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GST Council should expedite the rest of it The Goods and Services Tax (GST) Council has done well to clear a Bill that guarantees to fully compensate states for five years for any revenue loss during transition to the new tax regime. A legal backing provides comfort, but there should be ways to prevent states from slacking off on revenue collections. GST subsumes all indirect levies and avoids cascading of taxes, leading to potential revenue loss for states, but they will gain from being able to tax services. A precise estimate of gain or loss is not possible at this stage. Sensibly , states will be compensated on the basis of revenue projections from 2015-16 -when growth and revenue collections were buoyant. A protracted slowdown due to demonetisation would hurt their revenues next year. In any case, the Centre will have to bear an extra fiscal burden if states have to be compensated for revenue shortfall. So, the need is to change the approach to sharing taxes with states. There

Tax department has asked officials to start an outreach programme with stakeholders and make systemic changes to implement proposed modifications in Customs Act aimed at de-cluttering ports and enhancing revenue.The Finance Bill 2017 proposes to modify the Customs Act for filing of bill of entry the same day on which the vessel, aircraft or vehicle carrying the goods arrives at a customs station.Changes have also been proposed relating to the payment of duty and interest. The Economic Times New Delhi,20th February 2017

Cash purchases of jewellery will attract 1per cent tax collecte dat source from April 1 if the amount exceeds Rs.2lakh, against thecurrent threshold of Rs.5 lakh. OncetheFinance Bill, 2017, ispassed, jewellery willbetreatedonaparwith generalgoodswhichattract1 percentTCSoncashpurchase ofaboveRs.2lakh. TheBillseeks todoawaywiththethreshold ofRs.5lakhonjewellery purchases for applicability of TCS because the Union Budget 2017-18 has proposed to ban cash dealings of over Rs. 3 lakh and make violations punishable with a penalty of an equivalent amount to be paid by the person receiving the cash. However, as there is no special provision  for TCS on its purchase, jewellery is now being clubbed in general ´goods´ on which 1 percent TCS is triggered  if as ingletrans action exceeds  Rs.2 lakh in cash. Business Standard New Delhi,20th February 2017

The Employees´ Provident Fund Organisation (EPFO) is expected to launch online facility for settlement of  claims, including EPF  withdrawal and pension fixation, by May this year to  put an end totedious paper  work by its members. At present, EPFO receive close to 10 million applications manually for settlement of EPF withdrawal claim, pension fixation or getting group insurance benefit by families of the deceased.“The process of connecting all field offices with a centrals erver is going on. We may introduce the facility for online submission of all types of applications and claims like EPF withdrawal and pension settlement by  May this year,” EPFO´sCentral Provident Fund Commissioner VPJoy said. Business Standard New Delhi,2nd February 2017

Despite the volatility in the equity market, shares of brokerage firms that have diversified their business model have rallied handsomely in the past year. Shares of Motilal Oswal Financial Services, Edelweiss Financial Services and IIFL Holdings have all doubled in the past one year against the Sensex´s 23 per cent gain. These firms have benefited from the thematic rally in stocks of nonbanking financial companies (NBFCs) for most of last year. For these entities, broking activities are no longer the mainstay as they have diversified into lending, private wealth management, asset management and even insurance. For instance, the contribution of the capital markets business for IIFL in the overall profit pie (profit before tax or PBT) fell to 13 per cent in FY16 from 21 per cent in FY15, and further to eight per cent in the nine months ended December 2016. For Motilal Oswal Financial Services, revenues from the capital market business declined to 38 per cent in Q3 FY17 from 46

Secondary adjustment provision in Budget FY18 could hit cash flow, dividend payout A new provision for secondary adjustment in transfer pricing, announced in the Union Budget for 201718, is likely to affect the cash flow of multinational corporations (MNCs) and the dividend distribution tax paid by their Indian subsidiaries. The provision has also sparked worry on Minimum Alternate Tax (MAT) and service tax payable by the subsidiaries, as well as retrospective implementation from 201314. Experts claim the provision is in line with the norms of the Organisation for Economic Cooperation and Development (OECD) —an international economic organisation with 35 member nations —but its wording is giving rise to apprehension. Transfer pricing is the setting of the price of goods or services sold byasubsidiary to the parent. Aprimary adjustment is made, byatax administration, toacompany´s taxable profits on transactions with an associated enterprise inasecondary jurisdiction. At presen