GST updates (19 Nov 2016)

Government unlikely to bring GST bills soon

November 19, 2016
Government unlikely to bring GST bills soon

The government is keen to push the passage of three legislations related to the main GST bill in the ongoing Winter session, as Parliamentary nod for these bills is must for rolling out GST from the target date of April 1, 2017.

With the united opposition attacking the ruling dispensation in Parliament over the demonetisation issue, the government is unlikely to bring three bills related to GST in the coming days and hopeful of pushing them in latter half of the Winter session which began on Thursday.

The government is keen to push the passage of three legislations related to the main GST bill in the ongoing Winter session, as Parliamentary nod for these bills is must for rolling out GST from the target date of April 1, 2017.

The three bills related to GST are–the Central Goods and Services Tax Bill, the Integrated Goods and Services Tax Bill, the Goods and Services Tax (Compensation for Loss of Revenue) Bill.

The government is hopeful of passage of the three GST bills in the Winter session, which are likely to be introduced in either third or fourth week of the session, a source said.

As per the GST Constitution Amendment Bill, which was notified on September 17, 2016, the government is required to complete the process of implementation of GST within a year.

The all powerful GST Council, which is chaired by the Finance Minister and has representations from state, had already decided on a four-tier rate structure–5, 12, 18 and 28 per cent–with a cess over and above the peak rate for luxury and demerit goods.

The issue of dual control, which deals with who will control which set of assessees under GST, has been holding back the negotiations between the Centre and the states.

The government has listed total nine bills which also includes Surrogacy (Regulation) Bill for introduction, consideration and passage.

The government has listed 10 pending bills including HIV AIDS Prevention and Control bill, Mental Health Care bill, Maternity Benefit Amendment bill, Prevention of Corruption (amendment) bill and Consumer Protection bill for consideration and passing as these bills have already been introduced in Parliament. Source – [19-11-2016]

GST seminar to help govt. officers educate industry

November 19, 2016
Ahead of next week’s Goods & Services Tax (GST ) Council meeting, Cabinet Secretary P.K. Sinha has asked all the officers of the rank of joint secretary and above in all Central government departments to attend an interactive seminar on GST on Saturday. “Impact of GST will be felt by all sectors… various stakeholders need to be familiarised with the new taxation system to ensure smooth transition,” Mr. Sinha said in a letter to all the secretaries. “Senior officials can contribute to this in a major way by educating the different stakeholders,” he said. An official statement on the seminar said introduction of GST is the most important reform in the indirect tax system in the country. “Indirect tax structure in India is highly complex with hidden costs for trade and industry. Non-uniformity across the States, cascading of taxes due to ‘tax on tax’ and multiplicity of taxes in the current tax laws are huge deterrents for the businesses  Source [19-11-2016]

Duty sop in GST holds key to Foxconn’s Nokia unit takeover

November 19, 2016

Duty sop in GST holds key to Foxconn’s Nokia unit takeover

Taiwanese phone maker Foxconn’s plans to take over the shuttered Nokia factory near Chennai rest on a tax structure as India moves into the GST regime. Foxconn had shut its India plant near Chennai after Nokia exited the business of making phones in late 2014 following a large tax demand.

Its second innings had begun with a promise to start 10-12 factories across the country with an investment chest of Rs 12,000-crore ($2-billion). However, its comeback was through a small factory in Andhra Pradesh’s Sri City Special Economic Zone.


Producing for a range of Chinese brands like Xiaomi, Foxconn’s return coincided with a new tax structure that favoured foreign contract manufacturers to make locally instead of importing completely built units into India.

Now, at its seminal point of its second entry through taking over a now-defunct Nokia Chennai plant, Foxconn is faced with a gnawing uncertainty over whether the duty differential dispensation will exist at all in the GST regime.

In a proposal accessed by ET, Pankaj Mohindroo, president, Fast Track Task Force, wrote to the Department of Electronics and IT(DeitY) in August, saying: “The duty differential dispensation remains at the heart of the current momentum in mobile handsets and components’ manufacturing…”


In last year’s budget, the centre imposed a 12.5% countervailing duty on mobile phones that would be imported, strengthening the case of global corporations like Foxconn to set shop in India to serve the Indian market.

Since the Goods and Services Tax (GST) will subsume all state taxes such as the value-added tax -for which manufacturers can claim exemptions-retention of the duty differential becomes key for Foxconn to survive and expand in India.

In the one year after the centre incentivised domestic manufacturing, about 35 smartphone factories and 15 component manufacturers have set up shop, creating 50,000 jobs.


An official aware of developments connected to Foxconn said: “The Nokia factory deal is four-way the centre, the state, Nokia and Foxconn at four corners, with all of them having something to contribute to the deal.”

“From the centre’s part, all the tax concessions that triggered local manufacturing need to remain. Otherwise, it really is going to spoil the deal for Foxconn-not just for the Nokia plant but for the entire industry,” the official added.

Sources aware of the Nokia-Foxconn negotiations say that currently, negotiations are taking place on the sops that Tamil Nadu is willing to offer and the valuations of the 212-acre factory that was shut for overtwo years.

Queries on the issue sent by ETto Foxconn remain unanswered.

Tamil Nadu government officials maintain that the state government is aware of Foxconn angling for the takeover and is liaising with the Centre to making it happen.


The Union government’s Make in India campaign seeks to grab a portion of foreign investments flowing into China for the country’s cheap electronics manufacturing prowess.

The tax advantage has been seen pivotal to this effort.

Tax experts, however, believe that the coming of the GST will only help India gain an edge against China in the exports market.
Sachin Menon, head of indirect tax, KPMG, said: “With the goods and service tax proposing to refund entire input taxes, as opposed to partial refund of input taxes under the current regime, it will help India to be competitive even in the export market.” Source – [19-11-2016]

GST to reduce margins

November 19, 2016
The logistics & real estate industries could see their profitability indented if the abatement of tax is not continued under the GST regime.

Whilst industries in general will benefit by GST and will see margin expansion, those like the services that have lower tax rates could see margins contract. It could also bring down prices of products as it would eliminate multiple taxes or ‘taxes on taxes’. Industries like cement and auto manufacturers stand to benefit from lower GST tax rates, while those that could be impacted negatively due to GST include the cotton and downstream value chain and apparel segment of the textile industry and print media, which are currently either tax exempted or subject to concessional rates of taxes.

The logistics and real estate industries could see their profitability indented if the abatement of tax is not continued under the GST regime, while the impact on the infrastructure industry with high value contracts spanning across years would have to be assed contract-wise.

Analysing the pros and cons of the four-rate tax slabs -5 per cent, 12 per cent, 18 per cent and 28 per cent of the GST, India Ratings and Research (Ind-Ra), says the practise of “kaccha bills” which lead to leakages due to non-payment of taxes would be eliminated as the users of input supply would insist on tax invoices to claim the input credit. Source –[19-11-2016]

Published by Business So Simple

Hi, I am business consultant working with a team of Chartered Accountants, Company Secretaries, Lawyers & MBAs. I am promoter of " Make Your Business So Simple" "Make Education So Simple" Make Life So Simple" Make Legal Affairs So Simple".

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: