Month: December 2017

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Planning to Invest in Bitcoin? – Finance Ministry & RBI cautioned people of India to do at their own risk – Bitcoin is not a Legal Tender

There has been a phenomenal increase in recent times in the price of Virtual ‘Currencies’ (VCs) including Bitcoin, in India and globally. The VCs don’t have any intrinsic value and are not backed by any kind of assets.Government Cautions People Against Risks in Investing in Virtual ‘Currencies’ –  Says VCs are like “Ponzi Schemes”.
“There has been a phenomenal increase in recent times in the price of Virtual ‘Currencies’ (VCs) including Bitcoin, in India and globally. The VCs don’t have any intrinsic value and are not backed by any kind of assets. The price of Bitcoin and other VCs therefore is entirely a matter of mere speculation resulting in spurt and volatility in their prices. There is a real and heightened risk of investment bubble of the type seen in ponzi schemes which can result in sudden and prolonged crash exposing investors, especially retail consumers losing their hard-earned money. Consumers need to be alert and extremely cautious as to avoid getting trapped in such Ponzi schemes. VCs are stored in digital/electronic format, making them vulnerable to hacking, loss of password, malware attack etc. which may also result in permanent loss of money. As transactions of VCs are encrypted they are also likely being used to carry out illegal/subversive activities, such as, terror-funding, smuggling, drug trafficking and other money-laundering Acts. 
VCs are not backed by Government fiat. These are also not legal tender. Hence, VCs are not currencies. These are also being described as ‘Coins’. There is however no physical attribute to these coins. Therefore, Virtual ‘Currencies’ (VCs) are neither currencies nor coins. The Government or Reserve Bank of India has not authorised any VCs as a medium of exchange. Further, the Government or any other regulator in India has not given license to any agency for working as exchange or any other kind of intermediary for any VC. Persons dealing in them must consider these facts and beware of the risks involved in dealing in VCs.
The users, holders and traders of VCs have already been cautioned three times, in December, 2013, February, 2017 and December, 2017, by Reserve Bank of India about the potential financial, operational, legal, customer protection and security related risks that they are exposing themselves to by investing in Bitcoin and/ or other VCs. RBI has also clarified that it has not given any licence/ authorization to any entity/ company to operate such schemes or deal with Bitcoin or any virtual currency. The Government also makes it clear that VCs are not legal tender and such VCs do not have any regulatory permission or protection in India. The investors and other participants therefore deal with these VCs entirely at their risk and should best avoid participating therein.”  (Compiled from Information available at PIB)
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Impact of GST on the Prices of Goods and Services

Since GST bill has been introduced in the Parliament, economists across the country have started analyzing its impact on the economy. Recommended as the biggest reform of Indian economy, GST has a distinctive impact on every touch point from manufacturer and trader to buyer. Since it is about to proceed in the next couple of months, it is the time to analyze the impact of GST on a common man.

GST has been drafted to create a single window for indirect taxation which was incurred under various names until now. It is estimated to boost GDP by 2% in the short-term and will be a mix bag for the people. Many services may become expensive while goods may witness a fall in their prices due to GST. Though there is a mixed reaction from economists on implementation or transition phase, but everyone is sure that impact of GST will be positive in the longer term. But, everyone is concerned about its immediate impact. So, here we’ve analyzed the anticipated impact of GST on a common man’s lifestyle:

Services That May Become Costlier:

Under GST, these services may become expensive:

  • Healthcare
  • Residential Tenancy
  • Courier Expenses
  • School fees
  • Transport Communication

Some of the services might get less expensive. Prices of movie tickets may reduce due to impact of GST while dining at restaurant can become cheaper in the states where taxes are higher. Essential commodities and few vehicles can be cheaper.

Essential goods and commodities have been exempted or categorized in the low rates column. Also, it may bring down the cost of these products.

  • SUVs/ Luxury Vehicle/ Premium Car
  • Compact Sedan
  • Two Wheelers

Effect of GST on Consumer Durables

GST might have marginal impact on Consumer Durables. People can expect + or – 2 to 3% impact on these products.

  • Stoves
  • Washing Machine
  • Television

 

Impact of GST on Unhealthy Products

Unhealthy products or sin goods like aerated drinks, tobacco products and other such products have been categorized in a higher tax segment. Government has proposed tax around 40% on such goods, hence these may witness increase with the implementation of GST.

