GKCM Updates

Goods & Services Tax – An Insight

GOODS AND SERVICES TAX (GST) – A TRIUMPH TO LOOK FORWARD TO

GST is a single window to taxes on goods and services and will be with a regime to be charged on destination principal and credit of input will be availed once value addition is achieved.

GST, expected to be applicable w.e.f. 01st April, 2017, will change the existing model of business and reform it by giving an Organization single act to follow along with other state wise modules.

Important to understand difference between current tax structure and proposed GST operations

GST is defined as “any tax on supply of goods and services other than on alcohol for human consumption”.

Basically GST is a value added tax, which will be levied at all points in supply chain, where the deliverable changes hands, with a privilege to avail credit for any tax paid on input received for use in creating such supply.

GST Subsumes – VAT or sales tax, Central Sales tax, Entertainment tax (taxes on entertainment at panchayat, municipality or district level), Service Tax, Central Excise Duty, Purchase Tax, Octroi etc.

GST will work in 2 parts – Intra State and Inter State (IGST) and Intra State is further divided into two parts i.e. Central GST (CGST) and State GST (SGST) and the same will impact basis destination principal.

Input will be taken in following manner:

CGST-> CGST & IGST

SGST-> SGST & IGST

IGST-> IGST, CGST & SGST

Registration Requirement

North Eastern States

  • Registration – Aggregate Turnover in a year > USD 6,060/-*
  • Tax Liability – Aggregate Turnover > USD 7,575/-*

Other States

  • Registration – Aggregate Turnover in a year > USD 13,636/-*
  • Tax Liability – Aggregate Turnover > USD 15,152/-*

*(1 USD = INR 66 approx)

Pros of GST – Once Gained

  • Simplified tax structure and single act to follow;
  • Elimination of multiple taxes;
  • Improved regime in terms of Central and State applicability;
  • Increase in efficiency in terms of single line to follow;
  • Exports, still exempt;
  • Simplified compliance procedures;
  • No scope of cess, multiple levy of taxes, re-sale tax, additional tax, special tax etc. and so on.

Features of GST

  • Change from ORIGIN BASED TAXATION to DESTINATION BASED CONSUMPTION TAX
  • Apply at all stages – Primary and Secondary, including retail
  • Applied to Goods as well as Services
  • Common list of exempted goods and services under CGST and SGST
  • CGST will replace CENVAT and Service Tax whereas SGST will subsume VAT
  • IGST will be applicable on Imports
  • Model GST Law including Rules and Procedures to be recommended by GST Council

Exceptions on Applicability of GST

  1. Alcohol for Human Consumption – State Excise
  2. Electricity – Electricity Duty
  3. Real Estate – Stamp Duty along with Property Tax
  4. Petroleum Products (Some of them)
  5. Tobacco Products – Undr GST as well as Central Excise

Composition of GST Council & Its Meetings

GST Council will be a constitutional body established by president of India. It’s composition will be as follows:

  • Chairman – Union Finance Minister
  • Minister of State (Finance)
  • Finance Minister as member from each state

The meetings of the GST Council can proceed with a quorum of 50 percent and decisions will be taken with at least three-fourth weighted majority voting for a resolution. All decisions of the GST Council will be made by three-fourth majority of the votes cast; the center shall have one-third of the votes cast, and the states together shall have two-third of the votes cast.

Functions of GST Council

  • The functions of the GST council would be to make recommendation on:
  • What taxes, cesses, and surcharges to be subsumed under the GST?
  • What goods and services are subject to, or exempted from GST?
  • The threshold limit of turnover for application of GST
  • Rates of GST
  • Model GST laws, principles of levy, apportionment of IGST and principles related to place of supply
  • Special provisions with respect to the eight north eastern states, Himachal Pradesh, Jammu and Kashmir, and Uttarakhand
  • Other related matters

