Indian Union Budget Synopsis - 2019-20 Ashok Maheshwary & Associates
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Indian Union Budget Synopsis 2019-20 Ashok Maheshwary & Associates C H A R T E R E D A C C O U N T A N T S
Table of Contents
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Economic Survey 2018-19
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GDP Growth 2019-20 GDP Growth in 2018-19
GDP to grow at 7% in 2019-20 due to growth of investment & consumption India’s growth of real GDP has been high with average growth of 7.5% in the last 5
years (2014-15 onwards)
The April, 2019 Report of the World Economic Outlook (WEO) of International
Monetary Fund (IMF) has projected India’s GDP to grow even higher at 7.3 % in 2019 The Indian economy grew at 6.8% in 2018-19, experiencing some moderation in growth
when compared to the previous year
Despite the Report projecting a decline in growth of world output and that
of Emerging Market and Developing Economies (EMDEs) by 0.3% and 0.1 % This moderation in growth momentum is mainly on account of lower
respectively growth in
Agriculture & allied,
Trade, hotel, transport, storage,
Communication and services related to broadcastinga and
Public administration & defence sectors
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World’s Economy Current Account Deficit & Trade Deficit
The world output growth declined from 3.8% in 2017 to 3.6% in Current Account Deficit (CAD) increased from 1.9% of GDP in 2017-18 to 2.6% in April-December
2018 2018 on account of:
The slowdown in the world economy and Emerging Market and higher trade deficit driven by rise in international crude oil prices (Indian basket)
Developing Economies (EMDEs) in 2018 is due to:
The trade deficit increased from US$ 162.1 billion in 2017-18 to US$ 184 billion 2018-19
Escalation of US China trade tensions Merchandise imports reduced from 21.1% to 10.4% Growth in service exports and imports
Tighter credit policies in China in US dollar terms declined to 5.5% and 6.7% respectively in 2018-19, from 18.8% and 22.6%
Normalization of monetary policy in the larger advanced respectively in 2017-18
economies
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Forex Reserves
The foreign exchange reserves in nominal terms (including the valuation effects) decreased by US$ 11.6 billion
end-March 2019 over end-March 2018
During FY2018-19, foreign exchange reserves were declining until October 2018 due to RBI’s intervention to
modulate exchange rate volatility
India’s foreign exchange reserves continue to be comfortably placed at US $ 422.2 billion, as on 14th June 2019
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Foreign Direct Investment
Net Foreign Direct Investment (FDI) inflows grew by 14.2% in 2018-19.
FDI inflows have been growing at a high rate since 2015-16
Top sectors attracting FDI equity inflows are:
Services
Automobiles
Chemicals
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Investment scenario Investment in Service Sector
Decline in investment rate and fixed investment rate since 2011-12, In year 2011-12, industry sector had the highest investment rate
seems to have bottomed out with some early signs of recovery since followed by services
2017-18
Service sector is the most dynamic sector in the economy and has
Fixed investment growth picked up from 8.3 % in 2016-17 to 9.3% in remained the key driver of economic growth along with being a major
2017-18 and further to 10.0 % in 2018-19 FDI inflows have been contributor to GVA and export basket of the Indian Economy
growing at a high rate since 2015-16 Service exports enhanced to Rs. 14.389 lac cr (`USD 205.55 billion) in
The decline in fixed investment until 2016-17 was mainly by the 2018-19 from Rs. 0.746 lac cr (`USD 10.65 billion) in 2000-01
household sector India’s share in world service exports increased from 2% in 2005 to 3.5
Fixed investment by public sector and private corporate sector % in 2017. much higher than that of manufacturing exports which
remaining almost at same levels stands at 1.8 per cent in 2017
The growth of bank credit to MSME was contracting in 2016 and 2017,
but has started picking up in 2018
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Growth in Manufacturing Agricultural, Forestry and
Sector Fishing
Manufacturing accounted for 16.4 per cent in total GVA in 2018-19. Real growth in ‘Agriculture & allied’ sector was lower in 2018-19 at
The growth in manufacturing sector picked up in 2018-19,
2.9%, after two years of good agriculture
although the momentum slowed down towards the end of the
financial year with a growth of 3.1% in fourth quarter of the year,
as compared to 12.1%, 6.9% and 6.4% in first, second and third
quarter respectively
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Growth in other sectors
The growth in manufacturing sector picked up in 2018-19, although the momen-
tum slowed down towards the end of the financial year with a growth of 3.1% in
fourth quarter of the year, as compared to 12.1%, 6.9% and 6.4% in first, second and
third quarter respectively
Production of cement and consumption of finished steel grew at 13.3% and 7.5%
respectively in 2018-19, higher than growth rates in 2017-18, reflecting higher
growth of construction sector in FY2018-19
The ‘Financial, real estate and professional services’ sector grew at 7.4% in 2018-19,
higher as compared to 6.2% in 2017-18. This sector amounts for more than 20% of
overall GVA of the economy
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Non-Tax Proposals
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Infrastructure Development
( )
It has been proposed to return the regulation authority over the housing
financesector from National Housing Bank (NHB) to RBI
A Credit Guarantee Enhancement Corporation for which regulations
have been notified by the RBI, will be set up in 2019-20
An action plan to deepen the market for long term bonds including for
deepening markets for corporate bond repos, credit default swaps etc.,
with specific focus on infrastructure sector, will be put in place
It is proposed to permit investments made by FIIs/FPIs in debt securities
issued by Infrastructure Debt Fund – Non-Bank Finance Companies
(IDF-NBFCs) to be transferred/ sold to any domestic investor within the
specified lock-in period
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Industrial Development
For ease of access to credit for MSMEs, Government has It has been decided to extend the pension benefit to A social stock exchange - under the regulatory ambit of
introduced providing of loans upto 1 crore for MSMEs about 30,000,000 retail traders & small shopkeepers whose Securities and Exchange Board of India (SEBI) for listing
(~USD 143,000 USD) within 59 minutes through a annual turnover is less than 1.5 crore (~200,000 USD) social enterprises and voluntary organizations
dedicated online portal under Pradhan Mantri Karam Yogi Maandhan Scheme working for the realization of a social welfare objective
so that they can raise capital as equity, debt or as units
Government will create a payment platform for MSMEs
Under the Interest Subvention Scheme for MSMEs, like a mutual fund
to enable filing of bills and payment thereof on the
Rs.350 crores (~50 million USD) has been allocated for
platform itself
FY 2019-20 for 2% interest subvention for all GST
registered MSMEs, on fresh or incremental loans
The government will launch a scheme to invite global
companies through a transparent competitive bidding
to set up mega-manufacturing plants in sunrise and
advanced technology areas such as Semi-conductor
Fabrication (FAB), Solar Photo Voltaic cells etc.
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Industrial Development
The main objective of the Scheme is to encourage faster adoption of
Electric vehicles by way of offering upfront incentive on purchase of
Electric vehicles and also by establishing the necessary charging
infrastructure for electric vehicles.
Customs duty exemption on certain e-vehicle parts. Income tax deduction
of interest on loans for e-vehicle purchase.
© Copyright 2019 Ashok Maheshwary & Associates LLP - All Rights Reserved An International Tax Review Ranked Firm Swachh Bharat It has been proposed to expand the Swachh Bharat Mission to undertake sustainable solid waste management in every village along with harnessing the latest technologies available to transform waste into energy. © Copyright 2019 Ashok Maheshwary & Associates LLP - All Rights Reserved An International Tax Review Ranked Firm
Women’s Development to Women Led Development Various schemes such as MUDRA, Stand UP India and the Self Help Group An overdraft of Rs. 5,000 (~USD 80) shall be allowed to women SHG member (SHG) movement are aimed at expanding and encouraging women having a Jan Dhan Bank Account entrepreneurship One woman in every SHG will also be made eligible for a loan up to 1 lakh The Women (Self Help Group) SHG interest subvention programme has been under the MUDRA Scheme expanded to all districts © Copyright 2019 Ashok Maheshwary & Associates LLP - All Rights Reserved An International Tax Review Ranked Firm
Labour & Youth Welfare Vision For Next Decade
It has been proposed to lay focus on new-age skills like Physical and social infrastructure
Artificial Intelligence (AI), Internet of Things, Big Data, 3D Digital India
Printing, Virtual Reality and Robotics,
Pollution Free India
The Government is proposing to streamline multiple
Make in India
labour laws into a set of four labour codes to standardize
and streamline the process of registration and filing of Water management and clean rivers
returns Blue Economy
Space Programmes
Self-sufficiency and export of food grains
Healthy society
Team India with Jan Bhagidari
© Copyright 2019 Ashok Maheshwary & Associates LLP - All Rights Reserved An International Tax Review Ranked Firm Non-Tax Measures for Promoting Less Cash Economy The business establishments with annual turnover more than 50 crore shall offer BHIM UPI, UPI-QR Code, Aadhaar Pay, certain Debit cards, low cost digital modes of payment to their customers and no charges or Merchant Discount Rate shall be imposed on customers as well as merchants Banking & Financial Sector Having addressed legacy issues, public sector banks are now be further provided with 70,000 crore capital to boost credit for a strong impetus to the economy For purchase of high-rated pooled assets of financially sound Non-BankingFinancial Companies (‘NBFCs’), amounting to a total of Rupees 1 lakh crore (~USD 14.3 billion USD) during the current financial year, Government will provide one time six months partial credit guarantee to Public Sector Banks for first loss of up to 10% Reserve Bank of India (‘RBI’) is the regulator for NBFCs. However, RBI has limited regulatory authority over NBFCs. Appropriate proposals have been placed for strengthening the regulatory authority of RBI over NBFCs Disinvestment Government is setting an enhanced target of 1,05,000 crore of disinvestment receipts for the financial year 2019-20. Government will offer an investment option in ETFs on the lines of Equity Linked Savings Scheme (ELSS). However necessary amendments in the Income-tax © Copyright 2019 Ashok Maheshwary & Associates LLP - All Rights Reserved An International Tax Review Ranked Firm
Key Regulatory Annonuncements
The Government would examine suggestions of further
opening up of FDI in aviation, media (animation, AVGC)
It has been proposed to return the regulation authority
and insurance sectors in consultation with all stake-
Government has asked Securities Exchange Board of over the housing finance sector from National Housing
holders.
