i once again request you all for postinggo to content at glance 2 content at glance :-1.0 flowcharts...

1

Editor’s Column :-

It gives me immense pleasure to releasethis month’s Communique. Nowadays onall fronts, the most discussed and debatedtopic is Goods and Services Tax (GST). Itbeing the largest tax reform sinceindependence is awaited eagerly by all.

The 3rd meeting of GST Council from 18th

to 20th October 2016 was not fruitful in away that no important decision could betaken by the council except themethodology of compensation to states.

It was expected by all that the rate as wellas the list of exemptions will be finalised inthe meeting but somehow the consensuscould not come. I am afraid this may causedelay in implementation of GST despitethe fact that Honourable Finance Ministeris still telling 1st April, 2017 to be the dateof GST roll out .

Further to this much depends on theGSTN and its preparedness as that is goingto be the heart of GST. So, we all have tojust wait and watch.

I am feeling pride and happiness whileinforming you all that we have writtenbook on GST, in English as well as inGujarati, which is released by renownedpublication houses of the country. Coverpage copy of the books is as under. Itswritten in simple language and entireModel GST Law is explained with the helpof Tables and flow charts.

My dear friends, I have initiated uploadingof Videos in which the provisions of TheModel GST Law is discussed and you allare requested to go through the same.Further, We have developed a dedicatedportal for GST i.e. www.gstclub.in mainlyfor updations related to GST along withthe option to post Articles, Create Forumsby anyone. The main feature of the saidportal is once you enrol your E-mail ID,you start getting DAILY DIGEST from thesaid portal.

I once again request you all for postingarticles, creating forums onwww.gstclub.in also you are requestedto subscribe your E-mail ID by visitingthe site and be updated abouteverything on GST.

Happy Reading and your suggestionsare invited.

Thank You !

CA Avinash Poddar

http://www.gstclub.in/

http://www.gstclub.in/

Go to Content at Glance 2

Content at Glance :-

1.0 Flowcharts relating to Registration Procedure

2.0 News & Updates

1. No decision yet on GST rates as States oppose cess2. Concerns over GST legislation not addressed: Congress3. ‘Exempt gems, jewellery exports from GST’4. GST Rate Undecided Amid Tussle Over Share Of Centre vs States: 10 Facts5. A compromised GST6. Clear refunds, drawback before GST roll-out: CBEC Chairman7. GSTN receives over 200 applications from IT and fintech companies8. GST may make oil, chicken dearer; TV, air conditioner cheaper9. Bullion dealers, jewellers seek lowest GST slab10. GST Council eyes 16% levy on gold jewellery and 4% on bullion11. Here's the list: What is cheaper and what is dearer after GST12. GST cess confusion: Focus should be having most products at 18% rate13. Shifting the GST goalpost14. CAG gearing up for audit changes in view of GST rollout15. GST roll out stuck again16. GST Will Lead To Mergers And Rise Of World Class Consumer Companies: Mark

Mobius17. Madhya Pradesh to be logistics hub in GST regime: Jaitley18. Dharmendra Pradhan asks states to help bring petro products under GST19. GST law to boost domestic demand, drive job creation: PM Modi20. GST can be paid online using debit, credit cards: Revenue Secretary21. Multiple rates in GST just old wine in new bottle: P Chidambaram22. GST can be paid with debit, credit cards online23. Huge challenges for CAs after GST implementation: Venkaiah Naidu24. Four slab rate structure for GST is better than a single rate: Arvind Panagariya25. Centre's proposal on GST rates finds favour with Niti Aayog26. GST: November 8 is the D-day for migration of eight million assessees27. GST is an excellent initiative: Raghupati Singhania, MD, JK Industries28. Sisodia lauds Jaitley over GST, says 'grateful' to him29. Amid concerns, Niti Aayog supports four-slab GST & cess on sin goods30. Multiple-rate GST will be disastrous31. GST benefits Nagpur as companies like Flipkart look to turn it into logistics hub32. Revenue neutral rate structure of GST to be finalised next month: Shaktikanta Das33. World will toe GST invoice matching, says Deloitte's David Raistrick34. Chamber opposes cess on GST35. OPS cabinet discusses new edu policy, GST36. GST will be game changer for media, entertainment industry: Venkaiah Naidu37. Congress backs Pradhan over GST on petroleum products in MP


38. Govt sources say cess is a better option than high tax rate39. A K Bhattacharya: Who killed GST?40. Govt Firm on Multiple Rates and Cess on Luxury Goods under goods and services tax41. GST: Jaitley says yes to cess, no to additional tax for compensating states42. Letters: Flawed GST still superior43. GST row: Jaitley bats for cess over additional tax for compensating states44. GST rate speculation slows luxury car sales45. Realty may attract 18% GST; impact on housing prices neutral: ICRA46. Simple GST, thanks to SAP and Assocham's tech resource centre47. Time for Tamil Nadu government to pore over proposed GST rates48. The rationale for multiple rates in GST49. Panagariya defends 4 GST rates and cess50. Implementation of GST will help trade, industry: Official51. On GST, Centre must reach out to states to settle differences52. Trade, industry will benefit from GST, says official53. Help desk on GST installed


3.0 Knowledge series on The Model GST law by CA Avinash Poddar

New Releases

3.1 Part - XV - Seminar organized by Ahmedabad Branch WIRC of ICAI3.2 Part - XVI - Demand and Recovery u/s. 513.3 Part - XVII - Audit Provisions under The Model GST Law3.4 Part - XVIII - Special Audit Provisions under The Model GST Law

Released Earlier

3.5 Part - I - Overview of Goods and Service Tax3.6 Part - II - GST Registration - Knowledge Series on Goods and Service Tax (GST)3.7 Part - III - Time of Supply of Goods under GST3.8 Part - IV - Time of Supply of Services under GST3.9 Part - V – Change in effective rate of tax and valuation u/s 15 of The Model GST

Law3.10 Part - VI - GST Valuation (Determination of value of supply of Goods and Services)

Rules, 20163.11 Part -VII - GST Valuation (Determination of value of supply of Goods and Services)

Rules, 2016 - 23.12 Part - VIII - Place of Supply of Goods3.13 Part - IX - Place of Supply of Services - I3.14 Part - X - Place of Supply of Services - II3.15 Part - XI - Seminar on GST by GJEPC, Surat3.16 Part - XII - Job Work under GST3.17 Part - XIII - Transitional Provisions related to Job Work3.18 Part - XIV - Seminar on Basics of GST by Ahmedabad Branch WIRC of ICAI

https://www.youtube.com/watch?v=9-nJbWINcjA

https://www.youtube.com/watch?v=2lw41bVeLXk

https://www.youtube.com/watch?v=SDPcfLPf5fM

https://www.youtube.com/watch?v=KE5bHgADwqI

https://www.youtube.com/watch?v=QiXv83WEoJw

https://www.youtube.com/watch?v=iVQRNYXa6Ew

https://www.youtube.com/watch?v=1fJlXsdXAGo

https://www.youtube.com/watch?v=DCbnJrAVKJ0

https://www.youtube.com/watch?v=3rIgxFJ9llk

https://www.youtube.com/watch?v=3rIgxFJ9llk

https://youtu.be/_iBUaPwrWpk

https://youtu.be/_iBUaPwrWpk

https://youtu.be/voXi3_6EETc

https://youtu.be/voXi3_6EETc

https://youtu.be/olLuEPL7rVc

https://youtu.be/CUlRSuVkQYA

https://www.youtube.com/watch?v=_R5KVrX7XVo

https://www.youtube.com/watch?v=8qAHDZ599Ak

https://www.youtube.com/watch?v=_bDfK0cSLuM

https://www.youtube.com/watch?v=2ndYi0VKXbY

https://youtu.be/7rLjzAGTa54


1.0 Flow Charts relating to Registration ProcedureFC 1

REGISTRATION PROCESS

Eligible person, before filing for registration, tofurnish PAN, email id and mobile number inPART A OF FORM GST REG 01

Subject to verification, apply for registrationwith PART B of FORM GST REG 01

Electronic acknowledgement is generated inFORM GST REG 02

To intimate the same in FORM GST REG 03within 3 days of application

Query by Proper officer

Applicant to provide clarification in FORM GSTREG 04 within 7 days of intimation

Reject application and intimate with FORM GSTREG 05

Grant registration in FORMGST REG 06

Proper officer satisfied with clarificationYES

NO

NO

YES


FC 2

REGISTRATION FOR PEOPLE COVERED UNDER TDS OR TCS

Person required to deduct tax at source underSection 37(1) or required to collect at sourceunder Section 43C

Apply for registration with FORM GST REG 07

After due verification, granted registrationunder FORM GST REG 06

During a proceeding, officer is satisfiedthat such person is no longer liable todeduct tax at source under Section 37(1)or required to collect at source underSection 43C

NO

YES

Registration to continue to bevalid

After providing an opportunity of beingheard, cancel registration with FORMGST REG 08


Issued temporary identification number after depositing advanceamount as per provisions of Section 19A

FC 3

ASSIGNMENT OF UNIQUE REGISTRATION NUMBER

FC 4

GRANT OF REGISTRATION TO NON RESIDENT TAXABLE PERSON

Apply electronically, at least 5 days before commencing business, inFORM GST REG 10

Apply for Unique Registration Number in FORM GST REG 09

Proper Officer t issue the same in FORM GST REG 06


FC 5AMENDMENT OF REGISTRATION

Apply for amendment of any detail in FORM GST REG 11

Change is in notified information Change is in information otherthan notified information

Proper Officer shall be requiredto approve such information

Registration amended uponsubmission of form

Officer Satisfied Officer not satisfied

Grant registration with FORMGST REG 12

Intimate with FORM GST REG 03

Applicant to furnish informationin FORM GST REG 04

After satisfaction or inaction, theregistration shall stand amended


FC 6

SUO MOTO REGISTRATION

If any officer finds that a person who is liable to register under this act has not registered, such personshall be granted temporary registration in FORM GST REG 13 and such person shall be required tofurnish required information to the department within 30 days of issue of FORM GST REG 13.

CANCELLATION OF REGISTRATION

Voluntary Proper officer has reason tobelieve

Submit application in FORMGST REG 14 along withprescribed information

Provided 1 year has passedsince date of registration

Issue notice in FORM GSTREG 15

Proper officer shall issue FORMGST REG 16 to cancel theregistration

Registration shall continueto be valid

Proper cause provided tonot cancel registration

YESNO


Officer may revokecancellation by an order inFORM GST REG 18 within30 days

FC 7

REVOCATION OF CANCELLATION OF REGISTRATION

Registration cancelled by a motion by an officer

Submit FORM GST REG 17 within 30 days of date of service of order

Revocation not allowed if registration is cancelled for non-filing of returns

Reject the application forrevocation by order in FORMGST REG 05

Officer satisfied that there are sufficient grounds for revocation

YES NOFurther Query

Officer shall issue notice asking clarification in FORM GSTREG 03

Clarification to be provided by the applicant in FORM GSTREG 04

Dispose the application in manner specified above


FC 8

MIGRATION OF PERSONS REGISTERED UNDER EARLIER LAW

Extension of period of operation by casual taxable person and non-resident taxable person

To extend period of registration beyond the period specified in application, such person shall fileFORM GST REG 25 before expiry of validity of period of registration

Physical Verification of business premises in certain cases

An officer may get a place physically verified and upload such verification report on common portal inFORM GST REG 26 on day succeeding such verification.

Everyone registered under previous law and having PAN

To be issued Provisional Certificate in FORM GST REG 21,this shall include the GSTIN

Receiver of such certificates shall be required to furnishprescribed information and documents with FORM GSTREG 20, within 30 days of such certificate or the extendedperiod

All information furnished isfound to be correct & complete

No informationfurnished

Application regardingnon liability to register

Certificate of registration to begranted in FORM GST REG 06

Provisional Certificateis cancelled in FORMGST REG 22

FORM GST REG 24issued to cancelprovisionalcertificate


2.0 News & Updates

1. No decision yet on GST rates as Statesoppose cess

Council to meet again on November 3-4 to finalisethe tax structure; “Structure can be finalised afterconsensus is reached on funding forcompensations”.

The GST Council’s third round of deliberationsended here on Wednesday without a decision on therates structure after most States objected to aproposal to levy an additional cess on demeritgoods.

Triggers objections

The proposal from the Centre that triggeredobjections was for the imposition of a cess over andabove the Goods and Services Tax on ultra luxuryand demerit goods such as big cars, aeratedbeverages and tobacco products.

Finance Minister Arun Jaitley told a mediaconference that the GST Council — comprisingMinisters from all the States and headed by him —will meet next on November 3-4 to decide on theGST rates structure.

The Centre had on Tuesday proposed the cess as ameans to finance the compensation it will have topay States.

“While the modalities for calculating the losses wereagreed, by consensus, in the Council, there was noagreement on the funding mechanism the Centreproposed,” Revenue Secretary Hasmukh Adhia toldreporters after the conclusion of the discussions.

Separately, the Centre’s proposal on the GST ratestructure retains only the Clean Environment Cess,with the GST to subsume the rest (a move backed bythe States), Mr. Adhia said.

“A number of States objected to the use of GSTcollections (cess on GST) to finance GSTcompensations,” a member of the Council later toldThe Hindu.

He said the dissenting States demanded that theCentre fund the compensations out of theConsolidated Fund of India instead of tax revenue

mopped up from the GST system. “Just likecompensation to States were paid for losses arisingout of the shift to the VAT (Value Added Tax),” hesaid.

Finance Minister Arun Jaitley told reporters: “Wewill finalise the tax structure at the next meeting… itcan be frozen only after deciding whethercompensation to States is to be funded out of therate structure itself or from some special cess orsome third source.”

Mr. Adhia said the members had sought time fordiscussing with their State governments the four-slab rate structure, ranging from zero to 26 per cent,the Centre has proposed. “The Council will be ableto finalise the GST rates structure after consensus isreached on the funding mechanism forcompensations,” he said.

If instead of the proposed cess on GST, simply therate of the GST on demerit goods is raised, assuggested by some States, then, the GST ratestructure would end up with a multitude of taxslabs, Mr. Adhia explained.

For example, he said, the current rate of incidence oftaxes may differ for aerated beverages, cigarettes,bidis and luxury cars.

“If you have to put each in rate structure, onechallenge is how many slabs can you have then…Can you have 26, 45, 75 per cent slabs? There arecommodities where the effective rate of taxationcurrently is more than 100 per cent. Now thequestion is, is it feasible to have so many slabs oftaxation in GST,” Mr. Adhia said.

The Council could not dis Council to meet again onNovember 3-4 to finalise the tax structure;“Structure can be finalised after consensus isreached on funding for compensations”.


Triggers objections

The proposal from the Centre that triggeredobjections was for the imposition of a cess over andabove the Goods and Services Tax on ultra luxury


and demerit goods such as big cars, aeratedbeverages and tobacco products.






He said the dissenting States demanded that theCentre fund the compensations out of theConsolidated Fund of India instead of tax revenuemopped up from the GST system. “Just likecompensation to States were paid for losses arisingout of the shift to the VAT (Value Added Tax),” hesaid.



If instead of the proposed cess on GST, simply therate of the GST on demerit goods is raised, assuggested by some States, then, the GST rate

structure would end up with a multitude of taxslabs, Mr. Adhia explained.



The Council could not cuss the pr Council to meetagain on November 3-4 to finalise the tax structure;“Structure can be finalised after consensus isreached on funding for compensations”.


Triggers objections














The Council could not dis Council to meet again onNovember 3-4 to finalise the tax structure;“Structure can be finalised after consensus isreached on funding for compensations”.

The GST Council’s third round of deliberationsended here on Wednesday without a decision on therates structure after most States objected to a

proposal to levy an additional cess on demeritgoods.

Triggers objections









Mr. Adhia said the members had sought time fordiscussing with their State governments the four-


slab rate structure, ranging from zero to 26 per cent,the Centre has proposed. “The Council will be ableto finalise the GST rates structure after consensus isreached on the funding mechanism forcompensations,” he said.




The Council could not cus oposed GST rate of 4 percent for gold, he said.

http://www.thehindu.com/business/Economy/gst-council-meet-ends-without-a-decision-on-rates/article9240510.ece

2. Concerns over GST legislation notaddressed: Congress

The Congress said on Wednesday that if its concernson multiple rates and exclusions in the GSTlegislation were not addressed, it would oppose it inParliament.

“We have not been consulted officially yet,”Congress spokesperson Abhishek Manu Singhvisaid.

“If the government ignores our concerns or exceedsthe reasonable limits of taxation, it may faceproblems when the Bill comes up in Parliament,” hesaid.

http://www.thehindu.com/news/national/concerns-over-gst-legislation-not-addressed-congress/article9241095.ece

3. ‘Exempt gems, jewellery exports from GST’

Even as the Goods & Services Tax (GST) Council ismulling a decision on the taxation rates, the Gem &Jewellery Export Promotion Council (GJEPC), in arepresentation filed with the government, hassought exemption for gem and jewellery exporttransactions and minimal GST rates for domestictransactions.

At present, gems and jewellery exports areeffectively zero-rated. Hence any element of tax inexports is required to be rebated, GJEPC said in astatement.

As regards VAT, it is typically charged at the rate of1 per cent on the sale price by almost all states inIndia and the council said not more than 1.25 percent GST should be levied on sale of gold anddiamond jewellery in the domestic market.

“Export transactions should not be subjected to anyeffective GST. All related consumption of rawmaterials, inputs and input services such as input ofrough diamonds gold/silver/platinum (throughduty free export promotion schemes) at the inputlevel should continue to be free from the levy of anyimport duty/GST,” GJEPC said.

