1 Goods and Service Tax CMA Bhogavalli Mallikarjuna GuptaB.Com, MFM, M.IOD, ACMA, PGDCS SME, Author & Speaker for GST Founder : India-gst.in Advisor : Managegst.com MSME World - Member of National Advisory & Governing Body CMA Club India - Indirect Tax Committee Chairman

2 Goods and Service Tax Any views or opinions represented in this presentation are personal and belong solely to the speaker and do not represent those of people, institutions or organizations that the speaker may or may not be associated with in professional or personal capacity, unless explicitly stated. Any views or opinions are not intended to malign any religion, ethnic group, club, organization, company, or individual.

3 Goods and Service Tax Introduction to taxationCurrent Taxation in India Introduction to Goods and Service Tax Features of Goods and Service Tax Key Definitions Registration Supply Time of Supply Place of Supply Value of Supply

4 Goods and Service Tax Tax Invoice Delivery Challan E-Way BillInput Tax Credit Input Tax Credit Reversal Tax Deducted at Source Collection of Tax at Source Refunds Returns Returns filing process

5 Goods and Service Tax GST Impact on ERPGST Impact on Business Processes Transitional Provisions Q & A

6 Introduction to TaxationTax is a Latin word derived from the word “Taxo” meaning rate. Tax is a financial charge levied by the government (central / state / local body) for meeting the public expenditure like road, dams, army for safe guarding the borders etc. the dictionary meaning of tax “A compulsory contribution to state revenue, levied by the government on workers’ income and business profits, or added to the cost of some goods, services, and transactions: higher taxes will dampen consumer spending”.

7 Introduction to TaxationHistory of Taxation – Pre Medieval Period Where taxes collected during the ancient times? References in Kautaliya’s ‘Arthashastra’ “Ideally, government should collect taxes like honeybee, which sucks just the right amount of honey from the flower so that both can survive.” Kautaliya believed that lower tax rates would not prompt tax evasion and taxes were levied on manufacturing. Importance is given for manufacturing in the state and not for import of goods. Date of manufacturing is also mentioned on the products Ancient Sage Manu in his book Manu Smriti, discusses on taxation in very depth on how the king should collect tax, why he should collect, how much tax should be collected.

8 Introduction to TaxationHistory of Taxation – Medieval Period Also known as Delhi Sultanate Period Taxes were collected directly by the Mansabdars Separate tax department was established during Ala-udin-Khiliji

9 Introduction to TaxationHistory of Taxation – During Pre Independence The British were able to excise control over India after the Battle of Baxur in Fought between Mughul Emperor Shah Alam and Lord Clive. With the victory in Battle of Baxur, British were able to control directly 4 Lac Sq Kms through East India Company and were granted rites to collect taxes. Central Excise is an indirect and inland tax on the sale, or production for sale of specific goods, or a tax on a good produced for sale, or sold, within a country or licenses for specific activities. The two basic principles for tax to be levied: The article should be good It should have come into existence on account of manufacturing. The definition for ‘goods’ is: an article that can be brought into the market for being sold or to be purchased.

10 Introduction to TaxationIndirect Tax Direct Tax

11 Introduction to TaxationDirect Tax ? Taxes levied on income Tax is paid directly by the person who receives the income Statutory Provision Income Tax Act 1961

12 Introduction to TaxationWhat is indirect tax ? Tax levied on sale of goods or services Tax is not directly paid by the end consumer to the tax authority Constitutional provisions of Indirect Tax in India Authority to levy taxes - Article 265 of the Constitution of India Power to levy - 7th Schedule List, I, II & III of the Constitution Entries 83, 84, 92A & B and 92C of List I (Union List) Entry 54 of List II (State List)

13 GST – Current Taxes – Excise Taxesit is levied based on Section 3 of the Central Excise and Salt Act 1944 for goods manufactured in India except for salt Basic Excise Duty introduced from 1978 based on Section 37 of the Finance Act, It is levied on all excisable goods that come under taxation, in line with the Basic Excise Duty under the Central Excises and Salt Act of Applicability of the Special Excise Duty is mentioned in the Finance Bill for every year thereafter Special Excise Duty it is being levied from 1998 on petrol vide Finance Act 2 of 1998. Additional Excise Duty on Motor Spirit it is being levied on diesel from 1999. Additional Duty on Excise on High Speed Diesel Oil it is being levied from 2002 on petrol as surcharge. Special Additional Duty of Excise on Motor Spirit

14 GST – Current Taxes – Excise TaxesThis Additional Duty of Excise has been imposed on cigarettes, pan masala and certain specified tobacco products, at specified rates in the budget every year. Surcharge on Pan Masala and Tobacco Products it is levied on pan masala and certain tobacco products vide Finance Act From 2003 it is also being levied on polyester filament yarn, motor cars, two wheelers, multi-utility vehicles and crude petroleum oil. National Calamity Contingent Duty it is being levied from 2004 on all Central taxes for funding of primary education in India and abolished from 2015 Education Cess it is being levied from 2007 on all Central taxes for funding of secondary education in India and abolished from 2015 Secondary Higher Education Cess it is levied on various products from time to time Cess

15 GST – Current Taxes – Service TaxIntroduced in 1994 starting with 3 services Latter on expanded to many service – year on year Point of Taxation Rules introduced – 2011 – shift from Cash Basis Accounting to Accrual Basis Accounting Negative List – 2012 – only services mentioned in the list are exempt from service tax and rest are taxable Place of Provision of Services & Reverse Charge Krishi Kalayan Cess introduced in 2016

16 GST – Current Taxes – Import DutiesBasic Duty it is levied on imported goods under the Customs Act, 1962. Additional Duty (Countervailing Duty) it is levied under Section 3 (1) of the Custom Tariff Act which is equal to Excise duty levied on a product manufactured or produced in India. Additional Duty it is levied to compensate duty on inputs used by Indian manufacturers: This is levied under Section 3(3) of the Customs Act. Anti-Dumping Duty levied under section 9A of the Customs Tariff Act when a foreign exporter exports his good at low prices compared to prices normally prevalent in the exporting country. Protective Duty it is levied by the Tariff Commission set up based on recommendations of the Central Government to protect the interests of India on specified goods.

17 GST – Current Taxes – Import DutiesDuty on 73 Bounty Fed Articles it is levied in cases where the foreign country subsidizes its exporters for exporting goods to India; the Central Government may impose additional import duty equal to the amount of the subsidy or bounty. Export Duty it is levied on export of certain goods. At present very few articles such as skins and leather – are subject to export duty. The basic intention of imposing this duty is to discourage exports.

18 GST – Current Taxes – Central Sales TaxCentral Sales Tax is levied by the Central Government but collected by the State Governments as it is an origin-based tax under the constitutional Sixth Amendment Act 1956. If Forms are submitted the tax rates are 2% and in some cases lesser than 2% ( exempted areas)

19 GST – Current Taxes – Value Added TaxVAT– on sale and purchase of goods along with excise and other taxes as applicable, if any, for purchases within the same State, replacing Local Sales Tax. Entry Tax – is levied on goods entering the consuming State, from a producing State. Luxury Tax – it is levied on hotels by respective State Governments. Taxes on lotteries and gambling – it is a tax on sale of lotteries & gambling levied by States. Entertainment Tax – it is levied on entertainment programs, shows, etc. by States.

20 GST – Current Taxes – ChallengesInput Tax Credit – Not seamless Multiple Tax Authorities Tax on Tax / Tax Cascading Multiple Forms to be issued for movement of goods Different Tax Points Multiple Returns / Different Returns Classification of Items

21 GST – Current Taxes – Challenges

22 GST – What is GST? Goods and Service TaxIt is also know as Value Added Tax in few countries like European Union Goods and Service Tax is a comprehensive tax on supply of Goods and Services It is been implemented in about 160 countries Malaysia is the latest country to adopt GST A single tax is applicable for goods and services

23 GST – Across the Globe France was the first country to adopt GST in 1954 There are two types of GST systems; unified and dual. Most of the countries have a unified GST system. Brazil and Canada follow a dual system where GST is levied by both, the Union as well as the State governments Currently, there are 160 countries in the world that have implemented VAT / GST. Number of countries based on region are stated in the table Highest rates are in Hungary (27%) and Gambia (40%)

24 GST – Features of Goods and Service TaxGoods and services share the same manner with less number of taxes Same taxation at pan India level Tax levy is on supply No tax cascading / tax on tax One registration per state for all the taxes Uninterrupted input tax credit in the whole supply chain cycle Every tax invoice issued should have either HSN Code or SAC code Same return for the state and central taxes & returns are to be filed online only Exemptions will be very few mostly refund based only Origin based taxation to destination based taxation

25 GST – Features of Goods and Service TaxNo Tax on Tax Taxes are computed only on the item price only unlike current taxation where VAT is computed on Item Price Plus Excise Duties Example under current taxation structure Example under GST Description Amount (Rs) Item Price 10,000 Excise 12.5% 1,250 Value Added 15% 1687 Total 12,937 Description Amount (Rs) Item Price 10,000 9% 900 9% Total 11,800

26 Taxes under Goods and Service TaxApplicable on supply of goods and services in States and Union Territories Central Goods and Service Tax (CGST) Applicable on intrastate/within the state for supply of goods and services State Goods and Service Tax (SGST) Applicable on interstate /outside the state for the supply of goods and services Integrated Goods and Service Tax (IGST) Union Territory – Goods and Service Tax (UT GST) GST Cess Applicable on inter / within in the union territory for supply of goods and services Applicable on list of goods and services notified by the GST Council

27 GST – Central Goods and Service TaxCentral Excise duty Service Tax Additional Duties of Customs (CVD) Special Additional Duty of Customs (SAD) Duties of Excise (Medicinal and Toilet Preparations) Additional Duties of Excise (Goods of Special Importance) Additional Duties of Excise (Textiles and Textile Products) Cesses and surcharges Taxes which are being subsumed under CGST are

28 GST – Central Goods and Service TaxExcise Duty on Petroleum Products Excise Duty on Tobacco products Other Import duties – anti dumping Basic Customs Duty Taxes which are not being proposed to be subsumed under CGST are

29 GST – State Goods and Service TaxPurchase Tax Luxury Tax Entry Tax Entertainment Tax Taxes on advertisements Value Added Tax Taxes which are being subsumed under SGST are

30 GST – Central Goods and Service TaxState Goods and Service Tax VAT on Petroleum Products State Excise on alcoholic products Stamp Duty Electricity Duty Vehicle Tax Royalty Entrainment Duty Taxes which are not being proposed to be subsumed under SGST are

31 GST – Inter State Goods and Service TaxTaxes which are being proposed to be subsumed under IGST are Central Sales Tax SAD CVD

32 GST – Goods and Service TaxTransaction Existing Proposed Manufacture and removal if goods to location within the state ED CGST+SGST Manufacture and removal if goods to location outside the state IGST Manufacture and Sale of Goods within the state ED+ VAT Manufacture and Sale of Goods outside the state ED+ CST Sales by trader within the state VAT Sales by trader outside the state CST Barter No Taxes Taxable Exchange Royalty - paid within the state ST Royalty - paid outside the state Import of Services Taxes on transactions – pre and post GST

33 GST – Goods and ServicesTax Rates - Existing Central Basic Excise Duty % Basic Customs Duty -10% CVD – 12.5% SAD – 4% CST – 2% to 1.25% Service Tax Service Tax – 14% Swach Bharath Cess – 0.5% Krishi Kalayan Cess – 0.5% Value Added Tax Differs from State to State 1%, 5%, 14.5% & Special Rate (16% to 190%)

34 GST – Tax rates Tax Rates – Under GST 0% 0.25% 3% 5% 12% 18% 28% CessGST Rates 0% 0.25% 3% 5% 12% 18% 28% Cess

35 GST – Definitions Definitions (17) “business’’ includes(a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit; (b) any activity or transaction in connection with or incidental or ancillary to sub- clause (a); (c) any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency, continuity or regularity of such transaction; (d) supply or acquisition of goods including capital goods and services in connection with commencement or closure of business;

36 GST – Definitions Definitions (17) “business’’ includes(f) admission, for a consideration, of persons to any premises; (g) services supplied by a person as the holder of an office which has been accepted by him in the course or furtherance of his trade, profession or vocation; (h) services provided by a race club by way of totalisator or a licence to book maker in such club ; and (i) any activity or transaction undertaken by the Central Government, a State Government

37 GST – Definitions Definitions(52 ) “goods’’ means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply; (102) “services’’ “services” means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged;

38 GST – Definitions Definitions(60) “input service” means any service used or intended to be used by a supplier in the course or furtherance of business; (19) “capital goods” means goods, the value of which is capitalised in the books of account of the person claiming the input tax credit and which are used or intended to be used in the course or furtherance of business; (6)“aggregate turnover” means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both and inter-State supplies of persons having the same Permanent Account Number, to be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated tax and cess;

39 GST – Definitions Definitions(7) “agriculturist” means an individual or a Hindu Undivided Family who undertakes cultivation of land— (a) by own labour, or (b) by the labour of family, or (c) by servants on wages payable in cash or kind or by hired labour under personal supervision or the personal supervision of any member of the family; (20) “casual taxable person” means a person who occasionally undertakes transactions involving supply of goods or services or both in the course or furtherance of business, whether as principal, agent or in any other capacity, in a State or a Union territory where he has no fixed place of business;

40 GST – Definitions Definitions(18) “business vertical” means a distinguishable component of an enterprise that is engaged in the supply of individual goods or services or a group of related goods or services which is subject to risks and returns that are different from those of the other business verticals. Explanation.––For the purposes of this clause, factors that should be considered in determining whether goods or services are related include–– (a) the nature of the goods or services; (b) the nature of the production processes; (c) the type or class of customers for the goods or services; (d) the methods used to distribute the goods or supply of services; and (e) the nature of regulatory environment (wherever applicable), including banking, insurance, or public utilities;

41 GST – Definitions Definitions(30) “composite supply” means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply; Illustration.— Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply; ;

42 GST – Definitions Definitions(31) “consideration” in relation to the supply of goods or services or both includes–– (a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government; (b) the monetary value of any act or forbearance, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government: Provided that a deposit given in respect of the supply of goods or services or both shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply;

43 GST – Definitions Definitions(32) “continuous supply of goods” means a supply of goods which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, whether or not by means of a wire, cable, pipeline or other conduit, and for which the supplier invoices the recipient on a regular or periodic basis and includes supply of such goods as the Government may, subject to such conditions, as it may, by notification, specify; (47) “exempt supply” means supply of any goods or services or both which attracts nil rate of tax or which may be wholly exempt from tax under section 11, or under section 6 of the Integrated Goods and Services Tax Act, and includes non-taxable supply;

44 GST – Definitions Definitions (49) “family” means,––(i) the spouse and children of the person, and (ii) the parents, grand-parents, brothers and sisters of the person if they are wholly or mainly dependent on the said person; (50) “fixed establishment” means a place (other than the registered place of business) which is characterised by a sufficient degree of permanence and suitable structure in terms of human and technical resources to supply services, or to receive and use services for its own needs;

45 GST – Definitions Definitions(70) “location of the recipient of services” means,— (a) where a supply is received at a place of business for which the registration has been obtained, the location of such place of business; (b) where a supply is received at a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment; (c) where a supply is received at more than one establishment, whether the place of business or fixed establishment, the location of the establishment most directly concerned with the receipt of the supply; and (d) in absence of such places, the location of the usual place of residence of the recipient;

46 GST – Definitions Definitions(71) “location of the supplier of services” means,— (a) where a supply is made from a place of business for which the registration has been obtained, the location of such place of business; (b) where a supply is made from a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment; (c) where a supply is made from more than one establishment, whether the place of business or fixed establishment, the location of the establishment most directly concerned with the provisions of the supply; and (d) in absence of such places, the location of the usual place of residence of the supplier;

47 GST – Definitions Definitions (85) “place of business” includes––(a) a place from where the business is ordinarily carried on, and includes a warehouse, a godown or any other place where a taxable person stores his goods, supplies or receives goods or services or both; or (b) a place where a taxable person maintains his books of account; or (c) a place where a taxable person is engaged in business through an agent, by whatever name called; (90) “principal supply” means the supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary;

48 GST – Definitions Definitions(93) “recipient” of supply of goods or services or both, means— (a) where a consideration is payable for the supply of goods or services or both, the person who is liable to pay that consideration; (b) where no consideration is payable for the supply of goods, the person to whom the goods are delivered or made available, or to whom possession or use of the goods is given or made available; and (c) where no consideration is payable for the supply of a service, the person to whom the service is rendered, and any reference to a person to whom a supply is made shall be construed as a reference to the recipient of the supply and shall include an agent acting as such on behalf of the recipient in relation to the goods or services or both supplied;

49 GST – Definitions Definitions(61) “Input Service Distributor” means an office of the supplier of goods or services or both which receives tax invoices issued under section 31 towards the receipt of input services and issues a prescribed document for the purposes of distributing the credit of central tax, State tax, integrated tax or Union territory tax paid on the said services to a supplier of taxable goods or services or both having the same Permanent Account Number as that of the said office; (67) “inward supply” in relation to a person, shall mean receipt of goods or services or both whether by purchase, acquisition or any other means with or without consideration;

50 GST – Goods and ServicesDefinitions (68) “job work” means any treatment or process undertaken by a person on goods belonging to another registered person and the expression “job worker” shall be construed accordingly; (73) “market value” shall mean the full amount which a recipient of a supply is required to pay in order to obtain the goods or services or both of like kind and quality at or about the same time and at the same commercial level where the recipient and the supplier are not related;

51 GST – Definitions Definitions(74) “mixed supply” means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply. Illustration.— A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drinks and fruit juices when supplied for a single price is a mixed supply. Each of these items can be supplied separately and is not dependent on any other. It shall not be a mixed supply if these items are supplied separately;

52 GST – GST – Definitions Definitions(78) “non-taxable supply” means a supply of goods or services or both which is not leviable to tax under this Act or under the Integrated Goods and Services Tax Act; (82) “output tax” in relation to a taxable person, means the tax chargeable under this Act on taxable supply of goods or services or both made by him or by his agent but excludes tax payable by him on reverse charge basis; (83) “outward supply” in relation to a taxable person, means supply of goods or services or both, whether by sale, transfer, barter, exchange, licence, rental, lease or disposal or any other mode, made or agreed to be made by such person in the course or furtherance e of business;

53 GST – Definitions Definitions(98) “reverse charge” means the liability to pay tax by the recipient of supply of goods or services or both instead of the supplier of such goods or services or both under sub-section (3) or sub-section (4) of section 9, or under sub-section (3) or subsection (4) of section 5 of the Integrated Goods and Services Tax Act; (105) “supplier” in relation to any goods or services or both, shall mean the person supplying the said goods or services or both and shall include an agent acting as such on behalf of such supplier in relation to the goods or services or both supplied;

54 GST – Definitions Definitions(112) “turnover in State” or “turnover in Union territory” means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis) and exempt supplies made within a State or Union territory by a taxable person, exports of goods or services or both and inter-State supplies of goods or services or both made from the State or Union territory by the said taxable person but excludes central tax, State tax, Union territory tax, integrated tax and cess;

55 GST – Definitions Definitions(114) “Union territory” means the territory of— (a) the Andaman and Nicobar Islands; (b) Lakshadweep; (c) Dadra and Nagar Haveli; (d) Daman and Diu; (e) Chandigarh; and (f) other territory. Explanation.––For the purposes of this Act, each of the territories specified in sub-clauses (a) to (f) shall be considered to be a separate Union territory;

56 GST – Definitions Definitions(118) “voucher” means an instrument where there is an obligation to accept it as consideration or part consideration for a supply of goods or services or both and where the goods or services or both to be supplied or the identities of their potential suppliers are either indicated on the instrument itself or in related documentation, including the terms and conditions of use of such instrument; (119) “works contract” means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract;

