Goods and Services Tax

The Asstt. Commissioner of Income Tax, Cir. 23, Mumbai Versus M/s. Oberoi Realty Ltd. (Formerly known as Kingston Properties Pvt. Ltd.)
Income Tax
2016 (6) TMI 452 – ITAT MUMBAI – TMI
ITAT MUMBAI – AT
Dated:- 8-6-2016
ITA No. 6044/MUM/2013, C.O. No. 06/Mum/2015
Income Tax
Shri G. S. Pannu, Accountant Member And Shri Pawan Singh, Judicial Member
For the Revenue : Smt. Sudha Ramachandran
For the Assessee : Shri R. Murlidhar
ORDER
Per G. S. Pannu, AM
The captioned appeal by the Revenue and cross objection by the assessee are directed against order of CIT(Appeals) -40, Mumbai dated 28/08/2016, which in turn arises out of an order passed by Assessing Officer under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 (in short 'the Act') dated 06/12/2012.
2. In its appeal the solitary grievance of the Revenue is against the action of the CIT(Appeals) in allowing assessee's claim for deduction under section 80IB(10) of the Act to the extent of gross total income o

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versy in the Revenue's appeal.
3.1 The stand of the Assessing Officer is that the claim of deduction under section 80IB(10) is to be restricted to the extent of income under the head 'business or profession', whereas as per the assessee the claim of deduction under section 80IB(10) is allowable to the extent of gross total income. Notably, the stand of the assessee has been upheld by the CIT(Appeals) and accordingly, Revenue is in appeal before us.
4. Factually speaking, assessee is, inter-alia, engaged in the business of development and construction of a housing project, income whereof is eligible for deduction under section 80IB(10) of the Act. There is no dispute between assessee and the Revenue that the quantum of deduction under section 80IB(10) of the Act is Rs. 71,99,25,721/-. In its return of income, assessee claimed a deduction of Rs. 71,99,25,721/- under section 80IB(10) of the Act as it was within the limit of its gross total income amounting to Rs. 82,58,43,666/-. However

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sions of section 80IB(10) of the Act do not place any such restriction and the deduction allowable cannot be limited to the income assessable under the head 'business or profession'.
6. In the present case, respondent is an assessee engaged in the business of real estate and development of properties. With respect to development and building of a project – 'Oberoi Woods', it earned profits. Such project was eligible for the relief prescribed in Sec. 80IB(10) of the Act. There is no dispute between the assessee and the Revenue that the quantum of the claim u/s 80IB(10) of the Act amounts to Rs. 71,99,25,721/-. In the impugned assessment finalized u/s 143(3) r.w.s. 147 of the Act, the gross total income (before allowing deduction under Chapter VI-A) was arrived at Rs. 82,55,23,592/- which comprised of (i) income from house property – Rs. 13,51,076/-, (ii) income from business – Rs. 68,18,56,583/-; and, income from other sources – Rs. 14,23,15,933/-. The total taxable income has been com

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manner as may be prescribed. The sub-section relevant for our purpose is sub-section (10) of Sec. 80IB which prescribes for deduction in case of an undertaking developing and building housing projects. We do not dwell much on the aspect of deduction prescribed u/s 80IB(10) inasmuch as there is no dispute between the assessee and the Revenue that the claim of deduction u/s 80IB(10) works out to Rs. 71,99,25,721/-. So however, what is relevant to decide the controversy before us is the scheme in which the deductions prescribed in Chapter VI-A of the Act are allowable. For that matter, sub-section (1) of Sec. 80A prescribes that in computing the total income there shall be allowed from the gross total income, deductions specified in Sec. 80C to 80U of the Act subject to the conditions prescribed therein. The claim of the assessee is u/s 80IB(10) which is also liable to be governed by the prescription of Sec. 80A(1) of the Act. Sub-section (2) of Sec. 80A further prescribes that the aggreg

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ns of Chapter VI-A of the Act. No doubt, the profits derived from the eligible business, which in the present case is the development and building of a housing project, is relevant to compute the amount of deduction, so however, its allowability has to be reckoned in the context of the availability of gross total income of the assessee. Considered in this light, in our view, CIT(Appeals) has made no mistake in coming to conclude that the claim u/s 80IB(10) of the Act is to be allowed to the extent of gross total income as claimed by the assessee and not to be restricted to the extent of income from business or profession.
8. We find that the aforesaid conclusion of the CIT(Appeals) is in consonance with the parity of reasoning laid down by the Hon'ble Bombay High Court in the case of M/s. J.B. Boda & Co. P. Ltd. in Income Tax Appeal No. 3224 of 2009 dated 18.10.2010. In the said case, the amount of eligible deduction u/s 80-O of the Act (which is also a part of Chapter VI-A) was d

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nd the Revenue fails in its appeal.
9. In the cross-objection filed by the assessee, a solitary point has been raised which seeks to challenge the validity of the proceedings initiated by the Assessing Officer by issuance of notice u/s 147/148 of the Act.
10. In order to appreciate the aforesaid controversy, following facts are relevant. In the assessment originally finalised by the Assessing Officer u/s 143(3) of the Act dated 24.12.2009, the Assessing Officer determined the gross total income at Rs. 82,58,43,666/- comprising of (i) income from house property – Rs. 13,51,076/-, (ii) income from business – Rs. 68,18,56,583/-; and, income from other sources – Rs. 14,23,15,933/-. While computing the total income at Rs. 10,59,17,945/-, the Assessing Officer allowed deduction u/s 80IB(10) of the Act to the extent of Rs. 71,99,25,721/-, as claimed by the assessee. Subsequently, the Assessing Officer recorded reasons and issued notice u/s 148 of the Act dated 6.7.2012 reopening the assessm

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the provisions of Sec. 148 of the Act inasmuch as there was no fresh material with the Assessing Officer, and the reopening was based on entire material and facts already on record. It was also pointed out that in the original assessment finalised u/s 143(3) of the Act dated 24.12.2009, the Assessing Officer specifically discussed the allowability of deduction u/s 80IB(10) of the Act in para 7 of the assessment order and, therefore, it could not be said that there was any lack of application of mind. In this manner it was sought to be pointed out that the impugned reassessment would tantamount to a mere change of opinion, which is impermissible in law. Further, the learned representative also pointed out that the reasons recorded by the Assessing Officer are on a wrong footing and therefore there is no justification for initiation of proceedings u/s 147/148 of the Act. In the course of arguments, reliance has been placed on the following decisions to assail the initiation of proceeding

