EXTENSION OF DATE FOR FILING OPTION FOR COMPOSITION SCHEME

Goods and services tax

Updates

Ministry of Finance , Department of Revenue:

Dated : 21st July, 2017

F. No. 345/114/2017-GST

Order No. 01/2017-GST

Extension of date for filing option for composition scheme

Extension of time limit for filing intimation for composition levy under sub rule (1) of rule 3 of the CGST Rules, 2017

In exercise of the powers conferred by section 168 of the Central Goods and Services Tax Act, 2017, the Board hereby extends the period for filing an intimation in FORM GST CMP-01 under sub-rule (1) of rule (3) of the Central Goods and Services Tax Rules, 2017 upto 16th August, 2017.

order can be access at :   http://www.cbec.gov.in/resources//htdocs-cbec/gst/order-1-gst.pdf  

CENTRAL MONITORING COMMITTEE CONSTITUTED TO MONITOR GST IMPACT

Goods and services tax

Updates / Press releases :

Dated : 21^st July, 2017

Press Release :

Ministry of Finance

Central Monitoring Committee constituted to monitor GST Impact

Government has constituted a Central Monitoring Committee headed by the Cabinet Secretary to monitor the impact of GST 

The Government of India has setup a Central Monitoring Committee headed by the Cabinet Secretary.

Three meetings of the Central Monitoring Committee have been held on 2nd July, 11th July and 18th July. The reports include the details of feedback received from various Ministries and Departments regarding the following issues:

• Steps taken by department to disseminate knowledge about GST.
•  Stakeholders still not registered.
• Position of Prices of Products pre-GST and post-GST.
• Queries received, solved by GST Cell in every department.
•  Department wise FAQs made, disseminated among its stakeholders.
• Success stories which could be publicized.
• Sector Specific training on GST required by the Ministry.
• Shortages of products, if any.

Further, the Government vide DoPT OM dated 4th July 2017 and 6th July 2017 [F.NO.36/30/2017-EO(SM I)] has appointed 209 Joint/Additional Secretary Level Officers to monitor the implementation and effects of GST across the country through District Level Clusters and submit weekly reports. A Nodal Feedback Centre has been setup under the Ministry of Finance to collect, collate and analyze the feedback being received from the district level Nodal Officers.

Further, GST Feedback and Action Room (FAR) was constituted by CBEC w.e.f.26 June, 2017 with the purpose of reviewing the information received from Ministries, State governments, field formations and social media, newspapers, news channels, e-mail, etc. and report it on Real Time basis to the Revenue Secretary, CBEC, GSTN and other concerned authorities. A team of officers monitor various media reports for any GST related news/issues and also take further necessary action. FAR has multi-line telephone numbers which are available in the control room and these numbers have been informed to the Central and State GST officers. The emails received from the Ministries, State Governments and field formations are forwarded to the respective sections for information and feedback purpose.

The immediate and long term benefits of GST are as under:

• Transparency and accountability in business transactions
• Reduction in the cascading effect of taxation and increased input tax credit utilization
• Rationalization of tax rates
• Improvement in the ease of doing business

This was stated by Shri Santosh Kumar Gangwar, Minister of State for Finance in written reply to a question in Lok Sabha today.

press release can be access at : http://pib.nic.in/newsite/erelease.aspx   issued by Ministry of finance dated 21^st July, 2017.

NO TDS ON GST PAID OR PAYABLE ON SERVICES IN CASE GST IS SEPARATELY SHOWN IN THE INVOICE _ CBDT CLARIFICATION

Ministry of Finance _ Department of Revenue_ CBDT

F. No. 275/59/2012-IT (B)

Dated : 19^th July, 2017.

No tds on gst paid or payable on services in case gst is separately shown in the invoice _ CBDT Clarification

CIRCULAR No. 23 /2017.

Subject: Modification of Circular No.1 of 2014 in view of substitution of Service Tax by Goods and Services Tax (GST).

1. The Central Board of Direct Taxes (the Board) had earlier issued Circular No. 1/2014 dated 13.01.2014 clarifying that wherever in terms of the agreement or contract between the payer and the payee, the Service Tax component comprised in the amount payable to a resident is indicated separately, tax shall be deducted at source under Chapter XVII-B of the Income tax Act, 1961 (the Act) on the amount paid or payable without including such Service Tax component.

2. References have been received in the Board seeking clarification as to what treatment would be required to be given to the component of Goods and Services Tax (GST) on services, which has been introduced by the Government with effect from 1" of July, 2017 and into which the erstwhile Service Tax has been subsumed.

3. The matter has been examined. It is noted that the Government has brought in force a new Goods and Services Tax regime with effect from 01.07.2017 replacing, an10ngst others, the Service Tax which was being charged prior to this date as per the provisions of Finance Act, 1994. Therefore, there is a need to harmonize; the contents of Circular No. 1/2014 of the Board with the new system for taxation of services under the GST regime.

4. In the light of the fact that even under the new GST regime, the rationale of excluding the tax component from the purview of TDS remains valid, the Board hereby clarifies that wherever in terms of the agreement or contract between the payer and the payee, the component of 'GST on services' comprised in the amount payable to a resident is indicated separately, tax shall be deducted at source under Chapter XVII-B of the Act on the amount paid or payable without including such 'GST on services' component. GST for these purposes shall include Integrated Goods and Services Tax, Central Goods and Services Tax, State Goods and Services Tax and Union Territory Goods and Services Tax.

5. For the purposes of this Circular, any reference to 'service tax ' in an existing agreement or contract which was entered prior to 01.07 .2017 shall be treated as 'GST on services' with respect to the period from 01.07.20 17 onward till the expiry of such agreement or contract.

6. Hindi version shall follow.

Circular  can be access at : 

http://www.incometaxindia.gov.in/communications/circular/circular_23_2017.pdf  .

CONSTITUTION AND SET UP OF IAC & EFD BY RBI

 Corporate update _ RBI :

Press Release :

Dated : 18^th July, 2017

Ministry of Finance

1. Constitution of IAC by RBI

Reserve Bank of India (RBI) has constituted an Internal Advisory Committee (IAC), which arrived at an objective, non-discretionary criterion for referring accounts for resolution under Insolvency and Bankruptcy Code, 2016 (IBC). 

Reserve Bank of India (RBI) has constituted an Internal Advisory Committee (IAC), which arrived at an objective, non-discretionary criterion for referring accounts for resolution under Insolvency and Bankruptcy Code, 2016 (IBC). In particular, the IAC recommended for IBC reference all accounts with fund and non-fund based outstanding amount greater than Rs.5000 crore, with 60% or more classified as non-performing by banks as of March 31, 2016.

Accordingly, Reserve Bank of India has issued directions to certain banks for referring 12 accounts, qualifying under the aforesaid criteria, to initiate insolvency process under the Insolvency and Bankruptcy Code, 2016.  As regards the other non-performing accounts which do not qualify under the above criteria, the IAC recommended that banks should finalize a resolution plan within six months. In cases where a viable resolution plan is not agreed upon within six months, banks should be required to file for insolvency proceedings under the IBC.

However, the names and details of borrowers are not disclosed as prescribed under section 45E of the Reserve Bank of India (RBI) Act, 1934 and Banking Laws, which provide for the obligation of a bank or financial institution to maintain secrecy about the affairs of its constituents.

In respect of the above-mentioned 12 accounts, Reserve Bank of India has advised the banks to make provisions as under:

“The minimum provisions required to be maintained against the said accounts would be the higher of the following:

(a) 50 per cent for secured portion of the outstanding balance plus 100 percent for the unsecured portion.

 (b) Provisions required to be maintained as per the extant Asset classification norms.”

The additional provisions, as required in each case, should be proportionately spread over the remaining quarters of the current financial year, starting Q2, so that the required provisions are fully in place by March, 2018.

The effect of the provisioning requirement prescribed in respect of the said 12 accounts would vary for each account and for the respective banks depending upon the current asset classification, current provisions held, security coverage, etc.

This was stated by Shri Santosh Kumar Gangwar, Minister of State for Finance in written reply to a question in Rajya Sabha today.

press release can be access at :  http://pib.nic.in/newsite/erelease.aspx   issued by Ministry of finance dated 18^th July, 2017.

2.  RBI has set up an Enforcement Department (EFD)

RBI has set up an Enforcement Department (EFD) which would serve as a centralised department to speed up regulatory compliance; EFD has been entrusted with the responsibility of enforcement action on commercial banks 

Reserve Bank of India (RBI) has informed that they have set up an Enforcement Department (EFD). EFD would serve as a centralised department to speed up regulatory compliance. EFD has been set up to separate those who oversee the possible rule breaches and those who decide on punitive actions so that enforcement process operates fairly and is evidence based.

