GST Reform of indirect Taxation

#11
#12
Re: GST related

Land leasing, renting to attract GST from July 1
By PTI | Mar 28, 2017, 04.23 PM IST

Come July 1 and leasing of land, renting of buildings as well as EMIs paid for purchase of under-construction houses will start attracting the Goods and Services Tax.

Sale of land and buildings will be however out of the purview of GST, the new indirect tax regime. Such transactions will continue to attract the stamp duty, according to the legislations Finance Minister Arun Jaitley introduced in the Lok Sabha yesterday for approval.

Electricity has also been kept out of the GST ambit.

GST, which the government intends to roll out from July 1, 2017, will subsume central excise, service tax and state VAT among other indirect levies on manufactured goods and services.

The Central GST (CGST) bill -- one of the four legislations introduced, states that any lease, tenancy, easement, licence to occupy land will be considered as supply of service.

Also, any lease or letting out of the building, including a commercial, industrial or residential complex for business or commerce, either wholly or partly, is a supply of services as per the CGST bill.

The GST bills provide that sale of land and, sale of building except the sale of under construction building will nether be treated as a supply of goods not a supply of services. Thus GST can't be levied in those supplies.

'Goods' in earlier drafts of the bills were defined as every kind of movable property other than money and securities but includes actionable claim. 'Services' were defined as anything other than goods. It was thought that GST may be levied on supply of immovable property such as Land or building apart from levy of stamp duty.

But the bills presented in Parliament have now clarified this position.

Tax experts said that currently service tax is levied on rents paid for commercial and industrial units, although it is exempt for residential units.

Deloitte Haskins Sells LLP Senior Director M S Mani said: "While service tax is applicable at present on sale of under construction apartments, it is levied on a lower value as abatement allowed. The abatement is ostensibly to take care of the value of the land involved in the construction of apartments".

He said the GST Rules, which will come up for discussion in the Council meeting on March 31, would help ascertain whether a lower rate of GST is proposed for such transactions or whether a similar abatement procedure would be prescribed.

"This would also be dependent on the rate fixation committee which is expected to finalise its recommendations in April," Mani said.

Experts said service tax is currently levied on payments made for under-construction residential houses after providing abatement, which brings down the effective rate from 18 per cent to around 6 per cent.

"The government is trying its best to make GST litigation free. The bills very clearly specify that GST would be charged on any lease of land or letting out of the building or construction of a complex, building, civil structure or a part thereof, where whole or any part of consideration has been received before issuance of completion certificate or its first occupation," Nangia & Co Director Rajat Mohan said.

Experts said the GST subsumes central levies like excise and service tax and local levies like VAT, entertainment tax, luxury tax. However, it does not subsume Electricity Duty.

Since the GST Constitution Amendment Act does not provide for subsuming 'electricity duty' under GST, it will continue to be levied by the respective state governments.

Certain states like Delhi exempt residential properties from electricity duty but levy it on commercial and industrial units.
Wonder how it will affect the rent that I pay.
 

travi

Well-Known Member
#14
Re: GST related

AFAIK, ST and TDS both are applicable for residential Rent bcos it is essentially a service .
I was just reading about ST and most small owners fall under the 10L Turnover Limit which is exempt from collecting ST.

Similarly, if rent paid is in excess of Min. Tax Slab, then TDS is applicable.
Tenant should collect TDS, maybe owner can pay advance tax but unsure of that.
 
#15

tjadmin

Administrator
Staff member
#16
GST is expected to start from 1st July 2017. We want our forum member so start sharing there thought and keep this simple for user to understand the new reform of indirect taxation.

Goods and Services Tax (GST) is a significant step in the reform of indirect taxation in India. Merging several Central and State taxes into a single tax would mitigate cascading or double taxation, facilitating a common national market. The simplicity of the tax should lead to easier administration and enforcement. From the consumer point of view, the biggest advantage would be in terms of a reduction in the overall tax burden on goods.
 
#17
IMO

No govt whether state or central, will go to reduce tax, simplify methods, ease administrative and enforcement procedure.

Moreover, cant say for tax reduction in goods, but we must be ready for a steep hike in taxation in services.

Though I am not against GST, but in a country like ours with so many states and govts of different (read rivals) political parties, I doubt it will be a success, and in favour of general public and consumer.
 

canikhil

Well-Known Member
#18
IMO

No govt whether state or central, will go to reduce tax, simplify methods, ease administrative and enforcement procedure.

Moreover, cant say for tax reduction in goods, but we must be ready for a steep hike in taxation in services.

Though I am not against GST, but in a country like ours with so many states and govts of different (read rivals) political parties, I doubt it will be a success, and in favour of general public and consumer.
At present I expect significant challenges in the short term:

1. 37 returns to be filed under GST annually! Big compliance burden for small companies

2. inflationary conditions due to higher tax rates

3. challenges in tax assessment as tax department is generally very slow in skill upgradation

4. initial performance glitches in GSTN


In long term, a lot will depend on different state governments and center to ensure that GST doesn't go VAT way. avoiding frequent rate changes, exemptions etc is something that politicians find difficult to avoid.
 
#19
The problem with Indian tax structure is, that

1. No govt, whether state or central, want to loose revenue and keep on burdening consumer on one or other type of tax, duty, additional duty, cess, additional cess and what not. That happens in VAT era and I dont think that it will end in GST era also.

2. All sorts of new and additional forms and procedures were added to trouble a trader, and it is really troublesome for a trader, who has little staff.

3. IMO, since last quite a few years, a small trader is like a bonded labour in the hands of these govts., so as to work for them for free, and above it spend from his pocket to do all these formalities and maintain all sorts of records and then pay bribes (to come clean), hefty if there is some sort of non compliance of rules or even something if all is okay, so that the concerned authority may not use his discretionary powers. Spend energy, money and time (all three) for them and what to get in return, blames, gaalis, stamp of tax evaders etc. In a tax deptt, even a do takey ka peon bhi apne aap ko collector sey kam nahin samajhta hai, because no file will move without his wish (greasing his hands).

There are many more problems, will add sometime later
 
#20
Wish it provides a single click solution, instead of multiple form filling.

They should make it as easy as opening an account with a broker :)
 

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