Soya industry gets VAT breather in MP
New Delhi/ Bhopal December 28, 2010: Soya industry has now more room to breathe in domestic market as the Madhya Pradesh government today exempted de-oiled cake (DoC) from value added tax.The domestic soya crushing units will be given full input tax rebate on de-oiled cake, though Madhya Pradesh hardly has any share in Indian de-oiled cake market. The entire state production of de-oiled cake roughly at 36-40 lakh tonnes per annum goes to international market. Soyabean Processors Association (Sopa) said the state would now be able to participate and compete with the industries of neighbouring states like Maharashtra and Rajasthan.
“We had a long-pending demand of full input tax rebate as it was tough to compete in the domestic market as neighbouring states do not levy any tax. The decision will boost participation in domestic market. We welcome this step of rationalising the taxation system,” said Rajesh Agrawal, Sopa spokesperson.
At present soya crushing units, more than 70 in number, pay 7.5% tax that includes 2.2% mandi tax and 1% entry tax on both seed and oil. “In fact, there were losses to soya crushing units. A number of units had been either closed or the workers had migrated to neighbouring states like Maharashtra and Rajasthan due to growing tax evasion incidences. Moreover, this decision will boost prospects of raw material availability for soya de-oiled cake units,” a government
spokesperson said confirming the report of this decision, which was taken by the state Cabinet today. The state produces 50-60 lakh tonnes of soya and has combined crushing capacity of 125 lakh tonnes. DoC prices are hovering around Rs 18,500 per tonne in the domestic market.
Source: Business Standard
FM wants GST rollout with DTC, admits to
New Delhi, December 14, 2010 (PTI) : With the introduction of proposed GST all set to miss the timeframe of April one, 2011, the government today expressed desire to roll it out together with DTC from 2012-13. Addressing a seminar on Goods and Services Tax (GST), Finance Minister Pranab Mukherjee, however, admitted that there are some
problems in the way of implementing the new indirect tax system . He said issues relating to constitution amendments required to roll out the new indirect tax system remain to be sorted out with states.
Mukherjee said the Centre is willing to consider phased roll out of GST and hence suggested three-year time
frame to ultimately roll out one GST rate for all goods and services. "I also desire to simultaneously roll out GST (along with
DTC)," the Finance Minister said at a seminar organised by government auditor Comptroller and Auditor General of India
(CAG). DTC refers to Direct Taxes Code, which is slated to replace archaic Income Tax Act, from April one, 2012.
GST, on the other hand, is expected to replace state-level VAT and excise duty as well as services tax on the Centre's front, besides local taxes, cesses and surcharges. The finance minister said the revised DTC bill will be tabled
in Parliament after standing committee gives its recommendation and hoped that it would be implemented from April one, 2012, as scheduled. However, the roll out of GST has already missed the earlier deadline of April one, 2010, while the government's keenness to implement it from April one, 2011 is also all set to be missed. The Finance Minister admitted
problems relating to constitution amendment bill remains to be thrashed out with states.
Industry seeks VAT exemption on gems, jewellery exports
Chennai/ Hyderabad November 25, 2010: The gems and jewellery industry is demanding that value-added tax
(VAT) be exempted in Andhra Pradesh on exports of gems and jewellery, like in the states of Tamil Nadu and
Karnataka. The Andhra Pradesh government should introduce the "Best
Jewellers" award to encourage more jewellers to enter the export
market, said Ruban Hobday, regional director of Chennai-based Gem and Jewellery
Export Promotion Council. Hobday was addressing a gathering at a workshop on "Prospects and
opportunities of gem and jewellery sector in AP", organised by the
Federation of Andhra Pradesh Chambers of Commerce and Industry (Fapcci)
in Hyderabad on Wednesday. Speaking on the occasion, Karikal Valaven, commissioner of industries,
said the Indian gems and jewellery industry was one of the fastest-growing segments in the Indian economy with an annual growth
rate of over 15 per cent.
The industry recorded an export turnover of $16 billion during 2008-09,
making it a significant exchange earner for the country. The UAE was the
largest importer of gems and jewellery from India in 2008-09, with a
share of 31 per cent. This was followed by Hong Kong and the US with 25
per cent and 20 per cent respectively, he added.
According to Shekhar Agarwal, president of Fapcci, there was a need to
create more infrastructure facilities for the industry. Common testing
labs, exclusive gems and jewellery parks and incubation facilities,
besides upgradation programmes for artisans in the sector should be
created in places like Guntur, Nellore, Kadapa and Visakhapatnam where
traditional designs are being practiced, he said. Source: Business Standard
Mamata to take up filmmakers' tax woes with government
Panaji, November 22, 2010 (IANS): Railway Minister Mamata Banerjee Monday said she
will take up the film industry's concerns over taxation with the
government. Her assurance came after filmmaker Yash Chopra raised the
issue at the start of the 41st International Film festival of India (IFFI) here.
Speaking during the inaugural ceremony of the IFFI here, Banerjee agreed
to take up the cudgels for the film industry on tax issues with Finance
Minister Pranab Mukherjee. 'It is a matter related to the finance ministry and I will take up the
issue of taxation with Pranab da (Mukherjee),' Banerjee said. Taxation is too much. I must pursue the matter. The film industry has
contributed a lot to the country,' the Trinamool Congress leader said.
Chopra earlier said that the Indian film industry would be writing its
obituary soon, if it was taxed any further. Chopra slammed the government for devising a virtually strangulating tax
regime, which comprised of a cocktail of taxes, including value added
tax (VAT) and stamp duty.
West Bengal hikes 1% VAT on luxury household items
Kolkata 15, 2010: West Bengal Government incresed VAT Rate on luxury household items.
By increasing the VAT on luxury household items from 12.5% to 13.5% and
by cutting the non-plan expenditure by 10%, the state would be able to
overcome the crisis in next four months
Industries Ministry planning tax sops to promote electric vehicle use
New Delhi, November 10, 2010: The Heavy Industries Ministry has said that it is working on a national
plan for the EV industry, which would include such incentives and help
in developing the support infrastructure. Expected to be rolled out in a
year, the draft notice has already been circulated between other
Ministries concerned, while the final Cabinet approval is expected in December. The plan is to form an enabling policy structure giving special
incentives such as tax relief and waiver of other charges for EV
customers. By reducing the ownership cost of EVs, it hopes to increase
the popularity of such alternative transport solutions. The initial plan
is to roll out pilot projects in some small and medium cities.Though EVs enjoy a lower VAT in some States, the plan includes further
tax concessions for both the industry and customers, setting up an R&D
infrastructure and physical infrastructure such as charging stations and
other initiatives such as free parking for EVs,” said an official.
The Council will also work with the State Governments to provide fiscal
incentives for the use of Electric Vehicles. Currently, Delhi provides
the highest incentives for electric two wheelers with a rebate on VAT
amounting to 29.5 per cent reduction of the price.
Average indirect tax rate down to 12.5%, says KPMG study
November 2, 2010: The average indirect tax rate in India, comprising excise duty, customs
duty, service tax, value added tax and other local taxes, has come down
from 16 per cent in 2005 to 12.5 per cent in 2010 lower than the
global average of 15.61 per cent. The corporate tax rate has also fallen from 39.55 per cent in 2001 to
33.99 per cent in 2010, but it is still high than the global average of 24.99 per cent, says a study.
According to KPMG International 2010 Global Corporate and Indirect
Tax Survey released today, since 2009 the average global corporate tax
has dropped slightly from 25.44 per cent to 24.99 per cent in 2010. The
average indirect tax rate rose slightly from 15.41 per cent in 2009 to 15.61 per cent in 2010. "As governments look to recoup lost revenues from the economic downturn,
the entire world is in the midst of a period of considerable change with
their taxation regimes. A large number of countries are considering, or
are in the process of implementing, substantial reforms of their tax systems," it said.
According to the research, there has also been significant progress in
two of the world's major developing economies, China and India, who
are at different stages of implementing national value added tax (VAT)/
goods and services tax (GST) systems. Furthermore, the debate in the US
has progressed to the extent that consensus is building around the need
for a fiscal solution such as VAT. Source: Busoness Standard
Jindals failed to pay 12% VAT on jewellery at the airport
Mumbai, October 20, 2010 (DNA): The Jindals failed to present themselves at the Mumbai airport on
Tuesday after the Custom officials seized their jewellery and other
goods on Monday when they returned from London. However, the spokesperson for JSW group said that the Jindals were co-operating with
On Monday the Jindals returned from London by a British Airways flight.
They had purchased diamond and platinum jewellery in London where the
VAT is not levied. But in India they were supposed to pay 12% VAT which
they failed to, and also failed to declare it at the green channel.
The value of the goods is around Rs60 lakh and we are still evaluating,? he said. However, according to sources, the jewellery
itself is worth more than Rs1 crore.
RIL tax battle with UP to impose 21 per cent VAT
New Delhi October 14, 2010: Reliance Industries Ltd's legal battle over the Uttar Pradesh
government's decision to impose 21 per cent value-added tax on gas is
holding up supply to NTPC's two power plants and Indian Oil Corporation's Mathura refinery, despite a group of ministers making
allocation to them. While IOC has now approached the Ministry of Petroleum and Natural Gas
for permission to receive an equivalent quantity of gas at its Panipat
refinery, NTPC is hoping to sign an agreement with RIL for the uncontracted quantity soon.
RIL supplies 3.57 million standard cubic metres a day (mscmd) of gas to
four fertiliser companies in the state ? to Iffco for its Aonla and Phulpur units, Kribhco for Shahjahanpur, Indo Gulf Fertiliser for
Jagdishpur and Tata Chemicals for Babrala. Senior officials said pending resolution of the tax dispute, being heard in the Lucknow bench of the
Allahabad high court, RIL was seeking bank guarantees from existing customers for the tax incidence on the quantity sold since April 2009.
When asked, an RIL spokesperson did not comment. Source: Business Standard
Iran Has Lowest VAT Rate
October 8, 2010: Value-Added Tax (VAT) is three percent in Iran, the lowest VAT rate
across the world, said head of State Tax Affairs Organization. Ali Asgari explained that it is comprised of 1.5 percent taxation and
1.5 percent duties, IRIB wrote. According to studies conducted on 140 nations, VAT rates stands between
15-20 percent in 48 percent of nations, while the figure is between
10-15 percent in 24 percent of countries, he said. Iceland, Denmark, Hungary, Sweden, and Norway have the highest VAT rates
in the world with 25 percent.
Implementation of VAT law will increase transparency in economic
activities, cargo transactions and rendering services, the official said.
Asgari continued that Taxation Overhaul Plan including VAT law is part
of plan to make subsidies target-oriented. Source: Iran Daily
CTTA urges uniform VAT rate for teas sold at auction
Coimbatore, September 29, 2010: The Coimbatore Tea Trade Association (CTTA) of India has yet again
appealed to the state government for a uniform VAT rate of 1% for all
teas sold through the auction centres at first point. Addressing the 28th annual general meeting of the CTTA, its chairman, Mr
Chandrakant, highlighted the anomaly in the levy of VAT. While estate
teas are subject to 4% VAT, the bought leaf and co-operative factories
are categorised under 1% VAT.
Shortage drives cashew prices to record levels
Mangalore, Septeber 21, 2010: Fuelled by the shortage of domestic cashew crop, lower supply from the
world market, and a considerable growth in domestic consumption, cashew
kernels in the domestic market have been witnessing all-time high prices
for the past 10 days. On the reasons for the surge, Mr Prabhu said about 40 per cent of the
Indian crop had been affected due to inclement weather in April and May.
World supply also is lower due to poor crops in West Africa.
Mr K. Prakash Rao, former President of Karnataka Cashew Manufacturers'
Association, said there has been a drop in processing capacity in all
the processing centres by about 20 per cent. Added to this, the internal
market has grown by 15-20 per cent. To a query on North Indian demand for the commodity, Mr Walter D'Souza, former President of Cashew Export Promotion
Council of India quoted the example of Delhi and said the Government there had imposed a VAT of
12.5 per cent in the budget. The VAT was cut to five per cent in July-end.
Source: Business Line
Pranab Mukherjee reiterates the urgency in indirect tax regime
Delhi, September 13, 2010 (UNI) Reiterating that India’s GDP growth would hover between
8.5 and 8.75 per cent during the current fiscal, Union Finance Minister
Pranab Mukherjee spoke about the urgency of bringing a major reform in
the indirect tax regime. Speaking at the 179th Annual General Meeting of Calcutta Chamber of
Commerce, Mr Mukherjee sought the wholehearted cooperation of the
industry as well towards achieving the reforms programme, particularly in areas of Goods and Services Taxes (GST).
Referring to the importance of making GTS a simpler issue and see it in
perspective of the present system of state level VAT, Mr Mukherjee said
a synergy must be evolved to ensure that it did not impose any higher
burden on tax payers on one side and limit the scope of revenue generation for the government on the other.
Foodgrain may cost more in GST regime
New Delhi September 9, 2010: Prices of food grains, especially wheat and rice, may go up in the
proposed Goods and Services Tax (GST) regime. At present, about half the
states do not levy Value Added Tax (VAT) on wheat and rice, though they
are allowed to tax these food grains at 4 per cent. In GST, these items
may be taxed at 12 per cent at the concessional rate or 20 per cent at
the standard rate, unless the Union and state governments decide to
exempt these. Currently, there is no proposal to exempt these grains from GST.
The Centre is pruning its exemption list to align it with
states exemption list for VAT, which includes 99 goods. Food grains do not
feature in these items. Even if the government decides to tax wheat and
rice at the lower rate of 12 per cent, consumers will end up paying more
than the current rate. Food grains will become cheaper only if these are exempted from GST. Apart from VAT, various "statutory charges" are levied on food grains by
local governments in the existing regime. While the 4 per cent purchase
tax, levied in Haryana, Punjab and Uttar Pradesh, will be subsumed in
GST, other charges like rural development fee, market fee (mandi tax),
infrastructure development tax and commission to societies and sub-agents may continue in the new regime. A finance ministry official said there was no proposal to subsume local
taxes on foodgrain, except purchase tax, in GST. Since these are not
part of the chain, these will be levied along with GST. The official
added the Centre and states might have to exempt the grains from GST
because taxing them at such higher rates would be detrimental in a country like India.
In the existing set-up, total tax on rice and wheat is highest in Punjab
at 13.5 per cent, followed by Andhra Pradesh (12.5 per cent on rice) and
Haryana (10.5 per cent). In the GST regime, tax on food grains is Punjab
could go up to 21.5 per cent if the 4 per cent VAT/purchase tax is
replaced by 12 per cent GST. Other levies add up to 9.5 per cent in the state.
In states like West Bengal, Bihar and Gujarat, the tax is only 3 per
cent and it mainly comprises other levies which will not be subsumed in
GST. Kerala has exempted rice from tax but charges a market fee of 7 per
cent. Impact of taxing food grains in GST will have maximum impact on such zero-VAT states.
Source: Business Standard
Northeast asks centre to reduce gas prices
New Delhi, August 30, 2010 (IANS): The northeastern states have urged the central government to reduce the
prices of natural gas being used in various thermal power projects of
the region, a Tripura minister said here Sunday. The power ministers of the seven northeastern states met union Power
Minister Sushil Kumar Shinde and Petroleum and Natural Gas Minister
Murli Deora in New Delhi last week and told them that unless the
government reduces the gas price, the people of the northeast would be
burdened with heavy electricity tariff. 'Over 48 percent of the total electricity is generated from the
gas-based thermal power projects in the northeastern region,' Tripura
Power and Transport Minister Manik Dey told reporters. According to Dey, the petroleum and natural gas ministry recently hiked
the price of natural gas from Rs.2,112 to Rs.5,152 per 1,000 standard
cubic metre (SCM) inclusive of 10 percent royalty and 12.5 percent Value Added Tax (VAT).
Bengal to lose Rs 425 crore for higher VAT rate on handsets
Kolkata, August 27, 2010: West Bengal is set to lose Rs 425 crore on account of the difference in
value added tax (VAT) rates between the state which pegs VAT at 12.5 per
cent and the normal income tax (I-T) rate of 5 per cent, said a report
by the Indian Cellular Association (ICA). The apex body of the Indian mobile industry stated that multiple VAT
rates on mobile handsets across 35 States and Union Territories has
resulted in the resurgence of the grey market.
"India is a price-sensitive market. An increase in VAT in some states to
the RNR rate of 12.5 per cent aides the emergence of an internal
parallel market. We estimate mobile handsets worth Rs 5,900 crore will
move outside the VAT chain in 2010-11," said Pankaj Mohindroo, president, ICA.
This manifests in an increasing domination of market supply variables by
a situation similar to that of Chinese mobile handsets. The report
supports claims of a flourishing grey market with the support of a
phenomenon called the "Internal Parallel Market". Source: Business Standard
Amul wants VAT to to come down to 4 on dairy products
Mumbai/ Ahmedabad August 25, 2010 (BS) : In order to provide cushion to milk producers as well as consumers, the
Gujarat Co-operative Milk Marketing Federation (GCMMF), popularly known
as Amul, has suggested that a buffer stock mechanism for milk products
is required in India on the lines of buffer stocking of agricultural commodities like wheat and rice.
The federation also wants value added tax (VAT) on dairy products like
baby milk food, butter, ghee, cheese and ice-cream to come down to 4 per
cent from current 12.5 per cent as it would increase consumer demand,
boost milk products consumption and improve their health by way of better nutrition.
