Author: Microvista-Team

NEW DELHI: The GST would not increase compliance burden on assessees and all apprehensions in this regard are misplaced, Revenue Secretary Hasmukh Adhia said today.

“Many people think that implementation of GST would result in increase in compliance cost. This is completely misplaced,” he said while addressing netizens on Facebook.

Explaining the rationale, he said people have to keep different law books for filing return for various taxes like VAT, Excise etc in the present taxation regime.

“But with the roll out of GST, there would be a single tax and accounting for this will be very simple. It can be done through an offline excel form provided by GST Network. If someone uses this form for keeping record of purchase and sales, then he can use this for filing return. Thus, compliance would be minimised,” he said.

Adhia, who is spearheading implementation of the Goods and Services Tax (GST), said the finance ministry is gearing up for its roll out and five days training has already been given to officers.

Besides, IT training for them is going on, he said.

The government intends to implement the GST from July 1 and the GST Council headed by Finance Minister Arun Jaitley has finalised four rate categories of 5 per cent, 12 per cent, 18 per cent and 28 per cent after unifying levies like central excise, service tax and VAT.

Fitment will be done by adding the total incidence of current taxation (central plus state levies) and then putting the good or service in the tax bracket closest to it.

Adhia also said indirect tax burden may come down in the new GST regime.

“There would be many goods and services which would be out of GST so it would provide benefit to common man in respect of taxes. The roll out GST would be either tax neutral or there could be reduction of tax burden,” he said.

With regard to traders, he said, the tax filing would start from the threshold level of Rs 20 lakh and registration below the threshold limit is not required.

Within one state under one PAN only one registration is allowed, he said.

No other registration is allowed for one business but there is requirement of separate registration in case of supply of products in more than one state, he added.

For coding purpose, he said, no Harmonized System of Nomenclature (HSN) code is required for business turnover of Rs 1.5 crore.

On petroleum and alcohol products coming under GST, the revenue secretary said that these may not be under the new tax regime till such time the GST Council decides to impose a rate.

“In future if states decides then alcohol, petrol, natural gas will come under GST,” he said.

http://economictimes.indiatimes.com/news/economy/policy/gst-not-to-increase-compliance-burden-says-hasmukh-adhia/articleshow/58461788.cms

Migration of assessees is behind schedule. Also, the IT infrastructure for GST by the GST Network is still being tested. It is very likely that States will seek more time for the introduction of GST, said two sources close to the development.

According to official data, barring the southern States, enrolment of businesses under GST continues to lag, with only about 70 per cent of them migrating as of the April 30 deadline.

Migration of service tax and Central excise assessees to GST was also low at 43.73 per cent and 24 per cent, respectively.

The issue is likely to be taken up at the GST Council meeting in Srinagar on May 18 and 19.

“Unless we have tested the GSTN how can we say we are ready? Then there are 14 draft GST rules in the public domain, which are yet to be finalised. We also have no clarity on whether new rules will come in or only 14 will be there. July 1 seems to be a very aggressive date for rollout,” Bimal Jain, Chairman, Indirect Taxes Committee, PHDCCI, said.

Finance Minister Arun Jaitley is keen on launching GST from July 1 and the Finance Ministry is making every effort to ensure this. The Ministry argues that a July 1 rollout of GST, which has been delayed by seven years, would mean it starts from the beginning of a new quarter.

“It could be an accounting headache for firms if GST started from September 1,” pointed out an official.

However, businesses, too, are getting anxious about the final rules and fitment of commodities. “Talks have only been taking place about goods; what about services? Here again there is no clarity,” Jain added.

“It will be a race to the finish. If the GST Council finalises the rates and rules in the May meeting, companies will still need some time to tune their systems. With the planned anti-profiteering authority, everyone wants to be very careful,” noted an industry representative, who did not wish to be named.

A committee of officers under the GST Council is finalising the exact rate on goods and services under GST in the 4-tier structure. “It would be good if the Council favourably considers the industry demand for a Sept 1 rollout. …several critical issues need to be clarified and product wise rates have not been released as well,” said Pratik Jain, Partner and Leader (Indirect Tax), PwC.

