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Lok. Sabha. May 1. The Amendment Bill presented in the Rajya. Sabha. May 1. 4, 2. The Bill forwarded to joint committee of Rajya. Sabha and Lok. Sabha. Aug 2. 01. 5: Government fails to win the support of Opposition to pass the bill in the Rajya. Sabha where it lacks sufficient number. Aug 3, 2. 01. 6: Rajya. Sabha passes the Constitution Amendment Bill by a two- thirds majority. Note: GST constitutional amendment bill needs to passed by at least 5. Assam is 1st State to pass GST bill. July 2. 01. 7: GST to be applicable across India. Benefits of GSTFor Central and State Governments. Simple and Easy to administer: Because multiple indirect taxes at the central and state levels are being replaced by a single tax “GST”. Moreover, backed with a robust end to end IT system, it would be easier to administer. Better control on leakage: Because of better tax compliance, reduction of rent seeking, transparency in taxation due to IT use, an inbuilt mechanism in the design of GST that would incentivize tax compliance by traders. Higher revenue efficiency: Since the cost of collection will decrease along with an increase in the ease of compliance, it will lead to higher tax revenue. For the Consumer. The single and transparent tax will provide a lowering of inflation. Relief in overall tax burden. Tax democracy that is luxury items will be taxed more and basic goods will be tax- free. For the Business Class. Ease of doing business will increase due to easy tax compliance. Uniformity of tax rate and structure, therefore, better future business decision making and investments by the corporates. Removal of cascading effects of taxes. Reduction in transactional cost will lead to improved competitiveness. Gain to the manufacturer and exporters. It is expected to raise the country GDP by 2% points. Note: We have covered the 1. Goods and Service Tax in a separate article. GST Council. It is the 1st Federal Institution of India, as per the Finance minister. It will approve all decision related to taxation in the country. It consists of Centre, 2. Delhi and Puducherry. Centre has 1/3rd voting rights and states have 2/3rd voting rights. Decisions are taken after a majority in the council. Supporting Laws to implement GSTFor the implementation of GST, apart from the Constitution Amendment Act, some other statutes are also necessary. Recently 5 supporting laws to the GST were recommended by the council. The details are given below. The Central Goods and Services Tax Bill 2. The CGST Bill). The Integrated Goods and Services Tax Bill 2. The IGST Bill). The Union Territory Goods and Services Tax Bill 2. The UTGST Bill). The Goods and Services Tax (Compensation to the States) Bill 2. The Compensation Bill). And a state GST will be passed by the respective state legislative assemblies. Tax slabs are decided as 0%, 5%, 1. Further, a cess would be levied on certain goods such as luxury cars, aerated drinks, pan masala and tobacco products, over and above the rate of 2. States. However, which goods and services fall into which bracket is still an enormous task to be completed by the GST council. Highest tax slab is pegged at 4. What is the Principle of GST? The Centre will levy and collect the Central GST. States will levy and collect the State GST on the supply of goods and services within a state. The Centre will levy the Integrated GST (IGST) on the interstate supply of goods and services, and apportion the state’s share of tax to the state where the good or service is consumed. The 2. 01. 6 Act requires Parliament to compensate states for any revenue loss owing to the implementation of GST. Issues Arisen OR Unresolved. Not all items are covered: Taxation for certain items such as Alcohol, Tobacco etc. States argue that including them would hamper their revenue and they would suffer a huge resource. However, some experts say that the real reason is the nexus of politicians with some business class and high profile lobbying. Further, the Finance minister of India has said in the parliament that the consensus to include alcohol and tobacco under GST regime is possible in foreseeable future. Decision criteria for the tax bracket: There are apprehensions that how to decide about the items and the criteria that which item will fall into which tax bracket. It may lead to lobbying. To this, the Finance minister has said that the decision will be taken by the GST Council only and after due diligence and most probably by the consensus. Multiple tax rates and brackets: The philosophical idea that GST means “One Nation one Tax” is currently diluted due to multiple tax rates and brackets. To this, the Finance minister has said that since the target consumer of goods and services have different capabilities and therefore there must be a system similar to the democratic lines where higher value consumer pays more taxes. Power to impose tax taken away by Central Government from the Parliament: The Central GST Bill, 2. CGST rates, subject to a cap. This implies that the government may change rates subject to a cap of 2. Parliament. Under the Constitution, the power to levy taxes is vested in Parliament and state legislatures. Though the proposal to set the rates through delegated legislation meets this requirement, the question is whether it is appropriate to do so without prior parliamentary scrutiny and approval. Confusion regarding the location of consumption: Under GST, both state and Centre can tax the services based on their location of consumption. Now the confusion arises since the general rule to determine the location of the recipient is his location or address on record; there are specific rules for various services such as telecom, property, transportation, etc. This means that while a service may be consumed across multiple states, the tax revenue would be attributed to the state where the recipient is registered or his office is located. For example, suppose a company is located in Bangalore and advertises its products in the Kolkata edition of a newspaper, which has its registered office in Delhi. In this case, one may argue that the service is being finally consumed in Kolkata. However, as the recipient of services is in Bangalore, the tax would accrue to Karnataka. Anti- Profiteering Clause: The government is planning to set up an authority to see if any reduction in tax rates after GST is passed on to the consumer by companies or not. The industry and businesses are not taking this idea kindly and they see it as a backdoor entry of inspector raj. Experts say that prices should be market determined and no government authority has the business of deciding prices for goods and services. Confusion regarding the control over taxation: To avoid dual control, the GST council has reached a compromised formula. Rs 1. 