Goods and Services Tax

Goods and Service Tax – GST – By: – Nagesh Bajaj – Dated:- 3-10-2011 Last Replied Date:- 30-12-1899 – In Canada Goods and Services Tax (GST) is a multi-level value added tax introduced on January 1, 1991, by Prime Minister Brian Mulroney and Finance Minister Michael Wilson. The GST replaced a hidden 13.5% Manufacturers Sales Tax (MST); Mulroney claimed the GST was implemented because the MST hurt the manufacturing sector's ability to export and also replaced the Federal Telecommunications Tax of 11%.The introduction of the GST was very controversial. As of May 18th, 2010, the GST rate is 5%. The European model has helped to become the Canada s economy more efficient and competitive with lower-priced goods in the international market. H

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and services. The Federal Goods and Services Tax (GST) is collected by the Canada Revenue Agency (CRA). GST is a tax that applies at a rate of 5% to the supply of most goods and services in Canada . Three provinces ( Nova Scotia , New Brunswick , and Newfoundland and Labrador ) harmonized their provincial sales tax with GST to create HST. HST applies to the same base of goods and services as GST, but at a rate of 13%. Of this, 5% is the federal part and 8% is the provincial part Some specific products and services are exempt from GST. Such as Most health, medical, and dental services performed by licensed physicians or dentists for medical reasons; Child-care services; Long-term residential accommodation; Most goods and services provide

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goods and services that are not exempt from GST is a lot more than those which are zero-rated. Certain lower income segments of the population, while not exempt from paying GST, may be eligible to receive quarterly GST credits. The GST/HST credit is a tax-free payment that helps offset all or part of the GST or HST paid. Provincial Sales Tax (PST) is also called Retail Sales Tax (RST). In Quebec this tax is called QST. The tax is collected at the provincial level. Each province could charge consumers differently. The following list shows the current rates. The rates could change in the future. Ontario 8% British Columbia 7% Alberta 0% ( Alberta does not collect provincial sales tax) Manitoba 7% Quebec 7.5% Prince Edward Island ( PEI )

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Allied Laws – GST in CANADA – Article – TMI Updates – Highlights

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Allied Laws – GST and Economic Growth – Article – TMI Updates – Highlights

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Goods and Service Tax – GST – By: – Nagesh Bajaj – Dated:- 30-9-2011 Last Replied Date:- 30-12-1899 – To make India as a financial super power, the introduction of GST is must. There are much apprehension relating to proposed GST regime regarding the growth in Indian Economy and its effects thereof. As we know in India economy, destination based taxation requires high compliance cost and efficient administration. Taxation both direct and indirect plays an important role in promoting economic growth as well as equitable distribution. As we are facing the cascading system of indirect taxes in India and with the introduction of GST, all the cascading effects of Cenvat and service tax will be more comprehensively removed with a continuous chai

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r, GST will redistribute the burden of taxation equitably between manufacturing and services bringing about a qualitative change in the tax system. It will lower the tax rate by broadening the tax base and minimizing exemptions. The greatest impact of the implementation of the GST would create a common market across the country and reduce compliance costs and thus, create a equitable distribution. In the absence of significant fiscal options, incentivized policy to attract investors to states would shift to greater emphasis on structural reforms. The over macroeconomic effect of reduction in economic distortions due to GST would be to provide an impetus to economic growth. Thirteenth Finance Commission estimates the impact of the introducti

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ing sectors would benefit from economies of scale. Output of sectors including textiles and readymade garments; minerals other than coal, petroleum, gas and iron ore; organic heavy chemicals; industrial machinery for food and textiles; beverages; and miscellaneous manufacturing is expected to increase. The sectors in which output is expected to decline include natural gas and crude petroleum; iron ore; coal tar products; and nonferrous metal industries. The results of the NCAER Study are also suggested of the GST s positive environmental impact on the economy. Vijay kelkar, Chairman of the 13th Finance Commission said that the proposed GST would benefit the Indian economy by at least $15 billion (about ₹ 73000 crore) per year. A fall

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Goods and Service Tax – GST – By: – Nagesh Bajaj – Dated:- 27-9-2011 Last Replied Date:- 30-12-1899 – As we are expecting that the new regime GST will have a significant effect on the Indian Trade and will have a great impact on the day to day business established in India. Mr. Jose Cyriac, Additional Secretary (Revenue) Ministry of Finance said in the Seminar organized by the Banglore Chamber of Industry and Commerce that GST will be Trade Friendly . According to FM, a new GST regime will generate the targeted revenues with the minimization of exemption. It will broaden the tax base and lower the tax rates. GST is based on destination principle, so the distortions will be reduced fostering a common market across the country. The complianc

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nditions, limitation and procedures. Similar benefits may be given to Special Economics Zones (SEZs). Such benefits will only be allowed to the processing zones of the SEZs. No benefit to the Sales from an SEZ to Domestic Tariff Area (DTA) will be allowed. Both CGST and SGST will be levied on Import of goods and services into the country. The incidence of tax will follow the principle of destination based tax. The SGST of that State will be applicable where the goods and services are consumed. Full and complete set-off will be available on the GST paid on imports on goods and services. In GST, the relief is given to whom those who have Small businesses. They are out of the purview of the GST, means that the businesses with an annual turnove

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olic beverages would be kept out of the purview of GST. Sales Tax / Vat could be continued to be levied on alcoholic beverages as is prevailing in the present. There is no objection if some States impose Vat on it and if impose excise duty that may also not to be affected. On the other hand, tobacco products would be subjected to GST. Centre may be allowed to levy excise duty on tobacco products over and above GST. So far as petroleum products are concerned, it is decided that the basket of petroleum products, i.e. crude, motor spirit (including ATF) and HSD would be kept outside GST as is the prevailing practice in India . Sales Tax could continue to be levied by the States on these products with prevailing floor rate. Similarly, Centre co

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Allied Laws – GST in AUSTRALIA – Article – TMI Updates – Highlights

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Goods and Service Tax – GST – By: – Nagesh Bajaj – Dated:- 25-9-2011 Last Replied Date:- 30-12-1899 – In the European Union, the consumption tax is called Value Added Tax or VAT. In some countries like New Zealand and Canada called their consumption tax as a goods and service tax (GST). In Australia, GST provisions are set out in a piece of Legislation called the A New Tax System (Goods and Service Tax ) Act 1999 and the GST was implemented on 11th July, 2000. In Australia, GST is a part of the broader tax reform which replaces some indirect taxes. Australia s GST is equivalent to consumption taxes as prevailed in other parts of the world. In Australia, administration of the GST is handled by the Australian Taxation Office known as A.T.O.

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aws. Transactions under GST are also called Supplies. Supplies are classified into three categories :- 1. Taxable 2. Input – taxed 3. GST free A GST rate of 10% will be charged on most goods and services consumed in Australia. If registered , there are two types of sales which are treated differently:- Suppliers of GST free goods and services are not have to pay GST, when they make a sale but they will be entitled to GST credits. Suppliers of input taxed goods and services do not have to charge GST on sales but they are not be entitled to claim GST credits from their purchases of inputs. GST is not payable on input taxed supplies where financial supplies, residential rent, residential premises and supplies of food made by school tuckshops

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m Australia may include a payment of GST. Import Duty/ GST will be charged on following terms :- If the goods (1) have a value over AUD $ 1000 or (2) contain alcohol or tobacco of any quantity or value. On the contrary, if goods are valued under AUD $1000 and do not contain alcohol or tobacco then not required to pay any Custom Import Duty/ GST or associated Custom charges. All imported goods are assigned a tariff classification obtained from the Australian Customs Tariff which determines the rate of duty will pay for the product. To conclude the above, Australian goods and services tax revenue will be about A $ 13 billion ($ 12 billion ) more than estimated, Treasurer Wayne Swan said, increasing the funds available to states and to fund th

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Goods and Service Tax – GST – By: – Nagesh Bajaj – Dated:- 21-9-2011 Last Replied Date:- 30-12-1899 – The First Discussion Paper produced by the Empowered Committee of state Finance Ministers has come out with an innovative way to deal with inter-state transaction of goods and services. The forthcoming GST will be dual in nature and will be levied on all transactions of goods and services. Centre will impose CGST while the state will impose SGST on the same transaction. IGST will be combination of these two, i.e., (CGST plus SGST). As per Indian constitution the taxation of interstate sales is possible only in the state where it was consumed. Unfortunately, this led some states to issue notices to dealers not resident within their jurisdictions to file returns. To remove this problem a law was enacted by the Parliament in 1956 authorizing the central government to levy a tax on interstate sales called the Central Sales Tax (CST). The centre delegated the power to administer the tax to

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nd the revenue accrues to the state where the final consumer is located. The Task Force has suggested that the success of every model depended on the following pre-requisite: a. E-filing of return every month with dealer wise transaction details. b. E-payment of taxes. c. National Portal for access to information by member states and dealers. d. National agency for overseeing the flow of information and taxes. e. Strong IT infrastructure for the above issues. f. The intra and inter-state rates of tax should be equal to avoid evasion and camouflaging the intra state transactions or inter-state transactions. If we will give a look on the IGST Model suggested by the First Discussion Paper, it fulfills the all abovesaid requirements. 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 p

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ut addressing the fundamental concerns of IT infrastructure and information support system the adoption of IGST model would not be adequate. Hence they have suggested for Modified Bank Model instead of IGST Model. Conclusion: The model suggested by the First Discussion Paper is innovative in many ways. However, nothing has been said in the FDP in respect of stock transfer from one state to another. It is suggestive that stock transfers should also be taxed under IGST in the origin state and the credit of the same should be available in the destination state so that there shouldn't be any hindrance in the value chain. But the Empowered Committee of the State Finance Ministers should be appreciated for adopting such a model. LAWCRUX TEAM Import export trade, Custom duty, Central excise duty, GST, Indirect tax services, indirect tax, advance license, foreign trade policy, tax planning, e-book, EOU, SEZ, NEPZ, EPCG, DFRC, CBCC, DGFT, DEPB {http://www.lawcrux.com} Author: Nagesh Bajaj L

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Goods and Service Tax – GST – By: – Nagesh Bajaj – Dated:- 16-9-2011 Last Replied Date:- 30-12-1899 – The proposed GST Scheme has created a sense of fear among states that they will lose their autonomy over levy of taxes. Presently, states enjoy total autonomy atleast in respect of state taxes. It is upto state governments to decide – what to levy, type of levy, rate of tax and how to tax. Some state governments have expressed deep concerns that the introduction of GST regime will affect their fiscal autonomy. The reason behind this apprehension is that the design of GST is based upon a common base and an uniform rate across states. Also, after the implementation of GST, states would not have any power to make any unilateral changes. The Task Force on Goods and Services has defined the full autonomy in the exercise of taxation powers. It would mean that the centre or state, as the case may be: a) Retain the power to enact the tax; b) Enjoy the risks and rewards of ownership of the tax

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ue loss to the states. But the states are making it a political issue. Some states in their recent budget presentations have complicated the indirect tax regime by adding layers to tax slabs and raised taxes with an eye on enhancing the extent of compensation. So, the compensation has become a matter of grand bargain between centre and the states. Generally state governments use their fiscal policy as an instrument for the purpose of social welfare and sometimes for consolidating their vote bank. In fact, some of the state governments want to use the tool of taxation for maintenance of their vote bank. As per the recommendation of the Task Force, the present Empowered committee of state Finance Ministers may, upon the introduction of GST, be transformed into a permanent constitutional body known as the Council of Finance Ministers. This council shall comprise of the Union Finance Ministers and all State Finance Ministers. The Union FM would be the chairman of this council. The council

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the Indian economy and common man in the long run. Hence, both the centre and the states will have to show endurance upto some extent for better tomorrow. With the inclusion of the tax on services as well as tax on manufacture, the tax base of the state governments will increase significantly, whereas the taxbase of the centre on the other hand will increase only to the extent of tax on sales. Certainly, the widen taxbase would ensure more revenue for the states. Hence it is not right to say that the centre will be benefited more. State governments can achieve their objective of social and economic welfare through increased revenue and support inform of compensation by the centre. They shouldn t politicize this issue. Conclusion: The expected harmonious levy in GST regime across the states would lead to the unification of Indian market as the inter-state trade barriers would be removed. The uniform rate of tax, subsuming of major central and state taxes in GST, full set-off mechanism a

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Goods and Service Tax – GST – By: – Nagesh Bajaj – Dated:- 14-9-2011 Last Replied Date:- 30-12-1899 – In 2006, the UPA Government announced that a comprehensive GST would be launched on 1st April, 2010 and it was believed that the introduction of GST is a difficult task, as our current structure of indirect taxes is driven by the multiplicity of taxes. Some levied by the Centre and others by the States. Under the Chairmanship of Dr. Asim Dasgupta, the Empowered Committee carve out the design and structure of GST. The new regime GST gives an opportunity to bring together the machinery of the Centre and the States to jointly work for better enforcement. Prime Minister has also realized and stated that we have travelled a long way on implemen

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egarding the final structure of GST by the end of the month. But, States like Karnataka and Gujarat opposed the deadline i.e. April 1, 2010 as having inadequate ground level preparations and some States also pointed out that the preparation of IT infrastructure HSN code and legislation is essential, especially for tracking the movement of goods and services. There is much dispute over the reduction rate of Central Sales Tax .Due to CST reduction, some States were losing revenue in crores annually. Dr.Asim Dasgupta also said that 'CST loss is a serious issues for States'. The another controversy arose in the matter of petroleum and in alcohol. There are restrictions on availing credit of taxes paid on fuels. Further, the Task Force h

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warned about the issues includes consensus over rates, differential rates on certain items, compensation mechanism for States losing out on revenue etc and also required a constitutional amendment for its implementation. The First Discussion Paper released by Empowered committee of finance Minister on 10th Nov,2009 envisages an extremely diluted form of GST and the implementation of the GST should be postponed to 1st Oct,2010. In an Interview with CNBC-TV 18, Rajeev Dimri Head Indirect taxes at BMR and associates told that The government could make some preparatory changes. The GST was implemented on April 1st 2010 but, now it is excepted that it will implemented on April, 2011. Another interview with Anil Khandelwal Chief Financial Office

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Goods and Service Tax – GST – By: – Nagesh Bajaj – Dated:- 8-9-2011 Last Replied Date:- 30-12-1899 – IT infrastructure will be one of the basic requirements for successful implementation of Goods and Services tax. It should be well in place before introduction of GST. Based on the experience of different state governments, we can say that without an efficient e-governance it is not possible to administer value added tax regime effectively. The Input Tax Credit (ITC) is an important aspect of VAT and it is difficult to monitor ITC in the absence of fully developed computerized system. At present, the e-filing of returns as well as filing of various forms under VAT, excise duty and service tax is a bitter experience for the taxpayers. Inspite of the confirmatory claims made by both the central government and the state governments, the system is not adequate. The hardware developed is quite slow in responding to the taxpayers requirements. Not even hardware but software application is al

