NEW DELHI: A body of tax advocates today asked Finance Minister Arun Jaitley to make procedures and paperwork related to the upcoming Goods and Services Tax (GST) regime simple and less cumbersome.
“The draft GST rules have prescribed detailed paperwork for maintenance of records for GST purposes, which are highly complex and cumbersome. This will cause immense problem and hardships to assesees, especially small traders and businessmen,” All India Tax Advocates Forum President MK Gandhi said.
Under the draft rules, detailed records are to be kept not only by suppliers of goods or services, but also by intermediaries such as warehouse owners, transporters and agents, he said.
In addition to goods sold, they have to also track stocks given as free sample or gifts, Gandhi said in a statement.
“Even as concepts of manufacture or trading are no longer relevant under GST, the cumbersome record keeping requirements will continue to be bases on these lines. This will put unwarranted burden and botheration to assessees,” the forum said.
Gandhi further said that under the new tax regime no deletion or overwriting of entries will be allowed in registers, accounts and documents.
Such complicated paperwork will be too much for small time traders and businessmen to cope up with, he added.
The government plans to roll out the GST from July 1, which will subsume host of indirect taxes.
“The consensus on GST will go down in history as a great illustration of cooperative federalism. GST reflects the spirit of ‘One nation, One aspiration, One determination’,” an official statement quoted Modi as saying.
Prime Minister Narendra Modi said the consensus on Goods and Services Tax (GST) reflects the spirit of ‘one nation, one aspiration, one determination’.
“The consensus on GST will go down in history as a great illustration of cooperative federalism. GST reflects the spirit of ‘One nation, One aspiration, One determination’,” an official statement quoted Modi as saying.
The Prime Minister was delivering his opening remarks at the third meeting of the Governing Council of Niti Aayog.
According to the statement, the Prime Minister also said GST shows the strength and resolve of the federal structure.
Modi gave credit to all chief ministers for coming on one platform for GST, keeping aside ideological and political differences.
President Pranab Mukherjee on April 13 gave assent to four key legislations on GST. The government plans to roll out the new indirect tax regime from July 1.
GST, the biggest taxation reform since Independence, will subsume central excise, service tax, Value Added Tax (VAT) and other local levies to create a uniform market.
Businesses will now be permitted to keep accounts and records on their computers under the Goods and Services Tax (GST) as well as file online applications for advance rulings and appeals and revisions against tax orders.
These have been proposed by the Central Board of Excise and Customs in the draft rules for accounts and records under GST.
However, in what could increase the compliance burden for them, they would also be expected to maintain separate accounts of each activity including manufacture, trading, supplies, balance, as well as invoices and bills for all transactions.
The rules have proposed that all registered persons will also have to maintain records of monthly production, including details of raw materials and final goods as well as details of suppliers and retailers and warehouses where goods are stored.
Stock registers would also have to maintain details of goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples.
“Every registered person shall keep the books of account at the principal place of business and at every related places of business mentioned in his certificate of registration and such books of account shall include any electronic form of data stored on any electronic device,” said the draft rules.
Further, once an entry is made in registers, accounts and documents, they can not be erased or corrected without attestation and if the registers are in electronic form, a log of every deleted entry would have to be maintained.
Meanwhile, a separate set of draft rules on advance ruling under GST proposes that the Centre and the State government will appoint an officer in the rank of Joint Secretary with at least three years of experience at the level as a member of the Authority for Advance Ruling.
Applications for advance rulings can be filed on the GST Network portal along with a fee of ₹5,000. Appeals against the advance ruling would entail a fee of ₹10,000. The draft rules for appeals and revisions that applications to the appellate tribunal can be filed online but physical hard copies of the application and a certified copy of the decision or order appealed would have to be submitted within seven days of filing of the appeal.
Appeal option
The draft rules have also prohibited providing additional information or evidence to the Appellate Tribunal during hearing of the case. In case they are not satisfied with the order of the Appellate authority or Tribunal, taxpayers can then appeal to the High Court.
Experts welcomed the move to allow electronic or digital maintenance of records and filing of appeals. But they said that the compliance burden would significantly increase.
