Basic Principles under GST
AGARWAL JAY & CO.
CA Jay Agarwal – [email protected]
Understanding GST Implications
Any Transaction
Check for Charging Section
[Ref: Sec 8 of CGST Act (for local supply) / Sec 5 of IGST Act
(for Interstate supply)
Check for Supply
No
Is it supply of Goods and / or Services
No
[Ref: Sec 3, Sch1, 2 & 3 of CGST Act]
NO GST
[Ref Def n : Sec 2(49) Goods & 2(92) Services]
Check for EXEMPTIONS (if any)
[Ref: Sec 11 / 6 of CGST / IGST Act) ]
Yes
No
Taxable under GST
AGARWAL JAY & CO.
CA Jay Agarwal – [email protected]
ON WHAT VALUE ?
AT WHAT RATE ?
Ref: Sec 15 of CGST
Act & the Valuation
Rules.
Ref: Sec 8(1) / 5(1) of CGST /
IGST Act & Govt. Notifications.
Note: INPUT TAX CREDITS
available u/s. 16 of CGST Act.
Taxable
TIME OF PAYMENT
Ref: Sec 12 & 13 of CGST Act &
govt notifications.
WHO SHALL PAY TAX TO
GOVT?
Normally– Supplier
Some Cases under RCM – As
Notified and Ref : Sec 8(3) / 5(2)
of CGST / IGST Act.
CA Jay Agarwal – [email protected]
Taxes Subsumed under GST
CA Jay Agarwal – [email protected]
Transitional Provisions
AGARWAL JAY & CO.
CA Jay Agarwal – [email protected]
Transitional Provisions Categorisation
01.Registration and migration to the new law
02.Transfer of Credits
03.Refunds pending to be filed or finalised under existing
law
04.Adjudications or appeal under the existing law
05.Miscellaneous other issues
AGARWAL JAY & CO.
CA Jay Agarwal – [email protected]
Registration – Why Required ?

to get legally recognized as a supplier of goods and services

Collect tax on the outward supplies and pass on the credit to
the recipients

To claim the rebate of input tax credit
AGARWAL JAY & CO.
CA Jay Agarwal – [email protected]
Migration of Existing Taxpayers
AGARWAL JAY & CO.
CA Jay Agarwal – [email protected]
Transfer of Credit
Amount of credit carried forward in the return
The amount of any input credit carried forward in a return, which is
unutilized under the existing tax regime may be carried forward into
the GST regime except in the case of a person who opts to pay tax
under composition scheme in a GST regime.
The said credit will be allowed to be carried forward to the GST regime,
if the following conditions are satisfied:
(1) The said amount of credit is admissible as input tax credit under
this Act (How do we match credit to inputs?)
(2) The registered person has furnished all the returns required under
the existing law for the period of six months immediately preceding the
appointed date.
(3) Input tax credit does not relate to goods manufactured and cleared
under exemption notifications as are notified by the Government.
AGARWAL JAY & CO.
CA Jay Agarwal – [email protected]
Transfer of Credit rules in respect of
CGST/SGST
• File GST Trans -1 within 90 Days from appointed date.
• Specify the following –
 The value of claims under section 3, sub-section (3) of section 5,
sections 6 and 6A and sub-section (8) of section 8 of the Central Sales
Tax Act, 1956 made by the applicant and
The serial number and value of declarations in Forms C and/or F
and Certificates in Forms E and/or H or Form I specified in rule 12 of
the Central Sales Tax (Registration and Turnover) Rules, 1957
submitted by the applicant in support of the claims referred to in subclause (i) above;
AGARWAL JAY & CO.
CA Jay Agarwal – [email protected]
Availment of Capital Goods Credit
• Admissible in existing law as well as under the provisions of the GST
Act
“Unavailed CENVAT credit” means the amount that remains after
subtracting the amount of Cenvat credit already availed in respect of
capital goods by the taxable person under the existing law from the
aggregate amount of Cenvat credit to which the said person was
entitled to, in respect of the said capital goods under the existing law.
Under the present regime in the case of capital goods only 50% of the
eligible credit is allowed to be taken in the same financial year and
balance in subsequent period.
Note : The issue of credit availability on capital goods in transit is still
unaddressed.
AGARWAL JAY & CO.
CA Jay Agarwal – [email protected]
Inputs held in stock
Every person shall be entitled to take credit of eligible duties and taxes
who in the present tax regime :
• was not liable to be registered, or
• was engaged in the manufacture of exempted goods or provision of
exempted services ,or
• was providing works contract service and was availing the benefit of
notification No. 26/2012-Service Tax, dated 20.06.2012, or
• a first stage dealer or a second stage dealer or a registered importer or
a depot of a manufacturer.
