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India cut its windfall tax on petroleum crude to 1,700 rupees ($20.53) a tonne from 2,300 rupees a tonne, according to a recent government notification. Windfall Tax It is a tax levied by governments against certain industries when economic conditions allow those industries to experience significantly above-average profits. The term “windfall” refers to an unexpected rise in profits, and the tax on windfall gains is known as the windfall tax. When is it imposed? When the government notices a sudden increase in an industry's revenue, they impose this tax. However, these revenues cannot be linked to anything the company actively pursues, such as its business strategy or expansion. Rather,…
22 January, 2024
Tax
Tax Inspectors without Borders (TIWB) programme launched in partnership with India. TIWB is a capacity-building programme, helping countries in building tax audit capacity. TIWB is a joint initiative of the Organisation for Economic Co-operation and Development (OECD) and the United Nations Development Programme (UNDP). TIWB Programmes complement the efforts of the international community to strengthen co-operation on tax matters and contribute to the domestic resource mobilisation efforts of developing countries. It deploys qualified experts in developing countries and help build tax capacity in the areas of audit, criminal tax investigations and the effective use of automatically exchanged information. TIWB launched a programme in…
21 December, 2023
Tax
An investigation titled ‘Cyprus Confidential’ has shed light on the intricate web of tax avoidance and wealth concealment. What is Cyprus Confidential? It is a global offshore investigation of 3.6 million documents that reveal how the rich and powerful from around the world use Cyprus as a tax haven and a secrecy jurisdiction. Partnership- International Consortium of Investigative Journalists and 68 media partners. Cyprus- It is a small Mediterranean island off the coast of Turkey that has an outsized financial sector.It has some of the European Union’s most lax financial disclosure laws, making the country an ideal destination for stashing wealth. Cyprus Investment Programme-…
13 November, 2023
Tax
Windfall Tax The Ministry of Finance recently justified the windfall tax levied by the Center on domestic crude oil producers, claiming that it was not a last-minute decision but rather the result of extensive industry engagement. Image Source - clevernotes About Windfall tax It first appeared in 2022. Windfall taxes are made to tax any income a business makes as a result of an unforeseeable, external event, such as the increase in energy prices brought on by the conflict in Ukraine and Russia. These are gains that can't be directly linked to something the company actively did, like an investment plan…
15 September, 2022
Tax
WINDFALL TAX The Indian government has cut the recently imposed cesses and levies on diesel and aviation turbine fuel (ATF) and removed the cess on exports of petrol due to softening in crude oil prices, amid fears of a global recession. About windfall tax A Windfall tax is imposed by a government against certain industries when they experience above-average profits due to economic conditions. India imposed windfall taxes on 1 July, following the super normal profits of energy companies. Reduction in taxes Additional excise duties equal to 6 rupees per liter on exports of petrol have been removed. Duties on…
23 July, 2022
Tax
Goods and Service Tax - UPSC Analysis What is Goods and Service Tax? Through 101st Amendment Act guided by Art 301 Govt introduced GST (Goods and Service Tax) includes both Goods and Services Art 279 A is introduced to make GST workable. Enforced from 1 July 2017. Exceptions Except for Alcohol and Electricity, all items included. 5 Petroleum products are temporarily out of Goods and Service Tax (to control losses to the State): Crude Oil, petrol, diesel, ATF and Natural Gas. GST Council Constitutional Body. Responsible for Tax rates, a listing of items and any dispute resolution among States and…
18 January, 2022
Tax
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 Except for 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. GST Council Constitutional Body. Responsible for Tax rates, listing of items and any dispute resolution among States and provide participation of all States and UTs. Headed by FM. Represented by FM of…
01 January, 2022
Tax
Equalisation Levy Part of: GS-III- Economy (PT-MAINS-PERSONALITY TEST) Recently, the Central government has stated that it will not extend the deadline for payment of the equalisation levy by non-resident e-commerce players, even though a majority of them are yet to deposit the first instalment of the tax. **The equalization levy is aimed at taxing foreign companies which have a significant local client base in India but are billing them through their offshore units, effectively escaping the country’s tax system. The step has come in the backdrop of the United States Trade Representative (USTR) investigations into taxes adopted or under consideration by 10 nations, including India, on revenues of American digital service…
25 November, 2021
Tax
TAX REFORMS IN INDIA Context: This topic is important for GS Paper 3. Introduction to Tax Reforms in India Taxation is not just a vehicle for raising state revenue. It can also be critically important for economic and political development. In recent times, India has introduced some far-reaching reforms to increase compliance (like Goods and Services Tax (GST), reduction in corporate tax rate and phasing out of exemptions, etc.) and to reduce tax evasion (like Place of Effective Management, Black Money Act, etc.). India remains largely a tax non-compliant society- • Only 6.08 cr individuals pay taxes (~4.9%) much below the…
04 November, 2021
Tax
Indirect Taxes Indirect taxes are consumption-based taxes that are applied to goods or services when they are bought and sold. The government receives indirect tax payments from the seller of the good/service. The seller, in turn, passes the tax on to the end user i.e. buyer of the good/service. Thus, the name indirect tax as the end user of the good/service does not pay the tax directly to the government. Goods and Services Tax Goods and Services Tax (GST) is an indirect tax (or consumption tax) levied in India on the supply of goods and services. It is levied at…
29 July, 2021
Tax
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…
06 June, 2021
Tax
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 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. GST Council Constitutional Body. Responsible for Tax rates, listing of items and any dispute resolution among States and provide participation of all States and UTs.…
16 May, 2021
Tax
Goods and Service 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 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. GST Council Constitutional Body. Responsible for Tax rates, listing of items and any dispute resolution among States and provide participation of all States and UTs. Headed by FM. Represented by FM of States. Vice Chairperson from…
03 May, 2021
Tax
Modified tax system Introduction This article analyses the amendments brought to the Finance Bill 2021 regarding taxation matters Finance Minister has steered through Parliament the Finance Bill of 2021, which includes 127 amendments. Issues with the Rs.2.5 lac per year limit Responding to MPs’ concerns on the tax, she said that nearly 93% PF account holders will be covered by the ?2.5 lakh per year limit, while a mere 1% were abusing the system. Yet, she introduced an amendment doubling the threshold for annual PF contributions to ?5 lakh, only for employees whose employers do not remit any contribution to…
26 March, 2021
Tax
Data on petrol cess and other cesses. Cesses are collected for a specific purpose, and they need not be shared with the States, as they are excluded from the purview of a divisible pool of taxes. Heavy taxation on crude oil combined with a significant uptick in international crude prices is responsible for 2021 price rise. In the FY22 Budget, an Agriculture Infrastructure and Development (AID) Cess was announced on select items, including petrol and diesel. It is important to note that Not a single rupee of the cess collected on crude oil in the past 10 years was used…
24 February, 2021
Tax
Tax on PF withdrawals Introduction The income tax law proposed in the Finance Bill, 2021, has triggered anxieties for the salaried class: withdrawing tax exemption on interest income accrued into Provident Fund accounts arising out of employee contributions exceeding 2.5 lakh ‘in a previous year in that fund,’ on or after April 1, 2021. Issue The rationale — some employees are contributing huge amounts into their PF accounts and getting tax-free incomes. Views of the Revenue Department The Revenue Department has pointed out the tax will only affect a small group of ‘high net-worth individuals’ (HNIs); the 100 largest employees’…
18 February, 2021
Tax
Provident Funds to be Taxed at withdrawal- Budget 2020-21 Introduction The income tax law proposed in the Finance Bill, 2021, has triggered anxieties for the salaried class: withdrawing tax exemption on interest income accrued into Provident Fund accounts arising out of employee contributions exceeding ?2.5 lakh ‘in a previous year in that fund,’ on or after April 1, 2021. Reason Some employees are contributing huge amounts into their PF accounts and getting tax-free incomes. Subsequently, the Revenue Department has pointed out the tax will only affect a small group of ‘high net-worth individuals’ (HNIs); the 100 largest employees’ PF (EPF)…
18 February, 2021
Tax
Digital Services Tax Why in news? United States Trade Representative (USTR) reported that India’s DST is discriminatory & inconsistent with international tax principles. What is Digital service tax (DST)? Digital companies are not adequately taxed because they don’t have a physical location in the markets where they operate. DST aims to ensure that non-resident, digital service providers pay their fair share of tax on revenues generated in the Indian digital market. How does India’s DST evolve? In 2016, Akhilesh Ranjan Committee suggested to create a level-playing field between online businesses and brick-and-mortar businesses. Since digital businesses don’t have a physical presence but enjoy…
13 February, 2021
Tax
Analysis of Green Tax Union Transport Minister Nitin Gadkari has announced his Ministry’s approval of a ‘green tax’ on vehicles of specified vintage, as a means of dissuading people from using polluting vehicles. Among the major features of the measure is a 10%-25% additional green tax on the road tax payable by commercial transport vehicles that are older than eight years at the time of fitness certification renewal, and for personal vehicles after 15 years. The policy provides exemptions for tractors, harvesters and tillers used in farms, hybrid, electric, ethanol, liquefied petroleum gas (LPG) and compressed natural gas (CNG)-powered vehicles,…
31 January, 2021
Tax
