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Karnataka CM Siddaramaiah seeks GST exemption on handmade products

Karnataka CM Siddaramaiah seeks GST exemption on handmade products

Karnataka Chief Minister Siddaramaiah on Thursday urged the central government to exempt handmade products from Goods and Sales Tax (GST) regime.

GST exemption on handmade products

“As handmade products are produced by millions of artisans across the country, the imposition of goods and service tax on them is having an adverse effect on their livelihood. The GST Council should exempt them from the new tax regime at its next meeting,” said Siddaramaiah in a letter to Union Finance Minister Arun Jaitley.

Terming the burden of Goods & Service Tax on artisans and rural households a critical issue, the Chief Minister said the Council should deliberate on it on priority and provide relief to them (artisans).

Under the GST, handmade products are taxed between 5-28 percent since the new tax regime was introduced on 1 July across the country though majority of them (goods) are produced in the rural and informal sector by millions of people.

The letter was written on a representation from the Gram Seva Sangh committee to the Chief Minister, seeking GST exemption on handmade goods made and marketed by producer cooperative societies and their federations in the country.

The committee consists of noted activists Ashish Nandy, Uzramma and Shyam Benegal among others.

“Exemption from GST will not only benefit a large segment of our rural population, but also give a boost to rural employment and sustainability,” asserted the letter.

State Agriculture Minister Krishna Byre Gowda is Karnataka’s representative on the federal GST Council, headed by Jaitley as its Chairman.

“The representation requires urgent consideration and a positive resolution,” added the letter.

On the Chief Minister’s assurance of the state’s support to the artisans’ demand for zero percent GST on handmade products noted Kannada theatre artist and social activist Prasanna broke his six-day ‘satyagraha’ (hunger strike) here on Thursday evening by sipping tender coconut milk.

Source: First Post
Items In 28% GST Rate Slab Needs To Be Pruned, Says Hasmukh Adhia

Items In 28% GST Rate Slab Needs To Be Pruned, Says Hasmukh Adhia

GST:Hansmukh

The number of goods in the highest 28 per cent GST slab would be brought down and a committee of officers will calculate the revenue impact before going in for further reduction in tax rates, Revenue Secretary Hasmukh Adhia said today.

“It is required, the fitment of rates which has happened is mainly based on excise and VAT,” he said when asked if the GST Council is considering pruning of the number of items in 28 per cent tax bracket.

Goods and Services Tax (GST), rolled out from July 1, has subsumed over two dozen taxes and has transformed India into a single market for seamless flow of goods and services. All goods and services have been fitted in the four-tier GST rate structure of 5, 12, 18 and 28 per cent.

Adhia said while fitting the goods and services in various tax bracket, the GST Council has taken into consideration only the excise duty and VAT rate applicable on those items prior to GST.

“There are industries where 95 per cent of production used to take place in MSME and all of them used to avail excise duty exemption. So that means the excise rate we have taken for that item is only theoretical in nature and actually we have done a substantial increase in the rate of that item.

“That way it is being pointed out that it is a theoretical rate which has been derived, there is a need for rationalisation. Instead of doing a piecemeal reduction here and there, we do need to look at the entire rate of 28 per cent,” Adhia said at a GST Townhall organised by CNBC TV18.

There is definitely a scope for rationalisation of rates but it will happen only after the fitment committee does a detailed calculations of its revenue impact.

“The fitment committee will have to look at how much revenue we got from this items from excise and VAT earlier before we agree to any further wholesale reduction of rates. If we find that revenue reduction is too much, we may have to do that in stages,” he said.

Adhia also said that in the last 30-40 days glitches faced by GST Network software has reduced and there would be no leniency shown on businesses for delayed filing of returns.

Asked if the government is planning to waive penalty for delayed filing of GST returns, Adhia said “it cannot be a consideration because the moment we say we will not take any penalty till March, the compliance rate will come down further. How can we say that file return whenever you want till March.”

