GOOD AND SIMPLE TAX – GST FOR YOU

My third book on GST, ‘GOOD AND SIMPLE TAX – GST FOR YOU” is now available at https://notionpress.com/read/good-and-simple-tax-gst-for-you

The Goods and Service Tax rolled out in India on 1st July 2017 subsuming a plethora of taxes into a single tax and enabling input tax credit at every stage of the supply chain, thereby making the products and services cheaper to the end consumer. The rollout of GST also improves the ease of doing business in India.

The way the business is carried out in India is undergoing a major change as the terms of manufacture, purchase, sale, and service is replaced with a single word called “Supply.” The author covers all these topics like Supply, Place of Supply, Time of Supply and Valuation with easy to understand examples so that the trade and industry can benefit at large from the same and change their business practices accordingly.

“GOOD AND SIMPLE TAX – GST FOR YOU” is a written in layman’s language and it explains the complex GST requirements in a simple and lucid language with examples.

  • – CS Vasudeva Rao Devaki, DV Rao and Associates

Kindle version and e-book will be released shortly

book 3

 

Cabinet approves Scheme of Budgetary Support under GST Regime to the eligible units located in States of Jammu & Kashmir, Uttarakhand, Himachal Pradesh and North Eastern States including Sikkim

The Cabinet Committee on Economic Affairs chaired by the Prime Minister Shri Narendra Modi today has given its approval to the Scheme of providing Budgetary Support under Goods and Service Tax Regime for the eligible industrial units located in State of Jammu & Kashmir, Uttarakhand, Himachal Pradesh and North Eastern States including Sikkim. Budgetary support of Rs. 27,413 crore for the said Scheme has been approved for the period from 1.7.2017 till 31.03.2027 for such industrial units located in aforesaid States which availed the benefit of Central Excise exemption prior to coming into force of GST regime.

The Government of India was implementing North East Industrial and Investment Promotion Policy (NEIIPP), 2007 for North Eastern States including Sikkim and Package for Special Category States for Jammu & Kashmir, Uttarakhand and Himachal Pradesh to promote industrialization. One of the benefits of the NEIIPP, 2007 and Package for Special Category States was excise duty exemption for first 10 years after commencement of commercial production.

Upon repeal of the Central Excise duty laws, the Government has decided to pay a budgetary support equal to the central share of the cash component of CGST and IGST paid by the affected eligible industrial units. The support shall be available for the residual period (ten years from the date of the commercial production) in the States of North Eastern region and Himalayan States. DIPP will notify the Scheme, including detailed operational guidelines for implementation of the scheme within 6 weeks.

It is estimated that total number of 4284 eligible units located in the State(s) of Jammu & Kashmir, Uttarakhand, Himachal Pradesh and North Eastern States including Sikkim will benefit from the above scheme.

*****

AKT/VBA/SH
(Release ID :170017)

GST on Khadi products

Ministry of Micro, Small and Medium Enterprises (MSME) welcomes the introduction of GST. The entire Khadi & Village Industries (KVI) sector has been enjoying the benefit of tax exemption even under the pre-independence era. With the exemption to the SSI sector being drastically reduced from the existing Rs.150 lakh to Rs.20 lakh, the exemption cover enjoyed by many of the Khadi Institutions (KIs) has been removed. KIs are now mandated to obtain registration under GST and also pay GST on various Khadi products which is 5%.  The products of the Village Industries sector were either taxed @ 0-14.30% before-GST and post-GST the same products attracts tax @ 12-28%, and the details of the same is given below:  

Details of products of the Village Industries sector under pre-GST & post-GST

 

Items

Before (GST)

After (GST)

Dona plate

5%

18%

PVC Scrap

5%

18%

Ayurvedic Medicine

0%

12%

Sanitary Hardware & Paint

14%

28%

Marble & Granite

5-14%

28%

Electronic Weighing Scale

5.5%

28%

Lock

5%

18%

Mentha

5%

18%

Solar Plate

0%

18%

Textile sector

0 to 5%

18%

Gobar Gas/Bio Fuel Generator

0%

18%

Agriculture Diesel Engine (upto 12 B.H.P.)

