Business Processes in GST Part 1 - Registration Study Circle – Cochin Chapter of Institute of Cost Accountants of India

Taxable Person (Section 10 of CGST / SGST Act) Taxable Person means a person who is registered or liable to be registered under Schedule V of this Act. An establishment of a person who has obtained or is required to obtain registration in a State, and any of his other establishments in another State shall be treated as establishments of Distinct Persons for the purposes of this Act. Study Circle – Cochin Chapter of Institute of Cost Accountants of India

PERSONS LIABLE TO BE REGISTERED (Schedule V) Every supplier shall be liable to be registered under this Act in the State from where he makes a taxable supply of goods and/or services if his aggregate turnover in a financial year exceeds twenty lakh rupees Person who makes taxable supplies of goods and/or services from any of the States specified in sub-clause (g) of clause (4) of Article 279A of the Constitution, shall be liable to be registered if his aggregate turnover in a financial year exceeds ten lakh rupees. Sub-clause (g) of clause (4) of Article 279A of the Constitution : - Special provision with respect to the States of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand Study Circle – Cochin Chapter of Institute of Cost Accountants of India

Aggregate Turnover Section 2 (6) of CGST / SGST Act : “Aggregate turnover” means the aggregate value of all taxable supplies, exempt supplies, exports of goods and/or services and inter-State supplies of a person having the same PAN, to be computed on all India basis and excludes taxes, if any, charged under the CGST Act, SGST Act and the IGST Act, as the case may be; Explanation.- Aggregate turnover does not include the value of inward supplies on which tax is payable by a person on reverse charge basis under sub-section (3) of Section 8 and the value of inward supplies. Schedule V : Explanation 1.- The aggregate turnover shall include all supplies made by the taxable person, whether on his own account or made on behalf of all his principals. Explanation 2.- The supply of goods, after completion of job-work, by a registered job- worker shall be treated as the supply of goods by the “principal” referred to in section 55, and the value of such goods shall not be included in the aggregate turnover of the registered job worker. Study Circle – Cochin Chapter of Institute of Cost Accountants of India

Exemption from Registration Schedule V The following persons shall not be liable to registration – any person engaged exclusively in the business of supplying goods and/or services that are not liable to tax or are wholly exempt from tax under this Act; an agriculturist, for the purpose of agriculture. Study Circle – Cochin Chapter of Institute of Cost Accountants of India

Carry Over of Registration (Schedule V) Registered as per earlier Law : Every person who, on the day immediately preceding the appointed day, is registered or holds a license under an earlier law, shall be liable to be registered under this Act with effect from the appointed day. Business Transfer : Where a business carried on by a taxable person registered under this Act is transferred, whether on account of succession or otherwise, to another person as a going concern, the transferee, or the successor, as the case may be, shall be liable to be registered with effect from the date of such transfer or succession. Amalgamation or Merger : Transfer pursuant to sanction of a scheme or an arrangement for amalgamation or de-merger of two or more companies by an order of a High Court, the transferee shall be liable to be registered with effect from the date on which the Registrar of Companies issues a certificate of incorporation giving effect to such order of the High Court. Study Circle – Cochin Chapter of Institute of Cost Accountants of India

Outside the Preview of Basic Exemption (Schedule V) persons making any inter-State taxable supply; casual taxable persons; “casual taxable person” means a person who occasionally undertakes transactions involving supply of goods and/or services in the course or furtherance of business whether as principal, agent or in any other capacity, in a taxable territory where he has no fixed place of business; [Section 2 (20)] non-resident taxable persons; “non-resident taxable person” means a taxable person who occasionally undertakes transactions involving supply of goods and/or services whether as principal or agent or in any other capacity but who has no fixed place of business in India; Study Circle – Cochin Chapter of Institute of Cost Accountants of India

Outside the Preview of Basic Exemption (Schedule V) persons who are required to pay tax under reverse charge; As per Section [8(2)] of CGST Act & Section [5(2)] of IGST Act The Central or a State Government may, on the Recommendation of the Council, by notification, specify categories of supply of goods and/or services the tax on which is payable on reverse charge basis and the tax thereon shall be paid by the person receiving such goods and/or services and all the provisions of this Act shall apply to such person as if he is the person liable for paying the tax in relation to such goods and/or services. persons who supply goods and/or services on behalf of other taxable persons whether as an agent or otherwise; Section 2 (5) “Agent” means a person, including a factor, broker, commission agent, arhatia, del credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of supply or receipt of goods or services on behalf of another, whether disclosed or not; Study Circle – Cochin Chapter of Institute of Cost Accountants of India

