Goods and Services Tax

Goods and Services Tax – GST – By: – Pradeep Jain – Dated:- 1-2-2017 – GST DAILY DOSE OF UPDATION Definition of Consideration Taking further to our discussion, we are continuing our discussion the definitions given under Section 2 of revised GST law and comparing the same with old model GST law to know the changes made in revised law:- Section 2(28): Consideration: the new definition reads as follows: Consideration in relation to the supply of goods or services includes (a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or

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utmost importance in the light of decision of Supreme Court in the case of Maruti Suzuki Ltd. which states that subsidy provided by the government in form of adjusted payment of VAT will be treated as additional consideration and will be added in the assessable value of the goods for the purpose of excise duty. Relying on this decision, notices were sent to assessees claiming this subsidy. Now the new definition has specifically excluded the subsidies from its purview putting rest to all the possible litigations that may arise on this issue. Another point of probable litigation is that the definition states that consideration can be voluntary or non voluntary. Although the main phrase uses the term any act or forbearance , but it does not

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Sale of immovable property treated as Supply – Goods and Services Tax – Started By: – NANDAKUMAR KONKAR – Dated:- 31-1-2017 Last Replied Date:- 4-2-2017 – Under MGST Law, Clause 5 (b) of Schedule II [transactions to be treated as 'Supply'] states that : construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or before its first occupation, whichever is earlier. broadly construed to mean that transfer of property under construction (where entire consideration has been received after issuance of comple

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, it would not be a supply. So regardless of whether entire consideration is paid by buyer after CC or before 1st occupation, it would not be a supply. Alternately, if first occupation exception is not linked with receipt of entire consideration, it could mean in cases of occupation before issuance of CC, transaction would not be supply. Kindly clarify CA Nandakumar Konkar – Reply By KASTURI SETHI – The Reply = Dear Sir, Note the words, In GST there is no separate meaning for goods and services. written by Sh.M.Govindarajan, Sir in his article dated 1.2.17. – Reply By KASTURI SETHI – The Reply = Pl. read Goods or Services instead of goods and services . – Reply By NANDAKUMAR KONKAR – The Reply = Sir,My query is not whether sale of immovable

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Goods and Services Tax – GST – Dated:- 31-1-2017 – GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE CENTRAL BOARD OF EXCISE & CUSTOMS NORTH BLOCK, NEW DELHI-110001 F.No. IV/26/24/2016-Systems (S) Tel. : +91-11-23092628 Fax : +91-11-23092346 27.01.2017 Dear Colleague, Sub: Service Tax -Monitoring of Non-Filers/Stop-Filers & Widening of Taxpayer base- Reg. As you are aware, the Directorate General of Systems has been regularly taking several initiatives to enable the field formations to closely monitor the compliance levels in the Service Tax. Both in ACES as well as in EDW, there are several methods for identifying the Non-filers and Stop-filers of ST-3 Returns. The Directorate General of Systems has taken steps to send

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Budget – Dated:- 31-1-2017 – Economic Survey: The Constitutional Amendment on GST will create a common Indian market, improve tax compliance and governance and boost investment and growth. The Economic Survey states that the world GDP is expected to grow because of a fiscal stimulus in the United States but points out that there are considerable risks. Economic Survey: Addressing the Twin Balance Sheet problem of over-indebted corporates and bad-loan-encumbered Public Sector Banks will be vital. The Economic Survey 2016-17 presented in Parliament today states that against the backdrop of robust macro-economic stability, the year was marked by two major domestic policy developments-the passage of the Constitutional Amendment, paving the way for implementing the transformational Goods and Services Tax (GST), and the action to demonetize the two highest denomination notes. The GST will create a common Indian market, improve tax compliance and governance, and boost investment and growth;

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vements, especially involving the Chinese yuan, and from geo-political factors. Another serious medium-term risk is an upsurge in protectionism that could affect India s exports. The Survey states that the year also saw a number of legislative accomplishments in the country. In addition to the GST, the Government: Overhauled the bankruptcy laws so that the exit problem that pervades the Indian economy-with deleterious consequences highlighted in last year s Survey-can be addressed effectively and expeditiously; Codified the institutional arrangements on monetary policy with the Reserve Bank of India (RBI), to consolidate the gains from macroeconomic stability by ensuring that inflation control will be less susceptible to the whims of individuals and the caprice of governments; and Solidified the legal basis for Aadhaar, to realise the long-term gains from the JAM trifecta (Jan Dhan-Aadhaar-Mobile). Beyond these headline reforms were other less-heralded but nonetheless important actions

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ates and bad-loan-encumbered public sector banks-a legacy of the years surrounding the Global Financial Crisis will be vital. Looking further ahead, societal shifts at the level of ideas and narratives will be needed to overcome three long-standing meta-challenges: inefficient redistribution, ambivalence about the private sector and property rights, and improving but still-challenged state capacity. Doing so would lift an economy that is oozing with potential. In the aftermath of demonetisation, and at a time of gathering gloom about globalization, articulating and embracing those ideational shifts will be critical to ensuring that India s sweet spot is enduring not evanescent. The report says that India seems to be a demographic sweet spot with its working age population projected to grow by a third over the next three decades providing it a potential the growth boost from the demographic divided which is likely to peak within next five years. The Survey report also states that the Sw

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Goods and Services Tax – GST – By: – Pradeep Jain – Dated:- 30-1-2017 Last Replied Date:- 30-1-2017 – DAILY DOSE OF UPDATE BY CA PRADEEP JAIN Definition of Common Working Days Taking further to our discussion, we are continuing our discussion the definitions given under Section 2 of revised GST law and comparing the same with old model GST law to know the changes made in revised law:- 2(25) Common working days: The new definition reads as follows: Common working days in respect of a State shall mean such days in succession which are not declared as a gazetted holiday by the Central Government or the concerned State Government; This is a new definition added in the Revised GST Act. There is no reference of common working days at any place other than this definition in the Act. However, as per opinion of the author the working days wherever used in Act should be taken as common working days. In the In the absence of the definition, there could have been a scope of litigation because now

