TAIT conducts Workshop on GST

Trade Association of Information Technology (TAIT) has recently conducted a workshop discussing in detail with Shailesh P. Sethi, Advocate & Founder, SPS Legal, in the area of Indirect Tax Laws.

GST includes all forms of supply of goods and services such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business. For instance, an application which is downloaded by oneself from Google legally will be treated as an import of services for consideration for the furtherance of services.

Shailesh P. Sethi, Advocate & Founder, SPS Legal, said, "GST is not merely a tax reform, it is a fundamental business reform which will change the way business activities are conducted in the country by anyone. The dual structure of GST is the compulsion of federal character of our country and therefore a unified GST across the country is not possible. It will also be applied on bundled services. For instance, if one books a Shatabdi train ticket which includes meal, it is a bundle of supplies. It is a composite supply where the products cannot be sold separately. The one purchasing will not buy just the train meal and not the train ticket. The transportation of passenger is, therefore, the principal supply. Other examples will be dry fruit box, lodging services which come with food and stay package, etc."

Further elaborating on the GST tax regime, he explained that the existing origin based consumption tax such as Central Sales Tax (CST), service tax bill will be a thing of the past with the introduction of GST. Under GST, all transactions involving the inter-state supply of goods and services will be subjected to IGST but with the credit available to the recipient in another state. Presently, CST is not refundable. With a much wider availability of credit or input tax credit, GST is expected to mitigate the cascading effect of tax-on-tax to a large extent. It will help in creating a borderless common national market for goods and services and ensure a smooth movement of goods and services across the country.

As GST will subsume all major indirect taxes (central & state), the taxpayer will be relieved of the burden to deal with multiple tax window as is the case at present. Under GST, exports will be zero rated with a full refund of the GST paid by the exporters on their procurement of goods and services for export activities. GST will cost heavy compliance burden on the taxpayers requiring a registration in every state from where taxable activities are carried out. Every taxpayer, manufacturer, service provider, trader will be required to file minimum three returns for every registration held by him.

Every taxpayer will have to maintain a strict order of utilization of ITC in the form of CGST, SGST, IGST. Imports of goods and services are deemed to be interstate supplies and therefore will be subjected to IGST (replacing CVD & SAD) besides customs duty, wherever applicable.

GST will cover all B2B and B2C transactions and therefore the tax net will become wider. GST will necessitate and relook at all the areas of the business including procurement, marketing, warehousing, logistics, transportation, IT operations, indirect tax and above all the finance. GST will have a serious impact on the cash flow of the company and is expected to result in an increasing need for the working capital to attract in the initial years.