GST
  • 13-January-2017
    ALL ABOUT COMPOSITION LEVY UNDER REVISED GST MODEL

    ALL ABOUT COMPOSITION LEVY UNDER REVISED GST MODEL

    - Read the Full Article

  • 26-February-2016
    BASICS OF GST – IMPLEMENTATION IN INDIA

    INDIRECT TAX STRUCTURE IN INDIA

     

    India currently has a dual system of taxation of goods and services, which is quite different from dual GST. Taxes on goods are described as “VAT” at both Central and State level. It has adopted value added tax principle with input tax credit mechanism for taxation of goods and services, respectively, with limited cross-levy set-off. The present tax structure can best be described by the following chart:

     

     

    SHORTCOMINGS IN THE PRESENT STRUCTURE AND NEED OF GST

     

    1. Tax Cascading: The most significant contributing factor to tax cascading is the partial coverage by Central and State taxes. The exempt sectors are not allowed to claim any credit for the Cenvat or the Service Tax paid on their inputs.
    2. Levy of Excise Duty on manufacturing point : The CENVAT is levied on goods manufactured or produced in India. Limiting the tax to the point of manufacturing is a severe impediment to an efficient and neutral application of tax. Taxable event at manufacturing point itself forms a narrow base. For example, valuation as per excise valuation rules of a product, whose consumer price is Rs. 100/-, is, say, Rs. 70/-. In such a case, excise duty as per the present provisions is payable only on Rs.70/-, and not on Rs.100/-.
    3. Complexity in determining the nature of transaction – Sale vs. Service
    4. Inability of States to levy tax on services : With no powers to levy tax on incomes or the fastest growing components of consumer expenditures, the States have to rely almost exclusively on compliance improvements or rate increases for any buoyancy in their own-source revenues.
    5. Lack of Uniformity in Provisions and Rates
    6. Fixation of situs – Local Sale vs. Central Sale
    7. Interpretational Issues: whether an activity is sale or works contract; sale or service, is not free from doubt in many cases.
    8. Narrow Base
    9. Complexities in Administration

    GST (Goods and Service Tax)

    GST means Goods and Service Tax. It is an indirect tax levied on sale of goods and services. The reformists believe that GST is one of the most awaited law which upon introduced will boost the economic growth in the country. This law if passed by the parliament may come into force from April 2016. As everyone is talking about it now, let’s get into the basics of the proposed law in this article.

    Present system – This can be better explained through an example. Suppose you buy soap for Rs.50 per piece, it includes Excise Duty, VAT or CST, Customs duty on the imported raw materials, etc. So, currently you will have to pay multiple taxes on the same product. Let’s take another example; the food you buy at hotels will have VAT as well as Service Tax.

    Complexities in the present system – The taxes are levied by central government as well as state governments. So, the businessman has to maintain accounts which will comply with all the applicable laws. It is perceived to be a complex system. Hence, worldwide over 150 countries have adopted GST,  a simple tax system. Though it is late, India is catching up with the global trends.

     Is it easy to implement in India? Not really. Today states have autonomy in collecting state taxes. They have the feeling of losing their rights! They want liquor, fuel to be out of GST tax system. They are also worried about Central government sharing GST revenue with the states. If India becomes one common market, then the states will have to share their powers of taxing with the union government. (Which means states can’t increase the taxes as and when, as much as they want)

    If the GST bill is passed; will it come into effect immediately? NO. The earliest day we can see GST in India will be in April 2016. Again implementation depends upon the initiative and involvement of state governments. Some of the states may act quickly and some of them may take time to implement.

    GST Rate- Today, one pays Excise Duty of 12%, VAT of 14% on goods (totaling to 26%). 12% service tax on services. So, the rates may be anywhere between 12% and 26%. The average worldwide GST rate is around 18%

     

    FEATURES OF AN IDEAL GST

     

    The main features of GST are as under:-

    (a) GST is based on the principle of value added tax and either “input tax method” or “subtraction” method, with emphasis on voluntary compliance and accounts based system.

     (b) It is a comprehensive levy and collection on both goods and services at the same rate with benefit of input tax credit or subtraction of value of penultimate transaction value.

     (c) Minimum number of floor rates of tax, generally, not exceeding two rates.

    (d) No scope for levy of cess, re-sale tax, additional tax, special tax, turnover tax etc.

     (e) No scope for multiple levy of tax on goods and services, such as, sales tax, entry tax, octroi, entertainment tax, luxury tax, etc.

     (f) Zero rating of exports and inter State sales of goods and supply of services.

     (g) Taxing of capital goods and inputs whether goods or services relatable to manufacture at lower rate, so as to reduce inventory carrying cost and cost of production.

     (h) A common law and procedures throughout the country under a single administration.

    (i) GST is a destination based tax and levied at single point at the time of consumption of goods or services by the ultimate consumer.

     

    MODELS OF GST

     

    There are three prime models of GST: 

    • GST at Central (Union) Government Level only
    •  GST at State Government Level only
    •  GST at both, Union and State Government Levels

    EXPECTED MODEL OF GST IN INDIA- DUAL GST

     

    In India, the GST model will be “dual GST” having both Central and State GST component levied on the same base. All goods and services barring a few exceptions will be brought into the GST base. Importantly, there will be no distinction between goods and services for the purpose of the tax with common legislations applicable to both.

    For Example, if a product have levy at a base price of Rs. 100 and rate of CGST and SGST are 8% then in such case both CGST and SGST will be charged on Rs 100 i.e. CGST will be Rs 8 and SGST will be Rs.8.

     Interestingly, as per the recommendations of Joint Working Group (JWG) appointed by the Empowered Committee in May 2007, the GST in India may not have a dual VAT structure exactly but it will be a quadruple tax structure. It may have four components, namely - (a) a Central tax on goods extending up to the retail level; (b) a Central service tax; (c) a State-VAT on goods; and (d) a State-VAT on services.

    The significant features of Dual GST recommended in India, in conjunction with the recommendations by the JWG, are as under:

    1. There will be Central GST to be administered by the Central Government and there will be State GST to be administered by State Governments.

