Bharat Broadband Networks Limited (BBNL)

Transcription

1 Bharat Broadband Networks Limited (BBNL) GST Workshop 29 June 2017 Page 1 EY refers GST to Workshop the global organization, BBNL and/or one or more of the independent member firms of Ernst & Young Global Limited For discussion purpose only

2 Key Objectives of GST One Nation, One Tax - Single common National Market Eliminating cascading effect of Indirect taxes Uniformity in compliance framework - registration, payments and credits Ease in doing business Page 2

3 GST Framework GST snapshot Points for Consideration Key Take Away Tax on Supply of goods and services Destination Based Tax Local Supply CGST plus SGST (rates may vary) Interstate Supply IGST (single rate) Imports Basic customs duty (unchanged) IGST (single rate) Stock transfers i.e. on self supplies Self supply of goods and services taxable GST Valuation Rules to apply on such supplies Concept of Place of Supply becomes relevant for domestic supplies Myriad Compliances and hence Role of Technology significant Process and Control based compliances Service Companies would need substantial change in the existing IT systems The GST bill restricted the ambit of GST law to the while of India except Jammu and Kashmir. Supply by unregistered person to a registered person would now be liable to GST under Reverse Charge Mechanism and the same shall be available to the registered person as input tax Credit. Page 3

4 GST Present vs. Proposed GST A Bird s eye view GST is : a destination based Tax Levied on value addition at each stage Local Supply CGST plus SGST (rates may vary) Interstate Supply IGST (single rate) What it excludes : Petroleum and Real Estate Property are excluded Central Levies Excise Duties including the additional excise duties Additional duties of customs (i.e. CVD and SAD) CST (to be phased out) Service tax Cesses and surcharges levied by Union CGST Centre Taxes Taxes to be subsumed Taxes subsumed Purchase tax to be subsumed Municipal levies - likely to continue Stamp duty - likely to continue State Levies VAT/ Sales tax Entry tax not in lieu of octroi Entertainment tax (unless levied by the local bodies) Luxury tax Taxes on lottery, betting and gambling Cesses and surcharges levied by States SGST State Taxes Taxes applicable today Service Tax (both output and input service) Excise Duty (on procurement of inputs) VAT/CST (on procurement of goods) Entry Tax (on entry of goods in specified State) Basic Customs Duty (on import of goods) Additional Duty of Customs and Special Additional Duty (on import of goods) Taxes applicable post GST CGST SGST IGST Page 4

5 GST design ushers in a dual levy, and stakeholdership from States to tax supplies Alignment of powers of taxation on supply of goods and services Dual GST: CGST and SGST on local intra state supplies IGST on inter state supplies Exclusions/ Exceptions: Stamp duty and real property excluded Alcohol for human consumption excluded Impose excise duty and VAT: Petroleum (for a moratorium period) Tobacco Other features: State level compliance: Place of supply Larger pool of credits Matching concept GST Compensation cess: Rate of cess to be notified Cess will be levied on transaction value with availability of credit Not applicable for dealers opting for composition scheme Cess can be utilized against payment of such cess only Rates discussed by GST Council Rates 0% 5% 12% 18% 28% Goods and services covered Essential Food, medicines, services Precious metals, Common use items Standard Rate for services and goods Standard Rate for services and goods Demerit goods. Additional cess to be imposed on luxury goods Page 5

6 Charge of GST Goods/ Services SUPPLY OF by taxable person Deemed Supply of Goods/ Services In the course or furtherance of business PLACE OF SUPPLY India Outside India If export then zero rated supply, else IGST Intra-State Inter-State Requirement of registration in relevant State Liable to CGST + respective State s SGST Requirement of registration in the origin State Liable to IGST Page 6

7 Liability to pay Tax Supply of Goods/ Services Location of Service Provider (L1) L1 and L2 are in same State Intra-State Sale LOCAL STATE GST CGST SGST Place of Supply (L2) L1 and L2 are in different States Inter-State Sale INTEGRATED GST IGST (State) Page 7

