Tax cut on 178 items, only 50 still in 28% slab

Three months after rolling out the new taxation system, the GST Council chaired by Arun Jaitley announced major cuts in taxes of various items.

The move comes after traders, small and medium enterprises had complained of tedious compliance burden under the new Goods and Services Tax (GST). To provide relief to them, the council decided to cut GST rate on 27 common use items. 

Friday’s decisions will come into force over the next one week as they get notified. Here is the complete list of the changes in the GST slabs:

Most of the items of common consumption brought to five percent category.

Here is a Full list of revised GST rates for 178 categories of goods; Tax rate on five-star hotels unchanged:https://goo.gl/JCiDd7

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Composition scheme: Small traders, restaurant owners set to get fresh GST relief

A high-level panel on the goods and services tax (GST) in its meeting on Sunday recommended major changes in the new indirect tax system that may ease the compliance burden for all assessees and make the composition scheme more attractive.

Goods & Services Tax

 

It also proposed further easing the burden for restaurant owners.

The group of state finance ministers (GoM), led by Assam Finance Minister Himanta Biswa Sarma, recommended that all GST payers be allowed to file quarterly returns, even as those with an annual turnover of above Rs 1.5 crore had to pay the tax every month, sources said.

The GST Council in its previous meeting had decided to allow taxpayers with a turnover of up to Rs 1.5 lakh to file quarterly tax payment and return filing.

Additionally, the panel suggested a reduction in late filing fees to Rs 50 per day, against Rs 200 at present.

In a mega relief for small and medium enterprises, the panel recommended an overhaul of the composition scheme in the form of reducing rates, hiking the eligibility threshold to Rs 1.5 crore, from Rs 1 crore, and allowing interstate supply.

It also proposed reducing rates to a flat one per cent for manufacturers and restaurants, against the current rates of two per cent and five per cent, respectively.

For traders, it recommended a lower rate of 0.5 per cent in the case of a cumulative turnover of exempted and non-exempted goods, and one per cent for non-exempted goods.

The composition scheme, which offers easier compliance, has received a lukewarm response, prompting the GST Council to give it a relook.

“We have decided on a slew of measures to make the composition scheme attractive. It will be taken before the Council for a final decision,” said Sarma, after the meeting in New Delhi.

Even job work under manufacturing will be allowed in the composition scheme.

The other members of the panel are Bihar Deputy Chief Minister Sushil Modi, Jammu & Kashmir Finance Minister Haseeb Drabu, Punjab Finance Minister Manpreet Singh Badal, and Chhattisgarh Minister of Commercial Taxes Amar Agrawal. The recommendations will be placed before the GST Council in its meeting in Guwahati on November 10.

The GoM, constituted by the Council, has suggested allowing interstate sales for composition dealers.

“The GST is one nation, one tax. Hence, dealers should be allowed to make interstate sales,” said Sarma.

It also decided that restaurants outside the composition scheme — both AC and non-AC — must continue to get input tax credit even if their GST rate was reduced from 18 per cent to 12 per cent.

“We feel that restaurants must continue to get input tax credit. The rates in that case will be decided by the Council, considering the revenue implications,” said Sarma.

However, the panel could not work out a consensus over allowing input tax credit for business-to-business transactions under the composition scheme. The Council will decide the issue.

To date, 1.5 million registered entities, amounting to a sixth of 8.9 million GST assessees, have opted for the composition scheme so far. The Council, chaired by Union Finance Minister Arun Jaitley, had raised the eligibility threshold for the composition scheme to Rs 1 crore, from Rs 75 lakh. The new window will be available till March 31. A composition dealer needs to furnish one return, i.e., GSTR-4, on a quarterly basis, and an annual return, Form GSTR-9A, as against three forms every month by a normal taxpayer.

Besides, there is no requirement of invoice-wise details or Harmonised System of Nomenclature codes in their returns. The scheme is not available for manufacturers of tobacco and tobacco substitutes, paan masala, and ice cream.