    2. Central GST will replace existing CENVAT and service tax and the State GST will replace State VAT.

    3. Central GST may subsume following indirect taxes on supplies of goods and services:  Central Excise Duties (CENVAT)·  Additional excise duties including those levied under Additional Duties· of Excise (Goods of Special Importance) Act, 1957.  Additional customs duties in the nature of countervailing duties, i.e.,· CVD, SAD and other domestic taxes imposed on imports to achieve a level playing field between domestic and imported goods which are currently classified as customs duties.  Cesses levied by the Union viz., cess on rubber, tea, coffee etc.·  Service Tax·  Central Sales Tax – To be completely phased out·  Surcharges levied by the Union viz., National Calamity Contingent Duty,· Education Cess, Special Additional Duties of Excise on Motor-Spirit and High Speed Diesel (HSD).

     4. State GST may subsume following State taxes:  Value Added Tax·  Purchase Tax·  State Excise Duty (except on liquor)·  Entertainment Tax (unless it is levied by the local bodies)·  Luxury Tax· Octroi  Entry Tax in lieu of Octroi·  Taxes on Lottery, Betting and Gambling·

     5. The proposed GST will have two components – Central GST and State GST – the rates of which will be prescribed separately keeping in view the revenue considerations, total tax burden and the acceptability of the tax.

    6. Taxable event in case of goods would be ‘sale’ instead of ‘manufacture’.

    7. Exports will be zero rated and will be relieved of all embedded taxes and levies at both Central and State level.

     8. The JWG has also proposed a list of exempted goods, which includes items, such as, life saving drugs, fertilizers, agricultural implements, books and several food items.

    10. Certain components of petroleum, liquor and tobacco are likely to be outside the GST structure. Further, State Excise on liquor may also be kept outside the GST.

    11. Taxes collected by Local Bodies would not get subsumed in the proposed GST system.

    As per the proposed GST regime, the input of Central GST can be utilized only for payment of CGST & the input of State GST can be utilized only for payment of SGST. Cross- Utilization of input of CGST in payment of SGST and vice-a- versa, will not be allowed. (Source:- Hindu Business Line, dated 30-06-2009)

    • Railways and Construction Sector might be included in GST
    • Liquor, Petro Sector, Taxes of Local Bodies might be out of GST
    • Stamp Duty - It has not yet been decided whether stamp duty will be part of the GST or not.

     

     

     

     

     

     

     

     

     

     

    *Sources of the above information – Back Ground Material Issued by ICAI on GST.

        

     

     

    By:

                  CA RAMANDEEP SINGH BHATIA

            caramandeep.bhatia@gmail.com

                       + 91 9827152729

                              Raipur

     

    - Read the Full Article

  • 04-January-2016
    Demystifying Indian Goods and Service Tax

    Tax is a Latin word and derived from the word “Taxo” means rate. Tax is a financial charge levied by the government (central / state / local body) for meeting the public expenditure like road, dams, army for safe guarding the borders etc. the dictionary meaning of tax “A compulsory contribution to state revenue, levied by the government on workers’ income and business profits, or added to the cost of some goods, services, and transactions: higher taxes will dampen consumer spending”.

           In day to day life every individual or business man / woman pays various types of taxes. These taxes are direct tax in nature like Tax Deducted at Source i.e levied when income we earn and we receive the net amount like salaries where in the employer deducts the tax and the pays / deposits the net amount. In case of business when an individual or body of persons or company earns money on supply of services, the service receiver deducts tax and pays the net amount. In direct tax, the individual pays the tax directly to the tax authorities.  Indirect taxes are taxes which are paid indirectly by the individual like when one goes to super market and buys groceries or any electronic goods Value Added Tax is charged, the tax is collected by the super market or store keeper form us and deposits the tax on behalf us to the tax authorities, this is called indirect tax.

               Currently we have Central Excise on removal manufactured goods from factory, Value Added Tax on sale of goods within in the states,  Customs & Counter Vailing duties on import of goods into India, Service Tax on services and Central Sales Tax on sales in case of interstate sales.  These are the major taxes applicable on most of the transactions, apart from these transactions we also have industry specific cess like mineral cess, clean energy, etc.

               Some of the above taxes are administered by the central government like Central Excise, Service Tax and Customs and some by State Governments like Value Added Tax, Entertainment tax, luxury tax etc. and Octori  by local by Municipality or village or town.  Central Sales Tax levied by the central government and administered by the state government. Tax Point or the tax applicability are different for different taxes, for Central Excise it is on the moment of goods, for Service Tax it is on the invoicing or completion of service whichever is earlier. Apart from these structural differences, the items are not taxed across the sates equally, under VAT we have exemption less than 100 and under central excise the list of items is around 250. Added to this complexity, the items are taxed at different rates in different states and also in some states exempted for VAT and for Excise and VAT different treatment. These differences increase the compliance cost of an organization and also allow room for the users to make mistakes there by inviting wrath of the tax administration.

    - Read the Full Article


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Notification 2015
  • 17-December-2015
    Agricultural Income – Tax treatment / Taxability

    Agriculture income is exempt under the Indian Income Tax Act. This means that income earned from agricultural operations is not taxed. The reason for exemption of agriculture income from Central Taxation is that the Constitution gives exclusive power to make laws with respect to taxes on agricultural income to the State Legislature. However while computing tax on non-agricultural income agricultural income is also taken into consideration. 

     

    Introduction:

    Agricultural income earned by a taxpayer in India is exempt under Section 10(1) of the Income Tax Act, 1961. Agricultural income is defined under section 2(1A) of the Income-tax Act.

    As per section 2(1A), agricultural income generally means  (a) Any rent or revenue derived from land which is situated in India and is used for agricultural purposes. (b) Any income derived from such land by agriculture operations including processing of agricultural produce so as to render it fit for the market or sale of such produce. (c) Any income attributable to a farm house subject to satisfaction of certain conditions specified in this regard in section 2(1A). Any income derived from saplings or seedlings grown in a nursery shall be deemed to be agricultural income.

    Meaning of Agricultural Income:

    Section 2 (1A) of the Income Tax Act, 1961 defines “agricultural income” as an income under the following three sources:

    (i) Any rent or revenue derived from land which is situated in India and is used for agricultural purposes: The assessee will not be liable to pay tax on the rent or revenue arising from agricultural land subject to the conditions:

    (a) The land should either be assessed to land revenue in India or be subject to a local rate assessed and collected by officers of the Government.

    (b) In instances where such a land revenue is not assessed or not subject to local rate, the land should not be situated within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee or by any other name) or a cantonment board, and which has a population of more than ten thousand (according to the last preceding census which has been published before the first day of the previous year in which the sale of land takes place); or it should not be situated:

    • more than 2kms. from the local limits of any municipality or cantonment board and which has a population of more than 10,000 but not exceeding 1,00,000; or
    • not being more than 6kms. from the local limits of any municipality or cantonment board and which has a population of more than 1,00,000 but not exceeding 10,00,000; or
    • not being more than 8kms. from the local limits of any municipality or cantonment board and which has a population of more than 10,00,000.

    (c) The revenue must not include any income arising out of transfer of such land.

    Further, a direct nexus between the agricultural land and the receipt of income by way of rent or revenue is essential. (For instance, a landlord could receive revenue from a tenant.)

    (ii) Any income derived from such land by agricultural operations including processing of agricultural produce, raised or received as rent in kind or any process ordinarily employed by cultivator or receiver of rent-in-kind so as to render it fit for the market, or sale of such produce.

    (iii) Any income derived from any building owned and occupied by the assessee, receiving rent or revenue from the land, by carrying out agricultural operations: The building must be on or in the immediate vicinity of the land. It must be used by the assesee as a dwelling house or store-house or an out-building, in connection with the land.

     

    - Read the Full Article

  • 17-December-2015
    Delhi VAT-Filling of reconciliation return for year 2014-15- Date extended to 15.01.2016

    In partial modification to this department’s Circular No.28 of 2015-16 on the subject cited, above and in exercise of the powers conferred under Rule 49A of  the Delhi Value Added Tax Rules, 2005 read with section 9(2) of Central Sales Tax Act, 1956, I, S.S.Yadav, Commissioner, Value Added Tax, do hereby extend the last date of filing of online return in Form 9 for the year 2014-15, prescribed under Rule 4 of Central Sales Tax (Delhi) Rules, 2005 to 15/01/2016.

    GOVERNMENT OF NATIONAL CAPITAL TERRITORY OF DELHI

    DEPARTMENT OF TRADE AND TAXES

    (POLICY BRANCH)

    VYAPAR BHAWAN, IP. ESTATE, NEW DELHI-110 002

    No.F.3(589)/Policy/VAT/2015/1162-68

    Dated 15/12/2015

    CIRCULAR NO. 32 of 2015-16

    Sub: Filling of reconciliation return fothe year 2014-15.

    In partial modification to this department’s Circular No.28 of 2015-16 on the subject cited, above and in exercise of the powers conferred under Rule 49A of  the Delhi Value Added Tax Rules, 2005 read with section 9(2) of Central Sales Tax Act, 1956, I, S.S.Yadav, Commissioner, Value Added Tax, do hereby extend the last date of filing of online return in Form 9 for the year 2014-15, prescribed under Rule 4 of Central Sales Tax (Delhi) Rules, 2005 to 15/01/2016.

     

    The return is to be filed by dealers who have made interstate sale at concessional rates against statutory forms ‘C’ or stock transferred against ‘F’ forms or sold the goods against  ‘H’ forms to dealers (other than Delhi) or claimed deduction from taxable turnover against E-I/EII forms or I/J forms etc.

    The dealers who have not made the sale as mentioned above need not file reconciliation return in Form 9.

    (S.S. Yadav)

    Commissioner, Value Added Tax

    - Read the Full Article

  • 17-December-2015
    Delhi VAT-Filling of reconciliation return for year 2014-15- Date extended to 15.01.2016

    CIRCULAR NO. 32 of 2015-16 In partial modification to this department’s Circular No.28 of 2015-16 on the subject cited, above and in exercise of the powers conferred under Rule 49A of the Delhi Value Added Tax Rules, 2005 read with section 9(2) of Central Sales Tax Act, 1956, I, S.S.Yadav, Commissioner, Value Added Tax, do hereby extend the last date of filing of online return in Form 9 for the year 2014-15, prescribed under Rule 4 of Central Sales Tax (Delhi) Rules, 2005 to 15/01/2016.

     

     

    GOVERNMENT OF NATIONAL CAPITAL TERRITORY OF DELHI

    DEPARTMENT OF TRADE AND TAXES

    (POLICY BRANCH)

    VYAPAR BHAWAN, IP. ESTATE, NEW DELHI-110 002

    No.F.3(589)/Policy/VAT/2015/1162-68

    Dated 15/12/2015

    CIRCULAR NO. 32 of 2015-16

    Sub: Filling of reconciliation return fothe year 2014-15.

    In partial modification to this department’s Circular No.28 of 2015-16 on the subject cited, above and in exercise of the powers conferred under Rule 49A of  the Delhi Value Added Tax Rules, 2005 read with section 9(2) of Central Sales Tax Act, 1956, I, S.S.Yadav, Commissioner, Value Added Tax, do hereby extend the last date of filing of online return in Form 9 for the year 2014-15, prescribed under Rule 4 of Central Sales Tax (Delhi) Rules, 2005 to 15/01/2016.

     

    The return is to be filed by dealers who have made interstate sale at concessional rates against statutory forms ‘C’ or stock transferred against ‘F’ forms or sold the goods against  ‘H’ forms to dealers (other than Delhi) or claimed deduction from taxable turnover against E-I/EII forms or I/J forms etc.

    The dealers who have not made the sale as mentioned above need not file reconciliation return in Form 9.

    (S.S. Yadav)

    Commissioner, Value Added Tax

     

    - Read the Full Article

  • 17-December-2015
    Gearing up for GST- Draft Law at a Glance

    Goods and Service Tax-A dual tax system, proposed in the report submitted by the Joint Working Group of the Empowered Committee of the State Finance Ministers in November 2007, was to be implemented in April 2010,one for the Centre and other for the states replacing the state VAT and Cenvat. However the final decision on the time of its implementation is still pending as it is hanging between the ruling and opposition party due to certain undecided terms and conditions. 

