Considerable progress made on introducing GST: Pranab
New Delhi, December 23, 2009 (PTI): Finance Minister Pranab Mukherjee on Wednesday said that considerable progress
has been made towards implementing the Goods and Services Tax, a new indirect
tax structure that would subsume levies like excise, VAT and service tax."There has been considerable progress in preparing a roadmap for introducing the
GST and we value the suggestion the Chamber is able to provide on the approach
of introducing the GST," Finance Minister Pranab Mukherjee said on Wednesday at a PHD Chamber function.
The government has set April 1, 2010, as the deadline for implementing GST, but
apprehensions are being expressed on bringing in the new tax regime from the
scheduled date as a lot of ground work is yet to be done. Another major task before the Finance Ministry is implementing the Direct Taxes
Code, that will replace the Income Tax Act, 1991. The Minister further said the government will take inputs from
various stake holders, including industry chambers before finalising the Code.
"In this connection (taxcode) I would also like to point out... That I have an
open mind. It is not that something has appeared in the code and that is why we
have to stick to it," Mukherjee added.
Govt. asked states to review the VAT levy on imported
December 18, 2009: Reeling under one of the sharpest food price rise in many years, the government
is pulling out all stops to control the spiral. Even as food inflation,
currently hovering near 20% continues to make headlines, the government is learnt to
have undertaken several measures to bring it back under comfortable levels.
Prices of essential food items have risen sharply due to a severe drought this
year that resulted in depleted farm output and wholesale food prices in the
country are at a 10-year high.The centre has reportedly asked states to lift more rice and wheat under open
market sales scheme (OMSS). The Cabinet Secretary has also been talking to states for a better public
distribution system (PDS) for essential commodities. The Cabinet Secretary has also asked states to review the VAT levy on imported
sugar. Sugar prices have more than doubled this year on account of an unbridled
shortage of stock globally and the agriculture ministry wants no VAT levy on
Opposition up in arms over change in slab in Delhi VAT
NEW DELHI, December 16, 2009 : The BJP-led Opposition rallied against the Delhi Value Added Tax (Amendment) Bill, 2009 that was introduced in Delhi Assembly on Monday. The amendment seeks to scrap the slab of 4% and introduce a slab of 5%. The move will impact the prices of medicines, medical and surgical equipment, IT and electronic products such as computers, software and products under the industrial inputs among other things. Introducing the amendment bill, finance minister AK Walia said that
it proposes to incorporate certain provisions to address the urgent need to remove some fresh anomalies and discrepancies which have come to notice in the course of the implementation of the Act.
The Centre has asked the state government to raise VAT rate from 4% to 5% to partially compensate the loss incurred due to phasing out of central sales tax. ‘‘Hence it is proposed to enhance VAT rate from 4% to 5% on goods specified in third schedule except declared goods under Central Sales Tax Act, 1956. This enhancement of tax rate is likely to generate additional resources Rs 500 crore,’’ Walia added.
Assocham Suggests Uniform VAT On Petrol, Diesel Across India
December 12, 2009 (RTTNews): Industry body Assocham suggested that the government implement a uniform VAT structure of 8% on petrol and diesel across the country as the state tax is giving additional burden, media reports said.
Sales tax levied on petrol in states vary between 18.9% and 33% and on diesel from 8.3% to 34%. Tax/ Octroi is also levied on movements of crude in many states.
According to Assocham, the element of taxation on petrol and diesel is to the extent of 140% and hence there should be at least uniformity of VAT at 8%, which will give some relief to oil companies from higher crude oil prices globally and the common men is not burdened
unnecessarily. The chamber also said that government-owned oil companies should also be encouraged for export of petroleum products like private sector so that they also avail export duty benefits.
High taxes hitting food processing sector
NEW DELHI, November 30, 2009 (ET): Taxation of over 18 per cent on branded processed agricultural products is adversely affecting the competitiveness of the sector, an industry lobby has said in a report released on Sunday. According to the Associated Chambers of Commerce and Industry
(Assocham) in India, only about two per cent of India's fruit and vegetable output is processed and produce worth Rs 50,000 crore is wasted annually.
