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INDIAN CENTRAL BOARD OF EXCISE AND CUSTOMS CLARIFIES GOODS AND SERVICES TAX (GST)

Central Board of Excise and Customs (CBEC), under the Ministry of Finance, Government of India has released a Booklet containing Frequently Asked Questions (FAQs) relating to Goods and Services Tax (GST)on 21st September 2016.These FAQs cover issues like valuation, registration, payment , Input Tax Credit, scope and time of supply, refunds, appeals, advance ruling, seizure, arrest, penalties etc. The FAQ will serve as a training tool to help the officers and public to get acquainted with the Model GST law.

Below are few of the main clarifications covered under FAQs issued:

  • GST will not apply on commodities like alcohol for human consumption, Electricity &Petroleum Products viz. petroleum crude, high speed diesel, motor spirit (petrol), natural gas and aviation turbine fuel. The existing taxation system (VAT & Central Excise) will continue in case of these commodities.
  • A dual type of GST will be levied with the Centre and States simultaneously with a common tax base. The GST to be levied by the Centre on intra-State supply of goods and / or services would be called as Central GST (CGST) and GST to be levied by the States would be called the State GST (SGST). Integrated GST (IGST) will also be levied by Centre on every inter-state supply of goods and services.
  • The rates of CGST and SGST would be jointly decided by the Centre and States. The rates would be notified on the recommendations of the GST Council.
  • Under the GST regime, tax will be payable by the taxable person on the supply of goods and/or services. Liability to pay tax will arise when the taxable person crosses the threshold exemption, i.e. Rs.10 lakhs (Rs. 5 lakhs for NE States) but in certain specified cases the taxable person will be liable to pay GST even though he has not crossed the threshold limit.
  • A Special Purpose Vehicle called the Goods and Service Tax Network (GSTN) has been set up to cater to the needs of GST. The GSTN shall provide a shared IT infrastructure and services to Central and State Governments, tax payers and other stakeholders for implementation of GST. The main functions of the GSTN include: facilitating registration; forwarding the returns to Central and State authorities; computation and settlement of IGST; matching of tax payment details with banking network; providing analysis of tax payers’ profile; and reclaim of input tax credit.
  • Goods and Services Tax Council shall be establish under the GST regime to adjudicate any dispute between the Government of India and one or more States; or between the Government of India and any State or States on one side and one or more other Sates on the other side; or between two or more States which may arise out of the recommendations of the GST Council or its implementation thereof.
  • The Model GST Law codifies the offences and penalties in Chapter XVI. The offences are as follows:-

    Making a supply without invoice or with false/ incorrect invoice; Issuing an invoice without making supply; Not paying tax collected for a period exceeding three months; Not paying tax collected in contravention of the MGL for a period exceeding 3 months; Non deduction or lower deduction of tax deducted at source or not depositing tax deducted at source under section 37; Non collection or lower collection of or nonpayment of tax collectible at source under section 43C; Availing/utilizing input tax credit without actual receipt of goods and/or services; Fraudulently obtaining any refund.
  • Any person who is aggrieved by any order or decision passed by an “adjudicating authority” against him will the right to appeal within 3 months from the date of communication of order or decision.
  • As per Section 43B (d) of the MGL defines an Electronic Commerce as the supply or receipt of goods and/ or services, or transmitting of funds or data, over an electronic network, primarily the internet. FAQs clarified that a company which sells goods through its own website will not be considered as an operator but a person providing the information or other services incidental to or in connection with such supply of goods and services electronically would be considered as an operator. The electronic operators like Flipkart and Amazon will have to register themselves under the GST regime irrespective of the value of supply and threshold exemption will not available to ecommerce operators.
  • The e-commerce operator will be required to collect (i.e. deduct) an amount called as Tax Collection at Source (TCS) out of the consideration paid or payable to the actual supplier of goods or services in respect of supplies of goods and / or services made through such operator. The e-commerce operator can make such deductions either at the time of credit of any amount to the account of the actual supplier of goods and / or services or the time of payment of any amount in cash or by any other mode to such supplier whichever is earlier.
  • The TCS which is deposited by the operator under the GST regime into government account will be reflected in the cash ledger of the actual registered supplier (on whose account such collection has been made) on the basis of the statement filed by the operator.
  • The e-commerce operator required to furnish information relating to supplies of goods / services which are effected through the operator during any period and stock of goods held by actual supplier making supplies through such operator in the godowns belonging to the operator. This information is to be provided by the operator within 5 working days from the date of service of notice asking such information. In case the operator fails to furnish such information, the penalty could be extended to Rs. 25,000/- to the Government.
  • Every ecommerce operator is required to furnish electronically a statement of all amounts collected as TCS towards outward supplies of goods and/or services effected through it, during a calendar month within ten days after the end of such calendar month.
  • There will be a concept of matching in e-commerce provisions under the GST regime under which details of the supplies and amount collected during a particular calendar month, and furnished by every ecommerce operator in his statement will be matched with the corresponding details of outward supplies furnished by the concerned supplier for the same calendar month or any preceding calendar month. In case both the statements do not match the discrepancy shall be communicated to both persons.
  • In case the discrepancy still prevails, value of a supply relating to any payment in respect of which any discrepancy shall be added to the output liability of the said supplier for the calendar month succeeding the calendar month in which the discrepancy was communicated. The concerned supplier shall, in whose output tax liability any amount has been added shall be liable to pay the tax payable in respect of such supply along with interest, at the rate specified under sub-section (1) of section 36 on the amount so added from the date such tax was due till the date of its payment.
  • Model on GST law defines an aggregator as a person, who owns and manages an electronic platform, and by means of the application and communication device, enables a potential customer to connect with the persons providing service of a particular kind under the brand name or trade name of the said aggregator. Ola and Uber are the examples of aggregators and they will have to register them under GST and there will be no exemption for them.
  • Under the GST regime generally, the supplier of goods or service would be liable to pay GST. However in specified cases like imports and other notified supplies, the liability may be cast on the recipient under the reverse charge mechanism. In some cases, the liability to pay is on the third person as in the case of e-commerce operator responsible for TCS or Government Department responsible for TDS.
  • Registration under Goods and Service Tax (GST) regime will lead to the advantages to the business like legal recognition as supplier of goods or services, proper accounting of taxes paid on the input goods or services which can be utilized for payment of GST due on supply of goods or services or both by the business, legal authorization to collect tax from the purchasers and pass on the credit of the taxes paid on the goods or services supplied to purchasers or recipients.
  • Any taxable person committing any of the offences under the GST regime shall be punished with a penalty whichever is higher of the following amounts: The amount of tax that is evaded, fraudulently obtained as refund, availed as credit or not deducted or collected or short deducted or short collected, or a sum of Rs.10,000/-. Any registered taxable person who repeatedly makes a short payment of tax shall be a liable to penalty 10% of the tax short paid, or Rs.10,000 whichever is higher.

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23 September 2016
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