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Goods and Service Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 31-7-2010 Last Replied Date:- 3-8-2010 – The talks on introduction of goods and service tax (GST) in India from April 2011 have revived with the last meeting of Empowered Committee helf on 21st July 2010. It is expected that GST Bill may be introduced in Parliament session beginning today. Now that India will migrate to dual GST next year (or even after) – one central GST and other state GST, it will fall short of expected objectives. Initially, GST was meant to simplify the structure of indirect taxes in India and move towards a simple, cenvatable unified indirect tax regime. The present discussions however, are base on dual GST which Empowered Committee and centre have agre

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proposed that CGST will be lower rate for goods @ 6% and standard rate at 10%. The services will be charged at 8%. For states, it is proposed to have same rates resulting in total rate for CGST and SGST in the range of 12 to 20 % in first year which may later be brought down to 16 % . Thus, we will have three rates for goods and services both for centre and states separately. This may sound simple but shall lead to more tax outgo for taxpayers. In case of service tax, while present tax rate is 10%, it will go up by 60% to 16 %, 8% for states and 8% for centre. Similarly, tax on goods will also go up to 20% . Moreover, it is still not clear whether all state taxes will be subsumed in GST or only few ones. Information technology shall play a

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GST, the goods and service tax is infact a good but slow tax. – Reply By Vinay Agrawal – The Reply = Thanks Dr. Agarwal for a nice article. As we all know that today we are sitting in the begining of August 2010 and if we really go as per the wishes (wishes only and no clear road map) of Mr. Pranab Mukherjee then we are left with only 8 months. As of now there is absolutely no clarity regarding modus operandi in the new tax regime, no IT infrastructure in place (which of-course can not be there without the relevant rules and procedures), no concensus with states etc.etc. and so many similar issues. Do you think that it will be viable to impose (rather than implementing) the GST in a forceful manner just for the sake of meeting a deadline ?

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FM Wants New Tax Regime Which is Simple and Broad Based Leading to Lowering of Tax Rates, Better Tax Compliance and Reduced Litigation: Looking forward to Constructive Suggestions from Empowered Committee of State FMS on GST to set-up an Innovative & Cooperative Fiscal Federalism – Dated:- 22-7-2010 – Union Finance Minister, Shri Pranab Mukherjee said that the Government wants to present the stakeholders with a taxation regime which is simple and broad-based leading to lowering of tax rates, better tax compliance and reduced litigation. Shri Mukherjee further said that the new Direct Tax Code will take into account established and time test practices which have withstood judicial scrutiny. Regarding reforms in indirect taxes, Shri Mukherjee said that we are able to develop convergence on many contentious issues relating to GST during his meeting with Empowered Committee of State Finance Ministers yesterday. Shri Mukherjee was addressing the Special Session on the occasion of the meetin

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he legislation for DTC and seriously engaged to develop consensus to bring all the States on board to roll-out GST from 1st April, 2011. The full text of the speech of the Finance Minister, Shri Pranab Mukherjee delivered on the occasion of the meeting of the National Executive Committee of FICCI on the Topic: Agenda for the Nation: The Tax Reforms- GST and DTC is given below: It gives me great pleasure to address this session of the National Executive Committee of FICCI and have the opportunity to interact with the distinguished gathering of people working in different sectors of the economy. At the very outset, I would like to complement FICCI in its efforts to work closely with the Government on diverse policy issues and for providing a platform like this for public debate on key issues relating to the Indian economy and the business environment. Such deliberations play an important role in generating public opinion, building consensus and crystallising policy inputs and help us in

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em or have unsustainable fiscal deficit. As per the IMF's latest economic review, the world economy expanded at an annualized rate of over 5 percent during the first quarter of 2010. This has been mostly due to robust growth in Asia. There are encouraging signs of growth in private demand. Industrial production and trade posted double-digit growth, and consumer confidence continues to improve. Overall, macro-economic developments confirm expectations of a modest, but steady recovery in most advanced economies and strong growth in many emerging and developing economies. World growth is projected at about 4½ percent in 2010. Significantly India's growth in 2010 has been projected at 9.4 % by the IMF. The projection for India's economic growth is much higher than our estimated projection of about 8.5 % in the financial year. The growth over and above 8.5% would depend upon growth rate of our services sector. As per the latest GDP data services sector registered an avera

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s like pulses and milk have been contributing significantly towards food inflation and all efforts are being made to increase the availability of these items and the government has already put in place long term strategy to increase the production of the items for which demand is consistently increasing with the rise in the income level in general. In view of the recovery during 2009-10, this year in my budget for 2010-11, I initiated a partial roll back of stimulus measures and a resumption of the fiscal consolidation process by pegging fiscal deficit at 5.5 per cent of GDP. The Medium Term Fiscal Policy Statement 2010-11 has provided the roadmap with fiscal deficit declining to 4.8 per cent of GDP in 2011-12 and further to 4.1 per cent of GDP in 2012-13. So far we are on target and our revenue and expenditures streams are flowing as planned. Revenue realization so far has been satisfactory. DIRECT TAX CODE We have initiated the reforms in the Direct Taxes and as per our commitment; w

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nd their representatives for their active participation in shaping this historic legislation which will make Indian trade and industry globally competitive. GST We have also initiated the reforms in Indirect Taxes. We have worked with great perseverance in coordination with Empowered Committee of State Finance Ministers over the last 3-4 years to clear the way for the launch of this reform in the realm of indirect taxes. Given the size and complexity of our economy and our deep commitment to the values of pluralism, federalism and democracy I would say that this dialogue has moved at a satisfactory pace. Yesterday, I met Empowered Committee of State Finance Ministers and we were able to develop convergence on many contentious issues. A Draft Constitutional Amendment has been prepared and shared with the Empowered Committee of State Finance Ministers. We are looking forward to constructive suggestion from Empowered Committee on this landmark legislation, which will change the existing l

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nique Projects (TAGUP) headed by Shri Nandan Nilekani, Chairman, Unique Identification Authority of India has proposed a detailed roadmap and strategy for putting in place the requisite IT Infrastructure to handle work related to GST. Since this infrastructure needs to be in place well before the actual introduction of GST in April next year, we have constituted an empowered Group chaired by Dr. Nilekani with joint representation from the Centre and the States which would be authorized to take decisions about necessary IT parameters. This would help us in freezing one of the critical elements for successful role out of GST from 1st April 2011. On exemptions, we have proposed to review the existing exemptions from Central Excise duty so that the list of goods exempt from CGST is aligned to the SGST list and 99 items currently exempt from VAT are exempt from both components of GST. As for the rate structure, it has been the Centre's considered view that the full potential of GST coul

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d industry. Eventually, it will settle down to a level of 16 to 18% for both CGST and SGST which will mean an effective rate of 12%. In the second year the standard rate for SGST and CGST may be reduced to 9% retaining the lower rate at 6%. During the third year the standard rate may be reduced to 8% and lower rate increased to 8% and services retained at 8% both for CGST and SGST. Thus, in a phased manner, we will be able to achieve a single CGST and SGST rate for both goods and services. GST would provide a level playing field to domestic producers and has a potential of providing inbuilt stimulus to the economy by removing tax distortions and tax competitions. It has been estimated by NCAER that implementation of well designed GST will see an increase of 2 – 2.5% in India's GDP. Exports could increase by well over 10%. The expected net present value of GST gain exceeds half a trillion dollars. The gain from GST will propel India from one trillion dollar economy to two trillion d

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od and Right to Employment are not merely promises but the legal entitlements of the citizens and to fulfill these commitments, we need revenue. I am confident that the Tax Reforms in both Direct Taxes and Indirect Taxes will provide revenue buoyancy to meet our social sector expenditure. Our younger generation can look forward to an India which is free from poverty and illiteracy. I can see that today's Executive Body meeting is being attended by heads of MNCs, financial institutions, banks and economists and hope your inputs during the deliberations would lead to new insights. I am happy that FICCI has chosen this topic:- Agenda for the Nation: The Tax Reforms-GST and DTC. There cannot be more appropriate time than this, when the Government is in process of finalizing the legislation for DTC and also seriously engaged to develop consensus to bring all the States on board to role out GST from 1st April 2011. We have always valued the inputs from our stakeholders, whom we consider

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Dated:- 22-7-2010 – PIB Press Release Dated 21-7-2010 Following is the text of the speech of Finance Minister, Shri Pranab Mukherjee delivered at the meeting of the Empowered Committee of State Finance Ministers, here today: Dr. Asim Dasgupta, Chairman, Empowered Committee; Members of the Empowered Committee, senior officials from the Department of Revenue and CBEC and officials of the State Governments, It gives me great pleasure to welcome you this afternoon to what I perceive as a very significant link in the ongoing dialogue on the introduction of the Goods and Services Tax (GST) in the country. We have worked with great perseverance and industry over the last 3-4 years to clear the way for the launch of this momentous reform in the realm of indirect taxes. Given the size and complexity of our economy and our deep commitment to the values of pluralism, federalism and democracy it would not be an exaggeration to say that this dialogue has moved at a satisfactory pace. Since the del

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d further discussion. In its meeting held on the 21st of May, 2010 at New Delhi, the Empowered Committee deliberated further on these issues and chose to leave final decisions on many to the Government of India. In the light of this development, I have comprehensively reviewed the position with my team. Some of our decisions have already been shared with you this morning. I will elaborate these further. Before I go into that, let me break good news on an issue that has caused considerable anguish to the States and hence been raised repeatedly in the run up to this juncture. This is the issue of CST compensation. I am glad to inform you that the Government of India has decided to fully compensate the States for their revenue losses on account of CST reduction during the year 2009-10 and to release the balance outstanding amount to the States immediately. I am now waiting for Empowered Committee's recommendations on the CST compensation formula for the year 2010-11. I am confident th

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kh of turnover per annum or ₹ 1 crore per annum. Of course, we must not lose sight of one of the critical deliverables of GST viz. that it should result in considerable simplification for small dealers so that compliance is easy and assured. One measure that would immensely facilitate simplification is the use of Information Technology so that physical interface between the taxpayer and the administration is minimized. Earlier today, you have had the benefit of listening to a presentation by Shri Nandan Nilekani, Chairman, Unique Identification Authority of India wherein he has proposed a detailed roadmap and strategy for putting in place the requisite IT Infrastructure to handle work related to GST. Since this infrastructure needs to be in place well before the actual introduction of GST in April next year, decisions have to be made with great alacrity and speed. In order that no time is lost, we have proposed the constitution of an empowered Group chaired by Dr. Nilekani with j

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s been the Centre's considered view that the full potential of GST could be realized only if we adopt a single rate structure with unification of the rate for goods and services. However, we recognize that this may not be feasible on the date of introduction of GST and requires a phased approach so that the transition is smooth and painless both for the taxpayer and the administration. As such, we are agreeable to the adoption of a dual rate structure for goods at the inception of GST. In the year of introduction i.e. 1st April, 2011, the Central Government proposes to keep CGST lower rate for goods at 6% and standard rate at 10%. The services will be charged at 8%. Our request to the States will be to consider keeping the same rates i.e. the lower rate for SGST at 6%, standard rate at 10% and services at 8%. This mutually supportive approach will ensure that we have a single rate for CGST and SGST in the range of 12 to 20% in the first year of GST introduction. The peak effective

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Export of Goods and Services – Unrealised export bills – Write – off – Surrender of export incentives – FEMA – 03/2010 – Dated:- 22-7-2010 – Export of Goods and Services – Unrealised export bills – Write – off – Surrender of export incentives RBI/2010-11/123 A.P. (DIR Series) Circular No.03 July 22, 2010 To All Category – I Authorised Dealer Banks Madam / Sir, Attention of Authorised Dealer Category – I (AD Category -I) banks is invited to A.P. (DIR Series) Circular No. 12 dated September 09, 2000, A.P. (DIR Series) Circular No. 30 dated April 04, 2001, A.P. (DIR Series) Circular No. 61 dated December 14, 2002, A.P. (DIR Series) Circular No. 40 dated December 05, 2003 and A.P. (DIR Series) Circular No. 33 dated February 28, 2007, in terms o

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by the Reserve Bank or by the AD Category – I banks on behalf of the Reserve Bank, as per the extant guidelines; ii. the exporter produces a certificate from the Foreign Mission of India concerned, about the fact of non-recovery of export proceeds from the buyer; and iii. this would not be applicable in self-write-off cases. The above relaxation is applicable for the exports made with effect from August 27, 2009. 3. It is clarified that since the Drawback scheme is governed by the provisions of the Customs Act, 1962 and the Rules made there under, the provisions contained in para. 2.25.4 of the Handbook of Procedure – Vol. I. of the Foreign Trade Policy (FTP) (2009-2014) would not be applicable to the Duty Drawback scheme. Therefore, the d

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nge Management Act, 1999 (42 of 1999) and is without prejudice to permissions / approvals, if any, required under any other law. Yours faithfully, G. Jaganmohan Rao Chief General Manager Annex [Annex to A.P. (DIR Series) Circular No.03 dated July 22, 2010] Extract of Para. 2.25.4 of the Handbook of Procedure – Vol. I – 2009 – 2014 of Foreign Trade Policy (FTP) Realization of export proceeds shall not be insisted under any of the Export Promotion Schemes under this Foreign Trade Policy (FTP), if the Reserve Bank of India (RBI) writes off the requirement of realization of export proceeds on merits and the exporter produces a certificate from the concerned Foreign Mission of India about the fact of non-recovery of export proceeds from the buye

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FEMA – 06/2010-11 – Dated:- 1-7-2010 – Master Circular on Export of Goods and Services Master Circular No. 06/2010-11 Dated 1-7-2010 Export of Goods and Services from India is allowed in terms of clause (a) of sub-section (1) and sub-section (3) of Section 7 of the Foreign Exchange Management Act 1999 (42 of 1999), read with Notification No. G.S.R. 381(E) dated May 3, 2000 viz. Foreign Exchange Management (Current Account) Rules, 2000, as amended from time to time. 2. This Master Circular conso

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FEMA – 04/2010-11 – Dated:- 1-7-2010 – Master Circular on Import of Goods and Services Master Circular No. 04/2010-11 Dated 1-7-2010 Import of Goods and Services into India is being allowed in terms of Section 5 of the Foreign Exchange Management Act 1999 (42 of 1999), read with Notification No. G.S.R. 381(E) dated May 3, 2000 viz. Foreign Exchange Management (Current Account) Rules, 2000 as amended from time to time. 2. This Master Circular consolidates the existing instructions on the subject

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Goods and Service Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 17-2-2010 Last Replied Date:- 30-12-1899 – Macro Economic Backdrop Indian economy is pegged to grow at close to 7 percent in current fiscal, belying pessimism that the economy would grow at a lower pace due to global economic slowdown. There are also evidences that the industrial sector is reviving now, However, according to IMF, growth in the Indian economy is likely to pick up from 6.75% in 2009-10 to 8% in 2010-11. Also services sector, more particularly, banking, financial services, insurance and information technology are expected to grow in double digits. In the recent Reserve Bank's credit policy review, the central bank has given a clear message for fiscal consolidation and signaling an end to the expansionary policy stance. This appears to be in sync with improved global outlook, optimistic growth prospects and fear of inflationary expectations. So far as fiscal deficit is concerned, it could be reduced to 5

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ral feeling is that in the wake of proposed GST by 2011, the government may not propose major changes in excise and service tax arena, a school of thought is of the view that. 2010 budget will be the last opportunity to align existing rates to the proposed GST rates and also levy service tax on more services so that preparatory exercise is done and date bank created. Thus, extending the service tax to all services and having a common threshold limit match with that proposed in GST may be attempted. A common rate may also be explored. 2010 also presents the opportune time for introducing a negative list of taxable services and taxing services comprehensively. What would be more desirable is to identify all such services and atleast remove the overlaps between existing services. However, with GST just a year away, will it serve any tangible objective will have to be deliberated. Taking opportunity of the Budget 2010, Finance Minister ought to make certain bold and straight forward statem

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emptions. The payment and compliance becomes flawless through input tax credit mechanism thus, making goods and services competitive resulting in economic value added. There however, exists a set of differences between the centre and the states and states inter se on various issues concerning GST. Our country needs to adopt a balanced approach and a concerted effort to maximize taxes under GST across almost all goods and services so that industry is benefited in terms of lower cost of compliance. Not only this, GST will benefit the industry in terms of increased output and productivity and even improve the GDP by over one percent. GST should also spur higher tax compliance leading to lower tax rates. So far as GST exemptions are concerned, they should be decided judiciously rather than on arbitrary basis or on political compulsions. GST to be economically successful should also be backed by efficient tax administration and machinery. For this grass root level is most crucial which must

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common date. Appropriate amendments in the Constitution should be carried out without any further delay. The Government should also ensure that the definitions provided under the Centre as well as the State enactments should be uniform, unambiguous, simple and in harmony with other existing laws. As far as possible, artificial deeming fiction in the definitions should be avoided. It is also necessary that classification of goods and services is based on international norms to avoid all classification disputes. Service Tax On service tax front, following suggestions can be attempted keeping in mind that GST is still away, atleast for a year – Wherever assessees or trade associations or chambers seek clarification from the board, a time limit of say, 30 to 60 days be set so that board is bound to clarify the issues raised within such time fame. There have been instances where clarifications have come after a gap of as long as 2 to 3 years and in some cases, clarification is due. Like sma

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ce Tax should be paid under one code, ie, assessee's code and not the service code. This will simplify the procedure without any loss of revenue. On valuation of services, all reimbursements of expenses should be kept out of tax net and the definition of pure agent should be amended accordingly. Export and import of service needs to be redefined in a much simpler manner so that assessees comply with the law and litigation is reduced. Refund of service tax on input services to exporters is still a tedious process and despite of CBEC's clarifications, the field is not forthcoming with the hassle free refund process. The exporters are made to run from pillar to post for claiming refund at field level or at first appeal stage. The budget should seriously address this issue and help exporters and others to avail the benefit which is in line with the legislative intention as well as rules. Also, the simplified refund procedure should cover all service tax assessees. There have been l

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Goods and Service Tax – GST – By: – Pradeep Jain – Dated:- 3-2-2010 Last Replied Date:- 30-12-1899 – Comments of the Department of Revenue (DoR) on the First Discussion Paper on GST Prepared By: CA Pradeep Jain Siddharth Rutiya Visit us at www.capradeepjain.com Introduction: GST , commonly known as Goods and Service Tax has now become the buzz word of the industry as a whole. Any news, views or comments on this topic influences the industry at large and when the comments are from the Department of Revenue the impact is surely gigantic. Recently, the Department of Revenue has released its comments on the First Discussion Paper on GST. In this article we are attempting to highlight the key comments made by Department of Revenue alongwith the possible future prospects emerging there from. The Various issues and their comments are as follows: – Issue: – The GST shall have two components: one levied by the Centre (hereinafter referred to as Central GST), and the other levied by the States

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rmity between states which is totally absent earlier in current VAT regime. Secondly, t is not possible to collect the custom duty by the states. The custom department working under Centre is doing the same. In this place, the Central government will collect the tax and pass on to the state. This is also a practical solution. Issue: – The present thresholds exemption limits prescribed in different State VAT Acts varies from State to State. A uniform State GST threshold across States is desirable and, therefore, it is recommended that a threshold of gross annual turnover of ₹ 10 lakh both for goods and services for all the States and Union Territories may be adopted with adequate compensation for the States (particularly, the States in North-Eastern Region and Special Category States) where lower threshold had prevailed in the VAT regime. Keeping in view the interest of small traders and small scale industries and to avoid dual control, the States also considered that the threshol

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for return filing Electronic Return filing through certified service centres / CAs etc. Audit in 1-2% cases based on risk parameters Lenient penal provisions There may not be any need to have direct link between compensation package, if decided for, and the threshold for registration for North-Eastern and special category States. Comments of author:- Firstly, it is clear that the Central Government does not want to give exemption limit of ₹ 1.5 crore as currently available to industry. The Centre intends to give exemption of same limit as given by states. Even the higher service tax exemption limit for service providers is not acceptable to Centre. But by saying that they are ready to give more than ₹ 10 Lakhs if the states are also ready to give the same, they have moved the ball to the court of state. Further, the same exemption will also apply of IGST transaction. The simple registration, no physical verification and no pre-deposit, simple electronic and longer frequenc

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ill be for SGST alone, in case Centre also brings a Composition Scheme for small assesses. They also suggested that the Centre should leave the administration of Compounding Scheme, both for CGST and SGST to the States. Comments of author:- As the Centre is not interested to give more threshold exemption than the states, hence they intend to apply the same composition scheme for Centre also. A composition scheme upto ₹ 50 Lakhs will there which will address the problems of small players. This was porposed for SGST but the centre wants a separate and new scheme for centre. But it is not told that whether the same will passed on to the buyer and whether he will be able to get the credit of the same and set off against his CGST and SGST liability. If he is not able to do so then it will disadavantageous position for the small units. The taxpayer would need to submit periodical returns , in common format as far as possible, to both the Central GST authority and to the concerned State

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itter for assesses. Issue: – Inter-State Transactions of goods & services: The Empowered Committee accepted the recommendations of the Working Group of concerned officials of Central and State Governments for adoption of IGST model for taxation of inter-State transaction of Goods and Services The scope of IGST Model is that Centre would levy IGST which would be CGST plus SGST on all inter-State transactions of taxable goods and services with appropriate provision for consignment or stock transfer of goods and services. The inter-State seller will pay IGST on value addition after adjusting available credit of IGST, CGST, and SGST on his purchases. The Exporting State will transfer to the Centre the credit of SGST used in payment of IGST. The Importing dealer will claim credit of IGST while discharging his output tax liability in his own State. The Centre will transfer to the importing State the credit of IGST used in payment of SGST. The relevant information is also submitted to the

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for goods and services and for Centre and States. Having more than one rate either for CGST or SGST will complicate the working of IGST model. Issue: – GST Rate Structure: The Empowered Committee has decided to adopt a two-rate structure – a lower rate for necessary items and goods of basic importance and a standard rate for goods in general. There will also be a special rate for precious metals and a list of exempted items. For upholding of special needs of each State as well as a balanced approach to federal flexibility, and also for facilitating the introduction of GST, it is being discussed whether the exempted list under VAT regime including Goods of Local Importance may be retained in the exempted list under State GST in the initial years. It is also being discussed whether the Government of India may adopt, to begin with, a similar approach towards exempted list under the CGST. Comment: – There should be a single rate of SGST both for goods and services. A two rate structure for

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exempted under CENVAT regime. At the end, there must be a common list of exemptions for CGST and SGST. Comment of author: – The Centre wants only one rate should be there for GST. Even he wants to add ahcolic products, pan malsala, gutka etc. to this list and intend to impose further duties, if necessary. But he does not want that any product should be outside the GST. Moreover, Centre is of the opinion that single rate should be there on all goods and services whether essential or otherwise. The list of exempted product or services should be separately circulated and it should also be minimum. Conclusion:- The main dispute between Centre and state is being figured out after this comments from DoR. It is also relating to threshold exemption as well as relating to two tier rates. This also brings about that the centre does not want to give states the power to change the rates of SGST. This is good from point of view of assessee also. Otherwise, it will seem that the old system of VAT a

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Central Excise – 913/03/2010-CX. – Dated:- 3-2-2010 – CIRCULAR NO. 913/03/2010-CX. Dated: February 03, 2010 Sub.:- Valuation of MS and HSD sold amongst OMCs – MOU – Withdrawal of instructions dated 14-2-2007- regarding. Attention of field formations is invited to the Board s instructions issued from F. No. 6/21/2003-CX.I (Pt) on 14-2-2007, a copy of which is available on the departmental web-site cbec.gov.in. The issue discussed in the said instructions is regarding valuation of petroleum products sold by one oil company to other oil company based on import parity price as per MOU entered between them. 2. In the aforesaid instructions field formations were directed to decide the cases pertaining to SCNs issued to the Oil companies on the i

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Dated:- 27-1-2010 – New Delhi, Jan 27 (PTI) The Planning Commission today said that the proposed Goods and Services Tax (GST) is likely to miss the deadline of April 1, but it could be introduced in the next fiscal only. Well, we were hoping that it (GST) will come from April 1, but it does not appear that it will be so, Planning Commission Member B K Chaturvedi told PTI.He, however, said the proposed indirect tax regime, aimed at doing away with most of the indirect taxes at the Centre and the

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Dated:- 8-1-2010 – New Delhi, Jan 8 (PTI) The announcement of new date for the roll out of GST was deferred until month-end today as the Finance Minister Pranab Mukherjee is preoccupied with preparations for the next Budget. We will meet by month end and hope to finalise the dates and rates, Empowered Committee of state finance ministers Asim Dasgupta told reporters, amid speculation that GST may not be implemented from April 1, 2010, as was scheduled earlier.After the meeting with Union Financ

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Goods and Services Tax – Started By: – ranjit ronald – Dated:- 7-1-2010 Last Replied Date:- 10-1-2010 – It is understood that registeration under GST has been started w.e.f Jan,2010. In the case of Companies to whom we have to approach for GST registration formalities ranjit ronald KMML, KERALA – Reply By Surender Gupta – The Reply = I am surprised to hear this news. Can you tell me the soruce of such information – Reply By ranjit ronald – The Reply = This information is available on 50 th page

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Report of Task Force on Implementation of GST dated 15.12.2009 – Commentaries / Editorials – Dated:- 31-12-2009 – Also see: First Discussion Paper On Goods and Services Tax In India Or Download full f

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List Of Agencies Authorised To Issue Certification For Global System Of Trade Preferences(Gstp), India Sri Lanka Free Trade Agreement(Islfta), Certificates Of Origin Under Asean-India Free Trade Agreement And India – Korea Comprehensive Economic Partnership Agreement (Cepa). – DGFT – 26/2009 – Dated:- 23-12-2009 – List Of Agencies Authorised To Issue Certification For Global System Of Trade Preferences(Gstp), India Sri Lanka Free Trade Agreement(Islfta), Certificates Of Origin Under Asean-India Free Trade Agreement And India – Korea Comprehensive Economic Partnership Agreement (Cepa).

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Dated:- 16-12-2009 – New Delhi, Dec 15 (PTI) Giving voice to demands of some states, a task force constituted by the 13th Finance Commission has said the proposed Goods and Service Tax (GST) should have single rates at Central and state levels, and suggested postponement of its implementation by six months. The task force suggested five per cent GST at the Central level and seven per cent at the state level. The proposed tax will replace excise duty, service tax at the Central level and VAT at

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Goods and Service Tax – GST – By: – Arun Kumar Singh – Dated:- 9-12-2009 Last Replied Date:- 30-12-1899 – The proposed GST structure in India proposes dual structure. GST shall have two components- Central GST and State GST. The model shall be implemented by multiple statute- one for Central GST and SGST statute for every state. However, it is proposed that basic feature of laws related to chargeability of tax, definition of taxable event, taxable person, basis of classification, basis of value for chargeability of tax shall remain uniform. Further, to an extent uniform procedure for collection of both Central GST and State GST shall be prescribed. Central GST shall be payable to the account of Central Government whereas State GST shall be

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be subsumed: Central Excise Duty Additional Excise Duties Excise duty levied on medicinal and toiletries preparation. Service Tax Additional Custom Duty (CVD) Special Additional duty (SAD) Surcharges Cesses. Following state taxes shall be subsumed in state GST: VAT/Sales Tax Entertainment Tax Luxury Tax Taxes on lottery, betting and gambling State cesses and surcharges Entry tax not in lieu of octroi. Items not covered under GST: The proposed GST Structure keeps liquor and petroleum products out of the purview of GST. Regarding applicability of GST on natural gas, decision will be taken in course of time. Excise duty, presently levied by the states shall not be affected. Tobacco products shall be subject to GST with input tax credit. Centr

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te GST is being proposed for turnover till 50 lakhs. To implement the model various legislative changes and constitutional amendment shall be required. It is expected that draft Central GST Act may be released in course of a few weeks for discussion. Comments: The proposed structure is certainly far better than the existing structure. However, a single GST structure, with tax revenue distributed between Centre & states would have been better for trade. Even in the proposed dual structure, it will be advisable for parliament to make basic law even for State GST, which is possible under the present Constitutional scheme. Nevertheless, politics is not something what ought to be done but it is more about what could be done. Keeping in mind