The chamber observed that branded processed products are subject to central sale tax of about two per cent, apart from attracting four per cent local levies including entry tax and octroi, besides 12.5 percent of value-added tax. "However, unbranded products are mostly exempted or taxed at concessional rate of four per cent," said Assocham president Swati
Piramal, adding: "It acts as a disincentive for investment in the sector and affects competitiveness." Accordingly, all food products should be treated with parity in terms of rate of taxes such as VAT, it has argued. "The processed food industry should also be exempted from levy of service tax on goods transport service, mass communication and awareness building activities," Piramal said.
ASSOCHAM Suggests Tax Holiday To Hotel Industry
New Delhi, November 27, 2009 : The Associated Chambers of Commerce and Industry of India
(ASSOCHAM) suggests the need for extension of tax holiday scheme of 5 years to all categories of hotels to speed up infrastructure of hotels rooms needed for Commonwealth Games of 2010. The ASSOCHAM has pointed out that the government has already accorded tax holiday scheme of 5 years for 2, 3 and 4 Star hotels and even Convention Centres with a seating capacity of not less than 3000 in NCR of Delhi, Faridabad, Gurgaon, Gautam Budh Nagar and Ghaziabad. This facility, according to the ASSOCHAM, needs to be extended to all categories of hotels including of 5 star so that their capacity expansion takes place at desired speed to accommodate large number of travelers to India during 2010 games.
Finance panel for 12% GST
New Delhi, November 26, 2009: The proposed goods & services tax (GST) could turn out to be a far
more benign impost than anyone expected. In what would amount to a radical tax
reform, the 13th Finance Commission is understood to have arrived at a
revenue-neutral rate of around 12%, at least 4 percentage points lower than what
most believed the combined Centre-state rate would be.
According to official sources, in a technical paper the commission is going to
release shortly, it would also recommend a substantial broadening of the tax
base by including hitherto untaxed—but potentially high-revenue—areas like real
estate deals, high-end education and healthcare services. If the proposals are
accepted, India Inc’s tax liability will see a major dip.
In the commission’s ideal model, GST would subsume taxes on petroleum and
alcohol, both of which states want to keep outside the new comprehensive,
multi-point tax on value added. Levies on petroleum account for a third of the
tax revenues of both the Centre and states. The commission, headed by Vijay Kelkar, even wants the beedi industry, which forms a large chunk of the domestic
tobacco sector, to be brought under GST.
The Centre and states continue to disagree on the structure and modalities of
GST, with the former keen to use the new tax as a reform tool. So, by releasing
the technical paper, the commission would help the Centre turn the table on the
empowered committee of state finance ministers, which recently published a GST
discussion paper that most analysts said reflected a compromise.
Real estate transactions now attract only stamp duty at the output level,
whereas the output incurs input taxes like Vat on construction material and
service tax on specified work contracts. - Financial Express
Indian IT companies EU billing rates may come under tax strain
BANGALORE, November 16, 2009: A new tax rule in the European Union (EU) is making the light at the end of the tunnel for Indian IT service companies look a little India's top 10 BPOs
Starting January 1, the 27-nation bloc plans to impose value-added tax (VAT) on services delivered from non-EU nations such as India, a move which will put a renewed squeeze on profit margins of companies such as Tata
Consultancy Services, Infosys and Wipro, offshore outsourcing experts and tech firms say.
European companies that outsource IT and backoffice work will be looking to extract better value out of their service providers to offset the financial implications of the tax, which could increase the cost of such projects by up to 25%, said Nick Beecham, partner at UK-based law firm Field Fisher Waterhouse. Europe accounts for over a quarter of the $60-billion revenues of the Indian outsourcing industry. “Many businesses will already be doing this in the current economic climate. We particularly expect to see this happening with those outsourcing contracts that were signed two or more years ago at the height of the economic boom,” Mr Beecham said, expecting outsourcers to renegotiate billing rates at least 10-15% lower. - The Economic Times
Haryana urges Centre to defer GST
New Delhi/ Chandigarh November 12, 2009 :Haryana, which became the poineer state in launching VAT
(value added tax) in the country, needs more time to prepare itself for the proposed Goods and Services Tax
(GST).In a press communication released in Chandigarh, the authorities said the state finance minister had urged the central government to defer introduction of GST by one year, compensate the state for the loss of revenue of Rs 600 crore on account of the purchase tax levied on food grains like wheat and paddy, and make a leeway for Haryana for levy of VAT on agricultural inputs like fertilisers and pesticides.
