broad concepts overview of gst · broad concepts & overview of gst ca. ashok chandak ... tax...

© ASHOK CHANDAK [email protected]

BROAD CONCEPTS

&

OVERVIEW OF GST

CA. ASHOK CHANDAK

© ASHOK CHANDAK

ONE NATION ONE TAX

=

GOODS & SERVICE TAX

[email protected]

3Email: [email protected]

GSTGOODS & SERVICES

TAXOVERVIEW OF BASIC CONCEPTS

&

BROAD ANALYSIS OF

GST LAW

© ASHOK CHANDAK [email protected] [email protected] 4

DISCLAIMER

1) This presentation is purely based on

(a) the CGST Act and IGST Act passed by the Parliament recently,

(b) FAQ released on 31st March 2017, &

(c) Draft Rules.

2) This presentation is prepared for the purpose of GST Clinic by VIA Taxation

& Corporate Law Forum for the reference of the participants. The

information contained herein is meant for general purpose and is not

exhaustive and accordingly will not constitute any kind of professional advice

or services. The presentation is not intended to be solely relied upon for any

decision which may affect your business. It is advised that you should consult

qualified professional advisor before taking any action that might affect your

personal finances or business. By using any part of this presentation, the user

accepts that the author, presenter or any organisation with which he/she may

be associated shall be liable to the user for any decision made or reliance

placed on this presentation.

© ASHOK CHANDAK [email protected] [email protected] [email protected] 5

CONTENTS

▪ Present System of Indirect Taxation.

▪ What is GST and how it will work.

▪ Proposed GST Structure and Concepts.

(Important provisions of CGST & IGST Acts)

▪ Taxation System (Taxable Person, Taxable Event, Point of

Taxation, Place of Supply, Valuation).

▪ Administration Process in CGST Act (Registration, Returns,

Tax Payment, Assessments).

▪ Input Tax Credits.

▪ Impact on prices.

▪ Preparatory Steps.

▪ Conclusions.

© ASHOK CHANDAK [email protected] 6

• Main Indirect Taxes

➢ By Union• Customs

• Central Excise

• Service Tax etc

➢ By State• VAT

• Central Sales Tax

• State Excise

• Land Revenue etc.

• Entry Tax.

• Electricity Duty

• Tax on Sale of Electricity

• Entertainment Tax

• Luxury Tax

• Stamp Duty

• Motor Vehicles Tax

➢ By Local Govt.• Octroi/LBT

• Taxes on Property

• Taxes on Passengers

• Advertisement etc

PRESENT INDIRECT TAX STRUCTURE IN INDIA

Three Tiers of Government

* Union * State

* Local


- Goods and Services Tax as name suggests.

- To be levied on supply of goods and services.

- GST is a multistage tax to be imposed at final

consumption.

- Levied as a proportion of value added (like VAT).

- CGST & IGST to go to the Consolidated Fund of

India.

- SGST to go to the Consolidated Fund of the State.

WHAT IS GST ?

7


• Multiple taxes lead to double taxation and cascading effect.

• Indian indirect tax structure involving multiple taxes. not in sync with global practices.

• High cost of tax compliance and double taxation leads to higher prices of goods & services.

• Lack of uniformity in provisions and rates.

• High cost of tax collection leads to lower tax yield to the Government.

• Procedural simplification for registering and filing ofreturns.

• Reduced record keeping.• Improved tax administration.• Single registration and identification for assessee both

under Central and State GST.• Improved compliance by tax payers.• Reduction in unethical practices.• Improved legal redress system.• Electronic filing of statutory forms and payments.

8

WHY GST ?


9

• One taxable event against multiple events at present. A destination based consumption tax on goods and services “ONE NATION ONE TAX”

• Comprehensive value added tax on goods & service; GST to subsume multiple taxes.

• Expected to widen the tax base and lower the effective tax rate on goods ;

• Tax neutrality for business through Input TaxCredit mechanism.

• Objective is to make India a common market

Why GST?


• Dual GST- Central GST (CGST) and State GST (SGST) to be imposed concurrently on intra state supply of goods and services

• Inter-State transactions subject to Integrated GST (IGST) which will be generally aggregate of CGST and SGST

• Taxable event is ‘supply’ as against manufacture (excise), sale (VAT) and service (service tax)

• Cross utilization of CGST and SGST credit not allowed but permitted in respect of IGST

• Exports & supplies to SEZ developers and SEZ Units to be zero-rated

• Imports would be subjected to IGST and Basic Custom Duty.

• Inter state stock transfers , Branch Transfers, Consignment transfers taxable under IGST even though without Consideration.

• Intra state (within State) Branch Transfers, Stock Transfer not to be taxed only if not made to a Business Vertical separately registered.

Important Dimensions

10


What is Dual GST

Dual GST signifies that GST will be levied by both, the Central Government

and the State, on supply of goods or services. Under the Constitution, before

122nd amendment the taxing powers were split between the State and the

Central. In case of certain transactions, the power to tax were vested with the

Central and while in certain others, the power were vested with the State.

Under GST, the power to tax on supply of all goods and services will be

vested in the hands of both, the State and the Centre. In certain cases, such as

the inter-State transactions, the power to tax will be vested with the Central

Government, while the revenue will in some appropriate manner, get

distributed to the States. Considering the dual taxation power to tax

transactions under GST, the structure is referred to as Dual GST.

Considering the basic framework of the constitution and keeping its structure

intact, dual GST appears to be practicable solution for Indian scenario.


• CUSTOM DUTIES: Levied by the Central Government under the Customs

Law on all specified goods imported into and exported from India, as per

Customs Tariff Act.

• Other than Basic custom duty all other duties will be subsumed in IGST.

• CENTRAL EXCISE: Levied by the Central Govt. under the Central Excise

Act, 1944 on all specified goods manufactured/produced in India as per the

Central Excise Tariff Act subject to certain exemptions.

• With some exceptions Central Excise will be subsumed in CGST.

• SERVICE TAX : Levied by the Central Government under Finance Act, 1994,

on all services. (Except Negative List/Exempted Services)

• This will be subsumed in CGST additional Tax on services under SGST also.

• VAT (Value Added Tax) : Levied by the State Governments on sale of goods.

• VAT will be subsumed in SGST.

• CST : Levied by State Govt. under Central Sales Tax Act. (This is Revenue of

State Govt.). CST is payable when inter-State sales takes place.

• This will be subsumed in IGST with Central Taxes.

PRE GST TAXES IN INDIA


GST STRUCTURE

CGST

Service tax

Central Excise Duty

Additional Excise duties

Central cesses

& surcharges on goods &

services

Additional AdditionalDuty of Customs

Special Additional Duty of Customs

TAXES TO BE SUBSUMMED

Around 17 Laws to be Repealed/Subsumed

IMPACT

IGST

to

Replace

CST

State cesses & surcharges on goods & services

Taxes on lottery,

gambling

Taxes on betting

Entry Tax/

Octroi

Entertainment Tax (except by local

bodies)

Purchase Tax

Luxury Tax

Central Sales Tax

VAT

SGST


GST STRUCTURE

Taxes to Remain post GST

No Clarity about (a) Various cesses & (b) Tax on Sale of Electricity

TAXES TO

REMAIIN

POST GST

Basic Customs

DutyTaxes on

liquors and petroleum products

Stamp duty

Toll tax

Property tax

Export duty

Environment tax

State Electricity

Duty


GST STRUCTURE

GST would be levied by both the Central Government and the State

Government on the same transaction, making GST a dual transaction

tax structure.(CGST & SGST)

15

GS

T

Intra-State

CGST

SGST

Inter-StateIGST

(CGST+SGST)

Input CGST against –

CGST

IGST

Input SGST against -

SGST

IGST

Input IGST against –

IGST

CGST

SGST

CGST SGST IGST


GOODS AND SERVICES PROPOSED TO BE

KEPT OUT OF GST

• Alcoholic beverages, tobacco products and certain petroleum

products such as crude, motor spirit including aviation turbine fuel

and high speed diesel. Sales Tax/VAT will continue to be levied on

alcoholic beverages and Petroleum Products as per existing

practices. Excise duty that is levied thereon by States will also not

be affected.


How does GST work?

Under GST, every specified supply of Goods and/or Services (as ‘covered transaction’)

would be subject to tax and tax paid on inputs/capital goods/services would be available as

input credit.

Supply to include every kind of Supply of Goods and Services for consideration and in

some cases without consideration.

Goods: will not include money & securities. Will include Actionable Claims & News

Papers which are presently not taxed under VAT Act.

Services : Definition provides services means any thing other than goods. All intangible

properties and actionable claims (betting, gambling and lottery) will now be services and

some deemed sales which were earlier taxable by State because of Article 366(29A) of the

Constitution under VAT, will now be services and not to be taxed as sale and purchase of

goods. Presently There is no negative list. Services by State or Centre are only Exempt

(Sch IV)

Impact : News Papers, Actionable Claims (like betting, gambling and lottery) will become

taxable.


SALIENT FEATURE OF GST

The salient features of GST are given below :

• The basic principle would be that GST would be a consumption based levy.

Destination principle would be applicable in normal course. Exceptions in

service are there wherein other criterion such as performance or location is set

out.

• India would implement a dual GST with the tax structure and powers split

between the State and the Centre. State & Centre both will frame law.

• GST would subsume all major indirect taxes levied by the Central Govt. i.e.

central excise, customs (except Basic Custom Duty) and Service Tax and

majority of the taxes levied by the State Government i.e. VAT, luxury tax,

entertainment tax, etc. However, taxation of alcohol and narcotics intended to be

kept outside GST. Petroleum may be included in GST at later date.


SALIENT FEATURE OF GST Contd…

• There will be multiple rates i.e. 5%, 12%, 18% & 28% for goods/services. HSN

would form the basis of product classification for both CGST and SGST.

• GST would have a multi rate structures with standard rate, concessional rate,

special rate, exempted/nil rated etc. It is not yet clear whether services and

goods will have the same rate or be subjected to tax at different rates. Further,

the Government is yet to specify the rate of taxes proposed for each of the

category.

• GST will be levied on supply of goods and services and the supplier will be

allowed credit for the GST paid on purchases. The credit would be seamless

except that the credit of CGST paid will not be allowed for set-off against SGST

payable and vice versa.

• If there is any excess credit of un-utilised SGST or CGST it may not be

refundable except in case of exports and supplies to SEZ.


SALIENT FEATURE OF GST Contd…

• Administered by Three Laws

(a) Central Goods and Services Tax Act

(b) Integrated Goods and Service Tax Act- lot of changes in present concept of CST Act.

(c) State Goods and Services Tax Act ; or

(d) Union Territory Goods and Service Tax

• Local supplies would be subject to Central GST (CGST) and State GST (SGST)/ UTGST

at specified rates, while inter-State supplies would be subject to Integrated GST (IGST).

Export of goods and services/ supplies to SEZ units & developers would be zero rated.

• Either of the Central Government or the State Government will have the authority and

control over the assessee. Accordingly, the assessee would be required to pay GST into

the specified account of the State/Central and file periodic online returns.

Concerns :

* Number of Returns

* Assessment and Appeals

* Other Compliances.

* Shifting of Authorities from Central to State or vice a versa


How GST is different from the current system?

• In the current system, there is plethora of taxes, while GST seeks

to subsume majority of them into a few legislations.

• Further, in the current system, the supplier is restricted on taking

credit of the taxes so paid against the output tax payable by him.

GST seeks to eliminate / reduce the effect of cascading of tax by

providing seamless credit through the entire chain.

• The current scenario would be different in the context of

manufacturer, trader and service provider.

• GST will allow seamless flow of credit eliminating or reducing the

effect of cascading and seeks to do away with plethora of taxes in

the supply chain.


CGST/SGST/IGST

CGST would be levied by the Central Government and will be on value of goods and services.

Will subsume Excise Duty/Service Tax/CVD/SAD/Surcharge/Cesses.

Basic custom duty will continue.

SGST would be levied by the State Government and will be on value of goods and services.

Will subsume VAT/Entertainment Tax/Luxury Tax/Surcharges/Cesses/ Entry Tax (including

in lieu of octroi) Octroi. Similarly Purchase Tax in some cases will also be subsumed.

Stamp Duty, Municipal Levies, Royalties, Electricity Duty may continue. The position of

Special Sales Tax Payable in some cases like sale of Electricity. No clarity- should be

subsumed.

IGST would be total of CGST and SGST and will be levied on inter-State transaction of

sales and services. If SGST rates differ in various States then IGST rate will be as notified

under IGST Act. In such cases importing State will get credit of SGST at Standard Rate.

CGST rate being Standard, Credit will be available.

Will replace Central Sales Tax (CST).


GST RATES

Report on Revenue Neutral Rate and recommended GST Rates

Revenue neutral rate: 18%

Standard rate: 18%

Expected Rate on precious metals: 2-5%

Lower rate: 5% & 12%

Sin/demerit rate on luxury cars, aerated beverages, tobacco and

tobacco products: 28%

+ Cess

CGST + IGST = to be collected by

Central Government

SGST = to be collected by Each

State Government.

It was suggested in FAQ that SGST Rate

would be same.

?? How far it could be applied

To be seen!!!!

States have Band for Fiscal Flexibility


Revenue Neutral Rate (an Example)

1st Stage Final Stage

Present GST Present GST

Price 10,000/- 10,000/- 20,000/- 20,000/-

Excise @12.36%/ CGST @9%

1,236/- 900/- 1,236/- 1,800/-

VAT @ 12.5% / SGST @9%

1,405/- 900/- 2,655/- 1,800/-

TOTAL 12,641/- 11,800/- 23,891/- 23,600/-


Local Supply (within the State)

Local transaction of supply of goods and/or services dual GST i.e. CGST

and SGST will be payable. For example :

Basic value charged for supply of goods or services 10,000

Add : CGST @ 9% 900

Add : SGST @ 9% 900

Total price charged for local supply of goods or services 11,800

Note : In the above illustration, the rate of CGST & SGST is assumed to be 9% each.

The CGST & SGST charged on the customer for supply of goods or services will be

remitted by the seller into the appropriate account of the State/Central Government.


Inter-State Supply (from one State to another State)

When SUPPLY of Goods and/or Services is from One State to

Another, the transaction is Inter State Supply and “ IGST ” will be

leviable.

Inter-State transaction of supply of goods and/or services a single

IGST which will be prescribed under IGST law and likely to be

equivalent to CGST and SGST. For example :


Add : IGST @ 18% 1,800

Total price charged for inter-State supply of goods or services 11,800

Note : In the above illustration, the rate of CGST & SGST is

assumed to be 9% each.


Inter-State Supply Contd…

Total IGST will be remitted by the seller into the appropriate account

of the Central Government.

The CGST component will go to Central Government and SGST

component will be refunded by Central Government to the

purchasing State.

The inter-State purchaser will be eligible for credit of IGST.

The exporting State would therefore loose the tax which is being

compensated by way of allowing tax on services and compensation

from the Centre.


EXPORTS

Export out of India of goods and/or services would be zero rated.

In other words, the supplier will be allowed to export the goods

and/or services without charging any tax. For example:


Add : GST @ 0% NIL

Total price charged for export of goods or services 10,000

However, penultimate export of goods and/or services would attract

applicable tax on local/inter-State sale and actual exporter will get

set-off of CGST/SGST/IGST.

This may result in requirement of more Working Capital as it may

take nearly 3 months to take refund and will increase transaction

cost.


How would imports be taxed under GST?

In the current scenario, imports are subject to basic customs duty, countervailing

duty, customs cess and special additional duty in the hands of importer. In the GST

regime, imports would be subject to basic customs duty IGST. Again in the hands

of Importer IGST would be allowed as set off. Thus effective rate of tax may

come down.

Pre-GST GST

Basic Customs duty 10.00% Basic Customs duty

(Assumed rate)

10.00%

Countervailing duty 12.36% IGST (Assumed rate)

[CGST 9% +

SGST 9%]

18.00%

Customs Cess 3.00%

Special Additional Duty 4.00%

Total duty (Pre GST) 29.36% Total duty (GST) 28.0%


INPUT TAX CREDIT

Input Tax Credit refers to credit of IGST/CGST/SGST paid on

supply of goods/services for use in course or furtherance of

business

The supplier of goods or services will be allowed credit of GST paid on purchases for set-

off against the GST payable on sales.

ITC available only to the extent used for business purposes

ITC available only to the extent used for taxable supplies (in case

used for taxable/non-taxable/exempt supplies)

Meaning

Reversal

Requirements

Eligibility of credits could significantly increase on account ofchanges in taxability of output as compared to the present regime

For service providers and traders credit of GST paid on goods and services respectively could significantly increase the credit pool

Availment and utilization of credit of state wise GST would require appropriate vendor communication and recording of credit

Impacts

Concerns Matching with Tax paid by supplier

Nexus with output supply

Transitional provision for Inventory on first day and position of presently non

refundable tax component.

Taxes Paid in other states on Local supplies in that state.


INPUT TAX CREDIT UNDER GST

The assessee/dealer will be entitled to avail credit of GST paid on purchases. In

this regard, the dealer may purchase the goods or services locally or inter-State or

as imported. The following taxes paid on purchases when made locally, inter-State

or imported, would be available as credit in the hands of purchases.

The assessee is required to account for CGST, SGST and IGST separately, because cross

utilisation is not permitted.

Type of purchase Local Inter-State Imported

GST incidence on purchase

(taxes payable)

CGST

SGST

IGST BCD

IGST

Credit entitled on

(with respect to taxes paid)

CGST

SGST

IGST IGST

ITC ON CAPITAL GOODS UNDER GST: Full and immediate input credit

would be allowed for tax paid both CGST and SGST on all purchases of capital

goods in the year of acquisition of capital goods. Similarly any transfer of capital

goods later would also attract GST liability like all other goods and services.


Availability of ITC

ITC available only to the extent used for business

purposes

ITC available only to the extent used for taxable supplies (in case used

for taxable/non-taxable/exempt

supplies)

Concern: ITC on Goods & Services Procured in other states like (1)

Advertisements (2) Business Promotion (3) Employees Business Travel Cost on

other state etc.


Non Admissibility of Input Tax Credit

ITC on Motor Vehicles othwerwise than if used in the course of business.

ITC on foods and beverage, outdoor catering, beauty treatment, health service,

cosmetic and plastic surgery, club membership, health and fitness center, life

insurance, health insurance, travel benefits extended to employees for personal

use.

ITC on purchases from a composition dealer.

If a dealer has claimed depreciation on the tax component of capital asset

under the Income Tax Act, input tax credit will not be allowed on the said tax

component.

ITC on Goods/services in the execution of works contract if it results in

construction of immovable property otherwise than as a part of Plant &

Machinery.

To non Registered Person.

Concept of Proportionate Input Tax Credit in certain cases

Concept of Input Tax Credit in case of Jobwork

© ASHOK CHANDAK

Input Tax Credit - Change in Constitution

On sale, merger, demerger, transfer of business the unutilized ITC in the books of business can be transferred if the transfer is with specific provision for transfer of liabilities.

[email protected] 34


CROSS UTILISATION OF CREDITS UNDER GST

The assessee may have paid CGST, SGST or IGST on its purchases which he can

adjust against output CGST and SGST on local supplies and IGST on inter-State

supplies. The following table provides credit utilisation towards output tax

payable:

Nature of tax paid on purchase Can be utilised for

payment of

CGST CGST

IGST

SGST SGST

IGST

IGST IGST

CGST

SGST


IMPACT ON PURCHASE OF GOODS UNDER GST

GST

Note : The corollary to the above would be the impact on sales.

Full credit of SGST &

CGST No retention

Local purchases

(CGST 10%)

(SGST 10%)

Full credit of IGST even if

purchased from any

registered dealer

Interstate Purchase

(IGST 20%)


ITC TO BE ALLOWED AS PER GSTN

WHAT IS

GSTN ?Goods And Service Tax Network

developed for the first time to

establish a uniform interface for

the tax payer and a common and

shared IT infrastructure between

the Centre and States


IMPACT ON PROCUREMENT OF SERVICE

UNDER GST

In the current scenario, procurement of taxable services would be

subject to Service Tax. Considering that Service Tax is levied by the

Central Government, the tax would be the same, whether procured

locally or inter-State. Current rate is 15%. Similarly Import of

services, attract tax @15% under reverse charge which is available

for credit. However, in the GST regime, services procured from

outside the State / Country would be subject to IGST and services

procured from within the State, would be subject to CGST and

SGST. The total tax would be available for credit. Total rate of

service tax is likely to be 18-20%. Thus B to C will become costlier.


STOCK TRANSFERS UNDER GST

In the current scenario, stock transfer of goods or services

is not subject to VAT/CST or Service Tax so also in some

cases Excise. However, in the GST regime, Out of State

stock transfers will become taxable. In case subsequent to

stock transfer, the goods are exported out of India, this

would lead to a case of blocking of working capital.

Factory Export

Factory Export

NIL

Export Port Branch

Other State/ Business Vertical

GST NIL


THRESHOLD LIMIT UNDER GST

Uniform threshold of INR 20 Lakhs for both goods and

services and Rs. 10 Lakhs for North Eastern States.

This is consolidated limit of any person throughout the country.

Custom Nil

Excise 1.5 Crore

Service Tax 10 Lakhs

VAT By and large 10 Lakhs

* Compulsory Registration : Without any Threshold.

