GOODS AND SERVICE TAX

Summary1. Existing Tax structure2. Proposed Tax structure3. GST Position as on date4. What is GST, CGST, IGST & SGST5. How GST Will Work6. Benefit of GST7. Registration Under GST8. Transitional Provision for Registration9. Process & requirement for Registration10. Composition Scheme under GST11. Conditions for Composition Scheme12. Invoice Under GST13. Input Tax Credit14. Transaction how to utilize ITC15. Transitional Provision under GST16. Credit C/f17. Credit on stock18. Credit on capital Goods19. Goods Under Transit20. Return Under GST21. Requirements for return

Existing Tax Structure

Tax Structure in IndiaDirect Taxes

Indirect Taxes

Income Tax Gift TaxesState Tax

Central TaxCustom Tax

Excise Duty

Service Tax

CST

Surcharge & Cess

VAT

Entertainment Tax

Luxury Tax

Entry Tax

Surcharge & Cess Taxes on Lottery

Security Transaction Tax

Property Tax

Stamp Duty

Electricity Duty

Environment Tax

Export Duty

Taxes on Betting & Gambling

Credit Issue under current structureCredit of

Service Tax

VAT Excise Service Tax

Credit of VAT

Credit of Excise

VAT Excise Service Tax

VAT Excise Service Tax

(in some situation)

(in some situation)

Proposed Tax Structure under GST

State TaxCentral Tax

Excise Duty

Service Tax

CST

Surcharge & Cess

VAT

Entertainment Tax

Luxury Tax

Entry Tax

Surcharge & Cess

Taxes on Lottery

Security Transaction Tax

Taxes to be subsumed under GST

Taxes not subsumed under GST

Basic Custom Duty

Export Duty

Property Tax

Stamp Duty

Electricity Duty

Environment Tax

Way forward

• Constitution (101st) Amendment Act already notified on 08.09.2016

• GST Council already notified wef 12.09.2016

• Recommendation of Model GST laws by GST Council

• Passage of CGST and IGST laws by Parliament and passage of SGST laws by all State legislatures

• Notification of GST Rules

• Establishment of IT framework

Now What is GST?

One Tax For

Manufacturing

Trading

Services

Few Terms…

SGST ?CGST?IGST ?

Integrated GST

GST to be levied on Inter State Supplies

Three important Term

Tax Invoice Cost of Goods =

100IGST @20% =

20 Total =

120

Tax Invoice Cost of Goods =

100IGST @20% =

20 Total =

120

How GST Levied?

Tax Invoice (A)Cost of Goods =

100SGST (G) @10%

= 10CGST @10%

= 10 Total =

120

Tax Invoice (A)Cost of Goods =

100SGST (G) @10%

= 10CGST @10%

= 10 Total =

120

Location of

Supplier in

different state

Place of

Supply in

different

state

IGST

Location of

Supplier in

same state

Place of

Supply in

same state

SGST

LIMITATIONS OF CURRENT STRUCTURE VIS-A-VIS BENEFIT OF GST

Credit of Excise not allowed Credit of CST Not Available

MAHARASHTRA MADHYA PRADESH1. Cascading Effect of Tax

In GST Credit Will be Available in All the stages

2. Registration Under Different Act

In GST Single Registration In a State

3. Different Point of Taxation

Excise(On Manufacturing)

Service Tax(On provision of Service)

VAT( On sale of Goods)

In GST Same Rule for point of taxation for every type of transaction

No Entry Tax

Entry Tax

Value Added Taxe.g. on Sugar

@ 4%@ NIL %

4. Lack of Uniformity

One India One Market in GST

5. Goods Vs. Services dilemma & Manufacturing Vs. Service dilemma:

Sale

Manufacturing

License Software in CD

Services

Sale of Food In Restaurant

In GST Schedule III Specify Matters To Be Treated As Supply Of Goods Or Services

Duties & Taxes

Cost of Goods

Burden of Tax make Local goods Costlier

in International Market

6. Limited Export

Due to GST our Product become Competitive in International Market

Different Reg. no.

