GST TIN : HOW TO REGISTER UNDER GST, GET PROVISIONAL ID OR GSTTIN

All the existing tax payers registered under Central Excise, Service Tax, State Sales Tax / VAT (except exclusive liquor dealers if registered under VAT), Entry Tax, Luxury Tax, Entertainment Tax (except levied by the local bodies) have to enroll under Goods and Service Tax (GST) as data with different assessing authority is not complete or many tax payers has taken multiple registration, this Enrollment process has been started from October 2016 so that data of existing taxpayers can be validated before March 2017. There is no auto enrollment under GST so each tax payer has enroll for the GST.  Enrollment under the GST is common for both Central GST and the State GST. There will be common registration, common return and common Challan for Central and State GST. As one PAN allows one GST Registration in a state, you may register one business entity first

Once you enrolled under GST it will issue Provisional ID FORMAT OF GSTIN: 01ABCDE1234B1Z5

01ABCDE1234B1Z5
state Codepermanent account numberEntity Number of the same PAN In the stateAlphabet “Z” by DefaultCheck sum digit

Information required before doing provisional registration under GST 

Before enrolling with GST System Portal, you must ensure to have the following information/ documents available with you:-

  • I. Provisional ID received from State/Central Authorities;
  • II. Password received from the State/Central Authorities;
  • III. Valid Email Address;
  • IV. Valid Mobile Number;
  • V. Bank Account Number
  • VI. Bank IFSC

List of Documents required for Provisional registration under GST 

  • a. Proof of Constitution of Business :
    • i. In case of Partnership firm: Partnership Deed of Partnership Firm (PDF and JPEG format in maximum size of 1 MB)
    • ii. In case of Others: Registration Certificate of the Business Entity (PDF and JPEG format in maximum size of 1 MB)
  • b. Photograph of Promoters/ Partners/Karta of HUF (JPEG format in maximum size of 100 KB)
  • c. Proof of Appointment of Authorized Signatory (PDF and JPEG format in maximum size of 1 MB)
  • d. Photograph of Authorized Signatory (JPEG format in maximum size of 100 KB)
  • e. Opening page of Bank Passbook / Statement containing Bank Account Number of < Account Number>, Address of Branch, Address of Account holder and few transaction details (PDF and JPEG format in maximum size of 1 MB)

DSC is mandatory for enrollment by Companies, Foreign Companies, Limited Liability Partnership (LLPs) and Foreign Limited Liability Partnership (FLLPs), But using DSC first tax payer need to register their DSC on GST System Portal by clicking “register your DSC”.

Applicant E-sign the GST Enrollment Application using Aadhaar based OTP, After validating the Aadhaar Number, the GST system Portal will send a request to UIDAI system to send a One Time Password (OTP). 2. UIDAI system will send OTP to email address and mobile number registered against Aadhaar number. System will prompt user to enter OTP. The user will enter the OTP and submit the document. The e-Signing process is complete.

Legal Compliance Calendar for July Month-2016

Legal Compliance Calendar for July 2016: Every business consultant, business person and their legal and compliance department has to fulfill different regulatory filing on time. So to solve this problem we have compiled the different due date for legal filing under different act like Income Tax Act 1961, Service tax laws, Central Excise and Custom, Companies Act 2013, Provident Fund, Employee State Insurance Corporation or Value Added Tax i.e. different VAT Acts in India etc.

Income Tax Compliance for July 2016 

  1. 7th July – Due for payment of TDS/TCS for July’2016
  2. 31st July – Filling of TDS return for period April to June 2016 and TDS certificate has to been issued within 15 days of Filling of TDS return i.e. 15 August 2016. Previously due date for filling quarterly TDS return was 15 July.
  3. Due for Filling Annual Income Tax Return for Individual and HUF. Individual having only salary Income Tax can file ITR 1 and Business not under audit can file ITR 4S or  ITR 4 by 31 July 2016.

Rules and Guidelines for Income Tax Compliance 

A. For companies

  • TDS deducted during June 2016 due for payment on 07.07.16.
  • Filling of Quarterly TDS return by 31st July 2016.

B. For firm and individual covered under tax audits

  •  TDS deducted in June’ 2016 payment due on- 07.07.2016.
  • Filling of Quarterly TDS return by 31st July 2016.

Central Excise and Custom  Compliance for July 2016 

  1. 6th July- Due date for payment of excise for the month of June’2016
  2. 10th July – Last date for excise return for the month of June’2016 – Due Date for ER-1
  3. 20th July – Last date for excise return for the Quarter ending June’2016 i.e. April to June 2016 – Due Date for ER-1 for Excise registered units as Small Scale Industry

Rules and Guidelines for Central Excise Compliance 

  • Excise registered units as Small Scale Industry – Payment due date is 15th July 2016 and Return due date of 1st quarter ending 30th June 2016 is 20th July 2016 but Unit Registered as Non SSI units – Last date for payment for the month of June is 06.07.2016 and for return 10.07.2016

Service Tax Compliance for July 2016 

  1. 6th July- Due date for payment of service tax for the month of June’2016 for other than Individual, Partnership firm and HUF as they have deposit service tax on quarterly basis.i.e Companies has to deposit service tax on monthly basis in case
  2. 6th July 2016 – Due date for payment of service tax for the period April to June 2016 i.e. Quarter 1 of FY 2016-14 for Individual, Partnership firm and HUF as they have deposit service tax on quarterly basis.

VAT Tax Compliance for July 2016 

  1. 12th July – Last Date or Due Date of Payment of VAT Liability for June 2016 for business having turnover of more than Rs 200 cr in previous year under TNVAT (Tamil Nadu VAT)
  2. 14th July- Last date for payment of Rajasthan VAT liability for dealer covered under monthly tax liability.
  3. 14th July – Last date for Works Contract Tax TDS is for June 2016
  4. 15th July – Last for Monthly return for Composition Dealer under Karnataka VAT
  5. 15th July – Last date for TDS deposit for previous month under Delhi VAT
  6. 20th July – Last date for monthly return or statement for tax deducted at source under KVAT using VAT – 100, VAT – 110 , VAT – 125, VAT–126, VAT-127
  7. 20th July – Due Date or Last Date of Payment of VAT Liability for Month and Quarter ending June under UP VAT (Uttar Pradesh VAT rule 43)
  8. 20th July – Due Date for Payment of VAT Liability under Tamil Nadu VAT Act.
  9. 21st July -Last date for payment of Maharashtra VAT liability.
  10. 21st July – Last date for payment of Delhi VAT liability  for Month ending 30th June and for Quarter April to June 2016
  11. 21st July – Last date for payment of MVAT liability for Quarter 1 (April to June).
  12. 25th July – Last date for Filling of Delhi VAT return for Quarter ending June 2016
  13. 25th July – Last date of payment of VAT Liability under Bihar VAT Act
  14. 31st July – Last Date of Filling of Quarterly return under Bihar VAT Act
  15. 31st July – Last date of Filling Annual Return under Bihar VAT for Compounding Dealer

Provident Fund and ESIC Compliance for July 2016 

  1. 15th July – last date for payment of Provident fund liability, Due Date date for Provident fund Contribution, government has removed the grace period of 5 days from February 2016.
  2. 21st July- Last date for payment of ESIC liability for June 2016.
  3. 25th July- Last date for filing of PF return for the month of June

Summary Date-wise Compliance under different rules and regulation

  • 6th July- Due date for payment of excise and service tax for the month of June’2016
  • 7th July – Due for payment of TDS/TCS for June’2016
  • 10th July – Last date for excise return for the month of June’2016
  • 14th July- Last date for payment of RAJ VAT liability.
  • 14th July – Last date for WCT TDS is for June’2016
  • 15th July – last date for payment of Provident fund liability
  • 20th July – Different VAT return under Karnataka VAT
  • 21st July – MVAT last Date of Payment
  • 21st July- Last date for payment of ESIC liability for June 2016.
  • 25th July- Last date for filing of PF return for the month of June
  • 31st July- Last date for filing of Annual Income Tax return for Individual in ITR 1, ITR 4, ITR4S
  • 31st July – Last date for filling Quarterly TDS return under Income Tax.

Rajasthan VAT ACT 2003 :An Overview and Download

THE RAJASTHAN VALUE ADDED TAX ACT, 2003 has come into force on 30th March 2003 i.e. date when assent of the Governor was received. Value added tax is act  for levy of tax on sale or purchase of goods and to introduce value added system of taxation in the State of Rajasthan. Below Mention Act is updated till 8,March 2016 Last Budget of Rajasthan Government.

Summary of Rajasthan VAT 2003

Section 1 of RVAT Act 1. Short title, extent and commencement date for RVAT Act

Section 2 of the RVAT Act deals with different definition of the terms covered in the RVAT Act 2003. Important terms are 2(6) Meaning of Business , 2(10) Meaning of Term Contractor, 2(11) who is treated as Dealer or considered as dealer, 2(15) what do we mean by term Goods, 2(26) Place of Business and 2(35) & 2(36) definition of term sales and sales price and Most Sought after term works Contract is covered in section 2(44).

