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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.
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
To curb tax avoidance, GST rates may not be disclosed soon The rates under the Goods and Services Tax (GST) regime are unlikely to be out before April-end as the government wants to avoid any tax evasion attempt by companies. India’s corporate entities will be tracking the developments in the Budget Session, which resumed on Thursday, as the GST Bill will be taken up in Parliament for passage before it can be implemented from July 1. Once the GST regime comes into effect, tax rates for 80, 000 items will be revised and brought under the 5 percent, 12 percent, 18 percent and 28 percent bracket. Here, not only will the rate of excise and value-added tax be revised, but the rates will be different depending on which bracket a company operates in. Companies have already engaged tax consultants to understand how their tax liabilities will change after July 1 when GST is proposed to be implemented. M S Mani, Senior Director, Deloitte Haskins and Sells said that they are doing a GST Impact Assessment for companies looking at different tax scenarios. “If rates are revealed earlier, some companies may indulge in tax avoidance activities, ” he added. With no clarity on what the final rates would be, the industry is unable to plan on their provisions for future taxes that will be applicable beginning April 1. The tax changes will be a mammoth exercise for the authorities since for every single item the comprehensive rate will be given for each of the 29 states. It is also expected that there would also be disputes in areas where companies would either be categorised in a different segment or would want a lower rate of taxation. For instance, in case of chocolates/toffees, there are categories like candy, sugar-coated hard candy, toffee, chocolate-coated biscuit, and regular chocolate. So, the fear is that if the tax rates are put out in the public domain after the March 15 meeting of the GST Council, manufacturing companies may either stop production or over produce in order to avoid paying a heavy taxation later. This could, in turn, impact the country’s gross domestic product. Mani said that they have been doing simulations on the different tax structures so that companies are adequately prepared for all the situations that they may be exposed to from July 1. He added that smaller companies will also gear up on technology, especially since compliance will completely be driven by technology. Even payments will be made digital, so that all such transactions can be tracked.
SOME IMPORTANT DEFINITION UNDER GST ACT  AGGREGATE TURNOVER: 2(6) “aggregate turnover” means the aggregate value of • all taxable supplies, • exempt supplies, • exports of goods and/or services and • inter-State supplies of a person having the same PAN, to be computed on all India basis and excludes taxes, if any, charged under the CGST Act, SGST Act and the IGST Act, as the case may be; Explanation.- Aggregate turnover does not include • the value of inward supplies on which tax is payable by a person on reverse charge basis under sub-section (3) of Section 8 and • the value of inward supplies.  EXEMPT SUPPLY: 2(44) “exempt supply” means supply of any goods and/or services which are not taxable under this Act and includes such supply of goods and/or services which attract nil rate of tax or which may be exempt from tax under section 11.  AGRICULTURIST (8) “agriculturist” means a person who cultivates land personally, for the purpose of agriculture;  CASUAL TAXABLE PERSON (20) “casual taxable person” means a person who occasionally undertakes transactions involving supply of goods and/or services in the course or furtherance of business whether as principal, agent or in any other capacity, in a taxable territory where he has no fixed place of business;  REVERSE CHARGE (87) “reverse charge’’ means the liability to pay tax by the recipient of supply of goods or services instead of the supplier of such goods or services in respect of such categories of supplies as notified under sub-section (3) of section 8.  