Honourable Finance Minister Nirmala Sitharaman has presented her second Union Budget in the Parliament on 01 February 2020.This Budget focused on bringing a series of measures aimed at promoting investments in the country, creating a world class infrastructure and stimulating economic growth.

1. BUDGET 2020
Indirect Tax Proposals

2. Introduction to Budget
Indirect Taxes- Highlights
Goods & Services Tax (GST)
Customs

3. Introduction to Budget
Indirect Taxes- Highlights
Goods & Services Tax (GST)
Customs

4. Introduction to
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Union Finance Minister Nirmala Sitharaman presented the Union Budget for the financial year 2020-2021 on 1st February 2020
in the Lok Sabha that has placed significant emphasis on agriculture, wellness and education. These three areas have huge
potential to impact the lives of a large part of the population. There is also a strong message towards gaining people’s
confidence and trust through assurance about the stability of the banking system, making proposals like decriminalizing the
Companies Act, relooking at other laws, fine-tuning the Contract Act, increasing the deposit insurance and creating a
Taxpayers’ Charter in the statute to prevent harassment.
Recognizing urban centers as the growth engines and giving importance to the role of the private sector, there are proposals
to develop five smart cities, promoting electronics manufacturing, solar infrastructure, more trains, more airports and data
center parks under the PPP mode.
As outlined by the Finance Minister, the budget is woven around three prominent themes:
 Aspirational India in which all sections of the society seek better standards of living, with access to health, education
and better jobs;
 Economic Development for all, indicated in the Prime Minister’s exhortation of “SabkaSaath, SabkaVikas, SabkaVishwas”.
This would entail reforms across swathes of the economy. Simultaneously, it would mean yielding more space for the
private sector. Together, they would ensure higher productivity and greater efficiency; and
 Caring Society that is both humane and compassionate.

5. Introduction to Budget
Indirect Taxes- Highlights
Goods & Services Tax (GST)
Customs

6. Highlights
 It has been proposed to allow Input Tax credit vis-à-vis a debit note in the year of issuance,
instead of the year of the debit note’s underlying tax invoice;
 Omission of supplies relating to transfer of business assets without consideration
 Penalties for beneficiary of transaction introduced
 Exclusion of Certain Categories of Taxable Persons from Composition Scheme
 Health Cess at the rate of 5% will be levied as duty of customs on import of specified medical
equipments
 Additional measures will be implemented to curb misuse of Free Trade Agreements (FTAs) and
Rules of Origin will be revisited
 Additional safeguard measures on imports will be implemented to protect the domestic industry
 Electronic credit ledger has been introduced for making duty payment by way of direct duty
credit for export and other benefits.
 There has been an upward revision of duty rates across sectors to provide a level playing field
for domestic players.
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7. Introduction to Budget
Indirect Taxes- Highlights
Goods & Services Tax (GST)
Customs

8. Page 8 of 15Private & Confidential
Time Limit for availing ITC of debit notes
 Section 16 of CGST Act has been amended to delink the time limit of availing ITC of debit notes
from the ‘date of invoice relating to such debit note’ to the date of debit note itself.
 With this, credit in respect of debit note issued in say financial year 2019-2020 for an invoice
pertaining to 2018-2019 could now be claimed by the recipient by the due date of September
2020 return of the date of Annual return of 2019-2020 whichever is earlier.
Omission of Supplies relating to transfer of Business Assets without consideration
 As per Schedule II of CGST Act, transfer of business assets where goods forming part of the assets
of a business are transferred or disposed of by or under the directions of the person carrying on
the business so as no longer to form part of those assets, whether or not for a consideration, such
transfer or disposal is considered as taxable supply of goods by the person.
 Entries at 4(a) & 4(b) in Schedule II of the CGST Act is being amended with retrospective effect
from 1st July 2017 to make provision for omission of supplies relating to transfer of business assets
made without any consideration from Schedule II of the said Act.
 With the aforesaid amendment, Transfer of Business Assets without any consideration will not be
treated as taxable supplies and will be exempt from levy of GST.
GOODS & SERVICES TAX

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Penalties for beneficiary of transaction introduced
 Penalty provisions expanded to make the beneficiary of certain transactions at whose instance
specified transactions are conducted liable for penalty of an amount equivalent to the tax evaded
or input tax credit availed or passed.
 The specified transactions are supply of goods without invoices or under false/incorrect invoice,
incorrect availment of utilization of input tax credit and incorrect availment or distribution of
input tax credit by input service distributor
 Section 132 of CGST is being amended to make the offence of fraudulent availment of ITC without
an invoice or bill a cognizable and non-bailable offence. The person who commits the offence or
retains the benefit of involved transactions shall be liable for punishment prescribed u/s 132.
Alignment in Definition of 'Union Territory’
 Jammu and Kashmir Re-organization Act, 2019 whereby Jammu and Kashmir is considered as
Union Territory instead of State and Ladakh is considered as a Union Territory separate from
Jammu and Kashmir; and
 Dadra and Nagar Haveli and Daman and Diu (Merger of Union Territories), Act, 2019 where Union
Territory ‘ Dadra and Nagar Haveli and Daman and Diu’ was created by merger of existing Union
Territories.’
 According to above legislative changes, consequent amendment in list of states and Union
Territories is being done.

