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FAQs on Section 43B(h) of Income Tax Act- Payment to MSEs

noreply@blogger.com (Mohit Gaba) — Mon, 04 Mar 2024 05:52:00 +0000

Section 43B of the Income Tax Act provides for certain deductions to be allowed only on actual payment. Clause (h) has been inserted in the Section, by Finance Act 2023 (to be applicable from FY 2023-24), to include payments made to Micro and Small Enterprises within the ambit of Section 43B of the Income Tax Act.

Section 15 of the Micro, Small and Medium Enterprises Development (MSMED) Act 2006, provides that payment for any Goods or Services to Micro and Small Enterprises should be made within time as per written agreement, which cannot be more than 45 days . If there is no Agreement then the payment has to be made within 15 days.

Section 43B has been amended to provide that any sum payable by the assessee to a Micro or Small Enterprise beyond time limit specified in section 15 of MSMED Act (i.e. agreed time or 45 days whichever less), then deduction of same shall be allowed only on actual payment. Deduction will be allowed on accrual basis only if the payment has been made within the time mandated u/s 15 of the MDMED Act.

Micro or Small Enterprises as defined in MSMED Act mean, Manufacturers or Service providers having Turnover upto Rs.50 Crores and Investment in Plant & Machinery upto Rs. 10 Crore.

Whether the Section is applicable for Payments outstanding to Traders registered under Udyog Adhar?

Section 43B(h) is only applicable for payments outstanding to Micro or Small Enterprises. Only Manufacturers and Service Providers with Turnover less than Rs.50 Crores are covered in the definition of Micro or Small Enterprises.

Traders (Even if Registered under Udyog Adhar), are not covered in definition of Micro or Small Enterprises under the MSMED Act 2006. As Registration of Traders under Udyog Aadhar is only for the limited purpose of Priority Sector Lending. Therefore there will not be any disallowance u/s 43B(h) if PAYMENT TO TRADERS is made beyond the period specified in section 15 of the MEMED Act.

Whether the Section is applicable for Payments outstanding to Manufacturers or Service Providers not registered under Udyog Aadhar?

Section 43B(h) is applicable for payments outstanding to Micro or Small Enterprises beyond period specified in section 15 of the MSMED Act. The Section 15 mentioning the Liability of the Buyer to make payment, is applicable only for payments to ‘Suppliers’. MSMED Act defines ‘Supplier’ as Micro or Small Enterprise which has filed memorandum as specified. Thus section 15 of the MSMED Act is not applicable for payment to Micro or Small Enterprises who are not registered under Udyog Aadhar.

Therefore this section will also not be applicable for Payments outstanding to Manufacturers or Service Providers not registered under Udyog Aadhar

The period of 15 days/ 45 days will be counted from which Date?

For the Purpose of calculating delayed payment u/s 15 of the MSMED Act, the period will be counted from day of acceptance or day of deemed acceptance, i.e.

a. Day of Actual Delivery of Goods or rendering of services.

b. Where any objection is made by buyer in writing regarding acceptance of goods or services within 15 days of delivery; the day on which the objection is removed.

Example:

Invoice Date: 1st March 2024

Actual Delivery of Goods: 6th March 2024

Agreement period: 45 days

The Period of 45 Days will be counted from 6th March 2024 and not from 1st March 2024. The Payment for the Invoice can be made till 20th April 2024 to avoid disallowance u/s 43B(h)

When should Payment to Micro and Small Enterprises be made for Expenditure of 2023-24 to claim deduction in 2023-24 itself?

Assuming there is an Agreement between Purchaser and Seller to make payment in 45 days, and Delivery of Goods is on the Date of Invoice

For Invoices raised till 15/02/2024: Payment should be made till 31st March 2024

For Invoices raised from 16/02/2024 to 31/03/2024: Payment should be made within 45 days

Examples:

Invoice Date 01/01/2024: if payment made till 31/03/2024 deduction allowed in 2023-24

Invoice Date 01/03/2024: if payment made till 15/04/2024 deduction allowed in 2023-24, if payment made on 20/04/2024 deduction allowed in 2024-25.

Whether old outstanding Balances as on 31/03/2023 will also be covered for disallowance u/s 43B(h)?

Section 43B(h) is applicable from FY 2023-24. Only the Expenditure incurred after 01/04/2023 will be covered for disallowance under this section. Old outstanding balances have already been allowed as deduction during the earlier Financial Years. These will not be covered for disallowance under this section for current year.

However if any payment is being made in the current year to any Supplier having outstanding balance as on 31/03/2023, the same will first be adjusted against old balance before making any adjustment for the Purchases of current year.

Example 1:

Amount outstanding to ABC Ltd as on 31/03/2023 : Rs.15 lakhs

Purchases during the FY 2023-24 : Rs.10 Lakhs

Payment during the FY 2023-24 to ABC Ltd : Rs.15 lakhs

The payment of Rs.15 lakhs in the current year will first be adjusted against old balance and Rs.10 lakhs out of current year Purchases, will be disallowed as the same has not been paid.

Example 2:

Amount outstanding to XYZ Ltd as on 31/03/2023 : Rs.10 Lakhs

No transaction during the FY 2023-24

No disallowance will be made u/s 43B(h) during FY 2023-24.

Whether this section is applicable only to Taxpayers who are covered under Tax Audit u/s 44AB?

This Section is applicable to all assesses whether they are covered under Tax Audit or not. In the Income Tax Return Forms recently notified for the AY 2024-25, a new column has been inserted under Part A-OI (Other Information) to disclose the sum payable to Micro or small enterprises beyond the specified time limit per the MSMED Act.

Will this section be applicable if ITR is filed on presumptive basis u/s 44AD or 44ADA?

Sections 44AD and 44ADA start with the words “Notwithstanding anything contained in sections 28 to 43C”. When ITR is filed under these sections, it is deemed that all Deductions/ Allowances under sections 28 to 43C have been allowed. There will not be any disallowance u/s 43B if ITR is filed u/s 44AD or 44ADA.

What is the Rate of Interest payable under MSMED Act for delayed payment?

When the payment is not made within the time specified u/s 15 of the MSMED Act, Buyer shall be liable to pay compound interest with monthly rests to supplier, at 3 times the Bank Rate notified by the RBI. (i.e. if Bank Rate notified by RBI is 6.75%, then Interest is payable at 20.25% for delayed payment). Moreover this Interest is also not allowed as Deduction while computing Profits from Business in Computation of Income. This Interest is payable even if there is no agreement between the Buyer and the Supplier.

Disclaimer: The information provided in this article is intended for general informational purposes only. While every effort has been made to ensure accuracy, completeness, and timeliness of the content, it should not be construed as legal or professional advice . Readers are advised to consult a qualified tax professional to obtain specific advice tailored to their individual circumstances. The author and publisher disclaim any liability for any loss or damage incurred by individuals or entities relying on the information presented in this article.

REFUNDS TO EXPORTERS OF INVERTED RATED GOODS

noreply@blogger.com (Mohit Gaba) — Thu, 14 Feb 2019 13:32:00 +0000

Refunds under GST are governed by Section 54 of the GST Act. First Proviso to Section 54(3) imposes restriction on claiming Refund of unutilized Input Tax Credit, by specifying that Refund of unutilized ITC can be claimed only in two cases:

Zero Rated supplies made without payment of tax, and
Credit accumulated due to rate of tax on inputs being higher than rate of tax on output supplies. (i.e. Inverted Rated Goods).

Sub section 3 of Section 54 is reproduced below for reference:

“(3) Subject to the provisions of sub-section (10), a registered person may claim refund of any unutilised input tax credit at the end of any tax period:

Provided that no refund of unutilised input tax credit shall be allowed in cases other than––

(i) zero rated supplies made without payment of tax;

(ii) where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Government on the recommendations of the Council:

Provided further that no refund of unutilised input tax credit shall be allowed in cases where the goods exported out of India are subjected to export duty:

Provided also that no refund of input tax credit shall be allowed, if the supplier of goods or services or both avails of drawback in respect of central tax or claims refund of the integrated tax paid on such supplies.”

Second Proviso further restricts the Refunds by specifying that Refund will also not be allowed if the Goods Exported are subject to Export Duty.

Third Proviso specifies that the Refund of ITC shall not be allowed if the supplier avails drawback of Central Tax or claims refund of IGST paid on such supplies.

Both the Second Proviso and Third Proviso should apply to the Refund of ITC in case of zero rated supply without payment of Tax, and not to the Refund in case of Inverted Tax Structure. However both these provisos are placed such that these are interpreted to apply to Refund of ITC in all cases i.e. zero rated supplies without payment of tax as well as Refund in case of Inverted Rated Goods. Field Officers are interpreting the provisos in such manner and are restricting the Refunds to Exporters of Inverted Rated Goods. Let us understand this with an Example:

Scenario 1

A person makes outward supply of Goods Taxable at 12%, uses Inward Supply to manufacture those Goods. The Inward Supplies are taxable at 18%. The Person is entitled to claim Refund of Input Tax Credit accumulated due to Inverted Tax Structure. Assuming the person makes Domestic Sales of Rs.100/- , Tax on outward supplies will be Rs.12/-. And assuming the Raw Material is 80% of the Sales, Tax on Inward Supplies will be Rs.14.40. The Person is entitled to claim Refund of Rs.2.40 on account of inverted tax structure.

Scenario 2

Now the same person, instead of making Domestic Supplies, makes Export of Rs.100/- with Payment of Integrated Tax, and claims Refund of IGST of Rs.12/- on account of Export. Now as per Third Proviso to section 54(3), since the person has claimed Refund of IGST paid on the supplies, the person cannot claim Refund of Rs.2.40 (accumulated on account of inverted tax structure). The Exporter making supplies of Inverted Rated Goods is at disadvantageous position vis a vis the Person who is making Domestic Supplies.

The Exporters are always treated favorably vis a vis Domestic Suppliers, that is why the Exports are zero rated and even incentives are also given to Exporters. This cannot be the intention of the Law Makers to deny Refund of ITC on account of inverted Tax to Exporters who have claimed IGST on the Export of such goods.

The Field Officers are denying Refund of ITC on account of Inverted Tax in cases where IGST has been claimed on such supplies, by resorting to Third Proviso to Section 54(3). The Third Proviso which states that no Refund of ITC shall be allowed in cases where the supplier avails drawback of Central Tax or claims refund of IGST paid, should be applicable only in case of Refund of ITC on account of Export without payment of Tax under LUT/Bond. The Proviso should not be made applicable to Refund on account of Inverted Tax Structure.

By making the proviso applicable to Refund on account of Inverted Tax, the Exporters are being denied a benefit which is rightfully theirs.

Even otherwise, if the person manufacturing Inverted Rated Goods, Exports the Goods without payment of Tax under LUT/Bond, then the person can claim entire Refund. In our above Example, if the Exporter exports Goods without payment of Tax, then he will have accumulated ITC of Rs.14.40. Then he can claim Refund of the same on account of Export. In this case he can claim Refund of entire Rs.14.40 rather than Rs.12/- as was being done earlier. In this case the person making Export without payment of Tax is better placed than the person making Export with payment of Tax. Even this cannot be the intention of the Law makers to treat both the Exports differently.

Either a clarification should be issued by the Department on the issue, or the wordings of the Section should be suitably amended to give Refunds of Inverted Tax to Exporters (who have claimed Refund of IGST) also, as is being given to Domestic Suppliers, so that both are treated at par.

DISCLAIMER: The contents of this article have been prepared on the basis of the relevant provisions and as per the information existing as on 27/12/2018. The views of the author are personal and cannot be relied upon before any authority, without the written permission of the author. The article is meant for general guidance and the author disclaims any liability for any loss arising to any person acting or refraining from acting on the basis of any material contained in this article. It is recommended that professional advice be sought based on specific facts and circumstances.

Late Fees of Aug in Sep 3B

noreply@blogger.com (Mohit Gaba) — Mon, 16 Oct 2017 17:12:00 +0000

Msg from GSTN👇🏼

You might have received complaint about late fee being applied in case of Sept month 3B. This is not for any delay on filing jb of Sept month as we have not reached 20th Oct. It is on account of late filing of return for previous period.

The system does entry into ledgers from 3B return on the date on which return is submitted (entries get frozen). The late fee till that date is applied, if date of submission is later than the last date of filing. In case the return is filed later than the date of filing then the late fee for the gap between date of filing and last date of filing return or date of submission (whichever is later) is added in the next month’s return.

In case a taxpayer had submitted last month’s return on 22nd Sept (D1) and filed the return on 26th Sept (D2), then late fee was calculated for 22nd -20th Sept and shown in the payment sheet of Sept Return (2*100*2). . The delay between date of submission (D1) and date of filing (D2) [26th -22nd Sept] amounting to 4*2*100 is to be paid by the taxpayer. The same is now being added in the return and shown to the taxpayer.

Hope this clarifies the position.

A ticker has been put on the portal explaining this. Please disseminate this to taxpayers

Thanks
Team GSTN

8 States pass SGST Acts

noreply@blogger.com (Mohit Gaba) — Fri, 05 May 2017 03:39:00 +0000

Press Information Bureau
Government of India
Ministry of Finance
04-May-2017 18:13 IST

Eight States’ Assemblies pass the State GST Act within a short span of less than one month

Eight States have passed the State Goods and Services Tax (SGST) Act in their respective State Assembly in less than a month’s time. The Legislative Assembly of Telangana State passed the State GST Act on 9th April, 2017, that of Bihar State passed it on 24th April, 2017, Rajasthan Assembly on 26th April, 2017, that of Jharkhand on 27th April, 2017, Chhattisgarh Assembly on 28th April, 2017, that of Uttarakhand on 2nd May, 2017, Madhya Pradesh Assembly on 3rd May, 2017 while the Assembly of State of Haryana passed the State GST Bill today i.e. 4th May, 2017.

Earlier the GST Council had approved the model State GST (SGST) Bill in its 12th Meeting held on 16th March, 2017. The remaining States/UTs (having Legislative Assembly) are likely to pass the State GST Bill in their respective Assemblies before the end of this month, except one or two States which may pass the same in early next month.

The next GST Council meeting is scheduled to be held at Srinagar, J&K on 18th and 19th May, 2017. The Central Government has already informed that GST will be rolled-out from 1st July, 2017. The quick passage of the State GST Act by the different State Assemblies in a time bound manner shows the keenness on the part of the State Governments to ensure that implementation of the GST in letter and spirit is not further delayed and takes place from 1st July, 2017 as targeted by the Central Government. The officers of the Department of Revenue, Government of India led by the Revenue Secretary, Dr. Hasmukh Adhia and the concerned officials of the State Governments have already started the outreach programme in order to create general awareness among the people at large and stakeholders in particular and remove their doubts, if any, about the various provisions of GST and its related legislations.

SOURCE: PRESS RELEASE MINISTRY OF FINANCE

Goods and Services Tax GST) Council approves the Central Goods and Services Tax (CGST) Bill and the Integrated Goods and Services Tax (IGST) Bill

noreply@blogger.com (Mohit Gaba) — Sat, 04 Mar 2017 13:37:00 +0000

The Goods and Services Tax GST) Council, in its meeting held today in Vigyan Bhawan in New Delhi under the Chairmanship of the Union Minister for Finance & Corporate Affairs, Shri Arun Jaitley has approved the draft CGST Bill and the draft IGST Bill as vetted by the Union Law Ministry. This clears the deck for the Central Government to take these two Bills to the Parliament for their passage in the ongoing Budget Session.

Some of the main features of the two Bills, as finalized by the GST Council, are as follows:

i. A State-wise single registration for a taxpayer forfiling returns, paying taxes,and to fulfil other compliance requirements. Most of the compliance requirements would be fulfilled online, thus leaving very little room for physical interface between the taxpayer and the tax official.

ii. A taxpayer has to file one single return state-wise to report all his supplies, whether made within or outside the State or exported out of the country and pay the applicable taxes on them. Such taxescan be Central Goods and Services Tax (CGST), State Goods and Services Tax (SGST), Union Territory Goods and Services Tax (UTGST) and Integrated Goods and Services Tax (IGST).

iii. A business entity with an annual turnover of upto Rs. 20 lakhs would not be required to take registration in the GST regime, unless he voluntarily chooses to do so to be a part of the input tax credit (ITC) chain. The annual turnover threshold in the Special Category States (as enumerated in Article 279A of the Constitution such as Arunachal Pradesh, Sikkim, Uttarakhand, Himachal Pradesh, Assam and the other States of the North-East) for not taking registration is Rs. 10 lakhs.

iv. A business entity with turnover upto Rs. 50 lakhs can avail the benefit of a composition scheme under which it has to pay a much lower rate of tax and has to fulfil very minimal compliance requirements. The Composition Scheme is available for all traders, select manufacturing sectors and for restaurants in the services sector.

v. In order to prevent cascading of taxes, ITC would be admissible on all goods and services used in the course or furtherance of business, except on a few items listed in the Law.

vi. In order to ensure that ITC can be used seamlessly for payment of taxes under the Central and the State Law, it has been provided that the ITC entitlement arising out of taxes paid under the Central Law can be cross-utilised for payment of taxes under the laws of the States or Union Territories. For example, a taxpayer can use the ITC accruing to him due to payment of IGST to discharge his tax liability of CGST / SGST / UTGST. Conversely, a taxpayer can use the ITC accruing to him on account of payment of CGST / SGST / UTGST, for payment of IGST. Such payments are to be made in a pre-defined order.

vii. In the Services sector, the existing mechanism of Input Service Distributor (ISD) under the Service Tax law has been retained to allow the flow of ITC in respect of input serviceswithin a legal entity.

viii. To prevent lock-in of capital of exporters, a provision has been made to refund, within seven days of filing the application for refund by an exporter, ninety percent of the claimed amount on a provisional basis.

ix. In order to ensure a single administrative interface for taxpayers, a provision has been made to authorise officers of the tax administrations of the Centre and the States to exercise the powers conferred under all Acts.

x. An agriculturist, to the extent of supply of produce out of cultivation of land, would not be liable to take registration in the GST regime.

xi. To provide certainty in tax matters, a provision has been made for an Advance Ruling Authority.

xii. Exhaustive provisions for Appellate mechansim have been made.

xiii. Detailed transitional provisions have been provided to ensure migration of existing taxpayers and seamless transfer of unutilised ITC in the GST regime.

xiv. An anti-profiteering provision has been incorporated to ensure that the reduction of tax incidence is passed on to the consumers.

xv. In order to mitigate any financial hardship being suffered by a taxpayer, Commissioner has been empowered to allow payment of taxes in instalments.

The remaining two Bills namely, State Goods and Services Tax (SGST) Bill and the Union territory Goods and Services Tax (UTGST) Bill, which would be almost a replica of the CGST Act, would be taken-up for approval after their legal vetting in the next meeting of GST Council scheduled on 16 March 2017.

