Archive for the ‘Economy’ Category

Introduction of GST likely to phase out Excise exemptions

December 26, 2009 Leave a comment

India may move to a dual Goods and Services Tax (GST) regime next year, but the Cenvat (excise duty) related exemptions, especially area-based ones, will not be withdrawn at one go for ushering in the new tax system.

The Finance Ministry is not in favour of doing away with all the Central excise exemptions, numbering about 330, as part of the switchover to the GST regime.

The excise exemptions are only going to be “grandfathered” – brought down gradually – even if GST is ushered in earlier, a top Finance Ministry official said.

The official highlighted that India was a democracy and certain exemptions will have to be retained. A Task Force on GST appointed by the Thirteenth Finance Commission had in its recent report recommended that area-based exemptions in the case of Cenvat should not be continued under GST.

The Task Force had suggested that direct investment linked cash subsidy may be given, rather than area based exemptions, if it was considered necessary to provide support to industry for balanced regional development.

The task force report also highlighted that the case for providing area based exemption was extremely weakened in the face of its recommendation for sharp reduction on combined rates of CGST and SGST. A combined rate of 12 per cent (CGST and SGST) has been recommended by the Task Force in its report.

Currently, industries set up in the North East, Jammu and Kashmir, Sikkim, Uttarakhand and Himachal Pradesh enjoy exemption from payment of Cenvat.

The Task Force felt that area based exemptions created economic distortion and affected the economic viability of units located in non-exempt areas. They are prone to misuse and difficult to administer, the Task Force had said.

Threshold limit

Meanwhile, the Finance Ministry may favour a threshold limit that aligned with the proposed uniform State GST threshold of gross annual turnover of Rs 10 lakh both for goods and services.

The first discussion paper on GST, released by the Empowered Committee of State Finance Ministers on VAT, had proposed a uniform State GST threshold of gross annual turnover of Rs 10 lakh both for goods and services.

Currently, the threshold prescribed in different State VAT Acts, below which VAT is not applicable, varies from State to State.

For the Centre, the discussion paper suggested that the threshold for Central GST may be kept at Rs 1.5 crore and the threshold for Central GST for services may also be appropriately high.

The current thinking in the Central Board of Excise and Customs (CBEC) is that the threshold of Rs 1.5 crore proposed for goods was on the higher side. Having a threshold of Rs 1.5 crore for goods may shrink the tax base and thereby the revenue neutral rate may go up, official sources said.

The Finance Ministry is also not keen on having separate threshold limits for goods and services. “It is difficult to have two separate threshold limits,” official sources said.


Ministry of Corporate Affairs announces “INDIA CORPORATE WEEK”

December 8, 2009 Leave a comment

The Indian corporate sector, which has been growing at a rapid pace in the current decade, has been making significant contribution to the economic development of the country. At the same time, India Inc. is also developing sensitivity to community and social concerns which are a part of the broader national agenda of inclusive and sustainable growth. The Ministry of Corporate Affairs has been constantly trying to reposition itself as not only the regulator but also the developer and facilitator of the Indian Corporate sector.

While the Ministry is aiming at developing a consensus on what constitutes responsible and good corporate governance, there is also a need to provide positive reinforcement to the contribution of the corporate sector in the economic and social development of the country. The Ministry has therefore decided to celebrate 14th to 21th December 2009 as “India Corporate Week“. The celebrations will culminate in a grand finale at Vigyan Bhavan on21st December 2009, on which occasion the Honorable President of India, Shrimati Pratibha Devisingh Patil, will give away the “National Corporate Awards” to leading luminaries who have achieved excellence in the corporate sector.

ICAI recommends Sector-specific Accounting Norms

October 7, 2009 Leave a comment
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