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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 9-5-2016 – Frequently Asked Questions (FAQs) on GST and their answers which would help the readers to know and understand about the concept and nuances of proposed Goods and Services Tax (GST) and its models. These FAQs have been compiled with sole objective of providing a means of better understanding of GST. For details, readers may refer to Government portals / literature. Q.31 What is the scope of composition and compounding scheme under GST? Ans. A Composition/Compounding Scheme will be an important feature of GST to protect the interests of small traders and small scale industries. The Composition/Compounding scheme for the purpose of GST should have an upper ceiling o

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reduction in revenue of the government. This adjusted Rate is termed as Revenue Neutral Rate (RNR). According to Sub-committee on GST rates headed by CEA (MOF), 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 as a single rate. It is a given single rate that gets converted into a whole rate structure, depending on policy choices about exemptions, what commodities to charge at a lower rate (if at all), and what to charge at a very high rate. Q.33 How is Revenue Neutral Rate different from standard rate of GST ? Ans. The Revenue Neutr

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. For example, a legal entity with single registration within a State would have 1‟ as 13th digit of the GSTIN. If the same legal entity goes for a second registration for a second business vertical in the same State, the 13th digit of GSTIN assigned to this second entity would be 2‟.This way 35 business verticals of the same legal entity can be registered within a State. 14th digit of GSTIN would be kept BLANK for future use. Q.35 How will Goods and Service Tax return filing be done? Ans. Common periodicity of returns for a class of taxpayers would be enforced. There will be different frequency for filing of returns for different class of taxpayers, after payment of due tax, either prior to or at the time of filing return. The

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VAT and Sales Tax – Waiver of pre-deposit under APGST Act – It is always open to the petitioner to file appropriate proceedings before ADC seeking stay in the appeal filed or by filing a separate appl

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VAT – Delhi – 3/2016-17 – Dated:- 29-4-2016 – DEPARTMENT OF TRADE AND TAXES Govt. of NCT of Delhi (POLICY BRANCH) VYAPAR BHAWAN: I.P. ESTATE, NEW DELHI No. F.3(668)/Policy/VAT/2016/145-151 CIRCULAR NO. 03 of 2016-2017 Dated 29/04/2016 Sub:- Competition amongst the officers on relevant legal provisions, procedures and guidelines. To motivate the officers to acquire knowledge of the Delhi Value Added Tax Act, 2004, Central Sales Tax Act, 1956, other relevant Acts, Rules and provisions and to incu

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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 28-4-2016 – Frequently Asked Questions (FAQs) on GST and their answers which would help the readers to know and understand about the concept and nuances of proposed Goods and Services Tax (GST) and its models. These FAQs have been compiled with sole objective of providing a means of better understanding of GST. For details, readers may refer to Government portals / literature. Q.23 What is Central Goods and Services Tax (CGST) Ans. Under the Central Goods and Services Tax, the two levels of Government would combine their levies in the form of a single National GST, with appropriate revenue sharing arrangements among them. The tax could be controlled and administered by the Central Government. There are several models for such a tax. Australia is the most recent example of a National GST, where it is levied and collected by the Centre, but the proceeds are allocated entirely to the States. In the case of a Central GST (w

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ods and / or services in the course of inter-state trade or commerce. IGST Act shall apply to whole of India. Q.26 How will IGST work ? Ans. 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. Q.27 How will revenue from IGST be apportioned between Centre and States ? Ans. Revenue from IGST will be apportioned among Union and States by Parliament on basis of recommendation of Goods and Service Tax Council [Proposed

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imultaneously under Central GST (CGST) and State GST (SGST)? Ans. The Central GST and the State GST would be levied simultaneously on every transaction of supply of goods and services except the exempted goods and services, goods which are outside the purview of GST and the transactions which are below the prescribed threshold limits. Further, both would be levied on the same price or value unlike State VAT which is levied on the value of the goods inclusive of CENVAT. While the location of the supplier and the recipient within the country is immaterial for the purpose of CGST, SGST would be chargeable only when the supplier and the recipient are both located within the State. Illustration I: Suppose hypothetically that the rate of CGST is 10% and that of SGST is 10%. When a wholesale dealer of steel in Uttar Pradesh supplies steel bars and rods to a construction company which is also located within the same State for , say ₹ 100, the dealer would charge CGST of ₹ 10 and SG

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GST of ₹ 10 as well as SGST of ₹ 10 to the basic value of the service. He would be required to deposit the CGST component into a Central Government account while the SGST portion into the account of the concerned State Government. Of course, he need not again actually pay ₹ 20 (Rs. 10+Rs. 10) in cash as it would be entitled to set-off this liability against the CGST or SGST paid on his purchase (say, of inputs such as stationery, office equipment, services of an artist etc). But for paying CGST he would be allowed to use only the credit of CGST paid on its purchase while for SGST he can utilize the credit of SGST alone. In other words, CGST credit cannot, in general, be used for payment of SGST. Nor can SGST credit be used for payment of CGST. Q.30 What is the rate structure proposed under GST? Ans. The Empowered Committee has decided to adopt a two-rate structure -a lower rate for necessary items and items of basic importance and a standard rate for goods in general.

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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 26-4-2016 – Frequently Asked Questions (FAQs) on GST and their answers which would help the readers to know and understand about the concept and nuances of proposed Goods and Services Tax (GST) and its models. These FAQs have been compiled with sole objective of providing a means of better understanding of GST. For details, readers may refer to Government portals / literature. Q.15 Is there going to be any threshold limit for exemption under GST regime? Ans. Yes, there is likelihood of threshold exemption limit in GST based on gross turnover as in present case. Centre and few states are in favour of ₹ 25 lakh limit while some other states want a lower limit of ₹

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rent 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 has been considered that a threshold of gross annual turnover of ₹ 10 lakh both for goods and services for all the States and Union Territories might 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 threshold for Central GST for goods may be kept ₹ 1.5 Crore and the threshold for services should also be a

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E-filing of periodical returns E-payment of tax Common tax period National portal for access of information National Agency Trained and well equipped staff. Q.20 Why is Dual GST required? Ans. India is a federal country where both the Centre and the States have been assigned the powers to levy and collect taxes through appropriate legislation. Both the levels of Government have distinct responsibilities to perform according to the division of powers prescribed in the Constitution for which they need to raise resources. A dual GST will, therefore, be in keeping with the Constitutional requirement of fiscal federalism. Q.21 What is meant by dual GST ? Ans. Dual GST signifies that GST would be levied by both, the Central Government and the St

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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 20-4-2016 – Frequently Asked Questions (FAQs) on GST and their answers which would help the readers to know and understand about the concept and nuances of proposed Goods and Services Tax (GST) and its models. These FAQs have been compiled with sole objective of providing a means of better understanding of GST. For details, readers may refer to Government portals / literature. Q.7 How will the place of supply be determined? Ans. It is important to determine whether a transaction is intra-State or inter-State as GST (i.e. CGST plus SGST or IGST, as the case may be) will be applicable accordingly. For goods , the place of supply would be location where the goods are delivered. For services the place of supply would be the recipient location. However, there are multiple scenarios such as for supply of services in relation to immovable property, wherein this principle will not apply and specific rules will prevail. Thus, th

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protection favouring imports which will boost domestic manufacturing. Also, lagging regions will catch up with more advanced regions. 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. Q .10 How will GST benefit industry, trade and agriculture? Ans. The 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 industry, trade and agriculture. Q.11 How will GST benefit the exporters? Ans. The su

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#8377; 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 considered that the threshold for Central GST for goods may be kept at ₹ 1.5 crore and the threshold for services should also be appropriately high. This raising of threshold will protect the interest of small traders. A Composition scheme for small traders and businesses has also been envisaged under GST as will be detailed in Answer to Question 14. Both these features of GST will adequately protect the interests of small traders and small scale industries. Q.13 How will GST benefit the common consumers? Ans. With the introduction of GST, all the cascading effects of CENVAT and service tax will be mo

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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 16-4-2016 Last Replied Date:- 19-4-2016 – Frequently Asked Questions (FAQs) on GST and their answers which would help the readers to know and understand about the concept and nuances of proposed Goods and Services Tax (GST) and its models. These FAQs have been compiled with sole objective of providing a means of better understanding of GST. For details, readers may refer to Government portals / literature. Q.1 What is Constitutional Amendment Bill in relation to GST? Ans. The Union Government in third week of December, 2014 (19 December, 2014) introduced Constitution (122nd Amendment) Bill, 2014 in Parliament which when passed shall pave the way for introduction of proposed Goods and Service Tax (GST) in India. This is an improvised version of lapsed 115th Amendment Bill of 2011. The Bill on passage would enable the Central Government and the State Governments to levy GST. This tax (GST) shall be levied concurrently by

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er, the Constitution also does not empower the States to impose tax on imports. Therefore, it is essential to have Constitutional Amendments for empowering the Centre to levy tax on sale of goods and States for levy of service tax and tax on imports and other consequential issues. As part of the exercise on Constitutional Amendment, there would be a special attention to the formulation of a mechanism for upholding the need for a harmonious structure for GST along with the concern for the powers of the Centre and the States in a federal structure. Q. 3 What is cascading effect and how GST will address this? Ans . A tax that is levied on a good at each stage of the production process up to the point of being sold to the final consumer. Cascading effect of taxes is one of the major distortions of the Indian taxation regime. Federal structure of our democracy, allows both states and center to levy taxes separately and this has caused this cascading. While Income tax, Excise duty, Service t

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system of VAT compare? Ans. In principle, there is no difference between present tax structure under VAT and GST as far as the tax on goods is concerned because GST is also a form of VAT on Goods and services. Here at present the sales tax, with an exception of CST, is a VAT system and in case of service tax the system also has the Cenvat credit system hence both sales tax and service tax are under VAT system in our country. At present the goods and services are taxed separately but in GST the difference will be vanished. The overall system of GST is very much similar to the VAT, which can be considered as first step towards GST. Let us see the VAT implementation schedule of various states: Sr. no States Date of Levy of VAT Number of States 1 Haryana 1-4-2003 1 2 Andhra Pradesh, West Bengal, Kerala, Karnataka, Orissa, NCT Delhi, Tripura, Bihar, Arunachal Pradesh, Sikkim, Punjab, Goa, Mizoram, Nagaland, Jammu and Kashmir, Manipur, Maharashtra, Himachal Pradesh, Assam and Meghalaya. 1-4-

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ns within a State. The Centre would levy and collect the Integrated Goods and Services Tax (IGST) on all inter-State supply of goods and services. There will be seamless flow of input tax credit from one State to another. Proceeds of IGST will be apportioned among the States. GST will be a destination-based tax. All SGST on the final product will ordinarily accrue to the consuming State. Q.6 When will the liability to pay GST arise? Ans. The payment liability of CGST and SGST will arise at the time of supply as determined for goods and services. The provisions stipulate payment of GST at the earliest in case of: Goods: On removal of goods or receipt of payment or issuance of invoice or date on which buyer shows receipt of goods Services: On issuance of invoice or receipt of payment or date on which recipient shows receipt of services Given that there could be many parameters in determining time of supply, maintaining reconciliation between revenue as per financials and as per GST could

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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 9-4-2016 – GST Structure We are going to have a dual GST model. The Center and the States both, will levy GST on supply of goods and services. On Supply of goods and services in the course of Inter-state only Center will levy and collect taxes (IGST) which will be apportioned between Centre and States based on the recommendation of GST Council. The Center will have power to make place of supply rules in this regard. On supply of goods and services in the course of or International trade or commerce, states will not have any power to levy and collect taxes. For the first two years under GST (or as GST Council would recommend), 1% additional tax apart from GST will be levied on inter-state sale of goods which will be assigned to the state of origin of supply of goods. The rules regarding the place of origin will be formed by the Parliament. The Central Government would also have power to grant exemption to any goods from

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ay of notification, after enactment. For enactment, it has to be passed by two-third majority by both houses of the Parliament of those present and simple majority of total membership of both houses. It has to be then approved by one-half of the state Governments, i.e. atleast 15 states. The said Bill has been passed by Lok Sabha on 6-5-2015 but could not be passed by Rajya Sabha. The same has now been referred to the select committee of the Rajya Sabha. Fate of Bill in Parliament It may be noted that 122nd Amendment Bill has since been passed by the Lok Sabha in May 2015 and was referred to the Select Committee by Rajya Sabha on 12.05.2015 . Select Committee Report tabled in Rajya Sabha The Select Committee of Rajya Sabha has since tabled its report on GST Bill [i.e., Constitution (122nd) Amendment Bill, 2014] on 22.07.2015. While it endorsed majority of provisions, Congress, AIADMK and Left parties have opposed the GST Bill in its existing form. The Select Committee has suggested tha

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upon the GST Council, it would be guided by the need for a harmonized structure of goods and services tax and for the development of a harmonized national market for goods and services. While construing above definition of Band one has to ensure that harmonized structure of GST rates must not be altered. The GST Council is also tasked with making recommendations on taxes that would be subsumed by the Central and State GST laws. It has been recommended that in the drafting of state GST laws, revenue sources of Panchayats, Municipalities etc. must be protected. State governments must also take measures to ensure adequate revenue flow to local bodies. Voting pattern The Committee found no merit in altering the voting pattern proposed in the Bill. Dispute Settlement Authority The Bill states that the GST Council would decide upon the modalities to resolve disputes. The Committee has stated that the creation of a separate dispute settlement authority would hamper the functioning of the GST

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f 1% additional tax in its present form may lead to cascading effect of taxes. Therefore, it has strongly recommended that following Explanation should be added for word supply : Supply: All forms of supply made for a consideration. Compensation to States The Bill proposed that the Parliament may compensate States for loss of revenue for a period which may be extended to five years. The Committee felt that there was no justification for substitution of the word may with shall . It, has however, recommended that compensation should be provided for whole period of five years. GST rates of banking services The Committee recommended that the GST rate for the banking industry should be minimum, to ensure international competitiveness. If possible, banking services could be outside the purview of GST. GSTN The GSTN is the comprehensive back end infrastructure network for the management of tax data and reporting of the GST. The Committee noted that the Non Government shareholding in GSTN is d

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rn in the GST Council, by giving states three- fourth of the weighted votes, and the centre one- fourth. Cabinet clears GST Amendments The Union Cabinet on 29.07.2015 approved changes suggested by a Rajya Sabha Select Committee to the Goods & Services Tax Amendment Bill , including compensating the States for five years for loss of revenue. Sharing of GST Revenue with States The State Governments have not objected to the proposed formula of the Union Government for sharing of revenue with States that would be earned as Goods and Service Tax (GST). Under the proposed GST regime, both Centre and States will simultaneously levy GST across the value chain. Tax will be levied on every supply of goods and services for consideration. Centre would levy and collect Central Goods and Services Tax (CGST) and States would levy and collect the State Goods and Service Tax (SGST) on all transactions within a State. The Centre would levy and collect the Integrated Goods and Services Tax (IGST) on

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Central Excise – Cross utilization of the credit on excuse duty and service tax denied – the cross utilization of credit on goods and services being not covered by any restrictive provision, leave alo

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TRADE NOTICE NO.-02/2016 Dated:- 30-3-2016 Trade Notice – Circulars – GST – आयुक्त का कार्यालय केन्द्रीय उत्पाद शुल्क सीमा शुल्क एंव सेवाकर ११३ / ४ संजय प्लेस , आगरा C. No. V(30)47/Tech/Budget/2016-17 DATED: 30.03.2016

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VAT and Sales Tax – Adequate rebut of Legal presumption – Deemed sale drawn by the authorities under Section 46(15)(d) of the AGST Act – the authorities have failed to discharge the obligation – HC – TMI Updates – Highlights

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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 26-3-2016 – Amendment of Union List List I of Seventh Schedule would stand amended as follows: Entry 84 relating to excise duty would deal with duties of excise on the following goods manufactured or produced in India, namely:- (a) petroleum crude; (b) high speed diesel; (c) motor spirit (commonly known as petrol); (d) natural gas; (e) aviation turbine fuel; and (f) tobacco and tobacco products. Petroleum products and tobacco will continue to attract excise duty. However, the Bill specifically provides that petroleum products might not attract GST. However, at a later stage the GST Council might decide to levy GST on petroleum products. Entries 92 (Taxes on the sale or purch

