GST may let rethink owners to scarp their old vehicle under VVMP scheme

The government's ambitious programme to get old, polluting vehicles off the road has hit an unexpected speed breaker by Goods and Services Tax (GST). The Voluntary Vehicle Fleet Modernisation Programme (VVMP) is back on the drawing board as the government reviews its options to reward those who agree to junk their old vehicles to buy new, less polluting, ones. 

The draft policy currently proposes 3 incentives such as slashing excise duty by 50% on the purchase of a new vehicle after scrapping an old one, fair value for the scrap and special discounts from automobile manufacturers. The incentives are expected to reduce the cost of a new vehicle for the buyer by 8-12%. Further, to encourage commuters to shift to new and high capacity buses, which will help decongest roads, the policy also recommends complete excise exemption for state transport buses.

It is important to mention here that according to an important  study  Air pollution could cause 6-9 million premature deaths by 2060, with India and China facing threat of maximum number of such mortalities, according to an OECD report.The menace is also likely to cost 1 per cent of the global GDP, around $2.6 trillion annually, in terms of sick days, medical bills and reduced agricultural output, says the report by the Organisation for Economic Co-operation and Development (OECD).

The Indian Government earlier plan was to levy lower excise tax on new vehicles bought under VVMP scheme. But the new tax system that is expected take effect w.e.f 01st April’2016 will amalgamate excise duty into the overarching indirect tax called GST. The finance ministry doesn't seems to offer any incentives under GST and has advised the roads transport ministry to examine other methods to encourage people to scrap old vehicles. 

Road Transport and Highway Minister Mr Nitin Gadkari had recent meeting with Finance Minister Mr Jaitley on the matter and confirm that Finance Minister is in favour of providing financial benefits to people for scrapping their old vehicle to reduce pollution level (specially in Metro cities) but he is not in favour of any exemption of GST as the GST council will have to clear it.

He is of the view to give financial incentives under some special scheme. Road Transport ministry is reworking the proposal as per the FM's suggestions and will then be give it to the CoS (Committee of Secretaries). The roads ministry is working on a new proposal, which will shortly be put up before the committee comprising secretaries of the roads, steel, finance, heavy industries and environment ministries, a senior official in the roads ministry said. 

To see the relief that will make available to old vehicles owners post GST Act implementation to buy new vehicle under VVMP scheme, we have to wait and watch.

GST Bill: Centre to advance winter session of Parliament to pass bill

Picture Courtesy www.a1facts.com 

Please refer my earlier post where i mentioned that our PM Shri Modi is fully confident on GST implementation on its scheduled time as 01st of April,2017, the government is trying its best to do it.  In recent, the Modi government is considering advancing the winter session of Parliament to pass the Central GST (CGST) and Integrated GST (IGST) Bills, and pave the way for the implementation of the new tax regime.

The session is generally convened in the third or fourth week of November. The government, however, is looking to start the session from the first fortnight of November, just after the festival season.The Winter session of Parliament is generally convened in the third or fourth week of November. The government, however, is looking to start the session from first fortnight of November, just after the festival season.

Terming GST reform as a "game changer", Cabinet Secretary P K Sinha today said the government is working "overtime" to implement the indirect tax regime from April 1 next year.

The government is keen for early passage of the Central GST (CGST) and Integrated GST (IGST) bills, as it will give enough time to the Finance Ministry for implementation of the GST. The two bills are supporting legislations to the Constitutional Amendment Bill approved in the Monsoon session of Parliament.GST, being a constitutional amendment, required a ratification by 50 percent of state Assemblies, which has been achieved.

Earlier this month, President Pranab Mukherjee had given his assent to the bill. The Cabinet had also approved setting up a powerful GST Council a week ago, which will decide on the tax rate, exempted goods and the thresholds. The CGST and IGST bills have been drafted on the basis of the model GST law. The states will draft their respective State GST (SGST) laws with minor variation incorporating state-based exemption. The IGST law would deal with inter-state movement of goods and services.

