The Goods and Services Tax (GST) is being introduced with the basic concept of ‘One Nation, One Tax, One Market’. GST would mainly do away with double taxation and its cascading effect. “In the long run, there will be reduction in production cost mainly due to overriding of cascading effect of multiple taxes with the GST roll-out,” said CA Ashok Chandak, Past President of the Institute of Chartered Accountants of India (ICAI) while talking on the topic ‘Important concepts and taxable event’ at the mega seminar on ‘48 Hours to GST’ organised by Vidarbha Industries Association.
He said that GST identified entities on basis of the registrations numbers. So if a company has separate GSTNs for its two units, then supply between the units will attract GST. There will be no tax if there is a single GSTN for both the units. “However, this will be limited to deals within the state. Any transfer even with single GSTN outside the state will attract GST.” Companies will not be able to get input credit for a number of services availed for business purposes, but taken on personal name, like airlines tickets purchased for business travel. Tickets are only issued on personal names. So even if it is travel for the company’s work, no input credit will be available on the tax paid on tickets. This is because both, the buyer and seller have to match under the new system. Earlier, it was easier to get credits straightaway on the tax paid. Some of the airlines have started a system of issuing separate bill on monthly basis in company’s name.
CA Chandak said “GST will be imposed on final consumption value. It can also be imposed at different states of the country except Jammu & Kashmir. It will affect transportation cost, invoicing cost, maintenance cost, interest cost, etc.” In GST regime, a person would be benefited immensely as he would not have to deal with multiple tax authorities. The procedures had been simplified in order to maintain proper records. Similarly, the Government would also gain from lower cost of tax record administration, doing away with maintaining tax records with multiple authorities and reduction of administration cost. Also, various leakages would be plugged which were prevailing in the present tax structure. Better compliance by taxpayers would lead to increased revenue to the Government and improving the legal system. Filing of records would be totally online lowering manual interface to reduce unethical practices, he said.
There were doubts related to high sea sales. There is a common practice of selling goods on transit in the ship which are further sold on entering the port and also during transit. The question is at what point the tax will be levied, said a chartered accountant.
Experts have raised concerns over the non-availability of input tax credit under GST to a manufacturer for goods or services acquired from one state, if the end product is sold in another. The point was raised during a seminar to discuss the finer aspects of the new law which will come into effect on July 1.
Input credit is a refund available for tax paid while purchasing inputs used in making of a final product.
Traders should gear up for GST : With the introduction of GST from July 1, the way of doing business would completely change in the country. The business community should not be frightened of the Goods and Services Tax (GST) but must first try to completely understand the framework and compliances. “The GST Law is at a nascent stage and there is no need for the business community to panic,” said Adv Bharat Raichandani from Mumbai while talking on the topic ‘GST – A Reality’, at the mega seminar. He said that the business community should prepare and gear up for the biggest transition the country would be witnessing post Independence from July 1. Raichandani said that the GST Law was not very clear and there were various ambiguities in the provisions. “Lack of clarity in various issues and absence of GST in J&K will pose a serious challenge for the Government. It should have given more time to prepare for the transition to the GST regime,” he added. “For example, in a small country like Malaysia with a population of 60 lakh, the Government gave one year to the industry to prepare for the transition to GST. GST is present in more than 160 countries and is in operation since 70 years,” he said. “We should learn from their past experiences and adopt the best practices and provisions,” he suggested. GST being a compliance tax, uploading returns online on every would be difficult and a big challenge. In rural areas, the power supply and infrastructure were not upto the mark. A trader would have to file 37 returns every month in every State he was registered in.
Giving an example, Bharat Raichandani, a partner of UBR Legal, who was one of the speakers of at the conference said, “If a car-maker has plants in Maharashtra and Goa. The company’s Maharashtra unit procures spares from local ancillary units for which it pays GST. Now, when the car is sold outside Maharashtra, the input credit available for the tax paid on purchase of spares locally, will not be available to the company. While, dealers from other states who purchase the company’s cars will however, get input credit on the tax paid by them under GST. The manufacturing company only gets the credit for cars sold within the state.”
GST combines both state and central taxes. In the present system, input credit for central taxes can be availed anywhere, if the entity is same, he added.
Eminent speaker,V Shridharan, Senior Advocate from Mumbai and founder partner of Lakshmikumaran & Shridharan, talked on the topic ‘Some crucial issues in GST’. He said an indirect tax lawyer said that so far only the draft on the rates applicable has been issued. The final notification will be only issued on June 30. There is a likelihood that the final rates may change on the basis of representations put up by various business lobbies.
Shri Dhaval Talati, Sr. Tax Consultant from Mumbai made presentatation on Compliance under GST Registration, Payment, Returns, Tax returns, Invoices, Valuation, RCM, Anti Profiteering measures, Works contract, job work, Transitional provisions excluding ITC.
Shri Pravin Tapadia, Past President of VIA, in his welcome address, briefed about the latest updates on GST. CA Naresh Jakhotia, Joint Secretary of VIA conducted the proceedings. CA Sachin Jajodia, Convener of VIA Taxation and Corporate Law Forum proposed the formal vote of thanks. Prominently present were Shri Suresh Rathi, Vice-President of VIA, Shri O S Bagdia, Vice-President of VIA, Shri Rakesh Surana, EC Member of VIA, Shri Rohit Bajaj, Shri Shelendra Manawat, Shri Saket Bagdia, Shri Omprakash Jajodia, Dr Suhas Buddhe, Hon. Secretary – VIA. Prominent industry representatives from Vidarbha region and professionals attended the programme in large numbers.
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