Taxation
No tax on food items, contraceptives; mobile phone levy at 12% under GST
With the Goods and Services Tax (GST) Council deciding the tax rate on 1,211 goods on Thursday, there is cheer for the common man as 81 per cent of the goods are below 18 per cent, though people will have to shell out more even for small segment cars with additional cess levied on them.
 
Milk, eggs, salt, fresh vegetables, fruits, contraceptives, organic manure, earthen pots, coconut, prasadam supplied by religious places like temples, mosques, churches, gurudwaras and dargahs have been exempted under GST.
 
Live animals, fruit juices and meat will call for a 12 per cent tax while fish has been put in the 5 per cent tax rate.
 
Butter and cheese have been placed under the 12 per cent tax rate and condensed milk under 18 per cent. 
 
Beverages such as coffee (not instant), tea and groundnut, coal, hand pumps will attract 5 per cent tax under GST.
 
While jaggery is exempt under GST, cane sugar and beet sugar are in the 5 per cent tax slab. Bio gas plant, wind mills and kerosene lantern will also be under the 5 per cent tax rate.
 
Mobile phones, fountain pen ink, tooth powder, incense sticks, feeding bottles, Braille paper, children's colouring books, umbrellas, pencil sharpeners, tractors, bicycles, contact lenses, spectacle lenses, utensils, sports goods, fishing rods, combs, pencils and hand paintings have been placed under the 12 per cent tax rate under GST.
 
Bindi, vermilion, glass bangles, handlooms, hearing aids and handmade musical instruments have also been exempt under GST. A total of 7 per cent of items have been kept zero rated.
 
The goods which will fall under 18 per cent tax rate include helmets, LPG stoves, nuclear reactors, clocks, military weapons, electronic toys and plastic buttons.
 
The items which have been put in the highest tax slab of 28 per cent include aerated drinks, perfumes, after-shave lotions, deodarants, clothing of furskin, razor blades, cars, revolvers, pistols, 
 
More than 200 products appear in the 28 per cent tax slab. 
 
"Ideally, few products should have been put in 28 per cent bracket and 18 per cent should have been a miscellaneous schedule (to cover all balance products). The temptation of putting more products under 28 per cent bracket will certainly complicate the Indian GST structure," GST expert Pritam Mahure told IANS.
 
Compensation cess: 55 products will attract compensation cess. 
 
The cess on small cars ranges from 1-3 per cent, 3 per cent on motorcycles with 350 cc engine, personal aircraft and yachts while mid-segment and large cars will attract a cess of 15 per cent. 
 
All goods, other than pan masala containing tobacco 'gutka' will have to bear a cess of 89 per cent while tobacco and tobacco products will call for a cess in the range of 12.5-290 per cent. Cess of 5 per cent has been levied on cigarettes and 60 per cent on pan masala. Aerated drinks will attract a cess of 12 per cent.
 
Mahure says that it is expected that a few classification disputes may continue like whether groundnut chikki should be classified as 'sweetmeat' attracting 5 per cent GST rate or sugar confectionery attracting 18 per cent GST rate. 
 
Now, the manufacturers/traders will have to quantify the impact of the GST rates on their product prices and update their tax masters/registers with these rates. This is a complex exercise for traders who are not very conversant with tariff codes and classification, he added.
 
The rate structure for the remaining goods -- bidi wrapper leaves, biscuits, bidis, textiles, footwear, natural or cultured pearls, precious or semi-precious stones, precious metals, imitation jewellery, power driven agricultural, horticultural, forestry, poultry keeping or bee-keeping machinery and harvesting machinery is expected to be decided on Friday in the GST Council's meeting on the second day in Srinagar.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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Delhi HC clears decks for IT assessment into National Herald case
The Delhi High Court on Friday declined to entertain a plea by Young Indian Pvt Ltd (YI), of which Congress President Sonia Gandhi and Vice President Rahul Gandhi are the main stakeholders, challenging Income Tax notices served to the company -- clearing the decks for an IT probe.
 
