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152 New GST Suggestions Law -ICAI (Brief Overview)
152 New GST Suggestions Law -ICAI (Brief Overview)
Indirect Taxes Committee
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
1. The Institute of Chartered Accountants of India considers it a privilege to submit its suggestions on GST Law. We have segregated the 152 suggestions in 3 parts:
- Policy related issues
- Law Related Issues
- Procedural Issues
We shall be pleased to discuss suggestion in meeting to illustrate the points made by us.
2. We look forward to contributing in the drafting of simple, transparent, & fair GST laws in India.
3. In case any further clarifications or data is considered necessary, we shall be pleased to furnish the same. The contact details are:
For any further information, please visit the website of Indirect Taxes Committee: http://www.idtc.icai.org.
S. No. Topic(s) Suggestion(s) 1. Classification of single product under more than one schedule. It is suggested that a single consolidated list of products may be prepared for classification purpose by merging various schedules. Consolidated list may be adopted so that classification criteria follow settled law of basic to advance as far as possible and thus categorizing the products under one chapter with one rate 2. Compensation Cess on Coal It is suggested to levy Compensation Cess on Coal only at the first point when the raw coal and lignite and peat are raised and dispatched from the mine and any further moment thereon, be exempted. Further, transitional credit should be provided of the clean energy cess paid under the erstwhile regime. 3. GST on Petroleum products It is suggested that a suitable notification be provided as early as possible to levy GST on petroleum products, as it will bring an important chain in the economic activity within the GST fold and in select cases, the credit of GST paid on these items may be disallowed in order to minimise the possibility of misuse. 4. Testing and availability ofutilities and other IT infrastructural issues It is suggested that: ‑All the utilities on the GST portal be placed first and thoroughly tested before being implemented and shared with the general public – well within the due date for filing / use of the utilities. Only post testing, the trade/ industry be mandatorily required to comply with it. 5. Exclusion of transactions between employer-employee from GST It is suggested that the reverse may also be excluded i.e services provided by an employer to an employee. Cost of monitoring and reporting of supplies / services by an employer to an employee and payment of taxes thereon is an administrative hassle. This has also resulted in the employers amending the employment contract letter to include all the services / supplies therein to avoid payment of GST. 6. Facility for adjustment of incorrect tax paid (due to incorrect determination of place of supply) in addition to refund mechanism We welcome refund mechanism for incorrect payment of taxes by assessee .However, it is suggested that the adjustment of cash payment in wrong head be allowed at assessee level by way of journal entry on the GST common portal as taking refund is cumbersome in place of adjustment and refund process also leads to blockage of working capital. 7. Lower Interest rate in case of delayed payment of tax It is suggested that the difference in the interest rates given under Section 50 and section 56 be aligned or reduced to a minimal level of 12% which is the cost of borrowers. 8. Training to the officers under GST It is suggested that the officers be trained under this Act in respect of mindset of trust and support to the industry as against the tax terror which is prevalent even today. Those officers who would adjudicate and hear appeals are to compulsorily go through a special learning and test for understanding. 9. Interest be not considered as supply except Banking, NBFC Company Akin to the service tax law, it is suggested that the interest income earned by way of extending deposits, loans or advances be included in Schedule III of the CGST Act, 2017 (similar to negative list in service tax laws). If not, it is suggested that such interest is not considered as ‘exempt supply’ for a business entity other than Banking / NBFC Company as it leads to reversal of common ITC. Definition 10. Corrections to the definition of term Aggregate Turnover > It is suggested that the reference of the words “export of goods / services” be accordingly removed / omitted / deleted from the definition of Aggregate Turnover.> It is suggested that instead of words “aggregate turnover” the words “aggregate turnover of taxable supplies” be used. 11. Definition of Capital Goods > It is suggested that an exception be provided for items which are written off during the year of purchase in books of accounts to treat them as capital goods even if not capitalised in books of accounts.> Further, it is suggested that this definition may also include the goods, the value of which is amortized over a period in the books of accounts.
> Additionally, the term “in the course or furtherance of business” be replaced with “for the purpose of business” so that no scope for restriction of credit is left. Same change may also be done for definitions of “Input” & “Input Services”, “Outward Supply” and also in Schedule I & II.
> The term “value” be replaced with the words `purchase consideration’ for better clarity.
12. Definition of Electronic Commerce It is suggested that words” supply of ‘be replaced with the words “facilitating the supply of ……….,, 13. Definition of Exempt Supply – In line with Govt. Policy > It is suggested that non-taxable supplies be kept outside the ambit of ‘exempt supplies’ as well as `aggregate turnover’. Inclusion of non-taxable supplies in aggregate turnover results in an effectively lower limit for composition levy as well as for threshold exemption. Further, when a supply is non-taxable, it should not affect the taxability indirectly by affecting the threshold exemption and composition scheme.> An amendment may be required in said definition that “Exempt supply means any supply of goods/services which are non-taxable under this act other than supply for job work in accordance with Section 143 of the Act and includes such supply of goods or services or both, which attract nil rate of tax or which may be exempt from tax under section 11. 14. Amendment to the definition of `service’ – Exclusion of supply of Canned software It is suggested that an explanation as provided in Model GST law to the definitions of Goods as well as Services be restored that goods do not include intangible property and service includes intangible property. 15. Definition of “Inward Supply” – If removed denial of credit > It is suggested that supplies made without consideration be kept outside the purview of the definition of “Inward Supply”.> The above definition be changed to ‘Inward supply’ in relation to a person with reference to whom the place of supply is determined means the corresponding supply by the supplier of the outward supply”. 16. Amendment to the definition of `job work’ – Exclusion of repairs / maintenance It is suggested that a proviso be inserted to the definition of Job Work to provide that job-work will not include repair or maintenance or other forms of supply which are carried out with respect to the goods belonging to another taxable person. 17. Definition of “Location of the supplier of goods” It is suggested that “Location of the supplier of goods” be defined as Location of supplier means the location where goods are situated under the control of the supplier ready for supply with a proviso to cover situation in case of bill to ship to model U/s10 (1) (b) of IGST Act, 2017. 18. Definition of the term Consideration > It is suggested that the words “made or to be made” be replaced with the words “received or to be received” so as to enable levy of GST on the full consideration received by air-travel agents who collect commission from passenger as well as from airline. And there are other industries where there is two-way flow of consideration for the same supply> Further, to remove any ambiguity the definition of consideration be rephrased as follows:
“Consideration in relation to the supply of goods and/or services includes …………“
19. Term Provision to be included in Definition of Supply It is suggested that the term “provision” be included in the scope of supply. 20. Removal of words “such as” as the definition of Supply is inclusive one It is suggested to omit the words ‘such as’ in Section 7(1)(a) as, even after deletion of the words, the scope of supply would not become restricted / limited in any way. This is because, the definition of ‘supply’ is an inclusive one and takes into account even extraneous situations. 21. Taxability of Import of services It is suggested that entry 4 of Schedule I of CGST Act be deleted. 22. Business Goods put to Private use by an assessee If the intent of the Government is to levy GST on such services (for personal use), then Input Tax Credit on such services is also to be allowed to the registered person 23 Supply being regarded in section 7(1)(d) to be ‘treated as’ It is suggested that:> In first case, shift the location of clause (d) as a separate sub-section under section 7;
> In second case, replace the words of clause (d) with
“(d) the activities referred to in Schedule II whether or not in course or furtherance of business and whether or not for consideration as specified therein including their treatment as supply of goods or as supply of service respectively”.
24 Reimbursement of expense for which invoice is issued in the name of employee It is suggested that there be provided a suitable clarification regarding taxability of reimbursements made by an employer to the employee when the bill for a service etc. is issued in the name of that employee. 25. Mandatory Registration under section 9(3) for Reverse Charge purpose need not trigger the provisions of section 9(1) It is, therefore, suggested that relaxation be given to such of those Assessee’s who are required to register only due to the applicability of section 9(3) of the CGST Act, 2017 and having PAN-India turnover of less than Rs. 20 lacs in a financial year.Section 24 to be ‘notwithstanding section 22 but subject to section 23….’ 26. Tax liability on Composite and Mixed Supply It is suggested that definition of “Principal Supply” may be change to bring in the concept of dominant intention theory Levy & collection 27. Disabling the levy under Reverse Charge for supplies not in the course / furtherance of business An explanation be added to specify that supplies other than those in course or furtherance of business are excluded from the purview of Section 9(3) of the CGST Act, 2017. 28. Availability of Composition Scheme to all persons > It is suggested that eligibility for composition scheme be made available uniformly to all suppliers whether supplying goods or services or both> Alternatively, sector-specific composition schemes may be designed to cater to need of different sectors. For instance, the benefit of composition scheme can be extended to service providers up to a limit of Rs. 35 Lacs and supplier partly effecting supply of goods which are not leviable to tax under this Act.
> It is suggested that in section 10(1) the words “under this Act” be added after the words “in lieu of tax payable by him” to define and restrict the taxes liable to be paid to CGST/ SGST paid under this Act / respective State Acts.
> The embargo placed on effecting inter-State supplies by the taxable person opting to pay tax under the composition scheme must be done away with. GST, being a destination based consumption tax and moving in the direction of being ‘One India – One Tax’, this embargo appears to be travelling in the opposite direction.
29. Availability of Composition Scheme to supplier of services – where credit is not eligible u/s 17(5) of CGST Act, 2017. It is suggested that option of paying tax u/s 10 should also be extended to goods and services covered u/s 17(5)(b), (c) & (d) and services provided by professionals having small turnover. 30. Redundancy of the Composition Scheme in certain cases It is suggested that a mechanism be brought, wherein, the credit available to the registered dealer (composition registration) is passed to the recipient on similar lines to the mechanism for passing on CENVAT credit under Central Excise Law (First stage dealer provisions) or any other model of ad-hoc credit basis like 40% or 60% etc. as the procurements by a recipient from the composition dealer will affect the MSE Sector on account of the fact that the price of supplies made by the registered dealer (composition registration) are high in comparison to a 31. Ineligibility to opt for Composition Scheme if the person has stock on account of inter-state purchases It is suggested that, where the person wishing to opt for Composition Scheme holds such goods in stock which have been purchased in the course of inter-State trade or commerce or imported from a place outside India or received from his branch situated outside the State or from his agent or principal outside the State, he should be allowed to opt for Composition Scheme upon payment of appropriate tax under GST. 32. Classification & HSN code in case of services are overlapping & not aligned Appropriate amendment be made in the said notification to remove the ambiguity. Further, clarification on SAC codes under GST to be used on professional services rendered by chartered accountant be provided. 33. Power to grant exemption from Tax It is suggested that a proviso be added to sub-section 11 (3) of the CGST Act, 2017 to provide that “every such insertion / amendment / modification that has the effect of increasing the tax payable be effective from the date of such insertion only”. 34. Exemption in respect of Charitable Institutions It is suggested to extend the exemption to all activities undertaken by such charitable organizations, as they will be negligible in nature and further, they are not in the nature of the primary activity of the charitable organizations. Alternatively, a cap could be brought on such ancillary activities like 20% of total receipts for the specific purpose of providing exemption from tax and registration. 35 Composition dealers not to be given exemption under Notification No. 38/2017(C1) It is suggested that either of the two options be availed :‑1. Notification No. 38/2017 – Central Tax (Rate) dated October 13, 2017 be amended to provide that benefit of this notification not be available to a registered dealer under composition scheme.
2. Rule 5(1) of the CGST Rules, 2017 be amended to provide that a registered dealer under composition scheme will not be eligible to avail the benefit of Notification No. 38/2017 – Central Tax (Rate) dated October 13, 2017.
36 Possible Exempt supply in case of interest or discount It is suggested that the Notification 9/2017 dated 28.06.2017 (IGST-Rate) be suitably amended by inserting an explanation that the above entry only relates to supply made by the banking and other financial company. This will exclude those entities whose principal supply is taxable and it is only one of supply that they advanced loan to its subsidiary and consequently earning interest income. Time & Value of Supply 37. Rationalization of time limit w.r.t. Time of Supply of goods and services under RCM It is suggested that the time limit prescribed in both the cases be made 90 days in line with the provision of old service tax law. 38. Correction to determination of Time of supply in case of continuous supply of goods or services It is suggested that reference to only Section 31 be given instead of section 31(1) in the Section 12 of the CGST Act, 2017 and Section 31(2) in Section 13 of the CGST Act, 2017. 39. Clarification w.r.t change in rate of tax for continuous supply of goods / services In order to avoid possible litigation, it must be suitably clarified as to what is the time of supply in case of change in rate of tax w.r.t continuous supply of services/goods. Value of Supply 40. Exclusion of taxes/duties etc. paid under other statutes from the value of supply Any taxes, duties, cesses, fee and charges levied under any other statute be excluded from the transaction value so that spirit of GST may be maintained. Such charges, being simply in the nature of statutory levies, never form part of the taxable value, as no supply is rendered by airlines per se, in lieu of such charges. 41. Manner of determination of amount liable to be paid by the supplier It is suggested that the amount liable to be paid by supplier may have a reference to the contract or agreement between suppliers and recipient, by including the words ‘by reason of or in connection with’ in the Section after the words “liable to pay” so that that the said amount is defined and is limited to the scope of the contract or agreement. 42. Clarity on the nature of supply of vouchers • It is suggested that Section 13(4) be omitted from the law.• Further it is suggested that to avoid misinterpretation the following definition of term “Voucher” be provided:
‘voucher means any instrument or entitlement received from an arrangement with one person permitting another person to accept the same in redemption against payment owed in respect of a taxable supply any instrument or entitlement received from any Government under a law for the time being in force to redeem the same in respect of settlement of any payment owed towards any tax or duty
Explanation 1: voucher shall not include a system of payment recognized under the Payment and Settlement Systems Act, 2007 or any other law for the time being in force.
Explanation 2: voucher shall not include actionable claims”
43. Valuation in case of sale of repossessed goods Applicability of the proviso for disposal of goods repossessed from registered persons be clarified. 44. Supply of Goods on which ITC was not allowed at the time of purchase Rule 32 of the CGST Rules may suitably be amended so as to provide that the value of such goods for the purpose of levy of GST shall be only over and above the consideration on which tax has already been paid. Input Tax Credit 45 Exclusion of supplies liable to reverse charge from ‘Exempt Supplies’ for credit apportionment It is, therefore, suggested that supplies liable to tax under reverse charge mechanism be kept outside the ambit of exempt supplies for the purpose of determination of proportionate credits.Alternatively, the supplier may be provided an option to either:
> pay tax on forward charge basis along with corresponding ITC claim, OR
>The recipient can pay the applicable tax under reverse charge mechanism at a reduced rate and not claim the relevant ITC, subject to the condition of no ITC has been claimed by the supplier.
Further, refund mechanism in line of erstwhile Rule 5B of CENVAT Credit Rule be provided to such supplier providing services under 9(3) where refund was available to the supplier of services liable to RCM, where he is unable to utilise the credits for payment of output tax.
46 Eligibility of input tax credit on certain services mandated to be provided by a Company /entity It is suggested that the facility of availing input tax credit not be blanketly blocked when goods and/or services are used or intended to be used in the course or furtherance of business and especially, when incurring of certain expenses are mandated for an entity 47 Disallowance of Credit in respect of works contract services > It is suggested that Section 17(5)(c) be rephrased as “works contract and goods or services used in a works contract except where it is an input for further supply as works contract”.> It is suggested that the provisions under Section 17 relating to the Input Tax Credit be rationalized and brought at par with the simple concept that if outward supplies of a person are taxable then the inward supplies of the goods or services or both may be allowed as credit.
> Further, it is suggested that renovation works, repairs etc. be eligible for credit if they are in course /furtherance of business.
> The restriction of ITC in respect of all works contracts resulting in immoveable property at large be removed since in a large number of contracts which qualify as works contracts, the end result would be immovable property’.
48. Section 17(5)(b) of the CGST Act provides for restriction from availing input tax credit in respect supply of certain goods or services or both. It is suggested that an exception may be carved out under Section 17(5)(b) for outdoor catering just like the rent-acab service. If an analogy is drawn between the treatment given to Rent-a-cab services and outdoor catering, the exception would be required under GST Law. 49. Non-availability of ITC on motor vehicle to developers/builders • It is suggested that Clause (ii) of Section 17 (5) (a be rephrased as follows:“(ii) for transportation of goods, including own supplies, whether or not any amount is separately charged therefor”
• Further, clarification regarding transportation of items like money, securities, alcohol, petroleum products etc. be suitably provided.
• It is suggested that credit of motor vehicles be allowed if the motor vehicle is used in the course of business for business purposes including construction services.
50. Restriction of credit on goods confiscated or detained It is suggested that there be no denial of ITC on goods confiscated or detained. Interest & penalty may be charged but denial of credit will lead to cascading and multi-point tax philosophy 51. Eligibility of credit on capital goods and stock in certain cases • It is suggested that suitable credit be allowed on purchase of capital goods after deducting appropriate depreciation as the registered person enjoyed some exemption earlier and now come under the taxable chain. Article 14 of the Constitution of India provides right of equality and if credit to such person is not allowed then it will lead to non-equality among the equal.• It is suggested that in the principle of Natural Justice, the persons not obtaining registrations within the prescribed limit be allowed to set off the tax paid on the goods supplied by him (i.e. output tax payable) as he will be liable to pay tax from the date when he became liable for registration.
• Following explanations be added to Section 18(1)(d)
“Explanation 1 – exempt supply becomes a taxable supply includes when a bone fide view is overturned by law or decision of a Court or Tribunal and such bona fides declared in the law so laid down.
