Why India’s oil economy needs prudent supply management

As crude oil price is essentially a supply-side problem, prudent supply management can contain inflation better than through demand management. If inflation arising out of supply shock is controlled through demand management, the entire economy may have to pay a heavy price.

International prices of crude oil have been ruling firm in March 2018, close to $70 per barrel. Several factors are responsible for this buoyancy, which include, inter alia, demand-supply mismatch, global economic recovery, control over daily production by oil producing countries, trade war among major economies, and other geopolitical reasons. This is a major cause of concern for the oil importing emerging economies in general and India in particular.

India is the third largest consumer of crude oil, next to the US and China. The country’s domestic consumption of crude oil, which was 158.4 million metric tonnes (mmt) in 2013-14, seems to have crossed 200mmt in 2017-18. Domestic production continued to remain stagnant, at around 36mmt, during the same period. As a result, import dependency has gone up from a little over 77% in 2013-14 to about 82% in 2017-18.

Historically, the government subsidised consumers by regulating the prices of petroleum products. The fiscal burden arising out of petroleum products’ subsidy crossed Rs 1 trillion in 2008-09, forcing the Union government to deregulate their prices in a phased manner. After the global financial crisis, the fall in international prices of crude oil provided an opportunity to do so without disruption in the domestic economy. While petrol prices were deregulated in 2010, diesel prices became market related since 2014. As of now, while kerosene and LPG prices are still regulated, prices of other petroleum products have been freed before 2010.

As part of prudent fiscal management, the Union government did not pass on the entire benefit of the fall in crude oil prices to the consumers by imposing excise duty on petroleum products. The state governments also collected sizeable amount of revenues from VAT/other state taxes imposed on such products. The oil sector, which has been a major source of receiving subsidy, has now emerged as a major source of revenue for both central and state governments in the deregulated regime (see table).

Currently, the element of taxes (excise duty, road cess and state taxes together) on petrol and diesel at New Delhi has been approximately 48% and 39%, respectively. At Mumbai, the tax element on petrol/diesel is the highest. Dealers have separate margins of about 5% on petrol and 4% on diesel. A sizeable amount of revenues received from the oil sector has significantly contributed to fiscal consolidation at both central and state levels.

In the deregulated regime, there has been a two-way movement of petrol/diesel prices depending on global crude oil prices. The Union/state governments have also reduced excise duties/state taxes on certain occasions when the burden on the consumers has been high. In the context of the recent increase in international prices of crude oil, the consumers expect the government to reduce taxes so that the burden on them shall be reduced, besides anchoring overall inflation.

As of now, the fiscal situation is tight at both central and state government levels, following their commitment to achieve fiscal consolidation. Hence, it is natural for them to avoid cut in the taxes on petroleum products to prevent the fiscal arithmetic going haywire. On the other hand, the persistence of crude oil prices above $70 per barrel for a long period is likely to be inflationary. As indicated by the Reserve Bank of India, the global crude oil price is a major upside risk to inflation in the country. If inflation shoots up, the Monetary Policy Committee shall not hesitate to hike the repo rate at the earliest. The question, therefore, arises as to whether the inflationary impact of the rise in global crude oil prices should be handled through supply management or demand management?

As crude oil price is essentially a supply-side problem, prudent supply management can contain inflation better than through demand management. Under the flexible inflation targeting regime, there is an implicit understanding that the government, besides adhering to fiscal consolidation, has to undertake suitable supply management as and when required. If inflation arising out of supply shock is controlled through demand management, the entire economy may have to pay a heavy price. After demonetisation and GST shocks, India’s economic recovery is at a nascent stage. Unless nurtured carefully, India’s recovery may be short-lived, particularly if the cost of credit goes up significantly.

The oil ministry desires the GST Council to bring petroleum products under its ambit at the earliest. Tweaking of taxes on petroleum products, if any, can be done by the GST Council. The burden of revenue loss in case of a cut in taxes on petroleum products may be borne by both Union and state governments.

It is advisable to bring petroleum products under the ambit of GST at the earliest, at least from the point of view of having a uniform price of each petroleum product throughout the country. But there are quite a few issues that need to be sorted out before central and state GST rates are finalised on each petroleum product.

Being essential commodities, it may not be appropriate to impose the highest GST rate on petroleum products. The local taxes imposed on petroleum products by each state government are widely divergent. Moreover, it may take time to build consensus to bring petroleum products under GST. Adjusting the exiting tax element within 12% or 18%, particularly on petrol and diesel, may be difficult. Hence, both central and state governments may have to go in for reduction in excise duty/state taxes on petroleum products sooner or later, if global crude oil prices persist above $70 per barrel for a long time.

Barendra Kumar Bhoi, Former Principal Adviser and Head of the Monetary Policy Department,RBI.

source : http://www.financialexpress.com/opinion/why-indias-oil-economy-needs-prudent-supply-management/1127519/

GST And ‘Make In India’: A Win-Win For The Entire Nation

Existing economic initiatives, such as “Make in India”, are getting a boost from the new tax regime, at least for the most part

More than eight months have passed since the introduction of India’s Goods and Services Tax (GST), are form intended to revamp the entire taxation system and stimulate economic growth. What’s more, existing economic initiatives, such as “Make in India”, are getting a boost from the new tax regime, at least for the most part.

What exactly is the “Make in India” initiative?

Prime Minister  Narendra Modi launched “Make in India” on Sept. 25, 2014, with the primary goal of making India a global manufacturing hub by encouraging both multinational and domestic companies to design and manufacture products within the country. The initiative takes aim at increasing production capacity, stimulating job creation, and attracting foreign direct investment (FDI) as well.

While the initiative has been successful in positioning India as a global investment destination, FDI surged even more with the introduction of GST, increasing FDI by more than 40 percent. Other aspects, both positive and negative, of the interplay between “Make in India” and GST are also coming to light. Let’s take a look.

Balanced payment positions

One of the most pronounced changes to come with GST is the shift to destination-based taxation. This change has three impacts on the “Make in India” initiative.

A) Imports: The first is that all imported goods and services are charged with an integrated tax (IGST), which is equivalent to central GST and state GST combined together, as they effectively flow into an Indian state. This brings parity in taxation on local and imported products, meaning that Indian-made goods are better able to compete with imports.

B) Intrastate transactions: The fact that cross-state integrated tax (IGST) is the same as central and state GST for intrastate transactions also remove barriers for state-to-state commerce. Prior to GST, the tax implications of making something in one state and selling it in another were as daunting as buying from out of country. By normalizing taxes within and between states, the new tax regime makes Indian companies much more likely to purchase from one another, regardless of in what state the supplier resides.

C) Exports: The most significant impact of destination-based taxation is that, under GST, exports are zero-rated, given they are not consumed within an Indian state. This has been instrumental in boosting Indian exports in the international market. There are also mechanisms built into the system toreward exporters possessing a clean taxation record with an immediate refund amounting to 90 percent of their claims. There have been some difficulties in this regard, but more on that later.

Reduced production costs

Due to the uniformity in tax structure and the seamless flow of input tax credit for both input goods and services, production costs are lower now than under the previous tax regime. Reducing production costs positively impacts the manufacturing hub and is bound to increase manufacturing sector profits in the long run. Further, GST has inspired more innovative production and opened up new markets, increasing production capacity and job creation across the nation. The “one nation, one tax” concept has effectively made geographical boundaries irrelevant.

Free flow of goods

As mentioned above, GST has been successful in removing economic barriers and has paved the way for an integrated economy at the national level, which has also benefitted the logistics sector. Previously, trucks moving from one part of the country to another spent considerable time at border checkpoints waiting for documents to be reviewed and cleared.

Efficiencies in logistics have reduced this time significantly, benefitting the manufacturing sector and, thereby, the “Make in India” initiative. Improvements in infrastructure are expected to bring additional benefits in time.

GST has further increased demand in various sectors such as tyre manufacturing industry as companies previously in a wait-and-watch mode have switched to execution mode. This increase in demand will trigger an increase in production in years to come.

