GST - AN OVERVIEW I-5

Transcription

1 Contents 1 GST - AN OVERVIEW 1.1 What is Goods and Services Tax? Amendments made to GST Acts vide Amendment Act, Broad definition of service Dual GST for supply of goods and services within State IGST for inter-state transactions GST is consumption based tax based on VAT principle Input Tax Credit Central Excise duty on petroleum and tobacco products Sales tax on petroleum products and alcoholic liquor within State Tax on entertainment only by Municipalities, panchayat, regional council and district council Provisions applicable to Jammu and Kashmir Rates of GST Meaning of branded goods in case of food items GST Rates on services Exemptions from GST on services GST Compensation Cess on goods and services Abolition of other duties and taxes Taxation powers of district council 22 I-5

2 CONTENTS I Goods and Services Tax Network (GSTN) Central Clearing Agency to adjust IGST credit Unique features of GST - Game Changers in GST Taxes will move with goods Distribution network will be simpler Ways of doing business will change Uniform SGST Law all over India Avoidance of dual control Changes from earlier regime to be taken note of GST is on supply and not on sale or manufacture Payment of GST on advances received in case of services Reversal of input tax credit if payment is not made to supplier within 180 days Reverse charge in case of supplies received from unregistered person Valuation provisions to be taken note of Post supply discounts and price reductions after supply not eligible for deduction from value Disallowances of input tax credit (ITC) CGST/SGST or UTGST paid when IGST was payable and vice versa E-way Bill for transport of goods of value exceeding Rs. 50, Anti-profiteering provisions System is master - Not human being How GDP will increase? A Proposed revised system of returns and availment of ITC B Statutory changes to facilitate revised system of filing returns C Present Scheme of filing returns Reply to queries Some important and useful sites Helpline of Government Conclusion 44

3 I-7 CONTENTS 2 VAT CONCEPT AND ITS APPLICATION IN GST 2.1 Background of VAT Basic Concept of VAT VAT to avoid the cascading effect Meaning of Value added Input Tax credit system to implement concept of VAT VAT is consumption based tax Nature of VAT/GST Advantages of VAT/GST Disadvantages of VAT Invoice matching in GST Manufacturing States or Producing States will suffer in VAT system? Revenue Neutral Rate to get same tax revenue Zero rated and exempt transactions in GST Highlights of scheme of GST Input Tax Credit (ITC) Entire Input Tax Credit available even if part of input goes in by-product or waste Credit of tax paid on capital goods Instant credit One to one correlation not required Broad provisions regarding availability of input tax credit Can CGST and SGST paid in one State be utilized for payment of CGST or IGST in another State? 57 3 INPUT TAX CREDIT (ITC) 3.1 ITC is core provision of GST Input Tax Manner of taking input tax credit 61

4 CONTENTS I Documentary requirements and conditions for claiming input tax credit Input tax credit cannot be taken after one year from date of invoice or filing of annual return No Input tax credit if GST was paid by supplier on advance paid to him Requirements for availing Input Tax Credit Reversal of input tax credit if payment not made to supplier within 180 days Procedure for reversal of input tax credit in case of non-payment of consideration Blocked credit - Supply of goods and services ineligible for ITC Meaning of plant and machinery Meaning of works contract Meaning of motor vehicle Input Tax Credit of capital goods Meaning of capital goods for purpose of ITC Input tax credit of tax not allowed if depreciation claimed on tax component Ineligibility of ITC on pipelines and telecommunication tower Removal of capital goods after use Illustration Merger, amalgamation or sale of business Procedure for transfer of credit on sale, merger, amalgamation, lease or transfer of a business Input Tax Credit when taxable person becomes eligible for first time Credit of input tax at the time of registration Input tax credit when person opts out of composition scheme Input tax credit on stock when exemption on goods or services withdrawn Reversal of input tax credit if goods become exempt or taxable person switches to composition scheme Reversal of ITC if registration is cancelled 87

