gst goods and services tax presentation... · indirect taxation in india •india is a federal...

GST Goods and Services Tax Gopi Donthireddy Deputy Commissioner Indian Revenue Service

One Nation, One Tax

2

One Nation, One Tax

• Current Indirect Taxation Scenario

• What is GST trying to solve?

• Proposed taxation structure under GST

• Advantages and Disadvantages of GST

• Constitutional Changes. GST Council

• Features of GST – RNR, ITC Rules, IGST

• GSTN

• Registration, Returns, Payments, Refunds, Demands, Litigation, ITC

• Present Status

Agenda

3

One Nation, One Tax

Taxes in India (At Centre Level)

4

One Nation, One Tax

Taxes

Direct Indirect

Taxes in India

5

One Nation, One Tax

Total

(14.59L Cr)

Direct

(7.48L Cr)

Indirect

(7.11L Cr)

Central Excise

(2.85L Cr)

Service Tax

(2.15L Cr)

Customs

(2.11L Cr)

Direct Taxes

6

One Nation, One Tax

Income Corporation

Wealth Capital Gains

Who administers?

7

One Nation, One Tax

Direct

CBDT

Indirect

CBEC

CBEC

8

Board

CC1 CC2

Commissionerates

CCn

Commissionerate

9

Commissioner

Division1 Division2

(Headed by AC)

Ranges

(Headed by Supdt)

DivisionN

Directorates

10

DGs

NACEN DRI DGCEI Others

Indirect Taxation in India

• India is a Federal Country

• Both Centre and States have powers of taxation

• Defined in the 7th Schedule of the Constitution

• For eg., entry 84 in the Union List grants power to the Centre to levy Central Excise Duty (CENVAT) and entry 54 in the State List grants power to the State to levy tax on sale of purchase of goods other than newspapers

11

Current Indirect Taxation scenario

Indirect taxes levied by Centre & States

12

Taxes levied by Centre Taxes levied by State

Basic Customs Duty VAT

Central Excise Duty (CENVAT) Luxury tax

Service Tax Entertainment tax

Additional Excise Duties Taxes on gambling, lottery and betting

Countervailing Duty (CVD) Entry Tax

Special Additional Duty (SAD) Surcharges and cesses

Surcharges and cesses

Current Indirect Taxation scenario

What’s wrong with the current structure?

13

Too many Taxes

Multiple Jurisdictions

Services and Goods are subjected to different rates of taxation

Tax Cascading across the Value chain.

What is GST trying to solve?

What is Input tax Credit(ITC)?

14

Tyres

Chassis

Engine

+

+

Rs. 300

Inputs

Manufacture (Value Addition)

Rs. 700

Output (Car)

Rs. 1000

CENVAT

Calculating ITC

15

4 Tyres Cost: Rs. 100

C.Ex@10%: Rs. 10

1 Chassis Cost: Rs. 100

C.Ex@10%: Rs. 10

1 Engine Cost: Rs. 100

C.Ex@10%: Rs. 10

Total cost of inputs = Rs 300 Total tax on inputs = Rs 30

CENVAT

Calculating ITC – Manufacturer credit C.Ex@10% duty paid on final product is 10% on Rs 1000 = 100

16

Input goods of Rs. 300

Value addition of Rs. 700

Tax to be levied only on this value addition

(10% of 700 = Rs. 70)

So, manufacturer is given credit of the duty already paid on the inputs. His

final liability is Rs. 100 – Rs. 30 = Rs. 70

Tax already paid on this (10% of 300 = Rs. 30)

CENVAT

Tax Cascading exists - (CENVAT LOAD), CST

Manufacturing Distributive Trade Chain

Final Consumer

17

CENVAT

Cost 100

CENVAT (10%) 10

VAT (10%)

11 (Tax on Tax!!!)

Invoice Value 121

Structure under GST

• Single tax: that subsumes the multiple taxes currently being levied by both the States and the Centre

• Same rate for both Goods and Services

• Removal of interstate barriers by removal of CST.

• *** Seamless availability of ITC from manufacturing stage through to distributive trade (dealers)

• Destination based

18

Proposed taxation structure under GST

Central Taxes being subsumed

• CENVAT

• Additional Excise Duties

• Service Tax

• CVD, SAD

• Surcharges and Cesses. Eg., NCCD, Cess on education, rubber, tea etc.

19


State Taxes being subsumed • VAT

• Luxury Tax

• Entertainment Tax (Unless levied by local bodies)

• Octroi, Entry Tax

• Taxes on Lottery, Betting, Gambling

• Purchase Tax (States like Punjab want this to be left out. Punjab garners 1000 Cr from Purchase Tax on Food Grains)

20


What’s being left out? (1/2)

• Alcohol for human consumption. – In fact GST means any tax on the supply of goods or services or both(WC) except

taxes on supply of alcohol for human consumption - Art 366(12A)

• Petroleum crude, HSD, ATF, Natural gas. (Zero rated in the 122nd C.A Bill)

• So any future inclusion of Alcohol would need a C.A whilst of Petrol wouldn’t need a C.A

• Tobacco is in GST but Centre has powers to levy separate Excise Duty on it

21


What’s being left out? (2/2)

• Basic customs duty

• Property tax

• Stamp duty

• Electricity duty

• Toll tax, Road tax etc (These are in the nature of user fees and not exactly taxes on supply of Goods and Services)

22


Advantages of GST (1/3)

✓ Subsuming most of the indirect taxes currently being levied by the Centre and States into one

✓ Providing a comprehensive input tax credit across the entire value chain

✓ Removal of CST burden

✓ Win-win for both the industry and the government. Industry is set to gain from the comprehensive ITC and removal of CST. There may also be revenue/ resource gain for both the Centre and the States, primarily through widening of tax base and possibility of a significant improvement in tax-compliance.

23

Advantages & Disadvantages of GST

Advantages of GST (2/3) ✓ Dual administrative control with comprehensive sharing of information

between the Centre and states. This would lead to lesser evasion of taxes.

✓ Similar rate structures as far as possible across the entire country. This would lead to a common market. It would end the rate war between the states. Rate would no longer be a factor in choosing the location of an industry.

✓ The subsuming of major Central and State taxes in GST, complete and comprehensive setoff of input goods and services and phasing out of Central Sales Tax (CST) would reduce the cost of locally manufactured goods and services. This will increase the competitiveness of Indian goods and services in the international market and give boost to Indian exports.

✓ Ideally the 650 odd inter-state checkposts across the country should go. But features like different GST rates across states might reinforce the utility of checkposts to avoid evasion.

24


Advantages of GST (3/3)

✓ Crucial for the ‘Make In India’ campaign

✓ Will improve our Ease Of Doing Business Index

✓ Might bump up GDP growth rate by 1 to 2%

✓ Goods might get cheaper with RNR of 18%. Currently, good suffer tax around 27% (VAT + CENVAT)

25


Disadvantages of GST

↓ Services could get costlier, even if standard rate is expected to be between 18% to 20%. There is a proposal for levying lower rate of GST on services such as financial services (Processing fee etc - Read Financial Inclusion)

↓ Overall inflation might go up. There is evidence of this from countries that have already implemented GST

↓ Problems associated with dual tax administrations

↓ Destination based tax is bad for manufacturing states? (Hence the addl 1% was previously proposed for 2 years)

↓ Certain major products/areas are left out – Petroleum, Real Estate, Electricity

26


Constitutional Changes

✓ Enables State to levy Service Tax

✓ Enables Centre to levy VAT on goods

✓ Formation of GST Council

27


Art 246A.

GST Council (1/3)

• FM as the Chairperson

• Min of state for Revenue/Finance

• State FMs or nominated ministers

• VP to be chosen by the above (3rd)

28

GST Council

GST Council (2/3) The Goods and Services Tax Council shall make recommendations to the Union and the States on -

(a) the taxes, cesses and surcharges levied by the Union, the States and the local bodies which may be subsumed in the goods and services tax;

(b) the goods and services that may be subjected to, or exempted from the goods and services tax;

(c) model Goods and Services Tax Laws, principles of levy, apportionment of Integrated Goods and Services Tax and the principles that govern the place of supply;

(d) the threshold limit of turnover below which goods and services may be exempted from goods and services tax;

(e) the rates including floor rates with bands of goods and services tax;

29

GST Council

GST Council (3/3)

• Quorum – ½

• Decision is valid if taken by 3/4th of weighted votes

• Designed such that neither the Centre nor the states alone could impose a decision unilaterally

• Centre has 1/3rd vote

30

GST Council

Proposed taxation Structure

31


What are we taxing?

What are the taxes?

What are the rates?

Taxable Events

32

Tax Event

Central Excise Manufacture

Service Tax Provision of Service

VAT Sale

GST Supply


Taxable Event - Supply

33


All forms of supply of goods and services such as Sale, Transfer, Barter, Exchange, License, Rental, Lease made for a consideration

Importation of a service whether or not for a consideration

Supplies mentioned in Schedule I that are made without consideration

Taxable Event – Schedule I

34


Temporary application of Business Assets to a private use (Eg: Use of assets like car, bungalow for personal use of a director)

Services put to private use (Eg: Travel, telephone services provided to a director for personal use)

Assets retained after De-Registration (Eg: Payment of ITC taken on left over stock)

Free supply of goods like Samples. Doesn’t cover goods sent for Job work.

Administrative Structure

35

Centre State

CGST SGST

levies

IGST(CGST + SGST)

levies

Centre State

levies

Transfers SGST to destination later

Reg

ula

r sc

enar

io

Inte

r-st

ate

tran

sact

ion

s

Trade has to deal with dual tax administration!


Clause 7 of the

Draft Law

Clause 4 of the

Draft Law

RNR

• Select Committee of RS wants it to be below 20% (Standard Rate). Lower rate at 14%.

• Earlier a sub Committee of the Empowered Committee had set it at 27%. The 13th FC set it around 12%.

• Committee headed by CEA, Mr Arvind Subramaniam has looked into it and submitted a report. Recommended an overall RNR of 15.5% and a standard rate of 17-18%

• Key should be ‘Tax buoyancy without fueling inflation’

• Multiple slabs of rates

36

Features of GST

Likely Slabs

37

Features of GST

Slab Goods and Services

0% Natural and unprocessed produces, national flag, basic medical services, services in present negative list, exports etc

1%-2% Gold and Silver ornaments, precious and semi-precious stones

10%-12% (Merit Rate) Goods of basic necessities (including medicines), some capital goods. Goods and Passenger transport services.

18%-20% (Standard Rate) Normal rate

40% (Demerit Rate) Cigarettes etc

Understanding Inter-state Transactions

38

Seller (Origin/Exporting

State)

Buyer (Destination/ Importing State)

Charges IGST = CGST + SGST

Centre Credit of IGST used for payment of SGST

Credit of SGST used for payment of IGST

Features of GST

ITC Rules

➢ ITC of CGST to be used for payment of CGST & IGST

➢ ITC of SGST to be used for payment of SGST & IGST

➢ ITC of IGST to be used for payment of IGST, CGST & SGST in that order

39

Features of GST

Present Scenario (Inter-state trade of goods)

Input Manufacturer

Car Manufacturer

Dealer Consumer

State Tax (X)

Total = RS. 11 (11+0)

State Tax (Y)

Total = RS. 16.91 (13.91+3)

TAX INVOICE A VALUE = 100 CENVAT = 10

VAT = 11 INVOICE VALUE = 121

TAX INVOICE B COST = 100 VALUE = 110 CENVAT = 11

CST = 2.42 INVOICE VALUE = 123.42

TAX INVOICE C COST = 126.42

VALUE = 139.06 VAT = 13.91

INVOICE VALUE = 152.97

A B C

Central Tax Total = Rs. 11

(10+1)

CENVAT = 10

CENVAT = 11 ITC = (10) Cash = 1

Invoice Value = 121 (-) ITC CENVAT = 10

(-) ITC VAT = 11 ---------------------------

Cost = 100

Invoice Value = 123.42 (+) Entry Tax = 3

--------------------------------Cost = 126.42

CENVAT = 10% VAT = 10% CST = 2%

Value Addition = 10% ITC = Input Tax Credit

Entry Tax = 3

VAT = 13.91

VAT = 11

CST = 2.42 ITC = (2.42) Cash = 0

40

Features of GST

GST Scenario (Inter-state trade of goods)

Input Manufacturer

Car Manufacturer

Dealer Consumer

State Tax (X)

Total = RS. 0 (10-10*)

State Tax (Y)

Total = RS. 12.22 (2.2+9.9**)

TAX INVOICE A VALUE = 100

CGST (10%) = 10 SGST (10%) = 10

INVOICE VALUE = 120

TAX INVOICE B COST = 100 VALUE = 110

IGST (20%) = 22 INVOICE VALUE = 132

TAX INVOICE C COST = 110

VALUE = 121 CGST(10%) = 12.1 SGST (10%) = 12.1

INVOICE VALUE = 145.2

A B C

Central Tax Total = Rs. 12.22 (10+2+10**-9.9)

CGST = 10

IGST = 22 CGST = (10) SGST = 10

---------------- Cash = 2

Invoice Value = 120 (-) ITC CGST = 10 (-) ITC SGST = 10

--------------------------- Cost = 100

* State (X) will transfer Rs. 10 (SGST) used for payment of

IGST to centre ** Centre will transfer Rs. 9.9

(IGST) used for payment of SGST to State (Y)

SGST = 10

SGST = 12.1 IGST = (9.9)

------------------ Cash = 2.2

CGST = 12.22 IGST = (12.22) Cash = 0

Invoice Value = 132 (-) ITC_IGST = 22

--------------------------------Cost = 110

41

Features of GST

Comparison

42

S. No. Particulars Inter-state

Present (Rs.)

Proposed (Rs.)

1. Initial Cost Price 100.00 100.00

2. Centre’s Tax 11.00 12.1

3. State (X)’s Tax (Originating) 11.00 0

4. State (Y)’s Tax (Destination) 16.91 12.1

5. State’s Total Tax 27.91 12.1

6. Total Tax paid to Govt. 38.91 24.2

7. Final value paid by Consumer 152.97 145.2 Assumptions : Three levels of transactions (two manufacturing & one retail sale), each involving value addition of 10% Tax Rates assumed: CENVAT Rate = 10%; VAT Rate = 10%; CST Rate = 2%; Entry Tax = Rs. 3/- CGST Rate = 10%; SGST Rate = 10%; IGST Rate = 20%

Features of GST

GSTN (IT Backbone for GST) A Section 25 company

GSTN

Center

Users States

43

PORTAL 1. Registration 2. Return Filing 3. Payment 4. Refunds 5. Profiling

OWNERSHIP 24.5% - Centre 24.5% - States 11% - LIC Housing 10% - ICICI Bank 10% - HDFC 10% - HDFC Bank 10% - NSE SIC

GSTN

• Core Services – Registration

– Returns

– Payments

• Helpdesk support

• Information on Inter-State supply

and cross-credit utilization

• Analytics

• IGST Settlement

Common & Shared

IT Infrastructure

Harmonization of Business

Processes and Formats

Centre/States

Tax IT Systems

Autonomy of back-end systems

of States and Centre

• Approval of Registration

• Assessment

• Refunds

• Audit and Enforcement

• Adjudication

• Internal workflows to support

above functions

• Recovery

• Analytics and BI

Sta

tuto

ry F

un

cti

on

s

No

n-S

tatu

tory

Fu

nctio

ns

IT

Interfaces

GSTN

GST Ecosystem

Tax Authority GSTN IT Systems Taxpayer

State/Centre Portal

Common

Portal

Database

State / Centre Tax

IT Systems

State /

Centre

Database

Interface

API Interface

GST

Application

State/ Centre

Application

Accounting

Agencies &

Treasuries

Network of

Banks & RBI

GST Common Portal

API

Interface

API

Interface

GSTN

Data enter

APIs

State/CBEC to develop their own backend modules and

exchange data with GST common portal using APIs over a

secured network

GST Common Portal +

Backend System

State 1

State 2

State n

WAN

Network

19 States/UTs

1

2

API: Application Programming Interface

GSTN

Model-1 and Model-2 States List of Model-2 States List of Model-1 States

States and UTs with legislature States

1 Arunachal Pradesh 1 Andhra Pradesh

2 Assam 2 Goa

3 Bihar 3 Gujarat

4 Delhi 4 Haryana

5 Himachal Pradesh 5 J & K

6 Manipur 6 Karnataka

7 Mizoram 7 Kerala

8 Nagaland 8 Maharashtra

9 Odisha 9 Meghalaya

10 Puducherry 10 Punjab

11 Tripura 11 Rajasthan

12 Uttar Pradesh 12 Sikkim

13 Uttrakhand 13 Tamil Nadu

14 Madhya Pradesh 14 Telangana

15 Chhattisgarh 15 West Bengal

16 Jharkhand

UTs without Legislature

1 Chandigarh

CBEC 2 Daman & Diu

3 Dadra & Nagar Haveli

Levy

48

Levy

Power to Levy Article 246A

◦Both Centre and States have power to levy GST in course of intra-state trade

◦Only Centre has power levy GST in course of interstate trade

◦Section 7 of MGL (Model GST Law) ◦ CGST, SGST

◦Section 4 of MGL (Model GST Law) ◦ IGST

49

Levy

Incidence of Tax

50

Tax Taxable Event

Central Excise Manufacture

Service Tax Provision of Service

VAT Sale

GST Supply

Levy

Section 7 of MGL Section 7(1) – Charging Section

◦CGST, SGST

Section 7(2) ◦Taxable Person

Section 7(3) ◦Reverse Charge – To be notified on the recommendations of the GST Council

