GOODS AND SERVICES TAX-

Textile & Garment Manufacturers

Presented by:CA VIRENDRA PARWAL

Goods & Service TaxGhano Saro TaxGhani Sari TensionGood & Simple TaxGood Night -Sweat Dreams -Take Care

EXISTING INDIRECT

TAX STRUCTURE

CustomsDuty

ExciseDuty

ServiceTax

Sales Tax

Central

Levies

Entry Tax & Octroi

Entertainment Tax

Electricity Duty

Luxury Tax

VAT

Stat

eLevies

Stat

e

VAT /

Sales

Tax

Centra

l

Excis

e

duty

Entertainme

nt

Tax (not

levied

by local

bodies)

Surcharges

&

Cess

es

Addition

al

duties

of

excis

e

Surcharge

&

Cess

es Stat

e

Taxe

s

Centra

l

Sale

s

Tax

Central

Taxe

s

Purcha

se

TaxExcise duty

levied under

Medicinal &

Toiletries

Preparation

Act

Servic

e

Tax

Taxes

on

lottery

,

betting

&

gamblin

g

Entr

y

Tax Luxur

y

Tax

SAD &

CVD

CENTRAL & STATE TAXES TO BE SUBSUMED IN GST

MAJOR TAXES

REMAINED POST-GST

• Central Excise on:

o Tobacco

products

o Petroleum

Products

• Basic Custom

Duty

• State Excise on Alcohol

liquor

• State VAT on:

o Alcohol liquor

o Petroleum

Products

• Stamp Duty

• Electricity Duty

• Profession tax

• Road tax

• Taxes on Mineral Rights

• Property Tax

• Entertainment

Duty

• Gram Panchayat

Tax

Central

TaxesState Taxes

Local Body

Taxes

GST- FEATURES….

Destination-based consumption tax.

Applies to all supplies of goods/services (as against manufacture,sale or provision of service) made for a consideration except:

o Exempted goods / services – common list for CGST & SGST

o Goods / services outside the purview of GST

o Transactions below threshold limits

Dual GST having two concurrent components-

o Central GST (CGST) levied & collected by Centre

o State GST (SGST) levied & collected by States [including Unionterritories with legislature]

o Union territory GST (UTGST) levied and collected by Unionterritories without legislature

CGST, SGST and UTGST on intra-State supplies of goods / servicesin India

GST- FEATURES….

IGST levied and collected by the Centre applicable to:

o Inter-State supplies of goods / services in India

o Inter-state stock transfers of goods

o Import of goods / services

o Export of goods / services

Export of goods/services- Zero rated

Tobacco Products – under GST + Central Excise

GST would apply to all goods and services except Alcohol forhuman consumption.

GST on five specified petroleum products (Crude, Petrol,Diesel, ATF & Natural gas) would be applicable from a date tobe recommended by the GSTC.

PRIME MODEL OF GST

Central

GST

levied by

the Central

Govt.

Levied by the

States / Union

Territories

State GST

/ UT GSTIGST

Levied by the

Centre but

apportioned

between Centre

& States both

Concept of a supply is broader than a sale :

• Transfer of title is required for Sales

• Supply doesn’t require transfer of title

Presence of two persons for “taxable supply”:

• Pre-requisite for VAT and Service tax

• Not a pre-requisite for Excise

• Will not be a pre-requisite for GST

• Even self-supplies is a taxable supply in GST

Presence of Consideration for “taxable supply”:

• Pre-requisite for VAT and Service tax

• Not a pre-requisite for Excise

• Will not be a pre-requisite for GST

TAXABLE EVENT “SUPPLY” –BROAD CONCEPT

- Import of Service : With Consideration/ Withoutconsideration.

- Disposal of business asset: For a consideration ornot.

- Gift to employees exceeding Rs. 50,000/- in a F.Y.- Goods held for business are put to any private use

or made available to any person for any purposeother than business.

