audit u/s 35(5) of the cgst act 2017 · accountant. u/s 35(5) having appointed by auditee having...
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AUDIT U/S 35(5) OF THE CGST ACT 2017
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INTRODUCTION While the GST regime emphasizes self-assessment processes, the complexities involved in it make one wary.
At this Juncture, it is clear that the GST law is not presently simple enough for an assesse to compute his total and taxable turnovers and duly report the same.
In order to ensure effective compliance with the various GST Provisions and to ensure performance of audits in a systematic, transparent and fair manner, audit provisions have been incorporated under the GST Acts( s)/ Rules.
Definition of audit under the CGST ACT
2017
In terms of Section 2(13) of the CGST Act, 2017, “audit” means the examination of
records, returns and other documents
Maintained or furnished
by the registered person under this Act or the rules made thereunder or under any other law for the time being in force
to verify the correctness of
turnover declared,
taxes paid,
refund claimed and
input tax credit availed, and
to assess his compliance
with the provisions of this Act or the rules made thereunder.
POINTS FOR Discussion
• Now issues arises
• In view of correctness of provisions or compliances(refer audit definition 2(13)- Whether Gst Audit is an Audit or is it a certification ?
• Whether Audit shall be carried out on test check or entire checking?
• What is the ceiling limit by ICAI for Gst Audit (No of Gst audit to be carried out) ?
• If there is a wrong audit/certification will auditor be liable to get fine/penalty/punishment under the Gst?
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AUDIT Vis a vis certification
• The difference between term “Certificate” and “Report” is explained by ICAI in Para No.2.2 of its “Guidance Note
• on Audit Report and Certificates for Special Purpose” published in 1984 (revised 2016) as under;
• • “A Certificate is a written confirmation of the accuracy of facts stated therein and does not involve any estimate or opinion.”
• • “A Report, on the other hand, is a formal statement usually made after an enquiry, examination or review of specified matters under report and includes the reporting auditors opinion thereon”
• Chartered Accountant assures factual accuracy of contents to the users of certificate
• Chartered Accountant, through his audit report, expresses his opinion on truth and fairness of contents
• GST Audit Report is not an expression of opinion but it certifies the correctness of annual return filed by the auditee
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Recommended ICAI 9 © • Para 2 2ND Line : “My/Our responsibility is to express a
view on the correctness/completeness and accuracy of the returns filed”
• Para 3 2nd Line :-” We plan and perform the audit to obtain reasonable assurance about whether the said accounts , records and statements are free of material misstatement . The audit includes examining on a test check basis, evidence supporting the amounts and disclosure in this audit report.
• Para 5 1st Line :- The following comments are subject to my/our observations and comments about non-compliance , short comings and deficiencies int the returns filed
• Now house has to decide Whether GST report tilts more towards certificate or audit report ?
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Test check vis a vis Full check • GST Auditor to affirm that correctness of (source
Recommended ICAI 9 C and section 2(13)) slide 1
• (1) Computation of tax liability of Goods and / or services
• (2) Returns including Annual Return
• (3) Books of accounts and other related records and register
• (4) Aggregate of Outward supplies
• (5) Aggregate of Inward Supplies
• (6) Exemption and abatements claimed
• (7) Amount of credits determined as ineligible
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Test check vis a vis entire check -slide 2
• (8)Classification of outward supplies, rate of tax and computation of output tax (including that of inward supplies liable to tax on reverse charge basis)
• (9) Amount of Inuput tax paid on inward supplies and deduction of input tax credit claimed
• (10) Various Reconciliation for Gst Audit
(Issue :- Whether Full checking should be done in case of an Auditor who is not a GST Consultant to Auditee for routine matters?
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Selection of Effective and Sufficient Sample –SA 530 OF ICAI
• The auditor should design and select an audit sample, perform audit procedures thereon, and evaluate sample results so as to provide sufficient appropriate audit evidence
• Selection of sample will depend on following situation
• Q1- How GST was implemented?
• Q2-Present GST compliance whether manual or automated?
• Q3-What are the report available in system for Gst ie.
Support of accounting software/vendor Validation
of system generated reports
• Q4-Whether organisation has GST compliance team & if yes knowledge thereof ?
• Q5-Materiality/ risk to be determined based on ratio analysis
• Q6.Tolerable Misstatement:-A monetary amount set by the auditor in respect of which the auditor seeks to obtain an appropriate level of assurance that the monetary amount set by the auditor is not exceeded by the actual misstatement in the population(Selection of Top 10 parties which covers 70% of business)
• Q7-Non Sampling Risk-The risk that the auditor reaches erroneous conclusion for any reason not related to sample risk(Export only 10 exports ,than no sampling ull check)
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Selection of Effective and Sufficient Sample –SA 530 OF ICAI
• Sample Selection Method
• 1.Random Selection(applied through random number generators, for selection random number tables)
• 2. Systematic Selection:- in which the number of sampling units in the population is divided by the sample size to sampling interval for example 50, and having determined a starting point within the first 50, each 50 the sampling unit thereafter is selected.
• 3. Monetary Unit Sampling is a type of Value-weighted selection in which Sample Size, selection and evaluation results in a conclusion in monetary amounts
• 4.Haphazard selection, in which the auditor selects the sample without following a structured technique Although no structed technique is used, the auditor would nonetheless avoid any conscious bias or predictability(for example, avoiding difficult to locate items or always choosing or avoiding the first or last entries on a page) and thus attempts to ensure that all items in the population have a chance of selection.
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QUOTE
• “The skill of an accountant can always be ascertained by an inspection of his working papers.”—
• Robert H. Montgomery, Montgomery’s Auditing, 1912
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Ceiling limit of Gst audit under the CGST 2017
• Company’s Act 2013(20) :-As per Section 141 (3)(g) The Audit “ The Limit is 20 company audit per person
• Tax Audit(60) :-The limit is 60 Tax Audit per Person (In the Council General Guidelines, 2008, the Council Guidelines No.1-CA(7)/02/2008, dated 8th August,2008, in Chapter VI "Tax Audit assignments under Section 44AB of the Income-tax Act, 1961 ", in Explanation given in Para 6.1, in sub-para(a) and sub-para(b), the figure "45" be substituted with the figure "60". )
• GST Audit Under CGST ACT 2017(NO Limit)-Maximum specified Number of audit is not defined.
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Appointment as an Auditor for GST 1.Whether statutory auditors can be appointed as GST auditors ?
• Neither a ban under GST legislation nor under CA regulations
• Whether restrictions for appointment of statutory auditor where fee for other services is more than the statutory audit fee is applicable to GST auditors (Chapter IX of ICAI Guidelines) ?
2. Whether auditee can appoint joint auditors to conduct GST audit ?
• Neither a ban in GST legislation nor under CA regulations
• Joint auditors will have to sign the audit report
• If the auditors have different opinion, they should issue separate audit report [Refer SA 299]
3. Whether auditee has to appoint different auditors for his different registration or he can appoint single auditor for all its registrations ?
• It is at the discretion of the auditee
Issue:- Whether Registered Person can appoint Joint GST Auditor ,If Yes who will submit the Gst Report ?
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DISQUALIFICATION FOR APPOINTMENT AS AN AUDITOR FOR GST-ICAI Code of
conduct • Member in a part time practice is not entitled to perform attestation function (242nd Council meeting resolution)
• An employee of a CA firm can have COP but is not eligible to perform
attestation function
• Only proprietor or partner of CA firm can perform attestation function
• A chartered accountant having substantial interest in the auditee cannot take up the audit (Clause 4 of Part I of the Second Schedule the Chartered Accountants Act, 1949)
• Refer Appendix 9 of CA Regulations 1988 for the meaning of term
‘Substantial interest’
• A chartered accountant who is responsible for writing or the maintenance of books of account of the auditee should not audit such auditee (Clause (4) of Part I of the Second Schedule to the Act).
• Internal auditor of an auditee cannot be appointed as his tax auditor (281st Council Meeting Resolution).
• A chartered accountant should not accept the GST audit of a person to whom he is indebted for more than Rs.10,000/- (Chapter X of ICAI Guidelines)
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Code of conduct –ICAI some relevant provisions
• A chartered accountant cannot charge professional fees based on a percentage of profit or which are contingent upon the finding or the result of the professional employment. (Clause 10 of part I of the First Schedule to the CA Act, 1949).
• NOC:-Communication with the previous auditor is necessary in terms of Clause (8), Part – I of the First Schedule to the Chartered Accountants Act, 1949.
• Is it necessary to communicate with earlier VAT auditor (wherever applicable) for accepting audit for F.Y.
2017-18?
• Since both these audits are under different statutes, this may not be necessary
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Coverage FOR INITIAL DISCUSSION
• TYPES OF GST AUDIT
• WHY GST AUDIT IS REQUIRED
• RELEVANT STATUTORY PROVISIONS OF GST AUDIT
• APPLICABILITY OF TURNOVER UNDER GST AND WHEHTER THRE IS NEED TO CONDUCT GST AUDIT STATE WISE
• FAQ-ON GST ANNUAL RETURN AND AUDIT
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The Following 3 types of audits are prescribed under the GST Laws:
1] The 1st type of audit is called GST AUDIT is to be done by a chartered accountant or a cost
accountant. U/S 35(5) having appointed by auditee having turnover above prescribed limits
2] 2nd type of audit is called Department Audit(Audit by tax authorities) is to be done by the commissioner or any officer authorised by him in terms of section 65 of the CGST Act, 2017 read with section 20 of the IGST Act, 2017 and section 2 of UTGST Act, 2017.Commissioner can authorise Audit U/s 65 conducted based on the risk profile Lot of data with GSTN data analytics which will indicate patterns etc. Expected that there will be no audit for individual and sole proprietor assessee within Tax Audit Limits
3] The 3rd type of audit is called the Special Audit to be carried out by Chartered Accountant / Cost Accountant nominated by GST authorities and audit to be conducted under instructions of GST
authorities and is to be conducted under the mandate of section 66 of CGST Act,2017 read with Rule 102 of CGST Rules, 2017.Section 66-could in invoked in Scrutiny, enquiry, investigation-Value declared less or ITC not normal ,fraud , collusion , will mis-statement or suppression of facts suspected . Commissioner may direct the assessee to get books of accounts audited by Chartered Accountants or Cost Accountants .Cost of Audit will be borne by commissioner.
AUDIT UNDER GST LAWS – RELEVANT STATUTORY PROVISIONS
Class of registered persons liable for GST Audit:
Section 35 (5) of The CGST Act 2017 “Every registered person whose turnover during a financial year exceeds the prescribed limit (of RS. 2 crore ) shall get his accounts audited by a Chartered Accountant or a Cost Accountant”
Rule 80 (3) of the CGST Act 2017-Annual Return:- Every registered person whose aggregate turnover during a financial year exceeds two crore rupees shall get his accounts audited as specified under sub-section (5) of section 35 and he shall furnish a copy of audited annual accounts and a reconciliation statement, duly certified, in FORM GSTR-9C, electronically through the common portal either directly or through a Facilitation Centre notified by the Commissioner.
Section 35(5) contain word turnover and
Rule 80 (3) contain word Aggregate Turnover
It is to be noted that Turnover is not defined in CGST ACT 2017 However Section 2(6) defines “Aggregate Turnover” and Section 2(112) defines “Turnover in state” or “turnover in Union Territory”
AUDIT UNDER GST LAWS – RELEVANT STATUTORY PROVISIONS Class of registered persons liable for GST Audit:
• The phrase ‘aggregate turnover’, as defined in Section 2(6) “aggregate turnover” means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both and inter-State supplies of persons having the same Permanent Account Number, to be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated tax and cess;
It would mean the all-India PAN based turnover for the financial year (inclusive of exports, inter-State supplies, exempt supplies, stock transfers, etc. but exclusive of GST and compensation cess). And Term Financial Year is not defined in the Act or Rules
A Careful perusal of above-definition reveals that first of all it is an exhaustive definition because the expression ‘Means” [ and not include] has been used.
[1] Value of all Taxable Suppliers. The term “ Taxable Supply” Means a supply of goods and services or both which is leviable to tax under the GST Acts.
2] Value of all exempt Supplies .The Term Exempt Supply Means supply of any goods and services or both which attracts nil rate of tax or which may be wholly exempt from tax under section 11 of the CGST Act/ SGST Act or under section 6 of the Integrated Goods and services Tax Act, Examples of ‘ Exempt Supply” are –Live bovine animals, Live swine, Live Fish, Melons, services by a Foreign Diplomatic Mission Located in India, service by way of admission to a Museum, National Park, Wildlife Sanctuary.
It is also worth highlighting here that the term “ exempt supply “ includes non- taxable supply also. The term ‘ Non-Taxable Supply “ means a supply of goods and service or both which is not leviable to tax under the CGST Act/ SGST Act or under the IGST Act.
Examples of non- taxable supply are Alcoholic Liguor for Human Consumption and five specified Petroleum Products i.e. Petroleum Crude, Motor Spirit ( Petrol) ,High Speed Diesel [ HSD] Natural Gas and Aviation Turbine Fuel [ ATF]
3] Value of Export of Goods and service or both and
4] Supplies to branches in other states having same permanent account Number [PAN]
However, following Exclusions shall be made while computing the value of Aggregate Turnover.
i] Value of Inward supplies on which tax is payable by a person on Reverse Charge basis. Examples of Supplies subject to Reverse Charge are –service provided by way of Sponsorship to any Body Corporate or Partnership Firm, services supplied by a Director of a company or Body Corporate to the said company or Body Corporate.
Ii] Central Tax, State Tax, Union Territory Tax, Integrated Tax and Cess.
Definition of turnover In state or union territory
(112) “turnover in State” or “turnover in Union territory” means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis) and exempt supplies made within a State or Union territory by a taxable person, exports of goods or services or both and inter-State supplies of goods or services or both made from the State or Union territory by the said taxable person but excludes central tax, State tax, Union territory tax, integrated tax and cess;
Issue:- For Gst Audit Which turnover will be considered either 2(6) “aggregate turnover “ or 2(85)“Turnover in State “?
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ASSESSEES WHOSE ACCOUNTS ARE TO BE AUDITED
The threshold turnover limit of Rs.2 crore on pan India Basis.
1] Applicability of Turnover Limit for the period 01.07.2017 to 31.03.2018.
Since GST has been implemented with effect form 01.07.2017. As a consequence, during the financial year 2017-2018, GST remained in fore only for a period of nine months from 01.07.2017 to 31.03.2018 . Now , the question which arises here, is whether the above mentioned annual turnover limit of Rs. 2 crore for audit purposes shall apply proportionately in the given case for a period of nine months or whether the foregoing limit shall apply as it is for a period of nine months? A. Suitable and clarification form the Government ( s) is Required in this regard is awaited.
The ICAI has suggested a shorter audit for smaller assessees keeping in mind the cost and complexity of present law.
2] Conduct of GST Audit state- wise
It is worth emphasizing here that for audit purposes the turnover limit of Rs. 2 crore shall be computed by including turnover in all the states or Union territories, as the case may be i.e. on all India basis under same PAN, Further more, the foregoing threshold turnover limit of Rs. Two Crore is same for assesses in all the states and union Territories.
Thus, it can be safely inferred that no separate threshold limit has been specified for special category states
Since each of the state GST Acts also has the provisions relating to GST Audit, it appears that the GST audit shall be conducted state- wise.
It also appears that only for the purpose of determining the eligibility of the assesse who is required to get its accounts audited by a chartered accountant or a cost accountant, the all India based turnover shall be considered .
However, it shall be better if a suitable clarification from the Government (s) is issued in this regard at the earliest.
ISSUE :- Whether turnover of 2 crs will be counted from 01.07.2017 OR 01.04.2017?
Aggregate Turnover –issues related to GST Audit
• Issues:-
(1) Registered Person Turnover in Financial Statement is Rs.1.90 crs and in Returns is Rs. 2.10 crs?
(2)Registered in 11 states :-Entity Pan India aggregate turnover is 9crs, Maharashtra Turnover is 4 crs, other 10 each states 50 lakhs
(3) Registered in 5 states :- Entity Pan India aggregate turnover is 2.50 crs,turnover in Maharashtra 50 lakhs , Gujrat 60 lakhs,Delhi 20 lakhs,Rajasthan 100 lakhs and Punjab 20 lakhs
(4) Registered in 2 States=Entity Pan India Aggregate
Turnover is 3.20 lakhs=Rajasthan 3 crs , Sikkim 20 lakhs
(5) Registered in Maharashtra and having branch in Punjab as it deals with in exclusively exempt supply =Entity Pan India Turnover is 25 crs =Maharashtra 15 crs and turnover of exclusivery exempt supply in Punjab is Rs.10 crs
• Issue -Whether audit is required to be done each state ?
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Aggregate Turnover –issues related to GST Audit
• Issues:-
• Whether turnover means turnover as per accounts or turnover declared in GST returns?
• The turnover definition speaks of value of the supplies
• The term ‘value’ is defined u/s 15 of the Act read with Rule 27 to 35 of CGST Rules
• Late filing fees for delay in submission of annual return is computed as percentage to turnover in the State
• Example – Inter state branch transfers do not form part of turnover reflected in accounts. However, it is a
supply liable to tax under GST legislation
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Aggregate Turnover –issues related to GST Audit
Issues:- Whether turnover means how books of accounts have been maintained?
*Maintenance of Books of Accounts will depends on (a)Constitution of Entity,(b)Entity governed by specific law or not governed by specific law © Books as per Specific Law(d) Cash and Mercantile Book keeping
Issues :- Which act will govern maintenance of books of accounts?
*Companies Act read with Accounting Standard
Income tax Act read with ICDS
GST Act
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aggregate Turnover –issues related to gst audit
• 2.How the turnover will be calculated for following industries (a) Forex dealers and money changer(Rule 32(2)),Air Travel Agents(Rule 32(3)),Life Insurance companies(Rule 32(4)),Dealer in second hand goods(Rule 32(5))?
• * Rule 32 prescribes presumptive valuation for above supplies .In GSTR 1 Return (Row no 4-Taxable outward supplies),the registered person is obliged to declare value as per invoice raised and also taxable value of such invoice.-Issues is Whether value of supply would be taxable value of the supply (presumptive value of supply)or invoice value of supply(actual turnover)?
