EEPC for faster GST refunds, hails foreign trade policy

The Engineering Export Promotion Council (EEPC) has hailed the mid-term review of foreign trade policy but called for faster clearance of the Goods and Services Tax (GST) refunds.

“EEPC compliments the commerce ministry for a pragmatic mid-term review of the Foreign Trade Policy with the objective of improving ease of doing business for the exporters,” EEPC chairman T S Bhasin said in a statement.

He, however, stated that the need of the hour and key is faster clearance of the GST refunds.

“Exporters are pleased to find that the cutting cost and time of transactions form key priorities of the government with the steps like better trade facilitation, including easing of customs procedures. But we would urge the finance ministry to ensure that the tax refunds are done at the earliest so that the tempo in export growth is maintained,” Bhasin said.

Overall, the Foreign Trade Policy review sends a signal about the government’s commitment to promote exports. Hopefully, it is also picked up by the Reserve Bank of India for easing of interest rates, he added.

Source: https://economictimes.indiatimes.com/news/economy/policy/eepc-for-faster-gst-refunds-hails-foreign-trade-policy/articleshow/61945336.cms

Foreign Trade Policy- (1st April, 2015 – 31st March, 2020)- Govt of India

MID-TERM REVIEW

Updated as on 5th December, 2017

Government of India
Ministry of Commerce and Industry
Department of Commerce


TO DOWNLOAD THE FOREIGN TRADE POLICY IN PDF : CLICK HERE


CHAPTER 1
LEGAL FRAMEWORK AND TRADE FACILITATION

A. LEGAL FRAMEWORK

1.00 Legal Basis of Foreign Trade Policy (FTP)

The Foreign Trade Policy, 2015-20, (as updated) w.e.f. 05.12.2017 is notified by Central Government, in exercise of powers conferred under Section 5 of the Foreign Trade (Development & Regulation) Act, 1992 (No. 22 of 1992) [FT (D&R) Act], as amended.

1.01 Duration of FTP

The Foreign Trade Policy (FTP), 2015-2020,(as updated) w.e.f. 05.12.2017 incorporating provisions relating to export and import of goods and services, shall come into force with effect from the date of notification and shall remain in force up to 31st March, 2020, unless otherwise specified. All
exports and imports made upto the date of notification shall, accordingly, be governed by the relevant FTP, unless otherwise specified.

1.02 Amendment to FTP

Central Government, in exercise of powers conferred by Section 5 of FT (D&R) Act, 1992, as amended from time to time, reserves the right to make
any amendment to the FTP, by means of notification, in public interest.

1.03 Hand Book of Procedures (HBP) and Appendices & Aayat Niryat Forms (AANF)

Director General of Foreign Trade (DGFT) may, by means of a Public Notice, notify Hand Book of Procedures, including Appendices and Aayat Niryat Forms or amendment thereto, if any, laying down the procedure to be followed by an exporter or importer or by any Licensing/Regional Authority or by any other authority for purposes of implementing provisions of FT (D&R) Act, the Rules and the Orders made there under and
provisions of FTP.

1.04 Specific provision to prevail over the general

Where a specific provision is spelt out in the FTP/Hand Book of Procedures
(HBP), the same shall prevail over the general provision.

1.05 Transitional Arrangements

(a) Any License / Authorisation / Certificate / Scrip / instrument bestowing financial or fiscal benefit issued before commencement of FTP, 2015-20 (as updated) w.e.f. 05.12.2017shall continue to be valid for the purpose and duration for which it was issued, such License/Authorisation/ Certificate / Scrip / any instrument bestowing financial or fiscal benefit Authorisation was issued, unless otherwise stipulated.

(b) In case an export or import that is permitted freely under FTP is subsequently subjected to any restriction or regulation, such export or import will ordinarily be permitted, notwithstanding such restriction or regulation, unless otherwise stipulated. This is subject to the condition that the shipment of export or import is made within the original validity period of an irrevocable commercial letter of credit, established before the date of
imposition of such restriction and it shall be restricted to the balance value and quantity available and time period of such irrevocable letter of credit. For operationalising such irrevocable letter of credit, the applicant shall have to register the Letter of Credit with jurisdictional Regional Authority (RA) against computerized receipt, within 15 days of the imposition of any
such restriction or regulation.

