Saturday, January 19, 2019

GST Glossary and Goods & Services Tax (GST) | Definition



Goods and Services Tax (GST) Act deals with definitions, phrases, and expressions those are necessary to ensure proper implementation and interpretation of the law. Some of the major terms that are beneficial to businesses and consultants are compiled here.

Actionable Claim will have the significance assigned to it in section 3 of the Transfer of Property Act, 1882 (4 of 1882), which refers to a claim on any unsecured debt or any beneficial interest in movable property of the claimant.

Address of Delivery refers to the address of the recipient of goods and/or services indicated on the tax invoice issued by a taxable person for delivery of such goods and/or services.

Address on Record means the address of the recipient as noted in the files of the supplier. This may or may not be the same as the address of delivery.

Adjudicating Authority means any authority competent to pass any order or decision relating to the GST Act, but does not include the Central Board of Excise and Customs, the revision authority, authority for the advance ruling, and appellate authority for an advance ruling, appellate authority, or the appellate tribunal.

Aggregate Turnover means the total value of all taxable supplies, exempt supplies, exports of goods and/or services, and interstate supplies of a person having the same PAN, computed on the pan-India basis and excluding taxes. However, the value of inward supplies on which taxation is based on reverse-charge mechanism shall not be admitted.

Appellate Tribunal means the Goods and Services Tax Appellate Tribunal set up under section 109.

Application Service Providers (ASPs) are like GST Suvidha Providers (GSPs) but are more wholesome than GSPs. The support provided by ASPs will address most taxpayer compliance difficulties as they work as a liaison between the taxpayers and the GSPs.

Appropriate Government refers to the Central Government for IGST, UTGST and CGST, and the State Government for SGST.

Assessment means the determination of tax liability inclusive of self-assessment, re-assessment, provisional assessment, summary assessment, and best judgment assessment.

Capital Goods are goods that are capitalized in the books of accounts of the person claiming the credit and are intended to be used during business.

Casual Taxable Person is a person occasionally undertaking transactions involving the supply of goods and/or services during business, whether as principal, agent or in any other capacity, in a taxable territory where he has no fixed place of business.

CGST is the tax levied under the Central Goods and Services Tax Act, 2016.

Common Portal refers to the online GST portal approved by the Central and State Governments, on the recommendation of the council.

Composite Supply means a supply consisting of two or more goods and/or services, which are naturally bundled and provided together, one being a principal supply.

Consideration relates to the supply of goods or services involving:
·         Any payment made or to be made, whether in money or kind
·         Monetary value of any act or forbearance, whether or not voluntary
However, the subsidy given by the Central and/or State Governments are not included.

Council refers to the Goods and Services Tax Council set up under Article 279A of the Constitution.

Credit Note means a document issued by a taxable person in relation to the tax invoice exceeding the taxable value and/or tax payable in respect of supply, or where the goods supplied are returned by the recipient, or where the services supplied are found to be deficient.

Debit note means a document issued by a taxable person relating to the taxable value and/or tax charged as per the tax invoice when found to be less than the taxable value and/or tax payable in respect of such supply.

Digital signature Certificate (DSC) refers to a secure digital key that certifies the identity of the holder, issued by a Certifying Authority (CA). It typically holds information about the identity of the holder. It is the digital equivalent of a handwritten signature.

Electronic Commerce means the supply of goods and/or services including digital products over a digital or electronic network.

Exempt Supply means supply of any goods and/or services that are not taxable and includes such supply of goods and/or services that attract zero rate of tax or that may be exempt from tax per section 11.

Fixed establishment is a place, other than the place of business, that has a sufficient degree of permanence and suitable structure regarding human and technical resources as to supply/receive/use services for its own.

Forward charge means the tax liability of the supplier of goods and/or services to levy the tax on the recipient of the goods and/or services and to remit the same to the credit of the government.

Fund means the Consumer Welfare Fund set up under section 57 by the Central Government.
Goods refers to all types of movable property, including actionable claim, growing crops, grass, and things attached to the land that are agreed to be severed before supply or under a contract of supply. Excludes securities and money.

