GST Council to meet on Oct 6, may dole out sops to exporters

NEW DELHI: The 22nd meeting of the GST Council, chaired by Union Finance Minister Arun Jaitley, will be held on October 6 to deliberate on GSTN glitches and ironing out issues faced by exporters, a ministry official has said.
The meeting was scheduled to be held on October 24 but was preponed in view of the engagements following Diwali festival.
The next meeting of the Council will be held through video conferencing on October 6, the official said.
This will be the second time that the Council meeting would be held through video conferencing. The last such meeting was held on July 17 — the first meeting after the roll out of Goods and Services Tax (GST) from July 1.
The issues that are expected to be discussed include the findings of the Group of Minister (GoM) on technical glitches on the GST Network portal.
Also, some relief to exporters could be on cards as Revenue Secretary Hasmukh Adhia headed panel met 8 export promotion associations today to understand their concerns.


GST Council to meet on October 6, may dole out sops to exporters

NEW DELHI: The 22nd meeting of the GST Council, chaired by Union Finance Minister Arun Jaitley, will be held on October 6 to deliberate on GSTN glitches and ironing out issues faced by exporters, a ministry official has said.

The meeting was scheduled to be held on October 24 but was rescheduled in view of the engagements following Diwali festival.

The meeting was scheduled to be held on October 24 but was rescheduled in view of the engagements following Diwali festival.

The next meeting of the Council will be held through video conferencing on October 6, the official said.

This will be the second time that the Council meeting would be held through video conferencing. The last such meeting was held on July 17 — the first meeting after the roll out of Goods and Services Tax (GST) from July 1.

The issues that are expected to be discussed include the findings of the Group of Minister (GoM) on technical glitches on the GST Network portal.


States against govt plan to levy GST on petro products

tates have refused the central government’s appeal to bring petroleum products under the ambit of Goods and Services Tax (GST) even as prices of petrol and diesel continue to skyrocket in contrast to global standards.

Taxes constitute more than 50% of the price consumers pay for petrol and diesel. States, which charge sales tax and VAT (applied on top of the central excise duty) are reluctant to move away from the present tax regime unless the Centre promises special annual grants, top government sources told Hindustan Times.

Sources in the Union finance ministry said talks with the oil ministry is currently on but it’s the GST Council, the highest decision-making body of the indirect tax regime, that will have the final word on the inclusion of petroleum products. The Council is chaired by Union finance minister Arun Jaitley with all of his state counterparts as its members.

“It has only been two months since the GST was introduced. We have to give time to the states to get over the teething problems before we start discussions on whether petroleum products should be brought under GST. This matter is unlikely to be taken up immediately,” said a senior official in the finance ministry, refusing to be identified.

For the states, moving to the GST for petroleum products could amount to a “loss” in revenue. While the Centre collects ?21.48 as excise duty, states charge value added tax (or VAT, which varies from state to state, ranging between 25% and 48%) along with 25p as pollution cess with a surcharge.

In 2016-17, the combined revenue collected from the petroleum sector was ?463,089 crore, according to figures available with the ministry of petroleum and natural gas. Of this, states’ share was ?189,587 crore.

Under GST, even if petrol and diesel are charged at the highest slab of 28%, states, which get a substantial chunk of their revenue from the sector, will stand to lose considering they will only get 14% of it — much lower than the present rate of VAT.

“Taking the autonomy of taxing petroleum products away from the states will hurt our exchequer. States have freedom to change the VAT on petrol and diesel. But under the GST, this flexibility will go,” said a senior official in the finance ministry of a non-BJP ruled state.

Other state finance ministers HT spoke to said they are ready for the change “only if state-specific grants are announced by the Centre” to make up for any revenue loss.
With highest VAT and the surcharge in the country, Maharashtra government earns over ?20,000 crore a year from taxes on petrol and diesel.

“Bringing petrol and diesel under GST regime will lead to the huge loss to the state exchequer. There is rising demand of doing away with the surcharge, but we recently raised it on three occasions to generate funds for drought mitigation measures. We accumulate more than ?3,000 core from the surcharge. I don’t think doing away with the surcharge and VAT is possible at this stage,” said an official from the finance department.

The Centre has been under pressure from the opposition as well as consumers for the steady surge in fuel prices.

The ire is mainly directed at the fact that global crude oil price has fallen from $106 per barrel in July 2014 to $26 in January 2016 — a fall of 75%. At present, the global price of crude oil is $62.75 per barrel.


Centre eyes cuts in spending as glitches in GST hit revenue

India could be forced to cut spending on key infrastructure such as railways and highways as lower-than-expected tax collections and sluggish growth have upset the government’s budget calculations, two finance ministry officials said.

Tax receipts were about $7.8 billion in July – a little over half the monthly target – mostly because millions of firms failed to comply with the new Goods and Services Tax (GST) system that harmonises all state and central sales taxes but is still a work in progress.

The big worry is that economic growth, which slipped to a three-year low in the last quarter, could take a further hit if the public spending that largely underpinned expansion were to be slashed.

“There is a concern over lower tax collections,” a senior finance ministry official said.

The revenue shortfall could be at least Rs 800 billion ($12.5 billion) if the current trend continues until the end of the year, a second official said, forcing a re-think in government spending.He said receipts from individual and corporate income tax may slightly overshoot the target of Rs 9.8 trillion ($152.8 billion) for the whole year, partly due to a crackdown on tax evaders. And in coming months, GST collections may pick up.

Both officials spoke on condition of anonymity.

Without spending cuts, the second official said, the fiscal deficit could slip to 3.5% of GDP, from the target of 3.2% that the Narendra Modi government has set for 2017/18.The main problem has been the introduction of the GST, billed as India’s biggest tax reform in 70 years.

Ambiguous rules, an onerous return filing system and glitches with its IT back-end have made doing business far more complicated for many companies. Frequent changes in tax rates after the GST’s launch have heightened business uncertainty, resulting in many firms failing to register for the new tax.

Manpreet Singh Badal, finance minister of the northern state of Punjab, told Reuters the new tax was launched in a “hurry resulting in a lot of chaos and pandemonium”.

Punjab, for example, had suffered a revenue shortfall of about Rs 8 billion in the first month of the July-June fiscal year, he said as the textile, engineering goods and other small industries were hit. The state expects to raise near Rs 395 billion ($6.17 billion) in tax in 2017/18.
Under a GST deal, the central government has to compensate states if their receipts fall below an annual growth of 14% in taxes for the next five years.

India’s GDP growth itself has slowed to 5.7% in the April-June quarter from 7.9% a year earlier, a slowdown also partly blamed on the introduction of the GST, adding to the pressure on the state coffers.

Dividends from state-run companies are expected to fall and a $11 billion share sale programme is slowing down.

“If the revenues remain below target, then the government could cut spending on railways and road transport,” the second finance ministry official said.

Aiming to boost growth, Finance Minister Arun Jaitley increased budgetary allocations for the railways by one-fifth to 550 billion rupees and by 24% for highways development to Rs 649 billion this fiscal year from a year ago.

Complicating the finance ministry’s budget arithmetic further, the Reserve Bank of India announced last month that its annual surplus, a dividend transferred by the central bank to the government each year, would be only $4.9 billion, less than half the initial estimate, largely due to costs of Modi’s shock “demonetisation” initiative last year.

“This is an abnormal year. A shortfall in tax and non-tax revenue could give a shock,” said NR Bhanumurthy, an economist at the National Institute of Public Finance and Policy, a Delhi-based think-tank funded by the finance ministry.

He said the economy was still recovering from Modi’s move to withdraw 86% of high value banknotes as part of a fight against graft.


A finance ministry spokesman said tax receipts were expected to improve as problems related to the new GST system and the technology underpinning it were tackled.

In his annual budget presented in February, finance minister Jaitley had projected a 17% growth in tax collections, while estimating spending of nearly $335.05 billion in the current fiscal year.

Jaitley also has to set aside funds for stressed state-run banks, which need nearly $60 billion in extra capital to meet new international banking rules by March 2019 according to Fitch Ratings estimates.

Balancing those demands while trying to control the fiscal deficit would involve a cut in public spending, analysts said.

Soumya Kanti Ghosh, chief economist at State Bank of India, said in a research note this month that first quarter economic growth was supported by higher state spending but the need to rein in the fiscal deficit could force the government to cut expenditure.