The total milk procurement by GCMMF?s member unions during the year
2009-10 averaged 9.30 million kg per day, which shows a growth of 6.8
per cent over 8.7 million kg per day achieved during 2008-09. Sales
registered a growth of 19.3 per cent to reach Rs 8,005.36 crore as
against Rs 6,711.31 crore last year.
ASSOCHAM urges govt to extend Income Tax waiver benefits on cell phones
August 22, 2010: The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has
urged the government to extend Income Tax waiver benefits to mobile-handset manufacturing in backward areas from 5 years to 10 years
to help industry meet 100 per cent local demand for cell phones.
In addition the chamber has demanded withdrawal of safeguard customs
duty of 1 per cent on mobile handsets with immediate effect to help broad base their sales at reasonable prices.
In a representation submitted to Ministries of Telecommunications,
Commerce & Industry and the Finance by ASSOCHAM President, Dr. Swati
Piramal it has also been sought that element of Value Added Tax (VAT)
which currently varies between 6-14 per cent should be lowered to less than 4 per cent.
Single window system for VAT refunds for Delhi exporters
NEW DELHI, August 13, 2010: Exporters in Delhi will no more have to rush from one
department to another for refund of the value added tax (VAT). The Delhi
government Thursday started a single window service to speed up the
process of payment of VAT refunds to the exporters.
"Export promotion has been an important effort of the government at all
levels. As exports are free from any tax liability, exporters become
entitled for refund of VAT paid on all such purchases before export out
of India," said Delhi Finance Minister AK Walia. Inaugurating the first of its kind Export-Import Cell in the department
of trade and taxes, he said a separate cell for exports-import has been
created to speed up the process of payment of VAT refunds to the
exporters and this would help in making their products more price
competitive. The Cell would also deal with imports.
PM asked states to GST implementation
Delhi, August 2, 2010: Prime Minister Manmohan Singh asked states to embrace the
Goods and Services Tax(GST) from the next fiscal, saying replacement of
most indirect taxes by this will help in greater revenue mop up.
The Centre earlier this week proposed three different rates -- 20 per
cent for goods, 16 per cent for services and 12 per cent for essential items -- under GST. "Reform of tax structure and tax administration isanother important step
in resource mobilisation. The GST is especially important in this
context and I would urge Chief Ministers to give full support to the
effort to implement GST with effect from April 1, 2011," Singh said at
the National Development Council (NDC). The GST would replace excise and service tax at the central level and
VAT at the state-level.
The PM's statement comes at a time when doubts have been voiced by many
NDA-ruled states over the implementation of the GST from April one,
2011. The introduction of new indirect tax regime has already been
delayed by a year due to differences among the states and the Centre.
CAG cautions govt on 'teething problems' in GST
New Delhi July 27, 2010 (PTI) : The much-touted VAT, considered as the precursor to the proposed goods
and services tax (GST), resulted in a loss of revenue for 10 states, and
many manufacturers did not pass benefits arising out of low taxes to
customers, the country's apex auditor the Comptroller and Auditor
General of India (CAG) said today. CAG said this while warning the government about some teething
problems in the proposed GST. CAG also pointed at the lack of preparedness for the common I-T system,
which would enable the rollout of the GST.
In a study titled 'Implementation of VAT in India: Lessons for
transition to GST', the CAG pulled up the Central government for not
monitoring the progress made by respective state governments following
the implemention of VAT. It said that absence of monitoring led to manufacturers not passing the
benefits of tax rate reduction to the common man. "13 manufacturers did not reduce the maximum retail price of goods,
despite a sharp decline in the rate of tax. Consequently, the benefit of
Rs 40 crore was illegally retained by these maufacturers in the VAT
chain instead of being passed on to consumers," the CAG said. The study, covering 23 states, found that 10 states registered a dip in
average revenue during the post-VAT regime, as compared to the pre-VAT period.
Recently, Finance Minister Pranab Mukherjee had expressed hope that GST
would lead to higher revenue for states. In case of revenue loss, he
assured full compensation to states. Pointing that "loose ends across the VAT system have created a situation
rife with opportunities for tax evasion in the states", the CAG said
that one out of every two dealers had tried to evade tax. "...As the departments detected 56,000 cases of evasion, out of 1 lakh
dealers taken up for tax audits and additional demands totalling Rs 783 crore was raised," it said.
Pointing to the nascent I-T structure, CAG said, "We found that automation was in a nascent stage across all states, except
Kerala." The CAG said that if the VAT structure was implemented successfully, it
could have led to a smooth GST regime. "It was known that VAT will eventually lead to GST and a common
software developed on a common platform across the states would be a precursor
for this shift," the study said. Recently, UIDAI Chairman Nandan Nilekani had made a presentation on I-T
infrastructure before the empowered committee of state finance ministers on
GST. The government proposes to implement GST -- which will subsume excise,
service tax and VAT -- from April 1, 2011. As per the Centre's proposal,
goods will be taxed at 20 per cent and 12 per cent while 16 per cent tax
will be levied on services.
Delhi Govt. cut down VAT on the fuel from the existing 20% to 12.5%.
NEW DELHI, july 18, 2010 : Diesel in Delhi will cost Rs 2.50 less per litre from July 20 after the
state government cut down Value-Added Tax (VAT) on the fuel from the
existing 20% to 12.5%. A litre of diesel will now cost Rs 37.60 against
the current price of Rs 40.10. The government said its decision to slash
VAT was taken after it was found that the city government was losing on
revenue on sale of diesel as people preferred to buy the fuel from
neighbouring cities of Haryana where the rate was much less.
Delhi government's decision to reduce diesel prices will not
have any impact on freight rates, transporters said, though car companies said the decision would have a positive bearing on the sales of diesel cars.
GST to help revolutionise tax regime
JAIPUR, July 14, 2010: "The proposed goods and services tax (GST) would revolutionise
the indirect tax regime by facilitating the manufacturer to pay almost
all indirect taxes through a single challan," said Sunil Mitra, secretary, Union ministry of finance, while speaking at a panel
discussion organised by CUTS International and the department of
economics, University of Rajasthan, at Senate Hall on Tuesday. It was
held to create awareness on the distinctive features of the direct tax code (DTC) and GST.
Mitra laid stress on the important role the proposed tax reforms could
play in raising resources for the country's infrastructure which is
imperative to sustain high rate of growth. He spoke on a wide array of
issues related to taxes like area-based exemptions, role of subsidies
and concessions and also cleared doubts of businessmen, chartered accountants and students on the new tax reforms.
The participants urged the secretary to give some special privileges to
Rajasthan under the new tax reforms which is yet to be finalised in
order to create a conducive environment for industries. Earlier, AD Sawant, vice-chancellor, RU, also drew attention to the role
of taxation in facilitating infrastructure development. He urged the
secretary to stress on the need to checking tax evasion for raising the tax revenues.
Source: The Times of India
Media companies oppose tax on copyright services
New Delhi July 8, 2010 : PVR Pictures, Balaji Telefilms, Yash Raj Films and UTV Motion Pictures
have moved the Delhi High Court against the government's recent decision
to levy service tax on copyright services. In a writ petition filed
before the court on Wednesday, PVR Pictures said, by levying service tax
on copyright services, the government was going beyond its powers entrusted under the Constitution.
The finance ministry introduced the tax for the first time on July 1,
2010. PVR Pictures, in its petition, alleged that copyrights are treated
as goods and the transfer of copyrights are treated as sale of goods,
which falls within the domain of taxation by states under Article 246, and not the Union.The taxing entry for copyright services is contained in Section 65(105)
of the Finance Act. The company said treating copyright as goods as well
as a service is ultra vires (beyond the powers of) the Constitution of
India and contravenes Articles 14, 19(1)(g), 265 and 300A of the Constitution.
As per the service tax notification, all entities transferring for use
the copyright in any film or sound recordings would be liable to pay
service tax at 10.3 per cent, as well as sales tax on the copyright.
Source: Business Standard
Telecom operators seeks duty relief
New Delhi, July 6, 2010: Telecom operators have urged the government to
charge zero goods and services tax (GST) on mobile equipment to encourage local manufacturing.
Encouragement to local production is necessary in the wake of security
concerns over foreign equipment particularly those from China. Service providers also want GST to include all telecom infrastructure
and equipment to ensure complete elimination of the cascading effect of
indirect taxes. At present, in addition to the service tax, the sector is saddled with
several other charges and levies, including a 10 per cent excise duty on telecom equipment.
To eliminate the cascading effect of indirect taxes such as excise
duty, VAT, service tax, the government must implement GST in India at
the earliest so that telecom equipment become cheaper for the end-user,?
said Bharti Airtel in a written communication to telecom regulator Trai.
