Wednesday 15 June 2016

GST to be levied at first point of transaction w.e.f April, 2017

a)    The Finance Ministry has released the 'Model GST Law' on Tuesday, June 14, 2016. The draft of 'Integrated GST Bill, 2016' is also released along with such Model GST laws. It also provides the framework for levy and collection of CGST and SGST.
b)     The Sale of goods and services and all online purchases will attract Goods and Services Tax (GST) at the first point of transaction.
c)   The government is hoping to get the Constitution Amendment Bill passed by Parliament in the upcoming monsoon session. It plans to roll out GST from April 1, 2017 that will subsume excise, service tax and all local levies. Virtually all states have supported the idea of GST except Tamil Nadu which has "some reservations", Finance Minister Arun Jaitley said after the meeting of Empowered Committee on the long awaited indirect tax reform.
d)    The threshold annual turnover for levy of the tax at INR 10 lakh. The limit will be INR 5 lakh in North East and Sikkim.
e)    The model GST law, which has 162 clauses and four schedules, has also suggested a jail terms of up to five years and fine for violation of the provisions of the statute. The law also provides for setting up of an Authority for Advance Ruling, Consumer Welfare Fund, a 'Composition Levy' for entities with turnover of INR 50 lakh and self assessment by a tax payer.
f)    The ecommerce companies will be required to file a statement to the tax department providing details of all supplies made through the online platform.


The dealer is required to take registration under this law if his aggregate turnover in a financial year exceeds Rs.9 lakhs and in case of any North Eastern State the dealer required to take registration if their turnover exceeds Rs.4 lakhs.

The dealer has to take registration in the State from where taxable goods or services are supplied.

Every person already registered under extant law will be issued a certificate of registration on a provisional basis which shall be valid for period of 6 months and after furnishing of required information, final registration certificate shall be granted by the Central/State Government.

The person registered under this law is liable to pay tax if his aggregate turnover in a financial year exceeds Rs 10 lakhs. However, a dealer conducting business in any of the North Eastern is required to pay tax if his aggregate turnover exceeds Rs. 5 lakhs.

The taxable event under GST regime will be supply of goods or services. Supply includes all forms of supply of goods and/or services such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration. It also includes importation of service, whether or not for a consideration. A negative list has also been prescribed for transactions and activities of Government and Local Authorities which shall be exempt from GST levy, like activities of issuance of passport, visa, driving license, birth certificate or death certificate, etc.

CGST/SGST shall be payable at the earliest of the following dates, namely:
  (i)          Date on which the goods are removed for supply to the recipient (in case of movable goods).
 (ii)          Date on which the goods are made available to the recipient (in case of immovable goods).
(iii)          Date of issuing invoice by supplier; or
(iv)         Date of receipt of payment by supplier; or
 (v)         Date on which recipient shows the receipt of the goods in his books of account.

Every taxable person shall be assigned a GST compliance rating score based on his record of compliance with the provisions of this Act. The GST compliance rating score shall be updated at periodic intervals and intimated to the taxable person and also placed in the public domain.

Such Rules shall apply to the supply of goods and/or services under the IGST/CGST/SGST Bill. Some of the methods prescribed for valuation are given hereunder:
  a) Transaction Value of goods and/or services
  b) Transaction value of goods or services of like kind
  c) Computed Value Method in case where value cannot be determined under method (b)
  d) Residual Method in case where the value cannot be determined under the computed value method

Utilization of IGST: First be utilized towards payment of IGST then remaining amount may be utilized towards the payment of CGST and SGST, in that order.
Utilization of SGST: First be utilized towards payment of SGST and the amount remaining may be utilized towards the payment of IGST.
Utilization of CGST: First be utilized towards payment of CGST and the amount remaining may be utilized towards the payment of IGST.

a) The input tax credit on account of CGST shall not be available for payment of SGST.
b) Under the Model GST Law, a registered taxable person will be entitled to take credit of the amount of cenvat credit/ Value Added Tax carried forward in a return furnished by him in respect of the period ending with the day immediately preceeding the appointed day.
c) As per Model GST Law, a registered taxable person shall be entitled to take in his electronic credit ledger/credit of the unavailed cenvat credit/ unavailed input tax credit in respect of capital goods not carried forward in a return furnished by him for the period ending with the day immediately preceding the appointed day.
d) If a person registered under GST was not liable to be registered under the earlier law or if he was manufacturing exempted goods under the earlier law which are not taxable, then he will be allowed to take credit of eligible duties and taxes in respect of inputs held in stocks or semi-finished/finished goods.

Any tax, interest, penalty, fee, etc., shall be paid via internet banking or by using credit/debit cards or NEFT or RTGS. This amount shall be credited to the electronic cash ledger of dealer.

11) TDS
The Central or a State Government may mandate certain departments (viz, local authority, Govt. agencies) to deduct tax at the rate of one percent on notified goods or services, where the total value of such supply, under a contract, exceeds Rs 10 lakhs.

A person can claim refund of any tax and interest by making an application in that regard to the prescribed officer of IGST/CGST/SGST. The application can be made before the expiry of two years from the relevant date as may be prescribed. It has been provided that the limitation of two years shall not apply where such tax or interest or the amount has been paid under protest.

Every claim for refund of any duty/tax and interest, if any, paid on such duty/tax or any other amount, filed by any person before the appointed day, shall be disposed of in accordance with the provisions of earlier law and any amount eventually accruing to him shall be paid in cash. However, where any claim for refund is fully or partially rejected, the amount so rejected shall lapse

Dealers shall be required to furnish following returns
a) Monthly Return: Every registered taxable person shall have to e-file a monthly return for inward and outward supplies of goods and/or services, input tax credit availed, tax payable, tax paid and other particulars within 20 days after the end of such month.
b) Return for Composition Scheme: Dealers paying tax under composition scheme shall have to furnish a return for each quarter or part thereof, electronically within 18 days after the end of such quarter.
c) TDS Return: Every dealer who is required to deduct tax at source shall furnish a return electronically within 10 days after the end of month in which deduction is made.
d) Return for Input Service Distributor: Every Input Service Distributor shall file e-return for every calendar month or part thereof, within 13 days after the end of such month.
e) First Return: Every registered taxable person paying CGST/SGST on all intra-State supplies of goods and/or services shall have to furnish the first return from the date on which he became liable to registration till the end of the month in which the registration has been granted.
f) Annual return: Every registered taxable person shall have to furnish an annual return for every financial year electronically on or before the 31st day of December following the end of such financial year.
g) Final return: Every registered taxable person who applies for cancellation of registration shall have to furnish a final return within three months of the date of cancellation or date of cancellation order, whichever is later, in a prescribed form.