6 Issues with New 6% GST Schemes
The government, exercising the power vide sections 9(1), 11(1) and 16 (1) of the CGST Act, 2017, has issued notification No. 02/2019 – Central Tax (Rate), dated March 07, 2019 specifying special taxation system under GST for small Goods or service providers .
Issues and challenges
Optional
| It is nowhere mentioned in the notification that this system is optional. However, at two places it is mentioned that person who opts for paying tax @ 6% hints that system is optional. |
| Notification is issued in terms of sections 9(1) and 11(1) of the CGST Act, 2017 which does not empower the government to give an option. If it was issued under powers of section 10 of CGST Act 2017, then section 10(1) provision itself suggests that it is optional. [means taxable person may opt to pay in lieu of the tax payable by him under sub-section (1) of section 9, an amount of tax calculated at such rate ] |
No Inter State supply
Registered person should not be making any inter-State supply .
If at a later stage, it is found that even one transaction was inter-State then he will be called for regular tax for all turnover after such transaction.
Thus any wrong interpretation of determining place of supply will results the registered person to pay huge tax liability plus interest and penalty.
Eligibility of Composition Scheme to be checked
It applies to supplies made by registered persons who are not eligible for composition levy under section 10 of CGST act 2017
Thus if a person was eligible but not opted for GST Composition Scheme , he can not apply for new 6% GST Scheme.
Tax on Exempt Supplies
| Person with this notification will be liable to tax @ 6% even on exempt supplies. [ Note :In order the person to be eligible for 6% GST Scheme , Registered person should not be engaged in making any supply which is not leviable to Tax under the Act , Like alcoholic liquor for human consumption, supply of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel ] |
| This notification is issued under section 9 which empowers the government to levy tax and section 11 is for granting exemption which has an overriding effect. |
No Declaration is to be filed ?
There is no requirement in the notification that a person opting for this scheme has to file any declaration before any specified time period. [ like in case person wants to opt for GST Composition Scheme he has to apply in GST CMP 2 before beginning of Financial year )
This fact creates a question as to whether it has to be opted from 1st April, 2019 or can even be opted during the year.
No need for Reveral of Input Tax credit
There is no mention of any reversal of ITC on goods in stock or capital goods in stock. For e.g., A service provider availed ITC of capital goods in previous year and also utilised it entirely to discharge regular tax liability. Now under this scheme, nothing is mentioned in notification about reversal or lapse of such ITC on stock or capital goods already taken. |