GST-It must be better late than never!!

How truly it has been said. The change is the need of time, change is innovation, but it becomes arduous when it is not accepted by that people for whom it was made. Whenever any change is about to come in our country it hangs in the way cause of lack of cooperation. To change the system of Indirect taxation Government brought a new system for implementation called GST-The goods and services tax. It was heard that GST will bring a drastic revolution in Indian Indirect Taxation system but the real picture shows something else as it itself become a reason of struggle between Central and states.

Need:-

Indian entrepreneurs are loaded with a number of taxes. Almost every business transaction suffers a different tax. For services, it is service tax, for manufacture it is Excise Duty, for sale within state it is VAT, for inter-state sale it is CST, for income earned it is Income Tax, for wealth created it is wealth tax, etc. These are mere examples for the consultants, but for the businessmen, they mean a lot of compliances involving a significant number of man power and money. In order to relieve the businessman from some of the taxes, government has planned to bring a composite levy – The GST which is said to bring a tax-revolution in the country. It is said that the GST will simplify the complex tax structure of the country and will replace around 16 central and state taxes including the service tax, excise duty, VAT, etc. while maintaining a collaboration between the Centre and the State.

Benefits:-

The main beneficiaries will be the business personnel. At present, there are a no. of taxes governed by different Acts and rules. The separate records are to be kept, separate returns are to be filed, different dates are there for payment of taxes and filing of returns, etc. which require a significant amount of man power and money. However, the GST, when implemented, will replace many of the taxes and will obviously reduce the paper work, man power and money. Further, there are no. of ambiguities in certain cases which makes it difficult to ascertain as to which law is applicable. For eg. software and SIM cards are service or goods? The service tax department says it is a service while the sales tax department says it is sale of goods. The GST will resolve the issue. The Government too will be benefitted. It is anticipated that the GDP of the economy will be increased by $500 billion and exports will also increase by 15%.

Beginning of GST:-

The Thirteenth Finance Commission, as constituted by the President on November 13, 2007 to give recommendations regarding the Central-State Fiscal relations during the year 2010-15. The Commission recommended a model GST structure and also recommended a grant of Rs. 50000 crores for its implementation. The recommendations were accepted in principle and discussions were carried out between the Centre and State.

The Empowered committee of state finance ministers has released the First discussion paper on GST on 10.11.2009 and it was proposed that GST is going to be implemented on 01.04.2010 with its new developments regarding unvarying tax rates all over country, removing cascading effects of Cenvat and service tax with set off by making a chain of set-off for hierarchy of Producer/manufacturer/service provider to Retailer/End user level. For this purpose GST is to be introduced at state level. But as history repeats itself Government had faced and still facing intricacy of different opinions of states in the way of implementation of GST. It is not an easy task to combine all the provisions and demands of the states having different thoughts and opinions. When everyone was waiting to greet with GST it was recommended in Report of Task Force on GST that it will be postponed till 01.10.2010 due to oppositions raised by states which is again delayed by 01.04.2011.

In the middle:-

On oppositions made by states, Government presented a revised draft bill of GST in order to arriving at consensus with the states. In the revised bill Government has provided veto power to the Union Finance Minister relating to state subjects matters on taxation issues. Then after Finance minister had offered some concessions on major demands of states relating to simplification of tax administration and replacement of multiple levies of taxes like CST, VAT, Excise, Service tax into a single tax. Government also proposed dual rate system to be included in GST system but because of this new system states may have revenue loss in initial year of implementation of GST. For this it was cleared by the government for compensation to states for switchover to the new tax regime including special incentives to those states such as Punjab and Haryana for loss out of purchase tax. The Government also agreed to exclude crude oil, petrol, diesel and ATF from the GST structure on demand raised by states.

Present scenario:-

But as it was predicted this bill also comes in litigations between states and central. The Empowered Committee of State Finance Ministers on GST has rejected the constitutional amendment bill on 01.08.2010. The BJP-ruled states, including Gujarat, Madhya Pradesh, Chhattisgarh, Himachal Pradesh and few others had opposed the constitutional amendment saying that all powers of the states have been snatched through the constitutional amendment. Chairman of the Empowered Committee of State Finance Ministers commented on the constitutional amendment that states were against infringement on their financial autonomy and have certain reservation on the provision of draft bill for the GST council and the GST Disputes Authority hence this draft bill is not acceptable in this form to the states. However some states were in favour of this amendment.

On coming of oppositions from many states, Centre has given up on the matter of veto powers given to the Union Finance Minister. The veto power has been withdrawn from the constitutional amendment bill on GST with giving a statement that central FM had no any intention of becoming the Super Finance Minister to interfere with the State GST.

