Gst roll-out complete transformation of indirect tax

 

GST ROLL-OUT – COMPLETE TRANSFORMATION OF THE INDIRECT TAXATION LANDSCAPE:

Goods and Services Tax (GST), a historic tax reform, will come into effect from tomorrow i.e.1^st July 2017. GST will completely transform the Indirect Taxation landscape in the country involving both the Central and State levies. In a departure from the normal practice, GST will be administered together by the Centre and States.

To commemorate the historic occasion, a function will be held in the Central Hall of Parliament on the midnight of 30th June – 1st July 2017. The occasion will be graced by the Hon’ble President, Hon’ble Vice President,  Hon’ble Prime Minister, Hon’ble Speaker of Lok Sabha and Hon’ble Union Finance Minister among other dignitaries.

GST SO IMPORTANT: –

The biggest tax reform since independence – GST – will pave the way for the realization of the goal of One Nation – One Tax – One Market. GST will benefit all the stakeholders namely industry, government and consumer. It will lower the cost of goods and services, give a boost to the economy and make the products and services globally competitive, giving a major boost to the ‘Make in India’ initiative.

Under the GST regime, exports will be zero-rated in entirety, unlike the present system where refund of some of the taxes does not take place due to the fragmented nature of indirect taxes between the Centre and the States.

GST will make India a common market with common tax rates & procedures and remove economic barriers. GST is largely technology-driven and will reduce the human interface to a great extent. GST is expected to improve the ease of doing business in India.

In the majority of supplies of goods, the tax incidence approved by the GST Council is much lower than the present combined indirect tax rates levied [on account of central excise duty rates / embedded central excise duty rates/service tax post-clearance embedding, VAT rates or weighted average VAT rates, cascading of VAT over excise duty and tax incidence on account of CST, Octroi, Entry Tax, etc.] by the Centre and State(s).

The journey of GST after the Constitutional Amendment Act, 2016

After the assent of the Hon’ble President on 8^th September 2016, the 101st Constitutional Amendment Act, 2016 came into existence. The GST Council was constituted on 15.9.2016.

Since its formation, in September 2016 the GST Council has held 18 meetings. The Finance Ministers of all the States or their representative along with State and Central govt officials have participated in these extensive meetings and formulated the law and procedure to implement this historic tax reform.

It was a mammoth task involving 27000+ man hours of intensive work. More than 200 meetings of the officers of the Centre and States took place in different parts of the country to expedite the implementation of GST.

GST Acts

While framing GST Acts and Rules, enhanced ‘Ease of doing business for the taxpayers was a key consideration and accordingly the roles and responsibilities of the States and Central govt have been defined.

In a short span of time, the GST council has cleared GST laws, GST Rules, Tax rate structure including Compensation Cess, Classification of goods and services into different rate slabs, exemptions, thresholds, structure for tax administration, etc.

All the decisions of the Council were taken with consensus. While formulating the Acts and Rules, extensive participatory consultations with trade and industry including other significant stakeholders were undertaken. Feedback was also obtained by posting draft Acts and Rules on the websites and inviting comments from the public.

On 29^th March 2017, the Hon’ble Finance Minister of India tabled four Goods and Services Tax (GST) Bills for consideration and passage in the Lok Sabha namely The Central Goods and Services Tax (CGST) Bill, 2017.

The Integrated Goods and Services Tax (IGST) Bill, 2017, The Union Territories Goods and Services Tax (UTGST) Bill, 2017 and the GST (Compensation to States) Bill, 2017. They were passed by the Lok Sabha on 29^th March 2017 and by the Rajya Sabha on 6^th April 2017.

The GST Council has decided the final structure of GST as follows:

• The threshold limit for exemption from levy of GST is Rs. 20 lakh for the States except for the Special Category, where it is Rs 10 Lakh.
• A four slab tax rate structure of 5%, 12%, 18%and 28% has been adopted for GST.
• A cess would be levied on certain goods such as luxury cars, aerated drinks, pan masala and tobacco products, over and above the GST rate of 28%for payment of compensation to the states.
• The threshold for availing of the Composition scheme is Rs. 75 lakh except for special category States where it is Rs. 50 lakh and they are required to file quarterly returns only. Certain categories of manufacturers, service providers (except restaurants) are out of the Composition Scheme.

Other Important Features of GST :

Few things to know before GST rollout. GST will be rolled out from July 1, 2017, and just before its implementation the Govt. had issued various notifications on GST:

• There is a requirement to mention the HSN code of items in the tax invoices under GST. Now the Govt. has given some relief to small assessees with annual turnover uptoRs 1.5 crores.
• They are not required to mention the HSN code in their tax invoice. Taxpayers having turnover in the range of Rs 1.5-5 crore will be required to mention only two digits of the HSN code and taxpayers with turnover more than Rs 5 crore will be required to mention four digits of the HSN code.
• Now the Govt. has given exemption from the reverse charge in those cases wherein the value of goods or services does not exceed Rs 5000 and such goods or services are received by a registered person from the unregistered person.
• Earlier Military canteens (‘Canteen Stores Department’)were not required to pay any indirect tax on the purchase of goods. Now Military canteens will be required to pay GST at the time of purchase of goods and they would be entitled to a refund of 50 per cent of input tax under GST.
• Now e-commerce operators (like Ola, Uber) are required to pay GST on radio taxi services.
• Now e-commerce operators (like MMT, Oyo rooms) are required to pay GST on services of hotel accommodation only when such hotels are not registered under GST.
• Exemption from reverse charge has been given to a registered person on purchase of second-hand goods from an unregistered person subject to the condition that buyer will pay GST on its subsequent sales.
• Now builders would not be able to claim credit of unutilized input tax on the supply of construction services.
• Earlier UN and Foreign diplomatic missions were not required to pay any indirect taxes. Now they are required to pay GST and they will be entitled to claim a refund of GST subsequently.

GST UPDATES

• GST will be levied at the rate of 5% on various goods used for petroleum operations subject to some conditions.
• Any services provided by Panchayat will not be liable to GST.
• GST envisages all transactions and processes to be done only through electronic mode, to achieve non-intrusive administration.  This will minimise tax payers physical interaction with the tax officials.
• A GST provides for the facility of auto-populated monthly returns and annual returns.
• It also facilitates the taxpayers by prescribing a grant of refund within 60 days, and provisional release of 90% refund to exporters within 7 days. Further facilitation measures include interest payment if a refund is not sanctioned in time, and refund to be directly credited to bank accounts.
• Comprehensive transitional provisions for ensuring a smooth transition of existing taxpayers to GST regime, credit for available stocks, etc.
• Anti-profiteering provisions for the protection of consumer rights.
• The income tax department has said PAN that are not linked to Aadhaar by July 1 will not be cancelled, stepping in to calm the panic caused by a notification issued on Wednesday.
• The Centre is planning to integrate the direct and indirect taxation systems for all indirect taxpayers by linking the GST number with the permanent account number (PAN) issued by the income tax department, reports Shrimi Choudhary.
• With the advent of GST today the Centre is now planning to integrate the direct and indirect taxation systems for all indirect taxpayers by linking the GST number with PAN.
• No GST on Local supplies of second-hand goods by an unregistered person to registered who charges GST on further sale. Notification 10(CT) (Rate) dated 28.6.2017.
• Other provisions include system of GST Compliance Rating, etc.

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