Chamber of Tax Consultants
Programme
:
Live Interactive Webinar
Subject
:
Basic Concepts of Model GST law
Date & Day
:
26th October, 2016 (Wednesday)
Timing
:
4 pm to 6 pm
Faculty
:
October 26, 2016
CA Naresh Sheth
CA Naresh Sheth
1
Preamble
October 26, 2016
CA Naresh Sheth
2
Scope of Presentation
Ø
This presentation is a curtain raiser for GST
Ø
GST law is in draft form and yet to provide for important provisions and hence presentation:
•
Depicts bird eye view of GST
•
Focusses on conceptual aspects of GST
Ø
Presentation does not deal with clause by clause analysis of Model GST law
Ø
Purpose of this meeting is to apprise participants of:
Ø
•
Conceptual aspects of GST
•
GST impact on trade and business
•
Professional challenges and opportunities
GST will now be a reality soon and hence this is right time to prepare for GST
October 26, 2016
CA Naresh Sheth
3
Enactment of GST law – Way Forward
Ø
GST model law (CGST Act, SGST Act and IGST Act) in draft form is put in public domain
Ø
GST Council to draft and present GST Bill for adoption by Centre and States
Ø
GST law to be enacted by central government (Money Bill or Finance Bill)
Ø
GST Act to be enacted by all state governments
•
one year window to State Government, thereafter, all enactments inconsistent with Constitution will
be repealed
Ø
GST council to announce effective date i.e operative date for GST
Ø
CGST Act / IGST Act and SGST Act yet to be enacted by Central Government and State Government
respectively
October 26, 2016
CA Naresh Sheth
4
GST – Government’s readiness
Ø
GST network:
•
Special purpose vehicle (GSTN - SPV) is setup to create IT infrastructure for tax administration
•
GSTN – SPVs will provide common GST portal to build efficient interfaces with tax payers and tax
authorities
•
Ø
Readiness of GST network - ???
Administrative readiness:
•
Hierarchy and positions of existing staff of Central and State Government and their training
•
Setting up or realigning offices
•
Setting up of National Goods and Services Tax Appellate Tribunals in each state
October 26, 2016
CA Naresh Sheth
5
Present Indirect Tax Regime
and its shortcomings
October 26, 2016
CA Naresh Sheth
6
Major Indirect Tax Levies
State Taxes
Central Taxes
•
•
Central Excise Duty
Excise under M&TP Act
•
ADE (T&TA)
•
ADE (GSI)
•
Custom Duty
o
o
o
•
•
•
•
VAT/Sales Tax & CST
Entertainment Tax
Luxury Tax
Taxes on lottery, betting and
gambling
•
State Cesses and Surcharges
•
Entry tax
•
CVD
Stamp Duty
•
SAD
Electricity Duty
•
Profession Tax
Basic
•
Service Tax
•
R&D and other cesses
October 26, 2016
CA Naresh Sheth
Local body Taxes
•
Octroi
•
LBT
•
Property Tax
•
Entertainment Duty
•
Gram Panchayat Tax
7
Complexities & Issues
October 26, 2016
CA Naresh Sheth
8
Lacuna and drawbacks
Ø
Ø
Multiple taxes on same transaction
•
Software
•
Restaurant sales and Outdoor catering
•
Works Contract
•
Royalty, Franchise, Trademark, etc
Restrictive tax credit mechanism:
•
Manufacturers / Traders not eligible for input CST credit
•
Service provider not eligible for input VAT credit
•
Service provider not eligible for credit of SAD paid on imports
•
Traders not eligible for credit of input excise duty and service tax
•
Traders not eligible for credit of CVD paid on imports
October 26, 2016
CA Naresh Sheth
9
Lacuna and drawbacks
Ø
Cascading effect of taxes
Ø
Entry barriers leading to restricted movement of goods across the nation
Ø
Indian exporters are non-competitive in the global market
Ø
High prices of goods/services for end consumers
Ø
Ambiguities and uncertainties leading to tax disputes and long drawn litigations:
•
Constitutional challenges as to power to levy tax
•
Whether transaction is liable to VAT or service tax?