 

Source: http://bit.ly/2yYnwqO

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GST gets simpler for small Businesses and Exporters

The GST Council tweaked rules on Friday to make life simpler for small businesses and exporters and also cut rates on 27 products+ , including man-made yarn, which was a key demand of the textiles sector, in a bid to mollify those complaining about the new tax regime.

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While the main focus was on reducing the compliance burden for a majority of taxpayers+ who contribute a minuscule part of the revenue, the move to reduce the rate on man-made fibre was meant to comfort businessmen in states such as Gujarat, where assembly elections are due later this year.

Similarly, the tax rate on rotis and khakra was cut along with savouries and ayurvedic and homoeopathic medicines.

GST Council's decision to help small, medium businesses: PM


Prime Minister Narendra Modi, who had promised on Wednesday to remove all impediments, was quick to comment that the council's decisions would immensely help small and medium businesses, which have been complaining the most. "Good and service tax becomes even simpler. Today's recommendations will immensely help small and medium business... GST is in line with our constant endeavour to ensure interests of our citizens are safeguarded and India's economy grows," he tweeted hours after finance minister Arun Jaitley announced the changes at a press conference.

After day-long deliberations, the Centre and the states agreed to put in place a new mechanism that will allow those with a turnover of up to Rs 1.5 crore — which make up for over 90% of the base but only 5% of the tax collections — to file returns every quarter.

At the same time, Jaitley promised that none of the large businesses, which will have to file monthly returns, will be denied credit for the taxes paid by their smaller vendors.

In addition, the government has allowed traders, manufacturers and restaurants with turnover of up to Rs 1 crore, instead of the Rs 75-lakh cap earlier, to opt for the composition scheme that will reduce their compliance burden by paying a flat rate of tax ranging between 1% and 5%. In addition, the deadline for the reverse charge mechanism was also extended.

"If you look at the GST pattern, the large players provide substantial taxation. SMEs pay nil or nominal tax but have high compliance pressures," Jaitley said.

There was also a major relief package for exporters, who have been complaining of funds getting locked up due to the absence of refunds and tax credits. Jaitley acknowledged that funds were blocked, impacting the cash liquidity of exporters.

As a result, the GST Council has decided to exempt those covered by the advance authorization scheme, export promotion capital goods or 100% export-oriented units from paying taxes on inputs till March. Merchant exporters will pay 0.1% GST for purchases from domestic players.

Source: https://goo.gl/U36tFW

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Aadhaar Linking: 4 Deadlines That You Can't Afford To Miss

Aadhaar, the 12-digit unique identity number issued by the Unique Identification Authority of India (UIDAI), has to be mandatorily linked to your mobile phones, permanent account number or PAN, mobile phones and is also to be shared with financial institutions and has to be submitted to avail the various social security schemes. There are different deadlines for each of these.

1. Aadhaar PAN Link: Deadline December 31, 2017
The CBDT (Central Board of Direct Taxes) has extended the last date for linking of Aadhaar with PAN "to facilitate ease of compliance by the taxpayers". The new deadline is December 31, 2017, while the former one was August 31, 2017.
Linking Aadhaar-PAN is mandatory for processing of income tax returns (ITRs) for assessment year 2017-18.

2. Aadhaar Mobile Phone Link: Deadline is February, 2017
All mobile phone numbers not linked with Aadhaar will be deactivated after February 2018, according to a report by news agency Indo-Asian News Service (IANS) citing sources.
That means mobile phone service users will have to link their Aadhaar numbers with mobile numbers. Telecom companies had been earlier instructing users to start the process of linking Aadhaar with phone numbers.

3. Aadhaar financial institutions, banks link: December 31, 2017
The government has made it mandatory for all banks and financial institutions to mention the Aadhaar details of clients in the KYC (Know your Customer) document. A KYC document basically provides all the details that authenticate the identity of a user. People who have taken loans are also supposed to file their Aadhaar details. If you fail to link it with your bank account by December 31 this year, it may even become inoperable. 