SOURCE: PRESS INFORMATION BUREAU

Union Budget 2017

noreply@blogger.com (Mohit Gaba) — Tue, 07 Feb 2017 06:18:00 +0000

BUDGET 2017 PROPOSALS

TAX RATES

· There is a change in Tax Rates, which will benefit Individual/HUF taxpayers. Tax Slab for Individual/HUF will be:

o Upto Rs.250000/- NIL

o Rs.250001 to Rs.500000 5%

o Rs.500001 to Rs.1000000 20%

o Above Rs.1000000 30%

· Rebate of Rs.5000/- was allowed to taxpayers with Income below Rs.500000/-. Now this rebate has been reduced to Rs.2500/- and will be available only to persons with Income below Rs.350000/-.

· Exemption Limit for Senior Citizens and Super Senior Citizens will continue to be Rs.300000/- and Rs.500000/- respectively.

· Surcharge @ 10% has been imposed on the Individuals having income > 50 Lakhs and less than 1 Crore. Those with Income > 1 Crore will continue to pay surcharge @ 15%.

· Corporate Tax in case of Domestic Companies will be 25% if Turnover was less than 50 crores in FY 2015-16.

MEASURES TO REDUCE CASH TRANSACTIONS

· Revenue Expenditure incurred in Cash exceeding Rs.20000/- is not allowed as Expenditure while calculating Taxable Income. This limit is proposed to be reduced to Rs.10000/- w.e.f. 01/04/2017 (FY 2017-18, AY 2018-19)

· Earlier restriction on Cash Expense was only applicable to revenue expenditure. Now this is proposed to be made applicable to Capital Expenditure also. If any Fixed Asset is purchased for which payment is made in Cash exceeding Rs.10000/-, then Depreciation will not be allowed on the Cash portion.

· A new section 269ST has been proposed, which provides that no person shall receive amount of Rs.300000/- or more in Cash, in aggregate from a person in a day; or in respect of a single transaction; or in respect of transactions relating to one event or occasion from a person. Any person who contravenes the provision of this section can be levied penalty equal the amount of Cash received. [Eg. If Invoice is of R.450000/- and multiple Cash Receipts in respect of the Invoice are more than or equal to Rs. 300000/-, then penalty equal to the amount of cash received can be levied. ] This provision will be applicable from 1^st April 2017.

· Deduction u/s 80G was allowed if the payment upto Rs.10000/- was made in Cash. Now this limit is proposed to be reduced to Rs.2000/-. If Donation of amount exceeding Rs.2000/- is made in Cash, then no deduction u/s 80G will be allowed.

PRESUMPTIVE TAXATION

· Turnover limit for Presumptive Taxation for Businesses was increased from Rs.1 Crore to Rs. 2 Crore last year. It is again clarified that limit for Audit u/s 44AB is Rs.1 Crore. However if any person opts for presumptive taxation having turnover upto Rs.2 Crores, then he will not be required to get Books audited u/s 44AB.

· To promote digital transactions and to reduce cash transactions, it is proposed that for persons opting for presumptive taxation u/s 44AD rate of income to be declared will be 6% for Non Cash Sales and 8% for Cash Sales. In respect of any Sale, if the payment is received otherwise than Cash, then deemed profit will be 6% of such Non Cash Sales. Such receipts can be made before the due date u/s 139(1) of filing Income Tax Return. This benefit will be given from FY 2016-17 (AY 2017-18).

· Partnership Firms will have to declare income @ 8% (or 6% as applicable) of the Sales and pay tax on the same. Salary and interest to partners will not be allowed as deduction w.e.f. FY 2016-17 (AY 2017-18).

TDS/TCS

· TDS on Rent is applicable in case of Individual/HUF only if the Turnover is more than 1 crore during the last Financial Year. Now TDS on Rent is proposed to be made applicable on Individuals/HUF with Turnover less than 1 Crores, or not doing Business, also. Applicable if monthly Rent is more than 50000/- pm. TDS @ 5% to be deducted. No need to obtain TAN only for this purpose. (applicable w.e.f. 01/06/2017)

· TCS is applicable on Cash Sale of Jewellery if single invoice exceeds Rs. 5 Lakhs. This amount is proposed to be reduced to Rs.2 Lakhs. (w.e.f. 01/04/2017)

· Form 15G/H can now also be filed by Insurance Commission Agents for non deduction of TDS, if Income is below exemption limit. (w.e.f. 01/06/2017)

· TDS on Professional Services is proposed to be reduced to 2% in case of Call Centre Business.

· TDS @ 20% or applicable rate (whichever higher) is applicable in case PAN of deductee is not available. No such provision existed in case of TCS. Similar provision is proposed to be introduced for TCS. TCS @ double the rate mentioned in section or 5%, whichever higher will be collected if PAN is not available. (w.e.f. 01/04/2017)

CAPITAL GAINS

· In case of immovable property (Land or Building or Both), period of holding for qualifying an asset as long term has been reduced from 36 months to 24 months.

· Base Year for calculation of Capital Gains will be shifted from 01/04/1981 to 01/04/2001.

· In case of assets acquired before 01/04/2001, Fair Market Value as on 01/04/2001 shall be considered for Capital Gains calculation.

· Presently Exemption is available on Sale of securities (Shares/ MF), if STT has been paid on the Sale. It is proposed that the Exemption of Capital Gain on Sale of Securities will only be available if the STT has also been paid on Purchase of such Securities (If Purchased after 01/10/2014). Some cases like IPO, Bonus Issue, Rights issue, etc. will be notified on which such condition will not apply. Now proof of Date of Purchase will also be required for claiming exemption.

· To widen the scope of the section 54 EC, it is proposed to add notified bonds by the Central Government apart from bonds of REC or NHAI where investment can be made. (w.e.f. AY 2018-19 onwards)

OTHER PROVISIONS

· Section 44AA is proposed to be amended to increase monetary limits of income and gross receipts for maintenance of books of accounts from Rs. 120000/- to Rs. 250000/- and from Rs. 10 Lakhs to Rs. 25 Lakh, respectively in the case of Individuals and HUF carrying on business or profession. (w.e.f. AY 2018-19). For Other Assessees, limit remains the same.

· If return is not filed within due dates u/s 139(1)

(i) a fee of 5000/- shall be payable, if the return is furnished after the due date but on or before 31^st December of the Asst Year;

(ii) a fee of 10,000/- shall be payable in any other case.

However, in a case where the total income does not exceed five lakh rupees, it is proposed that the fee amount shall not exceed Rs.1,000/-. The amount of fees will have to be paid before filing the Return. If the Fees is not paid, then the same will be shown as demand during the processing.

· For the Assessment Year 2018-19, the time limit for making assessment has been reduced to 18 months from the end of assessment year, from the existing 21 months. From the Asst Year 2019-20, the time limit will be 12 months from the end of the Asst Year.

· Receipt of any sum of money or the property by any person without consideration or for inadequate consideration in excess of Rs. 50,000 is chargeable to tax as Income from Other Sources in hands of recipient being Individual/HUF. Now this provision is made applicable to all assessees.

· In case of Charitable Trusts, for claiming Exemption, they will have to file their Income Tax Return within Due Date. If Return is filed late, their exemption can be withdrawn. In case there is change in the Objects of the Trust, they have to file fresh registration by making application within a period of 30 days from the date of such change.

‘SUPPLY’ UNDER THE MODEL GST LAW

noreply@blogger.com (Mohit Gaba) — Sat, 21 Jan 2017 12:37:00 +0000

The Revised Model GST Law was placed in public domain on 26^th November 2016. In the GST Law, the taxable event would be SUPPLY. Under the existing laws there were multiple taxable events, i.e. manufacturing, provision of services, sales, etc. Under the GST law a single taxable event ‘supply’ will replace the multiple taxable events. Hence it is the most important part of the GST law, as it will determine the taxability or otherwise in the GST law.

Let us discuss the concept of Supply, as provided under the Model GST Law. The definition of Supply in the Model GST Law, is an inclusive one. It is contained in Section 3 of the Model GST Law. Apart from Section 3, Schedules I to IV are provided which explain various provisions related to supply.

SUPPLY includes all forms of supply of goods and/or services such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business.

IMPORT OF SERVICES

· To be treated as supply if received for a consideration, whether for personal use or business use.

· However if import of services is received without any consideration, then it will be treated as supply if it is received by a Taxable person from a related person or from any of his other establishment outside India, and it is in course or furtherance of business.

MATTERS TO BE TREATED AS SUPPLY EVEN IF MADE WITHOUT CONSIDERATION

· Permanent transfer/disposal of business assets where input tax credit has been availed on such assets.

· Supply of goods or services between related persons, or between distinct persons as specified in section 10, when made in the course or furtherance of business.

· Supply of goods—

o by a principal to his agent where the agent undertakes to supply such goods on behalf of the principal, or

o by an agent to his principal where the agent undertakes to receive such goods on behalf of the principal.

The Central Government or State Government, may upon recommendation of the Council, notify the transactions that are to be treated as a supply of goods and not as supply of services, or a supply of services and not as supply of goods. Schedule II of the Model law specifies the matters to be treated as supply of goods or supply of services.

Matters to be treated as Supply of Goods

· Any transfer of the title in Goods.

· Any transfer of title in goods under an agreement which stipulates that property in goods will pass at a future date upon payment of full consideration as agreed

· Where goods forming part of the assets of a business are transferred or disposed of by or under the directions of the person carrying on the business so as no longer to form part of those assets, whether or not for a consideration.

· Supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration.

Matters to be treated as Supply of Services

· Any transfer of goods or of right in goods or of undivided share in goods without the transfer of title thereof.

· Any lease, tenancy, easement, licence to occupy land.

· Any lease or letting out of the building including a commercial, industrial or residential complex for business or commerce, either wholly or partly.

