E-mail: caabhisheksharma@yahoo.com

Chairman, Jaipur Branch of CIRC of ICAI

Respected Professional Colleague,

“Take up one idea. Make that one idea your life; dream of it; think of it; live on that idea. Let the brain, the body, muscles, nerves, every part of your body be full of that idea, and just leave every other idea alone. This is the way to

success, and this is the way great spiritual giants are produced.” ― Swami Vivekananda,

I am always following the above lines in my life, because I understand that If you have

given up then no power of the world can restore your enthusiasm, your motivation

and your will to win. So for me the life is the mental game, more smartly you will

play, more success you will get.

Firstly I am thankful to the almighty god and my late amma & bauji who have

always been so kind to me and due to their blessings only I am here to the

Chairman of Jaipur Branch.

Friends for me particularly it is like a dream come true, I have really enjoyed

the journey from the student of ICAI Jaipur branch to become member and

then finally the Chairman of the largest branch of CIRC of ICAI. I am thankful

to the managing committee Jaipur branch who have kept faith and believe on me

and Unanimously elected me as Chairman Jaipur Branch for the term 2017-18.

During this tenure my vision is very much clear, as on the one hand I will focus to organize more and more

educational programme for our members to enrich and update them with the knowledge and on the other hand I am

also focused on Brand Building of ICAI and to provide special benefits to our members in terms of discount at the

various Institutions and other outlets.

As far as member of Industries are concern our focus is to explore new employment opportunity to the fresher

chartered accountants and also to give growth options to the existing working chartered accountants.

In the present time it is really a great opportunity to the professionals, as GST, IFRS, RERA and various other areas are

providing a huge demand and need for CA professionals. So This is the time to grab the opportunity and to put your

all professional efforts for these opportunities.

Friends I personally or my committee jointly can not do any wonders, until unless we get your suggestions, feedback

and motivation. Kindly continue to share the same with us at jaipur@icai.org.

Finally just want to conclude that with your support we all together will take

our profession to the newer heights.

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Thank you very much !

Jai Hind... Jai ICAI

From the desk of Chairman…

Respected Professional Colleague,

It is great honor for me to continue of the Secretary of the largest

branch of CIRC of ICAI.

At the outset, I would like to thank my colleagues in the

Managing Committee for once again elevating me to the

post of Secretary and contribute my services to the Jaipur

professional fraternity in that capacity. As the secretary, I

warmly welcome the newly elected members.

Someone has rightly said, “In order to succeed, we must

first believe that we can.”

Few milestones confirming our belief and success story were well planned and coordinated

events like, Singapore RRC for CA families.

I am pleased to inform that this year Jaipur branch will assign responsibility of convening

National Convention for CA Students by Board of Studies,

It is my humble request to share your views, ideas, valuable suggestions, in order to make this

newsletter more beneficial and a great medium of interaction with our members.

At last, I will request you all to join us in the two days GST conclave “Ek Kadam GST ki Aur”

to be orgainsed at ICAI Bhawan, Jaipur from May 26 to May 27, 2017. Members will definitely

get enlightened from the deliberation from the very eminent speakers from our profession.

With warm regards

CA Sanjay Kumar Maheshwari

Mobile: 9414234860

Email: casanjaym@yahoo.co.in

From the desk of Secretary…

Editor in Chief CA. Abhishek Sharma 9829399453

Editor CA. Amit Gatani 9414070608

Joint Editor CA. Anil Kumar Yadav 9660917000

Deputy Editor CA. Ashwani Mundra 9828225521 CA. Kamal Jain 9782555151 CA. Vijay Kumar Agarwal 9982723122

Members CA. Abhishek Maru 9829291595 CA. Abhishek Singhvi 9414210601 CA. Ajay Gaur 9982426699 CA. Akash Bargoti 9983332663 CA. Akash Jain 9460671198 CA. Aklak Husain 9928902121 CA. Amit Agarwal 9414062551 CA. Amit Dadheech 8952086340 CA. Amit Kedia 9414046121 CA. Amit Kumar Jain 9414321489 CA. Ankit Vijay 9783248794 CA. Ankur Gupta 4461044624 CA. Anu Shah Jain 8875000245 CA. Anuj Sharma 9828152341 CA. Anurag Maheshwari 9829285091 CA. Anushri Gupta 9414779750 CA. Ashok Saini 9875139001 CA. Ashutosh Agarwal 9828400386 CA. B. L. Chaudhary 9351320922 CA. Badri Naryan Maheshwari 9829109903 CA. Balkishan 9352242394 CA. Deepak Jain 9461551545 CA. Devendra Mittal 9829250009 CA. Dheeraj Borad 9829068558 CA. Gaurav Rawat 9571008844 CA. Govind Khandelwal 9799128000 CA. Harsha Ramnani 9001561467 CA. Jairaj Bothra 9660018715 CA. Kamlesh Chippa 9314231738 CA. Kartik Bapna 9982914577 CA. Kartik Khandelwal 9413490030 CA. Madhur Gupta 9983035000 CA. Mahendra Modi 9352638180 CA. Manish Jain 9782238095 CA. Manoj Agarwal 9602266000 CA. Milan Pareek 9460153100 CA. Mohit Patni 7665435856 CA. Naman Shrimal 9636111444 CA. Naresh Motwani 9828401009 CA. Naveen Sharma 9828319442 CA. Nitin Sharma 9829266636 CA. Om Rupani 9928559499 CA. Pankaj Jhanwar 9414770518 CA. Poonam Agarwal 7568414141 CA. Pramod Kanda 9829184900 CA. Priyanka Sharma 9983311255 CA. Pulkit Kapoor 9982360194 CA. Pushpendra Agarwal 9829178778 CA. Rajkumar Khandelwal 9414304422

CA. Rakesh Kabra 9828052448 CA. Rakesh Kothari 9828504428 CA. Ranjan Mehta 9672372075 CA. Raman Sharma 9887809533 CA. Ravi Mamodia 9828091785 CA. Rekha Maheshwari 9529927802 CA. Richa Pandya 9811195641 CA. Rohit Maheshwari 9829067244 CA. Ruchita Dhoot 9829671929 CA. Sachin Jain 9829393505 CA. Saurabh Agarwal 9828169924 CA. Saurabh Agarwal 7737745011 CA. Shalini Rajvanshi 9314668454 CA. Shamshudin Khan 9413559669 CA. Sourabh Baheti 9784668867 CA. Sumit Jain 8875072355 CA. Varun Bansal 9829888812 CA. Vijay Agarwal 9829391600 CA. Vijay Kumar Gupta 9829074212 CA. Vikesh Jain 9928493838 CA. Vinod Agarwal 9414070269 CA. Vipin Singhal 9829466657 CA. Vishnu Agarwal 9829867493 CA. Vivek Chattar 9314503966

Advisors CA. Anil Mathur CA. Rakesh Gupta CA. B K Mathur CA. Ram Manohar CA. Brijesh Maheshwari CA. Rameshwar Prasad Vijay CA. C. L. Yadav CA. Ratan Goyal CA. D. R. Mohnot CA. Ravindra Raniwala CA. Dilip Malpani CA. S S Dhakad CA. G. C. Jain CA. S. K. Goyal CA. Ganesh Bangar CA. S. L. Gangwal CA. H M Singhvi CA. Sanjay Kumar Shah CA. J K Agarwal CA. Sanjay Sharda CA. Jagdish Somani CA. Satish Gupta CA. L. D. Sharma CA. Sharad Kabra CA. Manish Suri CA. Shailendra Agarwal CA. Manoj Bhansali CA. Sunil Agrawal CA. Narendra Moolchandani CA. Sunil Goyal CA. Nitin Vyas CA. Suresh Garg CA. O. P. Agarwal CA. Ummed Mal Jain CA. P C Modi CA. Vijay Garg CA. P C Parwal CA. Vijendra Bangar CA. P P Pareek CA. Vikas Jain CA. Pushpendra Khandelwal CA. Vikas Rajvanshi CA. R. A. Sharma CA. Vimal Chopra CA. R. K. Sharma CA. Vipin Gangwal CA. Rajeev Sogani

