Tax directors told ITC that uncertainty over what changes the Indian GST Council will make to the four-tier rates system is hampering business tax planning efforts. To access our market-driven intelligence, please request a trial here.
Budget 2022 amended Section 29. It states that the GST registration will be cancelled by the officer if:
1) If a composition taxable person (paying tax under Section 10) has not filed GSTR-4 for a financial year by 30th April of the following financial year.
2) A person other than a composition taxable person has not filed a return for a financial year for such a continuous period as prescribed from time to time.
Since the introduction of GST from 1st July 2017, the GST Council has rationalized GST rates from time to time. These GST rate changes have a significant impact on the tax ability of various goods and services and, in turn, impacting the final price of a product. Thus, businesses need to be prepared on how to deal with these changes and take the necessary steps to pass on the benefit to the consumers, if there is a reduction in tax rates. The GST Council consults the Fitment Committee for any GST rate change. Then the proposed GST rate changes are announced at the GST Council meetings. Later, the CBI C gives effect to the changes by passing a notification on the CBI C website. Usually, the date of implementation of the new rate is mentioned in the notification itself, otherwise the date of implementation shall be the date of publishing the changes in the official gazette of the Central Government.
Factors Affecting Applicable Rates:-
In order to determine the applicable, rates in case of a change in rates, the following three events are crucial –
Date of issue of an invoice;
Date of payment;
Period of completion of supply.
In order to decide the appropriate rate in a given situation, one needs to answer the above three events.
Provisions of Change In Rate of Tax In Respect of Supply of Goods Or Services
Provisions of change in the rate of tax are contained under section 14 of the Central Goods and Service Tax (CGST) Act, 2017. It must be noted that section 14, overrules section 12 (time of supply of goods) and section 13 (time of supply of services). In other words, in case of the change in a rate of tax, provisions of section 14 are applicable in determining the time of supply of goods or services.
Rates in GST:-
Goods and Service Tax has just completed its first year. The basic intention behind the introduction of Goods and Service Tax was to make India ‘One nation, one market, one tax’. However, with the rollout of Goods and Service Tax, tax slab for various goods and services changed. Generally, goods and services are divided into 5 tax slabs under GST. The five tax slabs are 0%, 5%, 12%, 18% and 28%. Basically, all the goods and services that are essentials attracts 0% or 5% GST rates and on the other hand items/services with the highest luxury and demerit goods attract higher rates. Due to various representation from the respective field, demanding change in GST rates, GST council needs to come up with frequent change in rate sometimes effecting taxation of various goods and services. In this article, we look at the various GST rate change implications.
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