1. Registration 2. Invoice 3. Returns 4. Payment of Tax 5. Audit 6. Accounts & Records 7. Assessment 8. Refund 9. Inspection 10.

Transcription

1 1. Registration 2. Invoice 3. Returns 4. Payment of Tax 5. Audit 6. Accounts & Records 7. Assessment 8. Refund 9. Inspection 10. Specific concept (i) Levy of tax (ii) Supply (iii) Job work Provisions (iv) Input Tax Credit (v) Input Service Distributor (vi) Electronic Commerce (vii) Transitional Provisions 11. Quick Reference Charts GST - Mitra 1

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3 GST MITRA An Implementation Guide This Book is based on CGST & IGST Act confirmed by Parliament on 12 th April, nd Edition 19 th June 2017 Co-Authored by CA Pranav Kapadia and CA Atul Mehta Published by APMH & Associates LLP Chartered Accountants For Private Circulation Only GST - Mitra 3

4 Preface GST Mitra An Implementation Guide GST is one indirect tax for the whole nation, which will make India a unified common market. While GST promises to usher in an era of unified indirect tax regime, integrating India into a single homogenous market, it comes with certain complications inherited from the legacy tax regime. The objective is to make available a hand book for reference at each step be it GST implementation, compliance, litigation. This shall cover the key provisions of GST in a brief and lucid manner with the business communities, CEO s and CFO s, without many technical jargons. GST Mitra is an attempt to simplify the basic concepts of GST with reference to registrations, returns, payment of tax and refund process. In addition to it, this book also explains specific areas like to Job work, E-Commerce, Transitional provisions with the help of examples, relevant images and flowcharts so as to provide practical insights as to how GST would impact the day-today business transactions. - CA Amit Doshi Chairman APMH & Associates LLP 4 GST - Mitra

5 About the authors CA Atul Mehta Atul Mehta is a Partner of APMH & Associates LLP. Atul focuses on accounting and taxation practice of the firm. He has exposure of more than 17 years in accounts outsourcing and tax advisory side with a specialization in Service Tax. His expertise lies in consultancy, opinions and Tax Planning for Corporates and Individuals. Atul can lucidly handle complex audits, advisory and assessment matters issues related Works Contract matters, CENVAT Credit Rules, Point of Taxation (POT) Rules, Point of Provision of Services (POPS) Rule and so on. Currently Atul is a Convenor for Indirect Taxation Committee of the Chamber of Tax Consultants. He has led the Ghatkopar CA CPE Study Circle of WIRC. Atul has Conducted Training Session organized by WIRC-ICAI and has served at WIRC ICAI Committee for Research and Development and Direct Tax Committee. atul@apmh.in GST - Mitra 5

6 CA Pranav Kapadia Pranav Kapadia is a Partner of APMH & Assocaites LLP. Pranav s expertise lies in Advisory, Audit, Compliance, and Litigation Matters on Value Added Tax (VAT), Central Sales Tax (CST), Profession Tax (PT) and Service Tax. Pranav has been consultant to large corporates with presence in Multiple States with complex structures in Indirect Tax, especially VAT. Pranav lucidly deals in complex legal matters like Works Contracts (WCT), DDQ (Determination Disputed Question) now called Advance Ruling (AR), Assessments and Appeals related to VAT and Allied Tax Laws. He is the Vice President of The Goods and Services Tax Practitioners Association of Maharashtra for Pranav is also part of the Indirect Tax Research Committee of the WIRC of ICAI. He has been past Chairman of Indirect Tax Committee of The Chamber of Tax Consultants for and past Convenor of Ghatkopar CPE Study Circle of ICAI. Pranav has addressed various seminars and lectures on MVAT, CST and GST at the STPAM, Chamber of Tax Consultants, WIRC Study Circles of ICAI and various Industrial Associations in Mumbai and across Maharashtra. He has also bagged various awards at the STPAM. pranav@apmh.in 6 GST - Mitra

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11 Table of Contents Sr. No. Particulars 1. Registration Liability for Registration (New Dealer) in GST For whom registration compulsory? GST Registration for regular dealers / composite tax payer Procedure for Migration (existing dealers) Amendment of Registration Cancellation of registration Revocation of cancelled Registration Issuance of registration certificate Display of registration Certificate GST registration form for other stakeholders Invoice Format Time limit for issuing Invoice Manner of issuing Invoice Returns Due date For Filing of Returns Levy of Late Fees HSN / SAC Codes Key components of GSTR1, GSTR2, GSTR Process flow for monthly filing of return Payment of Tax Types of Electronic Ledger Rules for Utilization of cash Interest on delayed Payment of Tax Tax deduction at source E-Commerce Operator GST - Mitra 11

12 5 Audit By tax authorities Special Audit Accounts & Records Accounts & records Period of retention of Accounts Assessment Definitions Self Assessment Provisional assessment Final assessment Assessment in case of Non filers of returns Assessment in case of unregistered persons Refund Refund of Tax Procedure for Claiming Refund GST Refund Forms Interest on delayed Refund Inspection Inspection Power to arrest Power to summon person Access to business premises Specific Concept (i) Levy of tax Imposition (Levy) of tax Reverse Charge Composition Levy GST - Mitra

13 (ii) Supply Definition Time of supply of Goods & Services Value of Supply of Goods & Services (iii) Job work Provisions Definition Normal provision Transitional provisions related to job work (iv) Input Tax Credit Definitions Eligibility Present ITC GST ITC Conditions for claiming credit Situations where credit not available Apportionment of credit Availability of Credit (v) Input Service Distributor Definition Elements OF ISD Distribution of Credit Conditions for distribution of Credit Practical issue (ISD) (vi) Electronic Commerce Definition Collection of Tax at source Procedures (vii) Export Transaction Coverage of Export in GST Law Zero Rated Supplies Conditions when services are considered as export...63 Format of Invoice in case of exports GST - Mitra 13

14 (viii) Transitional Provisions Definitions Levy and payment of tax Input tax credit Credit in Inputs held as stock Goods returned under GST Law Goods sent on approval basis Refund claims before appointed date Refund claim after appointed date Existing litigation Claims of credit Output liability Revision of Returns Revision in Price Quick Reference Charts Filing sequence due dates for July, Aug. and Sec GST returns What is GSP and ASP IT Changes Action plan for GST transition Letter to Employees for GST awareness GST Mitra - You friend and APMH has rolled out the GST Mitra App on Android. The app shall contain the Useful GST articles, GST Latest updates, Notifications, GST Acts, GST Rules. One can search GST Mitra App on Google Play store or use QR Code for GST Mitra App Disclaimer: Content published in this book is based on the GST Acts, Rules, Formats and notifications published till date of last edition. This is to simplify the legal provisions and procedural aspects of of the law keeping in mind a basic businessman and their accounting team, with the helps of simpler language and graphical representation and so may result into error or omission or interpretation differences. This may not be construed as a legal opinion and should not be relied solely upon for critical business and compliance decision. 14 GST - Mitra

15 1. GST 2016, Registration (Sec. 22 of CGST Act.) Liability for Registration (New Dealer) in GST Region Aggregate Turnover North Eastern States + Sikkim, J & K, Rs. 10 lakhs Himachal Pradesh and Uttarakhand Rest Of India Rs. 20 lakhs Aggregate turnover considered here is the total pan -India turnover (including value of taxable, exempt and export supplies) of a business entity, and not state wise. A Business entity has the option of obtaining Single Registration in a State or Multiple Registrations for its different business verticals in a State. Vertical means a distinguishable component of an enterprise that is engaged in supplying an individual product or service or group of related products or services. Eg: ABC LTD is an Indian company; its diversified business includes 4 segments: FMCG, hotels, paperboards, & packaging. If the company is making supplies from different states, then seperate registrations are required in each state. Further, the company has the option to obtain seperate registration for each segment (business vertical) in each state. For whom registration compulsory? The following categories of suppliers need to mandatorily register irrespective of the turnover: Taxable person carrying on interstate supply. It also includes interstate branch transfer supplies. Casual and nonresident taxable person* Businesses liable to pay tax under reverse charge Agents supplying on behalf of a taxable person Input service Distributors Sellers on E-commerce platforms All e commerce operators Eg: Amazon, Flipkart etc. Persons responsible to deduct TDS GST - Mitra 15

16 Person supplying online information and database access or retrieval services from outside India to unregistered person in India. Voluntary registration by a person. In case of succession of Companies In case of Amalgamation of companies * Casual Taxable person means a person who occasionally undertakes transactions involving supply of goods/ services in the course of business whether as principal, agent or in any other capacity, in taxable territory where he has no fixed place of business. Eg: M/s ABC a Dealer Registered in Maharashtra takes part in an Exhibition-cum-sale at Gujarat will be treated as a Casual Taxable Person in Gujarat and liable for Registration in Gujarat. * Non resident persons: means a taxable person who occasionally undertakes transactions involving supply of goods / services whether as principal or agent or in any other capacity but who has no fixed place of business in India. Eg: Consultants with specialized skills coming for designing the residential/ commercial projects for builders. GST Registration for regular dealers / composite tax payer Procedure: Fill part A of form GST REG-01. GST REG-01 needs to be filed within 30days from the date person becomes liable for registration. Provide your PAN, mobile number, E mail ID You will receive an application reference number on your mobile via . Fill part B of form GST REG-01 and specify the application reference number you received. GST REG-02 is an acknowledgement received for filing registration. Following is the list of documents to be uploaded - Photograph, constitution of taxpayer, proof of place of business 16 GST - Mitra

17 (own premises/ rented premises), Bank account related proof, Authorization Forms. If additional information is required, Form GST REG-03 will be issued to you. In case any other information is required, need to respond in form GST REG-04 within 7 days from the date of receipt of form GST REG 03. If all information in form GST REG 01/ 04 is provided, final certificate in form GST REG-06 will be issued If the details are not satisfactory, the registration application can be rejected in form GST REG-05. GST - Registration Process Applicant Form GST REG-01 PART-A Pan Mob No. ID Form GST REG-01 PART-B Submission Application reference number Required documents Form GST REG - 06 Form GST REG - 04 Certificate of Registration Provide additional details or clarifications Form GST REG - 05 Rejection of registration application Form GST REG - 02 Within7 working days from the date of form GST REG-03 Yes No Acknowledgement If details are satisfactory GSTN Verification PAN-verification in portal Mob No. - OTP verification ID - OTP verification Application reference number is generated Yes If details are complete & satisfactory Within 3 working days Form GST REG - 03 No Notice seeking additional details or clarifications Procedure for Migration under GST for exisiting dealers Procedure: All existing dealers registered under Excise, VAT, Service tax laws etc and having valid PAN will be allotted a provisional certificate of registration in form GST REG-21 For enrolment of existing dealers, first a provisional registration shall be granted by the proper officer The dealers are required to submit Form GST REG-20 along with information and prescribed documents electronically with DSC or e-signature. GST - Mitra 17

18 If information is complete, the final registration certificate shall be issued in form GST REG-06 If the details submitted are not satisfactory, show cause notice may be issued in form GST REG-23,. before cancelling the provisional registration. GST - Existing Dealer Registration No Existing Registered Dealer GSTN Form GST REG-21 Provisional registration certificate Within 6 Months Form GST REG-20 Submission of details and documents If details are satisfactory, registration certificate will be issued Yes Form GST REG-06 Certificate of Registration Form GST REG-23 Show cause notice Yes Hearing on show cause notice. Successful? Form GST REG-22 Cancellation order of Provisional registration No Amendment of GST registration Every registered taxable person and a person to whom Unique Identity Number has been assigned shall inform the proper officer of any changes in the information furnished at the time of registration, or that furnished subsequently, in the manner and within such period as may be prescribed. On the basis of the information furnished, the proper officer may approve or reject amendments in the registration in the manner and within such period as may be prescribed. 18 GST - Mitra

19 Amending GST Registration Details GSTN Registered Dealer Form GST REG-11 Change in registration details Approval by an officer for changes specified in rule Form GST REG-22 Order to amend details Only for changes specified in rule For changes not specified in rule Making changes as per Form GST REG-11 or Form GST REG -12 Cancellation of GST Registration Procedure: - Submit form GST REG-14 for cancellation - Within 7 days, form GST REG-15 issued to show cause reason for cancellation - After verification, form GST REG-16 is issued within 30 DAYS from the date of show cause Applying for Cancellation of Registration Form GST REG-14 GSTN Registered Dealer Application for cancellation of registration Within 7 Days Form GST REG-15 Show cause hearing. Successful? Yes Form GST REG-16 Order to cancel registration Show cause notice GST - Mitra 19

20 Revocation of cancelled Registration Procedure: - In case registration is cancelled, taxable person can apply for revocation in form GST REG-17 within 30days from cancellation date. - If officer requires details, form GST REG-03 to be issued within 3 days. Taxable person needs to respond by giving details in Form GST REG-04 (7 DAYS) - If officer is satisfied, the cancellation is revoked in form GST REG-18 (30days) from the date of application - If officer is not satisfied the revocation is rejected in form GST REG-05. Issuance of certificate of registration Each tax payer will be alloted a state wise PAN based 15 digit Goods & Services Tax payer Identification Number (GSTIN) State PAN Entity Blank CA Check Code Code Digit 2 7 A A E P S K Display of Registration Certificate as GSTIN in name board Every registered taxable person shall display his certificate of registration in a prominent location at his principal place of business and at every additional place (depot/ job work premises/ warehouse). Every registered taxable person shall display his GSTIN in the name board exhibited at the entry of his principal place of business. 20 GST - Mitra

21 GST registration form for other stakeholders Form No GST REG-07 GST REG-08 GST REG-09 GST REG-10 Form Type Application for Registration as of person required to deduct TDS or TCS Cancellation of application for registration as of person required to deduct TDS or TCS Order for cancellation for application for registration as of person required to deduct TDS or TCS Application for registration for non resident taxable person GST - Mitra 21

22 2. Tax Invoice (Section 31 of CGST Act) Format Form GST INV 1 LOGO Plot No., Pune , Maharashtra, India Phone : Fax : Website : GSTIN: Serial no. of Invoice: 27AAAAA1111A1Z1 Mode of Transport : By Road Veh.No : Date & Time of Supply Place OF Supply: Details of Receiver (Billed to) Name: Details of Consignee (Shipped to) Name: Address : Address : State: State: State Code : State Code : GSTIN/Unique ID: GSTIN/Unique ID: HSN/ CGST SGST/UGST IGST S.N Description of Goods SAC Qty unit Rate Total Discount Taxable value o Rate Amount Rate Amount Rate Amount Code 1 Product Product XYZ ORIGINAL FOR RECEIPIENT Invoice Total ( In Words) : Total Certified that the Particulars given above are true and correct and the amount indicated a) represent the price actually charged and that there is no flow additional consideration directly or indirectly from the buyer or b) is provisional as additional consideration will be received from the buyer on account of Remark : TERMS OF SALE 1) Goods once sold will not be taken back or exchanged 2)Seller is not responsible for any loss or damaged of goods in transit 3)Buyer undertakes to submit prescribted ST declaration to sender on damand.disputes if any will be subject to seller court jurisdication For XYZ Authorised Signatory Details of Supplier Name, address, registration number (GSTIN) of the supplier A consecutive serial number not exceeding sixteen 22 GST - Mitra

23 characters, in one or multiple series, containing alphabets or numerals or special characters hyphen or dash and slash symbolised as - and / respectively, and any combination thereof, unique for a financial year Date of its issue Details of Recipient Name, address, and registration number of recipient In case of URD recipients -Name & Address of recipient alongwith address of delivery, state & code where taxable value of supply >50,000 Other Details Description of goods or services HSN code of goods/accounting code of services Quantity of goods and units or unique quantity code Total value of goods and services Taxable value of goods/ services including (abatements/ Discount) Rate of Tax Tax Class GST - Mitra 23

24 Amount of tax charged if any Place of supply along with the name of State, in case of a supply in the course of inter-state trade or commerce Place of delivery where the same is different from the place of supply Time limit for issuing Tax Invoices Supply of Goods In case of movement of goods In other case (no movement of goods) Supply of Services Normal case Time Limit Invoice to be issued before or at the time of removal of goods Invoice to be issued before or at the time of delivery of goods or making available thereof to the recipient Time Limit 30 days from the date of supply of service Continuous supply of services NBFC/ Bank/ Financial Institution Manner of issuing invoice 30 days from the date of completion of an event in the contract 45 days from the date of supply of services (1) The invoice shall be prepared in triplicate, in case of supply of goods, in the following manner: (a) The original copy being marked as ORIGINAL FOR RECIPIENT; (b) The duplicate copy being marked as DUPLICATE FOR TRANSPORTER; and (c) The triplicate copy being marked as TRIPLICATE FOR SUPPLIER. (2) The invoice shall be prepared in duplicate, in case of supply of services, in the following manner:- (a) The original copy being marked as ORIGINAL FOR RECIPIENT; and (b) The duplicate copy being marked as DUPLICATE FOR SUPPLIER. 24 GST - Mitra

25 3 RETURNS (Sec. 37 to Sec. 48 of CGST Act.) Every registered taxable is required to furnish Electronically the prescribed Returns in the GST regime There will be common e-return for CGST, SGST, IGST and UTGST for each state. Due Dates for filing Returns GSTR 1 (Outward Supplies) Due date of filing Return 10th next month GSTR -2 (Inward Supplies) Due date of filing return is 15th of next month GSTR-3 (Monthly Returns) Due date of filing of return 20th of next month GSTR-4 (Compounding tax payers) Due date of filing return is 18 th of next quarter GSTR-5 (Non resident tax payers) Due date of filing return is 20th of next month GSTR-6 (Input service distributor) Due date of filing returns is 15 th of next month GSTR-7 (Tax deducted at source) Due date of filing return is 10th of next month GSTR-8 (TCS Statement for eco) Due date of filing return is 10th of next month GSTR-9 (Annual Return) Due date of filing return is 31st december of next year Annual return information should be matched with monthly/ quarterly return filled by an assessee GST - Mitra 25

26 A return needs to be filed even if there is no business activity (Nil return) during the said tax period of return. UN agencies have to file return only for the month during which they make purchases. Levy of fees for late filing of return whichever is lower Rs.100 for everyday till default continues or Rs. 5000/- In case of Annual Return Rs.100 for everyday till default Continues Or Amount calculated at 0.25% of turnover in the state HSN / SAC Codes Following parameters with respect to HSN code for goods and accounting codes for services will apply: In all GST Returns return HSN codes for GOODS & SAC CODES for services are mandatory. It is not mandatory if the total turnover is less than 1.5 crores. HSN (Harmonized System of Nomenclature) is an internationally accepted product coding system formulated under General Agreement on Tariffs and Trade (GATT). Services will be required to be classified per the Services Accounting Code (SAC). Under GST, government shall continue the concept of classification based on HSN but a slightly modified version will be implemented wherein the turnover of the tax payers will play a vital role in 26 GST - Mitra

27 determining the code. However there will be separate codes for goods and services. Broad Rule is as under: - Summary of supplies effected against a particular HSN code to be reported in summary table in GSTR-1. - It will be optional for taxpayers having annual turnover upto Rs Cr but they need to provide information about description of goods. - It will be mandatory to report HSN code at two digits level for taxpayers having annual turnover in the preceding year above Rs.1.50 Cr but upto Rs Cr and at four digits level for taxpayers having annual turnover above Rs Cr. To find out the HSN codes Please check Enter product name to get the HSN code To find out SAC code Please check Click on e payment, enter assessee code and Captche code. For the new Service Code kindly refer Key Components of GSTR 1, GSTR 2, GSTR 3 GSTR 1 This return would capture the following Information: Basic details of the tax payer ie Name along with GSTIN Period to which the return pertains Aggregate turnover of the tax payer in the previous financial year and for the period April to June The aggregate turnover of previous FY would be submitted by the tax payers only in the first year and will auto populated uploaded in the subsequent years. Final invoice-level supply information pertaining to the tax period separately for goods and services has to be submitted as follows: Invoice-level information pertaining to the tax period should be reported for all supplies as under: (i) For all B to B supplies (whether inter-state or intra-state), GST - Mitra 27

28 invoice level details, rate-wise, should be uploaded in Table 4, including supplies attracting reverse charge and those effected through e-commerce operator. Outwards supply information in these categories are to be furnished separately in the Table. (ii) For all inter-state B to C supplies, where invoice value is more than Rs. 2,50,000/- (B to C Large) invoice level details, rate-wise, should be uploaded in Table 5; and (iii) For all B to C supplies (whether inter-state or intra-state) where invoice value is up to Rs. 2,50,000/- State-wise summary of supplies, rate-wise, should be uploaded in Table 7 Details relating to amended taxable outward supplies to be submitted (B2B, B2C suppliers) Details relating to advance received against supply to be made in future to be submitted. Details relating to taxes already paid on advance receipts for which invoices are issued in the current tax period to be submitted. Details relating to nil rated, exempted goods, non taxable outward supplies (both inter-state and intra-state) need to be included in return. Details of Exports, Supplies to SEZ units/sez Developers, Deemed Exports to be submitted seperately Details of Supplies attracting tax on Reverse Charge basis to be submitted. There will be a separate table for submitting the details of revisions in relation to the outward supply invoices pertaining to previous tax periods. This will include the details of Credit/ Debit Note issued by the suppliers. Separate table for modifications/ correcting errors in the returns submitted earlier. Details of supplies made through E-Commerce Operators attracting TCS (seperataly to be given operator wise, rate wise, B to B, B To C) Monthwise - HSN-wise - summary of Outward Supplies including quantity details to be submitted. Serial Numbers of Documents issued during the tax period to be submitted. The documents include 1. Invoices for outward supply 2. Invoices for inward supply from unregistered person 28 GST - Mitra

29 3. Revised Invoice 4. Debit Note 5. Credit Note 6. Receipt voucher 7. Payment Voucher 8. Refund voucher 9. Delivery Challan for job work 10. Delivery Challan for supply on approval 11. Delivery Challan in case of liquid gas 12. Delivery Challan in cases other than by way of supply (excluding at S no. 9 to 11) GSTR 2 The information in GSTR 1 shall be auto populated in concerned tables in GSTR-2A. The recipient tax payer can accept, modify, reject or keep the transaction pending for action. Separate tables for submitting details in relation to ITC received on an invoice on which partial credit has been availed earlier. Inward supplies received from a registered person. - Inward supplies on which tax is to be paid on reverse charge. - Inputs/Capital goods received from Overseas or from SEZ units on a Bill of Entry. - Amendments to details of inward supplies furnished in returns for earlier tax periods [including debit notes/credit notes issued and their subsequent amendments]. - Supplies received from composition taxable person and other exempt/nil rated/non GST supplies received. - Consolidated Statement of Advances paid/advance adjusted on account of receipt of supply. - Input Tax Credit Reversal / Reclaim - Addition and reduction of amount in output tax for mismatch and other reasons. - Monthwise- HSN codewise summary of inward supplies including quantity details. Separate tables for submitting details in relation to ITC eligible / available in respect of inputs, input services, capital goods. Separate tables for ISD credit and TDS/TCS credit received by Tax payer. GST - Mitra 29

30 GSTR3 It consists of aggregate level of outward and inward supply information which will be uploaded in GSTR 1 and GSTR 2 GSTR 3 can be generated only when GSTR-1 and GSTR- 2 of the tax period have been filed. Electronic liability register, electronic cash ledger and electronic credit ledger of taxpayer will be updated on generation of GSTR-3 by taxpayer. Details of payment of tax under various tax heads of CGST, SGST/UTGST, IGST and Cess would be populated from the debit entry in credit/ cash ledger. Details of ITC balance of CGST, SGST/UTGST, IGST at the end of the tax period will be auto populated in ITC ledger irrespective of mode of filing return. The return would have a field to enable the tax payer to claim refund or to carry forward ITC balance. Taxpayer will not be allowed to furnish return for tax period, If valid return for previous tax period has not been furnished. If return is furnished without payment of tax, then such return would be invalid. Details in GSTR-3 will be auto-populated through GSTR- 1 (of suppliers), own GSTR-2, ISD return, TDS return of deductor, own ITC Ledger, own cash ledger and own tax liability ledger. Process flow for monthly return filing GSTR1 All vendors have to update / upload their outward all sales invoices (zero duty, Interstate, Rejected, debit note Or Credit note ) details in return GSTR1 on or before Latest by 10th of every month for last month. Outward goods & Services In GSTR1 - HSN CODE for GOODS & SAC CODE for SERVICES is mandatory. Inward goods & Services All customers Down Load GSTR2A & accepting GSTR2A- (deleted, added Or corrected inward invoices by the suppliers /Vendors) on or before Latest by 15th GSTR1A - deleted, added Or corrected sales invoices details by the recipient ( means Customers) after down Load of GSTR2A by customer on or before Latest by 17 th Outward goods & Services Inward goods & Services Update /Upload Input tax credits to be claimed submi ing by GSTR2 based on GSTR2A on or before Latest by 15th GSTR3 by 20th Monthly returns Outward Duty Minus Inward duty Net to be paid (Auto GSTR1 GSTR2 ) 30 GST - Mitra

31 4. Payment of Tax 1. Type of Electronic Ledgers Three Electronic Ledgers of the tax payers Amount deposited by the tax payer towards payment of tax, interest, penalty or fees or any other amount shall be credited to the Electronic Cash Ledger. Input tax credit as self assessed by the taxable person shall be credited to his Electronic Credit Ledger All the tax liabilities of the taxable person will be recorded in Electronic Tax Liability Register. Payment of tax through Electronic mode is mandatory. When the payment to be made? Goods / Services: liability normally arises at the time of supply of goods Payment of taxes by the normal tax payers is to be done on monthly basis by the 20 th of the succeeding month. Cash payments to be deposited in the cash ledger and the tax payer will debit the ledger while making the payment in the monthly returns, GSTR-3 part B will provide details of any tax, interest or penalty payable and return furnished. Without payment of whole tax will be treated as Invalid Return for allowing credit on supplies made. 2. Rules for utilization of cash and cross utilization of input tax credit of IGST, CGST and SGST Amount in electronic cash ledger can be utilized for making payment towards tax, penalty, fees or any other amount payable. Amount available in electronic credit ledger can only be used for making payment towards tax only not for payment of interest, penalty or fees. GST - Mitra 31

32 O/p Tax PREFERE NCE IGST CGST SGST (-) I/P TAX 1 IGST CGST SGST 2 CGST IGST GST 3 SGST SGST CGST Input Tax means IGST/ Tax under reverse charge mechanism/ SGST / CGST / UTGST but does not include composition levy. Output Tax means the CGST/SGST chargeable (to be payable) on taxable supply and/or services made by Supplier or his agent. In case, any balance remains in cash or credit ledger After payment of Tax, interest, penalty, fee or any other amount would be refunded. List of Payment Forms are as follows: Sr No Form No Title of Return 1 GST PMT-1 Electronic Liability Register 2 GST PMT-2 Electronic credit ledger 3 GST PMT -3 Order by proper officer for Reduction / Rejection of amount of refund applied 4 GST PMT-4 Communication through portal by Registered person to Proper Officer informing discrepancy in electronic ledger 5 GST PMT-5 Electronic Cash Ledger 6 GST PMT-6 Challan for depositing Tax, Interest, penalty or fees 7 GST PMT-7 Communication by depositor to Bank / Electronic Gateway through common portal for non reflection of credit in Electronic Ledger 32 GST - Mitra

33 3. Interest on delayed payment of tax: Every person who fails to pay the tax to the state or central government need to pay the interest at such rate (not exceeding 18% p.a.) as may be notified by the government. The interest will be calculated from the first day on which such tax was due to be paid. Similarly, in case the taxable person makes an excess claim of input tax credit, then also he shall be liable to pay interest at the rated to prescribed (not exceeding 24% p.a.) Input Tax is the tax paid or payable in the course of business on purchases of any goods made from a registered dealer of the state. Input Tax Credit is the credit to be taken for tax paid on inputs. 4. Tax Deduction at Source Central or state government may mandate departments of central / state governments or local authority or government agencies or any other notified persons to deduct tax at source at the rate of 1 % from the payment made or credited to the supplier of taxable goods/ services notified by the central or State government where the total value of supply exceeds exceeds Two Lakh Fifty Thousand rupees. GST - Mitra 33

34 5. Audit By Tax Authorities 1. The commissioner of CGST / Commissioner of SGST or any officer authorized by them may undertake Audit of any taxable person for such period and in such manner as may be prescribed. 2. The tax Authorities may conduct audit at the place of business of the taxable person and/ or in their office. 3. The taxable person should be informed in advance for the period not less than 15 days prior to conduct of Audit 4. The Audit to be completed within period of 3 months from the date of commencement of Audit. 5. During the conduct of Audit, the Authorized officer may require the assessee. 6. (i) To give him necessary facility to verify the books of Accounts or other documents (ii) To furnish such information, as he asks for and help him in timely completion of audit. 7. Where the Audit conducted results in tax not deducted or not paid or erroneously refunded or input tax credit wrongly availed or utilized, then proper officer may take action as given under section 66 or 67. Special Audit If at any stage of investigation or any other proceedings before him, any officer taking into account nature and complexity of the case is of the opinion that the value has not been correctly declared or the input tax credit availed is not within the normal limits (excess availed), then he may, with the prior approval of the commissioner direct the assessee to get his records audited by CA or Cost accountant as may be nominated by the commissioner in this behalf. The chartered Accountant or cost Accountant shall within 90days submit a report of such special audit duly signed and certified by him to the said commissioner mentioning therein other particulars as may be specified. 34 GST - Mitra

35 6. Accounts and records (a) Who to maintain Accounts and Records under GST? Every person who get himself registered under GST Law is required to maintain books of account (b) What to maintain in accounts and records under GST? True and correct account of Production or manufacture of goods Inward and outward supply of goods and/ or services Stock of goods Input tax credit availed Output tax payable and paid Such other particulars as may be prescribed These records may be maintained in Electronic form. (c) Where Accounts and Records to be maintained under GST? This records are to be kept at the place of business If the registered taxable person has more than one place of business, the accounts relating to each place of business shall be kept at such place of business concerned. (d) Audit Of Accounts and records under GST. Every registered person whose turnover during a financial year exceeds rupees Two Crore shall get his accounts audited by Chartered Accountant or Cost Accountant, and need to submit the copy of audit report and reconciliation statement GST - Mitra 35

36 Period for which accounts and records needs to be maintaineditle of Normal Case In case of appeals/ revision/ other proceedings 72 months from the due date of filing annual returns from the year relating to accounts and records Records to be maintained for the period of on one year after the final disposal of such appeal / revision / other proceedings or for period specified whichever is later. 7. Assessment Definition: Assessment means determination of tax liability and includes self assessment, re assessment, provisional assessment, summary assessment and best judgment assessment Self Assessment Every registered taxable person shall himself assess the tax payable under this act and furnish the return for each tax period. Provisional Assessment When the taxable person is unable to determine the value of goods and/ or services or rate of tax, he may request the proper officer in writing giving the reasons for payment of tax on provisional basis, the proper officer may pass an order allowing the payment of tax on provisional basis at such rate or such value as may be specified by him. Bond would be executed, binding the person for payment of difference between the amount of tax finally assessed and amount provisionally assessed Final Assessment The final assessment order would be passed within a period not exceeding six months from the date of communication of the order issued. If sufficient cause is shown, then the period can be extended by joint/additional commissioner for further period not exceeding six months, and by the commissioner for such further period not exceeding four years. If the final assessment tax exceeds the provisional assessment 36 GST - Mitra

37 tax paid then differential amount need to be paid along with the interest. Interest is to be calculated (as per the prescribed rate) from the first day after the due date of payment of tax till the date of actual payment. But in case, the provisional assessment tax exceeds the final assessment tax, it will lead to refund consequent to the order for final assessment. In case refund is not paid within 60 days from the date of application, then interest on refund shall be paid. Assessment in case of Non filers of returns If the registered taxable person fails to furnish the return even after the service of notice, the proper officer may proceed to assess the tax liability to the best of his judgment and issue an assessment order within the time limit specified. Assessment in case of unregistered persons In case the person fails to obtain registration though he is liable to do so, then the proper officer may assess the tax liability to the best of his judgment and issue assessment order within a period of 5 years from the due date of filing returns, for the year to which tax not paid. GST - Mitra 37

38 8. Refunds (Sec. 54 of CGST Act.) Refund of Tax What is Refund under GST? Refund include rebate on inputs or input services. Registered taxable person can claim refund of Tax, interest, penalty, fees or any other amount paid by him. Any balance amount standing in the electronic cash ledger can be claimed as refund as per the return furnished in such manner as may be prescribed. It should be noted that no refund of unutilised input credit shall be granted except for 1) Zero Rated Supplies (Exports) made without payment of tax 2) Accumulation of credit on account of tax of inputs being higher than the rate of tax on output supplies (Other than nil rated and fully exempt supplies) Procedure for claiming refund Any person claiming refund of any tax or interest needs to make an application to the proper officer of CGST/SGST before the expiry of 2 years from the relevant date. Limitation period of 2 years will not be applicable if such tax or interest is paid under protest. Relevant date means In case of exports (a) Exported by sea or air The date on which ship or aircraft in which goods are loaded leaves India b) Exported by land The date on which goods passes the Frontier c) By post The to a place outside India date of dispatch of goods by post office to place outside India In case of deemed exports The date on which the return relating to such deemed exports is furnished 38 GST - Mitra

39 In case Tax becomes refundable as per judgment, order or direction of appellate tribunal or court In case tax is provisionally paid In any other case The date of communication of judgment, order or direction The date of adjustment of tax after final assessment The date of payment of tax The application should be accompanied by: (a) Documentary evidence to establish that refund is due. (b) Other evidence if any to show the amount of tax and interest is paid and the incidence of tax and interest is not passed on to any other person. But in case the amount of Refund claim is less Than 2 lacs rupees, it is not necessary to furnish documents, he just have to file a declaration based on the documentary evidence or other evidence. Incase the proper officer is satisfied that the whole amount claimed as refund is proper, he may make an order of refund and the amount is credited to the Fund. The proper officer will issue the order within 60days from the date of receipt of application. GST refund formsform No GST RFD- 01 GST RFD-02 GST RFD-03 GST RFD-04 GST RFD-05 GST RFD-06 GST RFD-07 GST RFD-08 GST RFD-09 GST RFD-10 Name of forms Refund application form Acknowledgment Notice of deficiency on application for refund Provisional refund sanction order Payment Advice Order sanctioning Refund Refund Adjustment Order Show cause Notice for Non-admissible claims Reply by registered person for Show Cause Notice Refund application form for international organizations GST RFD -11 Statement of inward Supplies of Goods or Services GST - Mitra 39

40 There are cases where the refund cannot be claimed: 1. No refund claim of unutilized credit in cases other than exports. 2. In cases where the input credit accumulated is more than output tax liability except in specified cases. 3. No refund of unutilized input tax credit shall be allowed which are subjected to export Duty. 4. No refund of input tax credit shall be allowed if the supplier avails of drawback, central tax of claims refund of output tax paid under IGST Act. Interest on delayed Refund If any tax ordered to be refunded to any applicant is not refunded within 60 days from the date of receipt of application at such rate then interest on refund can be claimed as follows: 6% on Refund If excess tax paid Not Refunded Within 60days from the date of receipt of applictaion from the date of receipt of application till the date of refund 40 GST - Mitra

41 9. Inspection, search and seizure, arrest Inspection Inspection can be carried out by an officer of CGST/SGST only upon a written authorization given by an officer of the rank of joint commissioner or above. A joint commissioner can give such authorization only if he has reason to believe that the person concerned has done one of the following: Suppressed any transactions of supply Suppressed stock of goods in hand Claimed excess input tax credit Contravened any of the provisions to evade the tax Transporter/owner of warehouse is keeping goods which have escaped payment of tax Authorization will be given to carry out inspection of any of the following: Any place of business of a taxable person. Any place of business engaged in business of transporting goods whether or not he is a registered person. Any place of business of an owner or an operator of a warehouse or godown. Other Procedure: Search and seizes the goods or books or things which in his opinion shall be useful or relevant to any proceedings. The officers have the power to seal or break open the door of any premises or to break open almirah, box, in which any goods, accounts etc. are suspected to be concealed. The custodian of the seized documents is entitled to make copies thereof or take extracts in the presence of an officer of CGST / SGST The officer is bound to issue the notice within 180 days of such seizure and if he fails to do so, then such seized goods are liable to be returned. Such period of 180 days would be extended by competent authority if sufficient cause exists. Officer can dispose of certain notified goods immediately after the seizure, if those goods are of perishable or hazardous nature or of depreciating value or there is constrained for shortage. GST - Mitra 41

42 The officer who seizes the goods are liable to maintain the inventory of the said goods. Provisions of Criminal Procedure, 1973 relating to search and seizure shall be applicable to GST act and powers given to Magistrate under code of Criminal Procedure 1973, will be possessed by Principal Commissioner of CGST/SGST. Power to arrest If the commissioner has the reason to believe that any person has committed an offence he may authorize any officer to arrest such person. Power to summon persons Proper officer shall have the power to summon (call) any person who he considers necessary either to give evidence or to produce any document which will be useful during the inquiry proceedings. Access to business premises Any CGST/SGST officer so authorized shall have access to any business premises to inspect books of account documents, computers, computer program, software and such other things as he may require and which may be available at such premises, for the purpose of carrying out Audit, scrutiny, verification as may be necessary to safeguard the interest of revenue. On demand by the audit officer or Chartered Accountant or Cost Accountant nominated by the department, for conducting the audit furnish followings : 1) Records 2) Trial Balance 3) Duly Audited Financial Accounts 4) Cost Audit Report 5) Tax Audit Report 6) Any other relevant records The person should produce the records related to GST, trial balance, audited financial reports etc within 15 days from the date of demand. 42 GST - Mitra

43 10. Specific Concepts 1. Levy of Tax (i) Imposition (Levy) of tax (Sec.7 of CGST Act.) Levy of CGST, SGST/UTGST on all intra state supplies of goods / services. Levy of IGST on all inter state supplies of goods / services. Central/State Government may specify categories of supply of goods / services for payment of tax on reverse charge mechanism. When Electronic Commerce Operator has no physical presence - his representative in taxable territory is liable. Neither physical presence of Electronic Commerce Operator nor representative appointed - Electronic Commerce Operator to appoint a person for paying tax. (ii) Levy of GST on Reverse Charge (Sec 9 of CGST Act) Reverse Charge Notified Services Sec 9(3) Purchases from Unregistered Dealer Sec 9(4) Time of Supply Date of Receipt of Goods Date of Payment in Books of Account / Dt of Debit to the Bank Account GST - Mitra 43

44 Date immediately following 30 days from the date of issue of invoice by Supplier Other case booking of entry in the books of Account of the Receipt Debit in books of Account for Service receipt For Associate Enterprise * No Reverse Charge for Local Purchases upto Rs 5000 per day from One or More Unregistered Suppliers. Notification 8 CT (Rate)of (iii) Composition Levy (Sec. 10 of CGST Act.) Turnover < 75 lacs in previous Financial Year. Turnover = aggregate value of all taxable supplies, exempt supplies, exports, of goods and/or services, on all India basis excluding GST. Category of Supplier Composition levy - Manufacturer 1% CGST + 1% SGST. - Persons engaged in making supplies referred to in clause (b) of paragraph 6 of Schedule II, 2.5% CGST + 2.5% SGST. - Others 0.5% CGST + 0.5% SGST (Excluding Service Provider) The limit for turnover for composition levy has been proposed to be increased to Rs.75 lakhs by the GST Council. ( It can be incrased max. upto Rs. 1 Crore). Conditions for composite tax payer Apart from the threshold Limits, the following conditions are applicable for composite tax payers. Cannot be engaged in supply of services Cannot be engaged in manufacture of specified notified goods Cannot supply goods not taxable under GST Cannot supply goods through an e commerce operator Cannot be engaged in Interstate supplies (goods / services) Does not have to collect tax on all the outward supply of goods / services Cannot claim Input tax credit on all inward supplies of goods & / services. 44 GST - Mitra

45 2. Supply of Goods and / or Services Definition: Supply includes all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business. Time and Value of supply 1. Time of supply of goods The liability to pay CGST and SGST shall arise only at the time of Supply of Goods. 1. Normal case Earliest of following 1. Date of issue of Invoice Or 2. Date of receipt of payment (entered in books of accounts or credited in bank a/c wh ich is earlier) 2. In case of Earliest of the following Reverse charge 1. Date of receipt of goods by recipient 2. Date on which payment is made 3. Date following the expiry of 30 days from the issue of supplier s invoice 3. Time of supply of vouchers Voucher entitles the holder to a discount, or may be exchanged for goods or services. Voucher may be called as coupon, pass etc. In case of supply If supply is identifiable - Date of issue of voucher of vouchers If supply not identifiable - Date of redemption of voucher 4. Residuary clause In case, time of supply is not determined according to above methods, time of supply shall be following: GST - Mitra 45

46 In residual cases Earliest of the following Date of filing of returns OR Date of payment of tax 2. Time of Supply of Services 1. Normal cases Earliest of following Example: 1. Date of Issue of Invoice (Prescribed period is within 30 days of provision of services) OR 2. Date of receipt of payment Particulars Date of Date of Date of Time of Completion invoice receipt of supply of service payment i Invoice Issued July 1 July 20 Aug 10 July 20 Within Prescribed period ii Invoice Issued July 1 July 28 July 25 July 25 within prescribed period iii Invoice not Issued July 1 Aug 5 July 25 July 1 Within prescribed period iv Invoice not Issued July 1 Aug 5 June 30 Jun 30 within prescribed period 2(a) In case of Earliest of the following reverse charge 1. Date on which payment is made (Debit in books of accounts / credited in bank A/c) OR 2. Date following the expiry of 60 days from the issue of supplier s invoice 46 GST - Mitra

47 Example: Particulars Date of Date of Date of 60 Days Time of Completion invoice receipt of from supply of service payment date of invoice i Invoice Issued July 1 July 20 Aug 10 Sept 20 Aug 10 Within Prescribed period ii Invoice Issued July 1 July 28 July 25 Sept 28 July 25 Within Prescribed Period iii Invoice not Issued July 1 Aug 5 July 25 Oct 5 July 25 Within Prescribed Period iv Invoice not Issued July 1 Aug 5 June 30 Oct 5 Jun 30 Within Prescribed Period 2(b) In case of Associated enterprise Earliest of the following 1. Date of entry in recipients books OR 2. Date of Payment (Debit/Bank) Example: Particulars Date of Date of Date of Date of Time of Completion invoice receipt of entry of supply of service payment Bks of A/cs of recipient i Invoice Issued July 1 July 20 Aug 10 July27 July27 Within Prescribed period ii Invoice Issued July 1 July 28 July 25 July27 July 25 Within Prescribed Period iii Invoice not Issued July 1 Aug 5 July 25 July27 July 25 Within Prescribed Period iv Invoice not Issued July 1 Aug 5 June 30 July27 Jun 30 Within Prescribed Period GST - Mitra 47

48 o 3. Time of supply of vouchers In case of supply of vouchers If supply is identifiable - Date of issue of voucher If supply not identifiable - Date of redemption of voucher 4. Residuary Clause In case, time of supply is not determined according to above methods, time of supply shall be following: In residual cases Earliest of the following - Date of filing of returns Or Date of payment of tax 5. Change in rate of TAX Situation 1: Provision for taxable services prior to change in effective rate of tax (Good or services) Before Change After Change Time of Supply Service provided Invoice + payment receipt Earliest of the follwing namely: 1. Date of invoice 2. Date of payment receipt Service provided + invoice Payment Date of invoice Service provided + payment Invoice Date of payment receipt Ex: Services provided before change in rate of tax w.e.f (old rate 15%& new rate 18%) 48 GST - Mitra

49 Cases Date of Date of Date of Time of Rate of Providing Invoice Payment supply Tax Service CASE 1 12/05/ /5/ /7/ /5/ % CASE 2 10/6/ /6/ /7/ /6/ % CASE 3 21/6/ /7/ /6/ /6/ % Situation 2 : Provision for taxable services after change in effective rate of tax Before Change After Change Time of Supply Invoice Service provided + payment Date of payment receipt Invoice + payment Service Provided Earliest of the following namely: 1. Date of invoice 2. Date of payment receipt Payment Service Provided + Invoice Date of Invoice Ex: Services provided after the change in rate of tax Cases Date of Date of Date of Time of Rate of Providing Invoice Payment supply Tax Service CASE 1 20/7/17 12/6/17 26/7/17 26/7/17 18% CASE 2 26/7/17 8/6/17 11/6/17 8/6/17 15% CASE 3 28/7/17 28/7/17 12/6/17 28/7/17 18% 3. Value of taxable supply of goods and/ or services Ex. Super Cars Ltd, a car manufacturer sells spare parts to R Ravindra Automobiles for Rs.6000/-. MRP of the spare parts is Rs.10, 000/- The invoice issued To Ravindra Automobiles is given below: GST - Mitra 49

50 GST Regime Super Cars Limited Spare Parts Ravindra Automobiles MRP = Rs. 10,000 Selling Price = Rs. 6,000 Invoice S.No. Description of goods 1 Spare Parts 1 18% Total Quantity Rate Per Amount 1 6,000 No 6,000 1,080 7,080 On Spare parts, GST is charged on the price payable, i.e. Rs. 6,000. On this value, (Assuming GST of 18% on spare parts) is charged. In the GST Regime, The value of goods & / services is the transaction value i e the price paid/ payable which is Rs.6000, in the above example. Where the supplier (Super Cars) and recipient (Ravindra automobiles) are not related and the price is the sole consideration for supply. Effect of various charges/expenses of supply on transaction value is as below Charges/ expenses related to supply Incidental expenses ex. Commission, packing Interest / late fees / penalty charged Subsidies excluding those provided By CG/SG Any tax other than GST Any amount payable by supplier but incurred by receiver Effect on transaction value Included in transaction value Included in transaction Value Included in transaction Value Included in transaction value Included in transaction value 50 GST - Mitra

51 A summary of the effect of discount on transaction value is Given below: Type of discount If the discount is given before or at the Time of supply and is recorded in the invoice If the discount is given after supply, but agreed upon before or at the time of Supply If the discount is given after supply, and not known at the time of supply Effect on transaction value Can be claimed as deduction from the transaction value Can be claimed as deduction from the transaction value Cannot be claimed as Deduction from the transaction value 3. Job work Procedures Definition: Undertaking any treatment or process by a person (Job worker) on goods belonging to another Registered taxable person (Principal) Normal provisions Case 1: To avail the input tax credit A principal (registered taxable person) may send inputs and/or capital goods without the payment of Tax to a job worker for job work and from there subsequently send to another Job work for further processing and bring back the goods after the completion of job work within one year and /or three years, respectively to any of his place of business without the payment of tax. Supply (sell) such inputs after completion of job work within one year and/or three years respectively from the place of business on payment of tax within India or with or without payment of tax for export as the case may be. GST - Mitra 51

52 Case 2: Cannot avail input tax credit Where the inputs and/ or capital goods sent to a job work are not received back by the principal after the completion of Job work or are not supplied from the place of Business within a period of one year / three years of their being sent out it shall be deemed that such input and / or capital goods had seen supplied by the principal to the job worker on the day when the said inputs / capital goods were sent out Job work-transitional Provisions Case 1: In case, inputs/ semi finished / finished goods received in the factory are removed to a job work premises for further processing prior to the appointed day, no tax shall be payable if in case goods are returned to the said factory premises within 6 months from the appointed day. Case 2 : If in case, inputs /semi finished good/ finished goods received in factory are removed to a job work premises for further processing prior the appointed day, are not returned within the period of 6 months the input tax credit shall be liable to be recovered. (ITC reversal). In case the finished goods are sold directly from job work premises to the customer it would be liable to GST. 4. Input Tax Credit Definitions: Input Tax is the tax charged on any supply of goods or services or both made to the recipient Input Tax Credit is the credit to be taken for tax paid on inputs. Input Service: Any service used or intended to be used by supplier in the course of business. Output Tax means the tax chargeable on the taxable supply of goods and/ or services made by Supplier or his agent. The output tax excludes the tax payable on reverse charge basis. Capital goods: Goods the value of which is capitalized in the books of accounts of the person claiming the credit and which are used in the course of business. 52 GST - Mitra

53 Eligibility (i) Present ITC Eligibility CGST SGST Central excise duty Service tax Additional custom duty Special additional custom duty Sales tax Entertainment tax Luxury tax Taxes on lottery, gambling, betting (ii) GST ITC Eligibility Seamless Credit Nature of Tax Goods/ Services Credit available to CGST Goods Manufacturer SGST Service provider IGST Traders Exempted Dealers/ non taxable supplies and composition dealers not entitled to claim ITC Conditions For claiming input tax credit Every registered taxable person shall be entitled to take ITC Charged on any supply of goods or services to him which are used in the course of business and the amount is credited to electronic Credit ledger of such person. No registered taxable person shall be entitled to ITC in respect of any supply of goods and / or services unless: He is in possession of a tax invoice He has received the goods and/ or services The tax charged in respect of such supply are actually paid the appropriate government account He has furnished the return under section 39. Where the goods are received in lots or installments, GST - Mitra 53

54 taxable person shall be entitled to take credit upon receipt of last lot or installment. Where the recipient fails to pay to the supplier of services, the amount towards the value of supply of services along with tax payable within a period of 180 days from the date of issue of invoice by the supplier, then input tax credit availed by the recipient shall be added to his output tax liability along with interest. In case, Depreciation has been claimed on the capital goods, then ITC shall not be allowed on the said tax component. A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier. Situations where ITC (Input tax credit) is not available : Negative List ITC will not be available in respect of the following: 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; 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 Membership of a club, health and fitness centre; Rent-a-cab, life insurance and health insurance except where the Government notifies the services which are 54 GST - Mitra

55 obligatory for an employer to provide to its employees under any law for the time being in force; or Travel benefits extended to employees on vacation such as leave or home travel concession; 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; Goods/services received by a person for construction of immovable property on his own account,other than P&M, even when used in course or furtherance of business. The expression construction includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalisation, to the said immovable property; The expression plant and machinery means apparatus, equipment, and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both and includes such foundation and structural supports but excludes (i) land, building or any other civil structures; (ii) telecommunication towers; and (iii) pipelines laid outside the factory premises. Goods /services on which tax has been paid under composition schemes Goods or services or both used for personal consumption; Goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples; and Taxes paid under sections 74, 129 and 130 (fraud/seizure/ detention) GST - Mitra 55

56 Apportionment of Credit Situations When the goods and / or services are used by Registered Taxable person partly for business and partly for other purposes In case the goods and /or services are used partly for taxable supplies (including zero rated supplies) and partly for exempt supplies In case of banking company or a financial institution Effect on ITC The amount of input tax credit shall be restricted to the tax attributable to the purpose of business, not for other Purposes. The amount of credit shall be restricted to the input tax attributable to taxable supplies including zero rated supplies only An amount equal to 50% of the eligible credit on inputs, capital goods and input services in that month. This option once exercised cannot be withdrawn during the remaining part of the year. 56 GST - Mitra

57 Availability of Credit Situations In case the person applied for registration within 30 days from the date he becomes liable for registration, and registration is granted If any of these below cases, Voluntary registration Ceases to pay tax under composition scheme Exempt supply of goods or services becomes a taxable supply In case there is change in the constitution on account of Sale Merger, Demerger, Amalgamation, Lease or transfer of business Effect on ITC He is entitled to take ITC in respect of inputs held in stock, inputs contained in semi finished goods, finished goods held in stock on the date immediately preceding the date from which he becomes liable to pay tax. Will be entitled to take ITC in respect of inputs held in stock, and inputs contained in semi finished or finished goods held in stock on the day immediately preceding the date of grant of registration / date from which he becomes liable to pay/ date from which supply becomes taxable. The registered taxable person shall be allowed to transfer the ITC that remains unutilized in the books of accounts to such sold, merged demerged, amalgamated, leased or transferred business as the case may be A taxable person shall not be entitled to take input tax credit in respect of goods and / or services after the expiry of one year from the date of issue of tax invoice relating to such supply. GST - Mitra 57

58 5. Input Service Distributor - ISD Definition: An office of the supplier of goods/ services which receives tax invoices towards receipt of input service and issues tax invoice or other prescribed document for the purpose of distributing the credit of CGST/SGST/UTGST paid on said services to a supplier of taxable goods/ services having the same PAN. Elements of ISD It must be an office of a supplier. ISD must be registered and having same PAN as of other places of business. It distributes credits of GST paid on services received among the other place of business and establishment of the supplier. Distribution Of credit Distribution Of Credit Location of ISD Credit of Credit of Credit of and recipient CGST SGST IGST of credit In different state IGST IGST IGST In same state CGST SGST CGST SGST Conditions for distribution of credit Against the prescribed documents issued to each of the recipient and such documents contains the details as prescribed. Credit distributed shall not exceed the amount of credit available for distribution. Credit of tax paid paid on input service attributable to recipient to be distributed to that recipient only. Credit of tax paid on input services attributable to more than one recipient to be distributed only amongst such recipients to whom the input service attributable pro rata on the basis of turnover in state of such recipient during 58 GST - Mitra

59 relevant period to the total of the turnover of all such recipients and which are operational in the current year, during the said relevant period. Credit of tax paid on input services attributable to all recipients of credit shall be distributed amongst such recipients and such distribution shall be pro rata on the basis of the turnover in a State or turnover in a Union territory of such recipient, during the relevant period, to the aggregate of the turnover of all recipients and which are operational in the current year, during the said relevant period. Relevant period shall be : If the recipients of credit have turnover in their States in the financial year preceding year during which credit is to be distributed, the said financial year; or If some or all recipient of credit do not have turnover in their states in the financial year preceding year during which credit is to be distributed, the last quarter for which details of the turnover of all the recipients are available, previous to the month during which credit is to be distributed, Practical Illustration related to distribution of Credit by ISD Input Service Distributor (ISD) has a total of 4 units namely A, B, C, and D which are operational in the current year. The credit of input service pertaining to more than one unit shall be distributed as follows: Distribution to A = Ta/Ts * Tc Ta = Turnover of unit A during the relevant period Ts = Total turnover of all its unit i.e. A + B + C during the relevant period Tc = Total credit of service tax attributable to services used by more than one unit Similarly the credit shall be distributed to the other units B, C and D. Illustration: An ISD has a common input service credit of Rs pertaining to more than one unit. The ISD has 3 units namely A, B, and C which are operational in the current year. GST - Mitra 59

60 Unit Turnover in the previous year (in Rs.) A (Manufacturing excisable goods) 40, 00,000 B (Manufacturing excisable and exempted goods) 30, 00,000 C (providing exclusively exempted service) 30, 00,000 Total 1, 00, 00,000 The common input service relates to units A, B and C, the distribution will be as under: (i) Distribution to A = x / = 4800 (ii) Distribution to B = x / = 3600 (iii) Distribution to C = x / = Electronic Commerce (Sec. 52 of CGST Act.) Definition: Electronic Commerce means the supply of goods and/or services including the digital products over digital or electronic network. Ex: Webinars, video tutorials, digital media, internet radio, etc. Electronic Commerce Operator (ECO) means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce. Digital goods or e-goods are intangible goods that exist in digital form. Central government or state government specifies the categories of services, the tax on which shall be paid by ECO, if such services are supplied through it. All the provisions shall apply to such ECO, as if he is person liable for paying the tax in relation to supply of such services. IF Eco does not have physical presence in taxable territory, any person representing such ECO, in the taxable territory shall be liable to pay tax. IF ECO neither has a physical presence in taxable territory nor has any person representing such Eco in the taxable territory, ECO shall appoint a person in the taxable territory for the purpose of paying the tax and such person is liable for payment of tax. 60 GST - Mitra

61 Collection of Tax at Source: Every ECO shall collect 1%CGST +1 % SGST (2% IGST) of the net value of taxable supplies made through it where the consideration with respect to such supplies is to be collected by ECO. Seller Delivery of Material Consumer Payment Commission - TCS Communicates the Order Rate of TCS 1% SGST + 1% CGST Payment collection Places the order online E-Commerce Company The Net Value of taxable supplies as follows: Particulars Total value of taxable supply of goods or services (-) value of taxable supplies returned to the suppliers during the said month Net value of taxable supplies Amount xxxxx (xxxx) xxxxx Liability for registration It provides that every electronic commerce operator irrespective of maximum is required to be registered under GST. It also provides that every person supplying online information and database access or retrieval services (OIDAR) from the place outside India to a person in India (other than a registered taxable person) is required to be registered irrespective of the threshold limit. A taxable person who makes any supply of goods through Eco is not eligible for composition levy. Electronic commerce operator need to file return under GSTR-8 GST - Mitra 61

62 Procedures to be followed Amount collected (TCS) have to be deposited with the appropriate government within 10 days after the end of the month in which collection is made. ECO has to furnish the statement which would containi. Details of outward supplies of goods or services (sales register) ii. Supplies returned through if any iii. Amount collected during the month in form GSTR-8, within 10 days after the end of such month Supplier would be eligible to claim tax credit on the basis of return filed by ECO. The details of supplies furnished by ECO be matched with the statement of outward supplies filed by the supplier of ECO for each month., if there is mis match, discrepancy shall be communicated to both the parties. If the discrepancies are not rectified, such amount would be added to the output tax liability of supplier if the value of outward supply filed by ECO is more than the value of outward supply filed by supplier, in the succeeding month in which discrepancy is communicated. Supplier would be liable to pay tax on the amount so added. Interest would be calculated from the date such tax was due till the date of its payment. Any authority may by notice either before or during the course of any proceeding require ECO to furnish details relating to supplies, stock of goods in the godowns or warehouse or any other place of business. Any person who fails to furnish the information required by the notice would be liable to penalty which may extend to Rs.25,000/- 62 GST - Mitra

63 7. Export Transaction Coverage of Export in GST Law Export as well as Import transactions are treated as Inter-state transactions. Look at the sections from IGST Act below: Sec 5 (5 ) of the IGST Act, Supply of goods or services or both, (a) when the supplier is located in India and the place of supply is 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. Sec 11 of IGST Act The place of supply of goods (a) imported into India shall be the location of the importer; (b) exported from India shall be the location outside India. Zero Rated Supplies It was noted that in the IGST Law, exports are proposed to be Zero rated which meansany of the following supplies of goods or services or both, namely: (a) export of goods or services or both; or (b) supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit. Export are specifically carved out as Zero Rated and thereby specifically the Input Tax Credit Remain available while there shall be no tax charged on the output side. Conditions when services are considered as export Following shall be the Conditions for making services classify as export of services when: (i) the supplier of service is located in India; (ii) the recipient of service is located outside India; (iii) the place of supply of service is outside India; GST - Mitra 63

64 (iv) the payment for such service has been received by the supplier of service in convertible foreign exchange; and (v) the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8; Format of Invoice in case of exports The Invoice rules as notified on 17th of June 2017 specify a few things in addition or replacement of the normal invoice to be be take care by the exporters apart from general invoice requirements. The invoice shall carry an endorsement SUPPLY MEANT FOR EXPORT ON PAYMENT OF INTEGRATED TAX or SUPPLYMEANT FOR EXPORT UNDER BOND OR LETTER OF UNDERTAKING WITHOUTPAYMENT OF INTEGRATED TAX, as the case may be, and shall, in lieu of the details like name and address of the recipient and the address of delivery along with the name of the state and it s code, contain the following details: (i) name and address of the recipient; (ii) address of delivery; and (iii) name of the country of destination: 8. Transitional Provisions Definition: Transition means passing (moving) from one key / phase to another What is Transition Provision under GST? GST transitional provision plays critical role while moving from Excise / Service Tax / VAT to GST (from existing law to GST regime). It is vital that all stakeholders understand as to how the GST model law is framed to handle transition from current laws to the GST Law. 64 GST - Mitra

65 The above situations arises in following cases: Levy & payment of Tax (goods and / or services) Input Tax Credit (goods and / or services) Goods returned Refunds Valuation 1. Levy & payment of tax Section Provisions 142 (10) The goods and / or services supplied after the appointed day, contract entered prior to appointed day will be liable to tax 142 (11) (a) Where the consideration is received prior to appointed date, supply of goods and or services is after appointed date, no GST is payable if duty/ tax under earlier law is paid. 142 (11) (b) Taxability of services as per provisions of old law where the point of taxation is achieved as per old law 142 (11) (c) Taxability of goods as per provisions of old law, where the point of taxation is achieved as per old law. GST - Mitra 65

66 Example: (i) Levy of payment of tax on Services Completion Invoice Paymt CGST SGST Reason of Service raised reced payable Payable Before Before After No No Sec. 142(11)(b) Before After Before No No Sec. 142(11)(b) Before After After Yes Yes Sec. 142(10) After Before Before No No Sec. 142(11)(b) After Before After Yes Yes Sec. 142(10) After After Before No No Sec. 142(11)(b) (to the (the extent extent of of advance) advance) After After After Yes Yes Sec. 142(10) (ii) Levy & payment of tax on Goods Supply of goods & invoice Paymt reced CGST Pyble SGST Pyble Reason Before Before No No Sec 142(11)(c) Before After No No Sec 142(11)(c) After Before Yes Yes Sec 142(10) After After Yes Yes Sec 142(10) 66 GST - Mitra

67 2. Input Tax Credit Sec. CGST Conditions SGST Conditions 140(1) Amount of Credit should VAT & entry ITC should be cenvat credit be available as tax carried eligible as per carried forward cenvat credit forward in preceding State in excise & rules, 2004 the return VAT Law service Should not opt Should not opt composition for composition scheme scheme Return to be Return to be filed within filed within 90 days 90 days 140(2) Un availed Should not opt Un availed Should not opt credit not for composition input tax for composition carried forward scheme credit in scheme in excise & respect of Unavailed service tax return capital means eligible regarding capital goods as per ITC less ITC goods VAT Law already availed 140(8) Cenvat credit Return has to NA can be carried filed within forward in 3 months from service tax return the appointed for Centralised date Registered Person Credit should be eligible in terms of cenvat credit rules 2004 Cenvat credit can be transfe -rred to any other registered taxable person under same PAN 140(9) Reclaim of Payment for NA Cenvat credit supply of service reversed due should be made to non payment within 3 months of input service from the within 3 months appointed day GST - Mitra 67

68 3. Credit on inputs held as stock (Sec 140(3)) Eligible Assessee Assessee who was not liable to be registered under the earlier law Manufacturer of exempted goods Works contract claiming abatement First stage dealer Second stage dealers Registered Importer Eligible Credits (CGST) Excise duties Additional duties NCCD (natural calamity contingent duty) Additional duty of customs Conditions Credits eligible only on inputs used for making taxable supplies under GST Benefits of credit passed on by way of reduction in price The person is eligible for input tax credit on such inputs Invoice for claiming credit should be available Invoice should not earlier than 12 months Supplier is not eligible for abatement under the current act Eligible Assessee Assessee who was not liable to be registered under the earlier law Sale of exempted goods Eligible credits (SGST) VAT Entry Tax Conditions Credits eligible only on inputs used for making taxable supplies under GST Benefits of credit passed on by way of reduction in price The person is eligible for input tax credit on such inputs Invoice for claiming credit should be available Invoice should not earlier than 12 months Supplier is not eligible was not specifically restricted under schedule/ notification 68 GST - Mitra

69 4. Sales under earlier law & goods returned under GST Law Goods Sold and duty/tax paid under earlier law section 142(1) (CGST) Sales not before 6 months from the appointed date Sales not before 6 months from the appointed date & goods not returned within six months from the appointed date Goods returned within 6 months from appointed date GST is payable by person returning the goods if he is registered person. No GST Payable & refund of the duty paid under existing law No GST is payable in case goods returned by unregistered person Goods exempted from payment of VAT under earlier law Sales not before 6 months from the appointed date Goods returned after 6 months from appointed date Goods returned within 6 months from appointed date GST is payable by person returning the goods No GST Payable No GST is payable in case goods returned by unregistered person GST - Mitra 69

70 5. Goods sent on approval basis and returned Goods sent on approval before appointed date and returned - Sec. 142 (12) Rejected/ returned beyond six months from appointed date Rejected/ returned within six months from appointed date Not rejected/ returned within six months from appointed date GST is payable by person returning such goods GST is not payable by person returning such goods GST is payable by person who sent such goods 6. Refund claim filed before appointed date (CGST/SGST) Sec.142(3) Any refund claim filed by any person before the appointed day shall be disposed off by paying in cash under the provisions of earlier laws. In case, any amount of CENVAT CREDIT/input tax credit rejected, Whether partial or fully shall lapse. Further, No refund claim shall be allowed where the amount is carried forward in the returns. 7. Refund claim filed after appointed date (CGST) Sec.142(4) Goods cleared or services exported before appointed date and refund is claimed after the appointed date. Refund claim shall be disposed of accordance with provisions of earlier law should be paid in cash. Any amount of Input tax credit rejected, partially or fully shall lapse. Further, No refund claim shall be allowed where the amount is carried forward in the returns. 70 GST - Mitra

71 Refund claim filed after appointed date (SGST) Sec.142(5) In case advance is received and tax is paid before appointed date, but services not provided, then the payment has to be disposed off as per the earlier law provisions and if any amount still accruing to him shall be paid in cash. 8. Existing litigation (CGST/SGST) Claims of credits (Sec.142(6)) Every proceedings (appeals/ revision/ review) relating to Cenvat credit will be disposed off as per the provisions of earlier law. In case, the input tax credit is eligible, the same shall be refunded to the assessee In case amount is already carried forward, the same shall be refunded to the assessee. In case Credit is found to be recoverable, then it shall be recovered as arrears of tax under GST law and no input tax credit shall be allowed under GST. Output Liability (Sec. 142(7)) Every proceedings (appeals/ revision/ review) relating to output tax liability is disposed off in accordance with the provision of earlier law. In case the amount is to be admissible to the assessee, the same would be refundable to the assessee. In case the credit is recoverable, then it shall be recovered as arrears of tax under GST law and no input tax credit shall be allowed under GST. 9. Revisions of returns after appointed date (Sec. 142(8)) In case the return is furnished under earlier law but is revised after appointed date, and if any amount is found to be recoverable, then it shall be recovered as arrears of tax under GST law and no input tax credit shall be allowed under GST. GST - Mitra 71

72 In case, return is revised after the appointed date results in refund of amount, then it shall be refunded under existing law. 10. Revision in Price (Sec.142(2)) Price of Goods/ services is revised upwards on or after appointed day Price of Goods/ services is revised downwards on or after appointed day In case, the contract is entered prior In case, the contract is entered to the appointed day but price prior to the appointed day, of goods/ services is revised but price of goods/ services is UPWARDS on or after revised DOWNWARDS on appointed day, or after appointed day, The registered taxable person will issue supplementary invoice or debit note within 30 days of such price revision. Such supplementary invoice/ debit note shall be deemed to have been issued in respect of outward supply under this act The registered taxable person will issue Credit Note within 30 days of such price revision. Such credit note shall be deemed to have been issued in respect of outward supply under this act Reduction in liability will not be allowed if recipient has not reduced his input tax credit. 72 GST - Mitra

73 Quick Reference Charts Filing sequence due dates for July, Aug. and Sec GST returns As per the notes of the GST Council meeting dt. 3rd June 2017, it is noted that there shall be a relaxation in first two months. Following is the possible sequence which is yet to be notified. For the Returns to be filed for the month of July 2017, one would be required just the a. Summarised payable and receivable in the Part B of the Form 3 and pay the tax on 20 th of the Aug. b. While the filing of GSRT 1 statement shall be done for the same on 1 st of Sep to 5th of Sep. c. GSRT 2 for July 2017 to be done from 6 th to 10 th of Sep 2017 d. GSRT 1 for Aug 2017 to be done from 16 th to 20 th of Sep 2017 e. Pay Tax for Aug 2017 by 20 th of Sep. by filing the summer in Part B of Form 3. f. GSTR 2 for Aug 2017 to be done from 21 st to 25 th of Sep 2017 g. Filings from Sep 2017 onward shall be on regular prescribed due dates. What is GSP and ASP What are the roles of GSP and ASP from a GST stand point? The Goods and Services Tax Network (GSTN) is a non-profit, public private partnership company. Its primary purpose is to provide IT infrastructure and services to central and state governments, taxpayers and other stakeholders, thereby facilitating the implementation of the Goods and Services Tax (GST). This is the first time in India wherein one API (Application Programming Interface) based indirect tax data engine shall be used for tax management for both states and the centre. Since the tax payers are required to provide invoice wise data of the sales, purchases, debit notes and credit notes, it is envisaged that huge data will get updated in the GSTN every GST - Mitra 73

74 month and may need a great infrastructure and processing capabilities. To scale this up and make it available to the businesses as large for uploading data, downloading various types of reports, it is important to partner with the private companies. These are named as GSPs (GST Suvidha Providers). These companies shall have the rights to access the GSTN with the help of various APIs at any give point in time. The GSPs shall have two types of challenges. One with respect to building a robust infrastructure and validation engine to stage and process before the data is uploaded in the GSTN. The another side of the coin is to create user friendly and analytical interface for the businesses to upload the data, handle mismatch and maintain the audit trail for the same. There are around 34 GSPs already confirmed by the government after lot of criterion and screwing on the readiness in the first phase. Applications are collected for the next phase of permissions to GSPs. The GSPs have a choice to allow application companies (ASPs) to build the applications on the top of the GSP. This opens possibilities for various players to build the applications for Invoicing, filing, e-way bill, assessments and such other stuff in tie up with the GSPs. To start with, this shall helps the users to have a user friendly interphase, optionally connectors with the ERP, track the mismatch and manage it smartly. GSTN may also come up with it s own free software which will have only uploading cost which is charged by GSTN. It is still not ready and available. One needs to select only ASP. Also it will be required to finalise, setup, train and test the working of filing side of there GST before the first return filing is due. The ASPs will have back to back tie up with one or more GSPs for the filing purpose. 74 GST - Mitra

75 IT Changes Action plan for GST transition New Fields Changes to COA Configuration Changes Interface Changes Reporting Changes Process Redesign System scalability & Architecture Risk mgt & Governance Change of Software? New disclosures would need the data fields for capturing the information E.g.: HSN codes, place of supply. Changes to chart of accounts is eminent There will be changes in business rules & and general configuration in the system Eg: Tax masters to be used instead of tax codes in SAP (TAXINN) Data coming from other system will undergo a change Reporting will change a lot to generate new reports related to GST & reconciliations Process would need to be redesigned Eg: state wise registrations (service companies) While the new design is being accepted, the long term vision and the changing requirements need to be considered. It is necessary to check current ERP matrix and make required changes, due to process redesigning If the existing system is inadequate for GST reporting, it may be necessary to implement a new solution. GST - Mitra 75

76 Letter to Employees with respect to GST In GST each transaction for furtherance of business shall attract compliance and also credits shall be available in most of the transactions. In larger organisation, a lot of people other than those from finance team and procurement team are dealing on behalf of the organisation. It's critical for doing adequate GST related communication with the team as well. Here is a quick communication that can be done from the CFO s / HR desk to the entire team so as to educate the team and sensitise them with regards to maximise the credits and compliance. Dear Team, As we all know, GST is launching from 1st of July While the accounting and IT teams are under study and preparation for GST compliant invoicing, development of other documentation, returns filing, etc, it is critical for all of us to be aware while transacting on any kind on behalf of the organisation. Following a small list of things that all of us need to keep in mind: 1. There is something called tax payment to be done by the buyer or service recipient of the transaction is entered with unregistered vendor. This means even the cash as well as credit card reimbursements on behalf of company shall be under the net except for certain exempt stuff. 2. Work with registered vendors under GST for every small purchase of goods or services. The registered vendor should furnish his GSTIN on the Tax Invoice. 3. Provide the company's GSTIN [mention the company GSTIN here] to the vendor and collect valid Tax invoice with company name and GSTIN. 4. Submission of all reimbursements as soon as possible. This will allow us to claim credits if any such transactions and also making the Reverse Charge tax payments if applicable. 5. Please note that all allowances which are not backed by the supporting shall become taxable under Reverse Charge Mechanism (RCM). So we shall encourage all claims backed by supporting documents hence forth. 76 GST - Mitra

77 5. Please note that the credits shall not be available for renting of cab, food and beverages and even hotel bills in states other than where our organisation is registered. 6. Here is a quick note on What is GST for you to understand. apmh.in/gst-india-simplified-a-research-document.pdf. Please reach out to [name of the concerned person] in case you are doing any important transaction and would want any clarification in this regard. Once the documents for reimbursements are submitted, the finance team shall bifurcate the transactions for RCM and do the needful. Also claim the credit wherever available. I hope you will cooperate in this regard. Regards APMH & Associates LLP GST - Mitra 77

78 S. No. Questions / Tweets Received Replies Registration 1. Does aggregate turnover include value of inward supplies received on which RCM is payable? Refer Section 2(6) of CGST Act. Aggregate turnover does not include value of inward supplies on which tax is payable on reverse charge basis. 2. What if the dealer migrated with wrong PAN as the status of firm was changed from proprietorship to partnership? New registration would be required as partnership firm would have new PAN. 3. A taxable person s business is in many states. All supplies are below 10 Lakhs. He makes an Inter State supply from one state. Is he liable for registration? 4. Can we use provisional GSTIN or do we get new GSTIN? Can we start using provisional GSTIN till new one is issued? 5. Whether trader of country liquor is required to migrate to GST from VAT as liquor is out of GST law? 6. Not liable to tax as mentioned u/s 23 of CGST means nil rated supply or abated value of supply? 7. Whether civil contractor doing projects in various states requires separate registration for all states or a single registration at state of head office will suffice? 8. Whether aggregate turnover includes turnover of supplies on which tax is payable by the recipient under reverse charge? He is liable to register if the aggregate turnover (all India) is more than 20 lacs or if he is engaged in inter-state supplies Provisional GSTIN (PID) should be converted into final GSTIN within 90 days. Yes, provisional GSTIN can be used till final GSTIN is issued. PID & final GSTIN would be same If the person is involved in 100% supply of goods which are not liable for GST, then no registration is required. Not liable to tax means supplies which is not leviable to tax under the CGST/SGST/ IGST Act. Please refer to definition under Section 2(78) of the CGST Act. A supplier of service will have to register at the location from where he is supplying services. Outward supplies on which tax is paid on reverse charge basis by the recipient will be included in the aggregate turnover of the supplier. 78 GST - Mitra

79 9. If there are two SEZ units within same state, whether two registrations are required to be obtained? 10. Is an advocate providing interstate supply chargeable under Reverse Charge liable for registration? 11. When is registration in other state required? Will giving service from Nasik to other state require registration in other state? 12. I have migrated under GST but want to register as ISD. Whether I can apply now & what is the procedure? 13. I have enrolled in GST but I forgot to enter SAC codes. What should I do? The status is migrated. 14. I have ST number on individual name and have migrated to GST.I wish to transfer this on my proprietorship firm. 15. Please tell if rental income up to 20 lacs attracts GST or attracts any other charge? 16. If someone trades only 0% GST items (grains, pulses) then is it necessary to register for GST, if the turnover exceeds `20 lacs? 17. Is it correct that person dealing exclusively in NIL rated or exempt goods/ services liable to register if turnover > 20/10 Lakh? 18. If I register voluntarily though turnover is less than 20 Lakhs, am I required to pay tax from 1st supply I make post registration? GST - Mitra SEZs under same PAN in a state require one registration. Please see proviso to rule 8(1) of CGST Rules. Exemption from registration has been provided to such suppliers who are making only those supplies on which recipient is liable to discharge GST under RCM. If services are being provided from Nasik then registration is required to be taken only in Maharashtra and IGST to be paid on inter-state supplies. A separate & new registration is required for ISD. New registrations are being opened from 0800 hrs. on The same can be filled while filing FORM REG-26 for converting provisional ID to final registration. This conversion may be done while filling FORM REG-26 for converting provisional ID to final registration. GST is leviable only if aggregate turnover is more than 20 lacs. (Rs. 10 lacs in 11 special category States). For computing aggregate supplies turnover of all supplies made by you would be added. A person dealing with 100% exempted supply is not liable to register irrespective of turnover. There is no liability of registration if the person is dealing with 100% exempt supplies. Yes, you would be treated as a normal taxable person. 79

80 19. Whether a separate GSTIN would be allotted to a registered person for deducting TDS (he has PAN and TAN as well)? 20. Is separate registration required for trading and manufacturing by same entity in one state? 21. I am registered in TN and getting the service from unregistered dealer of AP, should I take registration in AP to discharge GST under RCM? 22. Is there any concept of area based exemption under GST? Separate registration as tax deductor is required. There will be only one registration per State for all activities. Any person who makes make inter-state taxable supply is required to take registration. Therefore in this case AP dealer shall take registration and pay tax. There will be no area based exemptions in GST. 23. If a company in Maharashtra holds only one event in Delhi, will they have to register in Delhi? Will paying IGST from Maharashtra suffice? 24. How long can I wait to register in GST? 25. What If I am not liable to register under GST but I was registered under Service tax? 26. When turnover of agents will be added to that of the principal for registration? 27. If I am not an existing taxpayer and wish to newly register under GST, when can I do so? Refund 28. I have a pending export refund in Service Tax. What will happen? Only if you provide any supply from Delhi you need to take registration in Delhi. Else, registration at Mumbai is sufficient (and pay IGST on supplies made from Mumbai to Delhi) An unregistered person has 30 days to complete its registration formalities from its date of liability to obtain registration. You can apply for cancellation of Provisional ID on or before 31st July No. You would be able to apply for new registration at the GST Portal gst.gov.in from 0800 hrs. on 25th June 2017 Refunds under earlier laws will be given under the respective laws only. 80 GST - Mitra

81 29. As an exporter, how do I ensure that my working capital is not blocked as refunds? Appropriate provisions have been made in the law by providing for grant of 90% refund on provisional basis within 7 days from filing of registration. Cess 30. What will be the impact of GST on coal? Will the clean energy Cess on coal go or will it stay? Clean Environmental Cess on coal will be replaced by GST Compensation Cess. Composition Scheme 31. Suppose I am in composition scheme in GST. If I purchase goods from unregistered person, then GST will be paid to Government by me or not? Yes, you will be liable to pay tax on reverse charge basis for supplies from unregistered person. Customs 32. What duties will be levied on import of goods? Exports 33. Present Procedures have Service Tax on Nepal, But no Goods Tax on Nepal. But, With GST, what tax will apply? 34. Are there exemptions for SEZ? How will a SEZ transaction happen in GST regime? 35. How would the sale and purchase of goods to and from SEZ will be treated? Will it be export / input? Customs duty and cess as applicable + IGST+ GST compensation cess. IGST and GST compensation cess shall be paid after adding all customs duty and customs cess to the value of imports. The export procedure for Nepal would be same as that to other Countries. Supplies to SEZs are zero-rated supplies as defined in Section 16 of IGST Act. Supply to SEZs is zero rated supplies and supplies by SEZs are treated as imports. GST - Mitra 81

