Goods and Services Tax

                 Government has officially released the draft GST Compensation law on 26.11.2016. As per the provisions of section 8 of the Draft law it has been proposed that every taxpayer shall pay a cess at the rate decided on the value of each supply made by him/her. Such Cess shall be utilized for compensating the loss to the states due to enforcement of GST. Also as per provisions of section 16 of the CGST Act such cesses shall not be allowed as input tax credit against the supply made by the supplier. This shall have inflationary effect and prove to be an additional burden on the final consumer. It has been proposed that GST shall subsume all the indirect taxes except a few. GST Council has also decided that there shall be four rate structures under GST. Although the tax revenue of the government will increase post GST there shall be gradual reduction in the prices. Further it has been made mandatory for the taxpayers to p...

It is most likely that the new indirect tax regime of Goods and Services Tax will get enforced from 01.04.2017. While the industry is busy in analyzing the GST Impacts with their GST Consultants, Hotel Industry seems to be relaxing and eagerly waiting for the new regime. Hotel industry is likely to have far reaching positive impact of GST. At the very outset when the hotel industry is paying Service tax, VAT, Luxury Tax and other taxes whose sum total comes to 30-35%, they are going to gain to the extent of 17% under GST, assuming that the standard rate of GST i.e. 18% would apply. Since even today the consumers are ready to pay high taxes at a luxury hotel, it is expected that the hotel industry would retain the margin with themselves rather than passing on to its customer. Once GST is enforced, multiple tax regimes will go away and hence reduce the compliance cost enabling the ease of doing business for industry. It has also been proposed that there shall be least inter...

Section 9 of the law prescribes that any person whose annual aggregate turnover in the preceding financial year has not exceeded Rs. 50 lakhs can opt for composition scheme under GST. Under this scheme, on approval of proper officer, taxpayer has to pay taxes at the prescribed rates which shall not be less than 1%.   Persons who are engaged in 1) manufacturing of specified goods or supply of services or 2) supply of exempted goods 3) Inter-state outward supply 4) Supply through e-commerce operator shall not be eligible to claim the benefit of Composition scheme.       First proviso to section 9(1) provides that the manufacturers are ineligible to claim benefit of composition scheme. As per Section 2(66) of the CGST/SGST Act, “Manufacturer” shall have the meaning assigned to it by the Central Excise Act 1944. Central Excise Act 1944 defines “manufacture” to includes any process, - (i)    incidental or ancillary to the completion of a m...

Since Model GST Law has been uploaded on the public portal, each one of us had been deliberating on the same to understand the mindset of the law makers. Although MGL sets a background about the expectation of the law makers, it is set to change drastically by incorporating the changes recommended by the states, professional bodies and business communities. A government official had already announced that the new law is being prepared in consultation with the states and once the law is finalized it shall be put on the public domain. In this period of time when we are expecting new law to come, we should restrain ourselves from going into the details of the old law. From the concept of supply, time of supply, place of supply to assessment and audit procedures all is going to change to a large extent. The anomalies which were found in MGL are expected to be done away once the new law comes in. We can expect a major change in the definition of goods and services. As contested ea...

Modi Government has taken a historic step of demonetizing high value currency notes. This step has been taken at the right time from the government prospective i.e. exactly in the middle of their tenure. Most people are facing problems in this transformation, but the major chunk is satisfied and supporting our Prime Minister. Opposition is pressing that PM should give his statement in Parliament, but let me assure you again, he is man of words and once he will speak nobody else will be able to question him. What we call it  “Toofaan se pehle ki shanti”. Whatever might happen in parliament, the fate of Indian Economy had already been written on November 08, 2016. Believe me, India will shine brighter than a diamond, we earlier called it golden sparrow, it’s time to call it a diamond eagle. The demonetization is certainly going to have far reaching positive impact: 1.   The interest rates of loans granted by the Banks/NBFCs and other financial institutions are set ...

The much-awaited Goods and Services Tax (GST) Council meeting, slated for Friday, has been postponed by a week. Central and state officials are yet to agree on the Bills to effect the proposed system but there is still hope for meeting the April 1, 2017, target to begin the new indirect taxation system. The government says it is confident of being able to introduce the Bills in the ongoing session of Parliament, despite the indefinite adjournments of the latter on the protests over demonetisation. Also, the government is yet to decide whether to introduce the GST legislations as money Bills (which would mean  Rajya Sabha  approval is not needed; the governing alliance is in a minority here) or finance Bills. Prime Minister Narendra Modi might reply to a debate on demonetisation, if it takes place on Thursday, to try and request opposition parties to not stall Parliament proceedings. The Council, a body comprising the Union finance minister, his minister o...

With India being such a big nation having second largest population, car leasing business has been on continuous surge. Car leasing means when the possession of car is given to the lessee in exchange of monthly lease renal for a certain period of time. At the end of the lease agreement the lessee has the option to either buy that car or return that car back to the lessor. In all the conditions there was some service element which was charged to service tax. As per notification no: 26/2012 it was provided that the financial leasing will be charged at 10% of the value of the hire purchase/lease rentals. There is an abatement of 90%. The concept of abatement had arisen due to the bundled contract where the goods and services both were provided simultaneously. It was worked out that out of the total lease amount 10% shall be the service charges component by the lesser and hence chargeable to service tax. Now under GST there is no distinction between the goods and services for...

With GST coming in from 01.04.2017 e-commerce sector will have to see major changes. As per the provisions of the law person supplying goods/services through an e-commerce operator or an e-commerce entity itself both have to take the registration under GST irrespective of the turnover. The law prescribes that when an e-commerce company makes a payment to the supplier of goods/services it has to deduct certain percentage as Tax at Source and deposit the same by the 10 th of next month. It also has to file a statement with every month regarding the supply made by the supplier through their channel. This supply will be matched with the outward supply shown by the actual supplier under his GSTR 3 (monthly return). If there is a mismatch the complete onus shall lie on the actual supplier. The tax deposited by the e-commerce operator shall be reflected in the cash credit ledger of the actual supplier. The final GST Liability of the supplier will be worked out and adjusted with ...