Indian Union Budget Synopsis - sk-berater.com · Ashok Maheshwary & Associates CHARTERED ACCOUNTANTS 2019-20. Table of Contents ... Net Foreign Direct Investment (FDI) in˛ows grew

IndianUnion Budget Synopsis

Ashok Maheshwary & AssociatesC H A R T E R E D A C C O U N T A N T S

2019-20

Table of Contents

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© Copyright 2019 Ashok Maheshwary & Associates LLP - All Rights Reserved An International Tax Review Ranked Firm© Copyright 2019 Ashok Maheshwary & Associates LLP - All Rights Reserved An International Tax Review Ranked Firm

Economic Survey 2018-19

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© Copyright 2019 Ashok Maheshwary & Associates LLP - All Rights Reserved An International Tax Review Ranked Firm

GDP Growth 2019-20

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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

GDP to grow at 7% in 2019-20 due to growth of investment & consumption

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 %

respectively

GDP Growth in 2018-19

The Indian economy grew at 6.8% in 2018-19, experiencing some moderation in growth

when compared to the previous year

India’s growth of real GDP has been high with average growth of 7.5% in the last 5

years (2014-15 onwards)

This moderation in growth momentum is mainly on account of lower

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

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The slowdown in the world economy and Emerging Market and

Developing Economies (EMDEs) in 2018 is due to:

The world output growth declined from 3.8% in 2017 to 3.6% in

2018

Current Account De�cit & Trade De�citCurrent Account De�cit (CAD) increased from 1.9% of GDP in 2017-18 to 2.6% in April-December

2018 on account of:

Escalation of US China trade tensions

Tighter credit policies in China

Normalization of monetary policy in the larger advanced

economies

higher trade de�cit driven by rise in international crude oil prices (Indian basket)

The trade de�cit increased from US$ 162.1 billion in 2017-18 to US$ 184 billion 2018-19

Merchandise imports reduced from 21.1% to 10.4% Growth in service exports and imports

in US dollar terms declined to 5.5% and 6.7% respectively in 2018-19, from 18.8% and 22.6%

respectively in 2017-18


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Forex ReservesThe foreign exchange reserves in nominal terms (including the valuation e�ects) 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 InvestmentNet Foreign Direct Investment (FDI) in�ows grew by 14.2% in 2018-19.

FDI in�ows have been growing at a high rate since 2015-16

Top sectors attracting FDI equity in�ows are:

Services

Automobiles

Chemicals

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Investment scenarioDecline in investment rate and �xed investment rate since 2011-12,

seems to have bottomed out with some early signs of recovery since

2017-18

Fixed investment growth picked up from 8.3 % in 2016-17 to 9.3% in

2017-18 and further to 10.0 % in 2018-19 FDI in�ows have been

growing at a high rate since 2015-16

The decline in �xed investment until 2016-17 was mainly by the

household sector

Fixed investment by public sector and private corporate sector

remaining almost at same levels

The growth of bank credit to MSME was contracting in 2016 and 2017,

but has started picking up in 2018

Investment in Service SectorIn year 2011-12, industry sector had the highest investment rate

followed by services

Service sector is the most dynamic sector in the economy and has

remained the key driver of economic growth along with being a major

contributor to GVA and export basket of the Indian Economy

Service exports enhanced to Rs. 14.389 lac cr (`USD 205.55 billion) in

2018-19 from Rs. 0.746 lac cr (`USD 10.65 billion) in 2000-01

India’s share in world service exports increased from 2% in 2005 to 3.5

% in 2017. much higher than that of manufacturing exports which

stands at 1.8 per cent in 2017

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Growth in Manufacturing Sector

Manufacturing accounted for 16.4 per cent in total GVA in 2018-19.

The growth in manufacturing sector picked up in 2018-19,

although the momentum slowed down towards the end of the

�nancial year with a growth of 3.1% in fourth quarter of the year,

as compared to 12.1%, 6.9% and 6.4% in �rst, second and third

quarter respectively


Agricultural, Forestry and FishingReal growth in ‘Agriculture & allied’ sector was lower in 2018-19 at 2.9%, after two years of good agriculture

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Growth in other sectorsThe growth in manufacturing sector picked up in 2018-19, although the momen-

tum slowed down towards the end of the �nancial year with a growth of 3.1% in

fourth quarter of the year, as compared to 12.1%, 6.9% and 6.4% in �rst, second and

third quarter respectively

Production of cement and consumption of �nished steel grew at 13.3% and 7.5%

respectively in 2018-19, higher than growth rates in 2017-18, re�ecting 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� � ��

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It has been proposed to return the regulation authority over the housing

�nancesector from National Housing Bank (NHB) to RBI

A Credit Guarantee Enhancement Corporation for which regulations

have been noti�ed 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 speci�c 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

speci�ed lock-in period

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Industrial Development

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A social stock exchange - under the regulatory ambit of

Securities and Exchange Board of India (SEBI) for listing

social enterprises and voluntary organizations

working for the realization of a social welfare objective

so that they can raise capital as equity, debt or as units

like a mutual fund

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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For ease of access to credit for MSMEs, Government has

introduced providing of loans upto 1 crore for MSMEs

(~USD 143,000 USD) within 59 minutes through a

dedicated online portal

Under the Interest Subvention Scheme for MSMEs,

Rs.350 crores (~50 million USD) has been allocated for

FY 2019-20 for 2% interest subvention for all GST

registered MSMEs, on fresh or incremental loans

Government will create a payment platform for MSMEs

to enable �ling of bills and payment thereof on the

platform itself

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It has been decided to extend the pension bene�t to

about 30,000,000 retail traders & small shopkeepers whose

annual turnover is less than 1.5 crore (~200,000 USD)

under Pradhan Mantri Karam Yogi Maandhan Scheme

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Industrial Development

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The main objective of the Scheme is to encourage faster adoption of

Electric vehicles by way of o�ering 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.

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Swachh Bharat

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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.

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Women’s Development to Women Led Development

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The Women (Self Help Group) SHG interest subvention programme has been

expanded to all districts

Various schemes such as MUDRA, Stand UP India and the Self Help Group

(SHG) movement are aimed at expanding and encouraging women

entrepreneurship

An overdraft of Rs. 5,000 (~USD 80) shall be allowed to women SHG member

having a Jan Dhan Bank Account

One woman in every SHG will also be made eligible for a loan up to 1 lakh

under the MUDRA Scheme

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Labour & Youth Welfare

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It has been proposed to lay focus on new-age skills like

Arti�cial Intelligence (AI), Internet of Things, Big Data, 3D

Printing, Virtual Reality and Robotics,

The Government is proposing to streamline multiple

labour laws into a set of four labour codes to standardize

and streamline the process of registration and �ling of

returns

Vision For Next DecadePhysical and social infrastructure

Digital India

Pollution Free India

Make in India

Water management and clean rivers

Blue Economy

Space Programmes

Self-su�ciency and export of food grains

Healthy society

Team India with Jan Bhagidari

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Non-Tax Measures for Promoting Less Cash Economy

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The business establishments with annual turnover more than 50 crore shall o�er 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 �nancially sound Non-BankingFinancial Companies (‘NBFCs’), amounting to a total

of Rupees 1 lakh crore (~USD 14.3 billion USD) during the current �nancial year, Government will provide one time six months partial

credit guarantee to Public Sector Banks for �rst 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

DisinvestmentGovernment is setting an enhanced target of 1,05,000 crore of disinvestment receipts for the �nancial year

2019-20. Government will o�er an investment option in ETFs on the lines of Equity Linked Savings Scheme

(ELSS). However necessary amendments in the Income-tax

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Key Regulatory Annonuncements

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Government has asked Securities Exchange Board of

India (‘SEBI’) to consider raising the minimum public

shareholding in the listed companies from the

current threshold of 25% to 35%.

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FDI in�ows into India have remained robust despite

global headwinds. Global FDI �ows slid by 13% in

2018, to US$ 1.3 trillion from US$ 1.5 trillion the

previous year – the third consecutive annual decline,

according to UNCTAD’s World Investment Report

2019. India’s FDI in�ows in 2018-19 remained strong

at US$ 64.375 billion marking a 6% growth over the

previous year. Further steps have been taken in

order to make India a more attractive FDI

destination:

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The Government would examine suggestions of further

opening up of FDI in aviation, media (animation, AVGC)

and insurance sectors in consultation with all stake-

holders.

100% FDI would be permitted for insurance

intermediaries.

Local sourcing norms will be eased for FDI in Single

Brand Retail Sector.

The statutory limit for FPI investment in a company would

be increased from 24% to sectoral foreign investment limit

with option given to the concerned corporates to limit it to

a lower threshold. FPIs will be permitted to subscribe to

listed debt securities issued by ReITs and InvITs.

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There is also a proposal to merge the Non-Resident Indian

(‘NRI’)- Portfolio Investment Scheme Route with the For-

eign Portfolio Investment Route.

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It has been proposed to return the regulation authority

over the housing �nance sector from National Housing

Board (‘NHB’) to Reserve Bank of India (‘RBI’).

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To facilitate onshoring of international insurance transac-

tions and to enable opening of branches by foreign rein-

surers in the International Financial Services Centre, it is

proposed to reduce Net Owned Fund requirement from

Rs. 5,000 crore (`714 million USD) to 1,000 crore

(~143 million USD).

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Keeping in view the wider interest of the subscribers and to

maintain arm’s length relationship of the NPS Trust with

Pension Fund Regulatory and Development Authority

(‘PFRDA’), the government will take steps to separate the

NPS Trust from PFRDA with appropriate organizational

structure.

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Tax Proposals

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Income Tax

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Surcharge for individuals/HUF/AOP/BOI having income

more than INR 2 Crores has been increased as per below

limits:

Taxable Income exceeding INR 20mn but upto INR

50mn - 25%

Taxable Income exceeding INR 50mn - 37%

The rate of TDS for insurance payments is proposed to

be changed from 1% gross amount to 5% net amount

(net of amount).

Additional deduction of interest for Rs. 150,000 p.a u/s

80EEA for a�ordable housing subject to certain

conditions

In case of domestic company, the rate of income-tax shall

be 25% of the total income, if its total turnover or gross

receipts in the FY 2017-18 does not exceed INR 4bn (the

earlier limit was INR 2.50 bn), and in all other cases the

rate of Income tax shall be 30%.

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194M is proposed to be introduced wherein Individu-

al/HUF shall be required to deduct TDS on payment for

contractual or professional payments (not already

covered u/s 19C or 194J) exceeding INR 5mn @ 5%. How-

ever, such individuals will not need to procure TAN and

can pay taxes basis of their PAN only

For TDS on sale of property u/s 194-IA@ 1%, it has been

clari�ed that it shall also be applicable on other charges

like club membership, car parking, maintenance fee,

water/electricity charges, etc. pertaining to purchase of

property to take e�ect from 1st September 2019

Gifts by residents to non-residents of property or money

would be deemed income u/s 9 subject to any relief

under treaty as well as exceptions u/s 56(2)(x) of the Act.

Filing of Income tax returns would be mandatory for

individuals who have done certain expenditures i.e.

Foreign Travel for self /others exceeding Rs. 200,000

Deposit in current account exceeding Rs.10mn,

Electricity Expense more than Rs. 100,000

Others to be prescribed,

People claiming capital gain exemption u/s 54, 54F,

etc. if the income before claiming such exemption is

more than the minimum exemption limit

It has been proposed to provide interchangeability of

PAN and Aadhaar to enable a person who does

not have PAN but has Aadhaar to use Aadhaar in place of

PAN under the Act. Further, the individuals

who haven’t linked their Aadhaar, their PANs will be

made operative in the prescribed manner

It has been proposed to expand the scope of Statement

of Financial Transactions (SFT) by mandating

furnishing of statement by certain prescribed persons.

The current threshold of rupees �fty thousand on

aggregate value of transactions during a �nancial year,

for furnishing of information has also been proposed to

be removed

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TDS by Individual/HUF for contractual/professional pay-

ments exceeding INR 5mn in a Financial Year. However,

TAN would not be required and PAN would su�ce.


Income Tax

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Section 13A (Political party to receive donation

exceeding INR 2,000), 35AD (Capital Expenditure

exceeding INR 10,000), 40A (Any expense exceed-

ing INR 10,000), 2 nd Proviso to 43(1)(payment

exceeding INR 10,000 in a day not to be included

in cost of asset), 43CA (payment of consideration

for asset to be stamp duty value), 44AD (Presump-

tive Income) and 80JJAA (which provides thir-

tyDeduction of 30% per cent. of the additional

employee cost for 3 years) is are sought to be

being amended to include certain other modes of

payment for in addition to the already existing

permissible modes of payment in the form of an

account payee cheque or an account payee bank

draft or the electronic clearing system through a

bank account.

Similarly, Section 269SS, 269ST and 269T prohibit-

ing certain payments otherwise through

banking channel are also sought to be amended

to similar lines.

194N is proposed to be introduced for deduction

of TDS @ 2% on cash payments by a banking com-

pany/ cooperative bank/post o�ce to any person

from an account exceeding Rs. 10mn

(in aggregate) during a year.

