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SAURADIP BHATTACHARYYA, SFM PLHO

GAURAV GUPTA, DFM PLHO

Date: 24.04.2017
CONTENTS
 Introduction
 Tax structure: Existing and proposed & Example
 GST Law
 CGST and SGST (On intra-state transactions) IGST (on Inter
State Transactions), UTGST
 Taxable person
 Registration
 Important definitions
 Time of supply
 ITC
 TDS
 Returns
INTRODUCTION
GST is the single most important tax reform after 1947
Goods and Service Tax is a comprehensive nationwide
indirect tax.
A common tax on

Goods Services
It shall extend to the whole of India excluding Jammu and
Kashmir.
GST is a destination based tax. This means that goods and
services would be taxed at the point they are consumed.
PROBLEMS WITH CURRENT TAXATION
SYSTEM

Multiplicity of taxes
and their cascading effects.
Difficulty in compliance
No ITC available between taxes levied by
central and state government.
BACKGROUND
Idea of GST dates back to year 2000, when Atal Bihari Vajpayee led
government initiated the discussion on GST by setting up an empowered
committee headed by Asim Dasgupta (Finance Minister, Govt. of West
Bengal). Then it was suggested by The Kelkar Committee in 2004. Dr. Vijay
Kelkar recommended national GST.

The 1st announcement to introduce GST was made in budget


speech of 2006 by then FM P. Chidambaram.
Task of designing GST was given to empowered committee of
State Finance Ministers.

115th Constitution Amendment Bill was introduced in


March, 2011 in Lok Sabha. The Bill lapsed due to dissolution of 115th
Lok Sabha.
After great amount of deliberations,
Constitution(122nd) Amendment Bill, 2014 was
nd introduced in December 2014 by FM Arun Jaitely.
122
Target date for implementation was 1st April 2016.
The Bill was passed in Lok Sabha in 2015
Additional tax of 1% on inter-state supply was introduced.
Excise duty and Service tax were increased.

To Rajya Sabha

The Bill was then introduced in Rajya Sabha.


Congress dissented but specified that it was
in favour of introduction of simple and
comprehensive GST.
The bill could not be passed.
CGST, UTGST & IGST acts passed after assent of President on 12th April 2017
9 STAGES FOR GST ROLLOUT
1. The Constitution 122nd Amendment Bill for GST passed
in the Rajya Sabha on 3 August 2016.
2. Ratification of Bill by at least 15 states. Odisha is 16th.
1st September 2016
3. Presidents assent required after ratification by states.
8th September 2016
4. GST Council to be formed to finalize provisions related
to tax rate, exemptions etc. 12th September 2016
5. Industry Feedback ( Already obtained).
6. Respective Bills to be passed by each state legislature
(Yet to be passed).
7. Enactment by Parliament after finalization of laws by
Centre & States. (CGST, IGST & UTGST got president
assent on 12.04.2017)
8. GST Network to be launched to help taxpayers to
understand the processes.
9. Implementation of GST after completion of all
processes.
The Government is hopeful of implementing GST
by 1st July, 2017.
WHY IS AMENDMENT OF
CONSTITUTION REQUIRED?
The Constitution provides for distribution of power to tax between
the Centre and States.
Centre is empowered to tax
Services (Service Tax) and
Goods upto the production stage only (Excise Duty).
States have the power to tax sale of goods only (Sales Tax).
Thus, the Constitution does not vest express power either in the
Central or State Government to levy a tax on the supply of goods and
services.
Therefore, it is essential to have Constitutional Amendments for
empowering the Centre and the states to levy tax on Supply of goods
and services.
SCOPE
All goods or services are covered under GST
except :
Alcohol for human consumption
Electricity
Real Estate

Petroleum Products [u/s-9(2)] - Will be brought


in GST at a later stage from date to be notified on
recommendation of GST Council.
a) Motor Spirit b) HSD c)ATF
d)Crude e) Natural Gas
Products like Kerosene, Naphtha and LPG etc. will
be under the ambit of GST
HYBRID TAXATION

EXISTING GST

Excise Duty CGST/


MS SKO
HSD SGST LPG
ATF VAT
Lube
NG
Crude CST IGST etc.
GST AROUND THE WORLD
France was the first country to introduce GST in
1954.
The GST rates in various countries range from 5%
in Taiwan to 25% in Denmark.
EU, Brazil and Canada have dual GST models.
Notable countries that have implemented GST:
UK
France
GST has spread
Australia
to almost 150
Canada countries.
Japan
Notable Counties without GST:
USA
UAE
PRIME MODELS OF GST
Unified GST Dual GST

GST is levied by either GST to be levied by the center &


center or state the states concurrently

In India, GST will have a 'dual' structure, which means it will have 2
components
Central GST (CGST)
State GST (SGST).

They will both have separate powers to legislate and administer their
respective taxes, thus, equally empowering both Centre and state.
 Introduction
CONTENTS
 Tax structure: Existing and proposed & Example
 GST Law
 CGST and SGST (On intra-state transactions) & IGST (on Inter
State Transactions) & UTGST
 Taxable person
 Registration
 Important definitions
 Time of supply
 ITC
 TDS
 Returns
PRESENT INDIRECT TAX STRUCTURE IN INDIA
Indirect
Tax

Central
State Tax
Tax

Entry Tax,
Service Sales tax/
Excise Customs luxury tax,
Tax VAT
etc.

Entry No. 84, Residuary Entry No. 54,


Entry No. 83, Entry No. 52
List I, Sch Entry No. 97, List II (VAT)
List I, Sch and 92A of & 62 List II,
VII List I, Sch
VII List I (CST) Schedule VII
VII

Taxable Taxable
Taxable event Taxable event is
event is event is Taxable
is entertainment/
manufacture Provision of event is sale
Import/Export entry of goods
service
Proposed GST Regime
Proposed GST will replace the terms Manufacture, Sale, Provision of Service , Import
and Export, Entry of goods with one term Supply

Intra State Local VAT &


Excise and
Other taxes
Taxable Service Tax
will be known
will be known
Supply as SGST
as CGST

Inter State CST will be Approx. Sum


Taxable replaced by Total of CGST
Integrated GST and SGST
Supply (IGST)

Import From In Place of


CVD and SAD,
Outside Custom Duty IGST will be
India charged
PROPOSED MODEL OF INDIRECT TAXES
Indirect taxes
(except a few)

CGST SGST IGST

Intra-state transactions Inter-state transactions

location of the supplier and the location of the supplier and


place of the supply are the the place of the supply are
same state. different states.

Central goods and services tax(Central GST) (CGST)- Levy by Central Government on
Intra-State Supply of Goods and/ or Services
State goods and services tax(State GST) (SGST)- Levy by State Government Intra State
Supply of Goods and/ or Services
Integrated Goods and Service Tax (Integrated GST) (IGST)- Levy by Central Government
on Inter-State Supply of Goods and/ or Services
TAXES SUBSUMED IN GST

Taxes levied by Central Taxes levied by the State


Government (Central taxes) Government (State Taxes)
 Service tax  State VAT
 CVD (Countervailing Duty)-Additional  Central Sales Tax
Duty of Customs  Purchase Tax
 SAD (Special Additional Duty of  Luxury Tax
Customs)  Octroi, Entry Tax
 Central Excise Duty  Entertainment Tax (not levied by local
 Additional Excise Duties bodies)
 The Excise Duty levied under the  Taxes on lotteries, betting and gambling
Medicinal and Toiletries Preparation  Taxes on Advertisements
Act  State Cesses and Surcharges in so far as
 Cesses & Surcharge in so far as they they relate to supply of goods and
relate to Supply of Goods & Services services.
TAXES OUTSIDE GST

Basic customs duty


Stamp duty
Taxes on electricity
Taxes on alcohol for human consumption
IMPORTS AND EXPORTS

Imports Exports

Basic customs duty Zero rated supply


+
IGST No tax
RATE STRUCTURE
The Empowered Committee has decided to adopt a
two-rate structure
A lower rate for necessary items and items of basic
importance and
A standard rate for goods in general.

Special rate for precious metals

A list of exempted items.


GST Council has finalised the following GST
Rates in its meeting in November:

For Essential Items- 5%

Lower Standard Rate 12%

Standard Rate 18%

Higher Rate 28%

Peak Rate 40%

NOTE : The Council will review the fitment of


commodities under different rates in its meeting to
be held on May 18 and 19,2017.
EXAMPLE
Stage of Purchase Value Value at Rate of GST Input Net GST=
supply value of addition which GST on Tax GST on
chain Input supply of output credit output -
goods and Input
services tax credit
made to
next stage
Manu- 100 30 130 10% 13 10 13-10=3
facturer

Whole- 130 20 150 10% 15 13 15-13=2


seller

Retailer 150 10 160 10% 16 15 16-15-1

Assumption GST rate = 10%


 Introduction
CONTENTS
 Tax structure: Existing and proposed & Example
 GST Law
 CGST and SGST (On intra-state transactions) & IGST (on Inter
State Transactions)
 Taxable person
 Registration
 Important definitions
 Time of supply
 Valuation rules
 ITC
 TDS
 Returns
GST ACT, 2017
STRUCTURE
The GST Act (April 2017) consists of:
Under Central GST (CGST)
1) 174 sections divided into 21 Chapters and
2) 3 Schedules
Integrated GST Act (IGST)
1) 25 sections divided into 9 Chapters.
Union Territory GST Act (UTGST)
1) 26 sections divided into 9 Chapters.
Levy of CGST/ SGST/ IGST

LEVY OF CGST/SGST (Chapter-III-Sec 9 of CGST)


LEVY OF IGST (Chapter-III-Sec 5 of IGST)

There shall be levied a tax called the CGST/SGST/IGST on all


supplies of goods and/or services made in the course of Intra
State trade (CGST/SGST) or Inter-State trade (IGST)

at the rate specified in the Schedule to this Act and collected
in such manner as may be prescribed.
TAXABLE PERSON
(SECTION-2(107) READ WITH SEC 22 & 24)

Taxable Person means a person who carries on any business


in India and who is registered or required to be registered
under GST Act except the following:

Any person whose aggregate turnover in the FY


Rs. 20 lakh
Any person whose aggregate turnover in the FY
Rs. 10 lakh (if he conducts his business in any NE
state + Sikkim)
An agriculturist
Any person engaged exclusively in the business of
supplying goods or services or both that are not
liable to tax
REGISTRATION
(SECTION-22)
Threshold limit for registration:
Aggregate turnover in a FY exceeds Rs. 20 lakh
Aggregate turnover in a FY exceeds Rs. 10 lakh (for
persons conducting business in NE states ).

If the person (other than an Input Service Distributor) is


registered under an earlier law, it shall not be necessary for
him to apply for fresh registration and
he shall follow the procedure as may be prescribed.
Persons with multiple business verticals in a state may obtain
separate registration for each business vertical.
Registration number- PAN based unique identification number
COMPULSORY REGISTRATION
SECTION-24
The following categories of persons shall be required to be
registered under this Act irrespective of the threshold limit:
Persons making any Inter-State taxable supply.
Persons who are required to pay tax under Reverse charge.
Non-Resident taxable persons.
Persons who are required to deduct TDS.
Input service distributor.
Every person supplying online information and data base
access or retrieval services from a place outside India to a
person in India.
Casual taxable persons making taxable supply.
Every electronic commerce operator.
COMPOSITION LEVY SCHEME
(SECTION-10)
Eligibility: Aggregate turnover in a FY Rs. 50,00,000.

Amount: At a rate as may be prescribed, but not exceeding:


a) 1% of the turnover in case of a manufacturer.
b) 2.5% of the turnover in case of persons engaged in making supplies
referred to in clause 6(b) of Schedule II .
c) 0.5% of the turnover in case of other suppliers.
Conditions:
Such person shall not collect any tax from the recipient on supplies made
by him.
He shall not be entitled to ITC.
He shall not effect any inter-State outward supplies of goods and/or
services.
He is not engaged in making supply through an electronic commerce
operator who is required to collect tax at source u/s 52.
(Section-7) Supply:
SUPPLY
All forms of supply of goods and services like barter, exchange,
sale, transfer etc. made or agreed to be made for a
consideration, by a person in the course or furtherance of
business.

Import of services for a consideration whether or not in the


course or furtherance of business.

Specified activities made without a


consideration (Schedule-I)

Other activities specified to be treated


as supply of goods and services.(Schedule-II)
SCHEDULE- I
Activities to be treated as supply even if without consideration
1. Permanent transfer/disposal of business assets where ITC has been availed on such
asset.
e.g. Suppose if a person has purchased certain goods in December 2014
for business purposes out of which one item was disposed off without
consideration by the said person then such disposal shall be deemed as supply.
2. Supply of Goods or services between related persons or specified distinct persons when
made in the course or furtherance of business.
e.g. X Ltd., Mumbai transferring goods to X Ltd., Bhopal without consideration.
3. Supply of goods -
a) by principal to his agent where agent supply goods on behalf of principal : or
b) by an agent to his principal where agent undertakes to receive goods on behalf of the
principal.
e.g. X Ltd. supplied goods to his agent Mr. Y for further sale on behalf of X
Ltd. The transaction between X Ltd and Mr. Y is a taxable supply
4. Importation of services by a taxable person from a related person or from any of his other
establishments outside India, in the course or furtherance of business.
e.g. Import of service without consideration by X Ltd. from its related
entity in US.
TAX INVOICE
(SECTION-31)
A registered taxable person supplying,
Taxable goods shall issue tax invoice before or at the time of supply.
Details- description, quantity and value of goods, the tax charged etc.

Taxable services shall issue a tax invoice within the prescribed time.
Details- description, the tax charged thereon etc.
Amount of tax to be indicated in tax invoice and other documents.

Sec 34- Any registered taxable person who issues or receives a credit
or debit note in relation to a supply of goods and/or services shall
declare the details of such credit or debit note, in the return for the
month during which such credit or debit note has been issued or
received or in the return for any subsequent month but not later than
September following the end of financial year
(Section-9) Levy of and Exemption from GST:

Tax Transaction Levied by


CGST Intra-state supply Central government
SGST Intra-state supply State government
IGST Inter-state supply Central government
TIME OF SUPPLY OF
GOODS AND SERVICES
(SECTION-12, 13)

The liability to pay CGST / SGST on the goods/ services


shall arise at the time of supply.
TIME OF SUPPLY OF GOODS-(FORWARD CHARGE)

The date on which supplier issues the invoice or

Incase of movement of goods, issuance of invoice before or at


Earliest of the time of removal of goods.
the
following
dates In case supply does not involve movement of goods, issuance of
invoice before or at the time of delivery of goods or making it
available to the recipient

The date on which supplier receives the payment


TIME OF SUPPLY OF GOODS (REVERSE CHARGE)

Date of Date of
receipt of making
goods payment

Time of Supply

30 days from
the date of Date of entry
issue of in books of
invoice by the recipient
supplier
TIME OF SUPPLY OF SERVICES (FORWARD CHARGE)

The date on which supplier issues


the invoice or

Last date of issuance of invoice as


prescribed.
Earliest of
following
dates The date on which supplier receives
the payment

Date of provision of service

Date on which recipient shows


receipt of services in books
TIME OF SUPPLY OF SERVICES (REVERSE CHARGE)

Date of 60 days from


making the date of
Payment as issue of invoice
entered in
receiver books by supplier

Time of Supply
Incase of Associated
Enterprises where
supplier of service is
Date of debit outside India, date of
entry in books by
in books
recipient or date of
payment, whichever
is earlier.
INPUT TAX
CREDIT
PRESENT SYSTEM OF ITC

