Government ready to discuss on GST Bills in Winter Session

The Government ready for discussion on the three GST legislations in Parliament even as the Lok Sabha on Tuesday pushed through the I-T Amendment Bill amid din without debate. The government wants these Bills to be approved by the two Houses of Parliament with a consensus in the ongoing Winter Session so that the new tax regime could be rolled out from April 1 next year.

The Centre and states are finalising three Goods and Services Tax (GST) legislations — CGST, IGST and compensation law — which are to be introduced in the ongoing Parliament session, which ends on December 16.

Explaining the urgency to pass the Income Tax Second Amendment Bill, the source said the purpose of it was to ensure the black money money enters the formal banking system.

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“The predominant purpose of the PMGKY scheme is to use the proceeds for benefit of the poor. The political purpose is to impose exemplary tax on black money and then bring it back into the system,” the source added.

Amending the IT Act, the government has brought in a new scheme Pradhan Mantri Garib Kalyan Yojana (PMGKY) under which black money will be taxed at 50 per cent. Besides, 25 per cent of the money will be kept locked in for 4 years without any interest.

If people do not disclose under PMGKY and do so with the IT department afterwards, the amendment to the Act provides that they will have to pay 75 per cent tax. But if the assessing officer catches the assessee holding black the money, then the penalty will go up to 85 per cent.

Indian Express, 29th November 2016

Revised Model GST Law : A Review

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


All you need to know about GST Registration Migration

How to migrate to GST Registration

Registration is fundamental to the administration of any tax. The taxpayer enrolls himself by following the prescribed procedure, and thereafter a unique identification code is granted to such taxpayer, which is to be used in all correspondence. For the introduction of Goods & Services Tax or GST, it has been proposed that the registration of all existing assesses under Excise, Service Tax, VAT and certain other laws be migrated to the new system. The additional documents required will be obtained during the process of migration.

Having said that, let us take a detailed look at the process of migration that has been laid down in this behalf.

Step 1: Applying for provisional registration

Under the Model GST Law, it has been provided that provisional registration will be granted to all existing assessees on the appointed day. To enable this, the GST Common Portal has been made live on the 8th of November, 2016 where existing taxpayers can enroll themselves for smooth transition to GST. The enrolment has been taken up in a staggered manner, and an enrolment plan has been made available on the portal itself.

The respective tax authorities will grant a provisional ID and password to all the existing assessees as per the schedule provided in the enrollment plan. Such-ID and password will be used for enrolment on the GST Common Portal.

In the process of enrollment, certain additional documents such as proof of constitution of business, photograph of promoters / partners / Karta of HUF, proof of appointment of Authorized Signatory, photograph of Authorized Signatory and bank statement will be required to be uploaded.

After filling up the application, it will have to be digitally signed. DSC has been made mandatory for companies, foreign companies, Limited Liability Partnerships (LLPs) and Foreign Limited Liability Partnerships (FLLPs). Others have the option of electronically signing the application using Aadhar Number.

After the application is submitted, an Application Reference Number or ARN will be generated, which can be used for future correspondence.

It has been assumed that all existing Central Excise taxpayers are already registered under State VAT Department. Therefore, it covers both Central Excise and State VAT registration. For assessees under Service Tax, the enrollment has been scheduled from the 1st of January, 2017.

It may be noted that there will be no deemed enrollment under GST. All the taxpayers are expected to visit the GST Common Portal and enroll themselves.

Step 2: Grant of Provisional Registration

The Provisional Registration Certificate will then be made available for viewing and download on the GST Common Portal on the appointed day in FORM GST REG – 21. This Certificate will incorporate the Goods and Services Tax Identification Number (GSTIN) therein.

Step 3: Grant of Final Registration

The documents will be verified by authorized Center/State officials of the concerned Jurisdiction(s). Thereafter, if the information and the particulars furnished are found to be correct and complete, final Registration Certificate will be issued within six months after the appointed date in FORM GST REG – 06.

Assocham tied up with Tally Solutions to understand GST for traders

Assocham has tied up with Software product firm Tally Solutions to enlightenment the upcoming Tax reforms Goods and Service Tax (GST).

As part of the collaboration, Assocham and Tally Solutions plan to conduct a series of conferences for the retail community across the nation, over the next few months.

 Tax experts from government bodies will be participating in these conferences to help clear the air about GST, by discussing the law and its implementation in these events, a statement said.