Explanation 2 –notwithstanding anything to the contrary in this Act, entitlement to take credit on input tax shall refer to input tax related to input, input service and capital goods, computed as aforesaid, used in relation to such supply.
52. Tax treatment of supply of Capital Goods on which credit has been claimed It is suggested that the in place of words “in case of supply of capital goods or plant and machinery” the words “In case of supply of capital goods, on which input tax credit….” be used. It will help give the provision the intended scope and give no room for ambiguity. 53. Rationalization of certain conditions for claim of credit and eligibility > It is suggested that a proviso be added to Section 16(1) as follows:“Provided further that every registered person will be entitled take credit of input tax in accordance with this section even though tax is paid on outward supply is in accordance with section 7(1)(c) or section 9 (5) or any such provision from time to time”
> It is suggested that the mechanism to avail input tax credit on the purchase of inputs made during the period where he was unregistered be incorporated by way of proviso to Section 16(1) or by suitably changing the wordings contained in Section 40 to “effective date of First Purchase” instead of ‘effective date of registration’.
> It is also suggested that a suitable mechanism, in case of matching the credit, be provided for.
54 Streamlining of provisions for time-limit for claim of credit > It is suggested that the time-limit to claim Input Tax Credit in respect to any invoice be linked with the due date of filing the return rather than the actual filing of the return.> Further, it is suggested that the provision regarding belated claim of Input Tax Credits be suitably clarified. 55. Eligibility of credit on purchase of dumpers, tippers or other motor vehicle It is suggested that the credit of taxes paid on the purchase of dumpers and tippers or other motor vehicles of similar nature & kind be allowed. Further, it is suggested that the dumpers and tippers or other motor vehicles of similar nature & kind be included in the definition of “plant and machinery” in the explanation provided to Section 17 for the purposes of Chapter V (Input Tax Credit) and Chapter VI (Registration) and hence be eligible for Input Tax Credit and excluded from the definition of motor vehicles specifically as these motor vehicles are not used for transportation but construction (furtherance of business). 56. Exclusion of ‘Any other civil structure’ from the definition of `Plant and Machinery It is therefore suggested that the words “other civil structures” be removed from the said Explanation. Clear statement also be made with respect to inclusion of passive structures as ‘plant and machinery’ i.e. those used for the furtherance of business, even if they are considered as ‘immovable property’ for purposes of municipal taxes by special provisions in that law. 57. Disallowance of Credit in respect of Rent-a-cab services and other services It is suggested that restriction of availing credit on Rent-acab services be dispensed with and credit be allowed for rent-a-cab used in course / furtherance of business under Sec17(4)(b) (iii). Furtherance of business or personal use is sufficient test in relation to cab services.Further, it is suggested to remove restriction on availing credits on travel benefits extended to employees on vacation such as leave or home travel concession as provided in Sec17(4) (b) (iv) 58. Credit of taxes paid prior to grant of registration be allowed for 6 months It is suggested that persons be allowed to take credit of duty paid by them to their supplier in the initial 2 months of GST implementation, considering that it is the initial period of implementation of GST and the persons, along with the department and the general public in large was struggling to adopt to the new law. 59 Eligibility of credit w.r.t. renting of immovable properties A clarification to be issued in respect of the above to consider such civil structures as ‘plant’ and allow the corresponding credit on the same. This would address the concerns of the community at large and prevent avoidable litigation at a future date. 60. Interest on Reversal of Capital goods It is suggested that the words “along with applicable interest” be omitted. Registration 61. Provision of Centralized Registration The concept of Centralized Registration be provided for.Further, the assessee be mandated to provide in his return details of all the locations from which supply of goods/ services is made by him. 62. Exclusion of certain income to arrive at threshold limit for registration for all persons It is suggested that for determining the aggregate turnover limit of Rs. 20 lakhs for obtaining mandatory registration, non-operational income (like interest income) earned without any business motive not be considered. 63. EVC-OTP option for private limited companies too in GST It is suggested that e-filing with EVC-OTP option be allowed for private limited companies also in GST system. This will save lot of time, Cost for taxpayers& tax practitioners. 64. Registration for interstate supply of goods It is suggested that the benefit of twenty lakh for interstate service providers should be extended to interstate supply of goods also 65. Relaxation of time-limit for effective date of registration It is suggested that even in cases where the application for registration has been belatedly made, the effective date of registration be granted from the date of liability itself. 66. Cancellation of Registration It is suggested that clause (d) be deleted. Alternatively, the time-limit for commencement of business from the date of obtaining registration be extended to 1 year.Further, it is suggested that the facility of cancellation of registration from an earlier date be prohibited as this would disrupt the entire credit chain. 67. Certificate of Incorporation issued by ROC It is suggested that the words “giving effect to such order of the High Court or Tribunal” be deleted. 68. Activation of registration number w.r.t. deemed registration It is suggested that the activation of the registration number be done on an immediate basis, so as to facilitate the registered persons in compliance with the provisions of the law 69. Anomaly in registration Provision It is suggested that in Section 23 of the CGST Act, an over-riding clause be inserted: “Notwithstanding anything contained in section 22 & 24…” 70 Requirement of registration in respect of construction works undertaken in an outside State It is suggested that a suitable clarification be provided in respect of registration requirements on construction works undertaken outside the registered State. Perhaps based on nature of works undertaken could guide this categorization. Mere installation works appear to attract registration where securing registration becomes cumbersome. 71. Registration for an agent It is suggested that supply of goods between principal and agent, when made on account of agency, should be kept out of the list of transactions specified in Schedule I. It is also suggested that the requirement of obtaining registration regardless of the turnover being below the specified threshold limit be done away with.Also, one may consider introducing a concept like a ‘pure agent’ as is applicable in case of supply of services, in case of supply of goods as well. PROCEDURE RELATED ISSUES 72. Reason of Validation error not provided during registration It is suggested that the reason for validation error be communicated to the applicant through email etc. so that he can take immediate corrective action by providing the correct particulars. 73. Option of having multiple Trade Names with single GSTIN It is suggested that the option of having multiple trade names against one GSTIN be provided to all registered person, regardless of the constitution of business, to facilitate ease of doing business. 74. Effective date of cancellation of registration in case of automatically migrated from earlier regime It is suggested that appropriate notification providing that if cancellation application has been filed within the specified time limit it will be effective from the appointed date to give relaxation to such assesses. 75. Registration related issues under GST It is suggested that detail list of issues of registration be resolved appropriately. 