GST WORKSHOP BY DEHRADUN BRANCH OF ICAI 15
GST WORKSHOP BY DEHRADUN BRANCH OF ICAI 15 TH JUNE, 2017 ITC & PLACE OF SUPPLY Ashu Dalmia GST Consultant, Trainer & Author GSTIndia. biz Partner Ashu Dalmia & Associates Chartered Accountants
GST Acts CGST Act IGST Act SGST Acts Apply to whole of India except State of Jammu & Kashmir Apply to the respective State (States Started to enact) UTGST Act Andaman & Nicobar Islands Lakshadweep Dadra & Nagar Haveli Daman and Diu Chandigarh & Other Territory www. gstindia. biz GST (Compensation to the States) Act Apply to whole of India 2
LEVY OF GST CGST/SGST Act –Section 9(1) IGST Act-Section 5(1) UTGST Act-Section 7(1) CGST/SGST Act –Section 9(3) IGST Act-Section 5(3) UTGST Act-Section 7(3) Levy of GST-Forward Charge Reverse charge on specified Goods and or Services notified LEVY CGST/SGST Act –Section 9(5) IGST Act-Section 5(5) UTGST Act-Section 7(5) Levy of GST on Reverse charge LEVY on Ecommerce Operator for specified services www. gstindia. biz Reverse Charge on Inward supply from unregistered person CGST/SGST Act –Section 9(4) IGST Act-Section 5(4) UTGST Act-Section 7(4) 3
CLASSIFICATION OF SUPPLY AS INTRA STATE/ INTER STATE Location of supplier Same State Place of supply Intra Location State of supplier Different States Place of supply Sl. No. Location of supplier Place of supply Intra state/Inter state Tax Applicable 1 State ‘A’ Intra state supply CGST and SGST 2 State ’A’ State ‘B’ Interstate supply IGST interstate There are different provisions to determine location of supplier and place of supply for supply of Goods and for supply of services. www. gstindia. biz 4
INPUT TAX CREDIT (ITC) www. gstindia. biz 5
PREAMBLE Legal provisions relating to Input tax credit : Purpose of this presentation is to apprise participants of: Provisions relating to Input Tax Credit (‘ITC’) under GST Sections 16 to 21 of CGST/ SGST Act Its impact on trade and business Section 17 of IGST Act – ITC related provisions under CGST/SGST Act which applies to IGST also Professional and legal challenges www. gstindia. biz 6
IMPORTANT DEFINITIONS www. gstindia. biz 7
IMPORTANT DEFINITIONS UNDER CHAPTER-V ITC ITEM Capital goods Sec 2(19) PARTICULARS Goods, the value of which is capitalized in the books of accounts of the person claiming the input tax credit; and Which are used or intended to be used in the course or furtherance of business. Input Any goods other than capital goods; Sec 2(59) Used or intended to be used by a supplier for in the course or furtherance of business. Input Service Any service; used or intended to be used by a supplier in the course or furtherance Sec 2(60) of business. input tax credit Sec 2 (63) Input tax credit” means the credit of input tax; input tax Sec 2 (62) Input tax” in relation to a registered person, means the central tax, State tax, integrated tax or Union territory tax charged on any supply of goods or services or both made to him and includes; • IGST, CGST, SGST/UTGST Payable under reverse Charge. • But does not include the tax paid under the composition levy. www. gstindia. biz 8
IMPORTANT DEFINITIONS UNDER CHAPTER-V ITC ITEM PARTICULARS Output tax Sec 2(82) Output tax in relation to a taxable person means The tax chargeable under this Act; On taxable supply of goods and/or services or both made by him or by his agent; But excludes tax payable by him on reverse charge basis; Outward supply Sec 2(83) Outward supply in relation to a person means Supply of goods and/or services or both Whether by sale, transfer, barter, exchange, license, rental, lease or disposal or any other means Made or agreed to be made by such person In the course or furtherance of business Taxable supply means Sec 2(108) A supply of goods and/or services Which is leviable to tax under this Act www. gstindia. biz 9
IMPORTANT DEFINITIONS UNDER CHAPTER-V ITC ITEMS PARTICULARS Exempt Supply means Sec 2(47) Supply of any goods or services or both: Which attracts nil rate ; or Which may be wholly exempt from tax u/s 11 or Under section 6 of the Integrated Goods and Services Tax Act, and includes non- taxable supply; Job work Sec 2(68) Job work means any treatment and process Undertaking by a person on goods belonging to another registered taxable person and the expression “job worker” shall be construed accordingly” Non-taxable supply Sec 2(78) Non-taxable supply means A supply of goods or services or both Which is not Leviable to tax under this Act or under IGST ACT. www. gstindia. biz 10
IMPORTANT DEFINITIONS UNDER CHAPTER-V ITC ITEM PARTICULARS Zero Rated Supply means Supply of any goods and / or services in terms of Section 16 of IGST Act. Supply Sec 2(23) of As per Section 16 of IGST Act, Following taxable supply of goods and/or services; IGST Act Export of goods and/or services; Supply of goods and/or services to a SEZ developer or an SEZ unit; Subject to provisions of sub section (3) of section 17 of the CGST Act, credit of input tax may be availed for making zero rated supplies, even if that supply is an exempt supply. Principal Sec 2(88) Principal means A person on whose behalf an agent carries on the business of supply or receipt of goods or services or both. www. gstindia. biz 11
MANNER OF UTILIZATION OF INPUT TAX CREDIT CGST SGST CESS 1 ST to pay IGST 1 ST to pay CGST 1 ST to pay SGST CESS 2 nd to pay CGST 2 nd to pay IGST Not allowed from IGST 3 rd to pay SGST Not allowed from CGST Not allowed from CESS Not allowed from SGST IGST www. gstindia. biz 12
INPUT TAX CREDIT Eligibility and conditions for ITC Blocked Credit www. gstindia. biz Specific Situations 13
ELIGIBILITY & CONDITIONS FOR ITC Eligible to take ITC: Registered Taxable person [Section 16 of CGST/ SGST Act] Person making zero rated supplies [Section 16(3) of IGST Act] Every registered taxable Person Within the time and manner specified in section 49 Entitled to take ITC admissible to him www. gstindia. biz Said amount to be credited to the electronic credit ledger of such person 14
ELIGIBILITY & CONDITIONS FOR ITC Explanation of clause (b); It shall be deemed received of goods if delivered by supplier either by way of transfer of documents of title to goods or otherwise. He is in possession of; d Monthly returns are filed by 20 th u/s 39 a - Tax Invoice. - Debit note. -Other Document as may be prescribed (rule- 1). Registered person shall not be entitled to take credit of any input tax in respect of any supply of goods and/or services to him unless: Payment of tax charged in respect of such supply has been actually paid to government in: - Cash; or - Utilization of ITC. c www. gstindia. biz Receipt of goods and / or services or both. b 15
DOCUMENTARY REQUIREMENTS AND CONDITIONS FOR CLAIMING ITC (RULE NO. – 1) Do cum ent s & Con diti ons www. gstindia. biz 16
RULE – 1 Invoice issued for outward supply ITC shall be availed by Registered person/ISD on the basis of following documents Invoice Issued for inward supply where tax is paid under reverse charge. Debit Note Issued by supplier. Bill of entry or any similar document prescribed under the Customs Act, 1962 or Rules made there under for assessment of integrated tax on imports; An ISD invoice or ISD credit note or any document issued by an Input Service Distributor. www. gstindia. biz 17
ITC-ONLY THROUGH GSTR Input tax credit shall be availed by a registered person only if - Relevant information is furnished in FORM GSTR -2 by such person. If any order where any demand has been confirmed on account of any fraud, willful misstatement or suppression of facts. No input tax credit shall be availed by a registered person www. gstindia. biz 18
ITC-GOODS IN LOTS/INSTALMENTS Where goods against a single invoice is received, in lots or instalments • The taxable person can take credit upon receipt of last lot or instalment If credit not availed for any invoice till filing of return for month of • Credit shall September following lapse. the end of financial year or annual return, whichever is earlier www. gstindia. biz BLAST 19
ITC ON CAPITAL GOODS & PLANT AND MACHINERY Depreciation claimed on Tax component of the cost of capital goods under IT Act ITC not Available TOTAL COST = COST OF ASSET+TAX If Depreciation charged on COST ITC Available If Depreciation charged on TOTAL COST ITC not Available www. gstindia. biz 20
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EXCLUSION FROM ITC- SECTION 17(5) Particulars ITC restriction Motor All Motor Vehicle and other conveyance except when they are used for: vehicles and other conveyance • Making the following taxable supplies Further supply of such vehicles or conveyance; or Transportation of passengers ; or Imparting training on driving, flying, navigating such vehicles or conveyance • Transportation of goods www. gstindia. biz 22
EXCLUSION FROM ITC- SECTION 17(5) Particulars Specified supply of goods or services ITC restriction • Food and beverages Except where said category of inward supply of goods or services are used for making an outward supply of goods or service of same category • Outdoor catering • Beauty treatment • Health services • Cosmetic and plastic surgery Membership of a club, Health and fitness center • Rent-a-cab Except where the government notifies theservices which are obligatory for an employer to provide to its employees Life insurance • Health insurance • Travel benefits extended to employees on vacation such as leave or home travel concession www. gstindia. biz 23
EXCLUSION FROM ITC- SECTION 17(5) Particulars Works contract services ITC restriction When supplied for construction of immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service Goods or services When it is received by a taxable person for construction of an immovable property on his own account (other than plant and machinery) even when used in course or furtherance of business www. gstindia. biz 24
REVERSAL OF ITC IN CASE OF NONPAYMENT OF CONSIDERATION PROVISO TO SECTION 16(2) RULE-2 www. gstindia. biz 25
ITC REVERSAL-NON PAYMENT There is not any time limit for claim of re-availing of any credit, that had been reversed earlier If recipient fails to pay to supplier of services, the amount for consideration of supply within a period of 180 days from date of invoice. RP shall furnish the details in FORM GSTR-2 1. The amount of value not paid 2. ITC availed of proportionate to such amount RP shall liable to pay interest at such rate notified by govt. (not exceeding 18%)on such ITC from the date of availing credit on such supplies till the date when the amount added to the output tax liability Such ITC shall be added to the output tax liability of the RP for the month in which the details are furnished www. gstindia. biz 26
SPECIAL SITUATIONS www. gstindia. biz 27
ITC IN CASE OF MANDATORY REGISTRATION S. No. Taxability 1 ITC available Mandatory 1. Input tax for inputs held in registration stock Semi finished goods Finished goods 2. The credit will available for stock of above mentioned inputs for immediately preceding the day from which the person was liable to pay tax. If a person applies for registration within 30 days from becoming liable for it, and has been granted registration, can avail credit in respect of inputs held in stock on the date immediately preceding the day of becoming liable for registration www. gstindia. biz 28
ITC IN CASE OF VOLUNTARY REGISTRATION & SHIFT FROM COMPOSITION SCHEME S. No Taxability ITC available 2 Voluntary registration 1. • • • 2. 3 Taxpayer cease to be a composition dealer 1. Input tax for inputs held in • Stock • Semi finished goods • Finished goods • Capital goods 2. When a person ceases to pay tax in composition scheme, he can avail credit in respect of inputs held as stock and CG immediately preceding the day of becoming liable for mandatory registration. Credit on capital goods shall be reduced by such percentage points as may be prescribed. www. gstindia. biz Input tax for inputs held in stock Semi finished goods Finished goods The credit will available for stock of above mentioned inputs on the day immediately preceding the date of grant of registration. 29