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means of a wire, cable, pipeline or other conduit, and for which the supplier invoices the recipient on a regular or periodic basis; 2(31) Continuous supply of services: the definition reads as follows: means a supply of services which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, for a period exceeding three months with periodic payment obligations and includes supply of such service as the Central or a State Government may, whether or not subject to any condition, by notification, specify; There is no concept of continuous supply of goods under present Central excise or VAT/CST laws. Under service tax, continuous supply of service is defined to mean any service which is provided or agreed to be provided continuously or on recurrent basis, under a contract, for a period exceeding three months with the obligation for payment periodically or from time to time. Govt notified telecom services, works contract service are examples of continuou

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ued or any payment has been received by the supplier of service; (ii) Where the due date of payment is not ascertainable from the contract: When the supplier of service receives the payment, or issues an invoice, whichever is earlier; (iii) Where the payment is linked to the completion of an event: The time of completion of that event; The event of supply is central to levy of GST. When supply of goods or services is not done, mere raising of invoice/payment received is being treated as time of supply. It is not made clear what happens in such a scenario whereby payment is received/invoice raised but supply does not take place. The multiple events, namely raising invoice/making payment in case of supply of goods/services or say completion of event-in case of supply of service triggering the tax levy, confirms that the Govt wants to ensure tax is collected at the earliest point of time. This would create difficulties for long term contracts for supply of goods and/or services, especiall

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Goods and Services Tax – GST – By: – Pradeep Jain – Dated:- 30-1-2017 Last Replied Date:- 30-1-2017 – DAILY DOSE OF GST UPDATE BY CA PRADEEP JAIN Definition of Business Vertical Taking further to our discussion, we are continuing our discussion the definitions given under Section 2 of revised GST law and comparing the same with old model GST law to know the changes made in revised law:- 2(18): Business Vertical: The new definition reads as follows: business vertical means a distinguishable component of an enterprise that is engaged in supplying an individual product or service or a group of related products or services and that is subject to risks and returns that are different from those of other business verticals; Explanation: Factors t

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ion itself seems to be a complicated definition to understand. A preliminary interpretation led to a belief that as like the current system of registration in excise and service tax where separate registration is taken for separate premise, the new regime will also provide a similar facility. It is expressly stated in the new law that the business verticals situated in the same State will have an option to avail single or separate registration for all such business verticals. A very important thing to note here is that the term used here is business vertical and not business premise. Thus the definition becomes critical altogether when it comes to registration. A business segment is a part of the company that can be identified by the produc

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n or not. There is no specific provision in this regard and it is not clear that whether all the business verticals located in the same premises can be registered separately or not. However, if one looks into the practical aspect, it is found that for registration, details of constitution, name, bank account etc. is to be given by the assesses. This indicates that different business segments in the same premises may be separately registered only if the bank account is separate and separate accounting is being done for the said business as risks and returns are also required to be different. Moreover, practically assessees would avoid taking separate registration as taking separate registration will increase the administrative costs of the o

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GST won t lead to job losses at tax dept: Jaitley – Goods and Services Tax – GST – Dated:- 28-1-2017 – New Delhi, Jan 27 (PTI) Ahead of the rollout of GST, Finance Minister Arun Jaitley today sought to address concerns of job loss from reduced work of tax officials, saying they should have no insecurity as enough work and opportunities will be available to them in the new indirect tax regime. I see no reason really for disquiet for the simple reason (that) opportunities which are available to people in service and the matter of policy and constitutional guarantee are all protected, he said at the Investiture Ceremony 2017 and International Customs Day 2017 organised by CBEC here. Only the nature of activity will change because there will be

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l be integrated into one and therefore resulting in one assessment. Multiple systems on assessment which is there at present will evolve into a newer kind of system, he said. He was responding to Central Board of Excise and Customs (CBEC) Chairman Najib Shah's remarks drawing his attention to the rising disquiet in the cadre , saying there were human resource issues in the service. Jaitley said the revenue to be collected is going to expand and there will be expansion of economic activity as well. Therefore even though you have two parallel machineries which could now be converging into similar kind of activities and shared responsibility, I think the future will stand witness to the fact that there will be adequate amount of opportunit

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Goods and Services Tax – GST – By: – Ravi Kumar Somani – Dated:- 28-1-2017 Last Replied Date:- 20-6-2017 – The Indian auto industry is one of the largest in the world. The industry accounts for 7.1 per cent of the country's Gross Domestic Product (GDP). Almost 13% of the revenue from central excise is from this sector and claims a size of 4.3% of total exports from India. Despite its contribution to the economy and growth potential, this sector has been combating the hardship of high tax rates for substantially a long period of time now with central excise duty ranging between 12.5% to 30% coupled with introduction of multiple cesses at revenues whims and fancies, most recent being infrastructure cess. Apart from the high tax rates, industry has seen extensive litigations on VAT v/s Service Tax tussle, valuation issues in case of PDI charges, warranties, taxation on handling charges and many more. Thus, introduction of GST shall be a breather for this sector wherein taxes on vehic

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nter-state sale of the vehicles, they will be collecting and paying IGST (i.e. Integrated GST, which is nothing but the summation of CGST + SGST). Impact of GST on various aspects is as examined below: 1) Impact on Credits: Currently, automobile dealers are not able to avail CENVAT credit on the following indirect taxes paid by them: CST Paid on purchase of vehicle, spares, consumables, accessories and assets; Excise Duty paid on purchase of vehicles, spares, consumables and accessories; NCCD, Auto Cess and Infrastructure Cess paid on purchase of vehicles; CVD paid on any imported Spares, accessories and consumables; SBC paid on input services; Reversal of proportionate CENVAT credit of service tax due to trading activity – Showroom Rent, Advertisement expenses etc. In GST Regime, all the above duties/ taxes will get subsumed, therefore dealers should be able to avail the input tax credit of all its procurements of goods/ services except for few restrictions laid in the Model GST Law.

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00 5,93,000 Since IGST and cesses shall be fully available as credit in the GST regime, therefore they will not form part of purchase cost and can be set-off from output GST payable on sale of the vehicle. Procurements are assumed to be in the course of Inter-state. GST rates have been assumed to be at such levels based on the various news reports and the reports issued by various committees formed by the Ministry of Finance. As noted above, reduction in procurement cost is substantial as cascading of taxes was just adding to the cost in this sector. 3) Impact on the Sale Price: Since, the procurement cost reduces in GST and if the benefit of the same is fully passed on to the consumer, then it leads to reduction in sale price of the vehicles as tabulated below: Type of Vehicle Sale Price Current Regime Sale Price in GST Regime Sale Price VAT @ 14.5% Total SP Sale Price IGST @ 18% / 30% (2% cess) Total SP Motor Vehicle 61,215 8,876 70,091 52,500 9,450 61,950 Small Cars 4,89,720 71,009

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rate GST registration number is obtained for each such dealership, then transfer of any goods/ services between such dealerships will also be liable for GST. This shall block the working capital as the taxes needs to be paid from own funds and collection of taxes will be at a later date only when such goods/ services are eventually sold. Free Service Coupon vouchers: These coupons will be issued at the time of sale of the vehicle. As per the time of supply rule, GST on such coupons needs to be paid immediately on the date of issue of such vouchers. As per the policy of some manufacturers, the amounts in respect of such coupons will be redeemed to the dealers only once the customer brings the vehicle for repair to the workshop. Therefore, dealers would have to pay tax on such coupons immediately on its issue but the said taxes can be collected from the customers only when the vehicle comes for the repair leading to unnecessary blocking of funds in taxes. Vehicle Booking Advance: It is q

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ufacturer: Various commissions, incentives, reimbursements, warranty receipts etc. are received from manufacturer. Dealer dont pay taxes on these incomes on accrual basis as the same may or may not get approved by the manufacturer at a later date. Therefore, currently service tax is paid on receipt basis only when the amount is credited by the manufacturer and is reflected in the manufacturer s statement. However, the luxury of paying taxes on receipt basis will not be accepted in the GST regime as everything will be system driven. Therefore, dealers will have to either get its system corrected with the bankers and manufacturers immediately to ensure smooth transition into the GST regime or else it would have to take the brunt of taxes on its own due to fault of its vendors. 5) Impact on Valuation: Bundling of Car with accessories, warranty, handling charges: Automobile dealers charge amounts for Sale of vehicle and also for various ancillary services such as insurance, extended warran

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ecurity Number Plate Charges; Credit Card Swiping Charges etc. Currently, Service Tax is not paid on such values, if collected as a pure agent. Ideally, these receipts must also be kept out of the GST net, or else it would create further valuation tussle in the GST regime. Road Tax/ Life Tax: Currently, service tax or VAT is not paid on the Road Tax element. However, in the GST regime, value for the purpose of paying GST must also include Road Tax. Section 15 of the revised model law clearly states that no taxes shall be allowed as reduction from the value except CGST, SGST and IGST. Therefore, duplication of taxes to this extent shall continue, if not timely represented by the associations. Road tax rates are fairly high and it ranges between 2% to 15%. Such increased tax base would unnecessary increase cost for the consumers. Discounts: Generally, dealers receive various discounts from its manufacturers based on targets, vehicles lifted, Special Customers, Year-End Discounts etc. It

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anufacturer can later be taken as a credit. Adoption of this would require tremendous efforts. 6) Reduced current litigations: Currently, the sector is facing disputes on the following areas: Valuation in Servicing of vehicle: Complexity in bifurcation of the material and labour component in the servicing of vehicle has led to multiple disputes as both the service tax and sale tax authorities demand taxes on a higher component. Handling Charges: Whether it is liable for VAT or Service Tax has led to demand of taxes from both the authorities and thereby disputes. Registration charges: Disputes were noted on applicability of service tax on various charges that are merely collected as pure agent such as temporary permanent registration etc. Incentives: It has been a matter of dispute at a various judicial forums as to whether the incentives received by the automobile dealers from the manufacturer whether amounts to any Service to be liable for service tax. Such disputes would end in the G

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a dealer is not availing the credit of VAT/SAD currently due to restriction in the state VAT law, then credit can be availed based on the ascertainment of stock as on appointed day. However, if the credit of VAT is being currently availed then the same needs to be properly reflected in the last VAT return to transfer such credits to the GST regime. Credit of CST: The same cannot be availed based on the stock availability as on the appointed day. Entry Tax: Credit of same can be availed subject to possession of appropriate documents for the same in states where such set off is permissible. 8) Impact due to Anti-Profiteering Measures: Since a dealer will be able to take the credit of goods lying in stock, the tax cost would decrease. This additional benefit accruing to a dealer is expected to be passed on to the end consumer by way of reduction in prices etc. A separate authority will be formed in the GST regime to monitor the non-compliance of the anti-profiteering matters which could

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to the customers. Therefore, timely payment of taxes, filing of returns needs to be ensured in the GST regime. Accounting: Coordination/ communication, flow of documents from various branches to accounts department should be before 10th of the subsequent month. Therefore, accounting function needs to be more robust, live and automatic. As far as possible, a dealer must map its accounting framework with other processes in an ERP environment and therefore finance & accounts department needs to be better structured to cope up with the needs of the GST regime. IT Infrastructure: In GST regime, businesses have to move from the manual environment to computerized environment. Only an efficient IT infrastructure and its best usage can help businesses meet the high compliance needs of the GST. If IT infrastructure is not optimally utilized, then it would be challenging for any business including real-estate sector to function efficiently in the GST regime. Further, in the computerized envir

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Goods and Services Tax – GST – By: – Ranjan Mehta – Dated:- 28-1-2017 – Prelude:- Revised Model GST Law has been released by GST Council Secretariat in the month of November, 2016. Whatever be the fate of GST in this Budget session, this is certain that Govt. needs to bring it by 15th Nov, 2017, otherwise we will be living in an Indirect Tax Free World. In this context, it is very pertinent to understand, the impacts, GST is going to have on the various aspects of business. Since the incidence of GST, the ways in which businesses are done in India are going to change. Major re-hauling will be required, since currently taxes in a big away effect the Business Modelling in India. Every business process will needed to be relooked critically and re-engineered as per the foregoing provisions of GST Law to achieve the maximum benefit for business. Present Regime: – CST:- In Case of inter state sale of goods, presently CST is levied. CST is a Central Govt duty which is an origin based levy an

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s in case imported products, which we are not focussing in this article. Subsumation of duties under GST:- Following are the duties are going to be subsumed in relation to IGST. CST Additional duty of customs/countervailing duty u/s 3(1) in lieu of Excise Special Additional Duty u/s 3(5) in lieu of VAT/Sales Tax Anti-dumping, anti-subsidy duties and Basic Customs duties are not going to be subsumed under GST. Thus, we can understand that largely GST is going to subsume only those levies/duties which were part of or relevant to current levies of excise and VAT. Provisions and Law:- The provisions related to Interstate trade are contained in the IGST Law. IGST- The Integrated Goods and Service Tax Act contains the provisions related to assessment of Place of Supply of Goods. It is only the Place of Supply provisions which will determine that whether on a particular transaction IGST will be charged or CGST & SGST will be charged. Sec 5 of IGST Act is the charging section, it explains

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T. In case of Import of Goods:- In case of import of goods the provision is as follows:- PROVIDED that the Integrated Goods and Services Tax on goods imported into India shall be levied and collected in accordance with the provisions of section 3 of the Customs Tariff Act, 1975 (51 of 1975) at the point when duties of customs are levied on the said goods under section 12 of the Customs Act, 1962 (52 of 1962), on a value as determined under the first mentioned Act. Thus in case of imports, levy of IGST arise when the goods are going to cross the custom barriers of India and where the custom duties are levied. The Custom duty is levied at time when good are cleared from the port/airport after showing proper documentation (Bill of entry, Invoice etc.) This leads to a further question whether on High Sales and Transhipment GST will be levied? This question is unclear as of now as currently under customs duty is paid at the time when goods are cleared for Home Consumption. However the duty

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upply shall be Principal Place of Business of that third person. Ex 1 A Ltd in Ahmedabad directed B Ltd in New Delhi to deliver goods to C Ltd in Bangalore; Place of supply shall be Ahmedabad and B Ltd shall charge IGST. Ex-2 A Ltd in Kanpur directed B Ltd in Dehradun to supply material to Branch of A Ltd in Haridwar. The Place of supply for B Ltd shall be Kanpur; even where goods physically has not crossed the boundary of Uttarakhand. 4 Where there is no movement Where there is no movement involved; Place of supply shall be the location of goods at the time of delivery to recipient. A Ltd a Mining unit in Raipur made available lumps of Marble to B Ltd. However since lumps were huge, B Ltd asked A Ltd for permission to break them into pieces do some preliminary work and then transfer from there to Ranchi; Place of supply shall be Raipur. 5 When goods are assembled/ Installed Place of supply shall be place of such Installation or assembly. A Ltd in New Delhi installed a lift in the hosp

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to incorporate a few here for your knowledge. Problem in sec 7(2) Ex- A Ltd situated in Mumbai want to supply some material to B Ltd at Indore. A supplies material ex-factory usually, however since B Ltd could not arrange vehicle, they asked A Ltd to arrange for the vehicle for them for which they will reimburse. In This case the Place of supply shall be Indore, being the movement terminated for delivery at Indore only. A Ltd would Charge IGST on the invoice. Consider the same example and choose the answer if the vehicle was arranged by B Ltd. The Place of supply in this case will be Mumbai, since the movement of goods terminated for delivery in Mumbai itself i.e. material delivered to the transporter on behalf of B Ltd. A Ltd will charge CGST and SGST in his invoice since this is an Intra state supply of goods. Problem starts here, As soon as CGST & SGST are charged, the credit flow hampers for B Ltd, as by law credit of SGST is not available interstate; and further to that, as p

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ax since the place of actual supply is Uttarakhand only. However through flow back of invoice from Kanpur HO to Haridwar, Uttarakhand is in anyway going to get their share in IGST. But still the state tax authorities will try to get taxes at first stage only, as it may be difficult to get it at later stage. Further, it will be difficult for the assessee also, to prove such flowback. Ex-2 A Ltd in Kanpur supplied material to B Ltd in Nagpur on the direction of C Ltd in Kolkata; The place of supply in this case shall be Kolkata and the goods shall be deemed to be supplied to Kolkata as per sec 7(3). However the actual delivery took place at Nagpur. Here to move the complete cycle of credit; A Ltd will raise invoice to C Ltd and who in turn will raise invoice to B Ltd. All invoices will be IGST. Again the tax authorities of Kolkata and Nagpur will fight over the issue. Since the Kolkata would like that tax to remain in their state, while Nagpur would say that tax to be in their hands bein

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Goods and Services Tax – Started By: – Partha Sarkar – Dated:- 27-1-2017 Last Replied Date:- 29-1-2017 – What would be transactional value under Job Work on which GST to be applicable.It itself the Principal value of the Items on which job work to be done or it would be the service/Job order value between customer or service provider.Means an Items to be reconditioned or repaired whose original value was INR 100/- but for reconditioning order(service) value awarded by Cutomer INR 50/- Reply By

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Goods and Services Tax – GST – Dated:- 27-1-2017 – Visakhapatnam, Jan 27 (PTI) Finance Minister Arun Jaitley on Friday put up a spirited defence of demonetisation, saying the drive shook the financial system for a short while, but will integrate the shadow economy with the formal in the long run and ensure better tax compliance. He said most contentious issues regarding the Goods and Services Tax (GST) have been sorted out between the Centre and states and the new indirect tax regime is at the final stages of implementation. This (demonetisation), coupled with GST, in the days to come will ensure much larger revenues as far as states and the central government are concerned and expand the size as far as the formal economy is concerned, Jai

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Goods and Services Tax – GST – Dated:- 27-1-2017 – New Delhi, Jan 26 (PTI) Battling slump in demand after shock demonetisation, Finance Minister Arun Jaitley may look to spur consumption through lower taxes in next week's Budget, but he faces a peculiar situation as precise projections of indirect tax collection in 2017-18 are unavailable due to GST. Finance Ministers usually weave around their welfare spending proposals based on projections of direct and indirect tax collections in the fiscal. Projections of collection in direct taxes, made up of personal and corporate tax, would be available but with the rollout of Goods and Services Tax (GST) deferred till July 1, no reliable projection of indirect tax collection for 2017-18 fiscal

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Goods and Services Tax – GST – By: – Mr. M. GOVINDARAJAN – Dated:- 27-1-2017 – Functions of GST Council Article 279A (4) provides that GST council shall make recommendations to the Union and the States on- the taxes, cesses and surcharges levied by the Union, the States and the local bodies which may be submitted in the goods and services tax; the goods and services that may be subject to, or exempted from the goods and services tax; model Goods and Services Tax Laws, principal of levy, apportionment of Goods and Services Tax levied on applies in the course of inter-State trade or commerce under Article 269A and the principles that govern the place of supply; the threshold limit of turnover below which goods and services may be exempted from the goods and services tax; the rates including floor rates with bands of goods and services tax; special provisions with respect to the States of Arunachal Pradesh, Assam, J&K, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal

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rnment and State Governments, on the recommendation of the Council, for the specified purpose, as may be notified under the Act; Section 2(37) – Deemed exports as notified by the Central Government/State Government on the recommendations of the Council, refer to those transactions in which the goods supplied do not leave India and payment of such supplies is received either in India rupees or in convertible foreign exchange; Section 2(83) – regulations means the regulations made by the Commissioner under any provision of the Act on the recommendation of the Council. Section 2(88) – rules means the rules made by the Central Government under any provision of the Act on the recommendation of the Council. Levy and collection of Central/State Goods and Service tax Section 8(1) – There shall be levied a tax collected the Central/State Goods and Services Tax (CGST/SGST) on all intra-State supplies of goods and/or services on the value determined under Section1 5 and at such rates as may be no

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ing the tax in relation to the supply of such services; Composition Levy Section 9 – Notwithstanding anything to the contrary contained in this Act but subject to Section 8(3), on the recommendation of the Council, the proper officer of the Central or a State Government may, subject to such conditions and restrictions as may be prescribed, permit a registered taxable person, whose aggregate turnover in the preceding financial year did not exceed ₹ 50 lakh, to pay, in lieu of the tax payable by him, an amount calculated at such rate as may be prescribed, but not less than 2.5% in case of a manufacturer and 1% in any other case, of the turnover in a State during the year. Proviso (e) to Section9 – who is a manufacturer of such goods as may be notified on the recommendation of the Council; Exemption Section 11 (1) – If the Central or a State Government is satisfied that it is necessary in the public interest so to do, it may, on the recommendation of the Council, by notification, ex

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n 23(13) – The Central or a State Government may, on the recommendation of the Council, by notification, specify the category 6 of persons who may be exempted from obtaining registration under this Act; Tax invoice Section 25(1) – proviso – Provided that the Central/State Government may, on the recommendation of the Council, by notification, specify the categories of goods and/or supplies in respect of which the tax invoice shall be issued within such time as may be prescribed; Section 25(2) – proviso – Provided the Central/State Government may, on the recommendation of the Council, by notification, specify the categories of services in respect of which any other document issued in relation to the supply shall be deemed to be a tax invoice subject to such conditions and limitations as may be prescribed; Continuous supply of goods of services Section 25(7) – For the purposes of Section 25(4) and 25(5), the Central or a State Government may on the recommendation of the Council, specify,

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fund in certain cases Section 49 – The Central/State Government may, on the recommendation of the Council, by notification, specify any specialized agency of the United Nations Organization or any Multilateral Financial Institution and Organization notified under the United Nations (Privileges and Immunities) Act, 1947, Consulate or Embassy of foreign countries and any other person or class of persons as may be specified in this behalf, who shall, subject to such conditions and restrictions as may be prescribed, be entitled to claim a refund of taxes paid on the notified supplies of goods or services received by them. Interest on delayed refunds Section 50 – If any tax ordered to be refunded under Section 48 to any applicant is not refunded within 60 days from the date of receipt of application under sub section(1) of that section, interest at such rate as may be specified in the notification issued by the Central or a State Government on the recommendation of the Council shall be paya

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ity or transaction of purchase, sale or exchange of goods or property or right or interest in a property, under nay law for the time being in force, shall furnish an information return of the same in respect of such periods, within such time, in such form (including electronic form) and manner, to such authority or agency as may be prescribed. Power of Central (or State) Government to make rules Section 154(1) – The Central Government (or the State Government) may, on the recommendation of the Council, make rules, including rules conferring the power to issue such notifications with retrospective effect under those rules, to carry into effect the purposes of this Act. Removal of difficulties Section 158(1) – If any difficulty arises in giving effect to any provision of the Act, the Central Government/State Government may, on the recommendation of the Council, by general or special order published in the Gazette, do anything which appears to be necessary or expedient for the purpose of

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Goods and Services Tax – GST – By: – Pradeep Jain – Dated:- 27-1-2017 – DAILY DOSE OF GST UPDATE BY CA PRADEEP JAIN SECTION 2(37) DEEMED EXPORTS:- In continuation to our updates on definitions in Revised Model GST Law, we hereby discuss the definition of deemed exports which reads as follows:- Deemed Exports , as notified by the Central Government/State Government on the recommendation of the Council, refer to those transactions in which the goods supplied do not leave India, and payment for such supplies is received either in Indian Rupees or in convertible foreign exchange; The term deemed exports is often referred in the context of Foreign Trade Policy but it is observed that the proposed GST regime seeks to provide definition of deemed

