Registration requirements under Model GST Law, 2016

1. Registration requirement under GST is linked to aggregate turnover.

2. Aggregate turnover means aggregate value of all taxable , non taxable, exempt supplies and exports of goods and services of a person having same PAN to be computed on all India basis.

3. If aggregate turnover in a year exceeds 9 lakhs (4 Lakhs for North East states including Sikkim) then every supplier making taxable supplies from a State shall get himself registered in that state.

4. No registration required if aggregate turnover consists of goods and services not liable to tax.

5. Existing dealers other than input service distributor  to follow prescribed procedure and need not get registered afresh under GST.

6. Following persons need to get regd compulsorily irrespective of aggregate turnover :

A. Persons making inter state taxable supply

B. Casual taxable person*

C. Person liable to tax under reverse charge

D. Non resident taxable persons

E. Persons who supply goods and/or services on behalf of other registered taxable persons

F. Persons who supply goods and/or services other than branded services through an e- commerce operator

G. Every e -commerce operator

H. An aggregator

7. Other persons liable to compulsory registration

A. Person required to deduct tax

B. Input service distributor

C. Notified persons

8. Every person liable to registration in a state shall apply as such within 30 days of becoming liable.

9. Separate registration for different business verticals may be obtained.

10. Voluntary registration is also allowed.

* As per Section 2(16)

“casual taxable person” means a person who occasionally undertakes transactions involving supply or acquisition of goods and/or services in the course or furtherance of business whether as principal, agent or in any other capacity, in a taxable territory where he has no fixed place of business.

TCS on Motor Vehicles wef 01.06.2016

Every person, being a seller, who receives any amount as consideration for sale of a motor vehicle of the value exceeding ten lakh rupees, shall at the time of receipt of such amount, collect from the buyer, a sum equal to one percent of the sale consideration as income tax.

In the earlier provision TCS was only collected on tendu leaves, scrap, jwellery, bullion, parking In recent years, the scope of TCS is being extended in an effort to curb tax evasion and black money transactions. In 2012, certain transactions affecting customers—receipts in cash, for sale of bullion exceeding Rs.2 lakh, and of jewellery exceeding Rs.5 lakh—was brought within its ambit. In this Budget, from 1 June 2016,  The transactions are sale of a motor vehicle of value exceeding Rs.10 lakh, and receipt of money for sale of goods or provision of services exceeding Rs.2 lakh. In such cases, besides the sale price, the seller is required to collect an additional 1% from the purchaser, and pay it to the government.

This provision relating to vehicles applies not only to businesses that sell goods or provide services, but to all types of sellers. Even a salaried employee who sells a car for more than Rs.10 lakh, would need to collect TCS. Even a vehicle manufacturer selling vehicles to dealers, and a dealer selling those vehicles to customers, would need to collect TCS.

It would also apply to sale to all buyers, with certain exceptions. In case of sale of vehicles, government departments, public sector undertakings, clubs, and some others are excluded, and do not have to pay TCS. There is also an exclusion for a retail buyer purchasing goods for personal consumption. It may be possible to claim that a retail buyer of a car, buying the car for his personal use, does not have to pay the TCS.

However, for the purchase of goods or services exceeding Rs.2 lakh in cash, these exclusions would not apply.

The use of the term “motor vehicle” would include all types of vehicles—two-wheelers (such as high-end motorcycles), motor cars, SUVs, trucks and buses. Second hand sales would also be subject to TCS, if the sale value exceeds Rs.10 lakh.

Q.1   If full value of Sales Consideration received through cheque or mode other than Cash, whether TCS provisions will be applicable.

A.1    Yes still, the provisions will be applicable, particularly this section had covered every mode of receipt and therefore receipt can be any mode for an Invoice value exceeding Rs. 10,00,000, provisions will be applicable.

Q.2   If motor vehicle sold of value Rs. 10,00,000/- whether TCS provisions will be applicable? 

A.2    Based on the reading of the provisions, it is inferred that TCS Provision will not be applicable, as act uses the word exceeding Rs. Ten lakh, however not include Rs. Ten lakh.

