The biggest indirect taxation reform GST is going to implement very soon. One side it will rejuvenate the entire indirect taxation system and will bring multiple benefits, on the other side it will affect various ares like supply chain, cash flow, revenue and many more. Few of things are still unclear like the future of area based tax exceptions, which the industries are enjoying for setting up manufacturing facilities in north-eastern states or hill areas like Himachal Pradesh, Sikkim, Uttarakhand under GST?
Area based tax exemption will experience a key change in proposed GST regime, industrial units will have to pay duties first and get a refund later. Centre has decided to proceed with area based excise duty exceptions gave towards the Northeast and hill states when the GST regime will kick start. Industries will pay their duties first, then the centre or the state that gets the duty will then repay it to the exempted elements and the states will now choose the particular industrial exceptions they wish to proceed. The correct subtle elements on whether every one of the exceptions will be granted or refunded will be worked out later. The GST Council additionally affirmed the draft rules for returns, enrollment, payment, and invoices. These will be notified after the model GST laws are ordered.
The pay-first-get-refund-later approach is existing in Jammu and Kashmir, one of the states where tax holidays are given to industries. Enterprises set up in the Northeast, Sikkim, Uttarakhand, and Himachal Pradesh appreciates exemption from payment of Cenvat because of the geological area. While in Jammu and Kashmir, the tax is first paid and after that refund asserted, in Uttarakhand and Himachal Pradesh the ventures do not pay tax by any means.
The government is thinking about different strategies to re-outline the zone based exclusion conspire. The appropriation of the goods and services tax (GST) won’t prompt to ultimately withdrawal of the excise waivers for industries businesses in Jammu and Kashmir, North-eastern states, Uttarakhand and Himachal Pradesh. These sops would proceed in some frame or the other under then GST administration, until their state-particular due dates that have as of now been set lapse. However, these tax exemptions will not be further extended. This is because the exemptions could pose troubles about taxing manufacturing on the premise of the value added.