Lanch of gstindia.net Weekly Newsletter

GST will be applicable from 1st July, reverse count down has already begun. Everyone is gearing up to be GST compliant, may it be knowledge, technology or business processes.


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ICAI has published 5 Books/Papers on GST

http://gstindia.net has bought you fastest download links to these publications.
Background Material on Revised Model GST Law
Comprehensive
material containing a clause by clause analysis of the revised Model
GST Law along with FAQ’s, MCQ’s, Flowcharts and Illustrations etc. to
make the reading and understanding easier.

https://goo.gl/MyV3xC

Study Paper on Taxation of E-Commerce under GST
In-depth
knowledge of provisions of upcoming GST pertaining to E-Commerce
Transactions in a very practical and simplified manner.
https://goo.gl/ivjhio

Study Paper on Unjust Enrichment
In-depth practical and theoretical knowledge of the concept of unjust enrichment
https://goo.gl/HW75A3

FAQ and MCQ on Revised Model GST Law
Comprehensive coverage of GST in a question-answer format as an easy & lucid way to understand the law
https://goo.gl/nU1u1D

Simplified GST Guide for Manufacturer
Covers aspects of transaction related to manufacturing like levy and exemption, registration, time and place of supply, valuation, input tax credit, job work and much more under foreseen GST in very simple and easy to comprehend language
https://goo.gl/JhQetk

For more such file and discussion on GST, visit http://gstindia.net/forums

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Beta Launch of gstindia.net forum

Beta Launch of http://gstindia.net It is a forum for tax experts. 

A website where all the tax experts can share their views. This will help them in build their professional brand and also showcase their forte.

Register at gstindia.net today and start building your professional brand.
It is simple and easy to use.

Since it's still under development, if you come across any bug or if you have a suggestion, please share the same on below email address.

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What you Need to Know as a Trader

As a trader, today you are liable for registration under State VAT if your turnover exceeds the prescribed threshold limit. You are also liable for registration under Central Excise if you trade in Excisable goods. You are allowed to avail input VAT credit and set it off against the output tax liability. However, the excise duty you pay will not be available as credit, and it will be added to the cost of the product, and subsequently passed on to the buyer.

In the GST regime, it does not matter if you are a manufacturer, a trader or a service provider. Input tax credit is available across the supply chain until it reaches the end customer.


You may have these questions:

• As a trader registered under VAT, can I carry forward the closing balance of input tax credit?
• Can I claim Input Tax credit on the closing stock if I am registered under Excise?

Let us now answer the questions scenario-wise.

Scenario 1 – A trader registered under both VAT and Excise

Conditions
The closing balance of credit should reflect in the last VAT return filed by you
The credit, as reflecting in the return, should be allowed as credit under current law
It should also be allowed as input tax credit under GST

The balance credit available on the last day, prior to the date on which GST is implemented, can be carried forward as input credit to GST.

As a trader registered under VAT, can I carry forward the closing balance of input tax credit?
Yes, input VAT is allowed as a credit in the current regime as well as under GST. The input VAT credit amount can be fully carried forward as SGST Input Tax Credit.

Can I claim the credit on the closing stock if I am registered under Excise?
Excise duty is not allowed as input credit in the current regime. One of the conditions to carry forward the credit on closing stock is that on transiting to GST, the duty/tax should be allowed as a credit under the current statute. Today, a first stage or second stage dealer adds the excise duty paid on the price of the product. It is then sold to a manufacturer, who claims the input credit.
Therefore, if you are a trader registered under Excise, you will NOT be eligible to claim the credit on closing stock.

Scenario 2 – A trader who is not registered under VAT/CST

You need to be registered under the VAT/CST regime if your turnover exceeds the specified threshold limit. If you are not registered under the VAT/CST regime but are liable for registration under GST, you can claim input credit if you meet the conditions listed below.
The closing stock held must be used or intended to be used for taxable supplies.
You were eligible for input VAT credit under current law, but not being liable for registration (turnover was less than the registration threshold limit), you could not claim input tax credit.
You are eligible for input tax credit under GST
In GST, you are eligible for input tax credit if you are a regular taxpayer only. A composition taxpayer is not allowed to claim input tax credit.
You should have invoices or any other prescribed duty/tax paying documents for the closing stock.
The date of invoices or any other prescribed duty or tax paying documents must be within 12 months from the date of transitioning to GST.

