‘Buy one get one free’ deals to soon lose charm, GST may apply to free articles
The popular ‘buy one get one free’ deals stand to lose some of their charm as the proposed goods and services tax (GST) may apply to free articles given away with those purchased. As per Section 3 of the model GST law that the government has unveiled for stakeholder comments, supplies specified in Schedule I, made without a consideration, are also liable to GST. This means that the buyer will have to pay GST on the article that comes free, said tax experts, confirming that the provision will impact the popular sales. They called for clarity on the issue as the wider implication is that even free samples given by way of business promotion could attract GST. “Any form of direct or indirect GST on free supplies could have a significant impact on the sales & marketing spend of companies, specifically those dealing in consumer products,” said Pratik Jain, national indirect tax leader at PwC. Prashant Raizada, partner – indirect tax at BDO India, said, “The model GST Law does not provide any specific guidance on taxability of free samples issued by an entity to a prospective customer.” The provision is in line with the prevailing excise duty treatment (excise applies on free supplies as well), but marks a significant deviation from value-added tax (VAT) principles, experts said. “This emerges from the shifting of taxable event from manufacture/sale to supply,” said YG Parande, senior adviser, indirect tax, at Deloitte Haskins & Sells LLP. The government is keen to implement this crucial reform in indirect taxes that would replace multiple state and central taxes with a single GST. The model law has been endorsed by the empowered committee of state finance ministers. Experts also pointed out that Entry 5 of Schedule I of the model law covers “supply of goods and/or services by a taxable person to another taxable or non-taxable person in the course or furtherance of business”. “On a perusal of the said clause, it seems that free samples may potentially attract levy of GST on the value thereof as determined in terms of the GST Valuation Rules,” Raizada of BDO said. The draft law proposes reversal of GST credit attributable to non-taxable or exempt supplies, but it does not say if free goods and supplies would be covered. “While the GST law clearly lays down that supplies for business promotion without a consideration would be a supply, yet it fails to provide a clarity whether it would be treated as an exempt supply for reversal of credits,” said Bipin Sapra, partner at EY. Marko Dano Jersey
Tax-at-source clause worries e-tailers
The draft law on goods and service tax (GST) to bring e-commerce companies under its purview is giving e-tailers such as Flipkart and Amazon India the jitters. A major pain point for the e-commerce companies, which follow a marketplace model, is a clause relating to tax collection at source. According to senior executives at e-commerce companies, this clause will hurt the sellers who operate on thin margins to offer products at lower rates. They will either have to pass the tax burden onto the consumer or take a cut in their earnings. Some companies, like Flipkart, are welcoming the introduction of GST as it will do away with various state taxes such as entry taxes imposed by UP and Karnataka. A Flipkart representative said: “A specific proposal in the draft law relating to tax collection at source will be detrimental to lakhs of small and medium sellers who do business on e-commerce platforms. This clause, which is not applicable to offline sellers, will hurt the working capital requirement for these sellers as they work on small margins work on small margins to provide affordable rates to consumers.” Amazon India declined to comment, while an email sent to Snapdeal did not elicit any response. According to a senior lawyer advising a leading ecommerce company , book to provide affordable rates to consumers.” Amazon India declined to comment, while an email sent to Snapdeal did not elicit any response. According to a senior lawyer advising a leading ecommerce company , bookkeeping will become more difficult for these companies. “The fresh set of guidelines will make it more complex to deal with some aspects such as returned goods.The accounting processes will have to undergo a change to comply with the new rules,” he said. “The latest notification does not address how they will impose GST on peer-topeer platforms selling used goods such as Quikr and Olx. The initial reactions ve been worrying but hopefully the government will clear it all up,” said Harish H V of Grant Thornton, an accounting firm. Online payments and ecommerce platform Paytm’s VP Sudhanshu Gupta told TOI that it is in talks with have been worrying but hopefully the government will clear it all up,” said Harish H V of Grant Thornton, an accounting firm. Online payments and ecommerce platform Paytm’s VP Sudhanshu Gupta told TOI that it is in talks with sellers to come up with a plan to address the matter. GST, considered a major tax reform, has been stuck in Parliament due to resistance from Congress. On Tuesday , finance minister Arun Jaitley met state finance ministers to arrive at a consensus on key issues regarding GST. The Narendra Modi government plans to introduce a Constitutional amendment bill to implement GST in the monsoon session of Parliament. Mika Zibanejad Authentic Jersey
Ecommerce to see nearly 10 million sellers online by 2020
Over 10 million sellers are expected to be online to cater to the huge growth in the customer base on such platform in the next four years, a top e-commerce industry executive said today. “India’s internet users are soaring, and over 10 million sellers are expected to be online by 2020 to cater to the huge consumer base, be it through marketplaces or on their own,” Nitin Bawankule, Industry director at Google India said here today. “Beauty and personal care, lifestyle including home and furnishings, and fast moving consumer goods are the three categories that must focus on integrating their online and offline distribution to ensure seamless customer service,” he added, while addressing the retail industry at a conference. He urged the industry to think about customer acquisition and ensure supply chain efficiencies. He also expects that by 2020, the internet users in India would more than double to 650 million from the current 350 million. Presently, there are over 100 million online shoppers, which is also expected to grow exponentially. Of the 350 million internet users, over 75 million are urban, while rural accounts for less than 20 per cent. “In the next wave, over 250 million of the internet users will be from rural India, and it is necessary for retailers to stay ahead of this curve,” he pointed out, adding the women shoppers will be expected push online sales going forward. “Presently the male to female ratio of internet users is 70:30, and this (women users) is expected to go upwards of 40 per cent in the next five years. This will make a significant difference to businesses like healthcare and education,” Bawankule said. Women shoppers will make larger contributions to online shopping basket, and this will be a significant shift in India, he said. Kyle Lauletta Authentic Jersey
Not just Congress, online marketplaces too hate GST as they face compliance load
The long-awaited Goods & Services Tax (GST) Law, which was expected to resolve the tax issues faced by online marketplaces, could end up increasing compliance costs for them and also create working capital issues for sellers on their platform. The proposed “Model GST Law,” which awaits legislative clearance, says that online marketplaces will have to deduct taxes directly on the total sales made by merchants on their platforms and pay it to the government. Till now, online marketplaces passed on the payments made by customers to sellers after deducting their commissions and fees (such as for logistics or advertisement.) Tax experts and online marketplaces feel that this will put the burden of compliance and administration on the ecommerce companies, which may hurt both their and sellers’ margins. While Flipkart, India’s largest online marketplace, welcomed the new law, it also said that the provisions would put sellers on its platform at a disadvantage as compared to brick-and-mortar retailers. “A specific proposal in the draft law relating to tax collection at source will prove to be detrimental to lakhs of small and medium sellers who do business on ecommerce platforms. This clause, which is not applicable to offline sellers, will hurt the working capital requirement for these sellers as they work on small margins to provide affordable rates to consumers,” Flipkart said in an emailed statement. Players like Shopclues, which is valued over $1 billion and has 5 lakh registered merchants, are closely watching the roll out and execution of the policy. “We are cautiously optimistic about it, especially in our context as the current draft does not address needs of marketplaces clearly,” said Radhika Aggarwal, chief business officer at ShopClues. “Unless the government puts a robust digital infrastructure in place, compliance will put undue pressure on small businesses and us. We also really hope that statelevel entry taxes and octroi taxes will be abolished enabling SMEs to service consumers from across their state more efficiently.” Online marketplaces have been waiting for the GST law to help them resolve tax conflicts with various states like Uttar Pradesh, Karnataka and Gujarat who were coming up with new laws to tax online sales. Players like Flipkart, Snapdeal and Amazon had stopped selling products worth over Rs 5,000 in UP owing to tax issues with the government. But under GST, tax collected will be paid to the consuming states by the government. The GST law is likely to bring online marketplaces, including those selling services, under a tigher tax net. “If the merchant sells goods directly to the consumer, and no one declares it, there is a greater threat of evasion in ecommerce transactions,” said Sachin Menon, partner and head of indirect tax at KPMG India, who said this provision has been introduced to make the law foolproof. Torrey Smith Jersey
NCRPB approves 3 RRTS corridors, metro projects loan repayment tenure increased to 20 years
The National Capital Region Planning Board (NCPRB) today decided to increase loan repayment tenure from 10 to 20 years for metro and rail-based projects, reduced interest rates for infrastructure projects by 0.5 per cent and gave nod for implementation of three RRTS Corridors – Delhi-Alwar, Delhi-Panipat and Delhi-Meerut. The 36th meeting of the NCRPB held under the chairmanship of Union Urban Development Minister Venkaiah Naidu, also asked participating states to prepare the sub-regional plans for newly added districts within three months time for which 100 per cent funding will be provided by the Board. The Board also directed the NCR states to resolve the inter-state connectivity issues at the earliest, which would help in decongestion of roads leading to Delhi from adjoining states. “As metro projects are very capital intensive and have long gestation period, it needs support from financial institutions to make them viable. “First step in this direction is announcement of increase in the loan repayment period from 10 years to 20 years including moratorium period of 5 years for repayment of principal for all existing and new metro/ rail-based projects with financial assistance from NCRPB,” Naidu said while addressing the meeting. To provide a push for infrastructure development, the interest rates on funding from NCRPB was reduced from 7.50 per cent to 7 per cent for priority sector projects, while it was reduced for land development projects from 9.25 per cent to 8.50 per cent. Shawn Williams Jersey
