Section wise Analysis of Union Budget 2020 containing changes under GST, Customs and Central Excise Duty

Section wise Analysis of Union Budget 2020 containing changes under GST, Customs and Central Excise Duty

Key Highlights of Union Budget 2020

The Finance Minister Nirmala Sitharaman presented Union Budget 2020 in Parliament on Saturday, February 1st, 2020. She stated that the government shall work towards taking the country forward so that we can leapfrog to the next level of health, prosperity and well-being.

The budget was presented in the backdrop of two cross-cutting developments:

a) Proliferation of technologies, specially analytics, machine learning, robotics, bio-informatics and Artificial Intelligence; and

b) The number of people in the productive age group i.e. 15-65 years in India, being at its highest.

This combination is special to contemporary India. The energy, enthusiasm and the innovation of our youth are the ignition required to push forward. The Indian spirit of entrepreneurship which weathered several storms over the centuries inspires and motivates all of us alike and hence the government recognised the need to support and further energise this spirit.

This budget is woven around 3 prominent themes:

1. Aspirational India in which all sections of the society seek better standards of living, with access to health, education and better jobs.

2. Economic development for all, indicated in the Prime Minister’s exhortation of ‘Sab ka Saath, Sab ka Vikas, Sab ka Vishwas”. This would entail reforms across swathes of the economy. Simultaneously, it would mean yielding more space for the private sector. Together, they would ensure higher productivity and greater efficiency.

3. Ours shall be a Caring Society that is both humane and compassionate. Antyodaya is an article of faith.

The aim towards this budget has been to lift up the dampened spirits of the Indian economy and to provide a stimulus towards growth whilst recovering from the current slowdown faced by businesses.

Aspirational India

A. Agriculture, Irrigation and Rural Development

1. Rs. 2.83 lakh crore has been allotted for the year 2020-21:

• For Agriculture, Irrigation & allied activities- Rs. 1.60 lakh crore

• For Rural development & Panchayati Raj- Rs. 1.23 lakh crore

2. Implementation of following model laws by State Government which have been already issued by Central government:

• Model Agricultural Land Leasing Act, 2016

• Model Agricultural Produce and Livestock Marketing (Promotion and Facilitation) Act, 2017

• Model Agricultural Produce and Livestock Contract Farming and Services (Promotion and Facilitation) Act, 2018

3. Proposed comprehensive measures for one hundred water stressed districts as water stress related issued are now a serious concern across the country.

4. Expanded PM-KUSUM Scheme that removed farmer’s dependence on diesel and kerosene and linked pump sets to solar energy to provide 20 lakh farmers for setting up stand-alone solar pumps and help farmers to set up solar power generation capacity on their fallow/barren lands.

5. To change the prevailing incentive regime, which encourages excessive use of chemical fertilisers and encourage balanced use of all kinds of fertilizers including the traditional organic and other innovative fertilizers.

6. To create warehousing, in line with Warehouse Development and Regulatory Authority (WDRA) norms.

7. To build a seamless national cold supply chain for perishables, inclusive of milk, meat and fish, the Indian Railways will set up a ‘Kisan Rail’ through PPP arrangements.

8. Krishi Udaan to be launched by the Ministry of Civil Aviation on international and national routes

9. Integrated farming systems in rainfed areas shall be expanded. Multi-tier cropping, bee-keeping, solar pumps, solar energy production in non-cropping season will be added. Zero-Budget Natural Farming shall also be included. The portal on ‘jaivik kheti’, an online national organic products market will also be strengthened.

10. Proposed to put in place a framework for development, management and conservation of marine fishery resources.

1. Proposed to s

B. Wellness, Water and Sanitation

et up Viability Gap funding window for setting up hospitals in the PPP mode.

2. To strengthen ‘TB Harega Desh Jeetega’ campaign to end Tuberculosis by 2025.

3. Aiming to provide piped water supply to all households, Prime Minister announced from the Red Fort the Jal Jeevan Mission.

C. Education and Skills

1. Rs. 99,300 Crore for education sector in 2020-21 and about Rs. 3,000 Crore for skill development.

2. The New Education Policy to be announced soon.

3. Steps to be taken to enable sourcing External Commercial Borrowings and FDI so as to able to deliver higher quality education.

4. To start a programme whereby urban local bodies across the country would provide internship opportunities to fresh engineers for a period up to one year.

5. A few amongst the top 100 ranking institutions in the National Institutional Ranking framework to be asked to offer degree level full-fledged online education programmes.

6. Proposed a National Police University and a National Forensic Science University in the domain of policing science, forensic science, cyber-forensics etc.

