Chapter -03
FUNCTIONAL DEPARTMENT
The Journey to GST
Amendment of Constitution The 100th Constitution Amendment Bill, which aims to change the taxing powers of the states and union to enable GST, has been passed by the Lok Sabha and is now with a Parliamentary committee for scrutiny. It is a long journey for an amendment of this nature to actually be made, as laid down in Article 368 of the Constitution. After passing by both houses of Parliament, the Bill has to be ratified by at least half the states before it becomes law .This is required because the lists in the Seventh Schedule are being amended, which changes the balance of power in the federation of states.
GST law to be enacted by centre and each state as will be seen below, an important features of GST will be that tax paid on inter-state transactions will be available as input tax credit. For this purpose the taxing statutes of each state would have to incorporate this provision, as it will not work without complete synchronisation. Therefore the next step after the constitutional amendment will be that the GST Council (explained below) will provide draft enactment to the states and centre and these will have to passed by each of the states and by parliament respectively.
What is GST: how the levy will be different ?
GST is Goods and Services Tax:
A dual tax to be levied on the same taxable event by both the states and the union government.
The taxable event will be ‘supply’ of good or services.
The states will levy the tax on such supplies of good or services made within the state, while the union will levy the tax on inter-state supplies, but the state will collect it as in the present case of CST.
Thus on each ‘supply’ of good or services, there will be a state tax as well as a central tax. These will be called state GST and central GST respectively.
There will be a single document for tax purposes, and a single return filed with a central registry, from which the information will be split between the centre and the relevant state . The difference for levy taxes will follow
At present:
Currently the centre alone can tax 'services'. When service tax was introduced in 1994, this was an item not mentioned anywhere in Lists 1, 2 or 3 of the Seventh Schedule and was therefore covered under the residual entry number 97 in List I (union list). An item 92C has subsequently been inserted in List I, but not been operationalised.
Currently, different stages in the progression of goods in the supply chain are levied to different taxes, and there is no input tax relief for most of these, so that the price of goods gets correspondingly inflated. The taxes on goods include excise duty, VAT / CST, purchase tax (if applicable), entry tax (in various forms and names), and state cesses and surcharges. While a manufacturer's invoice does reflect both excise duty and VAT / CST even now, this is only because both are indirect taxes and are collected from the customer. However they are sequentially collected, excise duty on manufacture and then VAT / CST on sale, and are charged on different values (as elaborated elsewhere in this paper). It can also be seen that VAT / CST is not charged on transfer of goods that is not a sale, like stock transfer; and excise duty is not charged on sale transactions but is charged only on manufacture.
Because manufacture, sale and service are at present taxed differently, there is much ambiguity and litigation over legal concepts of what constitutes.
Manufacture
Sale
Service [as distinct from deemed sale under Article 366(29A) of the Constitution
In future (during GST regime):
(i) In GST it is proposed to delete entry ("tax on services") from List I so that the states as well as the centre can tax services. Also, both centre and states are to be explicitly empowered to levy goods and services tax, which is defined as a tax on the supply of goods or services or both. Thus the Constitution, upon amendment, will support levy of tax on services as well as goods by the states as well as the centre.
(ii) GST will replace a multiplicity of taxes on goods, like excise duty on centre. indigenous manufacture and on imports, VAT, CST, purchase tax, entry tax, and various cesses and surcharges. It will also replace entertainment tax (other than by local bodies), luxury tax, taxes on advertisements and taxes on lottery, racing and gambling. Furthermore, GST will be available as input tax credit.
(iii) The single tax on 'supply' will render redundant the decades-old debates on what constitutes manufacture, what constitutes sale, and how to tax composite transactions of service and sale. A greater degree of clarity regarding taxability, and a corresponding reduction in uncertainty will result. GST: chargeable by states and centre on the same taxable value The levy of GST will be simultaneously made on the same transaction by the states and centre. Consequently, the taxable value will be the same for the purpose of both state & central GST. This is different from the present scenario in the following ways:
At present:
Even today, a manufacturer's commercial invoice reflects both central excise duty and state VAT on the same goods. This is because both are indirect taxes and are collected from the customer. Conceptually, however, at present the centre taxes 'manufacture', and thereafter the state taxes 'sale' of the goods. The result is that the central excise duty is rd? imposed first on the goods, and the state tax comes after that, on a value that is price plus central excise duty. If the goods are priced at Rs 100, and IW3 excise duty is 10% and VAT is 14%, the present scenario is that the invoice will read as follows:
GOODS RS. 100.00
C. EXCISE DUTY @ 10% RS. 10.00
SUB-TOTAL RS. 110.00
VAT @ 14% RS. 15.40
In future (during GST regime):
When the same transaction of 'supply' is being taxed by both centre It, and states, the taxes are levied simultaneously on the same value. The rate of GST in the above transaction will be 24%, split as 10% central GST and 14% state GST. The transaction will then be taxed as follows:
Goods Rs. 100.00
C.GST 10% Rs. 10.00
S.GST @ 14% Rs. 14.00
Thus there will be a reduction in the amount of VAT (to be known as SGST) payable if the rate remains the same. (The same result could have been achieved by changing the method of valuation in VAT / CST law, but there was no incentive for the states to do this or agree to it, as it involves reduction in their revenue.) GST will provide input tax relief in inter-state transactions. The major gain from GST will be extension of input tax relief to inter-state sale of goods.
At present:
At present, there is a pan-India input tax relief mechanism for only the central taxes on goods and services, in the form of Cenvat credit. As for the state taxes, each state charges VAT on sale of goods within the state and provides input VAT credits for taxes paid within the state. Inter-state sales are subject to CST, levied by the centre but collected by the states. No credits are available for such inter-state transactions. The obvious reason for the absence of tax credits in inter-state sales is loss of revenue that would ensue by allowing tax paid to another state to be reduced from tax payable.
In future (during GST regime):
The breakthrough achieved by the GST model is the central clearing house to mediate inter-state credits, with central compensation built into the system. CST will be replaced by integrated GST (IGST), which the originating state will charge on the sale. IGST can be taken as a credit in the destination state. Its use will be to pay IGST, CGST or SGST, in that order of preference. The transaction will be electronically routed through the central clearing house, which will also track the use of IGST to pay go SGST and will compensate the state to that extent. In other words, the loss caused to the destination state by tax paid in another state being adjusted against tax payable to the destination state will be made up by the centre. the rationale for this is to encourage growth of the market, which in turn is expected to spur production and increase revenue. This system of input tax credit in inter-state sales is a major salutary feature of the proposed GST model.
Differential treatment for alcohol, tobacco and petroleum products
Alcoholic liquor for human consumption has been excluded from the purview of GST. The definition of goods and services tax in the proposed clause (12A) to be inserted in Article 366 of the Constitution is "tax on the supply of goods or services or both (except tax on the supply of alcoholic liquor for human consumption)." The manufacture and sale of the product will continue to be taxed by states.
(ii) Tobacco and tobacco products will be subject to central excise duty in addition to GST. While not excluded from GST, it is retained in entry S4 of List I (union list) also.
(iii) Petroleum products are excluded from GST for the present. and will continue to be taxed in the present mode — central excise duty on manufacture and VAT / CST on sale. However, the proposed Constitutional amendment requires the GST Council to fix the date by which these products will be brought into the purview of GST. This is in clause (5) of the proposed Article 279A. Additional 1% for originating state on interstate supply of goods — non-VATable In addition to GST, an amount of 1% on inter-state supply of goods will he charged by the centre and assigned to the originating state, as per section 18 of the Constitution amendment bill. What is the originating state will be determined in terms of the rules for place of supply, which will he framed by Parliament in terms of the same section. This tax of 1% on inter-state supply of goods will not available as input tax credit. The tax will be levied for an initial period of two years and may be extended on the recommendation of the GST Council (sec below).
* Operational mechanism
At the level of centre-state coordination on policy and implementation, the proposed Article 279A in the Constitutional amendment provides for the creation of a GST Council consisting of the union and state Finance Ministers and other designated functionaries, who will take decisions by majority vote in the manner provided. The role of the Council will he to make recommendations to the centre and the states on, inter alia, exemptions including threshold exemption, rates of tax, date of tax to be levied on petroleum products, special provisions for specified states.
However, the manner of operation of the levy on the ground is far from clear. Perhaps the GST Council will decide issues like, who will have A jurisdiction to audit the assesses, what will be the enforcement mechanism for cases of evasion, what will be the mechanism to prevent input tax fraud, and so on.
* Uniform rates of GST across states?
Part of the vision of the government in bringing GST is that it will transform India into one integrated market and greatly enhance the ease of doing business. To this end, uniform rates of GST across states are considered desirable, as a measure of simplification. However the states are understandably reluctant to surrender their discretion to tax; as compromise it is understood that the GST Council will give them a range within which they can raise or lower the rates.
