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?86,912 crore released as GST compensation payable to all States up to May 31, 2022: Finance Minister

Union Finance Minister Nirmala Sitharaman speaks in the Lok Sabha during Budget Session of Parliament, in New Delhi on February 13, 2023.

Union Finance Minister Nirmala Sitharaman speaks in the Lok Sabha during Budget Session of Parliament, in New Delhi on February 13, 2023. | Photo Credit: PTI

Finance Minister Nirmala Sitharaman on Monday said that a total of ?86,912 crore had been released towards Goods and Services Tax (GST) compensation payable to all States up to May 31, 2022, but it had been delayed for some States due to the non-availability of the Accountant General’s (AG) authenticated certificate.

Ms. Sitharaman was replying to a question by Dravida Munnetra Kazhagam (DMK) leader A. Raja during Question Hour in the Lok Sabha over whether it was possible to release the GST compensation amount “in anticipation” of the AG’s report as some States were facing financial distress.

“So, if it is possible, let it be released in anticipation of the AG report. And thereafter, we can reconsider the AG report with figures. These are my suggestions,” Mr. Raja said.

The Finance Minister replied that as per law, it was the GST Council that decided to whom the compensation was released, and not the Central government.

“AG’s certification is [mandatory] by law between the Centre, States and the AG, and it’s an agreed process. So, unless the authentication is given by the AG…,” Ms. Sitharaman remarked.

Also read: Just half a month worth of GST compensation is pending to States for final month of GST compensation regime: FM

She said that if there was any delay in securing the AG’s authentication, it was a matter between the AG and the State government concerned, and they had to sort it out. “If between them there is a problem, the authentication certificate gets delayed in reaching the Central government,” the Finance Minister said.

She said that as far as Tamil Nadu was concerned, the AG’s certificate had been received for 2017-18 and the amount had been released.

Ms. Sithraman added that the AG’s certified figure of about ?4,223 crore for 2020-21 for Tamil Nadu, even though there were some disputes, had been processed and it would be cleared.

Replying to a supplementary question by Kerala MP N.K. Premachandran, the Finance Minister pointed out that Kerala had not sent the AG’s certificate for GST compensation for 2017-18, 2018-19, 2019-20 and 2020-21.

“You have not sent [the AG certificate] even for one year and you keep blaming us that we are not giving you money on time. On the contrary, in the matter of tax devolution, as per the Finance Commission’s report, two installments instead of one have gone to all States. Kerala has also benefited from that,” Ms. Sitharaman said.

“The State governments have to, pardon me using the word, be efficient to sort out things with the AG. But without AG certificate, beyond certain limits, it is very difficult for me to go,” she said.

Overall, all States up to May 2022 for which payment is sent out in early June, every amount available in the public fund, had been cleared, she said. “The total amount given is ?86,912 crore that was released by May 31, 2022,” Ms. Sitharaman said.

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Kerala Government Tables Budget 2023: Key Highlights

On February 3, 2023, K N Balagopal, Finance minister, State of Kerala delivered the budget speech. As the Union Budget 2023 already featured a significant break, the following are the Key Highlights of the Kerala Budget 2023:

Budget Highlights

  1.  ‘Make in Kerala’ – 100 Cr to support Agritech startups

  2.  Energy Park – Set up an industrial park manufacturing EV battery and allied equipment

  3.  Electric Vehicle Consortium – set up EV drive testing lab

  4.  Constitute Fisheries Innovation Council

  5.  Form Medical Tech Innovation Park and Kerala Medical Technology Consortium (KMTC)

  6.  Proposes to set up new online examination centres under Kerala Public   service Commission

  7.  Implement E-governance scheme in courts

  8.  Loan scheme through KFC for ex-servicemen to start MSME units

  9.  7 changes to be brought on mining sector under non tax category

  10.  Property Tax revision to be conducted

  11.  5% increase on Electricity Duty for commercial and industrial units

  12.  One – time tax of 2% on newly purchased motorcycles up to 2 Lakhs

  13.  One time tax on newly purchased Motor cars and Private Service Vehicle for personal use

  14.  5% reduction in one time tax on Electric motor cabs and electric tourist motor cabs

