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TEST SERIES –Prelims – 40 tests – 7500 (7TH August)Mains – Essay Writing – 15 Tests – 6000
(8th July)
July1• Doctor’sDay• CAday• StateBankofIndiacelebratedits58thbankdayinChennaionMonday.• Itwasonthisday,July1,1955,theImperialBankofIndiawasreconstitutedbyanActofParliamenttotocreateStateBankofIndia
• InstituteofChartedAccountantofIndia (ICAI) established• Indiahasslippedto88thplaceintermsofmoneyparkedbyitscitizenswithSwissbanks,whiletheUKremainsonthetop.
Indiawasplacedat75thpositionin2015andat61stintheyearbeforethat,thoughitusedtobeamongtop-50countriesintermsofholdingsinSwissbankstill2007.Thecountrywasrankedhighestat37thplaceintheyear2004.
Rs 4,500crore in2016.
• TheElectionCommissionofIndia(ECI)haslaunched NationwideamonthlongSpecialDrivefromtoday,1st Julyformaximizationofregistrationofeligibleelectorswithfocusonleftouteligibleyoungcitizensinagegroupof18-19andremovalofnamesofregistereddeadelectors,ifany,fromelectoralrolls
• PartneredwithFACEBOOK• 25January1950(CelebratedasNationalVotersDay)• Originallyin1950,thecommissionhadonlyaChiefElectionCommissioner.TheElectionCommissionerAmendmentAct,1989madetheCommissionamulti-memberbody.• TheSixty-firstAmendment'oftheConstitutionof India,1989,loweredthevotingageofelectionstotheLok SabhaandtotheLegislativeAssembliesofStatesfrom 21 yearsto 18years.
President’s speech GST• Thishistoricmomentistheculminationofafourteen-yearlongjourneywhichbeganinDecember2002,whentheKelkar TaskForceonindirecttaxationsuggestedacomprehensiveGoodsandServicesTax(GST)basedontheValueAddedTaxprinciple.
TheproposaltointroduceGSTwasfirstmootedintheBudgetSpeechforthefinancialyear2006-07.
SincetheproposalinvolvedrestructuringandreformofnotonlyindirecttaxesleviedbytheCentrebutalsotheStates,theresponsibilityofpreparinga
designandaplanofactionfortheimplementationofGSTwasassignedtotheEmpoweredCommitteeofStateFinanceMinisterswhichhadbeenformed
earlierforimplementationoftheValueAddedTax.TheEmpoweredCommitteereleaseditsFirstDiscussionPaperonGoodsandServicesTaxin
November,2009.
TIMELINE
• GST,whichwillreplacemorethanadozencentralandstateleviesincludingfactory-gate,exciseduty,servicetaxandlocalsalestaxorVAT,isIndia’sbiggesttaxreformin70yearsofindependenceandwillhelpmodernise Asia’sthirdlargesteconomy.
Hereisalookatthetimelinesthatshapedthe‘onenation,onetax’system:*February1986:FinanceMinisterVishwanath Pratap Singhproposesamajor
overhauloftheexcisetaxationstructureinthebudgetfor1986-87.*2000:PrimeMinisterAtalBihariVajpyee introducestheconcept,setsupa
committeeheadedbythethenWestBengalFinanceMinisterAsim Dasgupta todesignaGSTmodel.
*2003:TheVajpayeegovernmentformsataskforceunderVijayKelkar torecommendtaxreforms.
*2004:VijayKelkar,thenadvisortotheFinanceMinistry,recommendsGSTtoreplacetheexistingtaxregime.
GST
VijayKelkarFinanceSecretary, GovernmentofIndia 1998–1999,
Chairman,13th Financecommission(The FinanceCommission cameintoexistencein1951.Itwasestablishedunder Article 280 ofthe IndianConstitution bythe PresidentofIndia.Itwasformedtodefinethefinancial
relationsbetweenthecentreandthestate. )
14th Finance commission – Y V ReddyTheshareofstatesinthenetproceedsoftheshareableCentraltaxes
shouldbe42%.Thisis10percentagepointshigherthantherecommendationof13thFinanceCommission.
13thFinanceCommission – 32%12thFinanceCommission– 30.5%
(Co-operativefederalism)
Fiscaldeficittobereducedto3%oftheGDPby2017–18.TheFinancialStabilityReport2017,releasedbyRBI,basesitsoptimismtothelowerfiscaldeficitat3.2%forthisyeardownfrom3.5%in2016-17
TEST SERIES –Prelims – 40 tests – 7500 (7TH August)Mains – Essay Writing – 15 Tests – 6000
(8th July)
Fiscaldeficit,canwecontrolit?
