1. GST BEFORE 16/09/2017
QUESTION:- Is it possible to postpone GST beyond 16th Sept. 2017?
ANSWER: – GST is not coming on 1st April 2017 and now lawmakers have given new date 1st July 2017. You mean to say that they will give a new date 1st Sept. 2017 and then have a situation in which again they will postpone it.
QUESTION:- Yes there may be an eventuality then what will happen?
ANSWER: – It is the duty of the law makers to introduce GST from 1st July 2017 since they have declared that the final date is 1st July 2017. So there should not be any apprehension in this respect.
QUESTION:- Ok, I am taking it you are sure. But for the benefit of the readers please take this hypothetical question.
ANSWER: – Ok, it appears that the power of the Government to impose the erstwhile Indirect tax will end on 16th Sept. 2016 so it should be treated as deadline. It is also apprehended that how the revenue will work in absence of all the Indirect taxes.
Though theoretical it is OK but practically our Lawmakers have two options.
First go to the President of India to remove this difficulty as is provided in the GST constitution amendment bill or go to parliament before a reasonable time to remove this difficulty.
2. MAIN HURDLE IN GST:- DUAL CONTROL
QUESTION:- What are the main hurdles in the timely introduction of GST?
ANSWER: – At present as per the statements of the Lawmakers and News paper reports, there is no problem and they will introduce the GST as per their revised schedule.
QUESTION:- The last problem was “Dual Control”?
ANSWER: – Yes it was and it is now solved by the States and the Centre.
QUESTION:- Now dual control will not create any problem?
ANSWER: – Now it will create problems for the Dealers who will face this situation when GST will actually be implemented. If dealers will have problem then certainly the lawmakers will have to face the problem. The solution will create more problems for dealers as well as lawmakers.
3. IGST :- IT WILL INCREASE COMPLIANCE COST
IGST is very complex tax and will it increase the taxation cost also?
IGST will not be a third tax and instead of it , it will be a mechanism to monitor the interstate trade and commerce and through this system one part of the tax will go to the centre and other part will go to the state where goods will be consumed.
It is not a third tax but certainly it will increase the compliance cost.
4. MIGRATION OF DEALER TO GST
QUESTION:- How GST Migration of Dealers is going on?
ANSWER: – The work is very slow and in most of the case first part of the Migration is completed in schedule time.
QUESTION:- What do you mean by first part of the Migration?
ANSWER: – First Migration means creating the user id and Password with the help of provisional id and password supplied by the respect indirect tax department but still the uploading of documents and verifying the information through digital signatures is still going on. I think it is good testing of the GSTN Network.
5. WILL IT BE A GAME CHANGER!!!
QUESTION:- GST will be a real game changer?
ANSWER: – Yes it will be.
QUESTION:- Will it be positive?
ANSWER: -Yes, I hope and pray for it. The success of the GST will bring stability to the Indian economy but its failure will be very tough to bear. Once implemented there will be no facility to roll back, practically.
6.WHO WILL BE MORE POWERFUL IN GST:- CENTRE OR STATE
QUESTION:-Who will be more powerful in GST centre or states?
ANSWER: – Obviously Central Government both economically and administratively. See in GST council the central government practically has the veto power and further the centre’s tax base will also increase.
7. GST PROCEDURES :- AMPLIFICATION IS MISSING
QUESTION:- The GST procedures should be easy and user friendly. What are the Indications in this respect considering the fact that till today two model Drafts of the GST law have been introduced by the Lawmakers.
ANSWER: – Yes it should be but as appears from the Draft law of GST including revised draft law of GST the procedures are not simple. If Lawmakers wants to make GST a success then “Simplification” should be there on their top agenda. If you want to increase the number of returns, procedural hazards then you will end with a complex and confusing law which will not be good for the taxpayers.
The law makers have still time so we can expect a lot on this front.
8.FEDERAL STAFF FOR GST
QUESTION:- You have talked about the ‘Federal staff” for the GST regime to avoid the 50:50 type of solution of Dual control. Is it possible? Will it not create cadre, seniority etc. problems.
ANSWER: -I think I have listened this idea at a debate on GST on a News channel. I found it the most viable solution of Dual Control problem. It is my suggestion Now and I know it will be very difficult but see here the Indian format of the GST is itself is very difficult to implement so one more unique step of “Federal staff” can be taken to relieve the taxpayers from future problems.
9. RATE STRUCTURE UNDER GST
QUESTION:-Is there any idea about the rate structure in GST?
ANSWER: – Yes the law makers have decided a four tier rate structure and it is 5%, 12%, 18% and 28%.
QUESTION:- What will the commodity wise rate structure. The taxpayers were waiting for it eagerly.
