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GST – Update

S Venkataramani

Singhvi, Dev & Unni

Bangalore

Bangalore Branch of SIRC of ICAI National Conference August 23, 2014

What is unsaid

Aspect theory likely to be introduced in definition clauses

Supply chain studies are underway

Model GST laws promised to bear in mind language, simplicity, business approach, tax payer commitments etc.

GST laws to work on huge IT backbone

Technology used to track data/ transactions

Impact assessment is underway

Benchmarking studies with other countries us underway

Pilot studies on tax leakage carried out in select cases in Maharashtra and Karnataka by linking TIN to PAN

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Possible Pitfalls

Interaction with experts suffers demonstrably

Hardly any research papers on GST

No evaluation carried out for new laws

Compliance cost, assessment not done

Amalgamation of tax departments not worked out

Compensation structure to States not finalised

Transition provisions yet to be analysed

Adequate attention not paid to continuing exemptions to existing units

Clearing house mechanism yet to be put on trial run

Points to be borne in mind

Stable law for atleast 5 years

CST at a blanket rate of 1% proposed for atleast 3 years

Tax collections must be monitored month on month and must be dynamic – cannot be target driven

Changes in rate of tax/ law, if any, must be based on proper studies with prior intimation of specified dates

Law must be simple to keep the size of legislation small

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Progress under new Union Government

Budget Speech

Finance minister budget speech 2014-15, dated July 10, 2014

‘The debate whether to introduce a Goods and Services Tax (GST) must now come to an end. We have discussed the issue for the past many years. Some States have been apprehensive about surrendering their taxation jurisdiction; others want to be adequately compensated. I have discussed the matter with the States both individually and collectively. I do hope we are able to find a solution in the course of this year and approve the legislative scheme which enables the introduction of GST. This will streamline the tax administration, avoid harassment of the business and result in higher revenue collection both for the Centre and the States. I assure all States that government will be more than fair in dealing with them’ .

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Initiatives Taken

Finance ministry is set to immediately release about Rs. 25,000 crore to the states to make good their past losses on central sales tax (CST) revenue.

North Block will also seek the law ministry’s consent to amend the Constitution to give “financial guarantee” to all 29 states against any revenue losses from embracing GST.

The states had pegged their unmet CST revenue losses until FY13 end at Rs. 34,000 crore.

(Source: The Financial Express, dated August 07, 2014)

Threshold limit

Threshold limit for levy of tax

Rs. 10 lakh - general category States

Rs. 5 lakh - special category and notheastern States

Significant development towards GST

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Divergences

Finance Minister not keen on retaining entry tax. States not in favour

No consensus on petroleum- Centre keen to include within GST. Centre suggested levy of additional State VAT but States not in agreement

Control of central GST States want legal control of central GST upto limit of Rs. 1.5 crore.

Centre is willing to give only administrative control

Above 1.5 crore dual control prescribed – agreed by Center and States

Synopsis of GST

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GST – Goods and Services Tax

Single levy on both goods and services

Proposed to subsume most of the Central and State level commodity taxes

How different?

Plethora of taxes, both at Centre and State, under the current system

Restrictions on seamless credits for manufacturers, traders and service providers, under the current system

GST further reduces the effect of cascading and seeks to do away with plethora of taxes in the supply chain

Tax competition / tax wars between States envisaged to end

Indirect tax collections aggregate 50% of Union Tax Revenues

VAT accounts for over 60% of States Tax Revenues

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Developments

Discussions on introduction of GST February 2006 Establishment of the EC of State Finance Ministers (JWG) 10.05.2007 EC submits a roadmap on GST 30.04.2008 First Discussion Paper published by the EC 10.11.2009 Report of the Task Force published by the TFC 15.12.2009 Comments on FDP by the DoR January 2010 Report by the “Group on implementation of GST” 12.07.2010 IT plan for enabling GST (Dr. Asim Das Gupta) 21.07.2010 Empowered Group on IT infrastructure presents IT strategy 21.10.2010 Report of the Technology Advisory Group for Unique Projects (TAGUP) 31.01.2011 Constitutional Amendment Bill presented (115th) 22.03.2011 Concept paper on negative list of services 19.08.2011 EC approves setting up of SPV for GST Network 22.08.2011 Report of the standing committee of Finance July 2013 Fourteenth Finance Commission Report headed by Mr. Reddy Union Budget 2014-15 presented by Mr. Jaitley 10.07.2014

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Key Features - Discussion Paper

Released by the Empowered Committee of the State Finance Ministers on 10.11.2009

The Empowered Committee is a registered body under the Societies Registration Act

Discussion Paper is divided into four sections Section – I : Deals with VAT implementation and

need for improvement

Section – II : Deals with preparation for GST

Section – III : Speaks of a comprehensive structure of the GST model

Section - IV : Deals with FAQs

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Key Features - Discussion Paper

Multiple Statutes – One for CGST & SGST statute State wise. In addition, IGST on inter-State transactions to be levied by the Centre.

PAN based GST registration number

Industrial incentives (if needed) will be converted into cash refund scheme after collection and payment of tax for seamless flow of GST

Zero rating- exports & supplies to processing zones in SEZs

No benefits on sales from an SEZ to DTA

CST will be abolished on the date of introduction of GST regime with financial support to States

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Key Features - Discussion Paper

Central taxes to be subsumed – ED, AED, ED under the Medicinal & Toiletries Preparation Act, Service Tax, CVD, SAD, surcharges and cesses;

State taxes to be subsumed – VAT / Sales tax, Entertainment tax (other than those levied by local bodies), Luxury tax, lottery, betting and gambling taxes, State cesses and surcharges relatable to supply of goods & services, Entry tax (not in lieu of octroi), SET may be abolished;

Levies to continue - Customs duty, Motor vehicle tax, tax on royalties, mining, stamp duty;

Comments of DOR - Electricity duty, Octroi, purchase tax and taxes levied by local bodies should also be subsumed under GST.

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Key Features - Discussion Paper

Alcoholic beverages

Would be kept outside VAT

Sales tax or VAT can continue

Option to move to GST levy

(DOR Comments: Alcoholic beverages should be brought under the purview of GST)

Additional levies permitted viz., State Excise, litre fees, etc.

Sales through nodal agencies may not be disturbed

Tobacco products

Will move to GST with ITC

Centre will be allowed to levy ED on tobacco products without ITC which will be over and above GST

State levies can continue

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Key Features - Discussion Paper

Purchase tax issues

Purchase tax is a tax at the point of purchase viz., purchase of food grains from farmers; purchase from URDs etc.,

Some States want purchase tax to be subsumed while others do not want set-off

Petroleum products

Crude, motor spirit, HSD, ATF kept outside GST

Certain petro products currently under VAT may get subjected to GST

State and Centre permitted to levy allied taxes on petro products outside GST regime

DOR comments - May be subject to GST and in select cases credit of GST paid on these items may be disallowed in order to minimize the possibility of misuse

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Issues – meaning of Consideration Clause 3.2(ii) – CGST & SGST applicable to all transactions of goods &

services for a consideration other than exempted goods & services, goods outside GST regime, transactions below threshold:

Definition of consideration not forthcoming and therefore what happens to transactions relating to:

Barter, Slump sale

Free samples / warranties / demo goods / change in use etc

Lost / destroyed / insurance claims

Would sale of stocks and shares become liable to GST

DOR Comments: There must be a common base for taxation Centre and States

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Issues

Clause 3.2(iii) – CGST & SGST to be paid separately

Account heads for all goods / services must be ensured correctly

The classification must indicate whether it relates to CGST or SGST

Identification of State to whom tax is to be credited.

DOR Comments: In addition, IGST should be paid to the accounts of the Centre.

This issue will arise in respect of:

Composite transactions involving goods and services

Goods which are exempt by Centre taxable by State

Goods which are exempt by States taxable by Centre

Services exempt by States or vice versa.