• Agriculturalloansaccountfor14%oftotalbanklending,accordingtotheReserveBankofIndiaandareequivalenttoaround6.5%ofGDP.
• Uniformfarmloanwaiverscouldleadtomoralhazardandweakenthegeneralrepaymentcultureamongfinanciallyhealthyfarmers
• SchemeslikeUDAY?
• TheUnionBudget2017-18hadsetthefiscaldeficittargetforFY18atRs54.7lakhcroretargetor3.2percentofthegrossdomesticproduct.
GST“Goingforward,reformsinFDIandrealestatesector,implementationofGST,andrevivalinexternaldemandarelikelytocontributetoabettergrowth
outlook.GVAgrowthisexpectedtobehigherat7.3%in2017-18,”
- Politicalstability- GST
- NITIAayog - GoodsandServicesTax(GST)wouldincreasetheGrossDomesticProduct(GDP)growthrateby1.5percent.
- IndianGSTisnotanidealonebecauseofitsfederalnature.SettingupofaGSTCounciltofinalise taxrateswascompromiseforcedbythefederalstructureofthecountry.
• "TherearemanycountriesintheworldhaveVAT,ValueAddedTax.AVATisnotGST.ThenumberofcountrieshavingGSTis6or7,not
morethanthat,"saidDebroy.
• "Exceptoneallareunitary.TheonlycountryintheworldwhichisfederalandhasGSTisCanada.Indiaisonlytheotherfederal
countryintheworldtohaveGST,"Bibek Debroy said
• Bibek Debroy – NITIaayog Member• Debroy termedthemultipletaxratesasthebiggestproblemofthe
GST.
TEST SERIES –Prelims – 40 tests – 7500 (7TH August)Mains – Essay Writing – 15 Tests – 6000
(8th July)
• February 28, 2006:GSTappearsintheBudgetspeechforthefirsttime;FinanceMinisterPChidambaramsetsanambitiousApril1,2010as
deadlineforGSTimplementation.HesaystheEmpoweredCommitteeoffinanceministerswillpreparearoadmapforGST.
• 2008:EmpoweredCommitteeofStateFinanceMinistersconstituted.
*April 30, 2008:TheEmpoweredCommitteesubmitsareporttitled‘AModelandRoadmapGoodsandServicesTax(GST)inIndia’tothe
government
*April 30, 2008:TheEmpoweredCommitteesubmitsareporttitled‘AModelandRoadmapGoodsandServicesTax(GST)inIndia’tothegovernment
*November10,2009:EmpoweredCommitteesubmitsadiscussionpaperinthepublicdomainonGSTwelcomingdebate.
* 2009:FinanceMinisterPranab MukherjeeannouncesbasicstructureofGSTasdesignedbyDasgupta committee;retains2010deadline.
*BJPopposesGSTbasicstructure.*February2010:FinanceMinistrystartsmission-modecomputerisation of
commercialtaxesinstates,tolaythefoundationforGSTrollout.*Pranab MukherjeedefersGSTtoApril1,2011.
*March22,2011:UPA-IItables115thConstitutionAmendmentBillintheLok SabhaforbringingGST.
*March29,2011:GSTBillreferredtoParliamentaryStandingCommitteeonFinanceledbyYashwant Sinha.
*Asim Dasgupta resigns,replacedbythethenKeralaFinanceMinisterKMMani.
*November2012:FinanceMinisterPChidambaramholdsmeetingswithstatefinanceministers;decidestoresolveallissuesbyDecember31,2012forGST
rollout.*February2013:DeclaringUPAgovernment’sresolvetointroducingGST,ChidambaraminhisBudgetspeechmakesprovisionfor Rs. 9,000croreto
compensatestatesforlossesincurredbecauseofGST.*August2013:ParliamentarystandingcommitteesubmitsreporttoParliament
suggestingimprovementsonGST.GSTBillgetsreadyforintroductioninParliament.*October2013:GujaratChiefMinisterNarendraModiopposesGSTBillsayingstate
wouldincurlossesworth Rs. 14,000croreeveryyearduetoGST.*2014:GSTBillclearedbyStandingCommitteelapsesasLok Sabhadissolves;BJP-
ledNDAgovernmentcomestopower.*December18,2014:Cabinetapproves122ndConstitutionAmendmentBilltoGST.*December19,2014:FinanceMinisterArun Jaitley introducestheConstitution
(122nd)AmendmentBillintheLok Sabha;Congressobjects.*February2015:Jaitley setsApril1,2016asdeadlineforGSTrollout.*May6,2015:Lok SabhapassesGSTConstitutionalAmendmentBill.
