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Central GST collection at Rs 3.26 lakh crore in FY’20: Anurag Thakur

Central GST collection at Rs 3.26 lakh crore in FY’20: Anurag Thakur

The Central GST collection so far this fiscal stood at Rs 3.26 lakh crore, which is around half the government’s target for 2019-20, Parliament was informed on Monday. “The Budget Estimates for Central Goods and Services Tax (GST) for 2019-20 has been fixed at Rs 6,63,343 crore. The actual net GST collection for the Centre till October 2019 in current fiscal year is Rs 3,26,490 crore,” minister of state for finance Anurag Singh Thakur said in a written reply to the Lok Sabha.

He said the shortfall or excess in collection of GST with respect to budget estimate, if any, is calculated after completion of financial year.

The minister was responding to a question on details of the shortfall in GST collections of indirect taxes until October this fiscal against the budgetary projections.

On direct taxes, the minister said that for 2019-20, the budget estimate is Rs 13,35,000 crore.

Between April-October, 2019 the net collection of direct taxes is Rs 5,18,084 crore.

When asked about the details of the revenue loss to the government on account of corporate tax rate reduction, Thakur said: “The likely revenue forgone due to the reduction in corporate tax rates has been estimated to be Rs 1,45,000 crore.”

On reasons for not cutting personal income tax rates, the minister said over the past years, the government has provided personal income tax relief to taxpayers taking into account the overall needs of the economy.

In reply to a separate question on the effect of slowdown on tax collection and fiscal deficit, Thakur said the revised estimates of tax collection and fiscal deficit are decided at the time of preparation of the budget estimate for the next year.

“The exercise for preparation of budget estimate for 2020-21 and revised estimates for 2019-20 is underway. At this stage, it may be premature to assess the revised estimate against the budget estimate for 2019-20 with respect to taxes,” he said.

The expected central taxes revenue for 2019-20 will be re-assessed and presented as revised estimate in the general budget, 2020-21, the minister said.

The recent initiatives undertaken by the government include basic tax exemption limit enhancement from Rs 2 lakh to Rs 2.5 lakh; increase in the limit for claiming deduction under section 80C of the Income Tax Act from Rs 1 lakh to Rs 1.5 lakh and standard deduction of Rs 40,000 for salaried taxpayers as well as pensioners.

Source: Times-Of-India

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Single rate, fewer exemptions in GST key to boosting India’s tax-to-GDP ratio

Single rate, fewer exemptions in GST key to boosting India’s tax-to-GDP ratio

India may be eyeing further reforms to lift the tax-to-GDP ratio after putting in place the goods and services tax (GST), one of the country’s biggest policy changes ever.

The tax-GDP ratio is expected to cross 12% in FY19, a new high in over a decade, but lower than emerging market peers. This means expanding a tax base that’s been eroded by large exemptions and carveouts. A simpler, non-adversarial tax regime can help in this regard.

“From all accounts, there is likely to be increasing pressure on government expenditure from 2019 onwards as competitive politics will compel enhanced spending on various social and agrarian sector areas,” said Sudhir Kapadia, national tax leader, EY India. “This would mean renewed efforts of broadening the tax base and enhancing revenues.”

One Nation, One Tax
GST created a seamless national market and ensured that consumers pay the same tax for goods and services. The GST Council has been making changes since the July 2017 rollout but deeper surgery may be needed.

An ideal GST means a single rate with negligible exemptions. In India, things are different because of political circumstance. Petroleum products, real estate, and liquor remain out of its purview and there are a plethora of rates. Kerala has been allowed to impose a 1% cess following the 2018 floods. The turnover threshold for goods was raised recently to Rs 40 lakh, but for services, it remains at Rs 20 lakh.

A GST 2.0 would mean moving closer to a single rate structure with fewer exemptions, bringing all sectors within its ambit and a simpler law. Any government will find it politically difficult to tax a Mercedes and salt at the same rate and it may also need to exempt a few items such as the latter altogether. But steps to reduce such divergence would be welcome. “This will require broadening of the tax base by getting petroleum and real estate in its fold, further simplification of tax rates, many legislative interventions and avoiding quick-fix solutions such as selectively restricting the input credit for a particular sector or accommodating state-specific changes, which dilutes the concept of ‘one nation one tax’,” said Pratik Jain, national indirect taxes leader, PwC.

A robust dispute-resolution mechanism and administration will help.

“Inclusion of petroleum products and the entire real estate value chain in GST should figure prominently in the agenda of the new government,” said MS Mani, partner, Deloitte, Haskins & Sells.

Use of the database to generate leads on tax evaders and rewarding honest taxpayers using the GST Compliance Rating tool will also generate more confidence among businesses, Mani said.
Direct taxes
Direct taxes, which saw a decadal high tax-GDP ratio of about 6% in the previous fiscal, need drastic simplification with minimal exemptions for individuals and businesses That would go well with the ambitious plan of the Central Board of Direct Taxes (CBDT) for jurisdiction-free assessment. A task force has been set up to draft a new tax code but a drastic reduction in rates may not be on cards.

“The main agenda for the new government is likely to be a renewed focus on streamlining processes and removing draconian provisions which have inadvertently crept into both the GST and direct tax laws,” said Kapadia of EY, adding that more likely than big-bang reforms would be the easing of processes and ensuring better compliance.

Raising Tax-To-GDP Ratio
The tax-to-GDP ratio for India has inched up slightly in recent years but remains well below the world average. The goods and services tax (GST) and demonetisation have helped but more measures may be needed to reduce evasion.

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Source: Economic Times
Direct tax collections surge, courtesy the biggest indirect tax reform — GST

Direct tax collections surge, courtesy the biggest indirect tax reform — GST

GST: direct tax collection

The government’s direct tax collection for the April-February period of the current financial year surged by 19.5% on-year to Rs 7.44 lakh crore, helped by buoyant corporate tax collections which rose more than personal income tax. However, one of the reasons behind the buoyancy in the direct corporate tax collections is India’s biggest indirect tax reform — GST (Goods and Services Tax).

According to latest government data, between April 2017 and February 2018, the net corporate tax collections surged 19.7% while the personal income tax collection swelled by 18.6%. While some of the growth in tax collections may be attributed to the growth in economy and rising compliance, it is also as a result of implementation of GST.

GST might have played a big role in the direct tax collection by putting a check on tax evasion, Naveen Wadhwa, DGM, Taxmann, said. “GST registration is integrated with Income-tax PAN and it has impacted the modus-operandi in which a business transaction is carried out. Such linking of PAN with Goods &  Services Tax has significantly stopped the tax evasion which, in turn, might have boosted the direct tax revenue collections,” Naveen Wadhwa said.

Earlier, Finance Minister Arun Jaitley too had alluded to the ripple effect of GST on growing the direct corporate tax collections. At a post-Budget event earlier this year, Arun Jaitley said that there is a curious relationship between the GST and direct tax. According to Finance Ministry’s observation, a lot of businesses have become a part of the formal economic system under GST, which has led to an impact on direct corporate taxes as well.

Also Read: 26th GST Council meeting likely on March 10; focus on simplification of return filing process

Moreover, massive rate rationalisation under the GST in past few months also led to an increase in the profitability of some companies, thus, increasing the amount of corporate tax. “… as the rationalisation happened in that (October-December) quarter, the corporate tax which was lagging behind suddenly moved up,” Arun Jaitley had said.

Meanwhile, few other factors helped too. The growth rate of direct tax collection “may be attributed not only to the economic growth but also the improving tax compliance and the rigorous collection approach adopted by the revenue department”, Gopal Bohra, Partner, NA Shah Associates said.

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Source: Financial Express
Direct tax collection rises 18.2% in April-December: Govt

Direct tax collection rises 18.2% in April-December: Govt

Direct tax collection- GST

The government on Tuesday said that the direct tax collections has jumped by 18.2 per cent during the first nine months of current fiscal at Rs 6.56 lakh crore. Direct taxes are made up of income tax paid by individuals, wealth tax and corporation tax paid by companies.

The Finance Ministry on Tuesday put out a statement saying: “The provisional figures of Direct Tax collections up to December, 2017 show that net collections are at Rs. 6.56 lakh crore which is 18.2 per cent higher than the net collections for the corresponding period of last year.” The net direct tax collections represent 67 per cent of the total budget estimates of direct taxes for FY2017-18 (Rs 9.8 lakh crore), the statement said.

The gross collections have increased by 12.6 per cent to Rs. 7.68 lakh crore during April to December, 2017. And in the same period, the government issued a refund of Rs 1.12 lakh crore. According to the Finance Ministry, the collection of advance tax has also gone up.

“An amount of Rs 3.18 lakh crore has been received as Advance Tax up to December 2017, reflecting a growth of 12.7 per cent over the Advance Tax payments of the corresponding period of last year,” the Ministry said.

While the country’s direct tax collection has seen rise, the indirect tax collection has been on decline for the last two months. Last year in December, the government released the indirect tax collection data for November.

