The historic and revolutionary tax reform of India- GST is ready for implementation after overcoming all Constitutional hurdles. The relevant Integrated Goods and Service Tax Act (IGST Act), Central Goods and Service Tax Act (CGST Act) and Goa Goods and Service Tax Act (GGST Act) are already notified; the rules for implementation of these Acts are in place; the formats of forms and the returns are declared and the approved Schedule of Tax Rates for all commodities and services is available online. Only the date of implementation of GST is required to be notified which is expected to be July 1, 2017.
The GST Law replaces 16 different Central and State taxes including Central Excise, Service Tax, CST, Goa VAT, Goa Entry Tax, Goa Luxury Tax, Goa Entertainment Tax. All goods and services will be covered under one GST except “alcohol for human consumption” and “petroleum products”. Same tax rates will be applicable throughout India on supply of these ‘Goods’ and ‘Services’.
At present, there are multiple taxable events along with multiple threshold limits to levy tax under different Acts – for Excise levy, manufacture of goods; for Service Tax, provision of services; for VAT, sale of goods; for Entry Tax entry of goods in the local area for use, etc.
Under GST, these multiple taxable events will be subsumed into one taxable event “Supply of Goods or Services”, with threshold limit for registration at Rs 20 lakh. The definition of “supply of goods and services” is wide to include sale, transfer, barter, exchange, license, rental, lease or disposals etc for consideration in furtherance of business. Certain specified transactions like inter-state stock transfers, branch transfers, free samples,which does not involve consideration will also attract tax.
GST will have three components of tax- State GST (SGST) and Central GST (CGST) for every taxable supply of goods and services within a State in equal ratio and Integrated GST (IGST) for inter-state supplies which will be at combined rate of SGST and CGST.
Under GST regime, registrations, filing of returns, documents, applications, payment of taxes etc has to be done electronically online without human interface and is applicable for all taxpayers without exception. Input tax credit will be available to a recipient only when specified returns are filed and output tax dues are paid by the supplier as well as recipient of goods and services within specified time after online matching of data.
All the tax-payers should now get themselves ready for migration from existing tax regime to GST regime and implementation of GST as under:
n Registration: All existing dealers already registered under Excise, Service and VAT are being granted provisional registration valid for six months without requiring to make any application. Final registration will be granted only when prescribed documents are furnished to the Department within six months.
Post GST, the supplier of goods or services whose aggregate turnover in India (taxable, tax- free, inter-state etc) exceeds Rs 20 lakh should apply for registration within 30 days with relevant documents. This turnover limit is not applicable for non-residents, casual traders, inter-state supplies, e-commerce, aggregators and for voluntary registrations.
In case a tax payer supplies goods or services in more than one state, he should arrange to obtain registration in each of the states from where the supplies are made.
n Composition Scheme: Existing tax payers who wish to migrate to composition scheme under GST regime should dispose off stocks held out of inter-state purchases, stock-transfers, purchases from unregistered dealers, before appointed date to be eligible for composition scheme where aggregate turnover should not exceed Rs 75 lakh.
n Carry forward of CENVAT and VAT ITC: The registered taxable person will be entitled to carry forward existing ITC against GST dues only if last return and returnsfor previous six months are filed under existing lawsfor period ending on the last date before appointed date. Carry forward of ITC will be lost if not included in the last return. Taxpayers should therefore be very careful to accuratelycompute carry forward of ITC and comply with the prescribed conditions.
n Un-availed CENVAT and VAT credit on Capital goods not carried forward in a return (50%) will be eligible to be credited to electronic credit ledgers.
n Credit for duties and taxes under Central Excise and Goa VAT Act in respect of inputs on stocks, semi-finished and finished goods held on previous day before appointed date is available for manufacturers, distributors, retail traders if they were not liable for registration under existing laws. This should be supported by Excise/ Tax Invoice issued within 12 months preceding the appointed date and equivalent benefit of this credit is passed on to the recipient. Other conditions are also required to be complied with.
n Credit for duties and taxes under Central Excise and Goa VAT on inputs held in stocks will also be available to the taxable person switching over from existing Composition Scheme subject to certain conditions.
A taxable person switching over to the Composition Scheme under GST regime will be required to pay carry forward of eligible Input Tax Credit under CENVAT and VAT by way of debit in electronic credit ledger or electronic cash ledger.
n CST Purchases: Since a tax payer is not eligible for Input Tax Credit in respect of inter-state purchase of goods, it is advisable to reduce inter-state purchases till implementation of GST.
n C/F/E1 Declaration Forms: Arrange to collect these forms immediately to file with Commercial Tax Authorities.
n Tax Rates: For proper charging of tax rate on the goods one deals in, arrange to ascertain in advance the applicable tax rates with HSN code from Schedule of Rate Table available online.
n Staff training: Send your concerned staff to the workshops and seminars organised by government, business associations, Institute of Chartered Accountants of India and other bodies to familiarize with GST laws and implementation.
n Returns: Every month in every state a tax-payeris required to file return of Outward Supplies in Form GSTR-1 within 10 days from end of the tax period; Form GSTR-2 of ‘Inward Supplies’ within 15 days, and return in Form GSTR-3 within 20 days and Annual Return in Form GSTR-9 by December 31. Thus, a taxpayer will be required to file minimum 37 returns in one year in a state. In addition, returns are required to be filed for TDS, TCS, Input Tax Distribution, etc.
n GST System Software: Since implementation of GST is electronically web- based, arrange to look for suitable GST software which are available in the market and get your staff trained to upload the data and handle other procedural matters.
Implementation of GST throughout India is a mammoth exercise. Faceless officials of the Finance Ministry deserve special appreciation for putting up full-proof meticulous GST legislations with elaborate rules for execution so also technical experts of the GST Network which will process online massive data.Credit also goes to GSTN Council and Parliamentarians of all political parties to achieve this goal after 12 years of waiting.
