GST Current Affairs

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Adoption of GST tax will boost India’s medium-term growth: IMF

The International Monetary Fund (IMF) has asserted that adoption of GST (Goods and Services) tax will boost India’s medium-term growth.

It was mentioned IMF’s latest Asia Pacific regional economic update. It mentioned that India has shown progress on reforms that could boost business investment and growth.

IMF’s findings

  • Greater labour market flexibility and product market competition in India remain essential to create jobs and raise growth.
  • Priorities also include effective implementation of the new corporate debt restructuring mechanisms.
  • India has shown progress on reforms that could initiate business investment, including already strong FDI inflows, which will further increase domestic demand.
  • Over the medium term, a number of Asian economies stand to benefit from a demographic dividend.
  • In some Asian economies like India and Indonesia the working-age population continues to grow, potentially helping sustain strong potential growth.
  • India’s growth continues to benefit from large improvement in terms of trade, positive policy actions, including implementation of key structural reforms, enhancement in confidence and gradual reduction of supply-side constraints.

What is GST?

  • GST is uniform single indirect tax regime throughout the country that has subsumed central and state indirect taxes into single indirect tax.
  • It aims to remove indirect tax barriers across states and integrate the country into a single common market, boosting government revenue and reducing business costs.
  • The Constitution (One Hundred and First Amendment) Act, 2016 gives the constitutional status to GST.

For more information: Benefits of GST Regime

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CCEA approves implementation of Project SAKSHAM for CBEC’s GST integration

The Cabinet Committee on Economic Affairs (CCEA) under the chairmanship of Prime Minister Narendra Modi has approved ‘Project SAKSHAM’.

The Project SAKSHAM is a New Indirect Tax Network (Systems Integration) of the Central Board of Excise and Customs (CBEC).

It seeks to bolster the information technology network for the new Goods and Services Tax (GST) regime that the Union Government intends to roll out from 1st April 2017.

The Project SAKSHAM will help in

  • Integration of CBEC IT systems with the Goods and Services Tax Network (GSTN).
  • Extension of Indian Customs Single Window Interface for Facilitating Trade (SWIFT)
  • Other taxpayer-friendly initiatives under Digital India and Ease of Doing Business of CBEC.

Background

  • With the implementation of GST, the Union government expects the number of taxpayers under indirect tax laws to increase to about 65 lakh from the current 36 lakh.
  • CBEC’s IT systems need to integrate with the GSTN for processing of registration, payment and returns data sent by GSTN systems to CBEC.
  • It will also act as a front-end for other modules like audit, appeal and investigation. However, there is no overlap in the GST-related systems of GSTN and CBEC.
  • IT infrastructure is also required for continuation of CBEC’s e-services in customs, central excise and service tax, implementation of taxpayer services, extension of SWIFT initiative and integration with government initiatives such as e-Taal, e-Nivesh and e-Sign.

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GST council sets exemption threshold for tax at Rs.20 lakh

The first meeting of Goods & Services Tax (GST) Council has decided to exempt businesses with annual turnover below Rs.20 lakh out of the GST net.

The meeting was presided by Union Finance Minister Arun Jaitley in New Delhi and was attended by Finance ministers of states.

Key Outcome of GST council’s first meeting

  • Exemption Issue: Threshold for exemption for businesses in Northeastern and hill states will be for annual turnover below Rs.10 lakh and rest of India it will below Rs.20 lakh.
  • The Northeastern and hill states have been accorded special status by the Constitutional Amendment paving the way for the GST.
  • Administrative Control Issue: Consensus was reached on the contentious issue of administrative control over indirect tax assessees.
  • States will have sole jurisdiction over assessees having a turnover of Rs.1.5 crore or less. In case turnover exceeding that limit, the administrative control will be jointly with the central and state governments.
  • The existing 11 lakh service tax assessees will continue to be under the jurisdiction of the Centre.
  • Revenue officials in the States will be trained for assessing assessees in the services sector as GST allows states to also tax services.
  • Compensation formula: The compensation that Central Government will pay to states for losses of revenue because of the transition to GST regime will be routinely, quarterly or bi-monthly.
  • Base Year: The GST Council also agreed to settle 2015-16 as the base year for calculating the compensation.

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