Highlights of Draft Model of GST Law published

The Finance Minister of India on 14.06.2016 has published and made available on public domain the draft model of GST. In his opinion, most of the States except Tamil Nadu has expressed assent on the implementation and adoption of GST.
 

1.       GST Act applies to whole of India

Some Terminologies:

zero-rated supply” means a supply of any goods and/or services on which no
tax is payable but credit of the input tax related to that supply is admissible;
Explanation.- Exports shall be treated as zero-rated supply.

2.       Levy of GST:

The Central GST(CGST) and State GST (SGST) shall be levied on all inter-state supplies of goods/services

3.       Composition Scheme will be available to person whose turnover does not exceed Rs. 50 lacs. The tax rate for the same will be more than 1% of the Turonver during the year. Composition Scheme not applicable to persons dealing in Inter-State transactions.

4.       Taxable Person: Any person carrying on any business whose aggregate turnover exceeds Rs. 10 lacs during a financial year. An Agriculturist will not be considered as Taxable Person.

5.       Time and Value Of Supply: The liability to pay CGST/SCGST will be at the time of supply of Goods/Services.

6.       Time of Supply of GOODS explained: It will be earliest of the following:

(a) (i) the date on which the goods are removed by the supplier for supply to the
recipient, in a case where the goods are required to be removed or
(ii) the date on which the goods are made available to the recipient, in a case where the goods are not required to be removed; or

Rate of Service Tax – Section 67A linked with POT Rules, 2011 to prevent disputes

BACKGROUND – Section 67A and POT Rules:

The Point of Taxation Rules, 2011 (in short POT Rules) was introduced w.e.f. 01-04-2011 to define and determine the point of taxation (in short POT) i.e. point in time when a service shall be deemed to have been provided. The twin objectives was to bring certainty regarding due date for payment of service tax (on accrual basis) and to determine the applicable rate of service tax as the one prevailing on the date of POT. While issuing the draft rules, the Central Government stated as under: 

“The purpose of these rules is to introduce clarity and certainty in the matter of levy and collection of Service Tax particularly in situations of change of rate of service tax or imposition of service tax on new services. At present there is lack of clarity as to the date from which the changed rate or a new levy of service tax become payable and tax payers as well as tax officials face uncertainty in this regard as the provisions are not explicit. Similar uncertainty prevails in regard to cases of continuous supply of services. So far these issues have been addressed by CBEC through clarificatory circulars that accompany such changes. A need has been felt to put the regulatory frame work on a transparent, clear and durable basis and hence these rules”. 

Proposed MVAT Registration process

The Maharashtra VAT (MVAT) Department is proposing to change the online registration process again. Following are the highlights and process of the same:

Registration under various Acts
The applicant shall visit MSTD Website. The Portal will display option for
• New Registration
• Amendment
• Cancellation
• Tax Practitioners Enrollment
• Consulates Registration
• Employers/Other Bodies Registration i.e. TDS/TCS.

 
New registration under various Tax Acts

Penalties under Service Tax Law

Finance Act 2015 has drastically amended the penalty provisions under the Finance Act 1994 (Service Tax law) in order to ensure nondiscriminatory form of penalties. Earlier penalties u/s 76 (for short payment of S/Tax) and u/s 78(Suppression of facts) used to be at Rs 100/- per day or 1% per month whichever is higher. This lead to the number of litigation upon the calculation of penalty. Finance Act 2015 has amended the same and the new provisions have been laid down. Summary chart of the new provisions is as follows:

Notifications and Recent Caselaws summary in Indirect Taxes in India

 Service TAX

Notifications/Circulars     

Ø   Seed testing and all ancillary activities thereto are not liable to Service tax – CBEC clarifies

It came to the notice of the CBEC that certain field formations have taken a view that all activities incidental to seed testing are leviable to Service tax and only the activity in so far it relates to actual testing has been exempted in the Negative List.

After elaborate interpretation of the words in the Statute, the CBEC vide Circular No. 189/8/2015-Service Tax dated November 26, 2015 has issued clarification that all testing and ancillary activities to testing such as seed certification, technical inspection, technical testing, analysis, tagging of seeds, rendered during testing of seeds, are covered within the meaning of ‘testing’ as mentioned in sub-clause (i) of clause (d) of Section 66D of the Finance Act. Therefore, such services are not liable to Service tax under Section 66B of the Finance Act.

