Yogendra Garg IRS Addl. DG, Centre of Excellence NACIN

Yogendra Garg IRS Addl. DG, Centre of Excellence NACIN

Pre-GST Indirect Tax Structure in India Central Taxes Central Excise duty Additional duties of excise Excise duty levied under Medicinal & Toilet Preparation Act Additional duties of customs (CVD & SAD) Service Tax Surcharges & Cesses State Taxes State VAT / Sales Tax Central Sales Tax Purchase Tax Entertainment Tax (other than those levied by local bodies) Luxury Tax Entry Tax (All forms) Taxes on lottery, betting & gambling Surcharges & Cesses GST 2 Constitution amended to provide concurrent powers to both Centre & States to levy GST (Centre to tax sale of goods and States to tax provision of services)

What is GST? One Tax For Manufacturing Trading Services ONE NATION: ONE TAX

Where are we today? Constitution Amendment Bill passed for levy of GST Parliament passes the CGST / SGST / UTGST / Compensation Cess Acts GST rules & rates notified for rollout from 1 st of July 4 GST Council formed and 18 meetings conducted Recommended the CGST / SGST / UTGST / Compensation Cess Act 18 GST rules recommended by GST Council GST rates recommended All States except J&K have passed their respective SGST Acts Roll out of GST on 1 st of July, 2017

Understanding CGST, SGST, UTGST & IGST Foreign Territory State 1 Union territory without legislature State 2 5

Features of Constitution Amendment Act Alcohol for human consumption Power to tax remains with the State Five petroleum products crude oil, diesel, petrol, natural gas and ATF Tobacco Entertainment tax levied by local bodies GST Council to decide the date from which GST will be applicable Part of GST but power to levy additional excise duty with Central Government Power to tax remains with local bodies 6

101 st Constitution Amendment Act Concurrent jurisdiction for levy & collection of GST by the Centre (CGST) and the States (SGST) Centre to levy and collect IGST on supplies in the course of inter-state trade or commerce including imports Compensation for loss of revenue to States for five Years GST on petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas & aviation turbine fuel to be levied from a later date All decisions on recommendations of GST Council 7

GST Council - Constitution Chairperson Union FM Vice Chairperson - to be chosen amongst the Ministers of State Government Members - MOS (Finance) and all Ministers of Finance / Taxation of each State Quorum is 50% of total members States - 2/3 weightage and Centre - 1/3 weightage Decision by 75% majority Council to make recommendations on everything related to GST including laws, rules and rates etc. 8

Salient features of GST The GST would be applicable on the supply of goods or services. Dual GST on any item - Central GST and State / Union Territory GST. Central tax (CGST) and State tax (SGST) / Union territory tax (UTGST). The GST would apply on all goods or services or both other than alcoholic liquor for human consumption and five petroleum products. 9

Salient features of GST... (contd.) 10 Destination based consumption tax The tax would accrue to the State which has jurisdiction over the place of consumption which is also termed as place of supply. Levied at all stages right from manufacture up to final consumption with credit of taxes paid at previous stages available as setoff. In nutshell, only value addition will be taxed and burden of tax is to be borne by the final consumer. Exports would be zero rated and imports taxed at the same rate as integrated tax (IGST) levied on inter-state supply of like domestic products

Salient features of GST... (contd.) Destination based consumption tax Tax payers with an aggregate turnover in a financial year up to Rs.20 lakhs would be exempt from tax. For special category states specified in Article 279A, the threshold exemption shall be Rs. 10 lakhs. Tax payers making inter-state supplies or paying tax on reverse charge basis shall not be eligible for threshold exemption. Small taxpayers with an aggregate turnover in a financial year up to Rs. 75 lakhs shall be eligible for composition levy. 11

Salient features of GST... (contd.) An Integrated GST (IGST) would be levied and collected by the Centre on inter-state supply of goods and services. HSN code shall be used for classifying the goods and services under the GST regime. Chapter 99 introduced for the Service Classification Codes Laws and procedures for levy and collection of CGST/SGST would be harmonized to the extent possible. 12

Salient features of GST... (contd.) Exports and Supplies to SEZs shall be treated as zerorated supply. Exporters need not pay GST on exports but will continue to be eligible for ITC which will be refunded to exporters No tax will be payable on final supplies to SEZ Devlopers or SEZ Units but ITC related to the supply shall be refunded to suppliers. Import of goods/services would be subject to IGST in addition to Basic Customs duty. 13

GST Rates Rate Schedule at 4 Digit Level 0%( on essential items, rice/wheat) 0.25% on Diamonds & Precious Stones 3% on Gold, Silver, Jewellery 5%: ( on items of mass consumption ) 12%/18%:(standard rates covering most manufactured items and Services) 28% : ( on Consumer Durable Goods, Pan masala, tobacco and aerated drinks etc) Basic philosophy behind these rates are that, to the extent possible, the current combined rate of tax levied on individual goods by the Central and the State 14 Governments should be maintained in GST

GST Rates Present service tax exemptions (83 services) to continue 18 services to attract reverse charge Four slab tax structure 5%, 12%, 18% and 28% Three services to attract Compensation Cess Services not specified elsewhere to attract 18% 15

Benefits of GST (1/2) 1 2 Reduction in Cascading of Taxes Overall Reduction in Prices Decrease in Inflation 3 4 Common National Market Benefits to Small Taxpayers Ease of Doing Business 5 Self-Regulating Tax System 6 Non-Intrusive Electronic Tax System Decrease in Black Transactions 16

Benefits of GST (2/2) 7 8 Simplified Tax Regime Reduction in Multiplicity of Taxes More informed consumer 9 10 Consumption Based Tax Abolition of CST Poorer States to Gain 11 Exports to be Zero Rated 12 Protection of Domestic Industry - IGST Make in India 17

Main Features of the GST Act (1/4) All transactions and processes only through electronic mode Non-intrusive administration PAN Based Registration Registration only if turnover more than Rs. 20 lac Option of Voluntary Registration Deemed Registration in three working days Input Tax Credit available on taxes paid on all procurements (except few specified items) 18

Main Features of the GST Act (2/4) Credit available to recipient only if invoice is matched Helps fight huge evasion of taxes Set of auto-populated Monthly returns and Annual Return Composition taxpayers to file Quarterly returns Automatic generation of returns GST Practitioners for assisting filing of returns GSTN and GST Suvidha Providers (GSPs) to provide technology based assistance 19

Main Features of the GST Act (3/4) Tax can be deposited by internet banking, NEFT / RTGS, Debit/ credit card and over the counter Concept of TDS for certain specified categories Concept of TCS for E-Commerce Companies Refund to be granted within 60 days Provisional release of 90% refund to exporters within 7 days 20

Main Features of the GST Act (4/4) Interest payable if refund not sanctioned in time Refund to be directly credited to bank accounts Comprehensive transitional provisions for smooth transition of existing tax payers to GST regime Special procedures for job work System of GST Compliance Rating Anti-Profiteering provision 21

Tax Payer Life Cycle Taxable Person Registration Migration Registered Person Supply Person Applies for Refund Avails Input Tax Credit Registered Person Assessment, Audit and Scrutiny Inspection, Search, Seizure, Arrest Invoice and Accounts Demands and Recovery Appeals and Revision Transition and Provisions Files Returns Pays Taxes

TDS As per Section 51 of CGST Act, 2017 following people/entities can be mandated to deduct TDS: A department or establishment of the Central or State Government, or Local authority, or Governmental agencies, or Persons or category of persons as may be notified, by the Central or a State Government on the recommendations of the Council, 24

TDS TDS is to be deducted at the rate of 2 percent on payments made to the supplier of taxable goods and/or services, where the total value of such supply, under an individual contract, exceeds Rs. 2,50,000/-. No tax deduction required where the location of supplier and place of supply is different from the State of the registration of the recipient (interstate supplies) 25

TDS Procedure Deductor (DDO) will need to get compulsorily registered under Section 23 (Form GST REG-07) ; For registration PAN is not required and TAN from Income Tax would suffice TDS deducted needs to be remitted by the 10th day of the month succeeding the month in which TDS was collected. GSTR 7 Return also needs to be filed in by the 10 th of next month TDS Certificate needs to be issued to the Deductee within 5 days of remitting TDS The amount deposited as TDS will be reflected in the 26 electronic cash ledger of the supplier

TDS Compliance Failure to issue TDS Certificate attracts penalty of Rs. 100 per day with maximum of Rs. 5000 Non-deduction / short deduction / non-payment or short payment of TDS is on offence under the act for which a minimum penalty of Rs 10000/- is prescribed upto amount of TDS not deducted, short deducted, not deposited 27

TDS Compliance Any amount deducted as TDS and reported in GSTR 7 will automatically reflect in electronic cash ledger of the deudctee available to the deductee for payment of GST Refund of the excess amount deducted: Refund of erroneous excess TDS deducted is possible to deductor, subject to Section 54 and Refund Rules No refund if amount reflected in the Electronic Cash Ledger of the deductee 28

Registration Compulsory Registration for Each State where business situated Option to take multiple registration for each business vertical within same state

Registration (contd.) Liability to be registered Every person who is registered under existing indirect laws being subsumed in GST Every person whose turnover in a year exceeds Rs. 20 lakhs ( Rs. Ten lakhs for special category states) Voluntary registration permitted even if no liability. 30

Mandatory Registration (irrespective of threshold) Persons making inter-state taxable supply Persons required to pay tax under reverse charge Casual and non-resident taxable persons E-Commerce operator Those required to collect TDS Persons supplying goods through e-commerce operator Persons making supplies on behalf of a registered taxable person Input Service Distributer Every person supplying online information and data base access or retrieval services from a place outside India to a person in India, other than a registered person 31

Registration (contd.) Registration ( GSTIN) to be granted State-wise. PAN mandatory for GSTIN except for NRTP- here Passport TDS Deductor-TAN Separate registration permitted for multiple business verticals in a State SEZ Developer/Units to compulsorily register as business vertical Registration deemed to be granted if objection by way of Notice is not communicated within the time of 3 working days

Returns Process under GST 33

Why Returns? Means of compliance verification Mode for transfer of information to tax administration To declare tax liability for a given period Providing necessary inputs for taking policy decision 34

Features of Tax Returns in GST Based on transactions Invoice based Designed for system based matching of Input Tax Credit and other details (import, export etc.) Auto-population from details of outward supplies Auto-reversal of ITC in case of mismatch Concepts of ledgers cash, ITC and liability No revised returns changes through rectifications and reported in the return for the month in which error detected 35

GST Returns: GSTR1 Statement of Outward Supplies What information? Basic details To be filed by 10 th of the next month- can be easily done by a computer Invoice level details ; GSTIN of recipient Invoice details Number, date, HSN/SAC,.Value, Taxable value Tax IGST, CGST, SGST/UTGST Rate and Tax amount What is not required to be uploaded? Invoice level information for B2C invoice < Rs. 2.5 lacs Consolidated information of all B2C supplies sufficient HSN/SAC.. < Rs.1.5 crore 36

GST Returns: GSTR 2 Information Flow for auto-population/ self feeding GSTR-6A ISD TCS/ TDS GSTR 2 To be Fed by Taxpayer Reverse Charge receipts from unregistered supplies Imports GSTR1s of the suppliers GSTR 5 Non Resident TP 37

GST Returns: GSTR 3 Auto-populated based on GSTR-1 and GSTR-2 Outward Supplies All B2B inter and intra state supplies All B2C inter-state supplies above the value of Rs. 2.5 lacs Exports Revision of tax of previous periods Inward Supplies Inter and intra state supplies received Imports Amendment to tax of previous periods Credit to ITC Ledger 38

GST Returns: Standardised forms/ certificates Form GSTR-1 -Details of outward supplies of taxable goods or services effected Form GSTR-1A Details of outward supplies as added, corrected or deleted by the recipient Form GSTR-2 Details of inward supplies of taxable goods and/or services claiming input tax credit Form GSTR-2A Details of inward supplies made available to the recipient on the basis of FORM GSTR-1 furnished by the suppliers GSTR-3 Monthly return on the basis of finalization of details of outward supplies and inward supplies GSTR-3A Notice to a registered taxable person who fails to furnish return 39

GST Returns: Standardised forms/ certificates (contd.) Form GSTR-4 Quarterly Return for composition Taxable persons Form GSTR-4A Details of inward supplies made available to the recipient registered under composition scheme on the basis of FORM GSTR-1 furnished by the supplier Form GSTR-5 Return for Non-Resident foreign taxable person Form GSTR-6 ISD return Form GSTR-6A Details of inward supplies made available to the ISD recipient on the basis of FORM GSTR-1 furnished by the supplier Form GSTR-7 Return for authorities deducting tax at source Form GSTR-7A TDS Certificate 40

GST Returns: Standardised forms/ certificates (contd.) Form GSTR-8 Details of supplies effected through e- commerce operator and the amount of tax collected Form GSTR-9 Annual return Form GSTR-9A Simplified Annual return by Compounding taxable persons registered under section 8 Form GSTR-9B Reconciliation Statement Form GSTR-10 Final return Form GSTR-11 Details of inward supplies to be furnished by a person having UIN 41

GST Returns: Correction in returns No Revision of returns As per the return taxes have already been paid and fund transfers already settled No significance as the basis now is individual transaction All changes through rectifications reported in subsequent returns If an invoice has been left out in GSTR-1 or GSTR-2 : can be uploaded in subsequent returns but to pay interest for any tax not paid on this account If any invoice has been wrongly entered but remains unmatched can be amended in subsequent returns 42

GST Returns: Correction in returns Post transaction changes to be done through debit or credit notes Other details like B2C supplies can be amended in subsequent returns Delayed uploading coupled with payment of interest All changes, credit or debit notes to be carried out before September of the next financial year To enable any auto-reversal before Annual Return 43

GST Returns: Annual Return Annual summary of all transactions Accounts to be certified by Chartered Accountant etc. if turnover more than Rs. 2 Crore Personal Details Details of Expenditure Purchases goods/services intra/inter state Imports Details of Income Supplies goods/services intra/inter state Exports Not to be filed by ISD, TDS Deductor, Casual Taxpayer, and Non resident taxpayer 44

GST Returns: First and Final Returns First Return Required when the liability to register and pay tax arose before grant of registration Final Return On closure of business Reversal of credit on goods in stock 45

Advance Rulings An applicant can apply for advance ruling even before taking up a transaction (proposed supply of goods or services) or in respect of a supply which is being undertaken. The only restriction is that the question being raised is already not pending or decided in any proceedings in the case of applicant. Advance ruling to be issued within 90 days. Advance ruling shall be binding on concerned officer or jurisdictional officer in case of applicant and only on the applicant Advance ruling to continue unless there is a change in law or facts.

Issues on which ruling can be asked? Classification Applicability of a notification Determination of time and value of supply Admissibility of input tax credit of tax paid or deemed to have been paid Determination of the liability to pay tax on any goods or services under the Act Whether applicant is required to be registered under the Act; Whether any particular thing done by the applicant with respect to any goods or services amounts to or results in a supply of goods or services 47

Transitional Provisions Existing taxpayers to be issued Provisional Registration valid for 6 months (extendible) Upon furnishing of prescribed information, final RC to be granted Cenvat credit/vat carried forward in return allowed as ITC under GST Un-availed Cenvat/VAT credit on capital goods, not carried forward in return, shall also be allowed as ITC under GST Eligible duties and taxes in respect of inputs held in stock permissible as credit to registered persons

Transitional Provisions Eligible duties and taxes in respect of inputs held in stock available as credit to taxable person switching over from compounding 40%/60% Deeemed credit on stocks if tax invoice not available (proof of procurement is mandatory) Transitional credit available generally only if both laws permit and invoice is not more than 12 months old No tax payable on goods removed/despatched earlier but returned within 6 months after the introduction of GST Proceedings under earlier law to be conducted under old law 49

Tax Payer Life Cycle :: Current Challenges 1 Taxable Person Registration Migration Registered Person Supply Person Applies for Refund Assessment, Audit and Scrutiny Inspection, Search, Seizure, Arrest Demands and Recovery Appeals and Revision 4 Transitional Provisions 2 3 Avails Input Tax Credit Invoice and Accounts Files Returns Pays Taxes Registered Person

Current Challenges (1/3) Migration of Existing Taxpayers Provisional ID not Activated Provisional ID not Communicated Issues of activating of provisional ID Provisional IDs cancelled and reactivated Provisional ID is GSTIN Cancellation of Provisional registrations if not liable to tax under GST New Registrations New registration started at www.gst.gov.in Deemed registration in three days Challenge in E-sign / DSC / EVC (Aadhar, Banking and GSTN based) 30 days window for getting registered 51

Current Challenges (2/3) Transition of Credit Lack of awareness on deemed credit provisions Available stock sold without adjustment of input tax credit Forms to be filled by taxpayers to take transition credit Declarations to be filed for job work Refund, assessment proceedings under existing law to continue 52 Filing of Returns Return filing to start from 20 th of August Return filing date for first two months extended Simple Excel / Java utility for filing of returns GST Practitioner / GSPs facility available Internet facility required only at the time of uploading

Current Challenges (3/3) Invoice No prescribed format for generation of invoice Invoice can be generated manually Provisional ID to be quoted on invoices if GSTIN not available Duplicate copy of invoice to be generated for transporting goods Invoice to be serially numbered No restriction on number of series Records to be maintained at Principal Place of Business Exports Raw material cannot be procured without payment of tax Exports are zero rated Manual Bonds for exports till GSTN is ready 53

How can we help? (1/3) @askgst_goi twitter handle started for real time answering of queries FAQs on GST in English, Hindi and Ten Regional Languages Available on CBEC Website E-Training Modules through videos on benefits, E-Commerce, Registration and Refunds etc. Available on You-tube GST Seva Kendra established at every Range Facilitation of migration, registration, duty payment and filing of returns 54

How can we help? (2/3) 55 Planned online campaign calendar GST- Manthan www.gstawareness.cbec.gov.in 24 * 7 Helpdesk through call centre agents All India Toll free phone: 1800-1200-232 E-mail: cbecmitra.helpdesk@icegate.gov.in Campaigns such as GST-Bharati and GST- Oneness Available on You-tube Mobile app CBEC GST for GST related material

How can we help? (3/3) Twitter channels @cbec_india and Dedicated You tube channel of GST_India Facebook Page of @cbecindia CBEC website for Concept - Presentation on GST FAQs on GST in English, Hindi and eight regional languages Constitutional Amendment Act CGST, IGST, UTGST and GST (Compensation) Acts Final Rules & Formats GST Rates 56

Sectoral Groups 18 sectoral groups formed under GST Council to: Examine industry challenges Prepare Sectoral Guidance Notes JS level officer of concerned line ministry is member of these groups Officer can flag important issues to sectoral groups List of officers of sectoral groups is available on www.cbec.gov.in Guidance notes to be released soon 18 Sectoral Groups Banking, Financial Services and Insurance Telecommunication Exports including EOUs and SEZs IT/ITES Transport and Logistics Textiles MSMEs Oil and Gas Gems and Jewellery Service Related to Government Food Processing Sector E-Commerce Infrastructure Travel and Tourism Handicrafts Media and Entertainment Drugs and Pharmaceuticals Mining 57

Thank You The following material is available on www. cbec.gov.in www.cbec-gst.gov.in Presentation on GST GST Concept & Status FAQs on GST in Hindi, English and 10 regional languages CGST, UTGST, IGST & Compensation Acts 18 Rules Constitutional Amendment Act