Valuation in GST. GST National Conference ICAI-IDTC SIRC-Chennai Jun 2017

Transcription

1 Valuation in GST GST National Conference ICAI-IDTC SIRC-Chennai Jun 2017

2 Basics for Valuation Relationship between: Consideration Price Value CGST Act refers: Levy and value Turnover and value Assessable value or transaction value Value of supply: Means or is; or Shall e..which is Key considerations: Cost impact by credit Relevance of Dai Ichi Income re-characterization Retention money

3 Express Provisions Key disqualifications: Price: Actually paid For the supply Unrelated parties Price is sole consideration Value to exclude: Discount on supply Discount allowed later: Est. by agreement Linked to invoice Value to include: Other taxes imposed Amounts owed by supplier but paid by recipient Costs at / efore supply Interest or late charges Direct subsidies

4 Recourse to Rules Declaration or prescription:. alue of supply..cannot be determined under ss 1. Reference to Rules: i all situatio s or o ly i these situatio s Disqualified by s.15(1) Situations specified: Consideration not in money terms Related persons Sole consideration Tariff value notified

5 Implied Provisions Valuation for IGST to be integrated with Customs Value of supplies with: Land and rights in land Excluded supplies Value for: Credit attri uta le Job-work (not u/s 143) Included consideration Any other consideration No consideration Incentive to distributor Key considerations: Leasing and HP Transport by rail Air-travel agents Insurance services Money changers Lottery distribution Reimbursable charges Chit fund activities Undivided share in land Inter-branch transfers Provision for bad-debts

6 Valuation Cases Reimbursable charges Warranty replacement Out-of-warranty Recovered parts Free or defaced samples Free-of-charge (project) Free replacements for: Transit-loss Quality defect Project delay Free-issue-material Part-B supplies Demo/trial equipment Stand-by equipment Loss-leader produ ts Sale price below cost Bra hes at loss Pseudo discounts Sponsorship/subsidy Paid dis ou t oupo s

7 Place of Supply in GST Jun 2017

8 Subject of GST Purpose of provision: Goods as services Goods (S.10 & 11) Services (S.12 & 13) Common provision Desti atio pri iple Relation to S.7 and 8 Facts about: Place of supply..shall be.. Location of supplier not used

9 Place of Supply s. 10(1)(a) Supply i ol es movement: Supply i ol es movement Supply i ol es o e e t Refer o asio s o e e t fro CST Act Question of fact: fro ter s of supply fro ature of goods supplied Termination of o e e t for delivery

10 Place of Supply s. 10(1)(b) Key considerations: A Supplier Recipient 1 10(1)(b) 2 10(1)(c) B Third Party Locus standii Recipient s.2(93) Overriding force Supply limbs? Review supply model, pre and post-gst

11 Place of Supply s. 10(1)(c) Supply does ot involve movement:. hether y..supplier or re ipie t. Place is location of goods at ti e of delivery Key considerations: What goods do ot involve movement? Where would they be taken for consumption?

12 Place of Supply s. 10(1)(d) Assembly at site: Delivery to site for assembly Assembly at site after delivery Interpretation of: Where the goods are asse led..shall e pla e of su h asse ly Key considerations: Would works-contract be covered s. 2(119)? Ho a y supplies i source-transfer-assemble? Which limb does clause (d) address?

13 Place of Supply s. 10(1)(e) Supply o oard conveyance: Supply of goods to airline Supply to passenger by airline Interpretation of:.lo atio at hi h su h goods are taken on board Key considerations: Differentiate between supply to conveyance and supply on-board conveyance Only one limb covered

14 Place of Supply s. 10(2) Residual provision Exclude other provisions Deter i e pla e of supply as pres ri ed Key considerations: Where.. a ot e deter i ed. Which circumstance?

15 International Supply Imports Exports Definition: Definition: Import Importer Export Exporter Place of supply is location of importer Key considerations: Place of import Port of import Reimport of exports Warranty imports Place of supply is location outside India Key considerations: Currency of transaction Location of recipient Merchanting trade High sea sales / SICOI Impact on credit

16 Subject of GST Goods as services Goods (S.7 & 8) Services (S.9 & 10) Identify services or goods with caution Relation to s. 7 and 8 Facts about: Legislative will place Location of supplier of services s. 2(15)

17 Place of Supply s. 12(3) Supply of: Immovable property grant-of-rights, construction or use Vessel, etc. Ancillary services Place is location of property Key considerations: Scope of i relatio to and y ay of Meaning of location

18 Place of Supply s. 12(4) Supply of: Restaurant and catering Personal grooming Fitness Beauty treatment Health service including cosmetic and plastic surgery Place is location of a tual perfor a e Key considerations: Exhaustive or illustrative Specific or expansive Rule implies taxability of new activities Implication to registered recipient

19 Place of Supply s. 12(5) Supply of: Training and performance appraisal Place is location of: registered recipient a tual perfor a e to unregistered recipient Key considerations: Location of such person s. 2(14)

20 Place of Supply s. 12(6) Supply of admission to: Cultural & artistic Sporting Scientific & educational Entertainment & amusement event Place is venue of event Key considerations: Admittance to viewer Ancillary services

