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GST Council working towards reducing tax rates: MoS Finance

GST Council working towards reducing tax rates: MoS Finance

The GST Council is working towards rationalising Goods and Service Tax (GST) rates,GST Council: sp shukla Minister of State for Finance Shiv Pratap Shukla said on Thursday.

A big announcement from the government regarding GST is imminent, he said at an event.

Currently, the GST has four rates of 5 per cent, 12 per cent, 18 per cent and 28 per cent.

The all powerful GST Council had, in its meeting in January, decided to slash the GST rate on 54 services and 29 items.

In its November 2017 meeting, the council had removed 178 items from the highest 28 per cent category while cutting tax on all restaurants outside starred-hotels to 5 per cent.

He further said the government is working to promote the growth of SME as it is an important sector to the economy including in output, employment and exports.

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Source: Business Today
GST likely to get centralised AAR for uniform rulings

GST likely to get centralised AAR for uniform rulings

India is looking at creating a centralised Authority for Advance Rulings (AAR) for the goods and services tax (GST) after divergent rulings on identical issues fuelled confusion over applicability and the rate of tax. A recent case in point being the divergent rulings by Karnataka and Maharashtra AARs on the issue of solar projects.

“We are looking at an issuebased central authority with officials from states and the Centre,” a top government official told ET. “If more than one appeal is filed on the same issue in different jurisdictions it can be taken up by this body.”

The AAR is a quasi-judicial body that allows assessees to get guidance on their potential tax liabilities relating to any transaction beforehand. The rulings by the AAR are case-specific, but they have a persuasive impact on tax assessment in cases of other firms under similar circumstances.

This is the key reason behind the government contemplating such a move. “AAR decisions are specific to the case, but they do have some precedence value,” the official said. The previous indirect tax regime had a centralised body ensuring consistency in orders.

Government Wary of Variations 

Maharashtra AAR ruled in a recent case that solar project contracts are “works contracts”, taxable at 18% as a deemed supply of service, instead of a “composite supply” that would have attracted 5%.

Karnataka AAR, on the other hand, reaffirmed in a case that engineering and procurement contracts are composite contracts and taxable at a concessional rate of 5%.

GST: Government Wary of Variations - AAR

The government is wary of such variation in rulings that could sow further confusion.

The structure of the proposed centralised authority will be decided once a decision is taken to set it up, the official said.

It may require a change in the GST laws and all the states would need to come on board.

Experts said the initial experience of the AAR mechanism in the case of GST has not been very encouraging for businesses and backed a centralised body for consistency. “On aspects like taxability of solar power plants, liquidated damages, exemption on sale by dutyfree shops at airports, etc, the authorities have taken a view which is not in line with the industry practice, globally accepted principles or government’s own intention while framing the laws,” said Pratik Jain, indirect taxes leader, PwC. “Further, there is likelihood of different states taking a divergent view on the same issue.”

Jain said there is an immediate need to have a centralised mechanism, either by changing the structure itself and bringing it at par with earlier central taxes or by building a control system under the GST Council’s aegis to ensure consistency and quality.

“Given that each AAR can potentially decide differently on an issue, it makes sense to create a central AAR which will take up issues where more than one AAR has been approached on a similar issue,” said Bipin Sapra, partner, EY.

“In such a scenario, a mechanism needs to be created where all AARs should be listed on the GST portal and in case of similar applications, the state AAR should refer it to the central AAR.”

India implemented GST on July 1 last year as to turn the country into a common market and erase interstate barriers.

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Source :  The Economic Times
Government Clarifies: No GST On Free Services Provided By Banks

Government Clarifies: No GST On Free Services Provided By Banks

Due to its complex nature, there is a lot of confusion about how Goods and Services Tax (GST) applies to the financial sector. Very few have had clarity on how personal finances are impacted by the new tax regime.

Finally, the government has issued detailed FAQs. No GST  In banking ServicesThe detailed clarifications on banking, insurance, and capital markets seek to address some pertinent issues relating to the industry such as levy of tax on free services as well as provide clarity to individuals. Below are a few of the clarifications:

GST on exit load of mutual funds
Exit load in the form of a fee (whether or not as a fixed percentage of the investment) is liable to GST. Even if the exit load is in the form of units in the fund, it may be concluded that the consideration received in money was later converted to NAV units.

The loan of one bank being taken over by another bank?
GST will be chargeable on any transaction processing fees levied for such takeover of loans, but not on the interest component (as interest is exempted).

Additional interest charged in case of default in the installment payment 
As per Section 15(2) of CGST Act, 2017, the value of supply includes, inter alia, interest for delayed payment of any consideration for any supply. Additional Interest charged for default in the payment of installment in respect of any supply, which is subject to GST, will be includible in the value of such supply and therefore would be liable to GST.

Charges for late payment of dues on credit card outstanding 
Goods and Services Tax applies to these charges. The exemption from levy of GST on interest specifically excludes interest charged on outstanding credit card balances as per serial no. 27 of the table of notification No. 12/2017-Central Tax (Rate) dated 28th June, 2017, as amended.

Banking services
According to the FAQs, automated tellers machines or ATMs will not constitute place of business and will not trigger GST registration, the government said. In case services are provided by multiple branches to a customer, the branch where the account is opened will pay GST and other branches will be deemed to provide services to the main branch. In case of import of gold, integrated GST will apply once, on import, and not again when it is appropriated by banks.

Insurance policies issued to Non-Resident Indians are liable to GST where payment is made from non-resident accounts in Indian rupees, according to the FAQs.

According to the FAQs, securitisation, future contracts, derivatives and forward contracts in commodities, unless entailing actual delivery of commodities, will however not be liable to this tax.

Source: ET


No change in the GST law and taxation relating to farmers since July 2017

No change in the GST law and taxation relating to farmers since July 2017

Ministry of Finance has stated that there has been no change in the GST law and taxation relating to farmers since July 2017, when GST was implemented. Support services to agriculture, forestry, fishing or animal husbandry are exempt from GST.

Such exempted support services include renting or leasing of vacant land with or without a structure incidental to its use. Thus, renting or leasing of land by farmers for agriculture, forestry, fishing or animal husbandry on batai (share cropping) or otherwise is also exempt from GST.No change in the GST law and taxation relating to farmers since July 2017

Centre clears double taxation under GST kept in bonded warehouses

Centre clears double taxation under GST kept in bonded warehouses

The indirect tax department has settled the issue of double taxation under the (GST) on GST kept in bonded warehousesimported goods kept in bonded warehouses and later cleared from there, which is a common trade practice in the country.

An earlier circular raised an issue of imposition of the Integrated GST (IGST) twice on such transactions. If a company imports goods and keeps these in a Customs-bonded warehouse, it has to pay IGST. And, again, when the goods are cleared for final sale.

Aditya Mody of Devashish Polymers said, “Hopefully, this should now benefit many players who were facing hardship due to this provision.”

Abhishek Rastogi, counsel for the petitioner and partner in Khaitan & Co, said the circular showed the government was actively taking steps to remove almost all issues raised before high courts through writ petitions.

Sources in the company said it was now likely to withdraw the petition from the high court, with the issue having been settled. However, the circular is effective from April 1 this year, raising doubts over tax issues prior to that date.

The sale of goods while being deposited in a Customs-bonded warehouse is a common trade practice, whereby the importer files an Into Bond Bill of Entry, and stores the goods in a Customs-bonded warehouse, the Board said. The goods are then supplied to another person who then files an Ex-Bond Bill of Entry for clearing the said goods from the Customs-bonded warehouse for home consumption.

According to provisions in the GST laws, IGST would be levied and collected in accordance with the provisions of the Customs Tariff Act, the Board added.

Thus, in the case of supply of warehoused goods, the point of the levy would be the point at which the duty is collected under Section 12 of the Customs Act, 1962, which is at the time of clearance of such goods.

The circular is effective from April 1 this year, raising doubts over the tax issues prior to that date.

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Source: Business Standard
Bringing auto fuel under GST could bring down prices by as much as Rs 29

Bringing auto fuel under GST could bring down prices by as much as Rs 29

Bringing petrol and diesel under the ambit of the Goods and Services Tax (GST) could reduce the prices of the two petroleum products by around Rs 29 in Mumbai, experts suggest, according to a report by The Times of India.petroleum-under-gst

The report cites experts and dealers as saying that if fuel is brought under the GST regime, at a rate of even 40 percent, the price of petrol will go down by Rs 29 while diesel could go down by Rs 14. Moneycontrol could not independently verify the report.

