Model (Draft) Goods and Services Tax (GST) law comprising draft GST Act, 2016, Integrated Goods and Services Tax, Act 2016 (IGST Act) and GST Valuation (Determination of the Value of Supply of Goods and Services) Rules, 2016 has been released by Ministry of Finance.
Important features of Draft GST law have been summarized below:
1. Central Goods and Services Tax (‘CGST’) and State Goods and Services Tax (‘SGST’) Act would extend to the entire country (including J&K).
2. Supply of Goods and Services
a) Supply of goods and/ or services to include supply of goods and services such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business. Supply also includes certain specified categories of supplies made without any consideration.
Complex transactions in relation to transfer, land and building, treatment or process, transfer of business asset have been clarified under schedule II for determining the supply of goods or services.
b) Time of Supply of goods shall be determined by the earliest of the following: date of removal of goods or date on which goods are made available to the recipient or date of issuance of the invoice or date of receipt of payment or date on which recipient reflects the goods in his books of account.
c) Time of Supply of services shall be earliest of the following: Date of issuance of the invoice or the date of receipt of payment or date of completion of services (where invoice is not issued within a prescribed time) or date on which the recipient reflects the receipt of services in his books of account.
3. Value of supply shall be the transaction value and includes the amount which has been incurred by the receiver, re-imbursements, free of charge supplies, royalties/license fees as condition of sale, incidental expenses, subsidies linked to supply, discount after supply and all taxes other than GST levies.
4. Compounded lower rate of tax proposed to be prescribed for registered taxable persons having turnover upto INR 50 lacs with conditions
5. Input tax credit can be utilized subject to following:
– IGST can be utilized against IGST, CGST and SGST (in the same order);
– CGST can be utilized against CGST and IGST (in the same order);
– SGST can be utilized against SGST and IGST (in the same order)
6. Supplies and services ineligible for input tax credit includes motor vehicle, personal use, works contract which result in immovable property etc.
7. Value of supply for stock transfer or transfer from principal to agent/ vice versa shall be transaction value
8. Input service distributor can distribute credit in following manner:
– Interstate distribution of credit can be done by way of IGST;
– Intrastate state distribution of credit (including IGST) can be done by way of CGST/SGST
9. E-Commerce players and Aggregators to collect tax at source from the payments made to suppliers at the prescribed rate.
Returns and Payment of Tax
a) Details of outward supplies of goods/services effected during the tax period shall be required to be furnished electronically by 10th day of the month succeeding the tax period
b) Details of inward supplies of goods/services received during a tax period to be furnished electronically by 15th day of the month succeeding the tax period
c) Return pertaining to tax deducted at source shall be required to be filed electronically by 10th day after the end of such month
d) Monthly return of outward and inward supplies, including details of input tax credit availed shall be required to be filed electronically within 20 days after the end of such month
e) Annual return to be filed by 31st December following the end of such financial year
11. Payment of Tax
a) Payment of tax shall be required to be made not later than the last date on which return is required to be furnished, through the payment modes and procedures as prescribed
b) Enabling provisions for deduction of tax at source @ 1% incorporated under the draft GST Act
a) Provisional registration will be granted on the appointed date with a validity of six months; final certificate shall be issued on furnishing prescribed documents within a period of six months
b) Supplier to take registration in the state from where the taxable supply of goods and/or services is made
c) Registration to be taken within 30 days from the date on which a person becomes liable
d) Mandatory registration for identified persons like persons making interstate supplies, liable under reverse charge mechanism, input service distributor, E-commerce operators, etc
e) Threshold for registration in NE states – INR 4 lacs; Other than NE states – INR 9 lacs
a) Application to be made to the respective officer within 2 years before expiry of relevant date
b) In case of export of goods/services, refund of upto 80% of the total amount claimed may be granted; balance 20% after verification of documents
c) Period of 90 days prescribed for disposal of refund applications
a) Provisions relating to liability under special cases such as transfer of business, amalgamation/merger of companies, liquidation, liability of guardians/trustees, etc. prescribed
b) Every taxable person shall be assigned a GST compliance rating score based in on his record of compliance with the provisions of this Act