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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.
Bengal unhappy with advancements under GST, asks other states to veto Bengal's finance minister, Dr Mitra seems to be dissatisfied with the norms under the new tax regime. His panel includes 31 finance ministers. He has succeeded in forcing changes to the new reform in the past. However, he says that his team's suggestions are now being ignored and he has urged his counterparts in other states to share their objections at a crucial meeting to be held in Delhi on Saturday with union minister Arun Jaitley. According to sources, Jaitley will have the final say. Chief Minister of West Bengal is not keen on supporting a tax reform that will hurt the poor.
The Goods and Services Tax (GST), the country’s biggest tax reform, is scheduled to be rolled out from July with the Parliament passing all the crucial laws on April 6. The main problem now is implementation, which politicians and experts say, will not be smooth as companies have to file as many as 37 forms in every state. While the compliance cost will increase, businessmen will have to brace for penalties, harassment and even jail term. Many smaller units will have to buy software and hire professionals to compile the transaction details to get tax refunds. For those having units at remote places, filing returns online will be a challenge in absence of internet connections. One of the main architects of the GST and former prime minister, Manmohan Singh, has warned that the new indirect tax regime could be a “game-changer” but fraught with “difficulties”. Congress leader Veerappa Moily has cautioned the government that the rushed GST rollout from July will make it a “technological nightmare” for businesses. Here are the 10 things that taxpayers have to look out for in the new GST regime: 1.Multiple tax forms Companies will have to go through a grueling exercise of filling up and filing multiple forms for central GST (CGST), the inter-state integrated GST every month. “The basic returns under GST could be 37 in a year for a single GSTIN—GSTR-1, GSTR-2 and GSTR-3—for each month, and one annual return. For a company with operations in 20 states, it means 740 annual returns, ” says Archit Gupta, founder and CEO of Cleartax.com. For an e-commerce company, it could even be as high as 432 returns in a year. 2.Can GSTN support a flood of data? GST Network is geared to accept up to three billion invoices a month from 8.5 million taxpayers from day one. The common portal (www.gst.gov.in) acts as an interface between different stakeholders in the GST ecosystem, namely taxpayers, tax departments, banks, the Reserve Bank of India, external service providers, among others. The portal becomes the touch point for taxpayer registration, invoice upload, tax payment, getting input tax credit, maintaining the cash ledger and stock holding etc. This would mean that the network must have the capacity to handle massive amounts of data, and hence the fear of a breach. Given the experiences of online filing of income tax and VAT, experts doubt the new GSTN will be able to seamlessly match billions of vouchers, facilitate tax collection, provide refunds and check evasion. 3.Go digital without hard copies GST will herald not only a new tax but also a 100% digital system to file returns and payments., further raising questions about adaptation, especially in arear of low internet adoption. “All filings, communications and payments will be through a common portal. There will be a discontinuance of hard copy filings and a move towards digital India. It will be a Herculean task as a large number of people especially the small traders do not have access to electronic facility, ” says Priyajit Ghosh, a partner looking into indirect taxes at KPMG. 4.Data privacy Subramanian Swamy, a leader of the ruling Bharatiya Janata Party, has openly expressed reservation at the security and privacy of the GSTN, which will be 51% owned by private players. Opposition leaders—Congress’ Kapil Sibal and CPI’s D Raja—have expressed concerns about data privacy under a private company GSTN. Finance minister Arun Jaitley has assured lawmakers in Parliament that there will be IT firewalls and penal provisions for any leak of information. Given the rise in cyber crimes, can leak of information and technical glitches be ruled out? 5.Allegations of draconian provisions Some of the Parliamentarians raised objections to some of draconian provisions of arrest for fraud in the initial years as many new firms will be using the GSTN system for the first time and are bound to make genuine mistakes. Although Jaitley has assured that small businesses will not be covered by the harsh provisions, every offence of tax evasion will be compoundable. There will be no arrest for frauds up to Rs 2 crore. For offences between Rs 2 crore and Rs 5 crore, it is going to be bailable. For offences over Rs 5 crore, it is going to be non-bailable.
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
NEW DELHI: The GST council approved the draft compensation bill for states. The government will table the bill in the next session of Parliament. “The Draft Compensation Bill has been approved in the GST Council meeting. The government will present the Bill to Parliament in next session, ” Finance Minister Arun Jaitley said after the GST council meeting today. “Next GST meeting will be held on March 4-5 in Delhi and the government is expecting to clear IGST and SGST bills in this meeting. It will also discuss slabs for commodities in next meeting, ” Jaitley said. “The GST council will then require one major meeting after March 4-5 to approve GST bill specifics, ” Jaitley added.
What is Union Territory GST (UTGST)? In our previous blogs, we have discussed about the taxes that will be levied on supply under GST. On intrastate supplies, the taxes levied are Central GST (CGST) and State GST (SGST). On interstate supplies, the tax levied is IGST. Another component of GST is now being talked about – UTGST. UTGST stands for Union Territory Goods and Services Tax. Let us understand UTGST, the circumstances in which it is levied, and the manner of its levy. Union Territory GST (UTGST) A union territory is directly under the governance of the Central Government. This differentiates them from the states, which have their own elected governments. Currently, there are 7 union territories in India: Chandigarh Lakshadweep Daman and Diu Dadra and Nagar Haveli Andaman and Nicobar Islands Delhi Puducherry Among these, Delhi and Puducherry have their own legislature, with elected members and a Chief Minister. Hence, they function as semi-states. Under GST, the SGST Act applies to all the states in India. The definition of ‘States’ in the Indian Constitution includes union territories with their own legislature. Hence, the SGST Act also applies to the union territories of Delhi and Puducherry. This means that on supplies within the union territories of Delhi and Puducherry, the taxes levied will be CGST +SGST, and on supplies from Delhi/Puducherry to another state/union territory, the tax levied will be IGST. As the SGST Act cannot be applied on a union territory without its own legislature, the GST Council has introduced the UTGST Act, to levy a tax, called UTGST, in the union territories of Chandigarh, Lakshadweep, Daman and Diu, Dadra and Nagar Haveli and Andaman and Nicobar Islands. UTGST will be levied in place of SGST in these union territories. UTGST is applicable in the union territories of Chandigarh, Lakshadweep, Daman and Diu, Dadra and Nagar Haveli and Andaman and Nicobar Islands. CLICK TO TWEET Levy of Tax Supply within the Union Territory On supplies within a union territory, CGST + UTGST will be levied. For example: Furniture Centre in Chandigarh supplies 50 sofa sets for Rs. 10, 00, 000 to Veena Furnitures in Chandigarh. This is a supply within the union territory of Chandigarh. Assuming a GST rate of 12% on sofa sets, the tax calculation in this case will be as follows: Particulars Amount (Rs.) Sofa sets 10, 00, 000 CGST @ 6% 60, 000 UTGST @ 6% 60, 000 Total 11, 20, 000 Hence, the only difference here, is that on supplies within union territories, UTGST will be levied in place of SGST. On supplies within a union territory, CGST and UTGST will be levied. CLICK TO TWEET Supply outside the Union Territory On supplies from a union territory to another state or union territory, IGST will be levied. For example: Furniture Centre in Chandigarh supplies 50 sofa sets for Rs. 10, 00, 000 to Ramesh Furniture Town in Delhi. This is a supply outside the union territory of Chandigarh. Assuming a GST rate of 12% on sofa sets, the tax calculation in this case will be as follows: Particulars Amount (Rs.) Sofa sets 10, 00, 000 IGST @ 12% 1, 20, 000 Total 11, 20, 000 Hence, similar to the levy of tax on supplies outside a state, IGST will be applicable on supplies outside a union territory. IGST will be applicable on supplies outside a union territory. CLICK TO TWEET Order of utilization UTGST credit can be utilised to set-off the tax payable in a manner similar to utilization of SGST credit, i.e.: Input Tax Credit Set-off against liability UTGST UTGST and IGST (in this order) Also, UTGST credit cannot be utilized to set-off CGST liability. Example: At the end of August ’17, Furniture Centre in Chandigarh has input tax credit and tax liability as shown below: Input tax credit (Rs.) Tax liability (Rs.) CGST 1, 00, 000 CGST 80, 000 UTGST 1, 00, 000 UTGST 80, 000 IGST 2, 00, 000 IGST 2, 50, 000 Here, Furniture Centre can utilise the UTGST credit of Rs. 1, 00, 000 as follows: Particulars Amount (Rs.) UTGST credit 1, 00, 000 (-) Set-off against UTGST liability (-) 80, 000 Balance 20, 000 (-) Set-off against IGST liability (-) 20, 000 Balance Nil UTGST will be levied in place of SGST in union territories without their own legislatures. The UTGST bill, along with CGST and IGST bills, which will be administered by the Central Government, has been passed
Coal sector benefits under GST, soon to welcome 5% tax on coal GST aims to take forward the drive that will help in providing affordable electricity to the poor class. Coal has been put under the 5% tax slab. According to minister for power, coal, renewable energy and mines Piyush Goyal free electricity, connections had been provided to 256.81L BPL families under the Modi government up to 30th May. GST aims for 'one nation-one tax' which would ultimately lead to reduced corruption.
GST roll out next fiscal: Is the govt looking at changing the financial year? Aiming towards a smooth roll out of Goods and Services Tax (GST) from 1 July, the GST Council in its next meeting on 18 February will look into the three laws in GST. The session by Secretaries Panel at ‘Budget 2017 The Verdict’ of CNBC-TV 18-Mint at Hyatt Regency in New Delhi on Thursday evening discussed GST and its power to arrest disinvestment plan, merger & acquisition, proposal for a new financial year among others in detail. “Industry is looking forward to the laws and rules. Once they are finalised by the GST Council – it’ll pave way towards 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 the rates are concerned, it is going to be a simplistic formula. The council has said that there would be four slabs of rates—5%, 12%, 18% and 28%, ” said Revenue Secretary, Hasmukh Adhia. After the announcement of Budget 2017 on 1 February, West Bengal’s finance minister, who also heads the empowerment panel on GST, sent 16 demands to finance ministry to look into, including the arrest clause. The arrest clause has been described as ‘draconian’ by the West Bengal government. “Power to arrest the tax defaulters is already there in excise and service tax, and also under VAT law in some states. After an extensive debate, majority in the GST Council decided that no arrest would be made in the case of tax evasion up to Rs 2 crore. However, evader between Rs 2-5 crore will face arrest but get a bail. But above, Rs 5 crore, it’s non-bailable, ” 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’re examining it, and once the decision is taken, it will be communicated.” On IDBI Bank’s disinvestment plan The government announced in the Union Budget on 1 February 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. The share value of it in market doesn’t reflect real estate it holds in Mumbai. The real estate valuation needs to be done carefully and 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% and we’ll improve it in 2017-18, ” added Das. Priorities in 2017 Ashok Lavasa, Finance Secretary: To ensure that people pay tax and it should be a more a tax compliant society. Shaktikant Das: Budget 2017 is very strong on reforms and our focus is on implementation. Hasmukh Adhia: Roll out of GST from 1 July. Year 2017 will be the Year of GST.
20th Feb, 2017GST council OKs draft law on relief to states Prospects of a rollout of the Goods and Services Tax (GST) by July 1 brightened with the GST Council approving on Saturday a draft law that seeks to compensate states fully in case of revenue loss as a result of the tax reform. The council is now expected to approve three other laws when it meets on March 4-5, paving the way for the legislations to be brought to Parliament by around March 9. The decision on categorisation of goods in tax slabs is not part of the law and will be worked out by the council after the enabling laws are passed. Briefing reporters after a meeting of the council, finance minister Arun Jaitley said he expected the panel to approve the C-GST, I-GST and S-GST laws at its next meeting in Delhi. "It's essential that enabling laws for GST are passed in the second half of the budget session to ensure rollout from July 1, " Jaitley said. The approval to the draft compensation law is read as a positive development as it was a contentious issue, improving the prospects of the ambitious indirect tax reform meeting its latest July 1 deadline. Parliament has been subject to disruptions and the heated poll rhetoric in the midst of assembly elections can be a worry. Source - Times of India
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