7. To reduce the shortage of qualified medical doctors, both general practitioners as well as specialists following are proposed:

• To attach a medical college to an existing district hospital in PPP mode. Those states that fully allow the facilities of the hospital to the medical college and wish to provide land at a concession, would be able to receive Viability Gap Funding.

• The Government to encourage large hospitals with sufficient capacity to offer resident doctors DNB/FNB courses under the National Board of Examinations.

• Special bridge courses to be designed by the Ministries of Health, Skill Development together with professional bodies to bring in equivalence to the abroad standards.

Economic Development

A. Industry, Commerce and Investment

1. Rs. 27,300 Crore allotted for development and promotion of Industry and Commerce for the year 2020-21.

2. Scheme introduced with focus on encouraging manufacture of mobile phones, electronic equipment and semi-conductor packaging with the objective to create immense job creation and to boost domestic manufacturing and attract large investments in the electronics value chain. (Details of the Scheme to be announced later).

3. Proposed National Technical Textiles Mission with a four-year implementation period from 2020-21 to 2023-24 at an estimated outlay of Rs. 1480 crore with the objective to reverse the trend of importing huge quantity of technical textiles.

4. Niryat Rin Vikas Yojana (NIRVIK) to be launched, which provides for higher insurance coverage, reduction in premium for small exporters and simplified procedure for claim settlements with the objective to achieve higher export credit disbursement.

5. Setting up of an Investment Clearance Cell to provide end to end facilitation.

B. Infrastructure

1. Rs. 100 Lakh Crore to be invested on infrastructure over the next 5 years.

2. Proposed to set-up a project preparation facility for infrastructure projects. This programme would actively involve young engineers, management graduates and economists from our Universities.

3. A National Logistics Policy to be released soon to create a single window e-logistics market and focus on generation of employment, skills and making MSMEs competitive.

4. Accelerated development of highways will be undertaken. This will include:

• Development of 2500 Km access control highways

• 9000 Km of economic corridors

• 2000 Km of coastal and land port roads

• 2000 Km of strategic highways

• Delhi-Mumbai Expressway and two other packages would be completed by 2023

• Chennai-Bengaluru Expressway to be started

5. Setting up a large solar power capacity alongside the rail tracks, on the land owned by the railways.

6. Four station re-development projects and operation of 150 passenger trains would be done through PPP mode.

7. 148 km long Bengaluru Suburban transport project at a cost of 18600 crore, would have fares on metro model. Central Government would provide 20% of equity and facilitate external assistance up to 60% of the project cost.

8. High speed train between Mumbai to Ahmedabad to be actively pursued.

9. The Jal Vikas Marg on National Waterway-1 will be completed. Further, the 890 km Dhubri-Sadiya connectivity to be done by 2022.

10. One hundred more airports to be developed by 2024 to support Udaan scheme.

11. Urged all the States and Union Territories to replace conventional energy meters by prepaid smart meters in the next 3 years. This would also give consumers the freedom to choose the supplier and rate as per their requirements.

12. Proposed to expand the national gas grid from the present 16200 km to 27000 km and to deepen gas markets in India, further reforms will be undertaken to facilitate transparent price discovery and ease of transactions.

C. New Economy

1. To bring out soon a policy to enable private sector to build Data Centre parks throughout the country. It will enable our firms to skilfully incorporate data in every step of their value chains.

2. To provide digital connectivity to all ‘public institutions’ at Gram Panchayat level such as Anganwadis, health and wellness centres, government schools, PDS outlets, post offices and police stations, Fibre to the Home (FTTH) connections through Bharatnet to link 100,000 gram panchayats this year. Rs. 6000 Crore provided to Bharatnet programme in 2020-21.

3. Measures for start-ups:

• A digital platform to be promoted that would facilitate seamless application and capture of IPRs. Also, in an Institute of Excellence, a Centre to be established that would work on the complexity and innovation in the field of Intellectual Property.

• Knowledge Translation Clusters to be set up across different technology sectors including new and emerging areas.

• For designing, fabrication and validation of proof of concept, and further scaling up Technology Clusters, harbouring such test beds and small-scale manufacturing facilities to be established.

• To provide early life funding, including a seed fund to support ideation and development of early stage Start-ups.

4. Allocated Rs. 8000 Crore for a period five years for the National Mission on Quantum Technologies and Applications.

Caring Society

A.Women & Child, Social Welfare

1. Rs. 28,600 Crore for programs that are specific to women for continuing the welfare of women via ‘Beti Bachao Beti Padhao’, ‘Poshan Abhiyan’.

2. No manual cleaning of sewer systems or septic tanks. Suitable technologies for such tasks have been identified by the Ministry of Housing and Urban Affairs.

