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.

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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
You may consult with the Tax Consultant in India/ Tax Advisor in India for any kind of help related to GST.

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

GST is a week away: How to time your buys to have best of two tax regimes

Despite skeptics raising doubts about smooth transition of existing tax regime to Goods and Service Tax structure, the stage is set for GST roll out on July 1 from midnight. A special session of Parliament too has been convened for the launch of GST.

Service Tax

All states except Jammu and Kashmir have passed GST enabling laws with West Bengal having promulgated an Ordinance for the purpose. This is going to be a historic moment when existing taxes will cease to apply and new uniform taxation will take over.
There is apprehension in markets prompting many outlets to announce discounts. Online shopping sites are every day announcing new pre-GST discount sales.
But, be wise while you choose what to buy in the pre-GST and GST regimes.
GOLD AND JEWELLERY
This is perhaps the best time to buy gold jewellery. Though the tax incidence on gold remains unchanged on the two sides of GST divide, it is the making charges that are going to make gold jewellery costlier under the new taxation regime.
At present, gold attracts one per cent excise duty and two per cent VAT. From July 1, there will be three per cent GST on gold.
But, while making charges are not taxed at present, the craft would attract 18 per cent GST from July 1 making gold jewellery expensive. But, if you are looking to invest in gold bars, biscuits and the like, better check the international rates.
MOBILE PHONES
Pre-GST tax incidence on mobile phones is around 13.5 per cent while after GST roll out it will be 12-18 per cent. Chances are that the mobile phones will become costlier by 5 per cent. The impact will be more felt in the southern states.
While the rest of India has a VAT of 12 per cent on mobile phones, the southern states levy 5 per cent VAT on them. So, traders in those states fear huge loss as under the GST they cannot claim input credit for their stocks piled for over a year. This has led to clearance sale at many places in the south. Many online platforms have offered greater discount on these phones sourcing them from southern states.
The mobile phones made in India are likely to cost more in comparison to imported phones under GST regime. So, if you are looking for one of the Indian brands, this is the best time to buy one. Since, there would not be much difference in price of these phones after GST, you may wait or go for it if discount rate is more than 10 per cent.
CAR AND BIKES
This is tricky area of purchase. Smaller cars are likely to become costlier by 8-10 per cent. So, if you are planning to buy one, the next seven days are for you to execute your plans. You may also get a discount in the range of 5-10 per cent as the dealers are apprehensive about the sale equation once GST is rolled out on the midnight of June 30th.
But, if you have been waiting for SUV and luxury cars, then wait for a little longer. Big cars are will attract 28 per cent GST from July one. At present, taxes on SUV and luxury cars are over 32-33 per cent.
For those looking for two-wheeler, a wait for another week is advisable. They may purchase a bike of their choice about two per cent cheaper.
LAPTOP AND DESKTOP
Laptops and desktops are set to become costlier as the present tax incidence on them is about 15 per cent which is set to go up to 18 per cent on July 1.
The prices of branded laptops and desktops would rise by around 5 per cent in effect. Though, the difference of rates between the online stores and offline retailers would be bridged a bit after GST roll out.
But, if you are planning to buy a laptop, you may easily find some of the best discount sale as the inventory of over one year old would not bring the benefits of input credit to the traders. Clearance sale is being seen everywhere.
TV AND FRIDGE
Television and refrigerators attract differing rates of taxes in different states. Generally the tax ranges between 23 and 28 per cent. But, revenue states like Delhi do not charge entry tax or octroi, TV and fridge usually cost lower.
Under GST regime, TV and fridge would attract 28 per cent tax. So, except in places like Delhi, there would not be much difference between the pre-GST and post-GST prices of TV and fridge. There would be nominal increase of about 2-3 per cent in prices.
It is better to wait for GST roll out as the dealers would then be under pressure to clear their stock of over six months old. The consumers are likely to get more discount than at present.
Same logic applies to furniture where wooden furniture is affected by GST regime. However, furniture made up of plywood, plastic and iron-steel is likely to cost more. But, then the dealers would be under pressure to clear stock after GST roll out.
Original Source: http://bit.ly/2t2hsKS

You may consult with the Tax Consultant in India/ Tax Advisor in India for any kind of help.