Goods and Services Tax

Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 30-7-2016 – Chapter VI of Model IGST Act provides for claim of input credit and its provisional acceptance, matching, reversal and reclaim (section 8); and transfer of input tax credit (section 9) Manner of utilization of input tax credit is provided in section 7 of the Model IGST Act (Refer part 8 of this series). Claim of Credit Every registered taxable person shall, subject to such conditions and restrictions as may be prescribed in this behalf, be entitled to take credit of input tax, as self-assessed, in his return and such amount shall be credited, on a provisional basis, to his electronic credit ledger to be maintained in the manner as may be prescribed. It is propose

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hing, reversal and reclaims of input tax credit. It prescribes manner of matching / reconciliation and time lines for this purpose. Those provisions shall apply mutatis mutandis to IGST also. Transfer of Credit (Section 9) The input Tax credit availed can be utilized only as provided in section 7(5) of this Act (Refer Part 8 of this series of articles). Once credit is utilized as such, the amount collected as IGST shall stand reduced by an amount equal to the credit so utilized and the Central Government shall transfer an amount equal to the amount so reduced from the IGST account to the CGST account in the manner and time as may be prescribed. The Rules will provide for manner and time lines. On utilization of input tax credit for payment

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Goods and Services Tax – GST – By: – CA Akash Phophalia – Dated:- 29-7-2016 – Introduction Effective convergence from existing regime to the new regime is the call of an hour. In order to ensure happy acceptance of GST law by all the sectors government has come out with transitional provisions in the model draft GST law which are detailed in FAQ manner as under. FAQ s Q. 1 What will be the effect on Existing Officers if GST will come into existence? Ans. All the existing officers shall continue to hold their office and shall be deemed to be have been appointed as GST officers/competent authorities under the respective provisions of the act. Q.2 What will happen to existing registrations? Ans. In GST Act, a provisional certificate of registration will be issued to every assessee who was registered under any of the earlier laws. Q.3 Whether certificate of provisional registration issued in GST act is Final Registration? Ans. No, the certificate of provisional registration issued in GST

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pplication is cancelled? Ans. If the person to whom provisional registration certificate is issued files an application that it is liable to be registered under this act, then it shall be deemed that the certificate of registration have not been issued. Q.8 What will happen if the CENVAT Credit shown in return? Ans. If any registered person shows CENVAT Credit in return furnished by him under the earlier law, then he shall be entitled to take CENVAT Credit if amount of CENVAT Credit is admissible under earlier law as well as GST Act. Q.9 What will happen if the CENVAT Credit on capital goods not shown in the return? Ans. If any registered person has not shown the amount of CENVAT Credit on capital goods in his return furnished under the earlier law, then he shall be entitled to take the amount of unavailed CENVAT Credit in this act provided the amount is admissible under earlier law as well as under this act. Here, unavailed CENVAT Credit means the amount that remains after subtracting

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or input tax Credit under this act. (iv) Invoice and other documents relating to payment of duty of inputs are in the possession of such person. (v) Such invoices and other documents were issued not earlier than twelve months immediately preceding the appointed day. Q.10B How the amount of CENVAT Credit is calculated? Ans. The amount of CENVAT Credit is calculated on the basis of Generally Accepted Accounting Principles. Q.10C What will happen if amount of CENVAT Credit is wrongly allowed? Ans. If the amount of CENVAT Credit is wrongly allowed then the same shall be recovered from such person. Q.14 What do you mean by Eligible duties and taxes ? Ans. For the purpose of GST act Eligible duties and taxes means:- (i) The duty of excise specified in the First Schedule to the Central Excise Tariff Act, 1985; (ii) The duty of excise specified in the second schedule to the Central Excise Tariff Act, 1985; (iii) The additional duty of excise leviable under section 3 of the Additional Duties of

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heme? Ans. The amount payable by the taxable person is equivalent to the credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date of such switch over by debiting the input credit or in cash. Provided that after payment of such amount , the balance of input tax credit , if any lying in his credit ledger shall lapse. Q.17 What will happen if exempted goods are returned to the place of business on or after the appointed day? Ans. If any goods on which duty has been exempted under the earlier law and such goods are returned within six months from the appointed day, then no liability will arise but if goods returned goods are liable to tax under this act and are returned after a period of six months from the appointed day then the amount of tax shall be payable by the person returning the said goods. Q.18 What happened if duty paid good returned to the place of business on or after

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time, and the goods are liable to tax, then the tax will be payable by the job worker. In order to avail of the benefit of this provision the job worker and the manufacturer have to declare the details of input held in stock Q.20 What will happen if semi-finished goods were removed for job work and returned on or after the appointed day? Ans. . If any good removed before the appointed day to the job worker for carrying out certain manufacturing processes, are returned to such factory on or after the appointed day but within six months from the appointed day then no tax shall be payable. The period of six months may be extended by the competent authority for a further period of two months. However, if the job worker returns goods after a period of six months and such extended time, and the goods are liable to tax, then the tax will be payable by the job worker. In order to avail of the benefit of this provision the job worker and the manufacturer have to declare the details of semi-fini

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e before the appointed day and the price of goods / services is revised downwards on or after the appointed day, then in this case the taxable person may issue a supplementary invoice or debit note within thirty days of such prices revision. Input credit – The taxable person shall be allowed to reduce his tax liability only if the recipient of the invoice or credit note has reduced its input credit corresponding to such reduction of tax liability. Q.23 Effect on pending refund claims? Ans. If any duty / tax and interest on tax / duty or any other amount paid by any taxable person and refund claimed by such person on such duty/ tax amount, then the amount claimed by taxable person shall be disposed of in accordance with the provisions of earlier law and any amount eventually accruing to him shall be paid in cash. Q.24 Effecto on claim of Cenvat credit under the earlier law? Ans. The amount of CENVAT Credit claimed by the person under the earlier law shall be disposed of in accordance wi

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refunded. Q.27 How the amount recovered or refunded in pursuance to revision of returns be treated? Ans. If any return furnished under the earlier law is revised and as a result of such revision any amount is found to be recoverable or refundable from or to the taxable person, the same will be recovered or refunded. Q.28 What treatment will be done for long term construction/works contracts? Ans. The goods or services supplied on or after the appointed day in pursuance of a contract entered prior to the appointed day will be taxed under the new provisions Q.29 What consequences will arise when supply of goods is on progressive or periodic? Ans. If supply of goods or services is made after the appointed day but consideration for such goods or services is already received before the appointed day and the duty and tax payable thereon has already been paid under the earlier law then no liability of tax arises on such goods or services. Q.30 What treatment will be done for retention paymen

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registered taxable person under this act. (ii) Both the principal and agent declare the details of stock of goods lying with such agent (iii) The invoices for such goods had been issued not earlier than twelve months immediately preceding the appointed day. (iv) The principal has either reversed or not availed of the input tax credit in respect of such goods. Q.33 Whether CENVAT Credit is allowed for tax paid on capital goods lying with agents? Ans. Yes, Where any capital goods belonging to the principal are lying at the premises of the agent on the appointed day, the agent shall be entitled to take credit to tax paid on such capital goods subject to fulfilment of the following conditions:- (i) The agent is registered taxable person under this act. (ii) Both the principal and agent declare the details of stock of goods lying with such agent (iii) The invoices for such goods had been issued not earlier than twelve months immediately preceding the appointed day. (iv) The principal has e

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READING DOWN MODEL IGST ACT (PART-8) (PAYMENT OF TAX) – Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 29-7-2016 Last Replied Date:- 8-8-2016 – Chapter V of the Model IGST Act comprises of section 7 which contains provisions for payment of tax, interest, penalty and other amounts. The manner of maintenance of books and procedural requirements shall be prescribed by the Central Government after the legislation is enacted. Manner of Payment Section 7 provides for deposit or payment of – tax (i.e.) IGST interest on delayed payment of tax interest fee any other amount Accordingly, taxable person shall be required to deposit aforementioned amounts by way of / by – Internet banking, or Using debit / credit card, or National Electronic Funds Transfer (NEFT), or Real Time Gross Settlement (RTGS), or Any other mode which will be credited to the electronic cash ledger of such taxable person maintained under the Act. The date of deposit in bank shall be deemed to be that date o

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ed in an electronic register Utilization of Credit Sub-section (5) provides for the manner in which input tax credit on account of IGST, CGST and SGST could be utilized. Accordingly, The amount of input tax credit on account of IGST available in the electronic credit ledger shall first be utilized towards payment of IGST and the amount remaining, if any, may be utilized towards the payment of CGST and SGST, in that order. The amount of input tax credit on account of CGST available in the electronic credit ledger shall first be utilized towards payment of CGST and the amount remaining, if any, may be utilized towards the payment of IGST. The amount of input tax credit on account of SGST available in the electronic credit ledger shall first be utilized towards payment of SGST and the amount remaining, if any, may be utilized towards the payment of IGST. This manner of utilization of input tax credit amongst three taxes inter se, can be understood by way of following diagrams – The follow

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e refund will be allowed as provided in section 38 of CGST Act as a consequence of which IGST balance will stand reduced. According to section 38 of CGST Act, any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him, may make an application in that regard to the proper officer of IGST/CGST/SGST before the expiry of two years from the relevant date in such form and in such manner as may be prescribed. The limitation of two years shall not apply where such tax or interest or the amount referred to above has been paid under protest. Order of Discharge Sub-section 8 provides for discharge of dues in the prescribed order and assessee can not appropriate tax demand under any other order of preference. Accordingly, every taxable person is required to discharge his tax and other dues in the following order- (a) self-assessed tax, and other dues related to returns of previous tax periods; (b) self-assessed tax, and other dues related to the re

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him, be deemed to have passed on the full incidence of such tax to the recipient of such goods and/or services. This deeming provision shall apply unless the taxpayer is able to prove to the contrary. The onus of proof will lie on the taxpayer. It appears to be a grey area and we can see continuation of disputes arising out of unjust enrichment. (To be continued…..) – Reply By swaminathan venkataraman – The Reply = OFFHANDAccording to own independent perception,- as often canvassed before, -the inherently dubious / patently distortional concept- 'DEEMED' – widely and impulsively employed in legal circles , in general, and mindlessly resorted to in modern- days- legislation, in particular, has most certainly the otherwise avoidable 'grey areas' ; which is potent with scope for controversies galore, and the resulting disputes and litigation.In the context herein, what calls for a special focus is the very much wanting political will and apathy in such matters; whic

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c of stock exchange , as he very rightly pointed out, that is one source commonly resorted to for speculation, making more money (gains), without earning it. Said, quoting the warning by Lord Keynes:- Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill (un !) done. (SOURCE: For more inspiring wise thoughts, suggest reading incisively through published speeches/writings of N A Palkhivala – We, the Nation THE LOST DECADES )Side Dish:25 years of reforms: Why India needs an administrative innovationAfter 25 years of liberalisation, India s rich are growing richer and the poor poorerqz.comA quarter century of market reform leaves India richer with wider inequality. – Reply By Dr. Sanjiv Agarwal – The Reply = Agree with your views , Mr Swaminathan, now the law

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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 27-7-2016 – Determination of place of supply of services is important for goods and Service Tax. Section 3 and 3A of IGST Act lay down principles for determining supply of goods and/ or services in the course of inter-state and intra-state trade or commerce. There provisions are subject to section 6 on place of supply of services. Two terms are important for determination of place of supply of services viz, 'service' and 'supply'. 'Service' in terms of section 2(88) of GST Act means anything other than goods. 'Supply' is defined in section 3 of the CGST Act, 2016. As discussed earlier in Part 2 of this series of articles, 'supply' includes- All forms of supply of goods and / or services Importation of services Supplies specified in Schedule-I (without consideration) Matters to be treated as supply of services as per Schedule-II Under the present law, Place of Provision of Services

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28/2012-ST, dated 20-6-2012 w.e.f. 1-7-2012. Such rules shall determine the place of provision of services for levy of service tax. Such rules shall determine Place where services are provided – Place where services are deemed to have been provided, or – Place where services are agreed to be provided, or – Place where services are deemed to have been agreed to be provided The place of provision of service rules will determine the place where the services shall be deemed to be provided. It s taxability will be determined based on the location of its provision. Place of Supply for IGST Section 6 deals with determination of place of supply of services. This contain 13 sub-sections and stipulates different situations in which place of supply of services shall be ascertained. In case of B2B (business to business) supply of services, the primary factor for determining the place of supply will be the location of the service recipient, subject to certain exceptions. As per sub-section (3), ge

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ply of services shall be determined in terms of section (6). Registered / unregistered person Unlike the present place of provision of service norms, place of supply of services for IGST shall be determined on the basis of status of person who in recipient (i.e. whether he is registered or not. 'Registered person' is not defined either in CGST law or IGST law but taxable person has been defined. Going by the definition of taxable person in section 9 of the GST Act, it includes both, registered person and one who is required to be registered. So, we can assume that for place of supply, registered person is a taxable person who is registered u/s 19 and Schedule-III and other than registered person is a taxable person who is required to be registered but not so registered. General Rule As a general rule, the place of supply of service shall be determined as follows – Sub-section of section 6 Supply of service to Place of supply Except 2 Registered person Location of recipient (i.e

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or estate agents, any service provided by way of grant of rights to use immovable property or for carrying out or co-ordination of construction work, or (b) by way of lodging accommodation by a hotel, inn, guest house, home stay, club or campsite, by whatever name called and including a house boat or any other vessel, or (c) by way of accommodation in any immovable property for organizing any marriage or reception or matters related therewith, official, social, cultural, religious or business function including services provided in relation to such function at such property, or (d) any services ancillary to the services in clause (a), (b) and (c) above. (See note 1 below) Location at which the immovable property or boat or vessel is located or intended to be located. Location at which the immovable property or boat or vessel is located or intended to be located. (5) The place of supply of restaurant and catering services, personal grooming, fitness, beauty treatment, health service in

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of any of the above events or services, or assigning of sponsorship of any of the above events. (See Note to below 2) Location of such person. Place where the event is actually held. (9) The place of supply of services by way of transportation of goods, including by mail or courier Location of such person Location at which such goods are handed over for their transportation. (10) The place of supply of passenger transportation service [Where the right to passage is given for future use and the point of embarkation is not known at the time of issue of right to passage, the place of supply of such service shall be determined in the manner specified in sub-sections (2) or (3), as the case may be.] (See Note 3 below) Location of such person Place where the passenger embarks on the conveyance for a continuous journey. (11) The place of supply of services on board a conveyance such as vessel, aircraft, train or motor vehicle. Location of the first scheduled point of departure of that conveya

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alled for receipt of services. Location of billing address of the recipient of services on record of the supplier of services; Location where such pre-payment is received or such vouchers are sold: Location where the telecommunication line, leased circuit or cable connection or dish antenna is installed for receipt of services. Location of billing address of the recipient of services on record of the supplier of services; Location where such pre-payment is received or such vouchers are sold: (13) The place of supply of banking and other financial services including stock broking services to any person. If the service is not linked to the account of the recipient of services. Location of the recipient of services on the records of the supplier of services. Location of the supplier of services. Location of the recipient of services on the records of the supplier of services. Location of the supplier of services. (14) The place of supply of insurance services Location of such person Locat

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reasonable basis as may be prescribed in this behalf. Note 1 Where the immovable property or boat or vessel is located in more than one State, the supply of service shall be treated as made in each of the States in proportion to the value for services separately collected or determined, in terms of the contract or agreement entered into in this regard or, in the absence of such contract or agreement, on such other reasonable basis as may be prescribed in this behalf. Note 2 Where the event is held in more than one State and a consolidated amount is charged for supply of services relating to such event, the place of supply of such services shall be taken as being in the each of the States in proportion to the value of services so provided in each State as ascertained from the terms of the contract or agreement entered into in this regard or, in absence of such contract or agreement, on such other reasonable basis as may be prescribed in this behalf. Note 3 The return journey shall be tr

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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 23-7-2016 – The concept of place of 'supply of goods's new in indirect taxation as presently 'place of removal' is relevant in central excise and 'sale' is relevant for value added tax. With GST, place of removal will no longer be relevant which has been a subject matter of interpretation and litigation in the present law. Section 5 of Model IGST law provides for provisions to determine the place of supply of goods only. Supply of goods may or may not involve movement of goods and supply of goods may take place under different situations and for different type of goods by supplier or receiver itself. Place of supply matrix Place of Supply 2 Where supply involves movement of goods Location of goods when movement of goods terminate for delivery to recipient 2A Where goods are delivered on directions of third person (transfer of documents) Principal place of business of third person who shall be dee

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s where such movement terminates for delivery to the recipient. Generally, it will be the location of receiver of goods. Delivery based place of supply (sub-section 2A) Where the goods are delivered by the supplier to a recipient or any other person, on the direction of a third person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to the goods or otherwise, it shall be deemed that the said third person has received the goods and the place of supply of such goods shall be the principal place of business of such person. Goods may be delivered to receiver or his agent or on his direction to any other person. It may be before or during the movement of goods and such delivery may be actual or by way of transfer of documents of title on goods. In case of such delivery of goods to third person, it shall be deemed that the place of supply of goods shall be the location of principal place of business of such person t

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ch installation or assembly. Where the goods are supplied for assembly, installation (or even commissioning, erection, fabrication etc) at site, place of supply of goods in question shall be the location of site where goods are supplied and used for assembly etc. Goods supplied on board a conveyance (sub-section 5) Where the goods are supplied on board a conveyance, such as a vessel, an aircraft, a train or a motor vehicle, the place of supply shall be the location at which such goods are taken on board. For supplies on board a conveyance (e.g. train, aircraft, vessel, motor vehicle etc), since conveyance is a moving subject, place of supply shall be the location where goods are taken on board. For example, in a Shatabdi train from New Delhi to Dehradoon, food is supplied or taken at board at New Delhi. The place of supply shall be New Delhi irrespective of where goods are consumed or where the train terminates. This provision is different from sub-section (1) where goods move from one

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Income Tax – Quality of representation on behalf of the Revenue – Inconsistent stand being taken by the Revenue in different appeals raising identical issues – most matters are distributed amongst a f

