GST (Goods and Service Tax)
Finance Ministry of India has released the Model GST Law on 14.06.216
Key Points of Model GST Law :-
Registration [Section 19 of Model GST Law ]
- Registration :The dealer is required to take registration under this law if his aggregate turnover in a financial year exceeds
- Rs.9 lakhs.
- Rs.4 lakhs for dealers conducting business in any North Eastern State including Sikkim.
- Place of registration : The dealer has to take registration in the State from where he makes a taxable supply of goods and/or services .
- Time to take registration : As per Model GST Law , Registration shall be applied within 30 days the date on which dealer becomes liable to registration.
- Registration in case of Multiple Business:– A person having multiple business verticals in a State may obtain a separate registration for each business vertical.
- PAN Number for Registration : Every person shall have a Permanent Account Number issued under the Income Tax Act, 1961 in order to be eligible for grant of registration.
- Unique Identity Number:- any specialized agency of the United Nations Organization or any Multilateral Financial Institution and Organization notified under the United Nations (Privileges and Immunities) Act, 1947 (46 of 1947), Consulate or Embassy of foreign countries and any other person or class of persons as may be notified by the Board / Commissioner, shall obtain a Unique Identity Number
Migration of existing taxpayers to GST [Section 142 of Model GST Law ]
- Every person already registered under extant law will be issued a certificate of registration on a provisional basis.
- This certificate shall be valid for period of 6 months from date of Issue. Such person will have to furnish the requisite information within 6 months and on furnishing of such information, final registration certificate shall be granted by the Central/State Government.
GST compliance rating score [ section 116 of Model GST Law ]
- Every taxable person shall be assigned a GST compliance rating score based on his record of compliance with the provisions of this Act.
- The GST compliance rating score shall be updated at periodic intervals and intimated to the taxable person and also placed in the public domain.
Taxable Person for Levy of Tax [ Section 9 of Model GST Law ]
- The person registered under this law is liable to pay tax if his aggregate turnover in a financial year exceeds Rs 10 lakhs.
- A dealer conducting business in any of the North Eastern is required to pay tax if his aggregate turnover exceeds Rs. 5 lakhs.
- The Central Government, a State Government or any local authority shall be regarded as a taxable person in respect of activities or transactions in which they are engaged as public authorities other than the activities or transactions as specified in Schedule IV ( A negative list has been prescribed in Schedule IV for transactions and activities of Government and Local Authorities which shall be exempt from GST levy, like activities of issuance of passport, visa, driving license, birth certificate or death certificate, etc. )
- The following persons shall not be considered as taxable persons
- (a) any person who provides services as an employee to his employer in the course of, or in relation to his employment, or by any other legal ties creating the relationship of employer and employee as regards working conditions, remunerations and employer’s liability;
- (b) any person engaged in the business of exclusively supplying goods and/or services that are not liable to tax under this Act;
- (c) any person, liable to pay tax under Section 7( 3) [Goods or services on which tax payable under reverse charge by person receiveing goods / services as Notified by Central / State govt], receiving services of value not exceeding ______ rupees in a year for personal use, other than for use in the course or furtherance of his business.
Taxable Event [ Section 7 , Section 3 , Section 2(88) of Model GST Law]
- The taxable event under GST regime will be supply of goods or services.
- Supply includes all forms of supply of goods and/or services such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration. It also includes importation of service, whether or not for a consideration.
- Services means anything other than goods;
Point of taxation in case of supply of goods [ Section 12 of Model GST Law ]
CGST/SGST shall be payable at the earliest of the following dates, namely:
(i) Date on which the goods are removed for supply to the recipient (in case goods required to be moved).
(ii) Date on which the goods are made available to the recipient (in case of goods not required to be moved).
(iii) Date of issuing invoice by supplier; or
(iv) Date of receipt of payment by supplier; or
(v) Date on which recipient shows the receipt of the goods in his books of account.
In case of continuous supply of goods
In case of continuous supply of goods, where successive statements of accounts or successive payments are involved, the time of supply shall be the date of expiry of the period to which such successive statements of accounts or successive payments relate. If there are no successive statements of account, the date of issue of the invoice (or any other document) or the date of receipt of payment, whichever is earlier, shall be the time of supply.
In Case of Reverse Charge :
In case of supplies in respect of which tax is paid or liable to be paid on reverse charge basis, the time of supply shall be the earliest of the following dates, namely—
(a) the date of the receipt of goods, or
(b) the date on which the payment is made, or
(c) the date of receipt of invoice, or
(d) the date of debit in the books of accounts
In case of Goods sent on sale or return basis
If the goods (being sent or taken on approval or sale or return or similar terms) are removed before it is known whether a supply will take place, the time of supply shall be at the time when it becomes known that the supply has taken place or six months from the date of removal, whichever is earlier
In case it is not possible to determine the time of supply
In case it is not possible to determine the time of supply the time of supply shall
(a) in a case where a periodical return has to be filed, be the date on which such return is to be filed, or
(b) in any other case, be the date on which the CGST/SGST is paid.
Point of taxation in case of supply of Services [ Section 13 of Model GST Law ]
The time of supply of services shall be
(a) the date of issue of invoice or the date of receipt of payment, whichever is earlier, if the invoice is issued within the prescribed period; or
(b) the date of completion of the provision of service or the date of receipt of payment, whichever is earlier, if the invoice is not issued within the prescribed period; or
(c) the date on which the recipient shows the receipt of services in his books of account, in a case where the provisions of clause (a) or (b) do not apply.
In case of continuous supply of services, the time of supply shall be –
(a) where the due date of payment is ascertainable from the contract, the date on which the payment is liable to be made by the recipient of service, whether or not any invoice has been issued or any payment has been received by the supplier of service;
(b) where the due date of payment is not ascertainable from the contract, each such time when the supplier of service receives the payment, or issues an invoice, whichever is earlier;
where the payment is linked to the completion of an event
where the payment is linked to the completion of an event, the time of completion of that event;
In case Tax Paid on on reverse charge basis
In case of supplies in respect of which tax is paid or liable to be paid on reverse charge basis, the time of supply shall be the earliest of the following dates, namely-
(a) the date of receipt of services, or
(b) the date on which the payment is made, or
(c) the date of receipt of invoice, or
(d) the date of debit in the books of accounts.
In a case supply of services ceases under contract before the completion of the supply
In a case where the supply of services ceases under a contract before the completion of the supply, such services shall be deemed to have been provided at the time when the supply ceases.
If it is not possible to determine the time of supply of services
Where it is not possible to determine the time of supply of services the time of supply shall
(a) in a case where a periodical return has to be filed, be the date on which such return is to be filed; or
(b) in any other case, be the date on which the CGST/SGST is paid.
Tax Collected at Source on online sales of goods or service [ Section 43C of Model GST Law ]
Every E-commerce operator engaged in facilitating the supply of any goods and/or services shall collect tax at source out of the amount payable or paid to the supplier, representing consideration towards the supply of goods and /or services made through it :-
- at the time of credit or
- at the time of payment
whichever is earlier.
Time for Payment to Govt :-The amount shall be paid to the credit of the appropriate Government by the operator within 10 days after the end of the month in which such collection is made.
Monthly Return :- Every operator shall, furnish a statement, electronically, of all amounts towards outward supplies of goods and/or services effected through it, during a calendar month, in such form and manner as may be prescribed, within 10 days after the end of such calendar month.
Reconciliation of Mismach of Return :Where the details of outward supply, on which the tax has been collected, as declared by the operator do not match with the corresponding details declared by the supplier the discrepancy shall be communicated to both persons in the manner and within the time as may be prescribed. In case such discrepancy which is not rectified by the supplier in his valid return for the month in which discrepancy is communicated shall be added to the output liability of the said supplier, in the manner as may be prescribed, for the calendar month succeeding the calendar month in which the discrepancy is communicated.
