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GST Council yet to reach, decide on rate cut for auto sector: Anurag Thakur

September 6, 2019 admin Comments 0 Comment

The GST council is yet to reach a consensus on 10 per cent rate (from 28 per cent to 18 per cent) cut for automobiles, as some of the state Finance Ministers are against the proposal. “We are open to taking it to the Council but most decisions there are taken unanimously. I would like the industry to also reach out to individual State finance ministers who are also part of the GST council,” Minister of State, Finance, Anurag Thakur said.

“This government is with you and we will do whatever it takes,” he said at the 59th Convention of Automotive Components Manufacturers Association of India (ACMA) here.

Some States including West Bengal, Tamil Nadu and Kerala are against the GST rate cut. Any rate cut on GST has to be first approved by the GST fitment committee and then sent to the Council at the next meeting. The fitment committee is expected to meet today.

Till all the States agree to the proposal, GST Council is unlikely to take up the rate cut for automobiles. The Council is scheduled to meet on September 20 in Goa.

Minister of Road Transport and Highways Nitin Gadkari had assured the auto industry, on Thursday, that he will push for reduction in rates with the Finance Minister.

Meanwhile, Thakur also said that the government is doing its best to help the auto industry and have taken some good decisions in the recent past. “In the first meeting to address the economic slowdown, on August 23, we listed a number of initiatives to help the automotive industry. That shows that we treat this industry on priority. If you take one step from your end, I can assure you we will take four steps from our side,” Thakur added.

Festive season demand

The auto industry is also voicing together for help from the government so that the festive season get some traction. “In order to get out of the current crisis and not miss the festive season, we require clarity from the government, here and now, on GST and scrappage policy,” Guenter Butschek, Managing Director and Chief Exective Officer, Tata Motors said.

“If the government does not believe, for whatever reasons, that it will not be able to reduce the GST, then actually let us know it here and now, loud and clear. Because that’s the customer expectation at this point of time, and it’s the reason why we currently see lots of cancellations of bookings. Why we actually see empty showrooms is because of the fact that customers expect there is a better deal coming, if not tomorrow then after September 20,” he added.

Source: The-Hindu-Business-Line

Govt. looking at export sops, GST incentives for auto sector

September 6, 2019 admin Comments 0 Comment

Offering some solace to the crisis-hit auto industry, Road Transport and Highways Minister Nitin Gadkari on Thursday assured ‘full’ support from the government to help overcome the free fall in vehicle sales. He said the Centre was looking at steps, including export sops and GST incentives, to help create demand in the sector.

“As far as the present economic data is concerned, automobile sector is facing a slowdown because of the global economy… because of demand and supply. The government is with the automobile sector,” the Minister said at the 59th SIAM annual convention.

The Minister also clarified that the government did not intend to ban ICE (internal combustion engine) powered vehicles.

He, however, added that the government would promote the use of alternative fuels and electric vehicles to tackle issues of a high crude oil import bill and pollution. Thursday’s statement comes as a relief for the industry, given that it was Mr. Gadkari who had in 2017 asked car makers to move to electric or they would be “bulldozed” into doing it.

Mr. Gadkari also promised to take up the industry’s request for a GST cut with Finance Minister Nirmala Sitharaman. “The industry’s demand for reduction in GST is understandable. I will take your suggestion [to reduce GST] to the finance minister… even if it can be done for a limited period of time. I will follow this up. This sector needs help at this time and that help should be in such a manner that it helps increase sales,” he said. Noting that the GST on electric vehicles had been reduced to 5% from 12% earlier, he said the government was mulling to extend the same benefit to hybrid vehicles.

Any decision on GST on automobiles would be taken up for discussion at the upcoming meeting of the GST Council on September 20. However, the industry is seeking an early solution as they fear that customers would defer purchases anticipating further reduction in prices.

Mr. Gadkari also said that his Ministry would award 68 road projects worth about ₹5 lakh crore in the next three months, which, in turn, would help generate demand for commercial vehicles.

SIAM president Rajan Wadhera sought introduction of a scrappage policy and a nodal Ministry for the industry, in addition to GST cuts. CII president designate and MD and CEO of Kotak Mahindra Bank Uday Kotak said that there was enough liquidity in the banking system to finance any form of vehicle.

Source: The-Hindu.