Goods and Services Tax Network (GSTN) is a non-profit, public-private partnership company. Its main purpose is to provide IT infrastructure and services to Central and State Governments, taxpayers, and other stakeholders to facilitate the implementation of GST.

GST Suvidha Provider (GSP) refers to third-party applications that assist the taxable person in accessing the GST portal in an enriched manner by being more user-friendly and customer-centred.

Harmonized System Nomenclature (HSN) Code is a numeral used to classify goods for taxation purposes provided by the World Customs Organization.

IGST means Integrated Goods and Services Tax Act, 2017. Integrated tax means the IGST levied under IGST Act, 2017.

Input Service Distributor means an office of the supplier of goods and/or services that receives tax invoices issued under section 31 toward the receipt of input services and issues a prescribed document for distributing the credit of CGST, SGST, UTGST and/or IGST paid for the said services.

Input Tax in relation to a registered fixed person, means the central tax, state tax, integrated tax or Union territory tax charged on any supply of goods or services or both made to him and includes:
ü  IGST Charged on the Import of Goods
ü  Tax payable under subsections (3) and (4) of section 9.
ü  Tax payable under subsections (3) and (4) of section 5 of the IGST Act.
ü  Tax payable under subsections (3) and (4) of section 9 of the respective SGST Act; or
ü  Tax payable under subsections (3) and (4) of section 7 of the UTGST Act.

However, it does not include the tax paid under the composition levy.
Input Tax Credit means the credit of input tax.

Intrastate Supply of Goods means the supply of goods during intrastate trade or commerce regarding subsection (1) of section 8 of IGST Act, 2017.

Intrastate Supply of Services means the supply of services during intrastate trade or commerce regarding subsection (2) of section 8 of IGST Act, 2017.

Invoice shall have the meaning as assigned to “Tax Invoice” as under section 31.

Inward Supply refers to the receipt of goods and/or services, whether by purchase, acquisition, or any other means, and with or without any consideration.

Job work means undertaking any treatment or process by a person on goods belonging to another registered taxable person.

Local Authority Means:
Ø  Panchayat as defined in clause (d) of Article 243 of the Constitution
Ø  Municipality as specified in clause (e) of Article 243P of the Constitution
Ø  A municipal committee, a zilla parishad, a district board, and any other authority legally entitled to or entrusted by the Central or any State Government with the control or management of a municipal or local fund
Ø  Cantonment board as defined in section 3 of the Cantonments Act, 2006 (41 of 2006)
Ø  Regional council or a district council formed under the Sixth Schedule to the Constitution
Ø  Development board formed under Article 371 of the Constitution
Ø  Regional council formed under Article 371A of the Constitution

Market value refers to the full amount that a recipient of supply would pay to obtain the goods and/or services of like kind and quality at or about the same time and at the same commercial level, where the recipient and supplier are not related.

Mixed Supply means two or more individual supplies of goods and/or services made together by a taxable person for a single price where such supply does not form a composite supply.

Non-Resident Taxable Person is someone who occasionally undertakes transactions involving the supply of goods and/or services, whether as principal or agent, or in any other capacity, but with no fixed place of business in India.

Output Tax means the CGST/SGST on taxable supply of goods and/or services made by a taxable person or by his agent. Excludes tax payable on a reverse-charge basis.

Outward Supply refers to the supply of goods and/or services, whether by sale, transfer, barter, exchange, licence, rental, lease, or disposal, or any other means made or agreed to be made during business.

Person includes:
1)      An individual
2)      A Hindu undivided family
3)      A company
4)      A firm
5)      A Limited Liability Partnership
6)      An association of persons or a body of individuals, whether incorporated or not, in India or outside India
7)      Any corporation set up by or under any Central, State, or Provincial Act or a government company as defined in section 2(45) of the Companies Act, 2013 (18 of 2013)
8)      A body corporate incorporated by or under the laws of a country outside India
9)      A cooperative society registered under any law relating to cooperative societies
10)  A local authority
11)  Central government or a State government.
12)  Society as defined under the Societies Registration Act, 1860 (21 of 1860)
13)  A trust
14)  Every artificial juridical person, not falling within any of the preceding sub-clauses

Place of Business Includes:
       I.            A place from where the business is ordinarily carried on, including a warehouse, a godown, or any other place where a taxable person stores his goods, or provides or receives goods and/or services
    II.            A place where a taxable person keeps his books of account
 III.            A place where a taxable person is engaged in business through an agent

Principal means a person on whose behalf an agent carries on the business of supply or receipt of goods and/or services.

