Sie sind auf Seite 1von 67

GST is not only tax reform but is a business reform

It is a destination based tax on consumption of goods and services. It is


proposed to be levied at all stages right from manufacture up to final
consumption with credit of taxes paid at previous stages available as setoff.
In a nutshell, only value addition will be taxed and burden of tax is to be
borne by the final consumer.
The proposed goods and service tax (GST) is a momentous step in the
direction of doing business and is most beneficial for Indias global
perception as well as industry sentiments. That GST can push India into the
list of top 100 countries in terms of ease of doing business.
Mr. Kaushik Basu Chief Economist and senior vice president world bank
CGST TO BE COLLECTED BY CENTRE

TO BE COLLECTED BY STATE
SGST

TO BE COLLECTED BY CENTRE
IGST
Under 0% tax rate, commodities such as food grains, rice, wheat are included.
The first slab is 5% tax, under which products of mass consumption are included such as spices, tea
and mustard oil.
Second slab is 12% under which processed food items has been included.
Third slab is 18% tax, under which items such as soaps, oil, toothpaste, refrigerator, and smart
phones have been included. Right now, these products are taxed more than 25% tax rates.
Fourth slab is 28%, Under 28% slab, white goods and cars are included. Currently, whatever
products are included in the 27-31% would be included in this tax bracket.
S. Subsumed under CGST Subsumed under
NO SGST

1. Central Excise Duty VAT / Sales tax


2. Additional Excise Duties Entertainment tax (unless it is
levied by the local bodies).
3. Excise Duty-Medicinal and Toiletries Preparation Act Luxury tax
4. Service Tax Taxes on lottery, betting and
gambling.
5. Additional CVD State Cesses and Surcharges
(supply of goods and services)
6. Special Additional Duty of Customs - 4% (SAD) Entry tax
7. Surcharges
8. Ceses
Taxes Not to be subsumed

Centre Tax State Tax


Basic Custom Duty Property Tax
Other Custom duty like: Anti Stamp Duty
Dumping Duty etc.
Electricity Duty
Export Duty
GST- possibly one of Indias greatest indirect tax reforms- proposes to unify the
multitude of indirect taxes in India and bring all goods and services under a
single GST. It will not only boost economic growth but will also improve the ease
of doing business in India by allowing a seamless flow of goods and tax credits
across all categories of transaction and state borders without any barriers or
restrictions.

Maximum number of bills should be raised in VAT regime so that the Input Tax
credit could be availed under GST.

Stock tally should be prepared on all India basis which shall be correlated with
the invoices not more than 6 months.

Registration in GST should be obtained on maximum business verticals post GST.


Maximum burden should be shifted to the customer/client as compared to VAT.
List of plant and machinery should be made having purchased within 6 months.
The aforesaid working is shown for claiming maximum benefit of ITC from GST
regime and to ensure minimum liability in GST.
Future contracts should be framed as such keeping in mind the provisions of GST
for full and optimal utilisation of Input Tax Credit.
Free of cost supplies are taxable under the GST regime thereafter the supplier
will have to include such supplies in his invoices made to the buyer.
Registration would be required for each area where supply is to be made. So the
company will have to analyse and prepare a list where registration would be
required.
Appropriate changes would be required in the IT systems of the company to be
in compliance with GST.
Supplier who makes taxable supply of goods or services or both whose T.O. exceeds 20 Lacs or 10
Lakh in special category states.
A person registered in existing law (with in 30 days)
Aggregate Turnover means the aggregate value of
all taxable supplies (through own or agent),
exempt supplies,
exports of goods and/or services and
inter-State supplies of a person having the same PAN, excludes taxes, if any, charged under the CGST
Act, SGST Act and the IGST Act, as the case may be;
DOES NOT INCLUDE:
the value of inward supplies on which tax is payable by a person on reverse charge basis and the value
of inward supplies.
Irrespective of Limit u/s 22(1) under this Act:
Inter-State taxable supply,
Casual taxable persons (apply 5days before commencement)
Persons paying tax under reverse charge
Persons who are Notified by Govt
Non-resident taxable persons (apply 5days before commencement)
Deductor of tax
Collector of tax
Agent
Input service distributor,
Supplier except Non Resident Taxable person, through electronic commerce operator who is required to collect tax.
Electronic commerce operator
Person supplying Online information and database access or retrieval services from a place outside India to a person
in India,
Persons Notified by Govt
Not Liable to Registration:

Person supplying goods or services not liable to Tax or exempt from Tax.
An agriculturist, to the extent of supply of produce out of cultivation of Tax
Person as Notified by Govt.
Each taxpayer will be allotted a State wise PAN-based 15-digit Goods and Services
Taxpayer Identification Number (GSTIN)

In terms of Indian Census 2011-Each State to have a unique code, such as 09 for Uttar
Pradesh
No. of Registration
Single registration In a State
Provided that a person having multiple business verticals in a state may be granted separate
registration for each business verticals.

BUSINESS VERTICALS
A distinguishable component of an enterprise :
Engaged in the Supply of Individual goods or services or
Group of related goods or services subject to risks and returns
That are different from those of other business verticals.
Invoice
Tax Invoice : Taxable Goods No Tax Invoice :
At Removal / Delivery (before or At) Supply less than Rs.200
Exempted goods / Section 10 shall
issue Bill of Supply
Tax Invoice : Taxable Services
Receipt voucher in case of Advance
Before or after provision of service.
Debit Note and Credit Note

Debit Note Credit Note


Tax charged found to be less than Tax charged found to exceed the
taxable value/payable. taxable value/payable.
RP who supplies shall issue to Goods are Returned
Recipient
Goods found to be deficient.
Shall declare in Return
RP who supplied goods shall issue to
Recipient.
Shall declare in return
EFFECT ON IMPORTER
Imports of Goods and Services will be treated as inter-state supplies and IGST will be
levied in addition to Custom Duties.
The incidence of tax will accrue to the State where the imported goods and services are
consumed.
Full and complete set-off will be available on the GST paid.
Transitional Provisions of GST which you must know now
Section 139
On 01.07.17 every person having valid PAN number shall be issued provisional registration
certificate under GST.
Such provisional registration certificate shall be converted in final registration certificate on
uploading certain documents.
Such provisional certificate would be cancelled when desired documents are not uploaded within
a month or applied for cancellation.

Section 140 : Transitional arrangement for Input Tax Credit


Person opting for composition in GST will not be allowed to transfer any input tax credit.
Registered person shall within 90 days from 1st July 2017 will submit declaration electronically in
FORM GST TRAN-1 duly signed on common portal specifying therein, separately, the amount of
input tax credit to which he is entitled under the provision of said section.
Where inputs have been received from an export oriented unit or a unit wealed in electronic
hardware technology park credit shall be allowed according to section 3(7) of Cenvat Credit
Rules 2004.
How Declaration for ITC on 30 June, 2017 would be prepared for Capital Goods -

The amount of tax or duty availed or utilized by way of input tax credit under each of existing law till appointed day
(17 July 2017)
The amount of tax or duty yet to be availed or utilized by way of input tax credit under each of the existing law till
appointed day.

For Goods other than capital goods

Furnish following details within 90 days from 1st July 2017

The name of supplier, serial number and date of issue of invoice by the supplier or any document on basis of which
credit of input tax was admissible under the existing law.
Description and value of goods or services.
The quantity in case of goods and the unit or unit quantity code thereof
The amount of eligible taxes and duties or as the case may be value added tax (or entry tax) charged by supplier in
respect of goods or services, and
The date on which receipt of goods or services are entered in the books of accounts of recipient.
THE AMOUNT OF CREDIT SPECIFIED IN THE APPLICATION FORM GST TRAN-1 SHALL BE CREDITED TO THE ELECTRONIC
CREDIT LEDGER OF THE APPLICANT MAINTAINED IN FORM GST PMT-2 ON COMMON PORTAL.
Other Conditions for transferring Input Tax Credit or on 30th June to 1st July

You must be in possession of duty paying invoice or document evidence, payment of duty which were issued not earlier
than 12 months.
You must have filed returns for last six months.
Such input or goods are used or intended to be used for making taxable supplies under GST.
Return as on 30th June can be furnished within three months.

