Fiscal Policy 11 Nov 2017 by Tojo Jose

GST Council go for major realignment: makes rate reduction on popular items

GST Council go for major realignment: makes rate reduction on popular items

Nearly four months after the launch, the GST Council has slashed rates for more than 200 items including goods and services. Rates of all several popular items like wire, cables, furniture etc., will come down from the 28% rate. GST Council that met for the 23rd time, decided to make serious rate changes besides enhancing the composition scheme for Small and Medium Enterprises. The annual turnover limit to be eligible for the composition scheme is now Rs 1.5 crores. The change has left just 50 items under the high tax rate of 28%. The new tax rates also give relief to the hotel industry where the new tax rates for low tier hotels is set at 5%. The GST has a four-tier struc

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Fiscal Policy 08 Nov 2017 by Tojo Jose

Multi-agency group to study Paradise Papers revelations

Multi-agency group to study Paradise Papers revelations

The Central Board of Direct Taxes has formed a multiagency group to look into the Paradise Papers revelations related to Indian residents. The group will be headed by the CBDT Chairman and include members of major financial investigation entities – the Enforcement Directorate, Financial Intelligence Unit and the officials from the RBI. The Paradise Papers are financial documents related to overseas money and income transactions of residents from various countries. Most of the accounts are accused to illegal and related to black money transactions. But experts point out that some of them might have been fair transactions to facilitate complex financial arrangements. Accor

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Fiscal Policy 25 Oct 2017 by Tojo Jose

Govt unveils Rs 7 lakh crores stimulus package; funded by Rs 3.44 lakh crore borrowings

Govt unveils Rs 7 lakh crores stimulus package; funded by Rs 3.44 lakh crore borrowings

The Government has brought out Rs 7.46 lakh crore stimulus to overcome the current economic slowdown. Two critical sectors – highways and public-sector banks will share the stimulus. Announcing the programme, Finance Minister Arun Jaitley said that the stimulus will be completed in the next two years. First beneficiary of stimulus are the PSBs, who will be recapitalized by Rs 2.11 lakh crore. The major portion of the stimulus goes to the road sector as the proposed Bharatmala Pariyojana will be funded with Rs 5.35 lakh crores. Bharatmala’s main thrust is to construct a coastal highway of nearly 34800 km. Funding of the programme The funding of the programme is cru

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Fiscal Policy 08 Aug 2017 by Tojo Jose

Tax filings and advance tax payments goes up on demonetisation impact

Tax filings and advance tax payments goes up on demonetisation impact

Trends on tax filings indicate they have gone up significantly during the post-demonetisation. While the tax filings increased by nearly 25%, advance tax payments increased by a whopping 42%. According to the Ministry Finance estimate, the number of income tax returns filing increased by nearly 25 % this fiscal. The ITR filing increased by 24.7% pushing the total return filings to 2.82 crores from 2.26 crores during the corresponding period in 2016-17. The number of filings by individuals reached 2.79 crores, registering an increase of 2.22 crores. “As a result of demonetisation and ‘Operation Clean Money,’ there is a substantial increase in the number of Income

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Fiscal Policy 05 Jul 2017 by Tojo Jose

Government warns companies on profiteering while making price adjustment with GST

Government warns companies on profiteering while making price adjustment with GST

Government today warned the retailors and manufactures against any profiteering during the GST transition phase. Companies should reduce the price for goods where the GST rates have come down. Only goods that ware manufactured before July 1 can be sold at the GST impacted higher price according to the Revenue Secretary Hasmukh Adhia. Profiteering means retailors are not transferrin the reduced tax in the form of a reduced price to the consumers. Manipulation of prices on stocks is the route for profiteering. Government has decided to create an anti-profiteering authority during the transitional period. A five-member National Anti-Profiteering Authority, headed by a secretary-level

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Fiscal Policy 03 Jul 2017 by Tojo Jose

GST’s customization: India’s own version may test businesses’ adaptability

GST’s customization: India’s own version may test businesses’ adaptability

The GST is considered to be the ultimate tax reform in indirect taxes globally. Several countries have adopted it and those who have unitary financial structure or where there is only one central government, GST launch is rather simple. But in India’s case, the situation is much different. Merging of central and state taxes needed constitutional arrangements and political consensus. Indian conditions are also much different with the business communities consists of largely small and medium enterprises that have several hurdles to establish and manage the GST infrastructure. It doesn’t mean GST is a higher order reform given the capability of the business community. Ra

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Fiscal Policy 02 Jul 2017 by Tojo Jose

GST on the first day: biggies get ready; small firms struggles

GST on the first day: biggies get ready; small firms struggles

The first day of GST indicates difficulties for small firms as most of them report lack of idea about tax implications on inputs and components they are selling. Customers on the other hand, have started to adjust with the higher rates on some of the popular items like movie tickets where the tax rate gone to the peak 28%. Several small firms and sellers issued multiple bills to the same customer as the commodity they have bought have different tax outgo. Lack of proper idea about the exact tax implication were reflected across businesses. Bigger entities and that selling high value consumer durables like car and electronics adjusted to the new tax system quickly. Reports from va

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Fiscal Policy 30 Jun 2017 by Tojo Jose

India enters the GST era

India enters the GST era

The Goods and Services Tax (GST)’s life starts on July first as the centre and states decided to merge more than a dozen of their small and big taxes under it. Now, nearly 70% of the country’s indirect tax revenues are covered under the GST. Importance of the event is well reflected as the Parliament is going to hold a midnight function on its launch. The rare gesture shows the pain and effort taken by the centre and the states to give away their pet taxes since independence while creating the GST. GST is rightly one of the biggest reforms since 1991 New Industrial Policy and the biggest tax reform since independence. It had the conceptual launch in 2000. But it

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Fiscal Policy 12 Jun 2017 by Tojo Jose

GST: tax rate on 66 items reduced and relief to small enterprises enhanced

GST: tax rate on 66 items reduced and relief to small enterprises enhanced

The GST Council’s 16th meeting on Sunday has brought down tax rate on 66 items in a fine-tuning exercise. The Finance Minister after the meeting also raised the exemption limit for the concessional composition scheme from Rs 50 lakh to Rs 75 lakh. Revision of other deserved items including that on hybrid cars are expected in the next meeting Items for rate cut Finance Minister Arun Jaitely who chaired meeting revealed the 66 items whose rate has been brought down. These include insulin, cashew nuts, pickles, ketchup, agarbattis, children’s drawing books, tractor components and others etc. Tax rate on children’s books were brought down from 12% to nil. For cine

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Fiscal Policy 07 Jun 2017 by Tojo Jose

Anti-profiteering body is the next big work for the GST Council

Anti-profiteering body is the next big work for the GST Council

When the government is targeting on an anti-inflationary GST system, it is necessary to ensure that tax reduction on several commodities should brought down prices as well. Here, tax administers fear that when cost cascading effect and input tax credits are allowed, tax burden will come down. As a result, businesses may not bring down prices rather they may convert the tax reduction into profits. The situation is called profiteering. Checking this profiteering through anti-profiteering mechanisms is the task in front of the government. The GST Council proposed formation of an anti-profiteering body using the tax administrators to make sure that businesses are transferring tax redu

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