GST – CONCEPT & STATUS (Updated as on 01st May 2018)
GST
Dated:- 10-5-2018
INTRODUCTION:
The introduction of Goods and Services Tax on 1st July 2017 was a very significant step in the field of indirect tax reforms in India. By amalgamating a large number of Central and State taxes into a single tax, the aim was to mitigate cascading or double taxation in a major way and pave the way for a common national market. From the consumer point of view, the biggest advantage would be in terms of a reduction in the overall tax burden on goods, which was estimated to be around 25%-30%. Introduction of GST would also make Indian products competitive in the domestic and international markets. Studies show that this would have a positive impact on economic growth. Last but not the least, this tax, because of its transparent and self-policing character, would be easier to administer.
GENESIS:
2. The idea of moving towards the GST was first mooted by the then Union Finance Minister
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s were clearly demarcated in the Constitution with almost no overlap between the respective domains. The Centre had powers to levy tax on the manufacture of goods (except alcoholic liquor for human consumption, opium, narcotics etc.) while the States had powers to levy tax on sale of goods. In case of inter-State sales, the Centre had power to levy a tax (Central Sales Tax) but the tax was collected and retained entirely by the originating States. As for services, it was the Centre alone that was empowered to levy service tax. Since the States were not empowered to levy any tax on the sale or purchase of goods in the course of their importation into or exportation from India, the Centre levied and collected this tax as additional duties of customs, which was in addition to the Basic Customs Duty. This additional duty of customs (commonly known as CVD and SAD) counter balanced excise duties, sales tax, State VAT and other taxes levied on the like domestic products. Introduction of GST r
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ST). The Parliament would have exclusive power to levy GST (integrated tax – IGST) on inter-State trade or commerce (including imports) in goods or services. The Central Government will have the power to levy excise duty in addition to the GST on tobacco and tobacco products. The tax on supply of five specified petroleum products namely crude, high speed diesel, petrol, ATF and natural gas would be levied from a later date on the recommendation of GST Council.
5. A Goods and Services Tax Council (GSTC) was constituted comprising the Union Finance Minister, the Minister of State (Revenue) and the State Finance Ministers to recommend on the GST rate, exemption and thresholds, taxes to be subsumed and other features. This mechanism would ensure some degree of harmonization on different aspects of GST between the Centre and the States as well as across States. One half of the total number of members of GSTC would form quorum in meetings of GSTC. Decision in GSTC would be taken by a majori
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y six meetings of the GSTC have been held so far. The following major decisions have been taken by the GSTC:
(i) The threshold exemption limit would be ₹ 20 lakh. For special category States (except J&K) enumerated in article 279A of the Constitution, threshold exemption limit has been fixed at ₹ 10 lakh.
(ii) Composition threshold shall be ₹ 1 crore. As decided in the 23rd meeting of the GSTC, this limit shall be raised to ₹ 1.5 crore after necessary amendments in the Act. Composition scheme shall not be available to inter-State suppliers, service providers (except restaurant service) and specified category of manufacturers. For special category States (except J&K and Uttarakhand) enumerated in article 279A of the Constitution, threshold exemption limit has been fixed at ₹ 75 lakh.
(iii) Existing tax incentive schemes of Central or State governments may be continued by respective government by way of reimbursement through budgetary route. The schemes,
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s 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 applicable has also been finalized.
(v) The five laws namely CGST Law, UTGST Law, IGST Law, SGST Law and GST Compensation Law have been recommended.
(vi) In order to ensure single interface, all administrative control over 90% of taxpayers having turnover below ₹ 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 ₹ 1.5 crore shall be divided equally in the ratio of 50% each for the Central and State tax administration.
(vii) Powers under the IGST Act shall also be cross-empowered on the same basis as under CGST and SGST Acts with few exceptions.
(viii) Power to collect GST in territorial waters shall be delegated by Central Government to the States.
(ix) Formula and mechanism for GST Compensation Ce
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yers.
(xiv) Supplies from GTA to unregistered persons has been exempted from tax.
(xv) Registration and operationalization of TDS/TCS provisions has been postponed till 30.06.2018.
