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GST Remains Complex, According to Arvind Subramanian

Akash G Varadaraj
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GST Remains Complex, According to Arvind Subramanian

Revenues from the seven-year-old Goods and Services Tax (GST) have failed to meet expectations, achieving pre-GST levels only recently. Former Chief Economic Advisor (CEA) Arvind Subramanian highlighted this on Thursday, calling the lack of critical data, such as refunds, a significant challenge.

Subramanian attributed the poor revenue performance to a ‘rate-cutting spree’ by the GST Council between late 2017 and 2019. He said both the Centre and the States were complicit in this. ‘The focus was on collections, because refunds were not published, and we were looking at the wrong number. Had the refunds data been published, we would have been much more careful about rate cuts,’ he noted.

In February, the government began releasing net GST collection numbers but has since stopped. ‘Without refunds data, we mistakenly believe revenues are performing well,’ Subramanian said at a seminar on seven years of GST hosted by the Centre for Social and Economic Progress.

Subramanian described the multiple cess rates and the GST rate structure as ‘monstrous’ and advocated for simplification. ‘You should just have one cess rate, one standard rate, and one low rate,’ he emphasised.

He also criticised the frequent changes in the GST regime made during GST Council meetings, stating this practice was hindering simplicity and rationalisation. In 2015, he had recommended a GST regime with three rates: one for essential goods, a standard 18% rate, and a 40% levy for demerit goods.

Subramanian has revised his stance on including items like electricity, petroleum, and alcohol in the GST net, which he and other economists had previously supported. ‘I now believe that would be a bad idea, especially given the acrimonious relations between the Centre and the States. It’s not politically advisable to expect or ask the States to give up more sovereignty,’ he said, noting that conditions have changed too much since GST’s launch before 2017 for the previous compromise to be relevant. Vakilsearch is well-positioned to assist businesses in addressing the complexities of the GST system. Our expert services include comprehensive GST compliance, strategic tax planning, and advisory support to help businesses optimise their tax liabilities and ensure adherence to regulatory requirements.

Tamil Nadu Government Initiates an Investigation Into a Coal Import Scandal Reportedly Implicating the Adani Group

Akash G Varadaraj
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Tamil Nadu Government Initiates an Investigation Into a Coal Import Scandal Reportedly Implicating the Adani Group

The Tamil Nadu government has taken decisive action to investigate a significant coal import scandal allegedly involving the Adani group and other entities. Authorised by the Directorate of Vigilance and Anti-Corruption (DVAC), the probe aims to scrutinise reported irregularities in tender conditions and coal imports that purportedly caused substantial financial losses for the state.

The investigation, initiated under Section 17A of the Prevention of Corruption Act, 1988, follows a complaint filed by Arappor Iyakkam, a prominent organisation advocating transparency in governance. According to sources quoted by The Hindu, the DVAC has been granted clearance to conduct a preliminary inquiry into these allegations.

‘We have received clearance from the government to register a preliminary inquiry and investigate allegations in the import of coal by the Tamil Nadu Generation and Distribution Corporation (TANGEDCO ),’ stated official sources familiar with the matter.

Arappor Iyakkam has accused TANGEDCO officials and Adani Global Pte Ltd. among others of involvement in corrupt practices amounting to approximately ₹6,066 crore between 2012-2016. Last year, Jayaram Venkatesan, convener of Arappor Iyakkam, expressed concerns over the lack of action in investigating these allegations.

‘Even after one-and-a-half years of assuming office, your government has so far not taken any steps to investigate the massive coal import scandal of the previous government,’ The Hindu reported Venkatesan as saying in a letter addressed to Chief Minister M.K. Stalin.

The DVAC’s inquiry marks a critical step in addressing allegations of corruption and ensuring accountability in public procurement processes. The outcome of this investigation will likely have far-reaching implications for transparency and governance in Tamil Nadu’s energy sector. 

This probe, authorised by the Directorate of Vigilance and Anti-Corruption (DVAC) under Section 17A of the Prevention of Corruption Act, 1988, exemplifies the government’s commitment to addressing allegations of corruption and financial misconduct.

For businesses and entities involved in large-scale procurement and tendering processes, this situation highlights the critical need for stringent compliance and transparent operational practices. Ensuring adherence to regulatory standards and ethical guidelines is not only a legal imperative but also essential for maintaining public trust and corporate integrity.