•
Overlapping powers of taxation by Centre and State – especially in deemed sales?
•
Whether transaction is liable to state excise or central excise?
•
Classification issues in excise and also in VAT
•
Whether VAT is leviable on service tax component?
October 26, 2016
CA Naresh Sheth
10
Present Indirect Tax System – Lacuna and drawbacks
Ø
Voluminous compliances
Ø
Multiple Proceedings
Ø
High compliance cost
October 26, 2016
CA Naresh Sheth
11
GST – Major changes in tax
pattern
October 26, 2016
CA Naresh Sheth
12
Major Taxes to be subsumed in GST
State Taxes
Central Taxes
Local Body Taxes
•
Central Excise Duty
•
VAT/Sales Tax & CST
•
Octroi?
•
Additional Excise Duty
•
Purchase tax
•
LBT?
•
Excise under M&TP Act
•
Entertainment Tax
•
Countervailing Duty
•
Luxury Tax
•
Special Additional Duty
•
Taxes on lottery, betting
•
Service Tax
•
R&D and other cesses?
and gambling
•
Entry tax
•
State Cesses and
Surcharges?
October 26, 2016
CA Naresh Sheth
13
Major Taxes to be retained Post-GST
State Taxes
Central Taxes
•
•
Central Excise on:
o
Tobacco products
o
Petroleum Products
•
State Excise on Alcohol liquor
•
Octroi??
•
State VAT on:
•
LBT?
Basic Custom Duty
October 26, 2016
Local Body Taxes
o
Alcohol liquor
•
Property Tax
o
Petroleum Products
•
Entertainment Tax
•
Gram Panchayat Tax
•
Stamp Duty
•
Electricity Duty
•
Profession tax
•
Road tax
•
Taxes on Mineral Rights
CA Naresh Sheth
14
Specific Products / Sectors – Post GST scenario
Products
GST
Central
Excise
VAT
CST
State
Excise
Petroleum
products
No
(Till notified
date)
Yes up to
notified
date
(Entry 84 of
List I)
Yes up to
notified
date
(Entry 54
of List II)
Yes
(Entry
92A of
List 1)
No
Yes
(Entry 84 of
List I)
No
(deletion
of Entry
54 of List
II)
Yes??
(Entry
92A of
List I)
Tobacco
products
Yes
[Article
246A r.w.
Article 366
(12)]
October 26, 2016
Input Tax Credit position
•
•
•
CA Naresh Sheth
No
•
•
•
•
Inputs to suffer GST.
Input GST will not be set-off
against output Central Excise or
VAT liability
Consumers (B2B) will not be
entitled to input tax credit of
Central Excise or VAT against GST
Considered as sin goods and will
suffer both GST and Excise
Input GST will be set off against
output GST.
Input GST will not be set off
against output excise liability
Consumers (B2B) cannot take
15
input tax credit of Central Excise
Specific Products / Sectors – Post GST scenario
Products
GST
Central
VAT
CST
Excise
Alcoholic liquor for
human consumption
No
No
Remarks
Excise
Yes
Yes
Yes
•
Inputs to suffer GST.