Act – “….value exceeding ten lakh rupees”.

Q.3   Whether TCS to be collected, if Motor vehicle of value exceeding Rs. 10,00,000 purchased for personal consumption from Retail Buyer? 

Yes, still Tax is to be collected at Source; as definition of Buyer isamended for clause VII in Bill passed in Lok Sabha, which specifically covers everyone as buyer, no one is excluded from Scope.

Act – “ sub –section (1D) or (1F) means a person who obtains in any sale, goods/services of the nature specified in the said sub-section” – Explanation 1.

Q.4   Collection of TCS to be on Receipt basis or on Invoice basis in case Motor vehicle sold of value more than Rs. 10,00,000? 

A.4    Collection of TCS to be on Receipt basis; the Finance Bill, 2016 as passed by the Lok Sabha provides that tax shall be collected on sale of motor vehicle only at the time of receipt of consideration. Earlier law was tax to be collected at source on date or receipt or invoice, whichever is earlier, now amended.

Act – “ Every person being a seller,…………….at the time of receipt of such amount, collect from the buyer…………” – Sub Section 1F.

Q.5   Limit of Rs. 10,00,000/- will be considered on amount inclusive of Tax or exclusive of Tax?

A.5       For Limit, amount will be considered inclusive of VAT i.e. Sales Consideration.

Q.6   Rate of 1% for collection of TCS to be charged on Ex-showroom Price or On-Road Price? 

A.6    TCS to be collected on Ex-showroom Price i.e. again on Sale Consideration (the Invoice amount, which include VAT)

Act – “…….a sum equal to one percent of the Sale Consideration as income tax”.

Q.7      Whether TCS to be collected only on sale of Passenger vehicle? 

A.7    For above question, answer is pessimistic; TCS must be collected on “sale of motor vehicle value exceeding Rs. Ten Lakh”, not just passenger vehicle. From the budget speech, it was perceived that it would be implemented only on passenger vehicles priced above Rs 10 lakh, but what has come prima facie in the language of the approved budget (Finance Bill 2016), TCS (tax collection at source) is applicable on all types of motor vehicles including trucks, buses, two-wheelers and cars sold by manufacturers, exports, dealers and government.

 

Q.8   From which date TCS on Sale of Motor Vehicle of value exceeding Rs. Ten Lakh is applicable? 

A.8       It is applicable from 1^st June, 2016.

Q.9   In case Invoice generated before applicability of law and amount received on and after 1st June, 2016; whether TCS provision will be applicable? 

A.9    No liability arises to collect TCS; as event (Sale of Car) arises already before applicability of law.

Example – Car Invoice generated on 25^th May, 2016 (Event arises before 1^st June, 2016) of Rs. 11,00,000 and Rs. 1,00,000  received on 5^th June, 2016 (receipt after or in 1^st June, 2016); no need to collect TCS only collect Rs. 1,00,000/-.

Q.10 In case complete invoice amount of Motor Vehicle, received before June, 2016 and Invoice generated on or after 1^st June, 2016; whether liability to collect TCS arises? 

A.10  Yes, liability to collect TCS arises, as event – generation of invoice is during the period of applicability of law. From customer amount of TCS is to be collected.

Example – Car’s complete invoice amount Rs. 11,00,000/- received on 25^th May, 2016 and invoice generated on 5^th  June, 2016, TCS to be collected from customer of Rs. 11,000 (1% of Rs. 11,00,000)

Q.11    Whether Manufactures will also collect TCS?

A.11     Yes, Manufacturers will also collect TCS from Dealers; as everyone is covered.

Q.12    Whether supplier will also collect TCS? 

A.12     Yes, Suppliers will also collect TCS.

Q.13    Whether Inter Dealer Seller will also collect TCS? 

A.13     Yes, in case of Inter dealer Sale TCS will be collected.

Q.14 If Ex-showroom Price of motor vehicle exceeds Rs. 10,00,000 but after giving discount, value is less than or equal to Rs. 10,00,000; whether TCS is to collected? 