76. Mismatch in GST Registration Number It is suggested that such system glitches be looked into and resolved so that the genuine assessees are not penalised for system defaults. Further, where multiple GSTINs have been issued against a single PAN (may be due to migration from various registrations, or any other reason), within the same State, a communication can be sent to the respective persons to intimate them regarding the multiplicity of registrations within the State. Accordingly, where a person has wrongly been allotted more than one GSTIN in a State, he can apply for cancellation of such registration. 77 Registration taken under the Wrong Head It is suggested that while making an application for registration under a particular head an option for reconfirmation field be added and later on assessee be permitted to modify such fields. 78 Issues faced while applying for GST Registration a) Date of grant of Registration Certificate It is suggested that the registrations so granted be checked for such anomalies and a provision for revision of effective date of registration be made in genuine cases. b) Delay in grant of Registration Certificate It is suggested that proper officers be requested to adhere strictly to the timelines laid down by law and support the assessees with timely grant of Registration Certificate. c) Proof of Business Premises It is suggested that the sale deed/ Index 2 in name of owner be accepted as a valid proof of business premises in the application for registration. d) Size of Documents to be uploaded while undertaking registration It is suggested that the size limit of the uploaded files be increased so as to maintain the quality and readability of the documents uploaded. e) Requisite Forms be activated on GST portal It is suggested that forms related to Registration, Cancellation or Modification in Registration be activated now so that the assessees requiring amendments or cancellations to their registrations may apply for the same at the earliest. f) Selection of Commissionerates code under state & central while applying registration It is suggested that system selects the appropriate system code on the basis of the area and PIN code entered by applicant, at both Centre and State jurisdictions TAX INVOICE, CREDIT AND DEBIT NOTES 79. Treatment of tax paid on units cancelled Clarification be provided. 80. One Consolidated Credit and debit notes on monthly basis It is suggested that the law provides an option to issue a consolidated debit / credit note, per month, per recipient (GSTIN), while the benefit of reduction in output liability in case of credit note can continue to be based on acceptance of such credit note by the recipient in his Form GSTR-2, upon matching of details. This option can be made available only in respect of supplies to registered persons, as tracking of debit / credit notes would be difficult in case of supplies to unregistered persons, and also because supplies to unregistered persons would normally not include issuance of multiple debit / credit notes during a month 81. Receipt Voucher in case of receipt of Advances against supply of goods or services in same month • It is suggested that complexity in documentation should be simplified to avoid pressure on the IT system without compromising on the revenue implications.• It is also suggested that the Receipt Voucher for advance be made mandatory only for cases where the advances are to be adjusted for supplies to be made beyond the month in which the advances are so received.
• Accordingly, a consolidated receipt voucher can be issued on a monthly basis, at the end of each month, toe every recipient from whom advances are received.
82. Issuance of invoice in case of supply from unregistered person Clarification is sought as to whether an invoice under section 31(3)(f) is required to be issued until the operation of Notification No. 38/2017 – Central Tax (Rate) dated October 13, 2017, i.e., so long as the exemption from payment of tax under section 9(4) of the CGST Act, 2017 is effective. 83. Invoice and Value in case of Barter transactions > It is suggested that a specific rule may be inserted to prescribe for the of tax invoice in case of a barter transaction.> Clarification is sought as to whether different value from both the parties i.e. supplier and receiver can be considered and GST can be levied accordingly may be in one case at lower value and another case it would be on higher value. Procedure Related Issues 84. Difficulty in keeping quantitative record of stock. Retail traders are worried about stock keeping, as they have wide range of different products. It is very tough to keep quantitative details of all products. 85. Multiple Details required to be provided in an invoice It is suggested that till an appropriate system is in place, GSTIN and product general details with some identification marks to correlate with Invoice or delivery challan be sufficient for invoicing. Place, HSN and other mandatory details be implemented when GST system is set to run smoothly. 86. One cash ledger instead of separate cash ledger(s) It is suggested that in cash ledger there should be only one cash ledger and as this money is not (yet) revenue of the Government, it can remain with the Union. Let cash ledger act as a E-wallet but, not as a dedicated column for the payment type. Adjustment of late fee, interest, penalty be possible in cash ledger with any head. ACCOUNTS AND RECORDS 87. Definition of Books of Accounts for the purpose of GST It is suggested that the term “Books of Account” be defined for the purpose of GST Laws. The reference to ‘books of account’ has also been made in the provisions pertaining to time of supply. A clear meaning established by law would thus support correct interpretations and would guide taxable persons in maintaining the bare minimum records. 88. Audited Annual Accounts It is suggested that a format of the Audit Report / Reconciliation Return should be specified to bring in clarity so that the assessee can plan and make necessary changes in their IT applications in a timely manner. Procedure Related Issues 89. HSN code is required to be mention in GSTR 1 & 2 It is suggested that an alternative way of identifying the rate-wise supplies being reported to give relief to small traders who are otherwise not required to mention the digits of HSN codes in a tax invoice issued by them.Further, it is also suggested that such requirement in case of GSTR-2 be removed in case of all assessee. GSTR 3B Related Issues 90. liability to pay interest on late payment of tax due to extension of due date of filing GSTR 1 due to technical problem It is suggested that the interest payable on late payment of tax at least be waived off for the month of July 2017 for which due date for filing GSTR 1 has been extended due to technical problem in GST network. Alternatively, a payment mechanism of debit of cash or credit ledger be made available to the assessee at any time during such time period 91. Password for login It is suggested that the copy-paste options be enabled in passwords, and the requirement to change password beyond a specified time be done away with. 92. No option to add an Authorised Signatory without the authorisation of the existing Authorised Signatory It is suggested that there must be an option to change the details of the authorized signatory wherever the existing authorised signatory cannot approve amendments in the application for registration, by way of a manual submission / a separate online application for intimating the reasons for requiring change of authorised signatory without the approval of the existing authorised signatory 93. No acknowledgement for return filed It is suggested that an option for generation of receipt in `ARN-tracking’ or ‘View my Submissions’ tab should be made available for each filing done on GST portal. 94 Pure agent reimbursement would go as non-taxable supply – may lead to excess reversal It is suggested that required column in the return to be inserted to show service provided as pure agent so that while calculating the proportionate ineligible credit, service provided as pure agent will not be considered as nontaxable supply. Return related 95. Payment provision be made available in Form GSTR 1 It is suggested that payment option be provided in Form GSTR 1 so that any liability which left to be recorded while filing Form GSTR 3b get paid off at the time of filing GSTR 1. 96. Reduction In Late fee for non- filing of Form GSTR 1 It is suggested that waiver of late fees vide Notification No. 64/2017 — Central Tax dated 15th Nov, 2017 provided in case of Form3B return filing be extended for GSTR 1 return also. 97. Issues faces by assesses while filing Form TRAN 1 It is a genuine hardship to the assessee because of delayed functionalities and system failure. Accordingly, it is suggested to resolve the issue related to TRAN 1 to enable such assesses to claim transitional credit 98. Actual date of Return filing missing It is suggested that the actual date of return filing must appear in the record of the assessee on the GST portal, along with the record of filings made by the assesse. 99 Facility be provided for Rectification of data/ return before or after payment of tax It is suggested that rectification menu be inserted especially in case of Form 3B return, which be applicable —(a) for rectification of data/returns before payment of tax; and