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ntry 55 (Taxes on advertisements other than advertisements published in the newspapers and advertisements broadcast by radio or television) shall be omitted. Entry 62, which deals with entertainment/amusement tax would be substituted, such that taxes on entertainments and amusements can be levied by a Panchayat or a Municipality or a Regional Council or a District Council. The Bill provides that the import of goods or services will be deemed as supply of goods or services or both, in the course of inter-state trade or commerce and thus it will attract IGST (CGST plus SGST). Thus, import of goods will attract Basic Customs Duty and IGST, while import of services will attract IGST. Further, it appears that alcohol for human consumption will b

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Union territories, shall not form part of the Consolidated Fund of India and be deemed to have been assigned to the States from where the supply originates. The Government of India may, where it considers necessary in the public interest, exempt such goods from the levy of this additional tax. The Parliament may, by law, formulate the principles for determining the place of origin from where supply of goods take place in the course of inter State trade or commerce. Amendment of Sixth Schedule – Entertainment tax, etc. Sixth Schedule deals with provisions as to the Administration of Tribal Areas in the States of Assam, Meghalaya, Tripura and Mizoram. New Para 8(3)(e) empowers the District Council for an autonomous district to levy and collec

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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 21-3-2016 – What is proposed Constitutional Amendment A newly inserted article 246A in the Constitution shall provide for special provision with respect to GST. According to the Bill, the following important clauses of the Bill are worth noting: Clause 246A The Legislature of every State shall have power to make laws with respect to goods and services tax imposed by the Union or by such State. Parliament will have exclusive power to make laws with respect to goods and services tax where the supply of goods, or of services, or both takes place in the course of inter-State trade or commerce. Clause 269A Goods and services tax on supplies in the course of inter-State trade or c

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dred and Twenty-second Amendment) Act, 2014, by order, constitute a Council to be called the Goods and Services Tax Council. Clause 279A The Goods and Services Tax Council shall make recommendations to the Union and the States on- the taxes, cesses and surcharges levied by the Union, the States and the local bodies which may be subsumed in the goods and services tax; the goods and services that may be subjected to, or exempted from the goods and services tax; model Goods and Services Tax Laws, principles of levy, apportionment of integrated Goods and Services Tax and the principles that govern the place of supply; the threshold limit of turnover below which goods and services may be exempted from goods and services tax; the rates including

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nown as petrol), natural gas and aviation turbine fuel. While discharging the functions conferred by this article, the Goods and Services Tax Council shall be guided by the need for a harmonised structure of goods and services tax and for the development of a harmonised national market for goods and services. The Goods and Services Tax Council shall determine the procedure in the performance of its functions. The Goods and Services Tax Council may decide about the modalities to resolve disputes arising out of its recommendations. Meaning of Goods / Services / GST The amendment Bill defines these terms- goods includes all materials, commodities, and articles; [article 366 (12)] services means anything other than goods: [article 366 (26A)] go

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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 15-3-2016 – The Constitution (115th Amendment) Bill, 2011 proposed to give powers to both, the centre and the states to make laws with respect to GST. The Bill was a necessity because, presently, the Union can not impose excise duty beyond the manufacturing stage and states cannot levy a tax on services. It sought to decide on tax rates, exemptions and threshold limits. It will also make recommendations on taxes, cesses and surcharges by the centre, states and local bodies, which may be subsumed in GST. Constitution (122nd Amendment) Bill, 2014 The Union Government in third week of December, 2014 (19 December, 2014) introduced Constitution (122nd Amendment) Bill, 2014 in Parliament which when passed shall pave the way for introduction of proposed Goods and Service Tax (GST) in India. This is an improvised version of lapsed 115th Amendment Bill of 2011. Contrary to the general perception amongst many quarters that this B

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ution (One Hundred and Twenty-Second Amendment) Bill, 2014 was introduced in the Lok Sabha on December 19, 2014. The following is the gist of amendments proposed by this Bill: The Bill seeks to amend the Constitution to introduce the goods and services tax (GST). Consequently, the GST subsumes various central indirect taxes including the Central Excise Duty, Additional Excise Duties, Service Tax, Additional Customs Duty (CVD) and Special Additional Duty of Customs (SAD), etc. It also subsumes state Value Added Tax (VAT)/Sales Tax, Central Sales Tax, Entertainment Tax, Octroi and Entry Tax, Purchase Tax and Luxury Tax, etc. Concurrent powers for GST: The Bill inserts a new Article 246A in the Constitution to give the central and state governments the concurrent power to make laws on the taxation of goods and services Integrated GST (IGST): However, only the centre may levy and collect GST on supplies in the course of inter-state trade or commerce. The tax collected would be divided betw

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nce, and the Minister in charge of Finance or Taxation or any other, nominated by each state government. Functions of the GST Council: These include making recommendations on: taxes, cess and surcharges levied by the centre, states and local bodies which may be subsumed in the GST; goods and services which may be subjected to or exempted from GST; model GST laws, principles of levy, apportionment of IGST and principles that govern the place of supply; the threshold limit of turnover below which goods and services may be exempted from GST; rates including floor rates with bands of GST; special rates to raise additional resources during any natural calamity; special provision with respect to Arunachal Pradesh, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand; and Any other matters relating to the goods and services tax, as the Council may decide. The Goods and Service Tax Council shall recommend the date from which the goods and