ANSWER: – The final rate structure is not declared yet but it is declared that 5% rate will be for common use items and the standard rate will be 12% and 18% and further the rate on “Demerits Goods” will be 28%. Luxury and demerit goods will further attract additional cess also.
The essential items will be at “Zero” rate hence most of the essential goods including food items which constitute half of the Cost inflation Index will be exempt from tax.
The final list may be prepared but still not declared.
QUESTION:- What about tax rate on Gold and precious metal?
ANSWER: – Centre proposed 4% for it but it is still kept pending considering the view that l lower rate is demanded by the concerned Trade and Industry and present rate of tax we can expect a much lower rate than 4% on this commodity.
10. PROVISION FOR ARREST
QUESTION:-What is the controversy about arrest provisions in GST Law?
ANSWER: – Yes , there are lot of apprehensions about these arrest provisions in the GST draft law and even in Draft GST law no substantial change have been made even after lot of representation by the trade and Industry. In fact the thresholds limit for Cognizable and non-bailable of has been reduced to Rs. 100 Lakhs. In the first Model Draft the threshold limit was Rs.250 Lakhs.
In the last GST council meeting the issue was discussed and as per news paper reports there is an agreement to make the threshold to Rs. 2 Crore. We still have these type of provisions in existing Service tax and Central Excise Laws so there is nothing new in this provision though the apprehension of the “Trade and Industry” .
QUESTION:- What experts are saying about the “Arrest” provisions of GST?
ANSWER: -Experts are also of the opinion though anti-profiteering and prosecution provisions may act as a deterrent for tax evasion, these are likely to do more harm than good under GST. It is said by Experts that sweeping powers are given to officials with discretion and subjectivity, it is likely to result in rampant misuse of authority creating hardships for GST dealers.”
11. GST RETURNS
There is disturbing news about number of returns under GST. Is there any fact that the number of returns to be filed under GST? Are there Monthly returns in GST? Will it not increase the compliance cost of the dealers.
ANSWER: – Yes there will be Monthly returns under GST and the dealers have to file returns with regular and very short intervals. There will be GSTR-1 (Outward supply) and the Last date will be 10th of the Succeeding month then GSTR-2 (Inward Supply) to be filed after 10th but before 15th and GSTR- 3 (Monthly return) to be filed before 20th of the succeeding Month hence there will be minimum of 36 returns for ever dealer. This number is quite high and requires reconsideration.
QUESTION:- The whole system will be online so what will be the problem in filling of GST returns?
ANSWER: – There will be no problem for big dealers but Majority of GST dealers will come from medium and small sector and at present they are only paying VAT and are out of the preview of central Excise. They are in most of the states filing quarterly return and their Output and Input returns are merged with the quarterly return hence they are filling four quarterly return and one yearly return and now they have to file 37 returns in a year so it will be a problem for majority number of dealers.
Lawmakers should look into this problem and solve it considering the fact that the more procedural compliance will create problems for the dealers.
12.COMPOSITION SCHEME FOR SMALL DEALERS
QUESTION:- Is there any provision of the “Composition Scheme” under GST for the dealers who are not willing or not able to follow the whole procedures of the GST?
ANSWER: – See here composition schemes are not viable for the dealer who is selling goods to the other GST dealers because of input credit problem. So the composition schemes are viable for the dealers who are directly selling goods to the consumers.
Composition scheme is the simple method of paying tax with very minimum procedural compliance.
QUESTION:-What will be the rate of Composition under GST? The dealers will be required to pay two composition fees under SGST and CGST?
ANSWER:- In draft Model GST the provisions of the Composition schemes are there and the threshold for composition is Rs. 50 Lakhs turnover and the rate will be not less than 2.5% each SGST and CGST i.e. total 5% for Manufacturers and for dealers the rate will be 1% each for SGST and CGST i.e. total 2% .
This is subject to final enactment of the Law.
QUESTION:-Is there any exception of dealers who will not be eligible for Composition Scheme under GST?
ANSWER:- The service Tax dealers and IGST dealers will be the exception and will not be able to go for composition besides some more exceptions.
QUESTION:-If a person has one unit which is manufacturing unit and selling manufactured goods to other dealers and further he has one more business in which he has a store and sale the goods directly to the customers. Now he wants to opt for composition scheme for this store and Normal GST Tax for the manufacturing unit. Is it permissible?
ANSWER:- No, it is not permissible. A person having PAN have to opt for composition scheme for all the units under same PAN hence composition scheme for only one of such unit is not permissible.
This is provided in the first proviso to Section 9(1) of the revised model GST Act.
Keep reading and send comments for corrections.
(CA SUDHIR HALAKHANDI, Laxmi Market, BEAWAR-305 901 (Raj), Rajasthan, Cell: – 98280 67256, Sudhirhalakhandi@gmail.com)