GST – INPUT TAX CREDI

T AND REGISTRATION
Content
 Set off under present tax regime

 Input Tax credit under GST

 Registration under GST

UNDERSTANDING VAT AND
SET OFF UNDER ‘GST’
Customs duties – Set off
 Comprise of
• Basic Customs Duty (‘BCD’);
• Duty equivalent to Excise (‘AED’); and
• Special Additional Duty equivalent to VAT (‘SAD’)

 Cenvat credit granted to Manufacturer of excisable goods f

or AED and SAD paid on “inputs” and “capital goods”

 Cenvat credit granted to provider of taxable services for A

ED paid on “inputs” and “capital goods”

 Taxes paid to Central set off with taxes payable to Central

Excise duty (‘ED’) – Set off

 Presently basic rate – no education cess

 Cenvat credit granted to Manufacturer of excisable goods f

or ED paid on “inputs” and “capital goods”

 Cenvat credit granted to provider of taxable services for E

D paid on “inputs” and “capital goods”

 Taxes paid to Central set off with taxes payable to Central

Value Added Tax (‘VAT’)
 Each state has its own VAT – APVAT, MVAT etc.

 Input Tax Credit (‘ITC’) granted to Manufacturer of taxabl

e goods for Local VAT paid on goods including capital goo
ds

 ITC granted to trader of goods for local VAT paid on purch

ase of goods

 Taxes paid to a State Govt. set off with taxes payable to a S

tate (liability for VAT and CST)

 Reversal of ITC on Stock transfer etc.

Central Sales Tax
 Central Act – administered and collected by each State et
c.

 No Input Tax Credit (‘ITC’) of CST to Manufacturer / Trad

er

 CST paid in one state can not be adjusted with CST

 CST paid to “origin” state “State Govt.” can not be set off w
ith any other taxes (CST or VAT)
Service Tax (‘ST’)
 Basic rate - no education cess
SBC :15th Nov’2015 – Not set off
KKC : 1st June’ 2016 – Set off only to service provider

 Cenvat credit granted to Manufacturer of excisabl

e goods for ST paid on “input services”

 Cenvat credit granted to provider of taxable servic

es for ST paid on “input services”

 Taxes paid to Central set off with taxes payable to Central

Input Tax Credit - GST
 Capital goods – Goods the value of which is capitalized in the books of
accounts of the person claiming the credit and which are used in the
course of furtherance of business

 Input – any goods other than capital goods used in the course of f
urtherance of business

 Input service means any service used in the course of furtheranc

e of business

 Input Service Distributor

• Distribution of GST paid on input services to other offices

 Input tax – CGST, SGST and IGST paid on any goods or services inclu
ding import of goods
Input Tax Credit - GST
Eligible Input tax credit as per GST Act

CGST / SGST / IGST / UGST charged on any supply of goods and ser
vices and includes:

 IGST paid on import of goods

 CGST / IGST / SGST / UGST paid under Reverse charge on goods an

d services

 CGST / IGST /SGST / UGST paid under Reverse charge on supply of

goods and services from unregistered person
Input Tax Credit - GST
 Input tax credit as self assessed in the return of a registered perso
n to be credited to his Electronic Credit Ledger

 Conditions for availing Input Tax credit

• Possession of tax invoice / Debit note issued by Regd. supplier
• Receipt of goods / services
• Tax is paid by the supplier
• Return is filed by the recipient of goods / services
• Amount towards supply of goods and services and tax thereon to be
paid to supplier within 180 days from the date of invoice
• Not eligible if depreciation on tax claimed under Income tax

 Credit to be availed before the due date of filing return for September
following the end of financial year or filing of annual return
Input Tax Credit - GST
 Input tax credit admissible only if engaged in taxable supplies

 Restriction on pipelines and telecommunication tower fixed to

earth (to be availed over a period of time)

 Proportionate input tax credit if engaged in exempt supply

 FI/NBFC engaged in accepting deposits, extending loans / adva

nces - Eligible to avail only 50% of total input credit for the mo
nth
Input Tax Credit - GST
 Input tax credit not eligible on following:-
• Motor vehicles and conveyances (only in specified cases eligible)
• Food and beverages, outdoor catering
• Beauty treatment, health services, cosmetic and plastic surgery
• Membership of club, health and fitness centre etc.
• Rent a cab, life insurance, health insurance
v Eligible if obligatory for an employer under any law for the time be
ing in force
• Travel benefits extended to employees on vacation such as leave
• Works contract services for construction of immovable property
v Other than plant and machinery
• Goods / services used for construction of immovable property
Other than plant & machinery
Input Tax Credit - GST
 Input tax credit not eligible on following:-
• Taxes paid under composition scheme
• Goods or services used for personal consumption
• Goods lost, stolen, destroyed, written off or disposed
by way of gift or free samples

 Credit not eligible after the expiry of one year from the dat
e of issue of tax invoice
GST - Issues impacting Set off

 GSTN – Separate registration for each State

 Multiple registration within same state permissible

 Registration compulsory for continuing Credit chain

GST payable on “supply”
 CGST – Intra – State supply of “goods” / “services”

 SGST (State ‘A’) – Intra – State supply of “goods” / “services”

 IGST – Import of “goods” and “services”

 IGST – Inter – State supply of “goods” / “services”

Payment of GST
 CGST to be utilized in the following order:-
• First utilize towards payment of CGST
• Second utilize towards payment of IGST
• Not to be utilized towards payment of SGST

 SGST (State A) to be utilized in the following order:-

• First utilize towards payment of SGST (State A)
• Second utilize towards payment of IGST
• Not to be utilized towards payment of CGST

 Settlement by Central Govt. of IGST utilized towards SGS

T
Payment of IGST
 IGST to be utilized in the following order:-
• First utilize towards payment of IGST
• Second utilize towards payment of CGST
• Third utilize towards payment of SGST
Are you liable to Register under GST
GST – “Supply” of goods and / or services

 Are you supplier of goods / services

• Books of accounts
• Bank Accounts
• Audited financial statement
• Income Tax return
• Form 26AS
• Excise / VAT / Service tax / Other Returns
• Ask your Auditor
Are you liable to Register under GST
Supply of Goods / Services – Excluded / Exempt

 Goods / Services outside the ambit of GST

 Excluded / fully Exempted under GST

 Below Threshold limit under GST

 Recipient liable under Reverse Charge

 Any other – as the case may be

They all are “Supplier” under GST
 Manufacturer
 Trader
• Registered Import dealer
• First Stage Dealer
• Second Stage Dealer
• Wholesaler, Stockiest, Retailer
• Documents of title – High Seas / SICOI
 Commission Agent
 Developer / Builder, Contractor
 Exporter / Deemed Exporter
 Service provider / Job worker
Pre-requisite for Registration under GST
 Permanent Account Number - “PAN”
 Particular State - Place of business
• From where goods / services are supplied
• Warehouse, godown, other storage place
• Place where books of accounts are maintained
• Place of business of Agent
• Branch office, Front office, Call centre etc.
 Classification of Goods / Services
 Authorised Signatory
 Email / Mobile number
 New or Migration from existing Registration
How many Registrations under GST
 Permanent Account Number - “PAN”
• Separate Registration for each State
• Single Registration within one State
Option to register each “Business vertical” separately
 Outward supply of goods / Services – Compulsory

 Fixed Establishment / Place of supply for others

• – Capable of Supply or to receive and use services
 Input Service Distributor
 Dual GST
• No concept of centralized registration for Service
s
Registration Number - GST
 Structure of registration number

 Each taxpayer will be allotted a State wise PAN-based 15-d

igit Goods and Services Taxpayer Identification Number (
GSTIN)

 Various digits in GSTIN will denote the following:

• State Code 12
• PAN 3 4 5 6 7 8 9 10 11 12
• Entity Code 13
• BLANK 14
• Check Digit 15
Migration of Existing Taxpayer under GST

 Person registered under existing taxes subsumed in GST a

nd having a valid PAN

 Person registered under earlier laws to be issued Registrat

ion Certificate (‘RC’) on provisional basis

 Migration of existing assessee to be handled by :-

• Manufacturer – State Govt. (Dealers under VAT)
• Trader – State Govt. (Dealers under VAT)
• Service provider – Central Govt. (Service tax assessee)

 Provisional RC to be valid for 6 months from the date of is

sue
Migration of Existing Taxpayer under GST

 Dealer to submit prescribed information to relevant autho

rity

 Validity of provisional registration may be extended furth

er by Govt. (Delay in transition)

 RC to be granted on final basis by Central/State Governm

ent on submission of information

 RC to be cancelled if dealer fails to furnish the informatio

n within prescribed period
Migration of Existing Taxpayer under GST

 Person may submit application if not liable for registratio

n under GST
• Discontinuation of business
• Threshold limit
• Product / Service not taxable under GST
• Relocation of business to another state
• Reorganization of supply chain

 Central / State Govt. had commenced the process of issuin

g registration under GST

Section 166 of the Model GST Law

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