GSTWORLD Network and Going Forward By Yash Dhadda

GST-WORLD® Network and Going Forward …. By Yash Dhadda | Chartered Accountant | Jaipur GST related issues in Exports and Textile Sector © Yash Dhadda 1

Where do you belong to now? GST-WORLD® Network © Yash Dhadda 2

Where are You? GST-WORLD® Network Accounts Team We Management of Company

Where we have headed to ? GST-WORLD® Network Single GST Dual GST © Yash Dhadda 4

DUAL GST : BASIC STRUCTURE GST-WORLD® Network Excise Duty VAT / CST Service Tax Manufacturing of Goods Sale of Goods Provision of Services – – – Intra-state Supply of Goods and Services Inter-state Supply of Goods and Services • Central GST • State GST • IGST Rajasthan to Gujarat Imports Exports • Basic Customs Duty • IGST (in place of CVD and SAD) • Zero Rated UK to Rajasthan to USA

Levy under IGST Act 2017 GST-WORLD® Network § 5. (1) Subject to the provisions of sub-section (2), there shall be levied a tax called the integrated goods and services tax on all inter-State supplies of goods or services or both. © Yash Dhadda 6

Sec 7: Inter State Supply GST-WORLD® Network § 5) Supply of goods or services or both, –– (a) when the supplier is located in India and the place of supply is outside India; (b) to or by a Special Economic Zone developer or a Special Economic Zone unit; or (c) in the taxable territory, not being an intra-State supply and not covered elsewhere in this section, shall be treated to be a supply of goods or services or both in the course of inter-State trade or commerce. © Yash Dhadda 7

Section 11: Place of Supply of Goods GST-WORLD® Network § 11. The place of supply of goods, –– (a) imported into India shall be the location of the importer; (b) exported from India shall be the location outside India What is export of goods? § Section 2 (5): (5) “export of goods” with its grammatical variations and cognate expressions, means taking goods out of India to a place outside India © Yash Dhadda 8

Export of Services GST-WORLD® Network § (6) “export of services” means the supply of any service when, –– (i) the supplier of service is located in India; (ii) the recipient of service is located outside India; (iii) the place of supply of service is outside India; (Section 13) (iv) the payment for such service has been received by the supplier of service in convertible foreign exchange; and (v) the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8; © Yash Dhadda 9

Registration requirement GST-WORLD® Network Following supplies shall be treated as inter state supply and compulsory registration shall be required under IGST Act, 2017 for persons making such supplies: (Section 24 of CGST Act) Exports Supply to or by a SEZ Developer or a SEZ Unit

Zero Rated Supplies GST-WORLD® Network § 16. (1) “zero rated supply” means any of the following supplies of goods or services or both, namely: –– (a) export of goods or services or both; or (b) supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit. Why by SEZ is not mentioned here ? © Yash Dhadda 11

Meaning and scope of Zero rated supply GST-WORLD® Network Zero rated Supply Exports Goods Services Supplies to a SEZ developer or a SEZ unit Goods Services

ITC Under Zero Rated Supplies GST-WORLD® Network § 2) Subject to the provisions of sub-section (5) of section 17 of the Central Goods and Services Tax Act, credit of input tax may be availed for making zero-rated supplies, notwithstanding that such supply may be an exempt supply. © Yash Dhadda 13

Refund Under Zero Rated Supplies GST-WORLD® Network § (3) A registered person making zero rated supply shall be eligible to claim refund under either of the following options, namely: –– (a) he may supply goods or services or both under bond or Letter of Undertaking, subject to such conditions, safeguards and procedure as may be prescribed, without payment of integrated tax and claim refund of unutilised input tax credit; or (b) he may supply goods or services or both, subject to such conditions, safeguards and procedure as may be prescribed, on payment of integrated tax and claim refund of such tax paid on goods or services or both supplied, in accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the rules made thereunder. © Yash Dhadda 14

How to claim refund against Zero rated supply? GST-WORLD® Network A zero rated supply can be made under either of the following options: Without payment of IGST, claiming refund of unutilised ITC. By furnishing Letter of Undertaking By furnishing Bond On payment of IGST, claiming refund of such taxes paid