Scenario 3 – A trader who is registered under VAT, and engaged in the sale of exempted goods

On the date of transition to GST, you are a trader who is registered under VAT and engaged in the sale of exempted goods, but tax taxable under GST.

Will you be allowed to claim input tax credit?
Yes. You are entitled to carry forward the input VAT credit held in the closing stock.

You were eligible for input VAT credit under current law, but as a trader engaged in exempted goods, you could not claim input tax credit. Other eligibility conditions applicable are same as discussed in Scenario 2.

Cross Posted from Tally Blog.

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GST Model Law - Draft GST Bill

CBEC has uploaded updated GST Bills which will be presented in parliament very soon.

GST Bill (aka Model GST Law) has reduced from 193 pages to 163 pages.
While we at +Madrecha Solutions are going through the revised Model GST Law to study the changes in revised draft, you can also download the same from the links below.

Revised Draft Model GST Law

Draft IGST Law

Draft GST Compensation Law

Looking for more files for download? Visit the updated GST India Download Page

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Welcome Videos, Bye Bye Boring Article

Launching "GST Bites", Video Series on GST.

Since passage of  Constitution Amendment bill for GST, we saw a plethora of sites writing / explaining GST and it's nitty-gritties. But, many GST learners found themselves lost in this ocean of GST articles / blog posts. More importantly, there is very little reliance on the articles that we read unless, you know credentials of the author. Hence, launching a video series which will be made by three Chartered Accountants.
Credentials of the authors for this Video Series -
Ashok Kumar Madrecha (CA, BCom Hons) - Practicing CA since 1989
Adarsh Ashok Madrecha (CA, DISA)           - Consultant at EY (Ernst Young)
Priya Adarsh Madrecha (CA, CS)                 - Ex Consultant at KPMG

1st video is out, have a look and don't forget to subscribe for more such videos.

Some of the 1st Reaction of viewers.

Intuitive and interesting videos.

Finally some fun in learning Tax

So simple and unique way to explain GST

Great Initiative, video is just awesome

Small Background

When me and my colleagues and friends started this blog, we were ahead of time in starting this GST blog. The topic of GST was in and out of media just like a movie actor. Then Constitution Amendment bill was passed unanimously by Parliament. It paved the way for GST law and now we (as well as our beloved Finance Minister +Arun Jaitley ) are confident that GST will be applicable from 1st April 2017.

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New Blog on Excel, Data Analytics, Office management

Starting new blog on - Excel, Data Analytics, Office Management. 
adarshmadrecha.blogspot.com

Since GST was delayed (5th time now), I was free to concentrate on new Idea for my Blog.
I found that many office goers face difficulty in using Excel. After all, Excel is the most used software in any CA Firm or Company.

Here, I shall be posting about

• Excel Tips and tricks
• Excel Videos
• Data analytics - How to get insights
• Office Management
• Excel Macros
• Excel User Defined Function

Posts

Just to have a glimpse of what this blog will be about, have a  look at the posts which are already posted last month.

1. Custom Function in excel for all your Date problems when you import the data in excel.
2. Must have Software in a CA Office (With Download links)
3. Vendor Master data analytics - Issues, Risks

Just enter your email ID below, and you will be subscribed to the new blog. 

Enter your email address:


Delivered by FeedBurner

Subscription is managed by Feed-burner (a Google Product), hence you can be sure of NO Spam.

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How key sectors will be affected with GST rollout?

Will food products become dearer? Will Land and Real estate be kept under GST? Will Service providers be happy with GST? How Manufacturers would be affected? What’s going to be in case of Works Contracts? How Power and Telecommunication sector be adversely affected? What about International Trade? Whether it will be zero rated or taxed??

This article will elaborate us the impact of GST on our Key Sectors / Industries. Let’s go through these specific sectors of Indian Economy and understand how each sector will be affected with the introduction of GST.

