GST council sanctions last two draft bills, limits cess on demerit merchandise

In a subversive move, the Goods and Services tax (GST) council on Thursday approved the last two remaining draft bills for State Goods and Services tax (SGST) as well as Union Territory Goods and Services tax (UTGST) and restricted the cess on cigarettes (290%), aerated drinks (15%) and luxury automobiles (15%).

Sliding an inch closer to the July 1 rollout date, the council cleared the remaining two GST bills to implement the biggest tax reform of the country paving its way into the state and parliament legislative bodies. The council’s approval of these two bills is being deemed as a landmark development in the country’s exhaustive journey to implementing a unified tax system, according to experts.

The council also approved to limit cess on demerit (and luxury or sin) merchandise. The newly introduced cess rates are as follows:

• For automobiles and aerated drinks (colas), the cess has been limited at 15% meaning that the total tax on cars and sweetened beverages cannot go beyond 43% (28% cess + 15% cess).
• For cigarettes and other tobacco products, the cess can be either 290% or 4,170 INR per 1000 sticks or a combination of both.

Admittedly, these newly introduced cess rates are just qualifying provision, since the actual tax rates could be lower, and the decision rests solely on the GST council. 

Interestingly, the GST council has also decided to introduce a qualifying provision cess rates on all the automobiles and not just luxury automobiles. This infers that the council could decide to levy cess on non-luxury automobiles as well at a later date, which can be over and above the 28% tax rate.   

For goods produced in SEZ (special economic zones), the council has decided to levy tax rates that are similar for exports. Procurement of goods by SEZs would be zero-rated, whereas in the previous draft, SEZs were required to pay the tax first before claiming refund. 

“In the previous meetings, the GST council already cleared bills for state compensation (for revenue loss that would occur while transition to GST reform), Integrated GST (IGST) and central GST (CGST),” said Finance Minister Arun Jaitley, who heads the council.  

Four of the proposed bills excluding the state GST bill will be put forward for Union and Lok Sabha cabinet’s approval, whereas the state GST draft will need approval by state legislatures.  

Further, it is expected that the NDA government would table the proposed bills in the current budget session as revenue bills for smooth passage into the parliament house. 

The bills are expected to eradicate tax hurdles across states and include certain indirect taxes to be levied by the states and centre subsuming luxury tax, entry tax, entertainment tax, value added tax (VAT), service tax and excise duty. 

Next, the council has to validate nine sets of taxation rules along with wrapping up the tiring task of allotting various goods and services into different tax buckets. 

These rules along with the ones on input and valuation tax credit, invoice returns, refunds, payment, and registration will be decided in the next GST council meet on March 31. 

“We have set aside sufficient buffer time to decide the rates for different tax slabs to ensure that we meet the July 1 rollout deadline,” added Mr. Jaitley.  

Bottom Line:

Industry and tax experts opine that the government should quickly release all the approved GST tax rates and slabs along with accompanying schedules and rules in order for businesses to evaluate the final impact of GST tax reform and align critical business processes around it.

Disclaimer: All the views, opinions and information expressed in this blog are those of the author and the respective sources and in no way reflect the principles, views or objectives of Sage Software Solutions (P) Ltd. 

Source: Firstpost and Livemint

It’s a Go-ahead from Lok Sabha for GST

India moves an inch closer to the dream of a unified tax reform, as the Lok Sabha on Wednesday passed the much-awaited GST bill after an all day long debate in the Parliament. The four GST bills include CGST (Central Goods and Services Tax), Union Territory GST Bill, Compensation GST Bill and Integrated GST bill. The GST bills span across PAN-India except Jammu and Kashmir as of now.

The government is eyeing for the July 1 rollout date for the new tax reform to come into play. Arun Jaitley, Finance Minister stated, lack of diverse slabs in the taxation system would make the reform regressive, since all goods will not attract same tax rates.

He further added, “Some goods certainly are essential for the poor class. A pair of Flip-flops and a BMW cannot have same tax structure. What is the merchandise and who uses them, matters here. And, this is a revolutionary tax reform that is deemed to benefit people from all walks of life”.

Goods might turn ‘a bit cheaper’ once GST tax regime comes into place and all other taxes are bumped off thus, eradicating the cascading effect, said Mr. Jaitley.

The four-tier tax slabs are 5%, 12%, 18% and 28% as sanctioned by the GST council. The government has decided to set the maximum GST slab at 40%.

Talking about the tax slabs on petroleum products, Mr. Jaitley added that though the council has included petroleum products in the GST tax regime, as of now it will stay zero-rated. The council has decided to bring it on table within a year after the GST implementation.

The nature of financial activity today is undergoing rapid changes and the prime objective of GST tax reform is to promote ‘free flow of services and goods across the country with a unified tax reform’. The new tax system is expected to be efficient, difficult to violate and will have stringent compliances.

President, Pranab Mukherjee had earlier approved the GST bill in September 2016. The bill, which aims to reboot the country’s intricate taxation system by substituting 17 different tax types with a single and unified levy, was sanctioned by the Rajya Sabha in August 2016. Whereas, the Union Cabinet sanctioned the GST bills in March.

The real purpose is to safeguard the consumers from inflation after the GST implementation. However, industry experts and business owners across the country are requesting to postpone the targeted implementation date i.e. July 1 to allow them to brace adequately for the GST tax rollout.

Disclaimer: All the views, opinions and information expressed in this blog are those of the authors and their respective sources and in no way reflect the principles, views or objectives of Sage Software Solutions (P) Ltd.

Source: SME Times and Pragativadi News

Rajya Sabha gives thumbs-up to all four GST Bills, Govt. determined for July 1 Rollout

The parliament on Thursday took the most decisive step, as it passed all the four GST bills clearing the path for July 1 rollout for the revolutionary and unified tax system i.e. GST (Goods and Services Tax).

