1. What will happen to
balance of Central Excise / VAT Credit for stocks on 30.6.2017?
Manufacturer
Section 140(1) – Materials
A Registered Person if they do not opt for compounding scheme, as
provided in Section 10, can claim the balance of CENVAT Credit & Service
tax Credit shown in last returns under existing laws before implementation of GST, as CGST credit.
· Similarly under provisions of SGST Act (to be enacted by States) balance
of VAT shown in last returns in existing law before
Closing credit balance in books of accounts
would be immaterial.
Section
140(2) – Capital goods
A Registered
Person if they do not opt for compounding scheme, as provided in Section 10,
can claim the unavailed CENVAT credit on capital goods as CGST.
Similarly under provisions of SGST Act (to be
enacted by States), unavailed balance of VAT on Capital goods can be claimed as
SGST credit.
Dealers / Distributors
Section
140(3) – Materials
A Registered
Person not eligible to be registered under existing laws or if they manufacture
exempted goods or they are a first stage dealer or second stage dealer or a
registered importer or a depot of a manufacturer, can claim the tax on closing
stock provided (apart from other conditions)
They can show the invoice under which the stocks
were purchased and this invoice should have excise duty value on it along with
evidence of payment of such duty.
This invoice should be within 12 months of the date
of GST implementation.
If the
Registered person is not able to provide invoice with excise duty as mentioned
above then they will be allowed credit in the below formula
Similarly under provisions of SGST Act (to be
enacted by States), VAT on closing stocks can be claimed as SGST credit
subject to similar conditions under CGST.
2. Invoice by vendor
on 29.06.2017 under old act, material received on 3.7.17 under GST, how to
avail credit?
Section
140(5)
If invoice is raised by vendor prior to GST
implementation and material is received after GST implementation then credit of
these taxes can be availed under CGST provided the same is accounted within 30
days and proof of this accounting shown. Extension of time beyond 30 days
can be provided by Commissioner in case to case basis. Similar provision
is also available for SGST under State GST Act
3. Material billed before 1.7.2017 under old laws,
material returned by customer after 1.7.17 under GST, what is the treatment of
taxes?
Section
142(1)
For
Unregistered person, any material billed before GST implementation to be
returned after GST implementation, then
this material should have been invoiced maximum 6
months prior to GST implementation
Should be returned within 6 months after GST
implementation
If the above 2 conditions are satisfied then refund
will be provided
For
Registered Person any material billed before GST implementation to be returned
after GST implementation, then the person returning the material should make it
as a supply under GST charging CGST / SGST / IGST on those products against
which the registered person can claim credit.
Similar provisions will be part of to be enacted
State GST acts for VAT
4. Any price changes for sales prior to 1.7.17
how to be handled?
Section
142(2)
Any upward or downward price changes for supplies
made before GST implementation should be made through supplementary invoice /
debit notes / credit notes and GST to be paid or refunded accordingly. If
refund has to be taken to ensure that the vendor reveres the GST credit before
going in for refund
5. Exporters how will
they get taxed or refund under GST
Normal Export:
Supplier
of Zero rated goods or services or both will have to receive inward supplies of
goods or service or both as inputs, input services or capital goods after
paying CGST/SGST or IGST as the case may be. Whatever tax has been paid under
GST laws for which such supplier is entitled for the availment of credit the
whole amount of eligible credits will become refundable, as his output tax
liability will be NIL being a zero rated supply.
Zero rated supply means u/s 16(1) of IGST Act
2017
• Export
of goods or services or both or
• Supply
of goods or services or both to a special Economic zone developer or a SEZ
unit.
Refund u/s 54 of CGST Act:
Refund
application to be made within 2 years by any person-section 54(1)
An
application for claiming refund of any tax and interest, if any, paid on such
tax or any other amount paid, has to be filed electronically to the proper
officer of the CGST within a period of two years from the relevant date in the
FORM GST RFD-1. It is worth highlighting here that the aforesaid refund
application may be filed by any person. Further, refund application has to be
filed electronically through the common portal either directly or from facilitation
centre, notified by the Board or Commissioner.
6. Place of goods of
supply
Chapter V of IGST Act, 2017
Section 10(1)(a) – Location
of the goods at the time at which the movement
of goods terminates for delivery
to the recipient
Eg
: Delhi customer order on Ranipet factory.
Delivery term ex-works – as delivery terminates at Tamilnadu, Ranipet
factory will charge SGST & CGST treating it as a local sales.
If
alternatively terms are CIF Delhi then place of supply is Delhi and IGST will
be charged treating it as a interstate sales.
Section 10(1)(b) – Eg : If a
customer in Delhi orders on Ranipet factory for delivery to warehouse in
Coimbatore, then place of supply will be Delhi who is the original customer and
IGST will be charged treating it as an interstate sales.
7.
Time of goods of supply (Chapter IV – Section 12 to 14 of the CGST Act, 2017)
The
taxable event under the GST regime shall be supply of goods and services.
However, the time of supply when the liability to pay CGST/SGST (intrastate) or
IGST (inter-state) on goods and/or services arises, shall be determined in the following
manner:
General Provision:
The time of supply of goods and services
shall be determined as under:
Time of supply for goods
|
Time of supply for services
|
Earliest of the following:
a.
Date of Issue of invoice by the supplier or
the last date on which he is required, to issue the invoice (under section
31(1)) with respect to the supply
b.
Date on which the supplier receives the
payment with respect to the supply
|
Earliest of the following:
a.
Invoice issued within prescribed time
period [under Section 31(2)]-> Date of issue of invoice by the supplier,
or the date of receipt of payment, whichever is earlier: or
b.
Invoice not issued within prescribed time
period [under Section 31(2)]-> Date of provision of receipt of payment,
whichever is earlier; or
c.
Others-> Date on which the recipient
shows the receipt of services in his books of account.
|
8. Payment of tax on advances received
It is important to note here that unlike
services, where service tax is payable on accrual basis, applicability of tax
on advance payment received is going to be a new phenomenon for goods
taxability in GST. GST would be payable on advance amount received in respect
of both goods and services provided such advance is linked to the supply of
goods and /or services.
9. When to raise invoice?
Provisions for
raising invoice:
|
Supply of goods [as
per Section 31(1)]
|
Supply of Services
[as per Section 31(2)]
|
Before or at the
time of,
a.
Removal of goods for supply to the
recipient, where the supply involves movement of goods, or
b.
Delivery of goods or making available
thereof to the recipient, in any other case
|
Before or after the
provision of service but within a period prescribed [i.e 30 days in all
cases/ 45 days in case of banking and financial institution form the date of
supply of services]
|
10. Sales returns
Section
34(1) when tax charged in tax invoice is higher or value charged higher in
invoice or where the goods supplied are returned by the recipient, or where
goods supplied are found to be deficient, the registered person, who has
supplied such goods, may issue to the recipient a credit note
Section
34(2) Credit note can be adjusted before September 30th of the
completion financial year against tax liability. Meaning if sales return happens on 1.10.17
& 31.03.18 credit note to be issued and adjusted before 30.09.2018 for both
the cases, provided customer reverses the GST credit for the material and there
is proof of the same.
Section
34(3) when tax charged in tax invoice is lower or value charged lower in
invoice, the registered person, who has supplied such goods, may issue to the
recipient a debit note
Section
34(3) Where a tax invoice has been issued for supply of any goods or services
or both and the taxable value or tax charged in that tax invoice is found to be
less than the taxable value or tax payable in respect of such supply, the
registered person, who has supplied such goods or services or both, shall issue
to the recipient a debit note or supplementary invoice containing such
particulars as may be prescribed.
Section
34(4) Any registered person who issues a debit note shall declare the details
of such debit note in the return for the month during which such debit note has
been issued and the tax liability shall be adjusted in such manner as may be
prescribed.
11. Exemption for
small traders – Rs.20 lacs
Section 22(2) Exemption limit for North
eastern states - Rs.10lakh
Section 22(1) Exemption limit for rest of India
– Rs.20lakh
The exemption limit is applicable only when
supply (sale) is made within the state. Any supply outside the state will
attract registration provisions. If IGST
charged no exemption.
12. List of traders
not allowed for the exemption of Rs.20 lacs
Section 24 of CGST Act, when Exemption limits
is not applicable
The following person shall have to register
irrespective of the turnover;
Person making any
inter-state taxable supply (i.e. selling outside the state)
Casual Taxable person
Person who required to pay
under Reverse Charge
Non-resident taxable person
A person required to deduct
tax (e.g. e-commerce business – marketplace).
The person supplying goods
or services or both as an agent of any other person.
Input Service Distributor
A person who supplies goods
or services through e-commerce.
Every e-commerce operator
An aggregator who supplies
services under his brand name
13. Composition scheme
– Rs.50 lacs
Section
10 - This is applicable if annual turnover is below Rs.50 lakhs. A registered taxpayer, who is registered
under the Composite Scheme will pay tax at a rate not more than 1% for
manufacturer, 2.5% for restaurant sector and 0.5% for other suppliers of
turnover.
Composition
Dealer is not allowed to avail input tax credit, such a dealer cannot issue a
tax invoice as well. A buyer from composition dealer will not be able to claim
input tax on such goods. A Composition Dealer is not allowed to avail input tax
credit of GST paid to their supplier.
Composition Scheme is available only for
intra-state supplies. If a dealer is involved in inter-State supplies, then he
cannot opt for the scheme.
14. List of traders
not allowed for the exemption of Rs.50 lacs
Following taxable persons are not granted
permission to opt for the scheme who:
Supplies goods not leviable
under the Act
Supply of services
Makes a supply of goods
other than intra state ie interstate or import/ export
Makes a supply of goods
through Electronic Commerce Operator ie Ecommerce and liable to collect taxes
Manufactures such goods as
may be notified
Further,
it is also if in case a taxable person has different business segments having
same PAN as held by the taxable person, he must register all such businesses
under the scheme.
If an individual has different business
segments such as:
Textile
Electronics and accessories
Groceries
Then he must register all the above segments
collectively under the composite scheme or simply opt not for the scheme.
15. Importance of HSN
– 2 digits, 4 digits
In Indian Context, a taxpayer
having a turnover exceeding Rs 5 crore is required to follow the HSN code of 4
digits. For taxpayers with turnover between Rs 1.5 Crores and Rs 5 Crores in
the preceding financial year, HSN codes may be specified only at 2-digit
chapter level as an optional exercise to start with. From second year of GST
operations, mentioning 2-digit chapter level HSN Code will be mandatory for all
taxpayers with turnover in previous financial year between Rs. 1.5 Crores and
Rs. 5.0 Crores. HSN code at 2 digit will be little easy for taxpayers and make
GST an international compatible tax as well.
16. Services
Accounting Code
For
every service there is a specific Tax collection accounting code and
Interest/Penalty accounting codes.
17. How will imports
be taxed under GST
The
GST should be payable on the transaction value of imported goods plus any
duties/ taxes, etc, levied under any statute other than the GST laws. This
should mean that while paying IGST on the imported goods, basic customs duty
(‘BCD’) should be added to the transaction value of the imported goods.
Additionally, other duties such anti-dumping duties, safe guard duties, etc is
envisaged to continue as well. This practice is in line with the current regime
as well as the global practices where import VAT or GST is payable.
Section
7(2) of the IGST Act, 2017 states that imports will be subject to IGST similar
to an interstate transaction
18. How will exports
be treated under GST
Normal Export:
Supplier
of Zero rated goods will have to receive inward supplies of goods or service or
both as inputs, input services or capital goods after paying CGST/SGST or IGST
as the case may be. Whatever tax has been paid under GST laws for which such
supplier is entitled for the availment of credit the whole amount of eligible
credits will become refundable, as his output tax liability will be NIL being a
zero rated supply.
Zero rated supply means u/s 16(1) of IGST Act 2017:
19. Supplies without
consideration, provisions under GST
Section
7(1)(c) read with Schedule 1 says that certain activities will be charged under
GST even if transferred without any
consideration
20. Are samples taxed under GST
There is no GST on samples, however we have
to reverse the input tax credit on those samples
21. Tax on composite
& Mixed supply
Composite supply
Composite supply means a
supply comprising two or more goods/services, which are naturally bundled and
supplied with each other in the ordinary course of business, one of which is a
principal supply. The items cannot be supplied separately.
Illustration in Revised GST
law: Where goods are packed, and transported with insurance, the supply of
goods, packing materials, transport and insurance is a composite supply.
Insurance, transport cannot be done separately if there are no goods to supply.
Thus, the supply of goods is the principal supply.
Tax liability will be the tax on the
principal supply i.e., GST rate on the goods.
If the second condition is not fulfilled it becomes a mixed
supply.
Mixed supply
Mixed supply under GST means two or more individual
supplies of goods or services, or any combination, made together with each
other by a taxable person for a single price. Each of these items can be
supplied separately and is not dependent on any other.
It shall not be a mixed supply if these items are supplied
separately.
