Free GST Updates 13th & 14th Mar!

Dear Professional Frndz, There are no updates on GST since Sunday, but lets focus on some key issues in GST:

  1. IRS Association is not happy with the way GST council has taken decisions in 2017. IRS association is worried that:
    1. Corruption is set to go in GST Era provided council has given them rights over 90% of  the assessee’s under Rs.1.5 Cr revenue
    2. IRS officials seems superior to State officials since they have passed UPSC exams and then have been appointed as officers of the ex-chequer
    3. They also sense that there will be loss of expertise since Central officers have been taxing on services since 1994, now under GST Era since the responsibilities will be shared between both centre and State employees.
    4. Association also feels that the decisions have been taken in pressure and in hurry so as to implement the GST at earliest and keep the government’s promise, but this is being done with lot of unplanned work which would cause ex-chequer a lot in terms of revenue loss
    5. Lets all hope there are suitable amendments in the revised GST Model so that the GST implementation is not hampered.

  1. Reverse Charge Mechanism (RCM)
    1. In services and goods prone to tax evasion, there will be a mechanism under the proposed goods and services tax (GST) regime to make buyers or receivers liable to pay the tax, instead of sellers or suppliers. This is called a Reverse Charge Mechanism (RCM).
    2. However, these are likely to be only imposed on business to business (B2B) supply of goods and services; not on business to consumer (B2C) movement.
    3. Also, farm produce might not come under this mechanism, as farmers are not required to be registered under GST
    4. The mechanism was introduced in services with effect from July 2012. However, it was there for only some, such as rent-a-cab or goods transport agency services.
    5. The GST Bill’s enabling provision for an RCM has not specified which goods and services will come under it.
    6. At present, a company receiving a cab service is required to pay 50 per cent of the 15 per cent tax on this, 7.5 per cent, to the government. This was introduced because there were many cases of tax evasion in this service.
    7. As such, the mechanism in GST is likely to be applied on items prone to tax evasion in case of goods as well. The government will have to identify these; initially, there might not be any item so named, he felt.
    8. At present, this mechanism is only in the case of value added tax (VAT), in the form of purchase tax. There is no such mechanism in excise duty.
    9. “A reverse charge on goods is currently present by way of purchase tax in states such as Haryana and Punjab, on purchases from unregistered dealers, primarily for agricultural commodities.
    10. In the case of purchase tax, there is an inbuilt mechanism of input credit but only when goods are bought and sold within a state. In the case of services, input credit could be claimed once the tax is paid by the recipient company. In GST, the receiver will have to self-certify that it has paid the tax to claim credit.
    11. However, it is not likely that the RCM will be there for agricultural produce such as fruit, vegetables or cereals. These items are likely to be exempted from GST.
    12. The reverse charge to be introduced on goods is proof that tax collection in this form holds gravity for the government. Hence, it is an important route for expanding the tax spectrum deeper into evasion-prone items, easier to tap in some cases.
    13. The government should keep the reverse charge on a minimum number of goods as far as possible. Otherwise, compliance obligations will increase.

 

That’s it for today, we will keep you updated for all the traction related to GST in India. Hope we are making the concepts clear and keeping you updated as well. Do write us your valuable feedback. Cheers!!

 

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