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GST Authority Fines LIC For Lower Payment of Taxes

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According to a notice from the State Taxes Officer in Srinagar dated 9 October 2023, LIC paid 12 per cent GST rather than 18 per cent on a few invoices

Life Insurance Corporation (LIC) has been fined Rs 36,844 by the GST authority for underpaying taxes, LIC said in a regulatory filing.

It also stated that company has received a communication/demand order for the state of Jammu and Kashmir’s GST collection as well as interest and penalties. The tax office has issued a demand order/ penalty notice for 2019–20, which includes interest and penalties totaling Rs 6,382 and Rs 10,462 for GST.

According to a notice from the State Taxes Officer in Srinagar dated 9 October 2023, LIC paid 12 per cent GST rather than 18 per cent on a few invoices.

The company also cleared that fine would not have any material impact on financials, operations or other corporate activities.

LIC’s poor performance persisted in the month of September as well. It reported a 27 per cent drop in new business premiums (NBP), notwithstanding growth recorded by private insurers.

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Next GST Council Meeting To Take Place On 7 October

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The Goods and Service Tax (GST) Council, chaired by Union finance minister and comprising state ministers, will meet on 7 October.

“The 52nd meeting of the GST Council will be held on 7th October, 2023 at Vigyan Bhawan, New Delhi,” said GST Council in the post on X.

The Goods and Services Tax (GST) rules were amended by the council during its meeting held on 2nd August in order to clarify the taxation of casinos, horse racing, and online gaming.

In the previous meeting, council stated that the 28 per cent GST duty on the face value will remain the same, whether it is a game of skill or chance.

The Council had also suggested including a specific provision in the IGST Act, 2017 that would establish GST liability for the supply of online gambling by an outside supplier to a person in India, a single registration for the said supplier under a streamlined registration process, and the prohibition of public access to any information created, transmitted, received, or stored in any computer resource used for the supply of online gambling.

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Economists Suggests FM To Step Up Capex, Cut Tax In Budget 2023

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According to the economists, considering the high inflation rate, providing a relief on income tax will boost domestic demand. In total, the finance minister has held eight rounds of discussions, beginning with India Inc on 21 November and ending with a round of consultation along with economists on 28 November.

The government is asked by the Economists to level up capital expenditure, rationalise personal income tax and stick to fiscal discipline in the upcoming Budget, on 28 November.

During the finance minister Nirmala Sitharaman led pre-Budget interaction, they also urged her to increase health care outlay and focus on quality job creation.

According to the economists, considering the high inflation rate, providing a relief on income tax will boost domestic demand. In their suggestion, the Centre should continue with long-term loans to states, meanwhile relaxing some of the spending restrictions and handhold them through fiscal management. Its focus should especially be on those with high borrowings.

The meeting was attended by the economists and experts along with N R Bhanumurthy of Dr BR Ambedkar School of Economics University, Ashwani Mahajan of Swadeshi Jagaran Manch, Poonam Gupta of National Council of Applied Economic Research, Monetary Policy Committee member Ashima Goyal, economist Karthik Muralidharan, Aditi Nayar of Icra, Santanu Sengupta of Goldman Sachs, Rahul Bajoria of Barclays, Madan Sabnavis of Bank of Baroda, and Deepak Mishra of ICRIER.

In total, the finance minister has held eight rounds of discussions, beginning with India Inc on 21 November and ending with a round of consultation along with economists on 28 November.

Expectedly, the Budget 2023-24 is to be tabled in Parliament on 1 February.

The finance Ministry said that with more than 110 invitees representing 7 stakeholder groups participated in all 8 meetings till date.

Also, she gave assurance to them on their suggestions to be considered carefully while preparing the Budget 2023-24.

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Tax Collection To Exceed Budget Estimate Nearly By Rs 4 Lakh Cr: Revenue Secy

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The tax collection target set in the Union Budget is nearly Rs 27.50 lakh crore, for the financial year ending March 2023. Expectedly, the total tax collection is around Rs 31.50 lakh crore for 2022-23

The revenue secretary, Tarun Bajaj said that tax collection in India will exceed the budget estimate by nearly Rs 4 lakh crore in the current fiscal, on 23 November. This is due to buoyant income tax, customs duty and GST (Goods and Services Tax) mop-up.

