Speaking to media after the GST Council meeting at Vigyan Bhawan in New Delhi, Odisha Finance Minister, Sashi Bhusan Behera said “After a while, the council has finally approved our demands to reduce GST on woods like Sal, Siali, Khali and Sabai Ghasa from 5 percent to nil. The most important matter is that the wood used in construction of chariots and idols of the holy Trinity of Puri Srimandir have been exempted from the tax,” he said.
“Sanitary napkins which were being supplied to women under the Khusi scheme and earlier taxed at 12 percent, have also been put under the exempted category while Handicraft items which were earlier taxed at 18 percent have been put in 12 percent tax slab. Since the state government does not collect taxes from handicraftsmen especially smiths, we have proposed before the fitment committee that the category should be completely exempted and in the next meeting on August 4, a detailed deliberation will be undertaken on the proposal,” Behera said.
It is to be noted that besides sanitary pads and wood, the council today also exempted Raakhis (without any precious metals), raw materials for brooms, commemorative coins circulated by RBI and fortified milk from GST. Similarly, items like handloom dari and fertiliser-grade phosphoric acid have been brought down from 12 to 5 percent tax slab.
Similarly, big rate cuts of 10 percent have been effected for as many as 15 items including cosmetics, refrigerators, paints etc.
The new rates will come into effect from July 27.
Besides, the Cabinet has also approved establishment of an Asian Public Health University for clinical research in the State.
As per sources, the health university will be established in association with a private organization.
A proposal on amendment of the Municipality Act was also cleared by the State Cabinet. As per the amendment, the period of disqualification of chairperson and councilor of an urban local body following a no-confidence motion has been extended to three months from one month.
As winter session of the Odisha Assembly is underway, the State government did not make any official announcement on the aforesaid Cabinet decisions.
https://youtu.be/Hpuyzu7Hme0
In the pre-GST regime, the State had collected Rs 3,691.28 crore during last year, the minister added.
He, however, said the State exchequer has lost around Rs 3,000 crore after the unified tax system is implemented.
As per the provisions of the GST law, the Centre would compensate loss of the States at 14% rate.
Behera further said the Centre has provided the Odisha government Rs 1,020 crore on account of loss of tax after GST implementation.
“The State has got Rs 333 crore in July-August whereas Rs 687 has already been sanctioned by the Centre for September-October,” the minister elaborated.
The State has been demanding before the Centre for lessening of GST on handicrafts. For example, after the State raised the issue before the GST Council on Sambalpuri Saree the tax has been reduced to 5%.
But, the 12% tax still persists on Sambalpuri Sarees above Rs 1,000, the minister said in the House.
https://youtu.be/-VBCK3lQzEo
As per the GST law a State can fine a nominal fee of Rs 100 per day in case of late filing of returns and payment of taxes.
The move came after the Centre's decision to waive the penalty on delayed filing of GST. “To facilitate taxpayers, late fee on filing of GSTR-3B for August and September has been waived,” tweeted Finance minister Arun Jaitley on Tuesday.
The late fee which has been already charged to businesses will be credited back to taxpayers’ accounts.
After implementation of GST, while there was 28% GST on clay and stone sculpture, Sabai Grass weaving ropes and Sal leaf plates, cups bore 18% GST.
Odisha had been demanding tax exemption on handicraft and handloom products. Chief Minister Naveen Patnaik had also written a letter in the matter to Prime Minister Narendra Modi.
Behera had also demanded the Union Finance Minister for GST exemption on the above products. As the livelihood of poor tribals and sculptors depend on the products, Behera had put forth the demand at the GST Council meet.
Respecting Odisha's demand the GST Council in a meet held on September 9, 2017 in Hyderabad had slashed the taxes on the products.
The tax on Sabai Grass weaving ropes and Sal leaf plates, cups were slashed to 5% from 18% and tax on clay sculpture was exempted. The tax on stone sculpture was slashed to 12% from 28%.
Besides, 5% tax has been slashed on Khadi clothes and fabrics being sold by organisations certified by Khadi and Village Industries Commission (KVIC).
Behera also added that 12% tax has been exempted from other handicraft products with 18% tax.
But taxpayers who do not want to claim any transitional input tax credit will have to pay the taxes as well as file returns by August 20.
The move came as a relief to businesses who wish to claim the credit can deposit taxes on the basis of self assessment by August 20 and thereby file their returns within August 28.
The GST council has already made filing the returns on self assessment for the months of July and August post GST rollout.
Taxpayers can file returns for both the months on the GSTN portal by filling the GSTR 3B form.
After the rollout of the indirect tax regime on July 1, over 15 lakh fresh registrations have been added with over 71.30 lakh excise, service tax and value-added tax (VAT) payers transferring to the GSTN portal.
Q: What is GST and how is it going to affect the States and small businessmen and big corporate?
A: GST is very different from the existing tax structure. Before GST, the 70 year old taxation system as prescribed by the Constitution included the State list and the Central list. Under State list all commodities and services had a sales tax implemented by State government or VAT. There were also 10 to 12 other types of taxes levied by the State like entertainment tax, luxury tax, entry tax for import of goods from other states, Central sales tax and so on. Under Central list, there was Central excise, service tax and many more, levied by the Central government.
This made each State function like individual islands. For example, if a motorcycle was manufactured in Odisha got raw materials from Andhra Pradesh, taxes were paid to Andhra Pradesh. When sold it to a wholesaler in Odisha, one had to pay tax at this junction. Then again, while selling it in a third state, say West Bengal, again tax was levied there. So the manufacturer paid multiple taxes and the product price used to be high which decreased the competitiveness of our businesses and industry.
Q: Will products now become cheaper after implementing GST?
A: With introduction of GST, a single tax replaced the multiple taxes levied upon each commodity and service. But in social media, a question is making rounds that while GST is being claimed as a single tax, the bill receipt shows a SGST and a CGST. I wish to explain that there is only one tax but with two components which include a State share and a Central share. Now India became one market. If tax is paid once for a product during manufacturing, in the second stage while going from wholesaler to retailer the tax will be subtracted. So the price will become competitive.
Most products have reduced tax rate under GST while it has been raised for many services. Though it is believed this will increase its price, since the multiple taxes are not levied, the price will not increase drastically. It could be slightly high in some cases. If service tax has been increased from previous 15% to 18% under GST, that doesn’t mean the price will increase straight by 3 per cent because other taxes levied on the service will no more be included.
In fact, majority items in GST baskets have been decreased and only some have increased. It will be clear in two to three months if GST will overall increase the prices or not. But as much as I understand with the experience I have, there is no chance of increase in price to a great extent.
Q: How will GST help various States including Odisha? Will it benefit States with mining resources more?
A: States with mining resources could not witness industrial development compared to Maharshtra, Gujarat, Tamil Nadu. States in eastern belt like Bihar, West Bengal, Odisha have lagged behind in industrial development. Odisha, Madhya Pradesh, Chhattisgarh, Jharkhand have rich mines but could not see great industrial development. Since GST is a destination and consumption-based tax, States where goods and services are finally consumed will get more revenue. Earlier service tax was levied and collected only by the central government. However, in GST the service tax component will be shared equally between the centre and the State. Under the GST, for the first time the States have been given the right under the constitution to collect and keep the revenue generated from service tax.
Q. As being pointed out by political parties, has the implementation of GST been done in a hurry?
It is not at all a step taken in a hurry. There is no perfect moment for implementation and had GST been implemented after six months some problems might have surfaced. Over the past 7-8 months, both the Centre, State governments, officials and traders associations were clearly informed and made aware of the GST implementation from July 1. Ample preparations have been made for its implementation. As far as my understanding goes, adequate preparations have been made at the State and the Central level. Cases where adequate preparations have not been put in place, the government has given 2 months’ exemption from filing of tax returns. This is a very big change and whenever a new system is put in place some glitches will surface at the beginning but within 2-3 months everything will be sorted out.
Q. What’s your opinion on experts who feel that the tax slabs under GST are higher as compared to other countries?
If one follows the textbook GST implementation, there should have been only a single rate. However, India has been operating under an existing tax system for the past 70 years. There are many items wherein the poor and the common man pay a tax of 5-6-7 %. Tax rate on maximum food items have been kept very low under the new regime. If one goes for a common rate, then items used by the poor and the common man will be taxed higher and luxury goods will attract a lower tax, which is not at all feasible from a socio-economic equity point of view. So keeping in mind the tax legacy of our country, we have created 4-5 slabs. This is a new beginning and as far as my expectations go, in the next 3-4 years the tax slabs are likely to reduce. The Union Finance minister has already indicated that in the next 3-4 years, the 12% and the 18% slab will be combined together to create one slab.
Q. Important sectors like petroleum, power and real estate have not been included in GST. Is there any scope to include these in future?
