The Finance Ministry on Monday released the ninth installment of Rs 6,000 crore to the states to meet GST compensation shortfall, taking the total amount of fund released to Rs 54,000 crore.
The Centre had set up a special borrowing window in October 2020 to meet the estimated shortfall of Rs 1.10 lakh crore in revenue arising on account of implementation of GST.
The Ministry of Finance in a statement said it has released the ninth weekly instalment of Rs 6,000 crore to the states to meet the GST compensation shortfall.
Out of this, an amount of Rs 5,516.60 crore has been released to 23 states and an amount of Rs 483.40 crore has been released to the three Union Territories (UT) with Legislative Assembly (Delhi, Jammu & Kashmir & Puducherry) who are members of the GST Council.
“The amount has been borrowed this week at an interest rate of 5.15 per cent. So far, an amount of Rs 54,000 crore has been borrowed by the Central Government through the special borrowing window at an average interest rate of 4.74 per cent,” the statement said.
The remaining five states, Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim do not have a gap in revenue on account of GST implementation, an official statement said.
The borrowings under the special window have been done in 9 rounds and the amount borrowed so far was released to the states on October 23, November 2, November 9, November 23, December 1, December 7, December 14, December 21 and December 28, 2020.
In addition to providing funds through the special borrowing window to meet the shortfall in revenue on account of GST implementation, the Centre has also granted additional borrowing permission equivalent to 0.50 per cent of Gross States Domestic Product (GSDP) to the states to help them in mobilising additional financial resources.
Permission for borrowing the entire additional amount of Rs 1,06,830 lakh crore (0.50 per cent of GSDP) has been granted to 28 states under this provision, the statement added.
Source: The Financial Express
The honourable Gujarat High Court has directed the Centre to check its definition of ‘textile’. Notably, this is for the purpose of levying excise duty after the revenue authority treated agro shade net and geogrid as plastic materials.
Recently, the central excise commissioner, Ahmedabad, issued notice to CTM Technical Textiles Ltd. to shell out Rs. 3.65 crore duty and penalty of equal amount for manufacturing agro shade nets and geo grids since 2007.
It was said these goods could be termed as articles of plastics because both the products are made of HDPE strips of less than 5 mm width. They are not made out of textile material.
The Central Government relied on a circular issued in 1992 by the Central Board of Excise and Customs and a 1994 trade notice issued by the Ahmedabad district collector.
On the other hand, CTM Technical Textiles argued that both the items were exempted from excise duty. Moreover, it is the only company out of hundred others producing these materials to have been asked to pay duty.
The matter was brought to the court which noticed that the excise commissioner refused to believe that the material was textile even after the department chemical examiner’s opinion that agro shed net is knitted fabric and geo grid fabric is woven fabric and polyester yarn is used for weaving.
The court said that the raw materials used for both the products include High Density Polyethelene (HDPE) strips, which is a plastic material. However, plastic is used in textile fabric – polyester, telelene, nylon fabrics, etc.
The High Court reminded the revenue authority that it is not the material that is used that defines textile, but it is the process of manufacturing that defines what is textile. The HC cited the definition of textile as made by the Supreme Court for the purpose of taxation.
The High Court ordered the Union of India to re-look into its definitions with observation, “Prima facie, it appears that the understanding of the word ‘textiles’ in common parlance has not been considered by the Board as well as by the Ahmedabad Collector while issuing the impugned Order and the Trade Notice, respectively. Instead of considering the method of weaving as a relevant factor, the nature of the raw material seems to have been taken into consideration while issuing such Order and Trade Notice.”
It is also pertinent to mention here that the High Court pulled up the revenue authority for seeking to levy duty only on one company and that too by not following proper procedure. It quashed the notice and ordered the excise commissioner to take a fresh decision on the issue after hearing the company.
Source: Apparel Online
Industry is hopeful of achieving about 85% of pre-pandemic levels of business in the next six months: Retailers Association of India
Retailers are looking at 2021 with cautious optimism after witnessing steady improvement in sales month-on-month coupled with positive consumer sentiment during this year’s festival season. But the industry is yet to return to pre-pandemic levels.
According to the 10th edition of the Retail Business Survey released by the Retailers Association of India, though the retail sector has been witnessing recovery in sales month-on-month, by November-end, the industry’s sales were still nearly 13 per cent short of last year’s sales on a year-on-year comparison.
“Levels of recovery differ across regions as restrictions begin to ease in a capricious manner across States. Western and Eastern India are indicating a slower recovery with sales at -18 per cent and -17 per cent, respectively (y-o-y), while Northern and Southern regions are both progressing at -9 per cent, on a y-o-y comparison,” the survey findings indicated.
Categories such as food & grocery and consumers durables & electronics witnessed much stronger recovery trends than other segments. The survey stated that the apparel and clothing segment, for instance, is still reeling under pressure at about -12 per cent year-on-year behind pre-pandemic levels.
Covid challenges
Kumar Rajagopalan, CEO, Retailers Association of India (RAI), said: “While the festival and the wedding season aided some recovery for certain segments, the lack of inbound travel of Non-Resident Indians during the winter has had a negative impact on sales. Retail businesses may get further impacted by international travel restrictions being imposed due to the new strain of the virus.
“Furthermore, with local level restrictions coming back into play, retailers are moving towards 2021 with cautious optimism. However, the industry is hopeful of achieving about 85 per cent of pre-pandemic levels of business in the next six months.”.
The $854-billion retail industry will need unconventional solutions and government support for recovery and all efforts are required to boost the local economy and help revive retail, saving millions of jobs, he added.
Source: The Hindu Business Line
The Central government has released the ninth instalment of Rs 6,000 crore GST compensation payment to the states. The states and union territories have so far received Rs 54,000 crore of the `1.1 lakh crore to be disbursed by the Centre this fiscal.
The central government borrows the funds under a special window and passes it on to states in back-to-back loan arrangement. The interest rate for the latest loan instalment was 5.15% while the average rate for the entire borrowing so far is at 4.74%, the government said.
While 23 states have been allotted Rs 5,516.6 crore in this round of weekly instalment, the remaining money (Rs 483.4 crore) has been released to the 3 union territories with legislative assembly (Delhi, Jammu & Kashmir & Puducherry) which are members of the GST Council.
“The remaining 5 states, Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim do not have a gap in revenue on account of GST implementation,” the government said.
Although GST regime has a mechanism of compensation cess fund, which is made up of cess proceeds, to be used for compensating states in case of shortfall below their protected revenue each year. This guarantee of revenue protection is baked into the law and the states are entitled to a 14% y-o-y growth in their GST revenue.
However, since last year, the compensation cess fund has proved to be inadequate for the purpose. The central government proposed this year that it would pay states through market borrowing but many states didn’t agree with the Rs 1.1 lakh crore estimated shortfall.
The Centre insisted that it would only pay to the extent of shortfall due to GST implementation issue and not Rs 1.85 lakh crore which is the revenue deficit that includes the pandemic-induced slowdown. After initial logjam, all the states eventually came on board with the borrowing scheme.
In addition to providing funds through the special borrowing window to meet the shortfall in revenue on account of GST implementation, the central government has also granted additional borrowing permission equivalent to 0.50% of Gross States Domestic Product (GSDP) to the states choosing option-I to meet GST compensation shortfall to help them in mobilising additional financial resources.
“All the states have been given their preference for option-I. Permission for borrowing the entire additional amount of Rs 1,06,830 crore (0.50 % of GSDP) has been granted to 28 states under this provision,” the government said.
Source: The Financial Express
Mumbai authorities have decided to amend the mandatory institutional quarantine rules for passengers arriving at the Mumbai International Airport from the UK, South Africa, Europe, and the Middle East.
Under the new guidelines issued by the Municipal Corporation of Greater Mumbai, travellers will be kept under institutional quarantine on arrival and RT-PCR tests will be conducted only on the seventh day after at the hotel or institution they are lodging at their own cost. If the reports of the test come negative, they will be allowed to leave the quarantine facility on the condition of seven days mandatory home quarantine. Returnees will be stamped ‘home quarantine’ and they have to submit an undertaking that they will abide by guidelines.
