GST: Govt in a fix over HUL’s Rs 1.19 bn offer under anti-profiteering rule

The central government has been taken aback by consumer goods major Hindustan Unilever’s (HUL) offer of Rs 1.19 billion in two tranches for not having passed on goods and services tax (GST) cut benefits to customers.
HUL is actually in the process of offering another tranche as well but is still awaiting instructions on how to deposit the allegedly profiteered sum in the consumer welfare fund.

According to officials, the current guidelines allow the government to accept penalties in the said fund after an investigation by Directorate General of Safeguards (DGS) and then an order from the anti-profiteering authority. However, HUL waited for neither; it did the calculation on its own and, in effect, told the government it was penalising itself.
“What do we do in case of suo motu action?” asked a government officer. What the DGS has done is to officially launch an investigation. Which has asked HUL to give it the details of the method used to calculate the amount. Thereafter, the anti-profiteering authority will apparently have to issue an order to accept the payment as read more


Be ready to pay more at restaurants as dining out could become costlier

One of the things that might get dearer as a direct impact of the Union Budget 2018 is dining out. Finance Minister Arun Jaitley hiked the customs duty on imported foodstuff and important ingredients to promote the Narendra Modi government’s Make in India pitch.

The Economic Times quoted disgruntled restauranteurs as saying that the hike will increase costs on the menu by up to 5 per cent as they won’t be able to absorb the double whammy of customs hike and GST. They also said the quality of food is bound to suffer as a big portion of ingredients is imported.

Unending problems-The restaurant sector has been dealing with various uncertainties since the last one year. This measure comes after the GST on restaurants was slashed to 5% from 18% earlier and scrapping of input tax credit under the new regime. As reported earlier, the industry was also hit hard by a ban on alcohol sale near highways last year that might have amounted to losses of Rs 500 billion.

However, the Centre has nixed the restaurants’ argument about input tax credit, saying the impact of input tax credit would not be more than 6% of the base price for large eateries which have franchises, and much lower at 2% for smaller ones.

Budget 2018: A believer of the Bhagwad Gita, Modi likely to shun populism

Have you noticed something in the past few years? Unlike in the past, when everyone used to wonder about what the new Budget will come up with, very few people do so any longer. The reason is that since 1997, the government has held income tax rates stable at 10, 20 and 30 per cent.

There has been some minor tinkering – after all, the tax bureaucracy must justify its existence – but overall, everyone has accepted these as fair rates and the government, aware that the tax base is tiny, has refrained from taxing income of the middle class more. A minor change that …read more

Budget 2018: Reeling under dwindling exports, AEPC seeks several relief

Reeling from a continued fall in export growth and marginal refunds on the goods and services tax (GST), the Apparel Export Promotion Council (AEPC) has written to the government, seeking 12-15 types of relief. They want the duty drawback and the refund of state levies (ROSL) to be restored to pre-GST levels, and also exemptions from the new indirect tax for exporters.
Growth of apparel exports has clocked a negative 39 per cent, 11 per cent and 8 per cent, respectively, in October, November and December last year, according to H K L Magu, chairman, AEPC.
Now, in the run-up to the Union Budget, the export body has sought incentives from the government, to boost exports. It wants the duty drawback on cotton apparels to be restored to pre-GST rates of 7.5 per cent and the ROSL of 3.5 per cent. They also want to be exempted from 18 per cent GST for air freight.
After the GST roll-out last year, the duty drawback fell to 2 per cent; ROSL to 1.5 per cent on cotton apparels, and 2.5 per cent and 1.5 per cent, respectively, on different man-made apparels.
Till September, when the previous rates were applicable, apparel exports grew in read more

GST rate cut: From diamonds to used cars, here’s full list of revised items

Two weeks ahead of Budget 2018, the Goods and Services Tax (GST) Council on Thursday cut rates on 83 employment-oriented goods and services, in a bid to encourage greater compliance as revenues have dipped since the landmark reform was announced in July.

The panel, headed by Finance Minister Arun Jaitley and comprising representatives of all states, at its 25th meeting decided to reduce tax rate on 29 items and 54 categories of services with effect from January 25. Businesses have raised concerns about high rates of taxation and cumbersome processes in GST, billed as India’s biggest tax reform in 70 years.

The goods on which GST will be lowered include biofuel-run buses, used motor vehicles and diamonds and precious stones.
Here’s the complete list:
List of goods on which GST rate recommended for reduction from 28% to 18%
Old and used motor vehicles on the margin of the supplier, subject to the condition that no input tax credit of central excise duty/value added tax or GST paid on such vehicles has read more

GST Council may lower rates for farm gear, electric vehicles next week

The GST Council may take up rationalisation of the goods and services tax (GST) rates for a handful of items at its meeting next week. These items include bio-diesel buses, electric vehicles and irrigation equipment.

The GST Council meeting will be its last one before the presentation of the Union Budget on February 1.

The relatively small list for rate reduction was finalised by the fitment committee earlier this week and may be taken up by the GST Council, which is headed by Finance Minister Arun Jaitley and comprises state finance ministers.

“The items qualifying for rate reduction in the upcoming meeting have been picked with an objective of giving a push to agriculture and clean energy. Other items in the 28 per cent tax slab will not be taken up this time with revenues yet to stabilise,” said an official.

The rate for irrigation equipment may be reduced from 18 per cent to 12 per cent, while that for bio-diesel vehicles and electric vehicles from read more

GST has reduced effective tax payable for all sectors, except power: Study

The goods and services tax (GST), rolled out on July 1, 2017, cut marginal tax rates–the real, effective tax a business pays, technically the difference between the pre-tax and post-tax rate of return on an investment–on businesses in India in all sectors, except electricity, which is exempt from the new tax regime, according to a new study.

The fall in marginal tax rates was in the range of 1-23 percentage points across sectors, according to estimates by Gaurav S. Ghosh, senior manager, EY, a global consultancy, and Jack Mintz, director of the school of public policy at the University of Calgary, Canada.

Marginal tax is the rate businesses end up paying on each new unit of investment after considering the effect of all statutory taxes levied. A higher marginal tax rate means businesses have lower incentives for increasing investment and vice versa, the authors explained.

At 23.2%, the transport sector saw the largest drop in marginal tax rate. At 0.9%, agriculture saw the read more