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Aggregate Turnover –issues related to GST Audit • Presumptive Value in Respect of Specified Supplies
• (1) Dealer in foreign currency
• Turnover as per books is the gross value of currency
exchanged
• Turnover under GST would be the margin as prescribed
under Rule 32(2) of CGST Rules
• (2) Air travel agent
• Turnover as per books is gross value of air tickets sold
• Turnover under GST would be 5% of basic fare for domestic travel
tickets and 10 % for international travel tickets [Rule 32(3) of
CGST Rules]
• (3) Life insurance business
• Turnover as per books is gross premium received
• Turnover under GST would be prescribed percentage of
premium received [Rule 32(4) of CGST Rules]
• (4) Dealer in second hand goods
• Turnover as per books is sale value of goods
• Turnover under GST would be margin prescribed under Rule
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FAQ:-GST annual return and audit
• 1. What is GSTR-9?
• Answer :- GSTR 9 is an annual return(section 44(1)) to be filed once in a year by the registered taxpayers under GST including those registered under composition levy scheme.
• RULE 80(3). Annual return.-(1) Every registered person, other than an Input Service Distributor, a person paying tax under section 51 or section 52, a casual taxable person and a non resident taxable person, shall furnish an annual return as specified under sub-section (1) of section 44 electronically in FORM GSTR-9 through the common portal either directly or through a Facilitation Centre notified by the Commissioner: Following submission to be made;-
(a) Annual return u/s 44(1),
(b) Audited annual accounts / financial statements
© Reconciliation statement u/s 44(2), reconciling the value of supplies
declared in the return furnished for the financial year and audited
annual financial statements(GSTR 9C-AUDIT REPROT)
• It consists of details regarding the supplies made and received during the year under different tax heads i.e. CGST, SGSTand IGST. It consolidates the information furnished in the monthly/quarterly returns during the year.
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Faq:- gst annual return and audit
• 2.Who should file GSTR-9 ?
• Answer :- Section 44 (1) mandate All the registered taxable persons under GST must file GSTR 9(Annual Return). However, following persons are not required to file GSTR 9
• Casual Taxable Person
• Input service distributors
• Non-resident taxable persons
• Persons paying TDS under section 51 of GST
Act.
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Continuation of previous slide • Section 35(5) mandates audit of every registered
person having turnover exceeding Rs.2 Crs.
• Section 44 (2) Every registered person who is required to get his accounts audited in accordance with the provisions of sub-section (5) of section 35 shall furnish, electronically, the annual return under sub-section (1) along with a copy of the audited annual accounts and a reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year with the audited annual financial statement, and such other particulars as may be prescribed.
• As per section 44(1) Casual Taxable person and Non-resident taxable person are not required to file annual return CA AVINASH LALWANI-ONLY FOR EDUCTION PURPOSE
Issue :-
1.Whether causal or non-resident taxable person (having turnover exceeding Rs.2 crs) is required to get accounts audited, file audit report and Annual Return?
2. Whether person dealing exclusively in land or completed building is liable to Gst Audit?
3.Whether person dealing exclusively in securities is liable to GST Audit?
(Schedule III items ,Exempt or non taxable turnover entity is not liable to take registration hence GST audit is not required)
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FAQ:-gst Annual return and audit
• 3. What are different types of return under GSTR-9 ?
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GSTR 9 GSTR 9 should be filed by the regular taxpayers filing GSTR 1, GSTR 2, GSTR 3.
GSTR 9 A GSTR 9A should be filed by the persons registered under composition scheme under GST.
GSTR 9 B GSTR 9B should be filed by the e-commerce operators who have filed GSTR 8 during the financial year.
GSTR 9 C GSTR 9C should be filed by the taxpayers whose annual turnover exceeds Rs 2 crores during the financial year. All such taxpayers are also required to get their accounts audited and file a copy of audited annual accounts and reconciliation statement of tax already paid and tax payable as per audited accounts along with GSTR 9C. NOW ICAI HAS RECOMMENDED 9D ALONG WITH 9C
Faq:- gst annual return and audit
• 4. When is GSTR-9 due ? Section 44(1) mandates Registered Entity to submit GSTR-9 on or before 31st December of the subsequent financial year.For instance for FY 2017-18, the due date for filing GSTR 9 is 31st December, 2018.
Issues:-
1.Whether annual return and/or reconciliation can be revised subsequently?
2. Can one file annual return and annual accounts without filing audit report(GSTR 9C-Audit report)?
3.Is it the Registered persons(auditee’s) responsibility to submit prescribed documents and not that of the auditor’s?
4. In case of an entity having multiple registrations, the audited financial statement would mean financial statement of the entity as a whole or it would mean audited financial statements of registered establishments for which annual accounts are being filed ?
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Faq:- gst annual return and audit
5. What is the Penalty for the late filing of GSTR-9 return ?
Section 47 (2) of CGST ACTLate fees for not filing the GSTR 9 within the due date is Rs. 100 per day per act up to a maximum of an amount calculated at a quarter percent of the taxpayer turnover in the state or union territory. Thus it is Rs 100 under CGST & 100 under SGST, total penalty is Rs 200 per day of default.
Issue:
1.Whether Penalty and late fee are different?
2. Whether Late fees imposed under CGST AND SGST will also be imposed under IGST?(refer viii-returns other than late fee of Section 20 of IGST ACT)
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Faq:- gst annual return and audit
Submission of GST Audit Report :
Section 35(5) The registered person shall submit a copy of the audited annual accounts, the reconciliation statement (reconciling the value of supplies declared in the return furnished for the financial year with the audited annual financial statement), in Form GSTR-9C and other documents as may be prescribed, on the GST Common Portal. The detailed Rules/Guidelines regarding the audit procedures and the Audit Report Format, etc. are yet to be prescribed/notified.
Section 44 (2) Every registered person who is required to get his accounts audited in accordance with the provisions of sub-section (5) of section 35 shall furnish, electronically, the annual return under sub-section (1) along with a copy of the audited annual accounts and a reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year with the audited annual financial statement, and such other particulars as may be prescribed.
Issue :- Who is liable to furnish Audit report to GST Department?
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Penal provision for non submission of gst audit report by auditee
• No specific provision prescribing penalty for not getting accounts audited or non-filing of audit report in FormNo. GSTR 9C
• Section 125 of the Act provides for residuary penalty of Rs. 25,000/- for contravention of any provision of the Act or Rules for which no penalty is prescribed
General penalty U/s. 125 can be levied for:
• Non-submission of Annual Accounts; and
• Non-filing / delayed filing of GSTR 9C
• Similar penal provision are there in State GST Act (Section 125 of MGST ACT) and also under IGST Act. (point xxi-offence and penalties Section 20 of IGST ACT and last para of section 20 of IGST ACT “Provided also that for the purposes of this Act, the value of a supply shall include any taxes, duties, cesses, fees and charges levied under any law for the time being in force other than this Act, and the Goods and Services Tax (Compensation toStates) Act, if charged separately by the supplier” )
ISSUE :- Would this mean that there will be separate penalties and late filing fees (under 3 different Acts) for one offence?
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Penal Provisions • Relevant extract of Section 122(3) of Act: • • Any person who –
• (a) aids or abets any offences specified in section 122(1) of the Act
• (b) …. • (c) ….. • (d) fails to appear before officer of Central Tax, when
issues with a summons for appearance to give evidence or produce a document in inquiry
• (e) …… • Shall be liable to penalty which may extend to Rs.
25,000/-
Issue:- What is aids or abets as referred in (a) above?
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• GST AUDIT UNDER SECTION 35(5)
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COVERAGE FOR GST AUDIT
• GST AUDIT PLAN
• GST AUDIT PROGRAM
• ICAI SUGGESTED FORMAT FOR
• GST 9 (D) VERSION 1-FOR REGISTERD PERSON WHO IS HAVING TURNOVER BELOW 10 CRS
• GST 9 (D) VERSON 1-FOR REGISTERD PERSON WHO IS HAVING TURNOVER BELOW 10 CRS
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PREPARATION FOR GST AUDIT
The GST Audit would be undertaken for the first time this year, and, therefore, demands significant preparation from both the auditor and the auditee. While the statutory audit (under the Companies Act, 2013) and tax audit (under the Income Tax Act, 1961) primarily rely on the financial records, the GST audit coverage would be larger.
It would be the duty of a Chartered Accountant/ Auditor to inform the auditee about the requirement of GST audit, mandatory documents and other preparations required from the auditee.
Suggested Gst audit plan • Preliminary
(a) Ascertain Scope
(b) Knowledge of Business
© Evaluate system and internal controls
• Plan and Action
(a) Desk Review
(b) Design Audit program and Substantive procedure
© Perform the audit
(d) Documentation
• Reporting
(a) Draft report and discussion
(b) Finalise the draft and report to management
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suggested Key points may be included in gst audit program
• (1) Computation of tax liability of Goods and / or services
• (2) Returns including Annual Return
• (3) Books of accounts and other related records and register
• (4) Aggregate of Outward supplies
• (5) Aggregate of Inward Supplies
• (6) Exemption and abatements claimed
• (7) Amount of credits determined as ineligible
• (8)Classification of outward supplies, rate of tax and computation of output tax (including that of inward supplies liable to tax on reverse charge basis)
• (9) Amount of Input tax paid on inward supplies and deduction of input tax credit claimed
• (10) Various Reconciliation for Gst Audit
Suggest clients to Get annual return reviewed by GST AUDITOR, it will help to take corrective actions and reduce qualification in audit report.
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• GST AUDIT –ICAI FORMAT
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• RECONCILIATION TO 9 (C) AUDIT REPORT
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Reconciliation Annexure A Net outward supplies after considering the return of supplies on which output tax is payable
SI NO PARTICULARS TOTAL
Revenue from operations
Other Income
Amount as per financials
Less Revenue /other Income pertaining to other registered/ distinct persons
Less Revenue items on which output GST is not payable
Zero rated without payment of tax-Export and supplies to SEZ
Deemed exports
Liable to tax under reverse charge mechanism
Wholly Exempt supplies
Partly Exempt Supplies (exempt portion)
Non- GST supplies
Not a supply as per Schedule III or the definition of supply
Reconciliation Annexure A Net outward supplies after considering the return of supplies on which output tax is payable
SI NO PARTICULARS TOTAL
Amount as per financials ( in the state)
Add- Sale of Capital Assets
Unearned revenue (advances)
Section 15
Taxes, duties, cess etc levied under other laws charged by supplier
Amount incurred by recipient but liable to be paid by supplier
Interest, late fee or penalty for delayed payment of consideration
Incidental expenses charged by the supplier
Schedule I
Write off and disposal of business assets without consideration, if GST Credit was availed
Supply of goods/services by <<GSTIN>> to related persons/distinct persons
(i) To employees ( excluding gifts per employee up to Rs. 50,000)
Reconciliation Annexure A Net outward supplies after considering the return of supplies on which output tax is payable
SI NO PARTICULARS TOTAL
(ii) To distinct persons having same PAN
(iii) To other related persons
Goods dispatched by GSTIN to agents to the extent sale is not made/ recognised
Any other ( please specify)
Less: Unbilled Revenue( considering the provisions of section 13(2) of the CGST Act,2017)
Revenue by way of supplies made through agents where tax paid in PY Upon initial dispatch
Revenue Omitted to be declared in the Annual Return
Revenue against which Time of supply has occurred in the previous year
Any other ( please specify)
Amount as per Annual Return ( in a state)
Reconciliation Annexure B Output tax payable including interest, fee, penalty and other levies
PARTICULARS TOTAL
Output tax
CGST
Total output tax payable determined under audit
Total output tax payable under annual returns
Difference
Reasons for difference: to be quantified
Reasons for difference: to be quantified
Reasons for difference: to be quantified
Reasons for difference: to be quantified
Reasons for difference: to be quantified
SGST
IGST
Compensation Cess
Reconciliation Annexure C Net inward supplies on which input tax credit has been taken
SR NO PARTICULARS TOTAL
Operational Expenses
Other expenses
Less Expenses pertaining to other registered persons/distinct persons
Less Expenses on which input tax credit is not available due to the following:
Not a supply as per Schedule III or the definition of supply
Inward supplies received from composition suppliers
Exempt inward supplies
Wholly Exempt Inward Supplies
Partly Exempt Inward Supplies ( Exempt portion)
Non- GST Inward supplies
Goods/ services are not used in the course or furtherance of business
Credit ineligible as the goods/services received are used wholly for effecting exempt supplies ( excluding exports)
Reconciliation Annexure C Net inward supplies on which input tax credit has been taken
SR NO PARTICULARS TOTAL
Credit ineligible u/s 17(5) (a) : On motor vehicles and other conveyances
Credit ineligible u/s 17(5) (b)(i) : On food and beverages, outdoor catering, beauty treatment , health services, cosmetic and plastic surgery
Credit Ineligible u/s 17( 5) (b) (ii): On Membership of a club, health and fitness centre
Credit Ineligible u/s 17(5) (b)(iii): On rent –a-cab, life insurance and health insurance
Credit Ineligible u/s 17(5) (b) (iv): On travel benefits extended to employees on vacation
Credit Ineligible u/s 17 (5) ( c) : On works contract services when supplied for construction of an immovable property
Credit Ineligible u/s 17 (5) ( d) : On goods/ services received for construction of an immovable property on own account
Credit Ineligible u/s 17(5) (g) : On goods or services received or both used for personal consumption
Credit ineligible u/s 17(5) (h): On goods lost, stolen, destroyed
Credit ineligible u/s 17(5)(h): On goods written off:
Reconciliation Annexure C Net inward supplies on which input tax credit has been taken SR NO PARTICULARS TOTAL
Credit ineligible u/s 17 ( 5) (h) : On goods disposed of by way of gift:
Credit ineligible u/s 17 ( 5) (h) : On goods disposed of by way of free samples:
Credit ineligible u/s 17(5) (i): In respect of tax paid in accordance with the provisions of sections 74,129 and 130
Credit not taken as the recipient’s GSTIN was not mentioned/ mentioned incorrectly
Credit reversed u/s 17 (4) for a banking company / financial institution/ non banking financial company
Credit not taken as the place of supply is outside the state
Amount as per financials ( in the state)
Add Purchase of capital assets
Prepaid expenses
Expenses of previous year on which input tax credit has been taken this year
Section 15
Taxes, duties, cess etc levied under other laws charged by supplier
Reconciliation Annexure C Net inward supplies on which input tax credit has been taken
SR NO PARTICULARS TOTAL
Amount incurred by recipient but liable to be paid by supplier
Interest, late fee or penalty for delayed payment of consideration
Incidental expenses charged by the supplier
Any other ( please specify)
Less Prepaid expense of previous years
Expenses omitted to be declared in the Annual Return
Expenses on which input tax credit will be taken in the subsequent year
Any other (please specify)
Amount as per Annual Return ( in a state)
Reconciliation Annexure D Tax payable ( Including interest, fee, penalty and other levies) on reverse charge inward supplies
Particulars Total
CGST
Total tax payable on reverse charge inward supplies determined under audit
Total tax payable on reverse charge inward supplies as per annual audit
Difference
Reasons for difference: to be quantified
Reasons for difference: to be quantified
Reasons for difference: to be quantified
Reasons for difference: to be quantified
Reasons for difference: to be quantified
SGST
IGST
Compensation cess
Reconciliation Annexure E Net input tax credit claimed on inward supplies considering all the reversals, reductions and reclamations of input tax credit
Particulars Total
CGST
Net input tax credit on all inward supplies determined under audit
Net input tax credit on all inward supplies as per the annual audit
Difference
Reasons for difference: to be quantified
Reasons for difference: to be quantified
Reasons for difference: to be quantified
Reasons for difference: to be quantified
Reasons for difference: to be quantified
SGST
IGST
Compensation cess
Reconciliation Annexure F Refund claimed
Particulars Total
CGST
Refund claimed as determined under audit
Refund claimed as per the annual return
Difference
Reasons for difference: to be quantified
Reasons for difference: to be quantified
Reasons for difference: to be quantified
Reasons for difference: to be quantified
Reasons for difference: to be quantified
SGST
IGST
Compensation cess
Reconciliation Annexure G Net outward supplies on which no output tax is payable
Particulars Total
Net outward supplies on which no output tax is payable as determined under audit
Net outward supplies on which no output tax is payable as per the annual return
Difference
Reasons for difference: to be quantified
Reasons for difference: to be quantified
Reasons for difference: to be quantified
Reasons for difference: to be quantified
Reasons for difference: to be quantified
Reconciliation Annexure H Net Inward Supplies ( including reverse charge inward supplies) on which no input tax credit has been taken
Particulars Total
Net inward supplies on which input tax credit has been taken as determined under audit
Net inward supplies on which input tax credit has been taken as per the annual return
Difference
Reasons for difference: to be quantified
Reasons for difference: to be quantified
H
Reasons for difference: to be quantified
Reasons for difference: to be quantified
• RECOMMENDED GST FORM GSTR – 9 D
• (RULE 80)
• Statement of particulars required to be furnished for the year ended March 31,2018 under Section 35(5) and 44 (2) of the CGST ACT read with corresponding provisions under the relevant State GST,UTGST and IGST Laws.
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• PART A OF RECOMMENDED GST FORM GSTR -9D
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1 Background of the registered Person
1. GSTIN of the registered person 2. Legal Name of Business 3. Trade Name of Business 4. E Mail address & Contact No. of the registered person 5. PAN 6. IEC Number 7. CIN (If Company), LLIP (If LLP), or Firm registration No.
(with registrar of Firms, if registered); any other – viz. Trust, AOP, etc.
8. List the registrations under other Indirect Tax Laws – Central Excise, Service Tax, Value Added tax and other state Commercial Tax Laws.
II GST profile of the registered person:
1. Centre/State Jurisdiction with range
2. Date of registration
3.Whether the registered person has obtained a new registration under the GST laws or migrated from the earlier laws
4. Constitution of Business – Proprietor, Partnership Firm, LLP, Company etc.
5. Category of the registered person – Regular / SEZ
6. Nature of Business – Works Contractor, Trader, Manufacturer, Job-worker etc.
7. Top 10 goods / services supplied (if lower than 10, state all) – To be provided along with classification including HSN details
8. Name, E mail address & contact no of the Primary Authorised Signatory’s
III Registration and place of business (under the same PAN)
1. Principal place of Business
2. Details of any addition/deletion in the additional place of business
3. Whether any registration as casual taxable person has been taken? If yes provide details thereof
4. GSTIN, Name and Principal Place of Business of:
a Business verticals, if any (including SEZ)
b ISD registration if any
5. Place of Business (Outside India)
6. Date of cancellation of registration (if any)
IV General Information
1. Name and version of accounting software used (if electronic records are being maintained, based on Management Information)
2. List of books of accounts/registers maintained 3. List of books of accounts/registers examined 4. Method of accounting employed for the year under audit 5. Method of valuation of closing stock 6. Whether tax audit under Sanction 44AB of the Income Tax Act, 1961 is
applicable to the registered person? If yes, whether the relevant report/returns are filed?
