ICAI has submitted 121 suggestions on various topics under GST to Union Minister of Finance, Shri Shri Piyush Goyal which includes suggestions on General Issues, Definitions, Classification And Exemption, Scope Of Supply, Composite And Mixed Supply, Composition Levy, Time & Value Of Supply, Input Tax Credit, Registration, Tax Invoice, Accounts & Records, Returns, Payments, Refunds, Assessment And Audit, Demands And Recovery, Advance Ruling, Offences And Penalties, Transitional Provisions, Miscellaneous Provisions, IGST –Levy & Collection, Place Of Supply, Zero Rated Supplies And Compensation Cess. ICAI Submission is as follows:-
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
(Set up by an Act of Parliament)
CA. Naveen N.D. Gupta
President
ICAI/IDTC/2018-19/Letter/14
10th July, 2018
Shri Piyush Goyal
Hon’ble Union Minister of Finance, and
Chairman, Goods & Services Tax Council
Ministry of Finance,
Government of India, North Block
New Delhi – 110001
Respected Sir,
Sub: Suggestions on GST Law
At the outset, we thank the Government for considering most of the suggestions on issues related to GST hitherto submitted by the ICAI.
Further, some more policy, law and procedural related issues on GST have been identified and reported by members across India who are involved in GST implementation and suggestion thereon. Compilation of these suggestions is enclosed herewith for your kind perusal. We hope that these suggestions would also be favorably considered.
We shall be glad to provide any further input as may be required and your office in case of any information may reach us at idtc@icai.in or 0120-3045954.
Wish best regards,
Yours sincerely,
CA. Naveen N. D. Gupta
Copy to:
1. Dr. Hasmukh Adhia, Finance Secretary (R), Department of Revenue, Ministry of Finance, Government of India,North Block New Delhi – 110001
2. Sh. Arun Goyal, Additional Secretary, Office of the Goods & Services Tax Council, Tower-II, 5th Floor, Jeevan Bharti Building, New Delhi -110001
INTRODUCTION
1. The Institute of Chartered Accountants of India considers it a privilege to submit its suggestions on GST Law. We have segregated the 121 suggestions on various topics under GST. We shall be pleased to discuss suggestion in meeting to illustrate the points made by us.
2. We look forward to contributing in the drafting of simple, transparent, & fair GST laws in India.
3. In case any further clarifications or data is considered necessary, we shall be pleased to furnish the same. The contact details are:
| Name and Designation | Contact Details | |
| Ph. No. | Email Id | |
| CA. Madhukar N Hiregange Chairman, Indirect Taxes Committee | 9845011210 | madhukar@hiregange.com
|
| CA. Sushil Kumar Goyal
Vice-Chairman, Indirect Taxes |
9830088400 | skgoyal@icai.org
|
| CA. Sharad Singhal,
Secretary, Indirect Taxes Committee |
09310542608 0120-3045954 | idtc@icai.in ;
s.singhal@icai.in
|
For any further information, please visit the website of Indirect Taxes Committee: www.idtc.icai.org.
EXECUTIVE SUMMARY
| GENERAL | ||
| S. No. | Topic(s) | Suggestion(s) |
| 1. | Simplification of GST Law | It is suggested that GST laws be made much simpler and less complex in a way that it could be understood even by a layman or an unorganised taxpayer without the intervention of a tax expert. |
| 2. | GST Compliance | It is suggested that the compliance under GST law be made simple and transparent which would ease compliances, cut or control cost of compliance and create a sense of ease of doing business. For example, the input tax credit mechanism needs to be relooked and eased out availment, apportionment, blockage, credit in special circumstances, and credit for capital goods ! job work which is a painful and cumbersome process of computation. |
| 3. | System integration and testing | It is suggested that adequate “use case testing” with several examples based on business models and business processes by tax experts be conducted / done / checked for compliance related forms and thereafter they should be made available for the end user on the online portal. |
| 4. | Delay in responses from GSTN Helpdesk | Considering the bulk of enquiries made to the help desks it appears that the GSTN helpdesk is overloaded and therefore it is suggested that additional manpower be deployed for resolving queries! issues, reduce call time! email reverttime, etc. to help keep up the good work undertaken by GST helpdesk. Assistance provided by properly trained officials will add to the smooth functioning of the GSTN helpdesk by way of providing specific answers to the queries! issues as against being referred to GST Acts, Rules, FAQs etc. |
| 5. | The duties and responsibilities and powers of the Officers at various levels be specifically put up for public comment
|
It is suggested that:
|
| 6. | GST implications on third country trading/ manufacturing/ service from India
|
The service and goods purchased by them in one Country and sold / delivered in another Country and all that business done from India, are treated as service import and service export when it is accounted in the Books. Therefore It is suggested that suitable rules to be framed in respect of Third country trading / manufacturing /service Business Modules in the Indian Global Economy.
