The tax system in India was very complex in nature, but post GST implementation the process has become smoother. It is inclusive of all indirect tax which helps in eradicating the cascading effect of tax as a whole. Tax structure in India is a three tier federal feature, which is made by central government, state government and local municipal bodies.
Constitution states that “No tax shall be levied or collected except by the authority of law”[i]. Hence, each and every tax that is collected needs to backed by accompanying law.
In India, tax was first time introduced in India in the year of 1860, by James wilsom in order to cope up with the losses beared by government on account of Military Mutiny of 1857. In 1918, a replacement tax was passed and again it had been replaced by another new act which was passed in 1922.This Act remained in force up to the assessment year 1961-62 with numerous amendments. In consultation with the Ministry of Law finally the tax Act, 1961 was passed. The tax Act 1961 has been brought into force with 1 April 1962. Since then several amendments have been made in Income Tax Act.
Singapore follows a single-tier corporate tax system where Singapore tax rate starts at 0% and goes upto 22% for residents and for non-residents its start from 15% and goes upto 22%. The Income Tax Act of Singapore is the governing statute for corporate and individual taxation matters.
Inland Revenue Authority of Singapore which was formed in 1960 was responsible for collecting income tax, property tax and goods and service tax etc. Inland Revenue Authority is solely responsible for taxation structure in Singapore. Authority make different policies, change tax structure and modify.
As Singapore became more developed, it became a more expensive place for businesses in the 1980s. Measures to revamp the economy, with the aim of making it more competitive was introduced.
Changes to government policies, incentives and taxes were considered.There was a shift towards lower direct taxes and the focus was on indirect taxes[ii].
The trend towards indirect taxation resulted in the introduction of the Goods and Services Tax (GST) in 1994.
GST STRUCTURE IN INDIA
GST is a comprehensive destination based indirect tax levy of goods as well as service at the national level. Main objective of GST was to consolidate multiple indirect taxes into a single tax.
GST is a well designed value added tax on all goods and services on all goods and services,is the most elegant method to eliminate distortions and to tax consumption.
HOW IT ALL WENT?
On 2003, Kelkar Task Force on Indirect Tax had suggested a comprehensive GST based on VAT principle. On Nov,2009 EC( Empowered committee) released its First Discussion principle on GST. On Nov,2012 a committee on GST design was constituted. On 19th Dec, 2014 Constitution Bill,2014 was introduced on Lok Sabha by Mr. Arun Jaitley. On 6thMay,2015 Constituion Bill, was passed in Lok Sabha and also Bill was referred to a 21 member Select Committee of Rajya Sabha.
On 3rd August,2016 Constituion Bill was passed in Rajya Sabha with certain amendments. On Sep,2016 the Bill was adopted by majority of State Legislature wherein approval of at least 50% of the State Assemblies was required. On 8th Sep,2016 the Bill received the assent of president and become Constitution Act,2016. On 12th April,2017 the CGST Bill 2017, IGST Bill2017. UTGST Bill 2017 and GST Bill,2017 received the assent of president.
GST council is the main decision-making body that has been formed to finalize the planning of GST. it’s been provided within the Constitution Act, 2016 that the GST council in its discharge of varied functions shall be guided by the necessity for a harmonized structure of GST and for the event of a harmonized national marketplace for Goods and Services.
Who Should Register for GST?
1. Casual Taxable Person
2. Inter State Supplier
3. Individuals registered under previous laws
4. Payer of Reverse Charge
5. Non- Resident
6. Input Service Distributor, etc.
Every supplier who make supply of Goods and service or both and the aggregate turnover exceeds the threshold limit in a financial year need to take Registration under GST.
States with threshold limit of 10 Lakh for both Goods and services- Manipur, Mizoram, Nagaland and Tripura
States with Threshold limit of 20 Lakh for both Goods and Services- Arunachal Pradesh, Meghalaya, Sikkim, Uttarakhand, Puducherry, Telangana
States with Threshold limit of 20 Lakh for services and 40 Lakh for Goods- Jammu and Kashmir, Assam, Himachal Pradesh and all other states.
Supplier having turnover less than 40 Lakh and 20 Lakh can also get themselves registered under GST, there is no restriction, however if turnover is more than specified limit then registration is compulsory.