3. Rs. 85,000 Crore for 2020-21 allocated for the welfare of Scheduled Castes and Other Backward classes.

4. Rs. 53,700 Crore for 2020-21 allocated for development and welfare of Scheduled tribes.

5. Rs. 9,500 Crore is being provided for 2020-21 for senior citizens and Divyang.

B.Culture & Tourism

1. Rs. 150 Crore allotted for Ministry of Culture and Rs. 2500 allocated for tourism promotion for 2020-21.

2. Five archaeological sites to be developed as iconic sites with on-site Museums. They are:

• Rakhigarhi (Haryana)

• Hastinapur (Uttar Pradesh)

• Shivsagar (Assam)

• Dholavira (Gujarat)

• Adichanallur (Tamil Nadu)

3. Re-curation of the Indian Museum in Kolkata, which is the oldest in the country.

C.Environment & Climate Change

1. In large cities having population above one million, clean air is a matter of concern. The government proposes to encourage such States that are formulating and implementing plans for ensuring cleaner air in cities above one million. Rs. 4400 Crore allotted for this purpose for 2020-21.

2. Advised closure of old thermal power plants having high levels of carbon emission.

Direct Tax Proposals

1. New & Simplified Taxation Regime has been introduced in the Finance Bill, 2020 for individual and HUFs with the following optional taxation rates subject to non-availment of exemption benefits –

Income BracketTax Rate (%)
Less than 5 LakhsExempt
5 Lakhs – 7.5 Lakhs10% (Presently 20%)
7.5 Lakhs – 10 Lakhs15% (Presently 20%)
10 Lakhs – 12.5 Lakhs20% (Presently 30%)
12.5 Lakhs – 15 Lakhs25% (Presently 30%)
More than 15 Lakhs30%

2. Corporate tax rate cut to 15% for new domestic companies in power sector & manufacturing.

3. Dividend Distribution Tax (DDT) in the hands of companies has been abolished. Classical system of dividend taxation shall be adopted in which dividend shall be taxed in the hands of the recipients instead of the companies.

4. Deduction of dividend to be allowed in cases when received by holding companies from subsidiaries.

5. Turnover limit for start-ups claiming tax deduction raised to Rs. 100 Crore.

6. Tax holiday for qualified start-ups raised to 10 years’ time period.

7. Vivad se Vishwas Scheme launched to reduce direct tax litigation in which the assessee is to pay only tax amount, not interest & penalty in cases where the tax claim is paid by March 31st, 2020. Those who avail the benefit of the scheme after March 31st, 2020 but before June 30th,2020 will have to pay some amount in addition to the tax liability.

8. Proposal to extend the date of loan sanction for availing additional deduction of Rs. 1.5 Lakh by one year to March 31st, 2021. Property developers will also get a tax holiday on the profit earned on affordable housing projects approved by March 31st, 2020.

9. Around 70 exemptions in the present regime to be done away with in the new regime and remaining exemptions to be reviewed in the coming days.

From the Authors Desk

Given the environment of slow growth, declining consumption and weak investment, Budget 2020 comes at a very crucial time of the Economy. Undoubtedly, the Finance Minister Nirmala Sitharaman has announced pro-middle class and development oriented Budget. The FM said the budget is aimed at boosting income and purchasing power of people. Moreover, in this budget the FM broke her own record and delivered the longest Union Budget speech which was 159 minutes long.

FM announced massive state funding to help India’s farm sector in Union Budget 2020-21, aiming to get broader economic growth back up from its lowest in a decade. The fiscal deficit target is revised to 3.8% for the current fiscal year, from an earlier target of 3.3%. She pegged the fiscal deficit target for 2020-21 at 3.5% of the GDP. To give more push to the export sector and achieve higher export credit disbursement, FM proposed a new scheme called Nirvik, which provides for high insurance cover, reduction in premium for small exporters and simplified procedures for claim settlements.

To the limelight of aam aadmi, Income Tax rates for earning up to Rs. 15 lakh per annum have been slashed and no tax will be applied on earnings up to Rs. 5 lakh, if a taxpayer opts for foregoing exemptions and deductions. The FM termed GST as a historic structural reform, while listing out the benefits of the GST regime in reducing the time taken by trucks to transport goods, substantially bringing down the effective tax incidence so that average household saves monthly 4% on account of reduced GST. Around 60 lakh new taxpayers added to tax net and a simplified new return system is being introduced from April 1, 2020. Also, the FM hailed e-invoicing as another innovation wherein critical information shall be captured electronically in a centralized system.

