Confused about the upcoming Goods and Services Tax (GST) and what it means to your business? Send your queries to our expert team today and watch out for the answers in this column. Mail your queries to askbl@thehindu.co.in.
K Vaitheeswaran, an advocate and tax consultant based in Chennai, takes on readers’ questions here.
We provide consultancy services on market conditions, raw material prices, vendor identification, etc to foreign customers. We receive commission in foreign exchange, which is a fixed percentage of the invoice value of the items purchased. There are different views on GST applicability. What is the correct position?
A number of conditions have to be satisfied for a transaction to be considered export of service. One key condition is that the place of supply must be outside India.
Where the nature of the transaction is such that you are only facilitating the supply of goods between two parties and you receive commission, it is likely that you will be considered an intermediary under IGST (Integrated GST) law.
This would mean that the place of supply shall be your location. GST would be applicable on this transaction even though the consideration is in convertible foreign exchange. The position can differ based on the nature of transaction or nature of activities carried out.
Will the practice of affixing MRP at a very high rate to facilitate discretionary discounts continue in the GST regime?
MRP is affixed on a product under the terms of the Legal Metrology Act. It is inclusive of taxes and indicates the maximum price at which the goods can be sold. GST has no role to play in this matter.
However, given the fact that the rate of GST applicable to a commodity is publicly known and the hidden levies such as excise duty and CST forming part of costs will disappear, the market and competition will take care to make adjustments according to the new regime.
I am an insurance agent. What is the GST position?
When an insurance agent provides services to any company carrying on insurance business, the insurance company is liable to pay GST under the reverse charge mechanism.
Can a trader registered under the VAT law claim transition credit benefit in respect of excise duty, where sufficient documents are available?
Section 140(3) of the CGST Act says a person who is registered under the Act, and who is not liable to be registered under the existing law, can take the credit of the eligible duties in respect of inputs held in stock, subject to conditions and compliance requirements. A key condition is invoices evidencing payment of duty, provided the invoices were issued within 12 months preceding the appointed day.
If the trader holds stock procured within the said period, but does not have document reflecting eligible duty, the Centre offers a scheme which involves upfront payment of CGST on supplies after the appointed day followed by refund of a certain percentage of the taxes paid. However, this scheme comes with additional conditions, including the requirement of passing on the benefits.
My commercial rentals from immovable property are more than ₹10 lakh but less than ₹20 lakh and I have already taken steps to migrate from service tax to GST. What would be my tax obligations under GST?
For your rentals up to June 30 this year, you will have to pay the service tax and also file returns under existing law.
After that date, given the fact that the threshold limit is increased, you needn’t register under GST.
Since the migration will automatically result in registration, you must take steps to cancel your registration after the appointed day is notified.