Thursday, May 18, 2017

A Mother's Diary




It was 6 o'clock in the morning. I was about to leave my bed to start my day. Just when I thought about it, I heard my daughter calling me Mumma, where are you? My heartbeat started increasing! I silently prayed to God, please make her sleep! She crawled towards me and hugged me (That is the best feeling I tell you!). I thought she must be sleepy so I decided to stay with her for sometime. She kept turning all the while, sometimes on my head, sometime on my hand, sometime coming closer and sometimes moving away. At one point I thought she slept! There was total silence! But, that was the silence before storm! Slowly, she whispered in my ears, very excitedly Mumma, I don't wanna sleep. Let's go out! That was it! I knew she won't sleep now. My morning routine have gone for toss! No exercise, no reading of news paper, no preparation for GST! Nothing! I took her out in my arms to her grandfather who was reading news paper and was waiting for me to prepare tea. He looked at me and smiled, as if saying,  Its Ok beta, I know why you are late today.  (Thank God I have got a family who understands my situation!).I dropped her there and went to prepare tea. But madamji followed me to the kitchen curiously to know what I am doing there. And then followed never ending long list of questions. Mumma, what are you preparing, why are you making tea, how tea is made, why only you make tea, what are you adding, please show it to me as well, I will also prepare mumma, makes me sit next to stove naa, please, what are you serving with tea, why this and not that, why..why..why.....??? Phew! I gave her a look to understand why, why Ananya, why the hell in the morning are you asking so many questions. I mean you have just got up! From where do you derive so much energy?. Enjoy the silence of nature. Keep quiet. Just then came another question, with an innocent looks on face, Kya hua mumma? Aap hume aise kyun dekh rhi hain? 

Finally, I was able to make tea. I asked her to call her baba which she did very obediently. She hold her baba's finger and brought him to the dining table (Cute na!). Then, she jumped on my lap and passed a smile at me (Muah!). I had prepared milk for her. She looked at it and said, Hum nhi peeyenge! Ye hume accha nhi lagta!  I wanted to enjoy my tea so I pretended to agree with her, Ok !  Sit silently! But, how can that happen, silence, when your kid is awake! Impossible! I have removed that word from my dictionary. After I finished my cup, I geared for the struggle of the day- to make Ananya have her milk! It took me full One hour to win that battle! I tried all the weapons, pyaar, daant, dhamki ( papa se bta dungi), story, videos on you tube and what not! And when have battles been won without blood shed? In my case, blood was replaced with milk, spilled all over! Another, half an hour to clean that mess! I was wondering, what next?

It was 9 o'clock in the morning by now! ( Really,only 9?). My cook would come in by 9:30. So I decided to give her a bath and then breakfast. She would probably sleep after that. As planned, I very happily took her to bathroom. She loves playing with the water, spilling it, cleaning the floor, jumping in her tub, coming out of it and into it again to hear the sound of water, applying soap on her and the same soap on floor! My daughter loves to complete the task, so she will apply wiper as well. For that she will again spread the water on floor and wipe it. The process goes on for infinite time! Another one hour for bathing and getting her ready! By this time, my cook was shouting from outside,  Bhabhi, naashta ban gay! Ab to aa jaiye!  Aa Jaiye, matlab? Main kya Water Park main enjoy kar rhi hun?

Another round of struggle was about to start! Breakfast! I was already out of energy, so I decided to feed her in her comfort zone (her bedroom) rather than on dining table. She was getting irritated. It was an indication that she is sleepy now! I was thanking my stars! I took a grip on my patience and started giving her food! After I have finished, she said to me, Mumma Neena! I can't tell how much I wanted to hear these two words! Immediately I took her in my arms and made her sleep! I thought, now she will sleep for at least two hours! I grabbed my books and immediately went to my study room! Hardly, half an hour would have passed I heard a crying voice. I ran straight into my room. Ananya was crying and saying  Mumma, aap khan chali gyi thi hume chod ke?I felt so guilty! I immediately took her in my arms and consoled her. Bas ab kya, neenna poori! Now, Mumma, humare saath kheliye, blocks, clay, puzzle, books.......Hey Prabhu, bas adhe ghante ka chain! Anyways, with no option left, I happily played with her!