Read: Government grappling to pinpoint reasons for low GST compliance

He said that any waiver, if at all is to be given, will be post facto. “It can’t be immediate. It is now absolutely essential that we bring discipline in businesses (for timely filing of returns)”.

As many as 55 lakh businesses had filed the initial GSTR-3B returns for July, the number was only 46 lakh who had filed final returns for the month.

Besides, 48 lakh businesses had filed initial GSTR-3B returns for August and till today morning 10 lakh businesses had filed 3B returns for September.

The government had earlier waived late fee for all taxpayers who could not file GSTR-3B for July within due date in view of glitches in GSTN portal.

With regard to bringing real estate within GST, Adhia said it would require that businesses can claim seamless credit of any taxes paid for a project.

“Now for that to happen, you will have to start taxing it from land itself. Land has to be part of GST. Now there are several issues connected with that. Issue of whether you want to put an extra GST on real estate while continuing with stamp duty. Stamp duty is a big source of income for state government,” he said.

Also Read: GST panel to meet MSME representatives in October end to ease tax rigour

Finance Minister Arun Jaitley had last week said real estate is a sector where maximum amount of tax evasion and cash generation takes place and the GST Council in its next meeting on November 10 will discuss bringing it within the fold of GST.

A 12 per cent GST is levied on construction of a complex, building, civil structure or intended for sale to a buyer, wholly or partly. However, land and other immovable property have been exempted from the GST.


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Source: ET

Government grappling to pinpoint reasons for low GST compliance

Government grappling to pinpoint reasons for low GST compliance

GST

Even more than 100 days after Goods and Services Tax (GST) kicked-in, the government is still trying to figure out the reason behind low compliance.

One of the biggest challenge for the government since GST’s implementation has been the issue of non-compliance as some assessees had difficulty in coping with it because it was a new system with a somewhat complicated return filing format.

Around 70 percent of the assessees under GST had filed detailed sales returns (GSTR1) for July, while about 64 percent did so for the summarised return GSTR3B in August.

Around 90 percent filed GSTR3B for July. There are 91.86 lakh tax payers who have fully transited to GSTN, out of which more than 15 lakh are not eligible as they have opted for the composition scheme that is meant for taxpayers with an annual revenue turnover threshold of Rs 1 crore.

While the government is currently conducting a survey to ascertain the reason for lower-than-expected return filing, but the rationale behind non-filing of returns could be completely different from what could be the obvious reason of a tendency to evade tax or a complicated tax return filing process.

Out of the total number of registered taxpayers, around 15-20 lakh assessees have been migrated to GSTN without being eligible, a senior government official told Moneycontrol.

“Poor compliance may not necessarily be tax evasion. For example, some tax payers who were registered under service tax regime have shut businesses. They have been automatically migrated to GST Network (GSTN), but they cannot de-register,” the official explained.

Currently, GSTN, the information technology (IT) backbone of GST, is working towards introducing a feature, which will enable businesses cancel their registration, if they decide or has already exited or wrapped up the business.

Read: GST panel to meet MSME representatives in October end to ease tax rigour

Under GST, an assessee can have nil taxes, but has to mandatorily file tax return.

According to experts, lot of assesses are not required to file returns because of a string of writ petitions.

For instance, legal services are under reverse charge mechanism (RCM) now and are not required to file tax returns. Such assessees would be waiting for an updated circular as the government has deferred RCM till March 31, 2018.

Reverse charge is a mechanism where the recipient of the good or service will have to pay GST, which is otherwise paid by the supplier. The charge is applicable on a registered dealer, if he buys goods from a dealer not registered under GST. However, the receiver of the good is eligible for input tax credit, while the unregistered dealer is not.

Also Read: GST composition scheme – GoM consensus on providing relief to small restaurants

“The main reason is not non-compliance. But lot of people have to be migrated out of GST. The predominant reason could also be that a lot of exempted suppliers will be out of the GSTN. They have been automatically migrated. The sheer drop in compliance is not only because of non-filing, but there could be other reasons also,” Abhishek A Rastogi, Partner, Khaitan & Co.

