Aurangabad Branch of WIRC of ICAI GST Course

Aurangabad Branch of WIRC of ICAI GST Course 20 -May-17 by CA Sanket Shah

Topics Transitional Provisions ● ● ● Migration of existing registrations ● Transition for ITC ● Transitional provisions for Job work ● Miscellaneous Transitional provisions Issues in GST implementation

Transition Provisions

Registration Existing Registrants: ● Automatic - Provisional Registration ● Submission of documents (6 months) - Final Registration is not required under new Law – Application to be filed within 30 days Portal to be opened again from 1 st June to 15 th June

Transfer of credits availed under existing law Allowances/ Conditions: ● All Credits under existing law to be carried forward to ECL ● Credit should be admissible under new law ● Should not relate to goods manufactured and cleared under such exemption notifications as are notified by Government ● Returns for last 6 months under old law to be filed ● Online Application in FORM GST TRAN-1 to be submitted within 60 days from the appointed day

Availment of un-availed credit on capital goods Allowances/ Conditions: ● Un-availed portion of credit of CG means that portion which was eligible under the old law to the extent not availed ● Credit should be admissible under old and new law ● Credit is not carried forward in the return furnished under existing law ● Online Application in FORM GST TRAN-1 to be submitted within 60 days from the appointed day ● Following particulars in respect of every item of capital goods are to be specified in the application: ● ITC availed under each of the existing laws ● ITC yet to be availed under each of the existing laws till the appointed day

Credit on input held by RTP - CGST ● RTP not required to take registration under old law ie Excise/ Service tax, FSD, SSD, registered Importer, Depot of Manufacturer ● Mfg of exempted goods or provision of exempted services, WCT services exempt under 26/2012 Credit of inputs held in ● Stock ● Contained in semi-finished goods ● Contained in finished goods ● ● ● ● Used for making taxable supplies Document evidencing payment of tax Not earlier than 12 months from new law Credit is eligible under new law RTP passes on the benefit by reduction of price Supplier not eligible for abatement under new Act Online submission within 60 days from the appointed day specifying details of stock held

Credit on input held by RTP - SGST ● RTP not required to take registration under old law ie supplier of exempted goods ● Composition Tax Payer ● Tax at 1 st point of sale and subsequent sale on taxable Credit of inputs held in ● Stock ● Contained in semi-finished goods ● Contained in finished goods ● ● ● Used for making taxable supplies Document evidencing payment of tax Not earlier than 12 months from new law Credit is eligible under new law RTP passes on the benefit by reduction of price Online submission within 60 days from the appointed day specifying details of stock held

Credit on input held by RTP – Document evidencing payment of tax not available RTP other than Manufacturer and Supplier of Services Credit shall be allowed as below: ● At 40% of the Central tax applicable on supply of such goods after the appointed date ● Shall be credited to ECL after Central tax is paid on such supply ● Scheme is available for six tax periods from the appointed date Conditions: ● Goods not wholly exempt from excise duty under First Sch of Central Excise or were not nil rated ● Document for procurement of goods is available ● Online Application in FORM GST TRAN-1 to be submitted within 60 days from the appointed day specifying details of stock held ● Separate form to be filed for each of the six tax period giving details of supplies of such goods ● Stock of goods on which credit is availed is so stored that it can be easily identified by RTP

Credit of input or input services received after appointed date Credit of eligible duties in input or input services received after appointed date on which tax was paid by the supplier under the existing law will be available Allowances/ Conditions: ● Invoice of duty paying document is accounted in books within 30 days from the appointed day ● Following Details are to be submitted online within 60 days ● Details i. e. name of supplier, invoice details, description, quantity and value of goods or services ● Amount of eligible taxes or duties charged by the supplier ● Date of receipt of goods or services is entered in the books of accounts of recipient

ITC in transition – Other cases Cases where credits are allowed: ● Tax being paid at fixed rate or paying fixed amount in lieu of tax under the existing law ● Centralized registration ● Credit of cenvat balance in the last return under the existing law be credited to ECL ● Return under the existing law needs to be filed within 3 months (including revision if any only to the extent of reduction in ITC) ● Credit should be admissible under the new law ● Such credit can be transferred to any other registered person with same PAN, who was already covered under Centralized registration under the existing law ● Credit reversed on completion of 3 months due to non-payment to vendor ● Credit can be re-claimed if payment to vendor has been done within 3 months from the appointed day

