OVER VIEW OF GST LAW PROCEDURE Yogendra Garg

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OVER VIEW OF GST LAW & PROCEDURE Yogendra Garg IRS Addl. DG, Centre of

OVER VIEW OF GST LAW & PROCEDURE Yogendra Garg IRS Addl. DG, Centre of Excellence NACIN

Presentation Plan Introduction Benefits and Salient Features of GST Rates IGST Mechanism Impact on

Presentation Plan Introduction Benefits and Salient Features of GST Rates IGST Mechanism Impact on Govt Departments-TDS Registration & Returns Compliance Interface 2

Current Indirect Tax Scenario Central Taxes • Central Excise Duty • M&TP Excise Duty

Current Indirect Tax Scenario Central Taxes • Central Excise Duty • M&TP Excise Duty • Additional Duties of Customs (CVD & SAD) • Service Tax • Cesses & Surcharge • Additional Duties of Excise State Taxes • • VAT/Sales Tax Central Sales Tax Purchase Tax Entertainment Tax other than those levied by the Local Bodies) Luxury Tax Entry Taxes on Lottery, Gambling & Betting Surcharge & Cesses 3

GST-VAT • Multi-point Taxation replacing single point taxation • Value addition taxed at each

GST-VAT • Multi-point Taxation replacing single point taxation • Value addition taxed at each stage • VAT introduced in France in 1954, in Brazil in 1960 • Over 160+ Countries so far 4

What is GST? One Tax For Manufacturing Trading Services ONE NATION: ONE TAX

What is GST? One Tax For Manufacturing Trading Services ONE NATION: ONE TAX

Limitations of current Tax regime 1. Cascading Effect of Tax MAHARASHTRA MADHYA PRADESH Sale

Limitations of current Tax regime 1. Cascading Effect of Tax MAHARASHTRA MADHYA PRADESH Sale on payment of CST Credit of CST Not Available Credit of Excise not allowed

Limitations of current Tax regime : 2. Multiple Registrations Central Excise

Limitations of current Tax regime : 2. Multiple Registrations Central Excise

Limitations of current Tax regime : 4. Lack of Uniformity No Entry Tax @

Limitations of current Tax regime : 4. Lack of Uniformity No Entry Tax @ NIL % @ 4% Value Added Tax e. g. on Sugar

Limitations of current Tax regime : 5. Goods Vs. Services dilemma ? License Software

Limitations of current Tax regime : 5. Goods Vs. Services dilemma ? License Software in CD Sale of Food In Restaurant Sale Services Manufacturing

Features of 101 st Constitution Amendment Act Concurrent jurisdiction for levy & collection of

Features of 101 st Constitution Amendment Act Concurrent jurisdiction for levy & collection of GST by the Centre (CGST) and the States (SGST) Centre to levy and collect IGST on supplies in the course of inter-State trade or commerce including imports Compensation for loss of revenue to States for five Years GST on petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas & aviation turbine fuel to be levied from a later date All decisions on recommendations of GST Council 6

Benefits of GST (1/2) • Reduction in Cascading of Taxes • Overall Reduction in

Benefits of GST (1/2) • Reduction in Cascading of Taxes • Overall Reduction in Prices Decrease in Inflation • Common National Market • Benefits to Small Taxpayers Ease of Doing Business • Self-Regulating Tax System • Non-Intrusive Electronic Tax System Decrease in “Black” Transactions 11

Benefits of GST (2/2) • Simplified Tax Regime • Reduction in Multiplicity of Taxes

Benefits of GST (2/2) • Simplified Tax Regime • Reduction in Multiplicity of Taxes More informed consumer • Consumption Based Tax • Abolition of CST Poorer States to Gain • Exports to be Zero Rated • Protection of Domestic Industry - IGST Make in India 12

Understanding CGST, SGST, UTGST & IGST State 1 Foreign Territory State 2 Union territory

Understanding CGST, SGST, UTGST & IGST State 1 Foreign Territory State 2 Union territory IGST Credit can be used for payment of IGST, CGST, SGST / UTGST in that order 5

Salient features of GST • The GST would be applicable on the supply of

Salient features of GST • The GST would be applicable on the supply of goods or services. • Dual GST on any item - Central GST and State / Union Territory GST. Ø Central tax (CGST) and State tax (SGST) / Union territory tax (UTGST). • The GST would apply on all goods or services or both other than alcoholic liquor for human consumption and five petroleum products. 14

Salient features of GST. . . (contd. ) • Destination based consumption tax Ø

Salient features of GST. . . (contd. ) • Destination based consumption tax Ø The tax would accrue to the State which has jurisdiction over the place of consumption which is also termed as place of supply. Ø Levied at all stages right from manufacture up to final consumption with credit of taxes paid at previous stages available as setoff. Ø In nutshell, only value addition will be taxed and burden of tax is to be borne by the final consumer. Ø Exports would be zero rated and imports taxed at the same rate as integrated tax (IGST) levied on inter-State supply of like domestic products 15

Salient features of GST. . . (contd. ) • Tax payers with an aggregate

Salient features of GST. . . (contd. ) • Tax payers with an aggregate turnover in a financial year up to Rs. 20 lakhs would be exempt from tax. Ø For special category states specified in Article 279 A, the threshold exemption shall be Rs. 10 lakhs. Ø Tax payers making inter-State supplies or paying tax on reverse charge basis shall not be eligible for threshold exemption. • Small taxpayers with an aggregate turnover in a financial year up to Rs. 75 lakhs shall be eligible for composition levy. 16

Salient features of GST. . . (contd. ) • An Integrated GST (IGST) would

Salient features of GST. . . (contd. ) • An Integrated GST (IGST) would be levied and collected by the Centre on inter-State supply of goods and services. • HSN code shall be used for classifying the goods and services under the GST regime. • Chapter 99 introduced fro the Service Classification Codes • Laws and procedures for levy and collection of CGST/SGST would be harmonized to the extent 17

Salient features of GST. . . (contd. ) • Exports and Supplies to SEZs

Salient features of GST. . . (contd. ) • Exports and Supplies to SEZs shall be treated as zero-rated supply. • Exporters need not pay GST on exports but will continue to be eligible for ITC which will be refunded to exporters • No tax will be payable on final supplies to SEZ Devlopers or SEZ Units but ITC related to the supply shall be refunded to suppliers. • Import of goods/services would be subject to IGST in addition to Basic Customs duty. 18

GST Rates • Rates: 0%( on essential items, rice/wheat) • 5%: ( on items

GST Rates • Rates: 0%( on essential items, rice/wheat) • 5%: ( on items of mass consumption ) • 12%/18%: (standard rates covering most manufactured items and Services) • 28% : ( on Consumer Durable Goods, Pan masala, tobacco and aerated drinks etc) • Basic philosophy behind these rates are that, to the extent possible, the current combined rate of tax levied on individual goods by the Central and the State Governments should be maintained in GST

GST Rates § Rates for goods have been recommended o o o o Rates

GST Rates § Rates for goods have been recommended o o o o Rates for goods at 4 -digit level 0. 25% for diamonds 3% Rate for precious metals, jewellery 19% items to attract 28% 43% to attract 18% 17% to attract 12% 14% to attract 5% 7% to attract NIL

GST Rates § Rates for services have been recommended o o o Present service

GST Rates § Rates for services have been recommended o o o Present service tax exemptions (83 services) to continue 18 services to attract reverse charge Four slab tax structure ü 5%, 12%, 18% and 28% Three services to attract Compensation Cess Services not specified elsewhere to attract 18% (job work in textiles & Gold-Silver jewellery at 5%)

Neither Goods nor Services !!! • The following would not constitute supply of Goods

Neither Goods nor Services !!! • The following would not constitute supply of Goods or Services (Schedule –III of the Act) Ø by an employee to employer Ø Services by any Court or Tribunal Ø Functions performed by Members of Parliament/ State legislature/Panchayats/ Municipalities/ other local authorities. Ø Duties performed by Constitutional functionary. Ø Duties performed by Chairperson/Member /Director in a body of CG/SG/local authority, who is not deemed to be an employee before commencement of this clause.

Neither Goods nor Services !!! (Contd. ) ØFuneral, burial, crematorium/mortuary service, including transportation of

Neither Goods nor Services !!! (Contd. ) ØFuneral, burial, crematorium/mortuary service, including transportation of deceased ØSale of land ØSale of building[ subject to clause (b) of paragraph 5 of Schedule II) ØActionable claims, other than lottery, betting and gambling

Inter-state supplies? • A supply of goods or services or both in the course

Inter-state supplies? • A supply of goods or services or both in the course of inter-State trade or commerce means any supply where the location of the supplier and the place of supply are in different States. (Section 3(1) and 3(2) of the IGST Act) – Exports/ Imports/ Supplies to & by SEZs-Deemed • Why IGST? Advantages? 24

Advantages of IGST Model 1) Maintenance of uninterrupted ITC chain on inter-State transactions. The

Advantages of IGST Model 1) Maintenance of uninterrupted ITC chain on inter-State transactions. The buyer in another State is in a position to avail credit of the IGST charged by the seller in one State. 2) The incidence of tax would be same be it inter state or intra state. Hence , there would be no rate shopping or unfair advantage to any state. 3) The tax regime is simple and there would not be any requirement of documentation as required in existing CST regime. 4) The tax collected in the originating state would be transferred to the destination state. 5) No refund claim in exporting State( within India), as ITC is used up while paying the tax.

Steps involved in interstate supplies in GST regime B 2 B B 2 C

Steps involved in interstate supplies in GST regime B 2 B B 2 C State ‘Aa’ Origin state GST is collected on supply ‘S’ State ‘Bb’ Destination State ITC of tax paid on ‘S’Destination isbased used fortax payment of belongs to IGST on further State B supplies How would GST amount move from ‘A’ to ‘B’ Utilisation of ITC means payment of lesser tax in cash to State B. So ‘B’ should get the amount from State A

Cross utilization of Input Tax Credit A Inward supply CGST Rs 10 SGST Rs

Cross utilization of Input Tax Credit A Inward supply CGST Rs 10 SGST Rs 10 CGST SGST TAXABLE PERSON Outward Supply IGST Payable Rs 25 C Rs 10 IGST 27

IGST Model- Underlying Rules • Sequential utilization of IGST, CGST and SGST credit for

IGST Model- Underlying Rules • Sequential utilization of IGST, CGST and SGST credit for settlement of IGST liability • No cross utilisation between CGST and SGST i. e. – Use only CGST and IGST credits for discharging CGST liability – Use only SGST and IGST credits for discharging SGST liability • a Dealer having both inter-state and intra-state supplies to discharge the IGST liability first and CGSTSGST thereafter October 31, 2020 28

TDS • As per Section 51 of CGST Act, 2017 following people/entities can be

TDS • As per Section 51 of CGST Act, 2017 following people/entities can be mandated to deduct TDS: • A department or establishment of the Central or State Government, or • Local authority, or • Governmental agencies, or • Persons or category of persons as may be notified, by the Central or a State Government on the recommendations of the Council, 29

TDS • TDS is to be deducted at the rate of 1 percent on

TDS • TDS is to be deducted at the rate of 1 percent on payments made to the supplier of taxable goods and/or services, where the total value of such supply, under an individual contract, exceeds Rs. 2, 50, 000/-. • No tax deduction required where the location of supplier and place of supply is different from the State of the registration of the recipient (inter-state supplies) 30

TDS • For purpose of deduction of TDS, the value of supply is the

TDS • For purpose of deduction of TDS, the value of supply is the amount excluding the GST in the invoice- no TDS on the CGST, SGST or IGST component of invoice. • TDS has to be remitted within 10 days from the end of the month in which tax is deducted to the appropriate government (Central Tax to Central Government and State Tax to State Government) 31

TDS Procedure • Deductor (DDO) will need to get compulsorily registered under Section 23

TDS Procedure • Deductor (DDO) will need to get compulsorily registered under Section 23 (Form GST REG-07) ; • For registration PAN is not required and TAN from Income Tax would suffice • TDS deducted needs to be remitted by the 10 th day of the month succeeding the month in which TDS was collected. • GSTR 7 Return also needs to be filed in by the 10 th of next month • TDS Certificate needs to be issued to the Deductee within 5 days of remitting TDS • The amount deposited as TDS will be reflected in the electronic cash ledger of the supplier 32

TDS • Failure to issue TDS Certificate attracts penalty of Rs. 100 per day

TDS • Failure to issue TDS Certificate attracts penalty of Rs. 100 per day with maximum of Rs. 5000. • Non-deduction / short deduction / nonpayment or short payment of TDS is on offence under the act for which a minimum penalty of Rs 10000/- is prescribed –upto amount of TDS not deducted, short deducted, not deposited 33