“A thorough understanding of GST will allow these businesses to continue their functions comfortably post the roll out as well,” Tally Solutions Chief Financial Officer Sathya Pramod said.

The camps will be held across 15 cities, including Mumbai, Chennai, Delhi, Hyderabad, Pune, Indore, Cochin, Goa, Coimbatore, Jaipur, Lucknow, Dehradun, Bhubaneswar, Jammu and Guwahati.

The Business Standard, 28th November 2016

Know How | GST will help in creating more Jobs

The Implementation of GST will lead to 11% in Job creation.

HR services provider TeamLease said that GST would not only have a positive impact on the ease of doing business but also propel formal job creation.

“Adoption of GST will lead to an 11 per cent growth in hiring across sectors. Further, from a region perspective though marginally South India will top the job generation chart,” it said.

Automobiles, logistics, home decor, e-commerce, media and entertainment, and cement sectors are projected to create 11-18 per cent additional jobs annually after implementation of GST.

In the case of IT/ITeS and BFSI segments, the growth rate has been pegged between 10 and 12.5 per cent.

According to TeamLease, around 10 to 13 per cent additional jobs are expected to be created every year by consumer durables, pharmaceuticals and telecommunications sectors.

“The uniformity and the reduction in the average tax burden offered by GST will provide a great impetus to employment creation,” TeamLease Services Co-Founder and Executive Vice President Rituparna Chakraborty said.

The report noted that the predictability of cost of products manufactured or services rendered across the country would improve enterprise productivity.

This would also trigger expansion of services, capacity and product ranges, resulting in a subsequent increase in manpower requirement, it added.

With GST, Team Lease said revenue collection from general sales tax would grow from the current level of 6.3 per cent to 11.49 per cent.

“Service tax, central excise and customs will also witness growth leading to greater funding towards workforce welfare and sustained job creation initiatives,” the report said.

The Economic Times, 28th November 2016

How Denomination will impact market growth in short term

India’s Market growth would be low in short term due to the ongoing denomination programme, said Hindustan Unilever Ltd (HUL). But in long term it would be definitely good for everyone.

“In the short term, market growths to be adversely impacted for a few months,” HUL said in a investor’s presentation.

But the company strongly believes that demonetisation and GST are significant growth driver for India and a win-win for everyone, it added.

According to the company, demonetisation and GST would help industry with “simpler and effective compliance” and “level playing field”.

It would benefit the country with “higher investment led growth” and the government with “lower fiscal deficit and higher tax base”.

In short term, consumers would be impacted by lower cash on hand and would be cautious with their spend. Initially, they would spend only on basic necessities.

HUL further added that trade would be down due to liquidity squeeze and there would stocking of the material as a short term measure.

Its impact would be varied across the geographies but the wholesale trade would be impacted the most. Moreover, in the long distance routes, there would be logistical impacts also.

According to the company, gradual improvement in the market impact is expected to be led by urban segment and would depend on liquidity build up across the chain.

“Speed of recovery will be dependent on liquidity build up across the chain,” said HUL in presentation copy submitted to BSE.

The Economic Times, 28th November 2016


GOOD NEWS : Relief for Banks and Securities

The Government has excluded securities from the definition of ‘Goods’ in the revised draft Model GST Law. It has been done for the relief of stock market, banks, brokers and mutual funds.

Section 2(49) of the revised draft model law states that “goods’’ means every kind of movable property other than money and securities. The previous draft of the Model GST bill had included ‘securities’ in the definition of goods, raising concerns on whether transactions in securities would attract GST.

The government released revised drafts of the Model GST Law, Integrated GST Law and GST Compensation Law on Saturday in a bid to introduce the goods and services tax (GST) and compensation Bills in the current winter session of Parliament.

According to the revised drafts, an ‘anti-profiteering’ measure has been proposed to ensure that trade and industry pass the benefits of reduction in tax rates to consumers. An anti-profiteering authority is likely to be set up for this.

The Bills have also introduced new concepts of “mixed” and “composite” goods as well as anti-profiteering measures.

The Bills will now be taken up by the GST Council, comprising the Union finance minister, the minister of state for finance and representatives of states, on December 2 and 3. The aim would be to introduce the Central GST (CGST), integrated GST (IGST) and compensation Bills in Parliament.

If passed, the government would be able to introduce GST from the targeted date of April 1, 2017. State GST Bills would have to be passed by respective state Assemblies.

