TRAINING NEW EMPLOYEES

GST – India-UpdatesRajesh SharmaAGM-IT Dainik Bhaskar Group

SAP – GST - Updates

• The Goods and Services Tax (GST) is going to impact every industry opening up many opportunities. However, migrating to a GST compliant system will bring a lot challenges as well. Here are the some latest updates on the new tax reform to help you prepare for the implementation.

GST Roll Out

While the implementation date is 3 months behind the schedule that is July 1, 2017, it is expected that the indirect tax rate under the current regime, may get aligned to the GST rates and taxation framework, pending the enactment.

The new date has provided industries with a time frame to plan for initiatives that require process and technology changes to leverage the business benefit that will accrue to the economy.

GST Rates

In November 2016, the GST council recommended key slab rates as 28%, 18%, 12% and 5%. The goods of mass consumption might attract NIL/lowest slab rate of tax. Also, the rate of service tax is likely to increase from current 15% to 18%.

Under the GST regime, the State and Centre will collect taxes at identical rates. In addition to this, the luxury or sin goods can be subjected to additional cess.

Challenge for Industry to Maintain Status Quo for Profits

• With GST, industries are expected to maintain status quo on profits. India Inc. needs to be aware and conscious of the anti-profiteering provisions that may become applicable in case the benefit of availability of the input credit or reduction in the GST is not adequately passed on to the consumers. The GST legislation provides for an authority to examine whether GST benefits are passed to consumer through appropriate pricing changes.

AUTHORITY FOR GST ADMINISTRATION

Authority for GST Administration

The appropriate GST administration authority for assessments for State or Centre, will be decided by the program. Thus there will be sharing of the entire tax base of assesses by the Centre and the State as per pre-determined ratio.

Authority for GST Administration

• During the GST council meeting on January 16, 2017; following were the key decisions with respect to administration of GST law by the States• Powers to levy tax on economic activity within 12 nautical miles of territorial waters• Powers to assess and administer 90% of the tax payers under INR 1.5 croreannual turnover

Authority for GST Administration

Assessee with a turnover over INR 1.5 crore will be administratively controlled by the Centre and the States in equal measure. However, the above decisions of the GST council are being widely contested on the grounds of constitutional validity.

The States are also expected to receive significant level of financial assistance to sail smoothly through the GST transition.

Authority for GST Administration

• The industry could face a challenge in supply destination. In case there is a dispute between the States over the supply destination, it is agreed that the Centre will have the power to administer those assessed. Further, in all situations the Centre has the power to collect the taxes.

Way Forward

Way Forward• The issues that reached an

agreement will be appropriately included in the IGST, CGST and SGST law. The draft laws will be discussed and submitted for approval to respective legislative bodies in the ensuing GST council meeting. Also, the GST officials are expected to complete the classification of various goods and services under the respective rates by end of March 2017. Following this, a dry/pilot run will be carried out on the GSTN.

Waiting

• A meeting of GST council is convened and scheduled to be held on February 18, 2017. Watch out for a detailed calendar of the events of enactment and other notifications under the GST law.

• Stay tuned for more updates and latest news on the game changing reform in India.

Rajesh Sharma