Similarly, afternoon passed by. giving her lunch, playing and talking with her! It's 5:30 in the evening and now madamji has again decided to sleep! Finally! She is sleeping now. And here I am, feeling exhausted, having a cup of tea in my hand, thinking to plan my day again and start afresh! My books are staring at me as if saying Dear Mumma, tomorrow is another day! Read me then! 

For a mother, every day is a mother's day! No matter how much you plan, and how much you try, things will happen only according to the boss wish! That said, all the struggle is worth the effort when she come and hugs me! I completely forget all my worries! A jaddu ki jhappi from her is all I need to re energise myself! Her smile is my tonic and her innocent face is my motivation to work more for her. Love you a lot darling! May be I could be an inspiration for you one day! That would be my reward for all I do for you!








Friday, May 12, 2017

Applicability of Income Tax Return Forms to be filed for AY 2017-18



It's that time of the year when we have to file income tax return. But which one & when? Let's find out!

ITR No.

Who can use the return

Who cannot use the return

Is Annexure Required

How can the return be filed

Can Paper return be filed

Is Audit compulsory

Is Digital Signature Certificate Compulsory

1
Individual whose total Income for the AY 2017-18 includes:
a)  Income from Salary/Pension
b) Income from ONE house property (no brought forward loss)
c) Income from other sources (Exceptions noted in next column)
1. The income should not include income from more than one house property
2.If there is brought forward loss from house property from any previous year
3.Income from other sources include Lottery income, income from race horses and income taxable u/s 115BBDA or income  of the nature referred in section 115BBE
4.Income under the head Capital Gains
5. Agricultural Income in excess of Rs 5000
6.Income from Business or Profession
7.Loss under the head “Income from other sources”
8.Person claiming relief u/s90 or 91
9.Any resident having any asset (including financial interest in any entity)located outside India or signing authority in any account located outside India
10.Any resident having income from any source outside India
Note: Such Individuals can file ITR 2
No
1.By Furnishing return in paper form
2.By furnishing return electronically under digital signature
3.By transmitting the data in the return electronically under Electronic verification Code(EVC)
4.By transmitting the data in the return electronically and thereafter submitting the verification of the return in Return Form ITR V
Yes, but only in below mentioned two conditions:
1.An individual of the age of 80 years or more at any time during the previous year
2.An individual whose  income does not exceed Rs 5 lakhs and no refund is claimed in the return
No
No
2
1.Individual and HUF who cannot file ITR1
2.Income under the head “Profits and gains from Business & Profession” is received form Partnership only (not proprietorship) 

Individual and HUF having income from Business or Profession from Proprietorship

Note: Such individual/ HUF can file ITR 3
No
1.By furnishing return electronically under digital signature
2.By transmitting the data in the return electronically under Electronic verification Code(EVC)
3.By transmitting the data in the return electronically and thereafter submitting the verification of the return in Return Form ITR V
No
No
No
3
Individual/HUF carrying out proprietary business or profession
N.A.
No
1.By furnishing return electronically under digital signature
2.By transmitting the data in the return electronically under Electronic verification Code(EVC
3.By transmitting the data in the return electronically and thereafter submitting the verification of the return in Return Form ITR V
No
No, the accounts are required to be audited only u/s 44AB(If conditions of the section are met)
No, only in the case where accounts are required to be audited u/s 44AB
4(Sugam)
Individual/ HUF/ Partnership Firm whose total income for the AY 2017-18 includes :
1.Business or Profession income are computed in accordance with section 44AD, 44 AE or 44ADA
2.Salary/Pension
3.ncome from One House Property(Excluding where loss is brought forward from previous year)
4.Income from other sources (Excluding winning from lottery or Race Horses)
1.The income should not include income from more than one house property
2.If there is brought forward loss from house property from any previous year
3.Income from other sources include Lottery income, income from race horses and
4.Income under the head Capital Gains
5.Agricultural Income in excess of Rs 5000
6.Income from speculative business
7.ncome from agency business or income in the nature of commission or brokerage
8.Person claiming relief u/s 90 or 91
9.Any resident having any asset (including financial interest in any entity)located outside India or signing authority in any account located outside India
10.Any resident having income from any source outside India
Note: In such case, the assessee can file regular ITR 3 or 5 as the case may be.


