PLEASE CONFIRM ANY CHANGES MADE OF EXCISE DUTY AGST CH 3003 I,E 6% AS EARLIER SAME OR NOT – Central Excise – Started By: – nandankumar roy – Dated:- 4-3-2016 Last Replied Date:- 8-3-2016 – PLEASE CONF
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Goods and Services Tax – 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 between 2 to 2.5 million Excise and Service Tax payers, the survey says the
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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 threshold limit. Bringing more and more people into the tax net via some f
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Goods and Services Tax – Started By: – Ramakrishnan T H – Dated:- 20-2-2016 Last Replied Date:- 11-9-2016 – Sir,Please provide the details about the merits and demerits of Goods and Services Tax provisions.Ramakrishnan.T.HPalakkad – 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. And more will be done till it is passed through the upper house. However, t
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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 will set at rest, as of now there is both Service Tax &
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minary 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 ward Consultants/CA/CA/ICWAs/Lawyers/Advocate would get lots of busine
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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – 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 could be (and likely so) inflationary pressure i
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arity 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, fairness, certainty and clarity shall hold the ke
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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 reluctance to implement GST: The taxes would be levie
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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 respect of Inter State Transaction, it will lead to increase i
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ce 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 implemented, however, it would be worthwhile to monitor the developmen
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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 17-2-2016 – The need of GST can be explained by way of the following reasons or weaknesses in the present system – In present tax structure there is no system of providing input credit mechanism in between taxes levied by state and the centre. Thus, cascading effect arises. There are various definitional issues related to manufacturing, sale, service, valuation etc arises. These needs to be rationalized. Several transactions take the character of sales as well as services, thus there is complexity in determining the nature of transaction. The mechanism of imposing taxes, exemptions, abatements, other benefits are different in state and centre. Existing laws have resulted in significant number of issues related to interpretation / tax disputes. Credit mechanism is also very narrow with several conditions alongwith procedural formalities which makes the compliances difficult. Administrative machinery at the centre and in
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d chain in the distribution trade below the manufacturing level in the existing scheme of CENVAT. The introduction of GST at the Central level will not only include comprehensively more indirect Central taxes and integrate goods and service taxes for the purpose of set-off relief, but may also lead to revenue gain for the Centre through widening of the dealer base by capturing value addition in the distributive trade and increased compliance. In the existing State-level VAT structure there are also certain shortcomings as follows. There are, for instance, even now, several taxes which are in the nature of indirect tax on goods and services, such as luxury tax, entertainment tax, etc., and yet not subsumed in the VAT. Moreover, in the present State-level VAT scheme, CENVAT load on the goods remains included in the value of goods to be taxed under State VAT, and contributing to that extent a cascading effect on account of CENVAT element. This CENVAT load needs to be removed. Furthermore,
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his power also to the States. Moreover, with the introduction of GST, burden of Central Sales Tax (CST) will also be removed. The GST at the State-level is, therefore, justified for (a) additional power of levy of taxation of services for the States, (b) system of comprehensive set-off relief, including set-off for cascading burden of CENVAT and service taxes, (c) subsuming of several taxes in the GST and (d) removal of burden of CST. Because of the removal of cascading effect, the burden of tax under GST on goods will, in general, fall. The GST at the Central and at the State level will thus give more relief to industry, trade, agriculture and consumers through a more comprehensive and wider coverage of input tax set-off and service tax set-off, subsuming of several taxes in the GST and phasing out of CST. With the GST being properly formulated by appropriate calibration of rates and adequate compensation where necessary, there may also be revenue/ resource gain for both the Centre an
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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 15-2-2016 – Intangible goods / services Presently, intangible goods / services / rights are taxed as one of the declared services under section 66E(c) under temporary transfer of intangible property right services. Such services are also liable to VAT and often there is a dispute on levy of Service Tax or VAT or both. This is likely to be resolved in GST regime as such services will suffer one common tax, i.e., GST. In many countries, transfer of such assets / services are taxed as a service only. Examples of such services could be copyright (excluded presently), trademarks, designs, patents, good will, IT software etc. Electricity / Power Power to levy tax on the consumption or sale of electricity vets with the State Governments under Entry No. 53 in List-II of Seventh Schedule of the Constitution of India. Though electricity is 'goods', sales tax is not imposed on sale of electricity in India. Therefore, it is
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transaction. Products outside the GST ambit GST shall be applicable across the products and services over the taxing jurisdictions with few exceptions. One such exception is petroleum products. The Centre has decided to keep petroleum production tax out of the taxing jurisdiction of the States while the States have retained the power to tax sale of petroleum products and potable alcoholic liquor with themselves. The reason cited for the same is that petroleum production tax fetches nearly 45% of the Centre's Indirect Tax revenue while sale of petroleum products and potable alcoholic liquor constitutes nearly 55% (35% plus 20%) of the State tax income. This is to provide fiscal security to stages and ensure that there is a minimum guaranteed income under the proposed GST regime. Another such product is tobacco which will come under the GST but from a future date. The exclusion of petroleum, liquor and tobacco, which accounts for nearly 40 per cent of total revenue, has been a point
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bacco Products while the Centre can impose both GST and Excise Duty. Standing Committee on Constitutional Amendment Bill had recommended that keeping in view the requests received from several States and the fact that the States are already levying VAT at very high rate on Tobacco and Tobacco Products, therefore, the States may also be allowed to levy State Excise Duty or any other tax in addition to GST on Tobacco and Tobacco Products. This could be achieved by making amendment in Entry 51 in the State List of Seventh Schedule of the Constitution by incorporating ―(c) tobacco and tobacco products. The Constitution Amendment Bill, 2014 has amended List II of Schedule VII of the Constitution according to which states may continue to levy tax on tobacco products. The proposed entry No. 84 will include duties of excise on the following goods manufactured or produced in India – petroleum crude; high speed diesel; motor spirit (commonly known as petrol); natural gas; aviation turbine
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Goods and Services Tax – GST – By: – ARPIT HALDIA – Dated:- 13-2-2016 Last Replied Date:- 30-12-1899 – Goods and Services Tax i.e. GST has been in the news for numerous reasons during the last decade be it the game changing concept in the history of Indian Economy or which GST Approach should be preferred i.e. common GST or Dual GST or whether Indian political system has the required will and common approach for implementation of GST and discussion has gone to the extent of deciding that whether it would anytime be implemented in India or not. What exactly is Goods and Services Tax, popularly known as GST . The Report of the Task Force on Goods and Services Tax Thirteenth Finance Commission referred to the report of the Task Force on Implementation of the Fiscal Responsibility and Budget Management Act, 2003 as follows: Accordingly, the Task Force recommended that a well designed destination-based value added tax on all goods and services is the most elegant method of eliminating dist