  15.  Up to 10% reduction on contract carriage/stage carriage vehicle operators

  16.  Increases One time Cess on newly registered motor vehicles

  17.  Private Service Vehicles and Special school bus tax at par with Educational Institution Buses owned by Govt.

  18.  Ceiling of Rs. 20,000 for filing appeals under the KVAT, KGST, and Luxuries Tax Acts

  19.   Necessary amendments on KVAT on appeal pre-deposits

  20.   Stamp duty increases from 5% to 7% on flats/apartments

  21.   Social Security Cess on IMFL and petrol and diesel

News Details HC:Offences U/S 276CC Against Assesses as Company’s ITR Filed But Not Individual Towards the willful failure to file the ITR, during maintaining the conviction for an offence under Section 276CC of the Income Tax Act, 1961, a Mumbai court would state that a presumption of the culpable mental state from the taxpayer’s admission could have emerged who files the ITR of the company of which he would be the director unable to furnish his individual ITR. The Court of Additional Sessions Judge, Dr A. A. Joglekar stated that the presence of men’s rea can be presumed and the same could be accused to prove the opposite while prosecuting the offence under Section 276CC of the Income Tax. For the punishment Section 276CC of the Income Tax Act furnishes for the cases in which an individual willfully fails to file ITR within the stipulated time, which he would be needed to file under Section 139 (1) or in pursuance of the notice issued under Section 153A. A notice under Section 153A of the Income Tax Act for furnishing the ITR for the pertinent accounting year within 30 days from the receipt of the notice is been issued to the taxpayer, Hema Chetan Shah. A show cause notice was served on the accused post the person losses to furnish the return in the specified duration asking to execute the prosecution under Section 276CC of the Income Tax Act. Towards the said show cause notice, an offence under Section 276CC read with Section 278E of the Income Tax Act was enrolled against him and prosecution for wilful failure to furnish an ITR was formed, as the accused, Hema Chetan Shah was lost to file the reply. Through the court of additional Chief Metropolitan Magistrate, the accused was convicted of the offence, which renders him to give the fine. Before the Additional sessions Judge, through filing a plea the accused challenged the order. The appellant before the sessions court stated he was prevented from furnishing the ITR as the pertinent files or papers were in the Income Tax Departments’ custody after the conduct of an investigation against the firm where the accused stood as a director. He contented, during furnishing the ITR no wilful default was done through the accused and hence there is no criminal liability that can be imposed on him. As per the case, the revenue heads would have provided a letter to the accused, the court considered that even the section 153A notice and the show cause notice asking to execute the prosecution being served on the accused under the Income tax act, providing the copies of the seized documents or statements would not be the precondition for the subject of the compliance of section 153A notice. The court sees “Furthermore, the complainant agency as on 15.09.2016 again corresponded by letter (Exh.43) thereby providing such last and final opportunity to the accused to collect such photocopies of the seized documents by 23.09.2016,” A chance is being provided to the accused for collecting the pertinent documents in xerox form via the income tax heads the court articulated “Therefore, in this regard, undoubtedly the factum of wilful default is well propelled and the complainant agency has succeeded in proving their case beyond a reasonable doubt.” The accused lost to follow the notice despite the correspondence and affording the chance to accumulate the pertinent copies, it added. The accused had acknowledged, in his capacity as the director of M/s. Decent Dia Jewels Pvt. Ltd., he had complied with furnishing the income tax return as observed by the sessions court in his cross-examination. The accused losses to follow the obligation for filing his ITR, the court stated that “This particular admission will naturally have a bearing upon the case wherein the accused on one hand has filed such returns pertaining to the company of which he is the director while has failed to comply with filing of such material Income Tax Returns, wherein the presumption as to the culpable mental state can be well derived and therefore, it can be clearly inferred that, the accused has committed, violated and transgressed the provision under Section 276CC read with Section 278E of the Income Tax Act.” “The accused undoubtedly failed to comply with the notice under Section 153A and therefore, is an offender under Section 276CC also that in a prosecution of offence as in the instant case, it can be well presumed the existence of Men’s rea and it is for the accused to prove the contrary.” concluded by the Judge. The appeal has been dismissed by the court while maintaining the Trial court’s order.

