CA Himanshu Dhakad
Introduction
Goods and Services Tax (GST) refers to the single unified tax created by amalgamating a large number of Central and State taxes presently applicable in India. The latest constitution Amendment Bill of December 2014 made in this regard, proposes to insert a definition of GST in Article 366 of the constitution by inserting a sub-clause 12A. As per that, GST means any tax on supply of goods, or services, or both, except taxes on supply of the alcoholic liquor for human consumption. And here, services are defined to mean anything other than goods.
Also Read- GST Enrolment – HSN Codes- Exhaustive List
Context & Genesis of GST
Currently, fiscal powers between the Centre and the States are clearly demarcated in the Constitution of India with almost no overlap between the respective domains. The Centre has the powers to levy tax on the manufacture of goods (except alcoholic liquor for human consumption, opium, narcotics etc.) while the States have the powers to levy tax on the sale of goods. In the case of inter-State sales, the Centre has the power to levy a tax (the Central Sales Tax) but, the tax is collected and retained entirely by the States. As for services, it is the Centre alone that is empowered to levy service tax. Since the States are not empowered to levy any tax on the sale or purchase of goods in the course of their importation into or exportation from India, the Centre levies and collects this tax as additional duties of customs. This duty counterbalances excise duties, sales tax, State value added tax (VAT) and other taxes levied on the like domestic product. Introduction of the GST would require amendments in the Constitution so as to concurrently empower the Centre and the States to levy and collect the GST.
The tax unification process has been going on in India for some time now. There have been efforts to improve upon the Central excise duty and States sales tax regime starting with the introduction of MODVAT in 1986. CENVAT which replaced MODVAT, at the central level, is a valued added tax that provided credit on tax paid on inputs and it was an improvement over Central excise duty. At state level, the state VAT was an improvement over sales tax regime. However, there have been some problems associated with the present taxation system like; the CENVAT is confined only to the manufacturing stage and it has not included several Central taxes. Similarly, the State VAT is paid on the value of goods that includes the CENVAT already paid. It is thereby a “tax on tax”. There is also burden of Central Sales Tax (CST) on the inter-state movement of goods. Further, ‘setting-off’ service tax has been a difficult proposition especially at the state level and taxes like luxury tax, entertainment tax etc. are still out of the purview of State level VAT. The GST is thus an overarching and overhauling effort in the Indian taxation system to unify the process and reduce the multiplicity of taxes.
The idea of moving towards the GST was first mooted by the then Union Finance Minister Shri P. Chidambaram in his Budget for 2006-07. Initially, it was proposed that GST would be introduced by 1st April, 2010. The Empowered Committee of State Finance Ministers (EC) which had formulated the design of State VAT was requested to come up with a roadmap and structure for the GST. Joint Working Groups of officials having representation of the States as well as the Centre were set up to examine various aspects of the GST and draw up reports specifically on exemptions and thresholds, taxation of services and taxation of inter-State supplies. Based on discussions within and between it and the Central Government, the EC released its First Discussion Paper (FDP) on the GST in November, 2009. This spells out the features of the proposed GST and has formed the basis for discussion between the Centre and the States so far.
The GST implementation took a lot of time as some States have been apprehensive about surrendering their taxation jurisdiction while others wanted to be adequately compensated.
In the Union Budget 2014-15 the Finance Minister indicated that the debate whether to introduce a Goods and Services Tax (GST) must now come to an end. Following the Budget presentation in July 2014, the Constitution Amendment Bill was placed in the Parliament in December 2014.
