Author: admin_gst

Odisha VAT on builders and work contractors
By: – Tarun Agarwalla
Goods and Services Tax – GST
Dated:- 8-7-2016

Odisha Vat Provisions- A study for construction and real estate sector.
Introduction
The issue of taxability of works contracts under VAT and Service Tax is something which has confronted assessee leading to frequent referrals to Courts over the years. While the issue of taxability under Sales Tax has led to referrals over the last 50 years or so, the issue with regard to service tax is a more recent one. But often the issue of taxability centres around the basic nature of contracts and the valuation methodology that should be adopted under both Sales Tax/VAT and Service Tax.
The subject of works contract is one of the most confusing and litigated issues. The Constitution (Forty Sixth Amendment) Act, 1982 granted powers to State Governments to enact laws for providing the levy of tax on the transfer of property (whether as goods or in some other form) invol

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y in goods from one of the parties to the contract to the other party thereto for a price.
In the 46th amendment of the constitution a new clause 29A have been inserted In article 366:-
`”(29A) “tax on the sale or purchase of goods” includes-
(a) …….
(b) a tax on the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract;”
State Sales Tax laws were suitably amended their respective state sales tax laws, then to incorporate the provisions to tax works contract. In the VAT regime similar provisions also been brought out as deemed sale. Under present Odisha VAT act definition of sale include deemed sale since inception of law which is borrowed from Sales Tax act.
Under the Odisha Vat Act As per section 2(63) 'works contract' means a contract for construction, building, manufacture processing, fabrication, erection, installation, fitting out, improvement, modification, repair or commissioning of an

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so cover a works contract), the dominant nature test would not be applicable and that the sale element of those contracts could be separated and subjected to sales tax or VAT.
Point of taxation
Indirect tax law provides the point of levy or the point of occurrence of liability to collect or pay to the concerned taxing authorities. Under Odisha VAT act clause 4 of section 11 express “the sale of goods shall, for the purposes of this Act, be deemed to have taken place, in the case of works contract, when the goods are incorporated in the course of execution of the works contract, whether or not there is receipt of payment for such sale”. Hence in case of works contract or similar contract of construction the liability occurs when the goods have been incorporated.
Valuation of goods in the works contract and
It is a fact that the VAT can only be levied on the value of goods transferred in pursuance of contract and hence the value of goods out of value of works contract need to be de

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vices.
* Profit earned by the contractor to the extent it is relatable to supply of labour and services.
* Amounts paid to a sub-contractor as consideration for the execution of works contract whether wholly or partly, in a case where the contractor proves to the satisfaction of the assessing authority that tax has been paid by the sub-contractor on the turnover of the goods involved in the course of execution of such works contract.[ this last clause(i) inserted since 01.10.2015]
When the value of material as well as labour or like charges cannot be ascertainable, verifiable
The proviso to section 11(2)(c) and proviso to Rule 6(e) also address to certain situation where the actual cost of labor, services or like charges could not be ascertained or verifiable. The provision says that, where the works contractor fails to produce evidence in support of expenses towards labour and services etc. or such expenses are not ascertainable a lump sum amount as such charges shall be determi

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shing of marbles 15%
(f) Supplying fixing of stones other than those described in (d) and (e)
(g) earth dam
(h) Masonary dam
(i) Concrete dam
(j) Spillway
(k) Canal lining
(l) Other canal structure 40%
(m) Wooden/bamboo fair weather bridges
30%
25%
30%
20%
15%
15%
50%
35%
45%
35%
35%
40%
20%
4
Sanitary fitting and plumbing's
15%
5
Painting and polishing
20%
6
Supplying and laying pipes
20%
7
Construction of bodies of motor vehicle and
Construction of trailers
20%
8
Services and maintenance of instruments, equipments, appliances, plants and machinery
80%
9
Tire rereading
30%
10
Processing and supplying of photographs and photo negatives
50%
11
Electroplating, electro-galvanizing, anodizing and the like
30%
12
Lamination, rubberisation, framing, coating and similar processes
30%
13
Printing and block making
30%
14
Supply and installing of weighing machine and weigh bridges
15%
15
Sculptural contract/contracts relating to ar

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osition scheme for works contract
The Odisha VAT Act also provides an option to all the dealers engaged in works contract and dealers undertaking the construction of flats, dwellings or buildings or premises and transferring them along with land or interest underlying the land to opt for a composition scheme notified under section 11(3). Government of Odisha have come out with two notifications dated 16.01.2016 made effective from 01.10.2015.
* Government of Odisha, department of finance dated 16/01/2016 no 1457/FIN-CT1-TAX-0035/2015- applicable to dealers transferring goods involved in the execution of works contact
* Government of Odisha, department of finance dated 16/01/2016 no 1461/FIN-CT1-TAX-0035/2015- applicable to dealers who undertakes the construction of flats, dwellings or buildings or premises and transfer of property along with land or interest underlying land to pay tax in lieu of VAT.
Composition Scheme for Works contractor
* Applicability- the scheme would be

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of composition from such date in Form C-1
Compliances-Every dealer opting for composition under this scheme shall furnish return for each tax period in Form C-5 within twenty-one days from the date of expiry of such tax period.
TDS Provisions- the TDS proviso will be applicable to the dealer as a contractor. In case the dealer furnish to the assessing authority, the details of the contractee in Form C-4, the assessing authority in form C-3 shall intimate to the contractee (deducting authority) to deduct tax at source at such rate and on such percentage of the gross value of the works, as specified in this notification.
Liability- the liability on the works contractor would be in lieu of amount of tax payable by him under section 9 (a).
Types of Dealer executing works contract- Type A and Type B
* Type A Dealer:- registered dealer who opt to pay composition tax under this Scheme shall,-
* Shall not purchase or procure goods from any place outside Odisha at any time during t

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act.
Rate of Tax applicable- the following is the table where the rate of tax under composition is being given
Category
Nature of Works Contract
Composition tax rate (As percentage of entire turn over in relation to works Contract in Odisha)
Under the Condition of Scheme-A
Under the Condition of Scheme-B
(1)
(2)
(3)
(4)
1.
Every registered dealer engaged in execution of works contracts of the following categories and incidental or ancillary activities in connection with or thereto:
(1) Civil Contracts, Such as,
(a) Civil Construction, improvement, modification, repair and maintenance, electrification, sanitary fittings, flooring, plastering, finishing, white washing, painting, polishing, interior decoration, etc. of any immovable property, including a building or a complex- residential or commercial.
(b) Water works and Sewerage works, including treatment plants, whether meant for individual houses/ buildings/ complexes or for the general public.
(c) Fabrication & fixi

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g vehicles, annual maintenance contracts (AMCs) and other similar contracts.
(3) All other types of works contracts, including those involving moveable goods, not specified elsewhere in this notification.
3%
6%
2.
Every registered dealer engaged in,-
(i) Printing and/or book-binding.
(ii) Textile processing such as dying, fabrication, tailoring, embroidery and other similar activities.
(iii) Electro plating, electro galvanizing, anodizing, power coating and other similar activities.
(iv) Re-treading of old tyres
2%
4%
Composition scheme for real estate developer, builder
* Applicability to dealer- the scheme would be available to a dealer who undertakes the construction of flats, dwellings or buildings or premises and transfer of property along-with land or interest underlying the land to pay tax, by way of composition, in lieu of VAT.
* Applicable to amount- the scheme can only applicable to All the payments received on or after 01.10.2015 towards construction of flat

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m C-1
Compliances-Every dealer opting for composition under this scheme shall furnish return for each tax period in Form C-5 within twenty-one days from the date of expiry of such tax period.
Liability and valuation – the liability on the dealer under the scheme would be in lieu of VAT on the aggregate amount. The aggregate amount would be the actual value of the contract or the value determined for stamp duty under the Odisha Stamp Rules, 1952, whichever is higher,
Rate of Tax applicable- The Applicable rate of tax would be 3.5% on the aggregate amount.
Tax Deducted at Source ( TDS)
Under section 54 read with Rule 58 of the Odisha Vat Act and Odisha Vat Rules, tax need to be deducted by certain specified persons while paying to a dealer with respect to the works contract being executed by such dealer.
* However in case the TDS is being made on principal contractor, there will no requirement of TDS in case of all future subcontracts.
* Further the principal contractor woul

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READING DOWN MODEL IGST ACT (PART-2)
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 7-7-2016

This article is in continuation of Part-I wherein we discussed meaning of Integrated Goods and Service Tax (IGST). In this part, let's understand some other definitions of terms defined in Model IGST Act.
Appropriate State [Section 2(a)]
Appropriate State has been defined as follows –
“Appropriate State”, in relation to a taxable person, means that State where he is registered or liable to be registered under section 19 of the Central Goods and Services Tax Act, 2016.
Explanation: For the purpose of this Act, “State” includes Union Territory with Legislature.
It may be noted that the term 'appropriate sta

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ll mean a state –
* where taxable person is registered, or
* where taxable person is liable to be registered u/s 19 of CGST Act, and
* includes a Union Territory with legislature
Government [Section 2(b)]
'Government' means the Central Government.
Government would mean only the Central Government (and not any state or other Government).
However, in Model GST Act, section 2(49) defines 'government' differently where it includes Central Government departments, State Government & its departments, and Union Territory & its departments. Here, even the departments of Central Government are excluded.
Supply [Section 2(f)]
The term 'supply' has been defined to mean the same as defined in section 3 of the CGST Act

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in the course of or furtherance of business
* supply shall include importation of service, irrespective of whether for consideration or not and whether in the course of or furtherance of business or not.
* supply shall include supply as per Schedule-I made without a consideration
It also includes a supply which is made or agreed to be made without a consideration and specified in Schedule-I to the Act, i.e., matters to be treated as supply without consideration which are as follows:
* Permanent transfer/disposal of business assets.
* Temporary application of business assets to a private or non-business use.
* Services put to a private or non-business use.
* Self supply of goods and/or services.
* Assets retained after deregis

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Video on key highlights of Draft Model GST Law
By: – Bimal jain
Goods and Services Tax – GST
Dated:- 5-7-2016

Dear Professional Colleague,
Video on key highlights of Draft Model GST Law
After getting the Draft Model Goods and Services Tax (“GST”) Law on public domain on June 14, 2016, GST has been creating a buzz amongst all stake holders, eagerly waiting for the monsoon session of the Parliament to commence with the hope that the much awaited Constitutional (122nd Amendment) Bill, 2014 on GST will be passed, which will pave the way for GST in the Country.
GST is a destination based consumption tax levied at multiple stages of production and distribution of goods and services, with taxes on inputs credited against taxes o

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theme presentation made by Mr. Bimal Jain on “Highlights of Draft GST Law, 2016” at the Workshop series on Draft Model GST Law – Scope of supply, Place & Time of supply, Valuation and Transitional provisions in GST, organised by the PHD Chamber of Commerce on June 29, 2016, focuses on following ingredients of Draft Model GST Law along with various suggestions/ issues:
* Overview of Existing Indirect Taxes
* How GST will help Trade & Commerce
* Meaning & Scope of taxable event i.e. 'supply' under GST
* Threshold Exemption
* Time of Supply
* Place of supply
* Valuation under GST
* Registration and Returns under GST
* Input tax credit – scope and limitations thereof
* Other important issues and way forward for GST
Hope th

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REGISTRATION PROCEDURE – MODEL GST LAW
By: – DR.MARIAPPAN GOVINDARAJAN
Goods and Services Tax – GST
Dated:- 4-7-2016

Chapter VI of the model GST law describes the procedure of registration. This Chapter provides procedure for registration, obtaining Unique identity number, registration for casual tax payer, amendment of registration, cancellation of registration and revocation of cancellation of registration.
Registration
Section 19(1) provides that every person who is liable to be registered under Schedule III of this Act shall apply for registration in every such State in which he is so liable within thirty days from the date on which he becomes liable to registration, in such manner and subject to such conditions as may be prescribed. If the person, other than an Input Service Distributor, is registered under an earlier law, it shall not be necessary for him to apply for fresh registration under this section and he shall follow the procedure as may be prescribed

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e, irrespective of the threshold specified;
* non-resident taxable persons, irrespective of the threshold specified;
* persons who supply goods and/or services on behalf of other registered taxable persons whether as an agent or otherwise, irrespective of the threshold specified
* persons who supply goods and/or services, other than branded services, through electronic commerce operator, irrespective of the threshold specified;
* every electronic commerce operator, irrespective of the threshold specified;
* an aggregator who supplies services under his brand name or his trade name, irrespective of the threshold specified.
Supplier
* The supplier shall not be liable to registration if his aggregate turnover consists of only goods and/or services which are not liable to tax under this Act.The supply of goods, after completion of job-work, by a registered job worker shall be treated as the supply of goods by the 'principal' referred to in section 43A, and the value of such go

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High Court.
Transfer of business
Where a business carried on by a taxable person registered under this Act is transferred, whether on account of succession or otherwise, to another person as a going concern, the transferee, or the successor, as the case may be, shall be liable to be registered with effect from the date of such transfer or succession.
In a case of transfer pursuant to sanction of a scheme or an arrangement for amalgamation or, as the case may be, de-merger of two or more companies by an order of a High Court, the transferee shall be liable to be registered, where required, with effect from the date on which the Registrar of Companies issues a certificate of incorporation giving effect to such order of the High Court.
Holder of earlier licence
Every person who, on the day immediately preceding the appointed day, is registered or holds a license under an earlier law, shall be liable to be registered under this Act with effect from the appointed day, which is subject

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ain a Unique Identity Number, in the manner prescribed, for the purpose(s) notified, including refund of taxes on the notified supplies of goods and/or services received by them.
The registration or the Unique Identity Number, shall be granted or, as the case may be, rejected after due verification in the manner and within such period as may be prescribed. The proper officer shall not reject the application for registration or the Unique Identity Number without giving a notice to show cause and without giving the person a reasonable opportunity of being heard. A registration or a Unique Identity Number shall be deemed to have been granted after the period prescribed if no deficiency has been communicated to the applicant by the proper officer within that period.
Deemed registration
The grant of registration or the Unique Identity Number under the CGST Act / SGST Act shall be deemed to be a grant of registration or the Unique Identity Number under the SGST/CGST Act provided that the

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Section 19A provides for registration for casual taxable person and nonresident taxable person. The certificate of registration issued to a casual taxable person or a non-resident taxable person shall be valid for a period of ninety days from the effective date of registration. The proper officer may, at the request of the said taxable person, extend the aforesaid period of ninety days by a further period not exceeding ninety days.
Notwithstanding anything to the contrary contained in this Act, a casual taxable person or a non-resident taxable person shall, at the time of submission of application for registration make an advance deposit of tax in an amount equivalent to the estimated tax liability of such person for the period for which the registration is sought. Where any extension of time is sought such taxable person shall deposit an additional amount of tax equivalent to the estimated tax liability of such person for the period for which the extension is sought. The amount dep

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ase may be, approval of amendments under the CGST Act/SGST Act shall be deemed to be a rejection or approval of amendments under the SGST Act/CGST Act.
Cancellation of registration
Section 21 (1) provides that the proper officer may, either on his own motion or on an application filed, in the prescribed manner, by the registered taxable person or by his legal heirs, in case of death of such person, cancel the registration, in such manner and within such period as may be prescribed, having regard to the circumstances where, –
* the business has been discontinued, transferred fully for any reason including death of the proprietor, amalgamated with other legal entity, demerged or otherwise disposed of; or
* there is any change in the constitution of the business; or
* the taxable person, other than the person registered under sub-section (3) of section 19, is no longer liable to be registered under Schedule III.
Section 21(2) provides that The proper officer may, in the manner as

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e to show cause and without giving the person a reasonable opportunity of being heard. The cancellation of registration under this section shall not affect the liability of the taxable person to pay tax and other dues under the Act for any period prior to the date of cancellation whether or not such tax and other dues are determined before or after the date of cancellation.
Deemed cancellation
The cancellation of registration under the CGST Act/SGST Act shall be deemed to be a cancellation of registration under the SGST Act/CGST Act.
Liability of tax payer
Section 21 (7) provides that every registered taxable person whose registration is cancelled shall pay an amount, by way of debit in the electronic credit or cash ledger, equivalent to the credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date of such cancellation or the output tax payable on such goods, whichever is hi

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READING DOWN MODEL IGST ACT (PART-1)
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 4-7-2016

Recommendations of Empowered Committee (First Discussion Paper)
According to First Discussion Paper on Goods and Services Tax in India by the Empowered Committee of State Finance Ministers (2009), IGST model has been recommended for taxation of inter-state transaction of goods and services.
Accordingly, 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 Ce

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to account.
Taxanomy of Model IGST Law
The IGST Act comprises of the following
* 11 Chapters
* 33 Sections
* 8 Definitions
Short till, extent and commencement (Section 1)
This legislation is called the integrated Goods and Services Tax Act, 2016 (in short IGST), an Act to levy, collect and administer IGST in India.
This Act shall be applicable to whole of India, i.e., including the State of Jammu & Kashmir. Presently, Service Tax does not apply to State of Jammu & Kashmir but Central Excise Act, 1944 applies to that state. What is meant by 'India' is defined in section 2(35) of Goods and Services Tax Act, 2016.
The Act after being legislated shall come into force from a date which will be notified by the Central Government by way of a notification. It may also appoint different dates for enforcement of different provisions of the Act.
Definitions (Section 2)
There are seven definitions in section 2, viz,
* Appropriate State
* Government
* Integrated Goods

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r IGST Act on the supply of any goods and / or services in the course of inter-state trade or commerce.
'Goods' and 'services' are defined in the Constitution of India itself vide 122nd Amendment. CGST Act in its section 2(50) also defines IGST as tax levied under the IGST Act.
IGST shall also apply to import of goods and services into India. The explanation stipulates that any supply of goods or services in the course of import of goods or services into Indian territory shall be deemed to be supply of goods / services in the course of inter-state trade or commerce and hence liable the IGST.
It has also been proposed that like import transactions, export of goods and services shall be deemed to be supply in course of inter-state trade or commence.
Interstate trade or commence will, therefore include supply of goods / services in the course of –
* Inter-state trade or commence
* Import into Indian territory (deemed to be inter-state)
* Export (deemed to be inte

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MODEL GST LAW: A NEW BEGINNING
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 2-7-2016

The draft of model law on proposed Goods and Services Tax (GST) has since been released by the Empowered Committee of State Finance Ministers (in short, EC) on 15th June, 2016 in its last meeting held.
Thus, called as 'Model GST Law', it shall comprise of two pieces of legislation, viz,
* Goods and Service Tax Act, 2016 (year may change)
* Integrated Goods and Services Tax Act, 2016 (year may change)
GST Act
The model GST Act comprises of –
* 25 Chapters
* 178 Sections (including numeric – alpha section)
* 4 Schedules
* GST Valuation (Determination of Value of Supply of Goods and Services), Rules 2016

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f supply of goods
* Time of supply of services
* Taxable supply
* First return
* Tax deduction at source
* Collection of tax at source
* GST compliance rating
* Business vertical principal place of business casual taxable person
* Zero rated supply, etc
However, provisions relating to registration, threshold exemption, taxability, point of taxation, valuation principles etc still shall continue and are guided by extant provisions.
The dealer is required to take registration under this law if his aggregate turnover in a financial year exceeds ₹ 9 lakhs. However, dealers conducting business in any North Eastern State are required to take registration if their turnover exceeds ₹ 4 lakhs.
The dealer has to take re

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GST and E-commerce
By: – Nexdigm IDT
Goods and Services Tax – GST
Dated:- 2-7-2016

Over the last couple of years, the advent and augmentation of e-commerce market in India has changed the way people buy and sell goods and services. India is adding three new Internet users every second and is the second largest market for e-commerce. Though the sector is still in the infancy stage, considering the endless possibilities in the Indian markets, huge hopes are pinned on the sector and e-commerce in India is expected to perform better year on year.
Taking into consideration the immense potential of the sector, one would expect tax laws to be conducive to the growth of this sector. Unfortunately for the e-commerce sector, the current indirect tax laws in India are an impediment to operations, thwarting the growth of the sector. Now that the Model GST law, 2016 is issued by the government on 14 June 2016, it would be relevant to understand what were the problems plaguing the e

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current Indirect tax regime as below:
* Levy of VAT/ CST e-commerce transactions:
Since the e-commerce operators are mere facilitators between the supplier of the goods or services and the customer, typically the operators are required to collect service tax on value of commission charged by them to the suppliers. However, considering the complexity of different models under the e-commerce sector, the tax authorities are perplexed whether the movement of goods from supplier to the warehouse of operator would fall within the ambit of sale of 'goods' chargeable to VAT / CST. Further, in most cases the suppliers are not registered under the State VAT laws and are not charging VAT/ CST on the transaction executed, the authorities want e-commerce companies to obtain registration and pay VAT/ CST on sales generated on their portals on the argument that the operators are acting as agents for the sellers.
In view of the above, the Kerala state department recently issued demand notice on

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suppliers:
Under the current Indirect tax regime, the suppliers cannot utilise credit of service tax paid by the operators for payment of their Excise/ Service tax/ VAT/ CST liability, since the services availed by suppliers cannot be attributed to their manufacturing/ trading activity. Further, even in case of service tax paid on common input services including accounting fees, rent, etc. the suppliers are required to reverse the credit in proportion to their trading operations (which is considered as an exempt service under the Service tax legislation). This results in huge increase in costs to the sector and has affected the margins of the suppliers.
To summarise the above, absence of specific direction and clarity under various Indirect tax legislations has led to diverse practice being adopted by the e-commerce sector and tax authorities on taxability of transactions, ultimately leading to tax litigations and increase in cost of compliances and operations.
GST on e-commerce-

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a concept of 'Tax collected at source' ('TCS') on e-commerce transactions. As per the Model GST law, any payment made by the e-commerce operator to the supplier would be subject to TCS at a rate to be notified. The TCS collected would be available as credit to the supplier. Further, the e-commerce operator would be required to pay the TCS collected and file an electronic statement to disclose TCS collected and supply of goods/ services made through every supplier during the month within ten days from end of month. This move of introducing TCS on e-commerce operators would significantly augment the compliance burden, since many of them deal with thousands of suppliers operating on their online platform. Additional compliances would require tweaking IT and other systems and increased costs to ensure strict disclosure requirements prescribed under the Model GST law.
* Inter-state movement of goods on online purchases:
On a cursory reading of meaning of the term 'supply' under the mode

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transactions are covered under the term supply as per the Model GST law and therefore exchange offers by e-commerce operators may attract GST.
* Valuation of supplies under GST:
As per the Model GST law, post supply discounts would be included in the value of taxable supply (except where it is known beforehand). Accordingly, in case of sale of goods at a discount, the operator may be required to pay GST on the price without discount resulting in additional tax burden on the e-commerce operator.
In light of the above, though the GST is expected to bring in major benefits to the e-commerce sector, the industry may suffer in case clarity is not provided to the above concerns and ambiguities in the Model GST law.
Way forward- What should the e-commerce companies do?
Though there a few ambiguities in the Model GST law released by the government, implementation of GST would address majority of the concerns of the e-commerce sector in terms of single Indirect tax across India, seamless

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HOPES FOR GST WITH RELEASE OF MODEL LAW
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 30-6-2016

With regional general elections to state assembly in some states getting concluded, policy makers on GST front got active and we saw a fully charged meeting or Empowered Committee under the Chairmanship of Mr. Amit Mitra, Finance Minister of West Bengal on 14-15 June, 2016. This meeting which took place after a gap of over 5 months could see the release of model law on goods and services tax, a major development in moving forward on GST front. This also indicates near consensus on various issues concerning GST. There may be some disagreements on certain issues by some State Governments but the release of model GST law in public domain is certainly a welcome step and would take the efforts forward. Now the eyes would be on monsoon session of Parliament in August, 2016 wherein Constitutional Amendment Bill is hopefully likely to be considered for passage. If th

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onsideration within the state will attract CGST (central levy) and SGST (state levy). On inter-state supply of goods, IGST shall be applicable. GST would be applicable on 'supply' of goods and services.
The salient feature of model GST law are enumerated hereunder:
1) Threshold limit for registration
The dealer is required to take registration under this law if his aggregate turnover in a financial year exceeds ₹ 9 lakhs. However, dealers conducting business in any North Eastern State are required to take registration if their turnover exceeds ₹ 4 lakhs.
2) Place of registration
The dealer has to take registration in the State from where taxable goods or services are supplied.
3) Migration of existing taxpayers to GST
Every person already registered under extant law will be issued a certificate of registration on a provisional basis. This certificate shall be valid for period of 6 months. Such person will have to furnish the requisite information within 6 mo

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ent under GST regime will be supply of goods or services. Supply includes all forms of supply of goods and/or services such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration. It also includes importation of service, whether or not for a consideration.
7) Point of taxation
CGST/SGST shall be payable at the earliest of the following dates, namely:
(i) Date on which the goods are removed for supply to the recipient (in case of movable goods).
(ii) Date on which the goods are made available to the recipient (in case of immovable goods).
* Date of issuing invoice by supplier; or
* Date of receipt of payment by supplier; or
* Date on which recipient shows the receipt of the goods in his books of account.
8) TCS on online sales of goods or service
Every E-commerce operator engaged in facilitating the supply of any goods and/or services (like Amazon, Flipkart, etc.) shall collect tax at source at the time of credit

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shall first be utilized towards payment of CGST and the amount remaining, if any, may be utilized towards the payment of IGST.
The input tax credit on account of CGST shall not be available for payment of SGST.
11) Payment
Any tax, interest, penalty, fee, etc., shall be paid via internet banking or by using credit/debit cards or NEFT or RTGS. This amount shall be credited to the electronic cash ledger of dealer.
12) TDS
The Central or a State Government may mandate certain departments (viz, local authority, Govt. agencies) to deduct tax at the rate of one percent on notified goods or services, where the total value of such supply, under a contract, exceeds ₹ 10 lakhs.
13) Refund
A person can claim refund of any tax and interest by making an application in that regard to the prescribed officer of IGST/CGST/SGST within two years.
14) Returns
Dealers shall be required to furnish following returns-
a) Monthly return
b) Return for composition scheme
c) TDS return
d) Retur

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GOODS AND SERVICE TAX VALUATION – DRAFT RULES
By: – DR.MARIAPPAN GOVINDARAJAN
Goods and Services Tax – GST
Dated:- 29-6-2016

The Central Government has put on the domain the draft rules entitled 'Goods and Service Tax Valuation (Determination of the Value of Supply of Goods and Services) Rules, 2016. These Rules are applicable to the supply of goods and services under the IGST/CGST/SGST.
Transaction value
Rule 2(1) (d) defines the term 'transaction value' as the value of goods and/or services within the meaning of section 15 of the CGST Act. Section 15 of the Model GST Act gives provisions for determining the value of supply.
Section 15(1) of the Act provides that The value of a supply of goods and/or services shall be the transaction value, that is the price actually paid or payable for the said supply of goods and/or services where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply.
Section 15(2) p

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or the CGST Act or the IGST Act;
* incidental expenses, such as, commission and packing, charged by the supplier to the recipient of a supply, including any amount charged for anything done by the supplier in respect of the supply of goods and/or services at the time of, or before delivery of the goods or, as the case may be, supply of the services;
* subsidies provided in any form or manner, linked to the supply;
* any reimbursable expenditure or cost incurred by or on behalf of the supplier and charged in relation to the supply of goods and/or services;
* any discount or incentive that may be allowed after the supply has been effected; such post-supply discount which is established as per the agreement and is known at or before the time of supply and specifically linked to relevant invoices shall not be included in the transaction value;
The transaction value shall not include any discount allowed before or at the time of supply provided such discount is allowed in the cour

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ristics, quality and reputation as the goods being valued, and perform the same functions or are commercially interchangeable with the goods being valued and supplied by the same person or by a different person.
Services of like kind and quality
Rule 2(1)(C) defines the phrase 'services of like kind and quality' as services which are identical or similar in nature, quality and reputation as the services being valued and supplied by the same person or by a different person.
Methods to determine value
The transaction value shall be the value determined in monetary terms. Where the supply consists of both taxable and non-taxable supply, the taxable supply shall be deemed to be for such part of the monetary consideration as is attributable thereto. The transaction value shall be accepted even where the supplier and recipient of supply are related, provided that the relationship has not influenced the price.
If the goods are transferred from-
* one place of business to another place

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ear to him reasonable, taking into consideration the relevant factors, including-
* difference in the dates of supply;
* difference in commercial levels and quantity levels;
* difference in composition, quality and design between the goods and/or services being valued and the goods and/or services with which they are compared;
* difference in freight and insurance charges depending on the place of supply.
Rule 5 provides that if the value cannot be computed under Rule 4 then it shall be based on a computed value which shall include the following-
* the cost of production, manufacture or processing of the goods or, the cost of provision of the services;
* charges, if any, for the design or brand;
* an amount towards profit and general expenses equal to that usually reflected in supply of goods and/or services of the same class or kind as the goods and/or services being valued which are made by other suppliers.
Where the value of the goods and/or services cannot be determ

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t the same time in comparable quantities in a comparable commercial transaction were assessed;
* the significantly lower or higher value of the supply of goods and/or services compared to the market value of goods and/or services of like kind and quality at the time of supply; or
* any mis-declaration of goods and/or services in parameters such as description, quality, quantity, year of manufacture or production.
The proper officer shall intimate the supplier in writing the grounds for doubting the truth or accuracy of the value declared in relation to the supply of goods and/or services by such supplier and provides a reasonable opportunity of being heard, before taking a final decision. If after hearing the supplier as aforesaid, the proper officer is, for reasons to be recorded in writing, not satisfied with the value declared, he shall proceed to determine the value in accordance with the provisions of rule 4 or rule 5 or rule 6, proceeding sequentially.
Pure Agent
'Pure Age

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ent of service;
* the recipient of service is liable to make payment to the third party;
* the recipient of service authorizes the service provider to make payment on his behalf;
* the recipient of service knows that the goods and/or services for which payment has been made by the service provider shall be provided by the third party;
* the payment made by the service provider on behalf of the recipient of service has been separately indicated in the invoice issued by the service provider to the recipient of service;
* the service provider recovers from the recipient of service only such amount as has been paid by him to the third party; and
* the goods and/or services procured by the service provider from the third party as a pure agent of the recipient of service are in addition to the services he provides on his own account.
Money changer
The value of taxable service provided for the services in so far as it pertains to purchase or sale of foreign currency, including m

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NO EASE OF BUSINESS FOR SELF EMPLOYED AND SMALL ORGANISATIONS- GST WILL MAKE LIFE DIFFICULT
By: – DEVKUMAR KOTHARI
Goods and Services Tax – GST
Dated:- 20-6-2016

Ease of doing business:
Government of India (NAMO government) is promising ease of doing business. However, feeling of business men is that doing business is becoming very difficult day by day. More formalities and obligations are being cast on businessmen – even on small self-employed people.
No ease of doing business for small supplier and service providers
As discussed hereafter even a rickshaw puller, / auto rickshaw, a barber shop , a pan shop, a small provision store run by self employed shop keeper, will be required to get registered under GST and pay GST. For example, even a self- employed small pan shopkeeper selling pan, cigarettes, and cold drinks can have turnover of Rs. three – four thousand daily with a net daily income of about ₹ 250- 300 will be required to get registered and pay GST.

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es on account of rent, interest, depreciation of assets, electricity, employee/ outsourced services cost, up-keep repair and maintenance of business space and machines, mobile and other phones, local taxes etc.
For examples, even a rickshaw puller has to pay rent to the Rickshaw owner, rent for parking, repairs expenses for rickshaw, local tax, road tax etc. Now-a-days even a Rickshaw Puller is required to have mobile phone so that his passengers can call him and fix time for pickup.
A barber has to pay rent for shop / space, they also have to pay some trade licence or similar fees to local authorities trade associations, repairs for shop and tools, consumable tools etc.
Income element:
Earning of income starts only when contribution from sales and services is enough to fully recover fixed costs ( including semi-fixed costs). Before break even point, there is no profit.
NE Region:
NE Region is itself a difficult place to live and work. The limit of ₹ 4 lakh is not at all ju

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ther substantial reduction for states in NE and Sikkim state.
In various states also for Sales Tax / VAT the exemption limits ranges around Rs. ten to fifteen lakh per annum. And these limits also require revision.
Therefore, threshold limit for liability for registration and GST payment need to be revised.
Presumptive income-tax- a basis:
Even if we apply presumptive net income computation Rule , at turnover of Rs. five lakh deemed income is ₹ 40000/- and on Rs. ten lakh it is ₹ 80000/-. These are far below basic exemption provided under Income-tax Act.
A person earning ₹ 40K in NE & Sikkim annually and ₹ 80K in other states should not be burdened with formalities of GST.
8% net profit is not feasible in case of small suppliers and service providers because for achieving breakeven itself, a turnover of 15-25 lakh is required. Only after achieving break even one derive net profit.
Estimation of income vis a vis turnover / gross receipts:
In case of supp

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s:
In case of supplies:
Turnover required for break even i.e. 18,00,000 + (2,50,000 / 10%) = 43,00,000/-
In case of services:
Turnover required for break even i.e. 12,00,000 + (2,50,000 / 15%) = 28,66,667/-
Before these levels there is hardly any scope to earn taxable income.
The assumed rate of GP is on higher side and fixed expenses are on lower side.
Requirement of Tax audit u/s 44AB:
At present (for PYE 31.03.2017) Tax Audit will be required when gross receipts exceed ₹ 100 lakh in a business and ₹ 50 Lakh in any profession. These limits also need revision in view of inflation and to reduce compliance cost and make business easy.
UP ward revision of thresh hold exemption for GST is required:
There is no justification of burdening with GST requirements such small traders and service providers who are not even able to earn income which enjoys basic exemption.
In case of NE and Sikkim about half of normal exemption limits has also no justification because in th

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Accounting charges.
7. Charges for sales tax lawyers for filing of 4 qtr returns, and one consolidate audit return annually, assessment of the cases.
8. Audit charges.
9. Filing of income tax returns.
10. Day to day Office running expenses
11. Printing and stationery
12. Telephone charges.
13. Repair and maintenance
14. Other miscellaneous.
Considering the formalities involved in GST, a small traders with a turnover of upto 80 lakhs will not have a taxable income in hand to pay an income tax.
Dated: 21-6-2016
Reply By Gautam Singh as =
Dear Sir,
I have read your article. It seems that, it is politically motivated.
You stressed much on the threshold limit for the registration which is ₹ 9 Lacs. Currently, almost all State's VAT have the threshold limit even below 9 Lacs. What about Sikkim, where current threshold limit for VAT registration is ₹ 3 Lacs.
You have analyzed the financials of Rickshawala, Panwalas, Barbers etc. in detailed. But, are they register

