GST – CONCEPT & STATUS (AS ON 1st JANUARY, 2019)
GST
Dated:- 8-1-2019
GOODS AND SERVICE TAX (GST)
CONCEPT & STATUS
CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS (CBIC)
DEPARTMENT OF REVENUE
MINISTRY OF FINANCE
GOVERNMENT OF INDIA
AS ON 1st JANUARY, 2019
The uniform system of taxation, which, with a few exceptions of no great consequence, takes place in all the different parts of the United Kingdom of Great Britain, leaves the interior commerce of the country, the inland and coasting trade, almost entirely free. The inland trade is almost perfectly free, and the greater part of goods may be carried from one end of the kingdom to the other, without requiring any permit or let-pass, without being subject to question, visit, or examination from the revenue officers. ……This freedom of interior commerce, the effect of uniformity of the system of taxation, is perhaps one of the principal causes of the prosperity of Great Britain; every great country being ne
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2. CONSTITUTIONAL SCHEME OF INDIRECT TAXATION IN INDIA BEFORE GST :
2.1 Article 265 of the Constitution of India provides that no tax shall be levied or collected except by authority of law. As per Article 246 of the Constitution, Parliament has exclusive powers to make laws in respect of matters given in Union List (List I of the Seventh Schedule) and State Government has the exclusive jurisdiction to legislate on the matters containing in State List (List II of the Seventh Schedule). In respect of the matters contained in Concurrent List (List III of the Seventh Schedule), both the Central Government and State Governments have concurrent powers to legislate.
2.2 Before advent of GST, the most important sources of indirect tax revenue for the Union were customs duty (entry 83 of Union List), central excise duty (entry 84 of Union List), and service tax (entry 97 of Union List). Although entry 92C was inserted in the Union List of the Sevent
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try 53 of the State List). CST was also an important source of revenue though the same was levied by the Union.
3. HISTORICAL EVOLUTION OF INDIRECT TAXATION IN POSTINDEPENDENCE INDIA TILL GST:
3.1 In post-Independence period, central excise duty was levied on a few commodities which were in the nature of raw materials and intermediate inputs, and consumer goods were outside the net by and large. The first set of reform was suggested by the Taxation Enquiry Commission (1953-54) under the chairmanship of Dr. John Matthai. The Commission recommended that sales tax should be used specifically by the States as a source of revenue with Union governments' intervention allowed generally only in case of inter-State sales. It also recommended levy of a tax on inter-State sales subject to a ceiling of 1%, which the States would administer and also retain the revenue.
3.2 The power to levy tax on sale and purchase of goods in the course of interSta
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ne-to-one correlation between input and manufactured goods for eligibility to take input tax credit. The comprehensive coverage of MODVAT was achieved by 1996-97.
3.4 The next wave of reform in indirect tax sphere came with the New Economic Policy of 1991. The Tax Reforms Committee under the chairmanship of Prof. Raja J Chelliah was appointed in 1991. This Committee recommended broadening of the tax base by taxing services and pruning exemptions, consolidation and lowering of rates, extension of MODVAT on all inputs including capital goods. It suggested that reform of tax structure must have to be accompanied by a reform of tax administration, if complete benefits were to be derived from the tax reforms. Many of the recommendations of the Chelliah Committee were implemented. In 19992000, tax rates were merged in three rates, with additional rates on a few luxury goods. In 2000-01, three rates were merged into one rate called Central Value Added Tax (CENVAT). A few co
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levied in States since independence. Sales tax was plagued by some serious flaws. It was levied by States in an uncoordinated manner the consequences of which were different rates of sales tax on different commodities in different States. Rates of sales tax were more than ten in some States and these varied for the same commodity in different States. Inter-state sales were subjected to levy of Central Sales Tax. As this tax was appropriated by the exporting State credit was not allowed by the dealer in the importing State. This resulted into exportation of tax from richer to poorer states and also cascading of taxes. Interestingly, States had power of taxation over services from the very beginning. States levied tax on advertisements, luxuries, entertainments, amusements, betting and gambling.
