Articles

Articles

DEMYSTIFYING SUPPLY AS PER REVISED MODEL GST LAW

By CA. Chitresh Gupta Managing Partner- Chitresh Gupta & Associates Article 366(12A) of the Constitutional (101st Amendment) Act, 2016 defines the Goods and Services tax (GST) as “a tax on supply of goods or services or both, except supply of alcoholic liquor for human consumption”. The term ‘supply’ is, however, not defined in the Constitution. The concept of ‘supply’ is the key stone of the proposed GST architecture. In other words, supply is life blood of GST regime. GST is a multi-stage tax levied on supply of goods and / or services, collected at each stage of the production and distribution, in proportion to the value added by each taxable person in the chain of supply. In the GST regime, the entire value of supply of goods and / or services is proposed to be taxed in an integrated manner, unlike the existing indirect taxes, which are charged independently either on the manufacture or sale of goods, or on the provisions of services. Section 3 of the Model CGST / SGST Act explains the meaning and scope of term “Supply”. Read... read more

Input Tax Credit under Revised Model GST Law 2016

INTRODUCTION In the present indirect taxation system, cascading of tax is significant due to non-availability of ITC at various stages. Following are certain instances of such cascading of taxes Permits restricted inter levy credits between Excise and Service Tax. No input tax credit of Central Sales Tax, Entry Tax, Octroi and Luxury Tax,; Input tax credit of VAT is not available to manufacturers and service providers; Input tax credit of Central Excise duty, service tax & CVD is not admissible to dealers in goods; No input tax credit of Swachh Bharat Cess available and No Cenvat credit of Krishi Kalyan Cess to manufacturers One of the basic tenets of proposed GST regime is seamless flow of input tax credit across the value chain right from manufacturer to the final consumer. This will result in equitable distribution and efficient allocation of economic resources. Under GST law, ITC will follow supply chain not only in intra-State transactions but also in inter-State transactions. Further, credit of tax paid at the time of import of goods and services would also be creditable. This is expected to result into significant reduction in cascading of taxes. Read... read more

All About Job Work in GST Regime

By CA. Chitresh Gupta B. Com(H), FCA, IFRS (Certified), IDT (Certified) Movement of goods to job workers is an essential business situation which occurs frequently. Many times a manufacturer send goods to a job worker for getting further work done on them, and receive the goods back from job worker or sell the goods directly from the place of job worker. The tax position along with this movement of goods needs specific attention because the availability of input tax credit depends on usage of goods in the manufacture of final product, and once goods are removed from the factory, it is significant to ensure that these goods either come back to the factory of manufacturer or otherwise are incorporated in the final goods sold by the manufacturer. In the existing regime, the value addition by the job worker is either taxable as manufacture or as taxable service, and in both cases, an exemption is granted to job worker in case, the principal manufacturer pays duty on the goods received after job work including the value addition. In GST regime, the same concept has been adopted more or less. 1. Concept of Job Work Section 2(61) of the Model CGST/SGST law provides that “job work” means undertaking any treatment or process by a person on goods belonging to another registered taxable person and the expression “job worker” shall be construed accordingly. READ... read more

FAQ ON GST ENROLMENT PROCESS AS PROVIDED BY GSTN AT www.gst.gov.in

Overview of Enrollment Who is an existing taxpayer? An existing taxpayer is an entity currently registered under any State or Central laws, like Value Added Tax Act, Central Excise Act and Service Tax Act. Existing taxpayers include taxpayers already registered under:- Central Excise Service Tax State Sales Tax or VAT (except exclusive liquor dealers if registered under VAT) Entry Tax Luxury Tax Entertainment Tax (except levied by the local bodies) What does the word ‘enrollment’ under the GST Common Portal mean? Enrollment under GST means validating the data of existing taxpayers and filling up the remaining key fields by the taxpayer in the Enrollment Application at the GST Common Portal. Do I need to enroll for GST? All existing taxpayers registered under any of the Acts as specified in Question 1 will be transitioned to GST. The enrollment for GST will ensure smooth transition to the GST regime. The data available with various tax authorities is incomplete and thus fresh enrollment has been planned. Also, this will ensure latest data of taxpayers is available in the GST database without any recourse to amendment process, which is the norm to update the data under tax statutes today. Why do I need to enrol myself as a taxpayer on the GST Common Portal? The GST Common Portal has been made available to enable taxpayers enrol with GST. Paper based enrolment option is NOT available. The GST Common Portal will enable taxpayers to meet the GST compliance requirement like filing return and making tax payment. Using the Portal requires existing taxpayers to enrol. Is there a concept of deemed enrollment under GST? No. There is no... read more

