GST Updates (08 Nov 2016)

Govt. launches GST Portal;issues state-wise enrolment schedule

Enrolment Plan for your State
The schedule of the enrolment activation drive for states is given below. We encourage you to complete the enrolment during the specified dates. However, the window will be open till 31/01/2017 for those who miss the chance.

Start Date
End Date
Puducherry, Sikkim
Gujrat, Maharashtra, Goa, Daman and Diu, Dadra Nagar
Haveli, Chhattisgarh
Odisha, Jharkhand, Bihar, West Bengal, Madhya Pradesh,
Assam, Tripura, Meghalaya, Nagaland, Arunachal
Pradesh, Manipur, Mizoram
Uttar Pradesh, Jammu and Kashmir, Delhi, Chandigarh,
Haryana, Punjab, Uttarakhand, Himachal Pradesh,
Kerala, Tamil Nadu, Karnataka, Telangana, Andhra
Service Tax Registrants
Delta All Registrants (All Groups)

Auto cos seek clarity on cess under GST

November 8, 2016

The automobile industry is jittery ahead of the Goods and Services Tax (GST) Council meeting later this month which will arrive at a definition of cars which fall under the ‘luxury’ category and the incidence of cess that will be applied on it.

Members from the auto industry met Revenue Secretary Hasmukh Adhia to discuss these issues under the GST regime which may be implemented from April 2017. They sought clarity from the Revenue Department to address the transitional issues before the GST is rolled out.

“We have talked about the cess rate that will apply on luxury cars and its definition. We have given our views,” said Pawan Goenka, Executive Director, Mahindra & Mahindra.

The GST Council had arrived at a four-tier tax structure of 5, 12, 18 and 28%. However, aerated drinks and tobacco which fall under the category of sin goods, as also high-end luxury cars will attract a cess in a manner that the total incidence of tax remains at the current level. Goenka said that lack of clarity on the definition and on incentives that were given by the Central and state governments, especially by the hilly states, are a real cause of concern for the automobile industry.

“It appears to us that the definition of luxury cars will remain the same and the tax incidence will be similar to what it is today. There may be some differential 2-3 per cent up or down, but it will not be a major change,” he added.

Kenichi Ayukawa, Maruti Suzuki MD and CEO feels that the GST tax structure may be good for the country but its implementation needs to be smooth. He said that, “We are expecting the definition (of luxury cars) to be as it is.” The GST Council, chaired by Finance Minister Arun Jaitley and comprised finance ministers of all states will arrive at a decision in their next meeting this month.  Source – [08-11-2016]

Maharashtra govt optimistic on GST effect

November 8, 2016
The Maharashtra government expects the four-tier rate slabs, decided between the Centre and states for the coming national goods and services tax (GST), to help consolidate its position as a prominent centre for manufacturing and logistics.

Manufacturing, engineering, construction and logistics together constitute a third of the gross state domestic product. State finance minister Sudhir Mungantiwar told this newspaper, “There will be growth in manufacturing and logistics. The share of state GST in total GST will be slightly more than what it is today in VAT (value added tax). The gain in services tax as part of the GST will be a total gain for all states.” The higher tax revenue from GST will be used for development of infrastructure, he said.

He noted octroi and local body tax, two major levies, would now be subsumed in GST. The Centre’s assurance on compensation for revenue loss for the first five years is important — the Brihan Mumbai Municipal Corporation, for instance, gets Rs 7,000 crore annually through octroi. Source – [08-11-2016]

Hotel Industry warns tourism will suffer at 18% GST on rooms

November 8, 2016
The Hotel and Restaurant Association of Western India (HRAWI) today said the government’s four-tier structure in Goods and Services Tax (GST), in which the service sector will be taxed at 18 percent, will cause the tourism sector a major setback.
In the recently concluded meet on GST, the government has declared a four tier structure of 5,12,18 and 28 percent of which the service sector will be taxed at 18 percent.
“It is estimated that the lower GST rate of 5 percent will contribute to a decrease in our Current Account Deficit, increase in the GDP, doubling up of both foreign and domestic travel and also doubling up of tourism induced employment, across each state and nationally,” HRAWI President Dilip Datwani said.

India’s tourism competitors in South East Asia (excluding Japan and China) earn among themselves over USD 150 billion in foreign exchange and attract almost 100 million tourists annually, he said.

According to estimates, a GST rate of 5 percent will more than double both foreign travel coming to India to 20 million tourists and domestic travel within India to 2.5 billion.
“We welcome the 5 percent tax slab on food, which is a positive outcome of subsumed taxes for hotels and restaurants. However, the 18 percent levy on services or room revenue in our case, compared to our neighbouring countries which charge a Tourism tax between 4 to 7 percent, rules out fair competition,” HRAWI former President Kamlesh Barot said. Overseas, he said, GST can have least slabs as they have minimum exclusions unlike ours.
“A foreign tourist planning a trip across Asia may entirely skip India or spend fewer days in our country on account of these perceived high room rates because we also don’t refund taxes to foreigners like many countries do,” added Barot.  Source – [08-11-2016]

Classification of goods under GST, the new flash point say experts

November 8, 2016
The government may be rejoicing after getting the GST (Goods and Services Tax) council to agree to the rates and slabs for the new tax, but experts and insiders point out that the biggest hurdle is yet to be crossed: choosing the goods that will fall into these slabs. It has been decided that a committee of top officials of all states will work on this, but this could become a flash point in the run-up to the implementation of this new indirect tax.

The GST Council, the highest decision making authority for the new tax, last week agreed to a four-tiered GST. Essential items such as food grains, one of the main reasons for rising inflation, will be taxed at zero rate. The lowest rate of 5% will be on items of common use, followed by the standard rates of 12% and 18% and the highest rate is 28%. Additionally, a cess will be added to the top 28% GST rate on luxury cars and harmful products like tobacco and fizzy drinks.

“A committee will decide the fitment of goods into the four-tiered GST rates. We cannot divulge anything more than this, now,” said revenue secretary, Hasmukh Adhia.
Top sources in finance ministry say that this committee is yet to be formed. The demand is to include senior functionaries from all states in the committee for deciding this ‘fitment’.
“But that would become very cumbersome. A committee with so many people will make the decision making even more difficult,” said an official in the know of the matter who did not wish to be named.

The GST council will have to define luxury and essential goods even before the classification of goods begin, the official quoted above, added.

Experts agree. “Classification of goods for fixing their tax slabs will throw up a fresh set of disputes and this may lead to some confusion,” Bipin Sapra, tax pertner, EY told HT.
Classification of goods into categories and applying different tax rates on them has the potential of leading to litigation, say experts.

“Multiple GST slab rates may be politically correct but it will lead to classification dispute and compliance challenges unless the items covered under the slabs are not clearly defined,” Sachin Menon, partner and head of indirect tax, KPMG said.

But, a top official in the revenue department allays all fears saying that the process of classifying goods will be based on the process of elimination. “Once the essential items and luxury goods are classified what is left will fall in to the standard category,” he added.

At the end of the fourth GST council meeting on November 4, finance minister Arun Jaitley had said that the issue of cross-empowerment is the only pending matter that needs to be resolved, before the other GST-related legislations are finalized.

Cross empowerment deals with the issue of who will tax whom between the Centre and the states once GST is rolled out.

But functionaries involved say that the issue of ‘fitment of categories of goods in to the tax slabs’ will be a more immediate hurdle to cross.  Source – [08-11-2016]

Levy 1.25 per cent GST rate on jewellery industry

November 8, 2016
Levy 1.25 per cent GST rate on jewellery industry: GJF

A delegation of the jeweller s’ body today met M ahar ashtra Finance M inister Sudhir M ungantiwar at Nagpur and submitted its representation on GST.

A jewellers body today demanded that the GST rate on the jewellery sector should be 1.25 per cent if the government wants the industry to be “compliant and organised”.

“We are now gearing up for GST and have proposed that the GST rate for the gems and jewellery sector should be 1.25 per cent if the government expects the industry to be compliant and organised,” All India Gems and Jewellery Trade Federation (GJF) Chairman Sreedhar G V said in a release.

A delegation of the jewellers’ body today met Maharashtra Finance Minister Sudhir Mungantiwar at Nagpur and submitted its representation on Goods and Services Tax (GST).
GJF, he said, will send the representation to Union Finance Minister Arun Jaitley on GST, highlighting various concerns of the sector.

“We have been constantly highlighting various contentious issues such as smuggling of gold and increasing PAN card limit for purchases, lack of hallmarking infrastructure and high Customs duties on raw material gold,” he added.

GJF, he said, is closely evaluating the implications of Model GST Law and has already started mapping the business practises of the sector with the Model GST Law and Draft GST Rules.

GJF Director and Member-High Level Committee (HLC) Ashok Minawala said, “The HLC Report, which was unanimously accepted by the government, was prepared after taking the suggestions and recommendations from over 60 associations of India into consideration.”
“Keeping in mind, the unique characteristics of the gems and jewellery sector, the kaarighars and small jewellers were kept out of purview of the Excise Duty. Therefore, while we welcome GST we request the GST Council to recognise the practical issues faced by the sector as highlighted in the HLC report,” Minawala added.  Source – [08-11-2016]

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