Rules to be referred for Exports & Refunds GST-WORLD® Network § Rule 46: Tax Invoice § Rule 89: Application for refund of tax, interest, penalty, fees or any other amount § Rule 96: Refund of IGST paid on export of goods out of India § Rule 96 A: Refund of IGST paid on export of goods or services under bond or LUT. © Yash Dhadda 16

Documentation for Exports on payment of IGST GST-WORLD® Network Commercial Invoice- Buyer • A commercial invoice for the buyer purposes may be made as per requirement or current practices. Tax Invoice- Compliance • A Tax Invoice as per CGST Rules, 2017 shall be made. Shipping Bill- With Tax Invoice details • Exporters have to provide details of GST Invoice in the Shipping bill like GSTIN, Tax Invoice Number etc.

Supplier Name…………………. . Address……………… GSTIN………………. . Original for Recipient Duplicate for Transporter Triplicate for Supplier Tax Invoice “SUPPLY MEANT FOR EXPORT ON PAYMENT OF IGST” or “SUPPLY MEANT FOR EXPORT UNDER BOND OR LETTER OF UNDERTAKING WITHOUT PAYMENT OF IGST” Invoice No. Invoice date Billed to Name Address Country Place of delivery Name Address Country of destination Application number for removal of goods for export : Place of Supply Date of removal of goods for export : GST-WORLD® Network S. No. Description of Goods/ Services HSNcode Freight Insurance Packing and Forwarding Charges Total Invoice value (in figure) Total Invoice value (in words) Tax under RCM is not payable for aforesaid transaction(s) Qty Rate (per item ) Uo. M Gross Discount value Rate Cess Amount Rate Amount Declaration Certified that the particulars given above are true and correct Integrated GST Net Taxable value Signature Name of Signatory Designation

Execution of Exports without payment of duty GST-WORLD® Network Exports without payment of IGST LUT Status Holder as per FTP 2015 -2020 Status Holder Certificate Foreign inward remittances= 10% of exports or Rs. 1 crore Whichever is higher 1. Banker’s Certificate for inward foreign remittances 2. Declaration for inward foreign remittances Validity of LUT = 1 Year Bond Amount of Bond= Estimated tax liability on exports Bank Guarantee Amount of Bank Guarantee = Not exceeding 15% of Bond amount Validity of Bond= Till outstanding tax liability is within the bond amount

Documentation Aspects Letter of Undertaking • GST RFD-11 • LUT on Stamp Paper • Status Holder Certificate/Banker’s certificate and Declaration foreign inward remittances as the case may be. • Declaration regarding not being prosecuted under CGST Act, 2017 or existing laws. • Certificate of IEC • Form REG-25, i. e. , Provisional Registration Certificate under GST. • PAN Card of authorised Signatory • Identity Proof of authorised signatory and witnesses • CA and Banker Certificate (for Turnover) Bond • • • GST-WORLD® Network GST RFD-11 Bond on Stamp Paper Bank guarantee Certificate of IEC Form REG-25, i. e. , Provisional Registration Certificate under GST. • PAN Card of authorised Signatory • Identity Proof of authorised signatory and witnesses

Refund Procedure for Exporters GST-WORLD® Network Exports Goods On payment of IGST Shipping Bill = Deemed Application for refund On filing of GSTR-3 Refund to be processed by customs Services Without payment of IGST On payment of IGST Form GST RFD-01 Statement of numbers & date of Export Invoices and Shipping Bills Without payment of IGST Form GST RFD-01 Statement of Invoice numbers & date Bank Realisation Certificate(BRC)/ Foreign Inward Remittance Certificate

GSTR-1 GST-WORLD® Network © Yash Dhadda 22

GSTR-3 GST-WORLD® Network © Yash Dhadda 23

Refund Without Payment of IGST GST-WORLD® Network § Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero-rated supply of services) x Net ITC ÷Adjusted Total Turnover © Yash Dhadda 24