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cover supply of goods under advance authorisation, supply to EOU/STP/EHTP/BTP, supply of capital goods against EPCG etc. Since the objective of introducing the concept of deemed exports under FTP is different. It allows the one of three benefits viz. refund of Terminal excise duty, duty drawback and advance authorisation to supplier of goods. The proposed revised GST Law proposes to remove any ambiguity as regards transactions that will be considered as deemed exports. This is for the reason that under GST Law, relevance of deemed exports is limited to grant of refund of taxes on supply of goods regarded as deemed exports. Even this will not allow the removal of gods at nil rate of duty which is allowed in present regime particularly for s

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Goods and Services Tax – Started By: – Avinash Agarwal – Dated:- 26-1-2017 Last Replied Date:- 30-6-2017 – Dear All,As there used to be CSA in case of VAT regime where company used to transfer stock to CSA against F-form, where all the sale proceeding used to be transferred directly to company and CSA used to get commission.However, now in GST it is understood that F-form format is waived off. All transfer of goods will be in the form of Sale & Purchase.So, how do you see as the tax implication in such case for CSA agent who is receiving the goods and selling it for company. Since all transactions are done in CSA's TIN/GSTIN, how do we justify it.?Should the company directly register themself in different state where they used to u

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ler would enrol by adding the CSA's address as additional place of business. CSA would not require to get separate registration. This is my view. Thanks. – Reply By YAGAY AND SUN – The Reply = However this is optional to show CSA's place as additional place of business. Further its Turnover will be added in your company's turnover. – Reply By Ganeshan Kalyani – The Reply = It is better to show the additional place of business in the enrolment form. – Reply By Prashant Asija – The Reply = Hi with reference to the abovce discussion we need to know the treatment on stock held by consignment agent1. Either we will treat that as our stock and take the credit of import duty paid2 or Consignment agent will claim 5.4% credit on the sale

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Goods and Services Tax – Started By: – NAUSHERAWAN SM – Dated:- 25-1-2017 Last Replied Date:- 26-1-2017 – We have one PAN and multiple TIN in Jharkhand. Let me know the registration procedure for GSTN. – Reply By Ganeshan Kalyani – The Reply = Sir, you can enrol with one TIN and add other TIN/location as additional place of business. If your business verticals are different then separate GSTN is allowed to opt for.Thanks. – Reply By YAGAY AND SUN – The Reply = Multiple GSTN if obtained then it

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Goods and Services Tax – Started By: – NAUSHERAWAN SM – Dated:- 25-1-2017 Last Replied Date:- 26-1-2017 – Let me know how we can arrive of HSN code. We are manufacturing Motor Vehicle Parts, Excavator Parts, Parts and spares of engine, Forgings, Castiangs. – Reply By Ganeshan Kalyani – The Reply = For the purpose of GST enrolment, the HSN code of Central Excise is to be referred. However, under GST the same is not yet finalised. – Reply By YAGAY AND SUN – The Reply = For classifying any goods u

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Goods and Services Tax – GST – Dated:- 25-1-2017 – CBEC has started the process of migrating the existing Central Excise (CE) and Service Tax (ST) registrations to GST and issue Provisional IDs to them. As a mandatory requirement, only PAN based registrations would be issued Provisional ID. It is therefore, advised that all Assessees having non-PAN based registrations, get their registrations converted to PAN based to obtain Provisional IDs. Since GST registration will be based on PAN and State, only one Provisional ID will be issued to a given PAN for a given state, irrespective of the number of registration on that PAN in that state. For Ex – PAN XXXXX1111X has 10 CE registrations in the state Maharashtra from XXXXX1111XXM001 to XXXXX1111XXM010 . In such cases only one Provisional ID will be issued to the registration XXXXX1111XXM001 (first registration when sorted alphabetically). In case the assessee wishes to enroll in GST for the other 9 registrations as well, the details regard

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tion in the alphabetical order would be granted the Provisional ID. In Step 2, all registrations belonging to EM category would be selected for issuance of Provisional IDs. In this step, only those registrations would be issued a provisional ID where the combination of State and PAN is not already occurring in Provisional IDs issued in Step 1. Similarly for step 3 XD registrations would be selected and Provisional ID issued to only those registrations where the combination of State and PAN is not already occurring in Step 1 and Step 2. Similarly step 4 and 5 would be executed. Additionally, Each CE registration contains 2 addresses – one for the Head Office and another for the Business Premise. For a given CE registration, if the State for the Head Office and Business Premise is different, then the registration will be eligible for issuance of 2 provisional IDs whereas in case where the State for Head Office and Business Premise is same, only one Provisional ID would be issued. ST Regi

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IDs is selected (including both Centralized and Non-Centralized), this would be checked with the list of registrations selected for Provisional IDs for CE. All ST registrations where the combination of State and PAN is same as that used in any of the CE registrations already selected would be removed from the list and would not be issued any Provisional ID. Summary: 1. Provisional IDs would be issued only for PAN based registrations. 2. Only one Provisional ID would be issued for multiple registrations where the combination of State and PAN is same and it would be for the first registration selected in the alphabetical order. 3. For CE registrations, the order of selection is XM , EM , XD , ED and EI 4. For ST registrations, the order for Non-Centralized is SD , ST and SE . 5. Only those ST registrations would be issued Provisional ID where the State and PAN combination is not occurring in selected CE registrations. Assistance Required: For any assistance required or complaints relate