Response of GST is indeed heartening but it remains to be seen as to how smooth these new systems will be put in place. Needless to mention that robust IT network is going to be the heart of new return system and e-invoicing. Unless the system supports these functions without glitches, their utility and efficiency may not be established in desired sense, which we are witnessing in the era of GSTR-1 and GSTR-3B which took its own time to settle and taxpayers still continue to face last day portal glitches leading to staggered extension of due dates – region based. Such ideas may not go well the concept of one nation one tax.

Moreover, the nation was also looking for a roadmap towards rate-rationalisation in GST, which does not seem to be on agenda of this budget. Earlier, former Finance Minister Arun Jaitley had said that the policymakers could merge the 12% and 18% slabs under GST going forward as revenue increases, thereby effectively making it a two-tier tax. Also, it is time that we strive to maintain stability of provisions and systems under GST, as frequent.

Though, Centre and States are quite receptive to resolve GST issues but certain level of steadiness is also required.

In nutshell, though this budget may be considered as good providing tax benefits to the middlemen, corporates and support to farmers, but the present situation of the economy and taxation system was requiring little more.

Changes under GST, Customs and Excise

The Finance Minister Nirmala Sitharaman presented Union Budget 2020 in Parliament on Saturday, February 1st, 2020. She stated that the government shall work towards taking the country forward so that we can leapfrog to the next level of health, prosperity and well-being.

The budget was presented in the backdrop of two cross-cutting developments:

a) Proliferation of technologies, specially analytics, machine learning, robotics, bio-informatics and Artificial Intelligence; and

b) The number of people in the productive age group i.e. 15-65 years in India, being at its highest.

This combination is special to contemporary India. The energy, enthusiasm and the innovation of our youth are the ignition required to push forward. The Indian spirit of entrepreneurship which weathered several storms over the centuries inspires and motivates all of us alike and hence the government recognised the need to support and further energise this spirit.

This budget is woven around 3 prominent themes:

1. Aspirational India in which all sections of the society seek better standards of living, with access to health, education and better jobs.

2. Economic development for all, indicated in the Prime Minister’s exhortation of ‘Sab ka Saath, Sab ka Vikas, Sab ka Vishwas”. This would entail reforms across swathes of the economy. Simultaneously, it would mean yielding more space for the private sector. Together, they would ensure higher productivity and greater efficiency.

3. Ours shall be a Caring Society that is both humane and compassionate. Antyodaya is an article of faith.

The aim towards this budget has been to lift up the dampened spirits of the Indian economy and to provide a stimulus towards growth whilst recovering from the current slowdown faced by businesses.

GST

Amendments carried out through the Finance Bill, 2020 will come into effect on the date of its enactment (unless otherwise specified), concurrently with the corresponding amendments to the Acts passed by the States & Union territories with legislature.

Proposed Amendments in the CGST Act, 2017

Current provisionsProposed provisionsEffect
Section 2(114) – Definition of Union Territory
‘Union territory’ means the territory of-

……..

(c) Dadra and Nagar Haveli and Daman and Diu;

‘Union territory’ means the territory of-

……..

(c) Dadra and Nagar Haveli and Daman and Diu;

(d) Ladakh

Seeks to align the definition of ‘Union territory’ in line with the Jammu and Kashmir Reorganisation Act, 2019 and the Dadra and Nagar Haveli and Daman and Diu (Merger of Union Territories), Act, 2019
Section 10(2) – Composition Scheme
Clause (b), (c) and (d):

(2) The registered person shall be eligible to opt under sub-section (1), if––

……..

(b) he is not engaged in making any supply of goods which are not leviable to tax under this Act;

(c) he is not engaged in making any inter-State outward supplies of goods;

(d) he is not engaged in making any supply of goods through an electronic commerce operator who is required to collect tax at source under section 52…….

Clause (b), (c) and (d):

The registered person shall be eligible to opt under sub-section (1), if––

…….

(b) he is not engaged in making any supply of goods or services which are not leviable to tax under this Act;

(c) he is not engaged in making any inter-State outward supplies of goods or services;

(d) he is not engaged in making any supply of goods or services through an electronic commerce operator who is required to collect tax at source under section 52…….

Seeks to harmonise the conditions for eligibility for opting to pay tax under Composition Scheme as sub-section (1) and sub-section (2A) of Section 10 of the CGST Act.
Section 16(4) – Time period for availing Input Tax Credit (ITC)
A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier.A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier.Seeks to delink the date of issuance of debit note from the date of issuance of the underlying invoice for purposes of availing ITC.
Section 29(1)(c) – Cancellation of registration by proper officer
(1) The proper officer may, either on his own motion or on an application filed by the registered person or by his legal heirs, in case of death of such person, cancel the registration, in such manner and within such period as may be prescribed, having regard to the circumstances where,––

………

(c) the taxable person, other than the person registered under sub-section (3) of section 25, is no longer liable to be registered under section 22 or section 24.