1. AGRICULTURE:

Presently in India, most of the food items are exempt from CENVAT. Still then, there are some food products, including food grains and cereals, which are covered under State VAT @ 4% in many states. State VAT exemption is limited to only unprocessed or raw food e.g., fresh fruits, vegetables, meat, eggs and coarse grains. As far as Delhi is concerned, no such levy is there.

When GST will be levied, combined rate would be 8% on food items. This clearly brings out that these items will be dearer by nearly 4%. There is no point in exempting food items totally as it will have adverse impact on Revenue Neutral Rate (RNR).

2. TRADERS:

CST ACT will be abolished totally from India. No question of sale or purchase against Form C. Inter State transactions which presently attract minimum 2% of the purchase price will be zero rated. The Traders will be saved from this additional tax burden.

3. MANUFACTURERS:

Presently, CENVAT is levied and administered by the Union Government. Rates of tax are uniform and no complications are seen in goods movement within the country. Threshold limit under Excise duty is Rs. 1.5 Crores.

With GST rollout, tiny sector and household industry will be adversely affected. States will administer Central GST of dealers with turnover below Rs. 1.5 Crores. This means present exemption will be gone for manufacturers.

Under GST, valuation of goods for levy of GST will be based on sale consideration. Purchasing of Capital goods from other states against Form C will be banned. No question of availing concessional rate will remain in force.

4. WORK CONTRACTORS:

Under the current provisions, works contracts attract three different duties. First is VAT on supply of goods. Second is Service tax on service element. Third is Central Excise Duty if a new commodity comes in existence in executing works contract.

It is quite clear that it is not easy to tax works contract. There are certain specific provisions and various rules in law for bifurcating goods and services element in this regard. Still lots of confusion and legislative compliances to go.

Under GST, goods and services both are treated at par and taxed at a uniform rate. GST will subsume sale of goods, provision of services and manufacture. GST will have a simple structure. No more confusion will remain.

One more point is that goods fabricated at site presently attract VAT or Service Tax. No CENVAT is levied. So, the contractors are required to pay maximum 12.5% which will be greatly affected in GST and might go upto 16-20%. Thus, additional burden for nearly 4- 8% will be created.

5. POWER SECTOR:

Although electricity is goods yet it is free from sales tax. Therefore, no sales tax is levied. The basic impact will be on purchase of goods by Power sector for generation and distribution of electricity from other states which is currently 2% under CST.

Abolition of CST will certainly affect this sector unless sale of electricity is brought within scope of GST and set off of input tax credit is allowed for tax paid on purchases.

6. TELECOMMUNICATION:

GST will not have a major impact on this sector. Like power sector, Telecom Companies also purchase goods for telecommunication from other states at a concessional rate which will go away with GST.

With the integration of Service tax and VAT under GST, controversy will be resolved with regard to confusion under composite transaction like sale of phone with talk time.

7. INTANGIBLE GOODS:

Taxability with regard to transfer of Intangible goods like software, intellectual property rights and goodwill will become clear under GST. Controversies will be resolved to a great extent.

8. LAND AND REAL ESTATE:

Till now, it is not clear whether land and real estate would fall within the ambit of GST or not. But many advanced nations are treating housing and construction activities just like a commodity and is subjected to VAT.

Poddar-Ahmad Working Paper has suggested including land and real property under GST. It is therefore suggested not to exclude this sector as it would lead to unnecessary disputes and tax cascading as well.

One view is that since this sector already attracts stamp duty, so exclude it totally from GST. But purpose of stamp duty is quite different from GST. Stamp duty is a cascading tax on each conveyance of title to real property while GST is tax on final consumption. Both are not substitutes in any sense. So, inclusion of real estate is appropriate.

But still the structure should be rationalised and rates to be lowered if GST is to be applicable in the real estate sector.

9. INTERNATIONAL TRADE:

GST will affect Importers in the sense that exemption which is available to them for High-seas sales under the CST Act will be withdrawn. Not only this, they will also be affected by change in tax rates.

Exports will continue to be zero rates and refund of input tax credit will be available to them. No major impact on Exporters.