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s a loser. It is unquestionably a very important moment because the whole process of indirect taxation in India will change once the GST itself is implemented. There will be uniformity to taxation as far as the whole country is concerned. There will be a seamless transfer of goods and services. The other important feature of this taxation is that there would be no tax on tax. It may bring inflation slightly down. Economists estimate that it has a potential to give a boost to India s GDP itself. Therefore, GST is a destination based Multipoint Tax system covering in its ambit both Goods and Services. All stages of production and distribution are held as mere pass through wherein tax paid is given as a credit to be adjusted against the liability to be paid at the next stage and tax finally sticks or gets added to the cost at the final consumption stage in the taxing jurisdiction. It has been further described as a destination based VAT Type dual Goods and Services Tax. There are so many
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Ministry of Finance, Government of India released in the month of March 2009 wherein it was stated that The state VAT design is based largely on the blueprint recommended in a 1994 report of the National Institute of Public Finance and Policy, prepared by a team led by late Dr. Amaresh Bagchi (hereinafter, the Bagchi Report ). This Report by Dr Amaresh Bagchi commonly referred to Bagchi Report on Reform of Domestic Trade Taxes in India: Issues and Options , National Institute of Public Finance and Policy, New Delhi stated the tax Structure as prevalent in India at that time was as follows: Archaic, irrational, and complex – according to knowledgeable experts, the most complex in the world . The Task Force on Implementation of the Fiscal Responsibility and Budget Management Act, 2003 July 2004 commented upon the Tax Structure prevalent in India at that time as follows: high import tariffs, excises and turnover tax on domestic goods and services have enormous cascading effects, leading
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ing cascading effect of multiple taxes and was more prone to tax evasion and avoidance. The Tax Rates were very high as the taxation base was very narrow, therefore there were political lobbying for exemptions and lowering of Tax Rates. The tax system at time was not providing a level playing field to all the market players. The neutrality principle of taxation provides that the taxes should be such that they provide a level playing field to all the market players and tax should not be a factor in the decision making of the consumer. There were classification issues as there were multiple Tax Rates and most surprisingly there were huge conflicts and competition between the States for lowering of Tax Rates going even to the extent as has been narrated in the Bagchi Report as follows: The States have been trying to export taxes via the CST and at the same time undercutting each other in sales tax rates to attract trade and Industry. This has created a situation in which all States are fi
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l there was a requirement of bringing in GST, then why it was not brought in place before VAT rather than first moving to VAT from single point taxation and then moving from VAT to GST. The answer had been given in Bagchi Report as follows: Given this background, the only feasible option seems to be a dual system in which the VAT is levied by the two levels of government independently within the existing constitutional framework. This would be possible if the MODVAT now operating through excise tax system is made into a full-fledged manufacturers VAT and the states also adopt a destination based harmonized system of VAT in place of the chaotic sales taxes operating now. The most important remark in the Bagchi report which also shows the farsightedness of the Study Team and its Team Leader Dr Amaresh Bagchi is as follows: Although it would not be the perfect or first best solution to the problems of the present system, reform on these lines would go a long way to remove many of its ill
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Report and was discussed in detail as a possible option in the report. It would be appropriate here to refer the observation in Working Paper on GST Reforms and Intergovernmental Considerations in India for the Department of Economic Affairs Ministry of Finance, Government of India released in the month of March 2009 wherein it was stated that Buoyed by the success of the State VAT, the Centre and the States are now embarked on the design and implementation of the perfect solution alluded to in the Bagchi Report. As announced by the Empowered Committee of State Finance Ministers in November 2007, the solution is to take the form of a Dual Goods and Services Tax (GST), to be levied concurrently by both levels of government. Therefore, preference was given to VAT over GST at that given point of time. The time has moved on and VAT has been successfully implemented now and the benefits of VAT can be seen by everyone. Therefore, country which took about 60 years from completely moving from
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wever, at present there is no seamless transfer of goods and services in the country and tax is not a mere pass through during production and distribution and is added as cost in many cases during the intermediate stage. However the concept of GST suggests that the tax should stick as a cost only at final consumption stage. Therefore, the concept of VAT in Central and State Taxes prevalent in the present scenario is limited in scope as against the concept of GST. Historical Background for Implementation of GST highlighted in Extract of Union Budget Speech during the last 10 Years It has been approximately a decade since the announcement was made by the then Finance Minister Shri P Chidambaram in the budget speech for the Year 2006-07 dated 28th February 2006 for implementation of GST as follows: 155. It is my sense that there is a large consensus that the country should move towards a national level Goods and Services Tax (GST) that should be shared between the Centre and the States. I
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d progressive scheme of Taxation known as GST. This declaration was more than a whisper and laid down the first real intent for the implementation of GST. In almost all the budget speech since the year 2006-07, there has been a reference to the implementation of GST. The relevant portion of the Speech of Hon ble Finance Minister in different years is being reproduced herewith to showcase the historical background of the process and preparation for the Implementation of GST. It showcases the fact that various amendments have been incorporated in statutes to bring the present scheme of taxation in line with the principles of Goods and Services Tax. These amendments would be cross referred in subsequent articles to show case that leaving aside the political issues, the necessary changes in the tax structure are being brought in slowly but surely and the present tax structure is being brought in line with the implementation of GST. Observation about GST in the Budget Speech for the Year 20
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the Goods and Services Tax with effect from April 1, 2010. Observation about GST in the Budget Speech for the Year 2009-10 82. In the course of preparation of this budget, I have had the opportunity to interact with large number of stakeholders and receive valuable inputs. Most suggestions were for structural changes in the tax system. Tax reform, like all reforms, is a process and not an event. Therefore, I propose to pursue structural changes in direct taxes by releasing the new Direct Taxes Code within the next 45 days and in indirect taxes by accelerating the process for the smooth introduction of the Goods and Services Tax (GST) with effect from 1st April, 2010 . 85. I have been informed that the Empowered Committee of State Finance Ministers has made considerable progress in preparing the roadmap and the design of the GST. Officials from the Central Government have also been associated in this exercise. I am glad to inform the House that, through their collaborative efforts, they
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er cent, the only rate below the mean rate. There is a case for enhancing the rate on many items appearing in this list to 8 per cent, which I propose to do, with the following major exceptions: • food items; and • drugs, pharmaceuticals and medical equipment. Observation about GST in the Budget Speech for the Year 2010-11 26. On Goods and Services Tax, we have been focusing on generating a wide consensus on its design. In November, 2009 the Empowered Committee of the State Finance Ministers placed the first discussion paper on GST in the public domain. The Thirteenth Finance Commission has also made a number of significant recommendations relating to GST, which will contribute to the ongoing discussions. We are actively engaged with the Empowered Committee to finalise the structure of GST as well as the modalities of its expeditious implementation. It will be my earnest endeavour to introduce GST along with the DTC in April, 2011. 121. To achieve the roll-out of GST by April
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ce tax to 12 per cent as it was before I introduced the third stimulus package. I am not resorting to this option to maintain the growth momentum and also to bring about a convergence in the rates of tax on goods and services. I, therefore, propose to retain the rate of tax on services at 10 per cent to pave the way forward for GST. Observation about GST in the Budget Speech for the Year 2011-12 Tax Reforms 21. The introduction of the Direct Taxes Code (DTC) and the proposed Goods and Services Tax (GST) will mark a watershed. These reforms will result in moderation of rates, simplification of laws and better compliance. 23. Unlike DTC, decisions on the GST have to be taken in concert with the States with whom our dialogue has made considerable progress in the last four years. Areas of divergence have been narrowed. As a step towards the roll-out of GST, I propose to introduce the Constitution Amendment Bill in this session of Parliament. Work is also underway on drafting of the model l