 Vakilsearch offers comprehensive legal solutions designed to support businesses in navigating the complexities of compliance and regulatory requirements. Our expert services in legal compliance, corporate governance, and anti-corruption measures are tailored to help organisations mitigate risks and foster ethical business practices. Partner with Vakilsearch to ensure robust compliance frameworks and safeguard your business against potential legal and financial liabilities.

Budget 2024 Wishlist: High Rebates and GST Reductions for Real Estate Sector

Monika Shanmugam
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Budget 2024 Wishlist: High Rebates and GST Reductions for Real Estate Sector

The Indian real estate industry has seen significant growth recently, and with Budget 2024 approaching, there’s a wave of optimism for potential reforms. Favourable policies and effective resource allocation by the government could further boost the sector’s progress and stimulate economic growth.

Industry Expectations

The real estate sector has several key expectations from the upcoming budget, which, if met, could greatly influence its future trajectory. These include GST rate reductions, enhanced home loan interest rate deductions, streamlined single-window clearance systems, lower property prices, and promotion of off-center locations. A major demand is for the sector to be granted industry status, which would help attract higher investments and streamline regulatory processes.

GST Rate Reductions

One crucial expectation is the reduction of GST rates. Implementing regulations on GST input tax credit would effectively lower property prices and promote transparency. This would benefit homebuyers and drive economic growth. Additionally, initiatives to stabilise material costs could create a vibrant real estate landscape, fulfilling homebuyer ambitions and contributing to economic revival.

Home Loan Interest Rebate

Raising the home loan interest rebate under Section 24 from ₹ 2 lakh to ₹ 5 lakh could boost demand. Increased budget allocation for urban infrastructure, lowered stamp duty rates, and waivers for first-time homebuyers could also stimulate growth. Expanding affordable housing to include properties up to ₹ 75 lakhs with larger carpet areas and re-launching credit-linked subsidy schemes (CLSS) would add value for homebuyers.

Enhanced Tax Benefits on Home Loans

There is a growing demand to increase the principal repayment deduction under Section 80C from ₹ 1.5 lakh to ₹ 2.5 lakh. This would provide substantial relief to homebuyers, making home loans more affordable and stimulating investment in the real estate sector. Additionally, releasing certain land holdings at lower costs, especially for affordable housing projects, would reduce overall real estate prices and make housing more accessible.

Focus on Sustainability

The sector anticipates incentives for sustainable and environmentally friendly residential projects. Subsidies, tax benefits, and favourable loan terms for green construction methods could address environmental sustainability and provide affordable, energy-efficient housing options, leading to long-term savings and improved living standards.

Technological Advancements

There is also an expectation for increased spending on digital infrastructure. Enhancing internet connectivity and digital banking facilities in rural and semi-urban areas, along with ensuring fair practices among digital lenders, would foster trust and boost digital transactions.

Conclusion

If these policies are implemented, the real estate sector will be well-positioned for continuous growth, contributing to a stronger economy and improved living standards across the country.

Centre’s Decision to Halt Monthly GST Data Raises Eyebrows

Monika Shanmugam
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Centre’s Decision to Halt Monthly GST Data Raises Eyebrows

The Union Ministry of Finance has stopped releasing its monthly GST collection data, a move that has sparked widespread concern. Traditionally, the Ministry provided a comprehensive overview of GST collections on the first day of every month.

This change comes as the country marked the seventh anniversary of the Goods & Services Tax (GST) implementation on July 1. The most recent formal data release, detailing May’s GST collections, was published on June 1. For June, GST collections stood at ₹ 1.74 lakh crore, but this figure was shared informally with reporters rather than through an official press release. Moving forward, only the gross total collections amount will be released, according to sources.

No official reason has been provided for this abrupt change, which comes just weeks before the first budget of Prime Minister Narendra Modi’s third term. The move has raised concerns amidst rising prices and slowing consumption, leading to calls for tax relief on various services, including health insurance.

GST collections have shown significant growth over the years. The last official release on June 1 reported that gross GST collections in the first two months of the current financial year reached ₹ 3.83 lakh crore, reflecting an impressive 11.3% year-on-year growth. This increase was driven by a 14.2% rise in domestic transactions and a 1.4% increase in imports. After accounting for refunds, net GST revenue till May 2024 stood at ₹ 3.36 lakh crore, marking an 11.6% growth compared to the same period last year.

