GST council to convene on May 28

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 Alcohol and Electricity all items 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. Decision is based on majority voting.
  4. Quorum = 50% and Majority = 75% members present.
• It preserves 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 Single Tax for supply of all goods and services (solved 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 cost of production and increase export and control inflation.
• GST is based on IT technology hence minimum interface between tax official and citizens.
• It is a part of Ease of Doing Business by doing away with multiple taxation, multiple filling and multiple compliance. Now all firms can file same tax, get GST number to get the benefit of Input Tax Credit.

• For PAN India Company a person should take different GST number 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 Gambing, Purchase Tax, State Surcharge and Cess.

Provisions of GST

1. As it is a Destination Based Tax, Chances is 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.

China’s Mars Mission

• China landed a spacecraft on Mars carrying its first Mars rover in a big boost to its space ambitions, the country’s space agency said on Saturday.
• China had in July last year launched its first Mars mission, called Tianwen-1, meaning Questions to Heaven, carrying a lander and rover.
• Tianwen-1 had been in orbit since February, and on Saturday, a lander descended successfully on to the surface of the red planet carrying a rover named Zhurong, named after a god of fire for a planet known in Chinese as the planet of fire. Only the Soviet Union and the U.S. had previously carried out a successful landing on Mars.
• China’s official media described “nine minutes of terror” during the descent — the hardest part of the mission. The descent “was extremely complicated with no ground control, and had to be performed by the spacecraft autonomously,” Geng Yan, an official at the China National Space Administration (CNSA) Lunar Exploration and Space Program Center, was quoted as saying by state media. “Each step had only one chance, and the actions were closely linked. If there had been any flaw, the landing would have failed,” he said.
• The rover will provide “first-hand materials for research on the planet’s space environment, surface topography, and soil structure”, the CNSA said.
• China’s leadership sees the space programme as an important part of China’s ambitions to close the technological gulf with the U.S.
• President Xi Jinping on Saturday described the Mars landing as “an important step in China’s interstellar exploration” and said it had “left a Chinese mark on Mars for the first time” and was “another landmark progress in China’s space industry development”.
• China had previously tried to launch a Mars orbiter along with Russia in 2011, but that failed to enter orbit. This attempt, on its own, hit the target.
• China’s Mars mission, along with lunar mission and space station, is key to its space programme. In 2019, the fourth lunar probe, Chang’e-4, carried out the world’s first landing on the far side of the moon. The Mars mission was launched the following year.
• China is also investing heavily in its manned space programme, as plans accelerate for its first space station, set to be functional by the end of next year and only the second space station after the International Space Station. Last month, a Long March-5B Y2 rocket carried out the first of three components for the space station, called the Tianhe or Heavenly Harmony module.
• Thomas Zurbuchen, of NASA’s Science Mission Directorate, congratulated China. “Together with the global science community,” he said, “I look forward to the important contributions this mission will make to humanity’s understanding of the Red Planet.”

Everything about: Myanmar military coup

About Myanmar

• Myanmar, aka Burma, is a country in South East Asia. It neighbours Thailand, Laos, Bangladesh, China and India.
• Myanmar is a diverse country, with the state recognizing more than one hundred ethnic groups.
• Forming roughly two-thirds of the population, ethnic Burmans, known as the Bamar, have enjoyed a privileged position in society and hold a majority of government and military positions.
• Many ethnic minority groups, on the other hand, have faced systemic discrimination, a lack of economic opportunities and development in their regions, minimal representation in government, and abuses at the hands of the military.
• Since independence, discrimination has been ingrained in Myanmar’s laws and political system.
• Anti-Muslim sentiment has also been on the rise in predominantly Buddhist Myanmar. (Rohingya crisis)
• Buddhist extremists, who promote the supremacy of Buddhism, have attacked Muslims and spread hate speech.