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Exclusion of Certain Categories of Taxable Persons from Composition Scheme
 Following categories of taxable persons are excluded from ambit of Composition Scheme who are
engaged in making:-
• Supply of services not leviable to tax under CGST Act
• Inter State outward supply of services
• Outward supply of services through E-Commerce Operator
Other changes
 Power of cancellation/suspension of registration extended to taxpayers who intend to opt out of
voluntary registration
 Power to condone delay in filing of application for revocation of cancellation of registration up to
30 days granted additional commissioner/joint commissioner. Power to condone further delay up
to 30 days granted to commissioner.
 Time limit for issuing Removal of Difficulty Orders increased from expiry of three years from date
of commencement to five years from the date of commencement of the GST Act.
 Harmonize the conditions for eligibility for options to apply under Composition Scheme.
 Empowers government to notify categories of services or supplies in respect of which tax invoice
shall be issued and to make rules regarding time and manner of its issuance.
 Empowers government to make rules to provide for forms and manner in which a certificate of
tax deduction at source shall be issued.

11. Introduction to Budget
Indirect Taxes- Highlights
Goods & Services Tax (GST)
Customs Law

12. Page 12 of 15Private & Confidential
Customs Law
Duty Scrips for reversion of duties and taxes on exported products introduced
 The government has proposed to digitally refund to exporters, duties and taxes levied at the
Central, State and Local Levels such as electricity dues and VAT on fuel used for transportation,
which are not getting exempted or refunded under any other existing mechanism.
 Benefit of the scheme will be granted by way of duty credit in the customs automated system in
the form of an electronic duty credit ledger
Measures to Protect Domestic Industry
 Safeguard duty introduced on goods imported into India in such increased quantity and under
such conditions so as to cause or threaten to cause serious injury to domestic industry.
 The measures include imposition of safeguard duty, application of tariff- rate quota or such other
measure as the Government may consider appropriate.
 Scope of Anti dumping Rules expanded to cover cases of circumvention of anti-dumping duty.

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Power to Central Government
- Importation and exportation of Goods
 Clause(f) of sub-section (2) in section 11 of the Customs Act, 1962 has been amended so as to
include any other goods along with Gold or Silver to enable the Central Government to prohibit
either absolutely or conditionally the import or export of such goods to prevent injury to the
economy on account of uncontrolled import or export of such goods.
- To make rules
 Clause (ja) is inserted in sub-section (2) of section 157 of The Customs Act, 1962 so as to
empower the board to make regulations for the manner of maintaining electronic duty ledger,
making of payment from that ledger, transfer of duty credit from ledger of one person to another
and the conditions, restrictions and the same time limit relating thereto.
 Clause (i) has been inserted in sub- section (2) of section 156 of The Customs Act, 1962 so as to
empower the Central Government to make rules providing for the form, time limit, manner,
circumstances, conditions, restrictions and such other matters for carrying out the provisions of
chapter VAA.
- To make regulations

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Make in India for Medical Devices
 The government has proposed imposition of health cess at 5% on the value of goods, specified in
fourth schedule, imported into India w.e.f. 2nd February 2020.
 The cess collected will be utilized for the purposes of financing the health infrastructure and
services.
 The value of goods shall be calculated in the same manner as the value of goods is calculated for
the purpose of customs duty under the section 14 of the Customs Act, 1962.
 The cess shall be applicable on all goods falling under headings 9018, 9019, 9020, 9021 and 9022.
Illustrative list includes scanners, X-ray Machines, pacemakers, etc.
 Exemptions provided on specified medical devices and inputs/parts for manufacture of medical
device.
Tariff and Rate Changes
 New HSN classification has been provided for certain goods such as Wall Fans, Open cell for
television sets, solar cells-assembled and not assembled, etc,
 BCD on Furniture increased from 20% to 25% and BCD reduced on specified parts microphones.
 Electric Motor Vehicles to attract higher custom duties for CBU, SKD and CKD from 1st April 2020.

15. Locations
Delhi
Email : snr@snr.company Website : www.snr.company
A-15, Second Floor, Hauz Khas,
New Delhi- 110016
Tel. +91 11 26856421, 41655801, 26855884
Fax: +91 11 26567540
No. 5A, Second Floor, 6th Main, KHB
Colony, Basaveshwaranagar,
Bangalore - 560079
Tel. +91 80 42064178
Bangalore
Pune
Office No. 5,Kalashree Apartment,
Opposite Bank of Maharashtra,
Karve Road,
Pune 411004
Ph: +91 20 25435788
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