We are what we are !!

  The GST collections trend in India upto June 2023 in FY23-24: April 2023:  Rs. 1,87,035 crore (highest ever) May 2023:  Rs. 1,57,079 crore June 2023:  Rs. 1,61,497 crore The average monthly gross GST collection for the first half of FY23-24 is Rs. 1,69,000 crore. This is 12% higher than the average monthly collection for the same period in FY22-23. The GST collections have been consistently growing in the current financial year. This is due to a number of factors, including the strong growth of the Indian economy, the increasing compliance with the GST law, and the government's efforts to boost digitization and transparency in the tax system. The average monthly gross GST collection for the first quarter of the FY 2021-22, FY 22-23 & FY 23-24 are Rs. 1.10 lakh crore, Rs. 1.51 lakh crore and Rs. 1.69 lakh crore respectively, the finance ministry said. The gross revenue has crossed the 1.6 lakh crore mark for the fourth time since the inception of GST in the coun...

  FS Dr.TVS rightly mentioned that Tax to GDP ratio should go up. Couple of thoughts related to this and other Revenue augmentation avenues; a) Tax exemption except for Primary produce which are Agri products, is anathema to Value Addition. I would say that Value Add abhors tax exemption, with few exceptions!! It also militates against the concept of  Nominal GDP growth rate as it is always zero and so unaffected by inflation or deflation. In the same breath, Agri income should also be taxed at say 0.1% atleast. Therefore, my humble submission to Govt , is to take a relook at all exempted/zero ( 0)-rated products under GST etc.Atleast these products should be brought under 1% slab by creating a new slab. b)Mining Royalty rates should be indexed to inflation. c) EB overdues to Power generation companies as per PRAAPTI.in is increasing every month which have touched Rs.1.07 lac cr. as of Feb 2022. You might have noticed that this is a serious drag on the...

  Mr.N.Venkatraman,Additional Solicitor General,GOI, has clearly brought the key aspects of this landmark judgment delivered by SC. The confusion stemmed from the attention-grabbing headlines  made by media, stating GST Council recommendations are non-binding on Centre and States and have only persuasive value at the most. The nuanced reading of this Judgment with its emphasis on cooperative federalism has not been clearly understood by opposition-ruled  states like TN. Politicians ruling in the States rarely understand that Cooperative Federalism  is a multiway street .CF not only means harmony in the  Centre-State relationship, but also means InterState harmony ( not at all seen even between contiguous States like TN,Kerala, Karnataka,AP)and  finally also means Intra-state harmony. When they keep harping on the point that States are not consulted by the Centre with respect to Indirect Taxation, they forget to what extent they do consult the...

  Comptroller and Auditor General of India(CAG) is the top Govt Auditor of India, who is a Constitutional authority. He Audits all the Central and State Govt related accounts and gives his report with his findings, lacunae observed in the system, along with necessary corrective measures as per the best practices around the world. In his latest report on the Income & Corporate  Tax department functioning under the Central Govt, he has given some damning statistics. People in the know feel vindicated with his report lashing at the ineptitude of the Dept in tackling the inefficiency of the tax bureaucracy. Let us look at some of his key observations:( link ) 1)Income tax arrears of demand has increased from Rs.11 lac cr.in 2017-18 to Rs.12.3 lac cr, in 2018-19. 2) Out of this Rs.12.3 lac cr. the Tax dept itself says 99% of it is non-collectible or in other words, would be difficult to recover. 3)At the CIT Appeals, which is the first forum of Appeals,the Auditor observed, the...