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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 21-7-2016 – Chapter III of the Model IGST Act provides for levy and collection of tax (IGST) vide section 4. Section 4 is the charging section for levy of IGST corresponding to section 6 of CST Act, 1956 dealing with liability to tax on inter-state sales. For the purpose of charging IGST, following points are important – Tax to be levied shall be called IGST IGST shall be levied on all supplies of goods and / or services made in course of inter-state trade on commerce Rate of IGST shall be as per Schedule to the Act (yet to be prescribed) IGST shall be collected in the prescribed manner for which rules shall be prescribed. Report on Business Processes for GST on GST payment

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shall be payable. It may be noted that sub-section (1) on levy of IGST shall be subject to provisions of sub-section (3) and (4) as these are over riding provisions. Sub-section (3) which provides for payment of IGST under Reverse Charge Mechanism (RCM) provides that reverse charge shall apply subject to the following – GST Council shall have to recommend the RCM. Central Government shall notify the RCM by way of a notification after GST Council has recommended RCM may be notified for specified categories of supplies of goods and / or services In RCM, tax shall be paid by the person receiving such goods and/ or services In RCM, all the provisions of IGST Act shall apply to such person as if he is the person liable for paying the tax in rel

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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 19-7-2016 – 'Supply' is going to be altogether a new concept in the indirect taxation, far away from manufacture (central excise), provision of service (service tax) or sale (value added tax). This concept will change the citus of taxation from 'origin' to 'destination' and is thus a total 'U-turn' from the present day taxation regime. Meaning of Supply [Section 2(f)] The term 'supply' has been defined to mean the same as defined in section 3 of the CGST Act, 2016 which provides for meaning and scope of 'supply'. This section provides for the meaning and scope of supply of goods and services. There is no concept of supply of goods and services in the present law either in Service Tax or Central Excise. In the proposed law, supply of goods or services shall include the following: lease or disposal, and Importation of services Supply as per Schedule-I (supply without conside

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Supply of goods / services by a taxable person to another taxable or non-taxable person in the course or furtherance of business. As Schedule-I includes matters to be treated as supply without consideration, the scope of 'supply' becomes much wider or unlimited. It shall cover services put to any private or non-business use and supply of goods or services by a taxable person to another taxable or non-taxable person in the course of or furtherance of business. (e.g., free gifts or samples, free services to friends etc). It may however, be noted that supply of goods by a registered person to a job worker as per section 43A dealing with special procedure for removal of goods will not be treated as supply of goods. Schedule II to Model GST law shall govern supply of goods or services in relation to transfer, land and building treatment or process, transfer of business assets, certain specified services etc. The provision empowers the Central or State Governments to specify by notif

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nce with the provisions of this Act. Supply of goods / services in inter-state trade or commerce section 3 of the IGST Act provides for principles for determining supply of goods and /or services in the course of inter-state trade or commerce. Accordingly, Subject to the provisions of section 5, a supply of goods shall be deemed to take place in the course of inter-State trade or commerce if the location of the supplier and the place of such supply are in different States. Subject to the provisions of section 6, a supply of services shall be deemed to take place in the course of inter-State trade or commerce if the location of the service provider and the place of supply of service are in different States. This section corresponds to sections 3 to 5 of CST Act, 1956. The provisions of section 3 shall determine as to when supply of goods or services shall take place or shall be deemed to have taken place, subject to provisions of section 5 in case of place of supply of goods and section

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ommerce as follows – Subject to the provisions of section 5, intra-state supply of goods means any supply where the location of the supplier and the place of supply are in the same State. Subject to the provisions of section 6, intra-state supply of services means any supply where the location of the supplier and the place of supply are in the same State. Accordingly, whereas place of supply of goods or services shall be determined in terms of section 5 and 6 respectively, intra-state supply shall mean- in case of goods – any supply of goods where location of the supplier and place of supply are located in the same state. in case of services – any supply of services where the location of supplier and place of supply are in the same state. These principles can be better understood by the following matrix illustration – Supply of Goods / Services Section Supplier Place of supply Supply Type 3 State A State B (Other than State A) Inter-State 3A State A State A (Same State) Intra-State In

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TRADE NOTICE No. 06/2017 Dated:- 18-7-2016 Trade Notice – Circulars – GST – OFFICE OF THE PRINCIPAL COMMISSIONER OF GST, GURUGRAM PLOT NO. 36-37, SECTOR 32, GURUGRAM, HARYANA C. No. IV(16) Hq Tech/GGW/Trade Notice/01/2017-18/1083 Dated:- 18.07.2016 TRADE NOTICE No. 06/2017 Sub: GST Gurugram Commissionerate operating as GST Seva Kendras It is brought to notice of the trade that GST Gurugram Commissionerate is operating GST Seva Kendras in the following locations :- 1. Room No. 005 and 009, Ground Floor, GST Bhawan, Sector 32, Gurugram. 2. Ground Floor, Mudit Square Building, Sector 32, Gurugram (For Divisions East 1 an

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Goods and Services Tax – GST – By: – CA Akash Phophalia – Dated:- 12-7-2016 – 1. Introduction Invoice is a document which provides evidence as to existence of transaction of sale or purchase of goods or the agreement of supply. GST act also gives immense importance to invoice and named it as tax invoice containing details provisions as stated hereunder. 2. Meaning of tax invoice Tax Invoice shall be deemed to include a document issued by an Input Service Distributor and also include any supplementary or revised invoice issued by the supplier in respect of a supply made earlier. 3. Issue of tax invoice Supply of goods Every registered person is required to issue a tax invoice at the time of supply of taxable goods and the invoice shall cont

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rtificate of registration. 5. Composition levy A registered taxable person who opts for composition levy shall at the time of supply of goods or services not issue a tax invoice. Instead it had to issue a bill of supply containing the particulars as required. 6. Non-taxable supply A registered taxable person who supplies non-taxable goods or services shall instead of issuing a tax invoice had to issue a bill of supply containing the particulars as required. 7. Tax Indication in the Tax Invoice Where A Registered Dealer providing supply for a consideration and which is liable to tax, then tax on such supply shall necessarily be indicates in all documents relating to assessment, tax invoice and other documents. 8. Credit Notes When a Credit n

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hen a Registered Dealer issued tax invoice for supply of goods or services and in such invoice the amount of tax charged and taxable value is less than the taxable value and tax payable, then said taxable person, who supplied the goods, may issue a debit note to the recipient containing such particulars as may be prescribed. Time limit for issuing Credit Note Thirtieth day of September following the end of the financial year in which such supply was made or date of filling of the relevant annual return; whichever is earlier: 10. Furnishing details of debit and credit note in return If any registered taxable person issues and receives a credit or debit note in relation to a supply of goods or services, he shall declare the details of credit

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Goods and Services Tax – GST – By: – CA Akash Phophalia – Dated:- 11-7-2016 – Introduction : The most awaited GST is all about supply as it merger sale and service in the term supply. The learned author aims at enlightening readers about the concept and importance of supply. Meaning and scope of supply The law provides for the definition and scope of apply. In simple terms, supply includes all the following – All forms of supply of goods and/or services such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business Importation of service, whether or not for a consideration and whether or not in the course or furtherance of business, A supply specified in schedule I, made or agreed to be made without a consideration. Schedule I – All the following matters will be considered as supply without consideration Permanent transfer or disposal of business assets. Temporary applicati

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ease, tenancy, easement, license to occupy land is a supply of services. Lease or letting out of the building including a commercial, industrial or residential complex for business or commerce, either wholly or partly, is a supply of services. Treatment or process Treatment or process which is being applied to another person's goods is a supply of services. Transfer of business assets Goods forming part of the assets of a business when transferred or disposed of so as no longer to form part of those assets, whether or not for a consideration, such transfer or disposal is a supply of goods. Where, by or under the direction of a person carrying on a business, goods held or used for the purposes of the business are put to any private use or are used, or made available to any person for use, for any purpose other than a purpose of the business, whether or not for a consideration, the usage or making available of such goods is a supply of services. Where any goods, forming part of the b

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mpletion certificate, where required, by the competent authority or before its first occupation, whichever is earlier. Here, the expression construction includes additions, alterations, replacements or remodeling of any existing civil structure; Temporary transfer or permitting the use or enjoyment of any intellectual property right; Development, design, programming, customization, adaption, up gradation, enhancement, implementation of information technology software; Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act; Works contract including transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract; Transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration; and Supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other articl

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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 11-7-2016 – Input Tax [Section 2(1)(d)] Input Tax has been defined as under- 'Input tax' in relation to a taxable person, means the Integrated Goods and Services Tax, Central Goods and Services Tax or State Goods and Services Tax, as the case may be, charged on any supply of goods and/or services to him which are used, or are intended to be used, in the course or furtherance of his business and includes the tax payable under sub-section (3) of section 4. Presently, Cenvat Credit Rules, 2004 also deal with input and input services for the purpose of Cenvat credit of input taxes. Model GST law in section 2(57) defines 'input tax' on similar lines with the diffe

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#39;Input Tax Credit' means credit of input tax as defined in section 2 (1)(d). Model GST law also defines input tax credit u/s 2(1) (58) on similar lines. When one takes credit of input tax in the course of business, it shall be called input tax credit. Presently, it is referred to as Cenvat Credit which is governed by Cenvat Credit Rules, 2004 . Output Tax [Section 2(1)(g)] Output tax is defined as under- 'Output tax' in relation to a taxable person, means the IGST chargeable under the Act on taxable supply of goods and/or services by him or his agent and excludes tax payable by him on reverse charge basis. Model GST Law defines output tax u/s 2(1)(72) on similar lines except with the difference that there IGST gets replaced b

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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 10-7-2016 Last Replied Date:- 11-7-2016 – Model GST Law (for CGST, SGST and IGST) in now in public domain for feedback by all stakeholders. The model law is still a draft of the proposed law which is itself subject to changes by the Empowered Committee and drafting panel. It is expected that draft of model law shall be finalized in due course after considering the suggestions of all concerned, once the enabling legislation is enacted by the Parliament. Here are some quick reactions on the proposed law – GST law should be a very simple tax law as the present law / provisions are too complex to understand by a common man. GST is not going to be governed by single legislation but by a bunch of legislations (38) – 36 state taxes for states and union territories, CGST and IGST. It will have to be ensured that all states have verbatim same provisions for rates, levy, administration and procedures. Only negative list or exempt

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e so as to even prescribe valuation of services without consideration. Transaction value of goods and services should factor the 'discounts'. There should be no tax on free supplies. Inter-state activitiesshould exclude activities of same person. Non compliances attract very harsh and heavy penalties / punishment and need to be diluted in view of GST being a new levy and new law. Prosecution threshold should be kept at ₹ 2 crores. A large number of compliances / returns / reconciliations are proposed. This will only burden all stakeholders, will make GST inefficient and a regressive tax. Cost of compliance will be major issue taking away benefits of GST. Also, same person should not be asked to file separate returns in different states. Set off of credit should be allowed amongst all states as a pool. Refund of any credit balance other than for exports is not allowed. This should be allowed subject to safeguards. Tax demands should be restricted to one year only, GST bein

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view point is key to success of GST as CGST / SGST are administered by two different authorities / departments. Input tax credit (Cenvat) should not be denied to real estate sector and allowed to works contracts only. Guidelines for valuation of land should be made clear and transparent. Also, non-subsuming of stamp duty in GST should be reconsidered. GST is the tax future. GST law should therefore be forward looking and open for futuristic businesses such as e-commerce, technology based, IT etc and recognize internet, digital economy, start ups etc. Clubbing all such services under telecommunication may not be correct as it only reflects poor understanding of 'technology' itself. Government should not hurry implementation of GST from April, 2017. Even if the Constitutional Amendment is passed by Rajya Sabha in monsoon session, there is lot of ground work to be done left. The most important is awareness, education, training and trail runs. 1st April 2017 is not that sacrosanct

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Goods and Services Tax – GST – By: – CA Akash Phophalia – Dated:- 10-7-2016 Last Replied Date:- 11-7-2016 – 1. Background Model GST law provides for registration of various persons in different situations. This article aims at enlightening readers about the persons who are required to take registration and other provisions related to registration. 2. Threshold Limit In order to provide relaxation to small suppliers it is provided that every supplier shall be liable to be registered under this act in the State form where it makes a taxable supply of goods or services if its aggregate turnover in a financial year exceeds ₹ 9 lacs. However, this limit is ₹ 4 lacs for the persons conducting business in NE states including Sikkim. Here, aggregate turnover means the aggregate value of all taxable and non-taxable supplies, exempt supplies and exports of goods and/or services of a person having the same PAN, to be computed on all India basis and excludes taxes, if any, charged und

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y of goods of services if its aggregate turnover in a financial year exceeds ₹ 9 lacs. (m) Supplier liable to be registered where it makes a taxable supply of goods of services if its aggregate turnover in a financial year exceeds ₹ 4 lacs. (for NE states including Sikkim) (n) Persons who were already registered under the earlier law subject to point (l) and (m) above. (o) Transferee in case where business is transferred. 4. Following table will make some situations regarding registration more clear – Situation Nature of supply Registration required 1 Taxable inter-state supply Yes 2 Exempted inter-state supply No 3 Intra-state supply (upto ₹ 9 lacs) No 4 Intra-state supply (exceeding ₹ 9 lacs) Yes 5 Intra-state supply (upto ₹ 9 lacs) Exempted inter-state supply of any value No 6 Casual Taxable person Yes 7 Reverse charge – for personal use upto prescribed limit No 8 Reverse charge – for personal use beyond prescribed limit Yes 9 Reverse charge – Other tha

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egistration is available Every person applying for registration should b having PAN number Non resident person may be granted registration on any other documents as prescribed ion absence of PAN number. Unique Identity number will be allotted to the assessees. 7. Special provisions relating to casual taxable person and non-resident taxable person Registration certificate issued will be valid for 90 days from the date of registration. This period could be further extended to 90 days. Such taxable persons are required to deposit tax in advance on the basis of estimated tax liability. This is just for your reference. It does not constitute our professional advice or recommendation. – Reply By Narayan Mahale – The Reply = Whether for every branch within the state is required to be registered or only a principal place of business would suffice? – Reply By CA Akash Phophalia – The Reply = In case of multiple business verticals, seperarte registration could be taken. This is an optional facil

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Goods and Services Tax – GST – By: – CA.Tarun Agarwalla – Dated:- 8-7-2016 Last Replied Date:- 21-7-2016 – Odisha Vat Provisions- A study for construction and real estate sector. Introduction The issue of taxability of works contracts under VAT and Service Tax is something which has confronted assessee leading to frequent referrals to Courts over the years. While the issue of taxability under Sales Tax has led to referrals over the last 50 years or so, the issue with regard to service tax is a more recent one. But often the issue of taxability centres around the basic nature of contracts and the valuation methodology that should be adopted under both Sales Tax/VAT and Service Tax. The subject of works contract is one of the most confusing and litigated issues. The Constitution (Forty Sixth Amendment) Act, 1982 granted powers to State Governments to enact laws for providing the levy of tax on the transfer of property (whether as goods or in some other form) involved in the execution of

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e parties to the contract to the other party thereto for a price. In the 46th amendment of the constitution a new clause 29A have been inserted In article 366:- (29A) tax on the sale or purchase of goods includes- (a) ……. (b) a tax on the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract; State Sales Tax laws were suitably amended their respective state sales tax laws, then to incorporate the provisions to tax works contract. In the VAT regime similar provisions also been brought out as deemed sale. Under present Odisha VAT act definition of sale include deemed sale since inception of law which is borrowed from Sales Tax act. Under the Odisha Vat Act As per section 2(63) 'works contract' means a contract for construction, building, manufacture processing, fabrication, erection, installation, fitting out, improvement, modification, repair or commissioning of any property. Any person would be liable

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e dominant nature test would not be applicable and that the sale element of those contracts could be separated and subjected to sales tax or VAT. Point of taxation Indirect tax law provides the point of levy or the point of occurrence of liability to collect or pay to the concerned taxing authorities. Under Odisha VAT act clause 4 of section 11 express the sale of goods shall, for the purposes of this Act, be deemed to have taken place, in the case of works contract, when the goods are incorporated in the course of execution of the works contract, whether or not there is receipt of payment for such sale . Hence in case of works contract or similar contract of construction the liability occurs when the goods have been incorporated. Valuation of goods in the works contract and It is a fact that the VAT can only be levied on the value of goods transferred in pursuance of contract and hence the value of goods out of value of works contract need to be derived or estimated. When the value of

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e to supply of labour and services. Amounts paid to a sub-contractor as consideration for the execution of works contract whether wholly or partly, in a case where the contractor proves to the satisfaction of the assessing authority that tax has been paid by the sub-contractor on the turnover of the goods involved in the course of execution of such works contract.[ this last clause(i) inserted since 01.10.2015] When the value of material as well as labour or like charges cannot be ascertainable, verifiable The proviso to section 11(2)(c) and proviso to Rule 6(e) also address to certain situation where the actual cost of labor, services or like charges could not be ascertained or verifiable. The provision says that, where the works contractor fails to produce evidence in support of expenses towards labour and services etc. or such expenses are not ascertainable a lump sum amount as such charges shall be determined as a percentage of total value of the works contract at the rate provided

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ry dam (i) Concrete dam (j) Spillway (k) Canal lining (l) Other canal structure 40% (m) Wooden/bamboo fair weather bridges 30% 25% 30% 20% 15% 15% 50% 35% 45% 35% 35% 40% 20% 4 Sanitary fitting and plumbing s 15% 5 Painting and polishing 20% 6 Supplying and laying pipes 20% 7 Construction of bodies of motor vehicle and Construction of trailers 20% 8 Services and maintenance of instruments, equipments, appliances, plants and machinery 80% 9 Tire rereading 30% 10 Processing and supplying of photographs and photo negatives 50% 11 Electroplating, electro-galvanizing, anodizing and the like 30% 12 Lamination, rubberisation, framing, coating and similar processes 30% 13 Printing and block making 30% 14 Supply and installing of weighing machine and weigh bridges 15% 15 Sculptural contract/contracts relating to arts 60% 16 Ship & boat building including construction of bridges, juries, tugs, trawlers and draggers 20% 20% 17 Laying of railway sleeper 20% 18 Overhauling or repairing or disma

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erring them along with land or interest underlying the land to opt for a composition scheme notified under section 11(3). Government of Odisha have come out with two notifications dated 16.01.2016 made effective from 01.10.2015. Government of Odisha, department of finance dated 16/01/2016 no 1457/FIN-CT1-TAX-0035/2015- applicable to dealers transferring goods involved in the execution of works contact Government of Odisha, department of finance dated 16/01/2016 no 1461/FIN-CT1-TAX-0035/2015- applicable to dealers who undertakes the construction of flats, dwellings or buildings or premises and transfer of property along with land or interest underlying land to pay tax in lieu of VAT. Composition Scheme for Works contractor Applicability- the scheme would be available to a dealer who is liable to pay tax on the sales effected by way of transfer of property in goods (whether as goods or in some other form (involved in the execution of works contract. Eligibility-The dealer opting for comp

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applicable to the dealer as a contractor. In case the dealer furnish to the assessing authority, the details of the contractee in Form C-4, the assessing authority in form C-3 shall intimate to the contractee (deducting authority) to deduct tax at source at such rate and on such percentage of the gross value of the works, as specified in this notification. Liability- the liability on the works contractor would be in lieu of amount of tax payable by him under section 9 (a). Types of Dealer executing works contract- Type A and Type B Type A Dealer:- registered dealer who opt to pay composition tax under this Scheme shall,- Shall not purchase or procure goods from any place outside Odisha at any time during the period for which he opts to avail this Scheme; and Shall not sell or supply goods to any place outside Odisha at any time during the period for which he opts to avail this Scheme. However, he may procure his own plant & Machinery and Equipments from outside Odisha, meant exclu

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B (1) (2) (3) (4) 1. Every registered dealer engaged in execution of works contracts of the following categories and incidental or ancillary activities in connection with or thereto: (1) Civil Contracts, Such as, (a) Civil Construction, improvement, modification, repair and maintenance, electrification, sanitary fittings, flooring, plastering, finishing, white washing, painting, polishing, interior decoration, etc. of any immovable property, including a building or a complex- residential or commercial. (b) Water works and Sewerage works, including treatment plants, whether meant for individual houses/ buildings/ complexes or for the general public. (c) Fabrication & fixing of shutters, doors, gates, windows, grills, furniture, fixtures, fitting outs and other similar contracts. (d) Procurement, erection, fabrication, installation commissioning of any plant, Machinery, equipment, transformers, lifts, elevators, escalators, weighing machines, air conditioners, air coolers, fire-fight

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fabrication, tailoring, embroidery and other similar activities. (iii) Electro plating, electro galvanizing, anodizing, power coating and other similar activities. (iv) Re-treading of old tyres 2% 4% Composition scheme for real estate developer, builder Applicability to dealer- the scheme would be available to a dealer who undertakes the construction of flats, dwellings or buildings or premises and transfer of property along-with land or interest underlying the land to pay tax, by way of composition, in lieu of VAT. Applicable to amount- the scheme can only applicable to All the payments received on or after 01.10.2015 towards construction of flats dwellings or buildings or premises and transfer of property along-with land or interest underlying the land shall be covered under this composition scheme. Eligibility-The dealer opting for composition under this notification- Shall not claim any input tax credit under the Act; Shall not claim any deduction with respect to labour and like c

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he value determined for stamp duty under the Odisha Stamp Rules, 1952, whichever is higher, Rate of Tax applicable- The Applicable rate of tax would be 3.5% on the aggregate amount. Tax Deducted at Source ( TDS) Under section 54 read with Rule 58 of the Odisha Vat Act and Odisha Vat Rules, tax need to be deducted by certain specified persons while paying to a dealer with respect to the works contract being executed by such dealer. However in case the TDS is being made on principal contractor, there will no requirement of TDS in case of all future subcontracts. Further the principal contractor would be able to transfer the tax credit proportionately to the subcontractor account electronically. The applicable rate of deduction is normally at 4% of the value of the works contract [section 54(1)]. However in the case of a dealer obtained a certificate for no deduction or lower deduction the deduction rate will be applicable at such rate for such specific dealer only. [Section 54(5)] If pri

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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 7-7-2016 – This article is in continuation of Part-I wherein we discussed meaning of Integrated Goods and Service Tax (IGST). In this part, let's understand some other definitions of terms defined in Model IGST Act. Appropriate State [Section 2(a)] Appropriate State has been defined as follows – Appropriate State , in relation to a taxable person, means that State where he is registered or liable to be registered under section 19 of the Central Goods and Services Tax Act, 2016. Explanation: For the purpose of this Act, State includes Union Territory with Legislature. It may be noted that the term 'appropriate state' shall be used only in reference to a taxable pe

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where taxable person is liable to be registered u/s 19 of CGST Act, and includes a Union Territory with legislature Government [Section 2(b)] 'Government' means the Central Government. Government would mean only the Central Government (and not any state or other Government). However, in Model GST Act, section 2(49) defines 'government' differently where it includes Central Government departments, State Government & its departments, and Union Territory & its departments. Here, even the departments of Central Government are excluded. Supply [Section 2(f)] The term 'supply' has been defined to mean the same as defined in section 3 of the CGST Act which provides for meaning and scope of supply. This section provi

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ation or not and whether in the course of or furtherance of business or not. supply shall include supply as per Schedule-I made without a consideration It also includes a supply which is made or agreed to be made without a consideration and specified in Schedule-I to the Act, i.e., matters to be treated as supply without consideration which are as follows: Permanent transfer/disposal of business assets. Temporary application of business assets to a private or non-business use. Services put to a private or non-business use. Self supply of goods and/or services. Assets retained after deregistration. Supply of goods / services by a taxable person to another taxable or non-taxable person in the course or furtherance of business. It may however,

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Goods and Services Tax – GST – By: – Bimal jain – Dated:- 5-7-2016 – Dear Professional Colleague, Video on key highlights of Draft Model GST Law After getting the Draft Model Goods and Services Tax ( GST ) Law on public domain on June 14, 2016, GST has been creating a buzz amongst all stake holders, eagerly waiting for the monsoon session of the Parliament to commence with the hope that the much awaited Constitutional (122nd Amendment) Bill, 2014 on GST will be passed, which will pave the way for GST in the Country. GST is a destination based consumption tax levied at multiple stages of production and distribution of goods and services, with taxes on inputs credited against taxes on output. GST is going to be big game changer and will be o

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Draft GST Law, 2016 at the Workshop series on Draft Model GST Law – Scope of supply, Place & Time of supply, Valuation and Transitional provisions in GST, organised by the PHD Chamber of Commerce on June 29, 2016, focuses on following ingredients of Draft Model GST Law along with various suggestions/ issues: Overview of Existing Indirect Taxes How GST will help Trade & Commerce Meaning & Scope of taxable event i.e. supply under GST Threshold Exemption Time of Supply Place of supply Valuation under GST Registration and Returns under GST Input tax credit – scope and limitations thereof Other important issues and way forward for GST Hope the information will assist you in your Professional endeavours. In case of any query/ informat

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Goods and Services Tax – GST – By: – Mr. M. GOVINDARAJAN – Dated:- 4-7-2016 Last Replied Date:- 13-7-2016 – Chapter VI of the model GST law describes the procedure of registration. This Chapter provides procedure for registration, obtaining Unique identity number, registration for casual tax payer, amendment of registration, cancellation of registration and revocation of cancellation of registration. Registration Section 19(1) provides that every person who is liable to be registered under Schedule III of this Act shall apply for registration in every such State in which he is so liable within thirty days from the date on which he becomes liable to registration, in such manner and subject to such conditions as may be prescribed. If the person, other than an Input Service Distributor, is registered under an earlier law, it shall not be necessary for him to apply for fresh registration under this section and he shall follow the procedure as may be prescribed in this behalf. Schedule III

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dent taxable persons, irrespective of the threshold specified; persons who supply goods and/or services on behalf of other registered taxable persons whether as an agent or otherwise, irrespective of the threshold specified persons who supply goods and/or services, other than branded services, through electronic commerce operator, irrespective of the threshold specified; every electronic commerce operator, irrespective of the threshold specified; an aggregator who supplies services under his brand name or his trade name, irrespective of the threshold specified. Supplier The supplier shall not be liable to registration if his aggregate turnover consists of only goods and/or services which are not liable to tax under this Act.The supply of goods, after completion of job-work, by a registered job worker shall be treated as the supply of goods by the principal referred to in section 43A, and the value of such goods shall not be included in the aggregate turnover of the registered job worke

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d under this Act is transferred, whether on account of succession or otherwise, to another person as a going concern, the transferee, or the successor, as the case may be, shall be liable to be registered with effect from the date of such transfer or succession. In a case of transfer pursuant to sanction of a scheme or an arrangement for amalgamation or, as the case may be, de-merger of two or more companies by an order of a High Court, the transferee shall be liable to be registered, where required, with effect from the date on which the Registrar of Companies issues a certificate of incorporation giving effect to such order of the High Court. Holder of earlier licence Every person who, on the day immediately preceding the appointed day, is registered or holds a license under an earlier law, shall be liable to be registered under this Act with effect from the appointed day, which is subject to the threshold limit. Schedule III further provides that such other person or class of person

