GST - Goods and Service Tax Demystifying GST - Goods and Service Tax

Agenda: Introduction to GST Understanding GST GST Highlights Registration GST Compliance Brief inference in comparison with existing law What will change Preparedness for GST Consequences of non-compliance

Introduction to GST GST- an important breakthrough – in the sphere of indirect tax reforms in India. Improvised Tax system over Central Excise Duty and Sales Tax system Significant improvement –the next logical step – towards a comprehensive indirect tax reforms in the country.

Outline on the major milestones Journey so far….. GST is being introduced in the country after a 13 year long journey since it was first discussed in the report of the Kelkar Task Force on indirect taxes,2013. Outline on the major milestones The constitution Amendment bill for GST passed by Rajya Sabha in August,2016 The draft model GST Law was released and put in public domain in June 2016. Bill was passed by the Lok Sabha on 06.05.2015. First Discussion Paper on Goods and Services Tax in India in November, 2009. Budget Speech for the financial year 2006-07 In 2003, the Kelkar Task Force Suggested Goods and Services Tax (GST) based on VAT principle.

What is GST? GST stands for Goods and Service Tax which is a comprehensive tax levied on manufacture, sale and consumption of goods and services at pan-India level. Thus, GST will be one indirect tax for the whole nation ,which will make India one unified common market.

GST Why GST? Simple Tax Structure Eliminates Cascading Effect Increased revenue Eliminates Cascading Effect The current indirect tax system with multiplicity of taxes - at different rates - at multiple points. This has led to several inefficiencies and limitation. One of the limitation was no cross setting of liability with central and state levied taxes which resulted in cascading effect. GST- a single unified tax across the nation aims at simplify the tax system and uniting the country economically as One Nation – One Tax. Technology Driven System

Highlights of GST Common threshold limit across the country Continuity of tax credit across the supply chain till it reaches the consumer. Elimination of tax cascading effect in the supply chain Pan Based Registration ‘on Supply’ tax liability instead of ‘Removal / Sale’

Highlights of GST Valuation method broadly as ‘Transaction Value’ Branch transfers taxable and credit eligibility Tax credit eligibility on inward supply of goods / services for Inter-state transaction No declaration forms (Form – C, F, etc…….)

Registration – Threshold Limit Regular Dealer North East India Aggregate Turnover exceeds 4L for Registration 5L for Payment of Tax Rest of India Aggregate Turnover exceeds 9L for Registration 10L for Payment of Tax Composition Scheme Composition Levy Aggregate Turnover does not exceeds 50L

Transition Registration Migration Automatic Registration First provisional & then final registrations

GST CGST SGST IGST Taxes subsumed under GST VAT Purchase Tax CST ADE CVD & SAD Excise Duty GST Entry Tax Luxury tax Service Tax Surcharge & Cess Surcharge & Cess CGST SGST IGST

Tax scenario under GST Example of Car: Existing Cost of Manufactures 4,00,000 Excise @ 12 % + Infrastructure cess1% 52,000 Vat 12.5% 56,500 Dealer Invoice 5,08,500 Dealer Cost (4,00,000 + 52,000) 4,52,000 Margin @ 10 % 45,200 Sale Price for delear 4,97,200 62,150 Price to customer 5,59,350   GST 4,00,000 CGST@11% 44,000 SGST@11% 4,88,000 40,000 4,40,000 48,400 5,36,800 Saving to Consumer Amount Percentage 22,550 4%

Input Credit Mechanism SUPPLIER BUYER TAX INVOICE Receipt of Goods /Services Receipt of Goods /Services TAX INVOICE Tax Laibility Returns Provisional ITC Eligible ITC Tax Laibility Returns Provisional ITC Tax Department Amount ITC credited Electronic Credit Ledger

7 day after expiry of registration Type of Returns Dealer Type Return Type Frequency Due Date Regular & Casual Dealer GSTR 1 Monthly 10th of succeeding month GSTR 2 15th of succeeding month GSTR 3 20th of succeeding month GSTR 8 Annual 31st Dec of next fiscal Compounding Tax Payer GSTR 4 Quarterly 18th of succeeding month Foreign Non-Resident Taxpayer GSTR 5 7 day after expiry of registration Input Service Distributor GSTR 6 Tax Deductor GSTR 7

Upload Process GST Portal GST Portal Sales Invoices Purchase Invoices Automated Tax returns Sales Invoices Purchase Invoices GST Portal 10th, every month 15th, every month 20th, every month

GST Return GSTR 1 GSP GST NET(GSTN) GSTR 2 GSTR 3 10th of the Next Month GSTR 1 Outward Supplies made by the Taxpayer GSP GST NET(GSTN) 15th of the Next Month GSTR 2 Inward Supplies received by the Taxpayer 20th of the Next Month GSTR 3 GST Return for the Month with Tax

Input Credit Adjustment CGST - ITC IGST CGST SGST - ITC IGST SGST IGST- ITC SGST CGST IGST

Mandatory e-payment for amount exceeding Rs 10,000 20th of subsequent Month Mandatory e-payment for amount exceeding Rs 10,000 Online: NEFT/RTGS/IMPS Offline: Cash/ Cheque / DD etc.

Inference with the existing Law: Composition scheme Composition levy Reverse Credit mechanism Exemptions Remission of tax

Inference with the existing Law: Captive consumption Reversal of ITC Input Service Distributor Job work Tax credit on inputs held in stock

With GST What will change ? Technology Digital B to G connect End-to-End Technology Driven System GST compliance rating Process Transaction Focused Transparency from grass-root level of business records Triangulation of suppliers and recipient records Rectification errors and omissions Reconciling returns with books Discipline On-Time submission of returns On-Time Payment Interest on disputed credits Less scope for Kacha Bill Vat only Dealers to GST Compliance to Inherited provisions of Excise and Service Tax in GST

Consequences of non-compliance Late fee of Rs.100/- per day for every day during which such failure continues subject to a maximum of Rs. 5000/-. Late Fee Delay in tax payment The rate of interest is yet to be notified. Interest Rs.10,000/- or an equal amount to the extent of tax evaded. Imprisonment with fine up to 5 years depending on amount of tax evasion with slab ranging from 25L to 500L Fines

GST Stakeholders

Preparedness for GST Books of accounts/ records matching 100% with the return Discipline in maintaining, recording and reconciling ‘electronic’ – Credit and Cash ledger Records to substantiate ITC eligibility on stocks / capital goods held as of last day of GST transition Transitioning to GST

Technology is the key Seamless Detection, Correction and Compliance at: Configuration Recording Reconciling at source Reconciling post reporting Triangulation with GSTN

Tally’s Technology for GST Hero of GST Success API Application Program Interface

Tally’s Technology for GST Tally’s Role Interface with GSTN GSP Business Solution ASP

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