Category: GST

NEW DELHI: Finance Minister Arun Jaitley on Monday said that the quarterly filing of returns under the Goods and Services Tax (GST) was not workable for taxpayers above Rs 50 lakh turnover.

“For all tax payers it is not workable to have quarterly return because input tax credit has to be given every month,” Jaitley said in a letter to All India Congress Committee general secretary Digvijaya Singh.

Only small taxpayers, whose turnover is below Rs 50 lakh per annum under the composition scheme, can avail of filing quarterly returns. But these will not be able to avail of input tax credit.

Singh in a letter to the Finance Minister questioned the requirement of submission of 37 forms in a year by a taxpayer under the GST, which would hamper the ease of doing business.

Currently the taxpayer needs to file only four forms in a year — one every quarter.

“You (Jaitley) would agree that instead of reducing the number of returns you have increased it by nine times. Would it improve our global ranking in ease of doing business which your government has been promising,” Singh wrote. Jaitley noted that the taxpayer needs to file only his initial return on the 10th of every month, while the other returns on invoice matching and availment of input tax credit are auto-populated.

“The model of invoice matching for eligibility of input tax credit of the recipient has been adopted in the GST design after much deliberation in the GST Council. One of the most important advantages of adopting this model is for curbing the possible tax evasion on account of fake invoice frauds,” Jaitley said.

“Though inward returns and monthly returns will be auto-populated, still the taxpayer will have to validate these details before submission and add additional information like GST paid under reverse charge mechanism, details of credit notes etc.,” GST expert Pritam Mahure told IANS.

Further, putting onus on buyers (that vendor should file returns) to enable claim of input tax credit would be found cumbersome by small businesses, Mahure added.

http://economictimes.indiatimes.com/news/economy/policy/quarterly-filing-of-returns-not-workable-under-gst-arun-jaitley/articleshow/58578900.cms

Hailed as the biggest tax reform since India’s independence, GST will replace an array of central and state levies with a national sales tax, thereby creating a single market and making it easier to do business in the country.

The Goods and Services Tax (GST) is on schedule for implementation from July 1 and will not lead to any significant increase in prices of goods although cost of some services may see a marginal hike, Finance Minister Arun Jaitley said today.

Hailed as the biggest tax reform since India’s independence, GST will replace an array of central and state levies with a national sales tax, thereby creating a single market and making it easier to do business in the country.

Addressing CII-Kotak investors’ round table here, Jaitley said that the GST Council, headed by him and comprising representatives of all states, will in the next few days finalise the rates of tax for different goods and services and the country is on track to roll out the simplified indirect tax regime from July 1.

“The current indirect tax structure in India is fairly complicated…those who transacted in either goods or services would have to deal with multiple authorities.

“The whole country was divided into multiple markets. So a free movement of goods and services was not possible. Now, the idea of GST was that let there be just one tax in the country,” Jaitley said.

He added that tax rates on goods may go down marginally under the new indirect tax regime while services may see some increase.

The GST Council, which had previously finalised a four- tier tax structure of 5, 12, 18 and 28 per cent, is scheduled to meet next week to put different commodities and services in the decided tax brackets.

Demerit and luxury goods will attract the peak tax rate plus a cess.

Tax rate closed to the existing incidence of total central and state levies will be chosen as the slab for a good or services.

“As far as goods is concerned, the tax is not likely to increase at all. If at all, it may marginally come down because of the cascading impact not being there and therefore, it is not likely to be inflationary.

“As far as services is concerned, obviously, they will go up marginally and therefore, there will be some impact on this. So, goods and services may react a little differently,” Jaitley said.

Asked if GST would stoke inflation, he said: “I don’t anticipate this to happen significantly. If at all, this may be a transient impact.”

At a separate interactive session on ‘India’s Business Environment: Reforms and Opportunities’ organised by CII, Indian Embassy and Japan Chamber of Commerce, he said after the Constitution was amended by Parliament and supporting legislations passed, state legislatures are approving the respective State GST law.

“Currently, that process is on. I see no difficulty in it,” he said adding GST rules have been framed and tax rates will be fixed at the GST Council meeting on May 18 and 19.

Jaitley sees no problems in rolling out GST from July 1.

“Hopefully, from July 1, one of the largest tax reforms in India since Independence — a simpler, more efficient and cleaner taxation system would be introduced in the country which itself would ease the very processes of doing business,” he said.

At the investors’ meet, he said there would be no cascading impact of tax on tax under GST.

“GST being a more efficient tax, evasion will become difficult. In the current system, there is large evasion,” he said.

Jaitley said the constitutional amendment gives time till September 15 for introduction of GST but the target date has been kept at July 1.

“So, we have a cushion of two-and-a-half months but it looks like we will be able to begin on schedule,” he said.

Also, a simple IT network has been put in place and there is no multiple forms for filing tax returns, he said.

GST would be a “transformational” system, he said, adding “there could be some small hiccups in the beginning but I think it’s understandable. We will be able to get over this”.

GST with a far more efficient system, Jaitley said, that will increase trade, tax collection and improve ease of doing business.

http://www.moneycontrol.com/news/business/economy/gst-scheduled-for-july-1-rollout-arun-jaitley-2273107.html

The Goods and Services Tax (GST) is beyond doubt the most revolutionary tax-related reform to be seen in India in several decades, since it will eliminate the conflicting and cascading taxation structures which have confounded several industries over the past few decades. It will most certainly have a profound effect on India’s economic prospects.

A single indirect tax which covers all goods and services will, in the long run, increase tax collection by making it easier for retailers and several other businesses to comply and also moderate overall taxation levels. That said, it should be remembered that the favourable effects of this new taxation regime will become evident only within 2-3 years of its implementation.

Though the goods and services tax (GST) tax structure has been announced, there is still a lot of conjecture about which tax rate will be applicable to the real estate and construction industry.

The tax rate is not decided yet and it would be premature to comment on it at this point. The expectations are for real estate to be in the 12% bracket. However, the GST rate is not the only important factor. The abatement rules as applicable under the service tax regime and the input tax credit facility for developers will determine if the effective tax incidence on real estate is lower or higher under GST.

Effectively, the composition scheme allowing for abatement against cost of land to the extent of 75% of the house cost for residential units priced under INR 1 crores and less than 2000 sq. ft. makes the effective rate at 3.75%. In other cases, the abatement goes down to 70%, making the effective rate at 4%. This will go a long way in determining whether GST is tax neutral or tax adverse for real estate.

The Government has offered some clarity on the abatement rules for under-construction houses and input tax credit benefits for developers.

Impact on Residential Real Estate:

If we look at the residential property sector, sales are not just impacted by tax rates but also by sentiment, and also on account of the trust deficit which the Real Estate Regulation & Development Act – or RERA – now seeks to address. That said, if costs do go higher under GST, the lower prevailing current home loan rates could assuage the impact to some extent.

Buyers and investors as well as developers are understandably worried that the final ticket size of homes will increase even if the Government levies GST at 12%, when compared to the existing service tax rates. Developers are still awaiting further clarity on this, but they know that it is in the interest of their business to keep ticket sizes range-bound. Evolving market dynamics have already brought about a change in the manner in which developers work. Staying customer-centric and delivery–focused to create a differentiated identity will be the most logical and likely method for them to adopt.

Impact on Rental Housing
Other doubts pertain to the rental housing market, which would naturally be impacted if the Government were to tax residential leases under GST. The common apprehension is that if this were to happen, the rental housing segment may see a huge slump over the medium-term, since residential leases are currently not taxed at all.

Here, it is pertinent to note that residential leasing is an inherent demand which will not evaporate merely by higher taxes. Certainly, we may be looking at a rental stagnation or marginal decline as the market readjusts to the new dynamics which GST will infuse. However, rental housing demand is sticky and end-user-driven in nature, so we are definitely not looking at a major slump in this segment because of GST even if it does tax residential leases.

That said, rental yields in major cities could certainly moderate if GST is levied on rental housing. In India, rental yields in housing are quite modest at around 2-4% on an average. Rents may either hold steady or decline marginally due to increase in housing stock. However, it is also true that most investors in the residential sector do not invest for rental yields but rather for the capital value appreciation, so reduced rental yields would not independently impact sentiment.

Impact on Commercial Real Estate
When it comes to GST’s impact on the commercial office real estate market – with the existing service tax for commercial leases at 15%, GST would be likely neutral overall (at 12% slight savings, and at 18% slight increase).