B. TRADE FACILITATION& EASE OF DOING BUSINESS

1.06 Objective

Trade facilitation is a priority of the Government for cutting down the transaction cost and time, thereby rendering Indian exports more competitive. The various provisions of FTP and measures taken by the Government in the direction of trade facilitation are consolidated under this chapter for the benefit of stakeholders of import and export trade.

1.07 DGFT as a facilitator of exports/imports

DGFT has a commitment to function as a facilitator of exports and imports. Focus is on good governance, which depends on efficient, transparent and accountable delivery systems. In order to facilitate international trade, DGFT consults various Export Promotion Councils as well as Trade and
Industry bodies from time to time.

1.08 Niryat Bandhu – Hand Holding Scheme for new export / import
entrepreneurs

(a) DGFT is implementing the Niryat Bandhu Scheme for mentoring new and potential exporter on the intricacies of foreign trade through counselling, training and outreach programmes.

(b) Considering the strategic significance of small and medium scale enterprises in the manufacturing sector and in employment generation, ‘MSME clusters’ have been identified, based on the export potential of the product and the density of industries in the cluster, for focussed interventions to boost exports.

(c) Outreach activities shall be organized in a structured way with the help of Export Promotion Councils as ‘industry partners’ and other willing ‘knowledge partners’ in academia and research community to achieve the objective of Niryat Bandhu Scheme. Further, in order to ensure optimum utilization of resources, efforts would be made to associate all the stakeholders, including Customs, ECGC, Banks and concerned Ministries.

1.09 Citizen’s Charter

DGFT has in place a Citizen’s Charter, giving time schedules for providing various services to clients. Time line for disposal of an Application is given
in Para 9.10 of HBP.

1.10 Online Complaint Registration and Monitoring System

An EDI Help Desk is available to assist the exporters in filing online applications on the DGFT portal and resolving other EDI related issues. For assistance an email may be sent at dgftedi@nic.in or Toll Free number 1800111550 can be used. Help Desk facility is also operational at the 4 DGFT Zonal Offices (details at http://dgft.gov.in). An Online Complaint registration and monitoring system allows users to register complaint and receive status/ reply online (details are at http://dgft.gov.in).


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Traders hit upon ‘0 GST’ scam in Hyderabad markets

Hyderabad: Post-GST, “zero business”, the practice of conducting sales without issuing bills to customers, has gained ground in the city’s markets. In raids recently conducted by officers of the commercial taxes, civil supplies and legal metrology departments, cases were booked against 300 traders indulging in this malpractice, and Rs 5.14 lakh was extracted from them in the form of penalties.

The raids revealed that traders were charging customers the GST amount, but not issuing bills, thus denying the Centre and the state the tax due to them.

Large-scale violations were uncovered in the markets in Begum Bazaar, Koti, Mehdipatnam, Siddi-amber Bazaar, Ranigunj, Nampally, Malakpet and Dilsukhnagar.

Traders in Charminar, Goshamahal, Uppal, Dilsukhnagar and Borabanda were found procuring commodities without bills. They procured palm oil and gutka from the Kakinada and Krishnapatnam ports in Andhra Pradesh and electronic, electrical, steel and construction material from the Chennai port.

Traders were also found procuring gutka, on which 28 per cent GST is applicable, from other states, without bills and invoices, and selling it to customers with the GST charges added, but without formal bills.

The zero business practice is also prevalent in the textile sector in the state. Cloth merchants were found procuring fabrics from Gujarat and charging the mandatory GST while selling them, without issuing bills.

GST: Anti-profiteering becomes a board issue

MUMBAI: Anti-profiteering under the goods and services tax (GST) has gone from being a plain costing issue to one that’s worrying board members. Several directors have written to company CFOs and finance teams seeking an update on price reductions under GST, said people aware of the matter.

The government has been actively pushing companies to pass on the benefits of GST, especially after rate reductions earlier this month, and directors don’t want their companies to get caught up in complaints on this score with the anti-profiteering authority about to be established, experts said. On the other hand, they are also concerned about maintaining profitability.

Central Board of Excise and Customs (CBEC) chairperson Vanaja Sarna recently wrote to about 100 consumer goods companies regarding GST benefits being passed on to consumers. Directors in most of these companies are asking for updates on anti-profiteering, said the people cited above. Some of the queries are also being directed at tax advisors, they said.

