Goods and Service Tax – GST – By: – Pradeep Jain – Dated:- 4-11-2015 – Introduction- Sincere is the word when combined with the word Effort makes the road to success as smooth and reliable. Such sincere efforts are being made by the Central Government for paving the path to Good and Services Tax (GST). The government with the aim to implement the GST w.e.f. 1.4.2016 has issued a draft for persual of experts, trade associations, etc. to suggest the flaws and improvements thereupon. This draft is in form of Report of The Joint Committee on Business Processes for GST . This report is divided into three parts namely GST Registration, GST payment process and GST refund process. This article is an attempt to analyze the first part of this report namely GST Registration . Compounding scheme – proposal needs improvement:- The report states that the GST Act will provide the option to dealers to opt for a compounding scheme, the threshold of which shall be higher than the normal threshold for r
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er of goods, the cascading effect will reduce drastically. Thus, the benefit of compounding scheme will continue to be allowed to medium level businesses alongwith the reduction in cascading effect. Input service distributor – scheme can be continued:- The Report states that the concept of input service distributor may continue if the GST law so provides. Under the present concept of input service distributor, if the input services are consumed at different units of the same assessees, it can be distributed by the head office if the same is registered as input service distributor. It has also been stated that this benefit would be an exception in the GST law which will be applicable only to the services which are consumed at different locations which are separately registered. There is no doubt of the fact that Input service distributor is a good scheme. However, in our view, due care should be exercised while framing the provisions related to this scheme under GST law. Since in this l
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m of registration, return and assessment of such casual dealers would be separately prescribed. It has also been mentioned that the casual dealers shall be required to self assess their likely tax liability and deposit the same as an advance tax. Such amount would be deposited by way of two demand drafts (one for centre and one for state) which would be returned to the tax payer after he has discharged his final liability. The analysis of this scheme indicates that it has been introduced for the traders dealing in the seasonal items. In our view, the provision related to advance payment of tax to both State and Central Government seems to be harsh and would not let it make a successful scheme. It implies that the trader would be required to arrange money before he has made any supply and deposit the same to the government. Eventhough the excess payment shall be refunded at the time of end of tenure of registration; still, arranging money at the time of beginning of venture will adverse
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ness won t suffer during transition period of GST. It has been stated there that the details given in the existing database of Centre and State laws will be imported by GST portal and only additional details will be required to be called from them. In this regard, it has been mentioned that VAT & Central excise details consists of fields ranging from 50 to 107; while GST registration form consists of 120 fields; thus, there is gap of 13 to 70 fields. As such, the details will be required to be called from the dealers. However, the report does not talk much about the authenticity of details already available with the State and Centre. There are chances that there has been significant change in the details of assessee, however, the same has not been informed by him or sought for amendment. Thus, there are chances that the details may be incorrect partly. Also, there is possibility that there is difference between the details available with Centre and states. The reports talk about ca
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have also been prescribed in the report for the purpose of migration. However, this report does not speak about the existing Cenvat balance at the time of implementation of GST. The Cenvat/VAT balance in hand plays a significant role while paying the tax liability. This is the factor directly related to the liquidity of an assessee. In our view, adequate provisions should be made in this regard and the assessees should be informed about the same well before through various means. This becomes more important as the rate of GST will be higher and will particularly affect those assessees which are registered under only one Act, say service tax law. At present they are paying the tax @ 14%, while under GST, this rate will be on much higher side. Thus, they will need more cash balance to pay off their taxes. If proper provisions related to Cenvat transfer are not made, the situation will become harsher and will face opposition by the assessee who are presently registered under only one Act
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where. It is worthwhile to mention here that the reverse charge is the most critical aspect of present service tax law. Also, the partial reverse charge was introduced only three years back, thus, it has not yet settled. Thus, even the giant service providers are facing difficulty in tackling with the partial reverse charge; so forget about the small and medium level service providers. When GST will be implemented, the situation will become worse as the new law will be accompanied by this complicated concept and that too unexplained in the reports like the current one. The report should have thrown the light on the various aspects like registration process, exemptions under reverse charge. The above referred discussion indicates that only the individuals importing services will not be required to take registration under reverse charge. However, it has not taken care of small and medium service providers which are presently excluded from reverse charge. It is therefore suggestible that
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report. Thus, the threshold should not apply on the supplies made in the brand name of some other person. Also, it would be feasible to import the related provisions from Central Excise Law since the same are old and more or less settled. While parting:- The Report of The Joint Committee on Business Processes for GST is very detailed and informative. It has been made after in depth research and analysis. However, still there is much to be included and improved. Also, such reports which are to be circulated on national level takes time, thus, significant amount of time should be given for suggestions as the process of circulation, access, reading, analysis and making suggestions is a long process and requires time. The time given for suggestions here is upto 31st October, 2015 which is very less looking to the quantum of information provided in the report. The haste and hurry sometimes leaves something important behind. GST is the biggest tax reform since independence and haste and hur
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