 India's FM is an unenviable position. Given the penchant for two steps forward and one step backward in all economic decisions, FM is in the eye of the storm unendingly ever since the pandemic struck India. In fact, even before that, India's GDP was sliding YOY from 2016-17 onwards. It hit a high of 8.26% in 16-17 and hit the lowest so far in Fiscal 19-20 at 4.2%. GST collections have also ebbed along with the GDP since even Nominal GDP has grown only by 7.2% in Fy 19-20.It was growing at 11.76% in Fiscal 16-17. So, this skidding of the nominal growth rate coupled with a reduction in GST rates in 2018 led to a shortfall in GST collections even though the tax base widened. The good thing about the One Nation, One tax has been the acceptance of this Taxation in lieu of VAT at the individual state level and Excise duty at the Central level. The consensus behind GST has been bought by Arun Jaitley with the commitment for providing Central funds at the growth rate of 14% YOY to the...

  We have had four lockdowns and unlocks across the country.To start with it was Complete lockdown, which struck like a bolt from the blue starting from March 24th till May 31st 2020. Many prominent opposition leaders severely criticized the Govt for this lockdown accusing Modi of dictatorship tendency throwing the hungry, poverty-stricken, migrants on the streets and pavements uncared for. The second lockdown little relaxed was in June as experimentation and once the pandemic started spreading wildly, Govt. was again back to stricter lockdowns. But by the end of june, Central Govt realized that the question of livelihood was becoming important and advised staggered unlocks. But many states ruled by opposition leaders taking a holier than Centre attitude continued with strict lockdowns introducing epasses even for intrastate movements, imposing restrictions like total lockdowns during weekends making life difficult for the common man. There was a tough competition between states as...

The only thing certain about Tax is, it is always taxing.  India abolished LTCG(Long Term Capital Gains) tax some years back while STT(Securities Transaction Tax) was introduced. After few years Arun Jaitley,the then FM at the Central Govt, thought it fit to reintroduce LTCG Tax from Fy 18-19, with an exemption if STT had been paid on the transaction. Now many Economists have recommended for abolition of LTCG tax showing the distortion it brings in transactions involving Digital Gold, unlisted shares and the black money generation it encourages in all and sundry especially in Real estate transactions. The arguments against LTCG Tax are strong and valid. The vagueness it brings in matters of valuation brings lot of confusion and uncertainty giving the incentive to hide part of the consideration received. What demo wanted to flush out, LTCG Tax has encouraged inadvertently. It has sent wrong signals across the economy. What is the remedy then. One simple alternative is to bring Trans...

GST portal has come a long way from a fledgling,fumbling and faltering days to its better days.However it has go a long way to evolve into a mature and more user-friendly phase. Now Central Govt is introducing e Invoicing with unique Invoice Reference Number (IRN) for traceability and matching concept introduction. This IRN will be given by Govt and this is to identify whether it is a valid e Invoice . This numbering system will be similar to cheque MICR no. for the purpose of verifying the genuineness and also for the use in matching it for clearing mechanism. This IRN will also serve similar purposes.More than bigger companies this system will help MSMEs in the longer run. F or MSME bill discounting some of the banks like Axis Bank have introduced a digital platform called TREds so that MSMEs can access cheaper bank finance against their supply invoices. Ministry of Corporate Affairs have also made it mandatory for all Corporates with a turnover of Rs.500 cr and above to register und...

 Import Trade wall or barriers are not new to India. The country had very steep walls in terms of Tariffs, licensing ,quotas etc. all in the name of safeguarding the domestic industry. When the country gained independence, many of the industries were either nascent or anemic and in order to restore their health, Central Govt had no option but to erect some import restrictions so that local industries in the economy are nurtured. This grooming of domestic industry with level playing field took a new turn in the late 1960s and 1970s with widespread nationalisation of private enterprises, ushering in an era of erratic socialism all in the name of protecting the citizens from private profiteering. This concept led to erecting walls within the country between the commanding heights of Govt. undertakings and the Private enterprises. The private sector was neglected and was left to fend for itself and scaling up an enterprise became a uphill challenge for private sector. Inorder to protec...

