President of India has granted his assent to the 4 GST Bills - Central Goods and Services Tax Bill (CGST Bill), Integrated GST Bill, UT GST Bill and the GST Compensation Bill, on 12th of April, 2017.
All the Bills were debated and discussed extensively by the GST Council comprising of Union Finance Minister and Finance Ministers of all the States of India. The Bills were passed in Lok Sabha on 29 March, 2017 and subsequently by the Rajya Sabha without any amendments. The stage is now set for State Legislatures to pass respective SGST Bill and roll out GST from 1 July, 2017.
‘Supply’ – Definition
Taxable event for levy of GST is supply of goods or services or both. The CGST Act defines ‘supply’ as including all forms of supply such as sale, transfer, barter, exchange, license, rental, lease or disposal. Such supplies made or agreed to be made for a consideration by a person in the course or furtherance of business are covered for the purpose of this levy.
Import of services for a consideration whether or not for business, activities mentioned in Schedule I as supplies even when consideration is not received, and activities deemed as supply of goods or services as per Schedule II, will also come under the ambit of ‘supply’. Schedule III mentions activities which will be treated as neither supply of goods nor services.
Rate of tax
Central Goods and Services Tax (CGST) is payable on all intra-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption. The maximum rate of tax as specified in Section 9 of the CGST Act is 20%, payable on the value determined under Section 15.,
Composition Scheme
Registered person whose aggregate turnover in the preceding financial year did not exceed INR 50 lakhs, is also eligible to opt for payment of tax at a specified reduced rate under the Composition Scheme. The scheme is available to manufacturers and to restaurant service suppliers not engaged in any inter-State outward supplies of goods and in making supply of goods through an electronic commerce operator. It may however be noted that suppliers under this scheme will not be entitled to Input Tax Credit.
Time of supply of goods and/or services
Provisions of the CGST Act also specify various circumstances and situations for the purposes of time of supply. This is required because liability to pay tax would arise at the time of supply, which is to be determined according to the provisions.
Valuation
According to Section 15 of the CGST Act, value of a supply of goods or services or both shall be the transaction value, provided the supplier and the recipient are not related and the price is the sole consideration of supply.
The provisions also provide for inclusion of various taxes, duties, amount that the supplier is liable to pay in relation to such supply, incidental expenses, including commission and packing, and interest or late fee or penalty for delayed payment of any consideration.
Further, subsidies directly linked to the price excluding subsidies provided by the Central Government and State Governments, are also includible.