While the international crude prices have dropped, people in India are paying higher prices because of a progressive increase in taxes. While the Centre has increased excise duty by Rs 10 per litre, in Maharashtra, VAT and surcharge increased by Rs 6.97 per litre.

While its basic price for the oil companies fell by Rs 5.52 per litre in four years, people in Mumbai are paying a retail price of Rs 6.33 per litre more, the report claims.

Central excise duty on diesel has increased by Rs 11.77 per litre while VAT and surcharge has increased by Rs 1.84 per litre in the last four years.

Petroleum pricing expert and fuel dealer Kedar Chandak told the newspaper, “If the prime minister and states’ chief ministers decide to give up a certain amount of taxes to extend relief to consumers and transporters, they can replace the existing multi-layered transport fuel tax structure with GST.”

“It is all the more tempting for governments to do so because it is an easy way to fill state coffers,” a transport expert said, according to the report.

Petrol and diesel prices continue to soar and touched another peak on Friday. Petrol was hiked by 36 paise to Rs 85.65 per litre in Mumbai.

This is the 12th straight hike in a row. Diesel prices on the other hand, were hiked by 24 paise to Rs 73.20 per litre in Mumbai. Petrol prices in Delhi were increased by 36 paise to Rs 77.83 per litre and diesel by 22 paise to Rs 68.75 per litre.

Petrol prices have risen by Rs 11.02 while diesel has risen by Rs 7.27 in the past 12 days in Mumbai.

Petroleum Minister Dharmendra Pradhan had earlier said that the government will intervene to reduce prices while his colleague Nitin Gadkari said that subsidising petrol and diesel to bring down their retail prices will take money away from government’s social welfare schemes.

Source :  Money Control
Free banking services out of GST net: FinMin

Free banking services out of GST net: FinMin

Free banking services like chequebook issuance and ATM free banking services out of gst net finmin officialwithdrawals is likely to remain out of the ambit of the GST, a senior finance ministry official said.

The Department of Financial Services had approached its revenue counterpart to clear the confusion over the levy of Goods and Services Tax (GST) on some of the free services offered by banks to their customers.

“The revenue department is likely to tell the financial services department that GST will not be levied on free banking services,” an official told PTI.

Amid banks getting service tax notice for non-payment of the levy on free services, the Department of Financial Services (DFS) had approached the revenue department seeking clarity on whether such services would attract GST.

The DFS was of the opinion that services such as the issuance of chequebooks, account statements and ATM withdrawals are free up to a certain limit and not commercial activities which cannot be brought under the ambit of GST.

Read More: Expedite GST practitioners’ registration: CBIC chief

The Indian Banks Association (IBA) on behalf of the management of banks too had made representation to the tax authorities.

The service tax notice for period 2012-2017 was served as tax officials were of the view that banks were not offering ‘free services’ but actually charging customers by asking them to maintain a minimum account balance.

Every bank offers a different slab of minimum balance to customers, based on which some free services are provided.

GST was rolled out from July 1, 2017, prior to which central excise and service tax was levied on goods and services.

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GST – Eway bill: All you need to know and experiences

GST – Eway bill: All you need to know and experiences

India has just announced the launch of another major reform under the GST regime. E-Way Bill : GSTAfter an aborted attempt in February, the government has finally managed to successfully roll out the E-way bill system for tracking goods movement under the Goods and Services Tax (GST) from April 1, 2018.

Eway bill is not a new phenomenon. It was prevalent in most states under the erstwhile VAT regime in the name of road permit, Eway bill, etc. It was used to monitor the movement of goods to/ from a state in order to check tax evasion. An eway bill is typically required to accompany goods on their movement from consignor to consignee.

Earlier, way bills were subject to state-specific rules and had to be generated through different state-specific portals.

Under GST, E-way bill is governed by a uniform set of rules applicable throughout the country. It is generated electronically on the e-way bill portal.

Under GST, E-way bill is governed by a uniform set of rules applicable throughout the country. It is generated electronically on the e-way bill portal.

The e-way bill system creates a facility for transporters to raise complaints, in case a vehicle is detained for more than 30 minutes.

Read More: All you need to know about E-Way Bill System

However, some features of the new E-way bill vis-à-vis VAT way bill such as mentioning HSN on the E-way bill, limited validity etc. are not welcomed by businesses.

know about eway bill

The government, while proposing the idea of incorporating E-way bill under GST, had the intention of creating an effective tool for tracking movement of goods and ensure various benefits to the industry.

The steps included:

  • Abolition of check-posts
  • Seamless movement of goods within a state and across different state borders
  • Boost to India’s logistics ecosystem resulting in lesser traffic on major transportation routes
  • Reduction in transportation costs and lead time by replacing physical check posts with mobile squads

For every shipment of goods of the value of more than Rs 50,000 whether inter-state or intra-state, an E-way bill must be generated through an online portal, before the goods are shipped, and it should include specified details of goods, their consignors, recipients, and transporters.

The government is looking forward to implementing the E-way bill system across India in a phased manner latest by June 1, 2018, for both inter- and intra-state movement of goods.

E-way bill for inter-state movement of goods was implemented from April 1, 2018. Subsequently, E-way bill for intra-state movement of goods have also been introduced in Andhra Pradesh, Gujarat, Kerala, Telangana, Uttar Pradesh, Bihar, Jharkhand, Haryana, Himachal Pradesh, Tripura, and Uttarakhand.

While relatively smooth, there have been few challenges and concerns in the journey so far. For example, lack of functionality to update the details mentioned and acceptance of E-way bill by the recipient.

Extension of validity of E-way bill results in the generation of multiple Eway bill numbers against a single invoice, which could lead to duplication.

Further, the timeline provided for the extension, i.e. 4 hours before and after the expiry of validity, seems short. There is also no mechanism to track delivery and closure of transportation of goods on the portal.

The government has been working tirelessly to iron out the wrinkles in the process of implementation of the E-way bill system. In order to address these issues, the system should provide forthe modification of details entered in the E-way bill, an extension of validity without generation of new E-way bill number, facility to track the status, closure, and acceptance by the recipient of E-way bill and a reasonable time limit for extension of Eway bill.

For businesses with operations across the country, the system is likely to pose a fresh set of compliance challenges. Businesses having multiple movements of goods on a daily basis would need a software solution to generate the E-way bill in a timely manner and also enable reconciliation of E-way bill with the turnover.

The said solution should also enable tracking the E-way bills generated by suppliers of businesses so as to enable reconciliation of purchases with E-way bill. The same would ensure assistance during department audits and investigations.

E-way bill has already started gaining attention at the high courts in India. Recently, the Allahabad High Court held that seizure of the consignment of goods merely because the details of vehicles or the transport company were provided in handwriting after downloading of the e-way bill from the online portal is not tenable.

Also Read: Digital copy of E-way bill enough to give transporters right of way

The court also contended that since the invoices and the goods receipts issued by the transport company clearly indicate the details of the tax charged, the seizure is liable to be squashed. The importance was laid on the fulfillment of mandatory requirements provided under GST laws, and not on mere procedural lapses.

In another case, goods were moving locally between two offices of the same assessee without the state way-bill and were detained during transportation by the revenue officer. As soon as the assessee was informed of the non-compliance, assessee raised the Eway bill and submitted the same to the revenue officer.

On the filing of a writ petition by the assessee, the Kerala High Court held that detention of goods merely for infraction of the procedural rules in transactions, which do not amount to taxable supply, is without jurisdiction.

Both the aforesaid judgments show the clear intent of the high courts to protect the assessee from procedural non-compliances wherein government revenue is not impacted.

It will be interesting to see whether the state authorities will approach the apex court against the aforesaid orders.

An effective user-friendly E-way bill system has the potential to suppress the black marketing and check tax evasion. With the proposed daily capacity of 75 lakh E-way bills on the portal, businesses are hopeful that as more and more States are being brought under the ambit of intra-state E-way bill, the portal will have minimum downtime.

