14 January 2010

Ahmedabad: No big Four had interest in ICAI Branches

One of my friend called me from Pune and asked did this time big four had a panel in branch election and big four contested? I was wondering why he is asking such question. Then I was traveling from Mumbai to Ahemdabad and one of CA belonging to Ahmedabad working in Mumbai in MNC recognised me and walked to me and introduced and asked the same question. Then I started thinking why people are thinking like this?
This is the background I thought let me write on this on my blog. If anybody knows about ICAI, is well aware the power is centered in New Delhi and all policy decisions are taken at Central Council. Regional Council are mere extension of branch, or say Regional council are only branches for big metros. Nothing else. Looking at this, as far my understanding goes, big fours are never attracted to even regional councils, forget about branches. The real power center is at New Delhi and big four always want their presence felt at Central Council.
There have been very few examples of having a big four candidates in regional council. In WIRC I have seen only N C Hegde in last many years who belonged to Big Four. And never at branches.
What happened at Ahmedabad? In Ahmedabad branch elections, only one candidate Sanjay R Shah out of 17 candidates contesting belonged to Big Four. And I don't think in this any activity by Big Four to control the branch. I look at it like this, Sanjay R Shah had been elected member of managing committee of Ahmedabad Branch in 2001-2004 too, when he was not part of any Big Four. So merely because he is now part of Big Four can't be looked at as an attempt of Big Four to conquer ICAI branches. I really wonder how the scenario was painted by presence of only one Big Four candidate that Big Four is contesting under a panel?
What do you think?

13 January 2010

Thane Branch Elections: People voted for the panel supported by existing committee

Thane branch elections like other branches,too were fought very fiercely. There were two panels in the fray. Sources says one plan is said to be supported by first chairman of Thane branch Raj Advani and the other by the people in existing managing committee. The other panel had a very good support of three study circles, Thane study circle, Dombivali study circle and Kalyan study circle.
Total votes casted in the elections were 895. It was indeed a very high no. of turnout in the election.
The panel in leadership of existing managing committee member Pankaj Parekh won and did the clean sweep by getting all the eight members elected from their panel.
Past chairman WIRC, Vipul Choksi was the returning officer and he did splendid job to handle the elections. In all fiercely contested elections, the role of returning officer becomes very very crucial. My compliments to Vipul Bhai.

Here is the list of candidates won:

Sr. No.	Name of Candidates	Votes
1	Pankaj Parekh	504
2	Madhukar Chavan	490
3	Jaydeep Sahastrabuddhe	484
4	Anand Gharpure	476
5	Sameer Sarandhar	455
6	Navinchandra Dedhia	448
7	Rajendra Chaplot	429
8	Madhav Khisti	426

10 January 2010

PAN requirement for transmission of shares in physical form

Circular No. SEBI/MRD/DoP/SE/RTA/Cir-03/2010, dated 7-1-2010

1. The Securities and Exchange Board of India (SEBI) vide circular ref. no. MRD/DoP/Cir-05/2007 dated April 27, 2007 made PAN mandatory for all securities market transactions. Thereafter, vide circular no. MRD/DoP/ Cir-05/2009 dated May 20, 2009 it was clarified that for securities market transactions and off-market/ private transactions involving transfer of shares in physical form of listed companies, it shall be mandatory for the transferee(s) to furnish copy of PAN card to the Company/ RTAs for registration of such transfer of shares.

2. Based on representations/ clarifications sought by market participants and in continuation to the aforesaid circulars, it is hereby clarified that it shall be mandatory to furnish a copy of PAN in the following cases –

2.1. Deletion of name of the deceased shareholder(s), where the shares are held in the name of two or more shareholders.

2.2. Transmission of shares to the legal heir(s), where deceased shareholder was the sole holder of shares.

2.3. Transposition of shares – when there is a change in the order of names in which physical shares are held jointly in the names of two or more shareholders.

