DUAL TAX METHOD IN INTRA STATE SUPPLY

Transcription

1 DUAL TAX METHOD IN INTRA STATE SUPPLY 1

2 INTRA STATE SUPPLY OF GOODS-Section 8(1) of IGST Act (1) Subject to the provisions of section 10, supply of goods where the location of the supplier and the place of supply of goods are in the same State or same Union territory shall be treated as intra-state supply: Provided that the following supply of goods shall not be treated as intra-state supply, namely: (i) supply of goods to or by a Special Economic Zone developer or a Special Economic Zone unit; (ii) goods imported into the territory of India till they cross the customs frontiers of India; or (iii) supplies made to a tourist referred to in section 15 2

3 INTRA STATE SUPPLY OF SERVICES-Section 8(2) of IGST Act (2) Subject to the provisions of section 12, supply of services where the location of the supplier and the place of supply of services are in the same State or same Union territory shall be treated as intra-state supply: Provided that the intra-state supply of services shall not include supply of services to or by a Special Economic Zone developer or a Special Economic Zone unit. 3

4 INTER STATE SUPPLY 4

5 INTER STATE SUPPLY OF GOODS-Section 7(1) & (2) of IGST Act 7. (1) Subject to the provisions of section 10, supply of goods, where the location of the supplier and the place of supply are in (a) two different States; (b) two different Union territories; or (c) a State and a Union territory, shall be treated as a supply of goods in the course of inter- State trade orcommerce. (2) Supply of goods imported into the territory of India, till they cross the customs frontiers of India, shall be treated to be a supply of goods in the course of inter-state trade or commerce. 5

6 INTER STATE SUPPLY OF SERVICES-Section 7(3) & (4) of IGST Act (3) Subject to the provisions of section 12, supply of services, where the location of the supplier and the place of supply are in (a) two different States; (b) two different Union territories; or (c) a State and a Union territory, shall be treated as a supply of services in the course of inter-state trade or commerce. (4) Supply of services imported into the territory of India shall be treated to be a supply of services in the course of inter-state trade or commerce. 6

7 INTER STATE SUPPLY OF GOODS & SERVICES-Section 7(5) of IGST Act (5) Supply of goods or services or both, (a) when the supplier is located in India and the place of supplyis outside India; (b) to or by a Special Economic Zone developer or a Special Economic Zone unit; or (c) in the taxable territory, not being an intra-state supply and not covered elsewhere in this section, shall be treated to be a supply of goods or services or both in the course of inter-state trade or commerce. 7

8 SUPPLY 8

9 [Section 7 of CGST Act] For the purposes of this Act, the expression supply includes (c) the activities specified in Schedule I, made or agreed to be made without a consideration; and SCHEDULE I- ACTIVITIES TO BE TREATED AS SUPPLY EVEN IF MADE WITHOUT CONSIDERATION 2. Supply of goods or services or both between related persons or between distinct persons as specified in section 25, when made inthe course orfurtherance ofbusiness: Provided that gifts not exceeding fifty thousand rupees in value in a financial year by an employer to an employee shall not be treated as supply of goods or services or both. 9

10 [Section 15] Explanation. For the purposes of this Act, (a) persons shall be deemed to be related persons if (i) such persons are officers or directors of one another s businesses; (ii) such persons are legally recognised partners inbusiness; (iii) such persons are employer and employee; (iv) any person directly or indirectly owns, controls or holds twenty-five per cent. or more ofthe outstanding voting stock or shares ofboth ofthem; (v) one of them directly or indirectly controls the other; (vi) both of them are directly or indirectly controlled by a third person; (vii) together they directly or indirectly control a third person; or (viii) they are members ofthe same family; 10

11 (b) the term person also includes legal persons; (c) persons who are associated in the business of one another in that one is the sole agent or sole distributor or sole concessionaire, howsoever described, of the other, shall be deemed to be related. [Section 25] (5) Where a person who has obtained or is required to obtain registration in a State or Union territory in respect of an establishment, has an establishment in another State or Union territory, then such establishments shall be treated as establishments of distinct persons for the purposes of this Act. 11

12 SCHEDULE I [See section 7]-ACTIVITIES TO BE TREATED AS SUPPLY EVEN IF MADE WITHOUT CONSIDERATION 3. Supply of goods (a) by a principal to his agent where the agent undertakes to supply such goods on behalf of the principal; or (b) by an agent to his principal where the agent undertakes to receive such goods on behalf of the principal. [section 2(5)] (5) agent means a person, including a factor, broker, commission agent, arhatia, del credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of supply or receipt of goods or services or both on behalf of another 12

13 [section 2(88)] (88) principal means a person on whose behalf an agent carries on the business of supply or receipt of goods or services or both; [Section 86] 86. Where an agent supplies or receives any taxable goods on behalf of his principal, such agent and his principal shall, jointly and severally, be liable to pay the tax payable on such goods under this Act. Who is an agent? An agent is a person employed to do act for another, or to represent another in dealing with third person [section 182 of Indian Contract Act, 1872]. 13

