Political shadow on GST Council decisions as election season takes over

Reaching a consensus might get tougher, as already seen with issues like inclusion of natural gas in GST and imposition of a sugar cess, both central proposals being resisted

A year after the levy’s rollout, decision making on the goods and services tax (GST) could get overshadowed by politics as the election season takes over.

Already, the frequency of meetings has come down from an average of over two a month till May to one in a gap of two and a half months. In fact, the meeting in early May was held through video conferencing. The next one is now slated for July 19.

Reaching a consensus might also get tougher, as already seen with issues like inclusion of natural gas in GST and imposition of a sugar cess, both central proposals being resisted.
While the Centre has argued for natural gas’ inclusion, this is being opposed by Andhra Pradesh. The Centre’s proposal for a sugar cess to compensate cane farmers is being opposed by cane producing states like Andhra Pradesh and Karnataka, apart from Kerala. Officials say there could be some revival in action around October-November, before the elections in Rajasthan, Madhya Pradesh and Chhattisgarh.

The GST Council had cut tax rates on a number of items prior to the Gujarat assembly elections in 2017.

However, some of the issues on which consensus has already been reached might go through. For instance, the GST Council meeting next month is likely to clear the return simplification process. Also, the government will have to take a call on extending the postponement of the reverse charge mechanism and tax collected at source, both of which would expire by this month-end.

Badal told Business Standard the ruling Bharatiya Janata Party (BJP) had already gone into election mode. “It is not going to tinker with GST now in a big way.” Assam finance minister Himanta Biswa Sarma (it is a BJP government, too) said there might be one meeting in two months from now “but that is because there is not much on the agenda, unlike earlier”.

Bipin Sapra, partner at consultancy EY, said there were a number of issues on which the GST Council needed to decide. “Reduced frequency of meetings due to unrelated issues would delay major changes in the law and procedures.”

A GST official had earlier this month talked about a proposal to include natural gas within GST on an experimental basis. This was strongly opposed by Andhra Pradesh finance minister Yanamala Ramakrishundu.

“The state has lost autonomy in raising fiscal resources with the introduction of GST…For the same reason, Andhra opposes inclusion of other petroleum products in GST,” he said.

Andhra Pradesh got revenue of Rs5.23 billion on sale of natural gas during 2017-18. “Being a producer of gas, our state would lose substantial revenue if it is included in the GST.”

Assam’s Sarma said that while his state favoured inclusion of natural gas and aviation fuel within GST, other petroleum items should wait. “Currently, even if we include petroleum, the consumer might not get much benefit because the burden of compensation cess will be higher. It is only once GST is stabilised and states no longer require compensation from the Centre that we should look at petroleum inclusion in GST.”

States earned Rs1.6 trillion in tax revenue from petroleum products in 2016-17, with Maharashtra, Gujarat, Uttar Pradesh and Tamil Nadu the top revenue earners.

Says Kerala finance minister Thomas Isaac: “If the central government is serious about including petroleum products in GST, let them make a serious proposal. Let them commit to a programme for compensating the states for the loss of revenue. Without such firm commitment, such talk is woolly,” he tweeted recently.

Haseeb Drabu, former finance minister of J&K, was the driving force in consensus creation at the GST Council. However, he was dismissed by the then Mehbooba Mufti government two months ago.

A proposal by the ministry of food and public distribution to impose a sugar cess of Rs3 a kg to compensate sugarcane farmers evoked sharp protests by some states, particularly Kerala, West Bengal, Karnataka and Andhra Pradesh. A committee was constituted on the matter.

Pratik Jain, partner at consultants PwC India, said although the frequency of meetings was expected to go down as GST was stabilising, this ought to not delay decision making. “Aspects like legislative changes, expansion of the tax base by including petroleum products, real estate, etc, would require detailed and frequent deliberations,” he said.

Abhishek Rastogi, partner, Khaitan and Co, said with elections drawing closer, “it will be interesting to see whether political parties will bury their differences and work together for the greater good of the nation.”