“There are a lot of exempted suppliers who have been automatically migrated to GSTN. They are not required to file returns. The system doesn’t allow them to de-register themselves,” Rastogi said.

If one weeds out ineligible tax payers, around 20 lakh payers would not be a part of the tax base, with very few defaulters, who may file returns later.

According to Pratik Jain, Partner and Leader Indirect Tax, PwC India, many dealers who have the GST registration but have nil turnover and hence have not filed the return.

“The government will have to investigate the reasons for low level of compliance and take corrective steps,” Jain said.


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Source :  Money Control
GST panel to meet MSME representatives in October end to ease tax rigour

GST panel to meet MSME representatives in October end to ease tax rigour

MSME GST

A five-member ministerial panel set up by the federal indirect tax body, the goods and services tax Council, will meet representatives of micro, small and medium enterprises (MSME) at its second meeting on 29 October to seek views on how to make compliance in the GST regime easier for them.

The panel tasked with suggesting ways of making the quarterly tax payment scheme for small businesses more attractive wants to consult SMEs to make its recommendations as broad-based as possible before they are placed before the Council to take a decision at its meeting on 9 November.

Read: GST composition scheme: GoM consensus on providing relief to small restaurants

The GST Council had at its last meeting on 6 October allowed firms with up to Rs1 crore annual sales to sign up for the quarterly payment scheme, up from the earlier Rs75 lakh and exempted inter-state service providers with sales up to Rs20 lakh from the need for GST registration. A similar relaxation is under consideration for the inter-state sale of goods without registration if turnover is below Rs20 lakh.

“The issues small traders were facing in the GST regime have been taken care of by the relaxations already announced at the last Council meeting. A lot of MSMEs with sales up to Rs1.5 crore, who, in the earlier regime had enjoyed excise duty exemption, have come under GST because of the Rs20 lakh sales threshold for GST registration. We want to consult small manufacturers on the issues they face in the new tax regime,” a person privy to the discussions in the panel said, on the condition of anonymity. The panel, which also looks into the taxation of restaurants, met on Sunday.

Read: Centre working on mechanism to speed up GST refund for exporters

The Council is taking extra care to resolve all the difficulties faced by the MSME sector because of its significant contribution to the economy and employment. According to data published by the ministry of MSMEs in 2011, the sector accounts for 33% of India’s manufacturing output and 36 million such enterprises employed more than 80 million people. Their contribution to the economy is believed to have gone up since.

The ministerial panel members are Assam finance minister Himanta Biswa Sarma, Bihar deputy chief minister Sushil Kumar Modi, Jammu and Kashmir finance minister Haseeb Drabu, Punjab finance minister Manpreet Singh Badal and Chhattisgarh commercial taxes minister Amar Agrawal.


GST Ready Invoicing Software – Generate GST Compliant Invoice

Source :  Livemint
Centre working on mechanism to speed up GST refund for exporters: C.R. Chaudhary Minister of State for Commerce & Industry

Centre working on mechanism to speed up GST refund for exporters: C.R. Chaudhary Minister of State for Commerce & Industry

GST Refund

The central government is working on mechanisms to further speed up the GST refund process for exporters, a minister said on Sunday.

“We are evolving a mechanism. We are trying to further reduce time for refunds,” Minister of State for Commerce & Industry C.R. Chaudhary told the media here on the sidelines of the inaugural session of the 186th AGM of the Calcutta Chamber of Commerce.

In a relief to exporters, the government recently announced that it would immediately refund exporters for the month of July and August through cheques from October 10 and October 18, respectively.

Also Read: Could the Government’s initiatives make GST a simple affair?

Following a GST Council meeting, Union Finance Minister Arun Jaitley told reporters that this would be an interim relief, and as a long-term measure e-wallets will be created for all exporters by April 1, 2018, to carry forward the refund process.

Chaudhary said large-scale reforms like GST will often lead to hiccups and inconvenience during inception but it will be beneficial in the long run.

