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NEW DELHI: The GST council approved the draft compensation bill for states. The government will table the bill in the next session of Parliament. “The Draft Compensation Bill has been approved in the GST Council meeting. The government will present the Bill to Parliament in next session, ” Finance Minister Arun Jaitley said after the GST council meeting today. “Next GST meeting will be held on March 4-5 in Delhi and the government is expecting to clear IGST and SGST bills in this meeting. It will also discuss slabs for commodities in next meeting, ” Jaitley said. “The GST council will then require one major meeting after March 4-5 to approve GST bill specifics, ” Jaitley added.
GST Council plans to take up three contentious laws for discussion; targets 1 July roll-out Aiming towards a smooth roll out of Goods and Services Tax (GST) from 1 July, the GST Council will look into the three GST laws in its next meeting, scheduled for 18 February. The session by the Secretaries Panel at CNBC-TV 18 Mint’s ‘Budget 2017: The Verdict’ programme in New Delhi on Thursday evening discussed in detail the GST and its power to arrest, disinvestment plans, mergers and acquisitions, proposals for a new financial year, and other factors. West Bengal finance minister Amit Mitra, who also heads the empowerment panel on GST. AFP file image “Industry is looking forward to the laws and rules. Once they are finalised by the GST council, it will pave the way towards the implementation of GST from 1 July. The agenda of the next meeting is to look into all the three laws. In the subsequent meetings, we’ll take up the rules. As far as rates are concerned, it’s going to be a simplistic formula. The council has said that there would be four slabs: 5 percent, 12 percent, 18 percent and 28 percent, ” said revenue secretary Hasmukh Adhia. After the announcement of the Budget on 1 February, West Bengal finance minister Amit Mitra, who also heads the empowerment panel on GST, sent 16 demands to the Finance Ministry to look into, including the arrest clause, which was described as “draconian” by the West Bengal government. “The power to arrest tax defaulters is already there under excise and service tax laws, and also under VAT in some states. After an extensive debate, a majority in the GST Council decided that no arrests should be made in cases of tax evasion up to Rs 2 crore. However, evaders between Rs 2 and Rs 5 crore could face bailable arrest. Above tax evasion of above Rs 5 crore, it may invite non-bailable arrest, ” he said. Is there a new financial year on cards? Economic affairs secretary Shaktikant Das said, “The report to change the financial year is under consideration by the government. We are examining it, and once the decision is taken, it will be communicated.” On IDBI Bank’s disinvestment plan The government announced in the Budget that it hopes to raise Rs 72, 500 crore in FY18 by divesting stakes in public sector firms. Compared to the revised estimate of Rs 45, 500 crore for FY17, this is an increase of around 60 percent. While discussing the disinvestment plan of the state-run IDBI Bank, Das said, “The divestment of IDBI Bank is not off the table. The work is in progress. Its share value in the market doesn’t reflect the real estate it holds in Mumbai. The real estate valuation needs to be done carefully and a transparent decision needs to be taken in this case.” “We’ve not derailed from the path of financial prudence. Today, our economy needs investment in certain sectors. As per the NK Singh panel, our fiscal deficit target is 3 percent and we’ll improve it in 2017-18, ” Das added. Priorities in 2017: “To ensure people pay tax and society becomes more tax compliant”: Ashok Lavasa, finance secretary. “Budget 2017 is very strong on reforms, and our focus is on implementation”: Shaktikant Das, economic affairs secretary. “Roll out of GST from 1 July 2017 will be the Year of GST”: Hasmukh Adhia, revenue secretary. “Look for a stable and buoyant market”: Neeraj
GST roll out next fiscal: Is the govt looking at changing the financial year? Aiming towards a smooth roll out of Goods and Services Tax (GST) from 1 July, the GST Council in its next meeting on 18 February will look into the three laws in GST. The session by Secretaries Panel at ‘Budget 2017 The Verdict’ of CNBC-TV 18-Mint at Hyatt Regency in New Delhi on Thursday evening discussed GST and its power to arrest disinvestment plan, merger & acquisition, proposal for a new financial year among others in detail. “Industry is looking forward to the laws and rules. Once they are finalised by the GST Council – it’ll pave way towards implementation of GST from 1 July. The agenda of the next meeting is to look into all the three laws. In the subsequent meetings we’ll take up the rules. As far