More than one billion consumers, 29 states, 22 official languages, and nine million businesses; bringing all of these together under one tax regime doesn’t sound easy and rightly so, since <keyword id="6359833" type="ORGANIZATION" weightage="100" keywordseo="Goods-and-Services-Tax">goods and services tax</keyword> (<keyword id="6354679" type="ORGANIZATION" weightage="100" keywordseo="GST">GST</keyword>) was indeed a daunting task for the Indian government and <a href="http://www.businessinsider.in/topic/Narendra-Modi">PM Modi</a>. Also read: <a href="http://www.businessinsider.in/decoding-BJP-and-the-GST-puzzle/articleshow/57986645.cms">Here’s how difficult the GST process was for the Modi government</a> As India gears up for a July 1 <a href="http://businessinsider.in/topic/GST">GST</a> rollout, one should take into consideration the 10-year battle in convincing powerful state governments and the restless opposition. "It has been a huge challenge with countless man hours," Anita Rastogi, Partner (indirect taxes) at PwC told <a href="https://www.bloomberg.com/politics/articles/2017-04-23/india-s-gst-challenge-makes-trump-s-tax-overhaul-look-easy">Bloomberg</a>. "The July 1 target is looking feasible. And the effort that has been put in is worth it because this will lead to greater tax compliance and better efficiency." Here are some of the challenges and potential rewards that the country would get from GST. Scale After the implementation of GST, India will create one of the world's biggest free trade areas, replacing at least 17 state and federal taxes on varied categories of products ranging from electricity to makeup. It has to be implemented at a large scale, ranging from <a href="http://www.businessinsider.in/topic/uttar-pradesh">Uttar Pradesh</a>, the population of which is similar to the size of Brazil, to <keyword id="826" type="CITY" weightage="100" keywordseo="Goa">Goa</keyword>, the tiny seaside region in India’s western part. All of these states have their different tax regimes, all of which would be broomed below the GST carpet. Logistics The government has decided to keep aside about 28 billion rupees ($435 million), which would be spent to set up a network over the coming five years. This network would be able to handle invoices worth 36 billion rupees a year, for which more than 61,000 government officials are being trained. Rates GST would comprise of four basic tax rates of 5%, 12%, 18% and 28%, for different <a href="http://www.businessinsider.in/markets/economy/same-type-of-products-to-get-single-gst-rate/articleshow/58217943.cms">categories of products</a>. While mass consumption items (like spices) would most likely attract a 5% rate, processed foods will attract a rate of 12%. The 18% bracket would see household goods like soaps, toothpaste, and smartphones, and other durable goods like air conditioners will fall under the 28% bracket. Luxury goods, like tobacco, luxury cars and alcohol will be taxed at even higher rates, and collections at these higher rates will go to a fund to compensate states for revenue losses. Inflation While some analysts are of the view that GST could increase inflation because of higher taxes on some goods, some economists give examples of countries like Australia and New Zealand that experienced a fleeting increase in inflation after GST implementation but normalized within a year. Impact When the tax regime is implemented, companies will of course face one-time costs in switching to new systems. This could also result in some disruption of activity, but analysts still expect that economy would benefit over the longer run. A huge single market would also attract more <a href="http://www.businessinsider.in/topic/FDI-India">FDI</a> into India, which is in need of capital investments.

Trump might be eyeing a tax overhaul in the US, but here’s why GST is more important

The <keyword id="6355512" type="ORGANIZATION" weightage="20" keywordseo="Union-Cabinet">Union Cabinet</keyword> today has passed all four legislations to implement the Goods and <keyword id="645517" type="COMPANY" weightage="20" keywordseo="services-tax">Services Tax</keyword> (GST). The bill would now be introduced in <keyword id="6354721" type="ORGANIZATION" weightage="20" keywordseo="parliament">Parliament</keyword> this week before it gets rolled out from <a href="http://www.businessinsider.in/gst-nearing-a-july-1-implementation-as-council-clears-all-five-draft-bills/articleshow/57674088.cms">July 1</a>. 
 
Also read: <a href="http://www.businessinsider.in/gst-to-be-rolled-out-by-july-1-this-is-how-it-will-be-different-from-uk-canada-other-countries/articleshow/57392589.cms">GST to be rolled out by July 1. This is how it will be different from UK, Canada, other countries</a> 
 
Once these bills are approved by Parliament and a separate one is approved by all state assemblies, the legislative process for GST roll out will be completed. The one-nation-one-tax regime will merge central taxes like excise duty and service tax and state levies like VAT. 
 