Section 3 of the RVAT Act deals with Incidence of tax i.e. who is liable to Rajasthan VAT. Importer of goods, manufacturer of goods with annual turnover of Rs 5 Lakhs and Trader of Goods having annual turnover exceeds Rs 10 lakhs. Also as per section 3(2) dealer having turnover of less than Rs 75 lakhs can opt for composition scheme and Turnover for composition scheme is calculated after deducting the turnover of goods covered in Schedule 1 of RVAT Act (Exempted Goods). Composition Scheme means that dealer will not charge VAT from customer/buyer but will pay specified percentage of turnover as fee in lieu of tax.

Section 4 of the RVAT Act deals with Levy of tax and its rate i.e. Taxable turnover is taxable at rates of VAT given in Schedule III to Schedule VI.

Section 5 of the RVAT Act deals with payment of lump sum in lieu of tax.

Section 6 of the RVAT Act deals with Levy of tax by weight, volume, measurement or unit on certain goods.

Section 7 deals with Levy of tax on livestock:  Tax shall be payable at such rate per head not exceeding five hundred rupees as may be notified.

Section 8 of RVAT Act Deals with taxation of Works Contract and Exemption of tax i.e. Exemption from Rajasthan VAT. Section 8(1) provides the list of goods covered under Schedule 1 which are exempted from Rajasthan VAT.Section 8(2) covers list of organisation to whom exemption form RVAT is given by the Government of Rajasthan. Exemption Scheme was given in Notification No 77 dated 11.08.2006 which has been amended Notification 3082 (F.12(101)FD/TAX/2011-59 Dated 13 August 2013 further Amended by Notification 3333 dated 09.03.2015 and last updated Notification for Amendment works Contract Exemption Fee is N.NO 3553 dated 08 March 2016.

Section 9 of RVAT Act deals with Bar against collection of tax when not payable i.e. Person not registered with Rajasthan Commercial Department under RVAT Act shall not collect any VAT from other person.

Section 10: Burden of proof i.e. its seller or purchasers liability to prove that particular Goods is not liable for VAT Tax.

Section 11 deals with Obligatory registration i.e. Who is required to register under VAT Every dealer liable to pay tax under sub–section (1) or (5) of section 3 shall get himself registered

Section 12 deal with Voluntary registration

Section 13: Authority competent to grant registration.

Section 14: Authorisation for collection of tax

Section 15 deals with Furnishing of security for registration. Security in the form of National Saving Certificate or in cash or in the form of three years bank guarantee of a nationalized bank of Rs 10,000/- for Small Scale Unit, Rs 15000/- for medium scale unit and Rs 25,000/- for Large Scale Unit (All for Manufacturing Concern). In case of Trading concern Rs 10,000/- and If Dealer is submitting initial security shall be in the form of surety of two dealers registered under this Act he is not required to submit bond or NSC. Dealer can give maximum surety of 4 concerns

Section 16: Amendment and cancellation of registration certificate Every change  there are 2 type of change 1. Change in Basic structure of Dealer 2. No Change is Basic Structure if any change effect the basic structure then dealer have to take New VAT registration e.g. such as, conversion of a proprietary concern into partnership firm or vice versa, dissolution of an existing firm and creation of new firm, formation of a firm into a company or vice versa, a fresh certificate of registration shall be required to be obtained by the dealer, in all other cases dealer is required to update VAT registration with 30 days from the date of change like addition or deletion of branch or change in address of registered office or addition of partner or addition of deletion of commodity or change in Name of business etc.

Section 17: how to Calculate Amount of  Tax payable by a dealer, Basic formula is

T = (O+R+P) – I
Where –
T is net tax payable;
O is amount of output tax;
R is amount of reverse tax;
P is the amount of tax payable under sub–section (2) of section 4; and
I is the amount of input tax.

Section 18: how to calculate Input Tax Credit, Input tax credit shall be allowed, to registered dealers on purchase of any taxable goods made within the State from a registered dealer for Sale but subject to conditions that where any goods purchased in the State are subsequently sold at subsidized price, the input tax allowable under this section in respect of such goods shall not exceed the output tax payable on such goods and no Input allowed for exempted goods.

Section 19: Input tax credit for stock on the date of commencement of this Act

Section 20: Payment of tax

Section 21 deals with Filing of return i.e. What are the different due dates for filling VAT returns under Rajasthan VAT and RVAT rules has provided the due date for RVAT return which are 45 days from the end of quarter for dealer who are liable to deposit tax on monthly basis i.e. Dealer liable to pay VAT of Rs 50,000/- for last financial year and 60 days from the end of the quarter for all the other VAT dealers.

Section 22: Assessment on failure to deposit tax or submit return or audit report

Section 23:  Self Assessment means dealer will be assessed based on the return filled by him.

Section 24: Dealer will be assessed based on the material available on record in case assesee officer not satisfied with the record available he can issue notice to dealer and dealer can file return or revise return and assessing officer can assesee best of his judgement, No assessment order under this section shall be passed after the expiry of two years from the end of the relevant year but Commissioner can extended the period of assessment and last date for assessment for FY 2013-14 is 31st July 2016.

Section 25 deals with  Assessment in case of avoidance or evasion of tax i.e. Dealer can be assessed for any period if assessee officer believes that dealer is trying evade tax but subject to condition that giving the dealer a reasonable opportunity of being heard. In case if tax is imposed under this section dealer has to deposit tax with 30 days of order.

Section 26: Escaped assessment means dealer escape the assessment due to non registration or under assessed.

Section 27: Audit of Dealer: Commissioner has reasons to believe that detail scrutiny of their business is necessary and No notice under sub–section (4) shall be issued after the expiry of five years, and no assessment under this section shall be made after the expiry of eight years, from the end of the relevant year.

Section 28: Assessment in case of a casual trader. Casual dealer will be assessed just after the transaction but no order or report can be made after the expiry of two years from the date of completion of the transaction.

Section 29:  Assessment in special cases. – (1) Minor and incapacitated person then tax will be recovered from guardian or trustee.

Section 30: Assessment of a dissolved firm

Section 31: Rounding–off of tax, interest and penalty rounded off to the nearest multiple of ten rupees

Section 32: Want of form not to affect proceedings.–

Section 33: Rectification of a mistake.No rectification under this section shall be made after the expiry of four years from the date of the order sought to be rectified.

Section 34: Reopening of ex–parte assessment

Section 35: Stay of proceeding.– No civil court or any other authority shall stay assessment proceedings purported to be initiated or already initiated under this Act.

Section 36: Determination of disputed questions

Section 37: Transfer of cases. A dealer may make an application on plain paper to the Commissioner to transfer any case under this Act from one officer or authority to other officer or authority on the following grounds, namely:– (a) Dispute of jurisdiction; or (b) Apprehension of miscarriage of justice; or (c) Business convenience.

Section 38: Liability for payment of tax or demand

Section 39: Liability of a surety.– The liability of a surety under this Act shall be co–extensive to the extent of the amount of security with that of the defaulting dealer and all the modes of recovery enforceable against the dealer shall be simultaneously enforceable against the surety.

Section 40: Liability of the representatives of a deceased person.–Representative of deceased person has to apply for VAT registration within 30 days of Death.

Section 41: Liability on dissolution, discontinuance or partition of business.

Section 42: Liability on transfer of business.–In case of transfer of business then the remaining unpaid at the time of the transfer, shall be payable by the transferee.

Section 43: Liability of principal and agent. Both Agent and Principal are jointly and severally liable to pay tax.

Section 44: Liability of firms and partners. All the partners are liable under the Act  for Tax.

Section 45: . Liability of Directors of a private company. Every person who was a director, at any time during the period for which the tax or other sums are due, shall be jointly and severally liable for the payment of such ta every person who was a director, at any time during the period for which the tax or other sums are due, shall be jointly and severally liable for the payment of such tax.

Section 46: Liability in case of amalgamation of companies

Section 47: Liability under this Act to be the first charge

Section 48: Certain transfers to be void.

Section 49: General mode of recovery. Any tax due shall be recoverable as an arrear of land revenue can be recovered by by attachment and sale of movable or immovable property of such dealer or person.

Section 50: Special mode of recovery. Tax can be recovered from any person from whom any amount is due or may become due to a dealer who has failed to pay due tax or other sum on demand by the assessing authority; or  any person who holds or may subsequently hold any money for or on account of such dealer.

Section 51: Power to reduce or waive interest and penalty in certain cases.If Commissioner is satisfied the dealer is under financial hardship and not is position to pay demand can wiase penalty or interest or both but only after recording reasons in writing.

Section 51A: Power of State Government to waive penalty and interest in certain cases

Section 51B:  Rebate of tax

Section 52: Power to write off demand.Writing off demand if its more than 10 year old and can’t be recovered as no property is available for attachment and demand has become irrecoverable.

Section 53: process of applying for refund

Section 54: Power to obtain security or withhold refund in certain cases.

Section 55: Interest on failure to pay tax or other sum payable.

