GST Council: Tax exemption threshold fixed at Rs 20 lakh

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The first session of the GST Council that concluded here on Friday made good progress in ironing out some of the contentious issues between the Centre and states: The exemption threshold for the goods and services tax (GST) has been fixed at Rs 20 lakh for all states except the northeastern ones and the three hill states of Jammu and Kashmir, Uttarakhand and Himachal Pradesh, in whose case this limit would be Rs 10 lakh; states will have the assessment powers for units with annual turnover up to Rs 1.5 crore while in the case of bigger businesses too, the one-taxpayer-one-authority principle will be retained and either the Centre or the state concerned will be accorded the assessing power based on risk profiling.

Importantly, the Centre agreed to the states’ demand for including the proceeds from sundry cesses levied by them in the definition of “revenue”, a step that could increase its compensation payouts. This would also mean that the states would cease to levy the cesses, the proceeds from which stood at close to Rs 40,000 crore in FY16.

The council decided to take 2015-16 as the base year to compute compensation to states for any future revenue loss, but left open the question of projecting the business-as-usual rate of increase in revenue, crucial for quantifying compensation. Finance minister Arun Jaitley said three options were under consideration for projecting the revenue growth rate: A mutually agreed-upon fixed rate; the average of the three best (high-growth) years in the past five years; and the average of median three of the last five years. States had earlier turned down the Centre’s proposal for taking the average of the last three years for projecting future revenue growth, saying these years haven’t been particularly good due to the economic slowdown.

Jaitley said the Centre will continue to assess the 11 lakh service tax assessees (even those below Rs 1.5 crore) but added that states will be given training to assess them and once they acquire competence, the future addition to this taxpayer base will be shared with them for the purpose of assessment.

Regardless of whether the Centre or the state has control on an assessee, the tax proceeds will be shared between the two — the central GST component will go to the Centre and the states will appropriate the state GST, which could be slightly higher than central GST. As far as integrated GST — to be levied on interstate transactions and imports — is concerned, the place of supply rules will decide who the appropriating authority will be; of course, the basic principle is that tax needs to be paid where the consumption takes place.

The council, Jaitley said, would meet again on September 30 to finalise the draft rules on the council’s functioning and the exemption thresholds and decide how the grandfathering of tax sops (like the area-based excise exemptions) will be carried out. The crucial question of the GST slab structure, the revenue-neutral rate (RNR) and actual GST rates would be discussed by the council between October 17 and 19. The Arvind Subramanian panel that had estimated a RNR of 15-15.5% had said if the standard rate is 17%, it could comprise central GST of 8% and state GST of 9%.

Tax experts welcomed the outcome of the first meeting of the council. Harishanker Subramaniam, national leader, indirect tax, EY India, said: “It is interesting is that for GST on services, the Centre will have administrative control irrespective of threshold at least in the initial years till states are trained to handle services. This may be a good news for industry as many were worried as to how states will handle complexity of services.”

According to Pratik P Jain, leader, indirect tax, PwC India, enhancing the annual turnover for exemption to Rs 20 lakh from Rs 10 lakh contemplated earlier would be administratively easier for the government as several small businesses would be out of the GST ambit. “Industry would also welcome the move to have a single assessing authority, instead of having a dual system of assessment and scrutiny, which was a major concern for businesses,” he said.

Source: http://www.financialexpress.com/economy/threshold-for-gst-fixed-at-rs-20-lakh/389350/

Indirect tax mop-up rises 27.5% to Rs 3.36 lakh cr till August

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Net indirect tax collections in the April-August period grew 27.5 per cent to Rs 3.36 lakh crore on the back of surge in excise collections.

The collection till August 2016 show that 43.2 per cent of the annual budget target of indirect taxes, which includes Central Excise, Service Tax and Customs, has been achieved.

Till August, Indirect tax net revenue collections are at Rs 3.36 lakh crore, which is 27.5 per cent more than the net collections for the corresponding period last year.

Net tax collections of Central Excise stood at Rs 1.53 lakh crore during April-August, as compared to Rs 1.03 lakh crore during the corresponding period in the previous financial year, registering a growth of 48.8 per cent.Net collections of Service Tax during April-August stood at Rs 92,696 crore, a growth of 23.2 per cent as compared to Rs 75,219 crore during the same period previous year.