51

Levy

Section 4 of IGST Section 4(1)

◦IGST

Section 4(2) ◦Taxable Person

Section 4(3) ◦Reverse Charge - To be notified on the recommendations of the GST Council

52

Levy

Section 9 - Taxable Person 1. Any person required to be registered under Schedule III of the act

2. Who are NOT taxable persons? ◦Under threshold (20 Lakhs/ 10 Lakhs)

◦Employee in an Employee- Employer relationship

◦Persons providing non-GST supplies

◦Agriculturist

◦Any person liable to pay tax under reverse charge receiving services of value not exceeding certain amount in an year for personal use alone.

3. Government bodies are taxable persons unless they are providing services mentioned under Schedule IV of the act.

53

Levy

Schedule IV Services provided by a Government or local authority to another Government or local authority excluding speed post services, transport of goods etc

Services provided by a Government or local authority to individuals in discharge of its statutory powers or functions such as passport, VISA, driving license etc

Services provided by a Government or local authority or a governmental authority by way of healthcare, education, municipal /panchayat functions

Services provided by Government towards maintenance of public order

54

Levy

Section 8 - Composition Levy Section 8(1)

◦Aggregate turn over < 50 lakhs

◦Pay tax as a certain percentage of turnover (Not less than 1%)

◦Not available for interstate suppliers

◦All other taxable persons with same PAN should also opt for the same

Section 8(2) ◦Can’t collect tax

◦Can’t pass on the credit

Section 8(3) ◦Penalty for misuse

55

Levy

Section 10 (1)If the Central or a State Government is satisfied that it is necessary in the public interest so to do, it may, on the recommendation of the Council, by notification, exempt generally either absolutely or subject to such conditions as may be specified in the notification, goods and/or services of any specified description from the whole or any part of the tax leviable thereon.

(2)If the Central or a State Government is satisfied that it is necessary in the public interest so to do, it may, on the recommendation of the Council, by special order in each case, exempt from payment of tax, under circumstances of an exceptional nature to be stated in such order, any goods and/or services on which tax is leviable.

56

Exemption

Section 10 Shorter Exemption List. Under 100 items.

The Union government is planning to prune the list of excise duty exemptions from the current 300 to the states’ list of 90 items that are exempted from value added tax.

States exempt unprocessed items and those consumed by the poor, such as fruit, fresh vegetables, salt, grains like wheat and rice, besides coarse fabric such as khadi from VAT. The Centre, on the other hand, provides excise exemption for processed foods such as biscuits, butter and cheese

At present, common exempted items between the Centre and states include bread (excluding pizza bread), eggs, milk, fresh vegetables, betel leaves, cereals, books, salt, and the national flag.

Although the list of exempted goods and services under the GST will be a common one, items of local importance in certain states could be exempted. For instance, coconut oil in Kerala, sattu in Bihar and jute in West Bengal could get special exemptions.

Area based exemptions to stay but they will now be available as refunds.

57

Exemption

Registration

58

Registration

Types of Registrants

59

Regular Compounding Casual

Non-resident

TDS Aggregator

ISD

Ecommerce

Operator

Registration

Registration - Clause 9

1. No Registration below Threshold (18 Lakhs. 9 Lakhs for NE and Sikkim).

2. Compounding Asssessees (Threshold turnover below 50 Lakhs). Pay Tax as a %ge (Not less than 1%) of turnover. No tax collected from Customer. No ITC claimed or passed on. Not applicable for Inter State Suppliers

3. Regular Assessees.

4. Interstate suppliers, Reverse Charge Payees (Compulsory Registration. Can’t opt for compounding scheme)

5. Casual Dealers means a person who occasionally undertakes transactions involving supply of goods and/or services in the course or furtherance of business whether as principal, agent or in any other capacity, in a taxable territory where he has no fixed place of business; Such taxpayers would be required to self-assess their likely liability and deposit the same as an Advance Tax (Generally for 90 days). Such amount would be deposited to his electronic cash ledger. Compulsory Registration.

6. Non Resident Taxpayer means a taxable person who occasionally undertakes transactions involving supply of goods and/or services whether as principal or agent or in any other capacity but who has no fixed place of business in India. Same as casual dealers in other matters. Compulsory Registration.

60

Registration

Aggregate Turnover

61

Includes * Excludes

All taxable and non-taxable supplies Reverse Charge Supplies

Exempt supplies Inward Supplies

Exports

* For the same PAN to be computed on an all India basis and excludes taxes charged under CGST, SGST, IGST acts.

Registration

Compulsory Registration (Schedule III) Liability to be registered irrespective of threshold

Persons making inter-State taxable supply

Persons required to pay tax under reverse charge

Casual and non-resident taxable persons

Persons who supply goods and/or services on behalf of other

registered taxable persons whether as an agent or otherwise,

E-Commerce operator

Persons who supply goods through e-commerce operator

An aggregator who supplies services under his brand name

Input Service Distributor

Persons required to deduct tax at source

62

Registration

Features of Registration (1/4) 1. All existing registrants (under state or centre) to get a Provisional

GSTIN by default.

2. ISDs to apply afresh.

3. New Registrants to apply within 30 days of liability.

4. New Regn to be given in 3 days if no Objection is raised by Centre/State. If query raised, party to reply within 7 days. Thereafter , authorities have 7 more days. PV comes later based on risk profile.

5. One regn per state. Multiple regns in a state allowed for different business verticals

63

Registration

Features of Registration (2/4)

State Code

PAN Code Entity Code

Blank

Check Digit

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

64

5. Structure of GSTIN

Entity Code: 1-9 followed by A-Z. Means 35 Combinations.

