Goods & Service Tax (GST) Implementations So Far – Part I

I must share with all netizens and professionals of India that various implementations had already been carried out in the existing frame of indirect taxation to launch Goods & Service Tax (GST) in India .

 A.Foundation of GST via Empowered Committee

Recently , Kerala Finance Minister Shri K.M.Mani was appointed as Chairman of the Empowered Committee of State Finance Ministers on the project “Goods & Service Tax Implementation in India” .

It is pertinent to note that on 12th August, 2004, the Government of India had reconstituted the Empowered Committee and included the State Finance and/or Taxation Ministers of every States as its member. Whereas, initially the Committee , constituted in 2000, had few State Finance Ministers as its member .

B.Consensus For Revenue Neutral Rate

It seems that Revenue Neutral Rate would be decided around 24% since 27% which was recommended by National Institute of Public Finance and Policy (NIFP) won’t be a feasible rate at all from any perspective of the trade .

I still maintain that any rate higher than the slab of 16% to 18% will be an unbearable rate for service sector of India . Even , I must reiterate that there are reports that any rate of tax beyond 16% will not be healthy for service industry .

C. Changes in Existing Excise & Service Tax Laws

The entire aspect of GST runs on supply of goods & services , time of supply  place ,input tax credit, establishment , consideration etc .

After an in depth analysis of various GST models of prominent countries of the world , I have found that various changes have already been implemented, in recent past ,in the existing excise and service tax rules .

The prominent amongst them are as below :

  1. Reverse Charge Mechanism
  2. Place of Provision of Service
  3. Place of Removal of Goods
  4. Point of Taxation of Services
  5. Deeming Provisions
  6. Definition of establishment
  7. Imports
  8. Non Excisable Goods

There are many hidden aspects of GST , which I shall be taking up in my subsequent articles .

D.Exemption Limit

Oflate , it has been confirmed  that the states have zeroed on threshold limit for an exemption under GST regime. It must be known that the Centre has always emphasized that Rs 25 lakhs should be set as threshold limit for exemption . Centre has also recommended that even during exemption the traders should be registered , whereas, it looks that the same  has not be considered by the Empowered Committee  .

It must be noted that the more than half of the current traders, in the tax net, would have been out of  the GST had the  threshold limit was fixed at Rs 25 lakhs .

However ,the following looks to be nearing reality :

  •  Traders with a turnover below Rs 10 lakhs a year wont require registration and will be exempted from GST arena
  •  Traders with annual sales between Rs 10 to Rs 50 Lakhs will have a concessional rate of GST i.e a rate lower than normal GST rate
  •  The exemption for manufacturers will remain upto Rs 1.5 Crore as what is prevailing even as on date.


E.Exceptions in Exemption Limit

The concessional tax rate would, however, not be available for traders making interstate transactions irrespective of their turnover . It will be optional for the traders that even during exemption , if they want to, they can get themselves registered as well .

For North Eastern States, the threshold limit of exemption could be Rs 5 lakhs only.

F.Input Tax Credit (ITC)

The Empowered Committee has finalized the levy of GST on interstate trade (IGST) and GST on imports.

It is being claimed that such finalization was carried out after taking care of all the existing problems faced by the businessman for paying taxes using the input tax credit credits already earned on taxes paid previously on raw materials and services.

Further,the cross utilisation of CGST or SGST credit for payment of IGST is on card .

G.GSTN For Registration, Returns & Payments

During March 2014, the most crucial part of data sharing cum transfer of data via GST project was finally initiated from the CBEC to Goods and Service Tax Network (GSTN).

GSTN is a non government ,private limited company incorporated on March 28,2013. The main purpose of GSTN is to provide IT infrastructure and services to the Centre, State Governments for proper implementation of GST .

GSTN is already working on the toes with trial launch of the  modules for registration, returns and payments.

The regime of GST will see an upsurge of new assesses and hence GSTN has been developed accordingly.

H.Role of CBEC

The Empowered Committee of Ministers of State  finalises the framework of law , while drafting of  GST law and procedures for CGST and IGST is carried out by CBEC . Thereafter , it gets final nod from the Centre .

CBEC has also a pivotal role to review the  content of work-flow software such as ACES (Automated Central Excise & Service Tax ) in line with the framed GST law and procedure.

It must be known that since long a special GST Cell is already working within CBEC under the Joint Secretary TRU –II  to tackle the future tax regime i.e  GST .

I.Lok Sabha to Select Committee

On May 6,2015, the GST bill was passed by Lok Sabha . But , due to opposition from Congress and the Government being in minority in Rajya Sabha has decided to refer the GST Bill to Parliament Select  Committee for a review . The panel will consist of 21 members. After such a review ,  the GST Bill will be on floor of Rajya Sabha during monsoon period .

Under the given facts and preparations , monsoon session of Parliament will be crucial to unlock the actual date of implementation of Goods & Service Tax in India. However, the Bill is expected to be cleared in monsoon session of the Parliament.

The aforesaid developments signal that sufficient ground work has already been done to pave the way for formulation of GST regime finally in India .

Anand Mishra, Founder Advocate, AMLEGALS

 ( The author is a leading indirect tax advocate handling cases in CESTAT & High Courts of India. He can be contacted on [email protected] and for more please refer . )

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