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GST Council plans to take up three contentious laws for discussion; targets 1 July roll-out Aiming towards a smooth roll out of Goods and Services Tax (GST) from 1 July, the GST Council will look into the three GST laws in its next meeting, scheduled for 18 February. The session by the Secretaries Panel at CNBC-TV 18 Mint’s ‘Budget 2017: The Verdict’ programme in New Delhi on Thursday evening discussed in detail the GST and its power to arrest, disinvestment plans, mergers and acquisitions, proposals for a new financial year, and other factors. West Bengal finance minister Amit Mitra, who also heads the empowerment panel on GST. AFP file image “Industry is looking forward to the laws and rules. Once they are finalised by the GST council, it will pave the way towards the implementation of GST from 1 July. The agenda of the next meeting is to look into all the three laws. In the subsequent meetings, we’ll take up the rules. As far as rates are concerned, it’s going to be a simplistic formula. The council has said that there would be four slabs: 5 percent, 12 percent, 18 percent and 28 percent, ” said revenue secretary Hasmukh Adhia. After the announcement of the Budget on 1 February, West Bengal finance minister Amit Mitra, who also heads the empowerment panel on GST, sent 16 demands to the Finance Ministry to look into, including the arrest clause, which was described as “draconian” by the West Bengal government. “The power to arrest tax defaulters is already there under excise and service tax laws, and also under VAT in some states. After an extensive debate, a majority in the GST Council decided that no arrests should be made in cases of tax evasion up to Rs 2 crore. However, evaders between Rs 2 and Rs 5 crore could face bailable arrest. Above tax evasion of above Rs 5 crore, it may invite non-bailable arrest, ” he said. Is there a new financial year on cards? Economic affairs secretary Shaktikant Das said, “The report to change the financial year is under consideration by the government. We are examining it, and once the decision is taken, it will be communicated.” On IDBI Bank’s disinvestment plan The government announced in the Budget that it hopes to raise Rs 72, 500 crore in FY18 by divesting stakes in public sector firms. Compared to the revised estimate of Rs 45, 500 crore for FY17, this is an increase of around 60 percent. While discussing the disinvestment plan of the state-run IDBI Bank, Das said, “The divestment of IDBI Bank is not off the table. The work is in progress. Its share value in the market doesn’t reflect the real estate it holds in Mumbai. The real estate valuation needs to be done carefully and a transparent decision needs to be taken in this case.” “We’ve not derailed from the path of financial prudence. Today, our economy needs investment in certain sectors. As per the NK Singh panel, our fiscal deficit target is 3 percent and we’ll improve it in 2017-18, ” Das added. Priorities in 2017: “To ensure people pay tax and society becomes more tax compliant”: Ashok Lavasa, finance secretary. “Budget 2017 is very strong on reforms, and our focus is on implementation”: Shaktikant Das, economic affairs secretary. “Roll out of GST from 1 July 2017 will be the Year of GST”: Hasmukh Adhia, revenue secretary. “Look for a stable and buoyant market”: Neeraj
HINTS OF SHIFT IN GST ROLLOUT DATE The April 2017 deadline for the rollout of Goods and Service tax is likely to be postponed. .A new date for GST rollout is under discussion.
