India Convention Promotion Bureau INTERACTIVE SESSION ON GST

India Convention Promotion Bureau INTERACTIVE SESSION ON GST 25 April 2019 Anil Chadha & Co Soubhagya

The Firm • Anil Chadha & Co • Arjun Chadha & Co • Soubhagya Consultancy Services Pvt Ltd • Chadha Mangla & Co 25 April 2019 Anil Chadha & Co ICPB – GST Interactive Session

Anil Chadha & Co – Background ► Integrated consultancy firm specializing in providing bespoke Tax & Transaction Advisory solutions ► Founded by Anil Chadha, one of India’s senior-most chartered accountants, in 1976 and has vast experience in the realms of Tax, Transactions, Investment Structuring and Corporate Finance ► The firm’s USP is its ability to offer end-to-end solutions under one roof, which eliminates the need for clients to separately interact with lawyers, banks and financiers, valuers, tax consultants and auditors ► Over the past 4+ decades, the firm has advised Indian clients across all sectors including, ► Automotive ► Construction and real estate ► Information technology and software exports ► FMCG and trading ► Financial services ► The firm has also extensive experience in structuring cross-border investments across international jurisdictions, with numerous clients based out of the United States, United Kingdom and East Africa ► Further, in tandem with its overseas affiliates, we have the requisite expertise in managing investments made by Indian investors in overseas jurisdictions 25 April 2019 Anil Chadha & Co ICPB – GST Interactive Session

The Firm 360 o Approach External Resources Corporate Finance, PE and VC advisory Tax & regulatory Customized solutions In-house research and international affiliates Business consulting and IT Execution team Transaction structuring Assurance Industry experts ► Multi-dimensional teams combining the functional expertise & experience of individuals with specialized skill base in various sectors ► 360 o suite of financial services ► Account Leader for each client – Operates as the single point of contact ► Industry specialists – In-depth knowledge of practical issues and solutions 25 April 2019 Anil Chadha & Co ICPB – GST Interactive Session

Arjun Chadha Partner – Tax and Regulatory Services Anil Chadha & Co, Chartered Accountants, New Delhi Email: Arjun@chadhaco. in Phone: +91 11 49873821 | +91 98116 62221 Arjun is a Partner with the Tax and Regulatory Services division of the firm and has over 10 years of experience in indirect and direct tax consulting. Qualified as a Chartered Accountant in 2009. Consultant - Ernst & Young India (tax division) for 3 years. Arjun is a tax expert and has represented large real estate, automotive and manufacturing entities before tax authorities at various levels. He has advised several large multinational and Indian corporates on various tax matters, such as GST transition and implementation, GST impact assessment studies, domestic and cross-border transaction structuring, supply chain review, contract review, litigation support, bid submission, due diligence and health checks. 25 April 2019 GST Experience Key Technical Experience (other than GST) ► Advised on tax implications of setting up and operation of large manufacturing facilities Re-structuring of operations and transaction structures and identifying opportunities to rationalise costs ► Advised non-resident developers of a large real estate venture in Delhi on optimum investment vehicles and repatriation of funds ► Review of contracts and cost build-ups to optimise GST liability ► Assisted a number of infrastructure and telecom companies in submission of bids ► Re-structuring of purchase contracts with a view to maximize input tax credit ► Conducted due diligences on corporates in case of buy-side and sell-side transactions ► On-going advisory and compliance ► ► GST support to MSME vendors of large manufacturers Comprehensive tax health checks from compliance and structuring perspectives ► Ltigation upto Tribunal level as arguing counsel ► Advance rulings ► ► Advise on and structuring of specific transactions to optimise the GST liability e. g. mergers, slump sale, transfer of majority shareholding, inter-state and cross-border transactions etc. Retained counsel on tax matters for a number of large corporates (Action Shoes, Federal Mogul Group, Anand Automotive Group, Mando Automotive India, Dana Automotive, Henkel India, Bliss GVS Pharma, Savvy Investors Group - Kensville Golf Resort, Gujarat) ► GST transition and implementation ► Anil Chadha & Co ICPB – GST Interactive Session

GST & MICE Open Issues 25 April 2019 Anil Chadha & Co ICPB – GST Interactive Session

Place of Supply Rules ► GST is a destination-based tax, i. e. , the goods/services will be taxed at the place where they are consumed and not at the origin. ► The state where they are consumed will have the right to collect GST ► This makes the concept of ‘Place of Supply’ crucial ► Standard provisions: ► Place of supply is the location of the recipient ► If recipient is unregistered and location is not available, place of supply is the location of the service provider 25 April 2019 Anil Chadha & Co ICPB – GST Interactive Session