GST Helpline & Migration of ST/Excise Assessee by 31.01.2017

To ensure implementation of GST by 1st April, 2017, Central Board of Excise & Customs (CBEC) has initiated the process of migration of its existing Central Excise/Service Tax assessees to GST from today. A 24×7 Helpdesk (Through Toll Free number and Email) started for the purpose. Central Board of Excise & Customs (CBEC) has initiated the process of migration of its existing ENTRAL EXCISE/SERVICE TAX assessees to GST with effect from 9th January, 2017. As part of its efforts to ensure implementation of GST by 1st April, 2017, CBEC has taken steps to ensure that its existing taxpayers are migrated to GST in a simple, user-friendly and smooth manner. Once the existing registered Taxpayers (both Central Excise as well as Service Tax) login to CBEC’s Web Portal www.aces.gov.in, a facility will be given in a secure manner to access the provisional login ID and password given by Goods and Services Tax Network (GSTN). Thereafter, using the same, they can log in to GST Portal (www.gst.gov.in) to fill the required fields and submit scanned documents. However, if they have already initiated the process of migration to GST as a VAT asssessee under STATE COMMERCIAL TAX department, no further action is necessary. PAN is mandatory for migration to GST. Hence, if the existing Central Excise/Service Tax Registration Code does not have PAN, then PAN has to be obtained from Income Tax Department and the Registration details have to be updated in the ACES Portal www.aces.gov.in. CBEC has made available a 24×7 HELPDESK (TOLLFREE NO 18001200232, EMAIL:cbecmitra.helpdesk@icegate.gov.in) for the purpose of assisting existing CENTRAL EXCISE/SERVICE TAX assesses. GSTN also has a HELP... read more

PRESENTATION ON GST BY CBEC

PRESENTATION PLAN WHY GST : PERCEIVED BENEFITS EXISTING INDIRECT TAX STRUCTURE FEATURES OF CONSTITUTION AMENDMENT BILL FEATURES OF PROPOSED GST MODEL FEATURES OF DRAFT GST LAW GSTN ROLE OF CBEC WAY FORWARD                    READ... read more

FREQUENTLY ASKED QUESTIONS (FAQ) ON GST

Foreword With the 101st Constitution Amendment Act coming into force on 8th September, 2016 and notification of the GST Council on 15th September – the road to GST rollout is clear. Government is keen on introducing GST the biggest indirect tax reform, with effect from 01 April 2017. One of the biggest challenges is to train the indirect tax officials of both Centre and State, as well as the trade on the concepts, processes and procedures of GST. National Academy of Customs, Excise & Narcotics (NACEN), the apex training institution for capacity building in indirect taxation under the Central Board of Excise and Customs, has been mandated to impart training on GST to Central and State Government officers. NACEN is conducting a mammoth capacity building exercise to train about 60,000 indirect tax officers of the Centre and State so that officers are well equipped to implement GST when it is rolled out. NACEN has already created a team of almost 2000 trainers across the country to train the field officers.Considering the limited time available, NACEN apart from Classroom training, is also planning to use advanced information technology tools, such as Virtual Classrooms and E-Learning modules, to ensure larger coverage. As part of this capacity building exercise, the NACEN has prepared a compilation of Frequently Asked Questions (FAQ) based on inputs gathered while conducting training and interactive sessions, as a training tool for helping the officers as well as public, to get acquainted with the Model GST Law and its nuances. The FAQs have been prepared and reviewed by a team of officials from both Centre and States. I congratulate... read more

GST – CONCEPT & STATUS

The introduction of Goods and Services Tax (GST) would be 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, it would 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 advantage would be in terms of a reduction in the overall tax burden on goods, which is currently estimated at 25%-30%. Introduction of GST would also make Indian products competitive in the domestic and international markets. Studies show that this would instantly spur economic growth. Last but not the least, this tax, because of its transparent character, would be easier to administer.Genesis 2. The idea of moving towards the GST was first mooted by the then Union Finance Minister in his Budget for 2006-07. Initially, it was proposed that GST would be introduced from 1st April, 2010. The Empowered Committee of State Finance Ministers (EC) which had formulated the design of State VAT was requested to come up with a road-map and structure for the GST. Joint Working Groups of officials having representatives of the States as well as the Center 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 the GST in November, 2009. This spells out the features of the proposed GST and has... read more

AMENDMENTS IN SERVICE TAX & CENVAT CREDIT RULES AS APPLICABLE FROM 1ST APRIL,2016

  The Finance Minister has, while presenting the Union Budget 2016-17, introduced the Finance Bill, 2016 in the Lok Sabha on the 29th of February, 2016. Clauses 145 to 157 of the Bill cover the amendments made to Chapter V of the Finance Act, 1994. Changes are also proposed in,- Service Tax Rules, 1994 (STR) The Point of Taxation Rules, 2011; CENVAT Credit Rules, 2004(Cenvat Rules); It may be noted that changes being made in the Budget are coming into effect on various dates, as indicated below: Changes coming into effect immediately w.e.f. the 1st day of March, 2016; Changes coming into effect from the 1st day of April, 2016; Amendments which will get incorporated in the Finance Act, 1994 on enactment of the Finance Bill, 2016; Amendments made in the Finance Act, 1994, which will come into effect from 1st day of June, 2016 after the enactment of the Finance Bill, 2016; and Chapter VI of the Finance Bill, 2016, regarding levy of Krishi Kalyan Cess on all taxable services will come into effect from 1st June 2016. We present below the brief analysis of various Service Tax Amendments which are made applicable from 1st April,2016. S1: CHANGES IN MEGA EXEMPTION NOTIFICATION Notification  No. 25/2012-ST as amended by notification No. 09/2016-ST dated 1st March, 2016 refers  I. LEGAL SERVICES BY ADVOCATES Exemption in respect of the following services is being withdrawn,- Services provided by a senior advocate to an advocate or partnership firm of advocates A person represented on an arbitral tribunal to an arbitral tribunal; Thus Service tax in the above instances would be levied under forward charge.... read more

Key highlights of Economic Survey Report 2016

Ahead of the Union Budget 2016, the Hon’ble Finance Minister Shri Arun Jaitley tabled today Economic Survey Report 2016 in the Parliament, outlining the broad direction of the Union Budget 2016 and the economic performance of the Country. A flagship annual document of the Ministry of Finance, Economic Survey reviews the developments in the Indian economy over the previous 12 months, summarizes the performance on major development programmes, and highlights the policy initiatives of the Government and the prospects of the economy in the short to medium term. Economic Survey 2016 termed external environment as challenging but projected a 7-7.5% GDP growth rate in the next fiscal which could accelerate to 8% in a couple of years. “One of the most critical short term challenges confronting the Indian economy is the twin balance sheet problem — the impaired financial positions of the public sector banks and some corporate houses. The twin balance sheet challenge is the major impediment to private investment and a full-fledged economic recovery,” the Survey said. The Economic Survey 2016 has also expressed concern over approval of Goods and Services Tax Bill being elusive so far. We are sharing with you the key highlights of the Economic Survey 2016: Economic Outlook, Prospects and Policy Challenges: With reforms in key areas, there is reduction in Macro-Vulnerability today Rates of 8% or Higher Expected in the next couple of years as there is Macro-Economic Stability now; India must plan for major currency readjustment in Asia; Expecting continued good performance by Industrial, Corporate & Infrastructure Sectors due to recent reforms; Indian equity market relatively resilient compared to other major emerging market economies;... read more

Budget 2016- Key Takeways from FM Speech

Facts & to  Figures GDP Growth Rate : 7.6% CPI Inflation Reduced from 9.4% to 5.4% Current Account Deficit : $ 14.4 Bn Forex Reserves – Highest till date $350 Bn Investment proposals Special Focus on Farm, Social , Infra & Rural Sector All Government benefits will be conferred upon persons who deserve it, by giving a statutory backing to the AADHAR platform. Move beyond Food Security towards Income Security for Farmers. Farm Incomes to double by 2022. Rs 35,984 crore allocated for Agriculture in 2016-17 A dedicated irrigation fund worth Rs 20,000 crore to be set up under NABARD A major programme for sustainable management of ground water resources has been prepared with an estimated cost of Rs 6,000 crore and proposed for multilateral funding. Soil Health Card scheme to be Revitalised. All 14000 cr farm to be brought under it by 2017. Rs 19000 crore allotted for e Pradhan Mantri Gram Sadak Yojana (PMGSY) Against the target of Rs 8.5 lakh crore in 2015-16, the target for agricultural credit in 2016-17 will be an all-time high of Rs 9 lakh crore. A sum of Rs 2.87 lakh crore will be given as Grant in Aid to Gram Panchayats and Municipalities as per the recommendations of the 14th Finance Commission. A sum of Rs 38,500 crore has been allocated for MGNREGS in 2016-17. 100% rural electrification by May 1, 2018 Rs 9,000 crore has been provided for Swachh Bharat Abhiyan. Launch of new Digital Literacy Mission Scheme for rural India to cover around 6 crore additional households within the next 3 years LPG connection in the name of... read more