GST shortfall may turn into next worry for the Centre

September 5, 2019 admin Comments 0 Comment

The sluggish growth in goods and services tax (GST) revenue receipts, unless reversed quickly, could poke a ₹40,000 crore hole in central government finances by the end of this fiscal, analysts warned on Wednesday, even as a private survey showed India’s services sector growth lost steam in August from a month ago.

An analysis of GST revenue trend Credit Suisse shared on Wednesday said growth in collections in the first five months of the fiscal has been 6.4%, well below the 10% estimated for the year. If this pace is maintained for the full year, the shortfall could be ₹40,000 crore, all of which may be borne by the central government, considering that states have been guaranteed 14% annual revenue growth under GST laws, the analysis said. The Centre compensates states for their revenue shortfall using collections from a cess on GST imposed on products such as automobiles. GST receipts which had touched ₹1.13 trillion in April could not sustain that growth subsequently.

“The rules are not clear to us, but if compensation needs exceed (the) cess collected, the extra funds would go out from general fiscal expenses. While this is just a Centre-state allocation issue, it can have a negative growth impact,” said the Credit Suisse analysis.

Finance minister Nirmala Sitharaman, who has already announced several steps to improve business confidence and boost growth, on Wednesday consulted infrastructure sector representatives on ways to stimulate growth. The tight fiscal position, however, reduces the government’s headroom for offering fresh sops.

The cooling down of the economy could hurt the central government’s fiscal health, a worry accentuated by fresh data on Wednesday. The services sector, which accounts for more than half of India’s $2.7 trillion economy, lost momentum in August, according to IHS Markit, a market information supplier. The IHS Markit India services business activity index, which tracks 400 businesses across various industries including transport, information, communication, finance, insurance and real estate, retreated from 53.8 in July to 52.4 in August, signalling a slower rate of output growth, the company said in a statement. A reading above 50 indicates expansion.

The survey, which collects data from businesses in the second half of every month, pointed out that all sectors it covered, except realty and business services, showed sustained growth. IHS Markit’s composite PMI output index showed expansion for the 18th month in a row, but at 52.6 in August, the expansion was slower compared to 53.9 in July.

“The weaker PMI readings for India’s service sector match the trend noted in the manufacturing industry, bringing unwelcome news of a cooling economy halfway through the second quarter of FY20,” said Pollyanna De Lima, principal economist at IHS Markit. Earlier in the week, IHS Markit survey showed India’s manufacturing output in August grew at the slowest pace in 15 months.

News of slower growth in services sector follows data earlier this week showing eight infrastructure industries slowed to a 2.1% expansion in July, down from a 7.3% growth in the year-ago period. Asia’s third-largest economy expanded 5% in the June quarter, the slowest pace in six years.

Credit Suisse said states received ₹6.5 trillion in GST revenue in FY19, including central government compensation, which, with a 14% growth, would touch ₹7.4 trillion in FY20. If this increase of ₹90,000 crore is not seen in aggregate GST collection, the Centre’s GST take would see a decline in FY20, Credit Suisse said.

Reuters reported, citing unnamed government officials and advisers, that the government may miss its 3.3% fiscal deficit target for the current financial year, despite receiving an additional dividend from the RBI. The gap between receipts and spending, which is met through borrowing, could go up to 3.5% of GDP, the report said.

Source: Live-Mint

Govt mulls GST rate cut for some sectors, assesses revenue impact

September 5, 2019 admin Comments 0 Comment

Amid increased pressure from the industry to reduce GST rate to boost demand for products like automobile, the government is assessing the impact on revenues if GST rate is reduced for some products. The GST Council, that decides GST rates, will have its next meeting on September 30 in Goa.

Currently, items like automobile, tyres, cement, air conditioners and large LCD televisions are in the 28% bracket. Automobiles also bear a cess, depending on the size of the vehicle, which increases the total tax incidence further.

According to a report in a leading business daily, the fitment panel is expected to meet shortly to consider suggestions given by some states as well as industry. The fitment panel comprises central and state officials.

“Issues are being examined in detail… Numbers are also being looked at,” the daily quoted an unnamed govt official as saying. According to the publication, some states favour GST rate cut for the auto and cement sector to boost demand for the products. Some state policymakers are of the view that a more radical view of the rate structure needs to be taken, for instance merging the 12% and 18% slabs into one.
The daily said while Punjab and West Bengal are in favour of reducing GST for automobile to help revive the economy, Kerala is opposing any such moves.

