Skip to main content

Centralised AAR for GST on Cards for Uniform Rulings

Centralised AAR for GST on Cards for Uniform Rulings
Bid to prevent divergent rulings on identical issues that fuel confusion
India is looking at creating a centralised Authority for Advance Rulings (AAR) for the goods and services tax (GST) after divergent rulings on identical issues fuelled confusion over applicability and the rate of tax. A recent case in point being the divergent rulings by Karnataka and Maharashtra AARs on the issue of solar projects.
“We are looking at an issuebased central authority with officials from states and the Centre,” a top government official told ET. “If more than one appeal is filed on the same issue in different jurisdictions it can be taken up by this body.”The AAR is a quasi-judicial body that allows assessees to get guidance on their potential tax liabilities relating to any transaction beforehand.
The rulings by the AAR are case-specific, but they have a persuasive impact on tax assessment in cases of other firms under similar circumstances. This is the key reason behind the government contemplating such a move. “AAR decisions are specific to the case, but they do have some precedence value,” the official said. The previous indirect tax regime had a centralised body ensuring consistency in orders.
Govt Wary of Variations
Maharashtra AAR ruled in a recent case that solar project contracts are “works contracts”, taxable at 18% as a deemed supply of service, instead of a “composite supply” that would have attracted 5%.Karnataka AAR, on the other hand, reaffirmed in a case that engineering and procurement contracts are composite contracts and taxable at a concessional rate of 5%.The government is wary of such variation in rulings that could sow further confusion.
The structure of the proposed centralised authority will be decided once a decision is taken to set it up, the official said. It may require a change in the GST laws and all the states would need to come on board.Experts said the initial experience of the AAR mechanism in the case of GST has not been very encouraging for businesses and backed a centralised body for consistency.
“On aspects like taxability of solar power plants, liquidated damages, exemption on sale by dutyfree shops at airports, etc, the authorities have taken a view which is not in line with the industry practice, globally accepted principles or government’s own intention while framing the laws,” said Pratik Jain, indirect taxes leader, PwC. “Further, there is likelihood of different states taking a divergent view on the same issue.”
Jain said there is an immediate need to have a centralised mechanism, either by changing the structure itself and bringing it at par with earlier central taxes or by building a control system under the GST Council’s aegis to ensure consistency and quality.“Given that each AAR can potentially decide differently on an issue, it makes sense to create a central AAR which will take up issues where more than one AAR has been approached on a similar issue,” said Bipin Sapra, partner, EY.

“In such a scenario, a mechanism needs to be created where all AARs should be listed on the GST portal and in case of similar applications, the state AAR should refer it to the central AAR.”India implemented GST on July 1 last year as to turn the country into a common market and erase interstate barriers.

The Economic Times, New Delhi, 05th June 2018

Comments

Popular posts from this blog

New income tax slab and rates for new tax regime FY 2023-24 (AY 2024-25) announced in Budget 2023

  Basic exemption limit has been hiked to Rs.3 lakh from Rs 2.5 currently under the new income tax regime in Budget 2023. Further, the income tax slabs in the new tax regime has been changed. According to the announcement, 5 income tax slabs will be there in FY 2023-24, from 6 income tax slabs currently. A rebate under Section 87A has been enhanced under the new tax regime; from the current income level of Rs.5 lakh to Rs.7 lakh. Thus, individuals opting for the new income tax regime and having an income up to Rs.7 lakh will not pay any taxes   The income tax slabs under the new income tax regime will now be as follows: Rs 0 to Rs 3 lakh - 0% tax rate Rs 3 lakh to 6 lakh - 5% Rs 6 lakh to 9 lakh - 10% Rs 9 lakh to Rs 12 lakh - 15% Rs 12 lakh to Rs 15 lakh - 20% Above Rs 15 lakh - 30%   The revised Income tax slabs under new tax regime for FY 2023-24 (AY 2024-25)   Income tax slabs under new tax regime Income tax rates under new tax regime O to Rs 3 lakh 0 Rs 3 lakh to Rs 6 lakh 5% Rs 6

Jaitley plans to cut MSME tax rate to 25%

Income tax for companies with annual turnover up to ?50 crore has been reduced to 25% from 30% in order to make Micro, Small and Medium Enterprises (MSME) companies more viable and also to encourage firms to migrate to a company format. This move will benefit 96% or 6.67 lakh of the 6.94 lakh companies filing returns of lower taxation and make MSME sector more competitive as compared with large companies. However, bigger firms have shown their disappointment since the proposal for reducing tax rates was to make Indian firms competitive globally and it is the large firms that are competing globally. The Finance Minister foregone revenue estimate of Rs 7,200 crore per annum for this for this measure. Besides, the Finance Minister refrained from removing or reducing Minimum Alternate Tax (MAT), a popular demand from India Inc., but provided a higher period of 15 years for carry forward of future credit claims, instead of the existing 10-year period. “It is not practical to rem

Don't forget to verify your income tax return in August: Here's the process

  An ITR return needs to be verified within 120 days of filing of tax return. Now that you have filed your income tax return, remember to verify it because your return filing process is not complete unless you do so. The CBDT has reduced the time limit of ITR verification to 30 days (from 120 days) from the date of return submission. The new rule is applicable for the returns filed online on or after 1st August 2022. E-verification is the most convenient and instant method for verifying your ITR. However, if you prefer not to e-verify, you have the option to verify it by sending a physical copy of the ITR-V. Taxpayers who filed returns by July 31, 2023 but forget to verify their tax returns, will get the following email from the tax department, as per ClearTax. If your ITR is not verified within 30 days of e-filing, it will be considered invalid, and may be liable to pay a Late Fee. Aadhaar OTP | EVC through bank account | EVC through Demat account | Sending duly signed ITR-V through s