Apart from these factors, details are still awaited for many other categories of products and services. Government is categorizing various goods and services. Hence, it is difficult to measure their impact on common man. But, it is sure that GST will decrease the supply cost. This reduction of cost will bring benefit for the end users in the longer term.

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Inter-State E-Way Bill compulsory from 1st February 2018 – GST Council Decided in its 24th Meeting

The 24th GST Council Meeting held on 16th December 2017, through video conferencing decides that Inter-State e-way Bill to be made compulsory from 1st of February, 2018.
The System to be ready by 16th of January, 2018; The Uniform System of e-way Bill for Inter-State as well as Intra-State movement will be implemented across the country by 1st June, 2018. 

The 24th Meeting of the GST Council held on 16th December 2017, through video conference under the Chairmanship of the Union Minister of Finance and Corporate Affairs, Shri Arun Jaitley. It discussed about the implementation of e-way Bill system in the country. Till such time as the National e-way Bill is ready, the States were authorized to continue their own separate e-way Bill systems. However, it was represented by the trade and transporters that this is causing undue hardship in the Inter-State movement of goods and therefore, bringing in an early all India system of e-way Bill has become a necessity. The GST Council today reviewed the progress of readiness of hardware and software required for the introduction of nationwide e-way Bill System. After discussions with all the States, the following decisions were taken :-

i) The nationwide e-way Bill system will be ready to be rolled out on a trial basis latest by 16th January, 2018. Trade and transporters can start using this system on a voluntary basis from 16th January, 2018.

ii) The Rules for implementation of nationwide e-way Bill system for Inter-State movement of goods on a compulsory basis will be notified with effect from 1st February, 2018. This will bring uniformity across the States for seamless inter-State movement of goods.

iii) While the System for both inter-State and intra-State e-way Bill generation will be ready by 16th January, 2018, the States may choose their own timings for implementation of e-way Bill for intra-State movement of goods on any date before 1st June, 2018. There are certain States which are already having system of e-way Bill for intra-State as well as inter-State movement and some of those States can be early adopters of national e-way Bill system for intra-State movement also. But in any case, the Uniform System of e-way Bill for inter-State as well as intra-State movement will be implemented across the country by 1st June, 2018. (Compiled from Sources available at PIB)

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Frequently Asked Questions (FAQs) with answers on GST

Question 1. What is GST? How does it work?

Answer: GST is one indirect tax for the whole nation, which will make India one unified common market. GST is a single tax on the supply of goods and services, right from the manufacturer to the consumer. Credits of input taxes paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.

Question 2. What are the benefits of GST?

Answer: The benefits of GST can be summarized as under:

For business and industry – 

  • Easy compliance: A robust and comprehensive IT system would be the foundation of the GST regime in India. Therefore, all tax payer services such as registrations, returns, payments, etc. would be available to the taxpayers online, which would make compliance easy and transparent.
  • Uniformity of tax rates and structures: GST will ensurethat indirect tax rates and structures are commonacross the country, thereby increasing certainty and ease of doing business. In other words, GST would make doing business in the country tax neutral, irrespective of the choice of place of doing business.
  • Removal of cascading: A system of seamless tax-credits throughout the value-chain, and across boundaries of States, would ensure that there is minimal cascading of taxes. This would reduce hidden costs of doing business.
  •  Improved competitiveness: Reduction in transaction costs of doing business would eventually lead to an improved competitiveness for the trade and industry.
  • Gain to manufacturers and exporters: The subsuming of major Central and State taxes in GST, complete and comprehensive set-off of input goods and services and phasing out of Central Sales Tax (CST) would reduce the cost of locally manufactured goods and services. This will increase the competitiveness of Indian goods and services in the international market and give boost to Indian exports. The uniformity in tax rates and procedures across the country will also go a long way in reducing the compliance cost.

For Central and State Governments –

  • Simple and easy to administer: Multiple indirect taxes at the Central and State levels are being replaced by GST. Backed with a robust end-to-end IT system, GST would be simpler and easier to administer than all other indirect taxes of the Centre and State levied so far.
  • Better controls on leakage: GST will result in better tax compliance due to a robust IT infrastructure. Due to the seamless transfer of input tax credit from one stage to another in the chain of value addition, there is an inbuilt mechanism in the design of GST that would incentivize tax compliance by traders.
  • Higher revenue efficiency: GST is expected to decrease the cost of collection of tax revenues of the  Government, and will therefore, lead to higher revenue efficiency.

For the consumers – 

  • Single and transparent tax proportionate to the value of goods and services: Due to multiple indirect taxes beinglevied by the Centre and State, with incomplete or no input tax credits available at progressive stages of value addition, the cost of most goods and services in the country today are laden with many hidden taxes. Under GST, there would be only one tax from the manufacturer to the consumer, leading to transparency of taxes paid to the final consumer.
  • Relief in overall tax burden: Because of efficiency gains and prevention of leakages, the overall tax burden on most commodities will come down, which will benefit consumers.

Question 3. Which taxes at the Centre and State level are being subsumed into GST?

Answer:   At the Central level, the following taxes are being subsumed:
a. Central Excise Duty,
b. Additional Excise Duty,
c. Service Tax,
d. Additional Customs Duty commonly known as Countervailing Duty, and
e. Special Additional Duty of Customs.
At the State level, the following taxes are being subsumed:
a. Subsuming of State Value Added Tax/Sales Tax,
b. Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax (levied by the Centre and collected by the States),
c. Octroi and Entry tax,
d. Purchase Tax,
e. Luxury tax, and
f. Taxes on lottery, betting and gambling.

Question 4. What are the major chronological events that have led to the introduction of GST?

Answer: GST is being introduced in the country after a 13 year long journey since it was first discussed in the report of the Kelkar Task Force on indirect taxes. A brief chronology outlining the major milestones on the proposal for introduction of GST in India is as follows:
a. In 2003, the Kelkar Task Force on indirect tax had suggested a comprehensive Goods and Services Tax (GST) based on VAT principle.
b. A proposal to introduce a National level Goods and Services Tax (GST) by April 1, 2010 was first mooted in the Budget Speech for the financial year 2006-07.
c. Since the proposal involved reform/ restructuring of not only indirect taxes levied by the Centre but also the States, the responsibility of preparing a Design and Road Map for the implementation of GST was assigned to the Empowered Committee of State Finance Ministers (EC).
d. Based on inputs from Govt of India and States, the EC released its First Discussion Paper on Goods and Services Tax in India in November, 2009.
e. In order to take the GST related work further, a Joint Working Group consisting of officers from Central as well as State Government was constituted in September, 2009.
f. In order to amend the Constitution to enable introduction of GST, the Constitution (115th Amendment) Bill was introduced in the Lok Sabha in March 2011. As per the prescribed procedure, the Bill was referred to the Standing Committee on Finance of the Parliament for examination and report.
g. Meanwhile, in pursuance of the decision taken in a meeting between the Union Finance Minister and the Empowered Committee of State Finance Ministers on 8th November, 2012, a ‘Committee on GST Design’, consisting of the officials of the  Government of India, State Governments and the Empowered Committee was constituted.
h. This Committee did a detailed discussion on GST design including the Constitution (115th) Amendment Bill and submitted its report in January, 2013. Based on this Report, the EC recommended certain changes in the Constitution Amendment Bill in their meeting at Bhubaneswar in January 2013.
i. The Empowered Committee in the Bhubaneswar meeting also decided to constitute three committees of officers to discuss and report on various aspects of GST as follows:-
(a) Committee on Place of Supply Rules and Revenue Neutral Rates;
(b) Committee on dual control, threshold and exemptions;
(c) Committee on IGST and GST on imports.
j. The Parliamentary Standing Committee submitted its Report in August, 2013 to the Lok Sabha. The recommendations of the Empowered Committee and the recommendations of the Parliamentary Standing Committee were examined in the Ministry in consultation with the Legislative Department. Most of the recommendations made by the Empowered Committee and the Parliamentary Standing Committee were accepted and the draft Amendment Bill was suitably revised.
k. The final draft Constitutional Amendment Bill incorporating the above stated changes were sent to the Empowered Committee for consideration in September 2013.
l. The EC once again made certain recommendations on the Bill after its meeting in Shillong in November 2013. Certain recommendations of the Empowered Committee were incorporated in the draft Constitution (115th Amendment) Bill. The revised draft was sent for consideration of the Empowered Committee in March, 2014.
m. The 115th Constitutional (Amendment) Bill, 2011, for the introduction of GST introduced in the Lok Sabha in March 2011 lapsed with the dissolution of the 15th Lok Sabha.
n. In June 2014, the draft Constitution Amendment Bill was sent to the Empowered Committee after approval of the new Government.
o. Based on a broad consensus reached with the Empowered Committee on the contours of the Bill, the Cabinet on 17.12.2014 approved the proposal for introduction of a Bill in the Parliament for amending the Constitution of India to facilitate the introduction of Goods and Services Tax (GST) in the country. The Bill was introduced in the Lok Sabha on 19.12.2014, and was passed by the Lok Sabha on 06.05.2015. It was then referred to the Select Committee of Rajya Sabha, which submitted its report on 22.07.2015.

