Comments Off on Gst: 12 states accept centre’s Rs 97,000 crore borrowing option
12 states, including Bihar, Andhra Pradesh, Uttar Pradesh, Meghalaya, Gujarat, Haryana, Karnataka, Madhya Pradesh, Sikkim, Tripura, Uttarakhand, and Odisha, have so far opted for the first option provided by the centre — Rs 97,000 crore borrowing to compensate for revenue shortfalls due to the shift to goods and service tax (GST).
Manipur is the only state that has opted for the second option, which includes borrowing under the Rs 2.35 lakh crore range, which entails revenue shortfalls due to the GST transition, as well as the economic downturn caused by Covid19.
Arunachal Pradesh, Nagaland, Goa, Assam, Mizoram, and Himachal Pradesh are likely to offer their preference between both the borrowing options offered by the Centre last month, in a few days
The centre, which has additional borrowing planned for FY21, requires states to borrow in order to cover the deficit in the cess fund. In the first window, both the principal and the interest would be covered by the termination fund and the States would also be compensated for the balance (Covid19 revenue loss). In the second option, the principal will be covered by a cess fund.
The GST Council will now meet on 5 October instead of 19 September. The question of the GST compensation shortfall may be raised in the monsoon session of the Parliament which begins today.
Approximately 10 opposition-led states have refused both borrowing options on the grounds that the Centre should borrow instead of states, while some have also sought the Prime Minister’s intervention to resolve the burning problem.
The Centre claimed that it was not under the obligation to compensate for the loss of revenue, depending on the opinion of the Attorney General who stated that the GST Council had to find ways of dealing with the loss of revenue and not the Central Government.
In the currenteconomic situation, it might not be feasible to raise the tax rate or to rationalize the rate in order to compensate for the shortfall, the Center announced at the Council meeting on 27 August putting forth two borrowing options for states.
Comments Off on 3 months’ extension for holding AGM for Companies
Three months’ general extension for holding AGM has been granted to all the companies because of Covid 19.
No application is required to be made!
Each company, other than the One Person Company(OPC), shall hold, in addition to any other meeting, a General Meeting as its Annual General Meeting (AGM) each year and specify the meeting as such in the notices calling it, and not more than fifteen months shall elapse between two AGM.
First AGM shall be held within nine months from the date of the close of the first financial year of the company and, in any other case, within six months from the date of the close of the financial year.
Registrar may, for any special reason, extend the period during which any annual general meeting, other than the first annual general meeting, is held by a period not exceeding 3 months.
Different representations have been received from companies, industry bodies and professional institutes, which point out that several companies find it difficult to hold their AGM for the financial year ended 31.03.2020 because of the difficulties faced by the Covid-19 Pandemic.
Due to such unprecedented special reasons, the time within which the AGM for the financial year ended on 31.03.2020 is required to be held is ought to be extended.
Extension of Annual General Meeting, other than the first AGM, for the financial year ended on 31.03.2020 for companies (.e. Registrar of Companies, NCT of Delhi & Haryana). which are unable to hold their AGM within the specified limits can also be availed via this notification..
Explanation: It is hereby clarified that the extension granted under this Order shall also cover the
(i) Pending applications filed in Form No. GNL 1 for the extension of AGM for thefinancial year ended on 31.03.2020, which are yet to be approved;
(ii) Applications filed in Form No. GNL-1 for the extension of AGM for the financial year ended on 31.03.2020, which were rejected,
where approval for the extension of AGM up to 3 months from the due date of the AGM shall be deemed to have been granted by the undersigned without any further action on the part of the company.
Comments Off on GST Mechanism between Centre & States: Payments & Dispute!
The Centre and the states are in a tussle over delayed compensation payments under GST
The Goods and Services Tax (GST), implemented in July 2017, marked a significant change from traditional production-linked tax to consumption-based tax.The new scheme covered State levies such as VAT, sales tax, excise / entry tax together with central levies such as central excise and service tax.States gave up some of their taxation rights in lieu of the Centre passing on their revenue share under GST and also compensating them for potential revenue losses in the first five years.
GST includes a tax levied by the Centre on the intra-state supply of goods and/or services called Central GST (CGST), and a corresponding tax levied by states/UTs called the State GST (SGST/UTGST) on these goods and services. CGST and SGST are levied simultaneously on every purchase of goods and services, except exempted ones. The customer pays the average rate under one of the major tax brackets—5 per cent, 12 per cent, 18 per cent and 28 per cent — in which half accures to the Center and half to the State where consumption occurs.
Integrated GST (IGST) is the GST levied on inter-state transactions and exports/imports of goods and services. IGST is a combination of SGST and CGST and is first levied and administered by the Centre, which then distributes it between the consuming state and itself.
In addition, a compensation cess, ranging from 1 to 200 per cent, is imposed on sin and luxury products such as tobacco, pan masala and other types of vehicles, over and above the topmost slab of 28 per cent.
How is all this work?
Take spoons and forks with a GST of 12 per cent. The consumer will pay 12 per cent on the price of spoons and forks if he or she buys from the manufacturer in the same state (intra-state transaction). Then 6 per cent will be the Center ‘s share as CGST and 6 per cent the State’s share as SGST.
In the case of a wholesale (B2B) trade, the GST allows the seller to claim an input tax credit (ITC) by taking off the tax liability against the tax already paid. For example , a manufacturer in Andhra Pradesh sells spoons and forks to a store in Andhra Pradesh (an intra-state transaction). The owner of the shop pays 12% to the manufacturer. When the customer buys them from his store, She pays 12 per cent of GST at the final price.The shop-owner then takes ITC for the 12 per cent he has already paid and deposits 12 per cent of GST with the authorities, removing the effect of taxation. For the whole purchase, GST of 12% is in effect applied only once after availing ITC.
How did compensation become an issue?
Compensation payments to states began to be delayed since October last year as GST revenues began to slow down. The Covid-19 pandemic widened the gap, with revenue from the GST decreasing by 41% in the April-June quarter.
The Centre released Rs 13,806 crore to the States on July 27 for March 2020, wrapping up the full payout for FY20 at Rs 1,65 lakh crore. Compensation is still pending for the four months of this financial year (April to July).
How is the dispute now placed?
Fresh tensions have resulted after senior Finance Ministry officials are learnt to have reported the Centre’s inability to compensate states in the near future, which was followed by the Attorney General of India’s legal opinion that the Centre does not have an obligation to pay for a revenue shortfall. The AG is learnt to have suggested that the GST Council can recommend to the Centre that it allow the states “to borrow on the strength of the future receipts from the compensation fund” and that the Centre will have to take the “final decision in the matter”.
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