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MODEL GST LAW : REFINEMENT REQUIRED

Goods and Services Tax - GST - By: - Dr. Sanjiv Agarwal - Dated:- 8-9-2016 Last Replied Date:- 12-9-2016 - The model GST law as released by the Government / Empowered Committee on GST is in public domain since mid June 2016. The proposed provisions only conveys the Government s intention to levy GST in India and the manner in which it will be administered, levied , collected and implemented . However, the said proposed provisions require refinement, improvement and changes in order to be busines .....

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ho operate in multiple states or all India basis. Procedures proposed for registration and returns are complex, cumbersome and regressive. Provision of classification, valuation supply etc also go against the principle of ease of doing business. Department should not have power to refuse registration ab initio which will adversely affect the business men. Grant of registration must be made obligatory as is at present. Multiple registrations of same person in different states should be done away .....

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so as to exclude the value of exempt and non-taxable supplies from aggregate turnover to make it meaningful and objective. Otherwise the purpose of exemption / threshold will be defeated. Definition of supply should be 'comprehensive' and not inclusive. It is defined as 'supply includes' rather than supply means....'. This will add to litigation. The supply of capital goods (whether to own depot or to the customer) be kept outside the purview of GST , and only the leasing / .....

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on and interpretational issues. Threshold exemption limit should be kept at least at ₹ 25 lakh for services and ₹ 2 crore for goods as anybody with lower limit can always voluntarily get registered. Also, small and medium entities may find it difficult to maintain electronic records and wish to avoid unnecessary inspections / litigations from the tax Department. Composition Scheme is meant for small taxable persons like neighborhood stores who does not keep record of their turnover a .....

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interest of small assessees as there might be a possibility that in aggregate turnover of ₹ 50 lakhs only a small amount constitute inter-state supply of goods or services which will deny him of the benefit of composition scheme. Valuation rules are too cumbersome so as to even prescribe valuation of services without consideration. Transaction value of goods and services should factor the 'discounts'. There should be no tax on free supplies. In GST system, it is expected that the .....

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lid returns by the supplier of such taxable person will most certainly lead to innumerable amount of litigations on account of a few unscrupulous dealers. Input tax credit (Cenvat) should not be denied to real estate sector and allowed to works contracts only. Guidelines for valuation of land should be made clear and transparent. Also, non-subsuming of stamp duty in GST should be reconsidered. Reversal of input tax credit used for goods and / or services used for personal or private consumption .....

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t hurry implementation of GST from April, 2017. There is lot of ground work to be done. The most important is awareness, education, training and trial runs. 1st April 2017 is not that sacrosanct but introduction of a perfect law at the right time is more important. Country can wait for a strong and robust GST law for some more time. General suggestions It should be ensured that all states have verbatim same provisions for rates, levy, administration and procedures. Only negative list or exemptio .....

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nt tax regime, but which are delivered or received after the date of implementation of GST, normally referred to as goods - in - transit. The transitional provisions should suitably provide for credit of taxes / duties paid under the current law. Refund of any credit balance other than for exports is not allowed. This should be allowed subject to safeguards / limitations. Special focus on awareness and training of all-officers, professionals and assessees is required including making available l .....

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ld be a provision that except in fraudulent cases, no arrest / prosecution be made in first year of implementation. No new taxes should be allowed to be levied by states in GST regime when compensation for revenue loss, if any is guaranteed. GST is the future tax. GST law should, therefore be forward looking and open for futuristic businesses such as e-commerce, technology based, IT etc and recognize internet, digital economy, start ups etc. GST law should be a very simple tax law as the propose .....

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