Information required for Transfer of Stock to GST

After Registration in GST, the next step is of stock transfer.  The rules have been notified by the government. Please refer to my blog http://mannkiabhivyakti.blogspot.in/2017/06/gst-transition-provisions-final-rules.html for detailed analysis of rules.  

But what all information would be required to transfer your stock to GST?  I have tried to compile the information which is useful for both business houses and practitioners.

Form GST TRAN - 1

Basic Information -

1. GSTIN -

2. Legal name of the registered person -

3. Trade Name, if any -

4. Whether all the returns required under existing law for the period of six months immediately preceding the appointed date have been furnished:- Yes/No

I. Amount of tax credit carried forward in the return filed under existing laws:

a) Amount of Cenvat credit carried forward to electronic credit ledger as central tax (Section 140(1) and Section 140(4)(a))

1. Registration no. under existing law (Central Excise and Service Tax)

2. Tax period to which the last return filed under the existing law pertains

3. Tax period to which the last return filed under the existing law pertains

4. Balance cenvat credit carried forward in the said last return

5. Cenvat Credit admissible as ITC of central tax in accordance with transitional provisions

(b) Details of statutory forms received for which credit is being carried forward

      Period: 1st Apr 2015 to 30th June 2017

C Form , F Form, H/I form - 

1. TIN of issuer

2. Name of issuer

3. Sr.no. of form

4. Amount

5. Applicable VAT rate

(c) Amount of tax credit carried forward to electronic credit ledger as State/UT Tax(For all registrations on the same PAN and in the same State)

1. registration No. in existing law

2. Balance of ITC of VAT and [Entry Tax] in last return

3. C form, F Form, H/I form - Turnover for which forms Pending, 

II. Details of capitals goods for which unavailed credit has not been carried forward under existing law (section140 (2)).

a) Amount of unavailed cenvat credit in respect of capital goods carried forward to electronic credit ledger as central tax

1. Invoice / Document no.

2. Invoice / document Date

3. Supplier’s registration no. under existing law

4. Recipients’ registration no. under existing law

5. Details of capital goods on which credit has been partially availed - Value and Duties and taxes paid- ED/CVD and SAD

6. Total eligible cenvat credit under existing law

7. Total cenvat credit availed under existing law

b) Amount of unavailed input tax credit carried forward to electronic credit ledger as State/UT tax (For all registrations on the same PAN and in the same State)

1. Invoice / Document no.

2. Invoice / document Date

3. Supplier’s registration no. under existing law

4. Recipients’ registration no. under existing law

5. Details regarding capital goods on which credit is not availed - Value and Taxes paid VAT [and ET]

6. Total eligible VAT [and ET] credit under existing law

7. Total VAT [and ET] credit availed under existing law

III. Details of the inputs held in stock in terms of sections 140(3), 140(4)(b) and 140(6).

a) Amount of duties and taxes on inputs claimed as credit excluding the credit claimed under Table 5(a) and 7(a)

1. Details of inputs held in stock or inputs contained in semi-finished or finished goods held in stock -

i) HSN (at 6 digit level)

ii) Unit

iii) Quantity

iv) Value

v) Eligible Duties paid on such inputs

2. 7A Where duty paid invoices or any other document are available -

i) Inputs

ii) Inputs contained in semi-finished and finished goods

3. Where duty paid invoices are not available (Applicable only for person other than manufacturer or service provider) – Credit in terms of Rule 1 (4)

i) Inputs

b) Amount of vat and entry Tax paid on inputs supported by invoices/documents evidencing payment of tax carried forward to electronic credit ledger as SGST/UTGST 

1. Details of inputs in stock - Description, Unit,Quantity, Value, VAT [and Entry Tax] paid

2. Total input tax credit claimed under earlier law

3. Total input tax credit related to exempt sales not claimed under earlier law

4. Total Input tax credit admissible as SGST/UTGST

5. Same details are to be filed for Inputs contained in semi finished and finished goods 

c) Stock of goods not supported by invoices/documents evidencing payment of tax (credit in terms of rule 1 (4)) (To be there only in States having VAT at single point)

1. Details of inputs in stock - Description, Unit,Quantity, Value, Tax paid

IV. Details of transfer of cenvat credit for registered person having centralized registration under existing law (Section 140(8))

1. Registration no. under existing law (Centralized)

2. Tax period to which the last return filed under the existing law pertains

3. Date of filing of the return

4. Balance eligible cenvat credit carried forward in the said last return

5. GSTIN of receivers (same PAN) of ITC of CENTRAL TAX

6. Distribution document /invoice - Number and Date

7. ITC of CENTRAL TAX transferred

V. Details of goods sent to job-worker and held in his stock on behalf of principal under section 141

a) Details of goods sent as principal to the job worker under section 141

1. GSTIN of Job Worker, if available

2. Challan No.

3. Challan date

4. Type of goods (inputs/ semi-finished/ finished)

5. Details of goods with job- worker - HSN, Description, Unit, Quantity and value

b) Details of goods held in stock as job worker on behalf of the principal under section 141