Managing Committee Chairman CA Abhishek Sharma Vice Chairman CA Ankit Jain Secretary CA Sanjay Kumar Maheshwari Treasurer CA Sushil Kumar Jalan CICASA Chairman CA Dinesh Jain YMEC Chairman CA Shishir Agarwal Member CA Nikhilesh Kataria Member CA Shiv Shanker Gupta Central Council Member CA Shyam Lal Agarwal Central Council Member CA Prakash Sharma Regional Council Member & Treasurar, CIRC CA Gautam Sharma Regional Council Member CA Rohit Ruwatia Agarwal Regional Council Member CA Pramod Boob

Editorial Board

Published by : Sh. S. C. Chaturvedi, Administrative Officer on behalf of The Institute of Chartered Accountant of India JAIPUR (CIRC) ICAI

Bhawan, D-1, Institutional Area, Jhalana Doonagari, Jaipur-4 Ph. 0141-3044200-21 *Fax : 0141-3044215

Email : jaipur@icai.org.jaipur@icai.in *website : jaipur-icai-org

Designed by : ITT Faculties of Jaipur Branch of ICAI

Anil Kumar Sharma Sanjay Kishore Karni Singh Rathore Suraj Sharma Maneesh Pareek

Respected Professional

Colleague,

It is Great honour for me to be the

editor of such an illustrious and

prestigious news letter of Jaipur

Branch of CIRC of ICAI. I am

thankful to the new management

committee for giving me this

opportunity to shape this new letter. I would also like to

express my sincere thanks and Gratitude to my parents, God

and all my dear professional colleagues for entrusting

confidence in me.

Most changes has been about “Changing Lens” and not

“Changing Visions.”

There’s a big difference when you change your lens, you still

see what you want to see. When you change your vision, you

will see what you may not have seen before.

It is believed that for any change to be implemented and to

overturn an established process- It goes through four different

stages

First, it is ridiculed

Second, it is violently opposed

Next, it is questioned

Finally, it is accepted as self –evident

The present professional scenario today demands changed

visions leading to changed approaches and never-before

practices.

Life is not by accident. All success, our life gifts us, is the

result of our willingness to dare; to Think beyond; let us

continue to “dare”. Let’s go beyond the ordinary in all that we

do.

In end before concluding my words, I would like to thanks the

contributors of articles, the reviewers, my associate editors for

the unstinted support they have given.

Friends, I am open to suggestions from all our members,

therefore, please feel free to give your valuable suggestions

and feedback

With warm Regards

CA AMIT GATTANI Mobile: 9414070608

E-mail: cagattaniamit@gmail.com

Respected Professional

Colleague,

It is a great honor for me to serve as the

Joint Editor for the ICAI Jaipur branch

editors desk. I would like to thank to

CA Abhisek Sharma, Chairman Jaipur

Branch for giving me this opportunity

to serve the Chartered community. I will do all my best to

continue the excellent work done by predecessor.

Our Newsletter is doing very well; however, it is facing the

challenges for further growth and improvement as many other

Newsletters. During my term as Joint Editor, I wish for the

following three goals to be achieved. The first is to further

improve the Newsletter quality through more rigorous paper

review as well as closer checking at the scope of received

manuscripts. The second is to encourage young professional

for writing the post for Newsletter as they have very much

updated themselves with new technology and also have new

ideas. I will closely work with Editors and Reviewers who

volunteer their precious time and expertise to this Newsletter. I

really appreciative their hardwork and their continued efforts..

The third is to expedite publication process. The specialty of

Jaipur Branch News Letter is that it includes many special

issues, which makes timely publication more challenging. I

will work with Guest Editors of special issues as closely as

needed to facilitate paper solicitation and review processes to

keep up with the publication timeline. Certainly, fast review

and publication process will make the Newsletter more

attractive to high-quality submissions, which in turn makes the

Newsletter more selective for better quality. Based on the solid

foundation built by my predecessors, a responsible and

insightful editorial board, and a deep pool of quality

reviewers, I am very confident that these goals will be

achieved.

I welcome to any suggestions and comments that are helpful to

improve the Newsletter, and also encourage interested

members of the Branch to offer and continue offering their

talents and expertise. Looking forward to working with you!

With warm regards,

CA Anil Kr. Yadav Mobile: 9660917000

Email: anilyadav17@gmail.com

Joint Editors Desk Editors Desk

BRANCH ACTIVITY DURING THE MONTH OF MARCH -2017

1. Full Day Seminar on Bank Audit (02.03.2017) The Jaipur Branch organized a full day Seminar on Bank

Audit on 2.3.2017 at ICAI Bhawan. In this Seminar CA.

Shyam Lal Agarwal-Chairman AASB and Central Council

Member-ICAI , CA Shri Niwas Y joshi Mumbai, CA.

Sandeep D welling Mumbai, Sh. P K Pradhan-GM,

Deptt. of Banking Supervision, RBI Jaipur & CA Vikas

Gupta were eminent speakers. CA. Sandeep D Welling,

Mumbai delivered the lecture on Auditor’s

Responsibilities on Demonetisation, CA. Shyam Lal

Agarwal, Chairman, AASB delivered the lecture on

Audit of Advances and NPA, CA Shriniwas Y Joshi,

Mumbai delivered the lecture on LFAR and

Certifications.

2. Seminar on Analysis of State Budget 2017 (14.03.2017)

The Jaipur Branch organized a Seminar on Analysis of

State Budget on 14.3.2017 at ICAI Bhawan. In this

programme Sh. Deepankar Aron, Addl. Commissioner,

Service Tax, CA. Jatin Harjai and CA. Yashasvi Sharma

were the eminent speakers. In this progamme Sh. Vikas

Joshi-Deputy Commissioner-Service Tax, Ms. Ankita

Singh-Assistant Commissioner-Service Tax, Ms. Sunila

Verma-Assistant Commissioner-Service Tax were

present. CA. R A Sharma was the programme

Chairman. Sh. Deepankar Aron, Addl. Commissioner,

Service Tax delivered the lecture on GST Migration, CA.

Jatin Harjai delivered the lecture on VAT, Entry Tax and

Luxury Tax Amendments in State Budget, CA. Yashasvi

Sharma delivered the lecture on RIPS, Stamp Duty

Amendments related to Builders in State budget.

3. S C Meeting on Recent Changes in Accounting Standards (Indian GAAP) and Important aspects for review of accounts before March closing (18.3.2017)

The Jaipur Branch organized a SC Meeting on Recent

Changes in Accounting Standards (Indian GAAP) and

Important aspects for review of accounts before March

closing on 18.3.2017 at ICAI Bhawan. CA.Bhupendra

Mantri, was the eminent speaker. He delivered the

lecture on the above subject.

4. Half Day Seminar on Bank Audit for CA Students (24.03.2017)

The Jaipur Branch organized a Half day Seminar on

Bank Audit for CA Students on 25.3.2017 at ICAI

Bhawan. In this Seminar CA. H. M. Singhvi was the

Chief Guest, CA Ajay Atolia, CA. Mukesh Gupta, CA.

Vikas Rajvanshi were eminent speakers. In this seminar

CA. Ajay Atolia, CA. Mukesh Gupta, CA. Vikas Rajvanshi,

CA. Rakesh Gupta, CA. Manish Goyal, CA. Sandeep

Jhanwar, CA. Sachin Kumar Jain (Lal Kothi) were the

panel speakers. CA. Sharad Kabra was the Moderator.

5. Half Day Seminar on Bank Audit (25.03.2017) The Jaipur Branch Hosted a Half day Seminar on Bank

Audit under the aegis AASB Committee on 25.3.2017 at

ICAI Bhawan. In this Seminar CA. P P Pareek was the

special guest, CA. Shyam Lal Agarwal-Chairman AASB

and Central Council Member-ICAI was the session

chairman, CA Akesh Vyas, New Delhi, was eminent

speaker. In this seminar CA. Ajay Atolia-Statutory

Auditor-Bank of Baroda, CA. P P Pareek-Statutory

Auditor-Union Bank of India, CA. Prakash Sharma-

Central Council Member, ICAI & Statutory Auditor-Bank

of Maharashtra, CA. Vikas Rajvanshi-Statutory Auditor

State Bank of Patiala, CA. Mukesh Gupta- Statutory

Auditor-Oriental Bank of Commerce, CA. Vikas Gupta-

Statutory Auditor-State Bank of Bikaner & Jaipur were

the panel speakers. CA. Shailendra Agarwal was the

Moderator.