Rail Budget 2016- Key Highlights

The Railway Budget for 2016-17 spared passengers and goods movement from any increase in tariffs while it announced introduction of three new superfast trains and creation of dedicated north-south, east-west and east coast freight corridors by 2019. Presenting his second Budget in the Lok Sabha, Railway minister Suresh Prabhu promised rationalizing of the tariff structure by undertaking a review to evolve competitive rates vis-a-vis other modes of transport and to expand the freight basket as a means of additional revenue mobilisation. What PM Modi said on Prabhu’s Rail Budget: Want to congratulate Suresh Prabhu and the entire Team Railways. This budget will enhance the Navnirman of the nation. Along with IT, investment has been given importance. In the last year we have seen lot of success and this budget is an effort to further improve on this. Here are highlights from his speech: The Rail Budget2016 is a story of transformation. We need to reorganise and rejuvenate the Indian Railways. PM once said his vision is to make Indian Railways the backbone of India’s progress and economic development. For year 2016-17 we expect the operating ratio of 92%. Co-operation, collaboration and communication- hallmarks of Indian Railways’ journey forward. We need to re-imagine conventional ways of solving issues. We will focus on zero based budgeting approach. 21 lakh crores capital plan in Rail Budget2016, shunning conventional approach, adopting new ways. A saving of 8,720 crore rupees for budget estimates of last year will be effected this year. We will be at the forefront of infrastructure investment in the country. Action has been initiated on 139 budget announcements made last year.... read more

Highlights of the Report on the Revenue Neutral Rate and Structure of Rates for the GST by the CEA Dr. Arvind Subramanian

Committee headed by the Chief Economic Adviser Dr. Arvind Subramanian on Possible Tax rates under GST submitted its Report to the Finance Minister. The Committee in its concluding observations has stated that this is a historic opportunity for India to implement a game-changing tax reform. Domestically, it will help improve governance, strengthen tax institutions, facilitate “Make in India by Making One India,” and impart buoyancy to the tax base. It will also set the global standard for a value-added tax (VAT) in large federal systems in the years to come.  Following are the highlights of the Executive Summary of the Report:   The GST has been an initiative that has commanded broad consensus across the political spectrum. It has also been a model of cooperative federalism in practice with the Centre and states coming together as partners in embracing growth and employment-enhancing reforms. It is a reform that is long awaited and its implementation will validate expectations of important government actions and effective political will that have, to some extent, already been “priced in.” Getting the design of the GST right is, therefore, critical. Specifically, the GST should aim at tax rates that protect revenue, simplify administration, encourage compliance, avoid adding to inflationary pressures, and keep India in the range of countries with reasonable levels of indirect taxes. There is first a need to clarify terminology. The term revenue neutral rate (RNR) will refer to that single rate, which preserves revenue at desired (current) levels. In practice, there will be a structure of rates, but for the sake of analytical clarity and precision it is appropriate to think of the RNR... read more

Highlights of the Model Goods and Services Tax Act, 2016

This act may be called the Central GST Act, 2016 (CGST) / State GST Act, 2016 (SGST). It extends to the whole India. In case of SGST, to the respective state. CGST/SGST will be levied on all intra-state supplies of goods/ services. Goods [Section 2(31)]: Goods mean every kind of moveable property other than actionable claim and money but includes securities, growing crops, grass and things attached to or forming part of the land which are agreed to be served before supply of under the contract of supply. Services [Section 2(59)]: Services mean anything other than goods. Supply of Goods and / or Services [Section 3]: Supply of goods / services includes all forms of supply such as sale, transfer, barter, exchange, license, rental, lease or disposal and importation of services, made or agreed to be made for a consideration by a person in the course or furtherance of business and also includes a supply specified in schedule I, made or agreed to be made without a consideration. Schedule I covers permanent transfer/disposal of business assets, temporary application of business assets to a private or non business use, services put to a private or non business use, self supply of goods/services and asset retained after deregistration. Levy and Collection of Central/ State Goods and Services Tax [Section 7]: There shall be levied a tax called the Central/ State Goods and Services Tax (CGST/SGST) on all intra-State supplies of goods and/or services at the rate specified in the Schedule to this Act and collected in such manner as may be prescribed. As GST will be applicable on ‘supply’ the erstwhile taxable events such as ‘manufacture’, ‘sale’, ‘provision of... read more