Advantages of GST
Adam Smith, father of economics, has laid down four canons of taxation which are equality, certainty, convenience and economy. A tax can be tested on these four criteria. The Good and Services Tax (GST) qualifies for these four canons in a better manner. By amalgamating various taxes into a single tax, GST would mitigate cascading or double taxation (tax upon tax situations) in a major way and pave the way for a common national market. If the benefits are passed on fully, for consumers, this would mean 25%-30% reduction in the prices they pay, as tax burden on goods comes down[1]. This can reduce the overall costs of production and hence, introduction of GST would also make Indian products more competitive in the domestic and international markets, with beneficial effects on economic growth. According to the implementing agency, Central Board of Excise and Customs (CBEC), this tax, because of its transparent character, would be easier to administer. Union Budget 2014-15 admitted that GST will streamline the tax administration, avoid harassment of the business and result in higher revenue collection, both for the Centre and the States. GST also helps in better tax collections, better tax compliance, less cases of tax evasion and litigation, more transparency, less harassment and corruption, according to Union Finance Minister, Shri Arun Jaitly[2].
Salient Features of GST as proposed in India
The salient features of GST are as under:
1. GST comes under the broad spectrum of what is known as Value Added Tax which provides for input credits and taxes only the value addition that happened in the process of production / provision of service.
2. GST would be applicable on supply of goods or services as against the present concept of tax on the manufacture or on sale of goods or on provision of services.
3. GST would be a destination based tax as against the present concept of origin based tax. i.e, tax is imposed at the point of consumption.
4. It would be a dual GST with the Centre and the States simultaneously levying it on a common base. The GST, to be levied by the Centre would be called Central GST (CGST) and that to be levied by the States would be called State GST (SGST). This is to protect the fiscal federalism of this country as both the levels of government have the constitutional mandate to levy and collect specific taxes. SGST would be applicable only if both the buyer and seller are located within the state. CGST does not have any such restriction regarding location.
5. The Centre would levy and collect the Integrated Goods and Services Tax (IGST) on all inter-State supply of goods and services. There will be seamless flow of input tax credit from one State to another. Proceeds of IGST will be apportioned among the States.
6. CGST and SGST would be levied at rates to be mutually agreed upon by the Centre and the States.
7. Credit of CGST paid on inputs may be used only for paying CGST on the output and the credit of SGST paid on inputs may be used only for paying SGST. In other words, the two streams of input tax credit cannot be mixed except in specified circumstances of inter-State sales.
8. All goods and services, except alcoholic liquor for human consumption, will be brought under the purview of GST (To include alcoholic liquor, which is a major source of revenue for the states, another constitution amendment would be required). Crude Petroleum and some petroleum products have also been Constitutionally brought under GST. However, it is provided that petroleum and petroleum products shall not be subject to the levy of GST till notified at a future date on the recommendation of the GST Council. The present taxes levied by the States and the Centre on petroleum and petroleum products, i.e., Sales Tax/VAT, CST and Excise duty only, will continue to be levied in the interim period.
9. Tobacco and tobacco products would be subject to GST. In addition, the Centre could continue to levy Central Excise duty and the States can levy sales tax / VAT.
10. Exports would be zero-rated.
11. Import of goods or services would be treated as inter-State supplies and therefore, would be subject to IGST in addition to the applicable customs duties.
12. The list of exempted goods and services is attempted to be kept to a minimum and it would be harmonized for the Centre and the States as far as possible.
13. A common threshold exemption would apply to both CGST and SGST. Dealers with a turnover below it would be exempt from tax. A compounding option (i.e.to pay tax at a flat rate without credits) would be available to small dealers below a certain threshold. The threshold exemption and compounding provision would be optional.
14. GST rates will be uniform across the country. However, to give some fiscal autonomy to the States and Centre, there will a provision of a narrow tax band over and above the floor rates of CGST and SGST.
15. It is proposed to levy a non-vatable additional tax of not more than 1% on supply of goods in the course of inter-State trade or commerce, except on those goods which are specifically exempted by the Central Government. This tax will be for a period not exceeding 2 years, or further such period as recommended by the GST Council. This additional tax on supply of goods will be assigned to the States from where such supplies originate. (Since GST is a destination based tax where the consuming state would receive the revenue, this provision has been built in to compensate the producer / manufacturing states, like say in case of petroleum products whose production constitutes a substantial portion of revenue for a few states)
16. The laws, regulations and procedures for levy and collection of CGST and SGST would be harmonized to the extent possible.