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dit of IGST while discharging his output tax liability in his own state. The centre will transfer to the importing state the credit of IGST used in the payment of SGST. The central agency will act as a clearing house. It will verify the claims and inform the respective governments to transfer the funds. Hence, there is maintenance of uninterrupted input tax credit chain on inter-state transactions. IGST model is completely a self-monitoring model. A close look on the IGST model suggests a facilitation of robust IT system with all the necessary information for computation of the tax credit. The most important task before the Empowered committee and the central government will be to build up information technology (IT) platform and infrastructure. The major responsibilities of IT infrastructural requirement will be shared by the central government through the use of its own IT infrastructure facility. The tax information network (TIN) system, built by NSDL for income-tax would be a right

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launch of GST. States don't possess an adequate IT infrastructure base in comparison to the Centre. It would create a great mess during functioning of IGST model. Hence, states should be equally equipped before introduction of goods and services tax. States should be merged into TIN, one by one, at an administrative level so that they get themselves accustomed with this network. While doing this state VAT should be kept apart. Conclusion: The system of IT infrastructure would be of much importance in the GST regime. If we will go into common market without adequate preparation and without a minimum level of e-governance across the states, there would be serious difficulties. So the government of India should take special measures to introduce computerization in tax administration in all states. Since new software application will have to be developed and installed within a short span of time there may be possibility of errors. It may take few years for settling down. LAWCRUX TEAM I

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Goods and Service Tax – GST – By: – Nagesh Bajaj – Dated:- 7-9-2011 Last Replied Date:- 30-12-1899 – The scheme of GST should be supported by a strong tax-administration infrastructure for it s optimum success. Without an efficient tax-administration the implementation of goods and services tax will be just like pouring water in the bottomless bowl. So, the structure, design and the business process of tax administration is an important factor in the determination of the revenue performance. To put in the words of Casanegra de Jantscher, tax administration is tax policy. Although various improvements have been recently made in the tax laws and administration over the past few years such as Large Taxpayer Unit (LTU) Scheme and Automation in Central Excise and Service Tax (ACES), the systems at both Central and state level remain complex. The tax systems suffer from substantial compliance gaps, except in the highly organized sectors of the economy. Tax administration is a typical issue

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cation. However, the states may, if necessary, undertake post-registration verification to eliminate any potential abuse. In future, the string corresponding to PAN will be replaced by the Unique Identification Number (UIN) proposed to be issued to all residents. It should be mandatory for all registrant dealers to obtain an e-mail ID and also open an internet banking account with any bank. The form must capture the e-mail ID and the internet bank account number. GST Invoice According to Task Force, VAT Invoices are crucial control document of VAT since it forms the primary source of information. Recommendations relating to VAT invoices are as under: i) The law should require a supplier making a taxable supply to another taxable person to provide a VAT invoice with that supply or the payment for it. The requirement should be enforceable by some penalty. ii) The VAT invoice should be standardized across all states so as to contain a minimum of information. Payment on monthly basis: The

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d as a single taxable entity eligible for CGST input credit across units / branches in that state. Strong, Broad and common IT infrastructure: The Central Government shall establish a common IT infrastructure which will serve the needs of both CGST and SGST. A Taxpayers Information Network (TIN) will be established by the centre keeping in view the information requirement of CBEC and the state tax administration. The TIN will be shared between the centre and the state. The payment of tax and transaction reporting should be made through a combined payment and transaction reporting statement in form no. GST-1. This statement should detail all business to business transactions relating to sale. This statement should be common for both CGST and SGST compliance and it should be mandatory to file this statement electronically on a monthly basis while making payment of taxes. Uniform Laws for SGST: Electronic filing of all other returns, if any, should also be mandatory. Therefore, the return

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Goods and Service Tax – GST – By: – Nagesh Bajaj – Dated:- 1-9-2011 Last Replied Date:- 30-12-1899 – Transportation & logistics is a much wider term. It covers various service providers and services provided by all modes of transportation (e.g., air, road, rail and sea). It also comprises related services such as warehousing, handling and value added services such as packaging, labeling, assembling etc. Transport service is used both as intermediate input and in final consumption. Also the transport equipments are subject to multiple taxation at both central and state levels. The present taxation regime leads to cascading effect of embedded taxes on the downstream industry (oil industry) which do not get rebated thereby leading to enha

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portation of persons by road transport. ii) Transportation of persons by rail. iii) Transportation of persons by air for domestic journey. iv) Transportation of persons by air in economy class for international journey. v) Transportation of persons by other than cruise ship from port in India. To rationalize the present indirect tax regime for transport services, the 13th Finance commission s Task Force has given some important suggestions: i) The tax on vehicles and the tax on goods and passengers levied by the state governments should be subsumed in the GST. ii) All transport equipments and all forms of services for transportation of goods and services by railways, air, road and sea must form an integral part of the comprehensive GST base

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only and that too restricted to classes other than economy class. Finance Bill, 2010 proposes to fully expand the scope of this service by bringing domestic air travel also in the net. The exclusion of economy class is also being removed and all classes of air travel will be liable to service tax as per the proposed change. As per departmental clarification, modalities of working out the tax amount including exemptions, abatement etc. would be prescribed at the appropriate time. Transport of goods through Railways, which was till now exempted from service tax will have to bear the burden of 10% service tax. It indicates that the government wants to take more and more services in the tax net before implementation of full fledged GST. Conclus

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Goods and Service Tax – GST – By: – Nagesh Bajaj – Dated:- 12-8-2011 Last Replied Date:- 30-12-1899 – The GST Model proposed in the First Discussion Paper produced by the Empowered committee of state finance ministers on Nov 10, 2009, will be dual in nature. It will consist of two components: CGST (Central GST) and SGST (State GST) simultaneously levied by centre and state, respectively, on all transactions of goods and services, except those exempted by law. Both states and centre would independently administer and levy tax on the supply of all goods and services. Currently in the indirect tax structure, the centre is liable to levy tax on manufacture, rendition of services and import of goods. States are empowered to levy and collect tax

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current list (list III). The relevant entries from all the three lists are as under: Entry no. 83 (Union list): It states about duties of customs including export duties. Entry no. 84 (Union list): It states about duties of excise on tobacco and other goods manufactured or produced in India. Entry no. 92A (Union list): It states about taxes on the sale or purchase of goods other than newspaper, where such sale or purchase takes place in the course of inter-state trade or commerce. Entry no. 92B (Union list): It states about taxes on consignment of goods where such consignment takes place in the course of inter-state trade or commerce. Entry no. 92C (Union list): It states about the empowerment of central government to tax services under the

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le of the constitution would require a special majority of parliament (i.e. 2/3rd majority of the total number of members present and voting, which should not be less than half of the total membership of the house), the ratification of at least half of the state legislatures by special majority and the president assent. Conclusion: A joint working group (JWG) has already been constituted on September 30, 2009 comprising of the officials of the central and state governments to prepare, in a time bound manner a draft legislation for constitutional amendment, draft legislation for CSGT, a suitable model legislation for SGST and rules and procedures for CGST and SGST. The empowered committee of state finance ministers is likely to meet Mr. Pran

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VAT and Sales Tax – Started By: – Milan Bajaj – Dated:- 10-8-2011 Last Replied Date:- 10-8-2011 – Can somebody help me by sending me an overview of GST & DTC for the purpose of preparation of Interviews. My email ID milanbajaj88@gmail.com Thank You. – Reply By pradeep khatri – The Reply = Dear Milan, You may search this information on Big 4 s Websites. I think that E&Y s website will provide you with the relevant information. Regards, Pradeep Khatri – Reply By Milan Bajaj – The Reply =

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Goods and Service Tax – GST – By: – Nagesh Bajaj – Dated:- 8-8-2011 Last Replied Date:- 30-12-1899 – The prevalent indirect tax structure in India has a number of exemptions. At central level, 330 exemptions are allowed under CENVAT. These exemptions to service providers and manufacturers depend on the fulfillment of various conditions which are specific to each exemption. Around 99 items are presently exempted under VAT. Individual states can expand this list even for the goods of local importance. It is not possible for the provider of exempt services or manufacturers of exempt goods to avail the benefit of input tax credits. This hampers the free flow of credits down the supply chain and increases the cascading effect. Ultimately whole