RECENT CASE LAWS

 Ø  

Recommended Rates for GST in India

Standard GST Rates @17-18% and GST Revenue Neutral Rate @ 15-15.5%- CEA Led Panel Recommends to FM

Finally ,its official that today  the chief economic advisor, Mr Arvind Subramanian, has submitted his report on the goods and services tax (GST) to Mr Arun Jaitley,Finance Minister  of India.

The most amazing thing in this report is recommendation of 15-15.5% GST Revenue Neutral Rate (RNR)  which  is much below than the minimum expectation of 18% GST RNR . This is going to be  a very welcome step amongst the trade of India .
It should be understood that GST is going to create a uniform market in India  beside  strengthening  the country’s tax institutions.
In order to arrive at such GST RNR , the panel had explored 3 three different methods to calculate the crucial revenue-neutral rate.Mr Arvind Subramanian claimed that this was a technical exercise and we took into account methods using direct taxes, indirect taxes and an approach suggested by the NIPFP.

It is pertinent to note that RNR is a rate  at which there will be no loss to state and central governments.
The committee decided to provide a range for the GST rate for various products and services:

1. Lowest GST Rates @ 12%

2.Standard GST rates @ 17-18 %  

Maximum products and services to fall under this rate. 

3.Higher GST Rates @ 40 %Cigarettes, luxury cars and beverages may attract higher GST rate.

Exclusions
The following sectors have been excluded while calculating the tax rate  :

1. Real estate, 
2. Electricity 
3. Alcohol and 
4. petroleum products

  Since ,some states have expressed reservations over giving up tax control on the lucrative items but the CEA panel suggested these be brought under the GST ambit soon.

The CEA led Committee has also suggested  for dilution of 1% inter state levy of additional tax .
(Anand Mishra, Founder Advocate , AMLEGALS – The author is a leading advocate who handles cases in Tribunals  & High Courts of India. He can be contacted on anand@amlegals.com and www.amlegals.com)

Executive Summary of Report for possible rate of tax under GST in India

 Highlights of the Executive Summary of the Report of the Committee headed by the Chief Economic Adviser Dr.Arvind Subramanian on Possible Tax rates under GST

 CA Rubneet Kaur

(Report submitted to the Finance Minister; On the Revenue Neutral Rate (RNR), the Committee recommends the same in the range between 15 percent and 15.5 percent (Centre and states combined) with a preference for the lower end of that range)

       At the outset, following are the important points explained in the report-

1.       The term revenue neutral rate (RNR) will refer to that single rate, which preserves revenue at desired (current) levels

2.       The RNR should be distinguished from the “standard” rate defined as that rate in a GST regime which is applied to all goods and services whose taxation is not explicitly specified.

3.        On the RNR, the Committee’s view is that the range should between 15 percent and 15.5 percent (Centre and states combined)

4.       The Committee would recommend that lower rates be kept around 12 per cent (Centre plus states) with standard rates varying between 17 and 18 per cent.

5.       Demerit rates—other than for alcohol and petroleum (for the states) and tobacco and petroleum (for the Centre)—will have to be provided for within the structure of the GST.

6.       The Committee recommends that this sin/demerit rate be fixed at about 40 percent (Centre plus states) and apply to luxury cars, aerated beverages, paan masala, and tobacco and tobacco products (for the states).

7.       If policy objectives have to be met, instruments other than tax exemptions such as direct transfers could be deployed

8.       Eliminating all taxes on inter-state trade (including the 1 percent additional duty) and replacing them by one GST will be critical to achieving the objective of Make in India

9.       The proposed structure of tax rates will have minimal inflationary consequences.

10.   . Bringing alcohol and real estate within the scope of the GST would further the government’s objectives of improving governance and reducing black money generation without compromising on states’ fiscal autonomy.

11.   Bringing electricity and petroleum within the scope of the GST could make Indian manufacturing more competitive

12.   Eliminating the exemptions on health and education would make tax policy more consistent with social policy objectives

Detail is as under

Committee headed by the Chief Economic Adviser Dr. Arvind Subramanian on Possible Tax rates under GST submitted its