8 Set off from output liabilities Input tax credits widened GSTN Electronic Registers for Credits - CGST/ SGST/ IGST (qua each registration held) Vendor populates sales to taxable person Reverse charge tax payment TDS provisions Allocation through ISD mechanism Reconciliation Limitation Period Vendor Blacklisting Order for utilisation of credits and payment of taxes CGST Output SGST Output IGST Output CGST Input IGST Input SGST Input IGST Input IGST Input CGST Input SGST Input Page 8

9 Location of service provider Page 9

10 Location of service provider (a) where a supply is made from a place of business for which the registration has been obtained, the location of such place of business (b) where a supply is made from a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment (c) where a supply is made from more than one establishment, whether the place of business or fixed establishment, the location of the establishment most directly concerned with the provision of the supply (d) in absence of such places, the location of the usual place of residence of the supplier Page 10

11 Place of Supply Page 11

12 Place of Supply of Goods (other than Import/Export) Supply with movement 3 rd party directing a transfer of title Supply without movement Place of delivery 3 rd party s registered address Location of goods Installation or assembly at site On board a conveyance Other cases Installation/ assembly site Location where goods taken on board To be determined Page 12

13 Place of Supply of Services supplier and recipient in India) (Location of General Rule When provided to registered person location of such person. When service provided to unregistered person address of recipient on record of provider (if such record exist) Location of service provider in all other cases Page 13

14 Place of Supply of Goods and Services - Procurements Service Installation of goods at site Repair and Maintenance (for goods located at site) Repair and Maintenance (for goods that are send to your premises) Supply of manpower Security Service Immovable property related rental Services Housekeeping Services Outdoor catering Services Rent-a-cab Accommodation Fixed telecommunication (in case where services are procured from MTNL in Delhi and Mumbai) Lease Line service (in case where services are procured from MTNL in Delhi and Mumbai) Place of Supply ( Bill to location for the vendor i.e. BSNL s location) State where the equipment is installed State where the goods are located at the time of repair State where the goods were located before sending for repair State where the manpower is deployed State where the security is provided State where the immovable property is located State where the services are rendered State where services are rendered State where services are requisitioned State where the accommodation take place Place where the instrument for providing the service is installed Place where the instruments are installed for provision of services (can be multiple locations) Page 14

15 Impact on BBNL s business Page 15

16 BBNL business understanding (key facts) Central Government of India directed the execution of National Optical Fibre Network Project (NOFN) to provide broadband connectivity to Gram Panchayats. BBNL agreed to undertake laying down of the incremental optical fibre cable in order to connect the Gram Panchayats located in 16 states BBNL engaged by BSNL, PGCIL and RailTel for providing support in carrying out: Survey Work Quality Assurance Cable Laying Acceptance Testing Commissioning and Taking over of completed routes (in the presentation, we have taken the example of BBNL s business with BSNL) Purchase of goods POs to be raised by BBNL c/o BSNL Invoices to be raised by the vendors in the name of BBNL c/o BSNL Consignee of goods shall be BBNL c/o BSNL Payments of goods to be made by BSNL from the funds received from BBNL Form C shall be issued by BBNL for procurement of such goods. BSNL to keep the inventory of BBNL separately and same shall not be mixed with inventory actually owned by BSNL so as to enable physical verification Ownership of goods will be with BBNL Page 16

17 BBNL business understanding (key facts) Cable laying services BSNL shall invite tenders on behalf of BBNL for cable laying work Invoices to be raised by contractor/ suppliers on BBNL c/o BSNL. BSNL to pay such vendors on behalf of BBNL after deducting appropriate TDS under CST/VAT/Income tax Act on behalf of BBNL TDS deducted by BSNL on behalf of BBNL, shall be deposited with the relevant tax authority by using the PAN, TIN, TAN etc. of BBNL Payment Mechanism BBNL shall advance a fund to BSNL which shall be used to pay the suppliers/ contractors BSNL to receive Centage i.e. payment towards management/consultancy towards execution of NOFN network We understand that under GST, PAN India registration has been obtained by BBNL (except in the state of Goa and UT of Lakshadweep) Page 17

18 Impact on BBNL Particulars Current regime GST regime Remarks Reimbursement of expenses incurred on behalf of BBNL Payments made by BSNL to contractors on behalf of BBNL Invoices raised by vendors for provision of goods and services Centage charged by BSNL for providing business support services No Service tax implications as BSNL would be acting as a pure agent No VAT/ CST applicable as goods owned by BBNL BSNL deducts WCT-TDS and deposits using BBNL s TIN Invoices raised in the name of BBNL c/o BSNL Payments of goods to be made by BSNL from the funds received from BBNL Form C shall be issued by BBNL for procurement of such goods. Service tax applicable One invoice from BBNL corporate office is being raised on periodic basis No GST implications as BSNL would be acting as a pure agent and goods are owned by BBNL GST-TDS requirements under GST yet to be prescribed Invoices raised in the name of BBNL c/o BSNL with the GSTIN number as well as address of BBNL Waybill requirements have been deferred by the government Invoice to carry the address of the place where the goods are being delivered (POS) GST applicable State-wise/ one central invoice for charging Centage for business support services (the same is to be decided with BSNL) No GST implications No requirements at present State-wise invoices will be raised by BSNL (for Centage) as well as by the vendors (for supply of goods/ services) on BBNL BBNL to ensure that invoices are received by them from BSNL before 10 th of every month State wise and invoice wise details of procurements to be filed in GSTR 1 by 10 th of every month ITC of GST paid on said invoice will be available to BBNL Page 18

19 Returns Page 19

20 Returns Current indirect taxes Proposed under GST (CGST, SGST & IGST) Law Returns Returns Service tax Centrally ST-3 (Half-yearly) return is filed Invoice level reporting is required in returns under GST regime Following returns would be required to be filed for all registrations (Common returns for CGST, SGST, IGST) separately: VAT/ CST/ ET/ LBT Excise Returns are filed as per respective provisions of states mostly monthly returns ER-1 (Monthly) Report Name Purpose Due Date GSTR-1 (Monthly) Outward supplies 10 th of next month GSTR-1A (Monthly) Details supplied by recipient Auto Populated GSTR-2 (Monthly) Inward supplies 15 th of next month GSTR-2A (Monthly) Details supplied by the supplier Auto Populated GSTR-3 (Monthly) Monthly Return 20 th of next month GSTR-6 (Monthly) ISD Return 13 th of next month GSTR-6A (Monthly) Details furnished by the supplier to ISD recipient Auto Populated GSTR-7 (Monthly) TDS return 10 th of next month ITC-1 Final acceptance of ITC available to recipient Auto Generated A reconciliation statement of GST returns vis-à-vis audited annual financial statement (to be filed with annual return) Page 20

21 Returns - Procedure GSTR 1 (Upto 10th of Month) Outward details of Supplies to be filed by supplier GSTR 2 (Upto 15th of Month) Inward details of Supplies to be filed by recipient taking into account outward supply details of supplier available in FORM GSTR 2A Upto 17th of Month Supplier needs to accept or reject the changes made by recipient available in FORM GSTR 1A FORM GSTR 1 filed by supplier stand amended to the extent changes accept by the Supplier Upto 17th of Month Supplier needs to accept or reject the changes made by recipient available in FORM GSTR 1A GSTR 3 (Upto 20th of Month) Every registered taxable person shall file a monthly return Annual Return- GSTR 9 taxable person (other than ISD, NR, TDS or TCS) shall file annual return upto 31st December following the end of financial year Page 21

22 Due dates for filing return Months T F S S M T W T F S S M T W T F S S M T W T F S S M T W T F S S M T W T F January February March April May June July August September October November December Outward supplies and TDS return Inward supplies and ISD return Monthly consolidated return Monthly Reconciliation Annual return Page 22

23 Returns Key Points Revision of returns Invalid Return NIL Returns No provisions for revision of returns (major departure from the current regime) Return without full payment of taxes. Input Credit not admissible No supply of goods/ services. Yet returns to be filed Reconciliations/ Mismatch If mismatch is rectified, the discrepancies to be added to the output tax liability of the supplier along with interest Rectification Any errors/omission of previous tax period may be rectified in the return for the month in which such error is detected Formats Invoice level details to be submitted in all returns (robust invoice statement should be ensured) NOTE: A 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 Page 23