Impact on Affordable Housing
Affordable housing is currently exempt from service tax. It is likely that the government may come out with a clarification regarding the applicability or continuing exemption under the GST.

http://economictimes.indiatimes.com/wealth/real-estate/how-will-gst-impact-the-indian-real-estate-sector/articleshow/58588312.cms

MUMBAI: A few days before the GST bill is ratified in the Maharashtra legislative assembly , the Shiv Sena has given BJP the jitters by indicating that it has reservations about the bill.

Shiv Sena president Uddhav Thackeray had said last week that the Sena would oppose any move that was considered as some kind of an ‘encroachment’ on the powers of the local body .Thackeray was talking about how municipal corporations like the BMC would be at the mercy of the Centre, or the state government, for funds which affect its autonomy .

Since Maharashtra has called a special three-day session to ratify the GST on May 20, state finance minister Sudhir Mungantiwar met Thackeray at his residence to iron out the `misunderstandings’.

While speaking to reporters after the meeting, Mungantiwar said that the Sena president was `apprehensive’ that civic bodies like the BMC run by the Sena would have to depend on the state or the Centre for funds.

But despite the assurances, Sena continues to play hardball. Sources said that a `presentation’ on the GST would be sent to the Sena president on Monday night following which another round of discussions would be held between Mungantiwar and Thackeray on Tuesday .

BJP leaders, however, claimed that this is nothing but the Sena holding the party to ransom in Maharashtra. “These are all tactics by the Sena to express its importance. The GST bill will be passed with Sena’s support, but the latter will still try to embarrass us,“ said a BJP leader, requesting not to be identified.

http://economictimes.indiatimes.com/news/politics-and-nation/uddhav-thackeray-plays-hardball-on-gst/articleshow/58588235.cms

AHMEDABAD, MAY 8:After ratifying the Goods and Services Tax (GST) Constitution Amendment Bill in August last year, the State Assembly will sit for a special session on Tuesday to ratify the newly introduced Goods and Services Tax (GST) Bill, 2017.

The ratification of the new bill in the State Assemblies is mandatory for rollout of the new indirect tax regime in the country.

“In order to implement the GST in the State from July 1, we have decided to call this special session to pass the Bill,” Pradeepsinh Jadeja, Minister of State for Legislative and Parliamentary Affairs had informed earlier.

On April 6, the Parliament had passed four legislations thereby paving the way roll out GST from July.

The Gujarat Assembly Speaker had not pronounced the last budget session that ended on March 31, 2017, as concluded, thereby leaving a room for a special sitting to be considered as a continuation of the budget session.

In August last year, Gujarat had convened a special two-day session for discussion and ratification of the Constitution Amendment Bill in August last year. The State had become the sixth State to ratify the Constitution Amendment Bill as a support to the ruling NDA government for easy and faster rollout of GST.

After the passing of the new GST bill in Gujarat Assembly and post the approval of the law by the Centre, the existing Value Added Tax (VAT) act will largely be withdrawn. However, the indirect tax in the form of VAT will continue to be levied on petroleum products such as petrol, diesel, crude oil, natural gas, liquor and aviation turbine fuel (ATF).

It is yet to be seen what strategy the Opposition Congress adopts during the passage of the GST Bill. In the last discussion on the Constitution Amendment Bill, the entire Opposition was suspended from the House for creating ruckus over Dalit atrocities issue.

The leader of Opposition in the State Assembly, Shankarsinh Vaghela, has demanded three-day session instead of one-day special session.

http://www.thehindubusinessline.com/news/national/gujarat-assembly-holds-special-session-to-pass-new-gst-bill/article9686767.ece

NEW DELHI, MAY 8:  With regulations for the country’s largest tax reform still being firmed up, tax officials as well as consultants are constantly brushing up on their knowledge on the new levy.

The Central Board of Excise and Customs has now asked its officials to work out an in-house mechanism for updating their knowledge on the goods and services tax.

Following such a move in the Ahmedabad Zone, the CBEC has now asked its field formations to prepare presentations and hold routine training and awareness updates for its officials and staff on GST.

While officers of the Union Finance Ministry and States have been receiving training at the National Academy of Customs, Excise and Narcotics (NACEN), the CBEC now feels that it may be a good idea to revise their knowledge on GST given the lack of time and the various revisions in the draft law as well as rules.

