goods and service taxgstidea.com/presentations/2016/feb/khadim-final.pdfgoods and service tax...

1

GOODS AND SERVICE TAX

HELPING CLIENTS KEEP MORE OF WHAT THEY EARN

Make in India by Making one India

JOURNEY SO FAR

EmpoweredCommittee setup by VajpayeeGovernment

Proposal tointroduce GST by1st April, 2010 bythen FMMr. Chidambaram

Empoweredcommitteestarted workingon GSTroadmap

First DiscussionPaper releasedby EmpoweredCommittee

TheConstitution115th

amendment billintroduced inLok Sabha forlevy of GSTexcept forspecified goods

The Constitution122nd

Amendment Billpassed in LokSabha on 6 thMay, 2015 thusenabling theintroduction ofGST by 1st April,2016

2000 20152009 20112006 2007

2

2011

BTA-INDIRECT TAX CONSULTANCY FIRM

GST COUNCIL AND POWERS

GST Council

Union Finance Minister

State Finance

Ministers

Minister of State

(Revenue)

Recommend on GST Rates

Recommend on Exemption and

thresholds

Taxes to be subsumed and other features

3

Principles that governs Place of

Supply

Recommend on GST Model


COMMITTEES FOR GST IMPLEMENTATION

4

Committees Current Status

Problem of Dual Control, Threshold and Exemption in GST Regime At finalization stage

Revenue Neutral Rates for CGST & SGST and Place of Supply Rules

Revenue Neutral Rate report has been published on 4th December, 2015

IGST & GST on Imports At finalization stage

Committee to draft model GST Law At finalization stage

Business Processes under GST Regime•GST Payment process

•GST Registration process•GST Refund process •GST Return process


CURRENT PATCHWORK

2000 2013 20142009-10 20112006-07 2007-08

Primary Producers

Manufacturers

DistributorsResellers

Service Providers

ServiceResellers

State VAT CENVAT/Service Tax

Primary Producers

Manufacturers

DistributorsResellers

Service Providers

ServiceResellers

Real Estate Land Component

Real EstateLand Component

5BTA-INDIRECT TAX CONSULTANCY FIRM

GST-ROADMAP SO FAR….

2000 2013 20142009-10 20112006-07 2007-08

6

CENVAT Credits

Customs

Central Excise

Service Tax

Central Sales tax

State Sales tax

Other local taxes

State-VAT

Phase I2004-05

Phase II2015-16

Central GST

State GSTWill also include “other local taxes” such as Entry Tax, Entertainment Tax, Luxury Tax, etc


TAXES SUBSUMED

Power to levy tax

Centre

Central Excise Duty

Special Additional Duty (SAD)

Service Tax

Other Duties of Excise

Countervailing Duty (CVD)

State

State VAT

Purchase Tax/Luxury tax. Octroi & Entry tax

Central Sales Tax

Taxes on Advertisement,/lotteries/

betting/gambling

7

Not Covered:-•Stamp Duty•Taxes & Duties on Electricity

•Taxes on Vehicles, goods and passengers


Customs Port

Import procurement Clearance of goods

(Import value=100)BCD = 7.5CVD = 13.43SAD = 4.83 (Refundable)

ABC India Pvt. ltd.

Warehouse/ Depot

Customers

Local Sale VAT@5%/14.5%

Stock Transfer against Form ‘F’

VAT = Nil

Local Sale

[Total Sales price = 138.33 (i.e. Sale price=100+ Custom duty = 25.76+ Value addition @10%=12.57)]

VAT @14.5%= 20.05

‘OR’Interstate Sale against Forms

(Assumed Sale price=138.33)

CST @ 2%/ Local VAT rate

= 2.76

Sample Components of billing

Particulars Amount

Total Sale Price 138.33

VAT @ 14.5% 20.05

Invoice Value 158.38

Less: CVD available as credit 13.43

Net effective Cost 144.95

*In addition their would be other levies such as octroi, Municipal Cess etc

PROCESS MAP-CURRENT REGIMETransportation -30


Customs PortImport procurement Clearance of goods

(Import value = 100)BCD @ 7.5%=7.5Central GST @8% = 8.6

ABC India Pvt. ltd.

