GOODS AND SERVICE TAX
- 1. NANDURU BHARAT CHANDRA CONSULTING SERVICES GOODS AND SERVICE TAX (GST) BHARAT CHANDRA NANDURU 9666706369, 8722400804
- 3. CONTENTS WHAT IS GST ? – OVERVIEW FEATURES OF GST REGISTRATION VALUE OF SUPPLY INPUT TAX CREDIT APPORTIONMENT OF CREDITS AND BLOCKED CREDITS JOB WORK BOND OR LETTER OF UNDERTAKING GST RETURNS AND DUE DATES ALONG WITH CATEGORIES OF TAXABLE PERSONS
- 4. GOODS AND SERVICE TAX Goods and Service Tax is an Indirect tax throughout India to replace taxes levied by the central and state governments. It will subsume various indirect taxes including central excise duty, services tax, additional customs duty, state level value added tax and Octroi. GST is levied on all transactions such as sale, transfer, purchase, barter, lease, import of goods and/or services. India will adopt dual GST model, meaning that taxation is administered by both the Union and State Governments. GST is a consumption based tax, therefore, taxes are paid to the state which the goods or services are consumed not the state in which they were produced.
- 5. . Every invoice should contain GSTIN and place of supply, based on place of supply, the invoice is named as “IGST” or “CGST and SGST.” Supply has to be supported with the necessary documents like tax invoice, material transfer note, Outward Supplies has to be uploaded in the Government Site within 10th of succeeding month and inward supplies within 15th of succeeding month, based on these GST return should be filed within 20th of succeeding month. Invoices filed in GSTR – 1 should match with the invoices filed in GSTR – 2.
- 6. Tax Invoice should be raised to claim the input tax credit. Input tax credit is not available on advances. Invoices raised within one year are eligible for claiming the Input tax credit For CFA Trade, we can claim credit(deemed), provided the material purchased has to be sold off within 6 months and make the payment to the Government. If GST rate is >=18% then available credit is 60%*9%*Selling Price, if GST rate is <=18% then available credit is 40%*1/2*GST Rate*Selling Price.
- 7. GST has to be calculated on free goods or on goods supplied on discount. The logic behind this is that the Input tax credit taken on the goods should be utilize for the goods in total while making the payment to the Government. Supply of goods between persons without consideration is deemed to be a “supply”. Stock transfer of promotion materials/ free samples will be subject to GST. Transaction value of would be value of goods of like kind and quality or the cost of sales. Currently, free supplies are subjected to Excise only. Hence, promotion expenses of companies like FMCG, Pharma will increase. Every person has to file a Form GST TRAN-1 within 90 days of appointed date for transition of input tax credit available under existing law or Goods held in stock on the appointed day.
- 8. Input tax paid under the earlier model has to be mentioned in the GST return for carry forward in GST model. It is to be noted that input tax credit not paid till the filing of GST return is not available for carry forward. Tax paid under Import and Sale model should be available as credit. GST on Import of Goods or services will be based on the place of supply i.e., location of recipient. If place of supply is outside India, then GST is not applicable. In case of imports the GST will be calculated on Assessable Value + Customs duty.
- 9. In case if any supply is made from Union Territory, then SGST will be replaced with UTGST. Supply of goods within the Union Territory is termed as Intra- State. Supply made within the Union Territories also termed as Intra- State. In case Union Territory has supplied Goods or Services to any State, then it is Inter-State and IGST will be levied on this. In case of services, same provisions enacted earlier will continue, the only change is the rate of tax.
- 10. Services by Government, Reserve Bank of India, Foreign Diplomatic Mission located in India etc., are exempted. Supply of Food/drinks in restaurant having facility of air-conditioning or central heating at any time during the year will attract the GST of 18%. Returns filed are final. There is no concept of revised return in GST. In case, there are any errors in filing the return then the transactions can be amended in future GSTR 1 / 2 in the tables specifically provided for the purposes of amending previously declared details. If GST is collected and not submitted to the Government within 3 months, then he has to pay a penalty of 10% of the tax amount due subject to a minimum of Rs. 10,000. Any offense under GST for which penalty is not specifically mentioned will be liable to a penalty extending Rs. 25,000.
- 11. Delivery has to be made within the time specified in the sale order or else interest has to be paid along with GST. Input Tax Credit on the Works Contract carried out in other state, will be available in that state itself. Existing PTS has to be modified by incorporating GST. Input tax credit can be claimed only after the payment of tax. GST will be reflected in the invoice if there is inter-state stock transfer tax invoice has to be issued for this, for rest delivery challan is sufficient.
