All five Bills cleared, paving way for new indirect tax regime rollout from July 1 DILASHA SETH &INDIVJAL DHASMANA New Delhi, 16 March
The Goods and Services Tax (GST) Council on Thursday clearedaproposal to cap the cess on luxury cars and aerated drinks at 15 per cent over the peak rate of 28 per cent.
The Goods and Services Tax (GST) Council on Thursday clearedaproposal to cap the cess on luxury cars and aerated drinks at 15 per cent over the peak rate of 28 per cent.
The ceiling for the cess on “sin” goods would be much higher.
An official said for paan masala, the cap would be 135 per cent.
On tobacco and cigarettes, the cap would be 290 per cent, or Rs.4,170 per 1,000 cigarette sticks.
Acall is yet to be taken on whether or notacess would be imposed on bidis.
The cess on coal and lignite (environment cess) would have an upper limit at Rs.400 per tonne, the official said.
However, the actual cess would be much lower —equal to the current indirect taxes on these goods.
The cap would give headroom to the authorities to increase the cess in the future.
After the meeting of the Council in New Delhi on Thursday, Union Finance Minister Arun Jaitley explained at present, luxury cars were taxed at 40 per cent.
After the GST is rolled out, luxury cars would be taxed at 28 per cent, andacess of 12 per cent more would be charged.
The Council gaveacushion of 25 per cent in the case of paan masala, the official said.
In the case of cigarettes, there was inbuilt headroomof 100 per cent, as either or both ceilings could be imposed.
Currently, the tax on cigarettes isamix of ad valorem (on estimated value of goods being taxed) andaspecific tax. While the valueadded tax (VAT) is ad valorem, excise isamix of ad valorem and specific tax.“Wewillmostlikelyuseacombination of both.
For instance, 50 per cent ad valorem and 50 per cent specific, so there are no leakages,” the official said. The environment cess had no cushion, as the industry could not bear more than that, he added.
The cess would be used to compensate states for any loss in revenue because of the GST. The cap on cess on any other items notified later would be used only if more compensation is needed; so, inaway, this was alsoaleeway.
The cess on coal and lignite (environment cess) would have an upper limit at Rs.400 per tonne, the official said.
However, the actual cess would be much lower —equal to the current indirect taxes on these goods.
The cap would give headroom to the authorities to increase the cess in the future.
After the meeting of the Council in New Delhi on Thursday, Union Finance Minister Arun Jaitley explained at present, luxury cars were taxed at 40 per cent.
After the GST is rolled out, luxury cars would be taxed at 28 per cent, andacess of 12 per cent more would be charged.
The Council gaveacushion of 25 per cent in the case of paan masala, the official said.
In the case of cigarettes, there was inbuilt headroomof 100 per cent, as either or both ceilings could be imposed.
Currently, the tax on cigarettes isamix of ad valorem (on estimated value of goods being taxed) andaspecific tax. While the valueadded tax (VAT) is ad valorem, excise isamix of ad valorem and specific tax.“Wewillmostlikelyuseacombination of both.
For instance, 50 per cent ad valorem and 50 per cent specific, so there are no leakages,” the official said. The environment cess had no cushion, as the industry could not bear more than that, he added.
The cess would be used to compensate states for any loss in revenue because of the GST. The cap on cess on any other items notified later would be used only if more compensation is needed; so, inaway, this was alsoaleeway.
“The majority of the PSU lendershaveshowngoodnumbers, which indicates that liquidityishighinthebankingsystem.
This, perhaps, is due to an increase in financial savings that took place after demonetisation,” said Rahul Garg, partner, direct tax, PwC.
Most large companies have not made their advance tax numbers public this time.
Tax experts said the March quarter saw the lingering impact of the note ban. “The patterninadvancetaxnumbers shows that the fourth quarter is depressed majorly due to demonetisation,” Garg said.
Direct tax collections at the end of the February stood at Rs 6.13 lakh crore, or 72.4 per cent of the fiscal year´s target of Rs 8.47 lakh crore.
The Mumbai circle, which contributes over 33 per cent of the direct tax collection, has collected Rs 1.88 lakh crore, or 69.6 per cent, againstatarget of Rs 2.7 lakh crore.
HDFC Bank´s numbers showa19 per cent growth compared to the previous quarter, Hindustan Unilevera5.5 per centrise, BajajAutoa22percent decline and UltraTech´s outgo remained unchanged.
This, perhaps, is due to an increase in financial savings that took place after demonetisation,” said Rahul Garg, partner, direct tax, PwC.
Most large companies have not made their advance tax numbers public this time.
Tax experts said the March quarter saw the lingering impact of the note ban. “The patterninadvancetaxnumbers shows that the fourth quarter is depressed majorly due to demonetisation,” Garg said.
Direct tax collections at the end of the February stood at Rs 6.13 lakh crore, or 72.4 per cent of the fiscal year´s target of Rs 8.47 lakh crore.
The Mumbai circle, which contributes over 33 per cent of the direct tax collection, has collected Rs 1.88 lakh crore, or 69.6 per cent, againstatarget of Rs 2.7 lakh crore.
HDFC Bank´s numbers showa19 per cent growth compared to the previous quarter, Hindustan Unilevera5.5 per centrise, BajajAutoa22percent decline and UltraTech´s outgo remained unchanged.
In line with the Income Tax Act, companies are required to pay 15 per cent of their total advance tax on June 15, followed by 30 per cent, 30 per cent and 25 per cent in the next three quarters, respectively.
Business Standard New Delhi,17th March 2017
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