1.By Furnishing return in paper form
2.By furnishing return electronically under digital signature
3.By transmitting the data in the return electronically under Electronic verification Code(EVC)
4.By transmitting the data in the return electronically and thereafter submitting the verification of the return in Return Form ITR V
Yes, but only in below mentioned two conditions:
1.An individual of the age of 80 years or more at any time during the previous year
2.An individual whose  income does not exceed Rs 5 lakhs and no refund is claimed in the return
No
No
5.
LLP/ AOP/BOI/Artificial Juridical Person/co-operative societies/ registered societies and Local authority
Person filing return u/s 139(4A)/ 139(4B)/ 139(4C)/ 139(4D)/ 139(4E)/139(4F)

Note: Assessee can file ITR 7
No
1.By furnishing return electronically under digital signature
2.By transmitting the data in the return electronically under Electronic verification Code(EVC)
3.By transmitting the data in the return electronically and thereafter submitting the verification of the return in Return Form ITR V
No
No, the accounts are required to be audited only u/s 44AB(If conditions of the section are met)
No, only in the case where accounts are required to be audited u/s 44AB
6
Companies (except company claiming exemption u/s11)
Companies claiming exemption u/s 11
No
Only electronically under digital signature
No
No, the accounts are required to be audited only u/s 44AB(If conditions of the section are met)
Yes in all cases
7
Person furnishing return u/s 139(4A)/ 139(4B)/ 139(4C)/ 139(4D)/ 139(4E)/139(4F)
NA
No
1.By furnishing return electronically under digital signature
2.By transmitting the data in the return electronically under Electronic verification Code(EVC)
3.By transmitting the data in the return electronically and thereafter submitting the verification of the return in Return Form ITR V
Note: Political parties should compulsorily file return electronically under digital signature
No
No, the accounts are required to be audited only u/s 44AB(If conditions of the section are met)
No, Only political party has to file return under digital signature


Notes:
1.      It is advisable to check your Tax Credit Statement ( Form 26 AS). If there is any discrepancy between TDS claimed and TDS as appearing in form 26AS, there is delay in processing of refund.
2.      Individuals filing ITR 1 will be required to provide details of cash deposited between 09/11/16 to 30/12/2016 in their bank account or any other account (such as loan account). However the details are required to be furnished only if the aggregate amount deposited exceeds Rs 2 lakhs.
3.      Where the Return Form is furnished by manually sending the ITRV, the assessee should print out two copies of Form ITR-V. One copy of ITR-V, duly signed by the assessee, has to be sent by post to - Post Bag No. 1, Electronic City Office, Bengaluru— 560 100, Karnataka. The other copy may be retained by the assessee for his record.
4.      Due date for filing return is as follows:
·         If the accounts are not required to be audited – 30th July 2017
·         If the accounts are required to be audited         –30th September 2017
5.      Tax slab for AY 2017-18
1.      In case of every individual (other than resident individual who is of the age of 60 years or more at any time during the financial year 2016-17) –


Income (Rs)
Tax Liability (Rs)
1
Upto 2,50,000
Nil
2
Between 2,50,001 – 5,00,000
10% of income in excess of 2,50,000
3
Between 5,00,001 – 10,00,000
25,000 + 20% of income in excess of 5,00,000
4
Above 10,00,000
1,25,000 + 30% of income in excess of 10,00,000

2.      In case of every individual who is of the age of 60 years or more but less than 80 years  at any time during the financial year 2016-17–


Income (Rs)
Tax Liability (Rs)
1
Upto 3,00,000
Nil
2
Between 3,00,001 – 5,00,000
10% of income in excess of 3,00,000
3
Between 5,00,001 – 10,00,000
20,000 + 20% of income in excess of 5,00,000
4
Above 10,00,000
1,20,000 + 30% of income in excess of 10,00,000

3.      In case of every individual who is of the age of 80 years or more at any time during the financial year 2016-17–


Income (Rs)
Tax Liability (Rs)
1
Upto 5,00,000
Nil
2
Between 5,00,001 – 10,00,000
 20% of income in excess of 5,00,000
3
Above 10,00,000
1,00,000 + 30% of income in excess of 10,00,000


Be informed and file correct return to avoid tax notice! Wish you all a very happy July!

Thanks for Reading!

