GOODS AND SERVICES TAX

JULY 2017
TABLE OF CONTENTS
SI No Topics
1 Status as on date
2 Basic structure of GST: An Outline
3 Basic structure of GST: Summary
4 GST Rates – Goods
5 GST Rates – Services
6 GST – A game changer for business
7 GST brief overview – Supply
8 GST brief overview – Valuation
9 GST brief overview – Input Tax Credit
10 GST: Impact on Compliance
11 GST Impact on compliances & statutory documents
12 GST: Anti-profiteering measure
13 GST: Transitional Provisions
14 GST: EPC Sector
15 GST: Real Estate
16 GST: Power Sector
17 GST: Iron and Steel Industry
18 GST: Overview on GSP & ASP
STATUS AS ON DATE
November 2016
• GST Rate structure for goods
approved
• Revised law draft released
18 & 19 May 2017
• Rates for ~1,211 goods released
(subject to further vetting); not
released for 6 sectors (textile,
footwear)
• GST Rate structure for services
released
• List of services proposed for
reverse charge released
• 7 set of rules finalized – Invoice,
Tax Payment, Registration, ITC,
Valuation, Refund, Composition
March 2017 12 April 2017
• CGST, IGST, UT-GST • President’s assent attained on
and Compensation 4 GST Bills
Bills approved by • States to ratify their
both the Houses respective SGST Bills
3 & 11 June 2017 18 June – 30 June 2017
• Rates released • 8 set of Rules in relation to
for 6 remaining Assessment, Advance Ruling,
sectors Appeals, Anti-profiteering, E-
• Transition & way bill, Inspection, demand
returns rules & penalty has been finalized
finalized • A number of notifications
• Rules for records under Central Tax, Integrated
finalized Tax, Union Territory Tax &
• Rates revised for Compensation Cess has been
66 items notified
BASIC STRUCTURE OF GST : AN OUTLINE

Central Taxes CGST

 Dual GST Model Proposed  Central Excise
 Various additional excise duties
 To be a consumption based tax rather than the
hitherto origination based tax  Additional duty of Customs (CVD)
 Special Additional duty of Customs
(SAD)
 Dual GST will comprise
 Service Tax
 The Central GST and the State GST
 Surcharges and Cess
 Central GST and State GST, in themselves,  Central Sales Tax
would comprise both the goods tax and the
State Taxes SGST
services tax
 VAT
 Both taxes to operate in parallel and to
 Purchase tax
apply on every transaction
 Entertainment tax
 Luxury tax
 Lottery taxes
 State cesses and surcharges
 Entry tax and Octroi
BASIC STRUCTURE OF GST : SUMMARY

Excise Duty - Manufacturing of Goods

VAT / CST – Sale of Goods
Service Tax – Provision of Services

Intra-state Inter-state
Supply of Goods Supply of Goods Imports Exports
and Services and Services

Basic Custom
Central GST IGST Zero Rated
Duty

IGST (in place

State GST of CVD and
SAD)
GST RATES – GOODS

Milk, Cereals, bread, flour Soaps, Computers,

etc. telephone sets, etc.

Gold, Silver, precious and A.C., refrigerator, car

semi-precious stones, etc. spare parts etc.

Essential items such as edible

oil, spices, tea, coffee, etc. Cars, Sin goods such as
aerated drinks, tobacco
products etc.

Smartphones, Butter, Ghee,

Packed Dry Fruits etc.
GST RATES – SERVICES

5% 12% 18% 28%

• Residual rate
• Luxurious
for services
Services
• Transport • Non-air (restaurant
(Room &
services (Rail, conditioning services,
restaurant in
Air and Road) restaurants telecom,
Five star
consultancy
hotel, etc.)
etc.)
GST – A GAME CHANGER FOR BUSINESS

Integration of Multiple taxes

Removing cascading tax effect

Higher threshold for registration

Composition scheme for small

businesses

Online simple procedure under GST

Seamless availability of credit

Defined treatment for e-commerce

Increased efficiency in logistics

Regulating the unorganized sector

GST BRIEF OVERVIEW
- SUPPLY
GST TO REVOLVE AROUND THE CONCEPT OF SUPPLY

Tax is on
supply

Place of Goods or
supply services?

Rate of
Time of tax and
supply taxable
base? What is Supply?
SUPPLY
Supply includes:
a. all forms of supply of goods and services such as sale, transfer, barter, exchange, licence, rental,
lease or disposal made or agreed to be made for a consideration by a person in the course or
furtherance of business
b. import of services for a consideration whether or not in the course or furtherance of business
c. the activities specified in Schedule I, made or agreed to be made without a Consideration
d. the activities to be treated as supply of goods or supply of services as referred to in Schedule II

Form of supply Meaning

Sale Transfer of title in a property for consideration
Barter The exchange of goods or services without the use of money
Transfer An act of transferring the title or possession in property
License To authorize or give permission to do some act/use something
To grant right of possession of any property to another in return for rent or other
Lease
consideration
Disposal The act of relinquishing the possession or title over something

Exchange The act of transferring interests each in consideration for the other
Rental The act of permitting the use of one’s property for payment
TIME OF SUPPLY - GOODS
Taxable under Forward Taxable under Reverse
Charge Charge

Earlier of Earlier of

Date of receipt of goods

Date of issuance of invoice

Date when payment is

made
Last date on which invoice
has to be issued

30 days from date of

Invoice
Date of receipt of
payment
Residuary rule - date of
entry in books of account
of recipient of supply
TIME OF SUPPLY -SERVICES
Taxable under Forward
Charge
Earlier of
• Date of payment or
• Date of Invoice, if issued within
prescribed period (30 days)
• If not issued within prescribed
period, date of provision of
service
If none of above apply, date on
which recipient shows receipt of
services in books
Taxable under Reverse
Charge
Earlier of
In case of Non Associated
Enterprise
• Date of payment (to be earlier
of entry in books or debit in
bank account)
• Date immediately following 60
days from the date of invoice
• If none of above apply, date of
entry in books of recipient
In case of Associated enterprise
• Date of payment
• Date of entry in books of
recipient
PLACE OF SUPPLY
Goods - Delivery contracts Place where goods delivered

Goods supplied Ex- • Destination of goods if known

works • Seller’s premises if not known

Goods supplied on Location of person on

Bill-to Ship-to basis whom bill raised

Services – residual Location of customer, if registered

rule Self location, if customer unregistered

Services related to Location of immovable property (restaurant,

immovable property hotels etc.)
GST BRIEF OVERVIEW
- VALUATION
PRINCIPLES – VALUATION
Current regime

Central Excise Service tax VAT

• Transaction value is the value • Under ST laws gross consideration • Value for levying VAT is the
taken to levy ED, where buyer & is the consideration used to levy consideration received or
seller are not related and price is ST on the same receivable
the sole consideration and
removal of goods are at factory
gate. In case the any of the
above conditions are not
satisfied, valuation to levy ED is
done as per Central excise
valuation rules. In case of certain
products, ED is payable on basis
of prescribed tariff valuation
PRINCIPLES – VALUATION
GST regime
Transaction value is the value to be used to levy the taxes. Transaction value is the value which is actually paid or
payable, where supplier and recipient of goods/ services are not related and price is the sole consideration. In case the
aforesaid conditions does not satisfied, value of goods/ services should be done as per valuation rules

1. When the consideration is not wholly in money

2. Supply of goods/ services between related or distinct persons, other than

1. Open Market value
2. If open market value is not
available, sum of
consideration in money and
such amount in money
equivalent to the
consideration not in money, if
such amount is known at the
time of supply
3. If value not determinable
as per 1 or 2 above, value of
supply of like kind and quality
of such goods or services
4. If value cannot
determinable as above, value
determined as per other rule
through an agent
1. Open Market value
2. If open market value is not
available, value of supply of
like kind and quality of such
goods or services
3. If value is not determinable
as above, value determined as
per other rules
Provided where the recipient
is eligible for full ITC, the
value declared in the invoice
shall be deemed to be the
Open Market Value for goods
or services
3. Valuation based on cost
110% of the cost of production valuation of goods/
or manufacture or cost of
acquisition of such goods or
cost of provision of such
services
4. Residual method for
services/ both
Valuation through principles
and general provisions of
section 15 of CGST Act and
these rules:
Proviso: In case of supply of
services, the supplier may opt
for this rule, disregarding cost
rule
GST BRIEF OVERVIEW
- INPUT TAX CREDIT
CREDIT CHAIN UNDER GST
GST Credits can be set off in the following order

CGST CGST IGST

SGST SGST IGST

IGST IGST CGST SGST

Separate CGST and IGST Credit Chains to be maintained for each State individually
GST ON INTRA STATE SUPPLIES OF GOODS/
SERVICES : CGST & SGST MODEL
West Bengal West Bengal

Invoice Invoice
Dealer
Value 150
Value 100
CGST (9%) 13.5
CGST (9%) 09
WB SGST (9%) 13.5
WB SGST (9%) 09
-----------------
IGST (18%) NIL
Final Consumer 177
----------------
118 -----------------
----------------

Output GST liability

Output CGST Liability 13.5 Output SGST Liability 13.5

Utilization of CGST Credit (09) Utilization of SGST Credits (09)
Net CGST liability 4.5 Net WB SGST Liability 4.5
GST ON INTER STATE SUPPLIES OF GOODS/
SERVICES : IGST MODEL
West Bengal Delhi
Invoice Invoice
Dealer
Value 100 Value 150
CGST (9%) Nil CGST (9%) 13.5
WB SGST (9%) Nil Delhi SGST (9%) 13.5
IGST (18%) 18 -----------------
---------------- Final Consumer 177
118 -----------------
----------------

Output GST liability

Output CGST Liability 13.5 Output SGST Liability 13.5

Utilization of IGST Credits (13.5) Utilization of balance IGST Credits (4.5)
Net CGST liability 0 Net Delhi SGST to be paid 9
INPUT TAX CREDIT UNDER GST
• Specified conditions to avail credit:
- Possession of invoice
- Receive goods/ services
- Recipient to file relevant returns
- Vendor or recipient (in case of RCM)
to discharge tax
Conditions
ITC
Matching
concept
• Loss of credit in case of vendor non-
compliance
• Addition in output tax of recipient in
case of discrepancy
• Commercial safeguards to be built in
Purchase order/contract
• Motor vehicles (except where used for taxable
supply)
• Supplies for personal use of employee (unless
obligated / notified by government)
• Works contract services for use in construction of
immovable property (other than plant &
machinery)
• Goods lost, stolen etc., free
samples, gifts
Ineligible • No ITC can be claimed if
depreciation claimed on credit
portion under Income Tax
Key points for • ITC reversal on account of
consideration providing taxable and exempt
supplies continues under GST
• Requirement to make payment to supplier within
180 days, otherwise ITC availed earlier shall be
added to output tax liability along with interest
• Time limit to avail ITC is till filing of September
month return of the subsequent fiscal year or
furnishing of the relevant annual return,
whichever is earlier
GST: IMPACT ON COMPLIANCE
COMPLIANCE ASPECTS

Registration
Who will register? When to file returns?
1 4
Where to register?
When to register?
1 Which returns to be filed?

Audit Invoices

6 2
When to issue an Who conducts
2 invoice? assessment? 5
What to include in
an invoice?
5 3
Assessment Payment

When to pay 4 of tax

Who conducts audit?
3 taxes? Returns 6
&
Revised returns
COMPLIANCE ASPECTS 1
Regstration Impact 6 2

5 3
Nature of No. of registration No. of registration
registration under current under GST regime 4
regime
Central Excise Factory Wise • Single registration under
registration GST in each of the states
• More than one business
Service Tax One units in one state can be
registration
registered as vertical
VAT and CST State wise separately
registrations

*The GST law has introduced a concept of casual taxable person which deals with the case of
registration of supplier in a state where he does not have a fixed place of business. However,
the said registration is temporary in nature and is valid up to a maximum period of 90 days.
Such registration would enable the levy of CGST & SGST instead of IGST in case of supplies
made to that state.
COMPLIANCE ASPECTS 1
Impact on Invoicing 6 2

In case of supply 5 3
of goods
4

Does it involve
movement of
goods?

Yes No

On or before
On or before
time of delivery
removal of goods
of goods
COMPLIANCE ASPECTS
Impact on Invoicing
Key details to be mentioned on an
GST invoice
• Name, address and GSTIN of the
supplier and recipient
• Consecutive serial number, unique for
a FY
• HSN code of goods or Accounting Code
of services
• Place of supply & State name, in case
of interstate supply
• Address of delivery where the same is
different from the place of supply
• In case of export, Invoice to carry
endorsement that “Supply meant for
export on payment of IGST” or
“Supply meant for export under bond
without payment of IGST”
1
6 2
Key points for consideration 5 3
• Invoice for services to be issued within 30
4
days from the completion of services
• System to be prepared for capturing GSTIN
for all vendor INR The capturing the correct
GSTIN would be crucial
• HSN code for goods/Accounting code of
services, that may be prescribed would be
required to be captured in the IT system
• IT system to be geared up to provide
reference of the original invoice number on
the credit or debit note issued
• Capture the place of supply would be
important
• Determining the correct taxes on each
supply might be very crucial under the GST
regime
COMPLIANCE ASPECTS 1
Payment and Taxes Impact 6 2

Following accounts along
Accounts with Forms are maintained
a) Electronic credit ledger - FORM
GST PMT-02
b) Electronic cash ledger -FORM
GST PMT-05
c) Electronic tax liability register -
FORM GST PMT-01
5 3
4
Following entry shall be passed
Accounting on discharge of tax liability
Entry
a) Electronic credit ledger – Dr.
b) Electronic tax liability register – Dr.
c) Electronic cash ledger – Cr.

Key points to be considered with

Key points respect to tax payments
a) Payment of GST liability before 20th of next
month
b) Payments shall be made state wise
c) Payments should be made through formats
prescribed in FORM GST PMT- 04
COMPLIANCE ASPECTS 1
Returns and Revised Returns Impact 6 2
Returns
5 3
4
Monthly Annual
Return Return

Outward Supply Inward Supply

Monthly Return
Details Details [GSTR – 9]
[GSTR - 3]
[GSTR -1 ] [GSTR -2 ] (31st Dec of Next FY)
(20 of next Month)
th
(10th of next Month) (15 of next Month)
th

Nature of return No. of returns under No. of returns under Net Impact
current regime GST regime
Central Excise Each Factory
Service tax 1 37 returns per registered
place of business of the
VAT Registered states
tax payer. (12+12+12+1)
COMPLIANCE ASPECTS 1
Returns and Revised Returns Impact 6 2

5 3
Sales and 4
purchase
statement-
transaction
• Seller uploads sales details on GTSN in GSTR-1 by 10th of next month. On the
matching
basis of above, the credit for purchaser would be generated
• Purchaser may accept or make amendment to the credit details – to submit
inward return by 15th of next month. Important to reconcile the details as
per GSTN with actual purchases.

Return filing • Finalisation of sales and purchase statement, filing of credit availment and
utilisation details along with other information (exports, imports etc.)
• Details of credit balance and challans is expected to be automatically
updated
• Balance (if any) may be paid post which return may be filed by 20th of next
month
• Post filing of return, if there is any discrepancy, discrepancy to be notified to
Correcting both seller and purchaser
discrepancies
• In case seller does not correct discrepancy, to be added to tax amount of
purchaser along with interest
• Revision of returns – No provision for revision – additions to be provided in
subsequent returns – Reconciliation
COMPLIANCE ASPECTS 1
Returns and Revised Returns Impact 6 2

Issue Possible outcome 5 3

 Discrepancy in details of supplier
and recipient
 Duplication of credit
 In case tax not desposited by
supplier (invalid return)
 To be added in tax liability of recipient in 4
subsequent month in which discrepancy
communicated along with interest
 To be added in tax liability of recipient in
month in which discrepancy communicated
along with interest
 ITC would not be available in respect of
supplies made by such person

Key points to consider

 System should provide data for outward supplies on real time basis

 Important to have checks in the IT system to reconcile details uploaded by vendor with actual purchases
 IT system to be aligned with GSTN so that details may be uploaded directly
COMPLIANCE ASPECTS 1
Assessment Impact 6 2

Type of 5
assessment
3
4

Self Provisional Summary

Other cases
assessment assessment* assessment

Asst. of non- Asst. of

Scrutiny of
filers of unregistered
returns
return person

*When the tax payer is unable to determine the value of goods or rate of tax, he
may request the proper officer for payment of tax on provisional basis. The proper
officer shall pass an order not later than 90 days from the date of receipt of request
allowing provisional payment of tax. The GST law has laid down a procedure which
should be adhered to in such cases.
COMPLIANCE ASPECTS 1
Audit Impact 6 2

5 3
Officer may require: The officer shall inform
4
Commissioner or any
1. Verification of Books registered person about
officer may undertake
of accounts & findings and reasons for
audit of registered
2. Furnish information such findings within 30
person
and render assistance days of conclusion

The period may get If found that tax is not

Audit may be conducted
extended by a further paid or short paid
at the place of business
period not exceeding 6 erroneously refunded,
of the registered person
months for reasons ITC wrongly availed or
or in their office
recorded in writing utilized, officer shall
commence recovery
procedure

The registered person The audit shall be

shall be informed by completed with a span
way of notice not less of 3 months from the
than 15 days prior to date of commencement
the conduct of audit of audit
GST: IMPACT ON COMPLIANCES &
STATUTORY DOCUMENTS
Periodic compliances

• Detail of Outward Supplies

GSTR-1
• To be filed on or before 10th of succeeding month

• Detail of Inward Supplies

GSTR-2
• To be filed on or before 15th of succeeding month

• Monthly GST Return

GSTR-3
• To be filed on or before 20th of succeeding month

• Annual GST Return

GSTR-9
• To be filed on or before 31st Dec following the Financial Year

• Input Services Distributor Return

GSTR-6
• Details of credit received and distributed

• Tax Deducted at Source Return

GSTR-7
• To be filed by 10th of subsequent month

State level accounts to be audited by Chartered Accountant latest by 31st Dec (if turnover exceeds 1 Cr)

Page 35
Periodic compliances
Reporting Applicability Frequency Prescribed Form Due Date
Outward Supplies GSTR -1 10th of next month
Inward Supplies GSTR -2 15th of next month
Matching of tax Monthly GSTR -1 A & GSTR - 16th & 17th of next
credits Every registered 2A month
person
Monthly return GSTR -3 20th of next month
By 31st December
Annual Return Annually GSTR – 9
of following FY

