Demystifying GST Goods and Services Tax Tally Solutions

Demystifying GST - Goods and Services Tax © Tally Solutions Pvt. Ltd. All Rights Reserved

Agenda: 1. Introduction to GST 2. GST Highlights 3. Registration 4. GST Compliance 5. Brief inference in comparison with existing law 6. GST Impact 7. Preparedness for GST 8. Technology for GST © Tally Solutions Pvt. Ltd. All Rights Reserved 2

GST Key Milestones 14 th June 2016 – Draft Model GST Law on public domain 3 rd Aug – Rajya Sabha passes the Bill 8 th Aug – Lok Sabha passes the Bill 8 th Sept – President Ascent 12 th Sept – Cabinet Approval to form GST Council 16 th Sept – Govt. notifies GST Council 22 nd /23 rd – First Council Meeting 26 th/27 th – Draft Rules on public Domain © Tally Solutions Pvt. Ltd. All Rights Reserved 3

Introduction to GST A significant indirect taxation revolution in our country since Independence “One Tax, One Nation, One Market” GST is outright Business Reform not just Tax Reform GST is not an incremental tax, it is an transformational Tax Reform GST is highly compliance driven Law © Tally Solutions Pvt. Ltd. All Rights Reserved 4

Why GST? Simple Tax Structure Increased revenue GST Eliminates Cascading Effect Technology Driven System © Tally Solutions Pvt. Ltd. All Rights Reserved 5

Highlights of GST Common threshold limit across the country Continuity of tax credit across the supply chain till it reaches the consumer Elimination of tax cascading effect in the supply chain PAN Based Registration ‘on Supply’ tax liability instead of ‘Removal / Sale’ © Tally Solutions Pvt. Ltd. All Rights Reserved 6

Highlights of GST Valuation method broadly as ‘Transaction Value’ Branch transfers taxable and credit eligibility Tax credit eligibility on inward supply of goods / services for Inter-state transaction No declaration forms (Form – C, F, etc……. ) © Tally Solutions Pvt. Ltd. All Rights Reserved 7

Registration – Threshold Limit Regular Dealer North East India Rest of India Aggregate Turnover exceeds 9 L for Registration 19 L for Registration 10 L for Payment of Tax 20 L for Payment of Tax Composition Scheme Composition Levy © Tally Solutions Pvt. Ltd. All Rights Reserved Aggregate Turnover does not exceeds 50 L 8

Transition Registration Migration Automatic Registration First provisional & then final registrations © Tally Solutions Pvt. Ltd. All Rights Reserved 9

Registration Process and Forms - Existing Dealer Registration No Form GST REG-21 GSTN Provisional Registration certificate If details Or information is satisfactory, Registration certificate will be issued Form GST REG-23 Yes Show cause notice Within 6 M Hearing on show cause notice. Successful? Existing Registered Dealer Yes Form GST REG-06 Form GST REG-20 Certificate of Registration Submission of details and documents © Tally Solutions Pvt. Ltd. All Rights Reserved No Form GST REG-22 Cancellation order of Provision Registration 10

Registration Forms Registration forms for other stakeholders Form No. Form Type Form GST REG-07 Application for Registration as Tax Deductor or Tax Collector at Source Form GST REG -08 Order of Cancellation of Application for Registration as Tax Deductor or Tax Collector at Source under Section 21 of the Form GST REG-09 Application for Allotment of Unique ID to UN Bodies/Embassies Form GST REG-10 Application for Registration for Non Resident Taxable Person. © Tally Solutions Pvt. Ltd. All Rights Reserved 11

Amendment of Registration details Amend Registration Details Form GST REG-11 Registered Dealer Change in registration details Making change as per Form GST REG-11 Form GST REG-12 GSTN Approval by an officer Form GSTREG-12 Order to amend details Only for changes specified in Rule For changes specified in Rule © Tally Solutions Pvt. Ltd. All Rights Reserved 12

Cancellation of Registration Form GST REG-14 Registered Dealer Application for cancellation of registration Within 7 days Form GST REG-16 Order to cancel registration GSTN Form GST REG-15 Show Cause Notice © Tally Solutions Pvt. Ltd. All Rights Reserved Show cause Hearing Successful ? Yes 13

Revocation of cancelled Registration Revoke cancelled Registration Form GST REG-17 Form GST-REG-04 Application to revoke registration Provide Additional Details or clarification Form GST REG-05 Rejection of revocation application No Registered Dealer Within 7 working days from the date of Form GST REG-03 Within 30 days from the date of cancellation order Form GST REG-03 Notice seeking Additional details or Clarifications GSTN Hearing on show cause notice. Successful ? Form GST REG-19 No Show cause notice Yes Complete details are provided? Within 3 working days from the date of Form GST -REG-17 © Tally Solutions Pvt. Ltd. All Rights Reserved Details are satisfactory? No Yes Within 30 days from the date of Form GST REG-17 or Form GST REG-04 Form GST REG-18 Order to revoke the registration 14

Mandatory Registration Taxable person carrying on interstate supply Casual and Non-resident Taxable Persons Businesses liable to pay tax under reverse charge Agents supplying on behalf of Taxable Person Input Service Distributor Persons responsible to deduct TDS Sellers on e-commerce platforms Aggregator supplying services under his brand name © Tally Solutions Pvt. Ltd. All Rights Reserved 15

Determination of GST charge CGST SGST IGST • CGST stands Central GST • This is applicable on within state supply • Tax collected will be shared to Central • SGST stands for State GST • This is applicable on within state supply • Tax collected will be shared to state • IGST stands for Integrated GST • This is applicable on Interstate and Import transactions • Tax collected is shared between central and state © Tally Solutions Pvt. Ltd. All Rights Reserved 16

Taxes subsumed under GST Excise Duty Surcharge & Cess ADE Service Tax Purchase Tax VAT Luxury tax CST CVD & SAD Entry Tax GST Surcharge & Cess CGST © Tally Solutions Pvt. Ltd. All Rights Reserved SGST IGST 17

Tax scenario under GST 4, 000 Cost of Manufactures Excise @ 12 % + Infrastructure cess 1% Vat 12. 5% Dealer Invoice CGST@11% 44, 000 56, 500 SGST@11% 5, 08, 500 44, 000 4, 88, 000 4, 97, 200 4, 40, 000 Margin @ 10 % Sale Price for dealer 52, 000 4, 52, 000 45, 200 Dealer Cost (4, 000 + 52, 000) Vat 12. 5% Price to customer 62, 150 40, 000 CGST@11% 48, 400 SGST@11% 48, 400 5, 59, 350 5, 36, 800 Amount. Percentage 22, 550 4% Saving to Consumer © Tally Solutions Pvt. Ltd. All Rights Reserved GST Existing Example of Car: 18

Input Credit Adjustment IGST CGST - ITC CGST SGST - ITC IGST SGST IGST- ITC SGST CGST © Tally Solutions Pvt. Ltd. All Rights Reserved IGST 19

Restriction of ITC set-off Under the current model draft law, the CGST and SGST of a state cannot be adjusted with the CGST/SGST of another state. Example: A CA has a registered place of supply in Karnataka, goes to Mumbai to appear for a court case, and stays in hotel in Mumbai. The Hotel will charge intra-state GST, as it is supply of service of immovable property, though the customer’s place of supply is Karnataka, in this scenario, the CGST/SGST charged in Maharashtra cannot be set-off against the liability of CGST/SGST of Karnataka © Tally Solutions Pvt. Ltd. All Rights Reserved 20

