Goods & serviceTax

RAJAT BADAYACA, B.COM

Introduction of GST

GST = Goods and Service tax

It is an indirect tax on :-• Goods• Services

Few products are not in ambit of GST. These are Alcoholic beverage, petroleum products, real estate and electricity.

Misconception/myths:-• Single tax• Single tax rate

Importance to:- Students Chartered Accountants/ lawyers Industry Fresher Others (Knowledge about economy)

Benefits:- Various indirect taxes subsumed (Except Basic Custom duty) GST council said that cess will also subsumed. Transparency Same rate of tax in whole country Possibility of reduction in tax evasion GDP increase by 1-2 % Reduce Cascading effect

Coverage of the law

The law covers entire India, including Jammu and Kashmir. In the present regime, service tax was not extended to Jammu and Kashmir.

GST is tax on goods and service with value addition at each stage.

It is destination based consumption tax. SGST will go to consumption state. There will be loss to producing state. So, central govt. will compensate to state govt. for first few years.

Three type of Taxes SGST CGST IGST

Intra-state supply SGST + CGSTInterstate supply IGST = (SGST + CGST)

Import Basic Custom duty + IGST

There will be three rates of tax Merit rate - Essential Commodity 10-12 %Standard rate - Major coverage 17-18 %Demerit rate - Applicable on Sin goods (Luxury) 40%

Definitions

Registration

Any person having aggregate turnover of Rs 9 lakh (Rs 4 lakh for person carrying out business in the north-east states including Sikkim) across all locations in India will need to obtain registration in the States from where they make a supply.

In addition, the following persons would be required to obtain GST registration irrespective of turnover: person making inter-state supply casual taxable persons person required to pay tax under reverse charge persons making supply on behalf of other registered taxable persons, whether as agent or

otherwise input service distributors persons making supply (except of branded services) through an e-commerce operator e-commerce operator aggregator supplying services under his brand name non-resident taxable persons

Every supplier shall take registration in each state from where he makes taxable supply of

goods and/or services.

SupplySupply is taxable event under GST. It includes:-

i) Sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for consideration in the course of business or furtherance of business.

ii) Import of service (No other conditions to be met)iii) Schedule I, Schedule II.iv) Supply of any branded service by an aggregator under a brand name or trade name

owned by him.v) Transactions between principal and agents are deemed to be supplies

Exclude:- Supply of goods to a job worker would not be treated as supply

Time of Supply Time of supply = When liability to pay CGST/SGST arise

Time of supply of goods is the earliest of: • date of removal/ making available goods by the supplier• date of issue of invoice• date of receipt of payment by the supplier• date on which the recipient shows the receipt of goods in his books of accounts.

Time of supply of services is the earliest of: • date of issue of invoice or date of receipt of payment, if invoice is issued within prescribed period• date of completion of service or date of receipt of payment, if invoice not issued within the

prescribed period• date on which recipient shows the receipt of services in his books of accounts, where above

provision does not apply

Time of supply under reverse charge is the earliest of: • date of receipt of supply; • date of payment; • date of receipt of invoice; or • date of debit in the books of accounts.

In addition to the above, there are provisions to determine the date of supply in case of continuous supply of goods/ services and when there is change in effective rate of tax.

Value of Taxable supply Normally:- Transaction value (Price actually paid or payable for said supply of goods/services) where supplier and recipient are not related and price is sole consideration. Transaction value include:-i) Amount that supplier is liable to pay but incurred by recipient.ii) Value of goods/services supplied directly or indirectly by recipient free of charge

or at reduced price.iii) Royalty and licence fees that recipient of supply must have to pay.iv) Any taxes, duty, fee, charges levied under any statue except CGST/SGST/IGSTv) Incidental expenses. (e.g. Commission, packing, any other charges )vi) Subsidies provided in any form or manner, linked to the supplyvii) Reimbursable expenditureviii)discount or incentive that may be allowed after the supply has been effected

Place of Supply

The place of supply of goods is the place where the goods are delivered, except in few cases.

The place of supply of services to a registered person, is the location of such registered person. For services provided to an unregistered person, it is the address of recipient, and if it is not available, the location of the supplier of services. There are various exceptions provided to these principles, such as services pertaining to immovable property, training and appraisal, admission to the events and organisation of events, transportation, telecom, financial services etc.

Input Tax Credit Input tax credit shall be credited to input credit ledger.

The GST law provides for credit of GST paid on all the inputs, capital goods and

services, barring some exceptions. The exceptions include the services received and used by employees and also vehicles (except when they are used for specified purposes), supplies received for execution of works contract for construction of immovable property (except plant & machinery) etc. Supplies used for personal consumption are also ineligible for credit.

100% credit on Capital goods.

Procedural requirement for claiming credit:- Possession of tax invoice Goods/service has been received Tax charged is actually paid to the credit of appropriate government Furnished the return

Contd. Input Tax Credit…

The time limit for claim of credit is one year from the date of the invoice. However, no credit pertaining to a financial year is allowed to be claimed post filing of the return for September of the next financial year, or the filing of the annual return for the year to which the credit pertains, whichever is earlier.

The concept of input service distributor is continued in the GST as well. However, credits

of GST paid on inputs or capital goods cannot be distributed.

Input tax credit can be utilised as follows Credit of SGST can be used for payment of SGST and IGST Credit of CGST can be used for payment of CGST and IGST Credit of IGST can be used for payment of IGST, CGST and SGST

…Contd. Input Tax Credit

Returns

Assesse Period Time limitRegistered taxable

person (except mentioned below)

Monthly 20 days from end of month

Composition scheme Quarterly 18 days from end of quarterRequired to deduct TDS Monthly 10 days from end of month

Input service distributor

Monthly 13 days from end of month

Every taxable person (except few category) shall file annual return on or before 31st December following the end of financial year.

The taxpayers having turnover exceeding the prescribed limit will also be required to get their accounts audited by a Chartered Accountant or a Cost Accountant, and submit a copy of the audited annual accounts with the annual return. In addition, they would also be required to submit a reconciliation statement, reconciling the value of supplies declared in the return

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