Govt proposes AAR to help traders obtain advance ruling on GST

To keep litigations under check, the government is proposing to set up an Authority for Advance Rulings (AAR) for ascertaining the future tax liability with regard to GST.

According to the draft GST legislation, the applicants could approach the authority for determination of its Goods and Services Tax liability.

The ruling could also be obtained with regard to classification of goods and services, determination of value of the goods, and applicability of notifications to be issued under the proposed GST.

The applicants would also be able to seek clarification on whether they are required to seek registration under the proposed Act.

The ruling given by the authority, the draft says, would be binding on the applicants as well as the jurisdictional tax authority with respect to the issues raised in the application.

The authority can have several branches and each will comprise one member appointed by the central government and one from the state government.

"The qualification, eligibility conditions, method and process of appointment of members shall be as may be prescribed", the draft said.

The government proposes to role out new indirect tax regime GST from April 1, 2016. While the Constitution Amendment Bill is pending in Rajya Sabha, the Centre is getting the administrative preparedness for smooth roll-out of GST.

Besides the Constitution Amendment Bill, the Centre and state will have to pass their own GST legislations, the model for which is being finalised by the Centre.

GST, which is being touted as the most comprehensive indirect taxation reform since independence, will subsume various indirect taxes, including excise, octroi and service tax.

A committee appointed by Finance Minister Arun Jaitley has recently suggested revenue neutral rate of 15-15.5 per cent. There would be a standard rate of 17-18 per cent, a low rate of 12 per cent, and 40 per cent for demerit goods like aerated drinks, pan masala and tobacco.