India (‘SEBI’) to consider raising the minimum public Board (‘NHB’) to Reserve Bank of India (‘RBI’).
shareholding in the listed companies from the 100% FDI would be permitted for insurance
current threshold of 25% to 35%. intermediaries.
Local sourcing norms will be eased for FDI in Single
(‘ ) Brand Retail Sector. To facilitate onshoring of international insurance transac-
tions and to enable opening of branches by foreign rein-
FDI inflows into India have remained robust despite
surers in the International Financial Services Centre, it is
global headwinds. Global FDI flows slid by 13% in (‘ )
proposed to reduce Net Owned Fund requirement from
2018, to US$ 1.3 trillion from US$ 1.5 trillion the
The statutory limit for FPI investment in a company would Rs. 5,000 crore (`714 million USD) to 1,000 crore
previous year – the third consecutive annual decline,
be increased from 24% to sectoral foreign investment limit (~143 million USD).
according to UNCTAD’s World Investment Report
with option given to the concerned corporates to limit it to
2019. India’s FDI inflows in 2018-19 remained strong
a lower threshold. FPIs will be permitted to subscribe to
at US$ 64.375 billion marking a 6% growth over the
listed debt securities issued by ReITs and InvITs.
(‘ )
previous year. Further steps have been taken in
Keeping in view the wider interest of the subscribers and to
order to make India a more attractive FDI
(‘ ) maintain arm’s length relationship of the NPS Trust with
destination:
Pension Fund Regulatory and Development Authority
There is also a proposal to merge the Non-Resident Indian
(‘PFRDA’), the government will take steps to separate the
(‘NRI’)- Portfolio Investment Scheme Route with the For-
NPS Trust from PFRDA with appropriate organizational
eign Portfolio Investment Route.
structure.
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Tax Proposals
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Income Tax
Surcharge for individuals/HUF/AOP/BOI having income 194M is proposed to be introduced wherein Individu- Foreign Travel for self /others exceeding Rs. 200,000
more than INR 2 Crores has been increased as per below al/HUF shall be required to deduct TDS on payment for Deposit in current account exceeding Rs.10mn,
limits: contractual or professional payments (not already Electricity Expense more than Rs. 100,000
covered u/s 19C or 194J) exceeding INR 5mn @ 5%. How- Others to be prescribed,
Taxable Income exceeding INR 20mn but upto INR
ever, such individuals will not need to procure TAN and People claiming capital gain exemption u/s 54, 54F,
50mn - 25%
can pay taxes basis of their PAN only etc. if the income before claiming such exemption is
Taxable Income exceeding INR 50mn - 37%
more than the minimum exemption limit
For TDS on sale of property u/s 194-IA@ 1%, it has been
The rate of TDS for insurance payments is proposed to
clarified that it shall also be applicable on other charges It has been proposed to provide interchangeability of
be changed from 1% gross amount to 5% net amount
like club membership, car parking, maintenance fee, PAN and Aadhaar to enable a person who does
(net of amount).
water/electricity charges, etc. pertaining to purchase of not have PAN but has Aadhaar to use Aadhaar in place of
Additional deduction of interest for Rs. 150,000 p.a u/s property to take effect from 1st September 2019 PAN under the Act. Further, the individuals
80EEA for affordable housing subject to certain who haven’t linked their Aadhaar, their PANs will be
Gifts by residents to non-residents of property or money
conditions made operative in the prescribed manner
would be deemed income u/s 9 subject to any relief
In case of domestic company, the rate of income-tax shall under treaty as well as exceptions u/s 56(2)(x) of the Act. It has been proposed to expand the scope of Statement
be 25% of the total income, if its total turnover or gross of Financial Transactions (SFT) by mandating
TDS by Individual/HUF for contractual/professional pay-
receipts in the FY 2017-18 does not exceed INR 4bn (the furnishing of statement by certain prescribed persons.
ments exceeding INR 5mn in a Financial Year. However,
earlier limit was INR 2.50 bn), and in all other cases the The current threshold of rupees fifty thousand on
TAN would not be required and PAN would suffice.
rate of Income tax shall be 30%. aggregate value of transactions during a financial year,
Filing of Income tax returns would be mandatory for for furnishing of information has also been proposed to
individuals who have done certain expenditures i.e. be removed
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Income Tax
Section 13A (Political party to receive donation To make a cash less economy, 269SU has been ( )
exceeding INR 2,000), 35AD (Capital Expenditure inserted providing every person carrying on busi- Section 80LA is amended to provide that a unit in IFSC
exceeding INR 10,000), 40A (Any expense exceed- ness to provide the facility for accepting payment shall be allowed 100% deduction for profits for any
ing INR 10,000), 2 nd Proviso to 43(1)(payment through the prescribed electronic modes, in addi- ten-year block within the fifteen-year period when the
exceeding INR 10,000 in a day not to be included tion to the facility for other electronic modes of permission to operate was obtained. The earlier provision
in cost of asset), 43CA (payment of consideration payment if the turnover in the last financial year allowed 100% deduction for profits for first 5 years and
for asset to be stamp duty value), 44AD (Presump- exceeded INR 500mn . The compliance is to be 50% profits for next 5 years
tive Income) and 80JJAA (which provides thir- done from 1st November 2019 and non-compli-
tyDeduction of 30% per cent. of the additional ance shall attract penalty of aINR 5,000 for every Exemption from dividend distribution tax from current
employee cost for 3 years) is are sought to be day during which such failure continues and accumulated income to companies and mutual funds
being amended to include certain other modes of operating in IFSC
No bank or system provider shall impose any charge
payment for in addition to the already existing Transfer of certain bonds, GDRs, Derivatives etc. by
upon anyone, either directly or indirectly,
permissible modes of payment in the form of an non-residents through a stock exchange in IFSC are not
for using the modes of electronic payment pre-
account payee cheque or an account payee bank regarded as transfer u/s 47 and hence not subject to tax.