There is a school of thought that is opposed to uniform rates on the ground that such a provision will be eventually detrimental to business. The states use rates of tax and exemptions from tax as an incentive to attract business. In this sense there is competition among the states, and business benefits. In case of uniformity, the tax rates are a fait accompli that will have to be faced by the potential investor without alternative recourse.
1. More details about GST of Article 368 of the Constitution can be perused at http://indiankanoon.org
2. In terms of the proposed Article 246A of the Constitution, Parliament as well as the legislatures of every state shall have power to make laws with respect to goods and services.
3. In terms of the proposed clause (12A) to be inserted in Article 366 of the Constitution, 'goods and services tax' means tax on the supply of goods or services or both (except tax on the supply of alcoholic liquor for human consumption).
4. Article 366(29A) of the Constitution was inserted in the pre-service tax period, to deem certain transactions as sale. The transactions included works contract, catering, hire purchase, aspects of which are now subject to service tax. In this article, we have addressed some of the basic queries around Composition Scheme under Goods and Services Tax Law Some important question regarding GST have been discussed below :
Ql. Who can opt for Composition Scheme?
Ans. Businesses dealing only in goods can only opt for composition scheme. Services providers have been kept outside the scope of this scheme. However, restaurant sector taxpayers may also opt for the scheme. This holds true if your annual turnover is below Rs 75 J 4 Lakhs.
Q2. What at is the tax rate applicable on a composition dealer?
Ans. A registered taxpayer, who is registered under the Composite Scheme will pay tax at a rate not more than 1% for manufacturer to 2.5% for restaurant sector and 0.5% for other suppliers of turnover.
Q3 Must a Composition Dealer maintain detail records?
Ans. No, a dealer registered under composition scheme is not required to maintain detailed records as in the case of a normal taxpayer.
Q4. Do Composition Dealers have the option to avail Input Tax Credit? Ans. No, a Composition Dealer is not allowed to avail input tax credit of GST paid to their supplier.
Q5. Can a Composition Dealer issue Tax Invoice?
Ans. No. Since a Composition Dealer is not allowed to avail input tax credit, such a dealer cannot issue a tax invoice as well. A buyer from composition dealer will not be able to claim input tax on such goods.
Q6. Which returns are required to be filed by a taxable person registered under Composite Scheme?
Ans. The taxable person is required to furnish only one return i.e. GSTR-4 on a quarterly basis and an annual return in FORM GSTR-9A.
Q7. Is liability to pay taxes under Reverse Charge Mechanism covered under the Composite Scheme?
Ans. Any tax payable under Reverse Charge Mechanism will not be covered under the scheme. These taxes will be liable to be paid as a normal tax payer.
Q8. Can a Composition Dealer collect composition tax separately?
Ans. No, a Composition Dealer is not allowed to collect composition tax from the buyer.
Q9. What is the threshold limit to be eligible for Composition Scheme? Ans. Any dealer whose aggregate turnover in a financial year does not exceed Rs. 75 Lakh can opt for composition scheme
Q11. Can a dealer involved in interstate supplies opt for Composition Scheme?
Ans. No, Composition Scheme is available only for intra-state supplies. If a dealer is involved in inter-State supplies, then he cannot opt for the scheme.
Q12. What are the penalties applicable on Composition Dealer in case of any default in tax payment?
Ans. If the tax administration has reason to believe that a composition dealer has wrongly availed the benefit under the composition scheme, then such a person shall be liable to pay all the taxes which he would have paid under the normal scheme. Also, he will be liable to pay a penalty equivalent to an amount of tax payable..This penalty will not be levied without giving a show cause notice to the dealer.
Q13. What are the transition provisions if a business transits from composition Scheme under current regime to Regular Taxation under GST?
Ans. Taxpayers registered under composition scheme under the current regime will be allowed to take credit of input held in stock, or in semi-finished goods or in finished goods on the day immediately preceding the date from which they opt to be taxed as a regular tax payer.
Q14 What are the conditions for availing input credit on stock lying at the time of transition?
Ans. Following are the conditions which must be addressed by the taxpayer to avail credit on input at the time of transition from composition scheme to the normal scheme:
Such inputs or goods are intended to be used for making taxable supplies under GST law.
Taxpayer was eligible for CENVAT Credit on such goods under the previous regime, however, couldn't claim it being under composition scheme.