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DRAFT – THE INTEGRATED GOODS AND SERVICES TAX ACT, 2016 – PART III
By: – DR.MARIAPPAN GOVINDARAJAN
Goods and Services Tax – GST
Dated:- 20-6-2016

In this part the provisions relating to settlement of cases under this draft Act is discussed in detail. Chapter VIII of the Act deals with the settlement of cases.
Case
Section 11(d) defines the term 'case' as any proceeding under this Act for the levy, assessment and collection of IGST before an IGST officer, or before a First Appellate Authority in connection with such levy, assessment or collection of IGST pending on the date on which an application is made. Where an order is passed by an adjudicating authority and for which the appeal period has not expired shall also be deemed to be a proceeding pending within the meaning of this clause. Where any appeal has been preferred after expiry of the period specified for filing such appeal under this Act and which has not been admitted, such appeal shall not be deemed to b

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alification of the members
The National Chairman/State Chairman shall be a person who is or has been a judge of the High Court. The qualifications, eligibility conditions and the manner of selection and appointment of the National Chairman, the State Chairman, and the Members shall be such as may be prescribed on the recommendations of the Council.
Functions
The National Chairman and the State Chairman shall exercise such powers and discharge such functions as may be prescribed on the recommendations of the Council.
State Commission
The jurisdiction of the State Settlement Commission constituted under this Act shall extend to the respective State. Each Bench shall be presided over by the State Chairman and shall consist of two other Members. when one of the persons constituting a Bench, whether such person is the presiding officer or other Member of the Bench, is unable to discharge his functions owing to absence, illness or any other cause or in the event of the occurrence of an

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ication shall contain a full and true disclosure of his tax liability which has not been disclosed before the jurisdictional IGST officer, the manner in which such liability has been derived, the additional amount of tax accepted to be payable by him and such other particulars as may be prescribed.
The Settlement Commission shall be disposed of in the manner as detailed below-
* No application shall be received by the Commission, unless-
* the applicant has furnished the return(s), which he is or was required to furnish under the provisions of this Act;
* a show cause notice for demand of tax issued by the IGST officer has been received by the applicant or an order confirming the demand of tax has been issued by the IGST officer and the same is pending before the First Appellate Authority;
* the additional amount of tax accepted by the applicant in his application exceeds five lakh rupees; and
* the applicant has paid the additional amount of tax accepted by him along with i

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fter taking into consideration the explanation provided by the applicant, it shall, within a period of forty five days from the date of the notice, by an order, allow the application to be proceeded with, or reject the application as the case may be, and the proceedings before the Settlement Commission shall abate on the date of rejection . An application shall not be rejected unless an opportunity has been given to the applicant of being heard;
* A copy of every order, shall be sent to the applicant and to the jurisdictional IGST officer;
* Where an application is allowed, the Settlement Commission shall, within seven days from the date of order, call for a report along with the relevant records from the jurisdictional IGST officer;
* Such officer shall furnish the report within a period of sixty days of the receipt of communication from the Settlement Commission;
* Where the jurisdictional IGST officer does not furnish the report within the aforesaid period of sixty days, the

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t and to the jurisdictional IGST officer to be heard, either in person or through an authorized representative, and after examining such further evidence as may be placed before it or obtained by it, the Settlement Commission may pass such order as it thinks fit on the matters covered by the application and any other matter relating to the case not covered by the application, but referred to in the report of the jurisdictional IGST officer and Designated Officer;
* An order shall not be passed in respect of an application after twelve months from the last day of the month in which the application was made, failing which the settlement proceedings shall abate, and the adjudicating authority or the First Appellate Authority, as the case may be, before whom the proceeding at the time of making the application was pending, shall dispose of the case in accordance with the provisions of this Act as if no application had been made;
* The period specified under this section may, for reason

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is not paid by the taxpayer within thirty days of receipt of a copy of the order by him, or within such period as extended by the Settlement Commission not exceeding three months, the amount which remains unpaid, shall be recovered along with interest due thereon at the rate prescribed under section 36 of the CGST Act, as the sums due to the Central/ State Government by the jurisdictional IGST officer in accordance with the provisions of section 54 of the CGST Act;
* Where a settlement becomes void as provided, the proceedings with respect to the matters covered by the settlement shall be deemed to have been revived from the stage at which the application was allowed to be proceeded with by the Settlement Commission and the jurisdictional IGST officer or the First Appellate Authority, as the case may be, may, notwithstanding anything contained in any other provision of this Act, complete such proceedings before the expiry of two years from the date of the receipt of communication th

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opportunity of being heard.
Powers of Settlement Commission
The following are the powers given to the Settlement Commission-
* Where during the pendency of any proceeding before it, the Settlement Commission is of the opinion that for the purpose of protecting the interests of revenue it is necessary so to do, it may, by order, attach provisionally any property belonging to the applicant in the manner as may be prescribed.Every provisional attachment made by the Settlement Commission shall cease to have effect from the date, the sums due to the Central Government / the State Government for which such attachment is made are discharged by the applicant and evidence to that effect is submitted to the Settlement Commission;
* If the Settlement Commission is of the opinion, for the proper disposal of the case pending before it, it is necessary or expedient to reopen any proceeding connected with the case but which has been completed under this Act before application for settlement15 w

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where the proceedings for the prosecution for any such offence have been instituted before the date of receipt of the application;
* n immunity granted to a person) shall stand withdrawn if such person fails to pay any sum specified in the order of the settlement passed within the time specified in such order or within such extended period as permitted by the Settlement Commission or fails to comply with any other condition subject to which the immunity was granted and thereupon the provisions of this Act shall apply as if such immunity had not been granted;
* An immunity granted to a personmay, at any time, be withdrawn by the Settlement Commission, if it is satisfied that such person had, in the course of the settlement proceedings, concealed any particular material to the settlement or had given false evidence, and thereupon such person may be tried for the offence with respect to which the immunity was granted or for any other offence of which he appears to have been guilty in

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Products currently exempt but likely to be taxed under GST – Model GST Law takes care of it
By: – Nexdigm IDT
Goods and Services Tax – GST
Dated:- 18-6-2016

Hope for GST being a reality in April 2017 rekindled with a positive meeting of the Empowered Committee of State Finance Ministers on 14 June 2016. Statement of the Union Finance Minister Mr. Jaitley stating a broad consensus have been built over GST bill and all the States barring one – Tamil Nadu are onboard for implementing GST.
The Model GST Law would act as a broad framework and Central GST as well as State GST Acts would be based on the same. In this article we would like to focus on Section 145 of the Model GST Law which enlists provisions in relation to 'Credit of eligible duties and taxes in respect of inputs held in stock to be allowed in certain situations' and evaluate whether the same would open up avenues to claim tax credit which is otherwise unavailable in the current indirect tax regime.
Relevant

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invoice and/or other prescribed documents evidencing payment of duty / tax under the earlier law in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day; and
(v) such invoices and /or other prescribed documents were issued not earlier than twelve months immediately preceding the appointed day.
(2) The amount of credit under sub-section (1) shall be calculated in accordance with generally accepted accounting principles in such manner as may be prescribed.
(3) The amount taken as credit under sub-section (1) shall be recovered as an arrear of tax under this Act from the taxable person if the said amount is found to be recoverable as a result of any proceeding instituted, whether before or after the appointed day, against such person under the earlier law.”
Now, when we decode the aforesaid provision, the following emerges –
* Eligibility of Input Tax Credit of the following:
Tax Credit of
Pertaining to
In

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es likely to get benefitted
* The aforesaid provisions of Section 145 of Model GST law could prove to be of major benefit to the Companies engaged in manufacture of goods which are currently exempt (say Pharma companies engaged in manufacture of medicines or vaccines) and are therefore unable to claim CENVAT credit/ input tax credit of the taxes paid on procurement of inputs.
* Companies which have opted for concessional duty rate of 2% (subject to non-availment of CENVAT credit on inputs) would also benefit from the said provision.
A look at other transitional provisions
* Section 143 of the Model Law provides for carry forward of CENVAT credit and VAT credit lying in the balance in the return furnished under the current tax regime to the GST regime. This is a much needed clarity and shall put to rest the numerous questions of industry and other stakeholders on fate of tax credit balance accumulated under current tax regime.
* A separate Section 144 provides clarity on eligib