Worth mentioning here is that the Indian economy grew at 5% in the April-June quarter, a 25 quarter low. Private consumption expenditure slowed to 3.1%, an 18-quarter low, while manufacturing grew 0.6%. The auto sector, which is currently witnessing its worst-ever slowdown in a decade, contributes nearly 50% to the manufacturing output. So revival of the sector is crucial to boost economic growth and achieve the govt’s $5 trillion economy target.

So far, private consumption has been supporting GDP growth. But with private consumption expenditure falling to 3.1%, any revival plan hinges on Indians loosening their purse strings during the festive season, which is when the bulk of sales take place traditionally.

Tax experts say a reduction in GST rate does not necessarily lead to a reduction in collections as they stoke demand as well. “Given the economic slowdown, there is certainly a case for reduction in rates for a few sectors such as auto,” the business daily quoted Pratik Jain, national leader, indirect taxes, PwC, as saying. “This has been done in the past and worked more often than not. Of course, this has to be backed up with other economic stimulus (measures) as well,” he added.

For sectors such as real estate and railways, where input tax credit is restricted, there is a case for reduction in rates on key inputs, he said.

Source: Times-Now

Sitharaman to propose GST cut on automobiles

September 3, 2019 admin Comments 0 Comment

Finance minister Nirmala Sitharaman on Sunday said the central government would take a proposal for lowering the goods and services tax (GST) rate on automobiles to the federal indirect tax body, the GST Council, to provide relief to an industry facing a crippling demand slowdown.

The minister, who briefed reporters in Chennai about the government’s efforts to arrest the economic downturn, said a decision on reducing tax rates on automobiles was not entirely in her hands as matters of indirect taxation were now entrusted to a federal body.

“It (the proposal based on industry demand) has got to go to the GST Council, where all state finance ministers assemble. It is for them to take a call. I have suggested to them (automobile makers) that I will take it to the council, but the final decision will be theirs… I will wait for the GST Council to take a call,” the minister said. The council is expected to meet in Goa on 20 September.

Sitharaman also said that the government’s efforts to promote electric mobility should not be misconstrued as promoting electric vehicles at the expense of those powered by internal combustion engines. “All vehicles will have their due market share. It is not that we are promoting one segment of the industry at the expense of another,” said the minister. She also said feedback received from industry about measures announced so far to support growth was positive.

Source: LiveMint

Traders want GST norms to be further simplified

August 30, 2019 admin Comments 0 Comment

Shortly after the Union finance minister Nirmala Seetharaman announced measures to help businessmen combat recession, city-based traders are demanding more benefits.

They are of the view that the norms governing the GST should be further eased and the government should take steps like making tax payments under the GST on quarterly basis for small industrialists.
Recently, the tractor parts manufacturers and traders association (TPMA), Ludhiana, organized a meeting with Pawan Garg, deputy excise and taxation commissioner (DETC), Ludhiana, and expressed their concerns.

Vijay Dadu, president, TPMA, said: “We are thankful to the Union government for understanding the situation of businessmen and taking steps in the right direction to revive the economy. But as far as small industries are concerned, there is still a scope of taking more steps which can give them a breather like simplifying the taxation system, particularly the GST, and depositing tax on quarterly basis for small industries.”

Dadu said: “We have had a cordial meeting with Pawan Garg and apprised him about all the problems being faced by the businessmen and which should be addressed at the earliest. If the taxation system is made more easy and simplified then the businesses will bloom. This will not only benefit the businessmen, but the government too since the revenue will also rise.”

Anoop Saggar, chairman of the TPMA, said: “The recession in India is getting more serious day by day and the situation is becoming more challenging for us. At this hour of distress, it is only the government from where we have hopes. The government should consider reducing the rate of interest on loans to small businesses. Even a small step like this can bring a lot of change. At the same time, businessmen should also try and adopt modern techniques which can help them in cutting down the labour and production cost.”

Meanwhile, the TPMA also conducted its annual general meeting on Sunday where the present committee presented details of the works done under their tenure.

Source: Times-of-India.

Abolish GST on maintenance charges of apartments’

August 26, 2019 admin Comments 0 Comment

The Visakhapanam Apartment Residents’ Welfare Association (VARWA) has urged Union Minister of State for Housing and Urban Affairs Hardeep Singh Puri to abolish GST on maintenance charges of apartment complexes, saying that it is adding to the burden of residents.

