Author: Microvista-Team

As GST is a destination-based levy, states will not be able to waive it to encourage industry

With the goods and services tax (GST) being destination-based, states might be unable to provide incentives to encourage local industry.

At the GST Conclave in New Delhi, Revenue Secretary Hasmukh Adhia on Tuesday said, “States are wondering how to continue with promised benefits. Any incentive has to be by way of the Budgets.”

States offering the incentives might not even be able to collect taxes, he added. In inter-state sale of goods, the destination states would collect the tax.

Some states currently offer incentives through refunds. As the value-added tax is origin-based, some states pay back the producers, irrespective of whether or not goods move out of the state.

Once the new indirect tax regime is rolled out, states may only be able to offer business-to-consumer (B2C) incentives, but not business-to-business (B2B) ones.

Adhia gave the example of goods produced in Gujarat but consumed in Bihar “What right will Gujarat have to forgo the tax of Bihar?” he said.

The Centre would continue with area-based exemptions to hilly and Northeastern states by way of refunds, the revenue secretary said.

Pratik Jain, leader, indirect tax, PwC-India, said incentives offered by states would likely get limited to goods consumed within the states.

“Besides, the effective rate of VAT may also go down from 13-14 per cent to 9 per cent on most products under the GST, narrowing the relative advantage industry enjoys,” said Jain.

Service tax rate to remain unchanged

Although the service tax rate will go up from 15 per cent to 18 per cent, Adhia said the effective rate would remain the same, as service providers would be allowed input tax credit for goods used by them to providing services. “Currently, a bank does not get an input tax credit for the stationary or office supply it uses. Under the GST, it will get that, so the effective tax rate will remain the same,” he said.

http://www.business-standard.com/article/economy-policy/gst-cloud-on-states-industry-sops-117042501301_1.html

MUMBAI: If you are an interior decorator based in Mumbai and are providing services on-site to a client in Bengaluru (where you don’t have a fixed place of business), then irrespective of your turnover, you will have to register under Goods and Services Tax (GST) in the state of Karnataka.

Small businessmen or professionals (such as architects, fashion designers, make-up artists, trainers, musicians, stand-up comedians — et al) providing taxable goods or services may find that they have to register under GST if the term ‘casual taxable person’ applies to them. This registration will be required even if they fall below the threshold limit for GST levy. Currently, the exemption limit for GST is a turnover of Rs 20 lakh (Rs 10 lakh in NE states).

The term ‘casual taxable person’ is specifically defined as ‘One who occasionally undertakes transactions involving supply of goods or services or both in the course or furtherance of business, whether as principal, agent or in any other capacity, in a state or a union territory where he has no fixed place of business’.

Nihal Kothari, executive director, Khaitan & Co, a law firm, illustrates: “A jeweller who has a showroom in Mumbai but participates in an exhibition-cum-sale in another city would fall under this category. However, if he sends the consignment from his Mumbai store, then it would be an inter-state sale and would not require his registration as a casual taxable person.”

Bipin Sapra, indirect tax partner at EY India, says, “The facts of each case will determine whether or not it would be a case of an inter-state supply or one falling in the category of supply by a casual taxable person. If both the place of supply and the location of the service provider is in a state where he doesn’t have a fixed place of business, registration as a casual taxable person may be required — more often than not, B2C transactions may fall in this category.”

Casual taxable persons are required to apply for registration five days prior to the commencement of business (or in other words, before entering into the transaction for supply of goods or services). The registration certificate is valid for 90 days and can be extended up to another 90 days. A TOI reader, who is a small businessman, wrote to us to express his dismay. “At the time of application for registration, an advance deposit of tax-equivalent to the estimated tax liability for the period  ..

Non-residents suppliers also require GST registration

On similar lines, even non-residents who occasionally supply goods or services but have no fixed place of business in India, will require GST registration. The modalities relating to registration and payment of estimated tax are the same as for ‘casual taxable person’. “For non-residents who occasionally supply goods or services, it is necessary that the application for registration be signed by an authauthorised signatory in India. Thus, they will need to seek help of an authored agent. On supply goods or services to India, they will have to pay an advance deposit of GST, against which logically they will be able to claim input tax credit with the help of such authorised agent, says Sachin Menon, indirect tax leader at KPMG India.

Menon says this provision is somewhat similar to the CBEC notification issued on December 1 last year, where the place of provision of a service was deemed to be the location of the unregistered service recipient. Consequently, digital supply — such as of music or movies — was subject to service tax, even if the supplier was based overseas. “In the case of equalisation levy (dubbed as Google tax) applicable @6% on gross B2B online advertisement revenues earned by a foreign entity, it is reported that the companies are passing on this tax burden to the customer, by way of higher pricing. A similar scenario could emerge here,” says Bipin Sapra, indirect tax partner at EY India.

http://economictimes.indiatimes.com/news/economy/policy/professionals-may-face-gst-as-casual-taxable-persons/articleshow/58355155.cms

NEW DELHI: A body of tax advocates today asked Finance Minister Arun Jaitley to make procedures and paperwork related to the upcoming Goods and Services Tax (GST) regime simple and less cumbersome.

“The draft GST rules have prescribed detailed paperwork for maintenance of records for GST purposes, which are highly complex and cumbersome. This will cause immense problem and hardships to assesees, especially small traders and businessmen,” All India Tax Advocates Forum President MK Gandhi said.

Under the draft rules, detailed records are to be kept not only by suppliers of goods or services, but also by intermediaries such as warehouse owners, transporters and agents, he said.

In addition to goods sold, they have to also track stocks given as free sample or gifts, Gandhi said in a statement.

“Even as concepts of manufacture or trading are no longer relevant under GST, the cumbersome record keeping requirements will continue to be bases on these lines. This will put unwarranted burden and botheration to assessees,” the forum said.

Gandhi further said that under the new tax regime no deletion or overwriting of entries will be allowed in registers, accounts and documents.

Such complicated paperwork will be too much for small time traders and businessmen to cope up with, he added.

The government plans to roll out the GST from July 1, which will subsume host of indirect taxes.

“The consensus on GST will go down in history as a great illustration of cooperative federalism. GST reflects the spirit of ‘One nation, One aspiration, One determination’,” an official statement quoted Modi as saying.

Prime Minister Narendra Modi said the consensus on Goods and Services Tax (GST) reflects the spirit of ‘one nation, one aspiration, one determination’.

“The consensus on GST will go down in history as a great illustration of cooperative federalism. GST reflects the spirit of ‘One nation, One aspiration, One determination’,” an official statement quoted Modi as saying.

The Prime Minister was delivering his opening remarks at the third meeting of the Governing Council of Niti Aayog.

According to the statement, the Prime Minister also said GST shows the strength and resolve of the federal structure.

Modi gave credit to all chief ministers for coming on one platform for GST, keeping aside ideological and political differences.

President Pranab Mukherjee on April 13 gave assent to four key legislations on GST. The government plans to roll out the new indirect tax regime from July 1.

GST, the biggest taxation reform since Independence, will subsume central excise, service tax, Value Added Tax (VAT) and other local levies to create a uniform market.

http://www.moneycontrol.com/news/business/economy/gst-great-illustration-of-cooperative-federalism-pm-modi-2263877.html

NEW DELHI, APRIL 20:

Businesses will now be permitted to keep accounts and records on their computers under the Goods and Services Tax (GST) as well as file online applications for advance rulings and appeals and revisions against tax orders.

These have been proposed by the Central Board of Excise and Customs in the draft rules for accounts and records under GST.

However, in what could increase the compliance burden for them, they would also be expected to maintain separate accounts of each activity including manufacture, trading, supplies, balance, as well as invoices and bills for all transactions.

The rules have proposed that all registered persons will also have to maintain records of monthly production, including details of raw materials and final goods as well as details of suppliers and retailers and warehouses where goods are stored.

Stock registers would also have to maintain details of goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples.

“Every registered person shall keep the books of account at the principal place of business and at every related places of business mentioned in his certificate of registration and such books of account shall include any electronic form of data stored on any electronic device,” said the draft rules.

Further, once an entry is made in registers, accounts and documents, they can not be erased or corrected without attestation and if the registers are in electronic form, a log of every deleted entry would have to be maintained.

Meanwhile, a separate set of draft rules on advance ruling under GST proposes that the Centre and the State government will appoint an officer in the rank of Joint Secretary with at least three years of experience at the level as a member of the Authority for Advance Ruling.

Applications for advance rulings can be filed on the GST Network portal along with a fee of ₹5,000. Appeals against the advance ruling would entail a fee of ₹10,000. The draft rules for appeals and revisions that applications to the appellate tribunal can be filed online but physical hard copies of the application and a certified copy of the decision or order appealed would have to be submitted within seven days of filing of the appeal.

Appeal option

The draft rules have also prohibited providing additional information or evidence to the Appellate Tribunal during hearing of the case. In case they are not satisfied with the order of the Appellate authority or Tribunal, taxpayers can then appeal to the High Court.

Experts welcomed the move to allow electronic or digital maintenance of records and filing of appeals. But they said that the compliance burden would significantly increase.

“We will have to see the impact of the proposed move on the service industry and how it plans to maintain accounts showing the quantitative details of goods used in the provision of each service, details of input services utilised and the services supplied as it is now a mandatory norm under GST,” said Rakesh Nangia, Managing Partner, Nangia & Co, on the draft rules for accounts and records.

