Draft integrated goods & services law, 2016

On 25.11.2016, Central Board of Excise and Custom has issued DRAFT IGST LAW. IGST Law contains Eleven Chapters and 24 Sections.

1. Inter-State supply of goods and/or services.

As per Section 3, Inter-State Supply of goods or services means any supply where the location of the supplier and the place of supply are in different States. Place of Supply is defined under section from 7 to 10.

In the case of import into India, Supply of goods or services shall be deemed to be Inter-state supply of goods or services.

In the case of when the supplier is located in India (i.e. Export) and the place of supply is outside India then Supply of goods or services shall be deemed to be Inter-state supply of goods or services.

In the case of Supply to a SEZ developer or an SEZ unit OR by a SEZ developer or an SEZ unit then Supply of goods or services shall be deemed to be Inter-state supply of goods or services.

2. Intra-State supply of goods and/or services.

As per Section 4, Intra-State Supply of goods or services means any supply where the location of the supplier and the place of supply are in the same State.

3. Important provisions of this act related to Levy and collection of IGST.

As per Section 5, IGST shall be levied

1. On all Inter-State supply of goods and/or services
2. On the value determined under section 15 of CGST Act, 2016
3. At such rates as may be notified by the CG but not exceeding 28% on the recommendation of Council and collected in such manner as may be prescribed.

In case of Imported Goods

As per proviso to section 5, the IGST on goods imported into India shall be levied and collected in accordance with the provisions of section 3 of the Customs Tariff Act, 1975 and section 12 of the Customs Act, 1962.

Reverse Charge mechanism under IGST

Just like Reverse Charge Mechanism of existing Taxation system, the CG may on recommendation of the Council specify categories of goods and/or services on whose supply tax is payable on reverse charge basis by the recipient of such goods and/or services and all the provisions of this Act related to payment of taxes shall apply on such recipient.

Services through E-Commerce Operator

In addition of aforesaid provisions, The CG may on recommendation of the Council specify categories of services on which tax shall be paid by the electronic commerce operator if such services are supplied through it, and all the provisions of this Act shall apply to such electronic commerce operator as if he is the person liable for paying the tax in relation to the supply of such services

In case where an electronic commerce operator does not have a physical presence in the taxable territory, any person representing such electronic commerce operator for any purpose in the taxable territory shall be liable to pay tax.

FURTHER in case where an electronic commerce operator does not have a physical presence in the taxable territory and also he does not have a representative in the said territory then such electronic commerce operator shall appoint a person in the taxable territory for the purpose of paying tax and such person shall be liable to pay tax.

4. Provisions related to Power to grant exemption from tax as detailed below:

As per Section 6, In case of any exemption granted by CG under section 11 of the CGST Act for intra-State supply of specify categories of goods and/or services shall apply mutatis mutandis to inter-State supply of specify categories goods and/or services.

In case of the public interest, CG exempt generally either absolutely or subject to such conditions as may be specified in the notification, inter-State supply of goods and/or services of any specified description from the whole or any part of the tax.

Further in case of public interest, CG by special order in each case, exempt any goods and/or service from payment of tax, under circumstances of an exceptional nature to be stated in such order.

If CG considers necessary it may clarify the scope or applicability of any notification or order issued under first two cases through further notification and such notification shall be issued at any time within one year from the date of issue of the original notification or order i.e. issued under first two cases and every such explanation shall have effect as if it had always been the part of the original notification or order.

5. Provisions related to Payment of tax, interest, penalty and other amounts

As per Section 11, Taxable person will paid amount for tax, interest, penalty, fee or any other

Amount through online banking subject to such conditions and restrictions as may be prescribed, shall be credited to the electronic cash ledger of such person to be maintained in the manner as may be prescribed. And the amount available in the electronic cash ledger may be used for making any payment towards tax, interest, penalty, fees or any other amount.

Utilization of Input Tax Credit

The utilization of Input Tax Credit (ITC) available in electronic credit ledger for the payment of various taxes i.e. IGST, CGST and SGST as presented below:

Other provision related to cash or credit electronic ledger

The balance in the cash or credit ledger after payment of tax, interest, penalty, fee or any other amount payable under the Act or the rules made thereunder may be refunded in accordance with the related provisions of the CGST Act, 2016.

Electronic Liability Register

All liabilities of a taxable person under this Act shall be recorded and maintained in an electronic liability register as may be prescribed.

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