Different Tax Rate

Different Details

Different Valuation

Different Forms

Different Format

Manual/ Online

7. Complicated Invoice

Different Rules are require to be followed under Different Acts

In GST Same Invoice for all type of transactions

Other Benefit of GST

Logistic BenefitPurchasing Option

TransparencyAbolishment of Purchase & Entry Tax

How GST will work?

Are you covered under GST?

Threshold Limit

Existing Taxes

Excise

Rs. 150.00 Lakh

Service Tax

Rs. 10.00 Lakh

VAT

Rs. 10 Lakh/ Voluntary

Proposed Tax

GST

Rs.20.00 Lakh in other

Rs. 10.00 Lakh In Northeast

COMPULSORY REGISTRATION UNDER GST

Aggregate Turnover includesi. All taxable & non-taxable suppliesii. Exempted supplies andiii. Export of goods and/or service

Further registration is mandatory in case ofa) Inter-state saleb) Casual taxable personsc) Reverse Charged) Non-residente) TDSf) Agentg) Input service distributorh) Electronic Commerce operatori) An aggregator with brand name

Registration

Compulsory Registration for Each State where business

situated

Option to take multiple registration for each business within same state

TRANSITIONAL PROVISION

Pre-GST

Registration under existing law i.e. VAT, S.Tax, Excise, etc

Not registered under existing law But liable to get Registration under GST

LAW:Issue of Registration Certificate on Provisional Basis

which will be valid for 6 MonthsApply for Registration within 30 days of becoming liable to Registration as per

Section 19.Liable to Reg under GST Not Liable to Reg under GST

Liable to furnish Info within prescribed time

Info furnished Info not furnished

Final Registration Granted

Registration will be cancelled

Follow the procedure as let down under Section 19 Apply for cancellation of

Registration

Enrolment Under GST

Sr. Question Answer1. What is Enrolment? Updating Database available about existing

tax payer by existing department.2. Who is Require to Enroll? Every existing taxpayer register under

existing law is liable to enroll on GST common Portal

3. What is the due date of Enrollment?

Due date of enrollment for VAT dealer in Maharashtra is 30th November 2016. However Enrollment portal will remain open till 31st January 2017.

4. Whether enrolment under both CGST & SGST Act is different?

No, On common Portal there is single enrollment for both CGST & SGST

Requirement for Enrollment

I. Provision ID Received from State/ Central AuthorityII. Password Received from State/ Central AuthorityIII. Email IDIV. Mobil No.V. Bank Account numberVI. Bank IFSCVII.Proof of Constitution of BusinessVIII.Photograph of Promoter/ Director/ PartnerIX. Proof of Authorized SignatoryX. Photograph of Authorized SignatoryXI. 1st Page of Bank Pass Book/ Statement

Composition Scheme

Taxable Supplies

Exempted Supplies Export

All supplies should be below Rs. 50.00 Lakh

In case of ManufacturePay Tax @2.5%

In case of TraderPay Tax @2.5%

Not Applicable to Service Provider

CONDITION FOR COMPOSITION SCHEME

Transaction all over the India should be consider for eligibility

i.e. PAN based turnover

Input Tax Credit Not allowed.

Inter State Supplies not allowed

Other Point related to scheme

E.g.: If Mr. X has to opt for composition scheme from 1st April, 2018, he has to fill the application on or before 31st March, 2018.If during the year, Mr. X’s turnover exceeds 50 lakhs at any point of time, his opted composition scheme will lapse and he will be shifted to the Normal scheme automatically.

Opt for scheme from 1st day of financial year only

Application should be filed before 31st march of previous year

Can shift from composition scheme to normal scheme at any time during year

Automatically shift to normal scheme if turnover exceed Rs.50.00

Shift over from Normal scheme under Existing Law to Composition Scheme under GST

Normal Scheme in existing Law

Want to Opt Composition Scheme under GST

There is unutilized credit under existing law

Pay an amount equal to Credit of stock held utilized

for pay tax

Un-utilized Credit will Laps i.e. reverse it

Invoice Under GSTTax Invoice

Name of SupplierAddress of Supplier

GST Registration No. of Supplier

Customer Name : Date : DD/MM/YYYYCustomer Address : Invoice No:Customer GST No. :