81% items to be taxed below 18% rate under GST: Government NEW DELHI: The Goods and Services Council finalised tax rates for 1, 211 items with a majority of items being kept at under 18 per cent rates. “GST Council approved 7 GST rules in a meeting held in Srinagar, while legal committee is looking at remaining 2 GST rules ( return, transition rules), ” Finance Minister Arun Jaitley said. Briefing the media after the meeting in Srinagar, Jaitley said, today’s meet was focused mainly on fitment of goods under slabs. GST Council may meet again if final rates not decided tomorrow. Clearing air over the GST rate slabs, Revenue Secratery Hasmukh Adhia said: “Nearly 81 per cent of the items will fall under below-18 per cent GST rate slabs and only 19 per cent of the goods will be taxed above 18 per cent.” Sugar, Tea, Coffee (except Instant) and edible oil to fall under 5 per cent slab, while cereals, milk to be part of exempt list under GST. In a big boost to industry, Council has set the rate for capital good, industrial intermediate items at 18 per cent. Coal to be taxed at 5 per cent against current 11.69 per cent. Tooth paste, hair oil, soaps will be taxed at 18 per cent, it is being tax at 28 per cent, currently. Common man items have gone into 12 per cent and 18 per cent slab. Indians sweets or mithai in 5 per cent slab. Council will discuss the rate slab for important goods like gold and beedi rates tomorrow. No decision has been taken on Services tax rates and rates over auto sector. The two-day meeting began here in Srinagar to finalise the nuts and bolts of the new tax framework, proposed to be rolled out from July. The council has begun discussion on the list of items that will attract 0 per cent GST. Most states have pitched for keeping items sensitive to their states out of the list. For example Uttar Pradesh wants Puja material out of tax net. Some other states want cotton yarn and silk yarn out. The Centre is keen on keeping the list small as a large list of exemptions would hurt the objective of base expansion. Exemption of essential services will also be discussed. The Council also discussed exemptions and items in the 5% slab. All raw food items, including foodgrains to be exempt. Processed food of daily needs to be in the 5% slab. If you are catching up now, here’s a primer 1.What’s so good about the new tax? Those 17 or more state and federal levies on everything from electricity to Gucci handbags complicate efforts to sell products to India’s population of 1.3 billion (about four times bigger than the U.S.). Under the current system, a product will be taxed multiple times and at different rates. Every day, for instance, more than 20, 000 truck drivers wait in queues up to three kilometers (1.8 miles) long to pay an entry fee at the New Delhi checkpoints, with food rotting, tempers fraying and costs rising. In another change, the GST will apply to goods at the point of consumption, rather than where they are produced. That will reduce the cascading effect of taxes, allowing producers to easily claim credits and minimising the opportunity for corruption. 2.What gets taxed, and at what rate? The tax will comprise four basic rates: 5 percent, 12 percent, 18 percent and 28 percent. While officials are yet to reveal final details of what will fall into each bracket, Finance Minister Arun Jaitley has said 50 percent of items in the retail inflation basket won’t be taxed in order to protect consumers from price rises on basics such as food grains. As well as those four rates, there’ll be higher rates for tobacco products (65 percent) and luxury goods. 3. Is there a downside to so many rates? Most countries use a single rate applied to virtually all goods. Critics say this complex system increases the chances of companies and consumers trying to game the system, as well as adding to the workload of bureaucrats. 4.Will the tax impact the economy? Citigroup’s economists say countries like Canada, Australia and New Zealand experienced a one-time bump in inflation after introducing GST but that prices soon normalised. Looking at the wider economy, the GST could lift growth by as much as 2 percentage points, according to Jaitley. Greater tax compliance and efficiency has the potential to increase government revenue, helping narrow Asia’s widest budget deficit and freeing up funds for schools and highways. And by streamlining the process of buying and selling stuff, the government is betting on a boost to Modi’s “Make in India” manufacturing push. 5.What about the businesses themselves? Companies will have to overhaul their accounting systems, which may involve one-time investment costs. Logistics firms stand to gain as it becomes easier to ferry goods across India. Other winners and losers will be determined by those rulings on which goods belong in which tax bracket — and by any exemptions included in the fine print. 6.Do many other countries use this type of tax? India will join 160 nations that have a value-added tax, including Poland, Canada and Japan. At the top rate, India’s GST will be among the highest. And with 29 states, 22 official languages and 9 million businesses, the logistics of overhauling India’s tax system are likely to make any tax changes by U.S. President Donald Trump look easy by comparison.
Good days may follow goods in highest tax slab, next big GST move could reduce prices of many items. India could review the application of the highest 28% slab under the goods and services tax (GST) and consider imposing a lower rate on items of frequent use, with policymakers supporting a move along these lines. Such a move will reduce prices of many goods, thus helping to boost demand. The Department of Industrial Policy and Promotion (DIPP) has pitched for such a shift to revive industry, especially small businesses that are regarded as engines of employment generation. “There is a need to relook at the 28% slab, ” said a senior government official. “Some of the goods placed in that bracket are manufactured by MSMEs (micro, small and medium enterprises) and they are feeling some pressure.” Items in the 28% slab include washing machines, refrigerators, electrical fittings, cement, ceiling fans, watches, automobiles, tobacco products, nutritional drinks, auto parts, plastic furniture and plywood. The move will have to be approved by the GST Council, the apex decision-making body for the new tax, which is scheduled to meet in Guwahati on November 9-10, when the matter could come up for discussion. Top government officials have hinted at such a move over time. The feeling in the finance ministry is that non-luxury items in the 28% slab should gradually be moved to lower rates. Trade and industry bodies have lobbied the government for moving items out of the top tax rate, which was meant to be imposed on luxury and so-called sin goods such as tobacco items. “The arbitrary creation of 28% tax slab has greatly distorted the scope and spirit of true GST, ” said the Confederation of All India Traders (CAIT). It should be restricted to luxury and demerit goods, it said. Some states, especially those ruled by the Congress party are likely to raise the matter at the upcoming council meeting. The GST Council had at its last meeting in October adopted a concept paper that laid down guidelines for changes in rates. According to this, no manufactured goods should be given outright exemption as this would hinder the Make in India initiative. States should opt for direct subsidy transfers if they wanted to reduce tax incidence on any item. For the 28% bracket, the paper said goods of mass consumption or public interest, intermediate goods and those predominantly manufactured in the unorganized MSME sector and export-related items could be considered for review, subject to revenue implications. This would mean GST rates stabilizing over a period of time with more need-based items first in line for tax cuts. Tax experts said the highest bracket shouldn’t have too many items. “The 28% category should ideally be limited to very few products, which qualify as luxury or sin goods, in line with recommendations in chief economic adviser Arvind Subramanian’s report on the GST rate structure, ” said Pratik Jain, indirect tax leader, PwC India. “Any successful GST regime is based on a wider tax base and moderate tax rates. Therefore, most of these products should be gradually brought down to 18%. Also, there is a case for reduction of tax on services from 28% to 18%.”
GST LATEST PRESS RELEASE PRESS RELEASE 10th November, 2017 Recommendations made On GST Rate changes by the GST Council as per discussions in its 23rd Meeting on 10th November, 2017 held at Guwahati a) In the meeting held today, that is 10th November, 2017, the Council has recommended major relief in GST rates on certain goods and services. These recommendations spread across many sectors and across commodities. b) As per these recommendations, the list of 28% GST rated goods is recommended to be pruned substantially, from 224 tariff headings [about 18.5% of total tariff headings at 4-digit] to only 50 tariff headings including 4 headings which have been partially reduced to 18% [about 4% of total tariff headings at 4-digit]. c) Further, the Council has recommended changes in GST rates on a number of goods, so as to rationalise the rate structure with a view to minimise classification disputes. d) The Council has also recommended issuance of certain clarifications to address the grievance of trade on issues relating to GST rates and taxability of certain goods and services. e) On the services side also, the Council recommended changes in GST rates to provide relief to aviation & handicraft sectors and restaurants. 2. Major recommendations of the Council are summarised below. (I) Pruning of list of 28% rated goods: The Council has recommended reduction in GST rate from 28% to 18% on goods falling in 178 headings at 4-digit level (including 4 tariff heading that are partially pruned). After these changes, only 50 items will attract GST rate of 28%. a) Goods on which the Council has recommended reduction in GST rate from 28% to 18% include:  Wire, cables, insulated conductors, electrical insulators, electrical plugs, switches, sockets, fuses, relays, electrical connectors  Electrical boards, panels, consoles, cabinets etc for electric control or distribution  Particle/fibre boards and ply wood. Article of wood, wooden frame, paving block 2  Furniture, mattress, bedding and similar furnishing  Trunk, suitcase, vanity cases, brief cases, travelling bags and other hand bags, cases  Detergents, washing and cleaning preparations  Liquid or cream for washing the skin  Shampoos; Hair cream, Hair dyes (natural, herbal or synthetic) and similar other goods; henna powder or paste, not mixed with any other ingredient;  Pre-shave, shaving or after-shave preparations, personal deodorants, bath preparations, perfumery, cosmetic or toilet preparations, room deodorisers  Perfumes and toilet waters  Beauty or make-up preparations  Fans, pumps, compressors  Lamp and light fitting  Primary cell and primary batteries  Sanitary ware and parts thereof of all kind  Articles of plastic, floor covering, baths, shower, sinks, washbasins, seats, sanitary ware of plastic  Slabs of marbles and granite  Goods of marble and granite such as tiles  Ceramic tiles of all kinds  Miscellaneous articles such as vacuum flasks, lighters,  Wrist watches, clocks, watch movement, watch cases, straps, parts  Article of apparel & clothing accessories of leather, guts, furskin, artificial fur and other articles such as saddlery and harness for any animal  Articles of cutlery, stoves, cookers and similar non electric domestic appliances  Razor and razor blades 3  Multi-functional printers, cartridges  Office or desk equipment  Door, windows and frames of aluminium.  Articles of plaster such as board, sheet,  Articles of cement or concrete or stone and artificial stone,  Articles of asphalt or slate,  Articles of mica  Ceramic flooring blocks, pipes, conduit, pipe fitting  Wall paper and wall covering  Glass of all kinds and articles thereof such as mirror, safety glass, sheets, glassware  Electrical, electronic weighing machinery  Fire extinguishers and fire extinguishing charge  Fork lifts, lifting and handling equipment,  Bull dozers, excavators, loaders, road rollers,  Earth moving and levelling machinery,  Escalators,  Cooling towers, pressure vessels, reactors  Crankshaft for sewing machine, tailor’s dummies, bearing housings, gears and gearing; ball or roller screws; gaskets  Electrical apparatus for radio and television broadcasting  Sound recording or reproducing apparatus  Signalling, safety or traffic control equipment for transports  Physical exercise equipment, festival and carnival equipment, swings, shooting galleries, roundabouts, gymnastic and athletic equipment 4  All musical instruments and their parts  Artificial flowers, foliage and artificial fruits  Explosive, anti-knocking preparation, fireworks  Cocoa butter, fat, oil powder,  Extract, essence ad concentrates of coffee, miscellaneous food preparations  Chocolates, Chewing gum / bubble gum  Malt extract and food preparations of flour, groats, meal, starch or malt extract  Waffles and wafers coated with chocolate or containing chocolate  Rubber tubes and miscellaneous articles of rubber  Goggles, binoculars, telescope,  Cinematographic cameras and projectors, image projector,  Microscope, specified laboratory equipment, specified scientific equipment such as for meteorology, hydrology, oceanography, geology  Solvent, thinners, hydraulic fluids, anti-freezing preparation b) Goods on which the Council has recommended reduction in GST rate from 28% to 12% are: Wet grinders consisting of stone as grinder Tanks and other armoured fighting vehicles (II) Other changes/rationalisation of GST rates on goods: a) 18% to 12% i. Condensed milk ii. Refined sugar and sugar cubes iii. Pasta 5 iv. Curry paste, mayonnaise and salad dressings, mixed condiments and mixed seasoning v. Diabetic food vi. Medicinal grade oxygen vii. Printing ink viii. Hand bags and shopping bags of jute and cotton ix. Hats (knitted or crocheted) x. Parts of specified agricultural, horticultural, forestry, harvesting or threshing machinery xi. Specified parts of sewing machine xii. Spectacles frames xiii. Furniture wholly made of bamboo or cane b) 18% to 5% i. Puffed rice chikki, peanut chikki, sesame chikki, revdi, tilrevdi, khaza, kazuali, groundnut sweets gatta, kuliya ii. Flour of potatoes put up in unit container bearing a brand name iii. Chutney powder iv. Fly ash v. Sulphur recovered in refining of crude vi. Fly ash aggregate with 90% or more fly ash content 6 c) 12% to 5% i. Desiccated coconut ii. Narrow woven fabric including cotton newar [with no refund of unutilised input tax credit] iii. Idli, dosa batter iv. Finished leather, chamois and composition leather v. Coir cordage and ropes, jute twine, coir products vi. Fishing net and fishing hooks vii. Worn clothing viii. Fly ash brick d) 5% to nil i. Guar meal ii. Hop cone (other than grounded, powdered or in pellet form) iii. Certain dried vegetables such as sweet potatoes, maniac iv. Unworked coconut shell v. Fish frozen or dried (not put up in unit container bearing a brand name) vi. Khandsari sugar e) Miscellaneous i. GST rates on aircraft engines from 28%/18% to 5%, aircraft tyres from 28% to 5% and aircraft seats from 28% to 5%. ii. GST rate on bangles of lac/shellac from 3% GST rate to Nil. 7 (III) Exemption from IGST/GST in certain specified cases: i. Exemption from IGST on imports of lifesaving medicine supplied free of cost by overseas supplier for patients, subject to certification by DGHS of Centre or State and certain other conditions ii. Exemption from IGST on imports of goods (other than motor vehicles) under a lease agreement if IGST is paid on the lease amount. iii. To extend IGST exemption presently applicable to skimmed milk powder or concentrated milk, when supplied to distinct person under section 25(4) for use in production of milk for distribution through dairy cooperatives to where such milk is distributed through companies registered under