5 I-9 CONTENTS Reversal of input tax credit if goods or services become wholly exempt or GST registration cancelled Reversal of ITC on imported gold dore bar sold after Recovery of ITC wrongly taken 89 4 NUMERICAL ILLUSTRATIONS OF INPUT TAX CREDIT 4.1 Procurement within State and supply within State Input goods and services used for taxable and exempted goods and services Receipt of goods and services within State but supply of goods and services outside the State Receipt of goods and services inter-state but supply of goods and services within the State Receipt of goods and services inter-state and supply of goods and services also inter-state 97 5 INPUT TAX CREDIT WHEN EXEMPTED AS WELL AS TAXABLE SUPPLIES MADE 5.1 Proportionate ITC when party used for business or taxable supplies Calculation of value of exempt supply Special provisions in respect of Banks, FI and NBFC Procedure to claim of credit by a banking company or a financial institution Determination of input tax credit when partly used for taxable supply and partly for exempt supply Final calculations at end of financial year of eligible ITC Determination of input tax credit in respect of capital goods used partly for taxable supply and partly for exempt supply Mode of calculations of ITC of tax paid on common capital goods Reversal of Input Tax Credit means ITC not taken 108

6 CONTENTS I-10 6 INPUT SERVICE DISTRIBUTOR (ISD) 6.1 Purpose of Input Service Distributor Manner of distribution of credit by Input Service Distributor Meaning of relevant period Meaning of recipient of credit Meaning of turnover Manner of recovery of credit distributed in excess Tax Invoice by Input Service Distributor Tax invoice by taxable person in name of input service distributor with same PAN and same State Code Monthly return by ISD Procedure for distribution of input tax credit by Input Service Distributor EXPORTS AND INPUT TAX CREDIT 7.1 Export of goods and services Export promotion under GST Zero rated supply Refund of input tax credit in case of export of goods or services or both Export of services If payment for export of services is not received in specified period Export to Nepal is normal export Export of goods on payment of 0.1% IGST (or 0.05% of CGST plus 0.5% of SGST/UTGST) if export through merchant exporter Refund of IGST not permissible if inputs were obtained without payment of GST or at concessional rate of GST or supplier claims deemed export benefit Procedure for export by direct exporter under bond or LUT without payment of GST 127D Who can execute LUT Receipt of payment in foreign exchange 130

7 I-11 CONTENTS Sealing of containers for exports Refund of IGST paid on goods exported out of India Grant of provisional refund in case of exports Export through post by e-commerce operators Supply of duty free ship stores from licensed warehouse Deemed Exports Deemed Exports in GST Deemed exports as notified on Refund claim in case of deemed export either by recipient or supplier Evidence to be submitted with refund claim in respect of deemed export REFUND OF INPUT TAX CREDIT 8.1 Refund of tax and interest Manual processing of refund applications Refund of IGST paid on goods exported or supplied to SEZ or SEZ Developer Manual Refund in case of refund of ITC on exports or IGST paid on export of services A Documents required for refund in case of exports Manual refund applications in case of deemed exports, inverted duty structure and balance in electronic cash ledger Application and procedure of refund Application for refund of tax, interest, penalty, fees or any other amount Documents to be filed with refund claim Debit to Electronic Cash Ledger if refund claimed Debit to Electronic Credit Ledger if refund of credit claimed under section Procedure after submitting refund application Order sanctioning refund Show Cause Notice if whole or part of refund is not admissible 155

8 CONTENTS I Refund order or adjudication order after SCN and hearing Credit of the amount of rejected refund claim Order sanctioning interest on delayed refunds Withholding of refund or deduction from refund in certain cases Withholding refund by order by Commissioner, if matter is in appeal Relevant date for filing refund claim Evidence to be submitted with refund claim in respect of deemed export Interest on delayed refunds Refund of unutilized input tax credit Refund of input tax credit in Electronic Credit Ledger Mode of Calculation of refund of ITC in zero rated supplies Refund in case of inverted duty structure Calculation of refund in case of inverted duty structure Refund in case of exports or supplies to SEZ Doctrine of unjust enrichment in case of refund of GST Incidence of tax deemed to have been passed to recipient Precautions while claiming refund to avoid doctrine of unjust enrichment No unjust enrichment if amount returned to buyer by cheque or credit note Refund to taxable person instead of depositing in consumer welfare fund 170 APPENDICES APPENDIX 1 : RELEVANT SECTIONS OF CGST ACT, APPENDIX 2 : RELEVANT SECTIONS OF IGST ACT, APPENDIX 3 : RELEVANT RULES OF CGST RULES, APPENDIX 4 : CLARIFICATIONS REGARDING EXPORTS RELATED REFUND ISSUES 216