GST Council to finalise draft rules today

The 13th sitting of the GST Council will take place on Friday in the backdrop of four key Goods and Services Tax (GST) Bills — the Centre GST, the Union Territory GST, the Integrated GST, and the compensation law — getting Parliamentary nod.

At the Council meetings, the Centre and the States finalise draft rules for various aspects of the GST and review the preparedness for the roll out of the new tax regime. At Friday’s meeting the Council will finalise rules on four issues relating to composition, transition, valuation and input tax credit.

 Read All About GST from Beginning

The Council has already approved five sets of rules relating to refunds, registration, invoices, payments and processes.

“This is now the last lap of discussions. Once the rules are finalised, the committee of officials will work on the fitment of commodities,” said an official.

With the passage of Bills in Parliament, the ball is now with the States, whichare expected to ensure timely passage of the State GST Bill in their respective Assemblies. “The exercise should be ideally be completed over the next two-three months,” said a source.

The Council is also likely to review the preparedness for the introduction of the GST, including that of the administration and migration of assessees to the GST Network.

However, despite demands by some sectors of industry as well concerns of a few States, the Government is unlikely to push the rollout date of GST beyond July 1.

“As of now, the July 1 date is achievable. All efforts are towards it,” said the official. Some sections of industry have suggested that GST should instead be rolled out from September 1 to ensure that there is adequate preparation and awareness about the levy.

The Hindu Business Line, 30 march 2017

Nifty at record high, Sensex up 116 points on GST push

With optimism surrounding the Goods and Services Tax (GST) Bill amid capital inflows, the benchmark Nifty closed at an all-time high of 9,173.75 while the Sensex rose for the third straight session on Thursday.

The 50-share NSE Nifty edged higher by 29.95 points, or 0.33 per cent to a record closing of 9,173.75 after hovering between 9,183.15 and 9,136.35. This is Nifty’s highest closing since March 17, when it had ended at 9,160.05. The 30-share Sensex, after touching the day’s high of 29,684.54, succumbed to profit-booking and hit a low of 29,521.65 before settling 115.99 points, or 0.39 per cent higher at 29,647.42. The index had gained 294.28 points in the previous two sessions.

 Read All About GST from Beginning

The Lok Sabha has cleared four GST legislation to pave the way for the rollout of the new indirect tax regime from July 1, boosting market sentiment.

The Indian Express, 31 March 2017

Congress may move GST amendments in Rajya Sabha

Congress will follow up on its trenchant criticism of the Goods and Services Tax bills in Lok Sabha by moving amendments in Rajya Sabha where the opposition has the numbers to embarrass the government.

It is likely that the amendments will be pressed and approved as was done with the Finance Bill, with the upper House accepting five changes to the legislation.

 Read All About GST from Beginning

However, with the GST being a ‘money bill’ like the finance bill, the changes will be non-binding. However, Congress sources clarified that party-ruled states will implement the GST and be part of the ‘onecountry-one-tax’ structure.

Congress’s intensity of criticism in the lower House raised questions whether the party would move to the extreme of opting out of the new tax. The decision to follow the LS strategy in the upper House will only reinforce the perception that Congress could junk the GST in its states.

“We are in favour of the GST and that is why we passed the Constitution amendment bill which was not possible without the opposition’s support. But there are serious problems with details of the proposed tax law. We are only discharging the responsibility of the opposition by warning about the implications of certain provisions,” a senior Congress member said.

This stance reconciles the contradiction between Congress-ruled states voting for the GST in the GST council and the party criticising it in Parliament.

Not that the Congress’s aggression is going to affect the BJP-led government which has laid the bottomline that the bills should be passed. PM Narendra Moditweeted the imminence of the law by celebrating its passage in LS on Wednesday.

Congress itself has been in a bind over how to conduct itself after having backed the Constitution amendment bill it held back by a year. The moment it voted for the change, the opposition ceded its influence on the government since the four central bills were to be ‘money bills’ and not subject to majority in Rajya Sabha.

On Tuesday, Rahul Gandhi chaired a strategy meeting where it was decided that the party should not come across as blocking the GST but should make clear its objections to the details.

 

Times of India, 31 March 2017

Goods and services tax regime – How it will impact on your life

The final countdown for goods and services tax regime has begun. The Centre is likely to meet July 1 deadline. But, even if it fails, the Modi government has time till September 15 to roll out GST.

Once the Parliament session is over, the GST Council has another task to perform – to categorise about 5,000 goods and services in the four GST slabs before what Finance Minister Arun Jaitley called a ‘revolutionary’ reform is rolled.

 Read All About GST from Beginning

The GST Bill lays down a destination taxation regime where end users or consumers will be taxed. The GST Council made it a four-tier tax structure with lowest tax slab fixed at 5 per cent followed by 12, 18 and 28 per cent brackets.

