CA. ASHOK CHANDAK BROAD CONCEPTS & OVERVIEW OF GST

Transcription

1 CA. ASHOK CHANDAK BROAD CONCEPTS & OVERVIEW OF GST ASHOK CHANDAK 1

2 ONE NATION ONE TAX = GOODS & SERVICE TAX ASHOK CHANDAK sbcngp@gmail.com 2

3 GST GOODS & SERVICES TAX OVERVIEW OF BASIC CONCEPTS & BROAD ANALYSIS OF GST LAW 3

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 31 st 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 4

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 5

6 PRESENT INDIRECT TAX STRUCTURE IN INDIA Three Tiers of Government * Union * State * Local 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 By Local Govt. Octroi/LBT Taxes on Property Taxes on Passengers Advertisement etc Motor Vehicles Tax ASHOK CHANDAK sbcngp@gmail.com 6

7 WHAT IS GST? - 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. ASHOK CHANDAK sbcngp@gmail.com 7

8 WHY GST? 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 of returns. 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. ASHOK CHANDAK 8

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 Tax Credit mechanism. Objective is to make India a common market Why GST? ASHOK CHANDAK sbcngp@gmail.com 9

10 Important Dimensions 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. ASHOK CHANDAK sbcngp@gmail.com 10

11 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 122 nd 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. ASHOK CHANDAK 11

12 PRE GST TAXES IN INDIA 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. ASHOK CHANDAK sbcngp@gmail.com 12

13 GST STRUCTURE Around 17 Laws to be Repealed/Subsumed IMPACT Special Additional Duty of Customs Service tax CGST Central Excise Duty VAT Central Sales Tax State cesses & surcharges on goods & services SGST Taxes on lottery, gambling Taxes on betting Additional Additional Duty of Customs Central cesses & surcharges on goods & services Additional Excise duties IGST to Replace CST Luxury Tax Purchase Tax Entertainment Tax (except by local bodies) Entry Tax/ Octroi TAXES TO BE SUBSUMMED ASHOK CHANDAK 13

14 GST STRUCTURE Taxes to Remain post GST State Electricity Duty Basic Customs Duty Taxes on liquors and petroleum products Environ ment tax TAXES TO REMAIIN POST GST Stamp duty Export duty Property tax Toll tax No Clarity about (a) Various cesses & (b) Tax on Sale of Electricity ASHOK CHANDAK 14

15 GST 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) Intra-State CGST CGST SGST IGST SGST Inter-State IGST (CGST+SGST) Input CGST against CGST IGST Input SGST against - SGST IGST Input IGST against IGST CGST SGST ASHOK CHANDAK sbcngp@gmail.com 15 15

16 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. ASHOK CHANDAK 16

17 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. ASHOK CHANDAK sbcngp@gmail.com 17

18 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. ASHOK CHANDAK sbcngp@gmail.com 18

19 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. ASHOK CHANDAK sbcngp@gmail.com 19

20 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 ASHOK CHANDAK sbcngp@gmail.com 20

21 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. ASHOK CHANDAK sbcngp@gmail.com 21

22 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). ASHOK CHANDAK 22

23 GST RATES Report on Revenue Neutral Rate and recommended GST Rates Sin/demerit rate on luxury cars, aerated beverages, tobacco and tobacco products: 28% + Cess Standard rate: 18% Revenue neutral rate: 18% Expected Rate on precious metals: 2-5% 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!!!! Lower rate: 5% & 12% States have Band for Fiscal Flexibility ASHOK CHANDAK sbcngp@gmail.com 23

24 Revenue Neutral Rate (an Example) 1st Stage Final Stage Present GST Present GST Price 10,000/- 10,000/- 20,000/- 20,000/ % / 1,236/- 900/- 1,236/- 1,800/- 1,405/- 900/- 2,655/- 1,800/- TOTAL 12,641/- 11,800/- 23,891/- 23,600/- ASHOK CHANDAK sbcngp@gmail.com 24

25 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 : 9% 900 Add : 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. ASHOK CHANDAK sbcngp@gmail.com 25

26 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 : Basic value charged for supply of goods or services 10,000 Add : 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. ASHOK CHANDAK sbcngp@gmail.com 26

27 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. ASHOK CHANDAK 27

28 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: Basic value charged for supply of goods or services 10,000 Add : 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. ASHOK CHANDAK sbcngp@gmail.com 28

29 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 Countervailing duty Customs Cess 3.00% Special Additional Duty 4.00% 10.00% Basic Customs duty (Assumed rate) 12.36% IGST (Assumed rate) [CGST 9% + SGST 9%] 10.00% 18.00% Total duty (Pre GST) 29.36% Total duty (GST) 28.0% ASHOK CHANDAK sbcngp@gmail.com 29

30 INPUT TAX CREDIT The supplier of goods or services will be allowed credit of GST paid on purchases for setoff against the GST payable on sales. Meaning Reversal Requirements Impacts Input Tax Credit refers to credit of IGST/CGST/SGST paid on supply of goods/services for use in course or furtherance of business 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) Eligibility of credits could significantly increase on account of changes 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 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. ASHOK CHANDAK 30

31 INPUT TAX CREDIT UNDER GST 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. 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. Type of purchase Local Inter-State Imported GST incidence on purchase CGST IGST BCD (taxes payable) SGST IGST Credit entitled on CGST IGST IGST (with respect to taxes paid) SGST The assessee is required to account for CGST, SGST and IGST separately, because cross utilisation is not permitted. ASHOK CHANDAK 31

32 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/nontaxable/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. ASHOK CHANDAK 32

33 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 sbcngp@gmail.com 33

34 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. ASHOK CHANDAK sbcngp@gmail.com 34

35 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: CGST SGST IGST Nature of tax paid on purchase Can be utilised for payment of CGST IGST SGST IGST IGST CGST SGST ASHOK CHANDAK 35

36 IMPACT ON PURCHASE OF GOODS UNDER GST GST Interstate Purchase (IGST 20%) Full credit of IGST even if purchased from any registered dealer Local purchases (CGST 10%) (SGST 10%) Full credit of SGST & CGST No retention Note : The corollary to the above would be the impact on sales. ASHOK CHANDAK sbcngp@gmail.com 36

37 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 ASHOK CHANDAK sbcngp@gmail.com 37

38 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 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. ASHOK CHANDAK sbcngp@gmail.com 38

39 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 NIL Export Factory GST Export Port Branch Other State/ Business Vertical NIL Export ASHOK CHANDAK sbcngp@gmail.com 39

40 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 Present Excise 1.5 Crore Limits Service Tax 10 Lakhs VAT By and large 10 Lakhs * Compulsory Registration : Without any Threshold. ASHOK CHANDAK sbcngp@gmail.com 40

41 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. ASHOK CHANDAK sbcngp@gmail.com 41

42 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 sbcngp@gmail.com 42

43 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. ASHOK CHANDAK 43

44 Tax Deduction at Source (TDS) Government may require o A department or establishment of Central Govt/State Govt o o o Local Authority Governmental Agencies Other notified person o To Deduct from payment made or credited to supplier of taxable goods and/or services o Where value of such supply under a contract exceed TEN LAKHS. o The deductee will get the credit of such deduction. ASHOK CHANDAK sbcngp@gmail.com 44

45 Integrated Goods and Services Tax IGST To Govern the supply of goods and services in the course of interstate trade and commerce. This will replace Central Sales Tax. The major issue what is interstate transactions of supply of 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 import into the territory of India shall be deemed to be a supply of goods and /or services in the course of inter-state trade or commerce and will attract Tax on Reverse charge basis. An export of goods and/or services shall be deemed to be a supply of goods and/or services in the course of inter-state trade or commerce attracting Zero rate. Any supply of goods and services where the location of the supplier and the place of supply are in different state then the supply will be called as Interstate supply of goods. ASHOK CHANDAK sbcngp@gmail.com 45

46 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. ASHOK CHANDAK 46

47 ADMINISTRATION OF GST 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 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. ASHOK CHANDAK sbcngp@gmail.com 47

48 PERSON LIABLE TO PAY TAX (i.e. Taxable Person) Aggregate turnover below specified limit Not taxable- Employer Employee relationship NON- TAXABLE PERSON on liable under RCM receiving services for personal use ASHOK CHANDAK 48

49 TAXABLE EVENT IN GST IS SUPPLY Sale, transfer, barter, exchange, license, rental, lease or disposal made for a consideration (with a few exception) SUPPLY to include 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 ASHOK CHANDAK sbcngp@gmail.com 49

50 Scope of taxable event expanded Supply includes 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. ASHOK CHANDAK 50

51 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 by the supplier for supply. (a)(ii) If the goods are NOT physically required to be removed goods are made available to the recipient. the date of removal the date on which 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 the recipient. (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 respect to the supply. The supply shall be deemed to have been made to the extent it is covered by the payment. ASHOK CHANDAK 51

52 TIME OF SUPPLY OF GOODS (LIABILITY TO PAY TAX ARISES) Contd The date on which the supplier receives the payment means the date on which payment is entered in his books of account or the date on which payment is credited to his bank account, whichever is earlier. (d) The date on which the recipient shows the receipt of goods in his books of account. In case of continuous supply of goods where successive statement of account or successive payments are involved, the time of supply shall be the date of expiry of the period to which such successive statement of account or successive payment relate. If there is no successive statement of account, the date of issue of the invoice (or any other document) or the date of receipt of payment, whichever is earlier, shall be the time of supply. Continuous supply of goods shall be specified, by notification, by the Central/State Government on the recommendation of GST Council. ASHOK CHANDAK 52

53 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 ASHOK CHANDAK 53

54 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 ASHOK CHANDAK sbcngp@gmail.com 54

55 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 sbcngp@gmail.com 55

56 Place of supply (other than specified transactions) : Services SERVICE To a registered person Location of service receiver 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 ASHOK CHANDAK sbcngp@gmail.com 56

57 Place of supply (other than specified transactions) : Goods GOODS Movement of goods *Location at which movement of goods terminates for delivery Goods are delivered at the direction of third Person Principal place of business of third person Goods supplied on board of a conveyance i.e. vessel, aircraft, train Location at which such goods are taken on board No Movement of goods Location of goods at the time of delivery to the receiver Goods assembled or installed at site Place of such installation or assembly 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 ASHOK CHANDAK sbcngp@gmail.com 57

58 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 Existing Situation 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 ASHOK CHANDAK sbcngp@gmail.com 58

59 TYPES OF RETURNS :- a) OUTWARD SUPPLIES b) INWARD SUPPLIES RETURNS c) INWARD/OUTWARD SUPPLIES & ITC, TAX PAYMENT d) TDS RETURNS e) INPUT SERVICE DISTRIBUTORS f) COMPOSITION RETURNS NOTE: NO REVISED RETURNS ASHOK CHANDAK 59

60 ASHOK CHANDAK 60

61 PAYMENT OF TAX, INTEREST, PENALTY: Tax has to be paid on or before filing of relevant return. (Generally on 20 th 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

62 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 CONTAINS DESCRIPTION, QUANTITY, VALUE OF GOODS, TAX CHARGED ; and OTHER PARTICULARS AS MAY BE PRESCRIBED. DEBIT & CREDIT NOTES CAN BE ISSUED BY REGISTERED TAXABLE PERSON WHERE TAX INVOICE ALREADY ISSUED IS FOUND TO EXCEED/ LESS THAN THE TAXABLE VALUE AND/OR TAX PAYABLE IN RESPECT OF SUCH SUPPLY ON OR BEFORE SEPTEMBER, 30 OF SUCCEEDING FINANCIAL YEAR. ASHOK CHANDAK sbcngp@gmail.com 62

63 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 & STATE ASHOK CHANDAK sbcngp@gmail.com 63

64 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. ASHOK CHANDAK sbcngp@gmail.com 64

65 AUDIT BY TAX AUTHORITIES DEPARTMENTAL AUTHORITIES MAY UNDER TAKE AUDIT OF THE BUSINESS TRANSACTION 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 3 MONTHS FROM THE DATE OF AOMMENCEMENTOF AUDIT. THE PERIOD OF 3 MONTHS MAY BE EXTENDED BY FURTHER PERIOD NOT EXCEEDING 6 MONTHS FOR THE REASON RECORDED IN WRITING. SPECIAL AUDIT : OFFCIER HAVING REGARD TO THE NATURE & COMPLEXITY OF THE CASE & THE INTEREST OF REVENUE OFFICER MAY WITH PRIOR APPROVAL OF COMMISSIONER,DIRECT SUCH TAXABLE PERSON IN WRITING TO GET HIS RECORDS AND BOOKS OF ACCOUNTS EXAMINED AND AUDITED BY A CHARTERED ACCOUNTANT OR A COST ACCOUNTANT AS MAY BE NOMINATED BY COMMISSIONER IN THIS BAHALF. ASHOK CHANDAK sbcngp@gmail.com 65

66 APPEALS ADVANCE RUING ASHOK CHANDAK 66

67 APPEALS FIRST APPEAL TO PRESCRIBED FIRST APPELLATTE AUTHORITY EITHER STATE OR CENTRAL 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 CONSTITUTE NATIONAL APPELLATE TRIBUNAL (NAT) FOR SECOND APPEALS. APPEAL AGAINST ORDER OF NAT CAN BE FILED BEFORE HIGH COURT. ASHOK CHANDAK sbcngp@gmail.com 67

68 ADVANCE RULING AUTHORITY SHALL BE LOCATED IN EACH STATE. APPLICATION FOR ADVANCE RULING CAN BE MADE ON CERTAIN QUESTIONS RELATING TO CALSSIFICATION, APPLICABILITY OF NOTIFICATION, ADMISSIBILITY OF ITC ETC. APPEAL AGAINST DECISION OF ADVANCE RULING AUTHORITY CAN BE FILED BEFORE APPLETTE AUTHORITY CONSTITUTED FRO SUCH PURPOSE. ASHOK CHANDAK 68

69 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 sbcngp@gmail.com 69

70 No refund of unutilised credit REFUNDS Under GST: 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 sbcngp@gmail.com 70

71 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 71

72 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 sbcngp@gmail.com 72

73 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. ASHOK CHANDAK sbcngp@gmail.com 73

74 GST COMPLIANCE RATING The GST compliance rating is a score given by the government to a business so as to see how compliant they are with the tax department. This score will be calculated based on parameters such as timely filing of monthly and annual returns, 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. department. Can be used by the other business to see that how compliant the particular assesse is with the tax ASHOK CHANDAK sbcngp@gmail.com 74

75 PREPARATION FOR GST o Registration and Migration from Existing Laws. o Obtain Excise Invoices for all purchases. o Keep closing stock as on as minimum as possible. o Avoid CST purchases nearer to 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. ASHOK CHANDAK sbcngp@gmail.com 75

76 CONCLUSION 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. ASHOK CHANDAK sbcngp@gmail.com 76

77 Any Questions? ASHOK CHANDAK 77