21 Place of Supply s. 12(7) Supply of: Organizing event Ancillary services Place is location of: registered recipient venue of event if recipient unregistered Key considerations: Assigning sponsorship Distribution by proportion of large events

22 Place of Supply s. 12(8) & 12(9) Supply of: Transport of goods Transport of passenger Place is location of: registered recipient loading or boarding if unregistered recipient Key considerations: Mode of transportation not specified Unspecified pre-booking PLUS place not known Return booking, separate

23 Place of Supply s. 12(10) Supply of services onboard Place is first poi t of departure Scope of supply: To conveyance operator By such operator Key considerations: Place of supply known even before supply Will explanation in ss. 9 apply to return journey

24 Place of Supply s. 12(11) Supply of: Device-dependent telecom service Mobile telecom service: Post-paid basis Pre-paid basis Any other Place is: Location of in situ device Post-paid / e-pay billing address Pre-payment location Address-on-record Key considerations: Ownership of device Fixed-wireless telephone Data-card for laptop

25 Place of Supply s. 12(12) Supply of: Banking Financial and broking service Place is: address i supplier s records location of supplier (address not on records) Key considerations: Not ser i es y ut of Overlapping services financial v/s consulting Supplier-guided category of services

26 Place of Supply s. 12(13) Supply of insurance service Place is: location of registered recipient address i supplier s records Key considerations: Ancillary services not covered Services to insured not to any others

27 Place of Supply s. 12(14) Supply of advertisement service to Government Place is State of dissemination in proportion Key considerations: Ser i es to ot y Allocation by reasonable asis i a se e of contract

28 Place of Supply s. 12(2) Supply of any other service Place is: location of registered recipient cl.(a) address i supplier s records cl.(b)(i) location of supplier cl.(b)(ii) Key considerations: When not covered by ss.3 to 14 If none of above, then: To registered person cl.(a) To any other cl.(b)

29 International Supply Exports-imports (s.13) Supplier or Recipient located outside India Location of recipient is place of supply, unless: Location is determined by other provisions or Location unknown then it is location of supplier Services on goods: Goods made available Recipient present Service on immovables Services of admission Origin-of-supply (3) Transport service On-board services OIDAR

30 Thank You Register at for regular updates on GST

31 GST -Some Basic Concepts Presented By: CA Madhukar Hiregange

32 Necessity for GST Present system of indirect tax has multiplicity of taxes levied by Centre & State Tax on tax, increases cost - Cascading No uniformity of tax rates Confusion when to pay, on what to pay Increase in compliance & administration costs Credit blockage due to restrictions under various laws Luxury tax, VAT, ST Example: i. A Service provider cannot claim VAT, Luxury tax, SAD Credit... ii. A VAT dealer cannot claim CST, luxury tax, Service tax Credit... iii. A a ufacturer ca ot clai CST, Lu ur ta Credit. Hiregange 2

33 Does GST help India progress? GDP Growth go Up by about 2-4% International Competitiveness by about 5-8% Increased FDI- Already seen Common Market- Tax distorted locations and check post delays would not be there. All those who gain to be part of tax payment Lower transaction cost reduced corruption Increased IDT + Direct Tax Revenue Hiregange 3

34 What is GST (Goods and Service Tax)? Ta o Suppl of Goods & Services Destination based tax Global Integration Goods Every kind of movable property other than money and securities. Services Anything other than goods Thus, GST has a wider coverage, and merges 11 Taxes. India proposes dual GST model Federal Structure - CGST & SGST. Internationally, GST was first introduced in France and now more than 160 countries have introduced GST Hiregange 4

35 Levy CGST/SGST - shall be levied on all intra-state supplies of goods and/or services IGST - shall be levied on all inter-state supplies of goods Composition Levy Not applicable to services ( Incl. WCT) - pay 0.5 1% for traders Restaurants 2.5% - More later Reverse Charge Goods ( URD ) & Services ( Unregistered, Unorganised, Import) Even those in Threshold as they will not be registered. Hiregange 5

36 18 Levy & Collection Services 1: Subject Goods Goods as services Included Implied Excluded 2: Supply 3: Place Inter-State Intra-State 4: Time Specified for goods Specified for services Indirect Taxes Committee, ICAI

37 19 Levy & Collection Description Composite Supply Mixed Supply Naturally bundled Supplied together Yes Yes No Yes Can be supplied separately No Yes One is predominant supply for recipient Yes No Other supply is not aim in itself of recipient Yes No Each supply priced separately No No All supplies are goods All supplies are services One supply is goods and other supply is services Yes Yes Yes Yes Yes Yes While, the above tests could be guiding principles in determining as to whether a supply is composite or mixed supply the end user test could be adopted as one of the criteria; Every supply will have to be independently analysed. Indirect Taxes Committee, ICAI

38 Composition Levy Sec. 10 of CGST Act-2017 Availed Allowed Available COT Eligible Hiregange Compliance 8

39 For the person who has AGGREGATE TURNOVER equal or less than Composition Scheme C O M P O S I T I O N 50 lakhs IN PR. YR AND CURRENT YEAR Rates [1+1] = 2% in case of a manufacturer ( other than notified) - [ ] = 1% for Traders - [ ]= 5% for Small suppliers of food & beverages* Note: Not available for service providers other than food related. If not eligible then very very difficult. Quarterly return- Upload of purchases? Hiregange 9