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Fake ITC GST Claim: Delhi HC Grants Bail on Personal Bond

The Delhi High Court (HC) chaired by Justice Amit Sharma  granted bail to the petitioner who claimed fake Input Tax Credit (ITC) under Goods and Services Tax (GST) on personal bond of Rs. 1,00,000  along with two sureties.

The Present application filed before the court  under Section 439 of the Code of Criminal Procedure, 1973 (‘CrPC’) seeks grant of regular bail in case charged Section 132 of the Central Goods and Services Tax Act, 2017 (‘CGST Act’).

The allegations against the applicant/ petitioner M/s Saraswati Enterprises, put forward by the respondents was related to unauthorised and fraudulent claim of input tax credit in respect of Goods and Services Tax (‘GST’).

The Section 132 of the CGST Act, 2017,  deals with punishment for offences like evasion and wrongful availing of input tax credit. The maximum punishment is 5 years imprisonment with fine.

According to section 132(5), the offences mentioned under clauses (a) or clause (b) or clause (c) or clause (d) of section 132(1) are cognizable and non-bailable.

It is submitted by the counsel of the applicant/ petitioner that the investigation is complete and further custody of the applicant is not required for any purpose. It is further submitted that the evidence brought on record by way of the aforesaid chargesheets is documentary in nature. Further, the co-accused also got bail.

Conversely,  the APP for the state submitted that the order granting bail to the co-accused Pulkit is distinguishable on the ground that the email on the basis of which fake GST account was registered belonged to the present applicant.

The count observed that as per the status report, there are no prior criminal antecedents of the present applicant and no useful purpose will be served by keeping the applicant in judicial custody any further.

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Karnataka collected record GST of Rs 6,085 cr in January: CM Bommai

Karnataka made a record Goods and Service Tax collection of Rs 6,085 crore in January this year, Chief Minister Basavaraj Bommai said on Saturday. In a set of tweets, the Chief Minister also gave credit to the reforms, vigilance and better compliance by taxpayers which made it possible.

"A record collection of 6,085 crore has been made under GST this month. Karnataka continues to be state with the highest growth rate of 30% in the GST tax collection," Bommai tweeted.

"This year`s remarkable mop up is due to measures undertaken for reforms, focused vigilance, recovery in economy and better compliance by taxpayers. This augmentation to revenue will allow the government to present a better budget this year," he added.

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Indias GST Council will decide on cement tax rate after expert study
India`s Goods and Services Tax (GST) Council will decide whether to cut tax rates on cement after an expert team submits its recommendation, the chairperson of the Central Board of Indirect Taxes and Customs said on Friday.

The fitment committee, which looks at the impact of rate changes, will meet to discuss and finalise its report on the lowering of a 28 per cent GST rate on cement and submit it to the council, the chair, Vivek Johri, said.

Also Read | Monthly GST revenue at Rs 1.50 lakh cr to be new normal next fiscal: CBIC chief

The GST Council, which is the final authority on such matters and is chaired by Finance Minister Nirmala Sitharaman, will meet on the 18th of February.

Johri said the agenda of the February 18 meeting is yet to be finalised.

"The finance minister has said the 28 per cent GST on cement needs to be discussed," Johri told reporters in New Delhi.

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Expiry of E-Way Bill during Transportation due to Breakdown of Vehicle: Calcutta HC Upholds Proceedings

The single bench of the Calcutta high court in a writ petition filed before upholds the proceedings on expiry of E-Way bill during transportation due to breakdown of vehicle.

The petitioner Ashok and Sons is the manufacturer/supplier of milestone Bitumen Emulsion and Allied products. He is a Registered Taxable Person duly registered under the GST Act with specific GSTIN number.

For the purpose of transporting the said goods the petitioner paid IGST at the rate of 18%. On payment of IGST E-Way bill was generated for transportation of the said goods from Begusarai to Guwahati.