17. A Goods & Services Tax Council which will be a joint forum of the Centre and the States will be created. This Council would function under the Chairmanship of the Union Finance Minister and will have Ministers in charge of Finance/Revenue or Minister nominated by each of the States & UTs with Legislatures, as members. Members have differential voting powers with votes of the central government having 1/3rd weightage and rest 2/3rd with states. Decisions can be taken only if it has more than 3/4th majority (i.e. Votes in Favour = 1/3 *Votes in favour by Center + [(2/3 * 1/No. of states present and Voting)*Votes in favour by States]). Such decisions will be immune from the deficiencies in the constitution of the GST council or appointment of its members or any procedural irregularity. The Council will make recommendations to the Union and the States on important issues like taxes, cesses and surcharges levied by the Union, States and local bodies which may be subsumed in the GST
a. the goods and services that may be subjected to or exempted from GST
b. apportioning of the revenue between center and states in case of IGST
c. Framing of model GST laws
d. deciding the principles that govern the determination of place of supply, based on GST laws
e. decision on threshold limits of turnover below which goods and services may be exempted from GST,
f. creating special provisions for states like Jammu& Kashmir, North Eastern States including Assam, and hilly states like Himachal Pradesh and Uttarakhand,
g. decision on the date on which GST will be levied on crude petroleum, high speed diesel, petrol, natural gas, and ATF.
h. tax rates including the floor rates and bands, special rates /rates for a specified period to raise additional resources during a natural calamity or disaster
i. framing dispute resolution modalities.
18. GST levied and collected by Union Govt. except the tax apportioned with states in case of IGST shall also be distributable between Union and States as per the recommendations of the Finance Commission.
19. Union Government cannot impose surcharges (which usually goes to the consolidated fund of India) on articles which are covered under GST laws.
20. Centre will compensate States for loss of revenue arising on account of implementation of the GST for a period up to five years. (The compensation will be on a tapering basis, i.e., 100% for first three years, 75% in the fourth year and 50% in the fifth year).
Taxes subsumed in GST
GST would replace the following taxes currently levied and collected by the Centre:
- Central Excise duty
- Excise Duty levied under the Medicinal and Toilet Preparations (Excise Duties) Act 1955,
- Additional Excise Duties (Goods of Special Importance)
- Additional Excise Duties (Textiles and Textile Products)
- Additional Customs Duty (commonly known as Countervailing duties or CVD)
- Special Additional Duty of Customs (SAD)
- Service Tax
- Cesses and surcharges in so far as they relate to the supply of goods and services
- Taxes on the sale or purchase of newspapers and on advertisements published therein.
State taxes that would be subsumed within the GST are:
- State VAT/ Sales Tax
- Central Sales Tax (levied by the Center and collected by the States)
- Luxury Tax
- Octroi
- Entry Tax i.e, taxes on the entry of goods into a local area for consumption, use or sale therein. (other than those in lieu of octroi)
- Purchase Tax
- Entertainment Tax which are not levied by the local bodies; i.e. panchayats, municipalities and District councils of autonomous districts can impose taxes on entertainment and amusements
- Taxes on general advertisements
- Taxes on lotteries, betting and gambling
- State cesses and surcharges insofar as they relate to supply of goods or services
GST does not subsume stamp duties and custom duties.
The model GST law in making is leaked and the same is analyzed. Further government has released Gist of Report of the JOINT COMMITTEE ON BUSINESS PROCESS FOR GST on GST Returns. Based on documents in hand below is detail analysis of GST.
