All online purchases to attract GST: Amit Mitra panel on model law
All purchases made online will attract a uniform Goods and Services Tax, likely to take effect from April next year, according to the model GST law approved by state finance ministers headed by West Bengal finance minister, Dr Amit Mitra today. Dr Mitra had served as Secretary General of the Federation of Indian Chambers of Commerce and Industry before his avatar as Bengal finance minister. The tax, in lieu of local levies, will be imposed at the first point of financial transaction. This clears the air on applicability of GST in e-commerce in cases where goods were being sold in one state but was being bought in another state. The model GST law, which has 162 clauses and 4 schedules, has also suggested a jail terms of up to 5 years and fine for violation of the provisions of the statute. It prescribes a threshold of Rs 9 lakh annual turnover for applicability of the new levy and Rs 4 lakh for businesses in North Eastern states including Sikkim. Revenue Secretary Hasmukh Adhia said the Empowered Committee of State Finance Ministers at their meeting today in Kolkata approved the model GST law. “We request all stakeholders to give their suggestions/ comments to secretariat of Empowered Committee of FMs and or to finance ministry,” Adhia tweeted. Government is hoping to get the Constitution Amendment Bill passed by Parliament in the upcoming Monsoon Session. It plans to roll out GST from April 1, 2017 that will subsume excise, service tax and all local levies. Virtually all states have supported the idea of GST except Tamil Nadu which has “some reservations”, Finance Minister Arun Jaitley said after the meeting of Empowered Committee on the long awaited indirect tax reform. Dee Gordon Authentic Jersey
Draft law proposes to bring e-commerce under GST
The draft model law on goods and service tax (GST) has proposed bringing all online buying within the purview of the proposed levy. The move will end uncertainty over tax on purchases from e-commerce sites. Introduction of GST will provide clarity on where the tax is levied, as the entire burden moves from the point of production to the point of consumption. In recent months, states such as Karnataka and Uttar Pradesh have imposed levies due to pressure from brick-and-mortar retailers but the legislation seeks to bring parity. For instance, UP recently imposed an entry tax on purchases from e-commerce sites. In a note, consulting firm PricewaterhouseCoopers said the draft bill, released for public comment after a meeting of state finance ministers with Arun Jaitley in Kolkata on Tuesday, has proposed tax collection at source for e-commerce, which will mean that any payment made to a supplier would be subjected to the provision at a notified rate. The draft will form the basis for the final law incorporating some of the changes suggested by experts. It will help provide clarity and the rationale for introducing some of the provisions in the landmark indirect tax reform measure. Experts said the inclusion of e-commerce under the ambit of the tax will pose a huge burden on these companies. “This will mean significant compliance burden on e-commerce companies as many of them deal with thousands of vendors. Further, this may lead to refund situation for many suppliers who operate on thin margin. In addition, e-commerce companies will need to file a statement providing details of all supplies made through this platform,” said Pratik Jain, indirect tax leader at the consulting firm. In any case the government is proposing to cast the net wider by including several more players within GST. Instead of a threshold of Rs 1.5 crore for central excise, the draft bill has proposed a Rs 10 lakh as threshold and any unit, service provider or retailer above the floor will be required to register and will be subject to tax. The proposed legislation also seeks to end uncertainty on software as intangibles will be considered as a “service”. Similarly, work contracts will also fall within the service segment and will ease life for the infrastructure sector. GST, which has been in the works for a decade, is seen as one of the most important tax reform initiatives post-independence, but is stuck in Parliament due to opposition from Congress. On Tuesday, finance minister Arun Jaitley met state finance ministers to thrash out a consensus on some of the contentious issues and the government hopes to introduce the Constitution amendment bill to implement the tax in the monsoon session of Parliament. Tyler Pitlick Jersey
GST inches closer to reality as states unite
The implementation of the landmark Goods and Services Tax inched closer on Tuesday with states unanimously backing it and agreeing that the ceiling rate should not be prescribed in the Constitution Amendment Bill that is awaiting a Rajya Sabha nod. The meeting raised hopes that the government and Congress may close the gap in their position over the landmark tax reform. Congress’s insistence on prescribing the 18% rate has effectively stalled the bill, which requires a two-thirds majority that NDA lacks in the upper House. “…There was complete consensus that there should be no constitutional cap be cause contingencies might arise as far as the quantum of taxation fixed by the GST council is concerned. It is best left to the discretion of the council,” finance minister Arun Jaitley said after a meeting of the empowered group of finance ministers. All three states -Karna taka, Himachal Pradesh and Meghalaya -that spoke at the meeting of the empowered group of finance ministers were in support of moving ahead on the GST Bill, said sources. The states did not mention any need for incorporating the GST rate in the Constitution Amendment Bill. Finance minister Arun Jaitley said virtually every state has supported the idea of GST except Tamil Nadu, which has some reservation. “There is one state which has said that even though they have reservations on the GST, they have thought how to make it implementable… Tamil Nadu has offered a few suggestions, which have been noted,” Jaitley said. According to the sources, even in case of TN, there was a change in