Haryana Finance Minister Ajay Singh Yadav pointed out at the meeting of state finance ministers
chaired by Union Finance Minister Pranab Mukherjee in New Delhi on Tuesday that a perfect IT system and complete computerisation were necessary for switching over to GST. Yadav said Haryana earned about Rs 600 crore per annum from the purchase tax levied on food grains, which it would lose after introduction of GST, as a consensus had been reached
among the states to exempt food grains from GST. “Either the purchase tax on food grains be not subsumed in GST, or some
suitable mechanism should be provided to compensate the state,” he suggested. -Business Standard
CMs urged not to charge higher VAT
Chennai, November 11, 2009: The Associated Chambers of Commerce and Industry of India
(ASSOCHAM) has urged Chief Ministers of Tamil Nadu,Andhra Pradesh and Kerala not to charge
higher VAT, including cess of 12.5 per cent and even beyond on processed fruits
and vegetables and scale the slab down to a uniform four per cent, as
recommended by Empowered Committee on VAT.
In a representation to Chief Ministers of the respective states, ASSOCHAM
Secretary General D S Rawat said these were among other few states which are yet
to execute the Empowered Committee recommendations. These states continue to levy additional VAT and cess on such products by
restricting the scope of the category description or by shifting the product
category itself from four per cent level to 12.5 per cent level, Rawat said.
ASSOCHAM said these states have disputed the classification of various value
added fruit and vegetables like potato chips, and banana chips. Source: Express India
Assam govt faces flak for VAT hike
GUWAHATI, November 2, 2009: The Assam government’s decision to increase VAT by 1 percentage point on items subjected to 4% and 12.5% tax under Schedule II of the VAT Act has come under attack both from the opposition and industry bodies. VAT on items like bicycles, aluminum utensils, bamboo products, medicines, sewing machines and several others has increased from 4% to 5%. However, VAT on declared goods would remain at 4%. Sources in the state government said that around Rs 130 crore additional revenue will be generated by the hike. The main opposition party, Asom Gana Parishad (AGP), has lambasted the government for this move. The Federation of Industry and Commerce of the North Eastern Region (FINER) also feels this move will be counter- productive.
Goods and services tax (GST)—might miss its April 1, 2010
New Delhi, October 30, 2009 (HT): Finance Minister Pranab Mukherjee on Friday said a schedule for
rolling back the tax breaks announced last year to help the economy tide over the ripple of
worldwide recession would depend on the domestic economy’s growth in the coming months. Besides, the country’s most ambitious tax reform initiative—a comprehensive
nationwide uniform goods and services tax (GST)—might miss its April 1, 2010
deadline as some contentious issues remain to be sorted out. India cannot be ruled from Delhi alone.
On the proposed GST, which is envisaged to be a comprehensive value added tax on
goods and services, Mukherjee said consensus eluded among states on some areas.
“In large areas we have been able to arrive at convergence of views.
Constitutional amendments are required (for rolling out GST). I am trying to
stick to the time schedule, but there could be some slippages,” he said. The indirect tax system is mired in a multi-layered structure that includes
levies such as excise duty, central sales tax, VAT and service tax among others.
In its final form, GST is expected to remove these distortions as all the
existing taxes will be subsumed under a singular regime.
E-Filing of VAT received overwhelming response in Punjab
CHANDIGARH, October 26, 2009: E-filing of VAT returns made mandatory for certain categories of tax payers by department of Excise and Taxation Punjab has received overwhelming response with over 20,000 tax payers filing returns electronically. According to A Venu Prasad, Excise and Taxation Commissioner Filing of VAT Returns electronically had become mandatory for persons making inter state sales and purchases, persons making export out of the territory of India , persons claiming refund under the act and persons whose turnover during any of the previous years was Rs. five crores or more. He said that these categories of tax payers have to file VAT Returns electronically by October 30, 2009, if
payments are to be made in cash.
Centre, states for mechanism on CST compensation
New Delhi, October 19, 2009 (PTI) The Centre and states today agreed for a joint mechanism
to offset losses arising out of Central Sales Tax cut effected in 2007-08, a
matter that has not yet been resolved due to differences on the amount of
ompensation. The decision was taken at a meeting of states finance ministers and Union
Finance Minister Pranab Mukherjee here.
