A presentation on GOODS & SERVICE TAX -GST

1. A presentation on GOODS & SERVICE TAX -GST BY CMA TUSHAR SARKAR

2. GST- An Overview

3. Overall Structure of GST • GST will be on ‘supply’ of goods or services or both in India w.e.f 01.07.2017( Jammu and Kashmir w.e.f 08.07.2018).For the purpose of GST upto 200 nautical miles inside sea in India. • For supplies within State or Union Territory (a) Central Tax ( i.e Central GST i.e CGST) will be payable to Central Govt. (b) State Tax ( State GST-SGST ) or Union Territory Tax ( UTGST-Union Territory GST) will be payable to State Government or Union Territory.

4. Overall Structure of GST ...... Contd. • For inter sate supplies Integrated Tax 9 Integrated GST-IGST) will be payable to Central Government. IGST is Payable if supply is beyond 12 nautical miles but upto ............ Nautical miles. • GST compensation cess will be payable on pan masala, tobacco products,coal, aerated waters, motor cars etc. • Basic custom duty, Social Welfare Surcharge, IGST and GST compensation Cess ( on goods where compensation Cess is payable).

5. Overall Structure of GST ...... Contd • Distinction between goods and services will be mostly eliminated. In construction industry, works contract, food related services like restaurant and outdoor catering, leasing and hire services and software services. • GST is consumption based tax. • The rates of IGST – Nil 0.1% 0.25%, 3%, 5%, 12%, !8% and 28%. • Central Excise duty will continue on petroleum products. • Tobacco and Alcoholic Liquor – out of GST

6. Taxes subsumed under GST • State Levies • VAT/Sales tax • Central Sales Tax (CST) • Entertainment tax (other than levied by local bodies) • Octroi and Entry tax • Purchase tax • Luxury tax • Taxes on lottery, betting, gambling • State surcharges, cesses relating to supply of goods and services • Central Levies • Central excise duty • Additional excise duties • ED under the Medicinal & Toiletries Preparation Act • Service tax • Additional Customs Duty s(CVD) • Special additional duty (SAD) • Surcharges and cesses relating to supply of goods and services.

7. Taxes - NOT subsumed under GST • Basic Customs Duty • Excise Duty / VAT on Petroleum Products for five years • Excise Duty on Tobacco Products • Electricity Duty by state • Entertainment tax levied by local bodies • State excise on Alcoholic Beverages • Property tax, Stamp Duty and taxes on immovable properties • Royalty on minerals, Environmental / regulatory taxes- e.g. vehicles tax

8. Overview of GST Service Tax Goods & Service Tax (GST) State Excise Duty Excise Duty Entertainment Tax VAT CST Luxury Tax Octroi Duty Features of GST. GST Council One Nation & One Tax & One Market Events are based on Concept of Supply. Streamlining & Cross Utilization of Input Tax Credits. Revolutionary Invoice Matching Concept. GST Governing Body with power to take decision on rates, exemption, threshold exemptions, etc with 33.33% voting power of Union Government & 66.66% power lies with the State Government.

9. SUPPLY UNDER GST

10. SUPPLY UNDER GST

11. Supply (S. 7) The expression ‘supply’ includes – (a) All forms of supply • such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made • For a consideration • In the course or furtherance of business (b) Import of services • for a consideration, • whether or not in the course or furtherance of business • (c) Schedule I activities made without consideration • (d) Schedule II activities treated as supply of goods or services

12. • Inclusive definition – difference between ‘include’ and ‘such as’, hence very wide • The difference between exhaustive and inclusive definitions has been explained in P. Kasilingam v. P.S.G. College of Technology (1995) Supp 2 SCC 348: “A particular expression is often defined by the Legislature by using the word ‘means’ or the word ‘includes’. Sometimes the words ‘means and includes’ are used. The use of the word ‘means’ indicates that “definition is a hard-and fast definition, and no other meaning can be assigned to the expression than is put down in definition”. (See : Gough v. Gough; Punjab Land Development and Reclamation Corpn. Ltd. v. Presiding Officer, Labour Court.) The word ‘includes’ when used, enlarges the meaning of the expression defined so as to comprehend not only such things as they signify according to their natural import but also those things which the clause declares that they shall include. • UOI vs Godfrey Phillips 1985 (22)ELT 306 (SC)- Inclusion can not be extended far away from nexus to main concept.

13. Supply under GST Supply

14. Concept of Supply……….. Continued • What is “NOT” a Supply? • Any Exemption provided vide Notification of the Council. • Proportion of Abatement as notified by the Council. • Employer – Employee Services. • Services By Courts & Tribunal • Services of Government • (State/Central/Local Authority). • Statutory Duty to be performed by Government. • Supply without Consideration. • Disposal of Assets of Business where Input Tax Credit has been availed. • Supply undertaken between Related Person. • Import of Services from a Related Person. • Supply of Goods – Agent Principal Relationship. • Business Assets utilized for personal used. • Inter-state Stock Transfer shall be treated as supply of Goods.

15. Composite Vs Mixed supply 1.A composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply 2. Composite Supply is naturally bundled. A mixed supply comprising two or more supplies for a single price shall be treated as supply of that particular supply which attracts the highest rate of tax Composite Supply is defined as Mixed Supply is defined as

16. Transfer of business assets, where ITC has been availed • Business Assets transferred w/o consideration to third party – taxable only if ITC availed • Gift uptoRs. 50,000 in a year to employee – not a supply • Services by an employee to an employer in the course of employment – in the negative list (Sch. III) • All perquisites which are part of employment contract are not supplies e.g. bonus, LTC, rent free accommodation or car, medical reimbursement, etc. • Gift of any goods or services beyond contractual terms – is covered under this entry e.g. Diwali gifts or vouchers • Litigation prone as activities like free lunch or free car or parties or foreign trips Schedule I – Supply without Consideration

17. INPUT TAX CREDIT

18. CENVAT CREDIT MECHANISM UNDER PRE GST VS POST GST • Cross credit of good and service tax is allowed since September 10, 2004; But limited to Central Excise & Services Tax • Cross credit among VAT and Service Tax, Central Excise is not allowed • Credit on inter- State transactions is not allowed; • Cross Credit of VAT with CST liability is allowed • Cross credit of good and Services would be allowed • Cross credit with respect to Central GST and State GST transaction would not be allowed Pre GST Post GST

19. What are the Credits available? • All Input tax Charged on supply of Goods / Services on the Goods & Services intended to be used in course of furtherance of Business or Commerce including GST paid on RCM basis. • Credits available for WCS in relation to Plants and Machinery other than Land, Buildings & other Civil Structures, Telecommunication Towers, Pipelines outside the factory premises. • What are the conditions for availing Input Credits in General? • Registered person should be in possession of tax invoices or debit notes. • Should have received the goods and services or both. • Tax charged in respect of such supply has been actually paid to the government, subject to provisional availment of credit by supplier, and, • Supplier has furnished the Monthly Return. • If the recipient fails to pay the supplier within 180 days, then amount of such credit availed needs to be added back to their output liability alongwith Interest. Credits shall be allowed subsequently on the payment made the supplier. • No credits shall be allowed after due date of Monthly Return to be filed for September following the F.Y. for which such Invoice pertains to, or , Furnishing of Annual Returns. i.e. For F.Y. 2017-18 uptill 20th Oct’18 or Date of Annual Return filed (Due date is 31st Dec’ 2018) Input Tax Credits (ITC)……… continued

20. What/Whose Credits are disallowed? • Non Registered Taxable person • No Credit on Depreciated components of the Capital Goods. • Apportionment of the ITC, if claimed partly for Business (including zero rated suppliers) and Partly of Personal Use or use of Exempted Supply.Option to Banking company, FI, NBFC to avail 50% of the eligible credit of the month without complying Taxable / Exempted apportionment • No Credit of Motor Vehicles & other Conveyances, in general except when used similar conveyances, transportation of passengers or imparting training & Transportation of Goods. • Supply of foods, beverages, catering, etc except when used to similar outward supply. • Membership of club, health & fitness centre. • Rent-a-Cab, Life & Health Insurance, except Government Notified obligatory duty or similar outward supply. • Travel benefits extended to employees. • Works Contract Services for construction of immovable property (other than P&M) except when used for similar outward supplies • Goods & Services received for construction of immovable property (other than P&M) on his own account or even for furtherance of Business. (Consider Section 2(119) & Sch II 5(b) for Definition of Construction) • Person paying Tax in Composition Scheme. Input Tax Credits (ITC)

21. A Glimpse of Audit under GST

22. Audits & Records

23. THANK YOU