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Goods and Service Tax - Improving Ease of Doing Business

Goods and Services Tax - GST - By: - CS SANJAY MALHOTRA - Dated:- 5-9-2016 Last Replied Date:- 6-9-2016 - Long awaited Constitutional (122nd) Amendment Bill has been passed by Rajya Sabha on August 3, 2016 and by Lok Sabha on August 8, 2016. The same has been ratified by more than 50% of the states in India as on Sep 04, 2016 and will be forwarded to President for his assent for amendment in constitution. GST Council will be formed accordingly to finalise the GST rates. GST Council is to be head .....

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from F.Y. 2016-17. Brief Introduction GST was introduced by France during the year 1954 followed by New Zealand, Japan, Canada and is in existence in more than 150 countries at present. Some countries have Dual Model under GST, wherein separate Central and State GST Rates are there, while others have single Tax rate under GST. GST is Destination based tax and have uniform rate for Tax for both Goods and Services across nation. GST is seen to be the biggest Tax Reform in India as will bring in Ra .....

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nation, Digital Environment moving to paperless regime, etc..... Cascading impact of taxes adds to the business inefficiency and Goods and Service Tax will do away with the same as the CGST/SGST/IGST would be calculated on common base. GST Glance : Worldwide Country Year Dual Structure Single Structure GST Rate France 1954 √ 20% South Korea 1977 √ 10% New Zealand 1986 √ 15% Japan 1989 √ 5% Canada 1991 √ 5% Singapore 1994 √ 7% China 1994 √ 17% Australia .....

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of GST. CGST and SGST shall be applicable in case of sales made with the state i.e. Intra-State Sale, whereas IGST (Integrated Goods and Service Tax) shall be levied in case of Inter-State Sales. GST Council having Members from State (Finance Ministers or their Representatives) and Union Finance Minister shall finalise the SGST rates which is uniformly applicable throughout the nation. Benefits to Stakeholders GST would benefit all segments of society i.e. Consumers, Industries, Service Provider .....

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which would give all the businesses level playing field in the competitive environment. GST is going to be a major shift in moving to Digital environment as all the Tax Payments, CENVAT Ledgers, returns, Refunds will be processed online over internet. The same will also result in Reduction in Compliance cost as all the required will be available online similarly to Income Tax i.e. Form 26AS, Returns, Refunds..... Impact of GST on Industry Goods and Service Tax is not only the change in the Indi .....

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ke Industries undertake financially feasibility of same in long run. Logistics Cost too will come down due to change in sourcing pattern from Inter-State to Intra-State as Input Tax credit is available across the Supply Chain. Business Associates would prefer to have sourcing from GST Vendors as the same would give them Tax Credit in GST as against sourcing from unregistered and exempted vendors, where the product cost will go up due to non-availability of Input Tax credit with them. Industries .....

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tive of Inter/Intra State Purchases. Cost of Collection of Taxes for the Central / State Govt. will come down as the all the payments, returns, Input Tax Credit ledgers are maintained online over internet. End of Tax Exemptions Era Goods and Service Tax will have barely minimum goods and services under Tax Exemption and may cover only those which may pertain to Life saving drugs, agricultural produce....... Area Based Exemptions will also put to an end in GST Regime and everyone will have level .....

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ST Regime would bring in shift from concept of Manufacture based Duty to Supply based duty. Major part on account of Litigations will come to an end as the concept of Manufacture will not of any relevance and the levy of duty in GST regime is supply based. Further the Input Tax Credits would also have continuity in the entire Supply chain which would reduce the cost of majority of products. For e.g. In the Textile Chain, Cotton, Cotton yarn is subject to State Taxes i.e. VAT/CST, whereas the Fab .....

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eligible to avail the Input Tax Credit for Central Excise Duty would now be eligible under GST regime for Central Taxes such as CGST / IGST, which can be further set off against their output tax liability. Registration under GST - (Section 19) Separate Registration is required at present under Central (Excise, Service Tax) and State Acts (VAT, CST). In GST, single registration is required, which is common for both CGST/SGST. Registration No will consists of 15 digits, wherein first 2 digits rep .....

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Non-Resident Taxable persons / Persons deducting TDS / Input Service Distributor / Electronic Commerce Operator / Aggregator supplying services under his brand name have to apply for registration, irrespective of Threshold limit of Turnover. Registration Application is to be filed online at GSTN (site under development), wherein person has to mention and attach all the required details. If the person is having businesses in 10 states, then he has to mention addresses of 10 states in same applic .....

