Goods and GST Bill passed, Goods and Services Tax - GST

[Ganeshan Kalyani]

Dear All,

GST Bill is passed in Rajya Sabha on 03. 08.2016.

A panel under chief economic adviser Arvind Subramanian has recommended a revenue-neutral rate of 15-15.5%, with a standard rate of 17-18% be levied on most goods and all services.

But, there has been no agreement yet on rates of various goods and services, which remains a tricky issue. According to the Bill, passed in the Lok Sabha in May 2015, the rates were to be decided by a GST council headed by the central finance minister with state finance ministers as members.

Let us wait.

Thanks.

Posts / Replies

[Ganeshan Kalyani]

CBEC Chief Najib Shah spoke in favour of multiple rates saying “How can you possibly have one rate for edible oil and car or for atta and computers. We cannot have one rate. We can reach one rate 20 years down the line. EU, several countries have one rate of 18/20 per cent, will that be acceptable to us? It would not be acceptable for us. We have to have multiple rates,”

[Ganeshan Kalyani]

Proposed model GST Law calls for three monthly statements and annual return at minimum per state. It also speaks of input credit matching. In all likelihood, compliance is set to go up. Therefore, systems should be in sync to throw reports that would enable timely compliance.

[Ganeshan Kalyani]

As per the proposed GST Law, “zero rated supply” means any of the following taxable supply of goods and/or services, namely –
(a) export of goods and/or services; or
(b) supply of goods and/or services to a SEZ developer or an SEZ unit.

Further proviso to this section read “…credit of input tax may be availed for making zero-rated supplies, notwithstanding that such supply may be an exempt supply”

[Ganeshan Kalyani]

As per Model GST Law, the tax liability on a composite or a mixed supply shall be determined in the following manner -
(a) a composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply;
(b) a mixed supply comprising two or more supplies shall be treated as supply of that particular supply which attracts the highest rate of tax.

[Ganeshan Kalyani]

Section 48 of the Revised Model GST Law provides for refund of un-utilized input tax credit to exporter of goods/ services.

Under original Model GST Law, 80% upfront refund within sixty days sanctioning clause was inserted i.e. on provisional basis subject to documents verification. This limit has been revised to 90% in the new draft.

It means that if an exporter files refund of say INR 100, tax authorities would provisionally pay INR 90 within 60 days of application. However, the verification of all the requisite documents would happen and then remaining amount will be refunded.

[Ganeshan Kalyani]

With introduction of Goods and Services Tax in India, compliance for tax payers is set to go up. Service sector will get most effected since under current law, almost every service provider is operated under centralised registration scheme wherein 2 returns in a year is all they file. Under GST, the dealers need to file their return for every states where they have business operations after getting GST registration .

[Ganeshan Kalyani]

Real Estate sector is likely to be taxed at 18%. Experts believe that GST rate of 18 per cent would be higher than the current effective rate of VAT and service tax for sale of under construction property in most states.

Industry is pitching for abatement under GST i.e. effective tax rate would come down from 18% to 12%-13%. Further, The Model GST Law restricts credit on goods and services acquired for construction of immovable property (other than plant and machinery). This clause is interpretative which may lead to litigation and result in denial of credits in certain situations.

[Ganeshan Kalyani]

PwC India Executive Director Sumit Lunker said the April 1 rollout deadline seems challenging, as the CGST and IGST laws can be passed only in the Budget Session in early February. Thereafter, states will have to pass the SGST law in their assemblies.

"After the law is passed, industry would need at least 3-4 months time to be GST ready, especially on the IT infrastructure front. Most IT companies would come out with their patches and updates after the final law is crystallised. July 1 appears to be a more feasible date for implementation," he said.

[Ganeshan Kalyani]

Nangia & Co Director (Indirect Taxation) Rajat Mohan said July 1 looks like the "best case scenario" for GST implementation as by then the industry will also be able to migrate into the new taxation regime.

Source: The Economic Times.

[Ganeshan Kalyani]

As far as the model GST law is concerned, PwC India Executive Director Sumit Lunker said, there is no big challenge in passing it as the GST Council has already cleared discussion on 20 chapters and only 7 chapters remain.

"While the issue of dual control remains unresolved till date, state governments across the country are keen to implement GST at the earliest. I am hopeful that the GST Council in its December 22-23 meeting will arrive at a consensus on the pending issues," he said.