“Regularity and predetermined frequency of meetings would enable faster and more predictable resolution of the current issues faced by businesses under GST. There are also quite open issues such as returns, etc, which have to be addressed in a time bound manner, ” said M S Mani, partner, Deloitte India.

How to grow GST in year 2: Work on administrative simplicity and reasonable rates to expand tax base to the maximum

Almost one year back, at the stroke of the midnight hour, India ushered in a new era and awoke to a ‘one country one tax’ regime. The introduction of the Goods and Services Tax (GST) on July 1, 2017 has been not only the biggest indirect tax reform, but also a landmark in the country’s taxation history. Last year has seen a remarkable journey of an entire nation’s bureaucratic and executive machinery working in overdrive to ensure successful GST implementation.

As far as the common man is concerned, though GST implementation faced transitional issues initially, it has stabilised now. However, last year has been somewhat challenging for industry. This was always expected, as it happens with every new law which impacts the length and breadth of the country.

The major challenge was in getting accustomed to the new laws and procedures, as also dealing with issues relating to compliance through the technological arm of GST which is the GST Network (GSTN). Amidst all this, the most commendable aspect has been the proactive and consultative way in which the government took corrective measures, be it administrative simplification or changes in the rates, to ensure smooth implementation of GST.

As we enter the second year of GST, the initial teething troubles may have been resolved, but a lot more needs to be done to achieve the main objective of GST being the keystone simplification exercise of the indirect taxation system.

GST Council and the government need to take the good work forward by ensuring a simplified and transparent administration along with rationalisation of rates to make them reasonable, by including most items so that the tax base is expanded and yield from the tax reform is maximised.

The return filing process needs to be made simpler. Not only will this increase compliance and widen the tax base, equally importantly it will facilitate ease of doing business. The current return filing process under GST is somewhat cumbersome and time consuming for the industry.

It has to be applauded that the GST Council has recognised the hardships faced by taxpayers and has proposed a simple new return design. The experience of challenges encountered should be a learning for the future and the government must endeavour to ensure that the same problems are not faced by industry under the new return filing process.

The moot point here is that before the new return filing system is actually implemented, it should be fully tested, and finalised after due consultation with the stakeholders by putting in the proposed return form in public domain. Most importantly, implementation of the new process should be started after extensive training to the stakeholders and due industry preparedness.

A recent press release issued by the government states that GST has resulted in formalisation of the economy and would augment not only indirect tax collections but also direct tax collections, due to seamless flow of data to the Centre and states. Further, a trend of increase in revenue collections under the GST regime has been observed, as per information placed by the government in public domain, from time to time.

The increasing revenue collections are also majorly attributed to implementation of anti-evasion measures, including the electronic way bill system. Thus, apprehensions regarding revenue loss to states seem to be fading away and now concrete efforts are required to bring excluded sectors within the GST net.

Undoubtedly, GST is still a work in progress, till the time all sectors of the economy are brought within the ambit of the new national indirect tax regime. To make the GST reform truly effective and to really make it ‘one country one tax’, both central and state governments must recognise the need of eventually bringing the excluded sectors like petroleum and real estate within the ambit of GST.

The next step would be to consider converging the existing band of GST rates to three, in line with international standards. This will help to resolve interpretation issues regarding classification of goods and consequently reduce complexity and probability of disputes, eventually leading to simplification.

With implementation of GST in the country, the mechanism of Advance Ruling has also been provided under the GST laws to achieve the objective of providing a binding ruling on important issues so that intending investors will have a clear-cut indication of their liability in advance. However, divergent rulings by different revenue officers in different states have created an environment of uncertainty and chaos amongst the taxpayers.

The government should, therefore, constitute an independent high level central body (similar to the one under the erstwhile indirect tax regime headed by a retired judge of the Supreme Court) as ‘Authority of Advance Ruling’ under the GST regime.