4. Aadhaar Details For To avail Social Security Schemes: December 31, 2017
Your 12-digit Unique Identity Number has to be provided for all social security schemes by December 31, 2017.  In order to avail your pension, LPG cylinders or government scholarships, one must provide his Aadhaar card details.

Source:http://www.msn.com/en-in/money/topstories/aadhaar-linking-4-deadlines-that-you-cant-afford-to-miss/ar-AArSiq7?li=AAggbRN&ocid=iehp

GSTR return filing date extended to 10th September

The Government on Monday said the date of filing GSTR 1 has been extended to September 10 against the earlier deadline of tomorrow.

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Subsequently, filling of GSTR 2 and GSTR 3 has been extended to September 25 and 30 respectively.
The filing of GSTR 1 for August has been extended to October 5, GSTR 2 till October 10 and GSTR 3 till October 15.
By late afternoon, the GSTN portal had crashed under heavy load and users got an error message asking them to try again later. 
Form GSTR-1 is a statement in which a regular dealer needs to capture all the outward supplies made during the month. Broadly, all the outward supplies made to registered businesses (B2B) are required to be captured at invoice level, and supplies made to unregistered business or end consumers are required to be captured at rate-wise. This would often mean several thousand invoices would need to be uploaded by a mid sized firm and therein lies the challenge. 
GSTR-1 format contains 13 tables in which the outward supplies details needs to be captured. However, the companies ET.com spoke to there are additional details the site asks for and this is proving to be another time consuming area.
"With the extension in deadline for submitting GSTR-1 for the month of July by five days, taxpayers will have more time to upload their data and submit return. However, given the issues being faced by taxpayers, more extension may be required than just five days," says ClearTax,Founder & CEO, Archit Gupta.
Read more:http://economictimes.indiatimes.com/small-biz/policy-trends/government-extends-gstr-1-filing-date-to-september-10/articleshow/60365236.cms
Source:https://goo.gl/8BrmrW
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Fringe benefits availed by employees liable to GST

The new Goods and Services Tax (GST) will be applicable on any non-monetary fringe benefit an employee gets from his employer, the government said today.
Monetary compensation paid to employees is not considered supply and will not attract GST, the Central Board of Excise and Customs (CBEC) said in the latest round of clarification issued in form of frequently asked questions (FAQ).

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The monetary income will, however, continue to attract the relevant income tax.
"The compensation to employees in the form of money is not a supply. However, fringe benefits are a supply of goods or services and are liable to tax if not exempted," the CBEC said.

The fringe benefits are transactions in furtherance of business. "Even if supplied without consideration, the same are deemed supply" and will attract GST, it said.
On rental income, it said GST will not be levied on the rental income of less than Rs 20 lakh in a year.

"That said, where the rental income from a single property is less than Rs 20 lakh but the aggregate rental income from various properties exceed Rs 20 lakh, the requirement for registration and GST payment will be there," it said.
According to the FAQ, no GST is chargeable if free replacement is provided by a business to customers without consideration under warranty.
Also, goods sent for a demonstration on returnable basis would not be considered supply as there is no transfer of title involved.
But, if some element of service is involved, the same will be a taxable supply, it said.

Equipment and instruments sent to manufacturers'' factory for repairs and calibration within India on returnable basis would mean no sale has taken place. And challan for movement of goods without supply is to be issued for such items.

On penalties levied on late or delayed payment of loans and advances, the FAQ said penal interest is a consideration for tolerating an act and it is a supply of service and will be taxable.

It prescribed that GST has to be paid by a job worker on job work charges only.
Also, GST would be charged on labour charges in an invoice.
Illustrating on how GST is to be levied, the FAQ said if laptop bag is supplied along with the laptop in the ordinary course of business, the principal supply is that of the laptop and the bag is an ancillary.