In November, the GST revenue stood at Rs 80,808 crore, down from over Rs 83,000 crore in the previous month. Even in October, the tax collections were not in expected line. The GST for October had slipped by almost 10 per cent to Rs 83,346 crore as compared to Rs 92,150 crore in September.

Last year in July, India overhauled its taxation system by introducing GST for indirect tax collections. The first month revenue under GST was over Rs 95,000 crore, however, in August the figure came down to Rs 91,000 crore. Decline in GST collections could be attributed to multiple factors such as compliance and tax rate adjustments.

In November, the GST Council brought down the taxes on over 200 goods by 10 per cent. As many as 178 items of daily use were shifted from the highest tax bracket of 28 per cent to 18 per cent. Reports suggest that the GST Council is expected to meet on January 11 to deliberate on latest downward trend in revenue collection.

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Source :  Business Today
Scope for reducing GST slabs with more revenue, says Arun Jaitley

Scope for reducing GST slabs with more revenue, says Arun Jaitley

Arun Jaitley : GST

Finance minister Arun Jaitley says there’s scope to reduce slabs for Goods and Services Tax (GST). Reducing the tax slabs does make perfect sense. It would simplify the tax system: make it transparent, efficient and tax payer-friendly.

We currently have four slabs fixed for GST, a low rate of 5 per cent, two standard rates of 12 per cent and 18 per cent, and a high rate of 28 per cent. It would make sense to drop middling 12 per cent and 18 per cent rates and opt for 16 per cent as the standard rate to be levied on most items. It would also be desirable to reduce the peak rate.

Note that apart from the four-rate slab structure in the GST regime, we also have 0 per cent on certain items of mass consumption, 3 per cent on gold and jewellery, and additional cess on high-end consumption items like automobiles.

The government needs to put out a discussion paper on how it proposes to go about reducing the GST slabs and lowering the rates. The way forward is to have three slabs in the GST structure, and prune the rates at either end. We need to boost tax buoyancy, but also make sure that there is revenue neutrality.

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Tax revenue must of course not be adversely affected in the changeover to the new indirect tax regime.

The way ahead is to have 16 per cent as the standard GST rate, by fusing the two rates of 12 per cent and 18 per cent. It would reduce classification disputes and put paid to lobbying for reduced tax rates. It would also be as per international norms.

A couple of years ago, an expert committee report on the revenue neutral GST rate noted that the standard rate in the high-income economies was estimated at 16.8 per cent. A standard rate of 16 per cent would also be in line with the rates of taxation in ancient India.

As per Kautilya’s Arthashastra, the median tax rate mentioned in the treatise was 16.33 per cent. So a standard rate of 16 per cent would be in line with current history and also reflect the going rates from over two thousand years ago!

The low GST rate of 5 per cent may also need to be pruned to 4 per cent. That on gold can well be nudged to 4 per cent (instead of 3 per cent at present), so that most products are covered under the two rates of 4 per cent and 16 per cent. In tandem, there’s the need to have somewhat lower tax on luxury goods and high-end consumption items.

The peak GST rate of 28 per cent needs to be purposefully reduced. Given that the peak direct tax is proposed to be reduced to 25 per cent, it would make sense to likewise reduce the highest indirect tax slab from 28 per cent to 24 per cent. So the three tax GST slabs can be structured as follows, 4 per cent, 16 per cent and 24 per cent.

In parallel, we need to modernise the indirect tax structure for petroleum products. Such products provide bountiful tax revenue of about Rs 5 lakh crore to the exchequer, and for the most part, remain outside the GST regime. Instead of taxing petro-products to the hilt, the tax base clearly needs to be widened. We must not depend heavily and disproportionately on just one revenue item: oil.


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Source :  The Economic Times
History of Indian Tax Structure

History of Indian Tax Structure

Introduction – (History)

The Income Tax was added in India for the first time in 1860 by using British rulers following the mutiny of 1857. The duration between 1860 and 1886 turned into a length of experiments inside the context of Income Tax. This duration led to 1886 whilst first Income Tax Act came into lifestyles. The pattern laid down in it for the levying of Tax maintains to perform even today although in some modified shape. In 1918, another Act- Income Tax Act, 1918 changed into surpassed, but it became quick lived and become changed by way of Income Tax Act, 1922 and it remained in lifestyles and operation until thirty first. March, 1961.

