1 Oct. 2016 Saturday Human Resources Overview of … · 1st Oct. 2016 Saturday. Human Resources. How this Presentation is Designed ? This presentation on new Proposed GST Law is designed

Prepared and Presented by Sreeram Kaza

Overview of Model GST Law

1st Oct. 2016 Saturday

Presenter

Presentation Notes

Human Resources

How this Presentation is Designed ?

This presentation on new Proposed GST Law is designed keeping in mind, of the following: Providing conceptual understanding . (To provide background understanding).

Illustration manner. (To understand the new Proposed law in easy manner).

Flow chart manner. (For quick understanding purpose) Updated recent Registration, Invoice, Payments, Return Rules published on 26th &

27th of Sep. 2016.

Important & Relevant FAQ by way of Incorporation at the relevant topics / subjects of the these slides presentation, which were published by the CBEC on 21st Sep. 2016

Prepared and presented By Sreeram Kaza 2

Sr.No. Topics Covered Page Nos. 1 Concepts (8 Slides) 5 To 13 2 Constitutional Provisions – Articles (18 Slides) 14 To 32 3 Summary of Concepts & Articles (7 Slides) 33 To 40 4 Summary of Legal Framework – GST (Proposed) (4 Slides) 41 To 45

5 Registration (55 Slides) 46 To 101 6 Charging Section (4 Slides) 102 To 106 7 Supply (21 Slides) 107 To 128 8 Place of Supply of Goods / Services (31 Slides) 129 To 160 9 Time of Supply of Goods / Services (15 Slides) 161 to 176

10 Valuation (22 Slides) 177 to 199 11 Input Tax Credit (105 Slides) 200 To 305 12 Job Work (20 Slides) 306 To 326 13 Input Service Distributor (13 Slides) 327 To 340 14 Return (147 Slides) 367 To 514

Index

3 Prepared and Presented By Sreeram kaza

Sr.No. Topics Covered Page Nos.

15 Payments ( 22 Slides ) 341 To 363 16 Remission ( 2 Slide ) 364 To 366 17 Refund ( 5 Slides ) 515 To 520 18 Demand – Recovery and Prosecution ( 6 Slides ) 521 To 527 19 Risk Factors ( 2 Slides ) 528 To 530 20 Transitional Provisions ( 27 Slides ) 531 To 558 21 GST Impact - Exports & Imports ( 29 Slides ) 559 to 589 22 GST Impact – Pharma Sector ( 25 Slides ) 590 To 615 23 GST Impact - Service Providers ( 20 Slides ) 616 to 636 24 GST Impact - Real Estate Sector ( 31 Slides ) 637 to 668 25 Conclusion 680 To 680

26 Disclaimer 682 To 682

Index

4 Prepared and Presented By Sreeram kaza

ConCept

8 Slides


The Options for introducing a VAT/ GST in the Indian context are : (The below given 3 options are thought for Indian context)

– National VAT (with arrangement for revenue sharing with states) (central GST) – State VAT (centre to withdraw from Indirect Tax field) (state GST) – Dual System • Non-concurrent Dual GST • Concurrent Dual GST ( CGST & SGST) (Proposed System) Note : In most of the foreign countries it is popularly known as “VAT” and in few countries it is called as “GST”.

Concept of GST (It is a Dual System )

National Institute of Public Finance and Policy (NIPFP), 1994 report (Popularly called as “BAGCHI Report”)

Concepts


(A) Highlights of National Institute of Public Finance and Policy (NIPFP), 1994 (Popularly called as “BAGCHI Report”)

• “A National VAT – Though attractive from many angles, a scheme of tax reform that takes away the most

important tax powers of the states and increases their dependence on the centre would not be acceptable to the states. The states then would have to depend on the centre for over 70 per cent of their tax revenue as compared to 32 per cent at present Nor would that be desirable in principle. It would go against the tenets of believed to be crucial for the effective functioning of a multi-level system of governance, allocation of resources for public spending according to the preferences of the people and promoting fiscal responsibility at all levels ” (Bagchi Report 3.2.1 – Page No. XX)

• Moreover, in a vast country like India , the centre would inevitably have to depend on the states in

administering such a tax .(The central excise department now handles only about 1,50,000 assessees A nationwide VAT would involve dealing with at least a million taxpayers. For all these reasons this option does not seem to be either desirable or feasible . (Bagchi Report 3.2.1 – Page No. XXI)

(B) Highlights of - GST Reforms and Intergovernmental consideration in India – March-2009 ( DEA , MOF ) • “The key concerns about this option would thus be political. Notwithstanding the economic merits of a national

GST, will it have a damaging impact on the vitality of Indian federalism? With no other major own-source revenues, will individual States become too dependent on collective choices and feel disempowered to act on their priorities? Will it be possible for the governments with such diverse political interests and philosophies to reach a consensus and adhere to it?” (Working paper No. 1 GST Reforms and Intergovernmental consideration in India – Page no. 18 – 2nd Para)

National VAT : Not Advisable

Concepts


Highlights of National Institute of Public Finance and Policy (NIPFP), 1994 (Popularly called as “BAGCHI Report”)

“A State VAT - Centre withdrawing from domestic trade taxation and leaving it to the states to levy the tax on domestic trade in the form of VAT replacing both Central excise and sales tax (allowing a few special excises on luxury items to be levied by the Centre). Centre to withdraw from the indirect tax filed immediately might also be a little too risky for revenue. (Bagchi Report 3.2.ii – Page No. XX & 3.2.2 of Page No. XXI)”

State VAT : Not Advisable

Concepts


Under the concurrent dual GSTs, the Centre and State taxes apply concurrently to supplies of all goods and services. However, it poses two challenges. • First, it requires a constitutional amendment. • Second, a framework is needed for defining the place of supply of inter-State services and for the application of

State GST to them. Therefore, to avoid any special efforts and for smooth levying a unified Centre tax on inter- State services , as suggested in the Poddar & Ahmed Working Paper [GST Reforms and intergovernmental Considerations in India (March 2009 report), Department of Economic Affairs Ministry of Finance Government of India], to circumvent both of these hurdles :

• GST on goods can be levied by the States only and

• on services by the Centre only.

The States already have the power to levy the tax on the sale and purchase of goods (and also on immovable property), and the Centre for taxation of services. However, Under this model, while levying the VAT on services, the Centre would essentially play the coordinating role needed for the application and monitoring of tax on inter-State services. The Centre would withdraw from the taxation of goods. Even the revenues collected from the taxation of services could be transferred back to the States, partially or fully. Within this framework, cascading could be completely eliminated by the States agreeing to allow an input credit for the tax on services levied by the Centre. Likewise, the Centre would allow an input credit for the tax on goods levied by the States.

Dual System - Non-concurrent Dual GST - Not be acceptable to the Centre as well as the States – Not Advisable

Concepts


• “However, effective administration of a concurrent system would call for a degree of coordination between the Centre and the States that is lacking at present and would be difficult to achieve even with the best of intentions.” (Bagchi Report 3.2.3.1 – Concurrent VAT – Page No. XXii)

• “Apart from the conflicts which it might generate, a concurrent VAT would be seen by the States

as an invasion into their tax powers.” (Bagchi Report 3.2.3.1 – Concurrent VAT – Page No. XXii)

• “While designing a model of dual VAT, it is thus advisable to explore ways in which both the Centre and the States can move their respective excises and sales tax systems towards a system of VAT within the framework of the Constitution and improve their implementation through better legal and administrative structures.” (Bagchi Report 3.2.3.1 – Concurrent VAT – Page No. XXii)

• “Given this background, the only feasible option seems to be a dual system in which the VAT is

levied by the two levels of government independently within the existing constitutional framework. This would be possible if the MODVAT now operating through the excise tax system is made into a full-fledged manufacturers’ VAT and the States also adopt a destination-based harmonized system of VAT in place of the chaotic sales taxes operating now.” (Bagchi Report 3.2.3.2 – Independent dual system– Page No. XXii)

Dual System - Concurrent Dual GST - Only feasible option (A) Highlights of National Institute of Public Finance and Policy (NIPFP), 1994 Report (Popularly called as BAGCHI Report”)

Concepts


• “Keeping in view the report of the Joint Working Group on Goods and Services Tax, the views received from the States and Government of India, a dual GST structure with defined functions and responsibilities of the Centre and the States is recommended. An appropriate mechanism that will be binding on both the Centre and the States would be worked out…..” (Para No. 3.2 - First Discussion Paper – Page No. 14)

• “India is a federal country where both the Centre and the States have been assigned

the powers to levy and collect taxes through appropriate legislation. Both the levels of Government have distinct responsibilities to perform according to the division of powers prescribed in the Constitution for which they need to raise resources. A dual GST will, therefore, be in keeping with the Constitutional requirement of fiscal federalism”. (Answer of Q. 9 - First Discussion Paper – Page No. 39)

Dual System - Concurrent Dual GST - Only feasible option (B) Highlights of First Discussion Paper – November 10, 2009 – Dual System – is recommended (The Empowered committee of state finance ministers)

Concepts


Features of Concurrent Dual GST

• There would a single registration or taxpayer identification number, based on the Permanent Account Number (PAN) for direct taxation.

• States would collect the State GST from all the registered dealers. To minimize the need for additional administrative resources at the Centre, States would also assume the responsibility for administering the Central GST for dealers with gross turnover below the current registration threshold. They might collect the Central GST from such dealers on behalf of the Centre and transfer the funds to the Centre.

• Procedures for collection of Central and State GSTs would be uniform. • There would be one common tax return for both taxes, • HSN ( Harmonized System of Nomenclature ) will form the basis of product

classification for Central GST and State GST.

Concepts


• Dual GST:- Many countries in the world have a single unified GST system i.e. a single tax applicable throughout the country. However, in federal countries like Brazil and Canada, a dual GST system is prevalent whereby GST is levied by both the federal and state or 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.

• Summary :- finally it is decided to opt for the “Dual System” of GST.

Features of Concurrent Dual GST :-

Concepts


Constitutional Provisions - Articles

18 Slides


265 - Taxes not to be imposed save by authority of law - Continued “No Tax shall be levied or collected except by authority of law.” • The Term “levy” means charging of tax or imposition of tax.

• "Collect" means the physical realisation of tax which is levied or charged. Note : Collection is merely for the administrative convenience. Under taxing statute, one must first determine the levy and once there is levy, then only one can apply the provisions for collection of taxes. Till the time there is no levy, cannot collect the taxes at all. [Section : 7 of CGST / SGST Act & Section 4 : of IGST Act]



246A - New

Empowers legislature of every state to make laws with respect to GST.

246A. (1) Notwithstanding anything contained in articles 246 and 254, Parliament, and subject to clause(2),the Legislature of every State have power to make laws with respect to goods and services tax imposed by the Union or by such State. (2) Parliament has exclusive power to make Laws with respect to goods and services tax where the supply of goods, or of services, or both takes place in the course of inter - state trade or commerce Note : will confer simultaneous power to Union and State legislatures to legislate on GST. The power to make laws on Inter-state transactions has been kept exclusively with the Central Government.



After article 279 of the Constitution, the following article shall be inserted, namely :- 279A. (1) The President shall, within sixty days from the date of commencement of the constitution (One Hundred

and Twenty- Second Amendment) Act, 2014, by order, constitute a Council to be called the Goods and Service Tax Council.

(2) The Goods and Services Tax Council shall consist of the following members, namely :- (a) the Union Finance Minister …………… (b) the Union Minister of State in charge of Revenue or Finance …….… (c ) the Minister in charge of Finance or Taxation or any other Minister nominated by each State Government ………… Members (3) The Members of the Goods and Service Tax Council referred to in sub-clause (c ) of clause (2) Shall,

as soon as may be, choose one amongst themselves to be the Vice-Chairperson of the Council for such period as they may decide.

(4) The Goods an Services Tax Council shall make recommendations to the Union and the States on - (a) …………. (b) …………. (c ) model Goods and Services Tax Laws, principles of levy, appointment of Integrated Goods and Services Tax and the principles that govern the place of supply. Note : The GST council shall formulate matters related to GST. The GST council shall be considered as a constitutional body like Election Commission of India, C & AG, Public Service Commission, Attorney general of India, RBI, etc., etc.

Insertion of new article 279 A – New - GST Council



“ Goods and Services Tax “ means any tax on supply of goods, or services or both except taxes on the supply of alcoholic liquor for human consumption “

[Supply means = Section 3 of CGST / SGST & 2(f) of IGST]

Insertion of Article 366 (12A) – New - in the phrase Definition - “Goods and Service Tax”



“Goods” includes all materials, commodities and articles.

[Definition 2(48) of CGST / SGST & 2(2) of IGST]

Insertion of Article 366 (26A) – New - in the definition of word “Services”

“Services means anything other than goods“

[Definition of Section 2 (88) of CGST / SGST & 2 (2) of IGST]

366 (12) – Goods - Continue



269A – New - For IGST Transactions

“269A, (1) Goods and services tax on supplies in the course of inter-State trade or commerce shall be levied and collected by the Government of India and such tax shall be apportioned between the Union and the State in the manner as may be provided by Parliament by law on the recommendations of the Goods and Services Tax Council. Explanation– For the purposes of this clause, supply of goods, or of services, or both in the course of import into the territory of India shall be deemed to be supply of goods or of services, or both in the course of inter-State trade or commerce. (2) Parliament may, by law, formulate the principles for determining the place of supply, and when a supply of goods, or of services, or both takes place in the course of inter-State trade or commerce”. Note : It means that consequent to the amendment, the exclusive power of the Union Parliament to legislate upon the subjects not enumerated in Lists II and III, will not be applicable to the GST. To be levied and collected by the Government of India and shared between the Union and States on the basis recommended by the Council.



270 – ( 1A) & (1B) – New

Sharing of GST Revenue with States :

The proceeds of IGST ( Inter-State Trade or Commerce + Imports ) will be apportioned between the States and the Centre, under the Article 269A, as provided by Parliament by law on the recommendations of the GST Council. That means The Centre would levy and collect the Integrated Goods and Services Tax (IGST) on all inter-State supply of goods and services. Further, the CGST collected by the Central Government as well as the Union's share of IGST collected will be devolved to the States as per the provisions of Article 270



271 – Insertion of New words - Restriction for surcharge

• The amendment in Article 271 restricts the power of the Central Government to levy any surcharge on the GST. We may therefore, be in a better situation wherein, GST will not be subjected to any surcharge.

• Cess – Still can be levied by the Central Government.



Clause 29A omitted from the Article 366 – Deemed Sale

• Clause 29A relating to deemed sale (i.e., tax on leases and works contract) has been omitted from the Article, as it will be subsumed within GST.



The entry 92 B - inserted by the constitution ( Forty-sixth amendment) Act, 1982 w.e.f. 2-2-1983. The said entry reads thus :

“ Taxes on the consignment of goods (whether the consignment is to the person making it or any other person) , where such consignment takes place in the course of inter-state trade or Commerce.”

• That means though the power is given by the Constitution to the Union Government , still the Union is not collecting any Taxes

on Stock Transfers or Consignment Sales. And further, there is no proposal to omit entry 92 - B , under the GST scenario.

• The background and conceptual position , for the insertion of the 92 – B was to implement the law commission of India in its 61st Report as per this report the existing Central Sales Tax Act was insufficient to tax the consignment transfers from branch to another, as it was beyond the concept of sale and further it recommended that the definition of sale in the Central Sales Tax Act, after carrying out the requisite Constitutional Amendment be amended. However, the Union of India, in part of the recommendations, and while accepting for implementation , instead of amending the definition of sales in Central Sales Tax Act, inserted a new Entry in the Union List as Entry 92B and also inserted a new sub-clause in Article 269 ( Taxes levied and collected by the Union but assigned to the states) of the Constitution. The Parliament also amended clause (3) of Article 269.

Note: The effect of the aforesaid amendments is that the field of taxation on the consignment/despatch of goods in the course of inter-State trade or commerce expressly came within the purview of the legislative competence of the parliament. This entry continued even on post GST scenario, but practically not been implemented since 1983.

92 B of List I – Union List of Article 246 – Continued Legal Background Stock Transfers – Inter State: Parliament is already having powers to levy the Tax vide- 92 – B ( List – 1 of Schedule – VII of the Article 246 ) but practically not implemented till date and also not proposed to omit under GST scenario :



Medicinal and toilet preparations ( M & TP ) - GST Payment – subsumed 268 of the Constitution to omit the duties of excise on Medicinal and Toilet preparations from the purview of the power of the Government of India of Goods and Services Tax on Goods and Services. (clause 6 of the 122nd constitution amendment).

That means on Medicinal and toilet preparations are covered under GST and the ITC (credit) is allowed accordingly. Note : As on date the Central Excise duty paid on imports which are used in State Excise Finished Goods is cost to us. Under GST scenario that will not be part of the cost as input tax credit is available to us.



Electricity – Electricity Duty – Not subsumed

246 – List – II ( State List ) – Entry No. 53 Retained

On July 22, 2015, Rajya Sabha Select Panel tabled its Report (119 Pages) on GST Constitutional Amendment Bill.

Vide Clause 17 (Amendment to Seventh Schedule) :

"Further, Committee has adopted the view that electricity must form part of GST base and part of Electricity duty must be replaced by GST which shall be fully creditable to industrial / commercial users"



Tobacco - GST payment

Article 246 – List – I – Entry No. 84 Retained

GST + Excise Duty + VAT Tax on Tobacco products: • Tobacco products would be subjected to GST with ITC. Centre may be allowed to levy

excise duty on tobacco products over and above GST with ITC and States will levy VAT.

Constitutional Provisions – Articles Entry No. 84 - Retained


Concept of Alcohol Liquor for Human consumption - GST Payment – Not Subsumed Alcohol Liquor for Human consumption is Out of GST purview. State will continue to levy the State Excise duties. ( No Levy of Central Excise Duty in past or no levy of duty in future under GST scenario.) GST means any tax on supply of goods, or services, or both, except taxes on supply of the alcoholic liquor for human consumption. To include alcoholic liquor, which is a major source of revenue for the states, another constitution amendment would be required. Inter state transactions shall come within purview of Central Government Tax.

Constitutional Provisions – Articles Entry 54 – State List – 7th Schedule


Petroleum – concept – GST payment – Not Subsumed

246 – List – I – Entry No. 84 & Entry No. 54 of List – II = 5 Items

Provisions Relating to Petroleum and Petroleum Products :

• Outside the GST • Sales Tax will continue to be levied by the States with prevailing floor rate • Centre will continue to levy the duties.

Petroleum products such as Crude oil, Petrol, Diesel, Aviation Turbine Fuel (ATF) and Natural gas kept out of the GST for the time being, till such time the GST Council may decide. These products may be included in the GST base in the future.

Extracts of the Report of the select committee Presented to the Rajya sabha on 22nd July 2015.

“Petroleum and Petroleum products, which are currently outside the purview of State VAT in most States, are proposed to be covered under GST in the Constitution Amendment Bill though the date on which such tax will be levied on these products has been left to the recommendation of the GST Council. Bringing these products under the ambit of GST will entail huge revenue loss to the States as Input Tax Credit will have to be provided eventually. Further, there is no guarantee that GST will not be prematurely imposed on these products. Hence, considering the limited revenue resources of the State, as has been repeatedly insisted upon by our Leader, the Hon'ble Chief Minister of Tamil Nadu Puratchi Thalaivi Amma, Petroleum and Petroleum products should be totally kept outside GST. However, the Select Committee has not considered these views on the provisions relating the petroleum and petroleum products and has not recommended appropriate amendments. Hence the AIADMK Party dissents from the report of the Select Committee.”

1.Motor spirit ( commonly known as petrol ) (Central Excise Duty : No Brand Name 9.48 Per Ltr., With Brand Name 10.66) 2.ATF ( Aviation turbine fuel) 3.HSD 4.Natural Gas ( final view is to be taken ) (VAT @12.5% + @2.5% )

5.Petroleum crude Petroleum products to be implemented from a future date to be notified by the GST Council. Further constitution amendment will not be required to bring these items within GST in future.)

Constitutional Provisions – Articles


Article 110 :

Financial bills are of three kinds: 1. Money bills A bill is considered as a Money bill if it contains only provisions dealing with all or any of the matters of sub clauses of Article 110 clause (1). 2. Financial bills (A) Category A Bills contain provisions dealing with any of the matters specified in sub-clauses (a) to (f) of clause (1) of article 110 and other matters, other than clause ( c). 3. Financial bills (B) ( Demanded ) Category B Bills involve expenditure from the Consolidated Fund of India i.e a bill dealing exclusively with sub-clause (c) of article 110 clause (1) and then other matters (not related to 110).



Article 368 :

Different Types of Bills are to be passed under the Constitution from time to time, say : Type - I : Bills that are passed by Parliament by simple majority. Type – II : Bills that have to be passed by Parliament by the special majority prescribed in Article 368(2) of the Constitution. Type – III : Bills that have to be passed by Parliament by the Special Majority as aforesaid and also to be ratified by not less than one-half of the State Legislatures. (Proviso to article 368(2) of the Constitution of India ) Note : How and Why the 122nd constitutional amendment Bill mandates the Type – III : Because it is a proposal to make changes in lists in Seventh Schedule to the Constitution.



Then what process is mandated to pass this Bill ( 122nd ) – Constitution ( One Hundred and First amendment ) Act, 2016 amended by President on Dt.08-09-2016 : The Bill has to be passed in each House by a majority of the total membership of that

House and by a majority of not less than 2/3 of the members of that house present and voting.

If however, a bill passed by one house is passed by the other house with certain amendments then the bill would again have to be approved by the other house.

The amendment shall also be ratified by Legislature of not less than one half of the States.

Once both the house and state legislature approve the bill, it shall be presented to the President who shall give his assent to the Bill.

Once consent by the president is given then Constitution shall stand amended in accordance with the terms of the Bill



7 Slides

of Concepts & Articles


Present Indirect Tax Structure of India Present Tax Structure

Sales Tax/ VAT/CST

1. Entry No.54 of List II (VAT) 2. (CST-92A)-(Union) (List-1) 3. (CST-246(4) -UT

Taxable Event is Sale

VAT CST

Subsumed in SGST

Subsumed in SGST

Customs Duty

Entry No.83,List I

Schedule VII

Taxable Event is Import &

Export

CVD / SAD

- Customs - Anti Dumping Duty - Safeguard Duty

Subsumed in IGST

Not Subsumed

in GST

Entry Tax/ Entertainment Tax

Entry No 52, & 62 List II

Schedule Vii

Taxable Event is Entertainment & Entry of Goods

Subsumed in SGST

Excise Duty

Entry No 84, List i, Schedule VII

Taxable Event is

Manufacture

Service Tax

Residuary Entry No 97, List I, Schedule VII

Taxable Event is Provision of

Service

Subsumed in CGST

Subsumed in CGST

Summary of Concepts & Articles


Advantages / Objectives of the GST

• Avoid Multiplicity of the Taxation ( See Pg. No. 43 )

• Avoid Double Taxation - Excise & Service Tax = Drawings & Design, Software, Supply contract cum installation. - VAT & Service Tax = Software, Construction, WCT, IPR, A.C. Restaurant, Right to use for movable goods • Avoid Cascading of Taxes - Excise Manufacturer - VAT Dealer can not set off - VAT Dealer- VAT - Service Provider can not set off - CST - Can not set off - Entry Tax - Not allowed for set off



One Nation – One Tax

Common procedures across the country for :

• Registration

• Payments

• Returns

• Refunds



Four Slab Rates under GST –

Report on the Revenue Neutral Rate and Structure of Rates for the Goods and Services Tax (GST) dated December 4, 2015 by Shri. Arvind Subramanian, Chief Economic Adviser & Chairman of the Committee. (Subject to approval of GST Council) 2% to 6% ( Specified Goods e.g. Precious Metal, etc. ) 12% (Low rate Goods) 18% (Standard Rate) 40% (De merit Goods – e.g. luxury car, aerated beverages, pan masala and tobacco, etc.)



Taxes under GST

CGST Intra – State Supply SGST IGST Inter – State Supply



GST on Supply

Central Excise - Manufacturing VAT - Sales Supply

Service Tax - Provision of Services (Levy / Charging of Tax /

Importation of Tax) Point of Taxation ( Collection of Tax )



States Concern / Benefits : What ?

• @ 2% CST Loss (In case of sales without C Form then @ 5% or @ 15% CST as the case may be)

• ITC reversal - on CST Sales - @ 1% reversal of purchase value ( Local – Intra) to the extent of CST Sales.

• ITC reversal - on Branch Transfers - @ 4% reversal of purchase value ( Local – Intra ) to the extent of Branch Transfers.

• ITC reversal - @ 4% reversal of purchase value in case Fuel is used in manufacturing.

• States will get additional benefit of Service tax is not convincing as there is no

clarity on it.

• States will get additional benefit of Imports – IGCT – SGST part is not convincing as there is no clarity on it.


Summary of Legal Framework – GST

4 Slides


(A) Chapters / Sections of Draft – CGST / SGST & IGST law (Dt.14-06-16) Sr. No. Regarding GST/ CGST IGST

Chapter Section Chapter Section 1 Preliminary I 1 to 3 I 1 to 2 2 Administration II 4 to 6 XI 32 to 33 3 Levy Of, And Exemption From, Tax III 7 to 11 III 4 to 4 4 Time And Value Of Supply IV 12 to 15 5 Input Tax Credit V 16 to 18 VI 8 to 9 6 Registration VI 19 to 22 7 Tax Invoice, Credit And Debit Notes VII 23 to 24 8 Returns VIII 25 to 34 9 Payment Of Tax IX 35 to 37 V 7 to 7

10 Transfer Of Input Tax Credit IX A 37A to 37A 11 Refunds X 38 to 41 12 Accounts And Records XI 42 to 43 13 Job Work XI A 43A to 43A 14 Electronic Commerce XI B 43B to 43C 15 Assessment XII 44 to 48 16 Audit XIII 49 to 50 17 Demands And Recovery XIV 51 to 59 18 Inspection, Search, Seizure And Arrest XV 60 to 65 19 Offences And Penalties XVI 66 to 72 20 Prosecution And Compounding Of Offences XVII 72 to 78 21 Appeals XVIII 79 to 83 22 Appeals And Revision XVIII 84 to 93 23 Advance Ruling XIX 94 to 105 24 Settlement Of Cases XX VIII 11 to 26 25 Presumption As To Documents XXI 106 to 107 26 Liability To Pay In Certain Cases XXII 108 to 115 27 Miscellaneous Provisions XXIII 116 to 139 IX 27 to 30 28 Repeal And Saving XXIV 140 to 140 29 Transitional Provisions XXV 141 to 162 X 31 to 31

30 Principles For Determining Supply Of Goods And/Or Services In The Course Of Inter-State Trade Or Commerce II 3 to 3

31 Place Of Supply Of Goods And/Or Services IV 5 to 6 32 Apportionment Of Tax And Settlement Of Funds VII 10 to 10 Prepared and presented By Sreeram Kaza 42

(B) Valuation Rules– CGST / SGST & IGST Law

Sr. No. Rule Regarding 1 1 Short title, commencement and application. 2 2 Definitions 3 3 Methods of determination of value 4 4 Determination of value of supply by comparison 5 5 Computed value method 6 6 Residual method 7 7 Rejection of declared value 8 8 Valuation in certain cases

Summary


Draft / Proposed GST Law available By way of :( Dual System) – In what Form the proposed law is available ? (C) (1) The Constitution (One Hundred and Twenty – Second Amendment Bill, 2014 ( Constitution ( One Hundred and First amendment ) Act, 2016 amended by President on Dt.08-09-2016 ) (D) (2) Report of the Joint Committee on Business Process for GST on GST Registration (52 Pages) (3) Report of the Joint Committee on Business Process for GST on GST Payment Process (84 Pages) (4) Report of the Joint Committee on Business Process for GST on GST Refund Process (49 Pages) (5) Report of the Joint Committee on Business Process for GST on GST Return (72 Pages)

(E) Law yet to be Notified [Reference mentioned as ] To be “Notified” in : 8 Recommendation of GST council to be Notified : 16 Procedure/Manner/Documents to be “Prescribed” : 128 _____ 152 _____

Note : 1 – Can be available @ http://www.prsindia.org/billtrack/the-constitution-122nd-amendment-gst-bill-2014-3505/ 2 To 5 – Can be available @ www.cbec.gov.in

Summary of Legal Background – GST (Proposed)


Draft / Proposed GST Law available By way of :( Dual System) – In what Form the proposed law is available ? (F) (1) GST – FAQ - 25-09-2016 (12 Pages) (2) (FAQ on GST - 25-09-2016 (276 Pages) (3) Draft Registration Rules - 25-09-2016 (10 Pages) (4) Draft-formats-under-registration-rules - 25-09-2016 (71 Pages) (5) Draft-invoice-rules - 25-09-2016 (6 Pages) (6) Draft-formats-under-invoice-rules - 25-09-2016 (4 Pages) (7) Draft-payment-rules - 26-09-2016 (5 Pages) (8) Draft-formats-under-payment-rules - 26-09-2016 (12 Pages) (9) Draft-refund-rules - 26-09-2016 (7 Pages) (10) Draft-refund-formats - 26-09-2016 (20 Pages) (11) Draft-return-rules - 26-09-2016 (11 Pages) (12) Draft-return-formats - 26-09-2016 (129 Pages) (13) GSTR - 26-09-2016 (17 Worksheets) (14) ITC-mismatch-report - 26-09-2016 (3 Worksheets) (15) PPT on GST - 12-09-2016 (36 Slides )

_____ Note : 1 To 15 – Can be available @ www.cbec.gov.in

Summary of Legal Background – GST (Proposed)


Registration

55 Slides

Goods and Services Tax

Identification Number [G S T I N]


Authority / Legal Provisions

GST - Model Law – Relevant Sections – Chapter - VI – Registration

Schedule – III ( Liable to be Registered) Note :

– In “Ten” Situations, wherein “Prescribed” is referred [Section - 19] – In “Three” Situations, wherein “Prescribed” is referred [Section - 20] – In “Six” Situations, wherein “Prescribed” is referred [Section - 21] – In “Two” Situations, wherein “Prescribed” is referred [Section -22]

– [TOTAL = 21 Situations, wherein “Prescribed is referred]

Section Heading

19 Registration

19A Special provisions relating to casual taxable person and non-resident taxable person

20 Amendment of Registration

21 Cancellation of Registration

22 Revocation of Cancellation of Registration

Registration


GST Registration – How & Method ? State wise registration in the GST regime • At present, tax payers are separately registered with State and/ or with Central tax

administrations or with both based on their business activity. • In the GST regime, a taxpayer will have to obtain State wise registration. Even within

a State, the taxpayer may either opt for a single registration or multiple registrations for different business verticals.

• That means, unlike the Current Scenario “Decentralised registration under Central and state Authorities” Under GST Scenario “Uniform E-Registration process based on PAN of Entity” needs to be obtained.

• Multiple registrations within one State to business verticals [as defined in Accounting Standard (AS) 17 issued by ICAI] of a taxable person may also be permitted, subject to all the verticals being on the same scheme of tax treatment. Multiple business verticals in a State may obtain a separate registration [Sub Section – (2)]

Registration


• Legally recognized as supplier of goods or services.

• Pass on the credit of the taxes paid on the goods or services supplied to purchasers or recipients.

• A legal person without GST registration can neither collect GST from his customers nor claim any input tax credit of GST paid by him

GST Registration – Why Registration ?

Registration


Transitional provisions for existing taxable persons - Section 142 of Model GST Law.

• Existing taxable persons will be given provisional registration certificate.

• Valid for six months.

• Submit required details.

• Final registration certificate.

Registration


Registration not to be obtained

• Individuals importing services for personal consumption will not be liable to pay GST under reverse charge or register under GST if the GST law within certain limits. [Section 9 (3) (c)]

• Provided that the supplier shall not be liable to registration if his aggregate turnover consists of only

goods and/or services which are not liable to tax under this Act. ( Rs. 9 & Rs. 4 Lacs) [There is a talk of Rs. 25 Lacs Incremental] [Section 9 (1) – 2nd Proviso]

• any person who provides services as an employee to his employer in the course of, or in relation to

his employment, or by any other legal ties creating the relationship of employer and employee as regards working conditions, remunerations and employer’s liability; [Section 9 (3) (a)]

• Any person engaged in the business of exclusively supplying goods and/or services that are not liable

to tax under this Act; [Section 9 (3) (b)]

• Agriculturist (Not corporate Agriculturist) [Section 9(1) first Proviso] • Government [Section 9 (2)] – [Specified in Schedule IV] - [Indicative List]

Registration


Mode or Registration—How to apply ? • GST Common Portal Directly CP • Tax Return Preparer TRP: A taxable person may prepare his registration application /

returns himself or can approach the TRP for assistance. • Facilitation Centre FC shall be responsible for the digitization and / or uploading of the

forms and documents including summary sheet duly signed by the Authorized Signatory and given to it by the taxable person.

Registration


Procedure for obtaining Registration

• Online verification of PAN of the Business / Sole Proprietor/ Partner/Karta/Managing Director and whole time directors/Member of Managing Committee of Association, Managing trustee/authorized signatory etc. of the business would be mandatory and without such verification, registration application will not be allowed to be submitted

• There is a separate procedures prescribed meant for new applicants and migration of existing registrants either with the Centre or State or both.

• For obtaining registration, all the taxable persons shall interact with tax authorities through a common portal called GST Common Portal that would be set up by Goods and Services Tax Network (GSTN).

Registration


Aggregate Turnover Vs. Taxable Turnover: In case of existing Service tax law , it exempts for obtaining the Service Tax Registration of the Taxable turnover up to Rs. 9 lacs limit and up to Rs. 10 lacs limit for payment of the Service Tax. However, in case of the GST law , it is talking about the Aggregate Turnover ( second proviso of the section 9 of the GST Act) not the Taxable Turnover for this purpose of the obtaining the Registration and for the purpose of the making the payment of the GST . • That means after the Aggregate Turnover of Rs. 9 lacs one has to get the Registration . • That means after the Aggregate Turnover of Rs. 10 lacs one has to start paying the GST. Further in case of North East ( including Sikkim ) the limits are as given below : ( third proviso of the section 9 of the GST Act)

• That means after the Aggregate Turnover of Rs. 4 lacs one has to get the Registration . • That means after the Aggregate Turnover of Rs. 5 lacs one has to start paying the GST. Further as per section 2 (6) of the GST Act, the “Aggregate Turnover“ means which shall be computed having the same PAN on all India basis and excludes the Taxes charged under – CGS Act, SGST Act, IGST Act and also excluding the “Reverse Charge” and “Inward supplies" but including the below mentioned 4 elements turnover : • All Taxable • Non – Taxable • Exempt supplies • Exports Note : Composite, Turnover Limits Situation.

Registration


Different 8 Slides Prepared and presented By Sreeram Kaza 55

Registration - Draft Goods and Service Tax Registration Rules, 20___

Form Number

Content

REG-20 Existing Tax Payer (Migrated) REG-01 New / Fresh - other than Migrated (including ISD, Composition & Casual) REG-07 TDS

REG-09 Un Bodies / Embassies REG-10 Non Resident

Different Categories


Existing Tax Payer (Migrated)

6 Slides Page No. 34 to 39

VAT Registration

GST Registration


Registration

Form Number

Content

GST REG-21 Provisional Registration Certificate to existing taxpayer

GST REG-20 Application for Enrolment of Existing Taxpayer

GST REG-06 Registration Certificate issued under Section 19(8A) of the Goods and Services Tax Act, 20--

GST REG-22 Order of cancellation of provisional certificate

GST REG-23 Intimation of discrepancies in Application for Enrolment of existing taxpayer

GST REG-24 Application for Cancellation of Registration for the Migrated Taxpayers not liable for registration under Goods and Service Tax Act 20--

Rule-14 – Migration of persons registered under Earlier Law [Existing Tax Payer (Migrated)]


New / Fresh - other than Migrated (including ISD,

Composition & Casual)


GST Registration – Section 19 (Chapter - VI of CGST / SGST Act) New / Fresh - other than Migrated – Mandate / Voluntary Basis : • Every person who is liable to be registered under Schedule III of this Act shall apply

for registration in every such State in which he is so liable within thirty days from the date on which he becomes liable to registration, in such manner and subject to such conditions as may be prescribed : [ Section – 19 (1) ]

Registration


GST Registration – Section 19 (Chapter - VI of CGST / SGST Act) Input Service Distributor ( ISD ) : • Input Service Distributor, apply for fresh registration under this section and

he shall follow the procedure as may be prescribed in this behalf. [ Proviso of Section – 19 (1) ]

Registration


GST Registration – Section 8 (Composition Scheme) (Chapter-III of CGST / SGST Act) New / Fresh - other than Migrated - Composition Scheme :

• A registered taxable person, Whose aggregate turnover in a financial year does not exceed [fifty lakh of rupees], to pay, in lieu of the tax payable by him, an amount calculated at such rate as may be prescribed, but not less than one percent of the turnover during the year. [ May be 2% + 2%]

• No such permission shall be granted to a taxable person who effects any inter-State supplies of goods and/or services.

• No such permission shall be granted to a taxable person unless all the registered taxable persons, having the same PAN as held by the said taxable person, also opt to pay tax under the provisions of this sub-section.

• Shall not collect any tax from the recipient on supplies made by him nor shall he be entitled to any credit of input tax.

Registration


GST Registration – Special Provisions (Casual Taxable Person ) New / Fresh - other than Migrated - Casual Taxable Person :

• The certificate of registration issued to a casual taxable person or a non-resident taxable person shall be valid for a period of ninety days from the effective date of registration.

• A casual taxable person shall, at the time of submission of application for registration under sub-section (1)

of section 19, make an advance deposit of tax in an amount equivalent to the estimated tax liability of such person for the period for which the registration is sought:

• ITC allowed on Inward Supplies. • The amount deposited under sub-section (2) shall be credited to the electronic cash ledger of such person

and shall be utilized in the manner provided under section 35.

