Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

GUIDE TO REVISED MODEL GST LAW, 2017

KEY FEATURES OF THE BOOK • Highlights of changes in Revised Model GST Law for easy understanding • Constitutional Amendments and likely date of GST Implementation • GST - Need & Necessity, Overview and Model for India • Discussion/analysis on Revised Model GST Law along with its comparison with First Model GST Law • Analysis of meaning of the terms 'Supply','Goods' and 'Services' in GST. • Gist of documents, information, procedure, etc., required for migration of existing registrants in GST • Discussion on various domains - intra-state supply and inter-state supply of goods and/or services, principles of place of supply & time of supply, valuation of goods and/or services, GST ITC, taxable person, appeals and revision, offences and penalties, demand and recovery, GST rate, e-commerce operator, etc., along with transitional provisions. • Discussion on contentious issues under Revised Model GST Law which requires reconsideration • Discussion on flow of input tax credit in GST with illustrations and negative list for GST ITC • Discussion on Draft Rules and procedural aspect of GST- Registration, Payment, Invoice, Returns and Refund • Impact of GST on business and specifically on manufacturers, traders and service sectors and preparation required for smooth migration • Transitional issues under GST along with effective tools for planning. • Likely challenges ahead for GST implementation • Way forward and Procedural changes in GST • Contains complete Revised Model GST Law, ModeI IGST Law and Draft GST Compensation Law along with Draft Rules and Formats on Registration, Payment, Invoice, Returns and Refund as released by the Government

  • Login to see the comments

GUIDE TO REVISED MODEL GST LAW, 2017

  1. 1. GST GUIDE TO REVISED MODEL GST LAW (With Draft Rules on Registration, Payment, Invoice, Returns and Refund) BIMAL JAIN ISHA BANSAL Highlights of the Book Published by B-4, Basement, Vandhana Building, 11 Tolstoy Marg, New Delhi-110 001 Phone : +91-11-41824268, 23324142 E-mail : info@youngglobals.com Website : www.bookskhoj.com Young Global Publications ABOUT THE BOOK KEY FEATURES OF THE BOOK This Handbook on Revised Model GST Law discusses the various provisions of the Revised Model GST Law and Draft Rules released by Government of India along with comparison with First Model GST Law in a precise and lucid manner for providing a complete insight to the readers for the preparation and assistance in smooth transition to GST. This Book is user-friendly, containing the gist of the provisions of the Revised Model GST Law and can be used by professionals, tax payers, tax officers, corporates, regulators, etc. for easy reference. • Highlights of changes in Revised Model GST Law for easy understanding • Constitutional Amendments and likely date of GST Implementation • GST – Need & Necessity, Overview and Model for India • Discussion/analysis on Revised Model GST Law along with its comparison with First Model GST Law • Analysis of meaning of the terms ‘Supply’,‘Goods’ and ‘Services’ in GST. • Gist of documents, information, procedure, etc., required for migration of existing registrants in GST • Discussion on various domains - intra-state supply and inter-state supply of goods and/or services, principles of place of supply & time of supply, valuation of goods and/or services, GST ITC, taxable person, appeals and revision, offences and penalties, demand and recovery, GST rate, e-commerce operator, etc., along with transitional provisions. • Discussion on contentious issues under Revised Model GST Law which requires reconsideration • Discussion on flow of input tax credit in GST with illustrations and negative list for GST ITC • Discussion on Draft Rules and procedural aspect of GST- Registration, Payment, Invoice, Returns and Refund • Impact of GST on business and specifically on manufacturers, traders and service sectors and preparation required for smooth migration • Transitional issues under GST along with effective tools for planning. • Likely challenges ahead for GST implementation • Way forward and Procedural changes in GST • Contains complete Revised Model GST Law, ModeI IGST Law and Draft GST Compensation Law along with Draft Rules and Formats on Registration, Payment, Invoice, Returns and Refund as released by the Government Price ` 650 GUIDETOREVISEDMODELGSTLAW (WithDraftRulesonRegistration,Payment,Invoice,ReturnsandRefund) • Summarized highlights of Revised Model GST Law and Draft Rules on Registration, Payment, Invoice, Returns and Refund for easy digest. • Contains action plan for smooth transition to GST regime along with suggestions for effective planning. • Discussion on various domains viz. supply of goods and/or services - intra-state and inter-state, principles of place of supply & time of supply, Valuation, GST ITC, taxable person, appeals and revision, demand and recovery, GST rates, e-commerce operator, etc., along with transitional provisions. • Contains complete Revised Model GST Law, Model IGST Law and Draft GST Compensation Law along with Draft Rules and Formats on Registration, Payment, Invoice, Returns and Refund as released by the Government. BIMALJAIN ISHABANSAL DECEMBER, 2016
  2. 2. GUIDE to Revised Model GST Law For purchase of HARD COPY OF THE BOOK PLEASE VISIT THE BELOW LINK http://www.bookskhoj.com/ViewDetails.aspx?viewId=8736 http://www.amazon.in/dp/8188274682? _encoding=UTF8&keywords=guide%20to%20revised%20model% 20gst%20law&qid=1482485836&ref_=sr_1_1&sr=8-1
  3. 3. YOUNG GLOBAL PUBLICATIONS B-4, Basement, Vandhana Building, 11, Tolstoy Marg, New Delhi - 110 001 Phone: +91-11-41824268, 23324142 E-mail: info@youngglobals.com Website: www.bookskhoj.com ®
  4. 4. Bimal Jain FCA, FCS, LLB, B.Com (Hons.) Isha Bansal ACS, LLB, B.Com (Hons.) An Insight into Goods & Service Tax YOUNG GLOBAL PUBLICATIONS CA. Chitresh Gupta B. Com (H), FCA, IFRS (Certified), IDT (Certified) ® GUIDE to Revised Model GST Law
  5. 5. © All rights reserved Price: `650 December, 2016 Edition Bookstore: B 4, Basement, Vandhana Building, 11 Tolstoy Marg New Delhi - 110001 011-41824268, 23324142, 23324153 Office: D-22, Ganesh Nagar, Pandav Nagar Complex, Delhi - 110 092 Phone: +91-11-22486290 Website: www.youngglobals.com E-mail: info@youngglobals.com Published by: Young Global Publications Composition & Designed by: Addon Digital Services Every effort has been made to avoid errors or omissions in this publication. In spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition. It is notified that neither the publisher nor the author or seller will be responsible for any damage or loss of action to any one, of any kind, in any manner, therefrom. It is suggested that to avoid any doubt the reader should cross-check all the facts, law and contents of the publication with original Government publication or notification. No part of this book may be reproduced or copied in any form or by any means (graphic, electronic or mechanical, including photocopying, recording, taping or information retrieval systems) or reproduced on any disc, tape, perforated media or other information storage device, etc., without the written permission of the publishers. Breach of this condition is liable for legal action. For binding mistake, misprints or for missing pages etc. the publisher’s liability is limited to replacement within one month of purchase by similar edition. All expenses in this connection are to be borne by the purchaser. All disputes are subject to Delhi Jurisdiction only.
