Basics of Goods and services Tax Keshav R Garg (B.Com, FCA, CS, ISA(ICAI)) Faculty on GST – Indirect Tax Committee of ICAI Author – GST Ready Reckoner by Bharat Publications Co- Author - A Handbook on GST Member – Indirect Tax Committee of PHDCCI, CII, MyGst.MyTax Foundation Address - #3328, Sector 27 D, Chandigarh, India Mail - Ph ,

Present Indirect Tax Structure Present Tax Structure Excise Duty Manufacture Service Tax Provision of Service Sales Tax/VAT/ CST Sale Custom Duty Import & Export Entry Tax/ Entertainment Tax Entertainment

Economic Activities in Business Scenario Economic Activities Intra-state transactions Excise & Service Tax to be called CGST Local VAT and other Taxes to be called SGST Inter-state Transactions CST to be replaced by IGST Import/Export Custom Duty In place of SAD & CVD, IGST would be levied

What is Goods and Service Tax? 1.Goods and Services Tax is a comprehensive Value Added Tax on Goods and Services, collected at each stage of supply chain, with applicable set off in respect of the tax remitted at previous stages. 2.It is a destination based consumption tax i.e. on final consumption. The Tax incidence under the GST would be the supply of Goods and Services. 3.India has adopted Concurrent Dual GST Model. 4.All sort of Indirect taxes except basic Custom Duty, Export Duty and few state taxes will subsume. 5.GST is expected to boost the Indian Economy’s GDP by around 2%.

Concurrent Dual Model of GST India has adopted Concurrent Dual GST model: 1.System strikes a balance between fiscal autonomy of the Central & State Governments. 2.It empowers both levels of governments to apply the tax to a comprehensive base of Goods and Services, at all stages in the supply chain. 3.The Centre shall administer CGST & IGST, states would administer SGST. 4.No cross set off of input tax credit shall be allowed i.e. CGST can be set off against CGST only and NOT from SGST. 5.A constitutional amendment with the consent of 50% states is required in order to implement such system of taxation.

Items Not Covered under GST 1.Power and Electricity 2.Petrol & Petroleum Products 3.Real Estate Transactions 4.Alcoholic liquor for Human Consumption 5.Tobacco and Tobacco products

Charging sections – 7 of CGST Act & Section 4 of IGST Act Section 7: Levy and Collection of Central/State Goods and Services Tax. —(1) There shall be levied a tax called the Central/State Goods and Services Tax (CGST/SGST) on all intra-State supplies of goods and/or services at the rate specified in the Schedule... to this Act and collected in such manner as may be prescribed. Section 4 of IGST Act 2016: Levy and collection of Integrated Goods and Services Tax.—(1) There shall be levied a tax called the Integrated Goods and Services Tax on all supplies of goods and/or services made in the course of inter-State trade or commerce at the rate specified in the Schedule to this Act and collected in such manner as may be prescribed.

What are Goods as per Section 2(48) “goods’’ means every kind of movable property other than actionable claim and money but includes securities, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under the contract of supply. Explanation.—For the purpose of this clause, the term ‘moveable property’ shall not include any intangible property;

What is Service? Section 2(88) “services’’ means anything other than goods. Explanation.—Services include intangible property and actionable claim but does not include money;

Who is liable to register under GST? State/AreaWhen to register Under GSTWhen to pay taxes under GST North East(NE) & Sikkim Aggregate Turnover exceeds Rs 4 Lakhs Aggregate Turnover exceeds Rs 5 Lakhs Other than NE & Sikkim Aggregate Turnover exceeds Rs 9 Lakhs Aggregate Turnover exceeds Rs 10 Lakhs What is Aggregate Turnover? Section 2(6) – Taxable Supplies + Non-Taxable Supplies + Exempt supply + Export of goods & services of a person having the same PAN – Material supplied in job worker on behalf of principal (through out the country). There is a compounding option where the supplier whosee supply does not exceed Rs. 50 lakhs can opt for under section 8. Under Compounding supplier shall pay at the rate of 1% on the supplies made but shall move out of the Input Tax Credit Chain.

Persons Compulsorily Required to take registration: Persons Compulsorily Required to take registration under the law irrespective of the threshold limit of Rs 9 lakhs. 1.Person making Inter-State Taxable Supply 2.Casual Taxable Person 3.Persons liable to pay tax under reverse charge 4.Non-Resident Taxable Supplier 5.Person required to deduct tax under section 37 i.e. Government, local authority etc. 6.Agents or other person supplying on behalf of others 7.Input Service Distributors 8.Persons who supply goods and/or service, other than branded services, through electronic commerce operator 9.Electronic Commerce Operator 10.Aggregator supplying under his brand name or his trade name 11.Any other person as may be notified by the government.

Transaction Value under GST Constituents of Transaction value (price actually paid or payable) of Supply Add: 1.The amount paid by recipient on behalf of supplier; 2.Value of Goods and/or Services supplied directly or indirectly by the Recipient reduced by the amount paid by the supplier; 3.Royalties and license fees which are not included in the price actually paid or payable; 4.Any taxes and duties other than IGST/CGST/SGST 5.All incidental expenses incurred before the supply of goods and/or services. 6.Subsidies linked to supply of goods and/or services. 7.Any Reimbursable expenditure incurred and charged in relation to the supply; 8.Any discount or incentives after the supply has been effected(Discounts established by the contract and which is known before supply shall NOT be included) Less: 1.Discounts allowed in normal course of trade practice before the supply is effected and the same is duly recorded in the invoice;

Input Tax Credit under GST IGST CGST SGST CGST IGST SGST IGST CGSTSGST

Returns under GST S. No.Return FormForDue date 1.GSTR – 1Outward Supplies made by taxpayer (other than compounding taxpayer and Input Service Distributor) 10th of next month 2.GSTR – 2Inward Supplies Received by a taxpayer (other than compounding taxpayer and Input Service Distributor) 15th of next month 3.GSTR- 3Monthly Return (other than compounding taxpayer and Input Service Distributor) 20th of next month 4.GSTR- 4Quarterly Return for Compounding Taxpayer18th of the month next to quarter 5.GSTR- 5Periodic Return by Non Resident TaxpayerLast day of registration 6.GSTR- 6Return for Input Service Distributor15th of next month 7.GSTR- 7Return for Tax Deducted at Source10th of next month 8.GSTR-8Annual ReturnBy 31st Dec of next FY 9.--Final Return after Surrender/Cancellation of Registration Within 3 months from the date of cancellation order.

Refunds under GST Refund Procedure under the GST Act Cases where the refund provisions are applicable Only in two cases, a taxpayer can apply for refund: 1.Input Tax Credit accumulated due to exports; 2.The rate of tax on inputs is higher than the rates of the output. 2.What is the limitation period?Refund application can be filed within 2 years from the relevant date. 3.What documents have to be accompanied with Refund application: Documents as prescribed. However in cases where the refund amount is less than Rs 5 lacs, self declaration by the taxpayer shall be sufficient. 4.How refunds for exports shall be granted?80% of the refund shall be granted upon the application by taxpayer and the balance 20% shall be disbursed on verification of the documents. The order of verification shall be passed within 90 days of the application. 5.In how much time shall the refund be granted Refund shall be granted within 3 months from the date of receipt of application otherwise an interest at the prescribed rates.

Keshav R Garg (B.Com, FCA, CS, ISA(ICAI)) Faculty – IDTC of ICAI Author – GST Ready Reckoner A Handbook on GST Member of: Indirect tax committee of CII, PHDCCI, MyGst.MyTax 3328, Sector 27 D, Chandigarh