Yes, the reverse charge mechanism will continue under GST. For goods, to begin with there is reverse charge on import of goods itself apart from other scenarios where this may apply for domestic procurements as well. For services, it is expected that reverse charge for import of service will happen surely, other than certain domestic services where it will apply. Partial reverse charge may not continue under GST but this can be confirmed only based on the final GST law.
Unlikely, until the Courts see a concern on confidentiality. The GSTN sharesholding pattern has been a very thought through plan, in order to ensure that decisions can be taken at the earliest on procurement of IT systems.
As per the revised draft model GST law, works contracts is going to be treated as a service. There is a debate on this for now, based on the Constitution Amendment Bill under Article 366(29A) where the power to levy tax on goods continues with States. Hence, there is a requirement to align the GST laws with this. It is expected that the final GST laws would bring clarity on this. For now, works contracts are going to be treated as a service.
Branches of most banks are located across the country, and banks provide services through various modes like ATMs, online banking, mobile banking, etc. How the location of supply of service will be decided, as it might not be possible to comply with if the same is linked with location of service receiver?
The location of supply for now is the address on record, which could be different for different purposes. The issue raised in valid and is being represented by banks to obtain clarity. The final GST law should provide clarity on the place of supply for these services.
Will banks with branches across India be provided with a single registration facility to avoid multiple compliance at multiple levels? Would this also entail compliance verification/audit at multiple levels?
The current understanding from the revised model GST law suggests that banks will have to comply under a decentralised compliance framework and therefore would have to obtain registration state-wise. Accordingly, compliance verification or audits shall happen state-wise. This issue was brought out before the GST Council in one of its earlier meetings by the industry, who requested for a centralised registration. Unfortunately, this was not accepted and we understand that banks may be requried to carry out de-centralised compliances.
The impact of prices on goods may not be fully known until the list of goods falling under each rate slab is finalised. For now, we only know the broad rate structure - 0%, 5%, 12%, 18% and 28%. However, only when the goods are fitted into this, we shall know the price impact. Having said this, we understand that the government's intention is to minimise the price impact and therefore many goods may suffer lower GST rate when compared to the existing tax impact covering excise duty and VAT at present. GST is seen to indirectly address the problem of purchase without receipts as the seller would need to account for his sales under GST in order to avail GST credits.
GST is expected to have a positive impact on the economy over a long term basis. The expected increase of GDP by 2% may be seen not in the immediate future but over a few years. Hence, a delay from April 2017 to July 2017 would not have a very high economic cost, though the earlier the government attempts to bring in GST, the better it would be for the overall economy as a whole.
Has the government kept alcohol, crude, high speed diesel, motor spirit (petrol), natural gas and aviation turbine fuel out of the GST ambit? What's the logic behind such a move?
Yes, the government has kept these products outside GST for various reasons. Petroleum products like high speed diesel, motor spirit, etc bring huge revenues to States, apart from the Centre and the States were not sure how their finances would be impacted if these products were also brought under GST. Hence, while these products are currently brought under GST but shall be effective only from a date to be notified by the GST Council, after the States are comfortable with the GST implementation not having a negative impact on their finances. It is clearly unfortunate that these products are kept outside GST but hopefully we shall see these products brought under GST soon.
Yes, GST is expected to do away with forms such as C Forms, Form XI, tax exemption forms, etc for the simple reason that no such concessional rates shall continue under GST. However, in the context of using forms for movement of goods across States, like way bills, the draft GST law provides for using these forms and therefore way bills may continue even under GST.
Yes, the GST law will resolve the dispute about the dual levy of VAT and service tax on software as software shall be treated either as goods or services under GST. Tangible software (on media) shall be goods and electronic software (downloaded) shall be treated as service.
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MODERATOR:
Hello, and welcome to the webchat with PwC Partner (Indirect Tax), Kunal Wadhwa on GST and the way forward
KUNAL WADHWA, PARTNER - INDIRECT TAX, PWC INDIA:
Hello
PRABHAKAR K S
Will the 'Reverse Charge Mechanism' concept continue under GST regime?
KUNAL WADHWA, PARTNER - INDIRECT TAX, PWC INDIA
Yes, the reverse charge mechanism will continue under GST. For goods, to begin with there is reverse charge on import of goods itself apart from other scenarios where this may apply for domestic procurements as well. For services, it is expected that reverse charge for import of service will happen surely, other than certain domestic services where it will apply. Partial reverse charge may not continue under GST but this can be confirmed only based on the final GST law.
PRABHAKAR K S
Can we expect any changes regarding GSTN shareholding pattern ?