For tax under GST, a mixed
supply comprising two or more supplies shall be treated as supply of that
item which has the highest rate of tax.
Illustration in Revised GST
law: A supply of a package consisting of canned foods, sweets, chocolates,
cakes, dry fruits, aerated drink and fruit juices when supplied for a single
price is a mixed supply. All can be sold separately. Assuming aerated drinks
have the highest GST rate, aerated drinks will be treated as principal supply.
22. Reverse Charge meaning
& implication
Under
section 1(98) “reverse charge’’, means the liability to pay tax by the person
receiving goods and / or services instead of the person supplying the goods and
/ or services in respect of such categories of supplies as the Central or a
State Government may, on the recommendation of the Council, by notification,
specify;
For
example, if we buy from an unregistered dealer we have to pay tax on their
behalf
23. Please explain Input
Tax Credit provisions briefly
Chapter V
if you are a manufacturer, supplier, agent, e-commerce
operator, aggregator or any of the persons mentioned here, registered under GST, You are eligible to claim INPUT
CREDIT for tax paid by you on your PURCHASES.
To
claim input credit under GST –
You must have a tax invoice(of purchase) or debit note issued
by registered dealer
You should have received the goods/services
Where recipient does not pay the supplier of goods
the amount towards the value of supply
along with tax payable therein within a period of 180 days from the date of
invoice he has to reverse the credit and pay GST along with interest
The tax charged on your purchases has been
deposited/paid to the
government by the supplier in cash or via claiming input credit
Supplier has filed GST returns
Possibly the most path breaking reform of GST is
that input credit is ONLY allowed if your supplier has deposited the tax he
collected from you. So every input credit you are claiming shall be matched and
validated before you can claim it. Therefore, to allow you to claim input credit
on Purchases all your suppliers must be GST compliant as well.
There’s
more you should know about input credit –
It is possible
to have unclaimed input credit. Due to tax on purchases being higher than tax
on sale. In such a case, you are allowed to carry forward or claim a refund.
If
tax on inputs > tax on output –> carry forward input tax or
claim refund
If
tax on output > tax on inputs –> pay balance
No
interest is paid on input tax balance by the government
Input tax credit
cannot be taken on purchase invoices which are more than one year old. Period
is calculated from the date of the tax invoice.
Since GST is
charged on both goods and services, input credit can be availed on both goods
and services (except those which are on the exempted/negative list).
Input tax credit
is allowed on capital goods.
Input tax is not
allowed for goods and services for personal use.
No input tax
credit shall be allowed after GST return has been filed for September following
the end of the financial year to which such invoice pertains or filing of
relevant annual return, whichever is earlier.
24. What are the
provisions for Input service provider
Input Service
Distributor under GST includes
an office of the supplier of goods and / or services which
receives tax invoices issued under section 28 towards receipt of
input services and
issues a prescribed document for the purposes of distributing
the credit of CGST (SGST in State Acts) and / or IGST paid on the said services
to a supplier of taxable goods and / or services having same PAN as that of the
office referred to above
Conditions for
distribution of Credit
- Prescribed
documents must be issued to the receipts of credit containing prescribed
details
- Amount of
credit distributed must not exceed amount available to distribution
- Credit
of tax paid on input services attributable to a recipient of credit shall
be distributed only to that recipient;
- Credit
of tax paid on input services attributable to all or more than one
recipient of credit shall be distributed only amongst such or all
recipient(s) to whom the input service is attributable and such
distribution shall be pro rata on the following basis
- turnover
in a State of such recipient, during the relevant period, to the aggregate
of the turnover of all such recipients to whom such input service is
attributable and which are operational in the current year, during the
said relevant period;
- if
some or all recipients of the credit do not have any turnover in their
States in the financial year preceding the year during which the credit is
to be distributed, the last quarter for which details of such turnover of
all the recipients are available, previous to the month during which
credit is to be distributed
25. Please explain Anti-profiteering
Section
171 has been inserted in the GST bill which provides that it is mandatory to
pass on the benefit due to reduction in
rate of tax or from input tax credit to the consumer by way of commensurate
reduction in prices.
This clause further provides for the establishment
of an authority against anti-profiteering in order to ensure its compliance.
While the end consumer may have some reason to cheer, the industry is still
doubtful of its implementation.
26. What is Compliance
rating mechanism?
Section
149 states that every registered person will be given a compliance score based
on his record of compliance with the provisions of this act
Please
note this may be very crucial as all customers will look at this rating.
