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k e r - s o f t w aWednesday, July 5, 2017 6:42 PM k e r- s o ft w a

Q: Explain Goods and Services Tax (GST).

It is an indirect tax throughout India to replace taxes levied by the central and state governments.

It was introduced as The Constitution (101st Amendment) Act 2016, following the passage of Constitution 122nd Amendment Bill.

It will subsume various indirect taxes including central excise duty, services tax, additional customs duty, surcharges, state-level value added tax and Octroi

It would mitigate double taxation as it is a tax on value addition only.

It is consumption based tax levied on the supply of Goods and Services which will be levied and collected at each

stage of sale or purchase of goods or services based on the input tax credit method.

It would provide for a common national market.

The simplicity of the tax would lead to easier administration and enforcement.

From the consumer point of view, the biggest advantage would be in terms of a reduction in the overall tax burden on

goods, which is currently estimated at 25%-30%,

It would facilitate free movement of goods from one state to another without stopping at state borders for hours for

payment of state tax or entry tax and reduction in paperwork to a large extent.

GST is expected to be applicable from 1 July 2017.

Q: What is GST Council ?

The GST is governed by GST Council.

It was created in September 2016 under Article 279-A of the Constitution of India.

It comprises of:

i. The Union Finance Minister (as Chairman),

ii. The Union Minister of State in charge of Revenue or Finance, and

iii. The Minister in charge of Finance or Taxation or any other Minister, nominated by each state government.

The decisions of the GST Council are made by three-fourth majority of the votes cast. The centre has one-third of

the votes cast, and the states together have two-third of the votes cast. Each state has one vote, irrespective of its size

or population.

As per Article 279A (4), the Council will make recommendations to the Union and the States on important issues

related to GST, like

i. Taxes, cesses, and surcharges to be subsumed under the GST;

ii. Goods and services which may be subject to, or exempt from GST;

iii. The threshold limit of turnover for application of GST;

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iii. The threshold limit of turnover for application of GST;
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v. Model GST laws, principles of levy, apportionment of IGST and principles related to place of supply;

vi. Special provisions with respect to the eight north eastern states, Himachal Pradesh, Jammu and Kashmir,

and Uttarakhand; and

vii. Other related matters.

Q: What is Goods and Services Tax Network (GSTN)?

It is a nonprofit organization formed to provide IT infrastructure and services to the Central and State Governments, tax payers and other stakeholders for
implementation of the GST.

The portal will be accessible to the central government which will track down every transaction on its end while the merchants/ vendors will be filing their taxes and
maintaining the details.

The IT network will be developed by private firms which are in tie up with the central government and will be having stakes accordingly.

The authorized capital of GSTN is Rs. 10 crore in which Central Government holds 24.5 percent of shares while the state government holds 24.5 percent and rest 51%
with private banking firms.

Q: Who are GST Suvidha Providers (GSPs) ?

GSPs are expected to provide convenient methods to taxpayers to access and upload their documents and returns

onto the GST Network (GSTN), the information technology backbone of the new indirect tax regime.

34 GSPs so far approved by the GSTN

Some GSPs may not be able to meet July 1 deadline.

Other GSPs say while they are confident in their own capabilities to meet the July 1 deadline, there are key processes

such as testing the compatibility of the GSTN software with the software run by each of the GSPs that has not

even begun as of now.

Q: Explain e-waybill system under GST ?

Under GST, freight worth over Rs. 50,000 will require obtaining a prior registration and generation of an

(electronic) e-way bill and will be used to track all inter-State and intra-State movement of goods.

Tax commissioners or an officer empowered by him would be allowed to intercept any conveyance to verify the e -

way bill or the number in physical form.

Doing away with hard copies of verification documents, e-way bills can also be generated through a smart phone and

sent to the driver of the cargo vehicle as an SMS.

6. Composition scheme under GST

The composition scheme under GST has been introduced for small business that would struggle to comply

with the various requirements of GST.

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with the various requirements of GST.
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k e r- s o ft w a The scheme is applicable for small businesses with an annual turnover not more than Rs. 75 lakh. ac
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Those opting for the scheme will have to pay tax at the rate of 1% for the trading community, 2% for those

engaged in manufacturing, and 5% for restaurants.

This should mean that a significant number of SME sector players should benefit from not having to meet with

detailed compliances under GST and also having a less financial burden, on account of GST.

Q: What is e-way bill ?

E-way bill is an electronic way bill for movement of goods which can be generated on the GSTN (common portal).

A movement of goods of more than Rs 50,000 in value cannot be made by a registered person without an eway bill.

E-way bill will also be allowed to be generated or cancelled through SMS.

When an eway bill is generated a unique eway bill number (EBN) is allocated and is available to supplier, recipient,

and the transporter.

Centre is in favour of postponing by a few months the implementation of e-way bill

GST Council has agreed to rope in the National Informatics Centre (NIC) to work along with GST Network to assess

if an all India e-way bill system can be created in a short time-frame.

Q: What are Anti-Profiteering clause under GST.

Clause 171 in the GST Act makes it mandatory to pass on the benefit due to reduction in rate of tax or from input tax

credit to the consumer by way of commensurate reduction in prices.

