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GST tweak may see the return of retrospective amendments

GST tweak may see the return of retrospective amendments

The government is likely to retrospectively amend laws governing the goods and services tax (GST) to deny transitional credit to taxpayers against cesses levied in the earlier indirect tax regime.

If it goes through with its plan, GST tweak may see the return of retrospective amendmentsthe Narendra Modi government will be going back on its promise of not making retrospective amendments to tax laws that have an adverse impact on taxpayers.

The proposed amendment to the GST law seeks to explicitly exclude cesses levied in a pre-GST regime from allowable transitional credit that can be claimed by companies. Under the transitional credit provision, companies were allowed to claim the tax credit against levies such as value added tax and service tax on stock purchased before implementation of GST for a limited period.

Many companies availed the transitional credit facility seeking input tax credit also for cesses such as the Krishi Kalyan cess paid in the pre-GST regime through the TRAN-1 form.

However, the central government doesn’t want to give credit against the cesses. Mint could not ascertain the exact amount of transitional credit claimed against cesses.

It accordingly proposes to specifically amend the transitional provision in the GST law to only allow input tax credit against eligible duties and insert an explanation excluding cesses from the list of eligible duties.

The amendments will be tabled in the upcoming monsoon session of Parliament beginning 18 July.

“Excluding cesses from transitional credit will be the only amendment that will be retrospective as the transitional claims have already been filed through the TRAN-1 form. None of the other amendments proposed to the GST laws are retrospective,” said a government official, who did not want to be named.

Companies had claimed nearly ₹65,000 crore in transitional credit by mid-September, prompting the Central Board of Indirect Taxes and Customs (CBIC) to review the claims. CBIC asked taxpayers to file revised claim forms by 27 December or face action for what they believe are exaggerated claims. It has started the process of phase-wise examination of some of the highest transitional credit claims.

CBIC also warned taxpayers not to utilize disputed transitional credit against GST liability and said that it will recover the amount with interest and penalty.

“Such an amendment will have a financial impact on the business as the tax liability will increase. Industry expected that the cesses that were creditable in the pre-GST regime will be creditable in the GST regime as well. We could see advance rulings or the companies approaching courts,” said Suresh Rohira, Partner, Grant Thornton India LLP.

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Source: Live Mint
GST is victory of honesty: PM Modi in Mann ki Baat

GST is victory of honesty: PM Modi in Mann ki Baat

Narendra Modi :GST

A week after the BJP broke off its alliance with the Peoples Democratic Party in Kashmir and faced a group of Chief Ministers from Opposition parties standing in solidarity against the Centre along with the Aam Aadmi Party government in Delhi, Prime Minister Narendra Modi spoke of the first anniversary of the Goods and Services Tax (GST) regime as a credit to cooperative federalism. He was delivering his monthly radio broadcast, “Mann ki Baat”, on Sunday.

“If I have to give credit to anyone for the successful implementation of the ‘One Nation, One Tax’ reform, then I credit the States of our nation. The GST is a great example of cooperative federalism, where all States decide to take a unanimous decision in the interest of the nation and then such a huge tax reform could be implemented in the country,” he said.

Terming the GST a “honest tax”, he said various State governments run by parties of differing ideologies had managed to find common ground. “GST is not only the victory of integrity but it is also a celebration of honesty. Earlier, in the case of taxation and allied affairs in the country, there were rampant complaints of inspector raj. In the GST scheme, information technology has replaced the inspector,” he said.

Prime Minister Modi praised Jan Sangh founder Syama Prasad Mookerjee, whose death anniversary marked as “Balidan Diwas” (day of sacrifice) by the BJP, fell on Saturday. Mookerjee died while incarcerated over protests on the separate status for Kashmir, and one of the main reasons the BJP had held on to the demand of abolition of Article 370 of the Constitution. While Prime Minister Modi did not refer to this aspect of Mookerjee’s political struggle, he spoke at length about the latter’s stamp on India’s first industrial policy, and, significantly, his role in “saving” Bengal.

“He was very passionate about the development of West Bengal. It was the result of his understanding, prudence and activism that a part of Bengal could be saved and it is still a part of India,” Mr. Modi said.

“For Dr. Syama Prasad Mookerjee, the most important thing was the integrity and the unity of India and for this, at the young age of 52, he also sacrificed his life.”

Remarking that 2019 would mark the century of the Jallianwala Bagh incident, Mr. Modi said that “violence and cruelty can never solve a problem and it is peace and non-violence which always wins”.

Mr. Modi said he would visit Maghar in Basti district of Uttar Pradesh to mark the spot where the Bhakti-era poet and saint Kabirdas took samadhi 500 years ago. Having been born near Kashi, he said, Kabirdas chose to die in Maghar which was considered inauspicious for afterlife. “All his life, he fought against superstition and casteism,” he said.

Source: The Hindu
Government Clarifies: No GST On Free Services Provided By Banks

Government Clarifies: No GST On Free Services Provided By Banks

Due to its complex nature, there is a lot of confusion about how Goods and Services Tax (GST) applies to the financial sector. Very few have had clarity on how personal finances are impacted by the new tax regime.

Finally, the government has issued detailed FAQs. No GST  In banking ServicesThe detailed clarifications on banking, insurance, and capital markets seek to address some pertinent issues relating to the industry such as levy of tax on free services as well as provide clarity to individuals. Below are a few of the clarifications:

GST on exit load of mutual funds
Exit load in the form of a fee (whether or not as a fixed percentage of the investment) is liable to GST. Even if the exit load is in the form of units in the fund, it may be concluded that the consideration received in money was later converted to NAV units.

The loan of one bank being taken over by another bank?
GST will be chargeable on any transaction processing fees levied for such takeover of loans, but not on the interest component (as interest is exempted).

Additional interest charged in case of default in the installment payment 
As per Section 15(2) of CGST Act, 2017, the value of supply includes, inter alia, interest for delayed payment of any consideration for any supply. Additional Interest charged for default in the payment of installment in respect of any supply, which is subject to GST, will be includible in the value of such supply and therefore would be liable to GST.

Charges for late payment of dues on credit card outstanding 
Goods and Services Tax applies to these charges. The exemption from levy of GST on interest specifically excludes interest charged on outstanding credit card balances as per serial no. 27 of the table of notification No. 12/2017-Central Tax (Rate) dated 28th June, 2017, as amended.

Banking services
According to the FAQs, automated tellers machines or ATMs will not constitute place of business and will not trigger GST registration, the government said. In case services are provided by multiple branches to a customer, the branch where the account is opened will pay GST and other branches will be deemed to provide services to the main branch. In case of import of gold, integrated GST will apply once, on import, and not again when it is appropriated by banks.

Insurance policies issued to Non-Resident Indians are liable to GST where payment is made from non-resident accounts in Indian rupees, according to the FAQs.

According to the FAQs, securitisation, future contracts, derivatives and forward contracts in commodities, unless entailing actual delivery of commodities, will however not be liable to this tax.

Source: ET


One year of GST: Modi government lists 5 key benefits of landmark indirect tax reform

One year of GST: Modi government lists 5 key benefits of landmark indirect tax reform

It’s been nearly one year since the new indirect tax regime came into existence on the 30th of June 2017, as GST: ‘One nation, One tax,’ in order to simplify the taxation on goods and services. Administered by both the center and states, Goods and Services Tax has subsumed several state and central indirect taxes such as State VAT, Central Excise Duty, Purchase Tax and Entry Tax. Positioned as one of the major structural reforms of the Narendra Modi-led government in the last four years since they came to power, the revenue department has released key benefits under the new regime. We take a closer look at the five key benefits.

Ease of doing business

According to the Revenue Department, GST has provided benefits to the small-taxpayers. Notably, under the GST, tax payers with an aggregate turnover in a financial year up to Rs.10 lakhs are exempt from tax. (Aggregate turnover shall include the aggregate value of all taxable and non-taxable supplies, exempt supplies and exports of goods and/or services and exclude taxes viz. GST.). Further, the GST has helped to improve the ease of doing business due to common national market.