"There will be a joint mechanism (for compensation) involving Government of
India officials and Empowered Committee Secretariat and states officials to
facilitate the compensation more clearly," Asim Dasgupta, chairman of empowered
committee of states finance ministers on Value Added Tax, told reporters after
the meeting. CST, a tax on movement of goods from one state to another, was reduced from 4%t to 3% in 2007-08 and further to 2 per cent in 2008-09 after the
introduction of VAT as it is considered distortionary.
Remove VAT on handloom-based fashion products
NEW DELHI, October 14, 2009: The Associated Chambers of Commerce and Industry
(Assocham) has urged the government to remove the value-added tax (VAT) on fashion products with more than 50 percent handloom and handicrafts input to make them competitive in the global market. "Indian fashion industry is at budding stage and accounts for barely 0.3 percent of international industry's networth, which may further come down in the absence of necessary government support," the chamber said in a letter to the finance ministry. Currently, fashion products fall under the VAT net ranging between
8-12 percent that makes them costlier. Therefore, the government should remove VAT on the handloom and handicraft-based fashion products, said the industry lobby. According to Assocham, the fashion design industry is expected to grow to Rs.800 crore in two-three years from Rs.300 crore now.
Rajasthan demands 4% VAT on sale of crude from Cairn's Barmer field
Jaipur, October 11, 2009 (PTI): The Rajasthan government has slapped a notice on Cairn India
demanding the company to pay 4% VAT instead of 2% CST on the sale of crude oil from the
explorer's oil fields at Barmer in the state. The company, on September 25, 2009, has made an online payment of Rs1.43 to the
state government's commercial tax division against CST over the sale of crude
from the oil fields in the month of August. CK Mathew, principal secretary (finance), said that the oil company will have to
pay VAT as the point of sale is located in Rajasthan. The government has nominated Indian Oil Corp, Hindustan Petroleum Corp and
Mangalore Refinery and Petrochemicals (MRPL) for purchasing crude oil from
PM for simpler tax regime for processed food sector
New Delhi, October 6, 2009 (PTI) Prime Minister Manmohan Singh today regretted that the
food processing sector was subject to "multiple levies" and said there is an
urgent need to rationalise tax structure to replicate the success of the IT
"Though primary agricultural commodities are mostly exempted from taxes,
processed foods are subjected to multiple levies. There is an urgent need to
rationalise and simplify tax structure," he said here while pointing out that
despite being a major food producer, India's share in the global processed food trade is less than two per cent. At present, many states are levying additional cess even when the empowered
panel of Finance Ministers of states on Value-Added Tax has suggested a four per
cent VAT on processed fruits and vegetables, hampering the flow of investment
into the sector.
Punjab launches E-payment of VAT
Jalandhar, September 29-, 2009: Punjab government on Tuesday launched electronic payment of Value
Added Tax (VAT) in the state to make the collection more convenient and efficient.Inaugurating the E-payment system here, Punjab Excise and Taxation Commissioner
A Venu Prasad said e-payment of VAT was first introduced in Ludhiana as a pilot
project by the department in the month of May 2009 and the same was being
extended to the entire state. It is targeted that by March 2011, all VAT payers would be able to pay the tax
electronically. Prasad revealed that in the current fiscal the expected VAT collection was about
Rs 8,000 crore compared to Rs 7,000 crore collected in the previous financial
year. With the introduction of e-payment, the money would flow from traders to the
government without any time gap and reconciliation of the accounts would be done
without any difficulty, he claimed.
Logistics sector to touch $125 bn by 2010
Chennai September 29, 2009: The Indian logistics industry is poised to become a $125 billion industry by 2010, an increase of around 17 per cent, from the current level, according to
Assocham. The knowledge chamber also said that the outsourcing of 3rd Party Logistics business (3PL) in India is set to become $ 90 million size by 2012. Assocham projected that Indian logistics industry is expected to touch $125 billion by 2010 from $105 billion, an increase of around 16-17 per cent in the next two years.
The 3PL industry is expected to become a $90 million industry from the current $58 million, as around 55 per cent of Indian companies are outsourcing logistic services like supply chain management and
warehousing, which used to be between 10-15 per cent, ten years ago.
