GOODS AND SERVICES TAX (GST) BY CHINNI SRAVANKUMAR CHARTERED ACCOUNTANT

INTRODUCTION Goods and Service tax ( GST) is a comprehensive levy on manufacture , sale and consumption of goods and services at a national level. It is collected on value added at each stage of sale or purchase in the supply chain. Seamless input tax credit throughout the supply chain.

Existing Tax structure in India Direct Tax Income Tax Wealth Tax Indirect Tax Central Tax Excise Service Tax Custome State Tax VAT Entry Tax, luxury tax, Lottery Tax, etc.

Indirect Tax = GST (Except customs) Tax Structure in India Tax Structure Direct Tax Income Tax Wealth Tax Indirect Tax = GST (Except customs) Intra- state CGST (Central) SGST (State) Inter State IGST (Central)

Subsuming of Existing Taxes Central Excise Additional duties of Custom (CVD) Service Tax Surcharges and all cesses CGST VAT/sales tax Entertainment Tax Luxury Tax Lottery Tax Entry Tax Purchase Tax Stamp Duty Goods and passenger Tax Tax on vehicle Electricity, banking, Real state SGST CST IGST

GST - BENEFITS Transparent tax system Uniform Tax system Across India Reduce tax Evasion Mitigation of cascading / double taxation More efficient neutralization of taxes especially for exports Development of Common National market

COMMODITIES NOT INCLUDED IN GST Alcohol Petroleum Products Tobacco Products

Persons required to get compulsory registration A person receiving supplies on which tax is payable by recipient on reverse charge basis. Casual taxable person Non- resident person. A person who supplies on behalf of some other taxable person. E-commerce operators TDS Deductor Input service distributor Those supplying online information from outside india to NRI in india

To whom GST does not apply Agriculturists 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.

GST on Job work Job Work is Adding value to the raw materials or semi- processed goods supplied by the principal manufacturer. GST rate on job work for the textile and chemical sector is 5% while for others is 18%. Purchased Goods can be sent to the job worker in the given manner From Principal Place of Business Directly From the place of supply of the supplier of such goods In both above cases, ITC will be allowed.

Updates regarding Job work The challan may be issued either by the principal or the job worker for sending goods to another job worker. The challan issued by the principal may be endorsed by the job worker. The challan endorsed by one job worker may be endorsed by another job worker.

SLABS TAX RATES APPLICABLE 0% Unpacked food grains, Milk, eggs, Curd, lassi, Unpacked panner, Fresh Vegetables, salt, Education Services, Health Services etc. 5% Sugar, Tea, edible Oils, Domestic LPG, Cashew Nuts, Fabric, Spices, Coal, packed Panner, Skimmed Milk Powder, Agarbatti etc. 12% Butter, Ghee, Almonds, Fruit Juice, Processed Food, Mobiles, Umbrella etc. 18% Hair Oil, Tooth paste, Corn Flakes, Soups, Capital Goods etc. 28% Consumer durables such as AC and Fridge , Luxury cars, pan masala, Tobacco products, Aerated drinks etc.

GST- FILING OF RETURNS Standard date of Filing GSTR-1 10 th of Next Month GSTR-2 15 th of Next Month GSTR-3 20 th of Next Month GSTR-3B GSTR-4 18 th of the Month Succeeding the Quarter GSTR-5 20 th of the Month Succeeding the tax period and within 7 days after expiry of registration GSTR-5 A 20 th of the Next Month GSTR-6 13 th of the Next Month GSTR-7 10 th of the Next Month GSTR-8 GSTR-9 31 st December of Next Financial year GSTR- 9A GSTR-10 Within three months of the date of cancellation or date of order of cancellation whichever is later GSTR-11 28 th of the Next month

GST – PROPOSED KEY FEATURES Dual GST: Central GST & State GST Destination based state GST Uniform Classification Uniform Forms- Returns , Challans ( in electronic mode) No Cascading of central and state taxes Cross credit between centre and state not allowed

REGISTRATION UNDER GST Each taxpayer would be allotted a PAN linked taxpayer identification number with a total of 13/15 digits. This would bring the GST PAN-linked system in line with the prevailing PAN-based system for Income tax facilitating data exchange and taxpayer compliance. The exact design would be worked out in consultation with the Income-Tax Department.

GST INVOICE The Task Force on GST said the computation of CGST and SGST liability should be based on the Invoice credit method. i.e., allow credit for tax paid on all intermediate goods and services on the basis of invoices issued by the supplier. Invoice level detail is necessary for the reconciliation of tax deposits, and the end-to-end reconciliation of ITC. An effective IGST implementation may also require invoice-level details. A number of states are capturing invoice details even in the existing VAT systems. It is proposed to follow a two-pronged approach with Dealer level granularity of returns in the first phase followed by invoice level in the next phase.

COMPOSITION SCHEME A Composition/Compounding Scheme will be an important feature of GST, to protect the interests of small traders and small scale industries. The Composition/Compounding scheme for the purpose of GST should have an upper ceiling on gross annual turnover and a floor tax rate with respect to gross annual turnover. In particular there will be a compounding cut-off at Rs. 50 lakhs of the gross annual turnover and the floor rate of 0.5% across the States. The scheme would allow option for GST registration for dealers with turnover below the compounding cut-off.

Benefits of Composition scheme Easy compliance as no elaborate accounts and records to be maintained Simple Quarterly Return Quarterly payment of tax.  

E-way bill A waybill is a receipt or a document issued by a carrier E-way bill is an electronic document evidencing movement of goods. E-way bill for inter-State movement of goods across the country from 1st April 2018. If the consignor or consignee has not generated the e-way bill and the aggregate invoice value is greater than 50,000, then the transporter has to generate the e-way bill in FORM GST EWB-01 in respect of inter state supply

Tax rates regarding composition scheme Type of Business Rate of tax Manufacture 2% Traders(Goods) 1% Supplier of food or drinks for human consumption (without alcohol) 5% Service Providers Cannot opt for composition scheme

Interest on late payment An interest of 18 percent is levied on the late payment of taxes under the GST regime. The interest would be levied for the days for which tax was not paid after the due date.

Penalty for non-filing of GST returns In case a taxpayer does not file his/her return within the due dates, he/she shall have to pay a late fee of Rs. 200/- i.e.Rs.100/- for CGST and Rs.100/- for SGST per day (up to a maximum of Rs. 5,000/-) from the due date to the date when the returns are actually filed.  

FLAWS OF GST MODEL Major flaw of this model is ,Local Dealers have to pay CGST in addition to SGST. In Addition to this, CGST mainly represents the Excise/service tax and SGST mainly represents the VAT portion but, because of ‘No differentiation between Goods and Services’ service supply within the state would attract SGST as GST is levied at each stage in the supply chain and Assessee have to Pay CGST as well as SGST. The issue which still needs to be resolved are, the revenue sharing between States and Centre, and a framework for exemption, thresholds and composition.

THANK YOU