7. Is the registered person a supplier/E-Commerce operator covered under Section9(5) of the CGST Act, 2017?
8. Whether cost audit report under section 148 of the Companies Act,2013 is applicable to the registered person? If yes, whether the effect of such report has been considered?
V Changes during the year (if any)
1. Details of change in the nature of Business during the year
2. Details of change in the constitution of the registration person during the year – LLP to Company, Proprietor to Partnership etc.
3. Changes in the Business structure on account of sale, merger, demerger, amalgamation, lease or transfer of the Business
4. Change in the partners, members, etc. of the registered person
5. Changes in the scheme of payment and their effective dates (composition to Normal and Vice versa)
Accounts and records- preparation for gst audit
• Issue :- Whether Stock Records are to be maintained or compulsorily ? If Stock records are not maintained than How do we report?
*CGST Rules 56 (2) Every registered person, other than a person paying tax under section 10, shall maintain the accounts of stock in respect of goods received and supplied by him, and such accounts shall contain particulars of the opening balance, receipt, supply, goods lost, stolen, destroyed, written off or disposed of by way of gift or free sample and the balance of stock including raw materials, finished goods, scrap and wastage thereof.
In case of stock records does not maintained by Registered Person, Whether Gst Auditor can issue proper disclosure for non maintenance of stock records in GST Audit Report.
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Storage of goods at warehouses providing services of goods at various place
• Section 2(85) of CGST Act- “place of business” includes––
• (a) a place from where the business is ordinarily carried on, and includes a warehouse, a godown or any other place where a taxable person stores his goods, supplies or receives goods or services or both; or
• (b) a place where a taxable person maintains his books of account; or
• (c) a place where a taxable person is engaged in business through an agent, by whatever name called;
• Issue :- As per definition of 2(85) whether place of storage of goods i.e. ware house is Additional POB of Registered person entity? i.e. bonded ware house, ware houses facility at Bhiwandi ?
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• PART A OF RECOMMENDED GST FORM GSTR -9D
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I. Levy & Collection of Tax Annexure 1 1. Whether the following supplies effected by the registered person have
been considered in returns (if any)?
a. Sale
b. Transfer
c. Barter
d. Exchange
e. License
f .Rental
g .Lease
h .Disposal (including disposal of business asset as per schedule 1)
I .Other Services
j .Any other supplies (please specify)
Supplies effected by the registered person not considered in return Annexure-I
Note :- To be furnished based on books and records maintained by the registered
person
AMT AMT AMT AMT AMT
List of Supplies Taxable Value
CGST SGST/UTGST
IGST Compensation Cess
Remarks
Sale
Transfer
Barter
Exchange
License
Rental
Lease
Disposal
Other Services
Any Other Supplies ( Please Specify)
Definition‟s
• Transfer means to pass over, convey, relinquishment of a right, abandonment of a claim, alienate, each or any of the above acts, lawfully
• Barter means a “thing or commodity” given in exchange for another. In other words, no value is fixed- viz., bartering a wrist watch with a wall clock. While exchange means:
• Mutual grant of equal interests, the one in consideration of another.
• When two persons mutually transfer ownership inter-se, at a price agreed upon or for goods and / or services plus money
• Disposal means distribution, transferring to new hands, extinguishment of control over, forfeit or pass over control to another
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Issue
• Examine the Sales Promotion polices and scheme during the year and Determination of Revenue and Gst Impact of all Samples ,Free supplies sales, Barter Activities as supply-Such transaction may not be accounted for in the books of accounts- for example-(a) Area sharing under Joint development agreement and impact of Gst thereon.(b) Services provided to SRA, MMRDA, MHADA, Municipal corporation for consideration in form of FSI, TDR or development potential Mutual promotions-TV channel promoting movies and movie stars promoting TV shows, Co-branding or co-promotion, credit card promotion(d) Exchange offers under promotion schemes(e) net working partner
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AAR-MAHRASHTRA- Compensation received by tenant from Builder-is it supply • GST is applicable on compensation received by tenant for delayed possession of new premises: AAR*
July 2, 2018[2018] 95 taxmann.com 3 (AAR -MAHARASHTRA)
GST : Amount received by tenant of building premises towards alternate accommodation or delayed possession of new premises would be receipt of amounts for doing an act i.e. vacating premises for redevelopment as well as tolerating construction cum redevelopment work till possession of new redeveloped premises and further for tolerating an act of not having completed redevelopment period within time, same would be a 'supply' and therefore, GST to be levied on such amount
• The applicant was a tenant in building premises. The owner of said building premises entered into an agreement for redevelopment of said premises with a developer 'S'. Consequent to the said redevelopment agreement, the applicant was required to vacate the premises to facilitate the redevelopment of the building, by the developer.
• In the process, the applicant has agreed to do an act i.e. vacating the premises to facilitate the supply of service by the developer to the owner and for vacating the said premises; the applicant has received / is to receive compensation from the developer.
• The receipt of amounts towards alternate accommodation or delayed possession of premises would be receipt of amounts for doing an act i.e. vacating the premises for redevelopment as well as tolerating the construction cum redevelopment work till possession of new redeveloped premises as per agreement and further for tolerating an act i.e the act of not having completed the redevelopment work within 36 months. In view thereof, the same would definitely be a 'supply' and therefore, there arises an occasion to levy GST on said amount.
• Issue :- My building is in redevelopment. I receive rent of around 10 lakhs from builder, Whether I need to pay Gst on Rs.10 Lakhs?
• ( person is not in business of letting out of his house , so issue arises Whether I am in business of letting out or it is merely enjoyment of fruits of ownership? Citation =429 AIR 1962 SCR SUPL(3) 368-,That merely letting out property and collected rent is not trade or business and cannot be “in course or furtherance of business)
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AAR-FOOD EXPENSES
• A recent order of the Authority for Advance Ruling – Kerala has ruled, in a matter involving recovery of food expenses from employees for the canteen facility provided by a Company, that such recovery falls within the definition of ‘outward supply’ and are therefore taxable outward supplies under the GST law. In para 9 of the order, the AAR-Kerala has concluded that the supply of food by the applicant (Company) to its employees would definitely come under clause (b) of Section 2(17) as a transaction incidental or ancillary to the main business and thereby the test of ‘in the course or furtherance of business’ is met by the applicant. – Order No. CT/531/18-C3 dated
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Import of service will be taxable in the hands of the recipient (importer):
• The word ‘supply’ includes import of a service, made for a consideration (‘consideration’ as defined in Section 2(31)) and whether or not in the course or furtherance of business. This implies that import of services even for personal consumption would qualify as ‘supply’ and therefore, would be liable to tax. This would not be subject to the threshold limit for registration, as tax would be payable in case of import of services on reverse charge basis, requiring the importer of service to compulsorily obtain registration in terms of Section 24(ii) of the Act. However, the GST law has ensured that persons who are not engaged in any business activities will not be required to obtain registration and pay tax under reverse charge mechanism, and it turn, requires the supplier of services located outside India, to obtain registration for the OIDAR (online information and database access and retrieval) services only
• Note: Import of services is included within the meaning of ‘supply’ under the CGST / SGST Acts. However, it would be liable to IGST since it would not be an intra-State supply. In fact, Section 2(21) of IGST Act has adopted the meaning of ‘supply’ from CGST/SGST Act.
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Some faq
• Q1. In respect of exchange of goods, namely gold watch for restaurant services, will the transaction be taxable as two different supplies or will it taxable only in the hands of the main supplier?
• Ans. Yes, the transaction of exchange is specifically included in the scope of “supply” under Section 7. Thus, exchange could be taxable both ways. Provided the person exchanging gold watch is in the business of selling watches (A contrary view could also be taken. It depends on the facts of each and every case).
• Q2. What are examples of ‘disposals’ as used in ‘supply’?
• Ans. “Disposals” could include donation in kinds or supplies in a manner other than sale.
• Q3. Will a not-for-profit entity be liable to tax on any supplies effected by it – e.g.: sale of assets received as donation?
• Ans. Yes, it would be liable to tax on value as may be determined under Section 15, for said sale of donated assets.
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suggested GST AUDIT VERFICATION in relation to-outward supply BRANCH/HO-INTERUNIT TRANSACTIONS
Detail of Transfer of Goods & services between two Different Distinct Entities with / without consideration( i.e.
(i) Branch/HO/Business Vertical transfers I/w and O/w), (ii) ISD invoices, (iii) cross charge-(a)Manpower and Hr Services(b)Software and IT Support Services ©
Advertising, marketing, brand promotion etc(d) Use of Intangible such as brand names, trademarks, technical knowhow etc etc).(Refer Schedule I of the CGST ACT)
(iv) Detail of Sale / Transfer to-from Branch/Ho of Capital Goods (used)-Cross Charge(Refer Schedule I of the CGST ACT)
(v) Detail of Sale / Transfer to-from Branch/Ho of motor vehicles (used)(Refer Schedule I of the CGST ACT) (vi) Detail GST on receipt of advances on services–1.7.2017 to till date (31.03.2018) and final adjustment thereof
(a) Advances received in HO is settled against sales of branch in other state and vice versa (b) Advance received in one branch settled against sales of branch in other state (c) Advances received and taxed in service tax regime and invoicing of said service is in GST
era
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suggested GST AUDIT VERFICATION in relation to-outward supply
EMPLOYER/EMPLOYEE RECOVERIES
Organisation HR Policies and practices
Detail of each type of (I) Recoveries from Employees, Vendors, Service Providers etc for example (i)In case of Employees- Perquisites and facilities provided to employees(a) Canteen facilities(b)Pickup and drop facilities ©Car provided(d)Notice Pay Recovery –(Refer Schedule I of the CGST ACT)(Usually recovery of expenses is netted off against the expenses in the books of account. Such recoveries forms part of turnover in GST returns but may not be appearing as separate revenue item in profit and loss account)
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suggested GST AUDIT VERFICATION in relation to-outward supply
PARTICULARS
Examine the policies related to related party transaction and Determine Supply to related party for example (a)Sharing of Common Premises(b) sharing of common infrastructure such as IT Systems, office infrastructure,© Sharing of common Human Resources and Management Resources(d) Corporate guarantee for each other and GST Impact thereon.( Related Person is defined under explanation to Section 15,Refer Schedule I of the CGST ACT)
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Analysis of profit and loss account-income for gst audit
• Outward supplies not accounted as revenues–
stock transfers/cross billings,
overdue job works,
sale on approval basis,
employer-employee transactions,
disposal of business assets without consideration,
Bill To Ship To invoicing from vendors
• (Generally Outward supplies accounted for Local Supply , Inter State Supply , Branch Transfer ,Highsea Supply, Supply from Bonded Warehouse, Export Supply, Sez Supply, Deemed Supply)
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Levy & Collection of Tax Annexure 2
2. Whether non-taxable supplies have been reported in the return?
Value of Non- Taxable Supplies Which have Not been Considered in the return –Annexure-2
Note :- To be furnished based on books and records maintained by the registered person
AMT
Description Total Value Remarks
Supply of Alcoholic liquor for human consumption
Supply of Petroleum crude
Supply of High Speed Diesel
Supply of Natural gas
Supply of aviation turbine fuel
Supply of motor spirit ( Commonly known as petrol)
High Sea Sales
Any other non taxable Supplies ( Please Specify)
Levy & Collection of Tax Annexure 3
3. Whether the tax liability for composite and mixed supply has been determined in accordance with Section 8 of the CGST Act,2017? If No, specify reasons/instances
Details of Composite and mixed Supplies not determined in accordance with Section 8 of the CGST Act 2017 Annexure-3- SLIDE 1
A. Composite Supplies Amt Amt Amt Amt Amt
Components of the composite supply
HSN/SAC of all such Components
HSN of Principal Supply
Rate of Tax applicable to the Principal Supply
Rate of tax as charged in the returns
Value of the Supplies
Differential CGST payable
Differential SGST/UTGST payable
Differential IGST payable
Differential Cess Payable
Remarks
Details of Composite and mixed Supplies not determined in accordance with Section 8 of the CGST Act 2017 Annexure-3-SLIDE 2
B. Mixed Supplies Amt Amt Amt Amt Amt
Components of the Mixed supply
HSN/SAC of all such Components
HSN of Supply on which the highest rate of tax is applicable
Rate of Tax applicable to such apply
Rate of tax as charged in the returns
Value of the Supplies
Differential CGST payable
Differential SGST/UTGST payable
Differential IGST payable
Differential Cess Payable
Remarks
DEFINITION OF composite or a mixed supply U/S 8 OF CGST ACT 2017 • 8. The tax liability on a composite or a mixed supply shall be determined in
the following manner, namely:—
• (a) a composite supply comprising two or more supplies, one of which is a
principal supply, shall be treated as a supply of such principal supply; and
• (b) a mixed supply comprising two or more supplies shall be treated as a supply of that particular supply which attracts the highest rate of tax.
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Examples of Composite Supplies
• Some Illustrations and cases of composite supplies have been discussed in thefollowing paragraphs:
(1) Illustration (provided in Section 2(27)): Where goods are packed, and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is the principal supply. This implies that the supply will be taxed wholly as supply of goods.
(2) Para 5(3) of Circular No.32/06/2018-GST dated 12.02.2018 clarifies that “food supplied to the in-patients as advised by the doctor/nutritionists is a part of composite supply of health care and not separately taxable”. It also goes on to clarify further that supplies of food by hospital to patients (not admitted) or their attendants or visitors are taxable.
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Examples of Composite Supplies • Circular No.11/11/2017-GST dated 20.10.2017 has provided clarification on • treatment of printing contracts. It is clarified that :In the case of printing of
books, pamphlets, brochures, annual reports, and the like, where only content is supplied by the publisher or the person who owns the usage rights to the intangible inputs while the physical inputs including paper used for printing belong to the printer, supply of printing of the content supplied by the recipient of supply is the principal supply.
• In case of supply of printed envelopes, letter cards, printed boxes, tissues ,napkins, wall paper etc. falling under Chapter 48 or 49, printed with design ,logo etc. supplied by the recipient of goods but made using physical inputs including paper belonging to the printer, the predominant supply is that of goods and the supply of printing of the content supplied by the recipient of supply is ancillary to the principal supply of goods and therefore such supplies would constitute supply of goods falling under respective headings of Chapter 48 or 49 of the Customs Tariff.
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Examples of Composite Supplies • Circular No. 34/8/2018-GST dated 01.03.2018 provides a clarification on some matters including
the following:
• The activity of bus body building is a composite supply. As regards which of the components is the principal supply, the Circular directs that it be determined on the basis of facts and circumstances of each case.
• Re-treading of tyres– In re-treading of tyres, which is a composite supply, the pre-dominant element is the process of re-treading which is a supply of service, and the rubber used for re-treading is an ancillary supply. The Circular also specifies that “Value may be one of the guiding factors in this determination, but not the sole factor. The primary question that should be asked is what is the essential nature of the composite supply and which element of the supply imparts that essential nature to the composite supply”.
• Other examples: If a contract is entered for (i) supply of certain goods and erection and installation of the same thereto or (ii) supply of certain goods along with installation and warranty thereto, it is important to note that these are naturally bundled and therefore would qualify as ‘composite supply’. Accordingly, it would qualify as supply of the goods therein, which is essentially the principal supply in the contract. Thus, the value attributable to erection andinstallation or installation and warranty thereto will also be taxable as if they are supply of the goods therein.
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Example of Mixed Supply • Some Illustrations and cases of mixed supplies have been discussed in
thefollowing paragraphs:
• Illustration (provided in Section 2(66)): A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drink and fruit juices when supplied for a single price is a mixed supply. Each of these items can be supplied separately and is not dependent on any other. It shall not be a mixed supply if these items are supplied separately. This implies that the supply will be taxed wholly as supply of those goods which are liable to the highest rate of GST.
• Other examples: If a tooth paste (say for instance it is liable to GST at 12%) is bundled along with a tooth brush (say for instance it is liable to GST at 18%) and is sold as a single unit for a single price, it would be reckoned as a mixed supply. This would therefore be liable to GST at 18% (higher of 12% or 18% applicable to each of the goods therein).
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Test for Composite/Mixed:-While there are no infallible tests for such determination, the following guiding principles could be adopted to determine whether a supply would be a composite supply or a mixed supply. However, every supply should be independently analysed.
Description Composite Supply
Mixed Supply
Naturally bundled YES NO
Each supply available for supply individually NO YES/NO
One is predominant supply for recipient YES YES/NO
Other supply(ies) are ancillary or they are received because of predominant supply
YES NO
Each supply priced separately YES/NO NO
Supplied together YES YES
All supplies can be goods YES YES
All supplies can be services YES YES
A combination of one / more goods and one / more services
YES YES
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Levy & Collection of Tax Annexure 4
4. Details of inward supply of notified goods/services liable to tax under reverse charge mechanism u/s 9(3) of the CGST Act, read with section 5(3) of the IGST Act, on which tax has not been remitted
5. Details of inward supply of taxable goods/services effected from unregistered persons liable to tax under reverse charge mechanism u/s 9(4) of the CGST Act, read with section 5(4) of the IGST Act, on which tax has not been remitted
Details of inward supplies on which tax payable under reverse charge mechanism ( RCM) has not been remitted Annexure-4-SLIDE 1
A. Notified inward Supplies liable to tax on RCM u/s 9(3)
Amt Amt Amt Amt Amt
Description of the goods/ Service
HSN/SAC Tax Rate Taxable Value
CGST SGST/UTGST
IGST Compensation Cess
Remarks
Details of inward supplies on which tax payable under reverse charge mechanism ( RCM) has not been remitted Annexure-4-SLIDE 2
B. Inward Supplies liable to tax on RCM on account of supplies made by unregistered person u/s 9 ( 4 )
Amt Amt Amt Amt Amt
Description of the goods/ Service
HSN/SAC Of all such Components
Rate of tax applicable to such Supply
Taxable Value
CGST SGST/ UTGST
IGST Compensation Cess
Remarks
Definitions • Levy and collection.
• CGST ACT 9 (3) The Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both
• IGST ACT 5 (3) The Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.
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RCM Impact – Section 9 (3)
• Analyse GST on Section 9(3) expenses.
Freight Payments –Type of tax
Ocean Freight
Advocate Payments
Forex gain/ loss,
Legal Expenses,
Professional services,
Advertisement & marketing,
Fees & licences
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Definitions • Levy and collection.
• CGST ACT 9 (4) The central tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.
• IGST ACT 5(4) The integrated tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.
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RCM Impact – Section 9 (4)
• Analyse GST on Section 9(4) expenses.
Law was applicable only upto13th October 2017
Self Invoice.