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ayments. A number of States have already started accepting Electronic Tax Returns and issuing forms required for inter-state trade. 152. In view of the healthy growth in indirect taxes in 2010-11, I had the option to roll back the Central excise duty to levels prevailing in November 2008. I have chosen not to do so for two reasons. I would like to see improved business margins translated into higher investment rates. I would also like to stay my course towards GST. I have therefore decided to maintain the standard rate of Central excise duty at 10 per cent. 153. I propose certain changes in the Central Excise rate structure to prepare the ground for the transition to GST, beginning with a reduction in the number of exemptions. At present, there are about 100 items that are exempt from Central Excise as well as State VAT. In addition, there are as many as 370 items that enjoy exemption from Central Excise duty but are chargeable to VAT. I propose to withdraw the exemption on 130 of thes
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essage that honest taxpayers would be facilitated and deviants would be dealt with severely; and • Adoption of Point of Taxation rules for services which would shift the basis for tax collection from cash towards accrual basis as with Central Excise duty. 194. Many experts have argued that it will be desirable to tax services based on a small negative list, so that many untapped sectors are brought into the tax net. Such an approach will be very conducive for a nationwide GST. I propose to initiate an informed public debate on the subject to help us finalise the approach to GST. Observation about GST in the Budget Speech for the Year 2012-13 27. Similarly, the Constitution Amendment Bill, a preparatory step in the implementation of Goods and Services Tax (GST) was introduced in Parliament in March 2011 and is before the Parliamentary Standing Committee. As we await recommendations of the Committee, drafting of model legislation for Centre and State GST in concert with States is un
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• Service Tax law is complex and sometimes avoidably different from Central Excise. We need to bring the two as close as possible in the light of our eventual goal of transition to GST. I have attempted to address both these issues this year. 159. Last year, I had initiated a public debate on the desirability of moving towards taxation of services based on a negative list. In the debate that continued for the better part of the year, we received overwhelming support for this new concept. It has been perceived both as sound economics and prudent fiscal management. 160. Thus, I propose to tax all services except those in the negative list. The list comprises 17 heads and has been carefully drawn up, keeping in view the federal nature of our polity, the best international practices and our socio-economic requirements. 171. Place of Supply Rules, that will determine the location where a service shall be deemed to be provided, are being placed in public domain for stakeholders comment
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overwhelming majority – are agreed that there is need for a Constitutional amendment; there is need for State Governments and the Central Government to pass a GST law that will be drafted by the State Finance Ministers and the GST Council; and there is need for the Centre to compensate the States for loss due to the reduction in the CST rate. I hope we can take this consensus forward in the next few months and bring to this House a draft Bill on the Constitutional amendment and a draft Bill 30 on GST. Hope inspires courage. I propose to take the first decisive step by setting apart, in the Budget, a sum of ₹ 9,000 crore towards the first instalment of the balance of CST compensation. I appeal to the State Finance Ministers to realise the serious intent of the Government to introduce GST and come forward to work with the Government and bring about a transformational change in the tax structure of the country. Observation about GST in the Interim Budget Speech for the Year 2014-15
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en apprehensive about surrendering their taxation jurisdiction; others want to be adequately compensated. I have discussed the matter with the States both individually and collectively. I do hope we are able to find a solution in the course of this year and approve the legislative scheme which enables the introduction of GST. This will streamline the tax administration, avoid harassment of the business and result in higher revenue collection both for the Centre and the States. I assure all States that government will be more than fair in dealing with them. Observation about GST in the Budget Speech for the Year 2015-16 11. We are now embarked on two more game changing reforms. GST and what the Economic Survey has called the JAM Trinity – Jan Dhan, Aadhar and Mobile – to implement direct transfer of benefits. GST will put in place a stateof-the-art indirect tax system by 1st April, 2016. The JAM Trinity will allow us to transfer benefits in a leakage-proof, well-targetted and cashless m
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o levy of tax on services by both the Centre and the States, it is proposed to increase the present rate of service tax plus education cesses from 12.36% to a consolidated rate of 14%. Hassle Free Business Environment: Created a non-adversarial tax regime, ending tax terrorism; Secured the political agreement on the goods and services tax (GST), that will allow legislative passage of the constitutional amendment bill; Conclusion: From the above relevant extract of budget speech of the past decade, following conclusions can be carved out on a generalized basis: Reforms have taken place in the field of Taxation to adopt the best practices in line with the implementation of GST i.e. adoption of Negative List, Building up of IT Infrastructure, Development of GST Network, Convergence to a Common Rate under Service Tax and Central Excise, Place of Supply Rules under Service Tax etc. There have been commitments to implement GST. The commitments are yet to be fulfilled. However, the magnanimit
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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 13-2-2016 – Systems of GST / VAT Internationally, there are three systems of Goods & Services Tax (GST) / Value Added Tax (VAT) in vogue in different countries, viz, Invoice System Payment System Hybrid System Invoice System: In the invoice system, the GST (Input) is claimed on the basis of invoice and it is claimed when the invoice is received, it is immaterial whether payment is made or not. Further the GST (Output) is accounted for when invoice is raised. Here also the time of receipt of payment is immaterial. One may treat it as mercantile system of accounting. In India the present system of sales tax on goods is an invoice system of VAT and here it is immaterial whether the taxpayer is following the cash basis of accounting or mercantile basis of accounting. The advantage of invoice system is that the input credit can be claimed without making the payment. The disadvantage of the invoice system is that the GST
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e basis of invoice and GST (Output) is accounted for on the basis of payment, if allowed by the law. In some countries the dealers have to put their option for this system or for a reversal of this system before adopting the same. GST and Present System of VAT 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, this difference will not exist and all goods and services shall be taxed alike as per the provisions of law. All the states have their own VAT Laws comprising VAT acts and VAT rules and these acts and rules are formulated on the basis of White Paper on VAT issued by the
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T calls for effecting widespread amendments in the Constitution and the various constitutional entries relating to taxation. In the current scenario, it is difficult to visualize constitutional amendments of such far reaching implications going through, more so in view of the fact that sharing of legislative powers is such an essential element of our federal polity. Another issue concerned is the appropriate designing and structuring of GST in India. The issue involved includes, how the issue of inter-state movement of goods and services may be addressed, taxes on services originating in one state and being consumed in other state etc. Another contentious issue that is bound to crop up in this regard is the manner of sharing of resources between the Centre and the states. Finally, apart from all these, there has to be a robust and integrated Management Information System dedicated to the task of tracking flow of goods and services across the country and rendering accurate accounting of
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Central Excise – Started By: – ASHOK AMIN – Dated:- 11-2-2016 Last Replied Date:- 11-2-2016 – Dear Experts,Is there any latest news in GST. Will the govt produce the GST scheme in the current budget ? Regards – Reply By Manjaly M – The Reply = There is a glimmer of hope for GST in budget 2016. Goods and Services Tax (GST) which is expected to provide the much-needed stimulant for economic growth by transforming the existing basis of indirect taxation in the process enabling the free flow of goo
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FEMA – Foreign Exchange Management – By: – Mr. M. GOVINDARAJAN – Dated:- 11-2-2016 – The Reserve Bank of India made Foreign Exchange (Export of Goods & Services) Regulations, 2015 ( Regulations for short) by virtue of the powers conferred by Section 7(3)(1)(a) and Section 47 (2) of the Foreign Exchange Management Act, 1999 ( Act for short) and in supersession of its Notification No. FEMA.23/2000-RB, dated 03.05.2000 as amended from time to time, which came into effect from 12.01.2016. The Regulations dealt with the exports, the declaration to be filed, the realization of export value etc., The Regulation 2(iv) defines the term export as including the taking or sending out of goods by land, sea or air, on consignment or by way of sale, lease, hire purchase or under any other arrangement by whatever name called and in the case of software, also includes transmission through any electronic media. Export with prior approval Regulation 13 provides that certain exports require prior app
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and Bhutan, shall furnish to the specified authority a declaration in one of the forms EDR or SOFTEX. The declaration shall be supported by such evidence as may be specified containing true and correct material particulars including the amount representing- The full export value (Regulation 2(v) defines the term export value in relation to export by way of lease or hire purchase or under any other similar arrangement, includes the charges, by whatever name called, payable in respect of such lease or hire purchase or any other similar arrangement) of the goods or software; or If the full value is not ascertainable at the time of export, the value which the exporter, having regard to the prevailing market conditions expects to receive on the sale of the goods or the software in overseas market; Realization of export proceeds in respect of export of goods/software from third party should be duly declared; The Importer-Exporter Code number allotted by the Director General of Foreign Trade
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ovides that Declaration in Form EDF shall be submitted in duplicate to the Commissioner of Customs. After duly verifying and authenticating the declaration form, the Commissioner of Customs shall forward the original declaration form/data to the nearest office of RBI and hand over the duplicate form to the exporter for being submitted to the authorized dealer. The declaration in form SOFTEX in respect of export of computer software and audio/video/television software shall be submitted in triplicate to the designated official of Ministry of Information Technology, Government of India at the software Technology Parks of India or the Free Trade Zones or Special Economic Zones in India. After certifying ll three copies of SOFTEX form, the designated official shall forward the original directly to the nearest office of RBI and return the duplicate to the exporter. The triplicate copy shall be retained by the designated official for record. Export with declaration Regulation 3(3) clarifies
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claration by the exporter that they are not more than ₹ 5 lakh in value; Aircrafts or aircraft engines and spare parts for overhauling and/or repairs abroad subject to their reimport into India after overhauling/repairs, within a period of six months from the date of export; Goods imported free of cost on re-export basis; The following goods which are permitted by the Development Commissioner of SEX, EHTP, STP or FTZ to be re-exported, namely: Imported goods found defective, for the purpose of their replacement by the foreign suppliers/collaborators; Goods imported from foreign suppliers/collaborators on loan basis; Goods imported from foreign suppliers/collaborators free of cost, found surplus after production operations. Replacement of goods exported free of charge in accordance with the provisions of Foreign Trade Policy in force, for the time being; Goods sent outside India for testing subject to re-import into India; Defective goods sent outside India for repair and re-impor
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alue declared in the declaration form does not differ from the value shown in the documents being negotiated or sent for collection ; or Where the value declared in the declaration is less than the value shown in the documents being negotiated or sent for collection, require the constituent concerned also to sin such declaration and thereupon such constituent shall be bound to comply with such requisition and such constituent signing the declaration shall be considered to be the exporter for the purposes of these Regulations to the extent of the full value shown in the documents being negotiated or sent for collection and shall be governed by these Regulations accordingly. Realization of export value Regulation 9 provides that the amount representing the full export value of goods/software/services exported shall be realized and repatriated to India within 9 months from the date of export, provided that where the goods are exported to a warehouse established outside India with the perm
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yment therefor if the goods has been sold; and The sale of goods and payment thereof, if goods or software has not been sold or reimport thereof into India as the circumstances permit, within such period as the RBI may specify in this behalf; The omission of the RBI to give directions shall not have the effect of absolving the person committing the contravention from the consequences thereof. Advance payment against exports Regulation 15 provides that where an exporter receives advance payment from a buyer/third party named in the declaration made by the exporter, outside India, the exporter shall be under obligation to ensure that- The shipment of goods is made within 1 year from the date of receipt of advance payment; The rate of interest, if any, payable on the advance payment does not exceed the rate of interest LIBOR + 100 basis points; and The documents covering the shipment are routed through the authorized dealer through whom the advance payment is received. In the event of the
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l, which may, having regard to the circumstances, be given or withheld or may be given subject to such conditions as may be specified by the RBI by directions issued from time to time; That a copy of the declaration to be furnished to the specified authority shall be submitted to such authority or organization as may be indicated in the order for certifying that the value of goods specified in the declaration represents the proper value. No direction shall be given by RBI and no approval shall be withheld by the Authorized dealer unless the exporter has been given a reasonable opportunity to make a representation in that matter. Project imports Regulation 17 provides that where an export of goods or services is proposed to be made on deferred payments or in execution of a turnkey project or a civil construction contract, the exporter shall before entering into any such export arrangement, submit the proposal for prior approval of the approving authority, which shall consider the propos
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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 11-2-2016 – GST, when comes, shall impact almost every one individually and to all sectors of trade and industry. Some of the sectors are discussed hereunder. Land, Real Estate, Renting Presently, Real estate transactions are taxed as levy of stamp duty. Renting/leasing transactions are covered under Service Tax. However, long-term leases suffer both, stamp duty and Service Tax and are under litigation presently. Construction activities and works contracts relating to construction/EPC contracts/installations etc are also liable to Service Tax as well as works contract tax (as VAT). As such, this sector is heavily under multiple tax burden. As of now, it is not clear as to whether real estate / land activities will be brought under the GST net or not as this sector provides major tax revenue to both, centre and states. In many other countries, construction and selling of houses is treated as a commodity and taxed to VAT
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Railways. While IR has a separate budgetary allocation by way of Rail Budget, its operations are subject to certain direct / indirect tax provisions in terms of direct tax, excise duty, service tax, Swachh Bharat Cess (SBC) etc. IR operates through zones, divisions and most of public sector undertakings, besides various business models / projects under PPP/JVs. Major revenue sources of IR include freight, passenger fare, advertisement & publicity, land lease, other leases etc. Looking to the expansion, modernization and maintenance of railways, IR is in urgent need of funds or schemes whereby IR can raise funds efficiently at low cost to meet its short term / long term financial requirements. Following issues need consideration from indirect taxes view point under the GST regime High Speed Diesel (HSD)/Light Diesel Oil (LDO) consumed by Indian Railway may be considered as input for the purpose of Cenvat Credit. Railway locos/coaches being used in-house (captive consumption) may be
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in the form of margin and is hidden in the form of interest, dividend, annuity payments etc. In India, most of the banking and financial services are exposed to levy of Service Tax but interest is in the negative list. Through the Select Committee of Rajya Sabha also advocated for exclusion of financial services from levy of GST based on the representation of banking industry, it is felt that there does not appear to be any economic logic or reason as to why such services should not suffer levy of GST. However, Cenvat credit should be allowed on such transactions. Since interest is a return on money lent to borrowers, it may continue to the out of GST net. Presently, leasing companies are burdened with both taxes- VAT as well as Service Tax. In GST regime, it is expected that such anomaly will go and there should not be dispute on the nature of transaction and it would be easier to decide as to when will a transaction in relation to transfer of right to use goods takes place in course
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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 10-2-2016 – How GST will work Generally, the dealers registered under GST (Manufacturers, Wholesalers and retailers and service providers) charge GST on the price of goods and services from their customers and claim credits for the GST included in the price of their own purchases of goods and services used by them. While GST is paid at each step in the supply chain of goods and services, the paying dealers don t actually bear the burden of the tax because GST is an indirect tax and ultimate burden of the GST has to be taken by the last customer. Features of GST GST can be divided into the following features to understand it better: Charging Tax The dealers registered under GST (Manufacturers, Wholesalers and Retailers and Service Providers) are required to charge GST at the specified rate of tax on goods and services that they supply to customers. The GST payable is included in the price paid by the recipient of the goo
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rers, service providers, wholesalers and retailers. If a dealer is not registered, he normally cannot charge GST and cannot claim credit for the GST he pays and further cannot issue a tax invoice. Tax Period The tax period will have to be decided by the respective law and normally it is monthly and/or quarterly. On a particular tax period, which is applicable to the dealer concerned, the dealer has to deposit the tax if his output credit is more than the input credit after considering the opening balance, if any, of the input credit. Refunds If for a tax period the input credit of a dealer is more than the output credit then he is eligible for refund subject to the provisions of law applicable in this respect. The excess may be carried forward to next period or may be refunded immediately depending upon the provision of law. Exempted Goods and Services Certain goods and services may be declared as exempted goods and services and in that case the input credit cannot be claimed on the GS
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sis of thresholds for goods and services prescribed for the States and the Centre Accounts and GST Credit The Central GST and State GST are to be paid to the accounts of the Centre and the States separately. It would have to be ensured that account-heads for all services and goods would have indication whether it relates to Central GST or State GST. Full input credit system would operate in parallel for the Central GST and the State GST. Taxes paid against the Central GST shall be allowed to be taken as input tax credit (ITC) for the Central GST and could be utilized only against the payment of Central GST. The same principle will be applicable for the State GST. Cross utilization of input tax credit for goods and services would be allowed. However, no credit between CGST and SGST would be permitted, except in the case of inter-State supply of goods and services under the IGST model. Credit Accumulation The White Paper on GST states that refund/adjustment of accumulated credit should b
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Goods and Services Tax – GST – By: – CA Akash Phophalia – Dated:- 10-2-2016 – Background The Joint Committee on Business Process for GST on GST return has given its report stating various returns to be filed by the different taxpayers alongwith the periodicity of filing of returns. GSTR -2 prescribes the details to be furnished by the taxpayer in relation to inward supplies effected by it for the relevant period. This article summarizes the components, periodicity and instructions for filing of the return based on the committee report. Who needs to file this return This return needs to be filed by every taxpayer. However, compounding taxpayers and ISD are not required to furnish this return as separate returns have been specified for such categories of registered taxpayers. Periodicity As per the committee report GSTR-2 is the monthly return need to be filed by the 15th of the subsequent month. It is required to be filed by every taxpayer. However, the date of filing of return is like
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or the services received from outside India. 6. The details of inward supplies would be auto-populated in the ITC ledger of the taxpayer on submission of his return. The taxpayer will select the invoice details regarding the in-eligibility and eligibility of ITC in relation to these inward supplies and the quantum available in a particular tax period. 7. There will be a separate table for submitting details in relation to ITC received on an invoice on which partial credit has been availed earlier. 8. In respect of capital goods, there will be a field to capture appropriate information regarding availment of ITC over a period (to be prescribed in GST Law in terms of duration and number of instalments) from the date of accountal of capital goods in the taxpayer s books of accounts. [GST Law may provide that Input credit pertaining to Capital Goods would be allowed to be availed of over a period of 2 years in two equal instalments] 9. In respect of inputs, there can be two situations. If
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rs will be provided in the GST Law. 12. There will be a separate table for submitting details in relation to NIL rated, Exempted and Non GST inward Supplies (Both Inter-State and Intra-State) including those received from compounding taxpayers and unregistered dealers. 13. There will be a separate table for the ISD credit received by the taxpayer. 14. There would be a separate table for TDS Credit received by the taxpayer. Auto Population in this return from GSTR-1 will be done on or after 11th of the succeeding month. Addition or Deletion of the invoice by the taxpayer will be permitted between 12th and 15th of the succeeding month. Adjustments would be permitted on 16th and 17th of the succeeding month Conclusion GSTR-2 is the comprehensive return having schema where detailed information is required to be furnished. Proper invoicing and documentation would be key feature to furnish the correct information in such return. By the time the schema and the law is finalised we can see furt
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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 5-2-2016 – While 'education' continues to be of utmost importance for the country's economic growth, it also has been a priority for the government in extending tax benefits and other concessions to boost education (both primary and professional / technical) in the country. The much thoughtful leaders of India have spared the education sector all alone from levy of taxes considering the importance of the same for the country. If a country wants to grow manifold than building infrastructure for education and educated infrastructure (people of the country) is a prerequisite. Education / coaching / training is a primary activity imparting skill in a particular discipline and is a process of development of personality of body, mind and intellect. The scope of education is broad but training or coaching is in a particular field. All three are very important today without which nobody could achieve anything. The c
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laced in such a situation where its inflow and outflow both are under the negative list or exempt and it is only the coaching part of entire education which is subject to levy of Service Tax. It may be necessary at this point. To bring in the relevance of coaching in our education system. Why do we need coaching today ? What is the purpose it serves ? What if coaching is not available ? In fact coaching bridges the gap of quality between the input (student coming for coaching) and the output (quality /skills required for further technical or professional courses). No coaching would be required if the education system of the country takes care of the desired levels of quality of education at all stages of education/career of a student. Since it is not there, the gap is filled by the coaching institutes. The importance of education has been considered in Service Tax law. Under the negative list following education services were exempt pursuant to section 66 (l) (d) which stipulates as un
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coaching only supplements the education and is an aid to complete the educations. Coaching and education both go together and in the present system, one cannot think of education without coaching. Infact many schools and colleges also provide coaching to the students appreciating the fact that it cannot be done away with. All parents want to provide the best educational opportunities for their children and coaching has become indispensable and irreplaceable to reinforce learning. More parents are becoming career-oriented and professional and they can t pay adequate attention to their children s education. Also, admittedly, many parents are not well-educated and knowledgeable enough in the academic field where their children need assistance. The benefits afforded by coaching institutions are enormous. Realistically it is already an integral part of a student education. With the ever increasing emphasis of getting excellent exam results at all levels, it is a difficult task for students
