Indian
Indirect tax payers have been greeted with a bouquet of complexities from the
time immemorial. These taxpayers were in need of a single flower as antidote,
which they now see budding in form of Model GST law released by the Union
Government. The proposed scheme of GST aims to reduce the existing intricacies
in administration of multiple indirect taxes. The much debated beauty and
barriers of GST as a unified tax on goods and services has finally come to the
rescue of taxpayers in the form of model GST law, framed by the Empowered
Committee of State Finance Ministers.
The
model law is designed in a manner that it can also be used by the states as
blue print for state GST. At the outset, the model law proposes its
applicability to whole of India and provides that different dates may be
appointed for different provisions of the Act. The draft law appears to be
largely premised on the existing state VAT laws and an attempt has been made to
reconcile the philosophies of existing Central Excise, VAT and Service tax
laws.
The
scheme of taxation under GST would be on supply of goods, thus the draft (i.e.
GST Act and IGST Act)is accompanied with the Valuation of Supply of Goods and
Services Rules and there exists a predominant emphasis on determination of
time, value and place of supply in the model law. By far and large, the
definitions under the model law are more precise and clear even when they
borrow reference from different bye laws. The definition of 'services' has been
kept same as proposed in the Constitution (122nd Amendment) Bill, services to
mean anything other than goods. Such a definition would enlarge the scope of
taxability on services. The model law has distinctly outlined the concepts of
works contract, job work and tax on right to use of goods.
The
draft does not talk about the rate of taxes but clears that rate of taxes on
various goods and services is to be appended as Schedule to the Act. Further,
in so far as a 'taxable person' and 'registration' is concerned, the threshold
for determination in North East states have been kept half as the business
transactions are correspondingly also lower than rest of India. Thus the
registered persons would be required to levy tax if the aggregate turnover exceeds
Rs. 10 lacs in a financial year, and Rs. 5 lacs in north east states. This
proposal also aims at expansion of tax base and uniforms the existing threshold
as under the different indirect tax laws.
The
draftsmen have made a proposal in the model law that the transactions would now
be put to tax under GST on 'transaction value' basis and this value can be
challenged by a proper officer in case he has reason to doubt the truth or
accuracy of the value declared. This concept has been borrowed from the Customs
laws and would certainly pregnant the industry with difficulties on valuation
of supply in proposed GST. Unlike present scheme, the model law also proposes a
compliance rating score of taxable persons to be updated on periodic basis and
placed in public domain.
India's
proposed GST is more of self-disciplined tax module, as conceded by CBEC
officers in various forums, thus one can see the compliance orientation in the
model law which carves out explicit provisions for requirement and manner of
registration, payment of taxes, filing of returns, issuance of tax invoices,
bill of supply, credit, debit notes and availment and transfer of credits.
Model law has also introduced the concepts of civil lawse.g. presumption as to
truth and admissibility of 'documents', 'mental state', 'burden of proof' etc.
which one do not find place in many of existing tax laws.
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