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ther commercial departments iv) Public sector enterprises v) Banks and Insurance vi) Health and Education services b) Any service transactions between an employer and employee either as a service provider, recipient or vice-versa. c) Any unprocessed food article which is covered under the public distribution system should be exempt regardless of the outlet through which it is sold. d) Education services provided by non-governmental schools and colleges. e) Health services provided by non-governmental agencies. The exemption list proposed by the Task Force leaves a corner for debate as it consists of services which are rendered by the government in the course of the discharge of the sovereign functions of the state. Sovereign functions are m

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nction, service tax is leviable provided there is a sale of the service on the basis of an invoice or a bill or voucher. Even if it is a statutory function and only a fee is charged, it is still conceptually a commercial sale. And the tax is leviable. The Report of Task Force should have said that these functions are not taxable. Department of Revenue (DOR) in its comment on the first discussion paper on GST favoured for a common list of exemptions for CGST and SGST. Efforts will be made by centre to substantially reduce the number of items presently exempted under CENVAT regime. Around 99 items presently exempted under VAT may continue to remain exempted in GST regime. There should be no scope, with individual states, for expansion of this

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Goods and Service Tax – GST – By: – Nagesh Bajaj – Dated:- 5-8-2011 Last Replied Date:- 30-12-1899 – GST is a destination based consumption tax. Consumption taxes are regressive in nature. It increases the gap between the rich and the poor. The pertinent point is whether such tax would be fruitful for the economy as a whole or not? Is it not so that shift towards the consumption tax would increase inequality? However, there are different ways to combat this inequality. For example, reduced rate of goods and services tax may be applied to certain necessities in order to reduce tax burden on the poor. But it is not an effective way to deal with the problem as the rich typically consume more of the necessities than the poor. Also it is difficult to ensure that none of the poor people lost out. This is the biggest concern that the oppositions use to oppose a tax on consumption. The poverty reduction will continue to remain the central objective of the economic policy making in India. Any

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olicy initiative since expenditure on food constitutes a large proportion of the total consumption expenditure of the poor. In any case, the poor will continue to have accessibility to these items at subsidized prices through the public distribution system. Basic health and education services are expected to be fully exempt in GST regime. Since these services are necessary to meet the basic human needs, the exemption for these services will enable the poor to have cheaper accessibility. In any case, as at present, these services will continue to be exempt from tax and therefore no additional burden will arise on account of the switchover to GST. Housing is yet another important item of basic needs of the poor. The Task Force recommended for the inclusion of transactions in real estate within the purview of GST. Therefore, for a registered real estate builder, all taxes on inputs (including on land) will be offset against the tax payable on the constructed property. This will effectivel

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erefore, the poor will also enjoy an increase in their income. Similarly, on account of increase in economic activity resulting in higher growth, there will be new opportunities for employment which will directly benefit the urban poor. According to the Task Force the benefit to the poor from the implementation of GST will flow from two sources: i) Through increase in the income levels and ii) Through reduction in prices of goods consumed by them. The proposed switchover to the flawless GST should, therefore, be viewed as pro-poor and not regressive. As per Task Force, prices of agricultural commodities and services are expected to rise. Most of the manufactured goods would be available at relatively low prices especially textiles and readymade garments. The prices of agricultural goods would increase between 0.61 and 1.18 percent whereas the overall prices of all manufacturing sector would decline between 1.22 and 2.53 percent. Hence, the terms of trade will move in favour of agricult

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crux Presents PAYROLL / Manufacturer Excise Softwares} Normal 0 false false false MicrosoftInternetExplorer4 GST is a destination based consumption tax. Consumption taxes are regressive in nature. It increases the gap between the rich and the poor. The pertinent point is whether such tax would be fruitful for the economy as a whole or not? Is it not so th

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Allied Laws – GST: IMPACT ON THE POOR – Article – TMI Updates – Highlights

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Goods and Service Tax – GST – By: – Nagesh Bajaj – Dated:- 3-8-2011 Last Replied Date:- 30-12-1899 – The comments of the Department of Revenue (DOR) on the First Discussion Paper on GST reflect the inclination of Centre on different contradicting issues related to Goods and Services Tax (GST). On some issues the DOR agrees with the recommendations of the Empowered Committee of State Finance ministers (here-in-after referred as EC) while on some varies with it. Comments of DOR on different significant issues and their consequences are as under: GST Model The DOR is agreed with the dual GST model having two components: CGST (Central GST) and SGST (State GST), recommended by the EC with appropriate binding mechanism to harmonise the various i

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and States. Accounts where CGST, SGST and IGST should be paid Ministry s view: CGST should be paid to the accounts of the Centre. SGST should be paid to the accounts of the states. IGST should be paid to the accounts of the Centre. Account-heads for all good and services would have an indication whether it relates to CGST or SGST (with identification of the state to whom the tax is to be credited). Input Tax Credit The Centre is agreed with the states recommendations on input tax credit. It means that the taxes paid against CGST should be allowed to be taken as input tax credit (ITC) for CGST and could be utilized only against the payment of Central GST. The same principle will be applicable for the SGST. A taxpayer or exporter would have t

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be prescribed in the respective legislation for CGST and SGST, to the extent feasible. It is proposed to prescribe a common registration form, common registration number, common return format, common service centers for acceptance of registration applications and return for Central GST and State GST. said Sushil Solanki, Commissioner, Central Excise. Threshold limit The DOR is of the view that there should be a uniform threshold for goods and services for both SGST and CGST. This annual turnover threshold could be ₹ 10 lakh or even more than that. The threshold should not apply to dealers and service providers who undertake inter-state supplies. A problem of dual control may arise and an opposition would come primarily from the trade

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Goods and Service Tax – GST – By: – Nagesh Bajaj – Dated:- 2-8-2011 Last Replied Date:- 30-12-1899 – This comparison is based on the recommendations of the First Discussion Paper produced by the Empowered committee of states finance ministers (hereafter referred as EC) and the Report of the Task Force on GST constituted by the Thirteenth Finance commission. Before going on discussion we should define GST and the Objective behind it. What is GST? GST is a tax on goods and services with comprehensive and continuous chain of set-off benefits from the Producer s point and Service provider s point upto the retailer level. It is essentially a tax only on value addition at each stage and a supplier at each stage is permitted to set-off through a tax credit mechanism. Under GST structure, all different stages of production and distribution can be interpreted as a mere tax pass through and the tax essentially sticks on final consumption within the taxing jurisdiction. Objective behind GST a) T

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ll goods and services upto final consumption point. Also both are of the view that the GST should be structured on the destination principle. According to Task Force this will result in the shift from production to consumption whereby imports will be liable to both CGST and SGST and exports should be relieved of the burden of goods and services tax by zero rating. Consequently, revenues will accrue to the state in which the consumption takes place or is deemed to take place. The Task Force on GST said the computation of CGST and SGST liability should be based on the Invoice credit method. i.e., allow credit for tax paid on all intermediate goods and services on the basis of invoices issued by the supplier. As a result, all different stages of production and distribution can be interpreted as a mere tax pass-through and the tax will effectively stick on final consumption within the taxing jurisdiction. This will facilitate elimination of the cascading effect at various stages of product

