UPSC (IAS) Preparation - Only most important current affairs for UPSC / IAS /UKPSC

27 June 2017

All you need to know about GST

Here are some FAQs about the Goods and Services Tax (GST) slated for rollout on 1 July

What is GST?

Goods and Services Tax (GST) is a value-added tax at each stage of the supply of goods and services precisely on the amount of value addition achieved. It seeks to eliminate inefficiencies in the tax system that result in ‘tax on tax’, known as cascading of taxes. GST is a destination-based tax on consumption, as per which the state’s share of taxes on inter-state commerce goes to the one that is home to the final consumer, rather than to the exporting state. GST has two equal components of central and state GST.

What is input tax credit?

To make sure that tax is levied only on the amount of value addition at each stage of the supply chain, credit for the taxes paid at the previous stage is granted. For example, a garment manufacturer gets credit for the taxes paid on the materials purchased while computing the final indirect tax liability on his product that is collected from the consumer. Similarly, a service provider, say, a telecom company, gets credits for the taxes paid on the goods and services used in his business.

Who is liable to pay GST?

Businesses and traders with annual sales above Rs20 lakh are liable to pay GST. The threshold for paying GST is Rs10 lakh in the case of northeastern and special category states. GST is applicable on inter-state trade irrespective of this threshold.

What are the existing taxes subsumed into GST?

Taxes on production such as central excise duty and additional excise duty, import duties such as additional customs duty known as countervailing duty and special additional customs duty, service tax, central cesses and surcharges, state taxes like value-added tax (VAT), central sales tax on inter-state trade of goods, luxury tax, entertainment tax except those levied by local bodies, taxes on advertisements, taxes on betting and gambling and state cesses and surcharges on supply of goods and services are subsumed into GST. Basic customs duty, which includes the tariff barrier on imports, is not part of GST.

What are the benefits of GST?

GST brings transparency on the taxes levied on the supply of goods and services. At present, when an item is purchased, the common man sees only the state taxes on the product label, not the various embedded tax components. GST will improve the ease of doing business as entry barriers along state borders will be dismantled. The new indirect tax system is expected to improve tax compliance, boost revenue receipts of central and state governments and accelerate GDP growth rate by an estimated 1.5-2 percentage points. Elimination of cascading of taxes will result in reduced tax burden on many items.

What are the products not part of GST?

Crude oil, diesel, petrol, natural gas and jet fuel are temporarily kept out of GST. The GST Council, the federal indirect tax body of state finance ministers chaired by the Union finance minister, will decide when to bring these items into GST. Liquor is kept out of GST as a constitutional provision and hence it would require an amendment to Constitution if it is to be brought into GST net.

What is integrated GST or IGST?

IGST is the tax on inter-state supply of goods and services with central and state GST components.

How are imports treated?

Imports are treated as inter-state supplies and will attract IGST. Exports do not attract any tax. Taxes paid on raw materials and services used in export of goods and services are refunded to the business.

What is the anti-profiteering mechanism?

To prevent the possibility of prices going up and to make sure that the reduced tax burden on products and services are passed on to consumers, the government has introduced an anti-profiteering clause in the GST law. The anti-pro teering authority to be set up will act on complaints of profiteering and direct a profiteering supplier to cut price, return the benefit of reduced tax burden to the buyer with 18% interest, or recover such amount if the buyer cannot be identified or doesn’t make a claim. A profiteering business could lose its GST registration, too.

How are decisions taken at the GST Council?

No decision can be taken in the Council without the concurrence of both the Union and the state governments. Decisions will be taken by a 75% majority of the weighted votes of members present and voting. The Union government’s vote has a weightage of one-third of the votes cast, while all states together will have a weightage of two-thirds of the votes cast.

67 tiger deaths reported in first half of 2017

67 tiger deaths reported in first half of 2017

An average of 11 tigers died every month in the first half of 2017 in India, indicating that at this rate tiger deaths this year could cross the 2016 figure

An average of 11 tigers died every month in the first half of 2017 in India, a number that indicates the country could lose more of its national animals this year than it did in 2016, which saw 122 tiger deaths, the most in a decade.

Growth of illegal international trade in tiger parts is resulting in a growth in poaching in India, home to around 60% of the world’s tigers that live in the wild.

