the goods & services tax law · the goods & services tax law balakrishna consulting wilson...
Post on 21-May-2020
2 Views
Preview:
TRANSCRIPT
The Goods & Services Tax Law
Balakrishna ConsultingWilson Garden, Bengalurubalakrishnaandco.com / balakrishnaconsulting.com 080 - 22221493
`
`
ASC Degree College, Bangalore
Learning GSTBasic concepts Scaling the peak!‣ Understanding ‘Supply’ under GST‣ Who should register?‣ Determination of GST
‣ Place of supply & Nature of supply‣ Time of supply‣ Valuation
‣ How to pay GST?‣ Input tax credit‣ Relevant rules
‣ How do I file returns?
‣ Transitional provisions‣ Invoice rules‣ Return rules‣ Sample questions
What is taxed in GST?Understanding concept of ‘taxable supply’
All forms of supply
made for a consideration
supplies made without
consideration
Supplies not covered under GST
of goods or services
in the course or furtherance of
business
What is taxed in GST?Supply without consideration
• Sale to related parties
• Import of services from related persons• Management services• Use of intellectual property, like brand owned
by parent• Use of software paid by related person
• Employer & employee are related!• Non monetary perks• Sale to employees• Gifts by employer to employee (>50k)• Employee loans• Facilities provided by employer?• Expense reimbursements?
• Sole agent / distributor also related!
Transactions between related persons
• Inter-branch transfers• Who is a distinct person?• Registration of each branch• Stock-transfers will now be taxable!• No F Forms
• Geographical tax planning• Support services to HO / branch
Transactions between distinct persons
• Permanent transfer of business asset, where ITC was availed
• Transactions between principal - agent
Other transactions
What is taxed in GST?Supplies not subject to GST
• Exempt supplies, i.e. those exempt by way of an exemption notification
• Certain goods or services that are outside the coverage of GST (Sch. III)
• Services by employee to employer• Sale of immovable property, i.e. land /
building subject to Sch. II• Services by any court or tribunal
established under law
Supplies not subject to GST
What is taxed in GST?Composite & Mixed supply
Composite Supply
‣ Comprises of two or more taxable supplies,
‣ that are naturally bundled and are supplied in conjunction with one another in the ordinary course of business
Treated as supply of principal supply
Mixed Supply
‣ Comprises of two or more individual supplies,
‣ that are are supplied in conjunction with one another.
‣ for a single price‣ & not a composite supply
Supply of goods / services taxed at the highest rate
Who is taxed in GST?Fundamental principles
Every supplier shall be liable to be registered under this Act in the State from where he
makes taxable supply…
… if his aggregate turnover in a financial year exceeds Rs. 20 lakhs
Multiple officesMandatory registration
Persons not liable to register
Voluntary registration
Vertical wise registration
Suo-moto registration
Who is taxed in GST?Who should register?
Agg.
Tur
nove
r of
curre
nt y
ear*
20 la
khs
10 la
khs
‣ Persons holding license under an existing law‣ Persons engaged in inter-state taxable supply‣ Casual taxable person & Non-resident taxable person‣ Persons required to pay tax on reverse charge basis‣ Agents‣ Input service distributors (in addition to regular
registration)
‣ E-commerce businesses‣ E-commerce operator required to deduct tax‣ Persons supplying through an e-commerce
operator‣ E-commerce operators required to pay GST
on reverse charge‣ Persons engaged in OIDAR
‣ Persons engaged in supply from specific states‣ Arunachal Pradesh‣ Assam‣ Manipur‣ Meghalaya‣ Uttarakhand‣ Himachal Pradesh
‣ Persons engaged in supply from other states
Aggregate Turnover
=
Taxable supply + Exempt supply +
Exports +Inter-branch transfers} Of persons with same
PAN on all India basis
Man
dato
ry
Who is taxed in GST?Procedure for registration
GST REG 01
Part A Part B
• Used to validate PAN, mobile number and email ID
• On successful validation an
application reference number
(ARN) will be generated
• ARN should be used to electronically submit Part B
• Acknowledgment of submission
of Part B shall be generated in
GST REG 02
GST REG 06 • On approval, GST REG 06 shall be generated
and GST Identification Number shall be issued
Who is taxed in GST?Sample questions
I have an office in Bangalore and Mangalore. Should I register them both?
I have an office in Bangalore and a support office in Chennai. Should I register them both?
I am an employee earning Rs. 15 L salary. I let out a property for Rs. 10 L.
I own a shop and sell vegetables (Rs. 15 L). I also sell aerated drinks (Rs. 6 lakhs)
Determining GSTHow is GST computed?