Referring to the Finance Ministry’s recent clarification, VARWA general secretary B.B. Ganesh said apartment owners need to pay a GST of 18 % if their monthly maintenance charges to the Residents’ Welfare Association (RWA) exceed ₹7,500 per month and even otherwise, the RWA should pay GST at that rate, if its turnover exceeds ₹20 lakh per annum.

Maintenance charges are collected by RWAs for meeting common expenses such as wages to security guards, sweepers, cleaners, gardeners, telephone and intercom service, electricity charges, municipal water, house-keeping, repairs and maintenance and etc., he said.

‘Additional burden’

“The RWAs pay GST on common expenses through the telecom service provider, intercom provider, man power agency and etc. Levying it on maintenance charges leads to double payment by apartment owners. GST on maintenance charges is taxing internal services of apartments many of which are supposed to be provided by civic bodies or government departments. But, the RWAs are providing them,” Mr. Ganesh contended.

Many people live in apartment complexes and gated communities for higher security and other services which are being provided by the RWAs. Paying charges for these would entail higher maintenance charges which in turn would bring RWAs into GST bracket, Mr. Ganesh said in an appeal sent to the Minister.

He said some apartment complexes provide shelter exclusively to senior citizens charging high amounts towards maintenance and it is unjust to levy GST on them, he opined. Mr. Ganesh sought the Minister’s intervention to ensure that GST on maintenance charges of apartments is abolished or at least senior citizens are exempted from it. He urged the Minister to take up the issue with the Ministry of Finance. Besides the rate of GST on maintenance should be reduced from 18 % to 5 %, he requested.

Source: The-Hindu

GST Council trims rate on EVs to 5% in bid to boost electric mobility

July 29, 2019 admin Comments 0 Comment

The Goods and Services Tax (GST) Council on Saturday decided to slash tax rates on electric vehicles (EVs) and chargers in a bid to encourage the adoption of eco-friendly mobility solutions.

The GST rate on EVs was cut from 12 per cent to 5 per cent, whereas for EV chargers, it was reduced from 18 per cent to 5 per cent. The Council also exempted the hiring of electric buses by local authorities from the GST, according to an official statement. The new rates will be effective from August 1.

The 36th meeting of the GST Council on Saturday, held via video-conferencing, was the second one for Finance Minister Nirmala Sitharaman as its chairperson.

The rate reduction will not have any significant impact on the government’s revenue, as the sector is yet to take off. “Only about 8,000 EVs were sold last year, as against close to 4 million non-EV passenger and commercial vehicles. Therefore, there may not be any impact on the revenue, at least in the immediate future,” said a government official.

The Narendra Modi government has committed to gradually doing away with fossil fuels and moving towards renewable energy. For that, it has been doling out incentives for clean energy, particularly EVs.

GST Council trims rate on EVs to 5% in bid to boost electric mobility In her maiden Budget on July 5, Sitharaman had announced an income-tax deduction of up to Rs 1.5 lakh on the interest paid on loans taken to purchase EVs, besides exemption from Customs duties on lithium-ion cells to help bring down the cost of such batteries, which are currently not manufactured in India. She had also promised investment-linked I-T exemptions for makers of components, such as solar electric charging infrastructure and lithium storage batteries under a yet-to-be-launched scheme. The industry lauded the GST Council’s move to cut taxes on EVs. “The GST rate cut will reduce the gap between EVs and IC (internal combustion) engine vehicles. If FAME 2 was a dampener, the GST reduction is certainly a bright spot in the National EV policy. The EV industry now awaits the corresponding reduction of the 18 per cent GST on spares batteries, as it will help maintain the low running cost of EVs over their lifetime,” said Sohinder Gill, director general, the Society of Manufacturers of Electric Vehicles.
Hyundai recently launched its full electric SUV Kona priced at Rs 25.3 lakh.

Expressing similar sentiment, Mahindra & Mahindra MD Pawan Goenka tweeted, “One more bold enabling step by GoI to support EV movement. With the GST rates coming down, the financial viability for 3W and even 4W for shared mobility becomes positive. Now let us just do it.”

Audi India Head Rahil Ansari said the move would definitely give a boost to EVs and “we are confident that it will motivate customers looking for both entry-level EVs as well as luxury EVs that will enter the market. We are pleased that this coincides with our plans for introducing the Audi e-tron in India by the end of this year.”

