Tag Archives: GST

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AJSH & Co LLP: Getting GST Ready

Midson Entrepreneur Network is a platform for entrepreneurs to collectively grow, learn and collaborate. Recently, a Diwali Special Meeting has been organized to bring together the trusted people and create Networking, Learning and Business Opportunities.

Ankit Jain, Director of AJSH & Co LLP, presented a talk on GST – Implementation Challenges & Remedies. The presentation covered the important aspects of the recent changes facilitated by GST council, GST on Services from Goods Transport Agency (GTA), GST on Job Work, Sale of Pre GST stock, GST on Exports, E-way Bill, Reverse Charge Mechanism, Increased Compliances and Challenges, Other Challenges, etc.

Mr. Jain guided the mass to combat the initial challenges of GST implementation by taking professional consultancy, using appropriate software for return filing and get the Get LOU issued for exporting without payment of IGST.

Below are the few glimpses of the meeting held in Caspia Hotel (Premier Inn):

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GST on Goods Transport Agency

GST for Goods Transport Agency

Transport of goods by road is the most commonly used mode of transportation for businesses which supply goods. This transportation by road is facilitated either by a Goods Transport Agency (GTA) or common carriers such as autorickshaw or courier agencies. In this blog, we will understand what is meant by a Goods Transport Agency (GTA) and the GST rates for transportation service provided by a Goods Transport Agency. This is the first blog in the series wherein, we will understand the various tax provisions with respect to services provided by Goods Transport Agencies and the tax impact on persons taking their services.

 

GST Registration
GST registration is mandatory in India for entities having more than Rs. 20 lakhs of aggregate turnover in a year (Rs. 10 lakhs in Special Category states). However, some of the supplies provided by a goods transport agency would be liable for GST under reverse charge basis. In a reverse charge transaction, the recipient of the goods is made liable for payment of GST. Hence, while providing services, goods transport agency must be aware of the reverse charge mechanism and raise invoice accordingly.

 

What is a GTA?

As per Notification No. 11/2017-Central Tax (Rate) dated 28th June, 2017, “goods transport agency” or GTA means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called.

This means, while others might also hire out vehicles for goods transportation, only those issuing a consignment note are considered as a GTA. Thus, a consignment note is an essential condition to be considered as a GTA.

 

What are the services provided by a GTA?

The service includes not only the actual transportation of goods, but other intermediate/ancillary service provided such as-

  • Loading/unloading
  • Packing/ unpacking
  • Trans-shipment
  • Temporary warehousing etc.
  • If these services are included and not provided as independent activities, then they are also covered under GTA.

 

What will be the rate of Tax in Case of the Goods Transport Agency (GTA Services) under GST Per se?

Looking at the entry no. 3, Services of goods transport agency (GTA) in relation to transportation of goods [other than used household goods for personal use]. The rate mentioned in the rate schedule is 5% (without ITC)

Entry no. 4 of the rate schedule prescribed says that Services of goods transport agency in relation to transportation of used household goods for personal use. The rate prescribed is 5% even in this case.

Important point to highlight here is that the transporter providing any other services like “Right to use” or “Leasing” of the vehicles, he will have to review the rates separately and not take the 5% as his rate.

This means that generally the rate is 5% for the GTA under GST. The point to be highlighted is that NO ITC is available to the transporter in this case.

 

Persons Required to Pay GST on Reverse Charge
When taking the services of a goods transport agency, the following types and class of entities would be required to pay GST on reverse charge basis.

  • Factories registered under the Factory Act.
  • Societies registered under the Society Act.
  • Any co-operative society.
  • Any person who is registered under GST.
  • Any Body Corporate (Company or LLP)
  • Any partnership, if registered or not as well as AOP.

 

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EXPORT WITHOUT PAYMENT OF IGST

Export Without Payment of IGST

Entities involved in export of goods or services having GST Registration are allowed to export goods without payment of IGST by furnishing an export bond or Letter of Undertaking (LUT) in Form GST RFD-11.

PROCEDURE FOR APPLICATION OF LETTER OF UNDERTAKING NUMBER:

According to the Central Goods and Services Tax Rules, 2017 any registered person exporting goods without payment of integrated tax is required to furnish a bond or a Letter of Undertaking (LUT) in FORM GST RFD-11. The following types of persons registered under GST will be allowed to submit a letter of undertaking and undertake export transactions.

  • Status holder as specified in the Foreign Trade Policy; or
  • Entities that have received the due foreign inward remittances amounting to a minimum of 10% of the export turnover, which should not be less than one crore rupees, in the preceding financial year, and he has not been prosecuted for any offence under the Central Goods and Services Tax Act, 2017 (12 of 2017) or under any of the existing laws in case where the amount of tax evaded exceeds two hundred and fifty lakh rupees.

Letter of Undertaking will be valid for a period of twelve months from the date of submission. If the exporter fails to comply with the conditions of the Letter of Undertaking, the privileges could be revoked and the exporter would be required to furnish a bond.

We are noting below the list of documents that the officials are usually asking at the time of submission ofLetter of Undertaking for export without payment of IGST.