57 GST – Definitions Definitions(44) “electronic commerce” means the supply of goods or services or both, including digital products over digital or electronic network; (45) “electronic commerce operator” means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce;

58 GST – Definitions Definitions (84) “person” includes—(a) an individual; (b) a Hindu Undivided Family; (c) a company; (d) a firm; (e) a Limited Liability Partnership; (f) an association of persons or a body of individuals, whether incorporated or not, in India or outside India; (g) any corporation established by or under any Central Act, State Act or Provincial Act or a Government company as defined in clause (45) of section 2 of the Companies Act, 2013;

59 GST – Goods and ServicesRegistration Numbers Existing Under GST Central Excise – Excise Control code Service Tax – Service Tax Registration Number Value Added Tax – Tax Identification Number Central Sales Tax – CST Number Exports / Imports – IEC Code GSTIN – Goods and Service Tax Registration Number Exports / Imports – IEC Code

60 Format of Registration GSTIN – 15 digits based on PANGST – Registration GSTIN Format of Registration GSTIN – 15 digits based on PAN The first two digits, determine the state in which the GSTIN in being obtained, the list of the states is based on 2011 Indian Census. Under this each state will be allocated a two digit number. Next 10 digits are PAN number of the entity issued by the Income Tax Department. 13th & 14th digits are alpaha numeric and it is based on the users requirement to get registration based on the business vertical. There can be 35 sequences maximum for this 1-9 numbers and alphabets a - z . If the tax payer is going for a single registration then it will be 1 in the thirteenth field but if he goes for more than one registration like one two business vertical say for example one for consumer durables and another for automobiles then the second one will be having 2 in the thirteenth number and the third registration number will be having 3 in the thirteenth field. 15th digit is check digit.

61 GST – Registration GSTINSection 22 of the CGST Act describes about the process and procedure for obtaining the registration number. Every Supplier who makes a taxable supply of goods or services in a previous financial year exceeds Rs Lacs in states other than north eastern states. Every Supplier who makes a taxable supply of goods or services in a previous financial year exceeds Rs 9.00 Lacs, in north eastern states. All existing tax payers in the current taxation on day prior to the appointed date Persons making any inter-State taxable supply; Casual taxable persons making taxable supply; Persons who are required to pay tax under reverse charge;

62 GST – Registration GSTINPerson who are required to pay tax under sub-section (5) of section 9; Non-resident taxable persons making taxable supply; Person deducting tds Person recovering tax tcs Input service distributor Suppling goods or service to e-commerce operator e-commerce operator Person supplying online information Any class of person as notified by government from time to time

63 Unique identification number in special casesGST – Registration GSTIN Unique identification number in special cases United Nations Organisation Multilateral Financial Institution Organisation notified under the United Nations (Privileges and Immunities) Act, 1947 Consulate or Embassy of foreign Countries any other person or class of persons, as may be notified by the Commissioner,

64 GST – Registration Composition SchemeA registered person, whose aggregate turnover in the preceding financial year did not exceed fifty lakh rupees. In the recent GST Council Meeting it is changed to Rs 75 Lacs and decision for Special Category States is pending. As per Act the Government can increase the limit upto Rs 1 Cr

65 GST – Registration Composition SchemeA person registered under Composition Scheme cannot claim Input Tax Credit A person registered under Composition Scheme cannot issue Tax Invoice or collect tax from customers A registered person can issue a Bill of Supply He has to file quarterly return unlike monthly return by regular tax payer

66 GST – Registration Composition Scheme Sl.No Category of BusinessTax Rates 1 Manufacture 1 % CGST + 1 % SGST 2 Restaurants 2.5% CGST % SGST 3 Others 0.5% CGST + 0.5% SGST

67 GST – Registration Regular / Composition / Un registered

68 Supply GST – Supply Supply IncludesFor consideration & for Business Purposes Whether or not for business Supply without consideration made or agreed to be made – Schedule I All form of supply of goods & Services Sale Transfer Barter Exchange License Rental Lease Disposal Importation of service for consideration Permanent transfer/disposal of business assets where ITC availed Supply of goods or services between related persons, or between distinct persons , when made in the course or furtherance of Business (Gifts provided by the employer to employee exceeding Rs50,000) Supply between agent and principal Import of service from a related person .

69 Schedule II : Activities to be treated as supply of goods or servicesGST – Supply Schedule II : Activities to be treated as supply of goods or services Supply of services Transfer of right Lease/tenancy/license to occupy land Lease of any building for business/commerce Treatment or process applied to other’s goods. Goods put to private/ non business use whether or not for consideration Renting of immovable property. Construction of complex except where the consideration is recd after OC. Temporary transfer of IPR. Development, designing of software. Agreeing to tolerate an act. Transfer of right to use. Works contract Supply of food for human consumption. Supply of goods Transfer of title. Hire Purchase Transfer/ Disposal of business assets whether or not for consideration Supply of goods by any unincorporated association to a member Note : Sale of assets by a person who ceases to be a taxable person shall be deemed to be supplied in the course or furtherance of business unless – Transferred as a Going Concern to another person Business carried on by a personal representative

70 GST – Place of supply Interstate Supply Two different statesTwo different Union Territories In a different state and a union territory

71 GST – Place of supply Intrastate SupplyIn case of intra state supply of goods or services or both, the supplier of the goods or services or both and the location of the recipient are in the same state or union territory.

72 GST – Place of supply Export of ServiceThe supplier of service is located in India The recipient of service is located outside India The place of supply of service is located outside India The payment for service is received in the converted foreign currency The supplier of service and the recipient of service are not merely establishment of a distinct person

73 Import of Service GST – Place of supplyThe supplier of service is located outside India The recipient of service is located in India The place of supply of service is in India

74 GST – Goods and Service TaxDomestic Transactions Intra State Inter State / UT Union Territory CGST SGST IGST CGST UT GST

75 GST – Place of supply Business Case Place of SupplyPlace of Supply - Goods Business Case Place of Supply Where moment of goods involved Location of place where moment of goods terminates Where moment of goods is not involved (sales from a showroom) Location of the goods at the time of delivery When goods are assembled or installed on site Location of assembly of installation of goods Where goods are supplied on board Location of embankment Where goods are supplied on document – bill to, ship to Principal place of third person who is supplying the goods

76 GST – Place of supply General Rule B2B – Business to BusinessPlace of Supply - Services Business Case Place of Supply General Rule B2B – Business to Business B2C – Business to Customer B2B : Location of Recipient B2C : Location of Recipient where address exists else location of supplier Immovable property related services Location of Property – Hotels, House Boats Performance based services Place of actual performance – in case of catering, health services, Services related to training B2C : Location of Performance

77 GST – place of supply Business Case Place of SupplyPlace of Supply - Services Business Case Place of Supply Event Bases Service B2B : Location of Recipient B2C : Location where event is held Passenger Transport Services B2C : Location of passenger where journey starts

78 GST – Goods and ServicesTaxable Event – Pre GST Central Excise On Manufacturing Levied on Removal Service Tax Completion of Service Invoice Value Added Tax On Sales On Accounting

79 Time of Supply GST – Time of Supply Time of Supply (Taxable Event)Forward Charge Reverse Charge Time of Supply (Taxable Event)

80 Time of Supply ServicesGST – Time of supply Time of Supply Goods Date of Issue of Invoice Date of Receipt of Payment Time of Supply Services Date of issuance of invoice Time of Supply (Taxable Event)– Under GST – Forward Charge.

81 GST – Time of supply Time of Supply (Taxable Event) – Under GST –Time of Supply Goods Date of receipt of goods Date on which payment is made Within 30 Days from Suppliers invoice date Time of Supply Servcies Time of Supply (Taxable Event) – Under GST – Reverse Charge

82 GST – Goods and ServicesExisting Valuation Central Excise – Ad valorem, Out put basis, Installed Capacity Service Tax – Transaction Value Value Added Tax – Item Cost + Central Excise

83 GST – valuation Section – 15 : Value of Taxable SupplyThe value of supply of goods and services will be the transaction value i.e for the actual value of goods and services paid or payable by the buyer if both the buyer and seller or not related parties and where price is the sole consideration Transaction values includes any taxes, duties, cesses, fees and charges levied under any statute, other than the (CGST, SGST, IGST, UT-GST & Cess) any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply and not included in the price actually paid or payable for the goods and/or services; incidental expenses, including commission and packing, charged by the supplier to the recipient of a supply and any amount charged for anything done by the supplier in respect of the supply of goods or services or both at the time of, or before delivery of goods or supply of services; interest or late fee or penalty for delayed payment of any consideration for any supply; and subsidies directly linked to the price excluding subsidies provided by the Central and State governments;

84 GST – valuation Section – 15 : Value of Taxable SupplyTransaction value does not include includes before or at the time of the supply if such discount has been duly recorded in the invoice issued in respect of such supply; and after the supply has been effected, such discount is established in terms of an agreement entered into at or before the time of such supply and specifically linked to relevant invoices; and input tax credit as is attributable to the discount on the basis of document issued by the supplier has been reversed by the recipient of the supply. Where the value of the supply of goods or services or both cannot be determined under sub-section (1), the same shall be determined in such manner as may be prescribed. Notwithstanding anything contained in sub-section (1) or sub-section (4), the value of such supplies as may be notified by the Government on the recommendations of the Council shall be determined in such manner as may be prescribed.

85 GST – Goods and ServicesExisting – Invoice Under existing regulation, the tax invoice sequence is different for different taxes GST – Invoice Same invoice series for all taxes

86 GST – Tax invoice Section 31 of CGST Act – Tax Invoice, Debit / Credit Note Section 31 of the CGST Act describes about the tax invoice, A Taxable Invoice should be issued at the time of supply as prescribed under section 12, 13 and 14 of the CGST Act.