[excluded
(Entry
(Entry
(Entry 51
•
Input GST will not be set-off
from GST
54 of
92A of
of List II)
under article
List II)
List 1)
366 (12A)
October 26, 2016
State
against output State Excise
or VAT liability
•
Consumers (B2B) will not be
defining
entitled to input tax credit
‘goods and
of State Excise or VAT
services tax’]
against GST
CA Naresh Sheth
16
GST – Salient Features
October 26, 2016
CA Naresh Sheth
17
GST – Model and Philosophy
Meaning
•
Broad based and comprehensive levy on goods and services consumed in economy
Dual Model
•
Central GST (CGST) to be levied on intra state supplies by Central Government
•
State GST (SGST) to be levied on intra state supplies by State Government
•
Both the above taxes would be levied simultaneously on same supply
•
Integrated GST (IGST) to be levied on inter state supplies by Central Government and to
distributed between Centre and States
•
Transaction in/or with Union Territories without legislatures (Say Daman)
Destination Based
•
At present VAT is collected and retained by originating state
Consumption Tax
•
Under GST, tax to accrue to the taxing authority which has jurisdiction over the place of
consumption also termed as place of supply
•
•
October 26, 2016
Supplies imported into country to attract GST
Supplies exported outside country not to attract GST
CA Naresh Sheth
18
GST – Other Obligations
TDS
TCS
Specified recipient of goods and services of contract value exceeding Rs. 10,00,000 will be
obliged to:
•
Deduct TDS @ 1% on amount paid or credited to supplier’s account
•
Pay such amount before 10th of subsequent month
•
Issue TDS certificate within 5 days from payment of tax
•
File monthly TDS returns on 10th of subsequent month
•
E-commerce operator to collect TCS from consideration for supply of goods/services at
prescribed rate on date of payment to vendor or credit to his account
• Pay such amount before 10th of subsequent month
• File monthly TCS returns on 10th of subsequent month
Reverse Charge
• Reverse charge to be prescribed (goods and service)
• No concept of partial reverse charge
Exemptions
October 26, 2016
• Yet to be notified by GST council
CA Naresh Sheth
19
GST – Taxable Event
Tax
Taxable Event in Existing laws
Service Tax
Provision of Service
Excise Duty
Manufacture of excisable goods
VAT/Sales Tax
Transfer of title in goods within state
CST
Transfer of title in goods outside state
Purchase Tax
Purchase of specified goods
CVD
On import in lieu of excise duty
SAD
On import in lieu of VAT
Entry Tax/ LBT
Entry of specified goods in the State for sale, use or
consumption
Entertainment tax
Provision of entertainment
October 26, 2016
CA Naresh Sheth
Taxable Event in GST Regime
Supply of goods/services
20
Broad Scheme and
Glimpses of GST
October 26, 2016
CA Naresh Sheth
21
Broad Framework of GST
October 26, 2016
CA Naresh Sheth
22
GST - Territorial Jurisdiction
Ø
GST to apply to whole of India including Jammu and Kashmir
October 26, 2016
CA Naresh Sheth
23
Charging Section [Section 7] of CGST/SGST Act
Charging Section [Section 4] of IGST Act
Intra state Supplies:
•
‘Intra state supply’ not
defined in CGST / SGST Act
•
It is defined u/s 3A of IGST Act
Supply u/s 2(92):
•
“supply” shall have the same
meaning as assigned to it in
Section 3
Taxable Person u/s 2(96):
•
October 26, 2016
CA Naresh Sheth
‘taxable person’ shall have the
same meaning as assigned to it
in Section 9 of the Act.
24
Composition Levy [Section 8 of CGST/SGST Act]
•
•
•
GST council to recommend the composition levy
Rate to be prescribed but same should not be less than 1% of turnover
Proper CGST/SGST officer may permit supplier to avail benefit of composition levy
October 26, 2016
CA Naresh Sheth
25
Trigger points for GST levy
Taxable
person
Supply
Goods
October 26, 2016
Inter-State
Intra-State
Services
CA Naresh Sheth
26
Taxable Person u/s 9 – Means and Includes
Taxable
Person
Who carries on any
business in India / any
other state
Ø
Ø
Who is registered ;or
Required to be registered under
Schedule III of this Act
Includes
Central government
State government
Local Authority
October 26, 2016
In respect of
CA Naresh Sheth
Activities or transactions as public authorities
- Other than those specified under Schedule IV
27
Business u/s 2(17) of CGST/SGST Act
Whether or not such activities are for pecuniary benefit
Ø
Includes incidental or ancillary activities apart from these
activities
Ø
Irrespective of volume, frequency, continuity or regularity of such
activities
Ø
Supply / acquisition of:
•
goods (Including capital assets); and
•
services
For commencement or closure of business
Ø
Provision of facilities / benefits to its members by:
For subscription / other
