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GST – CONCEPT & STATUS (Updated as on 01st March 2018)

GST – CONCEPT & STATUS (Updated as on 01st March 2018) - Goods and Services Tax - GST - Dated:- 5-3-2018 - INTRODUCTION: The introduction of Goods and Services Tax on 1st of July 2017 was a very significant step in the field of indirect tax reforms in India. By amalgamating a large number of Central and State taxes into a single tax, the aim was to mitigate cascading or double taxation in a major way and pave the way for a common national market. From the consumer point of view, the biggest adva .....

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inance Minister in his Budget for 2006-07. Initially, it was proposed that GST would be introduced from 1stApril, 2010. The Empowered 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, taxati .....

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nd the States were clearly demarcated in the Constitution with almost no overlap between the respective domains. The Centre had powers to levy tax on the manufacture of goods (except alcoholic liquor for human consumption, opium, narcotics etc.) while the States had powers to levy tax on sale of goods. In case of inter-State sales, the Centre had power to levy a tax (Central Sales Tax) but the tax was collected and retained entirely by the originating States. As for services, it was the Centre a .....

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ion of GST required amendments in the Constitution so as to concurrently empower the Centre and the States to levy and collect the GST. 3.1 The assignment of concurrent jurisdiction to the Centre and the States for the levy of GST required a unique institutional mechanism that would ensure that decisions about the structure, design and operation of GST are taken jointly. For it to be effective, such a mechanism also needed to have Constitutional force. CONSTITUTION (ONE HUNDRED AND FIRST) AMENDM .....

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tax- UTGST). The Parliament would have exclusive power to levy GST (integrated tax - IGST) on inter-State trade or commerce (including imports) in goods or services. The Central Government will have the power to levy excise duty in addition to the GST on tobacco and tobacco products. The tax on supply of five specified petroleum products namely crude, high speed diesel, petrol, ATF and natural gas would be levied from a later date on the recommendation of GST Council. 5. A Goods and Services Tax .....

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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. 6. 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 submitted its Report on the Bill on .....

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y five meetings of the GSTC have been held so far. The following major decisions have been taken by the GSTC: (i) The threshold exemption limit would be ₹ 20 lakh. For special category States (except J&K) enumerated in article 279A of the Constitution, threshold exemption limit has been fixed at ₹ 10 lakh. (ii) Composition threshold shall be ₹ 1 crore. As decided in the 23rd meeting of the GSTC, this limit shall be raised to ₹ 1.5 crore after necessary amendments in t .....

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emes, in the present form, would not continue in GST. Further, 50% exemption of the CGST portion will be provided to CSD (Defense Canteens). (iv) There would be four tax rates namely 5%, 12%, 18% and 28%. The tax rates for different goods and services have been finalized and notified. Besides, some goods and services would be under the list of exempt items. The list of exempted services has been finalized which is same as the services exempted under existing service tax law, except services supp .....

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ensate States for any revenue loss on account of implementation of GST. The list of goods and services in case of which reverse charge would be applicable has also been finalized. (v) The five laws namely CGST Law, UTGST Law, IGST Law, SGST Law and GST Compensation Law have been recommended. (vi) In order to ensure single interface, all administrative control over 90% of taxpayers having turnover below ₹ 1.5 crore would vest with State tax administration and over 10% with the Central tax a .....

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nalized. (x) Eighteen rules on composition, registration, input tax credit, invoice, determination of value of supply, accounts and records, returns, payment, refund, assessment and audit, advance ruling, appeals and revision, transitional provisions, anti-profiteering, E-way Bill, inspection, search and seizure, demands and recovery and offences and penalties have been recommended. (xi) The following classes of taxpayers shall be exempted from obtaining registration: Suppliers of services, havi .....

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unregistered persons has been exempted from tax. (xv) Registration and operationalization of TDS/TCS provisions has been postponed till 31.03.2018. (xvi) The e-way bill system shall be introduced nation-wide for all inter-State supplies with effect from 01.02.2018. As regards intra-State supplies, option has been given to States to choose any date on or before 01.06.2018. (xvii) www.ewaybillgst.gov.in, managed by NIC, shall be the Common Goods and Services Tax Electronic Portal for generation o .....

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FORM GSTR-3 for the months of July, 2017 to March 2018 would be worked out by a Committee of officers. (xxii) Late fee for delayed filing of return in FORM GSTR-3B for the months of July, 2017 to September, 2017 has been waived. The amount of late fee already paid but subsequently waived off shall be re-credited to the Electronic Cash Ledger of registered person under Tax head instead of Fee head. (xxiii) From October 2017 onwards, the amount of late fee payable by a registered person is as foll .....

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foreign convertible currency - such suppliers shall be eligible for input tax credit. (xxvii) Centralized UIN shall be issued to every Foreign Diplomatic Mission / UN Organization by the Central Government. (xxviii) www.gst.gov.in, managed by GSTN, shall be the Common Goods and Services Tax Electronic Portal. (xxix) Rate of interest on delayed payments and delayed refund has been recommended. (xxx) Rules for National Anti-Profiteering Authority have been recommended. The National Anti-Profiteeri .....

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axation 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 (central tax- CGST) and that to be levied by the States [including Union territories with legislature] would be called State GST (state tax- SGST). Union territories without legislature would levy Union territory GST (union territory tax- UTGST). (iv) An Integrated .....

