Government to easen GST norms for small businesses

The Goods and service tax regime may have been burdensome for small businesses to get acclimatized to  and although the current norm requires traders with an annual turnover of Rs. 20 lakhs and above to register under the GST system, for the businesses to fully exploit the benefits of the new system it is important that everybody from the raw material trader to the vendor registers under the system.

To this effect, the government is planning an easier set of rules to comply with for the convenience of small businesses with an annual turnover of under Rs 20 lakh.

This decision comes after Prime Minister Narendra Modi urged tax officials to help these traders and small businesses to migrate to the GST rule everyone in the production chain might be cumbersome, the government acknowledges these predicaments, “It should be like Saral (the income tax form), which should be a single-page form with only the sales and purchase details to be furnished,” a senior government official, who did not wish to be named, as reported in the Times Of India.

The registration process might be cumbersome along the chain, but the government has duly noted these predicaments, “It should be like Saral (the income tax form), which should be a single-page form with only the sales and purchase details to be furnished,” a senior government official, who did not wish to be named, as reported in the Times Of India.

Meanwhile, the new compliance mechanism is in its infancy and is being worked out by the Central Board of Excise and Customs. Once the conceptualization is done, the compliance rules will then be finalized by the GST Council.

The main idea is to expand the current tax base while ensuring that those registered under GST and who are doing business with non-registered entities have a fair and legitimate database of their business links.

Sources: Times Of India, Deccan Chronicle 

Image source: Deccan Chronicle 

30 crore families have bank accounts under Jan-Dhan : Arun Jaitley

Addressing the Conclave on Financial Inclusions organised by the United Nations in India in Delhi on Wednesday, Union Finance Minister Arun Jaitley highlighted the three-year progress of the central government’s Pradhan Mantri Jan-Dhan Yojana (PMJDY) programme.

Talking about the launch of the initiative three years ago, Jaitley emphasised that the programme came at a time, “when banking was just a prerogative of a small section of society, with almost 42 percent of India being excluded from it”.

Further, the FM went on to discuss the progress of the scheme. So far 30 crore new accounts have been opened under the PMJDY. Also, zero balance accounts have also decreased to about 20 percent from 77 percent in these three years.

Underlining the value of financial inclusion in the Central government’s policies, Jaitley also mentioned how the introduction of the Goods and Services Tax (GST) will help make formalisation “beneficial” for the country.

Discussing how another initiative Pradhan Mantri Mudra Yojana has aided the cause of financial inclusion, he explained that the scheme has helped in providing small loans and financing small businesses and the recipients have been women and vulnerable sections.

Sources – Deccan Chronicle , Firstpost

Image Source – Dalip Kumar


RBI Annual Report FY 2016-17 – An Overview

Reserve Bank of India in its annual report stated that fiscal consolidation may come under threat both at the central and state level due to the immediate effects of the goods and service tax (GST), loan waivers and pay revisions, putting pressure on the overall growth matrix.



According to the report, public administration, defense, and other services mainly stifled the growth number. PADO added 2.2% points to the growth of real GVA in the services sector and 1.4 % points to the growth of overall GVA of 6.6% during the year.

In terms of production, agriculture and other allied activities recovered sharply in 2016-17. This was mainly facilitated by adequate monsoons as well as a considerable amount of increase in pulses’ minimum support prices (MSPs) that augmented the sector’s growth.

RBI said that there were uncertainties in regard to revenue mobilization, subsequent to the implementation of the goods and services tax along with increasing committed liabilities of states could led to a possible breach of fiscal deficit targets.

“In the fiscal sphere, while the gains in growth, efficiency and tax buoyancy over the medium term from the recent implementation of GST are unequivocally recognised, near-term uncertainties with regard to revenue mobilization therefrom – which could impact fiscal consolidation at both centre and state levels – cannot be ruled out as this fundamental reform gains pan-India traction,” RBI said in its annual report

The State finances have also deteriorated on account of the UDAY (Ujwal Discom Assurance Yojana) scheme aimed at reviving poor power distribution companies (discoms) and revenue falling short despite cutbacks in capital expenses. Additionally, four state governments – Uttar Pradesh, Maharashtra, Punjab, and Karnataka — are likely to face challenges as the farm loan waiver could derail the fiscal discipline.


Infrastructure saw many firsts

Stalled projects declined by 40% in terms of value and 37% in terms of number, according to the RBI’s annual report.
The financial year saw the highest ever awarding and construction of national highways. Also, capacity addition in all the major ports was also the highest during this year. India for the first time turned from a net importer to a net exporter of electricity.


Aggregate Demand Suffered

During the financial year 2016-17, GDP weakened due to the slowdown in Gross capital formation (Net increase in physical assets in the financial year) as a result of sluggish business confidence and lowering in the entrepreneurial spirit took a toll on the new investment.Gross fixed capital formation contributed barely 0.7 percentage points to the real GDP growth of 7.1% in FY17, despite accounting for around one-third of real GDP.
RBI’s assessment reflects the real GDP growth was largely sustained by private and public spending. In fact, in the absence of factors like the 7th Central Pay Commission hikes and the one-rank-one-pension for defense services, real GDP growth would have been lower by 2 percentage points, the regulator noted.

The RBI said Private consumption spending alone contributed two-thirds of the growth in aggregate demand.

