Chief Economic Adviser Arvind Subramanian today said the spate of reforms in direct and indirect taxes will help India transform into an efficient and clean system from a nation that practised "<keyword id="2186469" type="UNKNOWN" weightage="100" keywordseo="Tax-terrorism">tax terrorism</keyword>". 
 
Simplifying and eliminate corporate taxes as well as cleaning up of legacy issues will continue going forward, he added. 
 
"We can really change the image of the country which was until recently practicing tax terrorism to one which really has a clean, efficient, modern broad-based tax system for the future and that could be one of the major reforms going forward," he said at interaction of industry with the Finance Minister here. 
 "Goods and Services Tax (<keyword id="6354679" type="ORGANIZATION" weightage="100" keywordseo="GST">GST</keyword>) is a game changing reform," he said. 
 
Observing that the GST will also provide a bouyant source of revenue for medium-term, he said "at a time when the fiscal outlook looks challenging, India needs this solid tax base for the future to be able to finance the social expenditures, agriculture, rural economy... the economy really needs." 
 
The government is creating a situation where states and the Centre are pooling in their strengths for better India. 
 
He also said "one of the great American President said the only two certainty in life are death and taxes. I think in this (GST) instance, India could very happily give up the tantalising uncertainty and could have the certainty of GST very soon." 
 Agreeing with Subramanian, Finance Minister <keyword id="42575" type="PERSON" weightage="100" keywordseo="Arun-Jaitley">Arun Jaitley</keyword> said, "When death is preceeded by a prolonged illness, it becomes agonising. I hope the same doesn't happen with the GST. "

Tax reforms to help India get rid of 'tax terrorism' tag: Chief Economic Advisor Arvind Subramanian

India improved its ranking in <a href="http://www.businessinsider.in/searchresult.cms?query=ease+of+doing+business" target="_BLANK￿￿￿￿">ease of doing business index</a> and jumped 12 ranks to 130th spot, the <a href="http://www.businessinsider.in/searchresult.cms?query=world+bank" target="_BLANK￿￿￿￿">World Bank</a> said it is not impossible for the country to be in the top 100. 
 <keyword id="6354424" type="ORGANIZATION" weightage="20" keywordseo="World-Bank">World Bank</keyword> Chief Economist and Senior Vice President Kaushik Basu said if India continues with its economic reforms, like the <a href="http://www.businessinsider.in/searchresult.cms?query=goods+and+services+tax" target="_BLANK￿￿￿￿">Goods and Services Tax</a>, and erases bureaucratic cost of doing business, it would not be impossible for India to rank in top 100. 
 
"There are countries which have moved 30-40 places at one go, but usually these are small countries. For a big economy like India, it is difficult, but from what we have seen thus far, it is not impossible," Basu. 
 
While Basu lauded the reforms in India and said India had a reasonably substantial movement in the first year itself, he felt the country has a long way to go. 
 
"There is a lot of serious interest in India to cut down bureaucratic costs of doing business for small and medium-sized firms. It is important however to recognise that this is just a start. There is still a long way to go," he said. 
 
So what are the areas where India needs improvement? 
1. According to Basu, India needs to trim transactions costs and the bureaucratic hurdles it places on individuals and small enterprises. 
2. The top economist said India required better infrastructure-roadways, railways and ports and the improvement, which has begun, should be continued. 
3. Basu says India needs inclusiveness as it is a diverse society and policies should be there so that all groups feel included. "In the World Bank's table of growth projections for major economies in the world India is topping the list for this the next year. Something similar is true of IMF projections. I do not think this has happened before. The <keyword id="6356076" type="UNKNOWN" weightage="20" keywordseo="indian-economy">Indian economy</keyword> has some deep strengths and must continue to build on them," he said. 
 
Basu also weighed on the importance of GST. 
 
"If, India can move so that by next year, after the budget, you have a GST in place, which can make a very big difference. It will not be a perfect GST to start with but it should be possible to make amendments and improve it over time," he said. 
 
(Image: Thinkstock)

Here’s why World Bank thinks India can make it in top 100 of ease of doing business index

Indian industry has been hankering for it for ages. Some recommend it; others criticize for making services ‘expensive’. Love it or hate it, the <keyword id="6354679" type="ORGANIZATION" weightage="80" keywordseo="GST">GST</keyword> is here to stay. 
 For those who might not know, here’s what it is. GST or <keyword id="6368071" type="UNKNOWN" weightage="80" keywordseo="Goods-and-Service-Tax">Goods and Service Tax</keyword> is the uniform tax rate Indians will be asked to pay for any goods or services they purchase (except tobacco, alcohol and petrol). 
 
The upside is whether you buy a t-shirt or dine at a restaurant, you’re paying the same tax rate. This increases transparency. The downside it that consumers may have to pay a bit more for the same services. 
 
A key committee set up by the government has suggested a GST rate of 17-18%. So what does it mean for the common man and how will things change? 
 
“The lower the rate, the better it is for the common man. The cost of goods is going down. Services might cost marginally higher, but a lot would be compensated for with the reduction in cascading. This would receive a positive response from the common man who paid close to 28% as indirect tax”, Bipin Sapra, Tax Partner, Ernest n Young said. 
 The catch is that GST has to pass both Houses of the Parliament before the Bill turns into legislation. It also has to get approval from the GST Council that will include <keyword id="25455" type="ORGANIZATION" weightage="100" keywordseo="finance">Finance</keyword> Ministers of States, top bureaucrats from the Centre and the Finance Minister himself. 
 
Judging the fact that the Congress was gunning for anything below 18%, and State Finance Ministers would see this as a measure that’ll ensure their states won’t be affected despite the cascading effect, the bill is largely expected to pass the Council with clear majority. Experts have their fingers crossed. 
 
"I hope this recommendation would expedite the process of introduction of GST in India. The ruling and opposition parties can come to an agreement based on the recommendation", Sachin Menon, Partner and Head, Indirect Tax and COO, Tax &amp; Regulatory Services at KPMG India said. 
 
Last but not the least, while the government is trying to stay true to its April 2016 deadline, the industry is expected to ask for some more time to implement the same as the GST would call for an overhaul in accounting structures. 
 
To not get ahead of ourselves, the next big question is if the Houses of Parliament agree to the recommended rates. 
 
Next Stop, the Lok Sabha! 
 
Image credit: Indiatimes

All
you need to know about the GST

We came up with a wishlist for direct tax framework in the country. Now its time for the industry to come up with yet another wishlist but this time, it is for indirect taxes. The industry has seen the <keyword id="6360789" type="ORGANIZATION" weightage="20" keywordseo="Modi-Government">Modi government</keyword> taking some bold steps as far as taxes are concerned. Beside this, a investor-friendly environment will pump up India’s rank on the list of ‘Ease of Doing Business’, which is also one of the key goals for the current government at the Centre. And keeping this in mind, the industry has suggested a few recommendations. Here is the list: 
 
Goods &amp; Services Tax (<keyword id="6354679" type="ORGANIZATION" weightage="20" keywordseo="GST">GST</keyword>) 
 
The central government has already taken a significant step forward for the implementation of the Goods and Services Tax (GST) in India. On December 19, 2014, the Constitution (122nd Amendment) Bill, 2014 has been tabled in the Indian Parliament, outlining and paving the way for introduction of a GST regime in India. With the state governments arriving at a consensus on various aspects of the GST regime, the Centre hopes to introduce GST in India at the earliest. 
 
Extend Excise Duty Benefits 
 
The Modi government had shown its intent for augmenting the growth of the manufacturing sector in India by extending the Excise duty benefits to the automobiles, consumer goods and capital goods industry till December 31, 2014. Now, in order to revive the manufacturing sector in India, it is the need of the hour to continue the duty sops beyond the said date. 
 
