Mumbai: In the back drop of recent GST Council driving the final decisions on all the aspects regarding GST, there is limited scope left for the interim budget 2019 to make any major announcements regarding Goods and Services Tax.
Nevertheless, without diving into the micro aspects of the GST law, one can still expect this Pre-Poll Interim Budget to drive major macro policy decisions which are directly or indirectly linked to GST.
It is a known fact that, month on month Government has fallen short of its GST Revenue targets and, at the macro level, this issue can only be corrected by either increasing the Tax Rates of GST or increasing the Tax base (number of Registrants) of GST. With the former (increase in rate) being a practical impossibility in the election year, Government is bound to look into new policies initiatives to incentivise small business owners to enroll into GST. Also, the efforts made to track leakages in revenue are evident.
The government has already taken its first step in this direction by providing GST-linked unsecured PSB loans and one can surely expect further announcements in this Interim Budget for the MSMEs / SMEs with regards to GST Linked Electronic Loan / Subsidy facilities. These policy initiatives shall indirectly incentivise voluntary registrations under GST, thus solving twin problems of correcting GST Revenue issue for the government while also solving the problems for MSMEs.
On the Customs front, India may look forward to further push its ‘Make in India’ agenda and try to strengthen its manufacturing position. The 17 Target sectors under ‘Make in India’ initiative namely, Automobile, Defense, Renewable Energy, among others are likely to see favourable customs changes.
Some import duty cuts have already been proposed ahead of the budget, one such being cut on import of parts and components for electric vehicles from the present rates of 15-30% to 10-15%.
Also, it is expected that the Budget should rationalise many custom rates to ensure local manufacturers get advantage in India over direct imports. The Government is expecting to reduce the Crude Bill by 10% by 2022. In order to achieve the same, export duty may be expected on export of domestic produce of Ethanol, Methanol and such fuels so that there is captive consumption within the economy, crude oil being a major hurdle for growth in the economy.
Further, in order to promote environment friendliness, it is expected from the government to reduce or exempt duty on Compressed Natural Gas (CNG), which shall promote usage of this environmental friendly fuel in domestic and commercial transportation sectors widely.
All eyes are now set on the Budget speech, on whether it fulfills the industry expectations.
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The article is written with inputs from CA Ravi Soni, representing Ravi B. Soni & Co.