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Service tax to move up from 15% to 18% under GST: Hasmukh Adhia

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Hasmukh Adhia

New delhi, April 13: Services sector is likely to attract a higher tax rate of 18 per cent from the current 15 per cent under the Goods and Services Tax (GST) regime, thus making services “slightly” more expensive, Revenue Secretary Hasmukh Adhia has said.

Yes, for the services sector the standard rate may move to 18 per cent,” said Adhia in an interview.

However, those exempted at present — like healthcare, education and agriculture — are likely to remain so.

Whatever is in the present exempt list, we will try to continue it. We would recommend this to the Council and it will take a view on it. Most probably they should agree. Our attempt is not to upset too many things in one go,” he said.

At present, the services sector is taxed at 14 per cent with two additional cesses — Swachh Bharat Cess and the Krishi Kalyan Cess attracting half a per cent each — taking the burden to 15 per cent.

The GST law says that agriculturalists — who employ themselves or their family members — will not come under GST even if their turnover is over Rs 20 lakh annually. Those who are employing persons and have a turnover of over Rs 20 lakh a year will have to register under the GST.

Currently, sericulture, floriculture, dairy, horticulture, fishing that usually employ outside labourers on a large scale are exempt from service tax as they come under agriculture. But whether these will attract tax under the GST is still debatable.

Those who are dealing in anything except what we have defined as ‘agriculturalist’ will have to register (under GST). But whether their products are taxable or not will have to be decided by the Council,” he said.

We have not yet decided on the exemption list. That will be decided separately by the Council, I don’t think it will want to tax many agriculture products,” said Adhia.

He also said that some services which currently have less than 15 per cent tax rate may attract lower rates.

Wherever the services at present attract lower than 15 per cent rate of service tax because of certain reasons, we will try to maintain that. Transport sector, for example, attracts lower than 15 per cent tax right now. We will put these in either 5 per cent or 12 per cent,” he said.

The Revenue Secretary also noted that since petrol and petroleum products have been kept zero-rated under the GST regime, transport can be a good candidate for 5 per cent tax rate.

Currently, there are about 60 services which are exempt from service tax, including education, healthcare and religious pilgrimage.

In terms of goods, Adhia said that whatever is the exact incidence of excise plus VAT, the fitment will be into a tax slab closer to that. But depending on whether the goods are put in the higher slab or the lower slab, the taxes may increase in a few cases.

“Most of the items will be as per formula, only a few items will need discussion. In a few cases, the taxes may increase, but not in all cases. Every year, the Council will meet and revise rates,” he said.

Though the GST Council took 13 meetings to decide on the enabling laws, Adhia said that since fitment of goods and services is a straightforward thing, it should not take too much time.

The Council is slated to meet on May 18-19 in Srinagar to decide on GST Rules, after which the fitment discussions will be taken up.

Adhia said that the government is determined to roll out the GST regime from July 1 despite some industry stakeholders demanding further postponement of the new tax regime.

We are determined to roll out GST from July 1, it doesn’t seem to be a problem. The live testing of GST is scheduled to begin from first week of May,” he said.

Adhia agreed that GST will have a greater compliance burden as companies having physical presence in more than one states need to do multiple registrations and pay taxes separately to each state.

“I won’t say it will complicate, but yes there is a slightly greater compliance burden on the centralised service sector operators because they have to pay tax to all the states. Centralised registration is not possible in the GST model,” he said.

“GST is a consumption-based taxation model, in which states want to calculate how much services are provided in their jurisdiction. That’s why the returns have to be filed separately for every state,” he added.

(By Meghna Mittal, IANS)

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Equities surged on IMD’s monsoon forecast, healthy IT earnings

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sensex

Mumbai, April 21: Forecast of normal monsoon rains, along with healthy earnings in the IT sector, lifted the Indian equity markets during the week ended Friday.

Besides, supportive global cues, coupled with expectations of healthy corporate earnings, led the two equity indices — the BSE Sensex and the NSE Nifty50 — to extend their rise for the fourth consecutive week.

However, higher crude oil prices, along with a weak rupee and heavy selling pressure in banking stocks — triggered by a likely hawkish stand of the Reserve Bank of India (RBI) in its next monetary policy review — trimmed some gains of the benchmark indices, said market observers.

On a weekly basis, the barometer 30-scrip Sensitive Index (Sensex) of the BSE rose by 222.93 points or 0.65 per cent to close at 34,415.58 points.

The wider Nifty50 of the National Stock Exchange (NSE) closed trade at 10,564.05 points — up 83.45 points or 0.80 per cent from its previous week’s close.

“Markets extended their winning streak to the fourth consecutive week on strong earnings from TCS (Tata Consultancy Services), Mindtree and Cyient which posted a better than expected quarterly numbers,” Prateek Jain, Director, Hem Securities, told IANS.

“Sentiments also got a boost from postive global clues and IMD’s (India Meteorological Department) forecast that India is likely to receive a normal monsoon in 2018, which further boosted sentiments,” said Jain.

Rahul Sharma, Senior Research Analyst, Equity99, said: “Investors’ sentiment also got a boost after India’s annual WPI-based inflation eased to 2.47 per cent in March, helped by a fall in food prices.”

“Positive global stocks also supported buying,” Sharma told IANS.