The case stems from a complaint by BJP leader Subramanian Swamy, who had alleged "cheating" in the acquisition of Associated Journal Limited (AJL), the publisher of National Herald, by YI -- a firm in which Sonia and Rahul Gandhi each have a 38 per cent stake.
 
Swamy had alleged that the Congress gave an unsecured loan to YI to acquire AJL.
 
The company withdrew the plea after a division bench of Justice S. Muralidhar and Justice Chander Shekhar asked it to approach the concerned Income Tax assessing officer. 
 
The bench dismissed the plea as it was withdrawn.
 
The plea had sought quashing of two Income Tax notices sent to YI in January and March with regard to the assessment year 2011-12. The plea also urged the court to give a direction to the IT Department to not take further action against it on the basis of these notices.
 
Besides the Gandhis, Congress leaders Motilal Vora, Oscar Fernandes, Suman Dubey, Sam Pitroda and YI are accused in the case.
 
Swamy had accused them of allegedly conspiring to cheat and misappropriate funds by just paying Rs 50 lakh, by which YI obtained the right to recover Rs 90.25 crore which AJL owed to the Congress.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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Firm on taxing agricultural income, Debroy says onus on states
Undeterred by the raging row stoked by his comments, NITI Aayog member Bibek Debroy is sticking to his guns that agricultural income should be taxed and says that the onus for this must be on the state governments.
 
"I had said that agricultural income should be taxed above a threshold. I also said it's a state subject and it's up to the states to do it. That was my position then and that is my position now," Debroy told IANS in an interview maintaining that there was no contradiction between his views and those of Finance Minister Arun Jaitley.
 
His remarks on April 25 raised the hackles of political parties including the MPs of the ruling BJP who criticised Debroy's views saying such economists were not in touch with reality and did not know the problems of farmers.
 
The very next day, Jaitley stepped in to douse the fires by clarifying that the central government had no plans to impose any tax on agricultural income as it did not have the constitutional authority to do so.
 
"The Finance Minister also said it is a state subject and the centre has no plans to tax agricultural income. How is it a contradiction to what I have said," Debroy wondered.
 
He added that even Chief Economic Adviser (CEA) Arvind Subramanian's remarks were in line with his statement.
 
Subramanian had on April 28 restoked the debate when he said that nothing prevented state governments from taxing agriculture income as the constitutional restriction was only on the central government.
 
Debroy also said that agricultural income was already being taxed in seven to eight states, including Assam, Kerala, Maharashtra, Orissa, Uttar Pradesh and West Bengal. He, however, added there may be cases where they taxed only "a certain kind" of agricultural income, "but they do tax it".
 
"Half the people who are creating this controversy don't even know that the issue of taxing agricultural income is being debated in India since 1953-54... People complaining about implementation don't even know there is a K.N. Raj committee report from 1972-73 called Taxation of Agricultural Wealth and Income, which talks about implementation issues."
 
"They don't know there was a Kelkar Task Force report in 2002 which estimated that if you use the existing threshold, 95 per cent of the farmers will be below it," Debroy said.
 
The media was "unnecessarily trying to manufacture a controversy", he added.
 
The NITI Aayog member said that there were 307 individuals who declared agricultural income of more than Rs 1 crore ($156,000) during fiscal 2014-15, alluding but not saying so in as many words, that something wasn't right here.
 
Debroy also noted there was also a company which had a profit of Rs 215 crore and yet claimed exemption worth hundreds of crores as its income was from agricultural sources.
 
"Now how is it reasonable to say that they should not pay taxes?"
 
Last week after Debroy first made the remarks, NITI Aayog said in a statement that his suggestion to tax agricultural income was neither the view of the Aayog, nor it was part of the Draft Action Agenda document conceived by the planning body.
 
"NITI Aayog has already told you that my views are not the views of the action plan. Therefore, the action plan's views are not my views also," Debroy said.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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