 In the course of transportation the good carriage suffered from breakdown and it was detained in a motor vehicle garage within the jurisdiction of Jalpaiguri. The vehicle was intercepted by the State Tax Officer and on inspection it was found that the E-Way bill in respect of the consignment had expired. Subsequently, the Assistant Commissioner, Bureau of Investigation Headquarter imposed SGST and penalty In order to release the vehicle the petitioner had to pay tax and the vehicle, but preferred an appeal before the appellate authority. But the appeal was dismissed. Against this order petitioner filed the writ petition before the High court of Gujarat.

On behalf of the petitioner Advocates Jagriti Mishra, Subham Gupta, Debayan Goswami, Reshab Kumar, appeared.

Advocates Subir Kumar Saha, and  Bikramaditya Ghosh, appeared for the respondents .

Counsel for the petitioner submits that the petitioner has no intention to evade tax. Petitioner already paid IGST at the rate of 18% on the value of the goods and procured E-Way bill. However, it was not within the control of the petitioner that there would be a mechanical defect of the said truck.

Counsel for the respondent submits that if a vehicle with certain consignment is found in statutory condition for this together it is supposed under the GST Act that the said goods are presumed to be delivered within the territory of the state itself. Petitioner’s consignment was found lying within the territory of the state for more than three days. The E-Way bill had expired. The petitioner had the opportunity to extend the validity of the E-Way bill when the goods vehicle allegedly had mechanical defects.

Further respondent counsel contended that the petitioner did not take any step for extension of E-Way bill. When the E-Way bill has not been extended it would be presumed that the consignment was sent to the State when the breakdown happened.

After considering the contentions of the both parties the single bench of the Justice Bibek Chaudhuri  held that  the “respondent authority is lawfully permitted to impose penalty under Section 129 as well as the State Goods and Service Tax Act 2017 as the goods were found to be detained in the territory of the State”.

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No Chance to File Updated ITR If Search Proceedings Ongoing by Dept

The people who have undergone the investigation through the income tax department in the former year shall not able to furnish the updated tax returns.

Before that, the individuals or businesses who have gone with the investigation in the related fiscal year and the former year cannot furnish the updated tax return, as proposed.

Quoting the former circular on November 3 for the updated tax return (under Section 139 8(a), the Central Board of Direct Taxes (CBDT) on February 6 clarified, “In the said circular, in sub-point (iii) of the point (1) of sub-paragraph… the words ‘two assessment years preceding such assessment year’ shall be read as ‘any assessment year preceding such assessment year’.”

So as to set off the losses made against the income or to avail for more refunds, updated returns could not get filed. Merely if the return selected is other than the scrutiny then only the option of the updated return could be taken.

What is an Updated Income Tax Return?

An updated income tax return is a revised or corrected version of a previously filed tax return. It may be updated if there are errors in the original return or if new information becomes available that affects the taxpayer’s tax liability. For example, if a taxpayer receives additional income after filing their tax return, they may need to file an updated income tax return form to reflect that additional income and potentially pay any additional taxes owed.

In general, taxpayers are required to file an updated return within three years from the date the original return was filed or within two years from the date the taxes were paid, whichever is later. However, it is always a good idea to check with the relevant tax authority in your jurisdiction for specific rules and regulations.

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COSIA: Govt to Resolve GST Issue Over Land Lease Transactions


The problem of GST on the leased land affecting the Ministry of Micro, Small & Medium Enterprises across India, it is been requested by the Chamber of Small Industries Association (COSIA) to the government to think again about the same issue.


President of COSIA Sandeep Parekh stated that the GST department has laid the industry into fear by sending a summons and has begun an investigation into the concern that how many transfers of leased lands have been initiated in the Maharashtra Industrial Development Corporation area since July 2017.


Post five years the council resembles taking a stand beneath the provision of supply of service on the transfer of leased land from one client to another other and therefore 18% would get imposed on the transactions, but there is an exemption of MIDC. it will alert MSMEs who had already sold their plots since July 2017 and indeed for the subsequent transactions, if the same would arrive in real.