Section 56: Penalty for not making application for registration is Rs 1000/-

Section 57: Penalty for failure to furnish security at the time of registration or additional security under section 15 then AO can impose penalty of Rs 2000/- and a further penalty of rupees twenty five for every day” till the requisite security or additional security is furnished.

Section 59: Penalty for not maintaining or keeping accounts “a sum not exceeding rupees five thousand and in case of continuing default a further penalty of rupees fifty for every day of such continuance.”

Section 60: Forfeiture and penalty for unauthorised collection of tax by unregistered dealer or excess collection by dealer then penalty in addition to tax collected will be a penalty equal to double the amount of tax which has been so collected by him.

Section 61: Penalty for avoidance or evasion of tax.–Penalty in addition to tax payable by him under this Act, a sum equal to two times the amount of tax avoided or evaded.

Section 62: Penalty for not furnishing statistics  “shall pay by way of penalty, a sum not exceeding rupees one thousand

Section 63: . Penalty on awarders. Where an awarder of a works contract, fails to deduct the amount in lieu of tax from the bill of a contractor as prescribed, or after having deducted such amount from such bill does not deposit the same in the prescribed manner and time, he shall be liable to pay tax deducted by him and a penalty for each violation, “which may extend upto rupees one thousand in the case of non–deduction, and a penalty at the rate of two percent per month on the amount so deducted” but not deposited for the period during which such default continues.

Section 64: Penalty for other violations

Section 65: Opportunity before imposition of penalty.– No penalty under this Act shall be imposed unless a reasonable opportunity of being heard is afforded to the dealer or the person concerned.

Section 66: Time limit for imposition of penalty or levy of interest. No order for imposition of penalty after expiry of two years from the end of the year in which the relevant assessment or rectification order is passed.

Section 67: Prosecution for offence

Section 68: Composition of offences.

Section 69: Penalty or composition under this Act not to interfere with punishment under other law.

Section 70: Investigation of offence

Section 71:  Accounts to be maintained by a dealer. Dealer should maintain record through which the value and quantity of the goods received, manufactured, sold or otherwise disposed of or held in stock by him can be calculated

Section 72:  Registered dealers to issue VAT invoice.

Section 73:  Audit of accounts. Every Dealer other than who opt for payment under section 3(2) or under section 5 or who efiles the VAT return. which makes Audit section irrelevant as all the dealers registered under Rajasthan VAT are required to e-file VAT return.

Section 74: Dealer to declare the name of his business manager in FORM VAT 02

Section 75: Power of entry, inspection and seizure of accounts and goods.

Section 76: Establishment of check–post or barrier and inspection of goods while in movement.

Section 77:Establishment of check–post on contract basis.

Section 78: Transit of goods by road through the State and issue of transit pass. shall make an order that notwithstanding anything contained in this Act, Where such owner, driver or person incharge fails to deliver such transit pass in respect of any goods such owner, driver or person incharge shall pay tax on such sale together with the penalty equal to double the amount of such tax. Transit Pass in FORM 47A. Rajasthan State Government has  specified the list of Goods for which transit passed is required.Form VAT 47A can be generated online through Rajtax Portal.

Section 79:  Import of goods into the State or export of goods outside the State.

Section 80: Liability to (“xxx”) furnish information by certain agent

Section 80A:  Liability to furnish information by certain persons

Section 81: Special provisions relating to under–billing. where AO believes that goods are under valued then he may seized the goods and impose the addition amount tax and impose penalty equal such additional VAT tax.

Section 82:  Appeal to the appellate authority. Appeal to be presented with 60 days of date of communication of such order.

Section 83:  Appeal to the Tax Board

Section 84: Revision to the High Court

Section 85: Revision to the Commissioner

Section 86:  No appeal or revision in certain cases. Dealer cannot file appeal or revision under section 82, 83,84 and section 85 for matter related to notice or summons issued for assessment, direction to maintain certain accounts or furnish certain information, statement, statistics or return; an order for impounding, seizure or retention of accounts, registers or documents etc.

Section 87: Persons appointed under this Act to be public servants

Section 88: Constitution of the Rajasthan Tax Board

Section 89: Indemnity.– No suit, prosecution or other legal proceeding shall lie against any officer or official of the State Government for anything which is done or intended to be done under this Act or the rules made thereunder in good faith.

Secion 90: Bar to proceedings except as provided in this Act.– No assessment made and no order passed by any officer appointed or authority constituted under this Act, shall be called into question, except as provided in this Act.

Section 91; General powers of the Commissioner

Section 92: Power to enforce evidence.

Section 93: Power to seek assistance from police officer or other officer.–

Section 94: Disclosure of information relating to a dealer.– (1) Where any information about the registration, returns and assessment or matters incidental thereto, of a dealer is required– (a) by a court in connection with any proceeding before it; or (b) by a police officer in connection with any investigation of a case; or (c) by any Government department for an

Section 95: Automation

Section 97: Court fees payable under this Act.– (1) Notwithstanding anything contained in any other law for the time being in force, all applications, appeals and other proceedings under this Act shall require court fee stamps of such value as may be prescribed. (2) The State Government shall be exempted from court fee leviable under this Act and the rules made there under. “

Section 97A: No refund etc. in case of retrospective exemption.In case any change giving retrospective exemption to dealer and he has collected VAT tax then has to deposit that sum with Rajasthan State Government and if already deposited no refund will be issued.

Section 97B: Delegation of powers.- The State Government may, by notification in the Official Gazette, direct that subject to such conditions, if any, as may be specified in the notification, any power exercisable by an assessing authority under this Act may be exercised by such officer of the State Government, as may be specified in the notification.”

Section 98: Power to remove difficulties. – (1) Where any difficulty arises in giving effect to the provisions of this Act, the State Government may, by notification make such orders not inconsistent with this Act, as may appear to be necessary or expedient for removing the difficulty. (2) No order under sub–section (1) shall be made after the expiration of three years from the date of commencement of this Act. (3) Every order made under sub–section (1) shall be laid before the House of the State Legislature.

Section 99: Power to make rules.–All rules made under this Act, shall be laid, for a period of not less than fourteen days which may be comprised in one session or in two successive sessions and if before the expiry of the sessions in which they are so laid or in the session immediately following the House of the State Legislature makes any modification in any of such rules or resolves that any such rules should not be made, such rules shall thereafter have effect only in such modified form or be of no effect, as the case may be, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done there under.

 Section 100: Repeal and savings.

DOWNLOAD PDF RAJASTHAN VALUE ADDED ACT 2003

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Legal Compliance Calendar for June Month-2016

Legal Compliance Calendar for June 2016: Every business consultant, business person and their legal and compliance department are always on guard that they fulfill all the regulatory filing on time. So solve this problem we have compiled the different due date for legal filing under different act like Income Tax Act 1961, Service tax laws, Central Excise and Custom, Companies Act 2013, provident Fund, Employee State Insurance Corporation or Value Added Tax etc.

Income Tax Compliance for June 2016 

  1. 7th June – Due for payment of TDS/TCS for May’2016
  2. 15th June- Last date for first installment of advance Income tax for Assessee having tax liability more than Rs. 10000/- and
  3. 15th June – Issuance of TDS certificate for other than salary for quarter 1 i.e. for TDS return filed for Period January to March 2016 due date for same was 15 May 2016 same has been to changed to 30 May for next year

Rules and Guidelines for Income Tax Compliance 

A. For companies

  • TDS deducted during May’2016 due for payment on 07.06.16.
  • Advance tax for FY 16-17 First instt of 15% due on 15/06/2016
  • Issue TDS certificate for Q1 for other than salary by 15/06/16 and TCS certificate by 30/05/16

B. For firm and individual covered under tax audits

  •  TDS deducted in May’ 2016 payment due on- 07.06.2016.
  • Advance tax to be paid 15% ( first installment) of tax liability till 15/06/2016
  • Issue TDS certificate for quarter ending 31st March 2016 for other than salary by 15/06/16 and TCS certificate by 30/05/2016
  • Annual information statement due date 31/05/2016

Central Excise and Custom  Compliance for June 2016 

  1. 6th June- Due date for payment of excise for the month of May’2016
  2. 10th June – Last date for excise return for the month of May’2016 – Due Date for ER-1

Rules and Guidelines for Central Excise Compliance 

  • Excise registered units as Small Scale Industry – No payment and no return due this month of June but Unit Registered as Non SSI units – Last date for payment for the month of May is 06.06.2016 and for return 10.06.2016

Service Tax Compliance for June 2016 

  1. 6th June- Due date for payment of service tax for the month of May’2016 for other than Individual, Partnership firm and HUF as they have deposit service tax on quarterly basis.i.e Companies has to deposit service tax on monthly basis in case