A.14  Based on the reading of the provisions, it is inferred that No need to collect TCS, as liability of TCS arises only if sales consideration (invoice amount) exceeds Rs. 10,00,000, but after givingdiscount to customers the invoice amount do not exceed Rs. 10,00,000 and hence no liability of TCS arises.

If discount is given through Credit Note, then liability of TCS collection arises, even though amount to be received by the seller do not exceed Rs. 10,00,000/- (because the seller Invoice amount exceeds Rs. 10,00,000). So only and only if, discount is given on invoice then such discount will be considered.

Q.15 If bill raised, for two different parts of motor vehicle (say in case of trucks for – chasis and body) as single invoice, whose value exceeds Rs. Ten Lakh, whether TCS provision will be applicable? 

A.15  Yes, TCS is to be collected, as the seller create a single invoice, it can be for two different parts of motor vehicle. So even though the individual value do not exceed Rs. Ten Lakhs, but if the invoice amount exceeds Rs. 10,00,000, then TCS is to be collected from customers.

Q.16 Amount of Sale Consideration received in parts/stages, whether TCS to be collected on 1st receipt itself or in stages? 

A.16  No regards to amount received in stages or in one pay, TCS to be collected at the time of first receipt itself.

Q.17    Whether amount of TCS to be collected at the time of Receipt of Booking Amount? 

A.17     Based on the reading of the provisions, it is inferred that; yes, on first receipt itself the TCS to be collected, which means TCS is to be collected with booking amount itself.

But practically, it’s not possible to collect TCS on full amount of Sales consideration, at the time ofbooking motor vehicle of value exceeding Rs. 10,00,000, with booking amount itself; thereforeconsidering practical life, amount on which 1% to be charged for collection of TCS is Booking Amount.

Further, on every second receipt of sales consideration full amount of Tax can be collected at source less already received at the time of booking a motor vehicle.

- See more at: http://taxguru.in/income-tax/tcs-on-motor-vehicles-wef-01-06-2016.html#sthash.0oWNAVkN.dpuf

Services by Government to Business Entity

Effects Of Changes In Negative List On Services Provided By Government To Business Entity (Amendment Made By Finance Act 2015 Applicable From 01.04.2016)

1. Amendment in Negative list:

As per Sec. 66D(a), services provided by government or a Local Authority are covered in negative list excluding 4 services, one of them was “Support services provided to business entities”. Finance Act 2015, has substituted the word “”support” with word “ANY”. The aforesaid amendment if effective notified on 01.04.20 16. Therefore with effect from 01.04.20 16 if government or local authority provides any services to business entities then on all such services, service tax would be leviable, except the services that are specifically exempted, or covered by any another entry in the Negative List.

2. Amendment in Service Tax Rule:

As per section 68(2) person liable to pay service tax shall be the person notified under rule 2(1)(d) of Service Tax Rules 1994. Rule 2(1)(d) specifies the cases where the service tax is required to be paid by service receiver under the reverse charge mechanism(either under full reverse charge or under partial reverse charge).

With respect to the cases mentioned in section 66D(a), business entities are required to pay 100% service tax under full reverse charge. Rule 2(1)(d) says that in

respect of services provided or agreed to be provided by Government or local authority “by way of support services” excluding, –

(1) renting of immovable property, and

(2) services specified in sub-clauses (i), (ii) and (iii) of section 66D(a)

Owing to amendment in section 66D(a) words “by way of support service” has been omitted with effect from 01.04.2016. Therefore from 01.04.2016 business entities are required to pay service tax on all the services provided by government or local authority, except the services that are specifically exempted, or covered by any another entry in the Negative List.

3. Amendment in Point of Taxation Rule:

Rule 7 of determines point of taxation in case of where the service tax is payable by service recipient i.e. the case of reverse charge. Till now as per Rule 7, where the government / local authority provides service to business entities, service tax shall be payable by business entities at the time of making payment to government or local authority.

With effect from 13.04.2016 government has inserted a proviso to Rule 7, through notification no. 24/2016, which add provides as follow –

Provided also that in case of services provided BY the Government or local authority  

TO any business entity, the point of taxation shall be the EARLIER of the dates on which –

(a) any payment, part or full, in respect of such service becomes due, as specified in the invoice, bill, challan or any other document issued by the Government or local authority demanding such payment; or

(b) payment for such services is made.