Key Highlights of Union Budget 2016-17 || Reforms On-The-Go

Taxation Reforms

  • No changes in existing income tax slabs
  • Infrastructure and agriculture cess to be levied.
  • Excise duty raised from 10 to 15 per cent on tobacco products other than beedis
  • 1 per cent Service charge on purchase of luxury cars over Rs. 10 lakh and in-cash purchase of goods and services over Rs. 2 lakh.
  • SUVs, Luxury cars to be expensive. 4% high capacity tax for SUVs.
  • Companies with revenue less than Rs 5 crore to be taxed at 29% plus surcharge
  • Limited tax compliance window from Jun 1 – Sep 30 for declaring undisclosed income at 45% incl. surcharge and penalties
  • 10% Dividend Tax for the recipient over Rs. 10 Lakh per annum – in addition to Dividend Distribution Tax paid by the Company (Subject to reconfirmation)
  • Rebate under 87A increased from Rs. 2000 to Rs. 5000 (addition of Rs. 3000)for Individuals having income upto Rs. 5 Lakh
  • Government will pay interest of 9% instead of 6% in case there is a delay in appellate cases beyond 90 days. Officers to be held accountable.
  • Monetary limit for the cases to be decided by one member bench increased to Rs. 50 Lakh from Rs. 15 Lakh.
  • Surcharge on Income Tax increased from 12% to 15% for those having income exceeding Rs. 1 Crore per annum.
  • New dispute panel – Taxpayer can settle by paying disputed tax and interest upto the date of the assessment. No penalty where the disputed tax in Rs. 10 lakh. Penalty on the balance to be 25% of penalty.
  • 100% deduction for the profits of undertakings from housing projects in cities during Jun’16 to Mar’19.
  • Deduction will be available for all assesses who are covered under Tax Audit for 30% of expenditure for additional employments. The number of days conditions have been reduced from 300 to 240. Earlier this was for only manufacturing undertakings.
  • The ceiling U/s 44AD for presumptive basis income to 2 Crores for Businesses with presumptive income @ 8% as well as the benefit of this section extended to the Professionals having the Gross receipts upto 50 Lakhs with presumptive income @ 50%.
  • Penalty for concealment reduced to 50 – 200% as existing from 100 – 300%
  • MAT will be applicable for startups that qualify for 100 per cent tax exemption. Capital gain not taxed where investment made in notified funds or in startups where they hold majority.
  • Direct tax proposals result in revenue loss of Rs.1060 crore, indirect tax proposals result in gain of Rs.20,670 crore

Personal Finance

  • Rs 1,000 crore allocated for new EPF (Employees’ Provident Fund) scheme
  • Government will pay EPF contribution of 8.33% for all new employees for first three years
  • Withdrawal of PF Accumulation even after 5 years of service is taxable for contribution on or after 01.04.2016 on 60% due to amendment in Section 10(12) subject to certain condition.
  • Deduction for rent paid will be raised from Rs 24,000 to Rs 60,000 to benefit those living in rented houses.
  • Additional exemption of Rs. 50,000 for housing loans up to Rs. 35 lakh, provided cost of house is not above Rs. 50 lakh.
  • Service tax exempted for housing construction of houses less than 60 sq. m

Social Reforms

  • Rs38,500 crore for Mahtma Gandhi MGNREGA for 2016-17
  • Swacch Bharat Abhiyan allocated Rs.9,500 crores.
  • Government is launching a new initiative to provide cooking gas to BPL families with state support.
  • 2.87 lakh crore grants to gram panchayats and municipalities – a quantum jump of 228%.

Health Sector

  • A new health protection scheme for health cover upto 1 lakh per family.
  • National Dialysis Service Prog with funds thru PPP mode to provide dialysis at all district hospitals.
  • Senior citizens will get additional healthcare cover of Rs 30,000 under the new scheme

Education Sector

  • Scheme to get Rs.500 cr for promoting entrepreneurship among SC/ST
  • 10 public and 10 private educational institutions to be made world-class.
  • Rs. 1,700 crore for 1500 multi-skill development centers.
  • Digital literacy scheme to be launched to cover 6 crore additional rural households
  • Objective to skill 1 crore youth in the next 3 years under the PM Kaushal Vikas Yojna-FM Jaitley
  • National Skill Development Mission has imparted training to 76 lakh youth. 1500 Multi-skill training institutes to be set up.