Highlights of Report of the Joint Committee on Business Processes for GST on GST Return

GST is a self-assessed destination based taxation system. The submission and processing of return is an important link between the taxpayer and tax administration. There will be common e-return for CGST, SGST, IGST and Additional Tax. Person Liable to File Return Every registered dealer: Every registered dealer is required to file Return for the prescribed tax period. A Return needs to be filed even if there is no business activity (i.e. Nil Return) during the said tax period of return. UN Bodies, UN agencies etc., will have unique ID and will require to file return for the month (in simpler form) during which they make purchases. They would not be required to file regular return. Government entities / PSUs, etc., not dealing in GST supplies or persons exclusively dealing in exempted/ Nil rated/ non-GST goods or services would neither be required to obtain registration nor required to file returns under the GST law. Types of GST Return Other Features of GST Return The return can be filed without payment of self-assessed tax as per the return but such return would be treated as an invalid return and would not be taken into consideration for matching of invoices and for inter-governmental fund settlement among States and the Centre. Nil Return also needs to be filed Returns by Normal / Regular taxpayers with multiple registrations (for business verticals) within a State: Such taxpayers would have to file GSTR-1, GSTR-2 and GSTR-3 returns for each of the registrations taken separately. Returns by Casual/ Non-Resident taxpayers (other than foreigners): • GSTR-1 (details of outward supplies); • GSTR-2 (details of inward supplies); and •... read more

Highlights of Report of the Joint Committee on Business Processes for GST on Refund Processes

In the taxation administration, refund refers to any amount that is due to the tax payer from the tax administration. In the present taxation system it is considered as a strained area, both for the taxpayer and the tax administration. So in order to establish an effective and efficient tax administration system it is essential that issues on which refund arises ought to be kept at minimum and be clearly defined in the law. Situations under GST where Refunds may Arise Excess payment of tax due to mistake or inadvertence. Export (including deemed export) of goods / services under claim of rebate or Refund of accumulated input credit of duty / tax when goods / services are exported. Finalization of provisional assessment. Refund of Pre – deposit for filing appeal including refund arising in pursuance of an appellate authority’s order (when the appeal is decided in favor of the appellant). Payment of duty / tax during investigation but no/ less liability arises at the time of finalization of investigation / adjudication. Refund of tax payment on purchases made by Embassies or UN bodies. Credit accumulation due to output being tax exempt or nil-rated. Credit accumulation due to inverted duty structure i.e. due to tax rate differential between output and inputs. Year-end or volume based incentives provided by the supplier through credit notes. Tax Refund for International Tourists Excess payment of tax due to mistake or inadvertence. Such excess payment may be on account of:- a) wrong mention of nature of tax (CGST / SGST / IGST), b) wrong mention of GSTIN, or c) wrong mention of tax amount. In... read more

Highlights of Report of the Joint Committee on Business Processes for GST on GST Payment Process

Main Features of Proposed Payment Process Electronically generated challan from GSTN Common Portal in all modes of payment and no use of manually prepared challan; Facilitation for the taxpayer by providing hassle free, anytime, anywhere mode of payment of tax; Convenience of making payment online; Logical tax collection data in electronic format; Faster remittance of tax revenue to the Government Account; Paperless transactions; Speedy Accounting and reporting; Electronic reconciliation of all receipts; Simplified procedure for banks; Warehousing of Digital Challan. Modes of Payment & Workflow The report proposes following three modes of payment: E- Payment: This includes Payment by taxpayers through Internet Banking through authorized banks and through credit card/debit card: The Taxpayer will generate e-Challan through GSTN Tax payer will select e-payment mode Net Banking Credit/Debit Card of any bank Tax Payer to choose Authorized bank in case of Net Banking Payment gateway of authorized bank (or their SPVs) in case of Credit Card/ Debit Card Credit Card to be used by taxpayer needs to be pre–registered at GSTN. This has been done to bring an additional safety check to eliminate the issue of charge back. GSTN will direct the taxpayer to the website of selected bank/payment gateway After Online Payment a unique CIN will be generated basis which GSTN will credit the Taxpayer’s ledger Copy of paid Challan will be made available on GSTN for taxpayer (downloadable/printable) II . OTC (Over the Counter)- Tax payer may make the payment of the taxes at the Authorized Bank’s counter. This will be beneficial for smaller taxpayers that do not have access to internet banking facilities. Cash allowed for Maximum... read more