- Supply of goods or service (Withoutconsideration)

IS IT “SUPPLY” ??

Distinct Person

Related Person

COMPOSITION LEVY (SECTION 10)

A Registered person whose aggregate turnover in the precedingFY did not exceed Rs. 75 Lakhs.

All the registered taxable person under the same PAN should beunder composition .

Cannot collect tax from the recipient on supplies made.

No credit of input tax .

Rates under Composition:

Category of Registered Persons Rate of Tax

Manufacturers, other than as notified byGovernment.

1%

Suppliers making supplies referred to in clause (b) ofparagraph 6 of Schedule II, i.e. restaurant supplies.

2.5%

Any other supplier. 0.5%

COMPOSITION LEVY (SECTION 10)

CONDITIONS TO OPT FOR COMPOSITION LEVY

Not a supplier of services other than restaurant and outdoorcatering (supplies referred to in clause (b) of paragraph 6 ofSchedule II);

Not engaged in making supply of goods which are not leviable totax under GST;

Not making any inter-State outward supplies of goods;

Not making any supply of goods through an electronic commerceoperator;

Not a manufacturer of notified goods.

TIME OF SUPPLY: SEC.12

Time of Supply of Goods

(a) Date of Issue of invoice or the last date on whichinvoice is required to be issued under Sec. 31.

(b) Date of Receipt of payment by supplier.(which ever is earlier)

Time of Supply of Goods (under RCM)• Date of receipt of goods• Date on which payment is made• date immediately following thirty days from the date of issue of

invoice by the supplier(which ever is earlier)

REVERSE CHARGESpecified categories of supply of goods or services.

Following services have been identified for RCM: GTA Advocate Sponsorship Services by Government Services by director Services from non-taxable territory

Supply of taxable good/services from un-registeredperson to a registered person. Tax Invoice by recipient Payment Voucher to supplier.

Tax InvoiceBill to Self Tax invoice format of Taxable supplyOn date of Receipt of Goods or servicesPayment voucher

Tax Invoice contentName address and GSTIN of the supplier.Invoice NoDate of Its Issue.Name, address and GSTIN of the registered recipient.(Buyer)HSN code of goods and SAC in case of Services.Description of goods and services.Total value of supply.Discount and abatement if any.Taxable value of supply.Rate of Tax (CGST,SGST,IGST and UTGST).Amount of Tax charged.Place of supply along with the name of state in case of inter-state supply.Whether the tax payable under the reverse charge.Signature/Digital signature

Invoice shall beraised for eachsuch transaction

Illustrations: RCM & GST

Inputs

Transaction Liable to GST

Supplier Registered

GST charged by Supplier

Tax Invoice/Debit

Note by supplier

Supplier Not Registered

GST to pay RCMDelay in GST , Interest to pay

Transaction Not Liable to GST like diesel etc

No GST under RCM or

otherwise

Purchase from Composition

dealer

NO GST under RCM or

otherwise

VALUE OF TAXABLE SUPPLY Value of Supply shall be the “TRANSACTION VALUE”.

Transaction Value to include: Any tax, duty other than GST

Commission, packing and other incidental expenses

Expenses incurred by recipient which was to be paid bythe supplier

Interest or late fee or penalty for delayed payment of anyconsideration for any supply to be included in transactionvalue.

Transaction value not to include any discount if it is given:

Before or at the time of supply and recorded in invoice,

After the supply if such discount is in terms of anagreement and ITC is reversed by the recipient.

VALUE OF TAXABLE SUPPLY

Value of supply of goods made or received through an agent:

Open market value of goods supplied OR

At the option of supplier, 90% of price charged for supply of likekind & quality by the recipient to his customer not being a relatedperson, where goods are intended for further supply by the saidrecipient.

Value of Supply between distinct or related persons, other than throughan agent:

Open market value of such supply.

Value of supply of like kind and quality, if open market value is notavailable.

Where recipient is eligible for full ITC, the value declared in theinvoice to be deemed as open market value of supply.

Option of supplier to charge price at 90% is also available here asis there in the case of an agent.

REGISTRATION- SEC. 23 & 24• Suppliers liable to be registered:

– Aggregate Turnover exceeds Rs. 20 Lakhs in a F. Y.

– Aggregate Turnover exceeds Rs. 10 Lakhs in a F.Y.

(Sikkim, Himachal Pradesh, Uttarakhand, ArunachalPradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland,Tripura).

• Person registered under any of the earlier law on theappointed day.

• Following person shall not be liable for registration:

– exclusively engaged in the business of supplying goods orservices or both that are not liable to tax or whollyexempt from tax under GST,

– An agriculturist, to the extent of supply of produce out ofcultivation of land

PERSONS REQUIRED TO BE REGISTERED (Irrespective of the threshold)

• Person effecting inter-state taxable supplies

• Liable to pay under RCM

• Casual Taxable Person making taxable supply

• Non-Resident Taxable Person

• Person required to deduct TDS

• Person supplying on behalf of another registered taxableperson

• Input Service Distributor

• E-Commerce Operator

• Supplying through E-Commerce Operator

INPUT TAX CREDIT

Inputs Capital Goods Input Service

Conditions to claim ITC:• Possession of tax invoice/tax paying document• Received goods or services• Tax paid to the government• Supplier furnished the return• Payment to supplier within 180 days from date of issue of invoice• No ITC after September following the end of FY or annual return

whichever is earlier

Motor Vehicles and other conveyance

Food and beverages, outdoor catering

Health service

Membership of club, health and fitness center

Rent a cab, life insurance and health services

Travel benefit to employees for vacation

Works contracts service for construction ofimmovable property

Goods or services for construction of animmovable property on his own account

Goods/Services used for personal consumption.

Goods lost/stolen/destroyed, gift or free sample.

BLOCKED CREDITS

ITC

CGST

IGST

SGST

CGST

IGST

SGST

IGST

IGST

CGST

SGST/ UTGST

UTILIZATION OF ITC

ITC ON THE BASIS OF USE OF INPUTS (Section 17)

26

Use of input tax credit: Partly for

Taxable Supplies

ITC Available

Zero-rated

Supplies

ITC Available

Non-taxable Supplies

ITC notavailable

Exempt Supplies

ITC notavailable

Nil-rated Supplies

ITC notavailable

ITC IN RESPECT OF GOODS SENT FOR JOB WORK

Principal Job Worker

Inputs/ Capital Goods sent for job work

Received back or directly supplied from job-worker’s premises within 1 year (inputs) or 3

years (capital goods) of being sent out

ITC available if the conditions and restrictions under job work are satisfied.

If not received back/directly supplied: deemed that principal supplied such inputs to job-worker on the day when the inputs were sent out.

Send on Delivery Challan prescribed if not related and Tax Invoice if related/distinct Person

The Principal shall be entitled to take credit ofinput tax on inputs even if the inputs are directlysent to a job worker for job work without beingfirst brought to his place of business.

Inputs sent to Job worker

Waste /Scrap generated

Can be supplied by Job-Worker if he is registered

If job worker is not registered then waste/scrap to be supplied by principal only.

Moulds and dies,jigs and fixtures,or tools-

Goods cannot be supplied from the place ofbusiness of a job-worker unless:

Job-worker is registered orIf job-worker is un-registered then principalto declare the place of business of job-workeras his additional place of business.