The CBEC has sought comments from the public on these draft rules by April 27 and these will be taken up for approval by the GST Council in its meeting on May 18 and 19.

http://www.thehindubusinessline.com/economy/policy/draft-gst-rules-allow-efiling-of-appeals-digital-accounts/article9654288.ece

KOLKATA: Gold may become costlier for Indians if the government accepts chief economic advisor Arvind Subramanian’s suggestion to put the yellow metal in the 12% tax bracket under GST.

With an import duty of 10%, tax on gold may turn out to be 22%, which will reduce its consumption in the physical form in the second largest gold consuming nation in the world.

At present, gold attracts an import duty of 10%. In addition, there is a VAT of 1% and an excise duty of 1%.“For a healthy development of trade, GST and import duty combined should not cross 12%; ideally, it should be in the range of 1012 %,” Shekhar Bhandari, business head for global transaction (banking and precious metals), Kotak Mahindra Bank, told ET.

Late last year, there was agreement on five broad GST slabs -0 (the exempted category), 5%, 12%, 18%, and 28%. While retailers and jewellers want the government to peg GST at 1.25%, keeping the customs duty intact at 10%, manufacturers and bullion dealers want a 6% GST and an import duty of 6%. Surendra Mehta, national secretary, India Bullion & Jewellers Association, reckons that import duty should be at 6% and GST should be 6%.

“If the tax incidence remains high, then there’s a propensity among people to evade tax. And that results in entry of gold through the illegal route which no government would like. Smuggled gold affects trade too,” Mehta explained.

Gold demand in the country fell 21.2% last year from the year before to 675.5 tonnes, according to a World Gold Council (WGC) report.

http://economictimes.indiatimes.com/markets/commodities/news/gst-may-make-gold-costlier/articleshow/58041530.cms

The European Securities and Markets Authority (ESMA) has today published a feedback statement setting out the digital format which issuers in the European Union (EU) must use to report their company information from 1 January 2020. It concludes that Inline XBRL is the most suitable technology to meet the EU requirement for issuers to report their annual financial reports in a single electronic format because it enables both machine and human readability in one document.    Read more

24th dec, 2016

NAGPUR: Though India has made rapid progress in utilization of modern technology, a lot more is needed to be done on this front so as to give economy a boost. Implementation of the Goods and Services Tax (GST) from next year will also help bring about all-round development of the country as it will generate more revenue, said MS Unnikrishnan, managing director and chief executive officer of Thermax Ltd, on Thursday.   

Addressing aspiring entrepreneurs at Vidarbha Industries Association, Civil Lines, Unnikrishnan said that science creates technology which, in turn, creates commerce.

He said, “India is lagging behind when it came to creating new technology as we are losing out on a lot of opportunities to help the economy grow. We must think differently from what we have been till now. There are many opportunities that can be exploited if we are a little creative with our ideas,” he said.

He urged the start-ups to capitalize on technology to fill the void in industries. Taking his point forward, he elaborated on the concept of hydroponic farming, a method of growing crops without soil. The time has come to use water soluble nutrients and minerals which are required for terrestrial plants. He said that this method of farming will alleviate space on land as hydroponic plantations could be housed in multistorey buildings also. Financial aides like loan waivers and subsidies also add significantly to the annual expenditure, he said.

He added that such expenses may not be necessary in the future if the government provided proper skill training to people which in turn will boost innovation and propel business.

Unnikrishnan explained the nature of India’s economy which, according to him, is consumer-based.

“Most of what we manufacture here is consumed. What remains is exported,” he said, adding that the country is growing as a manufacturing base of the world and it will not be long before it overtakes China in production.

Unnikrishnan opined that demonetisation was a good move by the government. However, its implementation could have been better. Earlier, the government had printed notes in excess which became a new method of hoarding wealth after gold and land. He said, “The person who thought that Rs500 and Rs1,000 notes should be demonetised wanted to do good for the country.” He said that if notes are printed in surplus, it will lead to grave consequences.

According to Unnikrishnan, the government has a grand plan to cleanse the economy of which demonetisation was a part. With the implementation of GST from next year, the economy is likely to see increased growth.

“The government does not have a lot of money at the moment,” claimed Unnikrishnan. For every Rs100 we earn, we pay Rs8 in taxes, which is far less than figures in developed nations, he added. The government’s intention to link transactions with Aaadhaar card and digitisation will bring transparency in the system, Unnikrishnan added.

“Generating revenue through taxes is the only way the government can get money to build infrastructure which supports the economy,” he said.

These major changes in finance will create a lot of opportunities for businesses to flourish. The ecosystem for manufacturing is also evolving in Vidarbha, said Unnikrishnan.