GST Updates (17 November 2016)


Draft GST bills circulated with states no rates details

November 17, 2016
The Centre has circulated the draft goods and services tax (GST) Bills with the states, but it does not contain the four-slab rates agreed to by the GST Council earlier. The Union government has also circulated the draft compensation Bill with states.
With a heated debate on in Parliament over the government’s demonetisation move, the Centre is likely to introduce the Central GST and integrated GST Bills in late November or early December in the ongoing session in the form of money Bills  – http://www.business-standard.com[17-11-2016]

No rates in draft GST Bills that Centre circulates with states

November 17, 2016
The Centre has circulated the draft goods and services tax (GST) Bills with the states, but it does not contain the four-slab rates agreed to by the GST Council earlier. The Union government has also circulated the draft compensation Bill with states.

With a heated debate on in Parliament over the government’s demonetisation move, the Centre is likely to introduce the Central GSTand integrated GST Bills in late November or early December in the ongoing session in the form of money Bills, a move that may draw flak from the Opposition.

The GST Council, a body having representation from the Centre and states, will discuss these Bills on November 24 and 25.

While the Centre and the states have already decided on four-tier GSTrates – five%, 12%, 18% and 28% – these rates did not find mention in the GST Bills, sources said.

“Rates are not a part of the Bills at the moment. Most probably, powers will be taken to notify exemptions and rates. Even today, the Central Board of Excise and Customs notifies these,” one of the sources said.

It has also not yet been decided how to ring-fence these rates, one of the crucial demands of the Congress, sources added. “There is no finality as of now on how rates will be ring fenced.”

The Centre will have to clear CGST, IGST and compensation Bills in Parliament and states SGST Bill in their respective assemblies before GST could be rolled out from April 1, 2017.

States will be given seven days to suggest changes or improvement to the draft laws for GST, after which these will be taken up by the GST council, sources said.

The Centre is likely to introduce the CGST and IGST Bills in the second half of the winter session – November-end or early-December. With the Opposition attacking the ruling dispensation in Parliament over the demonetisation issue, the government is unlikely to bring three Bills related to GST in the coming days.

CGST and IGST Bills are likely to be money Bills, a source in the Parliamentary Affairs Ministry said. This might draw criticism from the Opposition, which wants it to be tabled as finance Bill because the Rajya Sabha, where they have an upper hand, does not have the power to shoot down money Bills.

The GST Compensation Bill will provide legal backing to the Centre’s promise to compensate states if their revenue growth rate falls below 14% in the first five years of the GST rollout. The base year for calculating the revenue of a state has been decided as 2015-16.

The compensation law would have the taxes subsumed and the revenue forgone by each state on account ofGST rollout.

It will give the details on how the Centre plans to raise funds for compensating the revenue loss. The Centre and states had earlier agreed on around 28% tax on high-end cars, tobacco, pan masala and aerated drinks to compensate states. Also, clean energy cess would not be subsumed into GST and would be used for funding compensation. Once the requirement of compensation is over in five years of the GST rollout, these cesses would cease to exist.

The Bill would also specify how much revenue is being raised from which item by way of levy of cess and also the way it is reimbursed to the states, leaving no room for ambiguity.

It would also specify at the end of five years if there is a surplus in the cess pool and in what proportion it should be allocated between the Centre and states. Source – http://www.business-standard.com [16-11-2016]

GST offers opportunity to ‘go digital’

November 17, 2016
The countdown to the roll-out of the goods and services tax, or GST, has begun. The government, enterprises, regulators and consumers are gearing up to handle the tax implications of “one-country one-market structure”. A lot has already been written about how enterprises can prepare for GST. However, in my opinion, GST is not just a financial reform, but a broader business reform. It has the potential to relook at how enterprises conduct their business in India.

With GST, enterprises have an opportunity to revamp systems, go beyond the physical constraints of supply chain, and focus on what matters the most for any business—customer experience! It doesn’t just stop there. With delinking of the physical footprint from direct tax implications, enterprises can use this opportunity to move beyond physical structures, ‘go digital’ and provide digital experiences.

But first, why digital? Digital is the norm in today’s era as consumers respond more when they have better digital experiences. A recent study conducted by SAP concludes that a great digital experience directly correlates with customer loyalty and advocacy.

The outcomes of the study indicate that consumers who are delighted with a brand’s digital experience are almost 10 times more likely to remain loyal than those dissatisfied with it. Moreover, consumers ‘delighted’ with the digital experience of a brand are significantly more likely to recommend the brand, to the tune of positive 77%, versus a negative 60% for dissatisfied experience. A poor digital experience these days causes more harm to a brand than just a lost sale. Negative word of mouth in digital spreads faster and wider, resulting in ‘switching economy’. A successful digital experience strategy lends enterprises the ability to serve customer needs through personalization.