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below Sec. 147 of the Act brings out that even a case where income has been made subject of excessive relief can be construed as escapement of income, but the presence of the expression 'reason to believe' in Sec. 147 postulates that the Assessing Officer must formulate a belief that a particular income chargeable to tax has escaped assessment, which shall be well-founded. Therefore, we may examine the reasons recorded by the Assessing Officer to reopen the assessment, which read as under :-
“In this case assessment was completed u/s.143(3) r.w. s. 153C of the I. T. Act 1961, on 24.12.2009, assessing the total income of Rs. 10,59,17,950/- after allowing the deduction u/s 801B(10) of Rs. 71,99,25,721/-.
The assessee has claimed deduction of Rs. 71,99,25,721/- u/s 80IB(10) of the Income Tax Act 1961 in the return. The assessee had income of Rs. 68,18,56,583/- under the head Business and Profession. Therefore the assessee has claimed and has been allowed deduction in excess of its bus

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e offered under the head business and profession.
In view of the aforesaid facts and circumstances of the case and reason recorded as above, the assessment completed u/s 143(3) r.w.s. 153C of the I.T. Act, 1961 on 24.12.2009 is proposed to be re- opened. Issue notice u/s 148.”
A perusal of the aforesaid reasons reveal that the belief of escapement of income is founded on the ground that deduction u/s 80IB(10) of the Act has been allowed excessively to the extent that it is beyond the amount of income under the head 'business or profession'. It is a trite law that 'reason to believe' referred to in Sec. 147 of the Act is one which is prudent and plausible in law and not based on any misconception either in law or on facts. In the present case, the reasons recorded clearly suggest that Assessing Officer is under a misconception in inferring that there is an excessive grant of deduction u/s 80IB(10) of the Act. Ostensibly, the proposition in the mind of the Assessing Officer is not bor

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FREQUENTLY ASKED QUESTIONS ON GST [PART-6 (LAST)]
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 18-5-2016

Frequently Asked Questions (FAQs) on GST and their answers which would help the readers to know and understand about the concept and nuances of proposed Goods and Services Tax (GST) and its models.
These FAQs have been compiled with sole objective of providing a means of better understanding of GST. For details, readers may refer to Government portals / literature.
Q.37 In GST regime, Information Technology network will be crucial as most of the procedures would be automated. How it will be done?
Well-designed and well-functioning Information Technology (IT) infrastructure facility would be a precondition and pre-requisite for smooth administration of taxpayers, processing of returns, controlling collections, making refunds, auditing taxpayers, levying penalties etc. in the new regime. On the IT front, all stakeholders had agreed for a common PAN

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del, based on levy of user charges on tax payers and tax authorities availing its services. The GSTN will provide a front end portal to administer the Inter – State Taxation (IGST). The above network will work as a clearing house mechanism which will pool all the information about taxes levied on the Inter-State transactions and provide data on the amounts to be transferred to the destination state for ensuring seamless input tax credit.
GSTN has been entrusted with the responsibility to develop, operate and maintain a common GST portal which would provide a common and shared IT infrastructure between Central and State Governments, Banks, CBEC, Reserve Bank of India etc. For the purpose of simplicity for taxpayer, uniformity of tax administration, it is also proposed to have digitization of all documents and automation of related processes such as common PAN-based registration; common standardized return for all taxes (with different account heads for CGST, SGST, IGST); common standar

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above the state GST rate, though no decision had been taken on this. For a decision, this provision also requires a two-third majority in the Empowered Committee.
However, Sub-committee on GST rates headed by CEA( MOF) has not found favour with proposed additional tax.
Q.40 Are there any disadvantages of additional tax ?
Ans. The 1% tax will increase cost of inter-state job work of goods. The 1% tax will increase cost of inter-state transactions and hence, to that extent, will discourage inter-state movement of goods. Thus, it will be hindrance to inter-state movement of goods. It is yet to be seen whether 1% additional tax will be imposed only at the initial movement from originating State or at each inter-state movement of same goods.
Q.41 Will cross utilization of credits between goods and services be allowed under GST regime?
Ans. Cross utilization of credit of CGST between goods and services would be allowed. Similarly, the facility of cross utilization of credit will be av

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r Central and State taxes would be subsumed in GST and CST will also be phased out, the final net burden of tax on goods, under GST would, in general, fall. Since there would be a transparent and complete chain of set-offs, this will help widening the coverage of tax base and improve tax compliance. This may lead to higher generation of revenues which may in turn lead to the possibility of lowering of average tax burden.
Q.43 In case of transfer of business (change in the constitution), whether the input tax credit would be available to transferee?
Ans. Where there is a change in the constitution of a taxable person on account of sale, merger, demerger, amalgamation, lease or transfer of the business with the specific provision for transfer of liabilities, the said taxable person shall be allowed to transfer the input tax credit that remains unadjusted in its books of accounts to such transferred, sold, merged, demerged, leased or amalgamated business in the manner prescribed.
Q.44

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hing at a single rate, Indonesia has five positive rates, a zero rate and over 30 categories of exemptions.
In China, GST applies only to goods and the provision of repairs, replacement and processing services. It is only recoverable on goods used in the production process, and GST on fixed assets is not recoverable. There is a separate business tax in the form of VAT. At the same time, it must be noted that GST is a more structured and transparent form of indirect taxation. It has proven itself as the most efficient and effective method of providing revenues that government need, while encouraging economic growth and efficiency.
Q.46 Which countries follow the methodology of Dual GST ?
Ans. Presently Canada is the only country which follows the dual GST model. India is likely to follow the same because of its federal structure.
Q.47 Which is the latest country to introduce GST ?
Ans . The latest country to introduce GST is Malaysia where GST has been levied w.e.f. 1st April, 201

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Foreign Exchange Management (Exports of Goods and Services) Regulations, 2015
68 [(1)/23(R) Dated:- 12-5-2016 Circular
FEMA
Superseded vide A.P. (DIR Series) Circular No. 20 dated 16-01-2026 w.e.f. 01-10-2026

RBI/2015-16/395

A.P. (DIR Series) Circular No.68 [(1)/23(R)]

May 12, 2016

To

All AD Category – I Authorised Dealer Banks

Madam/ Sir

Foreign Exchange Management (Exports of Goods and Services) Regulations, 2015

Attention of Authorised Dealers (ADs) is invited to A.D.(M.A. Series) Circular No. 11 dated May 16, 2000 in terms of which ADs were advised of various Rules, Regulations, Notifications/ Directions issued under the Foreign Exchange Management Act, 1999 (hereinafter referred to as the Act). On

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FREQUENTLY ASKED QUESTIONS ON GST (PART-5)
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 9-5-2016

Frequently Asked Questions (FAQs) on GST and their answers which would help the readers to know and understand about the concept and nuances of proposed Goods and Services Tax (GST) and its models.
These FAQs have been compiled with sole objective of providing a means of better understanding of GST. For details, readers may refer to Government portals / literature.
Q.31 What is the scope of composition and compounding scheme under GST?
Ans. A Composition/Compounding Scheme will be an important feature of GST to protect the interests of small traders and small scale industries. The Composition/Compounding sche

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se. Therefore an adjusted in tax rate is required to avoid reduction in revenue of the government. This adjusted Rate is termed as Revenue Neutral Rate (RNR).
According to Sub-committee on GST rates headed by CEA (MOF), the term “Revenue Neutral Rate (RNR)” will refer to that single rate, which preserves revenue at desired (current) levels. In practice, there will be a structure of rates, but for the sake of analytical clarity and precision it is appropriate to think of the RNR as a single rate. It is a given single rate that gets converted into a whole rate structure, depending on policy choices about exemptions, what commodities to charge at a lower rate (if at all), and what to charge at a very high rate.
Q.33 How is Revenue Neutral Ra

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registrations a legal entity (having the same PAN) has within one State. For example, a legal entity with single registration within a State would have “1‟ as 13th digit of the GSTIN. If the same legal entity goes for a second registration for a second business vertical in the same State, the 13th digit of GSTIN assigned to this second entity would be “2‟.This way 35 business verticals of the same legal entity can be registered within a State. 14th digit of GSTIN would be kept BLANK for future use.
Q.35 How will Goods and Service Tax return filing be done?
Ans. Common periodicity of returns for a class of taxpayers would be enforced. There will be different frequency for filing of returns for different class of taxpayers, aft

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Petitioner can seek pre-deposit waiver under APGST Act by filing with ADC, per Section 19(2A).
Case-Laws
VAT and Sales Tax
Waiver of pre-deposit under APGST Act – It is always open to the pet

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Competition amongst the officers on relevant legal provisions, procedures and guidelines
3/2016-17 Dated:- 29-4-2016 Circular
VAT – Delhi
DEPARTMENT OF TRADE AND TAXES
Govt. of NCT of Delhi
(POLICY BRANCH)
VYAPAR BHAWAN: I.P. ESTATE, NEW DELHI
No. F.3(668)/Policy/VAT/2016/145-151
CIRCULAR NO. 03 of 2016-2017
Dated 29/04/2016
Sub:- Competition amongst the officers on relevant legal provisions, procedures and guidelines.
To motivate the officers to acquire knowledge of the Delhi

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FREQUENTLY ASKED QUESTIONS ON GST (PART-4)
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 28-4-2016

Frequently Asked Questions (FAQs) on GST and their answers which would help the readers to know and understand about the concept and nuances of proposed Goods and Services Tax (GST) and its models.
These FAQs have been compiled with sole objective of providing a means of better understanding of GST. For details, readers may refer to Government portals / literature.
Q.23 What is Central Goods and Services Tax (CGST)
Ans. Under the Central Goods and Services Tax, the two levels of Government would combine their levies in the form of a single National GST, with appropriate revenue sharing arrangements among them. The tax could be controlled and administered by the Central Government. There are several models for such a tax. Australia is the most recent example of a National GST, where it is levied and collected by the Centre, but the proceeds are allocate

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hall mean the tax levied under the IGST Act on the supply of any goods and / or services in the course of inter-state trade or commerce. IGST Act shall apply to whole of India.
Q.26 How will IGST work ?
Ans. Central Government would levy IGST (which would be CGST plus SGST) on all inter-State transactions of taxable goods and services with appropriate provision for consignment or stock transfer of goods and services. The inter-State seller will pay IGST on value addition after adjusting available credit of IGST, CGST, and SGST on his purchases. The Exporting State will transfer to the Centre the credit of SGST used in payment of IGST. The Importing dealer will claim credit of IGST while discharging his output tax liability in his own State. The Centre will transfer to the importing State the credit of IGST used in payment of SGST.
Q.27 How will revenue from IGST be apportioned between Centre and States ?
Ans. Revenue from IGST will be apportioned among Union and States by Parli

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ased.
Q.29 How would a particular transaction of goods and services be taxed simultaneously under Central GST (CGST) and State GST (SGST)?
Ans. The Central GST and the State GST would be levied simultaneously on every transaction of supply of goods and services except the exempted goods and services, goods which are outside the purview of GST and the transactions which are below the prescribed threshold limits. Further, both would be levied on the same price or value unlike State VAT which is levied on the value of the goods inclusive of CENVAT. While the location of the supplier and the recipient within the country is immaterial for the purpose of CGST, SGST would be chargeable only when the supplier and the recipient are both located within the State.
Illustration I: Suppose hypothetically that the rate of CGST is 10% and that of SGST is 10%. When a wholesale dealer of steel in Uttar Pradesh supplies steel bars and rods to a construction company which is also located within the

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in the State of Maharashtra for, let us say ₹ 100, the ad company would charge CGST of ₹ 10 as well as SGST of ₹ 10 to the basic value of the service. He would be required to deposit the CGST component into a Central Government account while the SGST portion into the account of the concerned State Government. Of course, he need not again actually pay ₹ 20 (Rs. 10+Rs. 10) in cash as it would be entitled to set-off this liability against the CGST or SGST paid on his purchase (say, of inputs such as stationery, office equipment, services of an artist etc). But for paying CGST he would be allowed to use only the credit of CGST paid on its purchase while for SGST he can utilize the credit of SGST alone. In other words, CGST credit cannot, in general, be used for payment of SGST. Nor can SGST credit be used for payment of CGST.
Q.30 What is the rate structure proposed under GST?
Ans. The Empowered Committee has decided to adopt a two-rate structure -a lower rate f

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FREQUENTLY ASKED QUESTIONS ON GST (PART-3)
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 26-4-2016

Frequently Asked Questions (FAQs) on GST and their answers which would help the readers to know and understand about the concept and nuances of proposed Goods and Services Tax (GST) and its models.
These FAQs have been compiled with sole objective of providing a means of better understanding of GST. For details, readers may refer to Government portals / literature.
Q.15 Is there going to be any threshold limit for exemption under GST regime?
Ans. Yes, there is likelihood of threshold exemption limit in GST based on gross turnover as in present case. Centre and few states are in favour of ₹ 25 lakh limi

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unt of lower tax incidence.
The present thresholds prescribed in different State VAT Acts below which VAT is not applicable varies from State to State. A uniform State GST threshold across States is desirable and, therefore, it has been considered that a threshold of gross annual turnover of ₹ 10 lakh both for goods and services for all the States and Union Territories might be adopted with adequate compensation for the States (particularly, the States in North-Eastern Region and Special Category States) where lower threshold had prevailed in the VAT regime. Keeping in view the interest of small traders and small scale industries and to avoid dual control, the States also considered that the threshold for Central GST for goods may b