    GEARING UP FOR GOODS AND SERVICES TAX-Vol I

    (DRAFT LAW- AT A GLANCE)

    “IMPACT AND IMPLICATIONS”

    The article (Vol I) broadly covers the various specific provisions related to working and operation of Goods and Services Tax vis-à-vis the statutory requirements of Model Draft law released by Govt w.r.t. concept of Txable event under GST i.e. Supply of goods and services.

    The article also brings out the clarity on the various issues addressed in the reports of registration and refund released by the Govt.

    As a part of Vol II, other provisions and pending reports will be summarised and issues will be addressed as contemplated in the reports of payment and return issued by Govt.)

    Authors

    Goods and Service Tax-A dual tax system, proposed in the report submitted by the Joint Working Group of the Empowered Committee of the State Finance Ministers in November 2007, was to be implemented in April 2010,one for the Centre and other for the states replacing the state VAT and Cenvat. However the final decision on the time of its implementation is still pending as it is hanging between the ruling and opposition party due to certain undecided terms and conditions.

    GST is a value added tax to be levied on both goods and services, except the exempted goods and services. The tax will be levied on the value of the product or service supplied. The taxes levied at the multiple stages such as CENVAT, Central sales tax, State Sales Tax, Octroi etc will be replaced by GST to be introduced at Central and State level.

    Why GST- How GST will be better than existing tax structure

    The single comprehensive tax is expected to give following advantages over and above the existing tax structure-

    • Dual model GST under federal structure i.e. CGST & SGST,
    • Elimination of cascading effects of the taxes,
    • CGST & SGST to be charged on same price,
    • Set-off relief fully captured,
    • Destination based tax structure,
    • Free movement of goods & service through out the country,
    • Applicable to all transactions of Goods & Services with some exceptions,
    • Input tax credit (ITC) for the CGST/SGST and could be utilized for payment of CGST/SGST, but cross utilization not allowed, except IGST
    • Inter State GST (IGST) –new model for Interstate transactions
    • It will also improve the International cost competitiveness of native Goods and Services.

    Government Has Released Model Draft of Proposed GST Act, 2016 and the 130 page report has been divided into 14 parts, 81 sections, 3 schedules and GST Valuation(Determination of the value of Supply of Goods and Services) Rules 2016.The issues covered in the report broadly covers the following

    1. Definition of 77 terms
    2. Meaning and scope of supply of goods and services
    3. Classes and powers of officers under the act
    4. Time of supply of goods and services
    5. Identifying the nature of Supply- interstate or intrastate
    6. Place of supply of goods and services
    7. Value of taxable supply
    8. Manner of taking input tax credit and utilisation thereof
    9. Remission of tax on supplies found deficient in quantity
    10. Recovery of tax not paid or short paid or erroneously refunded
    11. Interest on delayed payment of tax
    12. Refund of tax and interest on delayed refund
    13. Registration-amendment, cancellation, revocation
    14. Accounts and records –tax invoice, credit and debit notes, other records including period of retention
    15. Furnishing details of inward and outward supplies
    16. Payment of taxes, penalty, interest and other amounts.
    17. Offences and penalties.

    1. GST applicable on ‘supply of goods and services’

    Section 3- Meaning and Scope of Supply

    • Supply includes supply of goods and services
    • Includes all forms of supplies
      • sale
      • Transfer
      • Barter
      • Exchange
      • License
      • Rental
      • Lease
      • Disposal
      • Importation of services

    made or agreed to made For a consideration by a person in the course or furtherance of business

    Matters to be treated as supply even without consideration– Schedule 1

    1. Permanent transfer/ disposal of business assets
    2. Temporary application of business assets to a private or non business use
    3. Services put to a private or non business use
    4. Self supply of goods and or services
    5. Assets retained after deregistration

    Explanation to Schedule II

    Supply of goods Supply of services
    1.   Transfer of title of goods

     

    2.   Transfer of title of goods   under an agreement of transferring property in goods at a future date

    3.   Transfer of Business Assets with or without any consideration

    –        Which are no longer required

    By/ under directions of the person carrying on business

    4.   Transfer of goods included in business assets

    –        Sold by other person who has the power to do

    –        To recover any debt

    –        Owed by taxable person

    1.   Transfer of goods / transfer of rights in goods/ undivided share of goods without transferring title of goods.

     

    2.   Lease, tenancy, easement, license to occupy land

    3.   Lease or letting out of the building– commercial, industrial, residential

    for business/ commerce

    wholly or partly

    4.   Treatment/ process applied to another person’s goods

    5.   Goods held or used for the purposes of business

    –        Put to any private use

    –        Made available to any person for use

    –        For any purpose other than the business purpose

    –        With or without any consideration

     2. GST payable as per time of supply

    The liability to pay CGST / SGST will arise at the time of supply as determined in the following provisions prescribed separately for Goods and Servoces.

    Sec 11- Time of Supply of Goods

    1. On the basis of the Movement of Goods

    Goods required to be moved-Date on which the goods are removed by the supplier for supply to the buyer

    Goods not required to be moved-Date on which goods are made available to the buyer.

    2. On the basis of transactions- either of the following

    a. Date of issue of invoice by supplier

    b. Date of receipt of payment by supplier

    c. Date of receipt of goods entered into books of accounts of buyer.

