GST Rollout: Ready Reckoner on Goods and Service Tax ( GST )

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1 GST Rollout: Ready Reckoner on Goods and Service Tax ( GST ) Compiled By: SARC & Associates, Chartered Accountants, Head Office : D-191, Okhla Industrial Estate Phase 1, New Delhi

2 FOREWORD The Goods and Service Tax is the biggest Tax reform post-independence. All the stakeholders in the economic supply chain will significantly be affected by this Tax regime. GST is levied on both goods and services and has subsumed and replaced the current indirect taxes such as excise, VAT, and service tax. GST is expected to provide the much needed boost to investment and growth of the Indian Economy. Making the current system transparent, binding it by one tax regime, GST would be the desired stimulant for free flow of goods and services in the nation. The most significant challenge for all the stakeholders would be the transition from old tax regime to GST since it will have impact on all aspects of business starting from supply chain to Accounting, Financial Reporting, Tax planning and Assurances. To enable successful transition to the GST era the foremost thing is to get people together and train them and make them understand that change is the only constant and soon as a nation we realize that and gather courage to overcome that we would become a more stronger and empowered than ever. - CA Sunil Kumar Gupta Founder & Chairman, SARC 2

3 INDEX S.no Subject Page No. YEIDA: Introduction & Overview Concept of GST Levy of GST Meaning and scope of supply Exemption Reverse Charge Registration Place of supply Time of Supply Valuation Input Tax Credit( ITC ) Tax Invoice Payment of Tax Works Contract TDS Audit of Accounts & Records Transitional Provision Return Penalty Anti-profiteering measure Common Portal SAC applicable to YEIDA Annexure A ( Definition Under GST) Frequently Asked Questions ( FAQs ) GST Return Format

4 Overview of Yamuna Expressway Industrial Development Authority ( YEIDA ) YEIDA has been constituted under section ( u/s ) 3 of Uttar Pradesh Industrial Area Development Act, 1976, (UPIDA )(U.P. Act No. 6 of 1976) (As passed by the Uttar Pradesh Legislature); YEIDA was established on April 24, 2001 in terms of the section 3(1) of the UPIDA vide State Government Notification No. 697/lxxvii (N)-2001 and also notified by the Governor of Uttar Pradesh in exercise of the powers under the proviso to clause(1) of Article 243Q of the Constitution of India vide Notification No. 1280/ n/01 Lucknow dated 18th December, Status of YEIDA YEIDA is registered u/s 12AA of the Income Tax Act, 1961 vide Registration No. (U.R.N) 591/513/17-18 vide letter dated YEIDA is providing services in the nature of General public utility which falls under Charitable Activities u/s 12AA of the Income Tax Act, Objects of YEIDA The objects of YEIDA have been defined under provisions of section 6(1) of the UPIDA. The object of YEIDA is to secure the planned development of the Industrial Development Area. Without prejudice to the objects of the Authority, the Authority is also performing the following functions: Acquiring land in Industrial development Area, by agreement or through proceeding under the Land acquisition Act, 1894 for the purpose of this Act. Preparing plans for the development of the Industrial Development Area. Demarcating and develop sites for industrial, commercial and residential purposes according to the plan. Providing infrastructure for industrial, commercial and residential purposes. 4

5 Providing amenities as defined under section 2 of UPIDA. Allocating and transferring either by way of sale or lease or otherwise plots of land for industrial, commercial and residential purposes. Regulating the erection of building and setting up of industries, and Laying down the purpose for which a particular site or plot of land shall be used, namely for industrial or commercial or residential purpose or any other specified purpose in such area. 5

6 CHAPTER -1 CONCEPT OF GST 6

7 1. Concept of GST 1.1 GST is a comprehensive indirect tax levy on manufacture, sale and consumption of goods as well as services at the national level. 1.2 Its main objective is to consolidate all the indirect tax levies into a single tax, except customs (excluding SAD), replacing multiple tax levies, overcoming the limitations of existing indirect tax structure, and creating efficiencies in tax administration. 1.3 In Simple terms, GST is a tax levied on goods and services imposed at each point of supply of goods or services. 1.4 The tax will accrue to the taxing authority which has the jurisdiction over the place of consumption, which is also termed as place of supply. 1.5 Supply of alcoholic liquor for human consumption is kept out of GST. Five petroleum products viz. petroleum crude, motor spirit (petrol), high speed diesel, natural gas and aviation turbine fuel have temporarily been kept out of GST. 1.6 Destination Based Tax: A major change in administering GST is that the tax incidence is at the point of sale as against the earlier system of point of origin. 1.7 Taxes replaced: The GST has replaced the following taxes: Central Level Taxes and Cesses earlier levied and collected by the center:- Central Excise Duty Additional Excise Duty Excise Duty levied under the Medical & Toilet Preparation (Excise Duties) Act, Service Tax CVD (Additional Duties of customs) SAD (Special additional duties of customs), Service tax. Central Surcharge & cess, related to supply of goods or services. State taxes that have been subsumed under the GST are: State VAT/Sales Tax Entertainment Tax Central Sales Tax Octroi & Entry Tax Purchase Tax Luxury Tax Taxes on lottery Betting & gambling State Cess & Surcharge, related to supply of goods or services. 7

8 1.8 Types of GST: It is dual GST with the Centre and States simultaneously levying it on a common tax base. The GST levied by the Centre on intra-state supply of goods or services and will be called as Central GST ( CGST ) and that to be levied by the States/ Union territory would be called the State GST ( SGST )/( UTGST ). Similarly Integrated GST ( IGST ) will be levied and administered by centre on every inter-state supply of goods and services. CGST and SGST would be levied simultaneously on every transaction of supply of goods and services except the exempted goods and services. 1.9 Compliance Rating Mechanism: As per section 149 of CGST Act, 2017 every registered person shall be assigned a compliance rating based on the record of compliance in respect of specified parameters. Such ratings shall also be placed in the public domain. A prospective client will be able to see the compliance ratings of suppliers and take a decision as to whether to deal with a particular supplier or not. This will create a healthy competition amongst taxable persons. Following are the benefits of having good rating under Compliance Rating Mechanism: Less Chance of Scrutiny No Lock up of Input Tax Credit Reputation Enhancement More Opportunity for business In following scenarios dealers can be blacklisted under Compliance Rating Mechanism: Continuous defaults for 3 months in filing return Short Reporting of Sale for a period of 6 Months Continuous default for 3 month in payments of Taxes 8

9 CHAPTER 2 Levy of GST 9

10 2. Levy of GST 2.1 Article 246A of the constitution confers concurrent powers to both, Parliament and State Legislatures to make laws with respect to GST (CGST/SGST/UTGST). However, clause 2 of Article 246A read with Article 269A provides exclusive power to the Parliament to legislate with respect to inter-state trade or commerce i.e. IGST. 2.2 The taxable event under GST is supply of goods or services or both. 2.3 Supplies made without consideration will also come within the purview of supply under GST except those specified in Schedule I to the Central Goods and Service Tax Act,2017 ( the CGST Act ). 2.4 The Central Government or State Government, on the recommendation of the GST council, can notify an activity to be supply of goods or supply of services. 2.5 Composite Supply shall be treated as supply of the principal supply. 2.6 Mixed supply would be treated as supply of that particular goods or services which attracts the highest rate of tax. 10

11 CHAPTER 3 Meaning & Scope of Supply 11

12 3. Meaning and scope of supply 3.1 The taxable event under GST shall be the supply of goods or services or both made for consideration in the course of furtherance of business. The taxable events under the existing indirect tax laws such as manufacture, sale, or provision of services shall stand subsumed in the taxable event known as supply. 3.2 The term supply covers all forms of supply of goods and services or both that includes sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course of furtherance of business. 3.3 The term supply also includes import of service. 3.4 Taxable supply means a supply of goods and services or both which is chargeable to goods and service tax under the GST. 3.5 Following conditions are required to be satisfied to constitute a supply, i.e.- the activity involved supply of goods or services or both; the supply is for a consideration unless otherwise specifically provided for; the supply is made in the course of furtherance of business; the supply is made in the taxable territory; the supply is a taxable supply; the supply is made by a taxable person. 3.6 Types of Supplies Taxable and Exempt supplies Inter-state and Intra-state supplies Composite and Mixed supplies Zero rated Supplies 3.7Activities to be treated as Supply even if made without consideration as per Schedule I of CGST Act, 2017: 1. Permanent transfer or disposal of business assets where input tax credit has been availed on such assets. 2. Supply of goods or services or both between related persons or between distinct persons as specified in section 25, when made in the course or furtherance of business: 12

13 Provided that gifts not exceeding fifty thousand rupees in value in a financial year by an employer to an employee shall not be treated as supply of goods or services or both. 3. Supply of goods (a) by a principal to his agent where the agent undertakes to supply such goods on behalf of the principal; or (b) by an agent to his principal where the agent undertakes to receive such goods on behalf of the principal. 4. Import of services by a taxable person from a related person or from any of his other establishments outside India, in the course or furtherance of business. 3.8 Activities to be treated as Supply of Goods or Supply of Services as per schedule II of CGST Act, 2017: 1. Transfer (a) any transfer of the title in goods is a supply of goods; (b) any transfer of right in goods or of undivided share in goods without the transfer of title thereof, is a supply of services; (c) any transfer of title in goods under an agreement which stipulates that property in goods shall pass at a future date upon payment of full consideration as agreed, is a supply of goods. 2. Land and Building (a) any lease, tenancy, easement, licence to occupy land is a supply of services; (b) any lease or letting out of the building including a commercial, industrial or residential complex for business or commerce, either wholly or partly, is a supply of services. 3. Any treatment or process which is applied to another person's goods is a supply of services. 4. Transfer of business assets (a) Where goods forming part of the assets of a business are transferred or disposed of by or under the directions of the person carrying on the business so as no longer to form part of those assets, whether or not for a consideration, such transfer or disposal is a supply of goods by the person; 13

14 (b) where, by or under the direction of a person carrying on a business, goods held or used for the purposes of the business are put to any private use or are used, or made available to any person for use, for any purpose other than a purpose of the business, whether or not for a consideration, the usage or making available of such goods is a supply of services; (c) where any person ceases to be a taxable person, any goods forming part of the assets of any business carried on by him shall be deemed to be supplied by him in the course or furtherance of his business immediately before he ceases to be a taxable person, unless (i) the business is transferred as a going concern to another person; or (ii) the business is carried on by a personal representative who is deemed to be a taxable person. 5. Supply of services The following shall be treated as supply of services, namely: (a) renting of immovable property; (b) construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier. Explanation. For the purposes of this clause (1) the expression "competent authority" means the Government or any authority authorised to issue completion certificate under any law for the time being in force and in case of non-requirement of such certificate from such authority, from any of the following, namely: (i) an architect registered with the Council of Architecture constituted under the Architects Act, 1972; or (ii) a chartered engineer registered with the Institution of Engineers (India); or (iii) a licensed surveyor of the respective local body of the city or town or village or development or planning authority; (2) the expression "construction" includes additions, alterations, replacements or remodelling of any existing civil structure; (a) temporary transfer or permitting the use or enjoyment of any intellectual property right; 14

15 (b) development, design, programming, customisation, adaptation, upgradation, enhancement, implementation of information technology software; (c) agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act; and (d) transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration. 6. Composite supply The following composite supplies shall be treated as a supply of services, namely: (a)works contract as defined in clause (119) of section 2; and (b) supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration. 7. Supply of Goods The following shall be treated as supply of goods, namely: Supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration. 3.9 Activities or Transactions which shall be treated as neither as a supply of goods nor a supply of services as per Schedule III of CGST Act, Services by an employee to the employer in the course of or in relation to his employment. 2. Services by any court or Tribunal established under any law for the time being in force. 3. (a) the functions performed by the Members of Parliament, Members of State Legislature, Members of Panchayats, Members of Municipalities and Members of other local authorities; (b) the duties performed by any person who holds any post in pursuance of the provisions of the Constitution in that capacity; or 15

16 (c) the duties performed by any person as a Chairperson or a Member or a Director in a body established by the Central Government or a State Government or local authority and who is not deemed as an employee before the commencement of this clause. 4. Services of funeral, burial, crematorium or mortuary including transportation of the deceased. 5. Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building. 6. Actionable claims, other than lottery, betting and gambling. Explanation. For the purposes of paragraph 2, the term "court" includes District Court, High Court and Supreme Court. 16

17 CHAPTER 4 Exemption 17

18 4. Exemption 4.1 All Supplies by Authority are taxable except the supplies which have been notified as exempt by CBEC Services by an entity registered u/s 12AA of the Income tax Act, 1961 (43 of 1961) by way of charitable activities; [Charitable activities may be defined as presently in notification No 25/2012-ST] Services by government, local authority or governmental authority by way of any activity in relation to any function entrusted to a municipality under Article 243 W of the Constitution. Taxable service provided by State Government Industrial Development Corporations/ Undertakings to industrial units by way of granting long term (thirty years, or more) lease of industrial plots from so much of tax leviable thereon, as is leviable on the one time upfront amount (called as premium, salami, cost, price, development charges or by any other name) payable for such lease. Services provided by way of pure labour contracts of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of a civil structure or any other original works pertaining to the Beneficiary-led individual house construction / enhancement under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana (PMAY). Services by Central Government, State Government, Union territory, local authority or governmental authority by way of any activity in relation to any function entrusted to a municipality under article 243 W of the Constitution. Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority or a Governmental authority by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution. 18

19 CHAPTER 5 Reverse Charge 19

20 5. Reverse Charge 5.1 Reverse Charge means the liability to pay tax is on the recipient of supply of goods and services instead of the supplier of the goods or services in respect of notified categories of supply. 5.2 Earlier reverse charge mechanism was applicable only to services, but now it applies to supplies of both goods and services. 5.3 In case of receipt of supply from an unregistered person, the registered person who is receiving goods or services shall be liable to pay tax under reverse charge. 5.4 Any services received from a non-resident service provider, goods transport agencies, legal services, Arbitral Tribunal services, sponsorship Services, directors services to Company, Insurance Agent, Recovery agent to bank/fi/nbfc, transportation services on Import, Permitting use of Copyrights, Radio Taxi Services to E-commerce aggregator are covered reverse charge mechanism. 5.5 Services through an e-commerce operator are covered under reverse charge. 5.6 Time of supply of goods in case tax payable under reverse charge will be the earliest of the following dates: a) date of receipt of goods; or b) date on which payment is made; or c) the date immediately following 30 days from the date of invoice by the supplier. Time of supply of service in case tax payable under reverse charge will be the earliest of the following dates: a) date on which payment is made; or b) the date immediately following sixty days from the date of issue of invoice by the supplier. Exemption of reverse charge in case of petty expenses: As per the notification No.8/2017-Central Tax (Rate) dated Reverse charge shall not be applicable where the aggregate value of supplies of goods or service or both received by a registered person from any or all the suppliers, who is or are not registered, does not exceeds five thousand rupees in a day. 20

21 CHAPTER 6 Registration 21

22 6. Registration 6.1 As per section 22 of the CGST Act, 2017, every supplier (including his agent) who makes a taxable supply i.e. supply of goods and / or services which are liable to tax under GST law, and his aggregate turnover in a financial year exceeds the threshold limit of twenty lakh rupees shall be liable to register himself in the state or the Union territory of Delhi or Puducherry from where he makes the taxable supply. 6.2 In case of eleven special category states (as mentioned in Article 279A(4)(g) of the Constitution of India), the threshold limit for registration liability is ten lakh rupees. 6.3 Compulsory Registration: As per section 22 of the of the CGST Act, the following categories of persons shall be required to be registered compulsorily irrespective of the threshold limit: Persons making any inter-state taxable supply; Casual taxable persons making taxable supply; Persons who are required to pay tax under reverse charge; Person who are required to pay tax under sub-section (5) of section 9; (electronic commerce operators) Non-Resident taxable persons making taxable supply; Persons who are required to deduct tax under section 51, whether or not separately registered under this Act; Persons who make taxable supply of goods or services or both on behalf of other taxable persons whether as an agent or otherwise; Input Service Distributor, whether or not separately registered under this Act; Persons who supply goods or services or both, other than supplies specified under sub-section (5) of section 9, through such electronic commerce operator who is required to collect tax at source under section 52; 22

23 Every person supplying online information and database access or retrieval services from a place outside India to a person in India, other than a registered person; and Such other person or class of persons as may be notified by the Government on the recommendations of the Council. 6.4 Time Limit: A person should take a registration, within thirty days (30 days) from the date on which he become liable to registration, in such manner and subject to such conditions as is prescribed under the Registration Rules. A casual taxable person and a non-resident person should however apply for registration at least 5 days prior to commencement of business. 6.5 Every person who is liable to take a registration will have to get registered separately for each state where he has a business operation and is liable to pay GST in terms of sub section (1) of section 22 of the CGST Act. 6.6 In terms of proviso to sub section (2) of section 25, a person having multiple business verticals in a state may obtain a separate registration for each business vertical, subject to such conditions as may be prescribed. 6.7 In terms of sub-section (3) of section 25, a person, though not liable to compulsorily registered may get registered himself voluntarily, and all the provisions of this Act, as are applicable to a registered taxable person shall apply to such person. 6.8 As per section 25(6) of the CGST Act, every person shall have a Permanent Account Number ( PAN ) in order to be eligible for grant of registration. Exclusions: However as per the proviso to the aforesaid section, a person required to deduct tax u/s 51, may have, in lieu of a PAN, a Tax Deduction and collection Account Number issued in order to be eligible for grant of registration. As per section 25(7) PAN is not mandatory for a non-resident taxable person who may be grated registration on the basis of any other document as may be prescribed. 23

24 CHAPTER 7 Place of Supply 24

25 7. Place of Supply 7.1 The basic principle of GST is that it should effectively tax the consumption of such supplies at the destination thereof or as the case may be at the point of consumption. So place of supply provision determines the place i.e. taxable jurisdiction where tax should reach. The place of supply determines whether a transaction is intra-state or inter-state i.e. it is subject to CGST plus SGST in a given state or else would attract IGST if it is an inter-state supply. 7.2 The various elements involved in a transaction can be used as proxies to determine the place of supply. The proxy which gives more appropriate result than others can be used for determining the place of supply. The same are discussed below: Location of service provider; Location of service receiver; The place where the activity takes place/ place of performance; The place where it is consumed; and The place/person to which actual benefit flows. 7.3 Separate rules for place of supply in respect B2B (supplies to registered persons) and B2C (supplies to registered persons) transaction. 7.4 The place of supply of goods shall be the location of the goods at the time at which the movement of goods terminates for delivery to the recipient. 7.5 The place of supply in relation to immovable property is the location of immovable property. For example a road is constructed between two states and covering two states then the place of supply shall be treated as made in each of the states in proportion to the value of services separately collected and determined, in terms of the contract entered into in this regard. 25

26 CHAPTER 8 Time of Supply 26

27 8. Time of Supply 8.1 Section 12 & 13 of CGST Act,2017 provides that the time of supply shall be the earliest of the following sates: date of issue of invoice by the supplier or the date of receipt of payment; date of provision of service or the date of receipt of payment, whichever is earlier; date on which the recipient shows the receipt of service in his books of account, in case the aforesaid two provisions do not apply. 8.2 The time of supply with regard to addition in value of interest, late fee or penalty or delayed consideration shall be the date on which the supplier receipts such additional consideration. 27

28 CHAPTER 9 Valuation 28

29 9. Valuation 9.1 The value of supply of goods and services shall ordinarily be the transaction value which is paid or payable, when the parties are not related and price is the sole consideration. 9.2 Section 15 of CGST/SGST Act, 2017 further elaborates various inclusions and exclusions from the ambit of transaction value. Inclusions: Taxes, duties, cesses, fees and charges levied under any law for the time being in force other than the CGST Act, the SGST Act, the UTGST Act and the Goods and Services Tax (Compensation to States) Act, if charged separately by the supplier; Amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply and not included in the price actually paid or payable for the goods or services or both; Incidental expenses, including commission and packing, charged by the supplier to the recipient of a supply and any amount charged for anything done by the supplier in respect of the supply of goods or services or both at the time of, or before delivery of goods or supply of services; Subsidies directly linked to the price excluding subsidies provided by the Central Government and State Governments. Interest or late fee or penalty for delayed payment of any consideration for any supply. Exclusions Discount given before or at the time of the supply if such discount has been duly recorded in the invoice issued in respect of such supply; and Discount given after the supply has been effected, if such discount is established in terms of an agreement entered into at or before the time of such supply and specifically linked to relevant invoices; and input tax credit as is attributable to the discount on the basis of document issued by the supplier has been reversed by the recipient of the supply. 29

30 CHAPTER 10 Input Tax Credit 30

31 10. Input tax credit ( ITC ) 10.1 Input tax means the CGST, SGST, IGST or UTGST charged on supply of goods or services or both made to a registered person. It also includes tax paid on reverse charge basis and integrated tax goods and services tax charges on import of goods It includes taxes paid on input goods, input services and capital goods. Credit of tax paid on capital goods is permitted to be availed in one installment A registered person is entitled to take credit of input tax charged on supply of goods and services or both to him which are intended to be used in the course of business Following four conditions are to be satisfied by the registered person for obtaining ITC: Supplier is in possession of tax invoice or debit note or such other tax paying documents as may be prescribed; Supplier has received the goods or services or both; The supplier has actually paid the tax charged in respect of the supply to the government; Supplier has furnished the return u/s A registered person can take the ITC without payment of consideration for the supply but he is required to pay the consideration along with the tax within 180 days from the date of issue of issue of invoice. This condition is not applicable where tax is payable on reverse charge basis If he has not paid the consideration along with tax within 180 days, the amount of ITC will be added to its output tax liability along with interest. However, he can gain take the ITC on payment of consideration and tax A registered person cannot take ITC in respect of any invoice for supply of goods and services after the due date for furnishing the return under section 39 for the month of September following the end of financial year to which such invoice pertains or furnishing the relevant annual report, whichever is earlier. 31

32 So, the upper limit for taking ITC is 20 th October of the next financial year or the date of filing the annual return, whichever is earlier The ITC credit shall not be allowed on the tax component of cost of capital goods in respect of which depreciation has been claimed The credit of tax paid on every input used for supply of taxable goods or services or both is allowed except items of personal consumption, inputs use of which results into formation of an immovable property(except plant and machinery) even for business purposes, telecommunication services etc A person cannot take ITC in respect of goods stolen, lost, destroyed and written off. In addition, ITC with respect to goods given as gifts or free samples are also not allowed In case there is a change in constitution of a registered person, he shall be allowed to transfer the ITC which remains unutilized in its electronic credit ledger to its new entity, provided there is a specific provision for transfer of liabilities Where goods or services or both are used for effecting both taxable and nontaxable supplies, the ITC attributable only to taxable supplies can be taken. The manner of calculation of eligible credit is provided in the rules Zero-rated supplies have been covered within taxable supplies for the purpose of allowing input tax credit If the goods or services or both are used both for business and other purposes, then ITC attributable only to the purpose of business can be taken Block credit: the ITC shall not be available in respect of the following namely:- Motor vehicle and other conveyances except when they are used for making the taxable supplies such as further supply of such vehicles or conveyances, transportation of passengers, transportation of goods For supply of goods or services or both such as foods and beverages, outdoor catering, beauty treatment, health services. Cosmetic and plastic surgery, membership of a club, health and fitness center, rent a cab, life insurance and 32

33 travel benefit 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 or services or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business. Goods or services or both on which tax has been paid under composition scheme. Goods or services or both received by a non-resident taxable person except on goods imported by him. 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. 33

34 CHAPTER 11 Tax Invoice 34

35 11 Tax Invoice A registered person supplying taxable services shall, before or after the provision of service but with a prescribed period, issue a tax invoice showing description, value, tax charged thereon. A registered person supplying exempted goods or services or both shall issue, instead of a tax invoice, a bill of supply containing the particulars as prescribed. A registered person shall on receipt of advance payment with respect to any supply of goods or both issue a receipt voucher or any other document evidencing receipt of such payment. Where advance is received but subsequently no supply is made and no tax invoice is issued, then the said registered person may issue a refund voucher to the person who has made the payment. Tax Invoice should contain following fields: 1. Supplier Name 2. Supplier GSTIN 3. Invoice No. 4. Invoice Issue Date 5. Total Value 6. Taxable Value 7. Goods A/c HSN, Service Accounting Code 8. Goods and Services Description 9. Unit Quantity 10. Rate 11. IGST Rate 12. IGST Charged Amt 13. CGST Rate 14. CGST Charged Amt. 15. SGST/ UTGST Rate 16. SGST Charged Amount 17. Cess Rate 18. Cess Charged Amt. 19. Name/Recipient of Service/Goods 20. Place of Supply 21. Recipient GSTIN 22. TDS (if applicable) 35

36 11.1 Credit/ Debit Note: Where a tax invoice has been issued for supply of goods or services or both and taxable value or tax charged in that tax invoice is found to exceed the taxable value or tax payable in respect of such supply, or where the goods supplied are returned by the recipient, or where goods or services or both supplied are found to be deficient, the registered person, who has supplied such goods or services or both, may issue to the recipient a credit note containing such particulars as may be prescribed. A registered person who issues a credit note in relation to a supply of goods or services or both shall declare the details of such credit note in the return for the month during which credit note has been issued but not later than September following the end of the financial year in which such supply was made, or the date of furnishing of the relevant annual return, whichever is earlier. No reduction in output tax liability shall be permitted, if incidence of tax and interest on the supply has been passed on to any other person. A registered person who issues a debit note in relation to a supply of goods or services or both shall declare the details of such debit note in the return for the month during which such debit note has been issued and the tax liability shall be adjusted in such manner as may be prescribed. Format of Tax invoice to be raised is given on the next page Note: In case of supply of service, invoice shall be issued in Triplicate Original for Recipient Duplicate for supplier Triplicate for bank 36

37 Supplier Details- (Original for Recipient) Receiver Details- 1. Date of Invoice: Name: 2. Invoice no: Address: 3.Nam e: GSTN : 4. Address: Property Detail Location: Sector.. Block.Plot No 5. GSTIN: Category*. File Ref. No. *Residential/Industrial/Commercial/Instit utional S.No. Descripti on of Services SA C cod e Exem pt Value Taxab le Value (Rs.) CGST SGST IGST Total Value Rs. (Rs.) Rate (%) Rs. Rate(% ) Rs. Rate(% ) Total Rs Grand Total Invoice Value (In words) Amount subject to Reverse charge 37 Name of Signatory Designation Date

38 CHAPTER 12 Payment of Taxes 38

39 12 Payment of tax 12.1 Every deposit made towards tax, interest, penalty, fee or any other amount by a person shall be credited to the electronic cash ledger of such person Mode of payment: taxes can be paid by any mode such as internet banking, credit card or debit cards, National electronic fund transfer (NEFT). 12.3The input tax credit as self-assessed in the return of a registered person shall be credited to his electronic credit ledger. 12.4The amount of input tax credit available in the electronic credit ledger of the registered person on account of: Integrated tax shall be first be utilized towards payment of integrated tax and the remaining amount shall be untiled towards payment of central tax and state tax. The central tax shall be first untiled towards payment of central tax and the remaining amount shall be utilized for payment of integrated tax. The central tax shall not be utilized for payment of state tax or union territory tax. The state tax shall be first utilized towards payment of state tax and the amount remaining shall be utilized for payment of Integrated Tax. The Union territory tax shall first be utilized for payment of union territory tax and the amount remaining shall be utilized for payment of integrated tax. The state tax or union territory tax shall not be utilized towards payment of central tax. The balance in the electronic cash ledger or electronic credit ledger after payment of tax, interest, penalty, fee or any other amount shall be refunded Due date: Payment of taxes by the normal tax payers is to be done on monthly basis by the 20th of the succeeding month The amount of tax, interest, penalty, fine or any other sum payable, and the amount of refund or any other sum due, under the provisions of this Act shall be rounded off to the nearest rupee and, for this purpose, where such amount contains a part of a rupee consisting of paise, then, if such part is fifty paise or 39

40 more, it shall be increased to one rupee and if such part is less than fifty paise it shall be ignored. 40

41 CHAPTER 13 Works Contract 41

42 13 Works Contract 13.1 Works contract means a contract, wherein transfer of property in goods is involved in the execution of such contract and includes contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property To qualify to be categorized as a works contract under GST the main and only criteria is that there has to be a transfer of property goods which is involved in the execution of the contract. 13.2As per schedule-ii of GST work contracts shall be treated as supply of services and hence shall be taxable at the applicable for supply of services. 42

43 CHAPTER 14 TDS 43

44 14 TDS 14.1 Under the GST regime, section 51 of the CGST Act, 2017 prescribes the authority and procedure for Tax Deduction at Source. The Government may order the following persons (the deductor) to deduct tax at source: (a) A department or an establishment of the Central Government or State Government; or (b) Local authority; or (c) Governmental agencies; or (d) Such persons or category of persons as may be notified by the Government on the recommendations of the Council The tax would be of the payment made to the supplier (the deductee) of taxable goods or services or both, where the total value of such supply, under a contract, exceeds two lakh fifty thousand rupees (excluding the amount of Central tax, State tax, Union Territory tax, Integrated tax and cess indicated in the invoice) Thus, individual supplies may be less than Rs. 2,50,000/-, but if contract value is more than Rs. 2,50,000/- TDS should be deducted However, no deduction shall be made if the location of the supplier and the place of supply is in a State or Union territory, which is different from the State, or as the case may be, Union Territory of registration of the recipient Registration of TDS deductors: A TDS deductor has to compulsorily register without any threshold limit. The deductor has a privilege of obtaining registration under GST without requiring PAN. He can obtain registration using his Tax Deduction and Collection Account Number (TAN) issued under the Income Tax Act, Deposit of TDS with the Government: The amount of tax deducted at source should be deposited to the Government account by the deductor by 10th of the succeeding month. The deductor would be liable to pay interest if the tax deducted is not deposited within the prescribed time limit. 44

45 14.7 TDS Certificate: A TDS certificate is required to be issued by deductor (the person who is deducting tax) in Form GSTR-7A to the deductee (the supplier from whose payment TDS is deducted), within 5 days of crediting the amount to the Government, failing which the deductor would be liable to pay a late fee of Rs. 100/- per day from the expiry of the 5th day till the certificate is issued. This late fee would not be more than Rs. 5,000/-. For the purpose of deduction of tax specified above, the value of supply shall be taken as the amount excluding the Central tax, State tax, Union territory tax, Integrated tax and cess indicated in the invoice TDS Return: The deductor is also required to file a return in Form GSTR-7 within 10 days from the end of the month. If the supplier is unregistered, name of the supplier rather than GSTIN shall be mentioned in the return. The details of tax deducted at source furnished by the deductor in FORM GSTR-7 shall be made available to each of the suppliers in Part C of FORM GSTR-2A electronically through the Common Portal and the said supplier may include the same in FORM GSTR-2. The amounts deducted by the deductor get reflected in the GSTR-2 of the supplier (deductee). The supplier can take this amount as credit in his electronic cash register and use the same for payment of tax or any other liability. 45

46 CHAPTER 15 Audit of Accounts & Records 46

47 15 Audit of Accounts and Records 15.1Every registered person shall keep and maintain, at his principal place of business, as mentioned in the certificate of registration, a true and correct account of (a) Production or manufacture of goods; (b) Inward and outward supply of goods or services or both; (c) Stock of goods; (d) Input Tax Credit availed; (e) Output Tax payable and paid; and (f) Such other particulars as may be prescribed 15.1Where more than one place of business is specified in the certificate of registration, the accounts relating to each place of business shall be kept at such places of business. 15.2A registered person may keep and maintain such accounts and other particulars in electronic form in such manner as may be prescribed Every registered person whose turnover during the financial year exceeds the prescribed limit shall get his accounts audited by a chartered accountant or a cost accountant and shall submit the copy of the audited annual accounts along with the annual return. 47

48 CHAPTER 16 Transitional Provisions 48

49 16 Transitional provisions 16.1 A registered person shall be entitled to take credit in his electronic ledger in the return of the last period before the provisions of GST come into force ( appointed day ) Following conditions need to be satisfied: The said amount of credit is admissible as ITC under the CGST Act. The registered person has furnished all the returns required under the previous law for the period of six months immediately preceding the date of the appointed day. The credit does not related to goods manufactured or cleated under any exemption notification 49

50 CHAPTER 17 Returns 50

51 17 Returns 17.1 Every person registered under GST will have to file returns in some form or other. A registered person will have to file returns either monthly or quarterly basis A normal registered taxpayer has to file the outward supply details in GSTR-1 in relation to various types of supplies made in a month, namely outward supplies to registered persons, outward supplies to unregistered persons (consumers), details of debit/credit notes, zero rated, exempted and non-gst supplies, exports and advances received in relation to future supply A registered tax payer has to file details of inward supplies of goods and services in GSTR-2 which will be auto populated on the basis of the details furnished by the counterparty supplier in GSTR A registered tax payer has to file a comprehensive details of inward and outward supplies of goods and services in GSTR-3 which will be auto populated on the basis of the details furnished by the counterparty supplier in GSTR-2 and supplier himself in GSTR All taxpayers filing return in GSTR-1 to GSTR-3 are require to file annual return in GSTR A person required to deduct TDS and persons required to collect TCS will also have to file monthly returns showing the amount deducted/collected in GSTR HSN code in respect of supply of goods and accounting code in respect of supply of services ( SAC ) will have to be fed. Description of each item is not required to be uploaded. Taxable value of each transaction will be fed If a registered person after furnishing the return discovers any omission or incorrect particulars therein can rectify such omission or incorrect particulars in the return to be furnished for the month or quarter during which such omission or incorrect particulars are noticed. 17.9A registered person shall not be allowed to furnish a return for a tax period if the return for any of the previous tax periods has not been furnished by him. 51

52 17.10 A registered person who fails to furnish the details of outward or inward supplies shall be required to pay a late fee of 100 rupees for every day during which such failure continues, subject to maximum amount of 5000 rupees A registered person who fails to furnish the annual return by the due date shall be liable to pay a late fee pf 100 rupees for every day during which such failure continues subject to a maximum of amount equal to one/fourth of his turnover in the state. Due dates of GST Returns Form No. Description Due Date GSTR-1 Details of outward supplies of goods 10th of the next month or services GSTR 1A Details of auto drafted supplies of Goods or services 15 th to 17 th of the next month GSTR 2 GSTR 2A Details of inward supplies of goods or services Details of Supplies auto drafted from GSTR -1 or GSTR 5 to recipient 15th of the next month 11 th to 14 th of the next month GSTR 3 Monthly Return 20th of the next month GSTR 7 Return for Tax Deduction at source 10th of the next month GSTR 7A Tax Deduction at source Certificate within 5 days of crediting the amount to the Government GSTR 9 Annual return 31st December of the next financial year Formats of all the returns are attached at the end 52

53 Due dates of GST Returns for July & August, 2017 Form No. Month Due Date GSTR-3B July th August GSTR-3B August th September GSTR 1 July th September GSTR 2 July th September GSTR 3 July th September GSTR 1 August th September GSTR 2 August th September GSTR 3 August th September 53

54 CHAPTER 18 Penalty 54

55 18 Penalty 18.1 Section 122(1), CGST Act, 2017 provides that any taxable person who has committed any of the offences i.e. A. Supplies any goods or services or both without issue of any invoice or issues an incorrect or false invoice with regard to any such supply; B. Issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act or the rules made thereunder; C. Collects any amount as tax but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due; D. Collects any tax in contravention of the provisions of this Act but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due; E. Fails to deduct the tax in accordance with the provisions of sub-section (1) of section 51, or deducts an amount which is less than the amount required to be deducted under the said sub-section, or where he fails to pay to the Government under sub-section (2) thereof, the amount deducted as tax; F. Fails to collect tax in accordance with the provisions of sub-section (1) of section 52, or collects an amount which is less than the amount required to be collected under the said sub-section or where he fails to pay to the Government the amount collected as tax under sub-section (3) of section 52; G. Takes or utilises input tax credit without actual receipt of goods or services or both either fully or partially, in contravention of the provisions of this Act or the rules made thereunder; H. Fraudulently obtains refund of tax under this Act; I. Takes or distributes input tax credit in contravention of section 20, or the rules made thereunder; J. Falsifies or substitutes financial records or produces fake accounts or documents or furnishes any false information or return with an intention to evade payment of tax due under this Act; shall be punished with a penalty that shall be higher of the following amounts: 55

56 I. The amount of tax evaded, fraudulently obtained as refund, availed as credit, or not deducted or collected or short deducted or short collected, or II. A sum of Rs. 10,000/ Further section 122(2) of CGST Act, 2017 provides that any registered person who has not paid tax or makes a short payment of tax on supplies shall be liable to penalty which will be higher of: I. 10% of tax not paid or short paid: or II. Rs. 10,000/ General Penalty: Section 125 of CGST Act, 2017provides that any person who contravenes any provision of the Act or the rules made under this Act for which no separate penalty has been prescribed shall be punishable with a penalty that may extend to Rs. 25,000/-. 56

57 CHAPTER 19 Anti-Profiteering Measure 57

58 19 Anti-profiteering Measure 19.1 As per section 171 of CGST Act, 2017 any reduction in rate of tax on any supply of goods or services or the benefit pf input tax credit shall be passed on to the recipient byway of commensurate reduction in prices. An authority may be constituted by the government to examine whether input tax credits availed by any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the price of goods or services or both supplied by him GST impact Implication on new tenders/contract after GST The following points should be incorporated in the new Tender/Bid Documents The bidders should ensure that they are GST compliant and their quoted tax structure/ rates are as per GST law. The bidders are required to indicate the rate of GST applicable for the tendered item in their bids separately. The bidders while submitting their bids shall give the following declaration: We agree to pass on such additional set off / input tax credit as may become available in future under the GST provisions in respect of all the inputs used in the manufacture of the tendered item on the date of supply, by way of reduction in price and advise the purchaser accordingly. The Authority will not reimburse any GST paid by the supplier/vendor/contractor due to misclassification. Implication on previously awarded tenders/contracts The following points should be amended in the new Tender/Bid Documents The suppliers/vendor/contractor while submitting their bills for payment shall mention in the invoice, the cost of item supplied/ 58

59 service rendered and the rate and amount of GST charged and the other particulars as per the GST provisions. The suppliers/vendor/contractor while submitting their bills for payment shall give the following declaration: We hereby declare that additional set off/ input tax credit to the tune of Rs. has accrued and accordingly the same is being passed on to the Authority and to that effect the payable amount may be adjusted. 59

60 CHAPTER 20 Common Portal 60

61 20 Common Portal The Government on the recommendations of the Council, notified the Common Goods and Services Tax Electronic Portal for facilitating registration, payment of tax, furnishing of returns, computation and settlement of integrated tax, electronic way bill and for carrying out such other functions and for such purposes as may be prescribed. The screen of the common portal i.e. is attached here for your reference: 61