Question 5. How would GST be administered in India?

Answer: Keeping in mind the federal structure of India, there will be two components of GST – Central GST (CGST) and State GST (SGST). Both Centre and States will simultaneously levy GST across the value chain. Tax will be levied on every supply of goods and services. Centre would levy and collect Central Goods and Services Tax (CGST), and States would levy and collect the State Goods and Services Tax (SGST) on all transactions within a State. The input tax credit of CGST would be available for discharging the CGST liability on the output at each stage. Similarly, the credit of SGST paid on inputs would be allowed for paying the SGST on output. No cross utilization of credit would be permitted.

Question 6. How would a particular transaction of goods and services be taxed simultaneously under Central GST (CGST) and State GST (SGST)?

Answer : The Central GST and the State GST would be levied simultaneously on every transaction of supply of goods and services except on exempted goods and services, goods which are outside the purview of GST and the transactions which are below the prescribed threshold limits. Further, both would be levied on the same price or value unlike State VAT which is levied on the value of the goods inclusive of Central Excise.

A diagrammatic representation of the working of the Dual GST model within a State is shown.

Question 7. Will cross utilization of credits between goods and services be allowed under GST regime?

Answer : Cross utilization of credit of CGST between goods and services would be allowed. Similarly, the facility of cross utilization of credit will be available in case of SGST. However, the cross utilization of CGST and SGST would not be allowed except in the case of inter-State supply of goods and services under the IGST model which is explained in answer to the next question.

Question 8. How will be Inter-State Transactions of Goods and Services be taxed under GST in terms of IGST method?

Answer: In case of inter-State transactions, the Centre would levy and collect the Integrated Goods and Services Tax (IGST) on all inter-State supplies of goods and services under Article 269A (1) of the Constitution. The IGST would roughly be equal to CGST plus SGST. The IGST mechanism has been designed to ensure seamless. flow of input tax credit from one State to another. The inter-State seller would pay IGST on the sale of his goods to the Central Government after adjusting credit of IGST, CGST and SGST on his purchases (in that order). The exporting State will transfer to the Centre the credit of SGST used in payment of IGST. The importing dealer will claim credit of IGST while discharging his output tax liability (both CGST and SGST) in his own State. The Centre will transfer to the importing State the credit of IGST used in payment of SGST. Since GST is a destination-based tax, all SGST on the final product will ordinarily accrue to the consuming State. A diagrammatic representation of the working of the IGST model for inter-State transactions is shown.

Question 9. How will IT be used for the implementation of GST?

Answer: For the implementation of GST in the country, the Central and State Governments have jointly registered Goods and Services Tax Network (GSTN) as a not-for-profit, non-Government Company to provide shared IT infrastructure and services to Central and State Governments, tax payers and other stakeholders. The key objectives of GSTN are to provide a standard and uniform interface to the taxpayers, and shared infrastructure and services to Central and State/UT governments. GSTN is working on developing a state-of-the-art comprehensive IT infrastructure including the common GST portal providing frontend services of registration, returns and payments to all taxpayers, as well as the backend IT modules for certain States that include processing of returns, registrations, audits, assessments, appeals, etc. All States, accounting authorities, RBI and banks, are also preparing their IT infrastructure for the
administration of GST. There would no manual filing of returns. All taxes can also be paid online. All mis-matched returns would be autogenerated, and there would be no need for manual interventions. Most returns would be self-assessed.

Question 10. How will imports be taxed under GST?

Answer : The Additional Duty of Excise or CVD and the Special Additional Duty or SAD presently being levied on imports will be subsumed under GST. As per explanation to clause (1) of article 269A of the Constitution, IGST will be levied on all imports into the territory of India. Unlike in the present regime, the States where imported goods are consumed will now gain their share from this IGST paid on imported goods.

Question 11. What are the major features of the Constitution (122nd Amendment) Bill, 2014?

