Modi – government deserves accolades for making relentless efforts to increase tax revenue – even in the face of slowdown in economic growth [during the first two quarters of the current year, nominal growth in GDP was 8% and 6.1% respectively] – and ensure that it comes close to the target set for the year. The monthly collections under GST [Goods and Services Tax] which had slipped below Rs 100,000 crore mark for three consecutive months viz. August/September/October recovered to over Rs 103,000 crore in November and December each. This is mainly due to reining in evasion, increasing compliance and making businesses pay up [entities filing return increased from 7 million in April, 2019 to 8.1 million in December, 2019]....
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Category: Taxes & duties
The dawn of a new era
Slowly but surely, India has manoeuvred its way through digital transformation. It must build on this success and the communication revolution to a new level for the creation of a vibrant economy Having missed the first and second industrial revolution of the 19th and early 20th century (courtesy the subjugation of India to colonial rulers of those times) and even the third technology-driven revolution (this one was primarily due to the “protectionist” and “inward-looking” Government policies, which were not conducive to embracing technology), India is at the forefront of leading the fourth industrial revolution — a digitally driven one —with speed and scale. The digital revolution calls for a shift from mechanical and analogue electronic technology to digital electronics, which...
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Analyzing growth – slowdown is not structural
During the first five years of Modi – government i.e. 2014-15 to 2018-19, GDP [gross domestic product] grew @7.5% on an average. However, during the first and second quarter of current year, growth has slipped to 5% and 4.5% respectively. Actually, it started moving on a downward trajectory from the third quarter of last year when it was 6.6% followed by 5.8% in the fourth quarter. The average for these 4 quarters [3rd and 4th quarter of 2018-19 and 1st and 2nd quarter of current year] works out to about 5.5%. In comparison with the impressive growth recorded over a 5 year period, this is a significant dip of 2% but can’t be termed by any stretch of imagination as...
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Too little and a little too late
The Govt has put a moratorium on pending spectrum payments for telecoms without altering the overall timeline of clearing all dues by 2030-31. But, given the huge amount to be paid, this won’t be of much help Vodafone Idea Limited (VIL) — a joint venture between UK-based Vodafone and KM Birla-owned Idea Cellular — and Bharti Airtel have reported a staggering loss of Rs 51,000 crore and Rs 23,000 crore respectively for the second quarter of the current financial year ending September 30, 2019. This is primarily due to a recent order of the Supreme Court (SC) directing telecom companies to give “unpaid” dues towards licence fee and spectrum usage charges (SUC). The order is the culmination of a long-drawn court...
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Sagging GST collection – time to wield the stick
The finance minister, Nirmala Sitharaman has constituted a high level committee consisting of the representatives of the centre and states to study the reasons as to why tax collections under GST [Goods and Services Tax] have been slack and suggest measures to boost. The GST was launched on July 1, 2017. While, it may not be realistic to expect the desired buoyancy during the first year [as it takes time for the system to stabilize], during 2018-19, in all fairness, one would have expected the tax collection to pick up. But, the year ended up with big disappointment as the actual collection for the union government [it includes CGST (central GST), compensation cess and undistributed portion of IGST (integrated GST)]...
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Growth remains slack, despite booster doses
The downward revision in the GDP [gross domestic product] estimate for current year by the Reserve Bank of India [RBI] in its latest monetary policy review from the previous estimate of 6.9% [that itself was a significant reduction from the original 7.4%] to 6.1% now confirms the lingering fear of substantial deceleration in the economic activity that started from the second quarter of last year. When, the GDP growth declined to a six year low of 5% during the first quarter of current year, the expectation was that the growth momentum would pick during the 3rd and 4th quarter with the banking regulator projecting growth rate of 6.6% and 7.4% respectively. Now, if RBI itself is forecasting 6.1% for the...
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Booster for corporate India
Much will depend on how the surplus in the hands of companies resulting from tax cuts is apportioned among them and equally importantly, how it is spent In a flurry of announcements made on September 20, 2019 (also described in media circles as a third Union Budget in less than three months), Finance Minister Nirmala Sitharaman handed out a bonanza to the Indian corporate sector. The most pleasing announcement pertains to the steep reduction in the rate of corporate tax for new entities incorporated from October 1, 2019 in the manufacturing sector, that start production before March 31, 2023 from the existing 25 per cent to 15 per cent. After subsuming surcharge and cess, the effective incidence of tax will be lowered...
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FM’s booster dose for corporate India
In a flurry of announcements made on September 20, 2019 [also described in media circles as a third budget in less than three months], the finance minister, Nirmala Sitharaman handed out a bonanza to the Indian corporate sector. The most pleasing announcement pertains to steep reduction in the rate of corporate tax for new entities incorporated from October 1, 2019 in manufacturing sector and start production by March 31, 2023 from existing 25% to 15%. After subsuming surcharge and cess, the effective incidence of tax will be lowered from existing 29.15% to 17.01% – a drop of 12%. Such companies won’t have to pay minimum alternate tax [MAT] [levied on book profit of firms which have no taxable profit courtesy,...
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GST math gone haywire
The Centre and States must introspect as to why despite the regime being in place for over two years, the desired buoyancy in tax revenue has not been achieved A major reason for the delay in taking up the Constitutional Amendment Bill for enactment of the Goods and Services Tax (GST) was the reluctance of the then United Progressive Alliance (UPA) Government at the Centre to agree to the demand of the States. The latter wanted compensation of the loss of revenue that would arise with its launch vis-à-vis the revenue they would get under the subsisting dispensation of excise duty, sales tax or value-added tax plus a host of other local taxes. This hesitancy came although the concept was first introduced...
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GST math goes haywire
One of the reasons for inordinate delay in taking up the constitutional amendment bill for enactment of the Goods and Services Tax [GST] was the reluctance of the then UPA – government at the centre to agree to the demand of the states for compensation of the loss of revenue that would arise with its launch vis-à-vis the revenue they would get under the subsisting dispensation of excise duty, sales tax or value added tax [VAT] plus a host of other local taxes. Modi – government by agreeing to this demand achieved a fair degree of success in building consensus among all the states. Within two years of taking charge in 2014, it was able to steer through the constitutional...
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