87 GST – Tax invoice Section 31 of CGST Act – Tax Invoice, Debit / Credit Note Tax invoice shall be issued at the following times Removal of goods – where there is movement of goods is involved If there is no movement of goods then it is delivery of the goods to the buyer In case of services within 30 days of completion of service or before the service or at the time of service

88 GST – Tax invoice Section 31 of CGST Act – Tax Invoice, Debit / Credit Note A tax invoice is need not be issued if the value of the supply is less than Rs 200 In case of continuous supply of goods where successive statement of payments or successive statement of accounts is involved, tax invoice has to be issued earliest of the following dates Date of issue of statement Date of receipt of payment

89 GST – Tax invoice Section 31 of CGST Act – Tax Invoice, Debit / Credit Note Subject to the provisions of clause (d) of sub-section (3), in case of continuous supply of services,–– (a) where the due date of payment is ascertainable from the contract, the invoice shall be issued on or before the due date of payment; (b) where the due date of payment is not ascertainable from the contract, the invoice shall be issued before or at the time when the supplier of service receives the payment; (c) where the payment is linked to the completion of an event, the invoice shall be issued on or before the date of completion of that event.

90 GST – Tax invoice Section 31 of CGST Act – Tax Invoice, Debit / Credit Note Issue of tax invoice in case of pre closure of contract / supply Tax invoice has to be issued at the time of pre closure of the contract It should be issued to value for the extent of supply completed / executed

91 GST – Tax invoice Section 34 of CGST Act – Tax Invoice, Debit / Credit Note 34. (1) Where a tax invoice has been issued for supply of any goods or services or both and the taxable value or tax charged in that tax invoice is found to exceed the taxable value or tax payable in respect of such supply, or where the goods supplied are returned by the recipient, or where goods or services or both supplied are found to be deficient, the registered person, who has supplied such goods or services or both, may issue to the recipient a credit note containing such particulars as may be prescribed.

92 GST – Tax invoice Section 34 of CGST Act – Tax Invoice, Debit / Credit Note 34. (3) Where a tax invoice has been issued for supply of any goods or services or both and the taxable value or tax charged in that tax invoice is found to be less than the taxable value or tax payable in respect of such supply, the registered person, who has supplied such goods or services or both, shall issue to the recipient a debit note containing such particulars as may be prescribed.

93 GST – tax invoice : Rulesname, address and GSTIN of the supplier; a consecutive serial number, in one or multiple series, containing alphabets or numerals or special characters hyphen or dash and slash symbolised as “-” and “/” respectively, and any combination thereof, unique for a financial year; date of its issue; name, address and GSTIN or UIN, if registered, of the recipient; name and address of the recipient and the address of delivery, along with the name of State and its code, if such recipient is un-registered and where the value of taxable supply is fifty thousand rupees or more; HSN code of goods or Accounting Code of services; description of goods or services; quantity in case of goods and unit or Unique Quantity Code thereof;

94 GST – tax invoice : Rulestotal value of supply of goods or services or both; taxable value of supply of goods or services or both taking into account discount or abatement, if any; rate of tax (central tax, State tax, integrated tax, Union territory tax or cess); amount of tax charged in respect of taxable goods or services (central tax, State tax, integrated tax, Union territory tax or cess); place of supply along with the name of State, in case of a supply in the course of inter-State trade or commerce; address of delivery where the same is different from the place of supply; whether the tax is payable on reverse charge basis; and signature or digital signature of the supplier or his authorized representative:

95 GST – tax invoice : RulesTax invoice has to be issued in 3 copies for domestic transactions for supply of goods the original copy being marked as ORIGINAL FOR RECIPIENT; the duplicate copy being marked as DUPLICATE FOR TRANSPORTER; and the triplicate copy being marked as TRIPLICATE FOR SUPPLIER. Tax invoice for export of goods the invoice has to be endorsed clearly under which the exports are under which the supply is taking place “SUPPLY MEANT FOR EXPORT ON PAYMENT OF IGST” or “SUPPLY MEANT FOR EXPORT UNDER BOND WITHOUT PAYMENT OF IGST”. In such cases the information shown in Clause (e) has to be replaced with the following information name and address of the recipient; address of delivery; name of the country of destination; and

96 GST – tax invoice : RulesTax invoice for supply of services the original copy being marked as ORIGINAL FOR RECEIPIENT; and the duplicate copy being marked as DUPLICATE FOR SUPPLIER. It has to be issued within 30 days from completion of service

97 GST – tax invoice : RulesBill of Supply To be issued for Non GST supplies Separate series is required To be issued for each and every transaction above Rs 200 If bill of supply is not issued for all transactions end of the day a consolidated bill of supply has to be issued for the day’s sales

98 GST – tax invoice : RulesInvoicing – Receipt Voucher A receipt voucher or other document is issued on receipt of advance from the buyer and it should contain the following information name, address and GSTIN of the supplier; a consecutive serial number containing alphabets or numerals or special characters -hyphen or dash and slash symbolised as “-” and “/”respectively, and any combination thereof, unique for a financial year date of its issue; name, address and GSTIN or UIN, if registered, of the recipient; description of goods or services; amount of advance taken;

99 GST – tax invoice : RulesInvoicing – Receipt Voucher rate of tax (central tax, State tax, integrated tax, Union territory tax or cess); amount of tax charged in respect of taxable goods or services (central tax, State tax, integrated tax, Union territory tax or cess); place of supply along with the name of State and its code, in case of a supply in the course of inter-State trade or commerce; whether the tax is payable on reverse charge basis; and signature or digital signature of the supplier or his authorized representative.

100 GST – tax invoice : RulesInvoicing – Refund Voucher name, address and GSTIN of the supplier; a consecutive serial number not exceeding sixteen characters, in one or multiple series, containing alphabets or numerals or special characters -hyphen or dash and slash symbolised as “-” and “/”respectively, and any combination thereof, unique for a financial year date of its issue; name, address and GSTIN or UIN, if registered, of the recipient; number and date of receipt voucher issued in accordance with provisions of sub- rule 5;

101 GST – tax invoice : RulesInvoicing – Refund Voucher description of goods or services in respect of which refund is made; amount of refund made; rate of tax (central tax, State tax, integrated tax, Union territory tax or cess); amount of tax paid in respect of such goods or services (central tax, State tax, integrated tax, Union territory tax or cess); whether the tax is payable on reverse charge basis; and signature or digital signature of the supplier or his authorized representative.

102 GST – tax invoice : RulesInvoicing – Payment Voucher name, address and GSTIN of the supplier if registered; a consecutive serial number not exceeding sixteen characters, in one or multiple series, containing alphabets or numerals or special characters -hyphen or dash and slash symbolised as “-” and “/”respectively, and any combination thereof, unique for a financial year date of its issue; name, address and GSTIN of the recipient; description of goods or services; amount paid;

103 GST – tax invoice : RulesInvoicing – Payment Voucher rate of tax (central tax, State tax, integrated tax, Union territory tax or cess); amount of tax payable in respect of taxable goods or services (central tax, State tax, integrated tax, Union territory tax or cess); place of supply along with the name of State and its code, in case of a supply in the course of inter-State trade or commerce; and signature or digital signature of the supplier or his authorized representative.

104 GST – tax invoice : RulesInvoicing – Delivery Challan supply of liquid gas where the quantity at the time of removal from the place of business of the supplier is not known, transportation of goods for job work, transportation of goods for reasons other than by way of supply, or such other supplies as may be notified by the Board,

105 GST – tax invoice : RulesInvoicing – Delivery Challan date and number of the delivery challan, name, address and GSTIN of the consigner, if registered, name, address and GSTIN or UIN of the consignee, if registered, HSN code and description of goods, quantity (provisional, where the exact quantity being supplied is not known), taxable value, tax rate and tax amount – central tax, State tax, integrated tax, Union territory tax or cess, where the transportation is for supply to the consignee, place of supply, in case of inter-State movement, Signature

106 GST – tax invoice : RulesInvoicing – Rules – Delivery Challan Delivery Challan has to be issued in 3 copies for domestic transactions for supply of goods the original copy being marked as ORIGINAL FOR RECIPIENT; the duplicate copy being marked as DUPLICATE FOR TRANSPORTER; and the triplicate copy being marked as TRIPLICATE FOR SUPPLIER.

107 GST – tax invoice : RulesInvoicing –Rules – Movement of goods in knocked down condition the supplier shall issue the complete invoice before dispatch of the first consignment; the supplier shall issue a delivery challan for each of the subsequent consignments, giving reference of the invoice; each consignment shall be accompanied by copies of the corresponding delivery challan along with a duly certified copy of the invoice; and the original copy of the invoice shall be sent along with the last consignment.

108 GST – e-waybill E-Way bill - Draft RulesE – way bill is required to be issued if the in the following cases if the value of the consignment is more than Rs 50,000 in relation to a supply; or for reasons other than supply; or due to inward supply from an unregistered person. Documents to be carried along with the consignment Tax invoice or bill of supply or delivery challan based on the case a copy of the e-way bill or the e-way bill number, either physically or mapped to a Radio Frequency Identification Device (RFID) embedded on to the conveyance in such manner as may be notified by the Commissioner.