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on negative list and for few exemptions if necessary but didn t provide any list of exemption. However, the Task Force also said that there shouldn t be any exemption from CGST and SGST but if for some reason, it is considered necessary to provide exemption, the centre and states should draw a common exemption which should be restricted to the following: a. All public services of Government (Central, state and municipal/ panchayati raj) including civil-administration, health services and formal education services provided by Govt. schools and colleges, Defence, Para-military, Police, Intelligence and Government Departments. Public services will not include the following: 1) Railways; 2) Post and Telegraph; 3) Other commercial departments; 4) Public sector Enterprises; 5) Banks and Insurance; 6) Health and Education services. b) Any service transactions between an employer and employee either as a service provider, recipient or vice versa. c) Any unprocessed food article which is cover

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By: – abhi parakh – Goods and Services Tax – GST – Dated:- 28-7-2011 – – Goods and Service Tax An imminent stride towards a comprehensive Indirect tax structure Concept paper – Issues Challenges involved in successful implementation 1.0 Position Hitherto 1.1 The Indian Indirect Tax structure has come a long way since independence – (i) The 46 th Amendment to the Constitution of India (ii) MODVAT scheme in 1986 (iii) Service Tax vide the Finance Act 1994 (iv) inter-sectoral credit scheme in 2004 (v) State VAT 2005-2008. Notwithstanding the aforesaid, the existing structure still lacks the efficiency to reap benefits expected out of a comprehensive tax system 1.2 The Union Budget 2007 brought along a ray of hope amidst the complicated in-efficient Indian Indirect Tax structure in the form of an announcement as to the implementation of Goods and Service Tax. 1.3 The essential benefits of the proposed tax system and the issues

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on account of multiple check points, even intra-state at times 1.4 The proposed goods and service tax seeks to address the aforesaid issues including inter alia – (a) one single tax subsuming the host of existing levies like Central Excise, Service Tax, State VAT, Additional Duty of Customs, Central sales tax, Entry Tax, Octroi, stamp duty and cesses (b) free flowing larger pool of input credit (c) comprehensive destination based taxation hence transforming India into one single market (d) reduced compliances (e) free road movement with proposed mechanical manning hence faster and more reliable (f) single simpler statute hence an pro-assessee tax structure 2.0 Basis Structure of GST Before pondering over the issues challenges attached to the proposed levy, it would be of supreme importance to lay out the basic features of the proposed levy as presently envisaged. The documents released by the Government of India in pubic portal in this regard

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Union FM on 21-07-10 brought up the adoption of a single rate for services to the tune of 8% (both CGST SGST) and dual rate structure for goods in the range of 12 to 20% to be converged to 16% over a three year phase Input Tax Credit Mechanism – Larger pool free flow of credit Destination based GST hence – (a) shift of taxable event from production to consumption (b) revenue from inter-state transaction to accrue to the destination state not to the origin state, (c) exports to be zero rated and (d) imports to be subject to GST Existing exemptions remissions related to industrial incentives to be converted into cash refund schemes. Special Industrial Area Schemes to continue up to legitimate expiry time both for the Centre States. Any new exemption, remission etc. or continuation of earlier exemption, remission not to be allowed. In such cases, the Government to provide reimbursement after collecting GST. 3.0 ISSUES – to be addressed

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be the tax revenue that the government expects to generate out of the new tax system, interests of special sectors being securitised and political demands. The following may be noted in this regard – Threshold limits – uniformity to be maintained across SGST CGST as per `RTP and the speech of Union FM on 21-07-10 to be affixed at ₹ 10 lakhs for both CGST SGST thereby entailing a huge assessee base (about 5 million assessee), however the FDP` purported a lower threshold of ₹ 10 lacs for SGST higher one of ₹ 1.5 Crore for CGST Exemptions – Presently 99 items are exempt from both Central Excise State VAT, in addition 240 items are exempt from only Central Excise (post Union budget 2011) – as per GST propositions these 240 items would also be brought under tax net post GST implementation [speech of Union FM on 21-07-10] thereby aligning the list of exemptions Scope of the term `consideration – GST as presently envisaged would be a l

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at preliminary stages being virtually a pass-through, an exemption and incentive free tax system may also be justifiable. This may however, not be acceptable in the political circles, hence a refund model, as suggested in the `FDP `RTF could very well be a comfortable bargain. However, the transition of the incentives under the grand-father clause need be addressed appropriately by the new statute and adequate provisions need be incorporated to convert exemptions to refund schemes, since the GST chain should not be broken. (v) Treatment of Composite Contracts during the transitional phase – Composite Contracts are contracts that envisage both supply of goods rendering of services, the hitherto position hence necessitates taxation under multiple statutes since (a) the federal structure empowers the States to tax intra-state sale of goods and the Centre to tax supply of services (b) different rates for taxation of goods and services thereby entailing – Dispu

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N India integration of tax system as much as tax rates treatment of various constituents was concerned, thereby creating one single market. However, on account of political needs and conflicts the states diverted from the white paper issued by the EC and distorted the overall objectives of a flawless VAT system. The imminent GST should necessarily address the said flaw by setting up a system of taking key decisions on the structure of the statute. In this regard – The Constitution [one hundred and fifteenth amendment] Bill, 2011 (Bill no. 22 of 2011) vide insertion of Article 279A provides for the constitution of a Goods and Service Tax Council by the President of India, basic propositions in this regard are summed-up as under – Said council to comprise – (a) the Union Finance Minister (chair person) (b) the Union minister of the State in charge of revenue (c) Minister in charge of Finance or taxation or any other Minister nominated by each State Government. Deci

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e following issues related to taxation of inter-state transactions need to be addressed – Determine the appropriate model for taxing inter-state transaction Determination of taxing Jurisdiction – (a) in case of goods, GST since being a destination based VAT tax revenue to accrue to the state wherein the goods are finally consumed (b) in case of services, since intangible appropriate place of supply rules need be defined so as to determine the taxing jurisdiction under different genres of transactions Treatment of inter-state branch transfers – GST since purported to be a tax on transaction for consideration, branch transfers since not involving consideration should not prima facie be taxed [though, RTF has recommended levy of GST on inter-state stock transfer FDP has not explicitly conveyed the same in it discussion paper] Setting up of Central agency to control /or regulate the transfer of GST credit amongst states (viii) Compliance Procedures – m

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tter fruitful planning. In-order to overcome the hurdles it would be very important to identify them well in advance more so over ponder over them so as to derive viable solutions. Some of the imminent hurdles that could come in the way of GST Roll-out are detailed hereunder – (i) The Political scenario – Federal /or divided powers of taxation clubbed with a democratic framework of governance entail a situation wherein changes are driven by political requirements more than economic necessities – Implementation of a unified GST requires vesting of equal powers in the state central which in-turn mandates amendment of the Constitution of India [since presently constitution purports divided taxing powers]. Now, amendment of the Constitution where dealing with provisions relating to the states requires in addition to the approval by both the houses of Parliament, the approval of each every state legislative assembly. Thus, introducing impact of

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tion of a robust IT Infrastructure – a sound Information technology infrastructure is a pre-requisite for successful implementation of GST. The setting working up of the Central agency, E-filing and E-regulation of returns assessees would all require a hi-tech IT system. Moreover, such a system need be place substantially before the Roll-out of GST The CG with the approval of the EC has constituted an empowered Group chaired by Dr. Nandan Nilekani with joint representation from the Centre and the States which would be authorized to take decisions about the size, features and functionalities of such a system (iv) Timely completion of cadre review re-organization – of the excise and service tax commissionerates country-wide as GST commissionerates along with separate commissionerates for audit and anti-evasion would take time, and rushing the process through without much thought can prove disastrous for the tax department as lesson learnt from many mergers of

