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]

Considering the modalities of e-way bill are expected to be discussed by the GST council on August 5, 2017, one can only hope the overarching objective of GST, that is the simplification of processes and enabling ease of doing business, will be continue to be the order of the day.

[Ganeshan Kalyani]

GST was first announced in 2000 by the then government. Seventeen years later it is now a reality with the date for implementation set for July 1, 2017. Since 3rd August, 2016, when the Rajya Sabha first passed the bill introducing GST in the 122nd Amendment of the Constitution, there have been many changes in the proposed GST bill and the rules and regulations pertaining to it.

[Ganeshan Kalyani]

The persons who only supply goods/services on which reverse charge applies, are exempted from registering under GST registration.

[Ganeshan Kalyani]

Ola pays GST on the drivers’ services on reverse charge basis. Drivers are not required to register under GST thus removing the burden of tax compliance from individuals with limited resources (drivers) to large companies (Ola) with enough resources.

[Ganeshan Kalyani]

With the Notification of 19^th June and 28^th June, most of the CGST Act is now in force. Only sections 51 & 52 (TDS & TCS respectively) are not applicable as the government has relaxed TDS & TCS provisions for the time being to give more time to the e-commerce sellers.

[Ganeshan Kalyani]

Sections 42(9) & 43(9) are not applicable.

These clauses say that if the output tax liability is reduced (or input tax credit is increased) due to a debit note (or a credit note) [mismatch of invoices reconciliation] then such amount shall be refunded by crediting electronic ledger. This is not applicable right now as there will not be any reconciliation for 2 months.

[Ganeshan Kalyani]

Every registered person with turnover more than 1.5 crores must mention the HSN Codes in each and every invoice.

However, the numbers of digits to be mentioned in the Invoice depends on the annual turnover in the preceding financial year.

Turnover in previous FY	No. of digits
Upto ₹ 1.50 Cr	NIL
More than ₹ 1.50 Cr. & upto ₹ 5 Cr	2 digits
More than ₹ 5 Cr	4 digits

This is effective from 1^st July, i.e., all invoices from 1^st July must be GST compliant and have details of HSN codes.

The same notifications have also been made under IGST (notification 5).

[Ganeshan Kalyani]

Rates of interest-Notification 13/2017

The rates of interest are same as mentioned in the Act. The notification ratifies the rates.

This notification shall come into force from the 1st day of July, 2017

Sections	Interest p.a.
Sec 50(1)- Failure to pay tax	18%
Sec 50(3)- Less tax paid/ excess ITC availed	24%
Sec 54(12)- Interest on refunds withheld in an appeal later given	6%
Sec 56- Interest on delayed refunds	6%
Proviso to 56- Interest on refunds ordered in an appeal	9%

The same notification has also been made under IGST (notification 6).

[Ganeshan Kalyani]

Common Portal- Notification 4 /2017

It is notified that the website of the Common Portal is www.gst.gov.in managed by Goods and Services Tax Network.

[Ganeshan Kalyani]

Modes of verification-Notification 6 & 11/2017

The modes of verification are-

• Aadhaar based Electronic Verification Code (EVC)
• Electronic verification code generated through net banking login on the common portal
• Electronic verification code generated on the common portal

[Points ii & iii replacing the earlier Bank account based OTP as per earlier notification]

 

[Ganeshan Kalyani]

Central Tax Rate Notification (28.06.2017)