"Therefore, it is a composite supply and the rate of tax would be that as applicable to the laptop," it said.
Recipient of online database access services from a company abroad over the net would have to pay the applicable Integrated-GST (IGST) tax on reverse charge basis.

In case the recipient is not registered, "the matter is treated as an online transaction and database access or retrieval services (OIDAR) and the OIDAR service provider is liable to take registration and pay tax," it added.

Source: https://goo.gl/66mP5N

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The Impact of GST on Residential Real Estate

The switchover to the GST regime is undoubtedly one of the biggest tax reforms in post-independence India. It replaces the multiple taxes levied by the central and state governments and will become subsumed of all the indirect taxes, including central excise duty, commercial tax, octroi tax/charges, Value-Added Tax (VAT) and service tax.

GST has been predominantly conceptualized around a ‘One Nation, One Tax’ philosophy and will:

• Help eliminate the previous cascading tax structure
• Ease compliances
• Create uniform tax rates and structure, and
• Help in reducing additional tax burdens on consumers.

However, the biggest game changer in GST is the introduction of Input Tax Credit, whereby credits of input taxes paid at each stage of production or service delivery can be availed in the succeeding stages of value addition. This makes GST fundamentally a tax only on value addition at each stage.

Impact on Residential Real Estate

To say the least, the Indian real estate sector has been going through a significant transformation in the recent times. The recently implemented Real Estate and Regulation Act (RERA) has already started addressing the issue of non-transparency and affixes a level of accountability on real estate builders and brokers which are unprecedented in the history of the Indian property sector.

For the residential real estate sector, the implementation of GST will definitely be a positive sentiment booster among property buyers. GST may not be instrumental in bringing down the prices of residential real estate over the short term. However, it will benefit all the stakeholders of the residential real estate sector, as the perception of the sector will improve on the back of a simplified tax structure and accountability being fixed at every stage.

Benefit to Property Buyers

A simple and transparent tax applied on the purchase price is the biggest take- away for property buyers. Under the GST regime, all under-construction properties will be charged at 12% (excluding stamp duty and registration charges). It will not apply to completed and ready-to-move-in projects, as there are no indirect taxes applicable in the sale of such properties.

VAT (with rates differing from one state to another) and Service Tax together accounted for 7-9% of the ticket price for a residential property, which is 3-4% lower than the GST rate. However, due to information asymmetry, consumers were largely unaware of how VAT and service tax is calculated – definitely, the entire tax calculation was too complex for people to understand.

Any real estate product comprises of three expense components, namely land, material, and labour or service costs. VAT is calculated on material cost, and service tax is calculated on labour and service cost. It is very difficult for buyers to ascertain what components were included for calculation of VAT and service tax.

The implementation of GST makes the calculation much simpler since the buyer has to pay only a single Goods and Services Tax. Also, the builder must pass on the benefit of the price reduction he enjoys due to input tax credit to the buyer.

Impact on Affordable Housing

The affordable housing sector, which is a major thrust area of the incumbent Government and is the cornerstone of its ‘Housing for all by 2022’ vision, will not be impacted by GST. This has been clarified by the announcement from the Finance Ministry, which indicates that there will be no tax under GST for housing projects which come under the affordable housing scheme.

Benefit to Developers

In the previous tax regime, real estate developers also grappled with the challenge of multiple taxations. On various construction materials they purchased, builder paid customs duty, central sales tax, excise duty, entry tax, etc., thus creating various instances of multiple taxations. The cumulative burden eventually got passed on to the buyer.

GST will eliminate all the other taxes, and the benefit of being able to claim input tax credit can also improve developers’ profit margins.

Major construction materials have not seen a major change in tax rate.

