PHD CHAMBER BULLETIN Vol. XXXIX No. 3 MARCH-2017 `25 SPECIAL REPORT Defining Goods & Service Tax India Inc. / MARCH 2017 | 1 CONTENTS CONTENTS +LJKSUR¿OH3+'&KDPEHUGHOHJDWLRQDWWKH,QGLD%XVLQHVV3DUWQHUVKLS6XPPLWDW%DKUDLQ PRESIDENT MESSAGE 4 Monthly news bulletin of PHD Chamber CHAMBER AT WORK 6 President FOCUS STATES 34 Mr. Gopal S. Jiwarajka Senior Vice President COHESIVE INTERFACE 40 Mr. Anil Khaitan COVER STORY Vice President Mr. Rajeev Talwar Supply Time & Place of supply and input Tax credit under Revised Model GST law 41 Editor: A big boost in real estate 47 Mr. Saurabh Sanyal ECONOMY WATCH Secretary General Policy Pronouncements and Development 48 Production Editor: EXPRESSIONS Ms. Neelu Kapoor Thus Spoke Finance Minister Arun Jaitley… 50 PHD Chamber’s Partnership to showcase Jharkhand at Suraj Kund Mela 51 Editorial Design & Production: PHD Chamber Swachh Paryavaran Campaign 54 HEADWAY #1 Ganga Apt., Alaknanda, New Delhi-19 Tel. : 011-41704107 Skill Development Initiatives 57 e-mail: [email protected]; www.indusinc.com Towards Inclusive Growth 61 We welcome your feedback and suggestions: COMMUNIQUE [email protected] or [email protected] Bureaucratic Movements 67 New members 67 For further information, please contact: PHD CHAMBER OF COMMERCE AND INDUSTRY Media Buzz 68 PHD House, 4/2 Siri Institutional Area, International Exhibitions 70 August Kranti Marg, New Delhi-110016 Phone : 91-11-26863801-04 Fax : 91-11-26855450 Forthcoming Exhibitions 71 Email : [email protected] Website : www.phdcci.in Archives 72 2 | India Inc. / MARCH 2017 MESSAGE President’s Message Friends, both government officials and trade so that it becomes seamless and easier for its timely oday, India is considered a top star per- implementation. former in the world with the economy I must comment here that the industry growing at an impressive 7 percent T should have been consulted in the GST Coun- annually with improved living standards of cil’s decision on the four-tier rate structure at the masses. Emerging as the most attractive 5, 12, 18 and 28 percent. With the govern- investment destination with long-term po- ment now deciding to peg the peak rate at tential, it is considered the strongest among 40 percent in the legislation, I fear that rates G-20 countries. I acknowledge the country’s would increase once GST is implemented. strong macro-economic fundamentals, struc- tural reforms and a shift in investor sentiment, Already SMEs and start-ups are worried about an outcome of the Modi government’s proac- the sweeping nature of reforms that the GST tive approach towards growth that have played seeks to bring in as they don’t have the fi- a vital role in the improvement of macroeco- nancial ability to deal with such large-scale nomic indicators. changes. Not much attention has been given Mr. Gopal S. Jiwarajka to services in general and difficulties of ser- The government’s recent measures to en- President, PHD Chamber vice providers in particular. ergize India’s public finance system through rationalization of tax structure, improved The proposal on anti-profiteering mea- financial access through Jan Dhan Yojana, sure to ensure that trade and industry pass good governance among state-owned banks, The government’s recent the benefits of reduction in tax rates to con- introduction of a Bankruptcy Code, digitiza- sumers should be removed as it is open to measures to energize India’s subjective interpretation. I believe the costs tion as well as curtailing fiscal expenditure are public finance system through indeed noteworthy actions. It is heartening to of compliance and administration will signifi- witness that the 2017-18 budget proposals rationalization of tax structure, cantly outweigh the risks that businesses will are aimed towards stimulating growth, curb- improved financial access seek to ‘profiteer’ from the change in indirect ing black money, promoting digital economy through Jan Dhan Yojana, good tax system. I suggest that GST reform should and simplifying tax administration. Initiatives be complemented by reform in income and governance among state- property taxes in order to be growth-friendly such as BHIM application and Aadhaar pay owned banks, introduction of a have already been incentivizing digitization and redistributive. Bankruptcy Code, digitization of the financial system. Following demone- In sync with the rolling out of GST, the tization, it is now imperative to promote the as well as curtailing fiscal Chamber organized a National GST Conclave use of technology for faster processing of tax expenditure are indeed to discuss and deliberate on the GST in the returns and widening of the tax structure to noteworthy actions. country with its sectoral implications and uni- enhance the country’s tax revenues. form taxability & compliances across India. The Chamber has been regularly organizing Encouraged by buoyancy in tax revenues ing GST will be a bold new experiment in the Knowledge Series on GST to sensitize and with a 17 percent growth