10. PETROLEUM, LIQUOR AND TOBACCO PRODUCTS:

Presently, these goods are taxable at a higher rate of tax and multiple taxes are also levied on them. But these will be kept outside GST and therefore Government revenue will fall greatly. Manufacturers will also suffer cascading effect of taxes since they will not be entitled to claim input tax credit.

11.SERVICE PROVIDERS:

Services which are currently taxed at the place of rendering will be taxed at the point of consumption under GST. This clearly shifts the base of service tax from service rendering state to service consuming state. More services will be added to the GST regime and exemptions will be withdrawn. Classification disputes will also be resolved to a great extent.

The exact impact of GST can’t be guessed presently. It would be quantified once the GST ACT is finalised. Which sector will gain or lose will depend upon the tax schedules, final GST rates and the laws that will be framed subsequently. Be ready for GST.....whether you like or not!!!!

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Book on GST by ICAI - "Background Material on GST"

The Institute of Chartered Accountants of India - ICAI, with a view to update the members and other stakeholder about GST, has launched a Background Material on GST. The material covers various topics like concept of GST, its pros and cons, its feasibility & impact in India, challenges for Indian economy, GST in other countries etc. It is an all-inclusive material, which would provide an insight to the basic concepts of proposed GST regime. You can download the Background Material on GST from Knowledge Portal of ICAI, which is also available on the following link:Download GST Book - http://ge.tt/6e41dk82

We would further like to inform you that you may purchase “Background Material on GST” and get it delivered by courier by visiting the following link:
http://www.icai.org/publications.html?bookcid=25&bpg=1

Contents of Background Material on GST - ICAI

Section	Description	Page No
A-1	Indirect Tax Structure in India – An Introduction	1
A-2	What is GST, How it Works & its Advantages	15
A-3	Models of GST	20
A-4	Expected Model of GST in India	27
A-5	Revenue Neutral Rate (RNR)	38
A-6	Taxes/Duties to be Subsumed in GST	42
A-7	Inter-State Transactions and GST	44
A-8	Present Taxation vs. GST	57
A-9	Roadmap to GST in India	61
A-10	Challenges before the Government & Transitional Issues	69
A-11	Impact on Key Industries/Sectors	77
A-12	Expectations of Industry from GST	88
A-13	GST in other Countries	95
A-14	GST- Role of Chartered Accountants	103
B-1	Working Paper [No. 1/2009-DEA] on Goods & Services Tax	106
B-2	ICAI’S Concept Paper - GST Model for India – Suggestions	158
B-3	Relevant Articles of the Constitution of India	169
B-4	Entries in Schedule VII to the Constitution of India	178
C-1	First Discussion Paper on Goods and Services Tax in India	184

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Decoding 122nd Constitutional Amendment Bill for GST

By CA Vinod Kaushik

Background 

Before going into the depth of Constitution of India and its amendments we have to first understand why it needs to be amended to bring the GST Law. The GST Law is seen as one of the biggest tax reform in our country since Independence. The man who is behind this concept of GST in India is Mr. Atal Bihari Vajpayee who was the prime minister of India from 1998-2004. The Domestic and Foreign Industry Players are always having concerns with our present Indirect Tax System and its administration. India is Federal Country where Centre and State has its own taxation powers inbuilt in our constitution. The Union is levying Excise duty, Service Tax, Custom duty and States are levying and collecting VAT, CST, entry Tax, entertainment Tax. The Constitution is required to be amended because the Power of State and Centre shall be restructured in the Constitution itself and the Seventh Schedule which contains Union and State List shall be amended.

Development in Goods and Service Tax from 2006 till Date

In this phase of my write up I am trying to explain the step by step events from the date when the concept of GST was first introduced by Union Finance Minister in his Budget Speech of 2006-2007. In his Budget Speech of 2007-2008 Mr. P. Chidambaram requested the Empowered Committee of State Finance Ministers (EC) headed by Dr. Asim Dasgupta to work with central Government to prepare the road map for introduction of GST from 01-04-2010. After this delegation by Union FM to EC the EC then formed a Joint working Group to study the International Models of GST across the world. In November 2007 the Joint Working Group submitted its report to EC which contains the Dual GST structure for Indian Economy.