In 2009, the empowered committee of State Finance ministers came out with a discussion paper in which electricity and real estate were not included. Now discussions are on at the GST Council for implementation of GST in real estate sector. We hope that GST will come into force in real estate within next couple of years. Electricity was not there in the first recommendation and it may get included in future. The states did not want Petroleum products to be included in GST as it is a major revenue source for the states. However, at the centre we wanted to include it. Hence, it was agreed that as per constitution of the regime petroleum and petroleum products are a part of the GST. At a future date the GST Council chaired by the Union Finance minister will decide the date from which petroleum and petroleum products will be taxed.
Patnaik had mentioned in his tweet that he is glad as Odisha played an important role in GST rollout.
With #GSTRollOut, India transforms into #OneNationOneTaxOneMarket. Congratulations to all. Glad that Odisha played important role in it 1/2
— Naveen Patnaik (@Naveen_Odisha) July 1, 2017
The implementation should be smooth and take care of all doubts and concerns to benefit the common man, trade, commerce & industry 2/2
— Naveen Patnaik (@Naveen_Odisha) July 1, 2017
Odisha government had earlier supported the new tax regime. Addressing a workshop of MLAs held before the State Assembly's special session in May, Patnaik had said the GST would bring comprehensive reform of the indirect tax regime and a major financial reform to make India a single market.
The State government has maintained that all sections of the population will benefit from the GST.
State finance minister Sashi Bhushan Behera had attended the mid-night launch event of the GST rollout ceremony in Parliament.
President Pranab Mukherjee and Prime Minister Narendra Modi pressed button to officially launch the most anticipated bill at a special midnight GST session in the Parliament's Central Hall tonight.
Calling the GST a "disruptive change", President Pranab Mukherjee said the ambitious central tax is a "tribute" to the maturity and wisdom of India's democracy as he recalled steps taken during his own tenure as Finance Minister on this key reform measure.
The President also said the GST Council should continuously review the implementation and suggest suitable improvements to the new indirect taxation regime.
Quoting that a change of this magnitude however positive it may be, Mukherjee said, it is bound to raise some teething troubles and difficulties in the initial stages, but nevertheless these issues have to be solved with understanding and speed to ensure that they do not impact the growth momentum of the economy, he said.
"Success of such major changes always depends on their effective implementation. In the months to come, based on the experience of actual implementation, the GST Council and the Central and state governments should continuously review the design and make improvements, in the same constructive spirit as has been displayed till now," Mukherjee said.
The President further said the GST will "also make our exports more competitive and also provide a level playing field to domestic industry to compete with imports."
Under GST, Mukherjee said the tax incidence will be transparent, enabling full removal of tax burden on exports and full incidence of domestic taxes on imports.
By creating a unified common national market, the GST will act as a major boost to economic efficiency, tax compliance and domestic and foreign investment, he added.
The midnight session was attended by Vice-President, Lok Sabha Speaker, former Prime Minister H.D. Deve Gowda, union cabinet ministers, many chief ministers, state finance ministers and GST council members, senior government officials, legislators of both ruling party and some opposition parties.
While, some parties of the Opposition like the JD(U), the NCP, the BJD, the Samajwadi Party and Janata Dal (S) participated in the launch of the GST, the Congress, the Trinamool, the Left and some other parties gave the event a miss.
Odisha Finance Minister Sashibhusan Behera, MP Baijayant Panda, Bhartuhari Mahatab, Pratap Deb, Prasanna Acharya were also present at the special launch.
Odisha Chief Minister in a tweet said, “Odisha played important role in the rollout of OneNationOneTaxOneMarket and urged for its smooth implementation.”
Patnaik further urged for measures to address all doubts and concerns to benefit the common man, trade, commerce and industry.
Speaking to OTV, Finance Minister Behera said "GST rollout is perhaps the biggest ever taxation reform after the independence. It is definitely more simpler and better taxation system for all types of businesses, consumers and industries across the country,"
"The new reform though it seems challenging now will definitely usher positive results for the country in the coming days," Behera said.
Also Read: Odisha passes state GST Bill
BJD MP from Kendrapara, Baijayant Panda on the other hand said that, "It is a historic occassion as the country will now be a one market with one tax system. Our party (BJD) had supported it and we welcome it."
Cuttack MP Bhartruhari Mahatab after the special GST session said that Odisha being a consumer State will be benefited by it. Though there will be challenges, GST council would work to resolve such issues.
As the NDA government completes three years in office, besides the GST that was nearing a roll-out, its other achievements on the economic front would be financial inclusion, digitisation and public investment on infrastructure -- railways and power distribution, the Assocham said in a release here.
"The implementation of the GST in the next few weeks would cap other major initiatives of the government," said Assocham President Sandeep Jajodia.
Perceived as another credible step for structural changes in the economy was the focus on improving ease of doing business through measures like the GST and other taxation reforms, he added.
The GST Council at its 14th meeting held in Srinagar on Friday announced the fitment of services, as well as of 1,211 goods in the GST tax rates, heading towards the proposed July 1 roll-out.
The next meeting of the Council to decide on the rates of the remaining six goods items, including gold and beedi, was slated to be held here on June 3.
Assocham said the "clean-up" of the subsidy disbursal process was yet another big plus of the government, which is pursuing to link Aadhaar ID with every bank account holder.
Helped by favourable fall in the crude oil prices, elimination of subsidy on petrol and diesel and significant reduction in other fuels, including cooking gas, have brought a great improvement in the balance sheets of state-run oil marketing companies, it said.
India's foreign exchange reserves have touched an impressive high of $372 billion, boosting the rupee value, which is helping tame inflation further, it added.
Following several measures to open up foreign direct investment (FDI) in key areas like defence, insurance, infrastructure, the country has received record net FDI of $100 billion in the last three years, while foreign funds are pumping in huge liquidity into the stock market.
"Riding on ample liquidity and confidence of the global fund managers, India's market capitalisation has crossed a massive $2 trillion, so much so that some kind of caution is needed to handle such inflows," Assocham said.
"While, a high level of banks' non-performing assets (NPAs) remains an area of concern, the government has taken some decisive measures like empowering the Reserve Bank of India to set up Oversight Committees and refer the toxic assets for insolvency and all these should help resolution of the nagging problem," it added.
GOODS
Exempted
Milk, eggs, salt, fresh vegetables, fruits, contraceptives, organic manure, earthen pots, coconut, prasadam supplied by religious places like Temples, Mosques, Churches, Gurudwaras and Dargahs, jaggery, bindi, vermilion, glass bangles, handlooms, hearing aids, handmade musical instruments
5% Slab
Coffee (not instant), tea, groundnut, cane sugar, beet sugar, bio gas plant, wind mills, kerosene lantern, coal, hand pumps
12% Slab
Live animals, fruit juices, meat, butter, cheese, mobile phones, fountain pen ink, tooth powder, incense sticks, feeding bottles, braille paper, children's colouring books, umbrellas, pencil sharpeners, tractors, bicycles, contact lenses, spectacle lenses, utensils, sports goods, fishing rods, combs, pencils, hand paintings
18% Slab
Helmets, LPG stoves, nuclear reactors, clocks, military weapons, electronic toys, plastic buttons, condensed milk
28% Slab
Aerated drinks, perfumes, after-shave lotions, deodorants, clothing of fur skin, razor blades, cars, revolvers, pistols
SERVICES
Exempted
Healthcare, education, metro train, local train, religious travel, Haj Yatra
5% Slab
Transport services, Restaurants with turnover of Rs 50 lakh or below, cab aggregators (Ola and Uber), economy class air travel
12% Slab
Non-AC restaurant, hotels with tariff of Rs 1,000-2,500, business class air travel
18% Slab
AC restaurants with liquor licence, telecom, financial services
28% Slab
5-star hotels, race club, betting, cinema halls
Officials of the State Finance department and representatives of the Government of India will train the legislators on how the State will be benefitted with the implementation of the unified indirect tax at the workshop.
The State Cabinet had approved a proposal on the GST implementation during its meeting on May 11.
As per the proposal on the State GST, the new tax would be levied on all items except alcohol and five petroleum products.
Among the 6 goods which have been kept out of the ambit of the State GST, 5 are petroleum products and the sixth one is alcohol.
The five petroleum products on which the State GST will be exempted include Petrol, Diesel, Crude Oil, Aviation Fuel and Natural Gas.
“The GST can be implemented now after which there will be only 3 taxes instead of 17 taxes of the State and Centre. The three taxes are the Central GST, State GST and Integrated GST,” said Finance department secretary, Tuhinkant Pandey.
The cabinet meeting which was the first one after the ministry reshuffle also cleared 10 other proposals. The cabinet has decided to waive off VAT on ‘Moong Dal’ keeping in mind the interest of the farmers. Moreover, as per Cabinet decision, Markfed will procure ‘Moong Dal’ at a price of Rs 52.25/ Kg. The State government will bear a loss of Rs 2 crore annually in this regard.
“We have decided to exempt VAT for ‘Moong Dal’ farmers. Despite a loss of Rs 2 crore annually, to protect the interests of the farmers we have taken this decision,” said Finance minister, Sashibhushan Behera.
Similarly, the proposal to revise the recruitment and promotion of Village Agricultural Worker (VAW) also got the cabinet nod. Plus-II has now been made the minimum qualification for recruitment of VAW.