Principal Place of Business means the location of business specified as the principal place of business in the certificate of registration.

Principal Supply means the supply of goods and/or services that form the significant element of a composite supply and any other related supply being ancillary.

Recipient of supply of goods and/or services means:
1.      Where the consideration is payable, the person liable to pay that consideration.
2.      Where no consideration is payable, the person to whom the goods and/or services are delivered/rendered or made available.

Includes an agent working on behalf of the recipient in relation to the goods and/or services provided.

Registered Importer refers to the importer registered per the provisions of Central Excise Rules, 2002.

Related Persons Include:
a)      Officers or directors of one another's business
b)      Legally recognised partners in business
c)      The employer and the employee
d)     Someone who directly or indirectly owns, controls, or holds 25 percent or more of the outstanding voting stock or shares of both
e)      One of them directly or indirectly controls the other
f)       A third person directly or indirectly controls both
g)      Together they directly or indirectly control a third person
h)      They are members of the same family

Removal in relation to goods means:
·         Dispatch of the goods for delivery by the supplier or by any other person acting on behalf of such supplier
·         Collection of the goods by the recipient or by any other person acting on behalf of such recipient

Return refers to any return prescribed or required to be furnished.

Reverse Charge means the tax liability on the recipient of the supply of goods and/or services instead of the supplier of such goods and/or services.

Securities shall mean as per subsection (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956).

Services means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged.

SGST means the State Goods and Services Tax Act, 2017. State tax means the tax imposed under SGST Act, 2017.

Supplier signifies the person providing the said goods and/or services and shall include an agent acting as such on behalf of such supplier about the goods and/or services provided.

Supply includes all forms of supply of goods and/or services such as sale, transfer, barter, exchange, license, rental, lease, or disposal made or agreed to be made for a consideration by a person in the course of business and also includes import of services for a consideration whether or not in the course of business.

Taxable Person is an individual who carries on any business at any place in any state of India and who is registered or required to be registered under GST.

Turnover in a State or in Union Territory means the aggregate value of all taxable supplies, exempt supplies, exports of goods and/or services made within a state or Union Territory.

Sunday, January 6, 2019

GST Proves Big Difficulty for Banking Correspondents


As per the industry executives, it has come into being that Business Correspondents (BCs) are facing a challenging time under the goods and services tax (GST) regime.

As we know, Business Correspondents are the retail agents engaged by banks who provide banking services at locations other than a bank and under the new regime, tax liabilities & compliances have been exceeded for BCs to follow.

BCs plays a vital and a very important role in the financial inclusion in rural and semi-urban areas. The major challenges are regarding wafer-thin margins and high compliance cost. These factors are making the BCs feel the heat of the new tax regime.

If we take an example of the Jan Dhan account. The industry is facing problem in Figuring out, how to get implemented zero tax rate on transactions involving Jan Dhan accounts. The Originating Banks are not clear on the matter that how to come to the conclusion that whether the destination account is a Jan Dhan account as in most cases the two entities are separate.

“There is no clarity yet from the tax authorities. We are facing tough times in the business. It is a complicated business to be in, and now with the 18% tax rate our margins are getting further squeezed.,” informed a senior executive of an entity which works with banks to take financial services to remote areas.

The central government is supposed to be looking into the matter while the executives spoke on the current condition of anonymity.

A senior executive with a private sector bank argued that considering the current scenario, the BC business does not look not that lucrative anymore, though the BCs played a crucial role in reaching out to rural customers
“The off-us business is getting killed systematically. There is no money to be made in this area,” he said.

The off-us business deals with the new age banks which usually set up retailer points for offering basic banking services such as remittance and opening of accounts of customers who are typically migrant workers or the urban poor section.

These customers are those who send money to their families back home via such channels. On the other side, the banks who receive this amount in most cases are the government-owned ones. BCs get associated with the new age private banks. For such Government owned Banks, this was an attractive touch point for prospective customers.

