Karnataka witnesses 5-fold jump in GST tax evasion at Rs 39,577 cr in FY25
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The Hindu
25 minutes ago
- The Hindu
New GST regime will be consumer-centric, says Centre
The new GST regime previewed by Prime Minister Narendra Modi in his Independence Day address would be consumer-centric, with particular emphasis on the poor, the MSMEs, the middle class and the farmers, senior government sources said on Sunday (August 17, 2025). The new two-tier Goods and Services Tax (GST) structure of 18% and 5% rates will have the twin objective of making rates and processes simpler and more rational, as it was originally intended to be, the sources said. 'More equitable taxation' 'This has been in the making for a while. Our learning from the last eight years is going into this, and this will be a fundamental change in the template of taxation,' one senior functionary said. 'The new GST regime will make our taxation more equitable, and will see reduced taxes on what these four categories consume. The template will be more from the consumers point of view, and it will be put to and explained to the States from the consumers point of view.' The Centre expects any reduction in revenues that this may cause to be soon offset by a new buoyancy in the economy expected from rate rationalisation and process simplification. 'Reduced rates will not lead to reduced revenues, and we expect compliance and collection going higher,' an official said, adding that the forthcoming tax regime will be 'fiscally sustainable'. Most of the items in the 28% rate of GST will move to 18% and 'a few' will go to 40%, which will apply to exceptional items, termed 'sin goods', sources said. 'Revenues may fall in the very short run but we expect change in consumption and ease of compliance to make up for it. Thus, it will be a fairly fiscally sustainable exercise,' said a source. Deepavali deadline The Centre expects the States to be on board with the proposals in time for the Deepavali — October 20 — deadline it has set for itself to set them in motion. In a press release following the PM's speech, the Ministry of Finance said the Centre would be engaging with the State governments in the subsequent weeks, in the run-up to the next GST Council meeting. Two Groups of Ministers (comprising representatives of the State governments) — one on rate rationalisation and another on compensation cess — will have to approve the details before they go to the GST Council for approval. GST has been an ongoing topic of conflict between Opposition-ruled States and the Centre, but the latter does not expect resistance to its revamp proposals. 'The concerns regarding any potential revenue losses are not theirs (Opposition-ruled States) alone to tackle. The Centre and the States should all work together to expand the revenues, using this opportunity. I do not think anyone will or can oppose the proposed reduction in rates,' the functionary said. They also added that, since the Centre does not have any representative in the GoM on rate rationalisation, if the GoMs decide against the Centre's proposal, it would look like the States are deciding against lowering taxes for the common man. Both GoMs, followed by the GST Council, are expected to meet in the coming weeks. One source said the compensation cess will soon cease, before its legal end-date of March 31, 2026. While it was originally set to cease in 2022, its duration was extended thereafter to repay the loan taken to compensate States as the cess collections themselves had been hit by the COVID-19 pandemic. That loan will be repaid before time. However, this also creates a problem for the Centre as the cess also applies on sin goods like tobacco. 'If the cess ends, then this would substantially lower the effective rate of tax on tobacco, gutka, and other sin goods,' the source explained. 'And this is something the Centre cannot be doing. So, this was yet another reason why the GST revamp needed to be done soon.' That the GST reforms are happening amid global uncertainties and tariff threats by the United States is mere coincidence, according to the sources.
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Business Standard
an hour ago
- Business Standard
Govt confident of meeting fiscal deficit target despite planned tax cuts
India is confident of meeting its fiscal deficit target of 4.4 per cent for the current fiscal year, according to a government source with knowledge of the matter, despite its plans to cut consumption tax later this year. In the biggest tax overhaul since 2017, Prime Minister Narendra Modi on Saturday announced sweeping changes to the complex goods and services tax (GST) regime which will make daily essentials and electronics cheaper. "India's federal and state governments have options to offset any loss of revenue due to lowering of rates," the government source said without providing further details. The source also said it will end the practice of collecting compensation cess by December. The GST compensation cess is an additional levy imposed on certain items to compensate states for any revenue loss incurred due to the implementation. India's finance ministry did not respond to a request for comment sent outside of office hours.
Economic Times
an hour ago
- Economic Times
Banks look to start credit line on UPI for small value loans
ET Online After a prolonged delay, credit lines on the Unified Payments Interface (UPI) could finally see consumer adoption, with some of the high-street banks opening up to the product for disbursing small-value loans. 'Banks are looking to go after new-to-bank customers, by offering them small credit lines via popular UPI apps, that is how the product will take the first steps,' said the founder of a fintech firm, requesting anonymity. New-to-bank customers are those who are not existing clients of a bank but could be acquired through the UPI channel. Large lenders like ICICI Bank and smaller banks like Karnataka Bank could look to scale up the product through UPI apps like PhonePe, Paytm, BharatPe and Navi. While there has always been potential in the product, it is yet to gain widespread adoption. RuPay credit cards have, however, found a wider adoption among consumers and banks already. A second founder said banks had reached out to the Reserve Bank of India with some doubts on product functioning and that those clarifications have come, resulting in some early tests being conducted. The founder explained that, given it is a new product and consumers will have an interest-free period after disbursal of the loan, banks needed clarity from the RBI on its structuring.'RBI has given clarifications to some banks on how they can run it, and this would be around the likely treatment of the outstanding, interest-free periods, and reporting to the credit bureaus,' the second founder did not respond to email queries. The National Payments Corporation of India (NPCI), which runs the UPI platform had enabled pre-sanctioned credit lines on UPI in September 2023. However, most of the high-street banks did not go live with the feature due to technical is finally changing now with banks opening up, industry insiders July 10, NPCI issued a notification to banks asking them to ensure that all pre-sanctioned credit lines are aligned with the purpose for which the loan was that can be issued through this route are secured credit lines like gold loans, loans against fixed deposits, unsecured products like consumer loans, and personal loans, among the credit line product, a credit account can be linked to the UPI app in the backend. Banks will allow disbursal of small-value loans on the credit account, and consumers can utilise the limit by paying via UPI at merchant outlets or at ecommerce outlets.'Credit is the next big thing on UPI; this will help propel the payments platform to the next milestone in terms of transactions and adoption,' the first founder said. Industry estimates suggest that there are around 300 million users on UPI and around 150 to 200 million active or power users of the platform. Growth of the popular digital payment platform has been slowing, raising concern among sector regulators. Bankers believe that offering credit will open up new use cases on UPI, but there are risks which will need to be startup Zeta, which powers new-generation technological capabilities in banks, offers backend infrastructure to power credit lines on UPI. In August 2024, Zeta had predicted that by 2030, $1 trillion worth of transaction spends will be processed on UPI.'Opening up credit on UPI will need to be done through a measured manner, else defaults will rise and collecting such small amounts will become a huge challenge,' said a senior banker with a private sector lender. Elevate your knowledge and leadership skills at a cost cheaper than your daily tea. Tariffs, tantrums, and tech: How Trump's trade drama is keeping Indian IT on tenterhooks How IDBI banker landed plush Delhi properties in Amtek's INR33k crore skimming Good, bad, ugly: How will higher ethanol in petrol play out for you? As big fat Indian wedding slims to budget, Manyavar loses lustre Regulatory gray area makes investing in LVMH, BP tough For Indian retail Logistics sector: Be tactical in the face of head & tailwinds; 6 logistics stocks with an upside potential of over 30% Just hold a good business for the long term, irrespective of the noise; ignore the cap. 13 stocks with an upside potential of up to 51% Stock picks of the week: 5 stocks with consistent score improvement and return potential of more than 25% in 1 year