Such goods are eligible for input tax credit under GST regime.
The taxpayer has legal evidence of input tax paid on such goods.
Such invoices were issued within a period of 12 months from GST applicable date.
Q 15. What is the treatment for input credit availed when transitioning from normal scheme to Composition Scheme?
Ans. When switching from normal scheme to composition scheme, the taxpayer shall be liable to pay an amount equal to the credit of input tax in respect of inputs held in stock on the day immediately preceding the date of such switchover Below is the format prescribed by the government for registering as a composition dealer. Intimation to pay tax under Section 10 GST Registration – Eligibility, Process and Expert Help GST is the biggest tax reform in India, tremendously improving ease of doing business and increasing the taxpayer base in India by bringing in millions of small businesses in India. By abolishing and subsuming multiple taxes into a single system, tax complexities would be reduced while tax base is increased substantially. Under the new GST regime, all entities involved in buying or selling goods or providing services or both are required to register for GST. Entities without GST registration would not be allowed to collect GST from a customer or claim input tax credit of GST paid or could be penalised. Further, registration under GST is mandatory once an entity crosses the minimum threshold turnover of starts a new business that is expected to cross the prescribed turnover. As per the GST Council, entities in special category states with an annual turnover of Rs.10 lakhs and above would be required to register under GST. All other entities in rest of India would be required to register for GST if annual turnover exceeds Rs.20 lakhs. There are also various other criteria's, that could make an entity liable for obtaining GST registration -irrespective of annual sales turnover. Entities required to register for GST as per regulations must file for GST application within 30 days from the date on which the entity became liable for registration under GST. India Filings is the leading business services platform in India, offering a variety of services like income tax filing, GST return filing, private limited company registration,. trademark filing and more. India Filings can help you obtain GST registration in India and maintain GST compliance through a proprietary GST accounting software.
The average time taken to obtain GST Certificate is about 5 – 10 4 working days, subject to government processing time and client 11 document submission. Get a free consultation on GST and GST return filing by scheduling an appointment with an India Filings Advisor.
GST Registration Check
Easily check if your business needs to be registered for GST by answering a few questions.
State
Aggregate turnover.
GST Registration Eligibility
Turnover Criteria Entities involved in supplying of goods or services with an annual aggregate turnover of more than Rs.20 lakhs in most States
are required to register for GST mandatorily. In special category states, the aggregate turnover criteria has been reduced to Rs.10 lakhs. In addition to the turnover criteria, there are various other conditions that could mandate GST registration. Use the tool above to find if your business must be registered for GST in India.
IMPORTANT
Inter-State Supply Registration under GST is mandatory for entities undertaking inter-state supply of goods and/or services, irrespective of aggregate annual turnover. For example, if a business in Maharashtra supplies goods to a business in Tamil Nadu, then GST registration is required. E-Commerce Sellers Entities involved in the supply of goods or services through e-commerce platforms are mandatorily required to be
registered under GST, irrespective of aggregate annual turnover. Hence, sellers on e-commerce platforms like Amazon, Flipkart and Snapdeal would have to register under GST mandatorily. Existing Taxpayers All entities having service tax or VAT or central excise registration must be registered under GST mandatorily. Existing taxpayers have been provided with Provisional ID and password for completion of GST migration formalities and generation of GSTIN by the respective tax departments. Casual Taxable Persons A casual taxable person is someone who occasionally undertakes supply of goods or services having no fixed place of business. An example of a casual taxable person can be a fireworks shops setup during Diwali festival time, selling fireworks or a temporary food stall.
Documents Required for GST Registration.
GST Registration FAQs
PAN Card of the Business or Applicant
GSTIN is linked to the PAN of the business. Hence, PAN is required to obtain GST certificate. Identity and Address Proof of Promoters Identity
proof and address proof documents like PAN, passport, driving license, aadhaar card or voters identity card must be submitted for all the promoters.
Business Registration Document
Proof of business registration like incorporation certificate or partnership deed or registration certificate must be submitted for all types of registered entities. Address Proof for Place of Business Documents like rental agreement or sale deed along with copies of electricity bill or latest property tax receipt or municipal khata copy must be submitted for the address mentioned in the GST application. Bank Account Proof Scanned copy of the first page of bank passbook showing a few transaction and address of the business must be submitted for the bank account mentioned in the registration application. Digital Signature Class 2 or class 3 digital signature is required for the authorised signatory to sign and submit the GST application. In case of proprietorship, there is no requirement for digital signature.