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ful implementation of GST:
* Extensive Computerization and strong IT infrastructure
* E-filing of periodical returns
* E-payment of tax
* Common tax period
* National portal for access of information
* National Agency
* Trained and well equipped staff.
Q.20 Why is Dual GST required?
Ans. India is a federal country where both the Centre and the States have been assigned the powers to levy and collect taxes through appropriate legislation. Both the levels of Government have distinct responsibilities to perform according to the division of powers prescribed in the Constitution for which they need to raise resources. A dual GST will, therefore, be in keeping with the Constitutional requirement of fiscal federalism.
Q.21 What

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FREQUENTLY ASKED QUESTIONS ON GST (PART-2)
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 20-4-2016

Frequently Asked Questions (FAQs) on GST and their answers which would help the readers to know and understand about the concept and nuances of proposed Goods and Services Tax (GST) and its models.
These FAQs have been compiled with sole objective of providing a means of better understanding of GST. For details, readers may refer to Government portals / literature.
Q.7 How will the place of supply be determined?
Ans. It is important to determine whether a transaction is 'intra-State' or 'inter-State' as GST (i.e. CGST plus SGST or IGST, as the case may be) will be applicable accordingly.
For 'goods', the place of supply would be location where the goods are delivered. For 'services' the place of supply would be the recipient location.
However, there are multiple scenarios such as for supply of services in relation to immovable property, wherein this

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DP is likely to grow by 1-2 percent. GST would also eliminate the negative protection favouring imports which will boost domestic manufacturing. Also, lagging regions will catch up with more advanced regions.
Getting the design of the GST right is therefore critical. Specifically, the GST should aim at tax rates that protect revenue, simplify administration, encourage compliance, avoid adding to inflationary pressures, and keep India in the range of countries with reasonable levels of indirect taxes.
Q .10 How will GST benefit industry, trade and agriculture?
Ans. The GST will give more relief to industry, trade and agriculture through a more comprehensive and wider coverage of input tax set-off and service tax set-off, subsuming of several Central and State taxes in the GST and phasing out of CST. The transparent and complete chain of set-offs which will result in widening of tax base and better tax compliance may also lead to lowering of tax burden on an average dealer in industr

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the Empowered Committee has recommended that a threshold of gross annual turnover of ₹ 10 lakh both for goods and services for all the States and Union Territories may be adopted with adequate compensation for the States (particularly, the States in North-Eastern Region and Special Category States) where lower threshold had prevailed in the VAT regime. Keeping in view the interest of small traders and small scale industries and to avoid dual control, the States considered that the threshold for Central GST for goods may be kept at ₹ 1.5 crore and the threshold for services should also be appropriately high. This raising of threshold will protect the interest of small traders. A Composition scheme for small traders and businesses has also been envisaged under GST as will be detailed in Answer to Question 14. Both these features of GST will adequately protect the interests of small traders and small scale industries.
Q.13 How will GST benefit the common consumers?
Ans. Wi

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FREQUENTLY ASKED QUESTIONS ON GST
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 16-4-2016

Frequently Asked Questions (FAQs) on GST and their answers which would help the readers to know and understand about the concept and nuances of proposed Goods and Services Tax (GST) and its models.
These FAQs have been compiled with sole objective of providing a means of better understanding of GST. For details, readers may refer to Government portals / literature.
Q.1 What is Constitutional Amendment Bill in relation to GST?
Ans. The Union Government in third week of December, 2014 (19 December, 2014) introduced Constitution (122nd Amendment) Bill, 2014 in Parliament which when passed shall pave the way for introduction of proposed Goods and Service Tax (GST) in India. This is an improvised version of lapsed 115th Amendment Bill of 2011.
The Bill on passage would enable the Central Government and the State Governments to levy GST. This tax (GST) shall be levie

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of goods and services'. Moreover, the Constitution also does not empower the States to impose tax on imports. Therefore, it is essential to have Constitutional Amendments for empowering the Centre to levy tax on sale of goods and States for levy of service tax and tax on imports and other consequential issues.
As part of the exercise on Constitutional Amendment, there would be a special attention to the formulation of a mechanism for upholding the need for a harmonious structure for GST along with the concern for the powers of the Centre and the States in a federal structure.
Q. 3 What is cascading effect and how GST will address this?
Ans . A tax that is levied on a good at each stage of the production process up to the point of being sold to the final consumer. Cascading effect of taxes is one of the major distortions of the Indian taxation regime. Federal structure of our democracy, allows both states and center to levy taxes separately and this has caused this cascading. While

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w does the proposed GST and present system of VAT compare?
Ans. In principle, there is no difference between present tax structure under VAT and GST as far as the tax on goods is concerned because GST is also a form of VAT on Goods and services. Here at present the sales tax, with an exception of CST, is a VAT system and in case of service tax the system also has the Cenvat credit system hence both sales tax and service tax are under VAT system in our country. At present the goods and services are taxed separately but in GST the difference will be vanished. The overall system of GST is very much similar to the VAT, which can be considered as first step towards GST. Let us see the VAT implementation schedule of various states:
Sr. no
States
Date of Levy of VAT
Number of States
1
Haryana
1-4-2003
1
2
Andhra Pradesh, West Bengal, Kerala, Karnataka, Orissa, NCT Delhi, Tripura, Bihar, Arunachal Pradesh, Sikkim, Punjab, Goa, Mizoram, Nagaland, Jammu and Kashmir, Manipur, Maharash

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vy and collect the State Goods and Services Tax (SGST) on all transactions within a State.
The Centre would levy and collect the Integrated Goods and Services Tax (IGST) on all inter-State supply of goods and services. There will be seamless flow of input tax credit from one State to another. Proceeds of IGST will be apportioned among the States.
GST will be a destination-based tax. All SGST on the final product will ordinarily accrue to the consuming State.
Q.6 When will the liability to pay GST arise?
Ans. The payment liability of CGST and SGST will arise at the time of supply as determined for goods and services. The provisions stipulate payment of GST at the earliest in case of:
Goods: On removal of goods or receipt of payment or issuance of invoice or date on which buyer shows receipt of goods
Services: On issuance of invoice or receipt of payment or date on which recipient shows receipt of services Given that there could be many parameters in determining 'time' of supply

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BASIC CONCEPTS OF GST (PART- 15)
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 9-4-2016

GST Structure
We are going to have a dual GST model. The Center and the States both, will levy GST on supply of goods and services. On Supply of goods and services in the course of Inter-state only Center will levy and collect taxes (IGST) which will be apportioned between Centre and States based on the recommendation of GST Council. The Center will have power to make place of supply rules in this regard. On supply of goods and services in the course of or International trade or commerce, states will not have any power to levy and collect taxes.
For the first two years under GST (or as GST Council would recommend), 1% additional tax apart from GST will be levied on inter-state sale of goods which will be assigned to the state of origin of supply of goods. The rules regarding the place of origin will be formed by the Parliament. The Central Government would also hav

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tral Government may appoint by way of notification, after enactment. For enactment, it has to be passed by two-third majority by both houses of the Parliament of those present and simple majority of total membership of both houses. It has to be then approved by one-half of the state Governments, i.e. atleast 15 states. The said Bill has been passed by Lok Sabha on 6-5-2015 but could not be passed by Rajya Sabha. The same has now been referred to the select committee of the Rajya Sabha.
Fate of Bill in Parliament
It may be noted that 122nd Amendment Bill has since been passed by the Lok Sabha in May 2015 and was referred to the Select Committee by Rajya Sabha on 12.05.2015 .
Select Committee Report tabled in Rajya Sabha
The Select Committee of Rajya Sabha has since tabled its report on GST Bill [i.e., Constitution (122nd) Amendment Bill, 2014] on 22.07.2015. While it endorsed majority of provisions, Congress, AIADMK and Left parties have opposed the GST Bill in its existing form.
T

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that it was aware that while discharging the functions conferred upon the GST Council, it would be guided by the need for a harmonized structure of goods and services tax and for the development of a harmonized national market for goods and services. While construing above definition of 'Band' one has to ensure that harmonized structure of GST rates must not be altered.
The GST Council is also tasked with making recommendations on taxes that would be subsumed by the Central and State GST laws. It has been recommended that in the drafting of state GST laws, revenue sources of Panchayats, Municipalities etc. must be protected. State governments must also take measures to ensure adequate revenue flow to local bodies.
* Voting pattern
The Committee found no merit in altering the voting pattern proposed in the Bill.
* Dispute Settlement Authority
The Bill states that the GST Council would decide upon the modalities to
resolve disputes. The Committee has stated that the creation o

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on­cenvatable additional tax at 1% on inter­state supply of goods. The Committee felt that the provision of 1% additional tax in its present form may lead to cascading effect of taxes. Therefore, it has strongly recommended that following Explanation should be added for word 'supply':
Supply: “All forms of supply made for a consideration.”
* Compensation to States
The Bill proposed that the Parliament 'may' compensate States for loss of revenue for a period which may be extended to five years. The Committee felt that there was no justification for substitution of the word 'may' with 'shall'. It, has however, recommended that compensation should be provided for whole period of five years.
* GST rates of banking services
The Committee recommended that the GST rate for the banking industry should be minimum, to ensure international competitiveness. If possible, banking services could be outside the purview of GST.
* GSTN
The GSTN is the comprehensive back end infrastruc

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ermitted to retain 4% of centre's share of IGST on all interstate supplies of goods. All three notes were in favour of modifying the voting pattern in the GST Council, by giving states three- fourth of the weighted votes, and the centre one- fourth.
Cabinet clears GST Amendments
The Union Cabinet on 29.07.2015 approved changes suggested by a Rajya Sabha Select Committee to the Goods & Services Tax Amendment Bill , including compensating the States for five years for loss of revenue.
Sharing of GST Revenue with States
The State Governments have not objected to the proposed formula of the Union Government for sharing of revenue with States that would be earned as Goods and Service Tax (GST). Under the proposed GST regime, both Centre and States will simultaneously levy GST across the value chain. Tax will be levied on every supply of goods and services for consideration. Centre would levy and collect Central Goods and Services Tax (CGST) and States would levy and collect the Sta

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High Court Upholds Tribunal's Decision on Cross Utilization of Credit for Excise Duty and Service Tax; No Restrictive Provisions Found.
Case-Laws
Central Excise
Cross utilization of the credit on excuse duty and service tax denied – the cross utilization of credit on goods and services being not covered by any restrictive provision, leave alone any prohibition or embargo, the Tribunal's order does not call for any interference – HC
TMI Updates – Highlights, quick notes, marquee, ann

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Extension of e-payment deadline and of banking hours
TRADE NOTICE NO.-02/2016 Dated:- 30-3-2016 Trade Notice
GST
आयुक्त का कार्यालय
केन्द्रीय उत्पाद शुल्क सीमा शुल्क एंव सेवाकर
११३/४ संजय प्लेस, आगरा
C. No. V(30)47/Tech/Budget/2016-17
DATED: 30.03.2016
TRADE NOTICE NO.-02/2016
Subject: Extension of e-payme

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High Court Highlights Need to Rebut Deemed Sale Presumption u/s 46(15)(d) of AGST Act for VAT Cases.
Case-Laws
VAT and Sales Tax
Adequate rebut of Legal presumption – Deemed sale drawn by the

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BASIC CONCEPTS OF GST (PART- 14) – Constitutional Amendments
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 26-3-2016

Amendment of Union List
List I of Seventh Schedule would stand amended as follows:
* Entry 84 relating to excise duty would deal with duties of excise on the following goods manufactured or produced in India, namely:- (a) petroleum crude; (b) high speed diesel; (c) motor spirit (commonly known as petrol); (d) natural gas; (e) aviation turbine fuel; and (f) tobacco and tobacco products.
Petroleum products and tobacco will continue to attract excise duty. However, the Bill specifically provides that petroleum products might not attract GST. However, at a later stage the GST Council might de

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in the course of –
* inter-State trade or commerce or
* international trade or commerce of such goods.
Entry 55 (Taxes on advertisements other than advertisements published in the newspapers and advertisements broadcast by radio or television) shall be omitted.
Entry 62, which deals with entertainment/amusement tax would be substituted, such that taxes on entertainments and amusements can be levied by a Panchayat or a Municipality or a Regional Council or a District Council.
The Bill provides that the import of goods or services will be deemed as supply of goods or services or both, in the course of inter-state trade or commerce and thus it will attract IGST (CGST plus SGST). Thus, import of goods will attract Basic Customs Duty an

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ates.
* The net proceeds of additional tax on supply of goods in any financial year, except the proceeds attributable to the Union territories, shall not form part of the Consolidated Fund of India and be deemed to have been assigned to the States from where the supply originates.
* The Government of India may, where it considers necessary in the public interest, exempt such goods from the levy of this additional tax.
* The Parliament may, by law, formulate the principles for determining the place of origin from where supply of goods take place in the course of inter State trade or commerce.
Amendment of Sixth Schedule – Entertainment tax, etc.
Sixth Schedule deals with provisions as to the Administration of Tribal Areas in the Stat

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BASIC CONCEPTS OF GST (PART- 13) – Constitutional Amendment for GST
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 21-3-2016

What is proposed Constitutional Amendment
A newly inserted article 246A in the Constitution shall provide for special provision with respect to GST. According to the Bill, the following important clauses of the Bill are worth noting:
* Clause 246A
The Legislature of every State shall have power to make laws with respect to goods and services tax imposed by the Union or by such State. Parliament will have exclusive power to make laws with respect to goods and services tax where the supply of goods, or of services, or both takes place in the course of inter-State trade or commerce.