•
Club
consideration
•
Association
•
Society
•
Or any such body
Ø
Admission of person(s) to any premises for consideration
Ø
Services supplied by a person as the holder of an office which has
been accepted by him in the course or furtherance of his trade
commerce or vocation
CA Naresh Sheth
28
Ø
October 26, 2016
Taxable Person u/s 9 – Excludes
•
•
•
Person whose aggregate turnover does not exceed *Rs.20 lakhs (Rs.10 lakh for business in any NE States
including Sikkim)
* As decided by the GST
Agriculturist
Council as against original
limit of Rs.10 lakhs/Rs.5
Services by employee to employer:
lakhs prescribed in MGL
§
In the course of; or
§
In relation to his employment, or
§
By any other legal ties creating the relationship of employer and employee as regards:
o
Working conditions,
o
Remunerations, and
o
Employers liability
§
Supply of goods by employee to employer – taxable supply
§
Supply of goods/ services by employer to employee – taxable supply
October 26, 2016
CA Naresh Sheth
29
Taxable Person u/s 9 – Excludes
•
Person engaged exclusively in supply of goods/services not liable to tax
•
Person liable to pay tax under RCM, receiving services of value not exceeding _____ rupees in a year for
personal use, other than for use in the course of furtherance of his business
October 26, 2016
CA Naresh Sheth
30
Threshold exemption
Threshold Limit
Rs. 20,00,000 (Rs. 10,00,000 in NE states) – as per Newspaper reports
Model GST Law prescribed threshold limit of Rs. 10,00,000 (Rs. 5,00,000 in NE states)
Non - Applicability
•
Aggregate Turnover
Includes
Aggregate Turnover
Excludes
October 26, 2016
•
•
Inter state supplier
• Casual taxable person
• Non resident taxable person
•
Person liable for payment under RCM
• Person acting as agent
•
Person required to deduct tax
• E-commerce operators
•
Input Service Distributor
•
Any other Notified Person
•
Service Aggregator
•
Person supplying non branded goods and services through e-commerce operators
Taxable supplies
CGST / SGST / IGST
Exempt supplies
•
•
•
Export
•
Non-taxable supplies
Value of supplies on which RCM is paid
CA Naresh Sheth
31
•
Inward supplies
Supply- Pictorial depiction of Section 3
Supply includes:
Deemed Supply u/s 3(2)
-Schedule II
Physical supply u/s 3(1)
For
consideration
October 26, 2016
Importation
of service
With/ without
consideration
Supply between principal
& agent u/s 3(2A)
Without
Consideration
- Schedule I
CA Naresh Sheth
Supply of branded
services by an
aggregator u/s 3(4)
Any notified supplies u/s
3(3)
32
Deemed Supplies – Schedule I
Ø
Permanent transfer / disposal of business assets
Ø
Temporary application of business assets to a private or non business use
Ø
Services put to a private or non business use
Ø
Assets retained after deregistration
Ø
Supply of goods and / or services by a taxable person to another taxable or non taxable person in the
course of furtherance of business (Free Supplies)
October 26, 2016
CA Naresh Sheth
33
Broad Scheme of taxation for Job work
Job work
U/s 43 A of
CGST/SGST Act
•
No GST on:
o
o
•
Other than u/s 43A
•
Supply of raw material / semi-finished
goods from principal to job worker
Supply of semi / finished goods from job
worker to manufacturer
GST on job work charges only
•
•
•
October 26, 2016
CA Naresh Sheth
GST on:
o
Supply of raw material / semi-finished goods
from principal to job worker
o
Supply of semi / finished goods from job
worker to manufacturer
No GST on job work charges
Valuation ??
Transitional issues??
34
Definition of Goods
GST [Under section 2(48)]
Goods means:
•
Every kind of movable property
•
Other than:
- Actionable claim [Sec. 2(1)]
- Money [Sec. 2(68)]
•
But includes
- Securities;
- Growing crops, grass and things attached to or
forming part of land which are agreed to be
severed before supply or under the contract of
supply
Explanation: Movable property shall not include any intangible property
Constitution [Under Article 366(12)]
Goods includes:
•
All materials
•
Commodities; and
•
Articles
In addition to above, Schedule II deems certain supply to be that of goods
October 26, 2016
CA Naresh Sheth
35
Definition of Service
GST [Under section 2(88)]
Constitution Amendment Bill
Service means anything other than goods
Article 366(26A) defines term ‘service’ to mean
Explanation:
anything other than goods
Services include:
•
Intangible property; and
•
Actionable claim
But does not include money
In addition to above, Schedule II deems certain supply to be that of services
October 26, 2016
CA Naresh Sheth
36
Definition of Service
Ø
Ø
Actionable claim is a service:
•
Factoring of debts is a service
•
Dealing in lottery is a service
•
What about winning of lottery?
Intangible property is service:
•
Whether distinction between temporary transfer and permanent transfer is no longer relevant?
•
Whether permanent transfer of package software, brand, trade mark, copyright, patent, theatrical
rights, non theatrical rights etc. will be supply of ‘service’ under GST ?
•
Ø
Clause 5 (c) of Schedule II includes temporary transfer of Intangible property as supply of ‘service’?
Whether immovable property (which is not goods) is now service?
October 26, 2016
CA Naresh Sheth
37
Deemed ‘Goods’ and ‘Services’ – Schedule II
Goods
•
•
•
•
Transfer of title in goods
Transfer of title in goods at
future date upon payment of full
consideration
Transfer of business assets
except when:
§
Business transferred as going
concern
§
Business carried on by a
personal representative
(deemed to be a taxable
person)
Supply of goods by an
unincorporated association to its
members
October 26, 2016
Services
Transfer of without transfer of title in goods
•
Lease, tenancy, easement, license to occupy land
•
Lease or letting out of building or part for business or
commerce
•
Treatment or processing of other’s goods (job work)
•
Renting of immovable property
•
Sale of under construction flats / units
•
Temporary transfer or permitting use or enjoyment of IPR
•
Development, design, programming, customization etc. of IT
Software
•
Agreeing to the obligation to refrain from an act, to do an act
or to tolerate an act
•
Works contract
•
Supply of food as a part of service (Outdoor catering and
restaurant sale)
•
Transfer of right to use any goods
38
CA Naresh Sheth
•
GST – Point of Taxation
Tax
Point of Taxation in Existing laws
Earliest of: (general Rule)
Earlier date of:
Service Tax
Excise Duty
VAT/Sales Tax /
CST
•
Issue of invoice / Completion of service
•
•
Receipt of payment
•
Removal of goods from place of removal
Time of sale / time of transfer of title or possession of
goods
•
CVD / SAD
•
•
October 26, 2016
Point of Supply in GST Regime
Date on which bill of entry is presented - in case goods
are cleared for home consumption
Removal of goods
Goods made available to
recipient
•
Date of issue of invoice
•
Date of payment
•
Date of receipt of goods /
services in books of recipient
Date on which bill of entry for home consumption is
presented - in case of goods cleared from warehouse
Date of payment of duty – in any other case
CA Naresh Sheth
39
‘Interstate’ – Section 3(1) and 3(2)
‘Intrastate’ – Section 3A(1) and 3A(2)
IGST
leviable
Location of Supplier
Different States
INTER State trade/commerce
Place of Supply*
CGST/SGST
leviable
Location of Supplier
Same State
Place of Supply*
October 26, 2016
INTRA State Supply
*Refer section 5 of IGST Act to determine place of supply of goods
Refer section 6 of IGST Act to determine place of supply of services
CA Naresh Sheth
40
Scheme of valuation– Section 15
Section 15 (1) to
15(3) r.w. Rule
3(1) to 3(3)
Where
Value as per Valuation Rules
Price is sole
consideration
Buyer and
seller are
related
Buyer and
seller are
not related
Consideration
not in money
- wholly or
partly
•
•
Price not
influenced
•
•
Transaction Value
October 26, 2016
Section 15 (4)
& Rule 3(4)
Value of a supply of goods/and services shall be
CA Naresh Sheth
•
Pure agent
Money
changer
Insurer
Air Travel
agent
Agent- lottery
Reason to
doubttransaction
value
41
Buyer and
seller are
related &
price
influenced
Supplies as
notified by CG/
SG on
recommendation
of Council
Valuation Methods prescribed under Valuation Rules
Transaction
Vaue
Rule 3 r.w.
