GOODS AND SERVICE TAX GST Presented by CA

GOODS AND SERVICE TAX (GST) Presented by: CA Natwar Sarda M. Com, LL. B, FCA, DISA(ICAI) Chairman, GST Committee (RTCA) Past chairman Jaipur branch (ICAI) Past regional council member (ICAI) Past Education Secretary, Shri Maheshwari Samaj Jaipur. Mobile No. 9414053388 Email-id: natwarca@rediffmail. com

Illustration 1: When trader makes an inter-state purchases Description Pre-GST Regime Post-GST Regime Amount (in INR) 5% 18% 5% Manufacturer 1000. 00 Freight/Transportation 100. 00 Excise Duty 125. 00 CST/IGST Applicable 24. 50 198. 00 55. 00 Service Tax on Freight (15%) 15. 00 - - Total Cost 1264. 50 1298. 00 1155. 00 Value Addition 125. 00 VAT 69. 47 208. 42 - - CGST - - 110. 25 30. 62 SGST - - 110. 25 30. 62 Less: Input Tax - - 198. 00 55. 00 Net Taxes Paid 233. 97 372. 92 220. 50 Total Cost to Consumer 1458. 97 1597. 92 1445. 50 61. 24 1286. 24

Illustration 2: When trader makes an intra-state (within state) purchases Description Pre-GST Regime Post-GST Regime Amount (in INR) 5% 18% 5% Manufacturer 1000. 00 Freight/Transportation 100. 00 Excise Duty 125. 00 GST Applicable/VAT 61. 25 183. 75 198. 00 55. 00 Service Tax on Freight (15%) 15. 00 - - Total Cost 1301. 25 1423. 75 1298. 00 1155. 00 Value Addition 125. 00 VAT 68. 25 204. 75 - - CGST - - 110. 25 30. 62 SGST - - 110. 25 30. 62 Less: Input Tax 61. 25 183. 75 198. 00 55. 00 Net Taxes Paid 208. 25 344. 75 220. 50 61. 24 Total Cost to Consumer 1433. 25 1569. 75 1445. 50 1286. 24

Impact of GST �Prices are inflated due to following reasons: �Rates of supply of goods decided at higher sides �Supply of services are now taxable �Restrictions on taking ITC �Widespread of RCM �Cut down the list of exempted items

Impact of GST �Few major items where GST rates is hike abnormally: �Furniture - 28% �Cosmetic – 28% �Hardware – 28% �Branded Food grain & cereals – 5% �Auto parts – 28% �Iron & Steel – 18% �Restaurants – 12 to 28% �Building Material – 18%

Impact of GST on Traders �Computer illiteracy of 60% Traders. �Class II & class III city does not have infrastructure. �Limited resources �Minimum Human interference �Transparency �Minimum 37 returns for other then composite dealers. �Reduction of cascading effect of tax. �Set off all taxes paid. �Prefer to buy/receive supply with invoice.

REGISTRATION �Present Registration Migrate automatically on submission of specified documents. �Aggregate Turnover Exceeds 20 Lac. �Taxable , Non- Taxable, Exempted and Export Supply on PAN Basis. �Separate registration for every state. �Option for separate registration for multiple business verticals.

Registration Questions �Q-1. Mr. A is engaged in share business where he purchases shares & sell it and the turnover are in crores of Rs. He has let out its one portion of his residential house to Mr. Y who is using it for a commercial purpose. Whether A is liable to get registration. �Q-2. M/s Partnership is a small unregistered shop at Bhilwara, it participate in a two days exhibition in Mumbai, whether it requires a registration as a casual trader. M/s Partnership is participating in a two days exhibition at Jaipur is it still require to get a registration as casual trader.

Registration Questions �Q 3: Mr. A is a Proprietary unregistered trading firm in Dausa having a turnover which below Rs. 20 lacs. He paid to a transporter Rs. 7500/- as a freight, whether Mr. A is requires a registration on the basis of RCM liability. Whether it makes any difference if Mr. A is a partnership firm. The GTA is a registered entity and charging GST will it make any differences. The firm is registered & the value of transportation charges are less then 5000. 00 can the benefit u/s 9(4) can be availed.

Registration Questions �Q-4. Please calculate the tax liability of GTA Turnover of GTA To RCM liable person Others 9 lacs 3 lacs 19 lacs 3 lacs 25 lacs - �Q-5. M/s ABC a trader pay GST on Transport charges under RCM at 5%, can this amount is permissible as ITC or M/s ABC has to pay 12% to avail this amount as ITC?