May12,2015:TheAmendmentBillpresentedintheRajya Sabha.*CongressdemandstheBillbesenttoSelectCommitteeofRajya Sabha;demands
cappingGSTrateat18percent.*May14,2015:TheGSTBillforwardedtojointcommitteeofRajya SabhaandLok
Sabha.*August2015:GovernmentfailstowinthesupportofOppositiontopassthebillin
theRajya Sabhawhereitlackssufficientnumbers.*July2016:CentreopposescappingGSTrateat18%;getsstatesaround.
*August2016:Congress,BJPagreetopasstheConstitutionAmendmentBill.*August3,2016:Rajya SabhapassestheConstitutionAmendmentBillbytwo-thirds
majority.*September2,2016:16statesratifyGSTBill;PresidentPranab Mukherjeegives
assenttotheBill.*September12:UnionCabinetclearsformationofGSTCouncil
*September22—23:Councilmeetsforfirsttime.
*November 3:GSTCouncilagreesonfourslabtaxstructureof5,12,18and28%alongwithanadditionalcess onluxuryandsingoods.
*January16,2017:Jaitley announcesJuly1asGSTrolloutdeadline.Centre,statesagreeoncontentiousissueofdualcontrolandtaxingrightsongoodsathighsea.
*February18:GSTCouncilfinalises draftcompensationbillprovidingtomakegoodanyrevenuelosstostatesinfirstfiveyearsofGSTrollout.
*March4:GSTCouncilapprovesCGSTandIntegrated-GSTbills.*March20:CabinetapprovedCGST,IGSTandUTGSTandCompensationbills.
*March27:Jaitley tablesCGST,IGST,UTGSTandCompensationbillsinParliament.Lok SabhaandRajya SabhapassallthefourkeyGSTBills— CentralGST(CGST),
IntegratedGST(IGST),StateGST(SGST)andUnionTerritoryGST(UTGST).*May18:GSTCouncilfitsover1,200goodsinoneofthefourtaxslabsof5,12,18and28%.Over80%ofgoodsofmassconsumptioneitherexemptedortaxedunder
5%slab.*GSTCouncilfixescess onluxuryandsingoodstocreatekittyforcompensating
states.*May19:GSTCouncildecideson5,12,18and28%asservicetaxslabs.
TEST SERIES –Prelims – 40 tests – 7500 (7TH August)Mains – Essay Writing – 15 Tests – 6000
(8th July)
*Jun21:AllstatesexceptJammuandKashmirpassSGSTlaw.*June28:Mamata Banerjeeannouncesherparty’sdecision
toskipmidnightlaunchofGST.*June29:Congress,Lefttoodecidetoskiplaunch.
*June30Midnight:GSTrollED out.
• Myconfidencestoodjustifiedwhen,on8thSeptember2016,aftertheBillwaspassedbybothHousesofParliamentandmorethan50percentofStateLegislatures,IhadtheprivilegeofgivingassenttotheConstitution(OneHundredandFirstAmendment)Act.
• AftertheamendmentofConstitution,theGSTCouncilhasbeenconstitutedaspertheprovisionsofArticle 279A oftheConstitution.TheCouncil,whichisresponsibleformakingallrecommendationstotheUnionandStatesinrespectofGST,suchasmodellaws,rates,exemptions,isuniqueinourConstitution.ItisajointforumoftheCentreandtheStates,whereneithertheCentrenortheStatescan,withoutthesupportoftheother,takeanydecision.ThoughanelaboratevotingstructurehasbeenbuiltintothedecisionmakingprocessoftheCouncilintheConstitution,itisremarkablethatinthe18meetingsheldsofar,alldecisionshavebeentakenbyconsensusintheCouncil.Icongratulatethem.
• Centralexcisedutyhasalonghistory.DuringmydifferenttenuresasFinanceMinister,ithasalwaysbeenoneofthelargestcontributorstotheCentralexchequer.
• Servicetaxisrelativelynewbuthasgrownveryrapidlyinrevenueterms.Exceptforafewgoodsoutsidethepurviewofgoodsandservicestax,bothofthesewillnowdisappearalongwithAdditionalCustomsDuty,SpecialAdditionalDutyofCustomsandnumerouscessesandsurcharges.CentralSalestaxoninter-statesalewillceaseforgoodsfallingundergoodsandservicestax.
