Understanding Goods and Services Tax

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Presentation transcript:

Understanding Goods and Services Tax 17/07/2013 Understanding Goods and Services Tax

Agenda Constitutional Background IGST & CST Main Features of IGST Act Place of Supply Payment Refund

Constitutional Background (1/2) Article 269A: Goods and services tax on supplies in the course of inter-State trade or commerce shall be levied and collected by the Government of India and such tax shall be apportioned between the Union and the States in the manner as may be provided by Parliament by law on the recommendations of the Goods and Services Tax Council. Explanation.—For the purposes of this clause, supply of goods, or of services, or both in the course of import into the territory of India shall be deemed to be supply of goods, or of services, or both in the course of inter-State trade or commerce. (2) The amount apportioned to a State under clause (1) shall not form part of the Consolidated Fund of India.

Constitutional Background Article 269A: (3) Where an amount collected as tax levied under clause (1) has been used for payment of the tax levied by a State under article 246A, such amount shall not form part of the Consolidated Fund of India. (4) Where an amount collected as tax levied by a State under article 246A has been used for payment of the tax levied under clause (1), such amount shall not form part of the Consolidated Fund of the State. (5) Parliament may, by law, formulate the principles for determining the place of supply, and when a supply of goods, or of services, or both takes place in the course of inter-State trade or commerce.’’.

Union territory w/o legislature Understanding CGST, SGST, UTGST & IGST CGST + SGST IGST State 1 Foreign Territory IGST CGST + SGST IGST IGST CGST + UTGST State 2 Union territory w/o legislature IGST Credit can be used for payment of IGST, CGST, SGST / UTGST in that order

IGST & CST CST is origin based levy which is collected and retained by the originating State – taxpayer not registered with Centre IGST is destination based levy To be discharged by the taxpayer located in originating State but would accrue to the destination State ITC of CST is not available in subsequent supply chain. It is a distortion to value add tax Under IGST, purchaser in importing State would be allowed to take credit of the tax paid in originating State Centre’s responsibility to transfer funds (on consumption principle) at the end of month Detections during audit, etc. after a time gap

Main Features of IGST Act (1/2) Intra or Inter-State supply Intra-State supply of goods or services - where the location of the supplier and the place of supply are in the same State Inter-State supply of goods or services - where the location of the supplier and the place of supply are in different State Rules provided for determining the place of supply Domestic supply of goods Import / Export of goods Domestic supply of services Import / Export of services For territorial waters

Main Features of IGST Act (2/2) International Tourist Refund Zero Rated supply Exports Supplies to SEZs Apportionment of Tax and Settlement of Funds Provision for refund of tax wrongfully paid for inter-State or intra-State supply Adoption of all machinery provisions from CGST Act

Place of supply of goods (1/11) Involving movement of goods Location of goods at the time at which the movement of goods terminates for delivery to the recipient. Without movement of goods Location of such goods at the time of delivery to the recipient. Involving assembly /Installation Place of such installation or assembly On board a conveyance Location at which goods are taken on board

Place of supply (2/11) SUPPLY OF GOODS PLACE OF SUPPLY Imported into India Location of the importer Exported from India Location outside India Delivered by supplier to recipient or any other person on the direction of third person Principal place of business of Third person (Deemed receipt of goods by third person)

Place of supply where location of supplier and recipient is in India:(3/11) to a registered person (other than 12 specified services): Location of such registered person to any person other than a registered person (other than 12 specified services): Location of recipient where address on record exists Location of supplier of service in other cases

SERVICE IN RELATION TO PLACE OF SUPPLY Place of supply where location of supplier and recipient is in India:(4/11) SERVICE IN RELATION TO PLACE OF SUPPLY Immovable property Location of immovable property Performance based services Location where the services are actually performed Training and performance appraisal to an unregistered person Admission to an educational, scientific, cultural, artistic event etc. or amusement park Location of event or park.