Sources said that another cause of concern in some quarters is the passage of the State GST Bills. Only five States have passed the SGST Bill, although the Finance Ministry expects all States to enact it by May

31.http://www.thehindubusinessline.com/economy/govt-under-pressure-to-push-gst-rollout-to-september-1/article9674799.ece

“If petrol pump owners are selling other items like machine oil, then they will have to get enrolled for GST,” said Revenue Secretary Hasmukh Adhia in a Facebook Live session as part of the Finance Ministry’s awareness drive on the new tax regime. At present, petroleum products, including petrol, diesel, aviation turbine fuel, crude oil and natural gas, have been kept out of GST.

However, businesses with an annual turnover of up to ₹20 lakh will not have to register for GST or pay taxes.

The Revenue Secretary also said the Centre and States could at a later time choose to include petroleum products under GST, once revenue flows have stabilised.

“A large part of the income of States and the Centre comes for petroleum products,” he said, adding that States were concerned about a disruption in their income from these products under the new levy.

As much as 30-40 per cent of the income of States comes from potable alcohol and petroleum products.

Meanwhile, Adhia expressed confidence there would be no “tax terrorism” under GST.

“With the IT system of GST, taxpayers will not have to go to meet tax officials. We don’t want anyone to go to the tax department,” he assured, promising that there would be minimum interface with tax officials as long as assessees file their returns honestly.

He pointed out that both filing of returns as well as claims for refunds would be online under GST.

http://www.thehindubusinessline.com/economy/policy/petrol-pumps-selling-nonoil-products-must-enrol-for-gst-adhia/article9675598.ece#

NEW DELHI: The revenue department is stepping up its outreach programme, asking taxpayers to register with the GST Network by this month-end as only 34 per cent of the existing service tax assessees have so far migrated to the new payment portal.

There are a total of 80 lakh VAT, excise and service tax assessees.

While over 75 per cent of VAT and 73 per cent of the central excise assessees have switched to the GST Network (GSTN), the figure for service tax is a meagre 34 per cent of the existing assessees.

“We are fast approaching the last date for completion of migration i.e. April 30, 2017. I urge all zonal Chief Commissioners to take necessary steps to assist all existing taxpayers in their migration to the new regime,” CBEC Chairperson Vanaja N Sarna said in a letter to officers.

The zonal offices of the service tax department has started issuing advertisements in leading dailies, calling on the assessees to enrol and register with the GSTN immediately.

“Duty or tax credits under the existing laws cannot be carried forward in GST unless you enrol in the GST portal,” the department said, adding that provisional ID and password will be available for assessees on the ACES portal. It also asked taxpayers not keen on migration to the GSTN to confirm so by logging into the portal.

“Your provisional ID and password would be cancelled and this may deny your credit migration to the GST regime,” the department said.

Out of the 80 lakh assessees, some may not require registration under GST as they are below the threshold of Rs 20 lakh for the levy.

At present, VAT and service tax assessees with turnover of Rs 10 lakh are required to get themselves registered with states and the Centre, respectively.

Hence, assessees with turnover of up to Rs 20 lakh need not register with the GSTN, and as per the estimate of the Central Board of Excise and Customs (CBEC), out of the 80 lakh excise, service tax and VAT assessees, 54 lakh have turnover below Rs 20 lakh.

However, if the dealers want to claim input tax credit, they will have to get themselves registered with the GSTN, the entity building the IT backbone for the goods and services tax.

The government plans to put into effect GST from July 1 and in the run-up to the new indirect tax regime, it has started migrating excise, service tax and VAT assessees to the new tax payment portal.

GST will subsume at least 10 levies, including excise, service tax, VAT and other local taxes.

http://economictimes.indiatimes.com/news/economy/policy/only-34-service-taxpayers-move-to-gst-network-cbec-ups-outreach/articleshow/58393424.cms

The ambitious Goods and Services Tax (GST) to be implemented from July 1 would help raise India’s medium-term growth to above eight per cent, the International Monetary Fund has said adding that the reforms being done is expected to pay off in terms of higher growth in the future.

The ambitious Goods and Services Tax (GST) to be implemented from July 1 would help raise India’s medium-term growth to above eight per cent, the International Monetary Fund has said adding that the reforms being done is expected to pay off in terms of higher growth in the future.

“The government has made significant progress on important economic reforms that will support strong and sustainable growth going forward,” Tao Zhang, Deputy Managing Director of the International Monetary Fund, told PTI in an exclusive interview.

“We expect that the goods and services tax (GST), which is targeted to be applied starting in July, will help raise India’s medium-term growth to above 8 per cent, as it will enhance production and the movement of goods and services across Indian states,” the IMF official said.

“We are extremely impressed by the work that is being done and that we expect it will pay off in terms of higher growth in the future,” he said in response to a question on the reforms being undertaken by the Indian Government.

Observing that India is the “fastest growing emerging market economy” in a region that remains the strongest-growing in the world, Zhang said the IMF believes that India is going to continue to grow at a fast pace, with a projected 6.8 per cent rate for Financial Year 2016/17 and 7.2 per cent in 2017/18.

Lower global oil prices have boosted economic activity, and helped lower inflation.

In addition, fiscal and monetary policies have helped foster economic stability, he said.

“The currency exchange initiative led to a slowdown in economic activity.

However, there are initial signs of recovery as the currency exchange has been progressing well,” said Zhang, who assumed the role of Deputy Managing Director at the IMF on August 22, 2016.

Zhang, who worked at the World Bank from 1995 to 1997 and at the Asian Development Bank from 1997 to 2004, said a key concern for the IMF in India is the health of the banking system, “which is still dealing with a large amount of bad loans”, as well as “heightened corporate vulnerabilities” in several key sectors of the economy.

“As India persists with its strong reform efforts, labour market reforms should take priority,” he noted.

These would facilitate greater and better quality jobs, raise female labour force participation, and enhance the impact of recent product market reforms, he observed.

“While there has been important progress generally, we see scope to pursue better targeting and greater efficiency of subsidy and social spending programs through greater use of the trio of Aadhaar unique beneficiary identification, direct benefit transfers, and information technology,” Zhao said.

“Finally, more could be done to raise agricultural productivity and enhance market efficiency. This would help increase the supply of high-value foods, enhance returns to farmers, and dampen food inflation pressures,” said the IMF official responding to a question.

http://www.moneycontrol.com/news/business/economy/gst-to-push-indian-growth-to-over-eight-percent-imf-2267245.html

The meeting has been convened with an aim to review the work of revenue department under the finance ministry

Prime Minister Narendra Modi will next week hold a review meeting with the revenue department to take stock of the anti-black money drive post note ban and tax collected thereof, as also steps taken for the GST rollout.

The meeting schdeuled for May 2 has been convened with an aim to review the work of revenue department under the finance ministry, with specific focus on taxation matters and initiatives against black money, official sources said.

It will discuss the disclosures made in the tax amnesty scheme announced after junking of old 500 and 1,000 rupee notes in November last year.

The revenue department will also present a report card on not just the black money disclosed and tax collected thereof but also the ill-gotten wealth seized during searches and raids across the country.

An update on the notices sent to unusual bank deposits made post demonetisation would also be given, sources said, A review on the progress made in the anti-black money drive, called Operation Clean Money, and the tax amnesty scheme Pradhan Mantri Garib Kalyan Yojana (PMGKY)

The measures being planned by the tax department against tax evaders will also be discussed. The meeting follows tax, penalty and surcharge worth ₹2,300 crore being collected via the tax amnesty scheme floated post demonetisation.

The scheme, PMGKY, provided for payment of 50 % tax and penalty on unaccounted cash deposited in bank accounts post note ban.

While, under the Income Disclosure Scheme (IDS) – the first domestic black money disclosure scheme last year — Rs 12,700 crore tax has been collected.

Sources said the meeting would also review direct and indirect tax collection targets and steps to augment collections.

The Goods and Services Tax (GST), which is expected to be rolled out from July 1, is also likely to be discussed.

The GST Council, headed by Union Finance Minister Arun Jaitley and his stat counterparts, has held 13 meetings and decided on the four—tier tax structure of 5, 12, 18 and 28 %.

The crucial fitment of goods and services in the tax brackets is yet to be decided. The council will meet on May 18—19 and work out on the fitment.

http://www.thehindu.com/news/national/modi-to-meet-revenue-dept-on-may-2-black-money-gst-on-agenda/article18257198.ece

NEW DELHI:The government may slap customs duty on imported mobile phones after switching to the goods and services tax (GST) regime as it seeks to give a boost to local manufacturing, ward off Chinese imports and induce companies like Apple to make in India. Such a move could, however, increase the price of imported smartphones by 5-10%.

The ministry of electronics and information technology has secured legal opinion from the attorney-general who has said that imposing customs duty on phones will not violate the Information Technology Agreement (ITA), an international pact which mandates signatory countries to allow duty-free imports of certain electronics products.

An inter-ministerial committee, comprising representatives from the finance, commerce, and telecom and IT ministries, has been set up to examine the issue in detail.

These developments follow a growing thought in the government that zero customs duty is not helping the case of manufacturing in the country.

In addition, certain exemptions that are currently available to domestic handset makers — such as no countervailing duty on imported electronic components — will have to go after the GST regime comes into force. Imposition of customs duty will protect local manufacturers.

Though no final decision has been taken on the quantum of the duty, it is expected to be 5-10%.

The government has been wooing smartphone companies such as Apple to set up manufacturing facilities in India

While the iPhone maker is set to assemble handsets in India at a plant in Karnataka being set up by its contract manufacturer Wistron, it has demanded several tax concessions. The government’s stated position is that it will not give special concessions to any single company.

The government believes ITA does not cover the entire mobile phone category. A senior IT ministry official said that according to ITA, ‘one to many push button cellular telephony’ devices are exempt. “We are saying that our phones, even feature phones, are one to one, they are not one to many, so therefore all phones are not covered under ITA. The attorney-general’s legal opinion also said that ITA did not cover mobile phones,” said the official.

India has unilaterally exempted some electronic components from countervailing duty, levied in lieu of central excise duty. But this exemption may not continue under the GST regime, which will allow minimal exemptions. The finance ministry has asked the IT ministry to instead consider a change in the customs duty regime to shield domestic manufacturing.

“The present incentives to manufacture mobile phones in India need to be continued under the GST regime. Raising customs duty is a simple solution, if ITA so permits,” said Bipin Sapra, partner, EY.

http://economictimes.indiatimes.com/news/industry/cons-products/electronics/gst-impact-government-may-slap-customs-duty-on-imported-mobile-phones/articleshow/58369385.cms

NEW DELHI: Indian venture capitalists and private equity firms that pumped $15 billion into companies in 2016 are wary that come July, when the goods and services tax (GST) rolls out, their representatives/directors could be vulnerable to tax dues of investee companies even retrospectively.

The new law gives tax authorities the right to extract the full claim with interest and penalties from these directors exposing their personal assets and property to the risk of confiscation. This can happen only if it is proven that the non-recovery is attributed to gross neglect, misfeasance or breach of duty by the directors.

For instance, if company A, in which a fund Y invested in March 2016 and appointed a nominee on its board, were to receive a notice from the tax authorities in August this year for an unpaid claim pertaining to the financial year 2015, the nominee directors of fund Y are liable to satisfy the claim amounts if the company is unable. Otherwise the directors have to prove that they were not guilty of negligence, misfeasance or breach of duty.

These provisions incorporated in Section 89 of the Central Goods and Services Tax Act have the industry divided over its interpretation with some experts saying it does not clearly classify which category of directors would be liable. Others say that they contain only minor variations from previous laws and can be defended in court if punitive actions were to be imposed.