“Anti-profiteering has become a board issue, subsequent to the letter from CBEC,” said Sachin Menon, national head, indirect tax, KPMG India. “The basic question is what will be the benchmark price that companies must take, on the basis of which reduction has to be applied.”

Tax experts said companies are also concerned about profitability. While some companies have already announced by how much prices would be slashed, it’s just beginning of a complex pricing exercise, they said.

“While passing on rate reductions to end customers is a complex task in itself, considering the specific supply chain and pricing aspects that are relevant to a business, determining input tax credits that are required to be passed on is a very intricate exercise requiring significant cost accounting expertise,” said MS Mani, partner, Deloitte India.

India’s biggest fast-moving consumer goods (FMCG) including Hindustan Unilever, Proctor and Gamble, Marico, Dabur and Mondelez told ET they have already passed on the benefits of GST by either slashing the maximum retail price (MRP) or by increasing grammage.

Insiders said many boards are planning to discuss anti-profiteering at upcoming meetings, with CFOs and tax advisors asked to make presentations along with the latest updates.

“Many companies require external assistance in order to prepare a report card documenting the steps taken and outcomes achieved in order to comply with the anti-profiteering regulations,” said MS Mani, partner, Deloitte India.

FMCG companies, especially listed ones, need to balance the expectations of investors and consumers, experts said. While being penalised for profiteering is a risk, not able to show healthy margins could backfire on the company’s stock.

“The problem for several companies is maintaining a balance between price reductions and profitability,” said an independent director with one of the companies. “It’s a reputation risk if tomorrow the government pulls up the company but if margins dip, it could reflect on investor sentiment.”

Most companies are conducting extensive product-wise analysis, having cut prices to avoid being on the wrong side of the law, said tax experts. This is mainly because there is no mechanism to estimate anti-profiteering and whether companies can deduct compliance costs from the benefits they derive from GST rate cuts.

Tax experts also said there is no guides on cutting prices.

“Most products will have fluctuating price lines depending on the season/discounts during a year,” said Menon of KPMG India. “Though boards want to adhere to anti-profiteering norms, the costing is turning out to be a nightmare for most companies as there are no parameters as to how such a complex calculation–for example, product level or entity level–could be carried out.”

As it stands today, anti-profiteering mostly mandates companies to pass on benefits derived from input tax credits or output tax due to GST to consumers. The focus of the exercise is currently on companies that directly impact consumers and not passing on benefits of GST, which could trigger inflation going ahead.

Source : https://economictimes.indiatimes.com/news/economy/policy/gst-anti-profiteering-becomes-a-board-issue/articleshow/61874451.cms

Exporters file over 10,000 applications for GST refund

With over 10,000 applications for refunds filed by exporters till November, the GST Network today asked exporters to ensure that the claims do not exceed the GST paid in that month.

The Central Board of Excise and Customs (CBEC) had last month started refunds for exporters of goods who have paid IGST and have claimed refund based on shipping bill by filling up Table 6A.

Earlier this month, it allowed businesses making zero rated supplies or those who have paid IGST on exports or those want to claim input credit to fill Form RFD-01A.

It asked them to approach chief commissioner of central tax and the commissioner of state tax for the claim.

“As on November 30, 5,677 applications have already been filed by exporters using RFD-01 and 4,386 applications have been filed by them using Table-6 A of GSTR-1,” said a statement by the GST Network.

The Finance Ministry had last week said that exporters had claimed refunds of Rs 6,500 crore in the first four months of the GST roll out, and had advised them to file claims in proper form with matching shipping bills to facilitate early settlements.

Goods and Services Tax (GST) was rolled out from July 1.

GSTN, the company handling the technology backbone of the new indirect tax regime, said that in order to claim refund for any month, the exporter would have to file initial sales return or GSTR-3B for that month.

“The amount of refund claimed in Table-6A should not be more than the amount paid in GSR-3B of that month,” it said, adding that details of shipping bills, as filed with Customs, should be provided in Table-6A.

This would help avoid delay or rejection of Integrated GST (IGST) refund demand, GSTN added.