After due discussion between Central Government and Empowered Committee of State Finance Ministers the First Discussion Paper was prepared to make the GST Law a reality in India. The First attempt to introduce GST was made by then Finance Minister Shri Pranab Mukherjee on 16-03-2011 by introducing the Constitutional 115th Amendment Bill 2011 and the bill contains the amendments which were necessary to make the GST Law. The Bill was then sent to Parliamentary Standing Committee on Finance headed by Yashwant Sinha former Union Finance Minister and after due discussion with stakeholders and States the Committee submitted its Report with recommendation in August 2013 to both the Houses of Parliament. As usual the Centre Revised the Draft Constitutional Amendment Bill by accepting most of the recommendations made by Standing Committee and after this the Centre discussed the revised bill with States to reach on some conclusions. Unfortunately the helpless, unwilling and scam driven UPA Government could not convince the States on revised bill soon after the election were declared and the regime of UPA was demolished by Modi wave.

Now the BJP led NDA Government which people voted for development, growth and employment again started discussion with the states under leadership of Shri Arun Jaitley (Union Finance Minister) and finally reached on conclusion by drafting a fresh bill on Constitutional Amendment. The above said bill was drafted by keeping in mind the earlier developments and suggestion made by Standing Committee on Finance and pending demands of State Finance Ministers. The Constitutional (122nd) Amendment Bill, 2014 was introduced in Loksabha on 19-12-2014.

Now I have made a small attempt to decode this Amendment Bill and give you clarity on each and every aspect of the Bill. Before that it’s worthwhile to understand the process of amendment of Constitution.

Article 368: Power of Parliament to amend the Constitution and procedure thereof : Amendment in Constitution can be made by introducing a bill in either house of the Parliament and Bill has to be passed by 2/3 members of each house Present and voting, After this bill shall be sent to the president for its assent But if the bill need amendment in any of the list in 7th schedule ( Other articles also given) then it has to be ratified by at least half of the state assemblies After ratification by half of the state assembly it shall be sent to President of India for its assent. From above discussion you can understand that it is impossible for the Union Government to Introduce GST without support of States Assemblies and opposition in both the Houses of Parliament.

Now the provisions of this Bill have been analyzed one by one, and wherever possible comparison has been made with the Bill drafted by the UPA Government.

STEP BY STEP ANALYSIS OF 122ND CONSTITUTIONAL AMENDMENT BILL

Insertion of Article 246A: This Article was inserted in the main body of Indian Constitution after Article 246 to empower both the Centre and State to legislate on a common matter i.e. GST. Earlier the power of both the Governments were separate under Union list and State list, Without inserting 246A it is not possible for parliament to make Law on a matter which is neither mentioned in Union List and State List. The power to make laws on interstate transactions has been kept exclusively with Central Government.

Amendment in Article 248: The article 248 has been amended to avoid contradiction between this Article and Article 246A. The article 248 gives exclusive powers to parliament to make laws on matters not mentioned in State and Concurrent list. The amendment has added word “subject to 246A” Parliament has exclusive power to make laws on matters not mentioned in State and Concurrent list.

Amendment in Article 249: Earlier the above article was giving power to Parliament to make laws on the matters in State list if the same is necessary in the national interest. The above law can be made if the council of the states support this law by 2/3 majority. The amendment has inserted word Goods and Service tax also in this article so that Parliament can make law of GST.

Amendment in Article 250: This amendment is similar to that in 249, only difference is that this article comes into operation at the time of emergency and Article 249 comes when law is necessary in national interest.

Amendment in Article 268: Before amendment this article was giving power to Central Govt. to levy Stamp duties and Excise on Medicinal Toilet Preparations and collection powers were given to respective States. Now the amendment has deleted word Excise on Medicinal Toilet Preparations which means no more excise duty by states on Excise on Medicinal Toilet Preparations. This is a welcome move in GST to reduce the burden of multiplicity of taxes levied presently by State Govt.