In the latest meeting of state finance ministers and centre for GST, held on 20.09.2010 many states has accepted the approach of new draft of GST bill except few mainly Gujarat and Madhya Pradesh who still have different viewpoint. In that meeting the Madhya Pradesh government given an idea of an alternative model of the GST and BJP rules states has supported to it. Also some other states have allotted one month time for consideration to make their opinion on revised bill. In the meeting the states has stressed on retention of their rights and wished some more changes in the proposed Act.

Next what?

Recently, while addressing an interactive session organized by the Merchants' Chamber of Commerce at Kolkata, the chairman of empowered Committee – Mr. Asim Dasgupta, who is also the finance minister of West Bengal; indicated that the ongoing conflicts between the states regarding GST are about to resolve. The matter will be on board once again on October 30, 2010; when the empowered Committee will meet again. The points of dispute – the Dispute settlement mechanism of GST and GST council constitution will be discussed therein.

Before Leaving:-

Government has to obtain categorical support of all the sates since two-third majority is required for ratification of GST. But some states ruled by BJP and other opposite parties are not happy on implementation of GST. So it becomes a necessity for both Centre and States to have consensus on GST very soon for bringing the GST in actuality in 2011. But after coming of statement of Revenue Secretary in this august that introduction of GST will miss the deadline of April, 2011 it becomes unambiguous that the matter of GST becomes political issue rather than an economical or legal one. It is ever called that “Better late than never” so we can hope that the delay in coming of GST will bring a fruitful result with it’s implication. Let we hope that GST bill will be presented in winter session and political differences will shut down.

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VIJAY POPAT

SIMPLE TRICKS FOR PREPARING C.A. EXAMS

NOTE:- This info can be applied to any competitive examinations.  

Many  a times student ask whether 3 or 4 months will be sufficient enough for the preparation of examination like CA final, not only this ,they will put certain conditions  like they are average or dull student ,now will the time be sufficient for them to complete the syllabus. Someone will say we are smart worker , some one will say we are hard worker, now tell how much time will be sufficient for the exam preparation so that we can pass it with one go. These are the general queries come to ones mind when some one is facing the professional examination.

The solution to all the above queries will be given with the help of an algebraic equation.

Suppose for passing CA final a minimum of 10000 points is required, then this 10000 points can be achieved by multiplying two things i.e. 1.effective hours given for study and 2. points generated per hour

We can write the Points Required in the form of equation as:

Points Required(P) = effective hours given for study(H)   X  points generated per hour(G)

Assumptions behind the equation:

The views and thoughts behind the exams and the knowledge required is expressed with the help of this equation and points required is just a resemblance to the thought.

The Points Required(P) is complete in itself and it covers  all the factors necessary for clearing the examination like smart work, hard work etc

Effective hours given for study (H)  is the time when you feel that you have actually studied or learned something while studying

From the above equation following facts comes into picture

1.As we know ,points required is a constant figure ,hence if someone can generate higher points per hour ,then he/she has to contribute less effective hours of study compared to others and vice-versa

For E.g.: If “A” can generate 10 points per hour then he has to give only 10000/10 =1000 hours of effective studies. On the contrary if “B” can generate only  5 points per hour then he has to give 10000/5= 2000 hours of effective studies

2. We can say that, one   who feel him/her self more knowledgeable and Intelligent compared to others will have to give less effort compared to those who feels themselves as ordinary and average student

3. CA Curriculum has provided sufficient time for studies i.e. 2 to 3 complete years for the preparation of final exams which is sufficient from the exam coverage point of view. But still under some circumstances one can say that the time is not sufficient for the preparation

For e.g. if ”C”  can generate only 1 point per hour then he has to give 10000/1= 10000 hours of effective studies. If he manages to give on an average 8 hours of effective studies per day  for all the time period of his studies then he has give 10000/8=1250 days i.e. 1250/30=41.67 months i.e.3.47 years which is exceeding 3 years of time. Hence time became the limitation or hurdle in this situation. So in that sense can we say that this course is not meant for “C”. No, “C” can also  finish this course and its very much possible, and he can finish the same, very much within time. Now we will see how is that possible.

“C” will not take the time up to 3.47 years rather ”C” will try to generate more points per hour. Is increasing the points generation per hour possible? Yes it is very much possible. The below points are very much important for those  who feel  that they are below or average student:

1.  Do Yoga and Meditation. Concentration to a particular thing or a particular number or symbol with closed eyes increases the efficiency and thinking power

2. Solve Quiz, Sudoku etc, on a regular basis. By playing with mathematical numbers , the brain becomes sharp and intelligent, and the analytical power of the person grows.