3. Incase of mismatch in PAN card details as well as difference in maiden name and current name (in case of married women) of the investors -

3.1. The RTAs can collect the PAN card as submitted by the transferee(s).

However, this would be subject to the RTAs verifying the veracity of the claim of such transferee(s) by collecting sufficient documentary evidence in support of the identity of the transferee(s) as provided for at para. 2 in the SEBI circular no. MRD/DoP/Dep/Cir-29/2004 dated August 24, 2004 read with SEBI circular no. MRD/DoP/Cir-08/2007 dated June 25, 2007.

4. All Stock Exchanges are advised to:-

4.1. implement the above by making necessary amendments to the byelaws and Listing Agreement, as applicable;

4.2. bring the provisions of this circular to the notice of the listed companies for necessary compliance and also to put the same on their website for easy access to the investors; and

4.3. communicate to SEBI the status of the implementation of the provisions of this circular and the action taken in this regard in the Monthly Development Report.

5. All Registrars to an Issue and Share Transfer Agents are advised to:-

5.1. take necessary steps to implement the above decision.

5.2. disseminate the provisions of this circular on their website.

6. This circular is issued in exercise of powers conferred under section 11(1) of the Securities and Exchange Board of India Act, 1992, read with section 55A of Companies Act to protect interests of investors in securities and to promote the development of, and to regulate the securities market.

Results of Elections to Managing Committee of Ahmedabad Branch

Elections to the Managing Committee for Ahmedabad Branch was held on 9th January and Counting took place on 10th Jaunary. Total 2034 votes were cated in a single day for the branch election and it was highest no. of votes.

Following are the winning candidates and their votes

Sr No.	Name of Candidate	No. of Votes
1	NAGRI NIREN MORLIDHAR - 10	1145
2	DOCTOR DEVANG ANILKUMAR - 1	1045
3	SHAH SANJAY RASIKLAL - 14	1039
4	VAKIL JAINIK NAUTAMBHAI - 17	1035
5	TALATI ANIKET SUNIL - 16	1022
6	KHANDELWAL PURUSHOTTAM LAL - 7	992
7	KEDIA SUBODHKUMAR BAJRANGLAL - 6	935
8	SHAH TUSHAR JAYANTILAL - 15	922

Following are the details of votes of members who contested and lost

Sr No.	Name of Candidate	No. of Votes
9	LANGALIA VISHALKUMAR DINESHCHANDRA - 9	875
10	SHAH HIREN DINESHBHAI - 13	864
11	SHAH CHIRAG MAHENDRABHAI - 12	857
12	KHANDHAR AMISH JASHVANTLAL - 8	840
13	PAMNANI CHANDRAKANT HARNAMDAS - 11	822
14	GATTANI SHARAD RAMKRISHNA - 3	818
15	JOSHIPURA JAGDISH PADMAKANT - 5	763
16	DOSHI CHINTAN MUKUNDBHAI - 2	737
17	JHA SATYENDRAKUMAR KRISHANDEO - 4	310

09 January 2010

Amendment to Gratuity Act

Payment of Gratuity (Amendment) act, 2009 - amendment in section 2 and insertion of section 13A

An Act to further amend the Payment of Gratuity Act, 1972.

Be it enacted by Parliament in the Sixtieth Year of the Republic of India as follows:—

Short title and commencement

1. (1) This Act may be called the Payment of Gratuity (Amendment) Act, 2009.

(2) It shall be deemed to have come into force on the 3rd day of April, 1997.

2. In the Payment of Gratuity Act, 1972 (39 of 1972) (hereinafter referred to as 'the principal Act'), in section 2, for clause (e), the following clause shall be substituted, namely:—

'(e) "employee" means any person (other than an apprentice) who is employed for wages, whether the terms of such employment are express or implied, in any kind of work, manual or otherwise, in or in connection with the work of a factory, mine, oilfield, plantation, port, railway company, shop or other establishment to which this Act applies, but does not include any such person who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules providing for payment of gratuity;'.