scribed under section 269SU of the Act
draft or the electronic clearing system through a Such facility has also been extended to a Category-III AIF,
bank account. 194N is proposed to be introduced for deduction also located in IFSC of which all the unit holders are non-
Similarly, Section 269SS, 269ST and 269T prohibit- of TDS @ 2% on cash payments by a banking com- resident but subject to certain conditions
ing certain payments otherwise through pany/ cooperative bank/post office to any person Interest payment on external borrowing to a non-resident
banking channel are also sought to be amended from an account exceeding Rs. 10mn by a unit in IFSC for monies borrowed on or after 1st day of
to similar lines. (in aggregate) during a year. September, 2019, shall be exempt from tax
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Income Tax
( )
Insertion of section 80EEA for deduction in respect of
Benefit of Section 43D of the Act which deals To encourage fund management activities in India, interest up to INR 150,000 on loan taken during the
makes interest on NPAs taxable in the year of certain provisions u/s 9A are proposed to be amended FY 2019-20 for a residential house property subject
receipt has been extended to deposit-taking to the effect that - to following conditions:
NBFCs and systemically important non de-
the corpus of the fund shall not be less than INR loan has been sanctioned by a financial insti-
posit-taking NBFCs. Similarly, section 43B is
1bn at the end of 6 months from the end of the tution during the period beginning on the
proposed to be amended to provide that any
month of its establishment/incorporation or at the 1st April, 2019 to 31st March 2020.
sum payable by the assessee as interest on
end of such PY, whichever is later (the earlier provi- The stamp duty value of house property does
any loan or advances from a deposit-taking
sion provided for checking this limit at the end of not exceed INR 4.5mn
NBFCs and systemically important non de-
FY only); and Assessee does not own any residential house
posit-taking NBFCs shall be allowed as de-
The manner of computation of remuneration of property on the date of sanction of loan.
duction if it is actually paid on or before the
fund manager shall be prescribed as against
due date of furnishing the return of income.
the arm’s length principle provided earlier.
The definition of affordable housing projects hasbeen
aligned with the definition under GST laws.
Insertion of new section 80EEB for deduction in respect
of interest on loan taken for purchase of an electric
vehicle from any financial institution upto
INR 150,000 p.a subject to certain conditions.
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Income Tax
(iii) relax the condition restricting transfer of new For distressed companies provisions of
Start-ups will not be required to justify FMV asset being computer or computer software from section 79 that the provision shall not apply to
of their shares issued to Category-II AIFs also. the current 5 years to 3 years. those companies, and their subsidiary and the
For other cases, if the start-up and investor Special administrative arrangements shall be made subsidiary of such subsidiary, where-
files requisite declarations and provide infor- by CBDT for pending assessments of Start-ups and (i) the National Company Law Tribunal (NCLT) on a
mation in their returns, it would no longer be redressal of their grievances in relation to Angel Tax. petition moved by the Central Government u/s
subjected to any kind of scrutiny in respect of Section 79 is amended to provide that loss incurred in 241 of the Companies Act, 2013 has suspended
valuation of share premiums any year prior to previous year in case of closely held the Board of Directors of such company and has
Mechanism of e-verification will be start-up shall be allowed to be carried forward and appointed new directors u/s 242 of the Companies
introduced to fix the issue of establishing set off against income of previous year on satisfaction Act, 2013: and
identity of the investor and source of his of either of condition: (ii) a change in shareholding of such company, and
funds. on the last day of FY in which the loss is to be its subsidiaries and the subsidiary of such subsidi-
Section 54GB is proposed to amend the said adjusted, 51% of voting power is held by the ary, has taken place
section so as to- persons who were the beneficial owners on the in a previous year pursuant to a resolution plan
(i) extend the sun set date of transfer of resi- last day of FY in which the loss was incurred, or approved by NCLT u/s 242 of the Companies Act,
dential property from 31st March 2019 to for eligible start-ups, all the shareholders who 2013, after providing an opportunity of being
31st March 2021; held shares on the last day of FY in which loss heard to Principal Commissioner or Commissioner.
(ii) relax the condition of minimum share- was incurred continue to hold such shares on Also, for such companies, for MAT computation,
holding of 50% of share capital or voting the last day of FY in which loss is adjusted and the accumulated losses and unabsorbed deprecia-
rights to 25% . such loss been incurred during the period of 7 tion shall also be allowed to be reduced
years from year of incorporation.