To make a cash less economy, 269SU has been

inserted providing every person carrying on busi-

ness to provide the facility for accepting payment

through the prescribed electronic modes, in addi-

tion to the facility for other electronic modes of

payment if the turnover in the last �nancial year

exceeded INR 500mn . The compliance is to be

done from 1st November 2019 and non-compli-

ance shall attract penalty of aINR 5,000 for every

day during which such failure continues

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No bank or system provider shall impose any charge

upon anyone, either directly or indirectly,

for using the modes of electronic payment pre-

scribed under section 269SU of the Act

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Section 80LA is amended to provide that a unit in IFSC

shall be allowed 100% deduction for pro�ts for any

ten-year block within the �fteen-year period when the

permission to operate was obtained. The earlier provision

allowed 100% deduction for pro�ts for �rst 5 years and

50% pro�ts for next 5 years

Exemption from dividend distribution tax from current

and accumulated income to companies and mutual funds

operating in IFSC

Transfer of certain bonds, GDRs, Derivatives etc. by

non-residents through a stock exchange in IFSC are not

regarded as transfer u/s 47 and hence not subject to tax.

Such facility has also been extended to a Category-III AIF,

also located in IFSC of which all the unit holders are non-

resident but subject to certain conditions

Interest payment on external borrowing to a non-resident

by a unit in IFSC for monies borrowed on or after 1st day of

September, 2019, shall be exempt from tax

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Income Tax

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Bene�t of Section 43D of the Act which deals

makes interest on NPAs taxable in the year of

receipt has been extended to deposit-taking

NBFCs and systemically important non de-

posit-taking NBFCs. Similarly, section 43B is

proposed to be amended to provide that any

sum payable by the assessee as interest on

any loan or advances from a deposit-taking

NBFCs and systemically important non de-

posit-taking NBFCs shall be allowed as de-

duction if it is actually paid on or before the

due date of furnishing the return of income.

Insertion of section 80EEA for deduction in respect of

interest up to INR 150,000 on loan taken during the

FY 2019-20 for a residential house property subject

to following conditions:

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the corpus of the fund shall not be less than INR

1bn at the end of 6 months from the end of the

month of its establishment/incorporation or at the

end of such PY, whichever is later (the earlier provi-

sion provided for checking this limit at the end of

FY only); and

The manner of computation of remuneration of

fund manager shall be prescribed as against

the arm’s length principle provided earlier.

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To encourage fund management activities in India,

certain provisions u/s 9A are proposed to be amended

to the e�ect that -

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Insertion of new section 80EEB for deduction in respect

of interest on loan taken for purchase of an electric

vehicle from any �nancial institution upto

INR 150,000 p.a subject to certain conditions.

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loan has been sanctioned by a �nancial insti-

tution during the period beginning on the

1st April, 2019 to 31st March 2020.

The stamp duty value of house property does

not exceed INR 4.5mn

Assessee does not own any residential house

property on the date of sanction of loan.

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The de�nition of a�ordable housing projects hasbeen

aligned with the de�nition under GST laws.


Income Tax

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Start-ups will not be required to justify FMV

of their shares issued to Category-II AIFs also.

For other cases, if the start-up and investor

�les requisite declarations and provide infor-

mation in their returns, it would no longer be

subjected to any kind of scrutiny in respect of

valuation of share premiums

Mechanism of e-veri�cation will be

introduced to �x the issue of establishing

identity of the investor and source of his

funds.

Section 54GB is proposed to amend the said

section so as to-

(i) extend the sun set date of transfer of resi-

dential property from 31st March 2019 to

31st March 2021;

(ii) relax the condition of minimum share-

holding of 50% of share capital or voting

rights to 25% .

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Special administrative arrangements shall be made

by CBDT for pending assessments of Start-ups and

redressal of their grievances in relation to Angel Tax.

Section 79 is amended to provide that loss incurred in

any year prior to previous year in case of closely held

start-up shall be allowed to be carried forward and

set o� against income of previous year on satisfaction

of either of condition:

on the last day of FY in which the loss is to be

adjusted, 51% of voting power is held by the

persons who were the bene�cial owners on the

last day of FY in which the loss was incurred, or

for eligible start-ups, all the shareholders who

held shares on the last day of FY in which loss

was incurred continue to hold such shares on

the last day of FY in which loss is adjusted and

such loss been incurred during the period of 7

years from year of incorporation.

For distressed companies provisions of

section 79 that the provision shall not apply to

those companies, and their subsidiary and the

subsidiary of such subsidiary, where-

(i) the National Company Law Tribunal (NCLT) on a

petition moved by the Central Government u/s

241 of the Companies Act, 2013 has suspended

the Board of Directors of such company and has

appointed new directors u/s 242 of the Companies

Act, 2013: and

(ii) a change in shareholding of such company, and

its subsidiaries and the subsidiary of such subsidi-

ary, has taken place

in a previous year pursuant to a resolution plan

approved by NCLT u/s 242 of the Companies Act,

2013, after providing an opportunity of being

heard to Principal Commissioner or Commissioner.