in tax revenues in the governance of cooperative federalism. Be- prepare the industry so that seamless imple- last two years, this year’s budget was prudent sides boosting competitiveness, investment, mentation takes place. to keep the fiscal deficit target at 3.2 percent job creation and revenue, it will strengthen of GDP in 2017-18, slightly lower than 3.5 the ability of states to respond to local needs. I would rest my pen with a thought by percent of the current fiscal year. This fiscal GST will undoubtedly bring about radical Prime Minister, Narendra Modi’s quote, “GST deficit target implies gradual medium-term changes in the manufacture, sales as well as is a “great step by Team India, great step fiscal consolidation, driven largely by higher consumption of goods and services in India, towards transformation, great steps towards nominal GDP growth and bolstered by im- replacing different taxes the Centre and State transparency.” Having said I am positive once provements in revenue collection. Governments levy separately. GST is implemented, consumers and small businesses will gain tremendously from GST. The country is all set to witness the big- GST will change the entire landscape With this I strongly endorse the famous say- gest indirect tax reform of unmatched impor- the way the businesses conduct their opera- ing, “of course no power on earth can stop an tance in independent India. The Indirect Tax- tions before this momentous law comes into idea whose time has come.” ation will be completely overhauled with GST force. I expect industry to gear up and strat- most likely to be implemented from July 1, egize the compliance of laws under GST for Let’s earnestly remain inspired and work 2017, thereby making a paradigm shift from the conduct of their operations. Training and together towards building a prosperous and the existing system of taxation. Implement- awareness programs should be conducted for strong India! 4 | India Inc. / MARCH 2017 CAW National GST Conclave One Nation One Tax – Pivotal Tax Reforms 0U*RSDO-LZDUDMND3UHVLGHQW3+'&KDPEHU0U1.*XSWD&R&KDLUPDQ,QGLUHFW7D[HV&RPPLWWHH3+'&KDPEHU0U1DMLE6KDK&KDLUPDQ&%(& 0U%LPDO-DLQ&KDLUPDQ,QGLUHFW7D[HV&RPPLWWHH3+'&KDPEHUDQG0U9LMD\&KDXGKU\'LUHFWRU)LQDQFH3+'&KDPEHU he Indirect Taxes Committee of PHD bring radical changes in the manufacture, make GST a mass friendly taxation. The Min- Chamber organized a National GST sales as well as consumption of goods and ister assured that he would take up the afore- TConclave – One Nation One Tax – Piv- services in India. said issues in the forthcoming GST Council otal Tax Reforms on February 9, 2017 at Hotel Mr. Bimal Jain, Chairman, Indirect Taxes meetings as he felt that land and real estate Hyatt Regency, New Delhi. The objective of Committee, PHD Chamber felt that for sincere being outside the purview of GST and that the conclave was to promote an informed di- implementation of GST Law by July 1 proper higher taxation slab for consumer durables alogue on the Goods & Services Tax in the training and awareness program should be would not serve its basic purpose. Mr. Si- country with its sectoral implications and uni- conducted for both government officials and sodia also opined that dual control of GST form taxability across India. trade so that it becomes seamless and easier defeated its intended objectives and sought Mr. Manish Sisodia, Hon’ble Finance for its timely implementation. more intense consultations on the issue in future course of GST Council, arguing that Minister, Govt. of NCT of Delhi and Mr. Najib Mr. Manish Sisodia, Finance Minister the objective of GST should be consumer and Shah, Chairman, CBEC graced the occasion commented that land and real estate ought traders oriented and it should not entirely aim as Guests of Honour. to be brought in within the ambit of GST and at raising taxation with higher rates. Mr. Gopal Jiwarajka, President, PHD its taxation slab for vast majority of consumer Chamber shared that the new tax law will durables should be kept at lower ceilings to Mr. Najib Shah urged the industry not to 0U0DQLVK6LVRGLD+RQ¶EOH)LQDQFH0LQLVWHU*RYWRI1&7RI'HOKL0U1.*XSWD&R&KDLUPDQ,QGLUHFW7D[HV&RPPLWWHH3+'&KDPEHU0U$QLO.KDLWDQ 6HQLRU9LFH3UHVLGHQW3+'&KDPEHU0U1DMLE6KDK&KDLUPDQ&%(&0U*RSDO-LZDUDMND3UHVLGHQW0U%LPDO-DLQ&KDLUPDQ,QGLUHFW7D[HV&RPPLWWHH DQG0U9LMD\&KDXGKU\'LUHFWRU)LQDQFH3+'&KDPEHU 6 | India Inc. / MARCH 2017 keep seeking exemptions under the GST re- gime as most of such exemptions would go away when it is put in place after July 1st al- though the deciding authority on doing away with exemptions post GST and fixing its rates would be the prerogative of the GST Council. Senior tax experts present were Mr. Satya Poddar, Ernst & Young; Mr. Mukul Asher, Pro- fessorial Fellow, National University of Sin- gapore; Mr. Sujit Ghosh, Advaita Legal; Mr. Shailendra Kumar, TIOL; Mr. Pratik Shah, SKP Business Consulting LLP; Mr. Ritesh Kano- dia, Dhruva Advisors LLP; Ms. Richa Mishra, Bureau Chief, The Hindu Business Line; Mr.