    3. On the basis of continuous supply of goods

    Successive statement of accounts and payments involved-Date of expiry of period to which it relates

    Successive statement of accounts and payments not involved-Date of issue of invoice or Date of receipt of payment whichever is earlier

    4. When goods are sent or taken on approval or sale or return or similar terms

    In this goods are removed before it is known whether the supply will take place

    • Time when it is known that supply has taken place or
    • 12 months from the date of removal

    Whichever is earlier

    5. In any other case

    Periodical return has to be filed- Date on which such return has to be filed

    Periodical return no to be filed- Date of payment of CGST/ SGST

    Sec 12- Time of Supply of Services

    1. On the basis of issue of Invoice

    • Invoice issued within the prescribed period-Date of issue of invoice or date of receipt of payment whichever is earlier
    • Invoice not issued within the prescribed period- Date of completion of provision of service or the date of payment whichever is earlier
    •  In other case- Date on which the recipient shows the receipt of service in his books of accounts

    2. On the basis of continuous supply of services

    • If the due date is ascertainable- Date of liability of payment to service provider
    • If the due date is not ascertainable- Date of receipt of payment or issue of an invoice whichever is earlier

    3. In other situations

    -the payment is linked to the completion of an event When the event gets completed
    -if tax is paid on reverse charge basis Earliest of-

     

    –  Date of receipt of services

    –  Date of payment

    –  Date of receipt of invoice

    –  Date of debit in books of accounts

    Supply ceases before completion of service At the time of cessation

    4. In any other case

    • Periodical return has to be filed- Date on which such return has to be filed
    • Periodical return no to be filed- Date of payment of CGST/ SGST

    (Sec 13 explains the various situations when there is a change in rate of tax in respect of supply of services)

    3. Determining Place of Supply

    Typically for ‘goods’ the place of supply would be location where the good are delivered. Whereas for ‘services’ the place of supply would be location of recipient.

    Sec 15- Place of supply of Goods

    Distance supply+ Movement of goods Place of delivery of goods
    No movement of goods Place of delivery of goods(handed over to receiver)
    Assembly/ installation of goods at site Place of such installation/ assembly
    Supplied on board/ conveyance/ vessel Such place
    Other cases As recommended by Govt

     Sec 16- Place of Supply of Services

    Immovable property

     

    Restaurant and catering service

    Artistic/ sporting/scientific/ educational/ Entertainment

    Transportation of goods

    Passenger transportation service

    Board a conveyance/ vessel etc

    Telecommunication service

    Banking/ other financial service

    Insurance services

    Advertisement services

    Provided to registered person- Location of Service recipient

     

    Not provided to registered person- Location of Service provider

    4. Valuation of Taxable Supply

    • GST would be payable on the ‘transaction value’.
    • Transaction value is the price actually paid or payable for the said supply of goods and/or services between un-related parties.
    • The transaction value is also said to include all expenses in relation to sale such as packing, commission etc.
    • Even subsidies linked to supply will be includable.
    • As regards discounts/ incentives, it will form part of ‘transaction value’ if it is allowed aftersupply is effected.
    • However, discounts/ incentives given before or at the time of supply will be permissible as deduction from transaction value.

    Apart from this ,GST Valuation (Determination of the value of Supply of Goods and Services) Rules 2016 have also been provided in the draft law.

     

    - Read the Full Article

  • 17-December-2015
    Why CGST, SGST and IGST in India and Principle of Subsumation of Taxes
    It is a known fact that Dual VAT/GST Model has been sought to be brought in place in India. The common thought of people of the country is that why National VAT/GST has been brought instead of Dual VAT/GST It is a known fact that Dual VAT/GST Model has been sought to be brought in place in India. The common thought of people of the country is that why National VAT/GST has been brought instead of Dual VAT/GST and does the lawmaker’s were not farsighted enough about the option of National GST rather than Dual GST. It also appeared to public at large that why when the people of the country with little knowledge about taxation structure could see the benefits of National GST, could the lawmakers who deemed to have the expertise in the subject not see the benefits of National GST in place of Dual GST. It’s only the half picture that we see. The two models of GST i.e. Dual GST and National GST were both considered in the year 1994 before the implementation of State VAT. After detailed discussion as narrated below Dual GST with independent taxation powers to Centre and State upto a certain part of supply chain with full fledged Credit Mechanism under Excise and State VAT was implemented with an eye on the future for a full fledged Dual GST in the country and National GST was discarded deeming it inappropriate in India. So what is National GST or Dual GST and what are the merits and the demerits of the same and why Dual GST has been preferred over the National GST. The reason for bringing in SGST and CGST also lies in the same answer as well. 
     

    ♣ What is National VAT/GST:

    The Bagchi Report i.e. the Report on “Reform of Domestic Trade Taxes in India: Issues and Options”, National Institute of Public Finance and Policy, New Delhi described National GST as follows:

    “A National VAT – VAT as a National levy implemented through a Parliamentary legislation and administered by the Centre (or the States on behalf of the Centre)replacing both Central excise and sales tax, covering all goods and services, with arrangement for revenue sharing.”

    The report further went on to provide that

    “A unified system of taxing domestic trade in the form of a national VAT imposed and administered by the Centre would appear to be most attractive from many angles. It would, at one stroke, bring about harmonization and help remove the tax on inter-State trade.”

    It would be pertinent here to provide that National GST/VAT is presently in place in Australia, Germany, Austria, Switzerland etc.

    • Why National VAT/GST was not implemented and was ill favored by the lawmakers:

    The big question arises that why the law makers implemented Dual GST Model and National GST i.e. one common GST model was not brought in place in the country.

    To understand it better, we would have to consider an hypothetical example wherein entire revenue from the taxes in the country say Rs 5 Lakh Crore revenue is administered and imposed by Centre and which is to be distributed by the Centre between all the States and Centre on an appropriate basis.

    One possible scenario in the given situation is that some of the States might get the desired revenue and some would not be satisfied and allegations would then be levied regarding political backlash etc. It could be a harsh reality that leaving aside the States ruled by Political Party ruling the Centre might feel short charged in the entire scheme of distribution of revenue.

    - Read the Full Article


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What's New
  • 30-May-2016
    Companies (Auditor’s Report) Order, 2016 (Summarised Guidence) , Compiled By : CA RAMANDEEP SINGH BHATIA

    Companies (Auditor’s Report) Order, 2016

    COMPILED BY : CA RAMANDEEP SINGH BHATIA

     

    The Central Government, in exercise of the powers conferred, under subsection (11) of section 143 of the Companies Act, 2013* (hereinafter referred to as “the Act”), issued the Companies (Auditor’s Report) Order, 2016, (CARO, 2016/ “the Order”) vide Order No. S.O. 1228(E) dated 29th March, 2016.

    Please Download the PDF File attach in the Page for Details .