Justifying the four slabs, Finance Minister Arun Jaitley yesterday said that ‘a BMW car’ cannot be taxed the same way as ‘hawai chappal’.

THE OTHER SIDE OF GST

There is a theoretical possibility of GST rate going up to 40 per cent if the flexibility given to the Centre and states are factored in. Essentially, GST Bill does not provide for what the government has been promoting as ‘One Nation, One Tax’ regime.

The state and Centre will still be levying separate taxes on goods moving from one city to other and one state to other.

The all kinds of Cess – Swachh Bharat et al – will still be imposed on luxury and what is called demerit goods like cigarettes etc. The cess will be provisionally collected for five years after rolling out of GST. The proceeds will be used to compensate states incurring losses due to GST regime.

However, the GST will bring down the number of taxes currently being imposed in the country. Today more than 25 kinds of taxes including income tax are imposed in the country. The GST Bill is likely to reduce the number of taxes to around half-a-dozen.

SLABS AND ARTICLES THAT YOU USE

Under the present taxation system food articles and agriculture produces are not taxed. The same arrangement is likely to continue under the GST. For the other about 5,000 commodities and services, the nearest tax slab will be applied.

The GST Council is likely to begin fresh rounds of meeting to finalise the tax rates for goods and services. However, according to the GST Bill, services cannot be taxed over 18 per cent.

A five per cent tax will be imposed over articles of mass consumption like spices, packaged salts etc. Food grains to remain untaxed under the GST.

Most of the items used by aam aadmi will be taxed at 12-18 per cent rate. This is the area where common man is likely to be benefitted the most. Articles like soap, toothpastes, oil etc will be placed in the 12-18 per cent bracket. These articles are currently being taxed over 20 per cent rate.

The white goods – popular with the emerging middle class Indians – are currently being taxed around 30-31 per cent. Such goods – refrigerators, washing machine, air conditioners – will be brought to nearest slab of 28 per cent making them cheaper once GST is rolled out.

Luxury goods and sin or demerit goods will attract 28 per cent GST plus cess. Such articles include luxury cars, tobacco products, aerated drinks and the like.

People working at offices and are used to getting subsidised eatables, goods or services will have to pay more as GST Bill brings such places under the tax net.

Under the GST regime, an employee, who gets free goods or services, will have to pay taxes for the same. Free or subsidised facilities like food or beverages at workplace, club or fitness centre membership, cab facilities will be brought under the tax net.

India Today, 30 March 2017

GST : PM Modi wants BJP MPs to elucidate its advantages to the common man

With the goods and services tax (GST) Bill in the final stage of receiving parliamentary nod — the Upper House takes it up next week after the Lower House passed four GST legislations on Wednesday — Prime Minister Narendra Modi wants BJP MPs to take the message on this big reform to the people.

The finance ministry will brief ruling party MPs on GST, senior officials told ET. These officials spoke off record.

 Read All About GST from Beginning

Also, all state units and MLAs of Bharatiya Janata Party have been asked to spread the message on GST during the week April 6-14 — April 6 is the party’s foundation day and April 14 is BR Ambedkar’s birth anniversary.

A senior government official told ET that the prime minister wanted the “GST message to travel to the people” so that full information on “the tax reform’s architecture” is understood widely.

“The aim will be to explain the GST legislation simply, without economic jargon. It is a big decision and the PM wants people to have a clear idea of GST, its implications and how they stand to gain from it,” the official quoted earlier said.

There will also be interactions-cum-workshops for journalists, academics and opinion-makers. Senior ministers may host live sessions on Facebook.

“The PM’s directives are to use every platform, including social media, to take the GST message home before the rollout happens from July 1,” said another senior official.

As part of reach-out efforts during April 6-14, BJP office-bearers will also make efforts to communicate the benefits of the PM’s less-cash economy drive, with particular focus on getting as many people on board as possible on using digital payments apps like BHIM.

The Economic Times, 31 March 2017

10 Key Development in GST-related bills

After an eight-hour debate, the Lok Sabha on Wednesday passed four GST or Goods and Services Tax-related bills putting the government on course for the launch on July 1 of the country’s biggest tax reform since Independence. GST will subsume a slew of indirect taxes levied by the Centre and states, transforming India into a single market. The bills will now be presented in the Rajya Sabha or Upper House of Parliament. Calling it a “very significant step forward”, Union Finance Minister Arun Jaitley said, “We seem to be on time… (we are) reasonably optimistic about meeting the deadline”.  Read All About GST from Beginning

Here are 10 latest developments in GST Bills: 