Tax deduction at If notified by

Monthly GSTR – 7 10th of next month
source government
Every registered
Tax payments person other than Monthly GST PMT Form 20th of next month
composition dealer
E-way bill
At the time of
mandatory for all On each
E Way Bill Form GST INS - 01 commencement of
supplies exceeding consignment
movement of goods
INR 50,000
Statutory Documents under GST regime

• Supply of goods and services are to be made under a cover of a

“Tax Invoice”
Tax
Invoice • For supply of goods, “Tax Invoice” is to be issued in Triplicate
• For supply of services, “Tax Invoice” is to be issued in Duplicate

“Bill of Supply” to be raised instead of tax invoice in following cases:

Bill of
• Supply of exempted goods or services under the GST law
Supply
• Dealer has opted to pay tax under composition scheme

• Delivery Challan to be raised for movement of goods wherein

invoice has not been issued such as movement of goods from one
Delivery showroom to another in same State / one
Challan
• Delivery challan is to be issued in Triplicate

Page 37
Statutory Documents under GST regime
• Credit Note can be issued only in the following scenarios:
 Over charge of price or tax on the invoice; or
 Sales Return; or
 Deficient supplies of goods or services
Credit • Credit note issued should be reported in the month in which it is
Note raised; latest by earliest of:

 30 September of following FY; or

 Date of furnishing annual return for relevant FY
Tax benefit on issuance of Credit Note available only if
customer reverses ITC claimed earlier

• Debit Note can be issued only in cases where the price or tax has
Debit been under charged from the customer
Note
• Debit Note to be reported in month of issuance

Page 38
Statutory Documents under GST regime

Documents in • “Receipt Voucher” to be raised on receiving advances from

customer
case of advances
• On actual supply, a “tax invoice” is required to be issued
(Receipt Voucher
& Refund
• Tracking of “receipt vouchers” and subsequent tax invoices
required for return filing purposes
Voucher)
• In case of refund of advance, “Refund voucher” to be raised

Page 39
Statutory Documents under GST regime

• The final E-waybill Rules are yet to be notified

• As per the draft E-waybill Rules, mandatory to issue an e-waybill
where value of goods to be transported exceeds INR 50,000

E-Way Bills for

• Applicable for both inter-state as well as intra-state movement
of goods
Goods in
movement • Draft waybill rules further provides that in case where the goods
are being bought from an unregistered dealer, the consignee of
the goods would be required to issue an e - waybill if the value of
such goods exceeds INR 50,000
• Road permits will prove to be a hindrance in seamless movement
of goods across States
• Introduction of road permits under GST will defeat the
objective of free trade to an extent, and increase the
documentation
Type of documents and time of its issuance

# Scenario Document required Time of Issuance

• Before or at the time of removal of
1 Supply of goods • Tax Invoice + E-waybill
goods

Supply of services • Within 30 days from completion of

2 • Tax Invoice
(servicing etc.) service

Inter-State stock • Before or at the time of removal of

3 • Tax Invoice + E-waybill
transfer goods
Stock transfer within
4 • Delivery Challan + E-waybill • At the time of removal
the State
• Tax invoice + waybill – Before or at the
Supply of goods time of removal of goods
• Tax Invoice + E-waybill
5 followed by • Delivery Challan + waybill – For bringing
• Credit note
cancellation back goods
• Credit Note – At the time of cancellation
• Tax invoice + waybill – Before or at the
Supply followed by • Tax Invoice + E-waybill
6 time of removal of goods
price reduction • Credit note
• Credit Note – At the time of cancellation

Page 41
Type of documents and time of its issuance

# Scenario Document required Time of Issuance

• Receipt Voucher – At the time of receipt
Advance followed by
• Receipt voucher of advance
7 supply of goods /
• Tax invoice + E-waybill • Tax invoice + waybill – Before or on
services
removal of goods
• Receipt Voucher – At the time of receipt
Advance followed by • Receipt voucher of advance
8
cancellation • Refund Voucher • Refund Voucher – On cancellation of
supply and refund of advance
Reverse Charge
Mechanism – Purchase
• Invoice + E-waybill
9 from Unregistered
• Payment Voucher • Invoice + E-waybill – Before or at the
person (including
time of removal of goods
import of services)
Reverse Charge
• Payment Voucher – At the time of making
Mechanism – Purchase
payment to person
10 from Registered • Payment voucher
person but notified for
reverse charge

Page 42
GST: ANTI-PROFITEERING MEASURE
Anti-Profiteering Measure

Proving to the Maintaining records to

Authorities whether substantiate reduction
benefit has been in price highly
passed on or not – cumbersome
could be challenging Draconian
provision
- Undue power to
tax authorities
To determine whether
benefit of additional
Power to levy penalty if credits/ reduced rates
price not reduced passed on to customer –
• Conte How would the benefit be
computed??
GST: TRANSITIONAL PROVISIONS
CARRY FORWARD OF CENVAT CREDIT/ INPUT TAX
CREDIT

CENVAT Credit/ Unavailed

ITC carried CENVAT Credit/
forward in ITC on capital
returns goods

CENVAT Credit/
CENVAT Credit/
ITC of goods/
ITC of inputs
services in-
held in stock
transit
ITC CARRIED FORWARD IN RETURNS
Conditions for carry forward of ITC Procedure

• Carried forward ITC should be admissible under GST
Regime also
• All returns under existing laws should have been filed for
preceding 6 months
• ITC should not to be related to Exempted goods in GST
Note: Admissible ITC should be reflected in the last return
filed under existing laws
• Respective ITC of the state will be transferred to
respective SGST electronic credit ledger
• Information regarding the amount of ITC, the credit of
which company is entitled, is to be furnished in FORM
GST TRAN-1 within 90 days from appointed date
• The amount of credit specified in FORM GST TRAN-1
shall be credited in electronic credit ledger maintained
in FORM GST PMT-2

