GST Awareness Workshop Round 3

1. TAX INVOICE, & ITC GST Awareness Workshop Round 3 ORGANISED BY Commercial Tax Department Government of Goa

2. Tax Invoice B 2 B (Business to Business) B 2 C (Business to Consumer)

3. B2B (Business to Business) –Rule 46 • When both, Supplier and Recipient are registered taxpayers, Tax invoice shall be issued consisting of – • 1. Tax Invoice Number and Date • 2. Name, address and GSTIN of the Supplier • 3. Name, address and GSTIN of the Recipient • 4. Description of Goods and/or Services • 5. Quantity, Value and Taxable Value • 6. Rate of Tax of CGST, SGST and Cess or IGST and Cess to be shown separately, as applicable • 7. Amount of Tax of CGST, SGST and Cess or IGST and Cessto be shown separately, as applicable • 8. In case of inter-State supply, place of delivery and place of supply • 9. Signature / Digital Signature of the Supplier

4. B2C (Business to Consumer) – Rule 46 • When Supplier is a registered taxpayer and Recipient is eitherunregistered business or a direct consumer, Tax invoice shall be issued consisting of- • 1. Name, address and GSTIN of the Supplier • 2. Tax Invoice Number and Date • 3. Name and address of the Recipient in certain cases • 4. Description of Goods and/or Services • 5. Quantity, Value and Taxable Value • 6. Rate of Tax of CGST, SGST and Cess or IGST and Cess to be shown separately, as applicable • 7. Amount of Tax of CGST, SGST and Cess or IGST and Cessto be shown separately, as applicable • 8. In case of inter-State supply, place of delivery and place of supply • 9. Signature / Digital Signature of the Supplier

5. Bill of Supply – Rule 49 • When Supplier is a registered taxpayer opted forCOMPOSITION Scheme, Bill of Supply shall be issued, consisting of- • 1. Name, address and GSTIN of the Supplier • 2. Bill of Supply Number and Date • 3. Name and address of the Recipient in certain cases • 4. Description of Goods and/or Services • 5. Quantity and Value of goods and/or services • 6. The words “composition taxable person, not eligible to collect tax on supplies” to be mentioned at the top of Bill of Supply • 7. Signature / Digital Signature of the Supplier

6. Others requirements in Tax invoice/Bill of supply • When annual turnover is below Rs. 1.5 crore, no HSN/SAC code may be specified; when turnover is between Rs. 1.5 crore and Rs. 5 crore, 2 digit code shall be specified; when turnover is above Rs. 5 crore, 4 digit code shall be specified. • For B2B, issuance of tax invoice is compulsory irrespective of the value of invoice. • For B2C, issuance of Tax Invoice is compulsory if the value of invoice exceeds 200 rupees. • Bill of Supplyto be issued only by a registered taxpayer under Composition Scheme.

7. Input Tax Credit (ITC)

8. ….INPUT TAX CREDIT: CONCEPTS…. • Input means - section 2 (59): • any goods (subject to certain exceptions) other than capital goods • used or intended to be used by supplier • in the course or furtherance of business • subject to exceptions under Section 17(5) • Capital goods specified in section 2 (19)-subject to exceptions under Section 17(5) • Input services means - section 2 (60): • any services (subject to certain exceptions) • used or intended to be used by supplier • in the course or furtherance of business • subject to exceptions under Section 17(5)

9. ….INPUT TAX CREDIT: CONCEPTS…. • Electronic credit ledger means ITC ledger in electronic form maintained at GSTN - section 2 (46) • Inward supply means receipt of goods and / or services whether by purchase, acquisition or any other means and whether or not for consideration – section 2 (67) • Output tax means CGST / SGST/ IGST/UTGST chargeable on taxable supply of goods and / or services made by him or by his agent and excludes tax payable on reverse charge basis – section 2 (82) • Outward supply means supply of goods and / or services whether by sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made in the course or furtherance of business exceptsuch supplies where tax is payable on reverse charge basis – section 2 (83)

10. What is ITC • “input tax credit” means the credit of input tax [sec. 2(63)] • “input tax” means: • CGST (central tax,) • SGST (State tax), • IGST ( integrated tax) • UTGST (Union territory tax) charged on any supply of goods or services or both made to him

11. What is ITC ITC includes • IGST charged on import of goods • Reverse charge u/s 9(3) and 9(4) of CGST • Reverse charge u/s 5(3) and 5(4) of IGST • Reverse charge u/s 9(3) and 9(4) of SGST

