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Time and value of supply under GST

Time and value of supply under GST. Seminar by GSTPAM ON 13 TH AND 14 TH MAY 2017 By Nikita R Badheka Adv & Notary -Mumbai. Material Relied on. Subjects Broadly covered. TIME of SUPPLY OF GOODS AND SERVICES VALUE OF TAXABLE SUPPLY

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Time and value of supply under GST

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  1. Time and value of supply under GST Seminar by GSTPAM ON 13TH AND 14TH MAY 2017 By Nikita R Badheka Adv & Notary -Mumbai

  2. Material Relied on N R Badheka

  3. Subjects Broadly covered • TIME of SUPPLY OF GOODS AND SERVICES • VALUE OF TAXABLE SUPPLY • TAX INVOICE, CREDIT & DEBIT NOTE • ACCOUNTS & RECORDS N R Badheka

  4. What is GST ? • Tax on supply of Goods and/or/both services • Supplier of Goods and/or/both services • Recipient of Goods and/or /both services • Tax --State Tax –SGST Act • - Central Tax – CGST Act • -- Integrated Tax –IGST Act • - Union Territory Tax--UGST Act • All intra State Supplies –SGST +CGST • All Inter State supplies –IGST N R Badheka

  5. Relevant Important Definitions • Sec 2(32) – Continuous Supply of Goods • Sec 2(33) – Continuous supply of Services • Sec 2(47) – Exempt Supply • Sec 2(78) – Non-taxable Supply • Sec 2(108) – Taxable Supply • Sec 2(67) - Inward Supply • Sec 2(83) – Outward Supply • Sec 2(90) – Principal supply • Sec 2(74) – Mixed Supply • Sec 2[30}– Composite Supply • Sec 2(105) – Supplier • Sec 2(93) – Recipient N R Badheka

  6. Time of supply of goods • Important to determine the date or point of time when liability to pay arises • Supply of goods ---physical • Supply of service –time of supply challenging • Point of taxation had multiple issues • Liability to pay---the month in which it should be included in the return N R Badheka

  7. Time of supply of goods (Sec 12) N R Badheka

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  12. TAX INVOICE – CREDIT & DEBIT NOTE • Sec 31 to 34 - Read with Revised Invoice Rules • Normal Ingredients of Tax Invoice required • Specific mention of consecutive serial numbers in one or multiple series • HSN Code of Goods or Accounting Code of Service • In course of Inter-State supply – Place of Supply along with Name of State • In case of Bill to / Ship To – both the addresses be given • Case of Reverse Charge to be specified • In case of Export of Goods or Service, specific endorsement • “Supply meant for Export on payment of IGST or • Supply meant for Export under Bond or Letter of Undertaking without payment of IGST” • Name, Address and Country of Destination • Number and Date of Application for removal of Goods for Export N R Badheka

  13. TIME OF ISSUANCE OF INVOICE FOR SUPPLY OF TAXABLE GOODS • If Supply requires movement -Time of Removal of Goods Or • Delivery of Goods or making goods available to Recipient • The Government empowered to notify the time and manner in which Tax Invoice should be issued by specified category of Goods or Supplies • (Evidence for removal of goods, delivery of goods ) N R Badheka

  14. TIME OF ISSUANCE OF INVOICE FOR SUPPLY OF TAXABLE SERVICES • Before or After the provision of Service but within 30 days from the date of supply of service Government empowered to notify category of services in which • Any other documents to be deemed to be Tax Invoice or Tax Invoice may not be issued. Time of Issue of Invoice for New Registration • Within one month of date of issue of RC, RTP to issue revised Invoice against Invoice already raised for period between effective date of RC and date of Issue of RC---(The only event for Revised invoice) N R Badheka