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Clause 3.2(iv) – CGST /SGST to be treated separately

Tax payable under CGST - set-off only against ITC for CGST

Tax payable under SGST - set-off only against ITC for SGST

What happens when:

Purchase is taxable and sales are exempt? Whether refund is possible or both ITC under CGST / SGST stand forfeited?

Purchase is taxable at higher rate and sales are taxable at lower rate?

CGST is exempt (means goods sold are exempt under CGST list) and SGST is payable?

SGST is exempt (means goods sold are exempt under SGST list) and CGST is payable?

TAXPAYER TO MAINTAIN SEPARATE DETAILS FOR ITC UTILISED AGAINST CGST / SGST

CGST / SGST RULES WILL BE ALIGNED FOR UTILISING ITC

CROSS UTILISATION OF CGST / SGST ALLOWED IN IGST MODEL

Issues – Set-off

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Issues – Accumulation / refunds

Clause 3.2(vi) – ITC accumulation / refund is possible when the dealer is an exporter, input tax rate is higher than output tax rate or when he purchases capital goods

The above issues can be resolved when:

Refund operates in a time bound manner

Penal provisions could be framed for delayed refunds – say higher interest rates on refund

Cross utilisation of ITC is permitted

Clause 3.2(ix) – SGST threshold - Gross annual turnover will be Rs.10 lakhs for both States & Union

Implies upto Rs.10 lakhs of total turnover SGST / CGST registration is not required & dealer need not charge GST

Voluntary registration is permissible if dealer wants to get into GST stream

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Issues – Composition scheme Clause 3.2(x) – Composition scheme with cut-off of gross annual turnover of

Rs. 50lacs with floor rate of 0.5% across States

Is this cut-off of Rs.50 lakhs only for goods or only for services or for aggregate of both goods and services {say turnover of goods is Rs.40 lakhs & services is Rs.30 lakhs then what happens}

Since scheme is optional there can be conditions like interstate or export transactions may not be permitted

ITC may not be allowed in composite dealer or buyers hands

Composite dealer may not be permitted to collect tax

What happens when threshold is exceeded during the year

Floor rate is 0.5% so what is the actual rate – can different States have different rates for goods / services or can limit be prescribed for goods & services – say Rs. 10 lakhs for goods and Rs.40 lakhs for services

Whether there will be a separate return for such dealers

DOR Comments : The Centre may consider leaving the administration of Compounding Scheme, both for CGST and SGST to the States.

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Issues - Returns

Clause 3.2(xi) – Periodical returns in common format as far as possible two CGST / SGST authority

Implies two returns are to be filed – one with CGST and the other with SGST authority – same format MAYBE

Two payments to be made – one for SGST & the other for IGST & CGST together

Whether two returns can be filed in same office or different offices

This is because (i) CGST and SGST are two different administering authorities & (ii) two different payments are to be made & (iii) cross set-off not possible except in IGST model

Whether two audits, assessments & inspections etc.,

What if one return is not filed or one payment is not made

DOR Comments : In addition, taxpayers having inter-State transactions will require submission of returns to related Central IGST authority.

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Clause 3.5 – New IGST Model for taxation of interstate goods & services

Centre will levy IGST which is = CGST + SGST

IGST Model will be e-driven

Levy will be on all taxable transactions of goods & services

Implies exempt goods or services will be exempt from IGST

What happens when SGST is exempt on goods / service or when CGST is exempt on goods / service

Seller will pay IGST after taking ITC on IGST /CGST/SGST paid on purchases

Selling State will transfer to Centre ITC of SGST used to pay IGST

Importing dealer will claim full credit of IGST (as per invoice) while paying output tax in his State

Centre will transfer to importing State credit of IGST used in payment of SGST

CBEC likely to act as clearing house agent

DOR comments - IGST model will work smoothly only when there is a common threshold for Centre and States. Having more than one rate either for CGST or SGST will complicate the working of IGST model.