    Thank You

     

    - Read the Full Article

  • 14-May-2016
    The Finance Bill, 2016 HIGHLIGHTS OF DIRECT TAXES COMPILED BY: CA RAMANDEEP SINGH BHATIA

    The Finance Bill, 2016

    HIGHLIGHTS OF DIRECT TAX

    COMPILED BY: CA RAMANDEEP SINGH BHATIA

    (Download PDF file Attached)

    - Read the Full Article

  • 11-March-2016
    CHHATTISGARH COMMERCIAL TAX UPDATE- BUDGET 2016

    CHHATTISGARH  COMMERCIAL TAX UPDATE- BUDGET 2016

    Extract of Chief Minister Speech on Chhattisgarh Budget 2016-17 on 09.03.2016

    • Cycle and spare part of cycle exempted from VAT.
    • Rate of VAT on mobile phones reduced from 14% to 5%.
    • Cleaning equipments Jadu, pochha (mop),brush and wiper are exempted from VAT.
    • Batter of idli and Dosa are exempted from VAT from existing 14%.
    • In order to promote steel industry of the state iron ore, pig iron, sponge iron, iron ore palates, ingot , billet, and ferroalloys Rate of VAT has been reduced from 5% to 2%.
    • In order to promote dairy industry of the state Ghee, paneer and khowa manufactured in Chhattisgarh are exempt from VAT.
    • Rate of VAT on wire nails reduced from 14% to 5%.
    • Rate on CST on electro forged grating reduced from 14% to 5%.
    • Purchase tax @5% on boilers pressure parts if VAT has not been paid on yhr same.
    • Now annual return can be revised once.
    • Interest on delay payment of Taxes will be charged at the rate of 1.5% (simple interest) per month instead of multiple rates of 2.5% and 1.5% earlier.
    • 90% of quarterly tax has to be paid within 15 days from the end of quarter.
    • For filling of First appeal now 15% amount has to be paid instead of 10%.
    • No input tax rebate would be allowed even on tax free item by notification like tax free goods.
    • On transfer of stock full input tax rebate has to be reversed instead of up to 5%.
    • Revision of Dealer is abolished, however revision by commissioner will continues.
    • In order to de motivate tax evasion and under assessment penalty and interest both will be levied and penalty would be one and half to two times instead of one to five times.
    • For compounding of tax interest amount would also be considered.
    • Coconut  oil is generally used as hair oil in Chhattisgarh, hence normal rate of tax would be levied instead of rate applicable to edible oil.
    • Entry tax on lime stone used for construction would be Rs. 45/- per ton instead of Rs. 30/- and Rs. 60/- per ton.
    • 14% rate of VAT would be now 14.50%.
    • Per liter tax levied on petrol and diesel w.e.f. 01/01/2016 will continue.

     

    - Read the Full Article

  • 01-March-2016
    Changes under Service Tax Proposed in Finance Bill 2016

    Changes under Service Tax Proposed in Finance Bill 2016:-

    1) Service tax another surcharge from 01st June 2016- “Krishi Kalyan Cess” – 0.5 % . Thus Service tax now effectively will be 14%+0.5%+0.5% = 15 %

    2) Legal Service now removed from Reverse Charge Mechanism and brought to direct Service Tax at above effective rate from 01st April 2016.

    3) The services provided by mutual fund agent/distributor to a mutual fund or asset management company, are being made taxable under forward charge (removed from Reverse Charge Mechanism) with effect from 1st April, 2016, so as to enable the small sub-agents down the distribution chain to avail small scale exemption having threshold turnover of Rs 10 lakh per year. This will reduce burden of Mutual fund and other similar organisation.

    4) From 1st March 2016 Contract pertaining to monorail or metro construction, erection, commissioning or installation of original works will now be liable at 5.6% effective rate plus two surcharge.

    5) Service provided by ropeway, cable car or aerial tramway for transport of passenger will now be liable to service tax @ above rate from 01st April 2016.

    6) Service tax on transportation of passengers by Air-conditioned Stage carrier will be liable to tax from 01st June 2016 @ 5.6% effective rate plus two surcharge.

    7) Impose Service Tax on services provided by them by way of transportation of goods by a vessel from outside India up to the customs station in India with effect from 1st June, 2016 so as to complete the credit chain and enable Indian Shipping Lines to avail and utilize input tax credits.

    8) With effects from 01st April 2016, the following service are now exempted ---Service provided by:-a) Pension Fund Regulatory and Development Authority (PFRDA) b) Employees’ Provident Fund Organisation (EPFO) c) Insurance Regulatory and Development Authority (IRDA) d) Securities and Exchange Board of India (SEBI) e) services of general insurance business provided under ‘Niramaya’ Health Insurance scheme f) National Centre for Cold Chain Development under Department of Agriculture, Cooperation and Farmer’s Welfare, g) Biotechnology Industry Research Assistance Council (BIRAC) h) way of skill/vocational training by training partners under Deen Dayal Upadhyay Grameen Kaushalya Yojana i) Directorate General of Training, Ministry of Skill Development & Entrepreneurship j) a performing artist in folk or classical art forms of music, dance or theatre is being enhanced from Rs 1 lakh to Rs 1.5 lakh.

    9) From 1st March 2016 the construction service in respect of housing project (Urban) Mission/Pradhan Mantri Awas Yojana; low cost houses up to carpet area 60 sq.metres=(645 Square feet) under “Affordable housing in Partnership” ; low cost houses up to a carpet area of 60 square metres in a housing project under any housing scheme of the State Government is exempted from service tax.

    10) From 01st April 2016 Service Tax on single premium annuity (insurance) policies is being reduced from 3.5% to 1.4% of the premium.

    11) From 01st March 2016 services provided by Indian Shipping lines by way of transportation of goods by a vessel to outside India, will be entitle for Cenvat credit on inputs; input services and capital goods credit.

    12) Benefit from retrospective effect i.e. 01st April 2015 (earlier withdrawn from that date) - Exemptions on services of: a) construction provided to the Government, a local authority or a governmental authority, in respect of construction of govt. schools, hospitals etc. b) construction of ports, airports. Thus reduce service tax from 5.6 % to “zero”.

    13) Services provided by way of construction, maintenance etc. of canal, dam or other irrigation works provided to bodies set up by Government but not necessarily by an Act of Parliament or a State Legislature, during the period from the 1st July, 2012 to 29th January, 2014, are being exempted from Service Tax with consequential refunds, subject to the principle of unjust enrichment. Thus reduce service tax from 5.6 % to “zero”.