• Not allowed for Composition Scheme

• In case Non Resident Taxable Person – No requirement on Payment of Tax on Advance Basis.

• Non-resident taxable person may be granted registration under sub-section (1) on the basis of any other document as may be prescribed. [Sub Section – (4A)]

Registration


GST Registration – Special Provisions ( Casual Taxable Person ) • “casual taxable person” means a person who occasionally undertakes transactions

involving supply of goods and/or services in the course or furtherance of business whether as principal, agent or in any other capacity, in a taxable territory where he has no fixed place of business. [2 (21)]

Registration


Rule-1 - Application for registration ( Other than N.R., TDS [ 37 ], 43C, UN Bodies & Migration )

Registration

Form Number

Content

GST REG-01 Application for Registration under Section 19(1) of Goods and Services Tax Act, 20--

GST REG-02 Acknowledgement


Rule-2 - Verification of the application :

Registration

Form Number

Content


GST REG-03 Notice for Seeking Additional Information / Clarification / Documents relating to Application for <<Registration/Amendment/Cancellation>>

GST REG-04 Application for filing clarification/additional information/document for <<Registration /Amendment / Cancellation / Revocation of Cancellation>>

GST REG-05 Order of Rejection of Application for <Registration / Amendment / Cancellation/ Revocation of Cancellation>>


Registration

Form Number

Content


Rule-3 - Issue of Registration Certificate :


Registration

Form Number

Content

GST REG-25 Application for extension of registration period by Casual / Non-Resident taxable person

Rule-16 – Extension in period of operation by casual taxable person


SEC. 19A – CASUAL TAXABLE PERSON

Question No

Page No

Question Answer

6 29 Which are the cases in which registration is compulsory? Compulsory for Casual dealer

18 33 Who is a Casual Taxable Person? Occasionally + No fixed place

20 33 What is the validity period of the Registration certificate issued to a Casual Taxable Person and non- Resident Taxable person?

90 days

21 34 Is there any Advance tax to be paid by a Casual Taxable Person and Non-resident Taxable Person at the time of obtaining registration under this Special Category?

Yes

17 119 Who all need to file Annual Return? Not required

Registration


Tax Deduct at Source


Registration

Form Number

Content

GST REG-07 Application for Registration as Tax Deductor or Tax Collector at Source under Section 19(1) of the Goods and Service Tax Act, 20--


GST REG-09 Application for Allotment of Unique ID to UN Bodies/ Embassies /any other person under Section 19(6) of the Goods and Service Tax Act, 20--.

Rule-5 – Tax Deduct at Source [ 37 (1) ] / Collect Tax at Source [ 43 C ]


Un Bodies / Embassies


GST Registration – Section – 19 – Specialized Agency - Unique Identity Number Specialized Agency – UNO / Embassy • Any specialized agency of the United Nations Organization or any Multilateral

Financial Institution and Organization notified under the United Nations Consulate or Embassy of foreign countries shall obtain a Unique Identity Number.

• Any specialized agency of the United Nations Organization or any Multilateral Financial Institution and Organization notified under the United Nations (Privileges and Immunities) Act, 1947 (46 of 1947), Consulate or Embassy of foreign countries and any other person or class of persons as may be notified by the Board / Commissioner, shall obtain a Unique Identity Number, in the manner prescribed. [Sub Section (6)]

• Application form for Registration is not yet prescribed

Registration


Registration

Form Number

Content

GST REG-09 Application for Allotment of Unique ID to UN Bodies/ Embassies /any other person under Section 19(6) of the Goods and Service Tax Act, 20--.


Rule-6 – Specialized Agency – UNO / Embassy


Non – Resident


GST Registration – Special Provisions (Non-Resident Taxable Person )

Non – Resident Taxable Person :

• The certificate of registration issued to a casual taxable person or a non-resident taxable person shall be valid for a period of ninety days from the effective date of registration.

• A casual taxable person shall, at the time of submission of application for registration under sub-section (1)

of section 19, make an advance deposit of tax in an amount equivalent to the estimated tax liability of such person for the period for which the registration is sought:

• ITC allowed on Inward Supplies. • The amount deposited under sub-section (2) shall be credited to the electronic cash ledger of such person

and shall be utilized in the manner provided under section 35.

• Not allowed for Composition Scheme

• In case Non Resident Taxable Person – No requirement on Payment of Tax on Advance Basis.

• Non-resident taxable person may be granted registration under sub-section (1) on the basis of any other document as may be prescribed. [Sub Section – (4A)]

Registration


GST Registration – Special Provisions (Non-Resident Taxable Person ) • “non-resident taxable person” means a taxable person who occasionally undertakes

transactions involving supply of goods and/or services whether as principal or agent or in any other capacity but who has no fixed place of business in India; [2 (69)]

Registration


Registration

Form Number

Content

GST REG-10 Application for Registration for Non Resident Taxable Person.





Rule-8 – Non-Resident Taxable Person



Any person having multiple business verticals within a State, requiring a separate registration for any of its business verticals under sub-section (2) of section 19 shall be granted separate registration in respect of each of the verticals subject to the following conditions: • (a) Such person has more than one business vertical as defined under subsection (18) of section 2 of

the Act; • (b) No business vertical of a taxable person shall be granted registration to pay tax under section 8 if

any one of the other business verticals of the same person is paying tax under section 7. • Explanation: Where any business vertical of a registered taxable person that has been granted a

separate registration becomes ineligible to pay tax under section 8, all other business verticals of the said person shall become ineligible to pay tax under section 8.

• (c) All separately registered business verticals of such person shall pay tax under this Act on supply of goods and/or services made to another registered business vertical of such person and issue a tax invoice for such supply.

A registered taxable person eligible to obtain separate registration for business verticals may file separate application in FORM GST REG-01 in respect of each such vertical.

The provisions of rule 1 and rule 2 relating to verification and grant of registration shall mutatis mutandis apply to an application made under this rule.

Registration - Rule 4 - Separate Registrations for multiple business verticals within a State


• Every registered taxable person shall display his certificate of registration in a prominent location at his principal place of business and at every additional place or places of business.

• Every registered taxable person shall display his GSTIN in the name board exhibited at the entry of his principal place of business and at every additional place of places of business.

Registration - Rule 7 - Display of registration certificate and GSTIN in name board


Registration

Form Number

Content

GST REG-11 Application for Amendment in Particulars subsequent to Registration

GST REG-12 Order of Amendment of existing Registration



Rule-9 – Amendment to Registration

Form Number

Content



Registration

Form Number

Content

GST REG-13 Order of Allotment of Temporary Registration/ Suo Moto Registration


GST REG-02 Acknowledgement





Rule-10 – Suo moto registration


Registration

Form Number

Content

GST REG-14 Application for Cancellation of Registration under Goods and Services Tax Act, 20--.

Rule-11 – Application for cancellation of registration


Registration -

Form Number

Content

GST REG-14 Application for Cancellation of Registration under Goods and Services Tax Act, 20--.

GST REG-15 Show Cause Notice for Cancellation of Registration

GST REG-16 Order for Cancellation of Registration

Rule-12 – Cancellation of Registration


Registration - Revocation of Cancellation of Registration - Granted

Form Number

Granted



GST REG-17 Application for Revocation of Cancelled Registration under Goods and Services Act, 20--.



GST REG-18 Order for Approval of Application for Revocation of Cancelled Registration

Rule-13 – Revocation of cancellation of registration


Form Number

Not Granted



GST REG-17 Application for Revocation of Cancelled Registration under Goods and Services Act, 20--.

GST REG-19 Notice for Seeking Clarification / Documents relating to Application for << Revocation of Cancellation>>




Rule-13 – Revocation of cancellation of registration

Registration - Revocation of Cancellation of Registration – Not Granted


Registration

Form Number

Content

GST REG-26 Form for Field Visit Report

Rule-17 – Physical verification of business premises


• All applications, including reply, if any, to the notices, returns, appeals or any other document required to be submitted under these rules shall be filed electronically at the Common Portal with digital signature certificate or through e-signature as specified under Information Technology Act, 2000 (21 of 2000) or through any other mode of signature notified by the Board/Commissioner in this behalf

• Each document including return filed online shall be signed by – • in the case of an individual, by the individual himself or by some person duly

authorised by him in this behalf and where the individual is mentally incapacitated from attending to his affairs, by his guardian or by any other person competent to act on his behalf;

• in the case of a Hindu Undivided Family, by a Karta and where the Karta is absent from India or is mentally incapacitated from attending to his affairs, by any other adult member of such family or by the authorised signatory of such Karta

• in the case of a company, by the chief executive officer or authorised signatory there of;

• in the case of a Government or any Governmental agency or local authority, by an officer authorised in this behalf

Registration - Rule 15 - Method of authentication


• in the case of a firm, by any partner thereof, not being a minor or authorised signatory;

• in the case of any other association, by any member of the association or persons or authorised signatory;

• in the case of a trust, by the trustee or any trustee or authorised signatory; and • in the case of any other person, by some person competent to act on his behalf • All orders and notices under this chapter / Part shall be issued electronically by the

proper officer or any other officer authorised to issue any notice or order, through digital signature certificate specified under the Information Technology Act, 2000 (21 of 2000).

Registration - Rule 15 - Method of authentication


Enclosures

12 Slides Page No. 22 to 33 Prepared and presented By Sreeram Kaza 91

Scanned documents are required with the application for Registration (Enclosures along with application ) = Five • Partnership Deed in case of Partnership Firm / Registration Certificate in case of other

business like Society, Trust etc. which are not captured in PAN (Constitution or Business)

• In case of own premises – Latest tax paid receipt / Municipal khata copy / Electricity bill copy OR In case or lease of Rented or leased premises – a copy of the valid Rent / Lease Agreement OR In case of premises obtained from others, other than by way of Lease or Rent – a copy of the consent Letter(Principal place of Business)

• Opening page of the Bank passbook of the proprietor / Business concern containing Account no., Name of the Account holder, MICR and IFS codes and Branch details (Bank Accounts)

• For each Authorised Signatory – Letter of Authorisation or copy of Resolution of the Managing Committee or Board of Directors to that effect (Authorise Signatory )

• Photograph

Registration - General – Filling of Application


Summary : Application Method

• Submit the online application form (along with scanned copies of various documents as specified) to GSTN

• A confirmation code will be sent in the mobile no. and e-mail ID provided. • Once the code is entered, the verification is done. An ‘acknowledgement number’ is

generated as a proof of your submission. The processing of application will take some time.

• Once the application is approved, GSTIN is allotted and a unique user ID and

password.

Registration


Your Registration Number

Appear as ) (

(4 Slides) Page 40 To 43

GStIn


Structure of Registration Number-How Your GST Number appears ?

• Each taxpayer will be allotted a State wise PAN – based 15 – digit Goods and Services Taxpayer Identification Number (GSTIN)

• Various digits in GSTIN will denote the following :

• 1st & 2nd digit In the GSTIN, the State Code as defined under the Indian Census 2011

would be adopted. In Items of the Indian Census 2011, each State has been allotted a unique two digit code e.g. ‘09’ for the State of Uttar Pradesh, ‘27’ for the State of Maharashtra and ‘24’ for the state of Gujarat.

State Code P A N

Entity Code BLANK

Check Digit

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Registration


• 13th digit would be alpha-numeric (1-9 and then A-Z) and would be assigned depending on the number of registrations a legal entity (having the same PAN) has within one State. For example, a legal entity with single registration within a State would have ‘1’ as 13th digit of the GSTIN. If the same legal entity goes for a second registration for a second business vertical in the same State, the 13th digit of GSTIN assigned to this second entity would be ‘2’. This way 35 business verticals of the same legal entity can be registered within a State.

• 14th digit of GSTIN would be kept BLANK for future use. • The 15th digit is ‘Check Digit’. Now what is that. The report does not explain. But it will

be clear to you from the following extract from Wikipedia. ‾ “A check digit is a form of redundancy check used for error detection on identification

numbers (e.g. bank account numbers) which have been input manually. It is used to check for errors in computer-generated data. It consists of a single digit (sometimes more than one) computed by an algorithm from the other digits (or letters) in the sequence input.”

‾ Thus, it will be a random digit, logically selected on the basis of the other 14 numbers contained in the GSTIN, and will help to detect mistyping and other errors.

Registration – Application Form


• One Registration for all these below mentioned Payments, each state wise and its minor Heads such

as – Penalty, Interest, Fine, others.

CGST SGST IGST Composition in lieu of Tax ( In case of Section- 8 – Dealer ) Advance Tax Deposit ( In case of Casual dealer )

• A person shall not be liable to registration if his aggregate turnover consists of only goods and / or

services which are not liable to tax.

• The concept of a single/ centralized registration for multiple places of business has not been provided.

• Every person shall have a Permanent Account Number issued under the Income Tax Act, 1961 (43 of 1961) [Sub Section – (4)]

• Due to concepts of “Place of Supply” and to get the ITC Credits flow, more “ISD” Registrations

needs to be obtained. • Separate Registration Certificate for Regular , ISD, Composition Scheme, Specialized Agency,

Casual/ Non – Resident Taxable Person

Registration - Summary


REGISTRATION

Question No

Page No

Question Answer

11 31

Is possession of a Permanent Account Number (PAN) mandatory for obtaining a Registration? Yes. Except for non-resident taxable person

28 36

If the taxpayer has different business verticals in one state, will he have to obtain separate registration for each such vertical in the state? Optional

33 37

Whether all assessees/dealers who are already registered under existing central excise/service tax/vat laws will have to obtain fresh registration?

No. Except for assessees having centralized registration in current regime.

41 40 What is the process of refusal of registration?

Rejection of application for registration by one authority shall be deemed to be a rejection of application by the other tax authority

42 41 Will there be any communication related to the application disposal? Yes through an E-mail & SMS

43 41 Can registration certificate be downloaded from GSTN portal? Yes

Registration


REGISTRATION

Question No

Page No

Question Answer

5 262 Give two examples of registered taxable persons who were not liable to be registered under the earlier law but are required to be registered under GST?

1) A manufacturer having a turnover of say Rs 60 lakhs was enjoying SSI exemption earlier, will have to be registered in GST as the said turnover exceeds the basic threshold of Rs 10 lakhs

2) A trader having turnover below the threshold under VAT making sales through e-commerce operator will be required to be registered in GST. There will no threshold for such persons

17 33 Is it necessary for Govt. organization to get registration? No. As no Outward supplies UID for interstate purchases

Registration


REGISTRATION

Question No

Page No

Question Answer

15 32 Is it necessary for the UN bodies to get registration under MGL? Yes

16 32 What is the responsibility of the taxable person supplying to UN bodies?

Treat as B2B mentioning UID on invoice

Registration


SEC. 19A – NON RESIDENT TAXABLE PERSON

Question No

Page No

Question Answer

6 29 Which are the cases in which registration is compulsory? Compulsory for Non Resident taxable person

19 33 Who is a Non Resident Taxable Person? Occasionally + Outside India + No fixed place in India

20 33 What is the validity period of the Registration certificate issued to a Casual Taxable Person and non-Resident Taxable person?

90 days

21 34 Is there any Advance tax to be paid by a Casual Taxable Person and Non-resident Taxable Person at the time of obtaining registration under this Special Category?

Yes

17 119 Who all need to file Annual Return? Not required

Registration


4 Slides

Charging Section




Charging Section ( Sec. 7 of GST & Sec. 4 of IGST ) Ingredients Charging Section

CGST/SGST IGST (Intra state) (Inter sate)

1 Supply [ 7 (1) & 4(1) ] 3 2(f)

2 Taxable person [7(2) & 4 (2) ] 2(96) & Sec. 9 ..2(2)..

3 Tax [ 7(1) & 4(1) ] 2(94) & Sec. 8 ..2(2)..

4 Inter state/Intra state [ 7(1) & 4(1) ] Intra state 3 & 3A

5 Goods [ 7 (1) & 4(1) ] / Services [ 7 (1) & 4(1) ] 2(48) / 2(88) ..2(2).. / ..2(2)..

6 Schedule [ 7 (1) & 4(1)/ 4 (4) ] 1-2 2(87) ..2(2)..

7 CGST [ 7(1) & - ] / SGST [ 7(1) & - ] 2(22) / 2(89) ..2(2).. / ..2(2)..

8 Government [7(3) & - ] 2(49) -

9 Notification [ 7(3) & 4 (3) / 4(4) ] 2(71) ..2(2)..

10 Reverse Charge [ 7(3) & 4(3) ] 2(85) ..2(2)..

11 Person [ 7(3) & 4 (3) ] 2(74) ..2(2)..

12 IGST [ - & 4(1) ] 2(50) 1( C)

13 Central Government [- & 4 (3) ] - 2(b)

Note-1:- section 7 is related to CGST & SGST

Note-2:- section 4 is related to IGST


Supply – Definitions - Steps needs to be decided

(1 ) Determine either or

Whether Goods [Schedule II of GST Act]

Whether Services (Including Deeming) [Schedule II of GST Act]

(2) Location --- Where ? (Place of Supply)

Section 5 of IGST Act for Goods

Section 6 of IGST Act for Services

(4) Time of Supply --- What ? (Point of Taxation)

Section 12 of GST Act for Goods

Section 13 of GST Act for Services

Whether - Goods /

Services ?

Where = ?

When - To discharge

the liability = ?

(3) To Decide Location of State

Section 3(1), & 3A(1) of IGST Act

for Goods

Section 3(2), & 3A(2) of IGST Act for Services

Inter / Intra = ?


21 Slides

Supply





Section / Schedule

Heading

Section 2 (92) CGST / SGST – Meaning

Section 2(f) IGST - Meaning

Section-3 CGST / SGST (Meaning of Scope of Supply)

Supply - Definitions


Section – 2 (92) “supply’’ shall have the meaning as assigned to it in section 3. [Goods and Services Tax Act, 2016] Section – 2 (f) “supply” has the same meaning as assigned to it in section 3 of the CGST Act, 2016; [The Integrated Goods and Services Tax Act, 2016 ]

Supply : Definitions





Supply - Definitions :

• Section – 2 (74) : “person’’ includes – (a) An individual; (b) A Hindu undivided family; (c) Company ; (d) A Firm ; (e) A limited Liability Partnership (f) an association of persons or a body of individuals, whether incorporated or not, in India or outside India; (g) any corporation established by or under any Central, State or Provincial Act or a Government company as

defined in section 2(45) of the Companies Act, 2013 (18 of 2013); (h) any body corporate incorporated by or under the laws of a country outside India; (i) a co-operative society registered under any law relating to cooperative societies; (j) a local authority; (k) government; (l) society as defined under the Societies Registration Act, 1860 (21 of 1860); (m) trust; and (n) every artificial juridical person, not falling within any of the preceding sub-clauses;



------------------------------------------------------ Serious undertaking earnestly pursued

Pursued with continuity of ------------------- Reasonable / Recognizable

Conducted in a regular based on ----------- Sound and recognized Business principals

Predominantly concerned with the making of taxable supply for ----------- Consideration / profit motive

Is the Activity

“Supply made In the course or Furtherance of Business” – applied test

Note:-FAQ .No/Page No = 9/47







Supply : Schedule I specifies supplies without consideration - Deemed Provision : output GST will be charged:

Entry - 4 : “Assets retained after deregistration” Will also qualify as supplies - Valuation issues – Depreciation value or Market prevalent value Assets and Plant & Machine which were purchased to make taxable supplies and on the day of deregistration the same are still owned by the company and the scope of litigation in view of the valuation rules as • Depreciation value ( books of accounts ) of the assets or • Market value of such assets.

Supply :



Supply - Definitions : Section 3 (2A)

• Section – 2 (5) : “agent’’ means a person who carries on the business of supply or receipt of goods

and/or services on behalf of another, whether disclosed or not and includes a factor, broker, commission agent, arhatia, del credere agent, intermediary or an auctioneer or any other mercantile agent, by whatever name called, and whether of the same description as hereinbefore mentioned or not;

• Section – 2 (77) :

“principal’’ means a person on whose behalf an agent carries on the business of supply or receipt of goods and/or services;



FAQ

Q. No.

Page No.

Question Answer

6 20 Whether supplies made without consideration will also come within the purview of Supply under GST ?

Yes

5 46 Can a transaction in which any one or more of the above criteria is not fulfilled, be still considered as supply under GST ?

Yes – Under certain circumstances Such as - Importation of Service or Supplies without consideration

Supply :


Place of Supply of Goods / Services ( 31 Slides )



Section / Schedule

Heading

Section-3 Determining – State – Inter state [Article – 286(2)] [IGST]

Section-3A Determining – State – Intra State [Article – 286(2)] [IGST]

Section-5 Determine - Place of Supply - Goods [IGST]

Section-6 Determine - Place of Supply – Services [IGST]

Place of Supply of Goods and / or Services

Place of Supply











Sec. 6 - Place of supply of Service – Specified Services

Related to immovable property : (4) [a]

Section Ref.

Text Place of Supply of Service

S.6 (4) (a)

including services provided by - Architects, - Interior decorators, - Surveyors, - Engineers - Other related Experts / Estate agents - Any service provided by way of grant of rights to use immovable property - For Carrying out or co-ordination of construction work

The location at which the immovable property located or intended to be located.


IV. Exceptions : ( Either IGST or CGST + SGST ) [6 - (4) to (15)]


In relation to an immovable property : (4) [b]

Section Ref.


S.6 (4) (b)

by way of lodging Accommodation by : - - A Hotel - inn, - guest house - homestay - club - campsite - by whatever name called and including a house

boat or any other vessel

The location at which the immovable property or Boat or Vessel located or intended to be located.


In relation to an immovable property : (4) [d]

Section Ref.


S.6 (4) (d)

any services ancillary to the services referred to in clause (a), (b) and (c),




In relation to an immovable property : (4) [c]

Section Ref.


S.6 (4) (c)

by way of accommodation in any immovable property for :-

- Organizing any marriage - Reception - Matters related therewith : • official • social • cultural • religious - Business function including services provided

in relation to such function at such property




Sec. 6 - Place of supply of Service – B2C Supplier – Tangible / Physical

Performance Based : (5)

Section Ref. Text Place of Supply of Service

S.6 (5)

The place of supply of : - Restaurant - Catering services - Personal grooming - Fitness, - Beauty treatment - Health services including cosmetic and plastic

surgery

location where the services are actually performed


Sec. 6 - Place of supply of Service – Tangible / Physical

Performance Based : (6)

Section Ref.

Text Supply of Services made to Place of Supply of Service

S.6 (6)

The place of supply of :

- Training and

Performance Appraisal

A Registered person Location of such person

Other than a Registered person

Location where the services are actually performed


Sec. 6 - Place of supply of Service

Event : (7)


S.7 admission to : - cultural - artistic - sporting - scientific - educational - entertainment event - amusement park - any other place

Place of Event Actually Held

Or

Where the park or such other place is Located



Event : (8) (a)

Section Ref. Text Place of Supply

of Service

S. 6 (8)(a)

The place of supply of services by way of organization of :

- a cultural - artistic - sporting - scientific - educational - entertainment event including supply of service in

relation to a conference - fair - exhibition - celebration - similar events

Place of Event actually Held



Event : (8) (b)

Section Ref. Text Supply of Services

made to Place of Supply of

Service

S. 6 (8)(b)

- services ancillary to organization

of any of the above events or services. - assigning of sponsorship of any

of the above events

A Registered person

Place of Event actually Held

Other than a Registered person


Sec. 6 - Place of supply of Service – Specified Rules for certain Suppliers – B2C

Transportation of Goods including mail or Courier : (9)

Section Ref.


S.6 (9)(a)

- A Registered Person Location of such service receiver

S.6 (9)(b)

- A Person other than a Registered Person

The location at which such goods Are handed over for their transportation. (Supplier)


Sec. 6 - Place of supply of Service – Specified Rules for certain Suppliers – B2C

Passenger transportation service : (10)


S.6 (10)

- A Registered Person Location of such person

- A Person other than a Registered Person Place where the passenger embarks

on the conveyance for a continuous journey

Proviso Point of embarkation is not known at the time of issue of right to passage Determined in the manner specified

in sub-sections (2) or (3), as the case may be

Explanation: The return journey shall be treated as a separate journey



Service on board of conveyance : (11)

Section Ref.


S.6 (11)

Supply of services on board a conveyance such as

- vessel - aircraft - train - motor vehicle

The location of the first scheduled point of departure of that conveyance for the journey


Sec. 6 - Place of supply of Service – Specified Rules for certain suppliers

Supply of telecommunication services including data transfer, broadcasting, cable and direct to home television services to any person : (12) (a) & (b) & (c)

Section Ref.


S.6 (12) (a)

services by way of : - Fixed telecommunication line - Leased circuits - Internet leased circuit - Cable or dish antenna

- The location where these installed for receipt of services

S.6 (12) (b)

Services provided on post-paid basis to : - mobile connection for telecommunication - Internet

- The location of billing address of the service receiver on record of the Supplier of service

S.6 (12) (c)

service are provided on pre-payment through a voucher or any other means :

- Mobile connection for telecommunication - Internet

- The location where such pre-payment is received or

- Such vouchers are sold:



Supply of telecommunication services including data transfer, broadcasting, cable and direct to home television services to any person : [ (12) Proviso ]

Section Ref.


S.6 (12) Proviso

- if pre-paid service is availed or - The recharge is made through internet banking - Other electronic mode of payment

The location of the Recipient of service on record of the Supplier of service.


Sec. 6 - Place of supply of Service - Specified Rules for certain suppliers

Supply of banking and other financial services including stock broking services to any person: (13)

Section Ref.


S.6 (13)

supply of : - Banking and other financial services including - stock broking services - to any person

The location of the Recipient of service on record of the Supplier of service

S.6 (13) Proviso

if the service is not linked to the account of the Recipient of service,

The location of the Supplier of service


Sec. 6 - Place of supply of Service – B2C – Specified Rules for certain suppliers

Supply of insurance services to any person: (14)

Section Ref.


S.6 (14) (a)

A Registered Person The location of such person

S.6 (14) (b)

A Person other than a Registered person

The location of the Recipient of service on record of the Supplier of service



Supply of service of advertisement services to the Central Government, a State Government, a statutory body or a local authority meant for identifiable States: (15)

Section Ref.


S.6 (15)

shall be taken as located in each of such States and the value of such supplies specific to each State shall be in proportion to amount attributable to service provided by way of dissemination in the respective States as may be determined in terms of the contract or agreement entered into in this regard or, in the absence of such contract or agreement, on such other reasonable basis as may be prescribed in this behalf.

Each Such State


PLACE OF SUPPLY Question No

Page No

Question Answer

5 236 What would be the place of supply where goods are removed?

Location of the goods at the time at which the movement of goods terminates for delivery to the recipient. (Section 5(2) of IGST Act)

6 236 What will be the place of supply if the goods are delivered by the supplier to a person on the direction of a third person?

Principal place of business of Third person

8 237 What is the default presumption for place of supply in respect of B2B supply of services?

Presumption in case of supplies to registered person is location of such person

9 237 What is the default presumption for place of supply in respect of unregistered recipients?

The usual place of supply is location of recipient. However in many cases, the address of recipient is not available, in such cases, location of the supplier of services is taken as proxy for place of supply.

10 237

The place of supply in relation to immovable property is the location of immovable property. Suppose a road is instructed from Delhi to Mumbai covering multiple states. What will be the place of supply?

Where the immovable property is located in more than one State, the supply of service shall be treated as made in each of the States in proportion to the value for services separately collected or determined, in terms of the contract or agreement. In absence of agreement reasonable basis as may be prescribed

Place of Supply


PLACE OF SUPPLY Question No

Page No

Question Answer

11 238 What would be the place of supply of services provided for organizing an event, say, IPL cricket series which is held in multiple states?

Registered recipient-Location of such person Unregistered recipient- Place where event is held

12 238 What will be the place of supply of goods in respect of transport of goods by courier?

Registered recipient- Location of such person Unregistered recipient-Place where goods are handed over for transportation

13 238 What will be the place of supply if a person travels from Mumbai to Delhi and back to Mumbai?

Registered recipient- Location of recipient. Unregistered recipient-Place where he embarks. (Mumbai) Note: Return journey should be treated as separate journey

14 239 Suppose a ticket/ pass for anywhere travel in India is issued by M/s Air India to a person. What will be the place of supply?

Registered recipient- Location of such person Unregistered recipient-Location of recipient in case of address available or Location of supplier of service

Place of Supply


PLACE OF SUPPLY

Question No

Page No

Question Answer

16 240 A person in Goa buys shares from a broker in Delhi on NSE (in Mumbai). What will be the place of supply?

Location of the recipient of services on the records of the supplier of services i.e. Goa

17 240 A person from Mumbai goes to Kullu-Manali and takes some services from ICICI Bank in Manali. What will be the place of supply?

If the service is not linked to the account of person, place of supply shall be Kullu i.e. the location of the supplier of services. However if the service is linked to the account of the person, the place of supply shall be Mumbai, the location of recipient on the records of the supplier.

18 240 A person from Gurgaon travels by Air India flight from Mumbai to Delhi and gets his travel insurance done in Mumbai. What will be the place of supply?

Location of the recipient of services on the records of the supplier of insurance services i.e. Gurgaon

Place of Supply


Time of Supply of

Goods / Services

( 15 Slides )


Section / Schedule

Heading Page No.

Section-12 Time of Supply of goods [CGST/SGST] 110 to 114

Section-13 Time of Supply of Services [CGST/SGST] 134 to 138

Time of Supply of Goods and / or Services

Time of Supply













(1)(a) Taxable service provided Before Rate change :

Section Ref.

Date of Completion of Service

Date of Invoice

Date of Payment

Point of Taxation

(i) Before Change

After Change

After Change

Date of Invoice or Date of Payment Whichever is earlier

(ii) Before Change

Before Change

After Change

Date of issue of Invoice

(iii) Before Change

After Change

Before Change

Date of receipt of Payment

Supply : Change in rate of tax in respect of supply of services [Section-14]


(1)(b) Taxable service provided After Rate change :

Section Ref.

Date of Completion of Service

Date of Invoice

Date of Payment

Point of Taxation

(i) After Change

Before Change

After Change

Date of receipt of Payment

(ii) After Change

Before Change

Before Change

Date of Payment or Date of Invoice Whichever is earlier

(iii) After Change

After Change

Before Change

Date of issue of Invoice

Supply : Change in rate of tax in respect of supply of services [Section-14]


TIME OF SUPPLY Question No

Page No

Question Answer

1 53 What is time of supply?

The time of supply fixes the point when the liability to charge GST arises. It also indicates when a supply is deemed to have been made.

14 49 Whether transfer of right to use goods will be treated as supply of goods or supply of service ? Why?

Supply of service as per Schedule II point No. 1(2) of MGL

7 46 Are self-supplies taxable under GST? Yes in case of Inter-state self-supplies

14 56

Let’s say there was increase in tax rate from 18% to 20% w.e.f. 1.6.2017. What is the tax rate applicable when services provided and invoice issued before change in rate in April 2017, but payment received after change in rate in June 2017?

Old rate as service provided prior to change in rate i.e 18%

10 48 An individual buys a car for personal use and after a year sells it to a car dealer. Will the transaction be a supply in terms of MGL? No

11 48 A dealer of air-conditioners transfers an air conditioner from his stock in trade, for personal use at his residence. Will the transaction constitute a supply? Yes

Supply :


Valuation ( 22 Slides )



Value of Taxable Supply - shall include: [Section 15(2) of CGST/SGST]

• Any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply

and not included in the price actually paid or payable for the goods and/or services; • The value, apportioned as appropriate, of such goods and/or services as are supplied directly or indirectly by the recipient of the

supply free of charge or at reduced cost for use in connection with the supply of goods and/or services being valued, to the extent that such value has not been included in the price actually paid or payable

• Royalties and license fees related to the supply of goods and/or services being valued that the recipient of supply must pay, either

directly or indirectly, as a condition of the said supply, to the extent that such royalties and fees are not included in the price actually paid or payable

• Any taxes, duties, fees and charges levied under any statute other than the SGST Act or the CGST Act or the IGST Act • Incidental expenses, such as, commission and packing, charged by the supplier to the recipient of a supply, including any amount

charged for anything done by the supplier in respect of the supply of goods and/or services at the time of, or before delivery of the goods or, as the case may be, supply of the services.

• Subsidies provided in any form or manner, linked to the supply • Any reimbursable expenditure or cost incurred by or on behalf of the supplier and charged in relation to the supply of goods

and/or services; • Any discount or incentive that may be allowed after the supply has been effected except which are Provided that such post-supply

discount which is established as per the agreement and is known at or before the time of supply and specifically linked to relevant invoices shall not be included in the transaction value.




GST Valuation (Determination of the Value of supply of Goods and Services) Rules, - Sequential manner

Rule Heading

1 Short title, commencement and application.

2 Definitions

3 Methods of determination of value – Transaction Value

4 Determination of value of supply by comparison – Like kind & Quality

5 Computed value method – Various Costs + Charges + Profit

6 Residual method – Reasonable Method

7 Rejection of declared value

8 Valuation in certain cases

(1) Pure Agent – Like Service Tax Valuation Rules

(2) Money Changer










GST Valuation (Determination of the Value of Supply of Goods and Services) Rules, 2016 – Like Service Tax Valuation

Valuation in certain cases (Rule – 8) – Pure Agent – Legal Text • Notwithstanding anything contained in these rules, the expenditure or costs incurred

by the service provider as a pure agent of the recipient of service, shall be excluded from the value of the taxable service if all the following conditions are satisfied, namely :-

(i) the service provider acts as a pure agent of the recipient of service when he makes payment to third party for the goods and/or services procured;

(ii) the recipient of service receives and uses the goods and/or services so procured by the service provider in his capacity as pure agent of the recipient of service;

(iii) the recipient of service is liable to make payment to the third party;



Valuation in certain cases (Rule – 8) – Pure Agent – Legal Text (iv) the recipient of service authorises the service provider to make payment on his behalf;

(v) the recipient of service knows that the goods and/or services for which payment has

been made by the service provider shall be provided by the third party;

(vi) the payment made by the service provider on behalf of the recipient of service has been separately indicated in the invoice issued by the service provider to the recipient of service;

(vii) the service provider recovers from the recipient of service only such amount as has been paid by him to the third party; and



Valuation in certain cases (Rule – 8) – Pure Agent – Legal Text (viii)the goods and/or services procured by the service provider from the third party as a

pure agent of the recipient of service are in addition to the services he provides on his own account.

Explanation.- For the purposes of this sub-rule, “pure agent” means a person who– (a) enters into a contractual agreement with the recipient of service to act as his pure

agent to incur expenditure or costs in the course of providing taxable service;

(b) neither intends to hold nor holds any title to the goods and/or services so procured or provided as pure agent of the recipient of service;



Valuation in certain cases (Rule – 8) – Pure Agent – Legal Text (c) does not use such goods and/or services so procured; and

(d) receives only the actual amount incurred to procure such goods and/or services.



Valuation in certain cases ( Rule – 8 ) - Pure Agent: Transaction value shall be adopted excluding the expenditures and cost incurred by the service provider (SP) as a pure agent of the recipient of services, provided all the following conditions are fulfilled. No Change in comparison of the existing service tax valuation rules. • The service provider acts as a pure agent of the recipient of service when he makes payment to third party for the goods

and/or services procured. • The recipient of service receives and uses the goods and/or services so procured by the service provider in his capacity as

pure agent of the recipient of service • The recipient of service is liable to make payment to the third party • The recipient of service authorizes the service provider to make payment on his behalf. • The recipient of service knows that the goods and/or services for which payment has been made by the service provider

shall be provided by the third party • The payment made by the service provider on behalf of the recipient of service has been separately indicated in the

invoice issued by the service provider to the recipient of service; • The service provider recovers from the recipient of service only such amount as has been paid by him to the third party. • The goods and/or services procured by the service provider from the third party as a pure agent of the recipient of

service are in addition n to the services he provides on his own account.


GST Valuation - Stock transfers - valuation method - Major Impact Situations - Analysis As per Section 15 of GST Law, value of supply shall be ‘transaction value’ that is the price actually paid or payable for the said supply of goods where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply. Further per section 15(4)(ii) of GST Law the value of supply of goods in a situation where the supplier and recipient are related would be required to be determined as per GST Valuation Rules. As Per rule 3(5) of GST Valuation Rules, when goods are transferred from one place of business to another place of the same business, the value of such supplies would be the ‘transaction value’ Rule 3(4) of GST Valuation Rules which states that the transaction value shall be accepted even if supplier and recipient of supply are related, provided that the relationship has not influenced the price. Further if value cannot be determined under rule 3(4) or rule 3(5) then it requires the value to be determined by sequential application of rule 4 to 6 which are comparable price method, computed value method and residual method using reasonable means. What about In case of Business verticals of same state : Since the registration under GST is based on PAN and is also state specific and with an option of business vertical specific, levy of GST on all stock transfers made from one registration of the assesse to another registration of the assesse be it intra-state (in cases where the registration is by business verticals) or inter-state .


GST Valuation - MRP goods Valuation method - Major Impact Situations - Analysis

The Apex Court Jayanti Food Processing (P) Ltd Vs. CCE Rajasthan 2007 (215) E.L.T. 327 (S.C.) ruled that valuation of packaged goods which are sold to industrial & institutional buyers and are not meant for retail sale would be based on transaction value and not on the basis of RSP. Further, on the issue of valuation of packaged goods sold as comb pack or as promotional packs, the Bombay High Court L’Oreal India Pvt. Ltd. v. Commissioner - 2016 (331) E.L.T. A42 (Bom.) held RSP based valuation will not be applicable for such packs. Under existing VAT Scenario, most of the stats following sales price/transaction value method from valuation angle, not MRP. The model law envisages that levy of GST would be on the value addition at each stage of business with Input Tax credit. Thus, the MRP/ RSP based levy which has been there in the system for levy of Central Excise duty for the last close to three decades would no longer be relevant for valuation of goods in the GST regime. Therefore, around 144 products ( FMCG products , Medicaments etc. etc.) which were enjoying the MRP/ RSP valuation system will now follow the “Transactional Valuation “ system under GST regime.