6. S C Meeting on Health Awareness Talk (27.3.2017)

The Jaipur Branch organized a SC Meeting on health

Awareness Talk on 27.3.2017 at Eternal Hospital. Dr.

Jitendra Singh Makkar, Dr. Rajeev Bhargava, Dr. Kavita

Bhargava were the eminent speaker. He delivered the

lecture on the above subject. In this programme CA. R

P Vijay, CA. J K Agarwal were the Programme Director.

CA. Anil Kumar Yadav, CA. Atul Mansingka, CA. Sourabh

Baheti, CA. Akash Bargoti were the convenor of this

programme.

BRANCH ACTIVITY DURING THE MONTH OF APRIL -2017

01. S C Meeting on Use of Excel in Bank Audits (1.4.2017)

The Jaipur Branch organized a SC Meeting on Use of

Excel in Bank Audit on 1.4.2017 at ICAI Bhawan.

CA.Sachin Jain, was the eminent speaker. He delivered

the lecture on the above subject.

02. Motivational S C Meeting on How to be a Successful,

Graceful & Respectful CA (8.4.2017)

The Jaipur Branch organized a Motivational SC Meeting

on Use of How to be a Successful, Graceful &

Respectful CA on 8.4.2017 at ICAI Bhawan. CA. B.P.

Mundra, was the eminent speaker. He delivered the

lecture on the above subject

03. CIRC Symposium on How to appear before Income Tax

Authorities & Impact of Penalty provision on CA

Professionals U/S 271 J (15.04.2017)

The Jaipur Branch Hosted / organized a CIRC Symposium

under the aegis of CIRC on How to appear before Income Tax

Authorities & Impact of Penalty provision on CA Professionals

U/S 271 J on 15.4.2017 at ICAI Bhawan. In this programme Sh.

Jagdish Somani, CA. Siddharth Ranka and CA. Rohit Ruwatia

Agarwal were the eminent speakers. In this progamme CA.

Govind Khandelwal was the Convenor.

CA. Jagdish Somani delivered the lecture on How to appear

befor Commissioner (appeals) & Income Tax Officers, CA.

Siddharth Ranka delivered the lecture on How to appear

before Income Tax Appelate Tribunal, CA. Rohit Ruwatia

Agarwal delivered the lecture on Impact of Penalty provision

on CA Professionals U/S 271 J.

04. Full Day Seminar on GST & Income Tax Act (22.04.2017)

The Jaipur Branch organized a full day Seminar on GST

& Income tax Act on 22.4.2017 at ICAI Bhawan. In this

Seminar Sh. Kuldeep Ranka, I.A.S. was the Chief Guest.

CA. Jatin Harjai, CA. Virendra Parwal, CA. P. C. Parwal

and CA. Manish Agarwal were eminent speakers. CA.

Jatin Harjai & CA. Virendra Parwal delivered the lecture

on Transitional Provisions under GST & Key points

related to filing of existing VAT /Service Tax returns

under GST regime. CA. P.C Parwal & CA. Manish

Agarwal delivered the lecture on Income Computation

& Disclosure Standards and Reassessment under

section 148 of Income Tax Act.

CA. Ashwani Mundra & CA. Hemant Gupta were the

conveners of the programme.

05. S C Meeting on How to prepare Project Report, CMA

Data for Bank Finance including CIBIL related matters

(29.04.2017)

The Jaipur Branch organized a SC Meeting on How to

prepare Project Report, CMA Data for Bank Finance

including CIBIL related matters on 29.04.2017 at ICAI

Bhawan. CA. Anil Khandelwal was the eminent speaker.

CA. Anil Khandelwal delivered the lecture on the above

subject. CA. Rakesh Kumar Kabra was convenor of the

programme.

.

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Chartered Accountants with strong academic background and looking for challenging career. DISA/CISA qualification will add to the strengths. Total CTC commensurate with strength and would be attractive for right talent. S. Bhandari & Co., Chartered Accountants, Jaipur, Email: auditors@sbhandari.in/ bhandariss@hotmail.com

GST and Indian Federalism By Aparajito Sen

The soon to be implemented Goods and Services Tax (GST) is expected to harmonize indirect taxes and build a unified Indian indirect tax structure. Currently there are myriad indirect taxes that are levied and collected by the union and state governments. Since each state government has the power to decide its own indirect tax policy (rates, exemption limits, etc.), each state taxes different commodities differently. A commodity, thus, is priced differently across states. This is seen to be inconvenient for traders involved in inter-state transactions and business concerns based across multiple states. GST shall harmonize all these indirect taxes and replace them with a uniform GST rate. With GST, similar commodities shall be taxed identically across states.

Federalism in India

A federation, simply defined, implies a division in sovereign power between the union and constituent provincial governments. Very often, the nature of a federalism practiced by a country is understood in terms of its resemblance to the American system of federalism. Although India does not possess a perfect federal system of government (when compared to the classical western understanding of federalism), it is basically a federation “marked by the traditional characteristics of a federal system, namely, supremacy of the Constitution, division of power between the Union and States and existence of an independent judiciary.”-Ganga Ram Moolchandani v. State of Rajasthan (2001). India is, thus, often understood to be ‘quasi federal’ in nature with a union government more powerful than the states.

Nevertheless, the Supreme Court understands federalism to be an important constitutional principle. In the much famed Kesavananda Bharti v. Union of India (1973) case, Justice Sikri held that federalism was a part of ‘the basic structure’ of the Indian constitution, implying that a constitutional amendment cannot violate the principles of federalism. In S.R. Bommai v. Union of India (1991) the supreme court again held the importance of Indian federalism, ruling that a state emergency would fall under the ambit of Judicial review. More recently, in the Nabam Rebia v Deputy Speaker (2016) case, the Supreme court quashed the state emergency in Andhra Pradesh upholding federalism.

Implications of GST on Indian federalism

The power of a state government to decide its indirect tax policy independently is a federal power which it derives from the constitution. With implementation of GST, this power of deciding the indirect tax policy would lie with the

newly formed constitutional body- Goods and Services Tax Council (GST Council).

The council consists of representatives of the elected union and state governments. For a proposal to be passed by the council, it requires the approval of 3/4

th (75%) of the total

votes (of those present and voting). The union government possesses 1/3

rd of the votes (33.33%), while all the 31 state

governments (the elected governments of all 29 states and the union territories of Delhi and Puducherry that are members of the GST Council) collectively possess 2/3

rd of

the votes (66.67%). Given that the votes are equally divided amongst all member states, each state possesses (approx.) 2.15% of the total votes.

There is an obvious imbalance in the share of votes between the union and state governments. The union can veto any proposition of the states, even if hypothetically all 31 states agree to it. The union government, on the other hand, requires at most, the assent of 20 states alongside its own to pass a decision. Given that the national political party/ coalition in power at the centre is generally expected to be in power in a significant number of states, the voices of the states led by regional parties (which are not allies of the national political party / coalition in power at the centre) may be ignored in the decision-making process of the council.

It is evident from this imbalance in the share of votes, that the elected state governments are set to lose considerable federal powers with regards to indirect taxation. Some have contended conversely, arguing that GST, instead of impinging on Indian federalism, shall promote the spirit of ‘cooperative federalism’- that the states and the union shall ‘co-operate’ for a larger cause. The incumbent union assumes that the GST Council requires the states and the union to engage in positive discourse, to cooperate, and arrive at a mutual consensus, thus furthering a cooperative spirit. However, given the imbalance in the voting structure, it is hard to assume that the decision- making of the council may entertain ‘mutual consensus’.

