GST Introduction

The Constitution (One Hundred and Twenty-Second Amendment) Bill, 2014, seeks to amend the Constitution of India to facilitate the introduction of Goods and Services Tax (GST) in India. The proposed amendments in the Constitution will confer powers both to the Parliament and the State legislatures to make laws for levying GST on the supply of goods and services on the same transaction.

Goods & Services Tax is a comprehensive, multi-stage, destination-based tax that will be levied on every value addition.

Indian GST considers separate registrations of the same legal entity as independent tax persons, whereby supply among such registrations is subject to GST. This has a direct impact on the cash flows of an entity undertaking stock transfers.

Credits of input taxes paid at each stage will be available in the subsequent stage of value addition. Thus, the final consumer will bear only the GST charged by the last dealer in the supply chain.

With the deadline of July 1 approaching, the GST regulation in India has started to take shape by finalisation of law and rules. This has been a long journey of over 17 years which began with the intent of unification of indirect tax regime in the country.

GST is now a reality, and it is knocking the doors. But before going forward, let us have a look at some of the important features:

  • GST talks about supply and not sales, hence transfer of goods like the stock transfer is also liable to GST.
  • Free supplier or services are also covered under GST. In other words, if you were running any scheme like buy 1 get 1 free, then you are liable to pay GST on free supply as well.
  • All existing dealers registered with due authorities will be granted provisional registration automatically.
  • All dealers getting provisional registration will have to apply for GST final registration within six months.
  • If you were exporting goods or services or dealing in non-taxable products, then also you need to apply for registration.

Treatment of Non-Resident in GST

The non-resident persons want to conduct business in India will have two options: