Tax rates under GST will not be revised unless there is an anomaly: CBEC chief

index.jpgSource: The Hindu Business Line, July 19, 2017

New Delhi: The government on Wednesday said that tax rates under the Goods and Services Tax (GST) will not be revised unless there is an anomaly, but promised to go slow on enforcement actions in the first six months on genuine mistakes.

“The issue has snowballed…The textile sector is taxed for the first time. So anybody who comes into the net would feel the pinch,” said Vanaja N Sarna, Chairperson, Central Board of Excise and Customs, at a CII event. She said the CBEC has received representations from textile traders and is looking into their demands.

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CBDT notifies secondary adjustment rule in transfer pricing

Source: Financial Express, June 19, 2017

New Delhi: The Income Tax Department has come out with rules for operationalising the provisions of secondary adjustment in books of accounts to reflect actual allocation of profits between a company and its arm. The Finance Act 2017 has inserted Section 92CE in the I-T Act to give effect to the secondary adjustment norms, which are based on OECD’s transfer pricing guidelines for multinational enterprises and tax administrations. It is also provided that where the excess money available with the associated enterprise on primary adjustment is not repatriated to India within the prescribed time, it shall be deemed to be an advance made by the assessee to such associated enterprise.

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GST Council lowers tax rate on 66 items, offers relief to small entities

Source: The Hindu Business Line, June 11, 2017

New Delhi: Insulin, schoolbags, colouring books and construction items are among the 66 items on which the Goods and Service Tax levy has been lowered.The GST Council, meeting today for the 16th time, also gave traders, manufacturers and restaurants some relief by raising the cap on the ‘composition scheme’ to allow more small enterprises to opt for the scheme.

While the tax rate on insulin and cashew has been lowered to 5 per cent from the earlier 12 per cent, food items like pickles and ketchup will attract a tax of 12 per cent against the earlier proposal of 18 per cent (see chart)

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Commerce Ministry sets up facilitation cell to address issues regarding GST

Source: Business Standard, June 08, 2017

New Delhi: The commerce ministry today constituted a GST facilitation cell with a view to address issues regarding the new indirect tax regime in respect of foreign trade policy.

The cell is set up in the Directorate General of Foreign Trade (DGFT).

In a notice to all its regional offices, DGFT said: “to ensure smooth and successful roll out of Goods and Services Tax (GST), it is decided to constitute a GST facilitation cell”.The cell will be headed by Additional DGFT Nikunj Kumar Srivastava. It would have two Joint DGFT officials as members.

The regional authorities have also been advised to establish similar cells in their respective offices.The GST would be rolled out from July 1. It will subsume a host of central and state taxes like excise duty, service tax and VAT.

Industry gets 90 days to claim credit for GST transition stock

Source: The Economic Times, June 07, 2017

NEW DELHI: Traders and retailers can file declarations within 90 days claiming a tax credit for transition stock after the GST rolls out from July 1.

The draft transition rules for the Goods and Services Tax (GST) regime had pegged the time at 60 days. The transition rules approved by the GST Council provides that “every registered person entitled to take credit of input tax shall, within 90 days of the appointed day, submit a declaration electronically, specifying separately, the amount of input tax credit to which he is entitled…”.

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Multilateral tax pact to open doors for India to enter into bilateral APAs, say tax experts

index.jpgSource : The Hindu Business Line 31 May 2017

India’s decision to sign the multilateral convention on tax treaty related measures under the OECD-G20 BEPS project should spell music for several taxpayers faced with economic double taxation or transfer pricing issues.

This is because the signing of the multilateral instrument (MLI) at Paris on June 7 could open the doors for India to entertain bilateral advance pricing agreements (APAs) or mutual agreement procedures (MAP) with several countries for resolving transfer pricing issues, say tax experts.

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Relief to consumers, under GST, tax rates for most goods to fall

Source: Financial Express, Apr 18, 2017

New Delhi: The Goods and Services Tax (GST) Council’s resolve to minimise rate shocks will result in reduction in the nominal tax rates for a vast majority of goods. Half of the items in the Consumer Price Index (CPI) basket will be exempt from GST and another tenth will be taxed at the lowest rate of 5%. The balance CPI goods would come under either of the two standard rates of 12% or 18%, rather than the highest rate of 28%.

Though the current nominal tax rates for some CPI goods and many other mass-consumption and everyday use items like mobile phones, refrigerators, cosmetics and baked food are close to the highest GST rate of 28%, these too will likely fall under 18% GST, sources privy to the discussions in the council’s technical committee on fitment of rates told FE.

The government had iterated that the GST rate for an item will be, to the extent possible, the one that is nearest to the current rate. However, according to the sources, what the council will take into account is the real tax incidence at present rather than the nominal rate. For instance, if the nominal tax rate on an item with maximum retail price of `150 and ex-factory price of `100 is 26.5% (12.5% excise and 14% VAT), the real tax incidence on the price to the consumer could be just over 22%, as the excise duty is virtually levied on the ex-factory price, with abatement for post-manufacturing value addition.

Manufacturing units below the `1.5-crore turnover threshold enjoy excise exemption and currently pay only VAT on the final products. If the items manufactured by such units are brought under 28% GST rate, for the reason that nominal tax rate on the items is close to it, they would be hit hard. So the council would take the real excise incidence on the ex-factory value of the item as the basis for GST rate determination. Assuming that half of the sector manufacturing the item mentioned above is excise exempt, the real tax incidence, when nominal tax rate is 26.5%, could be just 18% (see chart).

“Under the GST regime, tax would apply on the transaction value of the product. Therefore, the correct excise incidence would be the actual excise duty paid expressed as a percentage of the final price to the customer,” said R Muralidharan, senior director, Deloitte Haskins & Sells.

However, items that currently suffer a real tax incidence around 28% and above will come under the highest GST rate of 28%, and so will the four demerit items — tobacco and tobacco products, aerated beverages, luxury cars and pan masala — on which the nominal taxes now are 40-60%, including cesses. Analysts also noted that since the VAT rates on items vary across the states, the fitment of GST rates should be on the basis of the weighted average VAT incidence.

Currently, over 300 items are exempt from excise duty and an average of 100 items are exempt from state VAT.