Tag Archives: Goods and Services Tax (GST)

Jaitley to Chief Ministers: Lower VAT rates on petroleum products used for manufacturing

Newsroom24x7 Staff

New Delhi: Union Minister of Finance, Defence and Corporate Affairs, Arun Jaitley has written to State Chief Ministers urging the States to reduce burden of Value Added Tax (VAT) on Petroleum Products used as inputs in making of goods after the introduction of Goods and Services Tax (GST).

//pagead2.googlesyndication.com/pagead/js/adsbygoogle.js

(adsbygoogle = window.adsbygoogle || []).push({});

The letter by Finance Minister highlights a concern being raised by the manufacturing sector in the country regarding the rise in input costs of petroleum products happening on account of transition to Goods and Services Tax regime. In the pre-GST regime, because the petroleum products as well as the final goods produced both attracted VAT, input tax credit of petroleum products being used as inputs by manufacturers was allowed to varying extent by different States. However, in the post-GST scenario, the manufactured goods attract GST while the inputs of petroleum products used in the manufacturing attract VAT and, therefore, it would lead to cascading of taxes. In view of this, in the pre GST regime certain States had lower rate of 5% VAT on Compressed Natural Gas used for manufacturing of goods. Some States also had lower rate of VAT on diesel being used for manufacturing sector.

//pagead2.googlesyndication.com/pagead/js/adsbygoogle.js

(adsbygoogle = window.adsbygoogle || []).push({});

Jaitley has requested other States also to explore the possibility of having a lower rate of VAT on petroleum products used for manufacturing of those items on which there is GST, so that there is minimum disruption in the costing of goods.

Implementation of GST by generalists and private players: Discontent brewing among IRS officers

Lalit Shastri

The idea of forming a private limited company with private players to implement the GST goes against the whole concept of sovereign responsibility of administering tax administration. It is to be underscored that India is a Union of States and the Union should not become weak by giving the States excessive leverage when it comes to implementing GST. It was weak institutional framework and tax administration that was responsible for the fiscal developments that eventually flared up the Greek crisis..

GstThere is stiff opposition and no dearth of anger among a section of officers belonging to the Indian Revenue Service as the Government of India has put a system in place whereby the GST secretariat will be headed by generalists and not by those who have the experience of collecting Central Excise and Service Tax, which accounts for 56% of GDP.

There is also stiff opposition to the whole idea of setting up a private limited company (GSTN), which is headed by a retired IAS officer, to implement GST.

While stating that they already have a successful track-record of assessment, collection, duty drawback and refunds, backed by one of the most efficient manpower and the best system in the world, the IRS officers are  pointing out that the Central Excise and Service Tax website handles the important job of Registration, Return filing and Duty Payment. They are particularly drawing attention towards their professional competency and asserting that the GST Secretariat should not be allowed to be run by generalists.

On the Customs side, it is being pointed out by the IRS officers that besides their duty to assess, their Single Window, ICEGATE (Indian Customs EDI Gateway) or the e-Commerce Portal of Central Board of Excise & Customs, and the Risk Management System (RMS), which is an IT driven system with the primary objective to strike an optimal balance between facilitation and enforcement, can be compared with the best systems anywhere in the world.

An IRS officer stated that the Directorate General of Central Excise Intelligence (DGCEI), Directorate of Revenue Intelligence (DRI) and their Audit are professionally managed and touch global standards. He further said that they ensure minimum interface, absolute transparency, and follow strict deadlines when it comes to taking decisions. Taking a jibe at the Government of India for entrusting the administration of GST Council and GST Network to IAS officers, he said this is highly demoralising for the Indian Revenue Service officers.

An IRS officer wrote on a social networking platform that “with weak and demoralised work-force, the Centre neither can be strong nor can it fulfill its responsibilities in a judicious manner vis-a-vis the Directive Principles of State Policy An economically weak Centre is a death knell for Democracy and Cooperative Federalism, he said adding the need of the hour is a professionally driven Tax Administration System.”

Another IRS officer reacted in sharp terms he said: “The idea of forming a private limited company with private players to implement the GST goes against the whole concept of sovereign responsibility of administering tax administration. It is to be underscored that India is a Union of States and the Union should not become weak by giving the States unnecessary leverage in administering the GST. It was weak institutional framework and tax administration that was responsible for the fiscal developments that eventually flared up the Greek crisis.”

The Union Cabinet in its meeting held on 12 September, 2016 approved setting-up of GST Council and its Secretariat. Simultaneously, it was announced that the first Meeting of the GST Council will be held on 22 and 23 September 2016 in the national Capital.

The Cabinet took decisions for the following:

  • Creation of the GST Council as per Article 279A of the amended Constitution;
  • Creation of the GST Council Secretariat, with its office at New Delhi;
  • Appointment of the Secretary (Revenue) as the Ex-officio Secretary to the GST Council;
  • Inclusion of the Chairperson, Central Board of Excise and Customs (CBEC), as a permanent invitee (non-voting) to all proceedings of the GST Council;
  • Create one post of Additional Secretary to the GST Council in the GST Council Secretariat (at the level of Additional Secretary to the Government of India), and four posts of Commissioner in the GST Council Secretariat (at the level of Joint Secretary to the Government of India).