“We will have to see the impact of the proposed move on the service industry and how it plans to maintain accounts showing the quantitative details of goods used in the provision of each service, details of input services utilised and the services supplied as it is now a mandatory norm under GST,” said Rakesh Nangia, Managing Partner, Nangia & Co, on the draft rules for accounts and records.
The CBEC has sought comments from the public on these draft rules by April 27 and these will be taken up for approval by the GST Council in its meeting on May 18 and 19.
KOLKATA: Gold may become costlier for Indians if the government accepts chief economic advisor Arvind Subramanian’s suggestion to put the yellow metal in the 12% tax bracket under GST.
With an import duty of 10%, tax on gold may turn out to be 22%, which will reduce its consumption in the physical form in the second largest gold consuming nation in the world.
At present, gold attracts an import duty of 10%. In addition, there is a VAT of 1% and an excise duty of 1%.“For a healthy development of trade, GST and import duty combined should not cross 12%; ideally, it should be in the range of 1012 %,” Shekhar Bhandari, business head for global transaction (banking and precious metals), Kotak Mahindra Bank, told ET.
Late last year, there was agreement on five broad GST slabs -0 (the exempted category), 5%, 12%, 18%, and 28%. While retailers and jewellers want the government to peg GST at 1.25%, keeping the customs duty intact at 10%, manufacturers and bullion dealers want a 6% GST and an import duty of 6%. Surendra Mehta, national secretary, India Bullion & Jewellers Association, reckons that import duty should be at 6% and GST should be 6%.
“If the tax incidence remains high, then there’s a propensity among people to evade tax. And that results in entry of gold through the illegal route which no government would like. Smuggled gold affects trade too,” Mehta explained.
Gold demand in the country fell 21.2% last year from the year before to 675.5 tonnes, according to a World Gold Council (WGC) report.
Arun Jaitley expresses hope that GST’s implementation from 1 July will be possible after the council approves the drafts of CGST and IGST laws
New Delhi: Moving a step closer towards implementing the goods and services tax (GST) from 1 July, the GST council on Saturday approved two crucial supporting legislations for this ambitious tax reform.
The GST council, in its eleventh meeting in New Delhi, approved the drafts of the central GST law (CGST) and the integrated GST (IGST) law. It will again meet on 16 March to clear the state GST law (SGST) and the union territory GST law (UTGST).
Once all the bills are passed by the council, the Union government will collectively take the bills to the Union cabinet for its approval. Subsequently, the bills will be tabled together in Parliament in the second half of the budget session.
To be sure, there are some minor changes that have been proposed in the drafts of the CGST and the IGST bills. The legal committee will make these changes and subsequently the drafts will be again circulated to the states in the next few days. The bills may then again come back to the council for its final nod.
In a press conference after the meeting, finance minister Arun Jaitley expressed hope that the implementation of GST from 1 July will be possible.
“Hopefully the laws will be in Parliament in this session. Once the GST council completes this round of legislative activity, then the work will start on fitment of goods and services into the various rate structures,” he said.
The IGST law, the CGST law, the UTGST law and the bill to compensate states for revenue losses arising from a transition to GST will require the approval of Parliament while the SGST law will require the nod of the state legislative assemblies.
West Bengal finance minister Amit Mitra said the demands of the states for sharing of administrative powers under the IGST act have been met. “The cross empowerment will not be done by notification, will be put in as part of IGST law. I am very happy since it was a demand of states,” he said.
Pratik Jain, indirect tax leader at PwC India said approval of CGST and IGST laws by the GST council is a decisive step towards implementation of GST from July 1 this year.
The telecom sector’s woes are expected to accelerate once the Goods and Services Tax is implemented in July. Given that the industry operates in 22 licensed service areas, it will be faced with multiple jurisdictions while paying GST. In order to avoid this the industry wants to be treated like banks where the revenues are aggregated in one place and then taxed because branches operate in different states.
In an interview with Moneycontrol, Rajan Mathews, Director General of Cellular Operators Association of India, said: “We pay our licence fee and taxes on a LSA (licensed service area) basis. So for the LSA of Delhi, there are three states (Uttar Pradesh, Haryana and Delhi). For Delhi, how many rates would apply given that Delhi is one service area? Similarly, place of origin is also an issue for SIM cards. Give us the same thing you allow for banks. We aggregate everything in one place if we are granted a central clearing mechanism.”
