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Tag: Goods and Service Tax

  • Proposed 28% GST on online gaming could lead to decline in active users: ASSOCHAM & EY Report

    Proposed 28% GST on online gaming could lead to decline in active users: ASSOCHAM & EY Report

    MUMBAI: According to a joint report by Assocham and EY, titled ‘GST on Online Skill-Based Gaming’, GST Council’s Group of Ministers (GoMs) are examining the GST on online gaming. One of the considerations by GoM is recommending a levy of 28 percent Goods and Services Tax (GST) on the complete contest entry amount including the prize pool, which can have an adverse effect on the industry. Levy of GST on the contest entry amount would increase the tax burden on the nascent industry by 10 to 20 times. The industry currently pays GST at the rate of 18 percent on the platform fee or the Gross Gaming Revenue (GGR) earned directly by the gaming operators.

    The report estimates that the industry contributes more than Rs 2,200 crore of GST in 2022 and the winnings from online games are subject to income tax, which also contribute a significant amount to the exchequer.

    The report has also listed out the unique features that set online skill-based gaming apart from games of chance. It entails technology solutions that are provided by operators to enable user-interface as well as build a gaming ecosystem and act as facilitators. The fee charged is a fixed consideration and is not dependent on outcome. Its success is also dependent on the superior knowledge of the user and engagement with the game, making skill the predominant element.

    The report notes that the proposed levy of tax at 28 percent from 18 percent, along with 30 percent income tax on winnings, takes the rate of taxation on online gaming between 45-50 percent. With the GST tax proposal leading to higher taxation, it could lead to a decline in active users and discourage domestic gaming industries.

    According to recent industry estimates, there are 500 gaming companies in the country, which have provided employment to thousands of people and have also seen an inflow of Foreign Direct Investment (FDI) worth $2.7 billion. However, they are likely to be impacted by high taxations and would open doors for offshore operators. The report states: “This sector could also help in facilitating the government’s vision for the Animation, Visual Effects, Gaming and Comic (AVGC) sector and encourage the domestic players rather than driving users to foreign companies/ offshore platforms; thereby enhancing government’s revenue collection.”

    Assocham secretary general Deepak Sood said, “The Assocham-EY report on the impact of GST on online skill-based gaming is quite revelatory. The growth of the online gaming industry comes as no surprise as it’s largely youth-driven and has been fuelled by the increasing usage of internet and smartphones, especially during the pandemic. India is expected to become one of the world’s leading markets in the gaming industry, which also bodes well in terms of a robust digital economy GDP as well as an employment-generator. Therefore, any step that the government takes to strengthen the sector through an optimal tax structure is welcome.”

    The report asserts that the right tax structure can have a positive impact on the industry and drive tax revenues. “The crystallisation of the GST valuation mechanism could be a catalyst in enabling ease of doing business and spur growth of this rising sector,” it concludes.

  • GST Constitutional Amendment Bill gets Lok Sabha nod after amendments

    GST Constitutional Amendment Bill gets Lok Sabha nod after amendments

    NEW DELHI: The long-awaited Goods and Services Tax Bill (GST), which has been riddled by several controversies which began in the time of the UPA government, has finally been passed with amendments worked out to pacify a vociferous opposition which held the majority in the Rajya Sabha.

    Although the Bill had been passed earlier in the Lok Sabha, an adamant Congress insisted on some changes which were worked out after talking to all states and the opposition parties.

    Thereafter, the amended bill had been introduced in the Rajya Sabha and passed last week. However, in view of the amendments, the amended Bill had to go through the entire rigmarole of a discussion in the Lok Sabha before it was passed unanimously.

    As the GST Bill is in the form of a Constitution Amendment, the rules required that it had to be passed by two-thirds of the members present and voting.

    The Amendment Bill will now go for Presidential assent to Pranab Mukherjee, but can become law only after it is ratified by at least fifteen state governments. The government hopes to get the approval within 30 days as it has set a deadline of 1 April 2017 for implementation of GST. Several states will have to call for special sessions to clear GST in the next 30 days.

    The Bill, which Finance Minister Arun Jaitley describes as a “one nation one tax” bill, was described by Prime Minister Narendra Modi as a major step “that will deliver us from tax terrorism.” He said “GST means a Great Step Taken by India, a Great Step of Transformation, Great Step towards Transparency.”

    Jaitley said India’s biggest tax reform will see the centre and states “pooling their sovereignty to reap the many benefits that will ultimately lead to India’s progress”. He claimed that “Tax evasion will lessen, there will be no tax on tax or a cascade of taxes and ease of doing business will improve.”

    The Rajya Sabha, where the government is in a minority, had passed the bill unanimously last week, with 203 members supporting and none against.

    Interestingly, the Congress reminded the government today that it had got the Bill passed in the Lok Sabha last year by the sheer dint of its numerical strength and not consensus.