VAT Tax Compliance for June 2016 

  1. 14th June- Last date for payment of Rajasthan VAT liability for dealer covered under monthly tax liablity.
  2. 14th June – Last date for Works Contract Tax TDS is for May 2016
  3. 15th June – Last for Monthly return for Composition Dealer under Karnataka VAT
  4. 15th June – Last date for TDS deposit for previous month under Delhi VAT
  5. 20th June – Last date for monthly return or statement for tax deducted at source under KVAT using VAT – 100, VAT – 110 , VAT – 125, VAT–126, VAT-127
  6. 21st June -Last date for payment of MVAT liability.
  7. 29th June- Last date for filing of VAT 11 annual return for the Year 2015-16 in Rajasthan VAT
  8. 30th June – Due Date filing return half yearly return for October to March (For dealers not liable to file F-704 under Maharashtra VAT
  9. 30th June – Person who stands enrolled before the commencement of a year or is enrolled on or before 31st May of a year under under Profession Tax Act 1975 for Profession Tax Enrollment Certificate (PTEC) holder Maharashtra

Provident Fund and ESIC Compliance for June 2016 

  1. 15th June – last date for payment of Provident fund liability Due Date date for Provident fund Contribution, government has removed the grace period of 5 days from February 2016.
  2. 21st June- Last date for payment of ESIC liability for May 2016.
  3. 25th June- Last date for filing of PF return for the month of May

Corporate Law and LLP Compliance 

30th June – Extended Last date for return of LLP for FY- 2015-16

Summary Date-wise Compliance under different rules and regulation

  • 6th June- Due date for payment of excise and service tax for the month of May’2016
  • 7th June – Due for payment of TDS/TCS for May’2016
  • 10th June – Last date for excise return for the month of May’2016
  • 14th June- Last date for payment of RAJ VAT liability.
  • 14th June – Last date for WCT TDS is for May’2016
  • 15th June – last date for payment of Provident fund liability
  • 15th June- Last date for first installment of advance Income tax for Assessee having tax liability more than Rs. 10000/- and issuance of TDS certificate for other than salary for quarter 4 for FY 2015-16
  • 20th June – Different VAT return under Karnataka VAT
  • 21st June – MVAT last Date of Payment
  • 21st June- Last date for payment of ESIC liability for May 2016.
  • 25th June- Last date for filing of PF return for the month of May
  • 29th June- Last date for filing of VAT 11 annual return for the Year 2015-16 in RAJ VAT
  • 30th June – Extended Last date for return of LLP for FY- 2015-16

Due Date for Half Yearly Service Tax Return Extended to 29th April 2016

G,overnment of India, Ministry of Finance through CBEC has issued the order for extension of due date of half yearly service tax return from 25th April to 29th April 2016. As tax payers were facing problem while filling service tax return on last date of filing service tax return. Service tax department website www.aces.gov.in was not able to handle the online traffic.

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
CENTRAL BOARD OF EXCISE AND CUSTOMS
SERVICE TAX WING
NEW DELHI

ORDER NO

1/2016-Service Tax, Dated: April 25, 2016

In exercise of the powers conferred by sub-rule (4) of rule 7 of the Service Tax Rules, 1994, the Central Board of Excise & Customs hereby extends the date of submission of the Form ST-3 for the period from 1st October 2015 to 31st March 2016, from 25th April 2016 to 29th April 2016.

The circumstances of a special nature, which have given rise to this extension of time, are as follows:

“Difficulties have been faced by assessees in accessing the ACES application on 25th April 2016”

F.No.137/99/2011-Service Tax

DENA Bank Applications for selection of CA Firms as Concurrent Auditors Year 2016-2017

DENA Bank has invited the tender from Chartered Accountant (CA) Firms for  Concurrent Auditors for Period Starting from July 2016-June 2017. Link for online registration will be available at Dena Bank Website from 26/04/2016 to 10/05/2016 for applying for Concurrent Audit for Dena Bank Branches. For Any kind of query, Please contact at:- email : conaudit@denabank.co.in   or Call PH NO: 022-22665616 / 18 . CA’s working as Proprietorship concern are not eligible for Concurrent Audit of Bank

Disqualifications for Chartered Accountant Firm Applying for DENA Bank Concurrent Audit

Any form of canvassing/lobbying/influencing/query regarding short listing, status etc will be treated as disqualification.

Following CA firms are not eligible for on line registration.

  1. Proprietorship CA firms.
  2. CA firm having less than 5 years existence.
  3. CA firms presently engaged by the Bank as concurrent auditor.
  4. CA firms not having CISA / DISA qualified partners / employees.
  5. CA firms engaged by the Bank as Statutory Auditors
  6. CA firms debarred by ICAI / RBI or blacklisted by the Bank for refusal to conduct any assignment allotted by the Bank during last 3 (Three) years.

Time Frame for apply for Concurrent Audit of Dena Bank 

  • Due Dates Commencement of RFR 26/04/2016
  • Last date for submission of RFR 10/05/2016