· Any treatment or process which is being applied to another person’s goods.

· Where, by or under the direction of a person carrying on a business, goods held or used for the purposes of the business are put to any private use or are used, or made available to any person for use, for any purpose other than a purpose of the business, whether or not for a consideration, the usage or making available of such goods is a supply of services.

· Construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or before its first occupation, whichever is earlier.

· Temporary transfer or permitting the use or enjoyment of any intellectual property right;

· Development, design, programming, customisation, adaptation, upgradation, enhancement, implementation of information technology software;

· Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act;

· Works contract including transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract;

· Transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration; and

· Supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration.

ACTIVITIES OR TRANSACTIONS WHICH SHALL BE TREATED NEITHER AS A SUPPLY OF GOODS NOR A SUPPLY OF SERVICES

· Services by an employee to the employer in the course of or in relation to his employment.

· Services by any Court or Tribunal established under any law for the time being in force.

· The functions performed by the MP/MLA/MLC/ Members of Local Bodies.

· The duties performed by any person as a Chairperson or a Member or a Director in a body established by the Central Government or a State Government or local authority.

· Services by a foreign diplomatic mission located in India.

· Services of funeral, burial, crematorium or mortuary including transportation of the Deceased

· Other Transactions notified by the Central or State Govt, upon the recommendation of the Council.

ACTIVITIES OR TRANSACTIONS UNDERTAKEN BY THE CENTRAL GOVERNMENT, A

STATE GOVERNMENT OR ANY LOCAL AUTHORITY WHICH SHALL BE TREATED

NEITHER AS A SUPPLY OF GOODS NOR A SUPPLY OF SERVICES

1. Services provided by a Government or local authority to another Government or local

authority excluding the following services:

(i) services by the Department of Posts by way of speed post, express parcel post, life insurance and agency services;

(ii) services in relation to an aircraft or a vessel , inside or outside the precincts of a port or an aircraft; or

(iii) transport of goods or passengers.

2. Services provided by a Government or local authority to individuals in discharge of its

statutory powers or functions such as-

(i) issuance of passport, visa, driving licence, birth certificate or death certificate; and

(ii) assignment of right to use natural resources to an individual farmer for the purpose of agriculture.

3. Services provided by a Government or local authority or a governmental authority by way of:

(i) any activity in relation to any function entrusted to a municipality under article 243W of the Constitution;

(ii) any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution;

(iii) health care; and

(iv) education.

4. Services provided by Government towards-

(i) diplomatic or consular activities;

(ii) citizenship, naturalization and aliens;

(iii) admission into , and emigration and expulsion from India;

(iv) currency, coinage and legal tender , foreign exchange;

(v) trade and commerce with foreign countries , import and export across customs frontiers, interstate trade and commerce; or

(vi) maintenance of public order.

5. Any services provided by a Government or a local authority in the course of discharging any liability on account of any tax levied by such Government or authority.

6. Services provided by a Government or a local authority by way of –

(i) tolerating non-performance of a contract for which consideration in the form of fines or liquidated damages is payable to the Government or the local authority under such contract; or

(ii) assignment of right to use any natural resource where such right to use was assigned by the Government or the local authority before the 1st April, 2016:

PROVIDED that the exemption shall apply only to service tax payable on one time charge payable, in full upfront or in installments, for assignment of right to use such natural resource.

7. Services provided by Government by way of deputing officers after office hours or on holidays for inspection or container stuffing or such other duties in relation to import or export of cargo on payment of Merchant Overtime Charges (MOT).

8. Services provided by Government or a local authority by way of-

(i) registration required under any law for the time being in force; or

(ii) testing, calibration, safety check or certification relating to protection or safety of workers, consumers or public at large, required under any law for the time being in force.

The concepts of Composite Supply and Mixed Supply have been introduced in the Model GST Law.

COMPOSITE SUPPLY means a supply made by a taxable person to a recipient comprising two or more supplies of goods or services, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply;

Illustration : Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is the principal supply.

A composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply.

MIXED SUPPLY means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply;

Illustration: A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drink and fruit juices when supplied for a single price is a mixed supply. Each of these items can be supplied separately and is not dependent on any other. It shall not be a mixed supply if these items are supplied separately.

A mixed supply comprising two or more supplies shall be treated as supply of that particular supply which attracts the highest rate of tax.

DISCLAIMER: The contents of this article have been prepared on the basis of the relevant provisions and as per the information existing at the time of preparation. The views of the author are personal and cannot be relied upon before any authority, without the written permission of the author. The article is meant for general guidance and the author disclaims any liability for any loss arising to any person acting or refraining from acting on the basis of any material contained in this article. It is recommended that professional advice be sought based on specific facts and circumstances.

(Author: CA. Mohit Gaba, N.K.GABA & Co. Chartered Accountants. The author can be reached at camohitgaba@gmail.com, M: +919872473334)

GST deadlock ends; FM Arun Jaitley says dual control issue resolved, 1 July roll out likely

noreply@blogger.com (Mohit Gaba) — Mon, 16 Jan 2017 13:32:00 +0000

Union Finance Minister, Arun Jaitley, on Monday said the differences between the centre and the state governments on the issue of dual control has been resolved, paving the way to the likely roll out of the indirect tax reform beginning 1 July of this year.

"Decision arrived at on cross empowerment and dual control issue of GST; entire taxation base to be shared between assessment machinery of Centre and states," said Jaitley at a presser in Delhi.

As per the understanding between the centre and states, 90 percent of the GST taxpayers with up to Rs 1.5 crore turnover will be assessed by states, while 10 percent will be assessed by the centre. As far as those above Rs 1.5 crore turn over is concerned, the assessment will be done on a 50:50 basis between centre and states.

Further, states will be empowered to tax any economic activity in territorial water up to 12 nautical miles,the FM said.

GST is the biggest indirect tax reform India has seen in decades and is expected to absolve several state level levies into one thus creating a uniform tax regime. This is expected to help the economy widen the taxbase over a period of time.

Earlier in the day, it appeared that there was no consensus emerging on the issue of dual control after Kerala finance minister, Thomas Isaac said the differences still persist.

"There is no agreement. The discussions are still going on. There is no agreement as to how the taxes will be administered", Kerala Finance Minister T M Thomas Isaac told reporters here. This gave a sense to the media that GST deadlock is continuing.
However, at the presser, Jaitley said all state finance ministers were now on the board on the issue of dual control except West Bengal FM.The next GST council meeting will be held on 18 February.

The Council, in its previous meeting, had agreed on most of the clauses of the draft IGST law, which along with central GST (CGST) and state GST (SGST) have to be passed by Parliament and state legislatures, respectively, before the new indirect tax regime can be rolled out. IGST deals in levy on inter-state supply (including stock transfers) of goods or services.

GST will subsume a host of indirect taxes levied by the Centre and states, including excise duty, VAT, service tax, entry, luxury and entertainment levies.

Parliament passed the landmark constitutional amendment in August last year and more than half of state legislatures ratified it by mid-September.

According to Jaitley, GST needs to be rolled out latest by September 16, 2017.

Under the Constitutional Amendment passed by Parliament for GST implementation, some of the existing levies will expire after September 16.

GST is expected to transform India into a single market, boost revenues through better compliance and simpler procedure.

SOURCE: FIRSTPOST

April 1, 2017 deadline for GST Rollout almost ruled out

noreply@blogger.com (Mohit Gaba) — Sat, 24 Dec 2016 11:37:00 +0000

The 2 day GST Coucil Meeting ended on 23rd December 2016. The Centre and States covered significant distance towards rollout of Goods and Service Tax (GST), when they cleared bulk of the laws for the Central and State GST. The revised draft Bills, after a legal vetting will again be placed before the GST Council at its next meeting scheduled to be held on 3rd & 4th January 2017. After that the Bills will be taken up by Parliament and State assemblies.

However consensus still could not be reached on the issue of administrative control. The issue of administrative control and the related Integrated GST Law that deals with inter state Sales will be taken up in the next meeting of the GST Council.

"I am trying my best (on deadline of 1 April). I don't want to hasten the process of discussion and don't want to delay the implementation," Jaitley said at a press briefing after the Council meet ended.
The Finance Minister however said: "There was no issue raised on dual control today as we were working on legislations."

The drafts of Central GST (cGST) and the compensation law have been mostly approved with the only portions relating to dual control being left out, he added.

Jaitley said that the two principle issues that still remain before the Council are Integrated GST (iGST) and cross empowerment.

Requirements for GST Enrollment

noreply@blogger.com (Mohit Gaba) — Tue, 13 Dec 2016 06:35:00 +0000

FOR GST ENROLLMENT

I. Provisional ID received from State/Central Authorities;
II. Password received from the State/Central Authorities;
III. Valid Email Address;
IV. Valid Mobile Number;

DOCUMENTS REQUIRED
a. Proof of Constitution of Business :
i. In case of Partnership firm: Partnership Deed of Partnership Firm (PDF and JPEG format in maximum size of 1 MB)
ii. In case of Others: Registration Certificate of the Business Entity
(PDF and JPEG format in maximum size of 1 MB)

Photographs of Promoters/ Partners/Karta of HUF (JPEG format in maximum size of 100 KB)
Aadhar Card Copy of Prop/ All Partners/ Karta
Copy of Passport of Prop./ All Partners/ Karta (if any)
Copy of PAN of all Partners/ Prop./ Karta
Proof of Appointment of Authorized Signatory (PDF and JPEG format in maximum size of 1 MB)
Photograph of Authorized Signatory (JPEG format in maximum size of 100 KB)
Opening page of Bank Passbook / Statement containing Bank Account Number of < Account Number>, Address of Branch, Address of Account holder and few transaction details (PDF and JPEG format in maximum size of 1 MB)
Proof of Principal Place of Business
PAN Card of Firm
Registration Certificate

Detail of Goods/Services supplied by the business (specify top 5 goods/commodities supplied)
HSN Code	________________	HSN Name	____________________

BANK ACCOUNT DETAILS
BANK ACCOUNT NO.		IFSC		TYPE OF ACCOUNT

#GST Exemption Limit set at Rs.20 lakhs

noreply@blogger.com (Mohit Gaba) — Fri, 23 Sep 2016 11:05:00 +0000

The meeting of GST Council was held at New Delhi today. The major decisions taken at the meeting are as follows:

Threshold for Exemption
The threshold for GST has been fixed at Rs. 20 Lakhs. For Businesses in North Eastern States, the limit will be Rs. 10 Lakhs. GST will not be applicable on Businesses with annual turnover below the exemption limit.