109 GST – e-waybill E-Way bill - Draft Rules – Validity

110 GST – Input tax credit Input Tax CreditBasic conditions for availing input credit Both buyer and seller are registered tax payers The tax payer has the procession of the tax invoice / debit or credit memo or supplementary invoice Received the goods or services Tax has been paid by the supplier of goods and services Tax payer has furnished returns In case of imports it is bill of entry or any other equivalent document Within 12 months from the issue of tax invoice or before filing of annual return Other conditions for availing input credit The goods and services are not used for personal / private consumption The goods and services are not used in supply of exempted goods

111 GST – Input tax credit Input Tax Credit not available in the following cases Input tax credit on motor vehicles in the following cases Transportation of goods Transportation of passengers Used for training On purchases from composite dealer Goods and services are used for personal consumption If goods are stolen, lost, destroyed or given as gift or free sample If taxes have been paid on account of penalty or during the audit Membership of a club, health and fitness center Rent a cab or life insurance premium

112 GST – Input tax credit Input Tax Credit not available in the following cases Works contract services when supplied for construction of immovable property (other than plant and machinery) except where it is an input service for further supply of works contract Goods or services 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 and services are used for furtherance of business

113 GST – Input tax credit Input Tax Credit MatchingSuppliers and recipients records are matched GSTR – 1 of supplier and GSTR -2 of the recipient GSTIN of the Supplier GSTIN of the Recipient Invoice / Debit Note Number Invoice / Debit Note Date Taxable Value Tax Amount

114 GST – Input tax credit Input Tax Utilization CGST SGST UT GST IGST

115 GST – Input tax credit Input Tax Credit – ReversalIf supplier of goods or services or both is not paid within 180 days then ITC taken has to be reversed with interest from the date on which ITC is availed Once the supplier is paid, then ITC can be availed Interest will be reversed but can be used only for adjustment of future tax liability

116 GST – tax deduction at sourceSection 51 – Tax Deduction at Source Similar to the existing Works Contract Tax / TDS in VAT levied in various states Under GST it is applicable only for immoveable properties related works only Who has to recover TDS Department established by the state or the central governments Local authority Govt Agencies Category of persons as notified by the government from time to time on recommendations of the GST Council

117 GST – Tax Deduction at SourceSection 51 – Tax Deduction at Source Tax Rate One Percent Max Tax Basis To be computed on amount excluding the GST Taxes Threshold limit for deduction of tax at source On contracts above equal to or above Rs 2.5 Lacs

118 GST – Tax Deduction at SourceSection 51 – Tax Deduction at Source Remittance of Tax by deductor Within 10 day of the next month Time limit for issue of TDS Certificate Within 5 days of remittance of taxes Is ITC available for the amount deducted as TDS by the Deductor ? Yes GSTR – 7 has to be filed by deductor on monthly basis

119 GST – Collection of tax at sourceSection 52 – Collection of Tax at Source Every electronic commerce operator has to deduct GST as part of collection of tax at source from the net payments made to the suppliers The amount is to be recovered from the amount payable to the supplier of goods or services The rate of TCS should not exceed 1 % The amount of tax recovered by the e-commerce operator has to be remitted within 10 days of the next month GSTR – 8 has to be filed by e-commerce operator on monthly basis

120 GST – Refunds Refunds Section 38 of the Model GST Act describes about the Refund process Refund of taxes under GST is possible under the following conditions The tax rate of the inputs is higher than the tax rate of the supplies In case of exports, where there is no output liability to be paid but input tax credit is availed on the purchases. Application for refund of CGST / SGST / IGST for tax paid or interest paid must be made within 2 years from the date of such form and as per prescribed procedure. The refund application must accompany with the following details Documentary evidence as may be prescribed Documentary evidence to show that the amount being claimed as refund is not passed on to anyone and the applicant has paid the taxes or interest. In case if the amount of refund is less than Rs 5 Lacs, the applicant may file a self-declaration that he is has not passed on the incidence of tax or interest for the amount being claimed as refund.

121 GST – REFUND Refunds Section 54 of the CGST Act describes about the Refund process Refund of taxes under GST is possible under the following conditions On export of goods or service out of India including Zero Rated Supplies On deemed exports Refund of tax on inputs used in for goods or service exported outside India The tax rate of the inputs is higher than the tax rate of the supplies Refund of unutilized input tax credit at end of tax period – no refund will be allowed if this pertains to anything other than on account of exports / zero rated supplies / supplies where rate of tax on inputs is higher than the rate of tax on output supplies Inward supplies made to UN Bodies/ Multi lateral financial institutions Supplies made to outbound tourists

122 GST – REFUND Refunds Relevant date Nature of Refund DetailsDate for refund to be considered Export of goods Exported by sea or air Date on which the shipping vessel or the aircraft leaves India Exported by road Date on which the goods leave the border Deemed Export Supply of goods the date on which the return relating to such deemed exports is filed Exported goods returned Returned for being remade, refined, reconditioned or similar process The date of entry into the business Export of services Where the supply of service had been completed prior to the receipt of such payment Date of receipt of payment in convertible foreign exchange Where payment for the service had been received in advance prior to the date of issue of the invoice Date of issue of invoice In case of legal dispute In cases where the tax becomes refundable as a consequence of judgment, decree, order or direction of Appellate Authority, Appellate Tribunal or any Court The Date of communication of such judgment, decree, order or direction Utilized input tax credit Input tax accumulated in case of exports or input tax rate higher than the output tax End of the financial year in which claim for refund arises Miscellaneous Provisional payment of tax under protest Date of adjustment of tax after the final assessment Refunds Relevant date

123 GST – REFUND Refunds Forms Sl.No Refund Form Number Particulars 1FORM GST RFD-01 Refund Application from to be filed by tax payer 2 FORM GST RFD-02 Acknowledgement issued by the department 3 FORM GST RFD-03 Intimation of any deficiency if any in the Refund Application 4 FORM GST RFD-04 Refund Order Issued by the department issued within 7 days 5 FORM GST RFD-05 Refund Payment Advise 6 FORM GST RFD-06 Final amount of refund 7 FORM GST RFD-07 Adjustment of Refund 8 FORM GST RFD-08 Reasons for short sanction of refund if any 9 FORM GST RFD-09 Reply to be filed by applicant for partial acceptance of refund within 15 days 10 FORM GST RFD-10 Refund application in case of UN bodies etc

124 GST – REFUND Refunds Application to be filed electronically through common portal Documents or other evidence (as specified) to establish the amount of tax and interest, if any, paid on such tax or any other amount paid in relation to which such refund is claimed and that the incidence of such tax and interest had not been passed on by him to any other person. No documentary evidence required for refund claim below Rs.2 lacs, except for declaration. If taxable goods or services are exported without payment of tax, under bond or letter of undertaking, then refund will be allowed as under: Refund Amount = (Export turnover of goods + Export turnover of services) x Net ITC/Adjusted Total Turnover

125 GST – REFUND Refunds Refund of tax paid in advance by casual / non-resident taxable person shall be claimed in last return or after last return is filed Application for refund other than for refund from electronic cash ledger shall be scrutinized within 7 days by the officer and acknowledgement issued if the application is complete After scrutiny, amount of refund may be sanctioned / notice issued for non admissibility of refund If the claim is rejected, then the amount paid on provisional basis needs to be credited to Consumer welfare fund Order of refund to be passed within 60 days from date of receipt of application and will also be accompanied by order for interest

126 GST – REFUND Refunds - Process Process of RefundIf the assessing office is satisfied with the documentation and reasons submitted, he may allow 90% of the refund to be processed immediately Balance 10% within 60 days from the date of filing of the refund application

127 GST – Goods and ServicesAnti-profiteering 171. (1) Any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices. (2) The Central Government may, on recommendations of the Council, by notification, constitute an Authority, or empower an existing Authority constituted under any law for the time being in force, to examine whether input tax credits availed by any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the price of the goods or services or both supplied by him. (3) The Authority referred to in sub-section (2) shall exercise such powers and discharge such functions as may be prescribed.

128 GST – Goods and Services

129 GST – Goods and ServicesReturns Why do tax payer has to file returns ? Mode of transfer of information between the taxpayer and taxman Department uses it as verification of compliances Finalization of the input tax credit and outward supplies liability to be paid if any Information provided in returns helps the administration in decision making

130 GST – Returns Features of GST Returns Filing Online filing mandatorySingle return for both state and central taxes Single return for the state and central tax administrators Filing of transaction level data Matching of suppliers and recipients data Different return formats based on the nature of tax payer – regular, composition, ISD, Casual taxable person, TDS, TCS, Return filing under GST has to be done through GST Suvidha Provider / Application Service Provider There will be minimal charges levied by the GSP Data if passed through GSP and it is encrypted 34 GSP’s as on date and the same is being increased API’s are provided by Goods and Service Tax Network and the GSP’s have to consume them

131 GST – Returns GST Returns Return filing through GSP’s

132 GST – Returns GST Returns Sl.No Return Details 1 Form GSTR-1Details of outward supplies of taxable goods and/or services effected 2 Form GSTR-1A Details of outward supplies as added, corrected or deleted by the recipient 3 Form GSTR-2 Details of inward supplies of taxable goods and/or services claiming input tax credit 4 Form GSTR-2A Details of inward supplies made available to the recipient on the basis of FORM GSTR-1 furnished by the supplier 5 Form GSTR-3 Monthly return on the basis of finalization of details of outward supplies and inward supplies along with the payment of amount of tax 6 Form GSTR-3A Notice to a registered taxable person who fails to furnish return under section 27 and section 31 7 Form GSTR-4 Quarterly Return for compounding Taxable persons 8 Form GSTR-4A Details of inward supplies made available to the recipient registered under composition scheme on the basis of FORM GSTR-1 furnished by the supplier 9 Form GSTR-5 Return for Non-Resident foreign taxable person 10 Form GSTR-6 ISD return GST Returns

133 GST – Returns GST Returns Sl.No Return Details 11 Form GSTR-6ADetails of inward supplies made available to the ISD recipient on the basis of FORM GSTR-1 furnished by the supplier 12 Form GSTR-7 Return for authorities deducting tax at source 13 Form GSTR-7A TDS Certificate 14 Form GST-ITC- Communication of acceptance, discrepancy or duplication of input tax credit claim 15 Form GSTR-8 Details of supplies effected through e-commerce operator and the amount of tax collected as required under sub-section (1) of section 43C 16 Form GSTR-9 Annual return 17 Form GSTR-9A Simplified Annual return by Compounding taxable persons registered under section 8 18 Form GSTR-9B Reconciliation Statement 19 Form GSTR-10 Final return 20 Form GSTR-11 Details of inward supplies to be furnished by a person having UIN GST Returns

134 GST – Returns GSTR - 1 The details of the GSTR – 1 to be filed by invoice wise by the tax payers consists the following data All outward supplies made to registered taxpayers i.e., B2B including the supplies attracting reverse charge All interstate supplies made to unregistered taxpayers i.e., B2C above Rs 2.5 Lacs All Intrastate supplies made to unregistered taxpayers not mentioned above Invoice wise details of all exports, deemed exports and supplies made to SEZ Operators or SEZ Developers Supplies made by SEZ to DTA along with the bill of entry has to be shown