This year, a total of 67 tiger deaths have been recorded thus far. Of this, nine are presumed deaths on the basis of body parts seized (although it is possible the animals were killed earlier). In many of the remaining cases, the cause of death is yet to be established.

India has 50 tiger reserves that cover 2.12% of the country’s total geographical area

Of the 122 tiger deaths registered in 2016 , 22 were presumed deaths on the basis of body parts seized. In the other 100 cases, the cause of death ranged from natural death in old age to drowning, electrocution, fighting, road/rail accidents, and poisoning for revenge (by humans). Two tigers, both presumed man-eaters were shot by officials.

India is home to 2,226 tigers which is about 60% of the world’s wild tiger population of about 3,890. The number marks the success of India’s efforts to protect its national animal. A decade back, pressure on their habitat and poaching had seen their population reach a low of 1,411 (in 2006).

But the increase in their number also seems to be driving an increase in attacks on them.

Experts say the high demand for body parts of tigers is resulting in more deaths.

“There is tremendous pressure on wild tigers for poaching due to surge in demands of their body parts and skin in countries such as China, Vietnam, Taiwan, and Cambodia. This phenomenon is driving poaching of tigers in the South Asian countries,” said S.P. Yadav, assistant secretary general at the Global Tiger Forum, an inter-governmental organization dedicated to tiger conservation.

Other experts point to the continuous battle between development and conservation, and vanishing tiger corridors for the high number of tiger deaths.

A senior official of the Union environment ministry said the number looks high because of the increase in the number of tigers in India.

Still, “the government does not take anything lightly; all protocols are followed and every tiger death is investigated to see if it’s a case of poaching or revenge killing,” this person added, asking not to be identified.

To check dwindling population of tigers, the Indian government launched Project Tiger in 1973.

India now has 50 tiger reserves that cover 2.12% of the country’s total geographical area

Bribes, borders and middlemen: Why GST is a game changer

Bribes, borders and middlemen: Why GST is a game changer
GST will help reduce the immense power India’s myriad middlemen wield at state borders, free up internal trade, make it easier to do business and widen the tax base
Seized vehicles. Bribes. Days-long delays. Moving goods across Indian states isn’t exactly easy—and that’s a major barrier to economic growth.

Rolling a truck of vegetables into Gujarat, the state once governed by Prime Minister Narendra Modi, requires a bribe of Rs500 to Rs2,000 even with your papers in order, according to Rakesh Kaul, vice-president of Caravan Roadways Ltd, which has about 400 trucks plying India’s pot-holed roads.

But getting past the state tax collectors into Uttar Pradesh, India’s most populous state, will cost you more: Upwards of Rs20,000, Kaul says. The penalty for not paying off the right people is steep fines from factories whose raw materials are stuck at state borders—sometimes for as long as five days.

That’s why he and other companies are cheering the 1 July implementation of India’s biggest tax reform since independence in 1947. The move will replace more than a dozen levies with a new goods and services tax. That should help reduce the immense power India’s myriad middlemen wield at state borders, free up internal trade, make it easier to do business and widen the country’s tiny tax base.

“Even if your documents are correct, they will find some small error and hold your vehicle,” Kaul says in his New Delhi office, located in a dusty trucking depot where hundreds of drivers sit near their brightly painted trucks in the 42-degree Celsius (108-degrees Fahrenheit) heat. “Once GST is there, all that is gone.”

Common market

The new tax would be Modi’s most significant economic reform since coming to power in 2014. Yet with less than two weeks to go before its implementation, the government is still refining the details, announcing on Sunday it would relax initial filing requirements for July and August amid concerns businesses were not ready. Despite the last-minute tweaks, finance minister Arun Jaitley confirmed Wednesday the tax would roll out on 1 July.

While India already boasts one of the world’s fastest growing major economies, architects of the reform say it will stoke efficiency and growth by creating a common market of 1.3 billion consumers—a population greater than the US, Europe, Brazil, Mexico and Japan combined.

Take the border crossings: Lorry drivers in India lose 60% of transit time to road blocks, tolls and other stoppages, which means logistics costs are up to three-times higher than international benchmarks. While truck drivers may still need to stop to have their goods checked, cut that time in half, and logistics costs could fall by up to 40%, according to a 2014 World Bank report.

Also read: Are half-baked anti-profiteering rules a nightmare in the making?

