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]

To have an automated seamless compliance under GST, software based applications to help tax payers do timely and convenient compliance are being developed. These players are called “Application Service Provider (ASP)” and these third party applications will connect with GST system via secure GST System APIs. The service providers developed these secure channels are called “GST Suvidha Provider (GSP)”.

[Ganeshan Kalyani]

Role of ASP
ASPs will focus on taking taxpayers’ raw data on sales and purchases and converting it into the GST returns (in case of multiple registrations, it is a huge task manually). These GST returns, or GSTRs, will then be filed on behalf of the filer with GSTN via the GSP. ASPs will act as a link between the taxpayers and the GSPs.

[Ganeshan Kalyani]

Role of GSP
GSP provides a secured tunnel which feeds in data from ASP (in other words, ASP’s output becomes input for GSP), submits it on GSTN and generates acknowledgement.

[Ganeshan Kalyani]

ASP-GSP will do following activities for you:
1. Invoice data upload (B2B and large value B2C).
2. Upload GSTR-1 (return containing supply data) which will be created based on invoice data and some other data provided by the taxpayer.
3. Download data on inward supplies (receipts or purchase) in the form of Draft GSTR-2 from GST Portal created by the Portal based on GSTR-1 filed by corresponding suppliers.
4. Do matching of purchases made and that downloaded from GST portal. Finalize the same based on his own purchase (inward supply data) and upload GSTR-2.
5. File GSTR-3 created by GST Portal based on GSTR-1 and 2 and other info and tax paid.
6. Meet other applicable compliance.

[Ganeshan Kalyani]

Benefits of meeting GST compliance through ASP-GSP
1. Consumption across technologies and platforms (mobile, tablets, desktops, etc.) based on the individual requirements.
2. Automated upload and download of data.
3. Ability to adapt to changing taxation and other business rules and end user usage models.
4. Integration with customer software (ERP, Accounting systems) that tax payers and others are already using for their day to day activities.
5. Assisting in input tax credit matching.

[Ganeshan Kalyani]

Outcome of today's GST Council meeting

Rate of 28% will be maintained for all cinema tickets above ₹ 100. For those below ₹ 100, it will be reduced to 18%, FM Arun Jaitley says

Received representation for about 133 goods. After considering representation, the GST council has reduced tax levels in 66 cases, he says.

Next meeting of the council will be on June 18, 11.30am at the same venue, Jaitley adds.

GST rate on insulin reduced from 12% to 5%; rate on school bags reduced from 28% to 18%, the finance minister says.

About tax revision on sanitary napkins, he said what has been decided earlier remains.

[Ganeshan Kalyani]

After the 16th GST Council meet concluded today, the rates of 66 items under the upcoming GST regime have been revised.
 

[Ganeshan Kalyani]

Addressing the media at a press meet after the gst council meeting held today , Finance Minister Arun Jaitley said that the rates have been revised after getting feedback from industry players.

[Ganeshan Kalyani]

Arun Jaitley said: " After considering the recommendations, the GST Council has reduced the tax level in 66 out of 133 items on which representations were made by the industries."

The reductions, he said, were based on two major principles -- maintaining equivalence and the change in the utilisation behavior.

[Ganeshan Kalyani]

Some of the revised tax items, the FM highlighted were:

Cashew revised from 12% to 5%

Packaged food, including some fruits and vegetables, pickles, toppings, instant food, sauces revised from 18% to 12%

Agarbatti revised from 12% to 5%

Dental wax revised from 28% to 8%

Insulin revised from 12% to 5%

Plastic beads revised from 28% to 18%

Plastic turpolin revised from 28% to 18%

School bags revised from 28% to 18%

Exercise books revised from 18% to 12%

Coloring books revised from 12% to nil

Pre-cast concrete pipes revised from 28% to 18%

Cutlery revised from 18% to 12%

Tractor components revised from 28% to 18%

Computer printers revised from 28% to 18%

[Ganeshan Kalyani]

Another important item on which GST has been reduced was the entertainment tax on cinema.

Under the GST, there will now be two categories for movie tickets. For tickets that cost less than ₹ 100, a tax of 18% will be levied. For the tickets costing more than ₹ 100, a GST of 28% will be levied.

Presently, entertainment tax is levied by individual states. The states levy a different rate, ranging from 28-110%, and the weighted average for the entire country is about 30%.

However, several state governments give an exemption to cinema of the particular language of that state. Under GST, there will now be no centralised exemption.

Jailtley said:" If states want, through the DBT (Direct Benifit Transfer), the state can refund the GST of regional cinema."
 

[Ganeshan Kalyani]

For workers in industries like textile, diamond processing etc, where the workers take the work home, 18% tax that is now being charged will be fixed at 5% because the GST for these sectors have gone down as well.

[Ganeshan Kalyani]

The next meeting for the GST Council will be on June 18th.

[Ganeshan Kalyani]

At its sixteenth meeting, the GST Council decided to reduce the tax rates on 66 items out of the 133 items for which it had received representations. It also increased the upper limit of turnover for payment of tax under the composition option from INR 50 lacs to INR 75 lacs and approved the accounts and records rules. The next meeting of the GST Council will be held on 18 June, 2017.

[Ganeshan Kalyani]

The Government had received representations from various industry associations with respect to rates after 03 June. After considering the principle of equivalence, changing consumption pattern and possible inverted tax structure, the Government has reduced tax rates on 66 items.

[Ganeshan Kalyani]

Description of Goods	Updated rate	Initially proposed rate
Printers* Tractor Components School bags Dental wax Cinema tickets of value upto INR 100	18%	28%
Packaged food including pickles, toppings, instant food, sauces, ketchups, etc. Exercise books Cutlery	12%	18%
Insulin Agarbatti Cashews	5%	12%
Colouring books	0%	12%
Job work services in case of textile, diamond processing, jewellery work etc.	5%	18%

[Ganeshan Kalyani]

Printers were falling under two conflicting entries, and the entry under which they would be taxed was unclear. The Government has clarified that it would be taxed @ 18%.

[Ganeshan Kalyani]

In addition to the above, the GST Council has also decided to increase the upper limit for the payment of tax under composition of tax option for traders, manufacturers and restaurants to INR 75 lacs from the previous INR 50 lacs. The service providers continue to remain ineligible to opt for the composition scheme.

[Ganeshan Kalyani]

The GST Council has also approved the accounts and records rules. However, the anti-profiteering rules are under preparation and will be released upon finalisation. It was mentioned that the release of anti-profiteering rules is not linked with the introduction of GST and that it could be brought over anytime.

[Ganeshan Kalyani]

The next meeting of the GST Council is scheduled to be held on 18 June, 2017, to consider e-way bill provisions and to decide the rate of tax on lottery.

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.