GST Updates (06 Jan 2017)

Tax refund to exporters under GST within seven days

January 6, 2017

Tax refund to exporters under GST within seven days:Commerce Min

Exporters have been demanding ab-initio exemption from payment of taxes under the Goods and Services Tax (GST) regime arguing that delay in refunds often takes months and also results in blocking the orking capital. They also stated that exports need to be encouraged view of the global slowdown.

The Department of Revenue has promised to refund tax claims of exporters within seven days under the new GST regime, thus addressing a major concern of the sector, Commerce and Industry Minister Nirmala Sitharaman said.

The minister also said that exporters would get interest on the refund if it is delayed beyond two weeks.

Exporters have been demanding ab-initio exemption from payment of taxes under the Goods and Services Tax (GST) regime arguing that delay in refunds often takes months and also results in blocking the working capital. They also stated that exports need to be encouraged in view of the global slowdown.

The minister recently raised the issues of exporters in the GST Council meeting.

The concern of the exporters was that the refund should not take too long, she told reporters after chairing the meeting of the Council for Trade Development and Promotion here today.

In today’s meeting, the exporters were assured “that on 90 per cent of the amount (of refund), within seven days, the refund will be made and if there is an undue delay, interest will be paid on the amount due,” Sitharaman said.

Elaborating on the issue, Commerce Secretary Rita Teaotia said the Department of Commerce has been taking up this matter with the Department of Revenue (DoR).

“GST clearly provides that the taxes must be paid and that the refund will be provided. So since the regime is so structured, in order to see that there is minimum pain to the exporters, what the DoR has committed that 90 per cent of the refund will be made within seven days. Delays beyond that would invite interest payment,” she said.

She said the remaining 10 per cent will be subject to whatever verification revenue department is required to do.

“This assurance satisfies the exporters,” she added.

Revenue department will work on the details to ensure that exporters do not suffer because of delay in refund.

Teaotia said exporters will get interest if the refund is delayed beyond two weeks.

“The issue about interest payment, what that amount would be and whether it would kick in after two weeks…that detail DoR would decide,” the Commerce Secretary said.

Further, the secretary said that on the issues related to tax treatment of SEZs under GST, the Department of Commerce has made representations before the GST Council.
“We are looking for favourable consideration of our submissions,” she said.

The Commerce and Industry Ministry has recently suggested to the GST Council to exempt leather and plantations sector from the GST ambit. Source – [05-01-2016]

With GST delayed, Budget-making just got tougher

January 6, 2017

The inevitable delay in implementing the national goods and services tax (GST), earlier targeted for April 1, will ensure the Budget-making process is much more complicated for the finance ministry.

The Centre will have to account for the presently applicable indirect taxes for that part of 2017-18 when GST will not apply.

Earlier, when GST was expected to apply from April 1, when the new financial year begins, Finance Minister Arun Jaitley’s Budget speech was expected to be completely different from previous editions. Part B, the taxation proposals, was to only have announcements related to direct taxes and customs duties.

While that could still be the case, planners will have to factor in the revenues from the current indirect taxes for budget estimates for the first half of the year at least. And then from GST, now expected to be rolled out on or after September 1.

On Wednesday, the long impasse over division of administrative turf between Centre and states persisted, as did the issues of higher compensation due to demonetisation and the definition of coastal states, at the latest GST Council meeting. Indicating a rollout of the new indirect tax regime is difficult not only from April 1 but also from July 1.

“Budget calculations will be complicated, with uncertainty surrounding the GST rollout date and the rates. The estimates might largely be based on assumptions. The government could look at setting up a contingency fund to overcome any mismatch in revenue estimates and actuals. It might do the calculations by assuming July 1 as the rollout date,” said Pratik Jain, leader-indirect tax at consultancy PwC. “They will have to take an estimated date for the rollout. In that case, they will project indirect tax collection at 75 per cent of the GST revenues estimated for the full financial year. They already have projections for service tax and excise duty and must have done some homework on classification of items,” said Bipin Sapra, partner at consultancy EY.

The sense is that Jaitley’s speech will stick to the earlier proposed script and not give indirect tax proposals. This means the usual announcements of levies on cigarettes, high-end cars and other luxury items, ‘white’ goods such as air conditioners, etc, and service tax exemptions, will not be a part of the Budget speech. It remains to be seen. Source – [06-01-2017]

GST: Jaitley pushes for consensus

January 6, 2017

The Centre on Wednesday said that it will wait for consensus to emerge on GST laws and will not push for a decision by vote despite the threat of a delay in rolling out the new tax regime from April.

“I have consciously avoided voting and we have decided on issues based on consensus, often after a long discussion. The GST Council is a federal institution and a delicate one,” finance minister Arun Jaitley said after the body comprising states and the Centre failed to finalise the draft laws once again. Jaitley said that given that the precedent from earlier meetings would be cited in future decision-making, GST Council was trying to decide on all issues by consensus.

Two major issues -the proposed levy of tax on sale in the high-seas and dual control over entities with annual turnover of less than Rs 1.5 crore -have held up the finalisation of the draft laws. The laws need to be cleared by the state legislatures and Parliament before GST can be rolled out and industry is demanding time to prepare itself for the new tax regime.

As a result, the possibility of rolling out GST from April seems remote and state FMs are talking about a delay with Kerala finance minister Thomas Issac suggesting that implementation may not take place before September, which is the Constitutional deadline. “I am not very optimistic about GST rolling out in June or July.It is better to move to GST after all the preparations are done. To my understanding, it will be implemented September on wards,” he told reporters. While West Bengal finance minister Amit Mitra did not indicate a date, he said that a number of steps had to be taken, including software upgradation by companies. Jaitley too acknowledged that it was a race against time.”We know the difficulties, we are moving against time,” he said, adding that the GST Council would try to clinch a deal at its next meeting on January 16. Source - [05-01-2017]

Possibility of GST rollout moves further to September: Thomas Issac

January 5, 2017
Possibility of GST rollout moves further to September: Thomas Issac

The possibility of roll out of the Goods and Services Tax (GST) has moved further to September as a new issue has cropped up – the states’ demand for an increased share in the new indirect tax collections, Kerala Finance Minister Thomas Issac said on Wednesday.

“I am not very optimistic about GST rolling in June or July. It is better to move to GST after all the preparations are done. To my understanding it will be implemented September onwards,” Isaac told reporters here after the two-day GST Council meet came to end.

Ruling out the April 1 implementation of GST, after the Day 1 of the Council meet, Issac on Tuesday had told reporters that the rollout of the GST may only be possible by June-July.

The Kerala Finance Minister on Wednesday said that the state GST(sGST) can be passed in the state’s respective budget sesssions or special sessions can be convened, which will make rollout possibile by September onwards.

Raising new issues between the Centre and the states, Issac said that the Council members discussed the four tax slabs under the GST and the states felt that the states and Centre share in the taxes should be 60:40 and not 50:50.

“Four different GST rates have been fixed. Highest bracket is 28 per cent. It is taken for granted that Centre and state share in it will be 50:50.

“Over the years, states’ rights have been curtailed. This presents a historic opportunity to correct the states’ share to 60 per cent and Centre’s share would be at 40 percent. The states today (on Wednesday) supported this understanding,” Issac added.

Four tax rates of 5 percent, 12 percent, 18 per cent and 28 per cent have been decided under the GST regime. These apart, another category of tax between 40 per cent and 65 per cent will be imposed on luxury goods like high-end cars, panmasala, aerated drinks and tobacco products.

With the states now demanding increased share in the indirect tax collections, the crisis of GST rollout has deepened as the other issues of dual control or cross empowerment, which deals with assessee’s jurisdiction and the issue of area of state jurisdiction under integrated GST (iGST) have already created an impasse in the Council.

A number of states are firm that dealers and service providers below Rs 1.5-crore turnover should be entirely under the state’s control.

“We haven’t been able to even touch the dual control issue, which is fundamental to this process,” West Bengal Finance Minister Amit Mitra had told reporters here on Tuesday.

The GST Council meetings which were progressing well have been impacted after demonetisation dented the states’ revenues by 30-40 per cent.

Mitra had said that states’ tax revenues have fallen around 30-40 per cent owing to the depressive impact of the November 8 demonetisation measure, which has complicated the issue of compensation to states for future losses arising from the GST implementation.

Noting that the compensation fund would, therefore, require to have a much larger corpus of around Rs 80,000-90,000 crore, as compared to the current plan of Rs 55,000 crore, Mitra had also said that the GST Council will now take a call about the Centre taking responsibility for fully compensating states for the loss of revenue. Source - [04-01-2017]

GST receipt estimates will not be part of Budget Estimates

January 6, 2017

As the April 1 deadline for the implementation of the proposed Goods and Services Tax (GST) looks increasingly out of reach, the Ministry of Finance is likely to continue with its tradition of giving estimates for excise and service tax in the upcoming Budget for 2017-18 (April-March). Estimates for GST receipts for the next financial year will become a part of the revised estimates, not Budget estimates for 2017-18, officials in the know said.

“With uncertainty over April 1 deadline for GST, we will continue with giving estimates for excise and service tax in 2017-18 Budget. Earlier, when the dummy exercise of Budget was being undertaken, we had kept a separate column for GST estimate but now with the matter stuck in GST Council, we will continue with the existing system of estimates for indirect taxes,” a government official said.

The government is constitutionally mandated – as per the Constitution (One Hundred and First Amendment) Act, 2016 passed by Parliament last year – to roll out the indirect tax regime by September 16 this year. Finance minister Arun Jaitley has said that being a transactional tax, GST can be rolled out anytime between April 1-September 16, though the government wants to implement it as early as possible.

“It would be difficult to give indirect tax estimates with breakup (excise and services tax) for half year and then GST estimate for second half. The government has to bring in GST by September, then the estimates for GST will become part of revised estimates than Budget estimates for 2017-18,” another official aware of the developments said.

Usually, the finance ministry begins its pre-Budget meetings by October-end for determining the revised estimates for the ongoing financial year and estimates for the next financial year.

This week, in its eighth meeting, the GST Council was unable to thrash out a consensus over the crucial issue of dual control and definition of territory regarding high sea sales within 12 nautical miles in offshore area of coastal states. Most states, including BJP-ruled Gujarat, have ruled out the April 1 deadline and are expecting GST to be rolled out only after June.

The government is already lagging on the initial timeline for GST having already missed the initial target of Winter Session for passage of supporting legislations for GST. The Centre had initially intended to get the three bills relating to GST—Central GST (CGST) bill, Integrated GST (IGST) bill and the the bill for compensating states for revenue losses—passed in the Winter Session of Parliament.

If the states and the Centre are able to build a consensus on the pending issues in the next meeting of GST Council on January 16, the bills are likely to be brought up for passage in the Budget Session by the Centre. Subsequently, states will have to pass the state GST (SGST) bill, a mirror image of the CGST bill, in their respective assemblies.

The resolution of dual control, which pertains to division of administrative control over tax assessees between the Centre and the states, will be crucial for timely implementation of GST. States have been demanding exclusive control over tax assessees with annual turnover below Rs 1.5 crore, but Centre has not relented so far on this demand and the issue has been pending with the GST Council since its second meeting in September.