The Cabinet also decided to provide for funds for meeting the recurring and non recurring expenses of the GST Council Secretariat, the entire cost for which shall be borne by the Central Government. The GST Council Secretariat shall be manned by officers taken on deputation from both the Central and State Governments.

The Constitution (122 Amendment) Bill, 2016, for introduction of Goods and Services Tax (GST) in the country was accorded assent by the President on 8 September, 2016, and the same has been notified as the Constitution (101) Act, 2016.

As per Article 279A (1) of the amended Constitution, the GST Council was to be constituted by the President within 60 days of the commencement of Article 279A. The notification for bringing into force Article 279A with effect from 12 September, 2016 was issued on 10 September, 2016.

As per Article 279A of the amended Constitution, the GST Council will be a joint forum of the Centre and the States. This Council shall consist of the following members:

  • Union Finance Minister – Chairperson
  • The Union Minister of State, in-charge of Revenue of finance -Member
  • The Minister In-charge of finance or taxation or any other Minister nominated by each State Government – Members

As per Article 279A (4), the Council will make recommendations to the Union and the States on important issues related to GST, like the goods and services that may be subjected or exempted from GST, model GST Laws, principles that govern Place of Supply, threshold limits, GST rates including the floor rates with bands, special rates for raising additional resources during natural calamities/disasters, and special provisions for certain States.


Goods and Services Tax Network (GSTN)†

It is a not-for-profit, non-Government Company set up by the Centre and States for implementation of the Goods and Services Tax (GST) by providing shared IT infrastructure and services to Central and State Governments, tax payers and other stakeholders.

GSTN is a National Information Utility (NIU) set up to provide an IT Backbone for the “smooth functioning of the Goods & Services Tax regimen”. It is being projected as an entity to “leverage the entire nation as One Market with minimal Indirect Tax compliance cost”.

GSTN was incorporated on March 28, 2013. The Government of India holds 24.5% equity in GSTN and all States of the Indian Union, including NCT of Delhi and Puducherry, and the Empowered Committee of State Finance Ministers (EC), together hold another 24.5%. Balance 51% equity is with non-Government financial institutions.

GSTN is a private limited company registered under the Companies Act, 1956. The Authorised Share Capital of the company is INR 10,00,00,000 (Rupees 100 million) with 49% equity of the company held by the Government (24.5% Central Government and 24.5% all State Governments/UTs put together) and 51% equity is held by private financial institutions namely ICICI Bank, HDFC Bank, HDFC Ltd, LIC Housing Finance and National Stock Exchange Strategic Investment Corporation Ltd.

Organisation Structure

Today GSTN has a team of 46 full time employees including 37 from the Private Sector and 9 deputationists from the Government. The Organisation Structure of the Company broadly consists of 3 verticals, viz. Technology, Services and Support, each headed by an Executive Vice President (EVP) reporting to the CEO. The Technology team is to be entirely sourced from the Private Sector, Services Team from deputationists consisting of Tax Officials from the Central and State Governments and the Support team is a mix from both Private Sector as well deputationists.

Indian IT services Company Infosys, through a competitive bidding process, in which other big IT companies like TCS, Wipro, Tech Mahindra and Microsoft also participated, bagged the contract of Rs 1,380 crore to be the Managed Service Provider (MSP) for GSTN.

The MSP shall build the technology infrastructure for Goods and Services Tax known as the GST System Project (GSTSP), a common Portal for the use of different Tax Payers, Tax Administrators and other stakeholders which includes common Registration, Return and Payment services. The MSP will build the system and once it is ready they will operate it for five years. The Contract with Infosys was signed on 6 November 2015.

Navin Kumar, a retired 1975 batch IAS officer, is the Chairman of the Goods and Services Tax Network.

GSTN Mandate

  • Provide common and shared IT infrastructure and services to the Central and State Governments, Tax Payers and other stakeholders for implementation of the Goods & Services Tax (GST).
  • Provide common Registration, Return and Payment services to the Tax payers.
  • Partner with other agencies for creating an efficient and user-friendly GST Eco-system.
  • Encourage and collaborate with GST Suvidha Providers (GSPs) to roll out GST Applications for providing simplified services to the stakeholders.
  • Carry out research, study best practises and provide Training and Consultancy to the Tax authorities and other stakeholders.
    Provide efficient Backend Services to the Tax Departments of the Central and State Governments on request.
  • Develop Tax Payer Profiling Utility (TPU) for Central and State Tax Administration.
  • Assist Tax authorities in improving Tax compliance and transparency of Tax Administration system.
  • Deliver any other services of relevance to the Central and State Governments and other stakeholders on request.