"Eligible Duties" in respect of inputs held in stock & inputs contained in semi finished or finished means goods held in
stock on 1st July or in respect of inputs and input services received after 1st July 2017.

The additional duties of Excise leviable under Section-3 of the Additional duties of excise (Goods of ..
importance) Act, 1957.
The additional duty leviable under Sec(1) of Section-3 of the Custom Tariff Act 1975.
Additional duty leviable under sub section (5) of Section 3 of Custom Tariff Act, 1975.
The Additional duty of Excise Leviable under 3 of the Additional duties of excise (Textile & Textile Article) Act 1978
The duty of Excise specified in first schedule to the Central Excise Tariff Act, 1985.
The duty of excise specified in the second schedule to the central excise tariff Act, 1985.
The national calamity contingent duty leviable under section 136 of Finance Act, 2001.
Service Tax leviable under section 66B of the financial Act 1994.
No Input Tax Credit where
Where the amount of credit relates to goods manufactured and cleared under exemption
notification.
Returns of preceding six months not furnished.
If before 30th June 2017 you were not registered under excise and were doing following
Engaged in manufacture of exempted goods.
Providing exempted services
Providing works contract services under 26/12 notification
You were first stage dealer or second stage dealer
Registered importer
Depot of manufacturer.
You would be entitled to take credit of eligible duties by credit in electronic credit ledger
account in respect of
Input held in stock
Input contained in semi finished or finished goods held in stock on 1st July 2017.
Conditions

Inputs or goods are used or intended to be used for making taxable supply
In possession of invoices 12 months old (dated)

If you don not have invoice dated 12 months earlier from 1st July 2017 and if you are not manufacturer or services
provider, you can also claim input tax credit subject to following conditions You are a trader

You are in possession of documents to prove procurement of goods.


Goods are liable to tax under GST.
Such credit shall be allowed at the rate of 40% if CGST in 9% or less 60% if CGST is more than 9% 30% if IGST is
20% if more than 9% IGST is 9% or less.

ITC in VAT on 30th June 2017 is available even if you are not in possession of any document evidence payment of VAT.
ITC is available in aforesaid ratio but you have to file Form-C, F, E1, E2 or other prescribed form under existing
law before 30.09.2017.

The aforesaid ITC claimed under existing central Act (State Act) would be available for six months from 1st July 2017
but you will have to deposit SGST/CGST/IGST first on prevailing rate under GST therefore only ITC as on 30th
June 2017 would be claimed.
Condition

1. Such goods were not wholly exempt from tax under


state value added tax act.
2. Any document for procurement of such goods is
available with you.
3. You should submit a statement in form GST TRAN-2 at
the end of each six months indicating therein details of
supplies of such goods effected during each month for six
months.
JOB WORK
Job work means any treatment or process undertaken by a
person on goods belonging to another registered person.

A manufacturer may send out his goods to a job worker for


initial process, intermediate process, assembly, packing or any
other completion process and later supply such goods to its
customers for use in any other manufacturing process
accompanied by its own. The goods sent for job work maybe
raw material, component parts, semi-finished goods and even
finished goods. The resultant goods could be with same
characteristics or with variation of the product send for job
work.
Entitlement to credit on inputs and
capital goods:
The principal can take credit of input tax on capital
goods sent to job-worker.

The said capital goods, after completion of job-work,


are received back by him within 1 years of their being
sent out.

The principal can take credit of capital goods even if


such capital goods are sent directly to job-workers
place without bringing to principals place of business.
Continued

Provided that where the inputs are sent directly to a job


worker, the period of 1 year shall be counted from the date of
receipt of inputs by the job worker.

If the capital goods are not received back within 3 years, the
principal shall pay an amount equal to input tax credit taken
on the said capital goods.

If the capital goods are received back by the principal, he may


reclaim the input tax credit and interest paid earlier.
Continued.

Where the inputs sent for job work are not received back
by the principal after completion of job work or otherwise
or are not supplied from the place of business of the job
worker within 3 years of 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.
RETURN FORM WHO NEED TO FILE? WHAT WILL BE FILED? WHEN TO FILE?

