GST

New Delhi:  The 5 per cent Goods and Services Tax (GST) on devices used by phyically challenged would actually lead to a reduction in their prices, the Union Finance Ministry said on Tuesday.

"5 per cent GST rate on these devices/equipments would enable their domestic manufacturers to claim refund of any accumulated input tax credit. That being so, the 5 per cent concessional GST rate on these devices/equipment would result in reduction of the cost of domestically manufactured goods, as compared to the pre-GST regime," the ministry said in a statement. 

The official clarification comes after Congress criticised the governemnt for levying GST on wheelchairs and Braille typewriters and demanded a full roll-back of the "disability tax".

"GST on disability aids like wheelchairs and Braille typewriters, once again shows this government's complete insensitivity towards our most vulnerable," Congress Vice President Rahul Gandhi said in a tweet on Monday.

The Finance Ministry statement, noting that "questions are raised about GST rates fixed for specific devices for physically challenged persons", said that most of the inputs and raw materials for manufacture of these assistive devices/equipments attract 18 per cent GST. 

"The concessional 5 per cent GST rate on these devices/equipments would enable their domestic manufacturers to avail input tax credit of GST paid on their inputs and raw materials.

"Further, the GST law provides for refund of accumulated input tax credit, in cases, where the GST rate of output supply is lower than the GST rate on inputs used for their manufacture," it said.

The ministry contended that if these devices/equipments are exempted from GST, then while imports of such devices/equipments would be zero rated, such domestically-manufactured devices/equipments will continue to bear the burden of input taxes, increasing their cost and resulting in negative protection for the domestic value addition.

"The 5 per cent concessional GST rate on such devices/equipments will result in a win-win situation for both the users of such devices, the disabled persons, as well as the domestic manufacturers of such goods. It is for this reason that the Council has kept these items in 5 per cent rate slab," it said.

Assistive devices and rehabilitation aids for physically challenged persons, which have been kept at 5 per cent GST rate, include Braille writing instruments, canes, electronic aids like the sonic guide, arithmetic aids like the Taylor Frame (arithmetic and algebra types), Braille calculators, electronic measuring equipment such as callipers, drafting and drawing aids, orthopaedic appliances, wheel chairs, artificial electronic larynx and artificial electronic ear. 

Talking books (in the form of cassettes, discs), talking thermometers, Braille computer terminals, Braille paper, all tangible appliances designed for use by the blind, Braille typewriters, Braille watches, teaching and learning aids for blind, urine collection bags, instruments and implants for severely physically handicapped and joints replacement and spinal instruments have also beenk kept in the 5 per cent GST slab. 

 

 

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NEW DELHI: A day after the pan-India Goods and Services Tax (GST) came into effect, Revenue Secretary Hasmukh Adhia on Sunday cleared certain misconceptions about the new indirect tax regime.

"There are seven myths going around about GST which are not true. I want to dispel them one by one in form of myth and reality. Pl see these," Adhia tweeted.

Cautioning people against falling prey to rumours, Adhia said in a series of tweets that the process around the implementation and execution of GST will be transparent.

"Nothing to worry on GST implementation, don't need big IT infrastructure. Even B2B don't need big software. We will give free software," he said.

He posed the myth-reality binary on GST thus: 

 

 

 

 

 

More News updates on GST, Click here: GST Special Coverage

 

NEW DELHI:  On a day after India's biggest tax reform came into force, Prime Minister Narendra Modi on Saturday vowed to continue the crackdown on black money and announced that the government cancelled registration of one lakh firms over the last 48 hours and was probing 37,000 shell companies on suspicions of funneling black money. Also, he said, 3 lakh other companies were under the scanner for suspicious transactions.

PM Modi patted his back for delivering on his promise to clean up the economy and cited recent statistics about the sharp decline in deposits by Indians in Swiss banks as one proof. "Those who have looted the poor will have to give back what they have looted," he said. But his 'I mean business' speech wasn't just aimed at the public at large outside, but the thousands of aspiring and practising chartered accountants gathered at the national capital's stadium as well.

He called them an important pillar of the Indian economy and appealed to their patriotism to nudge them not to help their clients fudge their accounts.

