Imposing fixed timelines on Guvs, Prez would lead to 'constitutional disorder': Centre to Supreme Court
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The Hindu
an hour 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.
Mint
2 hours ago
- Mint
Centre working on framework to help panchayats become financially-autonomous
New Delhi: The government is working on a framework to help village councils (panchayats) generate their own revenue and become financially autonomous, carrying out development works without relying on funds from the Centre or states. The Union Panchayati Raj ministry has set up a panel, consisting of senior officials from various state governments, which is tasked with formulating a blueprint that can act as a guide for states and Union territories (UTs) in creating and amending their model OSR (Own Source of Revenue) rules. "We have constituted a committee comprising senior officials from various state governments, to prepare a model OSR framework of panchayats, which can serve as a benchmark for the states in formulating and amending their OSR rules," Vivek Bharadwaj, secretary, ministry of panchayati raj, said. The template, to be shared with states and UTs, aims to plug the gaps in existing regulations and guide local bodies in mobilising revenue, which mainly comes from taxes, fees and other charges. The development assumes significance, as nearly a dozen states and UTs don't have OSR rules. The 22 states and UTs that have already formulated the rules need to update them, said Bharadwaj. Own Source Revenue (OSR) refers to the revenues that panchayats generate on their own, from sources such as property tax, water charges, market fees, trade licence fees and building permit fees. OSR rules help regulate, standardize, and empower panchayats to collect and manage the revenues efficiently. The OSR rules are crucial to panchayat as they empower them to function independently and also reduce over-dependence on central and state grants. Additionally, they support local development projects with locally-generated funds. According to Bharadwaj, there are 11 states and UTs that have not yet framed OSR rules. These include Arunachal Pradesh, Bihar, Jharkhand, Manipur, Nagaland, Sikkim, Uttar Pradesh, Andaman & Nicobar Islands, Dadra and Nagar Haveli and Daman and Diu, Ladakh and Lakshadweep. Twenty two states and UTs have already developed and implemented OSR-based regulations, allowing panchayats to levy and collect taxes, fees, tolls, or other local sources of revenue. Among these states are Andhra Pradesh, Assam, Chhattisgarh, Goa, Gujarat, Haryana, Kerala, Maharashtra, Tamil Nadu, and Karnataka. Some States have detailed guidelines on fixing OSR rates. In many instances across the states, it has been observed that much more efforts need to be made towards fulfilment of these requirements. "Financial rules related to OSR generation were prepared long ago in states, and hence have been suffering from various deficiencies like use of incomprehensible legal jargons and lack of updating," Bharadwaj added. Panchayats, which act as grassroots-level bodies to implement government programmes and for achieving the sustainable development goals, get grants from the Centre, state governments, as well as raise their own revenue in a limited way through internal sources like local-tax revenues and user charges. "Self-sufficiency is an ideal state for gram panchayats as they can have more funds to carry out developmental works. However revenue collection is conditional as it depends on economic activities in a particular area," said Sri Hari Nayudu, economist, National Institute of Public Finance and Policy (NIPFP), New Delhi. "Most of the time we are dependent on state government grants for developmental works, since most of us doen't know how to increase revenue. The proposed rules can guide us in that direction," said Gurcharan Singh, Panch-Charik Patti Sarkar, a rural local body in Moga district of Punjab. In 2021-22, the average per capita OSR collected by panchayats at all-India level was ₹ 100. Also, the average OSR for gram panchayat was ₹ 230,000 per year, with 42% of gram panchayats having less than ₹ 100,000 revenue per year. "The key reasons behind low revenue collection are over-dependence on grants, underutilization of tax powers, weak administrative systems and trust deficit with citizens which limit the revenue," said an economist who requested not to identified.
The Hindu
2 hours ago
- The Hindu
State seeks additional supply of urea coming in 4 ships by month-end to overcome 2.69L tonnes short supply
Minister for Agriculture Tummala Nageswara Rao has alleged that the Centre has badly failed in supplying the allotted urea to Telangana for the April-August period this year resulting in scarcity of the fertilizer in demand. At a meeting with the officials of the Agriculture department held here on Sunday, he suggested that the farming community not to purchase more urea than the required quantity to overcome the crisis at the earliest and demanded that the Centre supply at least 80,000 tonnes of additional urea from the stock being imported through four ships and reaching the country by the month-end. Director of Agriculture B. Gopi informed the meeting that the Centre had allotted five varieties of fertilizer to the State for this kharif season, including 9.8 lakh tonnes of urea and another 13.95 lakh tonnes of DAP, complex, MoP and SSP. The Minister stated that of the 8.3 lakh tonnes urea allotment for the April-August period, the Centre had so far supplied 5.32 lakh tonnes, leaving a shortfall of 2.69 lakh tonnes. He explained that the allotment was 4.34 lakh tonnes of urea produced within the country and 3.96 lakh tonnes of imported urea. Of the allotment, only 3.27 lakh tonnes of indigenous urea and 2.05 lakh tonnes of imported urea was supplied to the State. Of the indigenous urea, the lion's share was to be supplied from RFCL Ramagundam, but there was no production in the plant for 78 days out of 145 days from April to August, leading to a shortage of urea in the State. Of the imported urea, some companies had not supplied any amount of the fertilizer for at least for two-three months. Without knowing such facts, the Bharatiya Janata Party leaders of the State were speaking nonsense and trying to mislead the farming community. The matter was apprised to the Centre and the Union Minister concerned through letters several times and had also met them personally along with the officials, but in vain. Apart from Telangana, States such as Madhya Pradesh, Rajasthan, Andhra Pradesh, Karnataka, Tamil Nadu, Bihar, Haryana, Punjab and others were also facing urea scarcity reflecting Centre's failure to supply.