Also, for such companies, for MAT computation,

the accumulated losses and unabsorbed deprecia-

tion shall also be allowed to be reduced

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(iii) relax the condition restricting transfer of new

asset being computer or computer software from

the current 5 years to 3 years.


Income Tax

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Pre-�lled tax returns will be made available to taxpayers

who will contain details of salary income, capital gains

from securities, bank interests, and dividends etc. and

tax deductions. Information regarding these incomes

will be collected from the concerned sources such as

Banks, Stock exchanges, mutual funds, EPFO, State

Registration Departments etc.

Faceless e-assessment will be introduced to

eliminate undesirable practices because of

personal interaction between the taxpayer and the

department, scheme of faceless assessment in

electronic mode involving no human interface is

launched.

Cases selected for scrutiny shall be allocated to assess-

ment units in a random manner and notices shall be

issued electronically by a Central Cell, without disclosing

the name, designation or location of the Assessing

O�cer.

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Section 115UB is sought to be amended to provide that:

business loss of the investment fund shall be allowed to

be carried forward and it shall be set-o� and it shall not

be passed onto the unit holder;

other losses shall also be ignored for the purposes of

pass through to its unit holders for units has not been

held by the unit holder for a period of at least twelve

months;

loss other than business loss accumulated at the level

of investment fund as on 31st March, 2019, shall be

deemed to be the loss of a unit holder who held the

unit on 31st March, 2019 in respect of the investments

made by him and allowed to be carried forward by him

for the remaining period calculated from the year in

which the loss had occurred for the �rst time taking

that year as the �rst year;

loss so deemed in the hands of unit holders shall not be

available to the investment fund

for the purposes of chapter VI.


Income Tax

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To facilitate demerger of Ind-AS compliant companies,

necessary amendment is proposed in Section 2(19AA)

to provide that the requirement of recording property

and liabilities at book value by the resulting company

shall not be applicable in a case where the property

and liabilities of the undertakings received by it are

recorded at a value di�erent from the value appearing

in the books of account of the demerged company

immediately before the demerger in compliance to

the Ind-AS

Section 201 provides that the deductor shall not be

treated as assesse-in-default if the dedcutee

being a resident has furnished his return of income and

paid due taxes on said income. This provision is amend-

ed to include those cases as well where the payee is

non-resident and Section 40 is also being amended to

the e�ect that there shall be no disallowance.

The condition of threshold of INR10 million and

of primary adjustment made up to Financial Year

2015-16 are alternate conditions - this

amendment will take e�ect retrospectively from

�nancial year 2017–18.

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Option given to the taxpayer to make onetime

payment in case of excess money or part

thereof is not repatriated on time into India -

this amendment will be e�ective from 1st

September 2019.

Taxes will be paid 18% plus 12% surcharge on

excess money or part thereof in addition to

payment of interest till date of payment of

additional tax. The tax so paid is �nal payment of

tax and no corresponding tax credit will be

allowed.

There will be no deduction under any other

provision of the Act, in respect of amount on

which such additional tax is paid.

The excess money can be repatriated from any of

the associated enterprises of the taxpayer which

is not resident in India — this amendment will

take e�ect retrospectively from FY 2017–18.

The secondary adjustment provisions will apply

to advance pricing agreements (APAs) signed on

or after 1 April 2017.

Clari�cation on tax o�cer’s power to assess or reas-

sess post modi�ed return pursuant to APA

Master �le compliance requirement - applicable

even if no transfer pricing documentation is

required to be maintained.

Clari�catory amendment to alternate reporting

requirement of country-by-country reporting - the

accounting year in case of an alternate reporting

entity of the multinational group (where the parent

entity is outside India) will be the reporting

accounting year of such parent entity; this

amendment will take e�ect retrospectively from

FY 2016–17

Section 140A, 143, 234A, 234B and 234C are being

amended to consider the relief under Section 89 for

respective purposes.


Income Tax

� � � � � � � � � � �

� � � � ��

Buyback by listed companies is also now subject to

DDT u/s 115QA from 5 th July, 2019 onwards and

consequently the distribution shall be exempt in the

hands of the shareholders.

Black Money Act has been made applicable retrospec-

tively for non-residents and not ordinary residents as

well.

� � � � � ��

NPS exemption upto 60% of withdrawal has been exempted in line with the cabinet decision

already made in December’2018. Besides, contribution upto 14% against present limit of 10%

has been made exempt for central govt. employees

Relief in levy of Securities Transaction Tax (STT) by restricting it only to the di�erence between

settlement and strike price in case of exercise of option in case of derivative transactions.