Energy Sector

  • Rs. 3000 crore earmarked for nuclear power generation
  • Government drawing comprehensive plan to be implemented in next 15-20 years for exploiting nuclear energy
  • Government to provide incentive for deepwater gas exploration

Investments and Infrastructure Sector

  • Rs. 27,000 crore to be spent on roadways
  • 65 eligible habitats to be connected via 2.23 lakh kms of road. Current construction pace is 100 kms/day
  • Shops to be given option to remain open all seven days in a week across markets.
  • Rs. 55,000 crore for roads and highways. Total allocation for road construction, including PMGSY, – Rs 97,000 crore
  • New green field ports to be developed on east and west coasts
  • Revival of underserved airports. Centre to Partner with States to revive small airports for regional connectivity
  • 100 per cent FDI in marketing of food products produced and marketed in India

Agriculture Sector

  • Total allocation for agriculture and farmer welfare at Rs 35984 crores
  • 28.5 lakh heactares of land wil be brought under irrigation.
  • 5 lakh acres to be brought under organic farming over a three year period
  • Rs 60,000 crore for recharging of ground water recharging as there is urgent need to focus on drought hit areas cluster development for water conservation.
  • Dedicated irrigation fund in NABARD of Rs.20.000 cr

Banking Sector

  • Banks get a big boost: Rs 25,000 crore towards recapitalization of public sector banks.
  • Target of disbursement under MUDRA increased to 1,80,000 crore
  • Process of transfer of government stake in IDBI Bank below 50% started
  • General Insurance companies will be listed in the stock exchange
  • Government to increase ATMs, micro-ATMs in post offices in next three years

 


Form ADT-1 is now available as eForm || Appointment & Re-appointment of Auditor

Companies were earlier required to file form ADT-1 as an attachment with eForm GNL-2. Now, with effect from October 20, 2014, ADT-1 is available as an eForm and the same is required to be filed for appointment / re-appointment of Statutory Auditor.

The newly introduced eForm ADT-1 can be downloaded from the below mentioned link:

Link: eForms


Company Law Settlement Scheme 2014 extended till December 31, 2014

In view of response give by companies to file records and financials of previous years, Ministry of Corporate Affairs has extended the CLSS 2014 till December 31, 2014 to invite more of such companies to file their previous records and financials with 75% discount on the additional fees.

The circular with the reference can be downloaded by clicking the below link:

Link: MCA General Circular 44/2014


BLOOMING IMPLICATIONS – SECTION 185 OF COMPANIES ACT, 2013

Section 185 of the new Companies Act, 2013 is in discussion now a days. The Section restrains Companies with common management to share loans or guarantees to each other, which in implication, if done on or after September 12, 2013 can impose a fine which shall not be less than Rs. 5 Lacs and which may extend to Rs. 25 Lacs and the Director to whom such loan, advance or guarantee is given or provided in connection with any loan taken by him or any other person, shall be punishable with imprisonment which may extend to 6 months or with fine which shall not be less than Rs. 5 Lacs which may extend to Rs. 25 Continue reading


RELAXATION OF LAST DATE AND ADDITIONAL FEES IN FILING OF E-FORM 23C FOR APPOINTMENT OF COST AUDITOR

Ministry of Corporate Affairs has, through its General Circular No. 14/2013 dated November 01, 2013 relaxed the last date of filing e-Form 23AC for appointment of Cost Auditor of the Company as applicable to certain specified class of companies.

The additional fees applicable has been relaxed for the companies and they can file the e-form 23AC upto November 30, 2013 or within 30 days of commencement of company’s financial year, to which the appointment relates, whichever is later.

Sources


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