GST demand can be paid in instalments

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

Tax demand raised by authorities under the proposed Goods and Services Tax (GST) regime can be paid in monthly instalments of up to two years, on a case-by-case basis, in 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 the scope of revenue recovery without causing hardships to assessees.

“A provision for payment of tax in instalments has been allowed. 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 added in the state and Union Territory GST Bills, which are to be discussed at a meeting scheduled on March 16. After the approval, these Bills will be tabled in the upcoming Parliament session that would begin from March 9.

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

Transactions in territorial waters should be treated as intra-state supplies so that the states would be able to levy tax on them. The draft law has been revised for this purpose.

"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 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,” he added.

The Council has also approved a provision seeking a higher tax ceiling of 20 per cent under the CGST Bill. The ceiling was previously fixed at 14 per cent.

A similar provision will be added to the SGST Bill, enabling the Council to raise the peak rate to 40 per cent in the future as against the prescribed 28 per cent . For now, the four-tier structure of 5 per cent, 12 per cent, 18 per cent and 28 per cent will remain intact.

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.