  Whenever any change in the IT Act is contemplated it should be put through only one filter which is "simplification" of the tax. Revenue considerations, whether an increase or decrease, not to enter as a filter for any piecemeal or Adhoc changes during the course of the year.  Simplification, reduction of tax, widening of tax base may be used as multiple filters for once a year changes in the Budget. Many times an amendment is done in the name of maximizing tax revenues and plugging loopholes. This is a pure travesty of truth. Instead, Govt should move towards simplification and ease of compliance. This obsession with revenue maximization is a colonial hangover. Very often IRS officers and CBDT also complain about CAG Damocles sword over their heads if they don't plug loopholes. Indirectly such a plethora of amendments and tinkering goads loophole industry to become more innovative.CAs, lawyers enjoy and thrive on this.More the loopholes and more the plugging.More they ...

Sri. Krishnamurthy Subramanian, Chief Economic Advisor to Central Govt,yesterday, has gone on record saying that further demand stimulus measures will be announced after vaccine becomes available. Why should we link stimulus to vaccine availability is not clear. What kind of vaccine he is expecting and if the vaccine falls short of his expectations whether he would not allow roll out of stimulus? I t may become too late to wait till then.Why because, the common man has started saving his meagre earnings due to his fear about his future earnings and not due to Covid pandemic per se.In order to allay his fear about his employment and future earnings, Govt must sacrifice some near term revenue and announce some economic incentives  for kick starting the economy.What better place to start than with Indirect Tax cuts. Auto sector is the biggest in manufacturing in terms of GDP and reducing GST on it from 28% and converge it with Revenue Neutral Rate(RNR) of 18% will give a huge ...

Pl. see the below page from the Central Govt published data. link Regular IT assessments done by Dept is yielding only 7 to 8% of total Gross Direct tax collected where as Adv. Tax, TDS and SA Tax is 92% i.e the voluntary compliance . Is there not a strong case for abolishing Assts for atleast individuals who have good track record of say 10 continuous years and have limited scrutiny assessments only for Corporates/Companies with incentives for exemption from assessments if they remit Tax at least 15% more year on year.This will take care of tax buoyancy ratio and reduce assessment costs drastically. Mr.Sunil Jain of FE recently sent a tweet to FM saying that IT dept is following up with him on some assessment notice despite complying with it and paying tax. Everyone of us have similar experiences on IT assessments despite computerisation. Straightaway all these scrutiny assessments can be called " IT Harassments "-no euphemism. But it sho...

"Putting fruit at the eye level" is a Nudge. Nudge proposes positive reinforcements  to influence the behaviour and decision making at individual level and at a societal level. Richard Thaler   and Cass Sunstein in their book  Nudge: Improving Decisions About Health, Wealth, and Happines s have written on Nudges as the key method for influencing the human behaviour which has huge ramifications for the economic and political spheres of every country. Thaler won Nobel Prize for this path-breaking behavioural economics concept. The theory itself was built on the heuristic human behaviour concept of Daniel Kahnemann-Tversky model.Daniel Kahnemann in his book Thinking: Fast and Slow mentions System 1 and System 2 of human thinking process in which System 1 is quick, fast, hunch-based,heuristic and System 2 based on some primitive level analysis to arrive at prefered choice or option. When people have to contend with many choices/constraints or facing time constraint, S...

"Buy land, they're not making it anymore"-Mark Twain Govt. is in the process of identifying land parcels for attracting industries moving out of China for want of safe haven. If big land parcels can be earmarked for setting up Industrial parks and industrial clusters, it will give a huge fillip for Make in India campaign. As PM said India has the Intent, it paves way for Inclusion,  provides Infrastructure. attracts Investment and enables  Innovation. But what is stopping it from leap frogging. It is redtapism in land acquisition ,lackadaisical Court procedures and the greed of politicians that put paid to ambitions of growth in Make in India. Even smaller countries like Vietnam, Indonesia are able to attract industries moving out of China in a big way but the sleeping giant like India falters. Despite improving the ranking in Ease of Doing Business has the economy really energised itself to become an aspiring industrial giant. There are green shoots here and there...