Note: In case liability is pending under CST Act because of non-submission of statutory forms, ITC shall
be restricted to be carried forward in GST up to that extent
However, such restricted ITC shall be refunded when the pending statutory forms are furnished
UNAVAILED CENVAT CREDIT/ ITC ON CAPITAL GOODS
Conditions for carry forward of CENVAT Credit/
Procedure
ITC

1. Credit should be admissible as CENVAT Credit/ ITC under Following information is to be furnished in FORM GST
both laws TRAN-1 within 90 days from appointed date:
2. Unavailed CENVAT Credit/ ITC, in respect of capital goods
is not carried forward in the last return filed under • Details of availed CENVAT Credit/ ITC in respect of CG
and
existing law
3. Unavailed credit portion of following can be carried • Details of Unavailed CENVAT Credit/ ITC in respect of
forward CG till the appointed date under each of the existing
• CENVAT Credit laws
• Value Added Tax

Action point:
1. check the admissibility of unavailed credits on capital goods under the existing regime and GST
regime
2. Identify the amount of tax or duty yet to be availed in respect of CG
CENVAT CREDIT/ITC OF INPUTS, SEMI- FG, FG HELD
IN STOCK (Invoice evidencing payment of duty/ tax available)
Eligible Duties & Conditions Procedure
B Taxes • Stock used for • Registered person
• Excise Duty making taxable should furnish the
supplies under GST details of stock held
in GST TRAN 1
• Countervailing Duty within 90 days
• Registered person is
eligible for ITC on
• Special Additional such inputs under • Person should furnish
Duty GST the details of stock
held in GST TRAN 2
• National Calamity • Possesses invoice at the end of each of
Contingent Duty evidencing payment the six tax periods
of duty
• VAT • The amount of credit
• Such invoice is issued shall be credited to
not earlier than 12 the ECL in GST PMT
• Entry Tax (in 2
prescribed States) months before
appointed date.
• Stock on which credit
is availed should be
stored separately
CENVAT CREDIT OF INPUTS, SEMI- FG, FG HELD IN
STOCK (Invoice evidencing payment of duty is not available)
Eligible Duties Conditions Procedure
b• Excise Duty • Credit not available
to a manufacturer or
• Registered person
should furnish the
• Countervailing Duty service provider details of stock as
mentioned in earlier
• Such goods were not slide
• Special Additional
Duty wholly exempt from
duty of excise • Such goods are not
unconditionally
• National Calamity exempt under Excise
Contingent Duty • Credit could be
availed only for six law
tax periods post
implementation of • The document for
GST procurement of such
goods is available with
• Stock of goods on the registered person
which the credit is
availed can be easily
identified
CENVAT CREDIT OF INPUTS, SEMI- FG, FG HELD IN
STOCK (Invoice evidencing payment of duty is not available)
Type of Rate Credit allowed
When credit is allowed
Sales CGST IGST (As a % of tax rate)

9% or more _ 60% of central tax Credit shall be allowed after the

Intra-state central tax payable on such supply
Less than 9% _ 40% of central tax has been paid

_
18% or more 30% of integrated tax Credit shall be allowed after the
Inter-state integrated tax payable on such
_ supply has been paid
Less than 18% 20% of integrated tax
GOODS/ SERVICES IN-TRANSIT
Before appointed date After appointed date

Goods delivered Taxable person will

Goods ordered under
under GST law- Input be entitled to take
the existing law-
or input services credit of eligible
duty and taxes paid
received on or after duties & taxes in his
under existing laws
appointed date ECL

Action points
1. Invoice or any other duty/ tax paying document shall be recorded in books of accounts within 30 days
from the Appointed date
2. Furnish details in Form GST TRAN-1 in respect of credit that has been taken under this section
OTHER TRANSITIONAL SITUATIONS
Goods
returned
after the
appointed
Treatment date
Price
of Long- Revision-
term Rise/ Fall
contracts
Other
Transitional
Situations
Revision of Goods sent
Returns on approval
basis

Procurements
taxed under
earlier law
GOODS RETURNED AFTER APPOINTED DATE
Duty paid goods Conditions to be satisfied:
sold by Company • Goods are sold not earlier
returned by than six months prior to
appointed date
• Goods are returned
within 6 months from the
Registered Unregistered
appointed date
Customer Customer
• Sales return should be to
any place of business

Company will
Return of goods
get refund of
shall be deemed
taxes paid under
to be supply
existing regime

Action points :
CASE 1: Goods are returned by company– It shall be deemed to be outward supply by company and GST
shall be charged on such supply
CASE 2: Goods are returned to company by registered person – It shall be treated as inward supply by
Company and GST paid shall be creditable to Company
CASE 3: Goods are returned to company by unregistered person – Company will get refund of taxes paid
under existing regime
GOODS SENT ON APPROVAL BASIS
B Before appointed date After appointed date

Goods returned within

No tax shall be payable on
6 Months from
such goods
appointed date

Tax shall be payable by ‘the

Goods returned after
Goods sent for person returning goods’ as
6 Months from
approval well as by the ‘person sending
appointed date
goods on approval basis’
Not earlier than 6 months
from appointed date Goods are not
Tax shall be payable by ‘the
returned within 6
person sending goods on
Months from
approval basis’
appointed date

Action points :
1. Required to maintain details of goods sent on approval basis as on the date before the appointed date
2. Further, it is required to furnish details of such goods in Form GST TRAN-1 within 90 days of the
appointed date
PRICE REVISION – RISE/ FALL
Before appointed date After appointed date

To be issued within 30
In case of days of price revision
Supplementary
Price rise Invoice
/Debit Note
Contract entered

Price fall Credit note

Action points:
1. In case of price rise, Supplementary invoice / Debit note will be deemed to be issued in respect of an
outward supply under GST
2. In case of price fall, Credit note shall be deemed to be issued in respect of outward supply and
company shall be allowed to reduce its tax liability only if the recipient of credit note, i.e. the buyer
has reduced his ITC liability
3. Company should identify those transactions and issue necessary documents within the prescribed
timelines
CHANGE OF TIME OF SUPPLY UNDER GST
Before appointed date After appointed date

VAT paid under the To the extent tax paid

Inputs received under VAT, no tax shall be
earlier law
paid under GST

Service Tax paid Inputs Services To the extent tax paid

under the earlier law received under Service Tax, no tax
shall be paid under GST

Both VAT & Service Inputs & Input GST shall be paid on such
Tax paid (Works Services inputs & input services;
Contract services) received taxes earlier paid shall be
admissible as ITC