135 GST – Returns GSTR - 1 The details of the GSTR – 1 to be filed by invoice wise by the tax payers consists the following data Advances received during the month and advances adjusted during the month for the current month and prior months All debit/credit notes issued along with reference of the original invoice and date for B2B and B2B separately Summary of outward supplies for B2B and B2C for nil rated supplies, exempted supplies, and non-GST Supplies Summary of Outward supply of goods by HSN wise along with quality Net number of documents issued during the month for each category of documents like tax invoices, debit notes, delivery challans for job work, receipt vouchers, etc .,

136 GST – Returns GSTR - 1 The data uploaded in GSTR – 1 by the supplier of goods or services or both is auto populated to the following returns Part A of GSTR – 2A (regular taxpayer) GSTR – 4A (composition taxpayer) GSTR – 6A (input service distributor)

137 GST – Returns GSTR – 1A Changes made by recipient basis of Suppliers GSTR – 1 are reflected in this return The supplier can Accept Reject

138 GST – Returns GSTR – 2 GSTR – 2 is the monthly inward supplies return of good or services or both. It contains the following data This return has to be filed by 15th of the next month. Inward supplies of goods or services or both from B2B Inward supplies of goods or services or both from B2C that is purchases from unregistered taxpayers on which GST is to be paid on reverse charge basis. Inputs or capital goods received from overseas suppliers or SEZ’s Amendment/debit / credit notes issued for the data given above for previous months

139 GST – Returns GSTR – 2 Summary of interstate and intrastate supplies received from composition taxpayer, exempt supplies, Nil Rated Supplies and Non-GST Supplies. Input credit received from ISD, TDS and TCS Deductors Advance paid to unregistered taxpayers during the month by issue of payment vouchers and supplies adjusted against the payment vouchers issued during the month and the previous month. Input tax credit reversed on account of non-payment to supplier’s or due to mismatch or used for personal consumption etc Summary of Inward Supplies of goods with HSN codes, tax rates, and tax values.

140 GST – Returns GSTR – 2A GSTR – 2A is auto-populated based on the data filed by the supplier of goods or services or both. The data has to be accepted or rejected or modified or kept pending, if not received. Based on the changes here the GSTR – 2 will be updated accordingly, and this activity has to be completed by 15th of the month from 10th once the supplier files his GSTR – 1.

141 GST – Returns GSTR – 3 Summary of interstate and intrastate supplies received from composition taxpayer, exempt supplies, Nil Rated Supplies and Non-GST Supplies Input credit received from ISD, TDS and TCS Deductors Advance paid to unregistered taxpayers during the month by issue of payment vouchers and supplies adjusted against the payment vouchers issued during the month and the previous month. Input tax credit reversed on account of non-payment to supplier’s or due to mismatch or used for personal consumption etc Summary of Inward Supplies of goods with HSN codes, tax rates, and tax values.

142 GST – Returns GSTR – 3 GSTR – 3 is the summary return auto populated and generated based on the data of outward supply of goods or services or both and inward supply of goods or services or both. This return will determine the amount of input tax available for utilization and also the amount of tax to be paid along with interest, late fee, etc. for the month. Electronic liability register, electronic cash ledger and electronic credit ledger of the taxpayer will be updated on the generation of GSTR-3 by the taxpayer. Part A of GSTR-3 is auto-populated on the basis of GSTR 1, GSTR 1A and GSTR 2. GSTR – 3 will be treated as an invalid return if the total tax liability is not paid.

143 GST – Returns GSTR – 3A Is a communication received from the common portal if the taxpayer does not file his return for the inward supplies or outward supply of goods or services or both. The same notice/communication is issued to the taxpayer how does file is a final return on surrendering of his registration number.

144 GST – Returns GSTR – 4 On quarterly basis, every taxpayer registered as composition taxpayer has to file the GSTR – 4 return by 18th of the next month of quarter ending. It also includes and the amount of taxes to be paid and paid for the quarter for which the return is being filed. The GSTR – 4 contains the following information Inward supply of goods or services or both including the supplies which attract reverse charge or tax is to be paid on reverse charge. Any changes or debit/credit notes issued for the above supplies Taxes payable on outward supplies by rate wise for central and state taxes

145 GST – Returns GSTR – 4 Advance received during the month and also supplies made against advances received in the previous months. TDS credit received The amount of total tax payable along with the amount of tax paid. Any late fee or interest payable or paid If any refund received

146 GST – Returns GSTR – 4A GSTR – 4A is an auto populated or auto drafted return based on the returns filed by the regular taxpayer from his GSTR – 1, GSTR – 5 of input service distributor or tax deducted at source through GSTR – 7. The return will contain the following data Inward supplies received from registered taxpayers including inward supplies attracting reverse charge. Any debit/credit note issued for the above supplies for the previous period If any TDS credit is received from the deductor on works contracts.

147 GST – Returns GSTR – 5 It is a return to be filed by the non-resident taxpayer by 20th of the next month or within 7 days from the expiry of his registration period. The data to be filed in the return are Details of the import of goods or services along with the bill of entry number Any amendments / corrections for the previously declared import data Outward supplies to B2B during the return period Outward supplies to B2C during the period where the transaction value is greater than Rs 2.5 Lacs

148 GST – Returns GSTR – 5 Outward supplies to B2C net of debit or credit notes if issued during the tax period. Amendment to outward supplies for B2B or B2C Total amount of tax payable and tax paid for the return period Any late fee or interest payable Any amount received as refund.

149 GST – Returns GSTR – 5A GSTR – 5A is to be filed by persons who are supplying online data who is not based / has office in India. The return has to be filed by 20th of the next month. If the person supplying data is not Indian Resident, he has to have a registration under GST in India and if required can appoint an official representative who will file the return. Return to be filed based on place of supply The data to be filed includes the tax rate, taxable value along with the IGST and Cess Any amendments for the above data The amount of tax payable and paid

150 GST – Returns GSTR – 6 A taxpayer who is registered as Input Service Distributor has to file a return GSTR – 6 between 10th to 13th of the next month. ISD details will flow to Part B of GSTR-2A of the Registered Recipients Units on the filing of GSTR 6. ISD has to distribute both eligible and ineligible ITC to its Units in the same tax period in which the inward supplies have been received. Mismatch liability between GSTR-1 and GSTR-6 will be added to ISD, and further ISD taxpayer has to issue ISD credit note to reduce the ITC distributed earlier to its registered recipient's units. The amount of tax payable and paid along with if any Interest, the late fee payable and paid. If any refunds are eligible a claimed, the same will be reflected in return.

151 GST – Returns GSTR – 6 Basis of the return filed by the supplier of goods or services or both in his GSTR – 1, the data will be auto populated in GSTR – 6A of the Input Service Distributor. The data auto populated is Supplies made by the supplier along with invoice number, date, taxable value, tax rate and tax amounts. If there are any debit notes or credit notes issued for the previous period by the supplier if uploaded will also be part of the GSTR – 6A. The basis of the data auto populated there is no action to be taken by the input service distributor.

152 GST – Returns GSTR – 7 Any person how is eligible or required to deduct tax at source on the works contract is required to file GSTR – 7 by 10th of the next month. The return will contain the following information Details of tax deducted at source by deductee If any amendments issued for the previous tax periods Amount of tax deducted at source and paid If any interest and late fee payable and paid for the return period If any refund received during the return period

153 GST – Returns GSTR – 7A The taxpayer how is required to deduct tax on works contract is required to issue a certificate in the next period after payment of the tax recovered from the deductee in GSTR – 7A within stipulated period. The certificate will contain the following information GSTIN of the deductor and the deductee Amount of tax deducted as central tax or state tax or IGST Period for which the certificate is issued

154 GST – Returns GSTR – 8 Every e-commerce operator has to collect tax before paying it suppliers as collection of tax at source and have to file a monthly return known as GSTR – 8 by 10th of the next month. The return will contain the following information Details of the suppliers to e-commerce operators for the supplies made during the month and the goods returned. The amount payable by the e-commerce operator under GST and the amount recovered as GST in the form of central / state or IGST taxes. Amount of tax payable and paid If any interest and late fee payable and paid If any, refund received during the return filing period.

155 GST – Returns GSTR – 8 Any qualified persons as per the GST Law if they want to claim input tax refund on their inward supplies as UIN have to file GSTR – 11 by 28th of the next month. The return will contain the following details Inward supply of goods or services GSTIN of the supplier of goods or services Invoice wise details along with the taxes The amount of refund eligible.

156 GST – Returns GSTR-1 GSTR-2 GSTR-2A GSTR-1A GST Returns ProcessUpload of Invoice Data Upload of other data GSTR-2A Auto drafted from all suppliers/ISD/TD Sand TCS Download GSTR-2 Accept / Reject Modify / Add Upload of remaining data GSTR-1A Auto-drafted on the basis of submitted GSTR 2 Accept/Reject if GSTR 1 filed and GSTR3 not filed Auto Amended GSTR 1 if GSTR 3 not filed Acceptance/rejection/addition if GSTR 1 not filed or next period GSTR1 if GSTR 3 filed GST Returns Process

157 GST – Returns Input Service Distributor Tax Deducted at Source ReturnsGSTR -6:ISD return GSTR – 6A:Details of inward supplies made available to the ISD recipient on the basis of FORM GSTR-1 furnished by the supplier Tax Deducted at Source GSTR – 7: Return for authorities deducting tax at source GSTR – 7A: TDS Certificate Tax Collected at Source Tax Collected at SGSTR -8:Details of supplies effected through e-commerce operator and the amount of tax collected as required under sub-section (1) of section 43C source

158 GST – Returns Electronic Tax Liability RegisterThe Electronic Tax Liability Register will be debited with the following amount of tax payable, interest, late fee or amount of tax payable along with interest on account of mismatch of credit based on provisions of Section 29 or Section 29A or section 43C. any other amount payable by the tax payer or directed by the board on account of any proceeding’s carried out under the GST Act The Electronic Tax Liability Register will be credited with the following Amount deducted under Section 37 (Tax Deduction at Source) Amount collected under Section 43 C (Tax Collection at Source) Amount payable under Sub-section3 of Section 7 (tax payable under reverse charge) Amount payable by the department against any interest, refund, penalty, late fee or any other amount determined under the proceedings under this Act

159 GST – Returns Electronic Credit RegisterAn Electronic Credit Ledger will be maintained on the common portal in FORM GST PMT-2 for the tax payer for the amount being claimed as input tax credit, will be credited to this ledger. The Electronic Credit Register will be credited with the total amount of tax payable on account of liability, interest, late fee etc as determined under Section 35 of the Model GST Law. The Electronic Credit Register will be debited with any amount of refund under provisional basis under Sub-Section 4A of section 38 of Model GST Law received or transfer of input tax credit under Section 37 of the Model GST Law. In case if the refund is rejected, the amount debited under provisional basis under Sub-Section 4A of section 38 of Model GST Law will be debited through FORM GST PMT-2A.