Dual Control
On issue of Dual Control, consensus was reached in the meeting. All Businesses with annual Turnover below Rs. 1.50 Crore will be assessed by State Authorities. Businesses with Turnover above Rs. 1.50 Crore, will be assessed by either Central Govt or State Govt. For this purpose, a mechanism will be developed. All Service Tax assessees will be assessed by Central Government irrespective of the Turnover.

The next meeting of the GST Council will be held on 30th September to discuss draft Rules and Exemptions.

Rates and Slabs of GST will be decided in the meeting of the Council to be held on 17-19 October.

Centre, states agree on timetable for April 1 GST rollout

noreply@blogger.com (Mohit Gaba) — Thu, 22 Sep 2016 16:53:00 +0000

Moving towards rolling out GST from April 1, the Centre and states on Thursday agreed on a timetable for deciding on the tax rate and completion of legislative work but differences remained on the turnover limit for exemption from the new tax.

The first meeting of the newly-constituted GST Council saw states like Tamil Nadu and Uttar Pradesh demanding a larger say than one-state-one-vote principle that puts a smaller state on equal footing with a large manufacturing one. While their demand was overruled, consensus also eluded first day of the meeting over the issue of exemption to dealers from the Goods and Services Tax (GST). While some states demanded traders with turnover of Rs 10 lakh or less be exempted, a large number, including Delhi, were in favour of the limit being fixed at Rs 25 lakh in a year.
With tax collected from traders being just 2 per cent of the total tax collection, majority view was in favour of a higher exemption limit.

The GST Council, which is headed by Union Finance Minister Arun Jaitley and includes representatives of all the 29 states and 2 union territories, will continue tomorrow. At the meeting draft rules regarding GST were circulated and threshold for exemption and compensation norm discussed.
Clarity on base year for compensating states for loss of revenue following implementation of GST, which is to subsume an array of Central and state levies, including excise, service tax and VAT, will be deliberated further tomorrow.

Briefing reporters, Jaitley said the timetable has been set keeping the April 1, 2017, deadline in mind.
"The target also involves the passage of CGST and IGST law at the central Parliament and then by the state legislatures the state GST law in the winter session itself. "Today, starting from September 22, we roughly have two months time till November 22 to resolve all outstanding issues and therefore a draft timetable was given which also have been adopted," Jaitley said.

The GST Council meeting, which will continue tomorrow, will discuss on the compensation formula and with regard to the provision for cross empowerment, he said.
"With regard to composition we have finalised our proposal which has been unanimously accepted by the members. With regard to threshold for exemptions, there are two sets of suggestions which have come. We have converged to those two different views and both on officers and ministers track we will continue the meeting tomorrow and thereafter so that we are able to converge to one particular figure as far as the exemptions are concerned," Jaitley said.

Also, doubts were cast over West Bengal Finance Minister Amit Mitra being appointed vice-chairman of the GST Council in absence of the state approving the Constitution Amendment Bill.
To get that chair and for any member to be eligible to vote on issues before the Council, their respective states have to clear the Constitution Amendment Bill on GST.
A consensus on compounding or composition scheme was arrived at the GST Council meeting today which decided that traders with gross turnover cut-off of Rs 50 lakh will pay 1-2 per cent tax, Revenue Secretary Hasmukh Adhia said.

The composition scheme provides for a easier method of calculating tax liability and it allows option for GST registration for dealers with turnover below the compounding cut-off.
The scheme has been introduced in the Goods and Services Tax (GST) regime to reduce the administration cost associated with collection of tax from small traders. Accordingly, businesses below a turnover of Rs 50 lakh can pay taxes at a defined floor rate of 1-2 per cent, which will be much lower than the GST rate.
The Council in its subsequent meetings would take up the issue of GST rate. — PTI

SOURCE: THE TRIBUNE

#GST Council to discuss 3 critical issues on Thursday

noreply@blogger.com (Mohit Gaba) — Wed, 21 Sep 2016 15:11:00 +0000

The newly formed Goods and Services Tax (GST) council will meet for the very first time tomorrow. With the Union Finance Minister as the Chairperson, this panel of State Finance Ministers and some top officials from the Finance Ministry will have the task of finalizing the entire road map for the GST rollout.
The panel will be discussing three critical issues at the first meeting - dual control; the GST threshold and the compensation mechanism, reports CNBC-TV18’s Sapna Das.

On the issue of dual control, it is understood that the states are opposed to any concept of dual control up to an annual revenue number of Rs 1.5 crore. On the GST threshold front, it is given to understand the Centre has been pushing for an Rs 25 lakh annual threshold for GST from the time it should kick in. However, some states have a much lower limit of Rs 10 lakh. So, there is possibility a consensus agreement of threshold of Rs 25 lakh. With regards to the compensation mechanism, the formula and the base year will have to be decided; the year from which year the calculation will have to be made.

It is likely that there will be separate law on compensation under GST. Some other interesting issues like GST rate, as well as discussions on the GST exemptions are not on the Council’s agenda but the end call on whether to discuss the issues depends on the Chairperson. With regards to voting, the attempt would be to strike a consensus and at least three-fourth of the members will have to be on board on any decision to be taken.

SOURCE: MONEYCONTROL

#GST slabs necessary but only for a transition period, says Arjun Ram Meghwal

noreply@blogger.com (Mohit Gaba) — Mon, 19 Sep 2016 17:19:00 +0000

The Goods and Services Tax (GST) will have few tax rate slabs beside a standard rate but only for a transition period before India gradually moves to a pure single tax rate regime, Minister of State for Finance Arjun Ram Meghwal said on Sunday.

Slabs are necessary to protect manufacturing sector in the very low tax brackets, Meghwal added. “There will be slabs in the tax rate beside a standard rate. Some sectors like Bikaneri Papad where tax is just one per cent… these industries will die if a single standard rate is applied,” the minister said here highlighting benefits of GST at an event here.

“At the time when we are pushing for ‘Make In India’, we cannot afford to impact any manufacturing sector. Manufacturers should ‘not’ fear that indirect taxes will go up in a major way,” he asserted.
At an interactive session organised by the Calcutta Chamber of Commerce, Meghwal added that there would be several changes in the GST before it is passed and also said that the West Bengal government should pass it in the state Assembly.

“When Bengal chief minister Mamata Banerjee had come to Delhi she had said that they were in support of the GST. Their people had accordingly supported it in the Lok Sabha and the Rajya Sabha but in the recently concluded two-day session of the Assembly here, I was told that the GST discussion was dropped from the agenda owing to paucity of time. The consumer and manufacturers’ groups should put pressure on the government here to pass it in the Assembly,” Meghwal said.

Responding to a suggestion by an industry representative that the threshold limit of Rs 10 lakh as turnover should be raised Meghwal said that the threshold limit would definitely be changed. “We had kept it as Rs 10 lakh in public domain for public reaction. We want to increase it but the states are not agreeing because they think it will bring down their income. There will be a meeting of the states on September 22 or 23, where this thing will be discussed. I think the profit of a company, assuming it to be 10 per cent of the turnover, should be equal to the limit of tax exemption which a government employee gets,” he added. With PTI

SOURCE: THE INDIAN EXPRESS

'Govt mulls raising #GST exemption limit to 25 Lakh'

noreply@blogger.com (Mohit Gaba) — Mon, 19 Sep 2016 17:18:00 +0000

AHMEDABAD: In what can result in major relief to small traders and dealers, the Union government is thinking of exempting dealers with turnover up to Rs 25 lakh from Goods and Services Tax (GST). Earlier, traders with turnover of Rs 10 lakh or less had been marked for exemption.

"According to our recent discussion with the states, if we calculate the turnovers of dealers across the country, 60% of them fall under Rs 10 lakh and Rs 25 lakh bracket. If the limit is raised to Rs 25 lakh, 60% of dealers will go out of the tax net," said Hasmukh Adhia, revenue secretary, government of India.

"Now, it is a big number. However, the tax collected from these traders is just 2% (of total tax collections). Hence, we thought of increasing the limit for exemption application, and most states have agreed. But, the final decision in this regard will be taken by the GST Council," Adhia added.

Speaking at an awareness programme on GST in Ahmedabad on Saturday, Adhia also promised the business community that GST rate structure will be built keeping in mind that overall taxes on goods and commodities are brought down to benefit consumers. This will be the case for most commodities. "In case of a few commodities, we may have to increase the tax a bit," he said. The event was organised by Gujarat Chamber of Commerce and Industry (GCCI).

Making it clear that a single GST rate across the country is not feasible at this moment, he said, "There will be multiple GST rates to start with and these rates will be fixed by the council." The revenue secretary also accepted the suggestion made by GCCI that 'securities' should be excluded from the definition of goods, and that electricity, too, should be excluded from the ambit of GST.