Customs mop-up during April-August was at Rs 90,448 crore as compared to Rs 85,557 crore during the same period last fiscal, registering a growth of 5.7 per cent.
The government hopes to collect Rs 8.47 lakh crore from direct taxes and Rs 7.79 lakh crore from indirect taxes, which includes Customs, excise and service tax, in 2016-17.

 

Banks can accept tax dues in cash under IDS: RBI

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The Reserve bank of India (RBI) on Thursday directed banks to accept tax dues in cash under the domestic black money declaration scheme which closes on September 30. Under the Income Declaration Scheme, 2016, which came into effect on June 1, one can come clean by paying tax, penalty and cess totalling 45 per cent of the undisclosed income.

It was brought to RBI’s notice by the government that “banks are hesitant” in allowing deposit of large amounts of cash by declarants under the scheme.


“We advise that banks must invariably accept cash, irrespective of amount, over the counters from all declarants who desire to deposit cash at the counters, including deposits under the above Scheme through challan ITNS- 286,” the central bank said.

The banks, however, have to comply with the Know Your Customer requirements.

Source: http://www.business-standard.com/article/pti-stories/banks-can-accept-tax-dues-in-cash-under-ids-rbi-116090801067_1.html

Tax dept not to take action on cash deposits made after declaring income under IDS

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The government has said no adverse action will be taken by Financial Intelligence Unit or the income-tax department solely on the basis of the information regarding cash deposit made consequent to the declaration under the black money scheme.

 

Credit for unclaimed tax deducted at source made on declared income shall be allowed and no capital gains tax or TDS (tax deducted at source) shall be levied on transfer of declared benami property from benamidar to the declarant without consideration.

 

To reassure people about the Income Declaration Scheme, 2016, which will close on September 30, the Central Board of Direct Taxes has come out with sixth set of clarifications in form of frequently asked questions.

 

It has again assured those wanting to declare unaccounted assets or income that information in respect of a valid declaration would be confidential and not be shared with any law enforcement agency nor shall be enquired into by the income-tax department itself.

 

The scheme provides an opportunity to persons who have not paid full taxes in the past to come forward and declare their undisclosed income and assets. The scheme came into effect on June 1, 2016 and is open for declarations up to September 30, 2016.

 

A total tax of 45 per cent including surcharge and penalty has to be paid.

 

The amount payable under the scheme can be deposited in instalments. As per the latest clarification, assets declared under the scheme are to be valued at cost of acquisition or at fair market price as on June 1, 2016 as determined by the registered valuer, whichever is higher.

 

However, an option for valuation of registered immovable property on the basis of stamp duty value of acquisition adjusted with the Cost Inflation Index has also been provided.

 

The amount of fictitious liabilities recorded in audited balance sheet and not linked to acquisition of an asset can be disclosed under the scheme as such. The period of holding of declared registered immovable assets shall be taken on the basis of the actual date of registration.

 

The valuation report obtained by the declarant from a registered valuer shall not be questioned by the department. However, the valuer’s accountability will remain, it said.

Source: http://economictimes.indiatimes.com/wealth/tax/tax-dept-not-to-take-action-on-cash-deposits-made-after-declaring-income-under-ids/articleshow/54022802.cms

IDS: CBDT issues circular endorsing validity of e-declarations

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The CBDT has issued an order endorsing the legal validity of the e-declarations made under the ongoing domestic black money window, known as the Income Declaration Scheme (IDS).

With only a month left for the IDS to close on September 30, the Central Board of Direct Taxes (CBDT) said for those entities who make declarations of their domestic untaxed assets in the online mode, the Commissioner rank officer of its Central Processing Centre (CPC) in Bengaluru will be “deemed” as the authority for receiving such declarations under the relevant sections of the I-T Act.

“In continuation to Circular No 19 of 2016, dated 25th May, 2016, the Commissioner of Income-tax, Centralised Processing Centre, headquartered at Bengaluru shall exercise the concurrent powers and functions in respect of the declaration referred to in section 183 of the Finance Act, 2016 which has been furnished electronically under digital signature and shall also be deemed to be the Principal Commissioner or the Commissioner for the purposes of section 186 of the Finance Act, 2016 in respect of such declaration,” the CBDT said.

