10 Things you should know about the New GST Law Model

Introduction

The government has just released the Model GST law. It is the long awaited documents which actually describe about its regime. GST is one of the most discussed reforms India has witnessed in recent times. It will not only boost the GDP growth, but also will help India in improving its ranking in Ease of doing business report issued by World Bank.

This law will impact every dealer/service provider in India or worldwide, hence it is very important to keep updated with the recent amendments in this area. Even the ecommerce has also been specifically dealt with under its regime.

12 key points from new GST law are as under:

1. Merging of other taxes into One: Once the GST law is applicable, then the following act will be repealed and shall not apply.

• The State sales tax act
• Value added taxes
• Excise duty
• Entry tax
• Entertainment tax
• Luxury tax
• Service tax
• Duty of Excise on medical and toilet preparation

Hence, all other taxes shall subsume into one tax. The tax is GST.

2. Threshold Limit for Exemption from Levy of Tax: A person is required to pay taxes only if its gross turnover exceeds:

 

 

 

3. Threshold limit for Registration under CGST/SGST: A person is required to be registered under CGST/SGST only if its turnover exceeds:

 

 

This is as per schedule III. The person should apply for the GST registration within 30 days.

 

4. Registration will be branch wise: As per the Chapter VI, A person having multiple business verticals in a state may obtain a separate registration for each business vertical. This means every branch will also have to be registered separately.

 

5. Status of existing dealer/service provider already registered under VAT and Service Tax: Every previous registered dealer shall be deemed to be registered under this act and shall be issued a certificate of registration on a provisional basis.

This certificate will only be valid for 6 months. The dealer will have to submit some more information as required under the act and then the department will issue them the final registration certificate.

 

6. The charging point – When you are liable to pay: This charging point of tax is on supply of goods and Services. Like under excise, the liability arises as soon as you manufacture the goods, here liability arises as soon as goods or services are supplied or agreed to be supplied for a consideration.

Hence, make sure you make the timing right, otherwise authorities will impose interest and fines.

 

7. Impact on Ecommerce – Flipkart, Amazon: Under the GST law, the marketplaces like flipkart and Amazon are regarded as aggregators, which means a person who owns and manages an electronic platform, and by means of the application and a communication device, enables a potential customer to connect with the persons providing service of a particular kind under the brand name or trade name of the said aggregator.

• TDS on Payment to supplier: The ecommerce websites will have to deduct the taxes at a rate (as may be notified by the government) from the payment of the supplier at the time of credit of any amount to the account of the supplier of goods and/or services or at the time of payment of any amount in cash or by any other mode, whichever is earlier.
• This amount deducted shall be paid to the central government within 10 days after the end of the month.

 

8. Input Tax Credit – utilization: The rules relating to input tax credits are bit confusing, and will become the part of litigation in near future. The ITC will be in the nature of types:

• IGST: Integrated Goods and Service Tax means tax levied under Integrated Goods and service tax act, 2016. It is levied on interstate supply of goods and services.
• CGST: Central Goods and Service Tax means tax levied under State Goods and service tax act, 2016.
• SGST: State Goods and Service Tax means tax levied under State Goods and Service tax act, 2016.

The manner of utilization of credit under the entire above scheme is as follows:

 

 

9. GST Compliance rating – New Concept: This concept is first time introduced in India. It is like cibil score which denotes your credit worthiness. GST compliance rating will help the department in knowing the assessee well. It is the pure example of good governance.

The salient features in this regard are as follows:

• Every taxable person shall be assigned a GST compliance rating score based on his record of compliance with the provisions of this Act
• The GST compliance rating score shall be determined on the basis of parameters to be prescribed in this behalf.
• The GST compliance rating score shall be updated at periodic intervals and intimated to the taxable person and also placed in the public domain in the manner prescribed.

 

10. Filing of Returns: Different types of returns are needs to be filed as per the requirement under this act. The  following returns are needs to be filed:

 

• Monthly Returns: Every registered taxable person shall have to e-file a monthly return for inward and outward supplies of goods and/or services, input tax credit availed, tax payable, tax paid and other particulars within 20 days after the end of such month.
• TDS Return: Every dealer who is required to deduct tax at source shall furnish a return electronically within 10 days after the end of month in which deduction is made.
• First Return – Important for the first time: Every registered taxable person paying CGST/SGST on all intra-State supplies of goods and/or services shall have to furnish the first return from the date on which he became liable to registration till the end of the month in which the registration has been granted.
• Annual return: Every registered taxable person shall have to furnish an annual return for every financial year electronically on or before the 31st day of December following the end of such financial year.

 

The new model GST law can be downloaded from the following link:

MODEL GST LAW – DOWNLOAD YOUR COPY

 

Conclusion

The GST will be one of the most impacted taxes that the country has ever seen. The whole taxation system will take a paradigm change once this GST law is passed. Hence, every business whether he is a service provider, a dealer, a manufacturer or anyone who is doing business in India will get impacted by this act.