“This is a very draconian provision buried in an otherwise very welcome legislation and very retrograde for the ease of doing business objective of the government,” Avinash Bajaj, managing director of Matrix Partners, which manages $600 million in a combination of venture capital investments, said. Matrix Partners funded companies such as cab-hailing app Ola, online classifieds platform Quikr and Treebo Hotels among a dozen other investments in India.

http://economictimes.indiatimes.com/news/economy/policy/vcs-pes-fear-taxing-times-for-directors-under-gst/articleshow/58368618.cms

Revenue Secretary Hasmukh Adhia on Tuesday held out the assurance that prices of goods and services will not see an increase under the Goods and Services Tax (GST) regime.

For instance, goods that currently have a tax incidence of 32 per cent will be taxed at about 28 per cent under GST, he told reporters at a GST Conclave organised by the Finance Ministry.

“Almost 60 per cent of the income of the Centre and the States comes from items that attract 14 per cent value added tax and 12.5 per cent excise duty. There will be a likely decrease on the tax on each of these items under GST,” he said, adding that GST will reduce the cascading of taxes and help ease inflation.

In the case of services, which will see a higher tax of 18 per cent under GST (as against the 15 per cent service tax rate now), Adhia said the tax incidence will be the same. This is because a majority of the services will get input tax credit on purchases and the overall tax incidence will remain the same. This will be especially so in the case of banks and insurance companies.

“There could be a marginal increase of tax for some services,” he said.

Adhia also stressed that the government plans to roll out GST from July 1 and urged industry and trade not to be complacent.

The government will try to finalise the rates of tax for each item at the earliest, he said.

The GST Council, chaired by Union Finance Minister Arun Jaitley, is scheduled to take up fitment of commodities in the four-tier rate structure under GST at its next meeting on May 18 and 19.

Meanwhile, to reflect the integrity of businesses towards timely payment of taxes and filing of returns, each registered taxpayer under GST will be given a ‘compliance rating’.

Adhia said the rating will be based on their track record.

Adhia also said that GST will give a big fillip to domestic manufacturing and the Make in India programme as it will equalise the tax treatment for both imports and domestic products. Imported goods will attract Integrated GST (IGST) for which credit can be claimed at the time of sale.

Similarly, for locally manufactured goods, a similar GST rate will be applicable and hence, there will be no advantage for the imported goods, he said. “IGST is just an interim tax or a washout tax, which is equivalent to the GST rate on a specific product,” Adhia added.

http://www.thehindubusinessline.com/economy/no-significant-hike-in-tax-burden-under-gst-revenue-secretary/article9662453.ece

As GST is a destination-based levy, states will not be able to waive it to encourage industry

With the goods and services tax (GST) being destination-based, states might be unable to provide incentives to encourage local industry.

At the GST Conclave in New Delhi, Revenue Secretary Hasmukh Adhia on Tuesday said, “States are wondering how to continue with promised benefits. Any incentive has to be by way of the Budgets.”

States offering the incentives might not even be able to collect taxes, he added. In inter-state sale of goods, the destination states would collect the tax.

Some states currently offer incentives through refunds. As the value-added tax is origin-based, some states pay back the producers, irrespective of whether or not goods move out of the state.

Once the new indirect tax regime is rolled out, states may only be able to offer business-to-consumer (B2C) incentives, but not business-to-business (B2B) ones.

Adhia gave the example of goods produced in Gujarat but consumed in Bihar “What right will Gujarat have to forgo the tax of Bihar?” he said.

The Centre would continue with area-based exemptions to hilly and Northeastern states by way of refunds, the revenue secretary said.

Pratik Jain, leader, indirect tax, PwC-India, said incentives offered by states would likely get limited to goods consumed within the states.

“Besides, the effective rate of VAT may also go down from 13-14 per cent to 9 per cent on most products under the GST, narrowing the relative advantage industry enjoys,” said Jain.

Service tax rate to remain unchanged

Although the service tax rate will go up from 15 per cent to 18 per cent, Adhia said the effective rate would remain the same, as service providers would be allowed input tax credit for goods used by them to providing services. “Currently, a bank does not get an input tax credit for the stationary or office supply it uses. Under the GST, it will get that, so the effective tax rate will remain the same,” he said.

http://www.business-standard.com/article/economy-policy/gst-cloud-on-states-industry-sops-117042501301_1.html