SERVICE IN RELATION TO PLACE OF SUPPLY Place of supply where location of supplier and recipient is in India:(5/11) SERVICE IN RELATION TO PLACE OF SUPPLY Organisation of an educational, scientific, cultural, artistic event etc. to an unregistered person Location of the event If event outside India, location of the recipient Transportation of goods including by mail or courier to an unregistered person Location where goods are handed over for their transportation Passenger Transportation to an unregistered person Location of place of embarkation On board a conveyance such as vessel, aircraft, train or motor vehicle Location of first scheduled point of departure of conveyance

SERVICE IN RELATION TO PLACE OF SUPPLY Place of supply where location of supplier and recipient is in India:(6/11) SERVICE IN RELATION TO PLACE OF SUPPLY Fixed telecommunication lines, leased circuits, cable or dish antenna Location of installation of tele-communication line, leased circuits, cable or dish antenna Mobile connection provided on post-paid basis Location of billing address of service recipient on record of supplier of service Mobile connection provided on pre-paid basis through a selling agent, re-seller or distributor Address of the selling agent, re-seller or distributor Mobile connection provided on pre-paid basis by any person to final subscriber Location of receipt of pre-payment or sale of vouchers

SERVICE IN RELATION TO PLACE OF SUPPLY Place of supply where location of supplier and recipient is in India:(7/11) SERVICE IN RELATION TO PLACE OF SUPPLY Banking and other financial services including stock brokering Location of service recipient on record of supplier of service If the location is not on record POS shall be the location of supplier Insurance services to an unregistered person Advertisement services Location in State or Union territories identified in the contract or agreement

Place of supply- location of either supplier or recipient is outside India (8/11) Other than 10 specified services: Location of recipient of services Location of supplier of service in other cases

Place of supply location of either supplier or recipient is outside India (9/11) SERVICE IN RELATION TO PLACE OF SUPPLY Goods which are required to be made physically available Location where the services are actually performed Immovable property Location of immovable property Admission to an educational, scientific, cultural, artistic event etc. or amusement park Location of event or park. services supplied by a banking company, or a financial institution, or a non-banking financial company, to account holders Location of the supplier of services

Place of supply location of either supplier or recipient is outside India (10/11) SERVICE IN RELATION TO PLACE OF SUPPLY intermediary services Location of the supplier of services hiring of means of transport, including yachts but excluding aircrafts and vessels, upto a period of one month transportation of goods, other than by way of mail or courier Place of destination of such goods

lPlace of supply ocation of either supplier or recipient is outside India (11/11) SERVICE IN RELATION TO PLACE OF SUPPLY passenger transportation place where the passenger embarks on the conveyance for a continuous journey on board a conveyance during the course of a passenger transport operation first scheduled point of departure of that conveyance online information and database access or retrieval services Location of the recipient of services

Payments (1/2) System of electronic cash ledger and electronic ITC ledger Option of internet banking, NEFT / RTGS and debit/credit card Liability to be discharged by way of the debit in the electronic cash or credit ledger Cross-utilization of ITC between CGST & IGST, between SGST/UTGST & IGST allowed Hierarchy for discharging payments of various tax liabilities Self-assessed liability of earlier tax periods Self-assessed liability of current tax period Other liabilities Delayed payment of taxes to attract tax upto 18% Undue claim of ITC or seeking undue reduction in liability to attract interest upto 24% Concept of TDS and TCS

Payments (2/2) Rules provide for: Maintenance of Electronic Liability Register Maintenance of Electronic Credit Ledger Maintenance of Electronic Cash Ledger Manner of entries in these ledgers Generation of unique identification number for each debit or credit in ledger

Refunds (1/2) Time limit for refund - two years Relevant date for eligibility for refund under different circumstances Refund of accumulated ITC allowed in case of zero-rated supplies or inverted duty structure Refund to be granted within 60 days Interest @ 6% / 9% in case of delayed refund All refunds online Grant of 90% of refund on account of zero-rated supplies within seven days on provisional basis Directly credited to the bank account of the tax payer

Refunds (2/2) Rules provide for: Procedure for filing of refund application Time period Documents required Return itself treated as refund application Procedure for deficiency notice, acknowledgement & timelines Formula for calculation of refund arising on account of exports Grant of provisional refund Procedure for refund in case of holders of UIN Provisions relating to Consumer Welfare Fund