Some of the factors needs to be analysed by the Business/ Industry :

• Business arrangements entered by brand owners in the nature of contract manufacturing, toll manufacturing, etc.

• Appropriate consideration to discounts allowed at each stage of distribution while

computing the transaction value. • Clear rules regarding treatment of pre and post-sale discounts. • Treatment of promotional packs (whether of the identical goods or other goods)

supplied free of cost or at a discounted price. • Treatment of incentives and commissions allowed to distribution channel partners

GST Valuation (Determination of the Value of Supply of Goods and Services) Rules, 2016


FAQ – TABLE OF CONTENTS – 6 VALUATION IN GST Question No

Page No

Question Answer

1 59 What is the value of taxable supply to be adopted for the levy of GST?

Transaction Value (Price paid/Payable where party not related and Price is sole consideration. MGL Prescribed certain Incl & excl

3 59 Are there separate valuation provisions for CGST,SGST and IGST and Goods and services?

No (section 15 is common)

10 61 When are valuation rules applicable? Consideration not in Money terms, parties are related ,Transaction Value not sufficient

12 61 What are methods provided for determining the value, in terms of draft GST Valuation Rules?

Three Methods 1.Comparative2.Computation 3.Residual.

13 62 What are the inclusions specified in section 15(2) which could be added to transaction Value?

Obligation of supplier paid by receiver ,Royalty, Licences payable by Recipient, money value of Free/concession supply, Taxes Levied under other law. Expense incurred before supply & charged separately ,Subsidy received, Reimbursement claim by Supplier ,Discount allowed after supply (not usual)



Input

105 Slides Prepared and presented By Sreeram Kaza 200

Chapter -V

Section

CGST/SGST Chapter –VI Section

IGST

16

16A

17

18

Manner of taking input tax credit Taking input tax credit in respect of inputs sent for job work Manner of distribution of credit by Input Service Distributor (ISD) Manner of recovery of credit distributed in excess (Machinery provision)

8

9.

Claim of input tax credit and provisional acceptance, matching, reversal and re-claim thereof Transfer of input tax credit

Note : - In “Ten” Situations, wherein “Prescribed” is referred [Section - 16] - In “Two” Situations, wherein “Prescribed” is referred [Section – 16A] - In “Five” Situations, wherein “Prescribed” is referred [Section - 17] - In “One” Situations, wherein “Prescribed” is referred [Section - 8] - In “Two” Situations, wherein “Prescribed” is referred [Section - 9] [TOTAL = 20 Situations, wherein “Prescribed is referred]

Input Tax Credit


Common procedures across the country for :

• Registration

• Payments

• Returns

• Refunds

Input Tax Credit - Common ITC Law across the Country :


Input Tax Credit - 2 Routes

CGST Intra – State Supply SGST IGST Inter – State Supply

State wise - ITC


GST on Supply

Central Excise

VAT

Service Tax

Manufacturing

Sales

Provision of Services

GST

Supply {Goods / Services]

Levy / Charging of Tax / Imposition of Tax

Place of Supply

Point of Taxation [Collection of Tax]

ITC available

Input Tax Credit


Utilization of Input Tax Credit for Payment of Tax

Utilization of

Credit

1st Utilization

2nd

Utilization

3rd

Utilization

IGST

IGST

CGST

SGST

CGST

CGST

IGST

SGST

SGST

IGST

Input Tax Credit - Payment of Tax – ( Sec.-35 (5) ) – Order / Restriction



CGST Input Tax Credit

Can Not be Utilized

SGST Payments

SGST Input Tax Credit

Can Not be Utilized

CGST Payments

Input Tax Credit - Payment of Tax ( Sec.-35(7) ) - Restriction


I.T.C.

2. From Service Provider – e.g.

R&D, Construction

business - Goods / Services

3. From Any Promotional

material purchases –

Goods / Services

4. From Any goods or

services which are used in the

course or furtherance of

business

5. From C & F - Goods

6. From C.S.P. –

God own, Warehouse

- Goods

7. From I.S.D.

Registration – Input Services

1. From Manufacturing Plant –

Goods / Services

I.S.D. Registration Job Worker C & F

Supply Third Party

Purchases as a material Trader

C.S.P. / God own / Warehouse /

Plant Plant

New Sources for ITC Manufacturer 3,4,5,6

VAT 2,3,4,7

Input Tax Credit - Sources - Each State


• “Input tax credit” means credit of ‘input tax’ as defined in section 2(56) • [It appears as error and needs to refer 2(57)]

• “Input tax" in relation to a taxable person, means the {IGST and CGST}/{IGST and SGST}

charged on any supply of goods and /or services to him which are used, or are

intended to be used, in the course or furtherance of his business and includes the tax

payable under sub-section (3) of section 7 [2 (57)]

Note : 1. Taxable person – as per Section 9 2. Supply means – as per Section 3 3. Business – as per Section 2 (17) 4. Reverse Charge – as per Section 2 (85) & Sub Section (3) of Section 7

Input Tax Credit - Definitions


Taxable Person – [Section (9)]

• Taxable Person means a person who carries on any business at any place in India /State of

____ and who is registered or required to be registered under Schedule III of this Act:

• Provided that an agriculturist shall not be considered as a taxable person.

• Provided further that a person who is required to be registered under paragraph 1 of

Schedule III of this Act shall not be considered as a taxable person until his aggregate turnover in a financial year exceeds [Rs ten lakh]

• Provided further that a person who is required to be registered under paragraph 1 of Schedule III of this Act shall not be considered as a taxable person until his aggregate turnover in a financial year exceeds [Rs five lakh]

[This threshold of 5 lacs will apply only if a taxable person conducts his business in any of the NE States including Sikkim.]

Exempt

Not Taxable Person



Taxable Person – [Section (9)] • The Central Government, a State Government or any local authority shall be

regarded as a taxable person in respect of activities or transactions in which they are engaged as public authorities other than the activities or transactions as specified in Schedule IV to this Act.

• The following persons shall not be considered as taxable persons for the purposes of this Act –

(a) any person who provides services as an employee to his employer in the

course of, or in relation to his employment, or by any other legal ties creating the relationship of employer and employee as regards working conditions, remunerations and employer’s liability;

(b) any person engaged in the business of exclusively supplying goods and/or services that are not liable to tax under this Act;

(c) any person, liable to pay tax under sub-section (3) of section 7, receiving services of value not exceeding ______ rupees in a year for personal use, other than for use in the course or furtherance of his business.

Govt. – Taxable & Schedule - IV

Exempt



Schedule – III – Liability to be Registered • Every supplier shall be liable to be registered under this Act in the State

from where he makes a taxable supply of goods and/or services if his aggregate turnover in a financial year exceeds [Rs nine lakh]

• Every supplier shall be liable to be registered under this Act in the State from where he makes a taxable supply of goods and/or services if his aggregate turnover in a financial year exceeds [Rs. four lakh]:

[This threshold of four lakh will apply only if the taxable person conducts his business in any of the NE States including Sikkim.]

• Provided that the supplier shall not be liable to registration if his aggregate turnover consists of only goods and/or services which are not liable to tax under this Act.


Threshold


Schedule – III – Liability to be Registered

– Explanation 1.- The taxable threshold shall include all supplies made by the taxable person, whether on his own account or made on behalf of all his principals.

– Explanation 2.- The supply of goods, after completion of job-work, by a

registered job worker shall be treated as the supply of goods by the “principal” referred to in section 43A, and the value of such goods shall not be included in the aggregate turnover of the registered job worker.

• Subject to the provisions of paragraph 1, every person who, on the day

immediately preceding the appointed day, is registered or holds a license under an earlier law, shall be liable to be registered under this Act with effect from the appointed day.

• Where a business carried on by a taxable person registered under this Act is transferred, whether on account of succession or otherwise, to another person as a going concern, the transferee, or the successor, as the case may be, shall be liable to be registered with effect from the date of such transfer or succession.


Critical to J.W.

Critical to J.W.

Read in Schedule – II Point : 4 (4) (a)

Registered under Earlier Law


Schedule – III – Liability to be Registered • Notwithstanding anything contained in paragraph 1 and 2 above, in a case of

transfer pursuant to sanction of a scheme or an arrangement for amalgamation or, as the case may be, de-merger of two or more companies by an order of a High Court, the transferee shall be liable to be registered, where required, with effect from the date on which the Registrar of Companies issues a certificate of incorporation giving effect to such order of the High Court.

• Notwithstanding anything contained in paragraph 1 and 2 above, the following categories of persons shall be required to be registered under this Act:

(i) persons making any inter-State taxable supply, irrespective of the threshold specified under paragraph 1;

(ii) casual taxable persons, irrespective of the threshold specified under paragraph 1;

(iii) persons who are required to pay tax under reverse charge , irrespective of the threshold specified under paragraph 1;


Sanction of Scheme

Compulsory


Schedule – III – Liability to be Registered (iv) non-resident taxable persons, irrespective of the threshold specified under

paragraph 1;

(v) persons who are required to deduct tax under section 37;

(vi) persons who supply goods and/or services on behalf of other registered taxable persons whether as an agent or otherwise, irrespective of the threshold specified under paragraph 1;

(vii) input service distributor;

(viii) persons who supply goods and/or services, other than branded services, through electronic commerce operator, irrespective of the threshold specified in paragraph 1;

(ix) every electronic commerce operator, irrespective of the threshold specified in paragraph 1;


Compulsory


Schedule – III – Liability to be Registered (x) an aggregator who supplies services under his brand name or his trade

name, irrespective of the threshold specified in paragraph 1; and

(xi) such other person or class of persons as may be notified by the Central Government or a State Government on the recommendations of the Council.


Compulsory


Supply – Meaning and Scope of Supply - [Section (3)] • Supply includes –

(a) All forms of supply of goods and/or services such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business.

(b) importation of service, whether or not for a consideration and whether

or not in the course or furtherance of business, and

(a) A supply specified in Schedule I, made or agreed to be made without a consideration.

• Schedule II, in respect of matters mentioned therein, shall apply for determining

what is, or is to be treated as a supply of goods or a supply of services.

8-Transactions

I.S

Schedule -1 5- Transactions

Treated as what -

Mentioned



Supply – Meaning and Scope of Supply - [Section (3)] • Where a person acting as an agent who, for an agreed commission or

brokerage, either supplies or receives any goods and/or services on behalf of any principal, the transaction between such principal and agent shall be deemed to be a supply.

• Subject to sub-section (2), the Central or a State Government may, upon

recommendation of the Council, specify, by notification, the transactions that are to be treated as—

(i) a supply of goods and not as a supply of services; or (ii) a supply of services and not as a supply of goods; or (iii) neither a supply of goods nor a supply of services. • Notwithstanding anything contained in sub-section (1), the supply of any

branded service by an aggregator, as defined in section 43B, under a brand name or trade name owned by him shall be deemed to be a supply of the said service by the said aggregator.

Principal & Agent Transactions

Treated as what – To be Mentioned

Aggregator



Business – [Section 2 (17)] “business” includes – (a) any trade, commerce, manufacture, profession, vocation or any other similar

activity, whether or not it is for a pecuniary benefit;

(b) any transaction in connection with or incidental or ancillary to (a) above;

(c) any transaction in the nature of (a) above, whether or not there is volume, frequency, continuity or regularity of such transaction;

(d) supply or acquisition of goods including capital assets and services in connection with commencement or closure of business;


Money of not = 6

Commen-cement of Closure


Business – [Section 2 (17)] (e) provision by a club, association, society, or any such body (for a

subscription or any other consideration) of the facilities or benefits to its members, as the case may be;

(f) admission, for a consideration, of persons to any premises; and

(g) services supplied by a person as the holder of an office which has been accepted by him in the course or furtherance of his trade, profession or vocation;


4

1

Office


Reverse Charge - Levy and collection of Central / State Goods and Service Tax - [Sub Section (3) of Section (7)] “Notwithstanding anything contained in sub-section (2), the Central or a State Government may, on the recommendation of the Council, by notification, specify categories of supply of goods and/or services the tax on which is payable on reverse charge basis and the tax thereon shall be paid by the person receiving such goods and/or services and all the provisions of this Act shall apply to such person as if he is the person liable for paying the tax in relation to such goods and/or services”.


Specify


• “Input” means any goods other than capital goods, subject to exceptions as may be provided under this Act or the rules made thereunder, used or intended to be used by a supplier for making an outward supply in the course or furtherance of business – Section 2(54) of GST Act.

• “Input service” means any service, subject to exceptions as may be provided under this Act or the rules made thereunder, used or intended to be used by a supplier for making an outward supply in the course or furtherance of business – Section 2(55) of GST Act.



• “Outward supply” in relation to a person, shall mean supply of goods and/or services, whether by sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made by such person in the course or furtherance of business except in case of such supplies where the tax is payable on reverse charge basis – Section 2(72) of GST Act.

• “Exempt supply” means supply of any goods and/or services which are not taxable under this Act and includes such supply of goods and/or services which are specified in Schedule . . . of the Act or which may be exempt from tax under section 10 – Section 2(42) of GST Act.

• “Taxable supply” means a supply of goods and/or services which is chargeable to tax

under this Act – Section 2(97) of GST Act.

• Zero rated supply – “Zero-rated supply” means a supply of any goods and/or services on which no tax is payable but credit of the input tax related to that supply is admissible. – – Explanation – Exports shall be treated as zero-rated supply – Section 2(109) of GST Act.



Every registered Taxable Person entitled to take Input Tax Credit

in Electronic Credit Register

U/s.16(1)

Input Tax Credit – [Section – 16 (1)]


Liable for Registration within 30 days

U/s.[16(2)]

Voluntarily Opting

U/s.[16(2A)] (Schedule –III)

Apply for Registration

Credit can Avail on stocks of Inputs & contained in Semi/Finished - Goods

On the day immediately preceding the date from which becomes liable to pay tax

Previously in composition scheme

U/s.[16(3)]

Input Tax Credit - [ Section – 16(2), (2A) & (3) ] – Facility - Entitlement

Note : The amount of input tax credit shall be calculated in accordance with generally accepted accounting principles in such manner as may be prescribed – Section 16(4) of GST Act. Sub section (2) of section 16, Sub section (2A) of section 16, Sub section (3) of section 16.


Change in the Constitution of Registered Taxable Person on account of

Sale Merger Demerger Amalgamation Lease Transfer of Business

Input Tax Credit – Transfer [ Section - 16(8) ] – Facility - Beneficial

Input Tax Credit remains unutilized in Books of A/c. Allowed to Transfer

Note:- In the manner prescribed.


Input Tax Credit - Merger, amalgamation or sale of business - Beneficial

• Where there is a change in the constitution of a registered taxable person on account of sale, merger, demerger, amalgamation, lease or transfer of the business with the specific provision for transfer of liabilities, the said registered taxable person shall be allowed to transfer the input tax credit that remains unutilized in its books of account to such sold, merged, demerged, amalgamated, leased or transferred business in the manner prescribed – Section 16(8) of GST Act.

Note:- In the manner prescribed.


Input Tax Credit – Plant and Machinery [section – 16(9)(c)] - Beneficial

• Can avail input tax Credit of Plant and Machinery received by him during execution of works contract.

Note : No Specific entry for “Plant and Machinery” in general in any Tariff


Input Tax Credit – Contractor Works contract – [section – 16(9)(c)] -Beneficial

• The contractor who is undertaking works contract will be eligible to avail input tax credit of building material and input services as he is not ‘Principal’.



• “Works contract” means an agreement for carrying out for cash, deferred payment or other valuable consideration, building, construction, fabrication, erection, installation, fitting out, improvement, modification, repair, renovation or commissioning of any moveable or immovable property;

• “Principal” means a person on whose behalf an agent carries on the business of supply or receipt of goods and/or services – Section 2(77) of GST Act.

• “Agent” means a person who carries on the business of supply or receipt of goods and/or services on behalf of another, whether disclosed or not and includes a factor, broker, commission agent, arhatia, del credere agent, intermediary or an auctioneer or any other mercantile agent, by whatever name called, and whether of the same description as hereinbefore mentioned or not – Section 2(5) of GST Act.


Section 3(2A) Vs. Section 16(11) – E – 1 Sales

• It shall be deemed that the taxable person has received the goods where the goods are

delivered by the supplier to a recipient or any other person on the direction of such taxable person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise.

Note : Presently CST is cost though it is rendered as E1 Sales due to the first CST @ 2%.

Input Tax Credit – [ Section – 16 (11)- Explanation read with section 3(2A) ] - Beneficial


First Supply

Second Supply Supply 3(2A) of

GST)

Transaction between Principal and Agent deemed as supply as per supply definition [Section – 3]

ITC Can be claimed based on the “Taxable person – Agent [Deemed as Taxable Person] – Invoice by the “Customer[Recipient]”.

Principal [Supplier]

Taxable Person – Agent [Deemed as

Taxable Person]

Customer [Recipient]

Note : Explanation of Section 16(11) for ITC benefits to Principal ( Deeming Provision to enable to get the ITC) This system is as per Existing Local VAT Laws & Excise

Supply : Principal to Agent : [Section 3 (2A) of CGST / SGST Act.] - ITC

Before or During movement of Goods – By way of Transfer of Documents of Title to goods / otherwise [Presently it is called E1 / E2 Sale / LR [Transfer under VAT Laws] – Section 5 (2A) of IGST

Supply 3 (2A) of GST P.O.S. – Business

Place [Sec. 5(2A)] ITC 16 (11) Explanation


Input Tax Credit - Third Party Transactions - High sea sales, Sale in course of import, In – transit sales – Section 5 (2A) of IGST Act. (Place of Supply Rules) – [LR Sale] [E 1 Sale] - Beneficial

• 3rd party supplies (such as - bill-to/ ship-to or sale in transit) : Section 5(2A) of the Model IGST Law states that where the goods are delivered by the supplier to a recipient or any other person, on the direction of a third person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to the goods or otherwise, it shall be deemed that the said third person has received the goods and the place of supply of such goods shall be the principal place of business of such person.

• Further the definition of Section 2 ( 78 ) of the GST Act , the Principle Place of Business means

• “ The place of business specified as the place of the Principle Place of the business in the certificate of the Registration where the Taxable person keeps and maintains the accounts and records as specified under section 42 “

• Further the section 42 says that the such place shall be mentioned in the Registration

certificate , which means the state wise registration. Note : That means though the Vendor has not entered in the Books of Accounts and also not prepared the GRN at stores, still needs to raise Invoice to enable to take the Credit by the actual receiver as per this provision – Invite Practical issues.


Stock Transfers - Business Drive, not Tax Drive • Currently, companies operate from warehouses in every state via stock transfer

(through statutory forms) and thereafter, sell goods locally to the distributors.

• This is done with the intention to avoid payment of non-creditable CST and in order to pass the creditable VAT to their distributors.

• Post GST, Inter-State stock transfers will attract IGST.

• As credit of IGST will be available, there may not be any requirement of stock transfers and continuing such transfers will be Business drive, not Tax drive.

Input Tax Credit - Inter-State Stock Transfers – IGST payable and credit is allowed – Beneficial – Business Drive, not Tax Drive


Imports – Pure Traders - Consumer Goods – CVD – IGST ITC – Available – Reduction of Imported Goods cost in the market. Position of Indian manufacturers - ? For Traders – Beneficial

Pure Traders – Consumer Goods - CVD

• Credit of IGST will be available at the time of imports which is a cost under the

present regime, since CVD is not creditable for traders incase of Consumer Goods. And Imported Traders are paying VAT when they are selling to the Distributors or Retailers.

• Under GST scenario, Traders can get the ITC of IGST payment made by them.


Input Tax Credit - CENVAT Credit – Not to be reversed to the extent of M & TP Goods, Input service Tax credit related to Trading Goods (T/P Goods) – Beneficial ITC on M & TP Goods

• At present, companies are required to reverse majority of CENVAT Credit, incase of

Goods – related to Exempted Goods, Nil rate of duties, M & TP Goods. The reversed CENVAT Credit becomes a cost to the Company.

• Under GST scenario, entire credit of Goods & Services would be allowed to the

extent of M & TP Goods to the Business. Though, procurement of service/ goods would become expensive (due to increase in tax rate), however, the total input GST credit would be available with the Company to discharge its output GST liability. This would provide great benefit to the Company and should impact the pricing of the product.

Note: System Configuration.


Trading - ITC eligible under GST scenario which is cost under present scenario - Input services Tax Credit , Central Excise duty – CENVAT credit and VAT ITC- will be eligible under GST scenario – Beneficial

Trading – Common Input Services:

• As on date the manufacturers are not taking the CENVAT credit under Central Excise Law for the input services rendered directly for the Trading activity and for the input services related to the common input services involved for the trading as well. Many companies operate on ‘trader of goods’ model (popularly called as Third party purchases - TP) and as on date the input services credit is ineligible to set-off service tax paid which is a cost to the manufacturers. However, under GST scenario, such input services related to exclusively for the trading activity and related to the common input services related to the trading will be eligible as ITC and therefore it will reduce cost of goods sold.

• The resent budget provisions allowed to distribute the common credit to Job works but a lot of confusion still persisting and not practically use full at the ground level.

• Payment of VAT and Excise Duty is currently paid by the Third party while purchasing by

the Trader (by the company)


Trading - ITC eligible under GST scenario which is cost under present scenario - Input services Tax Credit , Central Excise duty – CENVAT credit and VAT ITC - will be eligible under GST scenario –Third Party (T.P.) – Beneficial

Finished goods purchases from within state for Trading purpose : E.D. Cost

• Under current VAT scenario, If the purchases are related within State (intra state purchases),

(say Gujarat T.P. to Gujarat purchaser) then, the VAT ITC is claimed by the purchaser and

the Central Excise portion is remained as a cost by the Trader. Say if the finished goods are

Rs100/-(say MRP) and the abatement is @ 35 % and the assessable value is Rs. 65 /- and

the Central Excise duty @ 6% on the assessable value of Rs. 65/- which comes : Rs. 3.90

towards the central excise portion is a cost to the Gujarat purchaser/Trader.

• Under GST scenario this will not be a cost factor plus also the input service credit is eligible.


Trading - ITC eligible under GST scenario which is cost under present scenario - Input services Tax Credit , Central Excise duty – CENVAT credit and VAT ITC - will be eligible under GST scenario – Third Party (T.P.) – Beneficial

Finished goods purchases from out side state for Trading purpose : E.D.COST + CST @ 2 %

• Under current VAT scenario, If the purchases are related outside State(inter state

purchases), (say Maharashtra T.P. to Gujarat purchaser) then, the CST paid to T.P. by the Gujarat Trader cannot be claimed as the CST is not set off and therefore the CST & Central Excise portion are remained as a cost by the Trader. Say if the finished goods are Rs. 100/- (say MRP) and the abatement is @ 35 % and the assessable value is Rs. 65 /- and the Central Excise duty @ 6 % on the assessable value of Rs. 65/- which comes : Rs. 3.90 towards the central excise portion is a cost to the Gujarat purchaser / Trader. + say the WBR is Rs. 65 /- (sale price) then the CST will be on that Rs. 65/- + Excise duty Rs. 3.90 = Rs. 68.90 and the CST @ 2 % = Rs. 1.38 total cost of Excise duty + CST = Rs. 5.28.

• Under GST scenario, the Excise portion and CST portion are eligible for ITC in the name

of IGST . Plus also the input service credit is eligible.



Purchases from within state - Branch Transfer to out side state : E.D. COST + ITC @ 4%

• Under Current VAT scenario, further, if the purchases are made from Gujarat T.P., by the

Gujarat Trader is transferred as out side state transfer/Inter- state transfer(branch transfer to

out side state C&F/CSP) then, the VAT ITC claimed by the Gujarat Trader needs to be reversed

@ 4% of the Purchase value while transferring, which is a cost to the Gujarat Trader. (say the

VAT ITC is claimed 5% and the reversal is made say 4% and net VAT ITC remained at the

hands of the Gujarat Trader is only @ 1 % ). Net cost will be 4% • Under GST scenario this will not be a cost factor plus also the input service credit is eligible.



Purchases from within state - Inter-state Sales : E.D.Cost + ITC @ 1%

• Under Current VAT scenario, similarly, if the purchases are made from Gujarat T.P., by the Gujarat Trader is

transferred by way of sale as out side state /Inter- state sales (out side state - stockist/dealer) then, the VAT ITC

claimed by the Gujarat Trader needs to be reversed @ 1% of the Purchase value while inter state selling. And

further the Gujarat Trader charged the CST while selling to the out side state will be a cost to the Maharashtra

purchaser say @ 2% . So effectively the cost will be say 1% reversed by the Gujarat Trader on the purchases

value while selling to Maharashtra customer/Trader and 2% CST by paid by the Maharashtra purchaser to the

Gujarat Trader. Say for understanding purpose the total cost will be around 3% (say) and some times it may be

more than @ 3% depending upon the purchase price + profit. (say purchase price is Rs. 100/- and the sale price is

Rs. 150/- and therefore the CST is paid on Rs. 150/- @ 2% = say Rs. 3 /- and the reversal by the Gujarat Trader @ 1

% on purchase price Rs. 100/- i.e. Rs. 1/- and the total will be Rs. 3/- + Rs. 1/- = Rs. 4 /-) . • Under GST scenario, the Excise portion and VAT portion are eligible for ITC in the name of CGST & SGST. Plus

also the input service credit is eligible.


ITC eligible under GST scenario which is a cost under present scenario (indirectly) – 4% SAD on Imports can be used for both IGST & SGST & CGST Payments – Beneficial 4% SAD – Usage: CENVAT Vs. VAT (ITC) Vs. GST (ITC)

• At present, most of the manufacturers are procuring the raw materials from other countries and pay import duty on the importation .

• While importing the 4% SAD ( in lieu of Sales Tax ) which is payable at the port of importation is eligible as CENVAT credit under Central Excise Law not under VAT law. In general the manufacturers are having the excess accumulation of CENVAT credit in view of exports and Inverted duty structure on products and hence practically the 4 % SAD payment made at the port which is eligible as a CENVAT credit under Central Excise Law is not really helpful as the manufacturers are paying by way of cash under VAT law and at the same time suffering the excess CENVAT credit balances as un utilized under Central Excise law which is a peculiar situation which will be taken care in case of GST scenario as the manufacturers will have to pay the IGST at the port which can be used as ITC (credit) at their plants which will be in turn used to discharge the payments of the IGST or CGST or SGST.


Input Tax Credit - Logistics – Beneficial – ITC Set off – Litigation avoided - Beneficial

Input Service Tax – Transportation – Input Service Tax Credit - Utilization

• The industry avails the logistics service for the transportation of raw material and

finished goods. The service tax is paid on the logistics for finished goods which the industry is facing litigation for set off. cannot set off at present. With the GST tax credit for logistics would also be available to the industry. This is because both the goods and services are under the ambit of GST.


LL - VAT Model

• LL will pay the CGST, SGST Or the IGST on the job work charges (as a matter of services) received by him.

• And the Principal will take the claim the Credit (ITC) on all the Inputs and on Input Services for the material being manufactured and the Input Services being consumed by the Job worker.

• Principal discharge the GST liability for the goods being manufactured by the Loan Licensee.

• The existing structure creates a peculiar situation of excess credit lying at LL in view of Central Excise and less ITC from VAT angle. GST will set right the situation.

Note: Duty paid Job work – Under Central Excise Law

Input Tax Credit - Job work (JW) / Loan licensee (LL) - Beneficial


Input Tax Credit - Low turnover threshold will ensure - large base of tax payers and More availability of Input Tax credits in the system - Beneficial

Threshold Limits – More Credits • If we compare the current regime under Central Excise, where exemption

from Payment is still possible for manufacturing units with turnover upto INR 1.5 crores, with GST exemption.

• Whereas under GST it is provided further that a person shall not be

considered as a taxable person until his aggregate turnover in a financial year exceeds Rs Ten lakhs or Rs Five lakhs, in case of Normal and North East including Sikkim for the purpose of Payment of GST. (There are chances of incremental of an exemption limit enhancement for small traders and the limit is likely to be fixed at Rs.25 lakhs as per, recent reports.)

• In the GST scenario, no business will be able to escape the liability to pay tax and file periodic returns and therefore, heavy credits flow in the system.


Input Tax Credit - Supply : Schedule I specifies supplies without consideration - Deemed Provision : output GST will be charged : ITC Allowed - Beneficial

Section 16(5) Vs. Entry 5 of Schedule - 1 Entry 5 : ”Supply of Goods and/ or Services by a Taxable Person to another Taxable or Non-Taxable Person in the course or Furtherance of Business” Eligible for the availment of Input Tax Credit under section 16 (5) of the Model GST Law since Input Tax in such cases will be attributable to the use of goods and/or services in the course or furtherance of business: Example : When a particular good is sold along with another good as a free of cost supply, then this Entry 5 would come into play. • For instance, if a Glass ware of dinner set is sold along with a Glass cups packet then the supply of the Glass

cups would be in the course or furtherance of business, without consideration leviable to GST.

• Free samples and gifts offered with purchases as well as popular ‘buy- one-get-one free’ schemes. Note : - Presently under Central Excise Law there is a dispute of allowing the CENVAT Credit on Bought-out Items. [Manik Machinery Mfg. (P)Ltd. – ELT 2016 (339)334 allowed]. Under VAT Laws it is not allowed. - On Supply of such free goods – GST payable.


Credit not allowed after expiry of one year from the date of issue

of invoice.

U/s.16(3A)

Input Tax Credit – [Section – 16 (3A)] - Restriction


Input Tax Credit - Manner of taking input tax credit – Section 16(3A) Restriction

• Input tax credit cannot be taken after one year from date of invoice or filing of annual return – A taxable person shall not be entitled to take input tax credit in respect of any supply of goods and/or services to him after the expiry of one year from the date of issue of tax invoice relating to such supply, in situations: 2 – Applied for Registration – Stocks. 2A – Section 19(3) – Schedule III – Voluntarily – Stocks. 3 – Section 8 – Composition levy – Stocks.

Note : Schedule III is talking about “Liability to be Registered”


Input Tax Credit – [ Section – 16(4) ] - Restriction

Whom ?

The Amount of Credit u/s. (2) Person Liable to Register

(2A) Voluntarily

(3) Composition Scheme Calculated as per general Accounting Principles U/s. 16(4)


In case common Credit – Part Credit attributed to

business is allowed

(Other purposes Not allowed)

U/s. 16(5)

Input Tax Credit – [ Section – 16 (5)] - Restriction


Input Tax Credit Definition of Input Tax Credit Section 2(57) Vs. Section 3 - Restriction

Input tax Definition Section 2(57) “Input Tax in relation to a taxable person, means the {IGST and CGST}/{IGST and SGST} charged on any supply of goods and/or services to him which are used, or are intended to be used, in the course OR furtherance of his business and includes the tax payable under sub-section (3) of section 7” That while the definition of ‘supply’ includes transactions which are carried out in the course or furtherance of business or otherwise, the definition of input tax has not been aligned with this to provide appropriate credits. This is bound to lead to higher costs for specified transactions covered under the definition of ‘supply’ of litigation. Supply – inclusive Definition – Sub-Section of Section 3 (1) wherein, talks about : Sub-Section (a) In the course of furtherance of business. – 8 Entries Sub-Section (b) In the course of furtherance of business. – Importation of Services Sub-Section (c) Entry no. 5 of schedule – 1 - In the course of furtherance of business. – Supply of Goods / Services

Sub-Section (2A) - Principal and Agent Sub-Section (4) - Aggregator In supply definition there are other entries which may not involve the words of “In the course of furtherance of business, without consideration still treated as a supply”. • Sub-Section (c) Entry no. 1 to 4 of schedule – (1) Permanent transfer/disposal of business assets, (2) Temporary

application of business assets to a private or non-business use, (3) Services put to a private or non-business use (4) Assets retained after deregistration


Input Tax Credit – Section 16(5) – Private or Non-Business use – Partly other than Business Use / Private Use - Restriction

• Section 16(5) restricts the credit on the same goods and/ or services if they are used for any other purposes, i.e., private or non-business use. Which Reads as under :

Section-16(5) “Where the goods and/or services are used by the registered taxable person partly for the purpose of any business and partly for other purposes, the amount of credit shall be restricted to so much of the input tax as is attributable to the purposes of his business.”

• Therefore, if the goods and/ or services are used partly for business purposes and

partly for non-business use, the proportionate credit attributable to non-business use would have to be reversed.

• Entry -1 • Entry - 2


Input Tax Credit – Supply : Schedule I specifies supplies without consideration - Deemed Provision : output GST will be charged : ITC Not Allowed - Restriction

Section 16 (5) Vs. Entry -2 of Schedule – 1 Entry - 2 : ”Temporary application of business Assets to a Private or Non – Business use” And further no input tax credit can be availed : Double issue • where a person uses car owned by the company • If a person makes items owned by its business available for temporary private use, either by using them

personally or by lending them to someone else.

• Where this entry could be relevant are when a director/ employee takes a computer home for his private use. Since the computer is the company's business asset.

• Director/ Employee uses the company's car for his family outing

• When the employees use the printers for taking prints for their personal use.


Goods and/or Services

Used for/ or private or personal consumption

Credit Not Admissible

Input Tax Credit – [ Section – 16 (9)(f) ] - Restriction


Input Tax Credit - Supply : Schedule I specifies supplies without consideration - Deemed Provision : output GST will be charged : ITC Not Allowed - Restriction

Section 16 (5) & 16 (9) (f) Vs. Entry -3 of Schedule – 1 Entry - 3: ”Services put to a Private or non-business use” without consideration and further no input tax credit can be availed : Double issues: That means we may purchase services for business but then, put them to private or non-business use. This includes making private use of the services for self or making the services available to others for their own private use. Availability of input tax credit : Treats private consumption without consideration as Taxable but at the same time also denies any input credit of tax paid for personal consumption . • Section 16 (5) of the Model GST Law provides that ailment of credit is limited to only the amount of input tax as

is attributable to the purposes of business when goods and/or services are used partly for the purpose of business and partly for other purposes.

• Further, section 16 (9) provides for situations in which no input tax credit can be availed which include inter alia goods and/or services used for personal consumption.


Input Tax Credit - Section 16 (14) – Supply of Capital Goods [similar to 3(5) & 3(5A) of CCR, 2004 ] [ Used or without used = ? ] – ITC to be Reversed / GST Payable - Restriction

Section 16 (14) Vs. Entry -1 of Schedule – 1 • Section-16 (14) “In case of supply of capital goods on which input tax credit has been taken, the registered taxable

person shall pay an amount equal to the input tax credit taken on the said capital goods reduced by the percentage points as may be specified in this behalf or the tax on the transaction value of such capital goods under sub-section (1) of section 15, whichever is higher.”

• Registered taxable person to be reversed after reduction of percentage points. The percentage points are yet to be

specified on this behalf. Payment / Reversal shall be Higher of : • Percentage basis reduction ( To be specified ] or • Tax on Transaction value. • At the same time, Entry - 1 of Schedule - 1 treats permanent transfer/ disposal of business assets as a supply without

consideration. Entry -1 of Schedule-I “Permanent transfer/disposal of business assets.” • This essentially means that while tax is payable on the transaction declared as a supply on one hand, credit is liable to

be reversed on the same simultaneously.


Input Tax Credit – Section 21 (7) – Registration Cancellation – Restriction

Section 21(7) Vs. Entry - 4 of Schedule-1

• Section 21 (7) of the Model Law requires every registered taxable person, whose registration is cancelled, to reverse the credit of Input Tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods as on the day immediately preceding the date of such cancellation.

• Yet, Entry-4 of Schedule - 1 declares assets retained after de-registration as a taxable

supply without consideration. [Section 3(1) (c) ]

Entry -4 of Schedule-I “Assets retained after deregistration.”

• This essentially means that while tax is payable on the transaction declared as a supply on one hand, credit is liable to be reversed on the same simultaneously.


Input tax credit attributed to Non-Taxable supplies or

Exempted supplies Not allowed (Allowed for Zero Rated

Supplies) U/s. 16(6)



Input Tax Credit - Proportionate ITC when party used for business or taxable supplies - Restriction

16 (5) & 16 (6) [Say it may be similar rule of 6 of CCR, 2004] • The Central or a State Government may, by notification issued in this behalf,

prescribe the manner in which the proportionate input tax credit is to be taken- Section 16(7) of GST Act for the sub section (5) & (6) of Section 16 i.e used for :

Allowed Not Allowed

• Business • Taxable Supplies

• Other purposes - (say private use) • Non – Taxable supplies • Exempt supplies


Input Tax Credit available on Motor Vehicle

If Supplied in usual course of

Business

Providing For Transportation

of Passenger

Providing For Transportation

of Goods

Providing For Imparting training on motor Driving skill

Input Tax Credit – [ Section - 16(9)(a) ] – Availability – Others : Not - Restriction

Other than above cases Credit not admissible.


Any Goods / Services used primarily for personal use or consumption of any employee

1 Food and beverages, 2 Outdoor catering, 3 Beauty treatment, 4 Health services, 5 Cosmetic and plastic surgery, 6 Membership of a club, 7 Health and fitness center, 8 Life insurance, 9 Health insurance and

10 Travel benefits extended to employees on vacation such as leave or home travel concession,

Input Tax Credit Not Available

Input Tax Credit - [Section -16(9)(b) ] – Restriction


Acquired by the principal


Execution of works contract

Results in construction of immovable property, other than

plant and machinery


Input Tax Credit – [ Section – 16 (9)(c) ] - Restriction


Acquired by the principal

Goods

Property in which is not transferred

Used in the construction of immovable property, other than

plant and machinery

Input Tax Credit – [ Section – 16 (9)(d) ] - Restriction

Credit Not Admissible Prepared and presented By Sreeram Kaza 262

Input Tax Credit - Needs clarity

Contractor to Sub Contractor = Contractor Status as Principal = ITC ?

• The issue will arise if the contractor gives some work on sub-contract basis. In

that case, the contractor will be ‘principal’ as far as the sub-contractor is concerned and in that case, the contractor will not be eligible to avail input tax credit of GST paid by sub-contractor.



Tax paid under Composition Scheme ( S. 8 )


Input Tax Credit – [ Section – 16 (9)(e) ] – Restriction - Composition


Input Tax credit is Not Available

If depreciation claimed on the tax component of the cost of capital goods under IT Act, 1961

Input Tax Credit – [ Section - 16(10) ] - Restriction

Thus, if net value of capital goods is Rs 100/- and GST paid is Rs 16/-, the taxable person should claim depreciation in income tax only on Rs 100/-, then only Rs. 16/- is allowed as ITC Prepared and presented By Sreeram Kaza 265

Input Tax Credit – Definitions [Appears to put restriction to claim 50% in first year and remaining for next year]

“Capital goods” means: -

(A) the following goods, namely:-

(i) all goods falling within Chapter 82, Chapter 84, Chapter 85, Chapter 90, heading 6805, grinding wheels and the like, and parts thereof falling under heading 6804 of the Schedule to this Act;

(ii) pollution control equipment; (iii) components, spares and accessories of the goods specified at (i) and (ii);

(iv) moulds and dies, jigs and fixtures;

(v) refractories and refractory materials;


(vi) Tubes and pipes and fittings thereof; (vii) Storage tank; and (viii) Motor vehicles other than those falling under tariff headings 8702,

8703, 8704,8711 and their chassis but including dumpers and tippers used-

(1) At the place of business for supply of goods; or

(2) Outside the place of business for generation of electricity for captive

use at the place of business; or

(3) For supply of services,



(B) Motor vehicle designed for transportation of goods including their chassis registered in the name of the supplier of service, when used for

(i) Supplying the service of renting of such motor vehicle; or

(ii) Transportation of inputs and capital goods used for supply of service; or

(iii) Supply of courier agency service;

(C) Motor vehicle designed to carry passengers including their chassis, registered in the

name of the supplier of service, when used for supplying the service of-

(i)transportation of passengers; or

(ii) renting of such motor vehicle; or

(iii)imparting motor driving skills;

(D) Components, spares and accessories of motor vehicles which are capital goods for the taxable person.

[ Section 2 (20) of GST Act]



No registered taxable person shall be entitled to the credit unless

U/s.16(11)

Possession of - Tax Invoice - Debit Note - supplementary invoice - such other taxpaying documents as may be prescribed

U/s. 16(11)(a)

Received the Goods and Services

U/s. 16(11)(b)

Tax charged in respect of such supply has been actually paid by - Cash Register - Credit Register

U/s.16(11( c )

Return furnished under Section 27

(Monthly Return) U/s.16(11)(d)

Input Tax Credit – [ Section - 16(11) ] - Restriction

Note : - Provided that where the goods against an invoice are received in lots or installments, the registered taxable

person shall be entitled to the credit upon receipt of the last lot or installment.

- A taxable person shall not be entitled to take input tax credit after the filing of the return under section 27 for the month of September following the end of financial year to which such invoice pertains or filing of the relevant annual return, whichever is earlier. Prepared and presented By Sreeram Kaza 269

Input Tax Credit - ITC – Heavy Reconciliation - Issues

16 (11) (c) & (d) – Difficult Situation – Needs Proper follow up & Internal System. • To verify whether each of its vendors have paid taxes to the Government with

respect of the purchase of goods/services done by the buyer. • It is also known that Central Government has already implemented similar

system for the purpose of Income Tax (Form 26AS) with respect to deduction of taxes. However in case of GST, the no. of transactions would be huge and if not monitored properly, would start blocking funds for the Companies, creating chaos and leading to huge reconciliations of credits, thereby making the systems complex and it would be prone to litigations.


October 20th is dead line [Assuming that the Annual Return is filed after 20th October, but before 31st December A taxable person shall not be entitled to take input tax credit in respect of any invoice for supply of goods and/or services, after the filing of the return under section 27 for the month of September following the end of financial year to which such invoice pertains or filing of the relevant annual return, whichever is earlier. • Section 30 – Annual Return – To be Filed – Following the End of the Financial year =

Before 31st December.

• Section 27 – Monthly Return for September will be before 20th October.

• Earlier of the above.

Example 2017-18 (Financial year) Invoices – Shall be taken – ITC – before 20th October of 2018 (6 Months 20 days)



Input Tax Credit - Recovery of ITC wrongly taken - Restriction

• Where credit has been taken wrongly, the same shall be recovered from the registered taxable person in the manner as may be prescribed in this behalf – Section 16(16) of GST Act.


Credit Notes – Matching • As per section (1) (a) of section 29 A GST Act , the details of Credit Notes issued

by the Supplier ( say – Companies / C&F) have to match with the corresponding reduction of Input Tax Credit claimed by the recipient ( say – Customers / stockist) Accordingly as per Sub Section (2), if the recipient ( stockist) does not adjust the Input Tax Credit, the tax and interest would be recovered from the supplier ( say – Companies / C&F).

• This provision places the liability on the C&F Customers / companies, in case if the Customers / Stockists are not complying the reversal of Input Tax credit.

• So training by the Companies needs to be initiated internally to all the Customers /

Stockists of each and every state, State wise, to make them understand, the implications, in this regard.

Input Tax Credit - Credit note issued by the supplier – Goods Return, Expiry, Breakage, spoilage ( popularly known as - EBS) & Rate difference etc., etc., Section - 29 A of GST Act ( CGST / SGST) : ITC - Restriction


Input Tax Credit - Sales on high seas may be taxed twice under GST – Double payment & Credit for one Transaction

• The definition of ‘territory’ in the Goods and Services Tax (GST) Model Law proposes to push the “physical boundaries” of India that could create aberrations for transactions on the high seas. The territory of ‘India,’ for the purpose of the levy and collection of the Integrated Goods and Services Tax (IGST) proposed to be collected by the Centre on all Inter-State supplies of goods and services and to be roughly equal to Central GST plus State GST, is proposed to be 200 nautical miles. This compares with the 12 nautical miles plus specified structures up to 200 nautical miles as specified in the Customs Act. The difference can create aberrations. For example, sales on the high seas between 12 and 200 nautical miles could get taxed twice to the IGST— once as a supply and later at the time of import.

• The model law also lacks clarity on the taxation of supplies terminating and

originating in territorial waters and in the continental shelf and the exclusive economic zone beyond 12 nautical miles.


Input Tax Credit - Increase of Imports Duty - CVD & SAD Vs. IGST – More ITC in the system.

Under the Model GST law all Imports of Goods will classify as Inter-State transactions subject to Integrated Goods and Services Tax (IGST). Credit of IGST will be available against output IGST, Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST) ( in that sequential order). Suppose if we take the normal GST rate say @ 20%, then @ 3% will be incremental of the rate when the BCD say as exemption, for comparison purpose.

Pre GST Amount Post GST Amount

CIF value of goods 100 CIF value of goods 100 100

BCD 0 BCD 0

CVD 12.50 IGST 20 SAD 4% on ( 100+12.50 = 112.50) 4.50 0

Total Duty Cost 17.00 Total Duty 20


Input Tax Credit - Business practices of setting up another new unit with new legal Constitution – More availability of Input Tax Credits in the system Setting up – Due to threshold – Minimum Incentive

• In the current regime, there are instances galore of manufacturers setting up

another unit in a new name and with different legal constitution, when the older unit is on the brink of exceeding the exemption threshold. This is done only to avoid registration and payment of excise duty.

• However, under the GST regime, there is minimum incentive to perform such practices as the low turnover threshold will ensure that almost all businesses pay GST and raise tax invoices so that the buyer is able to avail credit of input taxes.


Input Tax Credit - Impact on Industry - Exempted Areas – A Procedural challenge

ITC to Exempted Areas • Currently, certain locations such as Himachal Pradesh, Uttaranchal enjoy an excise tax holiday on

their manufacturing activities.

• However, since the output is exempt the tax paid in inputs/capital goods tend to be a cost to the entitles located in such areas.

• Though, area based exemptions may not continue in the GST era, based on past experience of VAT and on a generic basis, it appears that the presently exempted units may be required to pay GST on their finished goods but, would be entitled to claim refund in order to ensure continuity of GST at every stage.

• By doing so, the credit chain remains intact and at the same time incentives already agreed by the Centre and the State Government for both Central and State Level GST is passed on to the manufacturers.

• Such a move would ensure that the various manufacturing Industries in the said areas continue manufacturing operations in such locations.


• Existing Centralised Registration : The GST is a destination based tax where as Service Tax is charged at the place of providing service now the service providers are paying tax from a centralized office but now it would be required to split the GST payment across the states the services are consumed.

• Most service providers with a multi locational presence have opted for centralised registration and enjoy availing input credits, issuing output invoices, discharging service tax liability, undergoing audits and applying for refunds from a chosen single location will now have a massive change in the system.

Input Tax Credit - GST Impact - Service Providers – Centralised Registration Credit Vs. State wise ITC


ITC – Quick Consumption - Barter • Currently, the amount reduced on exchange or barter is outside the ambit of VAT

(except states such as Gujarat which have specific inclusion). Now Barter is covered under the meaning of “ Supply” and therefore, GST payable on Barter Transactions.

• The Model GST law [Section 3 (1) (a)] has included ‘Barter’ in the definition of

‘Supply’. Consequently, every transaction involving an exchange will be subject to GST.

Input Tax Credit - As various transactions are covered as supply like Barter/etc, etc – ITC Consumption of Input Tax Credit.


Input Tax Credit - DSIR - Customs Notification No. 51/96 dt. 23.07.1996 – For R & D Units Cash Outflow :

R & D Units – Cash outflow • As on date BCD is payable (duty of customs leviable in excess of the amount

calculated at the rate of five percent - i.e 5.15%) and CVD & SAD are exempted. States SGST portion cannot be given exemption for SGST portion of IGST. Therefore, SGST portion would be payable incase of DSIR importation and R & D units can avail the set-off of IGST portion including the SGST portion.

Note : - Excise Exemption Notification under Central Excise 10/97 Dtd. 01.03.1997 - Customs Exemption Notification under Customs 51/96 Dtd. 23.07.1996


Input Tax Credit - SAD Refunds 102/2007- CUS Dtd .14th- sep-2007- may discontinue :

• So far Imported trader is concerned, that is required to pass on CVD by issuing a First Stage Dealer’s invoice Under Excise Law and also charge VAT/CST on such sale within India. He would then be entitled to claim refund of the Special CVD paid on imported material. Here the catch is to first pay the special CVD and then for grant of refund of SAD. Also, if a ready buyer is not available and a time period of one year elapses from the date of import, the refund claim becomes stale as refund of Special CVD is available only if claim is made within one year from date of import.

• In the GST regime, as imported material will be liable to Integrated GST (IGST) in

addition to the Basic Customs Duty. Credit of IGST will be available to the buyer to be adjusted against the GST liability on his outward supplies since IGST credit can be utilized to pay IGST, CGST as well as for SGST (in that order) levied on goods or services supplied by the importer.

Note : - Additional duty of Customs / SAD – U/S 3 (5) of the C.T. Act 1975 = 4% - Additional duty of Customs / CVD – U/S 3 (1) of the C.T. Act 1975


Switches – Taxable Person to Composition Scheme or Exempted • Where any registered taxable person who has availed of input tax credit switches

over as a taxable person for paying tax under section 8 or, where the goods and / or services supplied by him become exempt absolutely under section 10, he shall pay an amount, by way of debit in the electronic credit or cash ledger, equivalent to the credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date of such switch over or, as the case may be, the date of such exemption:

• Provided that after payment of such amount, the balance of input tax credit, if any, lying in his electronic credit ledger shall lapse.

• Explanation : The amount payable under sub-section (12) shall be calculated in accordance with generally accepted accounting principles in such manner as may be prescribed.

Input Tax Credit – [ Section –16 (12), Proviso & Explanation] (Taxable to Exempt)


Pre – determined Sales • The current business model is exposed to VAT for scenarios classified as ‘pre-

determined sale’, whereas, under GST no such exposure should exist. • Under GST, every supply shall be taxable, thus not

warranting any excess stock to be sent. Consequently, helping reduce logistics and other costs.

Input Tax Credit - credit available not by any apprehension of Pre-determined sales from Factory – Need base Stock Transfer from Factory can optimize the ITC flow – Planning required.


Input Tax Credit - Import Duty – IGST payment – Working Capital issues: CVD + SAD Vs IGST - Planning required

Imports – IGST – Flow of Credits • Duty will be paid on Imports, whereas credit could be adjusted only on supply. Thus,

there may be a difference between time of actual payment of duty and its off-setting.

• Proper planning of inventory will ensure the minimum ITC accumulation and thereby,

optimizing the Working Capital flow.


Service Provider : As a Illustration


For Manufacturer / Seller : As a Illustration


Electricity :

• Input Tax Cost: Not allowed to claim the credit pertaining to the other than GST elements such as Electricity and Fuel and therefore it will be a cost to the recipient and hence needs clarity.

• Electricity / Fuel / Gas used for manufacturing = ITC Position = ? • If, Electricity is not subsumed under GST, then Input Tax Credit – For Electricity

companies – Huge Cost = ?

Input Tax Credit - Impact - ITC Not allowed on Fuels & Electricity - Needs Clarity


• The following table summarizes the place of supply of goods as defined under the GST Act and under the IGST Act:

• Since GST is a destination based consumption Tax, it is necessary to define the place of Supply to enable to get the appropriate revenue by the state, in case of Inter State supplies. (Section – 5 of Chapter IV of IGST ).

Situation Location as per Section 5 of IGST Act Supply involving movement of Goods [ 5 (2) ]

Location of termination of movement for Delivery – Destination Place

Supply by way of transfer of documents of title [ 5 (2A) ]

Principal place of business of the buyer

Supply not involving movement of goods [ 5 (3) ] Location of goods supplied

Goods assembled or installed at Site [ 5 (4) ] Place of installation or assembly

Goods supplied on board of Conveyance [ 5 (5) ] Location at which goods are taken on board

Input Tax Credit - Determine - Place of Supply - Goods : (Destination Base not Origin Base) : Section – 5 – ITC Impact

Note : = For Excise – It is New


• Being intangible, this is very important to decide the Place of Supply of Services. We need to Identify as “Which is the Place of Supply” as we need to obtain the Registration and discharge the GST liability.

• Normally for B2B Transactions, “location of services Receiver” is important unless and otherwise provided.

• Services provided to B2C transactions “location of supplier” is important. (Default Rule)

• Specific Rules are provided for 1. Performance Based, 2. Immovable Property, 3.Events, 4. Provider and Receiver are located in the same taxable territory. 5. Online information and database access or retrieval 6.Intermediary services, 7. Passenger transportation services, 8.services on board a conveyance, 9. Transportation of Goods including mail or Courier, 10.

telecommunication services , 11. of banking and other financial services, 12. insurance services to any person, 13. Supply of service of advertisement services to the Government.

Input Tax Credit - Place of Supply - Services : Section – 6 – ITC Impact


Inter & Intra State : Illustration In case of service related to organization of events, the POS is the state where event is held. Therefore, as per Place of Supply provisions, there can be situations where the supplier and place of supply will be in the same state, but the receiver will be located in a different state. Such supplies will then be taxed as intra-state supply liable to CGST and SGST, not available as credit to the receiver of goods located in different state. – Planning required. [Section 3 & 3(A) of IGST Act.]

Input Tax Credit - Place of Supply - Services : – ITC Impact


Inter & Intra States : Illustration :- Say in case of goods assembled at site/ goods supplied on board a conveyance, place of supply is the assembly site/ or where goods are taken on board the conveyance. A Supplier of goods is located in Delhi, assembly site where the goods are to be assembled is also located in Delhi, and receiver of goods is located in Maharashtra. In this case, since the place of supplier and place of supply is in the same state, the supply will not qualify as inter-state supply, and will be liable to CGST and SGST. – Planning required. [Section 3 & 3(A) of IGST Act.]

Place of Supply - Services : – ITC Impact


Input Tax Credit - Capital Goods – Embedded to an Immovable Property – ITC - Needs Clarity

Similarly, the definition of capital goods has again been based on tariff headings with no clarity on the credit for plant, machinery and equipment embedded to an immovable property.


Input Tax Credit - Payment of Tax, Interest, penalty

Payment

1. Tax Dues

2. Interest, 3. Fee, 4. Penalty

All Liabilities of Taxable person

Self Assessed Previous Pending

Self assessed current pending

Any other amounts payable

Any other amount

payable U/S 51

Deposit Made

Electronic Cash Ledger 35 (1) Electronic Register

35 (7)

Input Tax Credit

Self assessed

Electronic Credit Ledger 35 (2)

5. Others


Ledgers

These 3 ledgers will be maintained for all the taxpayers and can be collectively known as Taxpayer ledgers, which are as follows: I. Electronic Cash ledger II. Electronic Input Tax Credit ledger III. Electronic Tax liability ledger


(I) Electronic cash ledger - Section 2(40), Section 2(41), Section 16, Section 28, Section 29, Section 35 = 15 ledgers

• All the payments deposited via challan under the minor head Tax, Interest, Penalty, Fees and others of the respective Major head like CGST, SGST and IGST shall be credit under the electronic cash ledger of the taxpayer.

• Any utilization of the available credit towards payment w.r.to liability arising out of the return or any other demand will be debited to such cash ledger.

• Note: The cash ledger will display balance as on date under various major-minor

head combination will CGST Tax, CGST Interest, CGST penalty etc. which will be 15 in count (3 Major heads* 5 Minor heads = 15 Major-Minor heads columns)


(I) Electronic cash ledger - Manner of utilization - Section 2(40), Section 2(41), Section 16, Section 28, Section 29, Section 35

• As per the Section 35 all the payments deposited via challan under the minor head Tax, Interest, Penalty, Fees and others of the respective Major head like CGST, SGST and IGST shall be credit under the electronic cash ledger of the taxpayer which can be utilized only with respect to the same category of liability of tax, i.e. Liability of CGST Tax can only be paid from the Credit balance of CSGT Tax in cash ledger, which means no cross adjustments of the available credit balance w.r.to liability under other major heads shall be allowed. However, whether cross adjustments of minor heads under particular major head will be allowed or not is still not clear, i.e. whether CGST Tax liability can be paid from CGST Interest if balance available under CGST Tax is less. Apparently it seems that there won’t be any cross adjustments w.r.to minor heads under particular major head shall be allowed but the rules will clarify in this regards.


(II) Electronic Input tax credit ledger - Section 2(40), Section 2(41), Section 16, Section 28, Section 29, Section 35 = 3 ledgers

All the input taxes under various major heads i.e. CGST, SGST and IGST shall be credited to electronic ledger also known as Input tax credit or ITC ledger in the following situations: (All or any of them will form part of ITC ledger) • ITC for taxes paid on Inward supplies from registered taxpayers. • ITC available to unit based on the distribution of credit done by the ISD as per manner

prescribed in section 19 of the Draft law.

• Permissible ITC on inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date from which the taxpayer becomes liable to pay tax, provided he applies for registration within 30 days from the date of its liability.

• Permissible ITC on inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day of conversion from compounding taxpayer to normal taxpayer.

• ITC w.r.to taxes paid under reverse charge shall be credited to the Electronic credit ledger also known as Input tax credit ledger of the Taxpayer.


(II) Electronic Input tax credit ledger - Section 2(40), Section 2(41), Section 16, Section 28, Section 29, Section 35

• If the goods and/or services are used by the registered taxable person partly for the purpose of his business and partly for any other purposes, the amount of credit shall be allowed for the goods and/or services used for the purpose of his business.

• If the goods and / or services are used by the registered taxable person partly for effecting taxable supplies and partly for effecting non-taxable supplies which are exempt and not zero-rated, the amount of credit shall be restricted to so much of the input tax as is attributable to the taxable supplies including zero-rated supplies.

• In cases of change in the constitution of business of the registered taxable person on

account of sale, merger, demerger, amalgamation, lease or transfer of the business with the specific provision for transfer of liabilities, the said registered taxable person shall be allowed to transfer the input tax credit that remains unutilized in its books of accounts to such sold, merged, demerged, amalgamated, leased or transferred business in the manner prescribed.

• Input tax credit shall be available on provisional basis even when the supplier has not paid tax for a particular tax invoice.


(II) Electronic Input tax credit ledger - Manner of utilization Section 2(40), Section 2(41), Section 16, Section 28, Section 29, Section 35

Any utilization of the available credit for the following purposes shall lead to debit entry to the ITC ledger • Utilization towards liability arising out of the return

• Utilization against any demand notice received based on assessment

• Credit reversal due to Mismatch of input tax credit

• Lapse of input tax credit after expiry of one year from the date of issue of tax

invoice relating to the inward supply Note: Input tax credit ledger shall display the balance under respective Major head like CGST, SGST and IGST.


(II) Electronic Input tax credit ledger - Manner of utilization - Section 2(40), Section 2(41), Section 16, Section 28, Section 29, Section 35

As per the Section 35 of the draft GST law there shall be a mechanism of utilization of input tax credit based on some pre-defined rules. • IGST credit in ITC ledger to be utilized first for the payment of IGST liability and the balance

of IGST credit left, if any shall be utilized for the payment of the CSGT and/or SGST liability.

• CGST credit in ITC ledger to be utilized first for the payment of CGST liability and the balance of CGST credit left, if any shall be utilized for the payment of the IGST liability.

• SGST credit in ITC ledger to be utilized first for the payment of SGST liability and the balance of SGST credit left, if any shall be utilized for the payment of the IGST liability.

• There shall not be any cross utilization of the CGST credit for paying SGST liability and vice versa.

• The Input tax credit arising out of current period tax return shall first be utilized for the payment of current period return tax liability and the balance left if any shall be utilized for the payment of any other tax liability.


(III) Electronic Tax liability ledger - Section 2(40), Section 2(41), Section 16, Section 28, Section 29, Section 35

• Tax liability ledger shall also be electronically maintained which will display the amount of liability arising out the regular return of the taxpayer or any other liability arising out of demand notice, penalty etc.

• And shall also display the amount of liability paid by utilization of the available

credit balance in Cash ledger or Input tax credit ledger.


Total Major & Minor Heads Under GST = 15 Heads

Major Heads(Cash) Minor Heads(Cash) Per State - Heads CGST Interest SGST Penalty 3 x 4 = 12 Heads + Major 3 Credit Heads IGST Fee [IGST,CGST,SGST] Others = 15 Heads Per Sate Credit Cash

3 12


Interest

Failure to Pay Tax / Part of the Tax

On his own can pay for remaining Unpaid – for the

period

From the First day such tax was due

to be paid

Makes undue or excess claim of Input Tax Credit


period

From the First day such undue or excess claimed

[29(10)]

Input Tax Credit - Payment of Tax – ( Sec.-36 )


ITC

Question No

Page No Question Answer

1 261 Will the CENVAT/ITC carried forward in the last return prior to GST under earlier law be available as ITC under GST? Yes

2 261

A registered taxable person say, purchases capital goods in the last quarter of 2016-17. Though the invoice is received within 31st March but the capital goods are received on 5th April, 2017 (i.e. in GST regime). Will such a person get full credit of CENVAT in 2017-18? Yes

3 261

VAT credit was not available on items 'X' & 'Y' as capital goods in the earlier law. Since they are covered in GST, can the registered taxable person claim it now? No

4 261 Assuming such a person wrongly enjoyed the credit, will the recovery be done in GST or earlier law? Under GST law

6 262 Will ITC be allowed to a service provider on VAT paid inputs held as stock on the appointed day? No

17 266

What will be fate of any appeal or revision relating to a claim of CENVAT/ITC which is pending under the earlier law? If say, it relates to output liability then?

To be disposed of in accordance with the provisions of the earlier law

24 267

Where goods (including capital goods) belonging to the principal are lying with the agents on the appointed day, will the agent be able to take ITC on the same?

Yes Subject to certain conditions

Input Tax Credit


ITC

Question No

Page No

Question Answer

4 92 Does input tax includes tax (CGST/ IGST/SGST) paid on input goods, input services and/ or capital goods?

Yes. Capital Goods can also be availed in one installment

8 93 Where goods and/or services received by a taxable person are used for effecting both taxable and non-taxable supplies, whether the input tax credit is available to the registered taxable person?

Input tax credit of goods and / or service attributable to only taxable supplies can be taken by registered taxable person. Credit on capital goods also would now be permitted on proportionate basis.

Input Tax Credit



Job work

Job work : Definitions • "Job work" means undertaking any treatment or process by a person on goods

belonging to another registered taxable person and the expression "job worker" shall be construed accordingly - Section 2(62) of Model GST Law, 2016.

• Section 16A of Model GST Law, 2016 make provisions relating to taking input tax credit

in respect of inputs sent for job work. • Section 43A of Model GST Law, 2016 makes provisions for special procedure for

removal of Taxable goods for job work without payment of tax.


Meaning of 'Principal’ :

• The provisions relating to job work use the term 'Principal' at various places. • "Principal" means a person on whose behalf an agent carries on the business of receipt

of goods and/or services - Section 2(77) of GST Model Law, 2016. • Thus, person sending goods for job work is termed as 'Principal'. He should be a

registered person

Job work


Meaning of ‘Agent’ :

“Agent” means a person who carries on the business of supply or receipt of goods and/or services on behalf of another, whether disclosed or not and includes a factor, broker, commission agent, arhatia, del credere agent, intermediary or an auctioneer or any other mercantile agent, by whatever name called, and whether of the same description as hereinbefore mentioned or not.

Job work


Treatment or process : Services • Any treatment or process which is being applied to another person’s goods is a supply

of services. [Schedule – II (3)]

Job work - Schedule – II Matters to be Treated as Supply of Goods OR Services


Input Tax Credit of goods sent for job work : “Inputs & Capital Goods”

• The "principal" shall be entitled to take credit of input tax on inputs even if the inputs arc directly sent to a job worker for job-work without their being first brought to his place of business, and in such a case, the period of one hundred and eighty days shall be counted from the date of receipt of the inputs by the job worker - Section 16A(1) of GST Model Law, 2016

• The "principal" shall be entitled to take credit of input tax on capital goods even if the

capital goods are directly sent to a job worker for job- work without their being first brought to his place of business, and in such a case, the period of two years shall be counted from they date of receipt of the capital goods by the job worker - Section 16A(2) of GST Model Law, 2016

• The "principal" may reclaim the input tax credit and interest paid earlier when the

inputs or capital goods, as the case may be, are received back by him at his place of business - Section 16A(3) of GST Model Law, 2016.

Job work


I

Credit admissible on Inputs sent to Job worker by

Principal manufacturer

Credit admissible even on Inputs Directly sent by vendor to

Job worker on instruction of Principal Manufacturer

After completion of Job work needs to return within 180 days

If not Returned within Specified time period than needs to Pay amount equivalent to Credit availed

Job work - Input Tax Credit (Sec.-16A) – Credit Reversal

II

Credit admissible on Capital Goods sent to

Job worker by Principal manufacturer

Credit admissible even on Capital Goods Directly sent by vendor

to Job worker on instruction of Principal Manufacturer

After completion of Job work needs to return within 2 years

If not Returned within Specified time period than needs to Pay amount equivalent to Credit availed Prepared and presented By Sreeram Kaza 312

Special procedure for removal of goods for job work - Based on Permission – “Taxable goods” [Section 43A(1)] [Similar to Central Excise Rules 16-B & 16-C of C.E. Rules 2002]

• The Commissioner may, by special order and subject to conditions as may be specified by him, permit Principal to send taxable goods, without payment of tax, to a job worker for job-work and from there subsequently send to another job worker and likewise. [section 43A(1)]

Job work


Special procedure for removal of goods for job work - Based on Permission – “Taxable goods” [Section 43A(1)]

• Goods can be sent for job work from one job worker to another job worker without payment of duty.

Job work


Direct dispatch of “Taxable Goods” from place of job worker – [Section 43 A (1) (b) Proviso]

• The goods shall not be permitted to be supplied from the place of business of a job worker unless the “principal” declares the place of business of the job-worker as his additional place of business.

• However, there is some exception to it. In a case-(i) where the job worker is registered under section 19; or (ii) where the “principal” is engaged in the supply of such goods as may be notified in this behalf; goods can be supplied directly from the place of business of job worker by the principal.

Job work


Responsibility of tax and goods is of Principal – “Taxable Goods” – [Section 43A(2)]

• In order to avail the benefit of this special procedure the responsibility for accountability of the goods including payment of tax thereon has to be borne by the “principal”.

Job work


Treatment to “Taxable Goods” received back from job worker - [Section 43A (a) & (b)]

• After completion of job-work, Principal may either

• Bring back such goods to any of his place of business, without payment of tax, for supply therefrom on payment of tax within India, or

• With or without payment of tax for export, as the case may be, or

• Supply such goods from the place of business of a job-worker on payment of tax within India, or with or without payment of tax for export, as the case may be.

Job work


Time limit for receipt of goods back from job worker : Section 43A & Section 16A – Taxable Goods Section 43A which provides for special procedure for removal of goods on job work does not specify any time

limit for receipt of goods back. However, another provision contained in Section 16A specifies time limit for receipt of goods.

Accordingly, inputs should be received back within the period of 180 days of receipt of Inputs by job worker. Further, this time limit in respect of capital goods is 2 years.

Time limit for Taxable Goods is not prescribed. “removal’’, in relation to goods, means – Section 2(83) (a) Dispatch of the goods for delivery by the supplier thereof or by any other person acting on behalf of such

supplier, or (a) Collection of the goods by the recipient thereof or by any other person acting on behalf of such recipient.

Job work


• Regulate the removal of “taxable supplies” of goods from the place where produced, stored or manufactured or subjected to any process of production or manufacture and their transport to or from the premises of a registered person, or a bonded warehouse, or to a market.

Job work - 132 (XXIX) Power of Central (or State) Government to make rules


If “inputs and capital goods” not received back in specified time : Inputs / Capital Goods

• Where the inputs or capital goods, as the case may be, are not received back by the “principal” within the time specified, he shall pay an amount equivalent to the input tax credit availed of on the said inputs or capital goods, along with interest under section 36(1).

Job work


Job Work - Transactions Under GST

Principal – Normal Unit

Job work Purpose

Job worker having status of

SSI Unit (Un-Regd.) Normal Unit

Clearing the material by principal

Received by Job Worker (J.W)

Removing after process by J.W. 214/86

4 (5) (a)

No Duty by Job Worker

No Reversal of CENVAT Credit by Principal

1.N

ot tr

eate

d as

supp

ly [4

3A (1

)] 2.

Mat

eria

l use

d by

J.W

.


Principal – SSI Unit (Un-Regd.)

Job work Purpose

Job worker having status of

SSI Unit (Un-Regd.) Normal Unit

Clearing the material by principal

Received by Job Worker (J.W)

Removing after process by J.W. 83/94

84/94

No Duty by Job Worker

Without Duty

CENVAT - No Duty - No

1. Can not use 43A Provision considered as supply (as 43A is meant for Regd.)

2. Threshold exemption when received for J.W. and to further remove =?

3. Intimation Vs. Permission

1.Th

resh

old

Lim

its=

? 2.

SSI U

nit(

un-R

egd.

) con

sider

ed a

s sup

ply

[Exp

lana

tion

2 to

S. N

o. 1

of S

ched

ule

III]

3.M

ater

ial u

sed

by J.

W.

Job Work - Transactions Under GST


Major Impact to Job workers Job work Charges – Service Tax – Exemption as on date – Not Paying Service Tax on Services amount Receipt • When the Job workers are receiving goods under the situations of (1) Manufacturing takes place during the

process of Job work or (2) Non manufacturing but, duty paid by the Principal under : - 4(5) (a) - 214/86, Rule 16-A – B – C, 83/94 & 84/94 Dated 11.04.1994 - Non manufacturing situation where Principle is paying duty • However, in case of GST all Job workers needs to pay GST which is question of litigation.

Section – 15 (2) (b) : The value, apportioned as appropriate, of such goods and/or services as are supplied directly or indirectly by the recipient of the supply free of charge or at reduced cost for use in connection with the supply of goods and/or services being valued, to the extent that such value has not been included in the price actually paid or payable;

Job work


Commencement of time for payment of interest :

• Payment of interest shall commence from the date of expiry of 180 days or 2 years, as the case may be, although there is no specific mention to it.

• Current Law of Rule 14 of CCR, 2004 Vs. GST = ?

Job work


FAQ – TABLE OF CONTENTS – 9 JOB WORK Question No

Page No

Question Answer

4 86 Is Job worker required to take registration? Yes if Aggregate Turnover > Limit

5 86 Whether goods of Principal directly supplied from the job Worker’s Premises will be included in aggregate turnover of the job Worker ?

No – To be Include in Pricipal

6 86 Can the principal supply the goods directly from the premises of the job- worker without bringing it back to his own premises?

Yes - J.W registered as Addl Place of Business - J.W is Registered Person - Notified Goods

9 87 Are the provisions of job-work applicable to all category of goods? (From Registered Taxable Person intends to send taxable goods)

No. Not Applicable to -Exempted -Non Taxable Goods -sender is non register person

Job work


FAQ – TABLE OF CONTENTS – 9 JOB WORK

Question No

Page No

Question Answer

34 38 Whether the job worker will have to be compulsorily registered? No

35 38

Whether the goods will be permitted to be supplied from the place of business of a job worker?

Yes. Subject to Job worker is registered or the principal declares the place of business of the job worker as his additional place of business

13 265

When tax shall become payable in GST on manufactured goods sent to a Job worker under the earlier law?

The person returning the goods shall become liable to pay tax if the said goods are liable to tax in GST and are returned after 6 months from the appointed day

9 263

Shall a manufacturer or a job worker become liable to pay tax if the inputs or semi-finished goods sent for job work under the earlier law are returned after completion of job work after the appointed day?

No. Subject to conditions:- 1) Inputs/semi finished goods are sent in accordance with the provisions of earlier law. 2) Job worker returns the same within 6 months(extended 2 months) from appointed date. 3) Manufacturer as well as job worker declare the details of input held in stock as on appointed date.

10 264 What happens if the job worker does not return the goods within the specified time?

Tax would be payable by the job worker. Manufacturer will also be liable to pay tax on expiry of the specified time limit

Job work


13 Slides

Input ServICe

DIStrIbutor

Cre

dits


Section CGST / IGST

17 Manner of distribution of credit by Input Service Distributor

18 Manner of recovery of credit distributed in excess

Input Service Distributor

GST – Model Law – Relevant Sections – Chapter - V – Input Tax Credit


The term "Input Service Distributor" is defined in Section 2 (56) of the model Act, as below. "Input Service Distributor" means an office of the supplier of goods and / or services which receives tax invoices issued under section 23 towards receipt of input services and issues tax invoice or such other document as prescribed for the purposes of distributing the credit of CGST (SGST in State Acts) and / or IGST paid on the said services to a supplier of taxable goods and / or services having same PAN as that of the office referred to above; Explanation.- For the purposes of distributing the credit of CGST (SGST in State Acts) and / or IGST, Input Service Distributor shall be deemed to be a supplier of services.

Input Service Distributor – Meaning :


• Needs to apply for fresh registration as per Sec 19 (1).

• Defined as the ‘office’ which receives “ Input Service Invoices” and distributes credit of the same to a supplier of taxable “ Goods and/or Services” having same PAN as that of the office. [ Sec 2 (56) ]

• Deemed to be a ‘supplier of services’ for the purposes of distributing credit. [Sec 2 (56) ]

• Can Distribute credit of all - CGST, SGST and IGST [Sec 2 (56) read with Sec 17 ].

Input Service Distributor – Model GST law :


ISD may distribute credit in the following scenarios [Sec 17] : • where ISD and recipient of credit are located in different States • where ISD and recipient of credit (being a business vertical), are located in the same

State



Conditions : [ More or less these provisions of adopting the turnover of previous year for pro-rata distribution and considering the turnover of only operational units in the current year are also directly borrowed from the current CCR] [ Section -17] : • The credit of tax paid on input services attributable to a supplier shall be distributed

only to that supplier. (As per current Service Tax provisions). • The credit attributable to more than one supplier shall be distributed only amongst

such suppliers to whom the input service is attributable and such distribution shall be proportionate to the turnover in a State of such supplier. (as per current Service Tax provisions).

• Provisions for a separate monthly return [GSTR-6] have been prescribed for

ISD. unlike under the existing law, where the details of ISD are incorporated in half yearly Service Tax Returns [ST-3].



Distribution : In case, of Inter - State Distribution : • CGST Distribution as IGST [ section 17 (1) ] • IGST distribution as IGST [ section 17 (1) ]

• SGST distribution as IGST [ section 17 (1) ] In case, of Intra - State Distribution for Business verticals : • CGST & IGST Distribution as CGST [ section 17 (2) ] • SGST & IGST Distribution as SGST [ section 17 (2)]



Illustration A situation may arise that an ISD may receive invoices towards input tax credit, on payment of CGST and SGST (on an intra state supply) and it may have units both in the same state as well as in other states. For example, an ISD situated in Baroda may receive an Invoice for intra state supply of input service on payment of CGST and SGST (Gujarat) and such service may be common for its units situated in the State of Gujarat as well as other states. The CGST credit can be distributed to all the units of the ISD and such credit can also be used by such units without any problem. But if the SGST (Gujarat) credit is distributed to the units in other states, such states cannot utilise such credit of SGST (Gujarat) for any purpose. Hence, a good provision has been made in the model law that such SGST Credit can be distributed either as IGST if the ISD and Unit are situated in different State. Once the SGST (Gujarat) credit is distributed as IGST to the units in other states, such units can utilise such IGST credit, either for payment of CGST or SGST of their State or IGST of inter state, as the case may be.