3.7 A report, titled “Reform of Domestic Trade Taxes in India”, on reforming indirect taxes, especially State sales tax, by National Institute of Public Finance and Policy und
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in 1995. A standing Committee of State Finance Ministers was constituted, as a result of meeting of the Union Finance Ministers and Chief Ministers in November, 1999, to deliberate on the design of VAT which was later made the Empowered Committee of State Finance Ministers (EC). Haryana was the first State to implement VAT, in 2003. In 2005, VAT was implemented in most of the states. Uttar Pradesh was the last State to implement VAT, from 1st January, 2008.
4. INTERNATIONAL PERSPECTIVES ON GST / VAT:
4.1 VAT and GST are used inter-changeably as the latter denotes comprehensiveness of VAT by coverage of goods and services. France was the first country to implement VAT, in 1954. Presently, more than 160 countries have implemented GST / VAT in some form or the other. The most popular form of VAT is where taxes paid on inputs are allowed to be adjusted in the liability at the output. The VAT or GST regime in practice varies from one country to another in terms o
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ween the national and subnational entities (Brazil, Russia). While a centralized structure reduces fiscal autonomy for the States, a decentralized structure enhances compliance burden for the taxpayers. Canada is a federal country with unique model of taxation in which certain provinces have joined federal GST and others have not. Provinces which administer their taxes separately are called 'non- participating provinces', whereas provinces which have teamed up with the Federal Government for tax administration are called 'participating provinces'.
4.3 The rate of GST varies across countries. While Malaysia has a lower rate of 6% (Malaysia though scrapped GST in 2018 due to popular uproar against it), Hungary has one of the highest rate of 27%. Australia levies GST at the rate of 10% whereas Canada has multiple rate slabs. The average rate of VAT across the EU is around 19.5%.
5. NEED FOR GST IN INDIA:
5.1 The introduction of CENVAT re
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ury Tax, Entertainment Tax, etc. which have still not been subsumed in the VAT. Further, there has also not been any integration of VAT on goods with tax on services at the State level with removal of cascading effect of service tax.
5.3 CST was another source of distortion in terms of its cascading nature. It was also against one of the basic principles of consumption taxes that tax should accrue to the jurisdiction where consumption takes place. Despite remarkable harmonization in VAT regimes under the auspices of the EC, the national market was fragmented with too many obstacles in free movement of goods necessitated by procedural requirement under VAT and CST.
5.4 In the constitutional scheme, taxation powers on goods was with Central Government but it was limited upto the stage of manufacture and production while States have powers to tax sale and purchase of goods. Centre had powers to tax services and States also had powers to tax cert
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Force on Fiscal Responsibility and Budget Management (FRBM) recommended in 2005 introduction of a comprehensive tax on all goods and service replacing Central level VAT and State level VATs. It recommended replacing all indirect taxes except the customs duty with value added tax on all goods and services with complete set off in all stages of making of a product.
6.2 An announcement was made by the then Union Finance Minister in Budget (2007-08) to the effect that GST would be introduced with effect from April 1, 2010 and that the EC, on his request, would work with the Central Government to prepare a road map for introduction of GST in India. After this announcement, the EC decided to set up a Joint Working Group in May 10, 2007, with the then Adviser to the Union Finance Minister and Member-Secretary of the Empowered Committee as its Co-conveners and four Joint Secretaries of the Department of Revenue of Union Finance Ministry and all Finance Secretaries of
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. These views of EC were then sent to the Government of India, and the comments of Government of India were received on December 12, 2008. These comments were duly considered by the EC (December 16, 2008), and it was decided that a Committee of Principal Secretaries/Secretaries of Finance/Taxation and Commissioners of Trade Taxes of the States would be set up to consider these comments, and submit their views. These views were submitted and were accepted in principle by the EC (January 21, 2009). Based on discussions within the EC and between the EC and the Central Government, the EC released its First Discussion Paper (FDP) on GST in November, 2009. This spelled out the features of the proposed GST and has formed the basis for discussion between the Centre and the States.
7. CHALLENGES IN DESIGNING GST:
7.1 In the discussion that preceded amendment in the Constitution for GST, there were a number of thorny issues that required resolution and agreement betwee
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o collect at least some tax from inter-State sales in order to recover the cost of infrastructure and public services provided by the State Governments to the industries producing the goods which are consumed in other states. This line of reasoning is based on the assumption that in the absence of a tax on inter-State sales, the location of export industries within their jurisdiction would not contribute to the tax revenues of the exporting state. This view was missing the fact that any value addition in a jurisdiction necessarily means extra income in the hands of the residents of that jurisdiction. Spending of this income on consumer goods expands the sales tax base of the producing states and thereby contributes to their revenues. In fact, to the extent that consumer expenditures are dependent on the level of income of the residents of a State, it is the producing States that stand to gain the most in additional sales tax revenues (even under the destination basis of consumption tax
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lytical 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 and what to charge at a very high rate.
7.3.2 The Committee recommended RNR of 15-15.5% (to be levied by the Centre and States combined). The lower rates (to be applied to certain goods consumed by the poor) should be 12%. Further, the sin or demerit rates (to be applied on luxury cars, aerated beverages, pan masala, and tobacco) should be 40%.
7.4 Dispute Settlement: A harmonized system of taxation necessarily required that all stakeholders stick to the decisions taken by the supreme body, which was later constituted as the Goods and Services Tax Council (the Council). However, the possibility of departure from the recommendations of such body cannot be completely ruled out. Any departure would d
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were uncertain about impact of GST on their finances and moreover loss of autonomy in collection of tax revenue, States unanimously argued for exclusion of these products from the ambit of GST. In the 115th Amendment Bill alcoholic liquor for human consumption and five petroleum products namely crude petroleum, high speed diesel, motor spirit or petrol, aviation turbine fuel and natural gas were kept out of GST. But in the 122nd Amendment Bill, only alcoholic liquor for human consumption was kept outside GST and above mentioned five petroleum products were proposed to be brought under GST from a date to be recommended by the Council. The Central Government has also retained its power to tax tobacco and tobacco products, though these are also under GST. Thus, to ensure smooth transition and provide fiscal buffer to States, it was agreed to keep alcohol completely out of the ambit of GST.
8. CONSTITUTIONAL AMENDMENT:
8.1 As explained above, unification of Centr
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sp; The Constitution (115th Amendment) Bill, 2011, in relation to the introduction of GST, was introduced in the Lok Sabha on 11th March, 2011. The Bill was referred to the Standing Committee on Finance on 29th March, 2011. The Standing Committee submitted its report on the Bill in August, 2013. However, the Bill, which was pending in the Lok Sabha, lapsed with the dissolution of the 15th Lok Sabha.
8.3 The Constitution (122nd Amendment) Bill, 2014 was introduced in the 16th Lok Sabha on 19th December, 2014. The Constitution Amendment Bill was passed by the Lok Sabha in May, 2015. The Bill was referred to the Select Committee of Rajya Sabha on 12th May, 2015. The Select Committee submitted its Report on the Bill on 22nd July, 2015. The Bill with certain amendments was finally passed in the Rajya Sabha and thereafter by Lok Sabha in August, 2016. Further the bill was ratified by required number of States and received assent of the President on 8th September, 2016 and
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as may be provided by Parliament by law on the recommendations of the Goods and Services Tax Council. It also provides that Parliament may, by law, formulate the principles for determining the place of supply, and when a supply of goods, or of services, or both takes place in the course of interState trade or commerce.
iv. Article 270 has been amended to provide for distribution of goods and services tax collected by the Union between the Union and the States.
v. Article 271 has been amended which restricts power of the Parliament to levy surcharge under GST. In effect, surcharge cannot be imposed on goods and services which are subject to tax under Article 246A.
vi. Article 279A has been inserted to provide for the constitution and mandate of GST Council.
vii. Article 366 has been amended to exclude alcoholic liquor for human consumption from the ambit of GST, and services have been defined.
viii. Article 368 has been amended to pr
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commendation of the Goods and Services Tax Council.