Warehouse/ Depot

Customers

B : Sale (local) Central GST@8%State GST @9%

Stock Transfer

IGST@17%

A : Sale (local)

[Total Sales price = 127.71 (i.e. Sale price=100+ Custom duty = 16.10+ Value addition @10%=11.61)]

Central GST @8%=10.21 State GST@ 9%=11.49

Sample Components of billing

Particulars Amount

Total Sale Price pre GST 127.71

Central GST @8% 10.21

State GST @9% 11.49

Invoice Value 149.41

Less : Input Credit 8.60

Net effective cost 140.81

9

PROCESS MAP-PROPOSED REGIMETransportation -30


IGST-MODEL

IGST(CGST+SGST)

Leviable by Central Government

Inter-state transaction will attract IGST

Seller to pay IGST on the account of Central

Government post adjustment of credit

available on IGST, CGST & SGST

Buyer to claim credit of IGST paid on Input

The corresponding Central / State

Government to pay amount equivalent to

CGST/SGST credit utilised for payment of

IGST


INPUT TAX CREDIT- MANNER OF SET OFF

IGST CGST SGSTIGST

CGST IGSTCGST

SGST IGSTSGST


GST-EXCLUSIONSCentral Levy (Entry 84, List 1, Union List)

Petroleum

Tobacco & tobacco products

State Levy (Entry 54, List 1, State List)

Alcohol for human consumption

Petroleum

Not within GST framework

Land Component in Real State

Power & Energy


PROPOSED REVENUE NEUTRAL RATE

ParticularsRNR

(Revenue Neutral

Rate)

Rate on precious metals

"Low" rate (goods)

"Standard" rate (goods

and services)

"High/Demerit" rate or Non-GST excise (goods)

Preferred 156

1216.9

404 17.3

2 17.7

Alternative 15.56

1218.0

404 18.4

2 18.9

13

Electricity, Petroleum, Alcohol & real estate excluded while computing RNR


THRESHOLDS LIMIT

Particulars

Current

Goods Services Compounding Goods plus Services Compounding

CentreTurnover to the extent of Rs.150

lakhs*

Service value to the extent of Rs.10 lakhs

NA

**25 lakh for goods and

services combined

Between Rs. 25 lakh

up to Rs. 1 crores

State 5-10 lakh NA

permissible inSome of the

States forsome items andat varying rates

**25 lakh for goods and

services combined

Between Rs.25 lakh

up to Rs.1 crores

14

** It may be 40Lakhs as recommended by RNR Committee* Export & Exempted goods excluded from threshold


COMPOUNDING LEVY

Option to pay Tax @ 1% of Turnover

Turnover (Goods + Service Tax)< 50

lakh

Taxable person not

liable to pay tax under

RCM

No inter-state

supply of goods

No Input Credit


REGISTRATION UNDER GST REGIME

Registered under existing taxes will besubsumed under GST

Crossing the “All India Gross Turnover”threshold limit.

Making interstate supplies

Casual and non-resident suppliers

Unique Id for Govt Authorities and PSUsfor making inter-state purchases.

Online application through GSTCommon Portal. No application fee.

To be filed within 30 days fromthe date of the dealer’s liability forobtaining such registration

State wise registration for entitieshaving presence in more than onestate

Deemed approval within 3 days

Online grant of registration, &Downloadable RegistrationCertificate.

Details to be amended on selfservice basis

Mobile no.& Email address throughonline verification

Details like name, principal place ofbusiness to be amended afterapproval from tax authorities

16

Person liable to register Registration Process Amendment of

Registration


REGISTRATION UNDER GST REGIME

17

Link all GST related transactions of every person

Enable proper accounting of taxes paid on input goods and services

Enable passing of tax credit on supply of goods and services

Deemed approval after 3 days

15 digit Alphanumeric structure

State-wise registration for entities having presence in more than one State. Need not apply separately for each State

Downloadable Registration Certificate to be provided by GSTN


GST RETURNS & PERIODICITY OF FILING

18

Periodicity Nature of Assessee Type of Return Purpose Date of filing

Monthly

Normal/ regular

GSTR 1For uploading supply invoice

details

10th day of succeeding month

GSTR 2Auto-population & uploading purchase

details

15th day of succeeding

For finalization of supply & purchase

details


GSTR 3 Last date for filing return


Foreign Non Resident taxpayers GSTR 5 Monthly

Transaction

By 20th of the month & Within 7

days after expiry of registration

ISD GSTR 6 Monthly Transaction

15th day of thesucceeding month

Tax Deductor GSTR 7 Monthly TDS 10th of succeeding month


GST RETURNS & PERIODICITY OF FILING

19

Periodicity Nature of Assessee Type of return Purpose Date of filing

Quarterly Compounding Taxpayer GSTR 4 Taxpayers Quarterly

Return18th day of

succeeding month

AnnuallyAll Regular and

Compounding Tax Payer

GSTR 8

Aggregate of all monthly returns

and its reconciliation with the Audited Books

of Accounts

By 31st December following the end of

Financial Year


GST RETURNS

20

Common e-Return for CGST, SGST, IGST & Additional Tax

Payment of due tax is must for filing valid return

Provision for filing revised information

Maintenance of electronic Cash Ledger, electronic ITC Ledger, electronic Tax liability Ledger


GST RETURNS-PROCESS FLOW

21

Matching by GSTN

Matched

GSTN to inform Purchaser

ITC finalized in Purchaser’s ITC

Ledger

Un-Matched

Two months period for reconciliation

Reconciled

ITC finalized in Purchaser’s ITC

Ledger

Non-Reconciled

ITC reversed to be paid along

with interest by Purchaser

GSTN to inform both Supplier and Purchaser


22

GST RETURNS-PROCESS FLOW

Taxpayer

GSTN

Upload supply details by 10th

of the succeeding month File GSTR-1 by 10th of the

succeeding month

Inward supply details in GSTR-2 to be auto-populated

on the basis of GSTR -1of counter –party supplier

Add or modify details and file GSTR-2 by 15th of the

succeeding month

Reconcile by 17th of the succeeding month

Pay tax and file GSTR-3 by 20th of the succeeding month


SUPPLY-MEANING & SCOPE

Supply

Includes

SaleTransferBarterExchangeLicenseRentalLeaseDisposalImportationof Service

Forfurtherance ofbusiness withor withoutconsideration


SUPPLY –vs- SERVICE TRANSFER

Transfer of title in goods is a supply of goods

Transfer of goods, right in goods without transfer of title is a supply of services

Transfer of title in goods at a future date upon payment of full consideration (i.e financetransaction) is a supply of goods.

LAND AND BUILDING

Lease, tenancy, easement, licence to occupy land is a supply of services.

JOB WORK

Any treatment or process which is being applied to another person’s goods is a supply ofservices


PLACE OF SUPPLY OF GOODSInterstate Supply of goods

Movement of goods from one state to another (similar to CST laws)

Place of Supply of goods

Supplies involves movement of goods, location of receiver where goods are delivered

Supplies does not involve movement of goods, location of such goods at the time ofdelivery to receiver

Goods installed and assembled at site, place of installation

Separate rules to be framed by GST Council for situation uncovered above


TIME OF SUPPLY OF GOODSLiability to pay tax shall arise at the earliest of the following events :

a) Date of removal, where delivery to be made to buyer / Date when goods made availableto buyer (assembly/installation at site, stock transfer etc..)

b) Date of issue of invoicec) Date of receipt of paymentd) Date of record for receipt of goods in the buyer books of account

For Continuous Supply:

-In case of successive statement of accounts or successive payments are involved

Date of expiry of period to which successive statement of accounts or successive paymentrelates

-Absence of successive statement of accounts :

Earlier ofa) Date of issue of invoice, orb) Date of receipt of payment


PLACE OF SUPPLY OF SERVICEInterstate Supply of service

Location of service provider and service recipient in different states

Place of Supply of service

General rule – location of service recipient, if registered personlocation of service provider, if recipient not registered

Services in relation to Immovable Property – Location of such immovable property(Architects, interior decorators, surveyors etc…, renting, rights, hotel, guest house etc.., accommodation for marriage,reception, social, cultural functions etc.)

Performance based Services – Location where services actually performed(Restaurant and catering, training, performance appraisal, fitness, beauty treatment, health service etc)

Conveyance such as vessel, aircraft, train or motor vehicle – Location of first schedulepoint of departure

Banking & Insurance service – Location of the service recipient on record of serviceprovider


TIME OF SUPPLY OF SERVICEEarliest of the following :

a) Date of issue of invoice or date of receipt of payment, if invoice issued within prescribed timeb) Date completion of the provision of service or the date of receipt of payment, if invoice not

issued within prescribed time

In absence of a & b above, the date on which the recipient shows the receipt of services in hisbooks of account

Continuous supply of services:

a) Due date of payment specified in the contract – such due date when receiver is liable to payb) Due date of payment not specified in the contract :

• Issuance of invoice or receipt of payment, which ever is earlierc) Payment is linked to completion of an event – time of completion of event

Under Reverse charge Mechanism.

Earliest of the following :(a) Date of receipt of services, or (b) date of payment ,or (c) date of receipt of invoice, or (d) the date of debit in the books of accounts.


VALUE OF TAXABLE SUPPLYValue of a supply of goods and/or service shall be the transaction value i.e., price actually paid or payable where:-

Supplier and recipient are unrelated and•Price is the sole consideration

Inclusions in Transaction Value if not already included:

Amount incurred by the recipient on behalf of the supplierFree of Charge Supplies provided by the recipient directly or indirectlyRoyalties and License fee payable by the recipient as a condition of such supplyAny taxes, duties, fee and charges other that those under SCGST Act, CGST Act or IGST ActIncidental expenses or any other amount charged by the supplier for anything done on or before delivery of the supplySubsidies linked to the supplyAny discount or incentive that may be allowed after supply has been affected

Exclusions in Transaction Value: Any discount allowed on or before the time of supply if allowed in normal trade practice and duly recorded in the invoiceValue of Supply of goods involving B2C transaction shall be made at RSP less GST taxes


CENVAT CREDIT-MANNER OF UTILISATION

30BT ASSOCIATES-INDIRECT TAX CONSULTANCY FIRM

Credit shall be restricted to the

input tax used for business purpose

Goods and/or services used

partly for other

purposes

Goods and/or services used

partly for business purpose

Credit shallbe restricted to the extent attributable to the taxable

suppliesincluding zero-rated supplies.