Answer : The salient features of the Bill are as follows:

  • Conferring simultaneous power upon Parliament and the State Legislatures to make laws governing goods and services tax;
  •  Subsuming of various Central indirect taxes and levies such as Central Excise Duty, Additional Excise Duties, Service Tax, Additional Customs Duty commonly known as Countervailing Duty, and Special Additional Duty of Customs;
  • Subsuming of State Value Added Tax/Sales Tax, Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax (levied by the Centre and collected by the States), Octroi and Entry tax, Purchase Tax, Luxury tax, and Taxes on lottery, betting and gambling;
  •  Dispensing with the concept of ‘declared goods of special importance’ under the Constitution;
  • Levy of Integrated Goods and Services Tax on inter-State transactions of goods and services;
  • GST to be levied on all goods and services, except alcoholic liquor for human consumption. Petroleum and petroleum products shall be subject to the levy of GST on a later date notified on the recommendation of the Goods and Services Tax Council;
  • Compensation to the States for loss of revenue arising on account of implementation of the Goods and Services Tax for a period of five years;
  • Creation of Goods and Services Tax Council to examine issues relating to goods and services tax and make recommendations to the Union and the States on parameters like rates, taxes, cesses and surcharges to be subsumed, exemption list and threshold limits, Model GST laws, etc. The Council shall function under the Chairmanship of the Union Finance Minister and will have all the State Governments as Members.

Question 12. What are the major features of the proposed registration procedures under GST?

Answer: The major features of the proposed registration procedures under GST are as follows:
i. Existing dealers: Existing VAT/Central excise/Service Tax payers will not have to apply afresh for registration under GST.
ii. New dealers: Single application to be filed online for registration under GST.
iii. The registration number will be PAN based and will serve the purpose for Centre and State.
iv. Unified application to both tax authorities.
v. Each dealer to be given unique ID GSTIN.
vi. Deemed approval within three days.
vii. Post registration verification in risk based cases only.

Question 13. What are the major features of the proposed returns filing procedures under GST?

Answer: The major features of the proposed returns filing procedures under GST are as follows:
a. Common return would serve the purpose of both Centre and State Government.
b. There are eight forms provided for in the GST business processes for filing for returns. Most of the average tax payers would be using only four forms for filing their returns. These are return for supplies, return for purchases, monthly returns and annual return.
c. Small taxpayers: Small taxpayers who have opted composition scheme shall have to file return on quarterly basis.
d. Filing of returns shall be completely online. All taxes can also be paid onine.

Question 14. What are the major features of the proposed payment procedures under GST?

Answer: The major features of the proposed payments procedures under GST are as follows:
i. Electronic payment process- no generation of paper at any stage
ii. Single point interface for challan generation- GSTN
iii. Ease of payment – payment can be made through online banking, Credit Card/Debit Card, NEFT/RTGS and through cheque/cash at the bank
iv. Common challan form with auto-population features
v. Use of single challan and single payment instrument
vi. Common set of authorized banks
vii. Common Accounting Codes

(Complied from the Data available on PIB)

 

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Understanding the GST E-Way Bill – How Will It Work?

Under the newly introduced GST regime, the transporters are required to carry an electronic or e-way bill at the time of moving the goods from one location to another. It is a mandatory requirement and the transporters, consignors, and consignees must comply with it. This is an online version of the earlier accepted Way Bill that they had to obtain from the VAT authorities. In this case, e-way bill is required for the movement of goods above Rs. 50,000 in value. The government is planning to allow generating or canceling this bill through SMS as well. At the time of generating an e-way bill, a unique EBN or E-way Bill Number will be allocated to the supplier, recipient, and transporter.

When Should An E-Way Bill Be Generated?

Whenever there is a movement of goods in relation to a supply, for reasons other than a supply, or an inward supply from an unregistered person, it needs an e-way bill under the CGST Act.

What Constitutes Supply For the Purpose of E-Way Bill?

The supply for the purpose of generating an e-way bill includes the following:

  • If a supply is made for a payment or any other consideration during the course of business.
  • If the supply is made for a payment or any other form of consideration even if not in the course of business.
  • If a supply is made without any consideration or payment.

The Central Board of Excise and Customs has proposed that an e-way bill should be generated for the supply of goods above INR 50000. It will need an online registration of the consignment and authorities can inspect the same anytime if they suspect a tax evasion. The bills generated on the GSTN portal will be valid for a period of 1-15 days depending on the distance of travel. It may be increased to 20 days for a distance of more than 1000 km.

Who is Liable to Generate E-Way Bills?

This type of bill should be generated for the movement of goods above Rs. 50, 000 from or to a registered person. A registered transporter of supplier can also opt to carry an e-way bill for the goods costing below Rs. 50, 000. Unregistered persons and transporters can also apply for this bill. However, if the receiver is a registered person, it is important to ensure the compliance with the provisions of law in this case.

How to Generate an E-Way Bill:

The e-way bill under GST is generated after a well-defined process. In this regard, the person initializing the movement of goods is required to provide the details of goods to be transported on the GSTN portal. The taxpayers have to log into their GST account and generate Form GST EWB-01 by providing the following details:

  • GSTIN of the recipient of goods
  • Challan or invoice number
  • Challan or invoice date
  • Location of delivery
  • Worth of goods in INR
  • Reason for movement
  • HSN code
  • TDN or Transport Document Number

You should provide the PIN code of the place of delivery and Goods Receipt Number/ Airway Bill Number/Railway Receipt Number/ Bill of Lading Number for TDN.

After this step, you should provide the complete details of transport in part B of GST EWB-01. When the goods are moved by the customer or supplier in an owned vehicle, the information can be updated by the same person. When goods are handed over to a transporter by the supplier, the supplier needs to provide details for generation of an e-way bill under Part A of this form. Then, the transporter will generate the bill according to the information given by the transporter in Part B. In this scenario, goods can be moved only by providing information in Part A.

In the cases where goods need to travel less than 10 km within the Union or state territory from a supplier’s business location to a transporter, no details of transport are required to be provided by the supplier on the common portal of GST. And, if goods are moved for a distance of fewer than 10 km, the supplier need not provide the details of transport on the portal for generating the e-bill.

These are the details related to GST e-way bill that you should know.

 

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What is the Impact of GST on the Export of Services and Goods?

Previously, the export of services and goods was subject to a bevy of indirect taxes. Excise tax, customs duty, VAT, service tax, etc. was standard taxes charged from an exporter. Under the GST regime, all these taxes are subsumed into one. However, customs duty is an exemption and still levied on importers as usual.

Currently, there is no duty charged on exporters of services and goods. Above that, an exporter can claim any inputs that are received for purchasing of their raw materials. The government of India is aiming to increase the export of services and goods. To boost their ‘Make in India’ program, the government has offered various perks including zero duty on the exports. However, there is still some ambiguity in this arrangement and traders are looking for more clarification on the subject matter.

How Will It Be Levied?

Since the export of goods and services is considered a zero-rated supply, there is no GST levied on the same. Under the previous laws, a duty drawback was given for the taxes paid on inputs, provided these inputs were meant for export of goods exempted from taxes. It was truly daunting to claim this drawback. GST will mitigate these issues. Under this new system, duty drawback will be available only for the payment of customs duty on imported goods. Also, it will be allowed on some tobacco and petroleum products that are used as fuel or inputs for captive power generation in India.

Meaning of Export of Services under IGST Act 2017:

Services are treated as an export under below-mentioned circumstances when:

  • Service supplier is located in India
  • Service recipient is located outside India
  • Place of service supplied is located outside India
  • Supplier receives payment for such services in convertible foreign exchange

Here, supplier and recipient should be distinct person. For example- ABD consultancy firm in Delhi, India is providing services to XYZ firm in Dubai. Here, the location of supplier is in India, recipient location is Dubai, payment is made in Dirham (convertible foreign exchange) and supplier and recipient are different persons.

The Treatment on Zero-Rated Exports:

The government has issued a guidance note for clearing the doubts related to claims of input tax credits on the zero-rated products. Such exporters can claim refunds for zero-rated goods under two main options, viz.

  1. They should supply the goods or services, or even both under a Letter or Undertaking or Bond subject to the prescribed safeguards, procedures, and conditions. It can be provided without paying integrated taxes. Then, the exporter can claim a refund of the input tax credit that is unutilized. It requires filing an application for the refund either directly on the common portal or through a notified facilitation centre. Also, an export report must be filed under the Customs Act before filing this application for claiming refunds.
  2. Refunds can also be claimed by an exporter, Embassy, United Nations, agencies other than those specified in section 55 if they are paying IGST after fulfilling the prescribed conditions, procedures, and safeguards. This refund can be claimed on the tax paid on the goods and services supplied or both. Here, the applicant should follow the rules specified in Section 54 of CGST Act. In this context, the exporter has to submit the shipping bill for the goods exported. The person in charge of the shipment should also provide a complete report with the number and dates of all shipping bills mentioned clearly. The forms are available on the official website of the department.

How Are the Exports of Zero-Rated Services Treated Under GST?

Before claiming a refund of input tax credit, it is essential to determine if as service is covered under the definition given in the law. Any new conditions are not added to the existing definition of Export of Services. The rules for place of supply will vary on a case to case basis for determining their taxability. The location of service recipient is the default place of supply for export of services. The address mentioned in the records of the recipient must exist with the exporter in this case. This rule applies to IT/ITES services including intermediary services, software support, and maintenance.

There are separate implications of GST on software transactions including cloud computing. This is the packaged software that should be treated as ‘Goods’. It should be taxed as per the rates and place of supply applicable to export of goods. The customized software is charged as ‘Services’. Also, the software supplied electronically is charged as ‘Services’ because the definition of goods does not include intangible products. Same goes for the transfer of cloud computing services.

Refund of Input Tax Credit in Export of Goods:

The rules are clearly specified in this regard. They state:

  • If the supply of zero-rated goods is made without paying taxes, refund of input tax credit can be claimed under section 54(2) of CGST Act.
  • Unutilized input tax credit is not liable to refund in cases other than the zero-rated exports. Also, it states that refund will be available if credit is accumulating due to rate of tax on inputs being higher than the tax on output supplies. Also, this rule exempts nil rated and fully exempted products.
  • If the goods exported are subject to export duty, no refund will be allowed on an unutilized tax credit.
  • If exporter avails duty drawbacks of SGST/CGST/UTGST or claims refunds on IGST already paid on such exports, no refund will be allowed in these circumstances.

Deemed Exports:

Global tenders are invited for the prestigious projects in India financed by the foreign aid from Asia development bank, World Bank, etc. Indian suppliers face tough competition to win such projects from foreign suppliers. Since services are invited for a project funded with free foreign exchange, there is no customs duty involved in the bids. Supplies to such project where goods and services do not leave the country and payments are received by a supplier under Para 7.02 of Foreign Trade Policy (2015-2020) are termed as Deemed Export.

Following Transactions are treated as Deemed Exports under Foreign Trade Policy (2015-2020):

  • Export supplies for UN Agencies
  • Export against EPCG
  • Export against DFIA/ Advance Authorisation
  • Supplying for international competitive bidding project
  • Exporting marine freight containers
  • Supplying for EOU/ BTP/ EHTP/ STP
  • Supplying goods and services for project with zero customs duty
  • Supplying services and goods through competitive bidding to a nuclear project
  • Supplying services and goods to mega power projects

 

How Is the Government Looking for Export Promotion under GST?

Export is a priority but WTO recommends free and fair global trade. This rule binds on India as well. Hence, giving incentives to the exporters is against the norms of fair trade. However, these exporters are equally compensated by making their goods and services free from domestic taxes.

Following Are The Benefits Enjoyed By An Exporter Under GST:

  • GST exempted from final product
  • Refund of ITC on GST paid

Also, the government has planned few schemes for the exporters. These include:

  • SEZ allowed importing inputs without paying duty and export finished goods
  • Schemes of Advance Authorisation, DEPB, and DFIA
  • Duty Drawback Scheme
  • Scheme for Export Oriented Undertakings

With this comprehensive knowledge about GST implication on Export of Goods and Services, you can run your business smoothly and contribute to the cause of nation building.

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Who Can Be Taxable And Liable for Registration Under GST?

GSTKENDRA

With the introduction of GST, there has been a lot of confusion about the different aspects of this tax regime that combined nine existing taxes into one. Here, we will discuss the taxable person who is liable to register under this law. Any person who carries any business at any location in India and is registered or needed to get registered under the GST Act is defined as a taxable person. Person refers to an individual, company, firm, HUF, a government company, BOI, AOP, co-operative society, government, trust, local authority, artificial juridical person, and a body corporate incorporated under the laws applicable in a foreign country.

Who Should Get Registered Under GST?