9. GOODS & SERVICE TAX COUNCIL:
9.1 As provided for in Article 279A of the Constitution, the Goods and Services Tax Council (the Council) was notified with effect from 12th September, 2016. The Council is comprised of the Union Finance Minister (who will be the Chairman of the Council), the Minister of State (Revenue) and the State Finance/Taxation Ministers as members. It shall make recommendations to the Union and the States on the following issues:
i. the taxes, cesses and surcharges levied by the Centre, the States and the local bodies which may be subsumed under GST;
ii. the goods and services that may be subjected to or exempted from the GST;
iii. model GST laws, principles of levy, apportionment of IGST and the principles that govern the place of supply;
iv. the threshold limit of turnover below which the goods and services ma
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ices Tax Council shall constitute the quorum at its meetings. The Goods and Services Tax Council shall determine the procedure in the performance of its functions. Every decision of the Goods and Services Tax Council shall be taken at a meeting, by a majority of not less than three-fourths of the weighted votes of the members present and voting, in accordance with the following principles, namely: –
i. the vote of the Central Government shall have a weightage of one-third of the total votes cast, and
ii. the votes of all the State Governments taken together shall have a weightage of two-thirds of the total votes cast, in that meeting.
9.4 The Council has met for 31 times and no occasion has arisen so far that required voting to decide any matter. The following major recommendations have been made by the Council:
i. The threshold exemption limit would be Rs. 20 lakh. For special category States (except J&K) enumerated in article 279A o
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sation Law paving the way for implementation of GST.
v. In order to ensure single interface, all administrative control over 90% of taxpayers having turnover below Rs. 1.5 crore would vest with State tax administration and over 10% with the Central tax administration. Further all administrative control over taxpayers having turnover above Rs. 1.5 crore shall be divided equally in the ratio of 50% each for the Central and State tax administration.
vi. Powers under the IGST Act shall also be cross-empowered on the same basis as under CGST and SGST Acts with few exceptions.
vii. Power to collect GST in territorial waters shall be delegated by Central Government to the States.
viii. Formula and mechanism for GST Compensation Cess has been finalized.
ix. Rules on composition, registration, input tax credit, invoice, determination of value of supply, accounts and records, returns, payment, refund, assessment and audit, ad
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ad. The modalities for implementation would be finalized in consultation with GSTN and the Accounting authorities.
xv. A scheme of single authority for disbursement of the refund amount sanctioned by either the Centre or the State tax authorities would be implemented on pilot basis. The modalities for the same shall be finalized shortly.
xvi. The new return filing system shall be introduced on a trial basis from 01.04.2019 and on mandatory basis from 01.07.2019.
xvii. The due date for furnishing the annual returns in FORM GSTR-9, FORM GSTR-9A and reconciliation statement in FORM GSTR-9C for the Financial Year 2017 – 2018 shall be extended till 30.06.2019.
xviii. ITC in relation to invoices issued by the supplier during FY 2017-18 may be availed by the recipient till the due date for furnishing of FORM GSTR-3B for the month of March, 2019, subject to specified conditions.
xix. TDS/TCS provisions to be implemented from 01.10.2018. Further, t
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ther taxpayers would have to file FORM GSTR-1 on a monthly basis.
xxv. One more window for completion of migration process is being allowed. The due date for the taxpayers who did not file the complete FORM GST REG-26 but received only a Provisional ID (PID) till 31.12.2017 for furnishing the requisite details to the jurisdictional nodal officer shall be extended till 31.01.2019. Also, the due date for furnishing FORM GSTR3B and FORM GSTR-1 for the period July, 2017 to February, 2019/quarters July, 2017 to December, 2018 by such taxpayers shall be extended till 31.03.2019.
xxvi. Late fee shall be completely waived for all taxpayers in case FORM GSTR-1, FORM GSTR-3B &FORM GSTR-4 for the months / quarters July, 2017 to September, 2018, are furnished after 22.12.2018 but on or before 31.03.2019.
xxvii. From October 2017 onwards, the amount of late fee for late filing of GSTR-3B payable by a registered person is as follows: o whose tax liability for t
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eign convertible currency – such suppliers shall be eligible for input tax credit.
xxxi. Centralized UIN shall be issued to every Foreign Diplomatic Mission / UN Organization by the Central Government.
xxxii. Rate of interest on delayed payments and delayed refund has been recommended.
xxxiii. A Group of Ministers has been constituted to look into the issues being faced by MSMEs and to provide solutions for the same.
