GST DEMAND CAN BE PAID IN INSTALMENTS

Final draft says deals in states’ territorial waters to be treated as intra-state supplies

The tax demand raised by the authorities under the proposed goods and services tax (GST) regime can be paid in monthly instalments for up to two years, on a case-by-case basis, in case of financial hardship. The revised draft GST model Bill, approved by the GST Council on Saturday, gives powers to tax officers to allow a taxpayer to pay dues in a staggered manner if he is facing a crunch in finances. The move is aimed at improving the scope of revenue recovery without causing hardship to the assessees. “A provision for instalment for the payment of tax has been allowed in the law, in case of assessment. Commissioners have been empowered to examine and approve the mode of payment of dues,” said a senior government official in the ministry of finance. Payments made via instalments will escape penalty but not interest. DILASHA SETH reports

Tax demand raised by authorities under the proposed Goods and Services Tax (GST) regime can be paid in monthly instalments for up to two years, on a case-by-case basis, in the case of financial hardships.

The revised draft GST model Bill, approved by the GST Council on Saturday, gives powers to tax officers to allow a taxpayer to pay dues in a staggered manner if he is facing a financial crunch. The move is aimed at improving scope of revenue recovery without causing hardships to assessees.

“A provision for instalment for the payment of tax has been allowed in the law in case of assessment. Commissioners have been empowered to examine and approve the mode of payment of dues,” said a senior government official in the ministry of finance.

Payments made via instalments will escape penalty but not interest. The facility can be availed by a taxpayer by writing an application to the commissioner. The commissioner has been empowered to allow payment of taxes in instalments to mitigate any financial hardship on the taxpayer, the finance ministry said in a press release on Saturday, after the 11th GST Council meeting.

So far, only Central GST and Integrated GST Bills have been passed by the Council. Similar provisions would also be made in the state GST and Union Territory GST Bills, to be taken up at a March 16 meeting. After the approval, these Bills will be tabled in the upcoming second part of the Budget session of Parliament, which starts from March 9, after approval of the Cabinet and the Assemblies concerned.

The final GST draft law has also addressed concerns with respect to jurisdiction of the states to levy tax on supplies of goods and services within 12 nautical miles, in the territorial waters, off the states.

Transactions in territorial waters should be treated as intrastate supplies so that the states would be able to levy tax on these. The draft law has been revised to cover this.

"A similar provision would also be incorporated in the SGST law, which will fully empower the states to levy and collect taxes on the supplies of goods and services in territorial waters,” said Andhra Pradesh Finance Minister Yanamala Ramakrishnudu. “This will protect the states’ revenues as more and more transactions are likely to take place in states’ territorial waters, especially in the context of increased exploration, drilling for petroleum products and development of new seaports in territorial waters.”

The Council also approved an enabling provision for higher tax ceiling of 20 per cent under the CGST Bill, against 14 per cent prescribed earlier. A similar provision will also be made in the SGST Bill, enabling the Council to raise the peak rate to 40 per cent in aggregate for GST in the future against 28 per cent prescribed now. For now, the four tax slabs will remain the same, at 5 per cent, 12 per cent, 18 per cent and 28 per cent.

The fitment relating to item wise GST rates will be worked out after March 15 by a committee of officers. It will also decide a cess on luxury and demerit items — luxury cars, aerated drinks, tobacco — to compensate states for any loss of revenue from implementation of GST in the first five years.