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Union Budget 2019: Indirect Tax & GST Updates

Updated on :  

08 min read.

Union Budget 2019 had some of the key announcements made on the indirect tax front which was presented on 5th July 2019.

Interest subvention for GST compliant MSMEs

The Government has in the Union Budget 2019 allocated Rs. 350 crore for FY 2019-20 to fund the 2% p.a interest subvention for any fresh or incremental loans applied by GST-registered MSMEs applied on psbloansin59minutes.

Salient features: Eligibility & Procedure:

  • Nature of loan: Incremental term loan or fresh term loan sanctioned or incremental working capital extended during FY 2018-19 starting from 2nd November 2018 or FY 2019-20 will be eligible for interest subvention.
  • Businesses have to register on the website namely psbloansin59minutes through mobile number and OTP verification. The complete process of the loan application, verification, sanction and disbursal is faceless and happens online.
  • Interest subvention will be available for loans having a maximum credit limit of Rs 1 Crore for an MSME. However, MSMEs can still apply for business loans of up to Rs 5 Crore from SIDBI or five other public sector banks on the website.
  • Businesses need not provide any collateral and the interest rates start from 8% p.a under Credit Guarantee Fund Trust For Micro And Small Enterprises (CGTMSE). 
  • An Existing business must submit the following details while applying:
    1. GST Details: GST Identification Number (GSTIN), GST User Name and OTP
    2. Income Tax Details: Upload ITR in XML format
    3. Bank Statement: Upload Bank Statements for the last 6 months in PDF format (Borrower can upload Bank Statements for Maximum 3 Bank Accounts on the Portal, having major business activities)
    4. Details of Directors/Partners/Proprietor
    5. Details related to Loan Required
  •  In-principal approval will be given within 59 minutes of applying and the disbursal takes place in the next 7-8 working days. 
  • To assess the credit eligibility, the system works on advanced algorithms that sources data points from the history of borrower’s statutory compliances such as IT returns, GST filed data, Bank Statements and so on.  Therefore, being GST compliant can make you eligible for opting for this loan.
  • On GST portal login, a window is enabled on the dashboard to allow GST taxpayers(who are MSMEs) to give their consent for sharing the GST details with PSBloansin59minutes.com.

For further understanding about the process, please read our article on MSMEs get loans up to Rs 1 crore in 59 minutes

A committed panel to close pending pre-GST litigations

“Sabka Vishwas Legacy Dispute Resolution Scheme” will be launched soon to address and close the pending litigations that were raised under the central excise and service tax regime. It will run on a dispute resolution cum amnesty model.  FM in the Union Budget 2019 stated that there is more than Rs 3.75 lakh crore blocked in pre-GST tax litigations. The scheme will fasten the legal process involved in certain pre-GST cases on issues that are still ambiguous and pending before the tribunal.  Under the scheme, relief is provided in depositing the tax dues ranging from 40%-70% of the tax due under dispute for all cases, other than those disclosed voluntarily. The parties can settle all kinds of excise and service tax disputes, except for the following:

  • Cases already pending before the settlement commission or 
  • Cases where parties face conviction. 

Other benefits include waiver of interest and penalty on full payment of tax dues and not being subject to prosecution.

Basic customs duty revised on certain imported goods

union budget

Basic customs duty on few items were increased for allowing level-playing field for domestic industry. Likewise, duty on few items imported and used as inputs by domestic manufacturers were slashed. Below is an illustration of items where the BCD is hiked prominent ones being gold, silver and precious metals: The items on which BCD is slashed are CRGO sheets, amorphous alloy ribbon, ethylene dichloride, propylene oxide, cobalt matte, naphtha, wool fibres, inputs for the manufacture of artificial kidney and disposable sterilised dialyser, and fuels for nuclear power plants.  Customs duty is also being exempted on capital goods required for the manufacture of specified electronic goods.  The government is keen to promote the domestic manufacturing of electric vehicles. Hence, certain parts of electric vehicles can be now imported duty-free as the BCD is made exempt.  Similarly, to encourage domestic publishing and printing industry, 5 % customs duty is being imposed on imported books. In order to upgrade India’s defence system, import of defence equipment that are not being manufactured in India are being exempted from the basic customs duty.

Excise duty hiked on Petrol, Diesel and other items

union budget
union budget

The Finance Minister has proposed an increase to the special additional duty(SAD) on excise as well as the road and infrastructure cess on petrol and diesel each by a rupee per litre. The FM justified the hike on account of a marginal reduction in the oil prices across the globe. The update can be understood with the below tables:    

The announcement leaves uncertainty on whether the Central Government will include petrol under GST in the near-run and in turn do away with the central and state levy of taxes. Other minor rate changes in excise were announced with the tobacco products and crude to now attract a basic excise duty at a nominal rate such as Rs 10 per thousand, 5 per thousand, 0.5%, 1%, Rs 5 paisa per thousand, Rs 10 paisa per thousand depending upon the specifics. The decision was made to address a number of representations received from the industry that despite no basic excise duty, there was a natural calamity and contingent duty being levied on the item.

Other announcements

Retrospective exemptions are given to service tax law as follows:

Nature of ServiceService providerPeriod of exemption
Granting a liquor license against a licence fee or application fee.State Government1 April 2016- 30 June 2017
Educational programmes to students, except Executive Development Programme – (a) 2-year full-time PGD programmes in Management, where admissions are granted based on CAT results, conducted by IIM  (b) Fellow programme in Management;  (c) 5-year integrated programme in Management.IIM as per the guidelines of the Central Government1 July 2003 – 31 March 2016
Granting of a long-term lease of 30 years or more on plots for infrastructure for financial business, where consideration is received via an upfront amount.State Industrial Development Corporations or Undertakings, or by any other entity having 50% or more ownership of Central and State Government, and Union Territory to the developers in any industrial or financial business area1 October 2013 – 30 June 2017

To learn all the highlights of the Union Budget 2019 from the direct tax perspective, read our article on Union Budget 2019

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