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maintaining the basic principles of the levy. Take for instance the recently released Constitution Amendment Bill proposes to keep Real Estate, petroleum, natural gas outside the purview of GST, thereby flawing the principle of comprehensive coverage and larger pool of credit. Moreover, it also proposes that Entry Tax is not to be subsumed thereby resulting in the carryover of the existing defect of multiple levies. Though the aforesaid propositions have not yet attained finality, they do expose the governments haste in Rolling-out GST that could well result in a flawed GST (vi) Post-implementation blues – the key performance indicator of successful implementation of GST is the continuance of uniformity. Promises commitments made at the time of VAT implementation were shrugged off by the states by diverting from the rate structure other provisions. Hence it would be very important to ensure that appropriate arrangements are made so as to prevent /or

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Goods and Service Tax – GST – By: – Nagesh Bajaj – Dated:- 18-7-2011 Last Replied Date:- 30-12-1899 – The introduction of GST through the comman goods and service tax or GST from the next financial year appears uncertain with fresh opposition pouring in from BJP ruled states who claims that it would reduce their status of that of municipalities and corporations. Finance minister Pranab Mukherjee s plan to roll out a national level goods and services tax (GST) by April 1, 2012, may get further delayed as finance ministers of two key states have said that it may not be possible. Citing a lack of consensus amongst political parties as well as loss of states autonomy, Madhya Pradesh finance minister Raghavji and Bihar s deputy chief minister S

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on the tax. The GST bill needs approval of two third of the Parliament and half of the Indias 28 states to become the law.Hence BJP support is crucial at the states as well as at the central level.The opposition leaders think that the Constitution amendment bill introduced by centre is reactionary.It is absolutely useless and against the interest of the states.It has provisions which will curtail the autonomy of states. The centre is interfering in the rights of the states. Meanwhile, breaking away from the stand taken by BJP-ruled states, Modi called the tax a historic reform . If GST is implemented, Bihar will be a part of it. There is no question of having our own choice or dislike. This is a historic reform and we believe that the enti

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FEMA – 10/2011-12 – Dated:- 1-7-2011 – RBI/2011-12/10 Master Circular No.10/2011-12 July 01, 2011 To, All Category – I Authorised Dealer Banks Madam / Sir, Master Circular on Export of Goods and Services Export of Goods and Services from India is allowed in terms of clause (a) of sub-section (1) and sub-section (3) of Section 7 of the Foreign Exchange Management Act 1999 (42 of 1999), read with Notification No. G.S.R. 381(E) dated May 3, 2000 viz. Foreign Exchange Management (Current Acco

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FEMA – 07/2011-12 – Dated:- 1-7-2011 – RBI 2011-12/7 Master Circular No. 7/2011-12 July 01, 2011 To, All Category – I Authorised Dealer Banks Madam / Sir, Master Circular on Import of Goods and Services Import of Goods and Services into India is being allowed in terms of Section 5 of the Foreign Exchange Management Act 1999 (42 of 1999), read with Notification No. G.S.R. 381(E) dated May 3, 2000 viz. Foreign Exchange Management (Current Account) Rules, 2000 as amended from time to time. 2. This Master Circular consolidates the existing instructions on the subject of Import of Goods and Services at one place. The list of underlying circulars consolidated in this Master Circular is also furnished. 3. This Master Circular is being issued with a sunset clause of one year. This circular will stand withdrawn on July 1, 2012 and be replaced by an updated Master Circular on the subject. Yours faithfully, (Rashmi Fauzdar) Chief General Manager INDEX Section A – Introduction Section B- Ge

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nex- 4 Appendix List of Circulars consolidated in the Master Circular Section A – Introduction (i) Import trade is regulated by the Directorate General of Foreign Trade (DGFT) under the Ministry of Commerce & Industry, Department of Commerce, Government of India. Authorised Dealer Category – I (AD Category – I) banks should ensure that the imports into India are in conformity with the Foreign Trade Policy in force and Foreign Exchange Management (Current Account Transactions) Rules, 2000 framed by the Government of India vide Notification No. G.S.R.381 (E) dated May 3, 2000 and the Directions issued by Reserve Bank under Foreign Exchange Management Act, 1999 from time to time. (ii) AD Category – I banks should follow normal banking procedures and adhere to the provisions of Uniform Customs and Practices for Documentary Credits (UCPDC), etc. while opening letters of credit for import into India on behalf of their constituents. (iii) Compliance with the provisions o

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nnex-4). B.3. Import Licenses Except for goods included in the negative list which require licence under the Foreign Trade Policy in force, AD Category – I banks may freely open letters of credit and allow remittances for import. While opening letters of credit, the For Exchange Control purposes copy of the licence should be called for and special conditions, if any, attached to such licences should be adhered to. After effecting remittances under the licence, AD Category – I banks may preserve the copies of utilised licence /s till they are verified by the internal auditors or inspectors. B.4. Obligation of Purchaser of Foreign Exchange (i) In terms of Section 10(6) of the Foreign Exchange Management Act, 1999 (FEMA), any person acquiring foreign exchange is permitted to use it either for the purpose mentioned in the declaration made by him to an Authorised Dealer Category – I bank under Section 10(5) of the Act or to use it for any other purpose for which acquisition of foreign

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s, remittances against imports should be completed not later than six months from the date of shipment, except in cases where amounts are withheld towards guarantee of performance, etc. (ii) AD Category – I banks may permit settlement of import dues delayed due to disputes, financial difficulties, etc. Interest in respect of delayed payments, usance bills or overdue interest for a period of less than three years from the date of shipment may be permitted in terms of the directions in para C.2 of Part III below. B.5.2. Time limit for deferred payment arrangements Deferred payment arrangements, including suppliers and buyers credit, providing for payments beyond a period of six months from date of shipment up to a period of less than three years, are treated as trade credits for which the procedural guidelines laid down in the Master Circular for External Commercial Borrowings and Trade Credits may be followed. B.5.3. Time limit for import of books Remittances against import of boo

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) send into India without limit foreign exchange in any form other than currency notes, bank notes and travellers cheques; (ii) bring into India from any place outside India, without limit foreign exchange (other than unissued notes), which shall be subject to the condition that such person makes, on arrival in India, a declaration to the Custom Authorities at the Airport in the Currency Declaration Form (CDF) annexed to these Regulations; provided further that it shall not be necessary to make such declaration where the aggregate value of the foreign exchange in the form of currency notes, bank notes or travellers cheques brought in by such person at any one time does not exceed USD10,000 (US Dollars ten thousand) or its equivalent and/or the aggregate value of foreign currency notes (cash portion) alone brought in by such person at any one time does not exceed USD 5,000 (US Dollars five thousand) or its equivalent. B.6.2. Import of Indian currency and currency notes (i) Any person re

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ch a guarantee is issued against the counter-guarantee of an international bank of repute situated outside India, is obtained. (b) In cases where the importer (other than a Public Sector Company or a Department/Undertaking of the Government of India/State Government/s) is unable to obtain bank guarantee from overseas suppliers and the AD Category – I bank is satisfied about the track record and bonafides of the importer, the requirement of the bank guarantee / standby Letter of Credit may not be insisted upon for advance remittances up to USD 5,000,000 (US Dollar five million). AD Category – I banks may frame their own internal guidelines to deal with such cases as per a suitable policy framed by the bank s Board of Directors. (c) A Public Sector Company or a Department/Undertaking of the Government of India / State Government/s which is not in a position to obtain a guarantee from an international bank of repute against an advance payment, is required to obtain a specific

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a recognized processor of rough diamonds as per the list to be approved by Gems and Jewellery Export Promotion Council (GJEPC) in this regard and should have a good track record of export realisation; (b) AD Category – I bank should undertake the transaction based on their commercial judgment and after being satisfied about the bonafides of the transaction; (c) Advance payments should be made strictly as per the terms of the sale contract and should be made directly to the account of the company concerned, that is, to the ultimate beneficiary and not through numbered accounts or otherwise. Further, due caution may be exercised to ensure that remittance is not permitted for import of conflict diamonds; (d) KYC and due diligence exercise should be done by the AD Category – I bank for the Indian importer entity and the overseas company; and (e) AD Category – I bank should follow up submission of the Bill of Entry / documents evidencing import of rough diamonds into the c