40 Composition SchOptional Optional Scheme: Not for B2 B suppliers Taxable person who affects any inter-state supplies of G & / S - not entitled for composition scheme. No stock of goods procured interstate or Import Person having business in different places and separately registered all of them should opt for composition scheme. Person cannot be in composition in one registration and outside in another registration. A taxable person who pays tax under composition levy shall not collect any tax from the recipient on supplies made by him nor shall he be entitled to any credit. Industry representation needed made to ease some of these conditions to enable the survival of small business man without breaking the chain of credit. Hiregange 10

41 Exemption Rs. 20 Lakhs Aggregate T.O. ( Rs. 10 Lakhs for Special smaller States) No credit without registration Transactions by CG/ SG/ Local Body not a supply Goods/ Services exempted by CG/ SG to be notified. Very Few Exemption: Primary Health/ education, specific cereals.. Tax expected on: textiles, defense, research ++ Hiregange 11

42 Pre GST Role of CA Pre-GST Period Post-GST Period Role of Chartered Accountant Post - GST 12

43 Role as per Model GST Act, 2016 Overview Operational Consultancy Network support & Infra. Accounting & Taxation Compliance requirement Transitional Support Sr. Centre/State Support Sr. Audit & Assurance Pre-GST Period Role as pre GST Act 2. Overview 3. Operational Consultancy 4. Network support & Infra. 5. Accounting & Taxation 6. Transitional Support Sr. 7. Centre/State Support Sr. 8. Global Opportunities 13

44 Pre-GST Period 1. Role - pre -GST Act 2. Overview 3. Operational Consultancy 4. Network support & Infra. 5. Accounting & Taxation 6. Transitional Support Sr. 7. Centre/State Support Sr. 8. Global Opportunities Accounts and other records Audit Rs.1 Cr. Dept./ Special Audit Appearance by Authorised Representative Section 35 Section 35(5) 65/ 66 OtherProfBetter Fees Section 67 Inspection/ Access to Business Premises 14 Section 152 Disclosure of Information by Public Servant

45 Being in a position to analyse the industry impact considering the global and Indian situation of the product / service; Pre-GST Period 1. Role as pre M-GST Act 2. Overview Key Areas 3. Operational Consultancy 4. Network support & Infra. 5. Accounting & Taxation 6. Transitional Support Sr. 7. Centre/State Support Sr. 8. Global Opportunities In case of unintended hardship to some sectors- representation to the drafter would be in order as the level of listening presently is high; Akin to Companies Act The clarity on the major impact on the client under GST due to in-depth understanding of the business; This presently service offering would provide the client with important information to plan the way forward under GST. This could be done as GST law is in place; Being part of the core team of client for analysing, transiting into GST smoothly without business disruption & safeguarding of margins or as a knowledge advisor for s/w developers; 15

46 Pre-GST Period 1. Role as pre M-GST Act 2. Overview Key Areas 3. Operational Consultancy 4. Network support & Infra. 5. Accounting & Taxation 6. Transitional Support Sr. 7. Centre/State Support Sr. 8. Global Opportunities Understanding legacy tax Systems at client workplaces so as to provide appropriate advise on migrating to better systems/ ERP or suggest modification to make the existing systems GST compliant; Assisting in preparation of a strategic plan for procurement and marketing systems of clients needed under GST. For example supporting in decisions on: Closure/ reduction in godowns and branches; direct sale through e- commerce; evaluation of the working with C&F agents; in house/ outsourcing the distribution function to logistic companies; sourcing inputs at lowest cost within shorter time; linking to the ERP of the customer etc.; 16

47 Changes in accounting software and internal control systems to suit GST. Test and guide & confirm the robustness; Pre-GST Period 1. Role as pre M-GST Act 2. Overview Key Areas 3. Operational Consultancy 4. Network support & Infra. 5. Accounting & Taxation 6. Transitional Support Sr. 7. Centre/State Support Sr. 8. Global Opportunities GST awareness at initial stages and training for management, staff, vendors of clients. Vetting and suggestion to modify agreements/ contracts/ major purchase orders overlapping or supplies to be made in GST regime; 17

48 Pre-GST Period 1. Role as pre M-GST Act 2. Overview Key Areas 3. Operational Consultancy 4. Network support & Infra. 5. Accounting & Taxation 6. Transitional Support Sr. 7. Centre/State Support Sr. 8. Global Opportunities Ensuring that the claim of credit on stock in hand is maximized by ensuring purchasing with excise duty paying documents as well as proper stock recording especially with job workers and agents and ensuring well thought of stocking policy;. Reviewing the various business transactions to examine whether closing out the transaction in the pre GST or post GST period is advantageous; The students of CA- the future CAs would also require to be taught the new law to enable them do the GST work today + contribute in future; Many CAs have good HR skills and have been in accounts outsourcing- Maybe time to ramp up substantially with increased continuous trainignin GST abnd use of IT tools; 18