Input Service Distributor – Good Provision :


Input Service Distributor – ITC – SUPPLY V/S ISD – Same Treatment – Utilization

ITC (CREDIT) SUPPLY ISD

INTRA INTER INTRA INTER

SGST SGST IGST SGST IGST

CGST CGST IGST CGST IGST

IGST CGST/SGST IGST CGST/SGST IGST


Input Service Distributor – Supply – 3 Steps needs to be decided for obtaining the ISD Registration

(1 ) Determine either or

Whether Goods [Schedule II of GST Act]

Whether Services (Including Deeming) [Schedule II of GST Act]

(2) Location --- Where ? (Place of Supply)

Section 5 of IGST Act for Goods Section 6 of IGST Act for Services

Whether - Goods / Services ?

Where = ?

(3) To Decide Location of State

Section 3(1), & 3A(1) of IGST Act for Goods

Section 3(2), & 3A(2) of IGST Act for Services

Inter / Intra = ?


Input Service Distributor – Section 3 of IGST – Place of Supply Vs. ISD

Services [3(2)]

Location of the Supplier- Gujarat Place of Supply (POS) - Maharashtra

Different State

Inter - State Transaction

Gujarat State - Maharashtra

Receiver

(A) IGST Invoice (B) IGST Invoice

ISD route

Sending to Gujarat – IGST Invoice

If Registered at Maharashtra

then ITC available

(C) IGST Invoice

If No (A) & (B) then

COST

Taxable Supplier


Input Service Distributor – Section 3A of IGST – Place of Supply Vs. ISD

Services [3A(2)]

Location of the Supplier- Gujarat Place of Supply (POS) - Gujarat

Same State - Gujarat

Intra - State Transaction

Same State- Gujarat Different State - Maharashtra

Receiver

CGST / SGST Invoice

ITC Available

CGST / SGST Invoice

No ISD route

COST

CGST / SGST Invoice

ISD

Receiving State may Transfer to Gujarat

Taxable supplier Prepared and presented By Sreeram Kaza 338

Needs clarity : • Needs the clarity in the GST law, like the existing rule 6 of CCR, 2004 which provides

for reversal of CENVAT on Exempted Services. • Unutilized credit of SGST of one State may be transferred as IGST credit to another

State and the same can be potentially utilized for the payment of SGST/CGST/IGST liability in receiving State without any issues.

• Where ISD and recipient of Credit are located in same state other than business

vertical . [Sec. 17(2)](SGST) • It may be noted that during Budget 2016, distribution of credit by and ISD to an

"outsourced manufacturing unit" was allowed. But the provisions under the model GST do not enable distribution of credit to such "outsourced manufacturing unit", but credit can be distributed, only among the units having the same PAN.

• As job workers are not liable to pay any duty under the GST regime, they may not

require any credit. But what will happen to the proportion of the credit on input services, attributable to the goods manufactured by the job worker ?

Input Service Distributor - Model GST law :


ISD

Question No

Page No

Question Answer

30 37 Will ISD be required to be separately registered other than the existing taxpayer registration?

Yes

31 37 Can a taxpayer have multiple ISDs? Yes

8 107 Whether SGST credit can be distributed as IGST credit by an ISD to units located in different States?

Yes

9 107 Whether the ISD can distribute the CGST and IGST Credit as CGST credit? Yes

10 107 Whether the SGST and IGST Credit can be distributed as SGST credit? Yes

13 108 The ISD may distribute the CGST and IGST credit to recipient outside the State as? IGST

14 108 The ISD may distribute the CGST credit within the State as? CGST

23 267 If services are received by ISD under the earlier law, can the ITC relating to it be distributed in GST regime?

Yes


( 22 Slides ) Prepared and presented By Sreeram Kaza 341

Tax Invoice needs to be issued at the time of Supply of Goods Containing following Details

U/s. 23(i)

Tax Invoice needs to be issued at the time of Supply of Services

Containing following Details U/s. 23(ii)

Description Description Quantity Value of Goods Tax Charged thereon Tax Charged thereon Such Other Particulars as may be prescribed

Such Other Particulars as may be prescribed

Note : Registered Taxable Person supply “Non-Taxable” or paying under “Composition Scheme” shall issue "Bill of Supply"

Tax Invoice ( Sec. -23 ) & Bill of Supply – Shall Contain


Amount of Tax to be Indicated in Tax Invoice ( Sec.-23A ) When Supply is made for Consideration then Tax amount Needs to indicate in the Tax Invoice


Any Supply of Goods and / or Services – U/s. 24(1)

Any Supply of Goods and / or Services – U/s. 24(2)

Invoice Raised Invoice Raised

Value and Tax Charged is exceed the taxable value and / or Tax payable Value and Tax Charged is less than the

taxable value and / or Tax payable

Credit note needs to be issued to Receiver

Debit note needs to be issued

declare the details in the Return

and Supplier needs to issue - on or before 30-Sep following the end of financial year or - Date of filing of Annual return whichever is earlier

and Supplier needs to issue - On or before 30-Sep following the end of financial year or - Date of filing of Annual return whichever is earlier

Debit / Credit Note ( Sec.-24 )



Utilization of

Credit

1st Utilization

2nd

Utilization

3rd

Utilization

IGST

IGST

CGST

SGST

CGST

CGST

IGST

SGST

SGST

IGST

Payment of Tax – ( Sec.-35 (5) ) – Order / Restriction

• Excise duty is payable on removal whereas, in general service tax is payable on raising of invoice or receiving of consideration. As regards VAT, its payable on delivery of goods. Prepared and presented By Sreeram Kaza 345


CGST Input Tax Credit

Can Not be Utilized

SGST Payments

SGST Input Tax Credit

Can Not be Utilized

CGST Payments

Payment of Tax – Restriction ( Sec.-35(7) )


Payment of Tax, Interest, penalty

Payment

Tax Dues

Interest, Fee, Penalty

All Liabilities of Taxable person

Self Assessed Previous Pending

Self assessed current pending

Any other amounts payable

Any other amount

payable U/S 51

Deposit Made

Electronic Cash Ledger 35 (1) Electronic Register

35 (7)

Input Tax Credit

Self assessed

Electronic Credit Ledger 35 (2)


Interest

Failure to Pay Tax / Part of the Tax


period

From the First day such tax was due

to be paid

Makes undue or excess claim of Input Tax Credit


period

From the First day such undue or excess claimed

[29(10)

Payment of Tax – ( Sec.-36 )


Tax Deducted at Source

Deduct Tax on Specified Goods &/ Services @1% where exceeds Rs. 10 Lacs at the time of making payment to Supplier

TDS Amount to be deposit in govt. A/c. within 10 days after end of Month & also needs to issue Certificate deductee within 5 days from payment of TDS to Govt.

Deductor

a department or establishment of the Central or State Government,

Local authority

Governmental agencies

such persons or category of persons as may be notified

Payment of Tax – Tax Deducted at Source (Sec.-37) [ On – Government + Persons / Category of Persons as Notified ]

Note : Value of supply shall excludes the tax indicated in the invoice. Para-37(5) : The deductee shall claim credit, in his electronic cash ledger, of the tax deducted and reflected in the return of the deductor filed under sub-section (5) of section 27, in the manner prescribed. (Return GSTR-7) – within 10 days after end of such month.


S.N Particulars Present Taxation GST

1 Structural Difference

• Two separate VAT systems operate simultaneously at two levels, Centre and State, and tax paid (input tax credit) under one is not available as set off against the other

• Tax on services is levied under separate legislation by Centre

• No comprehensive taxation of services at the State level; few services are taxed under separate enactments

• A dual tax with both Central GST (CGST) & State GST (SGST) levied on the same base.

• There will be no distinction between goods and services for the purpose of tax with a common legislation applicable to both

• It allows seamless tax credit amongst Excise Duty, Service Tax & VAT

Structural Difference ---Present Taxation Payment Vs. GST Payment

Payments :


Credit to the Government : • A major head wise (CGST, IGST, and SGST) 3 Heads account of each government

(29+7 = total 36 accounts) to which the remittances received by it would be credit to the Government.

– CGST, IGST components will be accounted for under Consolidated Fund of

India (CFI). Transfers of due IGST amount to the States can thereafter be made there from as per the existing procedure.

Payments :


Challans :

• One mode of challan (With separate line item of CGST/SGST/IGST) will be used.

Payment :

• Payment by taxpayers through Internet Banking through authorized banks and through credit card/debit card

• Over the Counter payment (OTC) through authorized banks • Payment through NEFT/RTGS from any bank (including other than authorized banks)

Not Allowed :

• Other means of payment, such as payment by book adjustment as is presently being allowed by Government of India to some departments / State governments or payment by debit to export scrips, while paying tax would not allowed.

Payments :


• An inter-State seller will pay IGST on value addition after adjusting available credit of IGST, CGST & SGST on his purchases

• The Exporting State will transfer to the Centre the credit of SGST used in payment of

IGST • The Importing dealer will claim credit of IGST while discharging his output tax liability

in his own State.

• The input tax credit on account of SGST during a tax period shall first be utilised towards payment of SGST; the amount remaining, if any, shall be utilized towards the payment of IGST.

• The Centre will transfer to the importing State the credit of IGST used in payment of SGST

• The Central Govt. will act as a neutral agency and transfer the funds to the respective

State Govts. on destination principle i.e. place of supply/consumption occurs

IGST Model – How it Works

Payments :


• IGST Model envisages that the Centre will levy tax at a rate approximately equal to CGST + SGST rate on inter-State supply of goods & services

• IGST will be levied and collected by the Centre • It would basically meet the objective of providing continuous credit chain across

States • This model would obviate the need for refunds to exporting dealers as well as the

need for every State to settle account with every other State. Note : Flow of credit passing by States to Centre and Centre to State – for easy understanding purpose.

IGST Model – How it Works

Payments :


IGST Adjustments Under GST Scenario (State to Centre & Centre to State ) – As a Illustration

Using Credit Of IGST CGST

SGST I. e CGST Payment From Credit of --- CGST & --- IGST I. e SGST Payment From Credit of --- SGST & --- IGST

Exporting State Importing

State

Pay IGST

State Transfer to IGST

Fund

Takes Credit of IGST By the Importing

state Dealer

Sales Within State

Liability of

- CGST - SGST

Centre Transfer to the Importing State

Payments :


IGST - Concept

The overall calculation is showing that the IGST is not a third tax but a model to monitor the intere state Trade of Goods since both state and the centre is ultimately getting the amount of Tax as SGST and CGST on the Last consumer price (Nothing more or Nothing less) and further the GST is destination based tax hence besides centre the consumer state will get the whole amount of SGST and the revenue out of a interstate transaction to the selling state will be Zero.

Payments :


• Inverted Duty Structure Vs. GST Payments : Mostly Single Rate

In few situations the FG duty is 6% and inputs are 12.5% The difference in duty rates of inputs vis-à-vis the finished goods has resulted in accumulation of differential Cenvat Credit for the manufacturers not engaged of export of goods. The Central Excise/Cenvat Credit legislation does not provide any mechanism for refund of such accumulated Cenvat credit. With the Central GST presumed to have a single rate for both goods and services, going forward accumulation of credit may cease to be an issue for the industry.

• CST Vs. GST Payment :

Introduction of GST is a positive step and if implemented in the right spirit could result in reduction in transaction cost. The most visible and immediate impact of GST appears to be the proposed discontinuance of (Central Sales Tax (CST) levy. As on date, CST is a cost to manufacturers whenever they procure raw materials from outside their state and if sale is on inter-state basis. This is on account of the fact that CST paid in purchases cannot be set off against the local value added tax (VAT) liability of manufacturer/ dealer. Though, over the last couple of years CST rates have reduced from four to two percent, the said levy continues to be a cost to the manufacturers and traders dealing in interstate transactions. GST Will Take Care of this Issue.

Payments :


• Currently, certain locations such as Himachal Pradesh, Uttranchal enjoy an excise tax holiday on their manufacturing activities. However, since the output is exempt the tax paid in inputs/capital goods tend to be a cost to the entitles located in such areas. Though, area based exemptions may not continue in the GST era, based on past experience of VAT and on a generic basis, it appears that the presently exempted units may be required to pay GST on their finished goods but, would be entitled to claim refund in order to ensure continuity of GST at every stage. By doing so, the credit chain remains intact and at the same time incentives already agreed by the Centre and the State Government for both Central and State Level GST is passed on to the manufacturers.

Two types of area-based exemption schemes are in operation. Manufacturing units in J&K

and the N-E get excise benefit by way of refunds; those in Himachal and Uttarakhand get outright exemption. it appears that a decision is yet to be taken on this by the GST council. The matter is under deliberation by the government as it appears . In general, having given the exemption once, the Government cannot go back on the assurance. They might not get exemption under GST but will definitely get compensation. States and the Centre will have to work it out.

Units availing exemption will most likely be compensated through a budgetary provision.

Exempted Areas Vs. GST Payment – Still not clear

Payments :


As an Illustration : General understanding

As a Illustration to understand the overall impact of the GST below given table can be referred.

Payments :


For Manufacturer / Seller : As a Illustration


FAQ – TABLE OF CONTENTS – 7 GST PAYMENT OF TAX Question No

Page No

Question Answer

2 65 Who is liable to pay GST? Generally Supplier of Goods or services except Reverse Charge, TCS (E Commerce) and TDS ( Govt Department)

3 65 When is GST payment to be done by the Taxable person?

Generally earliest of the Following 1.Receiving Payment. 2.Issuance of Invoice. 3.Completion of Supply

20 71 What is the sequence of payment of Tax where that taxpayer has liabilities for previous months also?

As per 35(8) order is (Mandatory order) Self Assessed tax + Interest – Previous period Self Assessed tax + Interest – Current period Confirmed Demand


Payments :

FAQ – TABLE OF CONTENTS – 7 GST PAYMENT OF TAX Question No

Page No

Question Answer

22 72 What is TDS? Tax Deducted At source For Govt, Govt undertaking & other notified Entity making Contractual Payt > 10 Lakhs TDS Rate is 1%

23 72 How will the supplier account for this TDS while filling his return?

Reflected in E- cash ledger of Supplier Used for All Payment (Incl Interest, Penalty Etc)

24 73 How will the TDS Deductor account for Such TDS?

Deuctor need to registered under sec-19 File GSTR-7 Issue TDS Certificate with in 5 days of deduction(fail to issue fees 500/- per day maximum 5000.


Payments :

Question No

Page No

Question Answer

10 69 What are E-Ledgers? Electronic Tax Ledger Reflect Cash Payment and input tax credit of Tax payer E- ledger =Cash Ledger +ITC Ledger +Liability Ledger

11 69 What is a tax liability Register? Reflect Tax Liability of Tax payer

12 69 What is Cash Ledger? Reflect All Deposit made in Cash ,TDS/TCS. Used for making payment of Liability

13 69 What is an ITC Ledger? ITC is self assessed Tax Balance available. This can be used to make payment of Tax and not Interest/Penalty etc.

FAQ – TABLE OF CONTENTS – 7 GST PAYMENT OF TAX - LEDGERS


Payments :

Remission ( 2 Slides )


Remission - ( Section- 11 )

Remission of tax on supplies found deficient in quantity - Needs Modification

• Section 11 of the said law deals with remission of tax on such supplies wherein provision is made for remission of tax on such supplies which are found to be deficient in quantity due to any natural causes.

As on date Excise Rules 21 of CER 2002 provides that • Lost. • Destroyed by natural causes. • Unavoidable accident. • Unfit for consumption. • Unfit for marketing.


Question No

Page No

Question Answer

18 22 What is Remission of Tax /Duty ? Relieving from obligation to pay tax in natural causes.[lost/destroyed]

20 23 Whether remission is allowed for goods lost or destroyed before supply ? No

21 23 Whether remission is allowed for goods lost or destroyed for all reasons ? No

FAQ – TABLE OF CONTENTS – 2- LEVY OF AND EXEMPTION OF TAX

Remission - ( Section- 11 )


Return ( 147 Slides )


Section Heading

25 Furnishing details of outward supplies

26 Furnishing details of inward supplies

27 Returns

27A. First Return

28 Claim of input tax credit and provisional acceptance thereof

29 Matching, reversal and re-claim of input tax credit

29A. Matching, reversal and re-claim of reduction in output tax liability

30 Annual return

31 Final return

32. Notice to return defaulters

33. Levy of late fee

34. Tax Return Preparers

GST – Model Law – Relevant Sections – Chapter - VIII – Returns

Return :



• Regular taxpayers (including casual taxpayers) would have to file : 5 Returns + 1 (ISD)

– GSTR-1 (details of outward supplies - Monthly)(Section-25) – GSTR-2 (details of inward supplies - Monthly) (Section-26) – GSTR-3 (for each registration – Monthly ) (Section-27) – GSTR-7 ( Return for Tax Deducted at Source - Monthly)(Section-27) – GSTR-9 (Annual return - Yearly) (Section-30)

Note : • Regular taxpayers with multiple registrations (for business verticals) within a State

would have to file GSTR-1, GSTR-2, GSTR-3,GSTR-7 and GSTR-9 (Annual return) for each of the registrations separately if they choose for Separate registration option.

• A separate reconciliation statement, duly certified by a Chartered Accountant, will have

to be filed by those taxpayers who are required to get their accounts audited under section 42(4) along with the Annual Return.

Return – Normal / Regular Tax Payers


Debit Notes issued [2 (36) of CGST / SGST] Credit Notes issued [2 (35) of CGST / SGST] Zero rated supplies [2(109) of CGST/SGST] Exports [2(43) & 2(44) of CGST/SGST] Inter state supplies [3 of IGST] Supplementary Invoices [2 (60) & 23 of CGST / SGST] Exempt supply [2 (42) of CGST / SGST]

Return - Important Definitions


Amending – GSTR – 1

GSTR–1 A of the Supplier (To the supplier)

GSTR–1 (By Supplier)

GSTR–2 A (At Recipients) (Part – A )

Added / Corrected / Deleted (By the Recipient) in GSTR – 2 Or

Added / Corrected / Deleted (By the Recipient) in GSTR – 4

Amend – By – Furnishing Accept / Reject the Modifications made by the Recipient (BY the Supplier)

Amended GSTR–1

Rec

ipie

nt

Sup

plie

r

By Supplier

Available (Auto)

Amended – By Recipient

Available (Auto)

Amended – By Supplier

Amending from Time to Time

Return – Rule 1 – Form and manner of furnishing details of outward supplies of GST Return Rules:


Details Fed By your Supplier in their Return

In your GSTR -2

Not Eligible ITC

Your Inward Supplies – GSTR – 2 Consists of

Return – Rule 2 – Form and manner of furnishing details of inward supplies of GST Return Rules:

GSTR-1 GSTR-6 (ISD)

GSTR-7 (TDS)

GSTR-8 (TCS)

You can – Amend – By way of – Addition / Correction / Deletion

And further Delete / Quantum – Related to

In Eligible ITC

Invoice Level Quantum

Fully Partly Related to Non - Taxable Other Than Business Purposes


Part – A

Filing of your – GSTR – 3 – Monthly Return (other than composition Dealer)

Return – Rule 3 – Form and manner of submission of monthly return of GST Return Rules:

Part – B

Auto from Manual / Auto

GSTR – 1 GSTR – 2 Electronic Credit Ledger

Electronic Cash

Ledger

Electronic Tax liability

Ledger Discharge Liability

Discharge Liability By Way Debiting

Electronic Cash

Ledger

Electronic Credit Ledger

Refund

Deemed as Refund application Prepared and presented By Sreeram Kaza 374

Rule 4 - Form and manner of submission of quarterly return by the composition supplier of GST Return Rules :

• Every registered taxable person paying tax under section 8 shall, after adding,

correcting or deleting the details contained in FORM GSTR-4A, furnish a quarterly return in FORM GSTR-4 electronically through the Common Portal

• Every registered taxable person furnishing the return under sub-rule (1) shall discharge his liability towards tax, interest, penalty, fees or any other amount payable under the Act or these rules by debiting the electronic cash ledger.

• GSTR - 4A


Rule 5 - Form and manner of submission of return by non-resident taxable person of GST Return Rules :

• Every registered non-resident taxable person shall furnish a return in FORM GSTR-

5 electronically through the Common Portal. Including therein the details of outward supplies and inward supplies and shall pay the tax, interest, penalty, fees or any other amount payable under the Act or these rules within twenty days after the end of a tax period or within seven days after the last day of the validity period of registration, whichever is earlier.

• GSTR – 5


Rule 6 - Form and manner of submission of return by an input service distributor of GST Return Rules :

• Every input service distributor shall, after adding, correcting or deleting the details

contained in FORM GSTR-6A, furnish electronically a return in FORM GSTR-6, containing the details of tax invoices on which credit has been received and those issued under section 17, through the Common Portal.

• GSTR – 6 • GSTR – 6A


Rule 7 - Form and manner of submission of return by a person required to deduct tax at source , of the GST Return Rules.

• Every registered taxable person required to deduct tax at source under section 37 shall furnish a return in FORM GSTR-7 electronically through the Common Portal.

• The details furnished by the operator under sub-rule (1) shall be made available electronically to each of the suppliers in Part C of FORM GSTR-2A on the Common Portal after the due date of filing of FORM GSTR-7.

• The certificate referred to in sub-section (3) of section 37 shall be made available electronically to the deductee on the Common Portal in FORM GSTR-7A on the basis of the return filed under sub-rule (1).

• GSTR - 7 • Part C of GSTR - 2 A • GSTR – 7A


Rule 8 - Form and manner of submission of statement of supplies effected through e-Commerce ,of the GST Return Rules.

• Every e-Commerce operator required to collect tax at source under section 43C shall

furnish a statement in FORM GSTR-8 electronically through the Common Portal, either directly or from a Facilitation Centre, notified by the Board or Commissioner, containing details of supplies effected through such operator and the amount of tax collected as required under sub-section (1) of section 43C.

• The details furnished by the operator under sub-rule (1) shall be made available

electronically to each of the suppliers in Part D of FORM GSTR-2A on the Common Portal after the due date of filing of FORM GSTR-8.

• GSTR - 8 • Part D of GSTR -2 A


• A notice in FORM GSTR-3A shall be issued, electronically, to a registered taxable person who fails to furnish return under section 27 and section 31. GSTR-3A

Rule 9 – Notice to non-filers of returns of GST Return Rules:


• The following details relating to the claim of input tax credit on inward supplies including imports, provisionally allowed under section 28, shall be matched under section 29 after the due date for furnishing the return in FORM GSTR-3

• The claim of input tax credit in respect of invoices and debit notes in FORM GSTR-2 that were accepted by the recipient in FORM GSTR-2A without amendment shall be treated as matched if the corresponding supplier has furnished a valid return.

• The claim of input tax credit shall be considered as matched, where the amount of input tax credit claimed is equal to or less than the output tax paid on such tax invoice or Debit Note, as the case may be, by the corresponding supplier

GSTR – 2 GSTR – 2A GSTR – 3

Rule 10 – Matching of claim of input tax credit of GST Return Rules:


Rule 11 - Final acceptance of input tax credit and communication thereof of GST Return Rules :

• The final acceptance of claim of input tax credit in respect of any tax period,

specified in sub-section (2) of section 29, shall be made available electronically to the registered taxable person making such claim in FORM GST ITC-1 through the Common Portal.

• The claim of input tax credit in respect of any tax period which had been communicated as mismatched but is found to be matched after rectification by the supplier and/or recipient shall be finally accepted and made available electronically to the taxable person making such claim in FORM GST ITC-1 through the Common Portal

Section 29 (2) : “The claim of input tax credit in respect of invoices and/or debit notes relating to inward supply that match with the details of corresponding outward supply or with the additional duty of customs paid shall, subject to the provisions of section 16, be finally accepted and such acceptance shall be communicated, in the manner as may be prescribed, to the recipient” ITC – 1- Communication of acceptance, discrepancy or duplication of input tax credit claim


Rule 12 - Communication and rectification of discrepancy in claim of input tax credit and reversal of claim of input tax credit, of the GST Return Rules.

• Any discrepancy in the claim of input tax credit in respect of any tax period, specified in sub-section

(3) of section 29 and the details of output tax liable to be added under sub-section (5) of the said section on account of continuation of such discrepancy shall be made available to the registered taxable person making such claim and the supplier electronically in FORM GST ITC-1 through the Common Portal on or before the last date of the month in which the matching has been carried out.

• A supplier to whom any discrepancy is made available under sub-rule (1) may make suitable

rectifications in the statement of outward supplies to be furnished for the month in which the discrepancy is made available.

• A recipient to whom any discrepancy is made available under sub-rule (1) may make suitable rectifications in the statement of inward supplies to be furnished for the month in which the discrepancy is made available.

• Where the discrepancy is not rectified under sub-rule (2) or sub-rule (3), an amount to the extent of discrepancy shall be added to the output tax liability of the recipient in his return in FORM GSTR-3 for the month succeeding the month in which the discrepancy is made available.

• GST ITC – 1 • GSTR - 3 • Prepared and presented By Sreeram Kaza 383

Rule 13 - Claim of input tax credit on the same invoice more than once of GST Return Rules :

• Duplication of claims of input tax credit in the details of inward supplies shall be

communicated to the registered taxable person in FORM GST ITC-1 electronically through the Common Portal

ITC – 1- Communication of acceptance, discrepancy or duplication of input tax credit claim


Rule 14 - Matching of claim of reduction in the output tax liability, of the GST Return Rules.

• The details relating to the claim of reduction in output tax liability shall be matched under section 29A after the due date for furnishing the return in FORM GSTR- 3

• The claim of reduction of output tax liability due to issuance of credit notes in FORM GSTR-1 that were accepted by the recipient in FORM GSTR-2A without amendment shall be treated as matched if the corresponding recipient has furnished a valid return.

• GSTR - 3 • GSTR - 1 • GSTR – 2A


Rule 15 - Final acceptance of reduction of output tax liability and communication thereof of GST Return Rules :

• The final acceptance of claim of reduction in output tax liability in respect of

any tax period, specified in sub-section (2) of section 29A, shall be made available electronically to the taxable person making such claim in FORM GST ITC-1 through the Common Portal

• The claim of reduction in output tax liability in respect of any tax period which had been communicated as mismatched but is found to be matched after rectification by the supplier and/or recipient shall be finally accepted and made available electronically to the taxable person making such claim in FORM GST ITC-1 through the Common Portal



Rule 16 - Communication and rectification of discrepancy in reduction in output tax liability and reversal of claim of reduction, of the GST Return Rules.

• Any discrepancy in claim of reduction in output tax liability, specified in subsection (3) of section 29A, and the details of output tax liability to be added under subsection (5) of the said section on account of continuation of such discrepancy shall be made available to the registered taxable person making such claim and the recipient electronically in FORM GST ITC-1 through the Common Portal on or before the last date of the month in which the matching has been carried out.

• A supplier to whom any discrepancy is made available under sub-rule (1) may make suitable

rectifications in the statement of outward supplies to be furnished for the month in which the discrepancy is made available.

• A recipient to whom any discrepancy is made available under sub-rule (1) may make suitable

rectifications in the statement of inward supplies to be furnished for the month in which the discrepancy is made available.

• Where the discrepancy is not rectified under sub-rule (2) or sub-rule (3), an amount to the extent of discrepancy shall be added to the output tax liability of the supplier in his return in FORM GSTR-3 for the month succeeding the month in which the discrepancy is made available.

• GST ITC - 1 • GSTR - 3


Rule 17 - Claim of reduction in output tax liability more than once of GST Return Rules :

• Duplication of claims for reduction in output tax liability in the details of outward

supplies shall be communicated to the registered taxable person in FORM GST ITC-1 electronically through the Common Portal.



Rule 18 - Refund of interest paid on reclaim of reversal of GST Return Rules :

• The interest to be refunded under sub-section (9) of section 29 or sub-section (9)

of section 29A shall be claimed by the taxable person in his return in FORM GSTR3 and shall be credited to his electronic cash ledger in FORM GST PMT-3 and the amount credited shall be available for payment of any future liability of interest or the taxable person may claim refund of the amount under section 38..

• GSTR – 3 • PMT - 3

Sr No. Form No. Title of the Form

1 Form GST PMT-1 Electronic Tax Liability Register of Taxpayer (Part–I: Return related liabilities Electronic Tax Liability Register of Taxpayer (Part–II: Other than return related liabilities)

2 Form GST PMT-2 Electronic Credit Ledger

3 Form GST PMT-2A Order for re-credit of the amount to cash or credit ledger

4 Form GST PMT-3 Electronic Cash Ledger

5 Form GST PMT-4 Challan For Deposit of Goods and Services Tax

6 Form GST PMT-5 Payment Register of Temporary IDs / Un-registered Taxpayers

7 Form GST PMT-6 Application For Credit of Missing Payment (CIN not generated)


Rule 19 - Matching of details furnished by the e-Commerce operator with the details furnished by the supplier, of the GST Return Rules.

• The details relating to the supplies made through an e-Commerce operator, as declared in FORM GSTR-8, shall be matched with the corresponding details declared by the supplier in FORM GSTR-1-

• Provided that for all supplies where the supplier is not required to furnish the details separately for each supply, the following details relating to such supplies made through an e-Commerce operator, as declared in FORM GSTR-8, shall be matched with the corresponding details declared by the supplier in FORM GSTR-1-

• Provided further that where the time limit for furnishing FORM GSTR-1 under sub-section (1) of section 25 has been extended, the date of matching of the above mentioned details shall be extended to such date as may be notified by the Board/Commissioner.

• GSTR - 8 • GSTR - 1


Rule 20 - Communication and rectification of discrepancy in details furnished by the e-Commerce operator and the supplier, of the GST Return Rules.

• Any discrepancy in the details furnished by the operator and those declared by the supplier shall be made available to both electronically in FORM GST ITC-1 through the Common Portal on or before the last date of the month in which the matching has been carried out.

• Where the discrepancy is not rectified under sub-rule (2) or sub-rule (3), an amount to the extent of discrepancy shall be added to the output tax liability of the supplier in his return in FORM GSTR-3 for the month succeeding the month in which the details of discrepancy are made available and such addition to the output tax liability and interest payable thereon shall be made available to the supplier electronically on the Common Portal in FORM GST ITC-1.

• GST ITC - 1 • GSTR - 3


Rule 21 - Annual return of GST Return Rules :

• Every registered taxable person shall furnish an annual return under sub-section

(1) of section 30 electronically in FORM GSTR-9 . (Regular) • Provided that a taxable person paying tax under section 8 shall furnish the

annual return in FORM GSTR-9A. (Composition)

• Every registered taxable person whose aggregate turnover during a financial year exceeds one crore rupees shall get his accounts audited under sub-section (4) of section 42 and he shall furnish a copy of audited annual accounts and a reconciliation statement, duly certified, in FORM GSTR-9B, electronically through the Common Portal.

• GSTR – 9 • GSTR – 9A • GSTR – 9B


Rule 22 - Final return of GST Return Rules :

• Every registered taxable person required to furnish a final return under section 31,

shall furnish such return electronically in FORM GSTR-10 through the Common Portal either directly or from a Facilitation Centre, notified by the Board or Commissioner

Section 31 : “Every registered taxable person who applies for cancellation of registration shall furnish a final return within three months of the date of cancellation or date of cancellation order, whichever is later, in such form and in such manner as may be prescribed.” • GSTR –10


Rule 23 - Details of inward supplies of persons having Unique Identity Number of GST Return Rules :

• Every person, who has been issued a Unique Identity Number and claims refund of

the taxes paid on his inward supplies, shall furnish the details of such supplies of taxable goods and/or services in FORM GSTR-11.

• Every person, who has been issued a Unique Identity Number for purposes other than refund of the taxes paid, shall furnish the details of inward supplies of taxable goods and/or services as may be required by the proper officer in FORM GSTR-11.

• GSTR –11


Rule 24 - Provisions relating to a Tax Return Preparer of GST Return Rules :

• An application in FORM GST TRP-1 may be made to the officer authorised in this behalf for enrolment as Tax Return Preparer by any person who satisfies any of the conditions specified below, namely.

• On receipt of the application referred to in sub-rule (1), the authorised officer shall, after making such enquiry as he considers necessary, either enroll the applicant as a Tax Return Preparer and issue a certificate to that effect in FORM GST TRP-2 or reject his application where it is found that the applicant is not qualified to be enrolled as a Tax Return Preparer.

• If any Tax Return Preparer is found guilty of misconduct in connection with any proceeding under the Act, the authorised officer may, by order, in FORM GST TRP-4 direct that he shall henceforth be disqualified under section 34, after giving him a notice to show cause in FORM GST TRP-3 against such disqualification and after giving him a reasonable opportunity of being heard.

• A list of Tax Return Preparers enrolled under sub-rule (1) shall be maintained on the Common Portal in FORM GST TRP-5 and the authorised officer may make such amendments to the list as may be necessary from time to time, by reason of any change of address or death or disqualification of any Tax Return Preparer


Rule 24 - Provisions relating to a Tax Return Preparer of GST Return Rules :

• Any taxable person may, at his option, authorise a Tax Return Preparer on the Common Portal in FORM GST TRP-6 or, at any time, withdraw such authorisation in FORM GST TRP-7 and the Tax Return Preparer so authorised shall be allowed to undertake such tasks as indicated in FORM GST TRP-6 during the period of authorisation.

• Give his consent in FORM GST TRP-6 to any Tax Return Preparer to prepare and furnish his return

• Before confirming submission of any statement prepared by the Tax Return Preparer, ensure that the facts mentioned in the return are true and correct.

• GST - TRP – 1- Application for enrolment as Tax return preparer • GST - TRP – 2- Enrolment certificate as Tax return preparer • GST - TRP – 3- Show cause to as Tax return preparer • GST - TRP – 4- Order of cancelling enrolment as Tax return preparer • GST - TRP – 5- List of Tax return preparers • GST - TRP – 6- Consent of taxable person to Tax return preparer • GST - TRP – 7- Withdrawal of authorization to tax return preparer


Rule 25 - Conditions for purposes of appearance of GST Return Rules :

• No person shall be eligible to attend before any authority, as a Tax Return Preparer,

in connection with any proceeding under the Act on behalf of any taxable person or person unless his name has been entered in the list maintained under sub-rule (6) of rule 20

• An Accountant or a Tax return preparer attending on behalf of a taxable person or a person in any proceeding under the Act before any authority shall produce before such authority, if required, a copy of the authorization given by the taxable person or person in Form GST-TRP-6

TRP -1 : Application for Enrolment TRP -1 A : Acknowledgement Receipt TRP -2 : Enrolment Certificate TRP -3 : Notice for Information TRP -4 : Order of Rejection TRP -5 : Enrolled (State Wise) TRP -6 : Engagement letter by T.P to TRP TRP -7 :Disengagement from the assignment Prepared and presented By Sreeram Kaza 397

• Needs to be filed return electronically. [25(1)]

• Matching Section 25(2) : Which have remained unmatched under section 29 needs to pay with interest,

• No rectification of error after filing of the return under section 27 for the month of September following the end of the financial year or filing of the relevant annual return, whichever is earlier. – [25(2)]

• No revised return facility in GST Scenario.

Return - GSTR – 1 - Furnishing details of outward supplies


• All UN bodies seeking to claim refund / Government / PSU (Not Making Outward Supply ) of taxes paid by them would be required to obtain a unique identification number (ID) from the GST portal. The structure of the said ID would be uniform across the States in uniformity with GSTIN structure and the same will be common for the Centre and the States. The supplier supplying to these organizations is expected to mention the UID on the invoices and treat such supplies as B2B supplies and the invoices of the same will be uploaded by the supplier.

Return - GSTR – 1 - Invoice level Information – B2B - UID


Supplier Invoice Level State Wise Consolidated

B2B ( Inter / Intra ) --- --- B2C – Inter > 2.5 Lacs --- ---

B2C < 2.5 Lacs ( Address on Record – ( Inter )

--- ---

B2C < 50,000 – No Address ( Treated = Intra )

--- ---

B2C < 50,000 – Inter - Address on Record --- ---

B2C - 50,000 – 2.5 Lacs - Address on Record

--- ---

B2C - Intra (All) --- ---

Return - GSTR – 1 - Invoice - Summary


Category HSN Codes for Goods Account -ing Codes

for Services

Description

Digit Level

2 4 6 8 < 1.5 Crores (Turn over )

B2B + B2C (Inter State) > 2.5 Lacs per Invoice : 1.5 to 5 (previous financial year ) (PFY) (First Year) (Both Turn over Inter & Intra )

(Optional)

(F.Y)

B2B + B2C (Inter State) > 2.5 Lacs per Invoice : 1.5 to 5 (T) (PFY) (S.Y) (Both Turn over Inter & Intra )

(Mandatory)

B2B + B2C (Inter State) > 2.5 Lacs per Invoice : > 5 Crores (PFY) (T) (Both Turn over Inter & Intra )

Exports (Mandatory)

Imports (Mandatory)

B2B / B2C If Desire - ( optional )

(Optional)

(Optional )

Service Providers

compounding – Not Required

Return - GSTR – 1 - Invoice – Codes / Description


Tax Invoice wise uploading

Without invoice wise uploading (Tax Invoice needs to be raised.)

Debit Note (D/N) [With reference of Old Invoice] 24(2)

Advances Receipt

GSTR - 1

• 11 & 11A : #

• 8 & 8A - D/N

• 5 & 5A : B2B • 6 & 6A: B2C>Rs.2.5L • 10 & 10A. Export in

Case of payments

• 7 & 7A : B2C< Rs.2.5 L

Note : • # Transaction id would be Generated. • B2C Includes Goods & Services = Non Government of Registered Entities & Consumer

• Reflect in GSTR-2 (Two)

PAYMENT


Return - GSTR – 1

Tax Invoice wise Only Value

Credit Note – Old Invoice reference. (C/N) 24(1)

GSTR - 1

• 8 & 8A - C/N

• 12 : ADVANCES

• 10 & 10A : Export (Zero Rated Supply)

• 9 : Three Categories # of value

Note : • # Exempted, Nil Rated, Non GST Supply

• Sr No. 13 , Part 2 & Part 2A E Commerce Portal Not shown here

WITHOUT PAYMENT

No of Invoices Details

• 14 : Series Number of Invoices


Return - GSTR – 1

B2B

Partial Reverse Charge

Full Reverse Charge


Return - GSTR – 1

Amendments to - B2B


Return - GSTR – 1

B2C > Rs. 2.5 Lacs


Return - GSTR – 1

Amendments to - B2C


Return - GSTR – 1

Exports


Return - GSTR – 1

Amendment to Exports


Return - GSTR – 1

B2C < Rs. 2.5 Lacs


Return - GSTR – 1

Amendments to – B2C


Return - GSTR – 1

Debit Note /Credit Note


Return - GSTR – 1

Amendment to Debit Note / Credit Note


Return - GSTR – 1

Advance

Time of Supply – Payment (Say Customer’s Advances Receipt)


Return - GSTR – 1

Amendment to Time of Supply – Payment


Return - GSTR – 1

Advance – Invoice Wise

Invoice raised now for previous advances Receipt & Tax already paid


Return - GSTR – 1

B2B

B2C

Value


Return - GSTR – 1


Return - GSTR – 1

Invoices Details


Return - GSTR – 1


Return - GSTR – 1


Return - GSTR – 1

Matching Section 26(3) Who has furnished and which have remained unmatched under section 29, shall pay the tax and interest.