Decrease in inflation

According to the government, GST has led to a decrease in inflation due to the reduction in cascading effect of taxes and the overall reduction in prices. With an intent to curtail the inflation, the Government has taken various measures under the new regime including finalization of rates which are aligned to existing rate structure for most items and introducing an anti-profiteering clause in the GST law.


A decrease in black transactions

Due to the ‘non-intrusive’ and transparent tax system, the GST has led to a reduction in black transactions, according to the Ministry of Finance. Notably, Goods and Service Tax is a self-regulating online tax system.

Boost to Make in India

The government’s initiative of Make In India has also received a big boost under GST, as IGST provides protection to the domestic industry. Further, certain taxable supplies are taxed at the rate of 0% rather than at the standard rate of 15%, in case of export-related businesses.

More informed customers

The ministry of finance states that goods & service tax has led to more informed consumers due to the simplified tax regime, and the reduction in the multiplicity of taxes.

Source: Financial Express
PMO calls FinMin, Commerce officials on exporters’ GST refunds

PMO calls FinMin, Commerce officials on exporters’ GST refunds

The meeting would also assess the impact of delay in refund process on exports and manufacturing, sources said. The issue of refunds to exporters has been hanging fire for over five months now, with exporters complaining that delay in GST refunds has blocked their working capital.

GST Refund

The Prime Ministers Office has called a meeting of top officials of commerce and finance ministries tomorrow to discuss the issue of GST refunds as exporters claimed that their 70 per cent of refunds are still stuck even after eight months of roll out of the new tax regime.

The meeting would also assess the impact of delay in refund process on exports and manufacturing, sources said. The issue of refunds to exporters has been hanging fire for over five months now, with exporters complaining that delay in GST refunds has blocked their working capital. The revenue department, on the other hand, has argued that there are discrepancies in forms submitted by exporters with the customs department and those with the GST Network (GSTN). The Central Board of Excise and Customs (CBEC) has sanctioned Rs 4,000 crore worth refunds to exporters in four months since October. Still, claims of about Rs 10,000 crore are stuck due to discrepancies in the information furnished by exporters to GST Network (GSTN) through forms like GSTR 1 or Table 6A or GSTR 3B, and the shipping bills filed with the Customs.

According to sources, the meeting would be attended by Finance Secretary Hasmukh Adhia, Commerce Secretary Rita Teaotia, CBEC Chairperson Vanaja Sarna and top officials from the Directorate General of Foreign Trade (DGFT).

The DGFT, under the Commerce Ministry, is slated to make a presentation before the Principal Secretary to the Prime Minister on the pending refunds to exporters.

The GST Council in October last year had said that an e-wallet mechanism for refunds to exporters would be developed and had entrusted the DGFT to prepare required norms for the implementation from April, 2018.

Under the e-wallet mechanism, a notional credit would be transferred to the exporters account based on their past record and the credit can be used to pay taxes on input.

Exports during April-January 2017-18 grew by 11.75 per cent to USD 247.89 billion as against USD 221.82 billion in the year-ago period.

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Source :  Money Control
GST and real estate: Govt needs to address grey areas, disputes and litigations; take feedback from realtors, say experts

GST and real estate: Govt needs to address grey areas, disputes and litigations; take feedback from realtors, say experts

GST and real estate

Much has been discussed, argued and debated on demonetisation and the Goods and Services Tax (GST) implementation at various forums including election campaigns. Opposition parties slammed both the moves of Prime Minister Narendra Modi, though the latter managed to hit headlines on Thursday again after the Pew Research Centre’s survey announced him as ‘very popular’.

Without taking names or giving political colour, a panel discussion on ‘Dialogue on demonetisation, GST and the built environment industry’ organised jointly by RICS School of Built Environment, Amity University and National Institute of Urban Affairs (NIUA) on Thursday evening (16 November) in New Delhi, attempted a threadbare analysis of the impact of demonetisation and GST on the real estate sector.

In his inaugural presentation, noted economist Arun Kumar, Malcom S Adiseshiah, Chair professor, Institute of Social Sciences pointed out that the present form of GST was not ‘full GST’ as it kept real estate, alcohol, electricity and petroleum out of its ambit. “Now, if tax to GDP ratio rises, it’ll give rise to inflation. As a result, demand will fall and the rate of growth (will) decrease, which is contrary to what GST promised. The small and unorganised sector has been ignored and this sector can’t deal with GST due to its complexities. While demonetisation has put the economy on the downslide, the GST implementation has aggravated the condition. The poor have been marginalised in the process. Demonetisation and GST are the two big shocks,” he remarked.

On the possible impact of demonetisation on large real estate projects, Prof Kumar said demonetisation had resulted in decline of growth rate and GDP, and rise in deficit. “As the government won’t like fiscal deficit to go up, the demand in the sector will go down.”

Responding on a positive note, Arun Gupta, partner, SARC Associates said, “Demonetisation to some extent has led to an increase in tax compliance at present.” However, he mentioned, “GST in theory is a good system, but the way it was promised and projected during implementation, the government lost its way. There is a big lag between the plan and the outcome.”

Is demonetisation just a blip or has it had a much deeper impact on the economy? In response, Prashant Agarwal, partner (Indirect Taxes) at Pricewaterhouse Coopers said, “It was a shock therapy. Even after one year, we fail to know the significance of demonetisation or even implementation of GST. If we talk about these two actions or reforms, while PM Modi gained a Robin Hood image, the economists including former PM Manmohan Singh mentioned it as ‘shocking impact’. ”

Jagan Shah, director, NIUA observed, “Lack of implementation of policy interventions has impacted the sector. I don’t believe it’s a blip per se; but it’s a sign for a paradigm shift.”

Arun Kumar said that theoretically demonetisation won’t tackle black economy. “Demonetisation has hit investment and output. Credit off-take has declined. These are long-term effects. Investment can revive, once capacity utilisation picks up. Both public and private sectors have to boost investment, but it’s a Catch 22 situation.”

Gaurav Gupta, director, SG Estates Limited observed that after two decades people might not remember demonetisation, but it temporarily sucked up cash from the system. The move came as a shock and its biggest impact was on the unorganised sector. Probably, demonetisation wasn’t required, especially when government was implementing the GST.

Summing up the first round, panel moderator and associate dean and director, RICS School of Built Environment, Amity University, Sunil Agarwal said, “It’s not a blip as in the long-term people would remember the impact of demonetisation.”


Has GST adversely impacted the real estate sector? Panellists unanmously opined that while the intention of GST was good, its implementation and rates led to more confusion. They suggested that the government needed to address the grey areas,  disputes and litigations bothering the real estate sector by taking feedback from the realtors.

The government wanted the entire real estate sector under GST, but it’s half-done, which has been due to the states, said Prashant Agrawal, adding, “There’s an issue of distrust between the Centre and the states as far as revenue sharing is concerned. There are lot of legal issues in real estate sector. The players of this sector need to have a clear perspective and discuss their problems with the government on taxation. However, realising the problem, the government has brought down GST rates.”

In response, Gaurav Gupta said, “Real estate sector’s contribution to GDP is 9 percent and it is the second largest employment generator. The government has brought in lots of regulations, but there is an urgent need to improve the investment climate in this sector. Practical problems need to be resolved.”

Explaining the issue, Arun Kumar said, “There’s a need to simplify the process and bring real estate, liquor and petro fully under GST. This will help the sector. But there’s pressure from the states to keep them out and the Centre couldn’t handle it.”

While, the panellists delved into the pros and cons of note ban and GST, there were voices from amongst the audience who questioned the credibility of real estate players. Many shared the view that the decline in growth in the real estate sector started in 2012 — much before demonetisation and GST implementation —because of low credibility.

“Implementation of GST hasn’t contributed much to the slowdown in the real estate sector. Before GST, there was service tax. In fact, barring a few developers, the credibility of a majority has been questionable. They defaulted on the promises they made to their customers. Even banks refused extending credits. Despite taking money from home-buyers, the builders failed to deliver flats. It badly impacted the sector. The need of the hour is to regain confidence of the government, customers and financial institutions,” remarked Captain Vipul Choudhary, a retired army official and director, Olive Green Realty — a real estate consultancy firm.

