We are expecting that the new regime of GST in India will have an important influence on the Indian Trades and will have a worthy affect the business established in India.

A new regime of GST in India will create the targeted revenues with the minimization of exemption. It’ll broaden the taxes base and decrease the tax premiums. GST is dependent on destination principle, so the distortions will be reduced fostering a common market throughout the country. The compliance cost can come down and the trade and industry will become more competitive resulting in a growth in exports and lower costs for domestic consumers.

As we know the impact of GST, Central and State taxes will be subsumed, comprehensive set off of input goods along with services and phasing from CST would decrease the cost of local manufactured goods and services. This will boost the competitiveness of Indian goods and services in international market and thus boost to the exports.

In GST, Exports will be zero rated. As a result, the exporters will soon be eligible to claim the refund on the eligible input tax credits subject to conditions, constraint and procedures. Identical benefits may be given to Special Economics Areas and specific zones (SEZs). Such benefits are only going to be allowed to the processing regions on the SEZs. No benefit to the Sales from a SEZ to DTA will be allowed.

Equally CGST and SGST will be levied on Significance of goods and services to the country. The incidence of tax will track the principle of destination based taxes. The SGST of the State will be applicable where the goods are consumed. Complete and whole set-off will be obtainable on GST paid on imports with goods.

In the impact of GST, the relief is given to those who have Small businesses. They’re out of the purview of the particular GST, means that the businesses having an annual turnover of less than Rs 10 lacs will be exempted from GST.

Also, in the awareness of small investors a814nd small size industries and to prevent dual control, the State considered the threshold for CGST tax for goods might be kept at Rs 1.5 crore and the threshold for services must also be large.

The IT infrastructure requirement will undoubtedly be shared by the Central Government through the utilization of its own IT infrastructure ability. The problems of tying in the State Infrastructure facilities while using Central facilities and further improvement with the States own structure, including TINXSYS, is to be attended to expeditiously and in a period bound manner.

Alcohol based drinks will be kept out of the purview of GST. Sales Tax/Vat might be still be levied on alcohol based drinks as is prevailing in today’s system. There is no objection if the State imposes Vat on it and if inflict excise duty which could also to not be affected. On the other hand, tobacco products will be subjected to GST.

And for petroleum products, the basket of petroleum products will be left out of GST as is the usual practice in India. Sales Tax could still to be levied on these items.

Big change-small impact on “Sacks and Bags”

An article by: CA Pradeep Jain &

Hushen Ganodwala

Recently, Our Finance Minister, Arun Jaitley has increased the rate of excise duty from 12.36% (Including Education Cess and SHE Cess) to 12.5% (without any Education Cess and SHE Cess) for most of the products. In addition to this, amendments have also been made in the exemption notification no. 12/2012-CE dated 17.03.2012. This article is an attempt to analyse the amendment in rate of excise duty made in chapter sub-heading 3923. The Fifth Schedule of the Finance Bill, 2015 in clause (b) for entry in column (4) specifies the rate of excise duty for tariff items 39232100, 39232910 and 39232990 as “18%”.

However, if the new serial numbers 148B, 148C and 148D inserted in the notification no. 12/2015-CE dated 01.03.2015 are pursued, it is found that exemption is also available for the product “sacks and bags”. The relevant entries are produced for the sake of convenient reference as follows:-

Sl.No.

Tariff Heading

Description of product

Rate of duty

 “148B

3923 21 00

Sacks and bags, other than for industrial use

15%

148C

3923 21 00

All goods, other than goods mentioned at Sl. No. 148B above

12.5% –

148D

3923 29

All goods

12.5%

From the above table we find that rate of excise duty has been increased from 12% to 15% on Sacks and bags falling under 39232100 other than for industrial use. Alternatively, we can say that sale of sacks and bags to Industrial use, in such case excise duty attracts at the rate 12.5% and not 15%. Furthermore, the duty for all goods of 392329 is specified as 12.5% in the exemption notification. Consequently, the rate of excise duty for 39232910 and 39232990 is 12.5%.

It is submitted that the overall effect of the amendment is that the rate of excise duty for chapter 3923 pertaining to Sacks and Bags is as follows:-

Heading

Rate of excise duty

39232100  other than industrial use

15%

39232100 for industrial use

12.5%

39232910

12.5%

39232990

12.5%

It is further submitted that the net result is that the sacks and bags for other than industrial use will be leviable to excise duty at the rate of 15% whereas all other sacks and bags will be leviable to excise duty at the rate of 12.5%. In the opinion of authors, the practice of the government to resort to such a complicate procedure to specify the rate of excise duty for “sacks and bags” is not understandable. When the government had to keep rate of excise duty for all sacks and bags at 12.5% and those used for other than industrial use at 15% then what was the need to specify the rate of excise duty as 18%? And also the approach to amend the notification. All bags and sacks are chargeable general rate of 12.5%. The only exceptional rate applicable to 39232100 is 15% if have other than industrial use.

 Well, the tactics of government are known to them best, but this amendments is surely going to keep the manufacturers of “Sacks and bags” busy in determining the rate of excise duty applicable on their product.