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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