Former HUDCO CMD, PS Rana questioned why land had been made unaffordable for the masses. “In any project, land cost is the real culprit. For example, a developer buys land at Rs 1 crore from a farmer, but by the time he begins construction, the price shoots up to Rs 10 crore. This makes entire project costlier.”

Moderator Sunil Agarwal said, “The demand in real estate sector is there but it’s in segments. Now, a lot of corporate houses have entered, making the sector more organised. It’s giving credibility to the sector as well.”

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Source :  First Post
Note ban, GST impact behind us, growth in sight: FM Arun Jaitley

Note ban, GST impact behind us, growth in sight: FM Arun Jaitley

Arun Jaitley : GST

Finance Minister Arun Jaitley said today that the impact of structural reforms is “behind us” and the early economic indicators point to an improvement.

Structural reforms like demonetisation and the rollout of the Goods and Services Tax  (GST) would have had some consequences but they will help the economy, in the long run, he said.

“Having undertaken two major structural changes which are extremely important for the Indian economy, I think the impact being substantially behind us, the early indications for the future look to be positive,” he said at the India Today Conclave here.

In the last 2-3 months the Purchasing Managers’ Index (PMI) data has come out positive, similar to industrial output and core sector growth, he said, adding that these are some of the early indicators and “probably point to an improved situation”.

Also Read: PM Modi indicates more relief measures at next week’s GST Council meet 

Prime Minister Narendra Modi had on November 8 last year announced the demonetisation of old Rs 500 and Rs 1,000 notes to combat corruption, black money, terrorism and fake currency.

On the criticism that note ban has impacted growth, Jaitley said: “If you don’t have the capacity or courage or broad shoulders to undertake those structural reforms, then, of course, that status quo would have continued.

“And the status quo ante that existed in India, I don’t think that is an ideal situation where India would have lived to be.”

Jaitley said India was a fast-moving global economy for three years in a row and the time was opportune to undertake structural reforms. “Otherwise, the only option to structural reform that my predecessor could give you is policy paralysis, not my choice.”

Also Read: GST council meeting: 24 states confirm participation

The economy slowed to 5.7 per cent in the April-June quarter of the current fiscal, the weakest pace since 2014 as demonetisation sucked out 86 per cent of the currency in circulation throwing cash-dependent businesses in disarray and the implementation of GST from July 1 hit small and medium enterprises.

The GDP growth had started to slip in the quarters before demonetisation, he said, adding that the manufacturing activity declined in the run up to the GST roll out from July 1 as businesses started destocking their goods.

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Source :  The Times of India
PM Modi indicates more relief measures at next week’s GST Council meet

PM Modi indicates more relief measures at next week’s GST Council meet

Narendra Modi : GST Council

PM Narendra Modi on Saturday indicated that the GST Council in its meeting next week will carry out more changes in tax measures to “strengthen” businesses and the economy, but seemed to be wary of the possibility of some state playing spoilsport.

“If no state puts any obstacles then in the GST Council meeting on November 9 and 10, I am confident that steps necessary to provide a new energy to the country’s businesses and economy will be taken,” Modi said at a function to celebrate the country’s sharp jump in the World Bank’s ‘ease of doing business’ rankings.

Also Read: Offline version for GSTR-4 preparation launched on GST portal 

The PM did not spell out what decisions the GST Council might take. However, the hint of major changes comes against the backdrop of unrest among small and medium businesses over GST and the recognition that assuaging some of the concerns will be crucial for BJP in the Gujarat polls.

In its previous meetings, the Council provided a string of relief for businesses to help them cope better with the new tax regime. A panel of state finance ministers have already dropped loud hints about pegging the rates lower. In fact, the PM stressed that issues raised by small and medium enterprises have been positively accepted by the Council in the past.

The GST Council, headed by finance minister Arun Jaitley, will meet in Guwahati on November 9 and 10 against expectations that more rate relief may be on its way. TOI had reported earlier that the Council may reduce the number of products in the highest slab, after state finance ministers pointed out that several common-use products face a 28% levy.

Also Read: Steps to ease method of filing GST returns

At least two state finance ministers told TOI that items such as bath fittings, cement, steel products used as rods for construction are in the top bracket. “The idea was to classify goods and services into merit and non-merit goods with the non-merit goods in the top bracket,” a state finance minister, who has usually sided with the Centre on most issues, had told TOI.