3. After section 13 of the principal Act, the following section shall be inserted, namely:—

"13A. Validation of payment of gratuity - Notwithstanding anything contained in any judgment, decree or order of any court, for the period commencing on and from the 3rd day of April, 1997 and ending on the day on which the Payment of Gratuity (Amendment) Act, 2009, receives the assent of the President, the gratuity shall be payable to an employee in pursuance of the notification of the Government of India in the Ministry of Labour and Employment vide number S.O. 1080, dated the 3rd day of April, 1997 and the said notification shall be valid and shall be deemed always to have been valid as if the Payment of Gratuity (Amendment) Act, 2009 had been in force at all material times and the gratuity shall be payable accordingly:

Provided that nothing contained in this section shall extend, or be construed to extend, to affect any person with any punishment or penalty whatsoever by reason of the non-payment by him of the gratuity during the period specified in this section which shall become due in pursuance of the said notification.".

Stay of Central Council Elections on Postal Ballot issue

The stay on declaration of results of Central council has been granted in the matter related to Postal Ballot. Around 92 postal ballots were received in lot and those were rejected.The case is related to that. Let us wait for the hearing!!

07 January 2010

Internal Audit of Credit Rating Agencies

Internal Audit for Credit Rating Agencies (CRAs)

Circular No. SEBI/MIRSD/CRA/Cir-01/2010, dated 6-1-2010

It has been decided in consultation with the credit rating agencies (CRAs) that the audit envisaged under Regulation 22 of the SEBI (Credit Rating Regulations), 1999 shall include an internal audit to be undertaken in the following manner:

a. It shall be conducted on a half yearly basis.

b. It shall be conducted by Chartered Accountants, Company Secretaries or Cost and Management Accountants who are in practice and who do not have any conflict of interest with the CRA.

c. It shall cover all aspects of CRA operations and procedures, including investor grievance redressal mechanism, compliance with the requirements stipulated in the SEBI Act, Rules and Regulations made thereunder, and guidelines issued by SEBI from time to time.

d. The report shall state the methodology adopted, deficiencies observed, and consideration of response of the management on the deficiencies.

e. The report shall include a summary of operations and of the audit, covering the size of operations, number of transactions audited and the number of instances where violations / deviations were observed while making observations on the compliance of any regulatory requirement.

f. The report shall comment on the adequacy of systems adopted by the CRA for compliance with the requirements of regulations and guidelines issued by SEBI and investor grievance redressal.

2. The time schedule for the internal audit shall be as under:

a. The CRA shall receive the report of the internal audit within two months from the end of the half-year.

b. The Board of Directors of the CRA shall consider the report and take steps to rectify the deficiencies, if any, and the CRA shall send an Action Taken Report to SEBI within next two months.

3. It is clarified that for the half-year October 2009 - March 2010, the CRA shall receive the report of the internal audit by May 31, 2010. Its Board of Directors shall consider the report and take appropriate measures to rectify the deficiencies and the CRA shall send the Action Taken Report to SEBI by July 31, 2010.

4. This circular is issued in exercise of the powers conferred by Section 11 (1) of the Securities and Exchange Board of India Act, 1992 read with the provisions of Regulations 19(1), 20 and 22 of the SEBI (Credit Rating Agencies) Regulations, 1999 to protect the interest of investors in securities and to promote the development of and to regulate the securities market.

Stay of Rajasthan High Court on notificationm of declaration of results of Central Council

ANNOUNCEMENT REGARDING NOTIFICATION OF THE DECLARATION OF RESULTS OF ELECTION TO THE COUNCIL AND REGIONAL COUNCILS

6th January, 2010

The Notification of the declaration of results under Rule 36 of the Chartered Accountants (Election to the Council) Rules, 2006 was to be published in the Gazette of India dated 6th January, 2010. While the Notification on the declaration of results of election to the 20th Regional Councils is being notified in the Gazette of India dated 6th January, 2010, however, the notification on the declaration of results in respect of election to the 21st Council is withheld arising out of the Stay granted by the Honourable High Court of Judicature for Rajasthan, Jaipur Bench, Jaipur vide its Orders dated 5.1.2010 in Civil Writ Petitions Nos. 157/2010 and 158/2010.

Please wait for the further Announcement in respect of the Notification on declaration of the results of election to the 21st Council.

