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DRAFT REGISTRATION PROCEDURE OF GST – THERE IS A SCOPE FOR IMPROVEMENT

Goods and Service Tax - GST - By: - Pradeep Jain - Dated:- 4-11-2015 - Introduction- Sincere is the word when combined with the word Effort makes the road to success as smooth and reliable. Such sincere efforts are being made by the Central Government for paving the path to Good and Services Tax (GST). The government with the aim to implement the GST w.e.f. 1.4.2016 has issued a draft for persual of experts, trade associations, etc. to suggest the flaws and improvements thereupon. This draft is .....

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gistration under GST. Under this scheme, the dealer shall be required to pay tax on some specified rate without entering the Cenvat scheme. However, upon crossing the threshold of this scheme, the dealer will automatically come out of the scheme and will be subject to normal GST procedure. Under this scheme, as the dealer will not be covered under Cenvat scheme, cascading effect will be there as the input tax credit (ITC) shall not be available. Further, eventhough the dealer will be paying the .....

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r of goods, the cascading effect will reduce drastically. Thus, the benefit of compounding scheme will continue to be allowed to medium level businesses alongwith the reduction in cascading effect. Input service distributor - scheme can be continued:- The Report states that the concept of input service distributor may continue if the GST law so provides. Under the present concept of input service distributor, if the input services are consumed at different units of the same assessees, it can be .....

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w, two governing bodies will be there in respect of same input service, it would be difficult to frame provisions related to distribution. Further, the report indicates that there would be option of taking single or multiple registrations for different business verticals which would make it even more complicated. Thus, the essence of continuing this scheme solely depends on framing adequate legal provisions in respect of credit distribution. Provisions related to Casual dealers - good but somewh .....

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of registration, return and assessment of such casual dealers would be separately prescribed. It has also been mentioned that the casual dealers shall be required to self assess their likely tax liability and deposit the same as an advance tax. Such amount would be deposited by way of two demand drafts (one for centre and one for state) which would be returned to the tax payer after he has discharged his final liability. The analysis of this scheme indicates that it has been introduced for the .....

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y affect the liquidity in the hands of entrepreneurs. This will obviously discourage the new entrants and will be limited to the established businesses. It seems the provision related to advance payment of GST by casual dealers has been proposed to secure the interest of government. But due to the fact that it will adversely affect the liquidity of dealers at the time they need funds the most; an alternate arrangement can be made. This arrangement can be in form of a bond or bank security or a c .....

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ess won t suffer during transition period of GST. It has been stated there that the details given in the existing database of Centre and State laws will be imported by GST portal and only additional details will be required to be called from them. In this regard, it has been mentioned that VAT & Central excise details consists of fields ranging from 50 to 107; while GST registration form consists of 120 fields; thus, there is gap of 13 to 70 fields. As such, the details will be required to b .....

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ling of additional information from the dealers. However, in our view, the government, in addition to demanding the additional information, can also ask to verify the existing details or variation in details. This can be done by designing a form which is prefilled partly with information already available with an option to amend the prefilled information as well as add the new one. Thus, a single registration form of GST should have both the options - to verify the prefilled information and wher .....

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have also been prescribed in the report for the purpose of migration. However, this report does not speak about the existing Cenvat balance at the time of implementation of GST. The Cenvat/VAT balance in hand plays a significant role while paying the tax liability. This is the factor directly related to the liquidity of an assessee. In our view, adequate provisions should be made in this regard and the assessees should be informed about the same well before through various means. This becomes mo .....

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The issue of transfer of Cenvat will equally affect the manufacturers and traders who are registered under Central Excise as well as service tax and VAT. They will have ample amount of ITC with them and more the amount of Cenvat; lower the cash payment of tax. If proper provisions are not made and informed, the cash outflow will be on much higher side, thereby adversely affecting the working capital which is obviously not desired; neither by assessees, nor by government. Therefore, the report s .....

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here. It is worthwhile to mention here that the reverse charge is the most critical aspect of present service tax law. Also, the partial reverse charge was introduced only three years back, thus, it has not yet settled. Thus, even the giant service providers are facing difficulty in tackling with the partial reverse charge; so forget about the small and medium level service providers. When GST will be implemented, the situation will become worse as the new law will be accompanied by this complic .....

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he registration proposal should have included a detailed discussion on the reverse charge mechanism. Brand name - important provision missing:- The report has explained the proposed provisions related to threshold exemption in detail. It says that there would be a threshold counted on all India level including export and exempted supplies below which a person shall not be required to get registered. Further, there shall not be any threshold for traders involved in inter-state supplies. The road .....

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