Type of Returns (Latest 27 th Sept – Rule &Format) Regular Dealer Form Type Frequency Due Date Details to be furnished Form GSTR-1 Monthly 10 th of succeeding month Details of outward supplies of taxable goods and/or services effectedd Form GSTR-2 A Monthly On 11 th of succeeding Month Auto-populated details of inward supplies made available to the recipient on the basis of Form GSTR-1 furnished by the supplier Monthly 15 th of succeeding month Details of inward supplies of taxable goods and/or services claiming input tax credit. Addition (Claims) or modification in Form GSTR-2 A should be submitted in Form GSTR-2 Monthly 20 th of succeeding month Details of outward supplies as added, corrected or deleted by the recipient Form GSTR-3 Monthly 20 th of succeeding month Monthly return on the basis of finalization of details of outward supplies and inward supplies along with the payment of amount of tax Form GSTR-3 A -- -- Notice to a registered taxable person who fails to furnish return under section 27 and section 31 Form GSTR-9 Annually 31 st Dec of next fiscal Annual Return - Furnish the details of ITC availed and GST paid which includes local, interstate and import/exports. Form GSTR-1 A © Tally Solutions Pvt. Ltd. All Rights Reserved 21

Type of Returns (Latest 27 th Sept – Rule &Format) Composite Tax payer Return Type Frequency Form GSTR-4 A Quarterly -- Details of inward supplies made available to the recipient registered under composition scheme on the basis of FORM GSTR-1 furnished by the supplier Form GSTR-4 Quarterly 18 th of succeeding month Form GSTR-9 A Annual 31 st Dec of next fiscal Furnish all outward supply of goods and services. This includes auto-Populated details from GSTR-1, tax payable and payment of tax. Furnish the details of quarterly filed return along with tax payment. © Tally Solutions Pvt. Ltd. All Rights Reserved Due Date Details to be furnished 22

Type of Returns (Latest 27 th Sept – Rule &Format) Input Service Distributor Return Type Frequency Due Date Details to be furnished Form GSTR-6 A Monthly 11 th of succeeding month Details of inward supplies made available to the ISD recipient on the basis of FORM GSTR-1 furnished by the supplier Form GSTR-6 Monthly 13 th of succeeding month Furnish the details of Input Credit distributed Return Type Frequency Due Date Form GSTR-7 Monthly 10 th of succeeding month Tax Deductor TDS certificate Made available for download Form GSTR-7 A Details to be furnished Furnish the details of TDS deducted TDS Certificate – Captures details of value on which TDS is deducted and deposit on TDS deducted into appropriate Govt. E-commerce and Service Aggregators Return Type Form GSTR-8 Frequency Monthly © Tally Solutions Pvt. Ltd. All Rights Reserved Due Date Details to be furnished 10 th of succeeding month Details of supplies effected through e-commerce operator and the amount of tax collected 23

Type of Returns (Latest 27 th Sept – Rule &Format) Aggregate Turnover exceeding 1 Cr. Return Type Form GSTR-9 B Frequency Due Date Details to be furnished Annually Annual, 31 st Dec of next fiscal’ Reconciliation Statement -audited annual accounts and a reconciliation statement, duly certified. Final return -For taxable person whose registration has been surrendered or cancelled Return Type Form GSTR-10 Frequency Due Date Details to be furnished -- Within 3 Months from date of Surrender Registration or cancellation order Furnish details inputs and Capital goods held, tax paid and payable. © Tally Solutions Pvt. Ltd. All Rights Reserved 24

FORM GST ITC-1 Communication of acceptance, discrepancy or duplication of input tax credit claim Form GST ITC-1 A Mismatch Reports for Recipient Form GST ITC-1 B Mismatch Reports for Supplier Form GST ITC-1 C Mismatch Reports for E-commerce Operators © Tally Solutions Pvt. Ltd. All Rights Reserved 25

Input Credit Mechanism / Return Upload SUPPLIER GSTR-1 by 10 th Supply of Goods / Services TAX of INVOICE Goods/ Services Electronic Credit ledger Payment of Tax on 20 th TAX INVOICE BUYER GSTR-2 by 15 th FORM GST Provisional ITC-1 GSTR-1 A GSTR-1 between th byth 10 15 to th 20 © Tally Solutions Pvt. Ltd. All Rights Reserved GSTR-1 A GSTR-3 between on 20 th 15 th to 20 th GST Portal GSTR-2 A on 11 th GSTR-2 A by 11 15 thth on 26

