Goods and Services Tax – GST – By: – CA Venkata prasad Pasupuleti – Dated:- 17-9-2016 – GST is intend to cover larger number of people under its net and further keeping threshold exemption limit of 10Lakhs many people would come under GST net. Small tax payers may not have sufficient infrastructure, knowledge, awareness etc., in complying with various provisions of law including accounting, IT/ERP availability, and huge paper work. Because of this, every tax law provides alternative simplified scheme for the small tax payers, which is rough & ready method. GST law has no exception to this and Section 8 of Draft GST law deals with the same. Brief understanding of the scheme is as follows: Scheme is based on recommendations of the GST Council Scheme is subject to prescribed conditions and restrictions (to be prescribed) The proper officer of CGST/SGST shall permit the tax payer to pay/assessee under this scheme instead of paying at full rate. In existing many VAT laws or service tax
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GST rate. However this would be clear only when SGST law is out or any clarification in this regard. Tax rate shall be applied on turnover. Section simply refers turnover and not to the taxable turnover because of this, GST may have to be paid under this scheme even on non-taxable supplies. This lapse may be unintended and can expect replacement with taxable turnover . Sometimes it may happen that total turnover is ₹ 40Lakhs, out of which majority turnover is exports or exempted but there will be some local sales like old furniture or scrap sales etc., which may come around ₹ 1 lakh then GST payable thereon is coming around 40,000/- (assuming 1% rate) thereby making effective tax as 40%, which would be more than expected regular rate of GST. Permission to assess under this scheme is not eligible for the persons effecting any inter-state supplies of goods/services. Section says effects inter-state supply which implies that both output & input should be within one state t
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is is too harsh & heavy. For instance, person availed this scheme on notion that there would not be any interstate supplies (both procurements & output) but during later part of the year such inter-state supplies are made for whatever reasons it may be (like urgent business need or customer specification to use particular state raw materials etc.,) then the implications are heavy as he has to pay GST on all his supplies at full rate of GST along with 100% penalty apart from obvious interest liability. Further this differential tax may have to be paid from his own pocket as might have missed to collect from his customers (because he is under this scheme at that time). Such penalty shall be levied only after affording a reasonable opportunity of being heard to the taxable person being penalized. In addition to the above, liability under reverse charge may exist. This is because, scheme overrides all provisions of law except reverse charge that is levied u/s. 7(3) of GST law. Tax
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