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Indicating economic slowdown, J&K’s December GST collection declines by 22%  

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J&K’s GST declines by 22%

BK News

Srinagar, Jan 4: Jammu and Kashmir’s GST collection in December fell by 22% to Rs 318 crore from Rs 409 crore the same month a year ago, indicating reduction in business activities and slowing economy in the UT.

The December Goods and Services Tax (GST) collection also witnessed a 12% decline than November receipts of Rs 360 crore. December is the third consecutive month showing the decline in the GST figures.

Monthly all-India GST figures from April 2020-21 (Data source Union Finance Ministry)

In contrary, the December tax collection at the all-India level witnessed an all-time high of Rs 1.15 lakh crore, a 12% hike on a year-on-year basis.

The biggest growth in the last 21 months and highest monthly revenue collection since the implementation of the ‘one nation, one tax’ in July 2017.

Jammu and Kashmir, along with Arunachal Pradesh, has been the worst performer with a 22% decline in December GST collection among the states and union territories with a legislature.

Belying the official claims that the business sentiment in J&K has started showing improvement, the decline in the GST collection reflects that state of economic activity is in dire straits.

The GST collection in the UT had also declined in November by 5% to Rs 360 crore, compared to Rs 377 crore in October same year.

Traditionally, the November and December months have an increased trade activity in the UT as residents start preparations for upcoming long winters. People store food items, buy winterwear and gadgets, and make other arrangements, particularly in Kashmir valley, as snow and rains often damage Srinagar-Jammu Highway frequently disconnecting Kashmir with rest of the world during the winters.

Despite, the tax collection for December and November declined after a marginal, though constant, increase in the previous three months, which government had claimed, an indication of business revival and growth in the Union Territory.

Month-wise comparison of J&K’s GST collection for the last four months of 2020-21 (Data source Union Finance Ministry)

The GST collection for August, September and October has been Rs 326 crore, Rs 368 crore and Rs 377 crore respectively.

In November, J&K Government had said that after months of the economic slump due to COVID19 pandemic, the business in the UT had started showing improvement as indicated by the increase in GST collection.

“This has been made possible by the slew of measures taken by the government along with the economic relief package announced in the month of September 2020,” an official spokesperson had said, in a written statement.

“These steps (by the government) helped in boosting the business and the other ailing sectors that had suffered due to adverse impact of COVID-19 and had a positive impact on the growth of businesses in the Union Territory.”

Rs 1350-cr Economic Package

The UT government in September last year announced a Rs 1350-crore package. It included 5% interest subvention on all types of business loans, 50% subsidy on fixed electricity charges for one year and waiver on water charges for six months, besides some other measures.

The November and December GST figures validate what the traders’ bodies and businessmen here constantly say that Kashmir economy is going through worst of the times. COVID19 pandemic has only worsened the ‘bad situation’ which was going on since 2014 floods and in between faced 2016 turmoil and lockdown imposed post-August 5, 2019.

Kashmir Chamber of Commerce and Industries (KCCI) recently, while asking for full implementation of the economic package, said the business community is in stress.

While urging the government to extend VAT amnesty scheme for another year, KCCI said the situation emerging after August 2019 onwards has gone from bad to worse due to the COVID-19 pandemic and the economy is worst hit due to the stress.

AgriBiz

No cess imposed on Kashmir apples in Union Budget 2021-22

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No cess on Kashmir apples

BK News

Srinagar, Feb 1: A miss read budget announcement sent chill down the spine of Kashmir orchardists soon after Finance Minister Nirmala Sitharam proposed Agriculture Infrastructure and Development Cess on a number of commodities including apples. However, no cess has beeen imposed on Kashmir apples in Union Budget 2021-22.

Here is the story:

As some national news portals listed the names of the commodities and percentage of cess to be imposed on them, a number of people wrote Facebook and Twitter posts that 35% cess on apples will have a negative impact on the apple growers.

“The cess, which will be effect (sic) from February 2, will be charged at the rate of 35% on apples. This developed (sic) has sent shockwaves among apple growers of Kashmir,” wrote a Facebook page, which reports and discusses horticulture-related developments.

Misreading the bifurcation of the custom and agriculture cess on the apples, another, such page wrote, “While they have imposed 35% cess on apples, the customs duty has been reduced to 15% from 50%, which will prove double whammy for the local produce.”

However, the proposed cess on various commodities, the Finance Minister has meant, on the customs or excise duty imposed on the imported goods only. While she had not explicitly mentioned ‘imports’, news portals, particularly business news portals, also failed to explain it, which created confusion among the people, particularly the apple orchardists of Kashmir, who are not aware of the taxation jargon.

It was also missed by the people that no tax is imposed on any kind of agriculture goods produced within the country.

The new cess or AIDC introduced by the FM on a number of commodities including apples, liquor and fuel is imposed on imported goods only.

So this makes clear that no cess or any other tax has been imposed on the Kashmir apples.

In fact, the finance minister went ahead to explain that the AIDC won’t even affect the consumers.  “While applying the cess, we have taken care not to put additional burden on consumers on most items,” the FM said

The AIDC has been proposed on petrol and diesel. It will be Rs.2.5/litre on petrol and Rs.4/litre on diesel. Consequent to the imposition of AIDC, the Basic Excise Duty (BED) and Special Additional Excise Duty (SAED) on petrol and diesel is being reduced so that consumer does not have to bear any additional burden, Sitharaman said.

Similarly, the 35% cess on apples has been imposed after reducing earlier 50% customs duty to just 15%.