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nt for short duration of time). Casual Taxable Person and Non-Resident Person shall have to deposit the estimated Tax Liability at the time of seeking Registration under GST. Input Tax Credit (Section 16) In the current tax structure, CENVAT Credit is linked to inputs, input services, capital goods used in or in relation to the manufacture of Taxable final products, whereas in case of GST, Input Tax Credit is admissible on any supply of goods and / or services which are used or intended to be us .....

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be very harsh provision on recipient goods as would be difficult to monitor. GST Committee at CBEC Level and GST Council should review and punish the defaulter and follow the provisions as covered in Section 87 of Finance Act.(Section 16(11)(c) of Model GST Law) Input Tax Credit is available to the recipient of goods based upon the Matching Concept, wherein the tax credit availed by the recipient of goods shall be matched online with the tax amount paid by the supplier in respect of goods and s .....

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beverages, outdoor catering, beauty treatment, life insurance, health insurance, travel benefits, leave / home travel concession, motor vehicles until they are into such business, goods and services consumed for personal consumption..... Composition Levy of Tax-(Section 8) Composition Levy of Tax shall be applicable in respect of registered person whose aggregate turnover in a financial year within the state does not exceed ₹ 50 Lacs. These persons are liable to pay Composition Levy on th .....

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s per specified dates under respective acts. In GST Regime following returns are to be submitted online at GSTIN site. Statement of Outward Supplies for to be submitted by 10th of following Month. Statement of Inward supplies to be submitted by 15th of following Month. Monthly Return to be submitted by 20th of following Month. (Tax can be paid by such date) Annual Return to be submitted by 31st December of next fiscal. Persons required for deducting TDS to file return by 10th of the following mo .....

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Due to Inverted Tax Structure) Export (Including Deemed Export). Refund on Year End Volume Discounts. Refund of Pre-Deposit in case of Appeal / Investigation. Refund for Tax Payment in respect of supplies to CSD canteens, Un Bodies, Para Military forces... Refund is to be submitted online and the same shall be submitted within 2 years from the Relevant Date which is defined separately under the Act for each of category, wherever refund arises. Refund can be withheld by the department if the taxa .....

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T, then against CGST and finally against SGST. CGST credit shall be used first against CGST, then against IGST. SGST credit shall be used first against SGST, then against IGST. There is no cross utilisation of Input Tax Credit between CGST and SGST and vice-versa. Time and Value of Supply of Goods and Services- (Section 12) Liability to pay CSGT/SGST arises at the time of Supply of Goods which shall be earliest of the following: Date on which goods are removed by supplier of required to be remov .....

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d under Reverse charge, then earliest of date of receipt of goods or date on which payment is made or date of receipt of Invoice or date of debit in the books of accounts. Liability to pay CSGT/SGST arises at the time of Supply of Services which shall be earliest of the following: Date on Issue of Invoice or Date of Receipt of Payment whichever is earlier in case the Invoice is issued within prescribed period. Date of completion of provision of service or Date of Receipt of Payment if invoice is .....

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f amount payable / paid at the time of credit of account to supplier or while making payment in cash or any other mode, TCS (Tax collection at source) at such Rate (To be defined by GST Council) and to be deposited by 10th of following month into Government treasury. Further E-Commerce operator to issue TCS form to the receiver of payment / supplier of goods. IGST (Integrated Goods and Service Tax Supply of Goods in the course of Inter-State Trade or Commerce is subject to levy of IGST. Supply i .....

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the goods are supplied on board or conveyance i.e. vessel or aircraft, then place of supply shall be the location at which such goods are taken on board. Place of Supply of Services (Section 6) Wherever Services are rendered to Registered Person, then the Location of such person is considered as Place of supply of goods. In case services are rendered to a person other than registered person, POS shall be the location of supplier but if the address of service recipient exists in the records of s .....

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s. (for e.g. 50% CENVAT Credit on Capital goods to be availed in one F.Y. and 50% in net F.Y. During migration from present Tax Structure to GST Regime, CENVAT Credit admissible on Inputs held in Stock. During migration from present Tax Structure to GST Regime, CENVAT Credit admissible on Inputs held in Stock during switchover from Composition Scheme to Normal Tax Payment and Tax Credit Reversal / Payment in case of switch over from Normal Tax Structure to Composition Levy. Exempted Goods / Job- .....

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