TDS • Any amount deducted as TDS and reported in GSTR – 7 will

TDS • Any amount deducted as TDS and reported in GSTR – 7 will automatically reflect in electronic cash ledger of the deudctee available to the deductee for payment of GST • Refund of the excess amount deducted: • Refund of erroneous excess TDS deducted is possible to deductor, subject to Section 54 and Refund Rules • No refund if amount reflected in the Electronic Cash Ledger of the deductee 34

Registration Compulsory Registration for Each State where business situated Option to take multiple registration

Registration Compulsory Registration for Each State where business situated Option to take multiple registration for each business vertical within same state

Registration (contd. ) • Liability to be registered Ø Every person who is registered

Registration (contd. ) • Liability to be registered Ø Every person who is registered under existing indirect laws being subsumed in GST Ø Every person whose turnover in a year exceeds Rs. 20 lakhs ( Rs. Ten lakhs for special category states) Ø Voluntary registration permitted even if no liability. 36

Mandatory Registration (irrespective of threshold) Persons making inter-State taxable supply Persons required to pay

Mandatory Registration (irrespective of threshold) Persons making inter-State taxable supply Persons required to pay tax under reverse charge Casual and non-resident taxable persons E-Commerce operator Those required to collect TDS Persons supplying goods through e-commerce operator Persons making supplies on behalf of a registered taxable person § Input Service Distributer § Every person supplying online information and data base access or retrieval services from a place outside India to a person in India, other than a registered person § § § § 37

Registration… (contd. ) • Registration ( GSTIN) to be granted State-wise. • PAN mandatory

Registration… (contd. ) • Registration ( GSTIN) to be granted State-wise. • PAN mandatory for GSTIN – except for NRTP- here Passport – TDS Deductor-TAN • Separate registration permitted for multiple business verticals in a State – SEZ Developer/Units to compulsorily register as business vertical • Registration deemed to be granted if objection by way of Notice is not communicated within the time of 3 working days

Returns Process under GST 39

Returns Process under GST 39

Why Returns? • Means of compliance verification • Mode for transfer of information to

Why Returns? • Means of compliance verification • Mode for transfer of information to tax administration • To declare tax liability for a given period • Providing necessary inputs for taking policy decision 40

Features of Tax Returns in GST Ø Based on transactions – Invoice based ØDesigned

Features of Tax Returns in GST Ø Based on transactions – Invoice based ØDesigned for system based matching of Input Tax Credit and other details (import, export etc. ) Ø Auto-population from details of outward supplies Ø Auto-reversal of ITC in case of mismatch Ø Concepts of ledgers – cash, ITC and liability Ø No revised returns – changes through rectifications and reported in the return for the month in which error detected 41

GST Returns: GSTR 1 • Statement of Outward Supplies ØWhat information? ØBasic details To

GST Returns: GSTR 1 • Statement of Outward Supplies ØWhat information? ØBasic details To be filed by 10 th of the next month- can be easily done by a computer ØInvoice level details ; GSTIN of recipient ØInvoice details – Number, date, HSN/SAC, …. Value, Taxable value… ØTax – IGST, CGST, SGST/UTGST – Rate and Tax amount • What is not required to be uploaded? Ø Invoice level information for B 2 C invoice < Rs. 2. 5 lacs ØConsolidated information of all B 2 C supplies sufficient ØHSN/SAC …. . < Rs. 1. 5 crore 42

GST Returns: GSTR 2 Information Flow for auto-population/ self feeding TCS/ TDS GSTR-6 A

GST Returns: GSTR 2 Information Flow for auto-population/ self feeding TCS/ TDS GSTR-6 A ISD GSTR 1 s of the suppliers GSTR 2 • To be Fed by Taxpayer • Reverse Charge receipts from unregistered supplies • Imports GSTR 5 Non Resident TP 43

GST Returns: GSTR 3 • Auto-populated based on GSTR-1 and GSTR-2 • Outward Supplies