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Goods and Service Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 9-12-2009 Last Replied Date:- 30-12-1899 – Taxes out of Scope of GST The state governments are finding it difficult to arrive at consensus on following taxes to be subsumed in GST purchase tax – octroi duty – tax on alcoholic beverages (country liquor / IMFL) – tax on petroleum products – tax on tobacco items – stamp duty – toll tax – passenger tax – road tax – mining cess / royalty – electricity cess etc. Besides above, there is still no clarity on services- whether both, CGST and SGST would be levied on all services or that centre and states would distribute services amongst themselves or that centre alone will levy service tax on services and then appropriate it amongst states. Dual GST or Multiple GST Indian is a country with federal status wherein we have a Union Government (Central Government) and State Governments. So in the proposed setup, we are likely to have one central GST and 29 state GST's as we have 29

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, simple and easier in implementation. Tax Cascading Effect The greatest advantage of new GST regime is that it addresses fully the concern of tax cascading. Presently tax cascading is found in both- central and state taxes as the exempt sectors of economy (trade, oil etc) are not allowed to claim any cenvat credit of indirect taxes. It neither happens in excise duty nor in state value added tax. Also, on inter state sales, central sale tax (CST) is collected by the origin state for which no credit is allowed by any Government. It increases cost of production and makes business non-competitive. GST regime shall subsume most of the indirect taxes and will reduce the tax cascading effect to a great extent in entire supply chain. Only the final consumer will not be able to avail or utilize tax credit. Composite Contracts At times, it is seen that it is a common practice to have single composite contracts for various works, jobs, services etc such as in case of engineering projects, constr

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ch lead to litigation between the revenue and tax payers as to classification and valuation. One such contentious issue is that of software comprised in a compact disc wherein cost of media or the compact disc is labeled attracts central excise duty and its licence or right to use attracts service tax under intellectual property right service. Unfortunately, the first discussion paper is silent on this issue and it needs to be addressed appropriately. Government will have to specifically provide for such treatment clearly under the new GST regime. Fiscal Autonomy of States Presently, states enjoy total autonomy so far as state taxes are consumed- be it type of levy, what to levy, at what rate to tax and how to tax. Under GST regime, it is expected of states to have harmony in taxing including that in tax rates. Since the rates are going to be same, it would be a harmonious levy. How this is going to take shape is any body's guess. It is very difficult to have agreement on this aspe

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revenue neutral rates, it may not be possible to achieve a near revenue neutral situation. Despite the sincere attempts being made by the Empowered Committee on the determination of GST rate structure, revenue neutral rates, it is difficult to estimate accurately as to how much the States will gain from service taxes and how much they will lose on account of removal of cascading effect, payment of input tax credit and phasing out of CST. In view of this, it would be essential to provide adequately for compensation for loss that might emerge during the process of implementation of GST for the next five years. This issue may be comprehensively taken care of in the recommendations of the Thirteenth Finance Commission. The payment of this compensation will need to be ensured in terms of special grants to be released to the States duly in every month on the basis of neutrally monitored mechanism. According to Empowered Committee Chairman, based on the tax compliance in the initial year of G

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T, such amount will be reimbursed to the importing State by Centre. On a similar basis, if the dealer in exporting State utilizes credit of SGST for payment of IGST, Central Government will debit that amount to the exporting State. Thus, Central Government will act as 'clearing house' among different States for the purpose inter- state GST. IGST will be charged in invoice only if the selling dealer is registered under IGST. Similarly, credit of IGST can be taken only if the purchasing dealer is registered under IGST. Credit will be cross checked and verified through e-returns to be filed by selling dealers and purchasing dealers. IGST is expected to reduce the number of claims made, besides reducing the corruption and harassment. It will also reduce the litigation. Supply Chain Impact The dual GST structure will adversely affect the cost of supply chain, more particularly in manufacturing sector -both for inputs and output. The supply chains could be in relation to procurement

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n economic and tax implications. Businesses will have to and should undertaken a complete review and assessment of compliances under GST regime. Now that GST is likely to be deferred beyond April 2010 dead line , companies should evaluate the cost benefit in GST regime, based on existing systems and procedures. IT Infrastructure After acceptance of IGST Model for Inter-State transactions, the major responsibilities of IT infrastructural requirement will be shared by the Central Government through the use of its own IT infrastructure facility. The issues of tying up the State Infrastructure facilities with the Central facilities as well as further improvement of the States' own IT infrastructure, including TINXSYS, is to be addressed expeditiously and in a time bound manner. The major task before the Empowered Committee and the government will be to build up information technology (IT) platform or infrastructure. In my view, the tax information network (TIN) system, built by NSDL fo

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Goods and Service Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 9-12-2009 Last Replied Date:- 30-12-1899 – So far, VAT at the state or Cenvat at the central level, along with services tax, have been major steps in tax reforms. Before the present tax regime, there was the sales tax regime, where there was a cascading effect on tax. VAT has removed this burden, but it had deficiencies. The Cenvat load remains. There were several state taxes which were not subsumed in any one tax. The inter-state sales tax or CST was not fully relieved. All this will be accomplished by the state GST. If VAT was a major improvement in the indirect tax system, GST will be the next logical step and a major breakthrough in the history of tax reforms in the country. With the GST, the positive impact on the GDP and state domestic product may be as high as a 2 per cent gain. As a first major step in the GST direction, the release of first discussion paper is a major break through. The second step is the need f

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both for goods and services for all the States and Union Territories will be prescribed with adequate compensation for the States (particularly, the States in North-Eastern Region and Special Category States) where lower threshold had prevailed in the VAT regime. After taking into consideration the interest of small traders and small & medium scale industries and to avoid dual control, it has been proposed that the threshold for Central GST for goods will be lakh Rs.l.5 crore and the threshold for services should also be appropriately high. Service Tax under GST Service Tax is presently levied at 10.3% (inclusive of Education Cess) percent tax on more than 105 services. States do not levy or collect service taxes at present, but get a share from the Centre's collections. It is proposed that states will keep the entire collection from certain services from this year. States would also tax another set of proposed new services, collect and appropriate as \ part of compensation fo

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s of taxable goods and services with appropriate provision for consignment or stock transfer of goods and services. The inter-State seller will pay IGST on value addition after adjusting available credit of IGST, CGST, and SGST on his purchases. The Exporting State will transfer to the Centre the credit off GST used in payment off GST. The importing dealer will claim credit of IGST while discharging his output tax liability in his own State. The Centre will transfer to the importing State the credit of IGST used in payment of SGST. The relevant information will also be submitted to the Central Agency which will act as a clearing house mechanism, verify the claims and inform the respective governments to transfer the funds. The advantages of IGST model are as follows- Maintenance of uninterrupted input tax credit chain on inter State transactions. No upfront payment of tax or substantial blockage of funds for the inter-State seller or buyer. No refund claim in exporting State, as ITC

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ct to gross annual turnover. In particular, there would be a compounding cut-off at ₹ 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. Documentation and compliance Due to the dual structure of the GST, the assessees will be required to maintain separate accounts for Central GST and State GST. There will be one periodical return for both CGST and SGST with one copy each to be submitted to the respective GST authority. Conclusion GST will give more relief to industry, trade and agriculture through a more comprehensive and wider coverage of input tax set-off and service tax set-off, subsuming of several Central and State taxes in the GST and phasing out of CST. The transparent and complete chain of set-offs which will result in widening of tax base and better tax compliance may also lead to lowering of tax burden on an average dealer in ind