Issue - IGST model

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Issue – Setoff matrix

Output tax Input tax Setoff

IGST SGST Allowed

IGST CGST Allowed

IGST IGST Allowed

SGST SGST Allowed

SGST CGST No

SGST IGST Allowed

CGST CGST Allowed

CGST SGST No

CGST IGST Allowed

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Imports

DOR Comments

SGST on imports should also be levied and collected by the Centre.

Centre should pass on SGST collection on imports to concerned States on the destination principle.

Levy of GST on imports may be handled by Centre through a Central legislation either as a customs duty (as is being done now) or along the lines of IGST.

Taxation of import of services may be on the basis of reverse charge model, as is being done at present.

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Issue – Consign / stock transfers Appropriate provision for consignment or stock transfer of

goods & services Does it mean stock transfers of goods & services would taxable?

If yes at what valuation? Excisable value? Cost plus gross profit? How is valuation going to be done? Market value – How in case of WIP / semi finished goods? MRP?

In case of services – How? Whether any special rules of valuation are going to be framed for SERVICES?

What rate is it taxable – GST rate ? Lower rate? Special rate?

Will there be any restrictions on ITC?

What happens when goods are moved to a job worker? Jigs / fixtures / dies and tools are moved to a job worker?

What happens when machinery is moved from one unit to another within State or interstate?

ONE NEEDS TO WORK OUT THE MODEL BENEFICIAL – whether stock transfer / consignment sale Vs Sale to Disti / Stockist

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Compliances

Functions of assessment, enforcement, scrutiny and audit to be undertaken by the authority collecting the tax (States) with information sharing between Centre and States

No physical verification of premises and no pre-deposit of security

Electronic Return filing through certified service centres / chartered accountants etc.

Audit in 1-2% cases based on risk parameters

GST Preamble

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The Constitutional (115th) Amendment Bill, 2011 has been referred to the Parliamentary Standing Committee for scrutiny by the Union Cabinet which approved the Bill on 16.03.2011.

The Constitution (One hundred and Fifteenth) Amendment Bill, 2011 has been tabled in the Parliament on 22.03.2011 by the Finance Minister to facilitate implementation of Goods and Services Tax (GST).

The proposed GST Bill, inter alia seeks to introduce articles effecting the introduction of the Goods and Services Tax (GST) and the introduction of the GST Council.

GST Preamble

Definition of Goods and Service Tax - Article 366(12A)- It means any tax on supply of goods or services or both except taxes on the supply of following goods namely:

◦ Petroleum crude, High speed diesel, Petrol, Natural gas, Aviation turbine fuel, Alcoholic liquor for human consumption

Article 366(29A) shall be omitted - Clause 29A, relating to deemed sale (i.e. tax on leases and works contract) has been proposed to be omitted from the Article as it will be subsumed within GST.

GST Definitions

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Sixth Schedule

The District Council for an autonomous district shall have the power to levy & collect tax on entertainment and amusements within such districts

Seventh Schedule

Union List (List I) – Entry no. 84 substituted

The Union Government has the exclusive power to levy excise duty on the manufacture or production of Petroleum Crude, High Speed diesel, Petrol, Natural Gas, Aviation Turbine Fuel, Tobacco and Tobacco Products

Entry no. 92 (Tax on newspaper and on advertisement published therein) and 92C (Tax on services) has been omitted

GST – Amendment to Schedule

List II - State List– Empowering Panchayat/ Municipalities etc.

◦ Entry no. 52 - Substituted (relating to entry tax)

Only the municipalities or the Panchayat shall have the power to levy tax on the entry of goods into a local area for consumption, use or sale therein

◦ Entry no. 62 - Substituted (Taxes relating luxuries, entertainment taxes, amusements, betting and gambling)

Taxes on entertainments and amusements to the extent levied and collected by a Panchayat or a Municipality or a Regional Council or a District Council

GST – Amendment to Schedule

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GST – Amendment to Schedule

State List – List II

Entry no. 54 – Substituted (relating to sale or purchase of tax)

The State Governments shall have the power to levy tax on the sale (other than in the course of inter-state trade or commerce or in the course of international trade or commerce) of petroleum crude, high speed diesel, petrol, natural gas, aviation turbine fuel and alcoholic liquor for human consumption.