AGARWAL JAY & CO.
CA Jay Agarwal – [email protected]
Conditions for availing credit
 such inputs or goods are used or intended to be used for making
taxable supplies under this Act
 the said registered person is eligible for input tax credit on such
inputs under this Act
 the said registered person is in possession of invoice or other
prescribed documents evidencing payment of duty under the
existing law in respect of such inputs
 such invoices or other prescribed documents were issued not earlier
than twelve months immediately preceding the appointed day; and
the supplier of services is not eligible for any abatement under this Act:
AGARWAL JAY & CO.
CA Jay Agarwal – [email protected]
Special credit under CGST
What will happen to tax embedded in stock not reflected in
Purchase invoice ?
A registered taxable person, other than a manufacturer or a supplier
of services, is not in possession of an invoice or any other documents
evidencing payment of duty in respect of inputs, then such registered
taxable person shall take credit in the manner prescribed.
Tax Type
Rate of Tax
% Eligible
CGST
9% or above 9%
60% of CGST
CGST
Other Rates
40% of CGST
IGST
18% or above 18%
30% of IGST
IGST
Other Rates
20% of IGST
AGARWAL JAY & CO.
CA Jay Agarwal – [email protected]
Mechanism for availing Special credit
 such goods were not unconditionally exempt from the whole of the
duty of excise specified in the First Schedule to the Central Excise Tariff
Act, 1985 or were not nil rated in the said Schedule.
 the document for procurement of such goods is available with the
registered person.
 the registered person availing of this scheme and having furnished
the details of stock held by him in accordance with the provisions of
clause (b) of sub-rule (2) of rule 1, submits a statement in FORM GST
TRAN 2 at the end of each of the six tax periods during which the
scheme is in operation indicating therein the details of supplies of such
goods effected during the tax period.
 the amount of credit allowed shall be credited to the electronic credit
ledger of the applicant maintained in FORM GST PMT-2 on the
Common Portal.
 The scheme is available for six tax period.
 the stock of goods on which the credit is availed is so stored
that it can be easily identified by the registered person.
AGARWAL JAY & CO.
CA Jay Agarwal – [email protected]
Special credit under SGST
What will happen to tax embedded in stock which have suffered
tax at the first point of their sale in the State and the subsequent
sales of which are not subject to tax ? ( MRP taxation Concept )
A registered taxable person, other than a manufacturer or a supplier
of services, is not in possession of an invoice or any other documents
evidencing payment of duty in respect of inputs, then such registered
taxable person shall take credit in the manner prescribed.
Tax Type
Rate of Tax
% Eligible
SGST
9% or above 9%
60% of SGST
SGST
Other Rates
40% of SGST
IGST
18% or above 18%
30% of IGST
IGST
Other Rates
20% of IGST
AGARWAL JAY & CO.
CA Jay Agarwal – [email protected]
Mechanism for availing Special credit
 such goods were not wholly exempt from tax under the State Value
Added Tax Act
 the document for procurement of such goods is available with the
registered person.
 the registered person availing of this scheme and having furnished
the details of stock held by him in accordance with the provisions of
clause (b) of sub-rule (2) of rule 1, submits a statement in FORM GST
TRAN 2 at the end of each of the six tax periods during which the
scheme is in operation indicating therein the details of supplies of such
goods effected during the tax period.
 the amount of credit allowed shall be credited to the electronic credit
ledger of the applicant maintained in FORM GST PMT-2 on the
Common Portal.
 The scheme is available for six tax period.
 the stock of goods on which the credit is availed is so stored
that it can be easily identified by the registered person.
AGARWAL JAY & CO.
CA Jay Agarwal – [email protected]
Sections 140(4)- person having taxable
as well as exempted activities
Manufacturer – manufacturing both dutiable as well as
exempted
Service provider- providing both taxable as well as
exempted services
Credit relating to taxable service/ dutiable goods- based
on the final return [Section 140(1)]
Credit relating to exempted activities : to the extent of
credit relating to stock [Section 140(3)]
Where they are liable to pay tax under GST.
AGARWAL JAY & CO.
CA Jay Agarwal – [email protected]
Sections 140(5)- Inputs/ input services
received on or after appointed day
 Credit available if he document is received or accounted in books
within 30 days of appointed date or such period as extended by the
competent authority.
 Statement is duly filed in time containing following details :(i) the name of the supplier, serial number and date of issue of the
invoice by the supplier or any document on the basis of which credit of
input tax was admissible under the existing law,
(ii) the description and value of the goods or services,
(iii) the quantity in case of goods and the unit or unit quantity code
thereof,
(iv) the amount of eligible taxes and duties or, as the case may be, the
value added tax [or entry tax] charged by the supplier in respect of the
goods or services, and
(v) the date on which the receipt of goods or services is entered in the
books of account of the recipient.
