goods and services tax reform to consolidate indirect taxation ca. sanjeev malhotra fca, fcs, acma,...
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GOODS AND SERVICES TAXREFORM TO CONSOLIDATE INDIRECT TAXATION
CA. SANJEEV MALHOTRAFCA, FCS, ACMA, LL.B.
What is GST GST is a comprehensive value added tax on goods and services
It is collected on value added at each stage of sale or purchase in the supply chain
No differentiation between Goods and Services as GST is levied at each stage in the supply chain
Seamless input tax credit throughout the supply chain till tax is charged on final consumption value
At all stages of production and distribution taxes are a pass through and tax is borne by the final consumer
Exemption limit to be uniform; to maintain value chain, exemption limit to cover only retail trade where transactions with ultimate consumers; this will ensure proper input tax accounting and rebating mechanism for exports.
Present Indirect Tax Structure
Present tax structure
Excise DutyTaxab
le Event
is Manufactur
e
Service tax
Taxable
Event is
provision of
service
Sales tax/Vat/
CSTTaxab
le Event
is Sale of
Goods
Customs DutyTaxab
le Event
is Import or
Export
Entry Tax/
Entertainment tax / Other taxes
Taxes to be Subsumed - Central
Central Taxes
Excise Duty
Service Tax
CVD and SAD part of
Customs Duty
Surcharges and Cess
Taxes to be subsumed - State
State
VAT/ CST
Purchase Tax
Entry Tax
Entertainment Tax not of local bodies
Luxury Tax
Tax on lottery,
Betting and Gambling
Surcharges and Cess
Octroi
Proposed Indirect tax Structure
SGST
Intra State Supply of Goods and Services
Vatable
Can be paid out of SGST / IGST credits
GST exclusionsFollowing goods and services will
not be part of proposed GST.◦Alcohol for human consumption. –
State Excise plus VAT.◦Electricity – Electricity duty.◦Real Estate – Stamp duty plus
property taxes◦Petroleum Products – (to be included
from the date to be notified by GSTC)◦Tobacco Products – GST with Central
Excise
IGST Adjustments and Settlement
IGST credits can be adjusted for payment of IGST, CGST and SGST in sequence by importing dealer.
The exporting state will transfer to centre the credits of SGST used for payment of IGST.
The centre will transfer to the importing state the credits of IGST used for payment of SGST.
Central Govt. will act as a clearing house and transfer the funds across states.
Process of RegistrationRegn. To be done within 30 days.PAN based 15 digits GSTIN to be allotted.Gross Annual turnover all over the country will
be considered for regn. Or compounding Scheme.
Compulsory registration for dealer of inter state sale or reverse charge cases.
Unique identification no. for UN Bodies and Govt. deptt./ PSUs
The concept of ISD to continue for services.Suo moto registration in Enforcement cases.Multiple registration in same state allowed for
Business Verticals.
Process of Registration… contdThe scheme of TRP and Facilitation Centres to
be started.Compulsion to use DSC in case reqd. by any
other law.Application in GSTN and printed Extract to be
submitted to concerned tax authority within 30 days.
GSTN will communicate with applicant and concerned tax authority.
Approval or Rejection to be done within 3 working days otherwise it will be deemed approved by GSTN.
Risk profiling of assessee to be done by tax authority and input in GSTN.
Process of PaymentOnline tax payments are required.Bank payments are restricted to Rs. 10,000/-
per challan.Challan to be generated from GSTN which will
have unique Common Portal identification no. (CPIN).
CPIN will remain valid for 7 working days.The system will be integrated with RBI
system.RBI will act as clearing house for Govt. Cheque bouncing – System will bar such
assessees from this facility.
Process of RefundsGSTN to be integrated with Customs deptt.Refund application to be filed online.Refund application to be made within time
limit. (1 year as present)Refund to be processed in a specified time
limit.Stress on online verification of information.Pre and post audit of refunds to be carried
out depending on amounts.Provision of interest on delay in payment
of refund.
Way Forward for Introduction
Constitutional Amendment Bill to be passed.
To be ratified by 50% of State Assemblies.Assent by PresidentConstitution of GSTC.GSTC to recommend GST law and
Procedure.GST law to be introduced in Parliament and
State Assemblies.GSTN (GST network) to be made
operational.
Likely GST Administration
CGST by Union department and SGST by State Revenue deptt.
Cases with turnover upto 1.5 crores exclusively with State Revenue deptt.
Union to deal only with Enterprises having Pan India presence.
Routine matters with State and monitoring with Union.
ReturnsMandatory E filing of Returns.Returns to be made transaction
wise.Returns up to a certain turnover
limit will be assessed by one AA.