Remaining challenges

India’s GST has not been without its growing pains. One of the most significant hindrance to the success of the “Make in India” campaign has been delays in export tax refund payments. Most taxpayers are required to pay GST at the border in the form of customs duties, then request refunds of those taxes.

However, mechanisms to accomplish this have been late to come and complex for taxpayers to follow. Many exporters are reeling from cash crunches while waiting for pending GST refunds. These exporters have been among the worst affected due to various issues with required documentation in the absence of checklists, and this has negatively affected the “Make in India” initiative.

Some experts also believe that frequent shifts in policies are not sitting well with industry and could ultimately hamper the country’s financial rating. One recent example occurred within the automobile industry. The government approved a bill to raise the maximum cess levied on luxury cars from 15 to 25 percent in order to generate funds to compensate states for revenue loss due to GST implementation. Industry sharply criticised the move, and the country’s largest luxury car maker, Mercedes-Benz, even cancelled its plan to expand under the “Make in India” initiative.

In other areas, GST, coupled with “Make in India” and “Skill India”, is having the opposite effect. In particular, the tax reform and economic initiatives have ushered in a new era for start-ups in the country. Last year, India secured a place among the top 100 countries for ease of doing business — moving from position 130 to position 100, the highest jump any country has ever made.

However, as a whole, GST is still a work in progress. It is likely that, with time, the dust surrounding GST will settle, and it will prove to be the icing on the cake for “Make in India” and other initiatives designed to stimulate the economy.

source : http://businessworld.in/article/GST-And-Make-In-India-A-Win-Win-For-The-Entire-Nation-/09-04-2018-145857/

Lifestyle, Sharma Trading Co indulged in profiteering post GST rate reduction: DGS

“It is now up to the anti-profiteering authority to decide on whether to uphold the DGS findings and impose penalty,” the source added

The investigation arm of the revenue department has found merit in complaints against retail shopping outlet Lifestyle International and Sharma Trading Company for not passing on the benefit of GST rate reduction to consumers.

The Directorate General of Safeguards (DGS), which is entrusted to investigate the cases of profiteering under the new Goods and Services Tax (GST) regime, had in December, 2017, served notices to Lifestyle International and Sharma Trading Company for not passing on rate cut benefit to consumers.

DGS is currently under the finance ministry’s revenue department.

“The DGS investigation has found that Lifestyle International and Sharma Trading Company have indulged in profiteering. The reports are being sent to the National Anti-Profiteering Authority,” a source told PTI.

In the GST regime, complaints of profiteering come to Standing Committee under the authority, which then scans the complaints and sends to the DGS.

The DGS finalises its report and submits to the anti-profiteering authority, which takes a final call on whether the company has actually indulged in profiteering or not and accordingly levies penalty.

“It is now up to the anti-profiteering authority to decide on whether to uphold the DGS findings and impose penalty,” the source added.

In the case of Lifestyle International Pvt Ltd, an individual had complained that the retail outlet in Mahagun Mall, Vaishali, Ghaziabad, has “not fully passed on the reduction in rate of tax” from 28 percent to 18 percent on Maybelline FIT Me Foundation.

With regard to Sharma Trading Company, a departmental store had complained that the trader had not passed on the benefit of GST rate reduction to 18 percent from 28 percent on ‘Vaseline VTM 400 ml’.

As per the decision of the GST Council, tax rates on 178 items of daily use, like after-shave, deodorant, detergent and washing power, make up products, were cut from the top tax bracket of 28 percent to 18 percent.

Accordingly, businesses were required to pass on the rate cut benefit to consumers.

Based on a complaint, UP-based Vrandavanesharee Automotive Pvt Ltd, authorised dealer of Honda Cars, was also served a notice by the DGS in December 2017, for not passing on tax reduction benefits under GST.

The DGS, in its investigation, had found that the dealer had not indulged in profiteering and accordingly sent the report to the anti-profiteering authority. The authority in its latest order has upheld the findings of the DGS.

source : https://www.moneycontrol.com/news/business/economy/lifestyle-sharma-trading-co-indulged-in-profiteering-post-gst-rate-reduction-dgs-2544647.html

GST: Freelancers exporting software to take a hit

The GST Act, mandating every person engaged in exporting services to comply with the GST law, is likely to hit individuals and freelancers, especially software professionals, across the country. Under the GST law, if any person is supplying any goods or services outside the country, then GST registration becomes mandatory.

For example, if a freelancer is earning even a single rupee from outside the state, then he is liable for GST registration in India and also shall not be liable to claim the basic exemption limit of Rs 20 lakh. The freelancers who are exporting services outside India will not only have to register with GST but also has to file three returns every month. Prior to GST implementation, there were no such regulations.

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Industry lamented that this ambiguity may lead to restricting exports of services to significant level from the present levels. There appears to be serious dichotomy between intention and wordings of GST as far as export of services is concerned. They rue that the increase in indirect taxation will inflate the cost of the service.

“The move by the Centre will increase overhead expenses as well as administrative work. We are freelancers with a team of two and it will be very difficult to comply with new norms with limited earnings,” said Manmeet Sirohi (name changed), a Mohali-based freelancer who works for different companies based in the US, the UK and European countries.

Echoing similar sentiments, Anuj Aggarwal, managing director, Altruist Technologies (P) Ltd., said, “There are millions of freelancers in India who export software to different countries. This will incur increase in overhead expenses as they have to hire accountant also and their working capital will be blocked as first they have to pay tax and later on it will be refunded. My suggestion is there should be some threshold limit for registration.”

According to Mastan Singh Chambyal, a CA,  and vice-chairman, Chandigarh branch of Institute of Chartered Accountants of India (ICAI), as per the GST Act, every person exporting goods or services will have to comply with the GST law and they will levied a tax called IGST Tax. “There is no minimum exemption limit. Even the freelancers are also covered and have to get themselves registered. Under the GST, exports have been categorised as zero-rated supply and under the new regime, taxes paid on input as well as output supplies are refundable,” he added.

New norms

Under the GST law, if any person is supplying any goods or services outside the country, then GST registration becomes mandatory If a freelancer is earning even a single rupee from outside the state, then he is liable for GST registration in India and also shall not be liable to claim the basic exemption limit of Rs 20 lakh

The freelancers who are exporting services outside India will not only have to register with GST but also has to file three returns every month

SOURCE : http://www.tribuneindia.com/news/business/gst-freelancers-exporting-software-to-take-a-hit/447552.html

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GST Council to discuss anti-profiteering clause at the 10th meeting

A critical anti-profiteering clause in the draft Goods and Services Tax law to ensure that the benefit of lower taxes gets shared with consumers is likely to be finalised at the 10th meeting (February 18) of the all-powerful GST Council this weekend.

The Council, headed by Finance Minister Arun Jaitley and comprising representatives of all states, is also likely to finalise the definition of ‘agriculture’ and ‘agriculturist’ as well as the constitution of a ‘National Goods and Services Tax Appellate Tribunal’ to adjudicate on disputes.

Officials said the Law Ministry has sent the approved language and draft of the model GST Law, which outlines how the new national sales tax will be levied on goods and services.

The law ministry-approved draft and the language would be first discussed by the Council’s sub-committee comprising central and state officials on Friday before the Council takes it up at its 10th meeting scheduled to be held in Udaipur on February 18.

If the GST Council approves the revised draft in its meeting on Saturday, the government will attempt to present it before Parliament in the second half of current Budget Session next month, officials said.

The Government is keen to roll out the new regime from July 1 but for that, it will have to get two laws – the Central GST (CGST) Act and Integrated GST (IGST) Act approved by Parliament and each of the state legislatives have to pass the State GST (SGST) Act.

The model law, to be discussed by the Council this weekend, provides a common draft of CGST Act, SGST Act. Besides, there is an IGST law as well as Compensation law.

Officials said the government is keen that benefit of lower taxes is passed on to consumers and so an anti- profiteering measure has been incorporated into the draft law.

It provides for constituting an Authority to examine whether input tax credits availed by any registered taxable person, or the reduction in the price on account of any reduction in the tax rate, have actually resulted in a commensurate reduction in the price of the said goods and/or services supplied by him.