xxxiv. A Group of Ministers has been constituted to study the revenue trend, including analyzing the reasons for structural patterns affecting the revenue collection in some of the States. The study would include the underlying reasons for deviation from the revenue collection targets vis a vis original assumptions discussed during the design of GST system, its implementation and related structural issues. The Group of Ministers will be assisted by the committee of experts from Central Government, State Governments and th
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ods and Services Tax (Amendment) Act, 2018, the Union Territory Goods and Services Tax (Amendment) Act, 2018 and the Goods and Services Tax (Compensation to States) Amendment Act, 2018, respectively. The major amendments brought about by these Acts are as below:
i. Upper limit of turnover for opting for composition scheme to be raised from Rs. 1 Cr to Rs. 1.5 Cr. Present limit of turnover can now be raised on the recommendations of the Council.
ii. Composition dealers to be allowed to supply services (other than restaurant services), for up to a value not exceeding 10% of turnover in the preceding financial year, or Rs. 5 lakh, whichever is higher.
iii. Levy of GST on reverse charge mechanism on receipt of supplies from unregistered suppliers, to be applicable to only specified goods in case of certain notified classes of registered persons, on the recommendations of the GST Council.
iv. The threshold exemption limit for registr
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for home consumption; and
c. Supply of goods in case of high sea sales.
ix. Scope of input tax credit is being widened, and it would now be made available in respect of the following:
a. Most of the activities or transactions specified in Schedule III;
b. Motor vehicles for transportation of persons having seating capacity of more than thirteen (including driver), vessels and aircraft;
c. Services of general insurance, repair and maintenance in respect of motor vehicles, vessels and aircraft on which credit is available; and
d. Goods or services which are obligatory for an employer to provide to its employees, under any law for the time being in force.
x. Registered persons may issue consolidated credit/debit notes in respect of multiple invoices issued in a Financial Year.
xi. Amount of pre-deposit payable for filing of appeal before the Appellate Authority and the Appellate T
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Central Government and fifty per cent. to the State Governments or the Union territories, as the case may be, on ad hoc basis and this amount shall be adjusted against the amount finally apportioned.
xviii. Fifty per cent of such amount, as may be recommended by the Council, which remains unutilised in the Compensation Fund, at any point of time in any financial year during the transition period shall be transferred to the Consolidated Fund of India as the share of Centre, and the balance fifty per cent. shall be distributed amongst the States in the ratio of their base year revenue.
xix. In case of shortfall in the amount collected in the Fund against the requirement of compensation to be released for any two months' period, fifty per cent. of the same, but not exceeding the total amount transferred to the Centre and the States as recommended by the Council, shall be recovered from the Centre and the balance fifty per cent. from the States in the ratio of the
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yer and the supplier. Simply put, the process would be “UPLOAD – LOCK – PAY” for most tax payers.
iv. Taxpayers would have facility to create his profile based on nature of supplies made and received. The fields of information which a taxpayer would be shown and would be required to fill in the return would depend on his profile.
v. NIL return filers (no purchase and no sale) shall be given facility to file return by sending SMS.
vi. There shall be quarterly filing of return for the small taxpayers having turnover below Rs. 5 Cr as an optional facility. Quarterly return shall be similar to main return with monthly payment facility but for two kinds of registered persons – small traders making only B2C supply or making B2B + B2C supply. For such taxpayers, simplified returns have been designed called Sahaj and Sugam. In these returns details of information required to be filled is lesser than that in the regular return.
vii. The new re
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ble through the electronic cash ledger.
The above recommendations of the Council will be made effective only after the necessary amendments in the GST Acts are carried out.
10. THE DESIGN OF INDIAN GST:
10.1 Concurrent dual model of GST: India has adopted dual GST model because of its unique federal nature. Under this model, tax is levied concurrently by the Centre as well as the States on a common base, i.e. supply of goods or services or both. GST to be levied by the Centre would be called Central GST (Central tax / CGST) and that to be levied by the States would be called State GST (State Tax / SGST). State GST (State Tax / SGST) would be called UTGST (Union territory tax) in Union Territories without legislature. CGST & SGST / UTGST shall be levied on all taxable intra-State supplies.
10.2 The IGST Model: Inter-State supply of goods or services shall be subjected to integrated GST (Integrated tax / IGST). The IGST model is a unique con
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No upfront payment of tax or substantial blockage of funds for the inter-State supplier or recipient.
iii. No refund claim in exporting State, as ITC is used up while paying the tax.
iv. Self-monitoring model.
v. Model takes 'Business to Business' as well as 'Business to Consumer' transactions into account.