“Rise in export data for September shows that initial hiccups of GST roll out is stabilising,” he added.


GST Ready Invoicing Software – Generate GST Compliant Invoice

Source : The Times of India
There should be no penalty on late filing until GST return gets smooth: GCCI officials

There should be no penalty on late filing until GST return gets smooth: GCCI officials

GST-Penalty

Gujarat Chamber of Commerce and Industry (GCCI) officials held a meeting on Saturday in the wake of the problem being faced by traders in complying with provisions of the goods and services tax . They said that unless the provisions regarding filing of GST return were smoothed, there should be no penalty on late filing of returns.

GCCI president Shailesh Patwari said that in view of the festive season, last date of filing GST return, which is October 20, should be extended till October 31. Instead, he said the authorities have started imposing penalty of Rs 4,200 per day for late filing from October 14 itself. “Genuine traders are willing to file returns in time but the online system is faulty and it take at least four hours to file one return which delays in uploading the return but penalty is imposed for not filing,” he said. He said the amnesty scheme for removal of VAT should be extended till December 2017

Read: Tracking the GST that you pay is now at your fingertips!

GCCI senior vice-president Jaymin Vasa said: “We are opposed to word ‘penalty’, because it is paid but not allowed as ‘expenditure’”. he said. He said the GST Council meeting invites should also be sent to trade representatives so that traders views should also be heard and considered. Waris Isani, VP of GCCI committee on GST/VAT said: “It is important to solve all procedural issues because of which genuine traders felt harassed.”


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Source :  The Indian Express
Rs 8,000 cr released to states for GST related revenue shortfall: Revenue Secretary

Rs 8,000 cr released to states for GST related revenue shortfall: Revenue Secretary

Hasmukh-Adhia-GST

There have been few national-level complaints over businesses tending to profiteer after the goods and services tax (GST) roll-out and so the proposed authority to check such practices might not be required, revenue secretary Hasmukh Adhia said on Thursday. In an exclusive interview with FE, he also said more than Rs 8,000 crore has already been released to the states for their GST-related revenue shortfall for July-August period, as “almost all states except one or two” have sought the constitution-guaranteed succour.

Calling invoice-matching the “heart” of GST, the official said it would have to start in right earnest sooner rather than latter, although the GST Council was still open to relaxing the schedule for filing the comprehensive returns (GSTR-1, 2 and 3) and concomitant invoice-matching after learning from the July cycle that is underway.

The review could mean that even larger businesses that are now filing returns on a monthly basis could get leeway to upload bills on the GST Network after longer intervals, say quarterly or half-yearly. Recently, the council allowed firms with a turnover below `1.5 crore (over 90% of the taxpayer base) to move to quarterly-filing mode from October.

Asked how much of the Rs 65,000 crore transitional credit claimed against input taxes (excise/service tax) paid in pre-GST regime was allowed against the claimants’ July GST liability, the revenue secretary said that these credits were difficult to segregate from the fresh credits for July purchases.

However, he added that the whole transitional claims will be exhausted “in six months” (starting July). “Some people may not have a big (tax) liability so they could continue (to utilise transitional credit)

for a few more months and reduce (government) revenue in the period to that extent,” he said.

Without hazarding a conjecture on the revenue potential of the GST in the present form, as “we may have to wait for at least six months” to make a reasonable conclusion, the secretary said the proposed rate convergence would not happen this year. On the highest GST rate of 28% (applicable on 19% of items under GST when it was launched in July; the rates were cut on a few subsequently) being pinching, he said: “We may move items from higher to lower tax slabs on the basis of certain principles enunciated in the approach paper approved by the council. A fitment committee will work on it and its proposals will be considered in the council.” However, he added that the council hasn’t yet started working on more rate cuts as the approach paper was approved only in its last meeting on October 6.

