Connect with us


GST 2.0: Is this the right time? And what kind of reforms do we need?




The turbulent years of implementation VAT (VAT) in India seem to be over. This indirect and transaction-based tax, introduced nationwide in July 2017, is well established. Most initial problems, such as The controversial issue of states not receiving their constitutionally required compensation during the Covid peak period has also been resolved.

At last month’s GST Council meeting, the Indian government said it would settle the outstanding balance to the states – Rs 16,982 billion for June 2022, the final tranche – soon, although the compensation fund was empty. GST surveys are back on track. Revenue, which rose last month – Rs 1,49,577 crore – jumped 12% yoy. For the period April-February of the current fiscal year, the monthly GST collection didn’t even slip below Rs 1.4 billion, a significant threshold considering it plummeted to a paltry Rs 32,172 crore in lockdown-hit April 2020 before recovering to 1 lakh crore in October after six months .


As GST collection becomes robust – a result of tax base broadening and closing of leaks – this is the right time to embark on the next phase of India’s most ambitious tax reform. So what kind of reforms should be part of GST 2.0?

Pratik Jain, tax partner at Price Waterhouse & Co, says that “rate rationalization (reducing the current four tax rates from 5%, 12%, 18% and 28% to just three) and bringing petroleum products within the scope of the GST rate structure ‘ should be prioritized to take reform to the next level. If consensus on passenger fuels would take more time, the GST Council should start to include aviation turbine fuel (ATF) and natural gas, he says. Now petroleum products and select items such as electricity and alcohol are kept outside the scope of GST.


According to Jain, two areas require the council’s immediate attention – the formation of a GST Court of Appeal and closer coordination between central and state GST agencies for testing. The Council, co-chaired by the Union Treasury Minister and their state counterparts, is the supreme decision-making body on indirect taxation in India. The Council, for its part, has started work on new reform measures. Its 49th session, held in New Delhi last month, dealt with the issue of establishing an appeals court. It adopted the report of a group of ministers with some modifications. “Final draft amendments to the GST Laws will be circulated to Members for comment. The Chair has been authorized to complete the same,” read the official statement released after the meeting.


According to EY India tax partner Saurabh Agarwal, the GST Court of Appeal could be headquartered in Delhi with regional benches in Mumbai, Kolkata, Chennai, Bengaluru, Ahmedabad, Prayagraj, Chandigarh and Hyderabad as “it may not be possible to have it in India to set up all states in the initial stages”.

According to a recent report by the Press Trust of India, which quotes an unnamed official, each state is to set up a four-person appeals court with two technical members (one from the center and one from each state) and two legal members. Establishing an appellate court will reduce court cases and reduce litigation costs for litigants.


“From a short to medium term perspective, the next stage of GST reforms should aim to resolve disputes early and reduce ongoing litigation,” says Vikas Vasal, National Managing Partner – Tax, Grant Thornton Bharat.

“The focus should be on the establishment of courts of appeal, the introduction of faceless assessments similar to those in the income tax system, and an amnesty system to settle existing disputes, many of which arose from problems of interpretation or minor breaches during the early years of the GST,” he says and adds that the long-term focus should be on expanding the scope of the GST and bringing all goods and services within its scope.


However, Sushil Modi, a former Bihar Deputy Prime Minister and politician who headed the empowered GST committee prior to the introduction of the tax system, argues that the GST no longer needs any more big-bang reforms. “What it takes is a little fine-tuning. With good sales growth and inflation under control, this is the right time to start reducing the number GST plates to three. There should be one record between 12% and 18% and another between 5% and 12%,” he says, adding that the highest record (28%) should remain as it is.

An EY report, GST Transformation: The Road Ahead, published last year, proposes tariff rationalization based on the following formula: “Move to a three-tier tariff structure of 8 (benefit rate), 15 (standard rate), 30 (negative rate). rate) per cent by merging 12 per cent and 18 per cent into 15 per cent plates and increasing the error rate to 30 per cent from the current 28 per cent.” The report also states that the 30 per cent plate will rise to 40 per cent after the compensation levy is abolished can be raised.


The GST, which included 17 major taxes and 13 levies, has four panels plus an exemption list (eggs, cottage cheese, vegetables, etc. are not taxed). Luxury and sin items are subject to the maximum tax of 28%. Items such as tobacco, carbonated water, caffeinated beverages and some motor vehicles are subject to an additional levy above the 28% tax plate to fund the equalization body needed to assist states that have failed to comply with GST eliminate an annual growth of 14% and more. The compensation was only intended for the transitional period between July 2017 and June 2022.

While states are no longer receiving compensation, tax collection continues and will continue through March 2026. Collection of the levy has been extended to fill the revenue gap resulting from the pandemic as the center resorted to loans (Rs 1.1 lakh crore in 2020). -21 and Rs 1.59 lakh crore in 2021-22). The cess varies from item to item – for example, Pan Masala attracts a 60% Cess and Pan Masala, which contains tobacco, attracts a whopping 204% Cess.

According to an RBI government finance report released in January, the top 10 recipients of GST compensation payments during the five-year transition period were Maharashtra, Karnataka, Gujarat, Tamil Nadu, Punjab, Uttar Pradesh, Delhi, Kerala, West Bengal and Madhya Pradesh. The report states that the states and union territories likely to be hit hardest following the withdrawal of compensation are Puducherry, Punjab, Delhi, Himachal Pradesh, Goa and Uttarakhand, in that order, as measured by the share of GST compensation in their tax revenue averaged 10% or more.


However, after analyzing the sales figures for a 10-month period from April to January of FY22 and FY23, Jain comes to a different conclusion: “Uttarakhand, Himachal Pradesh, Karnataka and Gujarat were able to maintain a growth rate of more than 14% despite the discontinuation of the GST -Compensation. States like Delhi, Uttar Pradesh and West Bengal appear to be the hardest hit by the suspension of compensation.”

The very concept of compensation was woven into the GST regime to produce recalcitrant states like Maharashtra and Gujarat. Some of these producing countries used to enjoy higher revenues due to the origin-based tax regime that was in place prior to the GST. Once compensation is gone, how will states adapt to the new regime and reform to generate solid revenues? Finally, from Day 1, it was clear that the GST indemnity was only a temporary measure.

“Ultimately, states must become self-sustaining. To increase revenue, states should try to plug tax leaks and monitor compliance more closely,” says Jain.


Economist and former India’s chief statistician, Pronab Sen, adds that the losses to states from the withdrawal of GST remuneration is something that “needs to be examined by the Finance Commission”. A number of new reforms need to be initiated to make the GST simple and seamless.

However, Deloitte India’s tax partner MS Mani argues that it is important to stabilize the GST with minimal changes throughout the year, as any change requires a change in IT systems, product pricing, business plans, etc. “It would be good if all changes discussed and approved during a fiscal year were rolled out from April 1 of the next fiscal year to give companies time to prepare and be prepared for them,” he says.

Perhaps a number of changes could be consolidated and rolled out in one fell swoop. GST 2.0 is essential but should be rolled out with minimal disruption.


TikTok wants to distance from China but the government’s getting involved




China and US flags can be seen near a TikTok logo in this illustrative image taken on July 16, 2020.

Florence Lo | Reuters

BEIJING — China says it would “strongly oppose” a forced sale of TikTok, highlighting the government’s involvement in the social media giant, which is trying hard to distance itself from authorities in Beijing.

The Commerce Ministry said on Thursday that TikTok was in the process of being sold or spun off from its Beijing-based parent company ByteDance Chinese Technology Exports Law — Requiring export permits for certain technologies due to national security concerns. ByteDance also owns Douyin, the Chinese version of TikTok, which is popular in the country.

related investment news

TikTok's scrutiny could be bad news for US companies, Fast Money traders say

Reported Medias Pro

“The Chinese government would make a lawful decision,” spokesman Shu Jueting said in Chinese, translated by Reported Medias.

Shu was speaking at the ministry’s weekly press conference, hours before TikTok CEO Shou Zi Chew testified before a US House of Representatives committee.