Therefore after amendment, with effect from 13.04.20 16 point of taxation in respect of ANY services provided by government or local authority to business entities, shall be earlier of –

– date on which full or part payment becomes due or

– actual date of payment.

4. Amendment in Service Tax Valuation Rule:

As per rule 6(2), taxable value of service shall not include Interest on delayed payment of any consideration for the provision of services or sale of property, whether movable or immovable, which simply means service tax shall not be charged on interest part when the payment of consideration is delayed due to any reason.

There are certain cases where government defers the payment of consideration and charges interest or other amount on such deferred payment as a part of service scheme or agreement. Due to Rule 6(2), even in those cases government will not be able to charge service tax on such interest since it is to be excluded from taxable value of service.

In order to include such payment in the value of taxable service notification no. 2 3/2016 has been issued with effect from 13.04.2016. Therefore from 13.04.2016 even interest part shall be included in taxable value of service, where any service provided BY Government or a local authority TO a business entity and where payment for such service is allowed to be deferred on payment of interest or any other consideration.

5. Amendment in Mega Exemption:

New Entry no. 48 with effect from 01.04.2016, has been inserted in mega exemption notification no. 2 5/2012 providing that services provided by Government or a local authority to a business entity with a turnover up to rupees 10 lakh in the preceding financial year. Thus effectively only those business entities will be required to pay service tax whose turnover of previous financial year exceeds Rs. 10 Lakhs.

There were doubts that the sovereign functions of the Government such as mines allotment, spectrum auction, licensing, registration etc. may also come under the service tax net on account of the said amendment. However, this is not the intention of the legislature. Therefore in order to clarify, further amendments has been made in mega exemption 25/2012 by inserting entries no. 54 to 63, through notification no. 22/2016 with effect from 13.04.2016 which are as follow –

54. Services provided by Government or a local authority to another Government or local authority:

Provided that nothing contained in this entry shall apply to services specified in sub-clauses (i),(ii) and (iii) of clause (a) of section 66D of the Finance Act, 1994;

55. Services provided by Government or a local authority by way of issuance of passport, visa, driving licence, birth certificate or death certificate;

56. Services provided by Government or a local authority where the gross amount charged for such services does not exceed Rs. 5000/-

Provided that nothing contained in this entry shall apply to services specified in sub-clauses (i), (ii) and (iii) of section 66D(a).

Provided further that in case where continuous supply of service, as defined in clause (c) of rule 2 of the Point of Taxation Rules, 2011, is provided by the Government or a local authority, the exemption shall apply only where the gross amount charged for such service does not exceed Rs. 5000/- in a financial year;

57. Services provided by Government or a local authority by way of tolerating non-performance of a contract for which consideration in the form of fines or liquidated damages is payable to the Government or the local authority under such contract.

58. Services provided by Government or a local authority by way of-

(a) registration required under any law for the time being in force;

(b) testing, calibration, safety check or certification relating to protection or safety of workers, consumers or public at large, required under any law for the time being in force.

59. Services provided by Government or a local authority by way of assignment of right to use natural resources to an individual farmer for the purposes of agriculture.

60. Services by Government, a local authority or a governmental authority by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution.

61. Services provided by Government or a local authority by way of assignment of right to use any natural resource where such right to use was assigned by the Government or the local authority before the 1^st April, 2016:

62. Services provided by Government or a local authority by way of allowing a business entity to operate as a telecom service provider or use radiofrequency spectrum during the financial year 2015-16 on payment of licence fee or spectrum user charges, as the case may

63. Services provided by Government by way of deputing officers after office hours or on holidays for inspection or container stuffing or such other duties in relation to import export cargo on payment of Merchant Overtime charges (MOT).

(Entry No. 54 to 63 inserted w.e.f. 13.04.2016)

- See more at: http://taxguru.in/service-tax/services-government-business-entity-effect.html#sthash.ytBGbieo.dpuf