Previously, the detailed data releases included a breakdown of monthly collections for central GST, state GST, integrated GST, and cess collection data. The Ministry also shared key highlights of inter-governmental settlements, detailing total central and state revenue. Additionally, two charts were provided to explain trends in gross GST revenues with state-wise figures and comparisons to the previous year’s collections.

With the discontinuation of the monthly GST data release, state-wise GST data will only be available if individual states choose to disclose it. Former Chief Economic Adviser Arvind Subramanian recently raised concerns on social media, emphasising that the focus should be on revenues net of refunds, not just headline collections.

Unless this decision is revisited, future data releases will likely feature only headline figures, such as gross monthly and annual GST collections. Details of monthly IGST settlements between the Centre and states may still be disseminated, sources added.

EV Startup Matter Secures $35M in Series B to Bolster Supply Chain

Monika Shanmugam
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EV Startup Matter Secures $35M in Series B to Bolster Supply Chain

Electric motorcycle manufacturer Matter has raised $35 million (approximately INR 290 crore) in its ongoing Series B funding round, led by US-based Helena. The round also saw participation from Japan Airlines & Translink Innovation Fund, Info Edge’s Capital 2B, Saad Bahwan Investment Management Company (SB Invest), along with other institutional investors and family offices.

The fresh funds will be utilised to accelerate Matter’s manufacturing plans, strengthen its supply chain, and expand marketing efforts and retail store setups.

Last week, a famous news media reported that Matter raised $10 million (INR 82.6 crore) as part of this Series B round. Founder and CEO Mohal Lalbhai told the news media that the startup aims to raise $65-$70 million in the Series B round, with the $35 million being the first tranche.

Founded in 2019 by Lalbhai, Arun Pratap Singh, Kumar Prasad Telikepalli, and Saran Babu, Matter has developed a proprietary technology stack, including energy storage systems and a drive train. The startup has also developed the electric motorbike AERA.

On attracting international investors, Lalbhai said, ‘There is still a significant white space in the motorcycle market within the EV space, which has driven investments into the company.’

Despite plans to launch AERA in 2022, delays have pushed the startup to aim for vehicle deliveries by Diwali this year. Lalbhai emphasised the importance of a robust supply chain before AERA entered the Indian electric two-wheeler market, dominated by e-scooters.

‘The lopsided nature of India’s electric two-wheeler market is that there are almost zero motorcycles and 100% e-scooters,’ Lalbhai explained. ‘We wanted to ensure that once we start supplies, they stay consistent and we can keep scaling up.’

Matter’s first flagship store will open in Ahmedabad in August, followed by expansions to Mumbai, Pune, Bengaluru, Hyderabad, Chennai, Delhi, and Assam. The company aims to start selling 5,000-6,000 units of its electric motorcycles per month by March next year, with a target of 10,000 units per month by the end of 2025.

Commenting on the funding, Helena managing partner Suprotik Basu said, ‘We believe it is inevitable that transportation in this market will electrify, and India is the most exciting place for that transition. The Matter team has impressed us with their value-driven, high-performance technology products.’

Currently, Matter generates revenue from stationary applications of lithium-ion batteries. However, Lalbhai expects a significant portion of revenue to come from AERA sales within the next 12 months.

RBI Governor Das Warns Banks Against Mule Accounts

Monika Shanmugam
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RBI Governor Das Warns Banks Against Mule Accounts

Reserve Bank of India Governor Shaktikanta Das has issued a stern warning to banks about the rising threat of mule accounts, urging them to bolster their cybersecurity measures to combat digital fraud.

At a meeting with public and private sector bank heads at the Mint Road headquarters, Das emphasised the need for robust cybersecurity controls and effective management of third-party risks. He stated, ‘Banks must step up their efforts against ‘mule accounts’ and also intensify customer awareness and education initiatives, among other measures, to curb digital frauds.’

Mule accounts are bank accounts used to receive or transfer illegally acquired funds on behalf of others. Individuals can become money mules either intentionally or unintentionally, often lured by fraudsters with offers to share or rent their bank account details.

Governor Das also noted the continued improvement in banks’ asset quality, loan provisioning, capital adequacy, and profitability. While acknowledging the sector’s increased resilience, he stressed the importance of further strengthening governance standards, risk management practices, and compliance culture.

These discussions are part of the RBI’s ongoing engagement with the senior management of regulated entities. The meeting was also attended by Deputy Governors M Rajeshwar Rao and Swaminathan J, along with executive directors in charge of regulation and supervision.

