Much focus underneath GST has been given the products, however the govt has complete that the transition provisions square measure inadequate, particularly for the service tax cases.
One such downside is a way to report the service tax and take credit of an equivalent that was owed throughout the pre-GST amount, however paid throughout the GST regime. For the services underneath reverse charge created throughout Gregorian calendar month, the payment of service tax was technically due on Gregorian calendar month vi and to be precise it couldn't be according within the last service income tax return amount comprising Apr to Gregorian calendar month. This issue troubled all taxpayers.
Now the govt has kick off with a circular, that is raising a lot of queries than it's making an attempt to answer.
As per the circular, the maturity date of filing the revised service income tax return (which already invalid for many people) has been extended to Oct fifteen to facilitate coverage of such payment and taking credit in TRAN 1 deadline is Oct 30).
“Interestingly, the circular says this is often to assist those that prefer to wait until Gregorian calendar month vi, rather than paying by Gregorian calendar month thirty. whereas as per the law there was no demand to pay service tax by Gregorian calendar month thirty. Further, it's not best-known whether or not the revision window would be receptive all quite coverage (besides service tax paid in Gregorian calendar month) or solely reverse charge paid in July. whether or not assesses World Health Organization have already filed their revised come will re-revise their revised come is additionally not clear,” says KPMG, Priyajit Ghosh.
According to GST law, generally, the provider of products or services is vulnerable to pay GST. However, in specific cases like imports and different notified provides, the liability is also stitch the recipient underneath the reverse charge mechanism. equally CBEC has issued a listing of services that fall into the reverse charge mechanism.
Reverse charge suggests that the liability to pay tax is on the recipient of offer merchandise|of products} or services rather than the provider of such goods or services in respect of notified classes of products and services.
“The circular didn't address a really common downside moon-faced by the assessees, around coverage and taking credit of these service tax domestic invoices that were received on the far side Gregorian calendar month. Further, there's no clarity around coverage of service tax payment that were created on the far side Gregorian calendar month, in the main owing to late handiness of requisite data or omission. If GST wouldn't have replaced service tax, such payment would are according throughout various month of the service income tax return. As window of service tax coverage has been solely provided for Apr to Gregorian calendar month, taxpayers face difficulties,” says Ghosh.
Ghosh adds that several taxpayers would realise the necessity to revise their service tax coverage whereas finalizing their TRAN one. “Hence, to make sure sleek transition and logical coverage, it should be processed that every one styles of service tax payment will be according by Oct thirty one by method of ultimate revision of service income tax return and credit will be taken within the TRAN one,” says Ghosh.
The circular conjointly provides window of payment of service tax in cases wherever no registration was obtained.
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