Value of Supply of Goods / Services The value of taxable supply of goods and / or services shall be ‘the Transaction Value’. It refers actually the price paid or payable for supply of Goods and Services Inclusions in Transaction Value Any Cost Incurred by recipient on behalf of supplier Royalties & License fees Free supplies like Buy 1 get 1 free Any Taxes other than GST Post Supply Discounts Commission and Packing charges Exclusions in Transaction Value Discount allowed and recorded in Invoice © Tally Solutions Pvt. Ltd. All Rights Reserved Post Supply discount mentioned in agreement and well know before supply 27

Accounts & Other Records True and correct account of production or manufacture of goods, of inward or outward supply of goods and / or services, of stock of goods, of input tax credit availed, of output tax payable and paid, and such other particulars as may be prescribed in this behalf at the principal place of business. In case where there are more than one place of business as specified in the certificate of registration, the accounts relating to each place of business shall be kept at such places of business concerned Audited Accounts by practicing CA, Cost Acc. , CS - TO> 1. 0 © Tally Solutions Pvt. Ltd. All Rights Reserved 28

Period of Retention of Accounts Every registered taxable person shall retain them until the end of 60 months from the last of date of filing of annual return for the said year. Ex: - FY 2017 -18 , annual return to be submitted by Dec -2018 Example FY 2017 -18 , annual return to be submitted by Dec -2018. Books will be kept till end of Dec -2023 © Tally Solutions Pvt. Ltd. All Rights Reserved 29

Refund of Tax Refund to be claimed by making an application to the proper officer of IGST/CGST/SGST before the expiry of 2 years from the relevant date Refund will be given only for ITC claim in case of Export and in case where the credit has accumulated on account of rate of tax on input being higher than the rate of tax on output. In case where the goods are exported out of India are subject to export duty, no refund can be claimed 80% refund will be within specified time 20% after due verification of documents furnished © Tally Solutions Pvt. Ltd. All Rights Reserved 30

Tax wrongfully collected & deposited A taxable person who had paid CGST/SGST on a transaction considered by him to be an intra-state supply, but which is subsequently held to be an inter-state supply, first need to pay the liability of IGST and then claim refund of wrong tax amount paid. © Tally Solutions Pvt. Ltd. All Rights Reserved 31

Documents as Evidence Micro film or reproduction of the image of a document A facsimile copy of the document Printed material produced by a computer (Computer printout) Computer printout should be from the computer being used regularly to store or process information for any activity regularly carried on over the period (even if multiple computer, software used) will be considered as one computer © Tally Solutions Pvt. Ltd. All Rights Reserved 32

Transition Provisions Amount of CENVAT / VAT credit carried forward in a return to be allowed: - admissible under both Law Unavailed cenvat credit and VAT credit on capital goods, not carried forward in a return - admissible under both Law Manufacturers – who are not liable to be registered and engaged in the manufacture of exempted goods under the earlier law but which are liable to tax under GST Act, can avail credit of eligible duties & taxes in respect of inputs held in stock and input containing in semi-finished and finished goods. (tax invoice and other documents as prescribed) © Tally Solutions Pvt. Ltd. All Rights Reserved 33

Transition Provisions Manufacturers – was eligible for Cenvat credit on receipt of such goods and/ or services under the earlier law but for his not being liable for registration. (tax invoice and other documents as prescribed evidencing payment of duty/tax under the earlier law) Applies for dealer under composition scheme to regular dealer under the current law. All other conditions apply. © Tally Solutions Pvt. Ltd. All Rights Reserved 34

Payment 20 th of subsequent Month Mandatory e-payment for amount exceeding Rs 10, 000 Online: NEFT/RTGS/IMPS Offline: Cash/ Cheque / DD etc. © Tally Solutions Pvt. Ltd. All Rights Reserved 35