(xvi) The e-way bill system has been introduced nation-wide for all inter-State movement of goods with effect from 01.04.2018. As regards intra-State supplies, option has been given to States to choose any date on or before 01.06.2018. As on 01.05.2018, a total of 17 States and one Union Territory have introduced e-way bill system for intra-state movement of goods. These are Karnataka, Andhra Pradesh, Gujarat, Kerala, Telangana, Uttar Pradesh, Bihar, Haryana, Himachal Pradesh, Jharkhand, Tripura, Uttarakhand, Arunachal Pradesh, Madhya Pradesh, Meghalaya, Sikkim, Puducherry and Nagaland.
(xvii) www.ewaybillgst.gov.in, managed by NIC, shall be the Common Goods and Services Tax Electronic Portal for generation of e-way bill. As on 30.04.2018, around 2.80 crore e-way bills have been generated.
(xviii) E-Wal
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month was „NIL‟ will be ₹ 20/- per day instead of ₹ 200/- per day;
* whose tax liability for that month was not „NIL‟ will be ₹ 50/- per day instead of ₹ 200/- per day.
(xxiv) Facility has been introduced for manual filing of refund application.
(xxv) Facility shall be introduced for manual filing of application for advance ruling.
(xxvi) Supply of services to Nepal and Bhutan shall be exempted from GST even if payment has not been received in foreign convertible currency – such suppliers shall be eligible for input tax credit.
(xxvii) Centralized UIN shall be issued to every Foreign Diplomatic Mission / UN Organization by the Central Government.
(xxviii) www.gst.gov.in, managed by GSTN, shall be the Common Goods and Services Tax Electronic Portal.
(xxix) Rate of interest on delayed payments and delayed refund has been recommended.
(xxx) Rules for National Anti-Profiteering Authority have been recommended. The National Anti-Profi
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An Integrated GST (integrated tax- IGST) would be levied on inter-State supply (including stock transfers) of goods or services. This would be collected by the Centre so that the credit chain is not disrupted.
(v) Import of goods would be treated as inter-State supplies and would be subject to IGST in addition to the applicable customs duties.
(vi) Import of services would be treated as inter-State supplies and would be subject to IGST.
(vii) CGST, SGST /UTGST & IGST would be levied at rates to be mutually agreed upon by the Centre and the States under the aegis of the GSTC.
(viii) GST would replace the following taxes currently levied and collected by the Centre:
a) Central Excise Duty;
b) Duties of Excise (Medicinal and Toilet Preparations);
c) Additional Duties of Excise (Goods of Special Importance);
d) Additional Duties of Excise (Textiles and Textile Products);
e) Additional Duties of Customs (commonly known as CVD);
f) Special Additional Duty of Customs (SAD);
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with an annual turnover of ₹ 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. A composition scheme (i.e. to pay tax at a flat rate without credits) would be available to small taxpayers (including to manufacturers other than specified category of manufacturers and service providers) having an annual turnover of up to ₹ 1 crore (Rs. 75 lakh for special category States (except J&K and Uttarakhand) enumerated in article 279A of the Constitution). As decided in the 23rd meeting of the GSTC, this limit shall be raised to ₹ 1.5 crore after necessary amendments in the Act. The threshold exemption and compounding scheme would be optional.
(xiv) The list of exempted goods and services would be kept to a minimum and it would be harmonized for the Centre and the States as well as across States as far as possible.
(xv) All Exports and supplies to SEZs and SEZ units would be zero-rated.
(xv
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nsferred by Centre to the destination State. Further the SGST portion of IGST collected on B2C supplies would also be transferred by Centre to the destination State. The transfer of funds would be carried out on the basis of information contained in the returns filed by the taxpayers.
(xviii) Input Tax Credit (ITC) to be broad based by making it available in respect of taxes paid on any supply of goods or services or both used or intended to be used in the course or furtherance of business.
(xix) Electronic filing of returns by different class of persons at different cut-off dates.
(xx) Various modes of payment of tax available to the taxpayer including internet banking, debit/ credit card and National Electronic Funds Transfer (NEFT) / Real Time Gross Settlement (RTGS).
(xxi) Obligation on certain persons including government departments, local authorities and government agencies, who are recipients of supply, to deduct tax at the rate of 1% from the payment made or credited to th
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rroneous refund and its adjudication in normal cases.
(xxvii) Limitation period for raising demand is five (5) years from the due date of filing of annual return or from the date of erroneous refund for raising demand for short-payment or non-payment of tax or erroneous refund and its adjudication in case of fraud, suppression or willful mis-statement.