The EFD has become functional with effect from April 03, 2017. The EFD has been entrusted with the responsibility of enforcement action on commercial banks.

This was stated by Shri Santosh Kumar Gangwar, Minister of State for Finance in written reply to a question in Rajya Sabha today. 

press release can be access at :  http://pib.nic.in/newsite/erelease.aspx   issued by Ministry of finance dated 18^th July, 2017.

GST IMPACT _ TEXTILE SECTOR

Goods and services tax

Updates / Press releases :

Dated : 18^th July, 2017

Press Release :

Ministry of Finance

FM: Organized traders and unorganized sellers in Textile Sector have not been affected by the Goods and Services Tax (GST). 

In reply to a Starred Question in Rajya Sabha today, the Union Minister for Finance, Defence and Corporate Affairs, Shri Arun Jaitley said that the organized traders and unorganized sellers in Textile Sector have not been affected by the Goods and Services Tax (GST).

Shri Jaitley said that the GST rate structure for the textile sector was discussed in detail in the GST Council Meeting held on 3rd June, 2017, wherein the Council recommended the detailed rate structure for the textile sector. Accordingly, the GST rates for the textile sector have been notified as under:

S. No.	Type of fibre/filament	GST rate
		Fibre	Yarn	Fabrics*	Garments and made ups**
1.	Silk	Nil	5%	5%	5% / 12%
2.	Wool	Nil	5%	5%	5% / 12%
3.	Cotton	5%	5%	5%	5% / 12%
4.	Other vegetable fibres	Nil / 5%	5%	5%	5% / 12%
5.	Manmade fibres / filaments	18%	18%	5%	5% / 12%

• *5% GST rate with no refund of unutilized input tax credit.
• **(i) 5% GST rate for garments / made ups of sale value not exceeding Rs.1000 per piece.
• **(ii) 12% GST rate for garments / made ups of sale value exceeding Rs.1000 per piece.

Thus, the GST rate structure for the Textiles Sector enables ease of classification and determination of rate.

The main demand of the textile traders is not to put any tax on fabrics. However, the same cannot be accepted because of the following reasons:

• Nil GST on fabrics will break the input tax credit chain and then the garments / made ups manufacturers will not be able to get the credit of tax on previous stages
• Nil GST on fabrics will result in zero rating of imported fabrics, while domestic fabrics will continue to bear the burden of input taxes.
• Generally, the GST rates are equal or lower than the pre-GST tax incidence. And therefore, the price of fabrics is not likely to go up.

It is not correct to say that textiles sector was never taxed in independent India. In fact, during 2003-04, the entire textiles sector was subjected to central excise duty. Necessary steps have been taken to facilitate taxpayers to take GST registration. GST Sewa Kendras have been set-up in various centres to handhold the taxpayers and to provide all necessary guidance regarding GST compliance.

This was stated by Shri Arun Jaitley, Union Minister for Finance, Defence and Corporate Affairs in a written reply to a Starred Question in Rajya Sabha today.

press release can be access at :  http://pib.nic.in/newsite/erelease.aspx  issued by Ministry of finance dated 18^th July, 2017.

GST : A SIMPLER TAX SYSTEM

Goods and services tax

Updates / Press releases :

Dated : 18^th July, 2017

Press Release :

