GST Formalising Economy, Widening Tax Base, Says Finance Ministry
The Finance Ministry said it would be increasingly difficult for businesses to remain outside the tax net as GST is leading to formalisation of the economy. The Goods and Services Tax (GST) was introduced from July 1 last year to subsume plethora of indirect taxes like excise and sales tax. “Historic tax reform GST has resulted in formalisation of the economy and consequently information flow would eventually augment not only the indirect tax collections but also direct tax collections,” the ministry said in a statement. Before GST, the Centre had little data on small manufacturers and consumption because the excise was imposed only at the manufacturing stage while the states had little data on the activities of local firms outside their borders.
Under GST, there will be “now seamless flow” of availability of common set of data to the Centre and the states, making direct and indirect tax collections more effective.
“The (GST) tax base is expected to rise consistently as the incentives for formalisation increase,” it said adding that it would make increasingly difficult for those liable to pay tax to remain outside the tax net. The ministry further said steps were also being taken for further simplification of GST structure in order to facilitate tax payers and to extend benefit to the customers.
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Arun Jaitley Lauds GDP Growth, Says Job Creation Is On Track
In yet another long blog, Finance Minister and senior BJP leader Arun Jaitley on Monday lauded the fourth quarter GDP growth of 7.7 per cent saying the future looked much brighter than the past.
“The fourth quarter result of GDP data showed a phenomenal 7.7 per cent growth rate and has established India firmly as the fastest growing global economy. This trend, according to experts, is likely to continue for the next few years, he wrote.
“With structural reforms like demonetisation, the implementation of the Goods and Services Tax (GST) and the enforcement of the Insolvency and Bankruptcy Code (IBC), we had two challenging quarters,” Jaitley said adding that “those who predicted a two per cent decline in GDP growth have been conclusively proved wrong.”
He said a distinguished predecessor of his had feared that he may have to live his future in poverty. “We have enabled every Indian to be a part of the world’s fastest growing economy. The future looks much brighter than the past. This trend is likely to continue for some years,” Jaitley said.
He tried to address various economic issues concerning people from rising oil price, structural reforms and job creation and praised the social sector schemes and the rural development programmes launched by the government.
“These involve legislations which are path breaking and development works in roads, railways, housing, power, sanitation — which yield high social benefits — require high level of government expenditure. This type of government spending promotes growth. This is what we are witnessing today,” he said.
Jaitley who underwent kidney replacement recently is still recovering and is yet to rejoin his office.
On job creation Jaitley said: “An analysis of the data released clearly shows that the construction sector is expanding by double digits. It is a job creating sector. Investment is increasing. Domestic investment is also increasing. The FDI is at an unprecedented level.”
He said the IBC had unlocked value in non-performing assets. “Fixed capital formation is growing. Manufacturing is expanding. We are spending huge amounts on infrastructure creation. Expenditure on rural projects has increased in a big way. The social sector schemes, more particularly the financial inclusion programmes, have created a wave of self-employment. Each one of these is a high job creating sector,” he asserted.
He said if India remains a tax non-compliant nation, both Centre and state government would have very little to spend. They will borrow more and spend less. “Demonetisation, GST, digitisation, Aadhaar and the anti-black money measures are leading to gradual formalisation of the Indian economy.”
Talking about tax collection, Jaitley said: “We have reached 6.86 crore income tax return filers last year. The number of income tax returns post demonetisation show a 25 per cent growth. Even the corporate returns have increased by 17 per cent.”
He said that GST, after a few weeks of its implementation became problem free, and was leading to higher tax collection. “With higher revenues, the Government has been able to spend more on infrastructure, rural India and social sector schemes and yet maintained fiscal prudence and keeping the fiscal deficit on downward glide path,” he added.
“The last four years have seen an improvement in central government’s tax-GDP ratio from 10 per cent to 11.5 per cent. There is an increase of 1.46 percentage points. Almost half of this, 0.72 per cent of GDP, accounts for an increase in non-oil tax-GDP ratio. The level of non-oil taxes to GDP at 9.8 per cent in 2017-18 is the highest since 2007-08 a year in which our revenue position was boosted by buoyant international environment,” the minister said.
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Government Asks Exporters To Comply With Global Standards To Tap International Markets
The government said exporters, particularly from the food and agriculture sectors, should strictly comply with global norms for quality and standards, or else they might lose their export market share to other countries. Emphasising on the importance of adopting best standards for goods and services, Commerce Secretary Rita Teaotia said it is critical to promote manufacturing, exports and enhancing participation of domestic industry into global value chains.
She said in the food and agriculture sectors, Indian exporters are repetitively facing trade barriers on account of compliance issues. “Such situations are prevalent in discerning markets like the US, European Union and Japan and if Indian producers are unable to meet mandatory obligations for standards including the sanitary and phytosanitary (related with plants and animals) measures, we may lose our share of export market to other countries,” she said.
Teaotia was speaking at the National Standards Conclave, organised by the commerce ministry and industry body CII. She said promulgation of sanitary and phytosanitary (SPS) measures are very important as India receives so many alerts from these countries. “We have initiated an inter-ministerial space where agriculture ministry, health ministry and agencies like Fssia, Export Inspection Council, Apeda and Mpeda are now working together to be able to respond more appropriately and efficiently to these alerts,” she added.