Features of Registration (3/4) 6. Assessee should be able to submit one appln for all regns within and

outside the state

7. Dig Cert (DSC) allowed. If no DSC, signed copy of summary reg sheet to be sent to the CPC.

8. If either of the authorities cancel the reg, the whole regn is cancelled. Regn to be cancelled through a speaking order

9. Documents to be submitted:

Constitution of business, Principal place of business, Bank Account, Photograph, Details of authorized signatory

65

Registration

66

Document required to be uploaded

Constitution of Business No documents are required in case of proprietors and companies (Verification through PAN/Company

Identification Number through MCA 21).

Partnership Deed in case of partnership firm and Registration Certificates in case of society, trust etc.

as details are not captured in PAN.

Principal Place of business Own premises – any document in support of the ownership of the premises like Latest Tax Paid Receipt

or Municipal Khata copy or Electricity Bill copy.

Rented or Leased premises

Consent Letter, duly notarized, obtained from the Lessee of the premises, where the main lease allows

sub-lease.

In the absence of consent letter, rent receipt in respect of the relevant premises may be accepted with

ownership proof of the property.

Where ownership proof is not available, proof of possession by certain prescribed documents (such as

Certificate issued under Shop and Establishment Act, electricity bill, telephone bill, bank account

showing address proof, etc.) would suffice.

An affidavit in a prescribed format may be taken along with any of the other documents mentioned

above where ownership proof or lease agreement is not available.

Details of Bank Account (s) Any documents that contain the details like the Account No., Name of the Account Holder, MICR and

IFS Codes and Branch details. This can include documents like (a) self-certified copy of the online

banking details; (b) bank statement / cancelled cheque; (c) Also certificate issued by concerned Bank.

Required for all the bank accounts through which the taxpayer would be conducting business.

Details of Authorised Signatory Letter of Authorisation and copy of Resolution of the Managing Committee or Board of Directors to

that effect.

Required to verify whether the person signing as Authorised Signatory is duly empowered to do so.

Features of Registration (4/4) 10. Registration may be cancelled either on the volition of the Officer or by an application of the registrant. Not started business within 6 months of regn/ Not filed returns for a continuous period of 6 months. Cancellation to be done according to PNJ. Taxpayer to furnish a ‘Final return’along with the Cancellation Application.

11. Cancellation will not impact recovery of dues even if the dues are ascertained after cancellation.

12. There is a provision for revocation of cancellation of registration in cases where the registration is cancelled unilaterally by the officer.

13. Cancellation under CGST act is a cancellation under the SGST act and vice-versa

14. UN bodies/ Embassies to get UIN.

67

Registration

68

Prov. Regn

Granted to

Existing Registrant

(GST REG 21)

Existing

Registrant

Liable?

Submit

(GST REG 20)

Within 6 months

Apply for

Cancellation

(GST REG 24)

Prov. Registration

Cancelled

(GST REG 22)

Proper

Officer

Satisfied?

SCN

(GST

REG

23)

RC Granted

(GST REG

06)

Existing Registrant

Registration

No

Yes

Yes

No

No

Yes

69

Apply in

(GST REG 01)

Acknowledgement

(GST REG 02)

Proper

Officer

satisfied?

RC Granted

(GST REG 06)

Within 3 working

days

Notice for Addl.

Info

(GST REG 03)

Addl. info

submitted

(GST REG 04)

Proper

Officer

satisfied

?

RC Granted

(GST REG

06)

New Registrant

Registration

No

Yes

No Yes

Application

rejected

(GST REG 05)

Effective Date of Registration Effective date of registration shall be date of liability, if the

application for registration is filed within 30 days from the date on which the taxpayer becomes liable to pay tax. Else it is date of registration.

The ITC on inputs held in stock will be permitted only if the taxpayer has applied for registration within 30 days from the date he became liable for registration

As per section 27A, a person is required to file the first return for a period starting from date of liability till last date of the tax period in which the registration has been granted.

As per proviso to section 23, new registrant would be permitted to issue the revised tax invoices in lieu of the invoices already issued during the intervening period i.e. the period from date of liability till the date of grant of registration.

70

Registration

Penalty for not Registering He shall be liable to a penalty of:

Rs. 10,000/- or an amount equivalent to the tax evaded or the tax not deducted or short deducted or deducted but not paid to the Government or

input tax credit availed of or passed on or distributed irregularly, or

the refund claimed fraudulently,

whichever is higher.

71

Registration

Cancellation of Registration Due to cancellation of registration, taxable person shall pay by way of debit in the electronic credit or cash ledger

(a) In case of inputs:

(1) an amount equivalent to the credit of input tax in respect of:

(i) inputs held in stock and

(ii) inputs contained in semi-finished or finished goods held in stock

or

the output tax payable on such goods

whichever is higher, calculated in the manner prescribed in the rules

(b) In case of capital goods:

(1) an amount equal to the input tax credit taken on the said capital goods reduced by the percentage points as may be prescribed in this behalf

or

the tax on the transaction value of such capital

whichever is higher.

