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Copyright (c) 2016. Lakshmikumaran & Sridharan / Confidential.
UPDATES ON GST
METAL RECYCLING INDUSTRY
N.MATHIVANAN
Copyright (c) 2016. Lakshmikumaran & Sridharan / Confidential.
GST UPDATE GST Development
Salient Features of GST
GST Overview
Taxable Event – Supply / Nature of Supply and
Place of Supply
Registration
GST Rates
Valuation
Input Tax Credit and its Matching
Return
Compliance Calendar
Copyright (c) 2016. Lakshmikumaran & Sridharan / Confidential.
GST Development - When will GST come?
GST Constitutional
Amendment Act, 2016 - 8th
September 2016
(Power to collect taxes under
existing provisions till 16.9.2017)
Formed GST Council
(First Meeting on
22.09.2016)
Passage of CGST and IGST Laws by Centre and SGST
Law by States
(Expected by March 2017)
Rollout of GST
(Expected Date 1.7.2017)
Copyright (c) 2016. Lakshmikumaran & Sridharan / Confidential.
GST- Overview
Taxes subsumed under GST: Excise duty, VAT, CST, Service tax, CVD, SAD, Entry tax, etc.
Taxes not subsumed: Clean energy cess & stowing excise duty on coal, Electricity Duty, etc.
GST is IT Systems driven
Input tax credit – key pillar under GST
6
Taxable Event – Supply
Concept of composite supply and mixed supply
Supply for consideration
All forms of supply
Made or agreed to be made
For a consideration
By a Person In the course or furtherance of
Business
Sale/ Transfer /Barter / Exchange /License / Rental / Lease / Disposal
Phrase “To another person” not incorporated
Copyright (c) 2016. Lakshmikumaran & Sridharan / Confidential.
Supply without a consideration Sc
hed
ule
I
Permanent transfer/ disposal of business assets where input tax has been availed
Supply between related persons or distinct persons specified in section 10, when made in the course or furtherance of business
1. By principal to agent where agent undertakes to supply such goods
2. By agent to principal where agent undertakes to receive goods on behalf of principal
Importation of services by taxable person from related person or any of his establishments outside India, in the course or furtherance of business
New Business Transactions taxable under GST without consideration
E.g. – Use of office facility by another group entity
Copyright (c) 2015. Lakshmikumaran & Sridharan / Confidential.
Registration
Under GST it is only One State – One PAN – One Registration
Need for mapping different place of business presently exists within the State for ONE GST Registration
Option to go for multiple registration for different business verticals within the State also available.
Two registered unit under same PAN different
entity.
a. Inter office Adjustment
b. Impact of contracts entered centrally by
Head Office. Whether two Supplies? One
by Service provider to Head office and
another by Head Office to Factory/Branch
9
Supply under GST
GST Supply
Intra State Supply
Goods and/or Services
SGST
CGST
Inter State Supply
Goods and/or Services
IGST
Import
Goods
Basic Custom Duty
IGST
Services
IGST
Export
Goods and/or Services
Physical Export
1. Pay IGST and Refund to be
claimed by Exporter
2. Sale without IGST
Supply to SEZ
Goods and/or Services
Zero Rated
Pay IGST and Refund to be claimed by SEZ
Non GST Supply
E.g. Diesel
Supply
Copyright (c) 2016. Lakshmikumaran & Sridharan / Confidential.
Situation Place of Supply
Inter state Supplies ( Leviable to IGST) Intra State Supplies (Leviable to CGST / SGST)
If location of supplier and place of supply are in different States. If location of supplier and place of supply are in same State. Location of supplier of goods not defined even in revised draft GST law.
Import of services/goods Export of services/goods
Deemed to be inter state supply of goods and services Export is zero rated Concept of deemed export present Supplies to and by SEZ are deemed to be inter state transactions
Nature of Supply : Local / Inter State
Copyright (c) 2016. Lakshmikumaran & Sridharan / Confidential.
Place of Supply – Goods other than import/ export
1
2
3
4
5
When movement involved
Place where movement terminates for delivery
When movement not involved
Location at the time of delivery
Supplied on board a conveyance
Place where goods taken on board
Bill to Ship to model Person on whom bill
raised
Supply by way of assembly/ installation
Place of such assembly/ installation
Copyright (c) 2016. Lakshmikumaran & Sridharan / Confidential.
Place of Supply – Goods imported/ exported
The place of supply of goods imported into India shall be the location of the importer
The place of supply of goods exported from India shall be location outside India
Import India Export
Copyright (c) 2015. Lakshmikumaran & Sridharan / Confidential.
GST RATES
Exact list of taxes/cesses getting subsumed will be made available by GST Council/Legislation.
Can Petroleum products purchased against Form C even in GST regime ?
Further, rate of GST shall be mapped HSN wise.
Excise, Service Tax, VAT/CST, Entry Tax,
CVD/SAD will be subsumed.
ED,VAT /CST continuing on 5
petroleum products namely Petrol, diesel,
natural gas, ATF & Crude oil.
Four rate prescribed :
5% , 12%, 18% and 28%. Cess may be levied on high end/
luxury products.
Proposal for three tier rate structure for
services
Copyright (c) 2016. Lakshmikumaran & Sridharan / Confidential.
Value of taxable supply Transaction Value
Freight and insurance upto delivery of goods
Different value based on payment terms – Inherent interest component
Discount post removal
Valuation in case of transfer from one unit to another unit? Comparable value or cost of production
Valuation in case of transfer to depot Comparable value or cost of production or depot value?
Credit accumulation at depot in case of comparable value
Valuation
Copyright (c) 2016. Lakshmikumaran & Sridharan / Confidential.
Input Tax Credit
Input Tax Credit IGST/CGST/SGST charged on any supply of goods and/or services to taxpayer and includes any amount paid under reverse charge but excludes any such amount paid under composition levy
• Goods/Service • used or intended to be
used • by a supplier • in the course or
furtherance of business
Inputs/ Input Services
• Means goods, • the value of which is
capitalized in the books of accounts of the person claiming the credit and
• which are used or intended to be used in the course or furtherance of business
Capital Goods
Copyright (c) 2016. Lakshmikumaran & Sridharan / Confidential.
Input Tax Credit
Whole GST System is IT driven
Credit availment dependent upon vendor performance
Credit will be valid only if the supplier pays the amount to Government account and valid return is filed through system
Provisional credit allowed for 60 days
Credit can be availed only on receipt of goods / services
Concept of Matching introduced
Copyright (c) 2016. Lakshmikumaran & Sridharan / Confidential.
Input Tax Credit
3 Ledgers viz., Cash Ledger, ITC Ledger and Tax Liability Ledger of all taxpayers maintained electronically by GSTN system itself. (Not editable)
System put in place for capturing all details of outward supplies made by the Taxpayer in GSTN system.
Effective mechanism of matching of purchase details uploaded by company with details uploaded by vendor and customers in GSTN system.
Availment of eligible input tax credit on various inward supply of goods / services by the Taxpayer through GSTN system only.
Only credit reflected in the matched invoices will be treated as valid credit.
Copyright (c) 2016. Lakshmikumaran & Sridharan / Confidential.
Basic Features of Returns
Invoice based Return
Concept of Auto population
Designed for system based matching
Settlement through data received in returns
No revised returns – changes through amendments to original details
Maintenance of ledgers – Cash, ITC and liability
Copyright (c) 2016. Lakshmikumaran & Sridharan / Confidential.
Compliance Calendar
Sl Return/ Ledger Purpose To Be Filed By 1. GSTR–1 Outward supplies made by the Taxpayer (other than
compounding taxpayer & ISD) 10th of the next month
2. GSTR–2 Inward supplies received by the Taxpayer (other than compounding taxpayer & ISD)
15th of the next month
3. GSTR–3 Monthly Return (other than compounding taxpayer & ISD)
20th of the next month
4. GSTR–4 Quarterly Return for compounding Taxpayer 18th of the month next to the quarter
5. GSTR–5 Period Return by Non–Resident Foreign Taxpayer Last day of Registration
6. GSTR–6 Return for Input Service Distributor (ISD) 13th of the next month
7. GSTR–7 Return for Tax Deducted at Source (TDS) 10th of the next month
8. GSTR–8 Tax collected at source (TCS) 9. GSTR–9 Annual Return 31st December of the next FY
10. ITC Ledger of the Taxpayer Continuous 11. Cash Ledger of the Taxpayer Continuous 12. Tax Ledger of the Taxpayer Continuous
Copyright (c) 2016. Lakshmikumaran & Sridharan / Confidential.
GST Preparedness
GST Understanding and Awareness
Business transactions and its treatment in GST Regime
GST Efficient Business Model
Strategy for smooth transition
Smooth GST implementation
GST Compatibility - IT & Accounting System
Copyright (c) 2016. Lakshmikumaran & Sridharan / Confidential.
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