If a returnee from the UK tests positive, that person will be shifted to Seven Hills Hospital. The GT Hospital has been allotted for Covid-19 positive returnees from other countries.
Earlier the BMC guidelines on 14 days mandatory quarantine suggested symptomatic passengers from the UK to be sent to the hospital for further investigation and checkup. Passengers from the rest of the countries like Southeast Asia and the United States will not be sent to institutional quarantine, however, will be stamped for 14 days home quarantine by airport authorities as a precautionary measure.
Institutional quarantine guidelines are exempted for officials working in foreign embassy and Counsel General Office. Officials working in the embassy applying for exemption will have to adhere to guidelines under the Vande Bharat Mission.
The Maharashtra government has also imposed a seven-hour night curfew in cities across Maharashtra from December 22 for the next 15 days as a precautionary measure.
The new mutant strain of coronavirus found in the UK has forced Boris Johnson to announce another lockdown before Christmas. Several countries have imposed restrictions on flights from the UK and other European countries and South Africa.
Source: The Financial Express
BJP presented suggestions compiled by party office-bearers and state representatives for the upcoming budget to Union Finance Minister Nirmala Sitharaman on Monday in a pre-budget meeting held at party headquarters.
As per an official release, suggestions compiled by delegates from various social organisations were also presented by means of PowerPoint presentations and written representations.
The party said that 17 representatives from different segments of society participated in the meeting along with their colleagues.
"Issue for the development of the respective states and different segments were presented to the Finance Minister. Farmer's concern, expectations of labour force and trade and industries' wish list including middle-income group's concerns were extensively discussed in the meeting," it stated.
It further said that the representative expressed their views on resource mobilization for the government, and how taxation and GST implementation can be eased for traders, industrialists, and common men.
"Representative of social organizations expressed their views on how they can better participate towards the outreach of the social welfare schemes of the government to all segments of the society. New provisions that can be brought in the next budget with regards to this outreach were also discussed," it added.
Source: The Economic Times
The Union Finance Ministry has dug in its heels against petitions to postpone the last date for filing several returns, including for income tax (I-T) for assessment year 2020-21.
The ministry is also not disposed to defer its decision to make 1 per cent payment of tax liability in cash in GST despite pleas from a pro-government traders’ organisation.
The social media has been flooded with pleas for postponement, with former Commerce Minister Suresh Prabhu also writing to Union Finance Minister Nirmala Sitharaman in this respect.
But North Block has joined the battle of perception with at least six posts daily from the official Finance Ministry Twitter handle urging tax payers to submit the returns by December 31.
This exhortation is accompanied by statistics of I-T returns filed. For instance, the Finance Ministry in its fourth post on Monday reported that 7.10 lakh I-T returns were filed till 5 pm. It put the cumulative figure till that hour at 4.23 crore for assessment year 2020-21.
The postponements have been sought mainly because internal trade remains disturbed due to Covid.
Several associations, trade unions, professionals and Parliamentarians have sought staggered extensions in deadlines for various returns. They want the due date for filing annual returns for GST postponed to January 31 and for I-T returns to March 31.
The Government does not want to defer the implementation of Rule 86B in GST that levies mandatory cash payment of 1 per cent tax for businesses with monthly turnover of over Rs 50 lakh. The Confederation of All-India Traders (CAIT) cited enhanced compliance burden and financial obligation for traders in seeking a deferment but the government has stated that this provision will curb fake invoicing.
Source: The Tribune
A “limited” trade deal between India and the US, which was on the verge of conclusion before the US Presidential polls last month, is unlikely to see the light of the day at least before the second half of 2021, a source told FE.
The deal was expected to cover an annual goods trade of about $13 billion, or roughly 15% of the bilateral shipments (in FY20). “With Joseph Biden at the helm of affairs in the US, there would be a fresh review of the deal. It may be pushed back to the second half of the next year, or even further,” the source said.
“However, the good thing is that the scope of the deal can be expanded in this process to include more products,” he added. Despite differences over offers, both India and the US negotiated the mini deal for months, before the American election purportedly slowed down the process. The US was the largest single market for India, with goods exports worth $89 billion in FY20. This deal was expected to be followed up with talks for a free trade agreement (FTA).
At an event this month, US Trade Representative Robert Lighthizer said while both the sides were not far away from the mini deal, “keeping in mind obviously we have a political change going on over here… that is going to be a bit of a setback”. “…there is going to be some change and my guess is that it will slow things up,” he added.
FE had first reported on November 18 that the deal would be delayed, as the new administration could review even the settled issues.
Under the “limited” deal, India has been pushing the US for a complete restoration of duty benefits for it under the so-called Generalised System of Preferences (GSP). This will mean duty-free Indian exports of $6-6.5 billion a year (but the potential tariff forgone by the US was only $240 million in 2018).
However, the US wanted India to import farm and dairy products of equivalent amount ($6-6.5 billion) to restore the GSP benefits. New Delhi was willing to grant greater access in farm items, including cherries, alfalfa hay and pork, but was reluctant to pledge farm/dairy imports in such high volumes without reciprocity. Instead, it wanted to buy other American goods, mainly oil and manufactured products.
Also, as sources had earlier told FE, India might consider opening up its dairy and poultry sectors partially if it got a good deal from the US in textiles and garment and pharmaceuticals. In garments, for instance, the US import duties for India currently range between as much as 16.5% and 32%.
India is learnt to have offered to reduce tariffs on high-end bikes like Harley Davidson and sweeten its initial offer on easing price caps in medical equipment. India was also willing to resolve certain non-tariff measures, such as certification process for some dairy products.
However, the US was still unimpressed and its focus of negotiations, before the American election, increasingly shifted to selling more farm goods to India.
For its part, New Delhi has been critical of stringent US patent protection laws and various steps by the Food and Drug Administration (FDA), which have dented India’s exports of pharmaceutical products. This is among the important non-tariff barriers that India wants the US to remove.
In September, commerce and industry minister Piyush Goyal had said Lighthizer and he had agreed that “we can look to finalising (the limited deal) before the (US) election, or otherwise soon after the election”.
The importance of an India-US FTA, or at least this limited deal, has grown after the conclusion of the China-dominated RCEP pact in November. India pulled out of the RCEP talks, as it believed no deal was better than a raw deal.
Source: The Financial Express
President Donald Trump and the US Congress have upped the ante on China, legislating new policy aimed at challenging Beijing's efforts — acquiesced for years by Washington — to bully Tibet and Taiwan into submission.
Contained in the massive spending bill signed into law by President Trump on Sunday night is the Tibet Policy and Support Act (TPSA), which bolsters support for autonomous conduct of Tibetan affairs and calls for the establishing of a US consulate in Lhasa, and the Taiwan Assurance Act which strengthens military ties with Taiwan.
Coming on the heels of China's massive indoctrination efforts in Tibet, including setting up military camps, the TPSA reaffirms the rights of Tibetans to choose a successor to their spiritual leader, the Dalai Lama, while mandating sanctions on Chinese officials who interfere in the selection.
The TAA supports Taiwan’s meaningful participation in United Nations bodies while normalising regular arms sales and strengthening its defense capability.
The provisions freaked out Beijing, which has long carried out pogroms aimed at decimating Tibetan culture and religion with impunity in the face of successive US administrations and lawmakers being in thrall of China's economic growth. Trump is the first president who openly blew the whistle on the damage China is causing to the US economy, although it took the coronavirus pandemic for him to spring into action.
Warning that the US action constituted interference in China's internal affairs, a Chinese spokesperson asserted in Beijing that “the determination of the Chinese government to safeguard its national sovereignty, security and development interests is unwavering."
The spokesman also said Washington should not put the parts of the acts which “target China” into effect in order to avoid harming Sino-US relations, a reference to the "discretion" — cowardice in the eyes of critics — previous US Presidents exercised while considering previous such legislative provisions as "advisory" in order to not aggravate Beijing.
Although the Tibetan cause — and the Dalai Lama — has the respect and backing on the Hill, notably from the powerful House speaker Nancy Pelosi herself, successive US Presidents gradually dialed down support in the face of China's growing clout. US timidity was underscored by President Obama's decision to downgrade the venue of his meeting the Dalai Lama from the Oval Office to the Map Room, from where, according to one account, he was ushered out of the back door past heaps of trash.
The coronavirus pandemic, which Trump insists on calling the "China virus," has reset Washington's view of Beijing, with many more lawmakers taking a hard line on China. Given House Speaker Nancy Pelosi's long standing ties to the Tibetan cause, the incoming Biden administration is also expected to hew to the new policies outlined in the legislation.
Source: The Times of India
India could benefit from the likely shift in global supply chains from China to other economies in the aftermath of the COVID-19 pandemic, according to a survey . The Ficci-Dhruva Advisors Survey conducted this month covered more than 150 companies in India.
"Another major outcome of COVID-19 is the likely shift in global supply chains away from China to other economies. Nearly 70 per cent of the survey participants have said India could benefit from this move and they expect a fair share of manufacturing to shift from China to India in the near future," said Ficci on the findings of the survey.
Moreover, the prospect of introduction of a vaccine against COVID-19 early next year has improved the confidence level of businesses, with almost 74 per cent of the participants foreseeing a significant positive impact on their business once the vaccine is made available, the survey revealed.
However, to capitalise on the opportunities that could come India's way, there is need to strengthen its manufacturing ecosystem. Under the Aatmanirbhar Bharat package, the government has introduced several measures to address the immediate pain points of the economy as well as steps to improve India's manufacturing competitiveness.
These measures have been well received by the industry, with 45 per cent of the surveyed companies rating the latest set of announcements made under Aatmanirbhar Bharat package 3.0 as 'good to excellent'.
"The results of the survey are encouraging and highlight the ongoing industrial and economic recovery. This momentum needs to be built upon and now all eyes are on the upcoming Budget," Ficci President Uday Shankar said.
He observed that the context of this Budget is completely different due to an unprecedented social and economic challenge, exuding confidence that the government will take bold steps to respond to these challenges.
According to the survey, COVID-19-induced travel restrictions have limited the ability of companies to undertake business operations efficiently, as 74 per cent of the respondents have validated this.
To overcome this challenge and maintain business operations, companies have leveraged digital tools for communication. Given the benefits of use of technology, 64 per cent of the surveyed firms said moving forward, they will use a mix of travel and virtual meetings even after the situation becomes normal.
The results of the December 2020 survey also indicate that there has been a further improvement in the performance of companies compared to the situation in August.
With improvement seen in the economy, nearly 40 per cent of the surveyed firms are operating at a capacity utilisation level of over 70 per cent, vis-a-vis 30 per cent of the companies in August 2020.
Other indicators of improving business performance in the recent survey are related to order books and exports.
Nearly 50 per cent of the companies have reported seeing an increase in their order books and about 40 per cent said their exports have increased. In the August 2020 survey, the corresponding figures were 44 per cent and 30 per cent, respectively.
However, even as there are signs of improvement in performance of businesses, the impact of COVID-19 still lingers, as the survey results show that businesses continue to face challenges on account of weak demand (59 per cent), managing costs (54 per cent) and financial liquidity (48 per cent), Ficci stated.
Given this, the survey participants expect both government and RBI to continue with their support measures even next year.
There is a strong demand that the upcoming Budget must prioritise growth-oriented measures, including a cut in direct tax rates.
"The survey results portray a continued improvement in the business environment in India, with weak demand and managing costs still remaining India Inc's key challenges. The vaccine news has infused optimism among businesses," Dinesh Kanabar, CEO, Dhruva Advisors LLP said.
He further said given the impact of the pandemic on the economy, the Union Budget 2021-22 is one of the most anticipated Budgets.
