GST to be levied at first point of transaction: model law

The model GST law, approved by the state finance ministers on Tuesday, pegged threshold annual turnover for levy of the tax at INR 10 lakh. The limit will be INR 5 lakh in North East and Sikkim. The model GST law, which has 162 clauses and four schedules, has also suggested a jail terms of up to five years and fine for violation of the provisions of the statute.

The law also provides for setting up of an Authority for Advance Ruling, Consumer Welfare Fund, a ‘Composition Levy’ for entities with turnover of INR 50 lakh and self assessment by a tax payer. The GST, which will subsume excise, service tax and local levies, will be imposed at the first point of transaction in case of supply of goods, services or online sale.

This clears the air on applicability of GST in e-commerce in cases where goods are sold in one state but delivered in another state.

The e-commerce companies will be required to file a statement to the tax department providing details of all supplies made through the online platform.

Revenue Secretary Hasmukh Adhia said the Empowered Committee of State Finance Ministers at their meeting on Tuesday in Kolkata approved the model GST law.

“We request all stakeholders to give their suggestions/ comments to secretariat of Empowered Committee of FMs and or to finance ministry,” Adhia tweeted. The government is hoping to get the Constitution Amendment Bill passed by Parliament in the upcoming monsoon session. It plans to roll out GST from April 1, 2017 that will subsume excise, service tax and all local levies.

Virtually all states have supported the idea of GST except Tamil Nadu which has “some reservations”, Finance Minister Arun Jaitley said after the meeting of Empowered Committee on the long awaited indirect tax reform.