As regards transactions for domestic consumption,GJEPC has suggested that the preferred tax rates fordifferent segments should be from 0 to 1.25 per cent.

Praveenshankar Pandya, Chairman, GJEPC said,“Considering that India has achieved a pre-eminentglobal position in gems and jewellery exports andthat 4.6 million of people are directly employed inthe business, all transactions in the course of exportsof the products of Gem & Jewellery industry, shouldnot suffer any tax burden under GST.”

http://www.thehindu.com/todays-paper/tp-business/exempt-gems-jewellery-exports-from-gst/article9241874.ece

4. GST Rate Undecided Amid Tussle OverShare Of Centre vs States: 10 Facts

1. The decision-making body of the GST Council,which consists of Finance Minister Arun Jaitley andhis counterpart from each state, has to decide therate of tax, which must then be approved byparliament.

2. A gathering of the council has ended withoutany agreement. It will meet again on November 3










and 4 in Delhi. The government is keen to presentthe details of the tax to parliament when it meetsnext month. If the tax rate is not cleared - or if it isdelayed - the Finance Minister will find it tough tointroduce the GST as planned in April.

3. The GST does away with levies charged whengoods cross state lines and unifies India into a singlemarket.

4. The centre has suggested four tax slabs with thelowest at 6 per cent and the highest at 26 per cent,which would apply to about a fourth of the 300taxable items which will be covered by GST.

5. The slabs proposed are: 6, 12, 18 and 26 per cent.Food items should be exempt to keep inflation incontrol, the centre has suggested. FMCG andconsumer durable products would be taxed at 26per cent, against 31 per cent currently.

6. For luxury goods like fancy cars, cigarettes andsoft drinks, an additional cess over the 26 per centrate has been mooted which would be used tocompensate states for any losses they incur whentheir individual levies end.

7. But some states object to the cess, alleging itwould give the centre a bigger share of revenue.They want a higher tax rate without the cess carvedout on luxury goods, claiming this will give themthe larger portion of collections on luxury items.

8. The centre has agreed to compensate states forfive years for the revenue they will lose when GSTsubsumes their levies. The extent of compensationremains a contentious issue.

9. Some states have also objected to the fact that 11lakh businesses that currently pay service tax willcontinue to be assessed by the centre rather thanthem, which they say is unfair and eats into theirauthority. The centre says that over time, officials instates will be trained to take over.

10. "The underlying principle is that one assessewould be assessed only by one authority - that is theadvantage of GST. So who will the centre assess andwho will the state assess has to be decided," said theFinance Minister.

http://www.ndtv.com/india-news/with-new-gst-heres-how-different-items-could-be-taxed-10-points-1476169

5. A compromised GST

The Goods and Services Tax (GST) was expected toprovide for moderate rates of tax, with only a coupleof tax slabs — so designed to improve compliance,avoid classification disputes and keep matterssimple. It was also intended to provide forcomprehensive coverage and, therefore, anefficiency dividend in terms of better tax collection.Unfortunately, as things seem to be turning out,none of these objectives may berealised.Compromises along the way to gettingapproval for the new tax regime have meant thatthis long-awaited legislative reform will end up as alost opportunity. There are too many tax slabs — asmany as four main ones, and a total of sevencategories, ranging from zero to an undefined levelbeyond 26 per cent. The estimates made in the pastby expert committees and by government officialshad led the country to believe that the main tax rateswould stop short of 20 per cent; the figurementioned during the Parliament debate was 18 percent, which was also the broad level indicated in areport by the chief economic advisor in the financeministry. Instead, it now turns out, the two mostimportant rates of tax will be 18 and 26 per cent,with almost all items of middle-class consumptionattracting the higher of these rates. The 12 per centrate will be mainly for intermediate products, addedto which is a concessional slab of 6 per cent. Theintroduction of this last slab is the direct result of adesire to not tax items of mass consumption in anyway that might push up their prices. It bearspointing out, therefore, that food, education, healthcare and other key items of common expenditure areto be completely exempt from the GST. The result ofthe multiple rates is that what is a flat tax in othereconomies has morphed in India into a progressivetax system, with the top rate being hiked to 26 percent in order to neutralise the revenue loss from thesix per cent slab. The result is precisely what a GSTshould not be. As Vijay Kelkar and others haveargued, in an article inMint newspaper, anynegative impact of a properly constructed GST onthe poorer sections is better taken care of through adirect benefit transfer scheme, so that the GSTsystem does not lay itself open to evasion,classification disputes and other complications — allof these are the hallmark of the existing indirect taxsystem, which GST was supposed to change. Thereis more. What is one rate of service tax today is togive way to three rates! While most existing cesseswill cease to exist, one or more will continue to becharged. Finally, there is the aggravation of ~50,000crore to be collected as a contingency to compensatestates for any revenue loss. First, it should be




obvious that no state is going to lose revenue at theproposed rates of tax; the sum to be collected asinsurance against revenue losses will probably add apercentage point to the overall tax rate. Second, GSTwas supposed to deliver efficiency gains throughbetter coverage; the proposed rates of tax seem tomake no assumptions at all on this point, and it ispertinent to ask why. It is not too late to adoptreasonable rates as the GST Council wi The Goodsand Services Tax (GST) was expected to provide formoderate rates of tax, with only a couple of tax slabs— so designed to improve compliance, avoidclassification disputes and keep matters simple. Itwas also intended to provide for comprehensivecoverage and, therefore, an efficiency dividend interms of better tax collection. Unfortunately, asthings seem to be turning out, none of theseobjectives may be realised.Compromises along theway to getting approval for the new tax regime havemeant that this long-awaited legislative reform willend up as a lost opportunity. There are too many taxslabs — as many as four main ones, and a total ofseven categories, ranging from zero to an undefinedlevel beyond 26 per cent. The estimates made in thepast by expert committees and by governmentofficials had led the country to believe that the maintax rates would stop short of 20 per cent; the figurementioned during the Parliament debate was 18 percent, which was also the broad level indicated in areport by the chief economic advisor in the financeministry. Instead, it now turns out, the two mostimportant rates of tax will be 18 and 26 per cent,with almost all items of middle-class consumptionattracting the higher of these rates. The 12 per centrate will be mainly for intermediate products, addedto which is a concessional slab of 6 per cent. Theintroduction of this last slab is the direct result of adesire to not tax items of mass consumption in anyway that might push up their prices. It bearspointing out, therefore, that food, education, healthcare and other key items of common expenditure areto be completely exempt from the GST. The result ofthe multiple rates is that what is a flat tax in othereconomies has morphed in India into a progressivetax system, with the top rate being hiked to 26 percent in order to neutralise the revenue loss from thesix per cent slab. The result is precisely what a GSTshould not be. As Vijay Kelkar and others haveargued, in an article inMint newspaper, anynegative impact of a properly constructed GST onthe poorer sections is better taken care of through adirect benefit transfer scheme, so that the GSTsystem does not lay itself open to evasion,classification disputes and other complications — allof these are the hallmark of the existing indirect taxsystem, which GST was supposed to change. There

is more. What is one rate of service tax today is togive way to three rates! While most existing cesseswill cease to exist, one or more will continue to becharged. Finally, there is the aggravation of ~50,000crore to be collected as a contingency to compensatestates for any revenue loss. First, it should beobvious that no state is going to lose revenue at theproposed rates of tax; the sum to be collected asinsurance against revenue losses will probably add apercentage point to the overall tax rate. Second, GSTwas supposed to deliver efficiency gains throughbetter coverage; the proposed rates of tax seem tomake no assumptions at all on this point, and it ispertinent to ask why. It is not too late to adoptreasonable rates as the GST C ll meet again in early-November

http://www.business-standard.com/article/opinion/a-compromised-gst-116101901342_1.html

6. Clear refunds, drawback before GST roll-out: CBEC Chairman

CBEC on Wednesday asked its officials to chalk outaction plan for clearing pending refunds anddrawback payment for smooth transaction to GST --the new indirect taxation regime that is to be rolledout from April.

In a communication to top officials, Chairman ofCentral Board of Excise and Customs Najib Shahsaid preparations for introducing GST from thebeginning of the next fiscal year are in full swingwith the present focus on timely finalisation of itslegal and administrative framework.

"At the same time, it is necessary to continue tofocus on reducing the pendency of current items ofwork as this would have an important bearing onthe successful implementation of GST," Shah said.

The pending work relates to adjudication, andpayment of refunds, rebates and drawbacks.

"You would agree that too heavy a burden of legacywork regime would hamper us in giving ourundivided attention to GUST. The solution,therefore, is to immediately chalk out an action planto reduce the pendencies to the maximum possibleextent in the balance months of the current financialyear," Shah said.

The all powerful GST Council is currently meetinghere to decide host of issues, including the GSTrates. This the third meeting of the council headed

http://taxguru.in/goods-and-service-tax/gst-roll-government-working-target-date-1042017.html

http://taxguru.in/goods-and-service-tax/gst-roll-government-working-target-date-1042017.html


by Union Finance Minister Arun Jatiley. Financeministers of all states are members of the Council.

Government intends to implement the Goods andServices Tax (GST) from April 1, 2017. GST willsubsume most of the indirect taxes and make India acommon market.

"I am confident that with the suggested focusedapproach on reducing pendencies, come April 1,2017 the CBEC would be in an ideal position toensure the success of GST in the national interest,"Shah added.

http://www.business-standard.com/article/pti-stories/clear-refunds-drawback-before-gst-roll-out-cbec-chairman-116101900461_1.html

7. GSTN receives over 200 applications fromIT and fintech companies

Goods and Services Tax Network (GSTN), theagency in charge of building the technologicalinfrastructure for the implementation of GST, hasreceived over 200 applications from IT and fintechcompanies who seek to become GST SuvidhaProviders, but there are very few startups amongthem.

The GST Suvidha Provider (GSP) will offer productsand services to help tax payers and businesses incompliance. While leading tech companies such asSAP India, Tally Solutions, Vayam Technologies andMastekBSE 0.92 % Holdings have sought to becomeGSPs, ClearTax seems to be among the few startupsto have applied. The problem is the stringent criteriarelated to paid-up capital and turnover.

An IT/ITeS or financial company looking to becomea GSP must have paid-up (raised) capital of at leastRs 5 crore and an average turnover of at least Rs 10crore during the last three financial years.

“We kept the criteria stringent because, at thebeginning, we want companies who are tested andwhom we can rely on, since we are also building ourown infrastructure. Also, we cannot handle a largenumber of GSPs right in the beginning,” GSTNchairman Navin Kumar told ET. “However, we arenot barring startups from applying, and we havegiven a notification that even companies that don’tfit the criteria can apply and we will consider themin the next phase of selecting GSPs,” he added.

Software think tank iSPIRT said it was pushing torelax the GSP criteria to help startups. “iSPIRT islooking for an open policy that allows any startup ora small company to become a GSP. Instead ofturnover, the GSTN could use other instruments likesurety bonds or bank guarantees of Rs 5-10 lakh fora period of 12 to 18 months,” said Sudhir Singh, apolicy expert at the iSPIRT.

“The real concern of GSTN should be the productthat the GSP develops. To ascertain the applicationsecurity and ICT infrastructure of GSPs, they canuse third parties to verify that the technical criteriais met,” Singh said. Becoming a GSP can also open abusiness opportunity as the selected companies areallowed to turn their services and products into arevenue model.

ClearTax’s B2B business of providing softwareproducts to businesses brings 60% of the company’srevenue, and is expected to grow to 65% afterintegration with the GST ecosystem, said CEOArchit Gupta. “Startups have an important role toplay in the GST ecosystem for their speed ofinnovation and the quality of the products. Theyshould be encouraged to become GSPs,” he said.

http://economictimes.indiatimes.com/small-biz/policy-trends/gstn-receives-over-200-applications-from-it-and-fintech-companies/articleshow/54949263.cms

8. GST may make oil, chicken dearer; TV, airconditioner cheaper

proposed 4-tier GST structure may hit the commonman as it is likely to result in higher taxes on variousitems including kitchen staples such as edible oils,spices and chicken.

The prices of certain consumer durables liketelevisions, air conditioners, fridges and washingmachines may however become cheaper withdecrease in taxes.

The government plans to roll out the new indirecttax regime, Goods and Services Tax (GST), fromApril 1, 2017. In its meeting with states this week,the Centre has proposed a four slab GST ratestructure.

The lowest rate proposed is 6 per cent, with twostandard rates of 12 and 18 per cent. The peak rate,which will mostly apply to FMCG and consumerdurables, will be 26 per cent.

http://www.thehindubusinessline.com/economy/gst-training-govt-faces-steep-climb-as-deadline-nears/article9176086.ece



http://www.livemint.com/Politics/W1H4nrMVB0nDgraWuSIQSL/Centre-states-spar-over-control-of-big-service-tax-assessee.html




Besides, a cess is also likely to be levied on demeritor sin goods and polluting items.

According to the Centre's estimates on impact of the4-slab rate structure on CPI inflation, items likechicken and coconut oil which currently suffer a taxincidence of 4 per cent will be taxed at 6 per centunder the GST regime.

Similarly, the tax burden on refined oil, mustard oiland groundnut oil will go up from 5 per cent to 6per cent.

Other kitchen staples too will be taxed at 6 per centas against 3 per cent in case of turmeric and jeera, 5per cent in case of dhania, black pepper and oilseeds.

TVs, air conditioners, washing machines, inverters,refrigerators, electric fans and cooking appliancesmay become cheaper with the incidence of taxes onthem declining from 29 per cent to 26 per cent postimplementation of the GST.

Perfumes, shaving cream, powder, hair oil,shampoo, soap, and other toiletry items will becomecheaper as they too presently are taxed at 29 percent.

Gas stove, gas burner, mosquito repellent andinsecticide may, however, become expensive as theyare currently taxed at 25 per cent, lower than theproposed peak rate of 26 per cent under GST.

http://www.businesstoday.in/current/economy-politics/gst-may-make-oil-chicken-dearer-tv-air-conditioner-cheaper/story/238802.html

9. Bullion dealers, jewellers seek lowest GSTslab

Bullion dealers and jewellers have urged thegovernment to subsume the gold import duty in theproposed goods and services tax (GST) and keepbullion in the lowest slab.

In a representation to the finance ministry, the IndiaBullion and Jewellers Association (Ibja) soughtimplementation of the Arvind SubramanianCommittee report recommending the GST ratebetween 2 and 6 per cent on precious metals.

"We propose a basic customs duty of 9 per cent ongold to be subsumed with the GST rate. Thus, the

effective GSTrate on gold will be 11-15 per cent,"said Mukesh Mehta, national president of the Ibja.

India imports almost all its gold requirement of 850tonnes a year, which generates revenue of aroundRs 25,000 crore at a basic customs duty of 10 percent. The duty has led to a rise in smuggling.

"The government must frame a favourable policy tocurb smuggling. Subsuming the import duty ongold in the GSTwill be revenue neutral for thegovernment," said Surendra Mehta, secretary of theIBJA.

"The jewellery industry is gearing up for the GSTand the proposed rate of four per cent will hamperits growth," said Sreedhar GV, chairman of the AllIndia Gems and Jewellery Trade Federation. TheFederation has suggested the GST rate for theindustry be kept at 1.25 per cent.

"We request the GST Council to recognise the issuesfaced by the industry as highlighted in a high-levelcommittee report," said Ashok Minawala, director ofthe GJF who was a member of the committee thatmade the report.

http://www.business-standard.com/article/markets/bullion-dealers-jewellers-seek-lowest-gst-slab-116102100043_1.html

10. GST Council eyes 16% levy on goldjewellery and 4% on bullion

MUMBAI: The Goods and Services Tax Council,which will decide the GST rates, has discussedlevying 16% GST rate on gold jewellery, cuttingcustoms duty on gold to 2% from 10%, and levying4% GST on gold bullion, two persons privy to thediscussions told ET.

If implemented, a buyer of gold jewellery will endup paying around 6 percentage more by way of taxas at present the total tax comes to around 12.5%,but the proposal will discourage smuggling as thecost to import gold will fall by 4 percentage pointsto 6% — 4% GST and 2% customs duty. The movewill ensure the Centre will not suffer any tax losswhile states will get much more than the present 1%VAT on gold. Here's how.

The Centre currently gets 10% through customsduty. If duty is cut to 2% and GST of 4% is levied ongold, half of the GST will go to states and Centregets a total of 4% —2% GST and 2% customs. And

http://economictimes.indiatimes.com/news/economy/policy/rbi-gives-thumbs-up-to-18-gst-rate/articleshow/54674717.cms




when states collect 12% GST on gold jewellery(adjusting for input credit) revenue sharing willenable the Centre to get half, or 6% . So, the Centrewill continue to get 10% by way of tax. "Jewellerybeing a luxury item, you're going to have to paymore to buy it," said one of the persons cited earlier.

"It's lesser if you buy a (gold) bar or a (gold) biscuitwhich means that holding as a financial vehicle willcost you less," the person said.

http://economictimes.indiatimes.com/markets/commodities/gst-council-eyes-16-levy-on-gold-jewellery-and-4-on-bullion/articleshow/54965188.cms

11. Here's the list: What is cheaper and what isdearer after GST

NEW DELHI: Salt, bread, fresh fruit and vegetables,eggs, milk, curd, blood (yes blood, the human kind),prasad (the sacred kind), the national flag, kumkum,bindi-sindoor, glass bangles, even contraceptives —all these will continue to enjoy a taxfree run underthe proposed goods and services tax (GST) regime.