Action points:
It is required to furnish declaration in Form GST TRAN-1 within 90 days of the appointed date specifying
proportion of supply on which VAT or Service Tax has been paid but the supply is made after the
appointed date and the ITC is admissible thereon
AMOUNT RECOVERED/ REFUNDED DUE TO REVISION
OF RETURNS
Before appointed date After appointed date

Amount shall be
Any amount recovered as
becomes ‘arrear of tax’ &
recoverable shall not be
Return furnished Return revised admissible as ITC
under existing after appointed
laws date
Any amount Amount shall be
becomes refunded in cash
refundable as per provisions
of earlier law

Action points :
1. If in revised return, any amount of credit becomes inadmissible, then such inadmissible credit shall
be paid as ‘arrear of tax’ and shall not be allowed as ITC to company
2. If in revised return, any additional amount of credit becomes available to company, then company can
claim such credit as cash refund, only if the revised return is furnished within the time limit specified
under existing law
GST: EPC SECTOR
KEY DEFINITIONS
Scenario Remarks
Composite Section 2(30) of GST act, defines it as “a supply made by a taxable person to a recipient consisting of two
supply or more taxable supplies of goods or services or both, or any combination thereof, which are naturally
bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a
principal supply”
Applicable taxes will be the tax applicable on the principal supply
Works Section 2(119) of GST act, defines it as “a contract for building, construction, fabrication, completion,
contract erection, installation, fitting out, improvement, modification, repair, maintenance, renovation,
alteration or commissioning of any immovable property wherein transfer of property in goods (whether as
goods or in some other form) is involved in the execution of such contract”
Immovable Section 3(26) of the General Clauses Act, 1897, defines, " immovable property" shall include land,
property benefits to arise out of land, and things attached to the earth, or permanently fastened to anything
attached to the earth
Movable Section 2(7) of the Sale of Goods Act defines it as “Every kind of movable property other than actionable
Property claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming
part of the land which are agreed to be severed before sale or under the contract of sale”
Plant & Explanation to section 17 of GST Act, defines it as “apparatus, equipment, and machinery fixed to earth
machinery by foundation or structural support that are used for making outward supply of goods or services or both
and includes such foundation and structural supports” but excludes—
(i) land, building or any other civil structures;
(ii) telecommunication towers; and
(iii) pipelines laid outside the factory premises
CLASSIFICATION OF TURNKEY PROJECT
Current regime

Single Facts
Agreement
• Generally, splitting of agreement
into various work order’s is at the
Supply of Civil work customer’s request from tax
Consulting Engineering,
Equipment's (if any) perspective
Erection & Installation
• Splitting of agreement results into
following:
ED + VAT/CST Service Tax Service Tax +VAT
a) Lower tax base
b) Credit eligibility to customers
c) Billing linkage to individual
Split Contracts supplies
CLASSIFICATION OF TURNKEY PROJECT
GST regime
Turnkey Project Post GST
Pre GST

Works Contract Composite Supplies

Specific VAT law and Service
Tax law
Works Contract Other composite supplies
As per entry 6 of Section 8(1)
Schedule II read with
Actual Method
section 2(119)

Taxable at 18% with Rate of principal supply

State specific VAT Service Tax
full ITC will apply with full ITC

• GST is a tax on supplies of goods and/or services

• Whether a supply would qualify that of “goods” or “services” would impact the following three
parameters:
1) Place of supply
2) Rate of tax
3) Availability of credit
CLASSIFICATION OF TURNKEY PROJECT
Comparison
Turnkey project could be classified as follows
Particulars Split Contract
Individual supply of goods
and individual supply of
services with no cross
reference to each other
Each supply shall be
Classification
classified separately
Rate as may be applicable
Rate to respective goods or
services
Billing linked to individual
Billing
supplies
Composite Supply Contract
Works Contract
[As per entry 6 of Schedule II
read with Section 2(119)]
The provision of specified services of
any immovable property wherein
transfer of property in goods is
involved
Works contract shall be treated as
supply of service
Rate as applicable to works contract
services, i.e., 18% with full ITC
Billing linked to contractual
milestone
Other Composite Supply
[ Section 8(a)]
A supply consisting of two or more
taxable supplies of goods or services
or both, (one of which is a principal
supply) which are naturally bundled
Composite supply shall be treated as
a supply of such principal supply
Rate as may be applicable to
principal supply
Billing can be linked to contractual
milestone/supplies as may be
relevant
CLASSIFICATION OF TURNKEY PROJECT as
“Works contract service”
Advantages
1. Uniformity in tax position

2. Minimization of tax disputes on account of classification of works contract services in relation to immovable property
as “Services” under GST Regime

3. No artificial splitting of contract necessitated (except for commercial considerations)

4. Increase in eligible credits

Disadvantages
1. Increase in cash outflow on account of following reason:
• Increase in rate of tax from 15% to 18%
• Non-availability of artificial dissection of contracts due to clarity in law

2. Concern regarding ongoing projects in relation to immovable property which have been fully or partially split
artificially due to customer requirement. Need to revisit all such ongoing contracts and initiate discussions on
unbilled revenue, increase in price and consequent taxes

3. Non-availability of input tax credit on works contract for construction of an immovable property (other than plant
and machinery) in the hands of the project owner/ customer
GST: REAL ESTATE
REAL ESTATE IN INDIA
Background
Real Estate sector provides about 7 to 8% to India’s GDP and is a second largest employment generator

The current Indirect tax regime in India provides for a complex tax environment due to multiplicity of taxes,
elaborate compliance obligations and tax cascading

In addition, the Real Estate industry has been embroiled in disputes due to ambiguity in provisions as well as multiple
taxation

The GST regime is expected to simplify the Indirect tax regime as it would subsume most of the Indirect tax laws
(except Stamp duty) and hence is touted as a major tax reform

Present Scenario
• Currently, real estate players are enjoying 70% abatement on sale of under construction flats

• Currently real estate is extended to provide residential space, commercial space, retail space, hospitality space,
SEZs
• In current regime, there are restriction on input tax credit
GST IMPACT
Impact area Current Taxation
Sale of under-constructed • Leviable to Service tax @ 4.5 to 6 percent,
property as construction services/ works contract,
post abatement benefit
• Leviable to VAT @ 5 to 6 percent, as per
local VAT laws
• (Approx. effective rate in the range of 9%
- 12%)
Sale of constructed property • Outside indirect tax purview
/ second sale of constructed
property • Stamp duty is applicable
Sub-contracting • Contractors/ sub-contractors liable to pay
arrangements service tax and eligible for credits used for
similar business
• Typically, contractors are eligible for
deduction of amounts paid to sub-
contractors, for calculating State VAT
liability
GST Scenario
• Treated as supply of services
• GST rate @ 18 percent
• One third of the gross value given as
deduction towards value of land
included in the price of property (i.e.
undivided share of land)
• Outside GST purview
• Stamp duty continues to be applicable
• Concept of "first occupation" introduced
• Liable to GST with eligibility of input tax
credit used for supply of works contracts
services
However, no credit available for
construction of immovable property, if the
same capitalized in the books
GST IMPACT
Impact area
Easements and preferential
location charges
Free of cost supplies made
by the recipient of services
Refundable deposits
Input tax credit
Eligibility
Current Taxation
Currently Service tax is levied on easements
(unless claimed as a pure agent) and
preferential location charges
• Service tax – debatable
• VAT – not liable
Typically not liable to service tax, unless
appropriated against provision of services
 Service tax – allowed if used for
provision of similar services
 VAT – typically not allowed
GST Scenario
GST will be liable on the consideration
received towards easement and
preferential location charges since the
same is in the course of supply of
construction services
Liable to GST, if not included in the price
actually paid or payable for the goods and
services
Deposits not liable to GST unless
appropriated against supply
• Allowed for goods and services received
for construction of immovable property
including plant and machinery to a
person not capitalizing the same in his
books, i.e., when the immovable
property is treated as stock-in-trade for
the builders/ developers, credit of the
goods & services shall be allowed
• Works contract services used for further
supply of similar services is eligible
GST IMPACT
Impact area
Sale of land and building to
be treated as exempt supply
Exempt supply to include
GST paid under Reverse
Charge Mechanism (‘RCM’)
Place of Supply
In relation to immovable
property
Valuation
Valuation of works contract/
construction services
Current Taxation
Under the current regime, value of land and
immovable property are not taken for
computing reversal of credits
RCM is applicable only under the Service tax
laws. However, the same is not treated as
exempted services and as such reversal of
input tax credit is not required
Location of property, only if services are
directly in relation to immovable property
• Service tax is currently levied on the
service portion only, in case of actual
apportionment between service provided
and supply of goods
• Service tax is levied on the gross amount
charged (including value of land) in case of
composite contracts, by availing the
benefit of abatement
GST Scenario
Under GST regime, sale of land and
immovable properties are to be treated as
exempt supply for attribution of eligible
credits
Supplies on which GST is payable by the
recipient, will be treated as exempt supply
for attribution of eligible credits
Location of property, only if the service is
in relation to immovable property
• GST liable as supply of services on works
contract/ construction services, without
any bifurcation between goods and
services
GST: POWER SECTOR
POWER SECTOR IN INDIA
Background
• The power sector in India has the third largest electricity power in the world after China and U.S., and it is among
the core sectors of the country with an installed capacity of more than 330 GW. It facilitates development in
various other sectors like agriculture, manufacturing, construction and services among others

• Distribution of power was mostly owned by state distribution companies (discoms) in the past, now there are also
privately owned companies that undertake distribution of power

Present Scenario
• Electricity is held to be a ‘good’, but it is presently exempt from Excise duty and VAT. Only electricity duty is levied
on its consumption by the State
• All input taxes (such as capital expenditure on setting up power plants and duties and taxes on coal) are a cost to
power companies
• From the Fuel Aspect, producers are entitled to a reduced tax rate on raw material
 Excise Duty on Coal is levied at 6% and a nominal Central Sales Tax (CST) rate of 2%
 The Freight Charges on inputs receive 70% abatement, resulting in an effective rate of 4.5%
 For related procurement services, 15% service tax is levied
 On imported coal, producers are only levied Basic Customs Duty (BCD) of 2.5% and a Countervailing Duty (CVD)
of 6%, making the effective customs tax at 8.5%
• Waste generated in the form of dry fly ash is removed after charging excise duty @ 2% without availing CENVAT
credit on inputs and input services. Further VAT/ CST is applicable rate of 5%/ 2%
POWER SECTOR IN INDIA
GST Regime
• From the Fuel Aspect, producers are entitled to a GST at the following rate on raw material
 GST on coal shall be charged @ 5% + compensation cess @ Rs. 400 per tonne
 The Freight Charges on inputs received is liable to GST @ 5%
 For related procurement services, 18% GST shall be levied
 On imported coal, producers are only levied Basic Customs Duty (BCD) of 2.5% and a IGST @ 5%, making the
effective customs tax at 7.5%
• Presently, electricity has been kept out of GST net. Accordingly, GST charged on inputs, input services and capital
goods shall form part of the cost of power manufacturing companies, to the extent the same pertains to generation of
electricity
• Fly ash is chargeable to GST @18%. Since the said fly ash is generated as a by-product during the course of generation
of electricity, power manufacturing companies can avail the credit pertaining to generation of fly ash on a
proportionate basis

Taxes on consumption or sale of electricity have been decided to be

kept outside GST
POWER SECTOR IN INDIA
Conclusion
The power sector should be included in the GST scheme. Set-off for the taxes paid across all the processes / activities in
the power sector should be confirmed. Accordingly,
• It will reduce the cost of power projects. Consequently, cost of generation and distribution of electricity will also
come down considerably
• It will stimulate the Indian industries since power is a significant input in the process of production of goods and
services
• Indian industries may compete in the international market more efficiently.

• Reduced cost of generation and distribution of electricity will improve the profitability of power projects.

• Profitability in this sector will generate the scope of new investment into this sector
GST: IRON & STEEL INDUSTRY
GST IMPACT
Impact area
Rate of tax on Iron & Steel
Royalty and mining cess on
procurement of iron ore
Procurement of coal used as
fuel
Electricity duty
Current Taxation
• Excise Duty – 12.5%;
• Average VAT – 5%;
• CST – 2%
Total – 17.5%
• Forming part of manufacturing cost since
the same are not creditable
• Currently, coal is charged to excise duty
and VAT at a concessional rate + clean
energy cess @ Rs. 400 per tonne
• Also most of the State VAT laws also do
not allow the input tax credit of coal
used as a fuel
• Currently electricity duty is levied by the
State Government and the same is non-
creditable and hence a cost
GST Scenario
• Structural Iron & Steel items such as
iron bars/ rods angles, channels, etc. is
liable to GST @ 18%;
• Sanitary ware and parts thereof made of
iron & steel are liable to GST @ 28%;
• Household articles made of iron & steel
are liable to GST @ 12%
• Royalty and mining cess are not
subsumed in GST and that they shall
continue to be a cost in the GST regime
also
• Coal is liable to GST @ 5% + GST
compensation cess @ Rs. 400 per tonne
• Seamless credit of GST paid on coal
irrespective of its use;
• Electricity duty has not been subsumed
under GST and hence the same
continues to be a cost
GST IMPACT
Impact area Current Taxation GST Scenario
ADC and SAD on import of • Importer dealer registration required for • ACD and SAD would be subsumed under
goods the purpose of passing CVD / SAD credit GST which will be replaced by IGST
• Huge quantum of SAD refund stuck with which is creditable on immediate basis
the authorities
Job-work • No Excise duty under 214/86-CE • Intimation route retained
• Increase in timelines for return of goods
• Service tax exemption
from job-worker – 1 year for inputs & 3
years for capital goods
• GST leviable on job-work charges
• Provision for sale from job-worker
premises retained subject to the
condition that the job worker should
either be registered or shown as an
additional place of business of the
principal
Advance received for supply • No duty/ tax is levied on receipt of • Tax is payable on receipt of advances
of goods advance consideration for goods for supply of goods. However, credit can
be availed only after the receipt of
goods and invoice
• Adverse impact on the working capital
due to non-availability of ITC until
receipt of such goods
GST IMPACT
Impact area Current Taxation
Post Sales discounts • Post-supply discounts allowed to be
deducted from the transaction value of
goods under excise laws.
• CST law and most of the state VAT laws
allows discount only when the same is
reflected in the invoices
Stock transfer of goods • CST not levied subject to production of
Form - F and other relevant documents.
However VAT reversal applies, incase of
inter-state branch transfer;
• VAT is unconditionally exempt for intra-
state branch transfers;
• Excise duty is levied on 110% of cost
GST Scenario
• Deduction allowed, if as per the
agreement or known at or before the
time of supply, it is specifically linked to
relevant invoices and reversal of ITC
attributable to discount is made by the
recipient of supply
• Open market value (OMV); or
• Value of goods or services of like kind or
quality;
• 110% of cost of production or cost of
provision of services
• Best judgment basis in accordance with
valuation principles;
• Where the goods are intended for
further supply as such by the recipient,
the value shall be 90% of the price
charged for the supply of like goods by
the recipient t his unrelated customer;
• However, where the recipient is eligible
for full ITC, the value declared in the
invoice shall be deemed to be the OMV
GSP & ASP

July 2017
GST Suvidha Provider (GSP) & Application Service Provider
(ASP)
Basic concept

• GSP (GST Suvidha Provider) is a mediator process to reduce the load on GST IT infrastructure as well as to simplify the
invoice uploading and return filing process

• The aforesaid process can be made automated either by using own IT department of company or by third party service
providers, called as ASP (Application Service Provider)

• GSTN believes in creating an ecosystem of service providers viz GSP providing innovative solutions (Portal, Mobile App,
Enriched API) either themselves or through its third party partners, ASP for making tax filing more easy and convenient
to tax payers

• GSTN envisages a very important role of GSPs & ASPs in making GST rollout easy and convenient for tax payers

• End user will connect, share date and file return via one of the GSP in following way –
 Using the existing IT infrastructure, prepare the application to reach GSP to share data;
 Otherwise select some ASP provider services to assists in data sharing with GSP;
GSP (GST Suvidha Provider)
GSP Methodology

• Taxpayer will register with one of the GSP, who is providing a portal similar to GST portal but with enriched
functionalities
• Taxpayer will get a user id and password for GSP portal
• To use GST API, Taxpayer has to authenticate with GST system. This authentication can be done in two way:
• Tax payer chooses to provide OTP for every interaction with GST System like uploading of invoices, fetching GSTR2 auto
populated data, filling returns etc.
• Tax payer authorize GSP application to authenticate on his/her behalf to only provide OTP once (GSP Application will
map its portal user id with GST System ID)
• Tax payer will export his sales register entries( having invoice level details) in csv or excel format from his/her existing
application
• Tax payer will login in to the GSP portal (If Tax payer has chosen option-2 in third step above, he/she will be asked one
time GST portal user id and OTP to provide his/her authorization to GSP application) and upload csv file
• GSP application will process this csv and generate a JSON file, which is required by GST System, instantly or after
sometime based on application design and inform Tax payer
• Tax payer can also choose an option to auto submit prepared JSON to GST
• Tax payer can do this activity one or more time in a month and finally, when tax payer is planning to file return
• Tax payer will go to the GSP portal and ask it to fetch GSTR1 summary from GST system
• Taxpayer will view GSTR1 summary and will do digital sign using DSC or e-Sign or EVC as required
• Taxpayer will submit signed GSTR1 and get an acknowledgement.
GSP – Model Work

Upload Sales Register GST Portal

CSV/Excel (Providing Excel,
CSV etc. based GSP – GST GST
Download Auto Populate
invoice upload/ Server MPLS
Server
GSTR2 data in CSV/Excel
GSTR2 download/
GSTR1 Summary)
Tax payer’s
application
Export sales
(local ERP, Stand
register in
excel or CSV alone Custom
format application, excel
based system GSP Application
etc.)
ASP Services – Model Work
GSP
Application

Data extracted from users

system
ASP GSP – GST GST
(Application Server Server
Service Provider)
MPLS

Tax payer’s
application
(local ERP, Stand
alone Custom
application, excel
based system
etc.)
THANK YOU
Mumbai Pune New Delhi - Gurgaon
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