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MODEL GST LAWDecoding The Regulation…
Khandhar Mehta & Shah 1
122nd Constitution Amendment Bill, 2014 was approved in Lok
Sabha on 06-05-2015
Select Committee of Rajya Sabha submitted its
report on 22-07-2015
Rajya Sabha passed the bill unanimously on
03-08-2016
Lok Sabha has passed the bill on 08-08-2016 for the amendments suggested
by Rajya Sabha
More than half of the State Assemblies have
ratified the Bill and have received Presidential
Assent on 08-09-2016
GST Council is set up comprising Union and State Finance Ministers and will meet frequently to decide
on GST rates / slabs/ exemptions etc.
Parliament would take up GST Bill in the Budget
session along with CGST and IGST bill likely to
commence on 23-01-2017
31 State Assemblies (29 States + 2 UT) will pass SGST bill during
February and March 2017
GST TO GO LIVE BY 1st April 2017
GST – The Road Ahead
GST Council meeting Progress
Meeting No.
Date of Meeting Matters Decided / to be decided
1 22nd / 23rd September, 2016 1. Threshold Limit finalized at Rs. 20 Lacs and Rs. 10 Lacs for North EasternStates + Sikkim. It was also decided to subsume all the cesses into GST
2. On issue of compensation, it was suggested to take an average of revenuegrowth for three out of last five years excluding two outliers withsuggestion of fixing base year as 2015-16.
3. Control Jurisdictiona) Services: Central Authorities for initial 3 yearsb) Goods : Based on turnover
i)Turnover up to Rs. 1.5 Crores : Statesii) Turnover over Rs. 1.5 Crores : States + Centre
2 30th September, 2016 1. Many states gave incentive for setting up industry and exempted exciseduty. It was decided to grant cash refund will be given to all such entitiesin GST Regime.
2. The Council also agreed on five subordinate legislations i.e. draft rules andformats released on 26th and 27th September viz. (1) Registration (2)Invoice (3) Return (4) Payments & (5) Refund
3 17th, 18th / 19th October, 2016 Council was to decide upon rate slabs and exemption; however meeting was concluded without arriving at consensus on rate structure
4 3rd November, 2016 5% / 12% / 18% and 28% + Cess approved by the GST Council
5 2nd / 3rd December, 2016 No consensus among the States & Centre; Council receives few suggestions oncritical issue of cross empowerment
6 11 / 12th December, 2016 To be discussed on approval of drafts and cross empowerment
CONTENTS
BASICS OF GST
LEVY IN GST REGIME
TIME AND PLACE OF SUPPLY
GST VALUATION RULES
INPUT TAX CREDIT (ITC)
TAX ADMINISTRATION
TRANSITIONAL PROVISIONS
4
BASICS OF GST
5
GST - MEANING
• GST is stage wise destination based consumption tax.
• Broad based and a single comprehensive tax levied on goods and services consumed in aneconomy.
• Levied and collected on value addition at each stage of sale or purchase of goods or supply ofservices based on input credit method but without state boundaries.
• Uniform single tax across the supply chain.
• Improvement in international cost competitiveness of indigenous goods and services.
• Enhancement in efficiency in manufacture and distribution due to economies of scale.
• GST encourages an unbiased tax structure that is neutral to business processes, business models,organization structure, product substitutes and geographical locations.
• The prices of commodities are expected to come down in the long run as dealers pass on thebenefits of reduced tax incidence to consumers by slashing the prices of goods.
6
Intra-state Supply of Goods and Services
•Central GST
•State GST
Inter-state Supply of Goods and Services
• IGST
•1% Additional Tax on Supply of Goods
Imports
•Basic Customs Duty
• IGST (in place of CVD and SAD)
Exports
•Zero Rated
Excise Duty – Manufacturing of GoodsVAT / CST – Sale of GoodsService Tax – Provision of Services
DUAL GST : BASIC PROPOSED STRUCTURE
7
8
Summary…
Sr. No. Situation Supply Tax
1 Location of Supplier and Place of Supply in same State
Intra State CGST & SGST
2 Location of Supplier and Place of Supply in different States
Inter State IGST
3 Import of Goods or Services from outside India
Inter State IGST
4 Location of Supplier in India and Place of Supply outside India
Exports Zero Rated
PROBABLE RATE STRUCTURE IN GST
SGST (+) CGSTTotal Rate %
Goods and Services
Exempted Basic Education, Healthcare, Agriculture related, Public Transport etc.
Zero RatedEssential items including food grains, 50% of items under Consumer PriceIndex (CPI), Export of Goods and Services
5% Gold and Silver ornaments, precious and semi-precious stones
12% Rate for Basic Commodities
18% Standard Goods and Services
28% Items currently taxable with 30-31% like partial luxury items
28% + Cess Luxury & De-merit goods (Like Luxury Cars, Tobacco, Cigarettes)
Will be brought in GST at a later Stage
Petroleum and Petroleum products
Out of GST Alcoholic Liquor for Human Consumption
9
CHALLENGES
Multiple levies & Compliances at
State and Centre Levels
Overlapping of tax in various transactions
Complex Laws on movement of
Goods –
Form C,F…
Cascading of Taxes
Ineligibility of ITC for SPs & CENVAT
for Traders
Disputes of Classification, Valuation &
Credit Eligibility
CHALLENGES IN CURRENT INDIRECT TAX STRUCTURE
10
CENTRAL LEVIES
Excise Duty
@ 12.50%
Service Tax
@ 15%
CVD @ 12.50% / SAD @ 4%
Central Sales Tax @ 2%
GST
Customs Duty
Customs Duty
State VAT
@ 5% - 15%
Entry/ Purchase Tax
Octroi / LBT
Luxury / Entertainment Tax
@ 5% - 25%
GST
STATE LEVIES
11
12
TAXES NOT SUBSUMED IN GST
TAXES TO REMAIN IN GST
Property Tax &Stamp Duty
ElectricityDuty
Professional Tax
Excise Duty on Alcohol for
Human Consumption
CustomsDuty
Excise Duty on PetroleumProducts
Entitlement/Obligations - Present Laws and GST
13
Particulars VAT Excise Service Tax
GST
Allowance of Input Tax Credit (ITC) of pre-registration period No Yes Yes No
Allowance of Input Tax Credit when supplier does not discharge his liability
*No Yes Yes No
Allowance of ITC of tax paid on inter-state transactions No NA NA Yes
Refund of ITC to exporters Yes Yes Yes Yes
Refund of accumulated ITC due to inverted rate structure Yes No No Yes
Option of Revised Return Yes Yes Yes No
Rectification of Filed Returns No No No Yes
Matching of Invoices and Recovering tax from purchasers in case of mismatch
*Yes No No Yes
Reverse Charge Mechanism (RCM) for Goods No No NA Yes
Reverse Charge Mechanism (RCM) for Services NA NA Yes Yes
Partial Reverse Charge Mechanism (RCM) for services NA NA Yes No
* In some states such as Gujarat and Maharashtra
Entitlement/Obligations - Present laws and GST
14
Particulars VAT Excise Service Tax
GST
Tax on Advance Receipts No No Yes Yes
Power to reject transaction value declared in invoice* No No No No
Centralised Registration No No Yes No
Inclusion of free supplies in the taxable value No Yes Yes Yes
Inclusion of incidental expenses in the taxable value Yes Yes Yes Yes
Tax on Distribution of free samples No Yes NA No
MRP based valuation No Yes No No
Specific valuation in case of Related Party Transactions* No Yes No No
Post supply Discounts / Incentives not known at the time of supply to be included in transaction value
No Yes No Yes
* The same provision was there in earlier MGL. But, the same has not incorporated in Revised MGL.
FORMATION
• Provide common PAN-based registration
• Enable returns filing and paymentsprocessing for all States on a sharedplatform
• Ensure integration of the common GSTPortal with the existing tax administrationsystems of the Central / State Governmentsand other stake holders
• Build efficient and convenient interfaceswith tax payers to increase tax compliance
• Carry out research, study best practices andprovide training to the stakeholders
• Special Purpose Vehicle (GSTN-SPV) has beenset up to create enabling environment forsmooth introduction of GST
• GSTN-SPV will provide IT infrastructure andservices to various stakeholders including theCentre and the States
• Strategic control over GSTN-SPV has beenensured with the Government due tosensitivity of role of GSTN-SPV and theinformation which would be available with it
• GSTN-SPV has been incorporated as a not-for-profit, non-Government, private limitedcompany with 49% equity held by theGovernment and 51% equity held by the non-Government institutions
GST NETWORK – GSTN SPV
ROLES & RESPONSIBILITY
15
STAKEHOLDERS OF GSTN
GSTN
State Tax Authorities
Central Tax Authorities
SME Taxpayers
Corporate Taxpayers
Facilitation Agencies
Banks
GSTN
Registration
Returns
GST Payment
Refunds
Audits
Appeals
STAKEHOLDERS WORKFLOW
16
LEVY IN GST REGIME
17
MEANING AND SCOPE OF SUPPLY
Supply includes
18
For consideration & for business
• Sale
• Barter
• Transfer
• Exchange
• License
• Rental
• Lease
• Disposal
For consideration whether or not for business
• Importation of service for Consideration
Supply without consideration (Schedule-I)
• Permanent transfer/disposal of business assets only where ITC has been availed
• Supply b/w related persons and distinct person as specified
• Supply of goods by agent to principal and vice-versa
• Importation of service from related person or any of his other establishment o/s India in course or furtherance of business
SUPPLY – BETWEEN PRINCIPAL AND AGENT
Where a person, acting as an agent, for an agreed commission or brokerage, either supplies or receivesany goods and/or services on behalf of any principal, the transaction between such principal and agentshall be deemed to be a supply.
PRINCIPAL – AGENT TRANSACTION
PRINCIPAL AGENT
Supplies goods to agent for sale to third party
Agent receives commission from Principal
Transaction Person Liable to pay GST
Commission paid by Principal to Agent
Agent (GST @ 18%)
Goods supplied by Principal to Agent for sale to third party
Principal(GST @ 18%)
Goods supplied by Agent to Third party on behalf of Principal
Agent(GST @ 18%)
GIST OF SCHEDULE – II – GOODS VS. SERVICE
20
Service
• Transfer of goods without transfer in title thereof
• Transfer of business assets for private use with or without consideration
• Lease, tenancy, license to occupy land
• Lease or letting out of commercial or residential building
• Treatment or process which is applied to another person’s goods
• Declared list of service viz. Works Contract Service, Construction Services, IT Services, Restaurant and Outdoor Catering Service
Goods
•Transfer in title in goods
•Supply of goods by unincorporated association of body to their members for consideration
•Transfer of business assets except transfer made for the private use with or without consideration
GST SUPPLY CHAIN – LAY OUT
Supplier
DistributorOverseas Supplier
Customer
Distributor
Factory
Gujarat Maharashtra
Outside India
Import
Overseas CustomerExport (Zero Rated)
Purchase
CGST + SGST
Trfin
Gu
jarat
No
Tax
Sale
CG
ST + SGST
Transfer
IGST
Sale
IGST
Sale
CGST + SGST
Warehouse
Warehouse
BCD - Cost
IGST - Credit
India
21
TIME & PLACE OF SUPPLY OF GOODS
& SERVICES
22
TIME OF SUPPLY OF GOODS
23
Earliest of :
• Date of issue of invoice or last date of invoice required to issue
- Invoice shall issue on date of removal of goods or date on which goods made available to recipient
• Date on which supplier receives payment
Normal/
Continuous Supply
Earliest of :
• Date of receipt of goods
• Date of payment - earlier of entered in books or debited in bank
• Date immediately following thirty days from the date of issue of invoice by the supplier
• Any other case – date of entry in books of recipient
Reverse charge
• Incase of supply of vouchers, supply shall be
• date of issue of voucher, if supply is identifiable at that point or
• the date of redemption of voucher, in all other cases
• If time of supply is not determinable
• in a case where a periodical return has to be filed, be the date on which such return is to be filed, or
• in any other case, be the date on which the CGST/SGST is paid
Other cases
TIME OF SUPPLY OF SERVICES
24
Earliest of :
• Date of issue of invoice or last date of invoice required to issue
- Invoice shall issue before or after the provision of service but within period prescribed
• Date on which supplier receives payment
Normal/
Continuous Supply
Earliest of :
• Date of payment - earlier of entered in books or debited in bank
• Date immediately following Sixty days from the date of issue of invoice by the supplier
• Any other case – date of entry in books of recipient
Reverse charge
• Incase of supply of vouchers, supply shall be
• date of issue of voucher, if supply is identifiable at that point or
• the date of redemption of voucher, in all other cases
• If time of supply is not determinable
• in a case where a periodical return has to be filed, be the date on which such return is to be filed, or
• in any other case, be the date on which the CGST/SGST is paid
Other cases
PLACE OF SUPPLY OF GOODS (OTHER THAN IMPORT & EXPORT)
25
• Place where movement of goods terminate
Movement of goods
• Location of such Third person
Supply on direction of Third
person
• Location of goods at time of delivery to recipient
Supply without movement
• Location at which goods are taken on board
Supply on Board Conveyance
• As per law of Parliament based on Council’s suggestion
Others
PLACE OF SUPPLY OF GOODS FOR IMPORT & EXPORT
26
Import of goods in India –
Location of ImporterExport of goods o/s India –
Location of Exporter
PLACE OF SUPPLY OF SERVICES
Particulars Place of supply
General Provision Supply to Registered Person - Location of such person Supply to any other person - Location of recipient of services
where the address is on record; and in other cases locationof supplier of service
Immovable property Location of such property, and if the same is o/s India then,Location of recipient
Restaurant, personal grooming, fitness etc.
Location where the services are performed
Training service Where supplied to a registered person, location of suchperson
Any other person, location where services are performed
Admission to a cultural, sporting event etc.
Location where event is actually held
Organization of a cultural, sporting event etc.
Supply to Registered Person - Location of such person Supply to any other person - Location where event is held If event is held o/s India – Location of recipient
Goods Transportation Service including mail & courier
Supply to Registered Person - Location of such person Supply to any other person - Location where goods are
handed over for their transportation27
PLACE OF SUPPLY OF SERVICES Cont…
Particulars Place of supply
Passenger Transportation Service
Supplied to Registered Person - Location of such person Supply to any other person - Location from where the passenger
embarks on the conveyance
Services provided on board a conveyance
Location of first scheduled point of departure of that conveyance
Telecommunication services, including data transfer, broadcasting, DTH
Location where the telecommunication line, leased circuit or cableconnection or dish antenna is installed
For mobile connection for telecommunication and internet services:• Post-paid basis - Location of billing address of the recipient• Pre-paid basis through an agent – Location of selling agent or re-
seller or distributor• Pre-paid basis to final subscriber – Location where pre-payment
is received or vouchers are sold Any other case – Location of recipient as per record of supplier
Banking & other financial services
Account linked services - Location of recipient Non account linked services - Location of supplier
Insurance Services Supplied to Registered Person - Location of such person Supply to any other person - Location of the recipient of services
on record of supplier28
VALUATION RULES
29
VALUATION OF SUPPLY
Value of supply
30
Transaction Value, subject to • Unrelated Parties• Price is sole consideration
Transaction Value
• Shall Include
• Taxes and duties other than GST
• Amount paid by recipient instead of supplier and not included in price
• Incidental costs/ expenses (such as commission, packing, royalties etc.)
• Interest or late fee or penalty for delayed payment of any consideration
• Subsidies directly linked to the price except for Central / State Government subsidies
• Shall not Include
• Any discount allowed before or at the time of supply as recorded in invoice
• Post Supply Discount provided
• Discount is as per agreement entered into / before supply
• Discount is specifically linked to relevant invoices
• Input Tax Credit is reversed by recipient as is attributable to the discount
Transaction value accepted in following scenarios: • Related party transaction where price not influenced by relationship • Goods transferred from one place of business to another• Principal to an agent or vice versa
Value to be determined by proceeding sequentially through rules 4 to 6
Rule 7 – Prescribes the mechanism for rejection of declared value
Rule 8 – Valuation in certain cases • Pure agent of service recipient – consistent with service tax legislation • Money changer
VALUATION OF SUPPLY
Rule 4 Value by Comparison • Goods / services of like kind, quality and supplied at the same time • Adjustment by proper officer
Rule 5 Computed Value Method • Cost + charges for design or brand + profit and general expenses
Rule 6 Residual Method• Value determined using reasonable means
These Rules were prescribed in earlier MGL. The same were not incorporated in Revised MGL.
INPUT TAX CREDIT (ITC)
32
CASCADING OF TAX - PRESENT TAX STRUCTURE
33
Input CENVAT(Service Tax + Excise Duty)
Input Tax Credit of VAT
Input CST – Always a COST
(Service Tax + Excise Duty) Liability
VAT Liability
CST Liability
Credit available
Credit not available
Cascading Impact – Burden of Tax on Tax
Non – availability of VAT credit against Service Tax / Excise liability and vice-versa
Non – availability of CST credit against any liability
34
Central GST Credit
State GST Credit
IGST Credit
Central GST Liability
State GST Liability
IGST Liability
Credit available
Credit not available
AVAILABILITY OF CENVAT CREDIT - GST
To be Setoff in the same order
Credit of CGST Credit of SGST Credit of IGST
1 CGST Liability SGST Liability IGST Liability
2 IGST Liability IGST Liability CGST Liability
3 X X SGST Liability
AVAILABILITY OF CENVAT CREDIT - GST
CreditLiability
Gujarat SGST
GujaratCGST
Gujarat IGST
MaharashtraSGST
Maharashtra CGST
Maharashtra IGST
Gujarat SGST a X a X X X
Gujarat CGST X a a X X X
Gujarat IGST a a a X X X
Maharashtra SGST X X X a X a
Maharashtra CGST X X X X a a
Maharashtra IGST X X X a a a
INPUT TAX CREDIT
Credit in respect of any invoice or debit note pertaining to a financial year cannot betaken after
• Filing of return for the month of September following the end of financial yearto which such invoice or debit note pertains, or;
• Filing of the relevant annual return, whichever is earlier
Credit not admissible on such tax component of the cost of capital goods, for whichdepreciation has been claimed under the Income Tax Act, 1961 .
In case of supply of capital goods on which input tax credit has been taken, paymentis required to be made
• for an amount equal to input tax credit reduced by percentage as may bespecified, or;
• tax on the transaction value of such capital goods, whichever is higher
Time limit
Capital Goods
36
EXCLUSIONS IN ITC
EXCLUSIONS IN ITC
• Motor Vehicle & Other Conveyances
• Food & Beverages, Outdoor Catering, Beauty Treatment, Health services, Cosmetic and Plastic Surgery,
• Membership of Club, Health & Fitness Centre
• Rent-a-cab, life insurance, health insurance for employees except when such services are notified as obligatory upon employer
• Travel benefit extended to employees on vacation
• Works Contract service supplied for construction of immovable property
• Goods / Services for construction of immovable property on his own account
• Tax paid under Composition Scheme
• Personal Consumption
• Goods lost, stolen, disposed by way of gift or free samples.
• Tax paid pursuant to notice issued invoking larger period
ITC IN RESPECT OF STOCK
Entitlement of Credit of input tax in respect of input held in stock and Inputs contained in Semi Finished or Finished Goods
Person Eligible Point in Time
Person who has applied for registration within 30 days from the date he become liable and has been granted certificate of registration
On the day immediately preceding the date from which he becomes liable to pay tax
Person who has taken Voluntary Registration u/s. 23(3) of GST Act
On the day Immediately preceding the date of registration
Registered Taxable person ceases to pay tax u/s. 9 i.e. Composition Levy
On the day immediately preceding the date from which he becomes liable to pay tax u/s. 8
38
SWITCH OVER PROVISIONS
Registered Taxable person availing benefits of Input
Tax Credit (ITC)
Switches over as a taxable person paying tax u/s. 9 i.e. Composition levy
Goods / Services supplied by him become exempt absolutely u/s. 11
1. He shall pay an amount equal to the credit of input tax in respect ofinputs held in stock and inputs contained in semi finished or finishedgoods held in stock and on capital goods reduced by such prescribedpercentage points immediately preceding the date of such switchover or date of exemption.
2. Balance of Input tax credit, if any, lying in electronic credit ledgershall be lapsed.
39
REVERSAL OF ITC
ITC on Goods / Services
• Partly used for Business• Partly used for other
purpose
• Partly used for taxable supply
• Partly used for Exempt supply
ITC attributable to business purposes
will be eligible
ITC attributable to taxable supply will be eligible
Taxable supply shall include zero rated supply
40
GST ELECTRONIC CREDIT ALLOWED ON SUPPLY TRANSACTIONS
41
GSTN
Dealer A
Dealer BSupply along with Invoice
Cash Flow
Credit Flow
TAX ADMINISTRATION
42
REGISTRATION, PAYMENT & REFUND
State wise, Business vertical wise and Voluntary Registration options are available.
Concept of ISD continue.
Single threshold limit for goods and services. i.e. Rs. 20 Lakhs for normal category andRs. 10 Lakhs for Special category States & States specified under Article 279A(4)(g) of TheConstitution
Certain persons required to take compulsory registration. Such as Inter state supplier, Casualdealer, Person required to pay tax under RCM, Person paying TDS, Person acting agent, ISD,e-Commerce operator, Other persons to be notified by Government.
Registration
Payment
Single threshold limit for goods and services. i.e. Rs. 20 Lakhs for normal category andRs. 10 Lakhs for Northern Eastern State including Sikkim.
Three modes of payment of tax under GST regime are proposed i.e. through internet banking /credit or debit card, Over the Counter payment (upto Rs. 10,000 per challan) and paymentsthrough NEFT/RTGS.
The input tax credit as self-assessed in the return of a taxable person shall be credited to hiselectronic credit ledger to be maintained in the manner as may be prescribed.
43
REGISTRATION, PAYMENT & REFUND
Refund claim is required to be filed within 2 years from relevant date.
Refund order to be passed within 90 days from the date of receipt of application.
80% refund can be released provisionally and balance 20% after verification.
For refund application < Rs. 5 Lakhs only declaration & proof for incidence of tax is required.
Refund
44
Refund claim available in case of
ExportAccumulated credit due to inverted duty
structureDeemed Export
RETURNS
45
Types of Return Form Period for filing Return
Outward supplier GSTR -1 10th of next month
Inward supplier GSTR-2 15th of next month
All assessees exceptspecified
GSTR-3 20th of next month
Composition Dealer GSTR-4 18th of next month following end of quarter
Non - Resident taxableperson
GSTR-5 20th of next month
ISD GSTR-6 13th of next month
Person paying TDS GSTR-7 10th of next month
Supplies affected throughE- commerce operator
GSTR-8 10th of next month
Annual Return GSTR-9 31st December following F.Y.
Final Return - 3 months from the date of cancellation ororder of cancellation whichever is later
46
GOODS AND SERVICE TAX APPELLATE TRIBUNAL (‘GSTAT’)
• One bench for each state (29 States + 2 UT) i.e. 31 GST Appellate Tribunal
• GSTAT shall comprise of following members:
GSTAT
Member (Judicial)Member
(Technical – CGST)Member
(Technical – SGST)
TRANSITIONAL PROVISIONS
47
MIGRATION OF EXISTING REGISTERED TAX PAYERS
Issuance of Provisional
Certificate of Registration (RC)
Validity of RC for 6
months or extended
period
Furnish information as may be prescribed
Final RC to be issued if information
found adequate
•Cancellation of provisional RC on failure to submit information
48
STATE WISE ENROLMENT SCHEDULE
Government has started phase wise GST enrolment process of existing taxpayers for onlyexisting VAT registered taxpayers.
49
States / Union Territories Start Date End Date
Puducherry, Sikkim 08/11/2016 23/11/2016
Maharashtra*, Goa, Daman and Diu, Dadra Nagar Haveli, Chhattisgarh 14/11/2016 29/11/2016
Gujarat* 15/11/2016 30/11/2016
Odisha, Jharkhand, Bihar, West Bengal, Madhya Pradesh, Assam, Tripura,
Meghalaya, Nagaland, Arunachal Pradesh, Manipur, Mizoram
30/11/2016 15/12/2016
Uttar Pradesh, Jammu and Kashmir, Delhi, Chandigarh, Haryana, Punjab,
Uttarakhand, Himachal Pradesh, Rajasthan
16/12/2016 31/12/2016
Kerala, Tamil Nadu, Karnataka, Telangana, Andhra Pradesh 01/01/2017 15/01/2017
Service Tax / Excise Registrants not registered under State VAT Act 01/01/2017 31/01/2017
Delta All Registrants (All Groups) 01/02/2017 20/03/2017
The window will be open till 31/01/2017 for those who miss the chance.
* Extended upto 07.12.2016
CARRY FORWARD OF CENVAT CREDIT / ITC
•Amount of eligible CENVAT credit, VAT and Entry Tax# carried forward as per earlier law in return filed for the period ending immediately prior to appointed day
•Such credit shall also be eligible under GST Regime
Amount of CENVAT Credit / ITC to be allowed to registered taxable
person
• Un-availed CENVAT credit not carried forward in return filed for the period ending immediately prior to appointed day under earlier law
• Such credit shall also be eligible under GST Regime
Amount of un-availed* CENVATcredit of Capital goods to be allowed to registered taxable
person under GST
50
# Under VAT / Entry Tax, return shall be filed within 90 days of the appointed date
*Un-availed amount of CENVAT credit in respect of Capital goods = Aggregate amount of CENVAT Credit (-) Credit already availed in respect of capital goods in earlier return
CARRY FORWARD OF CENVAT CREDIT / ITC
Credit
VAT
Excise Inputs
Input Services
Capital Goods
Disclosed in Returns
Eligible in Current Tax
Regime
Eligible in GST Regime
Credit to be c/f.
Type of Credit Eligiblefor c/f.
Input Tax Credit - VAT Yes
CENVAT Credit – Inputs Yes
CENVAT Credit - Input Services Yes
CENVAT Credit - Capital Goods Yes
Unavailed CENVAT Credit - Capital Goods Yes
(subject to below conditions)
ELIGIBILITY OF CENVAT CREDIT / ITC FOR INPUTS IN STOCK
Category of Persons
Registered taxable personunder GST who :
• Was not liable to registerunder earlier law
• Is engaged inmanufacturing of exemptgoods or provision ofexempted service underearlier law
• Is engaged inmanufacturing of exemptedas well as taxable goods orproviding taxable as well asnon-taxable service
• Has availed benefit ofcomposition scheme underearlier law
• Was providing WorksContract Service by availingabatement benefit
• Is first stage dealer or asecond stage dealer orregistered Importer
Taxes in respect of:
• inputs held in stock onappointed date
• inputs contained in semi-finished or finished goodsheld in stock on appointeddate
Intended to be used formaking taxable supplies
Not availed CENVAT creditunder earlier law due to abovementioned situations
The said taxable person passeson the benefit of such creditby way of reduced prices tothe recipient
Not paying tax undercomposition scheme in GSTregime
Eligible CENVAT credit underGST regime also
Possession of invoice issuedwhich is not earlier thantwelve months immediatelypreceding appointed day
The suppliers of services is noteligible for any abatementunder GST regime
Eligible Duties & Taxes Conditions
52
ELIGIBLE DUTIES AND TAXES TO BE CARRIED FORWARD
Service Tax
Excise Duty
Additional Excise Duty on Textile
and Textile Articles
Additional Excise Duty on Goods of
Special Importance
COUNTER-VAILING
DUTY (CVD)
National Calamity
Contingent Duty
Whether Krishi Kalyan Cess (KKC) to be carried forward in GST regime ? 53
SPECIAL ADDITONAL DUTY (SAD)
Tax paid on Goods / Capital Goods lying with Agent (only SGST)
Sr.
No.
Tax paid on goods lying with agents on the appointed day to be allowed as credit to agent
GOODS CAPITAL GOODS
1 The agent is a registered taxable person under GST
2 Both the principal and the agent declare the details of stock of Goods / Capital Goods lying with
such agent on the date immediately preceding the appointed day
3 The invoices for such Goods / Capital Goods had been issued not earlier than twelve months
immediately preceding the appointed day
4 The principal has either reversed or not
availed of the input tax credit in respect of
such goods.
The principal has either not availed the input tax
credit in respect of such capital goods or, having
availed such credit, has reversed the said credit,
to the extent availed by him.
CREDIT OF ELIGIBLE DUTIES IN RESPECT OF INPUTS OR INPUT SERVICE DURING TRANSIT
Registered Taxable Person shall entitle to take credit of eligible duties and taxes in respect of
Input and Input Service
If, Input and Input Service received on or after appointed day BUT
duty in respect of the same paid before appointed day
And Invoice or any other duty paying document recorded in
books of accounts within 30 days from the appointed day
55Note : Period of 30 days can be further extended by competent authority for another30 days.
EXEMPTED GOODS RETURNED AFTER APPOINTED DATE
Exempt goods removed/sold under earlier law within 6 month prior to
appointed day
Returned within 6 months from appointed day to any
place of business
Not returned within 6 months of appointed day
to any place of business
No tax payable underGST Law
Tax payable by person returning the goods if such
goods are liable to tax under GST
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Return by a person , who is not registered under GST
regime - any time
DUTY PAID GOODS RETURNED AFTER APPOINTED DATE
Duty paid goods removed/sold under earlier law within 6 month prior to
appointed day
Returned by Registered Taxable Person within or
after 6 months from appointed day to any place
of business
Returned by person other than Registered Taxable Person within 6 months
from appointed day to any place of business
Treated as deemed supplyRegistered Taxable Person eligible for refund of duty
paid under earlier Law
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GOODS SENT ON JOBWORK RECEIVED ON OR AFTER APPOINTED DATE
Particulars Input Semi Finished Goods Finished Goods
Type Inputs
removed/dispatched as
such or post partial
process
Semi finished goods
removed from factory /
dispatched from place of
business
Excisable goods
manufactured in a factory /
any goods dispatched from
place of business
Process to be done prior to
the appointed day
Further processing,
testing, repair, or any
other purpose
For carrying out certain
manufacturing processes
Carrying out tests or any
other process not
amounting to manufacture,
to any other premises
Returned after completion
process within 6* months
from appointed day
To factory / place of Business –
No Tax payable
Returned after completion
of process, after 6* Months
from appointed day
Amount equivalent to Input Tax credit availed shall be payable
Selling goods directly from
premises of Job worker
within 6* Months
N.A. On payment of duty
within India or export
without payment of duty
On payment of duty within
India or export without
payment of duty
* Declaration to be filed by Manufacturer & Jobworker, if goods returned within 6 months* 6 Months can further be extended by 2 months by competent authority
PRICE REVISION IN EXISTING CONTRACT UNDER GST
A supplementary invoice ordebit note is required to beissued within 30 days of PriceRevision.
Tax is required to be paid to theextent revision under GSTregime.
A supplementary invoice orcredit note is required to beissued within 30 days of pricerevision
Tax liability to be reduced to theextent of revision under GSTregime.
UPWARD REVISION
DOWNWARDREVISION
BRANCH TRANSFER AND GOODS SENT ON APPROVAL BASIS
Treatment of Branch Transfers :
Treatment under SGST Amount of input tax credit reversed prior to the
appointed day shall not be admissible as credit of
input tax under this Act
Goods sent on Approval Basis :
Goods returned within 6*
months from appointed day
No tax payable
Goods returned post 6*
months from appointed day
Tax shall be payable by:
Person returning goods
Person who has sent goods on approval basis
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* 6 Months can further be extended to 2 months by competent authority
IMPORT / INTERSTATE SUPPLY ON OR AFTER APPOINTED DATE
Transaction Liability of Tax payment under GST regime
Supply made on or after appointed date Liable to Tax
Transaction initiated on or beforeappointed date on which full tax hasbeen paid in earlier law
Not liable to Tax
Transaction initiated on or beforeappointed date on which partial tax hasbeen paid in earlier law
Liable to pay Tax to the extent of balance amount
Note: A transaction shall be deemed to have been initiated before the appointed day ifeither the invoice relating to such supply or payment, either in full or in part, has beenreceived or made before the appointed day.
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VENDOR MANAGEMENT
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WHAT IS VENDOR MANAGEMENT?
Vendor Management is ongoing management of third-party providers of product or service
• The goal of VM is to ensure the organization continuously obtains the best value from external
providers of products and services while controlling exposure to vendor-related risk.
Governance & Process
Select Vendors
Manage Vendor
Contracts
Manage Vendor Risk
Manage Vendor
Performance
Vendor Appraisal Reporting
Vendor Mgt.
Lifecycle
WHY IT IS IMPORTANT ?
Because we must measure, manage, and scrutinize the vendors we rely on to deliver value
Co-ordination
• Manage 500 to 5,000 vendors
• Continuous monitoring and follow-up with vendors
• Managerial Decision for continuous defaults by vendors
.Scarcity of Resources
• Increase in manpower to carry out co-ordination task with vendors
• Increase in Payroll Cost
Risk
• Hit on Cash Flow due to delay in availability of ITC
• Credit Risk due to non-payment of Tax / non-filing of Return by vendors
• Increase in Working Capital Requirement
Service Providers
Contractors
Joint
VenturesAgencies
Law Firms
KEY TAKEAWAYS
Assess / Monitor effectiveness of vendor post vendor selection stage (though
procedural but one of the important aspect of GST)
Fix financial terms with vendors based on GST Score Card Rating.
Familiarize with the latest regulatory guidance including procedural aspect
Include vendor risk management as a function within the vendor management
program
Ensure Vendor Compliance
Vendor Selection
Vendor Management
Vendor Reporting
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GST IMPACT ON BUSINESS VERTICALS
Suppliers
• ITC Credit
Marketing
• Pricing Strategies
• Effect on demand
IT Systems & Human Resource
• Employee education
• System design
• Change Master Record
Supply Chain & Logistics
• Transaction Framework
• Warehousing
• Costing Analysis
Legal & Finance
• Cash Flow Impact
• Drafting Agreement
• Impact on existing contract
Customers
• Financing Model
• Offer Structure
GST RECONCILIATION
Particulars Amount (INR)
Amount (INR)
Sales as per financials statement 110.00
Add: Advances for goods recd. during the year (incl. GST) 25.00
GST on advances refunded 1.00
Branch Transfer Supply 20.00
Packing Charges (not forming part of sales) 5.50 51.50
Less: Advances refunded, if any (incl. GST) 5.00
GST on advances received 4.50
Export of Goods including deemed exports 15.00
Exempted Supply of Goods 5.00 29.50
Value of Supply liable for GST 132.00
GST Payable @ 18%Less: Input Tax Credit
23.7520.50
Net GST Payable 3.25
GST RECONCILIATION STATEMENT
(Rs. in Crores)
APPROACH TO GST
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Mapping ‘As-Is’ Scenario
Impact Assessment
Implementation Go Live
Approach to GST Implementation
Mapping of ‘As-is’Business model
Tax implications onthe existing BusinessModel
Working out impact of Dual GST on ‘As-Is’ model
Transition of tax credits
Evaluation of options to optimize GST impact
Finalization of changes required
Adjust business structure / transactions
Assist for changes in ERP systems / processes
Review contractual arrangements with suppliers/ customers
Train Accounts, Finance and Taxation Team
Review of documentation
Review of Central and State GST Returns
Tax adjustments
Handholding Support
Preparedness for GST
MonthTask
Dec2016
January 2017
February 2017
March 2017
April 2017
May 2017
June 2017
Mapping ‘As-Is’ Scenario
Impact Assessment
Implementation
Go Live / Handholding
Date of release of Final Draft of GST
Law
Effective date of Implementation of
GST
SECTOR SPECIFIC IMPACT
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Manufacturing Sector
Pharma Sector
Automobile Sector
Media and Entertainment Sector
Hospitality Sector
IT & ITES Sector
Turnkey Projects / EPC Sector
Real Estate Sector
Education Sector
Banking and Financial Sector
Logistics Sector
E-Commerce
KMS GST Tool
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GST TOOL is a calculator for computing impact of proposed GST Model Law on Indirect Taxes levied onGoods and Services. It also gives a comparative result on taxes under current Indirect Tax regime andpost implementation of GST on ‘AS IS’ basis.
GST Impact Analyzer – Sensitivity Analyzer
Following Steps are required to be followed to achieve decisive analysis of GST :
• Download the Standard Input Data Template (SIDT) and provide the data in the format of thetemplate
• Upload the data of SIDT on GST Tool
• Tool will compute the comparable impact on Indirect Taxes under Existing Regime and GST Regime
• Reporting Option will allow the user to obtain the report of impact analysis conducted by tool inrequired and customized formats
KMS GST Tool
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Thank YouCA. Amish Khandhar
Khandhar Mehta & Shah
3rd Floor, Devpath Complex,
Off C G Road, Bh. Lal Bunglow,
Ahmedabad – 380006
Gujarat – India
Phone : +91 79 66315450/51/52/53
Email : [email protected]
URL : www.kmsindia.in