The importance of Indian federalism in the context of indirect taxes

The question remains, however, how serious might the practical implications of such a contraction of federal powers be. Some suggest that an abstract constitutional principle like federalism should not ideally hinder the potential, far more practical economic prospects of any policy. To say so, however, would be to ignore the potential real implications of the so called abstract principle in question.

A state decides its indirect tax policy based on its unique circumstances and ambitions. To acknowledge the mere existence of such federal units itself is to acknowledge these inherent differences in circumstances and ambitions. Each separate state government possesses unique circumstances (credited to the state’s uniqueness geographically, demographically, politically, economically, or otherwise) and consequent unique ambitions that drive its unique policy. The fact that India possesses 31 elected state governments is indicative of the fact that it acknowledges this diversity. It is important to note here that indirect taxes make up a considerable share of the states’ own tax revenue. Therefore, the initiatives of the individual state governments depend heavily on their indirect tax revenue. It has often been argued by the incumbent union that the indirect tax revenues of state governments would increase post the implementation of GST and that the union government has anyhow assured to compensate the state governments for any shortfall in their indirect tax revenues for a five-year period. Although, the actual effect of GST on state government revenues can only be known post implementation of GST, it may not be out of place to mention here that manufacturing states (states that produce more than they consume-Gujarat, Tamil Nadu) are likely to lose out considerable indirect tax revenues post the implementation of GST. Besides, the union compensation is only for a five-year period, following which, states may find it difficult to independently control their revenue inflow attuned to their expenditure. More importantly, one must appreciate indirect taxes as a mode of directing policy than solely as a source of government revenue. By directing its indirect tax policy, states can control the consumption of specific commodities by taxing merit goods at lower tax rates, taxing luxuries at higher rates etc. For instance, the Kerala state government in 2016 introduced a ‘fat-tax’ on oily consumables to reduce the consumption of fattening food items based on the elected state government’s goals and aspirations. A state decides its tax policy based on its unique circumstances and ambitions. To acknowledge the mere existence of such federal units itself is to acknowledge these inherent differences in circumstances and ambitions. Given that the demographics, income among other circumstances are not similar across states, a state government may define a unique indirect tax policy as per its unique circumstance. Given that each different state possesses unique characteristics, it is essential that the elected state governments have the flexibility to determine their own tax policy independently. Which way should we ideally be headed? Currently, India is experiencing a trend towards centralization. The Bharatiya Janata Party in power at the centre, by itself holds a simple majority in the lower house of parliament, not requiring the support of any of its regional allies. There have been several attempts by the union to undermine the sovereignty of the federal state governments- the attempts of the Union to impose President’s rule in the

states of Arunachal Pradesh (2015) and Uttarakhand (2016) are reflective of this trend. Also, the latest state legislative elections in UP see national political parties becoming key contenders, often overtaking regional parties. Although it is unlikely that the objective behind GST was to curb state powers, one may validly suggest that the policy fits into the current centralizing trend. Historically, in India, the two extremes of centralized and decentralized regimes have not produced desirable results. The Indira Gandhi regime (during the emergency of 1975) established an absolutist, unitary, executive- dissolving the powers of all state governments. Although the policies of the government were unidirectional, they were left poorly implemented. The government was unable to meet either its growth or social prospects – The famed ‘Garibi Hatao’ initiative is today largely understood to be a failure, the liberalisation of 1991 having believed to have lifted more people out of poverty at a comparatively much faster rate. The UPA-I and UPA-II regimes of 2004 and 2009 posed polar opposites to the centralized government of 1975. The incumbent union government, then, was a weak coalition heavily dependent on the support of regional parties in the parliament. Resultantly, regional politics heavily influenced national policy making, often undermining national interest. For instance, India jeopardized its economic ties with Sri Lanka due to the hostility of a regional coalition partner (DMK party of Tamil Nadu) while significant policy decisions were hindered on account of ideological differences with another regional coalition partner (Trinamool Congress party of West Bengal). Experience, therefore, points to the need for striking a sound balance between a centralization and decentralization- giving the union and state governments adequate independence to frame policies within their own sphere, while coordinating and cooperating in issues of national interest. One must also appreciate that the state legislative Assemblies in India enjoy more democratic legitimacy than the Union parliament- it has been observed, over the years, that state legislative elections have consistently entertained higher voter turnouts than the union parliamentary elections. The principle of federalism, therefore, should ideally be protected. Conclusion Given that post implementation of GST- the freedom of the states to determine their own indirect tax policy shall be compromised and that the union can (already) override the states in the GST council, one may validly conclude that the states shall lose considerable federal powers. GST promises apparent economic gains – increased private investment, spur in economic growth apart from a much- needed economic unity among Indian states. Much like the Indian constitution which being a living, breathing document, adapts to the ever- changing times and circumstances, the understanding of federalism too should adapt to make room for a more cooperative understanding. For true cooperative federalism to prevail, however, there is a need to strike a balance between the powers of the union and the states and regard the elected state governments as rightful equal partners in deciding policy direction.

*************

IGST – INTEGRATED GOODS AND SERVICE TAX By CA SUDHIR HALAKHANDI

A new model is developed under proposed GST to

monitor the interstate trade of Goods and Services and this is called IGST. Let me clear first thing it will not replace the existing CST and there will be long awaited goodbye to Central Sales Tax in the GST regime.

Now it should also be noted that IGST will not be a Tax burden on Taxpayers and Consumers in addition to the SGST and CGST so one should not be presumed that IGST is a third tax on the consumers. It is only a mechanism to monitor the interstate trade of Goods and services and further to ensure that the ultimate SGST is gone to the consumer state since the GST is a destination based tax. It is called “Integrated Goods and Service Tax”. Let us try to understand this IGST mechanism step by step:-

1. Dealer of the selling state will collect IGST from the purchaser on Interstate Transaction and the rate of IGST will be the combined rate of SGST and CGST, Say if the rate of SGST is 8% and CGST is 10% then the rate of IGST will be 18%.

2. While depositing the IGST the seller will take credit of SGST and CGST paid by him on purchase of such Goods or services within the state.

3. The selling state will transfer the amount of input credit of SGST taken by the selling dealer against the IGST to the centre. This will ensure that selling state will not get any revenue out of this transaction.

4. The interstate buyer shall take credit of IGST against his liability of IGST/CGST/SGST.

5. Now come to the mechanism of transferring the SGST to the consumer state in which the central agency will transfer the amount of input credit of IGST used by selling dealer of consumer state while paying his liability of SGST.

This whole mechanism will be known as a system of monitoring the interstate trade of Goods and services and will be called IGST. It is interstate Goods and service tax and also mentioned as integrated Goods and service tax in

the discussion paper issued by the Empowered committee of the state Finance Ministers.

Since the concept of Taxation is changed from the sales to Supply of Goods and Services under the GST hence Branch and stock transfer will also be governed with this model. So it will be a goodbye to F-forms.

The IGST will not increase the taxation cost since it is only a Mechanism to monitor the Interstate movement of Goods but certainly it will increase the compliance cost of the dealers. Let us have a comprehensive illustration of IGST on imaginary figures:-

BASIC ILLUSTRATION OF IGST

Though practically how IGST will actually work can only be understood properly when it is implemented but whatever information is available at present from the basics which has been mentioned in the Draft law we can understand the IGST with the help of this very simple example:-

TRANSACTIONS OF SALES X of Mumbai sold Goods worth Rs. 10.00 Lakhs to Y of Mumbai and Y of Mumbai sold the same goods to Z of Rajasthan at Rs. 10.50 Lakhs. Now at second stage Z of Rajasthan sold the same goods to a consumer in Rajasthan at Rs.11.00 Lakhs. Suppose the rate of SGST is 8% and rate of CGST is 10%. Now this is the transaction of sale of Goods from one state to other state and now we are trying to analyze how IGST will work here.

Please note that in the example given above we have not followed the exact situation which has been mentioned in the draft of “Integrated Goods and Service Act” with respect of transfer of fund to and from the IGST to CGST and SGST because it seems to be very complicated and need some simplification of narration but what is given in this study will give you the insight of proposed working of the IGST.