LIST OF CENTER FOR CONCURRENT AUDIT

SNCENTERDISTRICTSTATE
1GUNTURGUNTURANDHRA PRADESH
2KAKINADAKAKINADAANDHRA PRADESH
3VIJAYWADAKRISHNAANDHRA PRADESH
4PATNAPATNABIHAR
5DHAMTARIDHAMTARICHATISHGADH
6BERLADURGCHATISHGADH
7BHILAIDURGCHATISHGADH
8DURGDURGCHATISHGADH
9MOHAN NAGAR DURGDURGCHATISHGADH
10KAWARDHAKAWARDHA(KABIRDHAM)CHATISHGADH
11SARAIPALLYMAHASAMUNDCHATISHGADH
12RAIPURRAIPURCHATISHGADH
13TATIBANDHRAIPURCHATISHGADH
14RAJNANDGAONRAJNANDGAONCHATISHGADH
15AMLI, SILVASSASILVASSADADRA & NAGAR HAVELI
16SILVASSASILVASSADADRA & NAGAR HAVELI
17DAMANDAMANDAMAN & DIU
18DELHIDELHIDELHI
19NCRDELHI NCRDELHI
20GOAGOAGOA
21AHMEDABADAHMEDABADGUJARAT
22BAVLAAHMEDABADGUJARAT
23KASINDRAAHMEDABADGUJARAT
24SANANDAHMEDABADGUJARAT
25AMRELIAMRELIGUJARAT
26SAVARKUNDLAAMRELIGUJARAT
27ANANDANANDGUJARAT
28PETLADANANDGUJARAT
29DHANSURAARAVALIGUJARAT
30MODASAARAVALIGUJARAT
31UBHARANARAVALIGUJARAT
32DEESABANASKANTHAGUJARAT
33PALANPURBANASKANTHAGUJARAT
34THARADBANASKANTHAGUJARAT
35ANKLESHWARBHARUCHGUJARAT
36BHARUCHBHARUCHGUJARAT
37DAHEJBHARUCHGUJARAT
38BHAVNAGARBHAVNAGARGUJARAT
39DHASABHAVNAGARGUJARAT
40ADIPURBHUJGUJARAT
41ANJARBHUJGUJARAT
42BALADIABHUJGUJARAT
43BHACHAUBHUJGUJARAT
44BHARAPARBHUJGUJARAT
45BHUJBHUJGUJARAT
46GADHSISABHUJGUJARAT
47GANDHIDAMBHUJGUJARAT
48KERABHUJGUJARAT
49MANDVIBHUJGUJARAT
50NAKHATRANABHUJGUJARAT
51RAHPARBHUJGUJARAT
52RAMPAR VEKARABHUJGUJARAT
53SAMATRABHUJGUJARAT
54BOTADBOTADGUJARAT
55BALWAGANDHINAGARGUJARAT
56CHHALAGANDHINAGARGUJARAT
57DEHGAMGANDHINAGARGUJARAT
58GANDHINAGARGANDHINAGARGUJARAT
59KALOLGANDHINAGARGUJARAT
60MANEKPURGANDHINAGARGUJARAT
61RUPALGANDHINAGARGUJARAT
62GONDALGONDALGUJARAT
63DWARKAJAMNAGARGUJARAT
64JAMNAGARJAMNAGARGUJARAT
65KALAVAD,JAMNAGARJAMNAGARGUJARAT
66JUNAGADHJUNAGADHGUJARAT
67KESHOD, JUNAGADHJUNAGADHGUJARAT
68MANAVADAR, JUNAGADHJUNAGADHGUJARAT
69VISAVADAR, JUNAGADHJUNAGADHGUJARAT
70LUNAWADAMAHISAGARGUJARAT
71KADIMEHSANAGUJARAT
72MEHSANAMEHSANAGUJARAT
73UNJHAMEHSANAGUJARAT
74VIJAPURMEHSANAGUJARAT
75VISNAGARMEHSANAGUJARAT
76HALVADMORBIGUJARAT
77MORBIMORBIGUJARAT
78TANKARA, MORBIMORBIGUJARAT
79TRAJPAR, MORBIMORBIGUJARAT
80NADIADNADIADGUJARAT
81AAT, NAVSARINAVSARIGUJARAT
82NAVSARINAVSARIGUJARAT
83PATANPATANGUJARAT
84RADHANPURPATANGUJARAT
85SIDHPURPATANGUJARAT
86KUTIYANA, PORBANDARPORBANDARGUJARAT
87PORBANDARPORBANDARGUJARAT
88RANAKANDORNA, PORBANPORBANDARGUJARAT
89GODHRARAJKOTGUJARAT
90JASDAN, RAJKOTRAJKOTGUJARAT
91RAJKOTRAJKOTGUJARAT
92AMBLIARASABARKANTHAGUJARAT
93GANTHIOLSABARKANTHAGUJARAT
94HIMMATNAGARSABARKANTHAGUJARAT
95IDARSABARKANTHAGUJARAT
96KHEDBRAHMASABARKANTHAGUJARAT
97KUKADIASABARKANTHAGUJARAT
98MUDETISABARKANTHAGUJARAT
99PRANTIJSABARKANTHAGUJARAT
100TALODSABARKANTHAGUJARAT
101BARDOLISURATGUJARAT
102SURATSURATGUJARAT
103DHRANGADHRASURENDRANAGARGUJARAT
104SURENDRANAGARSURENDRANAGARGUJARAT
105VADODARAVADODARAGUJARAT
106VALSADVALSADGUJARAT
107VAPIVALSADGUJARAT
108WAGHODIAWAGHODIAGUJARAT
109CHANDIGARHCHANDIGARHHARYANA
110HISSARHISSARHARYANA
111JINDJINDHARYANA
112KURUKSHETRAKURUKSHETRAHARYANA
113PANIPATPANIPATHARYANA
114RANCHI / BOKARORANCHIJHARKHAND
115BANGALOREBANGALOREKARNATAKA
116PATRENAHALLYCHIKBALLAPURKARNATAKA
117ERNAKULAMERNAKULAMKERALA
118TRIVENDRUMTRIVENDRUMKERALA
119BARWANIBARWANIMADHYA PRADESH
120BHOPALBHOPALMADHYA PRADESH
121HARDAHARDAMADHYA PRADESH
122INDOREINDOREMADHYA PRADESH
123JABALPURJABALPURMADHYA PRADESH
124AMRAVATIAMRAVATIMAHARASTRA
125AURANGABADAURANGABADMAHARASTRA
126BARAMATIBARAMATIMAHARASTRA
127AMALNER / DHULEDHULEMAHARASTRA
128DHULEDHULEMAHARASTRA
129SHIRPURDHULEMAHARASTRA
130CHALISGAONJALGAONMAHARASTRA
131CHOPDAJALGAONMAHARASTRA
132JALGAONJALGAONMAHARASTRA
133KOLHAPURKOLHAPURMAHARASTRA
134LATURLATURMAHARASTRA
135MUMBAIMUMBAIMAHARASTRA
136NAGPURNAGPURMAHARASTRA
137MUDKHED, NANDEDNANDEDMAHARASTRA
138NANDEDNANDEDMAHARASTRA
139PETH UMRINANDEDMAHARASTRA
140NANDURBARNANDURBARMAHARASTRA
141SHAHADANANDURBARMAHARASTRA
142DEOLANASHIKMAHARASTRA
143MALEGAONNASHIKMAHARASTRA
144NASHIKNASHIKMAHARASTRA
145SATANANASHIKMAHARASTRA
146VINCHURNASHIKMAHARASTRA
147BOISARPALGHARMAHARASTRA
148PALGHARPALGHARMAHARASTRA
149VIRARPALGHARMAHARASTRA
150PANAJIPANAJIMAHARASTRA
151SAILUPARBHANIMAHARASTRA
152PUNEPUNEMAHARASTRA
153PANVELRAIGADMAHARASTRA
154SANGLISANGLIMAHARASTRA
155SOLAPURSOLAPURMAHARASTRA
156THANETHANEMAHARASTRA
157ULHASNAGARTHANEMAHARASTRA
158VASHITHANEMAHARASTRA
159CUTTACKCUTTACKODISHA
160BHUBANESHWARKHURDHAODISHA
161AMRITSARAMRITSARPUNJAB
162LUDHIANALUDHIANAPUNJAB
163MOHALIMOHALIPUNJAB
164PATIALAPATIALAPUNJAB
165KISHANGARHAJMERRAJASTHAN
166BHILWARABHILWARARAJASTHAN
167JAIPURJAIPURRAJASTHAN
168JODHPURJODHPURRAJASTHAN
169CHENNAICHENNAITAMILNADU
170COIMBATORECOIMBATORETAMILNADU
171DINDIGULDINDIGULTAMILNADU
172ERODEERODETAMILNADU
173SALEMSALEMTAMILNADU
174TANJAVORETANJAVORETAMILNADU
175TRICHYTRICHYTAMILNADU
176HYDERABADHYDERABADTELANGANA
177DHARMARAMNIZAMABADTELANGANA
178BARABANKIBARABANKIUTTAR PRADESH
179GORAKHPURGORAKHPURUTTAR PRADESH
180KANPURKANPURUTTAR PRADESH
181LUCKNOWLUCKNOWUTTAR PRADESH
182DEHRADUNDEHRADUNUTTRAKHAND
183RUDRAPURUDDHAMSINGH NAGARUTTRAKHAND
184KOLKATAKOLKATAWEST BANGAL

DOWNLOAD FINANCE BILL 2016: BUDGET 2016-2017

FINANCE Bill 2016: BUDGET 2016-2017

This Year i.e. 2016-2017 Budget was Presented by Finance Minister Mr. Arun Jaitley (Budget of 2014-15 & 2015-16 also by Arun Jaitley under the Prime Minsiter  of India Mr.Narendra Modi) Finance Minister has started the Budget with Following Paragraph on February 29, 2016

“I am presenting this Budget when the global economy is in serious crisis. Global growth has slowed down from 3.4% in 2014 to 3.1% in 2015. Financial markets have been battered and global trade has contracted. Amidst all these global headwinds, the Indian economy has held its ground firmly. Thanks to our inherent strengths and the policies of this Government, a lot of confidence and hope continues to be built around India. The International Monetary Fund has hailed India as a ‘bright spot’ amidst a slowing global economy. The World Economic Forum has said that India’s growth is ‘extraordinarily high’. We accomplished this despite very unfavourable conditions and despite the fact that we inherited an economy of low growth, high inflation and zero investor confidence in Government’s capability to govern. We converted these difficulties and challenges into opportunities.” 

Download (PDF)

Section 180: Restrictions on Powers of Board

Ministry of Corporate Affairs, Government of India has published a circular with clarification with regard to Section 180 of the Companies Act, 2013.

The MCA acknowledged of receiving many representations regarding various difficulties arising out of implementation of Section 180 of the Act with reference to borrowings and/or creation of security, based on the basis of ordinary resolution.

The Ministry clarified that the resolution passed under Section 293 of the Companies Act, 1956 prior to 12/09/2013 with reference to borrowings (subject to the limits prescribed) and/or creation of security on assets of the company will be regarded as sufficient compliance of the requirements of Section 180 of the Companies Act, 2013 for a period of one year from the date of notification of Section 180 of the Act.

As per General Circular No. 04/2014 issued by MCA on 25/03/2014 clearly explain in the circular that the company has passed a ordinary resolution before 12/09/2013 so it can use borrowing funds till 11/09/2014 and immediately after this date the company has passed a special resolution in General meeting for continues using these funds in the future.

Thus, need of special resolution for the decision or borrow money (funds) which exceeding the paid up capital and free reserves of the company.

Further, borrowing powers now require approval by shareholders and applicable to both Public and Private Limited Companies, i.e., All companies covered u/s 180 of the Companies Act, 2013.

Corresponding Provisions of the Companies Act, 1956: Section 293

This section shall be read with Section 221 of the Companies Act, 2013.

Exercise of power without consent of members is exercise of powers beyond the authority of the Board and is ultra vires. And if the Board of Directors borrows in excess of the limits and without consent of members by Special Resolution, then the debt incurred by the Company shall not be valid or effectual. Since no specific penalty or punishment is prescribed for contravention of the Section, general penalty prescribed under Section 450 of the Act is applicable.

In Re.: United Spirits Limited, 2015(2) AKR 243

The sale of an undertaking is covered u/s 293(1)(a) of the Companies Act, 1956 upto 11/09/2013 and with effect from 12/09/2013 u/s 180(1)(a) and sub-section (49 of the Companies Act, 2013, which speaks of the restrictions of the powers of the Board. Therefore, in terms of Section 180 of the Companies Act, 2013 the approval of the BOD is required. In case a sale of an undertaking required the approval of the Honorable High Court, then such a condition would exist in Section 180. However, Section 180 does not provide for any approval by the High Court. Therefore, the Scheme of Demerger does not require the approval of the High Court u/s 180. In a Scheme of Demerger, Regional Director (Ministry of Corporate Affairs) objected that the Scheme of Demerger was only a high-off by way of a slump sale.

Reference:

According to Companies Act, 2013

Section 180: Restrictions on powers of Board

(1) The Board of Directors of a company shall exercise the following powers only with the consent of the company by a special resolution, namely:—

(a) To sell, lease or otherwise dispose of the whole or substantially the whole of the undertaking of the company or where the company owns more than one undertaking, of the whole or substantially the whole of any of such undertakings.