(T. Karthikeyan)
Returning Officer & Secretary

06 January 2010

Pune Branch Elections Called Off

Pune branch elections have been called of by WIRC. Following allegations and counter allegations, the elections have been called off by WIRC and a fresh procedure will be initiated.

05 January 2010

Pune: Branch Elections has created lots of controversy, matter goes to court!

Branch elections has become more controversial than the RC and CC elections. All the major branches in WIRC is having fierce fighting at branch level. It's really disheartening that in the elections of a professional body, such controversy are created.
It is always welcome if someone make effort to bring the people to consensus and a team of managing committee is elected unanimously which is representing the people at large. But these exercises sometimes lead to bigger divide than cementing the relations. People have alleged pressure, and forced withdrawals in the process.
For newly elected Central Council Member from Pune, its as said in Sanskrit, "Pratham Grase Makshika Bhakshanam."
As per my information Pune election has now reached to court. It is expected that the branch elections are likely to be postponed and the election process will be re-initiated.
The initial notice sent by branch for the Special General Meeting for Pune branch elections mentioned that the SGM is convened at 6 pm on January 7th to elect the new managing committee for Pune branch. The election notification however states that the timing of elections is 8 am to 6 pm on January 7th. As a matter of procedure, the election can not be conducted before the SGM, because the elections are the agenda on the SGM. Later on branch came out with an Errata to change the time to 8 am which created another technical problem of having a minimum gap of 10 days in date of election and list of final candidates.
Rejections of the nominations of the candidates too have created many controversies. Candidates has challenged the rejections on the basis of mismatching addresses or writing names with surname first or first name first.
In the whole process the returning officer too has target of candidates ire. Candidates blaming the Returning officer that he has not complied with the procedural requirement with respect to the dates and sequence of events.
Its really a sorry state of affairs that we the members of such an esteemed professional body can't conduct our branch elections peacefully and matter goes to court of law.
I have a suggestion, ICAI should conduct branch election too along with RC and CC elections. And if not for all, then at least for big branches having more than 2000 members, the elections should be conducted along with RC & CC. We can vote on three ballot papers instead of two. What do you think? Please comment..

IndianCAs: Goods and Service Tax (GST) Through Frequently Asked Questions

Hello Member,

Do you want to know more about Goods and Service Tax (GST)? Here is the FAQ by T B Chaterjee, you will really like it, if you are interested in the subject.

http://indiancas.blogspot.com/2010/01/faq-on-gst-by-tb-chaterjee.html

If you wish to read about WIRC Office Bearers Elections going on read following postings:

1. WIRC Office Bearers Combination - 2

http://indiancas.blogspot.com/2010/01/wirc-office-bearers-combination-2.html

2. WIRC: Who will make office bearer of WIRC? Combination 1

http://indiancas.blogspot.com/2010/01/wirc-who-will-make-office-bearer-of.html

3. Who will rule WIRC for next three years? Part-2

http://indiancas.blogspot.com/2010/01/who-will-rule-wirc-for-next-three-years_02.html

4. Who will rule WIRC for next three years? Part-1

http://indiancas.blogspot.com/2010/01/who-will-rule-wirc-for-next-three-years.html

Thanks & Regards,

Ashwin Nagar

WIRC Office Bearers Combination - 2

Welcome Back.
So now the combination 2. Why, because Combination 1 has got many problems. Many people and limited posts.

