MUMBAI: The Association of Multimodal Transport Operators of India (AMTOI), Federation of Freight Forwarders’ Associations in India (FFFAI), Consolidators Association of India (CAI) and Air Cargo Agents’ Association of India (ACAAI) jointly organised a seminar on "Compliance of GST Rules" on May 5, 2017 here.
It was conducted by Mr K. Vaitheeswaran, a leading Advocate and Tax Consultant. A similar session was subsequently held in Ahmedabad.
In an engrossing presentation, Mr Vaitheeswaran began by elaborating to the full house the modalities of the existing multiple Central and State taxes, before giving an overview of how the Goods & Services Tax (GST) came into being, its various aspects and its impact.
It was pointed out that Article 366 (12A) defines ‘Goods and Services Tax’ to mean any tax on supply of goods, or services or both except taxes on the supply of alcoholic liquor for human consumption. GST, therefore, is a tax on both goods and services across the supply chain and is levied at every stage of supply.
GST in the context of goods as a levy would commence from the manufacturer/producer/trader and will go through the entire supply chain. An effective and efficient GST system would provide for elimination of the cascading effect of taxes.
GST is expected to be implemented by July 1, 2017 or latest by September 1, 2017. He called on the trade to gear up for this major tax reform.
Some of the other key points on GST explained were as follows:
On its relevance, it was pointed out that both Government and industry are keen to implement GST.
Governments are looking at increasing the tax base and tax collections through GST. States are looking at GST as a window for taxing services, while the Centre is looking at GST to go beyond the point of manufacture.
Industry wants GST to eliminate the cascading effect of taxes and considers it as a path breaking tax reform in the field of indirect taxes.
It was stressed that GST is a path breaking tax reform, effecting harmonisation of taxes, eliminating tax as a cost and possibly eliminating unwanted business structures.
However, it will take time to stabilise given that it is not a simple law, has a complex legal structure as well as huge potential for conflict.
• CGST would be a levy by the Central Government through law made by the Parliament.
• SGST would be a levy by each State through law made by State legislature.
• UTGST would be a levy on intra-state supply of goods or services or both.
• IGST would be a levy by the Centre through law made by the Parliament on the supply of any goods and/or services in the course of inter-state trade or commerce.
• IGST would also apply on supply of goods and/or services in the course of import into the territory of India.
• GST Compensation Cess would be a levy by the Central government on inter/intra-state supplies of goods or services or both.
GST on exports
• Exports of goods and services would be zero rated.
• Section 16 of the IGST Act deals with ‘zero-rated supply’.
• Credit of input tax is available.
• Refund of credit for supply of goods or services or both under bond or letter of undertaking without payment of IGST.
• Payment of IGST on supply of goods and or services or both and claim of refund of IGST.
• Supply of goods and/or services to a SEZ developer or a SEZ unit is treated as zero-rated supply.
Service providers under GST regime
• Licensing under Customs Act to continue.
• Registration under Multimodal Transportation Act to continue.
• Customs duty, anti-dumping duty and safeguard duty would continue.
• CVD and SAD would become IGST.
• Both Centre and state will tax service providers.
• Items which are currently not liable to tax may become liable under GST.
• Multifold increase in compliance requirements.
• Where taxable supply is made in different States, registration required in each state.
• Every supplier will have to file details of outward supply online by the 10th of the succeeding month.
• Every supplier will have to file details of inward supply online by the 15th of the succeeding month.
• Matching has to take place to ensure that all the discrepancies are rectified.
• Monthly return has to be filed by the 20th of the succeeding month.
• Annual return to be filed on or before December 31 following the end of Financial Year.
• From 2 service tax returns, service providers will have to go online 37 times in a year.
• In case TDS is applicable, another 12 times in a year.
• In case Input Service Distribution is applicable, another 12 times a year.
• 61 times online per state as against 2 online filings for the whole country in a year.
Air Freight / Sea Freight GST
• Section 12 of IGST applicable when the location of supplier of service and the location of recipient of service is in India.
• Services provided by airline to freight forwarder.
• Services of freight forwarder to exporters.
• In the light of Section 12, international air freight and sea freight is getting taxed under GST both in the hands of the airline/liner and the freight forwarder.
Air Freight / Sea Freight GST 2
• Foreign buyer located outside India.
• Foreign buyer pays freight to freight forwarder located outside India or pays the airline/liner registered in India.
• Airline/liner as a service provider located in India.
• Recipient of service is the freight forwarder outside India or the buyer outside India.
• Section 13 of the IGST becomes applicable.
• Destination of goods is outside India.
• GST not applicable.
• Loss of business to Indian freight forwarders.
• International transportation of goods should be zero rated.
• Ancillary transport services should be zero rated.
• Freight forwarders providing single supply should be zero rated.
• Transportation, freight forwarding and related services for export goods must not be taxed.
• India has adopted a model which taxes international freight whereas countries such as Singapore, Australia, Malaysia, New Zealand do not tax international freight.
• India seeks to implement GST through a massive technology network known as GSTN.
• The Central government and the State Governments’ tax platforms would be integrated.
• GSTN would be the portal through which the GST laws of India would be administered and implemented.
• All registrations will have to be through the GSTN portal and only electronic filing is allowed.
• All payments of taxes are through the GSTN portal and only electronic payments are allowed.
• All details and returns have to be filed through the GSTN portal and only electronic filing is permissible.
• All refund applications, acknowledgements and claims through GSTN portal and through electronic filing.
Key documents in GST
• Tax Invoice containing all relevant particulars prescribed under GST Rules.
• Bill of Supply (supply of exempted goods/services).
• Receipt Voucher (advance payment).
• Supplementary Tax Invoice (revised invoice).
• Credit and Debit Notes.
• ISD invoice/ISD Credit Note.
• Delivery Challan.
Logistics - The opportunity
• Inter-state movement of goods is likely to become free.
• Increase in supply of goods to the customer as against stock transfer.
• Massive changes in procurement pattern.
• Key role for warehouses since depots would come down.
• Key role for logistics solution providers.
• Possibility of increase in import of some goods due to cost reduction on account of IGST credit availability.