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Key 15 suggestions on simplifying GST for SME / MSME sector

Goods and Services Tax - GST - By: - Bimal jain - Dated:- 1-8-2018 - Ahead of GST Council meeting on August 4, which would exclusively focus on the issues / hardships faced by MSME, CBIC is collating grievances/issues related to GST and suggestions thereof for mitigating such issues for MSME taxpayers. Following suggestions were compiled by Mr. Bimal Jain, Chairman, Indirect Tax Committee, PHD Chamber of Commerce towards making GST Law as Good and Simple Tax for SME/ MSME sector forming heart of .....

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regate Turnover for taking registration in the GST - Exempt supplies must not form part of aggregate turnover to determine threshold limit for taking registration in GST. This will enable a small taxpayer having majorly exempt supplies with only a small portion of taxable supplies to remain out of the net of GST. In other words, it will make the threshold limit of 20 Lakhs more significant for SME/MSME sector. II Definition of supply & composite supply As per Section 7(1) of the CGGT Act, Fo .....

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shall be taxed only when they constitute supply in accordance with provisions of Section 7(1)(a), (b) and (c) of the CGST Act, 2017. Suggestion(s): Removing subjectivity and inclusivity in definition of supply - The definition of term Supply starts with Supply includes is too wider a definition and with subjectivity, followed by inclusive definition. As this is taxable event in GST, it must be defined concretely so as to avoid any disputes & litigation, as we have past history for the term M .....

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uitable clarification be provided that if separate considerations are charged for various goods and services supplied in conjunction with each other in ordinary course of business, the same shall also amount to composite supply. Suitable clarification be issued to provide certainty for determining whether a bundle of supply is a composite supply and also to determine principal supply therein. III Composition Suppliers The current composition scheme is applicable only for manufacturers, traders a .....

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ers, benefit of composition scheme must be extended to other service providers also. Providing some ceiling for inter-state outward supplies of goods by a composition supplier - Presently, a person opting for composition scheme is not allowed to make any inter-state outward supply of goods. This is creating a bottle neck for small sector. It is suggested here also that certain percentage of turnover may be allowed for inter-state supply of goods for the benefit of SME/MSME sector in true sense. .....

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r the Govt. to notify a class of registered persons who would be liable to pay tax on reverse charge basis in case of receipt of taxable goods or services from an unregistered supplier. The details of such specified persons are to be notified in future. Suggestion(s): Reverse Charge under Section 9(4) of the CGST Act to be abandoned completely - Operation of Section 9(4) in its present form, if notified for a particular class of persons is not conducive as the registered recipient requires to ra .....

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ding a factor, broker, commission agent, arhatia, del credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of supply or receipt of goods or services or both on behalf of another . Suggestion(s): Clarification to the effect that Compulsory Registration for agents is restricted to only consignment agents - Though definition of agent under Section 2(5) as well as clause (vii) of Section 24 covers only those persons who supply taxable goods .....

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istration has been submitted by the applicant after the expiry of 30 days from the date of his becoming liable to registration, the effective date of registration shall be the date of the grant of registration. Further in terms of Section 18(1)(a) of the CGST Act, a person who has applied for registration under this Act within 30 days from the date on which he becomes liable to registration and has been granted such registration shall be entitled to take credit of input tax in respect of inputs .....

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ements made during such period. Further, ITC is also denied for stock held on the day immediately preceding the date of liability to register. It is recommended that alternate mechanism may be developed for genuine cases and registration may be granted with effect from the date of liability if proved bonafide. Further, credit of stock as on date of liability to register must also be allowed in bonafide cases. VII E-Way Bill Section 129 of CGST Act validates detention and seizure of goods/conveya .....