Present

Limits


COMPOSITION SCHEMES WHETHER

CONTINUE UNDER GST

The model law provides for upper ceiling of gross annual

turnover of INR 50 Lakhs with a floor tax rate of 1%

across the States for composition scheme. The scheme

would also allow option for GST registration for dealers

below the compounding cut-off. This limit also needs

enhancement.


BURDEN OF TAX INCREASE WITH GST

GST seeks to consolidate different transaction taxes into a

single legislation and reduce transaction cost. The effective

tax burden may increase in some of segments, while in

some cases it will reduce.

© ASHOK CHANDAK

e-Commerce

Every Assessee Selling goods on e-platform need to be registered compulsorily without any threshold.

Every electronic commerce operator shall, at the time of credit of any amount to the account of supplier of goods and/or services or at the time of payment of any amount in cash or any other mode , which ever is earlier, collect an amount as TCS.

Amount collected as TCS should be deposited with government within 10 days after end of month.

Details of such TCS should be uploaded within 10 days of succeeding month.

The data provided by operator will be cross checked by the supplier and discrepancies if any will be communicated .

[email protected]

© ASHOK CHANDAK

Tax Deduction at Source (TDS)

➢ Government may require

o A department or establishment of CentralGovt/State Govt

o Local Authority

o Governmental Agencies

o Other notified person

o To Deduct tax @1% from payment made orcredited to supplier of taxable goods and/or services

o Where value of such supply under a contract exceedTEN LAKHS.

o The deductee will get the credit of such deduction.

[email protected]


Integrated Goods and Services Tax IGST

To Govern the supply of goods and services in the course ofinterstate trade and commerce. This will replace Central SalesTax. The major issue what is interstate transactions of supplyof goods and services which is covered by the law.

All the interstate supplies will attract IGST and services

IGST rate will be on specified.

A supply of goods and /or services in the course of importinto the territory of India shall be deemed to be a supply ofgoods and /or services in the course of inter-State trade orcommerce and will attract Tax on Reverse charge basis.

An export of goods and/or services shall be deemed to be asupply of goods and/or services in the course of inter-Statetrade or commerce attracting Zero rate.

Any supply of goods and services where the location of thesupplier and the place of supply are in different state then thesupply will be called as Interstate supply of goods.


TRANSITIONAL PROVISIONS

Full chapter Section 139 to 142

GST registration of existing Tax payer

Carry forward of credit of Cenvat & VAT

Utilization of un availed Cenvat Credit on Capital Goods

Switchover to composition scheme

Return of Goods duty paid/exempted goods – inputs sent to job worker

Semi finished Goods received from job worker

Return of Finished Goods removed for certain process

Price revision under negotiation

Refund claim and Cenvat Credit claims

Penalty proceedings and litigation

Recovery of duty or amount of wrong credit.


ADMINISTRATION OF GST

India would implement dual GST. With a dual structure in place, the

SGST will be administered by each of the State and CGST will be

administered by the Centre. Consequent to the dual structure, the

benefit of Large Tax Payer’s Unit (LTU) and centralised registration

under Service Tax may be lost. Industry may represent that for units

operating under multiple jurisdictional presence, LTU/centralised

registration concept be continued for CGST/SGST.

GST COUNCIL to comprise up of

Chair person :- Union Finance Minister

Vice Chairman :- To be chosen amongst themselves

Members :- MOS in Finance Ministry (Revenue)

Finance Ministers of States or any other nominated by the State

Ex-officio Secretary :- Revenue Secretary of the Govt. of India.

Permanent Invitee:- CBEC chairman who will not be allowed to vote


NON-TAXABLE PERSON

Aggregate turnover below specified limit

Not taxable-Employer Employee

relationshipon liable under RCM receiving services for personal use

PERSON LIABLE TO PAY TAX (i.e. Taxable Person)


TAXABLE EVENT IN GST IS SUPPLY

Sale, transfer, barter, exchange, license, rental, lease or disposal

made for a consideration (with a few exception)

made in furtherance of business (with few exception)

Importation of service, whether or not for a

consideration /in course of furtherance of business is a

supply

SUPPLY

to include


• Goods and services supplied without consideration for furtherance of business.

• Business Assets put to non-business use, even without consideration.

• Barter/exchange transaction.

• Branch transfer.

Scope of ‘taxable event’ expanded

Supply includes……


TIME OF SUPPLY OF GOODS (LIABILITY TO PAY TAX ARISES)

Earliest of the following :-

(a)(i) If the goods are physically required to be removed the date of removal by the supplier for supply.

(a)(ii) If the goods are NOT physically required to be removed the date on whichgoods are made available to the recipient.

Means i) Where goods are physically not capable of being moved.ii) Goods are supplied in assembled or installed form.

iii) Goods are supplied by the supplier to his agent or his principal.

‘Made available to the recipient’ means when goods are placed at the disposal of therecipient.

(b) The date on which supplier issues invoice with respect to the supply.The supply shall be deemed to have been made to the extent it is covered by the

invoice.

(c) The date on which the supplier receives the payment with respectto the supply.

The supply shall be deemed to have been made to the extent it is covered by the payment.


‘The date on which the supplier receives the payment’ means the date onwhich payment is entered in his books of account or the date on whichpayment is credited to his bank account, whichever is earlier.

(d) The date on which the recipient shows the receipt of goods in hisbooks of account.

In case of continuous supply of goods

where successive statement of account or successive payments areinvolved, the time of supply shall be the date of expiry of the period towhich such successive statement of account or successive paymentrelate. If there is no successive statement of account, the date of issueof the invoice (or any other document) or the date of receipt ofpayment, whichever is earlier, shall be the time of supply.