The Constitution (122nd Amendment) Bill, 2016, for introduction of the GST in the country was accorded assent by the President on September 8 and the same has been notified as the Constitution (101st Amendment) Act, 2016."GST is the biggest game changer. But it is also a challenge. We are working overtime to make it happen from April 1, 2017," Sinha said at the Chief Secretaries Conclave last week organised by industry chamber PHDCCI in Delhi.The Government wants to implement the tax reform from April 1 next year so as to ensure a smooth rollover to the changed tax structure from the beginning of the new fiscal and to avoid mid-year alterations.

Mr. Sinha assured that the GST and other path breaking reforms that the government has committed to its people will be implemented as promised.

Read more at:http://www.firstpost.com/business/gst-bill-centre-to-advance-winter-session-of-parliament-to-pass-bill-3009864.html

ESOP- an motivational factor to make employees Millionaires

ESOP’s are Employee Stock Option Plans under which employees receive the right to purchase a certain number of shares in the company at a predetermined price, as a reward for their performance and also as motivation for employees to keep increasing their performance. It is also a kind of employee benefit plan, similar in some ways to a profit-sharing plan.Employees typically have to wait for a certain duration known as vesting period before they can exercise the right to purchase the shares.

The main aim of giving such a plan to its employees is to give shares of the company to its employees at a discounted price to the market price at the time of exercise. Many companies (especially in the startup phase) have now started giving Employee Stock Options as this is beneficial to both the employer as well as the employee.

Many companies like Infosys in their early days used to award employees and even clerical staff with ESOP’s. This way, there were able to manage their direct costs. Moreover, giving ESOP’s to employees was also a way of motivating the employees to work harder by creating the sense of ownership and directly rewarding employees for increase in the company’s valuation.

Infosys grew very fast; many employees who got ESOP’s of Infosys in the early days and preferred to keep these shares have today turned millionaires. Infosys used to even award Drivers, Office Assistants and Secretaries with ESOP’s and many of them have also turned millionaires. Many small companies which are growing fast but are in need of cash have started replicating the ESOP’s model which was implemented by Infosys. This model not only helps the organisations preserve cash but also keeps the employees motivated. In fact, Narayan Murthy went on record saying that “Every Indian employee at every level who joined the company on or before March 2010 is a stakeholder of Infosys”.

In recent news one can see how Cash bonanza is on the way for employees of payments company Citrus Pay, as bigger rival PayU agrees to buy the Mumbai company for about Rs 860 crore, in one of the biggest deals in the Indian financial technology space. About 50 employees are set to share in the spoils with an estimated Rs 43 crore being allocated as returns on the employee stock option plan (ESOP). About 15 employees are set to rake in over Rs 1 crore, with an office boy who was one of the first employees at the company taking home Rs 50 lakh. 

When the employees are given shares of the same company in which they are working, it gives them a sense of feeling that now they are not employees of this organisation but are the owners. As they are now they owners, they also have a share in the profits of the company. In fact, since employees directly benefit from the increase in the share price, they focus on overall value creation for the company.

PM Modi is confident on GST implementation on its scheduled time as 01st of April,2017

Prime Minister Shri Narendra Modi held a meeting which was was attended by Union Finance Minister Arun Jaitley, both the Ministers of State for Finance, senior officers from the Prime Minister’s office and the Finance Ministry to review the preparedness for the rollout of the Goods and Services Tax (GST) yesterday on September 14, 2016.

In order to ensure that there is no delay on the proposed date of implementation of GST from April 1, 2017, the Prime Minister reviewed the progress made on various steps needed for the rollout of GST relating to preparation of Model GST laws and rules to be framed, establishment of IT infrastructure (GSTN) for both Centre and States, training of officers of Central and State Governments and outreach for awareness of trade and industry.

He directed that all steps must be completed well before April 1, 2017 so that the country should be benefitted with timely implementation of GST Act.

He observed that the GST Council would need to have frequent and intensive meetings to be able to make timely recommendations relating to its mandate provided in Article 279A including making recommendations relating to Model GST laws, GST rates, goods and services that may be subjected to or exempted from GST.

What seems by this supervision that PM is very much confident on GST implementation on its scheduled time as 01st of April,2017.