“Since the new regime is all set for roll out from July 1, 2017, very little time is left to equip our officers with the requisite updated knowledge on GTS,” said CBEC Chairperson Vanaja N Sarna in a recent missive, noting that this is especially essential for the legislative and procedural aspects of the new law.

All five enabling legislations for GST for Centre, State, Union Territories as well as the Compensation Act are now finalised along with a half a dozen rules. The remaining rules are likely to be cleared by the GST Council in the next round of meetings.

Meanwhile, NACEN has nearly finished training all the Central and State value added tax officers, including 60,000 field officers and nearly 2,500 trainers.

Tax consultants and experts too are facing a similar dilemma and many firms are holding regular meetings to discuss all aspects of GST.

“We have been keeping a close watch on the developments relating to GST. We also meet on a daily basis to discuss and analyse various aspects of the GST laws,” said a consultant who did not wish to be named.

Similarly, other experts said that they have attended training and awareness sessions on GST, read up on the legislations and been for industry and government interactive sessions to clear doubts.

The CBEC on its part has been holding regular awareness campaigns for trade and industry. At the last count, it had held over 1,300 such sessions.

http://www.thehindubusinessline.com/economy/policy/as-gst-deadline-nears-officers-consultants-boneup-on-laws-and-rules/article9686815.ece#

NEW DELHI: Commerce and industry minister Nirmala Sitharaman said on Saturday a committee set up by her ministry will take up the concerns of exporters regarding an expected increase in fund requirement under goods and services tax (GST) regime with the council headed by finance minister Arun Jaitley and comprising all states, while promising to rework the Foreign Trade Policy from July 1 to bring it in sync with the new tax regime.

After consultations with experts on the mid-term review of the five-year trade policy, the minister told reporters that a committee comprising former commerce secretary G K Pillai, who heads a committee on duty drawback, commerce secretary Rita Teaotia and DGFT A K Bhalla had been tasked with taking up the matter with GST Council, which is due to meet later this month.

Exporters as well as the commerce department are worried over the current refund process. Under the new regime, GST will have to be paid upfront and only after the shipment moves out can an exporter claim a refund. Of the total dues, 90% of the taxes are to be refunded within a week, while the remaining will come later with a provision for 6% interest on delayed payment. “Exporters, especially small and medium enterprises, will find money getting locked up,” Sitharaman said with officials adding that this will increase the working capital requirement.

The second concern relates to exempted goods such as farm products, which are used as inputs where input credit will not be available since no taxes would be paid. “The GST Council should look at the specific problems and tell us a way on how to fill it up with scrips or something,” Sitharaman said.

She said that some of the other concerns will be taken up with revenue secretary Hasmukh Adhia.

Although the consultations were on the mid-term review of the policy that is due to end in 2020, a large chunk of the discussions focused on GST that is scheduled to kick in from July and will subsume a host of indirect taxes imposed by the Centre and the states, including Union excise, state VAT, service tax and central sales tax.

The minister said that several suggestions related to the review had also been made which included recommendations to enhance the focus on services beyond software and professionals who go abroad on work visas. Experts suggested that the shift will help improve the standards for health and education. In addition, there were suggestions against focusing largely on export to also factor in the impact of import of raw material such as gems or crude oil, which are processed and exported after value addition.

 

http://timesofindia.indiatimes.com/business/india-business/government-to-sync-trade-policy-with-gst-nirmala/articleshow/58555611.cms

Companies will have to maintain an array of accounting and tax records

The upcoming Goods and Services Tax (GST) regime, which the Centre intends to roll out from July 1, may turn out to be a record-keeping headache for firms, based on draft rules issued for accounts and records.

As per the rules, a registered tax-paying entity under the GST system for indirect taxation would have to maintain records of imported and exported goods or services and tax-paid supplies — separately for each activity, including manufacturing, trading and services.

Apart from maintaining accounting and tax invoice registers, entities will also have to record the complete address of premises where goods are stored, including goods in transit. If the goods are found to be stored elsewhere than the declared place, a tax would be payable as if they were supplied by the same entity.

“Considering the government’s stated intention of introduction of GST with effect from 01 July 2017, it would be a very difficult task for the industry to make changes in the IT systems to adhere to the recordkeeping requirements,” said PwC India’s tax and regulatory services team in a note on the draft rules.