position, and the Centre has sensed that there is “scope for bargaining”, which was not the case earlier. At the end of the meeting, West Bengal finance minister Amit Mitra, who is chairman of the empowered committee of state finance ministers, asked the FMs if there was consensus and the answer was yes, the sources said. The states, however, expressed the view that there were several “nuts and bolts” issues which need to be tackled before implementing the ambitious tax reform. The state finance ministers’ panel will be meeting again in Ju ly to discuss issues linked to the revenue neutral rate under GST and the issue of dual control. The states, sources said, are demanding a higher revenue neutral rate than the 1718% proposed by the panel headed by chief economic adviser Arvind Subramanian. Similarly, they are demanding greater say in the GST Council with Kerala pointing out that the Centre enjoyed complete veto while the state legislatures were losing their say. Further, they want the law to clearly state that the Centre will compensate for all revenue loss for five years – an issue that generated maximum debate. “It is, therefore, necessary that revenue experts and those who have dealt with it in the Centre and the states meet and come to this harmonious system. In the next meeting of FMs a presentation on this will be made, on the assumption that on the one hand we move towards the passage of Constitution amendment and on the other hand these two procedural issues -dual control, and quantum of revenue neutral rate -are finalised in the empowered committee,” said Jaitley. The government aims to introduce the GST Constitution Amendment Bill in the Rajya Sabha in the monsoon session of Parliament. The recent RS polls have provided some muscle to the ruling party to get the bill approved. “As far as future roadmap is concerned the timetable really is that we will try and see that the Constitution amendments are approved in the monsoon session, and therefore, by the end of the year we must have the CGST and SGST legislations in place.Thereafter, the IGST will need to be passed by the Centre also. The draft of these legislations have been circulated,” Jaitley said. Reshad Jones Authentic Jersey
Flipkart sellers threaten revolt over return policy; say will either exit or remain inactive
A small but growing tribe of disgruntled merchants on Flipkart are threatening to exit or be inactive on the online marketplace, objecting to a host of new conditions the company has imposed on them. Two trade associations, representing small groups of online vendors said several hundred members, have decided to stop selling on Flipkart because of what they say are “unilateral changes” in policy that would increase their cost of doing business. These merchants make for a tiny fraction of Flipkart’s 90,000 sellers and are unlikely to dent sales. But what could be worrying for Flipkart is that their dissent comes at a time when Amazon India is fast bearing down on it with an additional $3-billion investment from its US parent. Flipkart recently decided, among other measures, to increase the sales commission it levies on merchants, by up to 5% in some categories, as well as charge them a shipping fee, a reverse shipping fee, and a collection fee on every product returned by customers, effective June 20. It’s not so much the higher commissions as the charges on product returns and frequent policy flip-flops that have got the vendors in a tizzy, according to the merchant associations. Amazon, too, has recently increased commissions. “The changes on return shipping policy will impact sellers heavily,” said Sanjay Thakur, spokesman for ESellerSuraksha, a group of about 1,000 online sellers. “Flipkart used to charge a fee from sellers only if we were at fault, which would be less than 1% of the order (value). Now, Flipkart will deduct shipping charges and collection fees from sellers (in case of returns), which will be huge since return percentage ranges from 8% to 10% (deliveries) in most of the categories.” Handling product returns amounts to 1.5 times delivery costs, according to industry estimates. Amazon India said it does not charge its sellers for handling product returns. ShopClues said it does not charge its sellers for handling returns if there were no problems with their products. “It is not really the increase in commission that has upset sellers but the frequent policy changes done by Flipkart without consulting us,” said a merchant selling lifestyle products on Flipkart, declining to be identified. Thakur said of the 300 members who participated in a survey conducted by ESellerSuraksha on Flipkart’s recent policy changes, 98% were of the opinion that the new rules would “kill sellers,” and about 57% said they would “rethink” selling on Flipkart. More than 42% of the respondents said they would hike their prices for customers by 15-20% to make up for the extra costs, he said. A senior member of another merchant grouping, the All India Online Vendors Association (AIOVA), said about 300 of its 1,000 members had decided to quit Flipkart because of the company’s decision to pass on the burden of handling product returns to them. “Due to the new policy, sellers are now forced to increase prices by around 10% and will also charge shipping fees to customers,” he said. It wasn’t clear if any of the dissenting merchants are among the top 100 sellers Flipkart is looking to nurture as part of its new seller strategy. Flipkart said its new policy will make it simpler for sellers by offering predictability and control over payments. It has advised vendors to ensure effective cataloguing and packaging, and prevent mis-shipments to avoid product returns. “Our returns policy and process continues to be the best and the easiest in the industry,” a spokeswoman for Flipkart said. Pointing to Flipkart’s recent decision to reduce the number of days customers have to return products, she said it was “aimed at ensuring a more seamless experience for both sellers and customers to ensure quicker arrangement of products and timely replacement.” Jason McCourty Jersey
What is Tata’s plan to stand out in the crowded e-commerce mart?