A few essential services will also escape the levyunder the new regime that the government wants toroll out from April next year. All the same, the list ofexempted items that will be thrashed out by stateand central government officials shortly after therate structure is finalised will be getting shorter.

“The exemption list is to be pruned,” said agovernment official outlining the broad principlethat will be followed in deciding what doesn’t gettaxed under GST. But “those items that areexempted under value added tax will likely remainout of the tax net.”

This includes the items listed above. The exemptionsare aimed at making sure that the common manisn’t subjected to tax shock. Shortening the list willensure that the tax base is broadened.

“The list of exempted items cannot be very long butthose that are considered of common essential usewould be kept out,” the official said, adding thatsome of the services of this nature would also beincluded.

Exempted items won’t however be eligible for inputtax credit. Many sectors, therefore, want to beincluded in the GST net but zero-rated, whichmeans they’ll be eligible for input tax credit butuntaxed.

After the rates are endorsed by the GST Councilheaded by Finance Minister Arun Jaitley, it willdecide on exemptions and what items go into whichtax bracket. The Centre has proposed fivealternatives to a four-rate slab including a separatelevy of 4% for precious metals. The rates proposedare 5-7% at the threshold level and 10-19% at thestandard rate level.

The Centre’s preference is for 6%, 12%, 18% and 26%but the council will take a call on the framework atits next meeting on November 3-4. The ministersaid on Wednesday that a consensus is close on thematter.

Jaitley has already made it clear that the effort willbe to keep the exercise tax neutral and fit items intotax brackets that are similar to the levies on themnow.

http://economictimes.indiatimes.com/news/economy/policy/gst-may-make-oil-chicken-dearer-tv-air-conditioner-cheaper/articleshow/54956738.cms

12. GST cess confusion: Focus should behaving most products at 18% rate

The third meeting of the GST council (October 18-19), primarily to finalise the rate structure,compensation mechanism to states and issue of‘dual control’ in tax administration can be termed as‘partially’ successful.There were two key outcomes from the meeting.First, there seems to be a consensus on themechanism of compensation by the centre to thestates by taking FY16 as the base year and 14%annual growth over the base year. This looks farsimpler than earlier discussions about taking threeyears out of last five or an average of last five years,etc., for arriving at the base amount. States seemedhappy with this consensus and with that the focusmoved to the rate structure.As expected, the proposal mooted was for multiplerate slabs of 6, 12, 18 and 26%. This is in contrastwith earlier discussions (emanating out of the CEAreport) about primarily two slabs of 12 and 18, witha proposition of 40% on few ‘sin’ or ‘luxury’products. Having a lower rate of 6%, which seems tobe primarily meant for food products and otheressential items, makes sense as increasing theeffective rate on these products to 12% could havebeen inflationary and detrimental to the commonman.The other departure from the earlier thinking was tohave a new slab of 26% for certain products,possibly the ones the CEA recommended to put in





http://www.business-standard.com/article/economy-policy/states-start-looking-for-consultants-for-gst-116100500430_1.html





40% slab such as tobacco, luxury cars etc.Principally, this line of thinking looks reasonable, asa differential of 22% (between 40% and standardrate of 18%) was too steep and unprecedented.However, there were two big surprises here. First,there was a reference to ‘luxury products’, otherthan those contemplated in the CEA report. Whilethere were no official words on the additionalproducts which could fall here, possibility of certainconsumer durable and FMCG products falling intothis category was doing the rounds. Till now, theindustry (including FMCG, consumer durables etc.)had been expecting a standard rate of around 18%and had factored that in their business plans. Thegovernment had also been saying that there wouldbe a consequent price reduction in these segments asthe effective rate of tax would drop from current 25-27% to around 18%, making them cheaper for thecommon man.It appears that the government is trying to comparethe possible GST rates with the existing rate of taxon a product-by-product basis, which may not bethe best strategy, when the country is on the cusp ofa radical tax reform. Instead, the focus should be tohave most of the products at a standard rate (of18%) and bank on increased consumption, moremanufacturing and economic activity leading torevenue buoyancy.The second and bigger issue is the proposal thatproducts under this category could attract a centralcess (under Article 270 of the Constitution, Centrehas a right to impose such cesses) to fund thecompensation to be given to states, if any. Whilethere does not seem to be a consensus on this cess asyet, initial indications are that most states are inagreement with the mechanism. I think having acess is not a good idea and there are many reasonsfor it.To start with, right from the first discussion paperon GST, issued by the then Empowered Committeein 2009, industry has been told that all cesses andsurcharges will be subsumed under GST. This hasbeen reiterated over the years in various officialdocuments and the government interactions,including the FAQ document issued by CBEC lastmonth, which says that ‘central surcharges andcesses so far as they relate to supply of goods andservices’ would be subsumed in GST. A simple taxrate structure, with uniform classification acrossstates, with no additional layering of tax, was one ofthe reasons why GST got such an overwhelmingsupport from all stakeholders.Currently, many of these cesses (like automobilecess, NCCD, etc.) are applied at the stage ofmanufacturing only and are not credible forbusinesses. However, since GST is on all supplies, it

is not clear whether this cess will also apply at eachleg of supply chain, which would further lead tocascading of tax. Further, it seems that thinking is tohave different rates of cess for different products, asthe idea is to recover the differential between thecurrent effective rate of tax and 26%, which will leadto further complications.Also, it is not certain if the Centre would actuallyneed to compensate the states, given the fact thatthere are estimates of additional GDP growthbetween 1-2% on account of GST. The experience ofVAT also suggests that revenue growth of the statescould be significant. Economists would argue that ifGST rates are moderate, it would boost theconsumption and will result in overall increase oftax base for the government.It is also expected that parallel economy will shrinkunder GST, which could also lead to increasedincome tax collections. In any case, there are varioustaxes which are outside the GST net, which can beused as additional revenue generating measures.These include excise duty on tobacco, taxes onpetroleum products, stamp duties and so on.The other problem with having a slab of 26% is thesubjectivity in defining what would constitute a‘luxury’ product. Till a decade back, probably atelevision could qualify as a luxury product, whichis not the case today. Same is the case with fourwheelers, air conditioners and so on. Similarly, it’s amatter of debate as to whether an aerated beverageis a luxury product or not, given that studies pointthat more than 90% sales are made to people otherthan high income class.As it is, India is making a departure from a classicalGST system in many ways, including proposing themultiple rate structure, which seems to be the onlyrealistic way of moving ahead as of now. However,imposition of cess and broad-basing of thisproposed 26% slab, may be too much of a diversionfrom what was envisaged till now. This does requirea serious rethink.

http://www.financialexpress.com/fe-columnist/gst-cess-confusion-focus-should-be-having-most-products-at-18-rate/425567/

13. Shifting the GST goalpost

The outcomes of the latest meeting of the Counciltasked with steering the Goods and Services Taxregime are worrying. For one, it leaves the Centrehard-pressed to meet its intended deadline for thenew indirect tax regime, April 1, 2017. FinanceMinister Arun Jaitley had set a November 22 targetto resolve all operational issues with Staterepresentatives in the Council so that the rates and

http://timesofindia.indiatimes.com/city/delhi/Central-excise-officers-body-plans-protest-on-GST/articleshow/54697206.cms




implementation modalities could be codified intolaw and passed by Parliament in the winter session.When it met for the first time in late September,things appeared to be on track, with the Councilagreeing almost unanimously on technicalities suchas the turnover thresholds for firms to be coveredunder the GST and the division of administrativecontrol over tax assessees between the Centre andthe States. A time-bound road map to finaliseremaining details, such as the tax rates,compensation for States in case of revenue lossunder the new system, as well as the legislativeactions required in Parliament and the StateAssemblies, was also agreed upon.

As the winter session approaches, that spirit ofcooperation has evaporated: the Council has agreedon precious little, including the tax rates proposedby the Centre. Worse, the pact reached earlier onadministrative control of manufacturing sectorassessees has unravelled with States raising freshconcerns. The proposal to subsume in the GST allcess levies, several of them introduced by thepresent NDA government, has been discarded. Thiswas a critical part of the official GST pitch and wasbacked by the Council in September. But now theFinance Ministry is keen on an additional cess onultra-luxury and ‘sin’ goods to fund compensationfor States losing revenue. It has suggested a cessmay be better than the 40 per cent slab for demeritgoods, mooted by a committee led by ChiefEconomic Advisor Arvind Subramanian along withtwo other slabs of 12 per cent and 17-18 per cent.With a four-tier GST rate structure, a 4 per cent taxon gold (in line with the CEA’s advice), in additionto some exemptions that would be granted as taxrefunds, topped with the new cess to compensateStates, the new regime could well just be old wine ina new bottle, from the taxpayers’ perspective. Mr.Jaitley has explained that the rate proposals aremeant to prevent a spurt in retail inflation. But tobring about convergence with States at the Council’snext meetings in November and bring its showcasereform item back on track, the government needs toreturn to the drawing board.

http://www.thehindu.com/opinion/editorial/gst-council-meeting-shifting-the-gst-goalpost/article9246376.ece

14. CAG gearing up for audit changes in viewof GST rollout

As the government goes full throttle to roll outGoods and Services Tax (GST) from April 1, theCAG today said it is ready for the new challenges

and will take steps to enhance effectiveness ofrevenue audit.

Comptroller and Auditor General (CAG) ShashiKant Sharma said the department has been alert tothe emerging new challenges in the area of revenueadministration, including the GST and various otherreform measures taken by the government toimprove tax collection and combat tax avoidance.

In the coming days, the CAG will take measures thatwould enhance the effectiveness of revenue auditsuch that it contributes more effectively to the fiscalsustainability of the governments, he added.

During the valedictory function of the two-dayevent of CAG, Sharma said reforms undertaken bythe government are likely to improve budgetaryprocess and tax administration in a big way.

“Amalgamation of the Railways and Generalbudgets has brought the 92-year-old practice to anend. The government proposes to advance thebudget presentation date from the last week ofFebruary. Further, plan and non-plan expenditureare proposed to be merged.

“Many more sectors have been opened up to foreigndirect investment. Debt recovery is being madeeasier by amending the SARFAESI Act. And themost significant reform is introduction of GST,” hesaid.

Observing that CAG has taken due cognizance ofthese new challenges, Sharma said the departmenthas taken note of the changing paradigm in revenueadministration, including the challenges posed byshadow economy and black money, transfer pricing,accommodation bills etc and the need to managelarge volumes of digital information that willemerge from increasing automation of tax filing.

“Notwithstanding the fact that the revenue audithas led to identification and recovery of thousandsof crore of tax amounts every year, the auditdepartment has faced challenges in accessing thedata and information of taxpayers, whichsignificantly limits the potential and effectiveness ofaudit,” he said.

He further said the urban local bodies andPanchayati Raj Institutions that constitute the thirdtier of government have come to occupy a veryimportant place.

https://gst.taxmann.com/topstories/222330000000009166/service-tax-assessment-under-gst-technical-committee-to-iron-out-differences-hold-meetings.aspx

https://gst.taxmann.com/topstories/222330000000009166/service-tax-assessment-under-gst-technical-committee-to-iron-out-differences-hold-meetings.aspx


These bodies receive significant flows of funds, nowclose to Rs 14 lakh crore annually, but suffer frompoor governance, weak financial management andpoor accountability, he said.

http://www.financialexpress.com/economy/cag-gearing-up-for-audit-changes-in-view-of-gst-rollout/426251/

15. GST roll out stuck again

After raising high expectations, Finance MinisterArun Jaitley-headed GST Council has hit a speedbreaker which is rather annoying. This does notaugur well for the economy that needs as big bang areform as the Goods and Services Tax, sooner thanlater. Given the diversity of economic development,divergence of opinion among states is notsurprising. To narrow down such differences itself isthe job of the GST Council. The first two meetings ofthe Council appeared to be quite promising, raisinghopes about the roll out of the new tax regime fromApril 2017. Even on the opening day of the thirdmeeting of the GST Council on October 18, it lookedas if the agreement on the all-important issue of therates would be stitched and announced the nextday. But instead of a broad consensus, the three-daymeeting collapsed on the second day with widedifferences among the Centre and the states andwithin the states coming out in the open.

It now looks difficult for the GST Council to finishits work and enable the codification of rates andother important criteria for administering the mostimportant indirect tax reform, into a Bill for passageof Parliament in the winter session. The Centrecannot escape from its blame for seeking to distortthe concept of simplifying tax administration.Instead of making the GST people-friendly, thesurprise proposals would put more burden on thetax payers. By flagging four slabs to include thepriority, less priority, standard and so-called `sin’goods, the whole concept of tax compliance andrationalisation has been turned upside down. Themost regressive among the proposal is to slap a cessover and above the highest slab, believed to be 26%to make for the shortfalls in the revenues of thestates.

As it is, the GST dispensation approved byParliament is flawed with key items like petroleumand natural gas being kept out of the purview. It is

also believed that the most of the items of use to themiddle class would either be covered in the top orthe standard rate which could be 18% or 20%. Therewould be exemptions as well for the priority goodswhile for the less priority ones, the rate could be12% or so. This complex structure would surelyopen a gold mine for the lobbyists among differentindustry groups. The fresh proposals have createdso much confusion that even the ground covered inthe first two meetings on threshold limit andassessing authorities is lost. Let it not be a lostopportunity.

http://www.deccanherald.com/content/577079/gst-roll-stuck-again.html

16. GST Will Lead To Mergers And Rise OfWorld Class Consumer Companies: MarkMobius

In an exclusive interview with ET Now’s Tanvir Gill, Mark Mobius , Executive Chairman, TempletonEM, says GST is unlikely to be fully implementedbefore end of next year. Edited excerpts

The GST council has proposed a structure of levyingcess on ultra-luxury and sin goods by GST, adeparture from original GST concept. The soundbites that you are getting as of now, do theyconvince you that they could perhaps 11th hour 59thminute make it?

No I do not think that is possible because there areso many different forces at work that you cannotexpect a clean immediate implementation of thissystem.

So what would be a reasonable time line accordingto you?

I think the end of next year.

So it gets pushed back by eight-nine months?

For complete implementation. In the mean time,there will be incremental changes taking placewhich will be very beneficial. But to be realistic, wehave to take longer term in consideration. I wouldbe happy to be surprised. It will be wonderful ifthey are able to do it before that but I think it will bea little longer than we expect.

http://www.business-standard.com/article/pti-stories/revenue-dept-to-hire-agencies-to-train-industry-on-gst-116100500722_1.html

http://www.business-standard.com/article/pti-stories/revenue-dept-to-hire-agencies-to-train-industry-on-gst-116100500722_1.html

http://www.business-standard.com/article/specials/gst-to-make-inter-state-transactions-easier-116100601008_1.html

http://www.business-standard.com/article/specials/gst-to-make-inter-state-transactions-easier-116100601008_1.html


The reason I ask you this is because you had told methat with GST passage, you would look at doublingyour India investments. Even in your last interviewwith me about a month back, you said that yourIndia allocation was stand at 7.5-8%, the EM fundcan go up to 14%, even 20% plus. So when wouldyou start increasing your allocation? What wouldyou want to see to make that decision?

A lot of it will depend on what happens to pricing ofthe securities. When I say that I do not mean justthis absolute stock price but also the earnings. Ifearnings surge, then we can justify doubling,tripling our allocation and; of course, when we talkabout GST, we talk about what impact that has onthe earnings of the companies. We have to beflexible and look at each company on an individualbasis and determine what they are going to be andwhat impact the GST is going to have on thoseearnings. In some cases, it will be as much as 10%increase in earnings and that can be very significant.

Yes I want to talk about that because even S&P hasput out a note that if GST goes through as per plan,then India’s potential of 8% plus would very muchcome to the fore. Do you agree with that?

Absolutely. I agree yes, full implementation. This isvery important.

Full implementation. So, that you only foreseecoming through from FY19 onwards?

Yes exactly.

What would that do for corporate earnings becauseyou are foreseeing 12% to 15% earnings growth forFY17? With GST coming into place, how much ofthat could get revised higher? Where would theearnings range move up to?

There will be an incredible increase in earnings formany companies. As much as 20% in some cases.But I have to emphasise that with the GST, you nowhave a bigger market for many companies. So youare going to have consolidation of firms throughoutthe country and you are going to have the growth ofhuge conglomerates, huge companies that are worldclass and will be able to expand internationally at amuch faster pace.

So it is very important to emphasise that theconsumer market in India is enormous but it is nowdivided. It is segmented. With the GST, you will seea combining of these forces so that you then have

the rise of really huge consumer product companies,consumer service companies, etc. It can be veryexciting.

So give me a range anatomy, how high couldearnings growth go up by?

In the next three or four years, you can see 20-30-40% increase in earnings with the proper GSTimplementation.

And again a derivative of that would be what thatdoes for market valuations. Again you highlightedand I was quite startled when you said 20-25 timesPE expansion, valuation expansion is very much onthe cards. We are at about 17 times. One yearforward, that would mean a 50% strong rally fromhere. A 41,000 target for the Sensex, 13,000 for theNifty. Do all of that really rest on GST? What elsecan really take the market higher?

There are combinations of factors here. There is GSTbut there is also interest rates. With very benigninflation, you are going to see lower interest rateswhich means that you can justify higher PEs. Sothere are combination of things. There is GST impacton earnings growth, lower interest rates, cost ofcapital coming down -- all of these things combiningto give an incredible push to stock prices.

How soon do you think we would embark on thatmighty rally? We are pretty much still trying totease around the all-time highs. When do we go passthat?

I think middle of next year probably because by thattime the GST impact will really begin to feed intothe system if everything goes the way they areexpected to go.

So by August next year, we would be at 13,000index on the Nifty?

It is quite possible.

Just want to talk about whether this outperformancein India which largely seems like driven bydomestic fundamentals improving, can happen inisolation to the rest of the emerging market world?

It can because look at China. China has surgedahead far faster than every other emerging marketexcept India and India now could become a leader.It could really drive the growth of other markets


because the other thing that is happening is that asIndia opens, they will begin to see the impact oftrade and investment into other markets around theworld particularly emerging markets. Already thatis happening but I think it will happen to a greatextent going forward.

http://finance.indiaeveryday.in/news-gst-will-lead-to-mergers-and-rise-of-world-class-consumer-1258-2787845.htm

17. Madhya Pradesh to be logistics hub inGST regime: Jaitley

Madhya Pradesh would become a supply hub in thegoods and service tax regime, Union FinanceMinister Arun Jaitley told investors here whiledelivering the inaugural speech at the state’s fifthGlobal Investors Summit.

The summit is a biennial affair of the MadhyaPradeshgovernment to showcase the state’spotential to domestic and overseas investors.

“After the GST regime is implemented next year,there will be a flow of goods across the nation andMadhya Pradeshwill become the supply chain hubfor companies,” the finance minister pointed out.

“Despite economic challenges, we have been able tomanage respectable growth with certain advantageslike political stability, global oil and commodityprices, resources that we have saved to invest ininfrastructure, and a good monsoon as a result ofwhich we have surplus foodgrain production. It willcheck inflation and we will have a moderation ininterest rates. With these advantages, we have anopportunity ahead of us,” Jaitley told investors.

Responding to a remark by Gopichand Hinduja, co-chairman of the Hinduja group, that the governmentneeded to pick up pace, Jaitley said, “Generally,industry remains ahead of the government, buttoday we are at a historic moment when industry isbehind the government. You need to pick up thepace.”

While laying stress on Madhya Pradesh’sachievement of double-digit growth, the financeminister said, “States with double-digit growth haveseen chief ministers coming back to power. MadhyaPradesh has a leadership with clarity and a roadmap for progress.”

“Thirteen years ago we were advised not to travelby road in Madhya Pradesh. The state has now shedthe stigma of a Bimaru state. By maintaining 20 percent growth in agriculture it has empowered itsrural people and they now have purchasing power,”Jaitley said.

“It is a successful state that is able to transport waterfrom one corner to the other. It has sufficient powerand adequate spending on resources to empowerpeople,” he added.

Earlier, addressing the gathering, Madhya PradeshChief Minister Shivraj Singh Chouhan said, “Wehave a long list of investors who are converting theirinvestment into reality. A total of Rs 2.75 lakh croreinvestment is taking shape in Madhya Pradesh sincethe fourth season of the Global Investors Summitorganised in 2014.”

“We have a huge land bank of 1.25 lakh acres forindustry, nearly 18,000 Mw of power, skilledworkers, a citizen’s charter Act to ensure fasterdelivery of services, and no man-days lost,” thechief minister said.

“If you need more support like further training ofworkers we are ready to provide it. We have createdan ecosystem for our investors, and it is anopportune time to invest,” he added. UnionInformation Technology Minister Ravi ShankarPradesh said Madhya Pradesh was playing anexcellent role in infotech.

“Forty mobile phone-making companies are comingto India and one of them is coming to MadhyaPradesh,” he said.

Hinduja, on his maiden visit to Madhya Pradesh,said a recent visit by Chouhan to the UK promptedhim to visit the state and he was ready to investhere.

Kumar Manglam Birla, chairman of the Aditya Birlagroup, said his companies had invested Rs 30,000crore in the state and were investing a further Rs5,500 crore in two projects. “We will make furtherinvestments in expansion of the Mahan aluminaplant, the optical fibre cable business and otherprojects in Madhya Pradesh,” Birla said.

Anil Dhirubhai Ambani Group Chairman AnilAmbani said his group had a fair share in the state’stotal investment in recent years, particularly in thepower sector.

http://www.businessstandard.com/article/companies/siam-seeks-same-gst-rate-for-small-cars-muvs-116100600861_1.html




“We are coming up with two defence projects inPithampur and Bhopal. We have the world’s largestcapacity thermal power plant in Madhya Pradeshand we look for future investment in the energysector,” Ambani said.

http://www.business-standard.com/article/economy-policy/madhya-pradesh-to-be-logistics-hub-in-gst-regime-jaitley-116102200645_1.html

18. Dharmendra Pradhan asks states to helpbring petro products under GST

Speaking at the Global Investors Meet here, he saidpetroleum is currently under 'state list' for the thepurpose of taxation under GST.

"GST Council will decide on this (taxation ofpetroleum products). On behalf of the industry, Iwould request the states to allow petroleumproducts to be brought under GST taxation," he said.

As per the GST Constitutional Amendment Bill,petroleum products like LPG, kerosene and napthawould attract GST.

However, other products -- crude oil, natural gas,petrol, diesel, high speed diesel and aviation turbinefuel -- have been excluded from GST for initialyears. Hence, these products will continue to betaxed in the hands of the states as they are beingtaxed at present.

The GST Council, which consist of Union FinanceMinister and state counterparts, will decide on thedate of inclusion of these products in the GST basketand rates thereon.

Pradhan also asked Madhya Pradesh Chief MinisterShivraj Singh Chouhan to support bringing allpetroleum products under the Goods and ServicesTax (GST) regime.

"In the last 3-4 years, there is a healthy growth ofpetroleum products in Madhya Pradesh. I willrequest the Chief Minister that he should agree to(petro items coming under) GST. There would be noloss to the state on account of taxation of petroleumproducts," he said.

With two different kinds of taxation structure, in thenew regime the oil and gas industry would have tocomply with both the current tax regime as well asGST.

According to experts, GST would have a negativeimpact on the oil and gas industry due tocompliance with dual taxation regime and non-creditable tax costs.

Pradhan said petrol consumption in rural areas isgrowing by 10 per cent every year.

On the occasion, there were total seven MOUssigned today for setting up solar power plants andoil marketing and infrastructure facility in the state.

Neyveli Lignite Corp (NLC) and Madhya PradeshNew and Renewable Energy Department(MPNRED) signed an MoU to set up 1,000 MW solarpower plant, followed by an agreement betweenIOC, OIL India and Madhya Pradesh Urja VikasNigam Ltd (MPUVN) for 500 MW solar facility,NTPC and MPNRED for 500 MW solar power plant,PTC and MPNRED for 500 MW facility and NHDCLtd and MPNRED for 140 MW solar project.

Besides five MoUs on solar projects, there were twoagreements signed for oil marketing andinfrastructure facilities. One MoU was signedbetween BPCL and MPNRED for setting up anethanol plant and the other by IOC and MP Tradeand Investment Facilitation Corporation (TRIFAC)for developing oil marketing infrastructure in thestate.

State-run companies like NTPC, Neyveli Lignite willwork towards making the state a solar power hub.

Pradhan said there are 1.65 lakh houses in the stateand 56 lakh family had LPG connection till 2014.

http://economictimes.indiatimes.com/news/politics-and-nation/dharmendra-pradhan-asks-states-to-help-bring-petro-products-under-gst/articleshow/55017778.cms

19. GST law to boost domestic demand, drivejob creation: PM Modi

The Goods and Services Tax law will boost domesticdemand, create more opportunities for domesticbusiness and drive job creation, Prime MinisterNarendra Modi said on Sunday.

He said so far the domestic market has beenfragmented and different taxes across differentstates have made goods and services moreexpensive.








"This has hampered growth in inter-state commerce.We are enacting a Goods and Services Tax law, tocreate an integrated national market. This willfurther boost domestic demand, create moreopportunities for Indian business and drive jobcreation," he said.

India today, Modi said, is the fastest growing majoreconomy, and one of the most attractive destinationsfor FDI.

"Indeed, we stand out as a bright spot in the globaleconomy. This is the result of India's fundamentalstrengths — democracy, demographic dividend anddemand. We need to fully harness these strengths.This can happen only if businesses make long-terminvestments that create jobs and sustain economicgrowth," he said.

Addressing the valedictory function of aninternational conference on arbitration, the PrimeMinister said India is experiencing a digitalrevolution which is bridging the digital andeconomic divide in the society in general and ruralsociety in particular.

"A boost to the rural economy through thisrevolution will make the Indian economy even morerobust," he said.

Innovative business models and app-based start-upshave instilled a spirit of enterprise among Indians,he noted, adding that yesterday's job seekers arebecoming today's job creators.

"The legal profession is also opening up to thepromises of the digital world. From cause-lists tocase-laws, the lawyer's library is now just a clickaway on your mobile phone," he said.

http://www.business-standard.com/article/specials/gst-law-to-boost-domestic-demand-drive-job-creation-pm-modi-116102300360_1.html

20. GST can be paid online using debit, creditcards: Revenue Secretary

Under the proposed Goods and Services Tax (GST)regime, individuals and entities can pay taxes onlineusingdebit or credit cards, the government said onSunday.

"With regard to payments, the best thing that willhappen is all payments will have to be made online.

You can use any mode of payment, electronic,NEFT, RTGS. You can do it through debit cards orcredit cards of any bank," Revenue SecretaryHasmukh Adhia said while addressing the GlobalInvestors Summit here.

"You need not open an account in banks ofgovernment. Even if you have account in a privatebank, you can transfer money and it will reach thegovernment," Adhia said.

The top officer said GST will make it easier fortraders and industry to access Input Tax Credit, aswell as ease the compliance burden since the entirecountry will become a single market.

"I would ask the states to focus on the services sectorbecause industry will come on its own once demandincreases," he said.

The government, which proposes to implement thenew pan-India indirect tax regime from the start ofthe next fiscal in April, has made registration,refunds, returns filing and payment processesonline.

The GST regime will also ensure that the taxesdeducted by sellers reach the government, Adhiaadded.

At its second meeting last month after itsconstitution, the GST Council chaired by UnionFinance Minister Arun Jaitley approved five sets ofdraft rules relating to registration, payments, returnsand refunds under GST.

These provide for online registration by residentswithin three days of submission of application.

Non-residents who will come under the purview ofthe GST will be required to electronically submit theapplication for registration at least five days prior tothe commencement of business and shall alsodeposit full tax liability in advance.

The draft rules also provide that if a tax official failsto take action on registration application within astipulated time frame, the application for grant ofregistration shall be deemed to have been approved.

An applicant seeking registration will have tosubmit PAN, mobile number, email address on thecommon portal or through a facilitation centre.





In case all documents are in order, the tax officialwill approve registration in three working daysfrom the date of submission of application. The rulesprovide for suo moto registration of persons whoare liable, but have failed to apply for registration.

The GST Council, however, has failed to decide onthe big issue of GST rates in its three meetings held,and is likely to take a decision in its next meetinghere slated for November 3 to 4.

http://www.business-standard.com/article/economy-policy/gst-can-be-paid-online-using-debit-credit-cards-revenue-secretary-116102300364_1.html

21. Multiple rates in GST just old wine in newbottle: P Chidambaram

KOLKATA: Multiple rates in GST are nothing butold wine served in new bottle, said former financeminister P Chidambaram. The senior Congressleader was speaking in a programme on theeconomic reforms, organised by the Observer'sResearch Foundation and IIM (C).

" Multiple rates in GST, is not GST. It is as good asthe existing VAT rates. With this we will be foolingthe country in name of GST," said Chidambaram .

Explaining the positive impact of GST, the formerfinance minister added, "GST will have a short terminflationary effect. But will iron out in the longterm."

http://economictimes.indiatimes.com/news/economy/policy/multiple-rates-in-gst-just-old-wine-in-new-bottle-p-chidambaram/articleshow/55026183.cms

22. GST can be paid with debit, credit cardsonline

Individuals and entities can pay taxes online usingdebit or credit cards once the Goods and ServicesTax is rolled out, revenue secretary Hasmukh Adhiasaid.

The government proposes to roll out the newindirect tax regime from April 1 next year and hasmade registration, refunds, returns filing andpayment processes online.

"With regard to payments, the best thing that willhappen is all payments will have to be made online.You can use any mode of payment, electronic,

RTGS. You can do it through debit cards or creditcards of any bank.

"You need not open account in banks ofgovernment. Even if you have account in a privatebank you can transfer money and it will reach thegovernment," Adhia said while addressing theGlobal Investors Summit here.

He said GST will make it easier for traders andindustry to access Input Tax Credit and also easecompliance burden as the entire country willbecome a single market.

"I would ask the states to focus on the services sectorbecause industry will come on its own once demandincreases," Adhia said.

He said India is now taking several reform measuresand GST is the biggest tax reform sinceIndependence. Adhia added that GST will alsoensure that the taxes deducted by sellers reach thegovernment.

Asked what will happen to excise duty benefitscurrently enjoyed by units in Jammu and Kashmiras well as Northeastern and hilly states, Adhia saidthey will be protected in a similar manner. "Insteadof giving direct exemptions, we will take it throughthe Government of India's budgetary route," he said.

http://www.firstpost.com/business/gst-can-be-paid-with-debit-credit-cards-online-says-revenue-secretary-hasmukh-adhia-3068438.html

23. Huge challenges for CAs after GSTimplementation: Venkaiah Naidu

HYDERABAD: Union Minister M Venkaiah Naiduon Saturday said Chartered Accountants in Indiawill have huge opportunities and challenges whenthe Goods and Services Tax (GST) is implemented

Addressing the ICAI International Conference'Jnana Yagna' here, the Urban DevelopmentMinister said Chartered Accountants should play avital role in addressing issues such as curbing blackmoney

"Introduction of GST (Goods and Services Tax),which is round the corner is one of the pioneeringand game changing transformative initiatives takingshape in our country. GST introduction is a hugechallenge and opportunity for the Chartered











Accountants and you need to get ready for enablingthis change in a smooth and seamless manner,"Venkaiah added.

"This is a huge opportunity for all of you to bepartners in the progress of our nation," the Ministersaid.

He further said, it is a matter of pride that in none ofthe scandals or scams any Indian CA firm isreported to have been involved and it is theinternational accounting firms which werereportedly involved in different frauds and scams inIndia.

http://timesofindia.indiatimes.com/business/india-business/Huge-challenges-for-CAs-after-GST-implementation-Venkaiah-Naidu/articleshow/54999566.cms

24. Four slab rate structure for GST is better thana single rate: Arvind Panagariya

NITI Aayog, government's premier think-tank, hassupported the four slab structure for GST besidesarguing in favour of cess after several critics havequestioned the proposed structure saying that itwould dilute the original idea of a single unifiedrate.

"A four slab rate structure for GST is better thangoing in one go on to a single rate as in the latterprice effect on specific products could besubstantial," Aayog vice chairman and notedeconomist Arvind Panagariya said.

According to Panagariya, the revenues lossprospects under four slabs will be much less asopposed to the single rate, would be predictable andwould give a better picture of what the unified ratecould be going forward. "GST is a process and weare gradually heading towards it," he added.

The Centre has proposed a four-slab rate structurefor the Goods & Services Tax, ranging from zero to26%. The structure proposes the GST at 0 per cent ona host of goods and services, including food, healthand education services, and at 26 per cent on luxuryitems, such as fast-moving consumer goods andconsumer durables.

On consumption of ultra-luxury items and demeritgoods, such as big cars and tobacco products, it

proposes imposition of cess over and above a 26 percent GST rate. The GST is proposed to be levied at 6per cent, 12 per cent or 18 per cent on the remaininggoods and services.

Further supporting the imposition of cess underGST, Panagariya said that it is temporary in natureand could be withdrawn anytime. "Centre has tocompensate states for revenue loss. Keeping itseparate from tax rate will mean that it can bewithdrawn anytime," he added.

Commenting on whether the government will beable to meet the April 1 deadline for GST roll-out,Panagariya said government is working towards itand there is no reason why I should believe that itwill not happen.

"It's a little bit of race against time but certainly wellwithin the realm if possibility," he added.

http://economictimes.indiatimes.com/news/economy/policy/four-slab-rate-structure-for-gst-is-better-than-a-single-rate-arvind-panagariya/articleshow/55030276.cms

25. Centre's proposal on GST rates finds favourwith Niti Aayog

Niti Aayog vice-chairman Arvind Panagariya onMonday defended the Centre's proposal of four-slabGST rates, besides a cess on luxury and sin goods,amid criticism in certain quarters that the multiplerates would distort the structure of the indirect taxregime.

He also said that meeting the target of rolling outGST from April 1, 2017 is in the realm of possibilitythough it is race against time.

''The criticism that relevance of GST would be lostdue to the proposed four-slab structure is bitoverstated,'' Panagariya told reporters.

He said it should be kept in mind that while theremay not be a single GST rate for all items across thecountry, each item will have a single rate pan-India.

Panagariya said there is no tax theory which saysthat two slabs are better than bit more.

If only one rate or two rates structure is there inGST, items which are levied lower rates now at 3 or8 per cent would have seen much higher inflation,he said.









It is so because rates on these items would have tobe stretched much more than is the case in thecurrent rate structure.

Those attracting 3-8 per cent rate now are proposedto come under six per cent tax rate under GST. Theother rates are 12, 18, 26 and a cess over it.

He said this also gives predictability to tax structureas rates are not altered too much compared to thepresent one.

This would not have been possible had there been acouple of rates or a single rate.

Pointing out that GST is a process, he said hopefullythere would be a gradual movement towards asingle rate later.