Ministry of Finance

GST : to migrate from a complicated and multi tax system to a simpler tax system 

The tax rates on goods and services have been fixed taking into consideration, inter alia, the total indirect tax incidence in pre- GST regime, including cascading of taxes. The GST rates so notified are lower than the pre-GST tax incidence on most of the items of mass consumption, such as cereals, pulses, milk, tea, vegetable edible oils, sugar, toothpaste, hair oil, soap, footwear, Childrens' picture, drawing or coloring books, etc. In addition, the objective of GST was to migrate from a complicated and multi tax system to a simpler tax system. The GST thus, is a much simpler tax regime as compared to tax regime it has replaced. In fact, GST has replaced several taxes which were being levied and collected by the Centre, including Central Excise Duty; Duties of Excise (Medicinal and Toilet Preparations); Additional Duties of Excise (Goods of Special Importance); Additional Duties of Excise (Textiles and Textile Products); Additional Duties of Customs (commonly known as CVD); Special Additional Duty of Customs (SAD); and Service Tax. In addition, a number of State taxes have also been subsumed in GST, including State VAT; Central Sales Tax; Purchase Tax; Luxury Tax; Entry Tax (All forms); Entertainment Tax (except those levied by the local bodies); Taxes on advertisements; Taxes on lotteries, betting and gambling. Besides, a number of cesses have also been abolished vide the Taxation Laws Amendment Act, 2017. GST has only five rational rates (0%, 5%, 12%, 18%, and 28%) as against multiple excise duty rates, rate of cesses and surcharges and multiple rates of VAT (varying across the states in many cases). Therefore, overall the GST is much simpler to earlier tax regime it has replaced.

This was stated by Shri Santosh Kumar Gangwar, Minister of State for Finance in written reply to a question in Rajya Sabha today.

press release can be access at :  http://pib.nic.in/newsite/erelease.aspx  issued by Ministry of finance dated 18^th July, 2017.

GST RATES ARE LOWER THAN PRE – GST TAX ON MOST ITEMS OF MASS CONSUMPTION

Goods and services tax

Updates / Press releases :

Dated : 18^th July, 2017

Press Release :

Ministry of Finance

GST rates so notified are lower than the pre-GST tax incidence on most of the items of mass consumption such as cereals, pulses, milk, tea, vegetable edible oils, sugar, toothpaste, hair oil, soap, footwear, Childrens' picture, drawing or colouring books, etc. 

The GST rates on supply of goods and services have been notified based on the recommendations of the GST Council. The GST rates on goods and services have been fixed taking into consideration, inter alia, the total indirect tax incidence in pre-GST regime, including cascading of taxes. The GST rates so notified are lower than the pre-GST tax incidence on most of the items of mass consumption such as cereals, pulses, milk, tea, vegetable edible oils, sugar, toothpaste, hair oil, soap, footwear, Childrens' picture, drawing or colouring books, etc.

Further, any supplier in the State or Union territory, other than special category States, from where he makes a taxable supply of goods or services or both, whose aggregate turnover in a financial year does not exceed Rs.20 lakh [Rs.10 lakh in the case of special category States] is not liable to be registered under the Central Goods and Services Tax Act, 2017. Also, an eligible registered person in the State or Union territory, other than special category States [except Uttarakhand], whose aggregate turnover in the preceding financial year did not exceed Rs.75 lakh [Rs.50 lakh in the case of special category States other than Uttarakhand], can avail of the Composition Scheme under GST.

This was stated by Shri Santosh Kumar Gangwar, Minister of State for Finance in written reply to a question in Rajya Sabha today.

press release can be access at :  http://pib.nic.in/newsite/erelease.aspx  issued by Ministry of finance dated 18^th July, 2017.

GST EXEMPTION FOR PRODUCTS USED BY DIFFERENTLY ABLED PEOPLE

Goods and services tax

Updates / Press releases :

Dated : 18^th July, 2017

Press Release :

Ministry of Finance

GST exemption for products used by differently abled people 

Specified assistive devices, rehabilitation aids and other goods for differently abled people attract the lowest (non-Nil) GST rate of 5%. Most of the inputs for such goods attract 18% GST. Nil GST on any goods zero rates inputs, while domestic goods continue to bear input taxes. Further, for any goods which attract GST rate (other than Nil) which is lower than the inputs for such goods, the Central Goods and Services Tax Act, 2017 (GST law) provides for refund of accumulated input tax credit. Thus, 5% GST on assistive devices, rehabilitation aids, their manufacturers would enable their domestic manufacturers to claim refund of any accumulated Input Tax Credit. That being so, the 5% concessional GST rate on these devices/equipment would result in reduction of the cost of domestically manufactured goods, as compared to the pre-GST regime.

As against that, if these devices/equipments are exempted from GST, then while imports of such devices/equipments would be zero rated, domestically manufactured such devices/equipments will continue to bear the burden of input taxes, increasing their cost and resulting in negative protection for the domestic value addition.

This was stated by Shri Santosh Kumar Gangwar, Minister of State for Finance in written reply to a question in Rajya Sabha today.

press release can be access at :  http://pib.nic.in/newsite/erelease.aspx  issued by Ministry of finance dated 18^th July, 2017.

