Current architecture of GST is my brainchild, says PM Narendra Modi

Current Affairs
PM Narendra Modi on Thursday disclosed to Parliament that the present engineering of merchandise and ventures charge (GST), including more prominent weighting to assembling states, was his brainchild, which he had proposed as boss clergyman of Gujarat to then back pastor Pranab Mukherjee, however in the long run Arun Jaitley, the account serve during his administration's past term, included it into the law.
Answering to the conversation on the movement of gratitude to the President's location, the PM tried to safeguard the various revisions to GST, and said any change of such extent ought to have space for a remedial instrument. He said even the Constitution had been altered a few times.
On the National Population Register (NPR), the PM guarded the all-encompassing poll. In opposition to late explanations by different priests on the issue that the all-encompassing NPR survey was intentional, Modi said "little changes" were a piece of any ordinary managerial exercise of a legislature. The PM said information was required, remembering for the petulant inquiry on spot of birth of the dad of a respondent, to follow expanded relocation and decide the respondent's first language.
Congress pioneer Jairam Ramesh said the PM was "deceiving the House". Afterward, Ramesh said the "real truth was currently out in the open" with the PM himself demonstrating that none of the new NPR questions was "willful".

The PM underlined the requirement for cooperating to make India a $5 trillion economy. He said the administration had the option to keep up macroeconomic strength in the midst of intense worldwide condition. He likewise admonished all individuals to give recommendations on approaches to make the most of chances hurled by the current worldwide monetary circumstance...READ MORE

Hero MotoCorp asks govt for phased GST reduction to avoid revenue losses

International News

Hero MotoCorp on Thursday urged the government to consider a phase-wise reduction in GST on automobiles, cutting rates for two-wheelers in the first stage, and deferring tax cut on four-wheelers to a later stage.
The country's largest two-wheeler maker said the move would help the government contain potential revenue loss, and at the same time provide relief to around 20 million probable two-wheeler buyers across the country.
"I understand that potential adverse impact on government revenue is becoming a constraint (for GST rate cut). While increased sales should take care of that, even if we assume a shortfall in revenue, a resolution can be found if we approach this topic in phases," Hero MotoCorp CFO Niranjan Gupta told PTI.
The government may look at reducing the GST for only two-wheelers as the first step and defer it for four-wheelers, he added.
"This will contain the potential revenue loss, and also cover around 20 million buyers," Gupta said.
To begin with, the government can even look at bringing two-wheelers up to 150 cc into the 18 per cent goods and services tax (GST) slab, he said, adding that this will provide relief to almost 16 million probable customers - mostly in small towns and rural areas - with minimal revenue impact.
"Thereafter, the same can be extended to other segments, basis the outcome and fiscal space that the government may have," Gupta said.

 The two-wheeler market in India is pegged at around 20 million units per year with lower than 150-cc bikes accounting for the bulk of sales...Read More

GST Council unlikely to back tax cuts for automobile sector: Reports

International News

The goods and services tax (GST) panel is unlikely to approve lowering the tax for the auto and allied components sector this week, as a study has warned of major revenue losses, two government officials said.
A government study, attached to the agenda of a Sept. 20 GST panel meeting, has said the total annual revenue loss could be as much as Rs 50,000 crore ($6.95 billion), if the panel decided to lower tax rates for the auto sector to 18% from 28%.
Meanwhile, state officials in Kerala, Punjab and West Bengal say they are also opposed to any cut in tax rates in the autos sector, or even consumer goods, because of lacklustre tax collections this fiscal year.
In the April-July period, total tax revenues of 20 states fell 7% to Rs 4.9 trillion compared with the same period last year.
Some states were particularly hard hit, with data showing Andhra Pradesh, Rajasthan and Punjab tax collections plunged 59%, 35.5% and 12.5%, respectively.
"I will oppose any reduction for the simple reason that it won't be revenue neutral," said Thomas Isaac, finance minister of the southern state of Kerala.
The auto sector, which has been reeling from the worst slump in nearly two decades, has pushed for a lowering of tax rates at the Sept 20 GST panel meeting, in a bid to revive vehicle demand.
The GST panel is chaired by the finance minister and all state finance ministers are members. The panel makes decisions by vote.