Lawmakers questioned Chew for more than five hoursand wanted clarity on TikTok’s ability to operate independently of Chinese influences on its parent company.

ByteDance did not immediately respond to a request for comment on the Chinese Ministry of Commerce’s remarks.

Influencer Jason Linton on TikTok: It was life-changing

The poll did not appear to exonerate US lawmakers.

“At the end of the day, it was clear from the statement that Mr. Chew reports to the CEO of ByteDance. ByteDance controls TikTok,” Cameron Kelly, a visiting fellow at the Brookings Institution, told Reported Medias.Squawk Box Asia“Friday. Kelly was General Counsel at the US Department of Commerce from 2009 to 2013.

Kelly said the evidence that ByteDance has legal control over TikTok reinforces US lawmakers’ doubts about how well the app can demonstrate its independence through restructuring.

TikTok has a “Project Texas” plan to store American user data on US soil — to prove the company’s claims that mainland China authorities have no access to it.

Beijing … now doubly dares Congress and the administration to ‘save my day’.

Daniel Russell

Asia Society Policy Institute

“I don’t see a closure as a ban or a full divestment [of TikTok] is needed. But I think you need to separate that legal control,” Kelly said, noting that this could be done through a trust structure.

But the Commerce Department’s claim for control of a TikTok sale or spin-off suggests Beijing wants to be involved.

“The Chinese government’s public statement to block sales of TikTok in the US has little to do with protecting Chinese algorithms and technology and much to give Washington a taste of its own medicine,” said Daniel Russel, vice president of International Security and Diplomacy, Asia Society Policy Institute said in a statement.

“Beijing after I heard it [U.S. Commerce] Secretary Raymond’s complaint that banning TikTok would upset voters under 35 is now doubly bold for Congress and the government to ‘save my day,'” Russel said.

The US has tightened restrictions on American companies and individuals working with Chinese companies on critical technology for high-end semiconductors.

When asked about the Commerce Department’s comments Thursday, TikTok’s CEO said the app is not available in mainland China and is based in Los Angeles. But he said the company used the expertise of some of ByteDance’s Chinese employees for “engineering projects”.

Chew also told US lawmakers that China-based employees were employed by its parent company ByteDance may still have access to some US databut that new data will stop flowing once the company completes its plan for the Texas project.

Official Chinese commentators have previously emphasized this China-based companies should comply with local laws and regulations when doing business abroad.

It’s not immediately clear how China’s export control law, enacted in December 2020, could apply to TikTok.

Different types of exports are managed by different governmental organizations, “each of which has a separate regulatory system,” the EU Chamber of Commerce in China said in its latest position paper. It called for more clarity about the roles of the various bodies involved in the implementation of the export control law.

What’s next for TikTok?

The US and China have increasingly invoked national security as a reason for controlling technology.

“To be fair, there really are real national security risks involved [TikTok] — and that’s one reason banning the app from government phones and military phones makes sense,” said Glenn Gerstell, senior advisor at the Center for Strategic and International Studies on Reported Medias.Street Signs Asia“Friday. Gerstell served as General Counsel of the National Security Agency from 2015 to 2020.

“As for the general public, I don’t see any strategic value in China in understanding what a teenager’s dance moves are in Minneapolis. So the general public ban makes no sense,” he said.

TikTok has more than 150 million users in the US — or about half the country’s population.

It’s unclear whether the US will ultimately force ByteDance to sell TikTok or ban use of the app in the country. The hugely popular app is already banned from federal government devices.

“We see a 3-6 month timeframe for ByteDance and TikTok to work out a sale to a US tech player with a less likely and extremely complex spin-off,” said Dan Ives, analyst at Wedbush Securities, in a note.

“If ByteDance fights this forced sale, TikTok will likely be banned in the US by the end of 2023.”

— Reported Medias’s Lauren Feiner contributed to this report.

Continue Reading


Equities mixed aReported Mediaser central bank rate decisions




Stock markets were mixed on Friday as concerns over the health of the global banking system dragged US lenders’ shares down more than 14 percent this week.

