Central Goods and Services Tax Bill (CGST Bill), Integrated Goods and Services Tax Bill (IGST Bill), Union Territory Goods and Services Tax Bill and Goods and Services Tax (Compensation to States) Bill, 2017 have been introduced in the Lok Sabha (lower house of the Indian Parliament) yesterday (27 March, 2017). The Bills are likely to be taken up for discussion on 29 March, 2017.
Major features of CGST Bill - Definition of supply
Taxable event for levy of GST is supply of goods or services or both. The CGST Bill defines ‘supply’ as including all forms of supply such as sale, transfer, barter, exchange, license, rental, lease or disposal. Such supplies made or agreed to be made for a consideration by a person in the course or furtherance of business are covered for levy of CGST. Import of services for a consideration, activities mentioned in Schedule I as supplies even when consideration is not received and activities deemed as supply of goods or services as per Schedule II will also come under the ambit of supply. Schedule III mentions activities which will be treated as neither supply of goods nor services.
GST on petroleum products from date to be notified
At present five petroleum products have been kept out of GST regime, however CGST will be levied on petroleum crude, diesel, petrol, natural gas and aviation turbine fuel from a date to be notified based on recommendations of the GST Council.
Reverse Charge on specified supplies of goods / services
Based on GST Council’s recommendation, the government would be empowered to specify categories of supply of goods / services for reverse charge whereby recipient will be liable to pay tax and comply with law.
Composition Scheme whereunder GST will be payable based on fixed percentage of turnover will not be available to supply of services (except restaurants), persons engaged in inter-State supply of goods, those supplying goods through e-commerce and manufacturers of specified goods. Presently manufacturers, whose aggregate turnover in the preceding financial year did not exceed fifty lakh rupees, would be eligible for the scheme.
Advances to attract GST
The provisions of CGST Bill under the chapter on time and value of supply seek to reckon date on which payment for any supply is received as one of the triggers for time of supply and thus liability to pay GST will arise on such advance payments.
Threshold limit for registration
Every supplier whose aggregate turnover in a financial year exceeds Rs. 20 lakhs will be liable for registration. This limit will be Rs. 10 lakhs in respect of supply of goods or services or both from special category States. This threshold limit is not applicable in respect of certain categories like those making inter-State taxable supply, persons required to pay tax under reverse charge, input service distributors, e-commerce operators, etc.
Treatment of agriculture
An agriculturist will not be liable to take registration under GST to the extent of supply of produce out of cultivation of land.
Tax invoice, credit notes and debit notes
The CGST Bill contains detailed provisions requiring issuance of tax invoice and also credit notes whenever value or tax mentioned in the invoice is more than what is actually payable and vice versa. Similar provision has been made for issuance of debit notes.
Records to be maintained at every place of business
CGST Bill mandates every registered person to maintain records relating to production, inward supplies, input tax credit, stock of goods, output tax payable and paid, etc. Such records are to be maintained at principal place of business and also at additional place(s) of business.
Matching for Input Tax Credit
Purchase details of a tax payer will be matched with the corresponding supply details of his supplier and in cases of non-rectification of discrepancy, such amount will be added to output tax liability and interest on such credit availed will be payable.
Electronic cash ledger & credit ledger
Electronic cash ledger, electronic credit ledger and electronic liability register shall be maintained in the manner to be prescribed. These ledgers will be maintained at the common portal.
TDS in certain cases
Government department or establishment or government agencies will be required to deduct one per cent as tax from the payment made to the supplier when contract value exceeds Rs. 2.5 lakhs.
E-commerce operators to collect TCS
E-commerce operators who collect the consideration for supplies will be required to collect an amount not more than one per cent, as may be notified, of the net value of taxable supplies made through them.
Unjust enrichment to continue for refunds
The test of unjust enrichment placing the onus on the claimant to prove that tax incidence was not passed on at the time of claiming refund is being retained in GST regime and CGST Bill contains provisions in this regard.
Audit, search, seizure, confiscation and arrest
CGST Bill provides for audit and also inspection, search, seizure, confiscation and arrest whenever specified circumstances exist for the same. Issuance of summons to give evidence or produce documents as in the present Central Excise & Service Tax regime will continue.
Show cause notices
For demanding tax not paid or short paid, show cause notice can be issued within 3 years from the due date for filing annual return. In cases where fraud or suppression is alleged, the time-limit will be 5 years to be counted as in the case of normal period.
Provisional attachment of property including bank account
During pendency of proceedings, Commissioner may order provisional attachment of any property including bank account of the taxable person.
Liability when business is transferred
When a business is transferred, in respect of tax dues (whether order passed or not), both the taxable person and the transferee shall be jointly and severally liable.
Pre-deposit for filing appeals
Pre-deposit of 10% will be required for filing appeals with first Appellate Authority and additional 20% will have to be deposited if appeal is to be filed with Appellate Tribunal.
The CGST Bill provides for carrying forward Cenvat credit availed under the present law to the GST regime subject to various conditions and the same shall be as per manner to be prescribed. Such carrying forward facility will be available only if credit is admissible under the present law and GST law.
Any benefit resulting from GST whether due to rate or by more input tax credit, should be passed on by way of proportionate reduction in prices and an Authority constituted for this purpose will examine and take appropriate action as provided for.
Provisions have been made to cover job work, compliance rating, power to specify deemed exports, etc.
Compared to the Revised Model Law, the CGST Bill rationalises the Schedules from five to three but the essential schedules on treating certain transactions as supplies without consideration and deeming certain activities as supply of goods or services have been retained with certain modifications.