GST, which will replace the excise duty and service tax at the central
level and value-added tax at the state level, besides the cess, surcharges and local taxes, is expected to be implemented from the next
Finance minister Pranab Mukherjee is meeting state finance ministers on
July 21 to discuss constitutional amendments needed to roll out
GST.Operators said the lack of subsidies to local manufacturing in the
country is a major hurdle, which has led to a dependence on foreign vendors.
Source: The Telegraph
Goa to consider VAT reduction on petro products
Panaji, June 30, 2010 (PTI): Goa Chief Minister Digambar Kamat today said the
state was examining the possibility of reducing Value Added Tax (VAT) on
petroleum products to ease the prices. The Commissioner of Commercial Taxes Department has been asked to
examine the possibility of reducing VAT on these products, Kamat told
PTI. "Last time, when prices were hiked we had reduced the VAT on it," he said.
Kamat said that the commissioner of commercial taxes would now
examine the situation in other states vis-a-vis reduction of VAT.
"Generally, there is uniformity in VAT between various states. This
aspect also needs to be considered", Kamat, who is also holding the finance portfolio, said.
The Opposition Bharatiya Janata Party (BJP) had protested against the
petroleum product hike. Party leader Manohar Parrikar had said that the
state can reduce the tax on petroleum product so as to give relief to
the common people.
Put pressure on policy makers for GST rollout, FM tells ind
Surat, June 17, 2010 (PTI): Union Finance Minister Pranab Mukherjee on Wednesday asked the trade and
commerce fraternity to mount pressure on policymakers for smooth
implementation of the proposed Goods and Services Tax (GST) within the
committed timeframe. Mukherjee's statement comes at a time when the Centre and states are
struggling hard to find a common ground for introducing GST, which has
already missed the earlier deadline of April 1, 2010. Speaking at the annual installation ceremony of the South Gujarat
Chambers of Commerce here, Mukherjee said, "Change in the present system
to a new one is bound to find resistance." "I urge the trade and commerce fraternity to mount pressure on
policymakers for smooth convergence, which would lead to implementation
of GST in a committed time frame," the Union Minister said. The Centre and states have not agreed on many aspects of GST so far,
including the structure of tax rate on goods.
While states want two slabs for tax on goods, the Centre wants one.
GST is expected to replace most indirect taxes in the country, including
excise duty, service tax at the level of Centre and Vat at the states'
end, besides local levies. Mukherjee said a good monsoon will revive the growth momentum to achieve
the target set during the Budget, as the economy remained under pressure
due to the vagaries of weather and recessionary pressures emanating from
the world economy last year. The minister also said India has achieved a comfortable level of foreign
direct investment by crossing the $ 20.9 billion mark.
States refuse to budge on GST demands
NEW DELHI, June 9, 2010: State governments stuck to their demands of higher threshold
for central Goods and Services Tax and keeping local body taxes and
electricity duty out of it, threatening the total implementation of what
is touted as the biggest tax reform since independence. The states are demanding dual rate of state-GST to safe-guard their
interests, but opposed by the central government which favours a single
rate structure for ease. These demands were part of the reply sent by
the empowered committee of the state finance ministers in response to a discussion paper. The stand-off casts a shadow over the implementation of GST which FM
Pranab Mukherjee is aiming for by April, 2011. "A uniform threshold will
not be acceptable to small scale industries, that are tax exempt
currently and small traders," said Thomas Issac, Kerala Finance Minister.
"Small traders have apprehensions about dealing with two administrations, filling returns. There are practical problems and a
solution will have to be found through discussions. But, its not an issue that will break the discussions."
The government has been negotiating with the states to implement the GST
as it attempts to do away with the anomalies prevailing in the current
structure where goods and various services are taxed more than once by
state and Central government agencies. It is an attempt to create a
seamless pan-India market. To avoid the "tax-on-tax", states are seeking
more and concessions from the central government as the implementation
cut their revenues. The tax which was supposed to take effect April,
2010, is delayed due to disputes. Acceptance of dual rate structure nullifies the very reason behind the
GST as it not only complicates the tax structure, but also pushes up the taxation rate.
The Centre promised to compensate states in full for any revenue loss
that they may incur due the new tax. The new tax, it is proposed, will replace excise duty and service tax at
the Centre and VAT and local taxes at the states’ level.
Source: The Economics Times
Service tax haunts flat buyers
MUMBAI. May 26, 2010: Already burdened by galloping property prices, flat buyers are
now faced with another fait accompli. For the past one month, many city
builders have been asking purchasers to start paying up the 2.5% service
tax announced in the Union budget . For example, if the value of the
flat is shown as Rs 1 crore in the agreement, the buyer will now have to
shell out an additional Rs 2.5 lakh as service tax. Despite strong representations made to the Centre by those in the
construction industry , the finance ministry is unmoved.
The service tax will be charged on only those residential projects which
are still under construction or where a completed building has not
received its occupation certificate. Buyers say they were not informed of the additional levy when they had
booked the flats. The Confederation of Real Estate Developers’ Associations of India
(Credai) opposed the proposed service tax imposition, saying it would
ultimately make buying houses more difficult. Credai has stated that
such a move will lead to double taxation. Source: Times of India
NRI couple jailed in UK for VAT scam
LONDON, May 23, 2010 (PTI): An Indian-origin couple who fled to India in 2001 after being
arrested and questioned in a VAT scam worth nearly 700,000 pounds in
1998 and 1999, has been jailed after they returned to the UK recently.
Loughborough-based Rekha Parmar, 43, and her husband, Jiva Parmar, 43,
have pleaded guilty for the fraud and have been banned from being
company directors for 15 years. While Rekha was jailed for three years and nine months, Jiva was jailed
for three years and four months.The scam was described as "carousel fraud", which means a complicated
type of cross-border tax evasion that exploits the fact that some countries such as Sweden do not levy
States raising VAT to drive a hard bargain on GST
New Delhi May 15, 2010 (BS): With less than a year left for the scheduled introduction of
the Goods and Services Tax (GST), most states have increased their VAT (value-added tax) rates. The move is seen as an
attempt to extract better compensation from the Centre for loss on account of GST rollout. This will also
allow states to negotiate with the Centre for a higher State GST rate.
The industry fears this “blackmailing” by states may delay GST rollout beyond April 2011 and make things more difficult for the Union government when the Centre and states come to the negotiating table. It also fears this would lead to a higher GST rate, which should have been “around 14-15 per cent.”
“Increased rates of VAT in various states would now cause tougher negotiations between the Central government and the states due to their higher compensation claims. We fear that this might further delay the launch of the GST,” said Amit
Mitra, secretary general of the Federation of Indian Chambers of Commerce and Industry.
States had not increased VAT rates in the last few years. The
trend of increasing the rate caught up only after a task force of the 13th Finance Commission suggested a revenue-neutral GST rate of 12 per cent, much lower than the states’ demand of 18-20 per cent GST. The Finance Commission had also proposed a
compensation of Rs 50,000 crore to states in case of any revenue loss due to the implementation of GST. States, however, felt it was too little and increased the VAT rate to allow them a better bargain.
Taxes on Tobacco Products
New Delhi, May 07, 2010 (PIB) :As per the report, Tobacco Control in India, 2004, about
8-9 lakh persons die annually due to diseases attributable to tobacco use. The health cost of only three tobacco attributable diseases, viz. cancers, lung disorder and cardio vascular ailment was estimated in that expenditure at Rs. 30,833 Cr. (2002-03).
Currently, the incidence of Central Excise duty on major brands of cigarettes calculated on the MRP of the product ranges from 28% to 69%. The incidence would be even higher when calculated on factory gate prices. In addition, cigarettes bear state taxes such as VAT, Octroi etc.
In the 2010-11 budget, the Government has increased the basic excise duty on all tobacco products, except
beedis, by around 20%. Chewing tobacco, unmanufactured tobacco and Jarda scented tobacco have been brought
under the purview of compounded levy scheme wherein the excise duty is paid based on the number of machines installed in the factory of production. Gutkha is already under the compounded levy scheme since July 2008. In addition, some States also levy VAT on tobacco products.
This information was given by Minister of State for Health & Family Welfare, Shri S.Gandhiselvan in written reply to a question raised in Lok Sabha today.
Higher VAT squeezes cola, ice-cream cos margins
NEW DELHI, May 5, 2010: For a change, soft drink and ice-cream makers are feeling the heat this summer. Higher value-added tax (VAT) rates and raw
material costs have hit the margins even as sales failed to match the rising temperature, partly because prolonged power cuts discourage retailers from stocking ice-cream. "Sales are not growing in sync with the temperatures," said Kapil
Agarwal, CEO of Cream Bell ice-cream. So, instead of sitting back and enjoying record sales as North India
suffered the hottest April in 52 years, makers of ice-creams and soft drinks are out in the scorching sun, lobbying for VAT rollbacks or blaming power cuts.
