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Central Board Of Indirect Taxes And Customs (CBIC)
September, 04th 2019
           GOODS AND SERVICE TAX (GST)

                CONCEPT & STATUS




CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS (CBIC)

             DEPARTMENT OF REVENUE

               MINISTRY OF FINANCE

              GOVERNMENT OF INDIA

                AS ON 01st August, 2019




                                                     1 | 58
The uniform system of taxation, which, with a few exceptions of no
great consequence, takes place in all the different parts of the United
Kingdom of Great Britain, leaves the interior commerce of the
country, the inland and coasting trade, almost entirely free. The
inland trade is almost perfectly free, and the greater part of goods
may be carried from one end of the kingdom to the other, without
requiring any permit or let-pass, without being subject to question,
visit, or examination from the revenue officers. ......This freedom of
interior commerce, the effect of uniformity of the system of taxation, is
perhaps one of the principal causes of the prosperity of Great Britain;
every great country being necessarily the best and most extensive
market for the greater part of the productions of its own industry. If
the same freedom, in consequence of the same uniformity, could be
extended to Ireland and the plantations, both the grandeur of the state
and the prosperity of every part of the empire, would probably be still
greater than at present"

                                        ­ Adam Smith in Wealth of Nations`




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1.    INTRODUCTION:

       Whether it was uniformity of taxation and consequent free interior trade or
possession of the jewel in the crown` at the root of prosperity of Britain is
debatable, nonetheless the words of father of modern economics on the benefits
of uniformity of system of taxation cannot be taken too lightly. Before
implementation of Goods and Service Tax (GST), Indian taxation system was a
farrago of central, state and local area levies. By subsuming more than a score of
taxes under GST, road to a harmonized system of indirect tax has been paved
making India an economic union.

2.    CONSTITUTIONAL SCHEME OF INDIRECT TAXATION IN INDIA
      BEFORE GST:

2.1   Article 265 of the Constitution of India provides that no tax shall be levied
or collected except by authority of law. As per Article 246 of the Constitution,
Parliament has exclusive powers to make laws in respect of matters given in
Union List (List I of the Seventh Schedule) and State Government has the
exclusive jurisdiction to legislate on the matters containing in State List (List II of
the Seventh Schedule). In respect of the matters contained in Concurrent List (List
III of the Seventh Schedule), both the Central Government and State
Governments have concurrent powers to legislate.

2.2   Before advent of GST, the most important sources of indirect tax revenue
for the Union were customs duty (entry 83 of Union List), central excise duty
(entry 84 of Union List), and service tax (entry 97 of Union List). Although entry
92C was inserted in the Union List of the Seventh Schedule of the Constitution by
the Constitution (Eighty-eighth Amendment) Act, 2003 for levy of taxes on
services, it was not notified. So tax on services were continued to be levied under
the residual entry, i.e. entry 97, of the Union List till GST came into force. The


                                                                                  3 | 58
Union also levied tax called Central Sales Tax (CST) on inter-State sale and
purchase of goods and on inter-State consignments of goods by virtue of entry
92A and 92B respectively. CST however is assigned to the State of origin, as per
Central Sales Tax Act, 1956 made under Article 269 of the Constitution.

2.3   On the State side, the most important sources of tax revenue were tax on
sale and purchase (entry 54 of the State List), excise duty on alcoholic liquors,
opium and narcotics (entry 51 of the State List), Taxes on luxuries,
entertainments, amusements, betting and gambling (entry 62 of the State List),
octroi or entry tax (entry 52 of the State List) and electricity tax ((entry 53 of the
State List). CST was also an important source of revenue though the same was
levied by the Union.

3.    HISTORICAL EVOLUTION OF INDIRECT TAXATION IN POST-
      INDEPENDENCE INDIA TILL GST:

3.1   In post-Independence period, central excise duty was levied on a few
commodities which were in the nature of raw materials and intermediate inputs,
and consumer goods were outside the net by and large. The first set of reform was
suggested by the Taxation Enquiry Commission (1953-54) under the
chairmanship of Dr. John Matthai. The Commission recommended that sales tax
should be used specifically by the States as a source of revenue with Union
governments' intervention allowed generally only in case of inter-State sales. It
also recommended levy of a tax on inter-State sales subject to a ceiling of 1%,
which the States would administer and also retain the revenue.

3.2   The power to levy tax on sale and purchase of goods in the course of inter-
State trade and commerce was assigned to the Union by the Constitution (Sixth
Amendment) Act, 1956. By mid-1970s, central excise duty was extended to most
manufactured goods. Central excise duty was levied on unit, called specific duty,


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and on value, called ad valorem duty. The number of rates was too many with no
offsetting of taxes paid on inputs leading to significant cascading and
classification disputes.

3.3   The Indirect Taxation Enquiry Committee constituted in 1976 under Shri L
K Jha recommended, inter alia, converting specific rates into ad valorem rates,
rate consolidation and input tax credit mechanism of value added tax at
manufacturing level (MANVAT). In 1986, the recommendation of the Jha
Committee on moving on to value added tax in manufacturing was partially
implemented. This was called modified value added tax (MODVAT). In principle,
duty was payable on value addition but in the beginning it was limited to select
inputs and manufactured goods only with one-to-one correlation between input
and manufactured goods for eligibility to take input tax credit. The comprehensive
coverage of MODVAT was achieved by 1996-97.

3.4   The next wave of reform in indirect tax sphere came with the New
Economic Policy of 1991. The Tax Reforms Committee under the chairmanship
of Prof. Raja J Chelliah was appointed in 1991. This Committee recommended
broadening of the tax base by taxing services and pruning exemptions,
consolidation and lowering of rates, extension of MODVAT on all inputs
including capital goods. It suggested that reform of tax structure must have to be
accompanied by a reform of tax administration, if complete benefits were to be
derived from the tax reforms. Many of the recommendations of the Chelliah
Committee were implemented. In 1999-2000, tax rates were merged in three rates,
with additional rates on a few luxury goods. In 2000-01, three rates were merged
into one rate called Central Value Added Tax (CENVAT). A few commodities
were subjected to special excise duty.

3.5   Taxation of services by the Union was introduced in 1994 bringing in its


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ambit only three services, namely general insurance, telecommunication and stock
broking. Gradually, more and more services were brought into the fold. Over the
next decade, more and more services were brought under the tax net. In 1994, tax
rate on three services was 5% which gradually increased and in 2017 it was 15%
(including cess). Before 2012, services were taxed under a positive list`
approach. This approach was prone to tax avoidance`. In 2012 budget, negative
list approach was adopted where 17 services were out of taxation net and all other
services were subject to tax. In 2004, the input tax credit scheme for CENVAT
and Service Tax was merged to permit cross utilization of credits across these
taxes.

3.6      Before state level VAT was introduced by States in the first half of the first
decade of this century, sales tax was levied in States since independence. Sales tax
was plagued by some serious flaws. It was levied by States in an uncoordinated
manner the consequences of which were different rates of sales tax on different
commodities in different States. Rates of sales tax were more than ten in some
States and these varied for the same commodity in different States. Inter-state
sales were subjected to levy of Central Sales Tax. As this tax was appropriated by
the exporting State credit was not allowed by the dealer in the importing State.
This resulted into exportation of tax from richer to poorer states and also
cascading of taxes. Interestingly, States had power of taxation over services from
the very beginning. States levied tax on advertisements, luxuries, entertainments,
amusements, betting and gambling.

3.7      A report, titled "Reform of Domestic Trade Taxes in India", on reforming
indirect taxes, especially State sales tax, by National Institute of Public Finance
and Policy under the leadership of Dr. Amaresh Bagchi, was prepared in 1994.
This Report prepared the ground for implementation of VAT in States. Some of


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the key recommendations were; replacing sales tax by VAT by moving over to a
multistage system of taxation; allowing input tax credits for all inputs, including
on machinery and equipment; harmonization and rationalization of tax rates
across States with two or three rates within specified bands; pruning of
exemptions and concessions except for a basic threshold limit and items like
unprocessed food; zero rating of exports, inter-State sales and consignment
transfers to registered dealers; taxing inter-State sales to non-registered persons as
local sales; modernization of tax administration, computerization of operations
and simplification of forms and procedures.

3.8   The first preliminary discussion on transition from sales tax regime to VAT
regime took place in a meeting of Chief Ministers convened by the Union Finance
Minister in 1995. A standing Committee of State Finance Ministers was
constituted, as a result of meeting of the Union Finance Ministers and Chief
Ministers in November, 1999, to deliberate on the design of VAT which was later
made the Empowered Committee of State Finance Ministers (EC). Haryana was
the first State to implement VAT, in 2003. In 2005, VAT was implemented in
most of the states. Uttar Pradesh was the last State to implement VAT, from 1st
January, 2008.

4.    INTERNATIONAL PERSPECTIVES ON GST / VAT:

4.1   VAT and GST are used inter-changeably as the latter denotes
comprehensiveness of VAT by coverage of goods and services. France was the
first country to implement VAT, in 1954. Presently, more than 160 countries have
implemented GST / VAT in some form or the other. The most popular form of
VAT is where taxes paid on inputs are allowed to be adjusted in the liability at the
output. The VAT or GST regime in practice varies from one country to another in
terms of its technical aspects like definition of supply`, extent of coverage of


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goods and services`, treatment of exemptions and zero rating` etc. However, at a
broader level, it has one common principle, it is a destination based consumption
tax. From economic point of view, VAT is considered to be a superior system over
sales tax of taxing consumption because the former is neutral in allocation of
resources as it taxes value addition. Besides, there are certain distinct advantages
of VAT. It is less cascading making the taxation system transparent and anti-
inflationary. From revenue point of view, VAT leads to greater compliance
because of creation of transaction trails.