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79A
The President shall, within sixty days from the date of commencement of the Constitution (One Hundred and Twenty-second Amendment) Act, 2014, by order, constitute a Council to be called the Goods and Services Tax Council.
Clause 279A
The Goods and Services Tax 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 subsumed in the goods and services tax;
* the goods and services that may be subjected to, or exempted from the goods and services tax;
* model Goods and Services Tax Laws, principles of levy, apportionment of integrated Goods and Services Tax and the principles that govern the place of supply;
* the t

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cil shall recommend the date on which the goods and services tax be levied on petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel. While discharging the functions conferred by this article, the Goods and Services Tax Council shall be guided by the need for a harmonised structure of goods and services tax and for the development of a harmonised national market for goods and services.
* The Goods and Services Tax Council shall determine the procedure in the performance of its functions.
* The Goods and Services Tax Council may decide about the modalities to resolve disputes arising out of its recommendations.
Meaning of Goods / Services / GST
The amendment Bill defines these

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BASIC CONCEPTS OF GST (PART- 12) – Constitutional Amendment for GST)
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 15-3-2016

The Constitution (115th Amendment) Bill, 2011 proposed to give powers to both, the centre and the states to make laws with respect to GST. The Bill was a necessity because, presently, the Union can not impose excise duty beyond the manufacturing stage and states cannot levy a tax on services. It sought to decide on tax rates, exemptions and threshold limits. It will also make recommendations on taxes, cesses and surcharges by the centre, states and local bodies, which may be subsumed in GST.
Constitution (122nd Amendment) Bill, 2014
The Union Government in third week of December, 2014 (19 December, 2014) introduced Constitution (122nd Amendment) Bill, 2014 in Parliament which when passed shall pave the way for introduction of proposed Goods and Service Tax (GST) in India. This is an improvised version of lapsed 115th Amendment B

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t Features of Constitution (One Hundred And Twenty-Second Amendment) Bill, 2014
The Constitution (One Hundred and Twenty-Second Amendment) Bill, 2014 was introduced in the Lok Sabha on December 19, 2014. The following is the gist of amendments proposed by this Bill:
* The Bill seeks to amend the Constitution to introduce the goods and services tax (GST). Consequently, the GST subsumes various central indirect taxes including the Central Excise Duty, Additional Excise Duties, Service Tax, Additional Customs Duty (CVD) and Special Additional Duty of Customs (SAD), etc. It also subsumes state Value Added Tax (VAT)/Sales Tax, Central Sales Tax, Entertainment Tax, Octroi and Entry Tax, Purchase Tax and Luxury Tax, etc.
Concurrent powers for GST: The Bill inserts a new Article 246A in the Constitution to give the central and state governments the concurrent power to make laws on the taxation of goods and services
Integrated GST (IGST): However, only the centre may levy and collect GST

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embers:
* the Union Finance Minister (as Chairman),
* the Union Minister of State in charge of Revenue or Finance, and
* the Minister in charge of Finance or Taxation or any other, nominated by each state government.
Functions of the GST Council: These include making recommendations on:
* taxes, cess and surcharges levied by the centre, states and local bodies which may be subsumed in the GST;
* goods and services which may be subjected to or exempted from GST;
* model GST laws, principles of levy, apportionment of IGST and principles that govern the place of supply;
* the threshold limit of turnover below which goods and services may be exempted from GST;
* rates including floor rates with bands of GST;
* special rates to raise additional resources during any natural calamity;
* special provision with respect to Arunachal Pradesh, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand; and
* Any other matters

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l.
The net proceeds of additional tax on supply of goods in any financial year, except the proceeds attributable to the Union territories, shall not form part of the Consolidated Fund of India and be deemed to have been assigned to the States from where the supply originates.
Compensation to states: Parliament may by law provide for compensation to states for revenue losses arising out of the implementation of the GST, on the GST Council's recommendations. This would be up to a five-year period.
The Government of India may where it considers necessary in the public interest, exempt such goods from the levy of tax.
Both Centre and States will simultaneously levy GST across the value chain. Centre would levy and collect Central Goods and Services Tax (CGST), and States would levy and collect the State Goods and Services Tax (SGST) on all transactions within a State.
The Centre would levy and collect the Integrated Goods and Services Tax (IGST) on all inter-State supply of goods

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BASIC CONCEPTS OF GST (PART- 11)
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 11-3-2016

Steps Involved in GST Introduction
Following steps are needed on political, administrative and technological fronts for smooth implementation of GST:
* Constitutional amendments (pending in Parliament (Rajya Sabha); Standing Committee Report submitted; draws opposition from Congress)
* Drafting of GST law (process started)
* Strong political commitment (looks a distant reality in present political set up).
* Arriving at common / general consensus on major issues including political agreement (efforts are on through Empowered Committee / negotiations )
* Setting up a high level committee for monitoring the project of GST (Empowered committee is in place).
* Preparing a blueprint/road map for GST (to be made public)
* Creating a conducive environment for GST (slow efforts)
* Centre-States coordination (efforts on, onus on Empowered Committee)
* Cons

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introduced in India from 1st of March on select commodities
1991
Chelliah Committee recommends VAT
1999
FM announces decision to introduce VAT in India.
Formation of Empowered Committee on VAT
2002
Task Force on Indirect Taxes report headed by Kelkar
CENVAT introduced on all commodities at central level
2003
VAT introduced in first Indian State of Haryana
2005
VAT in 24 States/UTs including Punjab, Chandigarh, HP, J&K and Delhi.
2006
VAT implemented in 5 more States including Rajasthan.
2007
FM announces GST introduction in India from April 01, 2010.
Parthasarathi Shome submits a study paper on GST.
Empowered Committee of State Finance Ministers constitutes the Joint Working Group.
VAT implemented in Tamil Nadu & Puducherry.
Central Sales Tax (CST) phase out starts, CST cut to 3%.
Joint Working Group set up for proposing GST roadmap and structure.
2008
VAT introduced in the last Indian State of UP from January 01, 2008.
EC finalises its views on a broad GST