VARIOUS RETURNS/STATEMENTS

SlN

Return For: To be filed by

1 GSTR 1 Outward supplies made by taxpayer (other than compounding taxpayer and ISD, non-resident taxable person, persons required to deduct TDS or collect TCS)

10th of the next month

2 GSTR 1A Details of outward supplies as added/ deleted/ corrected by the recipient

Auto populated

3 GSTR 2 Inward supplies received by a taxpayer (other than a compounding taxpayer and ISD, non-resident taxable person, persons required to deduct TDS or collect TCS). To be filed on the basis of details in GSTR 2A

15th of the next month

4 GSTR 2A Details given by supplier of supplies shall be auto populated here

Auto populated

5 GSTR 3 Monthly return (other than compounding taxpayer and ISD, non-resident taxable person, persons required to deduct TDS or collect TCS). To be filed based on the details in GSTR 1 and GSTR 2

20th of the next month

6 GSTR 4 Quarterly returns for compounding taxpayers 18th after end of quarter

CONTD…SlNo.

Return For To be filed by

8 GSTR 6 Return for Input Service Distributor (ISD) 13th of the next month

9 GSTR 6A Details of inward supplies made available to ISD recipient on the basis of FORM GSTR-1 furnished by the supplier

Auto populated

10 GSTR 7 Return for Tax Deducted at Source 10th of the next month

13 GSTR 9 Annual Return By 31st December

14 GSTR 9A Simplified annual return by compounding taxpayer By 31st December

15 GSTR 9B Reconciliation Statement Annual Return

16 GSTR 10 Final Return Within 3 months of surrender

Where aggregate turnover of a registered taxable person during aFinancial Year exceeds Rs. 2 Crore, he shall get his accounts auditedand will furnish audited annual accounts along with a reconciliationstatement with the annual return.

TAX INVOICE

Registered person supplying taxable goods to issue taxinvoice, before or at the time of,—(a) removal of goods for supply to the recipient, where thesupply involves movement of goods; or(b) delivery of goods or making available thereof to therecipient, in any other case,

Tax invoice not to be issued if the value of the goods orservices or both supplied is less than Rs. 200/-. (Only ifrecipient is unregistered and does not require such invoice)

Consolidate Invoice can be issued at the end of each for suchsupplies

TAX INVOICE Registered person supplying exempted goods/services or paying tax

under the composition scheme to issue a bill of supply.

Registered person may issue a revised invoice within 1 month fromthe date of issue of RC against invoice already issued during theperiod beginning with the effective date of registration till the dateof issuance of certificate of registration.

SITUATION:

On receipt of advance payment with respect toany supply of goods/services. Tax to be paidby Recipient.

If subsequent to issue of receipt voucher, nosupply is made and no tax invoice is issued.

When registered person is liable to pay taxunder RCM in respect of supply fromunregistered person.

At the time of making payment to the supplier.

REGISTERED PERSON TO ISSUE:

Receipt Voucher

Refund Voucher

Tax Invoice

Payment Voucher

Any Person may file an application electronically

in FORM GST RFD-01 through the Common Portal.

In case of zero-rated supply of goods or services or both withoutpayment of tax under bond or letter of undertaking, refund ofinput tax credit shall be granted as per the following formula:

• “Adjusted Total turnover" means the turnover in a State, excludingthe value of exempt supplies other than zero-rated supplies,during the relevant period.

Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero-rated supply of services) x Net ITC ÷ Adjusted Total Turnover

REFUND • In case of refund on account of inverted duty structure,

refund of input tax credit shall be granted as per thefollowing formula:

FORM GST RFD-01: Application

FORM GST RFD-02: Acknowledgement

FORM GST RFD-03: Deficiency

FORM GST RFD-04:Provision al Refund

FORM GST RFD-06: Final Order of Refund

Every registered person shall keep and maintain, at his principalplace of business, a true and correct account of:-

Production or manufacture of goods;

Inward and outward supply of goods and/or services;

Stock of goods;

ITC availed;

Output tax payable and paid;

Others as prescribed. (To be dealt with rules)

In case of multiple places of business, accounts & records relating toeach place to be kept at respective places of business.

ACCOUNTS AND OTHER RECORDS (Section-35)

In addition to particulars mentioned in Sec. 35, true and correctaccount of following to be maintained:

Goods/Services imported or exported

Supplies attracting tax under RCM

Invoices, bill of supply, debit & Credit notes

Receipt, Payment & Refund Vouchers and e-way bills.

