Taxation Updates

Highlights of 22nd GST Council Meeting at New Delhi on 6 Oct. 2017

GST Council in its 22nd Meeting at New Delhi has recommended certain facilitative changes to ease the burden of compliance on small and medium businesses, like quarterly returns filing by small taxpayers with turnover upto Rs. 1.5 crores, composition threshold increased from 75 lacs to Rs. 1 crore, RCM put on hold till 31 March, 2018, etc., as detailed here-under:

• Quarterly Return for Small Taxpayers to Reduce Compliance Burden: MSMEs, Small Traders, Exporters, etc. having annual turnover of upto Rs. 1.5 crores have been given relief from monthly filing of GST Returns. Now they can file quarterly GST Returns and also they can pay taxes on quarterly basis.

CBEC Notifies Quarterly GST Return/ Tax Payment by Small Taxpayers.

• Review of Threshold Limit for Composition Scheme: Threshold limit for registration under composition scheme has been increased from Rs. 75 lac to Rs. 1 crore. Now small traders having turnover upto Rs. 1 Crore can pay tax at flat rate (1% for traders, 2% for manufacturers and 5% for restaurants) under composition and can file their returns on quarterly basis.

Composition Scheme Threshold Limit Increased to Rs. 1 Crore notified by CBEC

• Review of Reverse Charge Mechanism (RCM): For convenience of large taxpayers and survival of unregistered taxpayers, the Reverse Charge Mechanism (RCM) under GST has been put on hold till 31 March 2018.

Reverse Charge Mechanism (RCM) Suspended till 31 March 2018: CBEC Notification.

• Relaxations for Exporters: releasing quicker refunds of duties to ease their working capital requirements. Govt. has already allowed them to make exports without payment of IGST by furnishing LUT. Refunds for July and August 2017 will be released from 10th Oct. / 18 Oct. 2017 respectively, by cheque.

Major Relief Package under GST for Exporters

0.1% GST Rate for Supply of Goods to Merchant Exporters notified by CBEC

• TDS/ TCS: Registration and operationalization of TDS/TCS provisions shall be postponed till 31.03.2018.

Registration/ TDS-TCS Compliance under GST Suspended till 31 March, 2018.

• Review of GST Rates: In the case of about 27 items of goods and services, the GST rates have been reduced. For details, please refer the link below:

Reduction/ Changes in GST Rates on Job work etc. Service

Cut in GST Rate of Goods (27 Domestic Supplies+3 Imports Items)

• Extension of GST Return Due Dates: The last date for filing the return in FORM GSTR-4/ GST-5A/ GSTR-6 extended upto 15 Nov. 2017.

CBEC Extends Due Date for filing of GSTR-5A (July~Sept. 2017) by OIDAR Services Providers

CBEC Notifies Extended Due Dates for GST Returns (GSTR-4/ GSTR-6) upto 15 Nov. 2017

• E-way Bill System: Deferred till 31 March 2018.

E-Way Bill System Implementation Deferred till 31 March 2018

• No GST on Advance received by Small Taxpayers: No GST on Advance Payments received for Supply of Goods by Small Taxpayers having aggregate annual turnover of upto Rs. 1.5 crores.

No GST on Advance Payments for Goods received by Small Taxpayers.

• Interstate services providers exempted from Registration: all inter state service providers shall be exempted from Registration, if turnover remains below the threshold limit.

CBEC Notifies Regn. Exemption for All Inter-state Service Providers.

(Below Threshold).

• Services Provided by GTA to Unregistered Person Exempted: The services provided by a GTA to an unregistered person shall be exempted from GST.

Services Provided by GTA to Unregistered Person Exempted.

• Petroleum & Oil Sector: To reduce the cascading of taxes on petrol, diesel, ATF, natural gas and crude oil, following recommendations have been made:
  1. Offshore works contract services and associated services relating to oil and gas exploration and production in the offshore areas beyond 12 nautical miles shall attract GST of 12%;
  2. Transportation of natural gas through pipeline will attract GST of 5% without input tax credits (ITC) or 12% with full ITC;
  3. Import of rigs and ancillary goods imported under lease will be exempted from IGST, subject to payment of appropriate IGST on the supply/import of such lease service and fulfilment of other specified conditions.

Further, GST rate on bunker fuel is to be reduced to 5%, both for foreign going vessels and coastal vessels.

• Invoice Rules Simplification: Invoice Rules are being modified to provide relief to certain classes of registered persons.

The basis of ‘charge of tax’ as per any law is the ‘taxable event’. In case of GST, the ‘taxable event’ is the supply of goods or services.

Supply of goods or services may be divided into 2 categories:

1. Intra-State Supplies
2. Inter-State Supplies.

Intra-State Supplies: Intra-State Supplies cover the supply of goods and services where the location of the supplier and the place of supply are in the same State or Union Territory. The GST levied on Intra-State Supplies comprises of: CGST (Central GST) and SGST (State GST) / UTGST (Union Territory GST).

It is to be noted that there is single legislation, CGST Act, 2017, for levying CGST.  Whereas Union Territories without State legislatures (Andaman and Nicobar Islands, Lakshadweep, Dadra and Nagar Haveli, Daman and Diu and Chandigarh) are governed by UTGST Act, 2017 for levying UTGST. States and Union territories with their own legislatures (Delhi and Puducherry) have their own GST legislation for levying SGST.

Inter-State Supplies: Inter-State Supplies cover the supply of goods and services where services where the location of the supplier and the place of supply are in: (a). Two different States (b). Two different Union Territories (c). A State and a Union Territory. The GST levied on Intra-State Supplies comprises of IGST (Integrated Goods and Service Tax).  It is to be noted that IGST is approximately the sum total of CGST and SGST/UTGST.

In case of goods Imported into India, IGST is levied as per section 3 of the Customs Tariff Act, 1975 on the value as determined under the said Act.

Rates: In case of CGST the rates of tax are the rates as notified by the Government. (Maximum rate of CGST is 20%). In case of IGST the rate are approximately CGST rate + SGST/UTGST rate. (Maximum rate of IGST is 40%).

Supplies outside the purview of GST: The supply of alcoholic liquor for human consumption is outside the purview of CGST/UTGST/SGST/IGST. Whereas CGST/UTGST/SGST/IGST on supply of the following items is to be levied w.e.f. a notified date:

• Petroleum crude.
• High speed diesel.
• Motor spirit (commonly known as petrol).
• Natural gas and.
• Aviation turbine fuel.

Note: GST is to be collected and paid by a Taxable Person (as defined as per the act). The Value for the levy of the tax will be the transaction value under Section 15 of the act.

Gst or Goods And Services Tax is a form of Indirect Tax. Before we understand what GST is, we must understand the differences between direct and indirect taxes. 

Direct Taxes Vs Indirect Taxes: Tax can be defined as an obligatory contribution paid to the Government, which, in turn, provides public services to the people. In India, taxes can be broadly classified as Direct Taxes and Indirect Taxes.

Direct Taxes:

• The burden of tax is on the taxpayer and cannot be passed on.
• Tax is paid directly to the Government.
• Direct Taxes are Progressive in nature: Poor do not feel the burden of tax.
• Tax is levied on Income not Consumption;
• Income Tax comes under the purview of Direct Taxes.

Indirect Taxes:

• The burden or the incidence of tax is passed on in stages, and is finally borne by the consumer.
• At each stage, tax is paid to the Government, wherein, the taxpayer collects his tax debt from the next party.
• The final customer pays the actual tax.
• Indirect taxes are regressive in nature poor may feel the burden of tax.
• These are taxes on Consumption and not on Income.
• GST comes under the purview of Indirect Taxes.

GST is applicable on the “supply” of services or goods as opposed to the earlier concept of taxation on the manufacture of goods (Excise duty); sale of goods (Sales tax); or providing of service (Service Tax).

GST is a destination-based tax structure unlike the origin-based structure that existed previously. In order to implement GST, a dual GST system has been adopted which is imposed concurrently by the Centre and States.

As per the dual GST system, Goods and services are simultaneously taxed under GST by the Centre and States. GST extends to whole of India including the State of Jammu and Kashmir.

GST comprises of:

• Central Goods and Service Tax (CGST): Levied and collected by Central Government.
• State Goods and Service Tax (SGST): Levied and collected by State Governments/Union Territories with State Legislatures, on intra-State supplies of taxable goods and/or services.
• Union Territory Goods and Service Tax (UTGST): Levied and collected by Union Territories without State Legislatures, on intra-State supplies of taxable goods and/or services. 
• Integrated Goods and Service Tax (IGST): Levied by Central Government on all Inter-State supplies.

Q: What is the difference between VAT and GST?

A: Following are the basic differences between VAT and GST:

1. VAT was leviable only by the respective State Governments, while GST is leviable by Central and State Governments simultaneously.
2. VAT was applicable only on goods, while GST is levied both on goods as well as services.
3. VAT was levied on SALE of goods while GST is levied on SUPPLY of goods or services or both. (Sale is only A FORM OF supply. The definition of supply includes other forms as well, such as transfer, disposal, rent, lease, license, barter, exchange)
4. The excise duty or service tax paid on inputs could not be set off against the output VAT, while GST ensures seamless flow of credit with prescribed conditions.