GSTR-1 Registered Taxable Details of outward 10th of next month.


Supplier supplies of taxable
goods and/or services
effected
GSTR-2 Registered Taxable Details of inward 15th of next month.
Receipient supplies of taxable
goods and/or services
effected claiming
input tax credit.
GSTR-3 Registered Taxable Monthly return on the 20th of next month.
Person basis of finalization of
details of outward
supplies and inward
supplies along with
the payment of
amount of tax.
RETURN FORM WHO NEED TO FILE? WHAT WILL BE FILED? WHEN TO FILE?

GSTR-4 Composition Supplier Quarterly return for 18th of the month


compounding taxable succeeding quarter.
person

GSTR-5 Non-Resident Taxable Return for Non- 20th of the next


Person Resident foreign month.
taxable person
GSTR-6 Input Service Return for Input 13th of the next
Distributor Service Distributor month.

GSTR-7 Tax Deductor Return for authorities 10th of the next


deducting tax at month.
source
RETURN FORM WHO NEED TO FILE? WHAT WILL BE FILED? WHEN TO FILE?

GSTR-8 E-commerce Details of supplies 10th of the next month.


Operator/Tax Collector effected through e-
commerce operator and
the amount of tax
collected
GSTR-9 Registered Taxable Annual Return 31st December of next
Person financial year.
GSTR-10 Taxable person whose Final Return Within three months of
registration has been the date of cancellation
surrendered or cancelled or date of cancellation
order, whichever is later.

GSTR-11 Person having UIN and Details of inward 28th of the month
claiming refund supplies to be furnished following the month for
by a person having UIN which statement is filed.
Return Defaulters:

Where a registered person fails to furnish a return under section 39 or


section 44 of section 45, a notice shall be issued requiring him to
furnish such return within fifteen days in such form and manner as
may be prescribed.

Any registered person who fails to furnish the details of outward or


inward supplies required under section 37 or section 38 or returns
required under section 39 or section 45 by the due date shall pay a
late fee of one hundred rupees for every day during which such failure
continues subject to a maximum amount of five thousand rupees.
Any registered person who fails to furnish the return required under section
44 by the due date shall be liable to pay a late fee of one hundred rupees
for every day during which such failure continues subject to a maximum of
an amount calculated at a quarter per cent. of his turnover in the State or
Union territory.
FAQs on Job Work
Q . Whether goods sent by a taxable person to a job worker will be
treated as supply and liable to GST? Why?

Ans. It will be treated as a supply as supply includes all forms of supply


such as sale, transfer, etc. However, the registered taxable person (the
principal), under intimation and subject to such conditions as may be
prescribed send any inputs and/or capital goods, without payment of tax, to
a job worker for job work and from there subsequently to another job
worker(s) and shall either bring back such inputs/capital goods after
completion of job work or otherwise within 1 year/3years of their being sent
out or supply such inputs/capital goods after completion of job work or
otherwise within 1 year / 3 years 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
FAQs:
Q Can the principal supply the goods directly from the premises of the job
worker without bringing it back to his own premises?
Ans. Yes. But the principal should have declared the premises of an unregistered
job worker as his additional place of business. If the job worker is a registered
person then goods can be supplied directly from the premises of the job worker.
The Commissioner may also notify goods in which case goods sent for job work can
be directly supplied from the premises of the job worker.

Q . What would be treatment of the waste and scrap generated during the job
work?
Ans. The waste and scrap generated during the job work can be supplied by the
job worker directly from his place of business, on payment of tax, if he is
registered. If he is not registered, the same would be supplied by the principal on
payment of tax.
Supply is the term replaced for the term sale; no scope has been left for
any confusion and the definition includes every term which shall be coined
as sale. Even the supply which is made or agreed to be made without a
consideration will also amount to sale.