GST Returns: GSTR 3 • Auto-populated based on GSTR-1 and GSTR-2 • Outward Supplies – – All B 2 B inter and intra state supplies All B 2 C inter-State supplies above the value of Rs. 2. 5 lacs Exports Revision of tax of previous periods • Inward Supplies – – Inter and intra state supplies received Imports Amendment to tax of previous periods Credit to ITC Ledger 44

GST Returns: Standardised forms/ certificates • Form GSTR-1 -Details of outward supplies of taxable

GST Returns: Standardised forms/ certificates • Form GSTR-1 -Details of outward supplies of taxable goods or services effected • Form GSTR-1 A Details of outward supplies as added, corrected or deleted by the recipient • Form GSTR-2 Details of inward supplies of taxable goods and/or services claiming input tax credit • Form GSTR-2 A Details of inward supplies made available to the recipient on the basis of FORM GSTR-1 furnished by the suppliers • GSTR-3 Monthly return on the basis of finalization of details of outward supplies and inward supplies • GSTR-3 A Notice to a registered taxable person who fails to 45 furnish return

GST Returns: Standardised forms/ certificates (contd. ) • Form GSTR-4 Quarterly Return for composition

GST Returns: Standardised forms/ certificates (contd. ) • Form GSTR-4 Quarterly Return for composition Taxable persons • Form GSTR-4 A Details of inward supplies made available to the recipient registered under composition scheme on the basis of FORM GSTR-1 furnished by the supplier • Form GSTR-5 Return for Non-Resident foreign taxable person • Form GSTR-6 ISD return • Form GSTR-6 A Details of inward supplies made available to the ISD recipient on the basis of FORM GSTR-1 furnished by the supplier • Form GSTR-7 Return for authorities deducting tax at source • Form GSTR-7 A TDS Certificate 46

GST Returns: Standardised forms/ certificates (contd. ) • Form GSTR-8 Details of supplies effected

GST Returns: Standardised forms/ certificates (contd. ) • Form GSTR-8 Details of supplies effected through ecommerce operator and the amount of tax collected • Form GSTR-9 Annual return • Form GSTR-9 A Simplified Annual return by Compounding taxable persons registered under section 8 • Form GSTR-9 B Reconciliation Statement • Form GSTR-10 Final return • Form GSTR-11 Details of inward supplies to be furnished by a person having UIN 47

GST Returns: Correction in returns • No Revision of returns Ø As per the

GST Returns: Correction in returns • No Revision of returns Ø As per the return taxes have already been paid and fund transfers already settled Ø No significance as the basis now is individual transaction • All changes through rectifications reported in subsequent returns • If an invoice has been left out in GSTR-1 or GSTR-2 : can be uploaded in subsequent returns but to pay interest for any tax not paid on this account • If any invoice has been wrongly entered but remains unmatched – can be amended in subsequent returns 48

GST Returns: Correction in returns • Post transaction changes to be done through debit

GST Returns: Correction in returns • Post transaction changes to be done through debit or credit notes • Other details like B 2 C supplies can be amended in subsequent returns • Delayed uploading coupled with payment of interest • All changes, credit or debit notes to be carried out before September of the next financial year Ø To enable any auto-reversal before Annual Return 49

GST Returns: Annual Return • Annual summary of all transactions • Accounts to be

GST Returns: Annual Return • Annual summary of all transactions • Accounts to be certified by Chartered Accountant etc. if turnover more than Rs. 2 Crore • Personal Details • Details of Expenditure Ø Purchases – goods/services – intra/inter state Ø Imports • Details of Income Ø Supplies – goods/services – intra/inter state Ø Exports • Not to be filed by ISD, TDS Deductor, Casual Taxpayer, and Non resident taxpayer 50

GST Returns: First and Final Returns • First Return ØRequired when the liability to

GST Returns: First and Final Returns • First Return ØRequired when the liability to register and pay tax arose before grant of registration • Final Return ØOn closure of business ØReversal of credit on goods in stock 51

Refunds • • • Time limit for claiming refund enhanced 2 years from the

Refunds • • • Time limit for claiming refund enhanced 2 years from the relevant date. Refund of Input tax Credit allowed in case of exports or where the credit accumulation is on account of inverted duty structure. Refund shall be granted within 60 days from the date of receipt of application. In case of refund claim on account of exports, 90% of the claim can be given immediately within seven days on provisional basis. No need to furnish evidence against unjust enrichment if the refund claim is less than Rs. 2 lakhs. Self-certification would suffice. Interest payable after 3 months from the date of receipt of application till the date of refund. 52