 Still, those states ruled by the Bharatiya Janata Party may be willing to support a GST cut if the government pushes such a proposal...Read More

Govt offers resolution for pre-GST disputes with tax authorities

Current Affairs
Companies will get up to 70 per cent duty relief if they settle their pre-GST disputes with the tax authorities, according to a scheme, which will become operational from next month and run till the end of 2019.
There will also be an amnesty scheme. Under this, the assessee will have to voluntarily disclose the due taxes. The assessee will have to pay the full amount, but they will not face any legal action.
Sabka Vishwas (Legacy Dispute Resolution Scheme), 2019, was announced in the Budget. For any case pending in adjudication or appeal at any forum, this scheme offers a relief of 70 per cent from the duty demand if it is up to Rs 50 lakh and 50 per cent if it is over Rs 50 lakh.
The same relief is available for cases under investigation and audit, where the duty involved is quantified and communicated to the party or admitted by them in a statement on or before June 30, 2019.
In cases of confirmed duty demand, where there is no appeal pending, the relief offered is 60 per cent if the duty is up to Rs 50 lakh and 40 per cent if the duty is over Rs 50 lakh.
The scheme’s objective is to free as many taxpayers as possible from legacy taxes, the finance ministry said in a statement. The scheme is especially tailored to free small taxpayers from their pending disputes, the statement said.
"The government urges taxpayers and all concerned to avail themselves of this scheme and make a new beginning," the statement said.

 Abhishek Jain, tax partner at EY, said while various players in the industry had already started...Read More

UP govt to crack down on tax evasion, eyes over Rs 1.4-trn revenue in FY20

Company News

Uttar Pradesh government will crack down on Goods and Services Tax (GST) evaders to improve its tax and non-tax revenue collection.
The state is targetting a tax mop-up of Rs 1.4 trillion in the current financial year, 4.4 per cent higher than the revised budgetary estimates of Rs 1.34 trillion in 2018-19.Chief Minister Yogi Adityanath has asked the commercial tax department to employ technology tools to identify tax evaders for taking action. In a review meeting held in Lucknow recently, he underlined that UP was the largest consumer state and, as such, it should top the GST collection tally as well.
He directed the state taxman to take "effective steps" to improve the state tax collection by rooting out chronic tax evasion, and noted that a bigger GST kitty would boost state revenues and provide greater leverage to the government to invest in public welfare schemes.
During April-July 2019, UP tax revenue, comprising GST, Value Added Tax (VAT), excise, stamp and registration, transport, energy and land revenue heads, stood at Rs 41,202 crore. Similarly, the state clocked a non-tax revenue of Rs 1,982 crore during the first 4 months of the current financial year under the heads of mining, minerals, irrigation, forest and wildlife, police, public works department (PWD), housing, and employment, etc.

Adityanath also exhorted the excise department to pull up its socks for posting higher excise revenue in the current financial year. Meanwhile, the CM directed the transport department to develop bus terminals on the pattern of airports, so that they could be harnessed for commercial use and to boost income.During 2019-20, UP has projected total revenue receipts of more than Rs 3.91 trillion, including tax and non-tax revenue, both emanating from state collection and its share from the tax and non-tax revenue of the Centre...Read More

Pay up interest for delay in paying GST refunds: Gujarat High Court

International News

The Gujarat High Court has directed the authorities to pay interest for delay in paying GST refunds.
The authorities were asked to pay the interest at the rate of nine per cent per annum.
Saraf Natural Stone, a partnership firm, had filed a claim of GST refund. However, there was substantial delay by the authorities in granting of refund.
Following this, the firm approached the high court by way of writ and demanded interest from the authorities for the delay. It submitted that the authorities are required to grant a provisional refund of 90 per cent of the amount claimed within seven days of filing of the claim.
The firm said the authorities have not provided any reason for the delay and it was never in receipt of any deficiency notice, which could have transpired such a delay.
It further submitted that the delay has impacted its working capital and hence it is entitled to receive interest on such delayed payment.
However, the authorities — the revenue department, the Central Board of Indirect Taxes and Customs (CBIC) and the GST Network — submitted that there was no express provision made for entitlement of interest to the firm and hence there was no merit in this petition.

 The high court held that the position of law is quite well settled wherein the provisions relating to interest on delayed payment of refund have been consistently held as beneficial and non-discriminatory.Hence, it said the authorities are liable to pay simple interest on the delayed payment at the rate of nine per cent per annum...Read More