With the rollout of GST in July, the industry also fears that it is the rate of effective tax which will move up from the current 15 percent to 18 percent or more. The sector’s been lobbying hard with the government for lower rates since it is classified as an essential service. The industry has witnessed a sharp fall in profitability and revenues in the last two quarters and higher.
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NAGPUR: Though India has made rapid progress in utilization of modern technology, a lot more is needed to be done on this front so as to give economy a boost. Implementation of the Goods and Services Tax (GST) from next year will also help bring about all-round development of the country as it will generate more revenue, said MS Unnikrishnan, managing director and chief executive officer of Thermax Ltd, on Thursday.
Addressing aspiring entrepreneurs at Vidarbha Industries Association, Civil Lines, Unnikrishnan said that science creates technology which, in turn, creates commerce.
He said, “India is lagging behind when it came to creating new technology as we are losing out on a lot of opportunities to help the economy grow. We must think differently from what we have been till now. There are many opportunities that can be exploited if we are a little creative with our ideas,” he said.
He urged the start-ups to capitalize on technology to fill the void in industries. Taking his point forward, he elaborated on the concept of hydroponic farming, a method of growing crops without soil. The time has come to use water soluble nutrients and minerals which are required for terrestrial plants. He said that this method of farming will alleviate space on land as hydroponic plantations could be housed in multistorey buildings also. Financial aides like loan waivers and subsidies also add significantly to the annual expenditure, he said.
He added that such expenses may not be necessary in the future if the government provided proper skill training to people which in turn will boost innovation and propel business.
Unnikrishnan explained the nature of India’s economy which, according to him, is consumer-based.
“Most of what we manufacture here is consumed. What remains is exported,” he said, adding that the country is growing as a manufacturing base of the world and it will not be long before it overtakes China in production.
Unnikrishnan opined that demonetisation was a good move by the government. However, its implementation could have been better. Earlier, the government had printed notes in excess which became a new method of hoarding wealth after gold and land. He said, “The person who thought that Rs500 and Rs1,000 notes should be demonetised wanted to do good for the country.” He said that if notes are printed in surplus, it will lead to grave consequences.
According to Unnikrishnan, the government has a grand plan to cleanse the economy of which demonetisation was a part. With the implementation of GST from next year, the economy is likely to see increased growth.
“The government does not have a lot of money at the moment,” claimed Unnikrishnan. For every Rs100 we earn, we pay Rs8 in taxes, which is far less than figures in developed nations, he added. The government’s intention to link transactions with Aaadhaar card and digitisation will bring transparency in the system, Unnikrishnan added.
“Generating revenue through taxes is the only way the government can get money to build infrastructure which supports the economy,” he said.
These major changes in finance will create a lot of opportunities for businesses to flourish. The ecosystem for manufacturing is also evolving in Vidarbha, said Unnikrishnan.
GST council meet failed to arrive at any consensus on dual control issue.
The council has approved Central GST and state draft laws
The council has also agreed to a revenue sharing formula for the states losing out on income due to duties.
NEW DELHI:Finance Minister Arun Jailtey-led Goods and Services Tax (GST) council, on Friday, again failed to reach out atconsensus on contentious dual control or cross empowerment issue that deals with assessee jurisdiction. The meet failing to find any common ground on the issue has raised serious concerns about GST’s April 1 implementation date while the Finance Minister said that he was trying his best.
“I am trying my best (on deadline of April 1). I don’t want to hasten the process of discussion and don’t want to delay the implementation,” Jaitley said at a press briefing after the 7th GST Council meet ended.
“There was no issue raised on dual control today as we were working on legislations,” Jaitley said.
The council, however, agreed to a revenue sharing formula for compensating states losing out on incomes out of several state taxes.
“Center Goods & Services Tax (CGST) and State Goods & Services Tax (SGST) will be a reflection of one another. States will be compensated 100 per cent loss for 5 years,” Jaitley said while announcing that the council has also approved Central GST and State draft laws.