    A GST council will be formed after that with states and the centre as members. This council will recommend rates and other modalities for GST, which will replace a raft of different state and local taxes with a single unified value added tax system turning India into world’s biggest single market.

    Parliament will need to clear two more GST-related bills and each state will have to pass its own law. The government will push to get this done in the winter session of Parliament to meet the deadline.

    FICCI President Harvardhan Neotia said: “The approval of the Constitutional Amendment Bill marks crossing of another milestone in the journey towards introduction of a Goods and Services Tax (GST) regime in the country. The industry eagerly looks forward to the implementation of this uniform and simplified tax regime. It is expected that GST will lead to easy tax compliance and improve India’s competitiveness in the global arena. Implementation of GST will be a big incentive for bringing new investments into India and eventually will foster the growth of the Indian economy. FICCI would be privileged to work with and support the Central and State Governments in enabling a timely and hassle-free roll out of GST in India”

  • GST Constitutional Amendment Bill gets Lok Sabha nod after amendments

    GST Constitutional Amendment Bill gets Lok Sabha nod after amendments

    NEW DELHI: The long-awaited Goods and Services Tax Bill (GST), which has been riddled by several controversies which began in the time of the UPA government, has finally been passed with amendments worked out to pacify a vociferous opposition which held the majority in the Rajya Sabha.

    Although the Bill had been passed earlier in the Lok Sabha, an adamant Congress insisted on some changes which were worked out after talking to all states and the opposition parties.

    Thereafter, the amended bill had been introduced in the Rajya Sabha and passed last week. However, in view of the amendments, the amended Bill had to go through the entire rigmarole of a discussion in the Lok Sabha before it was passed unanimously.

    As the GST Bill is in the form of a Constitution Amendment, the rules required that it had to be passed by two-thirds of the members present and voting.

    The Amendment Bill will now go for Presidential assent to Pranab Mukherjee, but can become law only after it is ratified by at least fifteen state governments. The government hopes to get the approval within 30 days as it has set a deadline of 1 April 2017 for implementation of GST. Several states will have to call for special sessions to clear GST in the next 30 days.

    The Bill, which Finance Minister Arun Jaitley describes as a “one nation one tax” bill, was described by Prime Minister Narendra Modi as a major step “that will deliver us from tax terrorism.” He said “GST means a Great Step Taken by India, a Great Step of Transformation, Great Step towards Transparency.”

    Jaitley said India’s biggest tax reform will see the centre and states “pooling their sovereignty to reap the many benefits that will ultimately lead to India’s progress”. He claimed that “Tax evasion will lessen, there will be no tax on tax or a cascade of taxes and ease of doing business will improve.”

    The Rajya Sabha, where the government is in a minority, had passed the bill unanimously last week, with 203 members supporting and none against.

    Interestingly, the Congress reminded the government today that it had got the Bill passed in the Lok Sabha last year by the sheer dint of its numerical strength and not consensus.

    A GST council will be formed after that with states and the centre as members. This council will recommend rates and other modalities for GST, which will replace a raft of different state and local taxes with a single unified value added tax system turning India into world’s biggest single market.

    Parliament will need to clear two more GST-related bills and each state will have to pass its own law. The government will push to get this done in the winter session of Parliament to meet the deadline.

    FICCI President Harvardhan Neotia said: “The approval of the Constitutional Amendment Bill marks crossing of another milestone in the journey towards introduction of a Goods and Services Tax (GST) regime in the country. The industry eagerly looks forward to the implementation of this uniform and simplified tax regime. It is expected that GST will lead to easy tax compliance and improve India’s competitiveness in the global arena. Implementation of GST will be a big incentive for bringing new investments into India and eventually will foster the growth of the Indian economy. FICCI would be privileged to work with and support the Central and State Governments in enabling a timely and hassle-free roll out of GST in India”

  • GST Bill, DTH and broadcasting

    GST Bill, DTH and broadcasting

    MUMBAI: When the The Constitution (122nd Amendment) Bill, 2014 was passed in the Rajya Sabha late Wednesday night, it heralded the rollout of the goods and service tax era in India. In the making for nearly 16 years it is estimated to inject an additional one to two points in growth to the world’s fastest growing economy.

    GST, as envisaged by the government, is one indirect tax for the whole nation, which will make India one unified common market. It will subsume central excise duty, additional excise duty, service tax, additional customs duty commonly known as countervailing duty, and special additional duty of customs at the Central level. GST will also subsume state value added tax/sales tax, entertainment tax, central sales tax, octroi and entry tax, and purchase tax at the state level.

    Last year when finance minister Arun Jaitley had tabled the Bill then for debate, indiantelevision.com had spoken to industry stalwarts. Videocon D2H CEO Anil Khera had at that stage opined: “GST is a welcome move. It will help the DTH sector to prosper. DTH is the biggest victim of multiple taxation policy and GST will simplify that. The industry needs a uniform taxation system and the sooner it comes the better it is.”