  6. 6. This book is dedicated to Acharya 108 Sri Vidya Sagar Ji Maharaj ^^nwljksa ds fgr ds fy, vius lq[k dk R;kx djuk gh lPph lsok gS**   
  7. 7. For purchase of HARD COPY OF THE BOOK PLEASE VISIT THE BELOW LINK http://www.bookskhoj.com/ViewDetails.aspx?viewId=8736 http://www.amazon.in/dp/8188274682? _encoding=UTF8&keywords=guide%20to%20revised%20model% 20gst%20law&qid=1482485836&ref_=sr_1_1&sr=8-1
  8. 8. vii BIMAL JAIN FCA, FCS, LLB with 21 years of experience in Indirect Taxation – GST, Service tax, Excise, Customs, VAT/CST, Foreign Trade Policy, DGFT matters, etc. Bimal Jain, qualified as a Chartered Accountant in May 1994, and Company Secretary in December 2006 and LLB in December, 2009. He has worked in renowned companies viz. LG Electronics India Pvt. Ltd, Honda Motorcycle & Scooters India Pvt. Ltd, Hindustan Development Corporation Ltd, Khaitan & Company. Currently, he is the Chief Executive Director of A2Z Taxcorp LLP. Bimal is a Chairman of the Indirect Tax Committee of PHD Chamber of Commerce, Chairman of the Corporate Advisory Committee of IPEM Group of Institutions, Member of Indirect Tax Committee of FICCI & Assocham, Special Invitee of Indirect Tax Committee of ICAI, and Member of eminent faculties in Indirect tax committee of ICAI/ ICSI/ ICMA. He is awarded as Best Participant Award in MSOP – 117th Batch by ICSI, Business Leader Award by Amity School Noida, Best Speaker Award by NIRC – ICAI/ ICMA and Young Achievers Award at Igniting Minds, 2015. He regularly writes articles on multiple indirect tax issues and has authored books, namely, Service Tax Voluntary Compliance Encouragement Scheme, 2013, About the Authors
  9. 9. viii Guide to Revised Model GST Law GST books titling ‘Goods and Services Tax – Introduction and Way Forward’ and ‘GST Law and Analysis – With Conceptual Procedures’. He has also represented PHD Chamber of Commerce, Assocham, ICAI, ICSI before various Government Authorities/Committees viz. the Central Board of Excise and Customs, Ease of doing Business Committee, Empowered Committee of State Finance Ministers, etc. Bimal’scorecompetencyandareaofexpertiseareindirecttaxation, international and corporate taxation. He specializes in all aspects of GST, Excise, Service tax, Customs, Sales tax/VAT laws, Free trade/economic cooperation agreements, anti-dumping duty, foreign trade policy, etc. He carries a blend of industrial and professional acumen, knowledge and experience in carrying out diagnostic review of business operations, opinion & advisory services, process review, structuring of various business models, litigation services at all appropriate forums including Commissioner(Appeals), CESTAT, High Court and representation made before the TRU/ CBEC/ DGFT, etc., for various matters concerning trade, industry and commerce. ISHA BANSAL ACS, LLB, B.Com (Hons.) with more than 5 Yrs. of experience in indirect taxation matters Isha, qualified as a Company Secretary and LLB, after obtaining a Bachelor’s degree in Commerce (Hons.) from University of Delhi in 2008. She worked as an intern with DLF group looking after company secretarial and legal matters before moving to indirect taxation for which she had interest and flair. Thereafter, she joined A2Z Taxcorp LLP and is presently working as Senior Associate, providing legal and advisory services to various multinational companies in the areas of GST, Excise, Customs, VAT, Service tax, anti-dumping duty, foreign trade policy, etc. Her in-depth knowledge, drive and strategic insights have contributed immensely to the organizations she has worked with. Isha has done extensive study on GST in India and has been following all the developments in the rollout of GST by the Indian Government. GST is therefore one of her core competency areas along with other indirect tax laws.
  10. 10. ix Preface “Great Step by Team India, Great Step towards Transformation, Great Steps towards Transparency, this is GST” Shri. Narendra Modi, Hon’ble Prime Minister Goods and Services Tax (“GST”), envisaged as the Single biggest tax reform since Independence, is aimed to remove tax barriers between states to create a single market. GST is going to replace plethora of indirect taxes currently imposed at various stages of manufacturing, trading, etc. The implementation of GST will help to create a common national market and reduce the cascading effect of taxes on the costing and pricing of goods and services. It will have a far-reaching impact on almost all the realms of business operations in our country. It will impact tax structure, tax incidence, tax computation, supply chain optimization, credit availment & utilization, compliance etc., leading to a complete overhaul of the current indirect tax system in India. GST is a tax on goods and services with comprehensive and continuous chain of set-off benefits from the producer’s point and service provider’s point upto the retailer’s level. It is essentially a tax only on value addition at each stage, and a supplier at each stage is permitted to set-off, through a tax credit mechanism, the GST paid on the purchase of goods and services as available for set-off on the GST to be paid on the supply of goods and services. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set- off benefits at all the previous stages. On June 14, 2016, the central government put the Model GST Law on public domain after getting an in-principle nod from the Empowered Committee of State Finance Ministers for seeking suggestion from the public at large. Further,
  11. 11. x Guide to Revised Model GST Law 122nd Constitutional Amendment Bill, 2014 (“GST Bill”) received the assent of the Hon’ble President on September 8, 2016 and enacted as the Constitution (101st Amendment) Act, 2016 [“the 101st Constitutional Amendment Act”]. In series of event for GST implementation, on September 12, 2016, the Union Cabinet has approved formation of GST Council (Section 12 of the 101st Constitutional Amendment Act) followed by the government notifying September 16, 2016 as the appointed date for remaining Sections of the 101st Constitutional Amendment Act (i.e. Section 1 to 20, except Section 12). Since notification of the GST Council on 12 September 2016, six meetings of the GST Council have been held in New Delhi. These meetings were held on 22- 23 September, 2016, 30 September, 2016, 18-19 October, 2016, 3-4 November, 2016, 2-3 December, 2016 and 11 December, 2016 (as mentioned in the report card issued by the government on November 14, 2016). Further, the two day seventh GST Council meeting took place recently on 22-23 December, 2016. Earlier, the Central Board of Excise and Customs on September 26, 2016 has unveiled Draft Rules and formats under GST relating to registration, invoice and payment, followed by the Draft Rules and formats on GST returns and refunds on September 27, 2016, which got approval from the GST Council in its meeting dated September 30, 2016. Further, the government also unveiled the Revised Model GST Law and Draft Goods and Services Tax Compensation Bill by placing it in public domain on November 26, 2016 after incorporating suggestions from trade and industry, in a way, signalling that the GST might mark its advent soon. Though, the Government is committed to roll out GST as envisaged from April 1, 2017 but there may be some delay on account of the recent demonetisation of high-value currency by the government which has led to lot of tussles in the Parliament and moreover, the issue of dual control between the centre and state is not yet settled. The 101st Constitutional Amendment Act, to replace existing indirect taxes with the new GST law was notified on September 16, 2016, and the new ambitious tax reform has to be implemented within 12 months of that date i.e. before September 16, 2017. The Revised Model CGST/SGST Act, 2016 consists of 197 sections divided into 27 chapters along with 5 schedules as compared to 162 sections divided into 25 Chapters along with 4 schedules and Rules as to Valuation under First Model GST Law. Further, the Model IGST Act, 2016 consists of 24 sections divided into 11 chapters in comparison to 33 sections divided into 11 chapters under First Model GST Law. Furthermore, the Compensation bill consists of 11 clauses. This book attempts to give an insight to readers about the basic principle and theories of GST and relevancy of the same at the national & international level, in an accessible manner along with comparison of First Model GST Law with the Revised Model GST Law. I would like to highlight the title of the Book “Guide to Revised Model GST Law (with Draft Rules on Registration, Payment, Invoice, Returns and Refund)”, as the Book begins with a discussion on the present