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f the Consolidated Fund of India and be deemed to have been assigned to the States from where the supply originates. Compensation to states: Parliament may by law provide for compensation to states for revenue losses arising out of the implementation of the GST, on the GST Council s recommendations. This would be up to a five-year period. The Government of India may where it considers necessary in the public interest, exempt such goods from the levy of tax. Both Centre and States will simultaneously levy GST across the value chain. Centre would levy and collect Central Goods and Services Tax (CGST), and States would levy and collect the State Goods and Services Tax (SGST) on all transactions within a State. The Centre would levy and collect the Integrated Goods and Services Tax (IGST) on all inter-State supply of goods and services. There will be seamless flow of input tax credit from one State to another. Proceeds of IGST will be apportioned among the States. GST will be a destination

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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 11-3-2016 – Steps Involved in GST Introduction Following steps are needed on political, administrative and technological fronts for smooth implementation of GST: Constitutional amendments (pending in Parliament (Rajya Sabha); Standing Committee Report submitted; draws opposition from Congress) Drafting of GST law (process started) Strong political commitment (looks a distant reality in present political set up). Arriving at common / general consensus on major issues including political agreement (efforts are on through Empowered Committee / negotiations ) Setting up a high level committee for monitoring the project of GST (Empowered committee is in place). Preparing a blueprint/road map for GST (to be made public) Creating a conducive environment for GST (slow efforts) Centre-States coordination (efforts on, onus on Empowered Committee) Consolidation of Central Excise, Service Tax and VAT on imports/exports Identificati

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nces decision to introduce VAT in India. Formation of Empowered Committee on VAT 2002 Task Force on Indirect Taxes report headed by Kelkar CENVAT introduced on all commodities at central level 2003 VAT introduced in first Indian State of Haryana 2005 VAT in 24 States/UTs including Punjab, Chandigarh, HP, J&K and Delhi. 2006 VAT implemented in 5 more States including Rajasthan. 2007 FM announces GST introduction in India from April 01, 2010. Parthasarathi Shome submits a study paper on GST. Empowered Committee of State Finance Ministers constitutes the Joint Working Group. VAT implemented in Tamil Nadu & Puducherry. Central Sales Tax (CST) phase out starts, CST cut to 3%. Joint Working Group set up for proposing GST roadmap and structure. 2008 VAT introduced in the last Indian State of UP from January 01, 2008. EC finalises its views on a broad GST structure with consensus on Dual GST (Central & State GST), separate legislation, levy and administration. CST reduced to 2% 200

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xes proposed to be subsumed under GST, whether collected by States or local bodies. Petroleum and petroleum products to be subsumed in GST, with nominal or zero-rated tax. GST compensation to States pegged at around ₹ 11,000 crore. Centre to provide three year compensation on the revenue loss incurred by States after GST roll-out. December : GST Constitutional Amendment Bill moved in Lok Sabha 2015 06.05.2015 Lok Sabha passes GST Bill 12.05.2015 Bill on GST not passed by Rajya Sabha ; referred to Select Committee 17.06.2015 Committees Constituted to recommend tax rates and to monitor progress of IT preparedness / mechanism of GST / drafting of rules. 22.07.2015 Select Committee of Rajya Sabha tabled its report on GST Bill 29.07.2015 Union Cabinet approves Select Committee recommendations 11.10.2015 Discussion papers to on business processes on registration, payment, returns and refunds under GST made public 03.12.2015 Committee on Tax rates submits reports ? Revised draft to be p

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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 10-3-2016 – Union Budget for F.Y. 2016-17 is a complete miss so far as Goods and Services Tax is concerned, more so when everyone was expecting some announcement on GST in this Budget. The Budget speech in its opening paragraphs highlights the achievements of last three years including economic consolidation, growth and other strengths besides counting on the failures of previous Government but it lacks direction, vision, seriousness and commitment towards migrating to GST. It is regretful that with this broader focus in mind, Government has failed to touch upon the way forward for GST in India and thus missing the unique opportunity in the third Budget (out of five) of the

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se for GST regime. Textiles, readymade branded garments, edible oils, jewellery etc have been subjected to excise duty. Many exemptions in Service Tax have also been withdrawn and negative list pruned. On the fillip side, Budget has introduced new cesses which goes against the very scheme of proposed GST. Infrastructure cess has been levied as excise duty on vehicles w.e.f. 1st March 2016 (i.e., already levied) for the purpose of building traffic free roads and pollution free environment. This cess would be from 1% to 4% on various types of specified vehicles excluding taxies, three wheelers, ambulance, vehicles use by handicapped persons etc. Another cess called Krishi Kalyan Cess (KKC) @ 0.50 percent has been levied an all taxable service

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ST in still under preparation and is expected to be put up in public domain before finalization. It is an irony that even after twenty five years of starting economic reforms in India since 1991, we have not been able to have required tax reforms in place. On one hand we talk of good governance and talk of slogans like 'ek bharat, shreshta bharat' but on the other hand, fail to address the issue of deadlock on GST which is grossly detrimental to the economic interests of the nation. It also reflects weak political will and non-seriousness of all political parties. It would be in fitness of things that the Finance Minister comes out with a paper laying down clear cut road map on GST and its strategy to take it to logical conclusion i

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Companies Law – Started By: – Shyam Naik – Dated:- 6-3-2016 Last Replied Date:- 18-9-2016 – Dear Experts, A newly incorporated Pvt Ltd Company had taken interest free advances for from its holding company during 2012-13. the advance was taken for meeting its expenses. The Pvt Ltd Company was engaged in sourcing long term coal supply for upcoming power plant of fellow subsidiary. The plant is yet to be operational. Whether the amount shall be treated as deposit under the Companies Act 2013. Kind