Asked whether it wasn’t a matter of concern that 40% of the 55 lakh businesses that filed the interim returns for July had paid nil tax, Adhia said it indeed was. “It is a large number. If enforcement is required, we will carry it out, but not in the nature of search and seizure. We may carry out discreet inquiries and hold meetings with such groups of taxpayers, trying to find out the reasons (for claiming no business activity).”

The official admitted that once invoice-matching is regularised, it could prove a bit painful for a couple of months or so (as deferment will have resulted in some accumulation), but the system will be a powerful deterrent to non-compliant suppliers as they “run the risk of being pushed out of business permanently”. “Such suppliers will be recorded and based on who is defaulting and how much, we will issue compliance rating to them. A buyer will then look at the rating and if it is bad, might decide not to buy from the seller. It is a self-policing system.”

Also read: Are businesses really facing problems or is it just another political stunt with GST?

Adhia hinted at the redundancy of dreaded Anti-profiteering Authority, considering the nature of complaints and their resolution so far. “Whatever (complaints) we have got are from restaurants and real estate and these too are small in nature. There are no national level complains as of now. If a state receives a complaint, it will be examined by the screening committee at its level and the complaint will come to the standing committee (at the Centre) only if the screening committee finds merit in it. The standing committee could refer the matter to the DG-safeguards which, upon probe, could refer to the authority,” he explained. The GST Council has cleared the setting up of the authority, but it is yet to be approved by the Union Cabinet, let alone take shape.

While about `15,000 crore has been collected via the GST cesses on demerit goods in the July-August period, the funds released to the states were lower at just over `8,000 crore. But Adhia hastened to add that the cess proceeds might not be in surplus. Because of the transition, states saw buoyant VAT revenues in July and almost the entire revenue shortfall for the first two months of GST was of August, he said, adding that cess revenue might even fall in the coming months.


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Source :  FInancial Express
After GSTN, e-way bills could be another IT disaster in the making

After GSTN, e-way bills could be another IT disaster in the making

GSTN failure to handle the flood of GST return filings raises serious doubts about the success of the e-way bill system for SMEs

E-way Bill GSTN

For small and medium sized enterprises (SMEs), the recent decision to defer the implementation of e-way bills may just be the calm before the storm.

The GST Council on 6 October decided that the e-way bill system shall be introduced in a staggered manner with effect from January 2018 and shall be rolled out nationwide effective April 2018. Once implemented, movement of goods worth more than Rs50,000 within or outside a state will require securing an e-way bill by prior online registration of the consignment.

To generate an e-way bill, the supplier and transporter will have to upload details on the GSTN (Goods and Services Tax Network) portal. Once an e-way bill has been generated, a unique e-way bill number (EBN) shall be made available to the supplier, the recipient and the transporter on the common portal.

The aim is to eliminate state-wise documentation, ensure faster transit of goods by reducing the number of check-posts across the country, and curb corruption.

However, GSTN’s failure to handle the flood of return filing invoices raises serious doubts about the success of the e-way bill system since it is completely automated.

Also read: GST Council to discuss bringing real estate under its ambit: FM

Some tax experts foresee another IT debacle, especially for SMEs.

“If the government wants to implement it, then a key pre-requisite will be to put E-way bill IT infrastructure in place and test it beforehand. Failing which, a situation like that of GSTN may arise, and that would add to woes of smaller companies which may not be technologically equipped. E-way bill mechanism adds a layer of compliance and if implemented without IT preparedness, then defeats the purpose of GST, which is to boost ease of doing business in India,” Abhishek Jain, partner, EY said.

As for rules, an EBN will be valid for one day for a 100km journey and one day each for each additional 100km. Validity is based on the distance travelled by the goods and is calculated from the date and time of generation of e-way bill. Some find this a hindrance making transport of goods within the city difficult.

Also read: Are businesses really facing problems or is it just another political stunt with GST?

“It is a real-time system with validity of the bill decided beforehand for a particular transaction. This could, in fact, add to transit time for smaller quantities of goods within a city. Larger players like us would manage to incur the cost, but for smaller entities, it is a huge challenge,” said Sunil Shankar, business head, LED panels and AC, Mirc Electronics Ltd.

Also, installation of a radio frequency identification device in transporter’s vehicle to map the soft copy of an e-way bill is an additional cost. Some see scope for it being misused by taxmen, who can interrupt journeys to verify the e-way bill and even physically verify the consignment.

“E-way bill implementation would give a state government free hand to harass companies, particularly in cases where the E-way bill validity may have expired due to failure of the system or change in destination,” Sunu Mathew, managing director of LEAP India said. LEAP India is a Mumbai-based supply chain solutions company and its clients include Mondelez, Coca-Cola, Flipkart, LG, Amul and Toyota.

Concerned over these issues, Anita Rastogi, indirect tax partner at PwC India, suggests that e-way bills should be scrapped. “In the pre-GST era, value added tax (VAT) rates differed from state to state, so there were cases when companies would transport goods from higher VAT to lower VAT states, but now with GST fixed on each product, that VAT arbitrage has gone. E-way bill is an outdated concept; it is like moving one step backward to the License Raj,” she said.

Also read: 46 lakh taxpayers file GSTR-1 as deadline closes: GSTN

Meanwhile, finance minister Arun Jaitley last week said that e-way bill software has been made functional in Karnataka on a pilot basis and the experience has been pleasant.

E-way bills would aid in formalizing India’s logistics ecosystem and reduce road freight pricing. But implementation without sufficient IT preparedness will be nothing less than a nightmare. For SMEs, who have just got relief from the tedious monthly filing of GST returns, it could be a case of out of the frying pan into the fire.


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Source :  Livemint
Centre cuts GST rates on oil exploration and production

Centre cuts GST rates on oil exploration and production

oil exploration & production GST

Setting the stage for inclusion of some of the petroleum products in the Goods and Services Tax regime, the government on Wednesday reduced GST rates for exploration and production sector to reduce the cascading effect arising on account of non-inclusion of petrol, diesel, aviation turbine fuel, natural gas and crude oil.

The latest move by the government comes after it reduced basic excise duty on petrol and diesel by Rs 2 per litre last week, following which governments of Gujarat, Maharashtra and Himachal Pradesh also reduced the VAT rates on petrol and diesel in their respective states.

Detailing the recommendations made by the GST Council in its 22nd meeting on Friday, the finance ministry in a statement said that GST rate on offshore works contract services and associated services relating to oil and gas exploration and production in the offshore areas beyond 12 nautical miles would be 12 per cent, lower than the earlier decided rate of 18 per cent. Also, transportation of natural gas through pipeline will attract 5 per cent goods and service tax without input tax credit or 12 per cent with full ITC as against the earlier rate of 18 per cent.

The finance ministry also said that GST on the import of rigs and ancillary goods imported under the lease will be exempted from IGST, subject to payment of appropriate IGST on the supply/import of such lease service and fulfilment of other specified conditions. Also, GST rate on bunker fuel has been reduced to 5 per cent, both for foreign going vessels and coastal vessels.

Notifications to give effect to these proposals will be issued shortly, the ministry said.

Also read: GST Council to discuss bringing real estate under its ambit: FM

Tax experts said that the GST Council should consider inclusion of some of the left out petroleum products for the complete benefit for the sector than taking these ad-hoc relief measures. “The much-anticipated issues in the oil and gas sector, because of exclusion of petrol, diesel, crude, natural gas and ATF, have started surfacing. The exclusion of these products from GST increases the cost of these products as input GST not being creditable against the sale of these products adds to the cost of these products. Further, excise duty / VAT payable on sale of these products is not available as credit to industries buying these products. Thus, it is a double hit,” Abhishek Jain, Tax Partner, EY India, said.

