GST:-BOON

OR BANE

Nitika Gaur
WHAT IS GST ??
• GST means Goods and Services Tax
• One Nation One Tax
• It’s a destination based Tax
• Biggest Tax Reform as well as Business
Reform
• Original Idea in 2006
• Proposed Implementation 2010
• Finally Coming in 2017
Appointed Day

• APPOINTED DAY : 1ST July 2017

• Midnight 00:00 Hours GST Launch

Existing Law Shortcomings
•Compliance Cost : High
(Many Taxes : Excise, Service Tax, VAT, CST, Entry Tax, Octroi, SAD,
CVD, Purchase Tax, Entertainment Tax, Luxury Tax etc.)
•Admin Cost : High
•Complexity
•Interpretation Issue (Software both Good and Service)
•Tax Evasion (Now Straight as well as Reverse Charge Mechanism)
•Corruption (Now Online)
Benefits

• Input Credit will available :

Presently CST, Excise & Service Tax
not allowed against VAT
Benefit for Citizens

• (i) Simpler tax system

• (ii) Reduction in prices of goods and services due
to elimination of cascading.

• (iii) Uniform prices throughout the country

• (iv) Transparency in taxation system
• (v) Increase in employment opportunities
Benefit for Trade/Industry
• Reduction in multiplicity of taxes

• Mitigation of cascading/double taxation

• More efficient neutralization of taxes especially for exports

• Development of common national market

• Simpler tax regime-fewer rates and exemptions

Singapore Example

• Introduce 1st April 1994 @3%

• @ 4% Jan 2003

• @ 5% Jan 2004

• @ 7% July 2007
Five Acts
• The Central Goods and Services Tax Act, 2017

• The Integrated Goods and Services Tax Act, 2017

• The Union Territory Goods and Services Tax Act, 2017

• The Goods and Services (State Compensation) Tax Act, 2017

• The State Goods and Services Tax Act, 2017 (State wise)
TYPES OF TAXATION IN GST

•IGST : Integrated GST

(Inter-state sale & Stock Transfer, Import – SAD+CVD, Export is Zero rated)

•SGST : State GST

•CGST : Central GST

(Intra-State)
NOT COVERED

• ELECTRICITY

• STAMP DUTY & PROPERTY TAX

• PETROLEUM PRODUCTS

• ALCOHOL
Rate of Tax
(Highest Can Go up to 40%)

• Exempt
• 0% : Zero Rated for export
• 3% : Gold
• 5% : Essential Goods
• 12% : Basic Necessity Products
• 18% : Revenue Neutral Rate
• 28% : Demerit Goods
GSTN
• GST Company Incorporated (49% Central 51% State
and Govt Companies)

• Infosys Appointed as Managed Service Provider

(MSP) Rs. 1380 Crore

• 34 IT Companies Appointed as GST Suvidha

Providers (GSP)
• Saksham Project Rs. 2256 Crore for IT re-
engineering
SEC 171:
ANTI PROFITEERING MEASURE

• Benefit to be Passed on to Consumer

as per “IMPACT ANALYSIS”

• Else Heavy Penalty

Exemptions
• Exemption Limit : 20 Lacs (within state), 10
lacs for North East State like Assam, HP etc.
• Export : No Tax because its Zero Rated
• Exempt Supply :
- Transaction in Securities (Shares)
- Sale of Land
- Sale of Building
COMPOSTION SCHEME

• Turnover Limit Rs. 75 lacs (preceding year)

• 2% for Manufacturer (Other than Ice Cream,
Tobacco, Pan Masala)

• 1% for Traders
• 5% for restaurants
RCM

• Reverse Charge Mechanism

• Pay Tax on Purchase from Un-registered

Persons

• Registration under RCM is mandatory if

liable for RCM
C, F & H Forms

• No C Form
• No F Form
• No H Form
• Stock Transfer : GST Applicable (Inter State)
Tax Free Zones

• No Tax Free Zones

• Existing Tax Free Zones (1st Pay then Refunds)

E Way Bill

• E Way Bill : Goods value Rs. 50000 or more

• Supplier, Transporter, Recipient.
• Initial Relaxation
TDS @1%

• By Government Departments
• By Specified Persons
• Value Exceeding Rs. 2.5 lacs
Tax & Returns
•Monthly Online Tax
•Monthly online Returns
•R1 : 10th R2 : 15th R3 : 20th (For Regular Dealer)
•R4 : 18th (For Composite Dealer)
•R5 : 20th (For Non Resident)
•R6 : 13th (For ISD)
•R7 : 10th (TDS Return)
•R8 : 10th (E-Commerce Operator)
•R9 : 31st Dec (Registered Taxable Person)
…Returns
• (Myth : Huge Burden) Vs. (Reality : Easy)
• First 2 months last date relaxation and file R-3B
Summary Return (July and Aug – As per 18th June
Meeting of GST Council)
• Return can not be revised (Its Good)
• Annual return
• Individual Purchase and Sales bill to be uploaded
• Invoices can be kept in soft Copy (Its good)
• Limitation Period for raising demand is 5 years
Input Service Distributor

• ISD
• 12 monthly returns
• 1 Annual Return
Input Credit
• Credit Available for most of the Purchases in the course of
Business (A major Gift from the Present regime)
• Capital Goods Credit is available in one go
• Electronic Matching of Input Credit
• Input Credit is proportionately available for Taxable and Zero
rated goods only (Means for exempted goods it is not allowed)
• No Input Credit after Annual return is filed
• Serious Point : Supplier has Actually paid tax charged in respect
of Supply and furnished Return
• If Goods are received in lots : Input credit can be claimed upon
receipt of the last lot
Non Creditable Goods
No input credit available for :
- Motor Vehicles
- Food & beverages
- Outdoor Caterings
- Beauty Treatment
- Health Services
- Cosmetic and Plastic Surgery
- Club Membership
- Rent a cab
- Insurance
- Personal consumption
- Goods lost, stolen, destroyed, written off, disposed of by gift or sample
etc.
- Works contract on immovable property
Impact Analysis
Costing
•Change of Tax Rate
•Input Credit Availability
•Multiple Registration
•Consolidation of Godown or Interiors
•Transportation (No Entry Barrier and impact)
•IT Infra GST Compliant
•Finance Management (Stock Transfer : Working Capital)
•Compliance Cost (Invoice wise detail)
•Training to Team (Workshops)
SUPPLY
ALL FORMS OF SUPPLY COVERED :
•Sale
•Transfer
•Barter (Not in VAT) (other goods)
•Exchange (Not in VAT) (same kind)
•License
•Rental
•Lease
•Disposal
Business Includes
Section 2(17)
• Any Trade or Commerce, Manufacture, Profession, Vocation,
Adventure, Bet, whether or not for monetary benefit

• Incidental activity

• Irrespective of Volume, frequency, continuity or regularity

• Any club, association, society to its members

• Admission for a consideration to any premises

• Race club

• Service by Govt.
ACTIVITIES TO BE TREATED AS SUPPLY
EVEN IF MADE WITHOUT
CONSIDERATION (SEC 7)
• Permanent Transfer or disposal of business assets (Eg.
Donation, Pharma Company free supply)
• Supply of Goods or Services between related persons
(Except Gift to employee upto Rs. 50000 in a FY)
• Principle to Agent (Earlier F Form were applicable)
• Closure of Business
• Example : Air Conditioner Transfer from Stock in trade to
Personal Use
Important to Note for Construction

• Construction of Complex, Building,

Civil Structure or Part thereof shall be
treated as SERVICE
TRANSACTION NOT CONSIDER AS
SUPPLY OF GOODS OR SERVICES (Sec 7)

• Services by Employee to Employer

• Services by Court
• Services by member of parliament, Legislature
etc.
• Services of Funeral
• Sale of Land
Composite & Mix Supply

• Composite Supply (Eg. Supply of Goods, Packing,

Transport, Insurance)
• Rate of Tax will be rate of Principal Supply

• Mix Supply (Eg Haldiram Diwali Gift Pack)

• Rate of Tax will be highest rate tax item in Mix
supply
Time of Supply of Goods
SEQUENCE OF EVENTS
• Date of receiving Order : 10.07.17
• Goods removed from warehouse : 11.07.17
• Hands over to Agent for Transporter : 12.07.17
• Handed over to Transporter : 30.07.17
• Draws Invoice : 31.07.17
• Goods received by Agent of recipient : 10.08.17
• Payment received in Bank by Supplier : 01.10.17
Timing for Liability of Tax

Earlier of :
• Date of Issue of Invoice or
• Last date on which he is required to issue invoice
• Payment received (earlier of entry in books or
credited in Bank)
Place of Supply for Goods
(Sec 10)
• General Rule : Location of the Goods at the time where movement
of goods terminate for delivery to recipient.
(Eg. Mobile Purchase in Gurgaon)
• Goods Involving Delivery : Principal Place of Business of
Registered Buyer
(Eg. Delivery to third party)
• No Movement of Goods : Location of Goods
(Eg. Generator)
• Goods Assembled at site : Place of assembly
• Supply on Board : Location from where boarded (Aircraft in Delhi)
Place of Supply for Services
(Sec 12)
• General Rule :
- Location of Registered Buyer
- If Buyer not registered then known address
- Other cases, location of supplier
• Services for Immovable Property : Location of
Property
• Training Services where Actually Performed
• Admission to Event : Location of Event
• …....
Tax Invoice

•Only a Registered Person Can Issue

Tax Invoice (else Penalty Rs. 10000 per
Invoice)
•Tax invoice to be issued before or at time of :
-Removal of goods for supply to recipient or
-Delivery or making available to recipient
(If Goods on Approval then on Approval or 6 months whichever is
earlier)
Other Invoices and Vouchers

• “Bill of Supply” (Other than Tax Invoice)

• “Receipt Voucher” (For Advance Payment)
• “Refund Voucher” (For returning)
• “Invoice for Purchase” from Unregistered Person
• “Payment Voucher” for Purchase from Unregistered
Person
CHANGE IN RATE OF TAX

2 OUT OF 3 EVENT FORMULA TO BE

APPLIED :
•Issue of Invoice
•Receipt of Payment
•Supply of Goods or Services
VALUE OF TAXABLE SUPPLY
•The VALUE of a supply of goods and services or
both shall be TRANSACTION VALUE which is the
PRICE actually paid or payable for the said supply
where the SUPPLIER and RECIPIENT of the supply
are NOT RELATED and the price is the SOLE
CONSIDERATION for the supply

•Refer Valuation Rules if Value is not determinable

(Fair Market Value , Cost +10% etc is suggested in rules)
Addition in Value of Supply

•Interest, Late Fees, Penalty

•Amount incurred by recipient
(Eg. Free supply of Cement, Saria)
•Incidental Expenses
(Eg packing, Freight if supplier is liable, custom duty)
ILLUSTRATION
EX-1
• Where a new phone is supplied for Rs. 20000 along-with
exchange of an old phone
• If the price of new phone without exchange is Rs. 24000
• Then the open market value of Phone is 24000

Ex-2
• Where a laptop is supplied for 40000 along-with a barter of
printer that is manufactured by recipient and the value of printer
known at the time of supply is 40000
• But the open market value of laptop is not known
• The value of the supply of laptop is 44000.
Value is Given for Spl Cases
• Money Changer
• Insurance Policy
• Second Hand Goods
(Net Value)
Rating of persons
• New Initiative in GST to give rating to
Persons
• Defaulters identify
• Facilitate Companies to appoint good
associates
PAYMENT OF VALUE OF SUPPLY AND
TAX TO SUPPLIER WITHIN 180 DAYS

• If payment is not made within 180 days

• Input Credit will be disallowed
• Recipient to deposit tax with interest
No Credit for Tax Invoice Older than
12 months

• No Input Credit for stock in hand for

Tax Invoices Older than 12 months
Goods Sent for Job Work

• Goods if not received back within 1 year :

GST with Interest

• Capital Goods if not received back within 3

years : GST with interest
Registration-Migration
• Provisional Registration Re-open from
25th June to 15th June

• Final Registration : Download from Portal

• GST registration is based on PAN and

State

• Registration is required in each state

…Registration
Mandatory Registration :
• Supply Exceeds 20 lacs

• Inter-state
• Casual Taxable Person
• Reverse Charge Person
• ISD
• E Commerce Operator
• Person making taxable supply on behalf of another taxable person
• Person required to deduct TDS 9. Online Information and Database
access or retrieval system
Tax Credit on Stock
Registered Person
• Credit as per Last return on Appointed Day

• Condition : Return must be filed within 90 days

• Must have filed 6 returns preceding Appointed Day

• Credit will be reduced by pending C Forms

• Application to be filed in GST TRAN-1

…..tax Credit on Stock
Unregistered Person
• Credit to the extent of 40% / 60%
(Fear in Market for shortage of Medicines, AC &
Refrigerators etc.)
• Invoice should not be older than 12 months
• If Excise Invoice 100% available else 40% / 60%
• Stock sale within 6 months from AD
• First Pay GST and then claim 40% / 60%
• File detail in GST TRAN-1
Transition : Return of Goods

• Within 6 months from AD

• In respect of Goods prior to AD within
6 months
REFUNDS
(Sec 54)
• 90% refund within 7 days on provisional basis
• 10% after verification of Documents
• Refund Order within 60 days
• No document only Declaration if refund is less
than 2.5 lacs
E Commerce
•“Electronic Commerce” means the supply of
Goods or Services or both including digital
products over digital or electronic network

•“Electronic Commerce Operator” means any

person who owns, operate or manages digital
or electronic facility or platform for electronic
commerce
…..E Commerce

• Physical Presence or

• Person representing or

• Appoint any person

In taxable territory
….E Commerce
• Tax Collection at Source (TCS) @ 1% on
net value
• Pay and Furnish statement by 10th
• Supply through E-Commerce :
Mandatory Registration (No thresh-hold Limit)
• Concept of Matching of Supply of
E-Commerce Operator and Supplier
Accounts & Records
Accounts
• Production
• Inward and Outward Supply of Goods or Services
• Stock
• Input Tax Credit
• Output Tax Credit
Audit
-1 crore Penalty
-No account then tax payable on goods plus penalty
Period of retention of Accounts
- 72 months (6 years)
Penalty

• GST return non filing: Rs. 100 per day

(Max Rs. 5000)

• Annual Return non filing : 0.25% of

Annual Turnover
Penalty & Prosecutions
• Making a supply without invoice or with false/ incorrect invoice;
• Issuing an invoice without making supply;
• Not paying tax collected for a period exceeding three months;
• Not paying tax collected in contravention of the MGL for a period exceeding 3 months;
• Non deduction or lower deduction of tax deducted at source or not depositing tax deducted at source
under section 37;
• Non collection or lower collection of or non-payment of tax collectible at source under
• section 43C;
• Availing/utilizing input tax credit without actual receipt of goods and/or services;
• Fraudulently obtaining any refund;
• Availing/distributing input tax credit by an Input Service Distributor in violation of Section 17;
• Furnishing false information or falsification of financial records or furnishing of fake accounts/
documents with intent to evade payment of tax;
• Failure to register despite being liable to pay tax;
• Furnishing false information regarding mandatory fields for registration;
• Obstructing or preventing any official in discharge of his duty;
• Transporting goods without prescribed documents;
• Suppressing turnover leading to tax evasion;
• Failure to maintain accounts/documents in the manner specified in the Act or failure to retain
accounts/documents for the period specified in the Act;
• Failure to furnish information/documents required by an officer in terms of the Act/Rules or furnishing
false information/documents during the course of any proceeding;
• Supplying/transporting/storing any goods liable to confiscation;
• Issuing invoice or document using GSTIN of another person;
• Tampering/destroying any material evidence;
• Disposing of /tampering with goods detained/seized/attached under the Act.
…..Penalty
 I have Consulted
Mr. Rakesh Sharma CA, carakesh.com
&
Mr. Jagmohan CA, jda.com
you may contact them for more deeper
understanding.
Thank You
Raakesh Saraff
Founder & Managing Director

Infodrive India Pvt. Ltd.

E-2, 3rd Floor, Kalkaji Main Road
New Delhi – 110019, India,
Web: http://www.infodriveindia.com
Monday to Friday : 9:30 AM TO 6:30 PM,
Saturday 10:00 AM TO 5:00 PM