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Goods and Services Tax – GST – By: – CA.Tarun Agarwalla – Dated:- 25-1-2017 Last Replied Date:- 25-1-2017 – Composition scheme under Model GST Law, its impact on industry A. Introduction: 1. The New Model GST Law ( henceforth MGL ) as made available in the public domain as on 26th November 2016 have brought out many changes with respect to the provisions with respect to composition levy. Composition Levy has been present in indirect taxes to address the small business units or specific business units having complexity in the valuation of taxable amount.MGL section 9 talks about payment of taxes in lieu of normal tax liability under section 8 of MGL, talks about Levy in general. Composition scheme also brings a lesser compliance requirements, however, composition scheme normally successful in B to C segment rather than B to B segment. 2. At present almost all the state VAT laws normally have provisions for taxpayers to opt for composition scheme. Broadly two type of taxpayers is having

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n levy facility is to be used on all India PAN basis. It means all the registration across India belongs to the same PAN must avail the scheme. e) Once on a particular day, the aggregate turnover exceeds ₹ 50 lakhs, the scheme deemed to be withdrawn from such date. f) If the proper officer has reasons to believe that a taxable person was not eligible for the scheme, the taxable person shall pay tax under normal provisions and penalty. 5. Restriction for the scheme: – under the provision of section 9(1) of MGL, Composition semen could not be allowed in the following class of taxable persons:- a) who is engaged in the supply of services, or b) who makes any supply of goods which are not liveable to tax under this Act, or c) who makes any inter-State outward supplies of goods; or d) who makes any supply of goods through an electronic commerce operator who is required to collect tax at source under section 56; or e) Who is a manufacturer of such goods is as may be notified on the rec

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garded as services and not goods. In this respect the following issues may found relevant:- a) The transitional provisions section 172 may be used fully for such cases where a composition dealer may not be eligible under MGL. b) Works contractor normally be under composition scheme of Sate VAT and service tax normally be paid under abatement forging the CENVAT on inputs. In this case the Cenvat Credit on stocks, semi fished and finished stocks may not be available under section 172 of MGL. However, section 169 related to the general availability of credit may come for rescue. However, it is the subject matter of further analysis. 9. What would be regarded as composition scheme under earlier law gave not been provided in the MGL. For instance, there are cases in excise where the special rate of duty has been allowed without taking any CENVAT credit. In the MGL it is given that, Persons Manufacturing, specified items may not opt for composition scheme. Hence in such cases, whether sectio

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ns made or agreed to be made by such person in the course or furtherance of business. 11. Impact on decisions in GST a) As the small dealers in the majority of states are operating with the existing turnover limit of ₹ 50 lakhs. The impact may not be much. However, the majority of them may not cover due to the enhancement of taxable limit of ₹ 20 lakhs from the existing ₹ 10 lakhs. b) The persons present in more than one state with the same PAN may face a new difficulty in tracking the turnover limit of ₹ 50lkh, collectively. c) Input tax credit as per section 18(3) of MGL, the carry forward credit and compliance there off may discourage to the scheme. d) A majority of works contract cases were availing the composition scheme as there was no turnover limit earlier. However, at present, the segment was regarded as service and hence not eligible at all for the composition scheme. e) In the case of work contractor, builder, the credit available with respect to ITC

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Goods and Services Tax – GST – By: – Pradeep Jain – Dated:- 25-1-2017 Last Replied Date:- 25-1-2017 – DAILY DOSE OF GST UPDATE BY CA PRADEEP JAIN Definition of Turnover in a State and Zero rated supply Taking further to our discussion, we are continuing our discussion the definitions given under Section 2 of revised GST law and comparing the same with old model GST law to know the changes made in revised law:- 2(107): Turnover in a State: The new definition reads as follows: Turnover in a State means the aggregate value of all taxable supplies, exempt supplies, exports of goods and / or services made within a State by a taxable person and inter-state supplies of goods and / or services made from the State by the said taxable person excludi

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ng for composition levy, while calculating the limit of 50 lakhs as turnover in a state won t have to include such non taxable supplies giving the benefit of additional margin of turnover. Also the Input service distributors, while calculating the ratio of the units where the cenvat has to be distributed, won t have to include the value of non taxable supplies to the total turnover. But there is definition of exempt service given under Section 2(44) which reads as follows:- exempt supply means supply of any goods and/or services which are not taxable under this Act and includes such supply of goods and/or services which attract nil rate of tax or which may be exempt from tax under section 11 Thus, the definition of exempt supply include the

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on 15 of the IGST Act 2016 In the IGST act it is defined as any of the following taxable supply of goods and/or services, namely – (a) export of goods and/or services; or (b) supply of goods and/or services to a SEZ developer or an SEZ unit First of all it should be noted that reference is given that of section 15 whereas it should have been section 16. There seems to be a clerical error. Further if compared to the old definition, it can be noted that supply to SEZ unit or developer have been included in the scope of zero rated supplies. Also the old definition had the condition that cenvat shall be allowed against zero rated supply which is now been given in the form of section 16(2). There is no mention of the EOU or export through mercha

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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 25-1-2017 – Job work and GST Gems and jewellery sector is highly labour intensive and lot of work is done on a job work basis involving manual labour. The principal manufacturer has the option to send taxable goods without payment of GST to a job worker and bring it back, after processing, to any of his own place of business, for supplying such goods on payment of GST or export it. The principal also has the option to directly supply final products to end customers on payment of GST or export from the premises of job worker itself, subject to fulfillment of applicable conditions. GST credit is allowed in case of direct receipt of inputs or capital goods by the job worker, subject to receipt of goods back by the principal within specified period i.e., one year/ three years. Under the present service tax, job works in relation to cut and polished diamonds and gemstones, or plain and studded jewellery of gold and other pre

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nition of import of service does not specify such exclusion. Logically, definition of import of service also excludes services imported from overseas branch but clarity should bring for better understanding. Supply provided to domestic branch in other States shall be considered as distinct person. Accordingly, IGST would be leviable on such supplies. Domestic / SEZ Supply For units located in SEZ having operations across India and providing supply of services to customers located across India, the issue would arise as to where to pay GST and whether this would require splitting of invoices based on various locations of the service provider or the service recipient. For this purpose, the model GST law has prescribed the requirement of determination of the location from where the services are provided and the place of supply of such services, so that GST may be paid to the appropriate Government. In the context of determination of the location from where services are provided, it provide