The draft Bills do not have GST rates. Earlier, the GST Council had approved different tax slabs — zero per cent, five per cent, 12 per cent, 18 per cent, 28 per cent and a cess on sin and luxury goods. The exact segment-wise rates are yet to be worked out.

The government will, however, have to woo the Opposition over demonetisation as Parliament proceedings remained stalled last week, and politically settle the issue of turf between the central and state officials over administering assessees under GST.

The revised draft GST Bills outlines “mixed” and “composite” goods, which was not there in the earlier draft.

“Mixed” goods mean a seller may give different goods to a buyer, without a dominant price.

For instance, one may go to a restaurant and order a “thali”, comprising rice, roti, vegetables, pulses and a sweet dish. Some of these, such as rice, may be exempt from GST, but others such as the sweet dish may attract a rate, say 12 per cent. In such a case, the “thali” would attract the highest rate, that is, 12 per cent.

Another concept is “composite” of goods, where one dominant good is sold.

For instance, one may go to a mall and purchase a mobile handset. Along with it, the seller may give the buyer a bag for it. The bag might be exempt from GST but the mobile handset might attract 18-per cent tax. In this case, the rate applicable for the dominant good, that is the mobile handset, would apply.

Arguing that one had purchased a good that did not attract GST will not work.

“In a case of composite supply, wherein a supply is made comprising of multiple supplies of goods or services, out of which, one supply is predominant and others are naturally bundled with it, it will be treated as a supply of the predominant one. In a case of mixed supply, which involves multiple individual supplies of goods or services for a single price without any predominant supply, it will be treated as a supply of goods or services which attract highest rate of tax,” said Pratik Jain, leader, indirect tax, PricewaterhouseCoopers (PwC) India.

Jain, however, said it would be a challenge to implement these measures as it was difficult to ascertain if lower GST rate could cut the prices of a good or services, as a corresponding increase in the costs of inputs might affect it.

Asked about Malaysia, which had also introduced this measure, the expert said there were a number of litigations in the country over this.

The Bills also provided for staggering input-tax reimbursements, called input-tax credit in technical language, over a period of three years for goods such as telecom towers and pipelines.

In earlier drafts, intangibles were taken as services, but in the new drafts, this provision has been removed. There was a lot of confusion as to why some intangibles, particularly in the software sector, should be taken as services. One has to wait for exact rules on tangibles to see whether this problem has been resolved.

The new draft has also addressed concerns of stock markets, brokers and mutual funds as securities have been taken out from the definition of goods. This implies transactions — selling and buying — in these papers would not attract GST.

Along with GST Bills, a draft compensation Bill was also made public. This is the first draft as the GST Council decided only last month to have a separate compensation law. The Bill says that a tax revenue growth rate of 14 per cent would be assumed for states with the base year of 2015-16.

The Centre will give full compensation to states in case of revenue loss because of GST for the first five years of the introduction of the new indirect tax system. This would be given at the  end  of every quarter, says the draft Bill.

The Business Standard,26th November 2016

IMPORTANT UPDATE : 25 Key Changes in New GST Law

The Government has proposed revised Goods and Service Tax Law with an ‘anti-profiteering’ clause to ensure to ensure that businesses pass on any benefit of reduction in tax rates to consumers, a move aimed at checking any spike in prices of commodities as a result of the rollout of the ambitious tax reform measure.

25 Major Key Changes in New Amended Model GST Law

The Centre on Saturday unveiled three drafts which include the model GST law, the IGST law and the Compensation law which will be discussed by the GST Council in its two-day meeting starting December 2. The draft integrated GST law said that the Centre will notify the rates on the recommendations of the GST Council but it should not exceed 28%.

Read more about GST India.

The previous draft did not have the “anti-profiteering” clause and tax experts said the gains made by companies due to GST needs to be passed on to consumers. “But for industry it could mean lot of paper work and implementation challenges,” said Pratik Jain, partner and leader, indirect tax, at PWC. To ensure implementation of the anti-profiteering clause the Centre may set up an authority or entrust and existing authority examine if tax reduction benefits have been passed on.

The revised draft model goods and services law + unveiled by the government contains an anti-profiteering clause and says that to ensure its implementation, the Centre may set up an authority or entrust an existing authority 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 or services supplied by him”.

