value addition done in the supply chain in India. Such an addition would be the real measure of building up a new India through the requisite infrastructural base and technology.
(The author is Tax Partner at EY India. Views expressed are personal.)