Address Issue of double taxation 
 
Double taxation of certain transactions like taxation of intellectual property rights, supply of software, works contracts, etc. ,also require immediate attention. Ambiguity as regards levy of VAT and service tax on such transactions has been continuing for long. Although these issues have been examined by the courtson various occasions, but the position is still not settled. And as a result of whichthe assessee is paying both service tax and VAT. 
 
Rethink pre-deposit provision 
 
The Union Budget 2014-15 introduced provisions for a mandatory fixed pre-deposit of 7.5% of duty/penalty demanded for filing appeal with Commissioner (Appeals) or the Appellate Tribunal at the first stage. Another 10% of duty demanded or penalty imposed for filing second stage appeal before the Appellate Tribunal. It is seen that in most cases the demands raised by the department are either on procedural aspects or not in line with settled judgments on similar issues. Such demands are invariably quashed by the Appellate Tribunal. Given the same, a rethinking on pre-deposit provisions for filing appeals may be a prudent step in the direction. 
 
Reconsider service tax on educational institutions 
 
The Union Budget 2014-15 imposed service tax on 'auxiliary educational services' as well as renting of immovable property services provided to educational institutions (the said services were exempt from service tax prior to July 11, 2014). Post July 11, 2014, only four services provided to specified educational institution enjoy exemption from service tax, namely: transportation of students/faculty, catering, security and housekeeping, and services pertaining to admission and conduct of examinations. This amendment would have an adverse impact on the education sector and substantially increase the cost of educational services being provided by the institutions. There is no output service tax on educational institutions in India. Effectively educational institutions cannot claim cenvat credit of the service tax paid on these services. This eventually leads to an increase in the cost of provision of educational services. Therefore, levy of service tax on educational institutions needs a re-look. 
 
Revise penal rates of interest 
 
The Union Budget 2014 (w.e.f October 1, 2014) has substantially increased the interest rates for delay in payment of service tax (for a delay for a period beyond 6 months and upto 1 year) rate of interest is 24%. On the other hand, the rate of interest has been increased to 30%. Such high rates of interest are unfair especially in cases where the delay in payment of service tax by an assessee is under a bonafide belief due to interpretational, valuation/ or classification issues. In such cases, it is recommended that the interest rates should be restored to 18% per annum so as to reduce the cost burden on an assessee. Penal rates of interest may be prescribed in cases where an assessee has wilfully defaulted in discharge of his service tax liability. 
 
Finance Minister Arun Jaitley is expected to bring a slew of changes to kickstart India’s economic growth and move forward towards a non-adversarial tax system. The ball now lies in the court of the finance ministers as he will be delivering the wishes of people across the country. 
 
(About the authors: This article has been written by Rakesh Nangia, managing partner and Nitish Sharma, executive director, Nangia &amp; Co.)

Budget 2015: Reforms that Govt must initiate in Indirect Tax mechanisms

All purchases made online will attract a uniform Goods and <keyword id="645517" type="COMPANY" weightage="20" keywordseo="services-tax">Services Tax</keyword>, likely to take effect from April next year, according to the model <keyword id="6354679" type="ORGANIZATION" weightage="20" keywordseo="GST">GST</keyword> law approved by state finance ministers headed by West Bengal finance minister, Dr <keyword id="107244" type="PERSON" weightage="100" keywordseo="Amit-Mitra">Amit Mitra</keyword> today. 

	Dr Mitra had served as Secretary General of the Federation of Indian Chambers of Commerce and Industry before his avatar as Bengal finance minister. 
 

	The tax, in lieu of local levies, will be imposed at the first point of financial transaction. This clears the air on applicability of GST in e-commerce in cases where goods were being sold in one state but was being bought in another state. 
 

	The model GST law, which has 162 clauses and 4 schedules, has also suggested a jail terms of up to 5 years and fine for violation of the provisions of the statute. 
 