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Goods and Service Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 9-12-2009 Last Replied Date:- 30-12-1899 – The first Discussion Paper on GST has been released by the Central Government which also provides few (twenty) frequently asked questions (FAQ's) on GST. These FAQ's do not cover all aspects of GST. Some FAQ's given hereunder seeks to explain the concept of GST, as stated in the discussion paper. Q.1 What does GST seeks to achieve? Ans. GST is a major indirect tax reform in India which takes VAT to its logical conclusion. GST would avoid burden of multiple taxation (tax on tax) with a cascading effect. GST seeks to rule out cascading tax effect. Once it introduced, CST will also be removed. Q.2 What is going to be the GST rate structure? Ans. The first discussion paper has outlined the rate structure and thresholds for goods & service in detail. It has prescribed four rates for goods under state GST (SGST) and suggested similar model under Central GST (CGST). Bus

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t is the general approach to proposed GST? Ans. The Government has decided to have a two tier or dual GST to be levied by centre as well as states and that there is going to be a phased approach to GST after initial and periodic review depending upon revenue collection, losses to state if any, level of tax compliance, outgo on account of compensation to states etc. Q.5 How is GST going to be administered? Ans. The GST is likely to be administered by a separate body at central level and at states level. The joint working group for constitutional amendment will suggest the possible tax administration. It could be a two tier structure wherein there is a main inter-state body and a second body, which is a smaller representational body of states. In this, members of states may represent on a rotational basis to avoid it from being too big. It is expected that this body will be independently set up which will derive its authority and power from the constitution itself. It would be premature

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e for taxation of intra-State and inter-State has already been formulated by the Working Group of Principal Secretaries/Secretaries of Finance/Taxation and Commissioners of Trade Taxes with senior representatives of Department of Revenue, Government of India. For inter-State transactions an innovative model of Integrated GST will be adopted by appropriately aligning and integrating CGST and SGST. Q.8 At what rate, GST will be levied? Ans. As already announced by the government, there will be two taxes- central GST (CGST) and state GST (SGST). The discussion paper suggest that there will be following types of GST rates- (a) for necessary items and goods of basis importance- lower rate (b) for general goods- standard rate (c) for precious metals – special rate (d) exempted items- as per list to be prescribed (e) single service tax rate. Thus, we will have at least four different rates. What rates will be announced is not yet known. It is understood that there is no consensus among states

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may extend beyond present regime in GST regime, the tax exemption and incentives will be converted into cash refund schemes after collection of tax, so that the GST chain is not disturbed. While no new exemption would be allowed, existing special industrial area scheme could continue till their expiry time. Q.12 What shall be the basis of levy of GST in case of inter- state transactions where billing is done on a different basis (say in case of telecom sector)? Ans. In certain segments such as banking or insurance or electricity, services are provided at one point while service is utilized at various geographic points. At times, services is broken based on certain geographical locations. These should be subjected to integrated GST (IGST). In case of telecommunication industry, IGST would be adopted as the tax collected will be divided between states and in India telecom circles are presently divided on the basis of telecom circles which may or may not exactly relate to specific states

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and credit would also be allowed faster and electronically. Q.14 Will there be any composition scheme for small traders in GST regime? Ans. Yes, there is hope that small service providers and businessmen will be provided some relief in GST. Following persons may be liable to pay only state GST manufacturers with turnover upto ₹ 1.50 crore – traders with turnover upto ₹ 50 lakhs – small service providers (limit to be prescribed) The discussion paper suggests that a composition scheme for such assessees will be notified and no details are proposed in the paper. Q.15 Presently, centralized registration is allowed in indirect taxes to taxpayers having multi location operations. Whether in GST, there will be provision of centralized registration? Ans. Though the first discussion paper is silent on the issue of registration (or centralized registration), it is for sure that manufacturers, dealers and service providers will have to obtain registration mandatorily. The registration

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DGFT – 22/2009-14 – Dated:- 4-12-2009 – Amendment in Appendix 4D of HBP-Vol-I regarding list of agencies authorized to issue GSTP TO BE PUBLISHED IN THE GAZETTE OF INDIA EXTRAORDINARY (PART-I, SECTION-1) GOVERNMENT OF INDIA MINISTRY OF COMMERCE AND INDUSTRY DEPARTMENT OF COMMERCE PUBLIC NOTICE NO. 22/2009-2014 NEW DELHI, DATED 4th DECEMBER, 2009 In exercise of powers conferred under paragraph 2.4 of the Foreign Trade Policy 2009-2014, the Director General of Foreign Trade hereby makes the follo

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THE SHAPING UP OF GST REGIME – Goods and Service Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 30-11-2009 Last Replied Date:- 30-12-1899 – Tax Reforms and GST The introduction of goods and services tax (GST) from April 2010 was announced by Finance Minister in 2006-07 Budget. Union Budget 2007-08 reconfirms the proposal and moves a step ahead in announcing that the empowered committee of State Finance Ministers will work with the Union Government to prepare a roadmap for introducing a national level goods and services tax with effect from April 1, 2010. Union Budget 2006-07 (and reconfirmed in Budget 2007-08) has proposed a date, i.e., 1st April, 2010 for introduction of GST in the country. After value added tax, GST, when implemented shall be the most significant fiscal initiative of independent India and shall boost the economic development. The Vijay Kelkar Task Force had proposed the levy of Goods and Services Tax (GST) as a common tax for goods and services and availability of C

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an Goods and Services Act. The States will need to simultaneously introduce corresponding legislation for taxation of goods and services which will subsume their existing State-level cascading taxes. Need for a common tax Why do we need GST today? In today's Indian economy, where service sector contributes over 55%, separate taxation of goods and services is neither viable nor desirable. Value added in manufacture and sale of goods require inputs of both – goods and services and vice versa, which is often not separable. Taxation of goods and services separately by union as well as States brings in distortion in tax structure, is retrogatory and adversely affects revenues. The present consumption tax system in India is complicated as well as multi-layered. GST is a part of ongoing tax reforms which aims at evolving an efficient and harmonized consumption tax system. It shall replace the multiple taxes with a single tax operating at various levels of supply chain, thus, avoiding the

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ough transaction leading to an incentive for tax compliance. GST thus, seeks to achieve economic efficiency and tax neutrality. What is GST Simply put, goods and services tax is a tax levied on goods and services imposed at each point of sale or rendering of service. Such GST could be on entire goods and services or there could be some exempted class of goods or services or a negative list of goods and services on which GST is not levied. GST is an indirect tax in lieu of tax on goods (excise) and tax on service (service tax). The GST is just like State level VAT which is levied as tax on sale of goods. GST will be a national level value added tax applicable on goods and services. A major change in administering GST is that the tax incidence is at the point of sale as against the present system of point of origin. GST components According to Dr. Vijay Kelkar, There are four parts to the GST effort: establishing IT systems, building the Central GST, the political effort of agreeing on a

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would shift to State-level administration. At first, individual States should be merged into the TIN, one by one, at an administrative level while keeping the State VAT distinct from the Central GST. Once all major States are administratively working through the TIN, and the grand bargain has been agreed to, the stage would be set to throw a switch in April, 2010, where India would become a common market with a single Goods and Services Tax. India needs to adopt a GST system which is politically acceptable and administratively feasible. Internationally, there are three practices followed. GST is levied either on invoice system where GST is claimed on the basis of invoice and claimed when invoice is received irrespective of payment. In payment system, GST is claimed and availed when payments are received or made. Presently, service tax in India is based on payment system only where service tax is required to be deposited only when payment is collected. In yet another system, hybrid app