160 GST – Returns Electronic Cash LedgerThe payment of tax liability or interest or late fee or penalty any other amounts under GST can be done using any of the following methods Internet banking – authorized by the board Through credit card or debit card National Electronic Fund Transfer (NEFT) or Regal Time Gross Settlement (RTGS) Over the counter (OTC) for amounts less than Rs 10,000 in cash or through cheque or demand draft

161 GST – Transitional provisionsDictionary meaning of Transition “movement, passage, or change from one position, state, stage, subject, concept, etc., to another; change” From GST Transition provisions applies to transactions which have happened pre GST era and received or returned during the GST era.

162 GST – Transitional provisionsSection – 139 : Migration of existing taxpayers On and from the appointed day every registered person under any law like Central Excise, Value Added Tax, Service Tax etc will be issued a provisional certificate. Basis of verification of documents submitted for provisional registration, final registration certificate will be issued. (details refer to Registration Rules). The provisional certificate issued is deemed to be cancelled if the registration is not required under Section 22 - Persons liable for registration or Section 24 – Compulsory registration in certain cases.

163 GST – Transitional provisionsSection – 140 : Transitional arrangements for input tax credit CENVAT Credit can be carried forward basis on the return filed immediately prior to the appointed day and the same is not allowed in the following cases where the said amount of credit is not admissible as input tax credit under this Act; or where he has not furnished all the returns required under the existing law for the period of six months immediately preceding the appointed date; or where the said amount of credit relates to goods manufactured and cleared under such exemption notifications as are notified by the Government. Unavalied portion of the CENVAT Credit on capital goods can be availed immediately based on the balance in the return filed immediately day before the appointed day

164 GST – Transitional provisionsSection – 140 Sub-Section 2 : Closing Stock ITC can be taken by the following taxpayers in GST on inputs held in stock and inputs contained in semi-finished or finished goods on stock held before the appointed day Not registered under the existing law, manufacture of exempted goods or provision of exempted services, works contractor first stage dealer second stage dealer registered importer or depot of a manufacturer

165 GST – Transitional provisionsSection – 140 Sub-Section 2 : Closing Stock ITC is available in the following conditions Used for only taxable supplies Eligible to take ITC under the new law' Has duty paid documents with him Invoice date is not latter than 12 months preceding the appointed date Not eligible for abatement in the current law In case if the person does not have any duty paying documents, then he can claim credit based on process given in Rules

166 GST – Transitional provisionsSection – 140 Sub-Section 2 : Closing Stock ITC is available in the following conditions Used for only taxable supplies Eligible to take ITC under the new law' Has duty paid documents with him Invoice date is not latter than 12 months preceding the appointed date Not eligible for abatement in the current law In case if the person does not have any duty paying documents, then he can claim credit based on process given in Rules

167 GST – Transitional provisionsSection – 140 Sub Section 4 : Taxable and exempted goods TC can be taken on the inputs / semi finished goods or finished goods on the stock held on day prior to appointed day if such goods which are exempted under the current law but the same are taxable under GST. The process of availing ITC is same as above

168 GST – Transitional provisionsSection – 140 Sub-Section 5 : Goods and Services received after appointed day Goods or Services received after the appointed day Taxes have been paid under old taxes (excise, VAT, Service Tax ) Should be taken within 30 days from the appointed day & Can be extended for another 30 days A separate statement has to be furnished for such goods / services where ITC is taken What will happen in cases of AMC / Services for which invoice is issued but to be rendered through the year?

169 GST – Transitional provisionsSection – 140 Sub-Section 6 : ITC on closing stock where taxes are paid on fixed rate or fixed amount ITC is eligible on closing stock of inputs, inputs held in semi finished goods & finished goods Such goods or inputs are intended to be used for making taxable supplies The taxable person is not registered under composition scheme The taxable person is in possession of the duty paying document The tax paid documents are not latter than 12 months from appointed day

170 GST – Transitional provisionsSection – 140 Sub-Section 7 : Invoices received by ISD after appointed day ISD can avail in the ITC on invoices received after the appointed day Such credit received can be distributed to other units

171 GST – Transitional provisionsSection – 140 Sub-Section 8 : ITC in case of centralized registration In case of taxpayers who are required to take centralized registration under existing law and decentralized registration under new law The credit balance is available in the CENVAT balance Has filed returns within 3 months preceding the appointed day Can transfer the ITC to other registrations with the same PAN Number What basis ITC is to be transferred? What documents? No clarity

172 GST – Transitional provisionsSection – 140 Sub-Section 8 : ITC in case of centralized registration In case of taxpayers who are required to take centralized registration under existing law and decentralized registration under new law The credit balance is available in the CENVAT balance Has filed returns within 3 months preceding the appointed day Can transfer the ITC to other registrations with the same PAN Number What basis ITC is to be transferred? What documents? No clarity

173 GST – Transitional provisionsSection – 140 Sub-Section 8 : ITC Reversal & Reclaim Applicable in case of service tax ITC reversed prior to appointed day Supplier is paid within 3 months of the appointed day then ITC can be reclaimed On reclaim will it be taxes under GST or old taxes? How the same is reflected in the GST Returns ? What happens to ITC if the supplier is paid after three months of the appointed day due to cash flows – is he not eligible for ITC ???

174 GST – Transitional provisionsSection – 141 : Job work, repairs etc For goods sent before the appointed day for further processing, repairs, testing, reconditioning etc Has to be received within 6 months from the appointed date Can be extended for another period of 2 months by the commissioner If not received in said period then taxes have to paid under GST and not eligible for ITC The above is applicable only if the principal or job workers (if registered) declares the goods in prescribed format for the stock held on the appointed day.

175 GST – Transitional provisionsSection – 141 : Goods returned after appointed day Applicable for goods sent on duty paid documents earlier than 6 months from the appointed day Goods have to be returned within 6 months from the appointed day If returned by the customer (unregistered under GST) duty paid under previous taxes can be claimed as refund If returned by the customer (registered) considered as deemed supply as the customer is expected to clear the goods with payment of duties under GST

176 GST – Transitional provisionsSection – 142, Sub-section 2 : Price Revision Price revision happens after the appointed date Debit note / credit note or supplementary invoice has to be issued within 30 days of the said revision The buyer can take the tax benefit under GST by reducing the tax liability if the seller has reduced his ITC How the same will be reflected in the system ? As the original invoice is not uploaded in GSTR -1. how will validation will happen in such cases ?

177 GST – Transitional provisionsSection – 142, Sub-section 3 : Existing Refunds For claim of refund of Cenvat Credit, duty tax or interest before the appointed day Will be processed as per the old laws If eligible for refund, the same will be paid in cash If any refund if rejected it will lapse

178 GST – Transitional provisionsSection – 142, Sub-section 4 : Refunds - exports For refund claimed after the appointed date for export of goods or services Will be processed as per the old laws If eligible for refund, the same will be paid in cash If any refund if rejected it will lapse

179 GST – Transitional provisionsSection – 142, Sub-section 5 : New refund after appointed day For claim of refund of Cenvat Credit, duty tax or interest after the appointed day Will be processed as per the old laws If eligible for refund, the same will be paid in cash If any refund if rejected it will lapse

180 GST – Transitional provisionsSection – 142, Sub-section 6 : Appeals Every proceeding of appeal, review or reference relating to a claim for CENVAT credit initiated whether before, on or after the appointed day will processed as per the old laws If appeal is in favour of the tax payer it will be paid in cash If dismissed it will be lapsed

181 GST – Transitional provisionsSection – 142, Sub-section 7 : Appeals towards output tax liability Every proceeding of appeal, review or reference relating to a output tax liability whether before, on or after the appointed day will processed as per the old laws If appeal is in favour of the tax payer it will be paid in cash If appeal is not in favour of the tax payer then they will be processed ad arrears under GST

182 GST – Transitional provisionsSection – 142, Sub-section 8 : tax liability towards old transactions Every proceeding of appeal, review or reference relating to a output tax liability whether before, on or after the appointed day will processed as per the old laws If appeal is in favour of the tax payer it will be paid in cash If appeal is not in favour of the tax payer then they will be processed ad arrears under GST

183 GST – Transitional provisionsSection – 142, Sub-section 9 : Revised Return Return filed prior to the appointed day If return has to modified / revised If there is any change in the CENVAT Credit is not allowed / ineligible the same will be recovered in cash or as arrears in GST

184 GST – Transitional provisionsSection – 142, Sub-section 10 : Old Contracts Contracts entered prior to the appointed day Supplies after the appointed day will be with GST

185 GST – Transitional provisionsSection – 142, Sub-section 12 : Goods sent on sale or approval basis Goods sent on sale or approval basis prior to the appointed day Returned back within 6 months then no taxes are payable If returned after the above period then taxes are applicable under the current law Can be extended by another 2 months

186 GST – Transitional provisionsSection – 142, Sub-section 13 : Tax deduction at source If TDS is recovered under any State of UT VAT prior to appointed day If payment is made after appointed day then taxes as per Sec 51 is not applicable

187 GST – ERP impact GST Impact on Enterprise Resource PlanningStage 1 Form a team from all departments Decide to engage a knowledge partner or handle it in house Review the business process Understand the Model GST Law Understand the Compliance Requirements Stage 2 Train the teams Modify the business process Re negotiate contracts Revisit the business strategies Strategize transitional provisions Collaborate with your IT partner Stage 3 Train the end users Re write the SOP’s Educate the Business Partners Have testing plan for IT Applications Migrate the existing data Post go live support - team GST Impact on Enterprise Resource Planning