Explanation. — for the purposes of this clause,—

(i) “Undertaking” shall mean an undertaking in which the investment of the company exceeds twenty per cent of its net worth as per the audited balance sheet of the preceding financial year or an undertaking which generates twenty per cent of the total income of the company during the previous financial year.

(ii) The expression “substantially the whole of the undertaking” in any financial year shall mean twenty per cent or more of the value of the undertaking as per the audited balance sheet of the preceding financial year.

(b) To invest otherwise in trust securities the amount of compensation received by it as a result of any merger or amalgamation

(c) To borrow money, where the money to be borrowed, together with the money already borrowed by the company will exceed aggregate of its paid-up share capital and free reserves, apart from temporary loans obtained from the company’s bankers in the ordinary course of business:

Provided that the acceptance by a banking company, in the ordinary course of its business, of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft, order or otherwise, shall not be deemed to be a borrowing of monies by the banking company within the meaning of this clause.

Explanation.—For the purposes of this clause, the expression “temporary loans” means loans repayable on demand or within six months from the date of the loan such as short-term, cash credit arrangements, the discounting of bills and the issue of other short-term loans of a seasonal character, but does not include loans raised for the purpose of financial expenditure of a capital nature; Restrictions on powers of Board.

(d) To remit, or give time for the repayment of, any debt due from a director.

(2) Every special resolution passed by the company in general meeting in relation to the exercise of the powers referred to in clause (c) of sub-section (1) shall specify the total amount up to which monies may be borrowed by the Board of Directors.

(3) Nothing contained in clause (a) of sub-section (1) shall affect—

(a) the title of a buyer or other person who buys or takes on lease any property, investment or undertaking as is referred to in that clause, in good faith.

(b) The sale or lease of any property of the company where the ordinary business of the company consists of, or comprises, such selling or leasing.

(4) Any special resolution passed by the company consenting to the transaction as is referred to in clause (a) of sub-section (1) may stipulate such conditions as may be specified in such resolution, including conditions regarding the use, disposal or investment of the sale proceeds which may result from the transactions:

Provided that this sub-section shall not be deemed to authorize the company to effect any reduction in its capital except in accordance with the provisions contained in this Act.

(5) No debt incurred by the company in excess of the limit imposed by clause (c) of sub-section (1) shall be valid or effectual, unless the lender proves that he advanced the loan in good faith and without knowledge that the limit imposed by that clause had been exceeded.

Application for Compounding and Renewal of Registration under KVAT Act, KGST Act and KTL Act

Last Date for filing Application for  renewal of registration under KVAT Act, KGST Act and KTL Act for the year 2015-16 is extended upto 15th may 2015.

CIRCULAR No. 12/15 Sub:- Time limit for filing application for compounding and registration renewal for the year 2015-16 extended – instructions issued.

Certain server related issues have caused a slowdown in the KVATIS software application which is being rectified. Consequently various trade organizations have requested the department to extend deadline for filing of application for compounding and renewal of registration.

In the circumstances the following instructions are issued.

1) The last date for filing option for the payment of compounded tax under Section 7 of KGST Act, Section 5A of KTL Act and Section 8 of the KVAT Act for the year 2015-06 is extended upto 20th May, 2015.

2) The last date for filing application for renewal of registration under KVAT Act, KGST Act and KTL Act for the year 2015-16 is extended upto 15th may 2015.

Sd/- COMMISSIONER

Most Common FAQ on GST: Answer on Goods & Service Tax

Most Common FAQ on Goods and Services Tax (GST): Answer on Goods & Services Tax in India and its need

GST is an Step towards or Move towards the comprehensive indirect tax reforms in the India. Its will integrate Indirect taxes in India and bring them under single umbrella making it more efficient tax collection machinery and giving the benefit of Input tax credit for CST for interstate trade and will help is removing cascading effects of system of multi-point sales taxation. The introduction of GST at the Central level will not only include comprehensively more indirect Central taxes and integrate goods and service taxes for the purpose of set-off relief but also help entrepreneur in better handling of their business as they have to deal with single tax authority for indirect taxes. Also After GST’s arrival state taxes like entry tax ,luxury tax, entertainment tax, etc.and Central Taxes like Central Sales Tax, Central Excise and Service tax will be merged into GST.

Salient features of the Goods and Services Tax

  • The GST shall have two components: one levied by the Centre (hereinafter referred to as Central GST), and the other levied by the States (hereinafter referred to as State GST).
  • The Central GST and the State GST would be applicable to all transactions of goods and services
  • Central GST shall be allowed to be taken as input tax credit (ITC) for the Central GST and could be utilized only against the payment of Central GST. The same principle will be applicable for the State GST
  • Centre and the States would have concurrent jurisdiction for the entire value chain and for all taxpayers
  • Exemption Limit will be Rs 10 Lakhs for GST, so if persons turnover is less than Rs 10 lakhs then not liable to GST Registration
  • Composition Scheme for GST will be for Turnover of Rs 50 Lakhs with a floor rate of 0.5% across the States
  • Each taxpayer would be allotted a PAN-linked taxpayer identification number with a total of 13/15 digits, so merging the closing  the current system of TIN based
  • Merger of Different Taxes into GST like Central Excise Duty, Service Tax, Special Additional Duty of Customs , Additional Customs Duty, commonly known as Countervailing Duty (CVD etc. And Merger of State Taxes like VAT / Sales tax, Entertainment tax, Luxury tax, Taxes on lottery, betting and gambling, Entry tax not in lieu of Octroi etc.
  • GST will not cover Tax on items containing Alcohol, Tax on Tobacco products. Tax on Petroleum Products

Frequently Asked Questions and Answers on GST

Question 1 :   What is the justification of GST ?

Answer :      There was a burden of “tax on tax” in the pre-existing Central excise duty of the Government of India and sales tax system of the State Governments. The introduction of Central VAT (CENVAT) has removed the cascading burden of “tax on tax” to a good extent by providing a mechanism of “set off” for tax paid on inputs and services upto the stage of production, and has been an improvement over the pre-existing Central excise duty. Similarly, the introduction of VAT in the States has removed the cascading effect by giving set-off for tax paid on inputs as well as tax paid on previous purchases and has again been an improvement over the previous sales tax regime.

But both the CENVAT and the State VAT have certain incompleteness. The incompleteness in CENVAT is that it has yet not been extended to include chain of value addition in the distributive trade below the stage of production. It has also not included several Central taxes, such as Additional Excise Duties, Additional Customs Duty, Surcharges etc. in the overall framework of CENVAT, and thus kept the benefits of comprehensive input tax and service tax set-off out of the reach of manufacturers/dealers. The introduction of GST will not only include comprehensively more indirect Central taxes and integrate goods and services taxes for set-off relief, but also capture certain value addition in the distributive trade.

Similarly, in the present State-level VAT scheme, CENVAT load on the goods has not yet been removed and the cascading effect of that part of tax burden has remained unrelieved. Moreover, there are several taxes in the States, such as, Luxury Tax, Entertainment Tax, etc. which have still not been subsumed in the VAT. Further, there has also not been any integration of VAT on goods with tax on services at the State level with removal of cascading effect of service tax. In addition, although the burden of Central Sales Tax (CST) on inter-State movement of goods has been lessened with reduction of CST rate from 4% to 2%, this burden has also not been fully phased out.  With the introduction of GST at the State level, the additional burden of CENVAT and services tax would be comprehensively removed, and a continuous chain of set-off from the original producer’s point and service provider’s point upto the retailer’s level would be established which would eliminate the burden of all cascading effects, including the burden of CENVAT and service tax.  This is the essence of GST. Also, major Central and State taxes will get subsumed into GST which will reduce the multiplicity of taxes, and thus bring down the compliance cost. With GST, the burden of CST will also be phased out.

Thus GST is not simply VAT plus service tax, but a major improvement over the previous system of VAT and disjointed services tax – a justified step forward.

Question 2.    What is GST? How does it work ?

Answer :         As already mentioned in answer to Question 1, GST is a tax  on goods and services with comprehensive and continuous chain of set-off benefits from the producer’s point and service provider’s point upto the retailer’s level. It is essentially a tax only on value addition at each stage, and a supplier at each stage is permitted to set-off, through a tax credit mechanism, the GST paid on the purchase of goods and services as available for set-off on the GST to be paid on the supply of goods and services. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.

The illustration shown below indicates, in terms of a hypothetical example with a manufacturer, one wholeseller and one retailer, how GST will work. Let us suppose that GST rate is 10%, with the manufacturer making value addition of Rs.30 on his purchases worth Rs.100 of input of goods and services used in the manufacturing process. The manufacturer will then pay net GST of Rs. 3 after setting-off Rs. 10 as GST paid on his inputs (i.e. Input Tax Credit) from gross GST of Rs. 13. The manufacturer sells the goods to the wholeseller. When the wholeseller sells the same goods after making value addition of (say), Rs. 20, he pays net GST of only Rs. 2, after setting-off of Input Tax Credit of Rs. 13 from the gross GST of Rs. 15 to the manufacturer. Similarly, when a retailer sells the same goods after a value addition of (say) Rs. 10, he pays net GST of only Re.1, after setting-off Rs.15 from his gross GST of Rs. 16 paid to wholeseller. Thus, the manufacturer, wholeseller and retailer have to pay only Rs. 6 (= Rs. 3+Rs. 2+Re. 1) as GST on the value addition along the entire value chain from the producer to the retailer, after setting-off GST paid at the earlier stages. The overall burden of GST on the goods is thus much less. This is shown in the table below. The same illustration will hold in the case of final service provider as well.

