GOODS AND SERVICES TAX REFORM TO CONSOLIDATE INDIRECT TAXATION CA. SANJEEV MALHOTRA FCA, FCS, ACMA, LL.B.

What is GST  GST is a comprehensive value added tax on goods and services  It is collected on value added at each stage of sale or purchase in the supply chain  No differentiation between Goods and Services as GST is levied at each stage in the supply chain  Seamless input tax credit throughout the supply chain till tax is charged on final consumption value  At all stages of production and distribution taxes are a pass through and tax is borne by the final consumer  Exemption limit to be uniform; to maintain value chain, exemption limit to cover only retail trade where transactions with ultimate consumers; this will ensure proper input tax accounting and rebating mechanism for exports.

Present Indirect Tax Structure Present tax structure Excise Duty Taxable Event is Manufacture Service tax Taxable Event is provision of service Sales tax/Vat/CS T Taxable Event is Sale of Goods Customs Duty Taxable Event is Import or Export Entry Tax/ Entertain ment tax / Other taxes

Taxes to be Subsumed - Central Central Taxes Excise Duty Service Tax CVD and SAD part of Customs Duty Surcharges and Cess

Taxes to be subsumed - State State VAT/ CST Purchase Tax Entry Tax Entertain ment Tax not of local bodies Luxury Tax Tax on lottery, Betting and Gambling Surcharge s and Cess Octroi

Proposed Indirect tax Structure SGST Intra State Supply of Goods and Services Vatable Can be paid out of SGST / IGST credits CGST Intra State Supply of Goods and Services Vatable Can be paid out of CGST / IGST credits IGST Inter State Supply and Import of goods and Services Vatable Can be paid out of IGST/ CGST/SGST credits in sequence Additional Applicable on IGST transactions for 2 years Non Vatable Payable only in cash. collected by centre and assigned to States

GST exclusions Following goods and services will not be part of proposed GST. ◦ Alcohol for human consumption. – State Excise plus VAT. ◦ Electricity – Electricity duty. ◦ Real Estate – Stamp duty plus property taxes ◦ Petroleum Products – (to be included from the date to be notified by GSTC) ◦ Tobacco Products – GST with Central Excise

IGST Adjustments and Settlement IGST credits can be adjusted for payment of IGST, CGST and SGST in sequence by importing dealer. The exporting state will transfer to centre the credits of SGST used for payment of IGST. The centre will transfer to the importing state the credits of IGST used for payment of SGST. Central Govt. will act as a clearing house and transfer the funds across states.

Process of Registration Process of Registration Regn. To be done within 30 days. PAN based 15 digits GSTIN to be allotted. Gross Annual turnover all over the country will be considered for regn. Or compounding Scheme. Compulsory registration for dealer of inter state sale or reverse charge cases. Unique identification no. for UN Bodies and Govt. deptt./ PSUs The concept of ISD to continue for services. Suo moto registration in Enforcement cases. Multiple registration in same state allowed for Business Verticals.

Process of Registration… contd Process of Registration… contd The scheme of TRP and Facilitation Centres to be started. Compulsion to use DSC in case reqd. by any other law. Application in GSTN and printed Extract to be submitted to concerned tax authority within 30 days. GSTN will communicate with applicant and concerned tax authority. Approval or Rejection to be done within 3 working days otherwise it will be deemed approved by GSTN. Risk profiling of assessee to be done by tax authority and input in GSTN.

Process of Payment Online tax payments are required. Bank payments are restricted to Rs. 10,000/- per challan. Challan to be generated from GSTN which will have unique Common Portal identification no. (CPIN). CPIN will remain valid for 7 working days. The system will be integrated with RBI system. RBI will act as clearing house for Govt. Cheque bouncing – System will bar such assessees from this facility.

Process of Refunds GSTN to be integrated with Customs deptt. Refund application to be filed online. Refund application to be made within time limit. (1 year as present) Refund to be processed in a specified time limit. Stress on online verification of information. Pre and post audit of refunds to be carried out depending on amounts. Provision of interest on delay in payment of refund.

Way Forward for Introduction Constitutional Amendment Bill to be passed. To be ratified by 50% of State Assemblies. Assent by President Constitution of GSTC. GSTC to recommend GST law and Procedure. GST law to be introduced in Parliament and State Assemblies. GSTN (GST network) to be made operational.

Likely GST Administration  CGST by Union department and SGST by State Revenue deptt.  Cases with turnover upto 1.5 crores exclusively with State Revenue deptt.  Union to deal only with Enterprises having Pan India presence.  Routine matters with State and monitoring with Union.

Returns Mandatory E filing of Returns. Returns to be made transaction wise. Returns up to a certain turnover limit will be assessed by one AA.

THANK YOU CA. SANJEEV MALHOTRA FCA, FCS, ACMA, LL.B