Goods and Services Tax

Main Features of budgets of Meghalaya

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MEGHALAYA BUDGET 2017-18

The year 2016-17 was marked by two major national policy developments. Firstly, the passage of the Constitutional amendment, paving the way for introduction of the transformational Goods and Services Tax (GST), the objective of which is creating a common Indian market, improve tax compliance and governance and boost investment and growth. Secondly, the demonetization of the two highest denomination notes in the country.

 

During the year 2015 – 16, the Gross State Domestic Product (GSDP) at Current Market price was Rs 26,745 crore, as per the quick estimates, which shows an increase of 9.58% over the previous year. The advance estimates indicate that the GSDP for 2016-17 is Rs 29,566 crore, an increase of 10.55 % over 2015-16. The growth of the tertiary sector is registered at 11.93%, the secondary sector at 9.38% and the primary sector at 7.51% over the year 2015-16. The per capita income of the State at current price for the year 2016 – 17 stands at Rs 88,497 as per the advance estimates as against Rs 81,498 in the year 2015-16 showing an increase of about 8.26%.

 

Several initiatives have been taken up with a view to accelerating growth, providing ecologically sustainable livelihoods and inclusive development, reducing intra – State variations, improving connectivity, bridging infrastructure gaps, promoting human capital development and building skills, tapping emerging opportunities in border trade and market access development etc. I am happy to inform this august House that on several counts, we have been able to make substantial progress as in case of investments in Major District Roads and State Highways, improvement of critical feeders, replacement of semi-timber bridges, internal village connectivity including construction of missing culverts, Black Topping of Rural Roads Schemes (BTRRS), lay bye markets, modernization of rural markets, opening of first ever railhead in Meghalaya, launching of the Meghalaya Health Insurance Scheme, construction of hostels for rural students, Mission Green, Integrated Water Resource Management, Women Economic Empowerment through Financial Inclusion, etc.

 

Tax Proposals

  1. Revise excise duty in various segments of Beer, IMFL/Extra Neutral Alcohol (ENA) and different categories of IMFL products.
  2. Revise the license fee for various categories of bonded warehouses.
  3. Reduce export fee for IMFL products to give a boost to export of IMFL.
  4. Revise the license fee for “OFF” retail licenses and various types of bar licenses.
  5. Revise the fee for compounding and blending, reduction and bottling, distillery and brewery.
  6. Revise upward the VAT on liquor.
  7. Revise the late closing fees for hotels, restaurants and bars.
  8. Increase the rate of tax across all slabs under the Meghalaya Passengers and Goods Tax Act.
  9. Rationalize the tax structure on cigarettes and bidis.

Law and Order:

The staffing strength of police stations and outposts was increased; the first batch of SF-10 battalion, that passed out in October 2016, have been pressed into anti-militancy operations; additional resources in terms of trained personnel, suitable weaponry, effective communication equipments etc. were provided; intelligence collection was strengthened; additional Central Paramilitary Forces were mobilised; a Cyber Crime police station to handle cyber related crimes has been set up; new developmental initiatives with involvement of local communities as stakeholders were undertaken; investments were made on improving the road infrastructure and highway patrols have been introduced in all the highways

Agriculture and Allied Sectors:

Agriculture, being the key to rural prosperity and food security, will continue to play a significant role in the economy of the State. The focus of the Government is on increasing the production and productivity of foodgrains through better cultivation techniques, capacity building and improving water and moisture availability. Latest technical know-how through various schemes such as State Rice Mission (SRM), National Food Security Mission (NFSM), National Mission for Sustainable Agriculture (NMSA) and other schemes has been put in place and efforts are on to bring fallow lands under other winter crops to augment the incomes of the farmers. The sector has done the State proud by earning national recognition and the highest accolades as the Best Performing State in the form of the ‘Krishi Karman Awards’ for the last three consecutive years for its initiatives and excellent performance in food grains production in individual crops of rice, wheat, pulses and coarse cereals.