Note ban, GST have adversely affected India’s GDP growth: Manmohan Singh

Both demonetisation and GST have affected India’s gross domestic product (GDP) growth adversely, former Prime Minister Manmohan Singh said on Monday.

“Both demonetisation and GST have had some impact on GDP,” Manmohan Singh, who has earlier said the Indian economy has been running on only “one engine” of public spending, told CNBC-TV18 channel.

“Both would affect the informal sector, the small scale sector that are responsible for 40% of GDP… 90% of employment is in the informal sector.
“So when 86% of currency is withdrawn from circulation, plus GST, which was put in practice in haste.. lot of glitches are now coming up, it was bound to affect GDP growth adversely,” he said.

Former Reserve Bank of India Governor Raghuram Rajan estimated earlier this month that the country’s GDP had taken a hit of between 1% to 2% due to demonetisation, which translated to a sum of around Rs 2 lakh crore.


Bring petroleum products under GST: Oil minister Pradhan to finance ministry

Oil minister Dharmendra Pradhan said he has requested the finance ministry to bring petroleum products under the ambit of Goods and Services Tax (GST) in the interest of consumers.

Justifying the move, he said there has to be a “uniform tax mechanism” all over the country.

“This is the proposal of the Ministry of Petroleum. We have appealed to all the states and finance ministry (to bring petroleum items under GST). Looking into the consumer interest, there must be tax rationalisation. GST is a well thought mechanism by the Government of India and the states, they developed the GST Council…

“There are two kinds of taxes (on petroleum products). One is the central excise and the other one is state VAT. That is the reason we are expecting uniform tax mechanism from the industry point of view,” Pradhan told PTI.

Justifying the daily price mechanism which is in place for petrol and diesel, Pradhan said states are receiving 42% share in whatever levy is being collected by the Centre and clarified domestic rates are determined by international prices.

“There is no communication gap or mismatch (between domestic and global prices). Whatever is the international price we are passing exactly that to the Indian consumer. When it is increasing, we have to increase, when it is declining we have to decrease it. That is the practice in the country.”The minister for petroleum and natural gas said, “42% of the central tax is coming to states. And states have their own tax mechanism. So a substantial portion of tax collection is utilised and coming to the states.”

He said the Centre needs funds for implementing various development and welfare projects in the country.

“Don’t you think we should build good roads. Don’t you think we should give clean drinking water to citizens. See the spending of the Government of India. Previously, for the housing scheme (for the poor), the government was spending Rs 70,000 per unit. Now we are spending Rs 1.5 lakh.

“Where do you get the money from? Do you think (we) have kept the money in the treasury. We are passing the money for the greater recycling of the economy through infrastructure projects,” he explained.

Replying to a query, he said the second round of auction of oil and natural gas blocks received a good response from both international and domestic players.

Lucknow University to impose GST on fees

LUCKNOW: Studying in Lucknow University and its 159 associated colleges is set to get costlier with LU deciding to implement 18% GST in a number of services.
While some services will turn expensive from Monday itself, in others, the tax will be charged in fees from the next academic session.
“A circular has been issued to all academic and nonacademic departments of the university to charge GST on non-educational services such as canteen and parking lots with immediate effect.However, GST will be applied to annual academic fees and admission forms from the next academic session since this year, the admission pro cess is over,” said finance officer PC Mishra.
He added that GST will be applicable to all the services provided by the university to students and the colleges.LU will also apply GST with immediate effect on services it gives to associated colleges. For instance, a college applying for affiliation, recognition of courses or inspection of new facilities will have to pay GST along with the fees charged by LU for the purpose.
“GST will also be applied on fees charged from colleges and institutions for using LU infrastructure such as halls, auditorium and community centre,” said an official.
“Even seminars and workshops at the university will cost more since the rent of Malviya Hall, AP Sen Hall and other halls will be increased. The application of the tax will both directly and indirectly affect academic activities,” he added.
“Colleges might hike fees after GST application as they would have to shell more for affiliation and other services. To meet these expenses, they are likely to increase fees,” said a teacher.


Rs 65,000 crore GST credit: CBEC scans high-value claims

NEW DELHI: As much as Rs 65,000 crore out of the nearly Rs 95,000 crore tax collections in July — the first month of GST — have been claimed as transitional credit by taxpayers, prompting the CBEC to order a scrutiny of all cases above Rs 1 crore.
The Goods and Services Tax (GST) regime, which kicked in from July 1, allows tax credit on stock purchased during the previous tax regime.
This facility is available only up to 6 months from the date of GST rollout+ .
The Central Board of Excise and Customs (CBEC), the body which deals with formulation and implementation of policy concerning the levy and collection of indirect taxes, in a letter dated September 11 has asked tax officials to verify GST transitional credit claims of over Rs 1 crore made by 162 entities.

Dharmendra Pradhan backs daily fuel price revision, wants petrol, diesel to come under GST
In the transitional credit form TRAN-1 filed by taxpayers along with their maiden returns for July, businesses have claimed a credit of over Rs 65,000 crore for excise, service tax or VAT paid before the GST was implemented from July 1+ .
In light of such huge claims, CBEC Member Mahender Singh in the letter to chief commissioners said that as per the GST law, carry forward of transitional credit is permitted only when such credit is permissible under the law.
“The possibility of claiming ineligible credit due to mistake or confusion cannot be ruled out… It is desired that the claims of ITC (input tax credit) of more than Rs 1 crore may be verified in a time-bound manner,” the CBEC emphasised.
It asked the chief commissioners to send a report to the CBEC by September 20 on the claims made by these 162 companies.
To ensure only eligible credit is carried forward in the GST regime, the CBEC has asked field offices to match the credit claimed with closing balance in returns filed under the earlier law.
They are also required to check if the credit is eligible under the GST laws.
Till last week, as many as 70 per cent of 59.57 lakh taxpayers had filed returns for July, amounting to maiden revenue of Rs 95,000 crore under the GST regime.
However, out of this, the input tax credit (ITC) data for Central GST (CGST) claimed in TRAN-1 has shown that registered businesses have claimed over Rs 65,000 crore as transitional credit.
The government, in late August, had come out with form TRAN-1 for businesses to claim credit for taxes paid on transition stock.
Traders and retailers had 90 days to file for a claim.
Also, businesses have been allowed to revise the form once till October 31.
PwC India Partner and Leader (indirect tax) Pratik Jain said the Rs 65,000 crore amount looks high, particularly given the fact that a lot of large companies have not yet submitted TRAN-1.
Under the transition rules, traders and retailers are allowed to claim a credit of 60 per cent of taxes paid earlier against the CGST or SGST dues where the tax rate exceeds 18 per cent In cases where the GST rate is below 18 per cent, only 40 per cent deemed credit will be available against CGST and SGST dues.
Further, the government would also refund 100 per cent excise duty on goods that cost above Rs 25,000 and bear a brand name of the manufacturer and are serially numbered such as TV, fridge or car chassis.
To avail this, a manufacturer can issue a Credit Transfer Document (CTD) to the dealer as evidence of excise payment on goods cleared before the introduction of GST.
The dealer availing credit using CTD will also have to maintain copies of all invoices relating to buying and selling from the manufacturer, through intermediate dealers.

GST `indigestion’ hurts diners and eateries

THIRUVANANTHAPURAM: It has been two-and-a-half months since the country logged on to the GST regime. While several other sectors, which migrated to the new regime, have adjusted to its dynamics, confusion reigns in the hospitality sector.There is no end to confusion regarding billing in restaurants and fights between customers and hotel staff are a regular affair. While hotel and restaurant owners are complaining of a substantial drop in profits and soured relationships, regular customers cite instances of illegal tax collection and fleecing by businesses in the name of GST.
“There is no stability in business after GST was introduced. Customers continue to frown at us over bills. To calm them, recently we have offered a discount for takeaways,” said Abdul Shukoor, owner of Zam Zam restaurant chain.
A prominent vegetarian restaurant at Palayam has removed air conditioners from dining area to convert it to a non-AC restaurant and bring down the rate of GST.
Two days ago, members of Kerala Hotel and Restaurant Association (KHRA) staged a protest march to the secretariat seeking changes in GST slabs.They demanded exclusion of hotels with less than Rs 75 lakh annual turnover from GST and reduction of tax from 18% to 5%.
Before the GST implementation, majority of hotel owners had to pay only 0.5% VAT as tax which was not to be collected from the customers. Only star hotels and branded chains charged service tax and various cess components in addition to VAT.”As per the new norms, any hotel which has an annual income less than Rs 20 lakh should not levy GST from the customers. Any hotel that has an annual income between Rs 20 lakh to Rs 75 lakh has the option for compounding or non-compounding method of taxing. A compounding dealer should pay 5% of his annual revenue as tax and he should not levy any tax from his customers. While a non-compounding dealer can levy upto 12% tax (for non-AC hotels) and 18% tax (for AC hotels) from the customers. A hotel with more than Rs 75 lakh turnover should strictly register and make GST taxation compulsory ,” said Thyagaraj Babu, deputy commissioner, state taxes department A hotel owner from Kozhikode blamed illogical norms pertaining to GST implementation for the situation. “According to the norms, if a hotel has an air-conditioner anywhere inside the building, we are supposed to levy 18% tax from the customers. Hence, we are forced to levy 18% tax from people who eat even in the n o n AC a r e a .
This has affected business badly as customers make it a point of con tention and we have to explain it to them,” said Mohammed Su hail, Kozhikode district presi dent, KHRA Apparently, some restauranteers are using the opportunity to overcharge the customers.”Many restaurants in the city claim GST even without possessing identification number (GSTIN). I have experienced this in many hotels across the city,” said Ajith Kumar T L, a businessman.The intelligence wing of the taxes department collected data last month to study about the effectiveness of GST implementation and to identify restaurants that have not taken the GSTIN. Any bill that specifies the GST component should display GSTIN on top, a provision not followed by many hotels.
“If the customers spend time to observe the bill carefully, chances of being cheated can be avoided.Before paying the bill, which has added GST, customers should check if the hotel has a valid GSTIN written on top of the bill and make sure that the hotel is registered. Also, customers should make sure that double taxation is not done, i.e., taxing for each food item is illegal,” said E Khamarudhin, deputy commisioner, taxes (intelligence).


Govt rules out tax rollback as fuel prices rise, blames hurricanes for spike

The government said on Wednesday it will not step in to adjust prices of petrol and diesel, which are at its highest in three years, and blamed a spike in international crude oil prices for the increase.

The price of petrol in Delhi, for instance, has increased by Rs 4.90 a litre in the last two months, triggering criticism from consumers and the opposition.

“It is not in the good interest of the general public for the government to intervene in the day-to-day business of oil marketing companies,” oil minister Dharmendra Pradhan said after a meeting with the heads of state-run refiners on Wednesday.

Petrol cost Rs 70.38 a litre on September 13, up from Rs. 65.48 a litre on June 16 when the government introduced the system of revising fuel prices daily in sync with international oil markets. Prior to June 16, fuel prices were revised every fortnight to reflect international prices and exchange rates of the two weeks gone by.

The last time people in Delhi paid around Rs 70 a litre for petrol was in September 2014. But at that time, crude oil cost $96 a barrel (on September 15, 2014), nearly double of the $53 it did on September 13.

“Crude prices are seeing the impact of hurricanes Harvey and Irma, this has caused a 13% decline in global refining capacity…This has caused international crude prices to increase; petrol has increased 18% and diesel prices have increased 20% in global markets,” said Pradhan.

He said he was optimistic of global prices cooling in the coming days.The price break-up for every litre of petrol in Delhi shows that state-run companies charge dealers Rs 30.70. The remaining is in excise duty, dealers’ commission and state VAT which takes the price to Rs 70.38.

India’s crude oil basket was at $53 per barrel on September 13, compared to $46 a barrel on June 16.

The fall in crude oil prices since 2014 has been offset by an increase in taxes, particularly the central excise duty that was raised 9 times between November 2014 and January 2016. The corresponding tax mop up went from Rs 99,000 crore in 2014-15 to Rs 2,42,000 crore in 2016-17. Additionally, VAT, a component levied by state governments, has also been increased in some regions.

Deflecting calls for a rollback on such duties, Pradhan said the revenue is used for financing social and infrastructure projects.

He left the decision on taxes to the finance ministry.

India imports 80% of its oil need, raking up a hefty import bill, but sliding crude prices have trimmed it as well as the current account deficit.