Parliamentary Committee on Public Accounts sought comprehensive review of GST Framework.

Key Issues Highlighting the Need for Review of GST Framework

• Issues of MSMEs: Struggle with compliance due to complexity of Inverted Duty Structure and administrative burden.
• Issues of Exporters: Face delays in input tax credit (ITC) refunds, causing cash flow issues and reducing global competitiveness. 
• Issues of steel rolling mills: Pay dual taxes as scrap dealers evade GST (thus, hindering ITC claims by mills); some businesses relocate to states with GST relaxations.
• Tax evasion by Online Gaming Sector: Despite recent amendments to the GST law targeting this sector, tax evasion persists due to varied business models. 
  • From October 1, 2023, online gaming is taxed at 28% GST. 
  • Suppliers of online money gaming must register under the Simplified Registration Scheme of the IGST Act.
  • The Directorate General of GST Intelligence (DGGI) can direct intermediaries to block unregistered offshore gaming platforms violating the IGST Act.

Way ahead

• Simplified GST compliance framework specifically designed for MSMEs, 
• Dedicated fast-track refund processing system for exporters, ensuring that ITC claims related to exports, 
• A detailed independent study to understand the revenue streaming models adopted by various gaming platforms and accordingly develop a comprehensive guidelines specifically tailored to the online gaming sector. 

Public debt can drive development by funding critical expenditures, but excessive debt growth poses challenges, especially for developing nations.

• United Nations Conference on Trade and Development (UNCTAD) ’s 2024 report warns of rising debt risks, urging immediate global action to ensure stability.

Key Findings of the Report

• Global Debt Surge: Public debt reached $97 trillion in 2023, with developing countries' debt rising twiceas fast as developed nations.
  • India's public debt was recorded at 2.9 trillion US dollars.
• Debt Servicing Strains: 54 developing nations spend more on interest payments than on social sector.
• Unequal Financial System: Developing nations pay 2 to 12 times more in interest than developed countries.

Challenges Posed by the Rising Global Public Debt

• Debt Overhang: High debt levels can stifle economic growth by discouraging investment and consumption.
• Liquidity Challenge: The withdrawal of nearly $50 billion by private creditors from developing countries has worsened liquidity constraints.
• The creditor base with West-dominated institutions (private, multilateral, and bilateral creditors) makes debt restructuring expensive.

Recommendations

• Debt restructuring mechanisms to address coordination challenges.
• Expand contingency financing to prevent debt crises.
• Enhance participation of developing countries in global financial governance.

National Highways Infra Trust (NHIT) completed largest INVIT monetization in roads sector.

• NHIT is the Infrastructure Investment Trust (InvIT) set up by National Highways Authority of India (NHAI) in 2020 to support India's Monetization programme.

Infrastructure Investment Trust (InvIT)

• Definition: It is an investment vehicle, like a mutual fund or Real Estate Investment Trusts (REITs).
• InvITs enable direct investment of money from individual and institutional investors in infrastructure projects.
  • Investments can be made directly or through SPV (Special Purpose Vehicle)/Holding Company by the InvIT.
• InvITs earn income through tolls, rents, interest or dividends from their investments.
  • The interest, dividend, and  rental income are taxable in the hand of the unitholder.
• Regulation: InvIT are regulated by the SEBI (Infrastructure Investment Trusts) Regulations, 2014.
  • SEBI requires InvITs to distribute at least 90% of their income to investors.
  • InvITs are recognized as borrowers under the ‘Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002’.
• Types of InvITs: Public InvITs, Private listed InvITs and Private unlisted InvITs.
• Advantages of InvITs: Access to retail investors to invest in large infrastructure projects, low ticket size, liquidity (as units are listed on stock exchanges), etc. 
  • AM is the process of creating new sources of revenue for the government and its entities by unlocking the economic value of unutilised or underutilised public assets.