49 Pricing Revisit the pricing strategies with the distributors Renegotiate (if any) the pricing with suppliers Review of contracts Pre-GST Period 1. Role as pre M-GST Act 2. Overview Key Areas 3. Operational Consultancy 4. Network support & Infra. 5. Accounting & Taxation 6. Transitional Support Sr. 7. Centre/State Support Sr. 8. Global Opportunities Alignment of all major contract terms and tax clauses with GST Discounts terms to be specifically brought out in the contracts executed with distributors Representations Making representation for lower rate of GST, taxability of promo products issued free Compliance and documentation Maintaining detailed registers of supply and procurements, input credits Timely filing of monthly and annual returns 19

50 GST developments Sharing Tracking GST developments and creating awareness on GST Impact on supply chain Function wise Pre-GST Period 1. Role as pre M-GST Act 2. Overview Key Areas 3. Operational Consultancy 4. Network support & Infra. 5. Accounting & Taxation 6. Transitional Support Sr. 7. Centre/State Support Sr. 8. Global Opportunities Mapping impact of GST on current supply chain and suggesting modifications from GST perspective Imp.on bus./finance Focus on SOP + controls Identifying impact on financials, working capital, credit chain, concessions, and suggesting controls/ Short proc + planning options Post implementation compliances GST awareness trainings, review of compliances, creation of manuals and access to GST updates/resolution to queries ERP Updation - Validation Changes to ERP modules, MIS reports, statutory compliance support, and ongoing trouble shooting support 20

51 Synchronising IT Systems & Old data Pre-GST Period 1. Role as pre M-GST Act 2. Overview Key Areas 3. Operational Consultancy 4. Network support & Infra. 5. Accounting & Taxation 6. Transitional Support Sr. 7. Centre/State Support Sr. 8. Global Opportunities Data management for State Jurisdiction Updating Amendments in IT Systems Automation of returns and other utilities at Centre as well as States Strong Management Information System System Reconciliations Data Integration between Centre & States 21

52 Treatment of Incentives / Discount Pre-GST Period 1. Role as pre M-GST Act 2. Overview Key Areas 3. Operational Consultancy 4. Network support & Infra. 5. Accounting & Taxation 6. Transitional Support Sr. 7. Centre/State Support Sr. 8. Global Opportunities Process Documentations & Accounting Manuals Branch Transfers Budgetary Controls Control & Dispute Settlement 22

53 Deregistration from Existing Laws Pre-GST Period 1. Role as pre M-GST Act 2. Overview Key Areas 3. Operational Consultancy 4. Network support & Infra. 5. Accounting & Taxation 6. Transitional Support Sr. 7. Centre/State Support Sr. 8. Global Opportunities Managing Pending Litigations Review & Certification of Stock on date of transition Knowledge Sharing & Capacity Building Credit Analysis and Utilization Comparative Valuation Under GST 23

54 Representation - unintended hardship to sectors Conscripting Legislation & Rules/ Procedures Pre-GST Period 1. Role as pre M-GST Act 2. Overview Key Areas 3. Operational Consultancy 4. Network support & Infra. 5. Accounting & Taxation 6. Transitional Support Sr. 7. Centre/State Support Sr. 8. Global Opportunities Monitoring Transactions & Revenues Cross verification with Other Acts Training & Education Fixing Rate Based on RNR and Review 24

55 Tax Advisory Services International Research Issues Knowledge Process Outsourcing Information & Knowledge Sharing Capacity Building Services Technology Support Services Pre-GST Period 1. Role as pre GST Act 2. Overview Key Areas 3. Operational Consultancy 4. Network support & Infra. 5. Accounting & Taxation 6. Transitional Support Sr. 7. Centre/State Support Sr. 8. Global Opportunities* 25

56 How to get awareness in GST? Start focused reading/practice in VAT, Central Excise or Service Tax till 1 July or 1st September Update on CGST / IGST/ UTGST + State Laws Now Use online resources idtc@icai.org, gstclub, caclubindia, linkedin & others. Form a small group for GST updates in your office Attend GST Cert. Course + focused workshops. Read books/ write articles for internal use Hiregange 26

57 How to get Expertise in GST? Write Articles start with 1 small topic Do One Impact study for free or nominal fee Be part of future expert group Mainly CA + 1/2 experienced advocates- meet 2 days a week with a paper presenter. Attend the weekly study circle in local branch/ RC. Analyse all the suggestions made to Govt by various authorities ( ICAI) Write a topics GST book on a sector or areas of concern Answer online forums with care/ in depth reading Hiregange 27

58 Thank You Questions???

59 INPUT TAX CREDIT UNDER GST 1

60 INPUT TAX SCHEME GST on Goods /service Used/intended to be used in the course or furtherance of business Restricted Items ITC 2

61 TAX PAID ON Capital Goods Input services Inputs Input tax 3

62 TAXES ON WHICH CREDIT IS ELIGIBLE IGST, CGST, SGST / UTGST IGST on import of goods or services GST paid on reverse charge basis Tax paid under composition does not qualify as input tax 4

63 RESTRICTED ITEMS a) Motor vehicles / other conveyances: ITC for Motor Vehicles will NOT be available Except when they are used for: Transportation of goods, or Making the following taxable services: i. Further supply of such vehicles/ conveyances, or ii. Transportation of passengers, or iii. Imparting training for driving/ flying/ navigating such vehicles/ conveyances iv. Transportation of goods 5

64 RESTRICTED ITEMS b) Supply of goods and services being: Food and Beverages Outdoor Catering Beauty Treatment Life/ health Insurance Health Services Rent-a-cab Govt notifies services obligatory for employer to employees Cosmetic and Plastic Surgery ITC Not allowed, except when used in outward supply of same category 6

65 RESTRICTED ITEMS No credit shall be allowed for the following services: Membership of club Health and Fitness Centre Travel Benefits to employees

66 RESTRICTED ITEMS c) Works Contract (other than plant & machinery) d) Construction of Immovable Property (other than plant & machinery) Works contract services, Except where it is an input service for further supply of works contract service Construction includes reconstruction, renovation, addition or alteration or repairs to the extent of capitalisation. Goods or services received by a taxable person for construction of an immovable property on his own account including when used in course or furtherance of business; ITC not Available 8

67 Other restrictions e. GST paid under composition scheme under section 10; f. Goods or services or both received by a non-resident taxable person except on goods imported by him; g. Goods or services or both used for personal consumption; h. Goods lost or stolen/ written off/ disposed off by way of gift or free samples; (Gifts to employees beyond Rs.50, 000 is considered as supply- what happens to credit?) i. Tax paid after adjudication where there involves fraud etc. (S. 74) / detention (S.129) / confiscation of goods (S. 130) 9

68 ITC availment & utilisation System for a seamless flow of credit Extends to inter-state supplies Credit utilization u/s 49 would be as follows: Tax IGST CGST and SGST/UTGST cannot be mutually set-off. CGST SGST To be adjusted with 1) IGST 2) CGST 3) SGST 1) CGST 2) IGST 1) SGST 2) IGST UTGST 1) UTGST 2) IGST 10

69 CONDITIONS FOR AVAILMENT Invoice In possession of invoice or other document Receipt of goods or services [Instalment supply - credit only upon Receipt Tax receipt of the last lot/ instalment. Goods deemed to be received by a registered person when the supplier delivers the goods to the recipient/ any other person, on the direction provided by the registered person. Tax payment and filing of returns by supplier 11

70 CONDITIONS FOR AVAILMENT Payment to supplier within 180 days of date of invoice Payment Depreciation Time limit No depreciation on credit amount of capital goods Credit to be availed before filing of return for Sept month of next FY or before filing of annual return (earliest) 12

71 Document on the basis of which credit could be availed Regular supply Reverse charge Invoice of supplier Invoice made by recipient Price variation Debit note import Bill of entry ISD Document issued by ISD 13

72 INPUT TAX CREDIT APPORTIONMENT OF ITC 14

73 Exempt supply NIL rated Exemption Non taxable supplies non-taxable supply means a supply of goods or services which is not leviable to tax under this Act or under IGST Supply to SEZ / SEZ unit or Exports are ZERO rated supplies and not exempt supplies 15

74 S.17 - First apportion partly used for business and partly for other purposes (non-business): Use of input tax credit Attributable to Business purposes Credit available Attributable to Other Purposes Credit not available Formula for apportion is given in Draft ITC Rules 16

75 S.17-Second apportion partly used for taxable supplies and partly for exempted supplies: Use of input tax credit: Partly for Taxable Supplies Zerorated Supplies ITC Credit Availabl available e Nontaxable Supplies Exempt Supplies Nilrated Supplies ITC not not Credit availabl available e Formula for apportion is given in Draft ITC Rules 17

76 Specified input credit - Invoice level segregation Credit not eligible Only on inputs and input services not on capital goods Total credit for a period Personal purposes Exclusively used for Net credit eligible Exempted supply 18

77 Common Credit- apportionment Total credit less specified credits Common Credit Personal purposes- 5% of the credit Exempted supply Proportionate basis Taxable supply Proportionate basis 19

78 Reversal of credit on the basis of turnover To be reversed on the monthly basis using monthly turnovers Re-computation on annual basis within the month of September next FY 20

79 Special provision for banking companies & financial institutions: In the case of banking companies or financial institutions including NBFCs could opt for availment of 50% of the total credit eligible in the tax period. Where the aforesaid banking companies, NBFCs etc opt for availing 50% of total credit eligible, they have to follow the procedure contained in Rule 3 of Input Tax Credit Rules. 21

80 INPUT TAX CREDIT SPECIAL CIRCUMSTANCES 22

81 Eligibility of ITC Availment Eligibility to avail ITC Registered Person 16(1) Applied for registration within 30 days of being liable to register Person applied for Voluntary Registration Registered person ceases to pay composition tax ITC on supplies used/ intended to be used in the course/ furtherance of business ITC will be credited to the electronic Credit Ledger O n e ITC available on: a) Inputs b)semi-finished Good c) Finished Goods On the day immediately prior to date on which he is liable to pay tax Y e a r Same as above Same as above On the day immediately preceding the date of registration On the day immediately prior to date on which he is liable to pay tax u/s 9 23 Ti m e li m it

82 Eligibility of ITC Availment Eligibility to avail ITC-Cap goods Composition to regular scheme Exemption to taxable Capital goods as on the day immediately prior to date of such conversion Same as above Cost less reduction of 5% per Quarter from the date of invoice Same as above 24

83 Transfer of credit due to change in constitution Change in Constitution of Registered Person On account of: Sale, Merger, Demerger, Amalgamation, Lease, or Transfer of business Transferee is allowed to take credit of unutilized ITC 25

84 Reversal of ITC REVERSAL OF CREDIT Regular composition to Taxable to Exemption Reverse credit to the extent of stocks Capital goods as on the day immediately prior to date of such conversion Same as above Capital goods credit based on 5 years useful life Same as above 26

85 Removal of Cap. Goods Removal of Capital goods on which credit is availed Pay higher of below: A) Cost of Cap. Goods less depreciation based on useful life (assumed as 5 years) B) Transaction value Exception for refractory bricks, moulds an dies, jigs and fixtures which are supplied as scrap, then tax has to be paid on tra sa tio alue only. 27

86 Input tax credit on inputs/cg sent for job work Inputs/ Capital Goods sent for job work Principal Received back or directly supplied from joborker s pre ises ithi 1 ear i puts or 3 years (capital goods) of being sent out Job Worker If not received/directly supplied in time: It is deemed that Principal has supplied the input/capital goods on the day when input / capital goods were sent out. He can reclaim this ITC on receiving back such inputs/ capital goods. Where goods are directly sent to job worker, the period of one year shall be counted from the date of receipt of inputs by the job worker. 28

87 INPUT SERVICE DISTRIBUTOR (61) "Input Service Distributor" means an office of the supplier of goods and / or services which receives tax invoices issued under section 31 towards receipt of input services and issues a prescribed document for the purposes of distributing the credit of CGST (SGST in State Acts) and / or IGST paid on the said services to a supplier of taxable goods and / or services having same PAN as that of the office referred to above; 29

88 Input service distributor (Sec 20) ISD shall distribute the credit subject to following conditions: (a) the credit can be distributed to the recipients of credits against a prescribed document; (b) the amount of the credit distributed shall not exceed the amount of credit available for distribution; (c) the credit of tax paid on input services attributable to a recipient shall be distributed only to that recipient; 30

89 Input service distributor (Sec 20) (d) the credit of tax paid on input services attributable to more than one recipient e distri uted o l attri uta le re ipie ts o prorata o the asis of the tur o er i a State or UT of su h re ipie t, during the relevant period, to the aggregate of the turnover of all such recipients to whom such input service is attributable and which are operational in the current year, during the said relevant period. (e) where credit is attributable to all recipients, it shall be distributed amongst such recipients on pro rata basis of turnover in a State or UT of all recipients during the relevant period. 31

90 Explanation to Section 20-definitions (a the rele a t period shall e 1) if the recipients of credit have turnover in their States or Union territories in the financial year preceding the year during which credit is to be distributed, the said financial year; or 2) if some or all recipients of the credit do not have any turnover in their States or Union territories in the financial year preceding the year during which the credit is to be distributed, the last quarter for which details of such turnover of all the recipients are available, previous to the month during which credit is to be distributed; (b the e pressio re ipie t of redit ea s the supplier of goods or services or both having the same Permanent Account Number as that of the Input Service Distributor; 32

91 Recovery of ISD credit Sec 21 When ISD credit is distributed in excess of what is available, it can be recovered with interest in manner specified in section 73 or 74 33

92 Steps in availment and utilisation of credit Avail credit provisionally after receipt of goods and invoice S.41 Supplier to file returns along with supply details and pay taxes S.37 Recipient to file return along with inward details and pay taxes S.38 The credits are correlated with respective supplier returns S. 42 Credits which match to the vendor details are treated as finalised Credits not matched or excess on account of duplication etc. would be treated as tax payable and intimated to the recipient. Vendors also would be intimated about mismatch The said amount of credits not matched would be paid along with interest in the next month Where the vendor rectifies and uploads, to such an extent credit would be allowed and balance shall be payable with interest 34

93 THANK YOU V. RAGHURAMAN, B.Com, FCA, LLB, Grad. CWA, ACS, Advocate

94

95 Time and Tide wait for None

96 E A R L I E S T Time of Supply of Goods (Sec 12) Date of/ Last date for issue of Invoice Ref: Sec 31 (1) Date of payment received by Supplier Excess Amt Recd Rs 1000, when compared with Invoice value, supplier may opt to TOSG to be Date of Invoice for such amount

97 Time and Tide wait for None Tax too!

98 Few Explanations Explanation 1. For the purposes of clauses (a) and (b), supply shall be deemed to have been made to the extent it is covered by the invoice or, as the case may be, the payment. Explanation 2. For the purposes of clause (b), the date on which the supplier receives the payment shall be the date on which the payment is entered in his books of account or the date on which the payment is credited to his bank account, whichever is earlier.

99 TOSG in case of Reverse Charge (a) the date of the receipt of goods; or (b) the date of payment as entered in the books of account of the recipient or the date on which the payment is debited in his bank account, whichever is earlier; or

100 TOSG in Reverse (Contd) case of Charge (c) the date immediately following thirty days from the date of issue of invoice (??) or any other document, by whatever name called, in lieu thereof by the supplier:

101 TOSG in case of Reverse Charge (Contd) Provided that where it is not possible to determine the time of supply under clause (a) or clause (b) or clause (c), the time of supply shall be the date of entry in the books of account of the recipient of supply

102 Supply of Vouchers a) the date of issue of voucher, if the supply is identifiable at that point; or (b) the date of redemption of voucher, in all other cases

103 TOSG when above mentioned could not be determined (a) in a case where a periodical return has to be filed, be the date on which such return is to be filed; or (b) in any other case, be the date on which the tax is paid

104 TOSG in respect of Interest / Late Fee / Penalty for late payment of consideration The date on which the supplier receives such addition in value.