  15. EXCEPTION TO THE TAX INVOICE PROVISIONS • If Invoice less than Rs.200/-, may not issue Tax Invoice; • Subject to Recipient not a Registered Person and does not require such Invoice • Registered Person (RP) should issue consolidated Tax Invoice for such suppliers at close of each day in respect of all such supplies   • RP supplying exempted goods or service or both • Or paying Composition Tax--To Issue Bill of Supply in terms of Rule 4 • Bill of Supply to show Value of Supply of Goods or Service before considering discount or abatement N R Badheka

  16. TREATMENT TO ADVANCE PAYMENT • On receipt of Advance Payment, Receipt Voucher to be issued in terms of Rule 5 • Contents more or less same like Tax Invoice Except in place of Value of Goods to state amount of Advance taken • If no supplies made and no Tax Invoice issued after receipt of Advance Payment, RP to issue Refund Voucher RECEIPT OF GOODS/Services FROM URP • RP liable to pay Tax under Reverse Charge as Recipient to issue Invoice (self-Invoice) (small services or petty purchases from non taxable persons) • Recipient RP should also issue Payment Voucher at the time of making payment to Supplier N R Badheka

  17. Continuous Supply of Goods • Where successive Statement of Accounts or Payments involved • Invoice before or at the time of each Statement / Payment received Continuous Supply of Services • Date of Payment ascertainable from Contract • Invoice on or before Due Date • Date not ascertainable- Invoice before or at the time of receipt of Payment • Invoice on or before Completion of Event – If Payment linked N R Badheka

  18. CESSATION OF SERVICE CONTRACTD BEFORE COMPLETION • Invoice at the time when supply ceases • Invoice to the extent of supply before cessation • Goods sent on approval- for sale or return • Invoice – before or at the time of supply Or • Six months from the date of Removal, whichever is earlier N R Badheka

  19. SPECIFIC TIME LIMIT FOR ISSUE OF TAX INVOICE • Supplier of Service – Insurer or Banking Company or Financial Institution including Non-Banking Financial Company • The Period during which Invoice or any document in lieu thereof to be issued shall be 45 days • The Government may notify Telecom Operator, Insurer, Banking Company or Financial Institution • Making Taxable Supply of Service between Distinct Person N R Badheka

  20. MANNER OF ISSUEING INVOICE • Tax Invoice for Supply of Goods in Triplicate • Original for Recipient, Duplicate for Transporter and Triplicate for Supplier • Tax Invoice for Supply of Services in Duplicate • Original for Recipient, Duplicate for Supplier • Serial Number of Invoices issued during Tax Period to be furnished electronically through Common Portal in Form GSTR-1 N R Badheka

  21. LAW ABOUT DEBIT NOTE & CREDIT NOTE • After Issuance of Tax Invoice • If Value or Tax found to be charged in excess Or • Goods supplied are returned Or • Goods or Services found deficient, • Supplier to issue Credit Note as per Rule 6 N R Badheka

  22. LAW ABOUT DEBIT NOTE & CREDIT NOTE • Details of Credit Note to be shown in Return in the month of Issue or latest by September following the end of Financial Year or Date of furnishing Annual Return, whichever is earlier • No Reduction in output Tax liability if the incidence of Tax & Interest is passed on to the other person • Debit Note / Supplementary Invoice to be issued where Value or Tax charged found less (Price variation) • Details of Debit Note to be declared in the Return and Tax liability to be adjusted N R Badheka

  23. VALUE OF SUPPLY OF GOODS – SEC 15 R/W VALUATION RULES • Levy of Tax on Value determined under Sec 15 • Levy of Tax under RCM – Recipient to pay on Value of Goods / Services • Value of Goods / Services - Valuation Rule to apply to TDS and TCS N R Badheka

  24. TRANSACTION VALUE – SEC 15(1) • Basic Thumb rule –Transaction value of supply of goods or services or both .i.e • Price actually paid or payable for Supply where • Supplier and Recipient are not related • And Price is the sole consideration for Supply N R Badheka

