GST Bills introduced in Lok Sabha
12 March 2017
The Government has tabled the following Bills in the Budget session of the Parliament in its bid to meet the committed timeline of July 1, 2017 for GST rollout:
- The Central Goods and Services Tax Bill, 2017;
- The Integrated Goods and Services Tax Bills, 2017;
- The Union Territory Goods and Services Tax Bill, 2017;
- The Goods and Services Tax (Compensation to States) Bill, 2017.
- Territorial limits for levy of CGST and IGST under the respective Bills have been extended to the whole of India except the State of Jammu and Kashmir. However, compensation for loss of revenue due to implementation of GST has been extended to J&K under the GST Compensation Bill
- Scope of levy under these Bills comprises the following:
- CGST to apply on intra-state supplies including supplies within Union Territories
- IGST to apply on supplies from one State/Union Territory to another State/ Union Territory
- UTGST to apply on supplies within specified Union Territories
- GST on petroleum, high speed diesel, motor spirit, natural gas, aviation turbine fuel to be applicable from a date to be notified by the Government
- Sale of land and building, actionable claim (other than lottery, betting and gambling) and gifts not exceeding Rs 50,000/- in value in a financial year by an employer to an employee to not be be treated as supply of goods or services or both
- Deeming provision introduced for supplies made in territorial waters. Supplies deemed to be made in the States or Union territories where the nearest point of the appropriate baseline is located. Taxable person supplying from the territorial waters liable to obtain registration in the concerned coastal State or Union Territory
- Place of supply of goods for import & export to be:
- Location of the importer in respect of goods imported into India;
- Location outside India in respect of goods exported out of India
- Rate cap of 20% prescribed for CGST and UTGST while IGST rate capped at 40%
- Composition Scheme -Tax rate under composition scheme ranging from 0.5 to 2.5 % of turnover. Benefit of Composition Scheme may be extended upto 1 Crore by way of notification.
- Cess to apply on supply of goods and services covered under the Schedule to the GST Compensation Bill.
- Cap on Cess rates prescribed for Pan Masala, Tobacco, Coal, Aerated water, motor cars, station wagons, racing cars etc. covered under specified tariff headings. Cess on any other supplies capped at 15%
- Valuation to be based on transaction value basis in the event Cess is chargeable with reference to value of goods
- Taxable persons who have opted for composition scheme are excluded from the liability to pay cess
- Reverse charge applicable on procurement of goods and services (interstate and intrastate) from unregistered supplier.
- Input tax credit
- Failure to make the payment for supply of goods and services to the vendor within 180 days (instead of 3 months earlier) to result in reversal of input tax credit.
- Value of exempt supply for proportionate input tax credit reversal to include supply of securities and sale of land and building
- Availability of credits to Banks and NBFCs for branch transfers
- Full input tax credit available to Banks and NBFCs (instead of 50%) for supply to its branches
- Drawback benefit introduced for export of goods manufactured within India. Benefit not extended to supply of services. However, refund provision envisages restriction on input tax credit if the supplier of goods or services avails drawback in respect of central tax or claims refund of the integrated tax paid on such supplies
- Meaning of ‘plant and machinery’ explained to exclude telecommunication towers and pipelines laid outside factory premises
- Definition of deemed exports restricted to mean notified supply of goods
- Definition of Manufacture introduced – emphasis on the principle of emergence of a new product with a distinct name, character and use
- Ecommerce operators required to file an Annual statement (detail of outward supply and tax collected) before 31 December of the following financial year, and tax collected at source has been capped at 1% for ecommerce operator.
- No tax deduction required where location of supplier and place of supply is different from the State of the registration of the recipient. The threshold limit for deduction of Tax at Source has been reduced from INR 5 Lakh to INR 2.5 Lakh.
- Where both VAT and Service tax was paid on any supply, the taxable person shall be entitled to take credit thereof to the extent of supplies made after the appointed day and such credit shall be calculated in prescribed manner. This provision would be useful in case of supplies (such as software supplies) lev;
- Refund voucher needs to be issued in cases wherein advances received but supply of goods and services is not made. Payment voucher needs to be issued by a person liable to discharge liability under reverse charge at the time of making payment to the supplier.
- Prior period returns necessary for future returns: Registered person will not be allowed to furnish the return for subsequent period unless prior period return have been filed.
- Interest on refund claimed shall be allowed to the maximum of 6%.
- Penalty is leviable if tax is not paid within a period of 30 days from the due date. Penalty in case of short payment or tax erroneously refunded: -
- For reasons other than fraud – penalty shall be INR 10% of tax due or INR 10,000 whichever is higher;
- For reasons of fraud – penalty shall be INR 10,000 or tax due whichever is higher.
- The assesses required to collect tax collection at source not mandatorily required to obtain registration.
- Interest on delayed payment capped to 18% and 24% in special cases.
- The books of account or other records maintained by the registered person shall be retained until the expiry of 72 months (earlier 60 months) from the due date of furnishing of annual return for the year pertaining to such accounts and record; BDO comments With the introduction of these Bills, the Government has taken a mammoth step towards bridging the gap in transitioning to GST regime. The Bills also factor certain departure from the provision contained in the Model GST Law. This includes modifications to the definition of consideration, variation in place of supplies/credits etc. However, specific provisions for dual control for audit/assessments, e-permits etc have not been presently envisaged under these Bills. The Bills are scheduled for debate on March 29, 2017 and further clarity is expected to emerge on conclusion of such debates.