Goods and/or services (excluding capital

goods) used partly for for non taxable

(including exempted supplies)

Goods and/or services (excluding capital

goods) used partly for taxable

supplies(including zero rated supplies)

CENVAT CREDIT-EXCLUSION


Input Tax Credit shall not be available on the following:

on Motor Vehicle

HSD, Motor Spirit, aviation turbine fuel, petroleum crude oil and aviation gasoline

Outdoor catering, beauty treatment, health services, cosmetic & plastic surgery, membership of club, healthfitness centre, life insurance, health, insurance & travel benefit extended to employees on vacation such asleave or home travel concession, when such goods/or services are used primary for personal use orconsumption of any employee

goods and/or services acquired by the principal in the execution of works contract when such contract resultsin construction of immovable property, other than plant and machinery;

goods acquired by a principal, the property in which is not transferred (whether as goods or in some otherform) to any other person, which are used in the construction of immovable property, other than plant andmachinery;

goods and/or services on which tax has been paid under section 8 of the Act;

goods and/or services used for private or personal consumption, to the extent they are so consumed.

MISCELLANEOUS

32

A TDS of 1% will be deducted for supplies exceeding Rs.10 lakh under a contract to theDepartment of Central or State Government or Local Authority or Governmentalagencies .


COMPLIANCE RATING

GST compliance rating score based on the record of compliance.

The GST compliance rating score shall be determined on the basis ofparameters to be prescribed.

The GST compliance rating score shall be updated and intimated at periodicintervals and also placed in the public domain in the manner prescribed.


REFUND-SITUATIONS

Excess payment due to mistake and inadvertence

Export( including deemed export)

Finalization of provisional assessment

Refund of Pre-deposit International Tourists year end or volume based incentives

Carry Forward Input Tax Credit

Manufacturing / Generation/ Production/

Creation of Tax- free supplies or Non-GST

Supplies,

Tax payment on transactions by UN

bodies, CSD Canteens, Para-military forces

canteens, etc.


REFUND

Filing ofonlineapplicationeither onGSTN orthroughrespectivestate/central portal

Preliminaryscrutiny within30 workingdays

Online refundthroughRTGS/NEFT/ECS

Communicationthrough mailsand sms

In specified casesreturn may beconsidered asrefundapplication

Time limit forfiling refundclaim may be 1year from therelevant date

Time limit forrefund is yet tobe specified(preferably 90days)


ASSESSMENT OF IMPACT - APPROACHData

GatheringEstimating

Impacto Collating information

relating to procurement,stock transfer and saletransactions of the companyover a sample period

o Transaction mapping toinclude purchases and trackof eventual sale of finishedgoods/ services through thedistribution chain acrossIndia

o Computation of indirect taxcosts under the existingregime and under theproposed regime

o Estimating GST impact byperforming comparativestudy of indirect tax costscomputed above

o Estimated impact tohighlight the effect ofintroduction of GST onexisting operations of thecompany on an ‘as is’ basisi.e. based on existing mannerof conduct of business

o Analysis of estimatedGST Impact

o This would includecarrying out numericalanalysis of the impact

o Carrying out high levelassessment of GSTimpact on pricing/margins

Analysis of Impact

Assessment of Impact


KEY AREAS OF BUSINESS IMPACT


► Savings on account of the GST structure could be translated into product re-pricing

► Profitability would also need to be re-examined

Pricing Profitability► Stock transfers (credit and possible abolition of CST & Entry tax)► Distribution networks (reduce inventories; improve services)► Product allocation decision (Revised total delivered cost analysis)

Supply Chain Network - Restructure

► Changes need to be made to in the accounting and IT systems to record transactions as per the GST requirements

System Changes

► Interstate procurement could prove viable than today as credit may be available

► This may open opportunities to consolidate supplies of key raw materials and plant & machinery

Sourcing

► Appropriate measures need to be taken to ensure smooth transition to the GST regime. Measures would include

► Compliances under GST► Training of employees - Customer education► Tracking of inventory credit

Transition

Q & A SESSION


YOUTHANK

20. BTA-INDIRECT TAX CONSULTANCY FIRM

goods and service taxgstidea.com/presentations/2016/feb/khadim-final.pdfgoods and service tax...

Documents