Salient Features of Model GST law:
Important Definitions:
1. Business:
2. GST law has defined business for the first time.
3. Business Includes Vocation, profession and any work incidental or ancillary to the same
4. It also includes admissions of events, acquisition of goods for closure of business, provision for membership fees.
5. However business doesn’t Include Agriculture and thus it can be said that agriculture is out of purview of GST
6. Definition is inclusive in nature and intent is very clear that GST will apply on all transactions
7. Capital Assets; Definition same as IT. However Jwellery is excluded
8. Capital goods; to Include Plant, Machinery and equipment to be used in manufacture, trade, commerce, profession, vocation or any other similar activity
9. Composite Supply ; Includes combination of only goods, Services or both goods and services
10. Consideration: Its one of important Concepts of GST Law:
a. Includes Payment made in Money or otherwise whether by himself or by other person
b. Effectively means consideration includes nonb monetary transactions like Exchange or Barter
c. Monetary act for not doing a act is also included as Consideration. This is derived from Service Tax
d. However Security Deposit whether refundable or not is Excluded from consideration unless supplier applies the same
11. Continuous Supply of
a. Goods: To Include supplied as wells as agreed to supply on regular or periodic basis and raises invoice either regularly or periodically
b. Services : Same as Service Tax excepts its based on supply
12. Declared Services: Same as mentioned in Service Tax
13. Goods :
a. Includes Movable property other than Actionable claim and Money
b. Includes Securities
c. Growing crops, grass or any other thing if agreed to supplied after severing from the land
14. Services : Anything other than Goods
15. Location of Service Receiver and Supplier ; Derived from Service Tax
16. Place of Business to include any place from where business is carried including godown, agent place or place where books of accounts are kept
17. Related persons:
a. First time to include Employer and Employee
b. Members of Same family
c. If he maintains books of accounts at others place effectively means including practicing professional who write books of accounts
18. Works Contract: Defined as agreement for carrying out for cash, deferred payment or other valuable consideration, the building, construction, fabrication, erection, installation, fitting out, improvement, modification, repair, renovation or commissioning of any immovable property
19. Zero Rated Supply: Means where rate of tax is zero. However it is clarified that in such cases ITC is available. Also Clarified Exports as Zero Rated Supply
Important Concepts:
1. Supply :
a. GST is applicable on Supply of Goods and Services
b. Thus Manufacture, Sale, Provision becomes old concept paving way for Consumption based tax rather than origin based tax
c. Supply to Include :
i. sale,
ii. transfer,
iii. barter,
iv. exchange,
v. license,
vi. rental,
vii. lease or
viii. disposal,
ix. and importation of services
2. However supply is treated if made or agreed to be made for a consideration by a person in the course or furtherance of business
3. Definition of Business is very important
4. Also includes a supply specified in Schedule I, made or agreed to be made without a consideration paving way for Deemed supply list
5. Examples of Deemed Supply are permanent transfer of business assets, self-supply of goods or services, assets retained after deregistration etc
6. Levy of Tax on Supply:
a. The liability to pay CGST / SGST will arise at the time of supply as determined for goods and services.
b. In this regard, separate provisions prescribe what will time of supply for goods and services. The provisions contemplate payment of GST at the earliest for
i. Goods – Removal of goods or receipt of payment or issuance of invoice or date on which buyer shows receipt of goods
ii. Services – Issuance of invoice or receipt of payment or date on which recipient shows receipt of services
7. It can be observed that there are many parameters in determining time of supply. Thus, determining the time of supply and further maintaining reconciliation between revenue as per financials and as per GST rules could be a major challenge to meet.
8. Place of Supply of goods and Services becomes very important.
a. At present inter-State supply of goods attract Central Sales Tax.
b. Now, it provides that an inter-State supply of goods and/ or services will attract IGST ((i.e. CGST plus SGST).
9. Thus, it would be crucial to determine whether a transaction is a intra-State or Inter-State as taxes will be applicable accordingly. In this regard, the draft GST law provides separate provisions which will help an assessee determine the place of supply for goods and services.
10. Typically for goods the place of supply would be location where the good are delivered. Whereas for services the place of supply would be location of recipient.
11. However, there are multiple scenarios such as supply of services in relation to immovable property etc wherein this generic principle will not be applicable and specific rule will determine the pace of supply. Thus, the business will have to scroll through all the place of supply provisions before determining the place of supply.