AICD on other commodities:

2.5% on gold, silver and dore bars; 100% on alcoholic beverages; 17.5% on crude palm oil; 20% on crude soyabean and sunflower oil; 1.5% on coal, lignite and peat; 5% on specified fertilisers (urea, etc); 40% on peas; 30% on Kabuli chana; 50% on Bengal Gram/Chick Peas; 20% on Lentil (Mosur); 5% on Cotton.

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Taxation

Vehicles over 8 years old to be charged green tax

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Green tax for older vehicles

BK News

Srinagar, Jan 25: Union Minister for Road Transport and Highways Nitin Gadkari has approved a proposal to levy a ‘Green Tax” on old vehicles which are polluting the environment.

The proposal will now go to the states for consultation before it is formally notified, MORTH said in a statement.

Transport vehicles older than 8 years could be charged Green Tax at the time of renewal of fitness certificate, at the rate of 10 to 25 % of road tax.

Personal vehicles to be charged Green Tax at the time of renewal of Registration Certification after 15 years.

Public transport vehicles, such as city buses, to be charged lower Green tax.

Higher Green tax (50% of Road Tax) for vehicles being registered in highly polluted cities.

Differential tax, depending on fuel (petrol/diesel) and type of vehicle will be charged.

Vehicles like strong hybrids, electric vehicles and alternate fuels like CNG, ethanol, LPG etc to be exempted.

Vehicles used in farming, such as tractor, harvestor, tiller etc will be also exempted.

Revenue collected from the Green Tax to be kept in a separate account and used for tackling pollution, and for States to set up state-of-art facilities for emission monitoring.

MORTH said it Green Tax will dissuade people from using vehicles which damage the environment and motivate people to switch to newer, less polluting vehicles.

Green tax will reduce the pollution level, and make the polluter pay for pollution, it claimed.

The minister also approved the policy of deregistration and scrapping of vehicles owned by Government department and PSU, which are above 15 years in age. It is to be notified and will come into effect from April 1, 2022.

It is estimated that commercial vehicles, which constitute about 5% of the total vehicle fleet, contribute about 65-70% of total vehicular pollution. The older fleet, typically manufactured before the year 2000 constitute less than 1 % of the total fleet but contributes around 15% of total vehicular pollution. These older vehicles pollute 10-25 times more than modern vehicles.

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Energy

Centre’s tax collection on petrol, diesel up by 48% to Rs1.96 lakh cr

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Record collection on petrol diesel

Excise duty witnessed record hike despite low consumption, falling crude prices

BK News

New Delhi, Jan 17: While the pandemic pummelled tax collection across the board, excise duty mop-up jumped 48% in the current fiscal on the back of a record increase in taxes on petrol and diesel, that more than made up for the below normal fuel sales.

Excise duty collection during April-November 2020, was at Rs 1.96 lakh crore (Rs 1,96,342 crore), up from Rs1.33 lakh crore mop-up during the same period in 2019, according to data from the Controller General of Accounts (CGA).

This despite the fact that over 10 million tonnes less diesel – the most used fuel in the country – was sold during the eight months period.

Diesel sales during April-November 2020, stood at 44.9 million tonnes as compared to 55.4 million tonnes a year back, according to data from the oil ministry’s Petroleum Planning and Analysis Cell (PPAC).

Petrol consumption too was lower at 17.4 million tonnes, compared to 20.4 million tonnes during April-November 2019.

While Goods and Services Tax (GST) apply on most products since its introduction in 2017, oil products and natural gas has been kept out of its preview. Excise duty, which accrues to the centre, and VAT that goes to the state government, are levied on their sale.

Industry sources said the jump in excise duty was primarily because of a record increase in taxes on petrol and diesel during March and May last year.

The central government had raised excise duty on petrol by Rs13 per litre and that on diesel by Rs16 a litre in two tranches to mop up gains arising from international crude oil prices falling to a two-decade low.

With this, the total incidence of excise duty on petrol rose to Rs 32.98 per litre and that on diesel to Rs 31.83 a litre.

In full 2019-20 fiscal (April 2019 to March 2020), excise collection totalled Rs 2,39,599 crore, according to CGA.

Central excise duty makes up 39% of petrol and 42.5% of diesel. After considering local sales tax or VAT, the total tax incidence in the price is about two-thirds of the retail rate.

The excise tax on petrol was Rs 9.48 per litre when the Modi government took office in 2014, and that on diesel was Rs 3.56 a litre.

The government had between November 2014 and January 2016, raised excise duty on petrol and diesel on nine occasions to take away gains arising from plummeting global oil prices.

In all, duty on petrol rate was hiked by Rs11.77 per litre and that on diesel by 13.47 a litre in those 15 months that helped government’s excise mop up more than double to Rs 2,42,000 crore in 2016-17, from Rs 99,000 crore in 2014-15.

The government had cut excise duty by Rs 2 in October 2017, and by Rs1.50 a year later. But it raised excise duty by Rs 2 per litre in July 2019. It again raised excise duty on March 2020, by Rs 3 per litre each. In May that year, the government hiked excise duty on petrol by Rs10 per litre and that on diesel by Rs13 a litre.

While basic excise duty on crude is not so significant, it is ad valorem (a certain percentage of value) on ATF at 11 % and on natural gas-compressed 14 %. In case of an ad valorem system, earnings happen only if the product price goes up.

According to CGA, overtax revenue of the government is down 45.5 % at Rs 688,430 crore during April-November. For the full 2020-21 fiscal (April 2020 to March 2021), the government had budgeted Rs 16.35 lakh crore tax revenue.

Corporation tax mop-up is down 35 % at Rs 185,699 crore and income tax collection is 12 % lower at Rs 235,038 crore, the CGA data showed. — PTI 

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