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Citing Singapore model, experts bat for cutting multiple GST rates in India

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Citing the example of Singapore, several experts have suggested that India should do away with multiple tax slabs under the Goods and Services Tax (GST) for greater ease of compliance.

Singapore has only one tax rate under GST— seven per cent -- on taxable goods and services while India has multiple slabs to charge the indirect tax.

An achievement of India's GST implementation is that the measure hasn't been inflationary, according to Abhijit Nath, who works with Insitor Partners, a consultancy firm on GST.

“However, to avoid confusion and greater ease of compliance, India should aim for a two-rate system over time to be in line with global best practices,” suggested Nath.

GST introduction in India has the potential to be a long-term game-changer by unifying the country as one market, he said.

Singapore's practice of early announcement of GST rates for various categories helps in smooth transition, he added.

“This also makes the increase politically viable,” Nath said, suggesting that the same can be followed in India as well.

Singapore's Finance Minister Heng Swee Keat in his budget 2018 speech announced that there are plans to increase GST from 7 per cent to 9 per cent sometime from 2021 to 2025, according to the Inland Revenue Authority of Singapore (IRAS).

Sandeep Chilana, managing partner of Chilana and Chilana law offices, said India should endeavour to move towards least tax slabs.

He said while other countries have considered a single rate of GST, keeping in mind the vast gap in per capital income and the need for generating revenues, it may not be possible at this stage for India to consider it.

“However, India should endeavour to move towards least tax slabs possible, of 6 per cent and 14 per cent,” Chilana said.

Manu Bhaskaran, founding director and chief executive officer of Centennial Asia Advisors, said GST is one of the most efficient taxes available “so it is a good tax”.

“By itself, it can be regressive so it needs to be combined, as Singapore did, with other measures so that the net effect is not regressive,” he said, when asked what developing economies like India can learn from Singapore's GST model.

Govt's Rs 15,000 cr soft loan scheme to sugar mills moving at snail's pace: Industry experts

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The government's Rs 15,000-crore soft loan programme for sugar mills to set up ethanol units is moving at a very slow pace as banks have so far disbursed only about Rs 800 crore, industry experts have said.

The Centre had announced this loan package in two tranches -- first in June 2018 amounting to Rs 4,440 crore and the other in March 2019 of Rs 10,540 crore.

The objective was to help millers in clearing cane arrears and divert surplus sugar for ethanol manufacturing.

A soft loan is a loan that is given at a subsidised interest rate.

"About Rs 800 crore soft loan has been disbursed from banks so far to sugar mills for setting up ethanol units," a senior food ministry official told PTI.

The soft loan package is being implemented by the food ministry, which provides a list of eligible loan applicants to the banks for further process.

The ministry had received total 418 applicants, of which 328 applicants have been identified as eligible for availing soft loan from banks, the official said.

"The ministry has cleared 328 applications totalling a loan amount of Rs 16,482 crore so far. Now, banks have to further process these applications and take a call," the official added.

According to industry experts, only 5-6 per cent of the total soft loan amount of Rs 15,000 crore announced under the scheme has been disbursed so far by banks.

Of 418 applications, the ministry has approved 328 proposals after scrutinising various eligibility criteria.

The ministry checked whether mills have cleared loans taken from the government's Sugar Development Fund (SDF) and also whether they supplied their quota of sugar for ration shop sale (called levy sugar) prior to 2013.

A sugar industry official, who did not wish to be identified, said much of the time is being wasted in the first level of screening at the ministry level.

Ideally, the banks should check the eligibility criteria and sanction the loan amount accordingly, the industry official added.

"In this process, the scheme has not been able to take off properly. The scheme was launched in June 2018 and still the ministry is screening the applications. In this pace, mills may not benefit from the scheme. It takes at least 18 months to establish an ethanol unit," an another industry official said.

At present, 3-4 lakh tonnes of sugar gets diverted for ethanol making. With creation of additional capacity under the scheme, 9-10 lakh tonnes of sugar is expected to be diverted for ethanol production, according to the All India Sugar Trade Association.

Sugar mills have supplied 175 crore litres of ethanol to oil marketing companies (OMCs) till October 22 of the 2018-19 season (October-September) and helped them achieve 5.2 per cent blending with petrol, as per industry data.

The soft loan was announced to improve liquidity of mills, reduce sugar inventory and facilitate timely clearance of cane price dues of farmers.

However, cane arrear still remains high at Rs 9,000 crore so far this year based on the sugarcane price fixed by both the Centre and states, as per the ministry data.

There is sugar glut in India, the world's second largest sugar producer after Brazil. The country had produced 32.5 million tonnes and 33.1 million tonnes in 2017-18 and 2018-19 seasons (October-September), respectively, much higher than the domestic consumption of 25 million tonnes.

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