• Cement will be taxed at the rate of 28% under GST, which is higher the current average rate of tax around 20-24%
• Iron rods and pillars will be charged at the rate of 18%, which is similar to the average rate of 20% under the old taxation regime
• Paint, wall fittings, plaster, wallpaper and ceramic tiles will be taxed at 28%, which is also similar to the previous average rate of 20-25%
• Sand lime bricks and fly ash bricks will be taxed at 5%, which is lower than the previous rate of 6%.

However, the marginal change in the percentage of these variables will make a huge difference as transportation and logistics costs reduce in the single taxation system.

To conclude

While there might be a marginal impact on the real estate sector in the near term, we are definitely looking at a significant improvement in buyer sentiment and perception of this sector. Developers too will find the GST regime much simpler to work with, with the benefit of input tax credit being an added advantage.

Original Source: http://bit.ly/2ic2UUT 

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GST impact on online shopping

GST impact on online shopping, tax breaks: All you to know about the changed rules in 7 brief points:

On July 1, India moved on to a new era of taxation with the rollout of Goods and Services Tax (GST). It has now subsumed 17 central and state indirect taxes and 23 cesses into a single tax regime. Such a big transition is bound to change the lives of many individuals and businesses. Some of such changes are as follows:
Change in shopping online
Under the new regime, goods will be delivered to a customer much faster than the previous regime due to removal of paperwork to be filed with state authorities. Though goods will reach on time, a pain point for consumers would be returns and cancellations as e-commerce companies may make this a tad difficult since they would now have to bear the tax amount on their own and only later be able to get a refund from the government in case of returns and cancellations. The companies will face a major cash-flow disadvantage due to returns and cancellations.

GST

Relief to consumers
A huge relief to consumers has been the reduction in nominal tax rates for a majority of goods. Half of the items in the Consumer Price Index (CPI) basket will be exempt from GST and another tenth will be taxed at the lowest rate of 5%. The balance CPI goods would come under either of the two standard rates of 12% or 18%, rather than the highest rate of 28%.
Anti-profiteering clause
The government has set up an anti-profiteering body to keep a watch on how businesses recalibrate the tax-inclusive price charged from consumers. Hence, companies and traders are expected to pass on the benefit to the consumers. This would result in further reduction of prices on various goods and services.
Getting tech savvy
In lines with Digital India, all filings in GST will have to be done online. Hence, all businesses would not only have to update their systems but also train their workforce to become tech savvy. It will specifically effect smaller traders who earlier managed their tax filings manually.
Ease of process
GST will not only ease the process of business but also bring in transparency in the whole process. All the invoices uploaded by sellers will also be visible to buyers. For the first time, consumers will get to know the actual amount of taxes they are paying for goods and services in the form of single GST. The efficiency of GST is expected to bring down the tax burden and improve transparency.
Tax breaks to end
There is no more excise duty exemption for setting up production units in the north east or hill states. Businesses will have to make investment decisions based on sound economics rather than tax arbitrage. Units that have already come up on the promise of excise exemption for a specified period will have to pay tax first and claim refunds in the remaining period.
Competitive business environment
It will shift the burden of taxes from the manufacturers in India where the tax system is unfairly skewed towards the consumers. Manufacturers will pay lower taxes and there will be an environment of greater competitiveness and more freedom in business.
Compliances
The number of returns to be filed under GST has been a hot topic of debate. In the GST regime businesses have to file a total of 37 returns per state. However, everything being online, it is expected to be easier. Also, now such businesses would have to deal with one tax authority rather than multiple authorities as in the past regime.
Source: http://bit.ly/2sMoRyq
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How Will New Taxation System GST Work?

When GST or goods or services tax rolls out on July 1, it will be the biggest tax reform since Independence. GST will subsume a large number of central and state taxes into a single tax, paving the way for a common national market. From free flow of goods and services to elimination of cascading of taxes, the potential benefits to Indian economy are many. It is estimated that GST could raise GDP or gross domestic product growth by 1.5-2 per cent in the long term.