KUNAL WADHWA, PARTNER - INDIRECT TAX, PWC INDIA
Unlikely, until the Courts see a concern on confidentiality. The GSTN sharesholding pattern has been a very thought through plan, in order to ensure that decisions can be taken at the earliest on procurement of IT systems.
AMAN KOHLI
How will the works contracts be treated in the GST regime?
KUNAL WADHWA, PARTNER - INDIRECT TAX, PWC INDIA
As per the revised draft model GST law, works contracts is going to be treated as a service. There is a debate on this for now, based on the Constitution Amendment Bill under Article 366(29A) where the power to levy tax on goods continues with States. Hence, there is a requirement to align the GST laws with this. It is expected that the final GST laws would bring clarity on this. For now, works contracts are going to be treated as a service.
VISHAL CHOPRA
Branches of most banks are located across the country, and banks provide services through various modes like ATMs, online banking, mobile banking, etc. How the location of supply of service will be decided, as it might not be possible to comply with if the same is linked with location of service receiver?
KUNAL WADHWA, PARTNER - INDIRECT TAX, PWC INDIA
The location of supply for now is the address on record, which could be different for different purposes. The issue raised in valid and is being represented by banks to obtain clarity. The final GST law should provide clarity on the place of supply for these services.
NIKHIL
Will banks with branches across India be provided with a single registration facility to avoid multiple compliance at multiple levels? Would this also entail compliance verification/audit at multiple levels?
KUNAL WADHWA, PARTNER - INDIRECT TAX, PWC INDIA
The current understanding from the revised model GST law suggests that banks will have to comply under a decentralised compliance framework and therefore would have to obtain registration state-wise. Accordingly, compliance verification or audits shall happen state-wise. This issue was brought out before the GST Council in one of its earlier meetings by the industry, who requested for a centralised registration. Unfortunately, this was not accepted and we understand that banks may be requried to carry out de-centralised compliances.
SHARMILA JOSHI
At the proposed GST rate, what will be the impact on prices we pay for goods? Is GST likely to address the problem of purchase without receipts?
KUNAL WADHWA, PARTNER - INDIRECT TAX, PWC INDIA
The impact of prices on goods may not be fully known until the list of goods falling under each rate slab is finalised. For now, we only know the broad rate structure - 0%, 5%, 12%, 18% and 28%. However, only when the goods are fitted into this, we shall know the price impact. Having said this, we understand that the government's intention is to minimise the price impact and therefore many goods may suffer lower GST rate when compared to the existing tax impact covering excise duty and VAT at present. GST is seen to indirectly address the problem of purchase without receipts as the seller would need to account for his sales under GST in order to avail GST credits.
VARUN KHETARPAL
What is the economic cost of the GST bill implementation getting delayed to July 2017?
KUNAL WADHWA, PARTNER - INDIRECT TAX, PWC INDIA
GST is expected to have a positive impact on the economy over a long term basis. The expected increase of GDP by 2% may be seen not in the immediate future but over a few years. Hence, a delay from April 2017 to July 2017 would not have a very high economic cost, though the earlier the government attempts to bring in GST, the better it would be for the overall economy as a whole.
RAKESH ARORA
Has the government kept alcohol, crude, high speed diesel, motor spirit (petrol), natural gas and aviation turbine fuel out of the GST ambit? What's the logic behind such a move?
KUNAL WADHWA, PARTNER - INDIRECT TAX, PWC INDIA
Yes, the government has kept these products outside GST for various reasons. Petroleum products like high speed diesel, motor spirit, etc bring huge revenues to States, apart from the Centre and the States were not sure how their finances would be impacted if these products were also brought under GST. Hence, while these products are currently brought under GST but shall be effective only from a date to be notified by the GST Council, after the States are comfortable with the GST implementation not having a negative impact on their finances. It is clearly unfortunate that these products are kept outside GST but hopefully we shall see these products brought under GST soon.
KUNAL IMPEX
Will GST do away with all types of forms, such as C Forms, tax-exemption forms, Form C, Form XI, form for import of goods into state, etc
KUNAL WADHWA, PARTNER - INDIRECT TAX, PWC INDIA
Yes, GST is expected to do away with forms such as C Forms, Form XI, tax exemption forms, etc for the simple reason that no such concessional rates shall continue under GST. However, in the context of using forms for movement of goods across States, like way bills, the draft GST law provides for using these forms and therefore way bills may continue even under GST.
KRISHNAN A
Will the GST law address the dual levy of VAT and service tax on software?
KUNAL WADHWA, PARTNER - INDIRECT TAX, PWC INDIA
Yes, the GST law will resolve the dispute about the dual levy of VAT and service tax on software as software shall be treated either as goods or services under GST. Tangible software (on media) shall be goods and electronic software (downloaded) shall be treated as service.