 

The registration under this act is mandatory for any business whose turnover exceeds Rs. 20 lakhs in a financial year. This limit is Rs. 10 lakhs for North Eastern and Hill states. However, this clause is not applicable if your turnover includes supply of only those goods that are exempted under GST. Apart from this, persons who are liable for GST registration include:

  • Anyone registered under an earlier tax law, be it VAT, Excise, Service Tax, or any other law. Migration is mandatory for every taxable person.
  • If a business was registered but transferred to another entity or person, the transferee should initiate registration with effect from this date (of transfer).
  • Non-resident taxable person
  • Anyone involved in the inter-state supply of goods. It refers to the supply of goods or services from one state to another by a taxable person.
  • Persons paying tax under RCM or Reverse Charge Mechanism.
  • An e-commerce operator, aggregator, or someone supplying goods through this e-commerce aggregator.
  • A person supplying OIDAR
  • Agents working with a supplier
  • Casual Taxable Persons
  • Input Service Distributor

Here, the meanings of these taxable persons are explained:

Casual Taxable Persons:

It refers to a person who occasionally supplies goods or services and has no definite place of business. For example, the temporary firecracker shop set up at the time of festivals or a person in Bangalore supplying consultancy services in Noida without any place of business. This person will be treated as a taxable person liable to register in Noida.

Non-Resident Taxable Persons:

If a non-resident taxpayer occasionally supplies goods or services at a place in India which is covered under GST laws without any fixed place of business, the person is liable for registration. This person will be treated as a taxable non-resident.

Persons Paying Taxes under RCM:

The liability for making payments under GST lies with the supplier in most of the cases. However, this liability rests with the recipient in some cases. These transactions are called as reverse charge and a person required to pay taxes under this mechanism should seek GST registration.

Input Service Distributor:

It refers to the supplier of goods and services who gets tax invoices for receiving input services and also issues a specified document for distribution of credit of state tax, central tax, union territory tax, or integrated tax paid on these services to a supplier.

E-Commerce Aggregator:

E-commerce refers to the supply of goods or services through a digital network. The person who owns, operates, or manages this platform id compulsorily required to get GST registration irrespective of the business turnover.

Persons Supplying Through E-commerce Aggregators:

Those persons who supply goods or services through e-commerce operators are required to get registered under GST. However, this clause does not apply to the supplies in which the aggregator or operator has to collect tax at source on the behalf of a supplier.

Persons Supplying OIDAR:

A person who supplies Online Information or Database Access or Retrieval (OIDAR) services should also obtain GST registration if the supply takes place from a place outside India to a person residing in India.

The Rules of GSR Registration for Type of Taxable Persons:

 

  • The person is liable to apply for GST registration in the state where the person is liable. Application should be made within 30 days from the date of becoming liable to registration.
  • The Registration under GST will be based on PAN. Hence, having a PAN is a prerequisite.
  • Non-residents and casual persons are required to apply at least five days before the date of starting their business.
  • The registration will be state-wise. Hence, taxable persons must obtain separate registration for each state.
  • The taxable persons should obtain separate GST registration if working on different verticals within the same state.

Who Is Not Liable to GST Registration?

 

A person will be exempt from GST registration is engaged entirely in the supply of goods or services that are wholly exempt from tax are not liable for tax under GST Act. Also, this registration is not required for the agriculturists if the supply of produce from the cultivation of their land is exempt from GST. Here, agriculturist refers to an individual or HUF engaged in cultivation of land by own labour, by family’s labour, by servants working on wages paid in cash or kind, or by hired labour working under the supervision of own or a member of the family.

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GST Statistics for the Period till 25th December 2017

Gross collection of GST for the month of December 2017 has been Rs. 80,808 crores till 25th December 2017
Total Revenue Collection under GST:

The total collection under GST for the month of December 2017 has been Rs. 80,808 crores till 25thDecember 2017. 99.01 lakh taxpayers have been registered under GST so far till 25th December, of which 16.60 lakh are composition dealers which are required to file returns every quarter. 53.06 lakh returns have been filed for the month of November till 25th December.

Revenue of State Governments –

Out Of the Rs. 80,808 crores collected under GST for the month of December, 2017 (upto 25th December), Rs. 13,089 crores have been collected as CGST, Rs. 18,650 crores has been collected as SGST, Rs. 41,270 crores has been collected as IGST and Rs. 7,798 crores has been collected as Compensation cess. Further, Rs. 10,348 crores is being transferred from IGST to CGST account and Rs. 14,488 crores is being transferred from IGST to SGST account by way of settlement of funds on account of cross utilization of IGST credit for payment of CGST and SGST respectively or due to inter State B2C transactions. Thus, a total amount of Rs. 24,836 crores is being transferred from IGST to CGST/SGST account by way of settlement. Thus, the total collection of CGST and SGST for the month of December, 2017 (upto 25th December) is Rs. 23,437 crores and Rs. 33,138 crores respectively, including transfers by way of settlement.

(Compiled from the data available on PIB)