No rectification of error or omission in respect of the details furnished under sub-section (2) shall be allowed after filing of the return under section 27.

Concepts – for Reversal : Matching

Purchases : Any benefits i.e. any ITC ( credit ) claimed by the recipient / claimant needs to be reversed of such benefits i.e. ITC taken in case, if the vendor has not paid tax to the government and not filed valid return .

Note: we at the industry needs to ensure that our vendors are paying tax to the government and filing proper return after payment of the tax to the government.

Sales : Any benefits i.e. deduction on credit note upon issuance of the credit note to the customer issued by the suppler to the customer then the customer needs to reverse the earlier ITC claimed based on the earlier invoice to enable to claim the deduction by the supplier .

Note : We need to ensure that the customer is reversing the ITC benefits upon receipt of the credit note from us and needs to reflect the same in the customer’s GSTR- 2 Return .

Return - GSTR – 2 - In-ward supplies Return - Furnishing details


• In respect of inputs, there can be two situations – Lot Receipt.

• If inputs are received in one lot, the ITC will be given in the return period in which the purchase is recorded in the books of accounts.

• In case inputs covered under one invoice are received in more than one instance/lot, the ITC will be given in the return period in which the last purchase is recorded in the books of accounts. (GST Law to contain appropriate provision in this regard).

• A note in this regard has been incorporated in the Return form for the guidance of the taxpayer.

Return - GSTR – 2 – In-ward supplies Return


How GSTR-2 updated ? – 3 Methods • Supplier (Vendor) uploading – monthly Basis i.e. GSTR – 1 (Auto Populated – Monthly

basis)

• Supplier (Vendor) updating GSTR-1 on day to basis (Auto populated ) • Self uploading by Receiver (Self Entry) (Entry in GSTR – 2) (Manual)



• Auto-population would be done, on the basis of GSTR1 of counter-party supplier, on or after 11th of succeeding month

• Addition of invoices / debit note / credit note, not submitted by counter-party supplier, would be permitted between 12th to 15th of succeeding month

• Adjustments would be permitted on 16th and 17th of succeeding month

• Further the other details that are not auto-populated, i.e. import of services, eligibility of ITC and quantum thereof and purchases from unregistered taxpayer shall be furnished

• The ITC claim will be confirmed to purchasing taxpayer in case of matched invoices after

20th of the month succeeding the month of the tax period month provided counterparty supplying taxpayer has submitted the valid return (and paid self-assessed tax as per return).

• Communicate to the taxpayers through SMS/e-Mail, about the macro-results of the matching. The details will be in the taxpayers’ dashboard/ledger which can be viewed after log-in at the Portal.

• Auto-populate the ITC reversals due to mismatching of invoices in the taxpayer’s account in the return for the 2nd month after filing of return for a particular month.

Return - GSTR – 2 - Processing of Return – Auto Population – Matching


GSTR 1 10th of May 2016 By Supplier

Option of daily uploading of supplier details By supplier April,2016)

11th May 20016 Inward supply details in GSTR-2

to be auto –populated on the basis of GSTR-1 of counter-

party supplier/Vendors details

12th to 15th May 2016 Addition of Invoices /debit/Credit Note submitted by counter party supplier would be permitted

Adjustments would be permitted on 16th & 17th of succeeding month.

Pay tax Between 17th – 20th May,2016

20th May 2016 File GSTR-3 & Pay

Un-matched / Missed out details Communicated in June –[29(3)]

Two month period for reconciliation Up to 20th July,2016 (2 Months) [Assumed]

Non-Reconciled as on 20th July,2016 [Assumed]

ITC to be Reversed , to be paid along with Interest by Purchaser by 20th July,2016

[Assumed] [29(5)]

Self Entry By the Receiver in GSTR-2 manually during 10th to 15th May, 2016 for GRN prepared cases / Received Basis – But GRN not prepared / Received Basis (Services)

Further the other details that are not auto-populated, i.e. import of services, eligibility of ITC and quantum thereof and purchases from unregistered taxpayer shall be furnished. On or before 20th May,2016

Return - GSTR – 2 – In-ward supplies Return GSTR – 2 (For the month of April-2016)


Near real time - auto draft the provisional - GSTR-2 :

• GST Common Portal (GSTN) will auto-draft the provisional GSTR-2 of taxpayer based on the supply invoice details reported by the counter-party taxpayer (supplier) on a near real-time basis.

• Information about ITC ledger, Cash ledger and Liability ledger (these are running electronic ledgers maintained on the dashboard of taxpayer by GSTN). These would be updated in real time on an activity in connection with these ledgers by the taxpayer. Both the ITC ledger and the cash ledger will be utilized by the taxpayer for discharging the tax liabilities of the returns and others. Details in these ledgers will get auto populated from previous tax period return (irrespective of mode of filing return i.e. online / offline utility).



C . P. - GSTR-1 • 4 -1 & 4A-1 – Invoice Receipt • 4 -3 & 4A-3 - Reverse Charge

Auto Populated (Invoice)

Say (Invoice Receipt & Reverse Charge And Only Value

Purpose )

Manual (Provisional)

ISD (GSTR-6)

TDS (GSTR-7)

Partial Credit

(Say CG)

Debit Note / Credit

Note (D/C) (GSTR-1)

• C . P. – INVOICE / B. E • 4-2 -& 4A-2 - Invoice Receipt • 4-4 & 4A-2 - Reverse Charge

• 5 & 5A - Import of Goods • 6 & 6A - Import of Services

• Other – Only Value • 8 – Five Categories # of Value • 12 & 12 A - Reverse Charge Time of supply without invoice. • 13 – Reverse Charge Time of Supply invoice issued in current period • 14 & 14A – ITC Reversal

9 – ISD

10(1) & 10 (2) - TDS & TCS

11 – Partial Credit

7 & 7A - D/ C • For ITC - Based On C. P. – Debit Note • For ITC – Reversal On

C.P. – Credit Note

GSTR-2

• Description is not required to mention in GSTR- 1 & 2 however, in the Annual Return GSTR-9 it is required . • For purchases the quantity and UQC is also required to mention in Annual return GSTR-9 wherein, such details are

not required while filing GSTR-2. • C.P. Stands – Counter Party # Compounding, Unregistered, Exempted, Nil Rated, Non GST Supply (8)

Auto Populated From C. P.


Return - GSTR – 2 – Illustration

Tax Period

PART

• FULL • Un Registered


Return - GSTR – 2

Earlier Tax Period


Return - GSTR – 2

Import of Goods – Manual - Tax Period


Return - GSTR – 2

Import of Goods – Manual Earlier Tax Period


Return - GSTR – 2

Import of Services - Manual


Return - GSTR – 2

Manual – Value Only


Return - GSTR – 2

Liability based on this [7.5 on GSTR-3]


Return - GSTR – 2

Amendment


Return - GSTR – 2

Manual – Adjustment


Return - GSTR – 2

MANUAL


Return - GSTR – 2

AUTO POPULATED


Return - GSTR – 2

AUTO POPULATED


Return - GSTR – 2

Auto Populated from GSTR-8 In GSTR-2A Part - D


Return - GSTR – 2

AUTO POPULATED – Say Capital Goods


Return - GSTR – 2

D/N Added C/N Deleted


Return - GSTR – 2


Return - GSTR – 2

The return (GSTR-3) would be entirely auto- populated through GSTR-1 (of counterparty suppliers), own GSTR-2, ISD return (GSTR-6) (of Input Service Distributor), TDS return (GSTR-7) (of counterparty dedicator), own ITC Ledger, own cash ledger, own Tax Liability ledger. However, the taxpayer may fill the missing details to begin with

Return - GSTR – 3 – Monthly Return


• Needs to be file return electronically. • Matching Section 27(7) : After furnishing a return discovers any

omission or incorrect particulars, other than as a result of scrutiny, audit, inspection or enforcement activity by the tax authorities, shall rectify in the return to be filed for the month or quarter.

Return - GSTR – 3 – Monthly Return - Illustration


Provided that no such rectification of any omission or incorrect particulars shall be allowed as per section 27.

Return - GSTR – 3 – Monthly Return - Illustration


Auto Populated

Outward Supplies (Sr N0. 6)

GSTR-3

OWN – GSTR-1 • 5 • 8 (DN/CN) • 9 (Only Value)

B2B B2C

Export

(Sr No. 6.5)

Revision on Supply Invoices – C/N & D/N (Sr

No. 6.6)

INTER STATE (Sr No. 6.1)

INTRA STATE (Sr No. 6.2)


INTER STATE (Sr No. 6.3)


OWN – GSTR-1 • 6 • 7 • 8 (DN/CN) • 9 (Only Value)


Own GSTR-1 • 10

OWN – GSTR-1 • 5A • 6A • 7A • 8A

Total (Sr No.

6.7)

OWN – GSTR-3 • 6.1 to 6.6



Auto Populated

Inward Supplies (Sr N0. 7)

GSTR-3

OWN – GSTR-2 • 4 • 7(DN/CN) • 8 (Only Value)

B2B

Import(Sr No.

7.3) INTER STATE (Sr No. 7.1)


OWN – GSTR-2 • 4 • 7(DN/CN) • 8 (Only Value)

Tax Liabilities Reverse Charge

(Sr No. 7.5)

Revision Purchase Invoice

(Sr No.7.4)

OWN – GSTR-2 • 6

OWN – GSTR-2 • 8

OWN – GSTR-2 • 5 & 6

ITC Reversal (Sr No. 7.6)

Own – GSTR-2 • 14



Auto Populated

OTHERS (Sr N0. 8,9,10,11)

GSTR-3

Total Tax Liability (Sr

No.8) ITC Received (Sr No. 10)

TDS (Sr No. 9A & 9B)

OWN –GSTR-3 • 6.7 + 7.5

OWN –GSTR-2 • 10 (1) & 10(2)

Auto Populated ITC Ledger

Tax , Fine & Penalty

(Sr No.11)

Auto Populated Cash & ITC Ledger

Tax Liability Ledger

Auto Populated Real Time



Auto Populated / MANUAL

OTHERS

GSTR-3

Refund Claim of Excess ITC (Sr No. 12)

OUTPUT Tax added / reduced on communicated mismatches



Out Ward Supplies – B2B & B2C

B2B

B2B

B2C


Return - GSTR – 3

Out ward Supplies

B2C

EXPORTS


Return - GSTR – 3

OUTWARD SUPPLIES Liability 6.7 (also see 7.5)


Return - GSTR – 3

Inward Supplies


Return - GSTR – 3


Return - GSTR – 3

Liability – 7.5 (also see 6.7)


Return - GSTR – 3

Table = 6.7 + 7.5 + 7.6


Return - GSTR – 3

CREDIT


Return - GSTR – 3

Summary of ITC


Return - GSTR – 3

Liability (Auto + Manual)


Return - GSTR – 3

Refunds


Return - GSTR – 3

Manual


Return - GSTR – 3

• Compounding taxpayers would have to file a Quarterly return called GSTR-4. • Taxpayers otherwise eligible for the compounding scheme can opt against the

compounding and file monthly returns and thereby make their supplies eligible for ITC in hands of the purchasers.

• Compounding taxpayer will also file a simple Annual return . • After crossing the threshold exemption limit, the taxpayers may opt for compounding

scheme wherein they would be required to pay taxes at fixed rate without any ITC facilities. The compounding taxpayer will also need to declare invoice-level purchase information (auto-drafted from supply invoice information uploaded by counter-party taxpayers) for the purchases from normal taxpayers.

Return - GSTR – 4 – Compounding Tax payers


• Non- Resident Taxpayers (Foreigners) would be required to file GSTR-5 return for the period for which they have obtained registration within a period of seven days after the date of expiry of registration.

• In case registration period is for more than one month, monthly return(s) would be

filed and thereafter return for remaining period would be filed within a period of seven days as stated earlier.

• [ For these taxpayers the registration format to be used will be the same as that for UN

Bodies/Embassies ]

Return - GSTR – 5 - Non – Resident Taxpayers


• Needs to file return electronically.

• GST law may retain the concept of Input Service Distributor (ISD). Accordingly, ISDs would be required to file a monthly return.

• There will be separate ISD Ledger in the return that will detail the Opening Balance

of ITC (to be auto- populated on the basis of previous return), credit for ITC services received, debit for ITC reversal and ITC distributed and Closing Balance.

Return - GSTR – 6 – Input Service Distributor


- Inward ITC

Manual

Manual

Other deletion

This month


Return - GSTR – 6

Manual

Manual


Return - GSTR – 6

Manual

D/N – Inward ITC C/N – Differential value Plus/Minus


Return - GSTR – 6


Return - GSTR – 6

Distribution - Maunal


Return - GSTR – 6

Distribution - Maunal


Return - GSTR – 6


Return - GSTR – 6

Needs to file return electronically. GST law may provide for provision of TDS (Tax Deducted at source) for certain supplies of goods and/or services made to specified categories of purchasers who will be obligated to deduct tax at a certain percentage from the payment due to the suppliers. They will be required to file a TDS return and submit the following details:

(i) GSTIN/GDI of deductor (ii) GSTIN of deductee/supplier (iii) Invoice no. with date (iv) TDS Certificate no. with date and value (v) Taxable value (v) Rate of TDS for IGST, CGST and SGST as applicable (vi) Amount of IGST, CGST and SGST as applicable, deducted as TDS

Return - GSTR – 7 – Tax Deducted at source


GSTR – 7 TDS


Return - GSTR – 7

GSTR – 7 TDS


Return - GSTR – 7

GSTR – 7 TDS


Return - GSTR – 7

GSTR – 7 TDS


Return - GSTR – 7

• Needs to file return electronically.

• All the Normal taxpayers would be required to submit Annual Return. This return to be filed annually is intended to provide 360 degree view about the activities of the taxpayer. This statement would provide a reconciliation of the returns with the audited financial statements of the taxpayer.

• This return is a detailed return and captures the details of all the income and expenditure of the taxpayer and regroups them in accordance with the monthly returns filed by the taxpayer. This return also provides for the reconciliation of the monthly tax payments and will provide the opportunity to make good for any short reporting of activities undertaken supply wise. The said return would also capture the details of pending arrears against the taxpayer and the current status of the orders leading to such arrears.

• A separate reconciliation statement, duly certified by a Chartered Accountant, will have to be filed by those taxpayers who are required to get their accounts audited under section 42(4) of CGST / SGST..

Return - GSTR – 9 – Annual Return


GST Law may provide what constitutes a sale price especially with respect to post sales discount. The Law may also contain suitable provisions about admissibility or otherwise of post supply discounts. The adjustments for post sales discount will be completed before filing of annual return. The credit/debit note will be reflected in the monthly return in which the said adjustment is made.

Return - GSTR – 9 – Annual Return – Post sales discount


GSTR-9

Expenditure (5)

Income (6)

Purchase - ITC

availed

Inter state (a)

Intra state (b)

Imports (c)

Purchase- No ITC availed

(d)

Supplies – No GST

Paid

Inter state (a)

Intra state (b)

Exports (c)

Exports (d)

Other Supplies

(e)

Supplies – GST Paid

Note:Consolidated statement of purchases and supplies based on monthly return filed by the taxpayer can be made available to taxpayers by GSTN common portal as a facilitation measure for enabling him to prepare annual return

- Based on GSTR 3


Return - GSTR – 9


Return - GSTR – 9


Return - GSTR – 9


Return - GSTR – 9


Return - GSTR – 9


Return - GSTR – 9


Return - GSTR – 9


Return - GSTR – 9


Return - GSTR – 9


Return - GSTR – 9

GSTR-9

Expenditure (5)

Income (6)

Sales Returns

(e)

Other expenditure (other than purchase)

(f)

Purchase Returns

(f)

Other Income – Other than

supplies (g)

Return reconciliation

statement (7)

Other amount

(8)

Profit as per Profit and loss

account (9)

- Manual


Return - GSTR – 9


Return - GSTR – 9

Balance Sheet


Return - GSTR – 9


Return - GSTR – 9

Balance Sheet


Return - GSTR – 9


Return - GSTR – 9


Return - GSTR – 9


Return - GSTR – 9

• Outward supply invoices - Revision :

There will be a separate table for submitting the details of revisions in relation to the outward supply invoices pertaining to previous tax periods. This will include the details of Credit/Debit Note issued by the suppliers and the differential value impact and the concomitant tax payable or refund/tax credit sought. All under-reported invoice and ITC revision will have to be corrected using credit/debit note and such credit / debit note would be reflected in the return for the month in which such adjustment is carried out. The Credit/Debit Note will have provision to record original invoice, date etc. to enable the system to link the same with the original invoice as also to calculate the interest, if applicable. Its format will be like the invoice.

• Inward supply invoices - Revision :

There will be a separate table for submitting the details of revisions in relation to inward supply invoices pertaining to previous tax periods (including post purchase discounts received). This will include the details of Credit/Debit Note issued by the suppliers and the differential value impact and concomitant tax payable or refund/tax credit sought.

• Return - Revision :

There would be no revision of returns. However , as per monthly return serial number : 6.6 Revision of supply invoices pertaining to previous tax period (including post sales discounts or any clerical/other errors) Auto populated from GSTR1. Revision of purchase invoices pertaining to previous tax period (including post sales discounts received or any clerical / other errors will be Auto populated from GSTR-2

Return - GSTR – 9 – Revision


Non-filing, late-filing and short-filing of return

Non-Filers & Late-Filers : • In case of failure by the taxpayer to submit periodic returns, a defaulter list will be

generated by the IT system by comparing the return filers with the registrant database. Such defaulter list will be provided to the respective GST Authorities for necessary enforcement and follow up action.

• GST Common Portal can auto generate and send the notice to all non-filers (being

done by many State VAT authorities) in the form of email and SMS. Jurisdictional tax authorities can get the same printed and dispatch such notices. The details of non-filers shall be made available on the dash board of jurisdictional officers. GST Law may also provide for imposition of automatic late fees for non-filers and late filers which can also be in-built in the notices.

Return


Non-filing, late-filing and short-filing of return

Short-Filers :

• As per the requirement of the IGST model, Return should be allowed to be filed only on payment of due tax as self-assessed and declared in the return. It has, however, been decided that e-Return should be allowed to be uploaded even in case of short payment for the limited purpose of having the information about self-assessed tax liability even though not paid. The invoice matching and inter-governmental fund settlement would, however, take place only after the full tax has been paid. Return without full payment of tax will be allowed to be uploaded but it will be treated as an invalid return and this return will not be used for matching of invoices and settlement of funds.

• Any invalid return (including the one not supported by full payment) will merely be

recorded with unique transaction ID, but not accepted in the system, and that aspect will be made known to the taxpayer at the time of communicating the ID itself.

Return


• At the time of registration, every taxpayer has to enroll with GST Common Portal (GSTN). A unique User-ID and Password will be generated and intimated to the taxpayer. This User-ID and Password shall be used by him for filing the tax return on the Common Portal as well. However, a taxable person may prepare and submit his returns himself or can use services of a TRP.

• A return is a statement of specified particulars relating to business activity undertaken by

the taxable person during a prescribed period. A taxable person has a legal obligation:

• GST is a self-assessed destination based taxation system. The submission and processing of return is an important link between the taxpayer and tax administration as it is an important tool for.

• The supply information will also have details relating to the Place of Supply in order to identify the destination state as per the Place of Supply Rules where it is different from the location of the recipient.

• There will be common e-return for CGST, SGST, IGST and Additional Tax. • The filing of return would be only through online mode although the facility of offline

generation and preparation of returns would be provided. The returns prepared in offline mode would have to be uploaded.

Return – General


• The return can also be submitted by the taxpayer through any Facilitation Center (FC) approved by the Tax authorities and selected by the taxpayer at GST System.

• Along with the return, taxpayer is not required to submit any other document. The

documents as required for scrutiny or audit shall be made available by the taxpayer to the audit party deputed by the CBEC /State tax authorities/CAG.

• The return can be filed without payment of self-assessed tax as per the return but

such return would be treated as an invalid return and would not be taken into consideration for matching of invoices and for inter-governmental fund settlement among States and the Centre.

• Every registered person is required to file a return for the prescribed tax period. A

return needs to be filed even if there is no business activity (i.e. Nil Return) during the said tax period of return.

Return – General


• A return related liability should mean the tax liability for the transactions (including credit/debit notes) of the return period and the additional liability arising out of any ITC reversal or late inclusion of the supply in the return period.

• ITC ledger , Cash Ledger and Liability Ledger maintained on Tax

Payers dashboard will be auto populated from previous Tax period return data

• Government entities / PSUs , etc. not dealing in GST supplies or persons exclusively dealing in exempted / Nil rated / non –GST goods or services would neither be required to obtain registration nor required to file returns under the GST law. However, State tax authorities may assign Departmental ID to such government departments/ PSUs / other persons. They will ask the suppliers to quote the Department ID in the supply invoices for all inter-State purchases being made to them. Such supplies will be at par with B2C supplies and will be governed by relevant provisions relating to B2C supplies.

Return – General


• The return filing formalities are proposed to be increased, both in terms of periodicity and number of forms. "For example, a service taxpayer, covered by the Central service tax legislation, is currently required to file only a half yearly return. For service taxpayers, the burden will increase manifold -in terms of periodicity of returns, number of return formats, multiplicity of compliances for separate registrations and levels of details that are required to be filled . As per the proposal, different forms will have to be filed on a monthly basis -forms have to be filed for details of outward supplies, inward supplies and a monthly consolidated form. In addition, an annual return will also need to be filed.

• While it is proposed that the input tax credit balance will be auto- populated at the end

of the tax period in the ITC ledger, the issue relating to treatment of credit balance during the transition will need to be addressed.

• In proposed GST, Sales Tax Practioners (STP) who are present doing most of the

compliance are not recognized to issue Annual Return GSTR-8 in respect of assesses covered by Tax Audit U/s 44AB of Income-Tax Act, even though the returns are proposed to be filed by STP/TRP.

Return - Difficulties


• The report mentions that adjustment of lower tax payments are to be corrected in the subsequent periods. Effectively, the need for return revision in this scenario is negated. Further, excess tax payment in a given period was said to be adjustable against taxes payable in a subsequent period, as per the earlier GST reports. So this provision on return revision may not be as impactful as it sounds. However, some of the details around how the adjustments get reflected in subsequent period and the efficacy of the technological platform for the same still needs to be ascertained.

• In the proposed GSTR-1 & GSTR-2 supplier need to mention the Invoice No, date and

HSN/SAC. However, one invoice may have multiple goods of same or different HSN and invoice may have run into several pages. Further, one invoice may have goods as well as freight which is a service. In the circumstances how assessee will fill the multiple HSN/SAC code in a single line and if the system allows several lines for one invoice, return may run into several pages. In view of above, it appears that the system is extremely time consuming and will result in only mismatches and will make return filing as most difficult.



• In the proposed GSTR -1 supplier need to mention the Transaction id (A number assigned by the system when tax was paid advance received) for adjustment of tax paid on advance received. However, adjustment of advance tax may have different invoices raised, as whole advance may not be applicable for one invoice. And filling same transaction id for different invoices in the same return or in subsequent return will result in mismatches and will make return filing as most difficult.

• Thus it seems that the compliance burden may increase substantially on account of filing

of monthly returns and submission of invoice level details for B2B and inter-state B2C supplies.

• At present non-payment of tax liability of seller imposes no liability on purchaser. In this

proposal, purchaser is fully liable for the tax payment of seller. It appears that revenue wants to put entire burden of tax collection on purchasers. Tax collection from any supplier should be the responsibility of tax authorities not by the industry.



Return – Comparison scenario – work load increases @ 67%

Sr.

No. Periodicity

No. of returns-

Existing / GST No. of states/

plants

No. of returns

yearly- Existing/

GST

I. Monthly 52 ( VAT+ CST ) 6 ( Excise ) = 384/104

12X52 = 624 + 6 X12 = 72

696 / 1248

ii. Yearly 52 (VAT + CST) ST – 6 Excise – 9

67 / 26

iii. Total Returns

763 / 1274


Return – Comparison scenario – work load increases @ 67% – Back up details

• Illustration - Number of Returns to be filed in the GST scenario:

In case an assessee is having 3 plants at 3 different states and also having 23 C&F business across the country ( the plants are not covered in these 23 states ) then : registration is needed in the GST scenario for 22 and then the number of returns to be filed are as follows:

• Facts / Assumptions: • 3 Plants • 23 C&F



• Monthly/ Yearly - Returns taken as under : • Monthly : • VAT -1 multiply 12 months = 12 (C&F - 23 + plants 3 = 26 ) Total yearly Return = 312 • CST - 1 multiply 12 months = 12 (C&F - 23 + plants 3 = 26 ) Total yearly Return = 312 • Monthly: • Excise ER-1 monthly ( 3X 1 = 3 monthly ) Yearly Return = 36 • Excise ER-6 monthly ( 3 X1 = 3 monthly ) Yearly Return = 36 • Yearly : • VAT Yearly ( VAT - 26 places ) Yearly Return = 26 • CST Yearly ( CST – 26 places ) Yearly Return = 26



• Yearly ( considered the half yearly as yearly for this calculation purpose): • S. T - 3 multiply 12 months = 12 (Half yearly returns – 2 X 3 plants = 6) Yearly Return = 6 • Yearly : • Excise – ER-4 & ER- 5 & ER-7 = 3 Returns X 3 plants = 9 . Yearly Returns = 9 • GST: • GSTR-1 , GSTR -2 , GSTR- 3 , TDS -6 = 4 monthly • Annual : 1 = Annually = 1


Section-24

D/N. / C/N. Before 30th Sep. P.F.Y.

Section-16(15)

Inward ITC

Earliest of following - 20th Oct. or - A.R.(GSTR-8) 31STDec.

P.F.Y.

Section-16(12)

Stocks under 3

Situations

One year from the date of Invoice

Return – Time Restrictions


• Credit note relating to outward supply furnished by a taxable person to be matched with GSTR-2 of recipient as reductions.

• If exceeds the corresponding reduction and not declared by the recipient in his valid returns, the discrepancy shall be communicated to both such persons.

• And which is not rectified by the recipient in his valid return for the month in which discrepancy is communicated shall be added to the output tax liability of the supplier,

Return - Provisions : Section-29A – Credit Note


Question No

Page No

Question Answer

14 256 Will GSTN generate a unique identification for each invoice line in GSTN system? No

15 256 Can invoice data be uploaded on day to day basis? Yes

16 256 Will GSTN provide tools for uploading invoice data on GST portal? Yes

20 120 How can taxpayers file their returns? 1) Directly on the Common Portal online 2) Offline utility

22 121 Is it compulsory for taxpayer to file return by himself? No can be filled by TRP/FC (Facilitation centre)

17 119 Who all need to file Annual Return?

All taxpayers other than casual taxpayers, Non resident tax payers, ISDs, taxpayers under composition scheme & person authorized to deduct TDS

13 117 Whether the ITC denied can be restored? Yes. In case supplier uploads the invoice at any time after the reversal but by September of the next financial year

19 119 If a return has been filed, how can it be revised if some changes are required to be made?

Return once filed cannot be revised. They can be amended in any of the future GSTR-1/2 in the tables specifically provided for the purposes of amending previously declared details.

Return - FAQ



Section Heading

38 Refund of tax

39 Interest on delayed refunds

40 Consumer Welfare Fund

41 Utilization of the Fund

REFUND


Refund of Tax [ Section 38 - 41]

An application for refund of tax and/or interest shall be made to the proper officer of IGST / CGST /SGST within 2 years from the relevant date in a prescribed form. However, the limitation of 2 years shall not apply where such tax or interest is paid under protest.



Refund would be allowed only under the following cases: • Where the unutilized Input Tax Credit has accumulated on account of rate of

tax on inputs being higher than the rate of tax on output. [ Inverted Duty Structure ]

• Where the unutilized input tax credit pertains to Export activity (except where

the goods exported out of India are subjected to export duty).



The refundable amount shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to – • the Tax and Interest, if any, or any other amount paid by the applicant, if he

had not passed on the incidence of such tax and interest to any other person;

• the Tax or interest borne by such other class of applicants as the Central or a State Government may, on the recommendation of the GST Council, by notification, specify.



There is a conscious move to withhold the option of procuring duty free inputs for exported goods under the GST regime. This is in terms of the rationale laid down in the report on refund processes issued earlier by the


Demand – Recovery and Prosecution

( 6 Slides )


Demands and Recovery : Tax, Interest , Penalty

Analysis of section 51 A & 51 B : It may be noted that Section 51A and 51B of the GST model law provides for completion of assessment/issue of the order by the proper officer within three/five years as the case may be from the date of filing the annual return. However, no time limit has been prescribed for issuance of a SCN for initiating the litigation (or demand). This means that no minimum time gap needs to be maintained between issuance of a SCN and assessment order. For better understanding of the actual limitation period, we have explained the same with the following example. • Tax period under consideration Financial Year 2017-18 (i.e. April 2017 - March 2018) • Due date to file the annual return — 31 December 2018 • Limitation to pass order in respect of the aforesaid tax period shall be 31 December 2021 and

if the extended period is invoked, then 31 December 2023.

Therefore, effective limitation is starting from April 2017 and ending on December 2021 or 2023 (i.e. four years nine months or six years nine months as the case may be). Thus, the model GST law has proposed the limitation period of four years nine months in cases where non-payment is without fraud, suppression, etc. and six years nine months where the payment is due to fraud, suppression, etc.



Analysis of section 51 A & 51 B : Here, it is pertinent to discuss that the model GST law has also incorporated certain circumstances or situations which would be excluded from the limitation period of three/five years. These are: A. If the service of a SCN is stayed by the court or tribunal B.lf the issuance of the order is stayed by the court or tribunal C. If a different proceeding involving a similar issue has been decided against the Revenue; and Revenue appeal against the same before the relevant appellate forum is pending (say call Book) The model GST law has introduced a section stating that the order cannot travel beyond the allegations or grounds raised in the notice (SCN). Does not have a specific section or provision providing for imposition of penalty in cases where there is short payment of tax due to fraud though, Section 51B(1) mentions that penalty imposed would be equivalent to the tax demand, but in the absence of a specific section levying the penalty, there may be challenges towards imposition of such penalty.


Demands and Recovery : Tax, Interest , Penalty [Section 51 A & 51 B ]

Particulars Tax not paid / short paid / erroneously refunded on account of Other than fraud/ willful misstatement / suppression of facts (section 51A)

Tax not paid / short paid / erroneously refunded on account of fraud/ wilful misstatement / suppression of facts (section 51B)

Time period for issue of order

3 years from the due date or the actual date, whichever is earlier, for filing of annual return/ 3 years from the date of erroneous refund [51A (7)]

5 years from the due date or the actual date, whichever is earlier, for filing of annual return/ 5 years from the date of erroneous refund [51B (7)]

Penalty before service of Notice

No penalty payable, if tax and interest is paid [51A (3)]

Penalty @ 15%, if tax and interest is paid [51B (3)]

Penalty after issue/ communication of Notice

No penalty payable, if tax and interest is paid within 30 days of issue of notice [51A (5)]

Penalty @ 25% payable, if tax and interest is paid within 30 days of communication of notice [51B (5)]

Penalty after issue/ communication of Order

Not prescribed Penalty @ 50% of tax, if tax and interest is paid within 30 days of communication of order else 100% of tax [51B (8)]

Maximum levy of Penalty in the order

10% of the tax or Rs.10,000/- whichever is higher [51A (6)]

Not prescribed.



Section 52 General Provision relating to demand of tax - of the model GST law :

• Section 52 of the model GST law deals with a situation where the tax (i.e. GST) has been collected but has not been deposited with the appropriate government.

• Notice has to be issued to the taxpayer and an opportunity of personal hearing should also be given.

• Pass the order within one year from the date of issue of the notice.

• Additionally, it provides for imposition of a penalty, equivalent to the amount specified in the notice, as well as levy of interest.

• Stipulates general provisions relating to demand of tax

• If the service of SCN or issuance of order is stayed by a court or tribunal, then, a period of such stay is excluded from computing the limitation of three/five years.

• Demand cannot be confirmed on grounds other than the grounds specified in the SCN.

• Proper officer shall provide personal hearing. Also, if sufficient cause is shown, the proper officer may adjourn the hearings.

• Interest has to be paid whether or not stated in the order.

• If no order is passed within three/ five years, then, the adjudication proceedings shall be deemed to be concluded.

• Time taken in matters on similar issues, pending between different parties, shall also be excluded in computing the limitation of three/ five years


Prosecution and compounding of offences : Sections – 73 to 78 of Model GST Law

Following punishments have been prescribed for the offences, such as supply of goods without invoice/ incorrect invoice/ false invoice, fraudulent refund, falsifying financial records, etc.

Amount of tax evaded Punishment Nature of offence

Above Rs. 2.5 crores Imprisonment for a term up to 5 years with fine Cognizable and non bailable

Above Rs. 50 lakhs but less than Rs. 2.5 crores

Imprisonment for a term up to 3 years with fine Non cognizable and bailable

Above Rs. 25 lakhs but less than Rs. 50 lakhs

Imprisonment for a term up to 1 year with fine Non cognizable and bailable

Repeatedly convicted Imprisonment for a term up to 5 years with fine Non cognizable and bailable

• The offences may be compounded by the Competent Authority, subject to certain exceptions.

• Also, the compounding payment would be between the minimum of Rs. 10,000 or 50% of the tax involved, whichever is higher and would be subject to a maximum of Rs. 30,000 or 150% of the tax involved, whichever is higher


FAQ – TABLE OF CONTENTS – 19-INSPECTION SEARCH,SEIZURE,20-OFFENCE AND PENALTIES, PROCEUTION AND COMPOUNDING

Question No

Page No

Question Answer

19 197 Is there any special document required to be carried during transport of taxable goods ?

Yes,Form GST-Inv. -1

8 216 What action can be taken for transportation of goods without valid documents or attempted to be removed without proper record in books ?

Detention of Vehicle. - Released only after payment of tax .

14 218 Can any conveyance carrying goods without cover of prescribed documents be subject to confiscation ?

Yes, - Fine equivalent to tax payable .

12 238 Will ITC be allowed to a service provider on VAT paid inputs held as stock on the appointed day

For registered person-location of person . For unregistered person- place of supply


Risk Factors (2 Slides)


CHAPTER– XXIII - MISCELLANEOUS PROVISIONS - Section - 116. GST Compliance Rating - (1).Every taxable person shall be assigned a GST compliance rating score based on his record of compliance with the provisions of this Act. (2) The GST compliance rating score shall be determined on the basis of parameters to be prescribed in this behalf. (3) The GST compliance rating score shall be updated at periodic intervals and intimated to the taxable person and also placed in the public domain in the manner prescribed.

Risk factors - Needs to be analysed / seen :


CHAPTER- IX - PAYMENT OF TAX – Section - 35 : Payment of tax, interest, penalty and other amounts Section 35 - (8): Every Taxable Person shall discharge his Tax and other dues under this Act or the rules made thereunder in the following order: (a) self-assessed tax, and other dues related to returns of previous tax periods. (b) self-assessed tax, and other dues related to the return of the current tax period. (c) any other amount payable under the Act or the rules made thereunder including the demand determined under section 51 ( Determination of Tax not paid or short paid or erroneously refunded).

Risk factors - Previous Dues adjustment - Needs to be analysed / seen :


Transitional Provision


Transitional Provision – Registration ( Section-142 )

Section Nature Under GST

142

Migration of existing taxpayers to GST: 1. On appointed date provisional

registration issued . 2. Provisional registration valid for six

months. It may extend. 3. Needs to submit information

within six month. 4. On submission of information final

registration will be given. 5. If information not submitted

provisional registration cancelled.

Central Excise

Service Tax

VAT


Transitional Provision–Amount of CENVAT credit carried forward in a return to be allowed as input tax credit (Section-143)


143

Input Tax Credit Carried Forward mentioned in last Return ( Earlier law ) If input tax credit carried forward is also valid as per new law otherwise not allowed. If any amount found to be recoverable due to any proceeding instituted as per earlier law recovered as arrears of tax.

CGST Law

SGST Law


Transitional Provision–Un-availed Cenvat credit on Capital Goods not Carried forward in Return allowed in Certain situations (Section-144)

Section Nature Under

GST

144

Un-availed credit on Capital Goods not Carried forward in Return ( Difference between Total Eligible Credit Less – Actual Cenvat Credit availed ) Subjected to CENVAT Credit allowed if admissible in earlier law as well as new law. If any amount found to be recoverable due to any proceeding instituted as per earlier law recovered as arrears of tax.

CGST Law

SGST Law


Transitional Provision–Credit of eligible duties and taxes in respect of inputs held in stock to be allowed in Certain situations (Section-145)


145

Credit of eligible duties and taxes in respect of inputs held in stock in cases of - 1. Not Registered in earlier law 2. Engaged in mfg/sale of Exempted

goods in earlier law Subjected to: 1. Possession of Invoice / Other

prescribed documents 2. Such goods used in taxable supplies 3. Same inputs eligible in new law and

earlier law 4. Inputs in stock, inputs contained in

Semi Finished Goods or Finished Goods 5. Invoice / Other prescribed documents

issued not earlier then twelve months

CGST Law

SGST Law


Transitional Provision–Credit of eligible duties and taxes in respect of inputs held in stock switching over from composition scheme (Section-146)


146

Credit of eligible duties and taxes on inputs held in stock to be allowed to a taxable person switching over from composition scheme Subjected to: 1. Such goods used in taxable supplies. 2. Taxable person not paying tax under Section-

8. 3. Possession of Invoice / Other prescribed

documents. 4. Same inputs eligible in new law and earlier

law. 5. Inputs in stock, inputs contained in Semi

Finished Goods or Finished Goods 6. Invoice / Other prescribed documents issued

not earlier then twelve months

CGST Law

SGST Law


Transitional Provision–Amount payable in the event of a taxable person switching over to composition scheme (Section-147)


147

Amount payable in the event of a taxable person switching over to composition scheme Pertaining to: 1. Pay an amount of cenvat credit contained in

Inputs in stock, inputs contained in Semi Finished Goods or Finished Goods.

2. After payment of such tax if any balance lying in electronic credit register shall lapse

CGST Law

SGST Law


Transitional Provision–Exempted goods returned to the place of business on or after the appointed day (Section-148)


148

Exempted goods returned to the place of business on or after the appointed day 1. At the time of removal/sale of Goods exempted

and not earlier than six month prior to appointed day if returned within six month of appointed day – No tax payable.

2. If returned after six month tax payable by person returning goods if liable as per new law.

CGST Law

SGST Law


Transitional Provision–Duty paid goods returned to the place of business on or after the appointed day (Section-149)


149

Duty paid goods returned to the place of business on or after the appointed day 1. At the time of removal/sale of Goods duty

paid and not earlier than six month prior to appointed day if returned within six month of appointed day – No tax payable.

2. If returned after six month tax payable by taxable person if liable as per new law.

3. Receiver of such goods can take credit if duty paid at the time of removal.

CGST Law

SGST Law


Transitional Provision–Inputs removed for job work and returned on or after the appointed day (Section-150)


150

Inputs removed for job work and returned on or after the appointed day 1. If inputs as such/ partially processed material

cleared for job work returned in factory within six month – No tax payable.

2. This period may be extended for another two month.

3. If returned after six month or extended period tax payable by job worker if liable as per new law.

4. If not returned after six month or extended period tax payable by manufacturer if liable as per new law.

5. Manufacturer and Job worker declare details of Inputs held in stock by Job worker on appointed day

CGST Law

SGST Law


Transitional Provision–Semi-finished goods removed for job work and returned on or after the appointed day (Section-151)


151

Semi-finished goods removed for job work and returned on or after the appointed day 1. If Semi-finished goods cleared for job work

returned in factory within six month – No tax payable.


3. If returned after six month or extended period tax payable by job worker if liable as per new law.

4. If not returned after six month or extended period tax payable by manufacturer if liable as per new law.

5. Manufacturer and Job worker declare details of Inputs held in stock by Job worker on appointed day

CGST Law

SGST Law


Transitional Provision–Finished goods removed for carrying out certain processes and returned on or after the appointed day (Section-152)


152

Finished goods removed for carrying out certain processes and returned on or after the appointed day 1. If finished goods cleared for carrying out certain

processes not amounting to manufacturing returned in factory within six month – No tax payable.


3. If returned after six month or extended period tax payable by person returning if liable as per new law.

CGST Law

SGST Law


Transitional Provision–Issue of supplementary invoices, debit or credit notes where price is revised in pursuance of a contract (Section-153)


153

Issue of supplementary invoices, debit or credit notes where price is revised in pursuance of a contract. 1. If any upward revision after such appointed

date Supplementary invoice / debit note needs to be prepare by supplier within thirty days.

2. If any downward revision after such appointed date Supplementary invoice / credit note needs to be prepare by supplier within thirty days.

3. Taxable person can reduce their liability by invoice / credit note subjected to receiver reduce their input tax credit.

CGST Law

SGST Law


Transitional Provision–Pending refund claims to be disposed of under earlier law (Section-154)


154

Pending refund claims to be disposed of under earlier law. 1. If any refund claim filed before appointed

date it shall be paid in cash as per earlier law.

2. If any refund fully / partially rejected that rejected amount shall lapse.

CGST Law

SGST Law


Transitional Provision–Claim of cenvat credit to be disposed of under the earlier law (Section-155)


155

Claim of cenvat credit to be disposed of under the earlier law. 1. Every proceeding of appeal, revision, review

or reference related to claim of CENVAT Credit/Input tax credit shall be disposed of as per earlier law and refunded in cash.

2. Every proceeding of appeal, revision, review or reference related to recovery of CENVAT Credit/Input tax credit shall be recovered as per new law and not allowed as Input tax credit in new law.

CGST Law

SGST Law


Transitional Provision – Finalization of proceedings relating to output duty liability (Section-156)


156

Finalization of proceedings relating to output duty liability: 1. Every proceeding of appeal, revision, review

or reference related to any output duty liability initiated before appointed day shall be disposed of as per earlier law.

2. If any amount recoverable as a result of appeal, revision, review or reference will be recovered as per new law and ITC not allowed.

3. If any amount found admissible than refunded in cash.

CGST Law

SGST Law


Transitional Provision – Treatment of the amount recovered or refunded in pursuance of assessment or adjudication proceedings (Section-157)


157

Treatment of the amount recovered or refunded in pursuance of assessment or adjudication proceedings: 1. Due to assessment or adjudication

proceedings before or after appointed date any tax / Interest / fine / penalty recoverable it shall be recovered in new law as arrears of tax and credit not allowed.

2. Due to assessment or adjudication proceedings before or after appointed date any tax / Interest / fine / penalty refundable as per earlier law shall be refunded in cash.

CGST Law

SGST Law


Transitional Provision – Treatment of the amount recovered or refunded pursuant to revision of returns (Section-158)


158

Treatment of the amount recovered or refunded pursuant to revision of returns 1. Any return furnished under earlier law is

revised and if any amount found to be recoverable it shall be recovered in new law as arrears of tax and input tax credit not admissible.

2. Due to revision of return filed in earlier law and if any amount is refundable as per earlier law shall be refunded in cash.

CGST Law

SGST Law


Transitional Provision – Treatment of long term construction / works contracts (Section-159)


159

Treatment of long term construction / works contracts. 1. Any contract entered prior to appointed date but supply after appointed date shall be liable to tax under new law

CGST Law

SGST Law


Transitional Provision – Progressive or periodic supply of goods or services (Section-160)


160

Progressive or periodic supply of goods or services. If goods/services supplied after appointed day but consideration is received and duty and tax is also paid prior to appointed date – No tax payable

CGST Law

SGST Law


Transitional Provision – Treatment of retention payments (Section-161)


161

Treatment of retention payments If supply made before appointed date and part consideration received on or after appointed day duty and full tax is paid under the earlier law – No tax payable

CGST Law

SGST Law


Transitional Provision – Credit distribution of service tax by ISD (Section-162)


162

Credit distribution of service tax by ISD If service received prior to appointed day and invoice received after appointed day credit eligible for distribution.

CGST Law

SGST Law ---


Transitional Provision – Tax paid on goods lying with agents to be allowed as credit (Section-162A)


162A

Tax paid on goods lying with agents to be allowed as credit Subjected to 1. Agent registered taxable person. 2. Agent and principal needs to declared

stock as per prescribed manner / form within time limit as specified.

3. Invoice issued not earlier than twelve month of the appointed day.

4. Principal has either reversed or not received ITC on the same.

CGST Law ---

SGST Law


Transitional Provision – Tax paid on capital goods lying with agents to be allowed as credit (Section-162B)


162B

Tax paid on capital goods lying with agents to be allowed as credit: Subjected to- 1. Agent registered taxable person. 2. Agent and principal needs to declared

stock as per prescribed manner / form within time limit as specified.

3. Invoice issued not earlier than twelve month of the appointed day.

4. Principal has either reversed or not received ITC on the same.

CGST Law ---

SGST Law


Transitional Provision – Treatment of branch transfers (Section-162C)


162C

Treatment of branch transfers Any amount of ITC reversed prior to appointed day shall not be admissible as ITC in new law.

CGST Law ---

SGST Law X


Transitional Provision – Goods sent on approval basis returned on or after the appointed day (Section-162D)


162D

Goods sent on approval basis returned on or after the appointed day. If goods send on approval basis before appointed day but not earlier than six month and rejected or returned after appointed day but not later than six months. – No tax payable. It may extend for two months. Tax is payable by person returning goods if returned after six month or extended period if liable under new law from appointed day . Tax is payable by person originally send the goods if goods not returned within six month or extended period if liable under new law from appointed day

CGST Law ---

SGST Law


Transitional Provision – Deduction of tax source (Section-162E)


162E

Deduction of tax source. If supplier has supply goods and issue tax invoice prior to appointed day on which tax needs to deduct as per earlier law and payment made after appointed day – No deduction required under new law.

CGST Law X

SGST Law X


Question ANo

Page No

Question Answer

5 262

Give two examples of registered taxable persons who were not liable to be registered under the earlier law but are required to registered under GST ?

• Earlier under SSI Exemption turnover • exceed the basic limit

Sale through e- commerce

FAQ – TABLE OF CONTENTS – 4 MEANING OF SUPPLY, 24- TRANSITIOAL PROVISIONS.


GST Impact - Exports &

Imports ( 29 Slides )


How will imports be taxed under GST? Answer :The Additional Duty of Excise or CVD and the Special Additional Duty or SAD presently being levied on imports will be subsumed under GST. As per explanation to clause (1) of article 269A of the Constitution, IGST will be levied on all imports into the territory of India. Unlike in the present regime, the States where imported goods are consumed will now gain their share from this IGST paid on imported goods. [Press information Bureau, Government of India, Ministry of Finance dt. 03.08.2016]

GST Impact - Exports & Imports


Imports Vs. GST Payment = BCD + IGST

• Applicability of taxes on imports of goods:- It must be understood that customs duties will remain outside the GST regime. Thus, the applicable basic customs duty will continue to be leviable on import of goods. In addition to B.C.D. the IGST (both the CGST and the SGST) is to be levied on imports of goods. Thus, the additional duty of customs in lieu of excise (CVD) and the additional duty of customs in lieu of sales tax / VAT will (both ) subsumed in the imports GST. That means there will be Basic customs + IGST on Imports.

• Tax on import of services and person liable to pay:- Importation of services will be

taxed and IGST (Both CGST & SGST) will apply on such imports. The tax will be payable on a reverse charge mechanism also.

GST Impact - Exports & Imports Payments


General - Refund mechanism under GST : The report says that GST law shall provide for the cases in which refund claim can be filed. It states some of such cases : • Excess payment of tax by mistake • Export of goods and services under rebate claim, • Refund of accumulated credit in case of Exports, • Finalization of provisional assessment, • Refund of pre-deposit where the demand is dropped wholly or partly, • Refund of tax payment made by embassies or UN bodies, • Credit accumulation due to output tax being nil or concessional, etc. • Further, where the tax amount has been mentioned wrongly, either it

can be refunded or would automatically be carried forward at the option of tax payer.



Refund claim related to Export goods – IGST payment – Refund : In GST regime exports are proposed to be zero rated, i.e. the export goods will not suffer any actual tax liability although the inputs for them would be tax paid which would subsequently be neutralized. Exports will be treated as inter-state supply of goods, thus, IGST will be paid by the tax payer in case the tax is paid at the time of export. This IGST can be claimed as refund by following the procedure detailed as above. Following are the key features of newly proposed refund mechanism applicable to exporters under GST era:- • In IGST Model, there is proposal of online filing details of invoice wise

sale/purchase along with the monthly returns to GST network (GSTN). These details will be linked to customs network (ICEGATE). Thus, the details of basic export documents like invoice no., packing list, etc. as submitted to GSTN can be verified with those available at ICEGATE. Thus, there would be no need of submitting the same manually.

• The refund application will be submitted online within the time prescribed under GST law which is proposed as one year from relevant date. Definition of relevant date is to be prescribed by GST law.

• Mate’s receipt and bill of lading are the crucial documents evidencing the factum of export. Thus, the scanned copies of mate’s receipt and bill of lading will be submitted along with the refund application.



Refund claim related to Export goods – IGST payment – Refund : • Bank realization certificate (BRC) may not be available at the time

of filing the refund application; thus, the same shall be submitted subsequently to GSTN.

• There will be inbuilt feature in the GSTN to track those export invoices in respect of which BRC has not been submitted within due time. This feature will send alert to respective officer for taking the appropriate action.

• The time limit for granting refund has been fixed as three months from the date of filing of application.

• There shall be inbuilt feature in GSTN to link the refund sanctioned with blocking of carry forward of input tax credit in the return/cash ledger. Thus, double benefit could not be taken by the exporters.

• In case of export of service, only two documents are available – invoice and BRC. Further, no data is available on the ICEGATE also. Therefore, the refund in case of export of service shall be filed manually after the realization of export proceeds.



Procurement at NIL rate : proposed to be done away [ 43/2001- CE (NT) ]: 1. Procure duty free inputs for the purpose of manufacture of export goods which are cleared without payment of duty. [43/2001-C.E.(N.T.) dt. 26.6.2001] 2. Duty-paid inputs are procured for manufacture of export goods which are cleared without payment of duty. The refund of duty paid on inputs is claimed after export of goods without payment of duty. [21/2004-C.E.(N.T.) dt.06.09.2004] 3. Duty-paid inputs are procured and Cenvat credit is availed. Export Goods are manufactured and cleared on payment of duty by utilizing the credit so availed. Rebate claim of duty paid on export goods is filed. [19/2004-C.E.(N.T.) dt.06.09.2004]



Refund against Deemed exports: specifically provided under GST era:- Deemed export refers to the situations provided in chapter 7 of the Foreign Trade Policy. These situations include supply of goods to 100% EOU, Projects under international competitive bidding, etc. The supplier can claim the refund of terminal excise duty or drawback of duty paid on inputs used in manufacture of such goods as per provisions of Foreign Trade Policy. The report of the Joint Committee has proposed that under GST regime, deemed export shall be kept at par with normal exports. Therefore, all the procedures applicable in case of normal exports shall be applicable in case of deemed exports also; subject to following exceptions:- • The supplier of goods in course of deemed export will be required to pay IGST

and will be able to claim refund only if he has not collected the same. Also, it would have to be checked that receiver of goods has not claimed the input tax credit.

• For claiming the refund on deemed exports, a simple application will be required to file along with certificate from chartered accountant certifying that the burden of GST has not been passed. GST law may also provide a threshold below which no such certificate shall be required and self certification would be sufficient for claiming the refund.



Tax refund for international tourists: new scheme proposed in GST regime:- Tax refund for international tourists scheme provide an opportunity to foreign tourists to buy goods manufactured during their stay in any country and claim the refund of tax suffered by such goods at the time of their exit from that country. In India, this scheme will be implemented through retailers who shall be specifically registered for the purpose of this scheme. The refund would be available at designated ports and airports. Part of refund claim will be deducted as handling fees for such services rendered.



However, the Model GST law does not specify any specific exclusion for air or ocean freight. Thereby it can be construed that in case of transactions where the place of supply is within the taxable territory, even the air and ocean freight would be leviable to GST. Where’s the Place of Supply of ‘Transportation of goods’ services under the Model GST law? The ‘Place of Supply’ Rules define that the place of supply of transportation of goods services shall be: • the location of the recipient, if the recipient is a GST registered

person; • If the recipient is an unregistered person, the place of supply

shall be the place where the goods are handed over for transportation.

Considering the aforesaid, it is essential to understand the various legs on transaction involved in providing freight transportation service. Basis the origin and destination of the transaction, analysis of each transaction from point of view of GST is encapsulated below:



Inward Shipments – Shipments Coming Into India Type of Shipment Legs of Transactions Taxability Under GST

Delivered Duty Paid (‘DDP’) (Entire liability discharged by Consignor/ Seller)

Between Consignor and Overseas Agent (‘OA’)

Not taxable since both parties are located outside India

Between OA and Indian Freight Forwarder (‘Indian FF’) Taxable

Ex-Works (‘EXW’) (Entire liability discharged by Consignee/ Buyer)

Between Consignee and Indian FF Taxable under Rule 9 of proposed Place of Supply Rules

Between Indian FF and OA

Taxable under Rule 9 of proposed Place of Supply Rules. Tax liability to be discharged under Reverse Charge Mechanism (‘RCM’)

Cost-Insurance-Freight (‘CIF’) (Liability of Consignor to deliver the goods till Indian port i.e. port of importation)

Between the Consignor and Foreign Freight Forwarder (‘Foreign FF’)

Not taxable since both parties are located outside India


Free-on-Board (‘FOB’) (Liability of Consignor to deliver the goods till Foreign port i.e. port of exportation)

Between Consignor and Foreign FF Not taxable since both parties are located outside India




Outward Shipments – Shipments Going From India Type Of Shipment Legs Of Transactions Taxability Under GST

Delivered Duty Paid (‘DDP’) (Entire liability discharged by Consignor/ Seller)

Between Consignor and Indian FF Taxable under Rule 9 of proposed Place of Supply Rules

Between Indian FF and OA

Taxable under Rule 9 of proposed Place of Supply Rules. Tax liability to be discharged under RCM

Ex-Works (‘EXW’) (Entire liability discharged by Consignee/ Buyer)

Between Consignee and OA Not taxable since both parties are located outside India

Between OA and Indian FF Taxable

Cost-Insurance-Freight (‘CIF’) (Liability of Consignor to deliver the goods till foreign port i.e. port of importation)

Between the Consignor and Indian FF Taxable under Rule 9 of proposed Place of Supply Rules

Between Consignee and Foreign FF Not taxable since both parties are located outside India

Free-on-Board (‘FOB’) (Liability of Consignor to deliver the goods till Indian port i.e. port of exportation)

Between Consignor and Indian FF Taxable under Rule 9 of proposed Place of Supply Rules

Between Consignee and Foreign FF Not taxable since both parties are located outside India



Whether Merchant exporters procuring goods from manufacturers will be exempted from GST. The draft New GST Model Law only refers to refund and no exemption. Therefore the draft law does not allow exemption from GST to a Merchant Exporter procuring goods for exports.



Duty credit scrip's which are saleable is 'service' : Under GST, these will be treated as 'services' as these are intangible.



Duty drawback is simply money – neither goods nor services:

Duty drawback received in respect of exports is simply money. It is not goods and no sales tax is payable if exporter receives duty drawback - KMA Finished Leather v. State of Tamil Nadu (2004) 134 STC 185 (Mad HC DB). Since money is neither goods nor service, GST should not apply on duty drawback.



SEZ & FTP Authorisations: SEZ Act 2005 clearly provides exemption of taxes imposed by Central Govt. and IGST will be imposed and collected by the Central Govt and therefore for SEZ and FTWZ also, IGST may be exempted. Similarly, imports under Advance Authorisation scheme, EPCG Scheme, EOU / EHTP / STPI / BTP Scheme will be exempted from payment of IGST. The switchover to GST regime would principally not affect the Customs provisions, as import of goods, as against Basic Customs duty (‘BCD’) and Additional Customs duties, is likely to attract BCD and IGST. Similarly, import of services, as against Service tax at present, is likely to attract IGST in the GST regime. The IGST rate is likely to be an aggregate of CGST and SGST rates, to enable apportionment of IGST proceeds among the Centre and the States, basis the recommendation of the GST Council.



DTA to SEZ - Payment • Supply of goods and provision of services, to processing zones in a Special Economic

Zone (‘SEZ’) would be zero rated SEZ to DTA - Payments : • Supply of goods and provision of services by a SEZ to Domestic Tariff Area would be

liable to GST



Customs Notifications & Bonds/B.G. Keeping the likely GST structure in mind, the various benefits / incentives granted under FTP would require amendments: • The Foreign Trade Policy and Customs notifications will have to be

modified to align them with the CGST provisions. • The Bonds and Bank Guarantees that are required to be executed

under the existing schemes such as EPCG and EOU are directly linked to the estimated amount of duty saved during a particular period of time. Due to the envisaged change in the duty structure, there may arise a need for revising the Bonds and Bank Guarantees already executed.



Definitions: Section 2 (6) “aggregate turnover” means the aggregate value of all taxable and non-taxable supplies, exempt supplies and exports of goods and/or services of a person having the same PAN, to be computed on all India basis and excludes taxes, if any, charged under the CGST Act, SGST Act and the IGST Act, as the case may be; Section 2 (37) “deemed exports”, as notified by the Central Government/State Government on the recommendation of the Council, refer to those transactions in which the goods supplied do not leave India, and payment for such supplies is received either in Indian Rupees or in convertible foreign exchange; Section 2(104) “turnover in a State” means the aggregate value of all taxable and non-taxable supplies, including exempt supplies and exports of goods and / or services made within a State by a taxable person and inter-state supplies of goods and / or services made from the State by the said taxable person excluding taxes, if any charged under the CGST Act, SGST Act and the IGST Act, as the case may be;



Definitions: (109) “zero-rated supply” means a supply of any goods and/or services on which no tax is payable but credit of the input tax related to that supply is admissible; Explanation.- Exports shall be treated as zero-rated supply. Section 25 - Explanation.- For the purposes of this section, the expression “details of outward supplies” shall include details relating to zero-rated supplies, inter-state supplies, return of goods received in relation to/ in pursuance of an inward supply, exports, debit notes, credit notes and supplementary invoices issued during the said tax period. 38. Refund of tax (2) Subject to the provisions of sub-section (8), a taxable person may claim refund of any unutilized input tax credit at the end of any tax period: Provided that no refund of unutilized input tax credit shall be allowed in cases other than exports or in cases where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on outputs



Definitions: Section 38 Explanation. — For the purposes of this section - (A) “refund” includes refund of tax on goods and/or services exported out of India or on inputs or input services used in the goods and/or services which are exported out of India, or refund of tax on the supply of goods regarded as deemed exports, or refund of unutilized input tax credit as provided under sub-section (2). Section 38 - (B) “relevant date” means – (a) in the case of goods exported out of India where a refund of tax paid is available in respect of the goods themselves or, as the case may be, the inputs or input services used in such goods, - (i)if the goods are exported by sea or air, the date on which the ship or the aircraft in which such goods are loaded, leaves India, or (ii) if the goods are exported by land, the date on which such goods pass the frontier, or (iii) if the goods are exported by post, the date of despatch of goods by Post Office concerned to a place outside India; (b) in the case of supply of goods regarded as deemed exports where a refund of tax paid is available in respect of the goods, the date on which the return relating to such deemed exports is filed;



Needs Clarity

• Definition of India in Customs Act needs to be aligned with GST Act and manner of taxation of supplies originating/terminating in territorial waters and in CS &EEZ beyond 12 Nautical Miles (NM).

• Definition of India as given in Section 2(27) and (28)of Customs

Act needs to be aligned with GST Act. • Export of goods under Bond/LUT.

• Zero Rating of export of Non -GST Products • Treatment of composite supplies in the course of import/export



Needs Clarity

• Exemption of GST on goods or services imported into/exported out of SEZs .

• Job Work transactions between SEZ and DTA .

• Duty free procurements from DTA against ARE-1 in Central Excise

and Form I in respect of CST. • Incentives to FTWZs under GST regime . • Goods imported into FTWZ are not liable to Customs duty until

cleared from the FTWZ for home consumption. Upon clearance for home consumption, Customs duty should apply.

• Retention of concept of supporting manufacturer



Needs Clarity • Export Promotion Schemes by way of Advance Authorization , EPCG allow

exemption from Customs duties subject to specified end use. • Currently the post-import duty credit scrip's are being allowed to be used

for the purpose of paying Central taxes and duties.

• Tax credits are not required to be reversed in cases of deemed exports under the present Rule 6(6) of the CCR.

• There is no clarity on treatment of 100% EOUs / STP. At present the Scheme operates under suitable Exemption Notification issued under Central Excise Act.



Exports Vs. GST Payments – Needs more clarity

• Exports of Goods/Services :-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.

• Benefits availed presently by EOU's (exemption from excise duty and Central Sales

Tax (CST) on domestic procurement of goods.:-CST will be phased out and will have no place in the GST regime. It is expected that the benefits presently availed by the EOUs by way of exemptions would continue to be available in the GST regime as well.

• Exports – Refund – Finished Goods – GST Payment : It was noted that the exports would be treated as inter-state supplies and therefore IGST would be required to be paid by the taxpayer. Refund of such IGST would have to be paid by the Centre.



FAQ – TABLE – MERCHANT EXPORTERS Question No

Page No

Question Answer

19 142

Today under VAT/CST merchant exporters can purchase goods without payment of tax on furnishing of a declaration form. Will this system be there in GST? ( Against Form - H)

No - Pay Tax - Claim Refund of

excess ITC


FAQ – TABLE – IMPORTS AND EXPORTS Question No

Page No

Question Answer

6 229 How will imports/exports be taxed under GST?

All imports/exports will be deemed as inter-state supplies for the purposes of levy of GST (IGST). Imports – Destination Base


FAQ – TABLE – DEEMED EXPORTS Question No

Page No

Question Answer

1 137 What is refund? Includes Exports Refund

17 141 Will the principle of unjust enrichment apply to exports or deemed exports?

Not applicable in case of exports, applicable in case of Deemed exports.


FAQ – TABLE – IMPORTS

Question No

Page No

Question Answer

21 13 How will imports be taxed under GST? IGST payable

5 46 Can a transaction in which any one or more of the above (question - 4) criteria is not fulfilled, be still considered as supply under GST? (what elements constitute as – supply)

Yes, 3(1) (b) Importer of Services

6 46 Importation of Goods is conspicuous by its absence in Section 3 . Why?

Dealt separately Under Customs Act ,1962 IGST shall be levied

9 116 Do the taxable person have to feed anything in the GSTR-2 or everything is auto-populated from GSTR-1?

Some details recipient can fill like Imports.


FAQ – TABLE – EXPORTS Question No

Page No

Question Answer

22 14 How will Exports be treated under GST? Exports will be treated as zero rated supplies

14 22 How to compute ‘aggregate turnover’ to determine eligibility for composition scheme?

‘Value of all supplies (taxable and non-taxable supplies + Exempt supplies + Exports)

3 114 What type of outward supply details are to be filed in the return? ( Say GSTR- 1)

To file the outward supply details in GSTR-1 including Exports

2 137 Can unutilized Input tax credit be allowed as refund?

Yes, (i) Exports of goods on which export duty is not payable; (ii) Exports of services; (iii) Where credit has accumulated on account of rate of tax on inputs being higher than the rate of taxes on Outputs.

3 137 Can unutilized ITC be given refund, in case goods exported outside India are subjected to export duty?

No


FAQ – TABLE – EXPORTS Question No

Page No

Question Answer

8 138 Whether principle of unjust enrichment will be applicable in refund?

Yes, except in cases of exports and refund of unutilized ITC

10 139 Is there any time limit for sanctioning of refund?

Yes, 90 days in all cases. [Except to certain categories of exporter 80% of total amount claimed.]

15 140 Whether refund can be paid before verification of documents? Yes, 80% Before Verification. (38 (4A)]

16 141 In case of refund under exports, whether BRC is necessary for granting refund?

Submission of BRC details within a period of maximum one year or as extended by RBI

20 142

Presently under Central law, exporters are allowed to obtain duty paid inputs, avail ITC on it and export goods upon payment of duty (after utilizing the ITC) and thereafter claim refund of the duty paid on exports. Will this system continue in GST?

Refund will be allowable on the accumulated inputs as well as on exported finished goods

11 264 Can a manufacturer transfer finished goods sent for testing purpose to the premises of any other taxable person?

Yes, 6 months restriction Without payment of Tax for Exports.


GST Impact - Pharma Sector

( 25 Slides )


Pharma Industry Present Scenario – General

• The Indian Pharmaceuticals Industry (IPI), estimated turnover at Rs.45000 crores (450 billion), ranks fourth globally in terms of volume and is amongst the largest producer of Pharma products in the world along with USA. Japan, Europe and China.

• The cutting edge that IPI enjoys over most other nations is the cost advantage, given that the cost of labour and overall production is lower in India as compared to other nations.

• To cite an example, the manufacturing cost of Pharma products in India is nearly half the cost incurred in the US.

• But the multistage taxation in the Pharma Industry i.e. Customs Duty on imports, Central excise duty on manufacture, Central Sales Tax (CST)/VAT on sale of goods. Service tax on provision of services and levies such as entry tax, Octroi , cess by the State or Local municipal corporations/ municipalities is one of the Major block in its progress.

• Levy of multiple taxes, loss of credit of tax paid, compliance and litigation cost associated with the present tax set up are causing problems to the Pharma Industry.

GST Impact on Pharma


Inverted Duty Structure – In case of GST, there will be single rate in general - Beneficial

• CENVAT credit issues due to inverted duty structure will be resolved due to GST. This will reduce pressure on working capital.

• Pharma goods attract excise duty at 6 percent whereas the Active Pharmaceuticals Ingredients (API), which are inputs for manufacture of Pharma products typically, attracts duty at 12.5 percent. The difference duty rates of inputs vis-à-vis the finished goods has resulted in accumulation of differential CENVAT Credit for the manufacturers not engaged of export of Pharma goods. The Central Excise/CENVAT Credit legislation does not provide any mechanism for refund of such accumulated CENVAT credit. With the Central GST presumed to have a single rate for both goods and services, going forward accumulation of credit may cease to be an issue for the industry.



Trading - ITC eligible under GST scenario which is cost under present scenario - Input services Tax Credit , Central Excise duty – CENVAT credit and VAT ITC- will be eligible under GST scenario – Beneficial

As on date the manufacturers are not taking the CENVAT credit under Central Excise Law for the input services rendered directly for the Trading activity and for the input services related to the common input services involved for the trading as well. Many pharma companies operate on ‘trader of goods’ model (popularly called as Third party purchases - TP) and as on date the input services credit is ineligible to set-off service tax paid which is a cost to the manufacturers. However, under GST scenario, such input services related to exclusively for the trading activity and related to the common input services related to the trading will be eligible as ITC and therefore it will reduce cost of goods sold. However, the mechanism to be seen after release of the final Rules. Payment of VAT and Excise Duty is currently paid by the Third party while purchasing by the Trader (by the company)

For a detailed analysis of the Tax benefits under the proposed GST scenario in case of Third party purchases ( Finished Goods Purchases ) as a status of Trader is provided vide page numbers : 5 TO 7.



Trading - ITC eligible under GST scenario which is cost under present scenario - Input services Tax Credit , Central Excise duty – CENVAT credit and VAT ITC - will be eligible under GST scenario –Third Party (T.P.) – Beneficial

Finished goods purchases from within state for Trading purpose : E.D. Cost

• Under current VAT scenario, If the purchases are related within State (intra state purchases), (say Gujarat T.P. to Gujarat purchaser) then, the VAT ITC is claimed by the purchaser and the Central Excise portion is remained as a cost by the Trader. Say if the finished goods are Rs100/-(say MRP) and the abatement is @ 35 % and the assessable value is Rs. 65 /- and the Central Excise duty @ 6% on the assessable value of Rs. 65/- which comes : Rs. 3.90 towards the central excise portion is a cost to the Gujarat purchaser/Trader.

• Under GST scenario this will not be a cost factor plus also the input service credit is

eligible.



Trading - ITC eligible under GST scenario which is cost under present scenario - Input services Tax Credit , Central Excise duty – CENVAT credit and VAT ITC - will be eligible under GST scenario – Third Party (T.P.) – Beneficial Finished goods purchases from out side state for Trading purpose : E.D.COST

• Under current VAT scenario, If the purchases are related outside State(inter state

purchases), (say Maharashtra T.P. to Gujarat purchaser) then, the CST paid to T.P. by the Gujarat Trader cannot be claimed as the CST is not set off and therefore the CST & Central Excise portion are remained as a cost by the Trader. Say if the finished goods are Rs. 100/- (say MRP) and the abatement is @ 35 % and the assessable value is Rs. 65 /- and the Central Excise duty @ 6 % on the assessable value of Rs. 65/- which comes : Rs. 3.90 towards the central excise portion is a cost to the Gujarat purchaser / Trader. + say the WBR is Rs. 65 /- (sale price) then the CST will be on that Rs. 65/- + Excise duty Rs. 3.90 = Rs. 68.90 and the CST @ 2 % = Rs. 1.38 total cost of Excise duty + CST = Rs. 5.28.

• Under GST scenario, the Excise portion and CST portion are eligible for ITC in the name

of IGST . Plus also the input service credit is eligible.




Trading - ITC eligible under GST scenario which is cost under present scenario - Input services Tax Credit , Central Excise duty – CENVAT credit and VAT ITC - will be eligible under GST scenario – Third Party (T.P.) – Beneficial Purchases from within state - Branch Transfer to out side state : E.D. COST + ITC @ 4%

• Under Current VAT scenario, further, if the purchases are made from Gujarat T.P., by

the Gujarat Trader is transferred as out side state transfer/Inter- state transfer(branch

transfer to out side state C&F/CSP) then, the VAT ITC claimed by the Gujarat Trader needs

to be reversed @ 4% of the Purchase value while transferring, which is a cost to the

Gujarat Trader. (say the VAT ITC is claimed 5% and the reversal is made say 4% and net

VAT ITC remained at the hands of the Gujarat Trader is only @ 1 % ). Net cost will be

4%

• Under GST scenario this will not be a cost factor plus also the input service credit is eligible.


Trading - ITC eligible under GST scenario which is cost under present scenario - Input services Tax Credit , Central Excise duty – CENVAT credit and VAT ITC - will be eligible under GST scenario – Third Party (T.P.) – Beneficial Purchases from within state - Inter-state Sales : E.D.Cost + ITC @ 1%

• Under Current VAT scenario, similarly, if the purchases are made from Gujarat T.P., by the Gujarat

Trader is transferred by way of sale as out side state /Inter- state sales (out side state -

stockist/dealer) then, the VAT ITC claimed by the Gujarat Trader needs to be reversed @ 1% of the

Purchase value while inter state selling. And further the Gujarat Trader charged the CST while

selling to the out side state will be a cost to the Maharashtra purchaser say @ 2% . So effectively

the cost will be say 1% reversed by the Gujarat Trader on the purchases value while selling to

Maharashtra customer/Trader and 2% CST by paid by the Maharashtra purchaser to the Gujarat

Trader. Say for understanding purpose the total cost will be around 3% (say) and some times it

may be more than @ 3% depending upon the purchase price + profit. (say purchase price is Rs.

100/- and the sale price is Rs. 150/- and therefore the CST is paid on Rs. 150/- @ 2% = say Rs. 3 /-

and the reversal by the Gujarat Trader @ 1 % on purchase price Rs. 100/- i.e. Rs. 1/- and the total

will be Rs. 3/- + Rs. 1/- = Rs. 4 /-) . • Under GST scenario, the Excise portion and VAT portion are eligible for ITC in the name of CGST

& SGST. Plus also the input service credit is eligible.


ITC eligible under GST scenario which is a cost under present scenario (indirectly) – 4% SAD on Imports can be used for both IGST & SGST & CGST Payments – Beneficial 4% SAD – Usage: CENVAT Vs. VAT (ITC) Vs. GST (ITC)

• At present, most of the manufacturers are procuring the raw materials from other countries and pay import duty on the importation .

• While importing the 4% SAD ( in lieu of Sales Tax ) which is payable at the port of importation is eligible as CENVAT credit under Central Excise Law not under VAT law. In general the manufacturers are having the excess accumulation of CENVAT credit in view of exports and Inverted duty structure on products and hence practically the 4 % SAD payment made at the port which is eligible as a CENVAT credit under Central Excise Law is not really helpful as the manufacturers are paying by way of cash under VAT law and at the same time suffering the excess CENVAT credit balances as un utilized under Central Excise law which is a peculiar situation which will be taken care in case of GST scenario as the manufacturers will have to pay the IGST at the port which can be used as ITC (credit) at their plants which will be in turn used to discharge the payments of the IGST or CGST or SGST.


Pharma –Positive-Impact –CST – Beneficial

Central Sales Tax (CST) is levied on inter-State sale of goods by the Central Government, but collected and retained by the exporting States.

Inter sate transactions between 2 dealers will become Tax neutral under GST. The most visible and immediate impact of GST appears to be the proposed discontinuance of (Central Sales Tax (CST) levy. As on date, CST is a cost to Pharma manufacturers (1) whenever they procure raw materials from outside their state and (2) if sale is on inter-state basis. This is on account of the fact that CST paid in purchases cannot be set off against the local value added tax (VAT) liability of manufacturer/ dealer. Though, over the last couple of years CST rates have been reduced from four to two percent, the said levy continues to be a cost to the manufacturers and traders dealing in interstate transactions. The phasing out of CST with the advent of GST could do away these 2 aspects .

Under GST scenario, the C&F ( CFA) model will be driven by the requirement of the distribution channels , not by the driven of tax strategy, as being driven in present

today’s scenario , to save the CST portion.



Trading - ITC eligible under GST scenario which is cost under present scenario - Input services Tax Credit , Central Excise duty – CENVAT credit and VAT ITC- will be eligible under GST scenario Trading – Common Input Services:

• As on date the manufacturers are not taking the CENVAT credit under Central Excise Law for the input services rendered directly for the Trading activity and for the input services related to the common input services involved for the trading as well. Many companies operate on ‘trader of goods’ model (popularly called as Third party purchases - TP) and as on date the input services credit is ineligible to set-off service tax paid which is a cost to the manufacturers. However, under GST scenario, such input services related to exclusively for the trading activity and related to the common input services related to the trading will be eligible as ITC and therefore it will reduce cost of goods sold.

• The resent budget provisions allowed to distribute the common credit to Job works but a lot of confusion still persisting and not practically use full at the ground level.