Registration Questions �Q-6. XYZ is a business entity having a turnover in a preceding year Rs. 15 lacs obtained a legal service from a lawyer amounting to Rs. 12000/- whether the entity is liable to take registration under RCM u/s 9(3).

RCM u/s 9(4) �The central tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such persons on reverse charge basis as the recipient and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.

Questions on RCM u/s 9(4) �Q-1. A company send its staff on a tour where as per the company policy the staff is paid Rs. 3000/- per day lodging & boarding apart from this the staff has to oblige to submit hotel bills where he stayed. The hotel is a unregistered firm and the bill amount is Rs. 7500/whether RCM u/s 9(4) is payable by the company. If RCM is payable then in which month it is payable whether in the month of bill or in the month when the company reimburse it if the staff has been paid advance but the account is submitted in the subsequent month. What will be the treatment?

Questions on RCM u/s 9(4) �Q-2. The newspaper vendor use to raise the bill on annual basis which is approximately Rs. 10000/- the company use to provide in its book on monthly basis which is within the limit of Rs. 5000/- in all. Whether RCM u/s 9(4) is payable. �Q-3. Proprietor of ABC of Jaipur (registered firm) purchased some goods from Delhi from an unregistered firm which tax (IGST/CGST, SGST) is to pay under RCM.

Questions on RCM u/s 9(4) �Q 4: X of Jaipur purchases goods from Y of Delhi, both are registered firm the recipient of goods is X but the freight has been paid by Y. Who will pay the tax in RCM. Mr. Y paid the freight & charged it in bill what will be the treatment. �Q-5. X is an agriculturist went to an agent for sale of his produce in a Mandi. The agent sold the goods and issue his own invoice to purchaser, whether the agent who is a registered person will pay the tax u/s 9(4) on the goods received from agriculturist.

CREDIT OF INPUT HELD IN STOCK �DEALER REGISTERED IN EXISTING LAW UNDER CENTRAL EXCISE / VAT… �Carry forward only eligible ITC/ CENVAT credits. �All returns for preceding 6 months filed. �ITC/ CENVAT credit not related to exempted goods. �Admissible CENVAT credit to be reflected in the last return filed. �Credit admissible as ITC under GST. �File form GST TRAN 1 within 90 days.

CREDIT OF INPUT HELD IN STOCK �DEALER REGISTERED IN EXISTING LAW UNDER CENTRAL EXCISE / VAT… �There is no bar that goods belongs to preceding 12 months. �There is no bar that goods to be sold in 6 months. �Credit of Excess in VAT in SGST. �Credit of excess in central excise in CGST. �There are stock in hand on appointed date but no carry forward in return then no credit in GST. �If any declaration forms are pending the difference tax will be hold in GST regime and on submission of the forms take a refund in existing law.

CREDIT OF INPUT HELD IN STOCK �FOLLOEING DEALER IS NOT REGISTERED IN CENTAL EXCISE BUT DUTY IS SEPERATLY CHARGED IN BILL. . �Unregistered person under existing law. �Manufacturer of exempted goods. �Provider of exempted services. �Provider of Works Contract services and availing benefits of Not. No. 26/012 -ST. �First stage dealer. �Second stage dealer. �Registered importer. �Depot of a manufacturer.

CREDIT OF INPUT HELD IN STOCK �Then full credit of duty charged in bill will be available, subject to following condition : �Input/ goods used or intended to be used for making taxable supplies under GST. �ITC available on such input under GST. �Availability of invoice evidencing payment of tax or duty. �Invoices issued not earlier than 12 months prior to appointed day. �Supplier of services not eligible for abatement under GST.

CREDIT OF INPUT HELD IN STOCK �DEALER IS NOT REGISTERED IN CENTAL EXCISE / VAT AND DUTY / TAX IS NOT SEPERATLY CHARGED IN BILL. . �If the tax rate in the GST are less than 18% then 40% of the output tax amount credit is allowed. �If the tax rate in the GST are 18% or above then 60% of the output tax amount credit is allowed. �Credit of excise duty is available in CGST and credit of VAT is available in SGST.

CREDIT OF INPUT HELD IN STOCK �DEALER IS NOT REGISTERED IN CENTAL EXCISE / VAT AND DUTY / TAX IS NOT SEPERATLY CHARGED IN BILL. �If the goods are sold interstate and only excise is not charged in bill then half of the output tax will be allowed. �Supply of such goods within 6 months. i. e. this scheme is valid only for 6 months. �Even though he is not in possession of invoice evidencing payment of duty or tax. �Passes on the benefit of such credit by way of reduced prices.

Questions on Transition �Q-1. Mr. A sold the goods in the month of April 2017 and paid VAT Rs. 10000/-. The goods was returned on 1 st Aug. 2017 , what will be the treatment of VAT paid Rs. 10000/- in VAT regime and can we take the ITC of central tax elements involved in the goods. �Q-2. Mr. A purchased goods worth Rs. 1 lac from Mumbai where Rs. 12000/- is charged as Central Excise Tax and Rs. 2400/- as CST & the Mumbai dealer dispatched the goods on 29. 06. 2017 but received to Mr. A on 02. 07. 2017 can ITC as per rules can be availed on this goods. If the Mumbai dealer have not charged excise although it is a excisable goods can a credit of 40%/60% can be availed as ITC.

Place of Supply of Goods �Where the movement of Goods are there, the place of supply shall be where movement of goods terminates for delivery. �Where the goods are deliver on the directions of a person, the place of supply of goods shall be the principal place of business of such person. �Where the movement of goods are not there, the place of supply shall be the location of goods. �Where the goods are assembled at site, the place of supply shall be the place of such assembly.

Questions on Place of Supply of Goods �Q-1. M/s ABC & Co. is a registered trader in Jaipur receive an order from Ahmadabad for supply of goods worth Rs. 10 lacs. M/s ABC & Co. place an order to a firm of Surat with the instructions to transfer the goods to Ahmadabad. What tax will be charged by the Surat firm if it is registered or if it is not registered. �Q-2. In case of B 2 B transaction where a dealer of Jaipur visits to Delhi and purchases some goods from Delhi on cash payment taken the delivery at the shop of dealer of Delhi which tax the Delhi dealer will charge.

COMPOSITION UNDER GST �ELIGIBLE PERSON �All registered person having aggregate turnover not exceeding Rs. 75 lakhs. �INELIGIBLE PERSON �Services provider except restaurants �Tax is not levied �Supply of Interstate �E-commerce operator �Manufacturer notified by government � Ice-cream manufacturer. � Pan-masala manufacturer. � Tobacco manufacturer.

FEATURES �More then one registration under one PAN, option to take for all. �Option lapse as turnover exceed. �Opt out by one deemed for all. �Not to collect tax & not entitled for ITC. �In case of migration, application to file within prescribed time. �Aggregate turnover includes taxable supply, exempt supply, export supply, interstate supply to distinct persons on all India basis. �Turnover in state means all taxable supply, exempt supply by a taxable person, export supply, interstate supply.

FEATURES �In case of new registration, to opt composition in the registration form itself. �In case of registered person, option of composition to take prior to commencement of financial year �Every year fresh application need not to file. �Liability of reverse charge is there �Any purchases from unregistered dealer, the liability of reverse charge is there. �Purchase from outside state permissible. �Purchase from unregistered dealer is allowed subject to payment of tax.

OPTING THE COMPOSITION �File the application before the commencement of the year. �Input tax of stock in hand shall be debited in electronic credit ledger. �Any extra balance in the electronic credit ledger shall be lapsed. �Input tax of capital goods shall be debited in electronic credit ledger for its remaining residual life.

CONDITIONS �Casual taxable person and non-resident taxable person cannot opt for composition. �Migrating dealer opting for composition, should not held stock which belong to purchase interstate, purchase outside India, branch transfer outside state and agent/ principle outside state. �Stock held should not be a purchase from unregistered person, if so then first pay tax in RCM. �Inter state sale not allowed

CONDITIONS �Person opting for composition scheme despite not being eligible shall pay tax and penalty. �At the top of bill the word “composition taxable person, not eligible to collect tax on supply” is to mention. �Taxable person shall not collect any tax from recipient. �The taxable person is not entitle to any input tax credit.

CONDITIONS �To mention the word “Composition Taxable Person” on every place of business. �The composition dealer ceases to satisfy any of the condition, he shall issue tax invoice for every taxable supply.

NON-COMPOSITE DEALER MIGRATED WITH COMPOSITE OPTION �Any balance in the electronic credit ledger c/f shall be lapsed. �Input tax of capital goods if any c/f shall be lapsed. �In case more than one registration on same PAN the intimation to file at one place only. �Option taken for one place of business the other place of business under same PAN shall be considered as opted.

COMPOSITE DEALER MIGRATING WITH NON-COMPOSITE OPTION �Entitle to take credit of input tax on input held in stock. �Intended to use for taxable supplies �Eligible for ITC in GST Act �Possession of Invoice �Invoice not older than 12 months. �The details of Stock is to submit in the GST portal within 60 days from the appointed day.

COMPOSITE DEALER MIGRATING WITH COMPOSITE OPTION �GST Law permit to carry forward the ITC for registered dealer only when it is permitted in the existing law as well in GST law. �Composition dealer are not permitted to take ITC in the existing law as well as in the GST law.

OPTING OUT FROM COMPOSITION �Compulsorily opt out when turnover exceed. �Intimation to file within 7 days. �For voluntarily opt out file an application before withdrawal. �Detail of stock is to file within 30 days. �Entitle to take credit of input tax on input held in stock. �Entitle to take credit of input tax on input held in capital goods.

OPTING OUT FROM COMPOSITION �Credit on capital goods shall be reduced by percentage point. �Life of a capital goods is taken as 5 years. �For Eg. : - A capital goods has been used for 4 year 2 months 10 days. In this case the residual value shall be 9 months.

CONDITIONS �After ceasing to pay tax u/s 10 the input tax credit on stock and capital goods shall be allowed on submission of a certificate from CA/ CMA if such credit of tax exceed Rs. 2, 000. �The input tax credit claimed above shall be verified with corresponding details of supplier.

MISCELLANEOUS �Composition dealer to file return on quarterly basis. �Quarterly return to file by 18 th of next month. �Annual return to file by 31 st December of next financial year. � Three consecutive returns not filed, the proper office may cancel the RC. �Return can not be revised. �Composition withdrawal by Tax Authority. �Interest @ 18% on delay payment. �Penalty Rs. 10000 or tax amount whichever is higher.

FORMS TO USE IN COMPOSITION �CMP – 01 : Intimation for take of option (migration). �REG – 01 (part B) : Option at first time of registration. �CMP – 02 : Intimation to opt. � ITC – 3 : Detail of stock (in case of opting). �CMP – 04 : Intimation of opt out. �CMP – 05 : Show cause notice. �CMP – 06 : Reply of Show Cause Notice. �CMP – 07 : Order. �ITC – 01 : Details of Stock (in case of opt out).

RATES OF TAXES �Rates of taxes are as under: S No. CATEGORY OF REGISTERED PERSONS RATE Of TAX 1 Manufacturers, other than manufacturers of such goods as may be notified by the government. 1% 2 Restaurant 2. 5% 3 Any other supplier 0. 5%

Composition Questions �Q-1. Mr. X has taken new registration under GST law, at the time of filing the application for registration by mistake he has not opted for composition. Can he rectify the mistake? �Q-2. Mr. X is proprietor of a small firm X corporation who is engaged in manufacturing of bearing having a turnover of 50 lacs. X let-out one portion of his house to Mr. Y who is using it for his business the rent is Rs. 20 lac per annum. Can he opt composition scheme.

Composition Questions �Q-3. X has migrated in GST and opted the composition scheme on 01. 07. 2017. X has a stock on 01. 07. 2017 which was purchased from Delhi amounting Rs. 5 lac. The entire stock was sold in the month of July, whether X has to pay GST on the stock which was purchased from Delhi? What will be the situation if the stock of Rs. 5 lac is out of the purchases within the state but input tax on this stock has been availed in the Vat regime.

Composition Questions �Q-4. A one kachodi wala is a kachodi shop engaged in selling kachori. People purchases kachodi and carry at home and ate there also, The kachodiwala employed a person who serve chatni and provide water to those persons. The sitting arrangement is not there. The rate of composition will be 5 % or 2%.

GST INTRODUCTION / FEATURES �To avail input tax credit no need to keep accounts item wise or rate wise. �GST to pay on advance payment from customers. �Levy of tax on import from outside countries. �Branch/Depot/Consignment transfer is now taxable. �Every Dealer other than composition dealer has to file three return in a month. �One annual return by every dealer.

GST INTRODUCTION / FEATURES �No refund other than exporter and having rate difference. �Purchase from unregistered dealer will attract reverse charge provisions.

GST INTRODUCTION / FEATURES �General rate of GST has been decided 18%. �Rate for reverse charge has been separately mentioned. �No cross utilization of CGST and SGST. �Line by line entry in purchase and sale register.

GST IMPACT ON GOODS/SERVICE PROVIDER �Complication in filing the monthly return (specially HSN Code). �Taxability to deemed exporter. �No ITC on free gifts, samples etc.

STUCK UP OF WORKING CAPITAL �Due to taxability of branch/ depot/ consignment transfer. �Due to advance payment of IGST on import. �Tax rates are higher than VAT, therefore Maintenance cost of the stock will be high. �Taxes on advance payment. �Taxes to pay as reverse charge.

BILLING �Supply of Rs. 200 or more invoice to raise. �Debit/Credit Note concept. �Passing of Entry concept. �If supply of Rs. 50, 000 or more to unregistered person, the name, address, state etc. is to mention in invoice.

PAYMENT OF TAX �E- Payment (Internet Banking , Credit/Debit Card). �RTGS/NEFT. �Over the Counter(OTC) for deposits up to Rs. 10000 per challan per tax period by cash, cheque or demand draft. �Through Debit of Credit Ledger (Only Tax)

PAYMENT OF TAX �Payment monthly till 20 th of the succeeding month. �Payment of tax by composition dealer Quarterly. �The electronic credit ledger can be utilized only for the payment of tax liability. No interest, penalty, late fee etc. shall be utilized from electronic credit ledger. �E-commerce to deduct 1% TCS. � 2% TDS to deduct by deductor. �Due tax not paid in 3 month, penalty equal to tax amount minimum Rs. 10, 000.

INPUT TAX CREDIT �Input Tax Credit can be claimed up to the return of September of succeeding Year or filing of annual return whichever is earlier. �Payment to the creditors has to pay within 180 days, other wise the ITC will be reversed. �Reversal of ITC if goods gifted, given in free sample, lost, theft etc. �Matching Concept : - In case of Mismatch, Tax liability of next month shall increase with interest. �Duplicate of Credit : - Added in tax liability with interest. �Tax not deposited by supplier : - No Input Tax Credit.

RETURN UNDER GST �By every registered person whether no business. �Normally three monthly returns : � GSTR-1 : - Detail of outward supply : - By 10 th. � GSTR-2 : - Detail of inward supply : - By 15 th. � GSTR-3 : - Monthly Return : - By 20 th �One Annual return in GSTR-8 : - By 31 st December. �For composition dealer : - Quarterly return : - GSTR-4 : - By 18 th. �Return by awarder – By 10 th every month. �Invoice wise detail to fill in return. �In a single invoice if there are taxable as well as exempted supply then to show it separately. �HSN code in filing the return. �Detail of transaction worth Rs. 2, 50, 000 or more in case of interstate sale to unregistered dealer.

LATE FEES UNDER GST �Late fee • Failed to file annual return- Rs. 100 per day subject to a maximum quarter percentage of its turnover. • Failed to file other returns- Rs. 100 per day subject to a maximum Rs. 5, 000

REFUND �Application within 2 years from the relevant date. �Refund of Exporter. �Refund for rate of tax on input being higher than rate of tax on output. �Application to file with evidence but no evidence if refund amount less than 2 Lac except a declaration. �Provisional refund up to 90% in certain cases. �Withholding of refund. �Application disposal within 60 days.

MISCELLANEOUS �Books of Accounts : - No Specific record but as usually maintained. �Record to be maintained at every registered place. �Warehouse whether registered or not is required to maintain the accounts relating to consignee or consignor. �Audit by CA/CMA on exceed turnover. �Electronic Commerce. �Assessment. �Penalty : - General Penalty : - Minimum Rs. 10, 000 and Penalty for General default : - Rs. 25, 000. �Return not filed for 6 months for regular assessee and 3 Return for Composite Assessee. The RC may be cancelled.

SUGGESTIONS/CAUTION �Regularly/ daily check the mail from the department. �Return to amend in time frame (if any). �Filling of return under existing law for 6 months prior to appointed date. �file migration information on time. �Payment of tax exciding Rs. 10, 000 for a month compulsorily to deposit online/RTGS/NEFT/Debit/credit card. �Generate e-way bill for every consignment exceeding Rs. 50, 000(postponed till 1 st October, 2017). �Be prompt in cancellation/rejection of e-way bill, if needed.

SUGGESTIONS/CAUTION �Take the option of composition before the commencement of the year. �Pay the GST on advance payment. �Discharge the liability of reverse charge , if any. �Settle the creditors for supply within 6 month to save the ITC. �Supply the goods or services to branch at open market value. �Supply the goods and services to agent at a value at least at the 90% of the sale value. � 40% or 60% ITC is to pass on to customer.