    Speaking to CNBC TV18 on 2 August Dish TV chairman and managing director Jawahar Goel had said that the passage of the GST amendments would benefit his company to the tune of three to four per cent initially and this would likely improve to four to five per cent going forward.

    “Currently our outgo on indirect taxes is roughly around 23 percent and then for tax administration also, our expenditure is almost 1-1.5 percent, for managing our logistics in each of the states. The savings should go directly to our bottomline,” he had shared with the business news channel.

    Broadcasters would likely be impacted too as the indirect taxes that they pay currently are around 14-15 per cent. Observers expected the outgo for them could rise to about 18-20 per cent the introduction of GST.

    (Because this is a developing story, more facts may emerge as we go along. Hence it will be updated with new viewpoints then.)

  • GST Bill, DTH and broadcasting

    GST Bill, DTH and broadcasting

    MUMBAI: When the The Constitution (122nd Amendment) Bill, 2014 was passed in the Rajya Sabha late Wednesday night, it heralded the rollout of the goods and service tax era in India. In the making for nearly 16 years it is estimated to inject an additional one to two points in growth to the world’s fastest growing economy.

    GST, as envisaged by the government, is one indirect tax for the whole nation, which will make India one unified common market. It will subsume central excise duty, additional excise duty, service tax, additional customs duty commonly known as countervailing duty, and special additional duty of customs at the Central level. GST will also subsume state value added tax/sales tax, entertainment tax, central sales tax, octroi and entry tax, and purchase tax at the state level.

    Last year when finance minister Arun Jaitley had tabled the Bill then for debate, indiantelevision.com had spoken to industry stalwarts. Videocon D2H CEO Anil Khera had at that stage opined: “GST is a welcome move. It will help the DTH sector to prosper. DTH is the biggest victim of multiple taxation policy and GST will simplify that. The industry needs a uniform taxation system and the sooner it comes the better it is.”

    Speaking to CNBC TV18 on 2 August Dish TV chairman and managing director Jawahar Goel had said that the passage of the GST amendments would benefit his company to the tune of three to four per cent initially and this would likely improve to four to five per cent going forward.

    “Currently our outgo on indirect taxes is roughly around 23 percent and then for tax administration also, our expenditure is almost 1-1.5 percent, for managing our logistics in each of the states. The savings should go directly to our bottomline,” he had shared with the business news channel.

    Broadcasters would likely be impacted too as the indirect taxes that they pay currently are around 14-15 per cent. Observers expected the outgo for them could rise to about 18-20 per cent the introduction of GST.

    (Because this is a developing story, more facts may emerge as we go along. Hence it will be updated with new viewpoints then.)

  • Datawind hopeful that inverted duty corrections will extend to computing devices

    Datawind hopeful that inverted duty corrections will extend to computing devices

    NEW DELHI: Datawind president and CEO Suneet Singh Tuli has expressed hope that corrections in the inverted duty structure is extended to laptops and computing devices in the budget this year.

    Tuli said correcting the inverted duty structure was an important step to boost handset manufacturing. 

    “The Union Budget 2016 expects to aim at growth of the economy and to raise the country’s profile as an investment destination,” he said.

    He added the year 2015 saw ‘double digit growth’ for both handset and tablet manufacturing due to the favorable duty structure and therefore hoped the government will make serious attempts to push for the Goods and Service Tax (GST) Bill to simplify the current indirect tax structure by doing away with the multiplicity of taxes. 

    He said the industry was “hopeful of a common GST compliance, which will be done by all kinds of businesses, whether manufacturers, service providers, traders etc. We hope that the GST rate is reasonable and in the range of three – five per cent.”

  • Datawind hopeful that inverted duty corrections will extend to computing devices

    Datawind hopeful that inverted duty corrections will extend to computing devices

    NEW DELHI: Datawind president and CEO Suneet Singh Tuli has expressed hope that corrections in the inverted duty structure is extended to laptops and computing devices in the budget this year.

    Tuli said correcting the inverted duty structure was an important step to boost handset manufacturing. 

    “The Union Budget 2016 expects to aim at growth of the economy and to raise the country’s profile as an investment destination,” he said.

    He added the year 2015 saw ‘double digit growth’ for both handset and tablet manufacturing due to the favorable duty structure and therefore hoped the government will make serious attempts to push for the Goods and Service Tax (GST) Bill to simplify the current indirect tax structure by doing away with the multiplicity of taxes. 

    He said the industry was “hopeful of a common GST compliance, which will be done by all kinds of businesses, whether manufacturers, service providers, traders etc. We hope that the GST rate is reasonable and in the range of three – five per cent.”