Within the FM Sitharaman and the GST council, this case is been concerned by the COSIA, a pan-India MSME apex body. For raising the issue with the GST council it has been appealed to the Maharashtra deputy CM Fadnavis, who is also a state finance minister.


Under GST, an exemption is there on the initial lease of land from MIDC to the industry. But for the subsequent assignment of leasehold rights, there is no certain exemption given. It is a larger amount and the MSME registration proceeds to get under stress.


It is the problem that is faced all over India and currently, in the state of Maharashtra alone there are thousands of units that do not pay the GST on the work of the leasehold rights of the land which is opted on lease from MIDC under the “assignment of leasehold rights in the land” is similar to the “sale of land” and these transactions that comes under Schedule III of the CGST on which GST Act does not levy.


Under the land sale, all secure the stamp duty and indeed filed the income tax on the short-term and long-term gains acknowledging as deemed ownership and the premium would be paid to the MIDC in concern of transferring the lease.


Various MSME has faced bigger losses in the covid duration and indeed there are certain firms who forced to shut their operations and sell their plots in order to pay their liabilities.


The associations from all across India beneath a single platform have been drawn by the COSIA and before the respective state and central government, they are taking their cases.


We have written to all the concerned departments and requested to amend/clarify the GST rule for the long-term lease with retrospective effect and give relief to the thousands of MSMEs from all over India by considering it in schedule III,

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Attaching/Detaching Bank Accounts: GST Dept Highlights SOP Guidelines

For the Attachment or Detachment of the Bank account, Standard Operating Procedure (SOP) would have been issued by the Delhi Goods and Services Tax (GST) department.

So as to recover the outstanding amounts, the banks are attached or detached from vendors or dealers. Dealers will receive the notices against the recovery under tax compliance with the DVAT/GST Act and Rules made thereunder earliest to the time it arrived under the track of the Ward/Proper Officer.

The bank accounts of the dealer may be subject to being frozen by the Ward/Proper Officers in charge of collecting taxes, penalties, interest, and any other outstanding debts. This is in accordance with Section 46 of the Delhi Value Added Tax Act (DVAT) and the provisions outlined in Sections 78 & 79 of the Delhi Goods and Services Tax Act, 2017.

Respectively Sections 83 and 46A of the DGST Act, 2017, deliver for temporary attachment for preserving the revenue in some cases.

An SOP under the GST consists of the guidelines for manually providing letters to the managers of the bank for the purpose of Attachment or detachment of the particular bank account and was introduced on 4th March 2022, as per the above-specified rules.

Steps to Attach or Detach Bank Account

Mentioned below is the process that is to comply with the attachment/detachment of the bank account as per the notification-

  • Commissioner Approval, Trade & Taxes are compulsory prior to the attachment/detachment of the particular bank account of erring dealers.

  • The mentioned letter would get digitally signed through the related Ward Officer/Proper Officer during the issuance of the letter to the Bank Manager with the intent of attaching/detachment the particular Bank account of the dealers. Within the nodal officer, a copy of the letter must be provided.

  • Within the given format the letter should have the name, email, and mobile no of the ward in charge or the proper officer who used to send the mentioned letter.

  • An email through the official email IDs to the particular Bank manager of the respective bank must be given by the Ward In-charge/Proper Officer.

  • In the letter of detachment, It is to be specified by the ward officer that if the case is that any clarification/confirmation is required by the bank prior to detaching the particular bank account then the nodal officer could sort it.

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ICAI: A Compilation for GST Advance Rulings & Judicial Outlook

A compilation of effective Judicial and Advance Rulings on Goods and Service Tax (GST ), has been posted by the Institute of Chartered Accountants of India (ICAI). 

“Significant Judicial and Advance Rulings in GST: A Compilation” is the name of the publication that assists the readers in knowing the scenario of judicial for different GST provisions and the well-known problems in the GST law. So as to provide an in-depth overview of the cases the judicial and advance rulings have been concerned in a straightforward way in the publication. 

Landmark rulings of only the Supreme Court and High Courts as the GST Appellate Tribunal are the summaries that are contained in the publication. 

