Unveiling the GST Tax Rates

GST or the Goods and Services Tax is one of the much awaited and biggest tax reforms in India in last 70 years. GST claims to unify all the taxes levied throughout the country in a bid to eradicate inflation and induce economic growth. On 3rd of November, 2016, the GST council decided to get rid of the “the rich get richer and poor get poorer” catchphrase in India, as it revealed its four tier tax rates, applicable from the month of April.

So, what does the council has for the country folks?

The tax system has been categorised into four range i.e. 5%, 12%, 18% and 28% (steeper to the pre-proposed 6%, 12%, 18% and 26%). Let us apprehend them for a better understanding:

The 5% slab: The GST council has been very keen on eradicating inflation. as it has cut out the taxes levied upon grain and food (which constitutes up to 50% of the consumer inflation basket). To add more to it, the 5% tax slab is levied upon the common use products, in comparison to the earlier 9%.

The 12% & 18% slab: The two standard rates that would be applicable upon bulk items such as processed products, oils, soaps, etc. will be further categorised in the upcoming session as which commodity falls in which slab.

The 28% slab: The council has been keen on uplifting the economic equality, as the top percentile slab will be applied upon luxury and white goods along with tobacco and aerated drinks. An addition cess will also be implied on these goods to compensate for the rollout losses.

Another rate slab is yet to be decided for gold and other precious metals, which is likely to be around 4% (as proposed earlier). (Source: Economic Times)

Though these slabs are yet to be approved by the Parliament, the GST council has put their best foot forward to get rid of the indirect taxations in an attempt to gain a steady control over the administration of the overall tax system. 

Restrainers:

• An amount of 50,000 crore would be needed to compensate for the loss that the states had to bear from GST rollout, for which a lapsable clean energy cess and additional cess will be levied for the initial five years, said the Finance Minister. (Source: TOI)

• The service tax shoots up to 18% from the previous 15%.

• It may take a considerable amount of time for the governments as well as the common people to acclimatize with the new system.

However, these restrainers are momentary and assure long-term benefits for both the common man and the government. And, the council is more likely to get into training and testing mode in preparation of the new taxation system, that could be the game changer for a developing nation like India. 

Disclaimer: All the views, opinions and information expressed 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.

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

GST Network Safe from Ransomware Threat, says GSTN CEO

Amidst the ongoing ransomware hoopla that has inflicted more than 150 nations all over the world including Russia and UK, the GSTN or the Goods and Services Tax Network that offers IT infra for GST tax regime is safe, said Prakash Kumar, CEO for GSTN. This is because the Goods and Services Tax Network does not run on the vulnerable operating system.

Post the historic decision from Rajya Sabha when it approved all the four GST bills earlier this year in April, the Goods and Services Tax Network is all geared up for handling approx. 2+ billion invoices every month under the revolutionary tax system.

The ransomware has mostly inflicted computers and systems running on older version of Microsoft OS like XP.

Clarifying further, Mr. Kumar said to PTI, “Our network doesn’t run on Microsoft operating system and thus, we are safe from the malware. GSTN runs on Linux operating system, which is not inflicted by the ransomware threat.”

The Goods and Services Tax Network further assured its stakeholders that all the information/data will be securely stored in encrypted form and that access would be strictly limited to assessing officers and taxpayers only.

Around 60 lakh VAT, service tax and excise assessees have already enrolled onto the Goods and Services Tax Network’s portal between November 2016 to April 2017. At present, there are an estimated 80 lakh such assessees.

Coming on to Good and Services Tax regime, the GST council expects the inflation rates to drop as the new tax system is expected to bring down production and transportation costs. Talking of its impact, GST would not only benefit big players, but will also make it easy for small and medium –sized enterprises to do business in a smooth way. Post GST rollout, taxation will become easy and direct, thus boosting investment.

Statistics suggest that more than 2 lakh computers and systems could have been inflicted by the malicious ransomware, but for GSTN, there seems to be no threat as of yet.

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

Sources: The Hitavada, Gadgest 360 NDTV & TIMES NOW