There’s no shortage of hyperbole when it comes to describing the GST changes, which took more than a decade of protracted negotiations before Parliament pushed it through. The government’s chief economic adviser Arvind Subramanian described it as “transformational.”

“The GST is super important,” he said in an April interview. “It is also a daring, bold experiment in what I call the good governance of cooperative federalism.”

Four brackets

The GST rollout comes less than a year after the government’s surprise move in November to remove 86% of currency in circulation—a decision that contributed to a sharp slowing in growth during the January to March quarter. While the GST is seen as a leap forward in simplifying India’s system, getting the reform across the line has required compromises: India will have four tax brackets instead of the flat rate many other countries have.

Air conditioners, refrigerators and makeup will be taxed at 28%, for example, while toothpaste lands at 18%. Plane tickets attract a 5% GST rate, but business class tickets are 12%. Staples such as food grains and fresh vegetables are not taxed, while education and health services will continue to be exempted.

“India is obviously a huge and complex country in which governments’ ability successfully to implement major reforms is limited,” said Ian Hall, acting director of the Griffith Asia Institute.

‘Different countries’

The incoming GST will also force companies to consolidate their supply chain among fewer, larger facilities, says Vineet Agarwal, the managing director of Transport Corp. of India Ltd, which has about 10,000 trucks and around 11 million square feet of warehouses.

Currently, companies operate smaller factories and warehouses to take advantage of tax breaks offered by various states, as well as to avoid transporting goods over too many borders. “Literally, almost all states act like different countries,” Agarwal said.

One of the biggest goals of the GST is to widen the tax net in an economy where more than 90% of workers are employed informally. Companies will need to be in the tax system and prove they paid taxes to claim a credit against their costs. Pressure to comply will increase along the line and the black economy should shrink.

Inevitable disruption

Still, the tax may throw up losers. Manufacturing states may initially suffer as the extra revenue is generated in more populous consuming states. There are also sectors untouched by the new tax, including alcohol and real estate. Thousands of tax staff will also need to be trained and complex new IT systems adopted.

“There will inevitably be disruption as a result of the implementation of the GST,” said Samir Saran, vice-president of the New Delhi-based Observer Research Foundation.

To be sure, India isn’t alone in introducing a new tax that crosses jurisdictions and territories. More than 150 countries have a value added tax or GST including Canada, Australia and the European Union, according to Deloitte.

The optimistic case is that initial ruffles are soon smoothed over, according to Eswar Prasad, a professor at Cornell University in Ithaca, New York. “As in the case of the recent demonetisation gambit, any disruption in commerce and economic activity is likely to be short-lived, while the longer-term benefits could be significant,” he said.

Big companies will be prepared, Agarwal at Transport Corp. says, but he frets about the smaller, informal businesses. “There’s going to be chaos,” he says.

That informal workforce includes Babu Ram Rajput, a 28-year-old trucker in jeans and sandals who regularly drives goods across a vast swathe of north India. “I have not got any training,” he says, holding up a sheaf of tattered, dirty documents related to his current cargo. “I only know that GST is coming.”

Govt to rework plan on world-class universities

Govt to rework plan on world-class universities
Proposal on world-class universities submitted to cabinet to be deferred; inter-ministerial group to revamp the plan
The Union government has formed an inter-ministerial group to rework a cabinet proposal that aimed to establish 20 world-class universities in India.

Consequently, the proposal of the human resource development (HRD) ministry, submitted last month to the cabinet after months of deliberations, is being deferred, said two government officials on condition of anonymity.

MORE FROM LIVEMINT »
Erin Green, Infosys’s former head of immigration in US, files lawsuit against firm
Govt allows banks, post offices to deposit old bank notes with RBI
CDSL IPO subscribed 84 times
The inter-ministerial group comprises HRD minister Prakash Javadekar, textiles minister Smriti Irani, power minister Piyush Goyal and commerce minister Nirmala Sitharaman, the officials said.

“The four ministers will now decide the fate of the world-class university plan,” one of the two officials said.

The inter-ministerial group held its first meeting last week and another one is scheduled later this month, the second official added.

In February 2016, the centre announced a plan to establish 20 world-class universities in India—10 each in the private and public space. While a select group of existing public institutions will be upgraded to world-class status, both existing and upcoming private institutions can bid for the tag which has been changed from “world-class university” to “institute of eminence”.

