GST Council to set up grievance redressal mechanism for taxpayers - Pragnya IAS Academy - News Analysis.

GST Council to set up grievance redressal mechanism for taxpayers.

• The decision was taken at the 38th meeting of the GST Council held on December 18
• The committee will meet once every quarter or more frequently as decided by the co-chairs
The GST Council will set up a grievance redressal mechanism for taxpayers.
The decision was taken at the 38th meeting of the GST Council held on December 18.
It has decided that a structured grievance redressal mechanism should be established for the taxpayers under GST to tackle grievances on GST-related issues of specific and general nature, an official statement said on Wednesday.

The council will set up the Grievance Redressal Committee (GRC) at zonal and state levels consisting of both central tax and state tax officers, representatives of trade and industry and other goods and services tax (GST) stakeholders.
The committee will be constituted for a period of 2 years and the term of each member will be for likewise, said the statement.
If any member of the panel would be absent for three consecutive meetings, without adequate reasons, the member will be replaced with a fresh nomination by the principal chief commissioner/chief commissioner of central tax in consultation with the chief commissioner/ commissioner of state tax.
Functions of the committee include examining and resolving all the grievances and issues being faced by the taxpayers, including procedural difficulties and IT-related issues pertaining to GST, both of specific and general nature.
The committee will meet once every quarter or more frequently as decided by the co-chairs.
"For time-bound handling of grievances and accountability, GSTN shall develop a portal for recording all such grievances (including their scanned images) and their disposal.
"It shall be the responsibility of the co-chairs of the grievance redressal committees to ensure timely entry of the grievances and updating the status of their disposal on the portal," the statement said.
The details of action taken on all issues will be displayed on the portal, which shall be available for viewing to all stakeholders to check the status of the resolution, it added.


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GST Council to set up grievance redressal mechanism for taxpayers.

GST Authority clarifies on change/transfer in ownership of sole proprietorship - Pragnya IAS Academy - News Analysis.

GST Authority clarifies on change/transfer in ownership of sole proprietorship.

The Goods and Services Tax, GST Authority has clarified that transfer or change in the ownership of business will include transfer or change in the ownership of business due to death of the sole proprietor.

In a circular, Central Board of Indirect Taxes and Customs, CBIC said, that the transferee or the successor will be liable to be registered with effect from the date of such transfer or succession, where a business is transferred to another person for any reasons, including death of the proprietor.
It said, the applicant will be required to mention the reason to obtain registration as death of the proprietor, in the registration form, GST REG-01 to be filed electronically in the common portal. The legal heir of the dead sole proprietor will be required to give application for cancellation of the existing registration.
The GST Identification Number, GSTIN of transferee to whom the business has been transferred is also required to be mentioned to link the GSTIN of the transferor with the GSTIN of transferee. In case of death of sole proprietor, if the business is continued by any person being transferee or successor of business, it shall be construed as transfer of business. In case of transfer of business on account of death of sole proprietor, the transferee or successor will file Form GST ITC-02 in respect of the registration to be cancelled. CBIC said, a mechanism has been specified for transferring unutilised input tax credit.
In an another circular related to verification of applications for grant of new registration, the CBIC said there have been instances when registration gets cancelled due to one reason or any other reason, such businesses prefer to apply for new registration rather than applying for revocation of cancellation of registration. It said, there is possibility that such person might not have furnished requisite returns and not paid tax for the tax periods covered under the old or cancelled registration.
It added that such persons would be required to pay all liabilities due from them for the relevant period in case they apply for revocation of cancellation of registration. Hence, to avoid payment of the tax liabilities, such persons may be using the route of applying for fresh registration. One can take separate registration on the same PAN in the same State.
CBIC has asked its officials to exercise due caution while processing such applications. It clarified that not applying for revocation of cancellation of registration will be deemed to be a deficiency and could be reason for rejection of application for new registration.


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GST Authority clarifies on change/transfer in ownership of sole proprietorship.

Government plans mega event to mark first anniversary of GST on July 1 - Pragnya IAS Academy - News Analysis.