What has GST got to do with the digital experience? GST has a much wider impact on the way enterprises will conduct business in India. It is change from physical to digital. As enterprises take steps to comply with the GST regime, they must use new agile models of sourcing and delivery through a better supply chain.
Free up working capital: The other big benefit of GST is to free up working capital. A recent study from CARE Ratings concluded that GST could help to reduce logistics costs by up to 20% from current levels. These potential savings can help the enterprises to build a digital footprint instead of the traditional route of investing in new offices for a bigger physical footprint.

Level playing field: One of the direct implications of GST that I foresee is the level playing field that GST provides for enterprises of all sizes. Imagine what the Indian Premier League (IPL) did to Indian cricket. Today, we see players from across the world getting uniform exposure on a globally competitive platform. Similarly, GST unifies and simplifies tax structures across all Indian states, ensuring enterprises of reduced barriers to entry and allowing the ability to compete equally.

Bigger play for SMEs: For small and medium enterprises (SMEs) that are usually more cash-strapped, there is potential to save and reinvest in growth and redefine business prospects.

Personalization and real-time pricing strategy: More information allows enterprises to use sophisticated analytics tools, offer personalized experiences to a diversified base of customers that opens up opportunities for pricing strategies to be more real time and tailored for various business segments.

As businesses take steps to adapt to the new GST regime, it is an opportunity to ‘go digital’ and redefine the business processes. Source – http://www.livemint.com [17-11-2016]

Government shares 3 draft GST Bills with states for consultation

November 17, 2016
The Central government has circulated three draft Bills relating to the Goods and Services Tax (GST) with states for consultation, a senior government official said adding that these will be taken up for discussion in next GST Council meeting on November 24-25.

The GST Council will have to clear Central GST (CGST), Integrated GST (IGST) and the compensation Bills before they can be introduced in the Winter Session of Parliament, which commenced Wednesday. States have time of over a week to give their views on the three draft laws relating to GST.

The Centre and the states have already decided on a four-tier GST rates— 5 per cent, 12 per cent, 18 per cent and 28 per cent-— but is yet to decide on the issue of cross empowerment to avoid dual control.
On November 10, Lok Sabha had listed three draft Bills relating to GST for introduction in the Winter Session of Parliament.

The constitutional amendment enabling rollout of the indirect tax regime was passed by Parliament in August, following which it became an Act in September after ratification by 16 out of 31 states and state legislatures. The government aims to introduce GST, which will subsume excise, service tax, VAT and other local levies, from April 1, 2017. Source -http://indianexpress.com [16-11-2016]

Government unlikely to bring GST bills soon

November 17, 2016
With the united opposition attacking the ruling dispensation in Parliament over the demonetisation issue, the government is unlikely to bring three bills related to GST in the coming days and hopeful of pushing them in latter half of the Winter session which began today.

The government is keen to push the passage of three legislations related to the main GST bill in the ongoing Winter session, as Parliamentary nod for these bills is must for rolling out GST from the target date of April 1, 2017.

The three bills related to GST are-the Central Goods and Services Tax Bill, the Integrated Goods and Services Tax Bill, the Goods and Services Tax (Compensation for Loss of Revenue) Bill.

The government is hopeful of passage of the three GST bills in the Winter session, which are likely to be introduced in either third or fourth week of the session, a source said.

As per the GST Constitution Amendment Bill, which was notified on September 17, 2016, the government is required to complete the process of implementation of GST within a year.

The all powerful GST Council, which is chaired by the Finance Minister and has representations from state, had already decided on a four-tier rate structure-5, 12, 18 and 28 per cent-with a cess over and above the peak rate for luxury and demerit goods.

The issue of dual control, which deals with who will control which set of assessees under GST, has been holding back the negotiations between the Centre and the states.

The government has listed total nine bills which also includes Surrogacy (Regulation) Bill for introduction, consideration and passage.

The government has listed 10 pending bills including HIV AIDS Prevention and Control bill, Mental Health Care bill, Maternity Benefit Amendment bill, Prevention of Corruption (amendment) bill and Consumer Protection bill for consideration and passing as these bills have already been introduced in Parliament. Source – http://www.financialexpress.com [16-11-2016]


Govt in favour of cross empowerment without limits

November 17, 2016
The government is in favour of not splitting jurisdiction over the taxpayers but rather is batting for cross empowerment without limits. The logic offered is that the Centre estimates only 3-5 percent of the tax payers may be audited under the Goods and Services Tax.

The Winter Session of parliament will be mainly focussed on the GST. The revised draft GST model laws were sent to states for comments on Tuesday. The draft GST compensation bill will be sent soon.

The states are in favour of horizontal division of the assessees. However the government is against both horizontal or vertical division of taxpayers. Source – http://www.moneycontrol.com [16-11-2016]

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