10.3 Tax Rates: Owing to unique Indian socio-economic milieu, four rates namely 5%, 12%, 18% and 28% have been adopted. Besides, some goods and services are exempt also. Rate for precious metals is an exception to 'four-tax slab-rule' and the same has been fixed at 3%. In addition, unworked diamonds, precious stones, etc. attracts a rate of 0.25%. A cess over the peak rate of 28% on certain specified luxury and demerit goods, like tobacco and tobacco products, pan masala, aerated water, motor vehicles is imposed to compensate States for any revenue loss on account of implementation of GST. The list of goods and services in case of which reverse charge would be appli
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specified petroleum products, will not be accounted as part of the base year revenue. A GST Compensation Cess is levied on the supply of certain goods and services, as recommended by the GST Council to finance the compensation cess.
10.5 E-Way Bill System: The introduction of e-way (electronic way) bill is a monumental shift from the earlier “Departmental Policing Model” to a “SelfDeclaration Model”. It envisages one e-way bill for movement of the goods throughout the country, thereby ensuring a hassle free movement for transporters throughout the country. The e-way bill system has been introduced nation-wide for all inter-State movement of goods with effect from 1st April, 2018. As regards intraState supplies, option was given to States to choose any date on or before 3rd June, 2018. All States have notified e-way bill rules for intra-State supplies last being NCT of Delhi where it was introduced w.e.f. 16th June, 2018.
10.6 Anti-Profiteering Mechanism: Implementa
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of commensurate reduction in prices. It can order reduction in prices, imposition of penalty, cancellation of registration and any other decision as may deem fit, after inquiry into the case.
10.7 Concept of Supply: GST would be applicable on supply of goods or services as against the present concept of tax on manufacture of goods or on sale of goods or on provision of services. It includes all sorts of activities like manufacture, sale, barter, exchange, transfer etc. It also includes supplies made without consideration when such supplies are made in certain specified situations.
10.8 Threshold Exemption: A common threshold exemption would apply to both CGST and SGST. Taxpayers with an annual turnover of Rs. 20 lakh (Rs. 10 lakh for special category States (except J&K) as specified in article 279A of the Constitution) would be exempt from GST. The GST Act has been amended to raise threshold exemption limit in case of six more special category States. The amendment shall
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aking.
10.11 Cross-utilization of ITC: IGST credit can be used for payment of all taxes. CGST credit can be used only for paying CGST or IGST. SGST credit can be used only for paying SGST or IGST.
The credit would be permitted to be utilized in the following manner:
i. ITC of CGST allowed for payment of CGST & IGST in that order;
ii. ITC of SGST allowed for payment of SGST & IGST in that order;
iii. ITC of UTGST allowed for payment of UTGST & IGST in that order;
iv. ITC of IGST allowed for payment of IGST, CGST & SGST/UTGST in that order.
ITC of CGST cannot be used for payment of SGST/UTGST and vice versa.
10.12 Settlement of Government Accounts: Accounts would be settled periodically between the Centre and the State to ensure that the credit of SGST used for payment of IGST is transferred by the originating State to the Centre. Similarly, the IGST used for payment of SGST would be transferred by Centre to the destination State. Further the SGST po
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efund of tax to be sought by taxpayer or by any other person who has borne the incidence of tax within two years from the relevant date. Refund of unutilized ITC also available in zero rated supplies and inverted tax structure.
10.16 Tax Collection at Source: Obligation on electronic commerce operators to collect 'tax at source', at such rate not exceeding two per cent of net value of taxable supplies, out of payments to suppliers supplying goods or services through their portals. The provision for TCS has not been operationalized wef 01st October 2018.
10.17 Self-assessment: Self-assessment of the taxes payable by the registered person shall be the norm. Audit of registered persons shall be conducted on selective basis. Limitation period for raising demand is three (3) years from the due date of filing of annual return or from the date of erroneous refund for raising demand for shortpayment or non-payment of tax or erroneous refund and its adjudication in normal ca
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ntre would adopt such authority under CGST Act.
10.21 Transitional Provisions: Elaborate transitional provisions have been provided for smooth transition of existing taxpayers to GST regime.
10.21 Subsuming of taxes, duties etc.: Among the taxes and duties levied and collected by the Union, Central Excise duty, Duties of Excise (Medicinal and Toilet Preparations), Additional Duties of Excise (Goods of Special Importance), Additional Duties of Excise (Textiles and Textile Products), Additional Duties of Customs (commonly known as CVD), Special Additional Duty of Customs (SAD), Service Tax and cesses and surcharges insofar as they related to supply of goods or services were subsumed. As far as taxes levied and collected by States are concerned, State VAT, Central Sales Tax, Purchase Tax, Luxury Tax, Entry Tax, Entertainment Tax (except those levied by the local bodies), Taxes on advertisements, Taxes on lotteries, betting and gambling, cesses and surcharges insofar as they
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s and Services Tax (Amendment) Act, 2018, the Union Territory Goods and Services Tax (Amendment) Act, 2018 and the Goods and Services Tax (Compensation to States) Amendment Act, 2018, respectively. In order to ensure that the above changes in the Centre and the State GST laws are brought into force simultaneously, these amendments will be made effective from 01.02.2019.
11.3. On 22nd June, 2017, the first notification was issued for GST and notified certain sections under CGST. Since then, 154 notifications under CGST Act have been issued notifying sections, notifying rules, amendment to rules and for waiver of penalty, etc. 16, 32 and 1 notifications have also been issued under IGST Act, UTGST Act and GST (Compensation to States) Act respectively. Further 77, 81, 77 and 9 rate related notifications each have been issued under the CGST Act, IGST Act, UTGST Act and GST (Compensation to States) Act respectively. Similar notifications have been issued by all the States under
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Rs. 2,256 Cr.
12.2. Augmentation of human resources would be necessary to handle large taxpayers' base in GST scattered across the length and breadth of the country. Capacity building, particularly in the field of Accountancy and Information Technology for the departmental officers has to be taken up in a big way. A massive four-tier training programme has been conducted under the leadership of NACIN. This training project is aimed at imparting training on GST law and procedures to more than 60,000 officers of CBIC and Commercial Tax officers of State Governments.
12.3. CBIC would be responsible for administration of the CGST and IGST law. In addition, excise duty regime would continue to be administered by the CBIC for levy and collection of central excise duty on five specified petroleum products as well as on tobacco products. CBIC would also continue to handle the work relating to levy and collection of customs duties.
12.4. Director Ge
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N has selected 73 IT, ITeS and financial technology companies and 1 Commissioner of Commercial Taxes (CCT, Karnataka), to be called GST Suvidha Providers (GSPs). GSPs would develop applications to be used by taxpayers for interacting with the GSTN. The diagram below shows the work distribution under GST.
13.2. Central Government holds 24.5 percent stake in GSTN while the state government holds 24.5 percent. The remaining 51 percent are held by nonGovernment financial institutions, HDFC and HDFC Bank hold 20%, ICICI Bank holds 10%, NSE Strategic Investment holds 10% and LIC Housing Finance holds 10%. The GST Council in its 27th meeting held on 04th May, 2018 has approved the change in shareholding pattern of GSTN. Considering the nature of 'state' function' performed by GSTN, the GST Council felt that GSTN be converted into a fully owned Government company. Accordingly, the Council approved acquisition of entire 51 per cent of equity held by non-Governmental i
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ods and services in the international market and give boost to Indian exports. The uniformity in tax rates and procedures across the country will also go a long way in reducing the compliance cost.
14.3. Benefits to small traders and entrepreneurs: GST has increased the threshold for GST registration for small businesses. Those units having aggregate annual turnover more than Rs. 20 lakh (10 lakh in case of North Eastern States) have be registered under GST. Unlike multiple registrations under different tax regimes earlier, a single registration is needed under GST in one State. An additional benefit under Composition scheme has also been provided for businesses with aggregate annual turnover upto Rs. 1 Cr. With the creation of a seamless national market across the country, small enterprises will have an opportunity to expand their national footprint with minimal investment.