RATE OF TAXES PRESUMED

S.NO. DESCRITOPN RATE OF TAX

1. SGST 8%

2. CGST 10%

3. IGST (SGST+CGST) 18%

TAX LIABILITY OF VARIOUS DEALERS

S.N DESCRIPTION SGST (8%)

CGST (10%)

IGST (18%)

REMARK

1. X of Mumbai sold Goods worth Rs. 10.00 Lakhs to Y of Mumbai.

80000.00 100000.00 NA It is an Intra-state Sales hence SGST and CGST are Payable.

Less:- Input Credit NIL NIL NA

Tax Deposited by X 80000.00 100000.00 NA

2. Y of Mumbai sold the same goods to Z of Rajasthan at Rs. 10.50 Lakhs

NA NA 189000.00 It is Inter-state sale hence IGST is Payable.

Less:- Input Credit NA NA 180000.00 (SGST 80000.00 + CGST 100000.00)

In IGST the input credit of SGST and CGST paid on the goods which is sold in interstate sale is available.

Tax Deposited by Y NA NA 9000.00

3. Z of Rajasthan sold the same goods to a consumer in Rajasthan at Rs.11.00 Lakhs.

88000.00 110000.00 NA It is intra-state sale in the state of Rajasthan hence SGST and CGST is applicable.

Less:- Input Credit 79000.00 110000.00 NA The total Input credit of IGST is Rs.189000.00 and it can be set of against IGST, CGST and SGST in that order of priority.

Tax Deposited by Z 9000.00 NIL NA

TRANSFER OF REVENUE FROM STATE TO CENTRE AND VICE VERSA

S.NO. DESCRIPTION AMOUNT

1. The selling state will transfer the amount of SGST to the centre which has been taken as input credit while discharging the liability of IGST.

80000.00

2. The centre will transfer the amount of IGST to the Consumer state which has been taken as input credit while discharging the liability of SGST.

79000.00

EFFECT OF IGST ON REVENUE OF VERIOUS CONSTITUENTS

S.NO. DESCRIPTION OF CONSTITUENTS OF IGST

1. The selling State

2. The Purchasing State

3. The Centre

THE SELLING STATE

S.NO. DESCRIPTION SGST REMARK

1. The amount of SGST deposited by the First seller

80000.00 CGST and IGST are not part of state revenue hence not considered here.

2.

Less: - The selling state will transfer the amount of SGST to the centre which has been taken as input credit while discharging the liability of IGST.

80000.00 NA

3. Revenue of the Selling State NIL NA

Note- The GST is destination based tax hence the selling state will get NIL tax on inter-state transaction where goods are consumed in other state. The above calculation is supporting the same concept.

THE CONSUMER STATE

S.NO. DESCRIPTION SGST REMARK

1. The amount of SGST deposited by the seller in the Consumer state.

9000.00 CGST and IGST are not part of state revenue hence not considered here.

Add-The centre will transfer the amount of IGST to the Consumer state which has been taken as input credit while discharging the liability of SGST.

79000.00 NA

Revenue of the Consumer State 88000.00 NA

Note: - The sale price at consumer state is Rs.11.00 Lakhs @ 8% hence the revenue calculated at Rs.88000.00 is cross tallied and supported the same concept.

THE CENTRE

S.NO. DESCRIPTION CGST IGST TOTAL

1. The amount of CGST deposited by the First seller in the Selling state.

100000.00 NIL 100000.00

2. The amount of IGST deposited by the Second seller in the Selling state.

NIL 9000.00 9000.00

Total 100000.00 9000.00 109000.00

3. Add:-The selling state will transfer the amount of SGST to the centre which has been taken as input credit while discharging the liability of IGST.

NA NA 80000.00

Total NA NA 189000.00

Less -The centre will transfer the amount of IGST to the Consumer state which has been taken as input credit while discharging the liability of SGST.

NA NA 79000.00

Result-Revenue of the Centre NA NA 110000.00

Note: - The sale price at consumer state is Rs.11.00 Lakhs @ 10% hence the revenue calculated at Rs.110000.00 is cross tallied and supported this concept.

This will complete the full circle of IGST.

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Impact of GST on Inter State & Imports Transactions of Goods

By CA Ranjan Mehta

Prelude:- CGST and IGST Acts have been passed by the Parliament and 3 SGST laws have also been passed. Various trade bodies and Industries are pressurizing Govt to apply this law w.e.f. Sept, 2017 instead of July, 2017. Whatever be the decision this is certain that Govt. needs to bring it by 15

th

Nov, 2017, otherwise we will be living in an Indirect Tax Free World. In this context, it is very pertinent to understand, the impacts, GST is going to have on the various aspects of business. Since the incidence of GST, the ways in which businesses are done in India are going to change. Major re-hauling will be required, since currently taxes in a big away effect the Business Modelling in India. Every business process will needed to be relooked critically and re-engineered as per the foregoing provisions of GST Law to achieve the maximum benefit for business. Present Regime: - CST:- In Case of inter state sale of goods, presently CST is levied. CST is a Central Govt duty which is an origin based levy and is collected and retained by origin state. The rate of CST are 2-5% for B2B transactions and for B2C transactions they are equivalent to rate of VAT in the state of origin of goods. There is no separate levy of excise in such transfers as excise is levied on manufacture only and it has no linkage to sale or supply. Import Duties:- In Case of Import of goods, there are various levies of Customs at present.

1) Basic Custom Duty 2) Additional duty of customs/countervailing duty u/s

3(1) in lieu of Excise 3) Special Additional Duty u/s 3(5) in lieu of

VAT/Sales Tax 4) Anti-dumping duty 5) Anti-subsidy duty 6) Other various duties

Basic Custom duties is levied invariably on all products other than exempted products. Additional duty of customs or countervailing duty u/s 3(1) is generally equivalent to Duty of excise on that product in India; and Additional duty of customs u/s 3(5) is generally 4% which is a replacement for VAT/Sales tax. Anti dumping and anti subsidy duties have some very different conceopts in case imported products, which we are not focussing in this article. Subsumation of duties under GST:- Following are the duties are going to be subsumed in relation to IGST.

1) CST

2) Additional duty of customs/countervailing duty u/s 3(1) in lieu of Excise

3) Special Additional Duty u/s 3(5) in lieu of VAT/Sales Tax

Anti-dumping, anti-subsidy duties and Basic Customs duties are not going to be subsumed under GST. Thus, we can understand that largely GST is going to subsume only those levies/duties which were part of or relevant to current levies of excise and VAT. Provisions and Law:- The provisions related to Interstate trade are contained in the IGST Law. IGST- The Integrated Goods and Service Tax Act contains the provisions related to assessment of Place of Supply of Goods. It is only the Place of Supply provisions which will determine that whether on a particular transaction IGST will be charged or CGST & SGST will be charged. Sec 5 of IGST Act is the charging section, it explains that on which transactions IGST will be levied. Following are the transactions on which IGST Shall be levied:-

1. Supplies of Goods and services made in the course of Inter State Trade or Commerce.

2. Import of Goods into India This makes it very clear that in case of Inter state transactions of goods GST is going to be levied invariably. Further to that, on all the import of goods IGST shall be levied. When will the duties be levied? As per section 5(1) at following points IGST shall be levied:-

In Case of Inter State supply:- In Case of interstate stock transfer the tax shall be levied when supplies are made in the course of interstate trade or commerce. Thus it is very clear that in case of interstate transactions, when the supply is made, the tax shall be levied depending upon the place of supply. Upon happening of same transaction in different manners, Place of supply may get changed from intra state to interstate. Thus, the taxation would also needed to be changed from CGST/SGST to IGST.

In case of Import of Goods:- In case of import of goods the provision is as follows:- “PROVIDED that the Integrated Goods and Services Tax on goods imported into India shall be levied and collected in accordance with the provisions of section 3 of the Customs Tariff Act, 1975 (51 of 1975) at the point when duties of customs are levied on the said goods under section 12 of the

Customs Act, 1962 (52 of 1962), on a value as determined under the first mentioned Act.” Thus in case of imports, levy of IGST arise when the goods are going to cross the custom barriers of India and where the custom duties are levied. The Custom duty is levied at time when good are cleared from the port/airport after showing proper documentation (Bill of entry, Invoice etc.)