Concessional rate of Short-term Capital Gains (STCG) tax to certain equity-oriented fund of

funds shall also apply to funds set-up for disinvestment of Central Public Sector Enterprises

(CPSEs), to which concessional rate of long-term capital gains tax has already been extended.

� �

At the time of registration of a trust or institution,

the commissioner shall satisfy himself about

the compliance of the trust or institution to

requirements of any other law. In case registration

is granted and subsequently it is noticed that the

violation of other laws have taken place, the

registration can be cancelled after a�ording a

reasonable opportunity of being heard.


Income Tax

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� � � � � ��

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 �rst 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 �rst 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.


Goods & Services Tax

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Retrospective exemption has been provided for levy

of GST on “Uranium Ore Concentrate” from 1st July

2017 to 14 th November 2017.

Section 171(2A) of CGST Act has been inserted to

impose penalty equivalent to 10% of the amount so

pro�teered in case registered person has not

deposited the amount so pro�teered within 30 days

of the date of order.

Bill has established a new “appellate authority” called

the “National Appellate Authority for Advance

Ruling”. Provisions for the same has been inserted

and amended as per the following:

Section 106 of CGST has been amended to provide

that the National Appellate Authority shall have

power to regulate its own procedure.

Section 105 of the CGST Act has been amended to

provide that the National Appellate Authority

shall have all the powers of a civil court under the

Code of Civil Procedure, 1908 for the purpose of

exercising its powers under the Act


provide that advance ruling pronounced by the

National Appellate Authority shall be void where

the ruling has been obtained by fraud or

suppression of material facts or misrepresentation

of facts.

Section 103 of the CGST Act has been amended so

as to provide that the advance ruling pronounced

by the National Appellate Authority shall be

binding on the applicants, being distinct persons

and all registered persons having the same Perma-

nent Account Number and on the concerned

o�cers or the jurisdictional o�cers in respect of

the said applicants and the registered persons

having the same Permanent Account Number. It

also provides that the ruling shall be binding

unless there is a change in law or facts.

Section 102 of the CGST Act has been amended so

as to bring the National Appellate Authority

within the ambit of that section to empower it to

rectify its advance ruling.

New Sections 101A, 101B and 101C has been inserted to

CGST Act 2017,

Where Section 101A seeks to provide for constitution

of the National Appellate Authority for Advance

Ruling. It also provides for quali�cation, appointment,

tenure, conditions of services and manner of removal

of the President and Members of the National

Appellate Authority.

Section 101B seeks to provide for �ling of appeals and

the procedure to be followed for hearing appeals

against con�icting advance rulings pronounced on

the same question by the Appellate Authorities of two

or more States or Union territories or both under

section 101 (1) or section 101 (3) of the Act.

Section 101C seeks to provide that the National Ap-

pellate Authority shall pass order within a period of

ninety days from the date of �ling of the appeal. It

also provides that where the members di�er on any

point, it shall be decided by majority.

�


Goods & Services Tax

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Section 95(a) and Section 2(4) of CGST Act has been

amended to include “the National Appellate

Authority for Advance Ruling” in the de�nition of

“Advance Ruling” and 95 (f ) of CGST act has been

inserted to de�ne “the National Appellate Authority for

Advance Ruling”

Section 54 of CGST Act has been amended so as to

empower the Central Government to disburse the

refund amount to the taxpayers in respect of refund

of State taxes.

New Section 53A of CGST Act has been inserted and

Section 49 has been amended so as to provide for

transfer of amount in the electronic cash ledger

between the Centre and States as a consequence of

the new facility given to the tax payer for payment of

tax, interest or penalty.

Section 50 of the CGST Act has been amended so as

to provide for charging interest only on the net cash

tax liability, except in those cases where tax is paid

subsequent to initiation of any proceedings under

section 73 or 74 of the Act for demand and recovery

by reason of Fraud and wilful-misstatements.

Section 168, Section 52(4), Section 52(5) and section

44(1) of the CGST Act has been amended so as to

empower the Commissioner to extend the due date

for furnishing of Annual Return, Reconciliation

Statement, monthly and annual statement by the

person collecting tax at source.

Section 39 of the CGST Act is amended to provide for

furnishing of annual returns and quarterly payment

of tax by taxpayer who opts for composition levy and

to provide for certain other category of tax payers, an

option for quarterly and monthly payments under

the proposed new return �ling system.

A new section 31A to CGST Act has been inserted to

provide that supplier shall mandatorily o�er facility

for digital payments to his recipient.


mandate submission of Aadhaar or authentication for

persons who intend to take or have taken registration

under the GST Act in such manner as may be noti�ed

by the Government on the recommendations of the

Council.


provide for higher threshold exemption limit from

INR 2.5mn to INR 4mn, in case of supplier engaged

exclusively in the supply of goods.

