The post Five crucial years that changed the history of Indian Economy first appeared on Corp India News.
]]>Cambridge historian and author, Angus Maddison in his research on the British colonial occupation of India between the 17th century and mid 19th century, observed that India’s net worth in the global income index was approximately 23%, which was equal to entire Europe’s share of 23%.
We resonate with former Prime Minister, Man Mohan Singh’s quote on the subject “The brightest jewel in the British Crown is studded in the erasure of Indian economy, as when the noble Kohinoor diamond was allegedly taken by the Imperialists to clear their balance-sheets, India was left with 0.6% literacy and empty banks.
India’s GDP in 1947 hit a staggering low at just 2.7 trillion rupees, accounting for 3% of total global GDP compared to 23% which was maintained before the British Occupation of India. On the brighter side of things, the latest data published by National Statistical Office show that India is struggling, yet not giving up the fight with price hike and inflation.
The GDP growth rate is -3.8% contrary to the rate at which the economy should grow. With all the new notifications in GST law and inflation caused by pandemic, it will be interesting to watch the economy attain a level of Rs. 198.86 trillion, as against Rs 203. 51 trillion which was estimated in 2019-20
The question that still remains is did India manage to become the golden nation its freedom fighters had dreamt of? The answer to these remains locked in historic events. Read on to know what they are!
1969 – the year of revolution
The year is significant for many reasons, among which the one that stands out for is the emergence of green revolution. The green revolution was the former prime minister’s brain-child after observing the devastating impact and aftermath of nation-wide draughts and famines during late 60’s. The bill for self-sufficient production for food grains was proposed by Indira Gandhi, along with remarkable reforms in the banking sector by nationalizing 14 of the biggest banks in the country with over 50cr deposits to attend the needs of development and technology of the sector.
1991- The worst year before the pandemic
At a time when India’s external debt rose from $35 billion in 1984-85 to $69billion by the end of 1990-91, Economic reforms such as privatization, globalization, and liberalization sure appeared as a boon to the downward spiraling Indian economy.
The year 1991 was devastating as the economic situation became so grim that one point the country could not have afforded finance for even 3 weeks worth of import. Indian government had no other choice than putting 20 tonnes of gold from RBI on mortgage to claim a$200 million loan to clear import debts.
Amidst all the chaos, the Chandrashekar government and finance ministry led by Man Mohan Singh took reformative actions on the matter within weeks of assuming power. These reforms have been the pioneers of modern Indian economy for breaking the barriers of tough bureaucracy of business to open the window for foreign financial inflows and foreign manufacturing opportunities between india and rest of the world. According to verified data from Bombay Stock Exchange, the stock market was all on a all-time boom, with Sexsex ending at 1, 048 cr after the first few days of the implications of the new reforms.
A lesser known fact about this year is that it was shared by yet another economic event, which was later to be recorded as one india’s biggest scam, led by Harshad Mehta who broke the liquidity market with a 13% decline in one day. The scam was worth Rs. 4,000 cr.
2007-2008 The Great Recession
The Great Recession had the entire wall-street on its knees, marking the largest bankruptcy in U.S history with the collapse of “Lehmen Brothers”. An economic downfall at this scale was sure to affect the global economy, however, India maintained its GDP growth of 15% and economic growth rate of 6% for the FY 2008-09.
However, a twist in the plot took place when NDA led government announced a well-intended stimulus package that infused Rs 3 Trillion into public spending by lowering tax margins key rates by the Reserve Bank of India. This violation of fiscal consolidation of the norms flared inflation by 14%, leaving the rupee with no value. Moreover, as a result, Sensex dropped 20,000 points in December 2007 before bouncing back with 17,000 points in the same year.
2016; A year of shockers
Arguably one of the questionable moves led by the NDA government was to introduce demonetization to withdraw notes of higher denomination. On November 8th of the same year, Prime Minister of India, Narendra Modi took to public broadcast to declare the shocking removal of 500’s and 1000s’ Rupee notes out of legal tender of currency. This affected business owners across strata and scale of companies, while the move led to a Sensex crash of 1, 689 points, and the Nifty plunged by over 541 points.