This leads to a further question whether on High Sales and Transhipment GST will be levied? This question is unclear as of now as currently under customs duty is paid at the time when goods are cleared for Home Consumption. However the duty is levied when goods cross the custom frontiers of India i.e. it enters into Indian Territorial water/air. Thus if go by literal interpretation the High Sea Sales and Transhipment are going to be taxed under IGST being the leviability of duty

arise. It is not very clear whether these transactions would involve levy of IGST or not. But when we read very carefully the proviso above and sec 12 the Customs Act, 1962, which is stated below, we get a clear insight of the Govt’s intention. Except as otherwise provided in this Act, or any other law for the time being in force, duties of customs shall be levied at such rates as may be specified under the Customs Tariff Act, 1975 (51 of 1975)], or any other law for the time being in force, on goods imported into, or exported from, India. Sec 12 reads as “except as otherwise provided in the act”, which means that if anything specifically provided in the law then the same will prevail. Sec 52 and 53 of Customs Act, 1962 provides for high sea sales and transhipment cases to be out of levy. Thus through this route such transactions are kept out of the purview of GST.

Place of supply of Goods:- To determine the type of tax (CGST and SGST or IGST) to be levied one need to identify the place of supply first. Sec 10 of IGST act specifies the provisions for identifying the Place of supply of goods in case of Inland supply.

Sub Section

Type Provision Example

1(a) Normal Case scenario

Place of supply shall be the location of goods where goods terminates for delivery

A Ltd in Jaipur was to supply some Material to B Ltd in Mumbai. However A Ltd delivered the material to agent of B Ltd in Baroda. Place of supply shall be Baroda.

1(b) Third Party Scenario

Where material was supplied to a party on the direction of a third person, place of supply shall be Principal Place of Business of that third person.

Ex 1 A Ltd in Ahmedabad directed B Ltd in New Delhi to deliver goods to C Ltd in Bangalore; Place of supply shall be Ahmedabad and B Ltd shall charge IGST. Ex-2 A Ltd in Kanpur directed B Ltd in Dehradun to supply material to Branch of A Ltd in Haridwar. The Place of supply for B Ltd shall be Kanpur; even where goods physically has not crossed the boundary of Uttarakhand.

1(c) Where there is no movement

Where there is no movement involved; Place of supply shall be the location of goods at the time of delivery to recipient.

A Ltd a Mining unit in Raipur made available lumps of Marble to B Ltd. However since lumps were huge, B Ltd asked A Ltd for permission to break them into pieces do some preliminary work and then transfer from there to Ranchi; Place of supply shall be Raipur.

1(d) When goods are assembled/ Installed

Place of supply shall be place of such Installation or assembly.

A Ltd in New Delhi installed a lift in the hospital of B Ltd in Mumbai; Place of supply shall be Mumbai.

1(e) Goods supplied in Train, Bus, Aircraft or vessel

The Place of supply shall be the place where such goods are taken on Board

Aircraft of Indicome airlines started from Mumbai and food items were taken on board. The flight went on to Delhi and then on to Kathmandu. The Place of supply shall be Mumbai.

Sec 11 of IGST act specifies the provisions for identifying the Place of supply of goods in case of Export/Import:-

Clause Type Provision Example

A Import Place of supply shall be location of importer

A Ltd in Bhopal imported goods from USA. The place of supply shall be Bhopal

B Export Place of supply shall be location outside India

A Ltd exported goods from Jamnagar to Abu Dhabi. Place of supply shall be Abu Dhabi.

Problems in place of supply provisions-

Provisions of sec 10(1)(a) and 10(1)(b) have created some deeming fiction into the law which have created a lot of confusion in the minds of practitioners and Law experts. I am trying to incorporate a few here for your knowledge.

Problem in sec 10(1)(a)

Ex- A Ltd situated in Mumbai want to supply some material to B Ltd at Indore. A supplies material ex-factory usually, however since B Ltd could not arrange vehicle, they asked A Ltd to arrange for the vehicle for them for which they will reimburse.

In This case the Place of supply shall be Indore, being the movement terminated for delivery at Indore only. A Ltd would Charge IGST on the invoice.

Consider the same example and choose the answer if the vehicle was arranged by B Ltd.

The Place of supply in this case will be Mumbai, since the movement of goods terminated for delivery in Mumbai itself i.e. material delivered to the transporter on behalf of B Ltd. A Ltd will charge CGST and SGST in his invoice since this is an Intra state supply of goods.

Problem starts here, As soon as CGST & SGST are charged, the credit flow hampers for B Ltd, as by law credit of SGST is not available interstate; and further to that, as per the modules developed by GSTN the credit pool of CGST is also going to be maintained state wise; so that will further hamper transfer of credit of CGST earned in one state to another.

Problem in sec 10(1)(b)

Ex-1 A Ltd in Kanpur directed B Ltd in Dehradun to supply material to Branch of A Ltd in Haridwar.

The Place of supply for B Ltd shall be Kanpur; even where goods physically have not crossed the boundary of Uttarakhand.

Here, in this case B Ltd will charge IGST in his invoice, Place of supply being Kanpur, in terms of sec 10(1)(b) of IGST law.

Now, to take the credit of this IGST, Kanpur office of A Ltd need to include this in their inward return and then in turn needs to raise Invoice on its Branch office at Haridwar. Then only it can take credit of IGST and adjust it towards their outward tax liability, hence finally transfer the credit to Haridwar.

The state tax authorities will, in this case cause objections; since as per destination based consumption tax principle they should get tax since the place of actual supply is Uttarakhand only. However through flow back of invoice from Kanpur HO to Haridwar, Uttarakhand is in anyway going to get their share in IGST. But still the state tax

authorities will try to get taxes at first stage only, as it may be difficult to get it at later stage. Further, it will be difficult for the assessee also, to prove such flowback.

Ex-2 A Ltd in Kanpur supplied material to B Ltd in Nagpur on the direction of C Ltd in Kolkata;

The place of supply in this case shall be Kolkata and the goods shall be deemed to be supplied to Kolkata as per sec 10(1)(b). However the actual delivery took place at Nagpur.

Here to move the complete cycle of credit; A Ltd will raise invoice to C Ltd and who in turn will raise invoice to B Ltd. All invoices will be IGST.

Again the tax authorities of Kolkata and Nagpur will fight over the issue. Since the Kolkata would like that tax to remain in their state, while Nagpur would say that tax to be in their hands being Consumption in their state.

Ex-3 Consider the case in Ex-1 with an alteration that A Ltd do not have a branch in Haridwar but only have a temporary work site for erection of lift at someone else’s premises only for 5 days.

In this case A does not have a permanent establishment in Uttarakhand. However Material is supplied in Uttarakhand only. The HO of A Ltd in Kanpur cannot raise invoice at its Branch in Haridwar being not registered separately. How will Uttarakhand Govt get its share of revenue if B Ltd has raised IGST invoice.

This will create a lot of problems in the settlement of accounts and Law Machinery will harass the assessee for such problems and will try to tax in their state only.

Now lets take this example to another level

Ex-4 A Ltd a company situated in Dubai orders B Ltd in Jaipur to transport some material to its branch in Mumbai.

What would be the scenario?? I would leave it for readers’ guess and contemplation, since if we go by 10(1)(b) then Place of supply is Dubai and in such cases 10(1)(b) does not apply and 11(a) will apply. However since material is not going out of India, again the applicability of 10(1)(b) arise. Thus, it is a circular loop.

Conclude

The current provisions for place of supply of goods are quite confusing and will give birth to a lot of litigation issues post GST roll out. Govt should look out to simplify these provisions and provide more clarifications, So that Industry could prepare better.

Govt is set to roll out GST by 01st

July, with many issues still to be catered. In order to bring a simplified GST the Govt should amend the provisions cohesively sitting with the Industry, since it is the Industry who is the biggest stakeholder apart from the consumers.

