Pre-budget Expectations Indirect Tax
A few expectations from an indirect tax perspective are mentioned below.
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During the run-up to Union Budget 2019, expectations are rising to bring in reforms aimed at creating a tax and business-friendly environment. A few expectations from an indirect tax perspective are mentioned below.
1. To ease the financial burden on importers, Merchandise Export from India Scheme and service export from India scheme scrips should be allowed to use for the payment of GST.
2. The present law does not provide for manner of claiming refund of countervailing duty (‘CVD’) and special addition duty (‘SAD’) paid after 1 July 2017 on the non-fulfillment of export obligation where imports were made before the implementation of GST. In the pre-GST period, CVD or SAD was allowed to be recovered by way of input tax credit. To provide continuity of tax neutralisation, the government should lay down a procedure to claim the refund of such duties.
3. The progressive duty deferral policy, introduced through circular 38 dated 18 October 2018, has not been implemented due to lack of clarity on the timing of compliances followed under other regulations put in place by participating government agencies, such as the Food Safety and Standards Authority of India, and drug controller. Suitable non-tariff notifications or explanations under section 65 of the Customs Act should be issued to provide necessary clarity.
The GST Council had recommended the following changes to the GST law. These changes are expected to be brought into effect in the ensuing budget.
1. Relief to taxpayers for calculation of interest on net liability (after adjusting input tax credit)
2. Creation of the Centralised Appellate Authority for Advance Ruling to deal with divergent decisions given by two or more state Authorities for Advanced Rulings.
3. Removal of interest component on the reversal of credit in case of non-payment of vendor invoices within 180 days from the date of invoice, and a similar relaxation from payment of interest on the import invoices where GST is payable under reverse charge when the payment to the vendor is delayed beyond 60 days
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