Power tariff for captive power plants has been increased to 55 paise from 30 paise per unit which will bring in Rs 875 cr additional revenue to the government’s kitty.
Among others, the cabinet cleared the probe commission’s report on Kalinganagar firing and proposal to waive off stamp duty on 11 railway projects.
Citing his displeasure over the form in which the GST was passed, Odisha Finance minister Pradeep Amat said, on account of Coal cess being levied, Odisha had demanded an increase in royalty and the State had also demanded Green Tax provision in GST.
“The Coal cess has been increased from Rs 100 to Rs 400 and form the collected cess a compensation fund will be created out of which the States will be paid. It is essentially giving the States back their own money. Hence we had protested this move, which was also not accepted,” said Amat.
Also Read: Pradeep Amat to attend GST Council meet
On the other hand, BJP Legislature party leader, KV Singhdeo said that if there are any demands then the State can raise it at the GST Council meeting while leader of Opposition, Narsingh Mishra criticised the State government citing that awareness dawned upon it quite late.
“The ruling BJD is just for the sake of criticising the Centre is bring up such issues. In GST Council, the finance ministers of all states can voice their opinions and demands which will be taken into consideration at a later point in time,” said Singhdeo.
“On the second day of the GST Council meet, mainly two issues were taken up for discussion which included draft modalities of the compensation and provision for cross empowerment to ensure single interface Under GST. The threshold limit has been finalized at Rs 20 lakh. Moreover, other issues were also taken up for discussion. Various states have given their suggestions which are under consideration,” said Odisha Finance minister Pradeep Amat.
However, the decision on fixing the actual tax rates and the finalisation of draft rules has been left for later.
Briefing the media after the two-day, maiden meeting of the apex decision-making body on the new indirect tax regime, Finance Minister Arun Jaitley said the council also decided that exemption for assessees in the northeastern region and hill states will be Rs 10 lakh.
The base year for compensation to states -- on the basis of which they will get a share of the GST revenue -- has been fixed as 2015-16, said the Council Chairman. "We have also decided that the compensation should be given at regular intervals to states."
The Finance Minister, who is also Chairman of the Council, said the jurisdiction over assessees with a turnover of Rs 1.5 crore and below will solely be with the states and for those above, it will be jointly with the central and state governments.
The council is scheduled to reconvene on September 30 and again from October 17-19.
"All existing cesses will be subsumed in GST," Jaitley said, even as officials added that the draft rules and the model laws could be taken up on September 30.
"We will try to finalise the rates and the slabs during our meeting on October 17, 18 and 19," said the Finance Minister on a matter that has widely divergent views among the states and the Centre.
(With IANS inputs)
The session would begin with chief minister Naveen Patnaik moving a resolution for a discussion on the Bill in which all members would participate.
The Bill, which has been passed in the Lok Sabha and Rajya Sabha, has to get the consent of at least 50 percent of the states for implementation since it is a constitutional amendment bill.
Since the Bill was tabled in the Parliament by the BJP led NDA government and passed with the support of the BJD and the Congress, its ratification in the State Assembly will be a mere formality, say political analysts.
“As per rules, there should be discussion on GST Bill. All members will have their opinion on the Bill. After the resolution is passed in the House, the state government will inform the Parliament and the Centre,” leader of Opposition Narasingh Mishra told OTV today.
BJP MLA Radharani Panda said the Centre has fixed the date for Special Budget session in the Parliament on September 1. The people would benefit after the ratification of the GST Bill.
“As we had supported the Bill in Lok Sabha, we will obviously support the Bill in the Assembly,” government chief whip Ananta Das said.
"Until yesterday a single standard rate of GST was a stupid idea. Since yesterday, it is the declared goal of the government!
"Until yesterday capping GST at 18 per cent was impracticable. Since yesterday, the Congress party's original demand of an 18 per cent cap is the declared goal of the government!
"Until yesterday, the Chief Economic Adviser's RNR report to fix the standard rate at 15 per cent was in the dustbin. Yesterday it was retrieved and placed on the FM's table and was promptly accepted!" the senior Congress leader said in a series of tweets.
The former Union Minister's tweets came barely two days after Finance Minister Arun Jaitley on Monday hinted that the country might eventually have a single standard rate of GST, adding that the 28 per cent slab would soon be phased out, except on luxury and "sin goods".
In a Facebook post he also noted that the standard rate could be between the 12 and 18 per cent.
Jaitley's GST blog came a fortnight after electoral verdicts in three Hindi heartland states -- Chhattisgarh, Madhya Pradesh and Rajasthan -- did not go the Bharatiya Janata Party's way, and months ahead of the 2019 general elections.
"The Council has approved the proposal to form a seven-member GoM to study the revenue trend, including analysing reasons for structural patterns affecting revenue collection in some of the states," Finance Minister Arun Jaitley said after the meeting.
The study would include the underlying reasons for deviation from revenue collection targets vis-a-vis original assumptions discussed during the design of the GST system, its implementation and related structural issues, he said.
"There is improvement in many states, but we are behind target because we have a very stiff target. From the base year 2015-16, three increases of 14 per cent compounded annually, this year's target would be nearly 50 per cent above the base year. Falling short of target by 5 to 10 per cent is due the stiff target," he said.
However, Jaitley said the shortfall in GST collection would be made up by higher direct taxes and non-tax revenue, which are moving ahead of the schedule, and that the government is confident of meeting the fiscal deficit target of 3.3 per cent.
He said the GST collection in consuming states of North East, along with manufacturing and consuming states like Maharashtra and West Bengal showed significant improvement. Even Bihar that had a higher VAT percentage introduced in base year 2015-16 due to imposition of prohibition showed significant improvement.
"Even the lagging states showed improvement in the second year compared to first year of GST launch. Some states did not have improvement and it was decided to study those," the minister said.
Lagging states Bihar and Meghalaya improved their collection by 18 per cent, J&K by 11 per cent, Jharkhand 10 per cent, Rajasthan 8 per cent, Odisha 6 per cent and Chhattisgarh 5 per cent. Deficits fell from 26 to 17 per cent in Madhya Pradesh and 30 to 19 per cent in Tripura.
States that did exceedingly well are Mizoram, Arunachal Pradesh, Manipur, Telangana, Uttar Pradesh, Andhra Pradesh, Maharashtra, Sikkim, West Bengal, Tamil Nadu, Nagaland and Assam. They either turned positive or are within 1-6 per cent of their target.
States that could not improve their GST collections compared to last year are Puducherry, Himachal Pradesh, Uttarakhand and Punjab. Kerala and Gujarat maintained status quo.
"Overall, there is increment. The first year average was about Rs 89,000 crore a month, the second year average is around Rs 96,000 crore to Rs 97,000 crore. We would have been happier had the increase been higher but we have to factor in the fact that for hundreds of commodities the GST regime has brought the rates down. GST has not raised a single rate."
Jaitley said pan-India the revenue would have been higher on higher manufacturing revenues but the shortfall in services largely due to excessive competition in two sectors of telecom and airlines that the GST collection was adversely impacted.
While he said the GST Council cannot do anything about the two sectors but plans to take up the other two reasons that led to a lower collection in January meeting. These are taxation of residential property and extension of composition scheme to small service providers.
As for the GOM to analyse the collection shortfall among states, he said it would be assisted by a committee of experts from the Central and state governments and the National Institute of Public Finance and Planning (NIPFP).
The GoM in turn would give its recommendation to the GST Council. The members of the GoM and the committee of experts would be announced in due course of time.
"The stupid idea was the BJP's idea of having eight rates when GST was first implemented in July 2017," the former Finance Minister tweeted.
"If the GST Council will discuss tomorrow 'Ease of filing returns', is that an admission that filing returns has not been easy in the last 18 months?
"The truth is filing GST returns has been a nightmare," Chidambaram said.
"When the Congress President (Rahul Gandhi) said -- as I have said -- GST should be a single rate, it means that the standard rate of GST should be a single rate. That's absolutely correct.
"As (former Chief Economic Adviser) Arvind Subramanian's RNR (Revenue Neutral Rate) report pointed out, when there is a standard rate there will also be a standard-minus rate and a standard-plus rate. That's elementary, not stupid," he added.
Prime Minister Narendra Modi had said at an event in Mumbai on Tuesday that the government was aiming to bring 99 per cent of items below the 18 per cent GST slab.
This was a marked improvement over the September GST collection (for August) which stood at Rs 94,442 crore.
Jaitley attributed the rise in the tax mop-up to lower tax rates and higher compliance.
"GST collections for October 2018 have crossed Rs. 1 lakh crore. The success of GST is lower rates, lesser evasion, higher compliance, only one tax and negligible interference by taxation authorities," he said in a tweet.
The only other time the GST collections had crossed the Rs 1 lakh crore mark was in April (for the month of March) when it was attributed to it being the last month of the financial year when collections are usually high "as people also try to pay arrears of some previous months".
