GST Updates (14 Nov 2016)

Retain Differential Duty Under GST, Handset-makers Tell Govt

November 12, 2016
Handset makers have asked the government to continue differential duty advantage under the goods and services tax (GST) regime, and deincentivise import of fully built mobile phones by imposing higher rate than on locally produced phones.
Unsure of the slab rate under GST, representatives of the Indian Cellular Association (ICA) and Consumer Electronics and Appliances Manufacturers Association (CEAMA) separately met senior officials in the revenue department earlier this week to present possible solutions to keep local phone manufacturing going.
“We have proposed that the government introduces a new concept, a negative list under GST for imports and trading of goods, which includes mobile handsets, on which no credit of central GST should be allowed,“ CEAMA vice president Sunil Vachani told ET after the meeting.
The GST Council is yet to decide the rate category for mobile phones, which are at the forefront of PM’s Make in India initiative. India is set to produce mobile phones worth Rs 94,000 crore locally this fiscal, up from Rs 54,000 crore in 2015-16.
The government took the first step towards creating a uniform tax rate structure for the country with GST, but decided on a four-tiered tax system 5%, 12% 18% and 28% with the first three rate slabs comprising goods of mass consumption.
The 28% slab is applicable to white goods, cars, pan masala, tobacco and aerated drinks. Additionally , a cess will be imposed on luxury products and products such as pan masala, tobacco and aerated drinks. A committee of secretaries will now allocate items into different tax categories.
Handset makers fear that lack of clarity on the duty dispensation could not only upset the momentum of local manufacturing growth but also put at risk investments made by device makers that assemble phones locally. They said if the duty differential is not continued, it may also threaten the proposed Phased Manufacturing Programme (PMP) that aims to make 1.2 billion mobile phones – worth Rs 15 lakh crore by 202526 ¬ potentially employing 5.8 million people.
Both ICA and CEAMA have proposed an alternative, where import GST rate of 12.5% without any credit should be applied on phones that are imported. In order to maintain differential duty structure for locally made phones, a nil central GST rate without input tax credit and state GST rate of 5% at each stage which is creditable, should be set.
ET has seen details of the presentations made by both associations that represent leading mobile phone makers such as Samsung, LG and Micromax besides consumer durable makers such as Haier and Videocon.
The government currently levies a 12.5% countervailing duty on fully made phones imported into India and a similar rate of duty on batteries, chargers and headsets of mobile phones.
Senior officials from telecom and electronics and IT departments had earlier said that policy and regulatory framework would be supportive to the industry, seeking to position India as an emerging global hub for manufacturing of mobile phones. However, a final word from the government on the rates is awaited. – [12-11-2016]

GST implementation can’t be delayed beyond Sept 16, 2017

November 11, 2016
Finance minister Arun Jaitley on Thursday said the Centre was trying earnestly to build a consensus with the states on the sticky issue of sharing of administrative control on assessees to ensure that the April 1 deadline for rolling out the goods and service tax (GST) was met.
“We are making all efforts to introduce GST from April 1, 2017. GST has to be implemented latest by September 16, 2017, and if it is not implemented by then, states will not be able to collect their share of taxes, and hence, there is not enough scope to further delay the decision,” Jaitley said at an economic editors’ conference here.
The minister was referring to the GST Constitutional Amendment, which has a provision in this regard. After deciding the GST rate structure a day earlier, the Centre and states hit a speed breaker on November 4 as they could not decide on how the audit and enforcement powers would be shared between them in the GST regime.
The Union and state finance ministers would meet informally on November 20 to solve the issue politically and suggest their formula to the GST Council meeting on November 24-25 for endorsement. In the meantime, officials from both sides are deliberating to finalise the four draft laws — those on central GST (CGST), integrated GST (IGST), compensation and state GST (SGST) — by November 15. The Centre is trying to introduce CGST, IGST and compensation Bills in the winter session of Parliament later this month.
“Only the last stages (of decision-making) remain and I do hope we (GST Council) are able to resolve that too, through a larger consensus,” Jaitley said.
The government has covered a lot of distance for implementation of comprehensive indirect tax and it was not in favour of resorting to voting to decide on any issue at the GST Council meeting. “We have already sorted out 10 issues. The issue of dual control still remains, there is no reason why we will not be able to work out a reasonable solution on this,” he said.
Jaitley assured people that taxman will not hound those making small deposits in scrapped Rs 500/1,000 currency and advised them not to throng banks as there is enough time to exchange the junked notes. He however said that those depositing large sum of unaccounted money will have to face the consequences under tax laws, which provide for tax and a 200 per cent penalty. Source – [11-11-2016]

Surrogacy regulation and GST related bills to be introduced

November 11, 2016
As many as nine new bills, including three related to GST, and surrogacy regulation will be introduced in Parliament in upcoming Winter Session.

The three GST related bills are — Central Goods and Services Tax Bill, Integrated Goods and Services Tax Bill, Goods and Services Tax (Compensation for Loss of Revenue) Bill will be introduced in the session.
Winter Session of Parliament will begin from November 16. Surrogacy (Regulation) Bill will be introduced to constitute national surrogacy board, state surrogacy boards and appointment of appropriate authorities for regulation of the practice and process of surrogacy and for matters connected therewith or incidental thereto.
Besides these, six other bills will be introduced including IIM bill to confer Indian Institutes of Managements (IIM) statutory status and the competence to award degrees. While HIV AIDS Prevention and Control bill, Mental Health Care bill, Maternity Benefit Amendment bill, Prevention of Corruption (amendment) bill and Consumer Protection bill will be taken up for consideration and passing as these bills have already been introduced in the Parliament.
Mental Health Care bill, Maternity Benefit Amendment bill were passed by Rajya Sabha and are pending in Lok Sabha. While, Consumer Protection bill, and HIV, AIDS Prevention and Control bill were referred to the standing committees and Prevention of Corruption (Amendment) bill was referred to the select committee, according to Lok Sabha bulletin. Source [11-11-2016]

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