Goods and Services Tax – GST – By: – atul rathod – Dated:- 24-9-2016 Last Replied Date:- 26-9-2016 – Background:- As we all know Model law of GST has come in public domain and bill has been passed in Rajya Sabha and expected to get effective from 01.04.2017. The purpose of this article is to give overview on impact of GST on manufacture and Trader due to change in Indirect tax structure. Positive Impact on Manufacture One Tax: In Present structure of GST, there is various kind of taxes such as excise duty, Service tax, VAT, Entry tax, Central Sales Tax etc. But in GST Regime there is only one tax i.e GST however, there will be three parts such CGST, SGST, IGST. This is measure relief for the manufacturer. Rate of tax: In current tax regime the consumer pays approximately 25-26% more than the cost of production due to excise duty (at 12.5%) and value added tax (almost 14.5%) though there hasn t been any indication of a GST rate, but experts suggest between 18% and 22%. Ultimately goods
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gime of tax there are numerous issues on classification of goods due to separate rates on different goods and exemptions on certain goods. But in regime of GST there shall be minimization of classification issues due to uniform rate and less expected exemptions. Speedy Movement of Goods: In GST Regime of tax structure there will be minimization of trade barriers, such as filing of way bills/entry permits, Compliance under Entry tax will be abolished. There is much compliance in current regime on interstate movements or locally such as way bills, statutory forms etc which lead to slow movements of goods Where as this concept is going to be abolished though check points will still be eligible. CENVAT Credit: In Regime of Present tax, the manufacturer is unable to utilize the credit of Central Sales tax and VAT provided output is charged under Composition Scheme, which becomes the Cost for him. But In Regime of GST, A Manufacturer will be eligible to take Credit of SGST (Earlier VAT) as w
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eparate authorities for VAT, Service Tax, Central Excise, CST, etc. In GST Regime it is expected that assessment will be done by State authorities for SGST, Central Authorities for CGST, and Interstate authorities for IGST. Electronic Mode for Forms: In current Regime of tax there is very much manual filing of documents such as initial declaration, Numbering of Invoices etc. But in GST Regime there will be less manual filing of documents and more through electronic mode. Further, the communication with department also could be through electronic mode. Compliance:-In GST Regime huge Compliance would be there however, it could be negative impact as well as positive. Negative Impact Time of Supply: In Current Regime of tax the time of duty on manufacture attracts at the time of removal where as in GST Regime it will earliest of the four such as (Date of Issue of Invoice, Date of Payment, Date of Removal, Debit in the books of Receiver). No SSI Exemption: In Current tax structure a manufac
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gistic Sector etc. Introduction of Reverse Charge on Goods: In Current Regime Of tax structure there was reverse charge on specified services but in case of GST even the reverse charge will be applicable on goods. Post supply Discount: If the Discount has to be given post supply than it must be known to both the parties at the time of supply or pre-supply and the proof of being known is the clause of discount must be there either in contract or agreement or offer etc. Matching Concept of Returns: In Current if the tax has been made the purchaser to supplier then he is eligible to take the Credit it is immaterial whether the same has been credited to Central Government by the Supplier or not. But in GST Regime, the matching concept if Tax Credit will be there, if Credits pertaining to Supplier does not match with Purchaser than it will not be accepted in return unless it is rectified by both the parties. Denial of CENVAT Credit on purchases made from unorganized/unregistered Person: In
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n. However, net impact is neutral, on either of them needs to pay GST. Composition levy Increased: In Current Regime of taxation the limit under Composition Scheme is ₹ 40 lakhs where as under GST it is increased upto ₹ 50 Lakhs. It is beneficial as ₹ 10 lakhs in turnover is a big thing from trader point of view. But currently it is 1% but in GST Regime it will be minimum of 1%, it could be more than that. Credit of Excise Duty and Service tax: In Current Regime of taxation then a trader is not eligible to take Credit of input service as well as the Excise duty. However, In GST Regime he will be eligible to take all credits and it will make positive impact on trader. No Margin to Disclose: Currently a trader who wants to pass on the CENVAT Credit of excise duty needs to obtain dealer registration and have to disclose the margin. But now this is no more relevant as trader is eligible to take Credit as well as no requirement of Separate dealer registration. No Reversal
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Current Regime of tax, on being made available the Form C, CST rates charged at the rate of 2% instead of 14.5% which is local tax rate, however in GST Regime interstate will be taxed at standard rate i.e IGST. Goods sent to job work are taxable: In Current GST Regime of tax, the goods sent for job work are not liable to CST on being made available of Form H whereas in Current GST Regime it became taxable. Compliances: Instead of 12 Returns A Trader needs to file 37 returns in year and much more compliances which is similar to manufacturer as explained supera. The author can also be reached at atuljain1926@gmail.com – Reply By Ganeshan Kalyani – The Reply = The assessment part seems to be going to be difficult. The returns shall be filed in form GSTR 1, GSTR2 and so on. The return would have transaction of both SGST, CGST and IGST then how different authority i.e. state authority, central authority and interstate authority shall verify same return again and again ? – Reply By yogesh Pa
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it not appeared in the returns, like in case of litigation, many assesses paid duty/service tax under protest Amount paid against conditional stay, Pri-Deposit at filling commissioner appeal as well as tribunal appeals, also in case of disputed service, assesses take credit and revert the duty/service tax under protest in the sane month to minimize litigation & Interest liability. How above type credit/balance we have carried forward in records & last returns before implementation of GST Law?? We have take credit in current law.Please Guide in both queries. – Reply By atul rathod – The Reply = Ganeshan Kalyani: Dear Sir,No Provision regardig Scrutiny of Return is given in Model GST Law. In my Article i have mentioned about assessment which will be done by one authority up to certain limit and if turnover of the business cross that limit than it will be done by another authority. As per my view the assessment of Return would be done by only one authoity which would be common for
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