Just months after demonetization, the Rajya Sabha (Upper House) passed a crucial bill on Goods and Services Tax (GST). However, at that time, the markets didn’t react much and remained mostly flat on the upper side.
2020: the virus apocalypse
No later than 3 years after the aftermath of demonitaztion and GST law implication, the economy witnessed a lightening jolt with an uninvited guest; the Covid 19 pandemic. It may be too soon to declare the scale of destruction, both in economy and human life, but to bring perspectives together, a report published by Azim Premji University stated that the first wave of the virus brought 23 crore of Indian citizens below poverty line, which is going even lower than national minimum wage threshold of Rs 375 (reported by Anoop Satpathy Committee). Poverty margins have risen by 15% in rural India, while the urban India has been making most of a 20% rise in the pandemic this year.
As we enter yet another year with financial risks and worries, the overall impact of the second wave on the country’s economy still remains unclear. For now, we are grateful for the abundance in Sensex market, reaching an all-time high of 55K points and Nifty securing 16, 529 points leaving us with hopes for better and improved finances ahead, personally and nationally.
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The post Five crucial years that changed the history of Indian Economy first appeared on Corp India News.
]]>The post New GST Tax laws, boon or bane for the common man? first appeared on Corp India News.
]]>For beginners, let’s begin to understand what GST actually means before diving deeper into understanding the context of impact of the new notifications in tax laws.
What is GST?
GST , short for Goods and Services Tax, is a multi-stage-oriented tax imposed at every point of sale, replacing various multiple taxes such as VAT, service tax, custom fees, to name a few. GST centralizes tax returns under a single domestic indirect taxation law.
The GST model for India was concluded by task force headed by former finance ministry advisor, Vijay L. Kelkar under the vision of former Prime Minister, Shri Atal Bihari Vajpayee in 2000. After several attempts to propose a GST model since then, the four supplementary GST bills were approved by all cabinet ministers and members of the lower house, Lok Sabha, finally in 2017.
Before we proceed further into the articles, lets learn a few terms that will help you understand the GST updates and notifications after the recent amendments in central tax laws. To begin with, take a look at the brief below:
GST notification
GST notification is a regular update over central tax by the GST council of India. The GST revenue is collected by the central government from both, interstate and intrastate transactions.
To get accurate notifications, keep a tab of Cbec
Integrated Tax Rate
ITR also known as IGST (Integrated Tax Rate) is a tax that is levied on all inter-state supply chain of goods and services controlled and regulated by IGST Act. Any import or export made will be regulated under IGST. The Tax rate keeps changing, therefore, we suggest you keep a daily tab on schedules, notification, and due dates related to tax rate.
To get accurate information on IGST tax rate, keep a tab on GST Council of India
Income Tax Slabs
India is one of the only countries where there is a tax for all levels of employment process, be it individual, HUF, LLPs, partnership firms controlled and regulated by Income Tax India.. The tax applies to an array of income also known as Income Tax Slabs. The tax is levied as per the slab system if their income is above the minimum threshold limit (known as basic exemption limit ).
Let’s move forward with much discussed potential impact of the goods and services tax (GST) on inflation, and debatable rise in headline Consumer Price Index (CPI). The tax rates have impacted the consumption basket in various categories, challenging the composition of consumption of the end consumer.
Latest update in Common Man
As much as the new amended tax laws for GST remain indifferent for the business communities, on the flip side, the middle-class and lower-middle class communities may have to prepare themselves for one of the sharpest tax increases in areas of health, clothing and footwear, medicines and electricity, according to a report prepared by the Chief Economic Advisor of RNR. The expected tax increase is estimated between 8.8 % to 13.6% in healthcare products, excluding pharmaceutical drugs. While the forecast for clothing and footwear tax may rise up to 13.8% from 9.5%, currently. On the brighter side, the CPI shall witness a lower tax hike, exclusive of oil and fat making a decline in price rise by 0.6%.