Stringent requirements

“The industry needs to consider representing against some of the stringent requirements, like maintenance of separate records for different activities, which seem to defy the objective of simplification and rationalisation of compliances and ease of doing business in the GST regime,” Pwc India said.

Additional requirements have been specified for different firms — based on whether they are into manufacturing, services, execution of works contracts or a warehouse owner or operator, apart from the general obligations proposed for all entities in the GST net.

For instance, any entry in registers, accounts and documents should not be overwritten or deleted in any manner. Where the registers are maintained electronically, a log of every entry edited or deleted is needed.

The rules also require every registered entity to maintain its books of accounts in its principal place of business as well as every other registered place under the new indirect tax system.

The accounts and records rules, PwC India said, prescribe ‘extremely onerous recordkeeping requirements, such as separate records for manufacturing, trading, provision of services, and stringent norms for agents, transporters, clearing and forwarding agents as well as warehouse owners.

Records can be maintained in an e-form but must be preserved for 72 months from the due date of furnishing of annual return for the year. A group of retailers had written to the Finance Minister seeking a two-month extension from the proposed rollout date of July 1, on account of complexities in business processes to comply with the GST legislation.

While records can be maintained in an electronic form, they are to be preserved until the expiry of seventy-two months from the due date of furnishing of annual return for the year and are to be kept at every related place of business mentioned in the certificate of registration. These records must include all invoices, bill of supply, debit and credit notes.

http://www.thehindu.com/business/Economy/gst-agony-awaits-record-keepers/article18401075.ece

Worried over potential losses resulting from disparity between tax payout and tax refund once GST is kicked off stockists have started maintaining low levels of stocks.

Your local pharmacy may soon run dry of medicines as uncertainties cropping up over implementation of Goods and Services Tax (GST) are forcing stockists and trade channels to reduce stocks in trade, reports Times of India.

Worried over potential losses resulting from disparity between tax payout and tax refund once GST kicks in, stockists have started maintaining low levels of stocks. Some stockists have even started returning big chunk of stocks to the companies.

The news, which has already left patients in a frenzied state of mind, is expected to result shortage in shortage of medicines, at least in the short term. Experts, however, suggest there is nothing to panic about and no crisis situation is likely.

“Destocking is a natural fallout of the exercise, so as to minimise unnecessary impact. Lower stocks could be maintained, just enough to serve demand in the market,” A Vaidheesh, vice-president (South Asia) and managing director, GlaxoSmithKline Pharmaceuticals, told TOI.

Social media platforms were also abuzz with patients airing their concerns and stockists asking patients to store up their medicines before the “severe shortage” starts from July.

Worries of dealers and stockists are justified by the fact that they suffered losses in the past when tax refunds were delayed by the government when the value added tax (VAT) regime was implemented. Hence, stockists may decide to wait it out till they assess the tax refund situation post GST implementation and find some clarity before they replenish their stocks.

http://www.moneycontrol.com/news/trends/current-affairs-trends/stock-up-on-your-medicines-as-pharmacists-destock-bracing-for-gst-impact-2271133.html

NEW DELHI: The GST Bill, among other new transformations, will prove to be a game changer for the media and entertainment industry, Union Minister Venkaiah Naidu said here today.

“Campaigns like Make in India, Skill India and Digital India were clearly positive signals for new transformation including GST which would prove to be a game changer for Indian media and entertainment sector, especially the broadcasting sector,” Information and Broadcasting Minister Naidu said.

He was addressing a gathering at the inauguration of a two-day seminar organised by Telecom Regulatory Authority of India (TRAI) on its completion of two decades.

“Broadcasting sector in India is as at the threshold of entering into new era of digital broadcasting, which would open lots of opportunities to use latest technological innovations to not only enhance reach but also enhance the quality of the reach.

“The revival of radio, the digitisation of cable and the free-to-air DTH audience growth point to the latent demand for broadcasting in the Indian market at a time when broadcasting in advanced markets in the West is losing out significant space to digital on-demand media platforms,” he said.

The minister further said that the push towards Digital Terrestrial Television (DTT) comes at a critical juncture as public broadcaster Doordarshan looks to expand its DTT footprint from the current 16 cities to another 44.