Officials in the indirect tax wing of the finance ministry also agree that there are too many items on the top slab. Jaitley too has indicated that in the medium term the aim is to move to fewer slabs.

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Source :  The Times of India
Govt working on new consumer protection law: PM Narendra Modi

Govt working on new consumer protection law: PM Narendra Modi

Narendra Modi : GST

Prime Minister Narendra Modi today said a new consumer protection law is on the anvil to crackdown on misleading ads and ensure that grievances are redressed in a time-bound and cost-effective manner.

Narendra Modi also said the government has enacted a new GST law which will benefit consumers in the long run as prices would come down because of competition among manufacturers.

“Stringent provisions are proposed against misleading advertisements. A Central Consumer Protection Authority with executive powers will be constituted for quick remedial action,” he added.

The government is coming up with this new law, replacing the Consumer Protection Act 1986, which will incorporate the revised 2015 UN guidelines on consumer protection.

“Protection of consumer interests is a priority of the government. This is also reflected in our resolution of the New India. Moving beyond Consumer Protection, New India will have Best Consumer Practices and Consumer Prosperity,” Modi said.

He highlighted that the government in the last three years has launched many programmes like new real estate law, new BIS Act, UJJWALA scheme, DBT (direct benefit transfer) that would not only empower consumers but result in huge savings.

Consumer protection is among the government’s key priorities, he said, adding that it has recently enacted the Goods and Services Tax (GST) which is bringing in a new business culture across the country.

“In the long term, GST will benefit only consumer. Consumers will not be cheated as they become more aware of this law,” he said, adding that consumers can now see on receipts the tax they are paying to the Centre and states.

Narendra Modi also said the GST would encourage competition among companies that would results in fall in prices of goods, benefiting poor and middle-class consumers.

The time reduction in transportation of goods would also lead to fall in prices and this benefit will also be transferred to consumers, he said.

“Due to GST, various indirect and hidden taxes have ceased to exist. The biggest beneficiaries of GST will be the consumers, middle class,” he said.

Inflation has been brought down significantly in the last three years and this has also helped in consumer saving, he added.

Also Read: More relief for SMEs as GST Council set to reduce late filing penalties

Modi said the government has enacted a new Real Estate (Regulation and Development) Act to protect home buyers interest.

The RERA legislation would protect buyers from builders monopoly, he said while highlighting key provisions of this real estate law.

Modi said a buyer can book flat with 10 per cent booking amount from the earlier up to 40 per cent. The developer will not be able to divert fund as 70 per cent of the money has to be kept in an escrow account.

He said effective grievance redressal systems are vital for a democracy and therefore the government is integrating technology to ensure stronger grievance redressal mechanisms.

Stating that the scope of Consumer Protection is very broad in the vision of the government, Modi said: “Development of any country and consumer protection are complementary. Good governance has an important role in taking the benefits of development to every citizen.”

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Source :  The Economic Times
Could the Government’s initiatives make GST a simple affair?

Could the Government’s initiatives make GST a simple affair?

Make GST Simple

It’s been barely three months since the introduction of the Goods and Services Tax (GST), the good and simple tax law has been further simplified. The Hon’ble Prime Minister Narendra Modi also stated that the decisions taken by the GST Council in its twenty-second meeting have evoked the mood of Diwali festival for taxpayers.

The government was flooded with several representations primarily from the exporters as well as Small and Medium Enterprises (SME) on the varied challenges faced by them in the first quarter of GST implementation. The trader community especially merchant traders/exporters were facing serious concerns on account of blockage of working capital and delayed refund of the taxes paid on export of goods or services. The taxpayers were finding it difficult to undertake compliances correctly due to system issues and they were puzzled by the complications in the return filing process, reverse charge on procurement from registered suppliers, etc.