Place of Supply Rules Nature of Service Place of Supply Immovable property related services, including hotel accommodation and construction i) ii) Restaurant and catering services, personal grooming, fitness, beauty treatment and health service Location where the services are actually performed Admission to an event or amusement park Place where the event is actually held or where the park is located Organisation of an event i) B 2 B: location of the Registered Person ii) B 2 C: location where the event is actually held iii) If the event is held outside India: location of the recipient i) ii) B 2 B: location of such Registered person B 2 C: place where the passenger embarks on the conveyance for a continuous journey Passenger transportation 25 April 2019 Location of the property If property is located outside India – location of the recipient Anil Chadha & Co ICPB – GST Interactive Session

Place of Supply Rules Nature of Service Place of Supply Services on board a conveyance Location of the first scheduled point of departure of that conveyance for the journey If these services are supplied at more than one locations i. e. , i) Immovable property-related ii) Event related i) At more than one location, including a location in India - location in India where the greatest proportion of the service is provided ii) In more than one State - Each such State in proportion to the value of services provided in each State 25 April 2019 Anil Chadha & Co ICPB – GST Interactive Session

Input tax credit ► IGST can be set-off against IGST – even if place of supply is different ► One state local CGST & SGST cannot be set-off against another state’s local CGST & SGST ► Issue in travel industry because of anomaly in Po. S Rules ► Even within the same state, CGST and SGST cannot be set-off against each other ► New provision: ► IGST credit has to be set-off against IGST, CGST and SGST liability ► CGST credit can be used to pay CGST only after IGST credit has been exhausted ► SGST credit can be used to pay SGST only after IGST credit has been exhausted 25 April 2019 Anil Chadha & Co ICPB – GST Interactive Session

Input tax credit - Restrictions Expense Exception Motor vehicles i) ii) Motor vehicles for transportation of goods Motor vehicles with seating capacity upto 13 persons used for: ► further supply of such motor vehicles; or ► transportation of passengers; or ► imparting training on driving such motor vehicles; General insurance, servicing, repair and maintenance If used for motor vehicles as above Food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, life insurance and health insurance i) If input service is used to provide same category of output service ii) Where it is obligatory for an employer to provide these services to its employees under any law 25 April 2019 Anil Chadha & Co ICPB – GST Interactive Session

Input tax credit - Restrictions Expense Exception i) Membership of a club, health and fitness centre ii) Travel benefits extended to employees on vacation such as leave or home travel concession Leasing, renting or hiring of motor vehicles, vessels or aircraft Where it is obligatory for an employer to provide these services to its employees under any law i) ii) Motor vehicles for transportation of goods Motor vehicles with seating capacity upto 13 persons used for: ► further supply of such motor vehicles; or ► transportation of passengers; or ► imparting training on driving such motor vehicles; iii) If input service is used to provide same category of output service 25 April 2019 Anil Chadha & Co ICPB – GST Interactive Session

Input tax credit - Restrictions Expense Exception Construction of immovable property (capitalized expenditure) Routine repairs, renovation etc charged to P&L account as revenue expenditure Purchases from composition dealers Goods or services used for personal consumption Goods lost, stolen, destroyed, written off given as gifts or free samples 25 April 2019 i) Buy-one Get-one free offers Anil Chadha & Co ICPB – GST Interactive Session

Input tax credit – old method Type of Tax Liability IGST 50, 000 CGST 1, 00, 000 Credit Available Set-off of Liability Balance to be Balance credit paid in cash available 2, 00, 000 50, 000 (from IGST) 15, 00, 000 (from CGST) – – 20, 000 – 85, 000 (from IGST) SGST 1, 00, 000 15, 00, 000 (from SGST) 65, 000 (from IGST) 25 April 2019 Anil Chadha & Co ICPB – GST Interactive Session

Input tax credit – new method Type of Tax Liability IGST 50, 000 Credit Available Set-off of Liability 2, 00, 000 Balance to be paid in cash Balance credit available – 15, 000 35, 000 – 50, 000 (from IGST) CGST 1, 00, 000 15, 000 1, 00, 000 (from IGST) SGST 1, 00, 000 15, 000 Rs. 50, 000 (from IGST) 15, 000 (from SGST) 25 April 2019 Anil Chadha & Co ICPB – GST Interactive Session

Input tax credit - misconceptions ► Credit can be availed if I give my GSTIN to supplier ► I can avail credit of previous months at any time in the future ► Can be availed only up to 30 th September after the end of the FY ► For FY 2017 -18 – 31 st March 2019 ► Credit can be availed if amount is reflecting in my GSTR-2 A ► Credit can be claimed in Delhi even if Po. S of purchases is outside Delhi ► May be eligible in case of IGST ► Never eligible in case of another state’s CGST & SGST 25 April 2019 Anil Chadha & Co ICPB – GST Interactive Session