Government plans mega event to mark first anniversary of GST on July 1

The Government is planning a mega event to mark the first anniversary of GST roll out on July 1 with the participation of industry chambers, traders, and tax officials, besides, Finance Minister Piyush Goyal.

Sources said the government has decided to celebrate July 1 as the ‘GST-Day' and the mega-event is being planned at the newly constructed Ambedkar Bhawan in the national capital.
The biggest tax reform since independence, goods and services tax (GST) was launched in the midnight of June 30 last year by Prime Minister Narendra Modi and the then President Pranab Mukherjee in the central hall of Parliament.
GST has subsumed over a dozen local taxes and transformed India to a ‘one nation one tax' country. After the initial glitches, the GST system has stabilised and tax collection has also started picking up the pace.
Union Minister Arun Jaitley too would be addressing the gathering through video conferencing.
Over 1.11 crore businesses are registered under GST.


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Government plans mega event to mark first anniversary of GST on July 1

GST COUNCIL APPROVES OWNERSHIP CHANGE OF GST NETWORK TO CONVERT IT INTO GOVT HOLDING - Pragnya IAS Academy - News Analysis

GST COUNCIL APPROVES OWNERSHIP CHANGE OF GST NETWORK TO CONVERT IT INTO GOVT HOLDING.

The GST Council today approved converting the firm providing IT backbone to the Goods and Services Tax (GST) into a government owned entity from being a private company.

BJP MP Subramanian Swamy, who had for months questioned the private equity structure of GST-Network (GSTN), demanded transfer of Finance Secretary Hashmukh Adhia to a lesser important ministry for his alleged role in the "GSTN scam".
After the GST Council meeting, Finance Minister Arun Jaitley, who had for months defended the equity structure of GSTN, said he had proposed to the panel for a change in the structure of GSTN which was accepted.
He said the central government currently holds 24.5 per cent stake in GSTN and state governments collectively hold an equivalent stake. The remaining 51 per cent is held by five financial institutions.
Jaitley said the Council was agreed that the 51 per cent equity held by private entities should be taken over by the government and "eventually the central government will hold 50 per cent and state governments (together) will hold 50 per cent".
He said the collective share of state governments will be pro rata, divided among states in accordance with their GST ratios.
"While doing so the council also recommended that the GSTN will continue to employ people contractually and have the flexibility to get the best talent from the market considering the wide range of activities and the responsibilities of GSTN itself," Jaitley said.
Swamy, who had repeatedly questioned the shareholding pattern in the GSTN, terming it "a shady organisation" that was a "grave security" issue, tweeted soon after the decision was announced : "I demand the Finance Secretary Adhia be transferred to another Ministry like Textiles for his role in GSTN scam."
Jaitley had previously said that he did not find anything wrong in government holding 49 per cent stake in GSTN. "The present structure of GSTN was decided by the United Progressive Alliance (UPA) when P Chidambaram was the finance minister. I have personally reviewed the entire structure and I saw no reason to disagree with him," he had said in June last year.
The Goods and Services Tax Network - Special Purpose Vehicle (GSTN-SPV) was created as a private limited, not-for-profit company under Section 25 of the Companies Act, 1956 (Section 8 of the Companies Act, 2013) on March 28, 2013 with an objective to provide shared IT infrastructure and services to Centre and States Governments, tax payers and other stakeholders for implementation of GST in the country.
"Majority of the GST processes including registration, filing of returns, payment of taxes, processing of refunds is IT driven and GSTN is handling large-scale invoice level data of lakhs of business entities including data relating to exports and imports. Considering the nature of 'state' function performed by GSTN, Council felt that GSTN be converted into be a fully owned government company," an official statement issued after the meeting said.
The Council, it said, decided that the entire 51 per cent of equity held by the non-governmental institutions in GSTN amounting to Rs 5.1 crore would be acquired equally by the Centre and the States governments.
However, GSTN board shall be allowed to continue the existing staff at existing terms and conditions for the a period up to five years, and shall have the flexibility of hiring people through contract on the terms and conditions similar to those used by GSTN till now while hiring regular employees.
"The existing financial commitments given by Centre and States to GSTN to share the capital and O&M cost of the IT Systems shall continue," it said.
The GSTN currently is 24.5 per cent owned by the central government and a similar percentage is held by state governments collectively. The remaining 51 per cent is with five private financial institutions -- HDFC Ltd, HDFC Bank Ltd, ICICI Bank Ltd, NSE Strategic Investment Co and LIC Housing Finance Ltd. (Source: The Business Standard)


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GST COUNCIL APPROVES OWNERSHIP CHANGE OF GST NETWORK TO CONVERT IT INTO GOVT HOLDING.