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duct cost in the current tax regime. The ERP systems of most of the Companies may not be developed to capture these details and hence are unlikely to generate reports of taxes paid on procurement.
This aforesaid is a welcome provision; however, it would reap benefits only if an assessee ensures that a proper system is in place to record the taxes paid on procurement. One-to-one correlation of inputs used for manufacturing process and units lying in stock or in the stock of semi-finished or finished goods is equally important. The taxpayers may have to retain and maintain invoices and supporting documents evidencing payment of taxes on procurement. Thus, the taxpayers may also review the supporting invoices and check for all the prescribed parameters are present on the invoices to claim input tax credit under the GST regime.
Looking at the pace of activities at backend to roll out GST from April 2017, it would not be an overstatement that the government is ahead with GST preparedness

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GST Act 2016, REGISTRATION
By: – CA Akash Phophalia
Goods and Services Tax – GST
Dated:- 18-6-2016

1. Background
Model GST law provides for registration of various persons in different situations. This article aims at enlightening readers about the persons who are required to take registration and other provisions related to registration.
2. Threshold Limit
In order to provide relaxation to small suppliers it is provided that every supplier shall be liable to be registered under this act in the State form where it makes a taxable supply of goods or services if its aggregate turnover in a financial year exceeds ₹ 9 lacs. However, this limit is ₹ 4 lacs for the persons conducting business in NE states including

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to pay tax under reverse charge
(d) Non resident taxable persons
(e) Persons who are required to deduct tax under section 37 (TDS)
(f) Agents
(g) Input service distributor
(h) Supply of goods or services through electronic commerce operator, other than branded services
(i) Every electronic commerce operator
(j) Aggregator who supplies service under his brand name or his trade name
(k) Other notified persons
In the situation other than above-
(l) Suppliers liable to be registered where it makes a taxable supply of goods of services if its aggregate turnover in a financial year exceeds ₹ 9 lacs.
(m) Supplier liable to be registered where it makes a taxable supply of goods of services if its aggregate turnover in a financial

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beyond prescribed limit
Yes
9
Reverse charge – Other than personal use
Yes
10
Non-resident persons
Yes
11
Persons required to deduct TDS providing intra state supply upto ₹ 9 lacs
Yes
12
Input service distributor
Yes
13
Agent or the like
Yes
14
Intra-state supply upto ₹ 9 lacs
As an agent
Yes
15
Electronic commerce operator
Yes
16
Supply through electronic commerce operator – Branded or otherwise
Yes
17
Aggregator – supplying services
Yes
18
Intra-state supply – Exempted ₹ 5 lacs
Intra-state supply – Taxable ₹ 5 lacs
Yes
As the aggregate turnover exceeds ₹ 10 lacs.
5. Time limit for registration
Person liable to take registration under this act shall be liable to take regist

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DRAFT – THE INTEGRATED GOODS AND SERVICE TAX ACT, 2016 – PART II
By: – DR.MARIAPPAN GOVINDARAJAN
Goods and Services Tax – GST
Dated:- 18-6-2016

In this part the provisions relating to input tax credit is discussed in detail along with other things except the provisions relating to Settlement Commission.
Payment of tax etc.,
Section 7 provides for the payment of tax, interest, penalty or any other amount to the credit of the Government. Section 7(1) provides that every deposit made towards tax, interest, penalty, fee or any other amount is payable by a taxable person-
* by internet banking;or
* by using credit/debit cards; or
* by National Electronic Fund Transfer; or
* by Real Time Gross Settlement; or
* By another mode
subject to such conditions and restrictions as may be prescribed in this behalf, shall be credited to the electronic cash ledger of such person to be maintained in the manner as may be prescribed.
The date of credit to the account of

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ax or any part thereof to the account of the Central Government within the period prescribed, shall, on his own, for the period for which the tax or any part thereof remains unpaid, pay interest at such rate as may be notified, on the recommendation of the Council, by the Central Government.
Section 29(2) provides that the interest shall be calculated from the first day such tax was due to be paid. Section 29(3) provides that In case a taxable person makes an undue or excess claim of input tax credit under sub-section (10) of section 29 of the CGST Act, he shall be liable to pay interest on such undue or excess claim at the prescribed rate for the period computed in the manner prescribed.
Input tax credit
Section 2(1) (d) defines the term 'input tax' as in relation to a taxable person, means the Integrated Goods and Services Tax, Central Goods and Services Tax or State Goods and Services Tax, as the case may be, charged on any supply of goods and/or services to him which are used, o

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Act or the rules made there under in such manner and subject to such conditions and within such time as may be prescribed;
* The amount of input tax credit on account of IGST available in the electronic credit ledger shall first be utilized towards payment of IGST and the amount remaining, if any, may be utilized towards the payment of CGST and SGST, in that order;
* The amount of input tax credit on account of CGST available in the electronic credit ledger shall first be utilized towards payment of CGST and the amount remaining, if any, may be utilized towards the payment of IGST;
* The amount of input tax credit on account of SGST available in the electronic credit ledger shall first be utilized towards payment of SGST and the amount remaining, if any, may be utilized towards the payment of IGST;
* The balance in the cash or credit ledger after payment of tax, interest, penalty, fee or any other amount payable under the Act or the rules made there under may be refunded in ac

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es on utilization of input tax credit availed under this Act for payment of tax dues under the CGST Act as per sub-section (5) of section 7, the amount collected as IGST shall stand reduced by an amount equal to the credit so utilized and the Central Government shall transfer an amount equal to the amount so reduced from the IGST account to the CGST account in the manner and time as may be prescribed.
Section 9(2) provides that on utilization of input tax credit availed under this Act for payment of tax dues under the SGST Act as per sub-section (5) of section 7, the amount collected as IGST shall stand reduced by an amount equal to the credit so utilized and the Central Government shall transfer an amount equal to the amount so reduced from the IGST account to the SGST account of the appropriate State Government in the manner and time as may be prescribed.
Apportionment of Tax
Section 10 provides the procedure for apportionment of IGST, interest, penalty and other amount collected

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pply shall be apportioned to the Central Government;
Out of the IGST paid to the Central Government in respect of import of goods and / or services by an unregistered person or by a taxable person paying tax under section 8 of the CGST Act, the amount of tax calculated at the rate equivalent to the CGST on similar intra-state supply shall be apportioned to the Central Government;
Out of the IGST paid to the Central Government in respect of import of goods and / or services made in a year by a registered taxable person, where the such taxable person is either not eligible for input tax credit or where he does not avail of the said credit within the specified period and thus remains in the IGST account after expiry of the due date for filing of annual return for such year in which the supply was received, the amount of tax calculated at the rate equivalent to the CGST on similar intra-state supply shall be apportioned to the Central Government.
The following is the procedure for app

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nment and shall transfer to the SGST account of the State an amount equal to an amount apportioned to that State, in the manner and time as may be prescribed.
Refund of wrongly paid tax
Section 30 provides that a taxable person who has paid IGST on a transaction considered by him to be an interstate supply, but which is subsequently held to be an intra-state supply, shall, upon payment of CGST and SGST in the appropriate State, be allowed to take the amount of IGST so paid as refund subject to the provisions of section 38 of the CGST Act, 2016 and such other conditions as may be prescribed.
Officers under the Act
Section 32 of the Act provides for the appointment of the following officers for the purposes of this Act-
* Principal Chief Commissioners of IGST or Principal Directors General of IGST;
* Chief Commissioners of IGST or Directors General of IGST;
* Principal Commissioners of IGST or Principal Additional Directors General of IGST;
* Commissioners of IGST or Addition

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Key Highlights of Draft Model GST Law
By: – Bimal jain
Goods and Services Tax – GST
Dated:- 18-6-2016

Dear Professional Colleague,
Key Highlights of Draft Model GST Law
Recently, on June 14, 2016, the Government has put the Draft Model GST Law on public domain after getting in-principle nod from the Empowered Committee of State Finance Ministers, in a way, signalling that the GST might mark its advent from April 1, 2017.
It is imperative that Trade and Industry should understand key provisions in the Draft Model GST law including the intention of the legislation along with the probable impact on their business operations. We are summarising herewith an overview and key highlights of Draft Model GST Law for easy digest:
Overview of the Draft Model GST Law:
The Draft Model GST Law is a model, which the Central Government and each of the State Governments would use to draft their respective Central and State GST Acts. Further, a Draft of the Integrated GST (IGST) Act,

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e Central Government at the rate to be prescribed.
* Reverse charge basis
Notification may be issued for providing specific categories of supply of goods and/or services, on which, GST is payable by the person receiving such goods and/ or services, on reverse charge basis.
* Composition levy
A registered taxable person, whose aggregate turnover in a financial year does not exceed ₹ 50 lakhs, shall be provided an option to pay, in lieu of the tax payable by him, an amount calculated at such rate as may be prescribed, but not less than 1% of the turnover during the year, subject to following conditions:
* The benefit of composition scheme shall not be granted to a taxable person who effects any Inter-State supplies of goods and/or services
* The taxable person opting for composition levy shall not collect any tax from the recipient to whom goods and/ or services are supplied;
* No credit of input tax shall be allowed.
* Taxable person – Threshold limit to pay tax