According to the updated figures shared by the Centre with the states, the likely taxpayer base in GST would be 107 lakhs, out of which states account for 67 per cent (71.7 lakhs) and Centre is estimated to account for 33 per cent (35.3 lakhs). There are around 81.4 lakh VAT dealers, out of which active dealers are 66.5 lakhs. For service tax, there are 38 lakhs assessees, out of which 26 lakhs are active assessees, while there are around 4,00,000 assessees for excise. Around 4,00,000 taxpayers are common to the Centre and the states. Source – [06-1-2017]

Mitra walks out of pre-Budget meet, cites ‘financial emergency’

January 5, 2017

A day after his party’s leader in Lok Sabha, Sudip Bandyopadhyay, was arrested by CBI, West Bengal Finance Minister Amit Mitra today staged an angry walkout from a pre-Budget meeting saying there was ‘financial emergency and ‘political environment of fear’ in the country.

Mr. Mitra, who was in full attendance at the two-day meeting of the GST Council chaired by Mr. Jaitley that ended today, said the Union Budget had become a “meaningless” exercise after Prime Minister Narendra Modi, in his address to the nation on new year’s eve, made announcements similar to a Budget presentation.

He said that before walking out, he made the Union Finance Minister, who had called the meeting, hear the expectations of States on his fourth budget to be presented on February 1 and also make him aware of the “financial emergency” imposed by demonetisation and the job losses it has led to.

“I wanted the Finance Minister to hear the reality on the ground, the financial emergency in the country, the political environment of fear all around,” he told reporters after emerging from the meeting.

Mr. Bandyopadhyay was arrested by the CBI in Kolkata yesterday in connection with the Rose Valley chit fund scam — a move that promoted West Bengal Chief Minister Mamata Banerjee to allege that Prime Minister Narendra Modi was using central agencies like the CBI, Enforcement Directorate and Income Tax department against his political rivals who were raising their voice against demonetisation.

The Trinamool Congress, he said, is today demonstrating against “the political emergency that seems to have happened at every nook and corner on every matter.”

Mr. Mitra also said currency demonetiation has led to closure of small industries and left hundreds jobless across the country, including the BJP-ruled States.

While the leather industry in West Bengal has completely collapsed, closure of 12 lakh powerlooms in Maharashtra had led to workers returning to their native places in Bihar, Uttar Pradesh and Telangana. Source – [04-01-2017]

Arun Jaitley hopes to resolve dual control issue in next GST Council meet

January 5, 2017

Arun Jaitley hopes to resolve dual control issue in next GST Council meet

Admitting that the Goods and Services Tax (GST) Council was racing against time on the government’s implementation target of April 1, Finance Minister Arun Jaitley on Wednesday said it is hoping to resolve the vexed issues of Integrated GST (iGST) and dual control over assessees in its next meeting on January 16.

“We know the difficulties, we are moving against time. Dual control is a complex issue. We started a discussion that was inconclusive. We have decided to meet on January 16 to untie the knots in this issue,” Jaitley told reporters here after the two-day GST Council meet.

“We will be meeting to conclude the discussion on the gaps in draft laws. The gaps are on two issues. The first pertains to the definition of the word territory (in iGST) and the second is on dual control and cross empowerment,” he said.

Even after eight meetings of the GST Council, the deadlock continues between the Centre and the states on the vexed issue of “cross empowerment”, or dual control of assessees. The question of who will exercise control over GST assessees — the Centre or the states — remains critical.

The states want exclusive control on businesses with turnover below Rs 1.5 crore (the current threshold for central excise), including the service taxpayers.

The impact of demonetisation on states’ tax revenues was brought up at the GST Council meeting and Jaitley said that the states presented their estimates of December revenue figures based on collections made in November, the month of the demonetisation announcement.

“A number of state finance ministers gave details of how revenue has actually increased in their states during this period. We’ve asked for detailed data in this regard,” Jaitley said.

To a query on the impact of the November 8 demonetisation of high-value currency, Jaitley said that excepting the next quarter of the fiscal, the demonetisation-led process of “integrating the informal economy into the formal one” will actually result in higher revenues.

“My assessment is that with the integration of the informal into the larger economy, the revenue of states, unless very badly administered, will increase,” the union Finance Minister said.

“We will end this year with higher revenues…in both direct and indirect taxes we’ll exceed the budget estimates,” he added. Source – [04-01-2017]

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