1. GSTIN of Manufacturer

2. Challan No.

3. Challan date

4. Type of goods (inputs/ semi-finished/ finished)

5. Details of goods with job- worker - HSN, Description, Unit, Quantity and Value

VI. Details of goods held in stock as agent on behalf of the principal under section 142 (14) of the SGST Act

a) Details of goods held as agent on behalf of the principal

1. GSTIN of Principal

2. Details of goods with Agent - HSN, Description, Unit, Quantity, Value and Input Tax to be taken

b) Details of goods held by the agent

1. GSTIN of Principal

2. Details of goods with Agent - HSN, Description, Unit, Quantity, Value and Input Tax to be taken

VII. Details of credit availed in terms of Section 142 (11 (c ))

1. Registration No of VAT

2. Service Tax Registration No.

3. Invoice/document no.

4. Invoice/ document date

5. Tax Paid

6. VAT paid Taken as SGST Credit or Service Tax paid as Central Tax Credit

VIII. Details of goods sent on approval basis six months prior to the appointed day (section 142(12))

1. Document no.

2. Document date

3. GSTIN no. of recipient (If applicable)

4. Name & address of recipient

5. Details of goods sent on approval basis - HSN, Description, Unit, Quantity and Value

Form GSTR TRAN - 2

Basic Information -

1. GSTIN -

2. Name of Taxable Person

3. Tax Period - Month and Year

I. Details of inputs held on stock on appointment date in respect of which he is not in possession of any invoice/document evidencing payment of tax carried forward to Electronic Credit ledger.

1. Opening stock for the tax period - HSN (at 6 digit level), Unit, and Quantity

2. Outward supply made - Value, Central Tax, Integrated Tax and ITC allowed

3. Closing Balance - Quantity

II. Credit on State Tax on the stock mentioned in 4 above (To be there only in States having VAT at single point)

1. Opening stock for the tax period - HSN (at 6 digit level), Unit, and Quantity

2. Outward supply made - Value, Central Tax, Integrated Tax and ITC allowed

3. Closing Balance - Quantity

Thank You

           

All about Stock Transfer in GST

TAXABILITY OF STOCK TRANSFER

Under existing VAT/CST Laws, practically every company that makes inter-state stock transfers, does so under Form F and thus, no tax liability arises. In case of intra-state stock transfer, as such no VAT liability arises. However, assessee is required to reverse input tax credit on purchases if such goods are stock transferred.

In GST, every taxability is based upon supply concept. Does that mean Stock Transfers are taxable in GST? Let's find out.

Since the point of taxation in GST is supply, it is important to understand what constitutes supply, which is explained in section 7 of the CGST Act, 2017. 

Section 7 states that:

(1) For the purposes of this Act, the expression “supply” includes–– 

(a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business;

 (b) import of services for a consideration whether or not in the course or furtherance of business;

 (c) the activities specified in Schedule I, made or agreed to be made without a consideration; and 

(d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II.

Schedule I narrates the situation where activities are to treated as supply even without . They are:

1. Permanent transfer or disposal of business assets where input tax credit has been availed on such assets. 

2. Supply of goods or services or both between related persons or between distinct persons as specified in section 25, when made in the course or furtherance of business

Provided that gifts not exceeding fifty thousand rupees in value in a financial year by an employer to an employee shall not be treated as supply of goods or services or both.

 3. Supply of goods— 

(a) by a principal to his agent where the agent undertakes to supply such goods on behalf of the principal; or

(b) by an agent to his principal where the agent undertakes to receive such goods on behalf of the principal. 

4. Import of services by a taxable person from a related person or from any of his other establishments outside India, in the course or furtherance of business

Thus, Schedule I states that only when supply is made between two related or distinct persons, that would constitute a taxable supply otherwise not. 

"Related Person" is defined explanation to section 15 as:

a persons shall be deemed to be “related persons” if––

 (i) such persons are officers or directors of one another’s businesses;

 (ii) such persons are legally recognised partners in business; 

(iii) such persons are employer and employee; 

(iv) any person directly or indirectly owns, controls or holds twenty-five per cent. or more of the outstanding voting stock or shares of both of them; 

(v) one of them directly or indirectly controls the other; 

(vi) both of them are directly or indirectly controlled by a third person; 

(vii) together they directly or indirectly control a third person; or (viii) they are members of the same family;

"Distinct Person" is defined in sub section 4 of section 25 as:

A person who has obtained or is required to obtain more than one registration, whether in one State or Union territory or more than one State or Union territory shall, in respect of each such registration, be treated as distinct persons for the purposes of this Act.

