Goods and Services Tax Council (GSTC):
The GSTC has been notified with effect from 12th September, 2016. GSTC is being assisted by a Secretariat. The following major decisions have been taken by the GSTC as on 3rd June,2017-
(i) The threshold exemption limit would be Rs. 20 lakh.
• For special category States enumerated in article 279A of the Constitution, threshold exemption limit has been fixed at Rs. 10 lakh.
(ii) Composition threshold shall be Rs. 50 lakh.
• Composition scheme shall not be available to
- inter-State suppliers,
-service providers (except restaurant service) and
-specified category of manufacturers.
(iii) Existing tax incentive schemes of Central or State governments may be continued by respective government by way of reimbursement through budgetary route. The schemes, in the present form, would not continue in GST.
(iv) There would be four tax rates namely 5%, 12%, 18% and 28%.
• The tax rates for different goods and services have been finalized.
• Besides, some goods and services would be under the list of exempt items.
• The exempted services has been finalized which is same as the services exempted under existing service tax law, except services supplied by Goods and Services Tax Network which is the addition to the list of exempted services under service tax.
• Rate for precious metals is an exception to ‘four-tax slab-rule’ and the same has been fixed at 3%.
• A cess over the peak rate of 28% on certain specified luxury and demerit goods, like tobacco and tobacco products, pan masala, aerated waters, motor vehicles, would be imposed for a period of five years to compensate States for any revenue loss on account of implementation of GST.
• The list of services in case of which reverse charge would be applicable has also been finalized.
(v) The five laws namely CGST Law, UTGST Law, IGST Law, SGST Law and GST Compensation Law have been recommended.
(vi) In order to ensure single interface, all administrative control over 90% of taxpayers having turnover below Rs. 1.5 crore would vest with State tax administration and over 10% with the Central tax administration.
• Further all administrative control over taxpayers having turnover above Rs. 1.5 crore shall be divided equally in the ratio of 50% each for the Central and State tax administration.
(vii) Powers under the IGST Act shall also be cross-empowered on the same basis as under CGST and SGST Acts with few exceptions.
(viii) Power to collect GST in territorial waters shall be delegated by Central Government to the States
(ix) Formula and mechanism for GST Compensation Cess has been finalised.
(x) Nine rules on registration, composition levy, valuation, tax invoice, input tax credit, payment, returns, refund and transitional provisions have been recommended.
(xi) www.gst.gov.in, managed by GSTN, shall be the Common Goods and Services Tax Electronic Portal.
(xii) Rate of interest on delayed payments and delayed refund has been recommended.
(xiii) Rate of TCS has been recommended.
Que.11 Is there any option of paying TOT / Composition scheme under GST?
Yes, if the aggregate t/o is less than Rs.75 Lakhs. Then the person can opt to register under Composition scheme and to pay fixed % (2%/1%/5%) of total turnover as tax.
However, this scheme applicable for supplier of Goods and Restaurants. A Service provider doesn’t have an option of paying tax under Composition scheme.
Que.12 When to pay tax under GST?
A registered person shall be liable to pay tax on monthly basis, before filing the return for the month.
For Composition scheme, tax shall be paid and returns to be filed on quarterly basis.
Que.13 What are all the returns to be filed under GST?
Every registered person shall be liable to file a minimum of 3 returns on monthly basis
1. Outward Supplies – by 10th of the following month
2. Inward supplies – by 15th of the following month
3. Final return – by 20th of the following month
And one annual return, by 31st December of the following financial year.
For composition scheme, Quarterly returns to be filed by 18th of the 1st month of the following quarter.
Que.14 Reverse charge Mechanism (RCM) continues under GST?
Yes, RCM continues under GST also. For specified goods and services, Recipient shall be liable to pay tax, instead of supplier.
Also, if any purchases are made / services are availed by a registered person from an Unregistered person, such registered person shall be liable to pay tax under RCM.
However the same can be availed as Input credit.
Que.15 Does the MODVAT / Input tax credit (ITC) Mechanism continues under GST?
Yes, ITC mechanism is the Back bone of GST. GST paid on all the Purchases made and Expenses incurred in the course or furtherance of business shall be allowed as credit.
Note: There are few restricted expenses, for which credit shall not be allowed.
Que.16 How can we use the credit among the three components of tax?
IGST can be used for payment of IGST, CGST and SGST in that order
CGST can be used for payment of CGST and IGST in that order
SGST can be used for payment of SGST and IGST in that order
Cross utilization of CGST and SGST is not allowed
Note: Input taxes of one state can’t be utilized for discharging tax liability of other state.
Que.17 What is the matching concept under GST?
Under GST, for allowing the input tax credit, all the inward supplies declared by taxable person shall be matched with the outward supplies declared by the supplier.
• Credit shall be allowed to the recipient, to the extent of taxes paid by the supplier only.
• If the supplier doesn’t pay tax / fails to file the return, recipient shall not get the ITC for the purchases made from that supplier.
This matching is done in the GST network, on the basis of Invoice number and TIN provided by the supplier and recipient. Mismatch report shall be communicated to each of them and sufficient time is given for reconciling the same, before filing the returns.
Que.18 What are different types of supplies covered under the definition of ‘Supply’?
Supplies include all forms of supply of goods and/or services such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business.
• It also includes Importation of services, for a consideration whether in the course or furtherance of business.
• Further, following Schedules cover various supplies:
Supplies made without consideration - Schedule I
Determining what is to be treated as goods / services - Schedule II
Activities or Transactions neither Supply of goods nor Supply of services-Schedules III & IV
Que.19 . What are different forms of supply of goods?
Indicative list of supply of goods are sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business.
Que.20 What is Composite Supply and how it is taxable?
Composite supply means a supply made by a taxable person to a recipient comprising of two or more goods or services or any combination thereof, naturally bundled for supply in the ordinary course of business, wherein one of the components has the essential character of ‘supply ’is known as principle supply.
This composite supply shall be taxable at the rate applicable to principle supply.
For Example: In a natural bundle of supply of goods and insurance service on transportation, supply of goods is the essential supply and the rate applicable to such goods would be applicable for this composite supply.
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