- 12. TYPES OF GST GOODS AND SERVICE TAX COUNCIL HAS MADE THE GST INTO 1. INTEGRATED GST 2. CENTRAL GST 3. STATE GST 4. UNION TERRITORY GST
- 13. Classification of GST Inter State transactions were classified as IGST Intra State transactions were classified as CGST and SGST. GST on intra state transactions were shared by the Central and State in equal proportions. GST on inter state transactions were shared by the Central Government.
- 14. Rates of GST GST Council has finalized the rates into four along with the exempted rate of 0% and it includes milk, salt, fresh vegetables and other consumables. Rates are mainly of 1. 5% - Sugar, tea, edible oils, domestic LPG 2. 12% - butter, ghee, almonds, fruit juice 3. 18% - hair oil, tooth paste, soap 4. 28% - cars, consumer durables such as AV and fridge
- 15. Registration Every supplier has to register if the aggregate turnover in a financial year exceeds twenty lakhs rupees and in special category states it is ten lakh rupees. In the normal course, each supplier will register irrespective of turnover to derive the benefits from GST. Every person shall have a Permanent Account Number issued under the Income tax Act, 1961 in order to be eligible for grant of registration; person required to deduct tax under section 51 should have, a Tax Deduction and Collection Account Number issued under the said Act in order to be eligible for grant of registration.
- 16. Application should be made in prescribed forms based on the category of the applicant. 1) Normal taxable person has to apply in FORM GST REG – 01 2) Non-Resident taxable person in FORM GST REG 09 3) Other persons in FORM GST REG 10 Government will issue the Registration Certificate in Form GST REG – 06. Where a business is transferred to another person, then the transferee or the successor has to register from the date of such transfer or succession. Once the business is transferred then it is no longer in existence under the GST. So, new registration has to be carried out for the continuity of the business.
- 17. In case there is any amalgamation or demerger then the transferee has to register the business from the date on which the ROC issues a certificate of incorporation. Changes in the application for registration can be made through FROM GST REG – 11. It is to be noted that PAN cannot be altered. In case the supplier wants to change the PAN, then new registration has to be made.
- 18. Registration number consists of 15 alpha-numeric characters. First two characters relates to State Code, next ten characters relates to PAN of the taxpayer, next character relates to the number of registrations a legal entity has within the state, of the last two characters, the first digit is kept blank for future use and the last digit is used as a check digit. Every person has to register in such State or Union Territory within thirty days from the date on which he becomes liable for registration. Provided that a casual taxable person or a non-resident taxable person shall apply for registration at least five days prior to the commencement of business. The registration certificate can be valid only for the period specified in the application or ninety days from the effective date of registration, whichever is earlier.
- 19. A casual taxable person or a non-resident taxable person has to deposit an amount equivalent to the estimated tax liability at the time of submission of application for the period for which registration is sought. In case there is any chance of extension of time, then he has to deposit additional amount of tax for the period of extension. The amount deposited shall be credited to the electronic cash ledger of such person and shall be utilized in the manner provided under section 49. In case if any person who is not liable for registration get himself registered voluntarily, then all the provisions of this Act applicable to him. Delay in furnishing of outward and inward supplies will be liable for the late fee of rupees one hundred for every day during which the failure continues subject to a maximum of rupees five thousand.
- 20. VALUE OF TAXABLE SUPPLY (1) Value of supply is the transaction value mentioned in the invoice where the parties are not related and the price is sole consideration for the supply. (2) The value of supply shall include- a) any taxes, duties, cesses, fees and charges levied under any law for the time being in force other than this Act, the State Goods and Services Tax Act, the Union Territory Goods and Services Tax Act and the Goods and Services Tax (Compensation to States) Act, if charged separately by the supplier; b) any amount incurred by the recipient of the supply not included in the price; c) incidental expenses, charged by the supplier at the time of or before delivery of goods or supply of services d) interest or late fee or penalty for delayed payment of any consideration for any supply;
- 21. 3) The value of the supply shall not include any discount given before or at the time of supply if such discount is duly recorded in the invoice issued in respect of such supply 4) Where the value of the supply of goods or services or both cannot be determined under sub-section (1), the same shall be determined in such manner as may be prescribed. 4) Notwithstanding anything contained in sub-section (1) or sub- section (4), the value of such supplies as may be notified by the Government on the recommendations of the Council shall be determined in such manner as may be prescribed.
