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GSTSnapshotCompliance andBusiness Impact
Page 2Page 2Page 2Goods and Services TaxDraft for Discussion only
GST- What it is?
Page 3Page 3
Key Objectives of GST
One Nation, One Tax - Singlecommon National Market
Eliminating cascading effect ofIndirect taxes
Uniformity in complianceframework - registration,
payments and creditsEase in doing business
Page 4Page 4
GST Framework
► 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
GST snapshot
► 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 whole of India except
Jammu and Kashmir.
► Supply by unregistered person to a registered person would now be liable
to GST under Reverse Charge Mechanism (RCM) and the same shall be
available to the registered person as Input Tax Credit.
Points for Consideration – Key Take Away
Page 5Page 5
GST – A Bird’s eye viewGST is :
►A destination based Tax
►Levied on valueaddition – at each stage
►Local Supply – CGSTplus SGST (rates mayvary)
►Interstate Supply –IGST (single rate)
What it excludes :►Petroleum and Real
Estate Property areexcluded
GST
Excise Duties includingthe additional excise
duties
Additional duties ofcustoms (ie CVD and
SAD)
CST (to be phased out)
Service tax
Cesses and surchargeslevied by Union
VAT/ Sales tax
Entry tax not in lieu ofoctroi
Entertainment tax (unlesslevied by the local
bodies)
Luxury tax
Taxes on lottery, bettingand gambling
Cesses and surchargeslevied by States
• Municipal levies - likely to continue• Stamp duty - likely to continue
Central Levies State Levies
Taxessubsumed
CGST
Purchase tax tobe subsumed
Taxes to be subsumed
SGST
Taxes applicable today
►Service Tax (both output andinput service)
►Excise Duty (on procurementof inputs)
►VAT/CST (on procurement ofgoods)
►Entry Tax (on entry of goodsin specified State)
►Basic Customs Duty (onimport of goods)
►Additional Duty of Customsand Special AdditionalDuty (on import of goods)
Taxes applicable post GST►CGST►SGST►IGST
GST – Present vs. Proposed
Centre Taxes State Taxes
Page 6Page 6
GST design ushers in a “dual levy”, and stakeholdershipfrom States to tax supplies
Alignment of powers of taxation on supply of goods and services
Dual GST:
► CGST and SGST onlocal intra statesupplies
► IGST on inter statesupplies
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 servicescovered
Essential Food,medicines,services
Precious metals,Common use items
Standard Rate forservices and goods
Standard Rate forservices and goods
Demerit goods.Additional cess to beimposed on luxury goods
Page 7Page 7
Incidence of tax
Page 8Page 8
Supply ofGoods/
ServicesDeemed Supply
of Goods/Services
In the course orfurtherance of
business
Place of SupplyIndia Outside India
Intra-State Inter-State► Requirement of registration in relevant
State► Liable to CGST + respective State’s SGST
► Requirement of registration in the originState
► Liable to IGST
If export thenzero ratedsupply, elseIGST
Charge of GST
by taxableperson
Page 9Page 9
Liability to pay TaxSupply of
Goods/ Services
INTEGRATEDGST
LOCAL STATEGSTLocation
of ServiceProvider
(L1)
Place ofSupply
(L2)
CGSTSGST
IGST(State)
Intra-State Sale
Inter-State Sale
L1 and L2 are in sameState
L1 and L2 are in differentStates
Page 10Page 10
Supply made by a taxable person to a recipient comprising two ormore supplies of goods or services, or any combination thereof, whichare naturally blended and supplied in conjunction with each other inthe ordinary course of business, one of which is a principal supply
Illustration: Where goods are packed and transported with insurance,the supply of goods, packing material, transport and insurance is acomposite supply and supply of goods is the principal supply
Composite supply,consisting of two ormore supplies, one ofwhich is a principalsupply, shall betreated as supply ofsuch principal supply
Composite Supply (Naturally Bundled)
Page 11Page 11
Two or more individual supplies of goods or services, or anycombination thereof, made in conjunction with each other by ataxable person for a single price where such supply does notconstitute a composite supply
Illustration: A supply of a package consisting of canned foods,sweets, chocolates and juices when supplied for a single price isa mixed supply. Each of the items can be supplied separately andis not dependent on any other.
It shall not be a mixed supply if these items are supplied separately
Mixed supply,comprising two ormore supplies shallbe treated as supplyof that particularsupply which attractsthe highest rate oftax
Mixed Supply (Not Naturally Bundled)
Page 12Page 12
Input tax credit - key definitionsProvision Definition
Input Services • means any service used or intended to be used by a supplier in the course orfurtherance of business
Inputs • means any goods other than capital goods used or intended to be used by asupplier in the course or furtherance of business
Capital Goods • means goods, the value of which is capitalised in the books of accounts of theperson claiming the credit and which are used or intended to be used in thecourse or furtherance of business
Plant and Machinery • Apparatus, equipment, machinery fixed to earth by foundation or structuralsupport that are used for making outward supply and includes such foundationand structural support but excludes —(i) land, building or any other civil structures;(ii) telecommunication towers; and(iii) pipelines laid outside the factory premises
Page 13Page 13
GSTNElectronic Registers for Credits - CGST/ SGST/ IGST
(qua each registration held)
Vendor populates sales totaxable person
Reverse charge taxpayment
Allocation through ISDmechanism
Reconciliation Limitation Period Vendor Blacklisting
CGST Output SGST Output IGST Output
CGST Input
IGST Input
SGST Input
IGST Input CGST Input
SGST Input
IGST Input
Order for utilisation of credits and payment of taxes
Set off from output liabilitiesInput tax credits widened
TDS provisions
Page 14Page 14
Returns
Page 15Page 15
Current indirect taxes Proposed under GST (CGST, SGST & IGST)Law Returns Returns
Servicetax
Centrally ST-3(Half-yearly) returnis filed
• Invoice level reporting is required in returns under GST regime
• Following returns would be required to be filed for all registrations (Common returnsfor CGST, SGST, IGST) separately:
• A reconciliation statement of GST returns vis-à-vis audited annual financialstatement (to be filed with annual return)
VAT/CST/ ET/
LBT
Returns are filed asper respectiveprovisions of states– mostly monthlyreturns
Excise ER-1 (Monthly)
Returns
Report Name Purpose Due Date
GSTR-1 (Monthly) Outward supplies 10th of next month
GSTR-1A (Monthly) Details supplied by recipient Auto Populated
GSTR-2 (Monthly) Inward supplies 15th of next month
GSTR-2A (Monthly) Details supplied by the supplier Auto Populated
GSTR-3 (Monthly) Monthly Return 20th of next month
GSTR-6 (Monthly) ISD Return 13th of next month
GSTR-6A (Monthly) Details furnished by the supplier to ISD recipient Auto Populated
GSTR-7 (Monthly) TDS return 10th of next month
GSTR-9 (Annually) Annual return 31st Dec of FY
GSTR-9B Reconciliation Statement Auto Populated
ITC-1 Final acceptance of ITC available to recipient Auto Generated
Page 16Page 16
Returns - ProcedureGSTR 1 (Upto 10th ofMonth)Outward details ofSupplies to befiled by supplier
GSTR 2 (Upto 15th ofGSTR 2 (Upto 15th ofMonth)
Inward details of Supplies tobe filed by recipient taking
into account outward supplydetails of supplier available in
FORM GSTR 2A
Upto 17th of MonthSupplier needs to accept orreject the changes made byrecipient available in FORM
GSTR 1A
FORM GSTR 1filed by supplier standamended to the extentchanges accept by the
Supplier
Upto 17th of MonthUpto 17th of MonthSupplier needs to accept orreject the changes made byrecipient available in FORM
GSTR 1A
GSTR 3 (Upto 20th ofGSTR 3 (Upto 20th ofMonth)
Every registered taxableperson shall file a monthly
return
Annual Return- GSTR 9Annual Return- GSTR 9taxable person (other than ISD,
NR, TDS or TCS) shall file annualreturn upto 31st December
following the end of financial year
Option of dailyuploading of
supply details
Page 17Page 17
Invoice/ debit note/credit note
Page 18Page 18
Invoice - ParticularsSl. No Particulars Requirement
1 Name and registered address of relevant entity Mandatory2 GSTIN of relevant Company office Mandatory3 Name of Customer Mandatory
4 Address of Customer (Bill to and Ship to both), along with name of theState and its code, if unregistered Mandatory
5 GSTIN of Customer, if registered Mandatory6 Date of issue of invoice Mandatory
7Invoice number - consecutive (in one or multiple series), alphabetic ornumeric or having special character or any combination thereof butunique for a financial year
Mandatory
8 Place of Supply including relevant GSTIN no. of customer registeredat such location Mandatory
9 HSN code in case of goods or Service Accounting Code in case ofservice Mandatory
Page 19Page 19
Invoice - ParticularsSl. No Particulars Requirement
10 Description on nature of supply of goods / service Mandatory11 Quantity in case of goods and unit or Unique Quantity Code Mandatory12 Type of Tax (CGST, SGST/UTGST and IGST), Cess (if any) Mandatory13 Rate of Tax as applicable Mandatory14 Discount (if any) Mandatory
15 Value of service / goods taking into account discount or abatement, ifany Mandatory
16 Amount of Tax should be separately mentioned Mandatory17 Total value of invoice (i.e. including taxes) (in figure and words) Mandatory18 Amount of tax subject to reverse charges Mandatory
20 In case invoice has more than one tax rates, each type of rate of taxand amount for each supply should be mentioned separately Mandatory
21 Signature or digital signature of Authorised signatory Mandatory
Page 20Page 20
Credit and debit notesRegistered taxable person to issue
Credit or debit note in the following situations
Credit note Debit note
•Credit note to be issued when:• Taxable value/tax charged in the invoice exceeds
the taxable value/tax payable in respect of suchsupply
• Goods supplied are returned by the recipient• Deficient services supplied• Particulars of credit note -as may be prescribed
•Debit note to be issued when:• Taxable value/tax charged in the invoice is less
than the taxable value/tax payable in respect ofsuch supply
•Debit note includes a supplementary invoice•Particulars of debit note -as may be prescribed
Page 21Page 21
Discount - summary
Is discountestablishedin terms ofcontract?
NO
Discount not allowable asdeduction from value
Issue credit note linking the sameto all the invoices that it pertainsto. Reflect value and GST portionseparately
Is reversal done bythe recipient of thetax portion asattributable todiscount shown incredit note?
NO
YES
YES
Discount allowable as deductionfrom value
Is discountgiven tobuyer aftersupplyeffected?
YES
No
Discount to be recorded in theinvoice issued in respect of suchsupply
Recommendations- Check agreements to see if all types of discounts form part of agreement or not- If not, amend agreements to provide for the discount types- Ensure reversal are done by recipient of goods/services- Contractually bind recipients to reverse input tax credit attributable to discount
Credit Mechanism andMatching Concept
Page 23Page 23
Input tax credit- Key pointsRelevant/ Key Provisions Impact on Company
• ITC available to registered taxable person subject to prescribedconditions
• 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
• Electronic credit ledger generated by GSTN to bereconciled with the credit records of Company
• Company to upload the details of outward suppliescorrectly on GSTN to ensure that vendors gets thecorrect credit
• Simultaneously, vendors to upload details ofoutward supplies (commission/ incentive invoices)correctly to ensure that Company gets the correctcredit
Conditions for availing ITC by Company• 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• Company has furnished the monthly return
• Condition of actual receipt of goods/ services andpayment of tax by vendor to the Government foravailment of credit by Company is introduced in theGST regime
Page 24Page 24
Input tax credit- Key pointsRelevant / Key Provisions Impact on Company
• Tax paid under composite levy is an ineligible credit • No credit eligible on commission/ incentive invoices raisedby vendors registered under the composition scheme
Documents for availing input tax credit:
• Tax Invoice• Debit note• Bill of entry• Invoice issued to self in case of reverse charge payments• ISD invoice
The above documents must contain all the applicable particularsprescribed in Invoice Rules
• Company to ensure that a tax compliant invoice is raisedat the time of supply of vouchers/ c-topup to vendors
• Similarly, vendors to ensure that a tax compliant invoice isissued for charging commission/ incentive from Company
• Debit note/ credit note mandatorily to be issued in case ofany upward or downward revision in the value of supply
Page 25Page 25
Input Tax CreditUnder the GST Regime, input credit on commission would be based on “correct loading of data byvendors” in the GST Portal along with payment of due taxes to Government.
► Default in the payment of taxes to the Government by vendor or incorrect upload of data by supplier,would result in credit not being allowed to Company
► Vendors has to ensure his compliance so that the credit chain works seamlessly
• Vendorsprovide theirservices toCompany
1
• Tax Invoice israised andissued toCompany
2• Vendors
uploads hiscorrect Supplydetails onGSTN Portal
3
• Vendors havepaid taxes toGovernmentand filed return
4
Page 26Page 26
Credit efficiency under GST
• Under the current regime, vendors registered as traders are not eligible to getthe CENVAT Credit of Excise duty on goods and Service Tax paid on inputservices
• Under GST regime, vendor would be eligible to get the credit of GST applicableon both goods purchased and services received subject to prescribed terms andconditions
Excise duty / Service tax credit
• Under current regime, vendor is not eligible to get the credit of CST charged oninter-state sale of goods
• Under GST regime, vendor would be eligible to get the credit of GST charged onsuch sale subject to prescribed terms and conditions
CST Credit
Page 27Page 27
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
1
2
3
Action points
Continuousmonitoring ofvendor ratings
Contractrestructuring
including indemnityclause- with key
vendors
Educatevendors on how
to remaincompliant
Continuous default for a period of 3 months in paying reversedITC
Continuous default of 3 months or any 3 month-period overduration of 12 months in uploading sales details
Continuous short reporting of sales beyond a prescribed limitof 5% (of total sales) for a period of 6 months
Page 28Page 28
Reverse chargemechanism
Page 29Page 29
Reverse charge mechanism
Page 30Page 30
Purchases fromunregistered dealer
Page 31Page 31
Purchases from unregistered dealer
Impact on BusinessProcesses andCompliance
Page 33Page 33
GST will transform the way we do business
Advocacy
Supply Chain Re-design
Process Re-design incl. tax
Accounting
TechnologyRefreshPricing
Compliance
ChangeManagement
► Rate of Tax► Time & place of supply► Treatment of current incentives► Valuation
► Sourcing strategy► Distribution strategy► Outsourcing decisions► Working capital► management
► Procure to pay► Order to cash► Tax credits, payments and
accounting► Risks & controls
► System Changes► Compliance► Auditability► Automation
► Costing / Pricing► Forecasting/ scenario
building► Margin Management
► To be GST organisationstructure design
► GST registrations► Tax credit transitions► Return reporting► Shared/ Manage
services
► Program Management► GST awareness training► GST communication► Organization structure
Business ImpactAssessment
Page 34Page 34
Key Impact Areas – ProcurementArea Points
Need to educate the vendors tobring them on-board
► Companies may explore the need to educate, guide and handhold the vendors to ensure thatthey are on-board GST – Need to educate them about raising GST compliant invoices and filingif timely returns or else Companies may lose out on input tax credit
Synergies to accrue to vendors tobe passed on
► Companies to negotiate with the vendors to ensure that the synergies by way of unlocking ofcredits are passed on by way of reduction in prices
Vendor Rationalization ► Purchases of goods/services from unregistered vendors to attract payment of GST under reversecharge mechanism. Companies may choose to lessen the purchases from such vendors to avoidadditional compliances
► Further, currently Companies who are not in a position to avail input tax credit currently mayhave chosen to procure goods on payment of CST in order to save cost – Need to re-strategize?
► Once in the GST regime – GST Compliance rating may be used for selection of vendors
Change in purchaseorders/contracts
► Need to change the contracts to include GST specific terms and conditions like holding up thetax amount, clause for making good any loss that the Company might suffer on account of non-compliance by the vendor
Advances paid to suppliers ► In case of payment of advances to suppliers, companies would have to pay GST to vendors, butwould be able to avail credit only once the goods/services are received – Need to negotiate andchange payment terms?
Page 35Page 35
Key Impact Areas – Sales and Supply ChainArea Points
Need to educatedealers/distributors
► GST knowledge to percolate through out the supply chain to ensure minimum disruption in saleson and after the GST go-live date
Consolidation / Expansion ofwarehouses and CFA premises
► All inter-state stock transfers to be taxable and the recipient location to avail credit thereof –Companies may take a decision of consolidating existing warehouses / expand – Tax neutral
Dealers may come back andnegotiate
► Dealers may ask for a reduction in price on account of synergies that may arise on account GST.Companies to effectively manage such negotiations
Sales return ► Returns wherein tax is required to be adjusted to be routed through debit/credit notes linked withoriginal invoice – need to track every return
Advances received from customers ► Need to pay GST on advances received from customers – major change from current process
Anti-profiteering clause ► Any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit tobe passed on to consumers by way of reduction in prices – Impact of the same to be examinedas and when the government prescribes the mechanism
Impact of transition provisions ► The impact of transition provisions to be explained to the dealers and distributors to ensure thatthe benefit is passed on to the consumers
Page 36Page 36
IT impact areas to watch out forArea Points
Vendor Master ► Vendor master to be updated to contain the GSTIN of the vendor. Further, master also to beupdated to identify the vendors who are not registered under GST/ availing the benefit ofcomposition scheme
Material Master / Services Master ► HSN for the goods sold and SAC for services provided to be fed into the system
► On the procurement front, bifurcation to be made between inputs and capital goods to determinethe eligibility of credit
Customer Master ► Customer master to be updated to contain the GSTIN of the customers. Company to take carethat state-wise GSTIN of the customers is updated in the system
Invoices to be raised ► Invoice format to be updated in the system to include details as provided in the draft invoicerules. The invoice to be serially numbered and to include additional details such as GSTIN of thecustomer, place of supply and whether tax to be paid on reverse charge basis by the customer.
► Further, invoices also to be raised for inter-state stock transfers.
Debit and Credit notes to be raised ► Adjustment of tax on account of raising debit/credit notes to be allowed only if such notes containreference of the original invoice number.
Page 37Page 37
Area Points
Tax Codes ► Different tax codes to be framed for CGST, SGST and IGST. Further, state-wise codes for CGSTand SGST would also be required
► Separate tax codes for exports made under bond and exports made under rebate also to becreated
Creation of new GLs ► Need to create state-wise General Ledgers for CGST, SGST and IGST?
Raising of Purchase Order ► Purchase Orders to contain the address as well as the GSTIN of the premises wherein thegoods/services are to be procured to ensure the vendor raises invoice with the mentioned GSTINand thus enable smooth credit.
Treatment of advances ► Tax codes to be configured so as to provide for payment of GST on advances received for supplyof goods/services. Further, system to enable set-off of such advance amount at the time ofraising of invoices.
Filing of returns ► IT systems need to be configured in a manner that all the data required for filing the returns areavailable in an easy and time-efficient manner
► Wait for ERP vendors to release patches/notes
IT impact areas to watch out for
Page 38Page 38
Area Points
Timing of accounting for tax ► The timing for recognition of the input tax credit may undergo change
► Incidence of tax may be at time of payment / receipt of advances
► Every Stock transfer will now have tax outflow and accounting implication thereby
Transition provisions ► Extent and category in which the balances in input credit / refunds receivable accounts will betransferred, especially CENVAT in LLM units
► Time window available to account for unaccounted purchases and the Purchase / Sales returnsafter the date of transition.
► Tax component in closing inventory on date of transition
► Export benefits receivable (Licenses in hand / applied)
Others ► Sales to be reported net off GST, as compared to gross of excise duty under Ind AS
► PO level changes to be made for defining tax codes to exclude GST from the inventory value.
Accounting impact areas to watch out for
Page 39Page 39
Returns under GST
Page 40Page 40
Returns : Current v/s GST regime
Present regimeReturn For To be filed by
GSTR 1 Outward supplies(sale, stocktransfer, export)
10 of nextmonth
GSTR 2 Inward supplies(purchases, import)
15th of nextmonth
GSTR 3 Monthly return 20th of nextmonth
GSTR 6 ISD return 13th of nextmonth
GSTR 7 Tax deducted atsource
10th of nextmonth
GSTR 8 Annual return 31st Decemberof next FY
ITC ledger Continuous
Cash ledger Continuous
Tax ledger Continuous
Return Time period To be filed by
Excise
ER 1 Monthly return 10th of next month
ER 4 Annual return 30th November ofnext FY
VAT return in each state
Monthly / Quarterly return As prescribed
Annual return As prescribed
Audit reports As prescribed
Service Tax
ST 3 (Half yearly) 25 days from halfyear end
Annual return 30th November ofnext FY
Additional in GST regime
Page 41Page 41
Reporting requirements - returns
SUPPLIER(Outward Supplies)
RECIPIENT(Inward supplies)
Furnish details in Form GSTR-1 on or before duedate in manner as prescribed
The above details shall be available to recipient through common portal in below parts of FORM GSTR-2A- details of outward supplies furnished by the supplier in Part A of FORM GSTR-2A- Details of ISD invoices shall be made available in part B- Details of TDS deducted by the deductor under section 37 furnished in FORM GSTR-7 shall be made available in Part C- Details of tax collected at source by an e-commerce operator furnished in FORM GSTR-8 i shall be made available inPart D
Furnish details in Form GSTR-2 on or before due date in manner as prescribed. The following to also bespecified in the said form- Inward supplies wherein recipient is not eligible, fully/ partially, for input tax credit (where eligibility can be
determined at the invoice level) and- quantum of ineligible input tax credit on inward supplies which is relatable to non-taxable supplies or forpurposes other than business and cannot be determined at the invoice level.
The above details shall be available to supplier through common portal in FORM GSTR-1A
Supplier shall accept/reject these modifications made and Form GSTR-1 shall stand amended**subject to the above modifications.
** Rectification of error or omission in respect of the details furnished shall not be allowed after filing of the return for the month of September following the endof the financial year to which such details pertain, or filing of the relevant annual return, whichever is earlier.
Page 42Page 42
Reporting requirements – returns – monthly return
FORM GSTR-3
Part A of the monthly return to be generated based on information furnishedthrough returns in FORM GSTR-1, FORM GSTR-2, electronic credit ledger,electronic cash ledger and electronic tax liability register of the taxable person.
FORM GSTR-3
Tax, interest, penalty, fees or any other amount payable under GST act orrules to be paid. The same may be discharged by debiting the electronic cashledger and/or electronic credit ledger as per the details contained in Part B ofthe return in FORM GSTR-3.
Return furnished without payment of full tax due as per such return shallnot be treated as a valid return for allowing input tax credit in respect ofsupplies made by such person
Page 43Page 43
Reporting requirements – returns - Matching of claim of input taxcredit, final acceptance and communication
Taxable Person shall be entitled to take credit of Input tax as self assessed in his return subject to conditions andrestrictions
such amount shall be credited, on a provisional basis, to his electronic credit ledger
The prescribed details relating to the claim of input tax provisionally allowed shall be matched after due date of filingreturn in from GSTR-3.
The final acceptance of claim of input tax credit in respect of any tax period shall be made available electronically to theregistered taxable person making such claim in FORM GST ITC-1 through the Common Portal. If any such discrepancy isnot rectified than the same shall be added to the output tax liability of recipient in the month following the month ofcommunication of discrepancy
The claim of input tax satisfies theprescribed conditions (including caseswherein amount of Input tax credit claimedis equal to or less than the output tax paidby supplier) - MATCH
The claim of input tax does not satisfy theprescribed conditions- MISMATCH
Action taken for rectification and mismatch does not existpost rectification
The mismatch shall be communication and actions shallbe taken to rectify
Need for ASP – GSP
Page 45Page 45
ASP GSP Functionality
ASP-GSPImplementation Framework
MPLS
GSP
Export Supply-Purchaseregister/data in XML,CSV, Excel etc. formats
Upload / downloadformatted GSTRsand other data API
ASP Solution(Process transactionlevel data, Reconcileauto-drafted GSTR2against PurchaseRegister etc.)
GSP Solution(Integrate seamlesslywith GSTN Systemthrough APIs)
GSPServer
GSTNServer(GST CoreEngine)
Taxpayer System(ERP, Transaction Processing System,Custom Applications etc.)
GSTN
Page 46Page 46
Role and function of Application Service Providers (ASP) and GSTSuvidha Provider (GSP)
ASP►ASP to provide value added services for collating the data, data
validation, reconciliation of data uploaded by vendors withpurchase data as per the Company’s ERP
►Verifying the claim of Input Tax Credit (ITC) is one of thefundamental pillars of GST, for which data of Business to Business(B2B) invoices would be uploaded by taxpayers and matched byGSTN.
►A high level of synchronization is required between the taxpayer’ssystem and the GSTN system, which will be very difficult toachieve without automation.
►ASPs would focus on taking taxpayers’ raw data on sales andpurchases and converting it into the GST returns. These GSTreturns, or GSTRs, will then be filed on behalf of the taxpayer withGSTN via the GSP.
►ASPs would act as a link between the taxpayers and the GSPs. TheGSTN client ID and GSTN client secret for ASP will be generatedby GSP from the portal, which will be provided by GSTN. It’s a kindof sub-license generation. ASPs would create output in JSONformat confirming to the APIs published by GSTN so that the samecan be uploaded to GSTN through GSPs
GSP►There is a restriction on the size of data that can be uploaded
on and downloaded from GSTN at one time - GSP would act as agateway for companies with large quantum of transactions toupload and / or download data on GSTN
►The taxpayer would need to maintain data confidentiality andprivacy – GSPs would allow taxpayers to have control, securityand privacy, while interacting with GSTN through a securedleased-line using License Key provided by the GSTN
►Data would be uploaded / downloaded by GSPs in JavaScriptObject Notation (JSON) format using APIs
►GSP will not store data or process data►As on date, there are 34 GSPs who have been approved by the
GSTN►A GSP may also offer the services of an ASP to meet a client’s
particular data processing requirements, and providecustomized solutions to a large number of organizations. Thisprovides combined GSP and ASP support.
Page 47Page 47
Valuation
Page 48Page 48
Value of taxable supply
► Taxes, duties, cesses,fees and charges leviedunder any statute otherthan GST, if chargedseparately
► amount paid byrecipient instead ofsupplier
► incidental expenses(such as commission,packing etc.) chargedby the supplier from therecipient
► Interest or late fee orpenalty for delayedpayment
► Subsidies directly linkedto the price
► Discounts before or at the time ofthe supply except when
► duly recorded in the invoiceissued
► Post supply discounts exceptwhen
► agreed as per the agreement
► known before or the time ofsupply
► specifically linked to relevantinvoices and
► Input tax credit pertaining tothe discount has beenreversed by the recipient
► Subsidies provided by the Centraland State governments
Inclusions in TV Exclusions from TV
► Valuation Rules havebeen prescribed
► MRP based valuationsystem abolished
In other cases onwhat value of supply
will GST be paid?
Supplier andrecipient are not
related
Price is the soleconsideration
TransactionValue
Page 49Page 49
Place of Supply
Page 50Page 50
Goods imported into India - Location of importer
Goods exported from India - Location outside India
Place of Supply of Goods (Import/ Export)
POS of goodsimported into or
exported from India
Page 51Page 51
Place of Supply of Goods (other thanImport/Export)
Supply with movement
Place of delivery
3rd party directing a transferof title
3rd party’s registeredaddress
Supply without movement
Location of goods
Installation or assemblyat site
Installation/ assemblysite
On board a conveyance
Location where goodstaken on board
Other cases
To be determined
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When provided to registered person – location ofsuch person.
When service provided to unregistered person – addressof recipient on record of provider (if such record exist)
Location of service provider in all other cases
GeneralRule
Place of Supply of Services(Location of supplier and recipient in India)
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Particulars Place of Supply
Telecommunication services, including datatransfer, broadcasting, DTH Ø Specific Rules prescribed
In relation of immovable propertyØ Location of such property.Ø If the location of immovable property is located outside India,
the POS shall be location of recipient
Training and performance appraisal servicesØ Where supplied to a registered person, location of such
personØ Any other person, location where services are performed
Transportation of goods, including mail & courier
Ø Where supplied to a registered person, location of suchperson
Ø Any other person, location at which goods are handed overfor transportation
Passenger transportation ServicesØ Supplied to a registered person, location of recipientØ Any other person, location from where the passenger
embarks on the conveyance
Place of Supply of Services(Location of supplier and recipient in India)
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E-Way Bill RulesApril 2017
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Applicability
Every registered person causing movement of goods of consignment value exceeding 50,000 rupees(i) In relation to supply or(ii) For reasons other than supply or(iii) Due to inward supply from unregistered person
Where the goods are supplied by an unregistered supplier to a registered recipient, the movement shall be said to becaused by such recipient if the recipient is known at the time of commencement of movement of goods.
Transported as consignor/ consignee by own / hiredconveyance
Registered person shall before commencement of movement,furnish information relating to the said goods in Part A ofForm GST INS–01 electronically, on common portal
Registered person shall furnish information in Part B of FormGST INS–01
Registered person may generate the E-way bill in Form GSTINS-1
E–way bill rules
Handed over to transporter without generation of E-waybillRegistered person shall before commencement of movement,furnish information relating to the said goods in Part A ofForm GST INS–01 electronically, on common portal
Registered person shall furnish information related to thetransporter in Part B of Form GST INS-01
Transporter shall generate E-way bill in Form GST INS-1
OR
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Unique E-wayBill number
Ø Post generation of E-way bill, a unique E-way bill number shall be made available to the supplier, recipient andtransporter on the common portal
Transportertransporting
goods from oneconveyance to
another
Ø Transporter transferring goods from one conveyance to another in the course of transit shall before thetransfer and further movement of goods, generate a new E-way bill on the portal in FORM GST INS–01specifying the mode of transport
Multipleconsignments
Ø In case of multiple consignments to be transported in one conveyance, the transporter shall indicate the serialnumber of E–way bills generated for each consignment on the portal and shall generate a consolidated E-waybill in FORM GST INS–02 before movement of goods
Ø In case, FORM GST INS–01 is not generated by consignor and the value of consignment exceeds Rs. 50,000,the transporter shall generate FORM GST INS–01 on the basis of invoice or bill of supply or delivery challanand also generate a consolidated E-way bill in FORM GST INS–02 before movement of goods
E–way bill rules
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Cancellation ofE-way bill
Ø E-way bill shall be cancelled on the common portal directly or through a Facilitation Centre within 24 hours ofgeneration of the e-way bill if:Ø Goods are not being transportedØ Goods are not being transported as per the details furnished in the e-way bill
Ø An E-way bill cannot be cancelled if it has been verified in transitØ E-way bill cancellation may also be made by way of SMS
Validity
Ø <100 km – One day from date of generation of e-way billØ >=100 km < 300 km – Three days from date of generation of e-way billØ >=300 km < 500 km – Five days from date of generation of e-way billØ >=500 km < 1000 km – Ten days from date of generation of e-way billØ >=1000 km – Fifteen days from date of generation of e-way bill
Acceptance ofE-way bill
Ø The details of e-way bill shall be made available to registered recipient. Only registered recipient is liable toaccept E-way bill.
Ø The recipient shall accept or reject the consignment covered by e-way billØ In case of no response by way of acceptance/ rejection within 72 hours of details being made available to
recipient, acceptance shall be deemed
E–way bill rules
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Documents or device to be carried by a person in-charge of the conveyance
Ø The person in charge of conveyance shall carry-Ø invoice or bill of supply or delivery challan , andØ a copy of the E-way bill or the E-way bill number, either physically or mapped with Radio Frequency
Identification Device (RFID) embedded on to the conveyance .
Documents to be carried during transportation
Documents tobe carried
InvoiceReferenceNumber
Ø A registered person may obtain an Invoice reference number from the common portal by uploading, a taxinvoice issued by him in FORM GST INV-1, and produce the same for the verification in lieu of the tax invoiceand such number shall be valid for a thirty from the date of uploading.
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Verification ofDocuments and
Conveyance
Ø The commissioner or an officer empowered by him may authorise the officer to intercept any conveyance toverify the E-way bill or E-way bill number physically in intra and inter state movement of goods.
Ø The commission shall get RFID reader installed at the place where the verification of movements vehicle onwhich goods to be carried out in case where the e-waybill is mapped with RFID.
Ø Physical verification shall be carried out by office as authorized by the commissioner or an officeempowered by him.
PhysicalVerificationonly once
Ø Where physical verification of goods being transported on conveyance has been done during transit at a placewithin a state or in any other state, no further physical verification shall be carried out again in the state.
Verification of goods during transportation
Facility foruploading
informationregarding
detention ofvehicle
Ø Where a vehicle has been intercepted and detained for a period exceeding thirty minutes, the transporter mayupload the said information in FORM GST INS-04 on the portal.
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Impact on Companies
Ø E–way bill shall be applicable on inter state/ intra state movement of goods within branches of Companies subject to a monetary limitof Rs. 50,000. In other words, only consignments of value exceeding Rs. 50,000 shall be liable for E-way bill.
Ø E- way bill shall be required in cases other than supply. Thus, movement of goods under AMC contracts shall be covered. E-way shallbe required in the following cases:Ø Movement of goods from customer to CWH/ SWHØ Movement of goods from CWH to SWH/ SWH to CWHØ Movement of goods from CWH/ SWH to customersØ Movement of goods from SWH to SWH
Ø E–way bill shall be required in case of sale transactions made by Companies to its customers.
Ø E-way bill shall be required in case of purchase transaction made by Companies from unregistered suppliers.
E – Way bill rules
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Impact onCompanies –Inter branch
Ø E–way bill shall be applicable on inter state/ intra state movement of goods within different branches ofCompanies whether for consideration or not subject to a consignment value of Rs. 50,000.
Ø Part A and B of FORM GST INS-01 shall be filled by supplying branch of CompaniesØ E–way bill shall be generated by the transporter on the basis of above detailsØ Unique E-way bill number shall be made available to Companies’s branches and transporterØ The receiving branch of Companies shall communicate its acceptance of consignment (within 72 hours) on
the portal
E – Way bill rules
Impact onCompanies –
AMC contracts
Ø E–way bill shall be applicable on inter state/ intra state movement of goods under AMC contracts subject toa consignment value of Rs. 50,000.
Ø Part A and B of FORM GST INS 01 shall be filled by CompaniesØ E–way bill shall be generated by the transporter on the basis of above detailsØ Unique E-way bill number shall be made available to Companies (SWH/CWH) / customer and transporterØ The receiver (Customer/ Companies) shall communicate its acceptance of consignment (within 72 hours) on
the portal
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Impact onCompanies –Procurement
Ø E–way bill shall be applicable on inter state/ intra state purchase of goods by Companies subject to aconsignment value of Rs. 50,000.
Ø Part A and B of FORM GST INS 01 shall be filled by vendor in cases where movement of goods is caused bythe vendor.
Ø In other cases, Part A and B of FORM GST INS 01 shall be filled by Companies (Ex-factory sales by vendor)Ø E –way bill shall be generated by the transporter on the basis of above detailsØ Unique E-way bill number shall be made available to vendor, Companies and transporterØ Companies shall communicate its acceptance of consignment (within 72 hours) on the portalØ In case of purchase from unregistered dealer, the movement of goods shall be deemed to be caused by
Companies. In such case, Companies shall be liable to fill Part A and B of Form GST INS 01
E – Way bill rules
Impact onCompanies – Sale
Ø E – way bill shall be applicable on inter state/ intra state supply of goods subject to a consignment value ofRs. 50,000.
Ø In case of sales made from Chennai SEZ, customer shall fill Part A and B of FORM GST INS 01 as themovement of goods is caused by the customer (We understand that sales made from Chennai are Ex-factory sales)
Ø In case of sales made from other than Chennai SEZ, Part A and B of FORM GST INS 01 shall be filled byCompanies
Ø E –way bill shall be generated by the transporter on the basis of above detailsØ Unique E-way bill number shall be made available to Companies, customer and transporterØ The customer shall communicate its acceptance of consignment(within 72 hours) on the portal
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Free supplies
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Free supply of goods/ services
► The Revised GST Law proposes to tax all forms of supply including goods/services supplied without consideration to related and distinct persons as specified inschedule I in the course or furtherance of business.
► Free supplies/ gifts not exceeding INR 50,000 in a financial year by an employer to an employee shall not be treated as supply of goods or services or both.
Free supply of goods (eg-samples) byCompany is not taxable under VAT currently,excise duty is leviable.
Free supply of services is not liable to Servicetax in the absence of any consideration
Legal provision
Free supply of goods/services to related, distinct persons (this includes employees of Company) is asupply wherein the value in a FY exceeds INR 50,000. Eg. – free talk time to employees beyond INR50,000 is taxable
Free supplies to unrelated parties (such as vendors) not considered as supplies. Accordingly,GST should not be applicable
Input tax credit in respect of free supplies would not be eligible to the supplier if GST is notpayable on output
Current scenario GST scenario
Page 65Page 65
Transitional provisions
Page 66Page 66
Credit carried forward in the last return filed under the existing law
Transitional Provisions
Amount of CENVAT/ ITC to be carried forward in a return [Section 140(1) CGST & 18(1) UTGST]
Credit of CENVAT Credit/ ITC/ ET on Inputs, Capital Goods & CENVAT Credit on input services
Eligible Credit
Conditions1. Such credit should also be admissible under the GST2. Returns for last 6 months (immediately before the appointed day) under the current law should be filed3. Credit attributable to sale against declaration Forms shall not be allowed if Form are not received in prescribed period
Compliances Submit Form GST TRAN-1 within 60 days specifying details of tax or duty entitlement (for Input tax only)
Page 67Page 67
Transitional Provisions
Unavailed input tax credit on capital goods, not carried forward in a return [Section 140(2) CGST & 18(2) UTGST]
Credit of CENVAT Credit/ ITC on Capital Goods
Eligible Credit Unavailed CENVAT Credit/ ITC not carried forward in the last return filed under the existing law
Conditions Such CENVAT credit/ ITC should be admissible under Earlier Law as well as under GST
Compliances Submit Form GST TRAN-1 in a prescribed manner
Page 68Page 68
Transitional Provisions
Credit of eligible duties and taxes in respect of inputs held in stock [Section 140(3) CGST]
Credit of 1. Excise duty 2. Countervailing duty (CVD) 3. Additional duty (SAD) 4.NCCD
Eligible Credit Credit of eligible duties on goods held in stock (other than capital goods) by person not required to register underexisting law and other prescribed person
Conditions
1. Goods should be used for making taxable supply under GST
2. Credit on such inputs is admissible in GST
3. Such person should possession of Invoice or other prescribed documents evidencing payment of tax or duty
4. Trader is not in possession of such document, credit of 40% of central levies (ie CGST or IGST) will be available
subject to other conditions including the requirement to pass on the benefit of such credit to customer by way of
reduced prices
5. Such document issued within 12 months before appointed date
6. Supplier of service should not be eligible for abatement in GST
7. This Scheme shall be available for six tax periods from the appointed date
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Transitional Provisions
Credit of eligible duties and taxes in respect of inputs held in stock [Section 140(3) CGST]
Compliances
1. Submit Form GST TRAN-1 in prescribed manner
2. Where the invoice or other duty paying document is not available, a statement in Form GST TRAN <<number to be
prescribed>> needs to be submitted at the end of each of the six periods during which the scheme is in operation
3. The stock of goods on which the credit is availed is so stored that it can be easily identified
Page 70Page 70
Transitional Provisions
Credit of eligible duties and taxes in respect of inputs/ input services in transit [Section 140(5) CGST & 18(5) UTGST]
Credit of CENVAT Credit/ Input Tax Credit on inputs in transit or input services to be received on or after the appointed day
Eligible Credit CENVAT Credit/ Input Tax Credit charged by supplier on such inputs or input services under existing law
Conditions Recipient shall record invoice or tax paying document within period of 30 days from the appointed day
Compliances
Recipient shall furnish following details:
1. Name of supplier 2. Invoice Number 3. Invoice date 4. Description, quantity and value of goods
5. Amount credit 6. Date on which supply entered into books 6. Submit Form GST TRAN-1
Page 71Page 71
Transitional Provisions
CENVAT Credit balance available in Centralized Registration [Section 140(8) CGST]
Credit of CENVAT Credit on inputs, input services and capital goods
Eligible Credit CENVAT Credit to be carried forward in a last return under existing law
Conditions
1. Return to be furnished within 3 months from the appointed day
2. The Return should be original return or revised return with reduced credit
3. Credit is admissible under GST
4. Credit may be transferred to any person having same PAN
Compliances Submit Form GST TRAN-1 specifying prescribed details
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Transitional Provisions
Re availment of CENVAT reversed due to non payment of consideration [Section 140(9) CGST]
Credit of CENVAT Credit on input services
Eligible Credit CENVAT Credit reversed due to non payment of consideration to service provider within 3 months
Conditions Payment of consideration to be made to supplier of service within a period of 3 months from the appointed day
Compliances Submit Form GST TRAN-1 specifying prescribed details
Page 73Page 73
Transitional Provisions
Refund of tax paid on goods sold under existing law and returned after appointed day [Section 20(1) UTGST]
Refund of Tax paid under earlier law ie VAT/ CST
Eligible Returns Goods returned by unregistered person
Conditions1. Goods should have been sold within period of 6 months prior to the appointed day
2. The goods are returned within period of 6 months from the appointed day
3. Goods are identifiable to satisfaction of proper officer
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Transitional Provisions
Debit/ Credit Note issued post appointed day for supply made before appointed day [Section 142 (2) CGST & 20(1) UTGST]
Tax to be adjusted CGST and SGST/ UTGST or IGST
Cases covered Supplies made before appointed date and DN/CN issued after appointed date
Conditions
1. Price revision should be in pursuance of contract entered into prior to the appointed day
2. DN or supplementary invoice/ CN should contain particulars as may be prescribed and should be issued within 30
days from the price revision
3. In case of issuance of CN output tax liability would be allowed to be reduce only if recipient reduces his ITC
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