Outside the Preview of Basic Exemption (Schedule V) persons who are required to pay tax under sub-section (4) of section 8; Specific categories of services the tax on which shall be paid by the electronic commerce operator if such services are supplied through it PROVIDED that where an electronic commerce operator does not have a physical presence in the taxable territory, any person representing such electronic commerce operator for any purpose in the taxable territory shall be liable to pay tax: PROVIDED FURTHER that where an electronic commerce operator does not have a physical presence in the taxable territory and also he does not have a representative in the said territory, such electronic commerce operator shall appoint a person in the taxable territory for the purpose of paying tax and such person shall be liable to pay tax. ‘Electronic commerce operator’ means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce; [Section 2 (42)] ‘Electronic Commerce’ means supply of goods and/or services including digital products over digital or electronic network; [Section 2 (41)] Study Circle – Cochin Chapter of Institute of Cost Accountants of India

Outside the Preview of Basic Exemption (Schedule V) persons who are required to deduct tax under section 46; Tax Deducted at Source such persons or category of persons as may be notified, by the Central or a State Government on the recommendations of the Council, [“the deductor”], to deduct tax at the rate of one percent from the payment made or credited to the supplier [“the deductee”] of taxable goods and/or services, where the total value of such supply, under a contract, exceeds five lakh rupees. The amount deducted as tax under this section shall be paid to the account of the appropriate Government by the deductor within ten days after the end of the month in which such deduction is made, in the manner prescribed. If any deductor fails to furnish to the deductee the certificate, after deducting the tax at source, within five days of crediting the amount so deducted to the appropriate Government, the deductor shall be liable to pay, by way of a late fee, a sum of one hundred rupees per day from the day after the expiry of the five day period until the failure is rectified (not exceeding five thousand rupees) : Contd……… Study Circle – Cochin Chapter of Institute of Cost Accountants of India

Outside the Preview of Basic Exemption (Schedule V) The deductee shall claim credit, in his electronic cash ledger, of the tax deducted and reflected in the return of the deductor If any deductor fails to pay to the account of the appropriate Government the amount deducted as tax he shall be liable to pay interest in accordance with the provisions of sub-section (1) of section 45, in addition to the amount of tax deducted. Determination of the amount in default under this section shall be made in the manner specified in section 66 or 67, as the case may be. Refund to the deductor or the deductee, as the case may be, arising on account of excess or erroneous deduction shall be dealt with in accordance with the provisions of section 48: PROVIDED that no refund to deductor shall be granted if the amount deducted has been credited to the electronic cash ledger of the deductee. Study Circle – Cochin Chapter of Institute of Cost Accountants of India

Outside the Preview of Basic Exemption (Schedule V) persons who are required to collect tax under section 56; Collection of tax at source Every electronic commerce operator, not being an agent, shall collect an amount calculated at the rate of one percent of the net value of taxable supplies made through it where the consideration with respect to such supplies is to be collected by the operator. “Net value of taxable supplies" shall mean the aggregate value of taxable supplies of goods or services, other than services notified under sub-section (4) of section 8, made during any month by all registered taxable persons through the operator reduced by the aggregate value of taxable supplies returned to the suppliers during the said month. The amount collected under sub-section (1) shall be paid to the account of the appropriate Government by the operator within ten days after the end of the month in which such collection is made in the manner as may be prescribed. Every operator who collects the amount specified shall furnish a statement, electronically, containing the details of outward supplies of goods or services effected through it, including the supplies of goods or services returned through it, and the amount collected under sub-section (1) during a month, in such form and manner as may be prescribed, within ten days after the end of such month. Contd…. Study Circle – Cochin Chapter of Institute of Cost Accountants of India

Outside the Preview of Basic Exemption (Schedule V) The supplier who has supplied the goods or services through the operator shall claim credit, in his electronic cash ledger, of the amount collected and reflected in the statement of the operator The details of supplies furnished by every operator shall be matched with the corresponding details of outward supplies furnished by the concerned supplier registered under the Act. Where the details of outward supplies furnished by the operator do not match with the corresponding details furnished by the supplier the discrepancy shall be communicated to both persons. The amount in respect of which any discrepancy is communicated and which is not rectified by the supplier in his valid return or the operator in his statement for the month in which discrepancy is communicated, shall be added to the output tax liability of the said supplier, where the value of outward supplies furnished by the operator is more than the value of outward supplies furnished by the supplier Contd….. Study Circle – Cochin Chapter of Institute of Cost Accountants of India

Outside the Preview of Basic Exemption (Schedule V) Any authority not below the rank of Joint Commissioner may serve a notice, either before or during the course of any proceeding under this Act, requiring the operator to furnish such details relating to— supplies of goods or services effected through such operator during any period, or stock of goods held by the suppliers making supplies through such operator in the godowns or warehouses, by whatever name called, managed by such operators and declared as additional places of business by such suppliers - as may be specified in the notice. Every operator on whom a notice has been served shall furnish the required information within fifteen working days of the date of service of such notice. Any person who fails to furnish the information required by the notice shall, without prejudice to any action that is or may be taken under section 85 , be liable to a penalty which may extend to twenty-five thousand rupees. . Study Circle – Cochin Chapter of Institute of Cost Accountants of India

Outside the Preview of Basic Exemption (Schedule V) every person supplying online information and database access or retrieval services from a place outside India to a person in India; “Online information and database access or retrieval services” means services whose delivery is mediated by information technology over internet or electronic network, the supply of which is essentially automated involving minimal human intervention and impossible to ensure in absence of information technology. Illustrative list of electronic services which will be considered as OIDAR Advertising on internet; Providing cloud services; Provision of e-books, movie, music, software and other intangibles via telecommunication networks or internet; Providing data or information, retrievable or otherwise, to any person, in electronic form through a computer network; Online supplies of digital content (movies, television shows, music, etc.) ‒ digital data storage; and Online gaming Indicative list of non-OIDAR services Supplies of goods, where the order and processing is done electronically ; Supplies of physical books, newsletters, newspapers or journals; Services of lawyers and financial consultants who advise clients through email; Booking services or tickets to entertainment events, hotel accommodation or car hire; Educational or professional courses, where the content is delivered by a teacher over the internet or an electronic network (in other words, using a remote link); Offline physical repair services of computer equipment; Advertising services in newspapers, on posters and on television Study Circle – Cochin Chapter of Institute of Cost Accountants of India

Outside the Preview of Basic Exemption (Schedule V) input service distributor; "Input Service Distributor" means 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; [Section 2 (54)] such other person or class of persons as may be notified by the Central Government or a State Government on the recommendation of the Council. Study Circle – Cochin Chapter of Institute of Cost Accountants of India

Registration Section 23.Registration Every person who is liable to be registered under Schedule V of this Act shall apply for registration in every such State in which he is so liable within thirty days from the date on which he becomes liable to registration, A person, though not liable to be registered under Schedule V, may get himself registered voluntarily. Application for registration Part A of FORM GST REG-01 : Every person, other than a non-resident taxable person, a person required to deduct tax at source and a person required to collect tax at source, shall, before applying for registration, declare his Permanent Account Number (PAN), mobile number and e-mail address in Part A of FORM GST REG-01 (a) The PAN shall be validated online by the Common Portal from the database maintained by the Central Board of Direct Taxes (b) The mobile number declared under sub-rule (1) shall be verified through a one-time password sent to the said mobile number. (c) The e-mail address declared under sub-rule (1) shall be verified through a separate one-time password sent to the said e-mail address. Study Circle – Cochin Chapter of Institute of Cost Accountants of India

Registration On successful verification of the PAN, mobile number and e-mail address, an application reference number shall be generated and communicated to the applicant on the said mobile number and e-mail address Using the reference number generated the applicant shall electronically submit an application in Part B of FORM GST REG- 01, duly signed, along with documents specified in the said Form. On receipt of an application, an acknowledgement shall be issued electronically to the applicant in FORM GST REG-02. The application shall be forwarded to the proper officer who shall examine the application and the accompanying documents and if the same are found to be in order, approve the grant of registration to the applicant within three common working days from the date of submission of application. Where the application submitted is deficient, or where the proper officer requires any clarification he may so intimate in FORM GST REG-03 within three common working days from the date of submission of application Study Circle – Cochin Chapter of Institute of Cost Accountants of India

Registration The applicant shall furnish electronically such clarification, information or documents sought, in FORM GST REG-04, within seven common working days from the date of receipt of such intimation. Where the proper officer is satisfied with the clarification, information or documents furnished by the applicant, he may approve the grant of registration to the applicant within seven common working days of receipt of such clarification or information or document. Where the application for grant of registration has been approved, a certificate of registration in FORM GST REG-06 for the principal place of business and for every additional place of business shall be made available to the applicant on the Common Portal. The registration shall be effective from the date on which the person becomes liable to registration where the application for registration has been submitted within thirty days from such date. Where an application for registration has been submitted by the applicant after thirty days from the date of his becoming liable to registration, the effective date of registration shall be the date of grant of registration Study Circle – Cochin Chapter of Institute of Cost Accountants of India

Registration Where the proper officer is not satisfied with the clarification, information or documents furnished, he shall, for reasons to be recorded in writing, reject such application and inform the applicant electronically in FORM GST REG-05. If the proper officer fails to take any action- within three common working days from the date of submission of application, or within seven common working days from the date of receipt of clarification, the application for grant of registration shall be deemed to have been approved. Study Circle – Cochin Chapter of Institute of Cost Accountants of India

Registration (Multiple Registration in a state) A person having multiple business verticals in a State may obtain a separate registration for each business vertical, subject to such conditions as may be prescribed. Section 2 (18)“Business vertical” means a distinguishable component of an enterprise that is engaged in supplying an individual product or service or a group of related products or services and that is subject to risks and returns that are different from those of other business verticals; Explanation: Factors that should be considered in determining whether products or services are related include: the nature of the products or services; the nature of the production processes; the type or class of customers for the products or services; the methods used to distribute the products or provide the services; and if applicable, the nature of the regulatory environment, for example, banking, insurance, or public utilities. “Business verticals as defined in Accounting Standard (AS) 17 (Segment Reporting) issued by ICAI” : Report of THE JOINT COMMITTEE ON BUSINESS PROCESSES FOR GST Study Circle – Cochin Chapter of Institute of Cost Accountants of India

Registration (Multiple Registration in a state) No business vertical of a taxable person shall be granted registration to pay tax under section 8 if any one of the other business verticals of the same person is paying tax under Composition Levy Scheme. Where any business vertical of a registered taxable person that has been granted a separate registration becomes ineligible to pay tax under section 8, all other business verticals of the said person shall become ineligible to pay tax under section 8. All separately registered business verticals of such person shall pay tax under this Act on supply of goods and/or services made to another registered business vertical of such person and issue a tax invoice for such supply A registered taxable person eligible to obtain separate registration for business verticals may file separate application in FORM GST REG-01 in respect of each such vertical. The provisions of rules relating to verification and grant of registration shall mutatis mutandis apply to an application made for each vertical. Study Circle – Cochin Chapter of Institute of Cost Accountants of India

Registration (Casual & Non Resident taxable Person etc) A casual taxable person or a non-resident taxable person shall apply for registration at least five days prior to the commencement of business. The certificate of registration issued to a casual taxable person or a non-resident taxable person shall be valid for a period specified in the application for registration or ninety days from the effective date of registration, whichever is earlier. The proper officer may, at the request of the said taxable person, extend the aforesaid period of ninety days by a further period not exceeding ninety days. Such person shall make taxable supplies only after the issuance of the certificate of registration. A casual taxable person or a non-resident taxable person shall, at the time of submission of application for registration, make an advance deposit of tax in an amount equivalent to the estimated tax liability of such person for the period for which the registration is sought: Where any extension of time is sought an additional amount of tax equivalent to the estimated tax liability for the period for which the extension is sought shall be deposited. Study Circle – Cochin Chapter of Institute of Cost Accountants of India

Registration (Casual & Non Resident taxable Person etc ) The amount deposited shall be credited to the electronic cash ledger and shall be utilized for discharge of tax liability. Casual Taxable person shall use FORM GST REG-01 for registration. A non-resident taxable person shall electronically submit an application for registration in FORM GST REG-10. Both Shall be given a temporary identification number by the Common Portal for making advance deposit of tax Where a registered casual taxable person or non-resident taxable person intends to extend the period of registration indicated in his application of registration, an application in Form GST REG-25 Any person required to deduct or to collect tax at source shall electronically submit an application in FORM GST REG-07 for grant of registration. Where, upon an enquiry or pursuant to any other proceeding, the proper officer is satisfied that a person is no longer liable to deduct or collect tax at source, the said officer may cancel the registration and such cancellation shall be communicated to the said person in FORM GST REG-08. Study Circle – Cochin Chapter of Institute of Cost Accountants of India

Thank You Next Session : 27th January 2017, Friday Topic : Business Processes in GST (Part II) Moderator : CMA Raja Padmanabhan Study Circle – Cochin Chapter of Institute of Cost Accountants of India