It is also suggested that, third country trading /manufacturing /service companies need to be exempted from GST implications in respect of their global business done from India. |
| 7. | Settlement Commission provision be restored
|
It is suggested that provisions relating to Settlement Commission as provided in Chapter VIII of the Model GST Law is to be reinstated as genuine/bonafide mistakes may occur in the initial phases of the GST regime due to complexity of the Law. These provisions act as an alternate dispute resolution mechanism which is essential and therefore, the settlement commission provisions need to be restored. |
| 8. | Strengthening of Anti- Corruption measures
|
It is suggested that appropriate policies be formulated in order to strengthen the Anti- Corruption measures by building in the accountability of revenue officers. An end-to-end compliance rating concept to be given to the officers to ensure compliance on their part.
|
| 9. | Solution through Twitter handles
|
It appears that a solution provided through twitter and /or FAQ in many cases are contradictory in nature. These are published with a disclaimer which is creating confusion. In such situations there is no guarantee that if a solution / clarifications provided through Twitter / FAQ is followed by a taxable person he will BE protected from any additional liability at a later point in time. As such, the disclaimer needs to be removed or such solutions be converted to official clarifications. |
| 10. | Prospective effect of notification notifying increase in tax
|
Under the vulnerability of introduction of changes with the Council’s concurrence power to retrospectively change / amend / alter / modify the nature of exemption may be detrimental to the interest of the assessees. Therefore It is suggested that a proviso be added to sub-section 11 (3) of the CGST Act, 2017 to provide that “every such insertion / amendment / modification that has the effect of increasing the tax payable be effective from the date of such insertion only”. |
| 11. | Rate of tax on sale of ‘under construction units’or ‘incomplete units’
|
It is suggested that the GST rate for sale of under construction units i.e. sale of units before completion of construction shall not to be more than 12% (6% CGST + 6% SGST) of the agreement value which will make it comparable to the present situation. |
| DEFINITIONS | ||
| 12. | Proviso to the definition of ‘job work’–Exclusion of repairs / maintenance
|
“Job work”means any treatment or process undertaken by a person on goods belonging to another registered person. By this it appears to cover any kind of treatment or process undertaken including repairs, maintenance etc. Therefore, It is suggested that a proviso be inserted to the definition of Job Work to provide that job-work will not include repair or maintenance or other forms of supply which are carried out with respect to the goods belonging to another taxable person. |
| 13. | Location of the supplier of goods
|
The absence of the definition of “Location of the supplier of goods”is causing great concern to the trade and industry. Therefore, It is suggested that “Location of the supplier of goods”be defined as “the location where goods are situated under the control of the supplier ready for supply with a proviso to cover situations in case of bill to ship to model U/s10(1)(b) of IGST Act, 2017”. |
| 14. | EOUs deemed to delicensed vide notification 44/2016-Cus. dt. 29.07.2016 and circular 35/2016-Customs dated 29.07.2016
|
After the notification 44/2016-Cus. dt. 29.07.2016, EOUs have been deemed to be delicensed as a warehouse with effect from 13.08.2016. Therefore, It is suggested to replace with “EOUs deemed to be bonded”. Amend 46/2016-Cus. and withdraw circular 35/2016-Customs dated 29.07.2016 along with “deemed extension of warehousing period co-terminus with LOP” |
| LEVY AND COLLECTION | ||
| 15. | Non-levy of GST on goods listed in section 9(2) of CGST Act
|
In order to maintain a level playing field, it is suggested that all goods be brought into the purview of GST at the earliest, including petroleum, alcoholic liquor, and electricity. Other laws that govern the levy of taxes / duties on such non-GST goods be repealed. |
| 16. | Taxability of Transferable Development rights
|
It is suggested that a clarification needs to be issued that TDRs are not taxable under the GST Laws since it is an immovable property right.
|
| 17. | Levy & Collection under Reverse Charge in case of supplies other than those in course of furtherance of business
|
Section 9(3) of the CGST Act provides that the Government may specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient. By virtue of which tax is payable on any specified supply of goods or services whether or not in the course of furtherance of business therefore, it is suggested that, an explanation to Section 9(3) of CGST Act, 2017, be added to specify that supplies other than those in course or furtherance of business are excluded from the purview of Section 9(3) of the CGST Act. |
In Addition to above ICAI has submitted suggestions on Classification And Exemption, Scope Of Supply, Composite And Mixed Supply, Composition Levy, Time & Value Of Supply, Input Tax Credit, Registration, Tax Invoice, Accounts & Records, Returns, Payments, Refunds, Assessment And Audit, Demands And Recovery, Advance Ruling, Offences And Penalties, Transitional Provisions, Miscellaneous Provisions, IGST –Levy & Collection, Place Of Supply, Zero Rated Supplies And Compensation Cess.
Download Full Text of ICAI’s 121 Suggestions on GST Law submitted to Government
IN LIGHT ENGIEERING INDUSRY MACHINE CAN BE USED WITHOUT THE CONDITION AS MENTIONED
• Any other civil structure not to be excluded from Plant and machinery – Explanation in Section 17 for the purposes of Chapter V (Input Tax Credit) and Chapter VI (Registration) provides that the ‘Plant and Machinery’ means apparatus, equipment, and machinery
DELETE THIS PART
fixed to earth by foundation or structural support
following issue may also please be taken-up:
1. Where the manufacturer is having single registration but the manufacturing plant and/or storage location is divided by public road /railway lane, movement of goods between these two locations should be seamless, without involving any documentation and/or requirement of e-way Bill.