What started as a close-door and ultra-ambitious project by the Indian major Tata group, nick-named ‘Tata Mall’ for nearly 18 months, was launched as TataCLiQ.com a few weeks back. The short answer to the ‘what’s TataCLiQ?’ question is the group’s version of a unique phygital ecommerce marketplace. For the longer answer, read on. Tata CLiQ is an amalgam of physical and digital or phygital a platform, where shoppers can order, collect, return and exchange products from anywhere, anytime, either online or at brand partners’ stores. The TG is a customer, conscious about brands and whose expectation in terms of convenience and service is slightly higher, informs Ashutosh Pandey, chief executive officer, Tata CLiQ. The brand has been benchmarked against global players like Alibaba-Tmall and John Lewis. Kumar Rajagopalan, CEO, Retailers Association of India points out that the big differentiator for established firms entering e-commerce marketplaces would definitely be trust that customers have in these business houses. Which is where the Tata pedigree can hold the new entity in good stead. The service launches at a time when many of the assumptions about e-commerce are being re-examined. According to Srinivas Murthy, former SVP marketing at e-commerce major Snapdeal, being a late entrant has given TataCLiQ the chance to implement the category do’s and don’ts on Day 1. However, the challenge is to offer a differentiator versus competitors. On one end, there are the well-funded companies like Myntra, Flipkart, Snapdeal, Jabong and Amazon: digital natives that have challenged the brick and mortar economy. And on the other, traditional players like Shoppers Stop, Lifestyle and the Aditya Birla group. The euphoria around the great ecommerce marketing wars is settling and fundamental questions about business models and ROI are being asked. Flipkart recently crunched its return window from 30 days to 10 for most top selling products. Most players are feeling the heat on issues of profitability as well as customer service and experience. Adds Pandey, “We are entering at a time when the entire concept of everything on 70% discount is getting questioned.” In a market built on the pillar of discounting, the CLiQ model claims to be not just about rock bottom prices. It is about a few sellers and a lot of products from those sellers. As Pandey puts it, “Discounting is a legitimate lever but I do not want that to be the only lever for our business.” For now, he is not unduly worried about the upheaval in the market and puts it down to “growing up pangs”. The market will only expand over the next decade and discussions on whether brand A or brand B will survive are rather premature, in his view. Shoppers Stop for instance has embarked on its omnichannel journey last year and plans to link its multiple channels ie physical stores, web, social, mobile and marketplaces to provide a seamless and unified shopping experience to customers , shares Govind Shrikhande, customer care associate and managing director, Shoppers Stop. Unlike most other ecommerce players, Tata group’s foray appears cautious. Compared to the more cash-flush new age businesses, the brand has made its debut in a quieter avatar with a digital- only campaign for now. The splurge on mass media TV, print and outdoor will happen eventually. The current focus is on getting the delivery experience and onsite experience right, as well as adding new categories, says Pandey. For Subramanian Krishnan, chief strategy officer, TBWA India, the site, at least so far, feels conventional and does not deliver to this promise. He hopes the team will have the courage to live up to its strategy, and deliver a truly unique online retail experience. Matt Carpenter Womens Jersey
Air carrier owned by Indian couple shuts
Malaysia’s Rayani Air, the country’s first Sharia-compliant airline owned by an ethnic Indian Hindu couple, was shut down today, months after it was suspended for failing to adhere to aviation rules. The Malaysian Aviation Commission (MAVCOM) revoked Rayani Air’s Air Service Licence (ASL) after finding Rayani Air had breached the conditions of its licence. It said the airline also lacked the financial and management capacity to continue operating as a commercial airline. “As a consequence, Rayani Air can no longer operate as a commercial airline with effect from today,” it said. The airline was founded by Ravi Alagendrran and his wife Karthiyani Govindan and started operations in December. They used parts of their first names for the airline’s name. TJ Brodie Womens Jersey
Civil aviation should no longer be a central subject, asks PM Modi