Delhi, one of the key summer markets, recently increased VAT on soft drinks from 12.5% to 20%. This has squeezed the margins of PepsiCo and Coca-Cola, which were already under pressure due to high sugar
prices. Soft drink makers have increased prices by more than 20% earlier this year and they don’t want to do it again for fear of impacting demand, which has been growing at 20-30%. They are now trying to persuade the state government to roll back the VAT hike. Source: The Economic Times
Reforms in tax structure mooted
NEW DELHI, May 3, 2010 (PTI): Finance ministry advisors have called for reforms in the tax structure for services like shipping, aviation and telecom to
make them competitive, as well as put the economy on a higher growth path.A working paper authored by finance ministry senior economic advisor H A C Prasad and additional economic advisor R Sathish asked for rationalising the tax structure in the shipping
industry, which pays 12 direct and indirect taxes currently. Taxes like corporate tax, minimum alternate tax, dividend distribution tax, withholding tax on interest paid to foreign lenders, wealth tax, VAT, lease tax and service tax raise the effective tax rate of around 2%
under the tonnage regime to around 9%, said the paper, titled Policy for India’s Services Sector. As per the tonnage tax system imposed on shipping a few years back, levies were to be based on assets rather than on revenue. The paper clarified that these are the views of the authors and not the finance ministry.
CPI leader demanded reduce VAT on food items in Andhra
Hyderabad , April 27, 2010: The day-long shutdown called by opposition parties against price rise evoked partial response in Andhra
Pradesh affecting transport services. The Telugu Desam Party (TDP),
Communist Party of India (CPI), Communist Party of India-Marxist (CPI-M), Forward Block and
Revolutionary Socialist Party (RSP) called for the shutdown to protest price rise.
Blaming the policies of the central and state governments for the price rise,
CPI leader Narayana demanded that the government immediately reduce VAT on food items in Andhra Pradesh.
Online payment of service tax of over Rs 10 lakh made mandatory
Mumbai April 19, 2010: The Central Board of Excise and Customs (CBEC) has made it mandatory for assessees who have paid Rs 10 lakh or more as service tax for 2008-09 to file returns electronically
through internet banking from this year. Notifications issued by the government also specify the same for central excise duty paid to mandatorily file returns electronically. In both cases, Rs 10 lakh or more
include the amount paid by utilisation of Cenvat credit. While returns for central excise cannot be revised once filed, contents of service tax could be amended once within 90 days of filing returns.
Traders to observe May 1 as Anti-VAT day
April 17, 2010: Traders across the country have decided to observe May 1 as Anti-VAT day (VAT Virodh
Diwas) to protest against the Value Added Tax (VAT) Act, Confederation of All
India Traders (CAIT) secretary general Praveen Khandelwal said today.At a recent meeting in Nagpur, trade leaders from 26 states decided to fight
against the Government for back stabbing them on VAT, he said. He also alleged, ''In VAT white paper, it was agreed and promised to the traders
that VAT slabs will never be changed but the entire concept of VAT has been
moulded single handedly by the Government.'' Also, around 500 trade leaders from all over the country will meet here on May
25 and 26 to decide the further course of action.
Fuel traders threaten indefinite strike over diesel VAT
Delhi, April 09 , 2010 (IANS) : Petrol pump owners in Delhi called off their day-long strike for Friday but
threatened to observe an indefinite shutdown if the state government does not
bring down the value added tax (VAT) on diesel in the next 15 days. They will
meet Delhi Chief Minister Sheila Dikshit and Delhi Finance Minister A.K. Walia
Monday. They said the sale of diesel had gone down drastically after the
Delhi government raised VAT on it from 12.5 percent to 20 percent.
The fuel traders Thursday night called off their day-long strike planned for
Friday after Dikshit assured them that the government would look into their
demand within 15 days. "We have called off the strike for now. If the matter is not given
consideration, we would be definitely going in for an indefinite strike," Ajay
Bansal, general secretary of the Federation of All-India Petroleum Traders
(FAIPT), told IANS."Even Petroleum Minister Murli Deora said our grievances are genuine," said
CAIT to decide action on Goods and Services Tax
Nagpur, April 05, 2010: Confederation of All India Traders (CAIT) will meet in Nagpur from April 9-10 to discuss its further course of action on Goods and
Services Tax (GST), CAIT Secretary General Praveen Khandelwal said. ‘The National Governing Board of CAIT, comprising of leading trade
leaders of different states, will meet from April 9-10 in Nagpur to take stock of the current situation and decide whether or not to support implementation of GST,’ he said.
When Value Added Tax (VAT) was levied, the Central Government said there will be one tax throughout the country but the state
governments have taken a complete U-turn on the issue, he claimed. All states have moulded VAT slabs according to their whims without consulting the traders which has put a question mark on the proposed
GST likely to be introduced shortly, he added.
‘The recent hikes in VAT slabs by large number of states, including Delhi, is a clear deviation from the established fundamentals of VAT as guaranteed by the Central Government and the Empowered
Committee of state finance ministers in their VAT White Paper released in January, 2005,’ he said.
Besides, CAIT national president B C Bhartia said, ‘As per an estimate, there are more than six crore enterprises engaged in unorganised sector which are the real carriers of any indirect
taxation system in the country, as they only collect VAT taxes from the consumers and deposit the same to Government treasury.’ ‘Instead
of giving them a smooth passage which may promote voluntary compliance, the Central and state governments are making taxation laws with a mindset that traders are tax evaders,’ Mr Bhartia added. Source: UNI
Delhi govt decided to withdraw the value-added tax (VAT) on LPG
New Delhi, March 29, 2010: Bowing to mounting pressure from the opposition parties as well as
the people, the Delhi government on Monday partially rolled back the prices of
LPG gas cylinders meant for domestic consumption as well as the
CNG. The Delhi government, in its 2010-2011 Budget announced recently, had withdrawn
the Rs 40 subsidy extended to LPG gas cylinders. However, in the wake of
increasing public pressure, it has decided to withdraw the value-added tax (VAT)
imposed on the LPG. The prices of LPG cylinders in the national capital are now likely to come down
by Rs 12-15, meaning the effective hike for domestic consumers would be
somewhere between Rs 25 to 28.
Delhi Traders carried out a ``VAT Shav Yatra”
New Delhi, March 26, 2010: In an unusual protest, a large number of traders in the national capital of Delhi
carried out a ``VAT Shav Yatra” and burnt the effigy of Value Added Tax system to register their resentment and anguish over the Delhi government’s move to hike the VAT rates on a large number of commodities in the 2010-11 budget proposals.
The agitating traders gathered at Bara Tooti Chowk, Sadar Bazar in walled city area of Delhi and criticised Delhi government’s contention that
VAT slabs and diesel prices have been raised to mobilise funds for the Commonwealth Games. The Confederation of All India Traders
(CAIT), which organized the protest, has also announced that the traders in Delhi will be observing a bandh till 1 pm on Saturday.
Tea prices to go up from April in Maharashtra
Mumbai, March 25, 2010: With the recent hike in value added tax (VAT) on tea and other food items by
the Maharashtra government from 4 per cent to 5 per cent, tea prices will rise further from April 1 this year.
“If 12.5 per cent VAT comes into effect from April 1 this year, tea prices would
rise by Rs 20-30 per kg. It would be too harsh for the common man at large at a
time when the central government is struggling to bring down food inflation. The
lower and medium quality tea priced at Rs 180-200 per kg at present would shoot
up to Rs 200-220 per kg,” said Harendra Shah, president of Federation of Tea
Traders Association of Maharashtra and chairman of Federation of All India Tea Traders Association.
Higher VAT to increase smuggling of diesel
NEW DELHI, March 23, 2010: Increased VAT on diesel will impact the drive against pollution by
increasing the smuggling of inferior quality of the fuel from neighbouring states Haryana and UP — where it will be cheaper due to lower state levy — and
reduce sales at petrol pumps in the capital. The revised VAT will make diesel in Delhi cost Rs 3.37 a litre more than what it
sells for in Haryana and approximately Rs 2 a litre more than UP, according to Ajay
Bansal, general secretary of Federation of All India Petroleum Traders. The dealers are considering downing shutters as a mark of protest and will take a
call at a meeting on Tuesday.
‘‘VAT means death knell for Delhi dealers who have lost 70% of sales to the
neighbouring states in the last two years. With the new rate, the price difference with Haryana has jumped three times from Re 1.
