India: GST Rollout – Clarification On Anti-Profiteering Provision And Others

Last Updated: 10 July 2017
Article by SKP  

With the date for the implementation of the Goods and Services Tax (GST) less than 100 hours away, the government is making considerable efforts to address concerns of the taxpayers to ensure a smooth transition to the GST regime.

Town hall to address queries

The Revenue Secretary Hasmukh Adhia attended a town hall meeting in which he answered stakeholder queries and clarified the government's position on many important issues.

  • Key takeaways on anti-profiteering from the town hall are as follows:
    • Allaying fears of the industry about the anti-profiteering rules, Adhia said that the mechanism will be used as last resort. He further stated that the GST Council will first exercise the option of "talking with the industry" against which a complaint is received.
    • He added that the structure of anti-profiteering authority ensures that individual officials aren't empowered to use their discretion as only the Director General of (Safeguard) will be authorised to carry out a detailed investigation.
  • Other important points:
    • The GST Council will take a lenient view in enforcing penal provisions for minor compliance issues during the first six months after GST is rolled out. However, such leniency will be restricted to 'genuine cases' and based on the authenticity of the problem.
    • The Revenue Secretary re-affirmed that the fear of an increased compliance burden was a myth and a one-time tweaking of the business interface software will be sufficient for compliance requirements and there is no need to employ additional personnel to file returns.
    • Except in the case of textile and real-estate, all commodities with inverted duty structure i.e. where tax incidence is higher on inputs than on final products, taxpayers will be able to claim full input tax credit.
    • Packaged food would not attract any tax unless the packaging is done for brands that own trademarks.
    • There won't be any more revision in tax rates before 1 July, unless deemed absolutely necessary.
    • The valuation method on intra-state supplies within the company will not be questioned by the authorities.
    • Persons who were hitherto not liable to discharge excise duty will be able to obtain deemed/notional input tax credit benefit in respect of stock as on 1 July.
    • Clearance of goods from customs bonded warehouse after 1 July would attract BCD and IGST, and full credit can be availed for payment of output CGST and SGST/IGST.
    • E-way bill Rules will be finalised within the next three months, and until then the existing system will continue.

Deferment of TDS and TCS provisions

  • Ministry of Finance, Government of India through the Press Information Bureau has announced the following:
    • The provisions of Tax Deduction at Source (Section 51 of the CGST/SGST Act 2017) and Tax Collection at Source (Section 52 of the CGST/SGST Act, 2017) will be brought into force from a date which will be communicated later.
    • Persons who will be liable to deduct or collect tax at source will be required to take registration, but the liability to deduct or collect tax will arise from the date the respective sections are brought in force.
    • The persons who were liable to be registered under clause (ix) of Section 24 of the CGST/SGST Act, 2017 (as they were supplying goods or services through electronic commerce operator who is required to collect tax at source under Section 52) will not be liable to register till the provision of Tax Collection at Source is brought under force. In other words, persons supplying goods or services through an electronic commerce operator liable to collect tax at source would not be required to obtain registration immediately, unless they are otherwise liable for registration.

Re-opening of GST registration window

  • The GST registration window has re-opened from 25 June 2017 for a period of 30 days.
  • To ensure smooth registration, Aadhar-based verification procedure has been done away with in light of a few glitches reported in the process.
  • Persons not registered under existing laws can apply for registration under the GST regime in this window.

Jammu & Kashmir yet to pass GST law

  • Jammu & Kashmir is likely to suffer double taxation on inward and outward supplies made from other states (i.e. both GST and J&K state taxes may be applicable) as it remains the only state not to pass the state GST in the assembly.
  • SKP's comments

    • With the impending implementation a few days away, the government's outreach efforts for on-boarding stakeholders under GST is at its peak.
    • The clarification by the Revenue Secretary that the GST council will try to resolve any alleged violations of anti-profiteering provisions through consultation with the relevant industry comes as a welcome move.
    • Government by deferring enforcement of provisions relating to Tax Deduction at Source and Tax Collection at Source after taking into account the feedback received from the industry has once again shown its willingness to go the extra mile in order to ensure a smooth rollout of GST

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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