Highlights of The Union Budget (No. 2) 2024-2025

by Athena Law Associates

GENERAL

1. The Union Budget 2024-2025 presented in the Parliament today is in continuity of interim budget presented earlier. It’s a growth-oriented budget with special support for the poor, women, youth, and farmers and focused on increased spending, job creation, and tax relief for the middle class. Apart from continuing production linked incentive, government has introduced employment linked incentive scheme.INDIRECT TAXESCustoms Law: Important Changes
2. A new proviso has been added in Section 65 (1) under which Central Government has acquired power to exclude certain manufacturing processes/operations with respect to certain class of goods that shall not be permitted in a warehouse. Therefore, after presidential assent of the Finance Bill when it becomes Finance Act, Government may exclude solar power developers or certain other categories from the purview of Section 65 and connected MOOWR Regulations.
3. There were ongoing investigations demanding GST Compensation Cess on imports done by SEZ for which exemption notification was issued. This notification has been given retrospective effect from 01.07.2017 i.e., since the inception of GST.
4. Rates of Customs Duty have been rigged in such a way that domestic manufacturing is supported for achieving this goal the customs duty on the products for which India has sufficient manufacturing capacity has been enhanced and the import of Raw Materials / Inputs has been facilitated by lower duties. There is also a proposal to undertake a review in the coming 6 months. A few examples citing changes in customs duty rate are given below:

BCD has been reduced to NIL on the following critical minerals, namely, Antimony, Beryllium, Bismuth, Cobalt, Copper, Gallium, Germanium, Hafnium, Indium, Lithium, Molybdenum, Niobium, Nickel, Potash, REE, Rhenium, Strontium, Tantalum, Tellurium, Tin, Tungsten, Vanadium, Zirconium, Selenium, Cadmium, Silicon other than Quartz & Silicon Dioxide whereas BCD has been reduced to 2.5% on Graphite, Silicon Quartz & Silicon Dioxide.

The BCD on cellular mobile phone / PCBAs and Chargers or Adapters used in mobile phones has been reduced from 20% to 15%.

• BCD on precious metals on Gold Bars / Dore, Silver Bars / Dore and Platinum has been reduced from 10% to 5%. AIDC rate has also been reduced on import of these precious metals.
• Certain specified capital goods for use in manufacture of solar cells and modules are exempted from BCD.
• BCD on Ammonium Nitrate has been increased from 7.5% to 10%.
• The tariff rate of CTH 3920 and 3921 has been increased to 15%.

5. A comprehensive review has been undertaken in respect of 188 conditional exemptions/concessional rates (150 entries in notification No. 50/2017-Customs dated 30th June, 2017 and 38 exemptions/concessional rates are standalone Notifications). The summary of changes are as below:
   • 30 exemptions/concessional rates are being extended up to 31.3.2029
   • 126 exemptions/concessional rates are being continued up to 31.3.2026
   • 28 exemptions/concessional rates are being lapsed on their end dates of30.9.2024
   • end dates are being removed in 4 exemptions as they are covered by the exclusionclause.GST Law: Important Changes
6. No GST shall be leviable on un-denatured ENA or rectified spirit used for manufacture of alcoholic liquor for human consumption. [Amendment in S. 9(1)]# Past period litigation may be considered under newly inserted Section 11A.
7. The Government will have the power to waive off recovery of taxes which were not levied in the past or non-levy has continued till date as a result of general practice. This also includes short levy of tax on account of difference in tax rate. [Insertion of S. 11A]#The industries which are facing litigation due to industry practice will now have the opportunity to represent before the GST Council & Government for regularisation of GST treatments owing to general industry practice.
8. Input Tax Credit for FY 2017-18 to FY 2020-21 availed in any GSTR 3B filed upto 30th November 2021 shall be entitled irrespective of time limit provided under Section 16(4). [Insertion of Section 16(5)]# Opportunity to reclaim the ITC for taxpayers who have already reversed the ITC.
9. ITC of tax paid by the Supplier under Section 74A shall be allowed to the recipient even if the Department has alleged fraud, suppression, etc for the tax period FY 2024-25 onwards. [Amendment in S.17(5)(i) r/w S. 74 & S. 74A]

#This will reduce litigation on tax demands where recipient is eligible for credit. However, the demand of interest and penalty shall remain a decisive factor for settling the disputes with Department.

10. Self-invoicing under RCM has to be done within prescribed time limit [Amendment in S. 31(3)(f)]

#This compliance may impact time of supply for RCM liability and time limit to avail ITC.

11. Authorised representatives of all persons shall be permitted to appear before the proper officer to give the statement and produce documents in compliance of Summons under Section 70(1). [Amendment in S. 70]#Investigating Authorities used to summon key managerial persons such as CEO/CFO/Directors including foreign managerial persons. This amendment will extend big relief in such scenarios.
12. Determination of tax under Section 73 & 74 shall be done for the period up to FY 2023- 24. From FY 2024-25, tax shall be determined under newly inserted Section 74A, which is summarised as under: [Insertion of in S. 74A]

SCN can be issued within 3.5 years from the due date of filing GSTR 9 Annual Return.

Order can be passed within 12 months from the date of issuance of SCN. The said period may be extended for further six months by the Joint Commissioner/Commissioner after recording in writing the reasons for delay in issuance of Order.

Levy of Penalty shall be as under:

HIGHLIGHTS|UNION BUDGET JUL 2024

#It is now hopeful that the practice of alleging fraud, suppression merely to invoke extended period of limitation may be discontinued.

13. The time limit to file an Appeal before the GST Appellate Tribunal w.e.f. August 2024 shall be later of the following [Amendment in S.112]:

1. Within 3 months of the Appealable order
2. Notified date by the Government

14. Pre deposit for filing Appeal before GST Tribunal reduced from 20% to 10% of tax amount.

[Amendment in S. 112].

15. Amnesty Scheme: Waiver of Interest and Penalty for the tax period FY 2017-18 to FY 2019-20 [Insertion of S.128A]

A. Scenarios where benefit can be availed:

• SCN issued under Section 73 but no Order passed
• Order passed under Section 73 but Appellate/Revision order not passed
• Appellate/Revision Order passed with respect to Order under Section 73 but GST Tribunal Order not passed
• Notice/Orders under Section 74 considered as non-fraud matters by Appellate Authority/ Tribunal /Courts for which order passed/to be passed under Section 73

B. Subject to following compliance & conditions, the amount of interest and penalty levied with respect to demand made under Section 73 shall be waived off:

On payment of FULL amount of tax payable as per SCN/Order or Appellate/Revisional Order on or before the notified date

If in an Appeal already filed by the Department or revisional proceedings initiated by the Department, the amount of tax payable is increased, the same shall be payable within 3 months from the date of said Order.

• Appeal/Writ filed by the Taxpayer to be withdrawn on or before the notified date.
• No further Appeal can be filed in the matter concluded under this Scheme.
• No refund of interest/penalty already paid.

16. Application for alleging Anti-Profiteering shall not be accepted by the Authority from the date to be notified. [Amendment in S. 171]
17. Following activities carried out by the Insurance Service Providers shall not be considered as supply of service: [Insertion in Schedule III]
    1. In case of coinsurance service, the activity of apportionment of coinsurance premium by the Lead Insurer to the Co-insurer, subject to the condition that Lead Insurer pays GST on the entire amount of premium paid by the Insured.
    2. In case of reinsurance service, services by insurer to the reinsurer for which ceding commission or the reinsurance commission is deducted from reinsurance premium paid by the insurer to the reinsurer, subject to the condition that GST is paid by the reinsurer on the gross reinsurance premium payable by the insurer to the reinsurer.
18. The Supplier of zero-rated supply of goods shall not be eligible for refund of unutilised ITC where such zero-rated supply is subject to export duty [Amendment in S. 54 of CGST Act and S. 16 of IGST Act]DIRECT TAXES
19. Income tax slab rate has been changed in the new tax regime as below for AY 2024-25:

20. Standard deduction for the salaried employees in the new tax regime has been increased from ₹ 50,000 to ₹ 75,000.

21. Short-term Capital Gain (STCG) Tax on certain financial assets has been raised from 15% to 20%, whereas rate of Long-term Capital Gain (LTCG) Tax on all financial and non- financial assets has been fixed at 12.5%.

22. The Government has also abolished angel tax for all classes of investors.

For any further clarification and specific query, please feel free to contact the authors