• Payment of VAT and Excise Duty is currently paid by the Third party while purchasing by the

Trader (by the company)


Logistics - Beneficial

• The pharmaceutical industry avails the logistics service for the transportation of raw material and finished goods. The service tax is paid on the logistics for finished goods which the industry is facing litigation for set off. cannot set off at present. With the GST tax credit for logistics would also be available to the industry. This is because both the goods and services are under the ambit of GST.

• Truck drivers spend more than half of their time at check post and tolls. At present, there are more than 600 check points and more than ten types of taxes in road sector. After the introduction of GST, the time spend by the road transport industry in complaining with laws will reduce and service is going to be better which will boost the goods industry and thus the taxes also.



Pharma –Rates Increases

• Several Medicines are currently taxed at 5% of VAT and the rate could increase to 9%[ Expected ] under GST.[VAT Portion if SGST]



Pharma industry - Tax impact – DPCO – GST levy

• There would be cases where expiry stock is to be returned back for destruction purposes. Further, there could be movement of pharma formulations for relabelling to meet the DPCO requirements. From an operational perspective, it would be beneficial to ensure while making the final GST Law that such supply of goods is not subject to levy of GST.



Taxable event would be ‘supply’ under GST:- Barter System – GST levy

• Concepts with regard to taxable events learnt over the years such as manufacturing, sale, service, etc. would cease to exist under GST and all supplies would be subject to GST. As anticipated, the meaning of the term ‘supply’ is defined in the provisions and the same would include all forms of supply (goods/services) such as sale, transfer, barter, exchange, license, import of service, etc. Also, a few supplies without any consideration would be subject to GST.

• Here, it would be worthwhile to note that non-taxability of the barter system under the current VAT regime has now been covered in the definition of supply to make it taxable. Valuation of the same would prove to be a challenge to the department as well as industry. scope of litigation



Loan licensee : LL will pay the CGST, SGST Or the IGST on the job work charges (as a matter of services) received by him and the Principal will take the claim the Credit (ITC) on all the Inputs and on Input Services for the material being manufactured and the Input Services being consumed by the Job worker. Principal discharge the GST liability for the goods being manufactured by the Loan Licensee.



Medicinal and toilet preparations - GST Levy not M & TP Levy

Article 268 of the Constitution to omit the duties of excise on Medicinal and Toilet preparations from the purview of the power of the Government of India in view of the proposed imposition of Goods and Services Tax on Goods and Services. (clause 6 of the 122nd constitution amendment). That means on Medicinal and toilet preparations are covered under GST and the ITC (credit) is allowed accordingly. • Note : 1. As on date the Central Excise duty paid on imports which are used

in State Excise Finished Goods is cost to us. Under GST scenario that will not be part of the cost as input tax credit is available to us.

2. Bombay Prohibition Act continues- Cost Continues [Importation of Alcohol , local procurement of Alcohol.



Impact on Pharma Industry - Exempted Areas – A Procedural challenge

• Currently, certain locations such as Himachal Pradesh, Uttaranchal enjoy an excise tax holiday on their manufacturing activities. However, since the output is exempt the tax paid in inputs/capital goods tend to be a cost to the entitles located in such areas. Though, area based exemptions may not continue in the GST era, based on past experience of VAT and on a generic basis, it appears that the presently exempted units may be required to pay GST on their finished goods but, would be entitled to claim refund in order to ensure continuity of GST at every stage. By doing so, the credit chain remains intact and at the same time incentives already agreed by the Centre and the State Government for both Central and State Level GST is passed on to the manufacturers. Such a move would ensure that the various manufacturing hubs of the Pharma Industry in said areas continue manufacturing operations in such locations.



• As per section (1) (a) of section 29 A GST Act , the details of Credit Notes issued by the Supplier ( say - C&F) have to match with the corresponding reduction of Input Tax Credit claimed by the recipient ( say – stockist) Accordingly as per Sub Section (2), if the recipient ( stockist) does not adjust the Input Tax Credit, the tax and interest would be recovered from the supplier ( say – C&F). This provision places the liability on the C&F of Pharma companies, in case if the Stockists are not complying the reversal of Input Tax credit. In general, the medium seized company of any Pharma company may consists of 200 to 300 stockists of each state .

• So training by the pharma companies need to initiated internally to all the

Stockists of each and every state State wise, to enable them , to make them understand, the implications, in this regard.

Credit note issued by the C & F to the Stockists , towards – Goods Return, Expiry, Breakage, spoilage ( popularly known as - EBS) & Rate difference etc., etc., Section - 29 A of GST Act ( CGST / SGST) :



• The transition provisions provide that the credit balances which were admissible under the present central excise, service tax & VAT, regime would be carried forward under GST.

• In case of stocks of imported finished goods and duties paid towards the CVD and SAD as customs duties upon importation under these present subjects & the trading gods ( third party purchases - contract manufacturing goods ) wherein, duty has been paid by us and wherein, the credit not been claimed , cannot be claimed by us further .

• Accordingly, based on these provisions, keep the minimum stock of the imported /Trading Finished goods stock before the date of the GST being implemented.

Transition provisions for imported goods - Section 143 ( credit carried forward in a Return ), Section 144 (credit of inputs held in stock ) & section 162 A & 162 B (Tax paid on goods & C.G. lying with agents) and section 145 ( Credit of eligible Duties and Taxes on inputs ) :



• As per the charging section [ section 7 of the GST Act (CGST & SGST) Section 4 of the IGST Act ] and further the Schedule -1 of the GST Act ( CGST/ SGST) Act read with the definition of supply as per section 3 of the GST Act ( CGST/ SGST Act) Supply of goods between persons without consideration is deemed to be a “supply”. Accordingly, transfer of promotion materials , free goods & free samples will subject to GST.

• From vendor to the “depot of the samples “ maintained by the company and then, the

“depot of the samples” to the field persons on All India basis to all over the Medical representatives (MR) engaged by the company , directly and then, further distributed by such MR to the concern , for the purpose of the marketing as a strategic promotional activity .

• Or From vendor to the “depot of the samples “ maintained by the company as a virtual transaction i.e. sale to the C&F without movement of the goods by the company and keeping the goods at the “depot of the samples” and upon the rights received from the C&F and further without movement of the goods from the “depot of the samples “ to the C&F , and directly removing the goods from the “depot of the samples “ or from any other place of the business , to the field persons on All India basis to all over India to the Medical representatives (MR) engaged by the company , directly and then, further distribute by such MR to the concern , for the purpose of the marketing as a strategical promotional activity .

Promotional material like Mobile, TV, shirts, washing machines, pens, Gold coins, etc., :



• As per the charging section [ section 7 of the GST Act (CGST & SGST) Section 4 of the IGST Act ] and further the Schedule -1 of the GST Act ( CGST/ SGST) Act read with the definition of supply as per section 3 of the GST Act ( CGST/ SGST Act) Supply of goods between persons without consideration is deemed to be a “supply”. Accordingly, transfer of promotion materials , free goods & free samples will subject to GST.

• If these samples are transferred from the Factory of manufacture of the Third Party or the Factory of the Company to the Central Stock Point and from the CSP to depot maintained as “ depot of the samples “ and then, the “depot of the samples” to the field persons of All India basis to all over the Medical representatives (MR) engaged by the company directly and then, further distribute by the MR to the concern, for the purpose of the marketing as a strategic promotional activity . From the valuation angle , the transaction value of goods of like kind and quality or the cost of sales in case of free supplies .

Free Samples :



Valuation & Discount/Incentives-After Supply Effected.- Valuation Rules

• Valuation in GST would be payable on the ‘transaction value’. Transaction value is the price actually paid or payable for the said supply of goods and/or services between un-related parties.

• The transaction value is also said to include all expenses in relation to sale such as packing, commission etc.

• Even subsidies linked to supply will be includable. • As regards discounts/ incentives, it will form part of ‘transaction value’ if it is allowed

after supply is effected. • However, discounts/ incentives given before or at the time of supply will be permissible as

deduction from transaction value. • The draft Valuation Rules appears to be drafted by taking few provisions from current

Valuation provisions in vague in Excise (for e.g. concept of ‘transaction value’), Service Tax (for e.g. concept of ‘pure agent’) and Customs (for e.g. concept of ‘goods of like kind and quality’)



As per Section 15 of the GST Act ( CGST / SGST) the discounts/ incentives provided after the supply of goods will be excluded from the transaction value, provided they are • Known at or before the time of supply of goods and • linked to Invoices for the supply of goods. Further, discounts at the time of supply are excluded from the transaction value, i.e. post supply discounts , only if they are:

• established as per agreement • In the course of normal trade practice and • and are disclosed on the invoices That means the discounts which are in the nature of “secondary market” schemes will therefore, not be eligible for exclusion from the turnover.

Discounts :



Plus the other Issues for Revisit Under GST

• The impact of IGST on stock transfers could open up the need for pharma companies to re examine to the requirement to redesign supply chain network.

• To study the optimal number of warehouses, locations and linkages.

• Inventory management norms presently followed by the companies would also need to be re-evaluated in light of the proposed changes.

• Revisit the benefits of in house manufacturing vs outsourcing by way of contract manufacturing model ( TP and LL ).




GST Impact -

( 20 Slides )


GST Rate : The service sector at present is taxed at the rate of 15% including Swatch Bharat and Krishi Kalyan Cess (KKC). The GST rate is likely to be higher widely speculated at 15-20%. This means that there will be an impact on the services which will become costlier by the differential tax amount from the current levels.

GST Impact - Service Providers


State wise Registration : Supply of services on pan-India basis shall be required to seek registration in every such state from where they provide services with the GST on the supply being paid based on the place of supply determined. Value of supply in each State will have to be identified.



Existing Centralised Registration: The GST is a destination based tax where as Service Tax is charged at the place of providing service now the service providers are paying tax from a centralized office but now it would be required to split the GST payment across the states the services are consumed. Most service providers with a multi locational presence have opted for centralised registration and enjoy availing input credits, issuing output invoices, discharging service tax liability, undergoing audits and applying for refunds from a chosen single location will now have a massive change in the system.



Invoice wise details in the Return : Various service sectors like - Telecom and Banking companies will have crores of retail customers, identifying transactions which cross pre-defined threshold (Invoice Value > 2.5 lakh for interstate) and reporting them invoice wise is also laborious.



Need to raise various invoices :

Various service sectors including Banks may provide several services to a customer within a month (Ex: ATM, Cheque book,DD, loan etc.) and would be required to raise as many invoices as against the current practice of one service invoice per month.



B2C transactions :

Various service providers like Banking companies, transport companies , various public dealing service sectors airlines selling lakhs of tickets monthly, identifying intra-state / inter-state supply of services, exports / imports of services, providing invoice level details for B2C transactions is very pain staking.



Returns :

• Service Tax returns are currently made bi-annually, however under GST, it will have to be done monthly and for all states and UT wherever there is business presence.

• Service providers currently file one single return named ST-3 which under GST will get multiplied by the number of states (29)/UT (7) they operate.

• That is, for a pan-India operator, 36*5 monthly (GSTR 1, 2 ,3 , 6 & 7) 180 X 12 months = 2160 and 36 Annual Returns = 2196 against 2 existing returns .



Services through the Third Party Vendors : Services are often delivered through third party vendors (Ex: SIM card and prepaid voucher distributors, loan and credit card agents etc.) and hence determining point and time of supply is ambiguous. Deducting TDS on commission paid to such vendors and tracking the same is also tedious. Reverse and Partial charge mechanism will also continue under GST. Payment of TDS on advances (Ex: Pre-paid subscription) is difficult to track and report.



Related Party Transactions : Under the GST Model Law, the concept of valuation for services in related party transactions has been introduced. Therefore, for any services provided between group companies, such as back office support services, cross-charge for common expenses, etc., it needs to be demonstrated that the transaction is at arm’s length. If this cannot be demonstrated, the value will be determined based on the GST Valuation Rules, i.e. based on services of like kind and quality or the cost of providing the services, including profit[Section 15(2)]



Free Supply of services/Self Service- Inter-state : Presently, as per the definition of the term, ‘service’, only those activities which have a consideration are liable to service tax. However, the Model GST Law also proposes to tax services by a taxable person to another person in the course of furtherance of business, without any consideration. (As per Schedule I Point No. 5) R&D Units of same company- Issue to be taken into consideration



Lease Transactions • Presently, Finance lease transactions are liable to both, VAT and Service Tax, and

ordinarily Operating Lease transactions attract VAT. • Further, VAT is not payable on import of assets on lease basis. • Under the Model GST Law, a Finance Lease would be considered as supply of goods,

(Schedule II point 1(3)) and an Operating Lease would be considered as a Service (Schedule II point 1(2)).

• Further, leasing of an asset from outside India, will be liable to IGST.



Compliance cost : Mandatory Audit compliance which will be a cost to the service providers . The concept of the annual compliance audit has been borrowed from the existing VAT laws which will be a cost to the service providers .



Input Tax Cost: Service Providers are not allowed to claim the credit pertaining to Non-GST elements such as Electricity and Fuel and therefore it will be a cost to the recipient .



Pure Service Providers Vs. GST Payment Unlike the transition from the sales tax regime to the VAT, where only businesses dealing in goods were affected, in the case of GST, as the name suggests, both goods and service providers will be impacted. Thus, even pure service providers needs to plan for transition to the GST.



Service Providers Vs. Composition Scheme : Though the composition scheme is allowed to the Service Providers but practically this scheme is not really useful to the Service Providers. As the composition scheme restricts as per second proviso of the section 8 of the Model GST Act to render the Inter- State supplies. As this is not practically possible to the service providers to restrict the services to the outside states like the Goods.



• Services without consideration Vs. Schedule – 1 of the GST Act: • As on date the service tax is levied for the cases where there is a receipt of

the “consideration “. However , in case, of the GST the Tax is levied in situations where there is a free supply of the services i.e. levied where there is a supply even without consideration.

• And further the Valuation provisions for those cases of “free supply” will be a

difficult to estimate and leads to litigation. • Hence , in case of free supply of the services , as per schedule -1 of the GST

Act, without any consideration basis still the GST is payable and for valuations , which leads to litigation.

GST Impact - Service Providers - Illustration


Service Industry Service Provider

Transport Services Company Head Office- Delhi

Manufacturer Company Corporate Office - Mumbai

Regional Office – Chennai (TN) Plant at Chennai

Provided Services to lift the Material from Coimbatore to

Chennai

Agreement for Transportation of Goods

Advi

ce fo

r Tr

ansp

orta

tion

of G

oods

in T

N



Transactions – Head Office Vs Branch Office

Nature Invoice From Invoice To Services S.P (forward charge)

Delhi (H.O.) Mumbai (Corporate)

Deemed Services - Invoice based on contract

S.P. (Deemed Transaction)

Chennai (Regional )

Delhi (H.O.)

Deemed Services - Invoice needs to be raised ( as per point no : 5 of schedule – 1 of CGST / SGST Act)

ISD Mumbai (Corporate)

Chennai (Factory ) Mumbai Corporate pass the ISD Invoice to the Chennai Plant



GST Impact - Service Providers - As a Illustration


Q No.

Page No. Question Answer

3 19 Is the reverse charge mechanism applicable only to services? No

6 262 Will ITC be allowed to a service provider on VAT paid inputs held as stock on the appointed day? No

FAQ



GST Impact – Real Estate Sector

( 31 Slides ) Prepared and presented By Sreeram Kaza 637

The term "agent" is defined in Section 2 (5) as : "agent" means a person who carries on the business of supply or receipt of goods and/or services on behalf of another, whether disclosed or not and includes a factor, broker, commission agent, arhatia, del credere agent, intermediary or an auctioneer or any other mercantile agent, by whatever name called, and whether of the same description as hereinbefore mentioned or not;

GST Impact - Real Estate Sector


Real Estate sector includes : • Land • Land development • Construction on own land and sale of flats • Construction on land under Development Agreement and sale of

Apartments thereon • Maintenance • Rent • Brokerage



Existing Taxation structure : • The Central Government is leving Service Tax on under construction

activities.(Subsumed in GST)

• The State Governments are charging VAT / Composite Tax on various materials used in the construction ( Normal Sales Tax with Input Tax Credit or the composite Tax). (Subsumed in GST)

• The immovable properties are charged with Stamp Duty, at the time of registration of Sale Agreements. (Not subsumed in GST)



GST on Land / Construction

Situation Existing GST

Before Completion Certificate Taxable Taxable

Land Sale (In the course or furtherance of business) Not Taxable Taxable

Completion Certificate Received Not Taxable Not Taxable

Land Sale (Other than by Business Person) Not Taxable Not Taxable

Residence/Single units constructed for personal purpose Not Taxable Not Taxable

Sale of Constructed Property (Other than business) Not Taxable Not Taxable



Why Real Estate needs the GST ?

• Chain of transactions which will improve the tax base and bring transparency .

• To widen the base of Indirect Taxation.



On International Front :

• EU : Sales and Rental of newly constructed houses are taxable under VAT.

• Canada : Both supply and leasing of commercial land and buildings are under VAT.

• Australia : Supplies of land, commercial properties and newly constructed residential properties under VAT/GST



Construction - Model GST Law : “ SCHEDULE II - MATTERS TO BE TREATED AS SUPPLY OF GOODS OR SERVICES : Point no. 5. The following shall be treated as “supply of service” “ (b) construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or before its first occupation, whichever is earlier Explanation.- For the purposes of this clause- (1) the expression "competent authority" means the Government or any authority authorized to issue completion certificate under any law for the time being in force and in case of non-requirement of such certificate from such authority, from any of the following, namely:– (i) an architect registered with the Council of Architecture constituted under the Architects Act, 1972; or (ii) a chartered engineer registered with the Institution of Engineers (India); or (iii) a licensed surveyor of the respective local body of the city or town or village or development or planning authority.”

Note : Tax on actual Contractual Base : Construction activity / works contracts and also sale of units before completion have been deemed to be ‘supply of services’. Tax would be now charged on the actual contractual base and there should not be any overlap of VAT and service tax.



Construction - Model GST Law :

Construction means - SCHEDULE II - MATTERS TO BE TREATED AS SUPPLY OF GOODS OR SERVICES : Point no. 5. The following shall be treated as “supply of service” Further the Explanation says that - For the purposes of this clause - “(2) the expression "construction" includes additions, alterations, replacements or remodelling of any existing civil structure”.



The following Elements are subjected to provisions of services :

• Land development, • Construction on own land and sale of flats • Construction on land under Development Agreement and sale of Apartments

thereon • Maintenance • Rent and Brokerage are subjected to provisions of service tax.



Works Contract - Model GST Law :

SCHEDULE II - MATTERS TO BE TREATED AS SUPPLY OF GOODS OR SERVICES - Point no. 5. The following shall be treated as “supply of service” “ (f) works contract including transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract; “ 2. Definitions - In this Act, unless the context otherwise requires,- “ (107) “works contract” means an agreement for carrying out for cash, deferred payment or other valuable consideration, building, construction, fabrication, erection, installation, fitting out, improvement, modification, repair, renovation or commissioning of any moveable or immovable property; “ Note : Construction activity / works contracts have been deemed to be ‘supply of services’. This means that the GST rate and provisions, like place of supply rules, etc as applicable on services will apply to such transactions. The major gain from this treatment is that the tax would be now charged on the actual contractual value, without a need to split the contract value. It is silent about guidelines on valuation of land.



The following Elements are subject to provisions of works contract nature :

• Construction on own land and sale of flats • Construction on land under Development Agreement and sale of Apartments

thereon • Maintenance etc.



Place of supply of Goods and Services - Model GST Law :

Place of supply of Goods and Services : THE INTEGRATED GOODS AND SERVICES TAX ACT, 2016 CHAPTER– IV - PLACE OF SUPPLY OF GOODS AND/OR SERVICE Section : 6. Place of supply of services. “Shall be the location at which the immovable property or boat or vessel is located or intended to be located.” – [Sec. 6 (4)] “ (4) The place of supply of services, (a) in relation to an immovable property, including services provided by architects, interior decorators, surveyors, engineers and other related experts or estate agents, any service provided by way of grant of rights to use immovable property or for carrying out or co-ordination of construction work. “ Note : In above mentioned services, place of supply shall be location at which the immovable property is located or intended to be located.



Input Tax Credit - Model GST Law :

Input Tax Credit - CHAPTER V - INPUT TAX CREDIT - Goods and Service Tax Act, 2016 - Section 16. Manner of taking input tax credit - “Sub-section (9) Notwithstanding anything contained in sub-section (1), (2), (2A) or (3) input tax credit shall not be available in respect of the following ;” “(c) goods and/or services acquired by the principal in the execution of works contract when such contract results in construction of immovable property, other than plant and machinery; “ “(d) goods acquired by a principal, the property in which is not transferred (whether as goods or in some other form) to any other person, which are used in the construction of immovable property, other than plant and machinery; “



Application of Model GST Law for different category of persons : From a home buyers’ perspective : • Cost Reduction : Availability of free flow of credits, i.e Excise Duty, CST, VAT on

procurements like steel, cement and other materials used in construction.

• Further reduction of cost in view of Entry Tax / octroi .(Subsumed in GST)

• Now in GST regime immovable property will also include land. Now in case of land, if used in construction of property, then land will be treated as input. The GST paid in respect of land will be allowed as Input Tax Credit in the same manner as other construction materials. Therefore Valuation of land for claiming deductions is not provided as it appears as set off is available for land.

• If taxed at Standard GST rate (which is expected to be 18%) then rates will go up at higher side as per market practice.



Application of Model GST Law for different category of persons : From a developer’s perspective :

• Taxation of joint development agreements where area is shared between developer and land owner is clearer with barter transactions being covered within the meaning of ‘supply’.



Joint Development Agreement :

Under the GST regime, landlord-developer transactions are Taxable and hence the aspects of valuation and timing for payment of taxes on such transactions in view on the liability of landlords for sale of their portion of constructed area before completion of construction to be analysed. If Transfer of Development Rights (TDR) are taxable i.e. the Transfer of the development rights by the landowner to the developer and as per this GST model law , the developer may not be entitled to avail credit of GST paid on Transfer of Development Rights , hence resulting in huge incremental cost. Joint Developments covered under Section 3(1)(a) of the Model GST Law : Supply includes all forms of supply of goods and/or services such as sale, transfer, barter, exchange, license, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business.



Construction - before sale agreements – by the developer ?

Question of Hon’ble Supreme Court in Larsen & Toubro Ltd Vs State of Karnataka in 2013-TIOL-46-SC-CT-LB under the GST law.(para115). Pure Developer who has contracted out the entire construction activity can be treated as a taxable person? ( as on date not liable to pay VAT) Supreme Court in State of Andhra Pradesh v Larsen & Toubro Ltd reported in - 2008-TIOL-158-SC-VAT. Vs. Serial Number : 5 (b) of the Second Schedule of the model GST law: The concept of 'construction' can arise only when the Developer/Builder entered into a construction agreement with a prospective buyer, inasmuch as, for the period prior to the date of the agreement, the Developer/Builder is deemed to be constructing the civil structure for himself. So the judgment can continue even GST regime. Needs to examine further as this amounts and treated as the 'construction of a complex, building, etc' (prior to the date of the completion certificate) ?



Composition schemes Section 8 of the GST Model law and its restriction and question of RNR say 18 % ? : Huge cost to the Home Buyers.

Restricted to the composition scheme i.e. say Developers with an aggregate turnover of Rs 50 lakhs and its serious effect in comparison of the existing law as it prevails As of now for Builders to enable to pay the Composition Tax of say @ 00.60 % in Gujarat, @ 1% in Maharashtra, @ 4% in Karnataka and eligible and entitled to exemption in respect of the sub-contract turnover and land value. In GST regime, developers can not opt for composition scheme due to value constraints.



Application of Model GST Law for different category of persons : For SEZs :

• The SEZ units are given the same treatment as a DTA exporter and will be required to claim refunds of unutilised input GST credits.



Renting of Property by Builders : • Impact for commercial property developers, who today are burdened with high costs as no credit

is available on construction services used for developing a commercial property which is then rented out.

• Service tax is not levied on the renting of immovable property for residential purposes however, VAT and service tax are levied on Construction. Service tax is levied on renting of commercial purposes.

• It is not yet clear whether proposed GST will provide differential tax treatment to the residential properties.

• Needs to examine further as the Restriction on availing credits on goods and works contract

services used for setting-up commercial and retail projects continues as per section 16, in case of self projects. - Hence, this may leads to non-eligibility of the ITC to the developer.



Sl No. 5 of the Second Schedule to the model GST law reads as - The following shall be treated as "supply of service“ “(a) renting of immovable property;” Sl No. 2(2) of Schedule II: ‘‘Any lease or letting out of the building including a commercial, industrial or residential complex for business or commerce, either wholly or partly, is a supply of services.’’ Note : This is almost in continuity of the existing service tax provisions.



Construction of Building for the purpose of Let out by the Builder Model GST Law and question of Input Tax Credit denial. [under current service tax law, CENVAT credit is denied to a Builder/Developer who constructs a Building for being let out, in terms of Rule 2(l) of the Cenvat Credit Rules, 2004, as contrasted to a Builder/Developer who constructs a building for the purpose of a Sale as a Works Contract]. Denying the ITC (credit) when the building is let out, is not right spirit of the GST as we had expected that the GST law would would allow the credit as a seamless credit is not the right position as it reflects now .

Discrimination between the Residential Realty sector and the Commercial realty sector, vis-à-vis input tax credit would continue under the GST regime ?



Not subsumed in the GST - continue in the GST regime :

• Stamp duty on value of Land / Immovable property - continues even in post GST regime. The first time stamp duty is paid on land, then the flat buyers pay stamp duty on the House without any credit for the land payment – Double Taxation

• Registration charges – continues even in post GST regime.



Valuation :

Under the GST Model Law, the concept of valuation for services in related party transactions has been introduced. Therefore, for any services provided between group companies, such as royalty for access to global brand, group company cost allocations, etc., it needs to be demonstrated that the transaction is at arm’s-length. If this cannot be demonstrated, the value shall be determined based on the GST Valuation Rules, i.e. based on services of like kind and quality, or the cost of providing the services, including profit.



Immovable Property - Separate Contracts : State wise Invoices – needs to be analysed

• Under GST, since immovable property may be located in more than one State, the place of supply would be each such State where the immovable property is located, and hence, there may be a requirement for the vendor to raise separate invoices (for which separate contracts may also be required).

• One aspect which may be analysed is, if place of business is located in one State and services relating to immovable property are provided in various States (where there is no place of business), would registration be required in all States, or would it suffice if registration is obtained in only one State. ?

• Place of provision for services in relation to immovable property would be location of the immovable property. There may be possible issues where a single contract is entered into for provision of services related to immovable properties across two or more States. ?



Composition Scheme for Developers = ?

There is no option of paying GST under the composition scheme for developers selling units before completion as it appears that complete set off is available to the developers including land transactions.



Valuation issues : More Procedural – Scope of Litigation The goods and services received by the Owner /Builder / Developer on which the ITC has been claimed by such owner /Builder/Developer and given / provided of such inputs to the Contractor / works contractor / Service provider on free basis then, again the GST will be payable on such free goods by such Owner/ Builder / Developer and again on which the Contractor/ Works contractor / Service provider can take the ITC on that free goods.



Transitional Provisions - Model GST Law :

Transitional Provisions - CHAPTER XXV - TRANSITIONAL PROVISIONS - 159. Treatment of long term construction / works contracts - “ The goods and/or services supplied on or after the appointed day in pursuance of a contract entered into prior to the appointed day shall be liable to tax under the provisions of this Act.“ Currently, a service provider is not eligible to avail credit of the tax paid on goods. Under GST, since all supplies would be liable to GST, there needs to be a provision to allow a service provider to avail credit of the inputs held on the date of enactment of GST to the extent of the Central Excise duty paid on inputs. In the Model GST law, there is no specific transition provision to this effect.



Transitional Provisions - Model GST Law : Transitional Provisions - CHAPTER XXV - TRANSITIONAL PROVISIONS - 160. Progressive or periodic supply of goods or services - The goods and/ or services supplied on or after the appointed day in pursuance of a contract entered into prior to the appointed day shall be liable to tax under the provisions of this Act of section160. If the consideration for the said supply has been received prior to the appointed day and the duty or Tax payable thereon has already been paid under the earlier law. GST Act would not apply on advances received prior to the GST law for goods/ services to be provided during the GST regime, provided tax has been paid on the same. needs to raise the invoice and make the payment under existing law to avoid multiple SCNs Note : In case if GST has negative impact, consideration may be made earlier even for supplies to be undertaken post GST



Issues needs to be analysed By the Real Estate Business / contractors / Developers :

• Tax clause and Change in law clause to be analysed - Future contracts to be framed in light of proposed GST provisions for tax optimization

• In case of increased eligibility of credit, IT systems would need to be revamped to

record input tax credit (currently various credits are not be recorded if developer opts for composition/ abatement scheme).

• Review of existing contracts with customers as well as contractors/ vendors to analyse impact of change in taxability of works contract



Needs clarity - From the GST law : • Land aggregation transactions. • Allowing the credit (ITC) of goods and services acquired either by contractor or developer and the provisions

should not be subject to multiple interpretations which would result in future litigations

• Barter transactions are clearly covered under GST by including such transactions within the meaning and scope of ‘Supply’. This provides clarity on taxation of area share JDAs. The Model laws however does not contain any specific provision for valuation and timing issues for payment of GST on such transactions.

• While sale of ‘immovable property’ is expected to be outside GST net, as they should not qualify to be goods or services, there is no explicit exclusion in the Model laws like under the present service tax regime

• Taxability of development rights, land aggregation transactions, secondary market transfers, assignment of purchasing rights in immovable property, etc are likely to continue.




31 Slides

SEC. 8 – Composition Scheme

Question No

Page No

Question Answer

23 14 What is the scope of composition scheme under GST? Below Rs. 50 lakh subject to condition and no inter state purchase

24 14 Whether the composition scheme will be optional or compulsory? Optional

8 20 Will a taxable person be eligible to opt for composition scheme only for one out of 3 business verticals?

No

14 22 How to compute ‘aggregate turnover’ to determine eligibility for composition scheme?

Not only taxable but also aggregate

15 22 What are penal consequences if a taxable person violates the condition and is not eligible for payment of tax under Composition scheme?

Pay Interest and Penalty

4 19 What will be the implications in case of purchase of goods from unregistered dealers?

Pay GST

6 67 When is payment of taxes to be made by the Supplier? Quarterly

Miscellaneous


Question No

Page No

Question Answer

14 95 Mr. B, a registered taxable person was paying tax under composition rate up to 30th July, 2017. However, w.e.f 31st July, 2017. Mr. B becomes liable to pay tax under regular scheme. Is he eligible for ITC?

Yes – Eligible for ITC of inputs in stock

9 216 What is the penalty prescribed for a person who opts for composition scheme despite being ineligible for the said scheme?

Penalty equal to tax

7 262 A registered taxable person has Rs 1000 ITC credited to his electronic credit ledger from the last return under the earlier law. Now, he switches over to composition scheme in GST, will he get refund of that ITC?

No–pay an amount equal to ITC taken

Miscellaneous SEC. 8 – Composition Scheme


Question No

Page No

Question Answer

4 19 What will be the implications in case of Purchase of goods from unregistered dealers? No Credit available to purchasers.

17 33 Is it necessary for the Govt.organisation to get registration? Yes , for Inter State Transaction.

8 47 Whether transfer of title and /or possession is necessary for a transaction to continue supply of goods?

Yes.

16 49 Whether goods supplied on hire purchase basis will be treated a supply of goods or supply of services? Why? Yes, Due to transfer of title.

23 98

A taxable person is in the business of information technology. He buys a motor vehicle for use of Executive Directors. Can he avail the ITC in respect of GST paid on purchase of such motor vehicle ?

No. Available only taxable person is in business of transport.

9 116 Do the taxable people have to feed anything in GSTR-2 or everything is auto -populated from GSTR-1?

No, as major items are auto populated - imports, purchase etc. can be filled.

Miscellaneous FAQ – Related To “PURCHASE ”


Question No

Page No

Question Answer

14 117 Do tax payers under the composition scheme also need to file GSTR-1 and GSTR-2? NO. The have to file GSTR-4[Qtrly]

3 125

A' Supplied goods to 'B'in April '17 these goods were returned by 'B' to 'A' on June '17 . The tax rate charged by 'A' on such goods was 18%.in May '17, the rate was amended to 18.5%.what is the tax payable on return of such inward supply by B' to 'A' ?

18%.

6 138 Whether Purchases made by Embassies or UN be taxed or exempted? Taxed , later on refund can be claimed.

3 227 How will the Inter State supplies of goods and Services be taxed under GST? IGST Tax will be collected and paid.

19 142

Today under VAT/CST merchant exporters can purchase goods without payment of tax on furnishing of a declaration form. Will this system be there in GST? [ Form-H]

No.pay the tax and claim refund.

Miscellaneous FAQ – RELATED TO “PURCHASE ”


Question No

Page No

Question Answer

15 256 Can invoice data be uploaded on day today basis ? Yes.

2 261

A registered taxable person say, purchase capital goods in the last quarter of 2016-17. Though the invoice received within 31st March but the capital goods are received on 5th April 2017[ i.e GST regime] will such person get full credit of CENVAT in 2017-18 ?

Yes. Entitled to take full credit u/s144[1]

Miscellaneous FAQ – RELATED TO “PURCHASE ”


Question No

Page No

Question Answer

2 45 What is the meaning of Supply ?[ Transfer, Barter ] Included in supply definition.

7 46 Are self supplies taxable under GST ?[ Stock Transfer] Yes.

8 47 Whether transfer of title and /or possession is necessary for a transaction to constitute supply of goods ?

Yes.

11 48 A dealer of Air Conditioner transfer an air conditioner from his stocks in trade , for personal use at his residence . Will the transaction constitute a supply ?

Yes. Business asset put to private use.

14 49 Whether transfer of rights to use goods will be treated as supply of goods or supply of services ? Why ?

Yes, No transfer of titles in such supplies.

10 94 What would be input tax eligibility in case where there is a change in the constitution of a registered taxable person?

Allow to transfer the unutilized input tax credit .

Miscellaneous FAQ – RELATED TO “TRANSFER ”


Question No

Page No

Question Answer

16 150 If a person liable to pay tax has certain tax liability and in the mean time he transfer his business to another person, what happens to the existing tax liability ?

Jointly and severally liable to pay tax, interest or penalty if any.

11 264 Can a manufacturer transfer finished goods sent for testing purpose to the premises of any other taxable person ?

Yes.

Miscellaneous FAQ – RELATED TO “TRANSFER ”


Question No

Page No

Question Answer

7 93 What is the eligibility of input tax credit on input in stocks for a person who obtain a voluntary registration ?

Entitled to take input credit . 15 96 Mr. A. applies for voluntary registration on 5th June

17, and obtained registration on 22nd June 17, Mr. A. is eligible for input tax credit in inputs in stock as on___

21st June 17.

4 137 Can ITC of goods lying in stock at the end of financial year[after introduction of GST] be refunded ?

No, to be carry forwarded.

6 202 Will ITC be allowed to a service provider on VAT paid inputs held as stock on the appointed day No, only goods are covered.

24 267 Where goods [ including capital goods ] belonging to the principal are lying with the agents on ther appointed day , will agent be able to take ITC on the same ?

Yes, subject to fulfilment of conditions 1.Taxable person under GST 2.Declared of stock by both. 3.invoice issued not later than 12 month. 4.not availed the ITC

Miscellaneous FAQ – TABLE OF CONTENTS – 4 INPUR TAX CREDIT ,14-REFUND, 24- TRANSITIONAL PROVISIONS


Question No

Page No

Question Answer

18 12 Who is liable to pay GST under the proposed GST regime? Turnover above Rs. 20 Lakhs & Rs. 10 Lakhs (for NE)

20 13 How will the goods and services be classified under GST regime?

Turnover < Rs. 1.5 cr – No HSN Turnover Rs. 1.5 to Rs. 5 cr–2 digit HSN Turnover > Rs. 5 cr – 4 digit HSN

13 21 What is the threshold for opting to pay tax under the composition scheme?

Rs. 50 Lakhs

22 72 What is TDS? Payment > Rs. 10 Lakhs per annum – Tax @ 1%

2 113 Who needs to file Return in GST regime? On crossing Rs. 20/10 Lakhs Limit

5 114 Whether all invoices will have to be uploaded? B2B : All B2C > Rs. 2.5 Lakhs (Inter state)

13 140 Is there any minimum threshold for refund? Amount < Rs. 1000 (No refunds)

Miscellaneous VALUE (MONETARY CEILING)


Question No

Page No Question Answer

12 158 (only for SGST law) What is the meaning of “serious case”? Tax liability > Rs. 25 Crores

16 159 When the Tribunal is having powers to refuse to admit the appeal?

Tax involve < Rs. 1 Lakhs

27 203 What are cognizable and non-cognizable offences under MGL? Cognizable > Tax evaded Rs. 2.5 cr Non Cognizable < Tax evaded Rs. 2.5 cr

6 215 Is any penalty prescribed for any person other than the taxable person?

Upto Rs. 25,000 in some cases

7 216 What is the penalty provided for any contravention for which no separate penalty has been prescribed under MGL?

Upto Rs. 25,000

Miscellaneous VALUE (MONETARY CEILING) – FOR PENALTY


The proposed GST is not an ideal GST in comparison of the other countries of the world. However, considering the present political situation and limitations, this is the best that can be achieved in Indian context. The way of doing business will drastically change on introduction of GST. The proposed GST will surely be much better than the present complex provisions . It will help in developing a national market and considerably reduce the cascading effect of taxes in long run.

Conclusion


Thanks


This presentation has been prepared for a general awareness of the proposed GST law of this country. It provides general information and guidance as on date of preparation and does not express views or expert opinions . The presentation is meant for general understanding and no responsibility for loss arising to any person acting or refraining from acting as a result of any material contained in this presentation will be accepted. It is recommended that professional advice be sought based on the specific facts and circumstances. This presentation does not substitute the need to refer to the original pronouncements.

Disclaimer:
