Learning Partner’s

GST – Goods & Services Tax

Cracking the GST Code…

G – Getting

S – Simplified

T –Tax

Agenda:

üGetting Familiar with GST

ü Impact on Dealers of Pesticides, Fertilizers & Agro

üPlanning for Future Business / Implementation Challenges

üAccounting Software / IT Systems

üCompliances & Assessment Procedures

ü Impact on Pricing

Learning Outcome:

At the end of this course, Dealers will be able to achieve the following:

üUnderstand various concepts of Goods & Service Tax

üUnderstand the impact of new regulation on distributionof pesticides and kind of changes needed to be done

üGain an insight on the recording and analyzing thetransactions for compliance under GST especially insupply chain & distribution

üGetting familiar with the technology and the flow ofreturn filing under GST

üKnowing “place of supply rules” and applicability of thesame under GST

Ready to Race:

Existing Tax Structure in India

Existing

Tax Structure

Direct Tax

Income Tax Wealth Tax

Indirect Tax

Central Tax

Excise Service Tax Custom

State Tax

VAT

Entry Tax, luxury tax,

Lottery Tax, etc.

Proposed Tax Structure in India

Proposed

Tax Structure

Direct Tax

Income Tax Wealth Tax

Indirect Tax = GST (Except

customs)

Intra- state

CGST (Central) SGST (State)

Inter State

IGST (Central)

Key Taxes Subsumed

CentralCentral Excise Duty

Addnl. Excise Duties

Excise Duty on

MRP

Service Tax CVD

SAD

Surcharges

Cesses StateEntry Tax (not Octroi)

Cesses and surcharges on

goods and services

Taxes on lotteries, betting,

gambling

Luxury Tax

Entertainment Tax (except

levied by local bodies)

VAT/Sales Tax

Dual GST

CSTTOBEPHASEDOUT

Likely GST Model

.

Central Excise

Service Tax

.

Value Added Tax

Entry Tax/Octroi

Other

State

levies

Central GST

State GSTState GST

Import

GST

State GSTIGST

Basis of Charge:

• Excise is on?

“Manufacture”

• VAT is on?

“ Sale”

• GST will be on?

“Supply”

What is GST?

ü A new law which simplifies indirect tax in Indiaü For Crop Life Channel Partners, VAT will now become GST

Model / Components of GST

CGST (Central GST)

• Replace central Excise Duty & service Tax.

• Cover Sale transaction• Administered by CG• Further it is expected that

the duty and tax paid on closing stock would be available as credit.

• Levied on all intra-state sale/supplies of goods or services.

SGST (State GST)

• Replace State Vat, Entry Tax, Entertainment Tax, & Luxury Tax.

• Cover taxing of Services• Administered by SG• Rate can be a bit higher

than CGST rate .• It is expected that the duty

and tax paid on closing stock would be available as credit.

• Levied on all intra-state sale/supplies of goods or services.

IGST (Inter-State GST)

• Levied on all inter –state supplies of goods or services which are sold or transferred.

• Applicable to imports of goods or services.

• Expected to be equal to CGST as well as SGST.

• It is expected that the duty and tax paid on closing stock would be available as credit.

Procurement and Sourcing

Sales and marketing

Distribution

Logistics

Product Pricing

Profitability

Working Capital

Accounting

Human Resource

Current & Future

investments

Operational Areas to be impacted by GST- CMA’s to play significant role

Benefits:

• Single Window Scheme

• Officers have powers across laws

• No GST on farmer selling farm produce

• Most Compliances online

Set off of GST Credit

Limits & Other Details

• Registration over Turnover of 20 Lacs & 10 Lacs in North Eastern States

• Composite Scheme for traders, select manufacturers & restaurants up to75 lacs

• State-wise Single Return to be filed

• Most items will get Input Tax Credit (ITC) to avoid Tax on Tax

• Exporters to get 80 % refund in seven days

Applicable Rates under GST

Registration Under GST

Likely challenges for tax payers

A new tax law – a whole lot of tax controversies

Transaction restructuring

§ Transaction structuring to be reviewed

§ Procurement pattern and trading models to be analysed – No significant difference between local and interstate under GST?

§ Billing patterns, local vis-à-vis inter state to be reviewed

Records/ Accounting

§ State-wise sales records

§ Credit availment and utilization records

Transition

§ Transition of credits

§ New registrations

§ Change in contract clauses

§ Review of procurement costs

§ Taxability of transactions spread across regimes

§ Treatment of tax paid inventory

Re-designing of the entire ERP

§ Current ERP is aligned as per the current taxes

§ Change in accounting

§ Re-defining the logics

§ Updating masters

§ Overall pricing of goods –factoring of GST credits

§ Change in rate of taxes

Costing / Pricing of goods

Compliance

§ Tax computations

§ New formats for invoices / records/ returns/ declarations

§ Validity of statutory form (Form F/Form C)

§ Manner of payment of taxes

§ New compliance dates

§ Documentation for movement of goods

How to Register…!!!

Initial Registration

Documentation Checklist

Other Important Points

Migration Process of GST

Liability to Register in GST :

Every supplier shall be liable to be registered under this Act in the State from wherehe makes a taxable supply of goods and/or services if his aggregate turnover in afinancial year

Note:

The Aggregate Turnover shall include all supplies made by the taxable person,whether on his own account or made on behalf of all his principals.

25

Registration

Region Aggregate Turnover

North East India + Sikkim Rs 10 Lakhs

Rest of India Rs 20 Lakhs

Currently registered under VAT/CSTØAll dealers registered with central or state tax authorities and having a valid PAN will

be allotted by VAT dept/Excise/Service Tax with a provisional GST no and password.

ØDealer is required to login website https://www.gst.gov.in using the ID and Password.

ØExisting Tax payers will be auto-migrated and given a 15 digit provisional PAN based GST ID with following structure.

ØUsing the ID and Password the taxpayer can complete the migration process as per direction by system.

Migrating to GST

State Code PAN No of Tax Payer Entity

CodeBlan

kCheck Digit

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

2 7 A A A C T 1 5 0 7 C 1 Z X

Filing GST Returns

Various Forms Under GST

Form Type Frequency Due Date Details to be Furnished

Form GSTR-1 Monthly 10th of succeeding month

Furnish details of outward supplies of taxable goods and/or services affected

Form GSTR-2A

Monthly On 11th of succeeding Month

Auto-populated details of inward supplies made available to the recipient on the basis of Form GSTR-1 furnished by the supplier

Form GSTR-2 Monthly 15th of succeeding month

Details of inward supplies of taxable goods and/or services for claiming input tax credit. Addition (Claims) or modification in Form GSTR-2A should be submitted in Form GSTR-2.

Form GSTR-1A

Monthly 20th of succeeding month

Details of outward supplies as added, corrected or deleted by the recipient in Form GSTR-2 will be made available to supplier

Form GSTR-3 Monthly 20th of succeeding month

Monthly return on the basis of finalization of details of outward supplies and inward supplies along with the payment of amount of tax

Form GST ITC-1

Monthly — Communication of acceptance, discrepancy or duplication of input tax credit claim

Form GSTR-3A — — Notice to a registered taxable person who fails to furnish return under section 27 and section 31

Form GSTR-9 Annually 31st Dec of next fiscal Annual Return – furnish the details of ITC availed and GST paid which includes local, interstate and import/exports.

Composite Tax PayerReturn

TypeFrequency Due Date Details to be Furnished

Form GSTR-4A

Quarterly — Details of inward supplies made available to the recipient registered under

composition scheme on the basis of Form GSTR-1 furnished by the supplier

Form GSTR-4

Quarterly 18th of succeeding

month

Furnish all outward supply of goods and services. This includes auto-populated

details from Form GSTR-4A, tax payable and payment of tax.

