What is the taxable event under GST? – Question 2 – Draft-Bills-Reports – Levy of and Exemption from Tax – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 2 – Q 2. What is the taxable event under
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Question 1 – Draft-Bills-Reports – Levy of and Exemption from Tax – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 1 – 2. Levy of and Exemption from Tax Q 1. Where is the power to levy GST derived from? Ans. Article 246A of the Constitution, which was introduced by the Constitution (101st Amendment) Act, 2016 confers concurrent powers to both, Parliament and State Legislatures to make laws with respect to GST i.e. central tax (CGST) and state tax (SGST) or union territory tax (UTGST). Howe
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Question 33 – Draft-Bills-Reports – Overview of Goods and Services Tax (GST) – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 33 – Q 33. What is Anti-Profiteering measure? Ans. As per section 171 of the CGST/SGST Act, any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices. An authority may be constituted by the government to examine whether input tax credits availed by
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Question 32 – Draft-Bills-Reports – Overview of Goods and Services Tax (GST) – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 32 – Q 32. Is there any provision in GST for tax treatment of goods returned by the recipient? Ans. Yes, Section 34 deals with such situations. Where the goods supplied are returned by the recipient, the registered person (supplier of goods) may issue to the recipient a credit note containing the prescribed particulars. The details of the credit note shall be declar
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Question 31 – Draft-Bills-Reports – Overview of Goods and Services Tax (GST) – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 31 – Q 31. Different companies have different types of accounting software packages and no specific format are mandated for keeping records. How will department be able to read into these complex software? Ans. As per Section 153 of the CGST/SGST Act, having regard to the nature and complexity of a case and in the interest of revenue, department may take assistance
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Question 30 – Draft-Bills-Reports – Overview of Goods and Services Tax (GST) – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 30 – Q 30. What is the concept of Information Return? Ans. Information return is based on the idea of verifying the compliance levels of registered persons through information procured from independent third party sources. As per section 150 of the CGST/SGST Act, many authorities who are responsible for maintaining records of registration or statement of accounts or
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Whether transaction in securities be taxable in GST? – Question 29 – Draft-Bills-Reports – Overview of Goods and Services Tax (GST) – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 29 – Q 29. Whe
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Question 28 – Draft-Bills-Reports – Overview of Goods and Services Tax (GST) – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 28 – Q 28. Whether actionable claims liable to GST? Ans. As per section 2(52) of the CGST/SGST Act actionable claims are to be considered as goods. Schedule III read with Section 7 of the CGST/SGST Act lists the activities or transactions which shall be treated neither as supply of goods nor supply of services. The Schedule lists actionable claims other than lottery
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Question 27 – Draft-Bills-Reports – Overview of Goods and Services Tax (GST) – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 27 – Q 27. What is the purpose of Compliance rating mechanism? Ans. As per Section 149 of the CGST/SGST Act, every registered person shall be assigned a compliance rating based on the record of compliance in respect of specified parameters. Such ratings shall also be placed in the public domain. A prospective client will be able to see the compliance ratings of supp
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Question 26 – Draft-Bills-Reports – Overview of Goods and Services Tax (GST) – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 26 – Q 26. How are the disputes going to be resolved under the GST regime? Ans. The Constitution (one hundred and first amendment) Act, 2016 provides that the Goods and Services Tax Council shall establish a mechanism to adjudicate any dispute- (a) between the Government of India and one or more States; or (b) between the Government of India and any State or States
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Question 25 – Draft-Bills-Reports – Overview of Goods and Services Tax (GST) – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 25 – Q 25. What is GSTN and its role in the GST regime? Ans. GSTN stands for Goods and Service Tax Network (GSTN). A Special Purpose Vehicle called the GSTN has been set up to cater to the needs of GST. The GSTN shall provide a shared IT infrastructure and services to Central and State Governments, tax payers and other stakeholders for implementation of GST. The functions of the GSTN would, inter alia, include: (i) facilitating registration; (ii) forwarding the returns to Central and State authorities; (iii) computation and settlement of IGST; (iv) matching of tax payment details with banking network; (v) provi
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Whether the composition scheme will be optional or compulsory? – Question 24 – Draft-Bills-Reports – Overview of Goods and Services Tax (GST) – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 24 –
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Question 23 – Draft-Bills-Reports – Overview of Goods and Services Tax (GST) – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 23 – Q 23. What is the scope of composition scheme under GST? Ans. Small taxpayers with an aggregate turnover in a preceding financial year up to [Rs. 50 lakhs] shall be eligible for composition levy. Under the scheme, a taxpayer shall pay tax as a percentage of his turnover in a state during the year without the benefit of ITC. The floor rate of tax for CGST and SG
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Question 22 – Draft-Bills-Reports – Overview of Goods and Services Tax (GST) – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 22 – Q 22. How will Exports be treated under GST? Ans. Exports will be treated as zero rated supplies. No tax will be payable on exports of goods or services, however credit of input tax credit will be available and same will be available as refund to the exporters. The Exporter will have an option to either pay tax on the output and claim refund of IGST or export u
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Question 21 – Draft-Bills-Reports – Overview of Goods and Services Tax (GST) – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 21 – Q 21. How will imports be taxed under GST? Ans. Imports of Goods and Services will be treated as inter-state supplies and IGST will be levied on import of goods and services into the country. The incidence of tax will follow the destination principle and the tax revenue in case of SGST will accrue to the State where the imported goods and services are consumed.
