Mega Conference on Goods and Services Tax

1. Mega Conference on Goods and Services Tax P V SRINIVASANCorporate Advisor Email: pvs@pvsadvisors.com Mobile: +919845057597 April 9, 2017 Presentation to Pune Branch of WIRC of ICAI 1

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3. Understanding Goods and Services 3

4. S 2(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 served before supply or under a contract of supply • Sec 2 (102): “Services” means • anything • [other than goods, money and securities] • but includes activities relating to the use of money or its conversion by cash or any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged 4

5. S 2(30) “composite supply” means • 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 • Sec 2 (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 Sec 2(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 where in transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract. 5

6. Composite Supply / Mixed Supply [ Sec 8] • Tax liability on a composite or a mixed supply shall be determined in the following manner, namely - • A composite supply comprising tow or more supplies, one of which is a principal supply, shall be treated as a supply of principal; and • A mixed supply comprising tow or more supplies shall be treated as a supply of that particular supply which attracts the highest rate of tax. • S 2(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. 6

7. Schedule II [Section 7] Activities to be treated as supply of goods or supply of services 7 7

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10. Supply of services: • Renting of immovable property; • Construction of a complex, building, civil structure or part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire considerationhas been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier. • Temporary transfer or permitting the use or enjoyment of any IPR; • Development, design, programming, customisation, adaptation, upgradation, enhancement, implementation of information technology software; • Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act; and • Transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration. 10

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12. Schedule III [Section 7(2)] Activities or Transactions which shall be treated neither as a supply of Goods nor a supply of Services 12 12

13. Services by an employee to the employer in the course of or in relation to his employment; • Services by any court or Tribunal established under any law for the time being in force. • Functions of MP, MLC etc. • Services of funeral, burial, crematorium or mortuary including transportation of the deceased. • Sale of land and Sale of building (subject to not being a service) • Actionable claims, other than lottery, betting or gambling. Sec 7(2)(b): Activities or transactions undertaken by the Central Government, a State Government or local authority in which they are engaged as public authorities as may be notified by the Government on the recommendations of the Council. 13

14. Supplier / Recipient / Supply 14

15. Supply – Section 7 • All forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; • Import of services for a consideration whether or not in the course or furtherance of business; • The activities specified in Schedule I, made or agreed to be made without a consideration; • The activities to be treated as supply of goods or supply of services as referred to in Schedule II. 15

16. Schedule I – Section 7 – Activities to be treated as Supply even if made without consideration • Permanent transfer or disposal of business assets where ITC has been availed on such assets. • Supply of goods or services or both between “related persons” or between “distinct persons”, when made in the course or furtherance of business. • Gifts not exceeding Rs 50,000 in value in a financial year by an employer to an employee shall not be treated as supply of goods or services or both. • Sec 25(4): A person who has obtained or is required to obtain more than one registration, whether in one State or UT or more than one State or UT shall, in respect of each such registration, be treated as distinct persons. • Supply of goods – Principal-Agent: • By a principal to an agent where the agent undertakes to supply such goods on behalf of the principal; or • By an agent to his principal where the agent undertakes to receive such goods on behalf of the principal. • Import of services by a taxable person from a related person or from any of his other establishment outside India, in the course or furtherance of business. 16

17. Supplier S. 2(105) Recipient S. 2(93) of supply of goods or services or both In relation to any goods or services or both Person Supplying the said goods or services or both Includes an agent acting as such on behalf of such supplier In relation to the goods or services or both 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. 17

18. S 2(107: Taxable person: means a person who is registered or liable to be registered u/s 22 or 24. • S 2(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. • S 2(94) : Registered person: means a person who is registered u/s 25 but does not include a person having a Unique Identity Number. • S 2(50) / S. 2(7):“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. 18

19. S 2(70) / S. 2(14): “location of the recipient of services” 19

20. S 2(71) / S 2(15): “location of the supplier of services” 20

21. Place of Supply of Goods 21

22. Some key definitions • Sec 2(86) : “place of supply” means the place of supply referred to in Chapter V of the IGST Act • Sec 2(85) : “place of business” includes: • 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 • A place where a taxable person maintains his books of account; or • A place where a taxable person is engaged in business through an agent, by whatever name called.

23. Place of supply of goods – Imports & Exports India : S 2(56) of CGST Act: Means • Territory of the Union as referred to in clauses (2) and (3) of Article 1 of the Constitution; • The territorial waters, continental shelf, exclusive economic zone or other maritime zone as defined in the Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976 • The seabed and the subsoil underlying the territorial waters; and • The air space above its territory and territorial waters; 23

24. Inter-State & Intra-State 24

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28. Intra-State Supplies of Goods or Services or both Concurrent levy Sec 2(21): “Central tax” means Central Goods and Services Tax levied under the CGST Bill, 2017 Sec 2(93): “States tax” means State Goods and Services Tax levied under the SGST Bill, 2017 Sec 2(12): “Integrated tax” means the Integrated Goods and Services Tax levied under the IGST Bill, 2017 Sec 2(9): “Union territory tax” means the tax levied under the Union Territory Goods and Services Tax Bill, 2017 SEZ Imports Inter-State Supplies of Goods or Services or both 28

29. Place of Supply of Goods 29

30. Place of supply of goods 30

31. Place of supply of goods Section 10(2): Residuary: Where the place of supply cannot be determined as per above sub-sections, the same shall be determined in a manner as may be prescribed. 31

32. Place of supply of goods – Imports & Exports • Import of goods S 2(10): Means bringing goods into India from a place outside India • S 8(1): Place of supply shall be the location of the importer. • Export of goods S 2(5): Means taking goods out of India to a place outside India. • Sec 11(a) : Place of supply of goods: • Imported into India – location of the importer • Exported from India – location outside India. 32

33. Place of Supply of Services 33

34. General Services – Sec 12(2) 34 34

35. Immovable property related services 35

36. Immovable property related services 36

37. Immovable property related services • Explanation u/s 3: Where the immovable property or boat or vessel is located in more than one State:- • Supply of service shall be treated as made in each State. • In proportion to the value of services separately collected or determined, in terms of contract or agreement entered into in this regard. • In the absence of such contract or agreement, on such reasonable basis as may be prescribed in this behalf. 37

38. Performance based / Event related services 38

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40. Performance / Event related services 40

41. Transportation services 41

42. Financial Services 42

43. Advertisement Services 43

44. Telecommunication Services 44

45. Telecommunication Services 45

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48. Place of Supply of Services – Export and Import 48

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50. Export / Import of Services 50