GST Updates (17th Oct 2016)

No job losses under GST: FinMin to CBEC

October 17, 2016
The finance ministry has assured Central Board of Excise and Customs (CBEC) officers that there will be no reduction of manpower under the new goods and services tax (GST) regimeand the HR policy will be drafted after taking their views on board. In a meeting with the ministry last week, central excise officers flagged their concerns about use of technology and transfer of any assessees of excise and service tax to states under the new framework, leading to surplus manpower. “We flagged our concerns regarding surplus manpower and HR policy in the new regime. The board has assured us that there will be no manpower reduction. Also they have asked us to send our comments on human resource, which will be looked in to for framing of the policy,”Ravi Malik, secretary general, All India Association of Central Excise Gazetted Executive Officers, told The association had earlier planned to hold dharna son October 14, but following the assurance from the board, it decided to shelve the plan. “We have demanded that the1.1million service tax assessees under the Centre should continue to remain with the Centre in the GST regime. The board has said the final decision will be taken in the next meeting of GST Council and we will decide on our future course of action after that,” Malik said. –[17-10-2016]

GST Council to slap 40% ‘sin tax’ on tobacco products?

October 17, 2016
Consumer Voice, a voluntary action group, on Sunday urged the GST Council to levy the highest, “sin tax” of 40 percent on all forms of tobacco products, including cigarettes, beedis and smokeless tobacco.

According to Consumer Voice, the step will help in discouraging the use of tobacco and its addiction, especially among the poor and the nation`s youth.

The group said that a comprehensive economic reform like Goods and Services Tax (GST) offers the government a unique opportunity to tax tobacco uniformly at the highest GST rate of 40 percent and save millions of Indians from dying prematurely of tobacco related diseases.

“It has been proven globally that the most direct and effective method for reducing tobacco consumption is to increase the price of tobacco products through tax increases,” Consumer Voice said in a statement.

“Higher taxes are particularly effective in reducing tobacco use among vulnerable populations, such as youth, pregnant women, and low-income smokers,” read the statement.

The group said that each year almost one million people die from tobacco-related diseases in India. Tobacco also causes 2-3 lakh new cases of oral and neck cancer every year in India, which has the world`s sixth global burden of the disease.

“The total direct and indirect cost of diseases attributable to tobacco use was a staggering Rs 1.04 lakh crore ($17 billion) in 2011 or 1.16 percent of the GDP. Tobacco-attributable direct medical costs alone are around 21 percent of national health expenditure,” the statement said.

“Indeed the costs of tobacco are far greater than what the Indian government/states gain in tobacco excise revenue (just 17 percent of total health cost),” the group added.

“The GST regime should discourage consumption of that hazardous substances like cigarettes, beedis, pan masala, khaini and zarda through higher taxes. Beedis should be taxed at the same level as all other tobacco products under GST, since lower GST rates on beedis will promote its use amongst our most vulnerable populations and keep them below the poverty line,” said the statement quoting Ashim Sanyal, Chief Operating Officier, Consumer Voice.

While noting that the industry was opposing the recommendations to impose the “sin tax” rate of 40 percent on tobacco, Consumer Voice said that tobacco taxation in India was way below global standards. Source – [17-10-2016]

Higher collections can offset GST losses

October 17, 2016
The losses to be incurred by Tamil Nadu, being a manufacturing State, on account of implementation of Goods and Services Tax, would be offset by higher tax collections on services, according to a tax expert.

Tamil Nadu has expressed concern over GST, like the final rate which proposed to be 18 per cent,m and the power of vote in the GST Council. The State has pegged the annual revenue loss due to implementation of GST at over Rs. 9,000 crore.

“The losses on account of implementation of GST to Tamil Nadu would be more than offset by higher collection of service taxes. Remember Tamil Nadu is also high consumption state,” V.S. Krishnan, advisor, Tax Policy, EY, and a former member (service tax and GST) Central Board of Excise and Customs, told The Hindu .


Many States, including Tamil Nadu, had similar apprehensions when Value Added Tax was implemented. But post implementation of VAT, the State VAT collections had been robust across the States.

Mr. Krishnan said the revenue buoyancy, post VAT implementation, in States such as Tamil Nadu and Gujarat could have been even higher, but the States had some generous sales tax deferral schemes.

According to data from ratings agency ICRA, The Tamil Nadu Value Added Tax Act 2006 has come into effect from January 1, 2007. The sales tax collections grew 14 per cent in 2007, 2 per cent 2008 and 14 per cent again in 2009, it said.

Mr. Krishnan said that GST would help States plug the loophole and enable the State in robust tax collections. There was a need for a GST Secretariat in each State to address the day-to-day issues relating to implementation of GST.

“State GST secretariats will bring together central government and state government offices in one place. It should be a registered body under the Society’s Act,” he added.

‘Revenue buoyancy, post VAT, in some States could have been high, but for tax deferral schemes’  Source – [17-10-2016]

State tax officials to protest on Monday over their limited rights
October 17, 2016
GST Bill: State tax officials to protest on Monday over their limited rights

If you think that everything is going smooth with the passage of the Goods and Services Tax in the upcoming parliament session is concerned, think again. All India Confederation of Commercial Taxes Association (AICCTA) will be holding a mass protest against the central government on Monday at Jantar Mantar in Delhi, for ‘depriving’ the states of the power to enforce and collect taxes on goods and services.

Passing of GST bill – the much publicised grand move of the ruling NDA to reform the country’s indirect taxes system – faces the protest from the tax officials of various state governments.

Rajnikanta Sharma, general secretary of AICCTA – a body of tax officials of the state commercial tax departments – tells Firstpost, “We agree that the GST is the best move to reform indirect taxes among those have been implemented till now. But it frustrates the very motto of co-operative federalism espoused by the central government, by curtailing the powers of the states to collect tax.”

He said that the new tax regime aims to make the commercial taxes departments under the state governments’ subordinate branches of the central government.

“In the upcoming regime, the Centre is planning to confer rights to the states to enforce and collect tax up to a turnover of Rs 1.5 crore on goods but not on services. After the 1.5-crore mark, the new regime espouses the rule of equal jurisdiction between the state and the Centre,” he explains.

“Why can’t the commercial taxes departments of various state governments have equal power on both goods and services up to the 1.5 crore mark? Since the new tax regime embraces both goods and services, the states should be given equal powers to enforce and collect tax on both,” he adds.

Another tax official, on condition of anonymity, says that the Centre is planning to deprive the states of the right to impose tax on both goods and services on the pretext that the states do not have the experience of collecting service tax, as this is being done by the Centre all along.

“But even the Centre does not have the experience of enforcing and collecting tax on goods, still it takes the equal rights as the state governments to do the same on both goods and services above the 1.5-crore turnover mark. How can this be justified?” he asks.

Rajnikanta Sharma further says, “We are neither opposing the central government nor the new tax regime. We are fighting for the causes of our states.The states must continue to have the powers that they have now.”

Two of the important demands raised by the association is allowing the states to enforce and collect tax on both goods and services up to the 1.5-crore turnover mark and letting the states administer IGST (earlier known as CST) as it is doing now.

The association has already started its agitational program in various states. The tax officers association of various states have already staged protests in separate programs in the respective states.

On 18 and 19 October, a meeting of the GST council is likely to take place and AICCTA will be organising its protest a day ahead of this meeting. A nationwide mass casual leave program by the commercial tax officials will also be scheduled on that very day. Source – [17-10-2016]

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