He added, “While these are great steps for the future, short-term measures supporting the overall industry, also the luxury segment, are required by the government. All players are struggling with declining sales, which in turn is leading to production cuts and may lead to job losses, too.”

M S Mani, partner, Deloitte India, said it was needed to be ensured that the rate reductions did not lead to input tax credit accumulation in the hands of EV manufacturers. “There is also a need to clarify whether charging stations would be deemed to be supplying electricity (which is outside the purview of the GST at present) or providing a service taxable at 18 per cent. Hopefully, all the tax-related issues will be comprehensively clarified in future,” he added.

Abhishek Jain, tax partner, EY India, said, “The reduced rate should help foster demand for this environment-friendly variant, through a tax aribtrage between conventional vehicles and EVs.”

Source: Business-Standard

GST Council may weigh GST on petroleum goods at July 25 meet

July 23, 2019 admin Comments 0 Comment

The GST Council appears to have taken cognisance of the long-standing demand to bring petroleum goods under the GST ambit.

Sources told ETNow that the council is likely to discuss bringing petroleum products under GST in its next meeting on Thursday, July 25. While a concrete decision is not expected soon, it will certainly set the ball rolling.

Besides having a discussion on bringing petroleum products under GST ambit, the council is expected to take up the proposal on rate cut on electric vehicles from 12 per cent to 5 per cent and lower levy on on EV chargers as well as on solar-powered equipment.

The proposals for rate cut on EVs, EV chargers were sent to the fitment committee during last meeting. The council is also likely to discuss GST exemption on hiring electric buses besides looking into the issues being faced by taxpayers in filing annual returns.

The council may also discuss issues faced by small businesses from the services space who want to opt for the composite scheme.

Source: Economic Times

GST Council to decide on tax cut on EVs this week

July 22, 2019 admin Comments 0 Comment

The GST Council, chaired by FM Nirmala Sitharaman, will meet on July 25 and decide on lowering tax rates for electric vehicles, officials said. The 36th meeting of the Council, which will happen through video conferencing, is also likely to decide the valuation of goods and services in solar power generating systems and wind turbineprojects for the purposes of levying GST.

The Council, which has state finance ministers as members, in its meeting last month, had referred the issue relating to Goods and Services Tax (GST) concessions on electric vehicle (EV), electric chargers and hiring of electric vehicles, to an officers committee.

The recommendations of the officers committee is likely to be placed before the Council on July 25, officials said.

To push domestic manufacturing of e-vehicles, the Centre proposed to the Council to slash GST rates to 5 per cent from 12 per cent.

GST rate for petrol and diesel cars and hybrid vehicles is already at the highest bracket of 28 per cent plus cess.

The Council will also consider tax structure for solar power projects.

The Delhi High Court had in May asked the GST council to take a relook at the taxation structure following industry petition.

The government had earlier this year said that for the purpose of taxing solar power projects, 70 per cent of contract value would be treated as goods — taxable at 5 per cent, and balance 30 per cent as services — taxable at 18 per cent.

The solar industry has been pitching for a different ratio for splitting goods and services for levying GST.

Further, the Council may also look at taxation of lotteries. In the previous meeting, the Council had decided to seek legal opinion of the Attorney General for levying GST.

Currently, a state-organised lottery attracts 12 per cent GST, while a state-authorised lottery attracts 28 per cent tax.

Source: Economic Times.

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GST Council yet to reach, decide on rate cut for auto sector: Anurag Thakur

September 6, 2019 admin Comments 0 Comment

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Govt. looking at export sops, GST incentives for auto sector

September 6, 2019 admin Comments 0 Comment

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GST shortfall may turn into next worry for the Centre

September 5, 2019 admin Comments 0 Comment

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Govt mulls GST rate cut for some sectors, assesses revenue impact

September 5, 2019 admin Comments 0 Comment

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Sitharaman to propose GST cut on automobiles

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Traders want GST norms to be further simplified

August 30, 2019 admin Comments 0 Comment

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Abolish GST on maintenance charges of apartments’

August 26, 2019 admin Comments 0 Comment

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GST Council trims rate on EVs to 5% in bid to boost electric mobility

July 29, 2019 admin Comments 0 Comment

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GST Council may weigh GST on petroleum goods at July 25 meet

July 23, 2019 admin Comments 0 Comment

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GST Council to decide on tax cut on EVs this week

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