GST collections in May dropped to the lowest level since September 2020

• India’s Gross GST revenue fell to 1.02 lakh crore in May, from a record 1.41 lakh crore in April, but the number was likely to be revised upwards, the government said.
• The May collections, broadly pertaining to transactions in April, are the lowest since September 2020, which recorded revenue of 95,480 crores.
• Economists expect the collections to dip further in June even though the current lockdowns across the States may not be denting activity as much as last year’s national lockdown.

Goods and Service Tax – GST (Indirect Tax)

• Through 101st Amendment Act guided by Art 301 Govt introduced GST includes both Goods and Services
• Art 279 A is introduced to make GST workable. Enforced from 1 July 2017.
• Exceptions
  1. Except for Alcohol and Electricity all items are included.
  2. 5 Petroleum products are temporarily out of GST (to control losses to the State): Crude Oil, petrol, diesel, ATF and Natural Gas.
• GST Council
  1. Constitutional Body. Responsible for Tax rates, listing of items and any dispute resolution among States and provide participation of all States and UTs.
  2. Headed by FM. Represented by FM of States. Vice Chairperson from respective State FM.
  3. Voting: 2/3rd State and 1/3rd Center. The decision is based on majority voting.
  4. Quorum = 50% and Majority = 75% members present.
• It preserves the Principle of Cooperative Federalism. But if Tax rates are decided States have no autonomy to modify it which goes against Cooperative Federalism.
• GST tried to provide a Single Tax for the supply of all goods and services (solving the problem of multiple taxation).
• It is a destination-based tax (opposite of VAT) guided by 1 Tax 1 Nation 1 Market to decrease cascading effect and decrease the cost of production and increase export and control inflation.
• GST is based on IT technology hence minimum interface between tax officials and citizens.
• It is a part of Ease of Doing Business by doing away with multiple taxation, multiple filling and multiple compliances. Now all firms can file the same tax, and get a GST number to get the benefit of the Input Tax Credit.

• For PAN India Company a person should take different GST numbers in different States because State has State GSTs.
• Taxes subsumed under GST
  1. Central Taxes = Excise Duty (Medicinal and Toiletry Goods), Additional Duties of Excise (Goods of special importance), Additional Custom Duties, Special Additional Custom duties, Service Tax, Central Surcharges and Cess.
  2. State Taxes = State VAT, Central Sales Tax, Luxury Tax, Entry tax, Entertainment tax, Tax on Ads (other than Newspapers), Tax on Lotteries, Betting and gambling, Purchase Tax, State Surcharge and Cess.

Provisions of GST

1. As it is a Destination Based Tax, Chances are that UP Govt (Destination State) can earn more GST than Maharashtra which is manufacture state. Hence Govt came up with Cess @ 15% on more luxurious goods to compensate lossmaking states at 15% over peak rate of 28% but at times the effective rate is < 40%. Hence, effective rate of cess is 12%.
2. Exemption limit in plain area increased from 20 to 40 lakh rs. and in Northeast and Hilly regions, increased from 10 to 20 lakhs.
3. Govt introduced GST Composition Scheme:

1. If a Trader, manufacturer and restaurant; if annual turnover <= 1.5 crore then the Trader and Manufacture must pay 1% of GST and Restaurant can pay 5% of GST. But they are not eligible for input tax credit mechanism.
2. In service sector 18% is GST but if any enterprise has turnover of 50 lakhs then you can pay 6% They are not eligible for input tax credit off. Under it Center and State share is 50:50.
3. 4 Types of GST: CGST, SGST, UTGST and IGST imposed on imported goods or custom duties and interstate trade distributed to state as per FC recommendations.
4. Rates

1. 0% = Essential goods. Unbranded. Unpacked. Export and supplies to SEZ are 0 rated.
2. 5% = Packed essential goods. Branded. Important for consumption of masses.
3. 12% = Daily health and hygiene. Basic Raw material for industries, few construction items (except Cement).
4. 18% = Majority services.
5. 28% = Luxury goods and Cement.
6. Separate rate for precious metals = 3% and semi precious stones = 0.25%.
7. For administrative convenience, if a Business have turnover < 1.5 crore 90% belongs to State and 10% = Central. But if Business > 1.5 crore turnover then Centre: State share has 50:50.
8. Now J&K is also a part of GST.

5. Exceptions

• Except Alcohol and Electricity all items included.
• 5 Petroleum products are temporarily out of GST (to control losses to the State): Crude Oil, petrol, diesel, ATF and Natural Gas.

6. Input Tax Credit Off of State GST will be adjusted from State GST.
7. e-filing of returns from e-payment, netbanking, RTGS.
8. Refund of taxes to be sought by taxpayers or any other person is within 2 years time period from date.
9. Self assessment of tax payable by registered person provided by audit and he should comply provisions.
10. Formation of advanced ruling authority in every State to enable tax payers to seek a binding clarity on taxation matter, Center should adopt such authority.
11. GST Appellate Tribunal = Head Commissioner Level to solve disputes relating to GST amount.
12. Anti Profiteering Clause: To ensure that benefit of GST and Input Tax credit off can pass to consumers like Monetary Transmission of RBI.
13. 3 Tier Structure

1. Standing Committee on Anti Profiteering
2. Screening Committee at State Level
3. NAPA: (National Anti Profiteering Authority) to ensure that benefits that occur to entities due to decreased cost are passed on to customers. Entities that hike prices to get profits will be checked.

14. They will 1st identify business and ask him to comply. They can ensure payment of compensation to consumers at 18% from date of imposing high prices. If they do not accept, they can cancel its licence.

Schemes for Fisheries sector in India

Need for safeguarding the Aquatic ecosystem?

• The sustainability and conservation of our aquatic ecosystem which constitutes of various freshwater habitats, with oceans and seas covering more than 70 per cent of the Earth, has gained a lot of attention in recent times at national and international forums.
• It also underpins key economic sectors, such as fisheries and tourism. However, today these habitats are constantly facing huge threats from various actors.
• As predicted by eminent scientists and practitioners across the world, millions of tonnes of our plastic waste released into these habitats by humans are harming creatures, including seabirds, turtles, crabs and other species.
• To curb the impact caused to these habitats, it is imperative that more awareness be created amongst nations to take responsible actions, work towards the conservation of the environment and leverage existing resources to reverse and restore the planet Earth.
• However, at the same time, one must understand that protecting and restoring the entire ecosystem is a massive task and needs to be taken up collectively by nations across the globe on priority and at a faster pace.
• The Department of Fisheries, Ministry of Fisheries, Animal Husbandry and Dairying, Government of India truly recognizes the urgency to protect these habitats while ensuring optimal utilization of our national resources.
• In view of the same, the schemes and programmes being implemented by the Department, aim at the growth of the fisheries and aquaculture sector, keeping the sustainability of the environment as the prime focus.

Government Efforts

Blue Revolution

• “Blue Revolution”, the flagship scheme of the Department, launched in the year 2015, aimed to achieve economic prosperity of the country and the fishers and fish farmers as well as contribute towards food and nutritional security through full potential utilization of water resources for fisheries development in a sustainable manner, keeping in view the bio-security and environmental concerns.
• Under Blue Revolution, total funds of Rs. 2573 crores were released as central assistance to various States and Union Territories and various organisations for sustainable and holistic development of fisheries and fishers’ welfare, along with the promotion of environment-friendly aquaculture practices.
• As part of the Blue Revolution scheme, various environment-friendly technologies were adopted for safeguarding of our aquatic ecosystem.
• Recirculating Aquaculture Systems (RAS) were supported; RAS technology is eco-friendly, water efficient, and is a highly productive intensive farming system, with zero environmental impact.
• Likewise, Sea Cages for marine fish culture were promoted and supported, Seaweed cultivation has also been promoted, and fish lean/ban period has been implemented during the breeding season amongst many other initiatives.
• Solar panel units for producing energy to operate water pumps, and aerators and carry out other fisheries-related activities were provided assistance under the Blue Revolution Scheme.
• This entailed providing one-time central assistance to beneficiaries for procurement and installation of solar power support system for fisheries. These initiatives amongst others have played a major role in protecting the land as well as the aquatic ecosystems.

Pradhan Mantri Matsya Sampada Yojana (PMMSY)

• To further build on the achievements in the fisheries sector through the implementation of the Blue Revolution Scheme and develop the sector in a sustainable and responsible manner, the Government of India launched a flagship scheme of “Pradhan Mantri Matsya Sampada Yojana (PMMSY)” in May 2020, with highest ever estimated investment of Rs. 20,050 crore under the Aatmanirbhar Bharat package.
• PMMSY aims at sustainable and responsible development of fisheries sector with focus on infrastructure, species diversification, sustainable livelihoods, aquatic health management, robust database, innovations, collectivization, modernization of value chain, export promotion, establishing a robust fisheries management framework, with special focus on implementing technologies that ensure the protection of habitats and fisheries wealth.
• In this context, the Department is taking up a range of activities including implementation of bio-flocs, Recirculatory Aquaculture System (RAS) with a special focus, Reservoir cage culture, open sea cage culture for conservation of marine fisheries and risk mitigation to marine fishers, sea weed cultivation for supporting livelihood and ushering prosperity for coastal communities especially women in sustainable environment friendly manner alongwith providing livelihood and nutritional support for fishers’ families for conservation of fisheries resources during fishing ban/lean period. Furthermore, the Department is also actively promoting installation of Bio-toilets in fishing vessels to keep the marine environment clean and prevent contamination of marine resources.
• PMMSY aims to promote sustainable fish production systems/methods with minimal environmental impacts to support more crop per drop.
• Integrated Modern Coastal Fishing Villages will be developed under PMMSY with investment of Rs. 750 crore to leverage Blue economy/Blue growth with an aim to maximize economic and social benefits to coastal fishers while minimizing environmental impact through sustainable fishing practices. Project proposal with total outlay of Rs. 2881.41 crores has been approved under PMMSY during 2020-21 for sustainable development of fisheries and fisheries related infrastructure including fishers’ welfare.

G7 countries agree on a Uniform minimum Corporate Tax

What is G-7 grouping?

• It is an intergovernmental organisation that was formed in 1975.
• The bloc meets annually to discuss issues of common interest like global economic governance, international security and energy policy.
• The G-7 does not have a formal constitution or a fixed headquarters. The decisions taken by leaders during annual summits are non-binding.
• G-7 is a bloc of industrialized democracies i.e. France, Germany, Italy, the United Kingdom, Japan, the United States, and Canada.
• The G7 was known as the ‘G8’ for several years after the original seven were joined by Russia in 1997.
• The Group returned to being called G7 after Russia was expelled as a member in 2014 following the latter’s annexation of the Crimea region of Ukraine
• Summits are held annually and hosted on a rotation basis by the group's members.
• The groundwork for the summit, including matters to be discussed and follow-up meetings, is done by the “sherpas”, who are generally personal representatives or members of diplomatic staff such as ambassadors.
• The leaders of important international organizations like European Union, IMF, World Bank and the United Nations are also invited.
• The Group of Seven wealthy democracies on Tuesday discussed how to form a common front towards an increasingly assertive China in the Foreign Ministers’ first in-person talks in two years.

What is in the news?

• A group of the world’s richest nations reached a landmark deal to close cross-border tax loopholes used by some of the world’s biggest companies.

  The Group of Seven said it would back a minimum global corporation tax rate of at least 15%, and put in place measures to ensure that taxes were paid in the countries where businesses operate.

  The accord, which could form the basis of a global pact next month, is aimed at ending a decades-long “race to the bottom”, in which countries have competed to attract corporate giants with ultra-low tax rates and exemptions.

  That has, in turn, cost their public coffers hundreds of billions of dollars — a shortfall they now need to recoup all the more urgently to pay for the huge cost of propping up economies ravaged by COVID-19.

Why a global minimum?

• Major economies are aiming to discourage multinationals from shifting profits — and tax revenues — to low-tax countries regardless of where their sales are made.
• Increasingly, income from intangible sources such as drug patents, software and royalties on intellectual property has migrated to these jurisdictions, allowing companies to avoid paying higher taxes in their traditional home countries.
• With its proposal for a minimum 15% tax rate, the Biden administration hopes to reduce such tax base erosion without putting American firms at a financial disadvantage, allowing competition on innovation, infrastructure and other attributes.

Where are the talks at?

• The G7 talks feed in to a much broader, existing effort.
• The Organization for Economic Cooperation and Development has been coordinating tax negotiations among 140 countries for years on rules for taxing cross-border digital services and curbing tax base erosion, including a global corporate minimum tax.

• The OECD and G20 countries aim to reach consensus on both by mid-year, but the talks on a global corporate minimum are technically simpler and less contentious. If a broad consensus is reached, it will be extremely hard for any low-tax country to try and block an accord.
• The minimum is expected to make up the bulk of the $50 billion-$80 billion in extra tax that the OECD estimates firms will end up paying globally under deals on both fronts.

How would a global minimum tax work?

• The global minimum tax rate would apply to overseas profits. Governments could still set whatever local corporate tax rate they want, but if companies pay lower rates in a particular country, their home governments could “top-up” their taxes to the minimum rate, eliminating the advantage of shifting profits.
• The OECD said last month that governments broadly agreed on the basic design of the minimum tax but not the rate. Other items still to be negotiated include whether investment funds and real estate investment trusts should be covered, when to apply the new rate and ensuring it is compatible with U.S. tax reforms aimed at deterring erosion.

What about that minimum rate?

• Talks are focusing around the U.S. proposal of a minimum global corporation tax rate of 15% - above the level in countries such as Ireland but below the lowest G7 level.
• Any final agreement could have major repercussions for low-tax countries and tax havens.
• The Irish economy has boomed with the influx of billions of dollars in investment from multinationals. Dublin, which has resisted EU attempts to harmonise its tax rules, is unlikely to accept a higher minimum rate without a fight.
• However, the battle for low-tax countries is less likely to be about scuppering the overall talks and more about building support for a minimum rate as close as possible to its 12.5% or seeking certain exemptions.