“Now, extreme competition is driving prices downwards. Further, with higher taxes under GST, margins are getting squeezed,” said the banker cited earlier.


The executives said that the last-mile retailers have always been a pain point from the compliance point of view. The retailers are thus managing their profits by overcharging unsuspecting customers depending on the areas and presence of bank branches.

“This markup happens mostly in cash and customers are forced to pay that amount since branches are not close by and sending money home is a compulsion. “Now, with higher taxes, since the last-mile commission could get squeezed, they could be encouraged to charge more and fleece customers.” said another senior executive.

As per the Executives, there is another possibility that a chunk of transactions which were happening through banking channels could move to cash through hawala channels.

Now, as the GST Council has clarified all the rates, the Business Correspondence Federation of India is about to decide its next move.

“The entire argument of the industry was that since BCs help drive financial inclusion they could be taxed at a lower rate of 5%, thereby encouraging the industry and bring more people within the formal banking channels,” said one of the executives cited earlier.


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Monday, December 31, 2018

Centre, States Move to Implement Latest Round of GST Rate Cuts Announcements


Central and state governments are expected to issue more notifications shortly as they give effect to the tax rate cuts on about 22 items

The central government on Monday night notified goods and service tax rate cuts on movie tickets and certain services like third party insurance as had been announced by the federal indirect tax body, the Goods and Services Tax (GST) Council on 22 December.

The notifications are effective from 1 January. Central and state governments are expected to issue more notifications shortly as they give effect to the tax rate cuts on about 22 items that the Council had announced.

While the central government notifies the rate reduction on central GST (CGST) and integrated GST (IGST) applicable on imports and inter-state sales, states notify the state (SGST) rates.

The Council had at its last meeting decided to lower rates on seven items which were in the highest slab of 28% as part of a tax slab rationalisation.

The items in the highest slab benefiting from the rate cut included pulleys and transmission shafts used in farming, monitors and TVs up to screen size of 32 inches, power banks, retreaded tyres, digital cameras and video camera recorders, and video game consoles. The rate on these items are being lowered to 18%.

It was also announced that parts of carriages for disabled people, which were earlier taxed at 28%, will be reduced to 5%. The rate cuts will have a revenue impact of Rs 5,500 crore for the full year.

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Friday, December 28, 2018

P Chidambaram Attacks Centre Over Change In Stance On GST

P-Chidambaram Attacks

Former finance minister P Chidambaram on Wednesday attacked the Centre over its alleged change in stance on the Goods and Services Tax regime, saying that till yesterday a single standard GST rate was a stupid idea, but was now the "declared goal" of the Modi government.

The senior Congress leader's sharp criticism of the government comes days after the GST council at its 31st meeting slashed tax rates for 23 commonly-used items. The rates were reduced from 18 per cent to 12 and 5 per cent respectively.

Finance Minister Arun Jaitley on Monday had hinted at further rationalisation of the GST by merging the 12 and 18 per cent slabs. He had also accused the Congress of oppressing the country with a high indirect tax rate of 31 per cent.

Hitting out at the government, Mr Chidambaram said, "Until yesterday a single standard rate of GST was a stupid idea. Since yesterday, it is the declared goal of the government!"

"Until yesterday capping GST at 18 per cent was impracticable. Since yesterday, the Congress party's original demand of an 18 per cent cap is the declared goal of the government," he said in a series of tweets.

"Until yesterday, the chief economic adviser's RNR (Revenue Neutral Rate) report to fix the standard rate at 15 per cent was in the dustbin. Yesterday it was retrieved and placed on the finance minister's table and was promptly accepted," Mr Chidambaram tweeted.

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GST Focus Shifts to Enforcement Actions, Returns, Refund Simplification

GST Update
It faced a huge political backlash and became the butt of jokes with opponents calling it 'Gabbar Singh Tax', but weathered all of it in 2018 and its proponents are confident the GST is fast emerging as a strong tax-compliance tool and may eventually evolve into a single-slab taxation rate.

Dismissing the criticism that it was a 'good law, badly implemented', those in support point out it took two years for a GST to be implemented in Malaysia -- the last country before India to have introduced such a tax -- but only to be scrapped in the end by a new government there.