“It is important for the exporters to fill the refund details accurately since the computer system is designed to automatically grant refunds without involvement of any officer by matching information that is furnished on the GST portal and Customs system,” it said.

Source: https://economictimes.indiatimes.com/news/economy/policy/exporters-file-over-10000-applications-for-gst-refunds/articleshow/61902716.cms

GSTN to provide remaining IT functions on GST portal in next 2-3 months: Prakash Kumar, GSTN

The GST Network (GSTN), a non-profit, non-government organisation which manages the entire IT system of the GST portal has been at the receiving end for all the issues that cropped up in the course of the implementation of the Goods and Services Tax (GST) in India. Yet, in the past five months the organisation has steered India towards a new indirect regime, albeit on a bumpy road.

Here ETCFO caught up with Prakash Kumar , CEO, GSTN to get a sense of the key outstanding issues and the priorities for the coming months. Prior to this assignment, Kumar, an officer of the Indian Administrative Services (IAS) from 1985 to 2008, held positions at the strategic consulting arm of Cisco and then worked as the National Technology Officer at Microsoft India.

Kumar believes that the organisation got more flak than it deserved given the crunched deadlines it worked on for such a complex project. There simply wasn’t enough time to build and test the system and then educate the tax payers on the change. Excerpts from the conversation: 

Q: What are the current challenges that are taking up your time?

Prakash Kumar : The main job at present is to complete the pending functionality and to develop the back-end for 27 states. Roughly 27,000 tax officers of these states work on our system. Earlier, we were planning to do this in phase two, but this item has been advanced forward. Functionality has to be made available for these states. Other nine states are doing their own backend with independent vendors.

Other than that there are some pending functionalities in the existing system. So, for example, we are working on the ‘appeal’ functionality. We never thought that it will be required so soon. But then, when registration is cancelled, people will go to appeal. So there are lot of such functionalities that we are focussing on.

Another example is the refund process which we want to automate end-to-end. We have the next three months have to deliver on this. Today it is half automated and half manual – you apply and then the officer will go through each bill and approve. Next two to three months, the refunds would be done on the computers. The tax payers will not need to go to the tax officials.

Q: What are the other priorities?

Prakash Kumar : Based on this experience of the past five months for returns and the feedback from tax payers on GSTR1 and GSTR2, we are redesigning the whole system. For that a committee of 10 members has been constituted chaired by GSTN chairman and members from across the states. I am also a member.

What that committee is working on are ways to simplify how people will be interfacing with the system. In fact, we are targeting to even simply GSTR3.

We have to redesign the software. Migrating the data from the existing system yet again will be a challenge. That is why I am here, to ensure that it is designed in such a way that data porting doesn’t become difficult.

We realised this when we were doing migration initially. We had do some minor changes, when we started porting that data into new format. We had massive challenges in July. Suddenly, the screens went blank and the user could see nothing. This was because a new field had been introduced and the system was not used to it. It took us a few days to find out what had happened. And, people get impatient. Our call centre had a meltdown, it has a capacity for 20,000 calls but that day we had 50,000 calls.

We will try and finish the redesign by December, so that we can develop and test it properly.

Source: https://economictimes.indiatimes.com/news/economy/policy/gstn-to-provide-remaining-it-functions-on-gst-portal-in-next-2-3-months-prakash-kumar-gstn/articleshow/61867659.cms

May Merge 12% and 18% GST Rates to Have Just Three Tax Slabs, Hints Arun Jaitley

New Delhi: Finance Minister Arun Jaitley on Thursday indicated that the number of slabs of Goods and Services Tax (GST) could be pruned to just three.

The finance minister further added that the GST Council could consider merging the current slabs of 12% and 18% into one rate apart from reducing the number of items that are taxed at 28%.

“We started the rationalization (of GST rates) ahead of schedule. Future rationalization will depend on how the revenue moves. We have thinned down the 28% slab. Moving ahead, we will rationalize it further to probably keep only luxury items in the highest bracket,” Jaitley said.

The new tax regime has been a mainstay of the current government in its economic policies and Jaitley believes that there can never be one single GST rate in the country considering the social setup of the nation.

“We need to consider if we have the scope of merging the 12% and 18% slabs and have an interim rate. We have the lowest rate at 5%, then this new merged rate and the very thin slab of 28%. Eventually, that will be the direction,” Jaitley said.

