 "Will GST apply for payment made for March work?")
We had appointed a work contractor earlier this year and he completed the work in March. We are now making payment. Do we need to deduct goods and services tax (GST) on this?
Generally, under the state-specific VAT (value-added tax) laws, applicable prior to July 1, 2017, a supplier was required to deduct works contract tax deductible at source (WC-TDS) on the payments made to a works contractor. The liability to deduct WC-TDS arose on the date of making the payment to the contractor. Accordingly, if you have made payment after July 1, 2017, a position may be possible that you should not be required to deduct the WC-TDS. However, this would have to be examined based on the provisions of state-specific VAT laws.
Under the GST law, the government is empowered to notify transactions in respect of which the recipient of goods/services should be required to make TDS against payments to a supplier. However, the government has not notified such transactions, and has deferred the implementation of provisions relating to TDS deduction. Therefore, you may not be required to do a TDS for works contract-related services, for which the payment is being made after July 1, 2017.
We publish material pertaining to the medical field. We consult doctors for development of content. The consultation charges are usually Rs 20,000 in a year. As most doctors have not registered under GST, do we need to follow the reverse charge mechanism on the payments we make?
GST law requires a recipient registered under it to deposit the liability under the reverse charge mechanism for goods/services procured from an unregistered supplier.
Considering your query, the doctors should be mandatorily required to obtain GST registration if their annual aggregate turnover (including the exempt supplies made by them) exceeds Rs 20 lakh on an all-India basis. However, if the doctors are un-registered, you are required to deposit tax under reverse charge, on the consultation charges paid. Additionally, you are required to undertake related compliances.
Amit Bhagat, tax partner, PwC India
We have a restaurant wherein we also have a bar where we serve alcohol. Can we opt for the composition scheme?
Under GST law, a person engaged in supply of food for human consumption or any drinks may do so. However, one condition is that the supplier of food/drinks should not be engaged in making supplies of alcoholic liquor.
In your case, since you would also be supplying alcoholic liquor to customers, you will not be eligible for availing of the benefit of the composition scheme. As alcoholic liquor for human consumption is outside the ambit of GST law, you can raise a separate invoice for food and alcoholic liquor, charging applicable GST and VAT, respectively.
Is central sales tax (CST) paid on closing stock eligible for input tax credit or can it be set-off by GST?
A person holding closing stock of goods immediately prior to the date of GST implementation is eligible to claim input tax credit of eligible duties and taxes, subject to prescribed conditions. The list of such eligible duties and taxes doesn’t include CST paid under the earlier indirect tax regime. Therefore, you would not be eligible to claim input credit of CST paid in respect of goods held in closing stock as on June 30, 2017.
The writer is tax partner, PwC India. Aditya Khanna, associate director, PwC contributed to this column. The views expressed are experts’ own. Send your queries to yourmoney@bsmail.in