Vadodara has historically getting position of vice-chairmanship and Vadodara has always been with the winning combination. This time Vadodara is in problem. The challenges are from Surat for the position of vice-chairmanship. Not only Surat, but Pune is also putting a big challenge to the combination and claiming vice-chairmanship. So Who will get this position in addition to B K Patel and Makrand Joshi? Very interesting. If you want to take my view, Vadodara is trusted and old companion, so I bet on Vadodara, Rajesh Bhai, congratulations!!
Surat is a growing economy and crunching a large no. of chartered accountants every year. Surat has also become politically very active. Historically Surat was always with Mumbai candidates, but now since B K Rathi, Surat wants to make its on presence felt and want to play a role in the region. Surat has proved at many occasions that its not behind Vadodara in any case. It was inactive but it doesn't mean, its incapable. So you can't right off the Surat's claim so easily. Best of Luck Jay Chhaira!!
Pune is as big or bigger than Ahmedabad. if Ahmedabad gets vice-chairmanship why not Pune. Only problem is that my humble friend Dinesh Gandhi is very sober person. He doesn't believe in position. He is happy even if he gets and even if not.
C V Pawar is also claimiant for vice-chairmanship, but I think he has been sidelined by the current combination and most likely he will have to find the address of the coffee shop at cuffe parade which I mentioned in my earlier post.
Secretaries are fixed and happy. Anil Bhandari, Mangesh Kinare and Shardul Shah. No other challenger.
Treasurership too has become a bone of contention. One of the two Vadodara or Surat will get it. Dinesh Gandhi will another claimaint along with Julfesh Shah. Parag too is there to claim it. So one of the two Parag or Julfesh will get it.

So looking at all this, I think Combination 2 too is working. How?

Chairmen:

N C Hegde
Sunil Patodia
Durgesh Kabra

Vice-Charimen:

Jay Chhaira
C V Pawar
Rajesh Shah

Secretary:

Anil Bhandari
Parag Raval
Vishnu Agarwal

Treasurer:

Julfesh Shah
Neel Majithia
Diensh Gandhi

What will happen to Ashok Jain? I understand, he is a force in himself, so he will not be part of any group. He will remain out whichever combination succeeds.
You forgot Dhiraj Khandelwal? No I didn't, I think its a cooling period for his chairmanship claim. He has really worked very hard in his last term.
Shruti Shah and Dilip Apte will not take any position so far.

What do you think about this combination? And its possibility? Explore till the first combination settle their problems.

FAQ on GST by TB Chaterjee

In Pursuit of Knowledge

Indirect Taxes

Goods and Service Tax (GST) Through Frequently Asked Questions

Timir Baran Chatterjee, Sr. Executive
Vice President (Corporate Affairs & Legal) and Company Secretary

Q.1 What is GST?

A. GST stands for Goods and Service Tax. It is a comprehensive value added tax.

Through a tax credit mechanism, GST is collected on value added goods and services at each stage of sale or purchase in the supply chain. GST paid on the procurement of goods and services can be set off against that payable on the supply of goods or services. But being the last person in the supply chain, the end consumer has to bear this tax and so, in many respects, GST is like a last-point retain tax.

Q.2 How GST will have its impact on revenue for the producing states?

A. GST is a consumption based tax and not origin based. Under GST structure, the tax would be collected by the states where the goods or services are actually consumed i.e., where the goods are actually sold and not the goods where it is actually originated. Hence, losses could be heavy for producing states. In view of the above, the Centre is considering a proposal to compensate states for any revenue loss that they might suffer on implementation of the Goods and Services Tax. The move is expected to encourage the producing states to adopt the new tax structure scheduled to be implemented from April 1 next year.

Q.3 Which country introduced GST first?

A. France was the first country to introduce this system in 1954. Today it has spread to over 140 countries.

Q.4 Will prices go up after the implementation of GST?

A. In fact, the prices of commodities are expected to come down in the long run as dealers pass on the benefits of reduced tax incidence to consumers by slashing the prices of goods. So far services are concerned, the prices could increase in the short term in view of the increase of tax rate from the present 10% to approximately 14% to 16% under GST regime.

Q.5 Who would be impacted by the implementation of GST?

A. All businesses, whether engaged in sales or supply of services would be impacted by GST. The impact would be on supply chains, ERP, product pricing, dealer margins etc. Even pure service providers would be required to charge GST.

Q.6 Whether Housing and construction sector would be covered under the ambit of GST?

A. Construction sector is a significant contributor to the national economy and housing expenditure dominates personal consumption expenditure. In view of the same. Housing and construction sector would be most likely covered under GST. Incidentally housing and construction sector is already covered under service tax, VAT etc.

Q.7 Whether Rail sector would be covered under GST?