Question 3 :   How can the burden of tax, in general, fall under GST ?

Answer :         As already mentioned in Answer to Question 1, the present forms of CENVAT and State VAT have remained incomplete in removing fully the cascading burden of taxes already paid at earlier stages. Besides, there are several other
taxes, which both the Central Government and the State Government levy on production, manufacture and distributive trade, where no set-off is available in the form of  input tax credit.  These taxes add to the cost of goods and services through “tax on tax” which the final consumer has to bear.  Since, with the introduction of GST, all the cascading effects of CENVAT and service tax would be removed with a continuous chain of set-off from the producer’s point to the retailer’s point, other major Central and State taxes would be subsumed in GST and CST will also be phased out, the final net burden of tax on goods, under GST would, in general, fall. Since there would be a transparent and complete chain of set-offs, this will help widening the coverage of tax base and improve tax compliance. This may lead to higher generation of revenues which may in turn lead to the possibility of lowering of average tax burden.

 Question 4 :   How will GST benefit industry, trade and agriculture ?

Answer  :   As mentioned in Answer to Question 3, the GST will give more relief to industry, trade and agriculture through a more comprehensive and wider coverage of input tax set-off and service tax set-off, subsuming of several Central and State taxes in the GST and phasing out of CST. The transparent and complete chain of set-offs which will result in widening of tax base and better tax compliance may also lead to lowering of tax burden on an average dealer in industry, trade and agriculture.

Question 5 :   How will GST benefit the exporters?

Answer :   The subsuming of major Central and State taxes in GST, complete and comprehensive set-off of input goods and services and phasing  out of Central Sales Tax (CST) would reduce the cost of locally manufactured goods and services. This will increase the competitiveness of Indian goods and services in the international market and give boost to Indian exports. The uniformity in tax rates and procedures across the country will also go a long way in reducing the compliance cost.

Question 6 :   How will GST benefit the small entrepreneurs and small traders?

Answer :         The present threshold prescribed in different State VAT Acts below which VAT is not applicable varies from State to State. The existing threshold of goods under State VAT is Rs. 5 lakhs for a majority of bigger States and a lower threshold for North Eastern States and Special Category States. A uniform State GST threshold across States is desirable and, therefore, the Empowered Committee has recommended that a threshold of gross annual turnover of Rs. 10 lakh both for goods and services for all the States and Union Territories may be adopted with adequate compensation for the States (particularly, the States in North-Eastern Region and Special Category States) where lower threshold had prevailed in the VAT regime. Keeping in view the interest of small traders and small scale industries and to avoid dual control, the States considered that the threshold for Central GST for goods may be kept at Rs.1.5 crore and the threshold for services should also be appropriately high. This raising of threshold will protect the interest of small traders. A Composition scheme for small traders and businesses has also been envisaged under GST as will be detailed in Answer to Question 14. Both these features of GST will adequately protect the interests of small traders and small scale industries.

Question 7 :  How will GST benefit the common consumers?

Answer :         As already mentioned in Answer to Question 3, with the introduction of GST, all the cascading effects of CENVAT and service tax will be more comprehensively removed with a continuous chain of set-off from the producer’s point to the retailer’s point than what was possible under the prevailing CENVAT and VAT regime. Certain major Central and State taxes will also be subsumed in GST and CST will be phased out. Other things remaining the same, the burden of tax on goods would, in general, fall under GST and  that would benefit the consumers.

Question 8 :   What are the salient features of the proposed GST model?

Answer :         The salient features of the proposed model are as follows:

 (i)       Consistent with the federal structure of the country, the GST will have two components: one levied by the Centre (hereinafter referred to as Central GST), and the other levied by the States (hereinafter referred to as State GST). This dual GST model would be implemented through multiple statutes (one for CGST and SGST statute for every State). However, the basic features of law such as chargeability, definition of taxable event and taxable person, measure of levy including valuation provisions, basis of classification etc. would be uniform across these statutes as far as practicable.

(ii)      The Central GST and the State GST would be applicable to all transactions of goods and services except the exempted goods and services, goods which are outside the purview of GST and the transactions which are below the prescribed threshold limits.

(iii)     The Central GST and State GST are to be paid to the accounts of the Centre and the States separately.

(iv)     Since the Central GST and State GST are to be treated separately, in general, taxes paid against the Central GST shall be allowed to be taken as input tax credit (ITC) for the Central GST and could be utilized only against the payment of Central GST.  The same principle will be applicable for the State GST.

(v)     Cross utilisation of ITC between the Central GST and the State GST would, in general, not be allowed.

(vi)     To the extent feasible, uniform procedure for collection of both Central GST and State GST would be prescribed in the respective legislation for Central GST and State GST.    

(vii)    The administration of the Central GST would be with the Centre and for State GST with the States.

 (viii)   The taxpayer would need to submit periodical returns to both the Central GST authority and to the concerned State GST authorities.

(ix)     Each taxpayer would be allotted a PAN- linked taxpayer identification number with
a total of 13/15 digits.  This would bring the GST PAN-linked system in line with the prevailing PAN-based system for Income tax facilitating data exchange and taxpayer compliance. The exact design would be worked out in consultation with the Income-Tax Department. 

(x)      Keeping in mind the need of tax payers convenience, functions such as assessment, enforcement, scrutiny and audit would be undertaken by the authority which is collecting the tax, with information sharing between the Centre and the States.

Question 9 :   Why is Dual GST required ?

Answer :         India is a federal country where both the Centre and the States have been assigned the powers to levy and collect taxes through appropriate legislation. Both the levels of Government have distinct responsibilities to perform according to the division of powers prescribed in the Constitution for which they need to raise resources. A dual GST will, therefore, be in keeping with the Constitutional requirement of fiscal federalism.

Question 10 : How would a particular transaction of goods and services be taxed simultaneously under Central GST (CGST) and State GST (SGST)?

Answer :         The Central GST and the State GST would be levied simultaneously on every transaction of supply of goods and services except the exempted goods and services, goods which are outside the purview of GST and the transactions which are below the prescribed threshold limits. Further, both would be levied on the same price or value unlike State VAT which is levied on the value of the goods inclusive of CENVAT. While the location of the supplier and the recipient within the country is immaterial for the purpose of CGST, SGST would be chargeable only when the supplier and the recipient are both located within the State.

Illustration I :  Suppose hypothetically that the rate of CGST is 10% and that of SGST is 10%. When a wholesale dealer of steel in Uttar Pradesh supplies steel bars and rods to a construction company which is also located within the same State for, say Rs. 100, the dealer would charge CGST of Rs. 10 and SGST of Rs. 10 in addition to the basic price of the goods. He would be required to deposit the CGST component into a Central Government account while the SGST portion into the account of the concerned State Government. Of course, he need not actually pay Rs. 20 (Rs. 10 + Rs. 10) in cash as he would be entitled to set-off this liability against the CGST or SGST paid on his purchases (say, inputs). But for paying CGST he would be allowed to use only the credit of CGST paid on his purchases while for SGST he can utilize the credit of SGST alone. In other words, CGST credit cannot, in general, be used for payment of SGST. Nor can SGST credit be used for payment of CGST.

Illustration II: Suppose, again hypothetically, that the rate of CGST is 10% and that of SGST is 10%. When an advertising company located in Mumbai supplies advertising services to a company manufacturing soap also located within the State of Maharashtra for, let us say Rs. 100, the ad company would charge CGST of Rs. 10 as well as SGST of
Rs. 10 to the basic value of the service. He would be required to deposit the CGST component into a Central Government account while the SGST portion into the account of the concerned State Government. Of course, he need not again actually pay Rs. 20 (Rs. 10+Rs. 10) in cash as it would be entitled to set-off this liability against the CGST or SGST paid on his purchase (say, of inputs such as stationery, office equipment, services of an artist etc). But for paying CGST he would be allowed  to use only  the credit of CGST  paid on its purchase while for SGST he can utilise the credit of SGST alone. In other words, CGST credit cannot, in general, be used for payment of SGST. Nor can SGST credit be used for payment of CGST.

Question 11 : Which Central and State taxes are proposed to be subsumed under GST ?

Answer :         The various Central, State and Local levies were examined to identify their possibility of being subsumed under GST.  While identifying, the following principles were kept in mind:

(i)       Taxes or levies to be subsumed should be primarily in the nature of indirect taxes, either on the supply of goods or on the supply of services.

(ii)      Taxes or levies to be subsumed should be part of the transaction chain which commences with import/ manufacture/ production of goods or provision of services at one end and the consumption of goods and services at the other.

