Proposition of Goods and Service Tax

GST was proposed as an indirect and comprehensive tax to be imposed on sale, manufacture and consumption of goods in addition to services at national level. It replaced all indirect taxes imposed by Indian governments of central and State on goods and services. The CBDT or Central Board of Service Tax notified the regulations stating that the provisions of section 206AA should not be applied to payments of royalty, interest, transfer of capital assets and fees for technical services, so that, a non-resident can utilise lower tax rates just by furnishing documents and details.

GST Tax Rate for Non-Residents

GST can also be termed as a destination based tax which is imposed during consumption of goods and services via the ultimate consumer. A person having a taxable supply yield over Rupees 25 lakhs will be required for GST registration in India. It must be acquired within I month of surpassing Rupees 25 lakh yield limit. The registration is provided based on PAN. The section 206AA of the Act of Income Tax states that a non-resident would require providing PAN for availing lower withdrawing rates.

According to the Income Tax Act, the GST tax rate for lower withholding is 10.506% whereas in absence of PAN in increases to 20%. A non-resident can also use lower tax rates by providing details and documents prescribed which include email ID, address of resident country, contact number and Tax identification number of the withdrawer in the specified territory or country of residence.

Law for Draft Goods and Service Tax

The Finance Ministry of India released a draft law for comments of stakeholders for introducing GST or goods and service tax in the country. The draft includes provision on the collection and imposition of state and central GST on all supplies of services and goods within a state. It also includes details on the criteria of a taxable person, requirements of registration, process to claim for input tax credits and its refunds and also about the procedure and deadlines of tax payments and returns.

Imposition of Penalty for Prosecution on Non-Filers

Due to a sharp rise of non-filers of returns of Income Tax, the department of Income Tax ordered to impose penalty and start prosecution in those cases to safeguard compliance. According to statistical analysis, the number of possible tax liabilities non-filers has increased from 22.09 lakh to 58.95 lakh in just one year from 2014 to 2015. They also implemented NMS or non-filers monitoring system as a pilot project to compute action on the non-filers with possible tax liabilities. Thus NMS has reduced the number of non-filers.