Aggregate Rs.5,000/-in a day (accounting or
invoicing or payment)
Time of Supply
Timing of ITC
rate of tax,
type of tax,
eligibility of credits
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Levy & Collection of Tax Annexure 5
6. a) Whether any exemption notifications or special orders under the Act are applicable to the registered person? Provide summary of such supplies
b) Specify cases of non-compliance with the attached conditions
c) Provide instances where the registered person, despite being eligible to avail the benefit of any exemptions, has failed to claim the same
d) Whether classification of outward supplies/inward supplies liable to tax under reverse charge mechanism is in accordance with Schedules / Notifications / Circulars, etc. If not, provide details? Disclose the details where the supplier has offered the tax instead of the recipient
Summary of exempted Supplies, non-compliance with condition for exemption, foregone benefit of exemption and incorrect
classification Annexure-5-Slide 1
A. Summary of Exempted Supplies
Notification No Entry Description HSN Remarks
Summary of exempted supplies, non-compliance with condition for exemption, foregone benefit of exemption and incorrect classification Annexure-5-slide 2
B. Non Compliance with Conditions for Claiming Exemption
Amt Amt Amt Amt Amt
Notification No
Entry Description
HSN Condition Violated
Taxable Value
CGST Payable
SGST/ UTGST Payable
IGST Payable
Cess Payable
Remarks
Summary of exempted supplies, non-compliance with condition for exemption, foregone benefit of exemption and incorrect classification Annexure-5-slide3 C. Foregone benefit of exemption Amt Amt Amt Amt Amt
Notification No
Entry Description
HSN Value of exempt supplies
Taxable Value
CGST Payable
SGST/ UTGST Payable
IGST Payable
Cess Paid
Remarks
Summary of exempted supplies, non-compliance with condition for exemption, foregone benefit of exemption and incorrect classification Annexure-5-SLIDE 4
D. Incorrect Classification of outward supplies/ inward supplies liable to reverse charge
Amt Amt Amt Amt Amt
Description
Applicable HSN
Rate of tax applicable
Rate of tax as per the return
Taxable Value
( Excess CGST paid) / CGST payable
( Excess SGST paid) / SGST payable
( Excess IGST paid) / IGST payable
( Excess Cess paid) / Cess payable
Remarks
AAR RULING –Registration-Exempt Income • Issue:-Whether the applicant will be liable for registration under any
clause of Section 24 of the GST Act even if it is not making any taxable supply?
• (West Bengal-01/WBAAR/2017-18 dated 21/03/2018 incase of Joint Plant Committee )
• Facts :- Point no 4. It appears from the statement of accounts for the year ending on 31/03/2017, submitted along with the Application, that the main source of the Applicant’s income is interest accrued on the deposits and on the loans provided from the Steel Development Fund. A secondary source of income is the consideration received from sale of journals and periodicals and from renting accommodation in its guest houses. The aggregate turnover from these sources well exceeds the threshold of twenty lakh rupees and makes it liable for registration under Section 22 (1) of the GST Act, provided it does not make exclusively supply of goods or services that are not liable to tax or wholly exempt from tax under the GST Act.
• 5. The Applicant’s supplies of journals and periodicals are wholly exempt under serial no. 120 of Notification No. 2/2017 – Central Tax (Rate) dated 28/06/2017 (1126 – FT dated 28/06/2017 under the WBGST Act, 2017; hereinafter referred to as “the State Tax”) (Tariff head: 4907).
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AAR RULING –Registration-Exempt Income
• 7. Moreover, it is stated to be charging room rent below Rs. 1000/- per day per unit for accommodation in its guest houses, which is an exempt supply under serial no. 14 of the Exemption Notifications for Services.
• 8. The Applicant declares it makes no other supplies of goods or services.
• 9. However, as already seen, the main source of the Applicant’s income is the interest consideration received by way of interest on services like extending deposits, loans or advances. This service, also, is wholly exempt under Serial no. 27 of the Exemption Notifications for Services (Tariff head: 9971).
• RULING
• The Applicant is not required to be registered under the GST Act if he is not otherwise liable to pay tax under reverse charge under section 9(3) of the GST Act.
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ADVANCE RULING NO. GUJ/GAAR/RULING/2018/4 (IN APPLICATION NO. Advance
Ruling/SGST&CGST/2017-18/AR/21) Date : 20.03.2018. , M/s. Rishi Shipping
• 6.2 The applicant has submitted in the application that as a part of the services, it provides service of warehouse / space on rent to the customers, where they (customers of applicant) store imported agricultural commodities. Therefore, an issue arises whether the service of providing warehouse/ space on rent can be considered as ‘storage or warehousing’ service or ‘renting of storage premises’.
• 6.3 In this regard, we observe that there is difference between ‘storage or warehousing’ service and ‘renting of storage premises’ service. The ‘storage and warehousing service’ provider normally make arrangement for space to keep the goods, loading, unloading and stacking of goods in the storage area, keeps inventory of goods, makes security arrangements and provide insurance cover etc. In a case where a person only rents the storage premises, he does not provide any service such as loading / unloading, stacking, security etc. Mere renting of space cannot be said to be in the nature of service provided for storage or warehousing of goods.
• R U L I N G
• The service provided by M/s. Rishi Shipping (GSTIN 24ABCPM8333P1ZA) is classifiable as ‘Rental or leasing services involving own or leased non-residential property’ (Service Accounting Code – 9972) leviable to Goods and Services Tax @ 18%.
• Note:= Due care may be taken while classifying Revenue of Registered Person
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Levy & Collection of Tax 7. Whether the registered person availing option to supply for export without payment of
integrated tax has paid the tax along with interest on failure to :
a) Export goods within 3 months (or a further period allowed by the Commissioner) from the date of issue of invoice.
b) Receive payment in convertible foreign exchange within 1 Year (or a further period allowed by the Commissioner) from the date of issue of invoice
If not, please indicate the amount of tax payable along with the taxable value
8. Whether any goods have been subject matter of detention/seizure or confiscation as per Section 129 and 130 of the CGST Act 2017 on which any tax, interest or penalty has been determined as payable as per the order of the proper officer? If yes, whether the said liability has been discharged?
---------END OF Levy and Collection of Tax--------
Section 129 and Section 130 of the CGST ACT 2017
• Detention, seizure and release of goods and conveyances in transit.
• CGST SEC 129. (1) Notwithstanding anything contained in this Act, where any person transports any goods or stores any goods while they are in transit in contravention of the provisions of this Act or the rules made thereunder, all such goods and conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyance shall be liable to detention or seizure and after detention or seizure, shall be released.
• Confiscation of goods or conveyances and levy of penalty.
• 130. (1) Notwithstanding anything contained in this Act, if any person—
• (i) supplies or receives any goods in contravention of any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax; or
• (ii) does not account for any goods on which he is liable to pay tax under this Act; or
• (iii) supplies any goods liable to tax under this Act without having applied for registration; or
• (iv) contravenes any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax; or
• (v) uses any conveyance as a means of transport for carriage of goods in contravention of the provisions of this Act or the rules made thereunder unless the owner of the conveyance proves that it was so used without the knowledge or connivance of the owner himself, his agent, if any, and the person in charge of the conveyance, then, all such goods or conveyances shall be liable to confiscation and the person shall be liable to penalty under section 122.
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II Time of Supply (Verification of Compliance with Section 12,13 and 14 of the Act) Annexure 6
1. Specify instances where tax has not been paid in accordance with Section 12/13 read with Section 31 of the CGST Act, 2017
Details of Transactions where tax has not been paid in accordance with the provisions of time of supply Annexure-6-slide 1
Amt Amt Amt Amt Amt
Nature of Supply Basis as per law
Basis Followed
Value of such supply
CGST Interest
SGST/ UTGST Interest
IGST Interest
Cess Interest
Remarks
a) Time of supply of
goods i) Other than reverse charge
ii) Reverse Charge
iii) Continuous supply of goods
iv) Supply of Vouchers
v) Where not possible to determine as per the above
vi) Delayed payment of consideration
vii) Any other, please specify
Details of Transactions where tax has not been paid in accordance with the provisions of time of supply Annexure-6-slide 2
Amt Amt Amt Amt Amt
Nature of Supply Basis as per law
Basis Followed
Value of such supply
CGST Interest
SGST/ UTGST Interest
IGST Interest
Cess Interest
Remarks
a) Time of supply of Service i) Other than reverse charge
ii) Reverse Charge
iii) Continuous supply of goods
iv) Supply of Vouchers
v) Where not possible to determine as per the above
vi) Delayed payment of consideration
vii) Any other, please specify
Time of Supply of Goods – Sec 12(2)
© Indirect Taxes Committee, ICAI
113
As per Section 12(2) of CGST ACT, time of supply of goods shall be earlier of invoice/ payment, i.e., –
Actual date of issue of invoice by the supplier
Due date for issue of invoice by the supplier [Section 31(1)*]:
- Supply involves movement: Time of removal of goods for supply
- Continuous Supply: Date of issue of statement
- Sale on approval basis: Earlier of time at which it becomes known that the supply has taken place OR 6 months from date of removal
- Other cases: Delivery of goods/ making available to the recipient or
- Notified categories of supplies: Time to be specified by Rules
Date on which payment is entered in the books of Accounts of supplier
Date on which payment is credited to the supplier‟s bank a/c
*Where payment is received in advance, the Supplier shall issue a receipt voucher, and NOT a
tax invoice
Time of Supply of Goods – Sec 12(2) Illustrations
© Indirect Taxes Committee, ICAI
114
Section 12(2) Invoice date Invoice due date
Payment entry in
supplier's books
Credit in bank
account Time of supply
1 Invoice raised before removal 10-Oct-17 20-Oct-17 26-Oct-17 30-Oct-17 10-Oct-17
2 Advance received 30-Oct-17 20-Oct-17 10-Oct-17 30-Oct-17 10-Oct-17
Time of Supply of Goods – Sec 12(2) Illustrations
© Indirect Taxes Committee, ICAI
115
Supply involves movement of goods Section 12(2) r/w Section 31(1)(a)
Invoice/ document
date
Removal of goods
Delivery of goods
Receipt of payment
Time of supply
3 Delayed issue of invoice 26-Oct-17 20-Oct-17 26-Oct-17 26-Oct-17 20-Oct-17
4 Inter-State stock transfer 10-Oct-17 20-Oct-17 26-Oct-17 - 10-Oct-17
5 Advance received, invoice for full amount issued on same day (40% advance, 60% post supply payment)
30-Oct-17 10-Nov-17 14-Nov-17
30-Oct-17 30-Oct-17
20-Nov-17 30-Oct-17
Time of Supply of Goods – Sec 12(2) Illustrations
© Indirect Taxes Committee, ICAI
116
Supply otherwise than by involving movement of goods Section 12(2) r/w Section 31(1)(b)
Invoice date Receipt of invoice by recipient
Delivery of goods
Receipt of payment
Time of supply
6 Delayed issue of invoice 30-Oct-17 05-Nov-17 26-Oct-17 10-Nov-17 26-Oct-17
7 Invoice issued prior to delivery 20-Oct-17 10-Nov-17 26-Oct-17 10-Nov-17 20-Oct-17
Continuous supply of goods Section 12(2) r/w Section 31(4)
Invoice date Removal of
goods
SoA/ payments due
date
Receipt of payment
Time of supply
8
Contract provides for successive statements of account/ successive payments
01-Nov-17 15-Oct-17
05-Nov-17 01-Nov-17 01-Nov-17 25-Oct-17
9 11-Dec-17 08-Nov-17
05-Dec-17 11-Dec-17 05-Dec-17 30-Nov-17
10
08-Jan-18
14-Dec-17 05-Jan-18 01-Jan-18 01-Jan-18
23-Dec-17
Time of Supply of Services – Sec 13(2)
© Indirect Taxes Committee, ICAI
If invoice not issued within 30 days
(45 days in case of Banking, Insurance,
Financial Institution or NBFC company)
117
If both cases do not apply
*Where payment is received in advance, the Supplier shall issue a receipt voucher, and NOT a
tax invoice
Date on which recipient shows in
his books of accounts
Date of completion of service or
payment, whichever is earlier
If invoice issued within prescribed time u/s
31(2) - 30 days (45 days in case of Banking,
Insurance, Financial Institution or NBFC
company)
Date of issue of Invoice or
Payment, whichever is earlier
*Where payment of Rs. 1000/- is received in advance, then time of supply for goods or services is
date of issue of invoice
Time of Supply of Services – Sec 13(2) Illustrations
© Indirect Taxes Committee, ICAI
118
Section 13(2) Invoice date Invoice due date
Payment entry in
supplier's books
Credit in bank
account Time of supply
1 Invoice raised before completion of service
10-Oct-17 20-Oct-17 26-Oct-17 30-Oct-17 10-Oct-17
2 Advance received 30-Oct-17 20-Oct-17 10-Oct-17 30-Oct-17 10-Oct-17
Time of Supply of Services – Sec 13(2) Illustrations
© Indirect Taxes Committee, ICAI
119
Based on due date for invoicing Section 13(2) r/w Section 31(2) r/w Invoice Rule - 2
Invoice date Commencem
ent of service
Completion of service
Receipt of payment
Time of supply
3 Delayed issue of invoice 26-Dec-17 20-Oct-17 16-Nov-17 28-Jan-18 16-Dec-17
4 Advance received, invoice for full amount issued on same day (40% advance, 60% post supply payment)
30-Oct-17 30-Oct-17 30-Dec-17
30-Oct-17 30-Oct-17
04-Dec-17 30-Oct-17
Time of Supply of Services – Sec 13(2) Illustrations
© Indirect Taxes Committee, ICAI
120
Continuous supply of services Section 13(2) r/w Section 31(5)
Invoice date Date as per
contract Receipt of payment
Entry of provision of services in
books
Time of supply
5
Section 31(5)(a) Contract provides for payments monthly on the 10th of succeeding month
02-Nov-17 10-Nov-17 15-Nov-17 31-Oct-17 02-Nov-17
17-Dec-17 10-Dec-17 15-Dec-17 30-Nov-17 10-Dec-17
10-Jan-18 10-Jan-18 06-Jan-18 31-Dec-17 06-Jan-18
6
Section 31(5)(c) 12-Nov-17 10-Nov-17 25-Nov-17 12-Nov-17 10-Nov-17
Contract provides for payments on completion of event. Recipient to pay within 1 month from date of completion
24-Apr-18 24-Apr-18 20-Apr-18 24-Apr-18 20-Apr-18
Time of Supply of Goods / Services - Reverse Charge – Sec 12(3) / 13(3)
© Indirect Taxes Committee, ICAI 121
Date on which payment is entered in the books of recipient
Date on which payment is debited to the recipient‟s bank a/c
31st day (in case of goods) / 61st day (in case of services) from the date of issue of invoice by supplier Note: This factor is not relevant in case of services from a supplier being an associated enterprise outside India
Where it is not possible to determine time of supply in the 3 other cases: Date of entry in the books of account of the recipient
Where tax liable to be paid on reverse charge basis, the time of supply of goods/services shall be earliest of
Note: On the date of receipt of goods (or services) from a supplier being an
unregistered person, the recipient shall issue an invoice [Section 31(3)]
Time of Supply of Goods / Services - Reverse Charge – Sec 12(3) / 13(3)
© Indirect Taxes Committee, ICAI 122
Note: On the date of receipt of goods (or services) from a supplier being an
unregistered person, the recipient shall issue an invoice [Section 31(3)]
Reverse charge Section 12(3)
Date of invoice issued
by supplier
Removal of goods
Receipt of goods
Payment by recipient
Time of supply
1 General 31-Oct-17 31-Oct-17 20-Nov-17 30-Nov-17 20-Nov-17
2 Advance paid 31-Oct-17 31-Oct-17 20-Nov-17 05-Nov-17 05-Nov-17
3 No payment made for the supply
31-Oct-17 30-Dec-17 05-Jan-18 - 30-Nov-17
Time of Supply of Goods / Services - Reverse Charge – Sec 12(3) / 13(3)
© Indirect Taxes Committee, ICAI 123
Reverse charge Section 13(3)
Date of invoice issued
by supplier
Date of completion of
service
Payment by recipient
Entry of receipt of services in recipient's
books
Time of supply
4 General 31-Oct-17 31-Oct-17 20-Nov-17 30-Nov-17 20-Nov-17
5 Advance paid 31-Oct-17 31-Oct-17 05-Nov-17 31-Oct-17 05-Nov-17
6 Delay in payment (Max. 60 days from date of invoice)
31-Oct-17 31-Oct-17 10-Jan-18 31-Oct-17 31-Dec-17
7 Service received from associated enterprise located outside India (No time extension allowed)
31-Oct-17 30-Nov-17 05-Apr-18 31-Mar-18 31-Mar-18
8 Service by unregistered person, no payment made
- 30-Nov-17 - 05-Dec-17 05-Dec-17
Time of Supply of Vouchers – Sec 12(4)/13(4)
© Indirect Taxes Committee, ICAI 124
Time of supply in case of supply of voucher–
Date of issue – If supply is identifiable at the point of issue of voucher
Date of redemption of voucher – Other cases
Note: Voucher – can be for goods or services
Time of Supply of Vouchers – Sec 12(4)/13(4)
© Indirect Taxes Committee, ICAI 125
Issue of vouchers Section 13(4) [or Section 12(4)]
First service/ delivery of
goods
Issue of voucher
Redemption of voucher
Last date for acceptance of
voucher Time of supply
1
Voucher issued to a recipient after supply of a service [or specific goods], for the same service - valid for 1 year
01-Nov-17 01-Nov-17 14-Dec-17 30-Oct-18 01-Nov-17
2
Voucher issued to a recipient of machinery along at the time of delivery, for availing repair services [or specific goods] worth Rs. 5,000 - valid for 1 year
01-Nov-17 01-Nov-17 14-Dec-17 30-Oct-18 01-Nov-17
3
Voucher issued to a recipient after supply of a service, for any other services or goods across India, - valid for 1 year
01-Nov-17 01-Nov-17 14-Dec-17 30-Oct-18 14-Dec-17
4 Gift voucher for Rs. 1,500 for services [or goods]- valid for 6 months
- 01-Nov-17 25-Dec-17 31-Mar-18 01-Nov-17
Residual Provision – Sec 12(5) / 13(5)
© Indirect Taxes Committee, ICAI 126
Where it is not possible to determine the time of supply under any of the circumstances discussed, it shall be determined as:
Due date for filing of such return – If periodical return has to be filed
Date on which the Tax is paid – Other cases
© Indirect Taxes Committee, ICAI 127
Time of supply for value addition by way of
Interest,
Late Fees,
Penalty
For Delayed payment of
Consideration shall be
Date on which the supplier receives such addition in value
Time of Supply of Goods / Services - Value Addition –
Sec 12(6) / 13(6)-(Point vi of Annexure 6- Delayed
payment of consideration)
II. Time of Supply (Verification of Compliance with Section 12,13 and 14 of the Act) Annexure 7
2. Whether there was a change in rate of tax on the goods or services or both supplied during the year? Provide details where the effect of the change has not been provided same in all cases
Details of Transaction on which the effect of change in rate of tax has not been provided
Annexure-7
Description of goods and/or services
HSN Notification No
Effective date of new rate
Rate before change
Rate after change
Aggregate value of supplies made under the wrong rate
( Excess CGST Paid)/ CGST payable
( Excess SGST Paid)/ SGST payable
( Excess IGST Paid)/ IGST payable
( Excess Cess paid)/ Cess Payable
Remarks
Change in rate of tax in respect of supply of goods or services – Sec 14
© Indirect Taxes Committee, ICAI 130
Date of supply
of goods or
services
Date of
invoice
Date of
receipt of
payment
Time of supply Rate of tax
(1) (2) (3) (4) (5)
Before After After Earlier of (2) and (3) New
Before Before After (2) Old
Before After Before (3) Old
After Before After (3) New
After Before Before Earlier of (2) and (3) Old
After After Before (2) New
II Time of Supply (Verification of Compliance with Section 12,13 and 14 of the Act) Annexure 8
3. Details of supply of services where the supply ceased prior to completion, and no tax has been discharged thereon
Details of outward supply of service where services ceases prior to completion but not taxes discharged Annexure-8
Description of service
HSN Rate Reason for cessation
Total value agreed upon
Value upto cessation of service
CGST payable
SGST/ UTGST payable
IGST payable
Cess payable
Remarks
Section 31(6) supply of services ceases -TAX INVOICE, CREDIT AND DEBIT NOTES • 31 (6) In a case where the supply of services ceases under a contract
before the completion of the supply, the invoice shall be issued at the time when the supply ceases and such invoice shall be issued to the extent of the supply made before such cessation.