Supposing a good or service is to be levied with a GST of 5 per cent. But in course of the supply, a 20 per cent tax is paid, whose input credit is taken. So the final consumer will be levied only 5 per cent tax and not 25 per cent as input credit of 20 per cent is already taken, an official explained.

“This has to be declared at the time of filing returns by the taxpayer,” the official said.

The taxable event under GST is a supply of goods and services. The place of supply of goods is the place where the goods are delivered, except in few cases.

The Economic Times, 14 February 2017

GST to create Rs 36,000 crore software market in MSME segment

With the GST expected to be rolled out from September this year, there is a scramble among the software providers to have a bigger pie of the MSME segment whose invoicing and tax compliance IT requirements are estimated to create a Rs 36000-crore market.

Currently, only 90 lakh dealers out of the about 1.5 crore are using software for invoicing and filing returns and the rest are yet to adopt technology for this purpose, according to Mohit Bhambani, chief executive officer of city-based KDK Softwares. However, Bhambani said, there are about 1.6 crore MSMEs who are still not in the tax net. “GST will bring most of the more than 3 crore dealers into the tax fold and create a software market size of Rs 36,000 crore. Under the new regime companies would be required to show the tax they have paid while purchasing raw materials to claim deduction from their tax obligation,” said Bhambani.

The tax compliance, accounting and invoicing software market is mostly concentrated in Bengaluru and Jaipur, accounting for 90% of the companies who are now building on capabilities to offer GST solutions. While the southern city is home to companies like Cleartax, Winman Software, and Tally Solutions, Jaipur also has the likes of KDK Softwares, CompuTax and Saginfotech leading the pack.

 “Jaipur is the accounting capital of India producing 37% of the chartered accountants. On the other hand, Bengaluru is the Silicon Valley of India, the IT hub of the country. Development of tax filing and invoicing software requires both skills in equal measure, pretty much summing up why these two cities enjoy a leading edge,” added Bhambani.
As most of the MSME sector will come under the GST regime, the size of client base is expected to grow manifold requiring additional workforce to meet the increasing demand.

Times of India, 7 February 2017

GST will benefit warehousing sector : Official

Implementation of GST will benefit warehousing sector with prevailing taxation issues in logistics and transportation expected to be streamlined, a senior official said today.

Warehousing sector will see transformation to a next level as the GST regime would have preferential treatment towards this sector, Nikhlesh Jha, Additional Secretary & Financial Advisor, Ministry of Consumer Affairs, said at a conference here.

“Not only the GST regime will streamline the prevailing inadequacies in logistics in general but also address host of issues relating to transportation and warehousing in terms of their indirect taxation and therefore, the Ministry of Consumer Affairs is confident that GST as and when implemented will reshape the warehousing in particular,” he was quoted as saying in a statement issued by PHDCCI.

He exuded confidence that the finance ministry in its forthcoming budgetary exercise would have considerate treatment and allocations for warehousing sector.

Jha said that given its criticalities, the GST regime would be pro-actively supportive to logistics and warehousing.

Speaking on the occasion, Managing Director, Central Warehousing Corporation, Harpreet Singh said the government would create warehousing, cold storage with modern approach.

He said there would be more focus on hilly states such as Uttarakhand, Himachal Pradesh, Jammu & Kashmir and the entire northern eastern belt to make sure that not only agri production is safely stored but also substantially reduce the wastage on fruits and vegetables including floriculture.

Money Control, 30 January 2017

GST: Tax base sharing is main cause of ‘disquiet’ amongst officers

The dual GST model adopted by India is like a joint venture between the Centre and states, where both would levy and collect GST on a common tax base in such a predetermined manner that a taxpayer would have interface broadly with only one of the aforesaid two tax administrations. Success of a joint venture depends heavily on one factor—happiness of both the partners. Keeping this in mind, the Centre has been making a number of compromises. On their demand, essential inputs, like petroleum and its products, were kept outside the ambit of GST; so is alcohol, which is a state subject, although other demerit goods, like tobacco and cigarettes (central subjects), are in. States have also been allowed to vary their GST rates within a band. Most important, the Centre agreed to compensate them fully for first five years in case of loss of revenue.