Official data released during market hours on Monday showed that India’s Wholesale Price Index (WPI) inflation softened to 2.47 per cent in March from a rise of 2.48 per cent reported for February and acceleration of 5.11 per cent in the corresponding month of last year.

On the currency front, the rupee weakened by 92 paise to close at 66.13 against the dollar from its previous week’s close at 65.21.

“The Indian currency got hammered and sank to a 13-month low of 66.06 against the dollar (during the week) due to rapid surge in global crude oil prices and fiscal deficit worries,” D.K. Aggarwal, Chairman and MD of SMC Investments and Advisors, told IANS.

“The minutes of the last (previous) meeting of the Monetary Policy Committee (MPC) indicated the RBI may shift to a hawkish monetary stance in June. At present, market participants looked little worried that the commodity will continue appreciating to new highs, which would spell trouble for Indian markets,” Aggarwal added.

On the investment front, provisional figures from the stock exchanges showed that foreign institutional investors sold scrips worth Rs 2,821.24 crore, while the domestic institutional investors purchased stocks worth Rs 2,124.16 crore during the week.

Figures from the National Securities Depository (NSDL) revealed that foreign portfolio investors (FPIs) divested equities worth Rs 3,096.62 crore, or $471.78 million, during April 16-20.

“The top sectoral gainers were IT, metal, fast moving consumer goods (FMCG) and realty indices and the major losers were PSU banks, energy and bank Nifty indices,” Deepak Jasani, Head, Retail Research, HDFC Securities, told IANS.

On Friday, shares of IT bellwether Tata Consultancy Services (TCS) rose nearly seven per cent to touch a new high of Rs 3,414 per share, on the back of its robust earnings taking its market capitalisation (m-cap) to over Rs 6.50 lakh crore or around $98 billion.

The top weekly Sensex gainers were: TCS (up 8.11 per cent at Rs 3,406.40); Bharti Airtel (up 6.07 per cent at Rs 400.75); ITC (up 5.81 per cent at Rs 275.95); Power Grid (up 4.94 per cent at Rs 207.30); and Hindustan Unilever (up 3.96 per cent at Rs 1,465.50).

The losers were: Axis Bank (down 6.65 per cent at Rs 505.85); Tata Motors (DVR) (down 5.84 per cent at Rs 190.95); Tata Motors (down 5.72 per cent at Rs 336.25); State Bank of India (down 3.90 per cent at Rs 241.40); and IndusInd Bank (down 2.42 per cent at Rs 1,814.00).

IANS

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PNB claims expected recovery of Rs 1,800 cr from “Mission Gandhigiri”

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Punjab National Bank
Punjab National Bank (PNB). (File Photo: IANS)

New Delhi, April 20 (IANS) State-run lender Punjab National Bank is expected to recover around Rs 1,800 crore from its non-performing assets (NPAs) recovery mechanism — “Mission Gandhigiri” — which will soon complete one year of operation.

A senior bank official told IANS the mission, was launched in May 2017, had consistently delivered positive results with an average recovery of Rs 150 crore from the initiative.

“The mission was born out of the need to name and shame defaulters to increase societal pressure and urge them to pay back. Mission Gandhigiri has a dedicated recovery team across all circles of the bank,” the official, who did not want to be named, told IANS.

Accordingly, the passive recovery mechanism entails the team members to “visit the borrowers’ office or residence and sit their silently with placards that have hard-hitting messages such as ‘It is public money, please repay the loans’.”

On the legal side of the operation, following the government’s directions regarding wilful defaulters, the bank has declared 1,084 wilful defaulters.

“Due to PNB’s aggressive stance towards wilful defaulters, 150 passports have been impounded over the past few months,” the official said. Additionally, over the last 9 months, the bank has also lodged 37 FIRs against defaulters.

The bank is also leveraging data analytics for loan recovery and risk management.

“We have tied up with a leading credit agency and with the help of a third-party expert analytics, we will now be able to get access to contact information of PNB defaulters who have good credit record with other lenders,” the official said.

“This partnership is a part of the larger strategy to deploy technology to strengthen internal systems. This partnership will not only help the bank with loan recovery but will also help identify and automate profitable lending strategies and minimise credit and fraud risk,” the official said.

The bank has also recently started works towards “improving internal systems by incorporating analytics and Artificial Intelligence for reconciliation of accounts”.

In addition, two special OTS (One-Time Settlement) schemes have helped the bank to accelerate NPA recovery.

“From an average of recovering loan amount from 70,000-80,000 NPA accounts in a year, this move has resulted in recovery in 225,000 NPA accounts over a span of 10 months,” the official added.

“These schemes apply to small NPA accounts helping defaulters come out of debt.”

IANS

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Key Indian equity indices open flat

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Mumbai, April 20: The key Indian equity indices opened on a flat note on Friday.

At 9.17 a.m., the wider Nifty50 of the National Stock Exchange (NSE) traded at 10,558.15 points, down 7.15 points or 0.07 per cent from the previous close at 10,565.30 points.

The barometer 30-scrip Sensitive Index (Sensex) of the BSE, which opened at 34,434.14 points, traded at 34,414.73 points (9.17 a.m.) — down 12.56 points or 0.04 per cent — from its previous close at 34,427.29 points on Thursday.

The BSE market breadth so far was bearish with 710 declines and 507 advances.

IANS

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