- GST Council was deadlocked on the issue of compensation to be paid to states
- Council has decided to extend the compensation cess beyond the five-year period till 2022 that had been agreed to originally.
- Next meeting date: October 12
- Nirmala Sitharaman: The Centre will immediately disburse ₹20,000 crore collected in the cess fund in the current financial year to states.
- Integrated GST distribution ₹24,000 crore will be paid to states that had not received the payment as recommended by a group of ministers.
- GST collections have fallen short on account of the Covid-19 pandemic, in turn hitting compensation to states.
EASE OF COMPLIANCE
- From January 1, 2021, taxpayers with an annual turnover less than ₹5 crore need not file returns monthly but only every quarter.
- Ajay Bhushan Pandey: Taxpayers’ compliance burden will be reduced to eight returns from 24 now.
- Tax payments can be made through a simplified challan by these taxpayers.
- From April 1, 2021, taxpayers with more than ₹5 crore turnover will have to compulsorily mention harmonised system nomenclature codes up to six digits.
- Those having less than ₹5 crore turnover will have to mention HSN codes up to four digits.
- HSN is a goods classification system.
- Pandey said refunds will be disbursed through validated bank accounts linked to PAN and Aadhaar.
- The council also exempted 18% GST on startups involved in providing satellite launch services to ISRO, Antrix Corp and New Space India.
Not Just a Federal Dispute
- Government of India continues to see the dispute as a revenue-sharing problem between the Centre and the states, rather than as the macroeconomic constraint on India’s growth at this pandemic-afflicted juncture that it is.
- The goods and services that bear an additional layer of tax in the form of a compensation cess will have to bear that burden for many years beyond 2022, when it was supposed to be lifted.
- The states collectively outspend the Centre by almost 10 percentage points of GDP in a normal year.
- Crimping their revenues is guaranteed to deprive the economy of a vital component of demand, and dampen growth.
- Private sector is hard-pressed to survive
- It is government expenditure — or, more precisely, government-catalysed expenditure — that has to do the heavy lifting when it comes to economic recovery.
- The tussle between the Centre and the states over how to compensate the states for GST revenue shortfalls deprives the economy of this vital source of growth.
- Extra-heavy taxes on some goods and services for prolonged periods is not good policy.
RBI’s Monetary Policy Panel
- The government has appointed economists Shashanka Bhide, Ashima Goyal and Jayanth R Varma as independent members to the Monetary Policy Committee.
- Bhide is currently a senior advisor at the New Delhi-based think tank National Council for Applied Economic Research, while Goyal is a professor at the Indira Gandhi Institute of Development Research in Mumbai.
- Varma is currently a professor at the Indian Institute of Management, Ahmedabad.
- Their appointment had been cleared by the Appointments Committee of the Cabinet chaired by Prime Minister Narendra Modi.
- The government had set up the MPC in 2016 following finalisation of the Monetary Policy Framework Agreement that introduced inflation targetting. Inflation target was set at 4%( +/-2%).
Railways’ Capex Plan
- The Indian Railways is eyeing a capex plan of ₹2 lakh crore for each year till FY24.
- Massive infrastructure upgradation envisaged for the countrywide railway network.
- Indian Railways’ network capacity will get a huge fillip by March 2024, which will give a significant boost to freight movement by rail.
- Railways’ modal share in freight is also targeted to reach 40% by 2024.
- The Indian Railways’ capex plan for FY21is ₹1.6 lakh crore.
- The infrastructure upgradation plan includes doubling of 11,000 kilometre of track, tripling and quadrupling of around 3,000 km route network, 51 projects related to coal connectivity and 10 projects related to port connectivity, among others.
- Enhanced freight loading will be sustained after passenger trains resume.
- The Indian Railways will be able to sustain the growth in freight loading even after normal passenger train services resume.
- Regular passenger trains operations remain suspended amid the outbreak of Covid-19.
Power & Coal Sector
- Railway minister Piyush Goyal met with stakeholders from coal and power sectors
- AIM: To discuss issues pertaining to transportation of coal through rail, which accounts for almost 50% of the transporter’s freight basket.
- The meeting was held to ensure consolidation of the railways’ coal business and discuss ways and means to further improve the joint operational productivity of the railways, coal and power sectors concerning coal freight.