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Arun Jaitley To Brainstorm Over GST With State Finance Ministers Today

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Arun Jaitley To Brainstorm Over GST With State Finance Ministers

Arun Jaitley along with state finance ministers will hold wide-ranging talks today about state finances and indirect taxation at the 25th meeting of the Goods and Services Tax (GST) Council and a pre-budget consultation in the national capital.

 

Jaitley and senior finance ministry officials will be presented with the wish list for budget 2018-19 by the state finance ministers. This will be the first Union budget after the implementation of GST.

 

The GST Council takes all the decision in regards to the new indirect tax regime. With states getting assured compensation from the centre for revenue losses under GST states are comfortably placed as far as indirect tax revenues are concerned.

<p.However, they are expected to demand a relaxation in the deficit targets under the fiscal responsibility and budget management act as they look to roll out the recommendations of the 7th Pay Commission to state government employees.

 

The states suffered due to the implementation of UDAY, the bail-out package for state power distribution companies, which raised their debt levels, although it is not counted in state fiscal deficit. It is expected that the states will demand funds for specific infrastructure projects, for supporting locally relevant industries and new educational institutions.

 

The meeting will be followed by the meeting of the GST Council. Steps needed to make the invoice matching process simpler will be discussed here which may lead to combining some of the existing tax return forms under GST. Changes required in the GST laws will also be discussed.

 

Invoice matching is crucial as tax credits on the purchase of goods will be available to businesses only if the purchase details filed in GSTR 2 by the buyer matches details of outward supplies filed by the seller in GSTR 1. Since these details will be automatically filled with the tax return form of the buyer, the entire supply chain will be networked.

 

E-way bill and reverse charge mechanism – entities that pay a tax of small players that they source services and products from – will be crucial to check tax evasion under GST.

 

An e-way bill will need to be made for all movement of goods whether within or outside the state of more than Rs 50,000 by prior online registration of the consignment. Supplier and transporter can upload shipment details and get the unique e-way bill number.

 

Congress-ruled states like Punjab will look forward to getting petroleum and real estate under GST. They are also expected to advice caution against introducing e-way bills without adequate preparations in the back end.

 

E-commerce firms offering housekeeping services are liable to pay 18% GST even with less than Rs. 20 lakh turnover. They are also looking for a tax relief with either a lower tax rate without tax credits or parity with other e-commerce service providers who are not liable to pay tax if the service suppliers’ turnover is below the Rs. 20 lakh threshold.

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