“One of the contributing factors for this is Value Added Tax (VAT) which is expected to drive Indian
industry towards using more 3PL services”, said D S Rawat, Assocham Secretary General who released the paper.He added future consolidation will attract many companies under the umbrella of 3PL. Value added services are currently the most driving factor which hopes to increases in future. Business Standard
Good progress in talks with states on GST: CBEC
New Delhi September 25, 2009 (PTI): As deadline draws closer for implementation of Goods and Services Tax (GST), the Centre today said discussions on various issues have made "considerable progress". The Centre has been holding regular discussions with states on
GST, which is to be implemented by April 1, 2010. Some states were apprehensive that GST will do away with their fiscal autonomy.
"We are almost having meetings on a daily basis..To bring all
states together and make them agree to GST was a difficult task. Some states had apprehensions. The process has made considerable progress," Central Board of Excise and Customs
(CBEC) Chairman V Sridhar today said. He said many states are protective about their autonomy so far as taxes levied by them is concerned. After the Empowered Group of state finance ministers met on GST last week, Madhya Pradesh Finance Minister had expressed
apprehensions that the new tax system would take away the states' rights to tinker with rates.
The GST will subsume the central indirect tax levies like excise and service tax and a host of state taxes like VAT, octroi and purchase tax. The structure would be a dual structure--one at the Centre and the other at the state-level. States have already agreed to have two rates of taxes, with one standard rate and the other lower rate for essential goods. The rates, however, have yet not been finalised.
Clock makers exit due to high taxes
Rajkot September 22, 2009 (BS): Faced with a heavy tax burden, the small-scale wall clock makers of Morbi (Gujarat) are diversifying into ceramics, stationery items and retail. Besides, the industry is also losing ground to the metros and cities like Bangalore, where clock manufacturing has started picking up and taxation levels are lower, Morbi players claim. Morbi is regarded as the largest wall clock
manufacturing hub in India, with as many as 200 small-scale units. It also houses two of Asia’s largest wall clock manufacturers — Ajanta and
Samay. Having survived the slowdown and fierce competition from Chinese players, the industry is reeling under the burden of value added tax (VAT), according to manufacturers here. The industry has to pay 15 per cent tax, of which 12.5 per cent is VAT and 2.5 per cent is additional tax. The annual turnover of the small units is Rs 100-125
crore, and the industry gives direct and indirect employment to about 10,000 people. More than 60 per cent of the workers in the clock factories are women. Two years ago, there were more than 300 units in Morbi. Today, only about 200 are active.
CII seeks zero GST for processed fruit and vegetable industry
New Delhi September 17, 2009 (PTI) Industry body, the Confederation of Indian Industry (CII) has demanded that fruit and vegetable processing industry be exempted from the goods and services tax, proposed to be introduced from April 2010, as the sector is still at a "nascent stage" and needs support. We have requested the government to keep fruit and vegetable processing industry under a special GST rate of zero per cent," CII National Council for Agriculture Chairman Rakesh Bharti Mittal said. An empowered panel of finance ministers of different states yesterday resolved to meet the deadline of rolling out the GST regime in April next year and has reached a consensus to have two basic tax rates in the new system, and a special one for precious metals. But the rates are yet to be decided.