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Question 20 – Draft-Bills-Reports – Overview of Goods and Services Tax (GST) – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 20 – Q 20. How will the goods and services be classified under GST regime? Ans. HSN (Harmonised System of Nomenclature) code shall be used for classifying the goods under the GST regime. Taxpayers whose turnover is above ₹ 1.5 crores but below ₹ 5 crores shall use 2-digit code and the taxpayers whose turnover is ₹ 5 crores and above shall use 4-dig
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Question 19 – Draft-Bills-Reports – Overview of Goods and Services Tax (GST) – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 19 – Q 19. What are the benefits available to small tax payers under the GST regime? Ans. Tax payers with an aggregate turnover in a financial year up to [Rs.20 lakhs & ₹ 10 Lakhs for NE and special category states] would be exempt from tax. Further, a person whose aggregate turnover in the preceding financial year is less than ₹ 50 Lakhs can opt for
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Question 18 – Draft-Bills-Reports – Overview of Goods and Services Tax (GST) – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 18 – Q 18. Who is liable to pay GST under the proposed GST regime? Ans. Under the GST regime, tax is payable by the taxable person on the supply of goods and/or services. Liability to pay tax arises when the taxable person crosses the turnover threshold of ₹ 20 lakhs (Rs. 10 lakhs for NE & Special Category States) except in certain specified cases where th
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Question 17 – Draft-Bills-Reports – Overview of Goods and Services Tax (GST) – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 17 – Q 17. How will decisions be taken by GST Council? Ans. The Constitution (one hundred and first amendment) Act, 2016 provides that every decision of the GST Council shall be taken at a meeting by a majority of not less than 3/4th of the weighted votes of the Members present and voting. The vote of the Central Government shall have a weightage of 1/3rd of the vot
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Question 16 – Draft-Bills-Reports – Overview of Goods and Services Tax (GST) – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 16 – Q 16. What is the guiding principle of GST Council? Ans. The mechanism of GST Council would ensure harmonization on different aspects of GST between the Centre and the States as well as among States. It has been provided in the Constitution (one hundred and first amendment) Act, 2016 that the GST Council, in its discharge of various functions, shall be guided b
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Question 15. – Draft-Bills-Reports – Overview of Goods and Services Tax (GST) – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 15. – Q 15. What would be the role of GST Council? Ans. A GST Council would be constituted comprising the Union Finance Minister (who will be the Chairman of the Council), the Minister of State (Revenue) and the State Finance/Taxation Ministers to make recommendations to the Union and the States on (i) the taxes, cesses and surcharges levied by the Centre, the Stat
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Who will decide rates for levy of GST? – Question 15 – Draft-Bills-Reports – Overview of Goods and Services Tax (GST) – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 15 – Q 15. Who will decide r
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Question 13 – Draft-Bills-Reports – Overview of Goods and Services Tax (GST) – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 13 – Q 13. What are the benefits which the Country will accrue from GST? Ans. Introduction of GST would be 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 and allowing set-off of prior-stage taxes, it would mitigate the ill effects of cascading and pave the way for a c
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Question 12 – Draft-Bills-Reports – Overview of Goods and Services Tax (GST) – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 12 – Q 12. How a particular transaction of goods and services would 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 co
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in cash as he would be entitled to set-off this liability against the CGST or SGST paid on his purchases (say, inputs). But for paying CGST he would be allowed to use only the credit of CGST paid on his purchases 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. Illustration II: Suppose, again hypothetically, that the rate of CGST is 10% and that of SGST is 10%. When an advertising company located in Mumbai supplies advertising services to a company manufacturing soap also located within the State of Maharashtra for, let us say ₹ 100, the ad company would charge CGST of ₹ 10 as well as SGST of ͅ
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