The CPC based in Bengaluru is the nodal wing of the tax department to receive online filings and Income Tax Returns.

There are two options to file black money declarations under the one-time IDS, one by filling up physical form before a Principal Commissioner of Income Tax in any part of the country and the other by the official e-filing portal of the I-T department.

“The circular has been brought out to endorse the legal validity of IDS declarations made by the e-filing website. It was issued keeping in mind the legal requirement,” a senior official said.

The CBDT, till now, has issued five sets of clarifications or frequently asked questions (FAQs) containing answers to various questions on the implementation of the IDS.

The government, sometime back, had extended the deadline for payment of tax and penalty under IDS and allowed declarants to pay the amount in three instalments by September 30 next year.

The first instalment of 25 per cent under the IDS 2016 will have to be paid by November 2016, followed by another 25 per cent by March 31, 2017.

The remaining amount will have to be paid to the exchequer by September 30, 2017.

Earlier the tax, surcharge and penalty under the black money disclosure window were required to be paid by November 30.

The scheme was announced by the government with an aim to bring out black money from the domestic economy.

The government had come out with a similar scheme for Indians holding undisclosed income abroad.

The scheme will apply to undisclosed income whether in the form of investment in assets or otherwise, pertaining to financial year 2015-16 or earlier.

Source: http://www.thehindu.com/business/Economy/ids-cbdt-issues-circular-endorsing-validity-of-edeclarations/article9056076.ece

Tax resolution scheme: CBDT to write to 2.59 lakh taxpayers

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Keen to bring down the number of tax litigations, the Income Tax Department will soon write to over 2.59 lakh taxpayers asking them to avail the one-time dispute resolution scheme to settle their cases.

And to cut down on communication time, the Central Board of Direct Taxes (CBDT) will use email to communicate with the appellants.

“We have estimated that each Commissioner of I-T (appeal) would have about 300-400 litigations pending before them. We will send these assessees emails informing about the benefits of the dispute resolution scheme,” an official told PTI.

The direct tax dispute resolution scheme, introduced from 1 June, seeks to address the issue of pending litigation before commissioner of I-T (appeal). The scheme is open till 31 December.

As per I-T department data, there were 73,402 appeals with tax effect above Rs.10 lakh and 1,85,858 appeals with tax effect below Rs.10 lakh which are pending before commissioner of I-T (appeal) as on 29 February.

Thus, 2,59,260 appellants are eligible for the benefit of this scheme. “The publicity drive will not be as massive as the IDS. Since we know who our target assessees are, we will send them pamphlets and also emails. Also we will paste some pamphlets outside the CIT (appeals) office,” the official added.

Armed with a Rs.100 crore budget for advertisement of income disclosure scheme (IDS) and disputes resolution scheme, the tax department will now launch a publicity drive for entities which are locked in a litigation. Besides, the CBDT will soon come out with over two dozen FAQs based on the queries it has received from various stakeholders, including chartered accountants and industry chambers.

As per the scheme, a taxpayer who has an appeal pending before the CIT (appeals) can settle his/her case by paying the disputed tax and interest up to the date of assessment. No penalty in respect of cases with disputed tax up to Rs.10 lakh will be levied. For cases exceeding Rs.10 lakh, 25% of penalty would be levied and any pending appeal against a penalty order can also be settled by paying 25% of the minimum of the imposable penalty.

“Litigation is a scourge for a tax-friendly regime and creates an environment of distrust in addition to increasing the compliance cost of the taxpayers and administrative cost for the government,” finance minister Arun Jaitley had said in his budget speech.

In a first-of-its-kind nationwide publicity drive, the I-T department had tied up with seven airlines including Air India and Vistara to publicise one-time black money compliance window by printing the scheme’s details on the back of boarding passes.

Source: http://www.livemint.com/Politics/s28nm7vx4fQrNG3ldoqm0L/Tax-resolution-scheme-CBDT-to-write-to-259-lakh-taxpayers.html