Planning to buy e-vehicle? EV firms trim prices after GST breather

International News

Owning an electric car and two-wheeler will now be easier on the wallet. With a steep reduction in the GST (goods and service tax) rate taking effect, manufacturers of EVs have reduced prices of their models — up to Rs 80,000 for e-cars and up to Rs 9,000 for e-two-wheelers.
In a bid to spur the EV demand, Union Finance Minister Nirmala Sitharaman had announced a reduction in GST on EVs from 12 per cent to 5 per cent in her maiden Budget.
Sohinder Gill, director general at Society of Manufacturers of Electric Vehicles (SMEV), said EV makers, which mainly include eight two-wheeler makers, carmakers and three-wheeler makers, have passed on the benefit of the reduced GST rate.
“While it may not have much impact on the demand as the benefit from affordable two-wheelers will only be Rs 4000-5000, it will boost sentiment,” said Gill. Hero Electric, too, has reduced prices across its range, he added.
Tata Motors that sells the electric version of Tigor has reduced prices by up to Rs 80,000 across its variants, with effect from August 1. Tigor EV, which was earlier priced between Rs 12.35 lakh and Rs 12.71 lakh (ex-showroom price in Mumbai) and will now be available to customers between Rs 11.58 lakh and Rs 19.20 lakh.

 “In light of the recent announcement made by the government to slash the GST rate for all electric-powered vehicles from 12 per cent to 5 per cent, the price of Tata Motors’ EVs will be reduced by up to Rs 80,000, starting 1 August 2019,” said Shailesh Chandra, president –Electric Mobility Business and Corporate Strategy, Tata Motors, in a statement. These prices, he added, do not include the FAME subsidy and TCS (tax collected at source)...Read More

Margins may improve after a longwait as denim industry sees glut easing

International News

After quite a few years of facing a glut in the domestic market due to excess capacity, the Indian denim industry may finally see the demand-supply gap narrowing. In addition, with mass consumption demand also expected improve even as denim players go for more premium products, gross margins in the industry are also expected to improve by 3-4 per cent this year.
"There was a mismatch in demand and supply. But in the last couple of years, due to demonetisation and Goods and Services Tax (GST), the denim market has seen a slowdown and the overcapacity is getting adjusted. Also, no new capacities or fresh investments are likely to come up. Hence, the excessive capacity that got accumulated over the years is now getting utilised gradually," says Sharad Jaipuria, CMD, Ginni International told Business Standard.
Denim, mostly fabric, capacity in India had suddenly shot up a few years ago and now stands at roughly 1,700-1,800 million metres a year. However, with annual exports being hardly 200-250 million metres, the rest of the capacity was earmarked for the domestic market, creating a glut. This had led to shrinking margins for even some of the top denim makers.
However, Jaipuria, who is also the president of Denim Manufacturers' Association, believes that with no new investment in sight and capacity rationalising, gross margins could improve by 3-4 per cent this year.

 Reiterating Jaipuria's views is a recent report by India Ratings and Research (Fitch Group) as part of its FY20 outlook for textile sector’s denim industry which states that the denim manufacturers may expect operating margins to improve marginally.The rating agency too expects minimal new greenfield investments in the sector as sub-optimal utilisation levels will not entice any players to start investing before FY'22 given that the current capex will require two to three years to stabilise...Read More

Kerala: Migrant labour faces worst effects of post demonetisation slowdown

PTI11_13_2016_000206A

Current Affairs

When illiterate mason Jalaluddin Shaikh sought a better life seven years ago, he journeyed nearly 2,500 km south from his home in Murshidabad, Bengal, to this riverine town in the greater Kochi agglomeration, known for its farm produce, plywood and sundry small-scale industries.

Jalaluddin, 40, had heard stories of the opportunities in prosperous Kerala, and nearly five years, he was happy, earning Rs 22,000 every month at construction sites, saving enough to send Rs 15,000 back home.

Everything changed on November 8, 2016, when Prime Minister Narendra Modi’s demonetisation order invalidated 86% of India’s currency.

Jalaluddin’s life worsened in June 2017, when the Goods and Services Tax (GST)--widely criticised for its hasty, often chaotic, implementation--came into effect. With the absence of cash and the complexities of the GST, business dropped and uncounted industries closed.

The downturn was exacerbated by tensions in the Arabian Gulf--the source of 36% of Kerala’s income--when many Arab countries turned against Qatar. That crisis was preceded by a general slowdown in the Gulf states since 2010, when the price of oil had dropped. As wages went unpaid and jobs and incomes were lost in the Gulf, Kerala’s construction industry suffered, as did opportunities for migrants in Kerala.


 Here in India’s seventh-richest state by per capita income, 2.5 million of 33 million people--one in 14--were migrants, according to a 2013 study by the Gulati Institute of Finance and Taxation for the Kerala labour department. Mostly manual labour, they sent Rs 17,500 crore home every year. The government now believes about a million migrants are left, a quarter of the number projected for 2018. Although some questions were raised over the study’s accuracy, it is the only available data on migrants like Jalaluddin.

Relief for industry as govt clears air on levy of GST on promotional offers

Economy & Policy:

In a major relief to manufacturers, distributors, marketers and direct sellers of consumer products, the government on Thursday clarified the extent of tax liability and the eligibility of input tax credit on promotional offers such as free samples and “buy one, get one free”.