Friday, May 5, 2017

Why Agricultural Income should NOT be taxed in India



Since the time Chief Economic Advisor Arvind Subramaniam made a statement that India needs to tax agricultural income on rich farmers, editorial of every paper is speaking in favor of it. The whole idea of taxing agricultural income is to increase the tax base and hence generate more revenue. I, however, hold a different view due to below mentioned reasons:

1. Increasing the tax base - According to National Sample Survey, almost 90% farmers in India have less than 2 acres of holding. That means only a little over 10% of farmers would fall under the tax net. Amongst them, only 50% earns a substantial amount which would increase the government's revenue. That means the argument that taxing agricultural income would increase the tax base does not hold true. There are lakhs of small business houses who understate their income. Bring them under the tax ambit. Also, the accounts of NGOs, educational institutions, marriage halls etc which claim exemption under the category of Charitable Institutions need to be honestly and thoroughly checked. It would not only generate income for the state but would also solve many social problems like ever increasing school fees.The government should therefore concentrate on how to bring such entities under the tax net rather than taxing the farmers.

2. Increase in Government's Revenue - In India there are a little more than 4 lakh people claiming exemption of agricultural income. The case of Kaveri seeds and Monsanto India is generally put forward to support the claim as these two companies have claimed exemption in crores on account of agricultural income. My argument is that in order to tax these two companies, if we tax other farmers who though earn well but not as much as their other counterparts, it would be gross injustice to them. What the government should instead do is to stop the monopoly of these companies so that the income is distributed to other farmers as well. Make a level playing field, let other parties enter the competition an see the results.

3. What to tax and when - What should be the taxing event, when the output is produced or when it is sold in the market? What should be taxed? Is it the total output or the net output (Gross - self consumption)? Can all crops be taxed, whether commercial or otherwise? In a country like India which is heavily monsoon dependent, can there be uniformity in tax laws each year? Few months back there was a lot of hue and cry about the prices of Tur Daal. Can there be tax in such case when despite of bumper production our demand outpaced the supply and hence we have to resort to imports? Will it not worsen the situation by increasing the prices?

4. Accounting Issues - If big farmers are indeed to be treated at par with companies or professionals, they have to account for all the transactions carried on in their course of business. It is difficult to expect from the farmers to maintain the records. Making up a profit and loss account would be extremely difficult in such a case.

5. Increase in the prices of food articles - Taxing the agricultural income means increase the prices of the food articles. We are still struggling to keep the retail inflation within limits, any increase in the price of essential items would worsen the situation.

6. Political Suicide - Agriculture is a very sensitive issue in India. It is a sector which is often rocked with the news of farmers suicide. Taxing it would mean antagonising the sentiments of millions of Indians. Not only the farmers but also salaried class Indians empathize with them. On top of it the Opposition will make a lot of hue and cry and it is very unlikely that the law could be passed, just like the case of land ordinance. Thus, it is very unlikely that any political party would dare to take such step. Taxing it, at least for now, would be a political suicide.

In all the arguments making the news, the point which is lost is that the Income Tax officer has got the power to check the authenticity of the claim of agricultural income filed in the return. If they are unsatisfied with the claim they can disallow it. However, for that to happen our machinery needs to be transparent. The corruption in the Income Tax department is well known. Though the government has taken certain steps to clean the system, yet a lot remains to be done.

The government is desperate to curb the black money. Only if the government can check the exemption wrongly claimed by the people (including political parties), the need to tax it won't arise. There are lot many sectors which government can target to generate income, putting burden on the agricultural class is definitely not a work able idea. I rest my case.

Thanks for reading!

Wednesday, May 3, 2017

GST Concept & Status

  



Introduction

The introduction of Goods and Services Tax (GST) would be a very significant step in the field of indirect tax reforms in India. By amalgamating a large number of Central and State taxes into a single tax, it would mitigate cascading or double taxation in a major way and pave the way for a common national market. From the consumer point of view, the biggest advantage would be in terms of a reduction in the overall tax burden on goods, which is currently estimated to be around 25%-30%. Introduction of GST would also make Indian products competitive in the domestic and international markets. Studies show that this would have a boosting impact on economic growth. Last but not the least, this tax, because of its transparent and self-policing character, would be easier to administer.