Giving historical perspective, Panagariya saidformer finance minister Yashwant Sinha hadconverged 11 excise rates to three rates - 8, 16, 24 in1999-00 in his reforms. There were two additionalnon-vateable rates on luxury goods, he said.

On the proposed move to impose cess over 26 percent on luxury and sin goods, he said if this isreplaced with another tax the rate would be muchhigher than cess as 42 per cent of it would go tostates.

Besides, cess could be temporary and be done awaywith once its purpose to compensate states forrevenue loss in the first five years of GST roll out isover.

The GST Council could not decide on tax rates at itsmeeting on Thursday as discussions on cessremained inconclusive. If cess is decided, then taxrates could be fixed, finance minister Arun Jaitleyhad said.

The next meeting of the GST Council on November3 and 4 would try to evolve a consensus ontax rates.

The proposed GST structure of the Centre hasreceived flak from certain quarters. Former financesecretary Vijay Kelkar who headed the 13th financecommission that gave recommendations on GST,recently said the proposal was disappointing as itrobs the GST of its efficiency enhancing potential.

He had said impact of the tax rate proposals on theeconomy will be only one fourth of the high

potential impact that the 13th Finance Commissionhad estimated.

http://www.business-standard.com/article/specials/centre-s-proposal-on-gst-rates-finds-favour-with-niti-aayog-116102400755_1.html

26. GST: November 8 is the D-day formigration of eight million assessees

NEW DELHI: As many as 80 lakh assessees of exciseas well as service tax and VAT can start migratingtheir registration to the Goods and Service TaxNetwork portal by November 8, GSTN ChiefExecutive Prakash Kumar said today.

"On this date (November 8), we are releasingenrolments. This means getting these existing eightmillion assessees on to our system," Kumar wasquoted as saying by a PHDCCI release.

The GSTN, which is expected to provide commonand shared IT infrastructure for GSTimplementation, will transfer on-board to itsplatform the details of about 80 lakh existingassessees of excise, value-added tax, customs andservice tax.

Kumar said the migration of assessee details ontothe GSTN platform will sort out inconsistencies andhelp industry get ready for GST implementationdate of April 1, 2017.

"This move will help them do business without anyhassle from April 1 next year, which is the likelyGST implementation date," Kumar said.

GSTN, a not-for-profit entity incorporated in March2013, has been set up primarily to provide ITinfrastructure and services to the central and stategovernments, taxpayers and other stakeholders forimplementation of GST. It has also been allowed topartner with other agencies for creating an efficientand user-friendly GST eco-system.

http://economictimes.indiatimes.com/news/economy/policy/gst-november-8-is-the-d-day-for-migration-of-eight-million-assessees/articleshow/55031765.cms








27. GST is an excellent initiative: RaghupatiSinghania, MD, JK Industries

Discussing the pace of the economy, RaghupatiSinghania, MD, JK Industries tells us about thegrowth outlook and his expectations from GST.Excerpts:

What do you have to say about the pace of themarket

Raghupati Singhania: See the automobile growthhas to be looked at in different sectors, the car sectoris certainly growing and has grown well but in thecommercial sector the growth is rather slow, in factif anything it is very slow. Of course when we talkabout 2011 as a base we see nice percentile pointbecause that was a very high period but otherwise itis a little slow but hopefully within next six to eightmonths time we think that in the commercial sectoras well the growth should pick up. Please appreciatethat commercial sector growth means what, it isdirectly related to the GDP activity, is there morefreight available for carrying and so on so forth. Sotherefore I think that will catch up, of course farmsector has been good on the back of the goodmonsoon and hopefully should continue to be doingwell.

ET Now: How important is the GST here and doyou think the implementation is taking a bit of timeare you optimistic that we will be to really meet theGST deadline by April 1?

Raghupati Singhania: Look there a couple of pointsyou have raised, one GST per se is an excellentinitiative and I think it will create more seamlessmovement of goods in our country, you see thesetrucks lined up for hours together on state borders isa shame, national waste. Secondly, theimplementation on the grass root level will taketime, easily at least one year, I mean, from thestarting point because it is utilisation and adoptionto a newer system and training of people includingthe people who will administer, people who aregoing to use it like truckers and so on and peoplelike ourselves corporates will have to get trainedand get used to it.

http://economictimes.indiatimes.com/opinion/interviews/gst-is-an-excellent-initiative-raghupati-singhania-md-jk-industries/articleshow/55030582.cms?prtpage=1

28. Sisodia lauds Jaitley over GST, says'grateful' to him

In a rare show of admiration, Deputy Chief MinisterManish Sisodia, on Monday lauded Union FinanceMinister Arun Jaitley over the passage of the GSTBill, saying the AAP government is "grateful" to himfor pushing for tax reforms in the country.

Addressing a seminar on GST here, Sisodia said theDelhi government is a supporter of new tax reformssubject to "non-harassment" of traders.

"We should congratulate the Centre and Jaitleyji forbringing GST. As per my view, the governmentswhich have implemented the GST across the worldhave been unpopular (among some sections whohave to adjust during the transition)," he said.

He said GST becomes "unpopular" among thesections who have to adjust during the transitionfrom one system of taxes to another. But it's (GST)beneficial for the public at large.

"We are grateful to Jaitleyji for pushing for the taxreforms after talking to all party leaders. GST is theneed of the country...I am supporter of GST andDelhi government is also a supporter of GSTsubjectto non-harassment of traders," the Deputy ChiefMinister said.

The Delhi government had been at loggerheads withthe Union Finance Minister in the past over allegedirregularities in Delhi Districts Cricket Association(DDCA).

"Delhi government has cleared its stand that thereshould be Rs 20 lakh threshold limit under GST, butsome states want to bring it down upto Rs 5 to 10lakh following which traders will have to faceproblems," he added.

He further said traders should be apprised ofbenefits of GST in Delhi.

In August this year, The Delhi Assembly hadratified the GST Bill.

http://www.business-standard.com/article/pti-stories/sisodia-lauds-jaitley-over-gst-says-grateful-to-him-116102401174_1.html








29. Amid concerns, Niti Aayog supports four-slab GST & cess on sin goods

NEW DELHI: NITI Aayog, government's premierthink tank, has supported a four-slab structure forthe goods and services tax (GST) and backed theproposed cess on luxury and sin goods.

“A four slab rate structure for GST is better thangoing in one go on to a single rate as in the latterprice effect on specific products could besubstantial,” Aayog vice-chairman ArvindPanagariya said on Monday.

He said this structure would ensure less inflationaryimplications and lower tax rates for consumers aswell as revenue predictability for the exchequer.

Aayog’s backing to the Centre’s proposal comesafter several critics have questioned the proposedstructure saying that it would dilute the originalidea of a single unified rate.

The GST Council, which will finalise the GST rates,had failed to come to an agreement after threerounds of meetings last week with some statesopposing the Union finance ministry’s proposal tolevy a cess on ultra-luxury goods, tobacco and panmasala and for clean energy and instead favouring ahigher tax rate on consumer durables.

According to Panagariya, the revenues lossprospects under four slabs will be much less asopposed to a single rate, it would be predictable andwould give a better picture of what the unified ratecould be going forward. "GST is a process and weare gradually heading towards it," he said.

The Centre had proposed a fourslab rate structurefor GST, ranging from 6% to 26%.

The structure proposes zero GST on a host of goodsand services, including food, health and educatioservices, and slabs of 6%, 12%, 18% and 26% onremaining goods and services with the highest taxon luxury items such as fast-moving consumergoods and consumer durables.

On consumption of ultra-luxury items and demeritgoods, such as big cars and tobacco products, itproposes imposition of a cess over and above theGST rate.

Supporting the imposition of the proposed cess,Panagariya said it is temporary in nature and couldbe withdrawn anytime. “The Centre has tocompensate states for revenue loss. Keeping itseparate from tax rate will mean that it can bewithdrawn anytime,” he said.

The Centre requires over Rs 50,000 crore forcompensating the states for any revenue loss underGST for the next five years and had proposed tofund it through the cess.

Commenting on whether GST rollout can meet theApril 1deadline, Panagariya said the government isworking towards it. “It's a little bit of race againsttime but certainly well within the realm ofpossibility,” he said.

http://economictimes.indiatimes.com/news/economy/policy/niti-supports-multiple-rates-cess-under-gst/articleshow/55033969.cms

30. Multiple-rate GST will be disastrous

The proposed multiple rate GST structure will be"disastrous" and nothing more than same old VATrates in a "new shape", former finance minister PChidambaram said on Monday.

"We sincerely hope that we do not misinterpret thedesign of standard, standard minus and plus ratesof GST. We can have 20 rates. It will be disastrousand that cannot be GST, it will be fooling thecountry," Chidambaram told an interactive sessionwith IIM Calcutta students on economic reforms.

"A well designed GST is expected to have standardrate, plus and minus standard rate. That latitudeinterpreted to me as multiple rate — zero to 100 —that's not GST. That is simply existing VAT rates in anew shape, old wine in a new bottle," he said.

He said he hoped better counsel would prevailwhich would reduce the number of rates to "three orso".

The new Goods and Services Tax (GST) willsubsume a number of indirect taxes at the state aswell as central level and is targeted for rollout fromApril 1, 2017.

About states disagreeing and joining the secondwave of GST reform, Chidambaram said that evenwhen UPA had implemented VAT, some had not





joined initially and they had joined later, and soeventually all states will fall in line.

"Whatever, be the standard rates it will raise servicetax," he said.

At the GST Council meeting last week, there wasvirtual consensus among states on imposing of thecess, which tax experts and industry have opposedvehemently, saying it defeats the very concept ofone-nation, one-tax.

Besides, a four-slab tax structure of 6, 12, 18 and 26per cent with lower tariff for essential items and thehighest bracket for luxury and sin goods also foundfavour with them but a decision was put off to thenext meeting on November 3-4.

http://www.business-standard.com/article/specials/multiple-rate-gst-will-be-disastrous-chidambaram-116102400386_1.html

31. GST benefits Nagpur as companies likeFlipkart look to turn it into logistics hub

When retailer Future Group opened a warehouse onthe outskirts of Nagpur three years ago to supply itssupermarkets, the building was surrounded by dry,barren fields. Now it is only one in an expanse ofdistribution centres, storage depots and factories.

A dusty provincial city of 2.5 million, Nagpur is atthe geographical heart of the sprawling Indiansubcontinent. It is also at the heart of the action asAsia's third-largest economy prepares to roll out itsbiggest fiscal overhaul since independence: anational value-added tax that will replace aproliferation of local levies.

The tax itself - the country's first national goods andservice tax, due to be introduced next year - couldwell see delays.

But Nagpur is already benefiting from a change thatwill allow companies to move goods across stateborders without being hamstrung by local levies.Property prices have surged as companies fromAmazon to tractor maker John Deere have set upcentral facilities in the city to cut down on transportcosts.

"The advantage of Nagpur is simple. All metros (bigcities) in the country are all about 900 kms (560

miles) from there," said Rakesh Biyani, FutureGroup's joint managing director.

Consultancy Alvarez & Marsal, which specialises inturnarounds and performance improvement,estimates firms can cut logistics costs by 25 per centif they consolidate their warehouses in Nagpur.

Future Group is quadrupling the land it owns at theedge of the city, with plans to turn Nagpur into itsbiggest warehousing facility supplying more than250 of its Big Bazaar supermarkets.

Mahindra Logistics, part-owned by cars-to-ITconglomerate Mahindra Group, has acceleratedplans to buy more land in Nagpur since the new taxwas approved in August. E-commerce giant Flipkartand even guru-turned-businessman Baba Ramdevare setting up facilities in Nagpur or planning to.

Land prices are up by as much as a fifth since April,real estate agents say, as developers snap upfarmland.

Viren Thakkar, managing director of warehousemanager Logistics Park India, said he was gettingthree enquiries a week about Nagpur, up from one amonth a year ago.

"I have started aggregating land parcels in the city,anticipating demand," he said.

Nagpur has seen ambitious plans before. Almost adecade ago, the government was promoting plans tobuild an international metropolis here - then theglobal financial crisis hit and plans for export-oriented special economic zones were put on ice.

But since then, the country's consumer goodsmarket has blossomed, and so too has the pressurefor better logistics hubs: the e-commerce industry,for example, has grown five-fold between 2013 and2015, from $2.9 billion to $16 billion, Deloitteestimates.

Home advantage

Nagpur is also in a rosy political spot. The city ishome to Rashtriya Swayamsevak Sangh thatunderpins Prime Minister Narendra Modi's rulingparty, the Bharatiya Janata Party. The local MP istransport and shipping minister, Nitin Gadkari.





Nagpur-born Gadkari has said the government hassanctioned 250 billion rupees ($3.7 billion) worth ofprojects linked to the city since Modi came to powerin 2014, including starting work on a new ring-roadand acquiring land for a dry port with rail and roadconnections to Mumbai, the country's biggest cityand largest port 510 miles (825 km) to the west.

"Nagpur is the zero mile, where you canmanufacture and distribute in the country and thelogistics cost is less. There are huge opportunities,"Gadkari said in an interview at his office.

India's 'zero mile' marker, the centre of the country,has been located in Nagpur since the British colonialera.

Gadkari said he wants to accelerate construction of along-delayed international cargo hub and expandedthe airport, spread over an area the size of 4,000football fields, so that it provides 50,000 jobs by2019, compared to 9,600 staff today.

What is not clear is how quickly these ambitiousprojects will be completed. While a new expresswayto Mumbai has been approved, critics sayconstruction will mean acquiring land fromreluctant farmers - a slow process.

Gadkari's international cargo hub has been partlyconstructed and some tenants have arrived. But theairport expansion has stalled, although a tender forthe project is likely to be launched this year.

There is little question that the country needs anefficient hub.

The country, the world's seventh-largest, ishampered by creaking infrastructure, with manyroads and rail links dating to the colonial era. It hasfew cold storage networks, and cross-countrytransport is at glacial speeds.

Fractured tax systems among India's 29 states andseven other territories have hardly helped.

Indian goods trucks wait days at checkposts at stateborders for clearance and payment of local taxesbefore they can proceed. That has blockedmovement of goods and encouraged firms tooperate multiple warehouses across the country.

Mahesh Y Reddy, director general of theInfrastructure Industry and Logistics Federation ofIndia, said it was sometimes cheaper to send goodsfrom Mumbai's port to Dubai than to Nagpur, lessthan half the distance away, because of delays inshifting goods onto trucks and then the slow haulthrough the interior of the country.

"Ultimately, it's because of these inefficiencies thatthe likes of Nagpur do not become industrial hubs,"Reddy said, adding, "They remain as they are."

http://www.business-standard.com/article/economy-policy/gst-benefits-nagpur-as-companies-like-flipkart-look-to-turn-it-into-logistics-hub-116102500349_1.html

32. Revenue neutral rate structure of GST tobe finalised next month: Shaktikanta Das

NEW DELHI: Asserting that the government isdetermined to implement GST from the next fiscal,Economic Affairs Secretary Shaktikanta Das todayexpressed confidence that the revenue neutral ratestructure will be decided the next month.

"The rate structure on which there is a lot ofdiscussion going on at the moment with the GSTCouncil and also in the public domain... will getresolved in the next meeting of GST Council in thefirst week of November. Maybe, one or two sittings,it sittings, it should come to a conclusion," Das saidat an Assocham event here.

Dismissing criticisms, he said the rate structure hasbeen prepared based on "a very practical basis".

"The rate has to be necessarily revenue neutral. Youcannot have a rate structure where governments runinto huge deficit... Therefore, GST rates are workedout in such a manner that bulk of commodities areunder the standard rate, which is 18 per cent," hesaid.

The items which are very important, which are ofuse to a large cross-section of people and commonman are pegged at 6 per cent, he said, adding that 6per cent, 12 per cent, 18 per cent and a higher ratefor demerit goods has been proposed.

Former finance minister P Chidambaram yesterdaycriticised the proposed multiple-rate GST structureas "disastrous".

"We sincerely hope that we do not misinterpret thedesign of standard, standard minus and plus rates





of GST. We can have 20 rates. It will be disastrousand that cannot be GST, it will be fooling thecountry," Chidambaram had said.

Emphasising that the bankruptcy law together withGST will bring in a lot of dynamism into Indianeconomy, Das said the government is determined toimplement GST from April 1, 2017.

"Whatever preparedness is required, it is in place.The states governments are also equally committedto introducing it from April 1," he added.

Earlier this month, the Centre and states failed todecide the tax rate under the GST regime eventhough they "converged towards a consensus" onlevying a cess in addition to the highest rate of taxon luxury and sin goods.

A four-slab tax structure of 6, 12, 18 and 26 per centwith lower tariff for essential items and the highestbracket for luxury goods found favour with them,but a decision was put off to the next meeting onNovember 3-4.

http://economictimes.indiatimes.com/news/economy/policy/revenue-neutral-rate-structure-of-gst-to-be-finalised-next-month-shaktikanta-das/articleshow/55047359.cms

33. World will toe GST invoice matching, saysDeloitte's David Raistrick

NEW DELHI: Invoice-to-invoice matching under theproposed goods and service tax (GST) in India willmake it harder for the cash economy and other partsof the world will soon like to emulate this feature,says David Raistrick, Deloitte Global Leader forindirect tax.

“India is the only country that is doing it (invoice-to-invoice matching). This is unique...People will haveto comply or they will fall out of the GST chain,”Raistrick told ET in an interview .

He said invoice-to-invoice matching will make itharder for people to use cash and for people to be inbusiness and not pay tax. “Only those who play inthe cash economy will feel the pressure as they willlose credit,” he added.

