GST. Concept & Roadmap By CA. Ashwarya Agarwal

Transcription

1 GST Concept & Roadmap By CA. Ashwarya Agarwal 1

2 What is GST?? GST Goods and Services Tax Clause 12A of Article 366 of The Constitution of India goods and services tax means any tax on supply of goods, or services or both except taxes on the supply of the alcoholic liquor for human consumption; 2

3 Why GST 1. Multiple taxes lead to double taxation & cascading effect 5. High cost of tax collection leads to lower tax yield to the Government 2. Structure involving multiple taxes / rates not in sync with global practices 3. High cost of tax compliance and double taxation leads to higher prices of goods & services 4. Lack of uniformity in provisions of different law and interpretations 3

4 GST Today Constitutional amendment took place GST Council formed and Model GST law Drafted GSTN Network made operational 10 th GST council meeting We are left with only couple of tax periods Impact on our industry, trade Procedural impacts vs. Financial impacts 4

5 Gst vs Present tax- Similarities 1. Incidence on the recipient towards value chain till the consumer. 2. Based on concepts of VAT 3. The three steps- OTL- ITC = TP 4. Unjust enrichment 5. Same amount to be taxed once not twice 5

6 GST vs Present tax- Differences 1. Sale, Service, Manufacture SUPPLY 2. Deemed Supply Br. TRANSFER, PRINCIPAL TO AGENT 3. No centralized registration - (Service tax, Business Vertical) 4. Scheme of composition 5. No credit unless tax deposited by Supplier 6. Registration is must for tax credit 7. GOODS + SERVICES GOODS / SERVICES 8. IMPORT Duty- Under GST 6

7 Present Indirect Tax Structure of India Present Tax Structure [5 Important Constituents] Excise Duty Service Tax Sales Tax / VAT/ CST Customs Duty Entry Tax/ Entertainment Tax Entry No. 84, List I, Schedule VII Residuary Entry No. 97, List I, Schedule VII Entry No. 54 of List II (VAT) and 92A of List I (CST) Entry No. 83, List I, Schedule VII Entry No. 52 &62 List II, Schedule VII Taxable Event is Manufacture Taxable Event is Provision of Service Taxable Event is Sale Taxable Event is Import & Export Taxable Event is Entertainment & Entry of Goods 7

8 Proposed GST Structure CGST (Intra State) Central Excise Additional duties of Custom (CVD) Service Tax Surcharges and all cesses SGST (Intra State) VAT/sales tax Entertainment Tax Luxury Tax Lottery Tax Entry Tax Purchase Tax Stamp Duty Goods and passenger Tax Tax on vehicle Electricity, banking, Real state IGST (Inter State) CST 8

9 Proposed GST Structure Proposed GST will replace the terms Manufacture, Sale, Provision of Service, Import and Export, Entry of goods with one term, i.e. Supply 9

10 Supply (Sec-3 of Model GST Law) Supply includes all forms of supply of goods and/or services such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business,.. 10

11 What is GOODS & SERVICES?? Sec 2(49) of Model GST Law Goods means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply; Sec 2(92) of Model GST Law Services means anything other than goods; 11

12 Proposed GST Structure Intra-State supply (Goods and / or Service) Inter-State supply (Goods and / or Service) CGST IGST SGST 12

13 Features of GST Origin based tax to Destination based consumption tax All stages of value chain Primary/Secondary /Tertiary including retail Taxable event is supply Centre GST & State GST to operate concurrently IGST on inter state supplies in India. CGST & SGST on intra-state supplies in India Imports [BCD + IGST] Exports Zero rated 13

14 Major Components of GST Supply Returns Taxability Input Tax Credits Components of GST Registration Valuation Time of Supply Place of Supply 14

15 How to determine Tax Liability?? 1. Is It a Supply? 2. Is it a Good or Services? Rate, HSN, Classification 3. Is it a Non-taxable or Exempted Supply? 4. What is the place of supply? Intra State /inter sate 5. What is the Time of supply? 6. Is the supply by a Taxable Person? ( RCM, Aggregator) ===Tax Payable ( OT- ITC) 15

16 GST Rate Structure 0% 5% 12% 18% 28% 28% + cess 16

17 Benefits of GST 17

18 Input Tax Credit Present Law VAT VAT / CST CST Excise / Service Tax Excise / Service Tax 18

19 ITC in Proposed GST Law Manner of ITC as specified in Sec 44(5) CGST SGST IGST (1) CGST & (2) IGST (1) SGST & (2) IGST (1) IGST, (2) CGST & (3) SGST

