GET READY FOR GST

BY: CA RAJESH SALUJA

LUNAWAT & CO.

M # 9810009970. EMAIL: rajeshsaluja@lunawat.com

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GST….main features

� Destination based Consumption Tax:

� One taxable event : i.e. ‘Supply’ instead of multiple taxable events in the present structure.

� Uniformity in tax rates, items (HSN Codes – Harmonized System Nomenclature)

� Composite levy: One Tax on supply of Goods or Services or both

� Five Rates : Goods or services or both would be charged @ 0%, 5%, 12%, 18% and 28%(up to 43%)

� Seamless Credit : Availability of all input taxes against output taxes unlike in present structure where tax credit is not available in various cases / events.

� One software system (GSTN) for whole of India

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Two/Three Taxes

� CGST – Central GST

� SGST – State GST

� IGST – Integrated GST – IGST is more of a tax management tool.

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� For transactions within a state, both CGST & SGST would be

applicable – Presuming GST rate to be 18%, both taxes would be

applicable @ 9% each

� For Interstate transactions, only IGST would be applicable @ 18%

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Intra- State Inter- State

CGST SGST IGST

GST

9% 9% 18%

Two/Three Taxes 4

GST Structure

Transaction Structure Set off against Who will collect

Within State – Goods & Services

CGST CGST Central Government

SGST SGST State Government

Interstate - Goods & Services

IGST = (CGST+SGST) Vatable Collected by Center. Retain CGST, transfer SGST To Destination State

Import of Goods BCD + IGST IGST is Vatable.BCD is cost

Collected by Center. Retain CGST & BCD, transfer SGST to Destination State

Import of Services IGST = (CGST+SGST) Vatable Collected by Center. Retain CGST, transfer SGST to destination State

Export of Goods & Services

Nil Input credit refundable

NA

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TC credit of SGST is not available for CGST or vice-a-versa

IGST InputIGST

Output

SGST Input

CGST Input

SGST Out put

CGSTOut put

Proposed Flow of ITC Credit6

GST Acts

CGST Act

Will apply to whole of

India except State of

J&K

IGST Act

Will apply to whole of

India except State of

J&K

SGST Acts

Will apply to the

respective State

(States Started to

enact)

UTGST Act

� Andaman & Nicobar

� Islands

� Lakshadweep

� Dadra & Nagar Haveli

� Daman and Diu

� Chandigarh &

� Puducherry

GST (Compensation to

the States) Act

Apply to whole of

India

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Supply! Section 7(1)

� Under GST “Supply” is an important event.

� Supply includes:

(a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business;

(b) import of services for a consideration whether or not in the course or furtherance of business;

(c) the activities specified in Schedule I, made or agreed to be made without a

consideration; and

(d) the activities to be treated as supply of goods or supply of services as referred

to in Schedule II.

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Goods!

� Section 2(52) “goods” means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things

attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply;

Actionable Claims:1. Negotiable instruments like bills of exchange, Pro-notes etc.

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Services!

� Section 2(102) “services” means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by

cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged;

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Registration

� Any person, needs to get himself registered if his “aggregate

turnover” in a year exceeds 20 Lakhs (10 lakhs for 11 hill states)

� “aggregate turnover” means the aggregate value of all taxable

supplies

� (excluding the value of inward supplies on which tax is payable by a

person on reverse charge basis),

� exempt supplies,

� exports of goods or services or both and

� inter-State supplies of persons having the same Permanent Account

Number,

� to be computed on all India basis

� but excludes central tax, State tax, Union territory tax, integrated tax

and cess;

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Registration

Mandatory Registration under following circumstances :

(i) persons making any inter-State taxable supply;

(ii) casual taxable persons making taxable supply;

(iii) persons who are required to pay tax under reverse charge;

(iv) person who are required to pay tax under sub-section (5) of section 9;

(v) non-resident taxable persons making taxable supply;

(vi) persons who are required to deduct tax under section 51, whether or

not separately registered under this Act;

(vii) persons who make taxable supply of goods or services or both on

behalf of other taxable persons whether as an agent or otherwise;

(viii) Input Service Distributor, whether or not separately registered under

this Act;

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Registration

Mandatory Registration under following circumstances :

(ix) persons who supply goods or services or both, other than supplies

specified under sub-section (5) of section 9, through such electronic

commerce operator who is required to collect tax at source under

section 52;

(x) every electronic commerce operator;

(xi) every person supplying online information and data base access or

retrieval services from a place outside India to a person in India, other

than a registered person; and

(xii) such other person or class of persons as may be notified by the

Government on the recommendations of the Council.