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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 4-3-2016 Last Replied Date:- 22-3-2016 – Organizational Structure proposed under GST The organizational structure under the GST regime should be on functional basis rather than on territorial jurisdiction basis. The present organizational structure is based on territorial jurisdiction and one office i.e. Range handles all the different functions pertaining to units falling under their jurisdiction. Thus, one office handles the various functions of registration, audit, refund, adjudication, legal, recovery, taxpayer services etc. Under GST, it is proposed that different divisions of an office should handle different functions of registration, audit, refund, adjudication, legal, recovery, taxpayer services etc. This has been done to encourage specialization as well as better organizational structure. The new structure would be having: Organizational Structure for GST Audit Commissionerate Anti-Evasion Commissionerate GST

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lized groups may provide policy inputs to the Board also. It was proposed that the entire staff of Audit Commissionerate is not required to be centralized at the headquarters. Anti-Evasion Commissionerate Anti-evasion work is done by three types of teams – (i) Anti-evasion wing of the Commissionerate Headquarters; (ii) Preventive units of the Divisions; and (iii) Directorate General of Central Excise Intelligence (DGCEI). Out of the three, the DGCEI is carrying out the work of intelligence and investigation at national level. It is top-ranked of three as regards quality of cases booked, value of goods and amount of duty involved in offence cases. Proposal for GST It is proposed that the anti-evasion work should be handled by a more specialized and exclusive Anti-evasion Commissionerate. In case of certain states where there are smaller numbers of taxpayers like in North-eastern states, Uttarakhand etc., one anti-evasion Commissionerate may have jurisdiction over more than one State. In

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ataraman – The Reply = SpontaneousGST is, as generally understood, a national code, intended and expected to be implemented and enforced uniformly across the country, the state barriers not coming in the way and leading to any influence / impairment in doing so. Perhaps, while one is not quite clear, the learned writer, it appears, is inclined to the said view as is gathered, though not made explicit, from the very opening sentence of the write-up. Should that be so, and if that were the view finding favour with the experts at large (open to correction, if wrong), then the matter might be worthwhile taking up with the highest authority , sooner than later, to the end of having the entire scheme of things as presently envisaged , revamped, appropriately, beforehand.The learned expert may wish to bring out sufficient clarity, for the common good. – Reply By Dr. Sanjiv Agarwal – The Reply = Yes, This call should be taken by the empowered committee and professional bodies and apex chambers

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PLEASE CONFIRM ANY CHANGES MADE OF EXCISE DUTY AGST CH 3003 I,E 6% AS EARLIER SAME OR NOT – Central Excise – Started By: – nandankumar roy – Dated:- 4-3-2016 Last Replied Date:- 8-3-2016 – PLEASE CONF

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Goods and Services Tax – GST – Dated:- 26-2-2016 – Economic Survey 2015-16 proposes widening tax net from 5.5 percent of earning individuals to more than 20 percent, reasonable taxation of the better-off individuals with income from Real Estate and Agriculture, phasing out of the tax exemption Raj Higher Property Tax Rates to check speculation in real estate The Economic Survey terms the proposed Goods and Services Tax (GST) as a reforms measure perhaps unprecedented in the modern global tax history. The GST, to be implemented by the Centre, 28 States and 7 Union Territories, awaits a Constitutional amendment requiring broad political consensus. Estimated to affect between 2 to 2.5 million Excise and Service Tax payers, the survey says the

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such as the Indian state being able to avert famines while chronic malnutrition remains a challenge, organizing mega events but routine safety for women being more difficult to achieve, and effective state response to floods and tsunami while water and power metering remain more challenging. As a steps towards building fiscal capacity, the Survey suggests that the easiest way to widen the tax base would be not to raise exemption thresholds. Making a study of the data since Independence, the document points out that the exemption thresholds have been raised much more rapidly than underlying income growth resulting in a widening of the wedge between average income and threshold limit. Bringing more and more people into the tax net via some f

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Goods and Services Tax – Started By: – Ramakrishnan T H – Dated:- 20-2-2016 Last Replied Date:- 11-9-2016 – Sir,Please provide the details about the merits and demerits of Goods and Services Tax provisions.Ramakrishnan.T.HPalakkad – Reply By KASTURI SETHI – The Reply = Sh.Ramakrishnan.T.H, Destination is far away. So many changes are likely to take place. In this forum, Experts, namely, Dr.Sanjiv Agarwal, Dr.Bimal Jain have written so many articles on GST covering all the aspects. These are very useful. – Reply By Ganeshan Kalyani – The Reply = Yes as said by Sri Kasturi Sir there are so many changes being incorporated in the GST draft based on the Committee Study. And more will be done till it is passed through the upper house. However, t

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Reply By MARIAPPAN GOVINDARAJAN – The Reply = The merits and demerits could be determined only it comes in effect. Till such times assumptions may be there. – Reply By Ganeshan Kalyani – The Reply = You may please refer issue id 108821 where Sri Mahir Sir has elaborated the merits. Thanks. – Reply By AJAY JAIN – The Reply = Though it is not sure in what form ultimately the GST law would come into play, however, some inherent benefits may be envisaged at this stage like compliance under Single law instead of multiple Central & State laws, broadly all transaction would attract GST, so litigations in respect of determination whether process amounts to 'Manufacture' or not will set at rest, as of now there is both Service Tax &

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minary information on the issue. I think still it is not high time even for raring to go inasmuch as the situation is fluid. – Reply By Ganeshan Kalyani – The Reply = Sir, whether GST is possible to be implemented this year ???The Congress has given its support with the condition set earlier. They were I) 1% additional tax ii) 18% fixing a cap iii) an independent judge for GST dispute. BJP has accepted on the terms except fixing of 18% tax rate as a higher rate. Will this year be a dawn for GST ? Let's toss… – Reply By YAGAY AND SUN – The Reply = Merits Shall bring growth in GDP. Tax Compliance would be better. FII shall increase. Tax Collection Cost shall go south ward Consultants/CA/CA/ICWAs/Lawyers/Advocate would get lots of busine

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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 18-2-2016 – Challenges for GST Implementation Any change in taxation is difficult to implement, and in a federal republic like India where states are as powerful as they are, problems get compounded. The biggest of all challenges continue to be to understand the enormity of GST. It will impact every one and every part of business from manufacturing to financial reporting to tax accounting to supply chain to consumption. This will even require potential redesign of procurement vendor contracts, buying models, changes in information technology and ERP systems and logistics. The cost impact to achieve GST preparedness would differ from industry to industry and company to company. There will be issues on product mix, distribution, cash flows, working capital and ERP modules. Understanding and preparing for GST is a big management issue. Because of the huge change costs, there could be (and likely so) inflationary pressure i

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arity among the states in terms of their gross domestic production and tax base and revenue. As a result, it will affect different states and their revenues differently as also diverse impact on people. However, it should be borne in mind that all kinds of goods and services tax (GSTs) in federal countries all over the world are imperfect. Brazil's GST is so complicated that economists have called it a patchwork quilt. In European Union also the structure is defective such that in poorer countries like Italy and Spain, etc, there is a lot of cash sale. Even in Canada, each state collects it own sales tax apart from the central levy of seven per cent. In India, we have been able to subsume the sales tax, which is a better model than in Canada. Challenge also lies in making GST a clean and transparent tax law, unlike the present taxes. Also, we need to work out a clear and transitional phase. Economic fairness which comes from equity, fairness, certainty and clarity shall hold the ke

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the tax net by taxing every economic supply in the distribution network. This will lead to rapid increase in assesses. It will require some of the businesses to restructure their distribution network to reduce additional tax burden on the consumer with a view to be price competitive. Though it will generate revenue in a neutral and transparent way, the Government will have to ensure that the ultimate consumer is not burdened with tax beyond his capacity. Logistics: GST has to be implemented simultaneously by the Central & State Government. And, here Central govt can only provide the proverbial carrot but doesn't have the stick since it doesn't have constitutional authority to levy the tax without States acceptance, and hence its pretty much at the individual State's mercy to implement. And, forming a consensus between all 28 states having different political parties & their own agendas isn't that easy. States reluctance to implement GST: The taxes would be levie

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person collecting the tax on his supply in case of inter-State transactions should deposit the tax in the account of the State where the supply has been made. Then on the basis of revenue reports of the respective Governments, the banks can allocate the revenue to the respective States or the Central Government, as the case may be. The banking system needs to be improved fur this purpose. The challenge can be met by proper training and up gradation of tax administration with technological interface. IT infrastructure: If the Government wanted to introduce the proposed indirect tax, IT infrastructure for the Goods and Services would have to be put on fast track. IT infrastructure will play a huge role in interstate GST. IGST will be collected and passed on the states. It will have to be transferred electronically. Effective Credit Mechanism: If for any reason the proposed dual GST model does not allow credit to State GST in respect of Inter State Transaction, it will lead to increase i

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ce of levy does not affect revenue receipts. In GST, however, the place of supply will have to be clearly defined to avoid disputes among states in case of inter­ state transactions. Time of supply will explain the point at which tax would be levied – invoice date, due date or payment date. Currently, different taxes are levied by the Centre and the states at various stages. The service tax is levied on the receipt of payment, excise duty is imposed by the fifth of following month and sales tax is levied when the sale happens. These variations will be eliminated in GST. The challenges posed by GST are no different from what other countries have faced while implementing major tax reforms. Despite the various impediments to the proposed transition, once implemented GST is likely to usher in a more taxpayer friendly regime that could help make various business decisions 'tax neutral' . Until the time GST is implemented, however, it would be worthwhile to monitor the developmen

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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 17-2-2016 – The need of GST can be explained by way of the following reasons or weaknesses in the present system – In present tax structure there is no system of providing input credit mechanism in between taxes levied by state and the centre. Thus, cascading effect arises. There are various definitional issues related to manufacturing, sale, service, valuation etc arises. These needs to be rationalized. Several transactions take the character of sales as well as services, thus there is complexity in determining the nature of transaction. The mechanism of imposing taxes, exemptions, abatements, other benefits are different in state and centre. Existing laws have resulted in significant number of issues related to interpretation / tax disputes. Credit mechanism is also very narrow with several conditions alongwith procedural formalities which makes the compliances difficult. Administrative machinery at the centre and in

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d chain in the distribution trade below the manufacturing level in the existing scheme of CENVAT. The introduction of GST at the Central level will not only include comprehensively more indirect Central taxes and integrate goods and service taxes for the purpose of set-off relief, but may also lead to revenue gain for the Centre through widening of the dealer base by capturing value addition in the distributive trade and increased compliance. In the existing State-level VAT structure there are also certain shortcomings as follows. There are, for instance, even now, several taxes which are in the nature of indirect tax on goods and services, such as luxury tax, entertainment tax, etc., and yet not subsumed in the VAT. Moreover, in the present State-level VAT scheme, CENVAT load on the goods remains included in the value of goods to be taxed under State VAT, and contributing to that extent a cascading effect on account of CENVAT element. This CENVAT load needs to be removed. Furthermore,

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his power also to the States. Moreover, with the introduction of GST, burden of Central Sales Tax (CST) will also be removed. The GST at the State-level is, therefore, justified for (a) additional power of levy of taxation of services for the States, (b) system of comprehensive set-off relief, including set-off for cascading burden of CENVAT and service taxes, (c) subsuming of several taxes in the GST and (d) removal of burden of CST. Because of the removal of cascading effect, the burden of tax under GST on goods will, in general, fall. The GST at the Central and at the State level will thus give more relief to industry, trade, agriculture and consumers through a more comprehensive and wider coverage of input tax set-off and service tax set-off, subsuming of several taxes in the GST and phasing out of CST. With the GST being properly formulated by appropriate calibration of rates and adequate compensation where necessary, there may also be revenue/ resource gain for both the Centre an

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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 15-2-2016 – Intangible goods / services Presently, intangible goods / services / rights are taxed as one of the declared services under section 66E(c) under temporary transfer of intangible property right services. Such services are also liable to VAT and often there is a dispute on levy of Service Tax or VAT or both. This is likely to be resolved in GST regime as such services will suffer one common tax, i.e., GST. In many countries, transfer of such assets / services are taxed as a service only. Examples of such services could be copyright (excluded presently), trademarks, designs, patents, good will, IT software etc. Electricity / Power Power to levy tax on the consumption or sale of electricity vets with the State Governments under Entry No. 53 in List-II of Seventh Schedule of the Constitution of India. Though electricity is 'goods', sales tax is not imposed on sale of electricity in India. Therefore, it is

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transaction. Products outside the GST ambit GST shall be applicable across the products and services over the taxing jurisdictions with few exceptions. One such exception is petroleum products. The Centre has decided to keep petroleum production tax out of the taxing jurisdiction of the States while the States have retained the power to tax sale of petroleum products and potable alcoholic liquor with themselves. The reason cited for the same is that petroleum production tax fetches nearly 45% of the Centre's Indirect Tax revenue while sale of petroleum products and potable alcoholic liquor constitutes nearly 55% (35% plus 20%) of the State tax income. This is to provide fiscal security to stages and ensure that there is a minimum guaranteed income under the proposed GST regime. Another such product is tobacco which will come under the GST but from a future date. The exclusion of petroleum, liquor and tobacco, which accounts for nearly 40 per cent of total revenue, has been a point

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bacco Products while the Centre can impose both GST and Excise Duty. Standing Committee on Constitutional Amendment Bill had recommended that keeping in view the requests received from several States and the fact that the States are already levying VAT at very high rate on Tobacco and Tobacco Products, therefore, the States may also be allowed to levy State Excise Duty or any other tax in addition to GST on Tobacco and Tobacco Products. This could be achieved by making amendment in Entry 51 in the State List of Seventh Schedule of the Constitution by incorporating ―(c) tobacco and tobacco products. The Constitution Amendment Bill, 2014 has amended List II of Schedule VII of the Constitution according to which states may continue to levy tax on tobacco products. The proposed entry No. 84 will include duties of excise on the following goods manufactured or produced in India – petroleum crude; high speed diesel; motor spirit (commonly known as petrol); natural gas; aviation turbine

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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 13-2-2016 – Systems of GST / VAT Internationally, there are three systems of Goods & Services Tax (GST) / Value Added Tax (VAT) in vogue in different countries, viz, Invoice System Payment System Hybrid System Invoice System: In the invoice system, the GST (Input) is claimed on the basis of invoice and it is claimed when the invoice is received, it is immaterial whether payment is made or not. Further the GST (Output) is accounted for when invoice is raised. Here also the time of receipt of payment is immaterial. One may treat it as mercantile system of accounting. In India the present system of sales tax on goods is an invoice system of VAT and here it is immaterial whether the taxpayer is following the cash basis of accounting or mercantile basis of accounting. The advantage of invoice system is that the input credit can be claimed without making the payment. The disadvantage of the invoice system is that the GST

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e basis of invoice and GST (Output) is accounted for on the basis of payment, if allowed by the law. In some countries the dealers have to put their option for this system or for a reversal of this system before adopting the same. GST and Present System of VAT In principle, there is no difference between present tax structure under VAT and GST as far as the tax on goods is concerned because GST is also a form of VAT on Goods and services. Here at present the sales tax, with an exception of CST, is a VAT system and in case of service tax the system also has the Cenvat credit system hence both sales tax and service tax are under VAT system in our country. At present, the goods and services are taxed separately but in GST, this difference will not exist and all goods and services shall be taxed alike as per the provisions of law. All the states have their own VAT Laws comprising VAT acts and VAT rules and these acts and rules are formulated on the basis of White Paper on VAT issued by the

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T calls for effecting widespread amendments in the Constitution and the various constitutional entries relating to taxation. In the current scenario, it is difficult to visualize constitutional amendments of such far reaching implications going through, more so in view of the fact that sharing of legislative powers is such an essential element of our federal polity. Another issue concerned is the appropriate designing and structuring of GST in India. The issue involved includes, how the issue of inter-state movement of goods and services may be addressed, taxes on services originating in one state and being consumed in other state etc. Another contentious issue that is bound to crop up in this regard is the manner of sharing of resources between the Centre and the states. Finally, apart from all these, there has to be a robust and integrated Management Information System dedicated to the task of tracking flow of goods and services across the country and rendering accurate accounting of

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