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Composition Scheme - GST By CA Rakesh Kumar Kabra

The One Nation One Tax Scheme (GST) which promises to club all the indirect taxes into one also boasts a composition scheme for small businesses. The GST Composition Scheme will make compliance with tax laws hassle free for eligible businesses opting for the scheme.

Every tax system prescribes several actions which need to be taken by businesses to ensure compliance with statutory provisions. Things like periodic payment of taxes, filing timely returns and maintaining prescribed records are necessary steps in a tax system for corporate taxpayers.

Maintaining records, making payments and filing returns is a costly and cumbersome process that may just be asking too much from a small dealer trying to grow a business. For this reason, the Composition Scheme provides a range of benefits to reduce the statutory requirements.

Under current tax laws many state governments have provisions in their VAT system for payment of a composition levy by small businesses. Under composition scheme the assessee is made free from maintaining complete details of its inputs and outputs and he can merely make payment of tax on lumpsum turnover at fixed rate.

Key features

Pay tax on quarterly basis instead of monthly basis

Quarterly return filling instead of monthly filling

No need to maintain records for inward supplies

No need to issue Tax Invoice Lump sum payment of tax at specified rate on

turnover

Who Can Opt?

Under section10(1) of CGST Bill-

A Registered taxpayer

Whose aggregate turnover during preceding Financial year did not exceed

Rs. 50 lakhs for can opt for Composition Scheme.

Limit of Rs. 50 lakh can be increased up to Rs. 1Crore by Central government by notification.

Aggregate turnover under GST Law s aggregate value of:

Taxable supplies (excluding the value of inward supplies on which tax is payable on reverse charge basis),

Exempt supplies,

Exports of goods or services or both and

Inter-State supplies

of persons having the same Permanent Account Number to be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated tax and cess.

Eligibility

Under Section 10(2) registered taxable person shall fulfill following to opt for composition scheme-

Person is not engaged in the supply of service other than supplies referred to in clause (b) of paragraph 6 of Schedule II (supply, by way of or as part of any service or in any other manner whatsoever of goods, being food or any other article for human consumption of any drink (other than alcoholic liquor for human consumption))

The registered person not engaged in making any supply of goods which are not leviable to tax under GST Laws.

The registered person not engaged in making any inter-State outward supplies of goods (It is to be noted that interstate purchases can be made)

The registered person should not be engaged in making any supply of goods through an electronic commerce operator.

The taxable person should not be a manufacturer of such goods as may be notified by the Government on the recommendations of the Council.

All of the registered taxable persons under one PAN are required to opt for composition scheme.

Tax rate

Maximum tax rates are prescribed under clause (a), (b) & (c) of subsection (1) of section 10 of CGST Bill as under in 3 categories:

Manufacturer: Maximum one per cent of the turnover in State or turnover in Union territory.

Specific Service providers: Only such service providers who are supplier of food related services (restaurant services) specified under paragraph 6(b) of Schedule II which are kept under composition levy at a maximum two and a half per cent.

Other suppliers: Half per cent of the turnover in State or turnover in Union territory.

Actual rates under composition scheme are yet to be notified.

It is to be noted that above rates are prescribed under CGST bill and thus does not include rate of SGGT. Therefore maximum effective rate under composition scheme under above categories will be 2%, 5% and 1% respectively.

Restrictions:

Option of Composition scheme lapse when aggregate turnover during

Composition taxpayer is not eligible to collect tax from recipient of supplies financial year exceeds limit of Rs. 50lakh or as may be prescribed under section 10(1)

The person should neither be a casual taxable person nor a non-resident taxable person.

Composition taxpayer is not eligible for Input Tax Credit

Composition taxpayer cannot issue tax invoice.

Returns:

Person opting for composition scheme is required to file a quarterly return in Form GSTR-4 by the 18th of the month following the end of the quarter.

An Annual return in form GSTR-9A is to be filled by 31st December following the end of financial year.

Person opting for composition scheme are required to pay tax on quarterly basis.

Penalty

If a taxable person is found not eligible for this scheme then other than tax liability under normal rate she shall be liable for penalty under section 73 &74. Thus utmost care needs to be taken when opting for this scheme and paying taxes.

Conclusion

The Composition scheme’s scope is limited under GST

to small tax payers who fulfil the criteria of aggregate

turnover limit of Rs. 50 lakhs. The traders,

manufacturers, job workers who does not understand

GST and its implications might use this scheme to

their benefit. Only those who are selling to consumers

in the last mile of the supply chain would find

Composition worthwhile. Restriction on interstate

supplies has restricted the benefit of this scheme for

many dealers. Composition dealers still have the

liability to pay tax under RCM which many taxpayers

may find difficult to follow.

DISCLAIMER:

The information cited in this article is for information purpose only and contains author’s point of view which may very(or which contains author’s personal judgment). The information has been drawn from various sources. While author endeavour to keep the information up to date and correct, author take the responsibility for any typographical or clerical error which may have crept in while compiling the information provided in this article.

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BEHAVIOURAL BIASES By CA Harsh Saraswat

As the history goes it is believed that we all are rational human beings and strive to maximize our wealth prudently. However when it comes to stock markets it is noted that at many instances emotions and psychology influence our decisions, causing us to behave in unpredictable and irrational ways.

As Benjamin Graham quotes it “Markets are more psychological and less logical”

Behavioural finance is a new field of finance which with itself combines psychology, economics and finance to find explanations about the irrational decisions made by people in financial markets.

Few of the Significant Biases which can be noticed very vividly in markets are :

Confirmation Bias

Loss Aversion Bias

Ownership Bias

Gambler’s Fallacy

Winner’s Curse

Herd Mentality

Anchoring Bias

Projection Bias

Lets Discuss all the biases one by one :-

Confirmation Bias

This is one of the most common biases we will find in the markets. It is basically a tendency to search for reasons and information that confirms one’s beliefs or hypotheses. It mostly happens when a trader is holding on to a loss position, when a trader takes a position for a reason and that reason doesn’t works out then such trader looks for more reasons to justify his position so that he can hold on to that position. Such Bias intensifies when a trader is holding on to a loss position as booking out a loss is much tougher job psychologically. This below picture explains the situation quiet well.

If we extend this bias it also gives rise to In-group bias, It is a tendency where we surround ourselves with those who share the similar takes on our outlook. Not only does this provide a false sense of security in our individual viewpoints, it makes us suspicious-or angry-with outsiders who dare to question how we feel.

Loss Aversion Bias

Loss aversion refers to investor's tendency to strongly prefer avoiding losses to acquiring gains. The fear of loss leads to inaction. Studies show that the pain of loss is twice as strong as the pleasure of gain of a similar magnitude. Investors prefer to do nothing despite information and analysis favoring a particular action that in the mind of the investor may lead to a loss. Holding on to losing stocks, avoiding riskier asset classes like equity when there is a lot of information and discussion going around on market volatility is manifestations of this bias. In such situations, investors tend to frequently evaluate their portfolio’s performance, and any short-term loss seen in the portfolio makes inaction their preferred strategy. It is a very common tendency among immature investors to book small profits and hold on to bigger losses hoping that their prices will come back soon.

Ownership Bias

Things owned by us appear most valuable to us. Sometimes known as the endowment effect, it reflects the tendency to place a higher value on a position than others would. It can cause investors to hold positions they would themselves not buy at the current level. This commonly leads to not selling a stock even when all the indicators suggest that such stock should be sold.

Gambler’s Fallacy Predicting absolutely random events on the basis of what happened in the past or making trends when there exists none. It is the mistaken belief that if something happens more frequently than normal during some period, then it will happen less frequently in the future, or that if

something happens less frequently than normal during some period, then it will happen more frequently in the future (presumably as a means of balancing nature).

It is very well visible in Indian Stock markets also, the leaders who were leading the 2008 rally are now in the junkyards and people who fell for such bias are sitting on heavy losses. It will be the eighth wonder if the likes of DLF , Unitech etc. see their 2008 peaks again. Winner’s Curse Tendency to make sure that a competitive bid is won even after overpaying for the asset. While behaviourally it is a win, financially, it may be a loss.