GST Council approves ownership change of GSTN structure - Pragnya IAS Academy - News Analysis

GST Council approves ownership change of GSTN structure.

The Goods and Services Tax (GST) Council has approved ownership change of GST Network (GSTN) structure and now it will be converted into a government holding.

Briefing media after chairing the 27th meeting of the council through video -conferencing today, Finance Minister Arun Jaitley said, the government will acquire the 51 percent stake held by private entities and subsequently the central and the state governments will hold a 50 percent stake each in the entity. He said, the collective share of state governments will be pro-rata divided among the states as per their GST ratios.
On the issue of imposition of cess on sugar, the Finance Minister said that the GST Council took note of the prevailing distress in the sector where the farmers are facing a tough situation as the cost of sugar is more than its market price.
He said, the Council has recommended setting up of Group of Ministers from State Governments to look into the proposal and make a recommendation within two weeks.
On the issue of incentive to promote digital transaction, the Council recommend setting up of a Group of Ministers from state governments to look into the issue of giving two percent incentive for digital payments.


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GST Council approves ownership change of GSTN structure.

GST Council to take call on turning GSTN into govt entity on May 1 - Pragnya IAS Academy - News Analysis

GST Council to take call on turning GSTN into govt entity on May 1.

GST Council will also weigh options of raising the government's stake in the IT body to 51% from the current 49%.

The Goods and Services Tax (GST) Council meeting on May 1 will deliberate on the pros and cons of converting the GST Network (GSTN), the GST’s information technology backbone, into a government-owned company.
The meeting, to be held via video conferencing, is likely to discuss simplifying return forms and the recent resolution by the authority of advance ruling (AAR) on imposing the GST on duty-free outlets at Indira Gandhi International Airport.
The Council will meet on May 1 with a limited agenda of converting GSTN into a government company, return simplification and clarity on advance rulings,” said an official in the know.
The Council, chaired by Union Finance Minister Arun Jaitley, will also weigh options of raising the government’s stake in the IT body to 51 per cent from the current 49 per cent. Earlier this month, Finance Secretary Hasmukh Adhia was asked by Jaitley to review whether this was possible.
“A few states have been demanding that GSTN be a government-owned body. With Facebook data leak to Cambridge Analytica, the national security argument is gaining ground now,” said another government official.
Currently, five private institutions — HDFC, HDFC Bank, ICICI Bank, NSE Strategic Investment Co and LIC Housing Finance — hold a combined stake of 51 per cent in GSTN, which was incorporated on March 28, 2013. The Centre and respective states hold 24.5 per cent each.
Once the Council gives approval, the Union Cabinet will take up the proposal.
“Discussions on converting GSTN into a government body, per se, should not affect its functioning so long as it continues to be professionally managed,” said Pratik Jain, partner, PwC India.
GSTN Chief Executive Officer Prakash Kumar told Business Standard in an interview that ‘hiring and firing’ was faster here because it was a private company and the private sector salary structure helped it hire the right set of people.
Allaying concerns on information lapses, he stressed confidentiality was embedded in the GSTN structure. “No single person has complete information of a taxpayer. One has registration data, the other has returns data etc. So it will require three persons to collude to get the full data of a taxpayer. Even I cannot see the details of an individual taxpayer,” he had said.
A Group of Ministers, led by Bihar Deputy Chief Minister Sushil Modi, had failed to reach a consensus on simplifying GST return forms in its meeting last week. They would submit a draft with three options for the Council to discuss.
One of the options, as recommended by Infosys Chairman Nandan Nilekani, requires the seller to upload all invoices, which the buyer must acknowledge. Based on this, the buyer would get credit for taxes paid on inputs. No credit would be available if the buyer claims that some invoices are missing.
The other model requires a seller to upload invoices and moots provisional credit even if the invoice has not been uploaded. However, if a seller disputes a particular transaction, credit will be reversed at a later stage.
The third model is likely to be a combination of the first two.
“With respect to simplification, the issue pertains to providing provisional input tax to taxpayers, and whether it should be linked to tax payments made or not will be discussed,” said another government official.
“If the Council takes a decision on May 1, it could possibly be introduced in the last quarter of this year. While three monthly returns may be combined into one, I expect the principle of invoice matching to continue,” added Jain.
In addition, the Council is expected to provide clarity in the recent AAR judgment that stated outlets at Delhi International Airport were not ‘free from duties’ under the new indirect tax regime.
In the previous indirect tax regime — prior to the July 1 GST roll out — duty-free shops were exempt from the central sales tax and value-added tax as sale from such shops was considered exports and supplies were taking place beyond customs jurisdictions.
Jain said the recent advance ruling that the GST would be applicable to airport duty-free shops at departure terminals came as a surprise as it was not in line with the earlier practice as well as global VAT regimes.
The ruling was in response to an application filed by Rod Retail Private Limited, which runs a retail outlet at Terminal 3 (International Departure) of Indira Gandhi International Airport, New Delhi.
(GS Paper – 3 Related Article)
(Source: The Business Standard).


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GST Council to take call on turning GSTN into govt entity on May 1.

World Bank says Indian economy has recovered from the impact of demonetisation, GST - Pragnya IAS Academy - News Analysis

World Bank says Indian economy has recovered from the impact of demonetisation, GST.

But the organisation added that India needed to create 81 lakh jobs a year if it wanted to maintain its employment rate.

The World Bank said on Sunday that India’s economy has recovered from the impact of demonetisation and the introduction of the Goods and Services Tax regime, and would grow at 7.3% in 2018 and 7.5% in 2019. The organisation, in its bi-annual South Asia Economic Focus report, said this would drive South Asia’s growth rate to 6.9% in 2018 and 7.1% in 2019.
“Around 80% of the region’s Gross Domestic Product is generated in India,” the report said. “Both demonetisation and GST created short-term disruptions in economic activity. As the inflation rate rebounded pushing real interest rates down, a recapitalization plan for banks was announced, and the effects of the two temporary shocks vanished, and growth bounced back.”
India’s recovery will once again make South Asia the fastest growing region in the world, the report said. East Asia overtook South Asia’s growth rate after Indian economic growth decelerated.
“The acceleration of growth that we see in the region is not necessarily that all countries in the region are doing much better, it’s a mixed picture,” World Bank chief economist for South Asia Martin Rama said in an interview with the Hindustan Times. “But given the size of India, India’s bouncing back is driving the growth.”
However, the South Asia Economic Focus report added that job creation remained a concern for India. It said India needed to create 81 lakh jobs a year to maintain its employment rate, which has been declining as women leave the labour market.
Women were dropping out of the job market in areas which were “borderline” between rural and urban regions, where farming jobs had disappeared but others had not been created, Rama said.
The World Bank official added that he was “very confident” India could keep growing at 7% to 8% “without much effort, just good policies”, but it was doubtful whether it could approach double-digit growth rate again in future. (Source:scroll)


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World Bank says Indian economy has recovered from the impact of demonetisation, GST.

The cacophony of GDP numbers - Pragnya IAS Academy - News Analysis

The cacophony of GDP numbers

The formalization of the Indian economy due to GST can boost GDP growth figures to 8% in FY2018.

The impact of ‘normalization’ of the economy may add 1% to real GDP growth in H2 FY2017.

The period from 2011 to 2020 may be called the decade of incomparable gross domestic product (GDP) growth. Due to a battery of events in the last six years, the numbers may not be comparable across time periods and may get revised to such an extent that the revised growth trend may alter. Blanket criticism of the Union ministry of statistics and programme implementation (Mospi) or the government not only misses the nuances of the GDP estimation process but provides a hyper-simplistic explanation, which is incorrect. The author estimates that over the next six quarters, i.e. till Q4 FY19, the GDP numbers reported will initially throw up positive surprises, followed by a period of volatile GDP revisions. Other macro numbers, however, may not improve in tandem. Let us see under what assumptions and scenarios this can play out.

Formalization and normalization to surprise on the upside

The GDP growth estimates of H2 FY2018 will benefit from the lower base of H2 FY2017 as well as normalization of economic activity. In FY2015 and FY2016, the GDP in H2 was 104.3% of H1 GDP for the same financial year. In FY2017, the H2 GDP was 103.3% of H1 GDP. This may be due to demonetization. The impact of ‘normalization’ of the economy may add 1% to the real GDP growth in H2 FY2017. On similar lines, the ‘normalization’ related to the launch of the goods and services tax (GST) may increase the real GDP growth by 1% for Q1 FY2019.

However, the formalization of economic activity attributable to GST will have a higher positive impact on the GDP growth number and, possibly, for a longer period of time. Various economic estimates suggest that India’s parallel economy, i.e. economic activity which is below the official radar and thus not accounted for in GDP measurement, is 25% to 50% of the official GDP value. Arguably, if the entire parallel GDP is formalized in one year, it will give a humongous lift to the GDP growth number, not because economic activity may have improved but because more of it is measured. While the rate of formalization of the economy may be difficult to predict, one may make a range of assumptions and estimate the impact of calculated real GDP growth.

Let’s go with the estimate that the parallel economy is one-fourth of Indian GDP and assume that it will be formalized over a 10-year period. This formalization rate of economy, where more economic activity will get measured, should provide a 2.5% to 3% boost to real GDP growth. So there is a possibility that the H2 FY2018 real GDP growth may be above 8% to 8.5%. The full-year GDP forecast by many forecasters is in the range of 6.7% to 7%, thus building in an expectation of 7.5% plus GDP growth rate in H2 FY2018, given that the H1 FY2018 GDP growth is 5.8%. Moving further into FY2019, this formalization trend would have ensured a 7% real GDP growth floor at least as far as numbers are concerned.

Inadequate data infrastructure to produce ‘shocks’

However, there are risks to this growth trajectory posed by suboptimal data infrastructure for collecting economic data. While GDP estimate revisions are commonplace globally, the high dependence on the availability of periodic survey results, which are delayed, aggravates the problem in India. For the annual survey of industry, the latest available data are the provisional numbers till 2014-15. The 2016-17 survey, which will capture the impact of demonetization and GST, will only be available in 2019, and then we will get a more realistic estimate of FY2017–FY2018 GDP. But the biggest variability in GDP numbers may come in 2018 when the National Sample Survey Office (NSSO) survey on household expenditure for 2016-17 will be published. Existing GDP estimates are based on the 2011-12 survey. This input has a significant bearing on estimating private final consumption expenditure, which is 55% to 60% of India’s GDP. This will be incorporated in the GDP calculation from 2019, which may show a very different picture of the GDP’s trajectory from 2013 to 2019.

Nonetheless, the GDP formalization benefit stays. In fact, unless the revised GDP numbers are released in 2019, the GDP growth number may suggest a sustained recovery from Q2 FY18 all the way into FY19-FY20. In this era of yo-yo-ing GDP estimates, but upward bias nonetheless, if other economic indicators such as capex, corporate earnings or job growth do not palpably pick up, then the cacophony about the GDP number may increase.

Travails of a ‘high’ GDP growth number

The recovery of GDP, as may be perceived by the ‘reported’ number in conjunction with stabilizing or upward bias in inflation, may actually create a stronger argument for an interest rate hike, which again may be counterproductive. If the government focuses exclusively on the GDP number, then it may again, in 2019, go back to the ‘India Shining’ mode of 2004. However, it can use the anticipated higher GDP to go for a fiscal push, since the fiscal deficit ratio may continue to remain strong. This may go a long way in reviving the real economy, including jobs, capex and consumer spending, rather than convincing the common man that the economy has recovered because the GDP number is higher.

(Source:livemint)