Jaitley further went on to add that banks with their left-over cash post-demonetisation will fund the medium and small-scale enterprises.

“Banks will fund SMEs and the informal sector from the leftover cash it received during demonetisation,” said the finance minister, while speaking at the Hindustan Times Leadership Summit.

The Union minister also said that the government is looking to focus on the informal as well as small-scale enterprises in the future.

The move gains significance as not only the business sectors, but also RSS —ideological mentor of the ruling BJP — has expressed concern over the newly implemented Goods and Services Tax harming enterprises in terms of revenue.

During his speech, Jaitley also identified that “the bulk of job creation in India comes from the informal sector”.

Keeping in mind this concern, the GST Council, in its 23rd meeting held in Guwahati, brought down the tax rates on a number of items.

At present, GST has five tax slabs — 0%, 5%, 12%, 18% and 28%. Besides these, a cess is also levied on some sin and luxury goods over and above the tax rate of 28%.

Among other developments, the minister also said that Indians need to be nudged to comply to economic norms and that the 5% income tax rate is a ploy to get people to start paying taxes.

Source  :http://www.news18.com/news/india/may-merge-12-and-18-gst-rates-to-have-just-three-tax-slabs-hints-arun-jaitley-1591349.html

Final GST data may push up Q2 GDP

Second-quarter growth could be revised upwards once indirect tax collections are finalised: Anant

The Goods and Services Tax (GST) appears to have had an immediate and significant impact on economic growth, according to tax analysts and government officials.

The fiscal second quarter (July-September), which coincided with the July 1 roll-out of GST, saw GDP growth accelerate to 6.3%, from 5.7% in the first quarter. The new indirect tax regime had an impact — both in terms of the methodology of calculating GDP, as well as on the performance of the input parameters themselves.

‘Uncertainty over GST’

“In a normal year, businesses are conversant with the tax processes, and so know their tax liability, so the collections are usually in line with what is anticipated,” TCA Anant, Chief Statistician of India and Secretary to the Ministry of Statistics and Programme Implementation, said on Thursday. “However, this year, the uncertainty surrounding GST procedures, and the leeway the government has given in terms of extended deadlines, has meant that the indirect tax collections for the particular period are still being updated.” Gross Domestic Product (GSP) is calculated by adding the indirect taxes figure to Gross Value Added (GVA), and subtracting subsidies, Mr. Anant said, highlighting the reason that GST collections are so crucial for accurate GDP computation.

“On the one hand, there would possibly have been some disruption in the early days of GST due to the uncertainty surrounding the new processes,” Anis Chakravarty, Lead Economist at Deloitte India, told The Hindu. “On the other hand, net taxes are added back to the GVA and somewhat lower collections on the GST front could have had some dampening effect as compared to a non-GST year.”

Mr. Anant said the GDP data for the second quarter could see an upward revision when the government released its revised estimates as it would reflect the final indirect tax collections — a figure that would include the taxes collected from late filers as well.

“The Q2 growth pick up is almost entirely due to the growth pick up in manufacturing, which came to a standstill prior to GST due to destocking,” D.K. Srivastava, Chief Policy Advisor at EY India, said. “When GST got implemented, then orders started flowing in and growth picked up. So, GST has had a major impact on this quarter’s growth rate. In the coming quarters, the GST reforms in terms of rates and compliance should play a significant part in manufacturing sector growth.”

Mr. Anant said services was another area impacted by GST as earlier sales tax data was used to gauge activity.

“What we looked at instead was the sales tax collections for items that are currently outside GST, and what we found was that there is a stable ratio between those collections and overall sales tax collections in the past,” Mr. Anant said. “So, we used that as the basis to estimate services sector activity in this quarter.”

According to tax analysts, the services sector, especially hotels and restaurants, have suffered due to the increase in their effective tax rate under GST, and so the tax collection data from these sectors could be dampened.

Source : http://www.thehindu.com/business/final-gst-data-may-push-up-q2-gdp/article21235908.ece

Brokers’ body asks govt to reduce GST, scrap STT, dividend tax

The government should reduce GST on brokerages to 12 per cent as well as scrap taxes on securities transactions and dividends, according to a leading stock brokers’ group.