(b) rectification even after payment of the tax, wherein if the assessee is liable to pay more tax on rectification, the same may be required to be paid immediately. However, if rectification results into a refund to the assessee, the system should credit the refund amount to his account after due verification.
100 First Return cannot be filed if registration is granted in next month It is suggested that there be made available a facility to enable filing of GST returns for the month(s) preceding the month in which registration is granted, if registration has been applied for within prescribed time limit. 101. GSTN related problem It is suggested that Processing be on real time basis to avoid system failure due to heavy load of users. 102. Non-availability of provision for filing of return without payment of tax It is suggested to allow return filing without payment so that Tax can be paid till last date i.e. 20th, which will be credited automatically in the ledger. PAYMENT OF TAX 103. No interest recovery on the credit reversal on date of completion of building It is suggested to insert a proviso in the section as under: -” Provided that interest payable would be computed from the date on which the credits become ineligible”. 104. Extension of time limit to furnish information by the Electronic Commerce Operator It is therefore suggested to relax the given provision by providing extension of the time limit for furnishing of details by the Electronic Commerce Operator. 105. Certificate of tax collection in case of e-commerce operators It is therefore suggested that the enabling provisions regarding issuance of tax collection certificate be incorporated and suitable forms be notified by way of rules. GSTN Related Issues 106. Delay in responses from GSTN Helpdesk Owing to above concerns, it is suggested that additional manpower be deployed for resolving queries/ issues, reduce call/ email revert time to help keep up the good work undertaken by GST helpdesk. An assistance provided by properly trained officials will add to the smooth functioning of the GST helpdesk and providing specific answers to the queries/ issues as against being referred to GST Acts, Rules, FAQs etc. 107. High rate of interest in case of default in payment or wrong availment of credit In the implementation phase of GST, the notified interest rate should be equivalent to present bank rate and in any event nott exceeding 9% per annum, as tax payers would lack awareness, given that GST is a new law, and taxpayers may have made some inadvertent errors / mistakes.Even post first year, the notified interest rate should not exceed 12% per annum. REFUNDS 108. Refund in case of inverted duty structure It is suggested that:> the word ‘inputs’ be replaced with the phrase `inputs and input services
> Also, the word ‘Output Supply’ be replaced with the word ‘Outward Supply’.
> A mechanism for computation of the refund due on account of an inverted duty structure, given that the rate of tax
109. Payment of refundable amount to applicant It is suggested that all the input tax credits be seamlessly covered under the provisions of Section 54(6). 110. Execution of LUT / bond for export It is suggested that execution of LUT / bond be removed for export of services and also for third country trading cases. 111. Deemed exports It is suggested that NN49/2019-Central Tax to be made ‘subject to’ section 16 and 17 of CGST Act. There is no section granting entitlement to refund in case of deemed exports. Merely including in the definition of refund in section 54 does not become a substantive provision for entitlement to retund in these cases Advance Ruling 112. Refund for ‘deemed exports’ It is suggested that a substantive section in the Act be drafted to provide this entitlement to refund 113. Advance Ruling > It is suggested that Advance Rulings provisions as per Section 96 & 97 of the CGST Act, 2017 be made simple and exhaustive.> It is suggested that Advance Ruling provisions be extended for filing of application on behalf of an association representing its members (with a unanimous vote from the members), whereby the decision rendered by the Authority would mutatis mutandis apply to all the members of association representing such issue /industry. ASSESSMENT 114. Provisional Assessment – Security or Surety to be furnished with the Bond It is suggested that requirement of executing surety or security with prescribed bond be done away with. 115. Adjustment of additional tax paid – Section 60(3) The provisions of Section 60 (for provisional assessment) should be amended to provide for utilisation of credits to discharge additional liability, and availment of additional credits for the recipient, upon finalisation of provisional assessment, and such provisions should have an overriding effect on the provisions of Section 16(4), Section 37, 38 and 39(9) of the CGST Act, 2017. DEMANDS AND RECOVERY 116. Time limit for issuance of order for tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized by reason of fraud or any will full misstatement or suppression of facts It is therefore suggested that the time limit be reduced to 12 months since no information is hidden from the department with this elaborate reporting system in GSTR 1-2-3 including non – GST supplies and exempt supplies. Extended periods of limitation may remain only for fraud, suppression etc. in which case it can be 3 years (as per limitation Act) 117 General provision related to demand It is suggested that exclusion of time limit under Section 75(11) be qua assesse and qua state. OFFENCES AND PENALTIES 118. Incorrect Classification of goods or services It is suggested that initially (say for a period of 1 year), to support assessees during transition process, the cases of wrong classification of goods or services be treated as tax neutral, and any additional liability arising on account of incorrect classification be demanded with interest alone, and not penalty, unless the incorrect classification is on account of fraud or wilful suppression, etc. TRANSITIONAL PROVISIONS 119. Refund claims filed after the appointed day for goods cleared or services provided before the appointed day and exported before or after the appointed day to be disposed of under earlier law It is suggested that a proviso be included in section 142(4) of the CGST Act by virtue of which the CENVAT credit may lapse only after being given an opportunity of being heard and based on the grounds of rejection given in writing. 120. Stage wise deduction for an Immovable property It is suggested that the Revision option of service tax return be activated till the date of filing transitional credit. Procedure Related Issues 121. Aggregate turnover figure entered wrongly in return It is suggested that a facility be provided to the assessees to correct the amount of aggregate turnover which has been furnished wrongly by the assessee. 122 Input tax credit in respect of inputs sent for job work It is therefore suggested that the deeming provision for supply should consider the date on which the time period prescribed by law expires as the date on which the goods are deemed to be supplied by the principal to the job worker.It is further suggested that the law expressly provides that the job worker would be entitled to input tax credit thereon, although the supply is made without consideration, regardless of the provisions of Section 16(2) read with Rule 37 of the CGST Rules, 2017; a similar provision should also be made to enable the principal to avail credit on receipt of goods from the job worker (or direct dispatch for supply from the premises of the job worker) where the event takes place after the expiry of the time period prescribed by law.