Speaking at the Hindustan Time Leadership Summit 2018, Amarinder Singh, Chief Minister of the Congress-ruled Punjab, said his state's economy was not in a good shape and it had become dependent on the Centre after the implementation of the GST last year.
"We do not have money to run the state. After the GST, we have nothing left in the state. We are dependent on the Centre. We do not have industry. We have hostile neighbour who keeps us on our toes. We have only agriculture to go on," Singh said in a discussion, which was attended by his counterparts from Maharashtra and Karnataka.
"We have only three sources of revenue. One is fuel, one is excise and one is stamp duty on transfer of properties... As far as the real estate is concerned, Punjab has not moved ahead as yet because economy is not in good shape. Where do I get my revenue from?"
Endorsing Singh's views, Janata Dal-Secular (JD-S) leader H.D. Kumaraswamy, who runs the Karnataka government with the support of the Congress, said the Centre must take measures to solve the issue.
"The founders of the Constitution allocated some powers to states. The Centre is gradually taking all powers from the states. State governments have no scope for tax collection. We have to be dependent on the Centre," he said.
Congress President Rahul Gandhi has been demanding that petrol and diesel be brought under GST to reduce prices.
Responding to a question on Gandhi's stand on the issue, Kumaraswamy said: "That is his opinion. According to my opinion, the Centre has to take some severe measures."
Maharashtra Chief Minister and BJP leader Devendra Fadnavis said he agreed with Singh's views "to some extent" saying the GST had left states with little flexibility to have their own revenue.
However, he said he supported the idea of bringing fuel products under the GST saying "At some point of time, we have to do it."
"At the same time, we should think of alternatives. If we go on importing, we are going to play into the hands of the countries manufacturing (producing oil)," he said.
Fadnavis asked for production of bio-fuel and ethanol using agriculture produce as an alternative to crude oil.
"There is so much of agriculture production today that we do not know where to keep. States are buying produce (from farmers) but we do not know how to sell. It is a huge mess," he said.
"Now, we have sufficient foodgrains in our country, we can convert it into bio-fuel, ethanol. The second generation ethanol policy is there. We need to invest more into that. If in Brazil, 100 per cent ethanol can replace petrol and diesel, why can't we?"
Speaking at the Hindustan Time Leadership Summit 2018, Amarinder Singh, Chief Minister of the Congress-ruled Punjab, said his state's economy was not in a good shape and it had become dependent on the Centre after the implementation of the GST last year.
"We do not have money to run the state. After the GST, we have nothing left in the state. We are dependent on the Centre. We do not have industry. We have hostile neighbour who keeps us on our toes. We have only agriculture to go on," Singh said in a discussion, which was attended by his counterparts from Maharashtra and Karnataka.
"We have only three sources of revenue. One is fuel, one is excise and one is stamp duty on transfer of properties... As far as the real estate is concerned, Punjab has not moved ahead as yet because economy is not in good shape. Where do I get my revenue from?"
Endorsing Singh's views, Janata Dal-Secular (JD-S) leader H.D. Kumaraswamy, who runs the Karnataka government with the support of the Congress, said the Centre must take measures to solve the issue.
"The founders of the Constitution allocated some powers to states. The Centre is gradually taking all powers from the states. State governments have no scope for tax collection. We have to be dependent on the Centre," he said.
Congress President Rahul Gandhi has been demanding that petrol and diesel be brought under GST to reduce prices.
Responding to a question on Gandhi's stand on the issue, Kumaraswamy said: "That is his opinion. According to my opinion, the Centre has to take some severe measures."
Maharashtra Chief Minister and BJP leader Devendra Fadnavis said he agreed with Singh's views "to some extent" saying the GST had left states with little flexibility to have their own revenue.
However, he said he supported the idea of bringing fuel products under the GST saying "At some point of time, we have to do it."
"At the same time, we should think of alternatives. If we go on importing, we are going to play into the hands of the countries manufacturing (producing oil)," he said.
Fadnavis asked for production of bio-fuel and ethanol using agriculture produce as an alternative to crude oil.
"There is so much of agriculture production today that we do not know where to keep. States are buying produce (from farmers) but we do not know how to sell. It is a huge mess," he said.
"Now, we have sufficient foodgrains in our country, we can convert it into bio-fuel, ethanol. The second generation ethanol policy is there. We need to invest more into that. If in Brazil, 100 per cent ethanol can replace petrol and diesel, why can't we?"
"The revenue collected in September shows an upward trend as compared to the August collection," the Finance Ministry said.
The government had last month attributed the dip in tax revenues to "probable postponement" of sale of over 50 items, including refrigerators, washing machines and small televisions, on which tax rate was reduced by the GST Council at its July 21 meeting. The reduced rates were to come into effect from July 27.
"The actual impact of reduction of rate of taxes would be observed only from next month (September)," the Finance Ministry had then said.
Of the total gross revenue collected in September (for August), Rs 15,318 crore was collected as Central-GST (CGST), Rs 21,061 crore as state-GST (SGST) and Rs 50,070 crore as integrated-GST (IGST).
An additional Rs 7,993 crore was collected as cess, an official statement said.
"The total number of GSTR-3B returns filed for August up to September 30 was 67 lakh," it said.
"The total revenue earned by Central government and the state governments after settlement is Rs 30,574 crore for CGST and Rs 35,015 crore for the SGST."
The party again demanded that petrol and diesel be brought under Goods and Services Tax (GST). The government had earlier rejected the demand saying most states were opposed to it.
It also demanded that there should be immediate reduction in central excise duty and excessive VAT in the states.
"Many promises were made by Prime Minister Narendra Modi before coming to power in 2014, but none were kept. When questions were raised by Congress President Rahul Gandhi about the Rafale fighter deal and Amit Shah's son, those too went unanswered," Congress leader Ashok Gehlot said at a press conference in the Capital.
"The mismanagement of economy has led to high prices. When fuel prices were rising during the UPA regime, taxes were reduced to take the burden off the people. But due to the mismanagement by the current government, the prices of petrol, diesel and gas cylinders have gone up steeply," he said.
"We decided for the Bharat Bandh call today after a meeting of all party general secretaries and the state leaders," he said, adding the party was in touch with other opposition parties for their support.
He said Congress workers would protest at petrol stations across the nation between 10 a.m. to 3 p.m.
Later his party colleague Randeep Singh Surjewala said the "fuel loot" has resulted in the Modi government profiting Rs 11 lakh crore.
In May 2014, he said, excise duty on petrol was Rs 9 per litre while today it is Rs 19 per litre. "Similarly the excise duty on diesel in 2014 was Rs 3 and today it is around Rs 15 today.
"An RTI reply has revealed that the Modi government is selling diesel for Rs 34 per litre and petrol for Rs 37 per litre to other countries whereas in India the price is high," he alleged.
Calling it "fuel loot," the Congress leader said the diesel and petrol should have been brought under the Goods and Services Tax (GST).
"Rahul Gandhi had demanded to bring petrol and diesel under GST as this alone will give a relief to common people by Rs 10-15 per litre," he said.
"The rupee is getting devalued every day. 10 per cent is the loss in value of the rupee in last one year. It is the most devalued currency in Asia, but neither the Prime Minister nor the Finance Minister is worried about it."
On Supreme Court ruling that ‘bandhs' are illegal, Surjewala said: "We are aware of the ruling and that is why the ‘bandh' is between 9:00 am to 3:00 pm so that the common person is not inconvenienced."
Congress leader Ahmed Patel said that most opposition parties have given their consent to support the bandh. "Consultations are going on with three or four parties. The SP, RJP and NCP have agreed."
"We have not consulted BSP yet and so far as TMC is concerned, they have agreed to support the agitation," he said.
The pilot project, which proposes 20 per cent cashback on GST component of transactions, will be rolled out by states who voluntarily come forward and based on their experience, the Council may take a call to implement it across the country.
"Under the project, consumers will get a 20 per cent cashback subject to a cap of Rs 100 on all UPI and USSD transactions as well as transactions made using RuPay card and BHIM app," Finance Minister Piyush Goyal told reporters here after the GST Council meeting.
Although the decision on the pilot project has been taken, it will take some time for implementation as software for the purpose will have to be developed and the states will have to decide on it before the benefit reaches the people.
"We have decided a broad framework of the pilot project which is aimed at promoting digital transactions. We believe that this will help in increasing compliance and give a boost to the formal economy," Goyal said.
The GST Council also decided to form a Group of Ministers (GoM) headed by Union Minister of State for Finance Shiv Pratap Shukla to deliberate on issues facing micro, small and medium enterprises (MSMEs). The GoM will submit its recommendations in the next meeting of the Council.
The GoM on MSMEs will comprise Delhi Deputy Chief Minister Manish Sisodia, Bihar Deputy Chief Minister Sushil Kumar Modi, Assam Finance Minister Himanta Biswa Sarma, Kerala Finance Minister Thomas Isaac and Punjab Finance Minister Manpreet Badal.
Goyal, who presided the meeting to primarily discuss difficulties faced by MSMEs across the country, said the GoM will take the discussion further and interact with the the stakeholders before submitting its recommendations.
