[Opinion] Union Budget 2024-25 | Unveiling Transformative Indirect Tax Measures

Manoj Mishra & Shilpa Verma – [2024] 164 taxmann.com 695 (Article)

1. Introduction

The Union Budget for 2024-25, presented by the Hon’ble Finance Minister Nirmala Sitharaman, comes at a crucial juncture for India’s economic landscape. Amidst global uncertainties, the budget seeks to propel the India’s roadmap of ‘Viksit Bharat’, through strategic investments and reforms across various sectors to reinforce government’s commitment to inclusive growth, stability and resilience. Therefore, a significant thrust of this year’s budget is towards employment, skilling and providing support to the MSME, women and ‘anndata’ (Farmers).

On the indirect tax front, a comprehensive array of changes has been introduced under the Goods and Services Tax (GST) and Customs laws, which echoes the government’s ongoing endevours to streamline tax compliances, enhance clarity, and support various sectors of the economy. These changes primarily aim to reduce legal complexities, provide extensive relief to taxpayers, and facilitate trade across multiple industries. This article delves into the key proposals under the indirect tax and their implications, offering a detailed overview of the major amendments brought forth in this budget.

2. Proposals under GST

Under GST, earmarked by the 53rd GST Council, Section 74A has been introduced to overhaul the demand and recovery procedure for both fraud and non-fraud cases from FY 2024-25 onwards, by establishing a common time limit for the issuance of demand notices and orders. Accordingly, Section 73 and 74 which govern the demand and recovery procedure for fraud and non-fraud cases respectively, under the current GST framework have been restricted to cases till FY 2023-24. The intention of the government is to do away with the long prevalent and litigious differential timelines for issuance of show cause notice and orders for fraud and non-fraud cases, while retaining the underlying differentiation. Accordingly, a common time period of 42 months for issuing the show cause notice and 18 months (including a ‘6-month’ extension) for issuing order has been devised, while retaining the differentiation between fraud and non-fraud cases through differential penalty in a move which sets a thematic of killing two birds with one stone.

While this approach aims to simplify and unify procedures, it could create challenges for honest taxpayers. The existing three-year period for non-fraud cases, will be extended to 5years, including extension, which may be seen as excessively long. Additionally, treating fraud and genuine cases similarly could discourage compliance among honest taxpayers and potentially encourage deliberate non-compliance.

Similar to Section 74A, introduction of Section 128A for providing a conditional waiver of interest and penalties for non-fraud cases pertaining to previous fiscal years is another earmarked amendment. This provision (or ‘amnesty scheme’) on one hand, aims to ease and allay the financial burden of taxpayers who suffered from discrepancies and vulnerabilities in the initial years of GST implementation. On the other, seems like an ordeal for the diligent taxpayers who had timely deposited interest and penalty by specifically denying refund, which may become a point of contention between such diligent taxpayers and department premised on Article 14.

Click Here To Read The Full Article