    14) Services provided by the Indian Institutes of Management (IIM) by way of 2 year full time Post Graduate Programme in Management (PGPM) (other than executive development programme), Integrated Programme in Management and Fellowship Programme in Management (FPM) are being exempted from Service Tax with effect from 1st March, 2016. Now exempted.

    15) “One Person Company” and HUF can from 01st April 2016 pay quarterly Service tax.

    16) Interest rates on delayed payment of duty/tax across all indirect taxes are being rationalized and made uniform at 15%, except in case of Service Tax collected but not deposited to the exchequer, in which case the rate of interest will be 24% from the date on which the Service Tax payment became due.---( In case of assessees, whose value of taxable services in the preceding year/years covered by the notice is less than Rs. 60 Lakh, the rate of interest on delayed payment of Service Tax will be 12%.) – with effect from Finance Bill receives the assent of the President.

    17) Cenvat credit on input service will now be available on following abatements ( From 01st April 2016)

    a) Credit of input services is being allowed on transport of passengers by rail

    b) Credit of input services is being allowed on transport of goods, other than in containers

    c) Credit of input services is being allowed on transport of goods in containers by rail at a reduced abatement rate of 60%. (In effect tax will first increase by 1.4 % and then cenvat credit available)

    d) Credit of input services is being allowed on transport of goods by vessel

    18) The abatement rate in respect of services by way of construction of residential complex, building, civil structure, or a part thereof, is being rationalized at 70% by merging the two existing rates. Thus effective rate 4.2 % plus above two surcharges. From 1st April 2016

    19) The abatement on shifting of used household goods by a Goods Transport Agency (GTA) is being rationalized at the rate of 60%, without CENVAT credit on inputs, input services and capital goods. Thus the effective tax rate is 5.6 % . From 1st April 2016.

    20) The abatement rate on services of a foreman to a chit fund is being rationalised at the rate of 30%, without CENVAT credit on inputs, input services and capital goods. Thus the effective tax rate is 9.8 % . From 1st April 2016.

    21) A condition mandating inclusion of cost of fuel in the consideration for availing abatement on the services by way of renting of motor-cab is being prescribed with effect from 1st April, 2016.

    22) Indirect tax Dispute Resolution Scheme, 2016, wherein a scheme in respect of cases pending before Commissioner (Appeals), the assessee, after paying the duty, interest and penalty equivalent to 25% of duty, can file a declaration, is being introduced. In such cases the proceedings against the assessee will be closed and he will also get immunity from prosecution.

    23) The annual return will also have to be filed by Service Tax assessees, above a certain threshold, taking total number of returns to three in a year for them. This change shall come into effect from 1st April, 2016.

    24) Section 73 of the Finance Act, 1994 is being amended so as to increase the limitation period from 18 months to 30 months for short levy/non levy/short payment/non-payment/erroneous refund of Service Tax.

    25) The power to arrest in Service Tax is being restricted only to situations where the tax payer has collected the tax but not deposited it to the exchequer, and that too above a threshold of Rs 2 crore. The monetary limit for launching prosecution is being increased from Rs. 1 crore to Rs. 2 crore of Service Tax evasion.

    Yet to Announce :-

    a) Point of Taxation Rules, 2011 is being amended

    b) Cenvat Credit Rules

    c) Service tax rules on Compliances

    - Read the Full Article

  • 27-February-2016
    Tax Saving Options : Since march is approching, some options for saving your Income Tax are discussed below,

    Since march is approching, some options for saving your Income Tax are given,   

    Tax Saving under Sec 80C

    The maximum deduction under 80C combining all investment all investment deduction is Rs 1,50,000/-. Maximum Saving in Tax @ 30% : Rs.45,450/-

    Fixed Income

    (investment – Debt)

    Market Linked

    Expenditures

    PROVIDENT FUND (EPF/VPF)


    LIFE INSURANCE PREMIUM

    TUITION FEE FOR 2 CHILDREN

    PUBLIC PROVIDENT FUND (PPF)

    NEW PENSION SCHEME(NPS)

    STAMP DUTY AND REGISTRATION COST OF THE HOUSE

    NATIONAL SAVING CERTIFICATE (NSC)

    TAX SAVING MUTUAL FUNDS(ELSS)

    HOME LOAN PRINCIPAL PAYMENT

    TAX SAVING 5 YEARS FD FROM BANKS


    PENSION PLANS FROM INSURANCE COMPANIES

     

    FIVE YEARS POST OFFICE TIME DEPOSIT(POTD)


    UNIT LINKED INSURANCE PLAN(ULIP)

     

    SENIOR CITIZEN SAVING SCHEME(SCSS)

       

    NHB SUVRIDDHI

       

    SUKANYA SAMRIDDHI ACCOUNT

       

    Tax Saving under Sec 80D

    The maximum deduction under 80D combining all investment all investment deduction is Rs 30,000/- (Family) + Rs 30,000/- (Parents) .Maximum Saving in Tax @ 30% : Rs.18,180/-

    Health Insurance Premium of Your Family

    Maximum Rs 25,000/-

    For self and family

    Maximum Rs 30,000/-

     Senior citizen,

    The Health Insurance Premium of Your Parents

    Maximum Rs 25,000/-

    Parents are
    not a senior citizen

    Maximum Rs 30,000/-

    Parents are a senior citizen

    Preventive Health Check Up Tax Deduction

     Maximum Rs 5,000/-

    Aggregate expense on health checkups of your family. 

    Deduction under Section 80CCD (1B)

    Contribution to NPS (New Pension Scheme) Rs 50,000/- (From AY 16-17 ) Maximum Saving in Tax @ 30% : Rs. 15,150/-

    The minimum contribution is Rs. 6,000 per year. There is no limit on maximum contribution. But whatever amount you invest in the scheme ,only 50000 is maximum allowed to deduction under section 80CCD of the Income Tax Act,1961.This proposes to give NPS, an additional tax benefit on investments of up to Rs 50,000 a year, over and above Rs. 1.5 lakh a year under section 80C, for financial year 2015-16.

     

    Disclaimer : Please go through the Scheme as per your suitability , we do not advise any specific mode. 

    .SRKN & ASSOCIATE 

     

    - Read the Full Article


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Circulars
  • 17-March-2016
    Goods and Services Tax GST Knowledge

    What is Capital Goods?

    Capital goods are normally defined as follows:-
    - any goods which are capitalized for accounting purposes and in accordance with Generally Accepted Accounting Principles (GAAP) and,
    - written off over several years.

    The GST treatment on capital goods in Malaysia is as follows:-
    (a) A supply of capital goods is standard-rated.
    (b) Input tax can be claimed in full on all capital goods that are used to make wholly taxable supplies
    (c) If capital goods are used solely for exempt-supply, no input tax can be claimed.
    (d) Where capital goods are used for making both taxable and exempt supplies, input tax would need to be apportioned according to its proportional taxable use.
    (e) Intangible assets such as trademark and goodwill are taxable supplies.
    - Read the Full Article

  • 17-December-2015
    Delhi VAT: Reward Scheme to encourage market / trade association for payment of due tax

    Value Added Tax is one of the major sources of revenue of the Government of Delhi which is an indirect tax collected by traders from customers on sale of goods and then deposited with the Government. In its effort to collect the due tax, the Government intends to involve market associations. With this objective in view, the Government proposes to introduce a reward scheme for the associations.

    GOVERNMENT OF THE NATIONAL CAPITAL TERRITORY OF DELHI

    DEPARTMENT OF TRADE AND TAXES: VYAPAR BHAWAN

    I.P.ESTATE, NEW DELHI02

    No. F.3(552)/Policy/vat/2015/10971103

    Dated:30/11/15

    ORDER

    Value Added Tax is one of the major sources of revenue of the Government of Delhi which is an indirect tax collected by traders from customers on sale of goods and then deposited with the Government. In its effort to collect the due tax, the Government intends to involve market associations. With this objective in view, the Government proposes to introduce a reward scheme for the associations.

     

    OBJECTIVE OF THE SCHEME 

    It has been decided to introduce a reward scheme to encourage market / trade association for payment of due tax. A portion of the VAT collected in addition to the target from the markets/localities shall be made available for the maintenance and upgradation of that market to foster business and trade.

    SALIENT FEATURES OF THE SCHEME

    Eligibility Criteria:

    The market association, registered under the Society Registration Act 1861, must have at least 50 registered members to be eligible for the reward. The number of members would be frozen at the beginning of the scheme and thereafter at the end of April of each financial year. More than 50% of the members should be registered with the department. The office bearers of the association should be elected through the process of election in accordance with the constitution of the association. Not more than 5% of the registered members should have defaulted in return filing. KCS, liquor, tobacco and petroleum dealers are excluded from the ambit of this scheme.

    Enrolment:

    The association has to register itself online on the website of the department and upload the list of members with their TIN, Name & Address. If a dealer is a member of more than one market association, the said member can associate with only one market association. Cancelled dealers cannot participate in any association for the purpose of this scheme. Members should be from ward area only.

     

    - Read the Full Article

  • 17-December-2015
    Process and Checklist For Secretarial Audit

    Secretarial Audit a Governance measure that will have a positive effect on corporate entity. It is Compliance Audit system that used to carrying out auditing of compliances along with all Rules and Regulation made there under. It is a process to check compliances made by the Company under various Law, Rules, Regulation, and Procedure. APPLICABILITY OF SECRETARIAL AUDIT According to section 204 of Companies Act, 2013 and Rule 9 of Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, company required to obtain Secretarial Audit Report from independent practicing company Secretary. a). All Listed Company b). every public Company having Paid up Share Capital of Rs 50 crore or more; or, c). every public company having a Turnover of Rs. 250 crore or more. - See more at: http://taxguru.in/company-law/process-checklist-secretarial-audit.html#sthash.B6BPSA1W.dpuf

    - Read the Full Article

  • 17-December-2015
    Section 174 of Companies Act 2013- Quorum For Board Meeting

    Quorum here means the minimum number of directors to be present at the board meeting in order to hold the board meeting. The provisions related to the minimum no. of directors i.e. quorum is provided u/s 174 of the companies Act 2013.

    This section provides that the quorum of the board meeting should be 1/3rd of total strength or 2 directors whichever is higher. Total strength hereon shall not include directors whose place is vacant. However if the no. of continuing directors is less than the required quorum of the meeting then such continuing directors can hold a meeting only for two purposes :-

    1. To hold a general meeting of the company.
    2. To increase the number of directors to that fixed for the quorum

    Any fraction in the number should be taken as 1. In case any director is attending meeting through video conferencing or other audio visual means then no. of these directors shall also be taken into consideration. This provision of minimum no. of director is applicable for both private as well as public company.

    In case interested directors are present in the meeting and their no. is equal to or more than 2/3rd of the total strength of the board of directors then in that case the quorum of the meeting should be the number of remaining directors present at the meeting or two directors whichever is higher. Hereon also total strength shall not include directors whose place is vacant.

    Now the question arises in our mind is what happens if the required quorum is not present at the meeting. Section 174(4) provides that in case the quorum is not present at the meeting then the board meeting cannot be held and will be adjourned to the same day same time and same place of the next week. In case that day is a public holiday, then to the next succeeding day which is not a public holiday. However the Article of the company can provide otherwise and in that case the AOA of the company will supersede this section.

    - Read the Full Article


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SRKN & ASSOCIATES - Chartered Accountants (Formerly R S BHATIA & CO.)

SRKN & ASSOCIATES Formerly R S BHATIA & CO. Chartered Accountants, was established in the year 2011 by Ramandep Singh Bhatia, the founder member.

We also have a competent pool of professionals like Company Secretaries, IT Professionals, Lawyers, Cost Accountants etc. on assignment basis to provide cutting edge solutions to our clients.

We at SRKN & ASSOCIATES Formerly R S BHATIA & CO. has the knowledge and expertise necessary to help you with complex issues related to matters.

The firm offers a wide range of services such as statutory and internal audit, taxation services, corporate finance, financial accounting, valuations, legal compliances, company secretarial functions and Due Diligence.

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