Rajasthan firm on levying VAT on Cairn crude
JAIPUR, September 12, 2009 (ET): Ruling down the centre’s assertion to levy central sales tax on Cairn crude, Rajasthan government is firm on charging VAT on crude oil sold from Cairn India’s fields. Rajasthan government principal secretary (Finance) C K Mathew told ET that state government is entitled to accrue 4% VAT on the oil. “Cairn India has entered into an agreement with the state government which clearly states that the point of sale would be in
Rajasthan. The company buying the crude would have to pay 4% VAT to the state government. Even if delivery point is outside the state, it doesn’t matter in this case as the sale is made within the territory of the state,” he said in reaction to the letter written by Petroleum Secretary R S Pandey to Rajasthan Chief Secretary Kushal Singh saying: “State sales tax/VAT would accrue to Rajasthan
govt. in case the sale of crude oil is made for further processing within
Adani, HPCL may raise CNG prices by Rs 2
AHMEDABAD, September 11, 2009: City-based CNG distributors Adani Energy and HPCL are set to increase prices any time now. CNG price hike largely affects the strong auto-rickshaw union and both Adani Energy and HPCL are hesitant to make the first move, said an industry expert. Sources close to the development revealed that both Adani Energy and HPCL are operating on wafer thin margins and considering price hike. Currently, they are selling CNG at Rs 28.62 per kg in Ahmedabad market and are considering increasing it by Rs 2. Market leader Adani Energy and HPCL operate 50 and 16 stations, respectively in
Ahmedabad. In last couple of years, it was compelled to hike CNG prices on account of expensive gas supply coupled with heavy tax structure. For instance,
Adani Energy’s own cost per kg of CNG stands at close to Rs 22. Excise duty at the rate of 14.42% and VAT at 15% adds burden of
Rs 7 per kg for the consumers. - ET
e-payment of VAT begins today
THIRUVANANTHAPURAM, September 8, 2009: Kerala is all set to blaze a new trail in tax collection in the country with the launch of electronic payment of Value Added Tax (VAT) on Tuesday. As many as
1.30 lakh traders are expected to switch over to the e-payment system, which will both speed up tax
collection and lessen the difficulties being experienced by traders in paying taxes. The State had switched over to electronic filing of tax returns beginning January 1 this year and the e-payment system is being introduced to take the tax reforms initiated by the Left Democratic Front (LDF) government and its Finance Minister T. M. Thomas Isaac to the next level.
Initially, only traders having the Tax Information Number (TIN) with a turnover exceeding Rs.10 lakh are required to go in for e-payment. Around 25,000 to 30,000 traders who fall in the category of presumptive tax payers with an annual turnover not exceeding Rs.10 lakh will be exempt from the scheme for the time being. The government had done the same when launching the e-filing system. According to Dr. Isaac, this is the next logical step now that the State has achieved 100 per cent e-filing of returns.
Under the present system, the trader can make the payment online, get an electronic chalan and also the information whether he/she has made the correct payment and whether he/she is eligible for any tax refund. The Commercial Taxes Department has tied up with State Bank of India and State Bank of Travancore to facilitate e-payment of taxes and integrated its web sites with that of the two banks. The web site of the Commercial
Taxes Department has been audited by STQC, a Government of India agency,
to ensure its security. Source: The Hindu
Govt to call inter-state council meet to discuss VAT refund issue
September 4, 2009: The Government has decided to call a meeting of the inter-state council to discuss the issue of value added tax (VAT) refund, and neutralization of other state level taxes on exports. The news has been confirmed by minister of commerce and industry, Anand Sharma. The issue of
VAT refund is one of the biggest issues handicapping the exporting community, he said. The minister said that the government has taken a conscious view to expand and diversify India`s export market, especially in the emerging markets of Africa, Latin America, Oceania and CIS countries and the Government is taking initiatives to offset the disadvantage faced by India's exporters such as credit risk and higher transaction costs. The new foreign trade policy announced for 2009-2014 seeks to achieve an annual export growth
of 15% over 2010-11 with an annual export target of USD 200 billion March 2011. By 2014, it is expected to double India`s exports of goods and services.Source: IRIS (04-SEP-09)
CBEC exempts service tax on essential commodities
New Delhi September 2, 2009 (PTI): The government has exempted a number of goods like food grains, fertilisers and farm inputs from paying service tax for transportation through railways and waterways. According to the notification issued by the Central Board of Excise and Customs (CBEC), the list of exempted goods includes — edible oil seeds and edible oils; food grains (cereals and pulses) and flour, petroleum and petroleum products and Hank yarn made wholly from cotton.
"The central government, on being satisfied that it is necessary in the public interest so to do, exempts the taxable service provided to any person in relation to the transport of goods, through rail, national waterway, inland water and coastal shipping, from the whole of service tax leviable thereon," the
notification said. The list of exempted goods also includes raw jute and jute textile, seeds for food crops and fruits and vegetables, seeds for cattle feed, jute seeds, medicine/pharmaceutical products, relief materials meant for victims of natural or other
disasters, defence or military equipments. Among other items the list also includes consignments like personal luggage, postal mail, mail bags booked for
shipping. Registered newspaper and magazines, kerosene oil meant for supply through public distribution system, petroleum products including LPG cylinders (filled and empty) booked by public sector Oil marketing companies transported by Indian Railways have also been exempted. Earlier transportation of goods through ports, railways, as well as inland waterways attracted a service tax of about 10 per cent.