Where the job worker is not a registered person, the principal must be entitled to avail the credit of taxes paid by him pursuant to the ‘deemed supply’, when the principal receives the goods from the job worker / directly dispatches the goods for supply from the premises of the job worker.
123. The duties and responsibilities and powers of the Officers at various levels be specifically put up for public comment > Officers to be trained in respect of mindset of trust and supporting to the industry as against tax terror which is prevalent even today.> Forum for mandatory audit be made public as by January 2018, such audits can begin which would be useful for the trade/ industry rather than starting after the year end.
> Officers to be trained in GST as the vast majority are unable to answer basic questions. If this is not the case let them take a proper examination. Those who would adjudicate and hear appeals to compulsorily go through a special learning and test for understanding
IGST ACT 124. Location of the recipient where the address on record exists It is suggested that appropriate clarification be provided for the cases in retail trade. 125. Place of Supply of Service > It be suitably clarified that the list of services provided in the sub-section is an exhaustive list.> Section 12(4) be rephrased as follows:
“(4) The place of supply of restaurant and catering services, personal grooming, fitness, beauty treatment and health service including cosmetic and plastic surgery shall be the location where the services are actually performed.”
126. Section 12(6): Place of supply of services provided by way of admission to a cultural, artistic, sporting, scientific, educational, or entertainment event or amusement park etc > It is suggested that the words “or where the park or such other place is located” be deleted.> Also, a mechanism be provided for cases where services are provided at multiple locations under a single contract.
Ø A proviso be added as: Provided where the basis of allocation is not forthcoming, the duration in each State as a proportion to the total duration of the event shall be applied.
127 Insurance of Immovable Properties It is suggested that a mechanism for insurance of immovable properties be incorporated in the statute by way of following proviso:Provided that in the case of insurance of immovable property, where the basis of allocation is not forthcoming, the value of immovable property situated in each State as a proportion to the total value of the immovable property shall be applied. 128 Place of supply of services provided by tourism accommodation services such as hotels, cruises, campsites etc. • It is suggested that suitable amendment in the place of supply provisions be made to achieve seamless flow of credit and avoid any harm to the tourism industry.• Place of supply of accommodation (B to B) service provided to registered person shall be the location of recipient; person other than a registered person shall be the location of immovable property. 129 Place of supply of services in case of works contractor In case of works contract being service movement of goods from one state to another state is not industry friendly, therefore appropriate amendment be made in CGST Rules.An equivalent provision similar to section 10(1)(b) be enabled in relation to services involving goods or all services to enable free flow of trade. 130. Relief from payment of IGST to Representatives in India earning foreign exchange from Overseas Suppliers If this ‘origin based tax’ rule cannot be omitted, it is suggested that the general definition of an “intermediary” in Section 2(13) of the IGST Act be reconsidered by excluding intermediary for goods to provide level playing field to members engaged in assisting the overseas suppliers in the formulation of commercial and technical strategies resulting into successful marketing of their products 131. Export of Service > It is suggested that suitable rules to be framed in respect of Third country trading / manufacturing /service Business Modules in the Indian Global Economy.> It is also suggested that, third country trading / manufacturing /service companies need to be exempted from GST implications in respect of their global business done from India 132. Dual Levy on Export of services It is suggested that such transactions be notified as an exempt service. This will have reversal on Account of input, input service and capital goods. Also, it would help to avoid dual levy and one can undertake such transactions with ease. 133. Nature of Supply under IGST – Correct nomenclature to be used It is suggested that in order to avoid any confusion, the phrase used in Section 7 being “in the course of inter-state trade or commerce” be replaced with “inter-State supply” with appropriate grammatical variations. 134 Levy of IGST on import of services from outside India by SEZ It is suggested that :• Withdraw exemption to SEZs
• Issue circular that services from outside India is not leviable to IGST
135 Place of Supply in case of supply to SEZ • It is suggested that section 12 and 13 of IGST Act contain an explanation that “provisions of this section shall not apply to supplies to SEZ developer or unit and qualifying as zero-rated supply”• Accordingly, either ISGT will be charged on all supplies `billed to’ SEZ or zero-rated benefit allowed. 136 Levy of IGST in respect of goods ‘imported into India’ • It is suggested that words “goods imported into India” in proviso to section 5(1) be replaced with “imported goods”• It is suggested to withdraw circular 46/2017-Cus which states that `IGST is levied but deferred’ which is unauthorized in law. 137 General Suggestion (a) Settlement Commission provision be restored Provisions related to Settlement Commission as provided in Chapter VIII of the Model GST Law to be reinstated as genuine mistakes may occur in the initial phases of the GST regime due to complexity of the law. (b) Kar Samadhan Schemes Kar Samadhan Schemes under existing laws (both Central and state) be introduced to help the assessees clear their issues/ dues under existing law, support with hassle-free transition and reduce litigations. (c) Petroleum products and electricity In order to maintain a level playing field, all goods must be brought into the purview of GST at the earliest, including petroleum, alcoholic liquor, and electricity, and repeal the other laws that levy taxes / duties on such goods. The businesses that consume the products of these industries, if kept outside the purview of GST, would face issues like cascading of taxes, non-availability of credit, maintaining separate books of accounts for claiming ITC etc. (d) Anti-Corruption measures Anti-Corruption measures need to be strengthened by building in the accountability of Revenue officers. A 360 degree Compliance Rating be given to the officers ensure compliance on their part. (e) Exemption to exporter from payment of Tax on Inputs the time system stabilize: A general exemption maybe issued for a period 6 months to enable exports of goods as well as services to be carried out without any payment of taxes on inputs or inputs services as refund mechanism has not been established due to system glitches, margin erosion and impracticality. (f) Exemption to small assessee A relaxation may be provided to small assessees to facilitate payment of tax on receipt-basis. In the erstwhile service tax law, upto Rs. 50 Lacs assessee was permitted to pay tax on receipt basis. 