Confusion unabated

Mohan R Lavi | Updated on March 09, 2018


GST laws still have many grey areas

The 20th meeting of the GST Council stuck to past form — some changes in tax rates were announced, additional information on e-way bills was given and the date and place of the next meeting was announced. As the textile industry was up in arms, tax rates on job work services in respect of the textiles and textile products was reduced from 18 per cent to 5 per cent. Rent-a-cab services and goods transport agencies now have an option of paying 12 per cent GST with full ITC or 5 per cent without ITC.

Considering the fact that e-commerce operators such as UrbanClap provide essential domestic services, the responsibility to discharge GST has been placed on the e-commerce operators. The first litigation in GST was on legal services provided by a firm of advocates- the response of the Government has been to clarify that all such services would be on reverse charge.

The GST law introduces a concept of casual taxable person. FIFA and its affiliates who are a part of the under-17 World Cup to be held in India would probably be one of the first international bodies who would be defined as casual taxable person. They have now been specifically exempted. While the alacrity of the Government to clarify issues is praiseworthy, the fact that the clarification does not state the date from which the new rates would apply is going to create confusion.

What happens to the tax already collected and paid? What happens to services rendered in July but not invoiced? It is obvious that the new rates would apply but a definitive statement would certainly help. This lack of attention to detail under GST is worrying and sets a trend that GST is only going to increase the present burden on the appellate authorities and courts.

Under GST rules, transporting goods in excess of ₹50,000 within or outside a state will require securing an e-way bill by prior online registration of the consignment.

E-way bills

The supplier and transporter will have to upload details on the GSTN portal, after which a unique e-way bill number (EBN) will be made available to all parties to the transaction. The EBN will remain valid for one to 15 days — one day for distances up to 100 km and 15 days for distances of more than 1,000 km. The GST Council is contemplating an exemption for transporting goods up to 10 km within a city. Till date, lawmakers under indirect taxes had taken a liking for air conditioners — tax rates depended on whether restaurants had one or not. They appear to have taken a fancy for mandating distances that trucks should travel in a day. GST laws should ensure that the goods in trucks have suffered the right nature and amount of tax irrespective of how much the truck travels in a day.

The more fundamental question that needs to be asked is when the entire GST law is going to be driven by online technology, do we require e-way bills at all? Why cant the GST invoice itself which has all the information required by the e-way bill double up as the document for transportation? It has been repeatedly been mentioned that physical check-posts would be removed but there would be mobile squads — while this does generate a feel-good factor, for the transporter, mobile squads are just yet another name for check-posts.

Taxpayers in India have already braced themselves for weekly changes in GST laws at least for the next few months. They can only hope that the basic structure of the law is left unchanged.

The writer is a chartered accountant

Published on August 08, 2017

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor