GST Updates (04 Nov 2016)

GST Council decides four-tier rate structure of 5%, 12%, 18% and 28%

November 4, 2016

GST Council decides four-tier rate structure of 5%, 12%, 18% and 28%
The GST Council in its fourth meeting held on November 03, 2016, has finalised the GST rates. The finalised rates are 5, 12, 18 and 28 percent. The lower rate is for essential items and highest rate is for luxury goods. The GST rate on Gold has not been decided yet but the rate of service tax will go up from 15 percent to 18 percent.

In the last meeting held in October, Centre proposed four tier rates which are 6, 12, 18 and 26 percent. The rates have been approved by the GST council after some tinkering with the earlier proposed slabs.

The Hon’ble Finance Minister, Arun Jaitley, said that the Sin items such as tobacco, aerated drinks, pan masala, luxury car, etc., will be taxed at more than 28 percent as additional cess will be levied on these. Items constituting half of the consumer price index (CPI) basket including food grain, will be exempt. He also pointed out that the Corpus of Rs.50, 000 Crore would be needed to fund compensation to the States in the first year.

It would give a little more relief to the poor and a little more grief to the rich in the goods and services tax. The additional cess and a clean energy cess will create a revenue pool which will be used to compensate States for any loss of revenue during the first five years of the implementation of GST. The cess, Jaitley said, will not be an additional burden on the taxpayers because higher rate of 28% and cess will not exceed the total of the existing levies.

India Inc Welcomes Four-tier Tax Rates

November 4, 2016

India Inc, which will possibly benefit the most from the introduction of Goods and Services Tax, welcomed the rapid progress on this key reform even as it pointed out certain shortcomings that it hoped would be addressed over a period of time. Industry has called for a centralised registration system under GST, while flagging concerns around the burden of complexity that could arise due to multiple registrations for supply of goods and services in each state.

“Businesses in the services sector such as telecom, banking, insurance, airlines, ecommerce undertake pan-India operations. Meeting requirements of each state through different registrations, audits and compliances would be a massive task,“ said Confederation of Indian Industry President Naushad Forbes. On the four-tier rate structure that was unveiled on Thursday, the CII suggested that over time the government converge those into one or two rates.

Hemant Kanoria, chairman of SREI Infrastructure Finance, said GST as a concept would do good to the infrastructure industry, but “the process of its implementation should not be cumbersome“.

Industry stands to gain with lower incidence of tax, better input tax credit and lower logistics costs once the GST is rolled out nationally, creating a single national market for delivery of goods and services. This should boost the profitability of companies.
The Confederation of All India Traders (CAIT), however, said the final impact of the new structure would emerge only when the classification of goods under different tax rates was done.

The traders’ body called for one single return and single authority to control the taxation system, irrespective of rates. Only that will widen the tax net and increase revenue, said BC Bhartia, the president of CAIT.

“The rate structure will achieve the twin objective of protecting the revenues of the central and the state governments and further containing the inflationary pressures that may arise consequent upon the change of the taxation system,“ said Ficci President Harshavardhan Neotia. – [04-11-2016]

Nasscom concerned over GST implementation

November 4, 2016

Software lobby group National Association of Software and Services Companies (Nasscom) said it was yet to get clarity on the rates for IT products but cautioned that the bigger challenge for the sector would be the implementation of the goods and services tax. “The industry is looking at a rate of 12-16 per cent. So, it entirely depends on how it gets. But, the bigger concern is how the GST is applied,” said R Chandrashekhar, president of Nasscom. Finance Minister Arun Jaitley on Thursday announced the four slabs – 5 per cent, 12 per cent, 18 per cent and 28 per cent – for GST rates. The software industry was also concerned about the need to register in multiple jurisdictions. “Many state governments have not dealt with services as it was so far a central subject. How will they assess place of supply and also valuation of the inventory when it is supplied from another office?” said Chandrashekhar. “The tax rates are less of a concern. GST should also not make ease of business more complex with the whole process.” He also was concerned about credit for taxes as the industry was predominantly focused on exporting software. Stating that software is ‘intangible’, which can be used and transferred between offices, Chandrashekhar asked how would authorities count the place of supply, if it originates from another office. –[04-11-2016]

GST Site to Open soon so Filing won’t Tax You

November 4, 2016

Much before the April deadline of the roll-out of the Goods and Services Tax (GST), the online filing portal is ready to throw itself open to the public from next week, enabling tax payers to warm up to the new system before it finally launches in April of next year. On Thursday, the GST Council finalised a four-tier tax structure of 5, 12, 18 and 28% for the new tax regime, with lower rates for essential items and the highest for luxury and de-merits goods.

According to a government official, the GST portal will be hosted at the domain, which will be launched on November 8, even as the mobile app is currently being developed. “The proposal was discussed in the GST panel meeting today (Thursday) and the date has been finalised. There was no adverse reaction to it,“ said the official who requested anonymity.

The portal will allow tax payers whose PAN numbers have been verified by the tax department to register themselves in advance and fill in their details and legacy data. “The idea is to avoid everyone trying to log-in at the same time before the roll-out in April,“ said the official adding that the government is looking at getting the tax payers to enter all the data about themselves in their system for it to work smoothly at the time of the launch without any “challenges“.

ET had reported earlier that India’s second-largest software company Infosys has been mandated to develop and run the Goods and Services Tax Network (GSTN) -the entity tasked with providing the information technology infrastructure for it -in a project worth Rs. 1,380 crore. The portal itself will be a one-stop destination for filing and processing of all taxes for almost 65 to 70 lakh tax payers in the country and is being designed by a specialised design unit of Infosys.

The GST portal will be a front for the tax payer where registration, return and payments will be filed. It will also provide help-desk support. The technology at the backend will have the power to analyse data for trends on sales, tax filings etc. The portal will allow businesses to register using their PAN and mobile number or Aadhaar number. All businesses will be given a GST identification number, which will be a 15-digit code, consisting of their state code and ten-digit PAN.GSTN has already validated the PAN of 58 lakh businesses from the tax department over the past two years.

The official added that GSTN has already generated the GST identification numbers for around 20 lakh tax payers in eight states and has sent the data to the states for further disbursal. The rest of the tax payers will be covered in batches over the coming weeks, said the official. “We are doing it right now for VAT which covers excise as well, since those paying excise are also registered for VAT. Registration for people paying service tax will begin in January,“ said the official.

The entity is also in the process of developing a mobile app through which tax payers can also register themselves and at the same time allow them to file taxes or upload returns.
“We are making the process really simple by allowing people to just take pictures from their phone cameras and then upload them,“ said the official, adding that the app is also expected to be ready over the next five to seven days. – [04-11-2016]

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