On Demonetisation

The RBI reported that 632.6 crore notes of Rs 1,000 denomination in circulation, 8.9 crores have not been returned post the note ban on 8th November 2016. Thus, only 1.3% of Rs 1000 notes didn’t return after the demonetization exercise. The printing cost of new notes doubled to Rs 7,965 cr in the financial year 2017 from Rs 3,421 cr in the financial year 2016 on account of new currency printing post note ban.

Source – RBI Annual Report

Economic Times-

Image source- Financial Express

Govt planning 2% incentive on digital payments

The digital payments may soon become less expensive as the government is mulling over a 2% incentive on the same. In a move to encourage digital transactions and discourage cash payments, the government plans for a 2% relief on the applicable GST tax rate in digital payments that are billed up to Rs 2,000.

According to The Economic Times, the proposal which can be seen as a benefit either as a discount or cash back, is currently being discussed in the Finance Ministry, cabinet secretariat, RBI and Ministry of Electronics and IT.

The IT ministry has been leading the government’s efforts to encourage digital payments and has been considering initiatives that may popularise electronic payments further. PM Modi addressing the nation on 71st Independence Day, asked people to use less cash and Modi has been in favour to boost digital payments which has prompted various government departments to facilitate their acceptance.

As per TOI reports, a recent high level meeting took place which analysed digital payments post demonetization and was attended by IT Minister Ravi Shankar Prasad and senior officers from other government ministries including the finance ministry and the cabinet secretary’s office.

A TOI source also stated, “Transactions of up to Rs 2,000 are very high in volumes and if an incentive can be given here, it will provide an impetus to digital payments while facilitating the entry of more people within the formal economy. This will help plug leakages while playing a credible part in countering the development of black money.”

But as of now the route which the government may suggest for providing the 2% incentive is unclear.



Cigarrete prices to increase after GST

The stock market saw a fall of 15 percent in the shares of ITC Ltd, its steepest fall in 25 years. Many brokerages downgraded the stock and reduced their target prices as the government increased their cess on cigarettes, which ultimately led to the company going through an erase of nearly Rs50,000 crore in market value.

Not just that, other cigarette companies like VST Industries Ltd went down 3 percent and Godfrey Phillips India Ltd shares have also gone down by 6 percent mentioned Inshorts.

CLSA in a note mentioned “We were forced to downgrade to ‘sell’ as earnings outlook weakens,” adding, “Price hike would be required to grow earnings which may also impact volumes. The outcome is clearly negative from the neutral stance that the government always mentioned.”

Livemint also reported, that the prices of cigarettes will also increase by Rs 4.8-7.9 per 10 sticks, which further depends upon the specific filters and length of the cigarettes. Finance Minister Arun Jaitley, quoted after GST Council meeting, the increase in cigarette cess will ultimately benefit the exchequer by an approximate amount of Rs5,000 crore per year.

Sources: Inshorts, Livemint

Restaurants duping customers post GST

One can call it a mistake, one can call it confusion and one can call it deliberate, but it seems like Pune based restaurants are taking advantage of the confusion among customers regarding GST.


German Bakery Wunderbar, a bar cum restaurant near SB Road continues to charge 5% tax on Alcoholic beverages over the 18 % GST. When asked to clarify; Manager Aditya Shinde refused to comment on the situation, but mentioned that the restaurant is getting taxed by the wholesaler.  He asked us to contact the firms CA, but he has been unavailable for any comments.

Most of the restaurants have gone to a complete redesigning of their menu cards to replace the existing 3 tier (Service charge, VAT and service tax) structure with GST but in none of the restaurants the prices of the commodity have reduced.

Le Plaisir, an European themed restaurant based on Prabhat Road, increased their prices by 50 rupees per item just to hide that additional service charge which the customers are not liable to pay anymore.

Some of the restaurants in the city are charging 18% tax on home deliveries.

The situation was a bit different around Camp where some restaurants had put it up on their notice that they will continue to charge 6 per cent service tax.

Pune just became a bit more expensive for the food lovers than it already was, the move by the restaurants has been very un-welcoming and this could hurt the industry itself. With long queues on the counter for bill clarification how far of a stretch can this charade go.

Ram Vilas Paswan: Hefty fine if revised MRP not reprinted by September end.

Ram Vilas Paswan, the Consumer Affairs Minister has announced on Friday that a fine of Rs 1 lakh will be charged including a jail term if the manufacturers fail to reprint revised MRP by the end of September. The move has been made in the interest of the consumers.
“We have told companies to reprint revised rates on unsold goods. To make the consumers aware of the revised changes, stickers of new MRP should be pasted,” he said.
According to The Times of India, he mentioned that a committee of the consumer affairs ministry has been set up which will help in addressing the grievances of the consumer. He also said that to answer tax related queries they have increased the number of helplines from 14 to 60. Up till now, the consumer helplines have received more than 700 queries for which the ministry is seeking for expert help.
“The initial hiccups which arose due to the implementation of GST will be resolved soon. The concerned ministries especially finance and consumer affairs, are alert and a redressal mechanism is in place to resolve the concerns of consumers and traders,” Paswan assured as reported in Business Today.
Pawan warned that if the manufacturers do not comply with the rule, they will attract a penalty of Rs 25,000 for first time offence, Rs 50,000 for the second time and the fine can reach up to Rs 1 lakh along with imprisonment for one year.