These compromises impaired the shine of a good GST, but were considered necessary to bring states on board and make them happy. The finance minister was applauded for being flexible. But can the same be said about the recent decisions of the GST Council, for resolution of dual control issues?

The first decision for intra-state supplies by taxpayers below the threshold of Rs 1.5 crore was that states would administer both SGST as well as CGST for 90% of taxpayers, leaving the balance 10% for the Centre. Second, the taxpayer base will be divided 50-50 above the said threshold. Third, even for administering IGST for inter-state supplies, the taxpayer base will be divided in those two ratios. However, there is a rider that if there is a dispute between states over determination of ‘destination state’, as per the laws relating to ‘Place of Supply’, the IGST would be administered by the Centre. In GST regime, the destination state gets the share of state GST.

Another decision has been to cap the audit at 5% of the total taxpayers, based on risk factors. The list will be decided jointly by the Centre and states. The auditees will be shared through a computer-based programme. As for intelligence-based enforcement work, generally anti-evasion, this will be in the domain of both, perhaps on the time-honoured principle of first-strike—whoever strikes first carries on with the entire work in that particular case.

On the first decision of sharing of tax base below the threshold of R1.5 crore, it must be kept in mind that 93% of the existing service tax assesses of the Centre are in this band of less than R1.5 crore, and most cases of evasion have been detected in this band. Also, officers of the Centre, i.e. CBEC, have 23 years of collective experience in administering tax on services, since 1994. On the other hand, states have no experience. Being intangible, taxing services with reference to the place of supply is more complicated than taxing tangibles. Thus, it does not make sense to give a go to the vast experience of the Center’s officers and entrust most of the work to states.

The second decision of sharing the tax base 50-50 for taxpayers above the threshold of R1.5 crore is a fair one and this principle of equal sharing should have been followed for entire tax base.

The third decision regarding similar sharing of tax base with respect to IGST for inter-state supplies violates the provisions of Article 269A read with Act 246A. These provisions make it clear that GST in inter-state supplies ‘shall be levied and collected by the government of India’ and that the taxes collected would be ‘apportioned’ between the Centre and states. Even the law ministry has clarified that IGST can be levied and collected by the Centre alone. The reliance on Article 258, which authorises the President to entrust states with the executive power of the Centre in certain cases for the purpose of cross-empowerment with respect to IGST seems far-fetched. Besides, the rider that in the event of a dispute between two states regarding place of supply, the administering of IGST would vest on the Centre will only make things complicated.

On audit, all GST experts, led by Prof Richard Bird, have maintained that audit is the essence of administering GST. Audit has been decided to be capped at 5% of the tax base. Therefore, effectively, the Centre will have only 5% of 10% of the tax base below the threshold of R1.5 crore, with the Centre’s share of tax base in this band being only 10%. This is grossly unfair. But the decision of sharing of ‘anti-evasion’ work all through the tax base seems fair.

It is evident that CBEC has got an unfair deal with respect to sharing of tax base. Reportedly, the service associations of all the three groups—Groups ‘A’ ‘B’ and ‘C’—have in a joint memorandum demanded reversal of these decisions on sharing. These are the reasons that seem to have nudged the chairman, CBEC, on January 27, to draw FM’s attention to the ‘rising disquiet in the cadre’. The assurances given by FM, and later by the revenue secretary regarding protection of job and promotion prospects, could not remove this ‘disquiet’ as officers feel the arrangement would reduce Centre’s share of work. A future review of staff requirements vis-a-vis workload will indeed make a major dent in the interest of the field officers of CBEC. Further, there was no explanation to justify the 10-90 share between the Centre and states. Therefore, the general impression was that it was done to appease a few states.

As was stated at the beginning, both the partners should remain happy for a joint venture to succeed. The Centre had started well in ensuring that its partner, i.e. the states, remain happy. But the latest series of decisions arising out of unjust appeasement have made the field officers unhappy, thus casting a shadow on the success of this great joint venture. Sharing of the entire tax-base 50-50 seems to be the only answer.