† authorised websites

Modi reiterates commitment to transform quality of life, infrastructure and services

Newsroom24x7 Desk

Prime Minister Narendra Modi
Prime Minister Narendra Modi

New Delhi: On the first anniversary of his government, Prime Minister Narendra Modi on Tuesday said our objective is to transform quality of life, infrastructure and services. He also gave the assurance to the people that the goal is to “build the India of your dreams and that of our freedom fighters.”

In a letter to the people to mark his one year in office, the PM has said: “We assumed office at a time when confidence in the India story was waning. Un-abated corruption and indecisiveness had paralyzed the government. People had been left helpless against ever climbing inflation and economic insecurity.”

Stressing that urgent and decisive action was needed, the Prime Minister said runaway prices were immediately brought under control. The languishing economy was rejuvenated, building on stable, policy-driven proactive governance. Discretionary allotment of our precious natural resources to a chosen few was replaced with transparent auctions. Firm steps were taken against Black Money, from setting up an SIT and passing a stringent black money law, to generating international consensus against the same.

Uncompromising adherence to the principle of purity, in action as well as intent, has ensured a corruption-free government Modi has stated in his letter adding significant changes have been brought about in work culture, nurturing a combination of empathy as well as professionalism, systems as well breaking of silos. State governments have been made equal partners in the quest for national development, building the spirit of Team India. Most importantly, we have been able to restore Trust in the government, he has pointed out.

The PM has underscored the achievements of his government by stating that guided by the principle of Antyodaya, his Government is dedicated to the poor, marginalized and those left behind. He has further said in his letter: ‘We are working towards empowering them to become our soldiers in the war against poverty. Numerous measures and schemes have been initiated – from making school toilets to setting up IITs, IIMs and AIIMS; from providing a vaccination cover to our children to initiating a people-driven Swachh Bharat mission; from ensuring a minimum pension to our labourers to providing social security to the common man; from enhancing support to our farmers hit by natural calamities to defending their interests at WTO; from empowering one and all with self attestation to delivering subsidies directly to people’s banks; from universalizing the banking system to funding the unfunded small businesses; from irrigating fields to rejuvenating the Ganga River; from moving towards 24×7 power to connecting the nation through road and rail; from building homes for the homeless to setting up smart cities, and from connecting the North-East to prioritizing development of Eastern India.
In another letter to the people on economic issues, the PM said:

One year ago, you had entrusted me with the task of building a new India and putting a derailed economy back on track. We have achieved a lot. Economic growth has been revived, and is among the fastest in the world. Inflation is substantially down. Fiscal prudence has been restored. Confidence is up. Foreign investments have increased. This positive outlook is endorsed by major rating agencies and international institutions across the world.

Bold reforms pending for decades have been implemented. Diesel prices have been decontrolled. The Goods and Services Tax (GST) is slated to be introduced next year. By facilitating companies to Make in India through a focus on Ease of Doing Business, new jobs are being created. Cooking gas subsidies are being paid directly to beneficiary bank accounts under PAHAL – ensuring the right amount of subsidy, reaches the right people, at the right time. FDI limits in insurance, railways and defence production have been raised. Moreover, we have embraced the states as equal partners in national development, working as Team India in the spirit of cooperative and competitive federalism.

Political interference in public sector banking decisions is a thing of the past. Transparent coal auctions and allotments have mobilized potential revenues of Rs. 3.35 lakh crores to coal-bearing states over the lifespan of mines. And reform in the Mines Act has replaced a discretionary mechanism with a transparent auction process. To combat black money, a Special Investigation Team has been appointed and a new stringent law passed.

Nearly Rs. 1 lakh crores of public investment have been allocated in this year’s budget to improve physical as well as digital connectivity. A comprehensive transformation of the railways into a locomotive of growth has begun. Stalled highway projects are being restructured and revived. Power generation is at an all-time high. A new National Infrastructure Investment Fund has been set up with an annual government funding of Rs. 20,000 crores.

Economic growth benefits all Indians. Growth however, has meaning only if it empowers the poor, farmers, women, as well as middle and neo-middle classes of all communities. To enable us to continue paying remunerative prices to our farmers, we secured a permanent ‘peace clause’ at the WTO. The world’s largest financial inclusion project has brought banking to the doorsteps of the poor, opening a record 15 crore plus bank accounts with deposits of over Rs. 15,800 crores. An affordable social security system including pension, life insurance and accident insurance, has already witnessed 6.75 crore enrolments in its first week. MUDRA has been set up with a corpus of Rs. 20,000 crores to help our small businessmen, who despite being our biggest job creators have historically been starved of credit.

A lot has been achieved. However, this is just the beginning. There is much more to be done and I know your expectations are high. A year ago I gave you my word that while I might perhaps commit errors, I would always act with pure intentions and spend every available moment working for a better India. I have kept my word. I seek your continued support, suggestions and blessings in building the India of our dreams.