Raistrick, who supports indirect tax practices inDeloitte member firms and has also worked at theUK tax authority HM Revenue and Customs, seesintroduction of this game-changing feature beingdone at the opportune time as the country is going

in for a new tax framework and believes otherglobal tax administrations to follow suit.

“It is the right time to do as it’s a new tax. It’s goingto happen everywhere. It should generate morerevenues for the government and improvecompliance," he said.

Raistrick said if India sticks to 18% standard ratethat would be reasonable, but pointed out thatglobal norm was also to include petroleum andalcohol within GST but have additional excise dutylevied on it to allow industrial consumers to claimcredit.

http://economictimes.indiatimes.com/news/economy/finance/world-will-toe-gst-invoice-matching-says-deloittes-david-raistrick/articleshow/55039852.cms

34. Chamber opposes cess on GST

The Tamil Nadu Chamber of Commerce andIndustry senior president S. Rethinavelu hasstrongly opposed the idea of levying cess on selectgoods.

The GST council meeting, which was held last week,had proposed to levy cess on ultra luxury goods likebig cars and a few tobacco items. This, the Centre,had pointed at sourcing funds towardscompensation to States in the event of any revenueloss, which may be faced over next five years due toimplementation of GST.

Whatsoever may be the purpose, the Centre cannotlevy cess under the guise of compensating orfinding source.

The very idea of introducing GST was to avoid andeliminate all kinds of additions and stick to the onetax principle.

The cess was nothing but diluting the idea of one taxpolicy.

Instead of levying a blanket cess, the governmentmay consider enhancing higher rate of tax on suchultra luxury products and stop the issue fromsnowballing into deeper crisis.

The Chamber hoped the GST council meeting wouldearnestly consider the appeal and try to sort it out in








the initial stages and ensure smooth introduction ofthe much awaited GST from beginning of the nextfiscal, Mr. Rethinavelu added.

http://www.thehindu.com/news/cities/Madurai/chamber-opposes-cess-on-gst/article9263712.ece

35. OPS cabinet discusses new edu policy,GST

The Tamil Nadu cabinet on Monday met under theleadership of finance minister O Panneerselvam anddiscussed the new education policy and thestructure of GST as explored at a recent meeting inNew Delhi. This is the second meeting convened bythe finance minister in less than a week.

"The cabinet dwelt on the concerns to be addressedin the education policy, which is taken up fordiscussion by the Central Advisory Board ofEducation (CABE) in its 64th meeting in New Delhion Tuesday," sources said. In his recent statement,DMK leader M K Stalin had urged the state tounequivocally object to the policy, which accordingto him ruined the principles of social and equaljustice, reservation policies, language, rightsenshrined in Right to Education Act, and rights ofthe minorities.

The CABE meet is expected to discuss aboutimprovement of learning outcome, rationalization ofposting of teachers in rural areas, nationalachievement survey, besides introduction ofvocational subjects at secondary school, joyfullearning and anganwadis to be co-located withprimary schools.

"The cabinet also discussed about the state'sreservations over GST tax structure," said a source.The recent GST council meet convened by Unionfinance minister Arun Jaitley failed to arrive at aconsensus on a four-slab tax structure and put offthe decision to next meet slated for November 3 and4. The AIADMK government was objecting to theimplementation of GST in the state, a manufacturinghub, as it would have have a substantial loss in itsfiscal autonomy.

http://timesofindia.indiatimes.com/city/chennai/OPS-cabinet-discusses-new-edu-policy-GST/articleshow/55039742.cms

36. GST will be game changer for media,entertainment industry: Venkaiah Naidu

Minister of Information and Broadcasting MVenkaiah Naidu on Tuesday said the Goods andServices Tax (GST) will be a game-changer for themedia and entertainment industry.

He also said that the media and entertainmentindustry needed to outline a firm roadmap toensure the convergence of networks, devices andcontent, the core elements of the digitalentertainment process.

"The Make in India, Skill India and Digital Indiacampaigns are clearly positive signals of the newtransformation including GST which is expected tobe a game changer for the sector," he said.

"The growth of varied platforms such as 4G,broadband, mobile technologies, digital media hasenabled the sector to move towards convergenceacross platforms and content," Naidu saidaddressing the 5th edition of the CII Big PictureSummit here.

"The Indian media and entertainment industryneeds to outline a firm roadmap to ensure theconvergence of networks, devices and content, thecore elements of the digital entertainmentprocess," he said.

He also called upon the industry to giverecommendations for tackling the "acute shortage"of professionals across different segments andassured the government's commitment to workwith the industry to develop infrastructure.

He said that there is a huge opportunity totransform India into a global hub for film shootinglocation and digital media.

"Our films, actors, content, technology areexpanding footprint to new and emerging globalmarkets, and the aim of the government is to makethis transition smooth by creating an enablingregulatory environment," added Naidu.

Speaking on the occasion TRAI Chairman R SSharma said India was in the midst of a digitalrevolution which warranted creation of newbusiness models.

"Given the changes and the convergence that thisdigital revolution is bringing, it is essential that aclear regulatory framework is put in place in orderto minimise potential litigation," said Sharma







http://www.business-standard.com/article/economy-policy/gst-will-be-game-changer-for-media-entertainment-industry-venkaiah-naidu-116102501425_1.html

37. Congress backs Pradhan over GST onpetroleum products in MP

Opposition Congress today backed Union OilMinister Dharmendra Pradhan's suggestion thatthe BJPgovernment in Madhya Pradesh shouldlevy Goods and Services Tax (GST) on petroleumproducts in the state.

Speaking at the just-concluded Global InvestorsSummit here, Pradhan had asked states to agreeon bringing all petroleum products under the GSTregime and made specific appeal to Chief MinisterShivraj Singh Chouhan in this regard.

"In public interest, we demand the MPGovernment give permission to GST Council tolevy GST on petroleum products in the State aswished by Pradhan. But no other taxes should belevied on petroleum products in the State," MPCongress spokesman Narendra Saluja toldreporters here.

"The State Government had been collecting hugerevenue from taxes like VAT on petroleumproducts. As a result of this, these products havebecome too costly, especially for the common manin Madhya Pradeshin comparison to other States,"he added.

Pradhan, during the meet, told Chouhanconsumption of petroleum products had shot upin the last 3-4 years.

"I urge the Chief Minister to accord permission tobring petroleum products under the GST ambit.This won't hit revenue collection (of theGovernment)," he had said.

The Oil Minister had said petroleum is currentlyunder 'state list' for the purpose of taxation underGST.

"GST Council will decide on this (taxation ofpetroleum products). On behalf of the industry, Iwould request the States to allow petroleumproducts to be brought under GST taxation," hehad said.

As per the GST Constitutional Amendment Bill,petroleum products such as LPG, kerosene andnaptha would attract GST.

However, other items -- crude oil, natural gas,petrol, diesel, high speed diesel and aviationturbine fuel -- have been excluded from GST forinitial years. Hence, these products will continueto be taxed in the hands of the states as they arebeing taxed at present.

http://www.business-standard.com/article/pti-stories/congress-backs-pradhan-over-gst-on-petroleum-products-in-mp-116102501260_1.html

38. Govt sources say cess is a better optionthan high tax rate

Just a week before the next Goods and Service Tax(GST) Council meeting on November 3 and 4, theview of states being compensated through a cessrather than a hike in the proposed GST rate hasgained strength, with the Centre telling them thatan increase in the tax rate has to yield around Rs1.72 lakh crore. On the other hand, a cess whichwill yield Rs 50,000 crore a year would be enoughto compensate states.

The Centre has proposed a four-slab structure — 6per cent, 12 per cent, 18 per cent and 26 per cent—under the proposed GST and a cess beyond 26 percent on luxury and sin goods. States are expectedto lose around Rs 50,000 crore a year, which wouldbe compensated by the Centre in full for the firstfive years. If the GST rates are raised beyond 26per cent on luxury and sin goods, it must yield Rs1.72 lakh crore to the states and the Centre,government sources said. This is so because half ofthis would be state GST, and of the remaininghalf— Rs 86,000 crore — 42 per cent, or around Rs36,000 crore would go to states. This would leaveRs 50,000 crore in the Centre’s hands tocompensate states.

The other option could have been to raise directtaxes, which did not find favour with the Centre,sources said.

While there has been demand from variousquarters to have a maximum rate of 18 per cent,the government sources said it would have meanta Rs 1 lakh crore revenue loss to the Centre'sexchequer. This would have to be offset fromincreasing tax rates on items consumed by thepoor, they said.









On the other hand, a 26 per cent peak tax ratewould be mainly on consumer durable goods suchas refrigerators which already are taxed at thecombined rate of 25 per cent. So, there is not muchof the difference between existing rate and the oneproposed under the GST regime.

Moreover, there is no cascading and leakagesunder the GST regime which would save another2-4 per cent on taxes, which should also be takeninto account while comparing the presentstructure with the proposed peak GST rate.

The proposed GST, including a cess, would lead toa total of Rs 9.32 lakh crore to the Centre’s kitty.

The sources said that one can argue that theproposed GST is not an ideal one, but thegovernment's hands were tight.

While many experts have crticised the multiple taxrates proposed by the Centre for GST, the sourcessaid even in Europe there are specific rates forproducts. while Luxembourg has four rates, othercountries in the European Union have three slabs.Former finance secretary Vijay Kelkar who headedthe 13th Finance Commission that gaverecommendations on GST, recently said theproposal was disappointing as it would rob theGST of its efficiency enhancing potential.

He had said the impact of the tax rate proposalson the economy would be only one fourth of thehigh potential impact that the 13th FinanceCommission had estimated.

The next GST Council meeting’s agenda will be apacked one as it is expected to decide on themuch-awaited GST rates. Also, the issue ofadministrative control over tax assesses or dualcontrol — claimed to have been settled earlier —has been cropped up and it will be decided uponat the meeting slated for November 3-4. In the lastmeeting on October 19, the Centre and states didmanage to reach a broad agreement on theformula for compensation to loss-incurring statesand a cess over the peak rate to fund thecompensation.

The details of these, however, would be workedout at the next meeting, before tax rates can befixed.

http://www.business-standard.com/article/economy-policy/govt-sources-say-cess-is-a-better-option-than-high-tax-rate-116102501584_1.html

39. A K Bhattacharya: Who killed GST?

It is becoming increasingly clear that what wasexpected to be a game-changing reform byushering in the goods and services tax (GST) mayend up being closer to a name-changing exercise.This statement is likely to be perceived by some asan exaggeration, but just consider the facts. Theproposed GST regime was to have replaced aplethora of taxes paid at different stages with adestination-based tax to be levied at one or twodifferent rates with the benefit of a set-off for thetaxes paid out in earlier stages of the value chain.The idea was also to avoid exemptions so that theoverall rates remained reasonable without beingunduly inflationary. But what you may actuallyhave instead are seven different rates of taxationunder GST. Government officials would of coursehave you believe that there would be only fourrates of taxation — the lowest being six per cent,followed by 12 per cent, 18 per cent and 26 percent on what are called demerit or sin goodsincluding luxury items. What they do not count,however, are three more rates — a zero rate foritems that will remain outside the new tax regime,a four per cent tax on gold and acess rate on thehighest slab of 26 per cent, aimed at compensatingthe states for their revenue loss. Even afterassuming that there would be four rates –ostensibly to protect the poor from high taxes andto tax the sin goods at a higher rate – themultiplicity of tax rates, along with a long list ofexemptions will be enough to damage thefundamental structure of GST. Four rates wouldinevitably give rise to classification disputes overwhat items should be taxed at what rates, allowdiscretion to the taxman and his political mastersin deciding what rate should be levied on whatitems and, most harmfully, encourage businesslobbying, often resulting in illegal gratification of afew powerful people in the system. In contrast, allthe problems arising out of classification ofdisputes, discretion and lobbying by vestedinterests could have been addressed by opting fortwo rates —one standard and the other lower toaddress concerns over inflation in basic essentialitems like food. Remember that most expertcommittees have recommended an averagerevenue-neutral rate of 12-18 per cent. Thecommittee headed by Chief Economic AdvisorArvind Subramanian has suggested a standardrate of 18 per cent and a lower rate of 12 per cent





and explained that the inflationary impact undersuch a structure with a revenue-neutral rate of 15per cent would be minimal. The committee hasalso convincingly argued that precious metals likegold should not be taxed at a low rate as now butat ahigher rate as these are not items of purchaseby the poor. Yet, the die seems to have been cast infavour of aGST structure that will have at leastfour tax rates, several exemptions and a cess on singoods. There are many other imperfections in thecurrent proposal. For instance, the service taxcould well be levied at three different rates,instead of just one standard rate (with 10abatement rates) at present, which might give riseto a new set of classification disputes. The disputebetween the Centre and the states over thejurisdiction of service tax assessment has not beenfully resolved. The registration requirements fortrade and industry are not yet fully free ofcomplications. But these problems will pale intoinsignificance when compared to the largerproblem of multiple rates, many exemptions andthe continued levy of cess. So, who is responsiblefor the GST dream turning sour? Is it India’s taxbureaucracy that continues to enjoy a tremendousclout in the administration of tax policy? Imagine aGST structure where there are only two rates forboth goods and services, with virtually noexemptions and no cess! There will be no disputesover classifications and no scope for shifting someitems from the highest rate to the lowest or the oneabove that. Discretion will go away. The taxappellate bodies will have less work. Could it bethat the revenue departments of the Centre andstates were not comfortable with the idea of tworates and had argued that it would adverselyaffect revenue collections? For finance ministers,this would have been an alarm signal. No financeminister would like to lose revenue and widen thefiscal deficit. Some finance ministers in the statescould have even seen merit in retaining theflexibility of multiple rates which would havegiven them the leeway to juggle around with ratesto address concerns of specific interest groups.Finance ministers are also politicians and none ofthem probably would like the idea of a GST thatcould have been accused of having fuelledinflation. Hence, perhaps, their desire to keep alow rate and more exemptions, never mind that itwould have undermined the spirit and long-termgains of GST. Ranged against all these powerfulforces was a lonely group of economists, who hadheaded committees to recommend fewer andreasonable rates under GST with a very small listof exempted items. Remember that the GSTCouncil that is discussing and debating the rate

structure and its secretariat have a preponderanceof representatives of the revenue departments andfinance ministers. For now, therefore, it seems theeconomists have lost out to the combined force ofthe tax bureaucracy and politics.

http://www.business-standard.com/article/opinion/a-k-bhattacharya-who-killed-gst-116102501519_1.html

40. Govt Firm on Multiple Rates and Cess onLuxury Goods under goods and servicestax

Notwithstanding criticism, the government is ofthe view that the proposed cess on luxury and singoods under the goods and services tax (GST)regime is the best way of creating a corpus tocompensate states for any revenue loss, asconsumers will have to pay significantly more ifthe fund is financed from regular taxes.Thegovernment is also firmly backing its four slab-GST structure as it feels it's the most appropriatesystem for a country where indirect taxescontribute a big percentage of the exchequer'srevenue and where tax rates on mass consumptionitems should remain low.The proposed taxstructure has been criticised for being complicatedand one that defeats the purpose of a single neatGST while the cess is seen as distortionary and onethat would lead to cascading of taxes.The GSTCouncil, the apex body on the new tax regime, willmeet again on November 3-4 to freeze the tax rate.The government is confident that consensus on thecess and the slabs will be arrived at in thismeeting.CHEAPEST OPTIONThe government istargeting a Rs 50,000-crore corpus to fund statesfor any loss of revenue under GST and hasproposed a cess on luxury and sin goods for thispurpose.The benefit of the cess is that it wouldentirely accrue to the Centre and could then bedistributed to states.The other option, backed bysome states and experts, is to raise the highest taxrate instead as cess would cause cascading of taxesand would distort the GST. But, under this route,to create . 50,000-crore fund, the governmentestimated it would have to raise revenues of overRs 1.7 lakh crore from tax paying consumers.Thisis because of two reasons -42% devolution out ofCentre's taxes to states under the FourteenthFinance Commission and sharing of GST.In orderto retain Rs 50,000 crore in the compensation fund,the centre would need about . 86,000 crore inadditional tax before 42% devolution to states.TheNITI Aayog has also defended the cess despite itsshortcomings in that there would not be input taxcredit and said that it would anyway be temporary




, as it would compensate the states for loss ofrevenue in the first five years of GST.FOURSLABSFormer finance minister P Chidambaramhas criticised the proposed multiple rates. roposedmultiple rates.“A well designed GST is expected tohave standard rate, plus and minus standardrate.That latitude interpreted to me as multiplerate -zero to 100 that's not GST. That is simplyexisting VAT rates in a new shape, old wine in anew bottle,“ he had said.But the government iskeen to press ahead with the four slab structure forGST, as it believes this is the best way of ensuringagainst revenue loss, while at the same timeprotecting consumers.Under the proposedstructure, some goods will be exempted from GSTwhile others will be levied 6%, 12%, 18% and 26%rate.The government expects goods taxed at 6% toaccount for 7.08% of tax base, the 12% slab toaccount for 28.3%, the 18% slab to account for31.04% and the highest 26% rate to account for24.8% of total revenue. Gold taxed at 4% will getthe balance 8.7%.European countries too havemultiple levies and if one takes into account thedifferential VAT rates for tobacco and alcohol,most of these countries effectively have four rates

http://economictimes.indiatimes.com/news/economy/policy/government-firm-on-multiple-rates-and-cess-on-luxury-goods-under-goods-and-services-tax/articleshow/55058570.cms

41. GST: Jaitley says yes to cess, no toadditional tax for compensating states

Ahead of the GST Council meet next week,Finance Minister Arun Jaitley said the 4-slabstructure of 6, 12, 18 and 26 per cent was underconsideration, with lower rates for essentialcommodities and higher bracket for luxury goods.