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Income Tax
Faceless e-assessment will be introduced to Section 115UB is sought to be amended to provide that:
eliminate undesirable practices because of
business loss of the investment fund shall be allowed to
personal interaction between the taxpayer and the
be carried forward and it shall be set-off and it shall not
department, scheme of faceless assessment in
be passed onto the unit holder;
electronic mode involving no human interface is
other losses shall also be ignored for the purposes of
launched.
pass through to its unit holders for units has not been
Cases selected for scrutiny shall be allocated to assess- held by the unit holder for a period of at least twelve
ment units in a random manner and notices shall be months;
issued electronically by a Central Cell, without disclosing loss other than business loss accumulated at the level
the name, designation or location of the Assessing of investment fund as on 31st March, 2019, shall be
Officer. deemed to be the loss of a unit holder who held the
unit on 31st March, 2019 in respect of the investments
Pre-filled tax returns will be made available to taxpayers
made by him and allowed to be carried forward by him
who will contain details of salary income, capital gains
for the remaining period calculated from the year in
from securities, bank interests, and dividends etc. and
which the loss had occurred for the first time taking
tax deductions. Information regarding these incomes
that year as the first year;
will be collected from the concerned sources such as
loss so deemed in the hands of unit holders shall not be
Banks, Stock exchanges, mutual funds, EPFO, State
available to the investment fund
Registration Departments etc.
for the purposes of chapter VI.
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Income Tax
To facilitate demerger of Ind-AS compliant companies, The condition of threshold of INR10 million and The excess money can be repatriated from any of
necessary amendment is proposed in Section 2(19AA) of primary adjustment made up to Financial Year the associated enterprises of the taxpayer which
to provide that the requirement of recording property 2015-16 are alternate conditions - this is not resident in India — this amendment will
and liabilities at book value by the resulting company amendment will take effect retrospectively from take effect retrospectively from FY 2017–18.
shall not be applicable in a case where the property financial year 2017–18. The secondary adjustment provisions will apply
and liabilities of the undertakings received by it are to advance pricing agreements (APAs) signed on
Option given to the taxpayer to make onetime
recorded at a value different from the value appearing or after 1 April 2017.
payment in case of excess money or part
in the books of account of the demerged company
thereof is not repatriated on time into India - Clarification on tax officer’s power to assess or reas-
immediately before the demerger in compliance to
this amendment will be effective from 1st sess post modified return pursuant to APA
the Ind-AS
September 2019.
Master file compliance requirement - applicable
Section 201 provides that the deductor shall not be
Taxes will be paid 18% plus 12% surcharge on even if no transfer pricing documentation is
treated as assesse-in-default if the dedcutee
excess money or part thereof in addition to required to be maintained.
being a resident has furnished his return of income and
payment of interest till date of payment of
paid due taxes on said income. This provision is amend- Clarificatory amendment to alternate reporting
additional tax. The tax so paid is final payment of
ed to include those cases as well where the payee is requirement of country-by-country reporting - the
tax and no corresponding tax credit will be
non-resident and Section 40 is also being amended to accounting year in case of an alternate reporting
allowed.
the effect that there shall be no disallowance. entity of the multinational group (where the parent
There will be no deduction under any other
entity is outside India) will be the reporting
Section 140A, 143, 234A, 234B and 234C are being provision of the Act, in respect of amount on
accounting year of such parent entity; this
amended to consider the relief under Section 89 for which such additional tax is paid.
amendment will take effect retrospectively from
respective purposes.
FY 2016–17
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Income Tax
Buyback by listed companies is also now subject to
DDT u/s 115QA from 5 th July, 2019 onwards and
NPS exemption upto 60% of withdrawal has been exempted in line with the cabinet decision
consequently the distribution shall be exempt in the
already made in December’2018. Besides, contribution upto 14% against present limit of 10%
hands of the shareholders.
has been made exempt for central govt. employees
At the time of registration of a trust or institution,
Relief in levy of Securities Transaction Tax (STT) by restricting it only to the difference between
the commissioner shall satisfy himself about
settlement and strike price in case of exercise of option in case of derivative transactions.
the compliance of the trust or institution to
requirements of any other law. In case registration Concessional rate of Short-term Capital Gains (STCG) tax to certain equity-oriented fund of
is granted and subsequently it is noticed that the funds shall also apply to funds set-up for disinvestment of Central Public Sector Enterprises
violation of other laws have taken place, the (CPSEs), to which concessional rate of long-term capital gains tax has already been extended.
registration can be cancelled after affording a
reasonable opportunity of being heard.
Black Money Act has been made applicable retrospec-
tively for non-residents and not ordinary residents as
well.
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Income Tax
Press release dated 17th September, 2018, inter alia, announced that interest payable by an Indian company or a business trust to a non-resident, including a foreign com-
pany, in respect of rupee denominated bond issued outside India during the period from September 17, 2018 to March 31, 2019 shall be exempt from tax. The exemption
announced through the said press release is proposed to be incorporated now.