Hotel room tariff of up to Rs 7,500 will attract 18% GST

Goods and services tax

Updates / Press releases :

Dated : 18^th July, 2017

Press Release :

Ministry of Finance

Hotels with room tariff less than Rs. 7500 to attract GST

Government clarifies that accommodation in any hotel, including 5-star hotels, having a declared tariff of a unit of accommodation of less than INR 7500 per unit per day, will attract GST @ 18% ; 

Star rating of hotels is, therefore, irrelevant for determining the applicable rate of GST. 

Reports have been received expressing doubts whether 5-star Hotels are liable to pay GST @ 28% irrespective of the declared tariff of a unit of accommodation. 

In this context, it is hereby clarified that accommodation in any hotel, including 5-star hotels, having a declared tariff of a unit of accommodation of less than INR 7500 per unit per day, will attract GST @ 18%. Star rating of hotels is, therefore, irrelevant for determining the applicable rate of GST. 

press release can be access at : http://www.cbec.gov.in/resources//htdocs-cbec/press-release/cbec-press-release-hotel-accomodation.pdf and http://pib.nic.in/newsite/erelease.aspx  issued by Ministry of finance dated 18^th July, 2017.

INCREASE IN THE COMPENSATION CESS RATE ON CIGARETTES

Goods and services tax

Updates / Press releases :

Dated : 17^th July, 2017

Press Release :

CBEC - Ministry of Finance

Increase in the Compensation Cess rate on cigarettes to make the total tax incidence on cigarettes in GST regime at par with the total tax incidence in pre-GST regime. 

In pursuance of the recommendations of the GST Council in its 14^th Meeting held on 18.05.2017 and 19.05.2017, the Compensation Cess rates under Section 8 (2) of the Goods and Services Tax (Compensation to States) Act, 2017, was notified vide notification No.1/2017-Compensation Cess (Rate), dated 28.06.2017 on Intra-State or Inter-State supply of the specified goods, including cigarettes.

In respect of cigarettes, the Fitment Committee had recommended that in line with the weighted average VAT rate [28.7%], the GST rate on cigarettes may be kept at 28%. In addition, Compensation Cess may be levied on cigarettes at rates equal to 1.05 times the Specific Excise Duty Rates [net of NCCD]. However, this method of calibrating the Compensation Cess did not take into consideration the cascading of taxes [that is in earlier regime VAT being charged on value inclusive of the excise duty]. As a result, the total tax incidence on cigarettes in GST regime has come down, as compared to the total tax in pre-GST regime.

While any reduction in tax incidence on items of mass consumption would be welcome, the same would be unacceptable in case of demerit goods like cigarettes.

The GST Council in its 19^th Meeting  held today i.e. on 17.07.2017 reviewed the Compensation Cess rates on cigarettes and recommended the following increase in the same with effect from 00 hours on 18^th July, 2017 i.e. the midnight of 17^th and 18^th July, 2017:

		Compensation Cess Rates
Tariff Item		Present rate	Proposed Increase	New rates
	Non- filter
2402 20 10	Not exceeding 65 mm	5% + Rs.1591 per thousand	Rs.485 per thousand	5% + Rs.2076per thousand
2402 20 20	Exceeding 65 mm but not 70 mm	5% + Rs.2876 per thousand	Rs.792 per thousand	5% + Rs.3668per thousand
	Filter
2402 20 30	Not exceeding 65 mm	5% + Rs.1591 per thousand	Rs.485 per thousand	5% + Rs.2076per thousand
2402 20 40	Exceeding 65 mm but not 70 mm	5% + Rs.2126 per thousand	Rs.621 per thousand	5% + Rs.2747per thousand
2402 20 50	Exceeding 70 mm but not 75 mm	5% + Rs.2876 per thousand	Rs.792 per thousand	5% + Rs.3668per thousand
2402 20 90	Others	5% + Rs.4170 per thousand	31%	36% + Rs.4170 per thousand

press release can be access at : http://www.cbec.gov.in/resources//htdocs-cbec/press-release/change-compensation-cess-cigarettes.pdf and http://pib.nic.in/newsite/erelease.aspx  issued by Ministry of finance dated 17^th July, 2017.