Tag Archives: GST

Small Traders want penal norms delayed

With 60 per cent of the country’s small traders yet to be computerised, wholesalers and traders are demanding amnesty from penal provisions of GST for atleast nine months.

A large number of small traders are still not educated about GST and there are expected to be teething problem for them in the initial phase.

GST is expected to replace hand-written receipts as traders will need to maintain computerised records and file returns online. For that they will need to upgrade their existing business format and link digital payment with GST among other things.

“We are asking for interim period for general traders for whom so far no interaction has been initiated by the government and they are still unaware of nitty-gritty of GST. Since GST is a new thing for the trading community interim period will be best suited  to bring more people under GST net,” said Praveen Khandelwal, Secretary General, Confederation of All India Traders ( CAIT).

He said that when VAT was introduced there was around three years as transition period. Khandelwal said that during the trial period no penal action should be taken against any trader for procedural lapses.

As per the GST Council decision, traders in the country with revenue above Rs 20 lakh have to register for GST. “Till now GST rules have not been completely been framed. There are many things in pipeline. Trading community across country need to be informed about GST and GST is entirely different kind of taxation system against current tax regime. So it is obvious that during its operations there may be procedure lapse by the trading community,” he said.

“Still 60 per cent of the small businesses in the country  has not adopted computerisation which is a major challenge because GST is technology based taxation system,” he added.

Source: The Asian Age

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Taxpayers have to file only one return under GST: Revenue Secy

Taxpayers have to file only one return under GST: Revenue Secy

The fear that three returns in a month and one annual return under the proposed Goods and Services Tax (GST) would make the whole process very cumbersome and compliance-heavy is unfounded and exaggerated, said Revenue Secretary Hasmukh Adhia in an interaction with media here today.

Explaining how filing returns would not be as cumbersome as it is made out to be, Adhia said that when a supplier uploads details of the sales invoices generated in the GST system, and files GST Return-I, the details from the suppliers GSTR-I automatically gets updated in the GST Return II (GSTR-II) of the purchaser. All the recipient needs to do is amend or modify and file the GSTR-II by 15th of every month.

By 17th of the month both the supplier and the recipient would have to reconcile the invoice details and file the third return (GSTR-III) by 20th of the month.

“So what looks like three returns in a month is effectively just one return, and the other two are taken care of with little efforts of the assessee” .

Under the GST, all registered taxable entities have to file three monthly returns and one annual return (see Table). The first return is for all the sales made by the taxpayer,  the second one is for the purchases and the third monthly return is a composite return of all sales and purchases. So, in a year a total 37 returns have to be filed by assessees.

Tax experts and businesses have expressed their concern that three returns in a month would mean a huge compliance burden on taxpayers especially for small traders and SMEs.

 Return Form What to file? By Whom?  By When?
 GSTR-1  Details of outward supplies of taxable goods and/or services effected  Registered Taxable Supplier  10th of the next month
 GSTR-2  Details of inward supplies of taxable goods and/or services effected claiming input tax credit  Registered Taxable Recipient  15th of the next month
 GSTR-3  Monthly return on the basis of finalization of details of outward supplies and inward supplies along with the payment of amount of tax Registered Taxable Person  20th of the next month
 GSTR-9  Annual Return  Registered Taxable Person  31st December of next financial year

Source : Business Today

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E-commerce firms to deduct tax collected at source under GST

E-commerce operators like Flipkart and Snapdeal will have to deduct TCS (tax collected at source) while making payments to their suppliers, according to the new model GST law, which has done away with the definition of ‘aggregator’.
Explaining the changes in the provision, experts said the proposal will increase the compliance burden on e-commerce operators as they will have to deduct 2 per cent TCS and deposit it with the government. The measure  will not increase the incidence of taxation on consumers as the supplier will get tax credit for the TCS. The model GST law provides for 1 per cent TCS to be deducted by the E-commerce operators.
According to experts, this would mean that a similar amount will have to be levied on inter-state movement of goods, taking the total TCS deduction to 2 per cent although burden on consumers will not increase.
Mohan further said in case of return of goods by the consumer, the e-commerce companies will not have to deduct TCS as there is no actual sale.
The draft model GST law does not provide any definition of ‘aggregators’, saying that the government would later come out with a notification specifying which type of businesses would be covered under the term.
Aggregators mainly include Ola, Uber and UrbanClap which work as platforms for providing transport and other services. The TCS provision will not apply to aggregators.E-commerce companies will also have to file returns on the TCS deductions.The model law has defined ‘electronic commerce’ as supply of goods or services, including digital products, over electronic network.
‘Electronic commerce operator’ would mean those persons who own, operate or manage digital or electronic facility or platform for electronic commerce.

 

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States start looking for consultants for GST

States have started scouting for tax consultants to advise them on technical aspects of the goods and services tax (GST), which is planned to be rolled out from April next year.

With the Centre moving on to the fast track to meet the April 2017 deadline, the Punjab
government has initiated the process of appointing consultant to help it successfully
implement the new tax regime, which will subsume various state levies like octroi and sales tax.