Scope of Section 10 has been widened to provide

alternative composition scheme for supplier of ser-

vices or mixed suppliers (not eligible for the earlier

composition scheme) having an annual turnover in

preceding �nancial year up to INR 5mn.

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Service Tax

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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 on upfront amount paid for services by way of grant of long-term lease of plots for

development of infrastructure for �nancial business by the State Government Industrial Development Corporations or Undertakings or by any other entity

having �fty 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 �nancial business area, during the period from the 1st day of October, 2013 up to the

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 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 noti�ed. 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.

� �


Customs

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Section 41(1) of the Customs Act has been amended

to provide the facility to furnish departure manifest

to any person so noti�ed by the central government

in addition to the person-in-charge of the

conveyance

A new chapter XIIB relating to veri�cation of identity

and compliance in the Customs Act has been intro-

duced. The new section 99B seeks to empower the

proper o�cer of customs the following:

To carry out veri�cation of a person for ascertain-

ing compliance with the provision of the Customs

Act

For protecting the interests of revenue

To prevent smuggling in the manner as may be

prescribed

To verify identity of a person through Aadhaar

number or through any other alternative and

viable means of identi�cation

To specify the circumstances under which bene�t

of certain items shall be suspended or denied to

such person

Section 149, Section 157 of the Customs Act amended to empower Board to make regulations specifying time,

form, manner, restrictions and conditions for amendment of any document for new section 99B

Section 103 (1) of the Customs Act has been substituted to enable the proper o�cer to scan or screen any person

referred to in section 100 (2) of Custom Act, who has any goods liable to con�scation secreted inside his body

with prior approval of Deputy Commissioner of Customs or Assistant Commissioner of Customs. Earlier proper

o�cer needs to produce him before the nearest magistrate at the earliest, now Section 103 (6) of Custom Act is

amended to enable the magistrate to take action upon the report of scanning or screening by the proper o�cer

also.

Section 104 (1), (4) and (6) has been amended as

Section 104 (1) amended to empower an o�cer of customs to arrest a person who has committed an o�ence

outside India or Indian Customs waters

Section 104 (4) amended to insert two new clauses (c) and (d) therein, to provide for certain o�ences which

shall be cognizable

Section 104 (6) amended to insert a new clause (e) therein, to provide for an o�ence which shall be

non-bailable

Changes has been done in section 110 of Custom act which speci�es provisions related to seizure of goods:

Section 110 (1) of the Customs Act has been amended to substitute the existing proviso with two provisos so

as to specify the conditions under which the custody of seized goods could be given to certain person. The

amendment also seeks to specify the conditions, under which the custody of such goods, where it is not

practicable to seize such goods, could be given to certain persons

� �


Customs

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Section 114AB in the Customs Act has been inserted

to provide that any person who has obtained any

instrument by fraud, collusion, wilful misstatement or

suppression of facts and such instrument has been

utilised by such person or any other person for dis-

charging duty, such person to whom the instrument

was issued shall be liable for penalty up to maximum

face value of such instrument. An Explanation to

de�ne the term "instrument" has also been inserted

A new Section 110 (5) to Custom Act has been

inserted to empower the proper o�cer to provi-

sionally attach any bank account for safeguarding

the Government revenue and prevention of smug-

gling up to six months which may further be

extended up to six months by Principal Commis-

sioner of Customs or Commissioner of Customs

and inform the person whose bank account is

provisionally attached before the expiry of the

period so speci�ed

Section 110A of the Customs Act has been amend-

ed to empower an adjudicating authority to

release bank account provisionally attached under

section 110 to the bank account holder on ful�l-

ment of certain conditions

Section 117 of the Customs Act has been amended to

increase the maximum limit of penalty from one lakh

rupees to INR 400,000

First proviso to section 125 of the Customs Act has

been amended that there will be no �ne in lieu of

con�scation on the infringing goods in respect of

cases of deemed closure under section 28.