Place of Supply of Services Rules
| Services | Place of Supply |
| General – Regd Person | Location of Receiver |
| General – Unregd Person | Location of Provider |
| Services of Architects | Location of Immovable Property |
| Renting, Boarding Lodging | Location of Immovable Property |
| Services for Organizing Events eg. Marriages | Location of Immovable Property |
| Restaurant and catering services | Place of Performance of Service |
| services in relation to training, performance appraisal, personal grooming, fitness, beauty treatment, health services including cosmetic and plastic surgery | Place of Performance of Service |
| Admission to Events,Parks | Place where Event is held |
| Ancillary Services related to Events | Place where Event is held |
| Sponsorship | Place where Event is held |
| Transportation of goods, including by mail or courier – Regd Person | Location of Receiver |
| Transportation of goods, including by mail or courier – Unregd Person | Where Goods are handed over for their transportation |
| Passenger transportation service | Passenger embarks on the conveyance for a continuous journey |
| Vessel, aircraft, train or motor vehicle | First scheduled point of departure of that conveyance for the journey |
| Fixed telecommunication line, leased circuits, internet leased circuit, cable or dish antenna | Place where Device is Installed |
| Mobile connection for telecommunication and internet services provided on post-paid basis | Location of Billing Address of Customer |
| Mobile connection for telecommunication and internet service are provided on pre-payment through a voucher or any other means | Location where such prepayment card or Voucher is sold |
| Mobile connection for telecommunication and internet service are provided on pre-payment through a voucher or any other means thru Internet Banking | The location of the service receiver on record of the service provider |
| Banking and Financial Services | Location of the service receiver on the records |
| Insurance Services – Regd | Location of the service receiver |
| Insurance Services – Unregd | Location of the service receiver on the records |
| General Insurance -Immovable property | Location of Property |
Place of Supply of goods:
| Goods | Place of Supply |
| Distance Supply | Location of Customer |
| No Movement of goods | Location Where goods are Recd By Customer |
| Assembly or Installation | Location where goods are assembled or installed |
| Supply on Vessel, Aircraft | location at which such goods are taken on board |
Valuation in GST :
1. GST would be payable on the transaction value‘.
2. Transaction value is the price actually paid or payable for the said supply of goods and/or services between un-related parties.
3. The transaction value is also said to include
a. all expenses in relation to sale such as packing, commission etc.
b. Even subsidies linked to supply will be includable.
c. Royalty and License Fees also included in Value
d. Taxes other than GST
e. As regards discounts/ incentives, it will form part of transaction value‘ if it is allowed after supply is effected.
f. However, discounts/ incentives given before or at the time of supply will be permissible as deduction from transaction value.
4. The law also provides for Valuation Rules to help determine value in certain cases. The Valuation Rules appear to be drafted by taking few provisions from current Valuation provisions in vague in Excise (for e.g. concept of transaction value‘), Service Tax (for e.g. concept of pure agent‘) and Customs (for e.g. concept of goods of like kind and quality‘).
5. Retail Sales Price determined which is clear that Transaction value concept of Excise would be applied in certain cases for MRP based Valuation
ITC in GST:
1. Current CENVAT Credit regime disallows CENVAT Credit on various services such as motor vehicle related services, catering services, employee insurance, construction of civil structure etc. Similarly, State VAT laws restrict input tax credit in respect of construction, motor vehicle etc.
2. This denial of credits leads to un-necessary cost burden on assessee.
3. It was expected that in GST regime, seamless credit will be allowed to business houses without any denial or any restrictions except say goods /services which are availed for personal use than official use (something similar to United Kingdom VAT law).
4. However, surprisingly, inter-alia, aforesaid credit would continue to be not available (in respect of both goods or services).