Continuous supply of goods shall be specified, by notification, by theCentral/State Government on the recommendation of GST Council.

TIME OF SUPPLY OF GOODS (LIABILITY TO PAY TAX ARISES) Contd…


DIFFERENT PROVISIONS IN SUPPLY

Time of Supply When

1) Goods Sent on Approval

2) Supply of Services

3) Continuous Supply of Service

4) Reverse Charge for Supply

5) Time of Supply of Service :Change in rate of

Tax


Place of supply (specified transactions)

In relation to immovable Property including architect, interior decorator,

estate agent

Lodging, accommodation by a hotel, Inn, guest house

Accommodation in any immovable property for organizing marriage etc

Any service incidental to above

Restaurant, Catering service, Personal grooming, fitness, beauty parlours

Service in relation to training & performance appraisal

Service in relation to Organizing of a cultural, artistic, sporting, scientific,

educational or entertainment Event, conference, fair exhibition etc.

Admission to cultural, artistic, Sporting, scientific event, Amusement park


Place of supply (specified transactions)

Service of transportation of Goods including by mail or courier

Passenger transportation

Passenger transportation

Supply of service on board of A conveyance

Telecommunication service by fixed telecommunication line

In case of mobile communication Internet - Pre paid

In case of mobile communication Internet - Post paid

Banking and other financial Services, stock broking

Insurance services

Advertisement to a govt./ local authority for identifiable state

© ASHOK CHANDAK

To a registered

person

•Location of

•service receiver

[email protected]

Place of supply (other than specified transactions) : Services

SERVICE

To a non registered person

*Location of the service

receiver available on the

records of service provider or

*Location of the service

provider

• For determining the

appropriate levy-

CGST & SGST vs

IGST vs export

• Like present POPS,

2012 Rules, various

specified categories

of supply of

services provided

• New concept for

goods

56

© ASHOK CHANDAK

Movement of goods

*Location at which

movement of

goods terminates

for delivery

[email protected]

Place of supply (other than specified transactions) :Goods

GOODS

No Movement of goods

Location of goods at

the time of delivery

to the receiver

Goods are delivered

at the direction of third

Person

Principal place of

business of third person

Goods assembled or

installed at site

Place of such installation

or assembly

Goods supplied on board

of a conveyance i.e. vessel,

aircraft, train

Location at which such

goods are taken on board

Other cases

By law made by

the parliament

• For determining the

appropriate levy-

CGST & SGST vs

IGST vs export

• Like present POPS,

2012 Rules, various

specified categories

of supply of

services provided

• New concept for

goods

57


ExistingSituation

Excise

- MRP Based Valuation in certain cases

-Transaction Value

Tariff Value

VAT

No specific rules except certain inclusions and exclusions

Service Tax

Specific rules for certain sectors

Post GST Situation (Specified Situations)

GST

- Determination by comparison

- Computed Value Method

- Residual Method

- Rejection of declared value

- Valuation in case of pure agent and money changer

• Relationship between parties need to be considered for determining value of supply• Concept of MRP based valuation is not part of Model Law • For transactions of supply of services without consideration, determination of of

services could pose challenges

Supply of goods and services will

be valued as per transaction value.

Valuation Rules must be referred

in following situations

• Supplier and recipient are related

• Reason or doubt about truth and

accuracy of transaction value

• Consideration is not in money,

wholly, or partly

© ASHOK CHANDAK

RETURNS

➢ TYPES OF RETURNS :-

a) OUTWARD SUPPLIES

b) INWARD SUPPLIES

c) INWARD/OUTWARD SUPPLIES & ITC,TAX PAYMENT

d) TDS RETURNS

e) INPUT SERVICE DISTRIBUTORS

f) COMPOSITION RETURNS

NOTE: NO REVISED RETURNS

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© ASHOK CHANDAK

PAYMENT OF TAX, INTEREST, PENALTY:

Tax has to be paid on or before filing of relevant return.

(Generally on 20th of the Succeeding Month)

Every deposit towards tax, interest, penalty will be made by internet banking/ credit/ debit card/ NEFT/ RTGS or any other mode will be credited to taxable person’s electronic cash ledger.

The ITC self assessed in the return will be credited to taxable person’s electronic credit ledger.

The amount available in electronic cash ledger/ electronic credit ledger may be used for making payment towards tax payable subject to conditions

Appropriate Amount be disclosed in relevant column (like Tax, Interest Fees etc.)while making payment.

Anti Profiteering Measures.

© ASHOK CHANDAK

ACCOUNTS & RECORDS

EVERY REGISTERED PERSON SHALL KEEP & MAINTAIN AT HIS PRINCIPAL

PLACE OF BUSINESS AS MENTIONED IN CERTIFICATE OF REGISTRATION,

A TRUE & CORRECT ACCOUNTS UNTIL THE EXPIRY OF SIXTY MONTHS

FROM THE LAST DATE OF FILING OF ANNUAL RETURN OF THE YEAR

PERTAINING TO SUCH ACCOUNTS AND RECORDS.

➢ TAX INVOICE ISSUED BY TAXABLE PERSON SHOUL CONTAINSDESCRIPTION , QUANTITY , VALUE OF GOODS, TAX CHARGED ; and

OTHER PARTICULARS AS MAY BE PRESCRIBED.

DEBIT & CREDIT NOTES CAN BE ISSUED BY REGISTERED TAXABLEPERSON WHERE TAX INVOICE ALREADY ISSUED IS FOUND TO EXCEED/LESS THAN THE TAXABLE VALUE AND/OR TAX PAYABLE IN RESPECT OFSUCH SUPPLY ON OR BEFORE SEPTEMBER, 30 OF SUCCEEDINGFINANCIAL YEAR.

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ASSESSMENT

❖ SELF ASSESSMENT

EVERY DEALER SHALL HIMSELF ASSESS TAX PAYABLE & FURNISH RETURN FOR EACH TAX PERIOD.

❖ PROVISIONAL ASSESSMENT

WHERE ANY TAXABLE PERSON IS UNABLE TO DETERMINE VALUE OF GOODS AND/OR SEVICES , OR RATE OF TAX

APPLICABLE THERE TO, HE MAY REQUEST THE OFFICER IN WRITING GIVING REASONS FOR PAYMENT OF

TAX ON PROVISIONAL BASIS AT SUCH RATE OR ON SUCH VALUE AS MAY BE SPECIFIED BY HIM.

PROPER OFFICER SHALL PASS FINAL ORDER WITHIN 6 MONTHS FROM DATE OF COMMUNICATION OF ORDER.

❖ SCRUTINY OF RETURNS MAY BE EITHER OF TWO AUTHORITIES

❖ BY CENTER OR BY STATE

PROPER OFFICER MAY SCRUTINIZE THE RETURN AND RELATED PARTICULARS.

❖ ASSESSMENT OF NON-FILERS OF RETURNS : PROPER OFFICER MAY AFTER GIVING NOTICE OF 15 DAYS PROCEED TO ACCESS THE TAX LIABILITY OF DEALER TO BEST OF JUDGEMENT, TAKING INTO ACCOUNT RELEVANT MATERIAL WHICH IS AVAILABLE. IF DEALER FURNISHES A VALID RETURN WITHIN 30 DAYS OF SRERVICE OF THE ASSESSMENT ORDER, THE SAID ASSESSMENT ORDER SHALL BE DEEMED TO HAVE BEEN WITHDRAWN.

CONCERN: DIVISION OF DUTIES BETWEEN CENTRE & STATE63

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ASSESSMENT

❖ ASSESSMENT OF UNREGISTERED PERSONS

IF TAXABLE PERSON FAILS TO OBTAIN REGISTRATION EVEN IF LIABLE TO DO SO,

THE PROPER OFFICER MAY PROCEED TO ASSESS THE TAX LIABILITY OF SUCH

PERSON TO THE BEST OF JUDGEMENT FOR RELEVANT TAX PERIODS AND ISSUE

ASSESSMENT ORDER WITHIN THE PERIOD OF 5 YEARS FROM DUE DATE FOR FILING

OF THE ANNUAL RETURN FOR THE YEAR TO WHICH THE TAX NOT PAID RELATES.

❖ SUMMARY ASSESSMENT IN CERTAIN SPECIAL CASES PROPER OFFCIER MAY, ON ANY EVIDENCE

SHOWING A TAX LIABILITY OF A PERSON COMING TO HIS NOTICE, WITH PREVIOUS PERMISSION OF ADDITIONAL/JOINT COMMISSIONER, PROCEED TO ASSESS TAX LIABILITY OF

SUCH PERSON TO PROTECT THE INTEREST OF REVENUE AND ISSUE AND ASSESSMENT ORDER ,

▪ IF HE HAS SUFFICIENT GROUND TO BELIEVE THAT ANY DELAY IN DOING SOWILL ADVERSELY

▪ EFFECT THE INTEREST OF REVENUE.

[email protected]

© ASHOK CHANDAK

AUDIT BY TAX AUTHORITIES

➢ DEPARTMENTAL AUTHORITIES MAY UNDER TAKE AUDIT OF THE BUSINESSTRANSACTION OF ANY TAXABLE PERSON FOR SUCH PERIOD, AT SUCH FREQUENCY, &

IN SUCH MANNER AS MAY BE PRESCRIBED.

➢ AUDIT SHALL BE CONDUCTED IN TRANSPARENT MANNER , & COMPLETED WITHIN 3MONTHS FROM THE DATE OF AOMMENCEMENTOF AUDIT.

➢ THE PERIOD OF 3 MONTHS MAY BE EXTENDED BY FURTHER PERIOD NOT EXCEEDING6 MONTHS FOR THE REASON RECORDED IN WRITING.

➢ SPECIAL AUDIT : OFFCIER HAVING REGARD TO THE NATURE & COMPLEXITY OFTHE CASE & THE INTEREST OF REVENUE OFFICER MAY WITH PRIOR APPROVAL OFCOMMISSIONER,DIRECT SUCH TAXABLE PERSON IN WRITING TO GET HIS RECORDSAND BOOKS OF ACCOUNTS

➢ EXAMINED AND AUDITED BY A CHARTERED ACCOUNTANT OR A COST ACCOUNTANTAS MAY BE NOMINATED BY COMMISSIONER IN THIS BAHALF.

[email protected]

© ASHOK CHANDAK

APPEALS

➢ FIRST APPEAL TO PRESCRIBED FIRST APPELLATTE AUTHORITY EITHER STATE ORCENTRAL

➢ PROVISION OF APPEAL BY DEPARTMENT

➢ TIME OF APPEAL – WITHIN 3 MONTHS OF DATE OF COMMUNICATION OF ORDER.

➢ APPELLANT SHALL DEPOSIT 10 % OF AMOUNT IN DISPUTE FROM SAID ORDER.