4.2   When compared globally, VAT structures are either overly centralized
where tax is levied and administered by the Central government (Germany,
Switzerland, Austria), or dual GST structure wherein both Centre and States
administer tax independently (Canada) or with some co-ordination between the
national and sub-national entities (Brazil, Russia). While a centralized structure
reduces fiscal autonomy for the States, a decentralized structure enhances
compliance burden for the taxpayers. Canada is a federal country with unique
model of taxation in which certain provinces have joined federal GST and others
have not. Provinces which administer their taxes separately are called non-
participating provinces`, whereas provinces which have teamed up with the Federal
Government for tax administration are called participating provinces`.

4.3   The rate of GST varies across countries. While Malaysia has a lower rate of
6% (Malaysia though scrapped GST in 2018 due to popular uproar against it),
Hungary has one of the highest rate of 27%. Australia levies GST at the rate of
10% whereas Canada has multiple rate slabs. The average rate of VAT across the
EU is around 19.5%.




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5.    NEED FOR GST IN INDIA:

5.1   The introduction of CENVAT removed to a great extent cascading burden
by expanding the coverage of credit for all inputs, including capital goods.
CENVAT scheme later also allowed credit of services and the basket of inputs,
capital goods and input services could be used for payment of both central excise
duty and service tax. Similarly, the introduction of VAT in the States has removed
the cascading effect by giving set-off for tax paid on inputs as well as tax paid on
previous purchases and has again been an improvement over the previous sales tax
regime.

5.2   But both the CENVAT and the State VAT have certain incompleteness. The
incompleteness in CENVAT is that it has yet not been extended to include chain of
value addition in the distributive trade below the stage of production. Similarly, in
the State-level VAT, CENVAT load on the goods has not yet been removed and
the cascading effect of that part of tax burden has remained unrelieved. Moreover,
there are several taxes in the States, such as, Luxury Tax, Entertainment Tax, etc.
which have still not been subsumed in the VAT. Further, there has also not been
any integration of VAT on goods with tax on services at the State level with
removal of cascading effect of service tax.

5.3   CST was another source of distortion in terms of its cascading nature. It was
also against one of the basic principles of consumption taxes that tax should accrue
to the jurisdiction where consumption takes place. Despite remarkable
harmonization in VAT regimes under the auspices of the EC, the national market
was fragmented with too many obstacles in free movement of goods necessitated
by procedural requirement under VAT and CST.




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5.4   In the constitutional scheme, taxation powers on goods was with Central
Government but it was limited up to the stage of manufacture and production while
States have powers to tax sale and purchase of goods. Centre had powers to tax
services and States also had powers to tax certain services specified in clause
(29A) of Article 366 of the Constitution. This sort of division of taxing powers
created a grey zone which led to legal disputes. Determination of what constitutes
a goods or service is difficult because in modern complex system of production, a
product is normally a mixture of goods and services.

5.5   As can be seen from the previous paragraphs, India moved towards value
added taxation both at Central and State level, and this process was complete by
2005. Integration of Central VAT and State VAT therefore is nothing but an
inevitable consequence of the reform process. The Constitution of India envisages
a federal nature of power bestowed upon both Union and States in the Constitution
itself. As a natural corollary of this, any unification of the taxation system required
a dual GST, levied and collected both by the Union and the States.

6.    GST: A HISTORICAL PERSPECTIVE:

6.1   The Kelkar Task Force on Fiscal Responsibility and Budget Management
(FRBM) recommended in 2005 introduction of a comprehensive tax on all goods
and service replacing Central level VAT and State level VATs. It recommended
replacing all indirect taxes except the customs duty with value added tax on all
goods and services with complete set off in all stages of making of a product.

6.2   In the year 2000, the then Prime Minister introduced the concept of GST and
set up a committee to design a GST model for the country. In 2003, the Central
Government formed a taskforce on Fiscal Responsibility and Budget Management,
which in 2004 recommended GST to replace the existing tax regime by


                                                                                 10 | 58
introducing a comprehensive tax on all goods and services replacing Central level
VAT and State level VATs. It recommended replacing all indirect taxes except the
customs duty with value added tax on all goods and services with complete set off
in all stages of the value chain. An announcement was made by the then Union
Finance Minister in Budget (2006-07) to the effect that GST would be introduced
with effect from April 1, 2010 and that the EC, on his request, would work with the
Central Government to prepare a road map for introduction of GST in India. After
this announcement, the EC decided to set up a Joint Working Group in May 10,
2007, with the then Adviser to the Union Finance Minister and Member-Secretary
of the Empowered Committee as its Co-conveners and four Joint Secretaries of the
Department of Revenue of Union Finance Ministry and all Finance Secretaries of
the States as its members. This Joint Working Group got itself divided into three
Sub-Groups and had several rounds of internal discussions as well as interaction
with experts and representatives of Chambers of Commerce & Industry. On the
basis of these discussions and interaction, the Sub-Groups submitted their reports
which were then integrated and consolidated into the report of Joint Working
Group (November 19, 2007).

6.3   This report was discussed in detail in the meeting of the EC on November
28, 2007, and the States were also requested to communicate their observations on
the report in writing. On the basis of these discussions in the EC and the written
observations, certain modifications were considered necessary and were discussed
with the Co-conveners and the representatives of the Department of Revenue of
Union Finance Ministry. With the modifications duly made, a final version of the
views of EC on the model and road map for the GST was prepared (April 30,
2008). These views of EC were then sent to the Government of India, and the
comments of Government of India were received on December 12, 2008. These


                                                                             11 | 58
comments were duly considered by the EC (December 16, 2008), and it was
decided that a Committee of Principal Secretaries/Secretaries of Finance/Taxation
and Commissioners of Trade Taxes of the States would be set up to consider these
comments, and submit their views. These views were submitted and were accepted
in principle by the EC (January 21, 2009). Based on discussions within the EC and
between the EC and the Central Government, the EC released its First Discussion
Paper (FDP) on GST in November, 2009. This spelled out the features of the
proposed GST and has formed the basis for discussion between the Centre and the
States.

7.    CHALLENGES IN DESIGNING GST:

7.1   In the discussion that preceded amendment in the Constitution for GST,
there were a number of thorny issues that required resolution and agreement
between Central Government and State Governments. Implementing a tax reform
as vast as GST in a diverse country like India required the reconciliation of
interests of various States with that of the Centre. Some of the challenging issues,
addressed in the run up to GST, were the following:

7.2   Origin-based versus Destination-based taxation: GST is a destination based
consumption tax. Under destination based taxation, tax accrues to the destination
place where consumption of the goods or services takes place. The existing VAT
regime was based on origin principle where Central Sales Tax was assigned to the
State of origin where production or sale happened and not to the State where
consumption happened. Many manufacturing States expressed concerns over the
loss of revenue on account of shift from origin based taxation to destination based
taxation.




                                                                              12 | 58
7.2.1 An argument put forward on behalf of producing states in support of origin
based taxation is that they need to collect at least some tax from inter-State sales in
order to recover the cost of infrastructure and public services provided by the State
Governments to the industries producing the goods which are consumed in other
states. This line of reasoning is based on the assumption that in the absence of a tax
on inter-State sales, the location of export industries within their jurisdiction would
not contribute to the tax revenues of the exporting state. This view was missing the
fact that any value addition in a jurisdiction necessarily means extra income in the
hands of the residents of that jurisdiction. Spending of this income on consumer
goods expands the sales tax base of the producing states and thereby contributes to
their revenues. In fact, to the extent that consumer expenditures are dependent on
the level of income of the residents of a State, it is the producing States that stand
to gain the most in additional sales tax revenues (even under the destination basis
of consumption taxes) from increased export output.

7.3   Rate Structure and Compensation: There was uncertainty about gains in
revenue after implementation of GST. Though attempts were made to estimate a
revenue neutral rate, nonetheless it remains an estimate only. It was difficult to
estimate accurately as to how much the States will gain from tax on services and
how much they will lose on account of removal of cascading effect and phasing
out of CST. In view of this, States asked for compensation during the first five
years of implementation of GST.

7.3.1 A Committee headed by the Chief Economic Adviser Dr. Arvind
Subramanian on possible tax rates under GST suggested RNR (Revenue Neutral
Rate). The term RNR refers to that single rate, which preserves revenue at desired
(current) levels. This would differ from the standard rate, which is the rate that
would apply to a majority of goods and services. In practice, there will be a







                                                                                13 | 58
structure of rates, but for the sake of analytical clarity and precision it is
appropriate to think of the RNR as a single rate. It is a given single rate that gets
converted into a whole rate structure, depending on policy choices about
exemptions, what commodities to charge at a lower rate and what to charge at a
very high rate.

7.3.2 The Committee recommended RNR of 15-15.5% (to be levied by the Centre
and States combined). The lower rates (to be applied to certain goods consumed by
the poor) should be 12%. Further, the sin or demerit rates (to be applied on luxury
cars, aerated beverages, pan masala, and tobacco) should be 40%.

7.4   Dispute Settlement: A harmonized system of taxation necessarily required
that all stakeholders stick to the decisions taken by the supreme body, which was
later constituted as the Goods and Services Tax Council (the Council). However,
the possibility of departure from the recommendations of such body cannot be
completely ruled out. Any departure would definitely affect other stakeholders and
in such circumstances there must be a statutory body to which affected parties may
approach for dispute resolution. The nature of such dispute resolution body was a
bone of contention. Under the Constitution (One Hundred Fifteenth Amendment)
Bill, 2011, a Goods and Services Tax Dispute Settlement Authority was to be
constituted for this purpose. This body was judicial in nature. The proposed
constitution of this Authority was challenged because its powers would override
the supremacy of the Parliament and the State Legislatures. The Constitution (One
Hundred Twenty Second Amendment) Bill, 2014 departed from the previous GST
amendment bill and proposed that the Goods and Services Tax Council may decide
about the modalities to resolve disputes arising out of its recommendations.




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7.5   Alcohol and Petroleum products: Alcoholic liquor for human consumption
and petroleum products are major contributor to revenue of States. As States were
uncertain about impact of GST on their finances and moreover loss of autonomy in
collection of tax revenue, States unanimously argued for exclusion of these
products from the ambit of GST. In the 115th Amendment Bill alcoholic liquor for
human consumption and five petroleum products namely crude petroleum, high
speed diesel, motor spirit or petrol, aviation turbine fuel and natural gas were kept
out of GST. But in the 122nd Amendment Bill, only alcoholic liquor for human
consumption was kept outside GST and above mentioned five petroleum products
were proposed to be brought under GST from a date to be recommended by the
Council. The Central Government has also retained its power to tax tobacco and
tobacco products, though these are also under GST. Thus, to ensure smooth
transition and provide fiscal buffer to States, it was agreed to keep alcohol
completely out of the ambit of GST.

8.    CONSTITUTIONAL AMENDMENT:

8.1   As explained above, unification of Central VAT and State VAT was
possible in form of a dual levy under the constitutional scheme. Power of taxation
is assigned to either Union or States subject-wise under Schedule VII of the
Constitution. While the Centre is empowered to tax goods up to the production or
manufacturing stage, the States have the power to tax goods at distribution stage.
The Union can tax services using residuary powers but States could not. Under a
unified Goods and Services Tax scheme, both should have power to tax the
complete supply chain from production to distribution, and both goods and
services. The scheme of the Constitution did not provide for any concurrent taxing
powers to the Union as well as the States and for the purpose of introducing goods
and services tax amendment of the Constitution conferring simultaneous power on


                                                                               15 | 58
Parliament as well as the State Legislatures to make laws for levying goods and
services tax on every transaction of supply of goods or services was necessary.

8.2     The Constitution (115th Amendment) Bill, 2011, in relation to the
introduction of GST, was introduced in the Lok Sabha on 11.03.2011. The Bill was
referred to the Standing Committee on Finance on 29.03.2011. The Standing
Committee submitted its report on the Bill in August, 2013. However, the Bill,
which was pending in the Lok Sabha, lapsed with the dissolution of the 15th Lok
Sabha.

8.3     The Constitution (122nd Amendment) Bill, 2014 was introduced in the 16th
Lok Sabha on 19.12.2014. The Constitution Amendment Bill was passed by the
Lok Sabha in May, 2015. The Bill was referred to the Select Committee of Rajya
Sabha on 12.05.2015. The Select Committee submitted its Report on the Bill on
22.07.2015. The Bill with certain amendments was finally passed in the Rajya
Sabha and thereafter by Lok Sabha in August, 2016. Further the bill was ratified by
required number of States and received assent of the President on 8th September,
2016 and has since been enacted as Constitution (101st Amendment) Act, 2016
w.e.f. 16.09.2016.

8.4     The important changes introduced in the Constitution by the 101st
Amendment Act are the following:

      a) Insertion of new article 246A which makes enabling provisions for the
        Union and States with respect to the GST legislation. It further specifies that
        Parliament has exclusive power to make laws with respect to GST on inter-
        State supplies.

      b) Article 268A of the Constitution has been omitted. The said article
        empowered the Government of India to levy taxes on services. As tax on

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   services has been brought under GST, such a provision was no longer
   required.

c) Article 269A has been inserted which provides for goods and services tax on
   supplies in the course of inter-State trade or commerce which shall be levied
   and collected by the Government of India and such tax shall be apportioned
   between the Union and the States in the manner as may be provided by
   Parliament by law on the recommendations of the Goods and Services Tax
   Council. It also provides that Parliament may, by law, formulate the
   principles for determining the place of supply, and when a supply of goods,
   or of services, or both takes place in the course of inter-State trade or
   commerce.

d) Article 270 has been amended to provide for distribution of goods and
   services tax collected by the Union between the Union and the States.

e) Article 271 has been amended which restricts power of the Parliament to
   levy surcharge under GST. In effect, surcharge cannot be imposed on goods
   and services which are subject to tax under Article 246A.

f) Article 279A has been inserted to provide for the constitution and mandate
   of GST Council.

g) Article 366 has been amended to exclude alcoholic liquor for human
   consumption from the ambit of GST, and services have been defined.

h) Article 368 has been amended to provide for a special procedure which
   requires the ratification of the Bill by the legislatures of not less than one
   half of the States in addition to the method of voting provided for
   amendment of the Constitution. Thus, any modification in GST Council


                                                                           17 | 58
         shall also require the ratification by the legislatures of one half of the States.

      i) Entries in List I and List II have been either substituted or omitted to restrict
         power to tax goods or services specified in these Lists or to take away
         powers to tax goods and services which have been subsumed in GST.

      j) Parliament shall, by law, on the recommendation of the Goods and Services
         Tax Council, provide for compensation to the States for loss of revenue
         arising on account of implementation of the goods and services tax for five
         years.

      k) In case of petroleum and petroleum products, it has been provided that these
         goods shall not be subject to the levy of Goods and Services Tax till a date
         notified on the recommendation of the Goods and Services Tax Council.

9.       GOODS & SERVICE TAX COUNCIL:

9.1      As provided for in Article 279A of the Constitution, the Goods and Services
Tax Council (the Council) was notified with effect from 12.09.2016. The Council
is comprised of the Union Finance Minister (who will be the Chairman of the
Council), the Minister of State (Revenue) and the State Finance/Taxation Ministers
as members. It shall make recommendations to the Union and the States on the
following issues:

      a) the taxes, cesses and surcharges levied by the Centre, the States and the local
         bodies which may be subsumed under GST;

      b) the goods and services that may be subjected to or exempted from the GST;

      c) model GST laws, principles of levy, apportionment of IGST and the
         principles that govern the place of supply;



                                                                                     18 | 58
      d) the threshold limit of turnover below which the goods and services may be
         exempted from GST;

      e) the rates including floor rates with bands of GST;

      f) any special rate or rates for a specified period to raise additional resources
         during any natural calamity or disaster;

      g) special provision with respect to the North- East States, J&K, Himachal
         Pradesh and Uttarakhand; and

      h) any other matter relating to the GST, as the Council may decide.

9.2      The Council shall recommend the date on which the goods and services tax
be levied on petroleum crude, high speed diesel, motor spirit (commonly known as
petrol), natural gas and aviation turbine fuel. While discharging the functions
conferred by this article, the Goods and Services Tax Council shall be guided by
the need for a harmonized structure of goods and services tax and for the
development of a harmonized national market for goods and services.

9.3      One half of the total number of Members of the Goods and Services Tax
Council shall constitute the quorum at its meetings. The Goods and Services Tax
Council shall determine the procedure in the performance of its functions. Every
decision of the Goods and Services Tax Council shall be taken at a meeting, by a
majority of not less than three-fourths of the weighted votes of the members
present and voting, in accordance with the following principles, namely: --

      a) the vote of the Central Government shall have a weightage of one-third of
         the total votes cast, and

      b) the votes of all the State Governments taken together shall have a weightage



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      of two-thirds of the total votes cast, in that meeting.

9.4   The Council has met for 36 times and no occasion has arisen so far that
required voting to decide any matter. Till its 34th meeting, GST Council has taken
1064 decisions which include 219 decisions taken by the GST Implementation
Council (GIC). As on 14.05.2019, 1006 decisions have been implemented and
only a total of 58 decisions (of which 39 were unique issues) were under
implementation at different stages with different sections of DoR/CBIC/GSTN. In
other words, 94.5% of the decisions of the GST Council have already been
implemented, which is a significant achievement, given the complicated nature
and wide area of subjects/issues involved and the fact that all decisions were taken
unanimously.

The following major recommendations have been made by the Council:

9.4.1 Legal/Rules:

9.4.1.1   Recommending GST laws, namely CGST Law, UTGST Law, IGST
          Law, SGST Law and GST Compensation Law paving the way for
          implementation of GST.

9.4.1.2   Rules on composition, registration, input tax credit, invoice,
          determination of value of supply, accounts and records, returns,
          payment, refund, assessment and audit, advance ruling, appeals and
          revision,   transitional   provisions,   anti-profiteering,   E-way   Bill,
          inspection, search and seizure, demands and recovery and offences and
          penalties have been recommended.

9.4.2 Registration and Threshold:

9.4.2.1   Threshold limit of aggregate turnover for exemption from registration
          and payment of GST for suppliers of services would be Rs. 20 lakhs and


                                                                                20 | 58
          Rs. 10 lakhs in the States of Manipur, Mizoram, Nagaland and Tripura.

9.4.2.2   Threshold limits of aggregate turnover for exemption from registration
          and payment of GST for the suppliers of goods would be Rs. 40 lakhs
          and Rs. 20 lakhs in the States of Arunachal Pradesh, Manipur,
          Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana,
          Tripura and Uttarakhand with effect from 01.04.2019.

9.4.2.3   The following classes of taxpayers shall be exempted from obtaining
          registration:

          a. Suppliers of services, having turnover up to Rs. 20 lakh, making inter
             State supplies;

          b. Suppliers of services, having turnover up to Rs. 20 lakh, making
             supplies through e-commerce platforms.

9.4.2.4   Taxpayers may opt for multiple registrations within a State/Union
          territory in respect of multiple places of business located within the
          same State/Union territory.

9.4.2.5   Mandatory registration is required for only those e-commerce operators
          who are required to collect tax at source.

9.4.2.6   Registration to remain temporarily suspended while cancellation of
          registration is under process, so that the taxpayer is relieved of
          continued compliance under the law.

9.4.2.7   A Removal of Difficulty order has been issued to allow revocation of
          cancellation of those registrations, which were cancelled till 31.03.2019.
          The application for revocation can be filed till 22.07.2019.




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9.4.3 Migration:

9.4.3.1   One more window for completion of migration process is being allowed.
          The due date for the taxpayers who did not file the complete FORM
          GST REG-26 but received only a Provisional ID (PID) till 31.12.2017
          for furnishing the requisite details to the jurisdictional nodal officer was
          extended till 31.01.2019. Also, the due date for furnishing FORM
          GSTR-3B and FORM GSTR-1 for the period July, 2017 to February,
          2019 / quarters July, 2017 to December, 2018 by such taxpayers was
          extended till 31.03.2019.