138. GST Compensation Rules to be prescribed It is suggested that appropriate rules may be prescribed in relation to charge and credit of Compensation Cess. 139. Solution provided through Twitter and /or FAQ in some cases are contradictory in nature and even FAQ are having disclaimer which is creating confusion. 140 Deemed deduction towards land in case of sale of apartments It is suggested that: ‑a) A deduction may be provided for the market value of the land – as per the agreement between the developer and customer; OR based on certification by an approved valuer OR provide for different rates of deemed deduction based on location, areas or cities or distance from cities etc.
b) Also, following clarifications may be provided vide circular to be issued :
• The said deduction towards land cost must be allowed to be availed upfront out of the first few instalments received.
• The components of receipts that would form part and parcel of the consideration towards availing the land cost deduction must include – Car park charges, club house charges, reticulated gas supply charges, modular kitchen, preferential location charges, floor rise charges, water and power charges, DG set charges, maintenance charges etc. This is because these costs are in the nature of construction costs.
• In case of unsold flats on obtaining OC / PC, the reversal of input tax credits must not be arbitrary (but based on area unsold) and must not be subject to consequential levies such as interest / penalties.
141 Joint Development Agreements (Ws) – time and valuation for payment of GST It is suggested that GST becomes payable, only when, and to such extent that the units are sold; In respect of unsold units relating to the Land Owner, the GST be made payable at the time of obtaining the OC / PC from the prescribed authorities. 142 Revenue sharing under Construction service Suitable clarifications may be issued on the following points:(a) How is the land cost to be determined?
(b) Can it be said that what is paid / payable to the Land Owner would be the Land Cost and therefore permissible as deductions?
143. Input Tax Credit for Real Estate developers A clarification may be issued in respect of the said understanding which would address the concerns of the community at large and prevent avoidable litigation at a future date. 144. Transfer of immovable property by way of long lease It is suggested that similar exemption may be extended to all transfers irrespective of the period of lease and whether or not to an Industrial Unit and for any purpose as acquiring land on long lease is one of the well-known recognized methods of acquisition of land and levy of tax on land is a State subject. 145. Transfer of immovable property by way of Assignment of Lease – GST implications Accordingly, it may be suggested that the assignment of an existing lease by one Lessee to another (Assignee) would not amount to an activity and would amount to a transfer of title and therefore, be exempt under GST on the same basis as sale of land is exempt. 146. Transfer of immovable property by way of grant of Development rights – GST implications Accordingly, it may be suggested that any transaction of grant of development rights also needs to be exempted under GST laws on the basis of the exemption granted for sale of land. 147. Rate of tax on sale of under construction units It is suggested that the GST rate for sale of under construction real estate not to be more than 6% on the agreement value which will make it comparable to the present situation. 148. Taxability of TransferableDevelopment rights A clarification needs to be issued that such TDRs are not taxable under the GST Laws since it is an immovable property right 149. Movement of goods within same business not to be treated as supply The supply of capital goods (whether to own depot or to the customer) be kept outside the purview of GST, and only the leasing/ renting/transfer of right to use the asset be subject to tax. Movement of capital goods for provision of services like renting/ leasing/ transfer of right to use be excluded from the scope of supply under GST regime. 150. Levy & Collection under Reverse Charge It is suggested that, an explanation be added to specify that supplies other than those in course or furtherance of business are excluded from the purview of Section 9(3) of the CGST Act. 151 Deletion of Anti-profiteering clause under GST It is suggested that :
(i) Some margin (may be 0-5%) depending on the value and volume of product may be allowed to the industry considering that GST has been recently implemented and therefore, avoiding the frivolous issues. Further, investment made by Industries on implementation of GST in regards to changes in software & compliance cost be also considered for.
(ii) The view of professional be sought before taking final decision to invoke the Anti-profiteering clause i.e. before referring the matter to the Director General of safeguards for investigation.
(iii) To ensure that only genuine complain are being filed, a condition be imposed on the applicant that in case complain are found to be bogus, some penalty would be imposed.
(iv) Some restriction be imposed on the no. of complain to be filed against a particular company.
152 Change in GST Rate on Railway/ Metro fare • It is suggested that instead of exempting railway/ metro fare, make it zero rated or 5% to enable availment of input tax credit.• It is also suggested not to restrict refund of input tax credit on expenses. (e.g. Operations and Maintenance)