Industry players were apprehensive about incre­ased litigation from tax audit authorities if they marketed their products as free, beca­use of ambiguity on such offers. Now, the notification by the Central Board of Indirect Taxes and Customs makes it clear that tax would be applicable and input tax credit would be available for the entire package sold, including the free items.

Experts said the clarification will bring ease of marketing and save litigation troubles for the industry, but most importantly for the FMCG and pharma sectors where such offers are common.

In the case of free samples, such as the ones medical representatives of pharma companies provide to doctors, they would not be considered as supply, and would not attract tax.

For offers such as a discount of 10 per cent for a purchase of more than Rs 1,000 and of 20 per cent for a purchase of more than Rs 2,000, the discounted amount would be excluded to determine the value of supply. Such discounts are generally passed on by the supplier through credit notes.


 But this is applicable only when the discount is made clear at the time of supply. When it is provided after the sale, it is termed as secondary discount, the discounted value should not be excluded to calculate the value of supply...Read More

More defaults on cards? Realty cash crunch threatens stressed shadow banks

Economy & Policy:

India’s property developers are finding it hard to borrow money, raising the prospect of a wave of debt defaults from the sector hitting shadow lenders that are trying to survive a funding crunch of their own..

Developers have to repay about Rs 1.29 trillion a year on outstanding debt but generate less than half the amount in income that can be used for repayments, according to an analysis of about 11,000 companies by research firm Liases Foras. Rolling over loans and tapping private-equity funds will be a struggle for all but the established names, like Oberoi Realty Ltd. and Godrej Properties Ltd., said Niraj Rathi, an analyst at India Ratings and Research.
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This drying up of liquidity comes on top of years of sluggish home sales, mounting inventories and falling prices. The difficulties were masked over as non-banks lenders rapidly increased exposure to developer loans not protected by rental revenues in recent years, according to Jefferies Group LLC. They accounted for more than a third of lending to the sector last financial year. Now there’s a risk of a vicious cycle developing between struggling lenders and distressed builders.

“Non-bank financial companies were facing developer defaults for more than 12 months but were brushing them under the carpet," said Vikas Chimakurthy, CEO, Kotak Realty Fund, a $1.5 billion realty-focused private equity fund. “We may start to see some of these issues come to the surface in the next few quarters.”


 Already real-estate and allied businesses account for the largest number of cases referred to India’s two-year-old bankruptcy process after a 2016 crackdown on cash, tightened regulations and a new tax damped sentiment. The metropolitan areas around national capital Delhi and financial capital Mumbai have been the hardest hit.Developers in the north have been jailed and home prices in the Mumbai dropped in 2018 for a second year...Read More

Explainer: How GST cut on under-construction houses will help home buyers

Economy & Policy:

The Modi government announced a cut in the goods and services tax charged on sales of residential properties under construction as it looks to stimulate the economy by driving up consumption.
The Goods and Services Tax Council, comprising central and state finance ministers, announced that the new rate will be 5 percent, down from 12 percent, on all new housing projects except those that are classified as af fordable housing. The council also decided to slash the tax rate on affordable housing projects to 1 percent from 8 percent.However, builders will not be able to claim input tax credit (ITC) under the new GST rates. The new rates will be applicable from April 1.

The Council also made changes in the definition of affordable housing carpet area and cost. Properties costing up to Rs 45 lakh will now be considered as affordable. Houses with a carpet area of 90 square metre in metro cities and 60 square metre in non-metro cities will be considered affordable, the Council said.

Properties, where the construction has been completed, attract stamp duty, not GST. Hence, ready properties that have received the occupancy certificate (OC) do not attract GST.

What does this mean for home buyers?


 The GST Council’s decision will benefit buyers who are currently on construction-linked payment schemes. Data from property consulting form shows there are 5.88 lakh under-construction homes lying unsold in India's top 7 cities. Of these, 34% are priced below Rs 40 lakh alone. With affordable housing now being defined within Rs 45 lakh budget, more properties qualify for this ‘sweet spot category. The GST cut, coupled with this critical change in definition, will induce more sales in homes falling in this budget range...Read More

Over 7,000 cash-starved start-ups may benefit from angel tax relief

Companies News:

A series of changes made to the so-called angel tax by the government could give wing to 7,000 cash-starved start-ups, sources in the Department for Promotion of Industry and Internal Trade (DPIIT) said.

According to industry observers, an investment of around $12 billion might come from 2,000 angel investors and hundreds of smaller backers of start-ups by the end of the year. Of this, about $7 billion will come in the form of corporate investment.

