GST July 1st release: Yet to be an assured reality?

By Ranjeet Mahtani & Sweta Rajan

On the path to complete all responsibilities and release the requisite laws, regulations and rates ahead of the proposed transition date of July 1, 2017, the GST Council met on June 3, 2017. The key developments during the meeting were:

• A committee comprising revenue officers from Centre and States is to be set up to entertain complaints relating to anti-profiteering.
• GST rates of the items which were not placed across the agreed rate slabs (after the Council’s meetings on 18 and 19 May, 2017) were decided, including 3% GST on gold and gold jewellery, 0.25% on rough diamonds, 5% on packaged food items sold under registered trademarks, 18% on biscuits, 5% on footwear priced below Rs. 500/- and 18% on other footwear, 5% on readymade apparel under Rs. 1000/- and 12% on readymade apparel over Rs. 1000/-.
• An addendum to the GST Rates Schedule for goods was released making certain additions and amendments in the rates earlier released.
• The Central Government also released a list of IGST exemptions/concessions.
• GST Rules on transition were finalised. The time limit for claiming input tax credit of carried forward taxes and duties has been extended from 60 days to 90 days. Provisions enabling availing of credit of input tax credit (by unregistered dealers) of taxes paid under the current regime on goods held in stock on the date of transition have been prescribed subject to certain conditions.
• GST Rules on filing of returns have also been finalised and the returns and mismatch formats have been released.

Sectoral working groups

After the meeting, the GST Council also approved the appointment of 18 sectoral working groups consisting of senior officers from the Centre and States. These working grounds have been appointed to examine representations received from trade and industry associations and interact with representatives of associations in their respective sector. The sectors include banking, financial and insurance, telecom, exports (including EOUs and SEZs), IT/ITES, transport and logistics, textiles, MSMEs, oil and gas (upstream and downstream), gems and jewellery, government-related services, food processing sector, e-commerce, big infrastructure (airport, power, housing/construction), travel and tourism, handicraft exports, media and entertainment, and drugs and pharmaceuticals. 

In addition, a 3-tier structure has been approved for a project management team called GST Implementation Committee, headed by the Revenue Secretary, and eight standing committees. 

The Central Government has also been taking steps towards assisting and educating trade and industry in preparing for the transition to GST. These steps include the following:

1. GST Facilitation Cell: The Cabinet Secretary has asked different ministries, departments and PSUs to set up and activate a GST facilitation cell comprising of a small core team headed by the Economic Advisor or designated officer of the respective ministry/department. This cell would serve as the first point of contact for addressing any issue being faced by business or industry, and will provide all necessary support for the smooth rollout of GST w.e.f 1^st July 2017.
2. Clarification through Twitter handle: The Government has set up two Twitter handles, one to respond to queries on interpretational issues under GST, and another to address issues relating to IT and GSTN. While clarifications issued through the Twitter handle are helpful and educational, they are not to be treated as views of the Government that are applicable to any legal proceedings. Some of the important Twitter clarifications are as under:
   1. Remuneration to partners over and above share of profits is not in the nature of employer-employee relationship hence would be liable to GST
   2. Reimbursements of business expenses by registered person to employees would fall outside the scope of GST
   3. Reimbursements of employees on secondment would depend on the agreement as to what is the nature of relationship between the persons involved
   4. Input tax credit of IGST cannot be cross utilised amongst distinct persons (other than through the ISD facility). 

Present status and what’s left

Till date, 24 States and Union Territories have passed the State GST Bill. Various States including Karnataka, Kerala and Tamil Nadu are yet to pass the State GST Bill. All States will thereafter have to notify the various rules which have been finalised and approved by the GST Council. 

The next meeting of the GST Council is scheduled on June 11, 2017 during which they are scheduled to deliberate on the pending GST Rules such as Accounts & Records, E-way Bills, Advance Ruling, Assessment and Audit. 

While the Finance Minister and Revenue Secretary, continue to assure that GST will be implemented from July 1, 2017, there is yet no clear and final indication as to whether this assurance will translate into reality.