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Invoices

� In case of Goods - Invoice to be issued before removal (despatch or

delivery) of goods, in case of movement of goods, or delivery or

making available of goods, in any other case.

� In case of Services – Invoice to be issued within 30 days of supply of

services.

� Invoice for goods to be issued in triplicate – Supplier, Transporter and

Recipient.

� Invoice for services to be issued in duplicate.

� Cutting/amendment on invoice is not allowed.

� Preferable to issue computerised invoices using an accounting

software.

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Debit – Credit Notes – Section 34

� Under GST Debit and Credit Notes can only be issued by a Supplier

� A supplier shall issue a Credit Note in following cases:

� Tax Charged or Taxable value shown in Invoice is excess,

� Goods supplied are returned by the recipient, or

� Goods and services supplied are found deficient

� A supplier shall issue a Debit Note when:

� Tax charged or Taxable value shown in Invoice is less

The last date for issuing a Credit Note is 30th September of the

succeeding year or filing of annual return, whichever is earlier.

There is no last date to issue a Debit Note ☺

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ReturnsRETURN FORM PARTICULRS FREQUENCY DUE DATE OF FILING

GSTR-1 Outward supplies of goods or services MONTHLY 10th of succeeding month

GSTR-2 Inward supplies of goods or services MONTHLY 15th of succeeding month

GSTR-3 Monthly consolidated return MONTHLY 20th of succeeding month

GSTR-4 Composite Dealer Return QUARTERLY 18th of the month next to quarter

GSTR-5 Non-Resident Taxable Person Return MONTHLY 20th of succeeding month

GSTR-5A Online Information and Database Access or retrieval services

MONTHLY 13th of succeeding month

GSTR-6 Input Service Distributor Return MONTHLY 13th of succeeding month

GSTR-7 Tax Deducted at Source Return MONTHLY 10th of succeeding month

GSTR-8 Tax collection at Source Return MONTHLY 10th of succeeding month

GSTR-9 Annual Return ANNUAL 31st December ofSucceeding Year

GSTR-10 Final Return UPON

CANCELLATION

Within 3 months of cancellation or

date of order of cancellation

GSTR-11 Inward supplies statement by UIN MONTHLY 28th of succeeding month

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20th of the following monthTax on Outward Supply

20th of the following monthTax on Inward Supply

(Under Reverse charge)

10th of the following monthTax deducted at Source

20th of the following month or 7 days after expiry of registration

Tax payable by Non-Resident

Taxable Person

Due Dates

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18th of the month following quarterTax payable by Composition

Dealer

10th of the following monthTax collected at Source

Interest on Tax

A. Interest on Delayed Payments:

� Interest to be levied at a notified rate, not exceeding 18%

� from the day succeeding the day on which such tax was due

to be paid to the date of actual payment

B. Interest on undue or excess claim of credit or undue or excess

reduction in output tax liability

� Interest to be levied at a notified rate, not exceeding 24%

� from the day succeeding the day on which such tax was due

to be paid to the date of actual payment

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Forms for Payment of Taxes

S. No. Form No. Title of the Form

1. Form GST PMT-01Electronic Liability Register of registered personPart–I: Return related liabilitiesPart–II: Other than return related liabilities

2. Form GST PMT-02 Electronic Credit Ledger

3. Form GST PMT-03Order for re-credit of the amount to cash or credit ledgeron rejection of refund claim

4. Form GST PMT-04Application for intimation of discrepancy in ElectronicCredit Ledger/ Cash Ledger/ Liability Register

5. Form GST PMT-05 Electronic Cash Ledger

6. Form GST PMT-06 Challan For Deposit of Goods and Services Tax

7. Form GST PMT-07Application for intimating discrepancy in making payment(Account debited but CIN not generated or CIN generatedbut not communicated to the Common Portal)

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E-way Bill

1. Information to be furnished prior to the commencement of movement of goods.2. To be filed by a registered person.

3. To be filed only if the value of goods/consignment exceeding Rs.50,000/-.4. Its optional to file if the value of consignment is less than Rs. 50,000/-5. The movement of goods could be in relation to a supply.

6. The movement of goods could be for reasons other than supply.7. To be filed in case of inward supply from an unregistered person.8. To be filed electronically on common portal (GSTN).

9. To be filed in Part A of Form GST INS-01.10. In case a registered person uploads a tax invoice issued by him in FORM GST INV-

1, the aforesaid information in Part A of Form GST INS-01 will be auto populated. -

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E-way Bill

11. E-way bill will also be allowed to be generated or cancelled through SMS.12. When an e-way bill is generated a unique e-way bill number (EBN) is allocated

and is available to supplier, recipient, and the transporter.13. Any transporter transferring goods from one conveyance to another in the course

of transit shall, before such transfer and further movement of goods, generate a

new e-way bill on the common portal in FORM GST INS-01 specifying therein the mode of transport.

14. An e-way bill once generated can be cancelled subject to some conditions,

within 24 hours after its generation15. An e-way bill has to be accepted o rejected by a recipient within 72 hours of its

details being made available to him on GST portal

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Input tax credit – Section 17

Section – 17(5) – ITC shall not be available in respect of the following:

(a) motor vehicles and other conveyances.(b) supply of goods and services, namely,(i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery except where these are used as input services by a RTP providing

the same services.(ii) membership of a club, health and fitness centre,(iii) rent-a-cab, life insurance, health insurance except where the Government notifies

the services which are obligatory for an employer to provide to its employees under any law for the time being in force; and(iv) travel benefits extended to employees on vacation such as leave or home travel

concession

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Input tax credit – Section 17

Section – 17(5) – ITC shall not be available in respect of the following:(c) works contract services when supplied for construction of immovable property,

other than plant and machinery, except where it is an input service for further supply of works contract service;(d) goods or services received by a taxable person for construction of an immovable

property on his own account, other than plant and machinery, even when used in course or furtherance of business;(e) goods or services or both on which tax has been paid under section 10;

(f) goods or services or both received by a non-resident taxable person excepton goods imported by him;(g) goods or services or both used for personal consumption;

(h) goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples; and

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Input tax credit – Section 17

Section – 17(5) – ITC shall not be available in respect of the following:

(i) any tax paid in terms of sections 74, 129 or 130

Section 74 – Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized by reason of fraud or any wilful-misstatement

or suppression of factsSection 129 – Detention, seizure and release of goods and conveyances in transitSection 130 – Confiscation of goods and/or conveyances and levy of penalty

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Input Credit during Transition

Are you registered under Central

Excise?

Are you registered under VAT?

Yes

Yes

Can carry forward Cenvat credit, c/f

in return

Can carry forward Input VAT credit, c/f

in return. **

Are you registered under Central Excise?

Are you registered under VAT?

No

No

Do you have an Excise Invoice?

Yes

Can Take Full CenvatCredit

No

Can Take Partial Credit –60%/40% of CGST paid

Do you have an VAT Invoice?

Yes

Can Take Full VAT Credit

No

Can Take Partial Credit – 60%/40% of SGST paid

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Input Credit during Transition

** input tax credit mentioned in previous slide can be carried forward,

subject to the proviso of section 140(1) of SGST Act,

which says that if any central forms are pending for the period from

01.04.2015 to 30.06.2017,

the amount of outstanding tax of these pending forms, shall not be

allowed to be carried forward.

Example:

If for the above given period, the amount of pending ‘C’ forms is 50 Lakhs

and the item is taxable @ 12.5%. If these forms are not submitted, the

outstanding demand would be 10.5% of 50 Lakhs, which comes to 5.25

Lakhs.

Therefore, out of the total available credit, one need to set aside this

amount and carry forward the rest.

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Input Credit during Transition

Any person claiming credit of input tax U/s 140, shall file a declaration

with that respect, within 90 days of appointed day, which can be further

extended by 90 days.

The tax credit to be carried forward u/s 140(3) is allowed subject to

following conditions:

1. The stock should not be more than 12 months old.

2. In case of partial credit, the respective stocks need to be sold in 6

months from the appointed day

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Stocks

� Therefore, keeping in mind the provision related to pending

central forms, it is advisable that in all those cases where central

forms are pending, carried forward credit should be

minimum…meaning thereby that stocks held should be minimum.

� Stocks held against a excise paid invoice should be separately

identified – should not be older than 12 months.

� Identify correct rates under GST and HSN Codes of stocks held.

� Actual physical stock should match with books stock.

� If not maintaining , then start maintaining stock records –

preferably in an accounting software.

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Reverse Charge

� Reverse charge means that if a registered person buys any goods or

services from an unregistered supplier, then he as a recipient is

responsible to pay tax on behalf of this unregistered supplier.

� Under GST it is applicable on all purchases and expenses

� Once a registered person is buying from an unregistered person, he

has to:

� make a Tax Invoice in his own name

� Issue a payment voucher for payment made to such

unregistered person

� The registered person will get the credit of tax so paid under

reverse charge

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Advances Received

� Now advance payments received for a future supply of goods or

services or both shall be taxable

� Even though the seller deposits tax on this advance payment, the

buyer does not get any credit, till he receives the tax invoice and

goods/services

� Who will bear the tax on advances received – supplier or recipient?

� No issues if the advance payment and final supply and invoice is

issued in the same month.

� But if there is a bigger time gap between advance and final supply, money would be stuck

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Job-work under GST

� Goods sent for job-work is not a supply, provided they are received

back in one year.

� Capital goods sent to job-worker, is also not supply, provided they

are returned within 3 years.

� Goods for job-work can be sent on delivery challan only.

� Any goods sent on job-work under existing law, but returning under

GST regime, shall not be taxed, if returned within 6 months of

appointed day.

� If only machining or processing is done, it would be taxed as service

� But if any material is also used then, the concept of composite

supply or separate supply would apply.

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Place of supply of goods?

•whether by the supplier or the recipient or by any other person, the place of supply of such goods shall be the location of the goods at the time at which the movement of goods terminates for delivery to the recipient;

Where Supply involves movement

of goods

•whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to the goods or otherwise, it shall be deemed that the said third person has received the goods and the place of supply of such goods shall be the principal place of business of such person.

Where goods are delivered by

supplier to recipient on instructions of third person

•whether by the supplier or the recipient, the place of supply shall be the location of such goods at the time of the delivery to the recipient

Where Supply does not involve movement of

goods

Place of supply of goods?

• the place of supply shall be the place of such installation or assembly

Where Goods are assembled

at site of recipient

•where the goods are supplied on board a conveyance, including a vessel, an aircraft, a train or a motor vehicle, the place of supply shall be the location at which such goods are taken on board.

Where goods are supplied on board a vessel, train or aircraft

•Where the place of supply of goods cannot be determined, the place of supply shall be determined in such manner as may be prescribed

In all other cases

Place of supply of goods?

Location of

Supplier

Place of

SupplySame State

Intra State Supply

Location of

Supplier

Place of

SupplyDifferent State

Inter State Supply

Place of supply – impact of wrong

classification?

Correct Tax – IGST

Wrongly Charged - SGST and CGST

Correct Tax – SGST and CGST

Wrongly Charged -IGST

Pay correct tax and take

refund of wrong tax paid

How to be GST Ready

1. Identify stocks which are eligible for excise credit – 140(3)

2. Match actual physical stock with book stock – you would be required to

file stock details to claim input credit, within 90days of appointed day.

3. Make sure that your stock does not belong to an invoice which is more

than 12 months old.

4. Match stock details with HSN Codes.

5. Assess the impact of GST on working capital requirement and arrange

the same in advance.

6. For people using customized software, make sure that they are GST

compliant.

7. Postpone/delay the procurement of Capital Assets.

8. Try to close all central assessments to claim the input credit.

9. Post GST, purchases to be made from registered persons, to avoid

additional compliance formalities under reverse charge.

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How to be GST Ready

10.Decide upon the Sales – supply chain, Procurement strategies

11.Make sure that all new agreements/POs are made considering the

impact of GST, especially w.r.t advance payments, delivery in lots etc.

12.Assess the quantum of goods lying at your Sales Depot.

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Thank You!

The End.

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