Union Budget 2019: GST process simplified; businesses with annual turnover less than Rs 5 crore to file quarterly return

New Delhi: In order to further simplify the GST return filing process, Finance Minister Nirmala Sitharaman announced that taxpayers having an annual turnover of less than Rs 5 Crore shall file only quarterly returns. Presenting Union Budget 2019 at the Parliament on Friday, she said the threshold exemption limit for a supplier of goods is proposed to be enhanced from Rs 20 lakh to an amount exceeding Rs 40 lakh.

The Finance Minister announced that free accounting software for Return preparation has been made available to small businesses. A fully automated GST refund module shall be implemented. Multiple tax ledgers for a taxpayer shall be replaced by one.

The Budget proposes to move to an electronic invoice system wherein invoice details will be captured in a central system at the time of issuance. 

“This will eventually be used to prefill the taxpayers’ returns. There will be no need for a separate e-way bill. To be rolled out from January 2020, the electronic invoice system will significantly reduce the compliance burden,” said Sitharaman.

The Finance Minister said that the landscape of Indirect Tax has changed significantly with the implementation of GST. Terming it as a “monumental reform”, Sitharaman said the GST regime has brought together the Centre and the States with the result 17 taxes and 13 cesses became one and multitude of rates instantly became four.

“Almost all commodities saw rate reduction. Tens of returns were replaced by one. Taxpayers’ interface with tax departments got reduced. Border checks got eliminated. Goods started moving freely across states, which saved time and energy. The dream of ‘One Nation, One Tax, One Market’ was realized,” she said.

Complimenting the GST Council, the Finance Minister said the Council, Centre and States proactively worked to resolve the teething problems witnessed during the initial phase of GST. Sitharaman said that GST rates have been reduced significantly where relief of about Rs. 92,000 crores per year has been given.

On the issue of huge pending litigations from the pre-GST regime, the Minister said that there is a need to unload the baggage and allow business to move on, as more than Rs 3.75 Lakh Crore is blocked in litigations in Service Tax and Excise. 

The budget proposes a dispute resolution-cum-amnesty scheme, called 'the Sabka Vishwas Legacy Dispute Resolution Scheme, 2019' that will allow quick closure of these litigations. The relief under the scheme varies from 40 per cent to 70 per cent of the tax dues for cases other than voluntary disclosure cases, depending on the amount of tax dues involved. The scheme also provides relief from payment of interest and penalty. The person discharged under the scheme shall also not be liable for prosecution. 

On the Customs duty front, the Finance Minister said the proposals are driven with the objectives of securing the country’s borders, achieving higher domestic value addition through Make in India, reducing import dependence, protection to MSME sector, promoting clean energy, curbing non-essential imports, and correcting inversions. 

Describing Defence Modernization and Upgradation as a national priority and of immediate requirement, the budget proposes exemption from the basic Customs duty on import of such defence equipment that are not being manufactured in India.

Describing 'Make in India' as a cherished goal, the Finance Minister proposed an increase in basic Custom duty on certain items so as to provide domestic industry a level playing field. These items include PVC, cashew kernels, Vinyl flooring, tiles, metal fittings, mountings for furniture, auto parts, certain kinds of synthetic rubbers, marble slabs, optical fibre cable, CCTV camera, IP camera, digital and network video recorders. 

She also proposed to withdraw exemption from custom duty on certain electronic items which are now being manufactured in India. To encourage domestic publishing and printing industry, 5% custom duty will be imposed on imported books.

To further promote domestic manufacturing, the Budget proposes customs duty reductions on certain raw materials and capital goods. These include certain inputs of CRGO sheets, amorphous alloy ribbon, ethylene di-chloride, propylene oxide, cobalt matte, naphtha, wool fibres, inputs for manufacture of artificial kidney and disposable sterilised dialyser, and fuels for nuclear power plants. The Finance Minister announced exemption on certain parts of electric vehicles to further incentivize e-mobility.

Further, the Budget proposes to increase Special Additional Excise duty and Road and Infrastructure cess each by one rupee a litre on petrol and diesel.  “Crude prices have softened from their highs. This gives me a room to review excise duty and cess on petrol,” the Finance Minister said. Sitharaman also announced an increase in custom duty on gold and other precious metals from 10% to 12.5%.

The Budget also proposes rationalization of export duty on raw and semi-finished leather to provide relief to the sector.

Sitharaman said that tobacco products and crude attract National Calamity and Contingent duty which in certain cases is being contested on the ground that there is no basic excise duty on these items. To address this issue, the Budget proposes to impose a nominal basic excise duty on tobacco products and crude.

The Finance Minister proposed a few amendments to the Customs Act. She said, “Recent trends reveal that certain bogus entities are resorting to unfair practices to avail undue concessions and export incentives.”  She announced that misuse of duty-free scrips and drawback facility involving more than 50 Lakh rupees will be a cognizable and non-bailable offence.