  12. 12. Preface xi indirect tax structure of the country - its shortcomings coupled with the need of GST in India, Models of GST and Dual Model for India, various domains of GST - intra-state/inter-state supply of goods and/or services, taxable person, levy and exemption, principles of time of supply and place of supply, GST rate etc., along with procedural aspects viz. registration, payment, invoice, returns, refunds, etc. in a summarized and lucid manner for easy digest and furthermore moves on to suggest the impact of GST along with preparations required for GST and recommendations to the Revised Model GST Law. The key areas under Revised Model GST Law viz. meaning scope of supply, taxable person, threshold limits, principles of place of supply of goods and/or services, time of supply, valuation, GST credit, Adjudication, Appeal, Advance Ruling, Offences, Penalties, Imprisonment and Transitional provisions etc., have been summarized along with comparison of provisions of the Revised Model GST Law vis-à-vis First Model GST Law. The Book has also thrown light on the major concerns that may arise in GST along with suitable recommendations on the Revised Model GST Law. This Book has left no stone unturned in explaining and providing a complete understanding of the concept of GST and the provisions of the Revised Model GST Law in a simplified manner, followed by its impact, on manufacturing, service trading sector, and the preparation required for smooth transition to GST. It encourages the readers to easily grasp and understand why GST is proposed, its benefits, Dual model of GST for India and the problems/challenges inherent in the GST. I believe this book is user-friendly and can be used by students, professionals, industries, revenue officers – Central or State etc., for reference. I am thankful to my parents, family, friends, professional colleagues and office colleagues–Anjali,Nikita,Aanchal,Sumit,Ashish, fortheir excellent engagement efforts to support ensure enriched contents of the book. Moreover, I am also thankful to Young Global Publications, for their continued support and publication of this book and ensuring its nationwide reach. Further, with a view to improve future editions of this book, I solicit the valuable suggestions, views and healthy criticisms, if any, of my esteemed readers through any means of communication convenient to them. Place: New Delhi BIMAL JAIN Date: December 21, 2016 FCA, FCS, LLB, B.Com (Hons.) Email: bimaljain@hotmail.com
  13. 13. For purchase of HARD COPY OF THE BOOK PLEASE VISIT THE BELOW LINK http://www.bookskhoj.com/ViewDetails.aspx?viewId=8736 http://www.amazon.in/dp/8188274682? _encoding=UTF8keywords=guide%20to%20revised%20model% 20gst%20lawqid=1482485836ref_=sr_1_1sr=8-1
  14. 14. xiii Content at a Glance ABOUT THE AUTHORS vii PREFACE ix REVISED MODEL GST LAW – ONE MORE STEP TOWARDS BIGGEST INDIRECT TAX REFORM xxvii PART A: MODEL GST LAW Chapter 1 Overview of Present Indirect Taxation in India 1 Chapter 2 Overview and Need of GST 4 Chapter 3 How GST will work – Intra-State supply of Goods and/or Services 8 Chapter 4 Inter-State supply of Goods and/or Services under GST 10 Chapter 5 Taxable Event - Meaning and Scope of Supply 13 Chapter 6 Meaning of ‘Goods’ and ‘Services’ under GST 20 Chapter 7 Taxable person under GST and Reverse Charge Mechanism 22 Chapter 8 Composition scheme under GST 26 Chapter 9 Input tax credit under GST – Availment and Utilization 29 Chapter 10 Valuation of Goods and/or Services 43 Chapter 11 Exports and Imports of Goods and/or Services 47 Chapter 12 Place of Supply of Goods and/or Services 52 Chapter 13 Time of Supply (Point of Taxation) of Goods and/or Services 62
  15. 15. xiv Guide to Revised Model GST Law Chapter 14 E-commerce under GST 67 Chapter 15 Job Work Transactions under GST 71 Chapter 16 Assessment and Audit 74 Chapter 17 Demands and Recovery under GST 79 Chapter 18 Inspection, Search, Seizure and Arrest 86 Chapter 19 Offences and Penalties 91 Chapter 20 Prosecution and Compounding of Offences 96 Chapter 21 Appeals and Revision 101 Chapter 22 Advance Ruling and Settlement of Cases 106 Chapter 23 Transitional Provisions in GST 109 Chapter 24 Anti-Profiteering Measure 121 Chapter 25 Other Important Provisions 122 PART B: PROCEDURES AS PER DRAFT RULES IN GST Chapter 26 Registration in GST 126 Chapter 27 Ongoing migration of existing registrants in GST 130 Chapter 28 Tax Invoice, Credit and Debit Notes 133 Chapter 29 Payment of GST 138 Chapter 30 Returns under GST 144 Chapter 31 Refunds under GST 153 PART C: IMPACT, PREPARATION AND RECOMMENDATIONS Chapter 32 Impact of GST 159 Chapter 33 Preparation and Challenges ahead 167 Chapter 34 Recommendations on the Revised Model GST Law 178 ANNEXURES I. DRAFT MODEL CGST/SGST ACT, 2016 (AS RELEASED ON NOVEMBER 26, 2016) 186 II. DRAFT MODEL IGST ACT, 2016 (AS RELEASED ON NOVEMBER 26, 2016) 361 III. DRAFT GST (COMPENSATION TO THE STATES FOR LOSS OF REVENUE) BILL, 2016 386 IV. DRAFT GOODS AND SERVICES TAX - REGISTRATION RULES 394 V. DRAFT GOODS AND SERVICES TAX RULES - REGISTRATION FORMATS 405 VI. DRAFT GOODS AND SERVICES TAX - INVOICE RULES 477 VII. DRAFT GOODS AND SERVICES TAX RULES - INVOICE FORMATS 483 VIII. DRAFT GOODS AND SERVICES TAX - PAYMENT RULES 485
  16. 16. Content at a Glance xv IX. DRAFT GOODS AND SERVICES TAX RULES - PAYMENT FORMATS 489 X. DRAFT GOODS AND SERVICES TAX - RETURN RULES 500 XI. DRAFT GOODS AND SERVICES TAX RULES - RETURN FORMATS 513 XII. DRAFT GOODS AND SERVICES TAX - REFUND RULES 613 XIII. DRAFT GOODS AND SERVICES TAX RULES - REFUND FORMATS 620
  17. 17. For purchase of HARD COPY OF THE BOOK PLEASE VISIT THE BELOW LINK http://www.bookskhoj.com/ViewDetails.aspx?viewId=8736 http://www.amazon.in/dp/8188274682? _encoding=UTF8keywords=guide%20to%20revised%20model%20gst% 20lawqid=1482485836ref_=sr_1_1sr=8-1
  18. 18. xvii Detailed Content ABOUT THE AUTHORS vii PREFACE ix REVISED MODEL GST LAW – ONE MORE STEP TOWARDS BIGGEST INDIRECT TAX REFORM xxvii PART A: MODEL GST LAW Chapter 1  Overview of Present Indirect Taxation in India 1 1.1 SHORTCOMINGS IN THE PRESENT INDIRECT TAXATION SYSTEM 2 Chapter 2  Overview and Need of GST 4 2.1 VARIOUS MODELS OF GST 4 2.2 GST MODEL FOR INDIA – CONCURRENT DUAL GST 5 2.3 TAXES LIKELY TO BE SUBSUMED IN GST 5 2.4 TAXES NOT LIKELY TO BE SUBSUMED IN GST 6 2.5 HOW GST CAN HELP IN OVERCOMING THE SHORTFALLS IN OUR PRESENT INDIRECT TAXATION STRUCTURE 6 Chapter 3  How GST will work – Intra-State supply of Goods and/or Services 8 3.1 DETERMINATION OF SUPPLIES OF GOODS AND/OR SERVICES IN THE COURSE OF INTRA-STATE TRADE OR COMMERCE 8 3.2 HOW INTRA-STATE TRANSACTION OF GOODS AND SERVICES WOULD BE TAXED UNDER GST 9
  19. 19. xviii Guide to Revised Model GST Law Chapter 4  Inter-State supply of Goods and/or Services under GST 10 4.1 DETERMINATION OF SUPPLIES OF GOODS AND/OR SERVICES IN THE COURSE OF INTER-STATE TRADE OR COMMERCE 10 4.2 HOW INTER-STATE SUPPLY OF GOODS AND/OR SERVICES WOULD BE TAXED UNDER GST 11 Chapter 5  Taxable Event - Meaning and Scope of Supply 13 5.1 MEANING OF TERM ‘SUPPLY’ – AN INCLUSIVE AND SUBJECTIVE DEFINITION 13 5.2 IMPORT OF SERVICES 14 5.3 MATTERS TO BE TREATED AS SUPPLY EVEN IF MADE WITHOUT CONSIDERATION 14 5.4 SUPPLY OF GOODS VS. SUPPLY OF SERVICES 15 5.5 ACTIVITIES OR TRANSACTIONS WHICH SHALL BE TREATED NEITHER AS A SUPPLY OF GOODS NOR A SUPPLY OF SERVICES 17 5.6 ACTIVITIES OR TRANSACTIONS UNDERTAKEN BY THE CENTRAL GOVERNMENT, A STATE GOVERNMENT OR ANY LOCAL AUTHORITY WHICH SHALL BE TREATED NEITHER AS A SUPPLY OF GOODS NOR A SUPPLY OF SERVICES 18 5.7 POWERS OF THE CENTRAL OR A STATE GOVERNMENT TO NOTIFY TRANSACTIONS EITHER AS SUPPLY OF GOODS OR SUPPLY OF SERVICES OR NEITHER OF THEM 18 5.8 TAXABILITY OF COMPOSITE AND MIXED SUPPLIES: A NEW PROVISION INSERTED TO DETERMINE TAXABILITY OF BUNDLED SUPPLIES – NATURALLY BUNDLED OR NOT NATURALLY BUNDLED 18 Chapter 6  Meaning of‘Goods’and‘Services’under GST 20 6.1 MEANING OF ‘GOODS’ 20 6.2 MEANING OF ‘SERVICES’ 20 Chapter 7  Taxable person under GST and Reverse Charge Mechanism 22 7.1 MEANING OF TERM ‘TAXABLE PERSON’ 22 7.2 PERSON REQUIRED TO BE REGISTERED UNDER GST: SCHEDULE V 22 7.3 MEANING OF ‘AGGREGATE TURNOVER’ 24 7.4 DEEMED DISTINCT PERSONS UNDER GST 24 7.5 REVERSE CHARGE MECHANISM UNDER GST 25 Chapter 8  Composition scheme under GST 26 8.1 TURNOVER LIMIT FOR COMPOSITION SCHEME 26
  20. 20. Detailed Content xix 8.2 COMPOSITION SCHEME NOT AVAILABLE IN SPECIFIED CASES 27 8.3 NO COMPOSITION SCHEME IN CASE OF REVERSE CHARGE LIABILITY 27 8.4 COMPOSITION SCHEME TO BE ADOPTED UNIFORMLY BY ALL THE REGISTERED TAXABLE PERSONS, HAVING THE SAME PAN 27 8.5 WITHDRAWAL OF COMPOUNDING SCHEME ON CROSSING THRESHOLD LIMIT 27 8.6 COMPOUNDING DEALERS CANNOT ENTER INTO THE CREDIT CHAIN 27 8.7 PENALTY IN CASE OF IRREGULAR AVAILMENT OF COMPOSITION SCHEME 28 Chapter 9  Input tax credit under GST – Availment and Utilization 29 9.1 KEY DEFINITIONS 29 9.2 ELIGIBILITY AND CONDITIONS FOR TAKING ITC 31 9.3 APPORTIONMENT OF CREDIT AND BLOCKED CREDITS 32 9.4 AVAILABILITY OF CREDIT IN SPECIAL CIRCUMSTANCES 35 9.5. UTILISATION OF ITC 37 9.6. CONCEPT OF INPUT SERVICE DISTRIBUTOR (ISD) AND MANNER OF DISTRIBUTION OF ITC 37 9.6.1 Conditions for distributing ITC by ISD 39 9.6.2 Manner of recovery of credit distributed in excess 40 9.7 ILLUSTRATIONS 40 Chapter 10  Valuation of Goods and/or Services 43 10.1 BASIS OF VALUATION UNDER THE GST REGIME – TRANSACTION VALUE 43 10.2 INCLUSIONS IN THE TRANSACTION VALUE 44 10.3 EXCLUSION OF DISCOUNT IN THE TRANSACTION VALUE 45 Chapter 11  Exports and Imports of Goods and/or Services 47 11.1 IMPORT OF GOODS – DEEMED AS INTER-STATE SUPPLY UNDER GST 47 11.2 IMPORT OF SERVICES – DEEMED AS INTER-STATE SUPPLY UNDER GST 48 11.3 EXPORT OF GOODS AND/OR SERVICES – DEEMED AS INTER-STATE SUPPLY 49 11.4 ZERO RATED SUPPLY 50 Chapter 12  Place of Supply of Goods and/or Services 52 12.1 NEED FOR THE PRINCIPLES OF PLACE OF SUPPLY IN GST 53 12.2 MEANING OF IMPORTANT TERMS 53
  21. 21. xx Guide to Revised Model GST Law 12.3 PLACE OF SUPPLY OF GOODS OTHER THAN SUPPLY OF GOODS IMPORTED INTO, OR EXPORTED FROM INDIA 54 12.4 PLACE OF SUPPLY OF GOODS IMPORTED INTO, OR EXPORTED FROM INDIA 55 12.5 PLACE OF SUPPLY OF SERVICES WHERE THE LOCATION OF SUPPLIER OF SERVICE AND THE LOCATION OF RECIPIENT OF SERVICE IS IN INDIA 55 12.6 PLACE OF SUPPLY OF SERVICES WHERE THE LOCATION OF SUPPLIER OR THE LOCATION OF RECIPIENT IS OUTSIDE INDIA 59 Chapter 13  Time of Supply (Point of Taxation) of Goods and/or Services 62 13.1 TIME OF SUPPLY FOR GOODS AND/OR SERVICES 62 • General provision 62 • Supply of goods and/or services under reverse charge mechanism (“RCM”) 63 • Specific scenario – Supply of vouchers 64 • Residuary provision 64 13.2 CHANGE IN THE RATE OF TAX IN RESPECT OF SUPPLY OF GOODS OR SERVICES 64 • Where goods or services have been supplied BEFORE the change in rate of tax 64 • Where goods or services have been supplied AFTER the change in rate of tax 65 Chapter 14  E-commerce under GST 67 14.1 MEANING OF THE RELEVANT TERMS 67 14.2 COLLECTION OF TAX AT SOURCE (TCS) 67 14.3 MEANING OF TERM ‘NET VALUE OF TAXABLE SUPPLIES’ 68 14.4 OTHER PROVISIONS 69 Chapter 15  Job Work Transactions under GST 71 15.1 MEANING OF THE RELEVANT TERMS 71 15.2 SPECIAL PROCEDURE FOR REMOVAL OF GOODS FOR CERTAIN PURPOSES 71 15.3 INPUT TAX CREDIT IN RESPECT OF INPUTS/CAPITAL GOODS SENT FOR JOB WORK 72 Chapter 16  Assessment and Audit 74 16.1 MEANING AND TYPES OF ASSESSMENT 74 16.1.1 Self- Assessment 74 16.1.2 Provisional Assessment 75 16.1.3 Best Judgement Assessment 75
  22. 22. Detailed Content xxi 16.1.4 Summary Assessment 76 16.1.5 Re-Assessment 76 16.2 MEANING AND TYPES OF AUDIT 76 16.2.1 Audit by tax authorities 77 16.2.2 Special audit 77 16.2.3 Power of CAG to call for information for audit 78 Chapter 17  Demands and Recovery under GST 79 17.1 DETERMINATION OF TAX NOT PAID OR SHORT PAID OR ERRONEOUSLY REFUNDED OR INPUT TAX CREDIT WRONGLY AVAILED OR UTILIZED 79 17.2 GENERAL PROVISIONS RELATING TO DETERMINATION OF TAX 81 17.3 OTHER PROVISIONS 82 17.4 LIABILITY TO PAY IN CERTAIN CASES 84 Chapter 18  Inspection, Search, Seizure and Arrest 86 18.1 INSPECTION, SEARCH AND SEIZURE 86 18.2 INSPECTION OF GOODS IN MOVEMENT 88 18.3 ARREST PROVISION 88 18.4 OTHER PROVISIONS 89 Chapter 19  Offences and Penalties 91 19.1 PENALTY PROVISIONS IN RESPECT OF OFFENCES COMMITTED 91 19.2 GENERAL DISCIPLINES RELATED TO PENALTY 92 19.3 POWER TO IMPOSE PENALTY IN CERTAIN CASES 93 19.4 DETENTION, SEIZURE AND RELEASE OF GOODS AND CONVEYANCES IN TRANSIT 93 19.5 CONFISCATION OF GOODS AND/OR CONVEYANCES AND LEVY OF PENALTY 94 Chapter 20  Prosecution and Compounding of Offences 96 20.1 PROSECUTION 96 20.2 COGNIZABLE AND NON-COGNIZABLE OFFENCES 97 20.3 PRESUMPTION OF CULPABLE MENTAL STATE 98 20.4 COMPOUNDING OF OFFENCES 98 Chapter 21  Appeals and Revision 101 21.1 HIERARCHY OF APPELLATE AUTHORITY UNDER GST 101 21.2 PROVISIONS RELATING TO APPEALS AND REVISION 102 Chapter 22  Advance Ruling and Settlement of Cases 106 22.1 MEANING OF ADVANCE RULING 106 22.2 PROVISIONS OF ADVANCE RULING 107
  23. 23. xxii Guide to Revised Model GST Law Chapter 23  Transitional Provisions in GST 109 PROVISIONS UNDER MODEL CGST/SGST LAW • General Provision 109 • Migration of existing taxpayers having valid PAN to GST 109 • Amount of credit carried forward in last return to be allowed as input tax credit (“ITC”) 110 • Unavailed Cenvat credit on capital goods, not carried forward in a return 110 • Credit of eligible duties and taxes in respect of inputs held in stock to be allowed in certain situations 110 • Credit of eligible duties and taxes in respect of inputs held in stock for manufacturer/service provider engaged in non-exempted and exempted goods/services111 • Credit of eligible duties and taxes in respect of inputs or input services during transit 111 • Credit of eligible duties and taxes allowed to a taxable person switching over from composition scheme 112 • Exempted goods returned to the place of business on or after the appointed day 112 • Duty/(tax in SGST Act) paid goods returned to the place of business on or after the appointed day 112 • Inputs removed for job work and returned on or after the appointed day 113 • Semi-finished goods removed for job work and returned on or after the appointed day 113 • Finished goods removed for carrying out certain processes and returned on or after the appointed day 113 • Issue of supplementary invoices, debit or credit notes where price is revised in pursuance of a contract entered prior to the appointed date 114 • Pending refund claims to be disposed of under earlier law 114 • Refund claims filed after the appointed day for goods cleared or services provided before the appointed day and exported before or after the appointed day to be disposed of under earlier law 115 • Refund claims filed after the appointed day for payments received and tax deposited before the appointed day in respect of services not provided 115 • Claim of Cenvat credit to be disposed of under the earlier law 115 • Finalization of proceedings relating to output duty or tax liability 115 • Treatment of the amount recovered or refunded in pursuance of assessment or adjudication proceedings 116 • Treatment of the amount recovered or refunded pursuant to revision of returns 116 • Treatment of long term construction/works contracts 116 • Progressive or periodic supply of goods or services 116 • Taxability of supply of services in certain cases 117
  24. 24. Detailed Content xxiii • Taxability of supply of goods in certain cases 117 • Credit distribution of service tax by Input Service Distributor (ISD) 117 • Provision for transfer of unutilized Cenvat credit by taxable person having centralized registration under the earlier law 117 • Tax paid on goods lying with agents to be allowed as credit 118 • Tax paid on capital goods lying with agents to be allowed as credit 118 • Treatment of branch transfers 118 • Goods sent on approval basis returned on or after the appointed day 118 • Deduction of tax source (“TDS”) 119 • Transitional provisions for availing Cenvat credit in certain cases 119 PROVISIONS UNDER MODEL IGST LAW • Import of services or inter-state supply of goods and/or services made on or after the appointed day 119 Chapter 24  Anti-Profiteering Measure 121 Chapter 25  Other Important Provisions 122 25.1 GST RATE 122 25.2 SPECIAL PROCEDURE FOR CERTAIN PROCESSES 124 25.3 GST COMPLIANCE RATING 124 25.4 TAKING ASSISTANCE FROM AN IT PROFESSIONAL 124 25.5 DRAWAL OF SAMPLES 124 25.6 BURDEN OF PROOF FOR ELIGIBILITY OF GST ITC 124 25.7 ROUNDING OFF OF TAX, INTEREST, ETC. 125 PART B: PROCEDURES AS PER DRAFT RULES IN GST Chapter 26  Registration in GST 126 26.1 LIABILITY TO BE REGISTERED 126 26.2 STRUCTURE OF GOODS AND SERVICES TAXPAYER IDENTIFICATION NUMBER (GSTIN) 127 26.3 OTHER PROVISIONS 127 Chapter 27  Ongoing migration of existing registrants in GST 130 27.1 PROVISIONS FOR MIGRATION OF EXISTING REGISTRANTS IN GST 130 27.2 MIGRATION OF 8 MILLION ASSESSEES STARTED FROM 08-11-2016 131 27.3 INFORMATION AND DOCUMENTS REQUIRED FOR ENROLMENT WITH GST 132 Chapter 28  Tax Invoice, Credit and Debit Notes 133 28.1 TAX INVOICE 133