According to him the tax revenues growth will continue to be on higher than the GDP growth, backed by formalisation of the economy and better compliance, reported a media house.

The tax collection target set in the Union Budget is nearly Rs 27.50 lakh crore, for the financial year ending March 2023.

Bajaj said the direct tax collection comprising personal and corporate taxes would be close to Rs 17.50 lakh crore in the current fiscal. Mop up from indirect taxes (customs, excise and GST) would be close to Rs 14 lakh crore.

Expectedly, the total tax collection is around Rs 31.50 lakh crore for 2022-23, he added.

The direct and indirect tax mop up fixed in the budget stood at Rs 14.20 lakh crore and Rs 13.30 lakh crore for current fiscal, respectively. It took the total figure to Rs 27.50 lakh crore.

Bajaj said that “We are using a lot of data from the income tax and GST departments, and MCA (ministry of corporate affairs). Also, we get data regarding high value expenditure. Formalisation of economy and technology that has helped improved compliance.”

During last fiscal, the direct tax collection went nearly 50 per cent up to Rs 14.10 lakh crore as compared to 2020-21.

“Higher tax collection than GDP growth, will continue as a trend,” said the secretary.

He also said that the government will be very near to the target set during budget, despite there existed a reduction in customs and excise duties during this fiscal.

A target of collecting Rs 2.13 lakh crore and Rs 3.35 lakh crore from customs and excise duties, respectively, has been set in the budget.

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Penal Offences Covered Under IPC Maybe Removed From GST Law: Report

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The proposal, is expected to be considered in the next meeting of the GST Council, making it part of the exercise to decriminalise GST law. The amendments would be placed before the GST Council for approval. Thereafter, it would go to Parliament for effecting changes in the GST Act

The government is planning to cut the penal offences already covered under the Indian Penal Code (IPC) from the purview of GST Act in order to make it more taxpayer-friendly, said an official.

The proposal, is expected to be considered in the next meeting of the GST Council, making it part of the exercise to decriminalise GST law.

Once it receives the essence of GST Council, the Finance Ministry will propose the amendments to the GST law.  This may be discussed in the upcoming winter session of Parliament, in the next month.

According to the official, the changes in Section 132 has finalised by the GST Act Law committee as part of the exercise to decriminalise the law.

The offences on similar lines covered under the Indian Penal Code would be removed from GST law, the official added.

The amendments would be placed before the GST Council for approval. Thereafter, it would go to Parliament for effecting changes in the GST Act.

After the proposal receives approval from the Parliament, states would be required to change their state GST laws.

The offences like primarily fake billing may become a part of the decriminalisation exercise, according to tax experts. Also, supplies of goods or services or both without proper invoices and issues of invoices or bills without a supply of goods, may form part of the same.

The act of availing input tax credit (ITC) by using fake invoices too could be covered under the offences laid in the IPC.

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Govt’s Duty Rollback Decision May Not Benefit Steelmakers: Experts

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Also, the industry is concerned about any major uptick in the steel prices that may make the government reconsider export duties. During May, in this year, the duties were introduced when the global along with Indian steel prices reached a record high which enabled lucrative export opportunities

According to the industry experts, the decision taken by the government to cut export duties on ferrous and steel products may not serve any significant boost to the listed steelmakers of the country. The reasons quoted is global demand for steel that has collapsed, limiting the export opportunities.

Also, the industry is concerned about any major uptick in the steel prices that may make the government reconsider export duties, said experts.

However, what analysts think that the duty rollback may result in some sentimental boost and the marginally revised price targets may witness upwards trend nearly by 10 per cent to 15 per cent across steel companies like JSW Steel, Jindal Steel and Power.

Also, the low inventory in the system may serve a near-term support.

The shares of Tata Steel and SAIL in terms of price targets have not witnessed any significant alterations after the rollback of export duty.

During May, in this year, the duties were introduced when the global along with Indian steel prices reached a record high which enabled lucrative export opportunities. The situation, however, has changed drastically since then.

The World Steel Association (WSA) has reduced its 2022 and 2023 demand estimates across all regions along with India. The only exceptions to this are the Middle East and Africa.

The new global steel demand growth estimates have been altered to 2.2 per cent, keeping it down for 2022. Expectedly, demand may witness a downfall in Europe and the UK, where Tata Steel has a large exposure with the help of its European operations.

The prices of steel in India during May (hot rolled coil) were more than Rs 70,000 per tonne and the steel prices in Europe were nearly 1,000 dollar (Rs 77,000 approximately) per tonne.

The reasons behind export opportunities and higher volumes for domestic steel producers were premiums in the overseas markets.

In contrast, presently, the prices in India are at Rs.55,000 per tonne, which is down between 20 to 22 per cent. The European steel prices, however, went down by more than 40 per cent to 600 dollar (Rs. 49,000 per tonne approximately).

Further, the Chinese prices are also down 30 per cent in the period. Therefore, exporting steel maybe less beneficial for domestic producers, according to industry trackers.

The prices of shares of all four major steel producers being Tata Steel, JSW Steel, Jindal Steel and Power and SAIL on 18 November remained low as compared to their previous day’s close.

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No Export Tax On Low Grade Iron Ore, Few Steel Intermediates: Govt Notif

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On the same lines, New Delhi too lowered the export tax on iron ore and concentrates apart from the roasted iron pyrites to 30 per cent from 50 per cent. During October the iron ore exports of India had dropped to “nearly zero” due to higher export taxes and further it was expected to grow slowly because of lower demand from China

India through a notification cut down an export tax imposed on low grade iron ore lumps and fines containing iron content below 58 per cent, on 18 November. This order reversed an earlier order from May which had raised the tax to a steep 50 per cent to control inflation.

The said notification is effective from today (19 November). Also, through this, the government abolished export tax on few steel intermediates from 15 per cent, that too were imposed in May.

On the same lines, New Delhi too lowered the export tax on iron ore and concentrates apart from the roasted iron pyrites to 30 per cent from 50 per cent.

The notification said, “The Central Government, on being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments.”

During October the iron ore exports of India had dropped to “nearly zero” due to higher export taxes and further it was expected to grow slowly because of lower demand from China, reported a media agency.

The low-grade ore producers majorly depend upon overseas markets, because most of the domestic steel producers consume high-grade iron ore, the Federation of Indian Mineral Industries (FIMI) had said earlier during this year.

The intermediate steel products with high export tax too hurt the shipments significantly.

The exports of finished steel in India more than halved in the first seven months of the fiscal year beginning April 2022, the media report added.

During last week, India’s JSW Steel Ltd being the largest steel manufacturers in country, had said that there may be a fall in exports keeping it a five-year low in 2022/23 due of reduced global demand and the high export tax. The same was reported by media agency.

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Windfall Profit Tax On Crude Oil Up, Levy On Export Of Diesel Down

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The government reduced the rate on export of diesel to Rs 10.5 per litre with that from Rs 13 per litre in its fortnight windfall tax revision. Meanwhile, the windfall profit tax is calculated by deducting any price that producers are gets above a threshold, the levy on fuel exports is based on cracks or margins that refiners earn from overseas shipments

The government increased windfall tax on domestically produced crude oil however reduced the rate on export of diesel, on 16 November.

The crude oil produced by firms like state-owned Oil and Natural Gas Corporation (ONGC)witnessed a tax hike on to Rs 10,200 per tonne, from Rs 9,500 per tonne, effective from 17 November, said a government notification.

The government reduced the rate on export of diesel to Rs 10.5 per litre with that from Rs 13 per litre in its fortnight windfall tax revision. It includes the levy on diesel with Rs 1.50 per litre road infrastructure cess.

The export tax on jet fuel or Aviation Turbine Fuel (ATF) was set at Rs 5 a litre during the last review on 1 November 1. It has not been altered yet.

Initially when the levy was introduced, a windfall tax on export of petrol with diesel and ATF too was levied. However, the tax on petrol was scrapped in subsequent fortnightly reviews.

Meanwhile, the windfall profit tax is calculated by deducting any price that producers are gets above a threshold, the levy on fuel exports is based on cracks or margins that refiners earn from overseas shipments. Such margins are primarily a difference of international oil price realised and the cost.