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II Time of Supply (Verification of Compliance with Section 12,13 and 14 of the Act)
Annexure 9
4. Details of supply of goods on ‘sale on approval basis’ exceeding the time limit of 6 months and not offered to tax
Details of supply of goods on „ sale on approval basis‟ exceeding the time limit of 6 months and not offered to tax. Annexure-9
Months in which the time period of 6 months expire
Amounts
Amounts
Amounts
Amounts
Amounts
Amounts
Amounts
Amounts
Amounts
Amounts
Amounts
Amounts
Amounts
Amounts
Amounts
Amounts
Amounts
Month in which the goods were sent
Apr
May Jun Jul Aug Sep Oct Nov Dec Jan
Feb Mar Total
CGST payable
SGST/UTGST payable
IGST payable
Cess Payable
Remarks
Section 31(7) Goods Sent on Approval Basis-TAX INVOICE, CREDIT AND DEBIT NOTES • 31(7) Notwithstanding anything contained in sub-section (1), where
the goods being sent or taken on approval for sale or return are removed before the supply takes place, the invoice shall be issued before or at the time of supply or six months from the date of removal, whichever is earlier.
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Time of Supply of Goods – Sec 12(2) Illustrations
© Indirect Taxes Committee, ICAI
137
Sale on approval basis Section 12(2) r/w Section 31(7)
Removal of goods
Issue of invoice
Accepted by recipient
Receipt of payment
Time of supply
11 Acceptance communicated within 6 months of removal
01-Nov-17 25-Nov-17 15-Nov-17 25-Nov-17 15-Nov-17
12 Amount paid to supplier before informing acceptance
01-Nov-17 25-Nov-17 15-Nov-17 12-Nov-17 12-Nov-17
13 Acceptance not communicated within 6 months of removal
01-Oct-17 15-May-18 15-May-18 02-May-18 01-Apr-18
III Place of Supply Annexure 10
1. Specify instances where the registered person has not determined the place of supply in terms of Section 10-13 of the IGST Act,2017
Instances where place of supply has not been determined under section 10-13 of the CGST Act 2017 Annexure 10-SLIDE 1
Section reference under the IGST Act
Situation Amt Amt Amt Amt
A. Cases other than supply of goods imported into ,or exported from India
Basis of place of supply followed by the registered person
Basis of place of supply as per law
Place of supply as per return
Place of supply as per law
Value of such supply
(Excess CGST paid)/ CGST payable
(Excess SGST paid)/ SGST payable
(Excess IGST Paid )/ IGST payable
Remarks
Section 10 (1) (a)
Supply involves movement of goods, whether by the registered person (as a supplier ) or the recipient or by any other person.
Section 10 (1) (b)
Goods are delivered by the supplier to a recipient/ any other person on the direction of the registered person ( whether acting as an agent or otherwise ) before or during Movement of goods, either by way of transfer of documents of title to the good or otherwise.
Instances where place of supply has not been determined under section 10-13 of the CGST Act 2017 Annexure 10-SLIDE 1A
Section reference under the IGST Act
Situation Amt Amt Amt Amt
A. Cess other than supply of goods imported into ,or exported from India
Basis of place of supply followed by the registered person
Basis of place of supply as per law
Place of supply as per return
Place of supply as per law
Value of such supply
(Excess CGST paid)/ CGST payable
(Excess SGST paid)/ SGST payable
(Excess IGST Paid )/ IGST payable
Remarks
Section 10 (1 ) ( c)
Supply does not involve movement of goods, whether by the registered person ( as a supplier) or the recipient
Section 10 ( 1) ( d)
Goods are assembled or installed at site
Section 10 ( 1) ( e)
Goods are supplied on board a conveyance, including a vessel, an aircraft, a train or a motor vehicle
Section 10 ( 2)
Where place of supply of goods cannot be determined as above.
B. Cases of import and export of goods
Section 11 (1)
Goods imported into India
Section 11 (1)
Goods exported from India
Place of Supply of Goods – Sec 10 IGST (other than goods imported / exported)
141
Section 10(1)(a)
Supply involves movement of
Goods
Location of goods at the time at which
movement terminates for
delivery to recipient
Section 10(1)(b)
Goods supplied on direction of the
third person
Principal Place of Business of
the third person (i.e., address in
Registration Certificate)
Section 10(1)(c) Supply does not
involves movement of goods
Location of goods at the
time of delivery to the recipient
Section 10(1)(d)
Goods are assembled or
installed at site
Place of installation or
assembly
Section 10(1)(e)
Goods supplied on board a
conveyance
Location at which such goods are
taken on board
Sec 10(2) - Where none of the above rules apply, place of supply would be determined in the manner
to be prescribed © Indirect Taxes Committee, ICAI
Section 11 of IGST ACT ANNEXURE 10-POINT B-CASES OF IMPORT AND EXPORT OF INDIA • Place of supply of goods imported into, or exported from India
• 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.
CA AVINASH LALWANI-ONLY FOR EDUCTION PURPOSE
Instances where place of supply has not been determined under section 10-13 of the CGST Act 2017 Annexure 10-SLIDE 2
Section reference under the IGST Act
Situation Amt Amt Amt Amt
Basis of place of supply followed by the registered person
Basis of place of supply as per law
Place of supply as per return
Place of supply as per law
Value of such supply
(Excess CGST paid)/ CGST payable
(Excess SGST paid)/ SGST payable
(Excess IGST Paid )/ IGST payable
Remarks
C. Cases of Supply of services where the supplier or recipient is located in India
Section 12 ( 3) In relation to immovable property
Section 12 ( 4) Restaurant and personal care
Section 12 ( 5) Training and performance appraisal
Section 12 ( 6) Admission to events
Section 12 ( 7) Organising events
Section 12 ( 8) Goods transportation services
Section 12 ( 9) Passenger transportation services
Instances where place of supply has not been determined under section 10-13 of the CGST Act 2017 Annexure 10-SLIDE 3 Section reference
under the IGST Act Situation Amt Amt Amt Amt
Basis of place of supply followed by the registered person
Basis of place of supply as per law
Place of supply as per return
Place of supply as per law
Value of such supply
(Excess CGST paid)/ CGST payable
(Excess SGST paid)/ SGST payable
(Excess IGST Paid )/ IGST payable
Remarks
Section 12 (10) Services on board a conveyance
Section 12 (11) Telecommunication ,etc
Section 12 (12) Banking and other financial services
Section 12( 13) Insurance services
Section 12 (14) Advertisement services to governmental agencies
Section 12 (2) (a)
Where place of supply cannot be determined as above, in case of registered recipients
Section 12 ( 2) (b)
Where place of supply cannot be determined as above, in case of unregistered recipients
145
For Supply of any other Service,
Place of supply is: (General Rule)
Section 12(2)(a)): Registered recipient: Location of recipient
Section 12(2)(b): Unregistered recipient: Location of recipient if address in supplier‟s
records Location of supplier if address not available
Place of Supply of Services – Sec 12 IGST (where supplier and recipient are in India)
© Indirect Taxes Committee, ICAI
Place of Supply of Services – Sec 12 IGST (where supplier and recipient are in India)
146
Supply of:
Services directly in relation to: a) Immovable property – grant-of-
rights, construction, use, accommodation, marriage, letting out, architects, surveyors, etc.
b) Boat, Vessel – lodging, club, etc. c) Ancillary services to the above
Place of supply - Section 12(3): Location of property/ boat/
vessel If property is outside India –
Location of Recipient
a) Restaurant and catering
b) Personal grooming
c) Fitness
d) Beauty treatment
e) Health service including cosmetic and plastic surgery
Place of supply - Section 12(4):
Location of „actual‟ performance
© Indirect Taxes Committee, ICAI
147
Sec 12(5): Supply of Services of Training
and Performance Appraisal
Registered recipient:
Location of recipient
Unregistered recipient:
Place of „actual‟ performance
Sec 12(6): Supply of Services for admission to: a) Cultural and artistic b) Sporting c) Scientific and educational d) Entertainment event e) Amusement Park f) Services ancillary to above
Venue of event/ park
Sec 12(7): Supply of:
a) Organising cultural, arts, sports, educational, scientific, entertainment, conference, fair exhibition or similar events
b) Services ancillary to above
Registered recipient:
Location of recipient
Unregistered recipient:
Venue of event
Event outside India: Location of recipient
Place of Supply of Services – Sec 12 IGST (where supplier and recipient are in India)
© Indirect Taxes Committee, ICAI
148
Supply of services of:
Sec 12(8): Transportation of goods, including by mail or courier
Registered Recipient: Location of Recipient
Unregistered Recipient: Location where goods handed over for transportation
Sec 12(9): Passenger Transportation Service (Return journey treated as separate journey)
Registered Recipient: Place of Registered Recipient
Unregistered Recipient: Place where passenger embarks on the conveyance for a continuous journey
Sec 12 (10): Services on board conveyance like vessel, aircraft, train, motor vehicle
First scheduled point of departure of that conveyance for that journey
Place of Supply of Services – Sec 12 IGST (where supplier and recipient are in India)
© Indirect Taxes Committee, ICAI
149
Supply
of te
lecom
munic
ation s
erv
ices
inclu
din
g d
ata
t
ransfe
r, b
roadcasting,
DT
H, cable
etc
.
(a) Services of fixed telecommunication line, leased circuits, internet leased circuit, cable or dish antenna
Location where line / device is 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 / vouchers sold
Place of Supply of Services – Sec 12(11) IGST (where supplier and recipient are in India)
• In cases not covered, address of recipient on records shall be the place of supply;
• Where no address of the recipient available in records, location of the supplier shall be the place of supply © Indirect Taxes Committee, ICAI
150
Supply of:
Sec 12(12) Banking and Other Financial Services including
Stock Broking
Location of recipient in suppliers records
(If not available, location of supplier)
Sec 12(13) Insurance Services
Registered recipient: Location of recipient
Unregistered recipient: Location of recipient in
supplier‟s records
Sec 12(14) Advertisement
Services to Government, etc.
Place is State of dissemination in
proportion
Place of Supply of Services – Sec 12 IGST (where supplier and recipient are in India)
© Indirect Taxes Committee, ICAI
Instances where place of supply has not been determined under section 10-13 of the CGST Act 2017 Annexure 10-SLIDE 4 Section reference under the IGST Act
Situation Amt Amt Amt Amt
Basis of place of supply followed by the registered person
Basis of place of supply as per law
Place of supply as per return
Place of supply as per law
Value of such supply
(Excess CGST paid)/ CGST payable
(Excess SGST paid)/ SGST payable
(Excess IGST Paid )/ IGST payable
Remarks
D. Cases of supply of service where the recipient is located outside India
Section 13(3) (a)
Where goods are required to be made physically available to the Supplier
Section 13 ( 3)(b)
Service requiring the physical presence of the recipient
Section 13 (4) In relation to immovable property
Section 13( 5) Admission to or organization of events
Section 13( 8) (a)
Services by banking/ financial/ NBFCs to account holders
Section 13 ( 8) (b)
Intermediary services
Instances where place of supply has not been determined under section 10-13 of the CGST Act 2017 Annexure 10-SLIDE 5
Section reference under the IGST Act
Situation Amt Amt Amt Amt
Basis of place of supply followed by the registered person
Basis of place of supply as per law
Place of supply as per return
Place of supply as per law
Value of such supply
(Excess CGST paid)/ CGST payable
(Excess SGST paid)/ SGST payable
(Excess IGST Paid )/ IGST payable
Remarks
Section 13( 8) ( c)
Hiring of means of transport
Section 13 ( 9) Goods transportation services
Section 13 (10) Passenger transportation services
Section 13( 11) Service on board a conveyance
Section 13( 12) OIDAR Service
Place of Supply of Services – Sec 13 IGST (where supplier or recipient is outside India)
153
Sec 13(3)(a)-Services when goods required
to be made physically available
by recipient or Sec 13(3)(b) requiring physical presence of
receiver / person acting on his behalf
Location where services actually
performed
13(4)Services supplied directly in
relation to immovable property
Location of such immovable property (or where it is
intended to be located)
Sec 13(5)Service by way of admission to / organising an event,
etc. and ancillary services
Place where the event is actually
held
Sec 13(8)(a)-Banking services to account
holders,Section 13(8)(b) intermediary
services, Section 13(8)(C)hiring of
means of transport (other than aircraft and vessels) upto 1
month
Location of supplier
Section 13(9) Transportation of
goods (other than by way of mail / courier)
Destination of the goods
1 to 3 When supplied at >1 location (including India) Deemed location in India.
When supplied from >1 state / UT In proportion to the value of services © Indirect Taxes Committee, ICAI
Place of Supply of Services – Sec 13 IGST (where supplier or recipient is outside India)
154
Section 13(10)Passenger
transportation service
Place where passenger
embarks on the conveyance for
a continuous journey
Section 13(11) Service provided
on board a conveyance
First scheduled
point of departure of
that conveyance
for that journey
Section 13(12) Online information
and database access or retrieval
services
Location of recipient
Section 13(2) Residuary
Location of the recipient;
If not available in the ordinary
course of business, location of supplier
Section 13(13)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
© Indirect Taxes Committee, ICAI
III Place of Supply
2. Basis of identification of location of recipient, in case of supply of services if place of supply determined u/s 12(2) or 13(2) of the IGST Act,2017
Section 12(2) and 13(2) of The IGST ACT 2017
• Place of supply of services where location of supplier and recipient is in India.
• IGST SEC 12 (2) The place of supply of services, except the services specified in sub-sections (3) to (14),––made to a registered person shall be the location of such person; made to any person other than a registered person shall be,––
• (i) the location of the recipient where the address on record exists; and
• (ii) the location of the supplier of services in other cases
• Place of supply of services where location of supplier or location of recipient is outside India.
• IGST SEC 13 (2) The place of supply of services except the services specified in sub-sections (3)to (13) shall be the location of the recipient of services:
Provided that where the location of the recipient of services is not available in the ordinary
course of business, the place of supply shall be the location of the supplier of services.
CA AVINASH LALWANI-ONLY FOR EDUCTION PURPOSE
IV Value of supply Annexure 11
1. a) Details of all transactions of outward supplies (or inward supplies liable to RCM) where the transaction value is not acceptable under section 15 and value of supply is incorrectly determined under Rule 27-31 of the CGST Rules
Details of Transaction where transaction value is not accepted and value of supply is based on Rule 27-31 of CGST Rules 2017
Annexure-11-SLIDE 1
SR NO
TYPE Transaction Value as per tax invoice/ books
Taxable value reported in GST return
Correct taxable as per CGST Rules
( Excess CGST paid)/ CGST payable
( Excess SGST paid)/ SGST payable
( Excess IGST paid)/ IGST payable
(Excess Cess paid)/ Cess payable
Remarks
A Outward Supplies
1 Where price is not he sole consideration ( including barter, exchange,etc)
2 Permanent transfer or disposal of business asset where there is no consideration, and ITC was availed
3 Supply to related person ( other than employees ) where ITC not fully available to recipient, whether or not for a consideration
Details of Transaction where transaction value is not accepted and value of supply is based on Rule 27-31 of CGST Rules 2017 Annexure-
11-Slide 2
SR NO
TYPE Transaction Value as per tax invoice/ books
Taxable value reported in GST return
Correct taxable as per CGST Rules
( Excess CGST paid)/ CGST payable
( Excess SGST paid)/ SGST payable
( Excess IGST paid)/ IGST payable
(Excess Cess paid)/ Cess payable
Remarks
4 Supply to employees whether or not for a consideration
5 Supply to distinct persons where ITC Not fully available to recipient whether or not for a consideration
6 Supply of goods to agent without any consideration
7 Supply for consideration to an agent who is a related party
Details of Transaction where transaction value is not accepted and value of supply is based on Rule 27-31 of CGST Rules 2017 Annexure-11-Slide 3
SR NO
TYPE Transaction Value as per tax invoice/ books
Taxable value reported in GST return
Correct taxable as per CGST Rules
( Excess CGST paid)/ CGST payable
(Excess SGST paid)/ SGST payable
(Excess IGST paid)/ IGST payable
(Excess Cess paid)/ Cess payable
Remarks
B Inward Supplies
1 Inward Supplies received from related persons/ distinct persons, where ITC can be fully claimed by the GSTIN, attracting tax on RCM basis
2 Import of service without consideration from a related person/ his other establishment outside India, in the course of furtherance of business
3 Supply of goods received form agents without any consideration which attract tax on RCM basis
Details of Transaction where transaction value is not accepted and value of supply is based on Rule 27-31 of CGST Rules 2017 Annexure-
11-slide 4
• Where possible, indicate the relevant rule under which the valuation has been carried out
SR NO
TYPE Transaction Value as per tax invoice/ books
Taxable value reported in GST return
Correct taxable as per CGST Rules
( Excess CGST paid)/ CGST payable
(Excess SGST paid)/ SGST payable
(Excess IGST paid)/ IGST payable
(Excess Cess paid)/ Cess payable
Remarks
4 Supply for consideration received from an agent who is a related party and for which tax is payable on RCM basis
5 Where price is not the sole consideration ( including barter, exchange, etc)
Section 15 Value of Taxable Supply
• Value of taxable supply.