  25. 25. xxiv Guide to Revised Model GST Law 28.2 BILL OF SUPPLY 136 28.3 CREDIT AND DEBIT NOTES (DEBIT NOTE INCLUDES A SUPPLEMENTARY INVOICE) 136 Chapter 29  Payment of GST 138 29.1 PAYMENT OF TAX, INTEREST, PENALTY AND OTHER AMOUNTS 138 29.2 ORDER OF DISCHARGING TAX AND OTHER DUES 139 29.3 INTEREST ON DELAYED PAYMENT OF TAX 140 29.4 PAYMENT OF TAX DEDUCTION AT SOURCE (TDS) 140 29.5 SPECIAL PROVISION FOR PAYMENT OF TAX IN CASE OF ONLINE INFORMATION AND DATABASE ACCESS OR RETRIEVAL (OIDAR) SERVICES 141 Chapter 30  Returns under GST 144 30.1 MEANING OF RETURN 144 30.2 WHO ARE REQUIRED TO FILE RETURN? 144 30.3 SUMMARIZATION OF DIFFERENT RETURNS – REQUIREMENT AND PERIODICITY 145 30.4 STEPS FOR RETURN FILING (FORM GSTR-1, FORM GSTR-2 AND FORM GSTR-3) – AS PER THE DRAFT RULES ON RETURN 147 30.5 MATCHING, REVERSAL AND RECLAIM 148 30.5.1 Input tax credit 148 30.5.2 Output tax liability 150 30.6 OTHER PROVISIONS 151 Chapter 31  Refunds under GST 153 31.1 REFUND PROVISION 153 31.2 TIME LIMIT FOR FILING OF REFUND CLAIM 154 31.3 RELEVANT DATE FOR FILING REFUND APPLICATION 154 31.4 SANCTIONING OF REFUND 156 31.5 TIME LIMIT FOR PASSING ORDER 156 31.6 INTEREST ON DELAYED REFUNDS 157 31.7 ADJUSTMENT/WITHHOLDING OF REFUND 157 31.8 OTHER PROVISIONS 157 PART C: IMPACT, PREPARATION AND RECOMMENDATIONS Chapter 32  Impact of GST 159 32.1 IMPACT OF GST ON MANUFACTURING SECTOR 160 32.2 IMPACT OF GST ON SERVICE SECTOR 163 32.3 IMPACT OF GST ON TRADERS 165 Chapter 33  Preparation and Challenges ahead 167
  26. 26. Detailed Content xxv 33.1 PREPARATION AND CHALLENGES FOR THE TAXPAYERS 168 33.1.1 Migration of existing registered person 168 33.1.2 Last return under the existing regime to play important role 168 33.1.3 Computation of duties and taxes in respect of goods held in stock 169 33.1.4 Credit of stock in transit 169 33.1.5 Inputs/semi-finished goods removed to job worker and finished goods removed for carrying out certain processes 169 33.1.6 Exempted goods returned to the place of business on or after the appointed day 170 33.1.7 Area based Exemptions 171 33.1.8 Stock transfer is taxable in GST 171 33.1.9 Matching concept under GST 171 33.1.10 Benefit of abatement may not be available under GST 172 33.1.11 Services provided to employees 172 33.1.12 Reporting and analysis 172 33.1.13 Requirement of amendment in purchase order 172 33.1.14 Review of pricing policy 172 33.1.15 Review of long term contracts 173 33.1.16 Principles of Place of supply – a new concept for identifying intra-state and inter-state services 173 33.2 HOW TO GO ABOUT FOR GST – ACTION PLAN 173 33.2.1 Strengthening management of process change 173 33.2.2 Efficient strategic planning 174 33.2.3 Redefining operations and robust IT infrastructure 174 33.2.4 Education and training 174 33.3 PREPARATION AND CHALLENGES FOR THE GOVERNMENT 175 33.3.1 Dual control under GST 175 33.3.2 GST Council power only recommendatory in nature 175 33.3.3 Classification of goods and/or services in GST slab rate 176 33.3.4 Tax on services by the states 176 33.3.5 Whether existing cesses are going to be subsumed under GST? 176 33.3.6 Tax cascading 176 33.3.7 Implementation of anti-profiteering measures 176 33.3.8 IT infrastructure 176 Chapter 34  Recommendations on the Revised Model GST Law 178 34.1 SUPPLY 178 34.2 REGISTRATION 180 34.3 VALUATION 180 34.4 INPUT TAX CREDIT (ITC) 181
  27. 27. xxvi Guide to Revised Model GST Law 34.5 TDS PROVISION 184 34.6 TRANSITIONAL PROVISIONS 184 34.7 DEMANDS AND RECOVERY 185 ANNEXURES I. DRAFT MODEL CGST/SGST ACT, 2016 (AS RELEASED ON NOVEMBER 26, 2016) 186 II. DRAFT MODEL IGST ACT, 2016 (AS RELEASED ON NOVEMBER 26, 2016) 361 III. DRAFT GST (COMPENSATION TO THE STATES FOR LOSS OF REVENUE) BILL, 2016 386 IV. DRAFT GOODS AND SERVICES TAX - REGISTRATION RULES 394 V. DRAFT GOODS AND SERVICES TAX RULES - REGISTRATION FORMATS 405 VI. DRAFT GOODS AND SERVICES TAX - INVOICE RULES 477 VII. DRAFT GOODS AND SERVICES TAX RULES - INVOICE FORMATS 483 VIII. DRAFT GOODS AND SERVICES TAX - PAYMENT RULES 485 IX. DRAFT GOODS AND SERVICES TAX RULES - PAYMENT FORMATS 489 X. DRAFT GOODS AND SERVICES TAX - RETURN RULES 500 XI. DRAFT GOODS AND SERVICES TAX RULES - RETURN FORMATS 513 XII. DRAFT GOODS AND SERVICES TAX - REFUND RULES 613 XIII. DRAFT GOODS AND SERVICES TAX RULES - REFUND FORMATS 620 For purchase of HARD COPY OF THE BOOK PLEASE VISIT THE BELOW LINK http://www.bookskhoj.com/ViewDetails.aspx?viewId=8736 http://www.amazon.in/dp/8188274682? _encoding=UTF8keywords=guide%20to%20revised%20model%20gst% 20lawqid=1482485836ref_=sr_1_1sr=8-1
  28. 28. xxvii The Goods and Services Tax (GST) is envisioned as a biggest indirect tax reform of the independent India. It is a single tax on the supply of goods and services, right from the manufacturer to the consumer and credits of input taxes paid at each stage will be available in the next stage of value addition, which makes GST essentially a tax only on value addition at each stage. The implementation of GST will help to create a common national market and reduce the cascading effects of taxes on the costing and pricing of goods and services. It appears that the design of GST itself will lead to substantial benefits accruing to end consumers. The final consumer will thus have to bear only the GST charged by the last dealer in the supply chain, with set-off benefits available. GST will have a far-reaching impact on almost all the aspects of the business operations in the country, for instance, pricing of products and services, supply chain optimization, IT, accounting, and tax compliance systems. It will also help to build a transparent and corruption-free tax administration. GST is going to be a game changing indirect tax reform which was introduced as 122nd Constitutional Amendment Bill, 2014 (“the GST Bill”), replacing the 115th Constitutional Amendment Bill, 2011 and was passed by the Lok Sabha on May 6, 2015. However, it kept pending in the Rajya Sabha for long and was finally passed on August 3, 2016 with certain key amendments. Meanwhile, on June 14, 2016, the central government put the Model GST Law on public domain after getting an in-principle nod from the Empowered Committee of State Finance Ministers for seeking suggestion from the public at large. Further, in the series of events for implementation of GST, the said GST Bill received the assent of the Hon’ble President on September 8, 2016 and the same was enacted Revised Model GST Law – One more step towards biggest Indirect tax reform
  29. 29. xxviii Guide to Revised Model GST Law as the Constitution (101st Amendment) Act, 2016 [“the 101st Constitutional Amendment Act”]. On September 12, 2016, the Union Cabinet approved the formation of the GST Council (section 12 of the 101st Constitutional Amendment Act) followed by the government notifying September 16, 2016 as the appointed date for remaining sections of the 101st Constitutional Amendment Act ( i.e. section 1 to 20 except section 12). The GST Council’s first meeting was held on September 22-23, 2016, wherein consensus was developed on contentious issues of threshold exemption amount, dual control of the centre and states over assesses and base year of compensation to states for 5 years in the event of revenue loss due to switch- over to GST. However, the consensus initially arrived at on the aspect of dual control was broken later with states demanding complete control over assesses with turnover up to Rs. 1.5 crores. Then, the Central Board of Excise and Customs on September 26, 2016 has unveiled Draft Rules and formats under GST relating to registration, invoice and payment, followed by the Draft Rules and formats on GST returns and refunds on September 27, 2016, which got approval from the GST Council in its meeting dated September 30, 2016. Further, the government also unveiled the Revised Model GST Law and Draft Goods and Services Tax Compensation Bill by placing it in public domain on November 26, 2016 after incorporating suggestions from trade and industry, in a way, signalling that the GST might mark its advent soon. Since notification of the GST Council on September 12, 2016, six meetings of the GST Council have been held, wherein some of the important decisions taken (as mentioned in the report card issued by the government on December 14, 2016) are as under: (i) The threshold limit for exemption from levy of GST would be Rs. 20 lakhs for normal states (Rs. 10 lakhs for the special category states enumerated in Article 279A of the Constitution). (ii) The threshold for availing the composition scheme would be Rs. 50 lakhs. Service providers would be kept out of the composition scheme. (iii) To compensate states for 5 years for loss of revenue due to implementation of GST, the base year for the revenue of the state would be 2015-16 and a fixed growth rate of 14% will be applied to it. (iv) Approval of the Draft GST Rules on registration, payment, return, refund and invoice, debit credit notes with the understanding that minor changes may be permitted with the approval of the chairperson, if required, due to suggestions from the stakeholders or from the law department.
  30. 30. Revised Model GST Law – One more step towards biggest Indirect tax reform xxix (v) All entities exempted from payment of indirect tax under any existing tax incentive scheme would pay tax in the GST regime and the decision to continue with any incentive scheme shall be with the concerned state or central government. In case any state government or central government decides to continue any existing exemption/incentive scheme, it will be administered by way of a reimbursement mechanism. (vi) Bands of rates of goods under GST shall be 5%, 12%, 18% and 28% and in addition there would be a category of exempt goods. Further, a cess would be levied on certain goods such as luxury cars, aerated drinks, pan masala and tobacco products, over and above the rate of 28% for payment of compensation to the states. Further, the two day seventh GST Council meeting took place recently on 22-23 December, 2016. On the first day, the members debated over the provisions of the Model central/state legislation. Finally, the Council reached a broad consensus on the draft of central and state GST Legislations. On the subsequent day, a consensus was also built on the method of compensation of revenue loss to the states. It was also agreed that the states will get 100 percent compensation for revenue losses and would be compensated every two months. “The CGST and SGST laws, a total of 197 provisions and five schedules, have been approved. The legally vetted copy of the drafts will be circulated to the states. Only issues of dual control and cross empowerment are left.”, said Shri. Arun Jaitley during a press conference following the completion of the seventh GST Council meeting on December 23, 2016. The Council, however, failed to arrive at consensus on Integrated GST Law and dual control regarding division of jurisdiction and administrative powers over tax assesses with an annual turnover of INR 1.5 crores, between the centre and the states. The GST Council is scheduled to meet next on 3-4 January, 2017 to take up the issue of cross empowerment and IGST Law. It is pertinent to note that the government is all set and committed to roll out GST as envisaged from April 1, 2017, but may be delayed on account of the recent demonetisation of high-value currency by the government which has led to a lot of tussles in the Parliament. The migration of traders and merchants registered under various state and central tax regimes to the GST and the enrolment process has been sluggish as they are apprehensive about the legal implications of the GST. Moreover, the issue of dual control between the centre and state is a major roadblock for the implementation of GST for assessees whose turnover is less than Rs. 1.5 crores per year. Not only this, too many sections of the mammoth law are also yet to be finalised. Since the deadline of April 1, 2017, for rolling out GST appears little far from reality with pace of time, the government may stretch for July 1 as the next target date. The 101st Constitutional Amendment Act, to replace existing indirect taxes with the new GST law was notified on September 16, 2016, and the new
  31. 31. xxx Guide to Revised Model GST Law ambitious tax reform has to be implemented within 12 months of that date i.e. before September 16, 2017. KEY HIGHLIGHTS OF THE REVISED MODEL GST LAW The key highlights of major changes in the Model GST Law released in June, 2016 vis- a-vis November 2016 are as follows- • Capping of GST rate: The GST Council in its meeting held on 03-11-2016 has decided four-tier GST tax structure of 5%, 12%, 18% and 28%, with zero rate for essential items and the highest for luxury and de-merits goods that would also attract an additional cess on specified items. The lowest rate of 5% would be for common use items, while there would be two standard rates of 12% and 18% and luxury goods demerit goods would be covered under 28% tax rate slab with additional cess on specified items. In this regard, in the Revised Model GST Law, provisions have been inserted, thereby capping the central and state GST rates at 14% each and 28% for IGST. • Though changes have been made in definition of term “Supply”, it still continues to be inclusive and subjective one: The Model GST Law has chosen to define ‘supply’ in inclusive manner, without even defining what ‘supply’ means and its scope has been kept wide enough to include any form of supply like, sale, transfer, lease, rental etc., and even extended to cover barter and exchange. However, in the Revised Model GST Law, scope of supply has been curtailed to some extent by excluding importation of services without consideration out of taxable net, except when imported from a related person or from other establishment outside India. Further, revamp changes have been made in Schedule I dealing with “Matters to be treated as supply even if made without consideration” and nightmare situations as given in the First Model GST Law like business assets/ services put to private or non-business use, assets retained after deregistration, FOC supplies, etc., has now been done away. • Incorporation of new concept of ‘Mixed supply’ and ‘Composite supply’: In the Revised Model GST Law, new provisions have been inserted to determine taxability of mixed supply and composite supply which were not there in the First Model GST Law.  Composite supply i.e. the supplies that are naturally bundled  It shall be treated as supply of principal supply.  Mixed supply - The supplies that are not naturally bundled i.e. two or more individual supplies or combination thereof, not constituting composite supply  It shall be treated as a supply which attracts the highest rate of tax.
  32. 32. Revised Model GST Law – One more step towards biggest Indirect tax reform xxxi • No GST on securities: Unlike the First Model GST Law, the Revised Model GST Law has excluded securities from the ambit of the term ‘goods’. Meaning thereby, that the concerns of the stock market participants, brokers etc., has been addressed and there would no GST on securities. • Specified transaction in money to be services: Transaction in money is included in the definition of services but is limited only in cases when an activity relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged. • Increase in threshold limit for registration: Threshold limit for registration has now been increased from Rs. 9 lakhs to Rs. 20 lakhs for states excluding states specified in Article 279A(4)(g) of the Constitution and special category states, wherein Rs. 10 lakhs is prescribed (In the First Model GST Law, Rs. 4 lakhs was specified). • Aggregate turnover to exclude non-taxable supplies: The definition of aggregate turnover has been amended in the Revised Model GST Law to exclude non-taxable supplies but, exempt supplies, exports of goods and/or services still continues to be included in the aggregate turnover. • Insertion of concept of distinct person: Person/establishment of person who has obtained registration or required to obtain more than one registration whether in one state or more than one state/ in a state in addition to any other establishment in another state, to be treated as distinct person/establishment of distinct person. • MandatoryregistrationforoverseassuppliersupplyingOIDARservices to a person in India other than a registered taxable person: In the Revised Model GST Law, provisions have been inserted regarding mandatory registration for overseas supplier supplying online information and database access or retrieval (“OIDAR”) services to a person in India other than a registered taxable person, which was not there in the First Model GST Law. Further, in the Revised Model GST Law, the definition of the same, principle for determining place of provision of OIDAR services etc. have been inserted. • Casual taxable person or non-resident taxable person to apply for registration at least 5 days prior to commencement of business: In the Revised GST Law, it has been specifically provided that a casual taxable person or non-resident taxable person shall apply for registration at least 5 days prior to the commencement of business. However, a casual taxable person or a non-taxable person shall make taxable supplies only after the issuance of the certificate of registration.
