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Key Highlights of Draft Model GST Law

Goods and Services Tax - GST - By: - Bimal jain - Dated:- 18-6-2016 - Dear Professional Colleague, Recently, on June 14, 2016, the Government has put the Draft Model GST Law on public domain after getting in-principle nod from the Empowered Committee of State Finance Ministers, in a way, signalling that the GST might mark its advent from April 1, 2017. It is imperative that Trade and Industry should understand key provisions in the Draft Model GST law including the intention of the legislation a .....

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aft Model GST Law provides an insight on the governing provisions regarding levy and collection of GST. The Draft Model GST Law also states that the Act shall be referred as the Central/ State Goods and Services Tax Act, 2016. The Draft Model GST Law consists of 162 clauses divided into 25 Chapters along with 4 schedules and Rules as to Valuation under GST. Further, the Draft IGST Act consists of 33 clauses divided into 11 Chapters. Key Highlights of the Draft Model GST Law are as follows: Levy .....

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ly of goods and/or services, on which, GST is payable by the person receiving such goods and/ or services, on reverse charge basis. Composition levy A registered taxable person, whose aggregate turnover in a financial year does not exceed ₹ 50 lakhs, shall be provided an option to pay, in lieu of the tax payable by him, an amount calculated at such rate as may be prescribed, but not less than 1% of the turnover during the year, subject to following conditions: The benefit of composition sc .....

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ates including Sikkim, is required to pay tax if his aggregate turnover exceeds ₹ 5 lakhs. The Central Government, a State Government or any Local Authority shall be regarded as a taxable person in respect of activities or transactions in which they are engaged as public authorities other than the activities or transactions as specified in Schedule IV to this Act, like activities of issuance of passport, visa, birth certificate etc. Persons not to be considered as taxable person a) Any per .....

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t as may be prescribed in a year for personal use, other than for use in the course or furtherance of his business. Registration: Threshold limit A supplier is required to get registered under the GST if his aggregate turnover in a Financial Year exceeds ₹ 9 lakhs and ₹ 4 Lakhs where business is conducted in any of the North Eastern States including Sikkim. No threshold exemption for persons making Inter-State supply and those who are required to pay GST under reverse charge mechanis .....

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ms 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 or furtherance of business. Importation of service, whether or not for a consideration and whether or not in the course or furtherance of business. A supply specified in Schedule I, made or agreed to be made without a consideration. Schedule I covers matter to be treated as supply like permanent transfer/disposa .....

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f receipt of payment by supplier, or Date on which recipient shows the receipt of the goods in his books of account. Time of supply of services The time of supply of services shall be as under: The date of issue of invoice or the date of receipt of payment, whichever is earlier, if the invoice is issued within the prescribed period; or The date of completion of the provision of service or the date of receipt of payment, whichever is earlier, if the invoice is not issued within the prescribed per .....

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actions and e-commerce transactions. Thus, the relevant provisions have been prescribed for determining the place of supply of goods and/ or services under Chapter IV of the Draft IGST Act. Determination of the Value of supply of goods and services: In this regard, Draft GST Valuation (Determination of the Value of Supply of Goods and Services) Rules, 2016, has been prescribed, which shall apply to the supply of goods and/or services under the IGST/CGST/SGST Act. Methods prescribed for determina .....

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ed under the Comparison method, it shall be based on a computed value which shall include cost of production, manufacture or processing of the goods or, the cost of the provision of services, the charges, if any, for design & brand and amount towards profit & general expenses equal to that usually reflected in supply of goods and/or services of the same class or kind as the goods and/or services being valued which are made by other suppliers. d) Residual Method: Where the value cannot be .....

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nged from, or to, Indian Rupees (INR), the value shall be equal to the difference in the buying rate or the selling rate, as the case may be, and the Reserve Bank of India (RBI) reference rate for that currency at that time, multiplied by the total units of currency, etc.) are also prescribed under the Draft Valuation Rules. Payment of tax, interest, penalty and other amounts: Every deposit towards tax, interest, penalty, fee or any other amount by a taxable person shall be made by internet bank .....

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nd/or services, input tax credit availed, tax payable, tax paid and other particulars as may be prescribed within 20 days after the end of such month. Return for Composition Scheme: A registered taxable person paying tax under composition scheme shall have to furnish a return for each quarter or part thereof, electronically, within 18 days after the end of such quarter. TDS Return: Every registered taxable person who is required to deduct tax at source shall furnish a return, electronically, wit .....

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ble person except certain specified person shall have to furnish an annual return for every financial year electronically on or before the 31st day of December following the end of such financial year. Final return: Every registered taxable person who applies for cancellation of registration shall have to furnish a final return within three months of the date of cancellation or date of cancellation order, whichever is later, in a prescribed form. Utilization of input tax credit: Credit available .....

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GST/SGST before the expiry of two years from the relevant date in such form and in such manner as may be prescribed. However, the limitation of two years shall not apply where such tax or interest or theamount referred to above has been paid under protest. A taxable person may also claim refund of any unutilized input tax credit at the end of any tax period subject to the conditions specified. E-commerce - Tax at source to be deducted on online sales of goods and/or services Every E-commerce ope .....

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ayment of any amount in cash or by any other mode, whichever is earlier, collect an amount, out of the amount payable or paid to the supplier, representing consideration towards the supply of goods and/or services made through it, calculated at such rate as may be notified. Tax deduction at source: The Central or a State Government may mandate certain Departments, Local Authority, Governmental agencies, etc., to deduct tax at the rate of 1% on the notified goods and/or services, where the total .....

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The Central/ State Government may, on the recommendation of the Council, make rules, including rules conferring the power to issue notifications with retrospective effect under those rules, to carry into effect the purposes of this Act. Transitional Provisions: The transitional provisions have also been provided in respect of various matters which, inter alia, includes: Migration of existing taxpayers to GST Treatment of carried forward Cenvat credit and unavailed Cenvat credit Issue of suppleme .....

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