• 15. (1) The value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply.
CA AVINASH LALWANI-ONLY FOR EDUCTION PURPOSE
Transaction value: Recourse to Rules
© Indirect Taxes Committee, ICAI 163
A. Where value cannot be determined u/s 15(1), i.e., when: 1. Price is not the sole consideration
2. Supplier-recipient are related persons: Recourse to Rules even if the Supplier-Recipient relationship:
• Did not influence the price;
• Precedes agreement to the supply;
• Has no bearing on pricing;
• Has no bearing on Agreement to the Supply;
• Has no relevance to the Supply;
• Was to meet with different criteria or purpose;
(Rules will apply both ways – supplier to recipient and recipient to supplier)
B. In case of notified supplies
Related Person Definition Explanation to Section 15 • Explanation.—For the purposes of this Act,––(a) persons shall be deemed to be “related
persons” if––
• (i) such persons are officers or directors of one another’s businesses;
• (ii) such persons are legally recognised partners in business;
• (iii) such persons are employer and employee;
• (iv) any person directly or indirectly owns, controls or holds twenty-five per cent. or more of the outstanding voting stock or shares of both of them;
• (v) one of them directly or indirectly controls the other;(vi) both of them are directly or indirectly controlled by a third person; (vii) together they directly or indirectly control a third person; or(viii) they are members of the same family;
• (b) the term “person” also includes legal persons;
• (c) persons who are associated in the business of one another in that one is the sole agent or sole distributor or sole concessionaire, howsoever described, of the other, shall be deemed to be related.
CA AVINASH LALWANI-ONLY FOR EDUCTION PURPOSE
© Indirect Taxes Committee, ICAI 165
Valuation Rules under
CGST Rules, 2017
(Rule 27 to 35)
Rule 27 of CGST Rules
© Indirect Taxes Committee, ICAI 166
Value of supply of goods or services where consideration is not wholly in money • The value of supply shall be- a) The open market value of such supply
b) If open market value not available, • be the sum total of consideration in money and such further
amount in money as is equivalent to consideration not in money if such amount is not known at time of supply
Rule 27 of CGST Rules continued
© Indirect Taxes Committee, ICAI 167
• The value of supply shall be-
c) If value is not determinable under (a) or (b), the value of supply of goods/ services of like kind and quality
d) If value not determinable under (a), (b) or (c), be the sum total of consideration in money and such further amount in money that is equivalent to consideration not in money as determined by application of rule 30 or 31 in that order.
Rule 27 of CGST Rules continued
© Indirect Taxes Committee, ICAI 168
• Illustration:
• (1) Where a new phone is supplied for twenty thousand rupees along with the exchange of an old phone and if the price of the new phone without exchange is twenty four thousand rupees, the open market value of the new phone is twenty four thousand rupees.
• (2) Where a laptop is supplied for forty thousand rupees along with the barter of a printer that is manufactured by the recipient and the value of the printer known at the time of supply is four thousand rupees but the open market value of the laptop is not known, the value of the supply of the laptop is forty four thousand rupees.
Rule 28: Value of supply of goods or services or both between distinct or related persons,or than through an agent
© Indirect Taxes Committee, ICAI 169
(a) The open market value of such supply
Value of supply of goods or
services of like kind and quality
Provided that where goods are intended for further supply as such by
the recipient, the value shall, at the option of the supplier, be an
amount equivalent to 90% of the price charged for the supply of goods
of like kind and quality by the recipient to his customer not being a
related person
Value as determined by
application of Rule 30 or Rule
31, in that order
Where the recipient is eligible for full input tax credit, the value
declared in the invoice shall be deemed to be the open market value of
goods or services
Rule 29: Value of supply of goods made or received through an agent
© Indirect Taxes Committee, ICAI 170
a) be the open market value, or • at the option of the supplier, be 90% of the price charged for the
supply of goods of like kind and quality by the recipient (agent) to his customer not being a related person,
• where the goods are intended for further supply by the said recipient (agent)
b) where the value of a supply is not determinable under clause (a),
• the same shall be determined by application of rule 30 or rule 31 in that order.
Rule 29: Value of supply of goods made or received through an agent
© Indirect Taxes Committee, ICAI 171
• Illustration:
• A principal supplies groundnut to his agent and the agent is supplying groundnuts of like kind and quality in subsequent supplies at a price of five thousand rupees per quintal on the day of the supply. Another independent supplier is supplying groundnuts of like kind and quality to the said agent at the price of four thousand five hundred and fifty rupees per quintal. The value of the supply made by the principal shall be four thousand five hundred and fifty rupees per quintal or where he exercises the option, the value shall be 90 per cent. of five thousand rupees i.e., four thousand five hundred rupees per quintal.
Rule 30: Value of supply of goods or services or both based on cost
© Indirect Taxes Committee, ICAI 172
• Where value is not determinable by any of the preceding rules, • the value shall be 110% of the: cost of production or manufacture or cost of acquisition of such goods or cost of provision of such services.
Rule 31: Residual Method
© Indirect Taxes Committee, ICAI 173
• Where value cannot be determined under any above provision, the same shall be determined using reasonable means consistent with the principles and general provisions of Sec15 and these Rules.
• Further, in case of supply of services, the supplier may opt for this rule, disregarding rule 30.
IV Value of supply Annexure 12
2. Whether registered person has correctly determined the value of supply based on inclusions listed u/s 15(2)?
Details of Transaction wherein the value of supply has been incorrectly determined u/s 15 (2) of the CGST Act 2017 Annexure-12-Slide1
Amounts Amounts Amounts
Amounts
Amounts
Section
Inclusions Listed u/s 15 (2)
Nature of Contravention u/s 15(2)
Reasons of incorrect determination
Taxable Value to be included
CGST Payable
SGST/ UTGST payable
IGST payable
Cess payable
Remarks
15(2) (a) Any taxes, duties, cesses, fees and charges levied under any law for the time being in force other than that under the GST Laws/ GST Compensation Cess Law, if charged separately by the supplier
15(2) (b) Any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply and not included in the price actually paid or payable for the goods or service or both.
Details of Transaction wherein the value of supply has been incorrectly determined u/s 15 (2) of the CGST Act 2017 Annexure-12 –Slide 2
Amounts Amounts Amounts
Amounts
Amounts
Section
Inclusions Listed u/s 15 (2)
Nature of Contravention u/s 15(2)
Reasons of incorrect determination
Taxable Value to be included
CGST Payable
SGST/ UTGST payable
IGST payable
Cess payable
Remarks
15(2) (c) Incidental expenses, including commission and packing, charged by the supplier in respect of the supply of goods or services or both at the time of, or before delivery or goods or supply of services
15 ( 2) ( d)
Interest or late fee or penalty for delayed payment of any consideration for any supply
15 ( 2) ( e)
Subsidies directly linked to the price excluding subsidies provided by the central Government and state Governments.
Value of Taxable Supply – Sec 15
© Indirect Taxes Committee, ICAI 177
Value of Taxable Supply
Value of supply of goods and / or services on which CGST/SGST is to be discharged shall be the „Transaction Value‟, where
• Supplier and recipient of supply are unrelated
• Price is actually paid / payable – AND price is the sole consideration for the supply
Explanation to Section 15 of the CGST Act deems the persons below to be “related
persons”:
• Officers / Directors of one another‟s business
• Partners in business
• Employer – employee
• A person directly / indirectly owns / controls / holds 25% of shares of both the persons
• One directly / indirectly controls the other
• Both are directly / indirectly controlled by a third person
• Together, they directly / indirectly control a third person
• Members of the same family
• Sole agent / distributor / concessionaire of the other
Transaction value: Inclusions and exclusions
© Indirect Taxes Committee, ICAI 178
Transaction Value INCLUDES:
Sec 15(2)(a)Amounts charged by supplier to recipient in
respect of any taxes, duties, cesses, fees and charges
levied under any statute, other than taxes paid under GST
regime;
Sec 15(2)(b)Amount incurred by Recipient which is liable
to be paid by the Supplier;
Charges by Supplier to Recipient being:
• Sec 15(2)(c) -cIncidental expenses (e.g: packing,
commission)
• Sec 15(2)(c)-Charges for anything done by the
Supplier at the time or before the supply, in respect
thereof
• Sec 15(2)(d)-Interest/ late fee/ penalty for delayed
payment of consideration
• Sec 15(2)(e)-Subsidies directly linked to price – for
supplier receiving the subsidy (excluding Central and
State Govt subsidies; i.e., Government subsidies will not
be included in transaction value)
Transaction Value EXCLUDES
discount:
Sec 15(3)(a)-Before / at the time of
supply
• Single condition: Such discount
is duly recorded in the invoice
Sec 15(3)(b)-After the supply:
Cumulative conditions:
• Agreement establishing discount
entered into before / at the time
of supply
• Discount specifically linked to
relevant invoices
• ITC reversed by the recipient to
the extent of discount
IV Value of supply Annexure 13
3. Provide details of discounts adjusted in contravention of the provisions of Section 15(3)
Details of discounts adjusted in contravention with section 15( 3) of the CGST Act 2017 Annexure -13
Amounts Amounts Amounts Amounts
Amounts
Section Nature of discount
Nature of contravention u/s 15 ( 3)
Reasons for incorrect determination
Taxable Value to be included
CGST Payable
SGST/UTGST payable
IGST Payable
Cess payable
Remarks
15 ( 3) (a) Discount given before or at the time of supply
15 ( 3) ( b)
Discount given after the supply had been effected
IV Value of supply
4. Whether the registered person has reversed any output tax liability on account of bad debts?
IV Value of supply Annexure 14
5.Has the supplier contravened the provisions of pure agent as per Rule 33 of CGST Rules,2017?
Details of Supplies where the provisions of Rule 33 of CGST Rules 2017 in respect of pure agent have been contravened
Annexure-14
Nature of contravention
Reasons for contravention
Total Value including reimbursements ( Excluding taxes)
Taxable value on which tax has been paid
Additional value on which tax is liable to be paid
CGST payable
SGST/UTGST payable
IGST payable
Cess Payable
Remarks
Rule 33: Definition of Pure Agent
© Indirect Taxes Committee, ICAI 184
• Agency supplies are different from „pure agent‟ in relation to valuation
• There is a payment made to third party by a payer
• Payer is a supplier of goods or services or both to a beneficiary (client)
• Underlying obligation to pay third party is of the beneficiary (client)
• Payment by payer is to discharge beneficiary‟s obligation toward third party
• Third party enjoys recourse to beneficiary in case of non-payment by payer
• For example, income-tax liability of a client is paid by the CA
Rule 33: Value of supply of services in case of Pure Agent
© Indirect Taxes Committee, ICAI 185
• The expenditure or costs incurred by the pure agent shall be excluded from the value of supply, if all the following conditions are satisfied, namely:
a) pure agent makes payment to the third party on behalf of recipient as the contract is between third party and recipient;
b) Recipient uses the services procured by pure agent - Many rules omitted here
c) Recipient is liable to make payment to third party; d) Recipient authorizes pure agent to make payment on his behalf; e) Recipient knows that the services for which payment has been made by
pure agent shall be provided by third party;
Rule 33: Value of supply of services in case of Pure Agent
© Indirect Taxes Committee, ICAI 186
f) Payment made by pure agent on behalf of recipient has been separately indicated in invoice issued by pure agent to recipient;
g) Pure agent recovers from recipient only such amount as has been paid by him to third party;
h) Services procured by pure agent from third party are in addition to supply he provides on his own account.
V Input Tax Credit Annexure 15
A General
1 Details of ineligible input tax credit in respect of inward supplies of inputs, input services and capital goods availed during the year (disclose supplies from related persons and distinct persons including business verticals separately)
Details of ineligible input tax credit availed during the year Annexure-15-slide1
Amt Amt Amt Amt
SR NO Particulars CGST SGST IGST Cess Remarks
A. RELATED PERSONS AS PER SECTION 15 ( 5) OF THE CGST ACT AND DISTINCT PERSONS AS PER SECTION 25 OF THE CGST ACT
1 Goods/services are not used in the course or furtherance of business
2 Credit ineligible as the goods/services received are used wholly for effecting exempt supplies ( excluding exports)
3 Credit ineligible u/s 17 ( 5)
4 Credit ineligible as the recipients GSTIN was not mentioned/ mentioned incorrectly.
5 Credit reversible u/s 17 ( 4) For a banking company/ financial institution/ non banking financial company.
Details of ineligible input tax credit availed during the year Annexure-15-Slide 2
Amt Amt Amt Amt
SR NO Particulars CGST SGST IGST Cess Remarks
6 Credit not eligible as the place of supply is outside the state
7 Incorrect /Omission of Reversal u/r42
8 Incorrect /Omission of Reversal u/r43
9 Incorrect /Omission of Reversal u/r44
10 Incorrect /Omission of Reversal u/r44 A
11 Credit reversible u/r 37 for non- payment within 180 days
12 Excess credit distributed by ISD
13 Credit claimed beyond the period allowed u/s 16 (4)
14 Deprecation claimed on the tax component of capital goods in contravention of 16 ( 3)
15 Credit claimed without satisfaction of all the conditions u/s16(2)
16 Any Other (please specify
Details of ineligible input tax credit availed during the year Annexure-15-Slide 3
Amt Amt Amt Amt
SR NO Particulars CGST SGST IGST Cess Remarks
B. PERSONS OTHER THAN RELATED PERSON AND DISTINCT PERSONS AS GIVEN UNDER (A) ABOVE
1 Goods/services are not used in the course or furtherance of business
2 Credit ineligible as the goods/services received are used wholly for effecting exempt supplies ( excluding exports)
3 Credit ineligible u/s 17 ( 5)
4 Credit ineligible as the recipients GSTIN was not mentioned/ mentioned incorrectly.
5 Credit reversible u/s 17 ( 4) For a banking company/ financial institution/ non banking financial company.
Details of ineligible input tax credit availed during the year Annexure-15-Slide 4 Amt Amt Amt Amt
SR NO Particulars CGST SGST IGST Cess Remarks
6 Credit not eligible as the place of supply is outside the state
7 Incorrect /Omission of Reversal u/r42
8 Incorrect /Omission of Reversal u/r43
9 Incorrect /Omission of Reversal u/r44
10 Incorrect /Omission of Reversal u/r44 A
11 Credit reversible u/r 37 for non- payment within 180 days
12 Excess credit distributed by ISD
13 Credit claimed beyond the period allowed u/s 16 (4)
14 Deprecation claimed on the tax component of capital goods in contravention of 16 ( 3)
15 Credit claimed without satisfaction of all the conditions u/s16(2)
16 Any Other (please specify
V Input Tax Credit
2. Whether the records maintained by the registered person facilitate verification as to whether the goods/services had been received before the end of the month for which credit is availed?
V Input Tax Credit Annexure 16
3. Whether apportionment of credit has been effected in terms of section 17(2) of CGST Act,2017 read with Rule 42/43 of CGST Rules,2017
Concept of ITC
© Indirect Taxes Committee, ICAI 194
“Input tax" means IGST (including that on import of goods), CGST, SGST and UTGST;
Charged on any supply of goods or services and;
Includes the tax payable under sub-section (3) and (4) of section 9,
Includes the tax payable under sub-section (3) and (4) of section 5 of IGST Act,
Includes the tax payable under sub-section (3) and (4) of section 9 of SGST Act,
Includes the tax payable under sub-section (3) and (4) of section 7 of UTGST Act, excludes the tax paid under section 10 (composition levy)
Principles on Input Tax Credit
System for a seamless flow of credit
Extends to inter-State supplies
Credit utilization would be as follows [Sec 49(5)]:
*The numbers represent the order of utilization of credit
Expectation: Accumulation of unutilized GST credits would be avoided except in cases of exports
© Indirect Taxes Committee, ICAI 195
Credit of: Allowed for Payment of
IGST CGST SGST IGST (1) (2) (3) CGST (2) (1) SGST (2) (1)
Conditions for Availment of ITC by a Registered Taxable Person – Sec 16
Basis - tax invoice / debit note issued by a registered supplier, or other prescribed taxpaying document
Goods and/or services have been
received*
Tax actually paid by the supplier to the credit of the
appropriate Government, either
in cash or by utilization of ITC
He has furnished the monthly return in Form GSTR-3 under Section 39
© Indirect Taxes Committee, ICAI 196
Conditions for Availment of ITC by a Registered Taxable Person – Sec 16
Note:
• Credit only upon receipt of the last lot/ instalment in case of goods received in lots / instalments.
• Goods deemed to be received by a taxable person when the supplier delivers the goods to the recipient/ any other person, on the direction provided by the taxable person to the supplier.
• Exception in case of goods being directly sent to job worker
• If the recipient of services fails to pay (value + tax) within 180 days from date of invoice, (ITC availed + interest @ 18%) shall be added to his output tax liability. ITC available when amount discharged later
© Indirect Taxes Committee, ICAI 197
ITC in case of Capital Goods
© Indirect Taxes Committee, ICAI 198
Depreciation claimed on Tax component of the cost
of capital goods under IT Act
Example:
Cost of asset = Rs. 100
Tax-10%(say) = Rs. 10
Total Cost Rs. 110
ITC not Available
If Depreciation charged
on Rs.100
ITC Available
If Depreciation charged on
Rs.110
ITC not Available
“capital goods” means the goods, the value of which is capitalized in the books of accounts of the
person claiming the credit and which are used of intended to be used in the course or furtherance
of the business
ITC on the Basis of use of Inputs – Sec 17
© Indirect Taxes Committee, ICAI 199
Use of input tax credit
For Business purposes
ITC Available
For Other Purposes
ITC not Available
―input‖ means any goods other than capital goods used or intended to be used by a supplier in
the course or furtherance of business
―input service‖ means any service used or intended to be used by a supplier in the course or
furtherance of business
Note: Attribution
of ITC to be
made as per the
manner
prescribed in the
ITC Rules
ITC on the Basis of use of Inputs – Sec 17
© Indirect Taxes Committee, ICAI 200
Use of input tax credit: Partly for
Taxable Supplies
ITC Available
Zero-rated Supplies
ITC Available
Non-taxable
Supplies
ITC not available
Exempt Supplies
ITC not available
Nil-rated Supplies
ITC not available
Note: Attribution
of ITC to be
made as per the
manner
prescribed in the
ITC Rules
Alternative to apportionment between taxable and exempt supplies in case of banking companies
and financial institutions:
• Yearly option to avail a standard rate of 50% of eligible ITC on inputs, capital goods and input
services on a monthly basis
• 50% shall not be applied on tax paid on supplies made by one registered person to another
registered person having same PAN
Restrictions on ITC – Sec 17(5) Blocked credits
© Indirect Taxes Committee, ICAI 201
a) Motor Vehicles
ITC for Motor
Vehicles will
NOT be
available
Except
when
they are
used for
Transportation of goods , or
Making the following taxable services:
i. Further supply of such vehicles /
conveyances, or
ii. Transportation of passengers, or
iii. Training for driving / flying /
navigating such vehicles /
conveyances
Note: Where any amount has been paid on goods and / or services, in lieu of tax,
under composition scheme, no credit on such amount would be allowed.