She also informed that Indian National Strategy for Standardisation (INSS) will be released tomorrow and urged the industry to give feedback on the suggestions made in this report. INSS recommends wide range of policy directions such as standard settings, conformity assessment, accreditation, SPS and technical regulations as well as awareness building, training and education.
“It recommends an implementation framework for realising these goals, identification of the responsible agencies and related activities taken by them and time frames for achieving these milestones..it has a finite time,” the secretary said. It has also suggested setting up of a high-level committee for regular reviews, monitoring and publication of results. She added that three areas are important from standards perspective – manufacturing, services and food and agro products.
Global value chains, she said, are fast emerging as a key driver of standards, and participation in these requires uniform standards worldwide. “There is a need to assess the global standards, and working towards harmonisation and adopting global value standards are critical,” she said.
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India Working Towards Becoming $5 Trillion Economy By 2025, Says President Ram Nath Kovind
India is striving to become a USD 5 trillion economy and the world’s third largest consumer market by 2025, President Ram Nath Kovind has said as he highlighted investment opportunities in the country. Kovind, the first Indian president to travel to Greece in 11 years, arrived here on Saturday on the first leg of his three-nation tour. Addressing the diaspora here, he said his visit will strengthen ties between India and Greece.
Kovind praised overseas Indians for playing an important role in improving bilateral relations. “Greece and India presented the ideals of civilisation and culture in the ancient world. The relations between the two countries are very old and deep. Greek historian Megasthenes introduced India to the world through his book ‘Indica’,” the president said. “We are working towards making India a USD 5 trillion economy and the world’s third largest consumer market by 2025. According to the World Bank and IMF, our growth rate is going to be high,” he said.
Currently India’s economy is estimated at USD 2.5 trillion. Kovind said India had a very strong position in the world with the perspective of democracy, demographic divided and demand. “We are proud of our overseas Indians and their successes. Today there are plenty of opportunities for business, innovation and investment in India. I hope that whatever you can do for the development of India for the motherland, you will do that,” he said.
India-Greece bilateral trade stands at USD 530 million and some Indian companies are also present in the infrastructure, pharmaceutical and steel sectors in the central European nation.
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Doubling Farm Income By 2022: Modi Government’s Big Budget Boost To Agriculture Sector
Reaching out to farmers, Prime Minister Narendra Modi showcased his government’s “unprecedented” work in the agriculture sector, including doubling of the budget to Rs 2.12 lakh crore. Modi also reiterated that his government is working to double farm income by 2022. Continuing his outreach programme of direct interaction with beneficiaries of his pet schemes, Modi spoke to farmers from over 600 districts via video-conferencing, highlighting the government interventions right from seeds to market that is aimed at addressing farm distress. The government, through an extensive and balanced policy, is aiming to provide inputs like quality seeds, fertilisers, water and electricity as well as markets for increasing farmers’ income, he said.
“We have decided to double farmers income by 2022… When I talked about doubling of farmers income, there were many people who made fun that this is not possible and difficult. They created an atmosphere of doom. But we decided as I had full faith in farmers,” Modi said. To achieve this target, he said the four cornerstones of the government policy are cutting input cost, fair price for the crop, preventing post-harvest losses and creating alternate sources of income. Modi said in the Budget for 2018-19 fiscal, the government announced that the minimum support price (MSP) for all crops will be fixed at least 1.5 times the cost of production. He also listed out all the costs that will be included while fixing the MSP.
“The budget allocation for the agriculture sector in 5 years of the previous government was Rs 1.21 lakh crore. This has been increased to Rs 2.12 lakh crore during 2014-19, which is almost double. This clearly reflects our commitment to farmers welfare,” Modi said. Stating that there has been “unprecedented development” in the farm sector during the last four years, the Prime Minister highlighted that foodgrains production in the country touched an all-time high of 280 million tonnes during 2017-18 crop year as against an average production of 250 million tonnes during 2010-14.
There has also been bumper production of fruits, vegetables and milk, he said, adding that pulses production has increased by an average 10.5 per cent. Production of fish and milk grew by 26 per cent and 24 per cent, respectively. Egg output has risen by 25 per cent. “Our effort is to provide farmers assistance at all stage of agriculture — at the time of sowing, after sowing and at the time of harvesting,” he said, adding the policy interventions are being planned to help farmers right from seeds to markets. First, soil health cards are being provided to help farmers better understand soil nutrient status of his/her holding and advice them on the dosage of fertilisers.
Thereafter, loans are being made available to farmers to help them procure good quality seeds, he said, adding neem coating of urea has ensured that black-marketing of the crop nutrient is stopped and farmers get it without any problem. To ensure farmers get the right price for their crops, Modi said an online platform e-NAM has been started to eliminate middlemen. As many as 22,000 rural markets are also being linked to wholesale mandis. The government is also giving special attention to allied sectors like fisheries, dairy and bee-keeping to boost farmers income, he added. The Prime Minister said farmers should get full credit for ensuring the country’s food security but rued that “from the beginning, farmers were left to fend for themselves” which resulted in their shrinking prosperity.
Modi highlighted the various initiatives launched by the government in the last four years such as soil health cards, new crop insurance scheme, irrigation programme and e-NAM, among others. Under Prime Minister Krishi Sinchaee Yojna, Modi said about 100 projects are being completed so that water reaches all agriculture fields. The government is promoting drip irrigation to achieve “per drop more crop” and reduce input cost. Modi said farmers can increase their income by value-addition of farm produce.