Goods and GST Bill passed

[Ganeshan Kalyani]

Dear All,

GST Bill is passed in Rajya Sabha on 03. 08.2016.

A panel under chief economic adviser Arvind Subramanian has recommended a revenue-neutral rate of 15-15.5%, with a standard rate of 17-18% be levied on most goods and all services.

But, there has been no agreement yet on rates of various goods and services, which remains a tricky issue. According to the Bill, passed in the Lok Sabha in May 2015, the rates were to be decided by a GST council headed by the central finance minister with state finance ministers as members.

Let us wait.

Thanks.

[Ganeshan Kalyani]

GST Council would meet again on Feb 18 to approve drafts of supplementary GST legislation.

[Ganeshan Kalyani]

As per the revsied enrolment schedule, the due date for service taxpayers who are registered under Service Tax Act but not registered under State VAT has not been specified. “TBD” i.e. To Be Decided has been put as of now.

[Ganeshan Kalyani]

Since the likely standard rte of GST would be 18 percent as decided by GST Council, there is all likelihood that Service Tax rate may be increased to 16 or 18 percent in the Union Budget. This would result in higher revenues to centre as compared to GST regime where rate is likely to be lower for some selected services.

[Ganeshan Kalyani]

The trade and industry should familiarise themselves with the goods and services tax (GST) to be rolled out later this year and make all efforts in coordination with the tax departments to make it a success, says Commissioner of Customs, Central Excise and Service Tax B Hareram.

[Ganeshan Kalyani]

The GST council will meet again on 18.02.2017. The technical group of officers will finalize the draft legislations for the Central, State and IGST and compensation in the mean time. Once the drafts are cleared they would go the respective legislative bodies for approval.

[Ganeshan Kalyani]

The Ministry of Power has recommended that renewable energy be given a zero-rate tax status under the Goods and Services Tax, predicting several adverse effects to the economy if there is any increase in power tariffs due to the new tax regime.

[Ganeshan Kalyani]

It is estimated that the Government shall levy tax between 12 per cent and 18 per cent on services, depending on its classification based on essential and non-essential services as a move towards the final GST rate.

[Ganeshan Kalyani]

The GST will replace multiple indirect taxes like the central excise, sales tax, VAT and service tax by a single consolidated tax. The consolidation will bring to an end the exemptions associated with various taxes for exporters. As of now, it appears that exporters will first have to pay the GST on all raw materials, inputs and other services they source domestically for their exports and later claim refunds. This would imply greater expenditures for exporters since refunds will materialise only after several months.

[Ganeshan Kalyani]

Currently, consumers are paying a service charge tax of around 14.5-15% for all broadcast services like Television that includes Cable and DTH also films and digital content. Besides this, an entertainment tax of around 8-12% is further levied increasing the average tax to as much as 25%. However, once GST comes into play, consumers would have to pay a single tax that can be anything between 18-20%. Hence, the overall tax burden on consumers is set to reduce.

[Ganeshan Kalyani]

Under GST, service tax or state tax will be available as a credit which will reduce overall costs and eliminate any dual levies of service tax and VAT on transactions. However, media companies will have to pay additional local body tax over and above the one proposed in GST.

[Ganeshan Kalyani]

GST is a welcome step. It will unify the indirect tax administration in India and help the country in two ways. First it will simplify and make it easy for the consumers to understand. Second it will significantly improve the ease of doing business in India.

[Ganeshan Kalyani]

Mr. Rakesh Bhargava, director, Taxmann, said that July 1 is more "realistic deadline" for the rollout of GST. "It's a welcome step. The government seems to have felt the pain of the industry and decided to give it ample time to make the required changes before getting GST implemented," he said.

[Ganeshan Kalyani]

While the goods and services tax (GST) tax structure has been announced, the real estate industry is waiting with bated breath to see which tax rate is applied to the real estate and construction industry. Clarification would also be needed on the abatement scheme, and whether credit for input tax would be allowed if the composition scheme has been availed by developers.

[Ganeshan Kalyani]

It is expected that the Government may further raise the rate of service tax to 16% – 17% to bridge the gap between current service tax rate and proposed GST rates.

[Ganeshan Kalyani]

In a letter to Arun Jaitley, the All India Association of Group B Central Excise Gazetted Executive Officers, said the decision to transfer 90% of service tax assessees to states is not supported by any lawful and logical base and therefore, the decisions taken by GST Council is not correct.

[Ganeshan Kalyani]

The Association further said that the service tax assessees falling within the annual turnover limit of ₹ 10 lakh to ₹ 1.5 crore are at present being assessed by the Centre smoothly. By transferring of 90% of these assessees to states for levy and collection of SGST and CGST, the officers of the Centre would become work-less,” the association said in the letter.

[Ganeshan Kalyani]

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.

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

[Ganeshan Kalyani]

Since inception of the GST council last year, eight meetings have already taken place during which most of the issues between the States and Centre got resolved and the Government has now been able to reach a broader consensus on the model GST legislations and the same have been sent to the Ministry of Law for review.

[Ganeshan Kalyani]

The GST Council has already decided on a four-slab GST rate structure. Separately, a bureaucrats’ panel is working on the “classification” exercise, a comprehensive list clubbing thousands of goods and services into different rate categories.

[Ganeshan Kalyani]

The last date for GST enrolment is 31.01.2017.

AI Summary

Goods and Services Tax consolidation creates a dual GST framework with GST Council oversight and a shared IT platform for compliance.
Goods and Services Tax establishes a destination based, dual tax framework subsuming central and state indirect levies, administered through a GST Council and implemented via a shared IT platform (GSTN). The model law sets out registration and return regimes, HSN/SAC classification by turnover bands, input tax credit carry forward, composition and reverse charge rules, refund and valuation procedures, compensation to states during transition, and institutional arrangements for cross empowerment, adjudication and dispute resolution.