Jain further said, “It is encouraging to see various benefits being provided to this sector like lowering of excise duty and VAT rate (by some States) on petrol and diesel; reduction of GST rate from 18 per cent to 5 per cent (without credit) or 12 per cent (with credit) on transportation of natural gas through pipeline; reduction of GST rate on offshore works contract services related to oil and gas exploration from 18 per cent to 12 per cent, reduction of good and service tax on bunker fuel from 18 per cent to 5 per cent. However, instead of these ad hoc relief measures, it would be great if the GST Council uses this momentum to include these products into goods &service tax which would provide complete relief to this sector.”

Also read: Petrol Should be Brought Under GST, Reiterates Dharmendra Pradhan

Keeping petroleum products such as petrol, diesel, natural gas out of the ambit of the Goods & Service Tax has resulted in a cascading effect and higher cost in absence of input tax credit for upstream companies such as oil and gas exploration firms as well as for downstream refining companies.


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Source : The Indian Express
GST Council to discuss bringing real estate under its ambit: FM

GST Council to discuss bringing real estate under its ambit: FM

Finance minister Arun Jaitley said there is a strong case to real estate under the ambit of the GST, identifying it as one sector where the maximum amount of tax evasion takes place.

GST Council to discuss bringing real estate under its ambit

Identifying real estate as the one sector where maximum amount of tax evasion takes place, Finance Minister Arun Jaitley today said there was a strong case to bring it under the ambit of the GST.

The matter will be discussed in the next meeting of the GST, which will be held on November 9, in Guwahati, Jaitley said, while delivering a lecture at Harvard University.

“The one sector in India where the maximum amount of tax evasion and cash generation takes place and which is still outside the GST is real estate. Some of the states have been pressing for it. I personally believe that there is a strong case to bring real estate into the GST,” Jaitley said, while delivering the ‘Annual Mahindra Lecture’ on India’s tax reforms.

“In the next meeting itself, we are addressing one of the problem areas or at least (having) discussion (on) it. Some states want, some do not. There are two views. Therefore, by discussion, we would try to reach one view,” he said.

The finance minister said the move would benefit the consumers who will only have to pay one “final tax” on the whole product.

Also read: ‘Attempts to derail’ GST have failed: Arun Jaitley

“As a result, the final tax paid on the whole product in the GST would almost be negligible,” he said.

Jaitley said the reduction in eventual expenditure coupled with incentivising people to enter the tax net may also help reduce the size of “shadow economy”.

A 12 per cent GST is levied on construction of a complex, building, civil structure or intended for sale to a buyer, wholly or partly. However, land and other immovable property have been exempted from GST.

On demonetisation, Jaitley said it was a “fundamental reform” which was necessary to transform India into a more tax-compliant society.

“If you see the long-term impact of it, demonetisation brought in more digitised transactions; it brought the issue to the centerstage. It expanded the individual tax base. It compressed the cash currency by three per cent which was operating in the market,” Jaitley said.

“Those objectives are for the long-term. No doubt there are short-term challenges, but (necessary) for transforming India from a non-compliant to a more compliant society,” he said.

The finance minister said India had historically been one of the least efficient tax system in the world with an extremely small tax base.

Also read: Are businesses really facing problems or is it just another political stunt with GST?

“Frankly, over the last several decades, serious efforts, real efforts to expand this base had not been made. You had marginal efforts,” he said, adding that systematic efforts to challenge the “shadow economy” were made only recently.

“In the last few years, the bulk of the increase in tax payers has not been in terms of number of companies but individuals who are coming into the tax net,” he said.

Jaitley said some people had “misunderstood” the objective of demonetisation “which wasn’t to confiscate somebody’s currency”.

“Obviously if somebody has currency and deposits in the bank, it does not become lawful holding. They still have to account for it. Therefore, the anonymity which was attached to a cash currency came to an end and that holding got identified,” he said.

“The government was able to trace out about 1.8 million people whose deposits are disproportionate to their normal incomes. And they are all to answerable to the law and pay their taxes,” he said.

Jaitley is on a week-long stay in the US, during which he will participate in annual meetings of the IMF and the World Bank.


XaTTaX: Cloud and On-Premises Based GST Filing Software For India

Source: PTI