GST and Centre-State Financial Relations

Currently, fiscal powers between the Centre and the States are clearly demarcated in the Constitution with almost no overlap between the respective domains. The Centre has the powers to levy tax on the manufacture of goods (except alcoholic liquor for human consumption, opium, narcotics etc.) while the States have the powers to levy tax on sale of goods. In case of inter-State sales, the Centre has the power to levy a tax (the Central Sales Tax) but, the tax is collected and retained entirely by the originating States. As for services, it is the Centre alone that is empowered to levy service tax. Since the States are not empowered to levy any tax on the sale or purchase of goods in the course of their importation into or exportation from India, the Centre levies and collects this tax as additional duties of customs, which is in addition to the Basic Customs Duty. This additional duty of customs (commonly known as CVD and SAD) counter balances excise duties, sales tax, State VAT and other taxes levied on the like domestic product. Introduction of GST would require amendments in the Constitution so as to concurrently empower the Centre and the States to levy and collect the GST.
 
The assignment of concurrent jurisdiction to the Centre and the States for the levy of GST would require a unique institutional mechanism that would ensure that decisions about the structure, design and operation of GST are taken jointly by the two. For it to be effective, such a mechanism also needs to have Constitutional force.

Constitution (One Hundred and First) Amendment Act, 2016

To address all these and other issues, the Constitution (122nd Amendment) Bill was introduced in the 16th Lok Sabha on 19.12.2014. The Bill provides for a levy of GST on supply of all goods or services except for Alcohol for human consumption. The tax shall be levied as Dual GST separately but concurrently by the Union (central tax - CGST) and the States (including UnionTerritories with legislatures) (State tax - SGST) / Union territories without legislatures (Union territory tax- UTGST). The Parliament would have exclusive power to levy GST (integrated tax - IGST) on inter-State trade or commerce (including imports) in goods or services. The Central Government will have the power to levy excise duty in addition to the GST on tobacco and tobacco products. The tax on supply of five specified petroleum products namely crude, high speed diesel, petrol, ATF and natural gas would be levied from a later date on the recommendation of GST Council.
 
The Constitution Amendment Bill was passed by the Lok Sabha in May, 2015. The Bill was referred to the Select Committee of Rajya Sabha on 12.05.2015. The Select Committee had submitted its Report on the Bill on 22.07.2015. The Bill with certain amendments was finally passed in the Rajya Sabha and thereafter by Lok Sabha in August, 2016. Further the bill had been ratified by required number of States and received assent of the President on 8th September, 2016 and has since been enacted as Constitution (101st Amendment) Act, 2016 w.e.f. 16th September, 2016.

Goods and Services Tax Council (GSTC)

The GSTC has been notified with effect from 12th September, 2016. GSTC is being assisted by a Secretariat. Thirteen meetings of the GSTC have been held so far. The following major decisions have been taken by the GSTC:
 
(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%.
Besides, some goods and services would be under the list of exempt items. Rate for precious metals is yet to be fixed. A cess over the peak rate of 28% on certain specified luxury and demerit goods would be imposed for a period of five years to compensate States for any revenue loss on account of implementation of GST. The Council has asked the Committee of officers to fit various goods and services in these four slabs keeping in view the present incidence of tax.


(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) Four rules on input tax credit, composition levy, transitional provisions and valuation have been recommended. Further five Rules on registration, invoice, payments, returns and refund, finalized in September, 2016 and as amended in light of the GST bills introduced in the Parliament, have also been recommended.

 
Salient Features of GST
 
The salient features of GST are asunder:
 
(i) GST would be applicable on “supply” of goods or services as against the present concept of tax on the manufacture of goods or on sale of goods or on provision of services.
 
(ii) GST would be based on the principle of destination based consumption taxation as against the present principle of origin based taxation.
 
(iii) It would be a dual GST with the Centre and the States simultaneously levying it on a common base. The GST to be levied by the Centre would be called Central GST (CGST) and that to be levied by the States [including Union territories with legislature] would be called State GST (SGST). Union territories without legislature would levy Union territory GST (UTGST).
 
(iv) An Integrated GST (IGST) would be levied on inter-State supply (including stock transfers) of goods or services. This would be collected by the Centre so that the credit chain is not disrupted.
 
 
(v) Import of goods would be treated as inter-State supplies and would be subject to IGST in addition to the applicable customs duties.
 
