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Raakesh Saraff

Raakesh Saraff. GST My Learning as a entrepreneur from the experts on GST. WHAT IS GST ??. GST means Goods and Services Tax One Nation One Tax It’s a destination based Tax Biggest Tax Reform as well as Business Reform Original Idea in 2006 Proposed Implementation 2010

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Raakesh Saraff

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  1. Raakesh Saraff GSTMy Learning as a entrepreneur from the experts on GST

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

  3. Appointed Day APPOINTED DAY : 1ST July 2017 Midnight 00:00 Hours GST Launch

  4. GST Working

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

  6. Benefits Input Credit will available : Presently CST, Excise & Service Tax not allowed against VAT

  7. Benefit for Citizens (i)  Simpler tax system 
 (ii)  Reduction in prices of goods and services due to elimination of cascading (Refer Example) (iii)  Uniform prices throughout the country 
 (iv)  Transparency in taxation system 
 (v)  Increase in employment opportunities

  8. Benefit for Trade/Industry Reduction in multiplicity of taxes Mitigation of cascading/double taxation More efficient neutralization of taxes especially for exports Development of common national market Simpler tax regime-fewer rates and exemptions

  9. Singapore Example Introduce 1st April 1994 @3% @ 4% Jan 2003 @ 5% Jan 2004 @ 7% July 2007

  10. Five Acts The Central Goods and Services Tax Act, 2017 The Integrated Goods and Services Tax Act, 2017 The Union Territory Goods and Services Tax Act, 2017 The Goods and Services (State Compensation) Tax Act, 2017 The State Goods and Services Tax Act, 2017 (State wise)

  11. TYPES OF TAXATION IN GST IGST : Integrated GST (Inter-state sale & Stock Transfer, Import – SAD+CVD, Export is Zero rated) SGST : State GST CGST : Central GST (Intra-State)

  12. NOT COVERED ELECTRICITY STAMP DUTY & PROPERTY TAX PETROLEUM PRODUCTS ALCOHOL

  13. Rate of Tax (Highest Can Go up to 40%) Exempt 0% : Zero Rated for export 3% : Gold 5% : Essential Goods 12% : Basic Necessity Products 18% : Revenue Neutral Rate 28% : Demerit Goods

  14. GSTN GST Company Incorporated(49% Central 51% State and Govt Companies) Infosys Appointed as Managed Service Provider (MSP) Rs. 1380 Crore 34 IT Companies Appointed as GST Suvidha Providers (GSP) Saksham Project Rs. 2256 Crore for IT re-engineering

  15. SEC 171: ANTI PROFITEERING MEASURE Benefit to be Passed on to Consumer as per “IMPACT ANALYSIS” Else Heavy Penalty

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

  17. COMPOSTION SCHEME Turnover Limit Rs. 75 lacs (preceding year) 2% for Manufacturer (Other than Ice Cream, Tobacco, Pan Masala) 1% for Traders 5% for restaurants

  18. RCM Reverse Charge Mechanism Pay Tax on Purchase from Un-registered Persons Registration under RCM is mandatory if liable for RCM

  19. C, F & H Forms No C Form No F Form No H Form Stock Transfer : GST Applicable (Inter State)

  20. Tax Free Zones No Tax Free Zones Existing Tax Free Zones (1st Pay then Refunds)

  21. E Way Bill E Way Bill : Goods value Rs. 50000 or more Supplier, Transporter, Recipient. Initial Relaxation

  22. TDS @1% By Government Departments By Specified Persons Value Exceeding Rs. 2.5 lacs

  23. Tax & Returns Monthly Online Tax Monthly online Returns R1 : 10th R2 : 15th R3 : 20th (For Regular Dealer) R4 : 18th (For Composite Dealer) R5 : 20th (For Non Resident) R6 : 13th (For ISD) R7 : 10th (TDS Return) R8 : 10th (E-Commerce Operator) R9 : 31st Dec (Registered Taxable Person)

  24. …Returns (Myth : Huge Burden) Vs. (Reality : Easy) First 2 months last date relaxation and file R-3B Summary Return (July and Aug – As per 18th June Meeting of GST Council) Return can not be revised(Its Good) Annual return Individual Purchase and Sales bill to be uploaded Invoices can be kept in soft Copy (Its good) Limitation Period for raising demand is 5 years

  25. Input Service Distributor ISD 12 monthly returns 1 Annual Return

  26. Input Credit Credit Available for most of the Purchases in the course of Business (A major Gift from the Present regime) Capital Goods Credit is available in one go Electronic Matching of Input Credit Input Credit is proportionately available for Taxable and Zero rated goods only (Means for exempted goods it is not allowed) No Input Credit after Annual return is filed Serious Point : Supplier has Actually paid tax charged in respect of Supply and furnished Return If Goods are received in lots : Input credit can be claimed upon receipt of the last lot

  27. Non Creditable Goods No input credit available for : Motor Vehicles Food & beverages Outdoor Caterings Beauty Treatment Health Services Cosmetic and Plastic Surgery Club Membership Rent a cab Insurance Personal consumption Goods lost, stolen, destroyed, written off, disposed of by gift or sample etc. Works contract on immovable property

  28. Impact Analysis Costing Change of Tax Rate Input Credit Availability Multiple Registration Consolidation of Godown or Interiors Transportation (No Entry Barrier and impact) IT Infra GST Compliant Finance Management (Stock Transfer : Working Capital) Compliance Cost (Invoice wise detail) Training to Team (Workshops)

  29. SUPPLY ALL FORMS OF SUPPLY COVERED : Sale Transfer Barter (Not in VAT)(other goods) Exchange (Not in VAT)(same kind) License Rental Lease Disposal

  30. Business Includes Section 2(17) Any Trade or Commerce, Manufacture, Profession, Vocation, Adventure, Bet, whether or not for monetary benefit Incidental activity Irrespective of Volume, frequency, continuity or regularity Any club, association, society to its members Admission for a consideration to any premises Race club Service by Govt.