TAX INVOICE
SupplierName, address and GSTIN
Bill toName, address and GSTIN
Date of issueInvoice number
Ship toName, address and GSTIN
Description of supply
HSN / SAC
Quantity (goods)
Taxable value
Tax Type Rate of tax
Goods
Services
TOTAL TAX XXX
1
2
1Understanding Place of Supply
2Understanding Nature of Supply
GST = Rate of GST * Value of taxable supply
Type of GST = f (Place of supply & Nature of supply)
4Rate fitment
43 3Determining the type of GST
Determining GSTUnderstanding Place of Supply
GST is a destination based consumption tax
I am a trader of goods in Bangalore. I am sending goods to my customer in Mangalore.
Example 1
I am a trader of goods in Bangalore. I am sending goods to my customer in Chennai.
Example 2
I run a hotel in Maharashtra. Guests from all over India come and stay in the hotel.
Example 3
Determining GSTUnderstanding PoS for Goods
A B
Entails movement of goods to the recipient
C
A B
Delivery to recipient at the instruction of third party
A B
Does not entail movement of movement of goods
• Location where the delivery of goods terminates
• Ship to Address
• Principal place of business of third party
• Bill to Address
• Location of goods terminates at the time of delivery
• Ship to Address
Determining GSTUnderstanding Nature of Supply
• Location of Supplier and Place of Supply are in same state.
CGST + SGST
• Location of Supplier and Place of Supply are in different states.
• Supplies to or by a SEZ to DTA.
• All international supplies, i.e. Imports & Exports
IGST
Inter-state SupplyIntra-state Supply
What if PoS is incorrectly determined? What happens then?
Determining GSTPlace of Supply for Services
General Rule
Specific scenarios (eg.)
If recipient is registered If recipient is unregistered but
address is available
If recipient is unregistered but
address is not available
Performance based services
Location of performance
Immovable property
Location of immovable
property
Banking & Financial services
Recipient based
EventsRecipient based
(if registered), else Event
based
Determining GSTValuation
Transaction value accepted when supplier and recipient are not related and price is sole
consideration
+ specific inclusions discounts-
Option available for supplies made to distinct or related persons
90% of price of goods IF : resold by recipient to unrelated persons
2
1 Value declared in invoice IF : recipient can take full input credit
General Rule of Valuation
1 Open market valuation
2 Value of like kind of goods / services
3 110% of cost
Supply of goods / services
• Date of removal of goods
• Date of issue of invoice if raised within 30 days
Determining GSTTime of supply
Receipt of advance
• Advances for goods shall be subject to GST
• Needs to be tracked carefully in books
+ 30 days
30 days from supply of services
• Date of provision of services
Liability to pay GST shall arise in the month when the supply is made in accordance with the Time of Supply provisions
Determining GSTSupplies taxable under Reverse Charge
Procurements from unregistered dealers
• Present URD purchase v/s
GST URD purchase
• URD purchase v/s COT
purchase
• Imports
• Limit of Rs. 5,000 per day
Goods & services notified by government
• All imports of services
• Services provided by GTA
• Services provided by
individual advocate or firm of
advocates to business entity
• Sponsorship services
• Services provided by director; etc.
Services not covered by RCM anymore (if supplier is regd.)
• Manpower & security
• Rent-a-cab
• Works contract
Purchase from Unregistered Dealers
✗
Notified goods / services
Determining GSTSummarising what we have learnt
FIRST QUESTIONIS THERE A TAXABLE SUPPLY?‣ Check coverage under meaning of ‘supply’‣ Be aware - supplies without consideration
between related parties would be supply!‣ Also check for levy under reverse charge
SECOND QUESTIONWHAT IS THE PLACE OF SUPPLY?‣ Identify place of supply of goods & services
for domestic as well as international supplies
THIRD QUESTIONWHAT IS THE NATURE OF SUPPLY?‣ Check the ‘location of supplier’ & ‘place of
supply’ to classify between Intra-state & Inter-state (incl. imports and exports)
FOURTH QUESTIONWHAT IS THE VALUE OF SUPPLY?‣ Determine the value of supply of goods /
services‣ Refer valuation rules in case of related
party transactions
GST = VALUE of supply * Applicable RATE
Payment of GSTThe fundamentals
Restricted credits for service providers
• CVD 3(5) on import of goods
• VAT / CST on goods used to provide services
Restricted credits for traders
• CVD 3(1) on import of goods
• CST on inter-state purchases
• Services tax on services consumed
Restricted credits lead to higher prices!
Rs. 10input tax
Rs. 100base price
Rs. 116no ITC
with ITC
Rs. 105
Net GST Payable
Inputs
Input Services
Capital Goods
Eligible input credit
Output GST liability
CGST
SGST
IGST
5% margin
Payment of GSTInput tax credit
Registered person shall be entitled to take input tax credit on goods or services which are used by him in the course or
furtherance of his business
ITC is subject to following conditions
• Should be in possession of tax invoice / debit note
• Should have received goods / services
• Tax charged by supplier has been paid
• GSTR-3 has been filed
• Inward invoice should be in line with Invoice rules
• Payment to supplier has been made within 180 days from date of invoice
• Capital goods - ITC should not be claimed as depreciation
• Outer time limit to claim credit - September
ITC restrictions
• Personal consumption & exempt Supplies
• Motor vehicles
• Food, beverage, catering health services etc.
• Rent-a-cab
• Health insurance
• Works contract
• Goods lost, written-off, gifts or free samples
Payment of GSTPayment of tax
Output GST (forward charge)
eCasheCredit
Output GST (reverse charge)
eCash
Interest & Penalty
eCash
Electronic Cash Ledger
• Deposits made towards tax,
interest & penalty shall be
credited to the eCash Ledger
• eCash ledger of each type of tax
Electronic Credit Ledger
• ITC on provisional basis is
credited to this ledger
• eCredit ledger of each type of tax
CGST SGST IGST
CGST
SGST
IGST
Application of input credit
✗
✗
1st 2nd
1st 2nd
1st2nd 3rd
Recording transactionsPayments in GST
eLiability PMT 01
• Output GST (forward charge)
• Output GST (reverse charge)
• Interest, late fee, penalty etc.
eCredit PMT 02
eCash PMT 05
• Input tax credit (on provisional basis)
eCredit eCash
• Amount deposited through payment challan GST PMT 6
• Payment can be made through NEFT / debit card / credit card
• PMT 6 is valid for 15 days
eCash
eCash
• Input tax credit used to pay GST on forward charge
eLiability
• Payment of GST • on forward
charge• on reverse
charge• interest, late
fee, penalty etc.
eLiability
Filing returnsRules to offset GST
✔ Tax credit will be allowed on only those inputs that appear as outward supplies of your vendor
✔ The entire value chain has been linked through GST returns & any mismatch will be immediately reversed
✔ Taxable person has to discharge tax vis-a-vis input credit ‘wrongly’ availed together with interest
✔ If vendor subsequently rectifies his outward supply details, input credit can be re-availed and interest so paid will be refunded
GSTN
Supplier A ME Customer
Sells goods Resells goods
Outward suppliesGSTR1
GSTR2A Auto population of inputs
Confirmation of inputs GSTR2
Modification of suppliesGSTR1A
GSTR3Monthly returns
10th15th
17th
20th
GST ReturnsTypes of returns with due dates
R1, R1A
Details of outward supplies made & output tax
10, 17 R2, R2A
Details of inward supplies & ITC
15
R6, R8
Details furnished by ISD and e-commerce
13, 10 R3
Monthly return
20 R9, R9C
Annual return and Annual Audit Report
Sept.
Returns under GSTReturns to be filed
Apr - Jun
July
August
September
August September October
Service Tax 15 Aug
GSTR 3B 20 Aug
GSTR 1 5 Sept
GSTR 2 10 Sept
GSTR 3 15 Sept
GSTR 3B 20 Sept
GSTR 1 20 Sept
GSTR 2 25 Sept
GSTR 3 30 Sept
GSTR 1 10 Oct
GSTR 2 15 Oct
GSTR 3 20 Oct
Returns under GSTImportant contents of GSTR 3B
• Summarised returns• invoice wise details are not required to be disclosed• summarised / consolidated data to be submitted
Table 3.1 & 3.2
Outward supplies & inward supplies subject to RCM
• Outward taxable supplies• Zero-rated• NIL rated• Exempt, and• Others (i.e. subject to
regular GST)• Inward supplies subject to
reverse charge• Non-GST outward
supplies
This should match with your sales + expenses subject to RCM
Returns under GSTImportant contents of GSTR 3B
Table 4
Eligible Input Tax Credit
• ITC available• Import of goods
(paid with customs) • Import of goods
(paid on reverse charge)
• Subject to RCM• From ISD• Others
• ITC reversed• Ineligible ITC• ITC eligible
Returns under GSTImportant contents of GSTR 3B
Table 6.1 & 6.2
Payment of GST
• Tax payable, i.e.• CGST payable• SGST payable• IGST payable
• Amount paid through ITC• Tax paid in cash
Returns under GSTImportant contents of GSTR 1
Table 4
Taxable supplies made to registered persons
• Invoice wise disclosure• Outward supplies classified
into• Supplies made through
e-commerce operator (operator wise)
• Supplies attracting RCM• Other taxable supplies
• Data to be disclosed• GSTIN of recipient• Invoice details• Rate• Taxable value• PoS, and• Amount of tax
Table 5 & 7
Taxable supplies to unregistered persons
• Invoice wise disclosure where invoice value is more than Rs. 2.5 lakhs
• Consolidated rate wise disclosure if• intra-state supply, • inter-state supply of
value < Rs. 2.5 lakhs
Table 6
ZRS & Deemed Exports
• Invoice wise disclosure
Table 12
HSN wise summary of outward supplies
• HSN & description (optional)
• Total quantity• Taxable value• Amount of tax
NIL rated, exempted & non-GST supplies
• Consolidated disclosure
Table 8
Table 13
Documents issued during the period
• Serial number (from / to)• Total documents• Cancelled• Net issued
• Invoice for outward supply and inward supply from URP
• DN / CN• Receipt voucher• Payment voucher etc.