India will be 3rd largest market by 2022, says Gajapathi Raju
Civil Aviation Minister Ashok Gajapathi Raju on Wednesday said the nation would soon emerge as the third largest civil aviation market by 2022. Raju took to Twitter minutes after the Union Cabinet cleared the national civil aviation policy that has, in a way, seen major reforms in the aviation sector. “India will be the 3rd largest civil aviation market by 2022. To achieve this, we need right intentions, vision, planning and execution,” Raju tweeted, and followed it with another, praising the NDA government. “NDA govt clears India’s first ever integrated National Civil Aviation Policy. This will be a game-changer for the sector,” he said. The National Civil Aviation Policy introduces a slew of passenger-friendly measures including capping of airfares at Rs 2,500 for an hour-long flight. The Civil Aviation Ministry had sent the civil aviation policy to Cabinet for approval on June 3. L.C. Greenwood Authentic Jersey
Aviation policy a game changer: Ashok Gajapathi Raju
The much-awaited national civil aviation policy that seeks to strengthen regional connectivity and tap the sector’s high growth potential was on Tuesday cleared by the Union Cabinet. Civil aviation minister Ashok Gajapathi Raju said the policy is a “game changer” and that the country’s aviation sector is poised to become the world’s third largest by 2022. The policy has been finalised after nearly eight months since the ministry came out with the revised draft in October 2015 and follows many rounds of deliberations with stakeholders. The NDA government had for the first time unveiled the policy draft in November 2014. “NDA government clears India’s first ever integrated National Civil Aviation Policy. This will be a game-changer for the sector,” Raju said in a tweet. In another tweet, the minister said India would be the third largest civil aviation market by 2022. “To achieve this, we need right intentions, vision, planning and execution,” he added. Significantly, India’s domestic air traffic market logged the fastest growth in the world for the 13th consecutive month in April. The market grew at nearly 22 per cent during the month. “India’s domestic traffic soared 21.8 per cent, marking the 20th month of double-digit traffic growth and the 13th consecutive month it has led the domestic markets,” global airlines body, International Air Transport Association (IATA) had said last month. Roger Clemens Authentic Jersey
Home delivery of LPG cylinders to start for most rural consumers soon
A majority of rural consumers will soon be able to get home delivery of cooking gas cylinders. The government is likely to issue an order soon mandating that all cooking gas distributors serving rural areas and with sales exceeding 1,500 refills a month provide home delivery of cylinders to their customers, an oil ministry official said. So far, all of about 5,500 dealers under Rajiv Gandhi Gramin LPG Vitran (RGGLV) scheme, a government programme for rural distribution of cooking gas, were exempt from making home deliveries of cylinders. The imminent government order will change that for about 60% of RGGLV dealers, the official said, speaking on condition of anonymity. The order, however, will not impact regular dealers, who were not appointed under the RGGLV scheme, but still serve a section of rural consumers. India has about 18,000 cooking gas distributors in all, most of them concentrated in urban areas. The oil companies plan to add 10,000 distributors, the process of whose appointment will begin in this financial year. The government is now focused on increasing the access to clean fuel among rural households. It aims to add 100 million consumers in three years to the existing national base of about 167 million. New consumers will mostly come from the country’s interiors, where access and affordability have been impediments to subscription and consumption. Jonathan Ericsson Womens Jersey
CNG retail licences: PNGRB drops 7 out of 11 cities
Citing stakeholders’ feedback, oil regulator PNGRB has dropped seven out of the 11 cities it had identified for the bidding of licences to retail CNG. The Petroleum and Natural Gas Regulatory Board (PNGRB) cited “comments/views from various stakeholders” as the reason for dropping Chennai, Bhuaneshwar in Odisha, Jabalpur in Madhya Pradesh, Vishakhapatnam in Andhra Pradesh, Coimbatore and Chennai in Tamil Nadu and Guwahati in Assam from the bidding round. After this, only Jaipur and Udaipur in Rajasthan, Solapur in Maharashtra, Davanagari in Karnataka and Bhopal in Madhya Pradesh remain in bid round, PNGRB said in a public notice. PNGRB had in April identified the 11 cities for giving out city gas distribution licenses from among the 20 cities named for the $7.5 billion smart city makeover. Soon after government picked 20 cities to provide with uninterrupted power and water supplies, proper sanitation and public transport to turn them into smart cities with living standards comparable to Europe, the regulator decided to give out licence to retail CNG and piped cooking gas in 11 of cities that did not have them as yet. But the problem was most of them were not connected with any of the gas pipelines and so the fuel could not be taken to them for sale to automobiles and households. PNGRB had on March 31 issued a notice saying bidding process for licence for the 11 cities will start on April 22 with beginning of sale of bid documents and last date for bidding was June 20. It on April 22 modified the notice to say sale of bid documents would commence on May 16 and last date of bidding will be July 14. Davon Godchaux Authentic Jersey