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y agreed upon by the Centre and the States under the aegis of the GSTC. (viii) GST would replace the following taxes currently levied and collected by the Centre: a) Central Excise Duty; b) Duties of Excise (Medicinal and Toilet Preparations); c) Additional Duties of Excise (Goods of Special Importance); d) Additional Duties of Excise (Textiles and Textile Products); e) Additional Duties of Customs (commonly known as CVD); f) Special Additional Duty of Customs (SAD); g) Service Tax; h) Cesses an .....

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cohol for human consumption. (xi) GST on five specified petroleum products (Crude, Petrol, Diesel, ATF & Natural gas) would be applicable from a date to be recommended by the GSTC. (xii) Tobacco and tobacco products would be subject to GST. In addition, the Centre would continue to levy Central Excise duty but for the time being Compensation cess is being levied. (xiii) A common threshold exemption would apply to both CGST and SGST. Taxpayers with an annual turnover of ₹ 20 lakh (Rs. 1 .....

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ution). As decided in the 23rd meeting of the GSTC, this limit shall be raised to ₹ 1.5 crore after necessary amendments in the Act. 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) All Exports and supplies to SEZs and SEZ units would be zero-rated. (xvi) Credit of CGST paid on inputs may be used .....

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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 would be settled periodically between the Centre and the State to ensure that the credit of SGST used for payment of IGST is transferred by the originating State to the Centre. Similarly the IGST used for payment of SGST would be transferred by Centre to the destination S .....

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rent class of persons at different cut-off dates. (xx) Various modes of payment of tax available to the taxpayer including internet banking, debit/ credit card and National Electronic Funds Transfer (NEFT) / Real Time Gross Settlement (RTGS). (xxi) Obligation on certain persons including government departments, local authorities and government agencies, who are recipients of supply, to deduct tax at the rate of 1% from the payment made or credited to the supplier where total value of supply, und .....

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he provision for TCS has not been operationalized yet. (xxiv) System of self-assessment of the taxes payable by the registered person. (xxv) Audit of registered persons to be conducted in order to verify compliance with the provisions of Act. (xxvi) Limitation period for raising demand is three (3) years from the due date of filing of annual return or from the date of erroneous refund for raising demand for short-payment or non-payment of tax or erroneous refund and its adjudication in normal ca .....

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llate 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. (xxx) Provision for penalties for contravention of the provision of the proposed legislation has been made. (xxxi) Advance Ruling Authority would be constituted by States in order to enable the taxpayer to seek a binding clarity on taxation matters from the .....

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tment and Make in India campaign; (ii) Will prevent cascading of taxes as Input Tax Credit will be available across goods and services at every stage of supply; (iii) Harmonization of laws, procedures and rates of tax; (iv) It will boost export and manufacturing activity, generate more employment and thus increase GDP with gainful employment leading to substantive economic growth; (v) Ultimately it will help in poverty eradication by generating more employment and more financial resources; (vi) .....

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s is likely to come down which is expected to reduce prices and lower prices mean more consumption, which in turn means more production thereby helping in the growth of the industries. This will create India as a Manufacturing hub . (B) Ease of Doing Business: (i) Simpler tax regime with fewer exemptions; (ii) Reduction in multiplicity of taxes that are at present governing our indirect tax system leading to simplification and uniformity; (iii) Reduction in compliance costs - No multiple record .....

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l of transactions; (vii) Common procedures for registration of taxpayers, refund of taxes, uniform formats of tax return, 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. (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 supp .....

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te 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. Besides providing these services to the taxpayers, GSTN would be developing back-end IT modules for 28 States who have opted for the same. The migration of existing taxpayers has already started from November, 2016. The Revenue department of both Centre and States are pursuing the presently registered taxpayers to complete the nec .....

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been notified on 12th April, 2017. All the other States (except J&K) and Union territories with legislature have passed their respective SGST Acts. The economic integration of India was completed on 8th July 2017 when the State of J&K also passed the SGST Act and the Central Government also subsequently extended the CGST Act to J&K. 12. On 22nd June 2017, the first Notification was issued for GST and notified certain sections under CGST. Since then, 86 notifications under CGST Act ha .....

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Apart from the notifications, 37 circulars and 12 orders have also been issued by CBEC on various subjects like proper officers, ease of exports, and extension of last dates for filling up various forms, etc. ROLE OF CBEC: 14. CBEC is playing an active role in the drafting of GST law and procedures, particularly the CGST and IGST law, which will be exclusive domain of the Centre. This apart, the CBEC has prepared itself for meeting the implementation challenges, which are quite formidable. The n .....

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ent of human resources needed a review for smooth and effective implementation of GST. A Working Group has after extensive deliberations and studies, submitted its Report which has been approved by the Government and has since been implemented. 16. 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 departmenta .....

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t of these 7000 officers have attended refresher-training course also. 17. 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. 18. CBEC would be responsible for administration of the CGST and IGST law. In addition, excise duty regime would continue to be administered by the CBEC for levy and collection of central excise duty on five specified petroleum products as wel .....

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aced by the taxpayer and act as an active interface between the taxpayer and the Government. EXPERIENCE OF REGISTRATION & RETURN FILING: 21. Registration & Returns Snapshot: S.No. Details As on 01st March, 2018 1 No. of transited (migrated) taxpayers 70,42,675 2 Of which, how many did not opt for complete migration 6,36,189 3 No. of completely migrated taxpayers 64,06,486 4 Total No. of new applications received for registration 44,79,740 5 No. of applications approved 39,13,893 6 No. of .....

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