GST Implementation in India - Status Check and Future Roadmap
- 1. GST Implementation in India Status Check and Future Roadmap
- 2. Coverage…
- 3. Journey so Far… * Source: CBIC Presentation titled ‘GST – An Update’ *Source: CBIC Presentation titled ‘GST – An Update’
- 4. Challenges in Implementation of GST Major challenges faced in the implementation of GST
- 5. Challenges faced so far… Origin-based versus Destination-basedTaxation TheVAT Regime was based on origin principle. Many manufacturing States expressed concerns over the loss of revenue on account of shift from origin based to destination based States put forward an argument that they need to recover the cost of infrastructure and public services provided to the industries
- 6. Challenges faced so far… Rate Structure and Compensation Uncertainty about the gains after implementation of GST and difficulty in estimating as to how much the States will gain RNR of 15-15.5% was suggested. States asked for compensation during the first five years of implementation of GST
- 7. Amendment in the Constitution to confer concurrent powers on Centre and State to levy tax on Goods and Services Inclusion or exclusion of Alcoholic Liquor for human Consumption and Petroleum products in/from GST Transition challenges e.g. carry forward of VAT & Cenvat Credits & like Settlement of Disputes arising between Centre and States or between States Challenges faced so far…
- 8. Status Check • Government measures so far to resolve contingent issues and practical difficulties • Have we really implemented 100% of the intended law?
- 9. RCM Provisions Extending Benefits of Composition Scheme Deferring payment of tax on Advances for Goods Constitution of National Appellate Authority for Advance Ruling • Earlier deferred until 30.09.2019 • Now, amended to be made applicable only on specified class of registered persons in respect of specified supplies • Aggregate Turnover limit extended to Rs. 1.50 Crore • Scheme made available to supplier of services with a tax rate of 6% • Facing outrage from industry and commerce, government had deferred payment of taxes on advances received for goods. • Provide advance rulings on conflicting decisions on the same issue by two or more State Appellate Advance RulingAuthorities
- 10. Increasing thresholds for Registration States with threshold limit of Rs. 10 lakh for both goods and services Manipur Mizoram Nagaland Tripura States with threshold limit of Rs. 20 lakh for both goods and services Arunachal Pradesh Meghalaya Sikkim Uttarakhand Puducherry Telangana States with threshold limit of Rs. 20 lakh for services and Rs. 40 lakh for goods** Jammu & Kashmir Assam Himachal Pradesh All other States ** persons engaged exclusively in supply of goods
- 11. Status Check: No. of Registrations 0 2000000 4000000 6000000 8000000 10000000 12000000 14000000 No. of Registrations (as on 31st May, 2019) 13543560 1774379 Total No. of Taxpayers Composition Dealers
- 12. Status Check: E-Way Bill Successfully implemented from 01.04.2018 for inter-state movement of goods All the states have also implemented E-Way bill system for intra-state movement of goods No. of E-Way bill generated for Inter –State movement – 37.12 Crore* Intra –State movement – 3.17 Crore* Barring generation of E-Way bill, if a supplier or recipient does not file GST returns for 2 consecutive tax periods * As on 31st May, 2019
- 13. Status Check: Other Major Provisions Doing away with concept of BusinessVerticals Multiple registrations in a state possible for each place of business TDS &TCS Provisions Implemented w.e.f. from 01.10.2018 National Anti-Profiteering Authority Tenure of NAPA entended by 2 years So far, NAPA rendered order in approx. 73 cases
- 14. Open Issues and Future Roadmap •What are major open issues under GST for future course of action by Government…? •What is the future roadmap…?
- 15. Top Pressing Open Policy Issues SetoffofITC As amended recently, now IGST needs to be exhausted completely first, before utilization of CGST & SGST This has led to additional working capital blockage and unnecessary accumulation of ITC Sec-16(2)(c) Currently, Sec 16(2)(c) denies credit to the taxpayer if tax charged is not paid by supplier Here, Supplier is the defaulting person. And when govt. knows the GSTIN of both the persons, action must be taken against the defaulting person
- 16. Difficulty out of New Rule 88A Particulars IGST CGST SGST InputTax Credit 200 100 100 OutputTax Liability - 200 200 Example: Pre –Amendment: Particulars IGST CGST SGST OutputTax Liability - 200 200 Less: ITC CGST/SGST 100 100 IGST 100 100 Payment in Cash - - -
- 17. Difficulty out of New Rule 88A Post –Amendment: Particulars IGST CGST SGST OutputTax Liability - 200 200 Less: ITC IGST - 200 - CGST/SGST - 100 Payment in Cash - - 100 Balance ITC - 100 -
- 18. Top Pressing Open Policy Issues Charging tax on exempt supplies of Composition dealer • Manufacturers and services providers under composition have to pay tax on ‘Turnover in the State’ which includes exempt supplies Blocked Credit under section 17(5)(c) & (d) • Recently, in a writ petition, Hon’ble Orissa High Court allowed the credit of input used in construction of malls to a supplier engaged in renting of shops in the mall
- 19. Top Pressing Open Policy Issues Contrary Export Provisions • An exporter is allowed export of goods on payment of IGST or without payment of IGST • While Refund is denied of accumulated credit of Capital Goods; same can be used for payment of IGST Cross Charge • Karnataka AAR has ruled our that activities performed by employees at Corporate office for distinct persons shall be treated as supply • Recently, Finance Ministry also came out with a draft circular on chargeability of cross charge services between HO and Branches
- 20. Future Roadmap…