14 Who is principal? the person for whom such act is done, or who is so represented, is called the principal [section 182 of Indian Contract Act, 1872]. Mercantile Agent means a mercantile agent having in the customary course of business as such agent authority either to sell goods, or to consign goods for the purpose of sale, or to buy goods, or to raise money on the security of goods [section 2(9) of the Sale of Goods Act, 1930]. Del Credere Agent- he is a mercantile agent, who in consideration of an extra commission guarantees his principal that person with whom he enters into contract on behalf of the principal, shall perform his obligation. He occupies the position of a guarantor as well as an agent. However, he is not liable to the buyer for any default on the part of his principal. Non Mercantile Agent- who does not deal in mercantile transactions. These include attorneys, solicitor, guardian, promoter, wife etc. 14

15 [Section 2(74)] (74) mixed supply means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply. Illustration. A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drinks and fruit juices when supplied for a single price is a mixed supply. Each of these items can be supplied separately and is not dependent on any other. It shall not be a mixed supply if these items are supplied separately. 15

16 [Section 2(30)] (30) composite supply means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply; Illustration. Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply. 16

17 Section 2(32)] (32) continuous supply of goods means a supply of goods which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, whether or not by means of a wire, cable, pipeline or other conduit, and for which the supplier invoices the recipient on a regular or periodic basis and includes supply of such goods as the Government may, subject to such conditions, as it may, by notification, specify. Section 2(33)] (33) continuous supply of services means a supply of services which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, for a period exceeding three months with periodic payment obligations and includes supply of such services as the Government may, subject to such conditions, as it may, by notification, specify; 17

18 INPUT TAX CREDIT 18

19 2(63) input tax credit means the credit of input tax 2(62) input tax in relation to a registered person, means the central tax, State tax, integrated tax or Union territory tax charged on any supply of goods or services or both made to him and includes (a) the integrated goods and services tax charged onimport of goods; (b) the tax payable under the provisions of sub-sections (3) and (4) of section 9 [tax on reverse charge basis]; (c) the tax payable under the provisions of sub-sections (3) and (4) of section 5 of the Integrated Goods and Services Tax Act 9 [tax on reverse charge basis]; (d) the tax payable under the provisions of sub-sections (3) and (4) of section 9 of the respective State Goods and Services Tax Act 9 [tax on reverse charge basis]; or (e) the tax payable under the provisions of sub-sections (3) and (4) of section 7 of the Union Territory Goods and Services Tax Act 9 [tax on reverse charge basis], but does not include the tax paid under the composition levy [refer to 19

20 CONDITIONS TO BE FULFILLED BEFORE TAKING INPUT TAX CREDIT No registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless (a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed; (b) he has received the goods or services or both. [where the goods against an invoice are received in lots or instalments, upon receipt of the last lot or instalment] (c) the tax charged in respect of such supply has been actually paid to the Government (d) he has furnished the return under section 39. (e) pay to the supplier [other than when tax payable on reverse charge], the value of supply along with tax within 180 days from the date of invoice, otherwise pay/ reverse credit along with interest. However, can avail credit on payments to supplier. 20

21 NO INPUT TAX CREDIT Section 17(5) - Input tax credit shall not be available in respect of the following, namely: (a) motor vehicles and other conveyances except when they are used (i) for making the following taxable supplies, namely: (A) further supply of such vehicles or conveyances ; or (B) transportation of passengers; or (C) imparting training on driving, flying, navigating such vehicles or conveyances; (ii) for transportation of goods 21

22 NO INPUT TAX CREDIT Section 17(5) - Input tax credit shall not be available in respect of the following, namely: (b) the following supply of goods or services or both (i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery except where an inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply (ii) membership of a club, health and fitness centre; (iii) rent-a-cab, life insurance and health insurance except where 22

23 NO INPUT TAX CREDIT (A) the Government notifies the services which are obligatory for an employer to provide to its employees under any law for the time being in force; or (B) such inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as part of a taxable composite or mixed supply (iv) travel benefits extended to employees on vacation such as leave or home travel concession. (c) works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service; 23

24 NO INPUT TAX CREDIT (d) goods or services or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business. [Explanation. For the purposes of clauses (c) and (d), the expression construction includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalisation, to the said immovable property] (e) goods or services or both on which tax has been paid under section 10 [composite levy]; (f) goods or services or both received by a non-resident taxable person except on goods imported by him; (g) goods or services or both used for personal consumption; (h) goods lost, stolen, destroyed, written off or disposed of by way 24 of gift or free samples; and

25 REVERSE CHARGE MECHANISM 25

26 Section 9(4) (4) The central tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both. Section 22(1) 22. (1) Every supplier shall be liable to be registered under this Act in the State or Union territory, other than special category States, from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year exceeds twenty lakh rupees: 26