  1. “I congratulate countrymen on the GST Bill being passed. New year, new law, new India,” Prime Minister Narendra Modi has tweeted.
  2. The bills passed on Wednesday are the Central GST bill, the Integrated GST bill, the Union Territories GST bill and the compensation law. After Parliament’s nod, a state GST bill will be presented in state assemblies for their approval.
  3. Finance Minister Arun Jaitley made a strong pitch for a simple tax regime in the House, saying GST will make commodities “slightly cheaper”.
  4. To the opposition’s objection to a GST with multiple rate slabs, the Finance Minister said, “If there are no multiple rates, it will become a highly regressive tax… Some goods are essential for the poor.” To illustrate his point he said, “A BMW and Hawai chappal (slippers) can’t have the same tax. What is the good, who uses it, matters.”
  5. The proposed GST rates range from five to 28 per cent, with 12 per cent and 18 per cent being the standard rates. It has not been decided yet which tax rates will apply to which categories of goods.
  6. Speaking during the debate, the Congress’ Veerappa Moily accused the BJP of costing India 12 lakh crores by opposing the reform when it was initiated by his party when it ruled at the centre. He criticised various provisions in the bills and said the BJP’s effort was “not a game-changer, but only a baby step.”
  7. Mr Moily also accused the government of undermining the Rajya Sabha or Upper House. “The Upper House is the council of states, yet it has no right to discuss crucial bills. This is an assault on federal structure – I say that all members of the Rajya Sabha must resign,” he said.
  8. Because the four bills have been presented as “money bills”, the Rajya Sabha, where the government is in a minority, can only suggest changes. These will be brought back to the Lok Sabha, which can choose to accept or reject them.
  9. The government has emphasised that it wants the GST bills to be passed in parliament with the consensus as was witnessed in August last year when a bill to amend the Constitution was passed to facilitate the launch of GST.
  10. The one-nation one-tax regime is expected to boost the rate of economic growth by about 0.5 percentage points, broaden the revenue base and cut compliance cost for firms.

NDTV, 30 March 2017

GST anti-profiteering clause has cos worried

The anti-profiteering clause in the GST Bill has India Inc worried, even as finance minister Arun Jaitley, in various interactions, has said that there would be no witch-hunt.

Clause 171(1) of the GST Bill provides that any reduction in rate of tax on any supply of goods or services, or the benefit of input tax credit shall be passed on to the recipient (consumer) by way of a commensurate reduction in prices. There are many aspects that are currently open ended. “An authority is to be empowered to examine this. The finer rules and regulations and penalties are not yet known. The yardstick that would be deployed for such measurement also needs to be spelled out. However, savings to a company arising out of logistic or other efficiencies do not have to be passed on,” says Sachin Menon, indirect tax leader.

Read All About GST from Beginning

Industry representatives spill out their anxiety. To begin with the term ‘commensurate’ is not defined. While pre-GST figures (such as profits) will be compared with the post-GST numbers, the basis of valuation itself will be different under the old laws and under GST. For instance, a product could currently be taxable on MRP basis at a central level and against the billing price in a state, they point out. The issue also remains on whether anti-profiteering will be seen on a pan-India basis or state to state. For instance, in one state after the implementation of GST, the tax rate could be lower. Will an average pan-India figure be considered to determine whether the benefit of reduction in tax rate has been passed on? Also will the profit analysis be done at the entity level or product level? The rules that should provide clear guidelines to all these issues, is the wide sweeping comment across India Inc. “The basic tenet of anti-profiteering to curb inflation is valid. However, it is likely that the more efficient companies will be subject to far greater scrutiny. Determination of the input tax credit will be tougher in case of multi-product companies or in case of bundled sales, adds (say, sale of software maintenance services with a warranty),” Narayanan.

 “The purpose is to protect the consumer from inflation, after the introduction GST,” cites a government source. “It is cartelisation and price manipulation, which is our main cause for concern,” he added.

 

Times of India, 30 March 2017

GST closer to reality, Lok Sabha clears four related bills

The Lok Sabha cleared four bills related to the Goods and Services Tax (GST) on Wednesday, setting the stage for 28 states, along with Delhi and Puducherry, to enact state laws over the next three months to roll out the new tax regime from July.

The four bills — Integrated GST, Central GST, Union Territory GST and Compensation Bill — will be followed by work in the GST council, comprising FM Arun Jaitley and state finance ministers, to finalise rules and product- and service-wise rates by the end of April.

Read All About GST from Beginning

GST will replace central excise, service tax and state VAT and several other levies, in addition to subsuming existing cesses and surcharges.

J&K will not be part of the current regime but will enact laws to ensure that its taxation system is linked with the Centre and other states for consumer benefits.

My congratulations to all countrymen on the passage of the GST Bill. New year, new law, new Bharat,” PM Narendra Modi tweeted after the bills were cleared. The passage came as several amendments pushed by lawmakers from the Congress and BJD were defeated after the government sought to clear doubts.

Jaitley promised the House that the regime will make things “slightly cheaper” and products such as petroleum, which are currently out of the net, would be included over a period of time. In fact, the finance minister said a decision on including real estate may be taken within a year of rollout. “Today, you have tax on tax, you have cascading effect. When all of that is removed, goods will become slightly cheaper,” Jaitley said.

The minister defended the decision for multiple slabs, saying a one-rate formula was highly regressive as hawai chappals and a luxury car would face the same levy. He then went on to allay fears of food products facing the levy and said all farm goods would be kept out.

The GST Council has recommended a four-tier tax structure of 5, 12, 18 and 28%. On top of the highest slab, a cess will be imposed on luxury cars, soft drinks, tobacco products, pan masala and coal to compensate states for potential revenue loss during the first five years of implementation.

GST has been in the works for over a decade and it wasn’t until last year, when Parliament cleared amendments to the Constitution, that the new regime appeared to be a reality. This was followed by support from legislatures across the country, leading up to the establishment of the GST council.

While states such as West Bengal sought to block the reform, one of the biggest initiatives post-Independence, the Centre managed to overcome the hurdle with support from other opposition-ruled states, such as Bihar and Odisha.

Jaitley said once the new tax regime was rolled out, a businessman would have to deal with only one assessing officer instead of multiple authorities at present.

To opposition questions as to why the government brought the legislations as money bills, Jaitley cited constitutional provisions and said since 1950, all tax-related legislations were brought before Parliament as money bills.

The Times of India, 30 March 2017

Rs 12 lakh crore lost due to BJP opposition to GST: Congress leader Veerappa Moily

Rs 12 lakh crore lost due to years of delay in implementation of the GST due to opposition by the BJP when the UPA government was in power, the Opposition said Wednesday.

Criticising various provisions in the proposed GST regime, Moily said it will be a “technological nightmare” and the anti-profiteering provisions in it are “far too draconian.”

“Seven to eight years have passed after the erstwhile UPA government wanted to bring the GST bill. Some parties then felt it should be halted due to reasons best known to them,” he said.

India lost around Rs 1.5 lakh crore annually due to delay caused in the roll-out of GST which put the total loss at around Rs 12 lakh crore, said by the former Law Minister.

“The real estate sector generates lot of black money. It is very unfortunate that the sector was not brought under the ambit of GST,” said Moily.

“Intention may be good but this will land the country in complete tax distortion,” he said.

“There will be huge revenue loss to manufacturing states like Tamil Nadu. Some of our concerns were addressed while some are yet to be addressed,” he said.

The AIADMK MP, however said, “the Tamil Nadu government is fully committed for successful implementation of GST”.

Inputs from The Indian Express, 29 March 2017

Don’t use Cash for these Transactions

The Indian Government has issued cap on cash transactions on and penalty for transactions under sections –

13A -Exemption to political parties, 40A(3)- Disallowance for cash expenditure, 43(1)- Determination of actual cost of asset, 35AD- Investment linked deduction for capital expenditure, 80D- Health Insurance premium, 80G – Donations to certain funds and charitable institutions, 80GGA- Donations for scientific research and rural development, 80GGB – Donations by companies to political parties, 80GGC – Donations by any person to political parties, 269SS- Prohibition on acceptance of cash loans, deposits, etc., 269ST- Prohibition on receiving cash, 269T – Prohibition on repayment of loans or deposits in cash.

S. NoSectionCap on Cash TransactionPenalty for cash
transaction
113A -Exemption to
political parties
Receipt of cash donation
above Rs 2,000
No exemption
240A(3)- Disallowance
for cash expenditure
Payment of any
expenditure above Rs.
10,000

Payments for plying,
hiring or leasing of goods
carriage above Rs 35,000
No deduction
343(1)- Determination
of actual cost of asset
Payment above 10,000 for
purchase of asset
Such payment won't be
included in actual cost of
asset (viz, No depreciation)
435AD- Investment
linked deduction for
capital expenditure
Payment above Rs 10,000
for any capital
expenditure
No deduction
580D- Health Insurance
premium
No cash payment allowedNo deduction
680G - Donations to
certain funds and
charitable institutions
Donations above Rs.
2,000
No deduction
780GGA- Donations for
scientific research and rural development
Cash donation above Rs.
10,000
No deduction
880GGB - Donations by
companies to political
parties.
No cash payment allowedNo deduction
980GGC - Donations by
any person to political
parties
No cash payment allowedNo deduction
10269SS- Prohibition on
acceptance of cash
loans, deposits, etc.
Rs. 20,000 or more100% of amount received
11269ST- Prohibition on
receiving cash
Rs. 2,00,000 or more100% of amount received
12269T - Prohibition on
repayment of loans or
deposits in cash
Rs. 20,000 or more100% of amount paid

This article was featured in Business Standard

POSSIBLE GST RATES ALL COMMODITES SEARCH YOUR PRODUCT HERE