Page 50 - Plastics News September 2016

FEATURES
Tax on Petroleum Products:
As far as petroleum products are concerned, it was decided
that the basket of petroleum products, i.e. crude, motor
spirit (including ATF) and HSD would be kept outside GST
as is the prevailing practice in India.
Sales Tax could continue to be levied by the States on
these products with prevailing ?oor rate. Similarly, Centre
could also continue its levies. A ?nal view whether Natural
Gas should be kept outside the GST will be taken after
further deliberations.
Taxation of Services :
As indicated earlier, both the Centre and the States will
have concurrent power to levy tax on goods and services.
In the case of States, the principle for taxation of intra- The present thresholds prescribed in different State
State and inter-State has already been formulated by
the Working Group of Principal Secretaries/Secretaries
of Finance/Taxation and Commissioners of Trade Taxes
with senior representatives of Department of Revenue,
Government of India. For inter-State transactions an
innovative model of Integrated GST will be adopted by
appropriately aligning and integrating CGST and IGST.
Q: What is the rate structure proposed under
GST ?
A:The Empowered Committee has decided to adopt
a two-rate structure –a lower rate for necessary
items and items of basic importance and a standard
rate for goods in general. There will also be a special
rate for precious metals and a list of exempted items.
For upholding of special needs of each State as well as
a balanced approach to federal ?exibility, it is being
discussed whether the exempted list under VAT regime
including Goods of Local Importance may be retained in
the exempted list under State GST in the initial years. It
is also being discussed whether the Government of India
may adopt, to begin with, a similar approach towards
exempted list under the CGST.
For CGST relating to goods, the States considered that the
Government of India might also have a two-rate structure,
with conformity in the levels of rate with the SGST. For
taxation of services, there may be a single rate for both
CGST and SGST. The exact value of the SGST and CGST
rates, including the rate for services, will be made known
duly in course of appropriate legislative actions.
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Q: What is the concept of providing threshold
exemption for GST?
A:Threshold exemption is built into a tax regime to
keep small traders out of tax net. This has three-fold
objectives:
a) It is dif?cult to administer small traders and cost
of administering of such traders is very high in
comparison to the tax paid by them.
b) The compliance cost and compliance effort would be
saved for such small traders.
c) Small traders get relative advantage over large
enterprises on account of lower tax incidence.
VAT Acts below which VAT is not applicable varies from
State to State. A uniform State GST threshold across
States is desirable and, therefore, as already mentioned
in Answer to Question 6, it has been considered that a
threshold of gross annual turnover of Rs. 10 lakh both for
goods and services for all the States and Union Territories
might be adopted with adequate compensation for the
States (particularly, the States in North-Eastern Region
and Special Category States) where lower threshold had
prevailed in the VAT regime. Keeping in view the interest of
small traders and small scale industries and to avoid dual
control, the States also considered that the threshold for
Central GST for goods may be kept Rs.1.5 Crore and the
threshold for services should also be appropriately high.
Q: What is the scope of composition and
compounding scheme under GST?
A:A Composition/Compounding Scheme will be an
important feature of GST to protect the interests of
small traders and small scale industries. The Composition/
Compounding scheme for the purpose of GST should
have an upper ceiling on gross annual turnover and a
?oor tax rate with respect to gross annual turnover. In
particular there will be a compounding cut-off at Rs. 50
lakhs of the gross annual turnover and the ?oor rate of
0.5% across the States. The scheme would allow option
for GST registration for dealers with turnover below the
compounding cut-off.