Union Budget 2019 Wishlist for Indirect Tax

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By Jigar Doshi,

The GST Council is empowered to take all major decisions concerning amendments of GST under the GST regime. As far as indirect tax is concerned, the scope of the Union Budget is largely limited to proposing amendments to the GST law already recommended by the GST Council along with amendments about the Customs law. In this backdrop, here is what we hope from the Union Budget 2019:
 
Customs duty exemption for the mobile industry
 
To give a boost to mobile phone manufacturing, the government should look into the possibility of exempting the basic customs duty on Printed Circuit Board Assembly (PCBA) for low-value feature phones. This will provide a competitive edge to Indian manufacturers exporting feature phones that have a global market of around USD 250 billion.
 
Rationalization of import duties on automobiles
 
We anticipate that the government will reduce customs duty on the import of motor vehicles in completely knocked down condition (CKD) from 15% to 10% and semi-knocked down condition (SKD) from 25% to 20%. This will promote local value addition in the automobile sector. At the same time, the government can also look at increasing customs duty on imported motor vehicles to 40% (from the current 25%) to dis-incentivize their imports and promote local manufacturing. 
 
Subsuming stamp duty under GST
 
It has been a long-standing demand of real estate players to bring stamp duty under the GST regime. Stamp duty is a major source of income for state governments. With the implementation of GST, most states have been complaining of reduction in their tax collections and convincing them to subsume stamp duty under GST may be a challenge. 
 
Amendments to GST law
 
The GST Council in its 31st meeting had approved certain proposals which required amendments to the CGST Act. We expect these amendments to be proposed and passed with the Union Budget.
Creation of a Centralized Appellate Authority for Advance Ruling to deal with cases of conflicting decisions by two or more State Appellate Advance Ruling Authorities on the same issue.
Amendment of section 50 to provide that interest on account of a delayed payment of tax should be charged only on the net tax liability, after taking into account the admissible input tax credit (ITC), i.e., interest would be leviable only on the amount payable through the electronic cash ledger.
Amendment to section 16 to provide relief from interest liability on the reversal of ITC on account of non-payment of consideration to the supplier within 180 days. 

The author is Partner at Indirect Tax, SKP Business Consulting LLP

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