TMI BlogGST – CONCEPT & STATUS - Erstwhile / OldX X X X Extracts X X X X X X X X Extracts X X X X ..... ed Committee of State Finance Ministers (EC) which had formulated the design of State VAT was requested to come up with a roadmap and structure for the GST. Joint Working Groups of officials having representatives of the States as well as the Centre were set up to examine various aspects of the GST and draw up reports specifically on exemptions and thresholds, taxation of services and taxation of inter-State supplies. Based on discussions within and between it and the Central Government, the EC released its First Discussion Paper (FDP) on GST in November, 2009. This spells out the features of the proposed GST and has formed the basis for discussion between the Centre and the States so far. GST and Centre-State Financial Relations: 3. Currently, fiscal powers between the Centre and the States are clearly demarcated in the Constitution with almost no overlap between the respective domains. The Centre has the powers to levy tax on the manufacture of goods (except alcoholic liquor for human consumption, opium, narcotics etc.) while the States have the powers to levy tax on sale of goods. In case of inter-State sales, the Centre has the power to levy a tax (the Central Sales Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld ensure some degree of harmonization on different aspects of GST between the Centre and the States as well as across States. One half of the total number of members of GSTC would form quorum in meetings of GSTC. Decision in GSTC would be taken by a majority of not less than three-fourth of weighted votes cast. Centre and minimum of 20 States would be required for majority because Centre would have one-third weightage of the total votes cast and all the States taken together would have two-third of weightage of the total votes cast. 4.2 The Constitution Amendment Bill was passed by the Lok Sabha in May, 2015. The Bill was referred to the Select Committee of Rajya Sabha on 12.05.2015. The Select Committee had submitted its Report on the Bill on 22.07.2015. The Bill with certain amendments was finally passed in the Rajya Sabha and thereafter by Lok Sabha in August, 2016. Further the bill had been ratified by required number of States and received assent of the President on 8th September, 2016 and has since been enacted as Constitution (101st Amendment) Act, 2016 w.e.f. 16th September, 2016. Goods and Services Tax Council (GSTC): 5. The GSTC has been notified with effec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceptions. (viii) Power to collect GST in territorial waters shall be delegated by Central Government to the States. (ix) Formula and mechanism for GST Compensation Cess has been finalised. (x) Nine rules on registration, composition levy, valuation, tax invoice, input tax credit, payment, returns, refund and transitional provisions have been recommended. (xi) www.gst.gov.in, managed by GSTN, shall be the Common Goods and Services Tax Electronic Portal. (xii) Rate of interest on delayed payments and delayed refund has been recommended. (xiii) Rate of TCS has been recommended. Salient Features of GST: 6. The salient features of GST are as under: (i) GST would be applicable on supply of goods or services as against the present concept of tax on the manufacture of goods or on sale of goods or on provision of services. (ii) GST would be based on the principle of destination based consumption taxation as against the present principle of origin based taxation. (iii) It would be a dual GST with the Centre and the States simultaneously levying it on a common base. The GST to be levied by the Centre would be called Central GST (CGST) and that to be levie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l taxpayers (including to specified category of manufacturers and service providers) having an annual turnover of up to ₹ 50 lakh. The threshold exemption and compounding scheme would be optional. (xiv) The list of exempted goods and services would be kept to a minimum and it would be harmonized for the Centre and the States as well as across States as far as possible. (xv) Exports would be zero-rated. (xvi) Credit of CGST paid on inputs may be used only for paying CGST on the output and the credit of SGST/UTGST paid on inputs may be used only for paying SGST/UTGST. In other words, the two streams of input tax credit (ITC) cannot be cross utilized, except in specified circumstances of inter-State supplies for payment of IGST. The credit would be permitted to be utilized in the following manner: a) ITC of CGST allowed for payment of CGST IGST in that order; b) ITC of SGST allowed for payment of SGST IGST in that order; c) ITC of UTGST allowed for payment of UTGST IGST in that order; d) ITC of IGST allowed for payment of IGST, CGST SGST/UTGST in that order. ITC of CGST cannot be used for payment of SGST/UTGST and vice versa. (xvii) Accounts w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or erroneous refund and its adjudication in case of fraud, suppression or willful mis-statement. (xxviii) Arrears of tax to be recovered using various modes including detaining and sale of goods, movable and immovable property of defaulting taxable person. (xxix) Officers would have restrictive powers of inspection, search, seizure and arrest. (xxx) Goods and Services Tax Appellate Tribunal would be constituted by the Central Government for hearing appeals against the orders passed by the Appellate Authority or the Revisional Authority. States would adopt the provisions relating to Tribunal in respective SGST Act. (xxxi) Provision for penalties for contravention of the provision of the proposed legislation has been made. (xxxii) Advance Ruling Authority would be constituted by States in order to enable the taxpayer to seek a binding clarity on taxation matters from the department. Centre would adopt such authority under CGST Act. (xxxiii) An anti-profiteering clause has been provided in order to ensure that business passes on the benefit of reduced tax incidence on goods or services or both to the consumers. (xxxiv) Elaborate transitional provisions have been p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, common tax base, common system of classification of goods and services will lend greater certainty to taxation system; (viii) Timelines to be provided for important activities like obtaining registration, refunds, etc; (ix) Electronic matching of input tax credits all-across India thus making the process more transparent and accountable. (C) Benefit to Consumers: (i) Final price of goods is expected to be lower due to seamless flow of input tax credit between the manufacturer, retailer and service supplier; (ii) It is expected that a relatively large segment of small retailers will be either exempted from tax or will suffer very low tax rates under a compounding scheme- purchases from such entities will cost less for the consumers; (iii) Average tax burden on companies is likely to come down which is expected to reduce prices and lower prices mean more consumption. Goods and Services Tax Network: 8. Goods and Services Tax Network (GSTN) has been set up by the Government as a private company under erstwhile Section 25 of the Companies Act, 1956 . GSTN would provide three front end services to the taxpayers namely registration, payment and return. Be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after extensive deliberations and studies, submitted its Report which has been approved by the Government. 10.2 Augmentation of human resources would be necessary to handle large taxpayers base in GST scattered across the length and breadth of the country. Capacity building, particularly in the field of Accountancy and Information Technology for the departmental officers has to be taken up in a big way. A massive four-tier training programme is being conducted under the leadership of NACEN. This training project is aimed at imparting training on GST law and procedures to more than 60,000 officers of CBEC and Commercial Tax officers of State Governments. Officers of the office of CAG are also participating and getting trained in this training programme. More than 50000 officers (including around 20000 officers from States) have already been trained. 10.3 It is expected that a momentous reform like GST is popularized and familiarized to the trade and industry who are the vital stakeholders in successful implementation of this reform. Massive Public outreach and knowledge sharing programs being conducted by various formations of CBEC which, after Model GST Law was put in publi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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