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]

  Pepsico Chairman and CEO Indra Nooyi is learnt to have pitched for a lower GST rate on healthier beverages. Nooyi, who is on an India visit, met Finance Minister Arun Jaitley on Wednesday.

[Ganeshan Kalyani]

The GST Council will be conducting its 13th meeting on March 31 to discuss rules under GST and possible exemptions. GST Rates would be finalised post 13th meeting.

[Ganeshan Kalyani]

On GST Rates, Najib Shah, chairman of CBEC said, while “it is one of the biggest challenges” a committee of members from both states and center is looking into it. The aim is that closest slab should fit in most of the commodities.

[Ganeshan Kalyani]

Strong representations are being filed to continue existing exemptions available to SEZs through Commerce Minsitry.

Shah further said the exemptions will have to be minimum in GST. Exemptions promised will either phase out slowly or will be supported through Budgetary routes.

[Ganeshan Kalyani]

The most talked about highlight of the Model GST l Law (November draft) is a provision that enables government to constitute an authority to monitor the prices of goods and services under GST regime to ensure that any reduction in a business’ effective cost, or in the tax rate on goods and services as a result of the introduction of GST, is passed on to consumers in the form of appropriately reduced

[Ganeshan Kalyani]

Currently, lot of industries are plagued with different types of credit restrictions. For e.g. service provides do not credit of VAT paid on inputs procured. Such VAT paid only adds onto the cost.

[Ganeshan Kalyani]

Hard quote interpretation of Section 163 of Model GST Law mandates passing on of the benefit accrued because of additional input tax credit or reduced tax rate to consumer.

[Ganeshan Kalyani]

Currently, lot of industries are plagued with different types of credit restrictions. For e.g. service provides do not credit of VAT paid on inputs procured. Such VAT paid only adds onto the cost.

Another reason that can trigger anti-profiteering is reduction is prices due to reduction in tax rate. Therefore, if the tax cost of a product under GST regime gets reduced vis-a-vis tax cost of such product under non-GST regime, such benefit should be passed on by the supplier to the recipient of the supply.

The model GST Law in its current shape does not throw light on procedural aspects as to how this task will be undertaken, when does it start, how will excess profit be measured etc.

Such a concept was introduced in Malaysia too while implementing GST wherein price control was done through amendments to Price Control and Anti-Profiteering Act, 2011 in 2014 read with Pric (e Control and Anti-Profiteering (Mechanism to determine unreasonably high profit)(Net profit margin) Regulations, 2014.

These regulations specify a certain period during which increase in net profit margin will be under consideration through checks like tax imposed, supplier’s cost, demand and supply conditions, cost incurred in course or furtherance of business etc.

It remains to be seen how Indian government shapes up the enabling provision to ensure passing of reduction in cost under GST to consumers.

[Ganeshan Kalyani]

Sharing a link on GST.

http://www.gstindia.com/gst-law-a-look-at-the-tax-returns-you-need-to-file-and-when-to-file-them/

[Ganeshan Kalyani]

In the GST regime, a pay-first-and-get-refund system is preferred over tax exemption because an uninterrupted chain of value addition with tax at each stage is integral to the proposed tax on consumption.

[Ganeshan Kalyani]

The UAE minister was speaking in Dubai on 24 February after a joint press conference with Christine Lagarde, Managing Director of the International Monetary Fund (IMF) that VAT is expected to be introduced at a rate of 5% on 1 January 2018, with some limited exceptions including basic food items, healthcare and education.

[Ganeshan Kalyani]

The GST will bring in three developments 1) The system will be more efficient and compliance will be met. Avoidance is going to be difficult because you will be detected at some stage or the other. 2) There will be no cascading effect on tax on tax 3) There are few goods on which the tax might be higher or lower

[Ganeshan Kalyani]

GST doesn’t only stand for Goods and Services Tax, it also stands for Good Sense Triumphs, Chidambaram once said.

[Ganeshan Kalyani]

Industry body FICCI said it is looking forward to introduction of the much-awaited Goods & Services Tax (GST), saying it would be a very significant step in the field of indirect tax reforms in India.

[Ganeshan Kalyani]

Introduction of GST would make Indian products competitive in the domestic and international markets.

[Ganeshan Kalyani]

Biggest benefit of GST is that it will disincentivise tax evasion. If you don’t pay tax on what you sell, you don’t get credit for taxes on your inputs. Also, you will buy only from those who have already paid taxes on what they are supplying. Result: a lot of currently underground transactions will come overground.

[Ganeshan Kalyani]

Under current tax regime, we have more tax on fewer items; with GST, there will be less tax on more items. Ideally, no good or service should be tax-exempt, as this will break the input tax chain.

[Ganeshan Kalyani]

The proposed GST would subsume various central (Excise Duty, Additional Excise Duty, service tax, Countervailing or Additional Customs Duty, Special Additional Duty of Customs, etc.), as well as state-level indirect taxes (VAT/sales tax, purchase tax, entertainment tax, luxury tax, octroi, entry tax, etc).

[Ganeshan Kalyani]

The Goods and Services Tax (GST) Council has recently approved the final draft Central GST (C-GST) and Integrated GST (I-GST) laws in a bid to meet the July deadline. The council had earlier cleared the GST Compensation Bill, which requires the Centre to compensate states for any revenue loss for five years after migrating to the new tax system. All these initiatives are taking us closer to the one-nation, one-tax regime, soon to be implemented in India.

[Ganeshan Kalyani]

While GST holds immense benefits for businesses small and large, it also requires them to adopt technology and become part of a digital economy. Under the new indirect tax regime, every taxable person needs to furnish their tax details online.

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.