5. Manner of Credit:
a. Proportionate Credit in respect of goods used for business as well as other purpose
b. Proportionate Credit in respect of goods used for taxable and non taxable
6. Negative List in GST:
a. motor vehicles, except when they are supplied in the usual course of business or are used for providing the following taxable services—
b. transportation of passengers,
c. transportation of goods,
d. imparting training on motor driving skills;
e. high speed diesel oil, motor spirit (commonly known as petrol), aviation turbine fuel, petroleum crude oil and aviation gasoline;][the goods not liable to pay GST ?]
f. goods or services provided in relation to outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees on vacation such as leave or home travel concession, when such goods and/or services are used primarily for personal use or consumption of any employee;
g. goods and/or services acquired by the principal in the execution of works contract when such contract results in construction of immovable property, other than plant and machinery;
h. goods acquired by a principal, the property in which is not transferred (whether as goods or in some other form) to any other person, which are used in the construction of immovable property, other than plant and machinery;
i. goods and/or services on which tax has been paid under section 8 of the Act; and
j. goods and/or services used for private or personal consumption, to the extent they are so consumed.
♠ Utilization of ITC:
a. No Cross Credit in CGST and SGSST
b. Under IGST, Credit to be utilized first by IGST and then Cross credit is allowed for CGST and SGST
c. ITC can be carried forward and refund is not allowed except under Export of goods and services
♠ Conditions for Claiming Credit ;
a. he is in possession of a tax invoice, issued by a supplier registered under this Act or the IGST Act &
b. the tax charged in respect of such supply has been paid to the credit of the appropriate Government, either in cash or through utilization of input tax credit admissible in respect of the said supply which effectively means that if supplier and not paid the GST you will not get ITC.
Provisional Credit; However Consensus is not there among states on provisional credit
Inter-State supply of goods for consideration to attract additional tax:
1. Draft GST law provides that an additional tax upto 1% will be levied by Centre on inter-State supply of goods (and not on services) made for consideration.
2. Thus, effectively inter-State branch transfers will not attract this 1% additional Tax. This additional tax will be assigned to States from where the supply of goods originates.
3. This additional tax will be applicable for a period of two years and could be extended further by GST Council.
4. The credit of this additional levy will not be available as thus it will be a cost in the supply chain.
5. 33 GST Laws: In GST regime, there will be one CGST law and 31 SGST law for each of the States including two Union Territories and one IGST law governing inter-State supplies of goods and services.
6. Rate of GST:
a. Rate of GST is not yet specified in the draft GST law.
b. The rate of GST is not specified in draft GST law. However, various News reports suggest that the Revenue Neutral Rate (RNR) as proposed by the Chief Economic Advisor Shri. Arvind Subramanian could be 17%-18%.
7. Further, there could be lower rate (of 12%-14%) for concessional goods and higher rate (upto 40%) for luxury goods (such as luxury cars, tobacco products etc).
Time limit for show cause notices (SCN):
1. Time limit for issuance of SCN is generic cases (i.e. other than fraud, suppression etc) would be three years and in fraud, suppression etc cases it would be five years.
2. Its pertinent to note that the time limit prescribed for issuance of SCN for generic cases is much more than the current time limit prescribe in excise law (i.e. 12 months) and service tax legislation (i.e. 18 months).
3. This will give much leeway to the Authorities while issuing SCN and sleepless night to assessee for three years!
4. Most of the current provisions such as reverse charge, tax deduction, pre-deposit, prosecution, arrest etc have been continued in the proposed draft GST law.
Gist of Report of the JOINT COMMITTEE ON BUSINESS PROCESS FOR GST on GST Return
GST is a self-assessed destination based taxation system. The submission and processing of return is an important link between the taxpayer and tax administration as it is an important tool for:
1. Compliance verification program of tax administration;
2. Providing necessary inputs for taking policy decision;
3. Management of audit and anti-evasion programs of tax administration;
4. Finalization of the tax liabilities of the taxpayer within stipulated period of limitation
This document lists out the salient aspects of the process related to filing of GST returns:
Who is required to file return:
1. Every Registered Person.
2. Nil return is required to be filed
3. UN agencies etc. will have unique GST ID and will file return for the month (in simpler form) during which they make purchases.
4. UN Agencies would not be required to file regular return. They would submit their purchase statements (without purchase invoices) as per the periodicity prescribed for claim of refund.
5. Government entities / PSUs , etc. not dealing in GST supplies or persons exclusively dealing in exempted / Nil rated / non –GST goods or services would neither be required to obtain registration nor required to file returns under the GST law.
6. However, State tax authorities may assign Departmental ID to such government departments/ PSUs / other persons. They will ask the suppliers to quote the Department ID in the supply invoices for all inter-State purchases being made to them. Such supplies will be at par with B2C supplies and will be governed by relevant provisions relating to B2C supplies.
Periodicity of Returns:
- GSTR 1- Outward supplies made by taxpayer (other than compounding taxpayer and ISD) – 10th of the next month
- GSTR 2 – Inward supplies received by a taxpayer (other than a compounding taxpayer and ISD) – 15thof the next month
- GSTR 3 – Monthly return (other than compounding taxpayer and ISD) – 20thof the next month
- GSTR 4 -Quarterly return for compounding Taxpayer – 18thof the month next to quarter
- GSTR 5 – Periodic return by Non-Resident Foreign Taxpayer- Last day of registration
- GSTR 6 – Return for Input Service Distributor (ISD) – 15th of the next month
- GSTR 7 – Return for Tax Deducted at Source – 10th of the next month
- GSTR 8 – Annual Return – By 31st December of next FY
- ITC ledger of Tax Payer – Continuous
- Cash Ledger of Tax Payer – Continuous
- Tax ledger of Tax Payer – Continuous
Filing is only Online but return can be prepared offline and then uploaded
Contents of Invoice level information:
The following invoice level information would be captured in the return:
♠ Invoices pertaining to B2B transactions (Intra-State, Inter-State and supplies to UN organizations/embassies) [both for supply and purchase transactions]:
ο Goods and Services Tax Identification Number (GSTIN)/Unique ID issued to UN organizations/Embassies
ο Invoice Number, Date and value
ο HSN code for each item line (for Goods)/ Accounting code for each item line (for services)
ο Taxable Value
ο Tax Rate (CGST & SGST or IGST and/ or Additional Tax)
ο Tax Amounts (CGST & SGST or IGST and / or Additional Tax)
ο Place of Supply (State)
ο For Capital Goods, there will be separate column in the Table of the return for ease of tracking of credit due and availed over the period as prescribed by GST law
ο An Invoice may have two items having different tax rates or different HSN codes in case of B2B supplies. If the invoice contains more than one tax rate/one HSN Code, the taxpayer would have to submit line-wise information separately for each HSN Code / each tax rate
♠ Invoices pertaining to B2C transactions (Inter-State B2C supplies for consumer on record)[only supply transactions]:
ο In respect of invoices whose taxable value is more than Rs. 2.5 lakhs (to enable transfer of funds to respective states):
– Invoice Number, Date and value
-HSN Code for goods / Accounting code for services
-Taxable Value
-Tax Rate (IGST and Additional Tax)
-Tax Amount (IGST and Additional Tax)
-Buyer’s address (State Code)
-Departmental ID allotted by State Government to Government entities / PSUs , etc. not dealing in GST supplies or to persons dealing in exempted / Nil rated / non –GST goods or services
-Place of Supply (State) if different than S. No. (vi) above
ο For invoices whose taxable value is up to Rs 2.5 lakh, only aggregated taxable value of all such invoices will be submitted, state-wise and tax rate-wise.
♠ Invoices pertaining to B2C transactions (Intra-State B2C supplies) [only supply transactions]: For intra-state B2C supplies, aggregated taxable value of all such invoices will be submitted tax rate-wise.
Where to file the Tax return A registered Tax Payer shall file GST Return at GST Common Portal either:
- by himself logging on to the GST Common Portal using his own user ID and password;
- Through his authorized representative using the user Id and password (allotted to the authorized representative by the tax authorities), as chosen at the time of registration, logging on to the GST Common Portal
Revision of returns:
1. There would be no revision of returns.
2. All unreported invoices of previous tax period would be reflected in the return for the month in which they are proposed to be included. The interest, if applicable will be auto populated.
