Finance Ministry, on Tuesday, released a Goods & Services Tax (GST) draft bill inviting public opinion on it, which will be used to shape the final GST Act.
This was after Finance Minister Arun Jaitley met up with state finance ministers to discuss and deliberate on the stalled GST Bill. All states, except Tamil Nadu, have given support to the GST draft as it is now.
The purpose of the GST or the indirect tax reform will be to bring all the states under a single tax umbrella.
Here is a look at some key takeaways from the draft law:
Traders with revenue of Rs 10 lakh and above will come under the GST. For northeastern states, it will Rs 5 lakh. (Earlier, the government has proposed the cap to be Rs 25 lakh.)
As per the draft laws, GST will be applicable on all intra-state supply of goods and services.
Registration under GST
The draft law mentions rule which companies will have to follow in order to register under the GST. It also states that companies which are registered under some previous law will not have to register again, but will have to follow prescribed instructions in relation to this. Also, a person who has multiple businesses in a state will have to obtain separate registration for each of them.
The government has also laid down special provisions for casual taxable person and non-resident taxable person. Amendments, cancellation, revocation of cancellation are also explained in the draft.
For small traders
For traders with less than Rs 50 lakh revenue, an option of nominal tax of 1 percent is mentioned in draft law.
GST to be on transaction value
As per the draft laws, GST will be levied on transaction value and not on actual retail prices.
Guidelines for input tax credit
The draft mentions a method by which companies can avail input credit tax. It also defines goods and services on which input tax credit is not available.
Clear guidelines are there on how companies/individual can file tax returns, interest payments and refunds as well.
The draft also proposes to bring e-commerce companies under the GST, which will address concerns over revenue loss from online transactions.
The GST collected by e-commerce players will be paid to the government within 10 days after the end of the month in which collection was made.
Guidelines for audit, search, seizure and arrest
In case of tax evasion, as per the draft laws, central and state GST offices (above certain ranks) can conduct audit and inspection. A penalty of Rs 10,000 or amount equivalent to tax evaded whichever is higher is also mentioned.
The draft law also calls for setting up of a constitution of a National Goods and Services Tax Appellate Tribunal by the Centre for grievances and disputes. This tribunal will have a branch in all states.
There are guidelines for setting up of an Appellate Authority for Advance Ruling as well.
Consumer Welfare Fund
The draft laws also mention setting up of a Consumer Welfare Fund which shall be for the consumer welfare in accordance with government specified rules.
A GST compliance rating is proposed for every taxable person. The score will be based on his /her record of compliance with the provisions of the Act.
Read more at: http://www.moneycontrol.com/news/economy/goodsservices-taxwhat-it-means-forstates_6871881.html