FOLLOWING ARE OBSERVATIONS ON GST EVEN AFTER ONE YEAR OF IMPLEMENTATION:-
01. GST LAW CAN BE EXECUTED ONLY IN WORKS CONTRACT SERVICES ONLY IF THE BOOKS OF ACCOUNT ARE KEPT ON CASH BASIS INSTEAD OF ACCRUAL BASIS SINCE PROCESS FOR REVENUE REALIZATION IN LONG AND DEPENDS ON MILESTONES AND NOT CALENDAR MONTH ENDS.
02. THE EXEMPTION TO PUBLIC UTLITY WORKS CONTRACT SERVICES FOR
03. HSD PETROL ETC HIGH QUANTUM USAGE IN CONSTRUCTION/INFRASTRUCTURE INDUSTRY ON WHICH EXEISE DUTY AND VAT ARE ALREADY PAID @45-52% OF COST OF FUEL APPROX. CANNOT GET CLAIMED AS INPUT SINCE GST PORTAL DOES NOT HAVE ANY SLOT FOR REDUCING SAME FROM GST TAX LIABILITY.
04. TRANSPORTATION -GTA AND ADVOCATE FEE ONLY CONTINUATION UNDER RCM ARE NOT ACCEPTABLE AND WHOLE ISSUE BE DONE AWAY WITH.
05. SYSTEM OF RECOVERY OF GST BY GOVT. DEPARTMENTS OF R&B/NHAI/NHAIDCL/MORTH ETC FROM CERTIFIED BILLS UNDER GST AND ISSUING CERTIFICATES FOR SET OFF OF LIABILITY BE RESTORED INSTEAD OF ADDING GST VALUE IN CONTRACTOR BILL , PAYMENT OF SAME AND REMITTANCE OF GST BY CONTRACTOR ARE CUMBERSOME PROCESS HENCE NOT BEING FOLLOWED IN ANY OF THE GOVERNMENT CONTRACTS EVEN AFTER ANNUAL CELEBRATION OF GST
06. GST PORTAL AUDIT BY CISA/DISA/ AND OTHER SOFT WARE EXPERTS FOR CAPTURING THE COMPLEXITY OF ERSTWHILE EXCISE, VAT, CUSTOMS AND EXEMPTIONS TO PUBLIC UTILITY WORKS ETC BE TAKEN UP TO ENSURE SURVIVAL OF BUSINESS. NOW ENTIRE FOCUS AND ENERGY OF BUSINESS MEN IS EXHAUSTING IN GST COMPLIANCE THAN DOING BUSINESS AND REVENUE GROWTH OF RURAL AND NATIONAL ECONOMY, NOW GST ONLY BENEFITING DEFINED TRADING BUSINESS AND PORTAL DEVELOPERS AND NOT BUSINESS COMMUNITY.
07. COMPUTATION FORMAT AND FORMULE OF GST BE REVISITED EACH BUSINESS WISE AND GSTIN PORTAL TO ALLOW DEDUCTION OF NON GS, EXEMPT, BELOW THRESHOLD UNREGISTED DEALER PURCHASES, LABOUR, EARTH WORK-SOIL AND SAND PURCHASES ON WHICH ROYALTY ALREADY PAID ETC TO REDUCE THE HIGH COST OF HIGH RISK INFRASTRUCTURE AND CONSTRUCTION WORK
THERE IS NO SCOPE FOR REDUCTION OF TAXES ACTUAL./NOTIONAL FOR NON GST & EXEMPT PURCHASES FROM THE BELOW THRESHOLD LIMIT RS.20LACS TURNOVER SUPPLIERS OF GOODS AND SERVICES PARTICULARLY IN RURAL AREAS/REMOTE AREAS OF ROAD/CANAL PROJECT WORKS.
08.GST UNIMPLEMENTABLE DUE TO INHERENT LIMITATIONS IN GSTIN PORTAL AND FRAMING OF GST LAWS FOR WORK CONTRACT SERVICES INVOLVING HUGE VALUES OF GST LIABILITY DUE TO ABSENCE OF TAXABLE LIABILITY COMPUTATION SYSTEM UNDER GSTIN PORTAL BE OUTSIDE THE PRUVIEW PENALTITIES, INTEREST AND PUNISHMENTS AND CANNOT BE TREATED AS OFFENCES. THE OFFENCES UNDER GST MAY BE ENFORCED ON LOPSIDED GSTIN PORTAL CREATORS.
09. GST CAN BE IMPLEMENTED BY THE CONTRACTOR ONLY IF THEIR EMPLOYER/ULTIMATE EMPLOYER IN BOT PROJECTS ALSO IMPLEMENTS THE SAME. ELSE NOT POSSIBLE TO FOLLOW GST.