For furnishing the required assistance to the members and refining their talent through the courses, programs and conferences, live webcasts, e-learning, and others, the GST & Indirect Taxes Committee of ICAI would have been proactive with the time. On different concerns of GST, the same would have drawn valuable technical publications. 

The initiative and contribution drawing the publication is been made by CA. Rajendra Kumar P, Chairman, CA. Umesh Sharma, Vice Chairman, and other members of GST & Indirect Taxes Committee.

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HC: Tax Credit Cant Be Refused on the Basis of GSTR 3B & 2A Mismatch When GSTR 2A Not Operational

The supply of machinery, mechanical appliances, parts, etc including the erection, commissioning, and installation is being supplied by the applicant. The GST returns in Form GSTR 3B for the FY 2017-18 (for short, “the FY”) would have been submitted by the applicant. Asking for the books of accounts for conducting the desk audit and rendering the attendance of the applicant, the first respondent has provided the notice to the applicant, dated 20th January 2021.

An answer is been furnished by the applicant to the observations incurred in the inquiry of the audit. The applicant who has filed his return observed that there has an accidental error and mistakes were placed during the filing of his returns for the fiscal year 2017-18. Input Tax Credit (for short “ITC”) has been claimed for the imports under Integrated Goods and Services Tax, (for short “IGST’) in July 2017 and March 2018 because of oversight and inadvertence in Column No. 4A(5) rather than claiming the same under Column No. 4A(1), the petitioner observed. The mistake did through the applicant understand that it accidentally acknowledged the import IGST related to July 2017 as local IGST and import IGST referred to March 2018 as local CGST and SGST. ITC which had accrued to the applicant was responsible to get disallowed as witnessed by the first respondent DCCT in its audit because of the error in inserting the numbers in the incorrect column which gives the outcome of the mismatch between the GSTR-3B and GSTR-2A forms.

Applicants Opinion

  • Other than repeating diverse contentions requested by the applicant pertaining to the material on record, for the applicant, a senior counsel furnished that while filing the returns errors emerged during the developing phases of the GST regime, that were made applicable from the date 1/07/2017 and in the indirect tax regime there was a quantum revision that needs filing of returns to revamp including a diverse format, as per that smaller and inadvertent glitches like those done via applicant were bonafide at all and in that case, a moderate view would be certified, at the same phase especially since the revamp of errors does not yield any revenue loss nor shall there be any cascading effect which shall make the GST scheme unsettled.

  • The said senior counsel furnished that till the govt functioned the legal return beneath Form GSTR 2, 2A, and 3 as mentioned under the GST act for the Fiscal year 2017-18 filing of the returns via forms GSTR-3B was merely the stop-gap measure as specified beneath the GST act and that the auto-fill facility/auto-setter process that auto-populates details into Form GSTR 3B and GSTR 2B were merely available from the date 4/9/2020 and before that the dealers would need to insert the payable GST in a manual way in the GST portal that contains the technical and electronic issues.

  • He added, on the ICE-GATE portal which has been maintained through the customs department, Government of India, the information of the IGST concerned with the imports would be readily available and that the officers directed to that in the lack of GSTR 2-A towards all the months excluding July 2017 and March 2018 that is the months of commitment of errors. The revenue would need to consider beyond the returns furnished during adjudicating on the liability of the applicant and acknowledge the more holistic view witnessing to the books of accounts apart from the legal forms like ICE-GATE and others. He stated the same shall be transparently evident that the applicant would have gone within the bona fide error if the officers were to perform that moreover the same shall be qualified to claim the disputed ITC amount.

Department Opinion for the Case

While at present the applicant could not, at this belated stage, be allowed to correct the glitches that it has incurred in view of Section 39(9) of the CGST / KGST Act, stated by the AGA for the respondents beyond repeating diverse contentions requested in the statement of objections. He indeed trusts the current ruling of the Hon’ble Supreme Court in the case of Union of India v. Bharti Airtel Ltd.,& others – (2021) 13 SCALE 301, the taxpayer’s petition was denied by the Supreme court and there to amend its returns above the statutory duration specified under Section 39(9) of the Act. He argued to revise its returns there is no process that exists to facilitate the applicant to revise its returns in this belated phase, the appeal is accountable to get dismissed.

