Impact of Budget 2019-2020 on GST Registered Person

The Union Budget 2019-2020 was announced in the Parliament by the Finance Minster Nirmala Sitharaman on 5 July 2019. It focused on building a 5 trillion dollar economy through virtuous cycle of investment in the different sectors of the country. Great emphasis has been given in strengthening the connectivity infrastructure i.e. a need is there to develop a better communication and transportation system. Work needs to be fastened in the projects related to railways, roadways, postal services, mobile services, airways, waterways etc.

Full Guidance on Tax Deducted at Source (TDS) under GST

Also to mark the 150 anniversary of Mahatma Gandhi, the government has brought up an encyclopedia-like “Gandhipedia” that would sensitize the society and be a great effort to spread Gandhian values. Emphasis has been put on transforming the lives of rural people by introducing schemes like Pradhan Mantri Karam Yogi Maandhan that would provide Pension benefits to retail traders and small shopkeepers and Pradhan Mantri Matsya Sampada Yojana (PMMSY) that would establish robust fisheries management framework. Efforts will be put to transform common man’s life through schemes like MUDRA, UJJWALA, SAUBHAGYA etc. The government has Enhanced interest deduction for affordable housing loan and given Tax benefits for corporate tax payers.

14 Blocked Input Tax Credit (ITC) under GST

The government in its budget has explained that out of all the taxes and duties 19% of the rupee will be coming from GST, 21% from corporate tax, 16% from Income Tax, 8% from Union Excise Duties and 4% from customs. As far as taxation in concerned, a scheme of faceless electronic assessment is being introduced that would involve no human. To bring ease to the tax payers Aadhaar and PAN will be made interchangeable.

Since a major chunk of the rupee is coming from GST(19%), we need to look at some of the changes brought in for the GST registered persons and their impact on them.

  • Taxpayers having an annual turnover of less than Rupees 5 crore can now file quarterly returns. It would enable them to clear their GST accounts with the government on timely basis.

Taxation of Education Sector under GST Regime

  • Fully automated GST refund module shall be implemented. Multiple tax ledgers for a taxpayer shall be replaced by one that would simplify the GST procedure and make it less cumbersome and easy for the tax payers to file returns.


  • The Budget proposes to move to an electronic invoice system wherein invoice details will be captured in a central system at the time of issuance. This will eventually be used to prefill the taxpayers’ returns. There will be no need for a separate e-way bill. This will be rolled out from January 2020, and will significantly reduce the compliance burden.

Input Tax Credit (ITC) on Motor Vehicles

  • GST was referred to as a “monumental reform” by Ms Sitharaman that has brought together the centre and the states with the result 17 taxes and 13 cesses becoming one and a multitude of rates instantly becoming four.


  • For small business firms Free accounting software for Return preparation is being made available that would help them to file returns easily.

Top 20 Questions on E-Way Bill

  • On account of huge pending litigations from pre-GST regime, a need was emphasized to unload the baggage and allow business to move on, as more than Rs. 3.75 Lakh Crore is blocked in litigations in Service Tax and Excise. The budget has proposed a dispute resolution-cum-amnesty scheme, called “the Sabka Vishwas Legacy Dispute Resolution Scheme, 2019”. This would allow quick closure of these litigations. The relief under the scheme varies from 40 percent to 70 percent of the tax dues for cases other than voluntary disclosure cases, depending on the amount of tax dues involved. The scheme also provides relief from payment of interest and penalty. The person discharged under the scheme shall also not be liable for prosecution.

New GST Payment and Input Tax Credit (ITC) calculator

  • Hike in customs duty on certain items has been done to promote ‘Make in India’. This would have an indirect impact on the GST registered people as with hike in custom duty, domestic demand for foreign goods would reduce and in turn the production by Indian manufacturers would increase thereby satisfying the domestic demand. The profits of GST registered person would go up. When sales would increase automatically the collection of GST on such goods would also increase. This would in a way increase the government revenue.

Check the GST calendar

  • One of the important announcement is the reduction of GST on electric vehicles from 12% to 5%. She said that the government has already moved GST council to lower the GST rate on electric vehicles (EV) from 12% to 5%. Also to make EVs affordable for consumers, government will provide additional income tax deduction of Rs 1.5 lakh on the interest paid on the loans taken to purchase EVs.

GSTR-1: Points to note before filing GSTR1

Overall the Union Budget launched by the Modi Government 2.0, can be said as GST friendly as a lot of steps have been taken to make the GST procedure simple and transparent. Efforts are being put to make the GST return filing process less cumbersome and tedious. Some concrete steps have been taken in the investment sector to ensure that the government achieves its goal of being a 5 trillion dollars economy.

For any question visit us at GST Discussion Forum

The author of above article is Tanuja Puri, Assistant Professor.

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