12. Who is eligible to claim ITC • Registered person • Inward supplies, of goods/ services, • which are used or • intended to be used • in the course of his business or furtherance of his business • ITC shall be credited to the electronic credit ledger of such person Sec. 16(1) CGST/SGST

13. Conditions to claim ITC • Must have a tax invoice or debit note or any other prescribed tax paying document i.e. bill of entry, document issued by ISD • Must have received goods/ services • In Bill to ship to cases, goods deemed to be received • Supply of goods in lots/instalments-eligible for ITC upon receipt of the last lot or instalment: • Tax charged for such supply has been actually paid to the Government, either in cash or through ITC • Must have filed return under section 39 Sec. 16(2) SGST/CGST & ITC rule 1

14. Reversal Of ITC-non payment to supplier • ITC shall be reversed and added to output tax liability, with interest, if: • Payment to supplier towards value of supply along with tax payable thereon is not made within 180 days from date of issue of invoice • Details of such non-payment to be furnished in GSTR-2 for the month, next following expiry of 180 days • Interest from date of claim to date of payment of output tax • ITC can be availed , if payment of value of supply and tax is made to supplier Sec. 16(2)(d) Proviso & ITC rule 2

15. GST ITC & Income Tax Depreciation • ITC shall not be allowed if depreciation on tax component of the cost of capital goods and plant and machinery under the provisions of the Income-tax Act, 1961, is claimed

16. ITC to be claimed before……. • No ITC can be claimed • after the due date of furnishing of GSTR-3 return for September from end of year or • Filing of annual return, whichever is earlier Sec. 16(4)

17. Proportionate Credit • If goods/services are used partly for business purpose and partly for other purposes [sec. 17(1)] • If goods/ services are used partly for taxable supplies(including zero-rated supplies)and partly for exempt supplies [sec. 17(2) &(3)]. • Exempt supplies includes: • Any prescribed supply • Outward supplies liable for reverse charge • transactions in securities, • sale of land • Sale of building (except under construction) • Non-admissible credit should be indicated in GSTR-2 • Useful life of capital goods to be taken as 5 years

18. ITC-Banks, Financial Institutions etc Banking company, Financial institution, Non-banking financial company, engaged in supplying services by way of accepting deposits, extending loans or advances have option: • to take proportionate ITC for taxable supplies or • avail every month 50% ITC on inputs, capital goods and input services in that month and rest shall lapse • Option once exercised shall not be withdrawn in middle of year • Restriction of 50% shall not apply to tax paid on supplies made by two registered persons, holding same PAN Sec. 17(4)

19. ITC on Motor Vehicles • ITC on motor vehicles and other conveyances allowed only if used for taxable supply of : • such vehicles or conveyances • transportation of passengers • imparting training on driving, flying, navigating such vehicles or conveyances • for transportation of goods Sec. 17(5)

20. Blocked Credits • No ITC on • food and beverages • outdoor catering, • beauty treatment, • health services, • cosmetic and plastic surgery • But ITC allowed if above inward supply is used for making an outward taxable supply of same category of goods or services or both or as an element of a taxable composite or mixed supply Sec. 17(6)

21. Blocked Credits • No ITC- membership of a club, health and fitness centre [sec 17(5)(b)(ii)] • No ITC-travel benefits extended to employees on vacation such as leave or home travel concession [sec. 17(5)(b)iv)] • No ITC- rent-a-cab, life insurance, health insurance • ITC admissible if such service is obligatory for an employer, as per government notfn. • ITC admissible if such inward supply is used for making an outward taxable supply of the same category or as part of a taxable composite or mixed supply[Sec. 17(5)(b)(iii)]

22. Blocked Credits-works Contract etc. • No ITC on works contract services when supplied for construction of immovable property [sec. 17(5)(c)] • ITC admissible on construction of plant and machinery • ITC admissible, where it is an input service for further supply of works contract service; • No ITC on goods/services for construction of an immovable property on his own account [sec. 17(5)(d)] • ITC admissible goods/services for construction of plant and machinery on his own account • “construction” includes re-construction, renovation, additions or alterations or repairs, of said immovable property.

23. Blocked Credits-Fraud etc. • No ITC of any tax paid in accordance with the provisions of: • sections 74 (determination of tax and payment on account of fraud, willful mis-statement, suppression of facts) • Sec. 129 (detention and seizure, release of goods and conveyances in transit) • Sec.130 (confiscation of goods and conveyances)

24. Blocked Credits-Other • No ITC on inward supplies, on which supplier has paid composition amount u/s 10 • No ITC on supplies received by a non-resident taxable person • But ITC allowed on goods imported by him • No ITC on goods/services used for personal consumption • No ITC on goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples;

25. What is “Plant & Machinery” for ITC • ‘plant and machinery’ means: • apparatus, • equipment and machinery fixed to earth by foundation or structural support that are used for making outward supply • Plant & machinery includes such foundation and structural supports • Plant & machinery excludes : • land, • building • or any other civil structures, • telecommunication towers • pipelines laid outside the factory premises

26. ITC to newly registered persons • Application for registration within 30 days [sec. 18(1)(a)] • ITC on inputs held in stock and inputs(all forms)in stock on day, preceding date of liability • This also means that no ITC on pre-registration capital goods • This also means that no ITC on pre-registration input services • This also means that no ITC, if applied for registration late • A person, who takes voluntary registration can take ITC on inputs(all forms) in stock on the day immediately preceding the date of grant of registration. [sec. 18(1)(b)]

27. Switch OverComposition to Normal &Exempt to Taxable • A registered person switching (voluntarily or otherwise) from composition to normal and • Where an exempt supply becomes a taxable supply: shall be eligible to take ITC on: • inputs (all forms) in stock immediately preceding the date of switching • capital goods as reduced by such percentage points as may be prescribed. ITC to be reduced by 5% of tax paid, per quarter, from date of invoice [ITC rule 5(1)(a)] • E-declaration in Form GSTC-01 to be filed within 30 days [ITC rule 5(1)(b)] • If aggregate ITC claim exceeds Rs. 2 lakh, then claim to be certified by CA/Cost Accountant

28. ITC & Invoice Date • No ITC in respect of any supply after the expiry of one year from the date of issue of tax invoice relating to such supply.

29. Transfer of ITC-change in constitution etc. • In case of change in constitution due to sale, merger, demerger, amalgamation, lease or transfer of the business with the specific provision for transfer of liabilities, unutilized ITC can be transferred to transferee entity • Details of ITC to be furnished in GST ITC-02 • In case of demerger, ITC to be apportioned,based on value of assets, as per demerger scheme • CA/Cost Accountant Certificate is required • ITC gets credited to transferee after accepting of details by him

30. Switch from Normal to Composition etc. If a registered person opts for composition or where supplies become wholly exempt, he shall [sec.18(4)] • pay an amount, : • equal to ITC on inputs (all forms) in stock and • on capital goods, reduced by such prescribed percentage points as may be prescribed, • Amount can be paid either by debiting electronic credit ledger or electronic cash ledger • After payment of such amount, if any ITC is balance, then such ITC shall lapse

31. Disposal of capital assets • If a registered person supplies capital goods or plant and machinery, on which ITC has been taken, then he shall pay an amount equal to : • ITC , as reduced by prescribed percentage or • the tax on transaction value as determined under section 15, whichever is higher: • If refractory bricks, moulds and dies, jigs and fixtures are supplied as scrap, then tax on the transaction value, as determined u/s 15 can be paid Sec. 18(6)

32. INPUT SERVICE DISTRIBUTOR • Input Service Distributor (ISD) means - section 2 (61) • an office of supplier of goods and / or services • which receives tax invoices towards receipt of input services • which issues a prescribed document to a supplier of taxable goods and / or services having same PAN as that of ISD • for the purposes of distributing the credit of CGST, SGST, UTGST or IGST paid on said services • ISD would be deemed to be a supplier of services for the purposes of distributing the credit

33. FEATURES OF ISD PROVISIONS.… • Generally the supplier of goods and / or services are eligible for exemption threshold which also grants them exemption from requirement from obtaining registration – Section 22 • Exemption threshold not applicable to ISD – ISD liable to obtain registration without any threshold limit – Section 24 (viii)

34. ….FEATURES OF ISD PROVISIONS.… • ISD provision is required to transfer ITC on input services availed in one office but the said services are actually used in different units registered in different States or business verticals located in a State • ISD may distribute credit, if ISD & recipient are located in different States, of – Rule 4 of ITC Rules • CGST as IGST • IGST as IGST • SGST as IGST • UTGST as IGST • ISD may distribute credit, if ISD & business verticals are located in same State, of – Rule 4 of ITC Rules • CGST & IGST as CGST • SGST & IGST as SGST • UTGST & IGST as UTGST