  • Manufacturing slows in Q3-2016 despite Digital India & Make in India campaigns

    Manufacturing slows in Q3-2016 despite Digital India & Make in India campaigns

    NEW DELHI: Despite the emphasis on Digital India and Make In India campaigns and perhaps largely due to expectations of the Goods and Service Tax (GST) that never came through, manufacturing of electrical and electronic goods failed to pick up much during 2015.

    What’s more, the outlook the third quarter of 2015-16 predicts a slowdown due to various factors, according to the quarterly Manufacturing Survey conducted by FICCI.

    Considering that the Digital Addressable System (DAS) Phase III becomes a reality from New Year’s Day and the countdown begins for the final phase, and with auction for FM Radio Phase III having commenced, the slowdown in manufacture of electronic goods is not good news for the electronic media industry, which depends largely on set top boxes (STBs) and other electronic equipment.

    The FICCI survey says the outlook for Indian manufacturing sector in Q3 of 2015-16 looks to be weakening, as lesser percentage of respondents expect high growth to continue in Q-3 (October-December 2015-16). The percentage of respondents expecting higher growth in Q3 has gone down to 55 per cent as compared to 63 per cent for Q2 (July-September 2015-16), according to the survey.

    The survey had earlier indicated revival in the manufacturing activity in Q2 of 2015-16, which seems to be slowing down a little bit in Q3 now. The outlook on the basis of FICCI Manufacturing Survey for Q2 of 2015-16 was more optimistic than in the current quarter. Exports are primarily responsible for this less optimistic outlook besides domestic factors like poor demand conditions, high interest cost etc.

    The quarterly survey gauges the expectations of manufacturers for Q3 2015-16 for 12 major sectors namely textiles, capital goods, metals, chemicals, cement and ceramics, electronics, auto, leather & footwear, machine tools, food, tyre, and textiles machinery. Responses have been drawn from 336 manufacturing units from both large and SME segments with a combined annual turnover of over Rs 3.94 trillion.

    The survey had earlier indicated revival in the manufacturing activity in Q2 2015-16, which seems to be slowing down little bit in Q3 now. The percentage of respondents expecting higher growth in Q3 has gone down to 55 per cent as compared to 63 per cent for Q2 2015-16.

    Exports are primarily responsible for this less optimistic outlook besides domestic factors like poor demand conditions, high interest cost etc.

    In terms of investment, for Q3 2015-16, 68 per cent respondents as against 73-75 per cent respondents in earlier quarters reported that they don’t have any plans for capacity additions for the next six months implying slack in the private sector investments in manufacturing to continue, even though there is a fall in the percentage of respondents not looking at fresh investments. Poor demand conditions, high cost of borrowing, delayed clearances and cost escalation are some of the major constraints, which are affecting the expansion plans of the respondents.

    In Electronics and Electrical, the survey shows that average capacity utilisation in the second quarter was 65 per cent, which was only higher than one (textiles) of the 12 sectors surveyed. In fact, it had fallen by five per cent over the same period last fiscal.

    At a glance, the quarterly outlook for the sector shows moderate outlook for production, no capacity addition expected in the next six months, and a bleak outlook for both hiring and exports.

    Implementation of GST and keeping the sector at the lowest tax slab; imposing anti-dumping duty on imports of Dry Batteries; support of the tier 2 supplier by schemes (reward, recognition or subsidies), which can encourage them to improve their product quality; and reduction of interest rate are some of the suggestions from the respondents.

    The Electronics and Electrical sector for the October-December 2015 quarter witnessed 63 per cent respondents reporting higher levels of production on year-on-year basis though the level of growth itself may not be high.

    On the other hand, only 30 per cent of the respondents reported a higher level of orders for the October-December quarter as compared to the previous quarter while 50 per cent reported no improvement in their order books.

    Current capacity utilisation in the industry is around 65 per cent. Primarily owing to the lower current utilisation, 81 per cent respondents reportedly don’t have any plans to add any fresh capacity in next few months.

    A third of the respondents reported negative growth in exports in the October-December 2015 quarter as compared to the same quarter of last year. Also, 56 per cent reported no change in exports during the same period.

    Sixty per cent respondents maintained average inventory levels during October-December 2015 whereas only about a third maintained a higher inventory level. Almost all respondents were reluctant when asked about their plans of hiring additional work force in next three months.

    The Electronics industry respondents are availing credit at an average rate of 12 per cent. Around 40 per cent respondents in the sector expect the manufacturing sector to revive in the next six months while another 40 per cent expect no significant growth.

    About 30 per cent respondents reported that their production cost has increased than that of last year while costs remained same for 40 per cent respondents. Rising labour wages and rupee devaluation have been cited as the key reasons towards this end. Prices of raw materials, uncertainty of economic environment, lack of domestic and export demand, deficiency of power and competition faced from imports are significantly affecting the growth of this sector.