GST: To pass on tax benefits, first tabulate them, say experts

Experts help clear doubts around the impact of the new indirect tax regime on businesses

I am a service provider having offices in multiple states. Under the service tax regime, I had a centralised billing system. Under the GST regime, should I change my billing system and start raising invoices from the local branch?

Jivi Jebaraj, Chennai

In the GST regime, service providers are required to obtain registration in each state where they have a place of business. The concept of centralised registration is now redundant. If the services are entirely supplied from the branch, or the branch plays a significant role in supplying the services, then such a branch shall be required to raise invoices and charge applicable GST. It is critical to identify the “establishment” rendering the service and the “establishment” receiving the service to complete the input tax credit chain.

How do I ensure that I pass on the benefit to consumers in accordance with the anti-profiteering clause under the GST? Is there any mechanism prescribed for calculating the benefit due to the GST?

Dwarkesh Jhaveri, Mumbai

Anti-profiteering clause is a self-policing mechanism. The anti-profiteering rules notified by the government contain provisions relating to constitution of authority, procedure for conduct of proceeding, etc. Companies need to tabulate the benefits arising out of the GST on some reasonable basis and pass them on to the consumer. The rules do not contain any mechanism to calculate the benefit or the basis on which it will be passed on to the customer.

What will happen to transactions with export-oriented units (EOUs) under the new GST regime?
  Dharmesh Dutta, Hyderabad

In the excise regime, specific exemption was given from levy of excise duty under the Central Excise Act, 1944, for removal of goods to EOUs. However, no such exemption has been given in the CGST Act/SGST Act/IGST Act. Therefore, any transaction with EOUs will be treated on a par with the Domestic Tariff Area (DTA) transaction. So for example, if registered person supplies goods to EOU unit located in the same state, he will charge CGST and SGST at the rate applicable to such supply of goods. If goods are supplied to EOU unit located in another state, then such supply will attract IGST. Further, outward supplies from EOU unit will be treated in a similar manner and taxes will be levied on the transaction as applicable. In other words, EOUs will be like any other DTA unit for the purpose of the GST.

What will be the fate of trade promotion schemes under the GST? 

Mohandas Menon, Kerala

Various trade promotion schemes are under operation, including some in the form of target-based incentives, combo packs, buy one-get one free schemes, etc. The GST law mandates linking of original invoices for claiming deduction from output tax liability in case of discount schemes. With respect to combo packs, there may be implications of mixed supply requiring payment of tax at the highest rate of goods and credit reversal in case of free supplies. Each of the schemes needs to be carefully analysed in order to be GST-compliant.