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report should be submitted within 15 days from the close of the respective half year. C.1.3. Advance Remittance for Import of Aircrafts/Helicopters and other Aviation Related purchases As a sector specific measure, airline companies which have been permitted by the Directorate General of Civil Aviation to operate as a schedule air transport service, can make advance remittance without bank guarantee, up to USD 50 million. Accordingly, AD Category – I banks may allow advance remittance, without obtaining a bank guarantee or an unconditional, irrevocable Standby Letter of Credit, up to USD 50 million, for direct import of each aircraft, helicopter and other aviation related purchases. The remittances for the above transactions shall be subject to the following conditions: The AD Category – I banks should undertake the transactions based on their commercial judgment and after being satisfied about the bonafide of the transactions. KYC and due diligence exercise should be done by th

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id as milestone payments, the date of last remittance made in terms of the contract will be reckoned for the purpose of submission of documentary evidence of import. Prior to making the remittance, the AD Category – I bank may ensure that the requisite approval of the Ministry of Civil Aviation / DGCA / other agencies in terms of the extant Foreign Trade Policy has been obtained by the company, for import. In the event of non-import of aircraft and aviation sector related products, AD Category – I bank should ensure that the amount of advance remittance is immediately repatriated to India. Prior approval of the Regional Office concerned of the Reserve Bank will be required in case of any deviation from the above stipulations. C.1.4. Advance Remittance for the import of services AD Category – I bank may allow advance remittance for import of services without any ceiling subject to the following conditions: (a) Where the amount of advance exceeds USD 500,000 or its equivalent

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on usance bills or overdue interest for a period of less than three years from the date of shipment at the rate prescribed for trade credit from time to time. (ii) In case of pre-payment of usance import bills, remittances may be made only after reducing the proportionate interest for the unexpired portion of usance at the rate at which interest has been claimed or LIBOR of the currency in which the goods have been invoiced, whichever is applicable. Where interest is not separately claimed or expressly indicated, remittances may be allowed after deducting the proportionate interest for the unexpired portion of usance at the prevailing LIBOR of the currency of invoice. C.3. Remittances against Replacement Imports Where goods are short-supplied, damaged, short-landed or lost in transit and the Exchange Control copy of the import licence has already been utilised to cover the opening of a letter of credit against the original goods which have been lost, the original endorsement to the ext

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s sites in connection with the setting up of their International Call Centres (ICCs) subject to the following conditions: (i) The BPO company should have obtained necessaryapproval from the Ministry of Communications and Information Technology, Government of India and other authorities concerned for setting up of the ICC. (ii) The remittance should be allowed based on the AD Category – I banks commercial judgment, the bonafides of the transactions and strictly in terms of the contract. (iii) The remittance is made directly to the account of the overseas supplier. (iv) The AD Category – I banks should also obtain a certificate as evidence of import from the Chief Executive Officer (CEO) or auditor of the importer company that the goods for which remittance was made have actually been imported and installed at overseas sites. C.6. Receipt of Import Bills/Documents C.6.1. Receipt of import documents by the importer directly from overseas suppliers Import bills and documents should b

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0,000 where the importer of rough diamonds, rough precious and semi-precious stones has received the import bills / documents directly from the overseas supplier and the documentary evidence for import is submitted by the importer at the time of remittance. AD Category – I banks may undertake such transactions subject to the following conditions: (i) The import would be subject to the prevailing Foreign Trade Policy. (ii) The transactions are based on their commercial judgment and they are satisfied about the bonafides of the transactions. (iii) AD Category – I banks should do the KYC and due diligence exercise and should be fully satisfied about the financial standing / status and track record of the importer customer. Before extending the facility, they should also obtain a report on each individual overseas supplier from the overseas banker or reputed overseas credit rating agency. C.6.3. Receipt of import documents by the AD Category – I bank directly from overseas suppliers

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ive remittance was made, to ensure that the importer submits :- (a) The Exchange Control copy of the Bill of Entry for home consumption, or (b) The Exchange Control copy of the Bill of Entry for warehousing, in case of 100% Export Oriented Units, or (c) Customs Assessment Certificate or Postal Appraisal Form, as declared by the importer to the Customs Authorities, where import has been made by post, as evidence that the goods for which the payment was made have actually been imported into India. (ii) In respect of imports on D/A basis, AD Category – I bank should insist on production of evidence of import at the time of effecting remittance of import bill. However, if importers fail to produce documentary evidence due to genuine reasons such as non-arrival of consignment, delay in delivery/ customs clearance of consignment, etc., AD bank may, if satisfied with the genuineness of request, allow reasonable time, not exceeding three months from the date of remittance, to the importe

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of India (CAG). AD Category – I bank may insist on a declaration from the auditor/CEO of such institutions that their accounts are audited by CAG. C.7.3. Non Physical Imports (i) Where imports are made in non-physical form, i.e., software or data through internet / datacom channels and drawings and designs through e-mail/fax, a certificate from a Chartered Accountant that the software / data / drawing/ design has been received by the importer, may be obtained. (ii) AD Category – I bank should advise importers to keep Customs Authorities informed of the imports made by them under this clause. C.8. Issue of acknowledgement AD Category – I bank should acknowledge receipt of evidence of import e.g. Exchange Control copy of the Bill of Entry, Postal Appraisal Form or Customs Assessment Certificate, etc., from importers by issuing acknowledgement slips containing all relevant particulars relating to the import transactions. C.9. Verification and Preservation (i) Internal i

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er. (ii) AD Category – I bank should forward a statement on half-yearly basis as at the end of June & December of every year, in form BEF (Annex 1) furnishing details of import transactions, exceeding USD 100,000 in respect of which importers have defaulted in submission of appropriate document evidencing import within 6 months from the date of remittance, to the Regional Office of Reserve Bank under whose jurisdiction the AD Category – I bank is functioning, within 15 days from the close of the half-year to which the statement relates. (iii) AD Category – I bank need not follow up submission of evidence of import involving amount of USD 100,000 or less provided they are satisfied about the genuineness of the transaction and the bonafides of the remitter. A suitable policy may be framed by the bank s Board of Directors and AD Category – I bank may set their own internal guidelines to deal with such cases. C.11. Issue of Bank Guarantee AD Category – I b

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d shall be fixed later, as and when the importer sells the gold to the users. These instructions would also apply to import of platinum and silver. C.13. Direct Import of Gold AD Category – I bank can open Letters of Credit and allow remittances on behalf of EOUs, units in SEZs in the Gem & Jewellery sector and the nominated agencies / banks, for direct import of gold, subject to the following (i) The import of gold should be strictly in accordance with the Foreign Trade Policy. (ii) Suppliers and Buyers Credit, including the usance period of LCs opened for direct import of gold, should not exceed 90 days. (iii) Banker s prudence should be strictly exercised for all transactions pertaining to import of gold. AD Category – I bank should ensure that due diligence is undertaken and all Know Your Customer (KYC) norms and the Anti-Money-Laundering guidelines, issued by Reserve Bank from time to time are adhered to while undertaking such transactions. AD Category – I ba

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ks undertaking gold import transactions are required to submit as per the format enclosed at Annex-3, a monthly statement thereof, to the Chief General Manager, Trade Division, Foreign Exchange Department, Amar Building, Central Office, Reserve Bank of India, Sir P.M. Road, Fort, Mumbai 400001. C.14. Gold Loans (i) Nominated agencies / authorised banks can import gold on loan basis for on lending to exporters of jewellery under this scheme. (ii) EOUs and units in SEZ who are in the Gem and Jewellery sector can import gold on loan basis for manufacturing and export of jewellery on their own account only. (iii) The maximum tenor of gold loan would be as per the Foreign Trade Policy 2009-2014, or as notified by the Government of India from time to time in this regard. (iv) AD bank may open Standby Letters of Credit (SBLC), for import of gold on loan basis, where ever required, as per FEDAI guidelines dated April 1, 2003. The tenor of the SBLC should be in line with the tenor of the gold l