A post-event statement from the RBI highlighted discussions on various credit market issues, including the gap between credit and deposit growth, liquidity risk management, asset liability mismatches, trends in unsecured retail lending, cybersecurity, third-party risks, digital frauds, and the need to strengthen assurance functions. Other topics included credit to MSMEs, increasing the use of the rupee for cross-border transactions, and banks’ participation in RBI innovation initiatives.

According to media reports, at least five leading domestic banks are actively tracking money mule transactions and blocking such accounts. HDFC Bank was the first to investigate and take action on suspected cases in September 2023.

India Plans ₹ 44,000-Crore Push to Become Electronics Powerhouse

Monika Shanmugam
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India Plans ₹ 44,000-Crore Push to Become Electronics Powerhouse

India is gearing up for a massive boost in its electronics and semiconductor sector. A task force, established by the Ministry of Electronics and Information Technology (MeitY), is set to recommend a substantial allocation of ₹ 44,000 crore from 2024 to 2030, according to a report by Business Standard.

The initiative aims to simplify business operations for global firms designing products in India and safeguard domestic companies by managing and leveraging standard essential patents (SEPs).

Led by Ajay K Sood, the principal scientific advisor to the government, the task force proposes substantial incentives: ₹ 15,000 crore for electronic products (systems), ₹ 11,000 crore for semiconductor products, and ₹ 18,000 crore for talent development, infrastructure, logistics, and technology acquisition.

This move, awaiting government approval, could rival the production-linked incentive (PLI) scheme for mobile devices and electronics. Established in January, the task force includes industry leaders like Ajai Chowdhry, founder of HCL and chairman of EPIC Foundation, and Sunil Vachani, MD of Dixon Technologies.

The proposal focuses exclusively on benefiting Indian companies, defining them as entities where Indians control 51% of the shareholding, headquartered in India, with all global profits accruing to the Indian parent company.

Ajai Chowdhry emphasises the initiative’s long-term vision, highlighting the need to start now to reduce India’s electronics import bill. The task force also advocates for extending the PLI scheme until 2030, enhancing R&D tax policies, and promoting Indian products globally through subsidies and brand promotion.

Identifying 30 essential electronic products and 40 types of chips crucial for India’s needs, the report highlights the potential growth of the electronics market to $3 trillion by 2047, with exports targeting $1 trillion.

Monte Carlo Resolves Trademark Dispute With Skoda Auto

Akash G Varadaraj
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Monte Carlo Resolves Trademark Dispute With Skoda Auto

In a significant development, Skoda Auto India has acquired a licensing agreement from Monte Carlo Fashions Ltd to utilise the trademark ‘Monte Carlo’. This agreement comes after a trademark dispute initiated by Monte Carlo Fashions Ltd last year over trademark infringement concerning the ‘Monte Carlo’ brand.

Under the terms of the agreement, Skoda India has been granted the rights to use the ‘Monte Carlo’ trademark exclusively within India. This includes its application on cars, car accessories, spare parts, as well as on related packaging, promotional materials, and advertising.

Rishabh Oswal, Executive Director of Monte Carlo Fashions Ltd, expressed satisfaction with the agreement, describing it as a mutually beneficial solution. He stated, “We have agreed to grant Skoda a license to utilize our brand name for marketing and selling their Monte Carlo edition cars. This marks a positive outcome for both companies.”

Oswal also emphasised the broader implications of this case, hoping it will encourage greater vigilance among corporate entities regarding trademark issues. “We believe this case sets an important precedent for handling trademark disputes more meticulously,” he commented.

This agreement underscores the significance of intellectual property rights in corporate dealings, reflecting a strategic resolution that respects the interests of both parties involved.

As businesses navigate complex trademark disputes and agreements, Vakilsearch stands ready to provide expert legal counsel and strategic guidance. Our specialised services in trademark registration, licensing agreements, and intellectual property protection ensure that businesses can safeguard their innovations and brand assets effectively. Partner with Vakilsearch to navigate the intricacies of trademark dispute and achieve your business objectives with confidence and clarity.

 

Google Maps’ Latest Patent Introduces Multi-Car Navigation

Akash G Varadaraj
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Google Maps’ Latest Patent Introduces Multi-Car Navigation

Google Maps, a staple for solo adventurers worldwide, is gearing up to transform group travel with a groundbreaking new feature, according to a recent patent application. This innovation promises to streamline journeys for users travelling in multiple vehicles, marking a significant expansion beyond its current capabilities.