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f taxes on the notified supplies of goods and/or services received by them. The registration or the Unique Identity Number, shall be granted or, as the case may be, rejected after due verification in the manner and within such period as may be prescribed. The proper officer shall not reject the application for registration or the Unique Identity Number without giving a notice to show cause and without giving the person a reasonable opportunity of being heard. A registration or a Unique Identity Number shall be deemed to have been granted after the period prescribed if no deficiency has been communicated to the applicant by the proper officer within that period. Deemed registration The grant of registration or the Unique Identity Number under the CGST Act / SGST Act shall be deemed to be a grant of registration or the Unique Identity Number under the SGST/CGST Act provided that the application for registration or the Unique Identity Number has not been rejected under SGST/CGST Act withi

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registration issued to a casual taxable person or a non-resident taxable person shall be valid for a period of ninety days from the effective date of registration. The proper officer may, at the request of the said taxable person, extend the aforesaid period of ninety days by a further period not exceeding ninety days. Notwithstanding anything to the contrary contained in this Act, a casual taxable person or a non-resident taxable person shall, at the time of submission of application for registration make an advance deposit of tax in an amount equivalent to the estimated tax liability of such person for the period for which the registration is sought. Where any extension of time is sought such taxable person shall deposit an additional amount of tax equivalent to the estimated tax liability of such person for the period for which the extension is sought. The amount deposited shall be credited to the electronic cash ledger of such person and shall be utilized in the manner provided un

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nts under the SGST Act/CGST Act. Cancellation of registration Section 21 (1) provides that the proper officer may, either on his own motion or on an application filed, in the prescribed manner, by the registered taxable person or by his legal heirs, in case of death of such person, cancel the registration, in such manner and within such period as may be prescribed, having regard to the circumstances where, – the business has been discontinued, transferred fully for any reason including death of the proprietor, amalgamated with other legal entity, demerged or otherwise disposed of; or there is any change in the constitution of the business; or the taxable person, other than the person registered under sub-section (3) of section 19, is no longer liable to be registered under Schedule III. Section 21(2) provides that The proper officer may, in the manner as may be prescribed, cancel the registration of taxable person from such date, including any anterior date, as he may deem fit, where,

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ect the liability of the taxable person to pay tax and other dues under the Act for any period prior to the date of cancellation whether or not such tax and other dues are determined before or after the date of cancellation. Deemed cancellation The cancellation of registration under the CGST Act/SGST Act shall be deemed to be a cancellation of registration under the SGST Act/CGST Act. Liability of tax payer Section 21 (7) provides that every registered taxable person whose registration is cancelled shall pay an amount, by way of debit in the electronic credit or cash ledger, equivalent to the credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date of such cancellation or the output tax payable on such goods, whichever is higher, calculated in such manner as may be prescribed. In case of capital goods, the taxable person shall pay an amount equal to the input tax credit taken o

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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 4-7-2016 – Recommendations of Empowered Committee (First Discussion Paper) According to First Discussion Paper on Goods and Services Tax in India by the Empowered Committee of State Finance Ministers (2009), IGST model has been recommended for taxation of inter-state transaction of goods and services. Accordingly, the scope of IGST Model is that Centre would levy IGST which would be CGST plus SGST on all inter-State transactions of taxable goods and services with appropriate provision for consignment or stock transfer of goods and services. The inter-State seller will pay IGST on value addition after adjusting available credit of IGST, CGST, and SGST on his purchases. The Exporting State will transfer to the Centre the credit of SGST used in payment of IGST. The Importing dealer will claim credit of IGST while discharging his output tax liability in his own State. The Centre will transfer to the importing State the cred

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f the following 11 Chapters 33 Sections 8 Definitions Short till, extent and commencement (Section 1) This legislation is called the integrated Goods and Services Tax Act, 2016 (in short IGST), an Act to levy, collect and administer IGST in India. This Act shall be applicable to whole of India, i.e., including the State of Jammu & Kashmir. Presently, Service Tax does not apply to State of Jammu & Kashmir but Central Excise Act, 1944 applies to that state. What is meant by 'India' is defined in section 2(35) of Goods and Services Tax Act, 2016. The Act after being legislated shall come into force from a date which will be notified by the Central Government by way of a notification. It may also appoint different dates for enforcement of different provisions of the Act. Definitions (Section 2) There are seven definitions in section 2, viz, Appropriate State Government Integrated Goods and Service Tax (IGST) Input Tax Input Tax Credit Supply Output tax It has been specifica

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and 'services' are defined in the Constitution of India itself vide 122nd Amendment. CGST Act in its section 2(50) also defines IGST as tax levied under the IGST Act. IGST shall also apply to import of goods and services into India. The explanation stipulates that any supply of goods or services in the course of import of goods or services into Indian territory shall be deemed to be supply of goods / services in the course of inter-state trade or commerce and hence liable the IGST. It has also been proposed that like import transactions, export of goods and services shall be deemed to be supply in course of inter-state trade or commence. Interstate trade or commence will, therefore include supply of goods / services in the course of – Inter-state trade or commence Import into Indian territory (deemed to be inter-state) Export (deemed to be inter-state) Thus, IGST shall apply to inter-state transactions and import as well as export transactions (deemed to be inter-state transac

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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 2-7-2016 – The draft of model law on proposed Goods and Services Tax (GST) has since been released by the Empowered Committee of State Finance Ministers (in short, EC) on 15th June, 2016 in its last meeting held. Thus, called as 'Model GST Law', it shall comprise of two pieces of legislation, viz, Goods and Service Tax Act, 2016 (year may change) Integrated Goods and Services Tax Act, 2016 (year may change) GST Act The model GST Act comprises of – 25 Chapters 178 Sections (including numeric – alpha section) 4 Schedules GST Valuation (Determination of Value of Supply of Goods and Services), Rules 2016 109 definitions in section 2 IGST Act The Model IGST Act comprises

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ion of tax at source GST compliance rating Business vertical principal place of business casual taxable person Zero rated supply, etc However, provisions relating to registration, threshold exemption, taxability, point of taxation, valuation principles etc still shall continue and are guided by extant provisions. The dealer is required to take registration under this law if his aggregate turnover in a financial year exceeds ₹ 9 lakhs. However, dealers conducting business in any North Eastern State are required to take registration if their turnover exceeds ₹ 4 lakhs. The dealer has to take registration in the State from where taxable goods or services are supplied. Every person already registered under extant law will be issued

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Goods and Services Tax – GST – By: – SKP IDT – Dated:- 2-7-2016 – Over the last couple of years, the advent and augmentation of e-commerce market in India has changed the way people buy and sell goods and services. India is adding three new Internet users every second and is the second largest market for e-commerce. Though the sector is still in the infancy stage, considering the endless possibilities in the Indian markets, huge hopes are pinned on the sector and e-commerce in India is expected to perform better year on year. Taking into consideration the immense potential of the sector, one would expect tax laws to be conducive to the growth of this sector. Unfortunately for the e-commerce sector, the current indirect tax laws in India are an impediment to operations, thwarting the growth of the sector. Now that the Model GST law, 2016 is issued by the government on 14 June 2016, it would be relevant to understand what were the problems plaguing the e-commerce sector under the presen

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ow: Levy of VAT/ CST e-commerce transactions: Since the e-commerce operators are mere facilitators between the supplier of the goods or services and the customer, typically the operators are required to collect service tax on value of commission charged by them to the suppliers. However, considering the complexity of different models under the e-commerce sector, the tax authorities are perplexed whether the movement of goods from supplier to the warehouse of operator would fall within the ambit of sale of goods chargeable to VAT / CST. Further, in most cases the suppliers are not registered under the State VAT laws and are not charging VAT/ CST on the transaction executed, the authorities want e-commerce companies to obtain registration and pay VAT/ CST on sales generated on their portals on the argument that the operators are acting as agents for the sellers. In view of the above, the Kerala state department recently issued demand notice on various e-tailers demanding discharge of VAT

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suppliers cannot utilise credit of service tax paid by the operators for payment of their Excise/ Service tax/ VAT/ CST liability, since the services availed by suppliers cannot be attributed to their manufacturing/ trading activity. Further, even in case of service tax paid on common input services including accounting fees, rent, etc. the suppliers are required to reverse the credit in proportion to their trading operations (which is considered as an exempt service under the Service tax legislation). This results in huge increase in costs to the sector and has affected the margins of the suppliers. To summarise the above, absence of specific direction and clarity under various Indirect tax legislations has led to diverse practice being adopted by the e-commerce sector and tax authorities on taxability of transactions, ultimately leading to tax litigations and increase in cost of compliances and operations. GST on e-commerce- Boon or bane Bringing the e-commerce under GST will help co