9.4.4 Composition Scheme:

9.4.4.1   Composition scheme has been formulated for small businessmen being
          supplier of goods and supplier of restaurant services. Under the scheme,
          person with annual turnover up to Rs. 1.5 crore (Rs. 75 lakhs in States of
          Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim,
          Tripura and Uttarakhand) needs to pay tax equal to 1% to 5% on his
          turnover and needs to file his returns annually with quarterly payment
          from FY 2019-20.
9.4.4.2   Composition scheme has been made available for suppliers of services
          (to those who are not eligible for the presently available Composition
          Scheme) with a tax rate of 6% (3% CGST +3% SGST) having an annual
          turnover in the preceding FY up to Rs. 50 lakhs. They would be liable to
          file one Annual Return with quarterly payment of taxes. This has been
          made effective from 01.04.2019.

9.4.4.3   Taxpayers under Composition scheme have been allowed to pay self-
          assessed tax` on a quarterly basis till 18th of the month succeeding such


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          quarter and furnish a return till 30th April for the previous financial year.

9.4.4.4   A taxpayer who wants to opt for Composition Scheme for a financial
          year or during the middle of a financial year has to inform the
          government about his choice by filing FORM GST CMP-02.

9.4.4.5   The GST Council in its 36th meeting held on 27.07.2019 decided that the
          last date for filing of intimation, in FORM GST CMP-02, for availing
          the option of payment of tax under notification No. 2/2019-Central Tax
          (Rate) dated 07.03.2019 (by exclusive supplier of services), be extended
          from 31.07.2019 to 30.09.2019.

9.4.4.6   The last date for furnishing statement containing the details of the self-
          assessed tax in FORM GST CMP-08 for the quarter April, 2019 to
          June, 2019 (by taxpayers under composition scheme), has been extended
          from 31.07.2019 to 31.08.2019.

9.4.4.7   Composition scheme shall not be available to inter-State suppliers and
          specified category of manufacturers.

9.4.5 E-way bill system

9.4.5.1   The generation of e-way bill would be barred if a supplier or recipient
          does not file GST returns for 2 consecutive tax periods. This will be
          made applicable from 21.08.2019.

9.4.6 Tax Administration:

9.4.6.1   In order to ensure single interface, all administrative control over 90%
          of taxpayers having turnover below Rs. 1.5 crore would vest with State
          tax administration and over 10% with the Central tax administration.
          Further all administrative control over taxpayers having turnover above
          Rs.1.5 crore shall be divided equally in the ratio of 50% each for the

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          Central and State tax administration.

9.4.6.2   Powers under the IGST Act shall also be cross-empowered on the same
          basis as under CGST and SGST Acts with few exceptions.

9.4.6.3   Power to collect GST in territorial waters shall be delegated by Central
          Government to the States.

9.4.6.4   Power to take enforcement action over entire taxpayer`s base would be
          with both Central as well as State tax administration.

9.4.7 Compensation to States:

9.4.7.1   Formula and mechanism for GST Compensation Cess has been
          finalized.

9.4.8 Reverse Charge Mechanism (RCM):

9.4.8.1   Levy of GST on reverse charge mechanism on receipt of supplies from
          unregistered suppliers, to be applicable to only specified goods in case of
          certain notified classes of registered persons, on the recommendations of
          the GST Council. In this regard, notification No. 07/2019- Central Tax
          (Rate) dated 29.03.2019 has been issued which prescribes that the
          promoter shall pay tax on reverse charge basis w.e.f. 01.04.2019 on
          following supplies received from unregistered suppliers -

          a. such supplies which constitute the shortfall from the minimum value
             of goods or services or both required to be purchased by a promoter
             for construction of a project as prescribed in notification No. 11/2017-
             Central Tax (Rate) dated 28.06.2017;

          b. cement which constitute the shortfall from the minimum value of
             goods or services or both required to be purchased by a promoter for


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             construction of project as prescribed in notification No. 11/2017-
             Central Tax (Rate); and

          c. capital goods supplied to a promoter for construction of a project on
             which tax is payable or paid at the rate prescribed in notification No.
             11/2017- Central Tax (Rate).

9.4.8.2   Earlier the reverse charge mechanism under sub-section (4) of section 9
          of the CGST Act, 2017 and under sub-section (4) of section 5 of the
          IGST Act, 2017 was kept under suspension till 30.09.2019.

9.4.9 Payment of Tax:

9.4.9.1   There shall be no requirement on payment of tax on advances received
          for supply of goods by all taxpayers.

9.4.9.2   A Group of Ministers constituted for promoting digital payment has
          recommended to allow cash back to an amount equal to 20% of GST
          paid or Rs. 100/-, whichever is lower for cases where payment is made
          by BHIM or Rupay card. The necessary infrastructure is being
          developed and soon the scheme would be implemented on pilot basis in
          State of Assam and few other States which volunteer for the same.

9.4.9.3   In principle approval has been given for amendment of section 50 of the
          CGST Act to provide that interest should be charged only on the net tax
          liability of the taxpayer, after taking into account the admissible input tax
          credit, i.e. interest would be leviable only on the amount payable through
          the electronic cash ledger. This would be implemented once the law is
          amended.




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9.4.10 Exemption:

9.4.10.1 Supply from GTA to unregistered persons has been exempted from tax.

9.4.11 Refunds:

9.4.11.1 A scheme of single authority for disbursement of the refund amount
         sanctioned by either the Centre or the State tax authorities would be
         implemented soon. The modalities for the same are being finalized.

9.4.11.2 All the supporting documents/invoices in relation to a claim for refund
         in FORM GST RFD-01A shall be uploaded electronically on the
         common portal at the time of filing of the refund application itself,
         thereby obviating the need for a taxpayer to physically visit a tax office
         for submission of a refund application.

9.4.11.3 Fully automated refund module is being developed and will be deployed
         soon.

9.4.12 Return:

9.4.12.1 All taxpayers, except those registered under Composition scheme are
         required to file return FORM GSTR-3B & pay tax on monthly basis.

9.4.12.2 Taxpayers with turnover up to Rs. 1.5 crore are required to file
         information in FORM GSTR-1 on a quarterly basis. Other taxpayers
         would have to file FORM GSTR-1 on a monthly basis.

9.4.12.3 The due date for furnishing the annual returns in FORM GSTR-9,
         FORM GSTR-9A and reconciliation statement in FORM GSTR-9C
         for the Financial Year 2017 ­ 2018 is 31.08.2019.




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9.4.13 Late Fees:

9.4.13.1 Late fee shall be completely waived for all taxpayers in case FORM
         GSTR-1, FORM GSTR-3B & FORM GSTR-4 for the months /
         quarters July, 2017 to September, 2018 which are furnished after
         22.12.2018 but on or before 31.03.2019.

9.4.13.2 From October 2017 onwards, the amount of late fee for late filing of
         GSTR-3B payable by a registered person is as follows:

         a. whose tax liability for that month was NIL` will be Rs. 20/- per day
            instead of Rs. 200/- per day;

         b. whose tax liability for that month was not NIL` will be Rs. 50/- per
            day instead of Rs. 200/- per day.

9.4.14 New Return System:

9.4.14.1 The new return system is simple with two main annexures. One for
         reporting details of outward supplies (FORM GST ANX-1) and the
         other for availing input tax credit (FORM GST ANX-2) based on
         invoices, etc. uploaded by the supplier.

9.4.14.2 Invoices can be uploaded continuously by the supplier and can be
         continuously viewed and locked by the recipient for availing input tax
         credit. This process would ensure that very large part of the return is
         auto-populated based on the invoices uploaded by the buyer and the
         supplier. Simply put, the process would be UPLOAD ­ LOCK ­ PAY
         for most tax payers.

9.4.14.3 Taxpayers would have the facility to create his profile based on nature



                                                                           27 | 58
         of supplies made and received. The information which a taxpayer would
         be shown and would be required to fill in the return would depend on his
         profile.

9.4.14.4 NIL return filers (no purchase and no sale) shall be given facility to file
         return by sending SMS.

9.4.14.5 There shall be quarterly filing of return for the small taxpayers having
         turnover upto Rs. 5 crore as an optional facility. Quarterly return shall
         be similar to main return with monthly payment facility but for two
         kinds of registered persons ­ small traders making only B2C supply or
         making B2B + B2C supply. For such taxpayers, simplified returns have
         been designed called Sahaj and Sugam. In these returns, details of
         information required to be filled is lesser than that in the regular return.

9.4.14.6 The new return design provides facility for amendment of invoice and
         also other details filed in the return. Amendment shall be carried out by
         filing of a return called amendment return. Payment would be allowed to
         be made through the amendment return as it will help save interest
         liability for the taxpayers.

9.4.14.7 In order to give ample opportunity to taxpayers as well as the system to
         adapt, the GST Council in its 35th meeting held on 21.06.2019 has
         decided to introduce the new return system in a phased manner, as
         described below:

         a. Between July, 2019 to September, 2019, the new return system
             (FORM GST ANX-1 & FORM GST ANX-2 only) to be available
             for trial for taxpayers. Taxpayers to continue to file FORM GSTR-1
             & FORM GSTR-3B as at present;

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        b. From October, 2019 onwards, FORM GST ANX-1 to be made
              compulsory. Large taxpayers (having aggregate turnover of more
              than Rs. 5 crores in previous year) to file FORM GST ANX-1 on
              monthly basis whereas small taxpayers to file first FORM GST
              ANX-1 for the quarter October, 2019 to December, 2019 in January,
              2020;

        c. For October and November, 2019, large taxpayers to continue to file
              FORM GSTR-3B on monthly basis and will file first FORM GST
              RET-01 for December, 2019 in January, 2020. It may be noted that
              invoices etc. can be uploaded in FORM GST ANX-1 on a
              continuous basis both by large and small taxpayers from October,
              2019 onwards. FORM GST ANX-2 may be viewed simultaneously
              during this period but no action shall be allowed on such FORM
              GST ANX-2;

        d. From October, 2019, small taxpayers to stop filing FORM GSTR-
              3B and to start filing FORM GST PMT-08. They will file their first
              FORM GST RET-01 for the quarter October, 2019 to December,
              2019 in January, 2020;

        e. From January, 2020 onwards, FORM GSTR-3B to be completely
              phased out.

9.4.15 ITC:

9.4.15.1 ITC in relation to invoices issued by the supplier during FY 2017-18
        may be availed by the recipient till the due date for furnishing of FORM
        GSTR-3B for the month of March, 2019, subject to specified
        conditions.

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9.4.15.2 The due date for submitting FORM GST ITC-04 for the period July
         2017 to March 2019 was extended till 31.08.2019.

9.4.16 TDS/TCS:

9.4.16.1 TDS/TCS provisions shall be implemented from 01.10.2018.

9.4.16.2 Further, to provide some more time to TDS deductors to familiarize
         them with the new system, last date for furnishing return in FORM
         GSTR-7 for the months of October, 2018 to December, 2018 and
         January, 2019 was extended up to 28.02.2019. Further, exemption from
         TDS for been made for supply made by Government / PSU to another
         Government /PSU.

9.4.17 Export:

9.4.17.1 E-Wallet Scheme shall be introduced for exporters from 01.04.2020 and
         till then relief for exporters shall be given in form of broadly existing
         practice.

9.4.17.2 Supply of services to Nepal and Bhutan shall be exempted from GST
         even if payment has not been received in foreign convertible currency ­
         such suppliers shall be eligible for input tax credit.

9.4.17.3 Supply of services to qualify as exports, even if payment is received in
         Indian Rupees, where permitted by the RBI.

9.4.18 Rate of Interest:

9.4.18.1 Rate of interest on delayed payments and delayed refund has been
         recommended.




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9.4.19 MSME:

9.4.19.1 A Group of Ministers has been constituted to look into the issues being
         faced by MSMEs and to provide solutions for the same.

9.4.20 Revenue Mobilization:

9.4.20.1 A Group of Ministers has been constituted to study the revenue trend,
         including analyzing the reasons for structural patterns affecting the
         revenue collection in some of the States. The study would include the
         underlying reasons for deviation from the revenue collection targets vis
         a vis original assumptions discussed during the design of GST system,
         its implementation and related structural issues.

9.4.20.2 The Group of Ministers will be assisted by the committee of experts
         from Central Government, State Governments and the NIPFP (National
         Institute of Public Finance and Planning), who would study and share
         the findings with GoM. The GoM in turn would give its
         recommendation to the GST Council.

9.4.20.3 The amount of IGST not apportioned to the Centre or the States/UTs
         may, for the time being, on the recommendations of the Council, be
         apportioned at the rate of fifty per cent. to the Central Government and
         fifty per cent. to the State Governments or the Union territories, as the
         case may be, on ad-hoc basis and this amount shall be adjusted against
         the amount finally apportioned.

9.4.20.4 Fifty per cent. of such amount, as may be recommended by the Council,
         which remains unutilized in the Compensation Fund, at any point of
         time in any financial year during the transition period shall be


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         transferred to the Consolidated Fund of India as the share of Centre, and
         the balance fifty per cent. shall be distributed amongst the States in the
         ratio of their base year revenue.

9.4.20.5 In case of shortfall in the amount collected in the Fund against the
         requirement of compensation to be released for any two months` period,
         fifty per cent. of the same, but not exceeding the total amount
         transferred to the Centre and the States as recommended by the Council,
         shall be recovered from the Centre and the balance fifty per cent. from
         the States in the ratio of their base year revenue.

9.4.21 Real Estate:

9.4.21.1 The GST Council in its 33rd & 34th meetings held on 24.02.2019 &
         19.03.2019 respectively have made following decisions with respect to
         the real estate sector:

9.4.21.2 GST shall be levied at effective rate of 5% on residential properties
         outside affordable segment and 1% on affordable housing properties.

9.4.21.3 Definition of affordable housing: A residential house/flat of carpet
         area of up to 90 sqm in non-metropolitan cities/towns and 60 sqm in
         metropolitan cities having value up to Rs. 45 lacs (both for metropolitan
         and non-metropolitan cities). Metropolitan Cities are Bengaluru,
         Chennai, Delhi NCR (limited to Delhi, Noida, Greater Noida,
         Ghaziabad, Gurgaon, and Faridabad), Hyderabad, Kolkata and Mumbai
         (whole of MMR).

9.4.21.4 Conditions for new tax rate:

            a. Input tax credit shall not be available


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            b. 80% of inputs and input services [other than capital goods, TDR/
                  JDA, FSI, long term lease (premiums)] shall be purchased from
                  registered persons. On shortfall of purchases from 80%, tax shall
                  be paid by the builder @ 18% on RCM basis. However, Tax on
                  cement purchased from unregistered person shall be paid @ 28%
                  under RCM, and on capital goods under RCM at applicable rates.

9.4.21.5 GST exemption on TDR/ JDA, long term lease (premium), FSI:
         Intermediate tax on development right, such as TDR, JDA, lease
         (premium), FSI shall be exempted only for such residential property on
         which GST is payable.

9.4.21.6 The new rate has become applicable from 01.04.2019.

9.4.21.7 One time transition option given to real estate firms to continue to pay
         tax at the old rates (effective rate of 8% or 12% with ITC) on on-going
         projects (buildings where construction and actual booking have both
         started before 01.04.2019) which have not been completed by
         31.03.2019. Real estate firms can communicate their option till
         20.05.2019 to the jurisdictional officers.

9.4.22 Lottery:

9.4.22.1 The GST Council in its 32nd Meeting held on 10.01.2019 constituted a
         Group of Ministers to examine the GST Rate Structure on Lotteries.

9.4.23 Natural Calamity Cess:

9.4.23.1 GST Council in its 32nd Meeting held on 10.01.2019 approved levy of
         Cess on Intra-State Supply of Goods and Services within the State of
         Kerala at a rate not exceeding 1% for a period not exceeding 2 years.


                                                                              33 | 58
9.4.23.2 Kerala Government has, accordingly, decided to levy one per cent.
         Kerala Flood Cess` on value of intra-state supply of goods by taxable
         person to an unregistered person in respect of supplies specified in
         TABLE under sub-clause (2) of clause 14 of the Kerala Finance Bill,
         2019. The said cess has become effective from 01.08.2019.

9.4.23.3 The Kerala government has also decided to allow local bodies to collect
         entertainment tax on movie tickets up to 10 per cent.

9.4.24 Electronic Invoicing

9.4.24.1 The Council in its 35th meeting held on 21.06.2019 decided to introduce
         electronic invoicing system in a phase-wise manner for B2B
         transactions.

9.4.24.2 The Phase 1 is proposed to be voluntary and it shall be rolled out from
         Jan 2020.

9.4.25 Electric Vehicles

9.4.25.1 The Council in its 36th meeting held on 27.07.2019 decided to reduce the
         GST rates on electric vehicles from 12% to 5% and charger or charging
         stations for electric vehicles from 18% to 5% w.e.f. 01.08.2019.

9.4.25.2 Hiring of electric buses (of carrying capacity of more than 12
         passengers) by local authorities has been exempted from GST w.e.f.
         01.08.2019.

9.4.26 Recent Law amendments w.e.f. 01.02.2019:

9.4.26.1 Scope of input tax credit has been widened, and it would now be made
         available in respect of the following:



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         a. Most of the activities or transactions specified in Schedule III;

         b. Motor vehicles for transportation of persons having seating capacity
             of more than thirteen (including driver), vessels and aircraft;

         c. Services of general insurance, repair and maintenance in respect of
             motor vehicles, vessels and aircraft on which credit is available;

         d. Goods or services which are obligatory for an employer to provide to
             its employees, under any law for the time being in force.

9.4.26.2 The order of cross-utilization of input tax credit has been rationalized.

9.4.26.3 Commissioner empowered to extend the time limit for return of inputs
         and capital sent on job work, up to a period of one year and two years,
         respectively.

9.4.26.4 Place of supply in case of job work of any treatment or process done on
         goods temporarily imported into India and then exported without putting
         them to any other use in India, would be outside India.

9.4.26.5 The following transactions to be treated as no supply (no tax payable)
         under Schedule III:

         a. Supply of goods from a place in the non-taxable territory to another
             place in the non-taxable territory without such goods entering into
             India;

         b. Supply of warehoused goods to any person before clearance for
             home consumption;

         c. Supply of goods in case of high sea sales.

9.4.26.6 Registered persons may issue consolidated credit/debit notes in respect


                                                                                  35 | 58
         of multiple invoices issued in a Financial Year.

9.4.26.7 Amount of pre-deposit payable for filing of appeal before the Appellate
         Authority and the Appellate Tribunal capped at Rs. 25 crore and Rs. 50
         crore respectively.

9.4.26.8 Recovery can be made from distinct persons, even if present in different
         State/Union territories.

9.4.27 Others:

9.4.27.1 In principle approval has been given for creation of a Centralized
         Appellate Authority for Advance Ruling (AAAR) to deal with cases of
         conflicting decisions by two or more State Appellate Advance Ruling
         Authorities on the same issue. This would be implemented once the law
         is amended.

9.4.27.2 Existing tax incentive schemes of Central or State governments may be
         continued by respective government by way of reimbursement through
         budgetary route. The schemes, in the present form, would not continue
         in GST.

9.4.27.3 50% of the GST paid will be refunded to CSD (Defense Canteens).

9.4.27.4 Centralized UIN shall be issued to every Foreign Diplomatic Mission /
         UN Organization by the Central Government for handling their refund
         related applications.

9.4.27.5 There would be a single cash ledger for each tax head. The modalities
         for implementation would be finalized in consultation with GSTN and
         the Accounting authorities.

9.4.27.6 Free Accounting and Billing Software shall be provided to Small


                                                                           36 | 58
          Taxpayers by GSTN.

9.4.27.7 A scheme for grant of refund of taxes paid on inward supply of
          indigenous goods by retail outlets established at departure area of the
          international airport beyond immigration counters when supplied to
          outgoing international tourist against foreign exchange has been
          introduced w.e.f. 01.07.2019.

10. THE DESIGN OF INDIAN GST:

10.1 Concurrent dual model of GST: India has adopted dual GST model because
of its unique federal nature. Under this model, tax is levied concurrently by the
Centre as well as the States on a common base, i.e. supply of goods or services or
both. GST to be levied by the Centre would be called Central GST (Central tax /
CGST) and that to be levied by the States would be called State GST (State Tax /
SGST). State GST (State Tax / SGST) would be called UTGST (Union territory
tax) in Union Territories without legislature. CGST & SGST / UTGST shall be
levied on all taxable intra-State supplies.

10.2 The IGST Model: Inter-State supply of goods or services shall be subjected
to integrated GST (Integrated tax / IGST). The IGST model is a unique
contribution of India in the field of VAT. The IGST Model envisages that Centre
would levy IGST (Integrated Goods and Service Tax) which would be CGST plus
SGST on all inter-State supply of goods or services or both. The inter-State
supplier will pay IGST on value addition after adjusting available credit of IGST,
CGST, and SGST on his purchases. The Exporting State will transfer to the
Centre the credit of SGST used in payment of IGST. The person based in the
destination State will claim credit of IGST while discharging his output tax
liability in his own State. The Centre will transfer to the importing State the



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credit of IGST used in payment of SGST. The relevant information will also be
submitted to the Central Agency which will act as a clearing house mechanism,
verify the claims and inform the respective governments to transfer the funds. The
major advantages of IGST Model are:

      a) Maintenance of uninterrupted ITC chain on inter-State transactions.

      b) No upfront payment of tax or substantial blockage of funds for the inter-
         State supplier or recipient.

      c) No refund claim in exporting State, as ITC is used up while paying the
         tax.

      d) Self-monitoring model.

      e) Model takes Business to Business` as well as Business to Consumer`
         transactions into account.

10.3 Tax Rates: Owing to unique Indian socio-economic milieu, four rates
namely 5%, 12%, 18% and 28% have been adopted. Besides, some goods and
services are exempt also. Rate for precious metals and affordable housing are an
exception to four-tax slab-rule` and the same has been fixed at 3% and 1%
respectively. In addition, unworked diamonds, precious stones, etc. attracts a rate
of 0.25%. A cess over the peak rate of 28% on certain specified luxury and demerit
goods, like tobacco and tobacco products, pan masala, aerated water, motor
vehicles is imposed to compensate States for any revenue loss on account of
implementation of GST. The list of goods and services in case of which reverse
charge would be applicable has also been notified.

10.4 Compensation to States: The Goods and Services Tax (Compensation to
States) Act, 2017 provides for compensation to the States for the loss of revenue
arising on account of implementation of the goods and services tax.


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Compensation will be provided to a State for a period of five years from the date
on which the State brings its SGST Act into force. For the purpose of calculating
the compensation amount in any financial year, year 2015-16 will be assumed to
be the base year, for calculating the revenue to be protected. The growth rate of
revenue for a State during the five-year period is assumed be 14% per annum. The
base year tax revenue consists of the states` tax revenues from: (i) State Value
Added Tax (VAT), (ii) central sales tax, (iii) entry tax, octroi, local body tax, (iv)
taxes on luxuries, (v) taxes on advertisements, etc. However, any revenue among
these taxes arising related to supply of alcohol for human consumption, and five
specified petroleum products, will not be accounted as part of the base year
revenue. A GST Compensation Cess is levied on the supply of certain goods and
services, as recommended by the GST Council to finance the compensation cess.

10.5 E-Way Bill System: The introduction of e-way (electronic way) bill is a
monumental shift from the earlier Departmental Policing Model to a Self-
Declaration Model. It envisages one e-way bill for movement of the goods
throughout the country, thereby ensuring a hassle free movement for transporters
throughout the country. The e-way bill system has been introduced nation-wide for
all inter-State movement of goods with effect from 01.04.2018. As regards intra-
State supplies, option was given to States to choose any date on or before
03.06.2018. All States have notified e-way bill rules for intra-State supplies last
being NCT of Delhi where it was introduced w.e.f. 16.06.2018. New features in the
e-way bill system have been introduced such as the auto calculation of distance
based on PIN codes for the generation of e-way bill and blocking the generation of
multiple e-way bills against one invoice.

10.6 Anti-Profiteering Mechanism: Implementation of GST in many countries
was coupled with increase in inflation and the prices of the commodities. This


                                                                                39 | 58
happened in spite of the availability of the tax credit. This was happening because
the supplier was not passing on the benefit to the consumer and thereby indulging
in illegal profiteering. Any reduction in rate of tax or the benefit of increased input
tax credit should have been passed on to the recipient by way of commensurate
reduction in prices.

10.6.1 National Anti-profiteering Authority (NAA) has been constituted under
GST by the Central Government to examine the complaints of non-passing the
benefit of reduced tax incidence. The Authority shall cease to exist after the expiry
of two years from the date on which the Chairman enters upon his office unless the
Council recommends otherwise.10.6.2 The Authority may determine whether any
reduction in the rate of tax or the benefit of input tax credit has been passed on to
the recipient by way of commensurate reduction in prices. It can order reduction in
prices, imposition of penalty, cancellation of registration and any other decision as
may deem fit, after inquiry into the case.

10.7 Concept of Supply: GST would be applicable on supply of goods or services
as against the present concept of tax on manufacture of goods or on sale of goods
or on provision of services. It includes all sorts of activities like manufacture, sale,
barter, exchange, transfer etc. It also includes supplies made without consideration
when such supplies are made in certain specified situations.

10.8 Threshold Exemption: Threshold limits of aggregate turnover for
exemption from registration and payment of GST for the suppliers of goods
would be Rs. 40 lakhs and Rs. 20 lakhs (in case of States of Arunachal Pradesh,
Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana,
Tripura and Uttarakhand) with effect from 01.04.2019.




                                                                                  40 | 58
Threshold limit of aggregate turnover for exemption from registration and
payment of GST for suppliers of services would be Rs. 20 lakhs and Rs. 10 lakhs
(in case of States of Manipur, Mizoram, Nagaland and Tripura).

A common threshold exemption applies to both CGST and SGST. The benefit of
threshold exemption, however, is not available in inter-State supplies of goods.

10.9 Composition Scheme: Composition scheme has been formulated for small
businessmen being supplier of goods and supplier of restaurant services. Under
the scheme, person with turnover up to Rs. 1.5 crore (Rs. 75 lakhs in States of
Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura
and Uttarakhand) needs to pay tax equal to 1% to 5% on his turnover and needs to
file his returns annually with quarterly payment from FY 2019-20.

Composition scheme has also been formulated for supplier of services (to those
who are not eligible for the presently available composition scheme). Under the
scheme, person with turnover up to Rs. 50 lakhs needs to pay tax equal to 6% on
his turnover and needs to file his returns annually with quarterly payment from
FY 2019-20.

10.10 Zero rated Supplies: Export of goods and services are zero rated. Supplies
to SEZs developers and SEZ units are also zero-rated. The benefit of zero rating
can be taken either with payment of integrated tax, or without payment of
integrated tax under bond or Letter of Undertaking.

10.11 Cross-utilization of ITC: IGST credit can be used for payment of all taxes.
CGST credit can be used only for paying CGST or IGST. SGST credit can be
used only for paying SGST or IGST.

The credit would be permitted to be utilized in the following manner:

      a) ITC of CGST allowed for payment of CGST & IGST in that order;


                                                                              41 | 58
      b) ITC of SGST allowed for payment of SGST & IGST in that order;

      c) ITC of UTGST allowed for payment of UTGST & IGST in that order;

      d) ITC of IGST allowed for payment of IGST, CGST & SGST/UTGST in
         that order.

ITC of CGST cannot be used for payment of SGST/UTGST and vice versa. It has
been further provided that IGST balances shall be exhausted for payment of
IGST, CGST or SGST, as the case may be, before utilization of CGST or SGST.

10.12 Settlement of Government Accounts: Accounts would be settled
periodically between the Centre and the State to ensure that the credit of SGST
used for payment of IGST is transferred by the originating State to the Centre.
Similarly, the IGST used for payment of SGST would be transferred by Centre to
the destination State. Further the SGST portion of IGST collected on B2C
supplies would also be transferred by Centre to the destination State. The transfer
of funds would be carried out on the basis of information contained in the returns
filed by the taxpayers.

10.13 Modes of Payment: Various modes of payment of tax available to the
taxpayer including internet banking, debit/ credit card and National Electronic
Funds Transfer (NEFT) / Real Time Gross Settlement (RTGS).

10.14 Tax Deduction at Source: Obligation on certain persons including
government departments, local authorities and government agencies, who are
recipients of supply, to deduct tax at the rate of 1% from the payment made or
credited to the supplier where total value of supply, under a contract, exceeds two
lakh and fifty thousand rupees. The provision for TDS has been operationalized
w.e.f. 01st October, 2018. Exemption from the provisions of TDS has been given to
certain authorities under the Ministry of Defence.


                                                                              42 | 58
10.15 Refunds: Refund of tax to be sought by taxpayer or by any other person who
has borne the incidence of tax within two years from the relevant date. Refund of
unutilized ITC also available in zero rated supplies and inverted tax structure.

10.16 Tax Collection at Source: Obligation on electronic commerce operators to
collect tax at source`, at such rate not exceeding two per cent of net value of
taxable supplies, out of payments to suppliers supplying goods or services through
their portals. The provision for TCS has been operationalized w.e.f. 01st October,
2018.

10.17 Self-assessment: Self-assessment of the taxes payable by the registered
person shall be the norm. Audit of registered persons shall be conducted on
selective basis. Limitation period for raising demand is three (3) years from the due
date of filing of annual return or from the date of erroneous refund for raising
demand for short-payment or non-payment of tax or erroneous refund and its
adjudication in normal cases. Limitation period for raising demand is five (5) years
from the due date of filing of annual return or from the date of erroneous refund for
raising demand for short-payment or non-payment of tax or erroneous refund and
its adjudication in case of fraud, suppression or willful mis-statement.