  33. 33. xxxii Guide to Revised Model GST Law • Registration can also be amended by person having unique identity number: In the Revised Model GST Law, it has been provided that the person to whom a unique identity number has been assigned can get his registration amended. However,intheFirstModelGSTLaw,theprovisionforamendmentofregistration has been provided specifically to a registered taxable person only. • Taxablepersontodischargedueobligationsinadditiontotaxliabilities under GST even after cancellation of registration: It has been provided in the Revised Model GST Law that despite of cancellation of registration, the taxable person has to discharge all the tax liabilities and other dues or any obligation under the GST Act and rules made thereunder for any period prior to the date of cancellation, whether or not such liabilities are determined before or after the date of cancellation. • No requirement for registration also extended to a person engaged in exclusive supply of exempted goods and/or services: A person engaged exclusively in the business of supplying goods and/or services that are non-taxable or wholly exempted under GST are not required to take registration. Earlier, the person engaged exclusively in the business of supplying non-taxable goods and/or services were only kept out of the purview of the taxable person. • Minimum tax rate of 1% for traders and 2.5% for manufacturers opting for composition scheme: In the Revised Model GST Law, minimum rate of tax under composition scheme has been prescribed as not less than 1% for traders and 2.5% for manufacturers i.e. effectively for CGST/SGST, it would be 2%/ 5%. • No benefit of composition scheme to supplier of services and taxable person making inter-state outward supply of goods: In the First Model GST Law, benefit of the composition scheme was not available topersonwhoeffectsanyinter-state supplies ofgoods and/or services. However, in the Revised Model GST Law, the scope of the said scheme has been curtailed by restricting taxable person engaged in supply of services for availment of benefit of the composition scheme. Also, now it has been specifically provided that the person making inter-state outward supply of goods is not eligible for benefit of composition scheme thereby removing the ambiguity as to the term ‘person effecting inter-state supply’. • Rules for valuation of goods or services not yet provided in the Revised Model GST Law: The Revised Model GST Law does not contain any GST Valuation Rules, unlike the First Model GST Law i.e. GST Valuation (Determination of the Value of
  34. 34. Revised Model GST Law – One more step towards biggest Indirect tax reform xxxiii Supply of Goods and Services) Rules, 2016. However, it is specifically stated that where the value of supply of goods or services cannot be determined in terms of section 15(1), the same shall be determined in the manner as may be prescribed. This means that the GST Valuation Rules are yet to be revised and put on public domain. • Reimbursable expenditure or cost incurred, free of cost supplies, subsidies provided by central or state government etc., not to be included in transaction value: The items such as reimbursable expenditure or cost incurred, free of cost supplies which were forming part of the value of supply as per the First Model GST Law has now been removed. Further, it has been provided that subsidies provided by the central or state government shall be excludible from the value and only subsidies directly linked to the price will be included in the value of supply. • Removal of condition stipulating that discount should be allowed in the course of normal trade practice, for exclusion from value of supply In the First Model GST Law, it was provided that the discount allowed before or at time of supply shall not be included in the transaction value provided that such discount is allowed in the course of normal trade practice and duly recorded in the invoice issued. However, now the said condition of “discount is allowed in the course of normal trade practice” is removed. Thus, any discount that is given before or at the time of the supply will not form part of the value provided such discount has been duly recorded in the invoice issued in respect of such supply. • Interest or late fee or penalty for delayed payment of any consideration for any supply to be included in transaction value: Now, if interest or late fees or penalty for delayed payment of any consideration for any supply is paid, then it shall be includible in the value of supply, which is a departure from the provision under the present indirect taxation regime. • Separate provisions for place of supply in case of mobile connection for telecommunication services, DTH etc., provided on pre-payment through the selling agent/re-seller/distributor In the Revised Model GST Law, separate provisions have been provided for determining the place of supply of telecommunication services in cases where mobile connection for telecommunication, internet service and DTH services are provided on pre-payment through a voucher or any other means through selling agent/ re-seller/ distributor of SIM card/ re-charge voucher, which was not there in the First Model GST Law. The place of supply in the said cases shall be address of the selling agent/ re-seller/ distributor as per the record of the supplier at the time of supply.
  35. 35. xxxiv Guide to Revised Model GST Law • Deletion of concept of recipient showing receipt of supply in its books of accounts for determining time of supply: In the First Model GST Law, one of the parameter for determining time of supply was that of the recipient showing receipt of supply in its books of accounts, which has now been deleted from the list of events determining time of supply in GST in the Revised Model GST Law. • Extension of provisions for determination of time of supply when there is change in rate of tax to supply of goods: In the Revised Model GST Law, the provision for determination of time of supply when there is change in rate of tax has been extended to supply of goods which were restricted only to supply of services in the First Model GST Law. • Credit note can also be issued in case of return of goods by recipient and services found to be deficient : In the Revised Model GST Law, it has been specifically provided that credit note can be issued in the following cases also:  Where the goods supplied are returned by the recipient  Where services supplied are found to be deficient • Limits for deducting TDS reduced from Rs. 10 lakhs to Rs. 5 lakhs: In the Revised Model GST Law, threshold limit for deducting TDS has been reduced from Rs. 10 lakhs to Rs. 5 lakhs, i.e. TDS required to be deducted where the total value of such supply under a contract, exceeds Rs. 5 lakhs. • TDS to be deducted @2% in inter-state supplies and 1% in intra-state supplies: It is specified in the Revised Model IGST Law that the deductor is required to deduct TDS at the rate of 2% i.e. in case of inter-state supplies, as against 1% in case of intra-state supplies. • Changes in the provisions relating to input tax credit (ITC) in GST: The definition of the terms ‘input’ and ‘input service’ for availing ITC under GST has been elaborated to cover all goods/ services which are used or intended to be used by a supplier. The condition requiring the supplier to use input/input services for making outward supply has been removed. Further, the definition of capital goods has also been simplified in the Revised Model GST Law and has been brought in line with the accounting practices, to include all goods which have been capitalized in the books of accounts. Also, capital goods will be entitled for 100% credit immediately except for pipelines and telecommunication tower fixed to earth by foundation or structural support including foundation or structural support, on which credit shall be available is 1/3rd on yearly basis.
  36. 36. Revised Model GST Law – One more step towards biggest Indirect tax reform xxxv Furthermore, the negative list of goods and services on which no ITC shall be admissible has also amended to restrict ITC to other conveyances along with motor vehicles except when used for subsequent trading, transportation of passengers or goods, imparting training on driving, flying and navigating such vehicles and conveyances. Further, the government will notify services which are obligatory for an employer to provide to its employees under any law in force, on which credit shall be admissible. ITC of works contract services received will be allowed, where it is used for further supply of work contract services. Thus, the anomaly arising in the First Model GST Law as to whether credit shall not pass even between sub-contractor and contractor is now removed. • Works contract definition restricted to activities relating to immovable property: IntheRevisedModelGSTLaw,thedefinitionofworkscontracthasbeenamended and now it covers only the works contract relating to immovable property. • No GST on high sea supplies: It has been specifically provided in the Revised Model GST Law that IGST on imports of goods shall be payable only when the duties of customs are payable. However, the First Model GST Law was silent in this regard. Hence, high sea supplies will continue to enjoy exemption under GST as well. • Supplies to SEZ are now zero rated: Provisions for zero rated supply has been inserted in the Revised Model IGST Law, which provides that supply of goods and/or services to a SEZ developer or an SEZ unit shall also treated as zero rated supplies. Thus, zero rated supplies will attract nil rate of tax. • Changes made in the provisions of TCS required to be collected by e-commerce operator:  Rate of TCS was not prescribed in the First Model GST Law and the same has been now been fixed as 1% in case of intra-state supplies and 2% in case of inter-state supplies.  It may also be noted that in the First Model GST Law, TCS was payable out of the ‘amount payable or paid to the supplier, representing consideration towards the supply of goods and/or services made through it’, but, now it has been clarified and stated that rate shall be applied on net value of taxable supplies made through e-commerce operator.  Definition of ‘e-commerce’ and ‘e-commerce operator’ has been simplified and exclusion of persons engaged in supply of goods and/or services on their own behalf, from the definition of ‘e-commerce operator’, does not find place in the Revised Model GST Law.
