GST ADVISORY SERVICES
GST is an Indirect Tax which has replaced many Indirect Taxes in India. The Goods and Service Tax Act was passed in the Parliament on 29th March 2017. The Act came into effect on 1st July 2017; Goods & Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that is levied on every value addition.
In simple words, Goods and Service Tax (GST) is an indirect tax levied on the supply of goods and services. This law has replaced many indirect tax laws that previously existed in India.
GST is one indirect tax for the entire country.
The GST journey began in the year 2000 when a committee was set up to draft law. It took 17 years from then for the Law to evolve. In 2017 the GST Bill was passed in the Lok Sabha and Rajya Sabha. On 1st July 2017 the GST Law came into force.
GST Advantages:
GST has mainly removed the Cascading effect on the sale of goods and services. Removal of cascading effect has impacted the cost of goods. Since the GST regime eliminates the tax on tax, the cost of goods decreases.
GST is also mainly technologically driven. All activities like registration, return filing, application for refund and response to notice needs to be done online on the GST Portal; this accelerates the processes.
1. Removing cascading tax effect
2. Online simpler procedure under GST
3. Lesser Compliances
4. Defined treatment for e-commerce
5. Composition scheme for small business
6. Increased efficiency in logistics
7. Higher threshold for registration etc.
Components of GST:
There are 3 taxes applicable under this system: CGST, SGST & IGST.
1. CGST: Collected by the Central Government on an intra-state sale (Eg: transaction happening within home state)
2. SGST: Collected by the State Government on an intra-state sale (Eg: transaction happening within home state)
3. IGST: Collected by the Central Government for inter-state sale (Eg: home state to Other state)
Post GST:
In the pre-GST regime, every purchaser including the final consumer paid tax on tax. This tax on tax is called Cascading Effect of Taxes.
GST has removed this cascading effect as the tax is calculated only on the value-addition at each stage of the transfer of ownership. This indirect tax system under GST has improved the collection of taxes as well as boosted the development of Indian economy by removing the indirect tax barriers between states and integrating the country through a uniform tax rate.
Decisions at 37th GST council meeting
The meeting concluded with several decisions ranging from relaxations in annual return filing, rate revisions, deferment of new GST returns, changes to composition scheme, new GST exemptions and some clarifications detailed as follows:
1. Waiver of GSTR-9A for Composition Taxpayers for FY 2017-18 & FY 2018-19
Composition dealers have been granted exemption from filing of annual returns in GSTR-9A for the fiscal years 2017-18 and 2018-19. In the future, it is mostly expected to be done away since the form GSTR-4 has been tweaked to allow an annual declaration of turnover and tax details.
2. GSTR-9 for small taxpayers now not compulsory for FY 2017-18 & FY 2018-19
Those taxpayers having an annual turnover of up to Rs 2 crore in FY 2017-18 or FY 2018-19, may choose to not file GSTR-9, from the date to be notified by CBIC. GST Council has also decided to review the simplification of GSTR-9, 9A and 9C forms and filing. However, they must continue to file annual returns for FY 2019-2020 onwards.
Large taxpayers should continue to comply and close annual return filing both in GSTR-9 and GSTR-9C by 30 November 2019.
3. New GST Returns Deferred to April 2020
The new GST return system will now be implemented from April 2020. This decision is appreciated as several transitional issues that could crop up while implementing in the middle of the year, can now be avoided. Taxpayers can begin on a fresh note from a new financial year. It must be noted that the decision to defer applies to all taxpayers and for all forms under the new GST returns system.
4. Restrictions on ITC claim in GSTR-3B
To push the timely filing of a statement of outward supplies by taxpayers, the GST Council recommended restrictions on Input Tax Credit (ITC) claim. ITC will be restricted for the recipients if the suppliers have not furnished the details of outward supplies.
5. Circular on Post Sale Discount Withdrawn
CBIC released Central Tax Circular number 105, dated 28 June 2019. Through the circular, they have clarified post-sale discount for promotional activities by the dealer, secondary discounts, and reversal of ITC on post-sale discount.
The circular clarifies that whether the post-sale discount has to be included in the value of supply or not and whether ITC is to be reversed at the time of issuing a credit note or not in certain specified cases.
The GST Council recommended revoking of the circular number 105 with retrospective is effective from the beginning (ab-initio).
6. GST Exemptions announced
1. Supplies of goods or services to FIFA- specified individuals for the Under-17 Women’s Football World Cup in India.
2. Supply to the Food and Agriculture Organisation (FAO) for specified projects in India.
3. Imports of certain defence goods not made indigenously (up to 2024).
4. Import of silver/platinum by specified agencies (Diamond India Ltd), and the supply of silver/platinum by specified nominated agencies to exporters for the export of jewellery.
5. Storage or warehousing services for cereals, pulses, fruits, nuts and vegetables, spices, copra, sugarcane, jaggery, raw vegetable fibres such as cotton, flax, jute etc., indigo, unmanufactured tobacco, betel leaves, tendu leaves, rice, coffee and tea.
6. Storage or warehousing services for cereals, pulses, fruits, nuts and vegetables, spices, copra, sugarcane, jaggery, raw vegetable fibres such as cotton, flax, jute etc., indigo, unmanufactured tobacco, betel leaves, tendu leaves, rice, coffee and tea.
7. Storage or warehousing services for cereals, pulses, fruits, nuts and vegetables, spices, copra, sugarcane, jaggery, raw vegetable fibres such as cotton, flax, jute etc., indigo, unmanufactured tobacco, betel leaves, tendu leaves, rice, coffee and tea.
8. Life insurance business provided or agreed to be provided by the Central Armed Paramilitary Forces (under Ministry of Home Affairs) Group Insurance Funds to their members.
Services provided by an intermediary to a supplier of goods or recipient of goods when both the supplier and recipient are located outside the taxable territory.
1. The BANGLA SHASYA BIMA (BSB) crop insurance scheme of the West Bengal Government.
7. Other Significant Decisions
1. The validity period of the conditional GST exemption extended for export freight by air or sea by one more year till 30 September 2020.
2. Taxability of fishmeal: Exemption granted for all cases from 1 July 2017 to 30 September 2019, except where tax is already collected.
3. Pulleys, wheels and items under HSN 8483 used as agricultural machinery to be taxed at 12% during period 1 July 2017 to 31 December 2018.
4. Option to pay GST at the rate of 18% on transaction value at the time of disposal of specified goods for petroleum operations (on which concessional GST rate of 5% was paid at the time of original supply) provided that the goods are certified by Director General Hydrocarbon (DGH) as non-serviceable.
5. To specify modalities for allowing concessions on spare parts imported temporarily by foreign airlines for the repair of their aircraft, while in India in transit in terms of the Chicago Convention on Civil Aviation.
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