(1) The proper officer may, either on his own motion or on an application filed by the registered person or by his legal heirs, in case of death of such person, cancel the registration, in such manner and within such period as may be prescribed, having regard to the circumstances where,––

………

(c) the taxable person, other than the person registered under sub-section (3) of section 25, is no longer liable to be registered under section 22 or section 24 or intends to opt out of the registration voluntarily made under sub-section (3) of section 25.

Seeks to amend clause (c) so as to provide for cancellation of registration obtained voluntarily under sub-section (3) of Section 25.
Proviso to Section 30(1) – Revocation of Cancellation of Registration
Subject to such conditions as may be prescribed, any registered person, whose registration is cancelled by the proper officer on his own motion, may apply to such officer for revocation of cancellation of the registration in the prescribed manner within thirty days from the date of service of the cancellation order.Subject to such conditions as may be prescribed, any registered person, whose registration is cancelled by the proper officer on his own motion, may apply to such officer for revocation of cancellation of the registration in the prescribed manner within thirty days from the date of service of the cancellation order.

Provided that such period may, on sufficient cause being shown, and for reasons to be recorded in writing, be extended,––

(a) by the Additional Commissioner or the Joint Commissioner, as the case may be, for a period not exceeding thirty days;

(b) by the Commissioner, for a further period not exceeding thirty days, beyond the period specified in clause (a)

Inserting new proviso to empower the jurisdictional tax authorities to extend the period provided to file an application for revocation of cancellation of registration.
Proviso to Section 31(2) – Time period for issuing Tax Invoice
A registered person supplying taxable services shall, before or after the provision of service but within a prescribed period, issue a tax invoice, showing the description, value, tax charged thereon and such other particulars as may be prescribed:

Provided that the Government may, on the recommendations of the Council, by notification and subject to such conditions as may be mentioned therein, specify the categories of services in respect of which––

(a) any other document issued in relation to the supply shall be deemed to be a tax invoice; or

(b) tax invoice may not be issued.

A registered person supplying taxable services shall, before or after the provision of service but within a prescribed period, issue a tax invoice, showing the description, value, tax charged thereon and such other particulars as may be prescribed:

Provided that the Government may, on the recommendations of the Council, by notification and subject to such conditions as may be mentioned therein, specify the categories of services in respect of which––

(a) specify the categories of services or supplies in respect of which a tax invoice shall be issued, within such time and in such manner as may be prescribed;

(b) subject to the condition mentioned therein, specify the categories of services in respect of which––

(i) any other document issued in relation to the supply shall be deemed to be a tax invoice; or

(ii) tax invoice may not be issued.

Seeks to empower the Government to notify the categories of services or supplies in respect of which tax invoice or any other document shall be issued and to make rules regarding the time and manner of its issuance.
Section 51 – Tax Deduction at Source
Section 51(3):

The deductor shall furnish to the deductee a certificate mentioning therein the contract value, rate of deduction, amount deducted, amount paid to the Government and such other particulars in such manner as may be prescribed.

Section 51(3):

A certificate of tax deduction at source shall be issued in such form and in such manner as may be prescribed.

Seeks to empower the Government to make rules to provide for the form and manner in which a certificate of tax deduction at source shall be issued.
Section 51(4):

If any deductor fails to furnish to the deductee the certificate, after deducting the tax at source, within five days of crediting the amount so deducted to the Government, the deductor shall pay, by way of a late fee, a sum of one hundred rupees per day from the day after the expiry of such five days period until the failure is rectified, subject to a maximum amount of five thousand rupees.

Section 51(4):

If any deductor fails to furnish to the deductee the certificate, after deducting the tax at source, within five days of crediting the amount so deducted to the Government, the deductor shall pay, by way of a late fee, a sum of one hundred rupees per day from the day after the expiry of such five days period until the failure is rectified, subject to a maximum amount of five thousand rupees.

Seeks to omit provisions w.r.t. late fee for failure to furnish TDS certificate within 5 days.
Section 109(6) – Constitution of Appellate Tribunal and Benches Thereof
The Government shall, by notification, specify for each State or Union territory except for the State of Jammu and Kashmir, a Bench of the Appellate Tribunal (hereafter in this Chapter, referred to as ‘State Bench’) for exercising the powers of the Appellate Tribunal within the concerned State or Union territory:

Provided that for the State of Jammu and Kashmir, the State Bench of the Goods and Services Tax Appellate Tribunal constituted under this Act shall be the State Appellate Tribunal constituted under the Jammu and Kashmir Goods and Services Tax Act, 2017:

Provided further that the Government shall, on receipt of a request from any State Government, constitute such number of Area Benches in that State, as may be recommended by the Council:…….