5%

28%

Plywood

14.30%

28%

Sewing Machine parts

5%

12%

Detergents

5%

28%

Glassware boll (Kancha)

0%

18%

Tractor attachments

14%

28%

Weighing machines

14%

28%

Wet grinders

14%

28%

Compressors

14%

28%

Packing Machines

14%

28%

Auto-parts

14%

28%

Garage Equipment

14%

28%

Hand-made soap (3401)

0%

18%

Hand-made paper (4802)

0-4%

12%

Herbal Shampoo (3305)

5-12%

28%

Leather Products (suit-case/brief-case/other articles)

5-12%

28%

Agricultural, Horticultural or Forestry Machinery for Soil preparation

5%

12%

Harvesting or threshing machinery

0%

12%

All food mixes, sharbat, ready to eat packaged food

5%

18%

Hand operated mechanical appliances, weighing 10 kg or less, used in the preparation, conditioning or serving of food or drink

5%

18%

 

At present only Khadi yarn produced in Khadi sector is exempted, while other Khadi products attracts 5% GST.  Ministry of MSME has approached Ministry of Finance to consider the sector for exemption from GST or to ensure a seamless flow of input tax credit in order for Khadi Institutions to claim input tax credit.

         

 This Press Release is based on information given by the Minister of State for MSME Shri Giriraj Singh in a written reply to a question in Rajya Sabha on 10.08.2017 (Wednesday).

 

********

AK/RM

 

 

(Release ID :169854)

Blocked Input Tax Credit

Subsection 5 of Section 17 of the GST Act gives the list of items on which GST is not eligible

(5) Notwithstanding anything contained in sub-section (1) of section 16 and subsection
(1) of section 18, input tax credit shall not be available in respect of the following,
namely:—
(a) motor vehicles and other conveyances except when they are used––
(i) for making the following taxable supplies, namely:—
(A) further supply of such vehicles or conveyances ; or
(B) transportation of passengers; or
(C) imparting training on driving, flying, navigating such vehicles
or conveyances;
(ii) for transportation of goods;

(b) the following supply of goods or services or both—
(i) food and beverages, outdoor catering, beauty treatment, health services,
cosmetic and plastic surgery except where an inward supply of goods or services
or both of a particular category is used by a registered person for making an
outward taxable supply of the same category of goods or services or both or as
an element of a taxable composite or mixed supply;
(ii) membership of a club, health and fitness centre;
(iii) rent-a-cab, life insurance and health insurance except where––
(A) the Government notifies the services which are obligatory for an
employer to provide to its employees under any law for the time being in
force; or
(B) such inward supply of goods or services or both of a particular
category is used by a registered person for making an outward taxable
supply of the same category of goods or services or both or as part of a
taxable composite or mixed supply; and
(iv) travel benefits extended to employees on vacation such as leave or
home travel concession;
(c) works contract services when supplied for construction of an immovable
property (other than plant and machinery) except where it is an input service for further
supply of works contract service;

(d) goods or services or both received by a taxable person for construction of an
immovable property (other than plant or machinery) on his own account including
when such goods or services or both are used in the course or furtherance of business.
Explanation.––For the purposes of clauses (c) and (d), the expression
“construction” includes re-construction, renovation, additions or alterations or repairs,
to the extent of capitalisation, to the said immovable property;
(e) goods or services or both on which tax has been paid under section 10;
(f) goods or services or both received by a non-resident taxable person except
on goods imported by him;
(g) goods or services or both used for personal consumption;
(h) goods lost, stolen, destroyed, written off or disposed of by way of gift or free
samples; and
(i) any tax paid in accordance with the provisions of sections 74, 129 and 130.

Sale of Products after Introduction of GST 

On account of implementation of GST there may be instances where the retail sale price printed on pre-packaged commodity is required to be changed. The Department has therefore issued an order according to which, manufacturers/packers/importers of pre-packaged commodities are to declare the revised retail sale price (MRP), by way of stamping or putting sticker or online printing, as the case may be, on the unsold stock

Manufactured/packed/imported prior to 1st July, 2017, if any, in addition to the existing retail sale price (MRP), for three months i.e. upto 30th September, 2017. Use of un-exhausted packaging material/wrapper has also been allowed upto 30th September, 2017 after making the necessary corrections.

The said information has already been disseminated to all the stakeholders and Controllers of Legal Metrology of all States/UTs for immediate necessary action. The Department’s website contains FAQs for explaining the manner in which MRP can be undertaken.

The matter is being monitored on a continuous basis, and the complaints received so far for not selling the pre-packaged commodities at decreased prices where the rate has been decreased on National Consumer Helpline have been forwarded to the Controllers of Legal Metrology of all States/UTs for immediate necessary action.

Further as per the information of CBEC, section 171 of the Central Goods and Services Act, 2017 provides for Anti-Profiteering measure according to which any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices and the Central Government may constitute an Authority to examine the same. Many business entities have reduced the prices of their goods and services in view of lower GST rates under the GST regime. They have been publishing these revised rates in leading new dailies from time to time for consumer benefit.

The Department has already issued an advertisement in the Newspaper regarding MRP aspects and the final price to protect consumer interests. The Department is also doing the outdoor publicity through creatives on MRP after implementation of GST.

This information was given by Shri C. R. Chaudhary, the Minister of State for Consumer Affairs, Food and Public Distribution, in a written reply to a question in Rajya Sabha, today.

****AK
(Release ID :169647)

GST Tip 290

In Section 3.1 of GSTR – 3B, details of the outwards supplies along with the inwards supplies on which reverse charge is applicable has to be shown. It should be shown in summary format for the above supplies with the taxable value for each category along with the tax amounts. Outward supplies for Zero Rated, Nil Rated and exempted supplies have to be shown separately in the same section.

 

 

Are we ready for the game ?

GST is rolled out from 1st of July 2017 and the trade and industry is able to adapt to the same with some teething troubles. Though all the issues are not resolved some of them are still and it takes some time to get resolved. One month has passed after the rollout of GST and now it is the time for filing of returns. The same is updated through a press release by CBEC on 18th June 2017 – http://www.cbec.gov.in/resources//htdocs-cbec/press-release/press-note-on-return-filing.pdf

As there is a delay in filing of the returns, a new form is known as GSTR – 3B has been introduced and it has to be filed by 20th of Aug 2017. The format is released by the Government. It is basically a summary of the return for the month of July 2017 for determining the net tax liability to be paid. This statement looks simple but the challenge is on a careful review of the format it is clear that there is no provision for the opening balance of the input tax credit as of 30th June 2017. The reason is the GST Tran-1 form has to be filed within 90 days from the appointed date i.e 1st of July 2017. As a result of the closing balance of the Input Tax Credit will not be available for the taxpayers to use the same for payment of taxes for the month of July 2017.

This will have a huge impact on the cash flows as the tax payers have to pay in cash without using the available input tax credit and it is going to impact the MSME sector a lot especially for taxpayers who were not eligible to take registration under Central Excise in the erstwhile regime now they have to pay CGST.

The portal for the GST i.e GST.gov.in is not having the option of filing of the GSTR – 3B as on date, that means the taxpayers have to wait for some more time for filing of the return. This time lag should be utilized by the taxpayers for renegotiating with their customer to receive the payments or at least for the tax amount. Alternatively, they have to look out for additional cash flow either through additional funding or increase their CC limits or another means.  The same is likely to continue for the next month also.

Managing of the working capital is one area and another is ensuring that the data required for the return filing is also in place. GSTR – 3B is an interim return and the actual returns for GST have to be filed by 10th of September i.e, GSTR – 1 by 5th September 2017 and GSTR – 2 by 10th September 2017.