The prime minister said it required courage to act against a large number of companies as he had, and told them that this courage came from "desh bhakti", or patriotism. "Your patriotism is not less than mine," PM Modi told them. But, how is it possible that India had just 32 lakh taxpayers who declared an annual income of more than 10 lakh when there were 2 crore engineering and management graduates and 8 lakh doctors. When 2.18 crore people travelled abroad last year alone. That, he said, was India's bitter truth.
PM Modi asked his audience to take a pledge to bring people in the tax bracket rather than boasting about the number of clients they saved from paying taxes. It is said that a family which loses its house in a fire can stand on its feet, rebuild the house if they work together. But if one of them steals, there is no hope. The same principle applied for the economy too.

Holding a mirror to his hosts for the evening, the Institute of Chartered Accountants of India, PM Modi pulled out figures that showed just 25 chartered accountants (CA) had been penalised over the last 3 years for irregularities. And this, when over 1,400 cases have been pending for many years, he said.

PM Modi's stress on the chartered accountants comes against the government's stress on expanding the tax base. The GST - that merges dozens of central and state indirect taxes into a single tax - that was launched yesterday is the latest tool. Government officials have told NDTV that GST would not only bring more traders under the tax net but would also be used to identify people who were making money but not declaring income tax.

The prime minister told the CAs that the Constitution and society placed a lot of trust in them. "Your signature is more powerful than that of the Prime Minister and the government also believes the accounts signed by you," he said. But you have to decide whose interests come first; your client or the country.

 

 

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New Delhi: India should have a "new normal" with citizens ready to pay the taxes they need to pay and a new mindset to move from a developing nation to a developed one, Finance Minister Arun Jaitley said here on Saturday.

"During the time of demonetisation I have said that India now needs to define the new normal. And the normal is whatever taxes I have to pay, I need to pay," he said, addressing the 'Chartered Accountants Day' organised by The Institute of Chartered Accountants of India.

Jaitley said it is time now that India should move from a "developing economy to a developed economy".

"To take the country forward this mindset should also become the mindset of a developed economy."

The government on Saturday rolled-out the Goods and Services Tax (GST) across the country, the biggest indirect tax reform.

Jaitley pointed out that for decades there had been a tendency to evade taxes.

He referred to the 1 per cent levy on gold that led to protests across the country and it had to be withdrawn. But the same set of people welcomed GST Council's decision to put gold in 3 per cent tax bracket.

Jaitley said the government cannot keep lending money from various institutions to run the country. It has to get money from the citizens in the form of taxes.

"We cannot do it because in our system it became a norm to evade taxes."

Speaking about GST, he said it will add to the strength of the economic order and the formal economy will grow.

Referring to the current tax base, Jaitley said it was very low. Of the 130 crore population, only 78 lakh people show income above Rs 5 lakh, of which 61 lakh are salaried people.

He said, in indirect taxation under the three important categories - Service Tax, Value Added Tax and Excise Duty - a total 80 lakh people were registered, which is less than 1 per cent of the total population.

"This is the top 1 per cent economic strata of the society, which says they don't know how to operate computer and hence I do not want to pay tax," Jaitley said, adding that this was happening in a country which was famous for its information technology worldwide.

He said of the 80 lakh indirect tax payers, those below Rs 20 lakh a year are exempted and for those above Rs 75 lakh composition is provided.

"Please do something for the country - for the defence and development. Our system has been that not paying taxes is not wrong. No section can claim I have not paid taxes, so I will not pay."

"The government which blinks will never be able to bring reforms. We are never scared to do any reform," he added.

 

 

 

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Karaikudi (Tamil Nadu): In a scathing attack on the Goods and Services Tax (GST) in its current form, senior Congress leader and former Finance Minister P. Chidambaram on Saturday said it will put a burden on the common man and hugely affect small, medium and micro businesses and entrepreneurs while being inflationary with multiple rates.

The anti-profiteering provision in the new law will be an instrument of harassment in the hands of officials, he told a press conference here. 

Chidambaram said 80 per cent of all goods and services will bear a tax and prices will be higher. "There will be inflation. What is the government going to do about it?" he asked.

He said small, medium and micro scale entrepreneurs and traders will be affected in a "big" way because they are not ready for the roll out of the new law. "They asked for more time. They have been denied time," he said. 

Chidambaram said a "peculiar arrangement" has been made in the name of compromise and the law was being hastily implemented while the traders and business wanted some more time because they were not prepared for it yet. The consequences of the new law will be known only after some time, he added.

"This not the real GST that the Congress had desired and the ideal GST devised by experts. Nothing can be a 
worse legislation than this," he said.

Chidambaram said the UPA government had done all the homework for the law and at that time the BJP had bitterly opposed it. "The same BJP, when in opposition, had protested against the GST tooth and nail. No one can deny this fact," he said.

He said ideally GST meant one tax and the Congress had accepted the concept of a standard rate of 15 per cent along with a standard plus or standard minus rate. "We had said at any rate the tax cannot be beyond 18 per cent. We also accept the fact that there cannot be one tax rate in view of the current economic situation." 

Chidambaram, who had included the GST proposal in the Union Budget for the first time when he was Finance Minister, said against the concept of one rate, there are multiple rates now -- zero per cent, 2.5 per cent, 3 per cent, 5 per cent, 15 per cent, 18 per cent, 28 per cent and 40 per cent. 

"It is still far away from being a GST. It is still not GST," he said, adding that even the Chief Economic Adviser has favoured only a 15 per cent rate.

The former Finance Minister said the traders still do not know which GST would cover them and who is levying the tax on them -- whether the Centre or the state. "Ninety per cent will be under CGST and 10 per cent under SGST. A trader in Karaikudi will wonder whether he will come under the central government or state government officials." 

On the compliance front, he said once a trader does business in one state the compliance in the form filing returns would amount to 36 plus one returns, and if he does business in seven states, then it will amount to 37 returns in each state. The trader has to have a big machinery to keep up with compliance requirements. "This is the biggest shortcoming in the new law," he said.

Chidambaram contended that many products like petroleum, electricity and alcohol have been kept out of GST. 
"Petroleum and electricity constitute 35 to 40 per cent of the economy which is out of GST," he said, adding there will be two taxation systems -- one old that includes customs, excise and sales tax covering these products, and the other new.

The anti-profiteering provisions will be an instrument in the hands of the officials and "one knows what will happen if an instrument of harassment is given in the hands of officials".

This provision, Chidambaram said, is a mockery and has been made by those who do not understand market economics. "In market economics, one trader will not price the product higher when someone else is selling it at a lower rate and lose business. But the officials can question the trader selling it at a higher rate and harass him," he said.

 

 

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NEW DELHI: President Pranab Mukherjee and Prime Minister Narendra Modi pressed a button in parliament's Central Hall a little after midnight to launch the Goods and Services Tax (GST), India's biggest tax reform ever. The unified tax system, said the President, is "the culmination of a 14 year journey." Speaking before him, PM Modi described GST as Good and Simple Tax, stating that it is not the achievement of any one party or government. The Congress and several other opposition parties boycotted the function

 

Here are the top 10 updates ahead of GST launch 2017:

  1. "Today, after years, for a new economy, give new power to our federalism - there can be no better place than this," PM Modi said to applause. "We are deciding India's future," he said. 

 

 

  1. "It is remarkable that in 18 meetings of the GST council, all decisions taken by consensus," said President Pranab Mukherjee.

 

 

 

  1. The event, which began at 11 pm, extended to just after midnight to usher in GST on July 1, the new date set after an April 1 deadline was missed. A gong was sounded at 12 signalling GST is here.

 

 

 

  1. Mr Jaitley, who chaired a meeting of the powerful GST Council just hours before the launch, said the consensus among parties that has brought GST to launch is a high point in Indian politics at a time that the world is seeing slow growth and divisiveness. "It shows India can collectively think and act with maturity for broader purpose," the minister said.

 

 

 

  1. Central Hall has been fitted with new carpets and sound systems for the big night. Former Prime Minister HD Deve Gowda is seated at the high table with the PM and President, as are Lok Sabha Speaker Sumitra Mahajan and Vice President Hamid Ansari.