Form GSTR-9A

Annual 31st Dec of next fiscal

Furnish the consolidated details of quarterly returns filed along with tax

payment details.

Aggregate T/O exceeding One Crore

Return Type

Frequency Due Date Details to be furnished

Form GSTR-9B

Annually Annual, 31st Dec of next fiscal

Reconciliation Statement –audited annual accounts and a reconciliation statement, duly certified.

Invoicing Under GSTChanges in how invoices are made under GST

Pricing Under GSTWhat happens to Pesticides/fertilizer prices under GST?

Comparison (Trade of Goods)

45

Sr. No.

Particular Intra-State Inter-State

Present GST Present GST

1. Initial Value 121.00 120.00 121.00 120.00

2. Centre’s Tax 11.00 12.10 11.00 12.22

3. State (X)’s Tax 13.31 12.10 11.00 1.10

4. State (Y)’s Tax - - 16.91 12.22

5. State’s Total 13.31 12.10 27.91 13.32

6. Total Tax paid to Govt. 24.31 24.20 38.91 –Refund Claim

25.54

7. Non-Vatable Tax borne by Business

11.00 0.00 25.00 1.10

8. Final value paid by Consumer

146.41 145.20 152.97 146.65

Comparison (Trade of Service)

Sr. No. Particular Intra-State Inter-State

Present GST Present GST

1. Initial Value 110.00 120.00 110.00 120.00

2. Centre’s Tax 11.00 11.00 12.10 12.10

3. State (X)’s Tax 0.00 11.00 0.00 0.00

4. State (Y)’s Tax - - 0.00 12.10

5. State’s Total 0.00 11.00 0.00 12.10

6. Total Tax paid to Govt. 11.00 22.00 12.10 24.20

7. Non-Vatable Tax borne by Business

0.00 0.00 0.00 0.00

8. Final value paid by Consumer

121.00 132.00 133.10 145.20

Existing Tax Structure Vs GSTSale from Factory - Warehouse – Dealer / Sale from Factory – Dealer (pesticides)

Under Existing Tax Structure Amount in ₹ Under GST Regime Amount in ₹

Sales Price 280.00 Sales Price 280.00

Excise Duty@12.5% on MRP 37.5 CGST @ 9% 25.2

Sub-Total 317.5 SGST @ 9% 25.2

VAT @ 6% 19.05 Purchase Price for Dealer 330.4

Purchase Price for Dealer 336.55 Cost to Dealer (GST ITC Rs 50.4) 280.00

Cost to Dealer (VAT Credit Rs19.05) 317.05 Margin 10.00

Margin 10.00 Sub Total 290.00

Sub Total 327.05 CGST @ 9% 26.1

VAT @ 6% 19.62 SGST @ 9% 26.1

Sale Price of Dealer 346.67 Sale Price of Dealer 342.2

VAT Payable by Dealer(19.62-19.05) 0.6 GST Payable by Dealer(52.2-50.04) 1.8

Service availed 10.00 Service availed 10.00

Service Tax @15% 1.50 GST @ 18% 1.80

Dealer Can’t avail Credit of Rs 1.50 on Service Dealer Can utilized ITC of Rs1.80 paid on Service availed

Conditions for availing Input Tax Credit

ØUnder the GST regime, input tax credit can be availed by every registered taxable person on all inputs used or intended to be used in the course of or for furtherance of business.

Input Tax Credit

Input Tax Credit

“Capital goods” means goods,- the value of which is capitalised in the books of accounts- used or intended to be used in the course or furtherance of business

“Input” means- any goods other than capital goods- used or intended to be used in the course or furtherance of business

“Input service” means- any service used or intended to be used in the course or furtherance ofbusiness

“Input tax" in relation to a taxable person, means- the IGST, including that on import of goods,- CGST and SGST charged on any supply of goods or services to him- includes the tax payable under Reverse Charge- but does not include the tax paid underComposition Levy

List of Input Tax Credit available to Tax Payer:

Every registered Taxable Person can avail Input Tax credit on below mentioned purchase of goods and services received for the furtherance of business.

1) GST paid on Cement Purchase

2)GST Paid on purchase on Capital Goods

ü Motor Vehicle procured for transportation of Goods.

ü Furniture, Fixture, Computer, Printer and other office equipment.

3) GST Paid on various Services

ü Godown Rent

ü Telephone Bill

ü Internet Bill

ü Security Service

ü Manpower Service

ü General Insurance

ü Agent Commission

ü Any other Services availed for business

Impact of GST on retailer

ØEvery Registered Taxable Person shall be entitled to take credit of input tax in his return and such amount shall be credited to his electronic credit ledger.

ØThe Registered Taxable Person shall utilize the Input Tax Credit as the manner explained in below mentioned table.

Utilization of Input Tax Credit

ITC First - Set Off Balance - Set Off Can not be utilized

CGST CGST IGST SGST

SGST SGST IGST CGST

IGST IGST CGST / SGST -

Late Fees, Interest & Penalties under GST

Late Fees

Offence Late Fee

A person fails to furnish details ofoutward or inward supplies,monthly return or final return by thedue date

Rs. 100 for every day during which thefailure continues, subject to amaximum of Rs. 5,000

A person fails to furnish the annualreturn by the due date

Rs. 100 for every day during which thefailure continues, subject to amaximum of quarter percent of theperson’s turnover in the state wherehe/she is registered

InterestOffence InterestA person liable to pay tax fails topay the tax

Interest on the tax due will becalculated from the first day on whichthe tax was due to be paid

A person makes an undue or excessclaim of input tax credit or undue orexcess reduction in output taxliability

Interest on the undue excess claim orundue or excess reduction

A recipient of a service fails to pay tothe supplier of the service theamount towards the value of theservice, along with tax payablethereon, within 3 months from thedate of issue of invoice by thesupplier

Interest on the amount due will beadded to the recipient’s liability

Cancellation of Registration

The circumstances under which a person’s registration will be cancelledare:

• A regular dealer has not furnished returns for a continuous period of 6months.

• A composition dealer has not furnished returns for 3 quarters.

• A person who has taken voluntary registration has not commencedbusiness within 6 months from the date of registration.

• Registration has been obtained by fraud, willful misstatement orsuppression of facts.

PenaltiesOffence InterestIf a person:• Supplies goods and/or services without issuing an invoice or issues an incorrect

or false invoice• Issues an invoice without supply of goods and/or services• Collects tax but fails to pay the same to the Government beyond a period of 3

months from the date on which the payment becomes due• Who is an e-commerce operator fails to collect tax or collects lesser than the

amount required to be collected or fails to pay the tax to the Government• Takes input tax credit without actual receipt of goods and/or services either fully

or partially• Obtains refund of tax by fraud• Falsifies or substitutes financial records or produces fake accounts and/or

documents or furnishes a false return• Liable to be registered, but fails to obtain registration• Furnishes false information with regard to registration• Transports taxable goods without documents• Suppresses turnover leading to evasion of tax• Fails to maintain books of accounts and documents• Issues an invoice or document by using the identification number of another

person

Rs. 10,000 oran amountequivalent tothe tax evaded

Penalties

A person who aids orabets any of the offenceslisted above

Penalty may extend toRs. 25,000

Any offence for which apenalty is not separatelyprovided under the law

Penalty may extend toRs. 25,000

PenaltiesOffence Imprisonment

Commits or abets the following:• Obstructing or preventing any officer in

the discharge of his duties• Tampering with or destroying any

evidence or documentsFailing to supply any information required ofhim under the law or supplying falseinformation

6 months imprisonment with fine

Tax evaded or input tax credit wrongly availedor refund wrongly taken of an amountexceeding Rs. 50 Lakhs, but not exceeding Rs.1 Crore

Imprisonment which may extend to 1 year withfine

Tax evaded or input tax credit wrongly availedor refund wrongly taken of an amountexceeding Rs. 100 Lakhs, but not exceedingRs. 2.5 Crores

Non-bailable imprisonment which may extend to3 years with fine

Tax evaded or input tax credit wrongly availedor refund wrongly taken of an amountexceeding Rs. 2.5 Crores

Non-bailable imprisonment which may extend to5 years with fine

Ø Every registered taxable persons shall keep and maintain a true and correct account of,

1. Inward supply of Goods or Service

2. Outward Supply of Goods or Service

3. Stock of Goods

4. Input Tax Credit availed

5. Output Tax Payable and Paid

Ø The Registered Taxable person may keep and maintain such accounts in the electronic form.

Ø Every registered taxable person required to keep and maintain books of account or other records shall retain them until the expiry of 60 months from the due date of Annual Return for the year such records pertaining.

59

Accounts and Records

Possible risk for Unregistered Retailer

Possible Risk

Company Uploads Outward Supply

Dealer Uploads Outward Supply Correctly

Unregistered Retailer doesn’t upload

Registered Retailer correctly upload his

Inward Supply

The Supply Chain breaks at

Unregistered retailer

ØGSTN can easily track the purchases made by Unregistered retailer. ØGovt officials may impose huge penalty incase if they found that the retailer is liable to register but not registered.

Electronic LedgersRegister type Type of

FormDescription

Electronic Taxliability Register

GST PMT – 1 üAll liabilities of a taxable person shall be recorded andmaintained.üAny liability under GST Act will be recorded by debitingthe electronic tax liability register.üRegister shall be credited on discharge of or reduction inliability due to any other reason.

Electronic CreditRegister

GST PMT – 2 üIt shall be credited on availment of Input tax credit or re-credited in case of rejection of refund claim.üCredit shall be debited when the credit is utilized todischarge tax liability or the refund of unutilized credit.

Electronic CashRegister

GST PMT – 3 üIt will be credited once amount is deposited in it.üAmount credited shall be utilized for payment of tax,interest, penalty, fee or any other payment.

Identification foreach Paymenttransaction

üA UIN shall be generated at the Common Portal for eachdebit or credit to the electronic cash or credit ledger.üThe UIN relating to discharge of any liability shall beindicated in the corresponding entry in the electronic taxliability register.

Electronic Registers under GST

Electronic Liability Register – Ambuja Cement

Vendor Name GSTN No Inv No Inv Base Amt SGST CGST

Goyal Co 27AAACT6578C1XZ 1001 20000 2000 2000

Ramji Builder 27ABCDE1507C1XZ 1002 10000 1000 1000

Total Liability 3000 3000

Electronic Credit Register – Ambuja Cement

Vendor Name GSTN No Inv No Inv Base Amt SGST CGST

Jindal Steel 27JHGFR1234C1XZ 1111 15000 1500 1500

Ramji Builder 27IUUTR1507D1XZ 2001 11000 1100 1100

Total Input Tax Credit available 2600 2600

Electronic Cash Register– Ambuja Cement

Date of Deposit / Utilization

Mode of Payment SGST CGST

20/05/2017 ICICI Bank /RTGS 400 400

20/05/2017 -400 -400

Available Balance 0 0

Accounting Software

üHandwritten Accounts will no longer work

üAccounts have to be maintained on a Computer

üYou can choose any accounting software of your choice

üA Part / Full Time Accountant to be hired

üAnti Virus / Back Up to be taken at regular intervals

Web Resources

• http://tutorial.gst.gov.in/userguide/#t=View_FAQs_and_Help_Documents.htm• www.gst.gov.in• http://tutorial.gst.gov.in/faq/#t=I_am_unable_to_access_the_

GST_Common_Portal_available_at_www.gst.gov.in._How_can_I_access_the_site_.htm• http://www.cbec.gov.in/htdocs-cbec/gst/gst-training• http://www.indiancementreview.com/News.aspx?nid=V4y4rKn

rO22Ny54Js1mTlA==#sthash.iam2ocAc.dpbs

Thank You…!!!