After facing sustained pressure over the past three years from start-ups and venture capital funds over the tax, the government introduced changes in tax norms, giving in to most of the demands raised by the sector.

Providing a wider set of exemptions from the angel tax, the Centre allowed start-ups which have raised capital up to Rs 25 crore to claim tax benefits, as distinct from the earlier Rs 10 crore. It also gave a slew of waivers and a tweak in definition industry demanded.

Expecting big gains: DPIIT

According to officials at the DPIIT, around 6,700 firms of the 16,000 start-ups registered with the nodal agency will benefit from the changes in the angel tax over the next six months.

 “Around 7,000 firms will get immediate benefit. It would be many more over time. Many companies on our list have grown beyond just being start-ups and fall in the tax bracket,” an official from the DPIIT said...Read More

No support for govt employees, taxpayers under PM-KISAN scheme for farmers

Interim Budget 2019:

Families of farmers who have one or more members paying taxes or are a government employee will be ineligible for benefit under the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) scheme.


Families with at least one member drawing a monthly pension of Rs 10,000 will be ineligible, according to the guidelines issued to the states by the Centre on Wednesday. Families who have professionals such as doctors, engineers, lawyers, chartered accountants or architects will be left out too.

Announced in the Interim Budget, the scheme is supposed to provide an additional Rs 6,000 per annum income support to small and marginal farmers.A small or marginal farmer family is defined as "a family comprising husband, wife, and minor children, who collectively own cultivable land up to 2 hectare according to the land records of the state or Union Territory".


Families of former members of Parliament or Legislative Assemblies or even chairpersons of district panchayats would also be ineligible for benefit.


Some government employees, however, have been exempted from exclusion, such as those among the multitasking staff or classified in Class IV or Group "D" categories.

 The guidelines also said state governments can allow self-declaration of the beneficiary for exclusion, but the entire income-support transferred to him could be recovered and penal action initiated if the declaration is incorrect...Read More

Interim Budget 2019: Using technology to increase tax base and reduce rates

Economy & Policy:

In the Interim Budget 2019 speech, Finance Minister Piyush Goyal has reiterated the government's aim to continue technology-led tax reforms.

Technology to increase tax base and reduce rates

The use of technology is the only sustainable measure to increase tax compliance, tax base and eventually, tax collections. It is only when the government has reasonable surety of tax collections, can it take the steps to reduce tax rates and lower the burden on existing tax payer base.

According to government data sources, FY18 saw a 26 per cent rise in the number of income tax returns filed compared to last year, effectively adding 9.95 million new income tax payers. Estimates, according to statements of senior revenue officials, for new taxpayers to be added in 2019-20 is around 10 million. Consequently, there has also been a steady increase in tax collection year-on-year. This has allowed the government to reduce tax rates, for instance slashing the rates for companies having turnover below Rs 250 crore to 25 per cent and recent reductions in GST rates. Major contributors to these initiatives are technology-led reforms.

Digital tax administration and taxpayer experience


 It is not too far in history when individual taxpayers had to undergo several rounds of follow-up with the tax office to initiate refunds. With the set-up of Bangalore CPC, refunds for individual taxpayers are swift and relatively quite easy...Read More

What 2019 Budget can do to help India clean its air, reduce coal addiction

Interim Budget 2019:

India has one of the world’s largest programmes to expand renewables--a doubling of capacity over the next four years--but India’s ambitious 2022 target of generating enough non-coal energy to replace the equivalent of 175 coal-powered plants is veering off track.

On February 1, 2019, the ruling Bharatiya Janata Party (BJP) has a chance to get things back on track, help India reduce its addiction to coal, help clean the country’s air and meet the global climate-change commitments of the world’s fourth-fastest growing carbon polluter

After record growth in the installed capacity of renewables over the four years to 2017, capacity addition slowed down in 2018. The main reasons: an anti-dumping duty imposed by the government on imported solar modules to aid domestic manufacturing, higher rates of taxation under the goods and service tax (GST) and unclear policy.So, the last budget before 2019 general elections is of particular significance to the renewables sector, which comprises electricity from solar, wind, hydro and bio power.

These are the issues the budget must contend with:

• Due to a 2018 slowdown, the government will have to install 3.5 times more capacity every month than its average speed for the last four years.
• A new duty on imported solar modules--which meet more than 80% of the country’s need--increased production costs and threaten the competitiveness of solar tariffs against those of coal.
• Higher GST rates on solar modules and services are driving away investors and manufacturers. Delays in a long-term policy to remove uncertainty from the sector is holding back new investment.