The Government shall, by notification, specify for each State or Union territory except for the State of Jammu and Kashmir, a Bench of the Appellate Tribunal (hereafter in this Chapter, referred to as ‘State Bench’) for exercising the powers of the Appellate Tribunal within the concerned State or Union territory:

Provided that for the State of Jammu and Kashmir, the State Bench of the Goods and Services Tax Appellate Tribunal constituted under this Act shall be the State Appellate Tribunal constituted under the Jammu and Kashmir Goods and Services Tax Act, 2017:

Provided further that the Government shall, on receipt of a request from any State Government, constitute such number of Area Benches in that State, as may be recommended by the Council:…….

Seeks to make the provisions for Appellate Tribunal and its benches thereof applicable in the Union territories of Jammu & Kashmir and Ladakh.
Section 122 – Penalty for Certain Offences
After Sub-Section 1:After Sub-Section 1:

(1A) Any person who retains the benefit of a transaction covered under clauses (i), (ii), (vii) or clause (ix) of sub-section (1) and at whose instance such transaction is conducted, shall be liable to a penalty of an amount equivalent to the tax evaded or input tax credit availed of or passed on.

Seeks to insert a new sub-section (1A) so as to make the beneficiary of certain transactions at whose instance such transactions are conducted liable for penalty.
Section 132(1) – Punishment for Certain Offences
(1) Whoever commits any of the following offences, namely:-

a) supplies any goods or services or both without issue of any invoice, in violation of the provisions of this Act or the rules made thereunder, with the intention to evade tax;

(b) issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act, or the rules made thereunder leading to wrongful availment or utilisation of input tax credit or refund of tax;

(c) avails input tax credit using such invoice or bill referred to in clause (b);

(d) collects any amount as tax but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due;

(e) evades tax, fraudulently avails input tax credit or fraudulently obtains refund and where such offence is not covered under clauses (a) to (d);

(1) Whoever commits, or causes to commit and retain the benefits arising out of, any of the following offences

a) supplies any goods or services or both without issue of any invoice, in violation of the provisions of this Act or the rules made thereunder, with the intention to evade tax;

(b) issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act, or the rules made thereunder leading to wrongful availment or utilisation of input tax credit or refund of tax;

(c) avails input tax credit using the invoice or bill referred to in clause (b) or fraudulently avails input tax credit without any invoice or bill

(d) collects any amount as tax but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due;

(e) evades tax, fraudulently avails input tax creditor fraudulently obtains refund and where such offence is not covered under clauses (a) to (d);

Seeks to amend Section 132 so as to make the offence of fraudulent availment of ITC without invoice or bill cognizable and non-bailable under sub-section (1) of Section 69 and to make any person who retains the benefit of certain transactions and at whose instance such transactions are conducted liable for punishment.
Section 140 – Transitional Arrangements for ITC
Sub-Section (1):

A registered person, other than a person opting to pay tax under section 10, shall be entitled to take, in his electronic credit ledger, the amount of CENVAT credit of eligible duties carried forward in the return relating to the period ending with the day immediately preceding the appointed day, furnished by him under the existing law in such manner as may be prescribed:

……….

Sub-Section (1):

A registered person, other than a person opting to pay tax under section 10, shall be entitled to take, in his electronic credit ledger, the amount of CENVAT credit of eligible duties carried forward in the return relating to the period ending with the day immediately preceding the appointed day, furnished by him under the existing law within such time and in such manner as may be prescribed:

…………..

Seeks to amend Section 140 relating to transitional arrangements for ITC, so as to prescribe the time limit and the manner for availing ITC against certain unavailed credit under the existing law.

This amendment shall take effect retrospectively from July 1, 2017.

Sub-Section (2):

A registered person, other than a person opting to pay tax under section 10, shall be entitled to take, in his electronic credit ledger, credit of the unavailed CENVAT credit in respect of capital goods, not carried forward in a return, furnished under the existing law by him, for the period ending with the day immediately preceding the appointed day in such manner as may be prescribed:

…………..

Sub-Section (2):

A registered person, other than a person opting to pay tax under section 10, shall be entitled to take, in his electronic credit ledger, credit of the unavailed CENVAT credit in respect of capital goods, not carried forward in a return, furnished under the existing law by him, for the period ending with the day immediately preceding the appointed day within such time and in such manner as may be prescribed:

………….