Green Tax The Union Minister for Road Transport and Highways has approved a proposal to levy a ‘green tax’ on old vehicles. Personal vehicles will be charged a tax at the time of renewal of Registration Certification after 15 years. The policy will come into effect from April 1, 2022. Provisions The levy may differ depending on fuel (petrol/diesel) and type of vehicle. The proposal will now go to the States for consultation before it is formally notified. It includes 10-25% of road tax on transport vehicles older than eight years at the time of renewal of fitness certificate. The…
26 January, 2021
Tax
The government may raise import duties by 5-10% India is considering raising import duties by 5%-10% on more than 50 items including smartphones, electronic components and appliances in the upcoming budget. The move to increase import duties is part of Prime Minister Narendra Modi’s self-reliant India campaign that aims to promote and support domestic manufacturing, said the sources, who asked not to be named as the discussions are not public. One of the sources said the government was seeking to target additional revenue of about Rs. 200 billion to Rs. 210 billion, as it looks to shore up revenue amid…
19 January, 2021
Tax
Income Tax Dept. to crack down on GST fraud To read everything about Goods and Services Tax: click here Tightening the noose around fraudsters rigging the Goods and Services Tax (GST) regime, the government has roped in the Income Tax Department to tap illicit incomes as part of a crackdown against 7,000 fraud companies, identified using data analytics tools. Any income traceable to the use of fake bills and other GST frauds shall be considered concealed income and attract severe penalties so that direct tax collections may also get a leg-up while better compliance pushed GST collections to a record…
04 January, 2021
Tax
India and Cairn Energy on retrospective taxation GS-Paper-2 International issues, Bilateral Investment Treaties (PT-MAINS) GS-Paper-3 Tax Terrorism, Retrospective taxation (PT-MAINS) The Permanent Court of Arbitration at the Hague ruled in the favour of Cairn Energy over a retrospective tax demand worth Rs. 24,500 crore pursued by India’s tax officials since 2014. It has ruled that the tax levy falls contradiction of the India – UK Bilateral Investment Pact. This hearing is similar to the Vodafone case which India lost. But unlike the Vodafone case, where the Government had only Rs. 80 crore at stake if defeated, this verdict includes a shapr $…
25 December, 2020
Tax
Market dictates and a blow against equality Context Supreme Court of India heard brief arguments on the constitutional validity of the levy of Goods and Services Tax (GST) on mobility aids used by disabled citizens. The petitioner, in Nipun Malhotra vs. Union of India, argued that the tax imposed on these products, which included wheelchairs, tricycles for the disabled, braille paper and braille watches, was patently discriminatory. A decision to impose a tax, it said, was a matter of policy over which the judiciary ought not to ordinarily interfere. In adjourning the case, it suggested that the petitioner exhaust his…
07 November, 2020
Tax
Grim Sovereign Tangle: On GST compensation standoff Context Three years after the introduction of India’s new indirect tax regime, GST, it has started to face an existential crisis. The gains of GST have started to quickly erode as the slowdown in the economy, exacerbated by the Covid-19 lockdowns, has thrown all revenue calculations to the wind. Due to huge shortfalls in the tax collection under GST the Central government and State Government has come at loggerheads as Centre has shown its incapability to compensate the States as promised under the GST Act 2017. GST Compensation to the states: After the…
05 September, 2020
Tax
GST reform needs a new grand bargain By, Vijay Kelkar and Ajit Ranade are, respectively, Vice-President and Member, Pune International Centre Introduction: Under the GST era, the States gave up their right to collect sales tax and sundry taxes, and the Centre gave up excise and services tax. The nationwide GST promised frictionless commerce across State borders,buoyant and leakproof tax compliance, and removal of inefficiencies like the cascade of “tax on tax”. Abdication of responsibility The state’s consent was secured by a promise of reimbursing any shortfall in tax revenues for a period of five years. This reimbursement was to…
01 September, 2020
Tax
E-Office Central Board of Indirect Taxes and Customs (CBIC) launched the e-Office application in over 500 CGST and Customs offices across India here today. Over 50,000 officers and staff will use this application making CBIC one of the largest Government departments to automate its internal office procedures. The launch of e-Office marks a fundamental change in internal office procedures which is so far based on manual handling of files and paper movement. The CBIC expects e-Office would complement its many other IT led reforms which are directly aimed at enhancing the ease of doing business for the trade and industry.…
16 June, 2020
Tax
Behind the curve: On GST compensation to States # Meeting for the second time since the pandemic took hold in the country, the GST Council, last Friday, decided to relax late fees and interest payable for those taxpayers failing to file returns on time. # For businesses with no tax liabilities under the indirect tax regime, the late fees were completely waived. # This is in line with similar relaxations announced by the Centre in March, before the lockdown was declared, to ease compliance deadline worries of small businesses in particular. # But given the extent of economic damage as…
15 June, 2020
Tax
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