Entry no. 55 – Omitted

Relating to sale or purchase of newspapers and on advertisements published in such newspapers and the Taxes on services have been omitted. Thus facilitating the levy of GST on sale and purchase of newspapers and advertisements therein.

Article 246A - Special provision with respect to goods and services tax

As per the proposed Article, the Parliament and the Legislature of every State will have concurrent power to make laws with respect to goods and services tax.

The above power is subject to the condition that the Parliament will have the exclusive power to make laws with respect to goods and services tax where the supply of goods or services or both takes place in the course of inter-state trade or commerce.

Introduction of Article 246A

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Article 248: Residuary Powers of legislation

The residuary power of the Parliament to make laws with respect to any matter not enumerated under the Concurrent List or State list has been provided subject to the provisions of restriction under Article 246A.

Article 249: Power of parliament to legislate with respect to any matter in the tate level in the national interest

The Parliament has been vested with the power to make laws pertaining to GST on behalf of the State Legislature in circumstances of national interest. The power to make such laws would be pursuant to a resolution passed by the Council of States supported by not less than two-thirds of the members present and voting.

Amendment to other Articles

Article 250: Power of parliament to legislate with respect to any matter in the state level if the proclamation of emergency is in operation.

The Parliament has been vested with the power to makes laws pertaining to GST on behalf of the State Legislature when there is a proclamation of Emergency.

Amendment to other Articles

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Article 268 – Duties levied by Union but collected and appropriated by the States

Excise duty on medicinal and toilet preparations (containing alcohol, narcotic and psychotropic substances), which are mentioned in the Union List has been omitted for the purpose of this Article.

The effect of this omission is that the excise duty on medicinal preparation and psychotropic and toilet preparations would be subsumed within the proposed GST.

Note: Stamp duties will continue

Amendment to other Articles

Article 268A of the Constitution [as inserted by section 2 of the Constitution (Eighty-eighth Amendment) Act, 2003] shall be omitted:

This article is relating to Service tax levied by Union and collected and appropriated by the Union and the States

Article 269: Taxes levied and collected by the union but assigned to the States:

The power to levy taxes in respect of inter-State trade or consignment of goods has been made subject to the provisions of restriction under Article 269A . It implies that IGST law will be administered by Union and the proceeds will be retained by the Union.

Amendment to other Articles

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Article 269A - IGST

The GST on supplies of goods or services or both in the course of inter-state trade or commerce shall be levied and collected by the Union Government and shall be apportioned between the Union and the States which would be prescribed by the Parliament.

It has been clarified that supply of goods or services or both in the course of import into India shall be deemed to be a transaction of inter-state trade or commerce

The Parliament shall formulate the principles to determine when supply of goods or of services or both shall be treated as inter-state trade or commerce.

Transactions in the course of IST

Article 270: Taxes levied and distributed between the Union and States

A new clause has been inserted whereby the GST which has been collected by the Government of India shall be distributed to the States on such percentage as may be determined by the President after considering the recommendation of the Finance Commission.

Article 271 - Surcharge on certain duties and taxes for purposes of the Union

No surcharge under this Article would be applicable to GST

Distribution - Union and States

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Article 279A-

The President shall constitute a GST Council within sixty days from the Commencement of the GST Act.

Membership of the GST Council

◦ Chairperson - The Union Finance Minster;

◦ Members - The Union Minister of State for Revenue

◦ Members - The Finance Minister or Minister in charge of Taxation or any other Minister nominated by each State Government shall be the members of the GST Council.

◦ Vice-Chairperson - The Members (i.e., nominated by State) of the GST Council shall decide vice – chairperson of the GST Council for such period as decided by the members.

GST Council

Functions of the GST Council

The GST Council while being guided by the need for a harmonized structure goods and services tax and for the development of a harmonised national market for goods and services shall make recommendations to the Union and the States on:

◦ Taxes, cesses and surcharges levied by the Union and the States and local bodies which may be subsumed within the GST;

◦ Exemptions from GST for such goods and services;

◦ Threshold limit of turnover below which GST may be exempted;

◦ The GST rates;

◦ Any other matter relating to GST.