Indian PM Narendra Modi has said that states should have a significant say in the implementation of the regional air connectivity programme under the new civil aviation policy which is to be unveiled this week. He has said that giving states more space to decide on aviation-related matters is necessary since aviation should not only be a central subject. “The Prime Minister’s Office had asked to provide more powers to states on deciding the airports they want to launch flights from and on a few other things,” a senior ministry official told ET while requesting anonymity. The official added that these changes have been made in the policy document and have been sent to the Cabinet. As per the proposed regional connectivity scheme, the government will offer a subsidy to flights that connect currently non-operational airports at a pre-decided fare of Rs 2,500 per hour of flight. The analyst hired by the civil aviation ministry welcomed the government’s move to bring states on board. Patrik Berglund Authentic Jersey
Air India wants its ground staff with flying licence to become pilots
Air India is giving its ground staff and crew a chance to become pilots with the airline, a Hindustan Times report said. Air India said it wants to give an opportunity to several of its ground staff that hold commercial pilots’ licences (CPL) but were forced into other jobs due to a slowdown in the Indian aviation industry which led to an indefinite freeze on recruitment. Many young Indian pilots were rendered jobless and were forced to take up maintenance or ground operations jobs, or even change their careers because of the slowdown in the aviation industry that was caused by the fall of Kingfisher Airlines and other domestic airlines. The situation seems to be improving slightly now in the domestic arena, and Air India wants to cash in on the tide and give its in-house CPL holders to get a chance to fly its planes first. The report says that all the eligible Air India employees will have to clear all the tests before getting a chance to become a pilot, like all the regular candidates. The tests will begin on July 2. “We want to provide an opportunity to our in-house candidates to realise their dream of becoming a pilot,” Air India chairman and managing director Ashwani Lohani was quoted as saying in the report. Evan Fournier Womens Jersey
Regional air connectivity plan rekindles hopes of Kolhapur
The regional air connectivity plan proposed by the Union government, which gives more power to the state governments in making decision on starting aviation service, is likely to benefit cities like Kolhapur. Commencement of flights from Kolhapur to Mumbai is a pending demand for the past five years. Sources said the Union cabinet is set to clear the proposal in the next two days, which will benefit many states which are keen on such services. In most of the cases, the state governments have promised some financial support to promote the services. District guardian minister Chandrakant Patil said, “Once the new bill gets cleared by the Union cabinet, I am going to take the issue with chief minister Devendra Fadnavis. There is also a plan to go ahead with land acquisition without acquiring the forest land, which could also benefit us. If it is helpful, then airport expansion will be pushed with some financial support and persuasion with the Union government.” As per reports, the Prime Minister’s office has asked to provide more powers to the states on deciding the airports they want to launch flights from and on a few other things. Under the proposed regional connectivity scheme, the government will offer a subsidy to flights that connect currently non-operational airports at a fare of Rs 2,500 per hour of flight. The civil aviation ministry has hired a consultant to prepare a detailed plan for implementation of the scheme. Brice Butler Jersey
Market forces should decide airlines’ pricing norms: Experts
Even as passengers looked forward to the government implementing its new proposals to regulate cancellation, refund and baggage norms of domestic airlines, aviation industry experts warned that potentially this can even push up fares and that pricing policies must not be micro-managed. Industry observers said the new proposals tend to tweak the free-market pricing mechanism which could lead to negative consequences for the sector-as will be the case once Saturday’s proposals unveiled by the government come into force to rein in indiscriminate practices of some domestic passenger carriers. “The government should refrain from getting into micro-management issues like free baggage allowance, baggage-fee per kilo. It is best left to market forces,” said Amber Dubey, partner and India head of aerospace and defence at global consultancy KPMG. “Airlines that over-charge or inconvenience passengers will anyway get punished through word of mouth and social media. The government should consider stepping in only in extreme cases-but this definitely appears to be an overkill,” Dubey said. Jean-Sebastien Giguere Authentic Jersey