Such universities, the government feels, will help Indian higher education institutions scale the global league table at a time when very few find a place among the top 200 best universities in the world. According to the latest QS World University Rankings 2018, only three Indian schools are in the top 200.

The world-class university plan aims to provide academic and financial autonomy and end the influence of the University Grants Commission (UGC). Such public institutions will get financial support of Rs10,000 crore from the HRD ministry.

The rethink on the proposal was prompted because of four reasons, the officials said. The first was the issue of reservations, especially for foreign students. If public institutions reserve 50% of the seats (27% for other backward classes, 15% for scheduled castes, 7% for scheduled tribes and 3% for physically handicapped candidates) as per the Constitution and then reserve 30% of the seats for foreign students, general category students candidates could get squeezed.

Second, the choice-based credit system for such universities allows students to complete a course in a shorter period than they can do now. If implemented, it could mean that a student will be able to graduate with a masters degree in a year, an option not available at present.

Third, some in the government contended that the decision to grant complete autonomy from UGC should be a considered one as a situation could arise that could warrant the intervention of a regulator.

Fourth, the proposed financial support to the 10 public institutions may prove to be insufficient to build an institution of the desired quality.

“The problem with too many interventions and groups is that it may not yield quick results, a case in point being labour reforms that are stuck for the last two years,” the second official said.

An HRD ministry spokesperson said he is not aware of the development.

India’s increasing green growth

India’s increasing green growth
The country has become more energy efficient but its structural transformation is also taking some intriguing twists and turns
India is the fastest growing economy in the world. But how has it performed on green growth and energy efficiency? Electricity usage is an important indicator of energy efficiency, and, all else being equal, using less electricity to achieve a given level of output is more efficient. To the extent that electricity production standards and pollution emissions are homogeneous, performance on energy efficiency (positive and negative) can be mostly translated into green growth.

Green growth
We examined how green growth and energy efficiency has evolved in some 900 districts in India over the last few decades using enterprise data from the manufacturing sector (Ghani, Goswami, and Kerr, “Spatial Dynamics of Electricity Usage in India”, World Bank Policy Research Working Paper No.7055). India has indeed increased green growth. Energy efficiency has improved. India’s energy intensity of gross domestic product (GDP) has declined from 1.09kg unit of oil equivalent (koe) in the 1980s to 0.66 in recent times. China’s energy intensity is roughly 1.5 times that of India.

However, India’s structural transformation and economic growth is also taking many intriguing twists and turns. Energy efficiency has improved in urban areas as urban settings have reduced the cost of electricity use per output level due to denser customer bases and more efficient plant sizes for local energy producers. But large manufacturing enterprises are now de-urbanizing and moving into rural areas in search of lower land costs. These enterprises are locating in rural sites along major transport corridors, like the Golden Quadrilateral transport highway network. Energy efficiency has not improved in rural regions when compared with urban regions. This deviation is growing over time. This would suggest that urbanization as a potential driver of green growth may have a limited role to play.

The energy-intensive industries (e.g. iron and steel, fertilizer, petroleum refining, cement, aluminum, and pulp and paper) account for the bulk of the energy consumed. They have recorded greater energy efficiency improvement. Many factors account for this trend, including greater competition, rising energy prices starting in the late 1990s, and the promotion of energy efficiency schemes. Nonetheless, many industries remain inefficient by both national and international standards, and there is substantial potential for energy savings in energy-intensive industries.

Spatial disparities in energy efficiency across states remain huge, although there has been some convergence in energy efficiency across states. The usage of electricity per unit output is remarkably high in states such as Madhya Pradesh and Odisha, and in some cases twice the level of India as a whole. By contrast, states like Delhi and Haryana display electricity consumption levels that are consistently lower than the national average.

There remains huge heterogeneity in energy usage across industries although there is also some convergence across industries. Textiles, paper and paper products, basic metals, and non-metallic mineral products display the largest consumption of energy per unit output. Industries that display lowest usage include tobacco products and office, accounting and computing machinery. Differences in usage levels partly reflect the nature of industrial production processes and chosen scale that makes some industries generally more electricity intensive than others. The convergence in energy efficiency at the industry level are as high as the convergence in energy efficiency at the state level. This convergence is as much through growth in consumption levels for some industries (e.g., office, accounting and computing machinery) than declines in other industries (e.g., textiles). subsBox

Most reductions in energy usage have come from lower usage in existing sites of activity. The second biggest factor is the lower usage levels among fast-growing sectors. By contrast, spatial movements of manufacturing activity across India did not significantly reduce electricity consumption per unit of output and may have even increased it.