- 22. INPUT TAX CREDIT “Input Tax” in relation to a taxable person, means the Goods and Services Tax charged on any supply of goods and/or services to him which are used or are intended to be used, during furtherance of his business. It is the benefit available for the business people to reduce the tax liability. Input Tax Credit is available on Reverse Charge Transactions but it is not available on the transactions made with the taxable person who opts for the composition scheme. This amount is credited to the Electronic Credit Ledger of such taxable person and has to be utilized in the manner prescribed under section 49.
- 23. Input Tax CreditUsed for IGST CGST SGST IGST √ √ √ CGST √ √ × SGST √ × √
- 24. CONDITIONS FOR CLAIMING THE INPUT TAX CREDIT 1. A valid Tax Invoice/Debit note is mandatory for claiming input tax credit 2. Good and or services should actually be received or deemed to be received in cases of transfer of documents of title 3. Tax Charged should actually be paid to the government 4. Prescribed returns should be duly filed by both the recipient and supplier 5. For part or installment payments, credit is available at the time of last installment
- 25. 6. Recipient of goods/services should pay to the supplier (Including Taxes), within 180 days from the date of issue of invoice, else the Input Credit shall be reversed 7. Recipient should be entitled to claim such credit under other provisions of the law 8. Input tax credit on capital goods shall not be available if depreciation has been claimed on the tax component 9. Input credit can be claimed latest before due date of return filing for the Month of September of the subsequent year in which the invoice is being raised.
- 26. Apportionment of credit and blocked credits 1) The Input Tax Credit can be available only if they were used for the purpose of his business. 2) Input Tax Credit on the goods or services can be available when they were used for taxable supplies including zero-rated supplies 3) A banking company or a financial institution including a non-banking financial company, have the option to either comply with the provisions of sub-section (2), or avail of, every month, an amount equal to fifty per cent. of the eligible input tax credit on inputs, capital goods and input services in that month and the rest shall lapse. 4) The option exercised cannot be withdrawn for the remaining part of the financial year. 5) The restriction of fifty per cent shall not apply to the tax paid on supplies made between the branches located in other states.
- 27. input tax credit shall not be available in respect of the following, namely:— a) motor vehicles and other conveyances b) supply of goods or services or both for Food and beverages, membership of a club, health and fitness center, rent-a-cab, life insurance and health insurance, travel benefits extended to employees on vacation such as leave or home travel concession; c) works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service; d) goods or services or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business. e)
- 28. e) goods or services or both on which tax has been paid under composition scheme; 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, stolen, destroyed, written off or disposed of by way of gift or free samples;
- 29. Input Tax Credit on motor vehicles can be available when they are used i. for making the following taxable supplies, namely:— A. further supply of such vehicles or conveyances ; or B. transportation of passengers; or C. imparting training on driving, flying, navigating such vehicles or conveyances; ii. for transportation of goods; For the purposes of clauses (c) and (d), the expression “construction” includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalization, to the said immovable property;
- 30. Availability of credit in special circumstances (1) Subject to such conditions and restrictions as may be prescribed— a) Input Tax Credit held in stock and inputs contained in semi finished or finished goods on the day immediately preceding the date from which he becomes liable to pay tax under the provisions of this Act can be available; b) a person who takes voluntary registration can take credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date of grant of registration;
- 31. c) where any registered person ceases to pay tax under composition scheme, he can take credit of input tax in respect of inputs held in stock, inputs contained in semi-finished or finished goods held in stock and on capital goods on the day immediately preceding the date from which he becomes liable to pay tax as normal taxable person; Provided that the credit on capital goods shall be reduced by such percentage points as may be prescribed; d) Conversion of exempted supply into taxable supply can make the supplier to take the credit on inputs held in stock used for such exempt supply on the day immediately preceding the date from which such supply becomes taxable; (2) He shall not be entitled to take input tax credit on the supply of goods or services after the expiry of one year from the date of issue of tax invoice relating to such supply.
- 32. (3) Balance of Input Tax Credit after the transfer of business shall be made available to the successor in such manner as may be prescribed. (4) any registered person opts for composition scheme or the goods or services or both supplied by him becomes wholly exempt, then the amount equivalent to credit of input tax in respect of inputs held in stock and on capital goods reduced by such percentage points on the day immediately preceding the date of exercising such option or the date of such exemption, has to be paid off from the balance in electronic cash ledger or electronic credit ledger.
- 33. Provided that after payment of such amount, the balance of input tax credit, if any, lying in his electronic credit ledger shall lapse. (5)The amount of credit under sub-section (1) and the amount payable under sub-section (4) shall be calculated in such manner as may be prescribed. (6)In case of supply of capital goods or plant and machinery, on which input tax credit has been taken, the registered person shall pay an amount equal to the input tax credit taken on the said capital goods or plant and machinery reduced by such percentage points as may be prescribed or the tax on the transaction value of such capital goods or plant and machinery determined under section 15, whichever is higher: Provided that where refractory bricks, moulds and dies, jigs and fixtures are supplied as scrap, the taxable person may pay tax on the transaction value of such goods determined under section 15.