The Council also decided to refer all law and procedure-related issues to the Law Committee and issues related to GST rates to the Fitment Committee. Both committees would also file their recommendations before the next GST Council meeting.
Delhi's Finance Minister Sisodia said the MSME sector was facing several issues since the rollout of the GST last year in July. The government should not ignore small businesses -- which create employment -- while making rules for the big businesses that pay more taxes, he added.
"I congratulate the people of India on the special occasion of GST completing one year. A vibrant example of cooperative federalism and a 'Team India' spirit, GST has brought a positive change in the Indian economy. #GSTForNewIndia," Modi tweeted.
I congratulate the people of India on the special occasion of GST completing 1 year.
A vibrant example of cooperative federalism and a ‘Team India’ spirit, GST has brought a positive change in the Indian economy. #GSTForNewIndia https://t.co/PvZKtl2YIE
— Narendra Modi (@narendramodi) July 1, 2018
He also shared a poster on "One Year of GST" which listed down the achievements of the One Nation, One Tax.
"GST has brought growth, simplicity and transparency. It is boosting formalisation, enhancing productivity, furthering 'Ease of Doing Business', benefitting small and medium enterprises," Modi wrote alongside the poster.
Minister of Railways and Coal Piyush Goyal also congratulated the nation on completion of one year on GST by calling it "the most transformative tax reform in India ever".
"Congratulate the nation on completion of one year of GST -- the most transformative tax reform in India ever. One Nation, One Tax and One Market due to GST has led to economic growth, simplicity for people and transparency in the economy," he tweeted.
Following Modi's lead, Goyal also listed down how GST brought a "transformative change in the lives of people through ease of doing business, providing opportunities for SMEs, formalisation, and relief for consumers".
Touted as the biggest economic reform since Independence, the GST was launched on July 1, 2017, in a ceremony held in the Central Hall of Parliament on the midnight of June 30, 2017.
According to the Finance Ministry's tweets, the Union Minister for Railways, Coal, Finance and Corporate Affairs also appealed to consumers to demand for bills, whenever they buy any goods or services which would help in reducing the rates under the GST.
"GST is to complete one year. People's 'One Nation, One Tax' dream has now been changed into reality today. For this, I give credit to the states.
"GST is the best example of cooperative federalism. As all the states took a collective decision for the welfare of the country, such a big tax reform could be delivered," Modi said in his "Mann ki Baat" speech.
He said IT had replaced Income Tax officials through the GST as everything from return to refund was done through IT.
The Prime Minister said there were no checkposts now and the inflow and outflow of products had increased because of the GST.
"GST not only helped in saving time it also helped in the field on logistic."
"The impact of demonetisation and GST implementation has resulted into higher formalisation of economy. This is further substantiated by filing of more than one crore (new) income tax returns by tax payers during FY 2017-18 in comparison to FY 2016-17," Jaitley tweeted.
According to the data released by the Finance Ministry on Monday, 6.84 crore returns were filed during 2017-18, significantly higher than 5.43 crore filed in the previous fiscal.
"Direct tax collections for FY 17-18 has been Rs 10,02,607 crore (18 per cent higher than previous year)," Jaitley added.
"The data reveals the efficiency of the tax department and a rise in the number of honest tax payers. This historical revenue receipt is a factual testimony of accountable governance under Prime Minister Narendra Modi," he said.
The Budget, to be the last for the BJP in view of the general elections due in the first half of 2019, usually has two main components.
The first part deals with new schemes and outlays for various existing schemes and sectors for the coming fiscal, while the second contains announcements on direct and indirect taxes.
With GST realising the dreams of the pre-Independence nationalist bourgeoisie of a unified market through a single tax regime, replacing the earlier system of multiple central and state taxes, this year's budget will need take into account only those items like petroleum products that still remain outside the purview of GST.
The 2018-19 budget could thus contain changes in customs and excise duties on these remaining products, which for most others have been subsumed under GST.
In the area of direct taxes like income tax and corporate tax, Jaitley hinted at some relief for taxpayers as he made a case for rationalisation of the direct tax structure considering the fact that "the tax base has expanded".
Addressing an event here on Saturday to mark International Customs Day, Jaitley said: "In income tax, the base has become larger; it's bound to enlarge. And, therefore, charging higher rates from few selected groups -- which has traditionally been done -- is an area which has been changing."
The country's net direct tax collections witnessed an increase of 18.7 per cent till January 15 this fiscal, compared with the corresponding period last year.
With the general elections due in 2019, the government will present next year, instead of a full Budget, a vote-on-account, which only deals with the expenditure. Besides, new schemes and changes to taxation are not presented in a vote-on-account.
Moreover, with major states bound for polls this year, observers expect the budget to be weighed in favour of the farm sector at a time when data shows a dip in agriculture growth and the sector under stress.
"This ministry has requested Ministry of Finance to include ATF in the ambit of GST regime with full input tax credit at the earliest possible," Minister of State of Civil Aviation Jayant Sinha told the Lok Sabha in a written reply.
Currently, petrochemical products like jet fuel do not come under the ambit of the new indirect tax structure.
ATF is a major cost component for airlines which constitutes between 35 and 40 per cent of the overall expenses.
To another question, Sinha said that Indian scheduled airline operators had estimated employment opportunities for about 3,700 pilots and 3,600 co-pilots in the next five years.
Currently, a total of 3,603 pilots, 3,914 co-pilots, and 15,030 cabin crew are employed by the Indian scheduled airline operators, as per the data maintained by the Directorate General of Civil Aviation (DGCA).
"As per a recent comprehensive skill gap analysis...the total direct employment in the aviation sector in 2015 was about 1,95,320, comprising 33,000 at airports, 55,070 in airlines, 71,000 in cargo handling, 1,250 in Maintenance, Repair and Overhaul (MRO) sub-sector and 35,000 in ground handling operations," Sinha said in reply to another question.
It also said that real estate, a major area of tax evasion and black money generation, could soon be brought under GST.
"No extension of time will be given for filing GSTR-3B for September 2017. Please file this by October 20, 2017," the Central Board of Excise and Customs (CBEC) said through notices issued in several national dailies.
"Please file your return at the earliest (positively before Diwali)," CBEC said, referring to the major festival coming up next week, which is also observed as the start of the accounting year by many in the trading community.
The GSTR-3B return is a self-assessment by businesses of their sale and purchases during the period concerned.
"The one sector in India where maximum amount of tax evasion and cash generation takes place and which is still outside GST is real estate. Some of the states have been pressing for it.
"I personally believe that there is a strong case to bring real estate into the GST," Finance Minister Arun Jaitley said on Thursday, while delivering the Annual Mahindra Lecture at Harvard University in the US.
He said, the issue would be taken up at the next meeting of the GST Council scheduled for November 9.
Petroleum products, alcohol and real estate are three sectors which are still outside the GST since several states are opposing their inclusion in the new pan-India indirect tax regime.
"The last date for filing GSTR-1 for the month of July, 2017 is 10th October, 2017. An extension of two months has already been given. There will be no further extension given to taxpayers for filing their GSTR-1 return for July," a Finance Ministry statement here said.
"Once a taxpayer files GSTR-1 by 10th October, the corresponding entries in GSTR-2A of his buyer shall get auto populated. The buyer shall finalise his GSTR-2 after making modifications (additions, corrections or deletions), if required, in GSTR-2A," it said
"The Input Tax Credit (ITC) shall be availed by the buyer based on his GSTR-2. If a taxpayer does not file GSTR-1 by 10th of October, then his buyer may face difficulty in availing ITC of the tax paid on his supplies.
"It is therefore advised that all suppliers of goods or services, especially B2B suppliers, furnish their outward supply details in GSTR-1 by the due date so that no difficulty is faced by their buyers in availing ITC and the return cycle can be completed in due course," it added.
As decided in the GST Council meeting on September 9 in Hyderabad, returns for July have to be filed by October 10 under GSTR-1, by October 31 under GSTR-2 and by November 10 under GSTR-3.
Last month, the government ruled out further extension in filing of GST returns after December. The GST Council has allowed businesses to file GSTR-3B, which is a self-assessment of their sale and purchases, till December.
"The post GST scenario has critically impaired the transport trade. The leadership of All India Motor Transport Congress and other transport associations have proclaimed the two day token nationwide strike starting from 8 a.m. of October 9 (Monday) to 8 p.m. of October 10. We also support this," Calcutta Goods Transport Association's President Prabhat Kumar Mittal told reporters here.
He said there was utter confusion, chaos and disruption due to varied policies under GST that are imposed on the road transport sector.
"The exorbitant increase in the diesel price and daily fluctuations are affecting the road transport sector. The diesel and tolls account for more than 70 per cent of operating cost of the truck, though diesel is out of GST. Diesel must be brought under GST top bring uniformity of diesel pricing across the country," he said.
Transporters also demanded the revision of diesel prices should be done on a quarterly basis.
According to them, confusions arose with the existence of Reverse Charge Mechanism (RCM) and Forward Charge (FCM) in GST system.