Taking a note of the increasing dissent in the exporter and trading community, the GST Council has taken several decisions which are expected to benefit the exporters and SMEs and is intended to ease the compliance burden. Some of the key decisions taken by the GST Council especially for exporters include the extension of the upfront exemption from IGST on procurements available under various schemes such as advance authorisation, Export Promotion Capital Goods Scheme and 100% Export Oriented Units (EOUs). The exemption will apply to the procurement of goods whether imported or sourced indigenously. However, the said benefit is not extended to the procurement of services. As the contribution of services sector increases in the economy, the exporters would have rejoiced had the scheme extended to cover the procurement of services as well. Further, in the absence of any specific notification, it is not clear whether the service export units (such as Software Technology Parks of India /Service EOU) can avail the said exemption.

Another attempt made to alleviate the burden of working capital for merchant exporter was to reduce the GST rate on the procurements made by such exporters to a marginal rate of 0.1%. The GST Council has also announced that the refunds of the IGST paid on exports in the month of July 2017 will be paid/cleared from 10 October 2017 and that for the month of August 2017 will be cleared from 18 October 2017. The authorities also issued a Circular on 9 October 2017 clarifying the procedural aspects for grant of refund to exporters. Trade and industry will celebrate the festival of lights if the burden of working capital is made lighter by actual grant of refund within the timelines announced.

Also Read: GST composition scheme: GoM consensus on providing relief to small restaurants

Further, the decision to defer the compliance under the reverse charge mechanism applicable for procurements from unregistered suppliers till 31 March 2018 is a welcome relief. However, the trade expects that such reverse charge mechanism should be withdrawn completely and not deferred only for a few months.

Contrary to the industry demand for the abolition of the e-way bill system, the GST Council has decided to implement the same in a staggered manner from 1 January 2018 and on an all India basis from till 31 March 2018. The industry believes that given the stringent control and penal provisions for issuance of invoice/delivery challan for every movement of goods, the requirement for e-way bills could unnecessarily lead to additional compliance burden and not contribute to the ease of doing business in India.

Small enterprises can rejoice as the limit for composition scheme has been enhanced to INR1 crore in a move to provide relief to a large base of small taxpayers. Also, the SME sector has been granted the facility to furnish tax returns and tax payments on a quarterly basis instead of a monthly return/payment. However, all the taxpayers will have to file the monthly returns for the first quarter and the benefit of quarterly returns can be availed only from the quarter of October-December 2017. Thus, all taxpayers will have to experience the online matching concept and monthly return for the first quarter ending in September 2017.

Read: Are businesses really facing problems or is it just another political stunt with GST?

Unlike the erstwhile regime, the time of supply of goods also includes the receipt of advance and this has affected small dealers and manufacturers as they had to prepay the GST. Therefore, the GST Council has granted a waiver from payment of GST on receipt of advances. Now, small dealers and manufacturers having an annual aggregate turnover upto INR1.5 crore shall be liable to pay GST only on actual supplies of goods and not on advances received. This can also help eliminate the issue of non-availability of input tax credit albeit only for a small section of the taxpayers. Even the Tax Deducted at Source (TDS) and the Tax Collected at source (TCS) provisions are deferred till 31 March 2018.

Besides the above key measures, the GST Council has also rationalised the applicable GST rates for many products in line with the industry representation. The noteworthy items primarily include food items, unbranded ayurvedic/homoeopathy medicines, man-made and synthetic/artificial filament yarn, e-waste, etc.

Another crucial matter for the manufacturing sector is the uncertainty on the quantum of area-based incentives including incentives offered by states under the state industrial policy. Though recently a notification to the effect was issued in the public domain by the central government, the stand of state governments is not clear.

Read: Tracking the GST that you pay is now at your fingertips!

While some relaxations announced by the GST Council are a step in the right direction, however, the job is not yet done. These measures are primarily aimed at the SME sector and all other taxpayers who have an annual turnover of more than INR1.5 crore will still be required to comply with stringent compliance under GST. Besides this, there are several other challenges which the industry is facing especially with regard to a stabilisation of GSTN/technical glitches and it is expected that the GST Council will accord due importance to these issues to help ensure that the real intended benefit of GST is enjoyed equally by the trade and the consumer. These steps in a continuous dialogue between the government and trade can really make GST, in a true sense, a Good and Simple Tax.

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Source: Forbes India