Download - Transitional provisions
Sandesh Mundra & Associates304, Super Plaza, Vastrapur, Ahmedabad. [email protected]
Institute of Company Secretaries of IndiaAhmedabad Chapter
Let us look at Transitional Provisions
Bifurcation of Dealers coveredManufacturer
Service providers
Builders
Works contractor
Trader
Transitional issues
Migration
Credits
Goods Return (S/R and Job work)
Price revision and sale on approval
Litigations and claims
Provisional registration (PRN) on
PAN
Furnish information for final
Registration
Eligible for compositio
n, Apply within time
Valid for 6 months
PRN cancel if info. Not furnished
PRN cancellation if not liable for registration
If not applied, pay @ regular
rates
Section 139 - Migration
GENERAL ISSUES:-
Change in Constitution in VAT without change in PAN Cancellation of VAT no. on temporary basis Non-allotment of PRN Non-registration within allotted time Registration of Marketing offices required? What happens to Non Localized Dealers? What happens to banks / insurance companies / others with
Multiple branches in a state ? Whether separate registration required in IGST Act? Technical Loophole
E-signing not enabled after giving Adhar details
Issues in Migration
1. Section 140(1) – CENVAT in return allowed as ITC (other than composition scheme)
2. Section 140(2) – Capital Goods Credit not c/f3. Section 140(3) – For unregistered in the previous
law in case of stocks held.4. Section 140(4) – Credit of eligible duties/taxes in
stock (in certain cases)5. Section 140(5) – Credit of eligible duties/taxes on
inputs and input services during transit 6. Section 140(6) – Credit of eligible duties/taxes on
inputs in stock to person switching from composition7. Section 140(7) – Credit distribution by ISD8. Section 140(8) - Transfer of unutilised credit in
centralized registration under earlier law
Carry forward of Credits
Other than Composition Scheme
The returns are not furnished properly
for 6 months prior to AD
The amount of credit is not
admissible under GST Act
The amount of credit relates to goods
manufactured and cleared under
exemption notification by the
Government
Not Allowed to take credit if
SECTION 140(1)
General issues:- What if sale in course of export delivery after
AD*? Refund of credits will be allowed? Whether ITC carried forward on basis of revised
return? What if erroneously carry forward of ITC has
been left? By mere availing credit in return, can we take
credit? Will I be given refund for my credit if I am not
eligible of its c/f**? If not registered and not liable to file returns,
credit can be c/f**?
Issues in Credits under Section 140(1)
Capital Goods Credit not c/f
Entitled, CENVAT/VAT ITC in respect of capital goods, not carried forward in return
CENVAT credit is allowed under the
existing law.(before GST) and
also the GST regime.
Unavailed credit = Total credit - credit already
availed
Allowed to take credit ifSection 140(2)
General Issues:- Credit not at all taken in earlier law and allowed in GST will lapse? Entry tax credit on capital goods? Dealer in composition- Excise, VAT, in GST- Regular. Capital goods (CG) credit allowed? How CENVAT on CG allocated to different places of business? Can we plan adhoc
distribution?
For Traders:- Trader allowed CENVAT on CG in GST?
For Manufacturer:- URD in Excise but Registered in GST ? Area based exemption under Current Regime, taxable in GST. Credit on CG allowed?
Issues in Credits under Section 140(2)
For Service Provider:- Presently in centralized registration. 50% credit claimed in centralized return. Which
place of business eligible for rest 50% credit? Providing exempt services can claim CG credit?
For Builder/Works contractor:- CG on various sites in different states. In which state unavailed CENVAT to be claimed? Availing benefit of abatement Notification 26/2012, Can carry forward CENVAT on CG? CG credit on common capital goods used for projects in Composition and in Regular
scheme?
Issues in Credits under Section 140(2)
Credit of eligible duties/taxes on stock
Section 140(3)
Conditions for Availing Benefits
supplier of services not eligible for any abatement under GST in
voic
es
issu
ed
not
befo
re
12
mon
ths
prec
edin
g 30
/06/
2017
in po
sses
si
on of
inv
oice
eligible for ITC in GST
inputs
intended for
taxable
supplies
Person covered:- 1. Not liable to be registered under earlier law 2. Manufacture/sale of exempted goods 3. Exempted services 4. Works contract service and availing benefit of
Notification No. 26/2012-Service Tax, dated 20.06.2012 4. First stage dealer 5. Second stage dealer 6. A registered importer
Benefit provided in this section:- Credit of eligible duties and taxes for inputs in stock,
semi- finished or finished goods
Section 140(3) – Credit of eligible duties/taxes on stock……(cont.)
General Issues:- Not availing abatement in GST and abatement notified for us. Will we
loose all credits? Credit eligible in GST not eligible in earlier law. Can we claim credit? What if we avail any exemption in GST? Our credit will lapse? Change in accounting to claim maximum credit My invoice is earlier then 12 months but goods/services received 12
months before AD*? Credit of capital goods, WIP and input services? Meaning of “PERSON NOT LIABLE TO BE REGISTERED” For passing on benefits in anti-profiteering clause, can I deduct my ITC
losses incurred because of GST?
Issues in Credits under Section 140(3)
For Traders:- Not liable to get registered in excise and service tax. Can take CENVAT? Credit not allowed as goods in NO ITC SCHEDULE
For Service Provider:- Claim VAT credit of inputs held in stock as not liable to register in VAT? Service tax paid on advance. Credit availed. Invoice raised after AD Availing abatement in Service tax
For Builder and Works contract:- A BOT can avail credit of input services?
Issues in Credits under Section 140(3)
Credit of eligible duties/taxes on stock
Conditions for Availing
Benefit
Cenvat credit carried forward in a return furnished in
earlier law
Cenvat credit of eligible duties of
inputs held in stock, semi-
finished and finished goods
relating to exempted goods or
services
Section 140(4)
Credit of eligible duties/taxes on inputs and input services during transit
Condition for Availing Benefit
Rec
eived
on or
after
30/06
/201
7
Eligible
duties and
taxes as in
Section
140(3)
Invoice recorded in books within
30 days (30 extension
possible) from
30/06/2017
Duty/tax paid
before
30/06/2017
Section 140(5)
General Issues:- Tax paid after appointed day with interest? If statement not furnished credit not allowed? What if the output supply is exempt? It covers input goods and input services. What about capital goods in transit?
For Service provider:- How to substantiate services received prior 30/06/2017?
Issues in Credits under Section 140(5)
For Manufacturer:- Goods are in transit but moved to job-worker for quality checking purpose?
Benefit be allowed? Includes goods on which ownership is already transferred but the goods are
held by third party on our instructions?
For Works contractors:- In case of construction projects, what if the goods are not coming to the
dealer's premise but directly moving to the construction site? Can these goods be termed as goods-in-transit?
Issues in Credits under Section 140(5)
Credit of eligible duties/taxes on inputs in stock to person
switching from composition
Inputs intended for making taxable supplies
(Only for state taxes) goods not specified in schedule containing ITC restricted
goods
Person not in GST Composition
Person eligible for ITC under this Act
Person in possession of invoice
Invoices not before 12 months preceding AD*
Condition for Availing Benefit
SECTION 140(6)
General issues:- What about capital goods, input services and WIP? Goods mentioned in State’s negative list What about credit of Service tax? Composition in VAT claim. Can we claim excise in this Section?
For Service Provider:- Service at abated value
Issues in Credits under Section 140(6)
Section 140(7) – Credit distribution by ISDONLY FOR CGST
ITC of services received prior to AD*
Eligible for distribution as credit
Even if the invoice received on/after AD*
ONLY FOR CGST Person with centralized registration Eligible to credit of cenvat in a return Return to be filed within 3 months of AD* Return has to be original or revised return where the credit has
been reduced from that claimed earlier Credit allowed under GST Credit may be transferred to persons having same PAN as
centralized registration have
Section 140(8) - Transfer of unutilised credit in centralised registration under earlier law
Return from Job work
1. Section 141(1) – Inputs returned on/after AD 2. Section 141(2) – SFG returned on/after AD3. Section 141(3) – FG returned on/after AD
Inputs received in factory removed to a job worker For processing, testing, repair, reconditioning or any other
purpose in accordance with the provisions of earlier law Prior to AD Returned to factory on/after the AD No tax payable if returned within 6 months from AD Time may extend by 2 months Manufacturer and job worker to declare details of inputs in stock If not returned within 6/8 months ITC to be recovered
Section 141(1) – Inputs returned on/after AD
SFG removed for manufacturing processes in earlier law Prior to AD* Returned on/after AD* No tax payable if returned within 6 months from AD* 6 months may be extended for 2 months. Goods not returned within 6/8 months ITC liable to be recovered Manufacturer and job-worker to declare details of goods Manufacturer may transfer goods for supply on payment of tax in
India or without payment of tax for exports within six months or the extended period
Section 141(2) – SFG returned on/after AD
Taxable goods removed without payment of tax For carrying out tests or any other process not amounting to
manufacture Prior to AD* Returned on/after AD* No tax payable if returned within 6 months from AD* 6 months may extend for further 2 months If goods not returned within 6/8 months ITC shall liable to be recovered Manufacturer may transfer goods for supply on payment of tax in
India or without payment of tax for exports within six months or the extended period
Section 141(3)– FG returned on/after AD
General Issues:- In case of SFG, what if manufacturing process does not takes place? What if I forgot to declare details of stock? What if goods were in transit and not in stock with job-worker? What if I have send some capital goods and some value addition has
taken place? What if job-worker was URD in earlier law and registered in GST? Which ITC to be recovered? We will caught if third party stock is with us?
Issues under Section 141(1),141(2) and 141(3)
Revision of sales price
Goods on approval basis not earlier than 6 months before AD* Rejected/not approved by buyer and returned to seller On/after AD No tax payable if goods returned within 6 months from AD* 6 months may be extended for 2 months Tax by person returning goods if returned after 6/8 months Tax by person sending goods if not returned in 6/8 months What is difference between not returned or returned
after…..Drafting anomaly?
Section 142(1)– Goods returned on/After AD
Contract entered prior to AD* Price revised upwards/downwards On/or after AD* Registered person who made supply Issue to the recipient Debit/Credit note, within 30 days of revision In credit note, person allowed to reduce his liability if recipient
reduced ITC corresponding to such reduction of tax
Section 142(2) – Issue of Debit/Credit Notes
Pending Litigations and Claims
1. Section 142(3) - Pending refund claims disposed of under earlier law
2. Section 142(4) - Refund claims filed after AD* for supply before AD* and exported before/after AD* disposed of under earlier law
3. Section 142(5) - Refund claims filed after AD* for payments received and tax paid before AD* for services not provided
4. Section 142(6) - Claim of CENVAT credit disposed of under earlier law
5. Section 142(7) - Finalization of output tax liability proceedings6. Section 142(8)- Treatment of amount recovered/refunded in
pursuance of assessment or adjudication proceedings7. Section 142(9) - Treatment of amount recovered or refunded
pursuant to revision of returns
Following sections are added to carry forward
Pending Litigations, Refunds and related Claims
Identify controversies expected and apply for advance rulings Credits dependent on vendors. Ensure registrations, improvements in vendors
compliance rating class, communicate GST impacts for vendors, contractual clauses, Vendor training etc.
Analysis of credit leakage points in our business and plan to reduce them to the lowest. For example:- Procuring material within India instead of resorting to imports as custom duty is a cost to the company.
Review contractual terms considering the impact of GST. For example:- – Probable reduction in purchase price for probable A-Class vendors– Time limits for issue of debit/credit notes – Compulsions regarding vendor timely paying tax for claiming its credit etc.
General Transitional Activities
Review of registrations for various place to ascertain impact under GST We may do scenario analysis such as –
1. How to price the products?Ex:- CIF, FOB, Quantum of discount 2. Contract price to be kept exclusive or inclusive 3. What if tax inclusive price should be kept constant? 4. What if tax exclusive price should be kept constant? 5. Impact on pricing if absolute profit is kept constant 6. Impact on cash flows
General Transitional Activities
Companies have to revamp existing distribution strategies. But how to analyise it?
A solution for this issue can be trend analysis. We can do trend analysis on following subjects:- i. Inventory - Location wise & category wise ii. Branch transfers iii. Location wise sales
By trend analysis we make sure the importance of each and every distribution point in our distribution pattern and we can do decision making as to which one to shut down and where to start a new one. As a result of above decision we will be able to select states where we have to obtain provisional registration in GST.
General Transitional Activities
Review credits availed and disclosure in returns Schemes opted in VAT and impact under GST Ascertaining possibility of planning present purchases for better
transition Review existing litigations pending and action point required for
smooth transition in GST Presently, in C Form sales, submission of C Forms get delayed.
Govt. may not allow C Form in transition and gives cash refund of remaining balance on the submission of C Form?
General Transitional Activities
For Manufacturer:- Review of systems followed with respect to goods sent for job
work and impact under GST
For Trader:- Review of systems followed for goods received back from
customers and impact under GST
General Transitional Activities
• Thank you • Hope your transition is made easy