CA Nilay Shah's Blog

GST Council says states will get exclusive control over all dealers up to a revenue of Rs1.5 crore—addressing the issue of dual control over small traders In a big step towards the implementation of the goods and services tax (GST), the centre and the states on Friday reached a consensus on most contentious issues under the new indirect tax regime, raising hope that they would be able to agree on the last remaining issue, the tax rates, by next month. The GST council, at its first meeting, agreed on a revenue threshold of Rs20 lakh below which the traders will be exempted from GST. This limit will be Rs10 lakh for the north-eastern and hill states. The council also managed to reach middle ground on sharing of administrative powers between the centre and the states. It decided that states will get exclusive control over all dealers up to a revenue threshold of Rs1.5 crore—thus addressing the issue of dual control over small traders. Given the lack of expertise among states to l

Cos could however claim input tax credit on intra-company transactions. India Inc may have to deal with another avatar of GST — the tax may be applicable on senior executives’ big-ticket perquisites over and above those mentioned in the employment contract and on gift items of over Rs 50,000. However, companies should be able to claim input tax credit on these intracompany ‘transactions’. Tax professionals ET spoke to said the rate may be in the 18% band, depending on the nature of the perk/gift. A finance ministry official, who did not wish to be identified, said an employer’s gifts to employees will be treated as supplies without any consideration and attract GST. However, companies are likely to be able to claim input tax credit on it. Keeping tabs on company perks and gifts will not be an additional enforcement cost to the government, tax experts said. All purchases by companies will be available on GSTN. Therefore, during audits these issues can be easily identified. G

The goods and services tax (GST), India’s new indirect tax regime, makes directors of private limited companies liable for recovery of unpaid taxes, interest or penalties pertaining to supply of goods or services. To complicate matters, the GST Acts do not provide a definition for the term ‘director’ or make any distinction between executive or non-executive directors. Further, the existing directors and officer’s liability insurance — that helps a company hedge against professional and functional risks emanating from managing and running a business – do not cover the additional risks under GST. Section 89 of the Central GST Act refers to recovery of tax, interest and penalties in case of private companies. “In such cases all directors will be held liable unless they prove it is not due to their neglect or breach of duty," says Shriram Subramanian, founder and managing director, InGovern Research Services. Legal experts say VAT Acts of some states put the onus on directors for su