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➢ Boutique Law Firm, started in 2015
➢ Advisory, Health-Checks and Litigation support services in entire spectrum of Indirect Taxes,
International Trade, Legal Metrology and other Allied laws
➢ Team of 50 members with 5 Partners having experience in leading Accounting and Law firms
➢ Client base includes leading Indian corporates and MNCs across industry verticals
REFUNDS AND TDS UNDER GST
Key Accolades
About NITYA Tax Associates
TABLE OF CONTENTS
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REFUNDS
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A SNAPSHOT ON REFUNDS !!
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▪ Cashflow to exporter.
▪ Refunds are policy matters of government
o Nexus with exports
o Remittance of taxes back to taxpayer where it is collected without authority of law
▪ General refund types
o Input stage refund
o Output stage refund
o Notified situations
▪ Doors of Courts can be knocked where special situations for refund is not explicitly covered
under the Act.
▪ Given to a person who has actually borne the incidence of taxes
▪ Comes with procedures (Documentation + Verification + Limitation period)
LEGAL BACKGROUND
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LEGAL PROVISION
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Section 54 of CGST Act
▪ Any person claiming refund may file application….
▪ No refund of unutilized ITC in cases, other than:
o Zero rate supplies
✓ Physical exports
✓ Supplies to SEZ Units / Developers
o Inverted Duty Structure
GENESIS OF REFUND
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Constitution of India
▪ Article 265 -
No tax shall be levied or collected except by the authority of
law
Any amount collected in excess of tax shall be refund.
o Excess rate charged / clerical errors etc.
▪ Section 54 -
Substantial only for refund under inverted duty structure and
deemed exports refund
REFUND TYPES
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Output Stage Refund
Input Stage Refund
(Accumulated ITC)
Others
Inputs / Input
services used in
zero-rated supplies
Inverted duty
structure
IGST paid on
zero rated
supplies
Deemed
exports
Tax payment
under wrong
heads
Excess
payment of tax
Assessment /
Appeal / Any
other order
Other reasons
PROCEDURE
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Refund claim to be filed
within 2 years from ‘relevant date’
▪ Goods exported by sea or air -
Date on which such Ship / Aircraft leaves India
▪ Export of services -
Date of receipt of payment OR date of issuance of
invoice (in case of advance)
▪ ITC on inverted duty -
Due date for furnishing return for the period in which
refund is claimed
▪ Other cases -
Date of payment of tax
Note – Courts have construed time-limit to be a
substantial law and rejected claims which were filed
after due date
Notification No. 24/2021 - Central Tax dated June 1, 2021
▪ Any proceeding / issuance of order, intimation etc. by any
Authority or any appeal, reply, report, return, statement
etc. by Taxpayer
▪ Last date falling between April 15, 2021, to June 29,
2021
▪ Revised due date is June 30, 2021
PROCEDURE
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SC order dated April 27, 2021
▪ Whether extended time limit of SC order will apply on
new application?
▪ What if deficiency memo has been issued after March
14, 2021?
▪ What if application has been filed before March 14,
2021, and no deficiency memo is issued? Interest
implications?
Refund claim to be filed
within 2 years from ‘relevant date’
▪ Goods exported by sea or air -
Date on which such Ship / Aircraft leaves India
▪ Export of services -
Date of receipt of payment OR date of issuance of
invoice (in case of advance)
▪ ITC on inverted duty -
Due date for furnishing return for the period in which
refund is claimed
▪ Other cases -
Date of payment of tax
Note – Courts have construed time-limit to be a
substantial law and rejected claims which were filed
after due date
PROCEDURE
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Filing of refund claim
(RFD-01)
Generation of ARN
4 supporting docs
(max 5 MB each)
Deficiency Memo
(RFD-03)
(to be issued within 15 days)
Acknowledgement
(RFD-02)
(within 7 days)
Provisional Order
(RFD-04)
Final Order
(RFD-06)
(within 45 days)
(within 60 days)Disbursement
Fresh application
to be filed
Refund claim to be filed
within 2 years from ‘relevant date’
▪ Goods exported by sea or air -
Date on which such Ship / Aircraft leaves India
▪ Export of services -
Date of receipt of payment OR date of issuance of
invoice (in case of advance)
▪ ITC on inverted duty -
Due date for furnishing return for the period in which
refund is claimed
▪ Other cases -
Date of payment of tax
Note – Courts have construed time-limit to be a
substantial law and rejected claims which were filed
after due date
DEFICIENCY MEMO
May 2020
Files Refund
Application
June 2020
Issues
‘Deficiency
Memo’
Period of Refund - September 2018
Files Fresh Refund
Application
July 2020December
2020
Refund
Sanctioned
Interest Calculation -
From October 2020
&
Not from August 2020!
Jeopardizes limitation
period & accrual of
interest from original
date of fling
Issues
‘Deficiency
Memo’
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Ruling Decision
Jian International
(Del HC)
Insitel Services
(Del HC)
Time limit of 2 years does not
include time period from filing
refund claim till communication
of deficiencies for filing fresh
refund applications
Shri Gayatri Cashews
(Mad HC)
Garden Silk Mills
(Guj HC)
INTEREST
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Delayed refund!Ruling Decision
Apar Industries
(Bom. HC)
Saraf Natural Stones
(Guj. HC)
Amit Cotton Industries
(Guj. HC)
Willowood Chemicals
(Guj. HC)
PRACTICAL ISSUES
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Output Stage Refund
Input Stage Refund
(Accumulated ITC)
Others
Inputs / Input
services used in
zero-rated supplies
Inverted duty
structure
IGST paid on
zero rated
supplies
Deemed
exports
Tax payment
under wrong
heads
Excess
payment of tax
Assessment /
Appeal / Any
other order
Other reasons
Input Stage Refund
(Accumulated ITC)
Without payment of tax
i.e., Inputs / Input services
used in zero-rated supplies
On payment of tax
i.e., IGST paid on zero rated
supplies
Computation of refund of unutilized ITC
(only for inputs and input services) -
Lower of:
▪ Maximum refund amount as per
prescribed formula in CGST Rules
▪ Balance in credit ledger at end of tax
period for which refund is filed.
▪ Balance in credit ledger at time of filing
refund application
REFUND TYPES
Output Stage Refund
ISSUES
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KEY ISSUES
Refund to SEZ Rule 89(4)
Mismatch with SB
Rule 96B
ITC not appearing in GSTR-2A
Rule 89(4)(B)
Rule 96(10)
LIMIT ON VALUE OF EXPORTED GOODS – RULE 89(4)
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Refund of unutilized ITC available
Net ITC
Turnover of Zero-Rated
Supply of Goods
Turnover of Zero-Rated
Supply of Goods
Adjusted Total Turnover
Value of zero-rated
supply of goods made
during relevant period
without payment of tax
Value of exported goods to
not exceed 1.5 times of
value of goods sold
domestically
▪ Arbitrary provision
▪ Limits scope of export
▪ Ultra-vires
▪ Ambiguous terminology – Like goods /
similarly placed supplier
REFUND CURTAILED TO FOB VALUE OF EXPORTED GOODS
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▪ Clarified that zero-rated supply effected under GST. Hence,
value to be transaction value under Section 15 of CGST Act
▪ Refund to be granted on invoice value or Shipping Bill value,
whichever is lower
▪ Difference may be because of terms of sale, exchange rate etc.
Example
Particulars Amount (Rs.)
Turnover 500
Net ITC 200
Invoice Value150
(Goods value 100 + Freight 50)
FOB value basis SB 100
Refund Granted (150 / 500) * 200 = 60
Refund on FOB value (100 / 500) * 200 = 40
Excess Refund = Rs. 20
Circular No. - 125/44/2019 - GST
ILLUSTRATION (Turnover Rs. 500 & Net ITC Rs. 200)
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Output Stage Refund
Particulars Amount (Rs.)
Invoice Value150
[(Goods value 100 + Freight 50)
FOB value basis SB 100
Refund Granted 27
Refund on FOB value 100 * 18% = 18
Excess Refund = Rs. 9
Inverted Duty Refund
Particulars Amount (Rs.)
Invoice Value150
[(Goods value 100 + Freight 50)
FOB value basis SB 100
Refund Granted [(150 / 500) * 200] - 7.5 = 52.5
Refund on FOB value [(100 / 500) * 200] - 5 = 35
Excess Refund = Rs. 17.5
18% GST 27 5% GST 7.5
▪ To be inserted
▪ Refund formula uses the term ‘value’ denoting value arrived under Section 15 of
CGST Act
▪ Transaction value includes incidental expenses charged at the time or before
delivery
▪ Value of freight and insurance part of transaction value
▪ Detailed legal reply should be filed in case of any objection
▪ Revision of refund formula for future to avoid disputes
▪ File representations through trade associations to obtain clarity
IMPACT OF EXCESS SANCTION OF REFUND
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▪ Refund formula uses the term ‘value’ denoting value arrived under Section 15 of
CGST Act
▪ Transaction value includes incidental expenses charged at the time or before
delivery
▪ Value of freight and insurance part of transaction value
▪ Detailed legal reply should be filed in case of any objection
▪ Revision of refund formula for future to avoid disputes
▪ File representations through trade associations to obtain clarity
WAY FORWARD
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Applicable w.e.f March 23, 2020
Recovery of refund amount where export
proceeds not realized
▪ If export proceeds not realized (in full or
part)
▪ Within time period as allowed under FEMA
▪ Refund amount shall be recovered to the
extent of non - realization of export
proceeds
Ruling Decision
Bhawani Textiles
(Guj HC)
▪ Arbitrary provision
▪ Prospective or retrospective applicability?
▪ Compliance by self
▪ Payment waiver by supplier?
▪ Payment received after 3 months of recovery?
TIME LIMIT ON RECEIPT OF PAYMENT – RULE 96B
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Exporter
Export goods
Refund is
sanctioned
Export proceeds
not realized
TIME LIMIT ON RECEIPT OF PAYMENT – RULE 96B
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SanctionedApplication filedRefund period
April 30, 2020March 25, 2020
January 2020
June 30, 2020May 25, 2020
February 2020
March 20, 2020February 25, 2020
April 2020
April 30, 2020
Applicability of Rule
96B
January 2020 February 25, 2020
Circular No. 135/2020 dated
March 31, 2020 -
No refund of ITC on invoices not
reflected in GSTR-2A
▪ Refund cannot be denied on account of error
committed by the vendor
▪ Ultra-vires
▪ Subject to challenge in the Courts
REFUND RESTRICTED TO INVOICES REFLECTED IN GSTR-2A
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Taxpayer
Refund is
sanctioned
Invoices not reflected
in GSTR-2A
REFUND OF CAPITAL GOODS
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Inputs and Input
servicesCapital Goods
Ruling Decision
VKC Footsteps
(Guj HC)
▪ Rules cannot override provisions under Act
▪ Ultra-vires
▪ Explanation not clearly worded
INPUTS IMPORTED UNDER ADVANCE AUTHORIZATION
Duty free
import of inputs
BCD
GST
GST
AA Holder
IGST
Exports
` 50
Refund available
Rs.50
Rs.30
Rs.100
GST regime
Without
payment of
GST
Refund of ITC
available
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No IGST exemption on imports under AA scheme !
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Rs.50
Rs.30
Rs.100
INPUTS IMPORTED UNDER ADVANCE AUTHORIZATION
Duty free
import of inputs
BCD
GST
GST
AA Holder
IGST
Exports
` 50
GST regime
October 13,
2017
IGST
exemption
under AA
scheme
Notification 79/2017 - Customs
27
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Rs.50
Rs.30
Rs.100
INPUTS IMPORTED UNDER ADVANCE AUTHORIZATION
Duty free
import of inputs
BCD
GST
GST
AA Holder
IGST
Exports
` 50
GST regime
October 13,
2017
IGST
exemption
under AA
scheme
January 23,
2018
Refund if AA
benefit
availed ?
October 23,
2017
Notification 3/2018 - CTRefund available
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Rs.50
Rs.30
Rs.100
INPUTS IMPORTED UNDER ADVANCE AUTHORIZATION
Duty free
import of inputs
BCD
GST
GST
AA Holder
IGST
Exports
` 50
GST regime
October 13,
2017
IGST
exemption
under AA
scheme
January 23,
2018
Refund if AA
benefit
availed ?
October 23,
2017
Refund not
available
September 4,
2018
Notification 39/2018 - CT
Refund not
allowed if AA
benefit
availed
29
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Rs.50
Rs.30
Rs.100
INPUTS IMPORTED UNDER ADVANCE AUTHORIZATION
Duty free
import of inputs
BCD
GST
GST
AA Holder
IGST
Exports
` 50
GST regime
October 13,
2017
IGST
exemption
under AA
scheme
January 23,
2018
Refund if AA
benefit
availed ?
October 23,
2017
September 4,
2018
Refund not
allowed if AA
benefit
availed
October 9,
2018
Notifications +
Circular issued
to clear
anomaly
Notification 53/2018 - CT
Refund available
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Rs.50
Rs.30
Rs.100
INPUTS IMPORTED UNDER ADVANCE AUTHORIZATION
Duty free
import of inputs
BCD
GST
GST
AA Holder
IGST
Exports
` 50
GST regime
October 13,
2017
IGST
exemption
under AA
scheme
January 23,
2018
Refund if AA
benefit
availed ?
October 23,
2017
September 4,
2018
Refund not
allowed if AA
benefit
availed
October 9,
2018
Notifications +
Circular issued
to clear
anomaly
Notification 53/2018 - CT
Refund availableNotification
54/2018 - CT
Refund not
available
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Rs.50
Rs.30
Rs.100
INPUTS IMPORTED UNDER ADVANCE AUTHORIZATION
Duty free
import of inputs
BCD
GST
GST
AA Holder
IGST
Exports
` 50
GST regime
October 13,
2017
IGST
exemption
under AA
scheme
January 23,
2018
Refund if AA
benefit
availed?
October 23,
2017
September 4,
2018
Refund not
allowed if AA
benefit
availed
October 9,
2018
Notifications +
Circular issued
to clear
anomalyRefund available
March 23,
2020
Explanation
inserted
Notification 16/2020 - CT
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Rs.50
Rs.30
Rs.100
INPUTS IMPORTED UNDER ADVANCE AUTHORIZATION
Duty free
import of inputs
BCD
GST
GST
AA Holder
IGST
Exports
` 50
Refund available
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Ruling Decision
Cosmo Films
(Guj HC)
Zaveri & Co.
(Guj HC)
Balkrishna Industries
(Guj AAR)
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REFUND TO SEZ UNITS ON EXPORT OF GOODS
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Ruling Decision
Vaachi International
(GSTAA - AP)
Britannia Industries
(Guj. HC)
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d▪ ITC accumulated to SEZ
▪ Reason for accumulation?
▪ Export qualifies to be zero rated supply
▪ Rule 89(1) allows only supplier to claim
refund
▪ No refund to SEZ unit, if no export is made
by them, refund can only be sought by
supplier to SEZ
Without payment of taxOn payment of tax
EXPORT WITH PAYMEMT v. WITHOUT PAYMENT
35
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Factors
ITC on Capital Goods
Limit on Value of Exported Goods
Benefit as under Advance
Authorization
Disbursement
Procedural requirements
REFUND TYPES
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Output Stage Refund
Input Stage Refund
(Accumulated ITC)
Others
Inputs / Input
services used in
zero-rated supplies
Inverted duty
structure
IGST paid on
zero rated
supplies
Deemed
exports
Tax payment
under wrong
heads
Excess
payment of tax
Assessment /
Appeal / Any
other order
Other reasons
INVERTED DUTY STRUCTURE
37
5%
18%
Outward side
Inward side
Under Inverted Duty structure, refund granted as per below formula:
Net ITC
Turnover of Goods Tax payable on
supply of goodsAdjusted Total Turnover
Net ITC mean ITC availed on inputs
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DecisionRuling
VKC Footsteps
(Guj HC)
Transtonnelstroy Afcons Joint Venture
(Mad. HC)
Pending before SC
No benefit to Traders?
REFUND TYPES
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Output Stage Refund
Input Stage Refund
(Accumulated ITC)
Others
Inputs / Input
services used in
zero-rated supplies
Inverted duty
structure
IGST paid on
zero rated
supplies
Deemed
exports
Tax payment
under wrong
heads
Excess
payment of tax
Assessment /
Appeal / Any
other order
Other reasons
Meaning of deemed exports
(Notification 48/2017 dated October 18, 2017)
DEEMED EXPORTS
Supply of goods to Advance Authorization holder
Supply of capital goods to EPCG Authorization holder
Supply of goods to EOU / STP / EHTP / BTP
Supply of gold by Bank or PSU against Advance Authorization
39
DEEMED EXPORTS
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Section 54 of CGST Act
▪ Refund of GST
available
▪ Benefit available
either to supplier or
recipient
Deemed ExporterAA or EPCG
Holder / EOU
Supply of goods
GSTExports goods
Deemed
Exporter
AA or EPCG
Holder / EOU
OR
Refund of GST available
DEEMED EXPORTS
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Section 54 of CGST Act
▪ Refund of GST
available
▪ Benefit available
either to supplier or
recipient
Deemed Exporter
Supply of goods
GSTExports goods
Deemed
Exporter
Refund of GST available
Gives declaration that
no ITC has been
availed
AA or EPCG
Holder / EOU
Files application
for refund
DEEMED EXPORTS
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Section 54 of CGST Act
▪ Refund of GST
available
▪ Benefit available
either to supplier or
recipient
Deemed ExporterAA or EPCG
Holder / EOU
Supply of goods
GSTExports goods
AA or EPCG
Holder / EOU
Refund of GST available
Files application
for refund
EXPORT REFUND IMPLICATIONS
Deemed ExporterAA or EPCG
Holder / EOU
GSTExport of goods
Without payment of tax*
43
GST
AA or EPCG Holder /
EOU claims refund
Supplier or
Recipient claims
refund
*Export on payment of tax
cannot be made
Other
Procurements
REFUND TYPES
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Output Stage Refund
Input Stage Refund
(Accumulated ITC)
Others
Inputs / Input
services used in
zero-rated supplies
Inverted duty
structure
IGST paid on
zero rated
supplies
Deemed
exports
Tax payment
under wrong
heads
Excess
payment of tax
Assessment /
Appeal / Any
other order
Other reasons
REFUND OF TAX PAID IN WRONG HEAD – Section 77
CGST + SGST paid
IGST payable…
▪ Refund available for amount paid under
wrong head
▪ No interest on belated payment
Liability
CGST + SGST
Paid IGST instead of CGST + SGST
Claim refund of IGST and pay CGST + SGST
Interest liability?
45
Ruling Decision
Adithya & Ambadi Traders
(Ker HC)
Shree Nanak Ferro Alloys
(Jha HC)
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REFUND TYPES
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Output Stage Refund
Input Stage Refund
(Accumulated ITC)
Others
Inputs / Input
services used in
zero-rated supplies
Inverted duty
structure
IGST paid on
zero rated
supplies
Deemed
exports
Tax payment
under wrong
heads
Excess
payment of tax
Assessment /
Appeal / Any
other order
Other reasons
EXCESS TAX PAID - REFUND v. ADJUSTMENT
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Explanation 2 to Section 54 - Time limit to apply refund
Circular No. 26/26/2017 dated December 29, 2017, allows adjustment
Unjust Enrichment applicability
UNJUST ENRICHMENT
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Shift of burden of taxes
▪ Nature of deposits
▪ Burden of proof
▪ Recipient of supply can claim
o Exempt supplies by recipient
▪ Write-off in financial statements
▪ Increase in cost
▪ CA Certificate
UNJUST ENRICHMENT
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Shift of burden of taxes
▪ Allied Photographic India (SC) –
Uniformity in price
▪ Solar Pesticide Pvt. Ltd. (SC) –
Incidence in Financial Statements
▪ Aditya Industries (SC) – Credit Notes
issued subsequently
TDS
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APPLICABILITY
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Contract Value > Rs. 2,50,000
NN 50/2018 – Central Tax, dated September 13, 2018
Effective October 1, 2018
@ 2%
(1% CGST + 1% SGST)
Or
(2% IGST)
DEDUCTOR
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Local Authority
Department or an establishment of CG or SG
Society established by CG or SG or LA
Governmental Agencies
Public Sector Undertakings
Section – 51(1) NN: 33/2017 dated September 15, 2017
Tamil Nadu Coop. Silk
Producers Federation
Ltd., 2020 (32) GSTL 506
(AAR - GST- TN)
DEDUCTOR
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Local Authority
Department or an establishment of CG or SG
Society established by CG or SG or LA
Governmental Agencies
Public Sector Undertakings
Section – 51(1) NN: 33/2017 dated September 15, 2017
An authority or a board or any other body:
(i) Set-up by an act of Parliament or a State
Legislature; or
(i) Established by any Government,
with 51% or more participation by way of
equity or control, to carry out any function
Shapoorji Paloonji & Co.
Pvt. Ltd., 2016 (42) STR
681 (Pat.)
TRANSACTIONS
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Exempt Supplies
Non-taxable supplies
Advance for goods or services
RCM supplies
Supply by unregistered supplier
TRANSACTIONS
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Delhi
Delhi
Delhi
Supplier
Delhi
Maharashtra
Maharashtra
Recipient
Delhi
Delhi
Maharashtra
Place of Supply TDS
Maharashtra Maharashtra Delhi
PROCEDURE
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Deposit – Section 51(2)
TDS Certificate – Section
51(3)
Within 10 days of
succeeding month
Process Due Date
Within 5 days of deposit of
TDS
Interest @ 18%
Non-compliance
Late fees @ 200 / day
Return Filing – Rule 66 10th of the succeeding
monthLate fees @ 200 / day
Q&A
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Thank You ! CALL US
+91 9958100604
MAIL US
gaurav.narula.nityatax.com
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B-3/58, 3rd Floor, Safdarjung
Enclave, New Delhi-110029
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