GST Model Law

The Model GST Law covers the following:

1. Goods and Services Tax Act, 2016

2. Integrated Goods and Services Tax Act, 2016

3. GST Valuation (Determination of the Value of supply of Goods and Services) Rules, 2016.

Supply

• The taxable event for levy of GST shall be ‘supply’ of goods and services or both. The term ‘supply’ is defined inclusively to inter alia include –

• All form of Supplies for a consideration.

• Specific Supplies without consideration including supplies between two units/branches of same entity having separate GSTIN.

• Transactions between principal and agent are deemed to be supply.

• Supply of branded services by aggregator.

Means;

-        -  All Stock Transfers will be taxable under GST Act or IGST Act based on the place of supply.

-        -  There will not be any E-1 Sale / In-transit sale provisions under GST. But high-sea sale option will remain as it is since the same is governed by International business laws and treaty.

-          - FOC sample supply, Test sample supply etc. will be taxable under GST.

Levy of GST

• Central GST (CGST) and State GST (SGST) will be leviable on intra-State supplies and Integrated GST (IGST) will be leviable on inter-State supplies.

• The provisions for determination of whether a supply is inter-State or intra-State are in sections 3 and 3A of the IGST Act, 2016

• Supply of goods/services shall be inter-State if location of supplier and place of supply are in different States. Otherwise the supply will be intra-State.

• Imports of both goods and services have been deemed as inter-State supplies leviable to IGST. Export is zero-rated.

• Certain transactions involving both supply of goods and services such as works contract, restaurant service, etc. have been deemed as supply of service under Section 3 read with Schedule II of the Model Law. Various declared services of the current service tax law have also been deemed as supply of service. Transfer of Right to Use Goods has also been deemed to be a service.

• There are provisions for reverse charge payments in respect of both goods and services.

Means;

-          - GST Act applies on movement of goods/service.

-     - There may not be much hardship on determining the transaction as a supply of goods OR as a supply of service as both will attract GST Act in the same manner.

Input Tax Credit

• Input Tax Credit (ITC) is available in respect of inputs, capital goods and input services. There is a negative list of items on which no ITC is available.

• ITC is available only on provisional basis (for 2 months) until the supplier makes the tax payment and files a valid return. There will be matching of supplier and receiver data and credit will be confirmed only after such matching. Where the data is not matched and where the supplier has not made the tax payment, the ITC shall be reversed with interest.

• Interest is from the date of wrong availment or utilization.

Registration

• The persons liable for taking Registration are specified in Schedule III. They include 

 a) Persons crossing threshold of aggregate turnover of Rs. 9 lakhs in a financial year. Threshold is Rs. 4 lakhs for North-Eastern States.

b) Persons making inter-State taxable supply irrespective of threshold

c) Persons liable to pay GST under reverse charge

d) Input Service Distributor

e) Aggregator

f) E-Commerce Operator.

• Separate registration is required to be taken in each State. There is no provision for centralized registration.

 • Existing taxpayers will be issued Registration Certificate on a provisional basis valid for 6 months.

• Composition Scheme has been introduced in respect of taxable persons whose aggregate turnover does not exceed fifty lakhs.

Returns

• Normal taxpayer has to file 3 Returns in a month namely for outward supplies, inward supplies and consolidated. Specific provision has been made in respect of filing their first Return. Taxpayers are also required to file an annual return.

• Returns have also been prescribed for ISD, Tax Deducted at Source (TDS), Tax Collected at Source (TCS, applicable for e-Commerce Operators).

• Final Returns is to be filed in case of surrender / cancellation.

S. No.	Return / Ledger	For	To be filed by
1	GSTR 1	Outward   supplies  made   by   taxpayer (other  than compounding  taxpayer  and ISD)	10th of the next month
2	GSTR 2	Inward supplies received by a taxpayer (other than a compounding taxpayer and ISD)	15thof the next month
3	GSTR 3	Monthly         return         (other         than compounding taxpayer and ISD)	20thof the next month
4	GSTR 4	Quarterly    return    for    compounding Taxpayer	18thof  the  month  next  to quarter
5	GSTR 5	Periodic return by Non-Resident Foreign Taxpayer	Last day of registration
6	GSTR 6	Return for Input Service Distributor (ISD)	15th of the next month
7	GSTR 7	Return for Tax Deducted at Source	10th of the next month
8	GSTR 8	Annual Return	By   31st    December   of next FY
9	ITC Ledger of taxpayer		Continuous
10	Cash Ledger of taxpayer		Continuous
11	Tax ledger of taxpayer		Continuous

(i)      Normal / Regular taxpayers (including casual taxpayers) would have to file GSTR-1 (details of outward supplies ) (Annexure-II), GSTR-2 (details of   inward   supplies )   (Annexure-III)   and  GSTR-3   (monthly   Return ) (Annexure-IV) for each registration.

(ii)  Normal / Regular taxpayers with multiple registrations (for business verticals) within a State would have to file GSTR-1, GSTR-2 and GSTR-3 for each of the registrations separately.

(iii)    Annual  return  (GSTR -8)  (Annexure -IX)  will  be  filed  by  all                     normal/regular taxpayers. It will be based on financial records.

Payment priority

• Prioritization rule has been inserted for payment of taxes whereby taxes for the current period cannot be paid until the taxes/interest/late-fee/penalty in relation to returns of previous tax periods have not been deposited.

Transitional Provisions

• Amount of Cenvat credit carried forward in a Return will be allowed as ITC. Similar provision has been made for carry forward of Value Added Tax. However such carry forward is allowed only if the credit is admissible in terms of the ITC provisions of the GST Law. The procedure may require awaiting the Rules to be framed in this regard.

• Unavailed Cenvat credit on capital goods, which is not carried forward in a return, will also be allowed in certain situations.

• Credit of eligible duties and taxes in respect of inputs held in stock will also be allowed in certain situations.

                                                                           
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