Going ahead, implementation of these measures would certainly lead to achievement of intended objectives from introduction of GST – namely uniformity in taxes, simplification, ease of doing business and reduced litigation. The government and industry must come and work together to move to ‘successful GST’ from ‘successful implementation of GST’. This will be a key axis in India’s journey towards becoming a developed country in the future.

Source: https://blogs.timesofindia.indiatimes.com/toi-edit-page/how-to-grow-gst-in-year-2-work-on-administrative-simplicity-and-reasonable-rates-to-expand-tax-base-to-the-maximum/

PM credits states for Success of GST

New Delhi, June 24 (UNI) Prime Minister Narendra Modi on Sunday reached out to the states by crediting them for the success of Goods and Services Tax (GST) and said that the historic tax reform is a great example of ‘cooperative federalism’.

“If I have to give credit to anyone for successful implementation of ‘One Nation One Tax reform’, then I credit the states of our nation. GST is a great example of Cooperative federalism, where all the states decided to take a unanimous decision in the interest of the nation,” Mr Modi said speaking in the 45th edition of his monthly radio broadcast ‘Mann Ki Baat’ over All India Radio.

‘Till date, 27 meetings of GST council were held where people from different ideologies sat together, but all decisions were taken with consensus,” he said as the state is set for completion of first year since the new and uniform tax regime has come into effect.

The GST, initiated by the UPA regime originally is an uniform taxation mechanism that has replaced multiple Indirect Taxes in India. The Goods and Service Tax Bill was passed in Parliament March 29, 2017 and new tax regime came into effect from July 1, 2017. It is hailed as a comprehensive, multi-stage and destination-based tax.

“The check post has become extinct after the arrival of the GST scheme and the movement of goods has become faster, which not only saves time but is also accruing benefits in the area of logistics,” he said.

Prime Minister said earlier with regard affairs related to taxation, people spoke about “rampant complaints of Inspector Raj” but now the GST is seen not only as the victory of integrity “but it is also a celebration of honesty”. “GST is probably be the biggest tax reform in the world. The successful implementation of such a huge tax reform in India was successful only because the people of the country adopted it and through the power of the masses,” he said.

Earlier, there were 17 different taxes, but there is only one tax today, he stressed. ‘Return to refund, everything is online and transparent.’
World’s greatest tax reform, which would have normally taken 5-7 years, became stable in India in just one year, he said.

Mr Modi had a word of praise for corporate professionals and IT engineers in Bengaluru who came together to establish ‘Sahaj Samriddhi Trust’. They have activated this trust to double up farmers’ income, he said.

The Prime Minister also remembered Dr Shyama Prasad Mukherjee for his role in the education sector and industrial development of India.

‘Mukherjee laid strong foundation of India’s industrial development and he dreamt of making India self-reliant in every sector related to industry,’ Mr Modi said.

Hailing Sant Kabir, Mr Modi said the thoughts and ideals of Sant Kabir Das Ji emphasised on social harmony.

Remembering the martyrs of the Jallianwala Bagh massacre, he said ,’ April 13 next year will mark 100 years of the unfortunate Jallianwala Bagh massacre; it was the day when all limits of cruelty were crossed and power was misused.’

Inviting ideas for the 550th Prakash Parv of Guru Nanak Dev Ji next year, he said ‘In 2019, we mark the 550th Prakash Parv of Guru Nanak Dev Ji. Let us think about ways in which we can mark this historic occasion.’
Mr Modi extended good wishes to the medicos for July 1 Doctor’s Day and said the medicos not only cure but they also heal people and even provide lifestyle guidance.

“We remember doctors only at the time of crisis. But doctors are akin to mothers and often gives us new life. Mothers give us birth, but medicos often give us new life,” the Prime Minister said . He also referred to the grand celebration of yoga across the globe on June 21 and maintained that Yoga has truly emerged as a unifying factor and has been able to break all barriers.

Mr Modi made special mention about yoga enthusiasts, including women, taking part in this year’s InternationalDay for Yoga in Saudi Arabia.
The Mann Ki Baat programme is broadcast at all the All India Radio’s networks, FM channels, local radio stations and community radio.