	It prescribes a threshold of Rs 9 lakh annual turnover for applicability of the new levy and Rs 4 lakh for businesses in North Eastern states including Sikkim. 
 

	Revenue Secretary Hasmukh Adhia said the Empowered Committee of State Finance Ministers at their meeting today in Kolkata approved the model GST law. 
 

	"We request all stakeholders to give their suggestions/ comments to secretariat of Empowered Committee of FMs and or to finance ministry," Adhia tweeted. 
 

	Government is hoping to get the Constitution Amendment Bill passed by Parliament in the upcoming Monsoon Session. It plans to roll out GST from April 1, 2017 that will subsume excise, service tax and all local levies.
 Virtually all states have supported the idea of GST except Tamil Nadu which has "some reservations", Finance Minister <keyword id="42575" type="PERSON" weightage="20" keywordseo="Arun-Jaitley">Arun Jaitley</keyword> said after the meeting of Empowered Committee on the long awaited indirect tax reform. The model law also provides for Authority for Advance Ruling (AAR) to be located in every state. 

	There is also a provision of Appellate Authority to be formed in each state. The Appellate Authority shall comprise the Chief Commissioner of CGST and the Commissioner of SGST. 
 

	The GST model law has also provided for 'Composition Levy', on the lines of presumptive taxation scheme. 
 

	It provides for a levy of not less than 1 per cent tax on a person whose annual turnover on sale of goods and services in a single state is less than Rs 50 lakh. 
 

	The law provides for setting up of a Consumer Welfare Fund, which will be utilised by the Centre or States for the welfare of consumers. 
 

	"The Central/State Government shall maintain proper and separate account and other relevant records in relation to the Fund in such form as may be prescribed in consultation with the CAG," said the model law. 
 "The objective guidelines may carve down the potential for any abuse of discretion provided to the States in implementation of the GST in India," Nangia &amp; Co Partner Indirect Taxation) <keyword id="1430503" type="PERSON" weightage="20" keywordseo="Nitish-Sharma">Nitish Sharma</keyword> said. 

	The empowered Committee has also cleared the model Integrated GST law which has to be approved by both Centre and states. iGST will apply on inter-state sale of goods and services. 
 

	Besides, the CGST law has to be approved by the Centre and each state will pass its own SGST law. 
 

	The law provides that every registered taxable person shall himself assess the taxes payable under this Act and furnish a return for each tax period. 
 

	Any tax payer who fails to furnish the details of outward or inward supplies or returns by the due date will be liable to a late fee of Rs 100 for every day, subject to a maximum of Rs 5,000. 
 

	Also, any registered tax payer who fails to furnish the return by the due date, will be liable to a late fee of Rs 100 for every day, subject to a maximum of 25 per cent of his aggregate turnover.

All online purchases to attract GST soon: Amit Mitra panel

The Goods and <keyword id="6355686" type="COMPANY" weightage="20" keywordseo="Service-tax">Service Tax</keyword> is taking India by the storm. Touted to bring in the “one nation one tax” system, <keyword id="6354679" type="ORGANIZATION" weightage="20" keywordseo="GST">GST</keyword> will unite indirect taxes under one umbrella and facilitate Indian businesses to become globally competitive. Though much has been said about the GST will make tax collection efficient, reduce corruption and make inter-state movement of goods etc. easier, it is not the first time a tax law like this is being implemented anywhere in the world. 
 
France was the first country to implement GST in 1954, in order to reduce tax evasion. 
 
Since then, more than 140 countries have implemented GST with some countries preferring the dual-GST model (e.g. Brazil, Canada). India, too, has chosen the Canadian model of dual-GST. 
 
The United States does not have a unified tax model alike GST, with the states following their own taxes. 
 
