GST collection slips below Rs 1 trillion in March after four months

Goods and services tax (GST) collection fell below the Rs 1-trillion mark in March after a gap of four months, even as disruptions caused by the coronavirus-induced lockdown will get captured only in the coming months.
The numbers pertain to GST paid in February but collected in March, suggesting that collections might turn grimmer going forward.
The GST mop-up in March stood at Rs 97,597 crore, down 8.4 per cent on a year-on-year basis, the data released by the Ministry of Finance showed on Wednesday. The government had targeted a collection of Rs 1.25 trillion in March. GST collection grew by a meagre 3.7 per cent in the full fiscal year 2019-20.
The dismal collection in March is despite the stringent anti-evasion measures introduced by the government, including the blockage of e-way bill and restricting input tax credit to 10 per cent in the case of failure of invoice uploads by suppliers.
Already hit by an economic slowdown, the country went into a 21-day lockdown from March 24 to prevent the spread of Covid-19. All industries that were struggling have become non-operational, which will reflect in the April GST collection figures.
Kerala Finance Minister Thomas Isaac told Business Standard that the April numbers, which would essentially be transactions in March would only be about 15-20 per cent of the March figures.
Pratik Jain, partner, PwC India, said, “It seems that many businesses may not have been able to pay GST because of liquidity issues being faced after the lockdown. As the second half of March 2020 has been significantly impacted due to the Covid-19 outbreak, collections in April are likely to be substantially lower.”
In a major relief for businesses facing lockdown due to coronavirus, the last date for GST return filing for March, April and May 2020 has been extended to June 30, with no interest, late fee and penalty, for companies with up to Rs 5 crore turnover and subsidised interest of 9 per cent, and no penalty or late fees for bigger companies.
M S Mani, partner, Deloitte India, said it was necessary for businesses to conserve cash in order to enable resumption of operations once the lockdown ends. Hence, any deferral of the GST payment timelines by a few months would significantly assist them in this process, Mani said.
Central GST collection for FY20 at Rs 4.95 trillion fell Rs 18,188 crore short of revised estimates for the fiscal year. The finance ministry, in Union Budget 2020-21, had lowered the CGST collection target for FY20 to Rs 5.13 trillion from Rs 5.26 trillion estimated in July.

Of the Rs 97,597-crore revenue in March, the central GST collection stood at Rs 19,183 crore, state GST at Rs 25,601 crore and integrated GST at Rs 44,508 crore, which included Rs 18,056 crore collected on imports, the finance ministry said in a statement.

Budget 2020: Oil ministry calls for inclusion of natural gas under GST

Current Affairs
In front of the Union Budget, the Oil Ministry has made a restored pitch for consideration of flammable gas in the ambit of GST to advance the utilization of the earth well disposed fuel by decreasing assortment of duties and improving business atmosphere.
At the point when the Goods and Services Tax (GST) was presented on July 1, 2017, amalgamating 17 focal and state demands, five items to be specific unrefined petroleum, flammable gas, oil, diesel, and flying turbine fuel (ATF) were kept out of its domain given the income reliance of state governments on this segment. "As of now gaseous petrol is exhausted under the VAT system with VAT extending from 3 percent to 20 percent across states," the service said in a booklet it brought out to advance the utilization of the fuel in cars, family unit kitchens, and businesses.
Whenever brought under GST, gaseous petrol will pull in a uniform pace of assessment at the utilization point anyplace in the nation in the wake of getting rid of current paces of extract obligation and VAT. This, it stated, would "bring about an expansion in state residential item and financial advancement inferable from expanded monetary exercises" which will prompt improved business openings.

Likewise, it would prompt improved financial specialist certainty and pull in greater interest in gaseous petrol foundation in the nation, the booklet stated, including that a positive effect condition and wellbeing because of decrease in carbon discharges across significant urban areas was another bit of leeway. "As gas isn't under the ambit of GST, there is no information charge credit accessible. Further, the downstream ventures are not ready to guarantee the advantage of the assessment credit of VAT paid on acquisition of flammable gas which is accessible for substitute powers/feedstocks," the booklet said...Read More

Best of BS Opinion: Indo-US defence ties, IUC regime, and more

Election News
The national capital district was in virtual lockdown and parts of the nation saw fights among police and protestors and a series of captures. Be that as it may, in the budgetary capital, the Sensex proceeded with its unreasonable richness and in Kolkata the Indian Premier League barters proceeded with it patterns of breaking offer records.
On the assessment pages, journalists handle the issues that the Indian government ought to be taking a gander at also. Kanika Datta summarizes the perspectives.
Here's an assortment of Business Standard Opinion pieces for the afternoon.
Indo-US resistance ties stay solid notwithstanding dissension over exchange and human rights. New Delhi would do well not to put this to test, says Ajai Shukla.
China is moving to coordinate its money related markets with worldwide markets and influence its monetary heave further. Shyam Saran portrays these endeavors and asks where this leaves India, "presently decreased to looking indignantly at its tempestuous navel".
Our top alter clarifies why the administration should be controlled on assortment targets, given the steady underperformance of the Goods and Services Tax.

