GST anti-profiteering body set up

 The government has set up the National Anti-Profiteering Authority amid reports that some companies, particularly restaurants, are not passing on the benefit of the goods and services tax (GST) rate cuts to consumers. B N Sharma, additional secretary in the department of revenue, was on Tuesday appointed chairman of the authority.
Now, guidelines on what exactly constitutes profiteering are awaited. The authority will exist for a period of two years from the date Sharma takes charge.
The authority is mandated to ensure that the benefits of input credit and the reduction in GST rates on specified goods or services are passed on to the consumers by way of a commensurate reduction in prices. The government also named four senior officials as technical members of the authority.
“With the chairman and technical members now having been appointed, the authority becomes functional thereby reassuring consumers of the government’s commitment that GST would result in lower prices of goods and services,” a statement from the finance ministry said.
Govt eases transfer pricing dispute settlement
In a move to reduce litigation and boost investor confidence, the central government has decided to allow access to a bilateral forum for transfer pricing (TP) disputes, for all tax partner countries. The move to accept applications for bilateral advance pricing agreements (APAs) and mutual agreement procedures (MAPs) is expected to benefit a number of multinational companies that are based in important trade partners.
The government has said that even if a tax treaty with another country does not contain the provision of corresponding adjustment in matters of TP, it would still entertain bilateral MAPs &APAs with such a country. This does away with the requirement to amend tax treaties to remove such a deficiency.
ARCs can Now Control Sick Cos
In a move that would allow asset reconstruction companies (ARCs) take management control of sick companies, the Reserve Bank of India has removed the 26% cap on shareholding after conversion of the debt of the borrowing firm under reconstruction into equity.
In a note to ARCs sent late Thursday, the central bank said ARCs that maintain Rs. 100 crore net owned fund consistently and follow good corporate governance would be exempted from the 26% shareholding limit prescribed in 2014.
“This is a brilliant move,” said Vishal Kampani, managing director of JM Financial Group. “Debt resolution will get more traction and we expect banks to be more willing to sell their bad debts,” he said. ARCs are permitted to convert a portion of debt into shares of the borrower company as a measure of asset reconstruction.
Shipping, Airline Cos Add to GST Woes: Exporters Exporters have informed the finance ministry that goods and services tax refunds are getting delayed due to airline and shipping companies not submitting proof of export to customs and mismatches of invoice numbers in shipping bills and GST return forms.
India’s exports dipped for the first time in 15 months in October, falling 1.1% to $23.1billion and are expected to fall further in November as exporters turn away clients and new orders while they get to grips with the new tax regime, which was rolled out on July 1. Last month’s trade deficit widened the most in three years to $14 billion.
The Federation of Indian Export Organisations (FIEO) also said that despite the customs department allowing manual filing of input tax credit refund claims more than 10 days ago, the required application form (RFD-01A) is not available on the GST portal. “Only a fraction of the IGST (integrated GST) claims of July has been paid. The process has not even started for input tax credit,” FIEO director general Ajay Sahai said.
Divestments, GST mopup to lower fiscal deficit pains The success in divestments and encouraging goods and services tax (GST) collections will help the government reduce pressure on the fiscal math, says are port. “Disinvestment drive and GST rollout will reduce pressure on fiscal arithmetic,” domestic rating agency India Ratings said in a report on Monday.
It can be noted that government has reiterated its commitment to narrow down the fiscal deficit to 3.2 per cent for FY18. Frontloading of expenditure, where the Centre has exhausted 96 per cent of the deficit by August, and also a slowdown in growth had put question marks over whether the Centre will be able to meet the fiscal deficit target or not.

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Reverse Charge Mechanism Under GST

Reverse charge is a mechanism under which the recipient of the goods or services is liable to pay the tax instead of the provider of the goods and services. Under the normal taxation regime, supplier collects the tax from the buyer and deposits the same after adjusting the output tax liability with the input tax credit available. But under reverse charge mechanism, liability to pay tax shifts from supplier to recipient.

Concept of reverse charge

The concept of charging tax on a reverse charge basis is not new. Reverse charge mechanism existed in the previous service tax regime. However, the concept of reverse charge on the supply of goods is new.

In the normal course of business, the supplier of goods or services is liable to pay tax on supply, but in the case of reverse charge, the receiver becomes liable to pay tax instead. Thus, if a supplier who is not registered under GST supplies goods to a person who is registered under GST, the receiver pays GST directly to the government.

By way of an earlier notice dated 13 Oct. 2017, the government suspended the applicability of reverse charges on purchases made by registered persons from unregistered persons until 31 March 2018. This implies that a registered person can avail intrastate supplies of goods and/or services from unregistered persons without any daily ceiling, which was previously capped at Rs. 5000.

It is mandatory to register under GST to those liable to pay tax under Reverse Charge Mechanism irrespective of the threshold limit of 20 lakhs and 10 lakhs (North eastern States).

Applicability of Reverse Charge

• In case of services provided by taxi driver or rent a cab operator through electronic commerce operator then GST has to be paid by E-commerce operator;
•  Services through an E-commerce operator for supply of services (Startups like Housejoy shall be liable to collect GST from customers and pay to Government);
•  Unregistered dealer providing supply to the Registered dealer (Here the Registered dealer is liable to pay GST on such supply);
•  Supply of Cashew nuts, Bidi leaves, tobacco leaves by an agriculturist to any registered person, the registered person is liable to pay GST;
• Service of Goods Transport Agency;
• Services provided or agreed to be provided by an individual advocate or firm of advocates by way of legal services, directly or indirectly (Clarified by the Delhi High Court);
• Sponsorship Service received from any person, the liability to pay tax vests with Body corporate or Partnership firm located in taxable territory;
• Services provided by a director of a company or body corporate in such authority of Directorship, the company or body corporate is liable to pay GST;
• In case of services provided by an Insurance Agent, The Person running insurance business is liable to pay GST;
• Nonresident service provider, i.e. in case of imports, the reciepient of services in India would be required to pay such taxes.

Exemptions

In the following circumstances, the reverse charge mechanism shall be exempt: 

• On those Goods & Services which are exempt from GST ;
• Reverse Charge GST doesn’t arise in the case of an interstate supply made by the unregistered supplier (As Interstate supply needs GST registration) ;
• If the total supply of goods and services received from an unregistered person doesn’t exceed Rs.5000 a day.

Thus Reverse Charge Mechanism would boost the indirect tax revenue as well as propel buyers to buy from registered vendors to avoid litigation, disputes, and working capital issues.

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