Historical Background for Myanmar

• The country gained independence from Britain in 1948. Since then, Myanmar has been ruled by a military junta.
• The Union of Burma began as a parliamentary democracy, like most of its newly independent neighbours on the Indian subcontinent. But representative democracy only lasted until 1962, when General U Ne Win led a military coup and held power for the next 26 years.
• By 1988, widespread corruption, rapid shifts in economic policy related to Myanmar’s currency, and food shortages led to massive student-led protests. But it was crushed by the army. In the aftermath of the 1988 crackdown, Ne Win resigned as chairman of his party, although he remained active behind the scenes as another military junta took power.
• The new ruling military changed the country's name from Burma to Myanmar in 1989. In 2005, the military government moved the administrative capital to Nay Pyi Taw, a city it built-in central Myanmar.
• In 2007, the Saffron Revolution, widespread anti-government protests that were sparked by fuel price hikes and named after the saffron-coloured robes worn by participating Buddhist monks—and international pressure prompted shifts in Myanmar.
• The junta pushed forward a new constitution in 2008, which is still in place today, that gave the military widespread powers even under civilian rule. The military junta unexpectedly officially dissolved in 2011 and established a civilian parliament for a transitional period, during which former army bureaucrat and Prime Minister Thein Sein were appointed president.
• In 2015, Myanmar held its first nationwide, multiparty elections—considered to be the freest and fairest elections in decades—since the country’s transition away from military rule.
• Suu Kyi became Myanmar’s de facto leader in 2015.

What is the news?

• General Min Aung Hlaing led a Military coup in February 2021.
• By arresting President Win Myint, State Counsellor Aung San Suu Kyi and the rest of the ruling National League for Democracy (NLD) leadership, and declaring military rule under a state of emergency for at least a year, General Min Aung Hlaing has made it clear that it is the military that is in charge, and he is not particularly concerned about the opposition to or condemnation of the move.

What led to the 2021 Military coup?

• In 2020, Myanmar held its second national elections under civilian rule, which Ms Suu Kyi’s NLD party overwhelmingly won.
• The military suffered a major blow in the elections: the USDP won just 33 of 476 available seats, while the NLD won 396.

• The immediate reason for the coup was that the newly elected National Assembly was due to meet in Naypyidaw, despite the Tatmadaw’s (Army’s) claims that the November general elections had several irregularities and its contestation of the NLD’s landslide victory.
• Ms Suu Kyi had refused to bow to Gen. Hlaing’s demand that the results, which also saw the military-backed Union Solidarity and Development Party with reduced strength in Parliament, be set aside.
• Clearly, the Army, which still nominates a fourth of the parliamentary seats and retains the important Defence, Borders and Interior portfolios, felt it was better to dismiss the NLD government before it increased its clout.
• Gen. Hlaing is due to retire this year, and it is possible that the move was meant to extend his longevity in power.
• Backed by a silent Beijing, the junta leadership may also have gambled that it was better to take drastic action against the democratic leaders before the new U.S. administration finds its feet.
• Role of Aung Suu Kyi

1. The return to Army rule was also helped to some extent by Ms Suu Kyi, who came to office in 2015, but has lost opportunities to put her country more firmly on the road to democracy. She has accepted a dual power system in the state.
2. Daw Suu, as she is known, has also failed to bring democracy to her party, and been criticised for her autocratic style.
3. Her refusal to rein in the Generals when the Tatmadaw unleashed a pogrom on the Rohingya between 2016-17, had lost the Nobel Peace laureate much international support.

Impact on India

• The crisis had its spillover impacts on the borders as well.
• At least 300 Myanmarese, including police officers, are estimated to have since crossed into India.
• Mizoram Chief Minister Zoramthanga took up the issue with the Foreign Minister and India has shut the border for now, but it would be difficult for New Delhi to turn a blind eye to the border if the situation in Myanmar turns worse.

India’s Stand

• India had cultivated a careful balance, between nudging along the democratic process by supporting Ms Suu Kyi, and working with the military to ensure its strategic interests in the North East and deny China a monopoly on Myanmar’s infrastructure and resources, the developments are unwelcome.
• India expressed “deep concern” over the reports of an unfolding military coup in Myanmar.
• India has always been steadfast in its support to the process of democratic transition in Myanmar.
• The country believes that the rule of law and the democratic process must be upheld.
• India had shown a commitment to building robust relationships with Myanmar over the past two decades which intensified after the democratic process began in 2011.
• India has sealed its border with Myanmar: click here for further news.

Click here for the Jakarta Summit – Myanmar and ASEAN after the coup