(iii)     The subsumation should result in free flow of tax credit in intra and inter-State levels.

(iv)     The taxes, levies and fees that are not specifically related to supply of goods & services should not be subsumed under GST.

(v)      Revenue fairness for both the Union and the States individually would need to be attempted.

On application of the above principles, the Empowered Committee has recommended that the following Central Taxes should be, to begin with, subsumed under the Goods and Services Tax:

(i)       Central Excise Duty

(ii)      Additional Excise Duties

(iii)     The Excise Duty levied under the Medicinal and Toiletries Preparation Act

(iv)     Service Tax

(v)      Additional Customs Duty, commonly known as Countervailing Duty (CVD)

(vi)     Special Additional Duty of Customs – 4% (SAD)

(vii)    Surcharges, and

(viii)   Cesses.

The following State taxes and levies would be, to begin with, subsumed under GST:

(i)       VAT / Sales tax

(ii)      Entertainment tax (unless it is levied by the local bodies).

(iii)     Luxury tax

(iv)     Taxes on lottery, betting and gambling.

(v)      State Cesses and Surcharges in so far as they relate to supply of goods and services.

(vi)     Entry tax not in lieu of Octroi.

Purchase tax: Some of the States felt that they are getting substantial revenue from Purchase Tax and, therefore, it should not be subsumed under GST while majority of the States were of the view that no such exemptions should be given. The difficulties of the foodgrain producing States was appreciated as substantial revenue is being earned by them from Purchase Tax and it was, therefore, felt that in case Purchase Tax has to be subsumed then adequate and continuing compensation has to be provided to such States.  This issue is being discussed in consultation with the Government of India.

Tax on items containing Alcohol: Alcoholic beverages would be kept out of the purview of GST. Sales Tax/VAT could be continued to be levied on alcoholic beverages as per the existing practice. In case it has been made Vatable by some States, there is no objection to that. Excise Duty, which is presently levied by the States may not also be affected.

Tax on Tobacco products: Tobacco products
would be subjected to GST with ITC. Centre may be allowed to levy excise duty on tobacco products over and above GST with ITC.

Tax on Petroleum Products: As far as petroleum products are concerned, it was decided that the basket of petroleum products, i.e. crude, motor spirit (including ATF) and HSD would be kept outside GST as is the prevailing practice in India. Sales Tax could continue to be levied by the States on these products with prevailing floor rate. Similarly, Centre could also continue its levies. A final view whether Natural Gas should be kept outside the GST will be taken after further deliberations.

Taxation of Services : As indicated earlier, both the Centre and the States will have concurrent power to levy tax on goods and services. In the case of States, the principle for taxation of intra-State and inter-State has already been formulated by the Working Group of Principal Secretaries/Secretaries of Finance/Taxation and Commissioners of Trade Taxes with senior representatives of Department of Revenue, Government of India. For inter-State transactions an innovative model of Integrated GST will be adopted by appropriately aligning and integrating CGST and IGST.

Question 12 : What is the rate structure proposed under GST ?

Answer :         The Empowered Committee has decided to adopt a two-rate structure –a lower rate for necessary items and items of basic importance and a standard rate for goods in general. There will also be a special rate for precious metals and a list of exempted items. For upholding of special needs of each State as well as a balanced approach to federal flexibility, it is being discussed whether the exempted list under VAT regime including Goods of Local Importance may be retained in the exempted list under State GST in the initial years. It is also being discussed whether the Government of India may adopt, to begin with, a similar approach towards exempted list under the CGST.

For CGST relating to goods, the  States considered that the Government of India might also have a two-rate structure, with conformity in the levels of rate with the SGST. For taxation of services, there may be a single rate for both CGST and SGST.

The exact value of the SGST and CGST rates, including the rate for services, will be made known duly in course of appropriate legislative actions.

Question 13:  What is the concept of providing threshold exemption for GST?

Answer :         Threshold exemption is built into a tax regime to keep small traders out of tax net. This has three-fold objectives:

a) It is difficult to administer small traders and cost of administering of such traders is very high in comparison to the tax paid by them.

b) The compliance cost and compliance effort would be saved for such small traders.

c) Small traders get relative advantage over large enterprises on account of lower tax incidence.

The present thresholds prescribed in different State VAT Acts below which VAT is not applicable varies from State to State.  A uniform State GST threshold across States is desirable and, therefore, as already mentioned in Answer to Question 6, it has been considered that a threshold of gross annual turnover of Rs. 10 lakh both for goods and services for all the States and Union Territories might be adopted with adequate compensation for the States (particularly, the States in North-Eastern Region and Special Category States) where lower threshold had prevailed in the VAT regime. Keeping in view the interest of small traders and small scale industries and to avoid dual control, the States also considered that the threshold for Central GST for goods may be kept Rs.1.5 Crore and the threshold for services should also be appropriately high.

Question 14 : What is the scope of composition and compounding scheme under GST?

Answer :         As already mentioned in Answer to Question 6, a composition /Compounding Scheme will be an important feature of GST to protect the interests of small traders and small scale industries. The Composition/Compounding scheme for the purpose of GST should have an upper ceiling on gross annual turnover and a floor tax rate with respect to gross annual turnover. In particular there will be a compounding cut-off at Rs. 50 lakhs of the gross annual turnover and the floor rate of 0.5% across the States. The scheme would allow option for GST registration for dealers with turnover below the compounding cut-off.

Question 15 : How will imports be taxed under GST ?

Answer :         With Constitutional Amendments, both CGST and SGST will be levied on import of goods and services into the country. The incidence of tax will follow the destination principle and the tax revenue in case of SGST will accrue to the State where the imported goods and services are consumed. Full and complete set-off will be available on the GST paid on import on goods and services.

Question 16 : Will cross utilization of credits between goods and services be allowed under GST regime?

 Answer :         Cross utilization of credit of CGST between goods and services would be allowed. Similarly, the facility of cross utilization of credit will be available in case of SGST. However, the cross utilization of CGST and SGST would generally not be allowed except in the case of inter-State supply of goods and services under the IGST model which is explained in answer to the next question.

Question 17 : How will be Inter-State Transactions of Goods and Services be taxed under GST in terms of IGST method ?

Answer :         The Empowered Committee has accepted the recommendation for adoption of IGST model for taxation of inter-State transaction of Goods and Services. The scope of IGST Model is that Centre would levy IGST which would be CGST plus SGST on all inter-State transactions of taxable goods and services. The inter-State seller will pay IGST on value addition after adjusting available credit of IGST, CGST, and SGST on his purchases. The Exporting State will transfer to the Centre the credit of SGST used in payment of IGST. The Importing dealer will claim credit of IGST while discharging his output tax liability in his own State.  The Centre will transfer to the importing State the credit of IGST used in payment of SGST. The relevant information is also submitted to the Central Agency which will act as a clearing house mechanism, verify the claims and inform the respective governments to transfer the funds.

The major advantages of IGST Model are:

a) Maintenance of uninterrupted ITC chain on inter-State transactions.

b) No upfront payment of tax or substantial blockage of funds for the inter-State seller or buyer.

c) No refund claim in exporting State, as ITC is used up while paying the tax.

d) Self monitoring model.

e) Level of computerisation is limited to inter-State dealers and Central and State Governments should be able to computerise their processes expeditiously.

f) As all inter-State dealers will be e-registered and correspondence with them will be by
e-mail, the compliance level will improve substantially.

g) Model can take ‘Business to Business’ as well as ‘Business to Consumer’ transactions into account.

Question 18 : Why does introduction of GST require a Constitutional Amendment?

 Answer :            The Constitution provides for delineation of power to tax between the Centre and States. While the Centre is empowered to tax services and goods upto the production stage, the States have the power to tax sale of goods. The States do not have the powers to levy a tax on supply of services while the Centre does not have power to levy tax on the sale of goods. Thus, the Constitution does not vest express power either in the Central or State Government to levy a tax on the ‘supply of goods and services’. Moreover, the Constitution also does not empower the States to impose tax on imports. Therefore, it is essential to have Constitutional Amendments for empowering the Centre to levy tax on sale of goods and States for levy of service tax and tax on imports and other consequential issues. As part of the exercise on Constitutional Amendment, there would be a special attention to the formulation of a mechanism for upholding the need for a harmonious structure for GST along with the concern for the powers of the Centre and the States in a federal structure.

Question 19:  How are the legislative steps being taken for CGST and SGST ?

 Answer :     A Joint Working Group has recently been constituted (September 30, 2009) comprising of the officials of the Central and State Governments to prepare, in a time-bound manner a draft legislation for Constitutional Amendment.

Question 20:  How will the rules for administration of CGST and SGST be framed?

 Answer :    The Joint Working Group, as mentioned above, has also been entrusted the task of preparing draft legislation for CGST, a suitable Model Legislation for SGST and rules and procedures for CGST and SGST. Simultaneous steps have also been initiated for drafting of legislation for IGST and rules and procedures. As a part of this exercise, the Working Group will also address to the issues of dispute resolution and advance ruling.