Restrictions on ITC – Sec 17(5) Blocked credits
© Indirect Taxes Committee, ICAI 202
b) Supply of goods and services being:
Food and
Beverages
Outdoor
Catering
Beauty
Treatment
Health
Services
Cosmetic
and Plastic
Surgery
Membership
of club
Health and
Fitness
Centre
Travel
Benefits to
employees
Life / health
Insurance Rent-a-cab
Allowed ONLY if goods /
services of a particular
category are used towards
making taxable outward
supplies of the same
category
NEVER allowed
Allowed ONLY if where the services are notified as
obligatory for an employer to provide an employee
or services of a particular category are used
towards making taxable outward supplies of the
same category
Restrictions on ITC – Sec 17(5) Blocked credits
© Indirect Taxes Committee, ICAI 203
c) Construction of Immovable Property (other than plant and machinery)
Works contract services,
except where it is an input
service for further supply of
works contract service
Goods or services received by a
taxable person for construction of an
immovable property on his own
account even when used in course or
furtherance of business;
ITC not Available
Construction includes re-
construction, renovation,
additions or alterations or
repairs to the extent of
capitalisation
Restrictions on ITC : Sec 17(5) Blocked credits
© Indirect Taxes Committee, ICAI 204
Taxes on supply of goods or services paid u/s 10
Goods or services or both received by a non-resident taxable person except on goods
imported by him, shall not be allowed
Goods or services or both used for personal consumption
Goods lost, stolen, destroyed, written off or disposed of by way of gift or free supplies and
Any tax paid in accordance with the provisions of sections 74, 129 and 130.
Plant and machinery means means apparatus, equipment, and machinery fixed to earth by
foundation or structural support that are used for making outward supply of goods or services
or both and includes such foundation and structural supports but excludes— (i) land, building
or any other civil structures; (ii) telecommunication towers; and (iii) pipelines laid outside the
factory premises.
Eligibility and Time Limit for Availing ITC
© Indirect Taxes Committee, ICAI
205 E
lig
ibilit
y a
nd
Tim
e L
imit
of
IT
C A
vailm
en
t Registered Taxable Person – 16(1)
Admissible to take ITC on supplies used / intended to be used
in the course / furtherance of
business
ITC amount will be credited to the electronic Credit Ledger
Person applied for registration within 30 days of becoming liable to register, and registration granted
ITC available in respect of: a) Inputs b)Semi-finished Good c) Finished Goods
On the day immediately preceding the date from which he becomes liable to pay tax
Person applied for Voluntary Registration
Same as above On the day immediately preceding the date of registration
Earlier of : 1. Annual Return filing
Date 2. Return filing date for
September of the following FY
One Year from
the date of
issue of tax
invoice 18(2)
Eligibility and Time Limit for Availing ITC
© Indirect Taxes Committee, ICAI
206
Elig
ibilit
y a
nd
Tim
e L
imit
of
IT
C A
vailm
en
t
Registered taxable person ceases to pay composition tax
ITC available in respect of: a) Inputs/ Capital Goods b)Semi-finished Good c)Finished Goods
On the day immediately preceding the date from which he becomes liable to pay tax u/s 8
Where exempt supply become taxable
supply Same as above
On the day immediately preceding the date on which supply becomes taxable
Earlier of :
1. Annual Return
filing Date
2. Return filing date
for September of
the following FY
One Year from
the date of issue
of tax invoice
18(2)
Eligibility of ITC in case of New Registrations – Sec 18(1)
© Indirect Taxes Committee, ICAI 207
Person liable for registration u/s 25(1)
(
Who applies for registration within
30 days
Entitled to credit of input tax w.r.t inputs held in stock, semi-finished or finished
goods
Relevant Date: As on the preceding date
on which he becomes liable to
pay tax
Eligibility of ITC in case of New Registrations (Voluntary Registration) – Sec 18(1)
© Indirect Taxes Committee, ICAI 208
Person liable for registration u/s 25(3)
Entitled to credit of input tax w.r.t inputs held in stock, semi-finished or finished
goods
Relevant Date: As on the preceding date on which registration is
granted
Switching from Composition / Exempt Supply to Normal Tax / Taxable Supply – Sec 18(1)
© Indirect Taxes Committee, ICAI 209
Person ceases to pay tax u/s 10
Entitled to credit of input tax w.r.t inputs held in stock, semi-finished or finished goods and Capital
Goods
Relevant Date: As on the preceding date on which liable to pay u/s
9
Goods or Services becoming taxable
Entitled to credit of input tax w.r.t inputs held in stock, semi-finished or finished goods and Capital
Goods
Relevant Date: As on the preceding date from which supply becomes taxable
Credit on Capital Goods to be available after reducing 5% per quarter of a year or part from the
date of invoice or such other document on which capital goods were received by taxable person
Conditions for claiming credit under – Sec 18(1)
© Indirect Taxes Committee, ICAI 210
Purchase invoice should not be earlier than 1 year from the relevant date
Declaration in Form GST ITC-01 to be filed within 30 days from the date
of him becoming eligible
Details of Inputs held in stock / semi finished or finished goods and
capital goods to be furnished in Form GST ITC-01 within 30 days from
the relevant date
Declaration in Form GST ITC-01 to be certified by a practicing Chartered
Accountant or Cost Accountant if the value of credit claimed exceeds Rs.
2,00,000
ITC – Change in Constitution of Taxable Person Sec 18(3)
© Indirect Taxes Committee, ICAI 211
Change in
Constitution of
Registered Taxable
Person
On account of:
Sale,
Merger,
Demerger,
Amalgamation,
Lease, or
Transfer of business
Transfer of Unutilized
ITC in the books
allowed to such:
Sold,
Merged,
Demerged,
Amalgamated,
Leased, or
Transferred Business
ITC shall be apportioned in the ratio of value of assets of the new units in case of demerger scheme
Transferor to submit certificate from a practicing Chartered Accountant certifying whether the sale /
merger / de-merger / amalgamation / lease / transfer has been done with specific provision for
transfer of liabilities
Transferee to furnish details of credit available in Form GST ITC-02
Switching from regular to over composition- Pay and Exit – Sec 18(4)
© Indirect Taxes Committee, ICAI 212
Eligible credit under earlier law carried forward in the return
Amount equivalent to the credit of input tax in respect of input held in stock or input contained in semi-finished goods or finished goods held in stock
and capital goods as on appointed day
Such amount shall be payable by debiting the electronic credit ledger or cash ledger
Balance in electronic credit ledger shall lapse
Declaration for input tax reversed to be submitted in Form GST ITC-3
Supply of Capital goods on which ITC already taken – Sec 18(6)
© Indirect Taxes Committee, ICAI 213
Supply of Capital goods on which ITC had been
taken earlier Pay Tax on higher of:
ITC availed earlier LESS 5% for every quarter
OR
Tax on Transaction Value
Note: Any credit wrongly taken shall be subjected to the recovery provisions
Purchase Date of Laptop Jan 01, 2015
Purchase Price 50,000
Taxes Paid 10,000
Sale Date May 05, 2017
Sale Value of Laptop 10,000
Particulars Amount
Sale Value of Laptop 10,000
IGST @ 18% 1,800
Particulars Amount
Input Tax Credit Availed 10,000
Less: 5% per quarter (For 10 quarters) 5,000
ITC Rules – Credit in Special Circumstances
© Indirect Taxes Committee, ICAI 214
Credit of Capital Goods as provided to a person switching from composition to regular scheme and a person whose exempt supply becomes taxable supply (Section 18 (1)(c) and (d), shall be claimed after reducing such tax by 5% per quarter from the date of issue of invoice;
A declaration within 30 days shall be furnished in all the scenarios as specified in Section 18 (1) for details relating to inputs, semi-finished, finished and capital goods as the case may be;
CA/CMA certificate is necessary in case claim for input tax exceeds 2 lakhs;
Matching of claims shall be done with GSTR-1 or GSTR-4 of the corresponding supplier.
ITC Rules (Rule 36-45) – Manner of Reversal
© Indirect Taxes Committee, ICAI 215
I. Reversal of credit where inputs or input services are used partly for business purposes
or partly for effecting exempt supplies –
Total input tax in a tax period to be denoted as „T‟
Amount of input tax used exclusively for the purposes other than business „T1‟
Amount of input tax used exclusively for effecting exempt supplies „T2‟
Amount of blocked credit as per Section 17 (5) „T3‟
Amount of input tax to be credited to electronic credit ledger „C1 = T-(T1+T2+T3)‟
Amount of input tax used exclusively for effecting taxable and zero rated supplies „T4‟
T1, T2, T3, T4 to be determined at invoice level in GSTR-2
Common Credit “C2 = C1-T4”
Credit attributable towards exempt supplies “D1 = C2*(E/F)
where
„E‟ is the aggregate value of exempt supplies, that is, all supplies other than taxable and
zero rated supplies, during the tax period, and
„F‟ is the total turnover of the registered person during the tax period:
Credit attributable towards non business purpose “D2 = C2*5%
ITC Rules – Manner of Reversal
© Indirect Taxes Committee, ICAI 216
Remaining credit available for business purpose and for taxable and zero
rated supplies “C3 = C2 - (D1+D2)”;
C3 to be computed separately for CGST, SGST, UTGST and IGST;
D1 and D2 shall be added to output tax liability provided invoice wise
segregation has been made;
Credit calculated on provisional basis shall be computed finally before due
date of filing returns for the month of September following the end of the FY
to which credit relates;
In case amount calculated exceeds the provisional calculation the
differential amount shall be added to the output tax liability and interest from
the month of April of next FY till the date of payment to be paid;
In case amount finally calculated is short of the provisional calculation, the
differential amount shall be taken as credit in the month of September.
© Indirect Taxes Committee, ICAI 217
Terms used in
Rule
Particulars Amount
T Total Input Tax of Input and Input Services 500.00
T1 ITC for Non Business 100.00
T2 ITC for Exempt Supply 50.00
T3 ITC of Blocked Credits (Inputs Only) 25.00
C1 = T-(T1+T2+T3) Valid ITC in ECL 325.00
T4 ITC for Taxable Supply 200.00
C2= C1-T4 Common ITC 125.00
E Value of Exempt Supplies 2000.00
F Aggregate Turnover 5000.00
D1= E/F*C2 Value of ITC for Exempt Supply (From Common ITC) 50.00
D2= C2*5% Value of ITC for Non Business Purpose ( From Common ITC) 6.25
C3= C2-(D1+D2) Eligible ITC from Common ITC 68.75
T4+C3 Total Eligible ITC for Use 268.75
ITC Rules – Manner of Reversal- Illustration
ITC Rules – Manner of Reversal
© Indirect Taxes Committee, ICAI 218
II. Reversal of credit where capital goods are used partly for business purposes or partly
for effecting exempt supplies:
Amount of input tax in respect of capital goods used exclusively for non business purposes
or used for effecting exempted supplies shall be indicated in GSTR-2 and shall not be
credited in ECL
Amount of input tax in respect of capital goods used exclusively for effecting taxable
supplies including zero rated supplies shall be indicated in GSTR-2 and shall be credited in
ECL
Amount of input tax for remaining capital goods shall be denoted as „A‟ and useful life shall
be taken as 5 years
In case where capital goods subsequently used for business purposes or for effecting
taxable supplies including zero rated supplies, input tax credit shall be included in A after
reducing 5% for every quarter
The aggregate amount of A shall be denoted as Tc
Input tax attributable to common capital goods “Tm=Tc/60”
Input tax at the beginning of tax period for capital goods having remaining residual life
during tax period „Tr‟ which is aggregate of Tm of all capital goods
ITC Rules – Manner of Reversal
© Indirect Taxes Committee, ICAI 219
Amount of credit attributable towards exempted supplies “Te=(E/F)*Tr, where,
„E‟ is the aggregate value of exempt supplies, that is, all supplies other than taxable and
zero rated supplies, during the tax period, and
„F‟ is the total turnover of the registered person during the tax period:
Amount of Te along with applicable interest shall be added to output tax liability during
every tax period of the residual life of the concerned capital goods
Te to be computed separately for CGST, SGST, UTGST, IGST
For the purpose of this rule –
(1) “capital goods” shall include “plant and machinery” as defined in the Explanation to section 17;
(2) for determining the value of an exempt supply as referred to in sub-section (3) of section 17:-
(a) the value of land and building shall be taken as the same as adopted for the purpose of paying
stamp duty; and
(b) the value of security shall be taken as one per cent. of the sale value of such security.
ITC in respect of goods sent for job work – Sec 19
© Indirect Taxes Committee, ICAI 220
Principal Job Worker
Inputs/ Capital Goods sent for job
work
Received back or directly supplied from
job-worker‟s premises within 1 year
(inputs) or 3 years (capital goods) of being
sent out
ITC available if the conditions and restrictions under job work are satisfied
If not received / directly supplied in time: Principal to pay ITC availed + Interest.
He can reclaim this ITC on receiving back such inputs/ capital goods.
Input Service Distributor – Sec 20
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
© Indirect Taxes Committee, ICAI 221
Office /
Corporate
office of
Supplier
Distribution of Credit where ISD and recipient are
located in different State under CGST ACT, SGST
ACT or UTGST Act
Distribution of Credit where ISD and recipient are
located in within State under CGST ACT, SGST
ACT or UTGST Act
Input Service Distributor
© Indirect Taxes Committee, ICAI 222
ISD and Recipient in
Different States
CGST Act
Credit of CGST or IGST as
IGST
SGST Act
Credit of SGST as IGST
ISD and Recipient in Same State
(Business vertical)
CGST Act
Credit of CGST or IGST as CGST
SGST Act
Credit of SGST or IGST as SGST
Conditions to distribute credit : Input Service Distributor
Credit distributed to recipient through prescribed documents containing prescribed details. Such document should be issued to each of the recipient of credit.
Credit distributed should not exceed the credit available for distribution
Tax paid on input services used by a particular location (registered as supplier) has to be distributed only to that location.
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
© Indirect Taxes Committee, ICAI 223
Excess Credit distributed by Input Service Distributor – Sec 21
© Indirect Taxes Committee, ICAI 224
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 supplier(s)
ITC Rules – Credit Distribution Procedure in case of ISD
© Indirect Taxes Committee, ICAI 225
I. Distribution to one or more recipients – Section 20(2)(d)(e)
Credit to be distributed to recipients whether registered or not, from amongst the
total of all the recipients to whom input tax credit is attributable, including the
recipient(s) who are engaged in making exempt supply, or are otherwise not
registered for any reason –
C1 = (t1/T)*C
where,
“C” is the amount of credit to be distributed,
“t1” is the turnover, as referred to in section 20, of person R1 during the relevant
period, and
“T” is the aggregate of the turnover of all recipients during the relevant period;
Details where apportionment of credit has not effected in terms of section 17(2) of the CGST Act 2017 read with Rule 42 and 43 of the CGST Rules Annexure 16-Slide 1
Amt Amt Amt Amt
Rule Particulars of Reversal Reasons for contravention
( Excess CGST paid)/ CGST Payable
( Excess SGST paid)/ SGST Payable
( Excess IGST paid)/ IGST Payable
(Excess Cess paid)/ Cess Payable
Remarks
42(1)(b) Amount of input tax attributable to input and input services used exclusively for purposes other than business
42( 1) ( c)
Amount of input tax attributable to input and input services used exclusively for effecting exempt supplies
42( 1) ( d)
Amount of input tax in respect of input and input services on which is not available under section 17(5) of the CGST Act 2017
42(1) (f) Amount of input tax credit attributable to input and input services used exclusively for effecting supplies other than exempted but including zero rated supplies.
Details where apportionment of credit has not effected in terms of section 17(2) of the CGST Act 2017 read with Rule 42 and 43 of the CGST Rules Annexure 16-slide 2
Amt Amt Amt Amt
Rule Particulars of Reversal Reasons for contravention
( Excess CGST paid)/ CGST Payable
( Excess SGST paid)/ SGST Payable
( Excess IGST paid)/ IGST Payable
(Excess Cess paid)/ Cess Payable
Remarks
42(1) (i) Common credit of input and input services attributable to exempt supplies
42(1) (i) Common Credit of input and input services attributable to non business purposes
42 (2) (a) Aggregate of the reversal of input and input services determined at the end of the year determined to be in Shortage of the actual reversal made
42(2) (b) Aggregate of the reversal of input and input services determined at the end of the year determined to be in Excess of the actual reversal made
43(1) (a) Amount of input tax in respect of capital goods used exclusively of non business purposes or exclusively for effecting exempt supplies.
Details where apportionment of credit has not effected in terms of section 17(2) of the CGST Act 2017 read with Rule 42 and 43 of the CGST Rules
Annexure 16 –slide 3
Amt Amt Amt Amt
Rule Particulars of Reversal Reasons for contravention
( Excess CGST paid)/ CGST Payable
( Excess SGST paid)/ SGST Payable
( Excess IGST paid)/ IGST Payable
(Excess Cess paid)/ Cess Payable
Remarks
43(1)(b) Amount of input tax in respect of capital goods used exclusively for effecting supplies other than exempted supplies but including zero rated supplies
43(1)(c) Amount of input tax credit in respect of capital goods which are used for commonly for exempt and taxable supplies
43(1) (h) Common credit in respect of capital goods attributable to exempt supplies.