  37. 37. xxxvi Guide to Revised Model GST Law  TheRevisedModelGSTLawdoesnotprovideanydefinitionof‘aggregator’, and provisions have been inserted in section 8(4) which states that the government may come out with a notification specifying which type of services that would be covered therein. Aggregators includes Ola, Uber, etc., which work as platforms for providing transport and other services, whereinbymeansoftheapplicationandacommunicationdevice,apotential customer is connected with the persons providing service of a particular kind under the brand name or trade name of the said aggregator. The TCS provision will not apply to aggregators. But, it is to be noted that section 8(4) is only for specified services and not for goods. Thus, TCS provisions would be applicable on e-commerce operators for supply of goods. Further, two provisos are contained in section 8(4), to fix the liability of GST on e-commerce operators that do not have a place of business in India – i.e. their representative will be liable to discharge liabilities under GST or if they don’t have a representative, a person has to be appointed for the purpose of paying tax. • Requirement to take permission from the proper officer for sending inputs and/or capital goods to job work, without payment of tax has been done away In the Revised Model GST Law, the procedure of taking permission before sending any inputs and/or capital goods, without payment of tax, to a job worker for job-work and from there subsequently sending to another job worker and likewise has been dispensed away and now only intimation is required. • Insertion of provisions regarding no interest payable on the amount of IGST or CGST/SGST payable where tax wrongly collected and deposited: In the Revised Model GST Law, it has been provided that a taxable person shall not be required to pay any interest on the IGST or CGST/SGST payable on transaction of inter-state/ intra-state supply which is wrongly considered as intra-state/ inter-state supply. The said provision was not there in the First Model GST Law. • Insertion of provision of power of CAG to call for information for audit: In the Revised Model GST Law, provisions have been inserted pertaining to power of CAG to call for information, records and returns furnished under the GST Act from the proper officer, required for conducting an audit under the Comptroller and Auditors General’s (Duties, Powers and Conditions of Service) Act, which was not there in the First Model GST Law. • Amendment in triggering amount of offences for imprisonment and in other related provisions: The triggering amount for imprisonment of 3 years in the First Model GST Law was, amount exceeding Rs. 50 lakhs but not exceeding Rs. 2.5 crores, now the
  38. 38. Revised Model GST Law – One more step towards biggest Indirect tax reform xxxvii said amount is increased to amount exceeding Rs. 1 crore but not exceeding Rs. 2.5 crores. Similarly, triggering amount for imprisonment of 1 year was amount exceeding Rs. 25 lakhs but not exceeding Rs. 50 lakhs which is now increased to amount exceeding Rs. 50 lakhs but not exceeding Rs. 1 crore. Further, in the First Model GST Law, there was no provision for imprisonment upto 6 months and/or with fine in the specified cases viz. obstruction or prevention of any officer in the discharge of his duties, tampering with or destroying any material evidence or documents, or failure to supply any information or supplying false information. Also, earlier the words “amount of tax evaded” was used in prosecution provisions but now the said words have been replaced with “amount of tax evaded or the amount of input tax credit wrongly availed or utilized or the amount of refund wrongly taken”. Thus, now prosecution provisions will also apply if the amount relates to ITC wrongly availed or utilized or refund wrongly taken. • Determination of cognizable and non-cognizable offences: In the Revised Model GST Law, it has been specified that in case of 5 prescribed offences such as supply of any goods and/or services without issue of invoice or grossly mis-declaring the description of the supply on invoice, tax collected but not deposited beyond a period of 3 months from due date of payment etc., where the amount of tax evaded or ITC wrongly availed or refund wrongly taken exceeds Rs. 1 crore, then the offences shall be cognizable and non- bailable. However, in the First Model GST Law, the provision was “the offences relating to taxable goods and/or services where the amount of tax evaded exceeds two hundred and fifty lakh rupees shall be cognizable and non-bailable”. Thus, threshold amount is now reduced from Rs. 2.5 Cr to 1 Cr and the general provision has been made specific and the commissioner has been given power to take cognizance of offence. • Increase in time period for issuance of notice for retention of goods The time period for issuance of notice in respect of retention of goods was 60 days plus extended period of 60 days at a time subject to a maximum of 6 months in the First Model GST Law, which was considered to be on higher side. However, in the Revised Model GST Law, the said time period is further increased to 6 months plus extension of 6 months. • Time period for issuance of show cause notice in fraud and non- fraud cases prescribed: In the First Model GST Law, no time period was prescribed for issuance of show cause notice. However, now it is prescribed under the Revised Model GST Law and accordingly show cause notice is to be issued within the below mentioned time period-  In non-fraud case: Atleast 3 months prior to the time limit for issuance of order (Time limit for issuance of order: within 3 years from the due date for
  39. 39. xxxviii Guide to Revised Model GST Law filing of annual return related to the relevant period or within 3 years from date of erroneous refund).  In fraud case: Atleast 6 months prior to the time limit for issuance of order (Time limit for issuance of order: within 5 years from the due date for filing of annual return related to the relevant period or within 5 years from date of erroneous refund). • Order to be issued with 3/5 years from due date for filing annual return: The First Model GST Law prescribed that order has to be issued within 3 years (in non- fraud case) /5 years (in fraud case) from the due date or the actual date, whichever is earlier, for filing of annual return. However, the provision now states that issuance of order shall be within the specified time period which shall be calculated from the due date for filing of annual return. • Provisions for settlement commission not yet provided: In the First Model GST Law, extensive provisions regarding settlement of cases by settlement commission were provided but in the Revised Model GST Law, the said provisions have been deleted, which would create a question in the mind of the stakeholders that whether no such mechanism shall be provided to the assessee to assess their tax liability in case of doubt instead of entering into any legal proceedings. • Transitional provisions: Transitional provisions have been revamped in the Revised Model GST Law, to address the various concerns raised by the Industry like transitional credit on goods in transit, carry forward of credit by exempted service providers, first and second stage dealers, etc. • Anti-profiteering measures: Probably, picking a cue from Malaysia having provisions of anti- profiteering measure, the Revised Model GST Law has incorporated the said provisions, which were not there in the First Model GST Law, thereby making an attempt to ensure that businesses do not take advantage of GST and should pass on the benefit of GST ITC available or reduction in rates to the consumer. However, there are concerns regarding proper implementation of this anti- profiteering measure which will be used for identifying the profiteers and a fear is raised in the minds of traders that it may result into undue power delegated in the hands of the designated authority. Further, timing of implementation of these measures will also play an important role in ascertaining its success. • Draft Compensation Bill has also been released: The government has also released Draft Compensation Bill to provide for compensation to states for loss of revenue arising on account of implementation
  40. 40. Revised Model GST Law – One more step towards biggest Indirect tax reform xxxix of GST for a period of five years. Some of the important provisions of the said bill are as follows-  Base year- For the purpose of calculating the compensation amount payable in any financial year during the transition period, the financial year ending 31-3-2016 will be taken as the base year.  Projected growth rate: The projected nominal growth rate of revenue subsumed for a state during the transition period shall be 14% per annum.  Base year revenue: Base year revenue for a state shall be the sum of the revenue collected by the state and local bodies during the base year, on account of the taxes levied by the respective state or centre, net of refunds, with respect to the taxes imposed by the respective state or centre, which are subsumed into GST viz. VAT, CST, entry tax, octroi etc. Further, in respect of the state of Jammu and Kashmir, the base year revenue shall include the amount of service tax collected by the state government.  Levy and collection of GST compensation cess: A cess called GST compensation cess at such rate as may be notified to be levied and collected on the value determined under section 15 of the CGST Act, 2016 and on such supplies of goods and services, including imports of goods and services, and those supplies on which tax is payable on reverse charge basis, which may be prescribed on the recommendations of the GST Council, for the purpose of providing compensation to states for loss of revenue arising on account of implementation of the GST for a period of 5 years, w.e.f. the date from which the CGST Act is brought into force. However, no such cess shall be leviable on supplies made by a taxable person permitted to opt for composition levy.  Returns, Payments and Refunds: Every taxable person registered under the CGST Act, 2016, making a taxable supply of goods and/or services, shall furnish such returns in such formats, as may be prescribed, along with the returns to be filed under the CGST Act, 2016, shall pay the GST compensation cess in the manner as may be prescribed and apply for refunds of cess paid and refundable in such form as may be prescribed.  GST Compensation Fund: The proceeds of the GST compensation cess shall be credited to a non-lapsable fund known as the GST Compensation Fund in the Public Account, and shall be utilized for purposes specified above. • Insertion of other provisions: Certain new provisions regarding special procedure for certain processes i.e. registration, payment for certain classes of taxable persons and taking assistance from an IT professionals have been inserted in the Revised Model GST Law which were not existing in the First Model GST Law.
  41. 41. For purchase of HARD COPY OF THE BOOK PLEASE VISIT THE BELOW LINK http://www.bookskhoj.com/ViewDetails.aspx?viewId=8736 http://www.amazon.in/dp/8188274682? _encoding=UTF8keywords=guide%20to%20revised%20model%20gst% 20lawqid=1482485836ref_=sr_1_1sr=8-1

×