Ready for New Era- Goods and service Tax

[Prafful Lalwani]

Introduction

GST will be a game changing reform for the Indian economy by creating a common Indian market and reducing the cascading effect of tax on the cost of goods and services. The Constitution Amendment Bill for Goods and Services Tax (hereinafter referred to as “GST”) has been approved by the President of India post its passage in the Parliament (by Rajya Sabha on 3 August 2016 and by Lok Sabha on 8 August 2016) and has also been ratified by more than 50 percent of state legislatures. The Government of India is committed to replace all the indirect taxes levied on goods and services by the Centre and States and to implement GST by April 2017.

Salient Features of the proposed Indian GST System:

1. GST is defined as any tax on supply of goods and services other than on alcohol for human consumption.
2. Taxes would be subsumed under this regime as per follows:

3. Petroleum and petroleum products, i.e., crude, high speed diesel, motor spirit, aviation turbine fuel and natural gas, may be subject to GST – if changed, the date shall be notified by the GST Council.
4. Provisions will be made for removing imposition of entry tax / Octroi across India.
5. Entertainment tax, imposed by states on movie, theatre, etc., will be subsumed in GST, however taxes on entertainment at panchayat, municipality or district level will remain unchanged.
6. GST may be levied on the sale of newspapers and advertisements.
7. Stamp duties, typically imposed on legal agreements by states, will continue to be levied

Scheme of levy

Goods u/s 12	Reverse charge – Goods u/s 12	Services u/s 13	Reverse charge – Services u/s 13
Earliest of the following- When goods are removed by supplier. When goods are made available to the recipient. When supplier issues invoice. Supplier receives the payment. Recipient shows receipt in his books.	Earliest of the following- Receipt of goods. Date of payment. Date of receipt of invoice Date of debit in books.	Earlier of date of issue of invoice or receipt of payment (if invoice issued within prescribed period) Earlier of completion of service or receipt of payment (if invoice issued within prescribed period) Date shown by recipient in his books Specific provisions made for continuous supply of services.	Earliest of the following- Receipt of goods Date of payment Date of receipt of invoice Date of debit in books

Procedural aspects

1. Registration – Registration is mandatory for dealers having turnover over the specified limit. Dealers who are already registered with state VAT/sales tax authorities would be granted temporary registration number automatically under the GST regime and they have to get the permanent registration number within 6 months from the date GST becomes effective.

Dealers would be allotted PAN based 15 digit alpha numeric registration number and separate registration is required for each state in which dealer is having business.

2. Returns and their periodicity- Various returns are required to be filed with authorities (through GSTN) on prescribed frequency. Payment of taxes- Payment over ₹ 10,000/- will be made through online banking by accessing GSTN for challan generation. Following process will be followed for payment of taxes-

1. Visit the GSTN and create draft challan
2. Upon creation of the draft challan, the taxpayer will fill in the details of the taxes that are to be paid. The challan page will have sets of mandatory fields, which the user has to provide. The tax payer will have the option to pay CGST, IGST, Additional Tax and SGST concurrently. Generate the final challan after filling all the details.
3. The challan generated will have a 14-digit (yymm followed by 10-digit) Unique Common Portal Identification Number (CPIN).
4. Select the bank for making the payment. GSTN will share the relevant details (like GSTIN, CPIN, challan amount, relevant state etc.) on a real time basis with bank.
5. After successful payment, challan identification number (CIN) will be generated against CPIN.   

Refund of taxes-

Refund will be given in cases like export, unutilized credit, completion of assessment etc. In case of refund relating to input/input services used for export, the time limit for filing refund claim is one year from the date of export and the refund claim has to be certified by a chartered accountant. Principle of unjust enrichment is applicable in case of all refunds.

3. GST returns and Due date of filling the returns:

GST Return particulars	Due Dates
GSTR 1- Sales Register	10th of the next month.
GSTR 2- Purchase Register	15th of the next month.
GSTR 3- Monthly return form	20th of the next month.
GSTR 4- Quarterly return for compounding dealers	On and before 18th of the month after the quarter.
GSTR 5- Periodic return by Non-Resident Taxpayer	Within 18th day after end of the month.
GSTR 6- Return for Input Service Distributor (ISD)	15th of the next month.
GSTR 7- Return for Tax Deducted at Source	10th of the next month.
GSTR 8- Annual Return	On or before 31st December of next FY.

Conclusion

Tax payers need to be GST compliant to be able to test system changes in time. Depending on the operating geographies, size and sector, changes would be substantial and may require proactive planning with a time-bound action plan.