20 What is Input Tax Input Tax" means following taxes paid by taxable person on: IGST on Inter-State supply of goods & services; IGST on Import of goods; CGST and SGST on any supply of goods or services; GST paid under Reverse Charge - Section 8(3) Input Tax not available to dealer paying tax under Composite Levy Section 9 20

21 Capital Goods, Input & Input Service Sec 2(19) 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; Sec 2(52) input means any goods other than capital goods used or intended to be used by a supplier in the course or furtherance of business; Sec 2(53) input service means any service used or intended to be used by a supplier in the course or furtherance of business;

22 Condition for ITC Taxable Person shall not be entitled to ITC of input tax in respect of supply of any goods and / or services to him unless (Except Provisional ITC): (a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other taxpaying document(s) as may be prescribed; (b) he has received the goods and/or services; (c) Goods delivered to another person on direction of taxable person, shall be deemed that taxable person has received. the tax charged in respect of such supply has been actually paid to the account of the appropriate Government, either in cash or through utilization of input tax credit admissible in respect of the said supply; and (d) he has furnished the return under section 34:

23 Goods received in Lots / Instalment: ITC available on receipt of last lot / instalment; Contd. If payment for value of supply of services and tax thereon not made within 3 months of invoice date: ITC will be added to output tax liability; If depreciation is claimed on the tax component of the capital goods ITC of said tax component not available; Time Limit of ITC on any invoice / debit note (Whichever is earlier): i) Furnishing of Return for September month of subsequent FY (say 20 th Oct); or ii) Furnishing of relevant Annual Return (say 31 st Dec)

24 Returns 1) GSTR-1: Statement of outward supply (NTP) - 10 th of succeeding month; details of outward supplies shall include details of invoices, debit notes, credit notes and revised invoices issued in relation to outward supplies made during any tax period. 2) GSTR-2: Statement of inward supply (NTP) 15 th of succeeding month; NTP shall verify, validate, modify or delete the detail and may also include details. 3) NTP shall Accept / Reject the above incl. ISD 17 th of succeeding month; 4) GSTR-3: Return with detail of inward, outward, ITC, tax payable and paid, etc 20 th of succeeding month; Normal Taxable Person (NTP): Registered Taxable person other than ISD, NRTP, Composition levy, TDS & TCS

25 Matching of Input Tax Credit 1) Detail of inward supply Detail of outward supply furnished by corresponding taxable person, Addl. Duty, duplicate ITC claim; 2) Any duplicate claim of ITC shall be communicated to recipient; 3) If any excess ITC claimed by recipient in respect of inward supply, same shall be communicated to both the person; 4) Amount of excess ITC communicated, to be rectified by supplier in return for that month, otherwise added to output tax liability of recipient next month; 5) Output tax liability of recipient shall be reduced if supplier rectifies the return u/s 37(7), otherwise liable to pay interest; 6) If output tax liability reduced after payment of interest, same shall be refunded by crediting electronic cash ledger; 7) Amount of excess ITC on account of duplication of claim shall also be added to the output tax liability of recipient

26 Issues in Matching of ITC 1. Typographical error in entering GSTIN of buyer, Date, Bill No., Bill / Tax amount; 2. The supplier has filed the return, but paid a part of his tax liability, ITC shall be denied to all his buyers for that period Invalid return; 3. Return not rectified by supplier after intimation on mismatch Tax burden shall be on buyer, along with interest; 4. This exercise of match shall have to be done every month; 5. Vendor management

27 Refund Time limit for application of refund increased to 2 (two) years from the relevant date. Refund of un-utilized input tax credit in following situations: 1. Export of goods / services out of India; 2. Accumulated credit due to inverted duty structure. If refund amount less than Rs. 5 Lacs: 1. Furnishing of documents / evidences Not necessary 2. Declaration may be filed certifying that no tax incidence passed on 27

28 Transition to GST 9. Continuing contracts- Revision, Spill over to GST 8. Impact on pending refund claimsfiled/unfiled 1.Process reengineering & training 2. Review of present credits, compliance 3. Carry forward of CE/ST/VAT credits 6. Existing registrationmigration to GST 4. Stock lying with agents on transition- impacts 28

29 Impact areas - Vendor Management Review current vendors history to identify non-compliant vendors GST Compliance rating to identify non-compliant vendors Identify multiple new vendors, get revised quotes Conducting vendor education programmes for unorganized vendors Review price of all related party vendors to avoid disputes in transaction value Suggest vendors to follow similar exercise - better vendor relationships 29

30 Thank You CA. Ashwarya Agarwal