Compliance of Notice : Any authority not below the rank of Joint Commissioner may, by notice, either before or during the course of any proceeding under this Act, require the operator to furnish such details relating to—
(a) supplies of goods and/or services effected through such operator during any period, or
(b) stock of goods held by the suppliers making supplies through such operator in the godowns or warehouses, by whatever name called, managed by such operators and declared as additional places of business by such suppliers – as may be specified in the notice.
Every operator on whom a notice has been served shall furnish the required information within 5 working days of the date of service of such notice. Any person who fails to furnish the information required by the notice served shall be liable to a penalty which may extend to rupees twenty-five thousand.
Explanation: the expression ‘concerned supplier’ shall mean the supplier of goods and/or services making supplies through the operator.
Valuation Rules (GST Valuation (Determination of the Value of supply of Goods and Services) Rules, 2016)
Such Rules shall apply to the supply of goods and/or services under the IGST/CGST/SGST Bill. Some of the methods prescribed for valuation are given hereunder:
a) Transaction Value: As per this method the value of goods and/or services shall be the transaction value i.e value determined in monetary terms.
b) Transaction value of goods or services of like kind/ Comparison Method : Where value of supply cannot be determined under previous method [i.e. point a], the value shall be determined on the basis of transaction value of goods and/or services of like kind and quality supplied at or about the same time to customers.
c) Computed Value Method: Where value cannot be determined under previous method [i.e., point b], it shall be based on computed value which shall include cost of production, manufacture or processing of the goods or, the cost of the provision of services, the charges, if any, for design and brand and amount towards profit and general expenses.
d) Residual Method: Where the value cannot be determined under the computed value method, the value shall be determined using reasonable means consistent with the principles and general provisions of these Rules.
Utilization of credit: [ Section 35 of Model GST Law ]
Utilization of IGST: The amount of input tax credit on account of IGST available in the electronic credit ledger of dealer shall first be utilized towards payment of IGST and the amount remaining, if any, may be utilized towards the payment of CGST and SGST, in that order.
Utilization of SGST: The amount of input tax credit on account of SGST available in the electronic credit ledger shall first be utilized towards payment of SGST and the amount remaining, if any, may be utilized towards the payment of IGST.
Utilization of CGST: The amount of input tax credit on account of CGST available in the electronic credit ledger shall first be utilized towards payment of CGST and the amount remaining, if any, may be utilized towards the payment of IGST.
Note: The input tax credit on account of CGST shall not be available for payment of SGST.
Payment [ Section 35 of Model GST Law ]
- Any tax, interest, penalty, fee, etc., shall be paid via internet banking or by using credit/debit cards or NEFT or RTGS. This amount shall be credited to the electronic cash ledger of dealer.
- The input tax credit as self-assessed in the return of a taxable person shall be credited to his electronic credit ledger
- The amount available in the electronic cash ledger may be used for making any payment towards tax, interest, penalty, fees or any other amount payable under the provisions of the Act or the rules made thereunder in such manner and subject to such conditions and within such time as may be prescribed.
- The amount available in the electronic credit ledger may be used for making any payment towards tax payable under the provisions of the Act or the rules made thereunder in such manner and subject to such conditions and within such time as may be prescribed.
TDS [ section 37 of Model GST Law ]
The Central or a State Government may mandate, –
(a) a department or establishment of the Central or State Government, or
(b) Local authority, or
(c) Governmental agencies, or
(d) such persons or category of persons as may be notified, by the Central or a State Government on the recommendations of the Council,
to deduct tax at the rate of 1% from the payment made or credited to the supplier of taxable goods and/or services, notified by the Central or a State Government on the recommendations of the Council, where the total value of such supply, under a contract, exceeds rupees ten lakh.
Explanation. – For the purpose of deduction of tax specified above, the value of supply shall be taken as the amount excluding the tax indicated in the invoice.
Refund [ section 38 of Model GST Law ]
- A person can claim refund of any tax and interest by making an application in that regard to the prescribed officer of IGST/CGST/SGST. The application can be made before the expiry of two years from the relevant date as may be prescribed.
- It has been provided that the limitation of two years shall not apply where such tax or interest or the amount has been paid under protest.
- A taxable person may claim refund of any unutilized input tax credit at the end of any tax period (means the period for which the tax return is required to be filed): However no refund of unutilized input tax credit shall be allowed in cases other than exports or in cases where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on outputs:
- No refund of unutilized input tax credit shall be allowed in cases where the goods exported out of India are subjected to export duty.
- where any refund is due to a registered taxable person who has defaulted in furnishing any return or who is required to pay any tax, interest or penalty, which has not been stayed by any Court, Tribunal or Appellate Authority by the specified date, the proper officer may—
- (a) withhold payment of refund due until the said person has submitted the return or paid the tax, interest or penalty, as the case may be;
- (b) deduct from the refund due, any tax, interest or penalty which the taxable person is liable to pay but which remains unpaid.
Explanation “specified date” shall mean—
(a) the last date for filing an appeal under this Act, in a case where no appeal has been filed
(b) thirty days after the last date for filing an appeal under this Act, in a case where an appeal has been filed.
Returns [ Section 27 of Model GST Law ]
Dealers shall be required to furnish following returns
a) Monthly Return: Every registered taxable person shall have to e-file a monthly return for inward and outward supplies of goods and/or services, input tax credit availed, tax payable, tax paid and other particulars within 20 days after the end of such month.
b) Quarterly Return for Composition Scheme: Dealers paying tax under composition scheme shall have to furnish a return for each quarter or part thereof, electronically within 18 days after the end of such quarter.
c) Monthly TDS Return: Every dealer who is required to deduct tax at source shall furnish a return electronically within 10 days after the end of month in which deduction is made.
d) Monthy Return for Input Service Distributor: Every Input Service Distributor shall file e-return for every calendar month or part thereof, within 13 days after the end of such month.
e) First Return: Every registered taxable person paying CGST/SGST on all intra-State supplies of goods and/or services shall have to furnish the first return from the date on which he became liable to registration till the end of the month in which the registration has been granted.
f) Annual return: Every registered taxable person shall have to furnish an annual return for every financial year electronically on or before the 31st day of December following the end of such financial year.
g) Final return: Every registered taxable person who applies for cancellation of registration shall have to furnish a final return within three months of the date of cancellation or date of cancellation order, whichever is later, in a prescribed form.
Revision of Return [ Section 27 of Model GST Law]
- if any taxable discovers any omission or incorrect particulars therein, other than as a result of scrutiny, audit, inspection or enforcement activity by the tax authorities, he shall rectify such omission or incorrect particulars in the return to be filed for the month or quarter, as the case may be, during which such omission or incorrect particulars are noticed, subject to payment of interest, where applicable and as specified in the Act:
- However no such rectification of any omission or incorrect particulars shall be allowed after
- the due date for filing of return for the month of September or second quarter, as the case may be, following the end of the financial year, or
- the actual date of filing of relevant annual return,
whichever is earlier.
Transitional Provisions [ Section 143 , Section 144 ,Section 145 , Section 154 of Model GST Law ]
- Under the Model GST Law, a registered taxable person will be entitled to take credit of the amount of cenvat credit/ Value Added Tax carried forward in a return furnished by him in respect of the period ending with the day immediately preceeding the appointed day.
- As per Model GST Law, a registered taxable person shall be entitled to take in his electronic credit ledger/credit of the unavailed cenvat credit/ unavailed input tax credit in respect of capital goods not carried forward in a return furnished by him for the period ending with the day immediately preceding the appointed day.
- If a person registered under GST was not liable to be registered under the earlier law or if he was manufacturing exempted goods under the earlier law which are not taxable, then he will be allowed to take credit of eligible duties and taxes in respect of inputs held in stocks or semi-finished/finished goods.
- Every claim for refund of any duty/tax and interest, if any, paid on such duty/tax or any other amount, filed by any person before the appointed day, shall be disposed of in accordance with the provisions of earlier law and any amount eventually accruing to him shall be paid in cash. However, where any claim for refund is fully or partially rejected, the amount so rejected shall lapse.
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