Thus, a harmonious reading of all the sections together would lead us to derive the following conclusions:

• A branch operating in different state would be treated as a "distinct person".
• If a person has two separate registration within the same state (as per section 25 of CGST Act read with registration rules), both the registration would constitute a "distinct person".
• If a person has an "additional place of business" within the same state, under one registration only, that would not constitute as "distinct person".
• Only a transfer between two distinct person constitute a supply and hence taxability would arise.
• Both intra-state and inter-state transfer constitute supply.
• Inter - state transfer is  always taxable as separate registration is required in each state.
• Intra - State transfer is taxable only when the person is transferring to an establishment having a different registration. If the intra- state transfer has been made to an additional place of business, warehouse, godown or depot, having same registration as of the supplier, such transfer is not taxable

VALUATION OF STOCK TRANSFER

Rules for valuation in case of stock transfer has been provided in  rule 2, 4 and 5 of valuation rules (dated 17/05/2017). They are as follows:

 Rule 2: Value of supply of goods or services or both between distinct or related persons, other than through an agent  

The value of the supply of goods or services or both between distinct persons as specified in sub-section (4) and (5) of section 25 or where the supplier and recipient are related, other than where the supply is made through an agent, shall,-  

(a) be the open market value of such supply;

 (b) if open market value is not available, be the value of supply of goods or services of like kind and quality; 

(c) if value is not determinable under clause (a) or (b), be the value as determined by application of rule 4 or rule 5, in that order 

Provided that where goods are intended for further supply as such by the recipient, the value shall, at the option of the supplier, be an amount equivalent to ninety percent (90%) of the price charged for the supply of goods of like kind and quality by the recipient to his customer not being a related person 

Provided further that where the recipient is eligible for full input tax credit, the value declared in the invoice shall be deemed to be the open market value of goods or services

It Implies that:

• Value of taxable inter-state branch transfer would be calculated using this rule. 
• If the branch makes further sale of goods,without any addition or modification to the received goods, the value of stock transfer would be 90% of the value of goods at which they are sold to unrelated customers. However, it is at the option of the supplier.

Rule 4: Value of supply of goods or services or both based on cost   

Where the value of a supply of goods or services or both is not determinable by any of the preceding rules, the value shall be one hundred and ten percent of the cost of production or manufacture or cost of acquisition of such goods or cost of provision of such services. 

• The above rule is same as provided under the existing Excise Laws.

Rule 5: Residual method for determination of value of supply of goods or services or both    

Where the value of supply of goods or services or both cannot be determined under rules 1 to 4, the same shall be determined using reasonable means consistent with the principles and general provisions of section 15 and these rules

Provided that in case of supply of services, the supplier may opt for this rule, disregarding rule 4. 

INVOICE/CHALLAN FOR STOCK TRANSFER

• For inter - state transfer of goods and intra state transfer of goods between distinct persons, invoice has to be issued. Please refer to invoice rules for further details.
• For intra - state transfer of goods, to a warehouse or depot or branch of the same person, rule 10 of the invoice rules provide generation of delivery challan. 

Rule 10 of Invoice Rules: Transportation of goods without issue of invoice   

(1) For the purposes of :

(a) supply of liquid gas where the quantity at the time of removal from the place  of business of the supplier is not known,  

(b) transportation of goods for job work,  

(c) transportation of goods for reasons other than by way of supply, or   

(d) such other supplies as may be notified by the Board,  

the consigner may issue a delivery challan, serially numbered not exceeding sixteen characters, in one or multiple series, in lieu of invoice at the time of removal of goods for transportation, containing the following details:   

(i) date and number of the delivery challan,  

(ii) name, address and GSTIN of the consigner, if registered,  

(iii) name, address and GSTIN or UIN of the consignee, if registered, 

(iv) HSN code and description of goods,  (v) quantity (provisional, where the exact quantity being supplied is not known),  

(vi) taxable value,  

(vii) tax rate and tax amount – central tax, State tax, integrated tax, Union territory tax or cess, where the transportation is for supply to the consignee,  

(viii)  place of supply, in case of inter-State movement, and  

(ix)  signature.  

(2) The delivery challan shall be prepared in triplicate, in case of supply of goods, in the following manner:–  

 

(a) the original copy being marked as ORIGINAL FOR CONSIGNEE; 

(b)  the duplicate copy being marked as DUPLICATE FOR TRANSPORTER; and  

(c)  the triplicate copy being marked as TRIPLICATE FOR CONSIGNOR.  

(3) Where goods are being transported on a delivery challan in lieu of invoice, the same shall be declared in FORM [WAYBILL].  

(4) Where the goods being transported are for the purpose of supply to the recipient but the tax invoice could not be issued at the time of removal of goods for the purpose of supply, the supplier shall issue a tax invoice after delivery of goods.   

(5) Where the goods are being transported in a semi knocked down or completely knocked down  condition,  

(a) the supplier shall issue the complete invoice before dispatch of the first consignment;  

(b) the supplier shall issue a delivery challan for each of the subsequent consignments, giving reference of the invoice; 

 (c) each consignment shall be accompanied by copies of the corresponding delivery challan along with a duly certified copy of the invoice; and  

(d) the original copy of the invoice shall be sent along with the last consignment.   

I have tried to catch all the rules related to treatment of stock transfer, either to branch, depot, godown or warehouse both inter-state and intra-state in my blog. However, please feel free to point me out if I have missed out anything and also shoot any question which may come up in your mind. 

THANK YOU

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.

Ref: http://www.cbec.gov.in/htdocs-cbec/gst

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