[Ganeshan Kalyani]

Deloitte Haskins & Sells LLP Partner Prashant Deshpande said practically April 1 deadline "looks unachievable" because of the short window of time that will be available to the industry after the GST related legislations are passed.

"It will be a big tug of war to implement it from April and my advice to industry is that they should keep themselves prepared to ensure business continuity," he said.

[Ganeshan Kalyani]

As per the roadmap to GST roll out, government planned to finalise GST laws before the conclusion of winter session and present the bills. However, in previous GST Council meetings, consensus on dual control could not be established.

However, to bring this back on track, GST Council meeting was called on December 22-23. Here’s what can be expected from 2 day meeting starting tomorrow:

1. Finalisation of GST Bills

2. Achieve consensus on dual control/ administration.

[Ganeshan Kalyani]

Central Board of Excise and Customs released Frequently asked Questions (FAQs) in English. Later, for benefit of trade and to achieve wide reach – FAQs are understood by people speaking different languages across country, FAQs were released in Hindi and 7 regional languages – Assamese, Bangla, Gujarati, Punjabi, Kannada, Malayalam and Telugu.

[Ganeshan Kalyani]

"Neither the laws nor the schedule of the GST rates have been finalised as yet. This poses several challenges for businesses, the most critical being IT systems readiness, where changes can only start once the laws are finalised. Further, the industry needs to look at the vendor ecosystem as well and ensure that they are technology enabled for doing the GST compliances, which is critical for claiming the GST credits. With a bit of delay in the GST implementation, industry will be better geared up for transitioning their systems and processes." says Pratik Jain, partner and leader indirect tax, PwC

[Ganeshan Kalyani]

The Goods & Services Tax (GST) Council yesterday approved structure of Central Goods & Services Tax (CGST) and State Goods & Services Tax (SGST) laws.

The Council began its two-day meet yesterday and is expected to take up discussions on IGST and Compensation Law in its meeting today, government officials said.

The officials added that 3-4 clauses relating to dual control and definition of state are yet to be decided.

[Ganeshan Kalyani]

The second day of the meeting of the GST Council saw both sides agree to the compensation formula wherein the centre agreed to absorb any spillover of revenue losses accruing on account of the adoption of the new tax regime

The stage is now set for a dialogue on the final agenda item: cross empowerment. The council will meet on 3-4 January to resolve this issue.

[Ganeshan Kalyani]

The Centre will impose a cess on luxury items like high-end cars and demerit goods including tobacco, pan masala and aerated drinks, over and above the highest 28%. Under the structure, the clean energy cess and cess on luxury items and demerit goods would be utilised to create a ₹ 50,000 crore fund every year which will be utilised to compensate the states for first five years of GST roll out.

Source: livemint

[Ganeshan Kalyani]

The base year for calculating the revenue of a state for Compensation has been decided as 2015-16.

[Ganeshan Kalyani]

The GST Compensation Bill will provide a legal backing to the Centre’s promise to compensate the states if their revenue growth rate falls below 14% in the first five years of the GST roll out.

[Ganeshan Kalyani]

The council will again meet during January 3-4, to hammer out an agreement on the issue of dual control or "cross-empowerment”.

The original deadline to roll-out GST from April 1, 2017 appears increasingly unlikely. “Our effort is to make it early as possible,” Jaitley said.

Source: money control

[Ganeshan Kalyani]

Under GST, the states and the Centre will collect identical rates of taxes on goods and services. For instance, if 18 percent is the GST rate on a good, the states and the Centre will get 9 percent each called the CGST and SGST rates.

[Ganeshan Kalyani]

States have demanded that assessees should be divided horizontally with ₹ 1.5 crore be the cut-off base. Under this model, states would assess businesses with an annual turnover ₹ 1.5 crore, while both the Centre and states would do so for businesses having higher turnover.

[Ganeshan Kalyani]

The Centre is pushing for a vertical division of the assessee-base without a turnover threshold. Under this model, both states and the union government will have oversight powers on a certain fixed proportion based on the number of assessees, rather than the turnover.

[Ganeshan Kalyani]

Jaitley said that a committee is concurrently working on the “classification”exercise--a comprehensive list specifying the tax rate that each good and service will attract.

[Ganeshan Kalyani]

States will be compensated 100 percent loss for 5 years, the Finance Minister added.