As preparations for the Union Budget 2018-19 is underway, the Association of National Exchanges Members of India (Anmi) has flagged concerns about the Goods and Services Tax (GST) regime creating “some difficulty” in the financial market.

Post GST, the burden of taxation on the transaction charges has increased, the grouping said in a representation to the finance ministry.

“Rate of GST applicable on brokerage for share transaction is 18 per cent which is on much higher side and has further inflated the cost of transaction. We appeal to reduce the rate of GST to 12 per cent in the ensuing Budget,” it added.

Besides, the brokers’ group has requested the finance ministry to do away with the securities transaction tax and abolish dividend tax for growth of the capital markets.

According to the grouping, the STT plays a detrimental role in enhancing liquidity and creation of depth in Indian capital market.

“Removal of STT will encourage more liquidity and profitability in India, which in turn will increase depth in Indian capital market as well as more participation,” the grouping said.

STT is the tax on transaction of equities as well as their derivatives and accounts for a bulk of the transaction cost after deducting the brokerage fee.

Further, Anmi has suggested for rationalising the STT calculation method for option trading by removing certain anomaly.

“Dividend distribution tax (DDT) should be done away with or the rates should be brought down to be nearly negligible” and amendment to Section 14A, Rule 8(d) of the Income Tax Rules are the two other demands for reforms by Anmi.

The applicability of Section 14A has impact on dividend income. DDT is levied at almost 20 percent on the company for distribution of dividend to its shareholders.

The tax burden for brokerages has been increasing over the last three years – it has risen to 18 per cent from 12 per cent, Anmi said.

Also, the brokers’ body has said market intermediaries like sub-brokers should be exempted from registration under GST as they don’t raise any invoice for clients directly but only through the brokerage.

It also asked that GST return should be submitted quarterly in order to promote ‘ease of doing business’ instead of monthly returns.

Stating that the stock broking community is the backbone of the capital market, Anmi reiterated its demand to give an industry status to the broking business.

Source : http://www.moneycontrol.com/news/business/economy/brokers-body-asks-govt-to-reduce-gst-scrap-stt-dividend-tax-2447429.html

Real Estate Under GST Ambit? Not That Easy, Says Sushil Modi

Kolkata: Bihar Deputy Chief Minister and GST Council member Sushil Kumar Modi has said that the inclusion of real estate in Goods and Services Tax (GST) would take “much longer time” as it is “not that easy”.

He, however, added that GST Council is slated to discuss the issue in its next meeting.

“It is upto the GST Council to decide. But I think it will take much longer time and it is not that easy. Let other things stabilise in the GST, then petroleum products and real estate,” he said at a media conclave.

Sushil Modi, who is also Bihar’s Finance Minister, said the GST Council would discuss about the real estate issues in the next meeting.

In real estate, state levies such as stamp duty, registration charges, and property tax, which is a municipal levy, are currently outside the ambit of GST.

IANS quoted Sushil Modi as saying that every state finance minister is concerned to protect state revenue and the Centre has assured protection up to 14 per cent of revenue.

After the GST Council’s Guwahati meeting, in which the GST rates of 178 items were reduced from 28%, the GST is stabilising, Modi said.

Refuting the argument that the decision of pruning the number of items from higher bracket was taken in view of the Gujarat Assembly elections, he said: “Around 88 per cent of small businesses in Bihar fall below Rs 1.5 crore (annual turnover). It is not the case for Gujarat.”

“In the earlier regime, small businesses with less than Rs 1.5 crore (annual turnover) were exempted from excise duty. Most of the small businesses were below less than Rs 1.5 crore cap. Now, all of them came to net of GST.”

On the hardships that the businesses have been facing in filing GST returns, he said, it would take some time to settle in the new indirect tax regime. “Earlier in the VAT (Value Added Tax) system, 40 per cent was online based and the rest was done manually. The GST is end-to-end automation.”

In terms of compliance, the system would be simplified and in the coming two-three months, the GST compliance system would be less complicated and it would be easier for small businesses, he said.

The issues related to GST rates on items have been resolved by more than 80 per cent and very few issues are yet to be resolved regarding the tax rates, he added.

Source : http://www.news18.com/news/business/real-estate-under-gst-ambit-not-that-easy-says-sushil-kumar-modi-1586873.html