  25. CONSIDERATION FOR SUPPLY OF GOODS & SERVICES – SEC 2(31) • Inclusive Definition – includes • Payment made or to be made – in money or otherwise – • In respect of / In response to or For Inducement of • Supply of Goods or Services • Whether by Recipient or Any Other Person • Excluding Subsidy by Government • Incentive in Cash or Kind N R Badheka

  26. CONSIDERATION FOR SUPPLY OF GOODS & SERVICES – SEC 2(31) • Including Monetary Value of Any Act or • Forbearance • In respect of / In response to /For the Inducement of • Supply of Goods and Services • Whether by the Recipient or by Any Other Person • Proviso – Deposit in respect of Supply to be considered only when Supplier applies such Deposit as Consideration N R Badheka

  27. INCLUSION IN TRANSACTION VALUE • Taxes, Duties, Fees and Charges levied under any law, other than SGST / UGST / GST (Compensation to States) Act, if charged separately by the Supplier • Any amount that the Supplier is liable to pay in relation to such supply, Which has been incurred by the Recipient and Not included in the Price • Example: Insurance, Transportation, Mould Development Charges, Free Supply of goods treatment N R Badheka

  28. INCLUSION IN TRANSACTION VALUE (Contd.) • Incidental expenses, including Commission and Packing • Charged by Supplier to the Recipient • And any amount charged for anything done by the Supplier in respect of Supply of Goods or Services or both • At the time of or before Delivery of Goods • Specific job work done by the Supplier at the instance of the Recipient before Delivery N R Badheka

  29. INCLUSION IN TRANSACTION VALUE (Contd.) • Interest, Late Fee or Penalty for Delayed Payment to be included in the Consideration • Subsidies directly linked to the Price excluding subsidies by the Government to be included • Subsidy to be included in the Value of the Supplier who receives the Subsidy • How to apply Subsidy Provision to RCM • Difference between discounts and subsidy N R Badheka

  30. EXCLUSION FROM VALUE OF SUPPLY – SEC 15(3) • Transaction Value shall not include the Discount given • Before or at the time of Supply • Recorded in the Invoice • Discount after Supply to be allowed • If established as per Agreement entered into before the Supply specifically linked to Invoice • And, ITC is reversed by the Recipient of Supply N R Badheka

  31. THE CASE OF GOODS RETURNED OR NON-SUPPLY – SEC 31 & 34 • Value of Supply to be shown in the Tax Invoice • The Reduction or Deduction on account of Short Supply, Non-Supply or Goods Returned only by Debit Note & Credit Note • No provision for Revised Invoice-whether can be issued? • Whether cancellation of invoice permitted? –rejection of goods or services -- N R Badheka

  32. REFERENCE TO VALUATION RULES – SEC 15(4) & 15(5) • If Value of Supply of Goods cannot be determined as per Sec 15(1), then only refer to Valuation Rule • The Government may notify Reference to Valuation Rule for specified supplies. • Valuation Rules to be referred to where • Consideration is not wholly in Money • Supplier and Recipient are related person or distinct person • Supply of Goods or Services without Consideration • Supply of Goods made or received through Agent • Value of Supply of Goods or Services based on Cost – 110% of Cost of Production or Acquisition or Provision of Service N R Badheka

  33. CONCEPT OF OPEN MARKET VALUE • Where Supply of Goods or Services – not wholly in money • Value of Supply shall be Open Market Value (OMV) of such Supply • If OMV not available – Sum Total of Consideration in Money and any such further amount in Money as is equivalent to the consideration not in Money if such amount is known at the time of Supply • (Refer to illustration-1– New phone supplied in exchange of old phone at Rs20,000/-, OMV of new phone Rs.24,000/- Illustration-2 – Laptop supplied at Rs.40,000/- with barter of Printer manufactured by Recipient. Value of Printer known Rs.4000/- OMV of Laptop Rs.44,000/-) N R Badheka

  34. CONCEPT OF RELATED PERSON – SEC 15 – EXPLANATION • Persons deem to be related persons if such persons are • Officers or Directors of One another’s businesses • Legally recognized Partners in Business • Employer and Employee • Any Person – directly or indirectly – owns, controls or holds 25% or more of outstanding Voting Stock or Shares of both of them • One of them directly or indirectly controls others or • Both are controlled by third person, or • Together they control third person, or • Members of the same family • The terms person to include legal person • The Persons associated as Sole Agent, Sole Distributor, Sole Concessionaire deem to be related N R Badheka

  35. VALUATION RULE FOR SPECIFIC SUPPLIES • Notwithstanding anything with the Act or Rule, whether transaction value to be applied to specify supplies? • Supply of Service in relation to Purchase or Sale of Foreign Currency including Money Changing • Currency exchanged from or to Indian Rupee • Difference in Buying Rate or Selling Rate and the RBI Reference Rate for the Currency multiplied by total unit of currency • If RBI rate not available, 1% of the Gross Amount of Indian Rupee provided or received by the person changing the money • If currency exchanged is not in Indian Rupee, value shall be 1% of lesser of the two currencies if converted in to Indian Rupee N R Badheka

  36. SUPPLY OF FOREIGN CURRENCY, MONETY CHANGING • Annual Option • 1% of Gross Amount of money exchanged for an amount of Rs.1.0 lac, minimum Rs.250/ • Rs.100/- plus 0.5% of gross currency for amount exceeding Rs.1.0 lacs up to Rs.10 lac • Service value for air ticket by travel agent- 5% of basic fare for domestic travel ,10% of basic fare for international travel • - N R Badheka

  37. Supply of service valuation rules service in relation to LIC Gross premium, as reduced by amount allocated for investment or saving on behalf of customer -single premium annuity—10% of single premium charged In all other cases- 25% of premium charged for first year And 12.5% for later years Exception-entire premium towards rick covered.-no tax? N R Badheka

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  39. Concept of Pure agent – Cost incurred by supplier as pure agent of recipient to be excluded Pure agent is a person Who enters in to contractual agreement with recipient Do not hold title to goods Do not use goods for his interest Receives only actual amount incurred to procure services or goods N R Badheka

  40. Explanation.- For the purposes of this Chapter,- (a) “open market value” of a supply of goods or services or both means the full value in money, excluding the integrated tax, central tax, State tax, Union territory tax and the cess payable by a person in a transaction, where the supplier and the recipient of the supply are not related and price is the sole consideration, to obtain such supply at the same time when the supply being valued is made. * N R Badheka

  41. (b) “supply of goods or services or both of like kind and quality” means any other supply of goods or services or both made under similar circumstances that, in respect of the characteristics, quality, quantity, functional components, materials, and reputation of the goods or services or both first mentioned, is the same as, or closely or substantially resembles, that supply of goods or services or both. N R Badheka

  42. Accounts and Records High lights - Accounts relating to each place at such place Electronic form permitted Owner of warehouse, godown,any place used for storage of goods and every transporter –whether RP or not ,to maintain record of consigner and consignee and other relevant record Commissioner empowered to notify additional record Commissioner can grant Permission to maintain records in different manner N R Badheka

  43. Accounts and Records Audit by CA and Cost accountant on exceeding prescribed limit. Reconciliation with Income tax audit report mandatory Rp failing to account for goods/ services or both –proper Officer to determine amount of tax payable –as if they are supplied Accounts and records to be retained for 72 months after due date for filling appeal –ie for 6 years and 9moths after the end of year If appeal/revision/proceeding pending- retain the books for one year after completion of all proceedings N R Badheka

  44. Accounts and Records Normal provisions to be strictly followed Failure invites demand and recovery proceedings u/s 73 and 74 determination of liability Goods found other than declared storage-presumption of goods supplied Account of each activity ,each stock etc N R Badheka

  45. GST ---No Play ..Hard work Additional cost , Additional Burden One Nation - One tax = Multiple issues Beyond One Persons Capacity Thank You N R Badheka

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