Sub-Section (3):

A registered person, who was not liable to be registered under the existing law, or who was engaged in the manufacture of exempted goods or provision of exempted services, or who was providing works contract service and was availing of the benefit of notification No. 26/2012-Service Tax, dated the 20th June, 2012 or a first stage dealer or a second stage dealer or a registered importer or a depot of a manufacturer, shall be entitled to take, in his electronic credit ledger, credit of eligible duties in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day subject to the following conditions, namely:––

……….

Sub-Section (3):

A registered person, who was not liable to be registered under the existing law, or who was engaged in the manufacture of exempted goods or provision of exempted services, or who was providing works contract service and was availing of the benefit of notification No. 26/2012-Service Tax, dated the 20th June, 2012 or a first stage dealer or a second stage dealer or a registered importer or a depot of a manufacturer, shall be entitled to take, in his electronic credit ledger, credit of eligible duties in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day,within such time and in such manner as may be prescribed, subject tothe following conditions, namely:––

……..

Sub-Section (5):

A registered person shall be entitled to take, in his electronic credit ledger, credit of eligible duties and taxes in respect of inputs or input services received on or after the appointed day but the duty or tax in respect of which has been paid by the supplier under the existing law, subject to the condition that the invoice or any other duty or tax paying document of the same was recorded in the books of account of such person within a period of thirty days from the appointed day:

……….

Sub-Section (5):

A registered person shall be entitled to take, in his electronic credit ledger, credit of eligible duties and taxes in respect of inputs or input services received on or after the appointed day but the duty or tax in respect of which has been paid by the supplier under the existing law, within such time and in such manner as may be prescribed, subject to the condition that the invoice or any other duty or tax paying document of the same was recorded in the books of account of such person within a period of thirty days from the appointed day:

………..

Sub-Section (6):

A registered person, who was either paying tax at a fixed rate or paying a fixed amount in lieu of the tax payable under the existing law shall be entitled to take, in his electronic credit ledger, credit of eligible duties in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day subject to the following conditions, namely:––

……….

Sub-Section (6):

A registered person, who was either paying tax at a fixed rate or paying a fixed amount in lieu of the tax payable under the existing law shall be entitled to take, in his electronic credit ledger, credit of eligible duties in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day, within such time and in such manner as may be prescribed, subject to the following conditions, namely:––

………

Sub-Section (7):

Notwithstanding anything to the contrary contained in this Act, the input tax credit on account of any services received prior to the appointed day by an Input Service Distributor shall be eligible for distribution as credit under this Act even if the invoices relating to such services are received on or after the appointed day.

Sub-Section (7):

Notwithstanding anything to the contrary contained in this Act, the input tax credit on account of any services received prior to the appointed day by an Input Service Distributor shall be eligible for distribution as credit under this Act,within such time and in such manner as may be prescribed, even if the invoices relating to such services are received on or after the appointed day.

Sub-Section (8):

Where a registered person having centralised registration under the existing law has obtained a registration under this Act, such person shall be allowed to take, in his electronic credit ledger, credit of the amount of CENVAT credit carried forward in a return, furnished under the existing law by him, in respect of the period ending with the day immediately preceding the appointed day in such manner as may be prescribed:

………

Sub-Section (8):

Where a registered person having centralised registration under the existing law has obtained a registration under this Act, such person shall be allowed to take, in his electronic credit ledger, credit of the amount of CENVAT credit carried forward in a return, furnished under the existing law by him, in respect of the period ending with the day immediately preceding the appointed day within such time and in such manner as may be prescribed:

………

Sub-Section (9):

Where any CENVAT credit availed for the input services provided under the existing law has been reversed due to non-payment of the consideration within a period of three months, such credit can be reclaimed subject to the condition that the registered person has made the payment of the consideration for that supply of services within a period of three months from the appointed day.

Sub-Section (9):

Where any CENVAT credit availed for the input services provided under the existing law has been reversed due to non-payment of the consideration within a period of three months, such credit can be reclaimed within such time and in such manner as may be prescribed, subject to the condition that the registered person has made the payment of the consideration for that supply of services within a period of three months from the appointed day.

Section 168(2) – Power to Issue Instructions or Directions
The Commissioner specified in clause (91) of section 2, sub-section (3) of section 5, clause (b) of sub-section (9) of section 25, sub-sections (3) and (4) of section 35, sub-section (1) of section 37, sub-section (2) of section 38, sub-section (6) of section 39, sub-section (1) of section 44, sub-sections (4) and (5) of section 52, sub-section (5) of section 66, sub-section (1) of section 143, sub-section (1) of section 151, clause (l) of sub-section (3) of section 158 and section 167 shall mean a Commissioner or Joint Secretary posted in the Board and such Commissioner or Joint Secretary shall exercise the powers specified in the said sections with the approval of the Board.The Commissioner specified in clause (91) of section 2, sub-section (3) of section 5, clause (b) of sub-section (9) of section 25, sub-sections (3) and (4) of section 35, sub-section (1) of section 37, sub-section (2) of section 38, sub-section (6) of section 39, sub-section (1) of section 44, sub-sections (4) and (5) of section 52, sub-section (5) of section 66, sub-section (1) of section 143, except the second proviso thereof, sub-section (1) of section 151, clause (l) of sub-section (3) of section 158 and section 167 shall mean a Commissioner or Joint Secretary posted in the Board and such Commissioner or Joint Secretary shall exercise the powers specified in the said sections with the approval of the Board.Seeks to make provisions for enabling the jurisdictional Commissioners to exercise powers under sub-section (5) of Section 66 and also under second proviso to sub-section (1) of Section 143.

Section 66(5): Special Audit

The expenses of the examination and audit of records under sub-section (1), including the remuneration of such chartered accountant or cost accountant, shall be determined and paid by the Commissioner and such determination shall be final.

Second proviso to sub-section (1) of Section 143: Job work procedure

Provided further that the period of one year and three years may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding one year and two years respectively

Section 172(1) – Removal of Difficulties
If any difficulty arises in giving effect to any provisions of this Act, the Government may, on the recommendations of the Council, by a general or a special order published in the Official Gazette, make such provisions not inconsistent with the provisions of this Act or the rules or regulations made thereunder, as may be necessary or expedient for the purpose of removing the said difficulty:

Provided that no such order shall be made after the expiry of a period of three years from the date of commencement of this Act.

If any difficulty arises in giving effect to any provisions of this Act, the Government may, on the recommendations of the Council, by a general or a special order published in the Official Gazette, make such provisions not inconsistent with the provisions of this Act or the rules or regulations made thereunder, as may be necessary or expedient for the purpose of removing the said difficulty:

Provided that no such order shall be made after the expiry of a period of three years five years from the date of commencement of this Act.

Seeks to extend the time limit provided for removal of difficulties thereunder from three years to five years, with effect from the date of commencement of the said Act.
Schedule II – Activities or Transactions to be Treated as Supply of Goods or Supply of Services
Paragraph 4:

Transfer of business assets

(a) where goods forming part of the assets of a business are transferred or disposed of by or under the directions of the person carrying on the business so as no longer to form part of those assets, whether or not for a consideration, such transfer or disposal is a supply of goods by the person;

(b) where, by or under the direction of a person carrying on a business, goods held or used for the purposes of the business are put to any private use or are used, or made available to any person for use, for any purpose other than a purpose of the business, whether or not for a consideration, the usage or making available of such goods is a supply of services;

……….

Paragraph 4:

Transfer of business assets

(a) where goods forming part of the assets of a business are transferred or disposed of by or under the directions of the person carrying on the business so as no longer to form part of those assets, whether or not for a consideration, such transfer or disposal is a supply of goods by the person;

(b) where, by or under the direction of a person carrying on a business, goods held or used for the purposes of the business are put to any private use or are used, or made available to any person for use, for any purpose other than a purpose of the business, whether or not for a consideration, the usage or making available of such goods is a supply of services;

……….

Seeks to omit the words ‘whether or not for consideration’ so as to give clarity to the meaning of the entries (a) and (b) of said paragraph, while aligning the same with Section 7(1) and Schedule I (supply without consideration) of the CGST Act.

This amendment shall take effect retrospectively from July 1, 2017.

Retrospective exemption from, or levy or collection of, CGST in certain cases
Relevant clause of the Finance Bill, 2020Effect
Clause 130Clause 130 of the Bill seeks to provide retrospective exemption from CGST on supply of fishmeal, during the period from July 1, 2017 up to September 30, 2019 (both days inclusive).

It further seeks to retrospectively levy CGST at the reduced rate of 6% on supply of pulley, wheels and other parts (falling under heading 8483) and used as parts of agricultural machinery of headings 8432, 8433 and 8436 during the period from the July 1, 2017 up to December 31, 2018 (both days inclusive).

It also seeks to provide that no refund shall be made of the tax which has already been collected.

Clause 131The refund of accumulated credit of compensation cess on tobacco products arising out of inverted duty structure in Compensation Cess is disallowed w.e.f October 1, 2019 vide Notification No. 31/2019- Compensation Cess (Rate) dated September 30, 2019.

Clause 131 of the Bill seeks to give retrospective effect to the above notification w.e.f. July 1, 2017 onwards. Accordingly, no refund on account of inverted duty structure would be admissible on any tobacco products.

 

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