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]

The CAG proposes to use Aadhaar-based OTP and finger-print authentication for entry into the portal by any user, entry by officers of the Indian Audit and Accounts Department (IAAD) working on the GST audit as well as for digital signatures of documents.

[Ganeshan Kalyani]

E-way bill provision under GST is not made effective from 01.07.2017 as e-way bill system under GST is not yet ready. However, till 30.09.2017, a provision for e-way bill has been notified by Order vide G.O.MS No. 309 dated 24.07.2017.

1. Order notifying e-way bill provision to be effective till 30.09.2017.
2. e-Waybill is required for the movement of goods which are not exempted under the Act for all purposes i.e., coming into the State or going out of the State or for the movement within the State,
3. it is required when the value of goods excluding tax exceeds Fifty Thousand Rupees.

This notification will come into force with immediate effect and will be in operation till 30-09-2017.

[Ganeshan Kalyani]

GST full form is Goods and Services Tax . GST applies throughout India and is indirect tax. Moreover from now onward GST replaces many taxes. Generally State and Central Governments levy taxes. But after many meetings, Finance Minister of India and Indian Government introduced GST on July 1^st 2017. Government of India introduced Goods and Services Tax as The Constitution Act 2017.

[Ganeshan Kalyani]

There are total 5 GST tax rates. And these are 0%, 5%, 12%, 18% and 28%. Even there is special tax rate of 0. 25% on semi precious stones and rough precious stones. While there is 3% tax on gold. Luxury cars, aerated drinks and tobacco products have additional cess. This cess is of 15%.

[Ganeshan Kalyani]

SGST full form is State GST or State Goods and Services Tax. Whereas CGST full form is Central GST or Central Goods and Services Tax. It means that Central Government and State Government levy CGST and SGST on transactions. It is only when transactions are in one state.

[Ganeshan Kalyani]

IGST full form is Integrated Goods and Services Tax or Integrated GST. Additionally Central Government levies IGST on inter state transactions and imported goods and / or services.

[Ganeshan Kalyani]

India sits at number 35 on the World Bank Logistics Index, which takes into account multiple variables such as customs, infrastructure, international shipments, logistics quality and competence, tracking and tracing, and timeliness.

[Ganeshan Kalyani]

As Prime Minister Narendra Modi pushes for better standards in ease of doing business, bolstering the economy by way of the ‘Make-in-India’ initiative and looking to bring in increasing amount of foreign investment, it is important for us to analyse India’s logistics backbone accordingly.

[Ganeshan Kalyani]

While GST is expected to boost India’s ease of doing business rankings, it is still unclear if the big bang tax reform will yield similar results for the logistics sector in general and the air express industry in particular.

[Ganeshan Kalyani]

The ₹ 20,350 crore Indian air express industry – which creates six indirect jobs for one direct job and handles roughly 30 million shipments on a daily business – has voiced concerns on the ‘e-Way bill’, which comes as part of the GST reform. The big boys of the express delivery services (EDS) industry, including DHL, Blue Dart and FedEx, believe that the very construct of e-way bill is contrary to the core competency of the express industry, i.e. time-bound guaranteed delivery of shipments.

[Ganeshan Kalyani]

As per the CBEC guidelines, any movement of goods exceeding the value of ₹ 50,000 cannot be made by a registered entity without an e-way bill. This bill can be generated at the GSTN portal or through an SMS. However, with the extent of information solicited by the e-way bill, the industry sees existential challenges in complying with the process requirements.

[Ganeshan Kalyani]

Firstly, the bill aims to capture certain information such as vehicle registration number and driver details from express/courier and multi-modal transport operators prior to the movement of goods of consignment.

In the existing business models, multiple individual consignments are collected by the EDS operator (delivery boys on foot, e rickshaw, bicycle in addition to vans or motor bikes). Moreover, when these individual shipments are received at a hub, they are sorted and allotted vehicles depending on cost and time optimization algorithms. Not only is it impossible to give registered vehicle numbers for delivery boys on foot, allotting transport vehicles well before the shipments reach the sorting centre would hamper efficiency, hurt cost and impact delivery commitments.

[Ganeshan Kalyani]

Secondly, a new bill is required every time a shipment moves from one vehicle to another. In the express industry, which is dominated by real time decisions and cost optimisation, pronouncing the exact path and mapping the same to specific vehicle numbers will be a formidable operational challenge.

[Ganeshan Kalyani]

All consignments of value less than ₹ 50,000 are exempted from an invoice at the time of shipment. However, the express delivery service provider still needs to submit details related to the particular shipment on the common portal, before the shipment is moved. This creates an additional liability for the delivery provider, since the value is declared by the customer – the delivery provider is merely an agent to move goods from one location to another. It would be unfair to hold the delivery provider responsible for goods if the value is not the same as that declared by the sender.

[Ganeshan Kalyani]

It is imperative for us to appreciate the distinct way that India’s EDS model operates. Considering that its services are extremely sensitive to time and accuracy, any lag in the delivery process on account of compliance would be insensitive to the industry as a whole. It is important to take cognisance of the role that the air express industry has played in facilitating India’s trade competitveness.

[Ganeshan Kalyani]

Validity of e-way bill

As per the CBEC guidelines, e-way bills come with an expiry date. The validity period of a bill is dependent on the distance the goods have to be transported.

Distance	Validity Period
Less than 100 km	One day
100 km < Distance < 300 km	Three days
300 km < Distance < 500 km	Five days
500 km < Distance < 1,000 km	Ten days
More than 1,000 km	Fifteen days

[Ganeshan Kalyani]

Once an e-way bill expires, its validity can be extended by notifying the commissioner.

However, the very fact of assigning an expiry date to an e-way bill is incomprehensible for two reasons. One, the industry itself is based on tenets of time-bound delivery. Thus, prescribing a time limit for this business is absurd. Two, we all would agree that on multiple occasions, it is possible that these timelines are breached. Straightforward situations like a fallen tree on the road, metro rail repair, or even a VIP visit in a city can lead to unknowable delays. Inter-city delays in India are anyways commonplace and doomed.

[Ganeshan Kalyani]

If and only if the consignment needs to be tracked based on the vehicle number, it should be done only from the first point of collection, up to the last collection node. Not only is the vehicle number not applicable in multiple instances of first/last mile delivery of individual shipments (delivery on foot/public transport), it will also impact business spontaneity, discourage exception handling (medicines etc.) and reduce resource optimisation.

[Ganeshan Kalyani]

Shipments where the declared value is less than ₹ 50,000 should be excluded from consolidated e-way bill that the delivery provider is mandated to submit.

[Ganeshan Kalyani]

The ‘Way Bill’, a state-specific bill that was expected to die a natural death along with VAT, has transcended in its new avatar, the e-way bill.

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.