GST Council

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Other procedural issues relating to GST Council

One third of the total members of the GST Council shall constitute the quorum at the meetings;

The GST Council shall formulate its own procedures in the performance of its functions.

Every decision of the GST Council taken at a meeting shall be with the consensus of all the members present at the meeting.

Any act or proceeding of the GST Council shall not be invalidated merely by reason of:

◦ vacancy or defect in the constitution of the Council; or

◦ defect in the appointment of a person as a member in the GST Council; or

◦ any irregularity in the procedure adopted by the GST Council not affecting the merits of the decision.

GST Council

Article 279B-

The Parliament, by law, will provide for the creation of a Goods and Services Tax Dispute Settlement Authority (DSA);

DSA shall adjudicate any dispute or complaint referred to the DSA by the State Government or the Union Government

Such compliant shall be arising out of deviation from any recommendation of the GST Council which results in the loss of revenue to the State Government or the Union Government or affects the harmonised structure of the GST.

Dispute Settlement Authority

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The DSA shall consist of three members namely:

◦ The Chairperson, who has been a Supreme Court Judge or the Chief Justice of a High Court, appointed by the President, recommended by the Chief Justice of India;

◦ The remaining members shall be persons who shall have expertise in the field of law, economics or public affairs appointed by the President recommended by the GST Council.

The DSA shall pass suitable orders including interim orders

Only the Supreme Court shall exercise jurisdiction over such adjudication or dispute or complaint.

Dispute Settlement Authority

Article 286 - Restrictions to impose tax on sale / purchase of goods

States cannot impose tax on supply of goods or of services or both, where such supply takes place:

◦ Outside the State / Import / Export

Union is empowered to formulate principles for determining when a supply of goods or of services or both takes place outside the State / import / export – (in other words Union has power to enact IGST)

Any law of the State apart from GST shall imposes or authorizes the imposition of tax on the sale or purchase of goods declared by the parliament by law of special importance in interstate trade or commerce be subject to such restrictions and conditions in regard to the system of levy, rates and other incidents of tax as parliament may by law specify.

Amendment to Article 286

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Article 368 - Power of Parliament to amend the Constitution and procedure thereof

◦ Any amendment to Article 279A (GST Council) and Article 279B (Dispute Settlement Authority) requires:

Introduction of Bill in either House of Parliament;

The bill must be passed in each House by a majority of the total membership of that House and by a majority of not less than 2/3 of the members of that House present and voting

Thereafter to be presented to the President for his assent

It also requires to be ratified by the Legislatures of not less than one-half of the States by resolution to that effect passed by those Legislatures before the bill is presented to the President for assent.

Amendment to Article 368

Transitional Provisions

The Provisions of any law relating to tax on goods or services or on both in force in any state immediately before the commencement of this Act which is inconsistent with the provisions of the constitution as amended by this Act:

◦ shall continue to be in force until amended or repealed by the competent legislature or other competent authority; or

◦ until expiration of one year from such commencement

whichever is earlier

Clause 18 – Amendment Bill

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Statement of objects and reasons: Proposed bill to amend the constitution for

Subsuming various Central and State indirect taxes

Subsuming state VAT/Sales tax, Entertainment tax, Luxury tax, Taxes on lottery, Betting and Gambling, tax on advertisement, state cess and surcharge, and entry tax

Levy of IGST on interstate transactions of goods and services

Constitutional Amendment Bill

Conferring simultaneous power on Parliament and State legislature to make laws governing goods and service tax

Coverage of all goods except specified goods

Creation of GST council

Enabling the setting up of dispute settlement authority

Empowering district council and regional council to levy tax on amusement and entertainment

Enabling of levy of goods and service tax on sale of newspaper

Permitting municipalities and Panchayat to levy and collect tax on entry of goods in a local area for consumption, use or sale therein.

