Dear professional Colleagues,
This 2nd October, India marked the 150th birth anniversary of Mahatma Gandhi, an anti-colonial nationalist and political ethicist who employed nonviolent resistance to lead the successful campaign for India’s independence from British Rule and in turn inspired movement for civil rights and freedom across the world. He was a person who considered non-violence to be a philosophy, a principle and an experience based on which it is possible to build a better society. Fellow Indians paid homage to the father of the nation with prayer and tributes across the nation. A Sarva Dharma Prarthana Sabha was organised at Rajghat, the Samadhi of Mahatma Gandhi in the National Capital. President Ram Nath Kovind, Vice President Sri M. Venkaiah Naidu, Prime Minister Narendra Modi, former Prime Minister Dr. Manmohan Singh, Lok Sabha Speaker Om Birla, Rajya Sabha Deputy Chairman Harivansh, several Union Ministers, BJP veteran L. K. Advani, BJP working president J. P. Nadda paid floral tributes to Bapu at his Samadhi. In the evening, PM Modi visited Sabarmati Ashram in Gujarat to address 10,000 sarpanchs. He also declared India ‘open defecation free’ and success of the Swachh Bharat Mission and launch a war against plastic. As responsible citizens of India, it is our social responsibility to help in fulfilling Gandhiji’s vision of Clean India and take pledge for the same.
There have been several new updates on the GST portal over the last six months. The GST portal keeps rolling out new updates to help taxpayers file their returns more smoothly and effectively. We the tax practitioners need to stay up-to-date to avoid missing out on vital compliances. Two years after its launch, the Centre has begun the biggest review of Goods and Services Tax (GST). The Goods and Services Tax (GST) Council has cut taxes on hotel accommodation, outdoor catering, cut and polished semi-precious stones and lowered cess on passenger vehicles of up to 4,000-mm length carrying 10-13 people. The council also removed the requirement to file returns for two years for small taxpayers, and raised the producer levy on caffeinated beverages to 28% from 18% now while also imposing a cess on it. Several decisions have been taken with the broader principle of making the economy more vibrant. The council reduced tax rates for hotels to help achieve the targeted expansion in the tourism industry. Hotels with room tariffs of up to ₹ 1,000 need not pay any GST. For those with tariffs of
₹ 1,001-7,500, the tax will be 12%, and for those offering rooms at more than ₹ 7,500 a night, the levy will be 18%. The Council not only reduced the rates, but also reduced the slabs. Earlier, room tariffs of ₹ 1,001-2,500 attracted a rate of 12%; ₹ 2,500-7,500 attracted an 18% rate, and those costing above ₹ 7,500 paid tax at 28%. Outdoor catering will now pay 5% in taxes instead of 18%. Reduction in tax from the peak rate of 28% to 18% for hotels having tariff of more than ₹ 7,500 and from 18% to 12% for hotels having tariff less than ₹ 7,500 should give a boost to the tourism industry. In a relief for the IT and ITES sectors, the council has approved exemptions on outsourcing. It has exempted pharma companies that carry out specific research and development for foreign companies from GST. The council raised tax on caffeinated beverages to 28% from 12% now and imposed a 12% cess. GST was also increased on railway wagons to 12% from 5% to address the issue of accumulation of input tax credit. It also restricted the refund of compensation cess on tobacco. The annual return compliance waiver until ₹ 2 crore turnover would be quite an aid from an ease of compliance perspective for small businesses.
There was a significant development in the corporate income tax. India’s private sector is set to benefit from the single largest reduction in corporate income tax in almost three decades. Announced by Finance Minister Nirmala Sitharaman on September 20, India’s effective corporate tax rate is reduced by almost 10 percentage points for domestic companies. The government slashed basic corporate tax rate to 22% from 30% benefitting companies, while for new manufacturing companies it has been cut down to 15% from 25%. The relief measures announced by the Government will cost the government 1.45 lakh crore per year. The manufacturing sector stands to gain the most from the reductions in tax arbitrage. Tax consultants predict that existing companies may consider forming new entities for future investments to benefit from the sizeable tax break. To do this, companies will obviously need to plan their cash management, dividend distribution tax, and other matters of compliance to ensure they are not flouting legal norms or overly exposed to the tax department. The lower tax rate will allow India to compete with ASEAN’s emerging economies – like Vietnam, Thailand, and Indonesia for foreign investment more effectively – particularly given India’s larger market and cheap labor pool.
Friends, ‘Change is one of the biggest challenges for tax professionals.’ It takes careful planning to ensure the time spent keeping up with technical changes does not detract from time spent advising clients. Not only do tax professionals have ever-changing legislation to contend with, we have valuable client relationships to build and maintain. Demanding complexity, relentless changes has made the work of tax professional very complex. In the modern era, the tax profession faces a new set of challenges. But this doesn’t mean it’s all doom and gloom. However, if we work together and focus on what the future needs to look like and how we are going to achieve it, there shall be no difficulty. Although technological change may be part of these challenges, this is likely to be part of the solution. ‘The pace of change is really quite staggering. But the new technologies open up all sorts of new ways of working, which should lead to greater process efficiencies.’
Sure, the tax profession can be challenging. But the future looks bright indeed. After all, if it was easy, do you think we’d really enjoy it as much? I know I wouldn’t.
It gives me immense pleasure to inform you all that the Northern Zone of the All India Federation of Tax Practitioners, in association with the Income Tax Bar Association Varanasi, is organising “Dev Deepawali” Varanasi Tax Conference 2019, a two days National Tax Conference under the theme “A Bright Sail Towards Tax Proficiency” on 11th and 12th November, 2019. The Dev Deepawali, “the Diwali of the Gods” or “Festival of Lights of the Gods”, which falls on the full moon day of the Hindu month of Kartika, i.e. fifteen days after Diwali, is believed to be the day on which the Gods descend to Earth to bathe in the Ganges. The steps of all the ghats on the riverfront of the Ganges River, from Ravidas Ghat at the southern end to Rajghat, are lit with more than a million earthen lamps (diyas) in honour of the Ganges, and its presiding goddess. The festival is a major tourist attraction and the sight of a million lamps lighting on the ghats in vivid colours is a breathtaking sight. I am confident that the participants shall be greatly benefited by the deliberations in the Conference and at the same time, enjoy the Dev Deepawali and leave with memory of the mesmerizing view of the Ganga River glittering with more than a million lit-up earthen lamps.
Immediately thereafter, the 22nd National Convention is going to be held on 13th, 14th and 15th December, 2019 in Mumbai. A large number of delegates are going to participate in the event. We are looking forward to have you all in Mumbai and as such, appeal to you to register for the same in large numbers.
Thanking you all
Dr. Ashok Saraf