The previous Taxation Structure of the us of a played a completely vital function inside the running of our economy. Some time again the emphasis become on better charges of Tax and more incentives. While designing the Taxation shape it must be seen that it is in conformity with our financial and social objectives. It needs to know not impair the incentives to non-public financial savings and investment float and on the other hand, it ought to not result in lower in sales for the State.

In our beyond day, financial system structure Income Tax played a critical function as a source of Revenue and a degree of removal economic disparity. Our Taxation shape affords for Two forms of Taxes: – DIRECT and INDIRECT.

indian tax structure

There are one of a kind varieties of taxes; they’re as follows:

Direct Tax

  • Income Tax: This is one of the most not unusual sorts of tax and maximum of you will be familiar with it. This tax is deducted immediately from your income in case yornings exceed the taxable limit.
  • Capital Gains Tax: This tax is levied if you sell your house, bonds, stocks, rings, or something that gives you earnings. The profit can be calculated by way of deducting the entire quy you get through selling your asset and the quantity you paid for it. You must pay tax on the income.
  • Securities Transactions Tax: When you purchase or promote an inventory form the percentage market, you need to pay the Securities Transaction Tax. This tax is imposed by means of the Government because the general public who earn their income from the share market do no longer declare their property. As a result, they can avoid paying capital advantage tax, as the government can levy tax simplest on the inchey earn if these are not declared. Securities Transactions Tax or STT is levied on derivative gadgets, fairness stocks, fairness orientated mutual budget and many others.
  • Perquisite Tax: Perquisite Tax (in advance Fringe Benefits Tax or FBT) is levied to employees for the non-monetary blessings given to them by mea their employers. For instance, in case your organization offers you non-monetary advantages life a rented condo, an automobile with a driver, you’ll need to pay tax for it. This tax turned into in advance borne with the aid of the employers
  • Corporate Tax: These taxes are paid by the businesses to the Government of India and it’s far levied on the earnings of the corporation. Apart shape the company tax, additionally, they ought to pay different types of taxes.

Indirect Tax

  • Sales Tax: When you buy any commodity, you have to pay its cost price plus the sales tax. The manufacturer then pays the tax to the Government. In India this kind of tax is paid to both the state government (Sales Tax) and the central government (Central Sales Tax). The Sales Tax is levied only on the intra-sale of commodities (sale within one state). The Central Tax is levied for interstate sales (sales within states). Apart from the Sales Tax, there may be additional tax that can be levied on the sale of a commodity.
  • Service Tax: When you avail offerings you have to pay tax on it and that is known as Service Tax. This tax becomes brought in 1994 and is now relevant on every kind of services, besides the bad listing of services and is applicable in all of the states, except Jammu and Kashmir. Some of the services for which you have to pay taxes consist of, marketing, splendor saloon, fitness care, monetary services, and so forth.
  • Customs Duty and Octroi: This tax is levied on the goods imported into the u. S. A. In addition to the goods which might be exported to some other overseas use. It is charged atthe access point of the united states like airport, docks and many others. The Octroi Tax is levied for goods which might be transported from one municipality to another.
  • Excise Duty: The Excise Tax or the Central Value Added Tax (CEVAT) sort of assessment is collected on the products that are created inside the nation.
  • Anti Dumping Duty: When goods are exported from one use to any other at a price this is decrease than the real charge of that commodity, then the authorities charge anti-dumping duty tax on it.

Other Taxes

  • Professional Tax: If you are a running in a personal corporation, you need to pay this tax and it’d be deducted by your employer from your profits. The fee of this tax may also range from one nation to another.
  • Municipal Tax: You should pay this tax to the municipal enterprise in case you own a belonging.
  • Entertainment Tax: When you purchase tickets to watch a motion picture or a show, display, you have to pay Entertainment Tax for it.
  • Stamp Duty, Registration: When you purchase a property, you have to pay this expense notwithstanding the value consistent by the dealer, on the off chance that you need the advantages exchanged at your call.
  • Gift Tax: If you get a present that is additional than Rs 50,000 out of a year, you’ll must pay exhibit to assess for it.
  • Toll Tax: You should pay this duty in the event that you utilize the framework simply like the streets, thruways and numerous others. To save them eventually.

Some different types of expenses comprise of preparing charge, profit circulation assessment and riches impose. Different sorts of duties have developed as an imperative a piece of change of a kingdom. These expenses help in the execution of various fiscal approaches to advance the development of a nation. So they help in giving monetary soundness and ffurthermore,for the most part, ave a tendency to diminish the joblessness rate in a natural. In spite of the fact that people whine roughly paying expenses, a very much arranged tax assessment gadget is very basic for a vocal specialist.