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Source: ET
Indian economic growth: IMF pegs India growth at 7.4 % for FY18-19

Indian economic growth: IMF pegs India growth at 7.4 % for FY18-19

The Indian economy is expected to grow at 7.4 per cent in the current fiscal and accelerate further to 7.8 per cent as it recovers from the impact of demonetisation and Goods and Services Tax (GST) rollout, the International Monetary Fund (IMF) said on Wednesday.International Monetary Fund (IMF)

Asia continues to be the main engine of the world’s economy, accounting for more than 60 per cent of global growth – three-quarters of which comes from China and India alone, as per IMF’s Regional Economic Outlook: Asia and Pacific (REO).

“But there are risks and challenges ahead, including from a tightening of global financial conditions, a shift toward inward-looking policies, and – over the longer run – population aging, slowing productivity growth, and the rise of the digital economy,” it said.

Asia is expected to grow at 5.6 per cent this year and next, it said, adding that the outlook was supported by strong global demand, as well as still accommodative policies and financial conditions.

“In India, growth is forecast to rebound to 7.4 per cent in FY 2018/19 as the economy recovers from disruptions related to the currency exchange initiative and the rollout of the new Goods and Services Tax,” it said.

China, IMF said, was projected to grow at 6.6 per cent in the current year that will moderate to 6.4 per cent next year.

GST: Economy Growth

Explaining low inflation

Noting that present rates of inflation in Asia were some of the lowest in decades, it said, it had seen some upward movement since September 2017 on the back of rising oil prices.

“But core inflation – which excludes food and energy – remains low and below target in many economies. In 2017, headline inflation on average was 0.6 percent lower than target in Asian advanced economies, and 0.8 percent under target in Asian emerging market economies,” it said.

The latest report explores why inflation has been so low. And it finds that first that temporary global factors, including commodity prices and imported inflation, have been key drivers of low inflation. But these factors could reverse, and inflation could rise.

According to the report, inflation has become more backward-looking, meaning that past inflation drives current inflation more than future expectations. This suggests that if inflation rises, it may persist.

“Further, there is some evidence that the sensitivity of inflation to economic slack has decreased [i.e., the Phillips curve has flattened], suggesting that if inflation rises, there may be a large hit to output when reducing it,” it said.

All of these mean that central banks should watch out closely for signs of inflation pressure now and stand ready to respond.

Source: The Hindu
GST Council Meet: FM and the council focus on GST Returns and Cess on Sugar

GST Council Meet: FM and the council focus on GST Returns and Cess on Sugar

Finance Minister Arun Jaitley-led GST Council will meet today to discuss a simpler return form and the GST Council : GSTN Arun Jaitleyamendments required in the indirect tax regime rules.

The 27th meeting of the Council, which is likely to have finance ministers of all states, will meet through video conferencing and also mull over the proposal of converting GSTN into a government company.

A decision on return simplification could be on the cards with the Sushil Modi-led Group of Ministers putting before the Council the three models of new return form for discussion, an official said.

With Jaitley been advised by doctors to stay in isolation to avoid contracting infection, the meeting has been planned through video conferencing. The Council had in March discussed on two models of GST returns and suggested that the GoM would work further simplification.

The official said the amendment to the law would also be taken up once the Council clears the new GST return format. One of the models presented before the Council was that provisional credit should not be granted unless the taxpayers file returns and pay taxes.

The second model stated that provisional credit could be granted to a taxpayer, but returns have to be filed within 3-4 months and taxes have to be paid or else the credit amount would be reversed.

After consulting the stakeholders, the GoM earlier this month worked out a third model for return filing as per which credit could be extended once the invoice uploaded by the supplier is verified by the purchaser on the GSTN portal.

Jaitley had earlier this month asked Finance Secretary Hasmukh Adhia to “examine the possibility” of converting GSTN into a majority government company or a 100 per cent government company. GSTN provides the IT backbone for the new indirect tax regime.

Currently, five private financial institutions — HDFC, HDFC Bank, ICICI Bank, NSE Strategic Investment Co and LIC Housing Finance Ltd — hold 51 per cent stake in GSTN, which was incorporated on March 28, 2013, in the erstwhile UPA regime.

The remaining 49 per cent stake is with the Centre and States.

Source :  The Times of India