Goods and Services Tax CA. Sathish V & CA. Krishna J August 2017

Transcription

1 Goods and Services Tax CA. Sathish V & CA. Krishna J August 2017 Slide 1

2 Table of Contents 1 Input service distribution 2 E-Commerce in GST 3 Job work - an overview 4 Job work procedures in GST 5 Transition provision in GST ICAI

3 Input service distribution ICAI

4 Why ISD? A B C Corporate office Factory/Service location 1 Factory/Service location 2 Separate registration required in each state. Credit of respective locations can be availed under the respective state registrations C B What happens to common input services received by the Company, eg: corporate office rent, Statutory auditor fees etc., A ICAI

5 What ISD to do Sec 2(61) of CGST Act, 2017 Rules pertaining to manner & conditions for distribution of credit have been finalised 5

6 Conditions for distribution of credit ISD cannot charge or pay GST under RCM basis 6

7 Procedure for distribution of credit Step1 Step2 Step3 Manner of distributing Credit of IGST Intimate the GSTIN of ISD registration to the service suppliers. Key points: ISD to distribute eligible & ineligible input tax credit as per Sec 17(5). Credit of CGST, SGST & IGST to be distributed separately GSTR-6 to be filed by 13th of the subsequent month Distribution Formula: C1 = (T1 T) C Where: Credit available in a month to be distributed in the same month C = Total credit T1 = Turnover of the recipient during relevant period T = Aggregate turnover of all recipients recipients in same state CGST & S/UTGST Distributed as IGST credit to all recipients Manner of distributing Credit of CGST & SGST recipients in different state - IGST credit August 2017-ICAI 7

8 Key aspects under conditions for distribution of credit Terms Legal provision What is Relevant period for distribution of credit? Who is a Recipient of credit? If the recipients of credit have turnover in their states or union territories in the preceding financial year - Such preceding financial year, (or) If some or all the recipients do not have turnover in their state or union territory in the preceding financial year - Last quarter for which turnover of recipients is available previous to the month pertaining to which credit is distributed. Means Supplier of goods or services having the same PAN as that of the Input service distributor. The term turnover Taxable + non taxable - any duty or tax levied under Entry 84 of List I of the Seventh Schedule to the Constitution and entries 51 and 54 of List II of the said Schedule i.e., Central excise or VAT on specified products August 2017-ICAI 8

9 Return & Compliance of ISD No requirement of annual return 9 ICAI

10 Basics of Job work - GST ICAI

11 Existing Job work process ABC Job Worker 1 Supply of Raw 2 materials Movement of goods No tax Labour Charges No Service tax Raw Material Supplier ED + VAT/CST 4 Sale of finished goods 3 Supply of finished goods after Job work No tax 5 6 ED + VAT/CST Customer 11

12 Job work under GST Benefits extended Conditions to be adhered Raw materials can be removed without payment of duty to job worker premises Credit can be availed by principal even if goods are directly taken to job worker premises Materials after job work can be transferred back to principal without payment of duty Goods can be cleared directly to customer place Intimation to be made by Principal to the appropriate authorities (To be prescribed) Principal to maintain proper accounts on goods sent for Job work Applicable duties on Final products to be paid by the Principal Job worker s premise is included in the registration certificate of principal when Where Job worker is not registered under GST; and Finished goods are directly supplied from Job worker facility 12

13 Old vs GST Area of change Old regime GST regime No specific exemptions provided Job work charges Not subject to Service tax Hence, likely to be subject to GST Registration Job worker may be registered or unregistered Job worker to obtain registration if his aggregate turnover in FY exceeds 20 lakhs. Returns Time limit for return of goods from Job work Impact on non-receipt of goods within prescribed time No specific provision/requirement for disclosure Inputs 180 days Capital goods 2 years No time limit for Jigs, tools, moulds Reverse CENVAT credit availed on goods sent for Job work Re-take the reversed credit upon receipt of goods into factory Details of goods sent for/received from job work to be disclosed in form GST ITC-04 Inputs 1 year Capital goods 3 years No time limit for Jigs, tools, moulds Charge GST on goods sent for Job work along with applicable interest No options for re-availment of credit upon receipt of goods at later date. 13

14 Some questions on Job work activity Can Principal & Job worker be located in two different states? Whether Job work provisions should be compulsorily followed by principal? What will be tax implications where the job worker adds some materials from his end? Mechanism for disposal of scrap? 14

15 E-Commerce in GST ICAI

16 E-commerce transactions Electronic commerce means Supply or receipt of goods and / or services including digital products Over digital or electronic network Electronic commerce operator includes every person who, Owns, operates or manages digital or electronic facility or platform For electronic commerce ` 16

17 GST on e-commerce transactions TCS provisions shall apply in case of Operate as e-commerce operator; and Only for supplies where the operator is required to collect consideration Rate 1% - of value of goods supplied Value on which TCS to be paid TCS shall be collected on the value of taxable supplies of goods or services made during a month minus value as reduced by the value of taxable supplies returned to the said person during the said month Registration E-Commerce operator has to be compulsorily get registered under Sec. 24 of CGST Act In the absence of place of business & representative, operator to appoint a person in India for payment of tax 17

18 Basic provisions involving E-Commerce operator Details furnished by E-commerce operator in GSTR-8 shall be matched with the corresponding details furnished by the supplier in Form GSTR-1 w.r.t following aspects State of place of supply Net taxable value 18

19 Procedures involved in Job work activity ICAI

20 Procedural aspects governing Job work activity 20

21 Contents of Delivery challan.. Date & number Name, address & GSTIN of the consignor, if he is registered Name, address and GSTIN or Unique Identity number of the consignee, if registered HSN code & description of goods Provisional quantity can be disclosed where exact quantity is not known. Taxable value Tax rate & Tax amount Central tax, State tax, Integrated Tax, Union territory tax or cess, where the transportation is for supply to consignee. Place of supply, in case of inter-state movement; and Signature Serial numbers of Delivery challan issued during the month ( from to ) to be disclosed in GSTR-1 21

22 Contents of Delivery challan.. Delivery challan is to be serially number and can be maintained in one or multiple series. However it cannot exceed 16 characters. Actual value of goods, if known to be disclosed in the Delivery challan. If actual value is not known, a view can be taken that open market value of such goods be disclosed. Another question arises as to whether tax rate & tax amount requires to be disclosed on the delivery challan? The disclosure of tax rate & tax amount is required only when the transportation of goods is for supply to the consignee. CBEC FAQs defines movement of goods to job worker as supply as the definition supply includes sale, transfer etc. Delivery challan is required to be prepared in triplicate v v v Original for Consignee Duplicate for transporter Triplicate for Consignor 22

23 Manner in which goods can be supplied to a job worker Time limit of 1 year / 3 years for inputs / capital goods shall be adhered to in both the scenarios. No time limit in cases of Jigs/Mould/dies 23

24 Vendor of Principal directly sending goods to Job worker Sec 19 of CGST Act,

25 Quarterly compliance to be done by Principal - GST ITC ü ü ü Where inputs / capital goods are not received within the stipulated time limit, it shall be deemed that such inputs / capital goods have been supplied by the Principal to Job worker. Such supply shall be disclosed by the Principal in GSTR-1 & tax shall be paid along with interest. Clarity is awaited as to whether data will be picked up directly from GST ITC-04 or it needs to be manually disclosed by the principal in GSTR-1. 25

26 Transition provisions in relation to job work activity Disclosure to be made in GST TRAN-1 w.r.t goods sent to job worker and held in his stock time limit 90 days for filing of TRAN - 1 Goods lying with job worker to be returned within 6 months from appointed day. On sufficient cause being show, the commissioner may extend the time limit for a further period not exceeding 2 months 26

27 Transitional Provisions ICAI

28 Section 140(1) Carry forward of Cenvat credit Particulars Event prior to the appointed day Event on or after the appointed day Conditions Carry forward of CENVAT credit CENVAT credit is carried forward in the return. Excise return filed for June 2017 Service tax return to be filed for April - June 2017 Such credit will be entitled as input tax credit under CGST All credit which are eligible to be captured in the return before the appointed day It should be admissible as input tax credit under CGST Act All the returns applicable for the period of six months immediately preceding the appointed day, to be filed Credits pertaining to goods manufactured and cleared under exemption notifications (as notified by government) shall not be eligible for carry forward Disclose this in Table 5a. of GST-TRAN1 application for carry forward of existing Cenvat credits. Details pertaining to VAT credit carried forward to be disclosed in Table 5c. 28

29 Section 140(2) Unavailed Cenvat credit on Capital goods Particulars Event prior to the appointed day Event on or after the appointed day Conditions Carry forward of unavailed CENVAT credit pertaining to capital goods Unavailed but eligible CENVAT credit in respect of capital goods, not carried forward in the return. (Eg:- 50% credit availed prior to the appointed day (Year 1) and 50% to be availed post appointed day (Year 2) The credit not availed can be taken as an input tax credit under CGST The credit should be admissible as input tax credit under CGST, even if the same is not reflected as carry forward in the return, on the appointed day Such capital goods to be capitalized in the books of accounts on or after the appointed day & should be used in course or furtherance of business. Disclosure of Excise duty, CVD & SAD credits Similar provisions contained in SGST laws 50% credit on capex Balance 50% credit can be claimed now Pre-GST Post-GST 29

30 Section 140(3) Credit of eligible duties & taxes w.r.t inputs held in stock Persons who can opt for this provision : vperson who was not liable for registration under earlier laws. vperson who was engaged in manufacture of exempted goods vperson who was engaged in provision of exempted services v Person who was providing works contract service availing the benefit of Not 26/ ST v First stage dealer vsecond stage dealer vregistered importer vdepot of manufacturer 30

31 Section 140(3) Credit of eligible duties & taxes w.r.t inputs held in stock Particulars Event prior to the appointed day Event on or after the appointed day Conditions Credit of eligible duties and taxes in respect of inputs held in stock and inputs contained in Semi-finished or finished goods by eligible person. Credit of inputs held as stock at the premises of the such eligible person The credit can be taken as an input tax credit under CGST Such stock is used/intended to be used for making taxable supplies Such person is eligible for input tax credit on such inputs under CGST Such person possesses invoice and/or other prescribed documents evidencing payment of duty Such invoices and/or other prescribed documents were issued not earlier than 12 months prior to the appointed day Eligible person does not provide any service which is eligible for any abatement under CGST odisclose HSN level data of inputs & inputs contained in semi finished / finished goods osimilar provisions contained in SGST laws for VAT credits 31

32 Section 140(3) Credit of eligible duties & taxes w.r.t inputs held in stock Transition provisions where there is no document evidencing payment of duty Rule 117(4) of GST Rules vinput tax of 60% shall be permissible on goods which attract central tax of 9% or more. Input tax of 40% is permissible in other cases. The amount shall be credit after central tax on supply has been paid. vin the case Integrated tax is payable on supply, amount of credit shall be allowed at 30% & 20% respectively. vthis scheme can be resorted to on goods which were not unconditionally exempt from the whole of excise duty specified in first schedule to the Central Excise Tariff Act, 1985 or were nil rated in the said schedule. v Input tax credit in this case shall be allowed if the registered person is in possession of document for procurement of goods. v The registered person shall submit a statement in Form GST-TRAN 2 at the end of each of the six tax periods during which the scheme is operational 32

33 Section 140(4) Carry forward of credit Particulars Event prior to the appointed day Event on or after the appointed day Conditions Carry forward of credit where the registered person was manufacturing taxable as well as exempted goods or providing taxable as well as exempted services CENVAT credit is carried forward in the return CENVAT Credit of eligible duties in respect of inputs held in stock/ inputs contained in finished/semi-finished goods relating to exempted goods or services Such credit will be entitled as input tax credit under CGST Such credit will be entitled as input tax credit under CGST Conditions as specified in the provision of sections 140(1) of the CGST Law Conditions as specified in the provisions of sections 140(3) of the CGST Law 33

34 Section 140(5) Inputs / Input services received after appointed day Particulars Event prior to the appointed day Event on or after the appointed day Conditions Credit of eligible duties and taxes in respect of inputs or input services received after the appointed day Tax/duty paid by the supplier under existing law Inputs or input services received Invoice or duty/tax paying document is recorded in the books of accounts within 30 days from the appointed day On sufficient cause being show, commissioner can extend this by a further period not exceeding 30 days. Sale before GST RAJASTHAN Date Receipt of goods in GST regime Appointed MAHARASHTRA 34

35 Section 140(7) Credits pertaining to Input service distribution Particulars Distribution of service tax credit by ISD Event prior to the appointed day Input tax credit on account of services received by an ISD Event on or after the appointed day Tax impact Not applicable ISD shall distribute credit as per CGST Law 35

36 Section 140(8) Credits pertaining to Centralized Service tax registration Particulars Event prior to the appointed day Event on or after the appointed day Conditions Carry forward of CENVAT credit by a person having centralized registration CENVAT credit is carried forward in the return Such credit will be entitled as input tax credit under CGST If return is not filed before appointed day, then the same shall be filed within 3 month from the appointed day Such return filed should be an original return or a revised return (claiming lesser credit than the credit claimed in original return) Manner in which the credit can be claimed to be prescribed Such credit should be eligible for input tax credit under CGST Law Such input tax credit can be transferred to any of the registered person having the same PAN. 36

37 Section 140(9) Credits reversed due to non payment, now claimed Event prior to the appointed day CENVAT credit availed for input services reversed due to non-payment within three months (Under Rule 4 sub-rule 7 of CENVAT Credit Rules, 2004) Event on or after the appointed day Payment made to service provider Tax impact Credit can be reclaimed subject to: - Payment made within a period of three months from the appointed day 37

38 Section 142(1) Sales in pre GST regime & Return happens in GST regime vrefund of duty permissible if goods are sold within 6 months prior to appointed day & such goods are returned within 6 months from appointed date. v Where the goods are returned by a registered person under GST, it shall be construed as a supply & GST shall be charged. 38

39 Section 142(2)(a) and Section 142(2)(b) Price revisions in contracts Event prior to the appointed day Event on or after the appointed day Tax impact Contract entered Price revision - upwards Issue a debit note within thirty days of such price revision Such debit note shall be deemed to have been issued in respect of an outward supply. Contract entered Price revision - downwards Issue a credit note within thirty days of such price revision Such credit note shall be deemed to have been issued in respect of an outward supply Reduce tax liability only if recipient reduces his input tax credit. 39

40 Section 142(3) Refund claim filed vrefund claim is filed before, on or after July vthe claim of refund is pertaining to Cenvat credit, duty or taxes paid under earlier laws. vsuch refund claims shall be disposed off in accordance with existing law & amount accruing shall be paid in cash. vwhere the refund claim is fully or partially rejected, the amount so rejected shall lapse. v No refund on Cenvat credit carried forward as CGST credit is permissible. v Similar provisions are applicable for refund of Cenvat credit on export of goods. 40

41 Section 142(9) Revision of returns furnished under earlier law vwhere a return filed under existing law is revised after the appointed day, and pursuant to that revision any amount is found to be recoverable or Cenvat credit to be inadmissible, the same shall recovered as per the provisions of earlier law. v Similarly, if any amount is found to be refundable or Cenvat credit to be permissible pursuant to revision of returns, the same shall be refunded in cash. 41

42 Section 142(11) Tax suffered under existing laws vno tax shall be payable on goods under GST to the extent tax was leviable on the said goods under Value Added Tax Act of the state. vno tax shall be payable on services under GST to the extent tax leviable on the said services under Chapter V of Finance Act, v Where tax was paid on any supply both under the Value Added Tax Act and under Chapter V of Finance Act, tax shall be leviable under this Act and the taxable person shall be entitled to take credit of the Value Added Tax or Service tax paid under earlier law to the extent of supplies made after the appointed day. 42

43 Section 142(12) Goods sent on Sale or Approval basis. vno tax shall be payable on goods sent within 6 months prior to the Appointed day & rejected or not approved by buyer and returned within 6 months from Appointed date. von sufficient cause being shown, the time limit of 6 months can be extended by a further period not exceeding two months. v Where the goods are returned by a registered person beyond the timelines specified, it shall be deemed as a supply chargeable to GST. 43

44 Thank you 44