Filed with the US Patent and Trademark Office and spotlighted by @xleaks7, the patent unveils ‘Providing Navigation Instructions to One Device in View of Another Device.’ This feature aims to synchronise navigation for groups departing from different locations heading towards a shared destination, ensuring they arrive within a coordinated time frame.

Utilising users’ calendar schedules and messages, Google Maps will orchestrate these multi-car journeys seamlessly. It enables users to initiate multi-car navigation by sending invitations and providing synchronised directions to all participants. The system visualises all travellers’ locations on a map, suggests optimal meeting points, and highlights shared routes while recommending speed adjustments to maintain group cohesion.

Moreover, this advanced navigation system will relay real-time traffic and road conditions to all vehicles involved, ensuring a smooth journey. It notifies users if any vehicle veers off course and suggests stops to allow others to catch up, promoting a unified travel experience.

Accessible not only on smartphones but also via car infotainment systems connected through USB or Bluetooth, Google Maps’ new feature promises versatility and convenience for coordinated travel arrangements.

This development underscores Google’s ongoing commitment to enhancing user experiences and catering to the diverse needs of its global audience as it continues to innovate in the realm of navigation technology.

As Google Maps pioneers multi-car navigation through its latest patent, the landscape of group travel is set to evolve significantly. For businesses and individuals seeking efficient travel solutions, Vakilsearch offers tailored legal and compliance services to navigate the complexities of intellectual property protection. Partner with Vakilsearch to ensure your innovations are safeguarded and your business objectives are met in an ever-changing technological landscape.

GST Collections Increased by 7.7% to ₹1.74 Lakh Crore in June

Akash G Varadaraj
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GST Collections Increased by 7.7% to ₹1.74 Lakh Crore in June

In June, India’s gross Goods and Services Tax  GST collections saw a year-on-year increase of 7.7%, reaching ₹1.74 lakh crore for May sales. This growth rate is the slowest in three years, with the previous low recorded in June 2021.

Coinciding with the seventh anniversary of the GST rollout, the government announced it will stop issuing official monthly GST collection releases, which were typically shared on the first day of each month. The government will no longer provide statements regarding GST collections, sources said.

The customary GST collection release included a state-wise revenue breakdown, offering insights into economic and consumption activities. It also detailed the collection of Central GST (CGST), state GST (SGST), and compensation cess from imports and domestic sales. 

For the current financial year (April-June), gross GST collections totaled ₹5.57 lakh crore. In May 2024, the government collected ₹1.73 lakh crore, while June 2023 saw collections of ₹1.61 lakh crore. The Integrated GST (IGST) worth ₹39,586 crore was allocated towards CGST and ₹33,548 crore towards SGST. The highest GST collection of ₹2.1 lakh crore was recorded in April.

On social media platform X, the Finance Ministry celebrated seven years of GST, highlighting its positive impact on household goods taxes. ‘With reduced tax rates on household goods after GST implementation, #7yearsofGST has brought happiness and relief to every home through lower GST on household appliances and mobile phones,’ the Ministry posted.

The GST taxpayer base grew from 1.05 crore in April 2018 to 1.46 crore in April 2024. Comparative charts provided by the Ministry showed how GST implementation has reduced the cost of food items and mass consumption goods, enhancing the ease of living.

 As the anticipation builds for Union Budget 2024-25, salaried taxpayers are focusing on key expectations that could alleviate their tax burden and enhance financial planning. One of the foremost expectations revolves around Section 80C deductions, with experts forecasting an increase from the current ₹1.5 lakh to ₹2 lakh per financial year. This adjustment would provide much-needed relief by incentivizing investments in avenues such as provident funds, insurance premiums, and equity-linked savings schemes.

Furthermore, there’s optimism surrounding a potential increase in the standard deduction limit for salaried individuals, aimed at easing taxable income burdens. The recent introduction of a ₹50,000 standard deduction in the previous budget has set a precedent for further adjustments that could benefit taxpayers under the new tax regime.

 As salaried taxpayers await the unveiling of Union Budget 2024-25, navigating the intricacies of tax reforms and potential benefits requires expert guidance. Vakilsearch offers specialised tax advisory services tailored to help individuals and businesses stay informed and compliant with evolving tax laws. Whether it’s maximising deductions under Section 80C, understanding changes in standard deduction limits, or optimising tax planning strategies, our expert team stands ready to assist. Partner with Vakilsearch to ensure you make informed financial decisions amidst the changing tax landscape in India.

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