82 36. Please clarify status of international export freight under GST as the same was exempt under POPS rules. It is zero rated in most countries. 37. When goods are being imported from SEZ who will pay IGST? 38. Who will pay IGST when goods are procured from SEZ? Today importer is paying both BCD and CVD. POS for transport of goods determinable in terms of sec 12(8) or sect 13(8) of IGST Act, 2017, depending upon location of service provider/service receiver. Exports are treated as zero rated supplies. Such supply is treated as import and present procedure of payment of duty continues with the variation that IGST is levied in place of CVD. Such supply is treated as import and present procedure of payment continues with the variation that IGST is levied in place of CVD. Input Tax Credit 39. Is SGST of Rajasthan charged by supplier on purchase from Rajasthan can be utilize for payment of SGST in Madhya Pradesh? 40. How one can use SGST credit for the payment of IGST on another state? 41. Can one State CGST be used to pay another state CGST? 42. In case of service supplied, should the credit be given to the state where it is billed or the state it is rendered? 43. Company is engaged in manufacturing of cement & power. Which rule to be referred for reversal of credit related to power business? SGST of one State cannot be utilized for discharging of output tax liability of another State. SGST Credit can be used for payment of IGST liability under the same GSTIN only. The CGST and SGST Credit for a State can be utilized for payment of their respective CGST/SGST liabilities within that State for the same GSTIN only. Tax will be collected in the State from which the supply is made. The supplier will collect IGST and the recipient will take IGST credit. Detailed rules for reversal of ITC when the supplier is providing exempted and nonexempted supplies have been provided in ITC Rules. 82 GST - Mitra

83 44. How will the credit / debit note from unregistered supplier be reported to GSTN and ITC claimed in the same? Like invoice, credit/debit notes on behalf of unregistered person will be given by registered person only. Further, GSTR2 provides for reporting of same by the recipient. Invoice 45. A shop sells taxable & exempt products to the same person (B2C), is it required to issue tax invoice and bill of supply separately? 46. Do registered dealers have to record Aadhaar/PAN while selling goods to unregistered dealers? 47. All expenses like freight / transport / packing which are charged in Sales Invoice are taxable in GST? How to charge in bill? 48. Can we move construction material to builders on delivery challan and issue tax invoice post completion of activity? 49. How to treat following transaction in GST (i) Delivered supply shortages in Transit. (ii) Customer gets less quantity and pays less. 50. Should we issue Self Invoice for GST liability discharge on RCM or GST can be discharge through expenses booking voucher? Returns 51. What would be done on tax paid on advance receipt if advance has to be refunded in any circumstance In such a case the person can issue one tax invoice for the taxable invoice and also declare exempted supply in the same invoice. There is no requirement to take Aadhaar / PAN details of the customer under the GST Act. All expenses will have to be included in the value and invoice needs to be issued accordingly. Please refer to Section 15 of CGST Act and Invoice Rules. If the goods are meant to be supplied in the course of construction an invoice is necessary. If the goods are tools which are to be used for construction then delivery challan should be issued. The supplier may issue credit note to the customers and adjust his liability. For RCM liabilities tax invoice has to be issued on self. Advance refunded can be adjusted in return. GST - Mitra 83

84 52. Do registered dealers have to upload sale details of unregistered dealers also in GST? 53. How to incorporate two supplies in return for Pharma with same HSN code of four digits but having different tax rates? Supply 54. Should we discharge GST liability for all reverse charge having small amounts of Transaction or any amount limit is there? 55. What is treatment of promotional item given free to end consumers by FMCG companies? 56. How to comply with 9(4) of CGST Act if POS is in another State of the unregistered supplier 57. Under supply from unregistered dealer the purchaser have to pay GST on RCM basis.so whether stipend paid to intern will also come under RCM? 58. Salary by partnership firm to Partners as per Income Tax Act liable to GST? 59. Sec 9(4) of CGST Act Do I need to pay under RCM if I purchase stationary worth Rs.100 from an unregistered stationery shop? 60. What is the treatment of promotional item given free to end consumers by FMCG companies? If taxable, whether ITC is allowed? Generally not. But required in case of inter-state supplies having invoice value of more than Rs 2.50 Lakhs. Returns provide for furnishing rate wise details. It has been decided that Rs. 5000/- per day exemption will be given in respect of supplies received from unregistered person. For supplies above this amount, a monthly consolidated bill can be raised. Tax will be charged only on the total consideration charged for such supply. Any person making inter-state supply has to compulsorily obtain registration and therefore in such cases, section 9(4) will not come into play. Stipend paid to interns will be employer-employee transactions. Hence, not liable for GST. Salary will not be liable for GST. It has been decided that Rs. 5000/- per day exemption will be given in respect of supplies received from unregistered person. Tax is payable on consideration received for the supply. 84 GST - Mitra

85 61. Whether GST will be leviable in case of returnable packing material like drums supplied with finished goods? 62. How will disposal of scrap be treated in GST? 63. I am from MP and providing service to a customer in Maharashtra. I outsource the work to a service provider in Maharashtra, what tax i need to charge? 64. If address of buyer is Punjab and place of supply is same state of supplier (Rajasthan), then IGST will apply or CGST/SGST? 65. Why is bifurcation of cash deposit as CGST-SGST-IGST required? Is cash held against a GSTIN, to be adjusted via return u/s What is the difference in between Nil rated, taxable at 0% and exempted goods and services? Especially in relation with ITC 67. Will professional tax will be abolished in Maharashtra after introducing of GST? 68. Employer provides bus service, meal coupon, telephone at residence, gives vehicle for official and personal use, uniform and shoes, any GST? GST will be levied on the value charged for the supply only. If the disposal is in the course or furtherance of business purposes, it will be considered as a supply. Generally these will be two supplies where the supplier from MP will charge IGST from the recipient in Maharashtra. Whereas, the service provider in Maharashtra will charge IGST from the recipient in MP. If the place of supply and the location of the supplier are in the same State then it will be intra-state supply and CGST / SGST will be applicable. Three levies are under three different statutes and are required to be separately accounted for. Exempt supply includes Nil rated (taxable at 0%) and non- Taxable supplies and no ITC is available for such supplies. Professional tax is not a tax on supply of goods or services but on being in a profession. Professional tax not subsumed in GST. Where the value of such supplies is in the nature of gifts, no GST will apply till value of such gifts exceeds Rs /- in a financial year. GST - Mitra 85

86 69. The definition of composite supply and the description of same under Section 8 differ. Please explain consequences. 70. Whether slump sale will attract GST. If yes then under which Section? 71. Salary by Partnership firm to Partners as per Income Tax Act liable to GST? Partners are not employees of the firm. Section 2(30) defines what will be considered as a composite supply. Whereas, Section 8 provides that in case of a composite supply, the treatment for tax rate etc. will be that of principal supply. It will have the same treatment as normal supply. Salary will not be leviable of GST. Transition 72. How do I avail transition credit? Transition credit can be availed by filing the respective forms under Transition rules upto Please provide the clarity on area based exemption 50/2003 in UK & HP. 74. We manufactured excisable goods. But unit availed the exception benefits 50/2003. What about my dealers stock? 75. A trader buys from manufacturer not registered in excise as his turnover is below 1.5cr. Then in such case can trader take ITC on stock up to 40%? 76. I am a trader. I have excise paid purchase invoice. Whether I can claim credit of full excise duty on closing stock of 1st July 2017 Area based exemptions will not be continued under GST. It will be operated through the route of reimbursement as prescribed. The dealer will get deemed 40% / 60% of the CGST paid on supply of such goods in GST. If the goods are branded and greater than Rs. 25,000, full credit using CTD can be availed. Yes deemed credit will be available subject to satisfaction of other conditions as prescribed. Full transition credit of such duty will be available on stock in hand in respect of which you have duty paying excise document subject to conditions under Section 140(3) of the CGST Act. 86 GST - Mitra

87 77. If a trader purchases directly from manufacturer & has documents showing excise, will he get full excise credit or 40% of CGST? 78. If a fsd purchases directly from manufacturer and has value cum excise duty and excise duty is not separately shown will he get full credit? 79. Is the full excise credit also available to traders who purchases directly from manufacturers and excise is separately shown in invoice? 80. In June 17 Vat return no amount carried forward & held stock of Rs. 50 lakhs. Then can we take credit of that stock or not? 81. What will be the impact of closing stock which has been already paid vat on 1st July? 82. If in Vat return refund claimed in June 17 & no balance credit in GST. Then what s the position of submission of Form C 83. Some service was provided on but Invoice will be raised on Whether we have to charge Service Tax or GST? 84. Would we be eligible for credit on Capital Goods in transit and received post GST? Full transition credit of such duty will be available on stock in hand in respect of which you have duty paying excise document subject to conditions under Section 140(3) of the CGST Act. Full transition credit of such duty will be available on stock in hand in respect of which you have duty paying excise document subject to conditions under Section 140(3) of the CGST Act. Full transition credit of such duty will be available on stock in hand in respect of which you have duty paying excise document subject to conditions under Section 140(3) of the CGST Act. The supplier would be eligible to carry forward the closing balance of ITC from VAT return for June 17. The supplier would be eligible to carry forward ITC on such stock from VAT return for June 17. Refund claimed under existing law will be handled as per the provisions of the existing law. Form C to be submitted in terms of provision of Rule 1(1) of Transition Rules. If Point of Tax arises after appointed date, then GST will be chargeable on such supply. No provision for such credit is there in GST law. GST - Mitra 87

88 85. What about VAT balance pending on transition date? 86. What about deemed export against Form H? Balance VAT credit in the return will be transferred to new provisional ID as SGST Credit. Form H will not be there in GST. 87. Who will bear tax difference on closing stocks as on 30th June 2017? Whether the manufacturer/ dealer or government? 88. How will we get input credit on stock in hand for spare parts billed from other state, excise, CST and entry tax paid? 89. A trader buys from manufacturer not registered in excise as his turnover is below 1.5 crore. then in such case can traders take ITC on stock up to 40% 90. Whether we will be eligible for credit of duty paid on Capital Goods in transit and received post GST? 91. Can ITC of Swach Bharat Cess or Krishi Kalyan Cess be carried forward under GST? 92. Will Clean Energy CESS on imported Rs. 400 PMT continue to be applicable in GST? 93. Whether closing balance of edu cess and secondary higher education cess prior to 1st Mar 2015 can be carried forward in GST? 94. Can u clarify for 40 benefit on closing stock does 1 year limit apply or not? Closing ITC in VAT return will be allowed to be carry forward in GST. For all inputs with duty paying documents available respective CGST / SGST credit will be available. But credit of CST will not be available. Deemed Credit will be available on stock in hand provided the conditions of section 140(3) read with Rule 1(4) of Transition Rules are satisfied. No such provision in GST. No No. Clean Energy Cess is being repealed. Coal, however, will be subject to compensation Rs 400/- per tonne. No it will not be carried forward in GST as it is not covered by definition of eligible duties and taxes under Section 140 of the CGST Act. Deemed credit will be available for all stock procured within a 1 year period. 88 GST - Mitra

89 95. Till what time is transition credit available? Where do I need to declare my input stock? UTGST The window to declare transition credit forms is three months from the appointed day. Please refer to transition rules for more details. 96. Will there be GST in A&N Islands as previously there was no VAT 97. Whether IGST would be levied twice on high seas sales? First on high seas sales and second on custom clearance. IGST paid on 1 available as ITC? 98. Will Krishi Mandi Fee (imposed in U.P.) be waived off in GST? 99. Is E-Way Bill applicable from 1st July Is there a sunset clause for Anti- Profiteering law? Yes. For supplies within A&N, CGST plus UTGST would be leviable. IGST shall be levied only once on imports. GST does not concern such fee so GST does not affect it. The present system for E-way Bill in States to continue, till the E-Way Bill procedures are finalized. Yes, the sunset clause for Antiprofiteering Authority is of two years. It should be noted that the tweets received or the replies quoted are only for educational and guidance purposes and do not hold any legal validity. GST - Mitra 89

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92 The objective is to make available a hand book for reference at each step be it GST implementation, compliance, litigation. This shall cover the key provisions of GST in a brief and lucid manner with the business communities, CEO s and CFO s, without many technical jargons. - CA Amit Doshi 92 GST - Mitra