 

The ‘Mission Organic’ continues to focus on promoting organic farming, helping the farmers to tap the growing organic market. Continuous efforts are being made to popularize ‘bio-fertilizers, compost making’ and ‘bio-control practices’ for plant health management and these efforts are being scaled up through the establishment of village level community managed bio fertilizers and bio agent production units, in collaboration with IBDLP and MGNREGS.

 

Fisheries

An investment of Rs 186 crore under the Meghalaya State Aquaculture Mission (MSAM) has resulted in the development of 20,338 individual fish ponds, 26 hatcheries, 49 sanctuaries and 3 feed mills in the last 4 years of its implementation.

 

Sericulture and Weaving

Under the North Eastern Region Textile Promotion Schemes (NERTPS) for both sericulture and handloom sectors, funds to benefit 1,000 sericulture farmers under the Intensive Bivoltine Sericulture Development Project (IBSDP) and 2,300 sericulture farmers for Integrated Sericulture Development Project (ISDP), including 72 handloom clusters, have already been approved. Funds have also been approved for Block Level Clusters under the National Handloom Development Programme (NHDP).

 

Soil and Water Conservation:

At present, 84 projects under the Integrated Watershed Management Programmes (IWMP) are being implemented under this approach. The Accelerated Irrigation Benefit Programme with 42 projects will continue to be implemented in 2017-18 to encourage multi cropping activities and scientific conservation of water resources, with a focus on coordinated land development in river valleys.

 

Young people registered as Green and Social Volunteers have rallied around the “GRAMODAYA” or “Rise of the Village initiative”, a statewide mega-football event that is the largest grassroots level football tournament with a total of 712 matches across 178 sub-watersheds in all the 11 districts. This initiative seeks to bring together people from all walks of life in rural Meghalaya on to a common platform to celebrate rural life and the spirit of oneness.

 

Housing:

Under the “Chief Minister’s Housing Assistance Programme”, three bundles of roofing materials will be provided for the Economically Weaker Section and an assistance for dwelling houses will be provided to the Lower Income Group families.

A development outlay of ` 60 crore is proposed for this sector in 2017-18

Urban Development:

The major projects which are likely to be completed soon, are the Multi Purpose Utility Centre at Mawkhar, construction of additional 112 dwelling units at Nongmynsong, Solid Waste Management Project at Tura and Nongpoh, Short Term Scientific landfill Site Work at Marten, Shillong and Solid Waste Management Programme in the Greater Shillong Planning Area covering areas outside the Shillong Municipal jurisdiction.

 

The major projects in which works are in good progress are Augmentation of Public Transport in Shillong, Construction of Ancillary Infrastructure (Depot) for 240 additional buses at Mawiong and Upper Shillong, Improvement of Road within Mairang Town and Nongpoh Town, Construction of RCC Bridge to connect Gangdrak Dare at Tura, Construction of Road from Shamshan Ghat to Reservegittim at Tura, Road Network Project in New Shillong Township and Construction of Parking Cum- Commercial facility near Inter District Bus Terminus at Akhonggre.

 

Under the Swachh Bharat Mission, 10 statutory towns have been selected and beneficiaries have been identified to take up work on construction of individual household toilets, community toilet as well as improvement of solid waste management in the towns. The Government has also initiated works on up-gradation of Shillong under the Smart Cities Mission of Government of India.

 

Health and Family Welfare:

The Government had proposed to set up two medical colleges, with a view to bridge the shortage of doctors and health functionaries in the State. Setting up of the Medical College in PPP mode at Shillong will commence once the existing T.B Hospital is shifted to the new site at New Shillong Township. The land for another proposed Government Medical College at Tura has been donated by the people and the same will be taken up with the Government of India for funding support. The construction of the Cancer Wing in the Shillong Civil Hospital is in advanced stage and will benefit the cancer patients in the State.

 

To promote cleanliness, hygiene and infection control practices in public health care facilities and to inculcate a behavior related to clean environment, the State Health Facilities are participating in the KAYAKALP competition and received Awards under the Scheme.

 

Education:

To help students conquer the challenge of learning science and mathematics at an early age, the Government had initiated the Jodo-Gyan project, which would be rolled out to more districts in 2017-18. The mid day meal will also continue to be served at all primary and upper primary schools to encourage students to stay in school.

 

The “Supporting Human Capital Development project” has progressed well with infrastructural work progressing at rapid pace. The bidding process for teachers training, ICT classrooms and furniture has also been initiated. A total of 117 aided schools would benefit directly from the project.

Meghalaya Tax and economic reforms

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Meghalaya Goods and Service Tax:

The Meghalaya government introduced in the state assembly, the Meghalaya Goods and Services Tax Bill, 2017.  GST will abolish all the taxation related disputes between the States and this will make Indian economy more strong. It was the highest tax reforms of state and centre as well.

The Meghalaya government demanded the following amendments —

  • The GST Council accepted that green arecanut will be tax-free while processed arecanut or ‘supari’ will be taxed at 5 per cent only. So is also the case with dry fish in which the Council has agreed to bring down the tax from 12 per cent to 5 per cent
  • The other issues Meghalaya government had demanded was the reduction from Rs 50,000 to Rs 10,000 where a purchaser is not required to give his details in the invoice.

Goods and Services Tax (GST) is a comprehensive indirect tax on manufacture, sale, and consumption of goods and services throughout India. GST would replace respective taxes levied by the central and state governments.

What is GST?

  • It is a destination-based taxation system.
  • It has been established by the 101st Constitutional Amendment Act.
  • It is an indirect tax for the whole country on the lines of “One Nation One Tax” to make India a unified market.
  • It is a single tax on supply of Goods and Services in its entire product cycle or life cycle i.e. from manufacturer to the consumer.
  • It is calculated only in the “Value addition” at any stage of a goods or services.
  • The final consumer will pay only his part of the tax and not the entire supply chain which was the case earlier.
  • There is a provision of GST Council to decide upon any matter related to GST whose chairman in the finance minister of India.

What taxes at center and state level are incorporated into the GST?

At the State Level

  • State Value Added Tax/Sales Tax
  • Entertainment Tax (Other than the tax levied by the local bodies)
  • Octroi and Entry Tax
  • Purchase Tax
  • Luxury Tax
  • Taxes on lottery, betting, and gambling

At the Central level

  • Central Excise Duty
  • Additional Excise Duty
  • Service Tax
  • Additional Customs Duty (Countervailing Duty)
  • Special Additional Duty of Customs

Benefits of GST

For Central and State Governments

  • Simple and Easy to administer: Because multiple indirect taxes at the central and state levels are being replaced by a single tax “GST”. Moreover, backed with a robust end to end IT system, it would be easier to administer.
  • Better control on leakage: Because of better tax compliance, reduction of rent seeking, transparency in taxation due to IT use, an inbuilt mechanism in the design of GST that would incentivize tax compliance by traders.
  • Higher revenue efficiency: Since the cost of collection will decrease along with an increase in the ease of compliance, it will lead to higher tax revenue.

For the Consumer

  • The single and transparent tax will provide a lowering of inflation.
  • Relief in overall tax burden.
  • Tax democracy that is luxury items will be taxed more and basic goods will be tax-free.

For the Business Class

  • Ease of doing business will increase due to easy tax compliance.
  • Uniformity of tax rate and structure, therefore, better future business decision making and investments by the corporates.
  • Removal of cascading effects of taxes.
  • Reduction in transactional cost will lead to improved competitiveness.
  • Gain to the manufacturer and exporters.
  • It is expected to raise the country GDP by 2% points.

GST Council

  • It is the 1st Federal Institution of India, as per the Finance minister.
  • It will approve all decision related to taxation in the country.
  • It consists of Centre, 29 states, Delhi and Puducherry.
  • Centre has 1/3rd voting rights and states have 2/3rd voting rights.
  • Decisions are taken after a majority in the council.