It is basically overestimating the value of good and then ending up worse off than the losers, it is more linked with error of judgment. The winner's curse says that in such an auction, the winner will tend to overpay. The winner may overpay or be "cursed" in one of two ways: 1) the winning bid exceeds the value of the auctioned asset such that the winner is worse off in absolute terms; or 2) the value of the asset is less than the bidder anticipated, so the bidder may still have a net gain but will be worse off than anticipated.

Herd Mentality

This is a common behaviour disorder in investing community. This bias is an outcome of uncertainty and a belief that others may have better information, which leads investors to follow the investment choices that others make. Such choices may seem right and even be justified by short-term performance, but often lead to bubbles and crashes. Small investors keep watching other participants for confirmation and then end up entering when the markets are over heated and poised for correction. Most of the individuals don’t go against the crowd as economist John Maynard Keynes said: “It is better for reputations to fail conventionally than to succeed unconventionally.” Most of the Retail traders end up losing money in the market is because they enter at the stage of euphoria when the markets are over-heated and they tend to follow herd mentality and most commonly they watch news channels which confirm their thoughts.

Anchoring Bias Anchoring is a cognitive bias that describes the common human tendency to rely too heavily on the first piece of information offered when making decisions. Investors hold on to some information that may no longer be relevant, and make their decisions based on that. New information is labelled as incorrect or irrelevant and ignored in the decision making process. Investors who wait for the ‘right price’ to sell even when new information indicate that the expected price is no longer appropriate, are exhibiting this bias. For example, they may be holding on to losing stocks in expectation of the price regaining levels that are no longer viable given current information, and this impacts the overall portfolio returns. Actually, the decision should be made purely on the basis of what price and value difference exist today in light of available information rather than based on what the prices were in the past.

Projection Bias We project recent past to the distance future completely ignoring the distant past.

As Charlie says,

If we can avoid the above biases, we well might become masters of our mind and money.

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Note on Statement of Financial Transaction By CA. P. C. Parwal

1. Section 285BA of the IT Act, 1961 read with Rule 114E of IT Rules, 1962 deals with the

obligation to furnish statement of financial transaction (SFT).

2. The statement of financial transaction is to be furnished in respect of a financial year in Form No.

61A.

3. The statement shall be furnished by every specified person in respect of the specified transactions

which are registered or recorded by him on or after 01.04.2016. As per Rule 114E, 13 nature of

transactions along with value of the transactions and the reporting person of such transaction has

been specified.

4. As per the said rule, transactions at S.No.1, 2, 3, 4, 12 & 13 are to be reported by a banking

company or a cooperative bank or post master general or NBFC as specified therein. The

transactions at S.No.5, 6, 7, 8 & 9 are to be reported by a company or mutual fund or authorised

person under the FEMA as the case may be. Transaction at S.No.10 is to be reported by the

registrar or sub-registrar. Transaction at S.No.11 is to be reported by a person who is liable for

audit under section 44AB of the Act.

5. Any person who is a reportable person under the said rule is required to get himself registered

with the prescribed income-tax authority. After getting the registration number, he is required to

furnish the return in Form No.61A to the prescribed authority on or before 31st May through

online transmission of electronic data under the digital signature of the specified person.

6. As per S.No.11 of Rule 114E, any person who is liable for audit under section 44AB of the Act is

required to furnish statement in respect of receipt of cash payment exceeding Rs.2 lacs for sale of

goods or services of any nature. The limit of Rs.2 lacs is to be seen transaction wise and is not

required to be aggregated.

7. In view of above, if a person has no reportable transaction under Rule 114E, he is not required to

get himself registered and consequently he is not to file any statement of financial transaction.

There is no requirement that any person liable for audit u/s 44AB is to file the Nil return for

transaction at S.No.11 even if the receipt of cash in respect of sale of service does not exceed

Rs.2 lacs.

8. Section 271FA provides penalty of Rs.100/- per day if a person fails to furnish the SFT within

the time prescribed. The amount of penalty shall be Rs.500/- per day if the SFT is not filed

within the period specified by the notice issued by the AO.

*************

Day – 1 (26.5.2017)

Timing Topics & Speakers

8.30 AM – 9.30 AM Registration & Breakfast

9.30 AM - 10.00 AM Inaugural

10.00 AM - 1.00 PM New Taxation Regime-Concept, Constitutional Aspects, Challenges Taxable Event (Including Relevant Definitions and Schedules) Time of Supply

CA. Naresh Seth, Mumbai

1.00 PM-1.30 PM Technology for GST Compliance Sh. Pavan Peechara, Banglore

Technical Expert on GST

1.30 PM - 2.30 PM Lunch

2.30 PM - 5.00 PM Input Tax Credit, Returns, Matching Concept, Job Work Vendors Management in new Taxation Regime

CA. Bimal Jain, New Delhi

5.00 PM Tea & Networking

12 CPE Two Days GST Conclave

“Ek Kadam GST Ki Aur” Organized By:

Jaipur Branch of CIRC of ICAI

Date

Venue :

Auditorium, Jaipur Branch of CIRC of ICAI Registration Fee:Rs.500/-(including Kit & book of Bare Law on GST Acts & Draft Rules)

Registration is open for members and they are requested to register in advance.

Cheque/DD should be drawn in favour of "Jaipur Branch of CIRC of ICAI" Online Payment Link : www.jaipur-icai.org/Payments/page

26th & 27th May 2017

Day – 2 (27.5.2017)

Timing Topics and Speakers

9.00 AM – 10.00 AM Breakfast & Tea

10.00 AM - 12.30 PM Valuation, IGST including POS, Registration (Location Aspect)

CA. Rajiv Luthiya, Mumbai

12.30 PM – 1.00 PM Shifting of CA Firm to Technology Firm under GST era CA. Bhupendra Mantri, Jaipur

1.00 PM - 2.00 PM Lunch

2.00 PM - 3.30 PM Business Disruption by GST, and Preparedness for same. Transitional Handling and Planning

CA. Jatin Harjai, Jaipur CA. Yash Dhadda, Jaipur

3.30 PM - 5.00 PM Panel Discussion & Open House – Q & A CA. Jatin Harjai CA. Virendra Parwal CA. Mukesh Khandelwal CA. Yash Dhadda SH. Pavan Peechara CA. Ranjan Mehta CA. Rakesh Kabra

5.00 PM Tea & Networking

C

Jaipur Branch of CIRC of ICAI & Jaipur Branch of CICASA

NATIONAL CONFERENCE FOR CA STUDENTS

Birla Auditorium, Jaipur

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The Institute of Chartered Accountants of India (Set up by an Act of Parliament)

Why to Join Oral Coaching Classes of Jaipur Chapter ?

On weekend there will be extra classes for problem solving by expert faculties of

Jaipur & BOS New Delhi.

Scholarships will be given up to 25% of the fees to meritorious students.

Scholarships will also be given to Need based students.

Experienced Faculties.

In house Library facility available.

Group wise Fee

Group I Group II Both Group

7500/- 5500/- 12500/-

For Details Contact

Vishal Gupta, A.E.O.

ICAI Bhawan, D-1, Institutional Area, Jhalana Dhoongri, Jaipur

Phone: 0141-3044216, 9672023888

E-mail:jaipur@icai.org, education@jaipur-icai.org

CA. Abhishek Sharma (Chairman)

CA. Dinesh Kumar Jain (CICASA Chairman)

CA. Sanjay Kumar Maheshwari (Secretary)

S.N. Subject No of Lectures Subject wise Fee

1 Accounting 85 hours 3100/-

2 Business Laws, Ethics and Communication

27 ½ hours 1100/-

3 Cost Accounting and Financial Management

90 hours 3500/-

4 Taxation 90 hours 3100/-

5 Advanced Accounting 85 hours 3100/-

6 Auditing and Assurance 27 ½ hours 1100/-

7 Information Technology and Strategic Management

35 hours 1500/-