Accounts or records to be maintained activity-wise. (manufacturing,Trading and Provision of Services)

Books of Accounts and other records to be retained until the expiry of72 months from the due date of furnishing of annual return for theyear pertaining to such accounts and records.

MAINTENANCE OF RECORDS BY REGISTERED PERSON

Place of supply of goods- Sec. 10

• Where the supply involves movement of goods, the place of supply ofgoods shall be the location of the goods at the time at which themovement of goods terminates for delivery to the recipient.

• Where the goods are delivered by the supplier to a recipient or anyother person, on the direction of a third person, it shall be deemed thatthe said third person has received the goods and the place of supply ofsuch goods shall be the principal place of business of such person.

• Where the supply does not involve movement of goods, the place ofsupply shall be the location of such goods at the time of the delivery tothe recipient.

TRANSITION- CREDITS CENVAT Credit carried forward in return

Furnishing of all returns for the period of preceding 6 months

Credit should be Admissible under GST

Unavailed CENVAT Credit in respect of capital goods not carried forward in return.

Stock as on appointed day:

CONDITIONS:

Possession of invoice or duty paying document.

Invoice should not be older than 12 months.

Not eligible for any abatement under GST.

Details in FORM GST TRAN-1 within 90 days.

Inputs Inputs contained in Finished Goods

Inputs contained in Semi- Finished goods

DEEMED CREDIT TO BE ALLOWED

Type

GST rate

Deemed Credit

CGST/SGST

9% or more

60% of Tax

CGST/SGST

Less than 9%

40% of Tax

IGST

9% or more

30% of tax

IGST

Less than 9%

20% of tax

Available to Registered person other than manufacturer orsupplier of service who is not in possession of an invoice or otherduty paying document

Benefit of such credit to be passed on to the receipient by way of reduced price.

DEEMED CREDIT : CONDITIONS

This scheme shall be available for 6 ‘tax periods’ from the appointedday subject to the following conditions:

Central tax payable on supply of such goods has been paid.

Such goods were not unconditionally exempt from whole of

excise duty or were not Nil rated of first schedule of CETA, 1985.

Document for procurement of such goods is available.

Registered person submits a statement in FORM GST TRAN-2

at the end of each of the six tax periods indicating

therein the details of supplies of such goods effected

during the tax period.

The amount of credit allowed shall be credited to the electronic

credit ledger.

The stock of goods on which the credit is availed is so stored that

it can be easily identified.

ILLUSTRATION A person is registered in GST but was not registered under the

existing Excise Law. He has stock of Inputs of Rs. 50,00,000/- onthe appointed day which was leviable to E.duty @12%. He doesnot have invoice/document evidencing payment of Excise duty.In GST such goods are taxable @18%. The credit of CGST wouldbe available as under:-

Month Supply CGST Paid @9%

SGST Paid @9%

IGST Paid @18%

Credit allowed

July 2017 5,00,000 45,000 45,000 27,000 (60% of CGST)

Aug 10,00,000 90,000 90,000 54,000

Sep. 5,00,000 45,000 45,000 27,000

Oct. 10,00,000 90,000 90,000 54,000

Nov. 5,00,000 45,000 45,000 27,000

Dec. 5,00,000 90,000 27,000 (30% of IGST)

Jan. 2018 10,00,000 90,000 90,000 -

Total 50,00,000 405,000 405,000 90,000 2,16,000

Registered person entitled to take creditin his electronic credit ledger if suchinvoice is recorded in his books ofaccounts within 30 days of the appointedday (Can be further extended 30 days).Registered person to furnish a statementin respect of credit taken under thissection.

