Hey,
In this week’s quota on name dropping, big brands have literally dropped their names out of Facebook Advertising. Unilever, Coca-Cola, Honda Motors are just a few of over 20 multinationals which started the domino effect of putting a stop to advertising on Facebook.
Why so, you ask? This sparked from the “Stop Hate for Profit” Campaign. In simple words, Facebook has been accused of failing to take a stand against hate speech and racism.
This Week’s Dose-
Popcorn has always been a topic of interest. Not just because the puffed kernels feel good on our taste buds, but because of the unusually high price we pay while enjoying the bliss at Cinema.
If your jaw dropped while buying popcorn, don’t pick it up just yet. The ready to eat puffed popcorn will now attract 18% GST.
But why does it come under the 18% tax bracket? Well, it’s because popcorn is not as easily made as you think. The Authority for Advance Rulings on GST said that this ruling came from the complex process of making Popcorn. Heating the grains at a high temperature and then adding salt, turmeric powder, and a negligible quantity of oil for sticking the salt and turmeric on the corn makes it fit the description of ‘Prepared foods obtained by the roasting of cereal’ which attracts the 18% GST.
Next time you guffaw over ready-made popcorn, make sure you feel luxurious!
A brief history
April 2020 had seen a historic drop in fuel prices in Texas. The crude dropped all the way to zero and even beyond that. The seller was paying USD 37 to the buyer to buy oil.
Preposterous!
All the way up
Although prices have increased again, they are still pretty low in the USA. But for us, in India, the prices have not shown a single sign of a downward trend. It just keeps getting higher. Whenever international prices go down, the Government increases the excise taxes. Since June 7, there have been 21 fuel price hikes. Through its emergency powers, the Government can easily tweak the rates. Moreover, state governments have also increased the rates of fuel.
The present
Nearly 70% of the price of petrol and diesel is tax. The government has already collected INR 40,000 crore from this excise taxation in the months of April and May. Although vehicle movement was absolute minimum, fuel consumption has already reached 90% of the pre-COVID period.
Addicted to revenue?
Due to lower dollar prices of crude oil, India is expected to save nearly USD 50 billion (INR 3.75 lakh crore) on its import bill. Undoubtedly the foreign exchange reserve has crossed the half-trillion-dollar mark. The Government hopes to garner an additional 1.6 lakh crore at the very least if it doesn’t raise the excise tax. Hence instead of passing on the benefits of lower crude prices to the common man, the government is mopping up all the revenue.
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The deficit
The June Quarter of F.Y. 2020 saw a significant decline in the tax revenue collection. The Coronavirus clubbed with other factors have been the major reasons for this. The impact has been so bad, that the month of April saw a fiscal deficit of 35.1% of the targeted INR 7.09 lakh crore.
The decline
Gross direct tax collection fell a full 31% to INR 1,37,825 crore in the first quarter (June) of F.Y. 2020-21, down from INR 1,99,755 crore in the first quarter of F.Y. 2019-20
Q1 2020 results are rolling out!!! Brace for impact. Companies may deduct TDS on dividend payouts. Are you seeing your dividend payout shrink too?
It’s a usually good practice to look for all possible deductions for your business to save taxes, but please make sure to not take it too far.
The 1930’s Silent Film Star Ned Sparks’ story might teach us what not to do. A tragic comedy befell Sparks when he tried to write off a pair of $3,000 dentures as a business expense. He claimed that his shiny new (fake) teeth helped him speak clearly when he was filming.
Alas! The IRS (American Income Tax Department) didn’t find this amusing. They stated that they cannot allow this deduction as there was no proof that Sparks would use this luxurious pair of dentures for business purposes only.
Our key takeaway from this incident is: In case you get confused about a possible tax deduction, it is always a good idea to ask an expert. And also to keep your business and personal expenses separate.
“The best way to teach your kids about taxes is by eating 30% of their ice cream”
Bill Murray