The authority will have the power to impose penalty, “as may be prescribed in cases where it finds that the price being charged has not been reduced,” according to the draft.
The government is keen to ensure that the three legislations are approved in the ongoing winter session of parliament to meet the deadline of rolling out GST by April 1. “These laws will be considered by GST Council in its meeting scheduled for 2nd and 3rd Dec and finalised,” revenue secretary Hasmukh Adhia said on micro blogging site Twitter.

“Many concerns of the services sector, particularly with respect to single centralised registration and clarity in terms of place of supply rules, have not been adequately addressed. Further changes to this draft cannot, therefore, be ruled out,” said Pratik Jain of PWC.


The Times of India, 27th November 2016


80 Items are on GST Exemption List

While the whole exemption list has been finalized as now, it is learned that about 80 items would form part of exemption list (i.e. no GST would be applicable on it). These items include grains, non-mineral water, poha etc.

A committee of officials headed by Revenue Secretary Hasmukh Adhia is preparing the item-wise list for GST rates. Sources said that more than 16000 representations were received seeking exemptions or lower rate of GST.

Common items exempted by the Centre and states include bread, eggs, milk, vegetables, cereals, books and salt. These will continue to be exempted.

items of gst with rates    GST 0% Rate Category Items List  

items of gst with rates    GST 5% Rate Category Items List 

items of gst with rates    GST 12% Rate Category Items List

items of gst with rates    GST 18% Rate Category Items List 

items of gst with rates    GST 28% Rate Category Items List    

GST Rates Item Wise as discussed in GST Council Meeting held on 18th May 2017 – Download PDF

GST Compensation Cess Rates for different supplies as discussed in GST Council Meeting held on 18th May 2017 – Download PDF

Centre and states agreed to exempt most food items including wheat, rice and milk from the Goods and Services Tax (GST).

While manufactured goods will attract 18% GST, other household items such as sugar, tea, coffee and edible oil will attract 5% levy.

Luxury cars will be taxed at 28% GST plus a cess of 15%, while small petrol cars will be taxed at 28% GST plus a 1% cess and small diesel cars at 28% plus 3% cess.

HSN Codes of all Commodities – CLICK HERE 

New  GST, Rates of all Commodities – CLICK HERE 

The negative list of services, exempted from the levy, will be reduced to include only essential services such as health and education. “We will have a very small number of essential services out of the GST net,” the official added. The negative list of services currently has 18 heads, which include health care, education, goods transport agency and non-air conditioned restaurants, among others.

Source : BSTD

Uncertainties keep gold prices in check, no respite likely soon

Gold prices are down for a second week; 2 percent this week and 7 percent since demonetisation.

Global gold prices hit a high of USD 1,338 on the US presidential election day and while many investors bet on the expectations of a run-up rally in gold post Trump’s win, we are sitting at 9-month lows on gold, which is trading below Rs 1,200 an ounce. Indian prices are below Rs 28,600 per 10 grams and silver prices are down 11 percent since demonetisation.

India, the second biggest consumer of gold has witnessed 86 percent of currency being demonetised at one go. The large denominations of note used to buy gold are out of circulation.

The immediate rush to use the soon-to-be-illegit notes, led to a whopping USD 2 billion imports into India and then was soon followed by notices from excise department to 600 jewellers in the country.
The trade since then has come to a near standstill. We are in the middle of wedding season in India, a time when the jewellery buying is at its peak. But with demonetisation and uncertainty on gold, this month seems to be ending in a lackluster mode.

Good monsoons and the 7th Pay Commission which were seen as the strong reasons of good buying in gold have been overshadowed. What has taken over instead is fear and uncertainty and no sales in the industry.

And the rumor mills have been working overtime with temporary gold import ban into the country, limit on citizen’s holdings and check on bank lockers, among talks doing the rounds.

Global market are very closely watching India for its gold demand, and the uncertainty brewing here is impacting the mood elsewhere too.

Usually during times of uncertainty or financial crisis or when the fiat currency is seen devaluing, it is the gold and silver that have been known as a store of value, as the wealth which knows no boundaries. But for India that does not seem to be working.

Turning attention now to the global cues which have seen the USD at 14-year highs like strong economic data, estimates of high spending plans, and possibility of rate hikes in December. This has led to further pressure on prices.

For India in the meanwhile, the record high import duty, an upcoming Budget are also being discussed by the industry and add to that the GST – yet to be decided for Bullion. The uncertainty is here to stay for some time.

Money Control, 26th November 2016