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o tier integration – one at central level and other one at state level where all indirect taxes integrate into a single value added tax. All this will require great deal of political will, intellectual skill and administrative drill. For national level GST, Central Sales Tax (CST) of four per cent is being abolished, which Government has already announced from 1st April, 2007 in a phased manner. The country shall have to follow uniform Cenvat rate alongwith administration for goods and services and a uniform exemption free level. An efficient data base (tax information network) and audit system are also pre-requisite for an efficient and effective GST regime. The phasing out of CST has begun since Union Budget 2007 and by 2010 it shall be completely abolished. The Empowered Committee of State Finance Ministers should also try to integrate the recommendations of Govinda Rao and Vijay Kelkar Committees. There will be a need to follow a gradual approach rather than one go stand. It may ta

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center and the state will each legislate, levy and administer the central GST and state GST respectively. Towards the goal to have GST in place by April 2010, Central Government has taken steps for convergence of central excise duty rates to a mean rate, currently at eight percent. Under GST, the format will change and central taxes (CST, central excise, service tax) shall be subsumed into one. Also, sharing between centre and states will be there mere with a major shift in sharing pattern. In fact, GST will change the tax horizon of the country for the good. GST will also provide an opportunity to policy makers to follow principle of certainty and have clear cut defined exemptions, concessions, non taxable areas and services so as to avoid confusion and litigation. The rate of GST is not yet final and various State Governments are discussing it. While the indications of a dual GST structure look bright, unified GST would be preferred by assessees as it would be cost effective and pro

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laying field for projects and contracts with periods spanning over more than a year as in such cases, migration would be difficult and some cut off arrangement will have to be worked out. Obviously, as of now, all such contacts must be silent on this issue and may create a bottleneck between parties to contract. In GST regime, there will be no place for duties like additional custom duty or special additional duties or cess. Ideally, central and state indirect taxes such as central sales tax, excise duties, service tax, value added tax, entry tax, tax on consumption of goods, luxury tax, entertainment tax etc should be subsumed in GST. It needs to be cleared as to what would happen to issues involving stock transfers, inter state transfer, cross border taxation of service, taxation of service etc. Issues on Cenvat credit, place of taxation, timing of taxation and person liable – all are relevant and crucial. What all taxes will be subsumed in GST should be made clear. On indirect tax f

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ng taxes- (a) Central excise duties, additional excise duties, excise duties under Medicinal and Toilet Preparation Act, (b) Service tax (c) Additional customs duty (CUD) and Special additional Customs Duty (SAD) (d) Surcharge (e) Cess SGST is expected to subsume the following state taxes- (a) Value added tax( or sales tax) (b) Entertainment tax (c) Luxury tax (d) Tax on lottery, betting and gambling (e) State cess/ surcharge. Following are the highlights of proposed GST to be levied in India – Dual structure: As expected, India is implementing 'dual GST'. Centre Government would be levying Central GST (CGST) and State Governments would be levying State GST (SGST). CGST and SGST would be applicable on all the transactions of goods and services made for a consideration except: – Exempted goods and services which are outside the purview of GST and – Transactions which are below the prescribed threshold limits. Statutes: This dual GST model would be implemented through multiple st

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, the rules for taking and utilization of credit for the Central GST and the State GST would be prescribed and would be on similar lines. Fortunately, cross utilization of tax credit between the Central GST and the State GST would be allowed in the case of inter-State supply of goods and services under the IGST model. Interstate GST (IGST): Central Government would levy IGST (which would be CGST plus SGST) on all inter-State transactions of taxable goods and services with appropriate provision for consignment or stock transfer of goods and services. The inter-State seller will pay IGST on value addition after adjusting available credit of IGST, CGST, and SGST on his purchases. The Exporting State will transfer to the Centre the credit of SGST used in payment of IGST. The Importing dealer will claim credit of IGST while discharging his output tax liability in his own State. The Centre will transfer to the importing State the credit of IGST used in payment of SGST. Basic threshold: A d

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T, the tax exemptions, remissions etc. related to industrial incentives would be converted, if at all needed, into cash refund schemes. Regarding Special Industrial Area Schemes, it is clarified that such exemptions, remissions etc. would continue up to legitimate expiry time both for the Centre and the States. Taxes to be subsumed in GST : In CGST the taxes to be subsumed are Central Excise Duty, Additional Excise Duties, Service Tax, Additional Customs Duty, commonly known as Countervailing Duty (CVD), Special Additional Duty of Customs – 4% (SAD), Excise Duty levied under the Medicinal and Toiletries Preparation Act, Surcharges and cesses. Whereas SGST will subsume VAT/Sales tax, Entertainment tax (unless it is levied by the local bodies), Luxury Tax, Taxes on lottery, betting and gambling, State Cesses and Surcharges in so far as they relate to supply of goods and services, Entry tax not in lieu of Octroi. Products outside GST regime: Items containing Alcohol and petroleum produc

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Goods and Service Tax – GST – By: – Abhishek Jaju – Dated:- 27-11-2009 Last Replied Date:- 30-12-1899 – November 10, 2009 was much like an anticipated momentous day with the industry and professionals hoping a Pandora box to open. Now the discussion paper on GST has been in the public domain for quite an amount of time and the views from the industry have started pouring in. The arrival of this paper is slated to become one of the historic events in the taxation history of the country. Bringing in tax sector reforms has been on the radar of the present Central Government. The draft Direct tax code is already out and inviting reactions/ suggestions from cross sections of the country. And now the other big thing is on Indirect tax front- con

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tional Institute of Public Finance and Policy, prepared by a team led by Dr. Bagchi. In recommending a state VAT, the Bagchi report clearly recognized that it would not be the perfect or first best solution to the problems of the domestic trade tax regime in a multi- government framework but that was the only feasible option at that hour. · Journey of Value Added Tax in India: 01.03.1986 Introduction of MODVAT on selected no. of commodities 2002-03 CENVAT covered all the commodities CCR, 2004 (w.e.f. 10.09.04) Service tax/ Excise Duty adjustment available 01.04.2005 Implementation of state level VAT (in most of the states

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anufacturing to retail …. The fact that inter adjustment of CGST and SGST would not be allowed is bit disturbing in context with the FM's speech. Also the issue of set off of input IGST against output CGST is not very clear. The paper failed to throw light on the essentials like- · Rates of taxes · Threshold limit for services · Time Schedule for bringing in the draft, constitutional amendment, state laws · Bringing in consensus among the states · Manner of taxing inter-state services Essentially GST is a single rate structure and would have been phenomenal step if tax at single rate was levied with the sharing of revenue between states and centre based on range of parameters. Bringing in two co

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ISSUES IN CEMENT INDUSTRY UNDER GST REGIME – Goods and Service Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 22-11-2009 Last Replied Date:- 10-12-2009 – The Cement industry, being a core sector industry, producing the basic construction material essential for any construction activity, be it infrastructure, hospitals, housing, community development projects etc., plays a lead role in country's economic development and hence deserves due support from the Governments – central and states, for its healthy growth. Proposed GST Goods and Services Tax (GST) proposed from 1.4.2010 seeks to ensure simple and unambiguous tax laws, would replace taxes such as Octroi, Central Sales Tax, Turnover Tax, Tax on Consumption or Sale of Electricity, Tax on Transport of Goods and Services and elimiante cascading effects of multiple layers of taxation system presently in vogue. It should aim at facilitating seamless credit across the entire supply chain and across all states under a common tax base.