188 GST – ERP impact GST Impact on ERP Master Data Transaction DataReporting Migration

189 Master Data GST – ERP impact GST Impact on ERP – Master DataRegistration Number Tax Codes Tax Rates Chart of Accounts HSN Codes SAC Codes GST Impact on ERP – Master Data

190 GST – ERP impact GST Impact on ERP – Transaction DataReceipt, Refund, Payment, Delivery Challan & E-Waybill Number Input Tax Credit Reversal of Input Tax Credit Tax Invoice – HSN Code & SAC Reference Number for advance receipt GST Impact on ERP – Transaction Data

191 GST – ERP impact GST Impact on ERP – Reporting Engage a GSP / ASPConclude on the File Format Do a trail run if planning for two way interface Train your Business Partners

192 GST – Business process impactGST Impact on Business Process What is a business process A business process is an activity or set of activities that will accomplish a specific organizational goal organizational goal – to achieve compliance in each and every transaction carried out where ever there is GST implications

193 GST – Business process impactGST Impact on Business Process – Impacted Areas Purchasing Supply chain Sales IT Finance Accounts HR Legal Taxation

194 GST – Business process impactGST Impact on Business Process – Impacted Areas – Purchasing Identify the vendors – regular / composition / un registered Registration numbers for each location Provision for compliance rating Have provision to have HSN / SAC in all documents from requisition to purchase order Decide from the location from where the goods will be shipped (freight costs) Educate and train your suppliers and other business partners

195 GST – Business process impactGST Impact on Business Process – Impacted Areas – Purchasing Re-negotiate the prices as ITC is available seamlessly SOP for PO’s, Receipts, Payments etc to be updated Process defined for the rejections – supplier only can issue credit note Re negotiate the payment terms Document sequence for all documents location wise Check for the HSN code of each item and if changed update the same in system

196 GST – Business process impactGST Impact on Business Process – Impacted Areas – Supply Chain Re work on the existing warehouse locations Reorder level/ Maximum Qty/ Min Qty to be reworked Impact analysis of the reverse charge transactions Revisit your supply chain cycle – having clearing & forwarding agents, dealers, stockists etc., Evaluate the usage of RFID for e-waybill

197 GST – Business process impactGST Impact on Business Process – Impacted Areas – Sales Identify the customers – regular / composition / un registered In case un registered customers have provision to capture their name and address Registration numbers for each location Provision for compliance rating Re negotiate the payment terms Check for your competitors pricing

198 GST – Business process impactGST Impact on Business Process – Impacted Areas – Sales Have proper systems for customer rejections Sales promotion schemes – free goods, discounts & schemes Re work the contracts Work with customers on the delivery dates as transit times are reduced Have SOP updated supplier rejection – pre GST / post GST Have SOP updated for issue of credit / debit note – pre GST / post GST

199 GST – Business process impactGST Impact on Business Process – Impacted Areas – Finance Working Capital Assessment Determine impact on Costing and Price revision Valuation – Consideration / FOCs / Assets / Barter / Exchange / Disposals / Free Samples / Donation etc. Inter Branch Transactions Business Assets for Personal / Non-Business Use Services for Personal / Non-Business Use Trial Balance Analysis and Impact on GST Transaction analysis for proper accounting and reporting Revenue Impact and Budgeting

200 GST – Business process impactGST Impact on Working Capital Input Tax Credit available only on supplier payment of taxes, matching of records and filing of returns. If supplier does not pay If supplier does not file his return If supplier files his return but not a valid return In the all the above cases, the recipient has to pay cash, thereby impacting the working capital

201 GST – Business process impactGST Impact on Working Capital Reversal of GST if the supplier is not paid within stipulated time This provision was there only for services in the current law Now extended to the goods also under GST On self assessment basis the list of invoices have to be identified and ITC Reversed ITC has to be reversed along with interest rate as specified from the date of claim to the date of the reversal Interest paid will be reversed once the supplier is paid but the same cannot be used for payment of taxes, it will be parked separately and can be used for payment of interest in future if there is default again.

202 GST – Business process impactGST Impact on Working Capital GST on advance receipt from customers This provision was there only for services in the current law Now extended to the goods also under GST The supplier has to pay taxes on receipt of advance from the recipient of goods Today you may be paying Rs 10,000 as advance but under GST you have to pay Rs 10,000 + GST ITC is not available till the goods and services are received or delivered completely

203 GST – Business process impactGST Impact on Working Capital Stock Transfer to branches Today VAT is not applicable when stock is transferred to branches within the state or outside the state on issue of Form “F” Now under GST, taxes have to be paid on stock transfer to depots outside the state or if the entity has different registration number within the state Currently taxes paid is only excise, applicable only if the turnover is more than Rs 1.5 Crs but under GST the same is reduced to Rs 20 Lacs Incremental tax outflows or new tax outflows

204 GST – Business process impactGST Impact on Working Capital Increase in tax rates Applicable for service sector mostly as the rate is going to increase most likely from 15% to 18%. It is not incremental of 3% but incremental of working capital of 20% Same can happen in case of certain goods The full impact will be known only when the rates are released Increase in taxes on imported materials – chemicals today the tax rate is around 14% to 16% (CVD + SAD) but under GST it will be IGST and most likely the tax rate is 18% - increase of 2% but in absolute terms of working capital it is 15%

205 GST – Goods and ServicesGST Impact on Working Capital Units setup under various schemes and in exempted areas Under GST there are very minimal exemptions or no exemptions What will happen to the current units setup in such areas or availing such schemes They have to pay taxes upfront and then claim refund – huge and direct impact on the working capital. The cash flows are prepared based on these schemes now they have to re worked Examples – units setup in Uttarkand or Himachal or sales tax holiday for 5 years or 10 years or sales tax deferment for 10 years etc.,

206 GST – Business process impactGST Impact on Working Capital Reverse Charge Under taxation reverse charge is applicable only for selected services Under GST the same is applicable for goods and services List of goods and services to be notified by GST Council It is also applicable on purchases from unregistered tax payers Taxes have to be paid on behalf of supplier of goods and services and then credit can be taken. In the above process time lag of one month Payment of reverse charge is to be made in cash only not using any of the existing ITC of any other taxes

207 GST – Business process impactGST Impact on Working Capital Industry Specific Some industries are outside the scope of GST Electricity Real estate Petro chemical Indian Made Foreign Liquor (IMFL) Service Industry – impact of registration number state wise, Inputs and Capital goods are purchases with GST and not able to take ITC

208 GST – Business process impactGST Impact on Working Capital Transitional Provisions Input tax credit is allowed only if the tax payer is registered and the taxes are eligible for ITC in GST also. Closing stock as on the 30th June 2017 will not be available as the trader is not registered under central excise. There is provision to make 40% eligibility of ITC the details are awaited Preferable to have minimum amount of closing stock during transition More the stock, then ITC not available will make pricing uncompetitive and resulting in lower sales and cash flows Service industry has to take registration under GST State wise and provisions are not clear / there for transfer of closing ITC from the single account to multiple accounts

209 GST – Business process impactGST Impact on Working Capital Benefits – Generic Currently VAT Registered dealers or Central Excise registered are not able to take ITC on services or excise taxes Under GST the same is possible as the law uses the word furtherance of business Benefits – Capital Goods ITC under central excise is spread over two years ITC under VAT is different for different states Under GST, ITC is available completely without any deferment (as of now) The above two will have positive cash flows

210 GST – Business process impactGST Impact on Working Capital Imports Advance Authorization Scheme Currently no requirement to pay taxes Under GST only BCD will be exempted and IGST has to be paid Exports Promotion Capital Goods Scheme Duty free import of goods

211 GST – Business process impactGST Impact on Working Capital Increase in compliance cost More manpower is required for reconciliation of purchase and sales data Return filing is not free, some charges have to be paid Existing software has to be upgraded, Training of the teams on GST and on the upgraded software

212 GST – Business process impactGST Impact on Business Process – Impacted Areas – Accounts Review the existing Chart of Accounts Create New once for GST if required at state level / location level / business vertical level Identify which accounts are impacted by GST Check for the software computability for the new requirements under GST – TDS / TCS Have a reconciliation process in place to prepare GSTR – 9B Maintain audit trail for all the changes being made in accounts

213 GST – Business process impactGST Impact on Business Process – Impacted Areas – Taxation Registrations / addition of registrations / amendment in registrations / de-registrations Transitional provisions - Liability on transit transactions / Input credits / Carry forward Balances Working out the Liability on Outward Supply and Liability under reverse charge Impact of Taxation on Procurements of Goods, Services Asset movement to and fro from the supplier Asset movement from the customer

214 GST – Business process impactGST Impact on Business Process – Impacted Areas – Taxation SOPs for retrieving data required for accurate statutory compliances Issue of Forms / solving issues w.r.t. old taxation regime Educating all Departments / Functions across organization w.r.t. changes expected and methodologies to be followed Capturing Input Credit based on eligibility and time frame Identification of the capital goods and availment of credit considering eligibility Working out cost impact due to non-eligible credits

215 GST – Business process impactGST Impact on Business Process – Impacted Areas – Taxation Review of Contracts entered into by any Department / Function in the Organization for Transaction analysis Classification of goods / services Nature of supply - Goods / Services / Composite / Mixed / Continuous / Works contract Time of Supply – Capturing Receipt Date / Date of Invoice / Date of Removal Place of Supply – Intra state / Inter State / Contractual terms of Delivery / Delivery place Reverse charge transactions Tax Rate

216 GST – Business process impactGST Impact on Business Process – Impacted Areas – Legal Contracts review Revision in terms of contracts Track all open cases w.r.t. erstwhile regime Impact analysis w.r.t. open cases

217 GST – Business process impactGST Impact on Business Process – Impacted Areas – HR Engagement of Team in GST implementation Revisit HR Policies w.r.t. recovery / reimbursements Awards to employees / Reimbursements to employees Business Assets for personal purpose Recovery from employees Valuation of Benefits Leave Encashment / Medical / Insurance

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