Section 135 (1) of the Customs Act has been amend-

ed to impose punishment for obtaining an instru-

ment by any person from any authority by fraud,

collusion, wilful misstatement or suppression of facts,

where such instrument has been utilised by such

person or any other person a punishable o�ence if

the duty relatable to utilisation of the instrument

exceeds INR 5mn

Section 158(2) of the Customs Act amended to

increase the maximum limit of penalty from �fty

thousand rupees to two lakh rupees for violation of

any provisions of rules or regulations made under

Customs Act

Retrospective amendment to certain noti�cations

issued Section 25(1) of the Customs Act, 1962 and

3(12) of Custom Tari� Act, 1975 to change the tari�

classi�cation of Stearic acid from "3823 10 90" to

"3823 11 00"

� �


Customs

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First Schedule to the Customs Tari� Act amendedRetrospective e�ect to certain the noti�cation

number G.S.R. 1270(E), dated the 31st December

2018, which was issued in exercise of the powers

conferred by Section 25(1) of the Customs Act,

1962 and Section 3(12) of the Customs Tari� Act,

1975, to amend the noti�cation number G.S.R. 665

(E), dated the 2nd August, 1976, on the temporary

importation of vehicles as per the Convention on

the Temporary Importation of Private Road

Vehicles to bring it into force on and from the 1st

July, 2017, so as to give retrospective exemption

from the integrated tax leviable under section 3 of

the Customs Tari� Act, 1975.

Retrospective amendment to the noti�cation

number G.S.R. 186 (E), dated the 22nd February, 2016,

amending the noti�cation number G.S.R. 804 (E),

dated the 21st October, 2015, issued under Section

9A(1) and (5) of the Customs Tari� Act, 1975 to

retrospectively modify the tari� classi�cation of the

goods leviable to anti-dumping duty from tari�

heading "5402" to tari� sub-heading "5402 47" on

and from the 21st day of October, 2015 to 22nd day

of February, 2016

Section 9(1A) of the Customs Tari� Act inserted to

provide anticircumvention provision in case of

Countervailing duty

Section 9C(1) of the Customs Tari� Act amended

to provide for �ling of appeal before the Customs,

Excise and Service Tax Appellate Tribunal against

the �ndings of the designated authority regarding

determination of safeguard duty

in the manner speci�ed in the Fourth Schedule

with a view to revise the tari� rates in respect of

certain tari� items and to amend Chapter Note of

Chapter 98 so as to exclude printing books from

the purview of heading 9804;

in the manner speci�ed in the Fifth Schedule with

a view to rectify errors and harmonise certain

entries with Harmonised System of Nomenclature

and also to create new tari� lines from certain

entries, with e�ect from such date as the Central

Government may, by noti�cation in the O�cial

Gazette, appoint

Retrospective e�ect to noti�cation number G.S.R. 665

(E), dated the 5th July, 2016, amending the noti�ca-

tion number G.S.R. 285 (E), dated the 8th March 2016,

issued under Section 9A (1) and (5) of the Customs

Tari� Act, 1975, so as to retrospectively exclude

expanded Polypropylene beads and ter-polymer

from the levy of anti-dumping duty from 8th March,

2016 to 5th July, 2016

�


Glossary

� � � � � � ��

� � ��Association of Persons

� � � ��Alternative Investment Funds

� � � ��Body of Individuals

� � �� Bharat Interface for Money

� � � ��Central Public Sector Enterprises�

� � � � ��Central Board of Direct Taxes

� � � � ��Central Goods and Services Tax

� � � ��Dividend Distribution Tax

� � � ��Employees Provident Fund Organisation

� � ��Financial Year

� � � ��Foreign Institutional Investor

� � ��Foreign Portfolio Investor

� � � ��Goods and Services Tax

� � � ��Hindu Undivided Family

� � � ��Infrastructure Debt Fund

� � � � ��International Financial Services Centre

� � � ��Insolvency and Bankruptcy Code

� � � � ��Micro, Small and Medium Enterprises

� � � � � ��Micro Units Development and Re�nance Agency

� � � � ��Non- Banking Finance Companies

� � ��National Pension Scheme

� � � ��National Housing Bank

� � � � ��Pradhan Mantri Gram Sadak Yojana

� � � �� Pradhan Mantri Awas Yojana- Gramin

� � � � ��Pradhan Mantri Kaushal Vikas Yojana

� � � ��Reserve Bank of India

� � � � ��Securities and Exchange Board of India

� � � ��Self Help Group

� � � ��Securities Transaction Tax

� � � � ��Short-term Capital Gains

� � � ��Statement of Financial Transactions

� � � ��Tax Deducted at Source

� � � � ��Ude Desh Ka Aam Nagrik

� � ��Uni�ed Payments Interface

�


�

Ashok Maheshwary & AssociatesC 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 �rm having an international presence. We are a team of over 140 professionals

operating PAN India with multiple o�ces 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

� � @� � � ��

� � � ��

� �


� � � � � � � �� |� � � � �� |� � � � �� |� � � � �� |� � � � �� |� � � � �� |� � � � � ��

Documents

Indian Union Budget Synopsis - sk-berater.com · Ashok Maheshwary & Associates CHARTERED ACCOUNTANTS 2019-20. Table of Contents ... Net Foreign Direct Investment (FDI) in˛ows grew