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e model GST are as follows: Taxes SEZ units Present regime GST regime Customs Duty Exempt Basic Custom Duty – Upfront exemption may continue Excise Duty Service Tax CST/VAT Upfront exemption / refund Payable (subsequently refundable) As per revised Model GST law, if a SEZ unit is receiving zero rated supply, it shall be eligible to claim refund of IGST paid by the registered taxable person on such supply. But again this will lead to blockage of working capital which may lead to increase in price. Supply of goods and/ or services to or by a SEZ unit, shall be deemed to be a supply of goods and/or services in the course of inter-State trade or commerce. Accordingly, on supply of goods and/or services to or by a SEZ unit shall attract IGST at the prescribed rate but it may not exceed twenty eight percent as proposed now. Exports In case of export of products, raw material and capital goods are purchased either domestically or exported. Presently, these are allowed to be sourced duty free

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Goods and Services Tax – Started By: – RAM SHARMA – Dated:- 24-1-2017 Last Replied Date:- 26-1-2017 – Dear Sir, Whether we have to reverse cenvat credit and vat utilized in manufactuing of finished goods lying with our agent/brances or will be paid IGST on appointed date ? (Section 192 193,to 194) What will be the treatment of discount if we have issued debit note/credit note after issue the sales invoice and before the sales invoice.( mention in invoice at the time of removal) 3) How we will a

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Goods and Services Tax – Started By: – saket s – Dated:- 24-1-2017 Last Replied Date:- 29-4-2017 – Dear Sir,Need clarification on invoice serial number in GST. As per Invoice draft rule it says that we should have one unique series for one financial year. We have 3 warehouses in the same State following difference sequel of series at present and we want same to be continued in GST law also. Is it possible to continue this practice under GST regime?Saket – Reply By YAGAY AND SUN – The Reply = This can be allowed but there is no specific provision in Model GST Law. It may be clarified when the final GST Law would come in force. – Reply By Ganeshan Kalyani – The Reply = More clarity is awaited in this respect. – Reply By MARIAPPAN GOVINDARAJA

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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 24-1-2017 Last Replied Date:- 24-1-2017 – GST Council's 9th meeting was held recently on 16th January, 2017 for the ninth time, second time in 2017, for deciding upon the unresolved issues, mainly about the cross empowerment and territorial jurisdiction of states. This meeting was considered significant for timing of GST as the last attempt to reconcile and make the states agree, if the Union Government was still eyeing at 1st April, 2017 for GST introduction. However, the GSTC did decided the issues before it but also deferred GST schedule by a quarter to 1st July, 2017. States wanted that they should control the entire assessee base including service tax assessees below the threshold limit of ₹ 1.5 crore whereas Centre was of the view that the States lack expertise and knowledge in service tax. While this may be true in the present scenario, training can always be imparted and no such beginning is late. All

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states being allowed to have control over territorial waters. Though general consensus is being looked at, States like West Bengal and Kerala still continue to be in opposite camp. The Centre and States have agreed to share the entire taxation base for assessment with a horizontal division. According to the agreed formula, which will apply for both goods producers and service providers, States will have the power to assess 90 per cent of all assessees with a GST turnover of ₹ 1.5 crore or less and the remainder will be with the Centre. Further, assessees with a GST turnover of over ₹ 1.5 crore will be assessed in a 50:50 ratio by the Centre and States. Intelligence-based enforcement powers will vest with assessing officers of both the Centre and States for all assessees. Both have agreed that no assessee would be controlled by two authorities and there would be computer-based enforcement at both the Centre and the states. Those assessees who fall under the integrated GST,

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e., in 2017-18 fiscal, for quarter-I, we will have present tax regime and for remaining three quarters, we will be having GST in place. Even if it is delayed beyond July 2017, the transition may not be an issue as it is a transaction tax. July may be a reality, hopefully so. GST Council is also understood to be working on tax rate structure for services. This could be in 2-3 slabs for basic, standard and luxury / high end services. If this is through, we will end up in having too many GST rates which may not be desirable. It is expected that finalizing of segment wise GST rates will take some more time. On industry front, as the date comes nearer, there are going to be major challenges which inter alia include cash flow management, working capital, logistics, IT solutions, inventory planning and so on. Planning on all these fronts is subject to final law, rules, rates and credit / refund rules. With Union Budget 2017-18 now scheduled to be presented in Parliament on 1st February, 2017,

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Goods and Services Tax – GST – By: – Pradeep Jain – Dated:- 24-1-2017 – DAILY DOSE OF GST UPDATE BY CA PRADEEP JAIN Definition of Principal place of business, Proper Officer and Services Taking further to our discussion, we are continuing our discussion the definitions given under Section 2 of revised GST law and comparing the same with old model GST law to know the changes made in revised law:- 2(77) Principal place of business: the new definition reads as follows: Principal place of business means the place of business specified as the principal place of business in the certificate of registration; The old definition read as follows: principal place of business means the place of business specified as the principal place of business in t

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on. Deleting the condition of keeping books of accounts has made the definition simple to follow and now the assessee can name any of his premises as principal place of business. But there is no need to keep books of accounts there only. It can be kept at any place of business. 2(79) Proper Officer: the new definition reads as follows: Proper Officer in relation to any function to be performed under this Act, means the officer of goods and services tax who is assigned that function by the Commissioner of CGST / SGST; The old definition reads as follows: proper officer in relation to any function to be performed under this Act, means the officer of goods and services tax who is assigned that function by the Board/Commissioner of SGST; The am

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than an activity relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged. The old definition read as follows: services means anything other than goods; Explanation: Services include intangible property and actionable claim but does not include money. The amendment bought in the definition is that Securities explicitly excluded from services definition. We have told in our earlier update that securities are excluded from the definition of goods under Section 2(49) also. Thus securities won t be considered as goods or services and as a result, GST won t be applicable on the same. The definition

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