News Update

India, Oman resolve to expediate talks for DTAATight schedule for Monsoon Session - 46 bills to be passed in 24 daysGovt proposes to amend law for Fastags for all commercial vehiclesCBDT Instruction No 3/18 - Board asks CCITs to wrap up withdrawal of appeals by Aug 20, 2018I-T - If assessee fails to establish urgent nature of business necessities for taking loans from its Directors in cash, such transaction warrants levy of penalty u/s 271D: ITAT Special BenchOECD employment rate raises by 0.2% in Q1SC asks Parliament to enact new law to deal with mobocracyST - If GOI department could be treated as using 'Residential Complex' constructed by NBCC for its 'personal use', how another Corporate body could be denied benefit of that type of user of 'Residential Complex' to be occupied by its Managerial Staff: HCPlace of removal - Valuation under CE & Customs Laws - past and present (See 'TOG INSIGHT' on '')India mulling safeguard duty on Chinese and Malaysian solar panelsGovt hikes basic import duty on many textile goodsIMF says India to be fastest growing economy in 2019CBDT prescribes registration form for Non-resident applicantsIs disallowing supplementary claim under MEIS & SEIS Scheme by DGFT valid?CX - On being pointed out, Assessee immediately reversed Credit wrongly availed - there cannot be said to be any fraud through which it wanted to evade Duty - setting aside of interest & penalty cannot be faulted: HCIGST refund - CBIC launches another fortnightly drive till July 30I-T - Complaint received against assessee is a reason to suspect but it is not a reason to believe that some income has escaped assessment untill AO verifies content of information before initiating re-assessment: ITATWCO Secretary General lauds India's efforts to use technology for trade facilitationBrahMos successfully test-fired from Balasore Test RangeIndia-Oman Joint Commission Meeting begins in MuscatHi-tech maritime labs launching programmes for traineesChina's GDP logs 6.8% growth in first half of fiscal20 hurt in pandal collapse during PM's Midnapore political rallyExports - Accountability of inputs - DGFT eases norms for Advance Authorisation holdersCustoms - CBIC expands list of exempt items for handicraft sectorI-T - Even if soil separated from land and put in containers it continues to be specie of land and income from growing mushrooms in such containers under controlled environment is agri income exempt u/s 10(1): ITAT Special BenchWTO - Govt officials attend workshop on SPS control, Inspection & approval proceduresI-T - Surplus generated by agriculturist on sale of his agri land is no basis to deny exemption u/s 2(14) and treat sale consideration as business income: HCSecond Year of GST - A year to amend mistakesCommittee set up to examine 'decriminalisation' of offences under Companies Act
One Year of GST - High Time for Council to unfold reforms for 2nd Year

TIOL - COB( WEB) - 614
JULY 05, 2018

By Shailendra Kumar, Editor

JULY 1 was a big day for the 'Made in India' brand of the GST. After all, it was its first anniversary. There were celebrations across the country if one goes by the tweets - one of the important and tangible 'Indi(a)cators' of ground-level involvement of officials as well as taxpayers with this mega indirect tax reform process. Although the federating States may be mistaken for their lukewarm celebrations as they have very 'thin' presence on the social media space but a few phone calls to the officials in some of the States confirmed that they were no less excited than the CGST officials on this mega day. And it is so notwithstanding the fact that it was a Sunday.

For the noted mascots of the GST at the Union-level, it was a perfect day not only to rebut the charges levelled by the Opposition leaders but also to extol the salubrious impact of the GST on the economy as a whole. Since Mr Arun Jaitley is still recouping at home albeit he did address the gathering through a video link, the entire onus to talk about the future reforms was put on the Revenue Secretary, Dr Hashmukh Adhia, who has successfully midwifed the entire roll-out process. His detractors may find many faults with the implementational steps taken by him but for me, he has been a successful champion. Notwithstanding his limitations to understand the technicalities of a tax statute, he has always been on the forefront of all technical debates either on the idiot-box or seminars organised by the chambers of businesses. And based on his 'near perfect' understanding of the macro dimensions of the GST design he has even been answering a volley of technical queries.

Going by Dr Adhia's statements on various TV screens and even Mr Jaitley's address on the GST Day, one may come across many facts about what happened in the past and how a wrong committed was rectified with alacrity but not much could be inferred about the FUTURE ROADMAP of the GST Reform process. GST has stepped into the second year and has also been stabilising almost-rapidly, Mr Jaitley and Mr Adhia had enough time to talk about the key milestones the GST Council would like to achieve in the next 365 days. Whatever has happened in the last 365 days is past and the Nation and even foreign investors would be keen to know the future twists and turns which may be given to the GST. A palpable restlessness may be seen among the industry speakers and also some economists, including Mr Arvind Subramaniam, about knowing a time-frame for bringing the excluded sectors under its sweep. Though the Council may have its own legitimate reasons to procrastinate decisions on such issues but a White Paper approved by the Council, detailing the reform measures to be taken in the next 365 days would largely be welcome. I am sure that roping in petroleum and real estate sectors under the GST is not immediately feasible but some of the reforms such as easing the blocked credit and removal of restrictions on ITC are very much doable and a statement in this regard would be hailed widely.