SOURCE: THE TIMES OF INDIA

Taxpayers to get a feel of GST next month

noreply@blogger.com (Mohit Gaba) — Fri, 16 Sep 2016 15:31:00 +0000

Beginning next month, the Goods and Services Tax Network (GSTN) will start migrating over 80 lakh taxpayers onto its system. This will facilitate the smooth implementation of the GST regime. “The first part of our software will be ready by end October. Existing taxpayers of value added tax, service tax and central excise will be migrated to GSTN,” said Navin Kumar, Chairman, GSTN.

Identities to be issued
In an interview to Business Line, he said the GSTN will begin issuing GST identity numbers (TIN) and generating passwords for these taxpayers. “They can log on to our system, familiarise themselves [with it] as well as provide us relevant information,” he said. The GSTN, which will provide the IT infrastructure for the new indirect tax levy, has already received a list of all the taxpayers, their Permanent Account Numbers (PAN), names of the business entities, and their constitution or form from the tax authorities.

Requirements
On receiving their ID and passwords, taxpayers will be expected to log on to the GSTN and provide three additional inputs — place and address of business, name(s) of directors or proprietors, and details of bank accounts — which will become part of the GST records.

“Though the taxpayers will have time up to six months after the roll out of GST to provide this information, but we thought we will give them an opportunity to come on the system now itself and familiarise themselves,” said Kumar, adding that annually about four lakh new taxpayers are estimated to enrol on the IT network.

He also expressed confidence that the GSTN will be ready to meet the roll-out target of the indirect tax levy from April 1, 2017. “We will have a beta run from the end of February to end March and will go live from April 1,” he stressed.

Jaitley meets Sikka
Finance Minister Arun Jaitley on Thursday held a meeting where Infosys CEO Vishal Sikka made a presentation on the GSTN and its roadmap. Infosys is the technology partner for GSTN and is developing the system.

On Wednesday, Prime Minister Narendra Modi held a review meeting on the matter with Jaitley and Finance Ministry officials.

Apart from the Centre, the GSTN is also building the back-end IT infrastructure and software for 19 States and five Union Territories. Kumar said about 10 States such as Maharashtra, Gujarat and Tamil Nadu are building their own systems.

SOURCE: THE HINDU BUSINESS LINE

Union Cabinet approves creation of GST Council, Secretariat

noreply@blogger.com (Mohit Gaba) — Mon, 12 Sep 2016 15:31:00 +0000

The Union Cabinet on Monday approved the setting up of the Goods and Services Tax (GST) Council as well as the setting up of its secretariat as per the following details

(a) Creation of the GST Council as per Article 279A of the amended Constitution;
(b) Creation of the GST Council Secretariat, with its office at New Delhi;
(c) Appointment of the Secretary (Revenue) as the Ex-officio Secretary to the GST Council;
(d) Inclusion of the Chairperson, Central Board Of Excise And Customs(CBEC), as a permanent invitee (non-voting) to all proceedings of the GST Council;
(e) Create one post of Additional Secretary to the GST Council in the GST Council Secretariat (at the level of Additional Secretary to the Government of India), and four posts of Commissioner in the GST Council Secretariat (at the level of Joint Secretary to the Government of India).

The Cabinet also decided to provide for adequate funds for meeting the recurring and non-recurring expenses of the GST Council Secretariat, the entire cost for which shall be borne by the Central Government. The GST Council Secretariat shall be manned by officers taken on deputation from both the central and state governments.

The steps required in the direction of implementation of GST are being taken ahead of the schedule so far.

The Finance Minister has also decided to call the first meeting of the GST Council on 22nd and 23rd September 2016 in New Delhi.

The Constitution (122nd Amendment) Bill, 2016, for introduction of Goods and Services tax in the country was accorded assent by President Pranab Mukherjee on September8, 2016, and the same has been notified as the Constitution (101st Amendment) Act, 2016. As per Article 279A (1) of the amended Constitution, the GST Council has to be constituted by the President within 60 days of the commencement of Article 279A. The notification for bringing into force Article 279A with effect from 12th September, 2016 was issued on September 10, 2016.

As per Article 279A of the amended Constitution, the GST Council which will be a joint forum of the Centre and the states shall consist of the following members: -
a) Union Finance Minister - Chairperson
b) The Union Minister of State in-charge of Revenue of finance - Member
c) The Minister In-charge of finance or taxation or any other Minister nominated by each State Government - Members

As per Article 279A (4), the Council will make recommendations to the Union and the States on important issues related to GST, like the goods and services that may be subjected or exempted from GST, model GST Laws, principles that govern place of supply, threshold limits, GST rates including the floor rates with bands, special rates for raising additional resources during natural calamities/disasters, special provisions for certain states, etc.

SOURCE: BUSINESS STANDARD

GST- The Next Steps

noreply@blogger.com (Mohit Gaba) — Mon, 05 Sep 2016 17:14:00 +0000

GST Constitution Amendment Bill, having been passed by the Parliament, has now been ratified by 17 State Assemblies. Now the Bill will go to the President for assent, after which it will become Law. GST Council with representatives of the Centre and States will be notified after the Presidential Assent.

GST Coucil will decide the Rates of GST, the exemptions list, the Model Centre and State GST Laws, the threshold limits, etc.

GST Rates: There will be 5 slabs in GST, Exemption List for merit goods with 0% rate, Gold and Precious items are likely to be taxed at 2-3%; Essential Items at 12-14%; Standard Rate for most Goods/Services at 16-20%, and a Sin Goods which may be taxed at around 40%.

Threshold exemption limits has been fixed at Rs.10 Lakhs in the Model GST Law. However recently the Revenue Secretary Mr. Harmukh Adhia, said that "There will be an exemption limit for small traders and the limit is likely to be fixed at Rs 25 lakh. The states and the Centre are now involved in an intense discussion on this. More or less, we have reached an understanding that the limit will be up to Rs 25 lakh," It is expected that the threshold exemption limit is fixed somewhere between Rs.10 lakhs and Rs.25 lakhs.

Chorus grows for lower GST rate, some policymakers want it at 16%

noreply@blogger.com (Mohit Gaba) — Sat, 03 Sep 2016 16:02:00 +0000

NEW DELHI: Policymakers in some quarters of the government favour a goods and services tax rate of around 16% to make the reform more acceptable and also ensure it does not add to inflationary pressures. The new fiscal framework could provide the government wiggle room so that if revenues take a hit because of the low tax rate, this space could be utilized till the biggest tax reform since Independence starts yielding gains.

"A lower tax rate will ensure that the new tax is readily accepted. It means that there would be no demand and price shock to the economy," said a top government official who is aware of the discussion. This would be closer to the 16.8% average goods and services tax in high income countries than the 14.4% in emerging economies.

A number of countries including Australia, New Zealand and Canada experienced an increase in prices after GST was implemented, a fact that the government is concerned about. The finance ministry committee on the revenue neutral rate (RNR) headed by chief economic advisor Arvind Subramanian had pegged this at 15-15.5% in its report.

"An RNR in the 15-15.5 % range with a lower rate of 12% and a standard rate of 18% would have negligible inflation impact," it had said. "A higher RNR with a lower rate of 12% and a standard rate of 22% would have 0.3-0.7% impact on aggregate inflation." A higher goods and services tax rate will impact services, currently taxed at around 15%, the most. States in any case have to be compensated for any revenue loss by the Centre, so the latter should prod them toward a lower rate, the official, who did not wish to be identified, told ET.

A state finance minister concurred with this view. "States will get their compensation if there is a revenue loss, so it should not be so difficult," the minister said, suggesting states will not oppose such a move. If the rate is kept low then it will not give the impression of levies rising under GST, experts said.

"The current VAT (value added tax) and service tax rates for standard goods and services are not more than 15%," said Anita Rastogi, partner, indirect tax, PwC. "In case GST rates are kept low, say 16%, then optically it will not give an impression that the rate has been increased much under the new tax regime. Also, by now there is a public understanding that GST rates could be around 17% to 18%. "Hence, there will be a better buying from corporates on low GST rates, specially service sector where the current rate is 15%."

SOURCE: THE ECONOMIC TIMES

Analysis of changes in TCS Provisions, PAN Reporting requirements and Annual Information Return

noreply@blogger.com (Mohit Gaba) — Tue, 31 May 2016 14:35:00 +0000

ANALYSIS OF TCS PROVISIONS [applicable w.e.f. 01/06/2016]

SECTION 206C

(1D) Every person, being a seller, who receives any amount in cash as consideration for sale of bullion 35[***] or jewellery, or any other goods (other than bullion or jewellery) or providing any service, shall, at the time of receipt of such amount in cash, collect from the buyer, a sum equal to one per cent of sale consideration as income-tax, if such consideration,—

(i) for bullion, exceeds two hundred thousand rupees; or
(ii) for jewellery, exceeds five hundred thousand rupees; or
(iii) for any goods, other than those referred to in clauses (i) and (ii), or any service, exceeds two hundred thousand rupees:

Provided that no tax shall be collected at source under this subsection on any amount on which tax has been deducted by the payer under Chapter XVII-B.

(1E) Nothing contained in sub-section (1D) in relation to sale of any goods (other than bullion or jewellery) or providing any service shall apply to such class of buyers who fulfill such conditions, as may be prescribed.

(1F) Every person, being a seller, who receives any amount as consideration for sale of a motor vehicle of the value exceeding ten lakh rupees, shall, at the time of receipt of such amount, collect from the buyer, a sum equal to one per cent of the sale consideration as income-tax.

