CMA Shailendra Saxena

dr-shailendra-saxenaINTRODUCTION:

The Constitution (One Hundred and Twenty-second Amendment) Bill, 2016, for introduction of Goods and Services Tax (GST) in the country was accorded assent by the President on 8th September, 2016, and the same has been notified as the Constitution (One Hundred and First Amendment) Act, 2016. As per Article 279A (1) of the amended Constitution, the GST Council has to be constituted by the President within 60 days of the commencement of Article 279A. The notification for bringing into force Article 279A with effect from 12th September, 2016 was issued on 10th September, 2016. As per Article 279A of the amended Constitution, the GST Council will be a joint forum of the Centre and the States.

MEMBERS OF GST COUNCIL:

This Council shall consist of the following members namely: –

a) Union Finance Minister- Chairperson

b) The Union Minister of State, in-charge of Revenue of finance- Member

c) The Minister In-charge of finance or taxation or any other Minister nominated by each State Government-Members

Power of GST council only recommendatory in nature:

As per Article 279A (4), the Council will make recommendations to the Union and the States on important issues related to GST, like

a) The goods and services that may be subjected or exempted from GST.

b) Principles that govern Place of Supply.

c) Threshold limits.

d) GST rates including the floor rates with bands, special rates for raising additional resources during natural calamities/disasters or RNR

e) Special provisions for certain States, etc.

f) Transition Provisionsdiwali-special-wirc-e-billetion-on-gst

Matter has been discussed in First Meeting OF GST Council:

  • Threshold Limit in GST: Rs20 lac & Rs10 Lac for North Eastern States.
  • Empowerment of the States to collect both CGST and SGST including IGST, below the threshold of Rs.1.5 Crores. All VAT assessees up to Rs 1.5 Crore turnover will continue to be within the control of State GST authorities.
  • Similarly, all service tax assessees up to Rs.1.5 Crores threshold will continue to remain with the Centre.
  • Assessees above Rs 1.5 Crore, there will be dual control of the Centre as well as the States.

Matter has been discussed in Second Meeting of GST Council:

GST levy on all exempted items and the States and the Centre would be paying the incentive or subsidy back to them after making a budget allocation.

  • Both the Centre and the States are going to guillotine the present lists of exempted goods and services and subject them to the levy of GST and then make budget allocation for incentive or subsidy to be given to certain sectors and perhaps pay them in cash or some other form.
  • The Council approved the Draft GST Rules relating to the business processes such as registration, payment, invoice, refund and Returns.

Matter has been discussed in Third Meeting OF GST Council:

Discussion was held for following slabs of Rates:

  • 4% for Precious Metals
  • 6% for other essential
  • Most Services for 18%,those with abatement at lower 12% rate
  • 26% for packaged consumer goods
  • 26% + Cess for luxury items (Luxury Car, tobacco, pan masala and carbonated drinks.
  • Next meeting will be held on 3-4 November to finalize rates.
  • Once the GST rates are decided, the GST council will meet again on tentatively November 9-10 to finalize draft legislation.

Area of Concern for discussion held in a Recent Past Meetings:

When council met for the first time in late September, things appeared to be on track, with the Council agreeing almost unanimously on technicalities such as the turnover thresholds for firms to be covered under the GST and the division of administrative control over tax assessees between the Centre and the States, One issue arises that assesse having a turnover up to Rs.1.5 Crores will be administered by States. States have no experience to levy of Service Tax since its inception its dealt by of Center.

  • Article “269A. Levy and collection of goods and services tax in course of inter-State trade or commerce Specify
    that –

(1) Goods and Services Tax on supplies in the course of inter-State trade or commerce shall be levied and collected by the Government of India and such tax shall be apportioned between the Union and the States in the manner as may be provided by Parliament by law on the recommendations of the Goods and Services Tax Council”

(2) It is seems that another Constitution amendment would be necessary before it is decided to outsource to the States the work vested on the Centre with respect to collection of IGST for a assesse up to the turnover for Rs.1.5 Crores.

(3) If the States will be administered IGST, the issues will be arisen that which state would administer it, whether the origin state or the destination state. None of the individual States have an All India jurisdiction, in the absence of which a seamless flow of credit across the country will be a difficult task and defeat the purpose of GST.

  • The GST Council’s third round of deliberations ended on 19th October without a decision on the rates structure after most States objected to a proposal to levy an additional cess on demerit goods.
  • The power of GST Council is in nature of recommendatory, therefore decision of GST Council may create anomalies because in a country like India where each states are governed by different political parties, henceforth harmony on various issues under the GST is a difficult task.

CONCLUSION:

Third meeting of GST Council ends early,prior to 1 day from its schedule. Slabs of rate was not finalized Yet, Next meeting of council will be held on 3rd November and 4th November,to decide on the GST rates structure. It will be also decided tax structure at the next meeting and it can be frozen only after deciding whether compensation to States is to be funded out of the rate structure itself or from some special cess or some third source.One more challenges is regarding how many slabs can be in tax structure. Answer of these all question will be discussed by council in their next meeting in first week of November to meet the deadline for implementation of GST from 1 April,2017.Finance Minister Shri Arun Jaitley had set a November 22 target to resolve all operational issues with State representatives in the Council so that the rates and implementation modalities could be codified into law and passed by Parliament in the winter session. Government is dedicated with determination for implementation of GST with in schedule time for achieve its objective /benefits i.e. elimination of existing cascading effects of present taxation system, One Nation One Tax & Ease of doing business.

(Author can be reached at saxena20535@yahoo.com)


cma-harshad-deshpandeWe would like to thank CMA Harshad Deshpande, who is also the Chief Editor of WIRC Bulletin, ICAI, for his effort to make the content on GST available to larger section of people and for dissemination of knowledge on the topic , which is of prime importance  not only for the taxpayers but also for common man of the Country.

Article been published with permission from CMA Harshad Deshpande given on behalf of Western India Regional Council of India of The Institute of Cost Accountants of India.

Source- WIRC Bulletin Diwali Special Edition on GST

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