Presentation on Model GST Law

GSTGoods and Service tax

Siddaraju SKHanish and Associates

Points to be Discussed1. Background of GST2. What is GST?3. How GST works?4. Concept of GST5. Major taxes that are Subsumed.6. Certain Important Definitions.7. Section 3 – Meaning and Scope of Supply8. Levy of, and Exemption from Tax9. Time and Value of supply10. Input Tax Credit11. Utilization of Input Credit12. Registration13. Returns14. Section 29A - Matching, reversal and reclaim of input tax credit15. Levy of late fee16. Payment of Tax17. Offences And Penalties18. Benefits of GST19. Conclusion

Background

• In 2003, “Kelkar Task Force” – had suggested GST based on VAT Principle

• Proposal introduced in 2006-07 budget by P. Chidambaram

• GST draft bill announced in June 2016

• “Compensation to the state for loss of revenue arising on implementation of GST” one of major feature of constitutional bill, 2014

What is GST..?

• GST is one indirect tax for the whole nation,

• The Goods and Service Tax (GST) - By amalgamating a large number of Central and State taxes into a single tax

How GST Work..?

• Tax only on Value addition

• Credit of Input tax paid is available in each level

• The final consumer will bear GST charged

Concept of GST

• Intra state Transaction – SGST and CGST will be applicable

• Interstate transaction – IGST will be applicable

• GST will be applicable on all goods and services– Except Alcohol for human Consumption,

Electricity and Real Estate

• Petroleum products and tobacco products would be subject to GST

What Major taxes are subsumed..??

Sl. No Central Level State Level

1 Excise Duty VAT(State Sales Tax)

2 Additional Excise duty CST(Central Sales Tax)

3 Service tax Entertainment Tax

4 CVD Octroi and Entry Tax

5 SAD(Special Additional Duty)

Luxury Tax

6 Tax on lottery, Betting and Gambling

Important Definition• Aggregate turnover – Taxable, Non Taxable, Exempt and

Exports (Excluding Tax)

• Taxable person – Person who carries any business at any place in India , who is registered or liable to register

• India means – Includes Jammu and Kashmir

• RCM – Service provided by Government (categories of supplies will be notified)

• Services – anything other than goods; includes Intangible assets, Actionable claims

Section 3 – Meaning and Scope of Supply

• Supply includes sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration

• Importation of service, whether or not for a consideration

• Any supply under brand name or trade name is deemed to be supply

CHAPTER IIILEVY OF, AND EXEMPTION FROM, TAX

SL. No Type of Levy Applicability

1 SGST and CGST Intra state Transaction

2 IGST Interstate transaction*

3 Composition Levy For Composition Dealer who will not avail any Input credit

*Note: Integrated levy includes Imports

CHAPTER IVTIME AND VALUE OF SUPPLY

The time of supply of GOODS - Earliest of the following :

• Date of removal of goods

• The date on which the goods are made available to the recipient

• Invoice date

• Payment date

• The date on which the recipient shows the receipt of the goods in his books

CHAPTER IVTIME AND VALUE OF SUPPLY

The time of supply of SERVICES - Earliest of the following date

• The date of issue of invoice or the date of receipt of payment - whichever is earlier

• Completion of Services or Date of Receipt - whichever is earlier

• The date on which the recipient shows the receipt of services in his books

Note: also given time of Supply for Continuous supply, RCM and Change in rate of tax have given

CHAPTER VINPUT TAX CREDIT

Who can avail Credit …??

• Every registered taxable person• A person who has applied for registration –

Within 30days from the date he becomes liable• Person not liable, but he may get himself

registered voluntarily• Person who used goods/services – partly for

business, other purpose, Taxable & Non taxable;• Merger, demerger, amalgamation, lease or

transfer of the business - Shall be allowed


Who can not avail Credit …??

• Composition scheme dealer• Motor vehicles – unless it is usual course of business• In relation to food and beverages, outdoor catering• Beauty treatment, health services, cosmetic and

plastic surgery• Membership of a club, health and fitness centre• Life insurance, health insurance and travel benefits

extended to employees personal benefits• Any Contract results in construction of immovable

property, other than plant and machinery


On What Basis can avail Credit

1. Possession of a tax invoice

2. On receipt of Goods and Services

3. Return

CHAPTER - VIREGISTRATION

To Obtain Registration • If his aggregate turnover in a financial year exceeds

9lakh (4lakh for NE states)• Existing Registered person – need not apply for new

registration • Separate registration for each branches• Voluntary Registration available• PAN Based Registration number• NR also can obtain registration based on certain

documents for (90days)

(Note: The officer shall not reject the application without notice)


Cancellation of registration

• Business has been discontinued, transferred in any reason, amalgamated, demerged , disposed

• Contravened such provisions – Composition Dealer – Not filed return for last 3

consecutive tax periods– Regular Dealer - not filed return for continuous

6month – voluntary registration - Not commenced business

within Six months– Fraud, willful misstatement or suppression of facts


Contd….!!!CGST Cancellation deemed to be SGST Cancellation

Revocation of cancellation of registrationRevocation within 30days with sufficient reason

CHAPTER- VIIIRETURNS

Sections Return Due Date

25 Furnishing details of outward supplies(Sales)

On or before 10th of the succeeding following month

26 Furnishing details of inward supplies(Purchase & RCM)

On or before 15th day of succeeding following month

27 First Return On or before 20th day of succeeding following month

30 Annual Return On or before 30th of September

31 Final Return within 3months of the Date of cancellationORDate of cancellation order, whichever is later

CHAPTER- VIIIRETURNS

Notes:1. Filing return without payment of taxes due shall

not be treaded as valid return

2. Furnish Return - whether or not any supplies of goods and/or services(NIL Return)

3. ISD - within 13 after the end of such month

4. No Revised Return

Section 29AMatching, reversal and reclaim of input tax credit

1. No Credit unless the input credit matches the seller’s sales

2. Duplication, Excess, Less CENVAT Credit shall be communicated with recipient

3. Any Excess input availed – Attracts InterestExcess input will be refunded

Section 33 and 36Levy of late fee

1. Outward/ inward supplies and Return - late fee of rupees 100/day, Max 5000

2. Annual Return - 100/day, Max 1/4th of Aggregate turnover

3. Interest on delayed payment of tax – will be notified by Central and State government (Section 36)

CHAPTER-IXPAYMENT OF TAX

1. Every deposit made towards tax, interest, penalty, fee or any other amount by a taxable persona. Internet bankingb. by using credit/debit cards c. National Electronic Fund Transfer (NEFT)d. Real Time Gross Settlement (RTGS)e. by any other mode,

Note: The date of credit to the account of the appropriate Government is deemed to be the date of deposit

CHAPTER-IXPAYMENT OF TAX

The amount available in “Electronic cash ledger” & “Electronic credit ledger”

1. Any Tax paid by Cash – available in “Electronic cash ledger”

2. Credit availed – available in “Electronic credit ledger”

Utilization of CreditSL. No Input available Input can be utilized

against

1 IGST IGST – CGST – SGST

2 SGST SGST – IGST

3 SGST CGST – Input Not available

4 CGST CGST – IGST

5 CGST SGST - Input Not available

CHAPTER – XVIOFFENCES AND PENALTIES

Section 66 – Offences and penaltiesList of offence1. Supply goods without Invoice2. Issue Invoice without supply of Goods3. Collects any amount as tax but fails to pay the same – within 3months4. takes and/or utilizes input tax credit without actual receipt of goods and/or

services5. fraudulently obtains refund of any CGST/SGST6. falsifies of Financial Record, produces fake accounts, furnishes any false

information, return with an intention to evade tax7. Fails to obtain registration when person is liable to obtain registration8. Furnishes any false information for Registration9. transports any taxable goods without the documents10. Suppresses his turnover leading to evasion of tax11. Fails to keep, maintain or retain books of account and other documents12. Fails to furnish information and/or documents called for by a CGST/SGST officer13. Issues any invoice or document by using the identification number of another

taxable person14. Destroys any material evidence


Penalty for offence1. He shall be liable to a pay penalty of higher amount of

the following1. Rs. 10,0002. Amount equivalent to the tax3. the tax not deducted short deducted or deducted

but not paid4. input tax credit availed of or passed on or distributed

irregularly

2. Person who repeatedly makes short payment of tax shall be liable to a

- penalty of Rs. 10,000 or - 10% of the tax short paid, whichever is higher


Section – 67General penalty of Rs. 20,000 where no penalty is separately provided for in this Act

Benefits of GST

• For Business / Industry– Easy Compliance – Registration, Return,

Payment etc. available online– Tax rates would be common across the

country– Reduce Cascading effect – Tax on Tax– Cost of locally manufactured goods would

be reduced – By subsuming major Central and state taxes

Benefits of GST

• For Central / State Government– Simple and Easy to administrate –

Multiple taxes subsumed by GST and all compliances will be done through online

– Reduction in fraudulence– GDP growth will be increased

Conclusion

Under GST, the taxation burden will be divided equitably between manufacturing and services and It is expected to help build a transparent and corruption-free tax administration.

Hence, Let us welcome GST

THANK YOU