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Cement Industry vis- a-vis GST It is expected that the transition to GST would impact the cement industry due to certain issues that may need due consideration by the Central Government, and Empowered Committee and suitably addressed. In case of the cement industry, the following issues need special mention- (a) Value Added Tax – VAT provisions of different State's VAT Acts have different definitions for Capital Goods and varied number of installments in which credit may be availed. Now when the GST regime is proposed, and being deliberated upon, it is felt that the levy should be uniform and the rules/ regulations must be such that the inter – state trade and business can flow unhindered. Therefore, there should be uniformity in definition/treatment for GST across all the States. (b) Role of States -With proposed freedom to each State to legislate, levy and administer State GST (as announced by Finance Minister in Budget), there is a fear of it resulting in different treatment of

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mestone by 40% by the Ministry of Mines (up to ₹ 65 per tonne ) all over the country which adds to the production cost of cement substantially . Royalty should be therefore, considered as a tax to be included in GST structure to receive credit . (d) Fuel and Power – Electricity Duty is imposed all over the country, both on grid supply and captive power generation. The cement industry is an energy intensive industry and all its operations, from raw materials preparations till cement grinding, require huge consumption of electric power. In India, most of the cement units have their installed captive power generation facilities due to erratic grid power supplies. Industry experience suggest that around 80- 90 units of electric power is needed to produce one tonne of cement. High fuel prices increase the cost of cement production. It is worth mentioning that power and fuel cost comprises more than 50 percent of the total cost of cement production. The cost being high, it is desirable

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Goods and Service Tax – GST – By: – Pradeep Jain – Dated:- 18-11-2009 Last Replied Date:- 30-12-1899 – Prepared By: – CA Pradeep Jain, Sukhvinder Kaur, LLB (FYIC) Siddharth Rutiya Introduction: – The indirect tax regime in India is evolving into GST in the year 2010. The steps towards introduction of GST have commenced. The Empowered Committee of State Finance Ministers has introduced the First Discussion Paper on GST in India on November 10, 2009. A dual structure of Central GST (CGST) and State GST (SGST) is proposed to be imposed on the manufacture of goods and on provision of services. A continuous chain of set-off from the original producer's point and service provider's point upto the retailer's level would be established which would eliminate the burden of all cascading effects. For sale or services transactions between two states (inter-state), the Government has proposed to impose Inter State GST (IGST) which will include both CGST and SGST. Between the Inter-stat

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e scope of IGST model, as discussed in First Discussion Paper, is that the IGST will be levied by the Centre and it would be CGST plus SGST on all inter-state transactions of taxable goods and services. It is proposed that the inter-state seller will pay IGST on value addition after adjusting available credit of IGST, CGST and SGST on his purchases. The Exporting state will transfer to the Centre the credit of SGST used in payment of IGST. The Importing dealer will claim credit of IGST while discharging his output tax liability in his own State. The Centre will transfer to the importing State the credit of IGST used in payment of SGST. The major advantages of IGST Model as per discussion paper are as under: Maintenance of uninterrupted ITC chain on inter-State transactions. – No upfront payment of tax or substantial blockage of funds for the inter-state seller or buyer. – No refund claim in exporting State, as ITC is used up while paying the tax. – Self monitoring model. – Level of co

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er says that the service provider exemption from CGST should be kept high as currently they are enjoying exemption of ₹ 10 Lakhs. But there is no hint given for exemption limit for service providers from SGST. Even the discussion paper brings out a peculiar situation wherein the State Authorities will be empowered under their respective state GST statutes to exempt various goods that are of peculiar nature looking to the specificity existing in that state. If such a power is being granted to the states then the situation will be that certain goods will be exempted by SGST in that state, however, CGST will be levied on those products. Thus, it is clear that there will be separate exemption for CGST and SGST. Further, if the CGST is exempt then the assessee will not be allowed to take the credit of CGST. Similarly, if the SGST is exempt then credit of the same will not be allowed. Now, suppose an assessee is granted exemption from CGST but SGST is applicable, then the credit of CGS

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ayable and credit of the same is available. As such, everyone intends to purchase the goods from inside the state. Although it is very premature to say as only discussion paper is published for the GST but we have prepared the article on our understanding of the said paper. Looking to the recommendations as depicted in the discussion paper the situation as picturized by us in this article seems to be more factual but nothing can be expressed with utmost certainty as the law and GST code is yet to be released by the Government. Before Parting: – Thus, from the above discussion, the inter-state transactions appear to be more beneficial to the assessee who is providing output service or is manufacturing final product. This is because the assessee will not be paying the tax in cash and will be able to utilize the credit of IGST to do so. The views expressed by us in this article are the views as understood by us while analyzing the recommendations of Empowered Committee of State Finance Mi

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Dated:- 12-11-2009 – Shri Anand Sharma, Union Minister of Commerce & Industry, during his interaction with the Members of the Parliamentary Consultative Committee attached to his Ministry, here today, stated that even in the difficult times, we would like to achieve an annual export growth of 15% over 2010-11 and added that in the remaining three years, the country should be able to come back on the high export growth path of around 25% per annum. The Minister informed the Members that by 2014, India s exports of goods and services are expected to be doubled while the long term policy objective is to double India s share in global trade by 2020. The Members who attended the Meeting were: S/Shri Harin Pathak, G.M. Siddeshwara, Chandu Lal Sahu, Kristappa Nimmala, M. Srinivasulu Reddy, Sharad A Joshi, T.K. Rangarajan, N.R. Govindarajar and Y.P. Trivedi. Shri Jyotiraditya M Scindia, Minister of State for Commerce and Industry; Dr. Rahul Khullar, Commerce Secretary; Shri Ajay Shankar,

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ill doing well. To meet the objective of sustained growth in exports, Shri Sharma said our endeavour is to have a policy environment through a mix of measures including fiscal incentives, institutional changes, procedural rationalization, efforts for enhanced market access across the world and diversification of export markets. With this background, I have announced the New Foreign Trade Policy, 2009-14 on 27th August 09 giving special thrust to the employment oriented sectors which have witnessed job losses in the wake of recession especially in the field of textiles, leather, handicrafts, etc . As regards industrial slowdown witnessed during 2008-09, Shri Sharma said that it was generally widespread, affecting all the three key segments of the industry viz., mining, manufacturing and electricity and added that the deceleration was sharp in the the manufacturing sector. The Minister pointed out that the government has announced a lot of incentives to many labour-intensive industries.

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acilities etc. They also desired to know about the WTO related issues and the impact on Indian industry due to agreement with ASEAN. Some of the Members emphasized that effort should be made for achieving the export target fixed in the present scenario of continuous decline in exports and limited revival of demand in developed economies. They suggested that Ministry should come out with assessment of job losses in the wake of continuing downturn, particularly for gems and jewellery units in Surat and Textile Units in Tirupur and to examine the need to frame incentives linked to job protection and job creation. The Members stressed that the new initiatives taken in FTP, particularly the Export Promotion Schemes which are currently provided for two years, need to be continued for at least 5 years to ensure stability and confidence in the exporting community for sustained growth in exports. Replying to the suggestions of the Members present, the Minister informed that Agreement with ASEAN

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