105 E A R L I E S T Time of Supply of Services (Sec 13) Date of Invoice - If issued as per Sec 31 (2) Date of Provision of Service if invoice not issued as per Sec 31 (2) If both do not apply, Date of Receipt of service as recorded by recipient Excess Amt Recd Rs 1000, when compared with Invoice value, supplier may opt to TOSS to be Date of Invoice for such excess amount

106 Few Explanations (i) the supply shall be deemed to have been made to the extent it is covered by the invoice or, as the case may be, the payment; (ii) the date of receipt of payment shall be the date on which the payment is entered in the books of account of the supplier or the date on which the payment is credited to his bank account, whichever is earlier.

107 TOSS in case of Reverse Charge (a) the date of payment as entered in the books of account of the recipient or the date on which the payment is debited in his bank account, whichever is earlier; or (b) the date immediately following sixty days from the date of issue of invoice or any other document, by whatever name called, in lieu thereof by the supplier

108 TOSS in case of Reverse Charge Provided that where it is not possible to determine the time of supply under clause (a) or clause (b), the time of supply shall be the date of entry in the books of account of the recipient of supply:

109 TOSS in case of Reverse Charge Provided further that in case of supply by associated enterprises, where the supplier of service is located outside India, the time of supply shall be the date of entry in the books of account of the recipient of supply or the date of payment, whichever is earlier.

110 Supply of Vouchers (a) the date of issue of voucher, if the supply is identifiable at that point; or (b) the date of redemption of voucher, in all other cases

111 TOSS when determined - above mentioned could not be (a) in a case where a periodical return has to be filed, be the date on which such return is to be filed; or (b) in any other case, be the date on which the tax is paid

112 TOSS in respect of Interest / Late Fee / Penalty for late payment of consideration The date on which the supplier receives such addition in value.

113 Change in the rate of Goods / Services / Both (a) in case the goods or services or both have been supplied before the change in rate of tax, (i) where the invoice for the same has been issued and the payment is also received after the change in rate of tax, the time of supply shall be the date of receipt of payment or the date of issue of invoice, whichever is earlier; or (ii) where the invoice has been issued prior to the change in rate of tax but payment is received after the change in rate of tax, the time of supply shall be the date of issue of invoice; or (iii) where the payment has been received before the change in rate of tax, but the invoice for the same is issued after the change in rate of tax, the time of supply shall be the date of receipt of payment

114 Shall we quickly try to tabulate and simplify thereby For example Old rate of GST till New rate of GST From

115 Situat Supplied on ions Invoice Raised Point of Taxation (TOS) A Payment Received by Supplier B C D E F

116 When to refer bank account? Provided that the date of receipt of payment shall be the date of credit in the bank account if such credit in the bank account is after four working days from the date of change in the rate of tax

117 What is the date of payment The date on which the payment is entered in the books of account of the supplier or the date on which the payment is credited to his bank account, whichever is earlier.

118 QUESTIONS?

119

120 Levy & Composition, Exemption from Tax CA Ganesh Prabhu Balakumar B.Com, MFM, F.C.A, LL.B, DISA (ICAI) 1

121 All About GST Single Tax Payable on Taxable Supply Goods & Services Tax GST Single Tax on the Supply of Goods and Services Multi Stage & Destination based Consumption Tax 2

122 All About GST GST is charged only on the component of Value Addition No (Reduce) Cascading Effect i.e tax on tax 3

123 GST Model - India Dual GST CGST & SGST or UTGST IGST 4

124 Section 7 - Supply Sch 1 Activities w/o Consd. Sch 2 Activities Import services w/ or w/o Consd. Sale, transfer, barter, exchange, license, rental, lease, disposal w/o consd Sch3 Activities - NOT Activities by Govt or LA as Public Authorities Scope of Supply Notified by Govt + Co GST recom. 5

125 Taxable Event By a person In the course or furtherance of Business For a consideration Sale/ Transfer/ Barter/ Exchange/License/ Rental/ Leases/ Disposal Made or agreed to be made All form of Supply Supply Phrase To another person not incorporated

126 Sch I Supply without Consideration Permanent Transfer of BA - ITC Supply Between Related or Distinct Person FoB Gift by Employer to Employee Rs.50,000/- Supply by Principal to Agent or Receipt of Goods by Agent on behalf of Principal Import of Service Related Person - FoB 7

127 Sch II Supply of Goods or Services Transfer of title in Goods - SoG Right or UDS in Goods W/O Title Transfer SoS Transfer of title in Goods - Future Date HP/EMI - SoG Right in Immovable Property W/O Title Transfer - SoS Treatment or Process Another Person Goods - SoS Transfer of BA No Longer Forms Part - SoG 8

128 Sch II Supply of Goods or Services If a BA Private Use or Any Purpose other than purpose of Business SoS If a BA held by a taxable person who ceases to be a taxable person SoG Renting of IMP SoS (DS) Construction of Complex SoS - Except Entire Consd Temporary Transfer IPR SoS 9

