Fiscal Policy 12 Jun 2017 by Tojo Jose

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

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

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

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Fiscal Policy 07 Jun 2017 by Tojo Jose

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

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

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

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Fiscal Policy 20 May 2017 by Tojo

GST Council sets four tier rate structure for services; standard rate at 18%

GST Council sets four tier rate structure for services; standard rate at 18%

The GST Council has finalized its prime work on services front by selecting 18% rate as the standard rate for the new GST network. As a result, bulk of the services will come under this rate including financial services, high end hotels, liquor licenses etc. There is a four-tier service tax slab with education and healthcare coming under exempted category as now. The four rates under the GST for services are 5%, 12%, 18% and 28%. Besides this, there is an exempted list that has zero tax incidence. Currently, services are taxed at 15% with a negative list comprising few sectors including education. Migration to a higher tax rate of 18% will not be inflationary as several services

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Fiscal Policy 14 Apr 2017 by Tojo Jose

GST’s rate on real estate sector is keenly awaited

GST’s rate on real estate sector is keenly awaited

Can GST save the real estate sector from its status of being the country’s largest destination for black money? Real estate players are worried that if the GST rate on the sector goes high and if the stamp duty continues in its current form, the sector cannot be saved. Chances are that 18% tax slab will be applied on real estate sector. If this happens, dealers may go for inventions to evade taxes. Any high rate is an invitation to evade than to pay the tax. The Parliament has cleared the GST during the budget session, and the tax regime is expected to be launched on 1 July. As per the legislation, land leasing, renting of commercial properties and purchase of under-constru

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Fiscal Policy 03 Mar 2017 by Tojo Jose

GST’s upper rate may go up to 40%

GST’s upper rate may go up to 40%

The Goods and Service Tax Council may raise the upward ceiling of the tax rate to 40% so that certain high rate inviting commodities can be taxed. Effectively, the new ceiling will raise the peak rate of centre and state rates individually to 20%. Under GST, both centre and states have equal ceiling rates. As per the original scheme, the maximum rate was 28% implying a peak rate of 14% for both the centre and states. The rate structure of GST will remain the same with four rates – 5%, 12%, 18% and 28%. Now in the next meeting of the GST Council, the 28 % rate will be replaced by 40%. A change in a clause of the model GST Bill inserting “not exceeding 14%” with &

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Fiscal Policy 17 Feb 2017 by Tojo Jose

GST Council to decide rate on gold in the next meeting; rate may get doubled

GST Council to decide rate on gold in the next meeting; rate may get doubled

The GST Council’s meeting on February 18 at Udaipur will decide tax rate on gold. Gold is at present attracting a sales tax of 1% and an excise duty rate of 1%. Reports indicate that states are arguing for a rate of 4%. At this rate, the centre and state may divide the tax revenues equally among them. Effectively, the proposed rate doubles the existing cumulative rate of 2%. Besides the excise duty and VAT (state sales tax), gold is having an import duty of 10%. A high rate may encourage smuggling and tax evasion. indirectly, such a rate will bring frictions between the dealers and tax officials. The 4% tax rate for gold is a rate outside the prescribed GST rates of 5%, 1

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Fiscal Policy 01 Feb 2017 by Tojo Jose

The hits of Budget 2017

The hits of Budget 2017

The budget presented by Finance Minister Arun Jaitely in the background of demonetisation and the shift towards a digital economy wonderfully combines several beautiful measures. Budgets’ slogan – the TEC or “Transform, Energise and Clean India”, is well reflected in the initiatives and allocations announced in the budget. Extending from the restriction of Rs 3 lakh on physical transaction of money to galloping MGNREGA allocation to Rs 48000 crore, a dedicated programme for the safety of Railway passengers, partnering digital India steps to ‘clean India’, doubling Mudra scheme allocation, a resolution regime for financial institutions, etc. the b

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Fiscal Policy 01 Feb 2017 by Tojo Jose

Digital economy is the star of the budget

Digital economy is the star of the budget

Fighting black money, providing inclusion, enhancing the delivery of public services etc. the digital economy got top priority in the new budget. There is no tax at all for the manufacturing of certain types of digital economy equipments. All taxes – the customs duties (BCD, CVD, SVD) and excise duties were abolished for domestic manufacturing of digital economy equipments like POS machines and Micro ATMs. Digital economy is one of the ten distinct themes of the budget. Some of the other themes farmers, rural population, youth etc. “Promotion of a digital economy is an integral part of Government’s strategy to clean the system and weed out corruption and black mo

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Fiscal Policy 31 Jan 2017 by Tojo Jose

Economic Survey initiates debate on Universal Basic Income

Economic Survey initiates debate on Universal Basic Income

Government is thinking about shifting the delivery of public welfare services. The new idea is for providing Universal Basic Income to the poor people so that they can obtain the public goods. The Economic Survey, presented in the Parliament makes an exhaustive analysis about the feasibility of launching Universal Basic Income in India. UBI is an old welfare idea aimed at providing basic income to all citizens. Finland has launched a UBI for their citizens. Several other small countries are thinking about its launch. According to the Wall Street Journal, Switzerland voters have rejected the programme. Advantage of UBI in the present context is that once the UBI is provided, gove

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Fiscal Policy 17 Jan 2017 by Tojo Jose

GST to be rolled out from July1 as Centre and states resolves deadlock

GST to be rolled out from July1 as Centre and states resolves deadlock

The transformative indirect tax regime -GST is all set to be implemented from July 1st, 2017 as the Centre and states settled all of their remaining areas of divergence. At the end of the ninth meeting of the GST Council Monday, the Finance Minister Arun Jaitely hoped that implementing the accord from July will give time to the industry to make the necessary arrangement for the roll out. Commenting about the implementation from mid-way of a financial year, Finance Minister observed that there is no problem in doing it so as GST is a transactional tax. Of the areas of conflict between the centre and states, the most important one was the tax right on low value assesses. Here, as pe

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