  • Letter of Undertaking (on a stamp paper of Rs 100-Signed and stamped by directors/partners/proprietor)
  • GST RFD-11 (on letter head-Signed and stamped by directors/partners/proprietor)
  • Declaration of no offences under CGST Act, 2017 or any of the existing laws(on letter head-Signed and stamped by directors/partners/proprietor)
  • Foreign Inward Remittance Certificate/ Bank Realization Certificate/ Remittance Advices and EEFC Statement for preceding Financial Year
  • Bank Certificate stating that inward remittance is more than 1 crore
  • CA Certificate confirming the figures of preceding year Export Turnover and Inward Remittance
  • Copy of PAN of company/firm (Signed and stamped by directors/partners)
  • Memorandum and Articles of Association/ Partnership Deed(Signed and stamped by directors/partners)
  • Copy of Importer Exporter Code Certificate(Signed and stamped by directors/partners/proprietor)
  • Copy of Certificate of Provisional Registration in FORM GST REG – 25(Signed and stamped by directors/partners/ proprietor)
  • ID Proofs of directors/partners/proprietor (PAN and Aadhar- Self Attested)
  • Photo ID Proof of Witnesses(Self Attested)
  • Rent Agreement and NOC from owner for using the premises. (If rented)
  • Conveyance deed-If owned (Self Attested)
  • Proof of address of the premises- Utility Bill/ House Tax Receipt(Self Attested)
  • Copy of Export Invoice(Signed and stamped by directors/partners/proprietor)
  • Affidavit regarding fulfillment of conditions of Notification No. 16/2017-CT dated 07/07/2017 (on a stamp paper of Rs 100- Signed and stamped by directors/partners/proprietor)

We can help you in getting the Letter of Undertaking Number issued at the earliest. Please contact  AJSH & Co LLP for further assistance.

 

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GST and its Impact on Indian Economy

Goods and service tax (GST)

The GST is a new concept that simplifies the giant tax structure by supporting and enhancing the economic growth of a country. It is a comprehensive term levy on manufacturing, sale and consumption of goods and service at a national level.

Goods and service tax bill or GST also referred to as the constitution (one hundred and twenty-second Amendment) bill 2014 initiate a value added tax to be implemented on national level. In India, GST will be an indirect tax at all the stages of production to bring about uniformity in the system.

 

Positive impact of GST on India’s GDP

A comprehensive and robust tax structure that will bring the current set of indirect taxes like VAT, sales tax, excise duty etc. under one umbrella and will be instrumental in creating a seamless experience across all states. By bringing the varied tax structures under one net, it is also expected to reduce the cost of transaction for various business entities that had to comply with multiple taxes. We are well aware of the fact that transport and logistics industry is pivotal to the growth of Indian economy as there are lot of products that are delivered from one part of the country to another on a daily basis. So, it is assumed that implementation of a decent GST structure will eliminate other taxes and the export of goods and services will become economical.

 

Negative impacts of GST

There can be no gain without pain and that may be especially true when it comes to GST. As about 160 countries overhauled their indirect tax systems, they confronted numerous challenges. Latecomer India is unlikely to escape some havoc.

  • Service tax rate 15% is presenting charged on the services, so, if GST is introduced at a higher rate which is likely to be seen in near future, the cost of services will rise. In simple words, all the services like telecom,, banking, airlines, etc will become expensive.
  • Increased cost of services means an add to your monthly expenses.
  • You will have to reschedule your budget to bear additional tax
  • Increase in inflation might be seen initially
  • Being a new tax, it will take some time for the people to understand it completely, its actual implications can be seen only when the rate of tax is determined.
  • If the actual benefit is not passed to consumer hand then the seller increase his profit margin, the prices of goods can also see a rising trend.

 

Related Posts:

Goods & Services Tax

Basics that Every One Should Know about GST

How GST Works in India

 

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Tax Department Unveils Draft Rules For Registration Under GST

The government has put out the draft rules for the goods and services tax for discussion ahead of the September 30 meeting of the centre and states to discuss the regulations. In view of the right deadline, the finance ministry has asked for feedback by September 28. Rules relate to registration, invoice and payments, laying down procedures, guidelines and documentation.

The GST council will discuss the rules on September 30, The government has prescribed a largely online process for registration and laid down strict timelines for completing the process. We intend to have these rules approved by GST council in its meeting on 30th September so that business systems can be modified by all revenue.

It’s encouraging to see that the rules largely envisage electronic interactions between the tax authorities and industry with only need-based physical intervention like verification of premises on the application filed for Private company Formation in Gurgaon Indirect tax. Further all the PAN details are to be verified online with CBDT database which is expected to bring larger part of the business in the mainstream.

Your desired name must be included, typically with a corporate identifier, such as Corporation, Incorporated, Company, or an abbreviation, such as Inc. You may want to conduct a preliminarily name available search before submitting the Incorporation documents. If you incorporate online, the company incorporation in gurgaon service you purchase will typically include this. Remembers that the state holds final approval rights to ensure that a name is not already in use or in deceptive similar to one in use.

Much of this had already been explained through the FAQs issued by the finance industry earlier giving industry an advance peak into the details. Rules provide for complete electronic payment of tax and adjustment of credit and a unique ID number will be generated by the common portal for GST transactions for every debit or credit transaction.

 

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