· "seller" means

the Central Government, a State Government or any local authority or corporation or authority established by or under a Central, State or Provincial Act, or
any company or
firm or
co-operative society and
also includes an individual or a Hindu undivided family whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which the goods of the nature specified in the Table in sub-section (1) or sub-section (1D) are sold or services referred to in sub-section (1D) are provided.

· TCS @ 1% to be collected even if no PAN is provided by the Purchaser. In that case Form 60 to be obtained from the Purchaser and Return in Form 61 also to be filed (if Tax Audit applicable).

· Deduction at higher rate in case PAN not available (Section 206AA) is not applicable for TCS.

RULES 114B, 114C, 114D [Applicable w.e.f. 01/01/2016]

· PAN to be quoted in all the documents pertaining to specified transactions.

· Requirement of quoting PAN shall not apply to Central Government, State Government and the Consular Offices. However this exemption is not available for Local authorities, Improvement Trust, Development Boards

For General Transactions of Sale or Purchase of Goods or Services of any nature PAN to be quoted where amount exceeds Rs. Two lacs per transaction excluding following transactions :

a) Sale or purchase of motor vehicle where PAN to be quoted irrespective of amount

b) Sale of purchase of immovable property where PAN to be quoted for amount > 10 lacs.

c) Sale or Purchase of Securities (other than shares) where PAN to be quoted for transactions > Rs. One lac.

d) Sale of purchase of shares of unlisted Company where PAN to be quoted for transactions > Rs. One lac.

e) Purchase of foreign currency in cash where PAN to be quoted for payment exceeding Rs. 50000 at any one time.

f) Purchase of units of Mutual funds from issuing mutual fund where PAN to be quoted for payment exceeding Rs. 50000.

g) Purchase of debentures or bonds from issuing company where PAN to be quoted for payment exceeding Rs. 50000

h) Purchase of RBI Bonds from RBI where PAN to be quoted for payment exceeding Rs. 50000

i) Payment in cash for services to Hotel or restaurant against a bill exceeding Rs. 50,000 at any one time.

j) Payment in cash for services in connection with foreign travel exceeding Rs. 50000 at any time.

1. Limit of two lacs shall apply whether transaction is conducted in cash or cheque. However for payments to Hotel, restaurants, payments for foreign travel, foreign exchange while limit for cash transactions is Rs. 50,000, limit for non cash transactions only shall be two lacs.

2. PAN Reporting requirements is applicable for Goods/Services if Invoice Exceeds Rs. 2 lacs (whether payment received in cash or otherwise). However TCS applicable if any amount is received in cash.

3. In case of Motor Vehicles (other than 2 wheelers), PAN is to be quoted irrespective of the amount or mode of payment, but TCS applicable if value exceeds Rs.10 lacs (cash or non-cash)

4. A person who does not have PAN and enters into transaction specified in R. 114B shall make a declaration in F.60. Old Form 60 has been replaced with new Form 60. Earlier Form 61 which pertained to perons having agriculture income only has been rescinded and replaced with statement in Form 61 for providing information to the department.

5. Form 60 is required to be retained for six years from end of financial year (not assessment year) in which transaction is under taken. E.g. transaction for AY 2016-17 is undertaken in FY 2015-16, then Form 60 to be retained till 31-03-2022.

6. Form 61 statement required to furnished electronically by 30th April and 31st October for declarations received till 31st March and 30th September. For period 01/01/2016 to 31/03/2016, the date has been extended to 31st October 2016.

7. U/R 114C(2) , seller issuing bill to ensure after verification that PAN has been correctly furnished and mentioned in the document or that F.60 has been duly furnished with complete particulars where PAN is not available.

8. However all such sellers are not required to electronically furnish data about F. 60 to the department and it is only where audit is required u/s 44AB (including audit for presumptive taxation) that data is required to be furnished electronically in F. 61 besides retaining F.60 for six years from end of financial year.

9. Seller of Immovable Property and Seller of Motor Vehicles have to electronically furnish data in Form 61 (whether Tax Audit applicable or not)

ANNUAL INFORMATION RETURN and REPORTING (RULE 114E) [applicable w.e.f. 01/04/2016]

1. Payment made in cash for purchase of bank drafts or pay orders or banker’s cheque of an amount aggregating to ten lakh rupees or more in a financial year.

2. Payments made in cash aggregating to ten lakh rupees or more during the financial year for purchase of pre-paid instruments issued by Reserve Bank of India under section 18 of the Payment and Settlement Systems Act, 2007 (51 of 2007).

3. Cash deposits or cash withdrawals (including through bearer’s cheque) aggregating to fifty lakh rupees or more in a financial year, in or from one or more current account of a person

4. Cash deposits aggregating to ten lakh rupees or more in a financial year, in one or more accounts (other than a current account and time deposit) of a person.

5. One or more time deposits (other than a time deposit made through renewal of another time deposit) of a person aggregating to ten lakh rupees or more in a financial year of a person.

6. Payments made by any person of an amount aggregating to-
(i) one lakh rupees or more in cash; or
(ii) ten lakh rupees or more by any other mode,
against bills raised in respect of one or more credit cards issued to that person, in a financial year.

7. Purchase or sale by any person of immovable property for an amount of thirty lakh rupees or more or valued by the stamp valuation authority referred to in section 50C of the Act at thirty lakh rupees or more.

8. Receipt of cash payment exceeding two lakh rupees for sale, by any person, of goods or services of any nature

· Last Date of filing Annual Information Return which was earlier 31st August, now it will be 31st May of the succeeding Financial Year.

· For Delay in filing Annual Information Return, penalty @ 100/- per day for default can be imposed

Major Provisions for Business/Profession

In case of Immovable Property,

1. AIR Reporting required if value exceeds Rs. 30 lacs, but PAN to be quoted if value exceeds Rs. 10 lacs.

2. Responsibility of Seller and Registering officer to ensure PAN is duly and correctly mentioned, or declaration in Form 60 duly furnished with complete particulars.

3. Seller to file online Form 61, (if PAN of Purchaser not mentioned). Liability of seller even if not liable to Tax Audit.

4. AIR Reporting liability is of Inspector General/Registrar/Sub-Registrar

In case of Goods/Services

1. TCS applicable if any amount is received in cash , if invoice > 2 lacs. Applicable to all Firms/Companies/Co-op Society. Applies to Indl/HUF only if Sale in preceding year > 1 crore.

2. PAN to be quoted if invoice more than 2 lacs (whether cash or otherwise).

3. AIR Reporting applicable if Cash Receipt more than 2 lacs.

4. Filing Form 61 and AIR Reporting applicable only for Tax Audit cases (including Audit u/s 44AD presumptive taxation)

In case of Sale of Motor Vehicle (Other than Two Wheelers)

1. AIR Reporting required if cash receipt exceeds Rs. 2 Lakhs. (If Seller liable for Tax Audit).

2. PAN to be quoted irrespective of the amount. Responsilbility of Seller to ensure PAN is duly and correctly mentioned, or declaration in Form 60 duly furnished with complete particulars.

3. Seller to file online Form 61, (if PAN of Purchaser not mentioned). Applicable to seller even if not liable to Tax Audit.

4. TCS Applicable if Sale Consideration > 10 lacs, and Seller is Firm/Co/Co-op Society. TCS on Sale of Motor Vehicle not applicable if Seller is Individual/HUF.

Penalty for Non Compliance

272B. (1) If a person fails to comply with the provisions of section 139A, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum of ten thousand rupees.

For Filing Form 61 and Form 61A, create authorized user in E-filing website

· On menu “Manage ITDREIN”
· An authorized user will be created and the a new user –id of the authorized user will be created.
· Same user-id will be used to upload Form 61 and 61A on the IT E-filing website.

Disclaimer:

The contents of this blog are solely for informational purpose. It does not constitute professional advice or recommendation of the author. Neither the authors nor firm and its affiliates accept any liabilities for any loss or damage of any kind arising out of any information in this blog nor for any actions taken in reliance thereon.

Readers are advised to consult the professional for understanding applicability of these provisions. While due care has been taken in preparing this blog, the existence of mistakes and omissions herein is not ruled out. No part of this blog should be distributed or copied (except for personal, non-commercial use) without our written permission.

UNION BUDGET 2016- MAJOR PROPOSALS

noreply@blogger.com (Mohit Gaba) — Mon, 29 Feb 2016 14:26:00 +0000

BUDGET 2016 PROPOSALS

INCOME DECLARATION SCHEME 2016

· Government to bring Income Declaration Scheme 2016, to give opportunity to persons who have not paid full taxes in the past to come forward and declare their undisclosed income and pay tax. Scheme will start from 1^st June 2016 and will remain open till date to be notified. Tax @ 30%, Surcharge @ 7.5% and penalty @ 7.5% (Total 45% ) will be charged by the Government on the undisclosed income. The tax will have to be paid on or before the date to be notified by the Central Govt.

TAX RATES

· No change in personal income tax slabs has been proposed. However Rebate of Rs.5000/- in tax will be allowed to individuals earning upto Rs.500000/- per year. Earlier this rebate was Rs.2000/-.

PRESUMPTIVE TAXATION SCHEME

· Turnover limit for Presumptive Taxation for Businesses has been increased from Rs.1 Crore to Rs. 2 Crore. Net Profit @ 8% will have to be declared in the Income Tax Return, if Sale is less than 2 Crores, otherwise Tax Audit will apply. Firms will have to declare income @ 8% of the Sales and pay tax on the same. Salary and interest to partners will not be allowed as deduction, as was being allowed earlier.