section
15(1), (2)
and (3)
Value
Comparison
Rule 4
Computed
Value
Rule 5
Residual
Rule 6
Where value cannot be determined U/R 3, same to be
determined by proceeding sequentially from Rule 4 to 6
[Section 15(4) r.w. Rule 3 (6)]
October 26, 2016
CA Naresh Sheth
42
GST – Proposed Rate Structure
•
May be determined on the basis of Revenue Neutral Rate (RNR)
•
Proposed Rates in GST Council Meeting held on 16th -19th October 2016:
o
Exports & essential commodities – Nil
o
Precious Metals – 4%
o
Food items and other necessities – 6%
o
Substantial goods and services – 12%
o
Rest of goods and services – 18%
o
Luxury goods – 26%
o
Additionally, a Cess has been proposed for demerit goods (tobacco, pan masala, etc) and selected
luxury goods towards compensation to states
(No consensus is obtained in GST council meeting on above matters and same is to be decided on
CA Naresh
Sheth
October
26,to2016
meeting
be held on 3rd-4th November
2016)
43
Input tax credit- Basics [Section 16(1)]
Every Registered
Taxable Person
 Admissible Input Tax Credit 
Electronic Credit Ledger
Input Tax [Section 2(41)]:
IGST / CGST
&
IGST / SGST
Paid on
Supply
Used
In the course or
Of
furtherance of
goods and / or service
Business &
includes RCM
Electronic Credit Ledger:
Input credit ledger
Maintained in electronic form
For each registered taxable person
CA Naresh Sheth
October 26, 2016
44
Conditions for availing ITC
Ø
Where goods are received in instalments / lots – ITC will be available only after receipt of last lot /
instalment
October 26, 2016
CA Naresh Sheth
45
Set off provisions – IGST Credit [Section 35(5)(a)]
Payment of IGST
First
IGST Credit
Balance after IGST
Balance
Payment of CGST
after CG
ST
Payment of SGST
October 26, 2016
CA Naresh Sheth
46
Set off provisions – CGST Credit [Section 35(5)(b)]
First
CGST Credit
Payment of CGST
Balance after CGST
Prohibi
te
Payment of IGST
d
Payment of SGST
October 26, 2016
CA Naresh Sheth
47
Set off provisions – SGST Credit [Section 35(5)(c)]
First
SGST Credit
Payment of SGST
Balance after SGST
Prohibi
te
Payment of IGST
d
Payment of CGST
October 26, 2016
CA Naresh Sheth
48
Tax Scenario
- Post GST
October 26, 2016
CA Naresh Sheth
49
Tax levies in GST regime for Supply of Goods/Services
- Relevant extract of tax invoice
Inter-State Supply
Intra-State Supply
Particulars
Amount
(Rs.)
Value of Goods / Services
CGST(10% of 100,000)
SGST(10% of 100,000)
Total Amount
October 26, 2016
Amount
(Rs.)
100,000
10,000
10,000
Particulars
Amount
(Rs.)
Amount
(Rs.)
Value of Goods / Services
100,000
IGST (20% of 1,00,000)
20,000
20,000
120,000
CA Naresh Sheth
Total Amount
50
120,000
Tax Scenario Post GST - Supply chain of goods
Overseas
Vendor
Outside India
Imports
BCD- Cost**
IGST*
Zero rated
Exports
Maharashtra
Purchase/service
IGST*
Purchase / Service
Vendor
Gujarat
Vendor
Factory
CGST + SGST*
* Cenvatable
** Not cenvatable
e
Sal
CGST + SGST**
S
+
T
T **
S
G
Retailer
No tax
IGST*
Warehouse
Sale
Sale
CGST + SGST*
er
sf
*
an
ST
Tr
IG
Sale
Transfer
Transfer
S
CG
Customer
Overseas
customer
Distributor
CGST + SGST*
CA Naresh Sheth
October 26, 2016
IGS
T
Sal
e
Sale CGST
+
SGST**
**
Agent
Sale
India
Warehouse
CGST + SGST**
51
Customer
Tax Scenario Post GST – Service Transaction chain where service
provider has only one office
Service Vendor
Goods Vendor
Maharashtra
Import – IGST* (RCM)
Im
po
r
Outside India
Client
Export – zero rate
t
BC
IG D *
ST *
*
India
* Cenvatable
** Not cenvatable
Client
*
IGST*
Service
Provider
Gujarat
IGST
*
CA Naresh Sheth
+
ST
CG ST**
SG
Goods/ Service
Vendor
October 26, 2016
CGST + SGST*
Goods/ Service
Vendor
Client
52
Tax Scenario Post GST – Service Transaction chain where service
provider has offices at multiple locations
Outside India
No GST
Overseas Branch
Client
Import ??
Maharashtra
Export???
* Cenvatable
** Not cenvatable
T+
CGS **
T
SGS
Service Vendor
Export – zero rate
Import – IGST*
(RCM)
Gujarat
IGST*
*
Service
provider
CGST + SGST**
IGST*
Branch
Client
October 26, 2016
Client
CA Naresh Sheth
India
53
Entitlement / Obligations of
tax payers under present
laws and GST
October 26, 2016
CA Naresh Sheth
54
Entitlement/Obligations - Present laws and GST
Particulars
VAT
Excise
Service Tax
GST
Allowance of Input tax credit of pre-registration period
No
Yes
Yes
No
Allowance of Input tax credit when supplier does not discharge his liability
No
Yes
Yes
No
Allowance of Input tax credit of tax paid on inter-state transactions
No
NA
NA
Yes
Refund of accumulated input tax credit for exporters
Yes
Yes
Yes
Yes
Refund of accumulated input tax credit in case of inverted rate structure
Yes
No
No
Yes
Revision of returns without time limit and more than once
Yes
No
No
No
Mandatory Audit by CA/ Cost Accountant for assesse having prescribed
turnover
Yes
No
No
Yes
TDS in respect of purchase of goods/services above Rs. 10 lacs
No
No
No
Yes
- TDS in respect of works contract
Yes
NA
No
Yes
October 26, 2016
CA Naresh Sheth
55
Entitlement/Obligations - Present laws and GST
Particulars
VAT
Excise
Service Tax
GST
Export – Receipt of foreign convertible exchange
No
No
Yes
Yes
Tax Collected at Source (TCS) for e-commerce operators
No
No
No
Yes
Matching of Invoices of purchasers and suppliers of goods/services
*Yes
No
No
Yes
Recovering tax from purchasers in case of mismatch
*Yes
No
No
Yes
Reverse charge mechanism for goods in prescribed cases
No
No
NA
Yes
Reverse charge mechanism for services
NA
NA
Yes
Yes
Tax on advance receipts
No
No
Yes
Yes
Power to reject transaction value declared in invoice
No
No
No
Yes
* In some states such as Maharashtra and Gujarat
October 26, 2016
CA Naresh Sheth
56
Entitlement/Obligations - Present laws and GST
Particulars
VAT
Excise
Service Tax
GST
Centralised registration
No
No
Yes
No
Inclusion of free supplies in the taxable value
No
No
No
Yes
Inclusion of reimbursements in the taxable value
No
No
Yes
Yes
Tax on Distribution of free samples to physicians, clinical samples, etc
No
Yes
NA
Yes
MRP based valuation
No
Yes
No
No
Specific valuation in case of related party transactions
No
Yes
No
Yes
Area based Exemptions
Yes
Yes
No
No*
Post supply Discounts / incentives not known at the time of supply to
be included in transaction value
No
Yes
No
Yes
*Refund option is under consideration
October 26, 2016
CA Naresh Sheth
57
Procedures
October 26, 2016
CA Naresh Sheth
58
Registration
Ø
Existing registrants either with States or with Centre to be migrated to GSTN
§
VAT registration data to be used for migration of dealers in goods
§
Service Tax registration data to be used for migration of service providers
Ø
Provisional registration to be granted to existing registrants (valid up to 6 months)
Ø
Online application form through Common Portal
Ø
Documents to be filed for
§
Constitution of Business
§
Principal Place of Business
§
Bank Accounts
§
Authorised Signatory
§
Photograph
October 26, 2016
CA Naresh Sheth
59
Payment
Ø
Ø
Payment can be discharged from:
•
Debit to electronic cash ledger
•
Debit to electronic credit ledger
Payment of tax, interest, penalty or any other amounts to be paid to appropriate government by depositing
money in electronic cash ledger in following modes:
§
Internet banking
§
Credit / Debit notes
§
National Electronic Funds Transfer (NEFT)
§
Real Time Gross Settlement (RTGS)
§
Over the counter payment (OTC) [for deposits up to Rs. 10,000]
October 26, 2016
CA Naresh Sheth
60
Returns
Section
Type of Return
25
Outward supplies
GSTR -1 10th of next month
26
Inward supplier
GSTR-2
15th of next month
27
All assessees
except person
paying tax under
composition
scheme
Person paying
TDS
ISD
GSTR-3
20th of next month
GSTR-7
10th of next month
Prescribed details
GSTR-6
13th of next month
Prescribed details
Composition
Dealer
GSTR-4
18th of next month
following end of quarter
Prescribed details
27(5)
27(6)
27
October 26, 2016
Form
Period for filing Return
CA Naresh Sheth
Particulars to be disclosed
Details of outward supplies of goods and/or
services effected, during a tax period
Details of inward supplies of taxable goods
and/or services, received during the tax period
Details of inward and outward supplies of
goods and/or services, input tax credit availed,
tax payable, tax paid and other particulars as
may be prescribed
61
Returns
Section
Type of Return
Form
30
Annual Return
except for ISD,
deductor U/s.37,
Casual taxable
and non-resident
Final Return
GSTR-8
31
Ø
Ø
Period for filing Return
31st December following
Financial Year
Particulars to be disclosed
Prescribed details along with audited accounts
reconciling the value of supplies declared in
the return
-
3 months from date of
Prescribed details
cancellation or order of
cancellation whichever is
later
Assessee (of reasonable size) having ISD facility will have to file 61 returns in a year
If assesse has branches in all 29 states from which goods are supplied or services are provided, there would be
49 returns per branch, 12 ISD returns i.e 1433 returns
October 26, 2016
CA Naresh Sheth
62
GST
– Professional opportunities
October 26, 2016
CA Naresh Sheth
63
GST – Professional Opportunities
Ø
Ø
Ø
Advisory:
•
Novel Concept - Structuring and advising on supply chain, business model, etc
•
Advising on tax optimisation
Compliance:
•
Compiling of voluminous data of inward supplies, outward supplies and ITC
•
Filing 61 returns a year (almost 5 returns per month)
•
Reconciliation of financial statements and returns
•
CA firms will be as good as back office or BPO of clients
•
Whether CA firms are geared up for this and is it worth?
Litigation:
•
It appears that litigation will be lesser than what is there in existing regime
•
Litigation will arise in cases involving high stakes
•
Whether law firms will have an edge over Chartered Accountants?
October 26, 2016
CA Naresh Sheth
64
GST – Professional Opportunities
Ø
Ø
Ø
Training and Orientation:
•
Training of client’s staff
•
Corporate training and workshops
Software and system up-gradation:
•
Reviewing and upgrading present accounting and documentation system to align with GST
•
Integration and up-gradation of present system to align with GST
•
Tying up with software companies for development of software
GST Audits:
•
GST Audit will be mandatory u/s 43(4) of the Act for assesse having prescribed turnover
•
Due-diligence, reviews and con-current audits from GST perspective
October 26, 2016
CA Naresh Sheth
65
Words of Caution
Ø
Views expressed are the personal views of faculty based on his interpretation of model draft law.
Ø
Presentation is based on draft law and it needs to be revisited on proper enactment of law.
Ø
This educational meeting is arranged with a clear understanding that neither the Faculty nor the Chamber
will be responsible for any error, omission, commission and result of any action taken by a member or
anyone on the basis of this presentation.
October 26, 2016
CA Naresh Sheth
66
THANK YOU
[email protected]
October 26, 2016
CA Naresh Sheth
67