Transporters are not able to lift goods from unregistered traders as that would require transporters to pay GST on behalf of unregistered traders under RCM and they (transporters) can also avail FCM, where they need to pay 12 per cent GST but claim full input credit.
"The contra laws in the present GST regime are leading to coercive registration and unnecessary compliances by truckers and transporters. The government has put options under GST double taxation in the RCM and FCM for 5 per cent and 12 per cent respectively," said Tapan Bhaduri, Organising Secretary of Truck Owners' Association of Bengal.
He said the sale of used assets also attracts GST which leads to double taxation.
"In view of the difficulties of online filing, CII suggested that the due dates for filing GSTR-1, GSTR-2 and GSTR-3 should be deferred for another month or two. This will stabilise the system," the Confederation of Indian Industry (CII) said in a release here.
"The Finance Ministry has taken cognisance of the initial glitches being faced in online filing of invoices and extended dates for GST returns. CII has now requested for further extension to resolve certain system issues," it said.
Last month, the government announced a five-day extension for filing the GSTR-3B form till August 25, after the GSTN return filing portal was hit by a technical glitch and stopped functioning, a day ahead of the last date for filing.
Technical issues again earlier this month forced the government to extend the deadline for filing the GST sales return -- GSTR-1 -- for another five days till September 10.
CII suggested certain changes to the return filing procedure so as to streamline the system further.
"All modules of GSTN should be activated or enabled to amend core fields in registration to amend particulars of 'principal place of business' or to declare 'additional place of business' or file refunds," CII said.
"Further suggested that GSTR-3B should have provision for rounding off Input Tax Credit to nearest rupee. This will match output tax liability which is rounded off, and be accepted in the system," it added.
The industry body also suggested there should be no penal action by the authorities in the initial six months of the GST launch.
CII also pointed to an anomaly in the Tran1 form that is filed for July, the month GST was launched, to carry forward the closing balance of credits of June 2017,
Accordingly, Tran1 calculates the liability of pending forms -- "however, in many cases, the carry forwarded amount has been calculated in negative figure", the statement said.
"CII suggests that the system response should be enhanced to allow download, preview details, and take prints for reconciliation before submission," it added
Pradhan told reporters on the sidelines of an official function here that the Central government had asked the GST Council to consider implementing the new taxation regime in the petroleum sector.
"We have appealed to the GST Council to implement GST on petroleum products, which would ensure interests of the people. This way, the interests of the state and central government will also be secured," he said.
Pradhan also stressed on the need for the state to have a balanced model, so that taxes can be procured without the people being affected by it.
Attributing the recent hikes in fuel prices to the market fluctuations caused by the hurricanes Irma and Harvey in the US that caused market fluctuations, he said: "The prices have begun to fall, in fact they had gone down even during the last two days."
Following the decision of the GST Council earlier this month, "these notifications also provide that this 5 per cent GST will, however, not apply if the person concerned voluntarily foregoes any actionable claim or enforceable right on such brand name," a Finance Ministry release said here on Friday.
"These notifications, interalia, provide that 5 per cent GST will apply if on brand name (as defined in the notification) an actionable claim or enforceable right in court of law is available," it said.
The entity concerned will have to file an affidavit to the effect that it is voluntarily foregoing actionable claim or enforceable right on such brand name with the jurisdictional Commissioner of Central Tax or State Tax, or the jurisdictional officer of Union Territory Tax, it added.
An overwhelming majority of taxpayers logged on the GST portal to file returns during daytime, with a bulk of traffic witnessed in the afternoon hours, the hourly data on filings showed.
"The hourly trend for GSTR-3B from August 12 to September 20 shows that about 94 per cent of taxpayers filed the returns between 10 a.m. and 10 p.m. Only about 6 per cent did it late in the night or early morning. The trend is the same for other returns as well. We would like to underline here that the portal is handling peak hours smoothly," GSTN CEO Prakash Kumar said.
GSTR-3B is a summary return of details of outward supplies, inward supplies, credit and payment of goods and services.
As regards the GSTR-3B returns for July, a total of 46.4 lakh taxpayers filed them, representing about 78 per cent of all taxpayers registered on the GST portal and eligible to file GSTR-3B for July.
Those who were registered in August (10 lakh) and those who have opted for Composition Scheme (10 lakh) were not required to file GSTR-3B for July.
The GST Council, headed by Union Finance Minister Arun Jaitley, had set up a Group of Ministers headed by Bihar Deputy Chief Minister Sushil Kumar Modi to sort out the issues hampering the smooth operation of the GSTN portal.
Jaitley and Sushil Kumar Modi had advised the taxpayers to avoid a last-minute rush to meet the deadline and file returns four-five days in advance.
"If 75 per cent of people wait till the last day, the system is bound to crash... its capacity is 1 lakh per hour or 24 lakh throughout the day," Jaitley had said earlier.
Over 80,000 GSTR-3B compliances for August were uploaded every hour on Wednesday, GSTN Chairman Ajay Bhushan Pandey had said.
"Currently, the GSTN system is working smoothly and accepting more than 80,000 GSTR-3B returns per hour," Pandey told reporters here.
Till September 16, 3.5 lakh taxpayers had filed GSTR-3B returns for August, he said.
September 20 was the last date for filing the GSTR-3B forms, a summary return of details of outward supplies, inward supplies, credit and payment of Goods and Services Tax.
Last month, the government announced a five-day extension for filing the GSTR-3B form till August 25, after the GSTN return filing portal was hit by a technical glitch and stopped functioning, a day ahead of the last date for filing.
Thus, traders across the country faced problems and could not file their returns.
Technical issues again earlier this month forced the government to extend the deadline for filing the GST sales return -- GSTR-1 -- for another five days till September 10.
The GST Council, headed by Finance Minister Arun Jaitley, had decided to set up a Group of Ministers (GoM) to sort out the issues hampering the smooth operation of the GSTN portal.
Referring to the technical glitches that have plagued the digital filing of GST returns by businesses, Jaitley on Wednesday blamed it on the last-minute rush to meet the deadline.
"A lot of the GST problem is self-invited by assessees. For example, today (Wednesday) is the last date for filing returns (August), but till last night only 25 per cent had paid their taxes," Jaitley told reporters here.
"So, if 75 per cent of people wait till the last day, the system is bound to crash... its capacity is 1 lakh per hour or 24 lakh throughout the day. Till last night, there was no problem," he added.
Last month, he announced that the government had comfortably met the collection targets for the first month of GST implementation in July.
The Minister said that Rs 92,283 crore in tax had come in by August 29 with 38.38 lakh assessees, or only 64 per cent of those registered, having filed their GST returns. The total number of those registered under the GST who should be filing returns is 59.57 lakh.
"Technical glitches, procedural problems and absence of some forms on the network portal are causing delays in making payments and filing of returns by traders and dealers under the new GST regime," Bihar Deputy Chief Minister Sushil Kumar Modi, who is the GoM's convener, told reporters here.
The five-member GoM, which held its first meeting here, was set up on September 12 to look into the technical issues faced by the GST Network and address them in consultation with all stakeholders and its vendor, Infosys Ltd.
The decision to form the GoM was taken at the last meeting of the GST Council in Hyderabad on September 9 after several member states complained to Union Finance Minister Arun Jaitley, who heads the Council, that the glitches were causing problems for taxpayers in filing returns and making payments.
"As the new tax regime is being implemented only since July 1, with filings, posting invoices, making payments and returns entirely online through the GST Network (GSTN), there are bound to be glitches in the initial days, which we are trying to address them on fast track," said Modi after chairing the GoM's first meeting here.
Besides Modi, other GoM members are Chattisgarh Minister for Commercial Taxes Amar Agarwal, Karnataka Agriculture Minister Krishna Byregowda, Kerala Finance Minister T.M. Thomas Issac and and Telengana Finance Minister Etela Rajendar.
GSTN Chairman Ajay Bhushan Pandey and CEO Prakash Kumar assist the GoM in addressing the glitches.
"Over the last two months, 23,18,000 new traders have registered for the GST, with 11 lakh dealers under the composition scheme, taking the total number to over 85 lakh, including 62.25 lakh traders who migrated from the old VAT and service tax regime," said Modi.
Under the composition scheme, traders or dealers with less than Rs 75-lakh annual turnover have to file their quarterly returns though they will not tax their consumers.
"Though 47 lakh traders have filed summary returns under the GSTR3B for July, only 3.05-lakh of them have filed for August so far while the deadline is September 20," said Modi.
The glitches in the network will also compound filing the returns, as the GST portal will not be able to cope with the load on the system if traders rush to file at the last minute.
"The GST portal is by far the world's largest network, on which 22 crore invoices were filed over the last two months from across the country," he said.
Declining to explain the glitches faced by dealers to comply with the GST norms, Modi said the GoM had discussed the issues with Infosys, Commercial Tax officials of the state and central governments and tax consultants and resolved to fix about 80 per cent of them by October 30.
As each dealer had to register with PAN and Aadhaar numbers and comply with the norms applicable to them under the GST regime, they have been also facing procedural problems, as some of the forms to be filled were not yet uploaded on the portal.