24 Credit Mechanism and Matching Concept Page 24

25 Input tax credit - key definitions Provision Definition Input Services means any service used or intended to be used by a supplier in the course or furtherance of business Inputs means any goods other than capital goods used or intended to be used by a supplier in the course or furtherance of business Capital Goods means goods, the value of which is capitalised in the books of accounts of the person claiming the credit and which are used or intended to be used in the course or furtherance of business Plant and Machinery Apparatus, equipment, machinery, pipelines, telecommunication tower fixed to earth by foundation or structural support that are used for making outward supply and includes such foundation and structural support but excluded land, building or any other civil structures but excludes (i) land, building or any other civil structures; (ii) telecommunication towers; and (iii) pipelines laid outside the factory premises Page 25

26 Input tax credit- Key points Relevant/ Key Provisions ITC available to registered taxable person subject to prescribed conditions ITC to be credited to the electronic credit ledger of the taxable person Electronic credit register to be maintained on GSTN for every taxable person Conditions for availing ITC by BBNL Possession of tax invoice, debit note, supplementary invoice Receipt of the goods/ services Tax charged in respect of supply has been actually paid by vendor Supplier as furnished the monthly return Where goods are received in lots/instalment, BBNL shall be entitled to credit upon receipt of last lot/instalment Impact on BBNL Electronic credit ledger generated by GSTN to be reconciled with the credit records of BBNL We understand that there is no output service being provided by BBNL Condition of actual receipt of goods/ services and payment of tax by vendor to the Government for availment of credit by BBNL is introduced in the GST regime Page 26

27 Input tax credit- Key points Relevant/ Key Provisions Timelines for taking credit: Credit for any invoice of a FY can be taken only till earliest of: filing the return for the month of September following the said FY; filing of annual return (due date - 31 December of the following FY) Restrictions for taking credit: Value of supply of services and tax to be paid within six months from the date of invoice In case payment made after 6 months, credit would required to be reversed along with interest payment. Credit can be reclaimed at the time of making the payment to vendor. No time limit prescribed Key points for BBNL Internal controls / processes to be aligned to ensure that credit is availed within the prescribed timelines Internal control/processes to ensure compliance to such provisions BBNL to ensure that payment to all their vendors for the invoices raised is being made by BSNL, RailTel and PGCIL within 6 months from the date of invoice Apportionment of credit: Partly for business and partly for personal - Credit restricted attributable to business Partly for exempt supplies and partly for taxable including zero-rated supplies - Credit available only in relation to taxable supplies including zero-rated supplies Internal control/processes to ensure compliance to such provisions Page 27

28 Input tax credit- Key points Relevant / Key Provisions Ineligible credits : Credits in respect of motor vehicles Except when the motor vehicle is procured in the usual course of business or used for providing services of transportation of goods or passengers or imparting training on motor driving skills Impact on BBNL This is similar to provisions under current regime. Goods/services used primarily for personal use or consumption of employees: In relation to food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre and travel benefits for vacations Rent a cab, life insurance, health insurance except where such service are obligated by the government Tax paid under composite levy Page 28

29 Input tax credit Key points Ineligible credits : Relevant / Key Provisions Impact on BBNL This is similar to provisions under current regime. works contract services which results in construction of immovable property other than plant/machinery (except where it is an input service for further supply of works contract service). Telecommunication tower is excluded from definition of P&M Goods/services received for construction of immovable property on his own account (except plant/machinery) even when used in the course or furtherance of business goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples The tax component of cost of capital goods on which depreciation has been availed under the provisions of Income Tax Act, 1961, shall not be eligible for input tax credit Page 29

30 Input tax credit Key points Documents for availing input tax credit: Relevant / Key Provisions Tax Invoice Debit note Bill of entry Invoice issued to self in case of reverse charge payments ISD invoice Impact on BBNL Challan is not prescribed as a document for availing credit (as against the current regime) The above documents must contain all the applicable particulars prescribed in Invoice Rules Page 30

31 New Concept - Blacklisting of Dealers A system of GST Compliance Rating is proposed to be introduced. Any dealer having a rating below a prescribed level would be counted as a blacklisted dealer A continuous rating system for dealers would be maintained and profiles of all dealers would be posted in public domain Purchases made from a blacklisted dealer would not be eligible for ITC Triggers for blacklisting Action points 1 Continuous default for a period of 3 months in paying reversed ITC 2 3 Continuous default of 3 months or any 3 month-period over duration of 12 months in uploading sales details Continuous short reporting of sales beyond a prescribed limit of 5% (of total sales) for a period of 6 months Continuous monitoring of vendor ratings Contract restructuring including indemnity clausewith key vendors Educate vendors on how to remain compliant Page 31

32 Invoice level information required Credit Note/ Debit Note Particulars When issued Description Credit Note Taxable value/tax charged in the invoice exceeds the taxable value/tax payable in respect of such supply Goods supplied are returned by the recipient Deficient services supplied Debit Note/ Supplementary invoice Taxable value/tax charged in the invoice is less than the taxable value/tax payable in respect of such supply Who will issue Registered taxable person to issue Time of issue Earlier of 30th Sept following end of FY; or date of filing of annual return of the FY (i.e. 31 Dec) in which supply was made Page 42

33 Accounts and Records for BSNL Accounts & Records to be maintained under GST Certificate of registration Accounts/ records for inward/ outward supply of goods/ services, stock of goods, ITC availed, tax paid and payable etc. The accounts/ records are to be maintained at the principal place of business. The same can be maintained in electronic form as may be prescribed Retention of accounts/ records: Key Points 72 months from the due date of filing of annual return (31 December) of that FY In cases of matters under litigation, the accounts/ records to be maintained for a year after the final disposal of the litigation Aforesaid accounts / records under the law to be maintained by BSNL Internal IT systems and processes to be aligned accordingly In case of multiple premises effecting supply of goods/ services, BSNL to maintain records for supplies at each such premise Processes to be aligned for maintenance of accounts / records as per timelines above Page 48

34 Other Accounts & Records Page 49

35 Vendor master Recommended fields Name Address and contact details Type of vendor (Individual/ Firm/ Company) Nature of the vendor (SEZ unit/ Foreign company/ DTA unit/ STPI unit) Registration status- whether registered or not If yes, PAN and GSTN GST Compliance rating of vendor Date of enrolment State code Whether vendor is under composition scheme or not? In case of purchases from dealers under composition scheme GST cost will be inbuilt in supply and vendor will not charge GST separately Whether reverse charge is applicable or not State wise listing of vendors - In case the vendor is located in more than one state Page 50

36 Purchase order Recommended fields Name of vendor Registered Address and contact details of vendor GSTN of vendor Place of supply State code of vendor Description of goods/ services Location of vendor in India / outside India Service Accounting Code (SAC) of service supplied HSN code of goods supplied by vendor (to the extent possible) Whether vendor is under composition scheme or not? In case of purchases from dealers under composition scheme, credit would not be eligible GSTN of BSNL Name, address and contact details of the person placing the order and person receiving the goods/ services Bill to and Ship to (along with state codes) location (relevant for place of supply) CGST, SGST, IGST rate and value Value of goods/ services Quantity of goods/ services Taxable value Standard Terms and conditions (as amended) Page 51

37 Purchase report Recommended fields Name, address, state code and GSTN of supplier Bifurcation as input services, capital goods and inputs Date of invoice Invoice number Value of Invoice HSN / SAC of goods/ services Taxable value and rate of tax Bill to and ship to (of BSNL) along with GSTN and state code Creditable (for DTA)/ refundable (for SEZ) or non creditable Reverse charge applicable or not Bill of entry detail (number and date) Value of tax CGST, SGST and IGST levied by vendor along with value Tax code Date of posting of invoice in books (relevant for reverse charge) Document Currency Amount in document currency Whether liable for TDS or not Challan no. and date for payment of TDS and reverse charge ISD credit received along with document number and details of original invoice of seller raised on ISD PO issued by BSNL reference number Amount in local currency Page 52