· Any person paying tax under presumptive taxation scheme (section 44AD) will have to pay tax under the scheme for a continuous period of 5 years. If he opts out of the scheme during any year, then the option to pay tax on presumptive basis will not be allowed to him for next 5 years, and he will have to maintain proper books of accounts and get them audited during those 5 years.

· Presumptive Tax introduced for Professionals like doctors, engineers, chartered accountants, architects. Professionals will have to declare income @ 50% of Gross receipts, otherwise will have to get the books of accounts audited. Tax Audit Limit for professionals increased to Rs. 50 lakhs.

ADVANCE TAX & RETURNS

· Advance Tax will now have to be paid in four installments by all assessees – 15^th June, 15^th September, 15^th December, 15^th March. Earlier these installments were only for the Companies.

· If Income Tax Return (in which Refund is due) is filed late, then department will not pay interest for the delayed period.

· Now Income Tax Return can be filed only till one year from the end of the Financial Year. Earlier this limit was 2 years.

· Income Tax Return which was filed after the due date could not be revised. Now the late filed return can also be revised if there is any mistake in the original return.

· Earlier Dividends were exempt in the hands of the recipients. Now Dividend recipient will be liable to pay tax @ 10% if dividend received during the year is more than 10 lakhs.

TDS/TCS

· Threshold limit for deduction of TDS on Commission has been increased from Rs.5000/- to Rs.15000/-. TDS on Commission reduced from 10% to 5%.

· Threshold limit for deduction of TDS on Contract (Section 194C) increased to Rs.100000/- per year from Rs.75000/-.

· Recipients of Rental Income can also file Form 15G/15H for non deduction of TDS, if total income is below taxable limit.

· TCS @ 1% introduced on Sale of any Goods or Services in Cash exceeding Rs.2 lakhs. If any Goods/Services are sold and payment is received in Cash exceeding Rs. 2 lakhs, then TCS will have to be collected from the person and paid to the government on monthly basis.

SERVICE TAX

· Krishi Kalyan Cess @0.5% introduced. W.e.f. 1^st June 2016, effective rate of service tax will be 15% (Service Tax 14%, Swach Bharat Cess 0.5%, Krishi Kalyan Cess @ 0.5%).

· Annual Return of Service Tax introduced. Earlier there were only two half yearly returns of service tax. Now there will be three returns - 2 Half yearly and one annual.

· Delayed payment of Service Tax, Interest @ 15% will have to be paid. However if Service Tax is collected but not paid to Government, then interest @ 24% will have to be paid

GST unlikely this session, says Jaitley

noreply@blogger.com (Mohit Gaba) — Sat, 19 Dec 2015 13:40:00 +0000

New Delhi, December 19

Passing the Goods and Services Bill appears unlikely in the ongoing Winter Session of Parliament, Finance Minister Arun Jaitley said on Saturday.

The minister, who was addressing Federation of Indian Chambers of Commerce & Industry’s (FICCI) AGM, said the three remaining days of Winter Session would be crucial to get government Bills on amending in the arbitration act and a Bill on setting up commercial courts pushed through the Rajya Sabha.

The Central Government also intends to introduce the bankruptcy Bill in the current session.
The government however remains firm on not putting down the upper limit of 18 per cent on Goods and Services Tax into the Constitution, a prime issue of contention between it and the Opposition Congress.

"A delayed GST is better than a flawed GST".

Jaitley accused the Congress of delaying what he called collateral reasons. "Some people do get sadistic pleasure in seeing India slow down. But then, it's a sadistic pleasure at a very severe national cost. We cannot allow that," he said.

"I have no doubt in my mind that attempt to delay (GST) is entirely for collateral reasons. And the only collateral reason I suspect is if I couldn't do it, then why should somebody else do it?"

He said that he would continue to persuade the Congress into giving up their “rigid” demand. "The Constitution-prescribed tariffs actually can be an albatross around the neck of the future generation. And we owe it to them not to create situations of this kind," he said.

Congress leader Anand Sharma said that April 1, 2016, target for implementing the indirect tax was unachievable. "It (GST) is not going to happen in this session. We will engage with them, but this is not the right time. April 1, 2016, is not sacrosanct and not achievable at all."

Asked if the Congress would support the bankruptcy Bill, Sharma said: "We are in favour of passing what is urgent, what is appropriate". The Lok Sabha has already passed the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Bills and Arbitration and Conciliation (Amendment) Bill.

The GST has been a prime issue of contention between the Central Government and the Congress in the Rajya Sabha, where the NDA lacks sufficient numbers to get the Bill passed. The Central Government had initially planned to roll out the indirect taxation — touted to be biggest tax reform since independence — in the next fiscal.

Political parties in the Rajya Sabha agreed on Friday to pass several Bills pending in the House as a result of repeated adjournments in an all-party meet called by Chairman Hamid Ansari. There was however no consensus on the constitution Bill to introduce GST.

The Winter Session of Parliament ends December 21. — Agencies

SOURCE: THE TRIBUNE

Rule 37 BB of the IT Rules amended - Finance Ministry's Tweets

noreply@blogger.com (Mohit Gaba) — Thu, 17 Dec 2015 08:53:00 +0000

Sec 195 of the IT act empowers the CBDT to capture information in respect of payments made to non-residents whether chargeable to tax or not
— Ministry of Finance (@FinMinIndia) December 17, 2015

Rule 37 BB of the IT Rules amended to strike a balance between reducing the burden of compliance and collection of information .
— Ministry of Finance (@FinMinIndia) December 17, 2015

No Form 15CA & 15CB will be required to be furnished by individual for remittance which do not requiring RBI approval .
— Ministry of Finance (@FinMinIndia) December 17, 2015

List of payments which do not require submission of Forms 15CA & 15CB has been expanded from 28 to 33 including payments for imports.
— Ministry of Finance (@FinMinIndia) December 17, 2015

CA certificate in Form No. 15CB will be required in payments made to non-residents which taxable & the amt during the year exceeds Rs.5 lakh
— Ministry of Finance (@FinMinIndia) December 17, 2015

The amended Rules will become applicable from 01.04.2016.@arunjaitley
— Ministry of Finance (@FinMinIndia) December 17, 2015

Notification is available on the website of the Department at https://t.co/rSnAZ892vr. @IncomeTaxIndia
— Ministry of Finance (@FinMinIndia) December 17, 2015

India Desperately Needs GST : Jaitley

noreply@blogger.com (Mohit Gaba) — Wed, 09 Dec 2015 13:10:00 +0000

NEW DELHI: Stressing the urgency for early passage of the GST Bill in the Rajya Sabha, Arun Jaitley, Minister for Finance, on Tuesday said blocking it further will be damaging for the country. The Constitution Amendment Bill to roll out Goods and Services Tax has been stuck in the Upper House, thanks to stiff opposition by the Congress party.

“It’s extremely important and all parties must come together. Now that revenue neutral rate of 15 per cent has been announced which was not even discussed...People were discussing 22, 24 per cent...India desperately needs the GST, businesses and trade need GST and anybody tries to create hurdle in the passing of GST will be doing the great damage to the country,” Jaitley said in an interview to a private channel.
The 15 per cent revenue neutral rate has been suggested by a committee headed by Chief Economic Adviser Arvind Subramanian last week.

Referring to the Congress demand for inclusion of GST rate in the Bill, Jaitley said the Bill was initiated by the Congress itself and it should help in passage in the interest of the country.

“If the Congress party intends to pass the GST and help in passing the GST which in all fairness I must concede was an initiative started by the Congress party itself, it will be doing fair to its own programme, it will be doing fair to the country,” he said.

SOURCE: THE NEW INDIAN EXPRESS

GST may make services costlier

noreply@blogger.com (Mohit Gaba) — Wed, 09 Dec 2015 12:53:00 +0000

The government panel report on Goods and Services Tax (GST) and the recommended rates if implemented will make services more expensive under GST while most manufactured goods will become cheaper, say leading brokerages. A report by Kotak Institutional Equities says with services tax rate at 18 per cent under GST (currently at 14.5 per cent ), it will likely increase consumer price inflation (CPI) inflation by 60-70 basis points. But for goods, the standard GST rate at 18 per cent (Centre and states) is lower than the excise plus VAT rates, which are approximately at 12 per cent and 12.5 per cent respectively, it says. The note adds that the overall impact on inflation may be marginal given that most goods will be under the ambit of exemption and lower rates, which will offset the services component to some extent.

On the other hand, the GST regime is unlikely to have any significant impact on growth and tax revenues in the near term. The impact will be visible only over 1-3 years as companies benefit from efficiency gains through a unified national market and increase in tax compliance, it adds.
An analysis by JM Financial suggests sectors such as consumer staples, paints, consumer appliances, autos, cement, pharma and media will benefit from the proposed GST while telecom might be negatively impacted.

The big advantage can be a saving in freight costs by 15-17 per cent. The report adds in other countries where GST has been implemented, inflation rises in the near term though long term effects are deflationary. On whether the GST will be inflationary, the report says under the standard rate of 17-18 per cent, services will likely become more expensive.

Similarly, end consumer price levels may rise for clothing, footwear, tobacco products, processed food and others that were earlier charged lower rates. As a result, in the interim, consumer inflation may rise and decline over 3-5 years as efficiency gains and lower cascading of taxes kick in.
The report by JM Financial adds sectors such as consumer staples may benefit due to lower rate and higher credit against tax paid on inputs and media spends. Cement will also benefit owing to lower rate and streamlining of supply chain while autos and auto ancillary will gain due to streamlining of supply chain, move towards organized sector and increase in export competitiveness. But sectors such as telecom are likely to lose out because of high tax rates under GST, the report adds.

SOURCE: THE TRIBUNE