ITC IN CASE OF EXEMPT SUPPLY BECOMES TAXABLE S. No Taxability ITC available 4 Exempt Supply becomes taxable 1. Input tax for inputs held in • stock • Semi finished goods • Finished goods • Capital goods. 2. When an exempt supply of RTP becomes taxable, he can avail credit of inputs and CG held on immediately preceding day of supply becoming taxable Registered person shall file Form GST ITC-1 & a certificate form chartered accountants need to be required in case limit exceeds more then 2 lakhs. A registered person shall not be entitled to take input tax credit in respect of any supply of goods or services or both to him after the expiry of one year from the date of issue of tax invoice relating to such supply. www. gstindia. biz 30
ITC IN DIFFERENT SITUATIONS 6 Change constitution in In case of change in constitution (sale, merger, lease etc. ) the successor RTP can avail the unutilized credit in books of predecessor RTP 7 Taxpayer switches to When a RTP switches to composition scheme, or his supply becomes Composition scheme exempt, he will have to pay an amount equal to credit on inputs and capital goods held on immediately preceding day of exercising such option or date of such exemption. 8 Supply of capital goods or plant and machinery on which ITC has been taken In case of supply of capital goods or plant and machinery, on which input tax credit has been taken, the registered person shall pay an amount equal to the input tax credit taken on the said capital goods or plant and machinery reduced by 5% percentage or the tax on the transaction value of such capital goods or plant and machinery determined under section 15, whichever is higher. www. gstindia. biz 31
MANNER OF CLAIMING CREDIT IN SPECIAL CIRCUMSTANCES (RULE-5) www. gstindia. biz 32
ITC CLAIM FOR FIRST TIME ITC ON CAPITAL GOODS ITC shall be claimed after reducing tax paid on capital goods by 5% per quarter ITC claimed shall be furnished in form GSTR-1/4 Declaration shall be duly certified by CA/ CMA if aggregate value exceeds 2 lakh rupees www. gstindia. biz Declaration for input held in stock, semi finished or finished goods. RP within 30 days file declaration, electronically in Form GST ITC-01 33
FORM GST ITC-01 - DECLARATION FOR CLAIM OF INPUT TAX CREDIT UNDER SUB-SUCTION (1) OF SECTION 18 1 GSTIN 2 3 4 5 6 7 8 9 Legal Trade Date from which Date of Date on Claim under Verification name, if liability to pay tax grant of which goods section 18 (1) any arises under voluntary or services (1) (a) or (c) or section 9, except registration becomes section 18 18 (1)(d) section 9 (3) and [For claim taxable [For (1) (b) Details of stock section 9 (4) made under claim made of inputs, [For claim under section 18 under inputs section 18 (1)(a) (1)(b)] section 18 contained in and section 18 (1)(d)] semi-finished (1)(c))] goods or finished goods and capital goods on which ITC is claimed www. gstindia. biz 34
TRANSFER OF CREDIT ON SALE, MERGER, AMALGAMATION, LEASE OR TRANSFER OF A BUSINESS (RULE-6) www. gstindia. biz 35
RULE – 6 ITC ON SALE, MERGER, AMALGAMATION, LEASE OR TRANSFER Transferor shall submit a copy of certificate issued by CA/CMA certifying the transfer of business. furnished details in form GST ITC -02 for Unutilized Credit. Transferee shall accept the furnished details, Un-utilized credit specified in FORM GST ITC-02 shall be credited to his ECL. www. gstindia. biz 36
FORM GST ITC-02 - TRANSFER OF CREDIT ON SALE, MERGER, AMALGAMATION, LEASE OR TRANSFER OF A BUSINESS 1 2 3 4 5 6 7 8 9 GSTIN of Legal Trade GSTIN of Legal name Trade Details of Particulars of Verification transferor name of name, if transferee of name, if ITC to be certifying transferor any transferee any transferred Chartered Accountant or Cost Accountant www. gstindia. biz 37
APPORTIONMENT OF CREDITS (SEC-17) www. gstindia. biz 38
APPORTIONMENT OF CREDITS Use of input tax credit For Business purposes ITC Available For Other Purposes ITC not Available www. gstindia. biz 39
APPORTIONMENT OF CREDITS Use of input tax credit: Partly for Taxable Supplies Zero rated Supplies Non taxable Supplies Exempt Supplies Nil-rated Supplies ITC not Available ITC Available www. gstindia. biz 40
HOW TO DETERMINE THE INPUT TAX CREDIT (ITC) WHERE IT IS USED FOR - ü BUSINESS PURPOSES, OTHER PURPOSES, ü EFFECTING TAXABLE SUPPLIES INCLUDING ZERO RATED SUPPLIES AND EFFECTING EXEMPTED SUPPLIES www. gstindia. biz 41
SECTION 17 OF CGST ACT, 2017 WHERE IN SUCH CASES • Goods and/or services are used by the registered taxable person as under: Partly for business purposes and partly for other purposes; or Partly for effecting taxable supplies including zero-rated supplies and partly for effecting exempt supplies • ITC shall be allowed to the extent it is attributable to business purposes or taxable supplies including zero-rated supplies as the case may be www. gstindia. biz 42
SECTION 17 OF CGST ACT, 2017 How to determine the eligible ITC Rule-7 of ITC Rules Determination of ITC in respect of Inputs or Input Services Rule-8 of ITC Rules Determination of ITC in respect of Capital Goods www. gstindia. biz 43
RULE-7: ITC IN RESPECT OF INPUTS/INPUT SERVICES Step-1 Determine Common ITC • i. e. used for business purpose and other purpose or for taxable supplies including zero-rated supplies and exempted supplies (see Table-1) Step-2 Determine Eligible ITC • i. e. used for business purpose and for taxable supplies including zero-rated supplies (see Table-2) www. gstindia. biz 44
Table-1: Common ITC for a Tax Period (i. e. one month) Particulars Amount (Rs. ) Total ITC during the relevant year (T) XXXX Less: ITC pertaining to the input and input services which are used exclusively for “purposes other than business” (T 1) XXXX Less: ITC pertaining to the input and input services which are used exclusively for effecting “Exempt Supplies” (T 2) XXXX Less: ITC in respect of inputs on which credit is not available u/s 17(5) (T 3) XXXX Less: ITC pertaining to the input and input services which are used exclusively for effecting “Supplies other than exempted but including Zero-rated Supplies” (T 4) XXXX Common Credit (C = T – T 1 – T 2 – T 3 – T 4) XXXX ‘T 1’, ‘T 2’ and ‘T 3’ are not eligible to take ITC therefore not be credited to e-credit ledger ‘T 1’, ‘T 2’, ‘T 3’ and ‘T 4’ shall be determined and declared by the registered person at the invoice level in FORM GSTR-2 www. gstindia. biz 45
Table-2: Eligible ITC for a Tax Period (i. e. one month) Particulars Common Credit (C) Less: Ineligible Credit: Amount (Rs. ) XXXX - ITC pertaining to the “Exempt Supplies” (D 1) (Note-1) XXXX - ITC pertaining to the “Non-Business Purposes” (D 2) (Note-2) XXXX Eligible Credit (E = C - D 1 - D 2) XXXX The total amount eligible for input credit shall be computed separately for input tax credit of central tax, State tax, Union territory tax and integrated Tax. ITC pertaining to the Exempt Supplies and Non-Business Purposes shall be added to the output tax liability of the registered person. www. gstindia. biz 46
Calculation of Ineligible ITC Note-1: ITC pertaining to the “Exempt Supplies” equals to – Common Credit * E/F Where“E” denotes aggregate value of Exempt Supplies during the tax period; and “F” denotes “Total Turnover” of the registered person during the tax period Clarificationsq It is clarified that in case turnover is not available for the tax period, value of “E” and “F” shall be taken for the last tax period in which details of turnover are available q It is further clarified that values of “E” and “F” shall be exclusive of any duty or tax levied under entry 84 of List I of the Seventh Schedule to the Constitution and entry 51 and 54 of List II of the said Schedule. Note-2: ITC pertaining to the “Non-Business Purposes” equals to – Common Credit * 5% www. gstindia. biz 47
Final Eligible ITC for the Year The eligible ITC shall be calculated finally for the financial year before the due date for filing the return for the month of September following the end of the financial year to which such credit relates, in the manner prescribed in the said sub-rule. If final amount of Input Credit Reversal > Provisional amount of Input Credit Reversal If final amount of Input Credit Reversal < Provisional amount of Input Credit Reversal such excess shall be added to the output tax liability of the registered person for a month not later than the month of September following the end of the financial year to which such credit relates; and the said person shall be liable to pay interest on the said excess amount such excess amount shall be claimed as credit by the registered person in his return for a month not later than the month of September following the end of the financial year to which such credit relates www. gstindia. biz 48
RULE-8: ITC IN RESPECT OF CAPITAL GOODS Step-1 Determine Common ITC Step-2 Determine Ineligible ITC to be reversed • i. e. used for business purpose and other purpose or for taxable supplies including zero-rated supplies and exempted supplies • i. e. common credit attributable towards exempted supplies www. gstindia. biz 49
Common ITC for a Tax Period (i. e. one month) Particulars Total ITC during the relevant year (T) XXXX Less: ITC in respect of capital goods which are used exclusively for “non-business purposes” (T 1) XXXX Less: ITC in respect of capital goods which are used exclusively for effecting “Exempt Supplies” (T 2) XXXX Less: ITC in respect of capital goods which are used exclusively for effecting “Supplies other than exempted but including Zero-rated Supplies” (T 3) XXXX Balance Credit (A = T – T 1 – T 2 – T 3) XXXX ‘A’ shall be credited to the ecredit ledger and useful life of such goods shall be taken as 5 years from the date of invoice Amount (Rs. ) ‘T 1’ and ‘T 2’ are not eligible to take ITC therefore not be credited to e-credit ledger. However, ‘T 3’ shall be credited to ecredit ledger. www. gstindia. biz ‘T 1’, ‘T 2’ and ‘T 3’ shall be determined and declared by the registered person at the invoice level in FORM GSTR-2 50
Common ITC for a Tax Period (i. e. one month) Amount of ‘A’ as per previous Table T 1 or T 2 A Value of A = By reducing ITC @5% for every quarter or part thereof T 3 Tc Common Credit www. gstindia. biz A Value of A = By reducing ITC @5% for every quarter or part thereof 51
Ineligible ITC for a Tax Period (i. e. one month) Tm ITC attributable to a tax period on common capital goods during their useful life Tm= Tc÷ 60 Tr ITC at the beginning of a tax period on all common capital goods whose useful life remains during the tax period Aggregate of Tm www. gstindia. biz Te Common ITC attributable towards exempted supplies Te= (E÷ F) x Tr (See Notes) 52
Ineligible ITC for a Tax Period (i. e. one month) Note-1: Common ITC attributable towards “Exempt Supplies” equals to – Te= (E÷ F) x Tr Where“E” denotes aggregate value of Exempt Supplies during the tax period; and “F” denotes “Total Turnover” of the registered person during the tax period Clarificationsq It is clarified that in case turnover is not available for the tax period, value of “E” and “F” shall be taken for the last tax period in which details of turnover are available q It is further clarified that values of “E” and “F” shall be exclusive of any duty or tax levied under entry 84 of List I of the Seventh Schedule to the Constitution and entry 51 and 54 of List II of the said Schedule. Note-2: The amount of ‘Te’ along with applicable interest shall be added to the output tax liability of the person making claim of such credit. Note-3: The amount of ‘Te’ shall be computed separately for Central tax, State tax, Union territory tax and Integrated tax. www. gstindia. biz 53
CLAIM OF CREDIT BY BANKING COMPANY OR A FINANCIAL INSTITUTION SECTION 17(4) & RULE-3 www. gstindia. biz 54
APPORTIONMENT OF CREDITS Claim of credit by a banking company financial institution OR NBFC Company or institution choose to avail every month 50% of the eligible input tax credit on inputs, capital goods and input services in that month company or institution shall not avail the credit of 1. tax paid for non business purposes 2. credit attributable to supplies specified in sub-section (5) of section 17 company or institution shall avail (restriction of 50% shall not apply) the credit of tax paid where supplies made by one registered person to another registered person having the same Permanent Account Number. www. gstindia. biz fifty per cent. of the remaining amount of the input tax credit admissible to the company or the institution and shall be furnished in FORM GSTR-2 55
RULE – 3 Input Tax Credit For Business purposes ITC Available For Other Purposes ITC not Available The said company or institution shall avail the credit of tax paid on inputs and input services referred to in the second proviso to sub-section (4) of section 17 and not covered under clause (a); Form GSTR -2 fifty per cent. of the remaining amount of input tax shall be the input tax credit admissible to the company or the institution and shall be furnished in FORM GSTR-2 the amount referred to in clauses (b) and (c) shall, subject to the provisions of sections 41, 42 and 43, be credited to the electronic credit ledger of the said company or the institution www. gstindia. biz 56
ITC of inputs/CG sent for Job work - SEC. 19 Inputs/Capital Goods removed for Job Work Principal can take the credit of input sent for job work provided that input after job work has been received back within 1 year Principal can take ITC on capital goods if such goods have been received back within 3 years of being sent out ü If inputs/CG not received back by principal after completion of job work or are not supplied from place of business of job worker within 1 year (3 years for CG) from date of sending, it shall be deemed that inputs/CG had been supplied by the principal to job worker on the day when they were sent out. ü N. A. on moulds, dies, jigs, fixtures and tools www. gstindia. biz 57
CONDITIONS AND RESTRICTIONS IN RESPECT OF INPUTS AND CAPITAL GOODS SENT TO THE JOB WORKER (RULE-10) www. gstindia. biz 58
CONDITIONS-GOODS TO JOB WORKER Input, Semi finished or Capital goods shall be sent to job worker under cover of a challan Input or capital goods are not returned to the principal within the time Stipulated, the challan issued shall be deemed to be an invoice. challan issued by the principal to the job worker shall contain the details specified in rule Invoice. 10: The details of challan in respect of goods dispatched to a job worker or received from a job worker during a tax period shall be included in FORM GSTR-1 furnished for that period www. gstindia. biz 59
FORM GST ITC-04 - DETAILS OF GOODS/CAPITAL GOODS SENT TO JOB WORKER AND RECEIVED BACK 1 GSTIN 2 3 4 5 6 7 (a) Legal name Details of 3 A. 4. Details of 4 A. 5. Verification -(b) Trade inputs/capital Amendment of inputs/capital Amendments (by authorized name, if any - goods sent for details of goods received of Details of signatory) job-work inputs/capital back from job inputs/capital goods worker or sent goods received removed for out from back or job-work business place disposed of of job-work from business place of jobwork www. gstindia. biz 60
SEC. 20 Input Service Distributor ITC is distributed to supplier of goods and/or services of same entity having the same PAN Deemed as ISD is a supplier of Service for distributing credit Common Services used at for Distribution of Credit where ISD and recipient are located in different State under CGST ACT or SGST ACT Office / Corporate office of Supplier www. gstindia. biz Distribution of Credit where ISD and recipient are located in within State under CGST ACT or SGST ACT 61
Manner of distribution of credit by Input Service Distributor- SEC. 20 ISD & Recipient in Same State ISD & Recipient in Different States (Business vertical) CGST Act SGST Act Credit of CGST IGST Credit of SGST as IGST CGST Act Credit CGST www. gstindia. biz of SGST Act Credit of SGST as SGST 62
Conditions to distribute credit: Input Service Distributor (Sec. 20) v Credit distributed to recipient through prescribed documents containing prescribed details. Such document should be issued to each of the recipient of credit. v Credit distributed should not exceed the credit available for distribution v Tax paid on input services used by a particular location (registered as supplier) has to be distributed only to that location. v Credit of tax paid on input service used by more than one location who are operational is to be distributed to all of them based on the pro rata basis of turnover of each location in a State to aggregate turnover of all such locations who have used such services v the credit of tax paid on input services attributable to all recipients of credit shall be distributed amongst such recipients and such distribution shall be pro rata on the basis of the turnover in a State or turnover in a Union territory of such recipient, during the relevant period, to the aggregate of the turnover of all recipients and which are operational in the current year, during the said relevant period. www. gstindia. biz 63
PROCEDURE FOR DISTRIBUTION OF ITC CREDIT BY INPUT SERVICE DISTRIBUTOR (RULE-4) www. gstindia. biz 64
ITC – ISD Amount of Eligible And Ineligible ITC • ISD Shall Distribute It Separately Amount of Central Tax, State Tax And Union Territory Tax And Integrated Tax • Shall be Distribute Separately ITC requires to be distributed shall be calculated by following formula . • Furnish The Detail In Form GSTR-6 . ITC Available In A Month And C 1=(t 1÷T) x C C= Amount of credit distributed t 1= turnover of R 1 during the relevant period T= Aggregate of turnover of all recipients of relevant month. www. gstindia. biz 65
ITC – ISD • Already Distributed get reduced for any reason ISD shall issue a credit note for reduced from the amount to be distributed in the reduction in case ITC already month in which the credit note is included in the return in FORM GSTR-6 distributed Any additional amount of ITC • Such credit shall be distributed in the month in which the debit note is included in the return in FORM GSTR -6. www. gstindia. biz 66
EXCESS CREDIT DISTRIBUTED BY INPUT SERVICE DISTRIBUTOR- SEC. 21 Excess Credit Distributed by ISD Credit distributed in excess of what was available Excess credit distributed to one or more suppliers Recovery of such excess credit with interest from the Recipients www. gstindia. biz 67
Reversal of Credit Section -17(4) & Rule 9 www. gstindia. biz 68
Reversal/Payment of ITC In case • Option availed for tax payment u/s 10 after availing ITC • Goods/Services become taxable Amount need to be paid -by Debit of Cash/Electronic ledger -for ITC in respect of ü inputs held in stock, ü Inputs contained in semi finished or finished goods held in stock ü Capital goods shall be Immediately preceding the date of exercising option. In case of capital goods ITC reduced by 5% point per quarter taking life as 5 years. Such details will be furnished in ITC-03 and shall be duly certified by CA /CMA www. gstindia. biz 69
RULE – 9 For Input held in stock, semi finished or finished stock , ITC shall in calculated proportionally on the basis of invoice Amount of ITC for Capital goods determined separately for IGST and CGST, if more shall be the part of Output tax liability and furnished in Form GSTR 1 For Capital goods, ITC for remaining life in month shall be calculated on pro- rata basis, taking 5 years useful life. Detail furnished shall be duly certified by CA /CMA www. gstindia. biz If input invoice not available, estimated amount based on prevailing market price of goods on effective date. Amount determined become the part of output tax liability and details of amount shall be furnished in form GST ITC -03, where such amount relates to cancellation of registration 70
FORM GST ITC-03 - Declaration for intimation of ITC reversal on input, input contained in semi finished goods, finished goods and Capital goods in stock 1 2 GSTIN Legal name 3 4 5 6 7 8 Trade Details of Date from Details of stock of Amount of ITC Verification name, if any application filed which inputs held in payable and to opt for exemption is stock, inputs paid (based composition effective contained in semi- on table 5) scheme [ applicable finished or finished [ applicable only for goods held in for section 18 (4)] stock, and capital (4)] goods on which input tax credit is required to be paid under section 18(4). www. gstindia. biz 71
FORM FOR CLAIMING ITC FORM GST ITC-01 • Declaration for claim of input tax credit under sub-suction (1) of section 18. FORM GST ITC-02 • Transfer of credit on sale, merger, amalgamation, lease or transfer of a business FORM GST ITC-03 • Declaration for intimation of ITC reversal on input, input contained in semi finished goods, finished goods and Capital goods in stock. FORM GST ITC-04 • Details of goods/capital goods sent to job worker and received back. www. gstindia. biz 72
PLACE OF SUPPLY www. gstindia. biz 73
PLACE OF SUPPLY Place of Supply Goods Other than Import or Export Services Location of Supplier Location of Recipient Import or Export Both in India www. gstindia. biz Either one is outside India 74
[ Sec 10 – IGST Act] Place of Supply of Goods (other than goods imported/ exported) www. gstindia. biz 75
SUPPLY INVOLVES MOVEMENT OF GOODS Recipient at Chandigarh Supplier from Delhi Location of goods at the time at which movement terminates for delivery to recipient www. gstindia. biz 76
GOODS SUPPLIED ON DIRECTION OF THE THIRD PERSON Third Party from Mumbai Company at Delhi Actual delivery at Gurgaon Principal Place of Business of the third person (person on whose direction goods were supplied to another person ) www. gstindia. biz 77
SUPPLY DOES NOT INVOLVES MOVEMENT OF GOODS Contract for supply of goods through t/f of documents Supplier at Delhi Recipient at Rajasthan Warehouse at Noida (no movement of goods) Location of goods at the time of delivery to the recipient www. gstindia. biz 78
GOODS ARE ASSEMBLED OR INSTALLED AT SITE Gives contract ABC Ltd. in Mumbai XYZ Ltd. in Delhi To install a plant in NOIDA Place of installation or assembly www. gstindia. biz 79
GOODS SUPPLIED ON BOARD A CONVEYANCE e. g. vessel, aircraft, train, vehicle, etc. From Delhi To Chennai Location at which such goods are taken on board www. gstindia. biz 80
[ Sec 11 – IGST Act] Place of Supply of Goods (when goods imported into/ exported from India) www. gstindia. biz 81
GOODS IMPORTED INTO INDIA Import into India Port to Delhi America Delhi Location of importer - Delhi www. gstindia. biz 82
GOODS EXPORTED FROM INDIA Export from India China Location outside India www. gstindia. biz 83
[ Sec 12 – IGST Act] Place of Supply of Services (where supplier & recipient both are in India) www. gstindia. biz 84
EFFECT OF REGISTRATION ON SPECIFIC SERVICES Specific Services NOT effected by Location of Recipient Specific Services effected by Location of Recipient Directly related to immoveable property Organizing any events For admission to any event, Park Restaurant and catering, Fitness, Beauty treatment, Personal grooming, Health service Transportation of goods Passenger Transportation Services on board conveyance Services of Training and Performance Appraisal Banking and Other Financial Services including Stock Broking Advertisement Services to Government, etc. Insurance Services Telecommunication services www. gstindia. biz 85
PLACE OF SUPPLY OF SERVICES – GENERAL RULE (where supplier & recipient are in India) B 2 B SUPPLIES GENERAL RULE Location of Recipient Address on Records exist Location of Recipient B 2 C SUPPLIES Any other case Location of supplier www. gstindia. biz 86
RECIPIENT OF SUPPLY OF GOODS OR SERVICES OR BOTH As per Section 2(93) of CGST Act, 2017, Recipient of supply of goods or services or both means: If consideration is payable for the supply of the goods or services or both Person who is liable to pay such consideration If no consideration is payable for the supply of goods If no consideration is payable for the supply of services - The person to whom the goods are delivered or made available. - The person to whom possession or use of the goods is given or made available. The Person to whom the service is rendered. The Expression recipient shall also includes an agent acting as such on behalf of the recipient in relation to the goods or services or both supplied. www. gstindia. biz 87
LOCATION OF RECIPIENT Place of Business (Registered with GST) where a supply is received; In case supply is received at multiple places, the location of recipient is the place which is most directly concerned with receipt of the supply; As per Section 2(7) of the IGST Act, 2017 “fixed establishment” means a place (other than the place of business) which is characterized by a sufficient degree of permanence and suitable structure in terms of human and technical resources to supply services, or to receive and use services for its own needs; Section 2(14) of the IGST Act, 2017 defines the location of Recipient of service. As per this section, location of recipient of service means: www. gstindia. biz Location of fixed establishment (Other than the registered place of business) where a supply is received; In the absence of any such place, the location is the usual place of residence of the recipient 88
SERVICES DIRECTLY RELATED TO IMMOVABLE PROPERTY XYZ Ltd. In Mumbai ABC Ltd. In Delhi XYZ LTD. give contract to ABC Ltd. to construct a metro station in NOIDA Location of immovable property - Noida www. gstindia. biz 89
SERVICES DIRECTLY RELATED TO IMMOVABLE PROPERTY LOCATED OUTSIDE INDIA XYZ Ltd. In Mumbai Architect (Service Provider) ABC Ltd. In Delhi (Service Receiver) Mr. X give contract to ABC Ltd. to give a architect agreement to its company in US Location of ABC Ltd. i. e. Delhi www. gstindia. biz 90
SERVICES BY WAY OF ACCOMODATION FOR ORGANIZING ANY FUNCTION AND INCLUDING SERVICES RELATED TO SUCH FUNCTION From Haryana Business function in Delhi Location of immovable property www. gstindia. biz 91
SERVICES BY WAY OF LODGING ACCOMODATION BY HOTEL, INN, GUEST HOUSE, CLUB, ETC From Delhi To Mumbai Location of Hotel, Inn, Guest House, Club, etc. www. gstindia. biz 92
SUPPLY OF SERVICES FOR ADMISSION TO CULTURAL & ARTISTIC, SPORTING, SCIENTIFIC & EDUCATIONAL, ENTERTAINMENT EVENT, AMUSEMENT PARK AND ANCILLARY SERVICES From Mumbai Seminar in Delhi Venue of event/ park www. gstindia. biz 93
SERVICE BY ORGANIZING CULTURAL, ARTS, SPORTS, EDUCATIONAL, SCIENTIFIC, ENTERTAINMENT, CONFERENCE, FAIR, EXHIBITION OR SIMILAR EVENTS AND ANCILLARY SERVICES From Noida To Conference in Delhi Registered Recipient : Location of recipient www. gstindia. biz 94
SERVICE BY ORGANIZING CULTURAL, ARTS, SPORTS, EDUCATIONAL, SCIENTIFIC, ENTERTAINMENT, CONFERENCE, FAIR, EXHIBITION OR SIMILAR EVENTS AND ANCILLARY SERVICES From Puna To Exhibition in Mumbai Unregistered recipient: Venue of event www. gstindia. biz 95
SUPPLY OF RESTAURANT AND CATERING SERVICES, PERSONAL GROOMING, BEAUTY TREATMENT, HEALTH SERVICE, FITNESS, ETC. Fitness center Place of actual performance www. gstindia. biz 96
SUPPLY OF SERVICE BY TRANSPORTATION OF GOODS, INCLUDING BY MAIL OR COURIER Registered recipient ABC Ltd. Supplier Registered Recipient : Location of recipient www. gstindia. biz 97
SUPPLY OF SERVICE BY TRANSPORTATION OF GOODS, INCLUDING BY MAIL OR COURIER Unregistered recipient: Location where goods handed over got transportation. www. gstindia. biz 98
SERVICES IN RELATION TO TRAINING & PERFORMANCE APPRAISAL From Noida To Marshal Art center in Delhi Registered recipient: location of recipient www. gstindia. biz 99
SERVICES IN RELATION TO TRAINING & PERFORMANCE APPRAISAL From Gurugram To Delhi Unregistered recipient : place of performance www. gstindia. biz 100
SERVICES ON BOARD CONVEYANCE LIKE VESSEL, AIRCRAFT, TRAIN, MOTOR VEHICLE From Delhi To Mumbai First scheduled point of departure of that conveyance for that journey www. gstindia. biz 101
SUPPLY OF TELECOMMUNICATION SERVICES INCLUDING DATA TRANSFER, BROADCASTING, DTH, CABLE, ETC. (a) Services of fixed telecommunication line, leased circuits, internet leased circuit, cable or dish antenna Location where device installed (b) Post-paid mobile connection for telecommunication and internet services* Location of billing address of the recipient on record (c) Pre-paid mobile connection for telecommunication and internet services* Through internet: Location of recipient on record Through selling agents: Location of selling agent on record of supplier Though others: Location where pre-payment received www. gstindia. biz 102
ADVERTISEMENT SERVICES TO GOVERNMENT, ETC. Place is State of dissemination in proportion www. gstindia. biz 103
PASSENGER TRANSPORTATION SERVICE (RETURN JOURNEY TREATED AS SEPARATE JOURNEY) From Mumbai To Amritsar Registered Recipient : Location of recipient www. gstindia. biz 104
PASSENGER TRANSPORTATION SERVICE (RETURN JOURNEY TREATED AS SEPARATE JOURNEY) From HISAR DELHI Unregistered Recipient: Place where passenger embarks on the conveyance for a continuous journey www. gstindia. biz 105
BANKING & OTHER FINANCIAL SERVICES INCLUDING STOCK BROKING Company in Bengaluru Bank in Delhi Customer of bank from different places Location of recipient in suppliers records (If not available, location of supplier) www. gstindia. biz 106
INSURANCE SERVICES Registered Recipient : Location of recipient Unregistered recipient: Location of recipient in supplier’s records www. gstindia. biz 107
[ Sec 13 – IGST Act] Place of Supply of Services (where supplier or recipient is outside India) www. gstindia. biz 108
SPECIFIC RULES FOR SERVICES Where goods required to be made physically available Transportation of goods services Services on board a conveyance Requiring physical presence of receiver/ person Directly in relation to immovable property Passenger Transportation Service Online information and database access or retrieval services www. gstindia. biz By way of admission to/ organising an event Banking services to account holders, intermediary services, hiring of means of transport (other than aircraft & vessels) up to 1 month 109
PLACE OF SUPPLY OF SERVICES – GENERAL RULE (where supplier or recipient is outside India) GENERAL RULE YES Location of Recipient NO Location of supplier Location of the recipient available in the ordinary course of business www. gstindia. biz 110
CASE STUDY www. gstindia. biz 111
PLACE OF SUPPLY FOR SERVICE – WHEN RECIPIENT AND SUPPLIER BOTH IN INDIA As per section 12(8) of CGST Act, 2017 The place of supply of service by way transportation of goods, including by mail or courier to, a) A registered person , shall be the location of such person ; b) A person other than a registered person , shall be the location at which such goods are handed over for their transportation. www. gstindia. biz 112
PLACE OF SUPPLY FOR SERVICE – WHEN EITHER RECIPIENT AND SUPPLIER IS OUT OF INDIA As per section 13(9) of IGST Act, 2017 The place of supply of service by way transportation of goods, other than by mail or courier to, - shall be the place of destination of such goods www. gstindia. biz 113
PLACE OF PROVISION SERVICE As per section 66 B of Finance Act, 1994, there shall be levied a tax (hereinafter referred to as the service tax) at the rate of fourteen percent on the value of all services, other than those services specified in the negative list, provided or agreed to be provided in the taxable territory by one person to another and collected in such manner as may be prescribed. As per Rule 10 of Place of Provision of Rule 2012, place of provision of goods transportation services. The place of provision of services of transportation of goods, other than by way of mail or courier, shall be the place of destination of the goods: Provided that the place of provision of services of goods transportation agency shall be the location of the person liable to pay tax. www. gstindia. biz 114
DELIVERY DUTY PAID SHIPMENT – UNDER SERVICE TAX REGIME INDIAN EXPORTER INDIAN FREIGHT FORWARDER CONSIGNEE (OUT OF INDIA) Freight charges • Exempt under Rule 10 of Place of Provision of Service Rule, 2012 Pickup charges Other charges • Taxable and Service Tax payable www. gstindia. biz 115
DELIVERY DUTY PAID SHIPMENT – UNDER GST REGIME INDIAN EXPORTER INDIAN FREIGHT FORWARDER Freight charges • Taxable Pickup charges and Other charges • Taxable www. gstindia. biz CONSIGNEE (OUT OF INDIA) 116
SERVICES i. e. GOODS REQUIRED TO BE MADE PHYSICALLY AVAILABLE BY RECIPIENT Service center Location where services actually performed www. gstindia. biz 117
SERVICES REQUIRING PHYSICAL PRESENCE OF RECEIVER/ PERSON ACTING ON HIS BEHALF Location where services actually performed Services provided from remote location by electronic means Location of Goods supplied are repaired and reexported without used in India. Location of Recipient www. gstindia. biz 118
SERVICES SUPPLIED DIRECTLY IN RELATION TO IMMOVABLE PROPERTY From Delhi Construct a Building in US Location of such immovable property (or where it is intended to be located) www. gstindia. biz 119
SERVICE BY WAY OF ADMISSION TO, OR ORGANIZING AN EVENT, ETC. AND ANCILLARY SERVICES Spectators from Australia Match in India Place where the event is actually held www. gstindia. biz 120
Banking services to account holders, intermediary services, hiring of means of transport (other than aircraft & vessels) up to 1 month Location of supplier www. gstindia. biz 121
TRANSPORTATION OF GOODS (OTHER THAN BY WAY OF MAIL/COURIER) To London From India Destination of the goods www. gstindia. biz 122
PASSENGER TRANSPORTATION SERVICE From Delhi To USA Place where passenger embarks on the conveyance for a continuous journey www. gstindia. biz 123
SERVICE PROVIDED ON BOARD A CONVEYANCE Departure from Landon Mechanic from India First scheduled point of departure of that conveyance for that journey www. gstindia. biz 124
[ Sec 14 – IGST Act] Place of Supply of Services (Special provision for payment of tax by a supplier of online information and database access or retrieval services) www. gstindia. biz 125
ONLINE INFORMATION & DATABASE ACCESS OR RETRIEVAL SERVICES Recipient in India Location of recipient www. gstindia. biz 126
Person receiving such services shall be deemed to be located in the taxable territory if any two of the following non-contradictory conditions are satisfied, namely: üthe location of address presented by the recipient of service via internet is in taxable territory; ü the credit card or debit card or store value card or charge card or smart card or any other card by which the recipient of service settles payment has been issued in the taxable territory; üthe billing address of recipient of service is in the taxable territory; ü the internet protocol address of the device used by the recipient of service is in the taxable territory; üthe bank of recipient of service in which the account used for payment is maintained is in the taxable territory; üthe country code of the subscriber identity module (SIM) card used by the recipient of service is of taxable territory; üthe location of the fixed land line through which the service is received by the recipient is in taxable territory. ” www. gstindia. biz 127
Online information and Database access or retrieval Services. Section 2(17) of the IGST Act Online information and database access or retrieval services” means services whose delivery is mediated by information technology over the internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention, and impossible to ensure in the absence of information technology and includes electronic services such as, - ü Advertising on the internet ü Providing cloud services ü Provision of e-books, movie, music, software and other intangibles via telecommunication networks or internet ü Providing data or information, retrievable or otherwise, to any person, in electronic form through a computer network ü Online supplies of digital content (movies, television shows, music, etc. ) ü Digital data storage, and ü Online gaming www. gstindia. biz 128
PLACE OF SUPPLY OF SERVICES (where supplier or recipient is outside India) To prevent double taxation/ non-taxation, or for the uniform application of rules, CG has power to notify services/ circumstances Place of effective use and enjoyment of a service www. gstindia. biz 129
ashu. dalmia@ada. org. in +91 -9810893243 www. gstindia. biz www. ada. org. in
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