What is the alternative for us... At this rate, we will go out of business soon,’’ Bansal
said. At present, some 1,200kl (kilolitres) of diesel is sold daily through 408 petrol
pumps in the city. Bansal fears that this quantity will fall sharply now as business will get diverted to neighbouring states and make petrol pumps in Delhi
unviable. ‘‘Trucks and vehicles will top up in these states, where inferior quality fuel
is sold, before entering the city. This will severely impact efforts to check pollution. You will also see cheaper and lower grade of diesel being smuggled
into the city, which will increase once Euro-IV fuel is introduced in Delhi from
April 1,’’ Bansal said. Source: The Times of India
Chavan justifies one per cent hike in VAT
Mumbai, March 17, 2010 (PTI) : Maharashtra Chief Minister Ashok Chavan today justified the
hike of 1 per cent in existing VAT saying the state government had the right to
decide on taxation to augment its resources. "There is nothing wrong with it," Chavan said while addressing a press
conference after hosting the customary tea party on the eve of the first budget
session of the state legislature beginning here tomorrow.The government hiked the Value Added Tax (VAT) from 4 per cent to 5 per cent
Chavan criticised opposition Shiv Sena-BJP and MNS for boycotting the tea party hosted by him. "It is customary for them to do so. My government is ready to
discuss any issue raised by them during the session," he said.The Chief Minister said the government has already taken steps to ease the
hardships of the common man due to price rise.
Traders Up in Arms Against the hike in VAT Rates
Bangalore, March 16, 2010: Traders across the country are up in arms against State Governments for gross
deviations in the Value Added Tax (VAT) regime and have threatened to move the Supreme Court to seek justice.
Confederation of All India Traders (CAIT) General Secretary Praveen Khandelwal has decried the tendency of a large number of State Governments over what he termed as their complete U-turn on the 21 points of list of convergence mutually agreed by all State Finance Ministers.
In a press release, he criticised the Centre’s offer to hold talks with State Governments at this
stage as ``totally meaningless” as they have not kept their promises. Instead, they broke the
agreement. `We have no alternative but to take legal recourse and force the state governments to reverse the wrong decisions taken by them,” he said.
VAT was agreed by traders when all the States gave them a clear formula of
how it will be implemented
and their solemn promise that the taxation slabs will be changed only after holding consultations with all the traders. But these promises have not been kept, he explained.
"The increase in floor rates of VAT from 4% to 5% and 12.5% to 15% by various States was a big
betrayal. They levy of a surcharge on VAT by the Haryana government was the last nail in the
coffin,” he said pointing out that it had sent a wave of resentment and protest amongst the traders of the Country.
"It is an established fact that VAT and surcharge cannot go hand in hand,” he said wondering how the traders can trust the Centre and the States on the Goods and Services Tax (GST) system to be adopted
soon in India.” Khandelwal warned that the traders have been forced to give a rethink on GST as well and
neither the Centre nor the State Governments have kept their promise.When the VAT system was
introduced in the country in 2005, the Centre and the Empowered Committee of
State Finance Ministers had assured the Country about simpler taxation system based on certain basic fundamentals.
The White Paper on VAT released by the then Finance Minister P Chidambaram had specifically assured that with the introduction of VAT, there would be uniform rate of taxes on different
commodities in all States across the Country and floor rate of tax will not be amended or altered
by any State and all other taxes like surcharge, turnover tax and additional tax will go away, Khandelwal said. Source: Daijiworld Media Network
CAG recommends VAT on fabric, sugar in MP
March 13, 2010: The comptroller and auditor general (CAG) of India has said the Madhya Pradesh
(MP) government should levy the value added tax (VAT) on fabric, sugar and
tobacco. In its report for the year ending March 31, 2009, tabled today in the
state Assembly, CAG said, "Fabric, sugar and tobacco products are tax-free
goods, unless additional excise duty is levied on them under the Central Excise
And Tariff Act 1985. Since the central government has exempted these goods from
the additional excise duty from March 2006, they are now eligible to be taxed at the rate of 4 per cent." The report has also recommended to make amendments in the VAT provisions of the
act to check losses in revenue. The CAG has said in its pre-VAT (2003-2006) and
post-VAT (2006-2009) audit, that there was a loss of revenue due to lack of
certain provisions — name of commodities, in the form prescribed for filing
return, has been observed as missing. "As most of the cases under the VAT regime
are to be covered under self-assessment, it is not understood how the department
plans to scrutinise returns in absence of such details," said the report.
Rajasthan govt says new VAT not applicable on essential food items
Jaipur, March 10, 2010 (PTI): A day after hiking value added tax by one per cent in the Budget, the
Rajasthan government today announced that the new VAT rate would not be imposed
on essential food commodities such as wheat, rice and sugar.The state government had yesterday in the Budget 2011 proposed to hike VAT rate
to 5% from 4% that would come into effect from April.In an official statement issued here, the state government said that the higher
VAT rate of 5% would not be imposed on essential food commodities, including
wheat, rice, husk, sorgham, sugar and oilseeds such as mustard, ground nut,
seasame, soyabean etc. It added that the new VAT rate would also not levied on cotton, coal, iron,
steel, cotton thread, leather, and jute.On these items 4% VAT would continue as per the Rajasthan VAT Act's Schedule 4,
the release said.
Rajasthan budget raising the lower VAT rate of 4% to 5%
JAIPUR, March 10, 2010: Chief minister Ashok Gehlot had something to offer everyone in Tuesday's
state budget, but it is the economically weaker section and those in rural areas
that got a chunk of his largesse. Those hoping for some relief in fuel prices will also be disappointed.Gehlot tinkered with the VAT rates, raising the lower rate of 4% to 5% while
leaving the higher rate of 14% unchanged. He, however, moved some goods and
services — like CFL bulbs, marble powder, chips, water tankers and food itmes in
restaurants and hotels below three star categories — from the 14% slab to 5%. He
also exempted cinemas which have a maximum admission rate of Rs 50 from
entertainment tax and removed VAT from cinema reels.
Jharkhand budget diesel VAT rolled back
Ranchi, March 7, 2010: It was a budget aimed at sweetening the bitter price rise pill. From cutting down VAT on diesel, sweets and ice- cream to
making foodgrains available at Re 1 per kg for the poor, deputy chief minister Raghubar Das today presented an annual
budget which focused on rural development, food security and social welfare. Das brought smiles on the faces of children and adults alike
by reducing VAT on ice cream and sweets to 4 per cent from the existing 12.5 per cent.
The minister partially rolled back VAT on diesel to 18 per cent from 20, leaving petroleum dealers
unhappy. They threatened to continue their agitation till the government brought it down to 14.5 per cent. Source: The Telegraph
Houses to cost more after service tax
Mumbai, March 4, 2010: Now home buyers will bear a 10% service tax on properties under construction. This,
even before the title transfers from the developer to the consumer.
Union Budget 2010 may have put more money into the hands of consumers. But that
promise does not hold true for home buyers. A 10.3% service tax is now applicable on all under-construction properties. So
far, till the title in a property was passed to the buyer from the developer and
the occupation certificate was handed out, it was understood that there is no "service" that was being provided to customers. However, now the proposed change in the law defines "service" as any receipt of
money from the buyer to the developer."Service tax was imposed on developers in 2005. In 2009, the government issued a
clarification note based on which we sought legal opinion. And, we were advised
that developers did not have to pay service tax," said JC Sharma, MD, Sobha
Developers. Source: IBNLive
Orissa to offer VAT exemption to IT SMEs
Bhubaneswar March 02, 2010:As part of its endeavour to promote SMEs (Small and Medium Enterprises) in the IT sector in Orissa, the state IT
department plans to offer a rent subsidy of Rs 10 per sq ft to these units. Sources close to the state IT department said, plans are also afoot to offer other enabling measures like exemption of electricity duties and value added tax (VAT) for IT SMEs.These measures would be included in the new ICT (Information and Communication Technologies) policy of the state government. Earlier, SMEs had sought complete exemption from VAT on hardware
procurement by the units, investment subsidy and employment subsidy as well as “plug and play” office space for upcoming units. VAT on IT hardware currently ranges from 4 per cent to 12.5 per cent.
Goods and Services Tax delayed, now from April 1, 2011
NEW DELHI, February 26, 2010 (IANS): Finance minister Pranab Mukherjee Friday said he would
introduce major reforms for indirect taxes in the form of Goods and Services Tax (GST) from April 1 next
year. The government was earlier scheduled to introduce GST by April 1 this year.
"I am confident that the government will be in a position to implement DTC
(direct tax code) from April 1, 2011. It will be my earnest endeavour to
implement GST along with DTC from April 1, 2011," Finance Minister Pranab
Mukherjee said during his annual budget speech in the Lok Sabha.
GST is India's most ambitious indirect tax reform, which seeks to bring together
a common market and reduce costs to replace the current fragmented tax regime at
central and states levels like service tax, excise duty, VAT, cesses, surcharges
and local levies.