Supplier Recipient

Appointed Day

Duty / TaxPaid under theexisting law

Input / InputServicesreceived afterappointed day

6 Months

Inputs removed for job-work

1/07/2017Appointed Day

31/12/2017

2 months

On sufficient cause being shown

Inputs returned

S NO existing Law GST Taxability

1 Goods sent as such orafter partially processedto Job Worker

Returned by Job Workerwithin 6 months + 2months (If Extensionavailable)

No tax payable

2 Goods sent as such orafter partially processedto Job Worker

Returned by Job Workerafter the above prescribedperiod.

Input tax credit onsuch inputs will berecovered as anarrear of tax underGST.

6 Months6 Months

01/01/2017

Duty Paid Goods 01/07/2017 31/12/2017

S No Removal/Sale under Existing Law

Returned in post GST-era Taxability

1Taxable & removed notearlier than 6 monthsfrom appointed day.

By Non Taxable Person within 6months from appointed day andare identifiable to thesatisfaction of the properofficer.

Refund to registeredtaxable person.

By Taxable Person (B to B). Refund Not Available(Deemed as supply)

Returned

Appointed Day

GST TRAN

1 : 90 days

Appointed DayContract

EnteredPrice Revised Upwards

Supplementary invoice /Debit Note to be issuedwithin 30 days of Revision

Deemed to be Supply

Price Revised Downwards

Supplementary invoice /Credit Note to be issuedwithin 30 days of Revision

Taxable person shall beallowed to reduce his taxliability on account of issue ofthe said invoice or credit noteonly if the recipient of theinvoice or credit note hasreduced his input tax credit

NO GST PAYABLE

Where VAT/ Service Tax was LEVIABLEunder the existing law.

Supply is made prior to the appointed day.

And Time of Supply under GST arises afterthe appointed day-i.e., invoice raised after the appointed day,Or, payment made after the appointed

day.

GST PAYABLE

Where VAT and Service Tax PAID under theexisting law.

Supply is made after the appointed day.

Credit would be allowed as ITC in GST.

Declaration to be given in GST TRAN-1within 90 days.

COMPLIANCE RATING

Every person liable to pay GST shall be rated and will be assigned a GST compliance rating score

The rating would be based on his compliance with the provisions of CGST, SGST & IGST

The details of parameter & methodology would be prescribed

The compliance rating score will be updated periodically and will be intimated as follows: To the taxable person Will be placed in the public domain

ANTI-PROFITEERING MEASURE

In order to prevent any rise in price ofcommodities after GST implementation,the centre has proposed an ‘anti-profiteering’ measure to ensure that tradeand industry to pass the benefits ofreduction in tax rates and availability ofCredit to the consumers.

The Central Government will constitute anauthority or entrust the task to an existingauthority to examine that the input taxcredits or reduction in tax rates arepassed by registered tax payers toconsumers.

EMPLOYEES TRAINING

All the employees of the organisation shallundergo extensive training in GST so that itsimplications as well as documentation can bewell understood.

Training should be on all the aspects of theGST viz Accounts, Tax Invoice, Compliance,Legal Provisions etc. so that empoweredemployees can take appropriate and correctdecisions with the help of professionals whenthey face any challenge.

TYPES OF ASSESSMENT

Self Assessment

Sec. 59

Provisional Assessment

Sec. 60

Assessment of non-filers

of returnsSec. 62

Assessment of

unregistered persons

Sec. 63

Summary assessment in certain

special cases

Sec. 64

Scrutiny Assessment

Sec. 61

Assessment means determination of tax liability.

KINDS OF AUDIT UNDER GST

Audit by tax authorities

Sec. 65

Special Audit

Sec. 66

Annual Audit by CA/CWA

Sec. 35(5)

TAX STRUCTURE

Type

Man Made Fibre/Filament

Cotton

Silk

Yarn

18%

5%

5%

Job work

18%

5%

5%

Fabric

5%

5%

5%

Garment

5% , not more than 1000 Rs

12% more than 1000 Rs

No refund of accumulated ITC

CA VIRENDRA PARWAL

KALANI & Co.

98298 88807

vparwal@kalanico.com