According to sources, other states may also go in for consultants to assist the administration in the preparatory work for GST.

While the Punjab government is looking to appoint a consultant for two years, sources said
other states too would be looking at a similar timeline as the hurdles in implementation of GST are expected to come down in 12 years.

Among other things, the consultants will be required to suggest organisation structure of the department in the GST regime, strategy for transition period and ways to mitigate risks and checklist of tasks that need to be completed before introduction of GST.
Also, the consultant will be required to frame a communication strategy for administration visavis stakeholders such as industry and traders.

Also, the consultant will be imparting training on provisions of the GST Act/Rules and processes to officers of the department.

Besides, the entity will calculate the impact of GST implementation on state revenues keeping in view the present rate of tax in the state and the proposed rate of tax under GST.

Touted as the biggest tax reform since Independence, the GST will subsume excise, service tax, cess, VAT and other local levies and create a uniform market for seamless transfer of goods and services.

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GST progress held up by inter-state sales issue

A provision in the draft integrated goods and services tax (GST) law that says only the central government will have administrative power over all traders engaged in inter-state sales may disrupt the government’s plan to bring supporting GST legislation in the winter session of Parliament.

States such as West Bengal and Tamil Nadu have sought to change this provision to empower the states to control traders engaged in inter-state sales.

The GST council’s approval for supporting legislation may hinge on the acceptance of this demand by the centre, said people familiar with the discussions on GST.

So far, the centre and the states have not arrived at a consensus on the sharing of administrative powers under the proposed GST regime.

Pending a solution, the central GST (CGST) and the state GST (SGST) draft laws propose to bring in a generic clause allowing cross empowerment. The SGST law has a provision empowering central authorities and the CGST law has one empowering state authorities to administer taxpayers.

However, the Integrated GST (IGST) law, which deals with inter-state sales, only empowers the centre to preside over IGST proceedings.

States fear that the clause in IGST will lead to dual control as around 30-35% of the estimated 80 million plus traders who are expected to come under GST’s ambit carry out inter-state sales. This percentage increases to 80% if one takes into account both purchases and sales.

“Since IGST deals with movement of goods through various states and no one state will have jurisdiction on the entire supply chain, the centre argues that IGST traders should be under its domain. It has also cited the fact that states may have an incentive to influence a dealer to register his supplies as local supplies rather than inter-state supplies,” said a person familiar with the development. “But the states are countering these arguments (by) arguing that the use of technology negates the centre’s arguments,” the person added, asking not to be identified.

The GST council meeting, scheduled for 25 November, has been postponed till the first week of December as the final changes to the three draft laws—CGST , IGST and SGST—and the compensation law are being put together. The compensation law allows states to be compensated for any loss of revenue in the first five years of GST.

A senior government official, who asked not to be identified, expressed confidence that the government will be able to get the supporting legislation passed in the ongoing session of Parliament.

The centre may bring the CGST and the IGST bills as money bills to ensure their smooth passage in both Houses of Parliament, the official said, adding that a final decision will be taken after the GST council vets both the bills.

The government aims to implement GST from 1 April 2017, but for achieving this deadline, these bills need to be passed in the ongoing winter session.

A finance ministry statement said the GST council meeting has been rescheduled to 2-3 December after states sought some more time to “internally deliberate on revised draft of the laws”.

State and central government officials will meet on 25 November to finalize the draft GST bills and the compensation bill, following which it will be presented to the GST council next week, the statement added.

“Ideally, the industry would want that there is no dual control following the passage of the GST bill. But if it cannot be wished away, then a clear mechanism needs to be created so that for the same case or issue, a scenario does not occur where there are multiple inquiries, audits and investigations,” opine tax experts.

Source : News Articles

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“Anti-Profiteering” clause in the revised draft model – An update

The government has proposed an “anti-profiteering” clause in the revised draft model goods and services law to ensure that businesses pass on any benefit of reduction in tax rates to consumers, a move aimed at checking any spike in prices of commodities as a result of the rollout of the ambitious tax reform measure.

The Centre on Saturday unveiled three drafts which include the model GST law, the IGST law and the compensation law which will be discussed by the GST Council in its two-day meeting starting December 2. The draft integrated GST law said that the Centre will notify the rates on the recommendations of the GST Council but it should not exceed 28%.

The previous draft did not have the “anti-profiteering” clause and tax experts said the gains made by companies due to GST needs to be passed on to consumers. “But for industry it could mean lot of paper work and implementation challenges,”

To ensure implementation of the anti-profiteering clause the Centre may set up an authority or entrust and existing authority examine if tax reduction benefits have been passed on.

The revised draft model goods and services law unveiled by the government contains an anti-profiteering clause and says that to ensure its implementation, the Centre may set up an authority or entrust an existing authority to “examine whether input tax credits availed by any registered taxable person or the reduction in the price on account of any reduction in the tax rate have actually resulted in a commensurate reduction in the price of the said goods or services supplied by him”.