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ut and polished diamonds should not exceed 90 days from the date of shipment. (b) AD Category – I banks should ensure that due diligence is undertaken and Know Your Customer (KYC) norms and Anti-Money Laundering (AML) guidelines, issued by the Reserve Bank are adhered to while undertaking import of the metals and rough, cut and polished diamonds. Further, any large or abnormal increase in the volume of business should be closely examined to ensure that the transactions are bonafide and are not intended for interest / currency arbitrage. All other instructions relating to import of these metals and rough, cut and polished diamonds shall continue. C.16. Import factoring (i) AD Category – I bank may enter into arrangements with international factoring companies of repute, preferably members of Factors Chain International, without the approval of Reserve Bank. (ii) They will have to ensure compliance with the extant foreign exchange directions relating to imports, Foreign Trade

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f the transaction is extinguished by the payment received for the export leg of the transaction, without any delay. AD Category – I banks may note that short-term credit either by way of suppliers credit or buyers credit is not available for merchanting trade or intermediary trade transactions. Appendix List of Circulars consolidated in the Master Circular Import of Goods and Services AP (DIR Series) Circular No. 106 dated June 19, 2003 AP (DIR Series) Circular No. 4 dated July 19, 2003 AP (DIR Series) Circular No. 9 dated August 18, 2003 AP (DIR Series) Circular No. 15 dated September 17, 2003 AP (DIR Series) Circular No. 49 dated December 15, 2003 AP (DIR Series) Circular No. 66 dated February 6, 2004 AP (DIR Series) Circular No. 72 dated February 20, 2004 AP (DIR Series) Circular No. 2 dated July 9, 2004 AP (DIR Series) Circular No. 34 dated February 18, 2005 AP (DIR Series) Circular No. 1 dated July 12, 2005 AP (DIR Series) Circular No. 33 dated February 28, 2007 AP (DIR Seri

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Customs – 01/2011 – Dated:- 14-6-2011 – OFFICE OF THE COMMISSIONER OF CENTRAL EXCISE & CUSTOMS VADODARA-I TRADE FACILITY NOTICE NO. 01/2011-CUSTOMS 14 June 2011 Sub: Instructions / Procedure for issuance of NOC to exporters requesting for supervision of stuffing and sealing of containerized cargo and allocation of work amongst the field officers for such supervision and sealing. Attention of all manufacturers and exporters is invited to various Circulars/instructions issued by the Board from time to time laying down the procedures of stuffing and sealing of export containers, provision for single factory stuffing permission, export of non-excisable goods under self-sealing and self-certification and other related instructions in the subject matter. The reports called from the field formations have indicated that the number of exporters opting for stuffing and sealing of export containers in presence of the Central Excise officers has substantially increased even though the facilit

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been changed by JNCH, Nhava Sheva vide their Public Notice No. 23/2010 dated 26.02.2010 issued from F.NO. S/6-Misc-02/2007-FSP-JNCH. The Public Notice [in Para 10] now requires the exporters to submit their applications for Factory Stuffing Permission [FSP] along with the following documents: (i) NOC issued by the Central Excise Authorities for deputing officers for supervising the stuffing of export cargo; (ii) Original copy of the verification report on genuineness of the existence and functioning of the factory. This implies that the exporters would seek the NOC and the verification report from the jurisdictional Central Excise authorities prior to submitting their application for Factory Stuffing Permission [FSP]. 3.2 The exporter requiring the documents mentioned in (i) & (ii) above shall make an application to the jurisdictional Assistant/Deputy Commissioner in the prescribed application form [as in Annexure-I] along with the supporting documents. The jurisdictional Assistant

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ners. No request for stuffing and sealing of such export containers shall be entertained. 4. Allocation of the work of supervision of stuffing and scaling of the export containers. 4.1 The exporter to whom the NOC has been given and who has obtained the factory stuffing permission from the concerned Customs Station, as per the existing instructions, shall make an application to the Assistant/Deputy Commissioner in-charge of Technical Section in the format prescribed [as in Annexure-II], at least 48 hours in advance, for allocation of officers for the work of supervision of examination, stuffing and sealing of the export containers. Attention, in this regard, is drawn to the Board's Circular No.934/24/2010-CE dated 25.08.2010. Board has decided to provide online scheduling for factory stuffing examination by Central Excise Officers. The trade should, accordingly, submit their requisition for officers in the official e-mail Id: hqtechgrediffmail.com provided to the Technical Section.

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for rendering Services by Customs Officers) Regulations, 1998. If a manufacturer or exporter requisitions the services of Central Excise Officers for supervision and examination of export cargo and stuffing in containers at his premises, such officers also discharge functions of "Customs Officers". The MOT fees are to be paid in advance by the exporter as per their plan for stuffing. On confirmation of the availability of the officers by the Technical Section the exporter shall pay the MOT in advance and submit a copy of challan to the Technical Section. 4.4 If the Factory stuffing permission – issued by the Custom Station requires supervision of Assistant/Deputy Commissioner the jurisdictional Assistant/Deputy Commissioner of Central Excise shall do the needful. 5. Submission of Report regarding examination, stuffing and sealing of containers. 5.1 The inspector/superintendent nominated, for the purpose of examination, stuffing, sealing of containers, would act as a Sector/R

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E – I [Prescribed under Standing Order No./2011] Application form for obtaining NOC from Central Excise authorities 1. Applicant Firm Details i. Name ii. Address: (Registered Office in case of Companies and Head Office in case of Others) iii. Address of Factory where goods are Manufactured iv. Telephone Nos. v. Email address (for correspondence) 2. Excise Details i. Excise Registration Number ii. issuing Authority iii. Range & Address iv. Division & Address v. Commissonrete & Address 3. Details of Proprietor/ Partners/Directors of the applicant firm i. Name ii. Father s Name iii. Residential Address iv. Telephone 4. Nature of Concern (please tick)

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iv. Valid upto v. Products for which registered 9. Status House Details i. One/Two/Three/Four/Five Star ii. Certificate Number iii. Date of Issue iv. Issuing Authority v. Validity Date 10. PAN and Bank Details i. Pan Number ii. Issuing Authority iii.Name of the Bank iv.Account No. v. Type of Account 11. VAT Details i. VAT Registration Number ii. Issuing Authority 12. Turnover Details for the preceding three licensing years Financial Years annual Domestic Turnover (Rs. Lakhs Annual Export Turnover (Rs. Lakhs) (enclose copies of Balance sheets is for three years) 13. Factory Stuffing Premises Details i. Name

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is application are true and correct t the best of my / our knowledge and belief and nothing has been concealed or withheld therefrom. 2. I / We fully understand that any information furnished in the application if found incorrect or false will render me / us liable for any penal action or other consequences as may be prescribed in law or otherwise warranted. 3. I / We hereby certify that the firm / Company for whom the application has been made has not been penalized under Central Excise Act/Allied Acts. 4. I hereby certify that I am authorized to verify and sign this declaration in terms of Power of Attorney vested in me by the Firm / company Place: Date: Signature of the Applicant Name Designation Official Address Residential Address Email Address Telephone No. Mobile No. ANNEXURE – II (in Duplicate & in advance before 48 hours) Date: / /2011 To, The Deputy/ Assistant Commissioner (Tech.), Central Excise & Customs, Hdqrs., Commissionerate Subject: Requisition for allotment of

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