"We have taken up the issues raised by the stakeholders with the vendor and instructed it to address each of them on priority to ensure hassle-free filing of returns and payments by traders or dealers from November 1," added Modi.
In the poll conducted by the LocalCircles citizen engagement platform, a majority of 54 per cent citizens said their monthly costs had gone up by 30 per cent due to GST, while 20 per cent said there has been no impact.
A substantial portion of people said they did not know the monthly cost impact as they did not monitor it very closely.
For 51 per cent, monthly grocery expenses increased between 0 to 30 per cent, seven per cent said it reduced and 26 per cent said there was no impact.
In the another poll, 47 per cent people said that their monthly medical expenses have increased in the last two months. Five per cent said it had decreased post GST, 29 per cent said it was the same.
Around 39 per cent of the people said that traders in their area are insisting on cash transactions and not issuing a proper GST invoice. Twenty-eight per cent said traders were taking cash and digital payments but without a proper GST invoice.
Only 18 per cent said that traders were accepting both cash and digital payments and giving proper GST invoices.
The last poll asked citizens how their costs related to discretionary items like mobiles, computers, appliances, hardware, furnishings and apparel been impacted.
For 51 per cent, it has increased and only six per cent said it had decreased by 0 to 30 per cent. It was more or less the same for 30 per cent of the respondents.
"Notification regarding increase in the effective rates of the Compensation Cess on specified motor vehicles will be issued on September 11, 2017, effective from 00:00 hours the same day," the Central Board of Excise and Customs (CBEC) said in a tweet.
Following the 21st meeting of the GST council at Hyderabad on Saturday, Finance Minister Arun Jaitley announced that while status quo has been maintained for small cars (petrol and diesel), hybrid cars and 13-seater vehicles, the Council decided to increase the cess rates for some segments.
GST cess on mid-segment cars has been increased by 2 per cent, for large segment cars it has been increased by 5 per cent and for SUVs by 7 per cent, he said.
He said that in large vehicles where affordability of consumers is high, the cess has been increased.
"The pre-GST rate has not been restored... Even though we had a headspace of hiking cess by 10 per cent, it has been hiked by up to 7 per cent," he said.
Under the new indirect tax regime, cars attract the highest tax rate of 28 per cent, while a cess is levied on top of GST.
The government promulgated an ordinance last week increasing the cess from 15 per cent to up to 25 per cent.
"India is changing fast into one of the most open economies in the world today," Modi said while addressing the BRICS (Brazil, Russia, India, China, South Africa) Business Council meet here as part of the 9th BRICS Summit.
"Foreign direct investment inflows are at an all-time high, rising by 40 per cent," he said.
Stating that India has moved up in the World Bank index of ease of doing business and up 32 spots in last two years in the Global Competitiveness Index, Modi said: "The Goods and Services Tax that was introduced in July is India's biggest economic reform measure ever. In one stroke, a unified market of 1.3 billion people has been created."
He said that programmes like Digital India, Start-up India and Make in India were changing the economic landscape of the country.
"They are assisting India turn into a knowledge based, skill supported and technology driven society," Modi stated.
He said that the BRICS Business Council played a vital role in giving practical shape to the vision of the bloc's partnership.
"The partnerships you have forged and the networks you have created are energising the economic growth stories in each BRICS country," he said, while praising the council for entering into a memorandum of understanding with the New Development Bank (NDB), the multilateral development bank established by the BRICS member states.
Modi also voiced his appreciation that the BRICS Business Council has matching priorities of trade and investment facilitation, promoting skills development, infrastructure development, small and medium enterprises (SME) development, e-commerce and digital economy.
He said that the council's work towards establishment of a BRICS Rating Agency, energy cooperation, green finance, and digital economy was noteworthy.
"Let me conclude by saying that as governments, we will offer full support to your endeavours. And we also count on the BRICS Business Council to take us closer to our common objective of improving business and investment cooperation," the Indian Prime Minister.
The council's meeting was also attended by host Chinese President Xi Jinping, Russian President Vladimir Putin, Brazilian President Michel Temer, and South African President Jacob Zuma.
"I see two standard rates converging into one in future. The GST Council may decide on convergence of rates at appropriate time," Jaitley said here at the inaugural session of 'India Summit 2017' organised by The Economist magazine.
He, however, ruled out a single standard GST rate as it would be inflationary for a disparate range of consumers and added that one tax rate was inequitable.
He noted that GST implementation was quite smooth without any major glitches.
All goods and services under the pan-India GST regime, which has subsumed multiple central and state levies, have been categorised in four tax slabs of 5, 12, 18 and 28 per cent, besides those items that attract zero tax.
The Finance Minister had earlier said, "We can converge some taxation in the future. 12 per cent and 18 per cent can be converged into one. But if we make a single rate of 15 per cent now, then items like food, which is consumed by poor people, will get hit."
Touching upon the resolution of non-performing assets (NPAs) of public sector banks (PSBs), Jaitley on Thursday said that it was not possible to have a surgical solution to bad loans.
"Government is trying to resolve the NPA issue of PSBs on a priority basis and has taken various steps in this regard," he said.
Jaitley said the government was actively considering PSB merger as banking decisions need to be taken on commercial considerations.
He added that depending on affordability, the recapitalisation needs of banks would be met.
Traders across the country faced problems on Saturday due to the technical snag and could not file GST returns.
The last date for filing GSTR-3B form for July was August 20, which is a summary return of details of outward supplies, inward supplies, credit and payment of GST.
"Some technical glitches were experienced by last minute return filers," a Finance Ministry statement said.
However, the government cautioned the tax filers to file their return well before the deadline to avoid any last moment technical glitches.
"Also, since it is the first return to be filed under GST, the tax payers and the tax practitioners have requested for few more days to file their return," the statement said.
"There have been requests from states which are hit by floods to extend the last date for filing of GST returns. The state of Jammu and Kashmir has also requested for extension of time because of late passage of their GST ordinance," it added.
The statement explained that in order to take care of these issues, the GST Implementation Committee, consisting of state and central government officers, has taken a decision to extend the last date for payment of the GST for the month of July to August 25 for those who do not want to avail transitional credit in TRANS1 this month.
For those who want to avail TRANS1 this month, the last date for filing of returns will be August 28.
Earlier in the day industry experts said the government needs to extend the deadline as too many traders could not file returns due to technical glitches.
"The GST site was working intermittently since 12 noon. It created a lot of confusion among traders. Many of our clients called up saying they can't file returns. If this continues the government might need to extend the last date of filing by another couple of days at least," Prateek Jain, chairman, Assocham Special Task Force on GST, told IANS.
"Due to system errors, taxpayers are not able to file returns and more so today, possibly due to heavy traffic, GST taxpayers are unable to log in for filing of return. This situation is putting taxpayers in distress," Pune-based chartered accountant Pritam Mahure told IANS.
Up on the suggestion list of the IACC is the need to bring alcohol and petroleum products within the ambit of the Central GST, said the apex bilateral Chamber synergizing India-US economic engagement.
This should be done in a calibrated manner since more than 60 per cent of the revenues were mobilised through tax realisations from these goods, IACC's National Vice President Vasant Subramanyan said.
There is a strong pitch by the states not to give up the taxation of these sectors as the revenues from them constitute a major chunk of their resource mobilisation, the IACC said in a statement.
"A pragmatic approach to counter this will be citizens' pressure for assigning this right to the Centre," the statement released on Monday added.
Next in the order of importance, according to the IACC, is pruning up the number of slabs in the GST.
World over, GST or similar clone of a comprehensive indirect tax, would either have one slab or at best two.
In India, in effect, there are five slabs -- zero per cent, five per cent, 12 or cent, 18 per cent and 28 per cent -- which would make the tax structure complicated and difficult to comply with.
"We have to draw up a roadmap for further pruning the number of rates in a time-bound manner," IACC's Finance Committee Chairman S.K. Sarkar said.
"In the given situation, it is prudent to do away with highest slab/s and amalgamate it/them with the next lower slab," Sarkar said.
The conceptual ambiguity in the GST structure was another important issue that has to be addressed, the Chamber said.
The manufacturing states feel that their interests have been jeopardised under the GST, which is a destination based tax, the IACC noted.
It is important to evolve pragmatic schemes that should address the genuine concerns of manufacturing states in order to shore up their faith in the dispensation, it said.
Small businesses in the manufacturing sector would not have it easy in the GST regime.
Under the excise laws, only manufacturing business with a turnover exceeding Rs 1.50 crore had to pay excise duty.
Under the GST, the turnover limit has been reduced to Rs 20 lakh, increasing the tax burden for many manufacturing Small and Medium Enterprises (SMEs).
Many of the SMEs would find compliance tough and even if they comply with the GST norms, it would be at an additional cost.
Most businesses use accounting software or ERPs for filing tax returns, which have excise, VAT and service tax already incorporated in them.
"The transition to GST will require businesses to change their ERPs either by upgrading the software or by purchasing new GST-compliant software. This will lead to increased costs of buying new software and training employees on how to use it," Sarkar said.