➢ NO ADJOURNMENT FOR MORE THAN 3 TIMES DURING THE HEARING OF APPEAL.

➢ CENTRAL GOVERNMENT ON RECOMMENDATIOHN OF GST COUNCIL TO CONSTITUTENATIONAL APPELLATE TRIBUNAL (NAT) FOR SECOND APPEALS.

➢ APPEAL AGAINST ORDER OF NAT CAN BE FILED BEFORE HIGH COURT.

[email protected]

© ASHOK CHANDAK

ADVANCE RULING

➢ AUTHORITY SHALL BE LOCATED IN EACH STATE.

➢ APPLICATION FOR ADVANCE RULING CAN BE MADE ON CERTAIN QUESTIONSRELATING TO CALSSIFICATION, APPLICABILITY OF NOTIFICATION, ADMISSIBILITYOF ITC ETC.

➢ APPEAL AGAINST DECISION OF ADVANCE RULING AUTHORITY CAN BE FILED BEFOREAPPLETTE AUTHORITY CONSTITUTED FRO SUCH PURPOSE.

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INPUT SERVICE DISTRIBUTOR (Manner of Distribution)

1) Credit of CSGT as IGST / IGST as IGST

2) Credit of SGST as IGST (State Act to Provide)

If the ISD and recipient of Credit are in two

different states

1) Credit of CGST & IGST as CGST

2) Credit of SGST & IGST as SGST

If the ISD and the recipient (business

vertical are in the same state)

© ASHOK CHANDAK

REFUNDS Under GST: No refund of unutilised credit

Refund allowed in case of exports which are not subject to export duty and where rate of tax on input is higher than the rate of tax on output.

Refund other than in above cases is allowed in case of payment of excess tax by Mistake.

Unutilised credit carried forward to unlimited period.

Presently Central Excise/Service Tax no refund in VAT refund is after end of the year.

Refund allowed only on making an application on or before two years from the relevant date.

Limit of two years will not apply if tax or interest was paid under protest.

The application should accompany document/ other evidence to establish that payment of tax and interest was not passed to any other person.

Exception: If the refund is less than FIVE LACS no documentary evidence will be needed only a declaration is sufficient.

In case of export of goods/ services made by notified persons 80% of the refund will be granted on provisional basis and 20% on verification of documents.

The order granting refund should be issued from the date of receipt of complete application containing all prescribed information.

Refund other than above two cases (i.e. in case of Exports)

Provisions for Withholding the refund are also found in GST Law.


© ASHOK CHANDAK

INTEREST ON DELAYED REFUND:

If tax refundable is not refunded within three months from the date of receipt of application

Interest at specified rate shall be granted.

There should not be disparity in rate of interest payable and receivable.


© ASHOK CHANDAK

REVERSE CHARGE UNDER GST

Reverse charge means the liability to pay tax is by the recipient of goods/services instead of the supplier.

Reverse charge may be applicable for both services as well as goods.

Situations where reverse charge will apply

1. Unregistered dealer selling to a registered dealer

In such a case, the registered dealer has to pay GST on the supply.

2. Services through an e-commerce operator

If an e-commerce operator supplies services then

reverse charge will apply on the e-commerce operator.

He will be liable to pay GST.

3. Other categories of supplies applicable for reverse

charge will be notified by the Centre or State

Government.


© ASHOK CHANDAK

E WAY BILL UNDER GST (DRAFT RULES ISSUED)

E-way bill is an electronic way bill for movement of goods which can be generated on the GSTN (common portal). A ‘movement’ of goods of more than Rs 50,000 in value cannot be made by a registered person without an eway bill.

E-way bill will be generated when there is movement of goods –

1) In relation to a ‘supply’

2) For reasons other than a ‘supply’ ( say a return)

3) Due to inward ‘supply’ from an unregistered person

E-way bill will be issued with Validity.

E- way bill to be carried alongwith the invoice/ bill of

supply/ delivery challan, as the case may be.


https://cleartax.in/s/cleartax-guide-on-gst-portal

© ASHOK CHANDAK

GST COMPLIANCE RATING

The GST compliance rating is a score given by the government to a business soas to see how compliant they are with the tax department. This score will becalculated based on parameters such as timely filing of monthly and annualreturns, furnishing details of input credits used, taxes paid, etc.

Why Compliance Rating?

➢ According to the GST law, refund claims under the GST

regime will also be processed on merit basis, i.e on the

GST compliance rating of the registered taxpayer.

➢ Can be used by the other business to see that how

compliant the particular assesse is with the tax department.



PREPARATION FOR GST

o Registration and Migration from Existing Laws.

o Obtain Excise Invoices for all purchases.

o Keep closing stock as on 30.06.2017 as minimum as possible.

o Avoid CST purchases nearer to 30.06.2017.

o Design accounting procedure.

o Assess impact of GST on the products till the stage of final consumer.

o System Designing.

o Stationery Printing.

o Registration.

o Consult your Advisor before taking any initial decision.


WILL GST BENEFIT THE INDUSTRY

AND TRADE ????

GST would be beneficial to and is in the larger interest of industry

and trade by providing a simple, more comprehensive and wider

coverage of input tax credits and by subsuming majority of the

indirect taxes within its ambit. Consequent to elimination or

reduction in the cascading effect of taxes, the system would become

more transparent and self-policing. Further, to the exchequer, it will

widen their tax base, provide better tax compliance and may lead to

reduction in the tax burden on all dealers at large in the industry and

trade, provided tax compliance is made simplified.

CONCLUSION


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