(vi) Import of services would be treated as inter-State supplies and would be subject to IGST.
 
(vii) CGST, SGST /UTGST & IGST would be levied at rates to be mutually agreed upon by the Centre and the States under the aegis of the GSTC.
 
(viii) GST would replace the following taxes currently levied and collected by the Centre:
 
a) Central Excise Duty;
b) Duties of Excise (Medicinal and Toilet Preparations);
c) Additional Duties of Excise (Goods of Special Importance);
d) Additional Duties of Excise (Textiles and Textile Products);
e) Additional Duties of Customs (commonly known as CVD);
f) Special Additional Duty of Customs (SAD);
g) Service Tax;
h) Cesses and surcharges in so far as they relate to supply of goods or services.
 
(ix) State taxes that would be subsumed within the GST are:
 
a) State VAT;
b) Central Sales Tax;
c) Purchase Tax;
d) Luxury Tax;
e) Entry Tax (All forms);
f) Entertainment Tax (except those levied by the local bodies);
g) Taxes on advertisements;
h) Taxes on lotteries, betting and gambling;
i) State cesses and surcharges insofar as they relate to supply of goods or services.
 
 
(x) GST would apply to all goods and services except Alcohol for human consumption.
 
(xi) GST on five specified petroleum products (Crude, Petrol, Diesel, ATF & Natural gas) would be applicable from a date to be recommended by the GSTC.
 
(xii) Tobacco and tobacco products would be subject to GST. In addition, the Centre would continue to levy Central Excise duty.
 
(xiii) A common threshold exemption would apply to both CGST and SGST. Taxpayers with an annual turnover of Rs. 20 lakh (Rs. 10 lakh for special category States as specified in article 279A of the Constitution) would be exempt from GST. A compounding option (i.e. to pay tax at a flat rate without credits) would be available to small taxpayers (including to specified category of manufacturers and service providers) having an annual turnover of up to Rs. 50 lakh. The threshold exemption and compounding scheme would be optional.
 
(xiv) The list of exempted goods and services would be kept to a minimum and it would be harmonized for the Centre and the States as well as across States as far as possible.
 
(xv) Exports would be zero-rated.
 
(xvi) Credit of CGST paid on inputs may be used only for paying CGST on the output and the credit of SGST/UTGST paid on inputs may be used only for paying SGST/UTGST. In other words, the two streams of input tax credit (ITC) cannot be cross utilized, except in specified circumstances of inter-State supplies for payment of IGST.
 
The credit would be permitted to be utilized in the following manner:
 
a) ITC of CGST allowed for payment of CGST & IGST in that order;
b) ITC of SGST allowed for payment of SGST & IGST in that order;
 
 
c) ITC of UTGST allowed for payment of UTGST & IGST in that order;
d) ITC of IGST allowed for payment of IGST, CGST & SGST/UTGST in that order.
 
ITC of CGST cannot be used for payment of SGST/UTGST and vice versa.
 
(xvii) Accounts would be settled periodically between the Centre and the State to ensure that the credit of SGST used for payment of IGST is transferred by the originating State to the Centre. Similarly the IGST used for payment of SGST would be transferred by Centre to the destination State. Further the SGST portion of IGST collected on B2C supplies would also be transferred by Centre to the destination State. The transfer of funds would be carried out on the basis of information contained in the returns filed by the taxpayers.
 
(xviii) Input Tax Credit (ITC) to be broad based by making it available in respect of taxes paid on any supply of goods or services or both used or intended to be used in the course or furtherance of business.
 
(xix) Electronic filing of returns by different class of persons at different cut-off dates.
 
(xx) Various modes of payment of tax available to the taxpayer including internet banking, debit/ credit card and National Electronic Funds Transfer (NEFT) / Real Time Gross Settlement (RTGS).
 
(xxi) Obligation on certain persons including government departments, local authorities and government agencies, who are recipients of supply, to deduct tax at the rate of 1% from the payment made or credited to the supplier where total value of supply, under a contract, exceeds two lakh and fifty thousand rupees (Rs. 2.5 lac).
  
(xxii) Refund of tax to be sought by taxpayer or by any other person who has borne the incidence of tax within two years from the relevant date.
 
(xxiii) Obligation on electronic commerce operators to collect ‘tax at source’, at such rate not exceeding two per cent. (2%) of net value of taxable supplies, out of payments to suppliers supplying goods or services through their portals.
 