• AttheStatelevel,theenormityofthechangeisnoless.ThemajortaxesbeingsubsumedareValueAddedTaxorSalesTax,entrytax,taxesonadvertisements,andluxurytax,alongwithstate-levelentertainmenttaxandnumerouscessesandsurcharges.
• ThefollowingtaxeswillbereplacedbytheGST:• CentralExciseDuty• CommercialTax
• ValueAddedTax(VAT)• FoodTax
• Central SalesTax (CST)• Introit• Octroi
• EntertainmentTax• EntryTax
• PurchaseTax• LuxuryTax
• Advertisementtax• ServiceTax• CustomsDuty• Surcharges
TEST SERIES –Prelims – 40 tests – 7500 (7TH August)Mains – Essay Writing – 15 Tests – 6000
(8th July)
InadequateTime:Malaysia,whileintroducingasimplersystem(uniform6%rateandnodualGST),gavestakeholdersayearandahalftoprepareforthenewsystem.Rateswerefinalizedwellinadvanceandstepsweretakentoensurethatthevariousstakeholderswereawareofhowthe
systemfunctioned.
ContrasttheMalaysianapproachwiththescenarioinIndia,wheretheCabinetSecretaryaskedtheSecretariesof30centralministriestoorganizeoutreachmeetingsandpublicitycampaignsthroughtheir
departmentstoexplaintheprovisionsofthenewlawandrulestotheirstakeholdersonthe20thofJune,2017,i.e.lessthantwoweeksbeforetheGSTrollout.Similarly,therateswerefinalizedlessthanamonth
andahalfbeforetherolloutdate.
TheIssueofProfiteering:NotpassingonthebenefitstothecommonmanThegovernmentonitsparthasgivenoutnotificationsmainlytothetelecomandrealestatesectorsdirectingthemtoreducetheprices.Havingsaidthat,in
practicetherearenospecificguidelinesonAnti-ProfiteeringprovisionsThemethodtoreducethealreadyprintedMaximumRetailPrice(MRP)to
adheretothechangedratesisstillaquestionthathasnoanswer.Inthecaseofactsofprofiteeringbythesellersortraderstherearealotof
issuesthatareleftuntouched.Afewofthemare,themannerofcomputationofprofiteering,shouldtheanti–profiteeringinvestigationbedoneatthe
productorservicelevel,canprofitsgainedandlossesearnedbeset-offagainsteachotherwhiledealingwithmultipleproductsegmentsetc.
TEST SERIES –Prelims – 40 tests – 7500 (7TH August)Mains – Essay Writing – 15 Tests – 6000
(8th July)
Technical glitches
WhenaskedwhethertheGSTNwilldeliverarobustsoftware,ChairmanNavin Kumarsaid,“Nowhereintheworlddoesthehardeningofsoftwaretakeplacebeforetherollout.Whenyouareabouttodeploythesoftware,thereisacodefreezewhencodewritingstops.Inthenext10daysyoudothetesting.Thereisnotimeforthatnow.Ittakesthree-fourmonthsforstabilisation to
happen.”
Prakash Kumar - CEOGoodsandServicesTaxNetwork(GSTN),theinformation-technologybackboneofIndia'snewtaxregime,isadata-storagebehemoth.Nearly80lakhbusinesseswilluploaddetailsandcarryouttransactionsonthenetwork.AfterAadhaar,IndiahasseensuchalargescaleofIToperationsin
GSTN.
GSTN,anot-for-profitprivatelimitedcompany,has51percentequityoffiveprivateinstitutions--HDFCBankLtd(10percent),HDFCLtd(10percent),ICICIBankLtd(10percent),NSEStrategic
InvestmentCorporationLtd(10percent)andLICHousingFinanceLimited(11percent).Thecentralgovernmenthas24.5percentequityintheGSTN,whereasstategovernments,two
Unionterritoriesandempoweredcommitteeofstatefinanceministerstogetherholdanother24.5percentstakeinit.India'sleadingITcompanyInfosysismanagedserviceproviderofGSTN.
• inApril2012,aSpecialPurposeVehicle,theGSTN(GSTNetwork),wasapprovedforcreationbythegovernmentforGSTimplementation.
AREBANKSREADY?“witheffectfromJuly1,2017,theexistingservicetaxof15percentlevied
onallthebankingserviceswillbereplacedbyaGSTof18percent.”
Amongthebankingservicesthatwillattracthigherservicetaxincludedebitcard,fundtransfer,ATMwithdrawalbeyondthenumberoffreeservices,
homeloanprocessingfee,lockerrentals,issuanceofchequebooks/drafts/duplicatepassbooks,collectionofbills,collectionofoutstationcheques,cashhandlingchargesandSMSalerts.Inaddition,lifeandnon-life
premiumswillseeanincreasefrom15percentto18percent.