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

  32. Important to Note for Construction Construction of Complex, Building, Civil Structure or Part thereof shall be treated as SERVICE

  33. TRANSACTION NOT CONSIDER AS SUPPLY OF GOODS OR SERVICES (Sec 7) Services by Employee to Employer Services by Court Services by member of parliament, Legislature etc. Services of Funeral Sale of Land

  34. Composite & Mix Supply Composite Supply (Eg. Supply of Goods, Packing, Transport, Insurance) Rate of Tax will be rate of Principal Supply Mix Supply (Eg Haldiram Diwali Gift Pack) Rate of Tax will be highest rate tax item in Mix supply

  35. Time of Supply of Goods SEQUENCE OF EVENTS Date of receiving Order : 10.07.17 Goods removed from warehouse : 11.07.17 Hands over to Agent for Transporter : 12.07.17 Handed over to Transporter : 30.07.17 Draws Invoice : 31.07.17 Goods received by Agent of recipient : 10.08.17 Payment received in Bank by Supplier : 01.10.17

  36. Timing for Liability of Tax Earlier of : Date of Issue of Invoice or Last date on which he is required to issue invoice Payment received (earlier of entry in books or credited in Bank)

  37. Place of Supply for Goods (Sec 10) General Rule : Location of the Goods at the time where movement of goods terminate for delivery to recipient. (Eg. Mobile Purchase in Gurgaon) Goods Involving Delivery : Principal Place of Business of Registered Buyer (Eg. Delivery to third party) No Movement of Goods : Location of Goods (Eg. Generator) Goods Assembled at site : Place of assembly Supply on Board : Location from where boarded (Aircraft in Delhi)

  38. Place of Supply for Services (Sec 12) General Rule : Location of Registered Buyer If Buyer not registered then known address Other cases, location of supplier Services for Immovable Property : Location of Property Training Services where Actually Performed Admission to Event : Location of Event …....

  39. Tax Invoice Only a Registered Person Can Issue Tax Invoice (else Penalty Rs. 10000 per Invoice) Tax invoice to be issued before or at time of: Removal of goods for supply to recipient or Delivery or making available to recipient (If Goods on Approval then on Approval or 6 months whichever is earlier)

  40. Other Invoices and Vouchers “Bill of Supply” (Other than Tax Invoice) “Receipt Voucher” (For Advance Payment) “Refund Voucher” (For returning) “Invoice for Purchase” from Unregistered Person “Payment Voucher” for Purchase from Unregistered Person

  41. CHANGE IN RATE OF TAX 2 OUT OF 3 EVENT FORMULA TO BE APPLIED : Issue of Invoice Receipt of Payment Supply of Goods or Services

  42. VALUE OF TAXABLE SUPPLY The VALUE of a supply of goods and services or both shall be TRANSACTION VALUE which is the PRICE actually paid or payable for the said supply where theSUPPLIER and RECIPIENT of the supply are NOT RELATED and the price is the SOLECONSIDERATION for the supply Refer Valuation Rules if Value is not determinable (Fair Market Value , Cost +10% etc is suggested in rules)

  43. Addition in Value of Supply Interest, Late Fees, Penalty Amount incurred by recipient (Eg. Free supply of Cement, Saria) Incidental Expenses (Eg packing, Freight if supplier is liable, custom duty)

  44. ILLUSTRATION EX-1 Where a new phone is supplied for Rs. 20000 along-with exchange of an old phone If the price of new phone without exchange is Rs. 24000 Then the open market value of Phone is 24000 Ex-2 Where a laptop is supplied for 40000 along-with a barter of printer that is manufactured by recipient and the value of printer known at the time of supply is 40000 But the open market value of laptop is not known The value of the supply of laptop is 44000.

  45. Value is Given for Spl Cases Money Changer Insurance Policy Second Hand Goods (Net Value)

  46. Rating of persons New Initiative in GST to give rating to Persons Defaulters identify Facilitate Companies to appoint good associates

  47. PAYMENT OF VALUE OF SUPPLY AND TAX TO SUPPLIER WITHIN 180 DAYS If payment is not made within 180 days Input Credit will be disallowed Recipient to deposit tax with interest

  48. No Credit for Tax Invoice Older than12 months No Input Credit for stock in hand for Tax Invoices Older than 12 months

  49. Goods Sent for Job Work Goods if not received back within 1 year : GST with Interest Capital Goods if not received back within 3 years : GST with interest

  50. Registration-Migration Provisional Registration Re-open from 25thJune to 15thJune Final Registration : Download from Portal GST registration is based on PAN and State Registration is required in each state

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