In India, it has been about one and half years since the GST (Goods and Services Tax) was introduced in July 2017.

Confident that the new indirect tax regime has stabilised now, the authorities feel it is time to reap the benefits now and therefore the focus has shifted to enforcement actions, as also streamlining returns and refund processes.


Confident that the new indirect tax regime has stabilised now, the authorities feel it is time to reap the benefits now and therefore the focus has shifted to enforcement actions, as also streamlining returns and refund processes.

The GST, which replaced a tangle of local taxes and entry levies, saw a chaotic roll-out on July 1, 2017, following a decade of political debate but only three months of concrete planning.



Like any reform, the GST faced its own teething troubles and the main opposition party Congress's president Rahul Gandhi famously called it 'Gabbar Singh Tax' -- after the famous villain of all-time Bollywood blockbuster 'Sholay'.

The opposition parties vehemently criticised the new 'one nation, one tax' system having four different rates instead of a single rate adopted in some countries including the UK and Singapore.

Then there were concerns about an onerous reporting system and frequent policy changes disrupting supply chains, and in turn consumption, requiring first few months being spent on streamlining the back-end systems, educating businesses and finding appropriate slabs between 0, 5, 12, 18 and 28 per  ..

It was finally in 2018 that the actual work on 'one nation, one tax' began to be seen with banishing of inter-state check posts with implementation of an electronic permit.

By mid-2018, tax collections rose in a country where compliance historically has been low. The tax-to-GDP ratio, which touched its highest level of 11.6 per cent last fiscal, is expected to rise further to 12.1 per cent this financial year ending March 2019.


Throughout 2018, a broad rationalisation of rates was carried out and after the last round last week only about two dozen goods were left in the top 28 per cent bracket, with officials saying essential and daily use items of commoners have been put in the lowest slabs.

However, a large part of the economy - fuel, electricity, land and real estate excluding construction contracts are still outside the GST, probably due to revenue considerations of both the central and state governments.


Also, many believe the real impact of the GST on the GDP growth rate hasn't yet been seen although it has made doing business in India easier as seen by the jump in India's ranking on the World Bank's index.

Inflation too has eased because of doing away of tax-on-tax that was levied in pre-GST era where states charged VAT even on the excise duty levied by the Centre on ex-factory price of goods.

Despite the political opposition, India has stuck to the GST while Malaysia scrapped its 6 per cent GST, fulfilling a campaign promise by Prime Minister Mahathir Mohamad that gave him an unexpected win earlier this year. The disgruntled voters there had blamed this consumption tax, imposed in 2015, for increase in their cost of living.

In India, officials say, the taxpayer base has swelled post-GST as traders can now claim certain tax credits only if they can show that every supplier in in the chain has paid the required tax.


An analysis of various changes in the tax rates through 2018 shows that the effective tax has come down on about half of the commodities. Besides, Finance Minister Arun Jaitley has dropped broad hints at moving towards a single GST rate although he had previously ridiculed the idea when it was proposed by Congress.

To ensure businesses pass on the tax rate cuts to consumers, an anti-profiteering authority has been set up which has already levied fines, including on big corporate like HU ..


Talking to PTI, Revenue Secretary Ajay Bhushan Pandey, the man now overseeing the GST after retirement of its main architect Hasmukh Adhia, said the focus now is on enforcement action and streamlining returns and refund process.

Further rationalisation of rates is also on cards, including in housing sector and cement, while an increase in exemption threshold for small and medium enterprises (MSME) would be considered by the GST Council next month.


Currently, businesses with a turnover of up to Rs 20 lakh are exempt from GST.

Monthly GST revenues have averaged Rs 97,100 crore in the April-November period of current fiscal, up from Rs 89,100 crore in the last fiscal.

Stating that the revenue department will ensure that honest taxpayers are not harassed, Pandey said the first step would be to identify only those defaulters where there are gaps in returns and which need to be clarified.

The government has detected GST evasion worth Rs 12,000 crore between April and November, while recovery stands at around Rs 8,000 crore.

Pandey said a continuous and constant endeavour under the GST would be to simplify the process, especially relating to filing returns, or claiming refunds, or rate rationalisation.