Now that we know a little about the history of the unified tax model, let us compare the Indian GST with that of some other countries- 
 
 
 
 
Looking at the chart above, it is easy to deduce that the GST model across the commonwealth countries are similar, with some variations. The biggest differences in GST in India vis a vis GST with other countries are - 
 
Dual GST- more complications 
 
Most countries have implemented the ‘ideal GST’, with all indirect taxes grouped as one. India, however, is going to implement dual GST with separate central and state components, further complicating the process. This is why the whole concept of SGST, CGST and IGST (for inter-state sales) have been brought in. While this is a shade more intricate than the alternative ideal GST, it could get even more complicated if the states and the Centre come to loggerheads over a certain issue. 
 
High tax rates of Indian GST 
 GST rates are typically between 16 per cent and 20 per cent worldwide. Lower rates can help bring down tax evasion, thus benefitting the economy in the long run. As <keyword id="6355261" type="POSITION" weightage="20" keywordseo="Finance-minister">Finance Minister</keyword> <keyword id="42575" type="PERSON" weightage="20" keywordseo="Arun-Jaitley">Arun Jaitley</keyword> has said “What you need is a broader base of economy, for which you need a lower level of taxation.” The governments in other countries started with very low rates of GST, which the Indian politicians are not willing to start with. Singapore started with the lowest GST rate of 3% in the world, in 1994, and gradually increased it to a maximum of 8% over the years. To counter <keyword id="22195" type="COMPANY" weightage="20" keywordseo="Inflation">inflation</keyword>, the Singapore government had simultaneously cut down income tax rates (both at the individual and corporate levels), so that the public had more money in hand. 
 
The Indian council’s proposed four-tier GST tax structure of 5%, 12%, 18% and 28%, while efficient, can also prove to be regressive - especially for low income workers or pensioners. 
 
No measures yet to check inflation 
 
Inflation is a direct effect of any massive change in the tax system - a reason why it is important for Indian administrators to keep tabs on prices post July. Singapore, for instance, saw a hike in inflation when it introduced GST in 1994 but the country was able to control the risk to due to efficient price control measures administered by their Ministry. 
 
India can consider doing what Singapore and many other countries have done: initiate anti-profiteering laws at the retail level to protect consumers from price swindling. The GST council’s recent decision to bring in anti-profiteering measures should help in this regard, but there are still no concrete schemes we can look forward to, which is honestly, a little worrisome. 
 
SMEs and large organizations will now be at par 
 
The Indian GST places SMEs and large organizations at par by keeping the exemption threshold very low (Rs. 20 lakhs) without any tax differentiation. While large corporations have the resources to invest, change their systems and get ready for GST, it will be daunting for SMEs considering their limited resources. Our comparison chart above shows that most countries following GST have a much higher threshold limit. 
 
Although composition levy will be available, there are many disadvantages to it such as lack of input tax credit, no taxable invoices etc. which will deter many from availing such schemes. 
 
No GST for alcohol and petroleum products 
 
Alcohol and petroleum products are being kept outside the purview of GST, with each state free to set its own rates. These sectors constitute about 40% of a state’s revenue and being left out of GST may reduce a state’s tax earnings. Also, input credit will not be available for the manufacturers using alcohol and petroleum products thus increasing the costs for the end consumer. 
 
Conclusion 
 
There’s no surefire way to reduce the initial teething troubles India will face while transitioning to GST. Despite hurdles, the countries following GST have found that it reduces much of the compliance burden and double-taxation. 
 
In the long run, GST stands to be beneficial to both businesses and the country’s economy, but it remains to be seen if the benefits mentioned on paper will translate into real-life advantages too. 
 
(The article is authored by Archit Gupta, Founder &amp; CEO ClearTax.com)

GST to be rolled out by July 1. This is how it will be different from UK, Canada, other countries

Over the past year or so, the government has tried to recalibrate the institutional foundations of India. These include restoring the sanctity of the Prime Minister’s Office (<keyword id="6365387" type="ORGANIZATION" weightage="20" keywordseo="PMO">PMO</keyword>), doing away with the Planning Commission and replacing it with Niti Aayog. This also includes strengthening the fiscal federalism in India with 42% of total tax receipts going to the states now up from 32% earlier and trying to implement the Goods and <keyword id="6355686" type="COMPANY" weightage="20" keywordseo="Service-tax">Service Tax</keyword> (<keyword id="6354679" type="ORGANIZATION" weightage="20" keywordseo="GST">GST</keyword>) in India. All of these are structural and institutional changes that will benefit India, in the long run. 
 
However, at present, India is being held back. It is not because the present government has not tried to bring about a systematic change but largely because of several factors that have a bearing on growth and competitiveness of India. These include 
 
• Decrepit infrastructure at present due to a host of reasons such as: environmental clearances, land acquisition problems, etc. Also, low investments in PPP due to low appetite for risk among investors. 
 
• A large unemployed and unemployable youth due to a wide disparity between theory and practice in education and formal employment. With the large number of students passing out each year and absorption rates in formal employment dismally low, young people are often pushed into what is informal employment. In turn, this often leads to a low aspirations and prospects for growth. 
 • A third related problem is that of the enormous amount of regulatory and compliance issues. It starts from anybody wanting to start a business, have access to finance, etc. to filing his <keyword id="6354751" type="COMPANY" weightage="20" keywordseo="Income-Tax">income tax</keyword> returns once he starts a business. These take significant time and lead to an unease of doing formal business. Most businesses tend to remain informal, be structured differently, due to compliance costs and hassles. 
 
• Fourth, the bureaucracy at times is ill prepared for the challenges the economy faces. They are one of the most important pillars of our system and yet most times they are not given enough incentives be it in monetary terms or in terms of recognition, to show real performance. 
 
• Fifth, the legal functioning in the country is extremely slow, and this has to do with manpower and finances for the judicial system. The disposal of pending cases is reflective of the failings of our justice delivery mechanism. Due to these the investors are often shy of a country like India that has a rule of law but where the justice often is delayed to the point of being denied. 
 
• Sixth, the health system in the country is low cost but extremely inadequate for the population of our country. It is with respect to both infrastructure and the number of personnel in the sector. Our environment is extremely polluted inspite of the fact that environmental regulations and norms are often thrust on businesses. It shows a mentality of corruption to get somewhere around the regulation and make makeshift solutions to problems. 
 
• Finally, all these factors culminate into a lack of transparency and trust between the Government, Citizens, Institutions and Business. It leads to a mindset that very few things can change within the country inspite of whosoever comes in power. 
 
For India to succeed the first and foremost thing is fostering a culture of healthy competition and productivity among its youth. It can only start when the focus is on merit and nurturing talent. It has the potential to lead to a meritocratic society one that has a strong work culture at its core twenty years from now. It can lead to unleashing the creative spirit of the people and in turn enterprises that they create. 
 
(About the author: This article has been written by Dr. Amit Kapoor is President and CEO of India Council on Competitiveness and Honorary Chairman of Institute for Competitiveness, India. He tweets @kautiliya and can be contacted at<a href="mailto:amit.kapoor@competitiveness.in">amit.kapoor@competitiveness.in</a>)

You Searched For "gst in india" and got 7 results

Tax reforms to help India get rid of 'tax terrorism' tag: Chief Economic Advisor Arvind Subramanian

BI India Bureau

Here’s why World Bank thinks India can make it in top 100 of ease of doing business index

BI India Bureau

All you need to know about the GST

Saikat Pyne

Budget 2015: Reforms that Govt must initiate in Indirect Tax mechanisms

Guest Author

All online purchases to attract GST soon: Amit Mitra panel

BI India Bureau

GST to be rolled out by July 1. This is how it will be different from UK, Canada, other countries

Guest Author

What is holding India Back?

Amit Kapoor