Advance Rulings • An applicant can apply for advance ruling even before taking up

Advance Rulings • An applicant can apply for advance ruling even before taking up a transaction (proposed supply of goods or services) or in respect of a supply which is being undertaken. ØThe only restriction is that the question being raised is already not pending or decided in any proceedings in the case of applicant. • Advance ruling to be issued within 90 days. • Advance ruling shall be binding on concerned officer or • jurisdictional officer in case of applicant and only on the applicant Advance ruling to continue unless there is a change in law or facts.

Issues on which ruling can be asked? Classification Applicability of a notification Determination of

Issues on which ruling can be asked? Classification Applicability of a notification Determination of time and value of supply Admissibility of input tax credit of tax paid or deemed to have been paid • Determination of the liability to pay tax on any goods or services under the Act • Whether applicant is required to be registered under the Act; • Whether any particular thing done by the applicant with respect to any goods or services amounts to or results in a supply of goods or services • • 54

Transitional Provisions • Existing taxpayers to be issued Provisional Registration valid for 6 months

Transitional Provisions • Existing taxpayers to be issued Provisional Registration valid for 6 months (extendible) Ø Upon furnishing of prescribed information, final RC to be granted • Cenvat credit/VAT carried forward in return allowed as ITC under GST • Un-availed Cenvat/VAT credit on capital goods, not carried forward in return, shall also be allowed as ITC under GST • Eligible duties and taxes in respect of inputs held in stock permissible as credit to registered persons

Transitional Provisions • Eligible duties and taxes in respect of inputs held in stock

Transitional Provisions • Eligible duties and taxes in respect of inputs held in stock available as credit to taxable person switching over from compounding • 40%/60% Deeemed credit on stocks if tax invoice not available (proof of procurement is mandatory) • Transitional credit available generally only if both laws permit and invoice is not more than 12 months old • No tax payable on goods removed/despatched earlier but returned within 6 months after the introduction of GST • Proceedings under earlier law to be conducted under old law 56

Role of GSTN: The IT Backbone of GST a. 70 to 80 Lakhs taxpayers;

Role of GSTN: The IT Backbone of GST a. 70 to 80 Lakhs taxpayers; b. 260 to 300 Crores B 2 B invoice data per month c. More than 120, 000 tax officials to work d. Monthly filing of returns e. Credit of ITC f. Creation of Business Intelligence reports and Analytics g. Both Central and States Tax Departments • • Strong IT Infrastructure Independent Flexibility of Pvt Sector Strategic Control of Govt 57

Resource Material • CGST /IGST/ UTGST Acts • Ten Rules on Valuation, Compensation, Returns,

Resource Material • CGST /IGST/ UTGST Acts • Ten Rules on Valuation, Compensation, Returns, Registration, Composition, Invoice, Payment, Refund, Transition & e-waybill • Various Formats of returns/ registration • FAQs on GST • Migration – – GSTN FAQs on migration FAQs on Migration to GST by CBEC Step by Step guide to taxpayers Migration PPT 58

Resource Material- Links • http: //www. cbec. gov. in/htdocs-cbec/gst • http: //www. cbec. gov.

Resource Material- Links • http: //www. cbec. gov. in/htdocs-cbec/gst • http: //www. cbec. gov. in/htdocscbec/migration-to-gst. . . for migration related information • https: //www. gst. gov. in/ • http: //www. gstn. org/ • http: //tutorial. gst. gov. in

Help lines • www. gst. gov. in ØHelpline number: 0124 -4688999 Øhelpdesk@gst. gov. in

Help lines • www. gst. gov. in ØHelpline number: 0124 -4688999 Øhelpdesk@gst. gov. in • www. aces. gov. in : for migration of existing assessees and getting provisional ID & Password • cbecmitra. helpdesk@icegate. gov. in : for migration issues ØHelpline toll free number: 1800 -1200 -232 • CBEC GST Mobile App at Google Play Store

Thank You for your time and patience! Yogendra Garg IRS ADG Co. E NACIN

Thank You for your time and patience! Yogendra Garg IRS ADG Co. E NACIN y. garg@nic. in +919868052092 61