The first levy of windfall profit taxes was on 1 July, joining a growing number of nations that tax super normal profits of energy companies. During that time, the export duties of Rs 6 per litre (USD 12 per barrel) each were levied on petrol and aviation turbine fuel and Rs 13 a litre (USD 26 a barrel) on diesel. A Rs 23,250 per tonne (USD 40 per barrel) windfall profit tax on domestic crude production was also levied.

The duties were partially adjusted in the previous rounds on 20 July, 2 August, 19 August, 1 September, 16 September, 1 October, 16 October and 1 November.

Credits: AFP

FY23 Budget Estimate May Rise Between Rs 3-3.5 Lakh Cr

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The increase ranging between 10.9 to 12.7 per cent for the budget estimate of Rs 27.6 lakh crore gross tax collection has been recorded for the year. The gross direct tax collections went 30.7 per cent up from the last year to Rs 10.54 lakh crore, as per the latest data, as of 10 November

The government expects a surge in tax revenue at around Rs 3 to 3.5 lakh crore in the current fiscal year considering the revised accounts estimates for financial year 2023 (FY23) which is going to be presented in the February budget, said the officials.

There has been an increase in both direct and indirect taxes’ collection due to improved compliance, the post-pandemic economic recovery and high inflation, officials added.

The increase ranging between 10.9 to 12.7 per cent for the budget estimate of Rs 27.6 lakh crore gross tax collection has been recorded for the year.

Expectedly, the collection will majorly fund the extra spending on food and fertiliser subsidies and keep a check on fiscal deficit.

While presenting the budget in February for the current fiscal year, finance minister Nirmala Sitharaman had set a target of gross tax revenue of Rs 27.6 lakh crore in FY23. Reportedly the estimate is 9.5 per cent up from the revised estimate of Rs 25.2 lakh crore for FY22.

The gross direct tax collections went 30.7 per cent up from the last year to Rs 10.54 lakh crore, as per the latest data, as of 10 November. During the first ten months of the fiscal, the goods and service tax revenue is equally robust and up with 29.7 per cent at Rs 10.5 lakh crore.

A surge in the nominal gross domestic product (GDP) at 26.7 per cent on year-on-year basis was witnessed during the June quarter. It nearly doubled from 13.5% growth in real terms. As compared to the budget estimates in FY22 at Rs 22.2 lakh crore, the gross tax collections too went up, reaching Rs 25.2 lakh crore in the revised estimate.

According to the officials, apart from the recovery, the use of data mining and improved compliance, continued buoyancy. The rise in revenue will enable the government meet a spike in subsidy bills due to the rally in global food, fertiliser and fuel prices.

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Taxpayers Should Check AIS Quarterly, Report Discrepancies: Joint Secy, FinMin

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In last year during November, the income tax department had released a new Annual Information Statement (AIS) on its portal which provides a comprehensive view of taxpayer information with an option to submit feedback. Kamlesh Varshney said that the system that has been developed is a very important one that it promote voluntary compliance without actually scrutinising a taxpayer

The taxpayers must check their annual information statement every quarter and flag any discrepancies in order to help reduce wrongful HRA deductions, said a senior official from finance ministry, on 8 November.

In last year during November, the income tax department had released a new Annual Information Statement (AIS) on its portal which provides a comprehensive view of taxpayer information with an option to submit feedback. The statement includes additional information related to interest, dividend, securities transactions, mutual fund transactions and foreign remittance information. 

Joint secretary in the finance ministry, Kamlesh Varshney said during an event that one should keep on checking the AIS not only filing return but also quarterly. Checking the AIS (report) would ensure if anything wrong is reported so that other person claiming some kind of benefit wrongly is caught.

He said that to ensure voluntary compliance while filing the income tax returns (ITR), AIS has played an important role.

Quoting an example, he said people declare false information to their employer to claim HRA deductions. The AIS shows declarations along with the the person in whose account the rent amount has been credited.

Varshney said that the system that has been developed is a very important one that it promote voluntary compliance without actually scrutinising a taxpayer.

AIS’ objectives include displaying complete information to a taxpayer along with a facility to capture online feedback, promote voluntary compliance and enable seamless pre- filing of return. Its another objective is to “deter noncompliance”, as according to the Income Tax website.

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