In a survey conducted by Citizen Portal connected to Central Government Consumer Affair Department, nearly 40, 000 applicants displayed their disappointment with price hike in basic household items making the house cost go out of their monthly budget of spending.
New shockers in 28% and18% tax bracket for the common man
The shocking introduction of basic essential and miscellaneous needs such as sunscreen, pan-masala, weighing machine, vacuum cleaner, hair clippers, automobiles, fitness products have got many nodding their head in disdain. When it comes to service sector, any bill above 7,500 in hotels or restaurant, betting on casinos, racing, movie tickets will fall under 28% tax bracket. Prices of electronic device such laptops and mobile phones will now be treated under 12% from previously included in 8% tax bracket. With automobiles such as cars and bikes falling under the 28% bracket, citizens are afraid if they can afford it with contrasting price hike in essential goods and services. A relief revision would be much appreciated, as suggested by applicants on online forums and government portals.
However, on the brighter side, to impact the common man the government has revised five rules in tax laws functional since 1st January 2022. The amendments are said to decrease price of LPG cylinder, fewer charges on ATM cash withdrawals, deposit tax on India Post Payments Banks and transaction services related to ICICI.
However, to be on the safer side is to remain updated with changing tax rates under GST council.
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Dying hope for the poor
Data collected by RNR shows that the poor population has only 1 % stake in total expenditure on healthcare, which will rise up to 5.5% of total household expenditure after the new tax laws are implicated. To compare it with the rest of the population which spends 7.5% of their income on the same, it is expected that both strata of population are likely to be affected with the inclusion of some of the essential products in the 28% category. Read on to know what they are!
The national council of Economic Research in a study suggested that the implementation of new GST will result in drastic decline in the price of cotton textiles, silk and synthetic fibres by introducing them in 6% and 11% tax bracket.
Positive Impact of GST on the Common Man
- GST was certainly a better replacement of indirect taxes such as VAT, CST, service tax, CAD, SAD, excise, to name a few.
- Eliminated the overlapping situation of tax on tax, also known as the cascading effect of taxes.
- Decreased manufacturing cost by reducing the burden of taxes, as a result prices of consumer goods go down.
- Lower manufacturing cost is an invitation for more competitors which means the cost of automobiles and FMCG becomes affordable.
- Affordable product opens the opportunity for a common man to spend less money for the same goods and services that cost them their whole life.
- Increased demand is a key enhancer to supply chain. With GST the production is likely to increase, however this can only happen if the consumers are getting the products at a cheaper rate.
- A unified tax system enables a secure protection to the common man’s wealth against malpractice and fraudulent activities.
- Most importantly, experts expect to see a positive impact of GST on the Indian economy in the long run.
Negative impact of GST on the Common Man
- Minimized compliance burden on tax collector’s end while adding more on the plate of the tax payer with the filing of GST.
- Additional professional cost for filing GST services
- Even with several attempts from the government to ease the tax filing process, to make return filing easier has not been successful
- Small traders, service providers and merchants face challenges with the new complex model of GST
- With the current rate of 15% being charged on services, GST at 28% proposed for services like telecommunication, air-travel, banking and financial services is sure going to dig a big hole down the pocket for many from their monthly expenses.
- The common man is compelled to reset their budget to bear the cost of additional services.
- To prevent the risk of loss, additional cost comes with obligatory dependencies on tax experts and professionals, which mean more business expenses.
- GST is a new model, hence every new change in the law affects the structure and budgets of every individual, businesses and household.
- GST is a consumption-based tax, therefore, revaluating the accounts on which the service tax should be applied needs a revisit.
- If the consumers is not treated equally as the seller, the seller can increase the price of commodities during crisis.
- The rise in inflation can be observed initially, however, it may also come down gradually.
Based on the above discussion, it is safe to say that the new amendments and notifications in GST laws are not forgiving the common man. However, it is not okay to judge a book by its cover. GST as a tax model is fairly new, therefore, challenges are paramount, however, we look forward to the brighter side of the amended laws as we enter into yet another gloomy financial year.
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The post New GST Tax laws, boon or bane for the common man? first appeared on Corp India News.
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