129 Sch II Supply of Goods or Services Information Technology Software SoS Refrain from Act or Tolerate an Act SoS Transfer of Right to use any Goods SoS Composite Supply WCS & Supply of Food Supply of Food by Club or Association - SoG 10

130 Sch III Neither SoG or SoS Service - Employee to Employer In Relation or Course Any Court or Tribunal, Functions MP, MLA, etc. Post Recognized by CoI or CP, M, D of Board or Commission of CG or SG or LA Funeral, Burial, Cremation, or Mortuary Sale of Land (except Construction of Complex) Actionable Claims (except Lottery, Betting, Gambling) 11

131 Sec 8 TL on Mixed & Composite Basis Mixed Supply Composite Supply Meaning Two or more supplies together, which is NOT a Composite Supply Two or More supplies with 1 Principal Supply & Naturally Bundled Treatment As supply of that supply w/ higher tax rate As supply of that principal supply 12

132 Sec 9 (1) Levy of CGST & SGST Tax Levy of CGST (SGST Levy Respective SGST Act) All Intra-State Supply of G or S or B Except Liquor Value determined as per Sec 15 of CGST Act Rate Notified by CG, SG Not Exceeding 20% Collected in Manner Prescribed (Sec 12 & 13) 13

133 Sec 9 (3) Levy of CGST & SGST - RCM CG & SG Recommendation GST Council Specify Goods or Services or Both Tax on which Payable under Reverse Charge Tax shall be paid by Recipient All provisions apply as if he is Supplier of such Goods or Services. 14

134 Sec 9 (4) Levy of CGST & SGST URS Supply of taxable Goods or Services or Both By a Supplier, who is not registered under GST Tax on which Payable under Reverse Charge Tax shall be paid by such person as Recipient All provisions apply as if he is Supplier of such Goods or Services. 15

135 Sec 9 (5) Levy of CGST & SGST ECom CG & SG on Recommendations of GST Council Specify category of Services (Goods NA) Tax on which shall be paid by E-Commerce Operator If such services are supplied through them All provisions apply as if he is Supplier of such Goods or Services. 16

136 Sec 5 (1) of IGST - Levy of IGST Levy of IGST All Inter-State Supply Value determined as per Sec 15 of CGST Rate Notified by CG, SG - Not Exceeding 40% Collected in Manner Prescribed (Sec 12 & 13) IGST will be levied on Imported Goods 17

137 Sec 5(3) of IGST - Levy of IGST - RCM CG & SG on Recommendations of GST Council Specify Goods & Services Tax on which Payable under Reverse Charge Tax shall be paid by Recipient All provisions apply as if he is Supplier of such Goods or Services. 18

138 Sec 5(4) of IGST - Levy of IGST URS Supply of taxable Goods & Services By a Supplier, who is not registered under GST Tax on which Payable under Reverse Charge Tax shall be paid by Recipient All provisions apply as if he is Supplier of such Goods or Services. 19

139 Sec 5(5) of IGST - Levy of IGST E-Com CG & SG on Recommendations of GST Council Specify category of Services Tax on which shall be paid by E-Commerce Operator If such services are supplied through them All provisions apply as if he is Supplier of such Goods or Services. 20

140 Sec 10 Composition Levy - Eligibility PY Aggregate Turnover Rs.50 Lakh Engage in making Supply of goods which are liveable to tax under this Act; NOT Engaged Inter-State Outward supplies of Goods; Engage in Supply of Services of Supply of Foods (Sch2 Para6 Clause (b)) NOT Engaged Supply of goods through E Com (Sec 52 of CGST Act) 21

141 Sec 10 Composition Levy - Eligibility NOT Manufacturer of goods Notified* If same PAN for more than 1 RP, eligible only if both or all opt for Composition Levy NOT collect any tax from Recipient & NOT entitled to ITC If RP opted without being eligible and PO has reasons Tax+ Penalty u/s 73 & 74 22

142 Sec 10 Composition Levy Rate of Tax Manufacturer 1% of State or UT Turnover Supply of Food 2 ½% of State/UT Turnover Other Suppliers ½% of State/UT Turnover 23

143 Conditions & Restrictions Rules Neither a CTP or a NRTP. Goods held in Stock as on AD are not Inter State or Branch Transfer Imported Purchase Unregistered Person. (He shall pay tax under (3) & (4) of Sec 9 of CGST Act) He should mention the word CTP - on every Bill, Notices & on Signboard He need not file a fresh intimation every year. 24

144 Validity of Composition Levy Option to pay tax u/s 10 is valid only till all conditions are fulfilled. Conditions Not satisfied then withdrawal is made in FORM GST CMP 04 within 7 days of violation. And liable to pay tax U/s 9 of CGST Act 25

145 Sec 11 of CGST Power to Exempt Govt on GST Council recommendation in public interest may exempt:- By notification, exempt partly or wholly By special order under exceptional nature By Inserting explanation within one year of issue with retrospective effect 26

146 Doubts / Questions? 27

147 CA Ganesh Prabhu Balakumar Partner C.Ramasamy & B.Srinivasan Chartered Accountants, Chennai. Mobile: E- Mail : ganeshprabhu.b@crbs.in ganeshprabhu.b@gmail.com 28