Another anomaly in the GST structure is in the form of taxing branding packaged edible items if the brand name is registered under the Trade Marks Act. If it is not registered under the act, tax is not levied.
Introduction of the GST is seemingly affecting the textile industry at least in the short run.
It is expected that the tax rate under the GST would be higher than the earlier tax rate for the textile industry. Natural fibres (cotton, wool) which were exempted from tax, would be taxed under the GST.
A significant portion of the textile industry is in the unorganised sector or composition scheme. This creates a gap in the flow of input tax credit since tax credit is not allowed if the registered taxpayers procure the inputs from the unorganised sector.
Also, Composition scheme (turnover up to Rs 75 lakh) for traders, manufacturers and hotels may be done away with since this scheme militates against the GST principle of getting input credit across the supply chain.
In any case, this scheme does not appear to have too many takers, the IACC said.
On the export front, it is important to align two main export promotion schemes in India -- the Merchandise Exports from India Scheme (MEIS) and the Services Exports from India Scheme (SEIS) with the GST.
Under these schemes, exporters with a certain amount of turnover are provided with duty credit scrips.
These scrips allow for the exemption of duties paid on the import of raw materials.
Under the duty drawback scheme, the exporters are provided with a refund of the customs and excise duties paid on the imported inputs.
The GST legislation has a provision on a duty drawback for these inputs. This implies a refund of the taxes paid on both imported as well as domestic inputs.
The duty drawback scheme helps those exporters who produce goods that are not being taxed but still have to pay taxes on the inputs used in their manufacture.
Due to a higher rate of tax under the GST, exporters might face a cash crunch due to the blockage of working capital.
"In order to address this issue, the Finance Ministry should evolve schemes to fast track process of refund within a stipulated time of say five days," Subramanyan said.
"There are some reports that GST at the rate of 18 per cent will be levied on annual subscription/ fee charged for lodging in hostels. This is not true. There is no change in tax liability relating to education and related services in the GST era, except reduction in tax rate on certain items of education," the ministry clarified in a statement.
"It may be mentioned that services provided by an educational institution to students, faculty and staff are fully exempt," it said.
Services of lodging/ boarding in hostels provided by such educational institutions which are providing pre-school education and education up to higher secondary school or equivalent or education leading to a qualification recognised by law, are fully exempt from the GST.
"Annual subscription/ fees charged as lodging/ boarding charges by such educational institutions from its students for hostel accommodation shall not attract GST," the statement noted.
"GST is the most significant indirect tax reform introduced in the country since Independence," Confederation of Indian Industry (CII) Director General Chandrajit Banerjee said in a statement here. The GST will replace the existing myriad central and state levies on goods and services.
"GST has been finalised after a collaborative and consultative approach and we look forward to its introduction," he added.
The agenda of the GST Council meeting here currently underway includes discussion on postponing the requirement for filing returns under the GST as the IT infrastructure required for it is not yet ready.
CII said it is organising over 100 workshops across the country to enable enterprises to comply with the new regulations. The workshops are expected to reach out to around 5,000 enterprises. A helpline has been established where participants can request for clarifications, it said.
An awareness campaign has also been launched to inform industry about the processes related to GST, the statement added.
"All the rules are yet to be notified. Only after the rules are finalised can the IT systems from Goods and Services Tax Network (GSTN) be ready. The GST Suvidha Providers (GSPs) would be ready only after that," Tejas Goenka, Executive Director at Tally Solutions told IANS.
GSPs are expected to help large businesses with complex internal processes to comply with the GST regime. A meeting was held between GSTN officals and suvidha providers on Friday.
Neeraj Hutheesingh, Founder and Director, Cygnet Infotech said that with the roll-out date closing in, "the worst fears of the market are coming true -- lack of IT preparedness. July 1 fails to appeal as a feasible deadline."
All the GSPs shortlisted and licensed by GSTN, he explained, were dependent on the application progam interfaces (APIs) furnished by GSTN network. In all, 34 GSPs have been selected.
GSPs will use the APIs for accounting software, enterprise resource planning (ERP) software, filing software and billing software that will help businesses comply with the new indirect tax regime.
Analyst Pritam Mahure said that the roll-out date of July 1 is not an issue but the problem is that things were undecided even with 20 days remaining. It was hampering testing needs of the Suvidha Providers.
"Significant testing needs to be carried out by the ecosystem. However, GSTN sandbox release does not appear to be geared up for the same. It's a catch-22 situation. The problem is that everything is still in a fluid sate -- the tax rates, Rules," Mahure told IANS. A sandbox is a virtual space where new software can be tested securely.
"The primary focus is to handle the forms for which the APIs are avaible from GSTN. For the remainder forms, the entire flow is being finalised so that once the APIs for the same are available, we can be ready to offer the (service) to clients," Saket Agarwal, Global CEO, Spice Digital said.
Vinod Tambi, COO, Excellon Software, said: "Many of the aspects of GST such as rates, exemptions, have only been announced a few days back while we are still awaiting some other inputs. Hence July 1 does look like an uphill task."
GSTN has said that the API specifications will be released in staggered manner for all the GSPs so that they can study and analyse the same for making changes in their software developed on old design of returns.
Subsequent to publishing of the specifications, GSTN will also make available live APIs on the sandbox for testing of the codes that the GSPs will modify/develop. The live API will be made available only by June 29.
But the government has maintained a strict stance that July 1 deadline won't be deferred.
With a view to assessing preparedness in various areas of GST, a joint presentation by officials from the Centre and state tax administration was held in the national capital on June 4.
"In all interactions with trade industry and public, it should be clearly indicated by officers at all levels that the target date of implementation is July 1 only and the implementation of this big reform will not be deferred beyond this date," according to the minutes of the meeting accessed by IANS.
"All officers should keep a check on adverse publicity or criticism of GST and should counteract it promptly," it was noted at the meeting.
West Bengal Finance Minister Amit Mitra, has also been voicing serious doubts about the IT readiness by July 1.
"Entire GST will depend on one IT system of GSTN. The presentation given by them clearly shows that they are not ready and need more time. They have appointed 34 Suvidha providers for the whole country...will that be sufficient?" Mitra had wondered.
"Gold, which currently has an excise of 1 per cent and states charge around 1 per cent VAT...keeping these various taxes in mind, and after a lot of debate in the GST Council, we have finally reached a consensus on 3 per cent for gold and gold jewellery," Finance Minister Arun Jaitley, who heads the GST Council, told reporters here after the 15th meeting of the Council.
Besides, rough diamonds have been levied a nominal tax of 0.25 per cent in order "to keep the audit trail" of transactions, he said.
While beedi leaf, or "tendu" will be taxed at 18 per cent, beedis will be levied tax at 28 per cent.
"Beedi and beedi leaf will not attract cess over and above these taxes, but cigarettes will have cess," Jaitley said.
Footwear costing below Rs 500 will be taxed at 5 per cent, while those costing more will attract 18 per cent tax.
Regarding items of use by the common man, the minister said that even manufactured apparel costing less than Rs 1,000 would be taxed at 5 per cent
Revealing that textiles was a major topic of discussion at the meeting as it is a mass consumption item, he said that while cotton and all other natural fibres are in the 5 per cent bracket, "man-made" fibre will attract a levy of 18 per cent.
All yarn will be taxed at 5 per cent, subject to man-made fibres being charged at 18 per cent.
"Fabric of all categories will have 5 per cent tax, while for 'made-up apparel' it will be 12 per cent," Jaitley said.
"Packaged food items sold under registered trade marks, which are sold at a much higher price (than food) would carry a rate of 5 per cent," he added.
The Finance Minister also said that biscuits, both of the cheaper and more expensive varieties, would be taxed at 18 per cent.
The GST Council had convened here for its 15th meeting to finalise the rate fitment of the remaining six items, including gold.
The fitment of 1,211 items was decided at the Council's previous meeting held last month in Srinagar.
Earlier this week, West Bengal Finance Minister Amit Mitra had voiced serious doubts about the preparedness of the industry for GST by July 1.
Jaitley also said that in view of the many representations received on the fitments, the committee of officials would take up these cases.
These, as well as other pending matters, would be discussed at the next meeting of the GST Council that has been scheduled to be held here on June 11, he added.
The GST Network (GSTN) made a detailed presentation at Saturday's meeting on their IT preparedness for implementation from July 1.
"Members questioned the GSTN extensively on their level of preparations and the GSTN expressed confidence it is fully ready for the work assigned to it," Jaitley said.
Speaking to reporters here after the meeting, West Bengal Finance Minister Amit Mitra continued to be doubtful about the GSTN's readiness.
"Entire GST will depend on one IT system of GSTN. The presentation given by them clearly shows that they are not ready and need more time. They have appointed 34 Suvidha providers for the whole country, will that be sufficient," he said.
"We are not opposing GST. We support it. But the July 1 deadline should be extended. There should be more meetings, discussions," he added.
Queried about Mitra's position at the meeting on the July 1 rollout, Jaitley said that "the others did not share that view."