(xxviii) Arrears of tax to be recovered using various modes including detaining and sale of goods, movable and immovable property of defaulting taxable person.
(xxix) Goods and Services Tax Appellate Tribunal would be constituted by the Central Government for hearing appeals against the orders passed by the Appellate Authority or the Revisional Authority. States would adopt the provisions relating to Tribunal in respective SGST Act.
(xxx) Provision for penalties for contravention of the provision of the proposed legislation has been made.
(xxxi) Advance Ruling Authority would be constituted by States in order to enable the taxpayer
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n by generating more employment and more financial resources;
(vi) More efficient neutralization of taxes especially for exports thereby making our products more competitive in the international market and give boost to Indian Exports;
(vii) Improve the overall investment climate in the country which will naturally benefit the development in the states;
(viii) Uniform SGST and IGST rates will reduce the incentive for evasion by eliminating rate arbitrage between neighboring States and that between intra and inter-State sales;
(ix) Average tax burden on companies is likely to come down which is expected to reduce prices and lower prices mean more consumption, which in turn means more production thereby helping in the growth of the industries. This will create India as a “Manufacturing hub”.
(B) Ease of Doing Business:
(i) Simpler tax regime with fewer exemptions;
(ii) Reduction in multiplicity of taxes that are at present governing our indirect tax system leading to simplificati
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due to seamless flow of input tax credit between the manufacturer, retailer and supplier of services;
(ii) It is expected that a relatively large segment of small retailers will be either exempted from tax or will suffer very low tax rates under a compounding scheme- purchases from such entities will cost less for the consumers;
(iii) Average tax burden on companies is likely to come down which is expected to reduce prices and lower prices mean more consumption.
GOODS AND SERVICES TAX NETWORK:
9. Goods and Services Tax Network (GSTN) has been set up by the Government as a private company under erstwhile Section 25 of the Companies Act, 1956 . GSTN would provide three front end services to the taxpayers namely registration, payment and return. Besides providing these services to the taxpayers, GSTN would be developing back-end IT modules for 27 States who have opted for the same. The migration of existing taxpayers has already started from November, 2016. The Revenue department of
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tified certain sections under CGST. Since then, 96 notifications under CGST Act have been issued notifying sections, notifying rules, amendment to rules and for waiver of penalty, etc. Thirteen, twenty three and one notifications have also been issued under IGST Act, UTGST Act and GST (Compensation to States) Act respectively. Further 57, 61, 57 and 8 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 the respective SGST Act.
13. Apart from the notifications, 44 circulars and 14 orders have also been issued by CBIC on various subjects like proper officers, ease of exports, and extension of last dates for filling up various forms, etc.
ROLE OF CBIC:
14. CBIC is playing an active role in the drafting of GST law and procedures, particularly the CGST and IGST law, which will be exclusive domain of the Centre. This apart, the CBIC has pr
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ing, 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. Officers of the office of CAG are also participating and getting trained in this training programme. More than 52000 officers (including around 20000 officers from States) have already been trained. Out of these 7000 officers have attended refresher-training course also.
17. It is expected that a momentous reform like GST is popularized and familiarized to the trade and industry who are the vital stakeholders in successful implementation of this reform.
18. CBIC would be responsible for administration of the CGST and IGST law. In addition, excise duty regime would continue to be administered by the C
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No. of new applications received for registration
51,31,469
5.
No. of applications approved
44,10,338
6.
No. of applications rejected
6,15,991
7.
No. of applications which are still in process
1,05,140
8.
Total No. of taxpayers; new + migrated (3 + 5)
1,08,46,658
9.
No. of taxpayers who have opted for composition scheme
20,07,119
10.
No. of 3 (B) returns filed for July, 2017
63,95,556
11.
No. of 3(B) returns filed for August, 2017
68,63,945
12.
No. of 3(B) returns filed for September, 2017
71,25,202
13.
No. of 3(B) returns filed for October, 2017
67,97,880
14.
No. of 3(B) returns filed for November, 2017
67,88,825
15.
No. of 3(B) returns filed for December, 2017
67,77,191
16.
No. of 3(B) returns filed for January, 2018
67,37,400
17.
No. of 3(B) returns filed for February, 2018
66,41,318
18.
No. of 3(B) returns filed for March, 2018
60,66,551
19.
No. of GSTR 1 returns filed for July, 2017
56,91,216
20.
No. of GSTR 1 returns filed for A
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