Omission of Article 268A: This Article was giving power to Centre to levy Service tax and such tax shall be collected and appropriated by Centre and States together. Now under GST Regime no service tax exist hence the importance of this Article was no more required in the Constitution of India accordingly the same has abrogated from Constitution.

Amendment in Article 269 and Insertion of Article 269A: Before understanding the amendment made in Article 269 we have to understand the new Article 269A which grants exclusive power to Centre to levy integrated goods and Service Tax (IGST) on interstate transactions. This Article categorically says that Import of goods and Services into Indian Territory shall attract IGST. Now we can discuss 269 which was giving power to Central Govt. to levy taxes on Interstate sales i.e. CST and taxes on consignment of good and now the amendment has restricted the applicability of above article only on those taxes which are not mentioned in Article 269A i.e. IGST.

Amendment in Article 270 and 271: The Article 270 prescribe that the taxes levied by Union shall be distributed with the states and 271 has restricted the power of Parliament to increase the rate of GST by a surcharge for the purpose of Union. Under the GST Regime the increase of taxes shall be decided by the GST Council under Article 279A.

Insertion of Article 279A: In India the GST has been introduced in Dual structure i.e. Centre shall levy Central Goods and Service Tax (CSGT) and State shall levy State Goods and Service Tax (SGST) and in addition Centre shall levy Integrated goods and Service Tax (IGST). The above concept can only work on the basis of cooperative federalism between the Centre and State and this give rise to a platform where Centre and State can discuss various issues related to GST. Under 279A a council shall be constituted which shall be called GST Council consisting representation of Centre and States respectively.

Salient Features of GST Council:

A. The GST Council shall consist Union Finance Minister as a Chairperson, Union Minister of State in charge of Finance as a member, the State Finance Minister or State Revenue Minister as a member of the Council and the State FM shall select one of them as Vice Chairperson of Council.

B. The quorum of GST Council shall be ½ of its members.

C. Every Decision of the Council shall be taken at a meeting by a majority of at least ¾ of the weighted votes of the members present and voting. The vote of Centre shall have a weightage of 1/3 of total vote cast and vote of States taken together shall have weightage of 2/3 of total vote cast. From this mathematics we can conclude that Centre has VETO Power in the GST Council for decision making.

D. One of the contentious Clause of Article 279A is recommendation made by GST Council to the Union and the States on various critical matters. After so many meeting and deliberations this clause has been finalized and produced as under:

The Council shall make recommendation to the Union and States on following matters:

    Which taxes, surcharge, Cesses levied by Union, States and Local bodies shall be subsumed in GST. The taxes levied at present by Centre i.e. Excise Duty, Additional Excise duty, Service Tax, Additional Custom Duty, Special additional duty, Excise on Medicinal Toilet Preparations and Central Cesses and surcharge shall be subsumed in GST and taxes levied by States i.e. VAT, Entertainment Taxes, Luxury tax, lottery tax, CST and Entry taxes or Octrio shall be subsumed in GST. Basic Custom duty will remain alive and shall be collected by Custom Authorities as usual.

After taking several rounds of meeting by Union Finance Minister with State FM the above issue of items to be subsumed into GST has been resolved and still the alcohol is outside the ambit of GST and Petrol products has been included in the GST but they shall enjoy their present status unless recommended by GST Council as taxable under GST.

    Second recommendation by GST Council shall be with regard to Goods and Services which shall be exempt under GST regime, threshold under GST Law, Model GST Law i.e. GST Act GST Rules, Principal which shall govern place of supply rules etc.

3. Third recommendation by GST Council shall be with regard to floor rate with band of goods and services; this recommendation was not included in 115th constitutional amendment bill drafted by UPA Government in 2011. Though states were adamant on this issue but in my personal opinion the power to change the rate of GST shall bring down the harmonization of GST Law. But any how the Union Finance Minister has VETO in the GST Council and we assume he shall not allow any such adverse decisions except under special circumstances.

    In this part I am merging rest of the recommendations and they are special provisions to some states including Jammu and Kashmir, special rates for specified period to meet natural calamity and disaster and last are the residuary power i.e. any other matter relating to GST as the Council may decide.

