GST Notification Doesn’t End Govt’s Power To Levy Excise

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gst

After a hectic day of parleys and opinion from the attorney general, the government feels it retains power to levy excise duty on goods other than petroleum even after the provision of the Constitution amendment law was notified on September 16.

A top government source told ET that transitional amendment in the Constitution (122nd Amendment) (GST) Act, 2014, to roll out the goods and services tax (GST) would tax (GST) would provide cover to the government till the time this reform is implemented.

“We have had discussion with AG and he opined that there is no problem with the notification,” the official said citing Section 19 of the amendment.

This provision says: “Notwithstanding anything in this Act, any provision of any law relating to tax on goods or services or on both in force in any state immediately before the commencement of this Act, which is inconsistent with the provisions of the Constitution as amended by this Act, shall continue to be in force until amended or repealed by a competent legislature or other competent authority or until expiration of one year from such commencement, whichever is earlier.”

The official said there are some constituents that need to be seen in the notification.

Firstly, the Section 19 says tax on goods and services to be tax ed in any `state’, which refers to geographic entity of state and not by states. Secondly, withdrawal of power to levy tax lies with the competent authority and not the state legislature.

This protects the power to impose central levy during the transitional period of one year.

Revenue secretary Hasmukh Adhia tweeted: “The department of Revenue examined the validity and implications of notfns dated 10th and 16th Sept wrt existing taxes imposed by the Union and states. “There is no legal infirmity in these notifications. Law dept has confirmed that there appears to be no legal requirement to issue any further clarification or notification in this regard.”

ET had reported on Monday that massive confusion had arisen after the Centre notified certain provisions in the constitution amendment law for GST with effect from September 16.

The notification said the government will not levy excise on goods other than petroleum products from this date, implying loss of power to tax other goods.The notification also binds states to accept GST within a year or they will lose power to tax.

The Constitution (122nd Amendment) (GST) Act, 2014, passed by Parliament last month to roll out GST, has made changes in Entry 84 of List 1 or the Union List of the 7th Schedule of the Constitution.

Essentially, the amended list provides that excise duty can be levied only on petroleum and its products and tobacco and tobacco products, thereby limiting Central Excise Act’s scope to these specified products.

Experts felt through this notification the government had surrendered power to levy excise except in goods mentioned.

Examining A Muslim Woman’s Right To Property

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muslim-women

Article 14 of the Indian Constitution mandates equality among all its citizens. With the interesting interplay of socio-legal forces, Hindus, Muslims and Christians in India are governed by their respective personal laws – which includes property rights as well. As Muslims in the country do not have codified property rights, broadly speaking, there are governed by either of the two schools under the Muslim law – the Hanafi and the Shia. In India, a large number of Muslims are Hanafis or Sunnis. While the Hanafi school recognises only those relatives as heirs whose relation to the deceased is through a male. This includes son’s daughter, son’s son and father’s mother. The Shia school, on the other hand, favours no such discrimination. This means that heirs, who are related to the deceased through a female are also accepted.

A few general rules of inheritance for women are:

The daughter

Under the Muslim law, the laws of inheritance are rather strict. In keeping with its ideology that a woman is half the worth of a man, a son takes double the share of a daughter. But the daughter is the absolute owner of whatever property she inherits. If there is no brother, she gets half a share. It is legally hers to manage, control, and to dispose off according to her wishes.

She is eligible to receive gifts from even from those she would inherit from. This is contradictory because she can inherit only one-third of the man’s share but can get gifts without any hassle.

Till a daughter is not married, she enjoys the right to stay in her parents’ house and seek maintenance. In case of a divorce, charge for maintenance reverts to her parental family after the iddat period (approximately three months) is over. But, if her children are in a position to support her, the responsibility falls on them.

The wife

In the famous Shah Bano case, the Supreme Court had held that in case of a divorce, it is the responsibility of the husband to make reasonable and fair provision to maintain his former wife even after separation under Section 3 (1Ha) of the Muslim Women (Protection of Rights on Divorce) Act, 1986. This period extends beyond iddat as the woman retains control over her goods and properties.

In the event of the death of her husband, a widow gets the one-eighth share (when there are children) but will get one-fourth share (if there are no children). If there is more than one wife, the share may diminish to one-sixteenth.

The mother

A Muslim mother is entitled to inheritance from her children, if they are independent. She is eligible to inherit one-sixth of her dead child’s property if her son is a father as well. In the absence of grandchildren, she would get the one-third share.

What more?

There are other provisions, too, in the law which ensure financial security of a Muslim woman.

 The maher (entitlement)

This is the total money or property that a wife is entitled to get from her husband at the time of marriage. There are two types of maher: prompt and deferred. In the former case, the amount is given to the wife immediately after marriage; in the later, the amount is given to the wife when her marriage has ended, either upon the death of her husband or by divorce.