Other Issues GST-WORLD® Network § Duty Drawback- Higher Rate vs Lower Rate § § Notification No 59/2017 -Cus-NT date 29. 06. 2017 Circular No. 22/2017 -Cus dated 30. 6. 2017 Guidance Note issued by Indian Customs Supplementary Claim – Possible § Advances for Exports § Consignment Sale vs Removal for Sample § Receipt of Consideration is Compulsory ? § Process for SEZ and Commercial difficulty ? © Yash Dhadda 25

GST-WORLD® Network TEXTILE SECTOR © Yash Dhadda 26

Textile Processes GST-WORLD® Network © Yash Dhadda 27

Textile Processes GST-WORLD® Network © Yash Dhadda 28

GST Rates for Job Work – Textile Industry GST-WORLD® Network Chapter, Section or Heading Description of Service Rate of CGST Heading 9988 (i) Services by way of job work in (Manufacturing services on relation to- physical inputs (goods) owned (b) Textile yarns (other than of by others) man-made fibres) and textile fabrics; Group 510 511 512 2. 5 % 998821 998822 998823 Textile, wearing apparel and leather manufacturing services Textile manufacturing services Wearing apparel manufacturing services Leather and leather product manufacturing services © Yash Dhadda 29

Textile Fabric GST-WORLD® Network Fabric & Textile (Source : https: //en. wikipedia. org/wiki/Textile) The words fabric and cloth are used in textile assembly trades (such as tailoring and dressmaking) as synonyms for textile. However, there are subtle differences in these terms in specialized usage. Textile refers to any material made of interlacing fibres. A fabric is a material made through weaving, knitting, spreading, crocheting, or bonding that may be used in production of further goods (garments, etc. ). Cloth may be used synonymously with fabric but is often a finished piece of fabric used for a specific purpose (e. g. , table cloth). © Yash Dhadda 30

Sale Price more than Rs 1000. What is Sale Price/Value? GST-WORLD® Network © Yash Dhadda 31

Value vs Price ? GST-WORLD® Network § Value and Price separate terms have been used in the Rate Schedule § Sec 15 defines the Transaction Value (not price) as price paid or payable § A product can have MRP of Rs 1500/- but can be sold at 1000 only after discount. Then Price is Rs 1500 and sale value fetched is Rs 1000. § Situation can be tricky for post supply discount. What will be sale value ? § What if a product is sold at an all inclusive amount of Rs 1060. Which rate? (If 5% then base value shall be Rs 1010). (If 12% then base value shall be Rs 946/-). © Yash Dhadda 32

No Refund of unutilized ITC (Following outward supplies) GST-WORLD® Network CGST Rate 2. 5% 2. 5% But excess ITC can be carried forward © Yash Dhadda 33

Sampling of the Items GST-WORLD® Network § Section 17 (Blocked Credits) § (5) Notwithstanding anything contained in sub-section (1) of section 16 and subsection (1) of section 18, input tax credit shall not be available in respect of the following, namely: — (h) goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples; and § ACTIVITIES TO BE TREATED AS SUPPLY EVEN IF MADE WITHOUT CONSIDERATION 1. Permanent transfer or disposal of business assets where input tax credit has been availed on such assets. © Yash Dhadda 34

Sampling of Items GST-WORLD® Network § No ITC of finished Sample has been taken § ITC of inputs and input services has been taken § Such inputs or input services have not been given as sample § The business asset disposed (Sample), ITC of same was not taken. © Yash Dhadda 35

Issue of ROSL (Notification No 14/26/2016 -IT dt 27. 6. 17 GST-WORLD® Network § Refund of State Levy Scheme (ROSL) § It is to bring to your notice that Mo. T has issued Notification No. 14/26/2016 -IT dated 27. 06. 2017 revising the rates of rebate in Schedules I, II and III for the ROSL Scheme effective from 1. 7. 2017. The revised rates are 0. 39% for Ro. SL and 0. 23% for Ro. SL under Advance Authorization-All Industry Rates (AA-AIR) combination respectively. This notification may be downloaded from website egazette. nic. in and perused. © Yash Dhadda 36

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3 8 GST-WORLD® Network Yash Dhadda Mentor-GST World Thank You Dhadda & Co. Chartered Accountants Jaipur | Kota Phone +91 -9829186074 : yash@dhaddaonline. com : Ema : il © Yash Dhadda