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ate …. Today coaching is a major feeding industry to the main stream education sector and given this fact, it is more than justified that it be considered at par with education and spared from all types of taxation by way of exemptions, concessions and inclusion in negative list for the purpose of Service Tax. This argument becomes important at this juncture when India is embarking into an era of largest ever indirect tax reforms in the country with the introduction of Goods and Service Tax (GST) in near future. The other arguments could be many same of which, inter alia are discussed here, besides the main aspect of considering coaching at par with education itself. The subject of coaching, i.e., students to whom coaching is imparted come from an exempt environ (pre-school / school education) and post imparting of coaching, again enter the education field which is excluded from the scope of Service Tax. Why to tax only this part of education system. Rather, steps should be take
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tal goods, except for the provision of one or more of the specified services; or (B) services provided by way of renting of a motor vehicle, in so far as they relate to a motor vehicle which is not a capital goods In absence of significant amount of tax credit not being allowed, it adds to the cost of providing coaching (educations) which again is not desirable. Coaching section also suffers from high completion leading to increased costs in terms of advertisements, fee concessions and discount etc which are not allowed as credits or are disputed (without any sustainable grounds) leading to tax disputes / litigation. This also ought to be sorted out and settled. Today (w.e.f. 1.6.2015), rate of Service Tax is 14% (prior to 1.6.2015, it was 12.36% including education cesses). This itself is considered to be a very high rate of taxation / an indirect tax) which adds to the total cost to be paid by / recovered from the students. In GST regime, talked about likely rates of taxation is in t
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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 4-2-2016 – Disadvantages / Possible Distortions of Implementation of GST Proposed GST is not a national unitary / centralized tax but a tax to be levied by both, states and the union simultaneously. In GST proposed GST- (a) There is a retrograde move to extend GST to stock transfer by first charging on it and then giving credit. The states have forced their way in this decision which will cause a lot of impairment in work against the wishes of the Centre. It will involve tremendous work with no revenue gain. Even if certain amounts are given credit after initial payment of duty, the money has to be brought out from other circulations and to that extent the economy will become slower. (b) On import, a countervailing (CV) duty of 27 per cent, which is said to be revenue neutral rate for IGST, is to be paid which is substantially higher than before. Earlier, service tax was not to be included in CV duty, but now that also
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as basic food items, exports and some health services. Incorrectly claiming the full amount of GST credits on entertainment expenses where the business has elected for fringe benefits tax purposes to use the 50/50 split method, in which case only 50% of the input tax credits can be claimed. Claiming the entire GST credits on a car purchased for more than the luxury car limit. Sole traders and partnerships are not apportioning input tax credits and making adjustments to expenditure that's partly private and partly business use. Incorrectly claiming an upfront GST credit on assets financed through a commercial hire purchase (CHP).While an up-front GST credit is available for businesses accounting for GST using the accruals or invoice basis, Incorrectly claiming GST credits on payments for Yellow Pages advertising. If the business chooses to pay for the cost of advertising by installments. Claiming a GST credit when the business does not have a valid tax invoice at the time of lodgin
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uding that on exports Expanding service tax to almost all services Common/unified tax rate for goods and services which may be ideally, revenue neutral (a suitable GST rate) Avoiding or minimizing differential tax rates Abolition of other small taxes Abolition of CST in a phased manner Power to levy service tax on select/agreed services to States Issue of inter-State services and goods movement vis-a-vis levy of duty or tax to be sorted out Revenue sharing mechanism to be rationalized Centre should be enabled to tax value added upto retail stage. While GST may be seen as national VAT system on goods and services, states sales tax shall eventually cover all states to have state level VAT system for sales etc. GST, if implemented, would end up prevailing distortions in goods and services taxation in term of money and scope. It will also result in lowering of cost of compliance, enhancing compliance levels and result in higher tax collections. It would offer a wider tax base and reduce re
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VAT and Sales Tax – Input Tax Credit on the capital goods – crushing of stone is manufacturing activity or not. – TNGST – the crusher machine cannot be treated as capital goods – HC – TMI Updates – Highlights
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Goods and Services Tax – GST – By: – CA Akash Phophalia – Dated:- 25-1-2016 – Background The Joint Committee on Business Process for GST on GST return has given its report stating various returns to be filed by the different taxpayers alongwith the periodicity of filing of returns. GSTR -1 prescribes the details to be furnished by the taxpayer in relation to outward supplies effected by it for the relevant period. In this article the author has tried to summarize the components, periodicity and instructions for filing of the return based on the committee report. Who needs to file this return This return needs to be filed by every taxpayer. However, compounding taxpayers and ISD are not required to furnish this return as separate returns have been specified for such categories of registered taxpayers. Periodicity As per the committee report GSTR-1 is the monthly return need to be filed by the 10th of the subsequent month. It is required to be filed by every taxpayer. Late filing would
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-state supply, invoices value of which is less than ₹ 50,000/- and where address is on record will be uploaded under State-wise summary, invoices value of which is in between ₹ 50,000/- to ₹ 2,50,000/- will be uploaded under State-wise summary, invoices value of which is more than ₹ 2,50,000/- will be uploaded invoice -wise. (iii) The recommendation of the Committee on IGST and GST on Imports with respect to the details about HSN code for goods and Accounting code for services to be captured in an invoice are as follows:- (a) HSN code (4-digit) for Goods and Accounting Codes for Services will be mandatory initially for all taxpayers with turnover in the preceding financial year above ₹ 5 Crore (For the first year of operations of GST, self-declaration of turnover of previous financial year will be taken as the basis as all India turnover data will not be available in the first year. From the 2nd year onwards, turnover of previous financial year under GST w
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meters with respect to HSN code for goods and Accounting Code for services will apply for submitting the information in return relating to relevant invoice level information for B2B supplies (both intra-state and inter-state) and inter-state B2C supplies (where taxable value per invoice is more than ₹ 2.5 lakhs). It is proposed that in the return form the description of goods and services may not be required to be submitted by the taxpayer as the same will be identified through the submission of HSN code for goods and Accounting Code for services. In order to differentiate between the HSN code and the Service Accounting Code (SAC), the latter will be prefixed with S . The taxpayers who have turnover below the limit of ₹ 1.5 Crore will have to mention the description of goods/service, as the case may be, wherever applicable. (v) For all Intra-State B2C supplies (including to non-registered Government entities, consumer / person dealing in exempted / NIL rated / non-GST goods
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ed, Exempted and Non-GST outward supplies to (both inter-state and intra-state) to registered taxpayers and consumers will be mentioned separately. 8. Details relating to advance received against a supply to be made in future will be submitted in accordance with the Point of Taxation Rules as framed in the GST law. 9. Details relating to taxes already paid on advance receipts for which invoices are issued in the current tax period will be submitted. 10. Details relating to supplies exported (including deemed exports) both on payment of IGST as well as without payment of IGST would be submitted. 11. Meaning of various terms used are :- GSTIN – Goods and Service Taxpayer Identification Number UID – Unique Identification Number for embassies HSN – Harmonized System of Nomenclature for goods SAC- Service Accounting Code GDI – Government department unique ID where department does not have GSTIN POS – Place of supply of goods or services – State code to be mentioned Conclusion GSTR-1 is the
