GST and transition provisions

First-look of Model Goods & Service Tax Law (GST)

&Transitional Provisions from Old Law to

GST

Prepared By – Indirect Tax VerticalAsija & Associates LLP | Chartered Accountants|Lucknow | Gurgaon| www.asija.in

M/s Asija & Associates LLP, Chartered Accountants 1

Table of ContentPresent Tax Structure of Indirect Tax in India

Proposed Tax Structure under Model GST Law

Features & Provisions of Model GST Law Applicability of Model GST Law to a Taxable Person (Threshold Exemption) Utilization of Input Tax Credit under Model GST Law

Transitional Provisions (Explained) – Transition from Old Indirect Tax Laws to GST


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Present Tax Structure in India

Pres

ent t

ax st

ruct

ure Central Excise Duty

(Centre tax) Taxable event is manufacturing

Service Tax(Centre tax)

Taxable event is Provision of Service

VAT/CST/Sales Tax(State Tax) Taxable event is sale

Custom Duty + Counter- veiling duty (CVD) (Centre tax)

Taxable event is Import & Export

Entry Tax/ Entertainment Tax

(State tax)

Taxable event is entry of goods/ entertainment

M/s Asija & Associates LLP, Chartered Accountants

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Proposed Tax StructureIntra State

Taxable Supply

In place of center taxes like

Service Tax & Excise Duty, CGST will be

charged

In place of VAT & other state

taxes SGST will be charged

Inter State Taxable Supply

IGST to be charged in

place of earlier taxes like CST

Will be further apportioned in between the

centre & states

Import from Outside

India

Custom Duty + Counter-veiling duty (CVD) as

per earlier laws

In place of CVD IGST will be

charged

GST

Centre GST (CGST)

State GST (SGST)

Integrated GST

(IGST)


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Features of the Proposed GST ModelIt is a destination based tax on consumption of goods and services, where only value addition will be taxed and burden of tax is finally borne by the final consumer.

All goods or services are likely to be covered under GST except: Alcohol for human consumption Petroleum Products – (to be brought under GST from the date to be notified by the GST Council)

Tobacco products are to be taxed under GST. In addition, Centre could levy additional Cess over and above GST Rate on the same.

Exports to be treated as Zero rated supply.

Imports treated as inter-state supply & IGST will be charged.


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Features of the Proposed GST ModelA single PAN based threshold exemption limit would apply to both CGST and SGST. Taxpayers with a turnover below it would be exempt from GST.

The two streams of input tax credit (ITC) cannot be cross utilised, except in specified circumstances of inter-State supplies, for payment of IGST.

Liability for registration arises on crossing the threshold limit of Rs. 9 lakhs as specified by Schedule III (Limit being Rs. 4 lakhs in case business is conducted in any of the north east states including Sikkim.)

The law covers entire India, including Jammu & Kashmir


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Threshold limit for Exemption from GST

A single PAN based threshold limit will be allowed to a taxable

person

Aggregate Turnover* for the relevant F.Y. shall include value of : 1. All taxable Supplies 2 non-taxable supplies3. Exempt supplies &

4. Export supply

No tax to paid if the aggregate turnover is

upto Rs. 10 Lakhs in a FY (in case of NE

States the limit is Rs. 5 lakhs)

* As per earlier laws value of non-taxable & exempt supplies were not considered while calculating aggregate turnover for exemption limit.


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Utilization of Input Tax Credit

Input CGST

i) Output CGST

ii) Output IGST

Input SGST

i) Output SGST

ii) Output IGST

Input IGST

i) Output IGST

ii) Output CGST

iii) Output SGST

*The ITC on account of CGST can’t be utilized towards payment of Output SGST.*The ITC on account of SGST can’t be utilized towards payment of Output CGST.

*The Input credit shall be utilized for setting off the output tax liability in the order of preference [ i),ii) & iii) ]


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Transitional Provision under GSTMigration of existing Taxpayer to GST Transfer of CENVAT Credit in electronic credit ledger Unavailed CENVAT Credit on capital goods, not carried forward in a returnCredit of eligible duties to be allowed in case a person was not liable to be registered under earlier law or was manufacturing exempted goods Credit of eligible duties to be allowed to a taxable person switching over from composition schemePending refund claims to be disposed of under earlier law. (Refund from VAT Department)Claim of CENVAT credit to be disposed of under earlier law.Proceedings related to output duty liability


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Amount payable in the event of a taxable person switching over to composition scheme

Case where Exempted goods returned to the place of business after GST Implementation

Case where Duty paid goods returned to the place of business after GST Implementation

Inputs returned from Job Work after GST Implementation

Semi-finished goods returned from Job Work after GST Implementation

Finished goods returned from Job Work after GST Implementation

Other Relevant Transitions under Model GST Law :-

Transitional Provision under GST


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Migration of Existing Taxpayer

GST REG 21

• Provisional registration shall be granted to the person registered under Old Law.• It will be valid for Six months.• It will contain Provisional GST Identification Number.

GST REG 20

• The person has to apply in the said form for getting Final Registration under GST along with the specified information & documents.

• If the said information & documents are found to be correct Registration Certificate in FORM GST REG-06 will be issued.

GST REG 22, 23, 24

• Form GST REG- 22 will be issued cancelling the registration if the information & documents so provided are incorrect or incomplete.

• FORM GST REG-23 shall specify the discrepancies in the allotment application.• FORM GST REG 24 will be issued when the provisional registration needs to be cancelled on account of the

person not being liable to be registered under GST.

A person other than an ISD, registered under earlier law shall not be required to get fresh registration under GST


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FORM GST REG-20Information Documents

a) Provisional ID & Password; a) Proof of constitution of Business;

b) Valid email address; b) Photograph of Promoters/Partners/Karta of HUF;

c) Valid Mobile Number; c) Proof of appointment of Authorized Signatory;

d) Bank a/c number; d) Photograph of Authorized Signatory;

e) Bank IFSC. e) Opening page of Bank Pass Book/ Statement containing Bank A/c No., Address of Branch, Address of A/c holder & a few transaction details.

f) Proof of Principal/Additional place of business.

Information & documents required to be submitted under FORM GST REG-20


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CENVAT Credit to be allowed as ITCThe amount of credit :

• Unavailed Credit in respect of capital goods (Sec. 144); or• Carried forward in the last return. (Sec. 143)

Will be reflected in the electronic credit ledger :

• As ITC under GST.

In case of any recovery, under any proceedings instituted :

• Will be recovered as arrear of tax


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Credit of inputs in stock & inputs contained in semi-finished or finished goods in stock shall be reflected in the electronic credit ledger subject to the conditions mentioned below

A person, who:1. a) was not liable to be registered under the earlier

law; OR

b)was engaged in the manufacture/sale of exempted goods

OR2. Switches over from composition scheme.

Credit of eligible duties & taxes

a) Goods/inputs must be used for making taxable supplies under GST.

b) Goods/inputs were eligible for CENVAT Credit but remaining exempt

under earlier law.c) Must be in possession of invoice &/or documents, issued not earlier than 12 months from the date of

GST implementation showing payment of tax .

d) A person not opting for composition scheme

Conditions being:-


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Pending Refund claims

i) Every claim for refund of any duty/tax & interest, if any, filed by any person on or before GST implementation

ii) Shall be disposed of in accordance with the provisions of earlier law. Any amount eventually accruing to him shall be:a) paid in cash (as per CGST) b) refunded to him in accordance with the provisions of earlier law (as per SGST).

iii) Where any claim for refund is partially or fully rejected, the amount so rejected will lapse.


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Proceedings relating to Output Duty/ CENVAT

Ever

y pr

ocee

ding

rel

atin

g to

:

Output Duty Liability or

Claim for CENVAT Credit

Amount becomes

recoverable Shall be recovered as an arrear

of tax

Amount found to be admissible to

the claimant

CGST Shall be refunded in cash

SGSTShall be refunded in acc. with

the provisions of previous law *The amount so recovered or refunded will not be admissible as input tax credit under GST.


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Person switching Over TO Composition Scheme

In case of a person switching over to composition scheme:

• The amount of credit of input/goods held in stock immediately preceding such switch over shall be debited from his electronic credit ledger.

• Balance of ITC, if any shall lapse.

Conditions for being a composition taxpayer :

• Aggregate turnover shall not exceed Rs 50 lakhs.• Person shall not enter into any inter-state supply.• Tax payable at a rate not less than 1%.• Such person can’t issue a tax invoice.


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Goods returned to the place of business

Tax payable by person returning such goods

If returned later than 6 months Goods are liable for tax under GST

No tax payable If returned within 6 months. Are identifiable by the Proper Officer

Goods removed/sold not earlier than 6 months Duty paid goods Exempted goods

Credit of the duty

paid shall be

available


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Goods / Inputs removed for Job Work• No tax to be paid on inputs returned within 6 months• Details of inputs held by the job worker to be declared• Tax to be paid if inputs are liable for tax under GST & not

returned within the said time frame

Inputs removed & returned

• Same as above• Additionally, the manufacturer may transfer such goods

for supply within 6 months or extended period as the case may be

Semi-finished goods removed & returned

• Same as above• Additionally, the goods must not be removed for a

process amounting to manufacturingFinished goods removed

& returned


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• This presentation has been prepared by our firm to provide a gist of the applicable law pertaining to Model GST Law notified by the Government of India for upcoming GST Act 2016, pending for ratification in Parliament for applicability on or after 01/04/2017.

• For detailed insight and for better understanding of the various provision of the said law, the said presentation should be read along with related provision of Model GST Law 2016.

• Neither our firm nor any partner or employee or article of our firm shall responsible for any decision taken on the basis of the said presentation and without obtaining any professional guidance or consultation on the matter for which reliance was made on this presentation.

Disclaimer


Thank YouFor any queries kindly contact our GST Team :

Asija & Associates LLP Chartered Accountants

H.O. : 34/5 , Gokhale Marg, Lucknow

Ph. No. : 0522-4004652,2205072

CA Pradumn PandeyExecutive Partner

([email protected])

CA Rahul MishraPartner in Charge

([email protected])

CA Amber AgrawalAssociate Director

([email protected])


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GST and transition provisions