Consequence of Non-compliance Late Fee • Fails to furnish returns • For Monthly / Quarterly Retun - Rs. 100/- per day for every day during which such failure continues subject to a maximum of Rs. 5000/ • Annual Return -Rs. 100/- per day for every day during which such failure continues subject to a maximum of Rs. 0. 25 % of aggregate turnover Interest • Delay in Tax Payment • The rate of interest is yet to be notified Cancelation of Registration • If returns are not furnished for 6 consecutive tax period for regular dealer • If returns are not furnished for 3 consecutive tax period for composition dealer Fines • Rs. 10, 000/- or an equal amount to the extent of tax evaded • Imprisonment with fine up to 5 years depending on amount of tax evasion with slab ranging from 25 Lakhs to 500 Lakhs © Tally Solutions Pvt. Ltd. All Rights Reserved 36

With GST What will change ? Technology Process Discipline • Digital B to G connect • Transaction Focused • On-Time submission of returns • End-to-End Technology Driven System • GST compliance rating • Transparency from grass-root level of business records • On-Time Payment • Interest on disputed • Triangulation of credits suppliers and recipient records • Less scope for Kacha • Rectification errors and Bill omissions Vat only Dealers to GST • Compliance to Inherited provisions of Excise and Service Tax in GST • Reconciling returns with books © Tally Solutions Pvt. Ltd. All Rights Reserved 37

GST Impact Business Process Organizational competency / Consultancy Transitioning Compliance Credibility © Tally Solutions Pvt. Ltd. All Rights Reserved 38

Preparedness for GST Books of accounts/ records matching 100% with the return Educating your client on proper compliance Discipline in maintaining, recording and reconciling ‘electronic’ – Credit and Cash ledger Records to substantiate ITC eligibility on stocks / capital goods held as of last day before the appointed date Explore best technology – Adapt and Align with your professional activities Transitioning to GST © Tally Solutions Pvt. Ltd. All Rights Reserved 39

Technology for GST © Tally Solutions Pvt. Ltd. All Rights Reserved 40

Technology is the key Why? GST is transaction based technology driven compliance B to G data exchange through GSTN Triangulation of Business records with GSTN © Tally Solutions Pvt. Ltd. All Rights Reserved 41

Technology is the key Seamless Detection, Correction and Compliance Configuration Reconciling at source Recording Reconciling post reporting Triangulation with GSTN © Tally Solutions Pvt. Ltd. All Rights Reserved 42

Tally’s Technology for GST Hero of GST Success API Application Program Interface © Tally Solutions Pvt. Ltd. All Rights Reserved 43

Tally’s Technology for GST Tally’s Role Interface with GSTN GSP © Tally Solutions Pvt. Ltd. All Rights Reserved ASP Business Solution 44

Preparation Prevention is better than Cure What can we do today? For Tomorrow’s Readiness © Tally Solutions Pvt. Ltd. All Rights Reserved 45

Tally. ERP 9 Release 5. 4 Highlight of Tally’s latest release Simple and Quick configuration Triangulation report for ensuring 100% of books matching the report System assisted quick exceptional report and rectification Export of purchase & Sales details as per the prescribed format by a click of a button Saving of return filed for future reference © Tally Solutions Pvt. Ltd. All Rights Reserved 46

Tally. ERP 9 Release 5. 4 Highlight of Tally’s latest release Simple and Comprehensive Integrated inventory management system- Hassel free claim of opening input tax credit under GST Tally’s Foresight of base Technology fabric to meet GST compliance requirement : © Tally Solutions Pvt. Ltd. All Rights Reserved Auto Bank Reconciliation feature External Confirmation (Third-party Confirmation) 47

GST Government Knows what is GOOD for the Country Tax Experts know what is BETTER for Tax payers Tally will give the BEST Technology for GST © Tally Solutions Pvt. Ltd. All Rights Reserved 48

To Know more on GST Visit our Blog blogs. tallysolutions. com © Tally Solutions Pvt. Ltd. All Rights Reserved

Thank You Queries: gst@tallysolutions. com © Tally Solutions Pvt. Ltd. All Rights Reserved