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GST collections drop to Rs 94,726 cr in December, lowest in three months

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New Delhi: The government collected Rs 94,726 crore as goods and services tax (GST) in December, lower than the collection in the previous two months.

With a shortfall in seven of the nine months so far in 2018-19, GST collection in January, February and March has to be on average Rs 1.23 trillion to meet the budgeted target, according to calculations by Business Standard. While states are relatively safe due to compensation, the Centre’s fiscal position is in peril.

Against expectations of Rs 6.04 trillion from the Central GST (CGST) in 2018-19, CGST revenue stands at Rs 3.41 trillion in nine months (April-December). The Integrated GST (IGST) which has not yet been apportioned to either the states or the Centre stands at Rs 1.31 trillion. Adding half of it to the CGST kitty, the CGST collection till date becomes Rs 4.07 trillion, or 67 per cent of the annual target.

 

The Centre needs Rs 65,000 crore in January, February and March at least to recoup this shortfall. This includes tax collected as CGST as well as settlement towards CGST from IGST account. In comparison, the highest inflow as CGST was recorded in July 2018 stood at Rs 58,796 crore.

Admitting that the financial year would end with some shortfall, finance ministry officials said the amount would be near Rs 40,000 crore. Cuts in revenue and capital expenditure would be imperative, they said.

Experts said enhanced revenue from other indirect taxes and income tax would not be sufficient to make good the gap, and, as a result, anti-evasion measures would gain prominence.

“CGST collection so far suggests an impending shortfall relative to the budgeted estimate this fiscal year. A provisional settlement of the Integrated GST (IGST), as well as the residual GST compensation cess that remains after disbursal to states, will be key in augmenting the Centre’s cash flows in the coming months,” said Aditi Nayar, principal economist, ICRA.

The slowdown is surprising especially since Diwali fell in November, the month the December collection represents.

“The collections, while admittedly below the targets, seem to indicate the revenue is stabilising at around Rs 95,000 crore a month, despite the rate reductions in the current fiscal year. A lower revenue than the target could lead to more compliance pressures on businesses and more focus on anti-evasion measures,” said M S Mani, partner, Deloitte India.

Recovering evaded GST would also be important for meeting the annual target, said Pratik Jain, partner, indirect tax, PwC India.

Tax evasion detected in April-November stands at Rs 12,767 crore, of which Rs 7,910 crore has been recovered, according to the data presented by the finance ministry in Parliament.

“We should expect greater enforcement and investigations of cases in the next few months,” said Jain.

The GST Council, in its December 22 meeting, slashed the rates of 23 items, of which six were in the top slab of 28 per cent. This would help in improving compliance, experts said.

December recorded the highest number of monthly returns (GSTR-3B) filed, at 7.24 million, 4 per cent more than 7 million filed in November.

However, this might make further rate cuts difficult, some experts said.

“The slight dip in GST revenue collections as compared to the last two months is a bit discouraging. This may deter the government from rationalising the rate of goods left in the 28 per cent category like cement and auto parts in the short term,” said Abhishek Jain, tax partner, EY India


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RBI asks banks to grout ATMs to wall, floor for security by September-end

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Mumbai: The Reserve Bank asked banks to ensure their ATMs are grouted to a wall, pillar, or floor by September-end, except those installed in high secured premises such as airports, to enhance security of the cash vending machines.

In 2016, the RBI had st up a Committee on Currency Movement (CCM) to review the entire gamut of security of treasure in transit.

Based on the recommendations of the panel, the central bank has now issued instructions aimed at mitigating risks in ATM operations and enhancing security.

 

As part of the security measures, all “ATMs shall be operated for cash replenishment only with digital One Time Combination (OTC) locks”.

Also, “All ATMs shall be grouted to a structure (wall, pillar, floor, etc.) by September 30, 2019, except for ATMs installed in highly secured premises such as airports, etc. which have adequate CCTV coverage and are guarded by state/central security personnel”.

Further, banks may also consider rolling out a comprehensive e-surveillance mechanism at the ATMs to ensure timely alerts and quick response, it said.

The new measures to be adopted by banks are in addition to the existing instructions, practices and guidance issued by the RBI and law enforcement agencies.