Jaitley, in a Facebook post said he prefers a levy ofcess on tobacco and luxury products tocompensate states for loss of revenue on GST.Jaitley said if the central government has toborrow money to fund states' compensation, itwould add to its liability and increase cost ofborrowing for the Centre, state governments andthe private sector.

Alternatively, Jaitley said if cess is levied, stateswhich benefit out of GST roll out do not have tocompensate the losing states.

Here is the full text of Jaitley's explanation:

http://www.business-standard.com/article/specials/gst-jaitley-says-yes-to-cess-no-to-additional-tax-for-compensating-states-116102601271_1.html

42. Letters: Flawed GST still superior

With reference to A K Bhattacharya’s article, “Whokilled GST” (October 26) there is no denying that agoods and services tax rate structure with too manyeffective rates is undesirable.

The problems of classification disputes, misuse ofdiscretionary powers and lobbying for exemptionsreferred to by Bhattacharya are all too well known.History has it how the central excise duty structureafflicted with multiple rates and several exemptionscaused havoc in its implementation.

That said it must be admitted that policymakershave the formidable task of designing the actual ratestructure in the face of achieving multiple objectives,some of which are not only aggressively competingbut even conflicting. Unless a rate structure is testedfor some time, the revenue it would generateremains uncertain. That is also the worry of thestates.

Another problem is that GST rate structure can bedecided only by consensus between the Centre andstates. The GST Council also has to ensure that thenew regime does not push inflation. Theconstitutional obligation of the Centre tocompensate the states for any shortfall in theirrevenues has a compelling effect. Policymakers tendto be overcautious.

Be that as it may, the expectation from the GSTCouncil is high. The Council is playing a historyrole. It should leave no stone unturned to reduce thenumber of rates, mindful of the fact that it takesyears to correct distortions in rate structure.

It would, however, be inappropriate to argue that amultiple GST rate structure is no better than thecurrent indirect tax structure. GST is superior by itsvery nature. Even a defective rate structure cannotrob GST of its merit. It subsumes several central andstate taxes. Let us hope for the best.

http://www.business-standard.com/article/opinion/letters-flawed-gst-still-superior-116102601693_1.html

43. GST row: Jaitley bats for cess overadditional tax for compensating states












Finance Minister Arun Jaitley today favoured levyof cess on tobacco and luxury products tocompensate states for loss of revenue on GST sayingthe cost of funding that through an additional taxwould be "exorbitantly high and almostunbearable".

Ahead of the meeting of all powerful GST Councilnext week to decide on GST rates, Jaitley said the 4-slab structure of 6, 12, 18 and 26 per cent was underconsideration, with lower rates for essentialcommodities and higher bracket for luxury goods.

"Different items used by different segments ofsociety have to be taxed differently. Otherwise theGST would be regressive. Air conditioners andhawai chappals cannot be taxed at the same rate.Total tax eventually collected has to be revenueneutral. The Government should not lose moneynecessary for expenditure nor make a windfallgain," he wrote in a Facebook post.

Explaining the rationale for cess, Jaitley said if thecentral government has to borrow money to fundstates' compensation, it would add to its liabilityand increase cost of borrowing for the Centre, stategovernments and the private sector.

He said there is no rationale for increasing direct taxfor this purpose and theoretically it has been arguedthat the compensation be funded out of anadditional tax in the GST rather than by cess.

"Assuming that the compensation is Rs 50,000 crorefor the first year, the total tax impact of funding thecompensation through a tax would be abnormallyhigh. A Rs 1.72 lakh crore of tax would have to beimposed for the Central Government to get Rs50,000 crore in order to fund the compensation," hesaid.

"50 per cent of the tax collected would go to theStates as their GST share and of the balance 50 percent in the hands of the Central Government and 42per cent more would go to the States as devolution.

"So out of every 100 rupees collected in GST only 29per cent remains with the centre. The tax impact ofthis levy would be exorbitantly high and almostunbearable," he said.

Alternatively, Jaitley said cesses can be imposedwhich would be subsumed in the taxes after fiveyears.

"This would include clean energy cess and cesses onluxury items and tobacco products, which in anycase, presently also pay levy higher than 26 per cent.This would ensure no additional burden on the taxpayer and yet be able to compensate the losingstates," he said.

http://www.business-standard.com/article/pti-stories/fm-favours-cess-over-additional-tax-for-compensating-states-116102600822_1.html

44. GST rate speculation slows luxury carsales

MUMBAI: There isn’t much to celebrate for luxurycar companies this festive season.

At the time of the year when sales usually peak,these companies are dealing with a large number ofprospective customers who are postponing theirbuying decision. The reason: continuing uncertaintyover the rate of goods and services tax.

Many industry executives are now pruning theirsales estimates, which widely were for double-digitexpansion this year.

Discussions on fixing the tax rates remaininconclusive with the GST Council set to meet againin the first half of November. The expectation is thatthe GST would be set at 26% for the auto sector,which in theory should reduce the prices of luxurycars that at present attract as much as 52% in taxesunder various heads. But the uniform rate is likelyto come with a caveat: there are proposals to imposea cess on luxury goods to the extent that the newindirect tax system doesn’t hurt governmentrevenue — that would mean no change in the pricethat the buyer pays. People are delaying theirbuying decision until they have clarity on the levies,said in-dustry insiders.

An executive at a super-luxury car company saidmany potential customers had declaredunaccounted cash under the government’s recentlyclosed income declaration scheme (IDS), and don’thave the money to splurge now, or are cautious onspending. Many others are avoiding big-ticketpurchases to stay off the taxman’s scanner, headded. For makers of luxury cars and SUVs, thesedevelopments mean slow sales this Diwali season,and come as a double whammy. A Supreme Courtban on the registration of large diesel vehicles in theNational Capital Region had already hurt their salesin the first half of 2016 — that ban has now been





lifted, with the court imposing a levy on suchvehicles.

Enquiries from prospective buyers are still high, buttheir conversion into sales is taking much longer,said Roland Folger, managing director of Mercedes-Benz India. “There are lot of uncertainties regardingthe future of diesel as a fuel in luxury cars and theimpending GST tax structure, so one expects thegrowth forecast for Q4 to be slightly lower withcustomers deferring purchase,” Folger told ET.

DISAPPOINTING SALES

In the first nine months of 2016, the luxury carmarket is estimated to have expanded 3-5% to about26,000-28,000 units, largely driven by double-digitgrowth at BMW, Jaguar Land Rover and Volvowhich were aided by new launches.

The top two, Mercedes-Benz and Audi, have postedflattish to low single-digit growth. In 2015, sales inthe luxury segment totalled 36,000-37,000 units.Rohit Suri, president of JLR India, said he wasexpecting the market to grow in double digits, butnow fears purchase deferrals on account of GSTuncertainties in coming months to pull down thegrowth rate to a single digit.

It isn’t unusual for consumers to wait and watchwhen they expect major changes in taxes, especiallywhen it comes to the purchase of big-ticket itemssuch as luxury cars, said Gaurav Vangaal, senioranalyst at IHS Markit Automotive. But the problemthis time is that it is happening at the peak festivaltime.

UNCERTAINTIES HURT

The festive season typically accounts for 30% ofannual car sales, as many Hindus believe it isauspicious to acquire assets at the time.

Companies chip in by launching new models andmaking attractive offers to entice buyers. The macroenvironment, too, is seen favourable this year, withlow interest rates and stable fuel prices, as well asmore money in the hands of government employeesdue to a recent salary revision. These factors areindeed helping mainstream car companies, but orthose selling luxury vehicles, the benefits are offsetby the indecisiveness over the GST rate.

“There are market uncertainties currently and (that)are attributed to the recent diesel ban and GST

speculation,” said Tom von Bonsdorff, managingdirector at Volvo Auto India. But Volvo is on trackto post 15-20% growth this year, he said, thanks tothe availability of sub-2 litre diesel options acrossthe range — the court ban in NCR was on diesel carsand SUVs displacing 2 litre and more. But if not forthe uncertainties, conversion of enquiries to salescould have been even faster, von Bonsdorff added.

Industry players are now hoping that the final taxrate doesn’t create any major roadblock to thedemand situation.

http://economictimes.indiatimes.com/industry/auto/news/gst-rate-speculation-slows-luxury-car-sales/articleshow/55079322.cms

45. Realty may attract 18% GST; impact onhousing prices neutral: ICRA

NEW DELHI: Real estate is likely to attract a GSTrate of 18 per cent and its impact on housing priceswould be broadly neutral, rating agency ICRA said.

"Services, which would include works contract, areexpected to fall under the 18 per cent slab. ICRAexpects that at this rate of GST, the impact of theGST regime on the residential real estate prices willbe broadly neutral, with some variation across statesdue to the divergences in current taxation practices,"the agency said in a statement.

In the recently concluded Goods and Services Tax(GST) Council meeting, the finance ministryproposed a four tier GST structure, with a lower rateof 6 per cent, two standard rates of 12 per cent and18 per cent and higher rate of 26 per cent.

"A GST rate of 18 per cent would be higher than thecurrent effective rate of VAT and service tax for saleof under construction property in most states," theagency said.

The higher tax rate is expected to be offset to someextent by a reduction in the basic price throughbetter utilisation of input tax credits, it added.

Under the current tax regime, certain input taxespaid by the developer, such as excise duty andcentral sales tax (CST) on materials used for





construction, cannot be offset against indirect taxescollected from customers.

However, under the GST regime, there would bebetter utilisation of these input taxes paid, whichcan lower the project cost.

Net impact to the end customer will be an interplaybetween the increment in GST rates over the currenteffective tax rates and the extent of savings oncurrently unabsorbed input taxes.

Broadly, the impact is expected to be neutral - somestates like Karnataka could see potential savings inthe final cost to the end customer, whereas otherstates like Haryana and Maharashtra could seehigher prices.

The main indirect taxes incident on the real estatesector are excise duty, value added tax (VAT) andservice tax. These would be subsumed by GSTunder the new indirect tax regime.

However, there is significant variation in theindirect tax structure across the states due tovarying VAT rates and differences in methods forvaluing the services and goods portion of theconstruction contract.

Under the model GST law, it has been clarified thatconstruction or works contract would be deemed tobe a supply of service. This brings clarity on theapplicability of GST and uniformity in the indirecttax structure across states.

The GST paid by the developers for all inputs suchas labour, materials and other services can be takenas input credit and offset with the GST payable bythe end customer.

ICRA Vice President Shubham Jain said: "The GST isa positive step towards harmonisation of taxstructures across the states and improving ease ofdoing business for companies."

http://economictimes.indiatimes.com/wealth/real-estate/realty-may-attract-18-gst-impact-on-housing-prices-neutral-icra/articleshow/55076101.cms

46. Simple GST, thanks to SAP andAssocham's tech resource centre

NEW DELHI: Technology company SAP andindustry body Assocham on Wednesday launched aknowledge-sharing resource centre to helporganisations manage changes in their businessprocesses and information systems as a result of theupcoming Goods and Services Tax (GST) roll-out.

The resource centre, called SimpleGST, will be aone-stop portal for businesses and will provideinformation on key areas such as tax computation,master data management and business processlocalisation.

“GST has opened up opportunities for businesses inover 160 countries and helped them move beyondthe physical constraints to expand exponentially byharnessing digital prowess,“ said DS Rawat,secretary general, Assocham.

The roll-out of the new GST regime will necessitateover 51 million SMEs in India to considerreinvesting or redefining their business processes.

“It is estimated that over three to five billioninvoices will be uploaded on GST Network everymonth, and over 40% of these transactions will beprocessed through an SAP system,“ said NeerajAthalye, head of SAP S4HANA, SAP IndianSubcontinent.

At a panel discussion during the launch,participants said rerouting supply chain andcompliance are two important parts for effectivelyimple menting GST. Automation and encapsulationof the compliance measures into the IT systems ofthese organisations is imperative, and earlypreparation and planning is the key to a successfulGST implementation. Efforts such as this arecurrently focussed at answering some of thesequestions and smoothening the transition forbusinesses.

“SAP now sees a huge responsibility to get India Inccompliant with the upcoming law and is thusworking in close collaboration with customersacross industries, the overall ecosystem (includingGSTN) to provide solutions for a smooth transitionto goods and services tax (GST),“ said ArunSubramanian, VP, Globalization Services, SAP India.





http://economictimes.indiatimes.com/tech/ites/simple-gst-thanks-to-sap-and-assochams-tech-resource-centre/articleshow/55087627.cms

47. Time for Tamil Nadu government to poreover proposed GST rates

It should bargain in council based on the impact ofcentre’s four-slab rate structure on its revenues

The GST Council, a panel of Union and state financeministers, has met three times till now. Thoughconsensus has been the mode of decision-making,the process will not be smooth in the days to come.Very important decisions like tax rates, mobilisingrevenue to give compensation to states and divisionof tax administrative powers between the Union andthe state governments will see tough negotiationsand prolonged discussion.

The Centre has proposed a four-slab tax ratestructure-two standard rates of 12% and 18% foritems like consumer durables, 6% on essential itemsand 26% on luxury goods. It also proposes 40% sintax on tobacco products like cigarettes and panmasala. Services under GST will be taxed at 18%.Fewer than 100 items have been exempted fromGST. While proposing the GST rates, Union financeminister Arun Jaitley said, “The principles of fixingthe rate would be that they should be inflationneutral, and states and Centre continue with theirexpenditures and taxpayers are not burdened.”

Now Tamil Nadu should compare the revenuegenerated from each commodity with the likelyrevenue from GST under the relevant tax slabs.Under GST, the states get the power to taxproduction, which is under excise duty till now, andalso get the power to tax services, whilesubstantially losing sales tax on commodities.Though the Union government claims to haveproposed GST rates that will not increase inflation,the reduction in the number of goods to beexempted from tax, as well as the higher minimumrate may be inflationary. For instance, the 6%minimum rate may increase prices of food items.

Behavioural changes in consumers would be keysince there is a psychological impact of GST. Forexample, gold jewellery is currently attracting 10%customs duty, 4% excise duty and 2% sales tax VAT.The cumulative effect of all these taxes is highercompared to the proposed GST rate of 6%, with theUnion government proposing to reduce customsduty to 2%. In the existing system, the customers of

the gold jewellery see a bill that shows 1% or 2%sales tax (1% in TN) and they are blissfully ignorantof the impact of customs duty and excise duty. Ifthey see a 6% GST, it may impact their buyingdecision even though the price may not havechanged. Will there be more unbilled transactionsthen?

For the purpose of compensating state’s revenuelosses, it appears the states have agreed that theactual commercial tax revenue collected in 2016-17will be the base and an annual increase of 14% willbe assumed. Suppose ‘100 is the commercial taxrevenue collected in 2016-17, then ‘116 ought to bethe tax revenue collection in 2017-18 and anyshortfall from `116 will be compensated by theUnion government.

To compensate states like Tamil Nadu which arelikely to see a fall in tax revenue due to GST, theUnion government also proposes a cess on luxuryand sin items to collect additional revenue fordistribution to these states.But, given consumptionpatterns in Tamil Nadu, the state may see moreconsumption of luxury and sin items.This wouldmean customers within Tamil Nadu would bebearing the burden of the revenue loss of the statedue to GST.

States like Tamil Nadu should therefore carefullycalculate the incidence of luxury and sin taxes andthe cess thereon, to take a decision in this regard.The ideal proposition, in this case, would be toargue that the Union government should givecompensation from its general revenue and thereshould not be a specific cess on GST for this.

After the latest GST Council meeting held onOctober 17-19, Tamil Nadu has come back with lotsof homework to be done. It should not only studythe impact of the GST tax structure on revenuecollection, but also the impact of cess. Further, weshould also thrash out the division of taxadministration powers between the Union and stategovernments so that the taxpayers are not harassedby two tax authorities at the same time. The TamilNadu government should get control overmanufacturers and traders over whom it canexercise more effective supervision.

The final point is, it is impossible to a prioricalculate the revenue loss or possible gain from theGST. It is only with real-time data analysis that wecould estimate the revenue potential of GST andchalk out a strategy to improve revenue collection if





needed. Having accepted that taxing ultimateconsumption is the least market-distorting and fairsystem of commodity taxation, GST should come in.The Union and state governments have their workcut out so the system is rolled out on April 1, 2017.

http://blogs.timesofindia.indiatimes.com/tracking-indian-communities/time-for-tamil-nadu-government-to-pore-over-proposed-gst-rates/

48. The rationale for multiple rates in GST

Some critical issues are pending before the GSTCouncil for a final decision. Comments have beenmade in the public space with regard to two of theseissues. Even though the final decision with regard tothese two issues is yet to be taken by the GSTCouncil, the rationale behind the proposals placedbefore the Council needs to be explained.

The multi rate structure

It has been proposed to the Council that thereshould be a four slab multi-rate tax structure. Itemsconstituting nearly 50 per cent of the weightage inthe Consumer Price Index basket (mainly fooditems), are proposed to be exempted from the levyof the GST. There will be a zero tax on such items.The object of this is to ensure that the GST structureis not regressive or burdensome on the commonman.

Of the balance items, a tax rate of 6 per cent, 12 percent, 18 per cent and 26 per cent has been suggested.The principal rationale behind this tax structure isthat items which are presently taxed at rates closerto the range of each of the slabs will be fitted intothe particular rate of the slab.

