Latest news with #GoodsandServicesTax
The Hindu
9 hours ago
- Business
- The Hindu
GST notices to traders: A fiasco that could have been avoided with feet on ground
The Goods and Services Tax (GST) notice fiasco in Karnataka, which ended with the intervention of Chief Minister Siddaramaiah, could have been avoided with proper planning and feet on ground by Commercial Tax officers, senior department officials feel. Before issuing notices to traders, a spot visit to assess the nature of business should have been undertaken by the officials, multiple officials in the department said. Nature of business 'When traders were issued notices, officials did not know the nature of businesses in a large number of cases. They had not visited the business premises to conduct a survey. It was a thoughtless and faceless exercise, which embarrassed the government,' a senior official explained. 'There was a lack of clarity and specificity with respect to the nature of supply — whether it was goods or services.' Businesses with a turnover in trade of goods above ₹40 lakh and of services above ₹20 lakh have to be registered under the GST. As many as 18,000 notices have been issued across the State based on the information received by the Service Analysis Wing (SAW) after it sought details from the UPI platforms. Officials said that while details were received from three platforms, transactions in many others had not been received, which meant the exercise was not comprehensive. Goods not under GST As a result, another official pointed out, notices ended up being issued to vendors selling milk, vegetables, flowers, meat, and fruits, all of which are exempted goods under the GST. 'The notices scared the traders with a big tax demand and were issued on mere assumptions, without ascertaining the nature of receipts. Attempts were not made to ascertain whether receipts actually pertain to business transactions, or whether they were unrelated to business, or related to exempted goods.' The notices, if questioned in the High Court, could be struck down, sources said. Higher targets? Multiple officials with whom The Hindu spoke also referred to a very 'high and unreasonable' target set by the State government for the GST collections, which prompted the department to look towards newer sources of revenue or widen the tax base. By tapping the UPI net, the government was expecting at least ₹1,000 crore to ₹1,500 crore revenue, sources said. While the department collected about ₹1.02 lakh crore during 2024-2025, the government has set a target of ₹1.20 lakh crore for 2025-2026. 'Normally, the revision of the target is based on the GDP growth. Targets in the past were increased, which were double the rate of growth of the State's GDP. This time, the target has been raised by 17%, which we believe is very difficult to attain,' another senior official said. Concurring with his view, an officer said, 'The last fiscal had ₹1.02 lakh crore, which included about ₹6,000 crore from the IGST input tax credit reversal, which had not been claimed at all. This will drop down to about ₹1,000 crore this year. If this is considered, the revenue target has been increased by over 20%.'
Indian Express
14 hours ago
- Business
- Indian Express
‘People are paying taxes out of confidence in govt, fear of non-payment': Gujarat CM
Gujarat Chief Minister Bhupendra Patel on Thursday said that people are now paying taxes with the confidence that the revenue is being used 'effectively' with government schemes 'reaching the most marginalised sections of society'. He also said the fear of strict action against non-payment has contributed to greater compliance. Businesses, he said, are also paying Goods and Services Tax (GST) because they are receiving the necessary support from the government and their enterprises are performing well. Patel was addressing a public meeting in Suigam village of Banaskantha district on Thursday, where he inaugurated and laid foundation stones for development projects worth Rs 358.37 crore. He made the remarks in the context of Income Tax Day. He said, 'Today is Income Tax Day… Today, many farmers have become income tax payers. Earlier, people used to run away from paying tax… Earlier, (people used to think that) when my neighbour is not paying the tax, why should I pay it… Now, people think that if the tax is not paid then it brings strict action. So, people pay the tax (also) with confidence that the income from tax is not only put to good use, but also that the benefit of government schemes has reached the most marginalised person. Its benefit has reached all.' Referring to GST, the CM said, 'The point is that when will the business class pay the tax? Will anybody pay tax just like that? One will pay the tax if the business is doing good and is earning well.' Without providing specifics, Patel said that Rs 2 lakh crore worth of GST had been collected in one month. 'The government is happy that it has made an income of Rs 2 lakh crore,' he said. 'If you want GIDC (Gujarat Industrial Development Corporation) and business, then it requires facilities like roads, water, and electricity. If all these facilities are available, then good businesses are established. And when you do well, then you pay tax. It is a whole chain. Nobody is paying tax just like that. He (a businessman) will pay the tax when he gets all the facilities,' the CM said. Patel was accompanied by Gujarat Assembly Speaker and Banaskantha MLA Shankar Chaudhary, state Industries Minister Balvantsinh Rajput, and others.