V Input Tax Credit
6. Whether in case of Banking / Financial / NBFC. Credit have been availed in contravention of section 17(4) of the Act?
7. Whether on 1st July,2017 transition credits have been availed in contravention of Section 139 to 142 of the Act
8. Whether all the certificate(s) required under the section 18, has / have been obtained?
(point no 4 and 5 is missing in suggested format)
V Input Tax Credit Annexure 17
B Job work
1. Where registered person is the principal, whether tax has been discharged by him in accordance with Section 143 read with Rule 45? Specify instances where the tax has not been paid even though the goods are not received back by the principal/supplied from job worker’s premises within the prescribed time limit
Cases where inputs and capital goods have not been received within the prescribed time limit and no tax has been offered on them Annexure-17-Slide 1
A .Inputs Amount of tax payable in the current tax period
Month in which goods were sent out to job worker in the previous year
Value of goods which were sent and were not offered to tax even though they were not received within the prescribed time limit
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Remarks
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Total
Cases where inputs and capital goods have not been received within the prescribed time limit and no tax has been offered on them Annexure-17
B .Capital Goods Amount of tax payable in the current tax period
Month in which goods were sent out to job 3 worker year before the current tax period
Value of goods which were sent and were not offered to tax even though they were not received within the prescribed time limit
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Remarks
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Total
ITC in respect of goods sent for job work – Sec 19
© Indirect Taxes Committee, ICAI 233
Principal Job Worker
Inputs/ Capital Goods sent for job
work
Received back or directly supplied from
job-worker‟s premises within 1 year
(inputs) or 3 years (capital goods) of being
sent out
ITC available if the conditions and restrictions under job work are satisfied
If not received / directly supplied in time: Principal to pay ITC availed + Interest.
He can reclaim this ITC on receiving back such inputs/ capital goods.
Job Work • SECTION 143 :-Job work procedure.
• 143. (1) A registered person (hereafter in this section referred to as the “principal”) may under intimation and subject to such conditions as may be prescribed, send any inputs or capital goods, without payment of tax, to a job worker for job work and from there subsequently send to another job worker and likewise, and shall,––
• (a) bring back inputs, after completion of job work or otherwise, or capital goods, other than moulds and dies, jigs and fixtures, or tools, within one year and three years, respectively, of their being sent out, to any of his place of business, without payment of tax;
• (b) supply such inputs, after completion of job work or otherwise, or capital goods, other than moulds and dies, jigs and fixtures, or tools, within one year and three years, respectively, of their being sent out from the place of business of a job worker on payment of tax within India, or with or without payment of tax for export, as the case may be:
• Provided that the principal shall not supply the goods from the place of business of a job worker in accordance with the provisions of this clause unless the said principal declares the place of business of the job worker as his additional place of business except in a case—
• (i) where the job worker is registered under section 25; or(ii) where the principal is engaged in the supply of such goods as may be notified by the Commissioner.
• (2) The responsibility for keeping proper accounts for the inputs or capital goods shall lie with the principal
CA AVINASH LALWANI-ONLY FOR EDUCTION PURPOSE
Job Work • SECTION 143 :-Job work procedure.
• (3) Where the inputs sent for job work are not received back by the principal after completion of job work or otherwise in accordance with the provisions of clause (a) of sub-section (1) or are not supplied from the place of business of the job worker in accordance with the provisions of clause (b) of sub-section (1) within a period of one year of their being sent out, it shall be deemed that such inputs had been supplied by the principal to the job worker on the day when the said inputs were sent out.
• (4) Where the capital goods, other than moulds and dies, jigs and fixtures, or tools, sent for job work are not received back by the principal in accordance with the provisions of clause (a) of sub-section (1) or are not supplied from the place of business of the job worker in accordance with the provisions of clause (b) of sub-section (1) within a period of three years of their being sent out, it shall be deemed that such capital goods had been supplied by the principal to the job worker on the day when the said capital goods were sent out.
• (5) Notwithstanding anything contained in sub-sections (1) and (2), any waste and scrap generated during the job work may be supplied by the job worker directly from his place of business on payment of tax, if such job worker is registered, or by the principal, if the job worker is not registered.
• Explanation.––For the purposes of job work, input includes intermediate goods arising from any treatment or process carried out on the inputs by the principal or the job worker.
CA AVINASH LALWANI-ONLY FOR EDUCTION PURPOSE
Job Work • RULE 45 OF THE CGST RULES-RELATED TO ITC-JOB WORK
• 45. Conditions and restrictions in respect of inputs and capital goods sent to the job worker.-(1)The inputs, semi-finished goods or capital goods shall be sent to the job worker under the cover of a challan issued by the principal, including where such goods are sent directly to a job-worker, [and where the goods are sent from one job worker to another job worker, the challan may be issued either by the principal or the job worker sending the goods to another job worker:
• Provided that the challan issued by the principal may be endorsed by the job worker, indicating therein the quantity and description of goods where the goods are sent by one job worker to another or are returned to the principal:Provided further that the challan endorsed by the job worker may be further endorsed by another job worker, indicating therein the quantity and description of goods where the goods are sent by one job worker to another or are returned to the principal.
CA AVINASH LALWANI-ONLY FOR EDUCTION PURPOSE
VI Returns Annexure 18
1. Whether all the applicable returns / forms have been filed within the due dates?
Date of filing of returns / forms Annexure-18-Tabel 1 A. Monthly Returns
(i) GSTR-3B Months Due date Date of filing Delay ( in days) Late fee Remarks
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Date of filing of returns / forms Annexure-18-TABEL 2 A. Monthly Returns
(ii) GSTR-I Months Due date Date of filing Delay ( in days) Late fee Remarks
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Date of filing of returns / forms Annexure-18-TABEL 3 A. Monthly Returns
(iii) GSTR-2 Months Due date Date of filing Delay ( in days) Late fee Remarks
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Date of filing of returns / forms Annexure-18-TABEL 4 A. Monthly Returns (iv) GSTR-3
Months Due date Date of filing Delay ( in days) Late fee Remarks
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Date of filing of returns / forms Annexure-18-TABEL 5 B. Supplier of OIDAR Services
GSTR-5A Months Due date Date of filing Delay ( in days) Late fee Remarks
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Date of filing of returns / forms Annexure-18-TABEL 6 C. Other forms
Forms Due date Date of filing Delay ( in days) Late fee Remarks
Form GSTR9
Form GSTR 9B
Form GSTR 10
Form ITC 01
Form ITC 02
Form ITC 03
Form ITC 04 (Q1)
Form ITC 04 (Q2)
Form ITC 04 ( Q3)
Form ITC 04( Q4)
Date of filing of returns / forms Annexure-18-TABEL 7 D. Transition forms
Forms Due date Date of filing Delay ( in days) Late fee Remarks
Form GST TRAN 01
Form GST TRAN 02 (July 2017)
Form GST TRAN 02( Aug 2017)
Form GST TRAN 02 ( Sep 2017)
Form GST TRAN 02 ( Oct 2017)
Form GST TRAN 02 ( Nov 2017)
Form GST TRAN 02 ( Dec 2017)
VII Payments
1. Whether there are any mismatches between the electronic cash ledger and electronic credit ledger viz a vis records / books of accounts?
VII Payments Annexure 19
2. Whether any interest is payable on delayed payment of taxes and the same has been remitted?
Tax payable Interest Liability
Month Due date of
payment
Actual date of payment
Delay ( in Days)
CGST SGST/UTGST
IGST Cess CGST SGST/UTGST
IGST
Cess
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Total
Details of interest on delayed payment of taxes which have not been remitted A. Delay in posting credit entry to electronic liability ledger Annexure-19-SLIDE1
Tax Payable Actual Tax Paid within due date Shortfall in tax payment within due date
Interest Liability
Description
Due date of payment
Actual date of payment
Delay ( in days)
CGST SGST/UTGST
IGST Cess CGST SGST/UTGST
IGST Cess CGST SGST/UTGST
IGST Cess CGST SGST/UTGST
IGST Cess
Total
Details of interest on delayed payment of taxes which have not been remitted Annexure-19-SLIDE 2 A. Delay in underreporting of output tax/over reporting of input tax credit/wrongly availment of input tax credit in a particulars tax period.
VII Payments Annexure 20
3. List the instances where tax has been collected by the registered persons and has not been deposited with the Government
Details of tax collected but not deposited with the Government Annexure 20
Amount collected but not deposited Interest Liability
Description
Month in which collected
Due date of deposit
CGST SGST/UTGST
IGST Cess CGST SGST/UTGST
IGST Cess
TOTAL
VII Payments
4. Whether the provisions of TDS and TCS are applicable to the registered person during the period covered under audit? If yes, whether these provisions have been adequately complied with?
VIII Refunds
1. Where the registered person is eligible for refund under Section 54 of the Act, specify under which cases refund has been claimed? Whether the registered person has claimed any transition credit as well as refunds under the erstwhile laws
IX Documentation
1.Whether the registered person has issued the following documents in accordance with the act and rules framed thereunder: A Tax invoice u/s 31 and u/r 46 and Invoice cum bill of supply u/r 46A B Tax invoice on inward supplies from unregistered persons u/s 31 and u/r
46 C Bill of supply u/s 31 and u/r 49 D Receipt voucher u/s 31 and u/r 50 E Refund voucher u/s 31 and u/r 51 F Payment voucher u/s 31 and u/r 52 G Revised tax invoice, Credit Note and Debit Note u/s 34 and u/r 53 H Delivery challan u/r 55
X Ratios: Provide the following ratios for
current year and previous year A. Gross profit to turnover in state
B. Net profit to turnover in state
C. Cash payment of taxes / total payment of taxes
D. Related party turnover / total turnover
F Output Tax paid to outward taxable supplies
G. Output tax as per return / Total tax liability as determined under audit
H. Inward supply from unregistered persons to Net inward supplies
(note :- E is missing)
XI Any other issues considered to be relevant for the purpose of Audit to be given by way of a separate annexure to this report
The information furnished in this form is true and correct
The information furnished in this form is true and correct
As per our report of even date attached
For XXXXXXXXXX For and on behalf of
Chartered / Cost Accountants <<Legal name of
the registered person>>
Firm Registration Number
XXXXXXXXXX XXXXXXXXXXX
Partner Partner / Managing
Director etc.
Membership No: XXXXX
GST Enrolment Number: XXXXX
Place: XXXXXX Place: XXXXXX
Date: XX / XX/ 20XX Date: XX / XX/ 20XX
VERSION 2 –ABOVE 10 CRS
ADDITIONAL POINTS WITH ANNUEXURE
CA AVINASH LALWANI-ONLY FOR EDUCTION PURPOSE
I Levy & Collection of tax- Annexure-3
3.Whether it is ensured that transactions of the following natures have not been reported in the return?
• a) Transactions covered under Schedule III of the Act
• b) Transactions not covered by definition of supplies
Transactions reported in GST returns though they are covered under Schedule III or excluded from the definition of supplies Note- To be furnished based on books and records maintained by the registered person Annexure-3
Amt
Statutory Reference Description Total Value Remarks
Schedule III Para 4 Services of funeral, burial, crematorium or mortuary including transportation of the deceased.
Schedule III Para 5 Sale of land and, subject to clause ( b) of paragraph 5 of schedule II, Sale of building
Schedule III Para 6 Actionable claims, other than lottery, betting and gambling.
Transaction in money
Transaction in securities
Any other items, please specify
I Levy & Collection of tax
8. Whether e-waybills are applicable in case of movement of goods caused by the registered person during the period under audit? If yes, whether all the movements have been made using proper e-waybills?
IV Value of Supply Annexure-13
• 1. b) Details of transactions of outward supplies (or inward supplies liable to RCM) where the value of supply was reflected as transaction value in the monthly / annual returns, whereas the value should have been determined under Rule 27 – 31 of the valuation rules?
Details of Transactions where value of supply is based on transaction value although the value ought to have been determined under Rule 27-31 of the CGST Rules 2017. Annexure 13-SLIDE 1
SR NO
TYPE Transaction value as per tax invoice/books
Correct taxable as per CGST Rules
( Excess CGST paid)/CGST payable
( Excess SGST paid)/SGST payable
( Excess IGST paid)/IGST payable
( Excess Cess paid)/Cess payable
Remarks
A. Outward Supplies
1 Where prices is not the sole consideration ( including barter, exchange, etc)
2 Permanent transfer or disposal of business asset where there is no consideration , and ITC was availed
3 Supply to related person ( other than employees ) where ITC not fully available to recipient, whether or not for a consideration
4 Supply to employees whether or not for a consideration
5 Supply to distinct persons where ITC Not Fully available to recipient whether or not for a consideration
6 Supply of goods to agent without any consideration
7 Supply for consideration to an agent who is a related party
Details of Transactions where value of supply is based on transaction value although the value ought to have been determined under Rule 27-31 of the CGST Rules 2017. Annexure 13-SLIDE2
SR NO
TYPE Transaction value as per tax invoice/books
Correct taxable as per CGST Rules
( Excess CGST paid)/CGST payable
( Excess SGST paid)/SGST payable
( Excess IGST paid)/IGST payable
( Excess Cess paid)/Cess payable
Remarks
B Inward Supplies
1 Inward Supplies received from related persons/ distinct person, where ITC Can be fully claimed by the GSTIN, attracting tax on RCM basis
2 Import of services without consideration from a related person/ his other establishment outside India, in the course or furtherance of business
3 Supply of goods received from agents without any consideration which attract tax on RCM basis
4 Supply for consideration received from an agent who is a related party and for which tax is payable on RCM basis
The above details shall be provided as appearing in the tax invoices
IV Value of Supply Annexure-16
4. Details of outward supplies effected by the registered person where the value of supply has been determined in contravention of the provisions under Rule 31A / 32 of the CGST Rules, 2017
Details of transaction wherein the value of supply has been incorrectly determined u/r 31 A/32 of the CGST Rules 2017 Annexure 16
Amounts
Amounts
Amounts
Amounts
Amounts
Rule Nature of Supply Nature of Contravention
Reasons for incorrect determination
Taxable Value to be included
CGST payable
SGST/ UTGST payable
IGST payable
Cess payable
Remarks
31A(2) Lottery
31A (3) Betting, gambling and horse racing
32 (2) Purchase or sale of foreign currency including money changing
32 (3) Booking of tickets for air travel provided by air travel agent
32(4) Life Insurance
32(5) Supply of used goods by a person dealing in buying and selling of second hand goods.
32(6) Token or voucher or coupon or stamp redeemable against supply of goods or services or both
32(7) Supply by notified class of services providers as referred to in paragraph 2 of schedule I of the CGST 2017 between distinct person as per section 25 of the CGST Act 2017 where input tax credit is available
IV Value of Supply
5. Whether the rate of exchange for determining the value of imports / exports of goods*/ services are considered in accordance with Rule 34 of the CGST Rules, 2017?
V Input Tax Credit Annexure-19 (Part A)
3. Whether re-claim of tax credit taken without full /part payment to supplier?
ITC reversal u/s 16(2) Annexure 19 A. Reclaim of Tax Credit without full/part payment to the supplier
Amount of credit reclaimed upon payment of consideration
Month in which the credit was paid as output liability
Amount of ITC paid as output tax liability u/s 16(2) r/w Rule 37 which is subject to reclamation
Apr May Jun Jul Aug Sep Oct Nov
Dec Jan FEB Mar Remarks
PY-3
PY-2
PY-1
Apr -
May - -
Jun - - -
Jul - -- - -
Aug - - - - -
SEP - - - - - -
Oct - - - - - - -
Nov, Dec, Jan, Feb, March
- - - - - - - - - - - - -
Total
V Input Tax Credit Annexure-19 (Part B)
4. Details of transactions where the credit has not been reversedi* along with interest u/s 16(2) of the Act read with Rule 37 of the Rules, on account of non-payment of consideration & tax
ITC reversal u/s 16(2) Annexure 19 B. Details of transaction where the credit has not been reversed u/s 16(2) Of the Act read with Rule 37 on account of non payment of consideration and tax
Month in which the amount of credit should have been paid as output liability u/s 16(2) r/w rule 37
Month in which the credit was paid as output liability
Amount of ITC paid as output tax liability u/s 16(2) r/w Rule 37
Apr May Jun Jul Aug Sep Oct Nov
Dec Jan FEB Mar Remarks
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Total
Reversal of ITC Rules 42 – Manner of Reversal- Illustration-final working by September pay differential with interest/claim refund without interest
© Indirect Taxes Committee, ICAI 271
Terms used in
Rule
Particulars Amount
T Total Input Tax of Input and Input Services 500.00
T1 ITC for Non Business 100.00
T2 ITC for Exempt Supply 50.00
T3 ITC of Blocked Credits (Inputs Only) 25.00
C1 = T-(T1+T2+T3) Valid ITC in ECL 325.00
T4 ITC for Taxable Supply 200.00
C2= C1-T4 Common ITC 125.00
E Value of Exempt Supplies 2000.00
F Aggregate Turnover 5000.00
D1= E/F*C2 Value of ITC for Exempt Supply (From Common ITC) 50.00
D2= C2*5% Value of ITC for Non Business Purpose ( From Common ITC) 6.25
C3= C2-(D1+D2) Eligible ITC from Common ITC 68.75
T4+C3 Total Eligible ITC for Use 268.75
Reversal of credit rule 43 relating to capital goods-change in use of cg-reduce itc 5% per quarter
PARTICLUARS TREATMENT
ADD TOTAL INPUT CREDIT IN CAPITAL GOODS T
LESS EXCLUSIVE FOR OTHER THAN BUSINESS/EXEMPT SUPPLIES
NO CREDIT IN ELECTRONIC CREDIT LEDGER
LESS EXCLUSIVE FOR TAXABE SUPPLIES FULL CREDIT IN ELECTRONIC CREDIT LEDGER
NET COMMON CREDIT IN CAPITAL GOODS TC AVAIL EQULAAY EVERY MONTH FOR 60 MONTHS
LESS CREDIT ATTRIBUTABLE TO EXEMPT SUPPLIES-REVERSE IN T/O RATIO
Te Reverse every month for 60 months
CA AVINASH LALWANI-ONLY FOR EDUCTION PURPOSE
X Advance Ruling
1. Whether the registered person has given any affect to advance ruling order?
2. Whether the order of Advance ruling authority is proposed to be followed in the subsequent years? If not, please indicate the deviation.
XI Adjudication, appeals and revision
1. Whether there is any show cause notice issued by the appropriate adjudicating authority pending against the registered person? If yes, please provide details.
2. Whether there is any overdue demand in respect of any adjudication/appellate order passed against which no further appeal has been filed? If yes, please provide details.
CA AVINASH LALWANI-ONLY FOR EDUCTION PURPOSE
Complied by:-
• CA AVINASH LALWANI
• 09821118801
CA AVINASH LALWANI-ONLY FOR EDUCTION PURPOSE