Supporting Laws to implement GST

For the implementation of GST, apart from the Constitution Amendment Act, some other statutes are also necessary. Recently 5 supporting laws to the GST were recommended by the council. 4 for the bills should be passed by the parliament, while the 5th one should be passed by respective state legislatures. The details are given below.

  • The Central Goods and Services Tax Bill 2017 (The CGST Bill).
  • The Integrated Goods and Services Tax Bill 2017 (The IGST Bill).
  • The Union Territory Goods and Services Tax Bill 2017 (The UTGST Bill).
  • The Goods and Services Tax (Compensation to the States) Bill 2017 (The Compensation Bill).
  • And a state GST will be passed by the respective state legislative assemblies.
  • Tax slabs are decided as 0%, 5%, 12%, 18%, 28% along with categories of exempted and zero rated goods for different types of goods and services.
  • Further, a cess would be levied on certain goods such as luxury cars, aerated drinks, pan masala and tobacco products, over and above the rate of 28% for payment of compensation to the States.
  • However, which goods and services fall into which bracket is still an enormous task to be completed by the GST council.
  • Highest tax slab is pegged at 40%.

DEMONETIZATION AND CASHLESS ECONOMY

What is Demonetization?

  • It is a financial step where in a currency unit’s status as a legal tender is declared invalid.
  • This is usually done when old currency notes are to be replaced with the news ones.
  • The 500 and 1000 rupee notes seized to be a legal tender from 8 November, 2016.

A brief past

  • Demonetisation was earlier done in 1978 When the government demonetised Rs. 1000, Rs. 5000 and Rs. 10000 notes.
  • This was done under the High Denomination Bank Note (Demonetisation) Act, 1978.
  • The difference between 1978 and 2016 Demonetisation is that the currency in circulation (of the higher denomination) is higher in 2016 than was in 1978.
  • The current demonitization has been done by government under section 26(2) of the Reserve Bank of India Act.

 

Implications of Demonetization

  • A parallel black economy would collapse.
  • Of the Rs 17 lakh crore of total currency in circulation in the country, black money is estimated at mind-boggling Rs 3 lakh crore.
  • Counterfeit currency: Death blow to the counterfeit Indian currency syndicate operating both inside and outside the country.
  • On Employment: a large part of the Indian economy is still outside the banking system. So, the cash shortage will hurt the informal sector that does most of its transactions in cash.
  • On elections: It will reduce the Vote-for-Note politics making elections more clean and transparent.
  • On Economy:
  • First, it will bring more borrowings to the exchequer, improve inflation outlook and increase India’s gross domestic product (GDP).
  • Second, it will revive investment opportunities and give a fillip to infrastructure and the manufacturing sector.
  • Third, it will help reduce interest rates and lower income tax rate.
  • Real estate cleansing: An unexpected dip in land and property prices.
  • On Higher Education: will become more reachable as the black money from ‘high capitation fees’ is discouraged.
  • On security:
  • Terror financing: Terror financing is sourced through counterfeit currency and hawala transactions.
  • Kashmir unrest: The four-month-long unrest in Kashmir valley is on a backburner
  • North-East insurgency and Maoists: Black money is the oxygen for Maoists collected through donations, levy and extortions. The illicit money is used to purchase arms and ammunition

Economic Reforms:

The basic objective of economic reforms was to improve productivity growth and competitiveness in the Indian manufacturing sector. These reforms were aimed at making Indian manufacturing sector more efficient and technologically up to date, with the expectation that these changes would enable Indian manufacturing sector to achieve higher and sustainable growth. The government started to deregulate the Indian economy with a liberalization programme, focused on the investment pattern, trade policies, the financial sector, taxation and public enterprises.