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g goods and/or services that are not liable to tax under this Act;
(c) Any person, liable to pay tax under reverse charge basis, receiving services of value not exceeding the amount as may be prescribed in a year for personal use, other than for use in the course or furtherance of his business.
Registration:
* Threshold limit
A supplier is required to get registered under the GST if his aggregate turnover in a Financial Year exceeds ₹ 9 lakhs and ₹ 4 Lakhs where business is conducted in any of the North Eastern States including Sikkim.
No threshold exemption for persons making Inter-State supply and those who are required to pay GST under reverse charge mechanism.
* Place of registration
A supplier has to take registration in the State from where taxable goods and/or services are supplied.
Taxable Event:
The taxable event under the GST regime shall be supply of goods and/ or services. Thus, meaning of the term 'supply' plays a crucial role since under GST, ta

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which the goods are removed for supply to the recipient (in case of movable goods); or
Date on which the goods are made available to the recipient (in case of immovable goods); or
Date of issuing invoice by supplier; or
Date of receipt of payment by supplier, or
Date on which recipient shows the receipt of the goods in his books of account.
* Time of supply of services
The time of supply of services shall be as under:
* The date of issue of invoice or the date of receipt of payment, whichever is earlier, if the invoice is issued within the prescribed period; or
* The date of completion of the provision of service or the date of receipt of payment, whichever is earlier, if the invoice is not issued within the prescribed period; or
(iii) The date on which the recipient shows the receipt of services in his books of account, in a case where the provisions of (i) or (ii) do not apply.
Place of supply of goods and/ or services:
Since, the proposed GST framework will work

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ed under the Transaction Value Method, the value shall be determined on the basis of transaction value of goods and/or services of like kind and quality supplied at or about the same time to customers.
c) Computed Value Method: Where value cannot be determined under the Comparison method, it shall be based on a computed value which shall include cost of production, manufacture or processing of the goods or, the cost of the provision of services, the charges, if any, for design & brand and amount towards profit & general expenses equal to that usually reflected in supply of goods and/or services of the same class or kind as the goods and/or services being valued which are made by other suppliers.
d) Residual Method: Where the value cannot be determined under the Computed Value method, the value shall be determined using reasonable means consistent with the principles and general provisions of the Valuation Rules.
Valuation in certain cases: Provisions prescribed in relation to the

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er as may be prescribed.
Returns:
Every registered taxable person shall be required to furnish the following returns:
* Monthly Return: Every registered taxable person shall have to file a monthly return, electronically, of inward and outward supplies of goods and/or services, input tax credit availed, tax payable, tax paid and other particulars as may be prescribed within 20 days after the end of such month.
* Return for Composition Scheme: A registered taxable person paying tax under composition scheme shall have to furnish a return for each quarter or part thereof, electronically, within 18 days after the end of such quarter.
* TDS Return: Every registered taxable person who is required to deduct tax at source shall furnish a return, electronically, within 10 days after the end of month in which deduction is made.
* Return for Input Service Distributor: Every Input Service Distributor shall file return for every calendar month or part thereof, electronically, within 13 day

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: SGST
It is to be noted that input tax credit on account of CGST shall not be available for payment of SGST and vice versa.
Refund:
Any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him, may make an application in that regard to the proper officer of IGST/CGST/SGST before the expiry of two years from the relevant date in such form and in such manner as may be prescribed.
However, the limitation of two years shall not apply where such tax or interest or theamount referred to above has been paid under protest.
A taxable person may also claim refund of any unutilized input tax credit at the end of any tax period subject to the conditions specified.
E-commerce – Tax at source to be deducted on online sales of goods and/or services
Every E-commerce operator who is directly or indirectly, owns, operates or manages an electronic platform that is engaged in facilitating the supply of any goods and/or services or in providing any in

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record of compliance with the provisions of the GST Act. The GST compliance rating score shall be updated at periodic intervals and intimated to the taxable person and also placed in the public domain, which in return, shall enhance the reputation of the taxable person.
Issuance of Notification from retrospective effect:
The Central/ State Government may, on the recommendation of the Council, make rules, including rules conferring the power to issue notifications with retrospective effect under those rules, to carry into effect the purposes of this Act.
Transitional Provisions:
The transitional provisions have also been provided in respect of various matters which, inter alia, includes:
* Migration of existing taxpayers to GST
* Treatment of carried forward Cenvat credit and unavailed Cenvat credit
* Issue of supplementary invoices, debit or credit notes where price is revised in pursuance of a contract
* Pending refund claims to be disposed of under earlier law
* Treat

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Levy and Exemption under GST – supply of goods or services or both
By: – CA Akash Phophalia
Goods and Services Tax – GST
Dated:- 17-6-2016

1. Background
GST is a comprehensive VAT on the supply of goods or services or both. All goods and services will be subject to GST unless specifically exempted i.e. operating on negative concept. It is a tax on supply of goods or services or both except taxes on supply of the alcoholic liquor for human consumption”. Draft Goods and Service Tax Act 2016 was released few days ago. The relevant provisions related to levy and collection of GST are discussed hereunder.
2. Levy
This act proposed to levy tax which may be called as CGST or SGST on all the intra-State supplies of goods or servi

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provides the that all assessee subject to assessees liable to pay tax under reverse charge would be having an option to pay tax at such rate as may be prescribed but not less than one percent. Further, this scheme is available only to the assessees who are not affecting any inter-state supply of goods or services. Another point to note is that if the assessee with the same PAN number is having multiple registrations than it had to exercise this compounding option in all the registrations. Assessee was restricted to collect this tax from the recipients on supplies made by it. Assessee would also not be eligible for input credit.
4. Taxable person
Unlike earlier law, there is a separate section defining the meaning of the term 'taxable per

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ator
(j) Aggregator who supplies service under his brand name or his trade name
(k) Other notified persons
In the situation other than above-
(l) Suppliers liable to be registered where it makes a taxable supply of goods of services if its aggregate turnover in a financial year exceeds ₹ 9 lacs.
(m) Supplier liable to be registered where it makes a taxable supply of goods of services if its aggregate turnover in a financial year exceeds ₹ 4 lacs. (for NE states including Sikkim)
(n) Persons who were already registered under the earlier law subject to point (l) and (m) above.
(o) Transferee in case where business is transferred.
5. Not considered as taxable persons
The following persons will not be considered as taxable

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DRAFT – THE INTEGRATED GOODS AND SERVICE TAX, 2016 – PART I
By: – DR.MARIAPPAN GOVINDARAJAN
Goods and Services Tax – GST
Dated:- 17-6-2016

Introduction
Followed by the model Goods and Service Tax Act, 2016, ('Act' for short) the Finance Ministry brings in its domain the draft 'The Integrated Goods and Service Tax, 2016', which contains XI chapters and 33 sections.
* Chapter I – Preliminary – Sections 1 and 2;
* Chapter II – Principles for determining supply of goods and/or services in the course of interstate trade or commerce – Sections 3 and 3A;
* Chapter III – Levy and Collection of Tax – Section 4;
* Chapter IV – Place of Supply of goods and service – Section 5 and 6;
* Chapter V – Payment of Tax – Section 7;
* Chapter VI – Input tax credit – Section 8 and 9;
* Chapter VII – Apportionment of Tax and Settlement of Funds – Section 10;
* Chapter VIII – Settlement of cases – Section 10 to Section 26;
* Chapter IX – Miscellaneous – Section 27 to 30

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the location of the goods at the time at which the movement of goods terminates for delivery to the recipient;
* where the goods are delivered by the supplier to a recipient or any other person, on the direction of a third person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to the goods or otherwise, it shall be deemed that the said third person has received the goods and the place of supply of such goods shall be the principal place of business of such person;
* where the supply does not involve movement of goods, whether by the supplier or the recipient, the place of supply shall be the location of such goods at the time of the delivery to the recipient;
* where the goods are assembled or installed at site, the place of supply shall be the place of such installation or assembly;
* where the goods are supplied on board a conveyance, such as a vessel, an aircraft, a train or a motor vehicle, the pl

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mmovable property or for carrying out or co-ordination of construction work; or
* by way of lodging accommodation by a hotel, inn, guest house, home stay, club or campsite, by whatever name called and including a house boat or any other vessel; or
* by way of accommodation in any immovable property for organizing any marriage or reception or matters related therewith, official, social, cultural, religious or business function including services provided in relation to such function at such property;or
* any services ancillary to the services referred to in clause (a), (b) and (c),
shall be the location at which the immovable property or boat or vessel is located or intended to be located.
Where the immovable property or boat or vessel is located in more than one State, the supply of service shall be treated as made in each of the States in proportion to the value for services separately collected or determined, in terms of the contract or agreement entered into in this regard o