38 Sales report Recommended fields Name, address and GSTN of BSNL shipping location Name, address and GSTN of BSNL billing location Date of invoice Invoice number Name, address and GSTN of recipient (Bill to) along with state code Name, address and GSTN of recipient (Ship to) along with state code HSN code of goods (4 digit level, 8 digit level for exports) or accounting code of services Description of goods and services Quantity of goods Total value of goods/ services Amount of packaging and forwarding Value of tax Taxable value of goods/ services Rate of tax (CGST, SGST and IGST) along with category of taxes and tax amount Document Currency Amount in document currency Amount in local currency Place of supply along with name of state (for interstate supplies) in most cases it should be ship to location Tax code applicable Shipping bill number / bill of export Detail of advance received before making taxable supplies along with tax details (CGST, SGST and IGST) Customer PO reference number Page 53

39 Purchases from unregistered dealer Page 56

40 Purchases from unregistered dealer Page 57

41 Works Contract Page 58

42 Works Contract 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. Considered as supply of service under the GST regime Currently both Service tax and VAT is applicable on Works Contract. Accordingly, there is dual taxation on some portion and WCT-TDS is required to be deducted and deposited. Under the Revised GST Law, works contract will be treated as supply of services. Input Tax Credit Input tax credit not available in respect of works contract services when supplied for construction of immovable property, except for plant and machinery, except where it is an input service for further supply of works contract service Page 59

43 Refunds Page 62

44 Refund Situations Excess payment of tax Refund available in case of supply not provided wholly or partially Finalization of provisional assessment At the time of filing online return, declaration should be made whether the tax paid is final or provisional. Speaking order may be issued by the office for amount to be deposited or refundable, if any. Zero rated supply of goods/services Refund of input tax credit in case of export of goods/services Option to pay tax on supply of goods/services outside India and claim refund In case of supplies to an SEZ Refund of carry forward Input Tax Credit In cases of inverted duty structure, cash refund of unutilized ITC may be allowed after audit. Refund may also be granted in case where unutilized ITC remains because of partial reverse charge mechanism on output services. Impact on BBNL BBNL will not be able to claim refund of accumulated Cenvat credit The same will remain in their books and will be utilized against any future output tax liability Page 63

45 Transitional provisions and Immediate Action points Page 65

46 GST immediate action points Particulars Action points Implications GST enrolment Carry forward of unutilized credit GST action points All premises whether on lease/rent or otherwise that are located in the state should be mentioned in GST registration Matching/linking the details of ST, VAT/ CST and Excise registration (wherever applicable) pertaining to the state should be mentioned in the registration application CENVAT credit not availed should be captured Reconcile balance of CENVAT as per books and as per returns: - If : balance as per books > balance as per return - Disclosed in subsequent return or write off Invoices received but not processed To be recorded immediately and credit claimed. Cenvat credit loss to BBNL on account of nonregistration Cenvat credit loss to BBNL Page 66

47 GST immediate action points GST action points Particulars Action points Implications CENVAT credit on capital goods procured on or after 1 April 2017 Pendency of concessional forms under Central Sales Tax Act, 1956 In respect of capital goods procured during , partial CENVAT credit must have been availed in It must be ensured that the balance credit on such goods is availed before 1 July 2017 For capital goods procured on or after 1st April 2017, 50% of CENVAT can be claimed in the month of receipt of such good at BSNL premises. The balance 50% will be applicable in the GST regime. All pending Form C and Form F to be issued immediately Serial nos. and value are required be declared by vendors in their transitional forms. Loss of Cenvat credit to BBNL BBNL would have to indemnify the vendors with the amount of tax that they would be required to reduce on account of nonavailability of statutory forms Page 67

48 GST immediate action points Particulars Action points Implications Reverse Charge Treatment of Open Pos GST action points CENVAT credit may be availed by BBNL in its service tax return which will be filed upto 30 June 2017, and carry forward as CGST credit in the electronic ledger under GST. BBNL to ensure all invoices received are accrued and credit availed as of 30 June 2017 For POs w.r.t. which a. No GRN has been issued: Fresh state-wise POs will be issued b. Wherein GRN has been issued and Cenvat availed: followup with the vendors and book the invoices in the SAP system; c. Wherein goods move in instalment: POs will be closed to the extent goods have been received and invoicing done. For the remaining supply, fresh state-wise POs will be issued as per the provisions under GST Loss of Cenvat credit State-wise invoicing to be done SAP is configuring the same in the system Page 68

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