Budget 2017 at a glance: Readying the stage for GST

Sticking to its commitment to roll out the goods and services tax (GST) on time, the government will begin its outreach to trade and industry on April 1 to make stakeholders aware of the benefits of the indirect tax reform. The GST Council has finalised its recommendations on almost all issues based on a consensus approach. GST’s tech backbone is also getting ready as per schedule. The budget prepares the ground for its rollout:

No Service Tax on Insurance for Armed Forces
The armed forces are not required to pay service tax on life insurance schemes as the government has exempted them from paying this levy. Members of the army, navy and air force were paying 14% service tax under the group insurance schemes of the central government from 2004 onwards. The move will help reduce compliance costs for the armed forces.

Pay Less for Flagship IIM Programmes
Those admitted to twoyear, full-time post graduate programmes at the IIMs will now pay less, irrespective of whether they are living on campus as the government has fully exempted the course from 14% service tax. The exemption was earlier meant only for those who stayed in the hostels but has now been extended by omitting the word “residential”.

A Costly Affair
Seeking advance rulings for customs, excise duty and service tax is going to be costlier. Keen to weed out frivolous applications, the fee has been raised to Rs 10,000 from Rs 2,500. This will also provide the government with much-needed funds to improve infrastructure at these benches.

Flying Returns
There will be no service tax on viability gap funding for airline operators that provide services under the government’s Regional Connectivity Scheme aimed at boosting connectivity to small cities and towns. VGF is provided by the government and service tax lowers returns for operators.

Beneficial Owners
The ‘beneficial owner’ concept has been introduced under customs law as part of ease of doing business. This will cover situations when an importer is not the actual owner to avoid ambiguity and litigation. This will help in providing clarity to importers who may be importing goods for further onward supply

Export Duty on Aluminium
The government has ensured domestic resource security for alumina users by levying a 15% export duty on aluminium ore and laterite. Besides conserving local resources, the move will discourage exports and guarantee sufficient supply for users here.