10.18 Recovery of Arrears: Arrears of tax to be recovered using various modes
including detaining and sale of goods, movable and immovable property of
defaulting taxable person.

10.19 Appellate Tribunal: Goods and Services Tax Appellate Tribunal would be
constituted by the Central Government for hearing appeals against the orders
passed by the Appellate Authority or the Revisional Authority. States would adopt
the provisions relating to Tribunal in respective SGST Act.




                                                                                   43 | 58
10.20 Advance Ruling Authority: Advance Ruling Authority would be constituted
by States in order to enable the taxpayer to seek a binding clarity on taxation
matters from the department. Centre would adopt such authority under CGST Act.

10.21 Transitional Provisions: Elaborate transitional provisions have been
provided for smooth transition of existing taxpayers to GST regime.

10.21 Subsuming of taxes, duties etc.: Among the taxes and duties levied and
collected by the Union, Central Excise duty, Duties of Excise (Medicinal and
Toilet Preparations), Additional Duties of Excise (Goods of Special Importance),
Additional Duties of Excise (Textiles and Textile Products), Additional Duties of
Customs (commonly known as CVD), Special Additional Duty of Customs (SAD),
Service Tax and cesses and surcharges insofar as they related to supply of goods or
services were subsumed. As far as taxes levied and collected by States are
concerned, State VAT, Central Sales Tax, Purchase Tax, Luxury Tax, Entry Tax,
Entertainment Tax (except those levied by the local bodies), Taxes on
advertisements, Taxes on lotteries, betting and gambling, cesses and surcharges
insofar as they related to supply of goods or services were subsumed.

11. GST LEGISLATIONS:

11.1. Four Laws namely CGST Act, UTGST Act, IGST Act and GST
(Compensation to States) Act were passed by the Parliament and since been
notified on 12.04.2017. All the other States (except J&K) and Union territories
with legislature have passed their respective SGST Acts. The economic
integration of India was completed on 08.07.2017 when the State of J&K also
passed the SGST Act and the Central Government also subsequently extended the
CGST Act to J&K.

11.2. In its 28th meeting held in New Delhi on 21.07.2018, the GST Council



                                                                             44 | 58
recommended certain amendments in the CGST Act, IGST Act, UTGST Act and
the GST (Compensation to States) Act. These amendments have been passed by
Parliament and have been enacted w.e.f. 01.02.2019, as the Central Goods and
Services Tax (Amendment) Act, 2018, the Integrated Goods and Services Tax
(Amendment) Act, 2018, the Union Territory Goods and Services Tax
(Amendment) Act, 2018 and the Goods and Services Tax (Compensation to
States) Amendment Act, 2018, respectively.

11.3. On 22.06.2017, the first notification was issued for GST and notified
certain sections under CGST. Since then, 189 notifications under CGST Act have
been issued notifying sections, notifying rules, amendment to rules and for waiver
of penalty, etc. 19, 34 and 2 notifications have also been issued under IGST Act,
UTGST Act and GST (Compensation to States) Act respectively. Further, 90, 94,
90 and 10 rate related notifications each have been issued under the CGST Act,
IGST Act, UTGST Act and GST (Compensation to States) Act respectively.
Similar notifications have been issued by all the States under the respective SGST
Act. Apart from the notifications, 114 circulars, 18 orders and 14 Removal of
Difficulty Orders have also been issued by CBIC on various subjects like proper
officers, ease of exports, and extension of last dates for filling up various forms,
etc.

12.    ROLE OF CBIC:

12.1 CBIC is playing an active role in the drafting of GST law and procedures,
particularly the CGST and IGST law, which will be exclusive domain of the
Centre. This apart, the CBIC has prepared itself for meeting the implementation
challenges, which are quite formidable. The number of taxpayers has gone up
significantly. The existing IT infrastructure of CBIC has been suitably scaled up
to handle such large volumes of data. Based on the legal provisions and procedure







                                                                               45 | 58
for GST, the content of work-flow software such as ACES (Automated Central
Excise & Service Tax) would require re-engineering. The name of IT project of
CBIC under GST is SAKSHAM` involving a total project value of Rs. 2,256 Cr.

12.2 Augmentation of human resources would be necessary to handle large
taxpayers` base in GST scattered across the length and breadth of the country.
Capacity building, particularly in the field of Accountancy and Information
Technology for the departmental officers has to be taken up in a big way. A
massive four-tier training programme has been conducted under the leadership of
NACIN. This training project is aimed at imparting training on GST law and
procedures to more than 60,000 officers of CBIC and Commercial Tax officers of
State Governments.

12.3 CBIC would be responsible for administration of the CGST and IGST law.
In addition, excise duty regime would continue to be administered by the CBIC for
levy and collection of central excise duty on five specified petroleum products as
well as on tobacco products. CBIC would also continue to handle the work
relating to levy and collection of customs duties.

12.4 Director General of Anti-profiteering, CBIC has been mandated to conduct
detailed enquiry on anti-profiteering cases and should give his recommendation
for consideration of the National Anti-profiteering Authority.

12.5 CBIC has been instrumental in handholding the implementation of GST. It
had set up the Feedback and Action Room which monitored the GST
implementation challenges faced by the taxpayer and act as an active interface
between the taxpayer and the Government.

13.   GOODS & SERVICES TAX NETWORK:




                                                                             46 | 58
13.1 Goods and Services Tax Network (GSTN) has been set up by the
Government as a private company under erstwhile Section 25 of the Companies
Act, 1956. GSTN would provide three front end services to the taxpayers namely
registration, payment and return. Besides providing these services to the taxpayers,
GSTN would be developing back-end IT modules for 27 States who have opted for
the same. Infosys has been appointed as Managed Service Provider (MSP). GSTN
has selected 73 IT, ITeS and financial technology companies and 1 Commissioner
of Commercial Taxes (CCT, Karnataka), to be called GST Suvidha Providers
(GSPs). GSPs would develop applications to be used by taxpayers for interacting
with the GSTN. The diagram below shows the work distribution under GST.




                                                                              47 | 58
13.2 Central Government holds 24.5 percent stake in GSTN while the state
government holds 24.5 percent. The remaining 51 per cent are held by non-
Government financial institutions, HDFC and HDFC Bank hold 20%, ICICI Bank
holds 10%, NSE Strategic Investment holds 10% and LIC Housing Finance holds
10%. The GST Council in its 27th meeting held on 04.05.2018 has approved the
change in shareholding pattern of GSTN. Considering the nature of state`
function` performed by GSTN, the GST Council felt that GSTN be converted into
a fully owned Government company. Accordingly, the Council approved
acquisition of entire 51 per cent of equity held by non-Governmental institutions in
GSTN amounting to Rs. 5.1 crore, equally by the Centre and the State
Governments.

13.3 The design of GST systems is based on role based access. The taxpayer can
access his own data through identified applications like registration, return, view
ledger etc. The tax official having jurisdiction, as per GST law, can access the data.
Data can be accessed by audit authorities as per law. No other entity can have any
access to data available with GSTN.

14.   GST: A GAME CHANGER FOR INDIAN ECONOMY:

14.1 GST will have a multiplier effect on the economy with benefits accruing to
various sectors as discussed below.

14.2 Benefits to the exporters: The subsuming of major Central and State taxes in
GST, complete and comprehensive setoff of input goods and services and phasing
out of Central Sales Tax (CST) would reduce the cost of locally manufactured
goods and services. This will increase the competitiveness of Indian goods and
services in the international market and give boost to Indian exports. The




                                                                                48 | 58
uniformity in tax rates and procedures across the country will also go a long way in
reducing the compliance cost.

14.3 Benefits to small traders and entrepreneurs: GST has increased the threshold
for GST registration for small businesses. Those units having aggregate annual
turnover more than Rs 20 lakhs (Rs. 10 lakhs in certain cases) in case of supplier of
services and Rs. 40 lakhs (Rs. 20 lakhs in certain cases) in case of supplier of
goods have be registered under GST. Unlike multiple registrations under different
tax regimes earlier, a single registration is needed under GST in one State. An
additional benefit under Composition scheme has also been provided for
businesses with aggregate annual turnover up to Rs 1.5 crore (Rs. 75 lakhs in
certain cases) in case of supplier of goods and restaurant services and Rs. 50 lakhs
in case of supplier of services. With the creation of a seamless national market
across the country, small enterprises will have an opportunity to expand their
national footprint with minimal investment.

14.4 Benefits to agriculture and Industry: GST will give more relief to industry,
trade and agriculture through a more comprehensive and wider coverage of input
tax set-off and service tax set-off, subsuming of several Central and State taxes in
the GST and phasing out of CST. The transparent and complete chain of set-offs
which will result in widening of tax base and better tax compliance may also lead
to lowering of tax burden on an average dealer in industry, trade and agriculture.

14.5 Benefits for common consumers: With the introduction of GST, the
cascading effects of CENVAT, State VAT and service tax will be more
comprehensively removed with a continuous chain of set-off from the producer`s
point to the retailer`s point than what was possible under the prevailing CENVAT
and VAT regime. Certain major Central and State taxes will also be subsumed in



                                                                               49 | 58
GST and CST will be phased out. Other things remaining the same, the burden of
tax on goods would, in general, fall under GST and that would benefit the
consumers.

14.6 Promote Make in India: GST will help to create a unified common
national market for India, giving a boost to foreign investment and Make in India
campaign. It will prevent cascading of taxes and make products cheaper, thus
boosting aggregate demand. It will result in harmonization of laws, procedures and
rates of tax. It will boost export and manufacturing activity, generate more
employment and thus increase GDP with gainful employment leading to
substantive economic growth. Ultimately it will help in poverty eradication by
generating more employment and more financial resources. More efficient
neutralization of taxes especially for exports thereby making our products more
competitive in the international market and give boost to Indian Exports. It will
also improve the overall investment climate in the country which will naturally
benefit the development in the states. Uniform CGST & SGST and IGST rates will
reduce the incentive for evasion by eliminating rate arbitrage between neighboring
States and that between intra and inter-State supplies. Average tax burden on
companies is likely to come down which is expected to reduce prices and lower
prices mean more consumption, which in turn means more production thereby
helping in the growth of the industries. This will create India as a Manufacturing
hub.