- 34. Goods send on job work must be received back by the principal within 1 year for Inputs, semi-finished or finished goods and for capital goods it is 3 years, if they were not been received back within the period then it will be treated as supply on the date of supply and tax has to be paid along with interest. Input Tax Credit paid on purchase of goods send on job work will be available to the principal if he 1. Receive back the goods after processing from job worker 2. Supply to his customers from the place of business of job worker
- 35. Waste and scrap generated during the initial process, intermediate process, assembly, packing or any other completion process may be sold on payment of tax by: 1. Job worker- if he holds a registration 2. Principal- if job worker does not hold a registration Effective date for goods send depends on place of business: 1. send from principal’s place of business- Date of goods send out 2. send Directly from the place of supply of the supplier of such good- Date of receipt by job worker
- 36. CONDITIONS FOR CLAIMING INPUT CREDIT ON JOB WORK A. Inputs, semi-finished goods or capital goods send on job work 1. From principal’s place of business 2. Directly from the place of supply of the supplier of such goods must be dispatched along with a challan B. The challan issued must include the following particulars: 1. date and number of the delivery challan 2. name, address and GSTIN of the consigner and consignee
- 37. 3. HSN code, description and quantity of goods 4. Taxable value, tax rate, tax amount- CGST, SGST, IGST, UTT separately 5. Place of supply and signature C. The details of challan must be shown in FORM GSTR-1 D.Details of goods/capital goods sent to job worker and received back must be filed through Form GST ITC – 4
- 38. All taxable persons under GST are required to file monthly GST returns with details of all outward supplies, inward supplies and tax payable. Hence, in GSTR – 1, all persons registered under GST are required to furnish details of the outward supplies made by them in the previous month. GSTR – 1 must be filed before the 10th of each month. On 15th of every month, following the filing of GSTR – 1, GSTR – 2 must be filed by all registered businesses providing details of all inward supplies. In GSTR -2, details of inward supplies would be auto-populated and the taxpayer would have the option to accept, reject or modify the details of inward supplies that was auto-populated from GSTR – 1 filings.
- 39. Since, all GST forms are inter related for matching of various data points, the GST return rules provide that when the time limit for filing of GSTR -1 form is extended, the date for all other related forms must be extended as well. If there is a mismatch in the input tax credit, then the details of mismatch in input tax credit will be made available to the recipient in Form GST MIS – 1 and GST MIS – 2 on the GST common portal on or before the last date of the month in which the matching has been carried out. In case of any Insolvency and Bankruptcy, any amount payable by a taxable person or any other person on account of tax, interest or penalty which he is liable to pay to the Government shall be a first charge on the property of such taxable person or such person.
- 40. As per rule 96A of the Central Goods and Services Tax Rules, 2017 ( The CGST Rules), any registered person exporting goods or services without payment of integrated tax is required to furnish a bond or a Letter of Undertaking (LUT) in FORM GST RFD-11. Separate bond for each consignment or export has to be filed in FORM GST RFD – 11. The bond would cover the amount of tax involved in the export based on estimated tax liability as assessed by the exporter himself. The exporter shall ensure that the outstanding tax liability on exports is within the bond amount. In case the bond amount is insufficient to cover the tax liability in yet to be completed exports, the exporter shall furnish a fresh bond to cover such liability.
- 41. The Letter of Undertaking shall be furnished in duplicate for a financial year in the annexure to FORM GST RFD – 11 referred to in sub-rule (1) of rule 96A of the Central Goods and Services Tax Rules, 2017 and it shall be executed by the working partner, the Managing Director or the Company Secretary or the proprietor or by a person duly authorized by such working partner or Board of Directors of such company or proprietor on the letter head of the registered person. Exporter has to furnish a bank guarantee along with the bond. The amount of bank guarantee depends on the track record of the exporter. It is normally 15% of the bond amount.
- 42. LUT (Letter of Undertaking) is valid only for twelve months. If the exporter fails to comply with the conditions of the LUT he may be asked to furnish a bond. Exports may be allowed under existing LUTs/Bonds till 31st July 2017. Exporters shall submit the LUTs/bond in the revised format latest by 31st July, 2017. The following registered person shall be eligible for submission of Letter of Undertaking in place of a bond:- a) a status holder as specified in paragraph 5 of the Foreign Trade Policy 2015- 2020; or b) who has received the due foreign inward remittances amounting to a minimum of 10% of the export turnover, which should not be less than one crore rupees, in the preceding financial year, and he has not been prosecuted for any offence under the Central Goods and Services Tax Act, 2017 (12 of 2017) or under any of the existing laws in case where the amount of tax evaded exceeds two hundred and fifty lakh rupees.