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Govt Officials: GST Tax Rates Won’t be Merged in 2023-24

A top official stated on Monday that India would not change its Goods and Services Tax (GST) regime in the upcoming fiscal year, delaying a move that has been considered for more than a year to streamline its tax system and lessen the burden on consumers.

The GST, which was adopted in 2017 and unifies a number of state taxes, now has five tax rates across the nation. They vary from 0% and 28%.

The government discussed reforming the tax in 2021 by combining two GST tax rates and reducing the burden on a variety of goods. The five-year-old system has drawn criticism for having too many tiers.

Sanjay Malhotra a revenue secretary told that “Right now, we are just looking to maintain stability (in tax rates), a stable tax regime. Minor changes will always be there. major taxation change like a merger of tax rates, we are not contemplating in 2023/24,”

Malhotra stated that the government would eventually like to have fewer tax categories but did not provide a date.

We would want fewer tax rates, fewer disputes…that is certainly the goal to have fewer rates… and there may be scope to reduce tax slabs… that may be done in some point in time, but not now,

By having fewer rates, the Indian government hopes to streamline its taxes system for custom duty, which falls outside the GST framework.

Malhotra added that “Going forward, we would like to have fewer customs tax rates as well,”

Finance Minister Nirmala Sitharaman, who addressed the 2023/24 budget the previous week, projected a 12% increase in net GST collection for the federal government. For 2022/23, the government is projecting to collect 8.54 trillion Indian rupees ($103.20 billion).

A windfall tax on petrol, turbine fuel, and diesel that went into effect in July 2022 is another way the government hopes to raise 250 billion rupees.

Investors won’t be negatively impacted by the government’s decision to eliminate the 5% concessional tax rate for foreign portfolio investors (FPIs) on the interest income from debt instruments, according to Malhotra.

According to him, India has negotiated tax treaties with the majority of nations, requiring FPIs to pay a 10% tax on interest received on corporate and foreign currency bonds as opposed to the previous 5% tax.

He articulated that “Giving a lower tax rate will not help many of the funds because they would be required to pay taxes in their own countries. And to the extent of taxes, they pay in India, they get a higher setoff in their country,”

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Furnace Industry Urges to Reduce GST on Scrap 5% from 18%

Punjab’s furnace industry has petitioned the state and federal finance ministers to reduce the GST on scrap from 18% to 5%. Businessmen assert that this would halt the harassment of legitimate businessmen and put a complete end to the fraudulent invoicing and tax evasion of several thousand crores that are being carried out by fraudsters.

Dev Gupta, general secretary of the Induction Furnace Association of North India, commented on the matter, saying: Real businessmen, especially those involved in the furnace business, are having restless nights due to the challenges being generated by false billing. Scrap is a valuable commodity for con artists to operate a bogus invoicing scheme and defraud the exchequer due to the high GST rate of 18%.

Even if they do not engage in tax avoidance, many honest businessmen become caught in this vicious cycle. In order to safeguard our sector, we thus implore the finance ministers of the federal and state governments to cut the GST on scrap from 18% to 5%.

We have asked the ministers to debate this matter in open session at the forthcoming GST Council meeting on February 18, Gupta continued. We are convinced that everyone would agree to lower the GST rate on junk since doing so will actually raise government income by putting a stop to false billing.

The reduction of the GST on scrap to 5%, in the words of Vaishno Gupta, president of the Furnace and Allied Industries Association, would be nothing short of a surgical blow to the fraudulent invoicing and tax evasion malpractices in the country.

Criminals hijack GST worth thousands of crores of rupees each year through false billing; however, if the tax rate is lowered to the lowest slab, they will no longer be able to do so. We implore the GST council to take note of this problem and swiftly lower the GST on scrap to 5%.

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Loan EMIs May Go Up As RBI Announces Sixth Straight Lending Rate Hike

The Reserve Bank of India hiked its key repo rate by 25 basis points on Wednesday as expected but surprised markets by leaving the door open to more tightening, saying core inflation remained high.

The central bank said that its policy stance remains focused on the withdrawal of accommodation.

Most analysts had expected a hike on Wednesday to be the final increase in the RBI`s current tightening cycle, which has seen it raise rates by 250 bps since May last year.

The monetary policy committee (MPC), comprising three members from the central bank and three external members, raised the key lending rate or the repo rate to 6.50% in a split decision.

Four of the six members voted in favour of the decision.

"The global economic outlook does not look as grim now as it did a few months ago. Growth prospects in major economies have improved, while inflation is on a descent though still remains well-above target in major economies. The situation remains fluid and uncertain," RBI Governor Shaktikanta Das said while announcing the Monetary Policy Committee`s rate decision.

In a poll conducted ahead of the federal budget on Feb. 1, more than three-quarters of economists, 40 of 52, had expected the RBI to raise the repo rate by 25 bps. The remaining 12 predicted no change.

The annual retail inflation rate eased to 5.72% in December from 5.88% in the previous month, falling below the RBI`s upper tolerance band of 2%-6% for a second straight month.

But Das said core inflation remains elevated, and that further calibrated policy action was warranted.

"The stickiness of core or underlying inflation is a matter of concern. We need to see a decisive moderation in inflation," he said.

The Indian rupee slightly extended gains against the U.S. dollar after the rate decision. It firmed to 82.62 to the dollar from 82.67 before the announcement.

Meanwhile, bond yields also inched up with the benchmark bond yield rising to 7.3554%, from 7.3124% before the policy decision and the previous close of 7.3102%.

The Nifty 50 share index was up 0.72% to 17,849.85 as of 10:06 a.m. IST, while the S&P BSE Sensex rose 0.68% to 60,695.09

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Smartphone Makers Hint Shipment Growth Over Budget Tax Relief

Smartphone manufacturers are optimistic about a recovery in demand, driven by tax relief in the budget 2023-24 that should encourage middle-class customers to purchase more gadgets.

Experts in the market predicted that shipments, especially in the entry-level market, might increase by as much as 3%.

Tax experts stated that Consumption demand and industrial growth across sectors would increase due to a number of factors, including income tax reduction for the middle class and the newly announced Rs 10 lakh crore government capital allocation.

The income eligible for a refund would be enhanced from Rs 5 lakh to Rs 7 lakh annually, while the maximum surcharge would be decreased for the highest income bands, according to the government’s revised income tax return slabs under the new regime for FY24.

The new tax system now allows for a standard deduction, which is an additional advantage that might provide middle-class taxpayers with more disposable income.

All taxpayers would benefit from the proposed increased tariffs, and the additional savings will increase smartphone purchases, Demand Crunch.

However, several market trackers are still concerned about the demand resurgence problem, which has dogged the sector since Q2 of 2022 and is anticipated to last through the first half of this year.

Savings, in my opinion, will be used to cover rises in the cost of living because there is already concern about a global recession and the potential for more price increases.

Without more alternatives for consumers that are more affordable, he continued, the entry-level market would continue to have poor demand. We are concentrating more on exports and domestic manufacturing, but we are not considering how to increase demand in the gadgets sector, where there is still room for growth.

However, Tarun Pathak, research director at Counterpoint, predicts that the tax credit will propel a 2 to 3-per cent expansion in the smartphone market.

Low demand has had the greatest impact on the entry-level market, whereas the luxury one had double-digit growth, according to Pathak. According to him, the income slabs for which assistance has been granted directly correspond to the entry tier, where volume increase may occur.

Prior to 2022, the category with prices under Rs 10,000 per unit attracted 33% of volumes. We might expect a net increase of 7-8 million units in that market as a result of the income tax reform, according to Pathak.

Navkendar Singh of IDC India anticipates that the tax reduction would somewhat boost demand, but he is still dubious about price increases this year that might not have an impact on upgrade cycles. Since there is little activity in the sub-Rs 15,000 categories, people are yet compelled to purchase more expensive products.