A. Mr. Vijay Kelkar, Chairman of the 13th Finance Commission opined that the rail sector could be included under the GST umbrella to bring about significant tax gains and widen the tax net so as to keep the overall GST rate low. The inclusion of the rail sector in the tax regime which will do away with most of the indirect taxes should be done if the government wants to provide a level playing field to road and air transportation sector. This will have the added benefit of ensuring that all inter-state transportation of goods can be tracked through the proposed information technology. However, the matter is under the consideration of the Empowered Committee.

Q.8 Whether the existing check post at the state borders will be withdrawn after implementation of GST?

A. It may difficult to eliminate check posts given the concerns of state governments which may extent beyond collection of taxes and movement of goods to vehicle fitness examination, prevention of trafficking, collection of local cesses, octroi etc.

Q.9 What are the various types of GST?

A. GST is of two types- (a) Single or Unified GST and (b) Dual GST. Many countries have a unified GST system. However, countries like Brazil and Canada follow a dual system wherein GST is levied by both federal and state or provincial governments.

Q.10 What type of GST is expected to be applied in India

A. In India, a dual GST is being proposed wherein a central goods and services tax and state goods and services tax will be levied on the taxable value of a transaction. In India, due to federal structure, there is a proposal to introduce dual GST system.

Q.11 What is dual GST?

A. Under Dual GST system, GST is levied by both the federal and state of provincial governments. In India, a dual GST is proposed whereby a Central Goods and Services Tax (CGST) and a State Goods and Services Tax (SGST) will be levied on the taxable value of every transaction of supply of goods and services.

Q.12 What are the benefits of shifting to a dual GST system?

A. Dual GST is expected to be a simple and transparent tax structure with limited number of rates of tax. The result would be a reduction in the number of taxes at the Central and state levels, cut in effective tax rate for many goods, removal of current cascading effect of taxes, reduction of transaction costs for tax payers through simplified tax compliance, and increased tax collections due to wider tax base and better compliance.

Q.13 How will dual GST affect the fiscal health of states?

A. Being a consumption based tax, dual GST will result in better revenue collection for states with higher consumption of goods and services. The backward and less developed states would see fall in collections. The Centre is expected to put in place a mechanism to compensate states for any revenue loss due to GST.

Q.14 Will dual GST be levied in addition to the existing taxes?

A. No. It is proposed that the Central GST will subsume central excise duty (Cenvat), service tax, and additional duties of customs at the Central level; and value-added tax, central sales tax, entertainment tax, luxury tax, octroi, lottery taxes, electricity duty, state surcharges related to supply of goods and services and purchase tax at the state level.

Q.15 What will be the expected rate of GST

A. The combined GST rate is currently being discussed by the Centre and the Empowered Committee. The rate is expected to be in the range of 14-16%. Once the total GST rate is determined, the states and the Centre have to agree on Central GST and State GST rates. Today, services are taxed at 10% and the combined incidence of indirect taxes on most goods is around 20%.

Q.16 Will there be different rates for Goods and for Services?

A. Yes. It is expected that there will be single rate of GST for services at the Central and State Level. However, so far goods are concerned, there would not be one but a few rates of Central and State GST as under:

Zero Rates for goods of social importance

Special rates for gold, silver, precious metals, say 1%

Merit Rates

Revenue Neutral Rates

Q.17 What will be the taxable event under GST system?

A. The taxable event will be the "supply of goods" and the "supply of services". The current taxable event such as "manufacture", "sale of goods" "render of services" will not be relevant under GST system.

Q.18 Will there be uniform classification of goods (like Central Excise) under GST system?

A. It is expected that there would be an uniformity in the classification of goods under GST system.

Q.19 Will the Central GST and State GST would apply on all the transactions?

A. Yes. In every transaction (whether goods or services) both Central GST and State GST would apply at a predetermined rates.

Q.20 What will be the rate of taxation in case of interstate trade of goods?

A. At present interstate trade of goods is subject to payment of Central Sales Tax which is origin based. However, GST is a consumption based or destination based tax system. With the implementation of GST, CST is expected to be phased out. As a result, there would not be any tax when goods are sold on interstate basis. However, tax will be applicable in the destination state and not in the origin state.