- 43. (Status Holders are business leaders who have excelled in international trade and have successfully contributed to country’s foreign trade. Status Holders are expected to not only contribute towards India’s exports but also provide guidance and handholding to new entrepreneurs.) The existing practice of sealing the container with a bottle seal under Central Excise supervision or otherwise would continue till 01 Sep’17. Such sealing shall be done under the supervision of the officer having physical jurisdiction over the place of business where the sealing is being done. A copy of the sealing report would be forwarded to the Deputy/Assistant Commissioner having jurisdiction over the principal place of business.
- 44. If there are any grounds of claiming refund, then application has to be made in FORM GST RFD – 01. Grounds for claiming the refund were as under: 1. Excess balance in Electronic Cash Ledger. 2. Export of goods/services – With payment of tax. 3. Export of goods/services- Without payment of tax, i.e., ITC accumulated. 4. Supplies made to SEZ Units/SEZ Developer The application process for claiming refund shall include: a) such documentary evidence as may be prescribed to establish that a refund is due to the applicant and
- 45. b) such documentary or other evidence, like the amount mentioned in tax invoice, as the applicant may furnish to establish the amount of tax and interest, if any, paid by the applicant and that he has not passed the tax burden to another person. If the amount of refund claimed is less than Rs 2 lakhs then the taxpayer can file an application based on documentary or other evidence but only by certifying that the incidence of such tax is not passed on to any other person. Bank details of the applicant should be part of the application.
- 46. GST RETURNS AND DUE DATES Registered taxable person Return Details to be filed Due Date GSTR – 1 Outward Supplies of taxable goods and/or services 10th of the next month GSTR – 2 Inward Supplies of taxable goods and/or services 15th of the next month GSTR – 3 Monthly return 20th of the next month GSTR – 9 Annual Return 31st December of next financial year
- 47. Composition Supplier 1. This provision is applied to those who opt for composition scheme and the turnover is less than Rs. 75 lakhs. 2. He cannot issue tax invoice as he is not allowed to claim input tax credit 3. A registered taxpayer, who is registered under the Composite Scheme will pay tax at a rate not more than 1% for manufacturer, 2.5% for restaurant sector and 0.5% for other suppliers of turnover. 4. Reverse Charge Mechanism is not applicable to this scheme. 5. This scheme is available only for intra-state supplies. Return Form Details to be filed Due Date GSTR – 4 Quarterly Return 18th of the next month GSTR – 9A Annual Return 31st December of next financial year
- 48. Non – Resident taxable person 1. any person who occasionally undertakes transactions involving the supply of goods or services, or both, whether as principal or agent or in any other capacity, but who has no fixed place of business or residence in India. 2. In simple words, any and all the businesses which are supplying goods or services or data retrieval services from databases located outside India will fall under this definition and will come under the purview of the Goods and Services Tax law. Return Form Details to be filed Due Date GSTR – 5 Monthly return 20th of succeeding month
- 49. INPUT SERVICE DISTRIBUTOR 1. an office of the supplier of goods and / or services which receives tax invoices issued by supplier towards receipt of input services and/or goods 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 Return Form Details to be filed Due Date GSTR – 6 Monthly Return 13th of the month succeeding quarter
- 50. TAX DEDUCTOR 1. TDS is to be deducted at the rate of 1 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 two lakh fifty thousand rupees. 2. No tax deduction required where the location of supplier and place of supply is different from the State of the registration of the recipient. 3. As per GST law following people/entities need 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 Return Form Details to be filed Due Date GSTR – 7 Monthly Return 10th of the next month
- 51. E-COMMERCE OPERATOR 1. Electronic Commerce Operator means every person who, directly or indirectly, owns, operates or manages an electronic platform which is engaged in facilitating the supply of any goods and/or services. Also a person providing any information or any other services incidental to or in connection with such supply of goods and services through electronic platform would be considered as an Operator. 2. The GST Law also explains that a person supplying goods/services on his own account, however, would not be considered as an Operator. Return Form Details to be filed Due Date GSTR – 8 Monthly Return 10th of the next month
- 52. Note 1. For all the tax payers mentioned above the due date for filing the annual return is 31st December of the next financial year. 2. Form GSTR – 9 is used to file the annual return except composition supplier; these tax payers has to use Form GSTR – 9A