(basic)
PROPOSED SYSTEM OF ITC
AND
ORDER OF UTILIZATION OF CREDIT
Tax Utilization of ITC
(in order of preference)
1st preference - CGST
CGST
2nd preference - IGST
1st preference - SGST
SGST
2nd preference -IGST
1st preference - IGST
IGST
2nd preference -CGST
3rd preference -SGST
ASSESSEE CAN CLAIM ITC ONLY WHEN THE
FOLLOWING CONDITIONS ARE SATISFIED:
Taxpayer must
possess tax
invoice/any other
taxpaying document

He has
Tax has
received the
goods or Conditions been paid
to Govt.
services

He has filed
return u/s 39
UTILIZATION OF ITC
CGST
1st preference
Input tax credit

CGST SGST

IGST
2nd preference
UTILIZATION OF ITC
CGST

Input tax credit

SGST
SGST 1st preference

IGST
2nd preference
UTILIZATION OF ITC
CGST
2nd preference

Input tax credit

SGST
IGST 3rd preference

IGST
1st preference
INPUT TAX CREDIT
(SECTION-16)

Credit in respect of any invoice pertaining to a FY can be


taken only up to:
The filing of return for the month of September
following the said FY or
Filing of the relevant annual return
whichever is earlier
Restrictions on ITC
 Where the goods /services are used partly for business
purpose and partly for other purposes
 The amount of credit shall be restricted to so much of the
input tax as is attributable to the purposes of his business.

 Goods / services suffering composition levy


 Credit is not available on procurement of goods/services, on
which tax has been paid under composition scheme

 Where the goods /services are used partly for effecting


taxable supplies and partly for non-taxable supplies,
(including exempt supplies but excluding zero-rated
supplies)
 The amount of credit shall be restricted to so much of the
input tax as is attributable to the taxable supplies.
RETURNS
EXPECTED RETURNS UNDER GST

 All existing returns under VAT/ Sales Tax, CST at political state for Non-GST
products
 EXCISE RETURN FOR REFINERY UNITS FOR NON-GST PRODUCTS
 GST RETURNS FOR EACH STATE
 Details of outward supplies (Within 10 days after the end of such month)
 Details of Inward supplies (Within 15 days after the end of such month)
 GST Return - 20th day of the succeeding month
Compounding Taxpayer - 18th day after the end of quarter
Input Service Distributor - 13th day of the succeeding month
Tax Deductor - 10th day of the succeeding month
Annual Return- On or before 31st December following the end of FY

Additional works Credit ledger matching (Invoice matching) for all


transactions including stock transfer of goods and services & follow-up for
addressing the discrepancies with Vendors as well as Customers
Every taxable person shall discharge his tax and
other dues in the following order:

Self-assessed tax and other dues


of previous tax periods

Self-assessed tax and other dues


of current tax period

Any other amount payable under


the applicable provisions.
INTEREST ON DELAYED PAYMENT OF TAX
(SECTION-50)

 Payable on failure to pay tax in


prescribed time

 Interest at rate not exceeding 18%

 The interest shall be calculated from


the day succeeding the day on which
such tax was due to be paid.
LEVY OF LATE FEES
(SECTION-47)

Late fees=
Failure to furnish
Rs. 100 for every day
details of outward/inward
during which such
supplies (u/s 37 & 38)
failure continues
returns u/s 39
(max of Rs. 5,000.)
returns u/s 45(final return)

Late fees=
Rs. 100 for every day during
which such failure continues
Failure to furnish Annual return (maximum of an amount
calculated at a % of his
aggregate turnover)
TDS
(SECTION-51)
CG or SG may mandate certain Departments,
Who Local Authority, Governmental agencies etc.
1% on payment or credit to supplier of taxable
Rate goods or services
The total value of such supply, under a
When contract, exceeds Rs.2.50 lakhs.
Within 10 days after the end of the month in
Deposit which such deduction is made.
The deductee shall claim ITC of the TDS
ITC reflected in the return of the deductor.

Failure Deductor shall be liable to pay interest + TDS.

Refund Refund to deductor, if any, as u/s 54.

If the TDS has been credited to the electronic


No Refund cash ledger of the deductee.

TDS Return Within 10 days from the end of the month in which
tax is deducted
GAURAV GUPTA, DFM PLHO