Q.21 Whether GST would apply to stock transfers?

A. In GST, taxable event will be the "supply of goods" and the "supply of services" at the destination state. Therefore, stock transfers may be subject to GST at the destination state.

Q.22 Whether inter state supply of services will be subject to GST?

A. Yes.

However, detailed "place of supply "rules is to be framed for such transactions. It is a major challenge to the policy makers.

Q.23 What are the major challenges with regard to implementation of GST?

A. The introduction of the GST system is by far the most important tax reform in India. Consensus and co-ordination among states is required for it to succeed. Before it can be introduced, the Centre and states have to sort out issues like agreement on GST rates, constitutional amendments empowering states to tax services, taxation on inter-state transactions of goods and services, place of supply rules, drafting of Central GST and State GST legislation, consultation with all stakeholders including trade and industry associations before finalisation, administrative preparedness to implement the new tax regime and resolution of all other issues under discussion. This is a formidable challenge given that we have only limited time left.

Q.24 What are the implications of GST on imports and exports?

A. Basic Custom Duty will continue to there under GST system. However, the additional custom duty in lieu of CVD /Excise and the Special Additional Duty (SAD) in lieu of sales tax/VAT will be subsumed in the import GST.

The import of services will be subject to Central GST and State GST on a reverse charge mechanism. In other words, the GST will be payable by the Importer on a self declaration basis. Place of supply rules will determine which state will have the authority to get the tax. However, the taxes so paid will be available as Input Tax Credit and therefore it would be a revenue neutral.

Exports, however, will be zero rated, meaning exporters of goods and services need not pay GST on their exports. GST paid by them on the procurement of goods and services will be refunded.

Q.25 Whether the input tax credit for Central GST can be adjusted against liability of state GST or vice versa?

A. The proposed GST is likely to be a dual system that will support a Central and State GST chain separately. These two chains would be independent of each other. This implies that GST registered companies will not be able to adjust the input credits of one chain against the other. The Central GST chain is likely to integrate the existing excise duty and service taxes levied at the Central level while the State GST chain the current state-level VAT, other local levies and service tax on certain specific services on which States may get the powers to levy service tax. The input tax credit adjustments will operate within the respective chains but not across.

Q.26 Whether cross utilization of credits between goods and services be allowed under GST system?

A. Yes. Under GST system cross utilization of credit is allowed between goods and services. In other words, input tax credit received on purchase of goods can be adjusted against supply services and vice versa.

Q.27 Will the Input Tax Credit (ITC) and Cenvat Credit (CC) accumulated on the day of implementation of GST (expected date, 1st April, 2010) be allowed to be carried forward?

A. Most like "Yes". It is expected that both ITC and CC will be allowed to be carried forward under GST regime subject to fulfilment of certain conditions. The exact procedure and conditions will be specifically mentioned in the GST legislature.

Q.28 Will there be any threshold limits for the levy of GST?

A. It is expected that there will be uniform threshold limit and will be based on cumulative turnover of goods and services. Dealers with turnover below the threshold limit would not be covered under GST.

Q.29 Will exemptions from GST will be available? What will happen to the area based exemptions already granted to the investors?

A. Under GST regime, there will be a common list of exemptions for both the Central and State GST.

The tax benefits already enjoyed by the EOU, SEZ, Software Technology Park would continue to be available in the GST regime as well.

All area based exemptions schemes already in force are expected to be converted to post-tax cash refund schemes.

Q.30 Will there be a process of assessment under dual GST?

A. The dual GST is expected to be self assessed tax like existing VAT/CENVAT. However the authorities would have the power to audit and re-assess on a selective bases. The detailed procedural guidelines in this regard would be stated in the GST legislature.

Q.31 Whether there would be separate legislation for the Central and State GST

A. Yes. The Central GST law will be uniform and applicable throughout India. However, each state will legislate its own enactment to levy and collect the State GST based on common guidelines to be issued by the Empowered Committee of State Finance Ministers.