February 3 2020

Union Budget 2020 presented to Parliament – indirect tax

Source: IBFD Tax Research Platform News

On 1 February 2020, the Finance Minister presented the Union Budget 2020 before Parliament. The key amendments introduced in the Finance Bill 2020 regarding indirect tax are summarized below.

  • A simplified return will be implemented from 1 April 2020 with features like SMS-based filing for nil return, return pre-filling and improved input tax credit flow.
  • The refund process has been simplified and automated with no human interface.
  • Effective from February 2020, electronic invoicing will be implemented in a phased manner, and on an optional basis, to facilitate compliance and return filing.
  • To improve tax compliance, the use of a dynamic QR code is proposed for consumer invoices in which goods and services tax (GST) parameters will be captured for payments made through the QR code.
  • Customs duty exemptions will be comprehensively reviewed by September 2020, and suggestions are invited for aligning them with the needs of changing times and ease of doing business.
  • Keeping in view the needs of the micro, small and medium-sized enterprises (MSME) sector, customs duty has been raised on items such as footwear and furniture.
  • The imposition of nominal health cess by way of customs duty on imports of medical equipment has been introduced to generate resources for health services.
  • Custom duty rates are revised on electric vehicles and mobile phone components.
  • Customs duty on imports of newsprint and lightweight coated paper has been reduced from 10% to 5%.
  • The anti-dumping duty on PTA (input for textile fibres and yarns) has been abolished.
  • As a revenue measure, excise duty by way of national calamity contingent duty on cigarettes and other tobacco products has been increased.