Four-tier tax slabs of 5, 12, 18 and 28% along with an additional cess on demerit goods like <a href="http://www.businessinsider.in/luxury-cars-to-get-costlier-after-gst-rolls-out/articleshow/57687734.cms">luxury cars</a>, aerated drinks and tobacco products was passed last week by the parliament, while the process of putting various goods and services in different slabs will start from next month. 
 "The Union Cabinet chaired by Prime Minister <keyword id="6354477" type="PERSON" weightage="20" keywordseo="Narendra-Modi">Narendra Modi</keyword> has approved the four GST related bills -- The Central Goods and Services Tax Bill 2017 (The CGST Bill), The Integrated Goods and Services Tax Bill 2017 (The IGST Bill), The Union Territory Goods and Services Tax Bill 2017 (The UTGST Bill) and The Goods and Services Tax (Compensation to the States) Bill 2017 (The Compensation Bill)," an official statement said. 
 
While the CGST Bill makes provisions for levy and collection of tax on intra-state supply of goods, services or both by the central government, the IGST Bill makes provisions for levy and collection of tax on their inter-state supplies. 
 
Also read: <a href="http://www.businessinsider.in/e-commerce-have-to-pay-1-taxat-the-source-after-gst/articleshow/57717773.cms">E-commerce have to pay 1% tax at the source after GST</a> 
 
On the other hand, the UTGST Bill makes provisions for levy on collection of tax on intra-UT supply of goods and services in the Union Territories without legislature, and is similar to States Goods and Services Tax (SGST), to be levied and collected by the States/Union Territories on intra-state supply of goods or services or both. This has to be approved by each of the state assemblies. 
 
The Compensation Bill provides for compensation to the states for loss of revenue arising on account of implementation of the GST for a period of five years from the roll out. 
 
Also read: <a href="http://www.businessinsider.in/glucose-biscuits-set-to-go-lighter-all-thanks-to-gst/articleshow/57532944.cms">Glucose biscuits set to go lighter, all thanks to GST</a> 
 
GST, the biggest tax reform since India got independence is expected to accelerate the rate of economic growth by at least 0.5 percentage points, while also broadening the revenue base and cutting compliance cost for firms. 
 
(Image source: TomorrowMakers)

Get ready for GST! Draft bills have been approved by cabinet

It’s been a month that India’s leading conglomerate <keyword id="121459" type="CITY" weightage="20" keywordseo="ITC-Ltd">ITC Ltd</keyword> has increased the prices of its cigarettes <keyword id="42407" type="ORGANIZATION" weightage="60" keywordseo="Navy">Navy</keyword> Cut and <keyword id="489337" type="UNKNOWN" weightage="20" keywordseo="Gold-Flake">Gold Flake</keyword>. And with the budget day nearing, the smokers enjoying the winter breeze are anticipating another hole in the pocket very soon. The heat of the hike in price was felt by the people who buy full packet as the price of Navy Cut packet, which has gone up by Rs 11 to Rs 89 now. <a href="http://www.businessinsider.in/chinas-tourism-is-much-ahead-of-india-hereswhy/articleshow/56719212.cms">ALSO READ: Why China is ahead of us in tourism?</a> 
 
While the sudden surge in the price hasn’t been explained much by the company, revision of prices is quite common in pre-budget season. 
The demonetization in November has affected the tobacco industry quite deep. Most road side sellers, for first few weeks, didn’t understand how to operate digital payments. And that served as a major setback for the industry. While cigarette is quite important from the economy point of view, doctor’s advice, healthy living and several anti-smoking drives have already unnerved the sector since last few years. 
 
If the prices go further up, which is very highly possible this time, the<a href="http://www.businessinsider.in/searchresult.cms?query=tobacco&amp;sortorder=effectivedate"> cigarette companies</a> would need to subsidize on the prices and incur some losses as usual. 
 
<a href="http://www.businessinsider.in/your-air-travel-might-get-expensive-after-the-budget-speech-in-february-heres-why/articleshow/56647465.cms">ALSO READ: Air travel to get dearer after GST</a> 
 The finance ministry is also ready with <keyword id="6354679" type="ORGANIZATION" weightage="20" keywordseo="GST">GST</keyword> rollout, which is now expected to go live on July 1. While cigarettes have been kept at 40% tax limit, experts believe, it should have been at 80%. Since these are a highly demerit product, <a href="http://www.businessinsider.in/searchresult.cms?query=tobacco&amp;sortorder=effectivedate">40% of GST</a> indicates need for Rs 1902 crore of excise tax per 1,000 sticks in order to make sure the revenue from cigarettes stay intact. 
 
