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TMI BlogREADING DOWN MODEL IGST ACT (APPORTIONMENT OF TAX AND SETTLEMENT OF FUNDS)(PART-10)X X X X Extracts X X X X X X X X Extracts X X X X ..... READING DOWN MODEL IGST ACT (APPORTIONMENT OF TAX AND SETTLEMENT OF FUNDS)(PART-10) - By: - Dr. Sanjiv Agarwal - Goods and Services Tax - GST - Dated:- 3-8-2016 - - Chapter VII of the model IGST law under section 10 contains provisions for apportionment of tax collected under the IGST Act and how settlement of funds shall be done. The provisions shall also apply to apportionment of interest and penalties realized in connection with the tax being apportioned. The amounts paid in respect to IGST to Central Government can be apportioned to Central Government or the State Government(s). The rules in relation to the manner and time of apportionment, transfer or settlement shall be prescribed by the Central Government after enactmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Apportionment of tax collected According to sub-section (1), out of the IGST paid to the Central Government in respect of inter-State supply of goods and/or services to an unregistered person or to a taxable person paying tax under section 8 of the CGST Act, the amount of tax calculated at the rate equivalent to the CGST on similar intra-state supply shall be apportioned to the Central Government. On IGST paid to the Central Government, in case of inter-state supply of goods / services to unregistered person, or taxable person paying tax u/s 8 of CGST Act (i.e., composition levy) amount to be apportioned to Central Government shall be amount of tax determined at the rate which is equivalent to CGST on similar in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tra-state supply of goods / services. As per sub-section (2), out of the IGST paid to the Central Government in respect of inter-State supply of goods and/or services made in a year to a registered taxable person, where such taxable person is either not eligible for input tax credit or where he does not avail of the said credit within the specified period and thus remains in the IGST account after expiry of the due date for filing of annual return for such year in which the supply was made, the amount of tax calculated at the rate equivalent to the CGST on similar intra-state supply shall be apportioned to the Central Government. In case of inter-state supply of goods or services made to a registered person who is not eligible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for input tax credit, or where he does not avail credit within stipulated period i.e. remains in IGST account even after expiry of due date of filing annual return for the year in which supply was made, amount shall be apportioned to Central Government. The amount to be apportioned shall be tax @ equivalent to CGST on similar intra-state supply of goods / services. According to sub-section (3), out of the IGST paid to the Central Government in respect of import of goods and / or services by an unregistered person or by a taxable person paying tax under section 8 of the CGST Act, the amount of tax calculated at the rate equivalent to the CGST on similar intra-state supply shall be apportioned to the Central Government. IGST is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payable on importation of goods and services. In case of import of goods / services by any unregistered person or import by taxable person who pays tax u/s 8 of CGST Act (composition levy), from amount of IGST paid to Central Government, amount equivalent to CGST payable or similar intra-state supply shall be apportioned to Central Government. Sub-section (4) provides that out of the IGST paid to the Central Government in respect of import of goods and / or services made in a year by a registered taxable person, where the such taxable person is either not eligible for input tax credit or where he does not avail of the said credit within the specified period and thus remains in the IGST account after expiry of the due date for filing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annual return for such year in which the supply was received, the amount of tax calculated at the rate equivalent to the CGST on similar intra-state supply shall be apportioned to the Central Government. Sub-section (4) applies to apportionment in cases where import of goods / services is made by registered taxable person and such person is either not eligible for input tax credit, or he does not avail such credit within the stipulated period i.e. and thus remains in the IGST account even after the due date for filing annual return for the year in which such supply is made. In such cases, amount shall be apportioned to Central Government which shall be the amount of tax @ equivalent to CGST payable on similar intra-state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supply. According to sub-section (5), the balance amount of tax remaining in the IGST account in respect of the supply for which an apportionment to the Central Government has been done under sub-section (1), (2) or (3) shall be apportioned, in the manner and time as may be prescribed, to the State where such supply takes place as per section 5 or 6. Once the apportionment is made in terms of provisions of section 10 as above, balance amount of tax, if any shall be apportioned to the state of supply, i.e., the state in which supply of goods / services takes place as provided in section (5) or (6) of the IGST Act . Thus, states will have a second preference in apportionment of IGST. The manner and timing shall be prescribed by way ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of rules. Sub-section (6) provides that the provisions relating to apportionment of IGST to Central / State Government shall apply mutatis mutandis for apportionment of interest, and penalty which is realized in connection with the tax. Settlement of Funds Sub-section (7) deals with how funds shall be settled between Governments. Accordingly, where an amount has been apportioned to the Central Government or a State Government under sub-sections (1), (2), (3), (4), (5) and (6), the amount collected as IGST shall stand reduced by an amount equal to the amount so apportioned and the Central Government shall transfer to the CGST account an amount equal to an amount apportioned to the Central Government and shall tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansfer to the SGST account of the State an amount equal to an amount apportioned to that State, in the manner and time as may be prescribed. Once the amount of tax is duly apportioned, following consequences shall follow: IGST collected shall stand reduced by amount of IGST so apportioned. Central Government shall transfer to CGST account the amount apportioned to Central Government Central Government shall transfer to SGST account of the state, the amount apportioned to that State Government. The manner of such transfer and timing shall be prescribed by the Central Government in rules to be framed later. (To be continued ) - - Scholarly articles for knowledge sharing authors experts professionals Tax Managem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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