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GST

Duties & Taxes


Present Proposed

Service Tax

Excise Special
VAT

CST
CVD
Additional
Duty GST
Professional Tax

Entry Tax

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Duties & Taxes

State levies
Central levies Exclusions
Excise on alcohol, petroleum
Excise Duties including the and electricity VAT/ Sales tax
additional excise duties • Alcoholic liquor
Entry tax • Petroleum Products
Additional duties of customs
Entertainment tax (unless • Tobacco for Human
(i.e. CVD and ACD) Consumption
levied by the local bodies)
Service tax
Luxury tax
Cesses and surcharges levied
by Union Cesses and surcharges levied
by States
Subsumed to
Subsumed to
CGST
SGST

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Constitutional Amendments Proposed by 122nd Bill

Article 246A Article 269A


Parliament and State
legislatures empowered to Centre to levy GST on Inter-
legislate on GST (CGST & State supplies
SGST), respectively Import of goods or services
Centre exclusively empowered from outside India will be
to legislate on GST levied on treated as Inter-State supplies
inter-State movement of goods ‘Place of supply’ of goods &
and/ or services (IGST) services to be determined as
Power to States to levy tax on per rules formulated by Centre.
services for the first time.

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Rate of Tax
• Proposed Revenue Neutral Rate for GST - 18%
• States and Centre will decide rates for CGST & SGST,
separately
• Prevailing rate of GST in various countries are
Country Rate
Australia 10%
Canada 15%
Germany 19%
Japan 5%
Singapore 7%

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Proposed Acts & Rule
GST: Model Law

Released by Ministry of
Finance on 14th June 2016

Central /States GST Act,


GST Valuation Rules Integrated GST Act, 2016
2016

25 chapters
8 Rules 11 chapters
4 schedules

• The draft model law has been released to invite suggestions and feedback

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Taxable Event
Levy Taxable Event Consideration
Excise Manufacture Not Necessary
Service Tax Rendition of Yes
Service (Monetary /
Non Monetary)
Value Added Sale Yes
Tax (VAT) (Monetary)
Yes
GST Supply (Monetary /
Non Monetary)

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Taxes - GST Taxable Event

CGST - Centre will levy tax on


Intra State supply of goods and
services

SGST - State will levy tax on


Intra State supply of goods and
services

IGST - Centre will levy tax on


Inter State supply of goods and
services

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Evaluation – Cost & Tax Structure

Present
Tax

GST

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Cost – Producer to Wholesaler
Particulars Present GST
(INR) (INR)
Cost of Production 80,000 80,000
ADD: Producer’s margin of profit 20,000 20,000
Producer’s Price 1,00,000 1,00,000
Central Excise duty @ 12.5% 12,500 Nil
VAT at 15% 16,875 Nil
Central GST @ 9% Nil 9,000
State GST @ 9% Nil 9,000

Total Price 1,29,375 1,18,000

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Cost – Wholesaler to Retailer
Particulars Present GST
(INR) (INR)
Cost of goods to Wholesaler 1,12,500 1,00,000
ADD: Profit margin at 5% 5,625 5,000
Total 1,18,125 1,05,000
VAT at 15% 845 Nil
[17,719 (15% of 1,18,125) – 16,875]
(see slide no.11)
Central GST @ 9% Nil 450
[9,450 (9% of 1,05,000) – 9000
(see slide no.11)]
State GST @ 9% Nil 450
[9,450 (9% of 1,05,000) – 9000
(see slide no.11)]
Total Price 1,18,970 1,05,900

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Cost – Retailer to Customer
Particulars Present GST
(INR) (INR)
Cost of goods to retailer 1,18,125 1,05,000
ADD: Profit margin at 10% 11,813 10,500
Total 1,29,938 1,15,500
VAT at 15% [19,491 (15% of 1,29,938) 1772 Nil
– 17,719 (see slide no.12)]
Central GST @ 9% [10,395 (9% of Nil 945
1,15,500 -9450 (see slide no.11)]
Ientral GST @ 9% [10,395 (9% of Nil 945
1,15,500 -9450 (see slide no.11)]
Total Price to the final consumer 1,31,710 1,17,390
Tax component in the price to the final 31,992 20,790
consumer
Final price exclusive of taxes 99,718 96,600

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Cost – Import
Particulars Present GST
(INR) (INR)
Assessable Value 1,10,000 1,10,000
Basic Custom Duty (10%) 11,000 11,000
Gross Value 121,000 121,000
Counter Veiling Duty -12% 14,520 0
E. Cess & SHE Cess (2 +1 %) 436 0
Sum Total 1,35,956 121,000
Special Additional Duty (4%) 5,438 0
IGST (18%) 0 24,296
Total Cost before Input Tax Credit 1,41,394 145,296
Input Credit Admissible 18,708 24,296
Net Cost of Import 1,22,686 1,21,000

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Tax Structure – CSGT & SGST
KCM Sale Price 10,000
(Vadodara) Add: CGST (9%) 900
Add: SGCT (9%) 900
Total 11,800
CGST+SGST

XYZ Ltd
CMC Ltd
(Ahmedabad
IGST (Mumbai)
)

Sale Price 20,000


Add: IGST (18%) 3,600
Total 23,600

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Tax Structure - IGST

CMC
(USA) CIF Value (in INR) 10,00,000
Add: BCD (7.5%) 75,000
IGST
Gross Value 10,75,000
Add: IGST (18%) 1,93,500
ABC Ltd Total 12,68,500
(Vadodara)

For Tax Structure related to Export is to be notified

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Compliance

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Registratio
n

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Current v/s Proposed

Repeal registrations Registrations in force


under • CGST
• Excise • IGST
• Service Tax • SGST
• VAT
• Professional Tax
• Luxury Tax
• Entertainment Tax

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Process

Submission of
documents within
time limit to Dept. • If fails, the
Certificates Certificate
• Excise • Issuance of may be get
•Service Tax Provisional cancelled
•VAT Certificate • Satisfied
•Entry Tax & • Validity of 6 with
etc.… Months Documents,
On date of then, a new
Issuance
Appointment Registrations

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Salient features
PAN linked GSTIN with 15 digits

Threshold limit – to be 9 lacs INR


Threshold limit – to be 5 lacs INR
( for part of North East India including Sikkim)

State wise separate registration to be required

Removal of Single & Centralized registration

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Returns

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Comparison
C
U
Monthly/
R
Quarterly
Annually 50
E
N
T

G Monthly/
S Quarterly
Annually 37
T

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Under GST
Return Due Date Form
Outward Supplies 10th of next month GSTR-1
Inward Supplies 15th of next month GSTR-2
Summary Return 20th of next month GSTR-3
Composition 18th of next month of GSTR-4
Tax payer following quarter

By N.R.I 13th of next month GSTR-5


Input Service 10th of next month GSTR-6
Distributor

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Under GST
Return Due Date Form
Annual Return 31th December GSTR-7
following F.Y.
Final Return 3 months from date of GSTR-8
cancellation or
order of cancellation
whichever is later
(to include all
transactions from last
return to date of
cancellation)

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Goods

Time & Value


of
Supply

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Duty Payable
E
X At the time of removal of goods from
C Factory
I
S
E
Earlier of
• Date of removal of goods
• Date on which goods are made available to the
G recipient (where goods are not required to be
S removed)
T • Date of issuance of invoice
• Date of receipt of payment by supplier
• Date on which recipient shows receipt of goods in his
books of account
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Duty Payable
Continuous Supply of Goods
Earlier of
• Successive statement of accounts
• Date of invoice
Goods Sent for approval or sale on return
Earlier of
• Known the supply has taken place
• Six from the date of removal

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Job Work
Particulars Under Excise Under GST

Input Return within 180 Return within 180 day from


day from date of date of removal
removal

Capital Goods Return within 2 years Return within 2 Years from


from date of removal date of removal

Payment If the goods are not If the goods are not received
received within within prescribed time limit.
prescribed time limit.

Reclaim of On return of goods/ On return of goods/ Capital


Credit Capital Goods Goods

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Services

Time & Value


of
Supply

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Duty payable
Service Tax GST

Date of issuance of
Advance Received
invoice
Date on invoice raised Date of completion of
service (if invoice is not issued
Date on completion of within the prescribed period)
service
Date of receipt of payment
Date on which recipient
reflects the receipt of services
in his books of account

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Duty payable
Continuous Supply of Service
Earlier of
• Date of payment is ascertainable from Contract
• Date of payment received / issue an invoice
• Date of completion of an event

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Under Reverse Charge
Service Tax GST

Earlier of
Earlier of a) Date of receipt of service
a) Immediate due date on b) Date on which payment is made
payment made to supplier (Earlier of - date on which payment is
entered in the books of accounts of
b) After expiry of 3 months
recipient or date on which payment is
from date of invoice
debited in his bank account)
c) Date of receipt of invoice
d) Date of debit in the books of
accounts

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Value of Supply
• “Transaction value” - actually paid for such supply,
when the parties are not related and price is the sole
consideration
• MRP based valuation is done away with
• GST Valuation (Determination of Value of Supply of
Goods and Services) Rules, 2016
– where the consideration is not wholly or partly in
money; supplier and recipient are related,
supplies undertaken by pure agent, money
changer

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Value of Supply
Value Conditions
Includes • Amount paid by recipient on behalf of supplier
• Value of goods/services-supplied free of charge by
recipient
• Royalties and license fees
• Any taxes, duties, fees and charges
• Incidental expenses-commission and packing, charges for
anything done by supplier before delivery
• Subsides
• Any reimbursement/cost by supplier
• Discount or incentive allowed after supply
Excludes • Discount allowed before or at the time of supply
• Discount allowed post-supply as per agreement

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Input Tax

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Conditions - Eligibility
Input tax Conditions
credit

Available • Inputs/ input services used or intended to be used by a


supplier for making an outward supply including zero-
rated supply
• Credit should be eligible to proportion relating to
business
• Time limit of 1 year from issue of tax invoice
prescribed for availment

Restrictions • Possession of tax invoice or other prescribed taxpaying


document.
• Receipt of the goods and or services
• Actual payment of tax charged in respect of such supply
to the Government by the supplier, and
• Furnishing of return under Section 27.

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Conditions - Exclusion
Input tax Conditions
credit
Exclusion • Supplies used primarily for personal use or consumption of
any employee
• ITC will not be available beyond a period of one year from
the date of issue of invoice in case of new registration
• ITC will not be allowed in respect of any invoice after
September following the end of financial year or filing of
the annual return, whichever is earlier
• Goods/services used for construction of immovable
property
• In case of common procurements, credit is not eligible for
portion attributable to non-business activities and
exempt/non-taxable supplies
• Negative list on which input credit will not be eligible has
also been prescribed, which are similar to the restrictions
prescribed under the current service tax & VAT laws

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Utilization of Credit

• CGST
• IGST • Credit shall be first
CGST utilized for payment
of respective tax and
balance for payment
• SGST of other taxes
• IGST
SGST • Cross credit utilization
of CGST and SGST is
• IGST not permissible
• CGST
IGST • SGST

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Input services – Distribution
Type of Distributed Conditions
credit as

CGST IGST

• Where the Distributor and the recipient of credit


IGST IGST are located in different States

SGST IGST

CGST & CGST


IGST • Where the Distributor and the recipient of credit
being a business vertical, are located in same
SGST & SGST states
IGST

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Input services – Distribution
Type of Attributable Manner of distribution
credit to

Eligible input A supplier Only to that supplier


service credit
Eligible input More than one To whom it is attributable on pro-rata basis of
service credit supplier turnover in a State of such supplier

Manner of distribution –
against invoice or
prescribed document

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Refund
&
Penalty

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Refund
Particulars Conditions

Time limit • Apply within 2 years from relevant date prescribed other
than amount referred under protest

Unutilized • Application shall be made by the prescribed method


Credit • No documents need to be submitted for value refund is
less than Rs. 5,00,000. Only need to be filed declaration.

Period • Need to disburse within 3 months.


• In case of delay, will pay with interest as per prescribed
rate

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Penalty
Particulars Amount
Late furnishing details of Inward & Outward Per day Rs. 100 up to
Rs.5,000 (maximum)
Fails to furnish the return Per day Rs. 100
Deposit tax payment prior to issue of SCN No Penalty
For Minor Breach Rs. 5000 only
(Tax involved less than Rs. 5,000/-
Easily rectifiable or omission for submission
of Documents)
Minor mistakes or omission of documents No Penalty
submission or minor breach of tax regulation
or procedural requirement
Contravention of any provision for penalty Maximum up to Rs. 25,000/-
not defined

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Compliance Rating
• Innovative concept under GST
• Assigned a GST compliance rating score based on
his record of compliance
• Update on periodical interval for public domain

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Transitional Provisions

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CENVAT & Input VAT Credit

Particulars Provisions

Unutilised Unutilised CENVAT credit and VAT input tax credit can
CENVAT credit be carried forward subject to the following:
and VAT input • Amount is mentioned in return
tax credit • The credit is admissible under GST law

Unavailed credit Cenvat credit is available subject the following-


of capital goods • Credit was admissible as cenvat credit under
not carried previous law &
forward in return • Also admissible as input tax credit under GST law

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CENVAT & Input VAT Credit
Particulars Provisions

Unutilised Unutilised CENVAT credit and VAT input tax credit can
CENVAT credit be carried forward subject to the following:
and VAT input • Amount is mentioned in return
tax credit • The credit is admissible under GST law

Unavailed credit Cenvat credit is available subject the following-


of capital goods • Credit was admissible as cenvat credit under
not carried previous law &
forward in return • Also admissible as input tax credit under GST law

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CENVAT & Input VAT Credit
Particulars Provisions

Credit of eligible A registered taxable person not liable to registered


duties and taxes under earlier law or was engaged in manufacturer of
in respect of exempt goods is entitled to take credit of duties and
inputs held in taxes subject to following:
stock & Inputs • Inputs /goods are used or intended to be used for
contained in making taxable supplies
semi-finished or • Said taxable person was eligible for credit but was
finished goods not liable for register or goods were exempt under
(duties and taxes the said law
include – Excise • Said taxable person is eligible for ITC
duty, service tax, • Said taxable person is in possession of
CVD, SAD etc.) invoice/other document
• Such invoices/ other documents were issued not
earlier than 12 month preceding the appointed day

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Other Areas

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Composite Scheme
Suppose the date of appointment of GST – 1 April, 2017
Particulars Date of Date of Provisions
removal Receipt

Value of Input/WIP/FG 1,00,00,000 20,00,000 15,00,000


as on 1/04/2017
Tax to be payable under GST 18,00,000 12,00,000
(opt scheme of Composite Tax)
Amount of credit lapse 2,00,000 3,00,000
• To convert form Normal Payment to Composite Scheme, shall have to
follow the procedure.

• Dealing in long term construction/works contract under earlier law, after


date of appointment, tax shall be payable as per GST

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Exempted goods
Suppose the date of appointment of GST – 1 April, 2017
Particulars Date of Date of Provisions
removal Receipt
1/01/2017 10/06/2017 No Tax
Exempted goods
1/01/2017 1/11/2017 Tax to be payable

• No tax shall be payable on receipt of goods within 6 months from the


date of appointment.

• The tax shall be payable on returning the goods after 6 months from
the date of appointment.

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Job Work
Suppose the date of appointment of GST – 1 April, 2017
Particulars Date of Date of Provisions
removal Receipt
1/01/2017 1/06/2017 No Tax
Input / Semi- finished goods
1/01/2017 1/12/2017 Tax to be payable

• Job-worker and manufacturer will have to declare the goods lying with
job-worker of manufacturer.

• No tax shall be payable on receipt of goods within 6 months from the


date of appointment.

• Receipt of goods after 6 months , the tax shall be payable by job-worker


as well as manufacturer under the GST Act

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Recovery & Refund
Particulars Provisions
Recover any If any amount of tax, interest or penalty recover under
amount earlier law, then, that amount shall not be traded as an
Input
Refund any If any amount determine to be returned under the earlier
amount law, than, that amount shall be given in cash

Shall be applicable after date of appointment under earlier law for


• Adjudication
• Revision of return
Pending refund • Earlier claim of refund of duty/tax and interest filed
before appointed day shall be disposed of as per
earlier law
• Any claim for refund is fully or partially rejected,
amount so rejected shall lapse

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Way Forward
State-wise GST Act
Negative list of
Services
Services & Goods
Revenue Neutral
under RCM Rate

Rules on Valuation &


Credit

Date of Appointment

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Actions to be Required
• Time of Supply

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Actions

Accounting
Logistic
Litigation &
Warehouse
Changes in
ERP
Tax
Invoicing
Planning

Tax
Analysis

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Changes in ERP
“Sales/Manufacturing” to “Supply” and Updating masters
 State-wise sales records
 Credit avail and utilization records
 Tax computations
 New formats for invoices / records/ returns/ declarations
 Validity of statutory form (Form F/Form C)
 Manner of payment of taxes
 New compliance dates
 Documentation for movement of goods

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KCM Support
Pre GST Post GST
Pre GST Post GST

Fresh
Fresh
Registration
Registration
Complianc
Consultancy Complianc
Consultancy e&
e&
Advisory
Advisory
ERP Support
ERP Support Accounting
Accounting
K C Meheta & Co
K C M hta & Co

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Pre GST - Impact Analysis
Reconcile Books v/s Return - VAT/Excise/ST

Derive value of CENVAT/Input VAT Credit

Determine amount of Net Tax liability

Valuation of Inventory & Capital Goods

Migration of Accounting records

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Pre GST - Impact Analysis
Extensive support for ERP implementation

Impact of change in Contract Clause & period

Support to fulfill transitional compliance

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Post GST - Design & Implementation
Obtain new registration

Support to develop new Tax Structure

Develop new Accounting treatments

Integration of Accounting records

Tax Planning & their Analysis

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Post GST - Design & Implementation
Restructuring Supply chain with tax incident

Support to re-design pricing & discount


policy

Realignment of tax roles at Factory

Support to liquidate credit

Knowledge sharing work shop

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Thank you
This presentation is prepared exclusively for the benefit
and use of the clients of K. C. Mehta & Co. This should
not be used as a substitute for professional advice.
Reasonable care has been taken for ensuring the
accuracy and the authenticity of the contents of the
presentation. However, we do not take any
responsibility for any error or omission contained
therein on any account. It is recommended that the
readers should take professional advice before acting
on the same. The provisions contained in Finance Bill,
2015 are the proposals and are likely to undergo
amendments while passing through the Houses of the
Parliament before being enacted.