 

 

 

 

  1. Former PM Dr Manmohan Singh was invited too but his party the Congress' boycott means he is not attending.

 

 

 

 

  1. The government has invited all the Members of Parliament, Chief Ministers and state finance ministers. Opposition parties like the Congress, the Left, West Bengal Chief Minister Mamata Banerjee's Trinamool Congress, DMK and Lalu Yadav's RJD are boycotting the event. The Aam Aadmi Party isn't attending either.

 

 

 

 

  1. Bihar Chief Minister Nitish Kumar of the Janata Dal (United) or JD(U) has backed GST and though he and other senior leaders of his party are not attending, his party lawmakers have not been asked to stay away.

 

 

 

 

 

  1. Union Minister Nitin Gadkari told earlier today, "Congress is a confused party; where their Chief Ministers and finance ministers are supporting the GST and at the same time party leaders are criticising it."

 

 

 

 

  1. "A reform that holds great potential is being rushed through in a half-baked way with a self-promotional spectacle," Congress vice president Rahul Gandhi tweeted.

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NEW DELHI: Prime Minister Narendra Modi addressed the nation at the Central Hall of Parliament ahead of the GST launch at midnight. While the Congress and Trinamool Congress decided to abstain from the launch event, it was attended by NCP chief Sharad Pawar, former PM HD Deve Gowda and NDA allies. The landmark tax reform was launched just after midnight by the Prime Minister and President Pranab Mukherjee.

 

Here are 5 quotes of PM Narendra Modi's speech
  1. Today, the GST Council had its 18th meeting. It is a coincidence that the Bhagavad Gita also has 18 chapters.

 

  1. Imagine what India would've looked like today had Sardar Vallabhai Patel hadn't united all kingdoms of India. Just like that, GST is uniting all markets of India today.

 

  1. Albert Einstein had once said that if there is one thing that is most difficult to understand, it is income tax. I wonder what he would have said had he seen our tax system.

 

  1. The law may say GST is Goods and Services Tax, but in reality it is Good and Simple Tax. More than economic reform, it is a social reform.

 

  1. Sometimes there are concerns when we do new things. People who create unnecessary concerns, I request them not to.

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NEW DELHI: President Pranab Mukherjee addressed the nation from the Central Hall of Parliament at the Goods and Services Tax (GST) launch event. After his speech, he launched the landmark tax reform along with Prime Minister Narendra Modi. In his address, Mr Mukherjee also spoke about his experience as Finance Minister and described the the launch of GST as a "moment of satisfaction" for him.

 

Here are the top 5 quotes of President Mukherjee's address:

In a few minutes from now, we will witness the launch of GST. This historic moment is the culmination of a 14 year journey.

In meetings with Chief Ministers, officials, I found most of them had a constructive approach.

It is remarkable in 18 meetings of the GST council, all decisions taken by consensus.

The council has pleasantly surprised all of us by completing its task in time.

There is bound to be teething troubles. We have to solve them with speed. Success depends on effective implementation.

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New Delhi:  Mobile phone bills are expected to go up while recharges would yield less talk-time for prepaid customers from tomorrow under the new Goods and Services Tax (GST) regime.

Under the GST, telecom services would be taxed at 18 per cent compared to the current 15 per cent.

This means that a user would get a talk-time of about Rs. 80 on a recharge of Rs. 100, compared to about Rs. 83 earlier.

Similarly, costs for post-paid users would also go up to the extent of three percentage points. So, for a monthly usage of Rs. 1,000, users will have to pay Rs. 1,180 instead of Rs. 1,150 currently.

However, it remains to be seen whether telecom operators choose to absorb some impact of the increased tax levy (as they can claim input credit) or pass it on entirely to their customers.

Emails to telecom operators remained unanswered.

A number of retailers in the city remain clueless about the impact of the new tax regime on telecom services.
"It is only tomorrow once we start recharging for customers that we will get to know how much talk-time the customer is getting. But going by simple calculation, it (talk-time) is expected to be lesser," said one of the shopkeepers in the bustling Connaught Place area.

He added that it will take a few days for the situation to normalise.

Many customers who walked in for recharges, too, seemed unaware of what the GST roll out would mean for prepaid services.

Telecom operators are already under intense pressure, inflicted by newcomer Reliance Jio's competitive pricing. The industry had expected some relief from the GST Council in the form of a lower tax slab for telecom services.

However, the same was increased following which industry lobbyists made multiple representations stating that telecommunications is an essential service and should attract a lower tax rate of 5 per cent.

"Today it (industry) is saddled with an unprecedented debt of more than Rs. 4.5 lakh crore, with revenues of less than Rs. 2 lakh crore ... we are hopeful that the government will ... revise the current rate of 18 per cent, which is fairly high to the requested rate of 5 per cent," Cellular Operators' Association of India Director General, Rajan S Mathews told PTI.

This rate of five per cent is better aligned to telecom as it is an essential service and critical infrastructure, he opined.

 

 

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NEW DELHI: Rakesh Sachdeva sells auto parts in a busy market in central Delhi, just a few miles from Prime Minister Narendra Modi's office. Yet despite having a flourishing business he does not pay any tax.

Until now, his rundown premises and small scale operation has kept the business below the radar of tax officials. Come July 1, however, "the party will be over", says the 51-year-old, with a resigned shrug.

A nationwide Goods and Services Tax (GST), set to come into effect on Saturday, has faced criticism for its complex design. But the country's biggest tax reform since independence is promising to bring millions of firms like Sachdeva's into the tax net, boosting government revenues and India's sovereign credit profile.

The new tax will require firms to upload their invoices every month to a portal that will match them with those of their suppliers or vendors.

Because a tax number is needed for a firm to claim a credit on the cost of its inputs, many companies are refusing to buy from unregistered businesses. Those who don't sign up risk losing any customer who has.

"I have no option, but to register with the new system," said Sachdeva, who spoke to Reuters on condition the name and precise location of his shop were not disclosed.

Boosting The Coffers

Improved tax compliance should shore up public finances, augmenting resources for welfare and development spending and giving a lift to the $2 trillion economy.

India currently has one of the worst tax-to-GDP ratios among major economies at 16.6 percent, less the half the 34 percent average for the members of the OECD and also below many emerging economies.

While there is no official estimate of the potential fiscal gain, some tax experts say the measure, after the initial teething trouble, would lift the tax-to-GDP ratio by as much as 4 percentage points as the number of tax filers is estimated to more than treble to 30 million.

"In future, compliance is going to be extremely crucial," Rajiv Nair, chief executive officer at Kaya Ltd., told Reuters. "Since we are also responsible for compliance across the supply chain, we have to ensure that the suppliers we have are in a position to work with us in a compliant manner."

Nair's company, which makes beauty and personal care products, has just streamlined its supply chain, dropping vendors that were not going to be GST-compliant.
Other companies are doing the same. Elior Group, a French catering and food service company, said it has mandated GST-compliance as one of the eligibility criteria for its orders.

Winners And Losers

The unorganised sector of India's economy is vast, employing an estimated nine out of 10 workers.

While staying outside the GST regime risks losing business, joining it will necessitate an overhaul of firms' accounting systems and an investment in technology.

The new tax system requires three filing a month plus an annual return - a total of 37 filings - for each of India's 29 states in which a firm operates. For smaller companies operating on wafer thin margins, hiring accountants and technical staff could substantially dent their bottom line.

Sanjiv Mehra, head of a traders' body in Delhi, reckons a "prohibitive" cost could prove to be counterproductive.

"Compliance is needed for input tax credit," he said. "But what if you are in a business where margins are strong and allows you to forsake credit?"

But despite its flaws, many analysts think the new tax will be good news for bigger established businesses, because it will sweep away an array of federal and state sales taxes, levied at different stages of the supply chain, that often result in double taxation.

The government estimates the GST will save companies around $14 billion because it will allow them to organise their warehouses and supply chains more efficiently.

Firms can now move to demand-based "hub-and-spoke" models used globally, rather than operating state-by-state.

"Those companies which can wring out the maximum cost efficiency are the ones investors should bet on," said Ajay Bodke, head of portfolio management services at financial firm Prabhudas Lilladher in Mumbai. "All consumer-facing industries will be big beneficiaries of the GST."

 

 

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