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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 23-1-2016 Last Replied Date:- 27-1-2016 – How do we compare the present indirect tax laws vis-à-vis proposed GST law regime ? In this part, an attempt is being made to list down the possible differences between the present tax laws and proposed provisions under GST. This comparison is not final and is only for academic purposes to understand the differences or deviations tax base, origin, structure, approach to tax goods and services, place of provision, powers to levy tax, export and import etc. Comparison of Present Taxation and Proposed GST S.No Particulars Present Taxation Proposed GST 1. Structural Architecture • Two separate VAT systems operate simultaneously at two levels, Centre and State, and tax paid (input tax credit) under one is not available as set off against the other • Tax on services is levied under separate legislation by Centre, i.e., Finance Act, 1994 which regulates service tax &bu
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under separate Act, i.e., Customs Act, 1962. Taxable event is import No change is proposed 6. CVD/SAD Imposed by Centre under separate Act, i.e., Customs Act, 1962. Taxable event is import To be subsumed in CGST; Taxable event will be import 7. Service Tax Imposed by Centre under separate Act (Finance Act, 1994). Taxable event is provision of service To be subsumed in CGST & SGST; Taxable event will be provision of service 8. Central Sales Tax Imposed by Centre under CST Act, 1956. Collection assigned to States; Taxable event is movement of goods from one State to another Is being phased out 9. State VAT Imposed by States; Taxable event is sale within the State To be subsumed in SGST; Taxable event is sale within State 10. Inter-State Transactions Imposed on goods & services by the Centre (CST, Service Tax) To be subsumed in GST and subject to SGST & CGST 11. Tax on Manufacturing activity As Excise Duty by Centre No such powers under GST regime 12. Powers to levy Tax on Sa
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owed 19. Cascading Effect Allows cenvat tax credit between Excise Duty & Service Tax, but not with VAT (cross set off is not allowed) Allows seamless tax credit amongst Excise Duty, Service Tax & VAT 20. Non-Creditable Goods Do exist May exist depending upon negative list / exemptions etc 21. Credit on Inputs used for Exempted Activities Not allowed May not be allowed 22. Various Exemptions -Excise Free Zone or VAT Exemption Available May be phased out 23. Exemption for transit Inter-State Sale and High Seas Sale Available May be taxable 24. Transactions against Declaration Forms Allowed under the CST / VAT Forms likely to be abolished 25. Taxation on Govt. and Non-Profit Public Bodies Partially taxed May not change much 26. Stamp Duty Presently taxed concurrently by the Centre and State Status not clear; If subsumed under GST, big relief to real estate industry : to claim input tax 27. Excise Duty Threshold Limit Presently ₹ 1.5 crores Rs.10 lacs to 20 lacs (Turnover of
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of goods Situs issue between States Interpretational issues Sale or works contract Valuation of composite transactions, etc. Exemptions Suppression / limitation Likely to be reduced provided GST legislations are properly drafted (To be continued ………) – Reply By Ashok Aggarwal – The Reply = Very good analysis and comparison between present situation and that after implementation of proposed GST law. Let us hope that the procedures will be simple and more system based to avoid harassment of trade & industry at the hands of those who enforce the law. If the trade will be running to tax departments of Central & State Governments even after GST is reality, the very purpose of bringing GST would be defeated.At Sr N. 18 it is mentioned that no cross set off between CGST and SGST would be allowed against present Excise duty and Service tax. It may be noted that cross set off at present is allowed only between Central Excise duty and Service Tax and this position w
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Income Tax – Brought forward losses of firm – covered u/s 187 OR u/s. 78 – change in the terms and conditions of the partnership – the reconstitution of the partnership was made only as a result of ch
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Goods and Services Tax – Started By: – P S Nath – Dated:- 21-1-2016 Last Replied Date:- 11-9-2016 – Dear All,An interesting question on GST who are planning to buy vehicles from different state and want to transfer and register the vehicle in his name in different state where he lives. Assuming a scenario stated under…..A car which was purchased in 2010 by Person X (First Purchaser) in the State A and given road tax for 10 Years in the State A itself. A Person Y(Second Purchaser) resides in State B and wants to purchase the vehicle, transfer and re-register the vehicle in his own name in State B. So The vehicle age is 6 years and Person X already paid road taxes for 10 years in State A.Now the question…1. After rollout of GST how much
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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 20-1-2016 – Benefits of GST Benefits of GST shall accrue to all – trade & industry, Government and consumers. Trade and industry shall benefit in terms of easy compliance, removal of cascading effect of taxes and enhanced competitiveness. The Government shall have better control on leakages, higher revenue efficiency, consolidation of tax base and it may be easier to administer and monitor the law. Consumers will also benefit from likely reduced prices and single transparent tax structure. GST will end cascading effects: This will be the major contribution of GST for the business and commerce. At present, there are different state level and centre level indirect tax levies that are compulsory one after another on the supply chain till the time of its final consumption. Growth of Revenue in States and Union: It is expected that the introduction of GST will increase the tax base but lowers down the tax rates and also
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eir taxation that may crop at later stages. This will help the business community to decide their supply chain, pricing modalities and in the long run helps the consumers being goods competitive as price will no longer be the function of tax components but function of sheer business intelligence and innovation. Reduces average tax burdens: Under GST mechanism, the cost of tax that consumers have to bear will be certain and it is expected that GST would reduce the average tax burdens on the consumers. Reduces the corruption: It is one of the major problems that India is overwhelmed with. We cannot expect anything substantial unless there exists a political will to root it out. This will be a step towards corruption free Indian Revenue Services. Present CST will be removed and need not to be paid. At present there is no input tax credit available for CST. There are many indirect taxes in state and central level currently, which will be included by GST. i.e. you need to pay a single GST i
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which suffers from tax considerations and operational hurdles. GST is expected to contribute to 'make in India' and 'ease of doing business in India' initiatives of the Government. GST addresses the issue of multiplicity of taxes. All the rates under to GST will be uniform for are and the place of supply rules will guide the GST India portal to apportion the tax. It will boost up economic unification of India; it will assist in better conformity and revenue resilience; it will evade the cascading effect in Indirect tax regime. In GST system, both Central and state taxes will be collected at the point of sale. Both components (the Central and state GST) will be charged on the manufacturing cost. It will reduce the tax burden for consumers; It will result in a simple, transparent and easy tax structure; merging all levies on goods and services into one GST. It will bring uniformity in tax rates with only one or two tax rates across the supply chain; It will result in a g
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Goods and Services Tax – GST – By: – CA Akash Phophalia – Dated:- 16-1-2016 – Background During the Empowered Committee meeting held on 10th March, 2014, it was decided that a Joint Committee under the co-convenership of the Additional Secretary (Revenue), Government of India and the Member Secretary, Empowered Committee should be constituted to look into the Report of the Sub-Group-I on Business Processes for GST and make suitable recommendations for Registration and Return to the Empowered Committee. It was also decided that the Joint Committee should also keep in view the Registration and Return requirements necessary for IGST Model. The details incorporated here are adapted from the Report of the Joint committee on business process for GST Return – Meaning A return is a statement of specified particulars relating to business activity undertaken by the taxable person during a prescribed period. A taxable person has a legal obligation: (i) To declare his tax liability for a given pe