72

Registration

73

Registration

Returns

75

Returns 1. 11 returns in total

2. GSTR1 to GSTR11

3. GSTR1 – Statement of Outward Supplies (By 10th)

4. GSTR2 – Statement of Inward Supplies (By 15th)

5. GSTR3 - Monthly Return (By 20th). Payment also by 20th

6. GSTR4 – Quarterly Return for Compounding Taxpayer (By 18th)

7. GSTR5 – Non Resident Foreign Taxpayer (Monthly basis by 20th of the month succeeding tax period & within 7 days after expiry of registration)

8. GSTR6 – ISD (By 13th)

9. GSTR7 – TDS (By 10th)

10. GSTR8 – TCS/Ecommerce (By 10th)

11. GSTR9 – Annual (By 31st Dec of next Financial Year)

12. GSTR10 – Final Return

13. GSTR11 – Statement of Inward Supplies by UIN (By 28th)

76

Returns

Returns 1. GSTR2A is auto-drafted from

GSTR1

2. GSTR2 is prepared based on GSTR2A

3. Any invoices added to GSTR2 will get reflected in GSTR1A

4. If Supplier accepts changes as reflected in GSTR1A, his GSTR1 is amended to that effect

77

Returns

GSTR2A

GSTR2

GSTR1A

GSTR1

Returns • GSTR3 will be auto-populated using information from GSTR1 and GSTR2

(Auto Matching), GSTR6(ISD), GSTR7(TDS), ITC Ledger, Cash Ledger

• Definite increase in number of returns to be filed.

78

Returns

79

Returns

GSTR1

• Easy upload tools

• Periodical Uploading

• Filed By 10th

• Frozen after 10th

GSTR2

• Auto-populated

• Edits between 10th and 15th

• Filed By 15th

Reconciliation

• Between 15th and 17th

• Supplier to accept additional invoices

GSTR3

• Auto-populated based on GSTR1 and GSTR2

• Filed by 20th

80

Returns

S1

GSTR1

S2

GSTR1

S3

GSTR1

S4

GSTR1

B

GSTR2

(ITC Available)

B

GSTR1

(Total Tax Liability)

B

GSTR3

(Cash to be paid

=

Total Tax Liability – ITC

Available)

• e Tax Liability Ledger

• e Credit Ledger

• e Cash Ledger

ITC Matching and Auto-reversal • Provisional acceptance of ITC

• De-duplication Check Duplicate claim added to the buyer’s next return’s output liability

• Mismatch More credit is claimed than what is shown in the invoice

Credit is claimed on an invoice not uploaded by the supplier

Supplier can accept liability in the next return period

Claim added to buyer’s next return’s liability (2 Months)

• Reclaim of reversal

81

Returns

Short Filers •Return without full payment of tax will be allowed to be uploaded but it will be treated as an invalid return and this return will not be used for matching of invoices and settlement of funds.

•Any invalid return (including the one not supported by full payment) will merely be recorded with unique transaction ID, but not accepted in the system, and that aspect will be made known to the taxpayer at the time of communicating the ID itself.

82

Returns

Payment 1. Payment through authorized banks only.

2. No Manual Challans. All challans to be digitally generated through the GST portal.

3. RBI to play the role of aggregator through its e-Kuber System. Receive all the amounts from the authorized banks and then debit their accounts and credit Govt accounts.

4. Payment to be made via DC/CC or OTC(Cheque/DD/Cash) at authorized banks for payments upto Rs 10,000 only or NEFT/RTGS

84

Payment

Refunds

85

Refunds (1/2) 1. Excess payment of tax due to mistake or inadvertence.

2. A taxable person who has paid IGST/CGST/SGST mistakenly as an

Interstate/intrastate supply, but the nature of which was subsequently clarified, then, upon payment of CGST and SGST in the appropriate State or IGST, he shall be allowed to take refund of the tax paid under the mistaken head

3. Export (including deemed export) of goods / services under claim of rebate or Refund of accumulated input credit of duty / tax when goods / services are exported.

4. Finalization of provisional assessment.

5. Refund of Pre – deposit for filing appeal including refund arising in pursuance of an appellate authority’s order (when the appeal is decided in favor of the appellant).

6. Payment of duty / tax during investigation but no/ less liability arises at the time of finalization of investigation / adjudication.

86

Refunds

Refunds (2/2) 7. Refund of tax payment on purchases made by Embassies or UN bodies.

8. Credit accumulation due to inverted duty structure i.e. due to tax rate differential between output and inputs.

9. Year-end or volume based incentives provided by the supplier through credit notes.

10. Tax Refund for International Tourists.

11. Refund application to be filed within 2 years from the relevant date.

12. Refunds to be granted within 90 days

13. No refund shall be granted if the amount is less that Rs.1000/-.

14. For certain categories of assessees, in case of exports, 80% refund to be given on provisional basis. 20% after verification.

87

Refunds

Demands, Litigation

88

Demands 1. The proper officer shall issue the order under within three years

from the due date or the actual date, whichever is earlier, for filing of annual return for the year to which the tax not paid or short paid or input tax credit wrongly availed or utilized relates or, as the case may be, within three years from the date of erroneous refund. (No fraud)

2. The proper officer shall issue the order within a period of five years from the due date or the actual date, whichever is earlier, for filing of annual return for the year to which the tax not paid or short paid or input tax credit wrongly availed or utilized relates or, as the case may be, within five years from the date of erroneous refund. (In case of fraud)

89

Litigation

Penalty 1. In non fraud cases:

• Before issuance of SCN – 0%

• Within 30 days of issuance of SCN – 0%

• Beyond – 10%

1. In fraud cases:

• Before issuance of SCN – 15%

• Within 30 days of issuance of SCN – 25%

• Within 30 days of Adjudication Order – 50%

• Beyond – 100%

90

Litigation

Appeals and Revision Provisions are slightly different in CGST and SGST laws.

91

Litigation

Appeal to Supreme Court

Appeal to High Court

Appeal to SGSAT

Appeal to FAA

Adjudication / Demand

Revisional Powers of C-SGST

92

FAA

Adjudication Authority

1. On an appeal by Party or the CGST authorities (Based on review order by Commissioner, GST)

2. Should be filed within 3 months. Grace period of one month on showing sufficient cause.

3. Pre-deposit of 10% of Amount in dispute is mandatory.

4. Should ideally hear and decide the case within one year where it is possible to do so.

5. SGST Variation: In serious cases (Amt >=25 Cr + Good Case), pre-deposit demanded can go upto 50% of amount in dispute

6. SGST Variation: Orders passed by authorities subordinate to Commissioner, SGST are subject to revisional powers of Commissioner.

Litigation

Revisional Powers 1. Commissioner, SGST can enhance/modify/annul an order passed by

his subordinate if he considers it erroneous and prejudicial to the interest of revenue.

2. The order shouldn’t have already been appealed.

3. More than 3 years shouldn’t have passed since the order was passed

93

Litigation

NGSAT – National Goods and Services Appellate Tribunal

SGSAT

Member(J) Member

(T-CGST)

Member

(T-SGST)

94

Litigation

95

SGSAT

FAA

1. Based on an appeal by Party or the CGST authorities (Review Order by Committee of 2 designated officers of CGST)

2. Should be filed within 3 months. Can be extended on showing sufficient cause.

3. NGSAT can refuse to admit an appeal if the tax involved is less than 1 lakh.

4. Pre-deposit of 10% of Amount in dispute is mandatory (Is this in addition to any pre-deposit paid in a previous appellate forum?)

5. Should ideally hear and decide the case within one year where it is possible to do so.

6. SGST Variation: In serious cases (Amt >=25 Cr + Good Case), pre-deposit demanded can go upto 50% of amount in dispute.

Litigation

96

HC

SGSAT

1. Should be filed within 180 days. Can be extended on showing sufficient cause.

2. Total Sums due payable. 3. No appeal lies with HC if

• 2 or more states / state and centre have difference of opinion with regards to treatment of a transaction being intra-state or inter-state or place of supply.

4. At lease a 2 judge bench.

Litigation

97

SC

HC/SGSAT

1. Total Sums due payable. 2. HC should certify it as fit for appeal on its

own volition or on an oral application made by the party.

Litigation

Input Tax Credit

98

ITC ITC means credit of input tax

"input tax" in relation to a taxable person, means the {IGST and CGST}/{IGST and SGST} charged on any supply of goods and/or services to him which are used, or are intended to be used, in the course or furtherance of his business and includes the tax payable under sub-section (3) of section 7 (Reverse Charge).

Provisions similar to CENVAT Credit Rules

99

Capital Goods (Credit in one Go) “capital goods” means: -

(A) the following goods, namely:-

(i) all goods falling within Chapter 82, Chapter 84, Chapter 85, Chapter 90, heading 6805, grinding wheels and the like, and parts thereof falling under heading 6804 of the Schedule to this Act;

(ii) pollution control equipment;

(iii) components, spares and accessories of the goods specified at (i) and (ii);

(iv) moulds and dies, jigs and fixtures;

(v) refractories and refractory materials;

100

Capital Goods (vi) tubes and pipes and fittings thereof;

(vii) storage tank; and

(viii) motor vehicles other than those falling under tariff headings 8702, 8703, 8704, 8711 and their chassis but including dumpers and tippers

used-

(1) at the place of business for supply of goods; or

(2) outside the place of business for generation of electricity for captive use at the place of business; or

(3) for supply of services,

101

Capital Goods (B) motor vehicle designed for transportation of goods including their chassis registered in the name of the supplier of service, when used for

(i) supplying the service of renting of such motor vehicle; or

(ii) transportation of inputs and capital goods used for supply of service; or

(iii) supply of courier agency service;

102

Capital Goods (C) motor vehicle designed to carry passengers including their chassis, registered in the name of the supplier of service, when used for supplying the service of-

(i) transportation of passengers; or

(ii) renting of such motor vehicle; or

(iii) imparting motor driving skills;

(D) Components, spares and accessories of motor vehicles which are capital goods for the taxable person.

103

Input “input” means any goods other than capital goods, subject to exceptions as may be provided under this Act (i.e. MGL) or the rules made thereunder, used or intended to be used by a supplier for making an outward supply in the course of furtherance of business.

104

Input Service “input service” means any service, subject to exceptions as may be provided under this Act or the rules made thereunder, used or intended to be used by a supplier for making an outward supply in the course of furtherance of business.

105

Negative List 1. goods and / or services provided 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 on vacation such as leave or home travel concession, when such goods and/or services are used primarily for personal use or consumption of any employee;

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

3. goods and/or services on which tax has been paid under section 8; and (Composition Levy)

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

106

Transitional Provisions

107

CENVAT CGST

VAT SGST

Transitional Provisions The ITC shall be allowed only if the said amount was admissible as CENVAT credit or ITC under the earlier law and is also admissible as input tax credit under this Act.

108

Present Status • CA Bill

– Passed in RS. Amendments passed in LS

– More than 50% of states have approved it. Odisha is the 16th state.

– Will be put up for Presidential assent.

• GST Council to be setup within 60 days of enactment.

• The Council will be entrusted with recommending the tax rates, including the band of rates for goods and services. The Council will also decide on the draft GST law and Place of Supply rules and also the exemptions, threshold limits, dual administration between the states and the Centre as well as on the business process reports on payment process, registration, refund process and returns under GST, which are in public domain for suggestions.

• CGST, IGST Bills would have to be approved by the Parliament

• SGST Bills would have to be approved by State Legislatures

109

Present Status

Wrap Up 1. GST – CGST, SGST, IGST. Destination based Consumption Tax.

2. Seamless Registration of existing Taxpayers.

3. New Registration within 3 days.

4. Self Assessment.

5. Filing of returns through electronic mode.

6. GSTR3 and Tax Payment by 20th. Even for March.

7. Provisional acceptance of ITC. ITC matching and Auto-Reversal.

8. Demands. Time is set for Adjudication Orders

9. Key role by GSTN

110

Thank You

111

What is CENVAT?