I recently heard the lone voice of the Delhi Finance Minister expressing no confidence in the IGST model! And the obvious reason for his irritation is the consistent piling up of the IGST revenue which has come close to Rs two lakh crore in the past 10 months. Though one may argue that a major part of such revenue is only ledger entry and no hard cash but for the States, such a huge pile-up of credit is within the control of the Union of India and they would like to have their own pound of flesh. Obviously, the farrago of IGST collections seems to be raising serious questions in the minds of several State Finance Ministers and the Council would do well for itself if it details the future fine-tuning of the IGST model in its White Paper. Such a document would serve not only the present Central Government but also act as a roadmap for the new government which would take charge in May, 2019.

Such a document should also talk about a number of amendments required in the GST laws. Several internal and external committees have zeroed in on many sticky provisions which require steps like tweaking, rewording, rephrasing and rewriting. This way the proposed amendments can undergo the second round of refining and chiselling and a healthy debate may contribute to further simplify it. Of course, there is no such thing as a simple tax in the world of taxation but simplification as a milestone can be said to have been achieved if the compliance from an average taxpayer goes up by a few percentage points. Since simplification of a tax law is never a one-time affair, greater transparency in debating the proposed changes would serve it better besides cementing the faith of the taxpayers in the policy-making forum.

At present, what may appear to be a little obsessive for the policy makers is the revenue statistics. A surge in GST collections is again a process which can be realised over a period of time. By holding back the process of reform in the name of realising the milestone of Rs one lakh crore tax revenue is certainly not a wise decision. It is more so in the light of the fact that every reform measure has a gestation period and revenue is a by-product of it. Raising GST collections beyond the miracle figure of USD one trillion should be achieved only through a 'default mode'! And what is this mode? In simple words, the GST Council should continue to take reform and simplification measures without waiting for the revenue to cross the canvas of Rs one lakh crore and all such measures would automatically bring in more revenue. One good example is what Mr Jaitley quoted in his blog published on the GST Day. He said that as many as 15 lakh taxpayers who would, based on their turnovers, fall in the category of composition dealers, opted for normal registration and they are happy availing ITC and paying taxes on each transaction. Such a reality could never have been seen by the GST tax base strategists prior to its implementation. For them, all such taxpayers were pure composition dealers and they would have been presumed to have paid taxes only on their turnovers. But it did not happen! This is a live indicator of what a good design of a tax system could do. So, the simple mantra should be to keep simplifying cleverly and do not wait for the revenue to first enrich the kitty before more reforms are undertaken.

In the first year itself the GST as a reliable tax system has proven its worth. It has given a tax buoyancy of 1.22 to the indirect tax collections - unheard of phenomenon in India! On annualised basis, the total collections have been worked out to be close to Rs 11 lakh crore - a neat growth of about 12%. So close to the 'committed growth' of 14%! The fact that such an impressive growth has been recorded, the onus shifts from the court of the taxpayers to the GST Council's forum which needs to continue with the reform of tax rates of certain services and at least 28% tax slab for certain goods. A beginning is required to be made to retain the confidence of the taxpayers who expect logical reduction in the top tax slab category. Given the fact that more than Rs 8000 crore is being collected as CESS and what is presently needed to compensate the States is about Rs 7000 Crore, there is certainly sufficient room to push down certain goods in the 18% category at its July 21 meeting.

Secondly, the GST has done a great deal of good to the direct tax collections. Even the latest income tax figures indicate 17% growth in the corporate tax mop-up and 44% growth in the personal income tax collections. A slew of measures including the GST has ballooned the direct tax base from 3.7 crore to 6.9 crore. And the Exchequer has been reaping the benefits in terms of much higher collections. Given the fact that indirect tax is a regressive tax, why not to smoothen the impact of such regressive system by rationalising the tax rates periodically. I sincerely hope that the GST Council should now be a little better organised in terms of detailing its future decisions based on hardcore statistics and the process of reform should continue unhalted!


TIOL Tube Latest

GST 1st Anniversary - A Hardlook (Episode 2) | simply inTAXicating

What's New

CGST Notification
CGST Rate Notification
CGST Circular
Income Tax Notification
Income Tax Circular
Customs Tariff Notification
Customs NT Notification
Customs Circular
Anti Dumping Notification
DGFT Notification
DGFT Public Notice
DGFT Circular
RBI Circular