Sr. Description of Goods/Service *HSN Code of Goods

Qty Rate Total Abetment Taxable Supplies

1 XYZ 10 100 1000 1000

Total 1000 1000

Add: CGST @10% 100

Add: SGST @10% 100

Total 1200 1200

Authorized Signature*HSN -Harmonized System of Nomenclature (HSN)

Input Tax Credit

Do You know Input Tax Credit?State Tax= 14( 10 + 2 + 2)

SGST = 10

SGST = 12ITC = ( 10)Pay = 2

SGST=14ITC = ( 12)Pay = 2

CGST =10

CGST = 12ITC = (10) 2

Tax Invoice (A)Value = 100CGST = 10SGST = 10Total = 120

Tax Invoice (B)Cost = 100Value = 120CGST = 12SGST = 12Total = 144

Tax Invoice (C)Cost = 120Value = 140CGST = 14SGST = 14 Total = 168

Central Tax= 14( 10 + 2 + 2)

CGST= 14ITC = (12) 2

Input Manufacturer

Output Manufacturer Dealer Consumer

CGST Rate : 10%

SGST Rate : 10%

Credit on purchase of Input i.e. Raw Material, finished goods, Input service

Accounting Treatments

On Intra state purchase (Within the state purchase)

Material A/c………DrCGST A/c……………DrSGST A/c……………Dr To Supplier A/c………..Cr

On Inter State Purchase Material A/c………DrIGST A/c…………….Dr To Supplier A/c………..Cr

On Intra state Supplies Debtor A/c…………Dr To Sale A/c………………Cr To CGST………………….Cr To SGST………………….Cr

On Inter State Supplies Debtor A/c…………Dr To Sale A/c………………Cr To IGST……….………….Cr

On Payment of CGST or SGST if any Payable

CGST A/c……………Dr.SGST A/c……………Dr To Bank/Cash A/c…Cr

PRIORITY OF UTILIZATION OF CREDIT

CGST SGST IGST

CGST SGST IGST

IGST IGST CGST

SGST

CGST IGST SGST

Input 10000

30000 10000

Output 25000

10000 25000

Net (Refund)/Payable

15000

(20000)

15000

Payable - - 10000

TaxesParticular

what about credit on existing stock?

Eligible persons Credit entitled As onPerson applied for registration within 30 days of liable to register

Inputs held in stock & inputs contained in Semi finished or finished goods held

in stock

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

Person who is not required to register, but obtains Voluntary registration

The day immediately preceding the date of registration

Person ceases to pay composition tax

The day immediatelypreceding the date from which he becomesliable to pay tax under regular scheme

Person applied for registration After 30 days of liable to register Not entitle to take Input Tax Credit

When should I take credit?

Is in possession of a tax invoice ( not earlier than 1 year)

Goods/services are received

Tax on such goods are deposited with the Government by supplier

He has furnished return

INELIGIBLE CREDIT

Motor vehicles except used for usual course of business or for providing taxable services of –Transportation of passengers, goods or Imparting training or motor driving skills.

Specified goods and / or services as are used primarily for personal use or consumption of employee

Goods and/or services acquired by principal in the execution of works contract which resulted in construction of immovable property other than plant and machinery.

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.

Goods and/or services on which tax has been paid under composition scheme.

Goods and/or services used for private or personal consumption to the extent they are so consumed.

NOTE: Where the tax component has been capitalised to the asset and depreciation is claimed on it under Income-Tax Act, then no input tax credit shall be allowed on such tax component.

What about Credit under existing Law carried forward ?

What about Stock as on 31st March

Are You Planning to purchase Capital Goods?

Here is solution for You

Credit Under Existing Law carried Forward`

Input Tax

Credit

CENVAT credit

VAT credit

It includes Central excise Service Tax Education cess NCCD krishikalyan cess (only to

service provider) Additional duty u/s 3(1) of Custom Tariff Act

It includesITC under VAT law of state CVD 3(5) under CTA

CGST

SGST

Qualify for credit under existing law

Qualify for credit under GST law

Reflected in Return filled for period immediately before application date of

GST

Transitional Provision of Credit Of Input Held In Stock

I) If assessee is not liable to Register under existing law i.e. VAT & Service Tax because of following reasons: Turnover not exceeding exemption Limit or Deals in exempted goods or Paying tax in composition scheme.II) And he is liable to register under GST: So assessee is eligible to take credit of input held in stock on applicable date of GST in following

manner.

CENVAT credit VAT credit

It includesITC under VAT law of state CVD 3(5) under CTA

Can be availed against payment of CGST i.e.as a CGST Credit

Can be availed against payment of SGST i.e.as a SGST Credit

It includes Central excise Service Tax Education cess NCCD krishikalyan cess (only to service

provider) Additional duty u/s 3(1) of CTA

i. This Stock is used for making taxable goods

ii. Entity is not opted for composition scheme

iii. Eligible to take credit under earlier law but not taken due to limit or due to exempted goods or Composition scheme.

iv. Person is eligible to take credit under GST law.

v. Having invoice/document of this stock as on applicable date of GST.

vi. Above invoices/documents issued not earlier than 12 months of applicable date

vii. Amount should be calculated as per GAAP .

CONDITIONS FOR TAKING CREDIT OF INPUT HELD IN STOCK U/S 145

Transitional Provision for CAPITAL GOODS U/S 144

In case of capital goods, credit under excise is allowed in two equal installments :- 50% in the year of purchase and 50% in the subsequent year or thereafter.

Credit booked in year of purchase & c/f in return

Credit not booked in year of purchase i.e. not c/f as per return.

Carried forward in GST as CGST/SGST as the

case may be

Carried forward as per sec.144 in following manner

Cenvat Credit VAT Credit

GST

It includes Central excise NCCD Special Duty/ Countervailing Duty Additional duty u/s 3(1) of CTA

It includesITC under VAT law of state CVD 3(5) under CTA

CGST SGST

Accounting EntryCredit Under Excise, Service Tax, etc Carried forward in return

CGST A/c……………Dr. To CENVAT Credit A/c….Cr.

Credit Under VAT Law carried forward in return

VAT A/c………………..Dr To SGST A/c ………………….Cr.

Book Credit on Stock not carried forward in Return(By reducing cost of Stock)

CGST A/c…………..Dr.SGST A/c…………..Dr. To Goods A/c…………….Cr.

Credit of Capital Goods(assuming 50% of credit has been availed in last year)

CGST A/c………….Dr. To CENVAT (Deffered) Credit…Cr

100% Credit of VAT Paid on Capital goods is available in the year of purchase itself

MATCHING OF RETURN

1

• Upload the detail of outward supplies-including taxable supplies, exempt, export, deemed supplies, etc BY 10TH OF NEXT MONTH under GSTR-1

2• Accepted/ rejected/ modify by 15th of next month

auto drafted GSTR-2 Also upload detail of purchases not filed by supplier by

3• Accepted/ rejected/ modify by 17th of next month

detail filed by recipient in step 2

4 • GSTR-3 automatically generated on finalization as in Step:5

5• Pay the amount as shown in payable under

GSTR-3 & file the return by the 20th of next month.

GSTN Invoice IGST CGST SGST Place of SupplyNo. Date Value Goods

/Service

HSN Taxable Value

Rate Amt Rate Amt Rate Amt

Following Detail are required:1.Taxable Supplies to Registered Taxable Person2.Interstate Supply of Amount Exceeding Rs.2.5 Lakh to Consumer3.Taxable Supply to Consumer Other Than Above4.Detail of Credit/ Debit note5.Detail of Export6.Detail of Nil Rated, Exempted or non Taxable Supplies

Format of GSTR-1

Opportunity for Accountant?

• Monthly Updating of Accounting Require• Bill Wise Detail is to Maintain • Reconciliation with supplier vis-à-vis consumer to

take the credit and pass on the credit• For Transitional Credit Accounts need to be close

before 31st of March 2017• Detail of Stock as on 31st March2017 & Tax paid on

it is require to obtain to take credit of it.

ASK YOUR QUARY

CA Mayur ZanwarFCA, DISA, DIRM, B.com

Cell: 9422855595