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is actually held or where the park or such other place is located.
Section 6(8) provides that the place of supply of services provided by way of-
* organization of a cultural, artistic, sporting, scientific, educational or entertainment event including supply of service in relation to a conference, fair, exhibition, celebration or similar events; or
* services ancillary to organization of any of the above events or services, or assigning of sponsorship of any of the above events,
to
* a registered person, shall be the location of such person;
* a person other than a registered person, shall be the place where the event is actually held.
Where the event is held in more than one State and a consolidated amount is charged for supply of services relating to such event, the place of supply of such services shall be taken as being in the each of the States in proportion to the value of services so provided in each State as ascertained from the terms of the contract or agreement e

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the manner specified in sub-sections (2) or (3), as the case may be.
For the purposes of this sub-section, the return journey shall be treated as a separate journey even if the right to passage for onward and return journey is issued at the same time.
Conveyance
Section 6(11) provides that the place of supply of services on board a conveyance such as vessel, aircraft, train or motor vehicle, shall be the location of the first scheduled point of departure of that conveyance for the journey.
Telecommunications service
Section 6(12) provides that the place of supply of telecommunication services including data transfer, broadcasting, cable and direct to home television services to any person shall-
* in case of services by way of fixed telecommunication line, leased circuits, internet leased circuit, cable or dish antenna, be the location where the telecommunication line, leased circuit or cable connection or dish antenna is installed for receipt of services;
* in case of mobile

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es, the place of supply shall be location of the supplier of services.
Insurance Service
Section 6(14) provides that the place of supply of insurance services shall-
* to a registered person, be the location of such person;
* to a person other than a registered person, be the location of the recipient of services on the records of the supplier of services.
Advertisement services to Governments
Section 6(15) provides that the place of supply of advertisement services to the Central Government, a State Government, a statutory body or a local authority meant for identifiable States, shall be taken as located in each of such States and the value of such supplies specific to each State shall be in proportion to amount attributable to service provided by way of dissemination in the respective States as may be determined in terms of the contract or agreement entered into in this regard or, in the absence of such contract or agreement, on such other reasonable basis as may be prescribe

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ions of section 5, intra-state supply of goods means any supply where the location of the supplier and the place of supply are in the same State.
Section 3A (2) provides that subject to the provisions of section 6, intra-state supply of services means any supply where the location of the supplier and the place of supply are in the same State.
Levy and Collection of IGST
Section 4(1) provides for the collection of IGST on all supplies of goods and/or services made in the course of inter-State trade or commerce at the rate specified in the Schedule to this Act and collected in such manner as may be prescribed. Section 4(2) provides that the IGST shall be paid by every taxable person in accordance with the provisions of this Act.
Section 4(4) provides that notwithstanding anything contained in sub-section (1) but subject to such conditions as may be notified in this behalf, no tax under this Act shall be payable by any taxable person in respect of such supplies of goods and/or service

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GST Impact on Professionals (CA, CS, CMA)
By: – Saurabh Singhal
Goods and Services Tax – GST
Dated:- 16-6-2016

Taxable Event – Supply
* The taxable event for levy of GST shall be 'supply' of goods and/ or services. The term 'supply' is defined inclusively to cover general supply and deemed supply.
* General supply includes all forms of supply of goods and/or services such as sale, transfer, barter, exchange, license, rental, lease or disposal made for a consideration.
* Deemed supply includes specified transactions made without consideration.
Impact
* Supply of services by CA, CS and CMA for a consideration shall be leviable to GST.
Nature of Supply – Inter-state vs. Intra-state supplies
* Central GST (CGST) and

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o IGST.
Time of Supply and Valuation
* The provisions relating to time of supply and valuation are more or less on the same lines as existing in the current service tax regime.
Impact
* Accordingly, time of supply of services shall be date of invoice or date of receipt of payment, whichever is earlier. In case invoice is not issued within prescribed time, time of supply will shift to the date of completion of service.
* The value of service shall be the price actually paid or payable for supply.
Place Where Tax to be Deposited
* Taxable person is one who carries on business at any place in India and who is liable to be registered. Person is liable to be registered in the State from where supplies are made.
Impact
* Tax is to

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edit will be confirmed only after such matching. Where the data is not matched and where the supplier has not made the tax payment, the ITC shall be reversed with interest.
* Interest is from the date of wrong availment or utilization.
Returns
* Professionals like CA, CS and CMA are liable to file GSTR 1 (Statement of outward supplies), GSTR 2 (Statement of inward supplies), GSTR 3 (Statement of final tax and GSTR 8 (Annual return). Further, they may also be required to file GSTR 7 (Statement of TDS).
Payment of Taxes
* Prioritization rule has been inserted for payment of taxes whereby taxes for the current period cannot be paid until the taxes/interest/late-fee/penalty in relation to returns of previous tax periods have not been de

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Procedure of Settlement Commission
Section 26
Bill
SETTLEMENT OF CASES
Draft – Integrated Goods And Services Tax Act, 2016 ( IGST Act) – Draft June 2016
26. Procedure of Settlement Co

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Powers of Settlement Commission
Section 25
Bill
SETTLEMENT OF CASES
Draft – Integrated Goods And Services Tax Act, 2016 ( IGST Act) – Draft June 2016
25. Powers of Settlement Commission
(1) The Settlement Commission shall, for the purpose of exercising its powers regarding discovery and inspection, enforcing the attendance of any person and examining him on oath, issuing commissions and compelling production of books of account and other records, have all the powers of a civil

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Rectification of mistakes by Settlement Commission
Section 24
Bill
SETTLEMENT OF CASES
Draft – Integrated Goods And Services Tax Act, 2016 ( IGST Act) – Draft June 2016
24. Rectification of mistakes by Settlement Commission
The Settlement Commission may amend any order passed by it under section 16 so as to rectify any mistake apparent from the record, if such mistake is noticed by the Settlement Commission on its own accord, or is brought to its notice by the jurisdictional IG

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Bar on subsequent application for settlement in certain cases
Section 23
Bill
SETTLEMENT OF CASES
Draft – Integrated Goods And Services Tax Act, 2016 ( IGST Act) – Draft June 2016
23. Bar on subsequent application for settlement in certain cases
(1) Where-
(i) after the passing of an order of settlement under sub- section (5) of section 16, in relation to a case, such person is convicted of any offence under this Act in relation to that case; or
(ii) the case of such person i

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Order of settlement to be conclusive
Section 22
Bill
SETTLEMENT OF CASES
Draft – Integrated Goods And Services Tax Act, 2016 ( IGST Act) – Draft June 2016
22. Order of settlement to be conclusive
Every order of settlement passed under sub-section (5) of section 16 shall be conclusive as to the matters stated therein and no matter covered by such order shall, save as otherwise provided in this Chapter, be reopened in any proceeding under this Act or under any other law for the t

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Power of Settlement Commission to send a case back to the IGST officer
Section 21
Bill
SETTLEMENT OF CASES
Draft – Integrated Goods And Services Tax Act, 2016 ( IGST Act) – Draft June 2016
21. Power of Settlement Commission to send a case back to the IGST officer
(1) The Settlement Commission may, if it is of opinion that any person who made an application for settlement under section 15 has not co-operated with the Settlement Commission in the proceedings before it, send the case back to the jurisdictional IGST officer or the First Appellate Authority, as the case may be, who shall thereupon dispose of the case in accordance with the provisions of this Act as if no application under section 15 had been made.
(2) For the

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Power of Settlement Commission to grant immunity from prosecution and penalty
Section 20
Bill
SETTLEMENT OF CASES
Draft – Integrated Goods And Services Tax Act, 2016 ( IGST Act) – Draft June 2016
20. Power of Settlement Commission to grant immunity from prosecution and penalty
(1) The Settlement Commission may, if it is satisfied that any person who made the application for settlement under section 15 has co-operated with the Settlement Commission in the proceedings before it and has made a full and true disclosure of his tax liability, grant to such person, subject to such conditions as it may think fit to impose, immunity from prosecution for any offence under this Act and also either wholly or in part from the impositio

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visions of this Act shall apply as if such immunity had not been granted.
(3) An immunity granted to a person under sub-section (1) may, at any time, be withdrawn by the Settlement Commission, if it is satisfied that such person had, in the course of the settlement proceedings, concealed any particular material to the settlement or had given false evidence, and thereupon such person may be tried for the offence with respect to which the immunity was granted or for any other offence of which he appears to have been guilty in connection with the settlement and shall also become liable to the imposition of any penalty under this Act to which such person would have been liable, had no such immunity been granted.
–
Statute, statutory provi

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