Constitution Amendment Bill

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Negotiations between the Centre and states to move to the Goods & Services Tax (GST) regime have hit a roadblock again

States oppose inclusion of petroleum products and alcohol in GST

States have also turned down the Centre’s proposal to subsume entry tax in GST

Fresh Hurdles

Challenges in Migration

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Transition to GST – Business Issues

Ascertaining credits lying in excise duty, service tax, value added tax etc.,

Ascertaining the above tax components on RM, WIP, FG, goods in transits, consignment stocks etc.,

Filing of refund applications depending on the provisions of law as on transition date;

Ascertaining unexpired portion of fiscal incentives, if any, and moving necessary applications before the statutory authorities;

Obtaining refunds on concluded assessments; ensure whether GST provisions permit carry forward and set-off etc.,

Obtaining relevant declarations under Service Tax / Excise / VAT / CST laws, since the Government may a set a deadline for receipts / issue of declarations;

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Transition to GST – Business Issues

Aligning existing software to GST requirements;

Analysing and understanding whether stock transfers / consignment transactions / continuing existing depots or wear houses is cost effective

Analysing options as whether inter-State purchases attracting IGST or local purchases attracting dual levies is feasible ;

Location of ancillaries or suppliers within the States or outside the States is feasible;

Training employees in the areas of purchase/sales/marketing / finance / compliance etc.,

Analysing whether a B2B or B2C is cost effective.

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Place of supply for goods and services - ISSUES

Place of supply in respect of goods may not have much complications

Place of supply in respect of goods supply is generally based on the delivery, physical location of the goods.

Where goods are not removed where would be place of supply?

The place of supply could be deemed to be the place where the goods are located at the time when the supply takes place . Should see how the GST legislation would come with an answer on this aspect

Goods

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Place of supply in respect of service would pose complications

Place of Provision of Service Rules, 2012 may be adopted in GST with modification

Supplies under B2B and B2C, thoughts are as under

Under B2B location of recipient

Under B2C location where supplier is located

Services

Karnataka Commercial Tax - Initiative

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Form C/F

How to obtain Form C/F where dealer has inadvertently failed to declare or wrongly inter-State purchase or stock transfer in the VAT 100? New facility provided in the Commercial Tax Department website

http://vat.kar.nic.in (Circular 12/2014-15 dated 16.08.2014)

In the menu ‘correction of CST purchase value’ option provided

A declaration to be provided stating

Goods have been actually received against the goods

Undertake to produce books of accounts for verification that non-declaration/ wrong declaration has not resulted in under reporting of sales turnover

Dealer to submit the online request. A web acknowledgement is generated.

Form C/F

The jurisdictional LVO/VSO will select the case, approves and recommends cases for re-assessment to the JCCT (DVO)

DVO will recommend for audit.

Commissioner of Commercial Taxes will issue assignment as per the recommendation of DVO

The audit officer verify and pass re-assessment order stating

There is evidence for receipt of goods

Such goods have been duly accounted on stock book and other books of accounts

Under reporting or wrong reporting have not led to under reporting of sales and short payment of corresponding taxes

Internal approvals by LVO/VSO will be done based on the re-assessment order to enable the dealer download the Form C/ F

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e-uploading- sales/ purchase

Electronic uploading of purchase and sales details onto the departmental portal is mandatory for all dealers whose total turnover is Rs. 50 lakhs / above for the year ended. To be uploaded within 20 days from the end of the relevant tax period.

Initial few months was declared as educative period – to enable the dealers to familiarize and acquaint themselves with the electronic upload requirements

e-uploading- sales/ purchase

Educative period for various dealers based on total turnover

Type of dealers (threshold of total turnover)

Educative period extended upto

Rs 50 lacs to Rs. 1 Crore Upto 20.09.2014

Rs. 1 Crore to Rs. 2 Crores Upto 20.09.2014

Rs. 2 Crores to Rs. 5 Crores Ended on 20.08.2014

Above Rs. 5 Crores Ended on 20.07.2014

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S Venkataramani Singhvi, Dev & Unni

venkat@sduca.com

+ 91 80 2226 1371

Thank you