112

Tyres

Chassis

Engine

+

+

Rs. 300

Inputs

Manufacture (Value Addition)

Rs. 700

Output (Car)

Rs. 1000

CENVAT

Calculating CENVAT

113

4 Tyres Cost: Rs. 100

C.Ex@10%: Rs. 10

1 Chassis Cost: Rs. 100

C.Ex@10%: Rs. 10

1 Engine Cost: Rs. 100

C.Ex@10%: Rs. 10

Total cost of inputs = Rs 300 Total tax on inputs = Rs 30

CENVAT

Calculating CENVAT – Manufacturer credit C.Ex@10% duty paid on final product is 10% on Rs 1000 = 100

114

Input goods of Rs. 300

Value addition of Rs. 700

Tax to be levied only on this value addition

(10% of 700 = Rs. 70)

So, manufacturer is given credit of the duty already paid on the inputs. His

final liability is Rs. 100 – Rs. 30 = Rs. 70

Tax already paid on this (10% of 300 = Rs. 30)

CENVAT

Example Eating out in a restaurant: ST on 40% of the bill. VAT should be on 60% of the bill but it is on 100%

Before After

Cost: Rs. 190 Cost: Rs. 190

VAT (@14.5% on Cost) = Rs. 27.55

GST (@18% on Cost) = Rs. 34.2

Service Tax (@15% on 40% of Cost) = Rs. 11.4

Total Cost = Rs. 228.95 Total Cost = Rs. 224.2

115


GST and Real Estate There are three type of transactions involved in it – value of goods, value of services and value of land. All are different and all have a different type of taxation. VAT will be applicable on goods; service tax will be applicable on services and stamp duty on land.

First problem is, it is really difficult to ascertain the value of goods or material and value of services. So, there are many chances of double taxation and this is what is happening in current scenario

The second problem is “credit of tax”. Real Estate pays many taxes like VAT/CST, excise duty, service tax etc. But this sector is not able to avail benefit of these taxes. This affects the overall cost because these duties are added to the cost causing increase in the selling price.

Thirdly VAT rates vary from state to state. Therefore, one developer pays excess tax as compared to the other while working on same material. This affects prices and competition between two developers of different states.

116

GST and Real Estate First and basic benefit which Real Estate will get from GST is end to double taxation. When VAT and service tax both will be governed by same law there will be uniformity in taxation on all transactions. So there will be no double taxation which will reduce cost and increase profit margins for developers.

The second benefit will be a “credit of duty”. For instance, if a developer constructs a mall or office and rents it out in the current scenario, he can’t avail benefit of CENVAT credit of duty paid in construction while paying service tax due on rent. But with GST both the taxes will be governed by GST and so such credit will be available.

Thirs benefit is, presently developers can change Material and Service ratio in the selling price to keep the tax treatment in their favour. One tax system will bar such practices and this way GST will turn out to be a money minting machine for the Government.

117

Place of Supply Rules Supply includes various terms such as sale, provision of service, manufacture

Typically for ̳goods‘ the place of supply would be location where the good are delivered. Whereas for ̳services‘ the place of supply would be location of recipient. However, there are multiple scenarios such as supply of services in relation to immovable property etc wherein this generic principle will not be applicable and specific rule will determine the pace of supply. Thus, the business will have to scroll through all the place of supply provisions before determining the place of supply.

118

GSTR1 For all B2B supplie s (whether inter -state or intra -state), invoice level specified details will be uploaded

For all inter-state B2C supplies the suppliers will upload invoice level details in respect of every invoice whose value is more than Rs. 2,50,000/ -. For invoices below this value, State –wise summary of supply statement will be filed covering those invoices where the re is address on record.

The address of the buyer has to be mandatorily reflected in every invoice having a value of Rs. 50,000/ - or more.

4 Digit HSN code for turnover > 5 Cr, 2 Dig HSN code for turnover between 1.5 Cr and 5 Cr.

119

GSTR1 For all Intra -State B2C supplies consolidated sales (supply) details will be uploaded.

Place of supply needs to be mentioned.

120

GSTR2 Autopopulated based on GSTR1

Can add additional invoices not uploaded by counterparty if there are invoices and Goods/Services are received. Has to do it within 7 days of GSTR1 (17th). The Seller has to acknowledge the additional invoices added by the purchaser.

121

GSTR3 Based on data from GSTR1, GSTR2, GSTR6 (ISD), GSTR7 (TDS)

Tax Liability under CGST, SGST, IGST and other liabilities such as Interest, Penalty, Fees etc

3 Ledgers – ITC (Auto populated from GSTR2. Assessee can specify the items on which he/she would not claim ITC), Cash, Liability.

If excess paid, it can be carried forward or claimed as a refund in the return itself.

122

Advance Ruling

State Appellate Authority

(CC-CGST + C-SGST)

State Advance Ruling Authority

M-CGST M-SGST

1. All decisions to be made within 90 days

2. Appeal to made within 30 days

3. Applicable to the applicant who had sought it and to the jurisdictional tax authorities in respect of the applicant

4. Declared void ab-initio if obtained fraudulently by the applicant

123

Advance Ruling

Questions on which Advance Ruling can be sought

1. Classification of any goods and/or services under the Act

2. Applicability of a notification issued under provisions of the Act having a bearing on the rate of tax

3. The principles to be adopted for the purposes of determination of value of the goods and/or services under the provisions of the Act

4. Admissibility of input tax credit of tax paid or deemed to have been paid

5. Determination of the liability to pay tax on any goods and/or services under the Act

6. Whether applicant is required to be registered under the Act

7. Whether any particular thing done by the applicant with respect to any goods and/or services amounts to or results in a supply of goods and/or services, within the meaning of that term.

124

Advance Ruling

Application is not admitted where the question is

1. Already pending in the applicant’s case before any First Appellate Authority, the Appellate Tribunal or any Court

2. The same as in a matter already decided by the First Appellate Authority, the Appellate Tribunal or any Court

3. The same as in a matter already pending in any proceedings in the applicant’s case under any of the provisions of the Act

4. The same as in a matter in the applicant’s case already decided by the adjudicating authority or assessing authority, whichever is applicable

125

Advance Ruling