14.7 Ease of Doing Business: Simpler tax regime with fewer exemptions along
with reduction in multiplicity of taxes that are at present governing our indirect tax
system will lead to simplification and uniformity. Reduction in compliance costs as
multiple record-keeping for a variety of taxes will not be needed, therefore, lesser
investment of resources and manpower in maintaining records. It will result in


                                                                                50 | 58
simplified and automated procedures for various processes such as registration,
returns, refunds, tax payments. All interaction shall be through the common GSTN
portal, therefore, less public interface between the taxpayer and the tax
administration. It will improve environment of compliance as all returns to be filed
online, input credits to be verified online, encouraging more paper trail of
transactions. Common procedures for registration of taxpayers, refund of taxes,
uniform formats of tax return, common tax base, common system of classification
of goods and services will lend greater certainty to taxation system.

15. EXPERIENCE OF REGISTRATION, RETURN FILING &
   REVNUE:

15.1   Registration & Returns Snapshot:

 S.                                                               As on 30th June,
                               Details
 No.                                                                   2019


   1. No. of transited (migrated) taxpayers                             66,25,077

   2. Total No. of new applications received for registration            85,70,881


   3. No. of applications approved                                       72,58,894


   4. No. of applications rejected                                       12,60,462

                                                                        1,38,83,971
   5. Total No. of taxpayers; new + migrated (1 + 3)

      No. of taxpayers who have opted for composition                   17,60,779
   6. scheme


   7. No. of GSTR-3B returns filed for July, 2017                        65,91,592




                                                                                 51 | 58
S.                                                      As on 30th June,
                           Details
No.                                                          2019


 8. No. of GSTR-3B returns filed for August, 2017          71,81,706


 9. No. of GSTR-3B returns filed for September, 2017       75,31,709


 10. No. of GSTR-3B returns filed for October, 2017        72,90,864


 11. No. of GSTR-3B returns filed for November, 2017       73,86,672


 12. No. of GSTR-3B returns filed for December, 2017       74,73,816


 13. No. of GSTR-3B returns filed for January, 2018        75,94,141


 14. No. of GSTR-3B returns filed for February, 2018       77,21,477


 15. No. of GSTR-3B returns filed for March, 2018          78,34,743


 16. No. of GSTR-3B returns filed for April, 2018          79,13,649


 17. No. of GSTR-3B returns filed for May, 2018            80,59,421


 18. No. of GSTR-3B returns filed for June, 2018           81,66,076


 19. No. of GSTR-3B returns filed for July, 2018           82,63,212


 20. No. of GSTR-3B returns filed for August, 2018         83,59,366


 21. No. of GSTR-3B returns filed for September, 2018      84,35,694


 22. No. of GSTR-3B returns filed for October, 2018        84,89,963




                                                                    52 | 58
S.                                                     As on 30th June,
                            Details
No.                                                         2019


 23. No. of GSTR-3B returns filed for November, 2018      84,07,516


 24. No. of GSTR-3B returns filed for December, 2018      84,59,155


 25. No. of GSTR-3B returns filed for January, 2019       84,71,583


 26. No. of GSTR-3B returns filed for February, 2019      84,80,221


 27. No. of GSTR-3B returns filed for March, 2019         83,90,708


 28. No. of GSTR-3B returns filed for April, 2019         81,40,641


 29. No. of GSTR-3B returns filed for May, 2019           80,13,501


 30. No. of GSTR-3B returns filed for June, 2019          75,79,038


 31. No. of GSTR 1 returns filed for July, 2017           61,22,716

 32. No. of GSTR 1 returns filed for August, 2017         25,77,170

 33. No. of GSTR 1 returns filed for September, 2017      69,59,392

 34. No. of GSTR 1 returns filed for October, 2017        26,62,397

 35. No. of GSTR 1 returns filed for November, 2017       27,08,655

 36. No. of GSTR 1 returns filed for December, 2017       70,75,096

 37. No. of GSTR 1 returns filed for January, 2018        27,21,864




                                                                   53 | 58
S.                                                     As on 30th June,
                            Details
No.                                                         2019


 38. No. of GSTR 1 returns filed for February, 2018       27,36,103

 39. No. of GSTR 1 returns filed for March, 2018          73,10,507

 40. No. of GSTR 1 returns filed for April, 2018          28,74,669

 41. No. of GSTR 1 returns filed for May, 2018            29,04,310

 42. No. of GSTR 1 returns filed for June, 2018           75,34,721

 43. No. of GSTR 1 returns filed for July, 2018           29,41,650

 44. No. of GSTR 1 returns filed for August, 2018         29,46,818

 45. No. of GSTR 1 returns filed for September, 2018      76,90,704

 46. No. of GSTR 1 returns filed for October, 2018        29,51,630

 47. No. of GSTR 1 returns filed for November, 2018       29,34,152

 48. No. of GSTR 1 returns filed for December, 2018       76,20,357

 49. No. of GSTR 1 returns filed for January, 2019        28,99,216

 50. No. of GSTR 1 returns filed for February, 2019       28,47,353

 51. No. of GSTR 1 returns filed for March, 2019          70,19,590

 52. No. of GSTR 1 returns filed for April, 2019          26,69,680




                                                                   54 | 58
S.                                                          As on 30th June,
                             Details
No.                                                              2019


  53. No. of GSTR 1 returns filed for May, 2019                25,30,548

  54. No. of GSTR 1 returns filed for June, 2019               50,79,328

  55. No. of GSTR 2 returns filed for July, 2017               25,72,552

      No. of GSTR 4 returns filed for quarter July-
  56. September, 2017                                          10,15,580

      No. of GSTR 4 returns filed for quarter October-
  57. December, 2017                                           15,25,609

      No. of GSTR 4 returns filed for quarter January-
  58. March, 2018                                              15,83,499

      No. of GSTR 4 returns filed for quarter April-June,
  59. 2018                                                     15,58,692

      No. of GSTR 4 returns filed for quarter July-
  60. September, 2018                                          15,20,285

      No. of GSTR 4 returns filed for quarter September-
  61. December, 2018                                           14,67,106

      No. of GSTR 4 returns filed for quarter January-
  62. March, 2019                                              13,78,433



15.2   Revenue Collection Snapshot:
S. No. Revenue Collected in the Month of Amount (in Rs. Thousand crore)



                                                                        55 | 58
S. No. Revenue Collected in the Month of Amount (in Rs. Thousand crore)
  1.               July, 17                         21,572
  2.              August, 17                        95,633
  3.            September, 17                       94,064
  4.              October, 17                       93,333
  5.            November, 17                        83,780
  6.             December, 17                       84,314
  7.              January, 18                       89,825
  8.             February, 18                       85,962
  9.              March, 18                         92,167
  10.              April, 18                        1,03,458
  11.              May, 18                           94,016
  12.              June, 18                          95,610
  13.              July, 18                          96,483
  14.             August, 18                         93,960
  15.           September, 18                        94,442
  16.             October, 18                       1,00,710
  17.           November, 18                         97,637
  18.            December, 18                        94,726
  19.             January, 19                       1,02,503
  20.            February, 19                        97,247
  21.             March, 19                         1,06,577

  22.              April, 19                        1,13,865

  23.              May, 19                          1,00,289


                                                                  56 | 58
S. No. Revenue Collected in the Month of Amount (in Rs. Thousand crore)
    24.                 June` 19                               99,939

    25.                 July` 19                               1,02,083

    26.                  Total                                23,34,195



16. CHALLENGES & FUTURE AHEAD:

16.1 Any new change is accompanied by difficulties and problems at the outset.
A change as comprehensive as GST is bound to pose certain challenges not only
for the government but also for business community, tax administration and even
common citizens of the country. Some of these challenges relate to the
unfamiliarity with the new regime and IT systems, legal challenges, return filing
and reconciliations, passing on transition credit. Lack of robust IT infrastructure
and system delays makes compliance difficult for the taxpayers. Many of the
processes in the GST are new for small and medium enterprises in particular, who
were not used to regular and online filing of returns and other formalities.

16.2 Based on the feedback received from businesses, consumers and taxpayers
from across the country, attempt has been made to incorporate suggestions and
reduce problems through short-term as well as long-term solutions. After rectifying
system glitches, E-way bill for inter-State movement of goods has been
successfully implemented from 01.04.2018. As regards intra-State supplies, option
was given to States to choose any date on or before 03.06.2018. All States have
notified e-way bill rules for intra-State supplies last being NCT of Delhi where it
was introduced w.e.f. 16.06.2018. A total of 37.12 crore e-way bills for inter-State
movement and 3.17 crore for intra-State movement have been generated till
31.05.2019.


                                                                               57 | 58
16.3 NAA has initiated investigation into various complaints of anti-profiteering
and has passed orders in some cases to protect consumer interest.

16.4 To expedite sanction of refund, electronic filing of refunds, along with all
supporting documents/invoices, has been enabled on the common portal.
Clarificatory Circulars and notifications have been issued to guide field formations
of CBIC and States in this regard. The government has put in place an IT grievance
redressal mechanism to address the difficulties faced by taxpayers owing to
technical glitches on the GST portal.

16.5 The introduction of GST is truly a game changer for Indian economy as it
has replaced multi-layered, complex indirect tax structure with a simple,
transparent and technology­driven tax regime. It will integrate India into a single,
common market by breaking barriers to inter-State trade and commerce. By
eliminating cascading of taxes and reducing transaction costs, it will enhance ease
of doing business in the country and provide an impetus to Make in India
campaign. GST will result in ONE NATION, ONE TAX, ONE MARKET.

                                        *****
                Note: This write-up is for education purposes only




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