the Companies Act. iv. Exemption from IGST on imports of specified goods by a sports person of outstanding eminence, subject to specified conditions v. Exemption from GST on specified goods, such as scientific or technical instruments, software, prototype supplied to public funded research institution or a university or IISc, or IITs or NIT. vi. Coverage of more items, such as temporary import of professional equipment by accredited press persons visiting India to cover certain events, broadcasting equipments, sports items, testing equipment, under ATA carnet system. These goods are to be re-exported after the specified use is over. (IV) Other changes for simplification and harmonisation or clarification of issues i. To clarify that inter-state movement of goods like rigs, tools, spares and goods on wheel like cranes, not being in the course of furtherance of supply of such goods, does not constitute a supply. This clarification gives major compliance relief to industry as there are frequent inter-state movement of such kind in the course of providing services to customers or for the purposes of getting such goods repaired or refurbished or for any self-use. Service provided using such goods would in any case attract applicable tax. ii. To prescribe that GST on supply of raw cotton by agriculturist will be liable to be paid by the recipient of such supply under reverse charge. iii. Supply of e-waste attracts 5% GST rate. Concerned notification to be amended to make it amply clear that this rate applies only to e-waste discarded as waste by the consumer or bulk consumer. 8 (V) Changes relating to GST rates on certain services (A) Exemptions / Changes in GST Rates / ITC Eligibility Criteria i. All stand-alone restaurants irrespective of air conditioned or otherwise, will attract 5% without ITC. Food parcels (or takeaways) will also attract 5% GST without ITC. ii. Restaurants in hotel premises having room tariff of less than Rs 7500 per unit per day will attract GST of 5% without ITC. iii. Restaurants in hotel premises having room tariff of Rs 7500 and above per unit per day (even for a single room) will attract GST of 18% with full ITC. iv. Outdoor catering will continue to be at 18% with full ITC. v. GST on services by way of admission to "protected monuments" to be exempted. vi. GST rate on job work services in relation to manufacture of those handicraft goods in respect of which the casual taxable person has been exempted from obtaining registration, to be reduced to 5% with full input tax credit. (B) Rationalization of certain exemption entries i. The existing exemption entries with respect to services provided by Fair Price Shops to the Central Government, State Governments or Union Territories by way of sale of food grains, kerosene, sugar, edible oil, etc. under Public Distribution System (PDS) against consideration in the form of commission or margin, is being rationalized so as to remove ambiguity regarding list of items and the category of recipients to whom the exemption is available. ii. In order to maintain consistency, entry at item (vi) of Sr. No.3 of notification No. 11/2017-CT(R) will be aligned with the entries at items (ii), (iii), (iv) and (v) of SI.No.3. [The word “services” in entry (vi) will be replaced with "Composite supply of Works contract as defined in clause 119 of Section 2 of CGST Act, 2017"]. iii. In order to obviate dispute and litigation, it is proposed that irrespective of whether permanent transfer of Intellectual Property is a supply of goods or service.- (i) permanent transfer of Intellectual Property other than Information Technology software attracts GST at the rate of 12%; and 9 (ii) permanent transfer of Intellectual Property in respect of Information Technology software attracts GST at the rate of 18%. (C) Clarifications i. It is being clarified that credit of GST paid on aircraft engines, parts & accessories will be available for discharging GST on inter–state supply of such aircraft engines, parts & accessories by way of inter-state stock transfers between distinct persons as specified in section 25 of the CGST Act. ii. A Circular will be issued clarifying that processed products such as tea (i.e. black tea, white tea etc.), processed coffee beans or powder, pulses (de-husked or split), jaggery, processed spices, processed dry fruits & cashew nuts etc. fall outside the definition of agricultural produce given in notification No. 11/2017-CT(R) and 12/2017-CT(R) and therefore the exemption from GST is not available to their loading, packing, warehousing etc. iii. A suitable clarification will be issued that (i) services provided to the Central Government, State Government, Union territory under any insurance scheme for which total premium is paid by the Central Government, State Government, Union territory are exempt from GST under Sl. No. 40 of notification No. 12/2017-Central Tax (Rate); (ii) services provided by State Government by way of general insurance (managed by government) to employees of the State government/ Police personnel, employees of Electricity Department or students are exempt vide entry 6 of notification No. 12/2017-CT(R) which exempts Services by Central Government, State Government, Union territory or local authority to individuals. 3. It is proposed to issue notifications [giving effect to these recommendations of the Council] on 14th/15th November, 2017, to be effective from 00hrs on 15thof November, 2017.