The RBI also warned the banks that non-adherence of timelines or non-observance of the instructions would attract regulatory action including levy of penalty.

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SBI refuses to disclose communication from RBI, govt on electoral bonds

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New Delhi: The State Bank of India has refused to disclose any communication it received from the government or the Reserve Bank of India on electoral bonds, terming it “personal information” and held in “fiduciary capacity”.

Responding to an RTI filed by Pune-based activist Vihar Durve who had demanded copies of all letters, correspondence, directions, notifications or e-mails received from the RBI or any government department between 2017 and 2019, the SBI said it cannot be provided by it.

The bank cited two exemption clauses under the RTI Act to deny information — Section 8(1)(e) which pertains to information held in fiduciary capacity and Section 8(1)(J) which pertains to personal information of a person which has no link to any public activity.

 

“Information sought by the applicant cannot be disclosed as it is in fiduciary capacity, disclosure of which is exempted under Section 8(1)(e) and 8(1)(j) of the RTI Act, 2005,” the Central Public Information Officer of the bank said in his reply.

The bank also refused to give any details of action taken by it on such communications from the RBI and the government.

The electoral bonds, for giving donations to political parties, are being sold through SBI only. The sale opens in SBI branches when the Finance Ministry issues a notification of their sale for a given period.

The scheme of electoral bonds notified by the Centre in 2018 has been challenged in the Supreme Court.

Only the political parties registered under Section 29A of the Representation of the People Act, 1951 (43 of 1951) and which secured not less than one per cent of the votes polled in the last general election to the House of the People or the Legislative Assembly of the State, shall be eligible to receive the bonds.

The bonds may be purchased by a person who is a citizen of India “or incorporated or established in India,” the government had said in a statement last year.

The bonds remain valid for 15 days and can be encashed by an eligible political party only through an account with the authorised bank within that period only.

A voluntary group working in the field of electoral reforms, Association for Democratic Reforms (ADR), has demanded a stay on the sale while the CPI(M) has challenged it before the Supreme Court in separate petitions.

ADR recently filed an application in the Supreme Court seeking a stay on the Electoral Bond Scheme, 2018 which was notified by the Centre in January last year.

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Walmart’s Flipkart, Indian startup GOQii settle dispute over sharp discounting

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New Delhi: Walmart unit Flipkart has settled a legal dispute with an Indian startup that alleged it suffered losses because its products were sharply discounted on the global retailer’s website.

GOQii, a seller of smartwatch-type health devices, sued Flipkart last month in a Mumbai court, alleging its devices were discounted by around 70 per cent to the retail price, much more than the two sides had agreed. The court had, as an interim measure, ordered device sales to be halted on Flipkart.

In a joint statement , the companies said the dispute had been resolved and GOQii health devices would again be available on Flipkart. They didn’t say how the settlement was reached.

 

Vishal Gondal, CEO of GOQii, told Reuters the company would withdraw the case against Flipkart. The e-commerce retailer’s “team worked on a resolution benefitting the brand and the customers”, Gondal said in the statement.

The legal spat was seen as a test case of the giant retailer’s operating strategy in the country.

Small traders and a right-wing group close to Prime Minister Narendra Modi’s ruling party have raised concerns about large e-commerce companies, saying they burn billions of dollars deeply discounting some products to lure customers onto their sites, in the expectation that they will also buy other goods.

GOQii said it signed an agreement last year with a Flipkart unit to sell two of its devices at a price not below 1,999 rupees (USD 28.63) and 1,499 rupees. It later found the devices were being sold for 999 rupees and 699 rupees, calling it “unauthorized” discounting.

In response, Flipkart said it reserved “the right to institute actions for defamation, both civil and criminal”, arguing it wasn’t responsible for any discounts which are determined by third-party firms which sell via its website.

The two companies struck a friendlier tone in their joint-statement on Friday as they brought the legal battle to an end.

“We have ensured constant engagement with GOQii to resolve any differences,” Flipkart said in the statement.

With a 19 per cent market share, GOQii was the second-biggest player in India’s so-called wearables market last year, data from industry tracker IDC showed. The market is dominated by China’s Xiaomi, with Samsung a small player.

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