In recent times, Industrialization has become the catch word of the midtwentieth century and industrial development of the under developed countries or developing countries like India. One of the great world crusades of our times, the Less Developed Countries (LDCs) hope to find in it a solution their problems of poverty, insecurity, overpopulation, backwardness, illiteracy etc. They consider it a panacea for all the evils of their social and economic life. In fact, the essence of economic development of an LDC like India consists essentially in the growth of industrialization.

Realizing the importance of industrialization, once Pt. Jawaharlal Nehru rightly remarked, “Real progress must ultimately depend on industrialization”. His vision was to see India in the group of developed nations of the world and industrialization was the only key to restructure the economy and to achieve sustained growth. Indian economy is a basically an agriculture based economy. It has been evident from the experience of the most of advanced countries that growth based upon agriculture sector will not be sustainable growth.

After studying such behavior of terms of trade they made their belief that for the agriculture based economies terms of trade would always become unfavorable in long run because;

  1. a) The income elasticity of export-goods of agricultural countries is low, while the income elasticity of import-goods is very high. As in case of domestic demand, the demand for agricultural products in other countries, in particular advance countries, is very low. In fact, developed countries have surpluses in agriculture products for exports. As against this, the demand for the import of manufactured goods by LDCs is very intense; and
  2. b) With the advancement of technology, input-output coefficients are declining and most of primary products which were used as raw material are replaced by the industrial cheaper raw material.

On the other hand, if we develop only tertiary sector and ignore industrial sector then there may be tendency of inflation in the economy and this inflation may lead to deceleration economic growth. Therefore, industrialization is the only method to achieve sustained economic growth. Moreover, economic history demonstrates that to eliminate a country’s techno-economic backwardness it is necessary to develop the industrial sector and then to diversify it over a wide range of area and activities. Industrialization is a process of economic organization characterized by rapid setting up of industries and has invariably been the accompaniment of economic development. Nevertheless, economic development should not be treated synonymous with industrialization because industrialization is only a part of the whole process of economic development.

Some of the major initiatives taken by the government to promote Meghalaya as an investment destination are:

  • Under budget 2016-17, the state government proposed allocation of US$ 1.98 million for various art and cultural programs for the development, augmentation and preservation of cultural heritage of the state.
  • Under budget 2016-17, the state government proposed an allocation of US$ 103.42 million for development of education sector in the state.
  • Under the annual budget 2015-16, an investment of US$ 0.29 million has been approved by the Meghalaya State Medicinal Plants Board to increase the production of medicinal plants.
  • The state government has also proposed an outlay of US$ 32.13 million to improve power supply in the state and associated services, power losses in urban areas, etc., under the Restructured Accelerated Power Development and Reforms Programme.
  • An investment of US$ 3.98 million was proposed to be invested for the development of roads and bridges in the state and US$ 54.66 million was proposed for the improvement of the agriculture sector of the state under the 12th Five Year Plan (2012-2017).
  • The state is focusing on developing water harvesting and distribution infrastructure to increase the level of mechanisation in the horticulture sector.
  • Hydroelectric power projects with a total capacity of 687 MW have been proposed to be set up in Meghalaya. All these projects are projected to be operational by 2016-17.
  • The state government is inviting investments in this area through the PPP mode. Independent power producers (IPPs) are also being invited to develop hydro projects in Meghalaya; this provides immense potential for investment.

1.02.18 Meghalaya(MeghalayaPSC) Current Affairs

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NORTH-EASTERN STATES

  • Northeast states report spike in HIV rate in those injecting drugs

 

  • Close to 20% injecting drug users (IDUS) in Mizoram have HIV, compared to a nationwide prevalence of 6.26% among drug-users, shows data from National Aids Control Organisation’s (NACO) HIV Sentinel Surveillance 2017 released last month.

 

  • Six states in the region account for 43.5% of IDUS who tested positive for HIV in India.

 

  • The states in the region with higher than usual national prevalence among IDUS are Mizoram (19.81%), Manipur (7.66%), and Tripura (8.55%).

 

  • Needle-sharing among IDUS is one of the reasons driving the HIV epidemic in the region, with seven north-eastern states accounting for about 6% of all new HIV infections.