The telecom controller's choice to broaden the between associate charge system is a decent one at the same time, the second alter alerts, there is a need to guarantee that the market doesn't get twisted moving forward, says our second alter.....Read More

GST rate cut must to revive auto demand, says M&M MD Pawan Goenka

Current Affairs

Mahindra & Mahindra’s Managing Director (MD) Pawan Goenka said on Thursday automakers had taken every step to revive consumer sentiment, but only a goods and services tax (GST) rate cut would boost demand. “I think the industry has done whatever it could. An intervention from the government can only revive the demand,” he said, adding: “It’s not good to ask for a cut in GST rate, but we are now in a situation where only that can help us.”
M&M has decided to defer capacity expenditure by at least 15-20 per cent in light of the slowdown. A lending crisis among the country’s shadow banks, which fund nearly 55-60 per cent of commercial vehicles and 30 per cent of passenger cars, has led to automakers, including M&M, Maruti Suzuki India, and Tata Motors, to either cut production or temporarily close plants.
Goenka said things could become worse if the expected festive season demand doesn’t pick up in the next 10 days. “Right now, we are not even thinking in terms of year, we are thinking what would happen in the next ten days and if it remains subdued, I am afraid manpower has to be rationalised to align with capacity cut,” he said, when asked about if there would be further job loss.
M&M has retrenched about 1,500 temporary workers since April 1. “No one wants to cut jobs, but there are no other options in unprecedented times,” he said.

 Auto sales in India witnessed its sharpest decline in nearly 19 years in July, dropping 18.71 per cent, rendering almost 15,000 workers jobless over the past three months, Siam reported earlier this month. However, Goenka was enthusiastic about the future of electric vehicle and said that the company has recongnised electric and not hybrid as the future of mobility....Read More

Auto LPG body asks govt to cut GST, offer level playing field to spur usage

Current Affairs

The government should reduce GST on LPG used in automobiles to 5 per cent to provide the environment-friendly fuel a level playing field and spur its usage, the association of auto LPG has demanded.
The Indian Auto LPG Coalition (IAC) wants the government to treat auto LPG at par with any other clean fuel like CNG and provide similar fiscal regime as a mix of such fuels would be needed to curb urban pollution in the world's fastest-growing economy, its director-general Suyash Gupta said.LPG is a clean fuel like compressed natural gas (CNG) and has cost advantages over diesel or petrol. Auto LPG is used in 70 countries world over as compared for 4-5 nations including Iran, India, and Pakistan using CNG as automobile fuel.
Auto LPG requires a lighter cylinder than CNG and takes almost similar time as petrol/diesel for a refill, he said.
"We have written to Union Finance Minister Nirmala Sitharaman as well as all members of the GST Council for considering reducing GST tax on auto LPG to 5 per cent from 18 per cent currently," he said.LPG used for domestic purposes is taxed at 5 per cent and high incidence of tax for its usage in automobiles provides an incentive for illegal diversion, he said.
IAC also sought a reduction in GST on auto LPG kits to 5 per cent from 28 per cent."Providing policy level support and enabling a quicker growth of environment-friendly fuels is imperative now and just not an optional issue anymore," he said.

 He said, while the government is providing Rs 10,000 crore subsidy to push for sale of electric vehicles, auto LPG does not need any subsidy allocation - just a level playing field through policy interventions such as lowering GST...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

Housing GST rule must be changed, says West Bengal FM Amit Mitra

Economy & Policy:
Ahead of the GST Council meeting on Tuesday, West Bengal Finance Minister Amit Mitra has proposed that the new goods and services tax (GST) rate for ongoing residential housing projects be made optional.

The GST Council meeting slated for Tuesday will take up the issue of finalising the rules and procedures to implement the decisions of the last Council on real estate.

In his latest letter to Union Finance Minister, Arun Jaitley, Mitra has said that while the basic decision of bringing the effective rates of affordable housing and non-housing to 1 per cent and 5 per cent without input tax credit (ITC) was something everyone agreed upon, the mechanism being proposed was highly cumbersome and mind boggling.

Mitra said if the developer had purchased material and taken the ITC, he would be permitted to use only the percentage he had invoiced and had to reverse the rest. This needs to be done project wise though earlier accounts were not maintained project wise, he said. The net result would be that the cost of the project would increase immediately and the consumer would end up actually paying more rather than less, he added.

Also, according to him, the formulae specified would leave a lot of discretion with the tax authorities and might encourage rent seeking.

In the previous meeting, held on February 24, the GST Council had slashed tax rates for under-construction flats to 5 per cent and affordable homes to 1 per cent, effective April 1.

 Currently, GST is levied at 12 per cent with an ITC on payments made for under-construction property or ready-to-move-in flats where completion certificate is not issued at the time of sale. For affordable housing units, the existing tax rate is 8 per cent...Read More

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