COMPARISON OF GST BILL 2014 AND RECOMMEMNDATIONS OF SELECT COMMITTEE OF RAJYA SABHA,2015

The Constitution (122nd Amendment) Bill, 2014 was introduced in Lok Sabha on December 19, 2014 and was passed by it on May 6, 2015. The Bill was referred to a Select Committee of Rajya Sabha for examination which submitted its Report on July 22, 2015. The Report contained various recommendations along with three Notes of Dissent submitted by Congress, AIADMK and CPI. The Table below compares the provisions of the 2014 Bill with the recommendations of the Select Committee and the Notes of Dissent.   Constitution (122nd Amendment) Bill, 2014 Select Committee recommendations, 2015 Notes of Dissent in Committee Report, 2015 Additional Tax (in Interstate trade) (Clause 18) An additional tax of up to 1% on the supply of goods will be levied by centre in the course of inter-state trade or commerce. The tax will be assigned to the states from where the supply originates. This will be for two years, or longer, as recommended by GST Council. The 1% additional tax in its present form is likely to lead to cascading of taxes Add an explanation to the clause to define “supply” to mean all forms of supply made for a consideration”. The 1% additional tax is market distorting, especially since 100% compensation for five years to states has been proposed. Instead of the additional 1% tax, states should be permitted to retain 4% of centre’s share of IGST on all inter-state supplies of goods. Compensation to states (Clause 19) Parliament may provide for compensation to states for a maximum period of five years 100% Compensation to be for a five year period. 100% compensation to be... read more

GST RATES – AN UNRESOLVED ISSUE

One of the crucial issue for successful implementation of GST relates to the determination of the GST rate. Since the GST is primarily intended as an exercise in reforming the consumption tax in India and not an exercise for additional resource mobilisation through discretionary changes, the CGST and SGST rates should be such rates which would yield the same revenue as collected from the various taxes which will be subsumed in the CGST and SGST (hereafter such rates shall be referred to as ‘revenue neutral rates’ or ‘RNR’). The RNR for the CGST and the SGST is determined in accordance with the formula-RNR = R X 100 B Where; RNR : Revenue Neutral Rate for the Centre or the States as the case may be; R : Collection from the Central or State taxes, as the case may be, which are proposed to be subsumed in the CGST and SGST; B: Estimated Tax base of the GST [A] WHAT WILL BE THE ESTIMATED TAX BASE FOR GST? The Tax Base for GST will depends on the following factors: Exempted goods and Services : Currently, there are exemptions available to many goods under the various Vat Acts and there is also concept of declared goods under Central Sales Tax. Whether these exemptions and concept of declared goods will continue under GST is not clear. Goods which are outside the purview of GST : The government has introduced the GST Constitutional 122nd Amendment Bill 2014. The Amendments proposed in the Bill gives some indication of the sectors/ products which will be covered under GST. Like Alcoholic liquor for human consumption, Electricity... read more

Goods & Service Tax – Key Features

In continuance of our earlier series titled GST Knowledge Series# 1, Understanding the Mechanics of Goods & Service Tax, we have discussed the basic DNA of Goods & Service Tax popularly known as GST. These features as applicable to India were: 1. DUAL GOODS AND SERVICE TAX 2. APPLICABILITY OF GST TO ALL TRANSACTIONS 3. DESTINATION BASED MULTI POINT LEVY 4. COMPUTATION OF GST ON THE BASIS OF INVOICE CREDIT METHOD 5. PAYMENT OF GST 6. UNIFORM PROCEDURE FOR COLLECTION OF GST In this Article, we will take the discussion forward and discuss in detail about other Salient Features of GST. 1. THRESHOLD LIMIT The present threshold limits prescribed in different State VAT Acts below which VAT is not applicable varies from State to State. A uniform State GST threshold across States is desirable and, therefore, it is considered that a threshold of gross annual turnover of Rs.10 lakh both for goods and services for all the States and Union Territories may be adopted with adequate compensation for the States.The issue is still debated and there is no consensus till date. 2. COMPOSITION SCHEME UNDER GST The States are also of the view that Composition/ Compounding Scheme for the purpose of GST should have an upper ceiling on gross annual turnover and a floor tax rate with respect to gross annual turnover. The first discussion paper suggests that there would be a compounding cut-off at Rs. 50 lakh of gross annual turnover and a floor rate of 0.5% across the States. The scheme would also allow option for GST registration for dealers with turnover below the compounding cut-off. In... read more
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