Source: http://www.uniindia.com/pm-credits-states-for-success-of-gst/india/news/1269555.html

Madras HC Moved Against Constitution Of Appellate Tribunal Under GST Act

An advocate has moved the Madras High Court challenging the constitution of the appellate tribunal (AT) under the GST Act.

Advocate V Vasanthakumar filed the petition praying that Sections 109 and 110 of the Central Goods and Services Tax (CGST) Act, 2017 relating to constitution of the AT and qualification, appointment and condition of services of its member be declared ultra vires of Articles 13, 14, 19 and 50 of the Constitution of India “as the same are void, defective and unconstitutional, being violative of doctrines of separation of powers and independence of judiciary”.

Drawing a comparison between the pre- and post-GST structure of these benches, the petitioner said, “…during the pre-GST regime, taxes were levied under separate laws namely Central Excise, Custom and Service tax had also the scheme of second appeal before the Appellate Tribunal known as Custom, Excise & Service Tax Appellate Tribunal (‘CESTAT’). Each bench of CESTAT consisted of two members, one Judicial Member and one Technical Member.

“GST law provide for constitution of Appellate Tribunal. The Appellate Tribunal is constituted under Section 109 of the CGST Act and Tamil Nadu GST Act and Section 110 of the CGST / TNGST Act, provides for qualification appointment, condition of services, etc., for President and members of the Appellate Tribunal. The Appeal filed in the Tribunal is the second level of appeal, where appeals can be filed against the orders passed by the Appellate Authority or order in revision passed by revisional authority.”

With the law envisaging constitution of a two-tier tribunal i.e., national bench/regional benches and the state bench/ area benches, the petition said, “Section 109 (9) of the Central Act, contemplates that each State Bench and Area Benches of the Appellate Tribunal shall consist of a Judicial Member, one Technical Member (Centre) and one Technical Member (State) and the State Government may designate the senior most Judicial Member in a State as the State President whereas, the Supreme Court had in Union of India v R. Gandhi  categorically enunciated that Bench of National Company Law Tribunal / National Company Law Appellate Tribunal should consist of one Judicial Member and one Technical Member or the Judicial Member should be equal or in majority in compare to the Technical Member and in no circumstances the number of Technical Member should be in majority compared to Judicial Members.”

“…the “Coram” of the Appellate Tribunal consists of One Judicial Member and two Technical Members whereby the constitution of Appellate Tribunal is “corm non judice”,” he rued while seeking stay on the operation of sections 109 and 110.

It is to be noted that a similar petition challenging the constitution of Authority of Advance Ruling and the Appellate Authority of Advance Ruling under the Central Goods and Services Tax sans any judicial member is pending before the Gujarat High Court.

Source: http://www.livelaw.in/madras-hc-moved-against-constitution-of-appellate-tribunal-under-gst-act/


GSTN designing tools for taxmen to analyse data to check evasion

GST Network (GSTN), the company handling the technology backbone for Goods and Services Tax, has over the last 11 months provided a platform for businesses to file their returns and pay taxes every month.

Almost a year into providing platform for tax collection, GST Network is now developing applications and tools for tax officers to help analyse data of their assessees and check possible evasion, a senior official said.

GST Network (GSTN), the company handling the technology backbone for Goods and Services Tax, has over the last 11 months provided a platform for businesses to file their returns and pay taxes every month.

GSTN Chief Executive Prakash Kumar said the next focus of the company will be on providing data analytics and improving user interface on the GSTN portal, besides developing backend system for assessment, audit, appeal and advance ruling for 27 states.

“‘We are working on the analytics part. We have already started sharing with tax officers simple analytics on differences between GSTR-3B and GSTR-1, GSTR-3B and GSTR-2A. This is a broad state-wise data generated by GSTN, based on which the officers can look into the returns filed by taxpayers in his jurisdiction and spot mismatches,” Kumar told PTI in an interview.

GSTN currently only provides support to tax officers (on data analysis). And gradually we are providing them tools so that they can do it themselves… We are in the process of developing an application for Commissioners to generate data without any external help, he added.

He said the tools would enable tax officers to do the analysis themselves. “We have started work on it, We had even showed the functionality to state officers. We will be slowly releasing the tools over the next few months,” Kumar added.

GSTN is also working to improve its user interface by providing systematised error messages with ‘error numbers’. Once a taxpayers sees a particular error number pop up on the screen, he can call the GSTN help desk for solutions.

“Now the error message also says what has gone wrong and what you need to do to correct that. It will show a particular error number, which helps the GSTN helpdesk person to quickly identify the error that the taxpayer is committing and can guide him accordingly,” Kumar said.

Since the roll out of the GST from July 1, 2017, GSTN has handled 11.5 crore returns and processed 376 crore invoices.

Currently, over 1.11 crore businesses are registered under the GST regime, of which 63.76 lakh have migrated from the erstwhile service tax and VAT regime, and 47.72 lakh are new registrants. As many as 17.61 lakh businesses have opted for composition scheme under GST.

Kumar further said that GSTN has been sending Management Information System (MIS) reports to tax officers 27 states which are categorised as model 2 states for better understanding of taxpayers in their jurisdiction.

“We have provided 27 different MIS report for model 2 states. The tax officers get to see their own jurisdiction data, who their assessees are, return filed, taxes paid. The report has daily, monthly revenue collection list in the jurisdiction, ward-wise collection list, registration details, taxpayers with outstanding liability, disposal of cases, among other things,” he said.

Based on the broad data mining by GSTN, tax officers have started analysing cases where there are instances of mismatch and have been sending scrutiny notices to taxpayers whose summary sales returns GSTR-3B did not match with final returns GSTR-1 or with system generated purchase returns GSTR-2A.

Besides, many tax payers have got notices for utilising input tax credit (ITC) for payment of most of the GST liability and have been asked to explain reasons within a stipulated time. Also some notices have been sent for claiming less IGST input tax credit while filing sales returns as against the credit claims auto-generated by the GSTN.

On taxpayers getting notices for utilisation of ITC for GST payment, EY Partner Abhishek Jain said, “While these could be genuine cases for quite a number of businesses for reasons like low margins and large transitional credit pool, these notices could help check on utilisation of any ingenuine credits. Also, these could help detect fake credits claimed, if any”.

Source: https://www.moneycontrol.com/news/business/economy/gstn-designing-tools-for-taxmen-to-analyse-data-to-check-evasion-2627261.html

One year of GST: Is Goods and Services Tax rollout successful? PM Modi explains in 5 points

One year of GST: India will celebrate the first anniversary of Goods and Services Tax rollout in the country on July 1.

One year of GST: India will celebrate the first anniversary of Goods and Services Tax rollout in the country on July 1. As the historic, and one of the biggest, tax reform completes one year, Prime Minister Narendra Modi on Sunday talked about the reasons that led to the “success” of GST rollout and the changes that have been effected in the economy because of it. In his monthly radio address to the nation – Mann Ki Baat – on Sunday, PM Modi said, “My dear countrymen! It’s been an year when GST was implemented. ‘One Nation, One Tax’ was the dream of the people of this country that has become a reality today. If I’ve to give credit to anyone for successful implementation of ‘One Nation One Tax reform’, then I credit the states of our nation.”

Here are five points in which PM Modi explains the “success” of GST implementation in India:

1. Great example of cooperative federalism

“GST is a great example of Cooperative federalism, where all the states decided to take a unanimous decision in the interest of the nation, and then such a huge tax reform could be implemented in the country. So far, there have been 27 meetings of the GST Council and we can all feel proud that people from different political ideologies have been involved in these meetings. These meetings involve representatives of different states; states which have different priorities, but in spite of all this, all the decisions that have been taken in the GST Council so far have been taken with absolute consensus. ”

2. Celebration of honesty, victory of integrity

“Before the onset of GST scheme, there were 17 different types of taxes prevailing in the country, but now only one tax is applicable in the entire country. GST is not only the victory of integrity but it is also a celebration of honesty. Earlier, in the case of taxation and allied affairs in the country, there were rampant complaints of Inspector Raj.”

3. “IT replaced the inspector”

“In the GST scheme,information technology has replaced the inspector. Everything from return to refund is done through online information technology.”

4. Check posts gone, logistics benefit

“The check post has become extinct after the arrival of the GST scheme and the movement of goods has become faster, which not only saves time but is also accruing benefits in the area of logistics. GST is probably the biggest tax reform in the world.”

5. Huge success result of enthusiasm of ‘honest’ people of the country

“The successful implementation of such a huge tax reform in India was successful only because the people of the country adopted it and through the power of the masses, fuelled the success of the GST scheme. It is generally believed that such a big tax reform, in a huge country like ours with such a large population takes 5 to 7 years for effective adoption. However within a year, the enthusiasm of the honest people of this nation, the celebration of integrity in the country and the participation of people resulted in this new tax system managing to create a space for itself, has achieved stability and according to the need, it will bring reform through its inbuilt arrangement. This is a huge success in itself which 125 crore Indians have earned for themselves.”

Source: https://www.financialexpress.com/economy/one-year-of-gst-is-goods-and-services-tax-rollout-successful-pm-modi-explains-in-5-points/1218179/

GST, local themes put Titan on fast track

BENGALURU: Bhaskar Bhat has had a great career at Titan, rising to be the Tata Group company’s MD in 2002, and building it into an over $2-billion revenue entity. But even by those standards, last year must have been special.

The jewellery-andwatch firm’s top line grew 21 per cent and net profit jumped 53 per cent, a performance that sent its share price soaring, taking its market cap to $12 billion, a little behind Tata Motors ($13.3 billion) and ahead of Tata Steel (9.4 billion). Ten years ago, Titan’s market cap was a quarter of Tata Motors’ m-cap and less than 10 per cent of Tata Steel’s. And in November, in a recognition of Bhat’s success and contributions, the 64-year-old was elevated to the board of directors of Tata Sons, the holding company that controls India’s largest conglomerate.

When we ask Bhat about it, he modestly acknowledges the company had a very good year. “You know that. Competition has kind of got demolished jewellery primarily, but in all segments, for all unorganised businesses.” GST, demonetisation, and the Nirav Modi/Mehul Choksi episodes have all worked to the benefit of Tanishq, Titan’s jewellery brand. It accounts for 83 per cent of Titan’s overall income, and grew by over 24% last year. Many of India’s jewellers have dealt in cash, avoided paying taxes, and have been conduits for those who wanted to launder black money. But the government is cracking down on efforts to convert black money into gold – by insisting on a PAN card for gold transactions above Rs 2 lakh, and keeping a closer watch on jewellers’ transactions. “Customers are even getting scared of being caught on camera (dealing in cash at stores),” says Bhat.

This, combined with the introduction of GST that makes transparent accounting more imperative, has made plain gold jewellery no longer very remunerative for small players, and more so because it is a very low-margin business. Banks, too, have become wary of lending to jewellers following the Nirav Modi scandal. Consequently, business is moving to organised players like Tanishq.

Watches, which Titan began with and became almost a monopoly at one point – demolishing incumbent HMT, is now a fraction of the jewellery business, but nonetheless a growing one. Mobile phones have become timekeepers for many. So Titan has focused on making watches cool, a fashion accessory a positioning that has worked especially with the young.

“Today, it has gone beyond even just good looks. There has to be some meaning attached to it. For example, I wear a different watch every day. Today I wore this mechanical watch because this director was coming – he’s an engineer. It’s a conversation piece,” Bhat says.

The effort now is to increase the extent of “smartness” in every watch – a lesson many have learnt from Apple, which has become the world’s biggest watchmaker. Titan will not give up its analogue legacy (moving hands on the clock face). But it will introduce some of the most relevant digital features, such as fitness measurements, into watches.