We have not discussed one question which is coming into my mind about the disputes among various states or states with Centre; The earlier bill of UPA regime had provision of Dispute settlement Authority which was opposed by almost all of the states and also by Standing Committee on Finance and therefore this bill contains one provision that Council shall decide about the modalities to resolve the disputes arising out of its recommendations.

Amendment of Article 286: This article imposed restriction on States to make law on Interstate transactions and also the Import into Indian Territory. The amendment has just replaced the word sale or purchase of goods with supply of goods or Services or both. This amendment has deleted the concept of declared goods from Constitution itself. In the GST regime there is no concept of declared goods or goods of special importance.

Amendment of Article 366 : In this Article law makers has inserted clause 12A, Clause 26A and Clause 26B, Now Clause 12A has defined word “goods and service tax” , Clause 26A has defined word “service” and Clause 26B has defined meaning of “State”. “Goods and service tax” means any tax on supply of goods or services or both except taxes on supply of alcoholic liquor for human consumption. Definition is very simple and technically barred the alcoholic liquor for human consumption from GST through constitution, Earlier the states were demanding petrol products in the same category as alcoholic liquor for human consumption.

“Service has been defined as anything other than goods” and States has been defined as “States includes Union Territory with legislature”.

Amendment of Article 368: The procedure of amendment has been discussed earlier in this write up and there are certain matters where the amendment of Constitution is to be ratified by half of state assemblies and therefore by this amendment article 279A (GST Council) has been kept into that category also.

Amendment of Sixth Schedule: The sixth schedule contains the provisions as to administration of tribal areas of Assam, Meghalaya, Tripura and Mizoram, by amending this schedule law maker has empowered district council of these states to levy and collect taxes on entertainment and amusements.

AMENDMENT OF SEVENTH SCHEDULE: This schedule contains the union list, state list and concurrent list and the amendment of this list before introducing GST was very crucial for law makers. The major amendments have been proposed in both union list and state list which are discussed hereunder.

Changes proposed in union list: Earlier entry 84 has empowered centre to levy excise on all products including tobacco products but excluding alcoholic liquor or human consumption, now the amendment will take away the power of centre to levy excise on manufacturing except tobacco and petrol products. In nutshell in place of excise centre shall levy CSGT and IGST. Entry 92 and 92C has been proposed to delete the concept of taxes on sale or purchase of newspaper and advertisement thereon and service tax as levied by centre at present on provision of service.

Changes proposed in state list: Entry tax has been subsumed in GST therefore entry 52 has been deleted from state list and entry 55 empowering states to levy the tax on advertisement has been deleted from constitution itself. By amending entry 54 states has been empowered to levy tax on petrol and its related products except the sale of these items in interstate business. Entry 62 has been proposed to subsume luxury tax in the GST and taxes on entertainment and amusement shall only be levied and collected by local bodies only.

GST is destination based consumption tax : GST is a destination based consumption tax hence revenue shall accrue to those states where goods or services are finally consumed, now the producer states shall be discouraged for such huge production and to compensate them an extra 1% tax on supply of goods shall be levied for 2 years.

Compensation for States for loss on account of GST implementation shall be adequately placed in constitution and the period of compensation may not go beyond 5 years.

The Indian Industry is waiting very desperately for GST because it will subsume major indirect taxes levied by Central Government and State Government which will remove the cascading effect of taxes on costing of the Industry. The GST if implemented shall make the tax structure simple and hassle free for trade and Industry.

Now as on date everyone including me is hopeful that this amendment bill get passed in budget session of the parliament and also ratified by the states concerned. If all goes well in next session specially Rajyasabha the GST become reality from 01-04-2016.

This article is written by  +CA Vinod Kaushik 

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Why need for Constitution Amendment for GST - Video

2nd Video on GST Video Tutorials - Why need for Constitution Amendment for GST



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GST Introduction - Video

Starting GST Video tutorials. 

Many a times, learning by watching and hearing is better than just reading. With this in mind, starting GST video series on You-Tube. Subscribe here.

First Video in this series explains GST in brief, Taxes which will be substituted by GST, benefits of GST.

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