Overview of Model GST Law

Overview of Model GST Law

CAMohit Singhal

B.Com, ACA, DISA

Singhal Mohit & Co.

Chartered Accountants

322, First Floor, Ganpati Arcade, Gururdwara Road

Gurgaon, Haryana-122001Tel: 0124-4260113,9555379714

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Multiplicity of taxes and number of compliances

Double Taxation

High Compliance Cost

Frequent amendment in laws

Administration Complexities

Lack of Uniformity in provision & rates

Several interpretational and valuation Issues, taxable events, multiple threshold

exemption limits and different forms & procedures

Shortcoming in present indirect tax structure in

India.

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Need of GST

To eliminate shortcoming of present indirect

tax structure;

To end distortions of treatment of items under

sales & service;

Widening tax base, reducing exemptions, better

compliance etc.;

Removing cascading effect ,and

Avoiding double taxation.

Benefits of GST

Abolition of multiple layers of taxes

Eliminating cascading effects of taxes

Single platform and single market

Removing interpretational Issues and classification problems

Provide corresponding input tax credit at every stage of purchase

Overall growth of country

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First time ,Implemented by France in 1954.

Malaysia is the latest country implementing GST in April,2015.

Concurrent Dual Model of GST would suggested for India

Goods and services tax would be levied and collected at each stage of sale or

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

It is basically a tax on final consumption i.e. it is a destination based

consumption tax.

GST would applicable on “Taxable Supply” unlike told tax system on service

,sale and manufacturing

GST will have two components comprising –

-Central GST (CGST) levied and collected by the CG

-State GST (SGST) levied and collected by the SG

In respect of Inter-States supplies of Goods and Services , Integrated Goods

and Services(IGST) will apply, compromising sum total of CGST AND SGST.

IGST would be administered by Centre.

An Overview-GST

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Model of GST:-

Central GST

• Tax levied by Centre with provisions for revenue sharing with Provinces/ States

• Australia

State GST

• Tax levied by Provinces/ States

• USA

Non-concurrent Dual GST

• GST on Goods levied by State & on Services levied by Centre

Concurrent Dual GST

• Tax levied by Centre & State on both Goods & Services

• Brazil & Canada – “India”

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Being Federal structure, Indian GST model would be Concurrent Dual GST

consisting both the Central GST and State GST levied on same base.

Under this model, GST will be levied by both tiers of Governments

concurrently.

There will be Central GST to be administered by the Central Government and

there will be State GST to be administered by State Governments.

In this model, both goods and services would be subject to concurrent taxation

by the Centre and the States.

All types of goods and services will be brought under this proposed GST

structure except few exceptions.

Concurrent Dual GST-(Indian Model of GST)

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Taxes Subsume under GST

Sl.

No.

Subsumed under CGST Subsumed under SGST

1 Central Excise Duty VAT / Sales tax

2 Additional Excise Duties Entertainment tax (unless it is

levied by the local bodies).

3 Excise Duty-Medicinal and

Toiletries Preparation Act

Luxury tax

4 Service Tax Taxes on lottery, betting and

gambling.

5 Additional CVD State Cesses and Surcharges

(supply of goods and services)

6 Special Additional Duty of

Customs - 4% (SAD)

Entry tax not in lieu of Octroi

7 Surcharges

8 Ceses

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Article 366 (12A) of THE CONSTITUTION (ONE HUNDRED AND FIRST

AMENDMENT) ACT, 2016

Meaning of Goods and Services Tax(GST)

“Goods and Services Tax” means any tax on SUPPLY of GOODS, or

SERVICES or both except taxes on the supply of the alcoholic liquor for

human consumption;

-As per Sec 2(92) of Draft Model GST Law,

Supply shall have the meaning as assigned to it in Section -3 of the Act.

101 The Constitution Amendment Act, 2016

What is GST?

Power to make laws wrt GST by CG & SG

Inter –State transaction to be taxed by CG

Constitution of GST Council by President for making recommendation in

relation to rates , exemptions , laws , levy principal, threshold limit, special

provision for NE states, tax on petrol, other similar matter.

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Component of GST

CGST

• Central Goods and Services Tax

• Tax levied and collected by CG

SGST

• State Goods and Services Tax

• Tax levied and collected by SG

IGST

• Integrated Goods and Services Tax

• Tax levied and collected by CG and apportioned between CG & SG

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Mandatory for person liable to be registered under Schedule III.

State wise PAN-based 15 digit registration Number

Registration within 30 days from the date liable to registration.

Already registered under an earlier law – No need to apply fresh

registration .

A person may take voluntarily registration irrespective of his turnover.

United Nations organizations and Embassy of foreign country

requires unique identification number (ID) for claiming refund of taxes

paid by them.

Notified category of persons exempted from registration on Council

recommendation by CG/SG

Known as Goods and Services Taxpayer Identification Number (GSTIN).

Registration under GST

GSTIN

State PAN Entity Code

Blank Check Digit

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

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Monthly Returns

Separate returns for Input Service Distributor, TDS , TCS

First Return , Final Return & Annual Return

Returns under GST

Return Form Purpose

GSTR-1 Outward Supply

GSTR-2 Inward Supply

GSTR-3 Monthly Return

GSTR-4 Composition Scheme(Qtr)

GSTR-5 Non Resident Taxable Person

GSTR-6 Input Service Distributor

GSTR-7 TDS Deductor

GSTR-8 E-Commerce Operator

GSTR-9/9A Annual Return

GSTR-10 Final Return

GSTR-11 UN/Ambessy

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Time of Payment under Excise/Vat/Service Tax;

‘Liability to pay’ tax arises only at the ‘time of supply’;

Supply decides ‘what’ tax is imposed, time of supply decides ‘when’ tax is

imposed;

Separate provisions for GOODS and SERVICES separately;

Forward Charge, Continuous Supply of Goods/Services, Reverse Charge;

Time of Supply under GST

Place of Supply under GST

Intra-State Supply vs. Inter State Supply;

Applicablity of IGST and/or CGST/SGST;

Different provision for GOODS and SERVICES both;

Specific method prescribed .

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Payment Under GST

• Cash Ledger in electronic form which includes an deposit towards tax, interest,penalty, fees or any other amount

Electronic Cash Ledger-2(40)

• Input Tax Credit Ledger in electronic form which includes input tax credit as self-assessed in the return.

Electronic Credit Ledger-2(41)

• All liabilities of a taxable person under this Act shall be recorded and maintained in it

TAX LIABILITY LEDGER

Date of credit to Government A/c =Date of deposit

The Electronic Cash Ledger, Electronic Credit Ledger and Tax Liability Register are

unique features of the model GST law.

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Utilization of AmountCash Ledger Credit Ledger

Tax

TaxInterest

Penalty

Fees

Any other amount

Amount available in different ledger

may be used for making any payment

towards

CGST

IGST

IGST

CGST

SGST

SGST

IGST

CGST Input

IGST Input

SGST Input

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CG,SG,LA & Notified category of persons;

Rate of TDS is 1 % if value of supply exceeding Rs . 10 Lakhs under a

contract.

Payment of TDS within 10 days of end of month

TDS certificate in Form GSTR-7A on common portal of deductee.

Credit available in electronic cash ledger

TDS Provisions under GST

E Commerce Transactions under GST

E-Commerce Operator collect TCS

Rate as prescribed

Credit available in electronic cash ledger

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Job Worker Provision

Composition Scheme

Supply Definition

Taxable Person

Valuation of Supply

Input Tax Credit Provision

Refund under GST

GST Audit

GST Compliance Rating

Other Provisions

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Overview of Model GST Law

Education

Transcript of Overview of Model GST Law