the rates are concerned, it is going to be a simplistic formula. The council has said that there would be four slabs of rates—5%, 12%, 18% and 28%, ” said Revenue Secretary, Hasmukh Adhia. After the announcement of Budget 2017 on 1 February, West Bengal’s finance minister, who also heads the empowerment panel on GST, sent 16 demands to finance ministry to look into, including the arrest clause. The arrest clause has been described as ‘draconian’ by the West Bengal government. “Power to arrest the tax defaulters is already there in excise and service tax, and also under VAT law in some states. After an extensive debate, majority in the GST Council decided that no arrest would be made in the case of tax evasion up to Rs 2 crore. However, evader between Rs 2-5 crore will face arrest but get a bail. But above, Rs 5 crore, it’s non-bailable, ” he said. Is there a new financial year on cards? Economic Affairs secretary, Shaktikant Das said, “The report to change the financial year is under consideration by the government. We’re examining it, and once the decision is taken, it will be communicated.” On IDBI Bank’s disinvestment plan The government announced in the Union Budget on 1 February that it hopes to raise Rs 72, 500 crore in FY18 by divesting stakes in public sector firms. Compared to the revised estimate of Rs 45, 500 crore for FY17, this is an increase of around 60 percent. While discussing the disinvestment plan of the state-run IDBI Bank, Das said, “The divestment of IDBI Bank is not off the table. The work is in progress. The share value of it in market doesn’t reflect real estate it holds in Mumbai. The real estate valuation needs to be done carefully and transparent decision needs to be taken in this case.” “We’ve not derailed from the path of financial prudence. Today, our economy needs investment in certain sectors. As per the NK Singh panel, our fiscal deficit target is 3% and we’ll improve it in 2017-18, ” added Das. Priorities in 2017 Ashok Lavasa, Finance Secretary: To ensure that people pay tax and it should be a more a tax compliant society. Shaktikant Das: Budget 2017 is very strong on reforms and our focus is on implementation. Hasmukh Adhia: Roll out of GST from 1 July. Year 2017 will be the Year of GST.
HINTS OF SHIFT IN GST ROLLOUT DATE The April 2017 deadline for the rollout of Goods and Service tax is likely to be postponed. .A new date for GST rollout is under discussion.
1st Feb, 2017GST will hit tax collections, but boost GDP in medium run : Over the medium run, the implementation of GST and enactment of other structural reforms should help the economy realise its real potential GDP growth of 8-10%+ , chief economic advisor (CEA) Arvind Subramanian has said in the Economic Survey. However GST, which will be implemented from July 2017 if the finance ministry sticks to the new deadline, is likely to affect revenue collections adversely, particularly that of the Centre as the states' revenues are guaranteed. The survey pointed out that the transition to the GST is so complicated from an administrative and technology perspective that "revenue collection will take some time to reach full potential". Combined with the Centre's commitment to compensating the states for any shortfall in their own GST collections relative to a baseline of 14% increase, the outlook must be cautious with respect to revenue collections, the survey said. Source - TOI Business
The Goods and Services Tax (GST) is India's biggest indirect tax reform since independence. The GST bill, proposed to be implemented on July 2017, will simplify the tax framework for businesses It is important therefore, that you are prepared for this significant transition! GST is going to impact your cash flow, profitability and tax compliance. Input Tax Credit Now you can claim Input Tax Credit on all taxes paid on your business expenses Tax Return Filing If you do not file your return and pay the tax, your customer will not be eligible to avail Input Tax Credit . Also, if you miss a monthly filing, you will not be allowed to file for next month unless you have cleared previous month filing. Compliant Vendors Vendors need to be chosen carefully, as their credibility and compliance will impact your business. Similarly, your buyer will start choosing his vendors (you and your peers) based on your discipline and compliance. To ensure that business is able to transition to GST, you need to ensure that : Tax returns matches books of accounts during filing Maintain invoice level details to track and claim Input Tax Credit Meet tax filing timelines on 10 th, 15th and 20th of every month Your first step towards being GST ready
Supply of Goods or Services between Related and Distinct Persons Feb 15 2017 In our earlier blog GST Impact on Supply without Consideration and Importation of Services, we discussed about supply without consideration and the import of service. This blog discusses, in detail, supplies without consideration between: • Related person • Distinct person Related person The definition of “Related Person” is similar to the current Customs Valuation Rules. The supply is considered as between related persons only if the supply of goods or services is made between: 1.Officers or directors of one another’s businesses: In a supply, the supplier and the recipient are actually officers or directors of the other business. As illustrated above, Mr. Ganesh is a Director in Ganesh Trading Ltd, and an officer in Rakesh Trading Ltd. Mr. Rakesh, is a Director in Rakesh Trading Ltd. Also, Rakesh is an officer in Ganesh Trading Ltd. Therefore, any supply between them, will be treated as supply between related persons. 2. Legally recognized partners in business: The supplier and the recipient are partners in the same business or associated business. As illustrated above, Mr. Ganesh and Mr. Rakesh are partners in Ganesh Trading Ltd. Any supply between Mr. Ganesh and Mr. Rakesh will be treated as supply between related persons. 3. Employer and employee: Any supply of goods and services between employer and employee. Mr. Rakesh is an employee of Ganesh Trading Ltd. Any supply from Ganesh Trading Ltd to Mr. Rakesh is considered as supply between related persons. 4. The supplier or recipient directly or indirectly owns, controls or holds twenty-five per cent or more of the outstanding voting stock or shares. For example, the recipient hold 25% of equity in the supplier’s business. 5. One of them directly or indirectly controls the other: If in any supply, the supplier or the recipient directly or indirectly controls the other, then it is considered as supply between related persons. Direct Control As illustrated above, Ganesh Trading Ltd holds equity in Rakesh Trading Ltd. The supply between Ganesh Trading and Rakesh Trading are related since Ganesh Trading Ltd directly controls Rakesh Trading Ltd.’s business. Indirect Control As illustrated above, Ganesh Trading Ltd holds equity in Rakesh Trading Ltd . Rakesh Trading Ltd. holds equity in Max Trading Ltd. Any supply between Ganesh Trading Ltd and Max Trading Ltd. are related. This is because Ganesh Trading Ltd. indirectly controls Max Trading’s Ltd business by way of ‘Rakesh Trading’s’ business interest in Max Trading Ltd. 6. Both of them are directly or indirectly controlled by a third person: If in any supply, the supplier and the recipient are directly or indirectly controlled by a third person. In the illustration above, Ganesh Trading Ltd holds equity in Rakesh Trading ltd and Max Trading. The supply between Rakesh Trading Ltd and Max Trading ltd are related since both of them are directly controlled by Ganesh Trading Ltd. 7. Together they directly or indirectly control a third person: If in any supply, the supplier and the recipient, together, directly or indirectly control a third person. As illustrated above, Rakesh Trading Ltd holds 80% equity in Max Trading Ltd and 30% in Ganesh Trading Ltd. Max Trading Ltd’ hold 70 %equity in Ganesh Trading Ltd . Now, together, Rakesh Trading Ltd has control over Ganesh Trading Ltd and the supply between them will be considered as supply between related persons. 8. They are members of the same family: A supply made between the members of the same family is considered as supply between related persons. Distinct Person A Distinct Person can be defined as a taxable person who has obtained or is required to obtain more than one registration in the same state or a different state. Or an establishment of a person who has obtained or is required to obtain a registration, and also has the establishment in another state. Each of his/her registration and establishment will be treated as a Distinct Person, and any supply between them will be taxable. Therefore, any stock transfer or branch transfers are taxable in the following two cases: 1.Intrastate stock transfer: Only when an entity has more than one registration in one state. For Example Super Cars Ltd is a car manufacturing unit located in Karnataka. They also own a service unit in Karnataka. Super Cars Ltd have obtained separate registrations for both the manufacturing and service units. The manufacturing unit and the service unit of Super Cars Ltd will be treated as distinct persons, and any supply between them will be taxable, even without consideration. 2. Inter State Stock transfer: Transfer between two entities located in different states is taxable. For Example Super Cars Ltd is a car manufacturing unit located in Karnataka. They also own a service unit in Delhi. The manufacturing unit and the service unit of Super Cars Ltd located in Delhi will be treated as distinct persons, and any supply between them will be taxable, even without consideration.
