On June 14, 2016 the Finance Ministry has released the ‘Model GST Law’. It outlines the structure of the GST regime. Further, the draft of ‘Integrated GST Bill, 2016’ is also released along with such Model GST laws. It also provides the framework for levy and collection of CGST and SGST. “CGST” is the tax levied under the Central Goods and Services Tax Bill, 2016. “IGST” is the tax levied under the Integrated Goods and Services Tax Bill, 2016.
1) Threshold limit for registration
The dealer is required to take registration under this law if his aggregate turnover in a financial year exceeds Rs.9 lakhs.
2) Place of registration
The dealer has to take registration in the State from where taxable goods or services are supplied.
3) Migration of existing taxpayers to GST
Every person already registered under extant law will be issued a certificate of registration on a provisional basis. This certificate shall be valid for period of 6 months. Such person will have to furnish the requisite information within 6 months and on furnishing of such information, final registration certificate shall be granted by the Central/State Government.
4) GST compliance rating score
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 updated at periodic intervals and intimated to the taxable person and also placed in the public domain.
5) Levy of Tax
The person registered under this law is liable to pay tax if his aggregate turnover in a financial year exceeds Rs 10 lakhs. However, a dealer conducting business in any of the North Eastern is required to pay tax if his aggregate turnover exceeds Rs. 5 lakhs.
A negative list has also been prescribed for transactions and activities of Government and Local Authorities which shall be exempt from GST levy, like activities of issuance of passport, visa, driving license, birth certificate or death certificate, etc.
6) Taxable Event
The taxable event under GST regime will be supply of goods or services. Supply includes all forms of supply of goods and/or services such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration. It also includes importation of service, whether or not for a consideration.
7) Point of taxation
CGST/SGST shall be payable at the earliest of the following dates, namely:
(i) Date on which the goods are removed for supply to the recipient (in case of movable goods).
(ii) Date on which the goods are made available to the recipient (in case of immovable goods).
(iii) Date of issuing invoice by supplier; or
(iv) Date of receipt of payment by supplier; or
(v) Date on which recipient shows the receipt of the goods in his books of account.
8) TCS on online sales of goods or service
Every E-commerce operator engaged in facilitating the supply of any goods and/or services (like Amazon, Flipkart, etc.) shall collect tax at source at the time of credit or at the time of payment whichever is earlier.
9) Valuation Rules
Such Rules shall apply to the supply of goods and/or services under the IGST/CGST/SGST Bill. Some of the methods prescribed for valuation are given hereunder:
10) Utilization of credit:
Utilization of IGST: The amount of input tax credit on account of IGST available in the electronic credit ledger of dealer shall first be utilized towards payment of IGST and the amount remaining, if any, may be utilized towards the payment of CGST and SGST, in that order.
Utilization of SGST: The amount of input tax credit on account of SGST available in the electronic credit ledger shall first be utilized towards payment of SGST and the amount remaining, if any, may be utilized towards the payment of IGST.
Utilization of CGST: The amount of input tax credit on account of CGST available in the electronic credit ledger shall first be utilized towards payment of CGST and the amount remaining, if any, may be utilized towards the payment of IGST.
Note: The input tax credit on account of CGST shall not be available for payment of SGST.
Any tax, interest, penalty, fee, etc., shall be paid via internet banking or by using credit/debit cards or NEFT or RTGS. This amount shall be credited to the electronic cash ledger of dealer.
The Central or a State Government may mandate certain departments (viz, local authority, Govt. agencies) to deduct tax at the rate of one percent on notified goods or services, where the total value of such supply, under a contract, exceeds Rs 10 lakhs.
A person can claim refund of any tax and interest by making an application in that regard to the prescribed officer of IGST/CGST/SGST. The application can be made before the expiry of two years from the relevant date as may be prescribed. It has been provided that the limitation of two years shall not apply where such tax or interest or the amount has been paid under protest.
Dealers shall be required to furnish following returns
15) Transitional Provisions