The above two points will not give the result after one or two days but definitely in the long run this will work a lot. And the points generating power per hour can increased to 3 or 4 from 1 within a period of six  to eight months  if one will follow it properly with complete dedication.

Thus now “C” will  require only 3.47/3 i.e.  1.16 years of complete studies with 8 hours a day, which is much lower than the maximum time given  for preparation by CA curriculum

Hope the above points will be very much helpful for those students who feel that CA is not there cup of tea.

Now one more question can be raised on this equation, whether it covers the luck factor also?

My personal opinion is that, there is nothing called luck as such, if I will tell you through my example then the points required to  pass CA  was 10000 ,which was made by covering all the aspects, that  means a minimum prescribed level of knowledge is what expected by the Course Curriculum and if that level of knowledge is not there with the candidate then he/she  is not supposed to pass. And if the same happens in the examination we call it as the luck. But according to me he fails due to one of the two reasons: 1.Either his/her level of knowledge was not matching with ,what was required by the  course curriculum or 2.Though his knowledge was enough but he/she was lacking  with the presentation skills. But I will say “Luck required or not” is a very subjective thing and will vary from person to person.

If I will insert luck factor  into the equation then the new equation will look likes

Points Required(P) = effective hrs given for study(H ) X points generated per hr(G) X Luck Factor(L)

In   my previous equation  luck factor was by default 1,as L was 1 so it was not necessary to show L as the part of equation, as anything multiplied by 1 will remain that only.

Now here in the new equation , we will see how it  works:

Suppose  ”D” says he always have negative luck when he appears for  the exam. He says his luck is only 50% of others luck, means assuming other things same his chances of passing examination is half compared to others chances of passing the exams. And “D” also says that he can generate 5 points per hour then we have only G is missing in the equation:

P = H X G X  L  i.e. 10000= 5 X G X .5 i.e. G=10000/(5 x .5) i.e. G = 4000 hours.

Without considering the Luck Factor D was supposed to give only 2000 hours for studies but now as his luck is negative then he has to give 4000 hours. From this example one good point comes into picture:

1.  The luck factor can be compensated with the efficient and effective work. As the P is constant hence lower will be the L higher will be the G required

Conclusion:

This equation was there just to make you aware of your talent and potential. Nothing is impossible, and the success is achievable under worst to worst scenario.

The points generation per hour (G) is a subjective and relative term, and only one can understand his or her potential and generation capacity. After reading this article if you are going to ask me “how much points will I be able to generate per hour ,given the condition that I am average  or dull student”, then I will not be able to answer  your question, it is only you who can give answer to this question.

VIJAY POPAT

Online or offline - which tax filing process should you follow

In the digital age, its now possible for individuals to e-file their tax returns online. However, the offline option of physical filing continues to be popular. Over time, it is expected that more people will try out e-filing. Here we do a quick review of the respective processes involved in online and offline filing of tax returns.

Online – e-filing of tax returns

If you want to file your returns electronically, you have 2 options:

Option 1 – You can use online tax filing portals for preparation and filing of your tax return

Option 2 – You can e-file your tax return on Income Tax Department’s website after preparing it on your own using the software utility provided on the department’s site.

In each of the above options, your return will be electronically sent to the tax department. However, you still need to sign your tax return. If you have a digital signature, you can use this to electronically sign your return.

However, if you don’t have a digital signature, you will need to print out your ITR-V form. An ITR-V is an acknowledgement generated on filing your return. Print this document and sign it. Then send this hard copy of your ITR-V to the Central Processing Cell of Income Tax Department in Bengaluru within 120 days through ordinary post.

Offline – physical filing of tax returns

There is no danger or bias in filing online returns. However, if you are still old fashioned and slow to join the digital age, then you can choose to file your returns in physical form.

For physical filing you will have to prepare your tax return using the relevant form either on your own or through the help of a Chartered Accountant. Once your return is ready and signed by you, you will need to submit this to the local Income Tax Office.

Some things to remember

Here are some things for you to keep in mind:

• Whether it is electronic filing or physical filing, under the new procedure, individuals do not have to attach any documents or enclosures with the return of income

• The medium of filing has no bearing on whether the tax authorities will scrutinize your tax return and tax affairs. It makes no difference to the tax department whether you e-file or file physically

• If you are due a refund, you are not going to get it any faster if you file in one way or another.

VIJAY  POPAT