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ions. As per the Model GST law, any payment made by the e-commerce operator to the supplier would be subject to TCS at a rate to be notified. The TCS collected would be available as credit to the supplier. Further, the e-commerce operator would be required to pay the TCS collected and file an electronic statement to disclose TCS collected and supply of goods/ services made through every supplier during the month within ten days from end of month. This move of introducing TCS on e-commerce operators would significantly augment the compliance burden, since many of them deal with thousands of suppliers operating on their online platform. Additional compliances would require tweaking IT and other systems and increased costs to ensure strict disclosure requirements prescribed under the Model GST law. Inter-state movement of goods on online purchases: On a cursory reading of meaning of the term supply under the model GST law, it appears that any movement of goods from one place to another wo

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re exchange offers by e-commerce operators may attract GST. Valuation of supplies under GST: As per the Model GST law, post supply discounts would be included in the value of taxable supply (except where it is known beforehand). Accordingly, in case of sale of goods at a discount, the operator may be required to pay GST on the price without discount resulting in additional tax burden on the e-commerce operator. In light of the above, though the GST is expected to bring in major benefits to the e-commerce sector, the industry may suffer in case clarity is not provided to the above concerns and ambiguities in the Model GST law. Way forward- What should the e-commerce companies do? Though there a few ambiguities in the Model GST law released by the government, implementation of GST would address majority of the concerns of the e-commerce sector in terms of single Indirect tax across India, seamless flow of credit, etc. and would act as a catalyst for the growth of the industry by improvin

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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 30-6-2016 Last Replied Date:- 1-7-2016 – With regional general elections to state assembly in some states getting concluded, policy makers on GST front got active and we saw a fully charged meeting or Empowered Committee under the Chairmanship of Mr. Amit Mitra, Finance Minister of West Bengal on 14-15 June, 2016. This meeting which took place after a gap of over 5 months could see the release of model law on goods and services tax, a major development in moving forward on GST front. This also indicates near consensus on various issues concerning GST. There may be some disagreements on certain issues by some State Governments but the release of model GST law in public domain is certainly a welcome step and would take the efforts forward. Now the eyes would be on monsoon session of Parliament in August, 2016 wherein Constitutional Amendment Bill is hopefully likely to be considered for passage. If that could happen, we m

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central levy) and SGST (state levy). On inter-state supply of goods, IGST shall be applicable. GST would be applicable on 'supply' of goods and services. The salient feature of model GST law are enumerated hereunder: 1) Threshold limit for registration The dealer is required to take registration under this law if his aggregate turnover in a financial year exceeds ₹ 9 lakhs. However, dealers conducting business in any North Eastern State are required to take registration if their turnover exceeds ₹ 4 lakhs. 2) Place of registration The dealer has to take registration in the State from where taxable goods or services are supplied. 3) Migration of existing taxpayers to GST Every person already registered under extant law will be issued a certificate of registration on a provisional basis. This certificate shall be valid for period of 6 months. Such person will have to furnish the requisite information within 6 months and on furnishing of such information, final registr

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includes all forms of supply of goods and/or services such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration. It also includes importation of service, whether or not for a consideration. 7) Point of taxation CGST/SGST shall be payable at the earliest of the following dates, namely: (i) Date on which the goods are removed for supply to the recipient (in case of movable goods). (ii) Date on which the goods are made available to the recipient (in case of immovable goods). Date of issuing invoice by supplier; or Date of receipt of payment by supplier; or Date on which recipient shows the receipt of the goods in his books of account. 8) TCS on online sales of goods or service Every E-commerce operator engaged in facilitating the supply of any goods and/or services (like Amazon, Flipkart, etc.) shall collect tax at source at the time of credit or at the time of payment whichever is earlier. 9) Valuation Rules Valuation Rule

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lized towards the payment of IGST. The input tax credit on account of CGST shall not be available for payment of SGST. 11) Payment Any tax, interest, penalty, fee, etc., shall be paid via internet banking or by using credit/debit cards or NEFT or RTGS. This amount shall be credited to the electronic cash ledger of dealer. 12) TDS The Central or a State Government may mandate certain departments (viz, local authority, Govt. agencies) to deduct tax at the rate of one percent on notified goods or services, where the total value of such supply, under a contract, exceeds ₹ 10 lakhs. 13) Refund A person can claim refund of any tax and interest by making an application in that regard to the prescribed officer of IGST/CGST/SGST within two years. 14) Returns Dealers shall be required to furnish following returns- a) Monthly return b) Return for composition scheme c) TDS return d) Return for input service distributor e) First return f) Annual return g) Final return These returns are for di

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Goods and Services Tax – GST – By: – Mr. M. GOVINDARAJAN – Dated:- 29-6-2016 – The Central Government has put on the domain the draft rules entitled Goods and Service Tax Valuation (Determination of the Value of Supply of Goods and Services) Rules, 2016. These Rules are applicable to the supply of goods and services under the IGST/CGST/SGST. Transaction value Rule 2(1) (d) defines the term transaction value as the value of goods and/or services within the meaning of section 15 of the CGST Act. Section 15 of the Model GST Act gives provisions for determining the value of supply. Section 15(1) of the Act provides that The value of a supply of goods and/or services shall be the transaction value, that is the price actually paid or payable for the said supply of goods and/or services where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply. Section 15(2) provides that the transaction value shall include- any amount that the

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, charged by the supplier to the recipient of a supply, including any amount charged for anything done by the supplier in respect of the supply of goods and/or services at the time of, or before delivery of the goods or, as the case may be, supply of the services; subsidies provided in any form or manner, linked to the supply; any reimbursable expenditure or cost incurred by or on behalf of the supplier and charged in relation to the supply of goods and/or services; any discount or incentive that may be allowed after the supply has been effected; such post-supply discount which is established as per the agreement and is known at or before the time of supply and specifically linked to relevant invoices shall not be included in the transaction value; The transaction value shall not include any discount allowed before or at the time of supply provided such discount is allowed in the course of normal trade practice and has been duly recorded in the invoice issued in respect of the supply.

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th the goods being valued and supplied by the same person or by a different person. Services of like kind and quality Rule 2(1)(C) defines the phrase services of like kind and quality as services which are identical or similar in nature, quality and reputation as the services being valued and supplied by the same person or by a different person. Methods to determine value The transaction value shall be the value determined in monetary terms. Where the supply consists of both taxable and non-taxable supply, the taxable supply shall be deemed to be for such part of the monetary consideration as is attributable thereto. The transaction value shall be accepted even where the supplier and recipient of supply are related, provided that the relationship has not influenced the price. If the goods are transferred from- one place of business to another place of the same business; the principal to an agent or from an agent to the principal, whether or not situated in the same State, the value of

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y levels; difference in composition, quality and design between the goods and/or services being valued and the goods and/or services with which they are compared; difference in freight and insurance charges depending on the place of supply. Rule 5 provides that if the value cannot be computed under Rule 4 then it shall be based on a computed value which shall include the following- the cost of production, manufacture or processing of the goods or, the cost of provision of the services; charges, if any, for the design or brand; an amount towards profit and general expenses equal to that usually reflected in supply of goods and/or services of the same class or kind as the goods and/or services being valued which are made by other suppliers. Where the value of the goods and/or services cannot be determined under the provisions of rule 5, the value shall be determined using reasonable means consistent with the principles and general provisions of these rules. Rejection of declared value Wh

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value of goods and/or services of like kind and quality at the time of supply; or any mis-declaration of goods and/or services in parameters such as description, quality, quantity, year of manufacture or production. The proper officer shall intimate the supplier in writing the grounds for doubting the truth or accuracy of the value declared in relation to the supply of goods and/or services by such supplier and provides a reasonable opportunity of being heard, before taking a final decision. If after hearing the supplier as aforesaid, the proper officer is, for reasons to be recorded in writing, not satisfied with the value declared, he shall proceed to determine the value in accordance with the provisions of rule 4 or rule 5 or rule 6, proceeding sequentially. Pure Agent Pure Agent means a person who- enters into a contractual agreement with the recipient of service to act as his pure agent to incur expenditure or costs in the course of providing taxable service; neither intends to ho

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s for which payment has been made by the service provider shall be provided by the third party; the payment made by the service provider on behalf of the recipient of service has been separately indicated in the invoice issued by the service provider to the recipient of service; the service provider recovers from the recipient of service only such amount as has been paid by him to the third party; and the goods and/or services procured by the service provider from the third party as a pure agent of the recipient of service are in addition to the services he provides on his own account. Money changer The value of taxable service provided for the services in so far as it pertains to purchase or sale of foreign currency, including money changing, shall be determined by the service provider in the following manner- for a currency, when exchanged from, or to, Indian Rupees (INR), the value shall be equal to the difference in the buying rate or the selling rate, as the case may be, and the R

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Goods and Services Tax – GST – By: – CA DEV KUMAR KOTHARI – Dated:- 20-6-2016 Last Replied Date:- 26-6-2016 – Ease of doing business: Government of India (NAMO government) is promising ease of doing business. However, feeling of business men is that doing business is becoming very difficult day by day. More formalities and obligations are being cast on businessmen – even on small self-employed people. No ease of doing business for small supplier and service providers As discussed hereafter even a rickshaw puller, / auto rickshaw, a barber shop , a pan shop, a small provision store run by self employed shop keeper, will be required to get registered under GST and pay GST. For example, even a self- employed small pan shopkeeper selling pan, cigarettes, and cold drinks can have turnover of Rs. three – four thousand daily with a net daily income of about ₹ 250- 300 will be required to get registered and pay GST. It is highly feared that e