3. All under-reported invoice and ITC revision will have to be corrected using credit/debit note and such credit / debit note would be reflected in the return for the month in which such adjustment is carried out. The credit/debit note will have provision to record original invoice, date etc. to enable the system to link the same with the original invoice as also to calculate the interest, if applicable. Its format will be like the invoice.
There would be separate tables in the returns for reflecting those adjustments for which credit / debit notes are not required to be issued / issued. The interest, if applicable will be auto populated.
Constitution Amendment Bills of 2011 & 2014
The assignment of concurrent jurisdiction to the Centre and the States for the levy of GST would require a unique institutional mechanism that would ensure that decisions about the structure, design and operation of GST are taken jointly by the two. For it to be effective, such a mechanism also needs to have Constitutional force.
To address all these and other issues, the Constitution (115th Amendment) Bill was introduced in the Lok Sabha on 22.03.2011. The Bill was referred to the Parliamentary Standing Committee on Finance for examination and based on its report, certain official amendments were prepared. Subsequent to general elections and formation of a new Government, the Union Cabinet under Prime Minister Shri Narendra Modi approved on 17th December, 2014 the proposal for replacing the earlier bill of the erstwhile government with a similar bill along with some more amendments -The Constitution (122nd Amendment) (GST) Bill, 2014- to facilitate the introduction of GST. The Union Finance Minister Shri Arun Jaitley introduced the said Bill in the Lok Sabha on 19th December 2014.
Constitution Amendment Bill confers concurrent powers to Parliament and the state Legislatures to make laws governing GST.
Way forward
The Constitution Amendment Bill needs to be passed by a two-third majority in both Houses of Parliament and subsequent ratification by at least half of the State Legislatures. After passage of the Bill by both Houses of Parliament, ratification by State legislatures and receipt of assent by the President, the process of enactment would be complete.
Suitable legislation for the levy of GST (Central GST Bill and State GST Bills) drawing powers from the Constitution can be introduced in Parliament or the State Legislatures only after the enactment of the Constitution Amendment Bill. Unlike the Constitutional Amendment, the GST Bills would need to be passed by a simple majority. Obviously, the levy of the tax can commence only after the GST law has been enacted by the respective legislatures. Also, unlike the State VAT, the date of commencement of this levy would have to be synchronized across the Centre and the States. This is because the IGST model cannot function unless the Centre and all the States participate simultaneously.
Implementation Progress
Every Union Budget since its introduction of the idea in 2006-07 has been expressing the Government’s commitment to go ahead with the GST implementation. GST is expected to be implemented by April 2017.
The Central Board of Excise and Customs (CBEC) is involved with the drafting of GST law and procedures, particularly the CGST and IGST law, which will be exclusive domain of the Central Government. CBEC also addresses the implementation challenges. A GST Cell has been created within CBEC which functions under the Joint Secretary TRU –II.
In 2013, four Committees were constituted by the Empowered Committee of State Finance Ministers (EC) to deal with the various aspects of work relating to the introduction of GST. The Committees are:
1. The Committee on the Problem of Dual Control, Threshold and Exemptions in GST Regime;
2. The Committee on Revenue Neutral Rates for State GST & Central GST and Place of Supply Rules (A Sub-Committee has been constituted to examines issues relating to the Place of Supply Rules);
3. The Committee on IGST & GST on Imports (A Sub- Committee was set up to examine issues pertaining to IGST model);
4. The Committee to draft model GST Law (Three Sub-Committees were constituted to draft various aspects of the model law).
The GST law is still evolving and the dialogue continues between the Centre and the States on related issues. A number of procedural, legal and administrative issues relating to GST are under active discussions in various Committees / Sub-committees constituted by the EC and in various Groups constituted by the CBEC.