ITC matching ► Filing of GSTR-2 is not mandatory as of now ► GSTR-2 A is being auto-filled based on GSTR-1 filed by vendors ► If suppliers are not filing returns correctly, credit will not reflect in GSTR-2 A ► GST department – notices for mismatch ► GSTR-2 A to be reconciled with purchase ledger and invoices ► All credit in GSTR-2 A is not automatically eligible – check restrictions ► Corrective action – vendors should rectify or file their returns 25 April 2019 Anil Chadha & Co ICPB – GST Interactive Session

GST on reimbursable expenses ► Normally all reimbursable and incidental expenses are included in Value of Supply ► Exclusion of reimbursable expenses – Pure Agent ► Contractual agreement with the client to incur expenditure in the course of supply of goods or services ► Does not hold any title to the goods or services procured ► Does not use the supplies for his own interest ► Receives only the actual amount incurred ► Makes payment to the third party on authorization by the client ► Payment made on behalf of the client has been separately indicated in the invoice ► Charges additional amount for the services he supplies on his own account 25 April 2019 Anil Chadha & Co ICPB – GST Interactive Session

GSTR – 9 & 9 C ► GSTR-9 to be filed by all regular assessees ► GSTR-9 C is an additional requirement – turnover Rs 2 crore ► GST audit to be done by a CA or CMA ► Audited financial statements to be attached ► Due date – 30 th June 2019 Insert forms 25 April 2019 Anil Chadha & Co ICPB – GST Interactive Session

Recent Amendments & Updates 25 April 2019 Anil Chadha & Co ICPB – GST Interactive Session

GST Amendment Act – w. e. f. 1 st February 2019 ► Place of business – The concept of business verticals for separate registrations has been done away with. Now, assessees will be able to obtain multiple registrations in the same State for separate places of business, which was previously possible only for separate business verticals. ► Reverse charge - ► ► Will be applicable only on specified purchases by registered persons from unregistered suppliers ► Deleted – Earlier provision that was applicable for all purchases from unregistered suppliers ► Deleted – Rs 5, 000/- daily limit for exemption ► Specified items have not been notified as yet Input tax credit – discussed ► Change in credit utilization method ► Change in blocked credit items 25 April 2019 Anil Chadha & Co ICPB – GST Interactive Session

GST Amendment Act – w. e. f. 1 st February 2019 ► ► Reverse charge - ► Will be applicable only on specified purchases by registered persons from unregistered suppliers ► Deleted – Earlier provision that was applicable for all purchases from unregistered suppliers ► Deleted – Rs 5, 000/- daily limit for exemption ► Specified items have not been notified as yet Input tax credit – discussed ► Change in credit utilization method ► Change in blocked credit items Place of business – ► Deleted – separate business verticals for separate registrations ► Inserted – Multiple registrations in the same State for separate places of business Debit notes and Credit notes – ► Deleted – Linking each debit/ credit note to a single invoice ► Inserted – Can issue single debit/credit note against multiple invoices issued in a FY 25 April 2019 Anil Chadha & Co ICPB – GST Interactive Session

GST Amendment Act – w. e. f. 1 st February 2019 ► ► New return formats will be issued w. e. f. 1 st June 2019 ► Quarterly return for medium and large assessees ► Annual return for small assessees ► Tax payment will be monthly ► Matching of ITC will be effective Export of Services ► ► Import of Services ► ► The amendment allows to avail export benefits is services are provided to persons located in Nepal & Bhutan and consideration is received in INR An entity, even though not registered under GST, if receives services from their related parties located outside India, in course or furtherance of business, falls under the ambit of GST Recovery of tax ► Dues of one state can be recovered from unit of the same person in another state 25 April 2019 Anil Chadha & Co ICPB – GST Interactive Session

Changes effective from 1 st April 2019 ► ► ► Threshold exemption limit increased to Rs 40 lakhs ► Only available for intra-state suppliers of goods ► Not applicable for services – limit is still Rs 20 lakhs ► Limit for special category states (HP, Uttarakhand, NE states) – Rs 20 lakhs Composition scheme ► Limit increased from Rs 1 crore to Rs 1. 50 crore ► Traders and manufacturers can provide services also – upto 5 lacs or 10% of turnover, whichever is less ► Composition scheme for service providers – 6% upto Rs 50 lakhs – inter-state supplies not allowed Real Estate Sector – option to pay tax @ 1% or 5% without ITC 25 April 2019 Anil Chadha & Co ICPB – GST Interactive Session

474 DS, New Rajendra Nagar, New Delhi – 110060 Phone: +91 11 28742482 | +91 11 49873821 Mail: Arjun@chadhaco. in 25 April 2019 Anil Chadha & Co ICPB – GST Interactive Session