The Wire
20 hours ago
- Business
- The Wire
Bottom 50% Consumers' Share in GST Same as That of Middle 30%, Says New Study
This study contradicts a 2023 Oxfam report that said the poorest 50% of Indians were paying two-thirds of the total GST collection while the richest 10% accounted for a mere 3-4%. 'A balanced GST structure is essential to bridging the gap between MSMEs and the larger companies they supply.' Photo: Ishan Khosla/Flickr (CC BY-NC-ND 2.0). New Delhi: The bottom 50% of Indian consumers pay the same amount of Goods and Services Tax (GST) as the middle 30%, a new study by a Delhi-based think tank has shown. The study, authored by Sacchidananda Mukherjee of National Institute of Public Finance and Policy (NIPFP), used data from the Household Consumption Expenditure Survey (HCES) for 2022-23 to analyse the impact of the indirect tax regime on consumption. It found that both the bottom 50% and the middle 30% of Indian consumers living in rural areas shared 31% of the GST burden. Similarly, in urban areas, the bottom half and the middle 30% groups faced 29% and 30% of the GST burden respectively. The top 20% in rural areas accounted for 37% of GST collection while those in urban areas accounted for 41%. According to the Indian Express, the findings of this study contradict a 2023 Oxfam report that said the poorest 50% of Indians were paying two-thirds of the total GST collection while the richest 10% accounted for a mere 3-4%. The latest study, however, suggests that GST is 'moderately progressive' as it has had a redistributive effect. A tax system is considered progressive when higher-income groups pay a higher rate of tax. The study has come amid talks of a major overhaul of the GST brackets. Among the proposals for this overhaul is the elimination of the 12% slab by dividing goods from this bracket between the 5% and the 18% slab, the Indian Express reported. The study divided 390 items across nine categories: exempt, exempt to 5 per cent, 5 per cent, 5-12 per cent, 12 per cent, 12-18 per cent, 18 per cent, 28 per cent, and more than 28 per cent. Items like alcohol and fuel were part of a separate 'Out of GST' category. According to Mukherjee's study, 45% of the monthly per capita expenditure (MPCE) in both rural and urban areas was on items in the 'exempt' and 'exempt to 5%' GST buckets. Items in the 'Out of GST' category accounted for 9% of rural MPCE and 10% of urban. The study found that 47% of rural consumption was limited to items that were either exempt from GST or had a GST rate of up to 5%. The study warned that reducing the number of items exempt from GST may increase the tax burden for least-consuming people in rural areas. It also cautions against increasing the tax on items in the 5-12% slab as that would increase the tax burden on low-income households in both urban and rural areas. Mukherjee argued that while the consumption of items in the 12-28% bucket was complex, increasing the tax on these items 'may not be regressive if designed carefully'. Indirect taxes like GST are considered regressive as they increase the tax burden on the poor. The share of indirect taxes in the country's total tax collection has been rising since GST's implementation, while the share of direct taxes as well as corporate tax has fallen. The Wire is now on WhatsApp. Follow our channel for sharp analysis and opinions on the latest developments.
Indian Express
21 hours ago
- Business
- Indian Express
Bengaluru bandh over GST notices to small vendors called off after CM Siddaramaiah meets trade bodies
Small vendors and traders in Bengaluru, who have been protesting the Goods and Services Tax (GST) notices issued by the state commercial tax department to those conducting transactions of over ₹ 40 lakh per annum through UPI, have called off their strike on Thursday following a meeting with Karnataka Chief Minister Siddaramaiah. 'Trade bodies confirmed they have not supported any bandhs and agreed to withdraw planned protests following the chief minister's assurances. The government reiterated its focus on empowering small traders and boosting purchasing power through various programmes,' the chief minister's office said after the meeting with trade bodies, including the Federation of Karnataka Chambers of Commerce and Industry (FKCCI), on Wednesday. The proposed GST on small vendors—such as bakeries, tea and coffee sellers, chaat vendors, etc.—had sparked concerns over the last fortnight. Many had stopped UPI transactions and sought cash following rumours that authorities were likely to retrospectively impose GST on their previous sales. At the meeting, trade representatives raised concerns over the confusion regarding GST for small traders, including loan amounts and personal transactions, and urged the state government to allow traders to directly resolve issues with the commercial tax department. The traders also sought a helpline, awareness programmes to clarify GST regulations, and a 'one-time waiver of old tax arrears'. Siddaramaiah clarified at the meeting that 'notices were issued only to traders with UPI transactions exceeding Rs 40 lakh' to trigger GST registrations and announced that old tax arrears would not be pursued if traders register under the GST and start paying the tax in the future. Siddaramaiah also told the trade bodies that 'no taxes would be collected from traders dealing in exempt goods like milk, vegetables, meat, and fruits, but those liable under the law must comply'. Chief Minister Shri @siddaramaiah held a meeting with representatives of trade unions today regarding the recent GST notices issued to small businesses, and later addressed the media to clarify the issue and share the government's stance. • Representatives from various trade… — CM of Karnataka (@CMofKarnataka) July 23, 2025 'Karnataka ranks second in India for GST collection and shares 50 per cent of the revenue with the central government, as decided by the GST Council chaired by the Union finance minister,' Siddaramaiah said. The representatives of the trade bodies were told that 'only 9,000 notices have been issued and spread over 2-3 years which comes to around 18,000 notices'. The state government's move to issue GST notices to small-scale traders had resulted in a war of words between the ruling Congress and the Opposition BJP and JD(S) in Karnataka. 'With the Congress government's treasury running dry, the CM has unleashed the commercial taxes department to issue these notices in a bid to raise money. The notices served on street vendors and small businesses are completely illegal. The government must immediately stop issuing them and withdraw those already sent,' B Y Vijayendra, state BJP president, said at the party office this week. Former BJP chief minister Basavaraj Bommai also accused Siddaramaiah of trying to blame the Centre for the GST notices to small vendors. 'The GST Council is a joint responsibility of both the state and the Centre, but the major responsibility lies with the state. The implementation and administration are handled by the state's commercial tax department. Issuing notices to small traders has now disrupted their businesses severely,' Bommai said. 'As the finance minister, Siddaramaiah must resolve this issue and also ensure a lawful and practical framework is provided for traders to pay taxes in the future,' he added. Earlier, Karnataka Deputy Chief Minister D K Shivakumar had claimed that the GST notices were being issued by the Centre, but the blame for it was being planted on the state. 'The BJP government at the Centre fixed a turnover limit of ₹ 40 lakh for the GST registration and also instructed the state governments to follow it. The GST office has issued notices to about 14,000 traders, including tender coconut, flower, vegetable vendors. Our leader Rahul Gandhi had opposed the GST in the past,' Shivakumar stated. Asked if notices had been issued in view of the tax collection targets given by Siddaramaiah, he said, 'The officials are following the rules set by the Centre's GST Council. These notices have been issued due to the pressure from the Central GST Council.'
Hans India
a day ago
- Business
- Hans India
Won't pursue 2-3 years old cases, assures CM
Bengaluru: With small traders in Karnataka going on the warpath over the government issuing GST notices based on UPI transactions and the opposition backing them, the state government on Wednesday announced that cases ranging between 2-3 years won't be pursued, prompting the trade bodies to call of their proposed agitation on July 25. Although, the government asserted that the action of issuing notices was within the framework of law. On Wednesday, Chief Minister Siddaramaiah held discussions with traders' associations, which raised concerns about confusion over the GST notices, many of which include loan amounts and personal transactions. State BJP President B Y Vijayendra accused the CM of setting targets for the Commercial Taxes Department, which had issued the notices to small and micro traders. While urging the government to withdraw the notices, the main opposition party also extended its support to the traders' earlier call to strike work on July 25. The CM said that old tax arrears will not be pursued, provided all such traders register under the GST Act and begin paying Goods and Services Tax moving forward. 'I told the traders not to go on strike or stage a demonstration at Freedom Park. They have agreed to withdraw their agitation,' the CM told reporters after meeting with the trader community. He added that 'we will not collect taxes from traders dealing in exempted goods, even if notices have been issued. I have also instructed officials not to pursue cases related to notices for clearing arrears from the past two to three years.' The chief minister said the government will not pursue these arrears and will ensure traders do not face problems—provided they register with the Commercial Taxes Department. 'Traders must register. Registration is mandatory because everyone needs to be brought within the tax net,' he said. He clarified that businesses dealing exclusively in exempted goods will not be required to register. The chief minister, in a statement, said that notices were issued only to traders with UPI transactions exceeding Rs 40 lakh, primarily to prompt GST registration. Siddaramaiah reaffirmed his commitment to supporting small traders and ensuring lawful business said the government will assist in timely tax payments and strengthen the existing helpline for better accessibility. Meanwhile, Meera Suresh Pandit, Joint Commissioner of Commercial Taxes, clarified that notices are not final tax demands and the recipients have the right to respond with supporting documentation. If the reply is convincing or the goods and services are exempted under the GST Act, notices will be dropped. The top tax official termed the issuing of notices as within the framework of law. 'When a person reaches the threshold limit of Rs 20 lakh for services or Rs 40 lakh for goods, it is mandatory for the person to get registered under the GST Act to take registration and declare his turnover,' the officer told PTI. 'The registration empowers the trader to collect taxes from the consumers and pay it to the government. These taxes are meant for the government, but when the dealers collect them and fail to remit them, they are treated as unregistered persons, and we issue notices accordingly,' she added. The department, she said, cannot individually identify every trader evading registration. Instead, the Services Analysis Wing at the department's head office used reliable sources such as UPI transaction data to flag potential defaulters. 'If a person has transacted over Rs 20 lakh for services or Rs 40 lakh for goods in a year through UPI, it indicates that they may be liable to register under GST,' Pandit said, adding that notices were based only on preliminary data, not final determinations. Trade activist Sajjanraj Mehta raised concerns over the fairness of the recent GST stated that while the Commercial Taxes Department is legally within its powers to use such data, the lack of prior warning, context, and education has created confusion. 'Many small traders were unaware that their UPI inflows, often a mix of business and personal transactions, would be treated as undeclared turnover,' Mehta said.