Section 8 8. Levy and Collection of Central/State Goods and Services Tax (1) There shall be levied a tax called the Central/State Goods and Services Tax (CGST/SGST) on all intra-State supplies of goods and/or services on the value determined under section 15 and at such rates as may be notified by the Central/State Government in this behalf, but not exceeding fourteen percent, on the recommendation of the Council and collected in such manner as may be prescribed. (2) The CGST/SGST shall be paid by every taxable person in accordance with the provisions of this Act. (3) The Central or a State Government may, on the recommendation of the Council, by notification, specify categories of supply of goods and/or services the tax on which is payable on reverse charge basis and the tax thereon shall be paid by the recipient of such goods and/or services and all the provisions of this Act shall apply to such person as if he is the person liable for paying the tax in relation to the supply of such goods and/or services. (4) The Central or a State Government may, on the recommendation of the Council, by notification, specify categories of services the tax on which shall be paid by the electronic commerce operator if such services are supplied through it, and all the provisions of this Act shall apply to such electronic commerce operator as if he is the person liable for paying the tax in relation to the supply of such services: PROVIDED that where an electronic commerce operator does not have a physical presence in the taxable territory, any person representing such electronic commerce operator for any purpose in the taxable territory shall be liable to pay tax: PROVIDED FURTHER that where an electronic commerce operator does not have a physical presence in the taxable territory and also he does not have a representative in the said territory, such electronic commerce operator shall appoint a person in the taxable territory for the purpose of paying tax and such person shall be liable to pay tax.  TAX DEDUCTION AT SOURCE 46. Tax deduction at source (1) Notwithstanding anything contained to the contrary in this Act, the Central or a State Government may mandate, - (a) a department or establishment of the Central or State Government, or (b) Local authority, or (c) Governmental agencies, or (d) such persons or category of persons as may be notified, by the Central or a State Government on the recommendations of the Council, [hereinafter referred to in this section as “the deductor”], to deduct tax at the rate of one percent from the payment made or credited to the supplier [hereinafter referred to in this section as “the deductee”] of taxable goods and/or services, notified by the Central or a State Government on the recommendations of the Council, where the total value of such supply, under a contract, exceeds five lakh rupees. Explanation. – For the purpose of deduction of tax specified above, the value of supply shall be taken as the amount excluding the tax indicated in the invoice. (2) The amount ……………………….. -------------------------------- -------------------------------- (8) -----------------  COLLECTION OF TAX AT SOURCE - ELECTRONIC COMMERCE 56. Collection of tax at source - ELECTRONIC COMMERCE (1) Notwithstanding anything to the contrary contained in the Act, every electronic commerce operator (hereinafter referred to in this section as the “operator”), not being an agent, shall collect an amount calculated at the rate of one percent of the net value of taxable supplies made through it where the consideration with respect to such supplies is to be collected by the operator. Explanation.- For the purposes of this sub-section, the expression "net value of taxable supplies" shall mean the aggregate value of taxable supplies of goods or services, other than services notified under sub-section (4) of section 8, made during any month by all registered taxable persons through the operator reduced by the aggregate value of taxable supplies returned to the suppliers during the said month. (2) --------------- --------------------- (11) -------------------
Budget 2017, highlights 1-Turnover of companies upto 50 crore - tax will be 25 percent instead of 30percent 2-MAT credit carry forward for 15 instead of 10 years 3-LTCG on immovable period reduced from 3 to 2 years 4- Base Year for indexation now 2001 instead of 1981 5- Presumptive tax for small traders with turnover upto 2 crore under 44Ad now 6% instead of 8 % for full non cash turnover 6- Cash expenditure now allowed only 10000 instead of 20000 per transaction 7- No transaction above 3 lac will be allowed in cash 8- Trust cash donations max allowed only 2000 instead of 10000 9- Political parties - max cash donations from 1 person Rs 2000. 10- Domestic transfer pricing - only if 1 party enjoys tax benefits 11- 44AD - turnover limit increased to 2 crores for business. - 12- Professionals can pay advance tax in 1 installments if below 50 lac 13-Time for revising income tax return now reduced. 14- Scrutiny time limit reduced to 18 months 15- Individual tax reduced for income 2.5 to 5 lac tax rate now reduced to 5% 16- Surcharge of 10% on those who earn income from 50 lac to 1 crore 17- TDS - no Tds on insurance agents if 15 h filed 18- Simple 1 page income tax return for persons having non business income upto 5 lac