AGARWAL JAY & CO.
CA Jay Agarwal – [email protected]
Sections 140(6)- Person paying tax under
composition scheme / standard rate under
present scheme
A Person under composition scheme / similar schemes
under current tax laws could take credit under GST scheme
of taxes on inputs, semi finished goods and Finished goods
in stock. The conditions are as below:
(i) such inputs or goods are used or intended to be used for making taxable
supplies under this Act;
(ii) the said registered person is not paying tax under section 10;
(iii) the said registered person is eligible for input tax credit on such inputs
under this Act;
(iv) the said registered person is in possession of invoice or other prescribed
documents evidencing payment of duty under the existing law in respect of
inputs; and
(v) such invoices or other prescribed documents were issued not earlier than
twelve months immediately preceding the appointed day
AGARWAL JAY & CO.
CA Jay Agarwal – [email protected]
Section 140(7)- ISD
The input tax credit on account of any services received
prior to the appointed day by an Input Service Distributor
shall be eligible for distribution as credit under GST Act
even if the invoice(s) relating to such services is received
on or after the appointed day.
AGARWAL JAY & CO.
CA Jay Agarwal – [email protected]
Section 140(8)- Credit in respect of
Centralized registration
Such credit may be transferred to any of the registered taxable persons
having the same PAN for which the centralized registration was
obtained under the earlier law.
Return is filed within 3 Months from appointed date .
Credit carried forward in return is admissible in this act
Where revised return is filed then reduced credit is eligible to be c/f. In
case of increase ( Transitional refund provisions to apply )
AGARWAL JAY & CO.
CA Jay Agarwal – [email protected]
Reclaiming of credit
Reclaiming of credit reversed due to non-payment of
consideration
Where any credit availed for the input services provided
under the existing law has been reversed due to nonpayment of the consideration within a period of three
months, such credit can be reclaimed subject to the
condition that the registered person has made the payment
of the consideration for that supply of services within a
period of 3 months from the appointed day.
AGARWAL JAY & CO.
CA Jay Agarwal – [email protected]
Job work
Goods sent
to Job
Worker prior
to appointed
date
Check for
Receipt
date
Not received
back within
extended
allowed time
frame
Received back within 6
Months from appointed
date or extended by 2
months on sufficient
cause
No tax
is
Payable
Input Tax
to be
recovered
as arrear
tax
Note:
Every Principal and the Job Worker shall within 90 days from the appointed
day file an application in Form GST TRAN-1 specifying the stock/capital goods
held by him in the Job Worker’s premises agent wise/branch wise.
AGARWAL JAY & CO.
CA Jay Agarwal – [email protected]
Duty Paid Goods Returned after
appointed date
Duty Paid
Goods Not
earlier than 6
Months from
appointed date
are returned
Reverse
Charge u/s
9(4) Payable
Returned by
Registered
Person
Yes
Deemed as taxable
supply and tax to
be charged
No
No
Received
within 6
Months
from
Appointed
Date
Yes
Refund of
taxes paid
AGARWAL JAY & CO.
CA Jay Agarwal – [email protected]
Price Revision after appointed date
Contract
Entered prior to
appointed date
Prices revised
after appointed
date
Revised
upwards
Issue
Supplementary
Invoice / Debit
Note within 30
Days of revision
Revised
downwards
Issue
Credit
Note within
30 Days
Yes
Recipient to reduce
input tax credit by tax
amount in credit note
AGARWAL JAY & CO.
CA Jay Agarwal – [email protected]
Refund pending after appointed date
The section provides that every claim for refund of any duty
or tax paid under existing law, filed after the appointed
day, for the goods or services exported before or after the
appointed day, shall be disposed of in accordance with the
provisions of the existing law. It also provides the following:
(i) The refund, if rejected, fully or partially would lapse.
(ii) No refund claim shall be allowed of any amount of
Cenvat credit / input tax credit where the balance of the
said amount as on the appointed day has been carried
forward under this Act.
AGARWAL JAY & CO.
CA Jay Agarwal – [email protected]
Refund relating to taxes deposited but
service not Provided
The section provides that every claim for refund of any tax
deposited under the existing law in respect of services not
provided, filed after the appointed day, shall be disposed of
in accordance with the provisions of the existing law and
any amount eventually accruing to him shall be paid in
cash.
AGARWAL JAY & CO.
CA Jay Agarwal – [email protected]
Adjudication & Appeals
AGARWAL JAY & CO.