Rajya Sabha cleared The Union Territory GST Bill, 2017, The GST (Compensation to States) Bill 2017, The Integrated GST Bill, 2017 and The Central GST Bill, 2017.

The nation moves an inch closer to fulfilling the one-country-one-tax reform. The historic decision comes after the Lok Sabha cleared the four GST bills in parliament on March 29.

Arun Jaitley, Finance Minister asserted that once the new tax reform comes into play, harassment of organisations by diverse authorities will cease and we will have one tax rate for one commodity/merchandise all throughout the nation.

Read also: 4 Reasons your Business needs an ERP System to be GST Ready

In response to the 8-hour long debate in the parliament house, Mr. Jaitley besides giving credit to the former UPA government for their GST efforts added that the new tax regime will bring in a uniform and indirect tax system in the nation and won’t trigger inflation as conceived by certain sections.

“I have no hesitation in conceding that it is a collective property,” Mr. Jaitley stated. Further, he added that GST would not only benefit trade and industry, but will also benefit states and centre as well. The GST council is eyeing May 17-18 dates to approve the final rates and rules paving way for July 1 rollout.

The Rajya Sabha sanctioned all the four GST bills after intense negations over a number of amendments by the opposition parties.

With the parliament giving green signal, the obligation is being shifted to states that are now required to approve the state GST rules in respective state assemblies.

The Centre has already issued detailed rules for the purpose of stakeholder consultations. Whereas, the GST council is set to take up the remnants of this revolutionary tax reform next month to fix individual tax rates for goods and services.

The GST council on November 2016 has already decided a four-tier rate structure – 5%, 12%, 18% and 28%. Most goods are anticipated to fall under the 12% and 18% bucket, whereas a cess would be imposed on sin and luxury goods. The GST law allows a maximum tax rate of 40% (20% of which would be state GST and 20% would be central GST).

Mr. Jaitley took to twitter to express his gratitude: Here’s what he tweeted on the historic decision:

With regard to Jammu and Kashmir, Mr. Jaitley stated that the bill passed by the Rajya Sabha won’t be applicable to the state due to Article 370. However, Jammu and Kashmir will need to pass its own law for integrating the GST reform.

Also as regards to the various concerns put forth by the members of parliament on the GST network, IT brain, etc. Mr. Jaitley stated that the entire GST structure has been designed to recruit the best talents, as it would be handling millions of tax vouchers each month.

In another stint, the Lok Sabha on Thursday approved a bill in an effort to make customs and excise act compliant with the GST regime. This bill aims to get rid of the current cesses that would be incorporated into GST.

Disclaimer: All the opinions, information and views expressed in this blog are those of the authors and their respective sources and in no way reflect the principles, views or objectives of Sage Software Solutions (P) Ltd.

Source: Deccan Chronicle and The Economic Times

GST: What it means for the Common Man?

With the Rajya Sabha passing all the four GST bills in the parliament a week back, the nation’s biggest and revolutionary tax regime GST (Goods and Services Tax) is all set to become a reality soon. Boasted as the most subversive tax reform in the country after independence, GST is expected to curb transactional costs by introducing a unified tax system stirring economic growth in the long run.

With the prospects that GST would improve the GDP by a couple of percentages, the reform in its entirety might come with a mixed bag of surprises for the common man.

Talking about its long-term impact, GST should mark a positive impact on most sectors. Based on the GST implementation experience derived from other nations, India might experience an inflationary impact especially during the transition stage, which is expected to fade with the rollout of measures such as anti-profiteering.

Yes, with the inclusion of anti-profiteering along with other counteractive measures, GST should lead to reduced cost for most of the supplies to the end-users in the long-run.

Here’s a quick look at what the GST could mean for the common man:

Services that are likely to become expensive include:

• Mobile phone bills
• Premiums for life insurance plans
• Investment management and banking services
• Online ticket booking services
• Basic luxuries such as DTH services
  

Prices of the following essential services are also likely to go up:

• Healthcare
• Residential rentals
• School and educational fees
• Rail/metro commute
• Courier services

Services that might see a price drop in most of the states are as follows:

• As the GST council has decided to include entertainment taxes in GST, movie tickets might turn cheaper in most of the states across the country.
• Dining out in restaurants/hotels may turn pocket-friendly in several states.

Vehicles and certain essential goods to witness price drop:

Under the GST tax system and the current supply chain ecosystem, the following might get cheaper:

• Two wheelers
• Luxury and SUV or premium cars
• Entry level sedans excluding small cars

Minimal impact:

Basis of the current supply chain landscape and other associated indirect taxes, the common man can expect marginal impact on white goods such as:

• Stoves
• Washing machines
• Televisions
• Shampoos
• Toothpastes
• Soaps

Prices of sin goods and aerated drinks to go up:

The government with its determined outlook towards injurious/sin goods, proposed a high tax rates on ‘sin goods’ that include cigarettes, aerated drinks and tobacco products. With a higher tax rate of around 40%, these goods may witness steep rise in their prices.

Here’s the four-tier GST tax rates

Positive impact lurking around the corner, expected in long-term!

Whilst the afore-mentioned forecasts are based on the statements/data released by government officials and authorities, it would be good to wait for the final verdict on the fitment that the GST council and government will release for a wide range of supplies and services. Nevertheless, with the enablement of anti-profiteering and other counteractive measures, GST is expected to curb costs for most.

Disclaimer: All the opinions, views and information conveyed in this blog are those of the author and its sources and in no way reflect the principles, views or objectives of Sage Software Solutions (P) Ltd.

Source:  The Economic Times