This clause further provides for the establishment of an authority against anti-profiteering in order to ensure its

compliance.

To ensure its implementation, the Centre may set up an authority or entrust an existing authority to examine whether

input tax credits availed by any registered taxable person or the reduction in the price on account of any reduction in

the tax rate have actually resulted in a commensurate reduction in the price of the said goods or services supplied by

him.

Q: What are Reverse Charge under GST

Reverse charge, where the recipient is liable to pay tax, is common to many countries like Canada where it is

applicable on imports of services and intangible properties.

Normally, the supplier pays the tax on supply. In certain cases, the receiver becomes liable to pay the tax, i.e.,

the chargeability gets reversed which is why it is called reverse charge.

In India, this is a partly new concept introduced under GST.

The purpose of this charge is to increase tax compliance and tax revenues.

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Earlier, the government was unable to collect service tax from various unorganized sectors like goods transport.
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The concept of reverse charge mechanism is already present in service tax.

In GST regime, reverse charge may be applicable for both services as well as goods.

Q: Explain Tax Collection at Source (TCS) under GST.

A clause has been inserted under GST law for all the e-commerce aggregators.

E-commerce aggregators are made responsible under the GST law for deducting and depositing tax at the

rate of 1% for each payment to suppliers of goods or services in excess of Rs. 2.5 lakh.

All the traders/dealers selling goods/services online would need to get registered under GST even if their turnover is

less than 20 Lakhs for claiming the tax deducted by Ecommerce operators.

The government, in June 2017, decided to defer this requirement.

Machine generated alternative text: GSf .N THE CLASSROOM The Anti- ProfitFing rovision India is set to roll out goods and services tax from June 30 midnight, Which
will replace multiple state and central taxes with a single levy. The new tax is to bring down prices of goods as it Will remove tax-on-tax as also allow seamless tax credit
on inputs. Keen to ensure that this benefit is passed on to consumers in the torm of lower prices. the new framework provides for an anti- profiteering provision. Which
benefits the common man but has irked the industry. ET takes a 100k at the provision: What i! the anti-profiteering provision? The GST Act provides an enabling
provision to empower the Central Government to constitute, or appoint, an authority to monitor prices businesses charge for goods and services in the lead up to, and
following the introduction of, the GST. This is primarily to ensure that industry passes on the benefit to consumers and not pocket the gains themselves. Are there global
examples? Australia and Malaysia recently implemented GST laws that provide for anti-profiteering measures. India consulted both the countries on their experience and
structure HOW will the anti-profiteering provision work? A three-tier structure has been set up to implement this. The GST Council has set up a standing committee that
will receive complaints from consumers. It will. after examining the application, forward it to director general safeguards that will conduct an investigation into the
allegation. It would pass on the findings to an independent Anti-profiteering authority to give a final ruling. The authority is empowered to impose penalty, ask for return
of extra amount charged and also cancel licences. This authopity would exist for two years only jndustry apprtnenqve about tne provision? Industry fears that this would
lead to inspector raj. Any price incn?ase for other reasons such as higher input prices could also be investigated. There are some safeguards though built in to address
the issue. The authority cannot take action suo moto. Besides, all complaints have to be backed by proper documents to show that tax benefit has not been passed. 28t
eq

Q: What are likely effects of GST on Logistics?

Indian logistics industry is at the cross-roads, poised for growth on the back of the economic recovery and changing industry dynamics, domestic ratings agency Icra
said in a note. The GST, which got introduced on Saturday, will favour organized logistics players going forward, it said. The organized players will benefit because under
GST, there will be a consolidation of warehousing network, higher degree of tax compliance and creation of a level playing field between express and traditional
transport services through input tax credit, it said.

The railways, which have lost market share in the total freight movement over the last few years and now account for around a 30% share, will benefit from the
dedicated freight corridor (DFC) expected to get operationalized in 2019. DFCs would be a game changer as it would possibly remove several inefficiencies in freight
movement. After many delays, the DFCs are now expected to commence operations from 2019. On both the eastern as well as western corridors, Railways will stand to
gain traction from road segment, it said.

From <http://www.livemint.com/Politics/nQhssFXyHMFdh2zWMtF22L/Logistics-to-grow-at-10-GST-to-benefit-organized-players.html>

Review Questions:

Q: GST will usher in economic unification of of politically unified India. Comment.

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Q: In context of Goods and Services Tax, GST which of the following is/are CORRECT?

It will not affect direct tax regime of country.

Jammu and Kashmir is not part of GST

1 only
2 only
Both 1 and 2.
Neither

Solution: ( A ).

Q: In context of Goods and Services Tax Network (GSTN) which of the following is/are INCORRECT?

It is a nonprofit organization formed to provide IT infrastructure for GST implementation.

The IT network will be developed by CRISIL .

1 only
2 only
Both 1 and 2.
Neither

Solution: ( B ).

The IT network will be developed by private firms which are in tie up with the central government and will be having stakes accordingly.

The authorized capital of GSTN is Rs. 10 crore in which Central Government holds 24.5 percent of shares while the state government holds 24.5 percent and rest 51%
with private banking firms.

Sudhir
Ph: 8287523368 (Whatsapp), 7982149033.

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