 

  • The health ministry began an epidemiological investigation in December last year to understand reasons why HIV prevention and treatment programmes are not working in the region.

 

  • The virus has spread in the general population through drug use and controlling its transmission now has become a huge challenge.

 

  • For India to meet the goal of ‘End of AIDS’ as a public threat by 2030, it is imperative to bring the numbers down. 

     

    INTERNATIONAL

     

    ·        Melbourne To Host Final Of 2020 World T20

     

    • Melbourne Cricket Ground will host the final of both the men’s and women’s World Twenty20when the tournaments come to Australia in 2020.
    • It will mark the first time the tournaments are held as stand-alone events in the same year in the same country.
    • The women’s final will coincide with International Women’s Day (8th March).

     

     

    ·        Google Introduces A New App Named as Bulletin

     

    • Google introduced a new app named “Bulletin”that allows anybody to submit stories for and about their communities.
    • This is a free, lightweight app for telling a story by capturing photos, video clips and text right from your phone, published straight to the web.
    • The app is made for contributing hyperlocal stories about your community.
    • The application has been launched as a limited pilot project and is available in Nashville, Tennessee, and Oakland, California.

     

     

    NATIONAL

     

    ·        New e-way bill system comes into force to bring uniformity across the states

     

    ð  New e-way bill system comes into force to bring uniformity across the states for smooth inter-state movement of goods

     

    ð  A new e-way bill system will come into effect.

    • Under the new system, every transporter will have to carry a system-generated bill to move goods from one place to another.
    • The e-way bill systemintroduced to bring uniformity across the states for seamless inter-state movement of goods.
    • Under the Goods and Services Tax, interstate transportation of goods beyond 10 kilometers with a value of 50,000 rupees and above, will mandatorily require the e-way bill.
    • Last month, the GST Council decided to implement the e-way bill mechanism throughout the country from 1st of February, 2018.

     

    • PM Narendra Modi writes a book titled ‘Exam Warriors’ for students

     

    • Prime Minister Narendra Modi has written a book for students who battle stress and anxiety during examinations.

     

    • The book, slated to be released on February 3, talks about the ways in which students can tackle the stress.

     

    • The book has been titled ‘Exam Warriors’ and mentions various means such as practicing yoga.

     

    ·        Union Government launches GeM 3.0

     

    • The Ministry of Commerce & Industrylaunched the third version of the Government e-Marketplace (GeM 3.0).
    • The earlier version GeM 2.0 was launched a GeM 2.0 was launched as pilot project in August 2016.
    • GeM 3.0 will offer standardized and enriched catalog management, powerful search engine.
    • GeM is an Online Market platform to facilitate procurement of goods and services by various Ministries and agencies of the Government.

     

    • Wi-Fi hotspots for rural areas proposed

     

    • The government has proposed to set up five lakh Wi-Fi hotspots which will provide broadband access to five crore rural citizens.

     

    • Allocation of Rs 10,000 crore has been provided in 2018-19 for creation and augmentation of telecom infrastructure.

     

    ·        Govt proposes key amendments to PMLA

     

    • The Central government has proposed changes to various provisions of the Prevention of Money Laundering Act (PMLA) through the Finance Bill, including a crucial amendment that empowers the Special Court to restore confiscated assets to the rightful claimants even during the trial.

     

    • The government has introduced a new Sub-Section (2) of Section 66, making it mandatory for the ED to share relevant details with other agencies.

     

    • A key proposed change is in the definition of “proceeds of crime”, which now also allows the ED to proceed against assets of equivalent value located even outside the country.

     

    • A further limit of ₹1 crore involved in the alleged offence would allow the court to apply bail provisions more leniently to less serious PMLA cases, said the government.

     

    • Another suggested change is the inclusion of Section 447 of the Companies Act in the list of scheduled offences under PMLA. It will allow the Registrar of Companies to report suitable cases to the ED for money laundering probe.

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