Auto cos wants govt to retain 8% excise duty
February 19, 2010: IIFL has mentioned auto sector expectations from the budget in its research
report India Strategy dated 17th February, 2010. Last year, excise duty on small cars, two-wheelers and was cut to 8% from 14%, as part of fiscal stimulus.
Large cars and UVs attract an excise duty of 20% + an additional surcharge of Rs 15,000 or Rs 20,000 per vehicle, depending on engine
capacity. Automobiles attract 8% excise, 12.5% VAT, 2% CST and 1% natural calamity cess.
This, together with the cascading effect takes total taxation to 23-25%. Industry demand - Maintain 8% excise duty on small cars and two-wheelers. Reduce excise duty on MUVs designed for transportation of 7 to 12 persons to
8% (70% of these vehicles are used in rural areas). Remove excise duty element of Rs 15,000 on passenger cars other than small cars. Remove 1% National Calamity Contingent Duty (NCCD) on cars, UVs and
two wheelers. GST rate of 16-17% for goods and a closer time limit for GST
implementation. source: Moneycontrol
VAT on goods up in Haryana
Chandigarh, February 16, 2010: The Haryana government has increased the rate of Value Added Tax (VAT) on goods included from
Sr. 1 to 101 of Schedule “C” of Haryana Value Added Tax Act, 2003, from 4 per cent to 5 per cent with immediate effect. However, tax on entry in serial No. 102 of Schedule “C”
of the Act and on the declared goods covered in Section 14 of the CST Act would continue to be levied at 4 per cent. A notification to this effect
has been issued by the Excise and Taxation Department, Haryana. Source: The Tribune
The sale of cotton exempted from the VAT
CHENNAI, February 14, 2010: The State government will soon announce an attractive textile policy, which will
further promote investment and employment in the sector, according to Chief
Minister M. Karunanidhi. Giving away export awards for 2008-2009 at a function organised by the Cotton
Textiles Export Promotion Council (TEXPROCIL) here on Saturday, he called upon
investors from other States and other countries to invest in the State textile
industrial units and assured them of all necessary assistance from the government.
The textile sector in the State provided employment to 4 million
people, the Chief Minister said his government would do its utmost to protect
the industry. The approval for setting up five integrated textile parks at
Kumarapalayam, Cuddalore, Vadipatti (Madurai district), Andipatti
(Theni district) and Karur had boosted textile investment in the State.
Giving an exhaustive account of various initiatives he announced in the Assembly a marine discharge project. The sale of cotton in the
State by the Cotton Corporation of India had been exempted from the Value Added
Tax (VAT). The sales tax on hank yarn was abolished, helping six lakh handloom
weavers. Source: The Hindu
No impact of VAT reduction on mutilated rags
New Delhi/ Chandigarh February 08, 2010 (BS): The decision of the Haryana government to reduce VAT on
mutilated rags under the Haryana Value Added Tax Act, 2003, would virtually have no major impact on the woolen and shoddy mills in Haryana, even as the government claims otherwise. The members of
Woolen and Shoddy Yarn Mill Association maintained, apart from simplifying the process of refund for
woolen and shoddy yarn manufacturers, the decision would have no major impact. Panipat district in Haryana is one of the biggest producers of shoddy yarn with around 300 shoddy units. Mutilated rags
imported from overseas are used by the industry in Panipat to produce shoddy yarn. In its cabinet meeting held recently, the state government had announced its decision to reduce the rate of tax on mutilated rags under Haryana Value Added Tax Act, 2003 from 12.5 per cent to four per cent.
According to the government, to boost the woolen and shoddy yarn industry, which was under pressure
due to recession, the decision was taken.President of All India Woolen and Shoddy Mills’ association
Pawan Kumar Garg said earlier mutilated rags were not categorised under specified goods category but with their inclusion under specified goods category, VAT had been fixed at 4 per cent.
Liquor becomes dearer from April 1
CHANDIGARH, February 5, 2010: Haryana may witness an upward trend in liquor rates from April 1, when increase in licence fee of vends in the state comes
into effect. The hike may go up by 10% in Gurgaon, Faridabad, Panchkula and other parts of the state. Announcing the excise policy for 2010-11 after the state cabinet
meeting on Thursday, chief minister Bhupinder Singh Hooda admitted “mahangai ka asar hota hai (inflation has an impact),” while replying to a query on the likelihood of liquor rates heading orthwards. The state government has decided to renew vends of both country liquor and Indian made foreign liquor (IMFL) at a “reasonable” increase of 5 to 10%.
The cabinet has also decided to raise value added tax (VAT) on select commodities from 4% to 5% to generate additional revenue mobilisation of about Rs 300 crore per annum. The rate of tax on industrial inputs and packing materials, cereals, coal, cotton, cotton yarn, iron and steel and oil seeds will remain unchanged.
Tobacco products, including cigarettes, will also be dearer as the tax on them has been increased from 12.5% to 20%. The raise would not be applicable on tobacco products used in ‘bidi’ and
‘hukka’. Source: The Times of India
GST will not be introduced from April 1, 2010
NEW DELHI, January 30, 2010: After many doubts and much speculation, it’s now official. The proposed Goods and Services Tax (GST) which is to replace most of the indirect taxes levied by the Centre and the States will not be introduced from April 1, 2010. A fresh date for its implementation will be announced
in April after a meeting between the States and the Union Government.
Speaking to the media after a meeting with Union Finance Minister Pranab Mukherjee here on Thursday, Empowered Committee of State Finance Ministers chairman Asim Dasgupta said: “Because of the difficulties connected with the passing of the required constitutional amendment Bill in the Budget session, it will not be practical to introduce GST on April 1,
2010. The new date for [its] introduction, the Union Finance Minister suggested, would be settled in April.”
As per the original schedule of implementation, the GST was to be launched from April 1 this year to bring about uniformity in the indirect taxation structure throughout the country by doing away with Central levies such as excise duty and excise tax along with the value added tax (VAT) and octroi at the State level. Source: The Hindu
Rajasthan govt has announced VAT exemption on imported sugar
JAIPUR, January 29, 2010 (PTI): The Rajasthan government has announced VAT exemption on imported sugar in the state till June 30, in a bid to control the spiralling sweetener prices. "The decision to exempt four per cent VAT was taken by Chief Minister Ashok Gehlot yesterday, following which sugar price will
decrease by Rs 1.6 to 1.8," an official said. Sugar prices are ruling between Rs 41-43 a kg in the state.
"The government has exempted the tax in view of rising prices. After
June, further decision will be taken accordingly after a review of situation," the official added.
India, the world's largest consumer of sugar, is estimated to produce nearly 16 million tonnes of sugar against the annual demand
of 23 million tonnes. The gap of 7 lakh tonnes is being met through imports.
Centre, states differ on GST rate structure
New Delhi, January 27, 2010 (PTI) :The Centre on Monday opposed two rates suggested by states for goods under the
proposed goods Good and Services Tax (GST). "There should be a single rate of
SGST (state GST). A two rate structure of goods would pose problems," the Union
Finance Ministry said in its comments on the discussion paper on GST mooted by
the Empowered Committee of State Finance Ministers. The empowered panel has proposed to adopt a two-rate structure -–a lower rate
for items and goods of basic importance and a standard rate for goods in
general. It also suggested a special rate for precious metals and a list of
exempted items. However, the Revenue Department said that a two-rate structure
for goods would lead to more taxes on raw material and less taxes on finished
goods. The structure would also lead to demand of two rates on services which are currently taxed at a single rate.
The empowered panel has proposed a single rate for services under the GST. The
Revenue Department said that different rates for goods and services would imply
that the distinction between goods and services should continue. The department
also differed with the empowered panel proposal on keeping alcoholic beverages
and some petroleum products out of GST.
ASSOCHAM opposes hike in VAT by three states
January 22, 2010: The Associated Chambers of Commerce and Industry of India has
sought immediate intervention of Centre as well as Empowered Committee on VAT to
persuade State’s like Delhi, Karnataka and Assam not to deviate from VAT rate
fixed by the Empowered Committee on VAT in the interest of consumers.
Mr DS Rawat secretary general of ASSOCHAM said that it was unfortunate that
State government like Delhi, Karnataka and Assam have increased VAT rate on many products by 1%.
Other states will follow the suit, warned Mr Rawat as result consumers that are
already reeling under severe heat of price rise of essential commodities would
face utter inconveniences with increased VAT rate. He said that Indian industry, mostly in manufacturing segment will not be
affected with increased VAT rate as these will drop the burden of increased
taxation on consumers which will ultimately be worst sufferers. Mr Rawat appealed to empowered committee on VAT as well as the finance minister
to intervene and persuade state’s that has deviated from fixed VAT rate to
withdraw it at rates already fixed by the committee. If VAT rates are not
brought to original slabs, other states will follow the suit and that would be a
very bad precedent in the history of Indian taxation. Source: Steel Guru
Pawar mulling removal of value-added tax (VAT) on sugar imports
January 18, 2010: Prices of sugar, which have more than doubled in the past year, are set to
soften in 10 to 15 days, Agriculture Minister Sharad Pawar has said.
