The Integrated Goods and Service Tax Act 2016 – Principles of Determination of Place Supply in Inter State Supply
Indirect taxation and the definition for supply are to change in the new age scenario today. The Integrated Goods and Service Tax Act 2016 is far away from the central excise for the manufacturing sector. The concept is sure to change the taxation citus. Service taxes and the value added taxes are far away from the concept. You can say the origin to the end is simply going to be a circumlocution, as per the current taxation regime.
Conventional definition for supply remains the same for this year, too as per the latest act, CGST. That provides the scope and real meaning too. Some important points must be noted, for the purpose of GST, to get clarity on the term supply.
- It could be services or goods
- It can be custom made or tailor made
- It must be for a consideration
- Supplies must be made by individuals
- Furtherance of businesses, is the proposed agreement of supplies
- Importing services is also a supply
There are matters that are to be understood as agreed without consideration in supplies, and that are listed below here.
- Business assets disposals
- Permanent transfers
- Applying temporarily for business assets
- Non business usage services
- Private purpose services
- Self supply services or goods
- Deregistered assets that are retained
- Taxable person’s supply of goods and services
Supply and Sales
As we move on to the regime of GST, it becomes mandatory to align the financial statements and the accounting details for taxation. This is essentially to meet the standards that are thrown at us, by the IGST Act 2016. Recognizing revenue standards will change in the new regime. This is for the tax purposes. There could be mismatches or misinterpretations coming in for the supply and the sales figures. Same is the case with the transit figures and the work in progress.
This is because of the simple fact that there is effective influence from time of supply changes. Integrated Goods and Service Tax Act 2016 in view will change correspondingly too. Interestingly, any removal of goods need not be relevant too. During the dispatch, you must recognize this with clear cut emphasis made on top priority to not to allow errors in the overall calculations. Payments, invoices and the receipts order will change over a period as well.
The Destination Principle of Taxability
The destination principle of taxability is one cornerstone for the Integrated Goods and Service Tax Act 2016. That created the need for formulating the broad guidelines to define that place of taxations and the places of supply.
There is room for service rules, for identifying the jurisdiction for taxability, in India. Yet, the goal here is to identify the tax services in the cross border circumstances. It is determined by one of the most important rules that is mentioned in the Integrated Goods and Service Tax Act 2016. You can identify if it is an intra state model or an interstate model.
Place of Consumption
You need to identify the nature of state here. It must be intra state or interstate to arrive rightly at the chargeability purposes. You need to charge the goods supply right from the place of consumption. Instead, the present situation is different. It is being charged at the source destination. Services are independent though. States have no jurisdictions in India to tax it. That is pathetic plight that is zeroed in after such a long time or else fixed only after so many years of independence. Integrated Goods and Service Tax Act 2016 streamlines the idea, but still it is a round method of approach that has least clarity on its own.
The model Integrated Goods and Service Tax Act 2016, has formulated the different determinations tests. Those tests are meant for the goods supply and the services too. It can be within the state or it can be intra states too. It is just only as listed below.
Intrastate and Inter State Supplies in the Integrated Goods and Service Tax Act 2016
When the supply is going to be between the states then that is mentioned here as the interstate supplies.
Intra state means the supply is only within the particular state. Supplies shall include the following in that case in particular for example.
Service provider as well as the recipient of the services may belong to one state.
There are exceptions there to note like the export units. Refunds are there for the exports.
There are no individual or specific considerations here in Integrated Goods and Service Tax Act 2016, such as the transfer of the branches, or the outlets, or the inter unit movements and so on. There can be free issues or the captive consumption too, that are not a case to alter the situation by any means whatsoever as such.
Services pay off, or intra-state supply or interstate supply discussions are the latest talk of the town. When we are going to tell the people to do their own jobs precisely, and up to the mark, then we are sure to get workers. When we trust the people to get our job done, then we do get leaders too.