Returns under GSTImportant contents of GSTR 2
Table 3 & 4
Inward supplies - forward & reverse charge
• Invoice wise details• GSTIN of supplier where
registered• Invoice details• Taxable value• Amount of tax• PoS• Whether input tax credit is
ineligible?• Amount of ITC available
Table 5
Inputs received from overseas / SEZ
• GSTIN of supplier• Details of Bill of Entry• Rate and amount of IGST• Whether input tax credit is
ineligible• Amount of ITC available
Table 7
Supplies from COT, NIL rated, exempt etc.
• To be segregated between inter-state & intra-state
Table 11
Input tax credit reversal
• Where consideration has not been paid in 180 days
• ITC used partly for business and partly for other purposes etc.ISD credit
received
• ISD credit received and amount eligible
Table 8
Table 12
Modifications on account of mismatch
• ITC mismatch• ITC claimed twice, i.e.
duplication• Reclaim on account of
rectification of mismatched invoices
Table 10
Consolidated statement of advances
• Advance amount paid for reverse charge supplies
• Advance paid in earlier period but invoice received in current period
HSN summary of inward supplies
Table 13
Returns under GSTImportant contents of GSTR 3
Table 3
Turnover (auto-populated)
• Taxable,• ZRS on payment of IGST• ZRS without payment of IGST• Exempted, NIL rated, Non-
GST
Table 4
Outward supplies
• Inter-state outward supplies
• Intra-state outward supplies
• Amendments with respect to outward supplies
Table 5
Inward supplies subject to RCM
Table 8, 10 & 11
Total tax liability, interest & late fee
• On outward supplies,• On inward supplies
subject to RCM• ITC reversal or mismatch• Interest payable• Late fee payable
Input tax credit summary
• Segregated between inputs, input services and capital goods
Table 6 Table 12 & 13
Tax / interest etc. payable & paid
• Amount paid through ITC,• Amount paid in cash
Refund claimed in eCash ledger
Table 14Table 7
Modifications on account of mismatch
• Similar to GSTR 2
Transition ProvisionsWhy do we need transition provisions?
30th June 1st July
Stock purchased Stock sold
VAT @ 10% Rate VAT
Purchase price 100 10
Final price 110
Without TP GST @ 15% Rate GST
Purchase price 110 16.5
Final price 126.5
With TP GST @ 15% Rate GST
Purchase price 100 15
Final price 115
Impact = Rs. 11.5!
1 Transitional credits in returns 2 Transitional credits
embedded in stock 3 Transaction related provisions
Transition ProvisionsTransitional provisions on Credit
I am a trader. My VAT 100 for June has excess VAT input after paying all output VAT
CENVAT / VAT balance in last returns
• Balance of CENVAT / VAT in last returns can be carried forward
• Conditions • Person should not be availing
composition benefit • Returns for last 6 months should
be filed • Such credit should be eligible as
ITC under GST • No c/f of VAT credit to the extent
CST Forms not available!
I had purchased fixed assets on which I have not utilised full CENVAT credit
Unutilised CENVAT / VAT on capital goods
• Unutilised CENVAT / VAT on capital goods can be carried forward
Transition ProvisionsUnderstanding credits contained in stock
Manufacturer
Retail showroom
Super stockist
12.5% ED + 2% CST
5.5% VATWholesale dealer
5.5% VAT
Purchase Sale
Price 42,600 47,400
VAT 2,400 2,600
Total 45,000 50,000
12.5% ED + 5.5% VAT Sale
Price 39,000
VAT 11,000
Total 50,000
28% GST
Profit Rs. 5,000
Loss Rs. 3,600
Transition ProvisionsTransitional provisions on credit embedded in stock
I am a trader paying VAT. With GST subsuming excise duty, will I get any credit on my stock?
Eligible duties of inputs in stock, embedded in WIP & FG
• Specific category of persons entitled to this benefit. Possible litigations here
• Eligible duties embedded in stock of inputs, work-in-progress & finished goods can be claimed,
• Conditions • Inputs should be used to make
taxable supplies in GST • Should be in possession of duty
paying documents • Such document should not be
issued earlier than 12 months • Supplier of services should not be
entitled to abatement
Great! But what if I buy from another trader & do not have duty paying documents?
Deemed credit scheme for Inputs in stock, WIP & FG
• Persons other than manufacturers / service provider entitled to this benefit
• Deemed credit available as follows • 60% of CGST output when goods /
services are in rate band 18% and above
• 40% of CGST output when goods / services are in rate band below 18%
• Benefit to be passed on to customers
• This benefit is only for 6 months
• Credit Transfer Document!
Tax Invoice, Debit Note & Credit NoteGST compliant documents
Time limit for the issuance of invoice, & types of documents
• For Goods • If goods have to move - issue
before removal, • Other cases - before making
goods available to recipient
• For Services • Within 30 days from date of
provision of services
1 Tax invoice 2 Bill of Supply 3 Credit Note
4 Debit Note 5 Receipt Voucher 6 Payment
Voucher
7 Delivery Challan
Invoice rules
• Should contain requisite particulars
• Manner of issuing invoices • 3 copies for goods for recipient,
transporter and supplier, • 2 copies for services
• Advances - If rate of tax and nature of supply is unknown?
• Reverse charge & invoices
• e-Way bill
• HSN
Zero Rated SuppliesConcept & procedure
Understanding Zero Rated Supplies
• No output liability ; but can claim ITC refund
• Exports and Supplies to SEZ covered
• Procedure • Supply without payment of IGST by
furnishing LUT or Bond - claim credit refund
• Else, pay IGST using ITC & then claim tax refund
Understanding Export of service
conditions to qualify
• Supplier should be in India • Recipient should be outside India • Place of Supply is outside India • Consideration is received in convertible
foreign exchange
conditions not satisfied
Will not be an export. Subject to IGST!
conditions satisfied
Will be an export. Entitled to ITC refund
Claiming refunds
• No documentary evidence if refund < Rs. 200,000
• Refund within 60 days; else entitled to 6% interest
Procedure
• LUT / Bond to be used; eligibility defined for LUT
• LUT for financial year; bond is running bond
Sample questionsPart 1
• Why do we need GST?
• What are the taxes that have been subsumed by GST?
• What is the scope of coverage of GST? Explain what is
taxed in GST?
• Explain the impact of GST on the following transactions
• Employer providers rent free accommodation
facility to employees
• Employer gives a gift of Rs. 20,000 to his
employees
• I sell my personal car for Rs. 15 lakhs
• I sell my business car for Rs. 15 lakhs
• I forego my business furniture & interiors worth Rs.
10 lakhs for NIL. I had claimed input tax credit on
them previously
• Explain valuation principles under GST
• State the time of supply in the following circumstances
• Goods have been supplied from factory on 10-Aug
but reach customer location on 15-Sept.
• Payment for supply of goods received in advance
on 25-Sept and goods have been supplied on 10-
Oct
• Services made available on 15-July, and invoice
raised on 10-Aug
• Services made available on 15-July, and invoice
raised on 25-Aug
• Explain the change in time of taxation between the
GST law and the existing laws
Sample questionsPart 2
• Explain the concept of reverse charge in GST
• Explain how payments are made in GST? What would
the net amount of GST be payable in the following
cases
• Input CGST: Rs. 10,000; SGST: Rs. 10,000; IGST:
Rs. 15,000
• Output CGST: Rs. 25,000; SGST: Rs. 12,000;
IGST: Rs. 20,000
• Balance in PMT 05 CGST: Rs. 2,000; SGST: Rs.
1,000 and IGST: Rs. 2,000
• How do returns work in GST? Explain the various
returns to be filed with their timelines
• What are the important contents of GSTR-1, GSTR-2
and GSTR-3
• What is GSTR-3B? Why was it introduced?
• What are transitional provisions and why do we need
them?
• Explain the concept of deemed credit? Why is it
needed and what are the norms around it?
• How to generate an invoice in GST? Explain 5 crucial
contents on the GST compliant invoice
• How are exports subjected to tax under GST?
• What is the procedure to make zero-rated supplies
without payment of integrated tax?
top related