Makebankingtopoorattractive?
ButwithGST,theywouldberequiredtoobtainregistrationineachstate.TheirIT,accountingandcompliancestandardsneedtoundergo
changeforwhichbanksarenotcompletelyready.
“SincetheGSTwillbeoperationalfromJuly1,2017,bankshavetomakelotofchangesintheirsystemsandotherprocedures.ThepreparednessofallbanksforimplementationofGSTisaquestionmark,”– IndianBanks’AssociationinformingtheParliamentary
StandingCommitteeonFinance.
Criticism
• Socialfactorsignored
• Kumkum vsSanitaryNapkins(Everywoman'shealthright'estimatedthatonly12%ofthe335millionmenstruatingwomenhaveaccesstodisposablesanitarynapkins. )
• BabyFoods– Glucosebiscuits– 18%• Vaccines– 5%
• Looseunbrandedcommoditieslike dal,riceandotherdrystaplesareexemptfromGST.However,branded,packagedversionsofthesegoodswillbetaxedat5%underthenewregime.
• Theunorganised sectorofIndia’seconomyisvast,employinganestimatednineoutof10workers.While stayingoutsidetheGSTregimeriskslosingbusiness,joiningitwillnecessitateanoverhauloffirms’accountingsystemsandaninvestmentintechnology.The newtaxsystemrequiresthreefilingamonthplusanannualreturn- atotalof37filings- foreachofIndia’s29statesinwhichafirmoperates.Forsmallercompaniesoperatingonwaferthinmargins,hiringaccountantsandtechnicalstaffcouldsubstantiallydenttheirbottomline.
• Ifasmallcompanywantstodobusinessallroundthecountry,thennumberoffilingsmovesupto1,029
TEST SERIES –Prelims – 40 tests – 7500 (7TH August)Mains – Essay Writing – 15 Tests – 6000
(8th July)
Other NEWS
ThePresidentofIndia,ShriPranab MukherjeeinauguratedanexhibitionofartworksatAcademyofFineArts,Kolkatatoday(June30,2017).
HealsoreceivedthefirstcopiesoftwoCoffeeTablebooks‘ImagesandImpressions– ProfileandPersonaofPranab Mukherjee’and‘Pranab
Mukherjee100Frames’fromtheGovernorofWestBengal,ShriKeshariNath Tripathi whoformallyreleasedthesebooks.
• DecisiontoreduceTaxRateonFertilizersfromexisting12%to5%underGSTtakenintheinterestsoftheFarmers
UnderGSTregime,auniformMRPofRs.295.47per50kgbagtobefixedacrossthecountry
GSTregimetodeterinter-statesmugglingoffertilizersbyintegratingtheentirefertilizermarketintoaSingleMarket
FarmerstobenefittothetuneofRs.1261croresunderGSTregime:ShriAnanthkumar
• UnionMinisterforChemicals&FertilizersandParliamentaryAffairs,ShriAnanthkumar briefedthemediaontheoutcomeofthe18thmeetingoftheGSTCouncil,heldhereon30thJune2017,regardingFertilizersector.TheMinistersaidthatitwasdecidedtoreducetheGSTrateoffertilizersfromtheexisting12%to5%.Thisdecisionwasprimarilytakenintheinterestsofthefarmers.TheGovernmenthasalsotakenupwiththeIndustrytopassonthebenefittotheFarmers,theMinisterinformed.
• Witheffectfrom01.07.2017,theGovernmenthasimposed10%basiccustomsduty(BCD)on:
a)Cellularmobilephonesandspecifiedpartsofcellularmobilephoneslikecharger,battery,wireheadset,MicrophoneandReceiver,KeyPad,USBCableetc.
b)Certainotherspecifiedelectronicgoods.
Thepresentexemptionfrombasiccustomsdutyonspecifiedpartsofmobiles,namely,PrintedCircuitBoardAssembly(PCBA),CameraModule,ConnectorsDisplayAssembly,TouchPanel/CoverGlassAssembly,VibratorMotor/Ringerwillcontinue.
Further,inputsandrawmaterialformanufactureofpartsofabovespecifiedelectronicsgoodsincludingmobilephoneswillalsocontinuetobeexemptfromBCD.
65MoUssignedatTextilesIndia2017inthepresenceofUnionTextilesMinister
4thSlumYuva Daud concludesatRohini withover5000participants