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e for GST roll-out.
GST sub-committee in the EC proposes a revenue-neutral rate of 26.7%.
Alcohol to be kept outside the purview of GST.
All entry taxes proposed to be subsumed under GST, whether collected by States or local bodies.
Petroleum and petroleum products to be subsumed in GST, with nominal or zero-rated tax.
GST compensation to States pegged at around ₹ 11,000 crore.
Centre to provide three year compensation on the revenue loss incurred by States after GST roll-out.
December : GST Constitutional Amendment Bill moved in Lok Sabha
2015
06.05.2015
Lok Sabha passes GST Bill
12.05.2015
Bill on GST not passed by Rajya Sabha ; referred to Select Committee
17.06.2015
Committees Constituted to recommend tax rates and to monitor progress of IT preparedness / mechanism of GST / drafting of rules.
22.07.2015
Select Committee of Rajya Sabha tabled its report on GST Bill
29.07.2015
Union Cabinet approves Select Committee recommendations
11.10.2015
Discussion pape

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NOTHING ON GST IN BUDGET – 2016
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 10-3-2016

Union Budget for F.Y. 2016-17 is a complete miss so far as Goods and Services Tax is concerned, more so when everyone was expecting some announcement on GST in this Budget. The Budget speech in its opening paragraphs highlights the achievements of last three years including economic consolidation, growth and other strengths besides counting on the failures of previous Government but it lacks direction, vision, seriousness and commitment towards migrating to GST.
It is regretful that with this broader focus in mind, Government has failed to touch upon the way forward for GST in India and thus missing the unique opportunit

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awn or pruned as a preparatory exercise for GST regime. Textiles, readymade branded garments, edible oils, jewellery etc have been subjected to excise duty. Many exemptions in Service Tax have also been withdrawn and negative list pruned.
On the fillip side, Budget has introduced new cesses which goes against the very scheme of proposed GST. Infrastructure cess has been levied as excise duty on vehicles w.e.f. 1st March 2016 (i.e., already levied) for the purpose of building traffic free roads and pollution free environment. This cess would be from 1% to 4% on various types of specified vehicles excluding taxies, three wheelers, ambulance, vehicles use by handicapped persons etc.
Another cess called Krishi Kalyan Cess (KKC) @ 0.50 percent

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nding in Rajya Sabha. The draft law on GST in still under preparation and is expected to be put up in public domain before finalization.
It is an irony that even after twenty five years of starting economic reforms in India since 1991, we have not been able to have required tax reforms in place. On one hand we talk of good governance and talk of slogans like 'ek bharat, shreshta bharat' but on the other hand, fail to address the issue of deadlock on GST which is grossly detrimental to the economic interests of the nation. It also reflects weak political will and non-seriousness of all political parties. It would be in fitness of things that the Finance Minister comes out with a paper laying down clear cut road map on GST and its st

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Advance against Supply of Goods and Services
Query (Issue) Started By: – Shyam Naik Dated:- 6-3-2016 Last Reply Date:- 18-9-2016 Corporate Laws / SEBI / LLP
Got 3 Replies
Companies Law
Dear Experts,
A newly incorporated Pvt Ltd Company had taken interest free advances for from its holding company during 2012-13. the advance was taken for meeting its expenses. The Pvt Ltd Company was engaged in sourcing long term coal supply for upcoming power plant of fellow subsidiary. The plant i

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BASIC CONCEPTS OF GST (PART- 10)
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 4-3-2016

Organizational Structure proposed under GST
The organizational structure under the GST regime should be on functional basis rather than on territorial jurisdiction basis. The present organizational structure is based on territorial jurisdiction and one office i.e. Range handles all the different functions pertaining to units falling under their jurisdiction. Thus, one office handles the various functions of registration, audit, refund, adjudication, legal, recovery, taxpayer services etc.
Under GST, it is proposed that different divisions of an office should handle different functions of registration, audit, refund, adjudication, legal, recovery, taxpayer services etc. This has been done to encourage specialization as well as better organizational structure. The new structure would be having:
Organizational Structure for GST
Audit Commissionerate
Anti-Evasion

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It has also been suggested that these specialized groups may provide policy inputs to the Board also.
* It was proposed that the entire staff of Audit Commissionerate is not required to be centralized at the headquarters.
Anti-Evasion Commissionerate
Anti-evasion work is done by three types of teams –
(i) Anti-evasion wing of the Commissionerate Headquarters;
(ii) Preventive units of the Divisions; and
(iii) Directorate General of Central Excise Intelligence (DGCEI).
Out of the three, the DGCEI is carrying out the work of intelligence and investigation at national level. It is top-ranked of three as regards quality of cases booked, value of goods and amount of duty involved in offence cases.
Proposal for GST
* It is proposed that the anti-evasion work should be handled by a more specialized and exclusive Anti-evasion Commissionerate.
* In case of certain states where there are smaller numbers of taxpayers like in North-eastern states, Uttarakhand etc., one anti-evasion Co

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To be continued…………)
Reply By swaminathan venkataraman as =
Spontaneous
GST is, as generally understood, a national code, intended and expected to be implemented and enforced uniformly across the country, the state barriers not coming in the way and leading to any influence / impairment in doing so. Perhaps, while one is not quite clear, the learned writer, it appears, is inclined to the said view as is gathered, though not made explicit, from the very opening sentence of the write-up. Should that be so, and if that were the view finding favour with the experts at large (open to correction, if wrong), then the matter might be worthwhile taking up with the highest authority , sooner than later, to the end of having the entire scheme of things as presently envisaged , revamped, appropriately, beforehand.
The learned expert may wish to bring out sufficient clarity, for the common good.
Dated: 5-3-2016
Reply By Dr. Sanjiv Agarwal as =
Yes, This call shou

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PLEASE CONFIRM ANY CHANGES MADE OF EXCISE DUTY AGST CH 3003 I,E 6% AS EARLIER SAME OR NOT
Query (Issue) Started By: – nandankumar roy Dated:- 4-3-2016 Last Reply Date:- 8-3-2016 Central Excise
Got 2 Replies
Central Excise
PLEASE CONFIRM ANY CHANGES MADE OF EXCISE DUTY AGST CH 3003 (DRUGS) ARE SAME OR CHANGED I,E 6% AS EARLIER .
N ROY
Reply By KASTURI SETHI:
The Reply:
No change in Chapter 30 in Central Excise Tariff Act.
Reply By Mahir S:
The Reply:
no change of duty
Discu

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GST rollout to mark an unprecedented reforms measure in the modern global tax history
GST
Dated:- 26-2-2016

Economic Survey 2015-16 proposes widening tax net from 5.5 percent of earning individuals to more than 20 percent, reasonable taxation of the better-off individuals with income from Real Estate and Agriculture, phasing out of the tax exemption Raj
Higher Property Tax Rates to check speculation in real estate
The Economic Survey terms the proposed Goods and Services Tax (GST) as a reforms measure perhaps unprecedented in the modern global tax history. The GST, to be implemented by the Centre, 28 States and 7 Union Territories, awaits a Constitutional amendment requiring broad political consensus. Estimated to affect bet