“The taxation on tobacco should also be rationalized by a duty structure which is a mix of fixed and <a href="http://www.businessinsider.in/searchresult.cms?query=tobacco&amp;sortorder=effectivedate">ad-valorem</a> duty rather than only fixed duty component. By doing this, the Government will be able to generate additional revenue to the tune 20K-30K crore per annum which can be used for social and other activities and will also be discouraging the consumption of tobacco as per the WHO norms. Meanwhile alternative crop for tobacco farmers should also be given top priority, so as to keep their interest,” said <keyword id="67987" type="PERSON" weightage="20" keywordseo="Sanjay-Dalmia">Sanjay Dalmia</keyword>, Chairman of <keyword id="4095501" type="UNKNOWN" weightage="20" keywordseo="dalmia-group-of-companies">Dalmia Group of Companies</keyword> and also an expert in tobacco and pharmaceutical sector.

Statutory
Warning: Cigarettes to cost more after budget?

It is likely that <a href="http://www.businessinsider.in/searchresult.cms?query=arun+jaitley&amp;sortorder=effectivedate">Finance Minister Arun Jaitley</a> will increase the <a href="http://www.businessinsider.in/searchresult.cms?query=service+tax&amp;sortorder=effectivedate">service tax</a> from 15% to at least 16% in the run up to Goods and Services Tax (GST) rollout. 
 
During <a href="http://www.businessinsider.in/searchresult.cms?query=budget+2017&amp;sortorder=effectivedate">Budget 2017</a>, Jaitley is expected to close gap with 18% <a href="http://www.businessinsider.in/searchresult.cms?query=GST&amp;sortorder=effectivedate">GST</a> rate as most of the services are likely to attract a tax of 18% under GST. 
 <keyword id="117924" type="UNKNOWN" weightage="20" keywordseo="GST-Rollout">GST rollout</keyword> is expected to happen on July 1 as stalemate over dual control continued in the GST Council meeting. 
 
So, the government may slap a higher service tax for three months to somewhat offset the revenue loss after the GST kicks in. 
 
As per industry experts, a service tax closer to the GST rate will give time to consumers to adjust to the new rate. 
 
Service tax accounts for over 14% of Indian government’s total tax revenues. In 2016-17, Rs 231,000 crore service tax accounted for total tax revenues of Rs 16,30,887 crore. 
 
The GST Council has agreed on a four-slab structure –5, 12, 18 and 28 percent—along with a cess on luxury and sin products such as tobacco.

Arun Jaitley may increase service tax from 15% as precursor to GST rollout

New Delhi, Dec 17 () A day before the GST Council meeting, farmers' body FAIFA on Tuesday asked the government to have a taxation policy that disincentivises cigarette smuggling in India. 
 The Federation of All India Farmer Associations (FAIFA), which claims to represent farmers of commercial crops from various states, including Andhra Pradesh, Telangana, Karnataka and Gujarat, said there has been an increase in smuggled, illicit and contraband cigarettes due to higher taxation on the legal cigarette industry. 
 As a result, tobacco farmers have been adversely affected, the body said in a letter to Finance Minister Nirmala Sithraman, and asked the government to save livelihoods of such tobacco farmers. "FCV tobacco farmer is on verge of losing his one and only livelihood due to increase in input costs and drastic decrease in income which is caused by illicit cigarette trade in India," FAIFA president Javare Gowda said in a statement.
 He further said, "We would like to appeal to government to have a taxation policy that disincentivises cigarette smuggling in India, which will help curb illicit trade and increase the demand of domestic Indian grown tobacco."
 FAIFA's demand comes a day ahead of the meeting of the GST Council, the highest decision making body of the indirect tax regime, here on Wednesday.
 The tobacco farmers' body claimed that there has been over 40 per cent reduction in FCV (Flue-Cured Virginia) tobacco cultivation, resulting in loss of more than Rs 5,000 crore to farming community in the last six years.
 Moreover, the government revenue loss is in excess of Rs 13,000 crore on account of illicit cigarette trade, it claimed.
 Due to higher taxation, smuggled, illicit and contraband cigarettes, FCV tobacco production of 325 million kgs in 2013-14 came down to 210 million kgs in 2019-20, it added.
 On the other hand, the entire legal cigarette value chain is presently reeling under penal taxation on account of continuous increases in excise duties and compensation cess on cigarettes, which have cumulatively gone up by over 200 per cent from 2011-12, FAIFA claimed.
 "As a result of high taxes and growth of illegal cigarette trade, legal cigarettes have dropped by more than 25 per cent between 2011-12 and 2018-19, while illegal cigarettes have grown by 31 per cent during the same period," it said. RKL RVK

You Searched For "gst on tobacco products" and got 5 results

Trump might be eyeing a tax overhaul in the US, but here’s why GST is more important

BI India Bureau

Get ready for GST! Draft bills have been approved by cabinet

BI India Bureau

Statutory Warning: Cigarettes to cost more after budget?

Suchayan Mandal

Arun Jaitley may increase service tax from 15% as precursor to GST rollout

BI India Bureau

FAIFA asks govt for tax policy that disincentivises illegal cigarette trade

PTI