The Financial Express, 31 January 2017

GST won’t lead to job losses, enough work to be available: Arun Jaitley assures

After the Customs and Central Excise officials raised concerns of job loss after rollout of Goods and Services Tax (GST), finance minister Arun Jaitley on Friday assured that they should have no insecurity as enough work and opportunities will be available to them and only the nature of work will change in the new indirect tax regime.

“I see no reason really for disquiet for the simple reason (that) opportunities which are available to people in service and the matter of policy and constitutional guarantee are all protected,” Jaitley said at the Investiture Ceremony organised by Central Board of Excise and Customs (CBEC).

The proposed GST will subsume all indirect taxes, replacing an array of central and state levies like excise duty, service tax and VAT.

“Important changes and evolutions which take place are never put on the back burner for the reason that they are the responsibility of those who conduct the activity itself will now be in an altered form, altered environment,” he said.

He further said: “Once it takes place you have a situation where taxes (that) are levied by the state (and) by Centre (will) all be integrated into one and therefore resulting in one assessment. Multiple systems on assessment which is there at present will evolve into a newer kind of system,” he said.

Jaitley responded to concerns of indirect tax officials after CBEC chairman Najib Shah pointed to the “rising disquiet in the cadre”. Shah said there were human resource issues in the service.

Jaitley also said the revenue to be collected is going to expand and there will be expansion of economic activity as well. “Therefore even though you have two parallel machineries which could now be converging into similar kind of activities and shared responsibility, I think the future will stand witness to the fact that there will be adequate amount of opportunities to be created and therefore the kind of disquiet in service, the kind of personal pressure I see on you should reduce as there is no real occasion for a fear of this kind or a sense of insecurity for anyone in this service,” he said.

The finance minister said change and evolution are an integral part of any economic order. “This is an ongoing process it will continue and we will all have to adjust ourselves with this particular change. I can only assure you that there is no reason for disquiet, you can go and have a comfortable sleep tonight,” Jaitley said.

Revenue secretary Hasmukh Adhia also told the officers that they will have enough work to do under GST.

The Indian Revenue Service (Customs and Central Excise) Officers’ Association had asked the government to protect the sanctity of their service amid attempts by officers of state government VAT departments to equate themselves with IRS (Customs and Central Excise) officers. They had called for a non-cooperation movement by wearing black badges against the recent decisions made by GST Council, which divided the taxpayers in a 90:10 ratio below the annual turnover threshold of Rs 1.5 crore, with 90 per cent of the tax assessees to be scrutinised and audited by the states.

For taxpayers above the Rs 1.5 crore threshold, the taxpayers will be divided equally between the states. The arrangement between the Centre and the states to break the deadlock on division of control is being seen as a compromise on part of the Centre, as it has lost out on the maximum share of taxpayers under the threshold of Rs 1.5 crore.

The Indian Express, 28 January 2017

Retailers sought for early implementation of GST

Retailers have sought for early implementation of the Goods and Services Tax regime which they believe will be a game-changer for country’s retail sector.

Industry body Retailers Association of India has asked for early implementation of the GST, which will be a game changer for the Indian retail sector which is pegged to grow to USD 1.3 trillion by 2020, its CEO Kumar Rajagopalan said.

“We are waiting for the details of early GST rollout, which, we hear is now in July. This can be a big game changer for retailers across the country,” Rajagopalan told PTI.

Echoing Rajagopalan’s views, METRO Cash & Carry India CEO & Managing Director Arvind Mediratta said GST would also contribute greatly to smooth logistics and supply chain efficiency across states.

“Favourable tax rates under the proposed Goods and Services Tax would benefit the wholesale as well as real estate and infrastructure sectors, which have a direct bearing on the growth of organised retail across the country,” he added.

The industry body is also looking forward to various steps being taken by the government to build back consumer confidence and inspire positive sentiment towards consumption.

“This could be by relaxation in individual taxation and removal of cascading effect of taxes. We also look forward to clarification in FDI norms in retail towards making it a level-playing field,” Rajagopalan said.

Money Control. 20 January 2017