A Taxpayer is required to file document with the administrative authority which is commonly known as return.
Every Registered person other than Input service Distributor, non-resident Taxable Person and a person paying tax under the provision of section 10 have to file various return:
Outward Supplies: On or before 10th of next month for taxpayers having turnover upto 1.5 Cr. Quaterly – GSTR 1
Inward Supplies: After the 10th day bbut on or before the 15th Day of the month succeeding the tax period – GSTR 2
Monthly Return: On or before 20th of next Month- GSTR 3[iii].
The GST late filing penalty has been specified as follows:
A supplier fails to furnish details of supplies and fail to file return by the due date – Penalty for late filing is Rs. 100 for each day during which the failure continues, subject to a maximum of Rs. 5,000
A supplier fails to furnish the annual return by the due date – Penalty is Rs 100 for every day during which the failure continues, subject to a maximum of quarter percent of the person’s turnover in the state where he is registered[iv].
GST STRUCTURE IN SINGAPORE
Goods and Services Tax in Singapore is a broad-based value added tax levied on import of goods, as well as nearly all supplies of goods and services. The only exemptions are for the sales and leases of residential properties, importation and local supply of investment precious metals and most financial services. Export of goods and international services are zero-rated[v].
Before 1986, Singapore’s corporate income tax rate was 40% which was deemed to be uncompetitive. After that on 1st April, GST was implemented at a single rate of 3%. In 2003, it was increased to 4% and then in 2004, it increased from 4% to 5%. On 15th February,2007 it was announced that GST rate will be 7% with effect from 1st July, 2007.
1. On a Retrospective Basis
When the taxable turnover in a specific Quarter plus the previous three Quarters exceeds $1 Million.
2. On a Prospective Basis
When there are reasonable ground for one to believe that the taxable turnover will exceed $ 1 million in next 12 months.
Supplier having turnover less than $ 1 million can also get themselves registered under GST, there is no restriction, however if turnover is more than specified limit then registration is compulsory.
Exemption from Registration
A supplier is exempt from registration if turnover exceeds $1 million on a condition when supplier made zero rated supplies. Supplier will also be exempted from GST return.
A GST-registered business has to file GST tax returns
1. GST tax returns must be filed electronically either on a monthly or quarterly basis.
2. GST tax return and the payment of the GST amount are due one month from the end of the GST accounting period.
3. Even in the case of no GST transactions during an accounting period, the business must still file a nil return[vi].
Custom and Excise Duty
Singapore- Singapore is effectively a duty-free port. While no duties are imposed on exports from Singapore, an import duty is levied on a small number of items such as petroleum products, motor vehicles, tobacco products and liquor.
India- While excise duty is levied on goods produced or manufactured within the country, custom duty applies to the goods that are sold in India but were produced in a different country.
Singapore- Stamp duty applies on documents relating to transfer of company shares and real estate property. There are three types of duties payable on the sale, purchase, acquisition or disposal of properties in Singapore:
1. Buyer’s Stamp Duty (BSD)
2. Additional Buyer’s Stamp Duty (ABSD)
3. Seller’s Stamp Duty (SSD)[vii]
India- Stamp Duty is an indirect tax levied by the State Govt’s on the transfer of immovable property located in their state. It’s also levied by the govt. on all Legal Documents. The stamp tax Rates vary from State to State.
[i] INDIA CONST. Art. 256
[ii] https://www.guidemesingapore.com/business-guides/taxation-and-accounting/introduction-to taxation/singapore-tax-system-and-tax-rates (last visited on 28th June,2020)
[iii] https://cleartax.in/s/gst-return-gstr3(last visited on 29th June,2020)
[iv] https://tallysolutions.com/gst/gst-penalty-for-late-filing/(last visited on 29th June,2020)
[v] https://www.vskills.in/certification/tutorial/accounting-banking-finance/singapore-gst/(last visited on 29th June,2020)
[vi] https://www.startupdecisions.com.sg/singapore/taxes/goods-and-services-tax-gst/(last visited on 30th June,2020)
[vii] https://www.startupdecisions.com.sg/singapore/taxes/current-tax-rates-and-tax-system/(last visited on 30th June,2020)