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Claim of CENVAT credit to be disposed
of under the existing law
Every proceeding of
appeal, review or
reference relating to
Cenvat Credit
Claim of
Cenvat
Credit /
ITC
Found
Admissible
Found not
Admissible
Paid in Cash
Found Recoverable
To be recovered as arrears of Tax
Notwithstanding anything to the
contrary contained under the
provisions of existing law other than
the provisions of sub-section (2) of
section 11B of the Central Excise
Act, 1944 and amount so rejected
shall not be eligible as ITC
AGARWAL JAY & CO.
CA Jay Agarwal – [email protected]
Finalization of proceedings relating to
tax liability
Every proceeding of
appeal, review or
reference relating to
any output duty or
tax liability
Output
duty or tax
liability
Found
Refundable
Paid in Cash
Found Recoverable
To be recovered as
arrears of Tax
ITC not available on such amount
AGARWAL JAY & CO.
CA Jay Agarwal – [email protected]
Revision of Returns under existing law
Found Refundable
Return is Revised
Any amount
Paid in Cash
Found Recoverable
To be recovered as arrears
of Tax
ITC not available on such
amount
AGARWAL JAY & CO.
CA Jay Agarwal – [email protected]
Treatment of long term contracts
It provides that in respect of a contract entered:
prior to GST regime,
 the goods or services or both which are supplied on or
after the introduction of GST
liable to tax under the GST Act to the extent the supply
takes place after introduction of GST.
AGARWAL JAY & CO.
CA Jay Agarwal – [email protected]
Progressive or periodic supply of goods
or services
Notwithstanding anything contained in section 13, no tax
shall be payable on services under this Act to the extent the
tax was leviable on the said services under Chapter V of the
Finance Act, 1994;
Eg: Advance of Rs. 1,00,000/- was received on 10th June, 2017 for
service to be rendered in July, 2017. The invoice for the service was
raised for Rs. 1,50,000/- on 31st July, 2017. Assuming appointed day
as 1st July, 2017, GST shall be levied only on Rs. 50,000/-.
AGARWAL JAY & CO.
CA Jay Agarwal – [email protected]
Progressive or periodic supply of goods
or services
However, where supply has suffered both VAT and Service
tax in earlier law but supply made post GST Date :
Tax shall be leviable under this Act and the taxable person shall be entitled to
take credit of value added tax or service tax paid under the existing law to
the extent of supplies made after the appointed day. Credit of tax already paid
must not be understood as ‘input tax credit’ as defined u/s 2(63). This is an
apparent conflict but not so u/s 140(5) of the CGST Act which needs to be
reconciled.
Eg: Contract entered in March, 2017 for Rs. 1,00,00,000/-. Advance received
till 30th June, 2017 amounts to Rs. 10,00,000/-. Value Added Tax of Rs.
40,000/- and Service Tax of Rs. 60,000/- have been paid on the said advance.
Assuming appointed day as 1st July, 2017 GST shall be levied on Rs.
1,00,00,000/- as per Sec 13 of the CGST Act. The value added tax and service
tax paid shall be allowed as credit under the existing law in the manner as may
be prescribed.
AGARWAL JAY & CO.
CA Jay Agarwal – [email protected]
Goods Sent on Approval Basis
It has been provided for in the relevant provision that no tax shall be
levied on goods sent on approval basis, returning to the supplier due to
rejection or non approval by the buyer within a period of 6 months or
the extended period of 2 months but if returned afterwards but if not
returned within extended time allowed then tax shall be payable by
both persons sending the goods and the person returning the goods.
In case of sale of approval prior to appointed date, GST TRAN -1 to be
filed within 90 days as per Rule 3 of the GST Transitional Provision
Rules.
AGARWAL JAY & CO.
CA Jay Agarwal – [email protected]
Tax Deducted at Source
Where a supplier has made any sale of goods in respect of which tax
was required to be deducted at source under the earlier law and has
also issued an invoice for the same before the appointed day, no
deduction of tax at source under GST law [under section 51 ]shall
be made by the deductor under the said section where payment to the
said supplier is made on or after the appointed day.
AGARWAL JAY & CO.
CA Jay Agarwal – [email protected]
Transitional provisions under IGST law
[21 of IGST law]
Notwithstanding the provisions relating to time of supply [section 12
and 13 of the CGST Act, 2016] import of services made after the
appointed day shall be liable to tax under the provisions of IGST law
regardless of whether the transactions for such import of services had
been initiated before the appointed day. If however tax is paid under
earlier law, balance amount of tax is payable under this act.
AGARWAL JAY & CO.
CA Jay Agarwal – [email protected]
CA JAY AGARWAL – MEM NO. 305352
AGARWAL JAY & CO
125 COTTON STREET, 1ST
FLOOR, KOLKATA – 700 007
MOBILE +91 9836270911
Email : [email protected]