14.4. Benefits to agriculture and Industry: GST will give more relie
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p; Promote “Make in India”: GST will help to create a unified common national market for India, giving a boost to foreign investment and “Make in India” campaign. It will prevent cascading of taxes and make products cheaper, thus boosting aggregate demand. It will result in harmonization of laws, procedures and rates of tax. It will boost export and manufacturing activity, generate more employment and thus increase GDP with gainful employment leading to substantive economic growth. Ultimately it will help in poverty eradication by generating more employment and more financial resources. More efficient neutralization of taxes especially for exports thereby making our products more competitive in the international market and give boost to Indian Exports. It will also improve the overall investment climate in the country which will naturally benefit the development in the states. Uniform CGST & SGST and IGST rates will reduce the incentive for evasion by eliminating rate arbitrage between
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dministration. It will improve environment of compliance as all returns to be filed online, input credits to be verified online, encouraging more paper trail of transactions. Common procedures for registration of taxpayers, refund of taxes, uniform formats of tax return, common tax base, common system of classification of goods and services will lend greater certainty to taxation system.
15. EXPERIENCE OF REGISTRATION, RETURN FILING & REVNUE:
15.1. Registration & Returns Snapshot:
S.No.
Details
As on 1st January,2019
1.
No. of transited (migrated) taxpayers
66,24,439
2.
Total No. of new applications received for registration
69,67,275
3.
No. of applications approved
59,45,816
4.
No. of applications rejected
9,54,735
5.
Total No. of taxpayers; new + migrated (1 + 3)
1,25,70,255
6.
No. of taxpayers who have opted for composition scheme
17,74,379
7.
No. of 3 (B) returns filed for July, 2017
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667
23.
No. of 3(B) returns filed for November, 2018
70,16,199
24.
No. of GSTR 1 returns filed for July, 2017
59,57,094
25.
No. of GSTR 1 returns filed for August, 2017
24,74,287
26.
No. of GSTR 1 returns filed for September, 2017
66,62,414
27.
No. of GSTR 1 returns filed for October, 2017
25,43,415
28.
No. of GSTR 1 returns filed for November, 2017
25,73,512
29.
No. of GSTR 1 returns filed for December, 2017
67,00,075
30.
No. of GSTR 1 returns filed for January, 2018
25,58,477
31.
No. of GSTR 1 returns filed for February, 2018
25,54,257
32.
No. of GSTR 1 returns filed for March, 2018
67,52,855
33.
No. of GSTR 1 returns filed for April, 2018
26,38,841
34.
No. of GSTR 1 returns filed for May, 2018
26,50,296
35.
No. of GSTR 1 returns filed for June, 2018
67,34,092
36.
No. of GSTR 1 returns filed for July, 2018
26,17,221
37.
No. of GSTR 1 returns filed for August
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January, 18
89,825
8.
February, 18
85,962
9.
March, 18
92,167
10.
April, 18
1,03,459
11.
May, 18
94,016
12.
June, 18
95,610
13.
July, 18
96,483
14.
August, 18
93,960
15.
September, 18
94,442
16.
October, 18
1,00,710
17.
November, 18
97,637
18.
December, 18
94,725
19.
Total
16,11,691
16. CHALLENGES & FUTURE AHEAD:
16.1. Any new change is accompanied by difficulties and problems at the outset. A change as comprehensive as GST is bound to pose certain challenges not only for the government but also for business community, tax administration and even common citizens of the country. Some of these challenges relate to the unfamiliarity with the new regime and IT systems, legal challenges, return filing and reconciliations, passing on transition credit. Lack of robust IT infrastructure and system delays makes compliance difficult for the taxpayers. Many of the processes in the GST are new for small and medium enterprises in parti
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oices, has been enabled on the common portal. Clarificatory Circulars and notifications have been issued to guide field formations of CBIC and States in this regard. The government has put in place an IT grievance redressal mechanism to address the difficulties faced by taxpayers owing to technical glitches on the GST portal.
16.5. The introduction of GST is truly a game changer for Indian economy as it has replaced multi-layered, complex indirect tax structure with a simple, transparent and technology-driven tax regime. It will integrate India into a single, common market by breaking barriers to inter-State trade and commerce. By eliminating cascading of taxes and reducing transaction costs, it will enhance ease of doing business in the country and provide an impetus to “Make in India” campaign. GST will result in
“ONE NATION, ONE TAX, ONE MARKET”.
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Note: This write-up is for education purposes only
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Document 1
Harmonization of Business
Processes an
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