Jaitley said that the two principle issues that still remain before the Council are Integrated GST (iGST) and cross empowerment.
“In iGST, definition of territory of states is pending. And the division of authority between assessing authorities of Centre and states is pending. The two issues will be taken up together at the next meeting on January 3-4,” he added.
NEW DELHI: Demonetisation and uncertainty over the continuation of incentives for local production under goods and services tax are turning out to be a double whammy for smartphone makers, forcing them to slow down capacity expansion and pushing those considering fresh investment to the ringside.
The worry is primarily over the tax incentives that enticed them to build local capacities to make the maximum of the opportunities thrown up by the world’s fastest growing smartphone market.
Demonetisation was an unexpected and painful twist, but the companies expect the demand drought due to the current cash crunch to be temporary. Top Indian smartphone makers such as Lava, Intex and Micromax, which have moved a substantial portion of assembling capacities to India from China by investing hundreds of crores here, could be the worst hit if the duty differentials backing local production are discontinued under GST, said industry insiders.
“There is a stalling of investment in the mobile assembly space … players who were planning capacity expansion have stopped (proceeding with the plans), including us,” said Sunil Vachani, vice president of the Consumer Electronics and Appliances Manufacturers Association.
Vachani’s company, Noida-based Dixon Technologies, makes LED TVs, mobile phones and washing machines for brands such as Panasonic, Intex, Gionee, Godrej, Haier, Phillips and Anchor.
“The impact of demonetisation is temporary, but if differential duty is not there, there will be huge job losses, investments will go away and people who want to come for making components will also stay away,” he added.
Smartphone manufactures were among the first to respond to the government’s call for Make in India. The differential duty structure — tax on imported mobile devices is 11.5% more currently than that on locally made ones — created the bedrock for these companies to manufacture here. But there is no clarity now on how differential duty would be integrated with GST, the new all-encompassing indirect tax system which is expected to be rolled out in April.
The government has yet to give exact rate of tax on mobile phones under GST, like it has for white goods (28%) and cigarettes (40%). Manufacturers have approached the government seeking at least a 10% difference in duties under the GST structure to keep the investments flowing in.
International players that have set up factories in India, such as Foxconn, Flextronics and Salcomp, said investments were on, but according to company insiders, component suppliers that they were pursuing to come to India for creating a viable ecosystem were holding off their bets.
“Component makers in China that supply us are waiting for clarity on current developments,” said Sasikumar Gendham, managing director of Salcomp, the world’s largest maker of phone chargers with three plants in India. Hold-offs come at a time when the industry battles a sharp slowdown in demand, has been forced to cut production and benched or laid off employees due to demonetisation which forced people to put off discretionary spending.
Smartphone makers in India said they have no choice but to keep investing and expanding — albeit at a slower pace than before. They are telling suppliers to play the waiting game. “We may not meet our initial deadline of mid-2017 for the new plant but we’re not so worried because there isn’t that outlying massive demand to meet — for which the factory would be required — primarily due to demonetisation,” said a top executive at a leading Indian handset maker.
Industry experts said assembly of phones from imported semiknocked-down kits is the first stage that sets ground for higher value manufacturing in subsequent stages. But if incentives that created the basis of Make in India are removed, future progression will be equally deterred, they warned.
“If there is no assurance by the government that duty differential on mobile phones will be continued in the GST regime, there is a possibility of a serious setback to Make in India for mobile phones,” said Bipin Sapra, an indirect tax expert at EY. Any future investments potentially being planned by foreign players may also not come to India, he added.
An international contract manufacturer told ET that GST was its “primary concern”, which needed to be resolved on priority. Since introduction of the 11.5% duty differential between mobile phones made locally versus those imported, handset production in India nearly doubled to Rs 54,000 crore in 2015-16. Over the past 12 months, about 40 mobile phone manufacturing units have come up, which is set to raise local production by 75% to Rs 94,000 crore in 2016-17, the Indian Cellular Association has estimated.
In contrast, the high levels of import of mobile phones — the reason behind introducing Make in India — have come down by 4% last fiscal year to Rs 56,000 crore.