All about enrolment with GST common portal for registration in India 4 Saturday, June 17, 2017.
Update on 17th June, 2017:
According to GST portal:
1- If you are a Taxpayer having received Acknowledgement Reference Number (ARN): You should be able to download the Provisional Registration Certificate from "Download Certificates" at GST website from 27th June 2017.
2. If you are a Taxpayer, who has saved the enrolment form with all details but has not submitted the same with DSC, E-Sign or EVC:
You will receive the ARN at your registered email ID, if the data given are successfully validated after 27th June 2017.
In case of validation failure (data like PAN not matching), you should be able to login at the same portal from 27th June 2017 onwards and correct the errors. You can refer the registered email for details of the errors.
3. If you are a Taxpayer, who has partially completed the enrolment form:
You can login at the portal on the above mentioned date and complete the rest of the form.
4. If you are not an existing Taxpayer and wish to register newly under GST Applicant started applying for New Registration at the GST portal from 25th June 2017.
OBJECTIVE OF STUDY
To understand the services that are being provided by the CA Firm to its client.
Rendering advice to the client about international taxation matters, foreign collaborations, joint ventures, double taxation agreements etc.
To provide knowledge to its client about the latest policies of the government(i.e. GST & DEMONETISATION)
To understand the impact of GST in the economy. To explain the concept of GST reform on various products.
IMPORTANCE OF STUDY
• The study help in making aware about the importance of GST to the
responsible taxpayers.
Help in providing information to the clients or business man and their customer about the uniform tax system.
With the help of this study we are apply to make an outcome that how much people are aware about the various taxes levied by the government.
Chapter -04
COMPANY ANALYSIS
Source of Data Collection The data has been collected from Secondary Sources, Sample Technique No, sample technique has been used. As, the GST registration is mandatory organisation.
Collecting Secondary Data
When the data are collected by someone else for a purpose other than the researcher's current project arid has already undergone the statistical analysis is called as Secondary Data. The secondary data are readily available from the other sources and as such, there are no specific collection methods. The researcher can obtain data from the sources both internal and external to the organisation. The internal sources of secondary
data arc:
Sales Report
Financial Statements
Customer details, like name, age, contact details, etc
Company information
Reports and feedback from a dealer, retailer, and distributor
Management information system There are several external sources from where the secondary data can be collected. These are – Government censuses, like the population census, agriculture census, etc
Information from other government departments, like social security, tax records, etc.
Business journals
Social Books
Business magazines
The secondary data can he both qualitative and quantitative. The qualitative data can be obtained through newspapers, diaries, interviews, transcripts, etc., while the quantitative data can Inc obtained through a survey, financial statements and statistics.
One of the advantages of the secondary data is that it is easily available and hence less time is required to gather all the relevant information. Also, it is less expensive than the primary data. But however the data might not he specific to the researcher's needs and at the same time is incomplete to reach a conclusion. Also, the authenticity of the research results might be skeptical.
Statistical Techniques
The study is based on the upcoming policy of the government i.e. GST the technique used in the used in the study is the how one can get registered under the GST , for this government has provided with the portal known as GST Portal The site on which the technique is processed is (gst.gov.in) and after the registration and getting the GSTIN one can easily access.
Limitation of the study.
The study is time bounded and require specialisation.
The services of the study are costlier
Difficult for businessman to opt for GST.
Impact was there on the discounting system i.e. product is being taxed on the rates pre-discount whereas product are earlier taxed on the post discount price.
Chapter -05
FINDINGS & SUGGESTIONS
Learning
It's being a great experience while working in a CA Firm where I
have learned about the upcoming GST Policy i.e. what procedure is followed for getting registered under the policy and what are data is required for the same. It had been only few months that GST had been applied all over India as the only tax. I had even got the knowledge and
experience that how to deal with the client in a formal organisation.
Suggestion
The GST schemes should be made more beneficial for the businessman with small turnovers and the start ups.
They can offer the services at the most economical cost for attracting the clients.
The technology used by them can be more advanced.
Chapter -06
Conclusion
This firm provide quality service to its client and the advices and suggestion are given for maximisation of profit and maintain a stable financial status of the client
This Firm is the reputed firm of Lucknow and is best for providing services to the client and overall profit making.
Owner of this firm Mr. A.D. Tripathi is a C.A. of certified institution of I.C.A.l. who believes in providing best services to his client as the main mission.