This being said, nature-wise both VAT and GST are quite similar, since both are the taxes levied on additional value created.

Mumbai: A hike in taxes on gold under GST (Goods and Services Tax) could stoke under-the-counter buying and drive up appetite for precious metal smuggled into the country, where millions of people store big chunks of their wealth in bullion and jewellery.

As part of a new nationwide tax regime that kicked in on July 1, the GST on gold has jumped to 3 per cent from 1.2 per cent previously, with traders and buyers saying the move will likely force more transactions into the black market.

"Three per cent is too much. I preferred to buy without receipts. The jeweller did not have any problem," said a middle-aged buyer, who declined to be identified after making purchases on Monday at the country's biggest bullion market, Zaveri Bazaar in Mumbai.

Smaller shops could be more inclined to sell without receipts, potentially hitting sales at big jewellers that keep to the rules, said Harshad Ajmera, the proprietor of JJ Gold House, a wholesaler in the eastern Indian city Kolkata.

"Just to save 1 per cent, some customers were earlier buying gold without receipts. With the 3 per cent GST, now many more will be tempted to make unofficial purchases from small jewellers," Ajmera said.

The tax hike could also encourage more smuggling into the world's second biggest gold consumer, which buys almost all its bullion abroad. Gold smuggling has been rife since India raised import duties on the metal to 10 per cent in a series of hikes to August 2013, looking to curb demand to narrow a gaping current account deficit

The World Gold Council estimates smuggling networks imported up to 120 tonnes of gold into India in 2016.

Everyone who earns or gets an income in India is subject to income tax. (Yes, Indians living abroad too). Your income could be salary, pension or could be from a savings account that’s quietly accumulating a 4% interest. Even, winners of ‘Kaun Banega Crorepati’ have to pay tax on their prize money. 
For simpler classification, the Income Tax Department breaks down income into five heads:

Points to be considered:

1. Surcharge & Education Cess will not be considered for the purpose of TDS except in case of TDS on salary payment.

2. Higher rate of TDS for not furnishing correct PAN @ 20%.

3. Higher rate of TCS for not furnishing correct PAN @5% or twice of applicable rate whichever is higher.

4. Form 15G/ 15H received for non deduction of TDS (including Nil return): Now needs to report online on quaterly basis

5. Quaterly Statement of TDS: 31st July, 31st Oct, 31st Jan, 31st May

6. Deposition of TDS / TCS:

• TDS: March month: 30th April

• Other Month 7th of next month

• TCS: 7th of next month

7. Issue of TDS / TCS certificate: Within 15 Days from the due date of filing of quarterly TDS return Salary certificate in Form-16 upto 15th June of succeeding financial.

8. Fees of Rs. 200/- per day for late filing of TDS and TCS Return.

9. Fail to file TDS return within one year of due date or furnishing incorrect information penalty Rs.10,000/-.

10. Online generation of TDS certificate is mandatory in case of every person whose accounts are required to be audited u/s 44AB.

11. Declaration needs to be obtained while purchasing a software, from the transferor that TDS has been made u/s 194J or u/s 195 on payment for any previous transfer of such software from a resident or non-resident along with PAN, otherwise TDS u/s 194J is  required to be deducted.

12. While fling quarterly TDS return, information in respect of cases where no TDS is deducted due to obtaining self declaration or no deduction/ lower deduction certificate u/s 197 received from Income tax department is to be mandatory filed in TDS  return.

Set-off & Carry Forward Of Business Losses:     

Set-Off means adjustment of certain losses against the income under other sources in the same assessment year. Carrying Forward of unadjusted losses to be set-off in subsequent years is called Carry Forward.

How to adjust Business Losses?

If there is a loss in the business, the same can be adjusted against profits made in any other business of the same tax payer. The Loss, if any, still remaining, can be adjusted against Income from any other source.

From A/Y 2005-2006 loss from Business cannot be set off against Salary Income.

However, Loss sustained in speculative business can be adjusted only against profits earned in another speculative business.

Business Loss can be carried forward for a maximum period of next 8 (Eight) Assessment Years and adjusted against Business Profit of the subsequent years.

Unabsorbed Depreciation can be Set-Off even if Business/Profession is discontinued and can be carried forward for unlimited number of years.

However, for claiming the benefit of carry forward of losses, the tax payer has to invariably file his returns within due date.