Goods sent to Job worker ● Inputs and Semi-finished goods returned within 6 months – no tax ● Commissioner can extend by further period of upto 2 months Goods can be directly cleared from the premises of the job worker Returned after 6 months ● Input tax credit to be reversed on the same Details of inputs/ semi-finished goods held by principal at various premises of job workers (separately) needs to be submitted online within in 60 days

Tax paid goods (sent within 6 months before appointed) returned after GST Date Returned within 6 months ● By RTP – tax to be paid on such supply ● By Non-RTP – Refund to be claimed by Supplier Returned after 6 months ● By RTP – tax to be paid on such supply ● By Non-RTP – No refund option with Supplier Goods are identifiable to the satisfaction of officer

Price revision after GST Date Contract entered prior to GST Date Goods/ Services sent/ provided before GST Date Raise Supplementary Debit/Credit Note Within 30 days from revision Upward revision – GST payable Downward revision – GST liability reduction, subject to ITC reduction by buyer

Refund of old taxes ● Refund of old taxes – Cenvat/ VAT Input tax ● Refund of old taxes paid relating to export of goods/ services before or after the GST date ● To be paid in cash only ● No refund allowed if cenvat/ ITC carried forward ● Claim rejected (fully or partially) – credit will lapse ● Refund of tax paid under old law ● Relating to services not provided ● To be discharged in cash only

Goods sent (sent within 6 months before appointed) on Approval Basis Details of goods sent to be submitted online in 60 days Returned within 6 months or extended period ● No tax payable Returned after 6 months or extended period ● Tax to be paid on such supply by the person returning the goods Goods not returned after 6 months or extended period ● Tax to be paid on such supply

Transactions/ Contracts extending beyond GST Date General Principle Once tax is paid under earlier law, tax not payable again under new law Goods and/or Services supplied after GST date under long term contract would be taxable under GST If the point of taxation was in earlier period and tax paid thereof – No GST

Transition for existing projects Pre-GST: Vat @ 1% ST @ 4. 5% Total @ 5. 5% Agreement registered 1% VAT paid ST paid on partial receipts GST: GST payable on whole agreement Deduction of VAT and ST paid will be available (Law interpretation can lead to alternate tax positions also) GST @ 12 -18%

Transition for existing projects Pre-GST: Vat @ 1% ST @ 4. 5% Total @ 5. 5% ST paid on partial receipts Agreement not registered and 1% VAT not due GST: GST payable on whole agreement Deduction of VAT and ST paid will be available (Law interpretation can lead to alternate tax positions also) GST @ 12 -18%

Other relevant aspects ● Old taxes to be paid under new law as arrears and ITC would not be available on the same ● Any amount refundable under old law: ● Subject to incidence of tax not being passed on to consumer ● Any proceeding relating to old laws will be completed in accordance with that law and: ● Tax payable shall be recovered as arrears under new law (not admissible as ITC) ● Refund be granted in cash as per old law ● Any revision of return: ● Tax payable shall be recovered as arrears under new law (not admissible as ITC) ● Additional credit be claimed as refund (provided revised return filed within due dates) ● Goods/services supplied after GST date are taxable under new law (relating to contract entered before GST date

Challenges

Challenges in GST Implementation Anti-profiteering ● Pre-GST and Post-GST cost break up for products ● Impact of additional credits vis-à-vis increase in compliance cost ● Issues may come up during Audit by department ● Classification ● Composite/ Mixed/ Goods/ Services/ Works Contract ● Working Capital Issues ● Due to increase in tax rates (e. g. Service tax 15% to GST 18%) ● Inter-state purchases/ stock transfers would be subject to full GST ● Higher Compliance cost ● RCM ● All URD could be subject to RCM ● Cash flow impact ● Vendor master to be updated ● Additional compliances like raising invoices, etc ● Stock as on last day ● Matching physical stock (value and quantity) with books and statement for GST ●

Challenges in GST Implementation Transfer of Credits ● Last return under old law ● Excise credits – 40% scheme ● Non-submission of forms – credit reduced to that extent ● Reconciliation of credit – books v/s returns ● Accounting/ Audits/ Technology ● Small tax payers ● Income tax returns filed under Section 44 AD ● Huge Quantum of compliance ● Higher compliance cost ● Finalization of tax/ vat audit for FY 16 -17 by June 2017 ●

Thank you CA Sanket Shah +91 98201 21908 sanket 215@yahoo. co. in Disclaimer: ● My comments are based on GST Act assented on 12 th April 2017 and various updates (available in public domain) ● This publication contains information in summary form and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgment. On any specific matter, reference should be made to the appropriate advisor. ● This presentation is prepared and circulated for GST Course organized by Aurangabad Branch of WIRC of ICAI only