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2018 (7) TMI 1097 - MADHYA PRADESH, HIGH COURT ], upheld penalty to the tune of INR 1.32 crores for not filing Part B of E-Way Bill. Suggestion(s): Amending Section 129 of the CGST Act to restrict levying of penalties only in cases where there is intent to evade taxes - Section 129 of the CGST Act must be amended to restrict levying of penalties only in cases where there is intent to evade taxes. Further, suitable provision must be incorporated which allows releasing of goods without levying pe .....

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fication No. 12/2017 - Central Tax dated June 28, 2017 provides that a registered person whose annual turnover in the preceding financial year is less than ₹ 1 .5 crores is not required to mention the digits of HSN codes in a tax invoice issued by him. However, in GSTR-1, every assessee is required to give the details of stock sold HSN code wise. Further, such small tax payers are required to mention 4-digit HSN Code for generation of E-way Bill for movement of goods, having consignment va .....

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em. IX Payment of taxes and return should be made quarterly for SME/ MSME sector GST Council in its 28th meeting has recommended quarterly returns for businesses having turnover up to ₹ 5 crore instead of monthly filings. However, tax payment would be monthly. Suggestion(s): It is suggested that both the processes being interlinked with each other, should be made quarterly for SME/MSME sector instead of following two different systems for payment and returns filing. X Maximum Pre-deposits .....

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pellate authority to appellate tribunal is 20% of the disputed tax amount along with the amount deposited u/s 107(6) subject to maximum of ₹ 50 crores. Suggestion(s): Maximum ceiling should be 10 crores - Under Excise and Service tax, pre-deposit @ 7.5% of tax in dispute at first level and 2.5% at second level was applicable subject to maximum of ₹ 10 Crores. Keeping such high pre-deposit amount of 10%/20% with maximum ceiling as high as ₹ 25 crores/ 50 crores will cause undue .....

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ere allowed the benefit of both Countervailing duty (CVD) and SAD component, creating encouraging position for manufacturers when compared with traders of finished goods. With advent of GST, CVD and SAD got subsumed in IGST, credit of which is allowed to both traders and manufacturers. This has brought manufacturer as well as traders of imported goods at par level affecting adversely the Make in India initiative of Prime Minister Shri Modi. Resultantly, Indian markets are flooded with cheap impo .....

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reduced by around 16%. The Pre-GST & Post-GST duty structure is as under: Pre-GST Post-GST Basic Duty 10% 10% Countervailing Duty 12.5% Special Additional Duty 4% IGST 12% As imports of finished goods have become cheaper on par credit available to both manufacturer/ Trader, the domestic manufacturers are closing their operations and impacting adversely towards Make in India drive & there is loss of jobs in small scale units. Suggestion(s): IGST credit to be restricted only on import of .....

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XII Allowing filing of Advance Ruling by Association Presently, only a assessee/ taxpayer can file an application with the Hon ble Authority for Advance Ruling. Such application cannot be filed jointly by an association representing the entire Industry. Suggestion(s): Considering the rigorous procedure involved in Advance Ruling provisions, filing of application on behalf of association representing its members in a State may be permitted. This will benefit small taxpayers not being able to adop .....

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f the financial year. Suggestion(s): Facility on GSTN portal should be enabled to allow monthly and/ or quarterly refund - As of now Form RFD - 01A allows only monthly claim of refunds. Thus, proper GSTN functionality must be ensured for proper execution of proposed change. Removing anomaly of no refund on unutilized ITC on capital goods as against Rebate Mechanism of export made on payment of IGST - The CGST Rules do not allow refund of ITC on capital goods when zero-rated supplies are made aga .....

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of paragraph 5 of Schedule II, sale of building) by excluding it from the ambit of exempt supply for the purpose of reversal. Suggestion(s): Non-GST supply Vs. Non-taxable supply - Form GSTR-3B has used the term Non-GST supply which is nowhere defined in GST law. GST law only discussed the term non-taxable supply to mean a supply of goods or services or both which is not leviable to tax under GST Act [Section 2(78) of the CGST Act]. Like, supply of five specified petroleum products and alcoholic .....

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