Skip to main content

Friendly Advance Ruling Mechanism to Smoothen Ride Under GST Regime


All taxpayers to be able to ascertain tax liabilities beforehand
India is planning a significant shift toward a litigation-free environment under the GST regime, creating a liberal mechanism that would allow all taxpayers to ascertain liabilities beforehand. The draft rules for advance ruling mechanism will allow all categories of taxpayers to approach the authority , unlike the existing system that restricts the facility to proposed transactions before the start of a business.

The advance ruling infrastructure will also ensure that every commissionerate has an authority, with a joint commissioner level officer as a member. This is modelled after global best practices in which advance ruling is treated as a revenue function, and carried out directly by revenue authorities without being passed on to any quasi-judicial entity .

“The efforts seem to be to reduce post-assessment disputes and, hence, money stuck in litigation, and also to bring certainty in taxation of supplies by a person,“ said Bipin Sapra, partner at EY.

At present, advance ruling can be sought for customs, excise duty and service tax for any proposed transaction. It cannot be sought for any existing transaction for central taxes, although the state valueadded tax regime permits even existing transactions.

Experts say this move is the first step toward bringing down litigation, but bias should not be toward revenue generation. Some experiments in the direct taxes, with the dispute resolution panel having revenue authorities as members, have not been very successful due to the inherent revenue bias.

“AAR would comprise government officials and so the challenge would be to preserve objectivity to ensure that revenue bias does not come into play ,“ said Pratik Jain, leader, indirect taxes, PwC.

Draft advance ruling norms pro vide that an application for advan ce ruling or appeal has to be filed online, with fees of Rs 5,000 or Rs 10,000, respectively.

The government has released another set of rules dealing with advance ruling, and those dealing with accounts and record and appe als and revision. The proposed GST Council meeting on May 18-19 will take up the final set of rules.

Rules for accounts and records propose to make mandatory the maintenance of separate accounts and records for each activity , inclu ding manufacturing, trading and provision of services. These, ex perts say , could prove quite cum bersome and increase compliance costs.

“Draft rules on accounts and records look quite elaborate and onerous,“ said Jain. He said that while GST is on supplies, rules contain detailed requirements of maintaining records related to manufacturing, trading and services.

“Rules for accounts and records could be outlandish for taxpayers...Taxpayers also need to maintain invoices, bills of supply , delivery challans, credit notes, debit notes, receipt vouchers, payment vouchers, refund vouchers and e-way bills separately for each such activity,“ said Rakesh Nangia, managing partner at Nangia & Co.
The government proposes to roll out the new tax regime, which seeks to replace multiple state and central taxes with a single levy , on July 1.

The Economic Times New Delhi, 21st April 2017

Comments

Popular posts from this blog

Household debt up, but India still lags emerging-market economies: RBI

  Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.As of December 2024, India’s household debt-to-gross domestic product ratio stood at 41.9 per cent. “...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent of disposable income as of March 2024. Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans,” the RBI said in its report.Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data sho...

External spillovers likely to hit India's financial system: RBI report

  While India’s growth remains insulated from global headwinds mainly due to buoyant domestic demand, the domestic financial system could, however, be impacted by external spillovers, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report published on Monday.Furthermore, the rising global trade disputes and intensifying geopolitical hostilities could negatively impact the domestic growth outlook and reduce the demand for bank credit, which has decelerated sharply. “Moreover, it could also lead to increased risk aversion among investors and further corrections in domestic equity markets, which despite the recent correction, remain at the high end of their historical range,” the report said.It noted that there is some build-up of stress, primarily in financial markets, on account of global spillovers, which is reflected in the marginal rise in the financial system stress indicator, an indicator of the stress level in the financial system, compared to its p...

Retail inflation cools to a six-year low of 2.82% in May on moderating food prices

  New Delhi: Retail inflation in India cooled to its lowest level in over six years in May, helped by a sharp moderation in food prices, according to provisional government data released Thursday.Consumer Price Index (CPI)-based inflation eased to 2.82% year-on-year, down from 3.16% in April and 4.8% in May last year, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed. This marks the fourth consecutive month of sub-4% inflation, the longest such streak in at least five years.The data comes just days after the Reserve Bank of India’s (RBI) Monetary Policy Committee cut the repo rate by 50 basis points to 5.5%, its third straight cut and a cumulative reduction of 100 basis points since the easing cycle began in February. The move signals a possible pivot from inflation control to supporting growth.Food inflation came in at just 0.99% in May, down from 1.78% in April and a sharp decline from 8.69% a year ago.A Mint poll of 15 economists had projected CPI ...