GST - One Nation, Two Authorities, Three Taxes, Four Rates .....
TIOL-DDT 2964
04 11 2016
Friday
GST - One Nation, Two Authorities, Three Taxes, Four Rates ……
NOW it is final - there will be four rates of GST on goods - zero rate, 5%, two standard rates of 12% and 18% and 28%. Four rates doesn't really mean four rates. Apart from these rates there will be a separate-to-be-decided rate for gold. There will be a cess on goods attracting the 28% tax apart from the environment cess. Yesterday's meeting of the GST Council passed off without the need to use the calculator to find out the majority as per the formula. Decisions were by consensus, though Kerala took a lonely path. Kerala's well educated Finance Minister, Dr. Isaac Thomas found the meeting subdued. The TN Finance Minister was cool and the UP Finance Minister who was vociferous opponent of CESS was not seen. Everybody seemed to be eager for consensus. And Dr. Isaac found support strangely from the West Bengal Finance Minister. GST Council has certainly redefined political economics; the Finance Minister Jaitley concluded his Press Conference with a remark that all the Congress Chief Ministers supported all his proposals.
Today's meeting of the Council is certainly going to be a heated one as the question of who controls what is difficult to decide. The Centre wants to retain the whole of the present base of service tax part of GST, maybe after they can ascertain whether it is 1.1 million or 3.3 million. It is being suggested that the entire audit function is to be transferred to the States' Commercial Taxes Department and this has sent a chill down the spines of the Central Excise Department officers as Audit is the most lucrative section now and what will they do with all the Audit Commissionerates? It seems the corruption indices in both the States and the Central Departments are shooting up and one of the reasons cited is the uncertain future!
Finally, the One Nation, One Tax has become
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One Nation
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India that is a Union of States
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Two authorities
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CBEC and State Commercial Tax Departments
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Three Taxes
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SGST, CGST and IGST
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Four rates
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Zero, 5%, 12%, 18% and 28% with a gold rate and some cesses and a five year cess.
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FICCI has complimented the GST Council for reaching a consensus and finalising the four tier rate structure under GST. The FICCI President Harshavardhan Neotia says, "rate structure will achieve the twin objective of protecting the revenues of the Central and the State Governments and further containing the inflationary pressures that may arise consequent upon the change of the taxation system. It is believed that the consensus reached today on the rate structure will pave the way for a successful implementation of GST in the country from April 1 2017. FICCI looks forward to working with the Central and the State Governments in implementing the most ambitious indirect tax reform of the nation".
Highlights of GST Council Meeting
- THE GST Council has decided the GST rate structure in its meeting held on 3.11.2016. These rates are 5%, 12%, 18% and 28%.
- Zero rate will apply to several items, which constitute 50% of Consumer Price Index basket including food grains used by common people.
- 5% rate will apply to items of mass consumption particularly used by common people.
- Considering the inflationary impact of one standard rate, there will be two standard rates of 12% and 18%.
- Rate of 28% will apply to several items particularly white goods & others now attracting effective tax rate of 30-31%.
- Even though these goods attract 12.5% Excise Duty and 14.5% VAT, net effective rate comes to 30-31% taking into account the cascading effect.
- However, some items used by large no. of people particularly lower middle class now attracting 30-31% effective tax will be in lower tax slab.
Audit under GST
AS per the Model GST Act
49. Audit by tax authorities
(1) The [Commissioner of CGST/Commissioner of SGST] or any officer authorised by him, by way of a general or a specific order, may undertake audit of the business transactions of any taxable person for such period, at such frequency and in such manner as may be prescribed.
(2) The tax authorities referred to in sub-section (1) may conduct audit at the place of business of the taxable person and/or in their office.
(3) The taxable person shall be informed, by way of a notice, sufficiently in advance, not less than fifteen working days, prior to the conduct of audit in the manner prescribed.
(4) The audit under sub-section (1) shall be carried out in a transparent manner and completed within a period of three months from the date of commencement of audit: Provided that where the [Commissioner] is satisfied that audit in respect of such taxable person cannot be completed within three months from the date of commencement of audit, he may, for the reasons to be recorded in writing, extend the period by a further period not exceeding six months. Explanation.- For the purposes of this sub-section, ‘commencement of audit' shall mean the date on which the records and other documents, called for by the tax authorities, are made available by the taxable person or the actual institution of audit at the place of business, whichever is later.
(5) During the course of audit, the authorised officer may require the taxable person,
(i) to afford him the necessary facility to verify the books of account or other documents as he may require and which may be available at such place,
(ii) to furnish such information as he may require and render assistance for timely completion of the audit.
(6) On conclusion of audit, the proper officer shall without delay inform the taxable person, whose records are audited, of the findings, the taxable person's rights and obligations and the reasons for the findings.
(7) Where the audit conducted under sub-section (1) results in detection of tax not paid or short paid or erroneously refunded, or input tax credit erroneously availed, the proper officer may initiate action under section 51.
Audit can be a long process - it can go on for a period of three months which may be extended to nine months and the audit can be conducted at the business place of the taxpayer.
New Exchange Rates from Today
CBEC has notified new exchange rates for Imported Goods and for Export Goods with effect from 04th November, 2016. The USD is 67.60 for imports and 65.90 Rupees for exports.
Notification No. 136/2016-Cus (NT)., Dated: November 03 2016
FTP - SION Amended
THE DGFT has made certain amendments in the Standard Input Output Norms (SION) of Product group: Food products. This comes into immediate effect.
DGFT Public Notice No. 41/2015-2020., Dated: November 2, 2016
GST - Will Settle Down in Ten Years
A senior officer associated with GST told me, "GST will settle down in about ten years".
Until Monday with more DDT
Have a nice weekend.
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