The sugar crisis took a political twist when Uttar Pradesh Chief Minister
Mayawati recently blamed the Centre’s policies for the shortage. The state of UP
is a major sugar producer and Mayawati said the central government allowing
exports in a year of lean output was the chief reason behind the shortage, a move she said intended to benefit mill owners.
The government extended the deadline for importing refined sugar and said it was mulling removal of
value-added tax (VAT) on imports. The Home Ministry would also crack down on smuggling of sugarcane and sugar in the country, the government promised. Those measures may have now borne fruit now as wholesale sugar prices have come
down by about 10% — from Rs 4,280 per quintal to Rs 3,980 per quintal — in the last two days, Pawar said. He added retail prices were expected to come down
soon as well.
ICAI wants GST rollout to be delayed by a year
NEW DELH, January 16, 2010I: The Institute of Chartered Accountants of India
(ICAI) has asked the government to defer the implementation of Goods and Services Tax (GST) from April 1, 2010 by an year to allow for a smoother transition to the new indirect tax framework. “For smoother transition, it is imperative that GST be implemented
from the first day of a financial year. Since there is very little time for the slated implementation date of April 1, 2010, it is recommended that GST be implemented from April 1, 2011,” the ICAI said in its submission to the government.
The ICAI had constituted an expert committee to look into the implementation of the GST structure at the instance of the finance ministry. While favouring a dual- GST structure, the ICAI want the tax to be administered by a common authority. As part of transition measures, the ICAI has suggested that the
indirect tax on on-going works contracts/turnkey contracts and lease transactions be discharged on similar basis as like prior to introduction of GST. This it says will safeguard against an increase
in liability for suppliers involved in such contracts from an adverse impact of higher taxation rates under GST. Source: The Economic Times
Delhi shifted to a 5% Value Added Tax (VAT) slab from 4%.
NEW DELHI, January 15, 2009: Starting Thursday, Delhi shifted to a 5% Value Added Tax (VAT) slab from 4%. The shift to the 5% slab will impact the prices of medicines, surgical and medical equipment, IT and electronic products like computers and software, and industrial inputs, among other things. The five percent slab will cover 170-odd items.
The draft amendment bill proposing a hike in VAT had been met with much opposition by the trader lobby. The Confederation of All India Traders had earlier raised
concerns over the proposed increase in the VAT slab, saying it would lead to a hike in the prices of necessities and affect the common man.
But the government moved to pass the amendment Bill in the Delhi assembly in December, and on Wednesday notified the scrapping of the 4% slab and its replacement with the 5% slab. But Delhi
Fianance Minister AK Walia is clear the shift to the 5% slab is in keeping with the Central Government's directions on the VAT regime."All items under the 4% slab in the VAT Act are now under the 5% slab. The shift to a 5% slab will lead to an escalation in revenue collections," Walia said. Source: The Times of India
States have been asked to remove VAT and other taxes on imported sugar.
New Delhi, January 14, 2010: PRIME Minister Manmohan Singh, who chaired a meeting of Cabinet Committee on
Prices (CCP) on Wednesday, approved a host of measures aimed at taming the food inflation. The measures include: The Cabinet approved the sale of 5 lakh tonne
of wheat and 2 lakh tonne of rice through state-run agencies such as the National Agricultural Cooperative Marketing Federation of India Ltd and National
Cooperative Consumers’ Federation of India Limited. Also, 2-3 million tonne of wheat and rice should be released in the open market over the next two months.The CCP has approved
extending the deadline for refined sugar imports to December 31. There will be no quantitative cap on imports. The import of raw sugar at zero duty is already permitted up to 31 December 2010. Sugar prices
have hit the roof on account of drought in India and flood in Brazil, the two major sugar producing countries. The Cabinet also changed a rule to help millers in Uttar Pradesh, to process
nine lakh tonne of imported raw sugar lying at Mundra and Kandla ports, skirting a ban on supplies of imported raw sugar imposed by the Mayawati government in November to quell farmers’ protest. States have been asked to follow Delhi to remove VAT and other taxes on imported
sugar. The CCP has also instructed the Home Ministry to crack down on smuggling
of sugarcane and sugar from India to Nepal.
Pranab to meet state FMs on Jan 13; govt to miss GST deadline
NEW DELHI, January 10, 2010: Finance Minister Pranab Mukherjee may meet state finance
ministers this week to discuss their requirements and implementation of proposed Goods and Services Tax,
speculated to be delayed by over six months, is likely to be discussed during the meeting. "Finance Minister will meet state finance Ministers on January 13 as a pre-budget exercise," an official said. Among other things, the meeting is also likely to discuss issues pertaining to implementation of GST, which is likely to be delayed by at least seven to eight months, he said.
The government had proposed to introduce GST from April 1, 2010, but it would not be possible as the constitutional amendments, necessary for introduction of the new tax structure which will subsume levies
like excise, VAT and service tax, would take seven to eight months.The government, the official said, may not introduce the amendment bills in the forthcoming Budget session as there is no consensus
among the states on rates and modalities of the new tax regime.States, which have been clamouring for more funds to tide over the financial difficulties following the economic crisis which had hit revenue collections, will also raise the issue of compensation on account of phasing out of the Central Sales Tax (CST). Source: The Economic Times
Low VAT/GST be imposed on processed food: Sahai
Kolkata, January 8, 2010 (PTI): The Union Minister for Food Processing Subodh Kant Sahai
today said Value Added Tax rates or Goods and Services Tax rates (when it will
be in place)on processed food should be between zero to four per cent.Speaking at the North-East summit organised by the Indian Chamber of Commerce,
he said that if processed food were taxed at higher rates, then the food
processing industry would not be viable for investors. Sahai said that he had urged Asim Dasgupta, chairman of the
empowered committee of state finance ministers on GST, to keep these products in the above mentioned
taxation bracket. Once the production level of processed food increases to 50 per cent from the
present level of 10 per cent, tax rates could then be increased.
GST launch set to be delayed
NEW DELHI, January 8, 2010 : By all indications, the proposed Goods and Services Tax (GST) — much-awaited by India Inc. for
nationwide uniformity in indirect taxes — is set to miss the April 1, 2010,
deadline that was slated for its introduction. A decision on fixing a fresh date
for its launch is likely on Friday. A day before the Empowered Committee of State Finance Ministers’ meeting with
Finance Minister Pranab Mukherjee, panel Chairman and West Bengal Finance
Minister Asim Dasgupta said: “Tomorrow, we will discuss the new date for
introduction [of GST] and compensation formula to the States with the Union
Finance Minister .. Together, we will announce a new date.”
Dr. Dasgupta was talking to the media here after a meeting of the State finance
ministers on arriving at a revenue neutral rate for the GST which is envisaged
to subsume a host of indirect taxes such as excise duty and service tax at the
Central level and VAT (value added tax) at the State level, apart from surcharges, cesses and other local taxes.
Initially, the government had proposed to replace all these levies with GST from
April 1, 2010. However, no consensus has been arrived at thus far, either on the
mechanism of revenue sharing between the Centre and the States or on the date of
its countrywide launch. Besides, the other reason for its delay is the need for
Constitutional amendments for rolling out the new tax regime, apart from the
preparedness and of all the 32 States and Union territories. Source: The Hindu
Industry favours early implementation of GST
New Delhi January 5, 2010 9PTI): India Inc today asked Finance Minister Pranab
Mukherjee to introduce Goods and Services Tax (GST) "as early as possible",
amid speculations that the indirect tax reform may not be implemented from the scheduled date of April 1.
"We want that the GST deadline should not be missed," Ficci President Harsh Pati Singhania told reporters after a pre-budget meeting with Finance Minister Pranab Mukherjee along with other industrialists here today.CII President Venu Srinivasan said: "Our view is that even if there are lacunae and flaws in GST, we will correct it as we move along, GST should be implemented as early as possible."
"We want GST implementation as soon as possible," Assocham President Swati Piramal said.
Some states, including Madhya Pradesh, Rajashtan, and Tamil
Nadu, want the GST implementation to be delayed as there are issues relating to preparedness. In fact, Mukherjee had also said that it might not be possible to introduce GST from April 1.
Singhania said in case GST could not be implemented from April 1, Central Sales Tax (CST) should be reduced to one per cent from the current 2 per cent. CST is a levy imposed on
inter-state movement of goods and has been cut from earlier 4 per cent to 2 per cent in phases, after VAT was introduced. CST does not conform to the idea behind VAT or GST, as the indirect tax reforms aim at a common market across the country.