Supply includes:

Sale, transfer, barter, exchange, license, rental, lease or disposal made


or agreed to be made for consideration in the course or furtherance of
business,

Importation of service, whether or not for a consideration and whether


or not in the course or furtherance of business
Tax invoice and other
documents for supply
Time limit for issuing tax invoice

SUPPLY OF GOODS
Involving Before or at the time of removal
movement of of goods for supply to the
recipient
goods

Continuous Before or after the time of


issuance of periodic statement or
supply of goods receipt of payment

No movement of Before or at the time of delivery


of goods or making available
goods involved thereof to the recipient

Note: The above provisions are mandatorily applicable for all taxable supply of goods made, except where the value of
supply is less than INR 200 and the recipient is not registered.
PwC 40
Time limit for issuing tax invoice
Before or within 30 days

SUPPLY OF SERVICES
Normal scenario from the date of the
provision of service
Before or within 45 days
Banks, Insurance &
from the date of the
Financial Institutions
provision of service
Supply of service
Before accounting or expiry
between distinct
of the quarter
person, as above

On or before due date of periodic


payment, as per contract
Continuous supply
of service Before or at the time supplier
receives payment; or on or before
completion of the specified event

Note: The above provisions are mandatorily applicable for all taxable supply of goods made, except where the value
of supply is less than INR 200 and the recipient is not registered.
PwC 41
Other documents
Delivery Challan Transportation of goods without invoice

Exempted goods/ service, composite


Bill of supply
dealer

Receipt voucher Receipt of advance

Refund voucher Refund of advance

Increase/ decrease in value of supply in


Debit note/ credit note
original invoice

Self invoice Purchase from unregistered dealer


May 2017
PwC 42
Transportation of goods without issue of invoice

A Delivery Challan may be issued by the Consignor instead of an Invoice


at the time of removal of goods for transportation in certain cases

Can be issued in case of following Serially numbered Challan to


Manner of Preparation of Challan
supplies contain following details
Supply of liquid gas where the Date and number of the delivery To be issued in Triplicate in the
quantity at the time of removal is challan following manner:
not known Name, address and GSTIN of the Original copy marked as
Transportation of goods for job consigner, if registered ORIGINAL FOR CONSIGNEE
work Name, address and GSTIN or UIN Duplicate copy marked as
Transportation of goods for of the consignee, if registered DUPLICATE FOR TRANSPORTER
reasons other than by way of HSN code and description of goods Triplicate copy marked as
supply for ex. for Supply within Quantity (Actual or provisional, as TRIPLICATE FOR CONSIGNER
same registration) available)
Taxable value of goods Delivery Challan details should be
declared in e-Way bill
CGST+SGST/UTGST or IGST rate
and amount
Place of supply, in case of inter-
State supply
Signature May 2017
PwC 43
Place of supply
Place of Supply
For Goods (Other than Import/Export)
When movement of goods is Place where movement
involved terminates for delivery

When movement of goods is Location of goods at the time


not involved of delivery to recipient
Goods

Delivery of goods on direction Principle place of business* of


of third person third person

Place of
On-site assembly/installation
assembly/installation

Supply of goods on board a Location at which goods are


conveyance taken on board

*Principal place of business = place of business specified as the principal place of business in the certificate of
registration
PwC
Goods delivered on direction of third person

Place of supply shall be Maharashtra


Supplier IGST shall be levied by Supplier on tax
invoice raised on ABC Ltd
IGST
Input tax credit shall be available to
Maharashtra
ABC Ltd
Gujarat ABC Ltd shall raise a tax invoice on the
customer charging CGST & SGST

Seamless flow of credit between ABC


CGST + SGST Ltd and Customer

ABC Ltd (Third Person) Customer

Flow of invoice
Movement of Goods

PwC
Place of Supply for Goods
Import and Export

XYZ Ltd Outside India


Import of goods
Location of the importer
into India India

Importer

Export of goods
Outside India XYZ Ltd Location outside India
from India
India

Exporter
Movement of Goods

PwC
Service Description If supplied to a registered If supplied to any other person
person

Event related service or Training and performance appraisal service The location of such Location where the services are actually
training service Organisation of cultural, scientific, sporting, registered person performed
educational, entertainment event or any Location where the event is actually held
ancillary event Location of the recipient of the insurance
Insurance Service service

Transportation Service Transportation of goods, including by way of The location of such Location at which the goods are handed
mail or courier registered person over for their transportation
Passenger transportation service Location where the person embarks on a
conveyance for a continuous journey

On board services Service on board a conveyance including vessel, First scheduled point of departure of the conveyance
aircraft, train or motor vehicle

Event based service Organisation of cultural, scientific, sporting, Location where the event is actually held
educational, entertainment event or any ancillary
event

Financial Service Banking and financial services including stock Location of the recipient on the records of the supplier
broking services Location of the supplier if the location of the recipient is not available

PwC
Place of Supply of Service
Service Description Place of supply

Performance based services Restaurant and catering services, personal Location where the services are actually performed
grooming, fitness, beauty treatment, health
services
Telecommunication Service Service by way of fixed telecommunication line, Location where the antenna, line, cable or circuit is installed
leased circuits, internet leased circuit, antenna for supply of service
services

Mobile connection and internet services provided on Billing address of the recipient of service
post paid basis
Prepaid telecom, internet or DTH service Through a selling agent, re-seller, distributor of SIM cards
address of the selling agent, distributor or re-seller
Directly to final customer where such pre-payment is
received

Any other case Address of the recipient as per the records of the supplier

May 2017
PwC 49
Place of Supply of Services
Location of supplier or recipient outside India
Service directly in relation to
Location where the immovable property is
immovable property
located or intended to be located

Location where the service is actually Service supplied in relation to goods


performed* made physically available to supplier**

Service supplied by way of


admission to events Location where the event is actually held

Services supplied by banking


Location of supplier of services
company, intermediaries

*Except when service is provided from remote location


**The provision shall not apply in respect of services provided on goods temporarily imported into India for repairs and are
exported after repairs without being put o use
PwC
Place of Supply of Services
Location of supplier or recipient outside India

Transportation Transportation of
of goods (other than mail or passenger
courier)

Place where passenger


Place of destination of
embarks on a conveyance for
goods a continuous journey

PwC
Place of Supply of Services

Services consisting of hiring of means of


transport, including yatch but excluding Location of supplier of services
aircrafts and vessels upto 0ne month

Online information and database


Location of recipient of service access or retrieval services

Service supplied on board a conveyance


during the course of passenger transport First scheduled point of departure of the conveyance for
the journey
operation

PwC
Section

4
Time of supply
Time of supply of goods

Time of supply
of goods

General Provision for goods Reverse charge for goods


Earlier of: Earlier of:

Date
Date of Date on immediat
Date of ely
Date of receipt which
receipt following
issue of of paymen
of 30 days
invoice paymen t is from the
goods
t made date of
invoice

PwC
Time of supply of services
Time of supply
of services

General Provision for


Reverse charge for services Import of services from
goods
Earlier of: AE Earlier of:
Earlier of:

Date Entry in
immedia the
Date of Date on tely
which books
Date of receipt followin
paymen of Date of
issue of of g 60
t is account payment
invoice paymen days
made of
t from the recipie
date of nt
invoice

PwC 55
Advances
Procedure
Month 1 advance received
Impact/ Challenges

Bifurcation of advance against


each HSN/ SAC in case of
Receipt voucher Time of supply of
Advance received common invoice for multiple
or other specified service receipt
for services to be services required
document to be of payment tax
supplied
issued liability triggered
State Code to be provided -
advances would need to be
specifically aligned to a State

Invoice wise and Transaction ID would Transaction ID would be auto


SAC wise be generated on generated by system on payment
reporting in GSTR payment of tax for of tax and needs to be captured in
-1 (Part 11) each transaction IT system

PwC 56
COMPOSITION
SCHEME
FAQs
Q1. Who can opt for Composition Scheme?
Ans. Businesses dealing only in goods can only opt for composition scheme.
Services providers have been kept outside the scope of this scheme.
However, restaurant sector taxpayers may also opt for the scheme.
This holds true if your annual turnover is below Rs 50 Lakhs.
Q2. What is the tax rate applicable on a composition dealer?
Ans. A registered taxpayer, who is registered under the Composite Scheme will
pay tax at a rate not more than 1% for manufacturer, 2.5% for restaurant sector
and 0.5% for other suppliers of turnover.
Q3. Can a Composition Dealer issue Tax Invoice?
Ans. No. Since a Composition Dealer is not allowed to avail input tax credit, such
a dealer cannot issue a tax invoice as well. A buyer from composition dealer
will not be able to claim input tax on such goods.
Contd.
Q4. What are the penalties applicable on Composition Dealer in case of any default in tax payment?
Ans. If the tax administration has reason to believe that a composition dealer has wrongly availed the benefit under the composition scheme,
then such a person shall be liable to pay all the taxes which he would have paid under the normal scheme. Also, he will be liable to pay a
penalty equivalent to an amount of tax payable.This penalty will not be levied without giving a show cause notice to the dealer.

Q5. What are the transition provisions if a business transits from Composition Scheme under current regime to Regular Taxation under GST?
Ans. Taxpayers registered under composition scheme under the current regime will be allowed to take credit of input held in stock, or in semi-
finished goods or in finished goods on the day immediately preceding the date from which they opt to be taxed as a regular tax payer.

Q6. What are the conditions for availing input credit on stock lying at the time of transition?
Ans. Following are the conditions which must be addressed by the taxpayer to avail credit on input at the time of transition from composition
scheme to the normal scheme: Such inputs or goods are intended to be used for making taxable supplies under GST law. Taxpayer was
eligible for CENVAT Credit on such goods under the previous regime, however, couldnt claim it being under composition scheme. Such
goods are eligible for input tax credit under GST regime. The taxpayer has legal evidence of input tax paid on such goods. Such invoices
were issued within a period of 12 months from GST applicable date.

Q7. What is the treatment for input credit availed when transitioning from normal scheme to Composition Scheme?
Ans. When switching from normal scheme to composition scheme, the taxpayer shall be liable to pay an amount equal to the credit of input tax
in respect of inputs held in stock on the day immediately preceding the date of such switchover. The balance of input tax credit after
payment of such amount, if any lying in the credit ledger shall lapse.
INPUT TAX CREDIT
Defined U/s 16 of the CGST Act, 2017. Every Registered person shall, be entitled to take credit
of Input Tax charged on any supply of goods or service or both to him which are used or intended
to be used in the course or furtherance of his Business and such amount shall be credited to the
electronic credit ledger of such person.

REQUIREMENTS FOR CLAIMING ITC: Section 16(2) of CGST ACT


1. The Registered Taxable person should be in possession of a Tax Invoice.
2. He has received the goods or service or both.
Note: In the case of Sale-in-Transit, it shall be deemed that the regd. Person has received the
goods where the goods are delivered by the supplier to a recipient on the Directions of such
registered person, before or during movement of goods, either by way of transfer of documents
or title of goods.
3. Tax Charged has been actually paid to the Govt.
4. He has furnished the return U/s 39.
PROVISO..
a) Where goods against an Invoice are received in lots and Installments, the Regd. person shall be
entitled to take credit upon receipt of last lot or installment.
b) Where recipient fails to pay to the supplier of goods or service, the amount towards value of
supply along with tax payable thereon within 180 days from the date of issue of Invoice by the
supplier, an amount equal to the ITC availed by the recipient shall be added to his output tax
liability along with Interest thereon.
c) The recipient shall be entitled to avail ITC on payment made by him of the amount towards
value of goods or service along with tax payable thereon.

DISTRIBUTION / APPORTIONMENT OF ITC: Section 17 of CGST Act


Where goods or service are used by Regd. person partly for any business and partly for other
purpose : ITC can be availed to an extent as is attributable to the purpose of his business.
Where goods or service are used by Regd. person partly for effecting taxable supplies including
zero rated supplies and partly for effecting exempt supplies : ITC can be availed to an extent as
is attributable to the said taxable supplies including zero rated supplies.
The exempt includes supply where the recipient is liable to pay under Reverse Charge
Mechanism and the recipient can avail the ITC on the amount of goods and service so paid under
reverse charge.

RESTRICTIONS ON AVAILMENT OF ITC: Section 17(5) of CGST ACT


ITC shall not be available in respect of the following namely:
1. Motor vehicles and other conveyances except when they are used in furtherance of business.
2. Food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic
surgery except where an inward supply of goods and service or both of a particular category is
used by a registered person for making outward taxable supply of the same category of goods
or service or as an element of taxable composite or mixed supply.
3. Membership of a club, health and fitness centre.
4. Rent a cab, life insurance and health insurance except where
A. The Govt. notifies the services which are obligatory for an employer to provide to its
employees under any law for the time being in force.
A. Such inward supply of goods or service of a particular category used by a Regd. Person for
making an outward taxable supply of the same category of goods or service or as a part of a
taxable composite or mixed supply.
C. Travel benefits extended to employee on vacation such as leave or home travel concession.

5. Works Contract service when supplied for construction of an immovable property (other than
plant and machinery) except where it is an input service for further supply of works contract
service.
6. Goods or service or both received by a taxable person for construction of an immovable property
(other than plant and machinery) on his own account including when such goods or service are
used in the course or furtherance of business.
Note: Construction includes reconstruction, renovation, additions or alterations or repairs, to the
extent of capitalisation, to the said immovable property
7. Goods or Service or both on which tax has been paid U/s 10.
8. Goods or service or both received by a Non resident taxable person except on goods imported by
him.
7. Goods or service or both used for personal consumption
8. Goods lost, stolen destroyed, written off or disposed of by way of gift or free samples.
9. Any tax paid in accordance with Sections 74, 129 and 130

AVAILABILITY OF CREDIT IN SPECIAL CIRCUMSTANCES: Section 18


a) A person who has applied and granted registration within 30 days from the date on which
he becomes liable shall be entitled to avail ITC on inputs held in stock and inputs
contained in semi finished or finished goods held in stock till the last date before the
introduction of this Act.
b) A person who takes voluntary registration, shall be entitled to avail ITC on inputs held in
stock and inputs contained in semi finished or finished goods held in stock till the last
date before the introduction of this Act.
c) A registered person ceases to pay tax U/s 10 (Composition scheme) shall be entitled to
avail ITC on inputs held in stock and inputs contained in semi finished or finished goods
held in stock and on capital goods on the date from which he becomes liable to pay tax
under normal scheme.
d. Where exempt supply of goods or service or both by a Regd. Person becomes a taxable
supply, such person shall be entitled to avail ITC on inputs held in stock and inputs
contained in semi finished or finished goods held in stock related to such exempt supply
and on capital goods only used for such exempt supply on the date from which such supply
becomes taxable supply
1. A Regd. Person cannot claim ITC in respect of any supply of goods or service or both to him
after the expiry of 1 year from the date of Tax Invoice relating to such supply.
2. Where there is change in constitution of regd. Person on account of sale, merger,
demerger, acquisition, lease or transfer of the business with the specific provision for
transfer of liabilities, he shall be allowed to transfer the ITC which remains unutilized in
his electronic ledger to such sold, merged, demerged, leased or transferred business.
3. Where Regd. Person who has availed ITC opts to pay under composition scheme or where
the goods or service supplied by him becomes wholly exempt, he shall pay an amount
equal to the credit of ITC in respect of inputs held in stock and inputs contained in semi
finished or finished goods held in stock and on capital goods, reduced by such percentage
points as may be prescribed immediately on the date of exercising such option.
Note: After payment of such amount, the balance ITC, if any, lying in electronic credit
ledger shall lapse.
4. In case of supply of capital goods or plant and machinery, wherein ITC has been taken, he shall
pay an amount equal to tax credit taken on the said capital goods or plant and machinery
reduced by percentage points as may be prescribed or the tax on the transaction value of such
capital goods or plant and machinery determined U/s 15, whichever is higher.

ITC IN RESPECT OF INPUTS AND CAPITAL GOODS SENT FOR JOB WORK: Section 19 of CGST Act

1. The principal shall be entitled to take credit of ITC even if the inputs are directly sent to a job
worker for job work without being first brought to his place of business.
2. The Principal shall, subject to certain conditions, be allowed to take ITC on capital goods sent to
a job worker for job work.
3. The principal shall be entitled to take credit of ITC on capital goods even if the capital goods are
directly sent to a job worker for job work without being first brought to his place of business.
Where the capital goods sent for job work are not received back by the
principal within a period of three years of 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 such capital goods were sent out.

Das könnte Ihnen auch gefallen