"It would be interesting to observe the growth-oriented measures, which are introduced and if tax cut proposals are tabled," Kanabar added.
Source: The Economic Times
President-elect Joseph R. Biden Jr. said on Monday that his transition team had faced “obstruction” from the Defense Department, raising new concerns about the Trump administration’s cooperation with transition officials with just over three weeks until Inauguration Day.
“Right now, we just aren’t getting all the information that we need from the outgoing administration in key national security areas,” Mr. Biden said in Wilmington, Del., after he and Vice President-elect Kamala Harris were briefed by members of the transition’s agency review teams for agencies dealing with national security and foreign policy, like the Defense and State Departments.
“It’s nothing short, in my view, of irresponsibility,” Mr. Biden said.
In his remarks, the president-elect said that his team had “encountered roadblocks” from political leaders at the Defense Department as well as at the Office of Management and Budget. Mr. Biden emphasized the importance of a smooth transition, saying, “Right now, as our nation is in a period of transition, we need to make sure that nothing is lost in the handoff between administrations.”
“My team needs a clear picture of our force posture around the world and our operations to deter our enemies,” he continued. “We need full visibility into the budget planning underway at the Defense Department and other agencies in order to avoid any window of confusion or catch-up that our adversaries may try to exploit.”
In a statement on Monday, the acting defense secretary, Christopher C. Miller, defended the department’s level of cooperation with the Biden team. He said the department was continuing “to schedule additional meetings for the remainder of the transition and answer any and all requests for information in our purview.”
“Our D.O.D. political and career officials have been working with the utmost professionalism to support transition activities in a compressed time schedule, and they will continue to do so in a transparent and collegial manner that upholds the finest traditions of the department,” Mr. Miller said. “The American people expect nothing less, and that is what I remain committed to.”
The Biden transition was hamstrung at the outset by the Trump administration’s delay in formally designating Mr. Biden as the apparent winner of the election. The head of the General Services Administration did not take that step until Nov. 23.
More recently, Mr. Biden and his team have complained about their dealings with the Pentagon in particular.
A week before Christmas, Yohannes Abraham, the executive director of the Biden transition, said that the president-elect’s team had encountered “isolated resistance in some corners, including from political appointees within the Department of Defense.” He expressed concern about what he described as “an abrupt halt in the already limited cooperation there.”
Mr. Miller had cited a “mutually agreed-upon holiday pause,” but Mr. Abraham said that no such agreement had been made.
And last week, during an event at which Mr. Biden criticized President Trump for playing down the Russian hacking of the federal government and private companies, Mr. Biden said, “The Defense Department won’t even brief us on many things.” The department responded by calling that claim “patently false.”
After Mr. Trump’s postelection firing of Defense Secretary Mark T. Esper and a purge of the department’s senior leadership, the Pentagon was put under the political control of several Trump loyalists, including Kashyap Patel, Mr. Miller’s chief of staff, who is best known for his efforts to discredit the Russia investigation when he was a Republican congressional aide.
But even as Mr. Biden complained on Monday about a lack of cooperation from some political appointees in the Trump administration, he also offered praise for career federal government employees who have worked with members of his transition. “For some agencies, our teams received exemplary cooperation from the career staff,” he said.
Mr. Biden also offered a downbeat assessment of the toll that four years of Mr. Trump’s presidency had taken on the country’s national security apparatus.
“The truth is, many of the agencies that are critical to our security have incurred enormous damage,” the president-elect said. “Many of them have been hollowed out — in personnel, capacity and in morale.”
Mr. Biden has emphasized a promise to rebuild alliances and restore the United States’ standing in the world, and he has already named most of his top foreign policy and national security officials — though he has yet to announce his choice to lead the C.I.A.
Since winning the election, the president-elect has had calls with a long list of foreign leaders, and in his remarks on Monday, he reiterated his desire to repair relationships that had been damaged during the Trump administration.
“Right now, there’s an enormous vacuum,” Mr. Biden said. “We’re going to have to regain the trust and confidence of a world that has begun to find ways to work around us or work without us.”
Source: The New York Times