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ing which they make purchases. They would not be required to file regular return. They would submit their purchase statements (without purchase invoices) as per the periodicity prescribed for claim of refund. Government entities / PSUs , etc. not dealing in GST supplies or persons exclusively dealing in exempted / Nil rated / non -GST goods or services would neither be required to obtain registration nor required to file returns under the GST law. However, State tax authorities may assign Departmental ID to such government departments/ PSUs / other persons. They will ask the suppliers to quote the Department ID in the supply invoices for all inter-State purchases being made to them. Such supplies will be at par with B2C supplies and will be governed by relevant provisions relating to B2C supplies. Periodicity of filing of returns There will be different frequency for filing of returns for different class of taxpayers, after payment of due tax, either prior to or at the time of filing r
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0th of the next month 8 GSTR 8 Annual Return By 31st December of next FY 9 ITC Ledger of taxpayer Continuous 10 Cash Ledger of taxpayer Continuous 11 Tax ledger of taxpayer Continuous Important points relating to periodicity of return filing (i) Normal / Regular taxpayers (including casual taxpayers) would have to file GSTR-1 (details of outward supplies) (Annexure-II), GSTR-2 (details of inward supplies) (Annexure-III) and GSTR-3 (monthly Return) (Annexure-IV) for each registration. (ii) Normal / Regular taxpayers with multiple registrations (for business verticals) within a State would have to file GSTR-1, GSTR-2 and GSTR-3 for each of the registrations separately. (iii) Compounding taxpayers would have to file a quarterly return called GSTR-4 (Annexure-V). (iv) Taxpayers otherwise eligible for the compounding scheme can opt against the compounding and file monthly returns and thereby make their supplies eligible for ITC in hands of the purchasers. (v) Casual/ Non – Resident Taxpayer
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for filing of details of outward supplies (GSTR-1), inward supplies (GSTR-2) and Monthly return (GSTR-3) would be10th, 15th and 20th day respectively of the succeeding month for all Monthly filers. (x) Cut-off date for filing of Quarterly return (GSTR-4) by compounding taxpayer would be 18thday of the first month of the succeeding quarter. (xi) Cut-off date for filing of Input Service Distributor return (GSTR-6) (Annexure-VII) would be 15th day of the succeeding month. (xii) Cut-off date for filing of TDS (Tax Deducted at Source) return (GSTR-7) (Annexure-VIII) by Tax Deductor would be 10th day of the succeeding month. (xiii) For Annual return, the cut-off date would be 31st December following the end of the financial year for which it is filed. (xiv) The filing of return would be only through online mode although the facility of offline generation and preparation of returns would be provided. The returns prepared in offline mode would have to be uploaded. This is just for your refere
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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 15-1-2016 – According to Model IGST Law, IGST shall 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. According to the report of the Task Force on GST, 13th Finance Commission (2009), it had recommended that adoption of the IGST Model for implementation with the caveat that a strong IT infrastructure and complete information of the interstate transactions is a precondition and essential prerequisite for considering the IGST model. Without addressing these fundamental concerns of IT infrastructure and information support systems, the adoption of IGST model which is still at a conceptual stage is far from realistic at this stage in adoption of GST in the course of interstate transaction in goods and GST for the nation'. Central Government would levy IGST (which would be CGST plus SGST) on all inter
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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. The relevant information is also submitted to the Central Agency which will act as a clearing house mechanism, verify the claims and inform the respective governments to transfer the funds. Revenue from IGST will be apportioned among Union and States by Parliament on basis of recommendation of Goods and Service Tax Council [Proposed Article 269A(2) and Article 270 (1A) of Constitution of India]. The apportionment will be required as input tax credit of IGST can be used for SGST and vice versa. Since IGST will be on 'supply of goods or services', IGST will be payable on stock transfers, branch transfers and even when goods are dispatched inter-state job work and return. The inter-state adjustment will be made by
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substantially. Model can take Business to Business as well as Business to Consumer transactions into account. Salient Features Integrated GST On inter-state and cross border transactions Centre would levy and collect IGST in lieu of CGST and SGST. To be shared between Centre / States Single IGST rate IGST would be levied on all inter-State transactions of taxable goods and services with appropriate provision for consignment or stock transfer of goods and services. Inter-State dealer will pay IGST after adjusting available, input IGST, CGST and SGST on purchases. IGST – Illustration Maharashtra seller selling to Karnataka buyer for ₹ 1,00,000/-. IGST payable assuming an 8% rate is ₹ 8,000/-. Rs.8,000/- can be paid by adjusting Inter-State purchases (IGST) ₹ 3,000/- Local purchases (CGST) ₹ 1,500/- Local purchases (SGST) ₹ 1,500/- Since dealer has used SGST of Maharashtra to the extent of ₹ 1,500/-, Centre has to transfer ₹ 1,500/- to Maharashtra
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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 14-1-2016 – Objectives of GST One of the main objective of Goods & Service Tax (GST) would be to eliminate the cascading effects of taxes on production and distribution cost of goods and services. The exclusion of cascading effects i.e. tax on tax will significantly improve the competitiveness of original goods and services in market which leads to beneficial impact to the GDP growth of the country. It is felt that GST would serve a superior reason to achieve the objective of streamlining indirect tax regime in India which can remove cascading effects in supply chain till the level of final consumers. Salient Features of the GST Model The GST shall have two components: o
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e GST are to be paid to the accounts of the Centre and the States separately. It would have to be ensured that account-heads for all services and goods would have indication whether it relates to Central GST or State GST (with identification of the State to whom the tax is to be credited). Since the Central GST and State GST are to be treated separately, taxes paid against the Central GST shall be allowed to be taken as input tax credit (ITC) for the Central GST and could be utilized only against the payment of Central GST. The same principle will be applicable for the State GST. A taxpayer or exporter would have to maintain separate details in books of account for utilization or refund of credit. Further, the rules for taking and utilizati
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d State GST. The administration of the Central GST to the Centre and for State GST to the States would be given. This would imply that the Centre and the States would have concurrent jurisdiction for the entire value chain and for all taxpayers on the basis of thresholds for goods and services prescribed for the States and the Centre. The taxpayer would need to submit periodical returns, in common format as far as possible, to both the Central GST authority and to the concerned State GST authorities. Each taxpayer would be allotted a PAN-linked taxpayer identification number with a total of 13/15 digits. This would bring the GST PAN-linked system in line with the prevailing PAN-based system for Income tax, facilitating data exchange and tax
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FEMA – 39 – Dated:- 14-1-2016 – RBI/2015-16/287 A.P. (DIR Series) Circular No. 39 January 14, 2016 To All Category – I Authorised Dealer Banks Madam/ Sir, Export of Goods and Services – Project Exports Attention of Authorised Dealers is invited to Regulation 18 of Notification No. FEMA 23/2000-RB dated 3rd May 2000 viz. Foreign Exchange Management (Export of Goods and Services) Regulations, 2000 in terms of which export of goods or services on deferred payment terms or in execution of a turnkey project or a civil construction contract requires prior approval of the approving authority, which shall consider the proposal in accordance with the guidelines issued by the Reserve Bank from time to time. Further, attention of Authorized Dealers (
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of India that i) the OCCI has been renamed as Project Export Promotion Council (PEPC) and ii) civil construction contracts may include turnkey engineering contracts, process and engineering consultancy services and Project construction items (excluding steel & Cement) along with civil construction contracts, it has been decided to make the necessary changes in Memorandum of Instructions on Project and Service Exports (PEM) accordingly. 3. The revised Memorandum of Instructions on Project and Service Exports (PEM) is enclosed. 4. Authorized Dealers may bring the revision in the Memorandum to the notice of their constituents concerned. 5. The directions contained in this circular have been issued under section 10(4) and 11(1) of the Fore
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