A simplified GST returns forms will be launched on a trial basis in April 2019 and will be made mandatory from July onwards. Also on the anvil is filing of 'nil' return by sending an SMS and online refund applications.

Stating that 28 per cent slab is "gradually moving towards a sunset", Pandey said going forward the slabs would be 0, 5 per cent and one standard rate between 12-18 per cent.

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GST Evasion Worth Rs 38,896 cr Detected During April-Oct

GST Evansion
The government has detected GST evasion worth Rs 38,896 crore in 6,585 cases in the April-October period of 2018-19, Parliament was informed Friday.

Minister of State for Finance Shiv Pratap Shukla said while central excise evasion of Rs 3,028.58 crore in 398 cases was unearthed during the seven-month period, service tax evasion of Rs 26,108.43 crore was detected in 3,922 cases.

Customs evasion was detected in 12,711 cases involving Rs 6,966.04 crore and Goods and Services Tax (GST) evasion worth Rs 38,895.97 crore was unearthed in 6,585 cases, he said in a written reply in the Lok Sabha.

The total amount of evasion in indirect taxes (GST, service tax, excise and customs) during April-October adds up to about Rs 75,000 crore.

During the seven-month period, the Central Board of Indirect Taxes and Customs (CBIC) recovered evasion worth Rs 9,480 crore in GST, Rs 3,188 crore in service tax, Rs 1,600.84 crore in customs and Rs 383.5 crore in central excise, Shukla said.


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Thursday, December 27, 2018

GST Journey Since Launch and the Road Ahead


Since India introduced the goods and services tax (GST) in July 2017, the tax reform has seen numerous changes. About 18 months into its life, it is still under intense scrutiny. Mint takes a look at GST’s evolution and its future direction.

In the pre-GST tax regime, each commodity would attract up to 17 taxes, Under the GST, four tax slabs were introduced, with each item taxed at one rate. The plan is to move towards a single standard rate in the future of around 15% Since its implementation GST rates have been sharply cut on many items. The highest slab of 28% has only 27 categories of products, down from close to 228 at the time of rollout Has GST succeeded in achieving its goals?

The goods and services tax (GST) replaced 17 central and state taxes that existed before and has led to the removal of check posts at state borders, transforming India into a single market. It cut business costs by removing what is called “tax on tax”. GST has also increased the number of taxpayers to 3.4 million, according to the fiscal year 2017-18 Economic Survey. The increase in the tax base will help the exchequer with higher receipts when economic growth quickens. However, a large part of the economy—fuels, electricity, land and real estate excluding construction contracts are still outside GST.

Why has this tax regime been criticized?
One of the criticisms from the opposition Congress party is that GST has multiple tax slabs and that the highest slab is 28% against a cap of 18% it had proposed. The National Democratic Alliance government contests this saying that GST has brought down the tax rate on 97.5% of commodities to 18% or less, as against an effective rate on most of the items in the pre-GST era of 31%. The opposition also alleges that the GST regime was rolled out in a hurry and without adequate preparation, which resulted in hardship for traders across the country.

Why has India adopted multiple GST Rates?

Income inequality makes it difficult for India to adopt a single tax rate for all commodities as in the city state of Singapore, which taxes all items at the rate of 7%.

Have consumers benefited?
Yes, through tax cuts. Transparency in its computation has made the high incidence of indirect tax on many daily use items apparent, which has prompted the federal tax body, the GST Council, to cut tax rates. The Council estimates the tax cuts announced so far amount to a benefit of ?80,000 crore a year. However, the issue of businesses not passing on tax cut benefits to consumers remains a serious concern. Many consumers have filed complaints which are being examined by the National Anti-profiteering Authority.

What direction is the GST heading towards now?
The GST Council plans to converge the 12% and 18% slabs, which would make GST a two-slab tax, barring the items on the exempt category and the few luxury and sin goods taxed at 28%. When revenue receipts improve, the council will also consider inclusion of crude oil, petrol, diesel, natural gas and aviation turbine fuel in GST. This will help businesses into oil and gas exploration, refineries, as well as industries such as airlines in reducing their tax burden.

The Mint, 26th December 2018

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