Good and Service Tax

Here is a 10-point:

1. GST is a destination-based tax, as against the present principle of origin based taxation. The new tax regime follows a multi-stage collection mechanism wherein tax is collected at every stage and the credit of tax paid (input tax credit) at the previous stage is available as a set-off at the next stage of transaction. This helps to eliminate "tax on tax" or the cascading impact of tax. GST shifts the tax incidence near to the consumer and benefits the industry through better cash flows and better working capital management. From consumer point of view, GST helps to bring down overall tax.
2. Input tax credit: This means that at the time of paying tax on output manufacturers or service providers, for example, can reduce the tax by the amount they have already paid on inputs. For example, a manufacturer's total tax on output comes to Rs. 5,000 while tax paid on input (purchases) is Rs. 3,000. In this case, the manufacturer needs to deposit only Rs. 2,000 (Rs. 5,000 - Rs. 3,000) as tax, after claiming credit of Rs. 3,000, thus reducing the overall incidence of tax on final product. But credit available to the recipient (the manufacturer in this case) only if invoice is matched. So GST helps in checking evasion of taxes.
3. GST rates: GST rates on goods and services have been broadly classified into four tax rates: 5 per cent, 12 per cent, 18 per cent and 28 per cent. Some goods and services would be exempt. Precious metals like gold will attract a separate tax rate of 3 per cent. A cess will be levied over the peak rate of 28 per cent on specified luxury and sin goods. Under GST, businesses are required to file returns each month. But the government has let companies file late returns for the first two months so that they can adapt to a new online filing system.
4. CGST, SGST, IGST: The GST to be levied by the Centre would be called Central GST (CGST) and that to be levied by the States (including Union territories with legislature) would be called State GST (SGST). An Integrated GST (IGST) would be levied on inter-State supply (including stock transfers) of goods or services. This would be collected by the Centre. Import of goods would be treated as inter-State supplies and would be subject to IGST in addition to the applicable customs duties. Exports will be treated as zero-rated supplies which means no tax will be payable on exports of goods or services. However, exporters can claim input tax credit.
5. Who is liable to pay GST? Businesses with an annual turnover of Rs. 20 lakh (Rs. 10 lakh for special category states) would be exempt from GST. A composition scheme (to pay tax at a flat rate without input credits) is available to manufacturers and service providers having an annual turnover of up to Rs. 75 lakh. The composition scheme is optional.
6. Stocks in transition: On stocks unsold before GST rollout, manufacturers and retailers have been allowed to carry forward input tax credit for 90 days. On such goods they can claim as much as 60 per cent of the input tax credit on stocks lying unsold up to June 30.
7. Anti-profiteering mechanism: An authority will be set up to see that any reduction in rate of tax of any supply of goods or services for the benefit of input tax credit will be passed on the recipient by commensurate reduction in prices. Anti-profiteering clause in GST is a deterrent which is not intended to be used unless forced to, says Finance Minister.
8. Decision mechanism: GST Council will make recommendations on everything related to GST including laws, rules and rates etc. Union Finance Minister Arun Jaitley heads the panel while ministers of finance or taxation of each state are its members. Decisions in the Council are taken by a 75 per cent majority. Centre and a minimum of 20 states are required for majority because Centre would have one-third weightage of the total votes cast and all the States taken together would have two-thirds of weightage.
9. Not part of GST: Petroleum products such as petrol, diesel and aviation turbine fuel have been kept out of GST as of now. The GST Council will take a decision on it at a later date. Alcohol has also been kept out of GST.
10. Administrative control: To ensure single interface, all administrative control of 90 per cent of taxpayers having turnover below Rs. 1.5 crore would vest with state tax administration while 10 per cent with the central tax administration. Further, all administrative control over taxpayers having turnover above Rs. 1.5 crore will be divided equally between central and state tax administrations. States will be compensated for any revenue loss from GST implementation for five years.

Source: http://bit.ly/2s4zND6