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ven a small business has some fixed expenses on account of rent, interest, depreciation of assets, electricity, employee/ outsourced services cost, up-keep repair and maintenance of business space and machines, mobile and other phones, local taxes etc. For examples, even a rickshaw puller has to pay rent to the Rickshaw owner, rent for parking, repairs expenses for rickshaw, local tax, road tax etc. Now-a-days even a Rickshaw Puller is required to have mobile phone so that his passengers can call him and fix time for pickup. A barber has to pay rent for shop / space, they also have to pay some trade licence or similar fees to local authorities trade associations, repairs for shop and tools, consumable tools etc. Income element: Earning of income starts only when contribution from sales and services is enough to fully recover fixed costs ( including semi-fixed costs). Before break even point, there is no profit. NE Region:

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imits will be increased substantially to at least ₹ 20 lakh. However, the same remained unchanged and now in GST also same amount is kept with further substantial reduction for states in NE and Sikkim state. In various states also for Sales Tax / VAT the exemption limits ranges around Rs. ten to fifteen lakh per annum. And these limits also require revision. Therefore, threshold limit for liability for registration and GST payment need to be revised. Presumptive income-tax- a basis: Even if we apply presumptive net income computation Rule , at turnover of Rs. five lakh deemed income is ₹ 40000/- and on Rs. ten lakh it is ₹ 80000/-. These are far below basic exemption provided under Income-tax Act. A person earning ₹ 40K in NE & Sikkim annually and ₹ 80K in other states should not be burdened with formalities of GST. 8% net profit is not feasible in case of small suppliers and service pr

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e of services Rs.12,00,000/- Turnover required to earn taxable income: In case of self-employed people assuming a gross profit of 10% in case of trading and 15% in case of service the turnover required for earning income at least equal to basic exemption under Income -tax Act will be as follows: In case of supplies: Turnover required for break even i.e. 18,00,000 + (2,50,000 / 10%) = 43,00,000/- In case of services: Turnover required for break even i.e. 12,00,000 + (2,50,000 / 15%) = 28,66,667/- Before these levels there is hardly any scope to earn taxable income. The assumed rate of GP is on higher side and fixed expenses are on lower side. Requirement of Tax audit u/s 44AB: At present (for PYE 31.03.2017) Tax Audit will be required when gross receipts exceed ₹ 100 lakh in a business and ₹ 50 Lakh in any profession. These limits also need revision in view of infla

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kh For service providers ₹ 25 lakh The above are just half of limits prescribed for tax audit report u/s 44AB. – Reply By SANJAY MEHTA – The Reply = Now a days a normal business entity whose turnover is 40 lakhs annually needs following expenses to run his business at lowest smooth level.1. Rent of the shop. 2. Electric charges.3. Salary of the staff at least 2 nos.4. Trade licence fees both shop and Godown. 5. Profession tax.6. Accounting charges.7. Charges for sales tax lawyers for filing of 4 qtr returns, and one consolidate audit return annually, assessment of the cases.8. Audit charges.9. Filing of income tax returns.10. Day to day Office running expenses11. Printing and stationery 12. Telephone charges.13. Repair and maintenance 14. Other miscellaneous.Considering the formalities involved in GST, a small traders with a turnover of upto 80 lakhs will not have a taxable income in hand to pay an income tax. – Reply By Gautam Singh – The Reply

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Goods and Services Tax – GST – By: – Mr. M. GOVINDARAJAN – Dated:- 20-6-2016 – In this part the provisions relating to settlement of cases under this draft Act is discussed in detail. Chapter VIII of the Act deals with the settlement of cases. Case Section 11(d) defines the term case as any proceeding under this Act for the levy, assessment and collection of IGST before an IGST officer, or before a First Appellate Authority in connection with such levy, assessment or collection of IGST pending on the date on which an application is made. Where an order is passed by an adjudicating authority and for which the appeal period has not expired shall also be deemed to be a proceeding pending within the meaning of this clause. Where any appeal has been preferred after expiry of the period specified for filing such appeal under this Act and which has not been admitted, such appeal shall not be deemed to be a proceeding pending within the meaning of this clause. Where any Court or Appellate Tri

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been a judge of the High Court. The qualifications, eligibility conditions and the manner of selection and appointment of the National Chairman, the State Chairman, and the Members shall be such as may be prescribed on the recommendations of the Council. Functions The National Chairman and the State Chairman shall exercise such powers and discharge such functions as may be prescribed on the recommendations of the Council. State Commission The jurisdiction of the State Settlement Commission constituted under this Act shall extend to the respective State. Each Bench shall be presided over by the State Chairman and shall consist of two other Members. when one of the persons constituting a Bench, whether such person is the presiding officer or other Member of the Bench, is unable to discharge his functions owing to absence, illness or any other cause or in the event of the occurrence of any vacancy either in the office of the presiding officer or in the office of one or the other Members

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the jurisdictional IGST officer, the manner in which such liability has been derived, the additional amount of tax accepted to be payable by him and such other particulars as may be prescribed. The Settlement Commission shall be disposed of in the manner as detailed below- No application shall be received by the Commission, unless- the applicant has furnished the return(s), which he is or was required to furnish under the provisions of this Act; a show cause notice for demand of tax issued by the IGST officer has been received by the applicant or an order confirming the demand of tax has been issued by the IGST officer and the same is pending before the First Appellate Authority; the additional amount of tax accepted by the applicant in his application exceeds five lakh rupees; and the applicant has paid the additional amount of tax accepted by him along with interest due thereon under section 36 of the CGST Act. the Settlement Commission, if it is satisfied that the circumstances exi

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by an order, allow the application to be proceeded with, or reject the application as the case may be, and the proceedings before the Settlement Commission shall abate on the date of rejection . An application shall not be rejected unless an opportunity has been given to the applicant of being heard; A copy of every order, shall be sent to the applicant and to the jurisdictional IGST officer; Where an application is allowed, the Settlement Commission shall, within seven days from the date of order, call for a report along with the relevant records from the jurisdictional IGST officer; Such officer shall furnish the report within a period of sixty days of the receipt of communication from the Settlement Commission; Where the jurisdictional IGST officer does not furnish the report within the aforesaid period of sixty days, the Settlement Commission shall proceed further in the matter without the report of the said officer; After examination of the report of the jurisdictional IGST office

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e it or obtained by it, the Settlement Commission may pass such order as it thinks fit on the matters covered by the application and any other matter relating to the case not covered by the application, but referred to in the report of the jurisdictional IGST officer and Designated Officer; An order shall not be passed in respect of an application after twelve months from the last day of the month in which the application was made, failing which the settlement proceedings shall abate, and the adjudicating authority or the First Appellate Authority, as the case may be, before whom the proceeding at the time of making the application was pending, shall dispose of the case in accordance with the provisions of this Act as if no application had been made; The period specified under this section may, for reasons to be recorded in writing, be extended by the Settlement Commission for a further period not exceeding three months; For the purposes of the time limitthe period commencing on and fr

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s unpaid, shall be recovered along with interest due thereon at the rate prescribed under section 36 of the CGST Act, as the sums due to the Central/ State Government by the jurisdictional IGST officer in accordance with the provisions of section 54 of the CGST Act; Where a settlement becomes void as provided, the proceedings with respect to the matters covered by the settlement shall be deemed to have been revived from the stage at which the application was allowed to be proceeded with by the Settlement Commission and the jurisdictional IGST officer or the First Appellate Authority, as the case may be, may, notwithstanding anything contained in any other provision of this Act, complete such proceedings before the expiry of two years from the date of the receipt of communication that the settlement became void. Order of Commission – conclusive Every order of settlement passed shall be conclusive as to the matters stated therein and no matter covered by such order shall, save as otherwi

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the opinion that for the purpose of protecting the interests of revenue it is necessary so to do, it may, by order, attach provisionally any property belonging to the applicant in the manner as may be prescribed.Every provisional attachment made by the Settlement Commission shall cease to have effect from the date, the sums due to the Central Government / the State Government for which such attachment is made are discharged by the applicant and evidence to that effect is submitted to the Settlement Commission; If the Settlement Commission is of the opinion, for the proper disposal of the case pending before it, it is necessary or expedient to reopen any proceeding connected with the case but which has been completed under this Act before application for settlement15 was made, it may, with the concurrence of the applicant, reopen such proceeding and pass such order thereon as it thinks fit, as if the case in relation to which the application for settlement had been made by the applicant

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in the order of the settlement passed within the time specified in such order or within such extended period as permitted by the Settlement Commission or fails to comply with any other condition subject to which the immunity was granted and thereupon the provisions of this Act shall apply as if such immunity had not been granted; An immunity granted to a personmay, at any time, be withdrawn by the Settlement Commission, if it is satisfied that such person had, in the course of the settlement proceedings, concealed any particular material to the settlement or had given false evidence, and thereupon such person may be tried for the offence with respect to which the immunity was granted or for any other offence of which he appears to have been guilty in connection with the settlement and shall also become liable to the imposition of any penalty under this Act to which such person would have been liable, had no such immunity been granted; The Settlement Commission may, if it is of opinion

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