The wasiyat (will)

A Muslim cannot give away more than one third of his/her total property through a will. In circumstances where there are no heirs in the estate as prescribed by law, the wife may inherit a greater amount by will.

The hiba (gift)

Under the Muslim law, any type of property may be given as a gift. For a gift to be valid, a declaration of the wish to make the gift must be made which should be accepted by the receiver.

Price-monitoring Structure Under GST In The Pipeline

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Price-monitoring Structure Under GST In The Pipeline

The government is considering a price-monitoring mechanism under the proposed goods and services tax (GST) to ensure that the multiple benefits of the landmark reform are passed on and head off any unwarranted price shocks. States are also keen to ensure that the effects of GST provide a demand push to the economy.

“A mechanism will be put in place to keep a tab on prices,” said a senior official aware of deliberations before the GST Council meets later this week to decide on key issues, including the tax rate.

The government is keen to put GST in place on April 1, 2017. The incidence of tax on goods is expected to fall sharply under GST, widely seen as India’s biggest reform since independence.

It will replace multiple central and state taxes, creating a national market. GDP growth is expected to get a boost of up to 2 percentage points from the reform with the bulk of benefits going to industry that will see logistics costs and taxes decline.

The government wants to guard against profiteering by companies that will benefit from seamless input credit or tax on tax. This was among the points raised by some members of the empowered committee of state finance ministers at its last meeting.

Tax experts said a price-monitoring system without legislative backing may not be effective but suggested additional compliances that could be imposed.

“The government clearly wants to ensure that GST does not lead to price increase and inflation. However, I am not sure if any price monitoring system would be effective, particularly if it does not have legislative backing,” said Siddharth Mehta, partner, PwC India.

He said this could lead to complicated compliance paperwork and avoidable disputes between government and industry and the former should instead ensure that the GST rate is moderate and credit system smooth.

LOW TAX RATE

The implementation of GST in some countries fuelled inflation and the government is keen to prevent a similar situation by starting with a low tax rate.

ET view: Broaden the Tax Base

A price monitoring mechanism is fine. But the government should desist frequent tinkering of rates to grant sector specific sops. Some experts favour setting GST rates low to start with. The other option is to have multiple rates. This makes eminent sense and will work in India just as in the EU where VAT rates vary across member states. Including large chunks of the economy in the tax base and keeping sops to the minimum will help lower GST. A wider base gives leeway to lower GST that allows credit for input taxes paid across the value chain, makes production efficient and lowers retail prices.

Benefits of Registering Property in Wife’s Name

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Benefits of Registering Property in Wifes Name

There are several benefits to buying a property in a woman’s name, either as the sole owner or as a joint owner, with governments and banks offering several sops.

“Aspiring home buyers can seek certain benefits including tax exemptions, if a home is bought in a woman’s name. Such offers can also attract more women buyers to the realty sector,” points out Ashok Mohanani, CMD, Ekta World. Encouraging women to register assets in their name, also boosts women’s empowerment, he adds.

Tax benefits

Experts explain that some of the obvious tax benefits of buying a home in the wife’s name, include an extra deduction of interest up to Rs 1.5 lakh every financial year, if the house is self-occupied. If a husband and wife are the joint owners of a property and if the wife has a separate source of income, then they can both claim tax deductions individually. The tax benefit will depend on the ownership share of each co-owner.

Discount on stamp duty charges

Several state governments in north India are now offering a partial waiver on stamp duty, for buyers registering properties in a woman’s name – either as a sole owner or as a joint owner.

“You can save 1%-2% on stamp duty, if the property is in a lady’s name. In Delhi and Haryana, the stamp duty rate is 4% for women, compared to 6% for men. Moreover, if you are undergoing some financial setback and have some debts to repay, the property held in your wife’s name, does not come under the cover for your loss,” points out Sushil Raheja, CEO of Raheja Homes Builders & Developers.

 

Stamp duty charges for Women Vs Men

State/UT For Women For Men
Delhi 4% 6%
Haryana 3% to 6% up to 7%
Rajasthan 4%* 5%

* As 1% rebate over normal rate

Discount on home loan interest rates

Many banks like SBI, ICICI and HDFC Bank, offer discounted rates on home loans for women borrowers. The prevailing interest rates for women borrowers are as mentioned below:

Interest rate for woman borrower Vs others

Bank Interest for Women borrower Interest Rate for others
SBI 9.35% 9.40%
ICICI 9.40% 9.45%
HDFC Bank 9.40% 9.45%-10.45%

Note: For amount < Rs 1 Cr

Things to keep in mind when buying a home in the wife’s name

Experts maintain that it is a good idea to buy a home in the name of one’s wife or in co-ownership. However, the wife can enjoy the tax benefit, only if she has a separate and genuine source of income. Moreover, if there is any legal dispute on the property, then both, the husband and wife, will be involved in the case. Therefore, home buyers should evaluate all possibilities, before making a final decision.

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