1. Most of the goods are kept at the same rates as announced by the GST council earlier but rough or nonindustrial unworked diamond or precious stones will be charged CGST at the rate of 0.125%.
2. List of goods exempt from CGST. No change in the list.
3. Oil, gas, coal and petroleum licenses and sub-contract licenses and leases will be charged GST at the rate of 2.5%.
4. The person liable to deduct TDS as per the GST law supplying intrastate goods or services to an unregistered person would be exempt from CGST.
5. Cashew nuts, not shelled or peeled, Bidi wrapper leaves (tendu), Tobacco leaves, silk yarn, Supply of lottery would have reverse charge applicable under GST.
6. Refund of the unutilized ITC would not be provided in the case of the tax on output being lower than the tax on inputs for certain goods mainly related to the textile and railways.
7. The supply of goods by CSD to unit run canteens and authorized customers and supply of goods by the unit run canteens to the authorized customers.
8. 50% of the tax paid on inward supplies of goods by the CSD for further supply to unit run canteens or authorized customers can be claimed as refund under GST.
9. Person liable to deduct TDS as per the GST law supplying intra goods or services to an unregistered person would be exempt from CGST.
10. Intrastate supply of second hand goods by a registered person who deals in selling second hand goods to an unregistered person would be exempt from CGST.

[Ganeshan Kalyani]

Cases where the e-commerce operator will pay IGST- Notification No. 14/2017

E-commerce operator will pay the IGST in the following services-

• Transportation of passengers by a radio-taxi, motorcab, maxicab and motor cycle (Eg. Ola outstation from Bangalore to Chennai)
• Providing accommodation in hotels, inns and other commercial places meant for residential or lodging purposes. For example a small hotel registered on Oyo rooms. Oyo rooms will pay IGST However, if the person (hotel) supplying such service through e-commerce is liable for registration under GST then that person will pay. Eg, Ibis Hotel is a large multi-chain hotel also registered on Oyo rooms. Then Ibis Hotel will pay.

It will come into force with effect from the 1st July, 2017.

[Ganeshan Kalyani]

Goods on which reverse charge applies-Notification No.4/2017

A list of goods on which reverse charge applies is issued by CBEC. When the supply is made by the specified person, then IGST will be payable on reverse charge basis by the recipient of the intra-state supply of such goods. All the provisions of will apply to such recipient.

[Ganeshan Kalyani]

No ITC for Construction- Notification No. 12/2017

No refund of unutilized ITC will be allowed input tax credit shall be allowed for IGST in construction of a complex, building etc. (works contract). Except in cases where the entire consideration has been received after issuance of completion certificate or after its first occupation, whichever is earlier.

[Ganeshan Kalyani]

Reverse Charge- Notification No. 10/2017

List of services on which reverse charge is applicable is issued. It is the same as issued under CGST Act.

[Ganeshan Kalyani]

Army Canteens- Notification No. 6 & 7/2017

In the public interest exempts, the following are exempted from IGST (& also CGST)-

• The supply of goods by the Canteen Stores Department (CSD) to the Unit Run Canteens or
• The supply of goods by the CSD/Unit Run Canteens to the authorized customers

The CSD can claim a refund of 50% on IGST of all input goods received by it for subsequent supply of such goods to the Unit Run Canteens or to the authorized customers of the CSD.

This notification shall come into force with effect from the 1st July, 2017.

[Ganeshan Kalyani]

Inverted Rate Structure- Tax On Inputs>Tax On Outputs- Notification No.5/2017

Refund of unutilised ITC will NOT be allowed, when the ITC is accumulated due to rate of tax on inputs being higher than the rate of tax on the output goods (except nil rated or fully exempted goods).

High tax on the imported raw materials compels manufacturers to raise price. On the other hand, foreign finished goods have lower tax rate.. In conclusion, manufactured goods by the domestic industry becomes uncompetitive against imported finished goods.

List of goods on which this notification applies.

[Ganeshan Kalyani]

For UIN & Diplomats Notification No. 13/2017

This notification specifies the conditions applicable –

• UN or specified international organisations and
• Foreign diplomats in India

[Ganeshan Kalyani]

Panchayat services- Notification No. 11/2017

Constitutional services of the Panchayat are not covered under GST.

 

[Ganeshan Kalyani]

News on GST Act

The entire framework of GST is based on GST Act. It was devised by the GST Council, which is a committee consisting of the Union Finance Minister (Chairperson), the Union Minister of State, the minister in-charge of finance or taxation or any other minister nominated by each State Government.

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.