Determination of fair market value based on the prescribed rules may result into genuine hardship in cases where the consideration for transfer of shares is approved by
certainauthorities and the person transferring the share has no control over such determination. In order to provide relief to such types of transactions from the
applicability of sections 56(2)(x) and 50CA, it is proposed to amend these sections to empower the Board to prescribe transactions undertaken by certain class of persons
to which the provisions of section 56(2)(x) and 50CA shall not be applicable.
Section 270A contains provisions relating to penalty for under-reporting and misreporting of income which provide for various situations for the purposes of levy of
penalty. However, these provisions do not contain the mechanism for determining under-reporting of income and quantum of penalty to be levied in the case where the
person has under-reported income and furnished the return of income for the first time under section 148 of the Act. In order to provide for manner of computing the
quantum of penalty in a case where the person has under- reported income and furnished his return for the first time under section 148, Section 270A is proposed to be
amended retrospective from AY 2017-18.
Rule 68B of the Second Schedule for sale of immovable property attached towards the recovery of tax, penalty etc. is being amended so that where demand has been
crystallised on conclusion of the proceedings, the period of limitation shall extend from 3 years to 7 years. Such period can be further extended by Board for 3 more years
for reasons to be recorded in writing.
It is proposed to amend section 276CC of the Act to include the self-assessment tax, paid before the expiry of the assessment year, and TCS for the purpose of determining
tax liability. The threshold for involing the section is proposed to be enhanced from INR 3,000 to INR 5,000.
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Goods & Services Tax
Retrospective exemption has been provided for levy Section 104 of the CGST Act has been amended to New Sections 101A, 101B and 101C has been inserted to
of GST on “Uranium Ore Concentrate” from 1st July provide that advance ruling pronounced by the CGST Act 2017,
2017 to 14 th November 2017. National Appellate Authority shall be void where
Where Section 101A seeks to provide for constitution
the ruling has been obtained by fraud or
Section 171(2A) of CGST Act has been inserted to of the National Appellate Authority for Advance
suppression of material facts or misrepresentation
impose penalty equivalent to 10% of the amount so Ruling. It also provides for qualification, appointment,
of facts.
profiteered in case registered person has not tenure, conditions of services and manner of removal
deposited the amount so profiteered within 30 days Section 103 of the CGST Act has been amended so of the President and Members of the National
of the date of order. as to provide that the advance ruling pronounced Appellate Authority.
by the National Appellate Authority shall be
Bill has established a new “appellate authority” called Section 101B seeks to provide for filing of appeals and
binding on the applicants, being distinct persons
the “National Appellate Authority for Advance the procedure to be followed for hearing appeals
and all registered persons having the same Perma-
Ruling”. Provisions for the same has been inserted against conflicting advance rulings pronounced on
nent Account Number and on the concerned
and amended as per the following: the same question by the Appellate Authorities of two
officers or the jurisdictional officers in respect of
or more States or Union territories or both under
Section 106 of CGST has been amended to provide the said applicants and the registered persons
section 101 (1) or section 101 (3) of the Act.
that the National Appellate Authority shall have having the same Permanent Account Number. It
power to regulate its own procedure. also provides that the ruling shall be binding Section 101C seeks to provide that the National Ap-
unless there is a change in law or facts. pellate Authority shall pass order within a period of
Section 105 of the CGST Act has been amended to
ninety days from the date of filing of the appeal. It
provide that the National Appellate Authority Section 102 of the CGST Act has been amended so
also provides that where the members differ on any
shall have all the powers of a civil court under the as to bring the National Appellate Authority
point, it shall be decided by majority.
Code of Civil Procedure, 1908 for the purpose of within the ambit of that section to empower it to
exercising its powers under the Act rectify its advance ruling.
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Goods & Services Tax
Section 95(a) and Section 2(4) of CGST Act has been Section 50 of the CGST Act has been amended so as A new section 31A to CGST Act has been inserted to
amended to include “the National Appellate to provide for charging interest only on the net cash provide that supplier shall mandatorily offer facility
Authority for Advance Ruling” in the definition of tax liability, except in those cases where tax is paid for digital payments to his recipient.
“Advance Ruling” and 95 (f ) of CGST act has been subsequent to initiation of any proceedings under
Section 25 of the CGST Act has been amended to
inserted to define “the National Appellate Authority for section 73 or 74 of the Act for demand and recovery
mandate submission of Aadhaar or authentication for
Advance Ruling” by reason of Fraud and wilful-misstatements.
persons who intend to take or have taken registration
Section 54 of CGST Act has been amended so as to Section 168, Section 52(4), Section 52(5) and section under the GST Act in such manner as may be notified
empower the Central Government to disburse the 44(1) of the CGST Act has been amended so as to by the Government on the recommendations of the
refund amount to the taxpayers in respect of refund empower the Commissioner to extend the due date Council.
of State taxes. for furnishing of Annual Return, Reconciliation Section 22 of the CGST Act has been amended to
Statement, monthly and annual statement by the provide for higher threshold exemption limit from
New Section 53A of CGST Act has been inserted and
person collecting tax at source. INR 2.5mn to INR 4mn, in case of supplier engaged
Section 49 has been amended so as to provide for
transfer of amount in the electronic cash ledger Section 39 of the CGST Act is amended to provide for exclusively in the supply of goods.
between the Centre and States as a consequence of furnishing of annual returns and quarterly payment Scope of Section 10 has been widened to provide
the new facility given to the tax payer for payment of of tax by taxpayer who opts for composition levy and alternative composition scheme for supplier of ser-
tax, interest or penalty. to provide for certain other category of tax payers, an vices or mixed suppliers (not eligible for the earlier
option for quarterly and monthly payments under composition scheme) having an annual turnover in
the proposed new return filing system. preceding financial year up to INR 5mn.
