Flyer No: 06 Month : 03 Year : 2017

With the deadline of July 1, 2017 in vicinity, the Government, Revenue officials and trade are busy with preparations for migration to GST. The model GST law is expected to come up for debate in Parliament during second phase of budget session commencing from March 9. The rules are expected to be available in public domain by April. Once the model law is passed by Parliament, States would be introducing their SGST draft in legislative assemblies.

In the meanwhile, the GST Council which have had more than ten meetings so far has approved CGST and IGST laws and The Compensation bill. But at the same time, the GST council has come up with an alarming proposal of making provision for peak rate of GST under at 20%. As of now, the peak rate is placed at 14%. This provision does not have any immediate impact on proposed four tier rates of -5%, 12%, 18% and 28%, but would mean that if and when necessary, without consultation with Parliament, Central Government and respective state governments can increase rates up to 20%. The peak rate therefore on any commodity can go up to 40%. The impact on consumer undoubtedly would be that of regressive tax where the cascading taxes would well be with in rate of 40%. 

The GST model law although states that composition scheme is not applicable for service providers, it has been decided that Restaurants with an annual turnover of less than Rs 50 lakh will be able to avail the composition scheme under GST regime and pay a flat tax of 5% after the GST council decided to widen the ambit of this scheme.

The Council will again meet on 16th March, 2017 to deliberate final versions of State GST and Union Territory GST Bills. 

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IGST - Part II

 The Finance Ministry has launched mobile app for GST for providing updates to taxpayers. The app is available for download for Android users.

 On GST migration, it is estimated that over eighty lakh assessees are to be migrated. The reported maximum percentage of migration of traders are from Karnataka at 96%, followed by Andhra Pradesh - 92%, Madhya Pradesh - 86.9%, Tamilnadu - 86%, Gujarat - 84% etc. Kerala, reports migration at 60% with a claim of having completed full fledged migration with all relevant enclosures and proofs. The migration date for traders have however been extended till March 15, 2017. However, the percentage of migration for central excise/service tax assesee is not attractive with 2.94% in excise and 8.22% in service tax. 

 The IRS Association has written to Prime minister their concerns over sharing of administrative powers with State Commercial Tax. With only 18% of tax payers under control of centre, the revenue loss of arrangement is estimated at 1.1 Trillion. The letter also expresses concern over delegation of power under IGST to States without accountability as States are outside purview of CAG and PAC. Officers have also sought transferring the goods and services tax network (GSTN)—the information technology backbone of GST—to CBEC.

 GSTN, has expressed its readiness for implementation of GST from July 1, 2017.

 CBEC has issued summons to GSTN in order to submit records to examine application of service tax in respect of various payments made/received by GSTN towards licence fee, other service charges etc.
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