The authority will have the power to impose penalty, “as may be prescribed in cases where it finds that the price being charged has not been reduced,” according to the draft.

The Union government on Saturday released the drafts of the three supporting legislations for the goods and services tax (GST).

The three draft laws—the central GST law, the integrated GST law and the compensation law—will be discussed in the next meeting of the GST Council on 2-3 December. Once the council gives its nod, the bills will be tabled in Parliament in the ongoing winter session. Passage of the bills in the upcoming winter session will be crucial for the government to meet its 1 April implementation deadline.

As per the provisions of the draft GST (Compensation To The States For Loss Of Revenue) Bill, 2016, states will be compensated for five years for any losses arising from a transition to this new indirect tax regime. The base year for calculating the compensation figure will be 2015-16. A uniform growth rate of 14% for all states will be assumed for calculating the revenue due to states and the shortfall, if any, from a transition to GST. The compensation will be paid quarterly to the states based on provisional calculations.

Besides all the indirect tax collections of the states including the value added tax, luxury tax and the entertainment tax, the taxable base will also include the revenue from the 2% central sales tax.

For special category states and the North-Eastern states, the revenue foregone by these states on account of exemptions given by them to specific entities will be included in their revenues while computing compensation. The bill also provides for imposition of a cess on certain specified items the proceeds of which will go to a GST compensation fund.

At the end of five years, it has been proposed that 50% of the unutilized funds in the GST Compensation Fund will be transferred to the consolidated fund of India, and will be distributed between the centre and the states as per the formula of the fourteenth finance commission. The remaining 50% will be distributed among the states in the ratio of their total revenues from SGST in the last year of the transition period.

The draft GST law lays out the process by which CGST and SGST will be levied and collected, the resolution of disputes and the process of registration and refunds. The draft empowers the central government to empower an existing authority or creating a new authority to ensure that the reduction in the tax rate of items are passed on to the consumers by a commensurate reduction in the price of that particular good and services supplied by him. The authority will be empowered to impose a penalty in case the lower taxes are not passed on to the consumers.

The draft also retains the provision of imposing a 1% tax collected at source on e-commerce companies. E-commerce companies will have to collect this amount from their supplier and file corresponding returns. The law also requires service tax assesses to register in every state they operate—a provision strongly opposed by telecom, banking and insurance companies as it will increase their compliance requirements.

“Provisions relating to anti profiteering, while aimed at protecting the consumers, might be difficult to implement. Many concerns of the services sector, particularly with respect to single centralized registration and clarity in terms of place of supply rules, have not been adequately addressed,” said Pratik Jain, leader, indirect tax at Pwc India, in a note.

The draft IGST law provides for the way inter-state sales will be taxed. The draft says that the IGST rate cannot be more than 28%—the highest tax slab agreed by the GST council. Yielding to demand from states, the draft law also proposes to empower state government tax officials in certain cases to act as administrators of the act, besides central tax authorities.

The draft also has provisions to allow exports of goods and services and supply of goods and services to a special economic zone to be classified as zero rated supply—situations in which the tax on input supplies is nil.

The government is keen to ensure that the three legislations are approved in the ongoing winter session of parliament to meet the deadline of rolling out GST by April 1. “These laws will be considered by GST Council in its meeting scheduled for 2nd and 3rd Dec and finalised,” revenue secretary Hasmukh Adhia said on micro blogging site Twitter.

In the revised draft, the definition of “goods” excludes securities, which means that no GST needs to be paid on sale and purchase of securities. This would allay the concerns of the stock market, brokers, mutual funds and banks as the definition of “goods” in the previous draft included securities, tax experts said.

The draft GST compensation law said that compensation payable to a state shall be provisionally calculated and released at the end of every quarter, and shall be finally calculated for every financial year after the receipt of final revenue figures, as audited by the CAG.

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GST portal goes live

GSTN software almost ready: GSTN Chairman Navin Kumar

India has initiated an enrolment drive for taxpayers under the goods and services tax (GST), in keeping with the April 1, 2017 rollout deadline for the new indirect tax system. A new portal for GST went live on Tuesday to enable easy countrywide enrolment of taxpayers. A statewise schedule has also been put out for enrolment of existing payers of excise duty, service tax and state taxes.

The portal, http://www.gst.gov.in, has been rolled out by the GST Network that is readying the IT
backbone for this new tax regime. Existing taxpayers of value added tax can start migrating from Tuesday, followed by service tax and excise.

Puducherry will lead the process of migration to the GST system. For service tax, registrant’s migration to GST will be from January 1, 2017 till January 31, 2017. Although the window will be kept open till January 31, 2017 for assesses who do not register before the specified dates, the government is keen that enrolment is completed before the deadline.

Basic information such as names and PAN from existing database of the income tax department has been collated by the GST Network and essential information such as place of business, nature of business, name of directors and bank accounts details needs to be fulfilled by the assessee. Experts say the government is moving in a fast lane on GST implementation and now it is industry’s turn to gear up.

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