© Copyright 2019 Ashok Maheshwary & Associates LLP - All Rights Reserved An International Tax Review Ranked Firm Service Tax Bill seeks to provide retrospective exemption from service tax on service by way of grant of liquor licence by the State Government, during the period from the 1st day of April, 2016 up to 30th day of June, 2017 Bill seeks to provide retrospective exemption from service tax to the long duration degree or diploma programmes except Executive Development Programme provided by the Indian Institutes of Management to the students during the period from the 1st day of July, 2003 up to the 31st day of March, 2016. Bill seeks to provide retrospective exemption from service tax on upfront amount paid for services by way of grant of long-term lease of plots for development of infrastructure for financial business by the State Government Industrial Development Corporations or Undertakings or by any other entity having fifty per cent. or more ownership of the Central Government or State Government or Union territory, directly or through an entity which is wholly owned by such Governments, to the developers in the industrial or financial business area, during the period from the 1st day of October, 2013 up to the 30th day of June, 2017. Bill seeks to provide for Sabka Viswas (Legacy Dispute Resolution) Scheme, 2019. The Scheme is a one-time measure for liquidation of past disputes of CGST Act as well as to ensure disclosure of unpaid taxes by a person eligible to make a declaration. The Scheme shall be enforced by the Central Government from a date to be notified. It provides that eligible persons shall declare the tax dues and pay the same in accordance with the provisions of the Scheme. It further provides for certain immunities including penalty, interest or any other proceedings under the Central Excise Act, 1944 or Chapter V of the Finance Act, 1944 to those persons who pay the declared tax dues. © Copyright 2019 Ashok Maheshwary & Associates LLP - All Rights Reserved An International Tax Review Ranked Firm
Customs
Section 41(1) of the Customs Act has been amended Section 149, Section 157 of the Customs Act amended to empower Board to make regulations specifying time,
to provide the facility to furnish departure manifest form, manner, restrictions and conditions for amendment of any document for new section 99B
to any person so notified by the central government
Section 103 (1) of the Customs Act has been substituted to enable the proper officer to scan or screen any person
in addition to the person-in-charge of the
referred to in section 100 (2) of Custom Act, who has any goods liable to confiscation secreted inside his body
conveyance
with prior approval of Deputy Commissioner of Customs or Assistant Commissioner of Customs. Earlier proper
A new chapter XIIB relating to verification of identity officer needs to produce him before the nearest magistrate at the earliest, now Section 103 (6) of Custom Act is
and compliance in the Customs Act has been intro- amended to enable the magistrate to take action upon the report of scanning or screening by the proper officer
duced. The new section 99B seeks to empower the also.
proper officer of customs the following:
Section 104 (1), (4) and (6) has been amended as
To carry out verification of a person for ascertain- Section 104 (1) amended to empower an officer of customs to arrest a person who has committed an offence
ing compliance with the provision of the Customs outside India or Indian Customs waters
Act Section 104 (4) amended to insert two new clauses (c) and (d) therein, to provide for certain offences which
For protecting the interests of revenue shall be cognizable
To prevent smuggling in the manner as may be Section 104 (6) amended to insert a new clause (e) therein, to provide for an offence which shall be
prescribed non-bailable
To verify identity of a person through Aadhaar
Changes has been done in section 110 of Custom act which specifies provisions related to seizure of goods:
number or through any other alternative and
viable means of identification Section 110 (1) of the Customs Act has been amended to substitute the existing proviso with two provisos so
To specify the circumstances under which benefit as to specify the conditions under which the custody of seized goods could be given to certain person. The
of certain items shall be suspended or denied to amendment also seeks to specify the conditions, under which the custody of such goods, where it is not
such person practicable to seize such goods, could be given to certain persons
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Customs
A new Section 110 (5) to Custom Act has been Section 114AB in the Customs Act has been inserted Section 135 (1) of the Customs Act has been amend-
inserted to empower the proper officer to provi- to provide that any person who has obtained any ed to impose punishment for obtaining an instru-
sionally attach any bank account for safeguarding instrument by fraud, collusion, wilful misstatement or ment by any person from any authority by fraud,
the Government revenue and prevention of smug- suppression of facts and such instrument has been collusion, wilful misstatement or suppression of facts,
gling up to six months which may further be utilised by such person or any other person for dis- where such instrument has been utilised by such
extended up to six months by Principal Commis- charging duty, such person to whom the instrument person or any other person a punishable offence if
sioner of Customs or Commissioner of Customs was issued shall be liable for penalty up to maximum the duty relatable to utilisation of the instrument
and inform the person whose bank account is face value of such instrument. An Explanation to exceeds INR 5mn