(xxiv) System of self-assessment of the taxes payable by the registered person.
 
(xxv) Audit of registered persons to be conducted in order to verify compliance with the provisions of Act.
 
(xxvi) Limitation period for raising demand is three (3) years from the due date of filing of annual return or from the date of erroneous refund for raising demand for short-payment or non-payment of tax or erroneous refund and its adjudication in normal cases.
 
(xxvii) Limitation period for raising demand is five (5) years from the due date of filing of annual return or from the date of erroneous refund for raising demand for short-payment or non-payment of tax or erroneous refund and its adjudication in case of fraud, suppression or willful mis-statement.
 
(xxviii) Arrears of tax to be recovered using various modes including detaining and sale of goods, movable and immovable property of defaulting taxable person.
 
(xxix) Officers would have restrictive powers of inspection, search, seizure and arrest.
 
(xxx) Goods and Services Tax Appellate Tribunal would be constituted by the Central Government for hearing appeals against the orders passed by the Appellate Authority or the Revisional Authority. States would adopt the provisions relating to Tribunal in respective SGST Act.
 
(xxxi) Provision for penalties for contravention of the provision of the proposed legislation has been made.


(xxxii) Advance Ruling Authority would be constituted by States in order to enable the taxpayer to seek a binding clarity on taxation matters from the department. Centre would adopt such authority under CGST Act.
 (xxxiii) An anti-profiteering clause has been provided in order to ensure that business passes on the benefit of reduced tax incidence on goods or services or both to the consumers.
 
(xxxiv) Elaborate transitional provisions have been provided for smooth transition of existing taxpayers to GST regime. 

Benefits of GST

(A) Make in India

(i) Will help to create a unified common national market for India, giving a boost to Foreign investment and “Make in India” campaign;
 
(ii) Will prevent cascading of taxes as Input Tax Credit will be available across goods and services at every stage of supply;
 
(iii) Harmonization of laws, procedures and rates of tax;
 
(iv) It will boost export and manufacturing activity, generate more employment and thus increase GDP with gainful employment leading to substantive economic growth;
 
(v) Ultimately it will help in poverty eradication by generating more employment and more financial resources;
 
(vi) More efficient neutralization of taxes especially for exports thereby making our products more competitive in the international market and give boost to Indian Exports;
 
(vii) Improve the overall investment climate in the country which will naturally benefit the development in the states;
 
(viii) Uniform SGST and IGST rates will reduce the incentive for evasion by eliminating rate arbitrage between neighboring States and that between intra and inter-State sales;


(ix) Average tax burden on companies is likely to come down which is expected to reduce prices and lower prices mean more consumption, which in turn means more production thereby helping in the growth of the industries . This will create India as a “Manufacturing hub”.

 (B) Ease of Doing Business

(i) Simpler tax regime with fewer exemptions;
 
(ii) Reductions in the multiplicity of taxes that are at present governing our indirect tax system leading to simplification and uniformity;
 
(iii) Reduction in compliance costs - No multiple record keeping for a variety of taxes - so lesser investment of resources and manpower in maintaining records;
 
(iv) Simplified and automated procedures for various processes such as registration, returns, refunds, tax payments, etc;
 
(v) All interaction to be through the common GSTN portal - so less public interface between the taxpayer and the tax administration;
 
(vi) Will improve environment of compliance as all returns to be filed online, input credits to be verified online, encouraging more paper trail of transactions;
 
(vii) Common procedures for registration of taxpayers, refund of taxes, uniform formats of tax return, common tax base, common system of classification of goods and services will lend greater certainty to taxation system;
 
(viii) Timelines to be provided for important activities like obtaining registration, refunds, etc;
 
(ix) Electronic matching of input tax credits all - across India thus making the process more transparent and accountable.
 

(C) Benefit to Consumers:

(i) Final price of goods is expected to be lower due to seamless flow of input tax credit between the manufacturer, retailer and service supplier;
 
(ii) It is expected that a relatively large segment of small retailers will be either exempted from tax or will suffer very low tax rates under a compounding scheme- purchases from such entities will cost less for the consumers;
 
(iii) Average tax burden on companies is likely to come down which is expected to reduce prices and lower prices mean more consumption.


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