How to Determine Supply of Goods vs Supply of Services in GST Schedule-II of the model GST law provides clarity on determining the type of supply as supply of goods or supply of services. This aims at eliminating the dilemma that exists in the current indirect tax system, for example, Service Tax Vs. VAT on works contract, AC Restaurant Service, Software, etc. It is, therefore, important for businesses to know whether supply amounts to supply of goods or supply of services, and treat supply accordingly. The law broadly lists transactions related to transfers, land and building, treatment or process (applied on third party’s goods), and transactions related to construction and works contact, renting, etc. Let us discuss some important supplies with examples. Forms of supply Treated as supply of? Example 1 Any transfer of the title in goods Goods Furniture House sold furniture to Mr. Ganesh. This will be treated as supply of goods, because on sale, the title of the furniture is transferred to Mr. Ganesh. 2 Any transfer of goods without transfer of title Services Furniture House supplied furniture to Mr. Rakesh, on rental basis, for a period of 3 months. This amounts supply of service because furniture is transferred for Mr. Rakesh’s usage, and the title of the furniture is still with Furniture House. 3 Any transfer of title of goods under an agreement which stipulates that property in goods will pass at a future date upon payment of full consideration as agreed. Goods Furniture House supplied furniture to Mr. Ramesh in an agreement to receive payments in 6 instalments. This amounts supply of goods, because the title of the furniture will pass on to Mr. Ramesh on completing the payment of 6 instalments. Typically, all hire purchase will qualify under this section. 4 Any lease, easement, tenancy, and licence to occupy land Services Mr. Suresh lets out land on lease to Furniture House. The letting out of land on lease is considered as supply of services. 5 Any lease or letting out of the building including a commercial, industrial or residential complex for business or commerce, either wholly or partly Services Mr. Suresh lets out a building to Furniture House. Furniture House used the building for display and sale of furniture. This is a supply of services. 6 Job work – Any treatment or process which is being applied to another person’s goods Services Furniture House also undertakes repair works and polishing of the furniture of their customers. The repair and polishing activity will be treated as supply of service. 7 Permanent transfer or disposal of business assets transferred with or without consideration Goods We have discussed this in detail in this blog post GST Impact on Supply without Consideration & Importation of Services 8 Business assets put to private use or non- business use whether or not for a consideration Services Car used for business is put to private use. This is a supply of services. 9 Renting of immovable property Services Renting of shop premises is considered as supply of services. 10 Development, design, programming, customisation, adaptation, up-gradation, enhancement, implementation of information technology software Services Max Technologies Ltd developed a payroll software for Furniture House. The development of software is a supply of services. 11 Works contract, including transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract of immovable property Services Murali Construction Ltd constructed a commercial complex involving material and labour. This is a supply of services.
20th Feb, 2017GST council OKs draft law on relief to states Prospects of a rollout of the Goods and Services Tax (GST) by July 1 brightened with the GST Council approving on Saturday a draft law that seeks to compensate states fully in case of revenue loss as a result of the tax reform. The council is now expected to approve three other laws when it meets on March 4-5, paving the way for the legislations to be brought to Parliament by around March 9. The decision on categorisation of goods in tax slabs is not part of the law and will be worked out by the council after the enabling laws are passed. Briefing reporters after a meeting of the council, finance minister Arun Jaitley said he expected the panel to approve the C-GST, I-GST and S-GST laws at its next meeting in Delhi. "It's essential that enabling laws for GST are passed in the second half of the budget session to ensure rollout from July 1, " Jaitley said. The approval to the draft compensation law is read as a positive development as it was a contentious issue, improving the prospects of the ambitious indirect tax reform meeting its latest July 1 deadline. Parliament has been subject to disruptions and the heated poll rhetoric in the midst of assembly elections can be a worry. Source - Times of India
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