provisionally attached before the expiry of the define the term "instrument" has also been inserted
Section 158(2) of the Customs Act amended to
period so specified increase the maximum limit of penalty from fifty
Section 117 of the Customs Act has been amended to
increase the maximum limit of penalty from one lakh thousand rupees to two lakh rupees for violation of
Section 110A of the Customs Act has been amend- any provisions of rules or regulations made under
rupees to INR 400,000
ed to empower an adjudicating authority to Customs Act
release bank account provisionally attached under First proviso to section 125 of the Customs Act has
section 110 to the bank account holder on fulfil- been amended that there will be no fine in lieu of Retrospective amendment to certain notifications
ment of certain conditions confiscation on the infringing goods in respect of issued Section 25(1) of the Customs Act, 1962 and
cases of deemed closure under section 28. 3(12) of Custom Tariff Act, 1975 to change the tariff
classification of Stearic acid from "3823 10 90" to
"3823 11 00"
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Customs
Retrospective effect to certain the notification First Schedule to the Customs Tariff Act amended Retrospective amendment to the notification
number G.S.R. 1270(E), dated the 31st December number G.S.R. 186 (E), dated the 22nd February, 2016,
in the manner specified in the Fourth Schedule
2018, which was issued in exercise of the powers amending the notification number G.S.R. 804 (E),
with a view to revise the tariff rates in respect of
conferred by Section 25(1) of the Customs Act, dated the 21st October, 2015, issued under Section
certain tariff items and to amend Chapter Note of
1962 and Section 3(12) of the Customs Tariff Act, 9A(1) and (5) of the Customs Tariff Act, 1975 to
Chapter 98 so as to exclude printing books from
1975, to amend the notification number G.S.R. 665 retrospectively modify the tariff classification of the
the purview of heading 9804;
(E), dated the 2nd August, 1976, on the temporary goods leviable to anti-dumping duty from tariff
in the manner specified in the Fifth Schedule with
importation of vehicles as per the Convention on heading "5402" to tariff sub-heading "5402 47" on
a view to rectify errors and harmonise certain
the Temporary Importation of Private Road and from the 21st day of October, 2015 to 22nd day
entries with Harmonised System of Nomenclature
Vehicles to bring it into force on and from the 1st of February, 2016
and also to create new tariff lines from certain
July, 2017, so as to give retrospective exemption
entries, with effect from such date as the Central Retrospective effect to notification number G.S.R. 665
from the integrated tax leviable under section 3 of
Government may, by notification in the Official (E), dated the 5th July, 2016, amending the notifica-
the Customs Tariff Act, 1975.
Gazette, appoint tion number G.S.R. 285 (E), dated the 8th March 2016,
Section 9(1A) of the Customs Tariff Act inserted to
issued under Section 9A (1) and (5) of the Customs
provide anticircumvention provision in case of
Tariff Act, 1975, so as to retrospectively exclude
Countervailing duty
expanded Polypropylene beads and ter-polymer
Section 9C(1) of the Customs Tariff Act amended from the levy of anti-dumping duty from 8th March,
to provide for filing of appeal before the Customs, 2016 to 5th July, 2016
Excise and Service Tax Appellate Tribunal against
the findings of the designated authority regarding
determination of safeguard duty
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Glossary
Association of Persons Micro, Small and Medium Enterprises
Alternative Investment Funds Micro Units Development and Refinance Agency
Body of Individuals Non- Banking Finance Companies
Bharat Interface for Money National Pension Scheme
Central Public Sector Enterprises National Housing Bank
Central Board of Direct Taxes Pradhan Mantri Gram Sadak Yojana
Central Goods and Services Tax Pradhan Mantri Awas Yojana- Gramin
Dividend Distribution Tax Pradhan Mantri Kaushal Vikas Yojana
Employees Provident Fund Organisation Reserve Bank of India
Financial Year Securities and Exchange Board of India
Foreign Institutional Investor Self Help Group
Foreign Portfolio Investor Securities Transaction Tax
Goods and Services Tax Short-term Capital Gains
Hindu Undivided Family Statement of Financial Transactions
Infrastructure Debt Fund Tax Deducted at Source
International Financial Services Centre Ude Desh Ka Aam Nagrik
Insolvency and Bankruptcy Code Unified Payments Interface
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Ashok Maheshwary & Associates
C H A R T E R E D A C C O U N T A N T S
Established in 1981 and headquartered in Gurgaon, we are an accounting, tax and business consultancy firm having an international presence. We are a team of over 140 professionals
operating PAN India with multiple offices across India. Our resource pool consists of Chartered Accountants, MBA’s, Company Secretaries, Lawyers and Financial Management Experts having
in-depth experience in providing multi-disciplinary services in a wide range of areas including: Audit & Assurance, Corporate Finance, Tax and Regulatory, Funs Advisory & Compliances, ,
Valuations, Mergers and Acquisitions, Business set up, International tax and Transfer Pricing . We have been consistently ranked by International Tax Review for the last 4 years and our
practices have received international recognition. Our partners contribute to Indian and International Media publications.
Suite # 344, Tower B2, Spaze I-Tech Park,
Sector - 49, Sohna Road,
Gurgaon - 122018, Haryana, India
Phone No: +91 124 4637530
Mobile No: +91 9810188104, +91 9811987402
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