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. This difference in taxpaying and voting results in contrasting phenomena such as the Indian state being able to avert famines while chronic malnutrition remains a challenge, organizing mega events but routine safety for women being more difficult to achieve, and effective state response to floods and tsunami while water and power metering remain more challenging.
As a steps towards building fiscal capacity, the Survey suggests that the easiest way to widen the tax base would be not to raise exemption thresholds. Making a study of the data since Independence, the document points out that the exemption thresholds have been raised much more rapidly than underlying income growth resulting in a widening of the wedge between average income and

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merits and demerits of GST
Query (Issue) Started By: – Ramakrishnan T H Dated:- 20-2-2016 Last Reply Date:- 11-9-2016 Goods and Services Tax – GST
Got 10 Replies
GST
Sir,
Please provide the details about the merits and demerits of Goods and Services Tax provisions.
Ramakrishnan.T.H
Palakkad
Reply By KASTURI SETHI:
The Reply:
Sh.Ramakrishnan.T.H,
Destination is far away. So many changes are likely to take place. In this forum, Experts, namely, Dr.Sanjiv Agarwal, Dr.Bimal Jain have written so many articles on GST covering all the aspects. These are very useful.
Reply By Ganeshan Kalyani:
The Reply: Yes as said by Sri Kasturi Sir there are so many changes being incorporated in the GST draft based on the Committee Study. An

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nothing can be concluded as of now in respects of Merits and Demerits.
Reply By MARIAPPAN GOVINDARAJAN:
The Reply:
The merits and demerits could be determined only it comes in effect. Till such times assumptions may be there.
Reply By Ganeshan Kalyani:
The Reply: You may please refer issue id 108821 where Sri Mahir Sir has elaborated the merits. Thanks.
Reply By AJAY JAIN:
The Reply:
Though it is not sure in what form ultimately the GST law would come into play, however, some inherent benefits may be envisaged at this stage like compliance under Single law instead of multiple Central & State laws, broadly all transaction would attract GST, so litigations in respect of determination whether process amounts to 'Manufacture' or not

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eply:
SH.AJAY JAIN JI,
Sir, Thanks for useful preliminary information on the issue. I think still it is not high time even for raring to go inasmuch as the situation is fluid.
Reply By Ganeshan Kalyani:
The Reply:
Sir, whether GST is possible to be implemented this year ???
The Congress has given its support with the condition set earlier. They were I) 1% additional tax ii) 18% fixing a cap iii) an independent judge for GST dispute. BJP has accepted on the terms except fixing of 18% tax rate as a higher rate.
Will this year be a dawn for GST ? Let's toss…
Reply By YAGAY AND SUN:
The Reply:
Merits
* Shall bring growth in GDP.
* Tax Compliance would be better.
* FII shall increase.
* Tax Collection Cost shall go south

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BASIC CONCEPTS OF GST (PART-9)
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 18-2-2016

Challenges for GST Implementation
Any change in taxation is difficult to implement, and in a federal republic like India where states are as powerful as they are, problems get compounded.
The biggest of all challenges continue to be to understand the enormity of GST. It will impact every one and every part of business from manufacturing to financial reporting to tax accounting to supply chain to consumption. This will even require potential redesign of procurement vendor contracts, buying models, changes in information technology and ERP systems and logistics. The cost impact to achieve GST preparedness would differ from industry to industry and company to company. There will be issues on product mix, distribution, cash flows, working capital and ERP modules. Understanding and preparing for GST is a big management issue.
Because of the huge change costs, there coul

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ndia, being a federal state, there is wide disparity among the states in terms of their gross domestic production and tax base and revenue. As a result, it will affect different states and their revenues differently as also diverse impact on people.
However, it should be borne in mind that all kinds of goods and services tax (GSTs) in federal countries all over the world are imperfect. Brazil's GST is so complicated that economists have called it a patchwork quilt. In European Union also the structure is defective such that in poorer countries like Italy and Spain, etc, there is a lot of cash sale. Even in Canada, each state collects it own sales tax apart from the central levy of seven per cent. In India, we have been able to subsume the sales tax, which is a better model than in Canada.
Challenge also lies in making GST a clean and transparent tax law, unlike the present taxes. Also, we need to work out a clear and transitional phase. Economic fairness which comes from equity,

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increase in Assesses: The dual GST model will widen the tax net by taxing every economic supply in the distribution network. This will lead to rapid increase in assesses. It will require some of the businesses to restructure their distribution network to reduce additional tax burden on the consumer with a view to be price competitive. Though it will generate revenue in a neutral and transparent way, the Government will have to ensure that the ultimate consumer is not burdened with tax beyond his capacity.
Logistics: GST has to be implemented simultaneously by the Central & State Government. And, here Central govt can only provide the proverbial carrot but doesn't have the stick since it doesn't have constitutional authority to levy the tax without States acceptance, and hence its pretty much at the individual State's mercy to implement. And, forming a consensus between all 28 states having different political parties & their own agendas isn't that easy.
States relu

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ion and transfer of revenue to respective States. The person collecting the tax on his supply in case of inter-State transactions should deposit the tax in the account of the State where the supply has been made. Then on the basis of revenue reports of the respective Governments, the banks can allocate the revenue to the respective States or the Central Government, as the case may be. The banking system needs to be improved fur this purpose. The challenge can be met by proper training and up gradation of tax administration with technological interface.
IT infrastructure: If the Government wanted to introduce the proposed indirect tax, IT infrastructure for the Goods and Services would have to be put on fast track. IT infrastructure will play a huge role in interstate GST. IGST will be collected and passed on the states. It will have to be transferred electronically.
Effective Credit Mechanism: If for any reason the proposed dual GST model does not allow credit to State GST in respe

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big issue because service is taxed by the Centre and the place of levy does not affect revenue receipts. In GST, however, the place of supply will have to be clearly defined to avoid disputes among states in case of inter­ state transactions. Time of supply will explain the point at which tax would be levied – invoice date, due date or payment date. Currently, different taxes are levied by the Centre and the states at various stages. The service tax is levied on the receipt of payment, excise duty is imposed by the fifth of following month and sales tax is levied when the sale happens. These variations will be eliminated in GST.
The challenges posed by GST are no different from what other countries have faced while implementing major tax reforms. Despite the various impediments to the proposed transition, once implemented GST is likely to usher in a more taxpayer friendly regime that could help make various business decisions 'tax neutral' . Until the time GST is implement

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