The FTSE All-World stock index fell 0.1 percent during Asian trade on Friday but rose 1.6 percent on the week. Technology stocks in Asia initially followed the Nasdaq Composite higher on hopes that the US Federal Reserve’s monetary tightening cycle is nearing its end.

Hong Kong’s Hang Seng Tech Index rose as much as 2.3 percent on Friday before gaining just 0.1 percent. Other benchmarks in the region posted modest losses, including a 0.3 percent decline for China’s CSI 300. Gains for technology stocks in Asia followed a 1 percent increase for the Nasdaq Composite Index on Thursday.

Futures sent the FTSE 100 stock index down 0.6 percent at the London open, while the S&P 500 was expected to rise 0.2 percent.

The broader S&P 500 returned just 0.3 percent, with financial stocks struggling to recover aReported Mediaser the collapse of the US Silicon Valley bank Rescue of the Swiss lender Credit Suisse from competitor UBS.

The KBW Nasdaq Bank index ended Thursday’s session down 1.7 percent, even aReported Mediaser comments from US Treasury Secretary Janet Yellen that regulators “stand ready to take additional action where warranted” to address the issue to ensure safety of bank deposits. The US banking index has lost almost 30 percent in the past two weeks.

The US Federal Reserve continued to hike interest rates by 0.25 percentage points on Wednesday. The Bank of England also raised interest rates by 0.25 percentage points on Thursday.

Citigroup strategist Dirk Willer said it was “too early to say” whether stress in the banking sector had become large enough to significantly affect the US business cycle. But he added that the Fed has “become more cautious, as has the ECB” amid heightened uncertainty.

“We remain negative on risky assets as bank stress tightens credit and reinforces Citi’s call for a US recession [the second half] 2023,” Willer said.

In foreign exchange markets, the dollar index – which tracks the value of the greenback against a basket of other currencies – fell 0.1 percent, while US 10-year Treasury yields fell 0.04 percentage point to 3.385 percent.

Continue Reading


ARK Buys the Wells Dip With $17.7 Million COIN Purchase




Join the most important conversation in crypto and web3! Secure your place today

ARK Invest bought COIN low and sold it high this week.

On Tuesday, Cathie Wood’s fund sold 160,887 shares of COIN for $13.5 million when the stock was trading at around $83 per share. A little over 48 hours later, ARK bought the drop, buying 268,928 shares of COIN as the stock fell to close at $66.30 in the US on Thursday.

According to an email sent Thursday evening US time, 230,599 of those shares went to the ARK Innovation ETF (ARKK), while 38,329 of those shares went to the ARK Next Generation Internet ETF (ARKW).

Over the course of those two days Coinbase released that it received a Wells Notice from the Securities and Exchange Commission warning a company that the SEC plans to take enforcement action against it.

A Wells note means that the SEC has completed an investigation and believes the evidence gathered is substantial enough to warrant enforcement action. It does not guarantee enforcement action will be taken, and Coinbase has until March 29 to notify the SEC if it plans to challenge the enforcement action.

The The SEC also announced this on Wednesday that it is suing Justin Sun, the Tron Foundation, the BitTorrent Foundation and Rainberry (née BitTorrent) for selling unregistered securities and manipulating the market through wash trading. Internet personality is Jake Paul also sued for his alleged illegal promotion of Sun-Linked Crypto.

in one last twitter sectionCoinbase CEO Brian Armstrong said the company will become more politically involved and will ask its US-based users to vote for “pro-crypto candidates.”

“What we’re going to do is put out content where people can contact their congressman, donate to pro-crypto candidates, show up in town halls, and get your voice heard,” he said. “We will elect pro-crypto candidates in this country to ensure our success is assured.”

Despite the plunge caused by Wells, COIN is still up 97% year-to-date.

ARK also announced that it has purchased 320,557 shares of Block (SQ) with 275,554 of those shares going to ARKK.

Jack Dorsey’s fintech payments company, which has some crypto exposure, is also down 14% as of Thursday’s close notable short Hindenburg Research attacked it in a scathing report for “wildly” inflating user counts.

Block says the report is inaccurate and intends to “cooperate with the SEC and consider legal action against Hindenburg Research.”

Continue Reading