Those currently taxed below 3 per cent as the totaltax of the Centre and the States will be taxed at azero rate. Those between 3-9 per cent will be taxedat a 6 per cent rate, those between 9-15 per cent willbe taxed at 12 per cent and there would be astandard rate of 18 per cent.

Some have suggested that multiple tax rate isdisadvantageous to the GST and would neutralisesome of the advantages of a uniform tax structure.The reality is that a multiple tax rate in India isinevitable for several reasons.

Different items used by different segments of societyhave to be taxed differently. Otherwise the GST

would be regressive. Air conditioners and hawaichappals cannot be taxed at the same rate. Total taxeventually collected has to be revenue neutral. TheGovernment should not lose money necessary forexpenditure nor make a windfall gain. The tax onsome products in a narrow slab regime willsubstantially increase.

This would be highly inflationary. A commoditybeing taxed by the Centre and the State at 11 percent at present will be taxed at 12 per cent. If it’staxation is suddenly raised on standard rate of 18per cent, it would disrupt the market and would behighly inflationary.

There are presently several items mainly used by themore affluent which are currently taxed at a VAT of14.5 per cent and an excise of 12.5 per cent. If thecascading effect of these taxes and octroi is added,then range of taxation of these products is between27-31 per cent. It has been proposed to the Councilto fix the rate of these items at 26 per cent. Some ofthe items which are now being used by the lowermiddle classes will eventually be proposed to beshifted to the 18 per cent bracket.

With regard to demerit and luxury goods which aretaxed globally at a higher rate, no rebates arecontemplated. Each good would be taxed on thebasis of its own demerit.

Compensation payable through cess

The GST will result in the consuming Statesincreasing their revenues from the very first yearonwards. The GST Council has fixed a 14 per centrevenue growth as a uniform, secular growth ratefor all States. The revenue loss, if any, of a State hasto be calculated on this basis. Some producing Statesmay lose marginally in the initial years. TheConstitutional amendment guarantees a five yearcompensation to these States.

The moot question is as to how is this to be fundedby the Central Government? If the CentralGovernment has to borrow money to fund thecompensation, it would add to its liability andincreasing the cost of borrowing by the Centre, theState Governments and the private sector.

There is no rationale for increasing direct tax for thispurpose. Theoretically it has been argued that thecompensation be funded out of an additional tax inthe GST rather than by cess.





Assuming that the compensation is ₹50,000 crorefor the first year, the total tax impact of funding thecompensation through a tax would be abnormallyhigh. A rupees 1.72 lakh crore of tax would have tobe imposed for the Central Government to get₹50,000crores in order to fund the compensation. 50per cent of the tax collected would go to the States astheir GST share and of the balance 50 per cent in thehands of the Centre and 42 per cent more would goto the States as devolution. So out of every 100rupees collected in GST only 29 per cent remainswith the centre. The tax impact of this levy would beexorbitantly high and almost unbearable.

The alternative proposal is to have a cess accountand continue same existing levies as cess for aperiod of five years before subsuming them as tax.This would include clean energy cess and cesses onluxury items and tobacco products, which in anycase, presently also pay levy higher than 26 per cent.This would ensure no additional burden on the taxpayer and yet be able to compensate the losingStates. It may further be noticed that benefitingStates are not compensating the losing states. TheCentre, as a non-beneficiary, has to compensate andthe proposal for continuing existing cesses for fiveyears to the extent of compensation required is themore benign way of compensating the losing Stateswithout burdening the tax payer.

These are only at the proposal stage and would bediscussed at length in the meeting of the GSTCouncil early next month.

http://www.thehindubusinessline.com/opinion/arun-jaitley-on-two-crucial-aspects-of-gst/article9272172.ece

49. Panagariya defends 4 GST rates and cess

NITI Aayog Vice-Chairman Arvind Panagariya onMonday took on critics of the Centre's proposals tolevy a cess on top of the Goods and Services Tax(GST) with four tax slabs ranging from six per centto 26 per cent apart from a zero-tax category.

Cess helps

Moving to just two rates or a single GST rate,instead of the four rates in the range proposed bythe finance ministry to the GST Council, couldtrigger inflation in some products and services, Mr.Panagariya said. The cess on GST would help theCentre compensate states for revenue losses for fiveyears and could be wound down after that, he

pointed out, as opposed to the alternative ofimposing higher GST rates to ensure that the centralexchequer has enough in its own kitty tocompensate loss-making States.

“Two issues have been raised about the rates’structure and the cess proposal on GST, with somepeople having said there are too many rates,” Mr.Panagariya said. He added that analysts who felt thegains expected to accrue from the new indirect taxregime would be lost with multiple tax rates, have‘overstated’ the problem without understanding thehistorical context of India’s indirect tax reforms.

“Till 1999, there were about 11 rates of excise duty –which Yashwant Sinha as Finance Minister modifiedto three rates – 8 per cent, 16 per cent and 24 percent. Since then, the rates have changed a lot and weagain have multiple tax rates,” he pointed out.

Inflation impact

“A lot of people have identified GST as a single taxrate across commodities, when the larger part of thegain is having a single rate on any given productacross the nation. If we do a single tax rate of say, 16or 18 per cent, some rates will have to be raised veryfar up,” Mr. Panagariya said, highlighting the‘inflation implications for those commodities that gofrom low rates to 16 per cent in one go.’ On thecontrary, moving some goods from four per centand others from eight per cent to a standard six percent rate would not only moderate the inflationimpact but also reduce the prospects of revenue loss.

“It’s more predictable. These are things that haven’tbeen picked up properly and most analysts haven’tthought through the historical background or theproblems of adopting a single rate in one go,” Mr.Panagariya said. If the government were to opt for astraightforward GST regime without a cess, the taxrate would have to be much higher as 42 per cent ofrevenue is devolved to the states, to whom theCentre has committed to compensate for revenuelosses in the first five years of GST implementation.

“100 per cent of the cess proceeds will go to theCentre and the advantage of cess is it’s supposed tobe temporary. If it is imposed for the specificpurpose of compensating the states, then it will bedropped after five years and you will get a lowerrate,” he said.

http://www.thehindu.com/business/Economy/panagariya-defends-4-gst-rates-and-cess/article9262651.ece






50. Implementation of GST will help trade,industry: Official

mplementation of GST will help trade and industryand there is no need to have any room of concernabout its implementation, a top official said here onFriday.

"GST is indeed a good tax," Pullela Nageswara Rao,Chief Commissioner of Central Excise, Customs andService Tax, Kerala, said.

He said state will collect a part of it and the Centrewill collect one part.

"Nothing that would harm or hurt you will happen.

This will definitely help the growth of trade andindustry," Rao said.

He made this observation during his inauguraladdress at the one day awareness workshop on 'GSTand its Implications' organised by Federation ofIndian Chambers of Commerce and Industry(FICCI) along with KPMG in Kochi. "With theimplementation of GST, Central Exciseand all suchorganisations will change our role from enforcementagency to facilitation agency. Let's slowly break theold laws and go for the new ones," a FICCI releasequoting Rao said here.

The GST, which has already been approved by thePresident of India, is scheduled to be implementedacross the country from April 1, 2017.

It replaces all indirect taxes levied on goods andservices by the Centre and States, making for asingle, easier taxation system.

There are 60,000 Central Excise and Customs andstate government officers who will be trained for theswitch to GST, a tax system practised in 160countries.

S Sivankutty, Deputy Commissioner (Intelligence),Commercial Taxes, Central Zone, Ernakulam in hisintroductory address commented that in theglobalised situation we have to capture the market.

Described as a system that will create transparencyand credibility, the GST is expected to bring innumerous changes.

The GST single taxation system will increase ease ofdoing business, pointed out Deepak L Aswani, Co-Chair, FICCI Kerala State Council.

"This will be a significant step with the benefitspassed on to the consumer," he said.

Sachin Menon, FICCI Co-Chair- GST, Partner andHead, Indirect Tax, KPMG in India, said,Keralabeing one of the highest consuming states, itwill be one of the largest beneficiaries ofintroduction of GST.

"This will improve the finances of the stateSignificantly. Kerala is seen as one of the most vocalstates in the GST council today and by taking thelead in spreading awareness of GST, it reiterates itscommitment to implement GST," he said.

http://www.business-standard.com/article/economy-policy/implementation-of-gst-will-help-trade-industry-official-116102801428_1.html

51. On GST, Centre must reach out to states tosettle differences

Will the GST era begin on April 1 2017? A lot willdepend upon the outcome of the deliberations at theGST Council meetings scheduled for the first half ofNovember. There are three crucial issues on whichconsensus has to be reached before we can take upthe model law to be passed by the Parliament andstate assemblies.

One, the GST rate structure. We are yet to startdiscussing the rates. We have moved away from therather futile debate on the revenue neutral rate, theestimates of which range from 12 per cent to 24 percent. Instead, now the approach is to start from anapproximate structure of rates, say, 6 per cent, 12per cent, 18 per cent and 26 per cent. All the existingcommodities will be distributed to each of the aboverates on the basis of the proximity of the existingcombined burden of current Central and state taxes.This data will enable the estimation of potential taxrevenue of the Centre and the state and the ratesmay be tweaked to arrive at a structure whichwould ensure revenue neutral receipts.

The most controversial is the upper rate of 26 percent. The commodities included in the higherbracket currently suffer 14.5 per cent VAT and itmakes no sense to reduce the SGST to 13 per cent.Besides, these commodities suffer Central exciseduty of 16 per cent and above; commodities such as





SUVs attract excise rate as high as 34 per cent. Thereare other taxes currently subsumed under the GSTsuch as octroi, entry tax, cesses and service tax.Besides, one has also got to account for thecascading impact of tax prevalent in the existingsystem.

The logic of reducing the tax incidence on consumerdurables and demerit goods to 26 per cent makesthe GST severely regressive. It may also be notedthat around 200 commodities that suffer no Centralexcise currently but have only lower VAT rate of 5per cent are proposed to be included in the lowerbracket of 6 per cent. The present rate structureraises tax on necessities and reduces the tax onluxuries. The distributional impact of the proposedstructure is not acceptable to the states.

The chief economic adviser’s report hadrecommended the demerit goods rate of 40 per cent.It should be reintroduced in the structure and thestates should be given flexibility in determining thedemerit goods. The attempt of Kerala to introduce afat tax on a few branded food products had initiatedwidespread debate on the efficacy of the move. Itwill be a retrogressive step if the fat tax has to begiven up with the introduction of the GST. Besides,the upper rate of 26 per cent must be raised to atleast 30 per cent. It should enable us to reduce thetax rate on necessities so that the GST rate structureis rendered more progressive.

How will the resources required for compensatingthe states be mobilised? The current thinking of theCentral government is to impose a cess on tobacco,pan masala and some of the upper ratedcommodities such as aerated drinks. Now the secretis out. The upper rate has been pegged at a lowerrate so that the Central government has the optionto impose the cess as and when necessary — ofcourse, with the concurrence of the GST Council.This is not acceptable to the states. They are beingdeprived of their legitimate revenue so thatcompensation can be mobilised by the Centre.

It may be remembered that when the VAT wasintroduced in 2005, the then Union finance minister,P. Chidambaram, had proposed an additional cessof 1 per cent on the VAT rate. It was not agreed toby the states. The Centre was forced to find acompensation amount from its other elastic sources.

The Centre today still has direct taxes, customs andincome from the sale of assets like spectrum orborrowing from which it can easily draw the

required resources. The only cess the states werewilling to concede was the additional tax on tobaccoand the clean environment cess on coal which theCentre was constitutionally entitled to impose. Theestimated compensation was only Rs 50,000 crore ofwhich over Rs 43,000 crore would be met by theabove two taxes. It was only a matter of Rs 7,000crore that stood in the way of a consensus at theGST Council.

Finally, there is the vexed question of the role of thestates and the Centre in administering the GST. Inthe first GST Council, deliberations moved to anagreement where the services would be handled bythe Centre, the GST on goods below Rs 1.5 croreturnover would be in the domain of the states andthose above Rs 1.5 crore turnover concurrently bythe state and the Union.

We had objected to composite dealers active ongoods and services, the dealers in services indeemed goods such as works contract and the newservice entrants being included to the Centre’s net.But, now all these conclusions has been thrownoverboard by the new data that has been madeavailable.

The raising of the threshold limit from Rs Rs 10 toRs 20 crore has resulted in the removal of 33 lakhproportion of goods taxpayers from the stateadministration. Besides, the Centre is getting accessto 12 lakh dealers from the VAT net. With servicesand IGST entirely with the Centre, the Centralgovernment`s 40,000 workforce gains more dealersthan states with five times more workforce than theCentre. The so-called conclusion reached in the firstCouncil meeting has been abandoned by all states.

If the Central government adopts a more flexiblestand, it should be possible to thrash out thedifferences and move towards the target date for theimplementation of the GST. States are gripped withthe fear of losing their financial autonomy afterdeletion of entry 54 and 62 from the constitution.

That fear has to be assuaged by reinforcing thecommitment on the part of the Centre by agreeing tothe states’ request of a vertical split up of service taxadministration so that goods and services up to Rs1.5 crore would be in the domain of states andanything above would be administeredsimultaneously by the Centre and the states.


http://indianexpress.com/article/opinion/columns/flexibly-on-goods-and-service-tax-bill-gst-council-tax-revenue-gst-rate-vat-gst-bill/

52. Trade, industry will benefit from GST, saysofficial

KOCHI: Trade and industry will benefit from theGoods and Services Tax (GST), and there is no roomfor any concern about its introduction, said PullelaNageswara Rao, Chief Commissioner of CentralExcise, Customs and Service Tax, Kerala.

He was speaking at an awareness workshop on‘GST and its Implications’ organised by theFederation of Indian Chambers of Commerce andIndustry (FICCI) and KPMG here on Friday.

According to Rao, once the GST comes into effect,the role of various government agencies such as the

Central Excise will change to that of ‘facilitationagencies’ from ‘enforcement agencies.’

“The GST has already been approved by thePresident of India, and is scheduled to beimplemented across the country from April 1, 2017.It replaces all indirect taxes levied on goods andservices by states and the Centre, making way for asingle, easier taxation system. A total of 60,000Central and State Government officers will betrained to facilitate the switch-over to the new taxsystem that is followed in 160 countries,” addedRao.

Speaking on the occasion, Commercial TaxesDeputy Commissioner (Intelligence) S Sivankuttysaid the new system would bring in transparencyand credibility.

“The GST single taxation system will increase easeof doing business,” said FICCI Kerala State Councilco-chair Deepak L Aswani.

“Being a leading consumer state, Kerala will be oneof the biggest beneficiaries of GST, which willenhance the State’s finances significantly,” saidSachin Menon of KPMG.

Santosh Dalvi, Savit Gopal, Manish Vasarkar andSavio Mathew also spoke.

http://www.newindianexpress.com/cities/kochi/2016/oct/29/trade-industry-will-benefit-from-gst-says-official-1532935.html

53. Help desk on GST installed

CHANDIGARH: Since GST is a reality now and thegovernment is moving in the direction ofimplementing GST by April 1, 2017, looking at theanxiety of the common man towards theimplementation of the biggest tax reform, thisDiwali, a GST helpdesk for common man wasstarted in Chandigarh. This helpdesk swill be runfree-of-cost for benefit of public at large, andeducate people about GST.

The idea of the helpdesk in the interest of commonman has been invented by Keshav R Garg, a city-based GST expert.

"We have already been running a service taxhelpdesk where we are getting regular queries fromvarious parts of the country. Also, it is proudmoment for us to announce that we have completedone year of regular updates on GST which are sentto over 3,000 people by using the social networkingapplication WhatsApp," said Garg.

"I hope that our new initiative of GST helpdesk shallhave far reaching impact in resolving issues of thecommon man," said Garg.

http://timesofindia.indiatimes.com/city/chandigarh/Help-desk-on-GST-installed/articleshow/55124774.cms










Our Offices:

Surat

City Light - L 16-17, Agrasen Point, Opp. Maharaja Arcade, City Light, Surat

Varachha - B-107, Apex Commercial Center, Near Yash Plaza, Varachha Road, Surat

Hazira - 101, 1st Floor, Ridhhi Plaza, Near SBI, Hazira Main Road, Kawas, Surat

Ring Road - 110, Metro Tower, Near Kinnery Cinema, Ring Road, Surat

Ankleshwar -S-29, Hexzone Arcade, Near JayabenModi Hospital, Valia Road, Ankleshwar

Vadodara - 306, Top Floor, Alien Complex, Nr. Devdeep Complex, Nizampura, Vadodara

NCR - C-2270, Sushant Lok-1, Gurgaon, Haryana

Associate Offices:

Ahmedabad, Haridwar, Bhagalpur, Pune, Mumbai, Kolkata

Communique Edited By :- CA Avinash Poddar

Communique Compilation By :- Shailin Doshi

Darshita Shah

Keval Devganiya

Disclaimer :

The contents of this document are solely for informational purpose. It does not constituteprofessional advice or recommendation of firm. Neither the authors nor firm and its affiliatesaccepts any liabilities for any loss or damage of any kind arising out of any information in thisdocument nor for any actions taken in reliance thereon.

Readers are advised to consult the professional for understanding applicability of this newsletterin the respective scenarios. While due care has been taken in preparing this document, theexistence of mistakes and omissions herein is not ruled out. Nopart of this document should bedistributed or copied (except for personal, non-commercial use) without our written permission.

i once again request you all for postinggo to content at glance 2 content at glance :-1.0 flowcharts...

Documents