Asked about Titan’s newest business, the sari brand Taneira, Bhat says it’s still too small to even call it a business. “I can call it a business when it hits Rs 100 crore,” he says, but adds that the concept has been accepted well. Taneira’s value proposition is ‘India under one roof’. “We think it will do well because the India story is seeping into Indians,” says Bhat. “They are seeking a strong Indian identity.”

Source: https://timesofindia.indiatimes.com/business/india-business/gst-local-themes-put-titan-on-fast-track/articleshow/64641700.cms

Arun Jaitley shuns demand for sharp cut in tax on fuel

NEW DELHI: Finance minister Arun Jaitley rejected the demand for a sharp cut in taxes on fuel, saying the suggestion was a ‘trap’ that would burden India with ‘unmanageable debt’, as he highlighted the macroeconomic stability achieved by the government.

India has firmly established itself as the world’s fastest-growing major economy with ‘phenomenal’ 7.7% growth in the March quarter, Jaitley said in a Facebook post on Monday. This followed two challenging quarters due to structural reforms including demonetisation, the goods and services tax (GST) and the Insolvency and Bankruptcy Code (IBC).

“The future looks much brighter than the past. This trend is likely to continue for some years,” said Jaitley, who is recuperating after a kidney transplant. Railway minister Piyush Goyal is handling the portfolio in his absence.

On the issue of employment, Jaitley said job-creating sectors were all doing well, pointing to double-digit growth in construction, rising overseas investment, bad loans being resolved under IBC, expansion in manufacturing and greater spending on infrastructure.

“The social sector schemes, more particularly the financial inclusion programmes, have created a wave of self-employment,” he said.


Without naming former finance minister P Chidambaram, he dismissed the latter’s assertion that petrol prices can be cut. “Another distinguished predecessor of mine had stated that the tax on oil should be cut by 25 rupees per litre. He never endeavoured to do so himself,” Jaitley said.

“This is a ‘trap’ suggestion. It is intended to push India into an unmanageable debt–something which the UPA (United Progressive Alliance) government left as its legacy.”

It was up to states that are earning more due to the abnormal increase in oil prices to provide relief to consumers. “The states charge ad valorem taxes on oil. If oil prices go up, states earn more,” he said.

He said the economy and markets reward structural reforms, fiscal prudence and macroeconomic stability, pointing out that the current National Democratic Alliance (NDA) government has a “very strong reputation for fiscal prudence and macroeconomically responsible behaviour.”

“They (markets) punish fiscal indiscipline and irresponsibility. The transformation from UPA’s ‘policy paralysis’ to the NDA’s ‘fastest growing economy’ conclusively demonstrates this,” he said as he effectively ruled out tax cuts, flagging the adverse impact that the lower tax revenue would have on infrastructure, rural India, the social sector and development in general.


Jaitley also hit out at former prime minister Manmohan Singh and former finance minister Yashwant Sinha for their criticism of demonetisation.

“Those who predicted a two percent decline in GDP growth have been conclusively proved wrong,” Jaitley said. Following demonetisation, Singh had said GDP would decline 2% while Sinha had attacked Jaitley saying he was working overtime to make sure that all Indians see poverty from close quarters.

“A distinguished predecessor of mine feared that he may have to live his future in poverty. We have enabled every Indian to be a part of the world’s fastest-growing economy,” Jaitley said. Growth declined to 6.6% in FY18 from 7.1% a year ago following a slump in the first two quarters but recovered to 7.7% by the fourth one.

He said development works in roads, railways, housing, power, sanitation – which yield high social benefits – require a high level of government expenditure. “This type of high government spending promotes growth,” he said. “This is what we are witnessing today.”


Demonetisation, GST, digitisation, Aadhar and anti-black money measures are leading to gradual formalisation of the Indian economy, he said. Measures such as the Foreign Black Money Act, Benami Prohibition Act, Income Disclosure Scheme, and the amended tax treaties with Singapore and Mauritius have all yielded rich dividends, he said.

Source: https://economictimes.indiatimes.com/news/economy/policy/arun-jaitley-hints-at-no-cut-in-excise-on-oil-asks-citizens-to-pay-taxes-honestly/articleshow/64632860.cms

GST formalising economy, widening tax base: Finance Ministry

“Historic tax reform GST has resulted in formalisation of the economy and consequently information flow would eventually augment not only the indirect tax collections but also direct tax collections,” the ministry said in a statement.

The Finance Ministry today said it would be increasingly difficult for businesses to remain outside the tax net as GST is leading to formalisation of the economy. The Goods and Services Tax (GST) was introduced from July 1 last year to subsume plethora of indirect taxes like excise and sales tax.

“Historic tax reform GST has resulted in formalisation of the economy and consequently information flow would eventually augment not only the indirect tax collections but also direct tax collections,” the ministry said in a statement.

Before GST, the Centre had little data on small manufacturers and consumption because the excise was imposed only at the manufacturing stage while the states had little data on the activities of local firms outside their borders.

 Under GST, there will be “now seamless flow” of availability of common set of data to the Centre and the states, making direct and indirect tax collections more effective.

“The (GST) tax base is expected to rise consistently as the incentives for formalisation increase,” it said adding that it would make increasingly difficult for those liable to pay tax to remain outside the tax net.

The ministry further said steps were also being taken for further simplification of GST structure in order to facilitate tax payers and to extend benefit to the customers.

Source: https://www.moneycontrol.com/news/business/economy/gst-formalising-economy-widening-tax-base-finance-ministry-2603311.html

Are structural reforms such as RERA and GST encouraging NRIs to invest back home?

NRIs lack the confidence to invest in the Indian real estate market due to poor grievance redressal mechanism, confusion over GST, lack of incentives and low capital and rental returns

Despite a spate of structural reforms such as GST and RERA, NRIs still hesitate to invest in the property market back home due to reasons such as poor grievance redressal mechanism, confusion over GST, lack of incentives and low capital and rental returns, says a report.

As many as 62 percent are not ready to commit investing in the property market anytime soon. Nearly 84 percent are of the view that there is no incentive to invest back home, says the BrandX report 2017-2018 by Track2Realty, an independent real estate think tank.

While almost half are of the view that property prices are too high in India, 34 percent would still want to wait for the market to become more transparent. More than half maintain that it would take another 36 months for the property market to become transparent and lucrative for investment. As many as 26 percent say it would take another five years and only 16 percent are optimistic that the scenario may improve in the next one year, it says.

 It is the implementation of reforms that deters NRIs from investing in real estate. As many as 68 percent are of the view that the grievance redressal mechanism in India is still not up to the mark and that it would still take years to get justice.

As many as 56 percent NRIs maintain that a listed real estate company provides no guarantee that it will protect consumer interests over a non-listed one, says the report.

High cost of properties deters as many as 40 percent NRIs from investing back home. For 38 percent it is the lack of appreciation potential and for 22 percent, it is low rental returns, the report says.

GST has further dampened their spirits and 70 percent of NRIs find it extremely confusing to calculate GST and stamp duty, the report says.

More than half (54 percent) rule out investing back home due to emotional connect. This is because the young NRIs (as many as 78 percent) have absolutely no emotional connect. It is only those in the age group of 50 years who may be driven to invest in India after retirement, says the report.

Neither does a weak rupee encourage NRIs to invest in India. As many as 72 percent have no hope that the rupee will become strong in the near future, says a report.

Neglible rental returns, safety, security and maintenance costs are other reasons that deter NRIs from investing in India.

As many as 68 percent NRIs are of the view that if some incentives such as opening up agricultural land, they may consider investing in India, says the report.

These findings are part of the global online and off-line survey conducted by Track2Realty. The sample included NRIs from the US, UK, Middle East, South Africa, Canada, Australia, New Zealand, Malaysia, Singapore and Mauritius.

Source: https://www.moneycontrol.com/news/business/real-estate/are-structural-reforms-such-as-rera-and-gst-encouraging-nris-to-invest-back-home-2590637.html