Revised Model GST Law : A Review

November 30, 2016   admin  GST News
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The Government Presented a revised draft model Goods and Service Tax Law last weekend.

This Includes :

  • The Model Goods and Service Tax Law
  • The Model Integrated Goods and Service Tax Law
  • Draft Goods and Service Tax Compensation Law

The esssential part of these is the Model GST Law that includes mechanism of GST i.e Registrations under GST, Returns under GST, and Refund under GST. Some improvements have been done as compared to earlier drafted GST Model in June.

Read more about GST India.

Improvements in Revised Model GST Law :

  • ‘Securities’ will not attract any tax under GST.
  • Supplies to Special Economic Zones (SEZ) will continue to be exempt from indirect taxes.
  • Wider definition of ‘input’ and ‘input services’ in input tax credit provisions.
  • Stock transfers will be taxed under GST, and while that may increase working capital costs, it will allow set-offs as well.
  • Transition provisions have been improved.

Negatives :

The list of negatives or provisions that could do with improvement is just as long.

  • Actionable claims have been included in the definition of ‘goods’. This could spell trouble for securitisation and other debt-related businesses as well as the state-run lottery business.
  • Intangible goods have not been excluded in the definition of ‘goods’. This misses an opportunity to resolve several litigious positions on software etc.
  • Place of Supply and Time of Supply provisions that could adversely impact online purchases from foreign e-commerce sites.
  • Valuation

Anti-Profiteering :

The surprise inclusion in the model law has been that of an anti-profiteering provision. It’s a short section with big implications.

163. Anti-profiteering Measure

  1. The Central Government may by law constitute an Authority, or entrust an existing Authority constituted under any law, to examine whether input tax credits availed by any registered taxable person or the reduction in the price on account of any reduction in the tax rate have actually resulted in a commensurate reduction in the price of the said goods and/or services supplied by him.
  2. The Authority referred to in sub-section (1) shall exercise such functions and have such powers, including those for imposition of penalty, as may be prescribed in cases where it finds that the price being charged has not been reduced as aforesaid.

Bloomberg Quint, 30th November 2016


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