5 crore or less, will be assessed by states and the rest by the Centre. For those with a turnover of over Rs 1. Centre will share it equally. However, this . For example, if an entity with a turnover of less than Rs 1. Rs 1. 5 crore in the following financial year, who would be the new authority to take over the assessment? And, how will the existing investigations, if any, against the entity be addressed, and by whom? What is GSTN? GSTN is registered as a not- for- profit company under the companies Act. It has been formed to set up and operate the information technology backbone of the GST. While the Central (2. LIC Housing Finance with 1. ICICI Bank, HDFC, HDFC Bank and NSE Strategic Investment Corporation Ltd with 1. GSTN had awarded Infosys Ltd the contract to develop the hardware and software for GST. The idea behind GSTN was to set up an entity that is equidistant from both the Central government and the state governments, as it will advise both the Centre and the states on the information technology network. Controversy around GSTNIt is argued by some as a private company therefore not under government control. Insights Daily Current Affairs, 2. March 2. 01. 7Insights Daily Current Affairs, 2. March 2. 01. 7Paper 2 Topic: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests. International Diamond Conference “Mines to Market 2. International Diamond Conference “Mines to Market 2. Key facts: The Gem and Jewellery Export Promotion Council of India hosted the International Diamond Conference. 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The GJEPC is the apex body of the gems & jewellery industry and today it represents over 6,0. Sources: pib. Paper 3 Topic: Science and Technology- developments and their applications and effects in everyday life Achievements of Indians in science & technology; indigenization of technology and developing new technology. Green nod for Neutrino project suspended. The Southern Bench of the National Green Tribunal has suspended the Environmental Clearance (EC) granted to the India- based Neutrino Observatory (INO) that was to come up in Theni and asked the project proponent to make a fresh application. Why was it suspended? The Tribunal found that the Mathikettan Shola National Park in Idukki district of Kerala was just about 4. Tamil Nadu- Kerala border was just a kilometre away, making it a Category . The underground laboratory, consisting of a large cavern of size 1. X 2. 6m X 2. 0m and several smaller caverns, will be accessed by a 2. What is INO being built for? 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The court has also directed the central government to constitute the Ganga Management Board within eight weeks to look into the issue of cleaning and maintaining the river. Sources: the hindu. Paper 3 Topic: Inclusive growth and issues arising from it. SBI- Mahila bank merger okayed. The three- year- old Bharatiya Mahila Bank will be merged with the State Bank of India (SBI) to expedite the outreach of banking services to women. The SBI is already in the process of amalgamating its five associate banks. About Bharatiya Mahila Bank: Bharatiya Mahila Bank (BMB) is an Indian financial services banking company based in Mumbai, India. It was launched in 2. Indian Prime Minister Indira Gandhi. India is the third country in the world to have a bank especially for women, after Pakistan and Tanzania. In the last three years since BMB was established, it has extended loans of Rs 1. Sources: the hindu. Paper 2 Topic: India and its neighbourhood- relations. New Delhi, Kabul talks soon to boost trade. India will soon hold talks with Afghanistan on ways to boost bilateral trade and investment. This move is also aimed at mounting pressure on Islamabad to facilitate trouble- free transit of goods from India to Afghanistan through Pakistan (Wagah- Attari route). Significance of transit through Pakistan: This is to help in the development of Afghanistan which is a land- locked and Least Developed Country (LDC) as well as to boost trade and investment in South Asia through better regional connectivity. It will also help India to improve trade ties with Central Asian nations. In the absence of transit route through Pakistan, India depends on other countries, including Iran, to send goods to Afghanistan even though it increases time and costs for Indian exporters. APTTA: Thanks to the Afghanistan- Pakistan Transit Trade Agreement (APTTA), Afghanistan can use Pakistan’s territory for transit trade while Pakistan’s goods can move through Afghanistan to nations bordering Afghanistan. However, Islamabad has not agreed to allow using APTTA for goods to be transported from India to Afghanistan through Pakistan’s territory (via the Wagah- Attari route). India is keen to join APTTA and Afghanistan has backed India’s readiness to be an APTTA member but Pakistan has so far rejected such a proposal. Way ahead: In this regard, the . Pakistan and Afghanistan are also . However, it is still far below potential. During April- December 2. India’s exports to Afghanistan being $3. Afghanistan worth $2. India’s main export items to Afghanistan are textiles, pharmaceuticals, tobacco, iron & steel and electrical machinery, while its imports from Afghanistan are fruits and nuts, gums and resins, coffee, tea and spices. Sources: the hindu. 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