Goods and Services Tax

GST- which has already derailed is certainly going to miss the deadline of 1 April 2017. The fix which the biggest indirect tax reform is facing is of the administrative control upon the taxpayer. In the recent GST Council Meet no conclusion was reached upon this issue and the next meeting has been scheduled for December 23 and December 24. Centre is devising a method that the computers will select 5% taxpayers and allocate them to centre and the state authorities on random basis. Justification for such a system is Computer Assisted Scrutiny Selection (CASS) followed by the Income Tax Department. They say that even under Income Tax, Assessee is not sure as to who is going to assess his income. But what they have forgotten is that the assessee under Income Tax does know under whose jurisdiction his PAN number falls and which wing of the department is likely to assess him. There is absolutely no confusion as to which authority he has to approach. Under GST, they are proposing...

Q1: What is Input Tax? Input Tax is tax paid on supply of goods and/or service which is used or intended to be used in course or furtherance of business. Q2: What if the intention to use in business is extinguished at the later stage? If taxpayer has claimed the ITC against an invoice which he intended to use in business but at the later stage it is not used. The mount of ITC claimed shall have to be reversed. If appropriate balance is not available in ITC ledger the same has to be paid in cash.  Q3: What taxes are eligible for Input Credit? Under GST, taxpayer can avail ITC of only IGST/CGST/SGST paid by them on the supply procured. No other duty/cess/tax shall be eligible for ITC. Compensation Cess as proposed by Draft Compensation Law shall not be eligible for claiming input tax credit. Q4: What are the conditions to avail Input tax Credit? The taxpayer has to satisfy four conditions for availing input tax credit: 1.      ...

It is apprehended that delay in GST is certainly going to have impact on the mathematics of the Budget for the Financial Year 2017-18. It is most certain that GST will get deferred for one quarter at least. In this scenario, old laws shall prevail for first 3 months and GST for next nine months. The government has to work on the Part B of the budget on the basis of the revenue collection expected under both laws. Accordingly amendments would be brought in the present tax structure. It is most likely that service tax rate might be increased to 16-17% in lieu of GST rate being decided at 18% for levy on services. Although delay in the biggest tax reform might sour the flavor of many professionals, the business community is certainly going to welcome the delay. It will give them time to understand the new law and rules. 3 months would be enough time for them to implement the change in their business policies and accounting packages. If GST further gets postponed from July 1,...

GST Council concluded its meeting yesterday without any consensus on the dual control under GST. There is still a stumble block of the administrative powers centre and state governments are going to hold. After resolving the compensation issues, states are not ready to withdraw their control upon the taxpayers. Earlier it was decided that states will have sole control upon the taxpayers having aggregate turnover up to Rs. 1.5 crores and above that both centre and state will have dual control in case of goods. But for services it was decided that all the taxpayers shall remain under the control of central government.  Next meeting on this issue has been planned on 11 th and 12 th December. Even if breakthrough is obtained in this meeting, winter session will get over in next 3 days i.e. 15.12.2016. In such a scenario it does not look like that government will be able to get the bill passed so quickly. Even if it brings these bills as money bill, 14 days time have to be...

GST Council had its meeting yesterday regarding the administrative control of taxpayer between centre and state government, but no consensus was achieved. The issue of paramount importance was put at the back-burner and was kept for discussion today i.e. 03.12.2016. Without the consensus being reached on this critical issue, it is unlikely that government will table the GST Bills in the Parliament. Finance Minister himself said that we have to roll out GST maximum by September 16, 2017 beyond which it would be difficult to levy present indirect taxes. Only 9 days are left for current winter session and it is unlikely that the bills will be presented. Such a hesitation of the finance head of the nation is surely a red sign that GST is set to get deferred for another 6 months from its targeted date of 01.04.2017.   Looking at the issues GST has apart from the drafting errors, it seems that the government should pull up its socks and try to resolve them. Legislature and draf...