35. ….FEATURES OF ISD PROVISIONS…. • Manner of distribution of credit by ISD - section 20(3) • credit to be distributed under a prescribed document containing details as prescribed • amount of credit to be distributed shall not exceed credit available for distribution • credit of tax paid on input service attributable to a recipient of credit shall be distributed only to that recipient • credit of tax paid on input services attributable to more than one recipient shall be distributed to all such recipients in the ratio of their turnover during the relevant period

36. ….FEATURES OF ISD PROVISIONS • Relevant period: • If the recipients of credit have turnover in the FY preceding the year during which credit is to be distributed – the said FY • if some of recipients of credit do not have turnover in the FY preceding the year during which credit is to be distributed – the last quarter for which details of turnover of all recipients are available preceding the month during which credit is to be distributed • Recovery from receipient of credit, alogwith interest, in case of inter se excess distribution by ISD - section 21 r/w section 73 or 74

37. RETURNS........?

38. Why Returns ? • Means of compliance verification • Mode for transfer of information to tax administration • To declare tax liability for a given period • Providing necessary inputs for taking policy decision

39. Features of Tax Returns in GST • Based on transactions – Invoice based • Designed for system based matching of Input Tax Credit and other details (import, export etc.) • Auto-population from details of outward supplies • Auto-reversal of ITC in case of mismatch • Concepts of ledgers – cash, ITC and liability • Norevised returns – changes through amendmentsrectifications and reported in the return for the month in which error detected to original details

40. GST Returns: GSTR1 • Statement of Outward Supplies • What information? • Basic details To be filed by 10th of the next month- can be easily done by a computer • Invoice level details ; GSTIN of recipient • Invoice details – Number, date, HSN/SAC, ….Value, Taxable value…. POS • Tax – IGST, CGST, SGST/UTGST – Rate and Tax amount • What is not required to be uploaded? • Invoice level information for B2C invoice < Rs. 2.5 lacs • Consolidated information of all B2C supplies sufficient • HSN/SAC ….. < Rs.1.5 crore

41. GST Returns: GSTR 2 Information Flow for auto-population/ self feeding TCS/ TDS GSTR1s of the suppliers GSTR-6A ISD GSTR 2 • To be Fed by Taxpayer • Reverse Charge receipts from unregistered supplies • Imports GSTR 5 Non Resident TP

42. GST Returns: GSTR 3 • Auto-populated based on GSTR-1 and GSTR-2 • Outward Supplies • All B2B inter and intra state supplies • All B2C inter-State supplies above the value of Rs. 2.5 lacs • Exports • Revision of tax of previous periods • Inward Supplies • Inter and intra state supplies received • Imports • Amendment to tax of previous periods • Credit to ITC Ledger

43. GST Returns: Standardised forms/ certificates • Form GSTR-1 -Details of outward supplies of taxable goods or services effected • Form GSTR-1A Details of outward supplies as added, corrected or deleted by the recipient • Form GSTR-2 Details of inward supplies of taxable goods and/or services claiming input tax credit • Form GSTR-2A Details of inward supplies made available to the recipient on the basis of FORM GSTR-1 furnished by the suppliers • GSTR-3 Monthly return on the basis of finalization of details of outward supplies and inward supplies • GSTR-3A Notice to a registered taxable person who fails to furnish return

44. GST Returns: Standardised forms/ certificates (contd.) • Form GSTR-4 Quarterly Return for compounding Taxable persons • 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 • Form GSTR-5 Return for Non-Resident foreign taxable person • Form GSTR-6 ISD return • Form GSTR-6A Details of inward supplies made available to the ISD recipient on the basis of FORM GSTR-1 furnished by the supplier • Form GSTR-7 Return for authorities deducting tax at source • Form GSTR-7A TDS Certificate

45. GST Returns: Standardised forms/ certificates (contd.) • Form GSTR-8 Details of supplies effected through e-commerce operator and the amount of tax collected • Form GSTR-9 Annual return • Form GSTR-9A Simplified Annual return by Compounding taxablepersons. • GSTR-10 Final return • Form GSTR-11 Details of inward supplies to be furnished by a person having UIN

46. Types of Returns and due date for filing

47. GSTR-3B • Form GSTR-3B : It is a provisional assessment of Tax Liability. • It is a self assessment of Taxes of the taxable person. • To be filled only for the month of July & August 2017 • For the invoices generated for July to be filed by 20th of August & for invoices pertaining to August by 20th Sept. • Full detail of Taxes of different heads SGST, CGST IGST & Cess to be mentioned. • Details of ITC available, credit available on TDS to be mentioned. • Calculation of tax liability after adjustment for ITC/TDS and details of payment.

48. Dates for filling of form GSTR-3B Rule 61(5)