What can India do?
India faces multiple challenges. The green growth agenda may need to extend beyond urban areas and also include rural areas. Lack of access to energy and unreliable energy supply forces firms to invest in self-generation capacity at the expense of more productive capital, outsource part of the production process, or expand firm size.

Although the installed capacity of India’s power system is the fifth-largest system in the world (after China, the US, Japan, and Russia), it is still insufficient to meet India’s rapidly increasing demand. Electricity consumption in India is only around 566 KWh per capita, compared to the world average of 2,782 KWh per capita. India is still home to more than 250 million people who have no access to electricity. Electricity shortages are frequent in India and are estimated to cost the country around 7% of GDP. Since electricity is an essential input in growth, about 35% of manufacturing plants in India insure themselves against outages by self-generating or otherwise substituting away from grid electricity. So policymakers need to review the incentives and regulations that govern self-production of electricity, when unreliable energy supply forces firms to invest in self-generation capacity at the expense of more productive capital, outsource part of the production process, or expand firm size.

As the fourth greatest energy consumer in the world, how India manages industrialization and urbanization process has huge environmental implications. Policymakers need to move on three fronts to reduce greenhouse gas emissions. First, increase energy efficiency. Second, improve access to technology. Third, promote renewable fuel. India is promoting greater use of renewable in the energy mix mainly through solar and wind and at the same time shifting towards supercritical technologies for coal-based power plants. Efforts are also being made to improve energy efficiency through various innovative policy measures under the overall ambit of Energy Conservation Act 2001.

launch of Cartosat-2 series satellite along with 30 co-passenger

29 nano satellites from 14 countries are being launched as part of the commercial arrangements between Antrix Corporation and international customers.

The 28-hour countdown for the launch of Cartosat-2 series satellite along with 30 co-passenger satellites from Sriharikota in Andhra Pradesh began at 5.29 a.m. IST on June 22, 2017.

The Polar Satellite Launch Vehicle, in its 40th flight (PSLV-C38), would launch the 712 kg satellite for earth observation and 30 other satellites together weighing about 243 kg into a 505 km polar Sun Synchronous Orbit (SSO) at 9.20 a.m. IST on June 23, 2017, the Indian Space Research Organisation (ISRO) said.

The co-passengers, comprise 29 nano satellites from 14 countries — Austria, Belgium, Chile, Czech Republic, Finland, France, Germany, Italy, Japan, Latvia, Lithuania, Slovakia, the United Kingdom and the United States of America besides a nano satellite from India. PSLV-C38 will be launched from the First Launch Pad of the Satish Dhawan Space Centre.

This will be the 40th flight of PSLV and the 17th of PSLV in ‘XL’ configuration (with the use of solid strap-on motors).

The space agency said the 29 international customer nano satellites are being launched as part of the commercial arrangements between Antrix Corporation Limited (Antrix), commercial arm of ISRO and international customers.

Cartosat-2 is a remote sensing satellite and it is similar in configuration to earlier satellites in the series with the objective of providing high-resolution scene specific spot imagery.

ISRO chairman A.S. Kiran Kumar told reporters at Chennai airport that all the activities for the launch were going on. He expressed happiness on the “Mangalyan” mission completing 1,000 days on June 19, 2017 and said it had been performing very well

Centre mulls different time zones across the country

Centre mulls different time zones across the country
One can actually save energy because the sunrise and sunset timings are different (in the country), but the office timings are one across the nation”

The Department of Science and Technology (DST) is conducting a study to assess the feasibility of having different time zones in the country.

The study is being conducted to give “scientific inputs” on the matter, DST secretary Ashutosh Sharma said. Recently, Pema Khandu, the Chief Minister of Arunachal Pradesh, had demanded a separate time zone for the northeast.

“The DST has been conducting studies on this, looking at what is the potential of energy saving if you have two different time zones,” Mr. Sharma said. “One can actually save energy because the sunrise and sunset timings are different (in the country), but the office timings are one across the nation,” he added.