Standardised PPT on GST Indirect Taxes Committee The Institute of Chartered Accountants of India

Disclaimer and Copy right This presentation has been prepared to provide a standard ‘user presentation’. The views expressed in this presentation are those of Speaker(s). The Institute of Chartered Accountants of India may not necessarily subscribe to the views expressed by the speaker(s). The information cited in this presentation has been drawn from various sources. While every efforts have been made to keep the information cited in this presentation error free, the Institute or any office do not take the responsibility for any typographical or clerical error which may have crept in while compiling the information provided in this presentation. Further, the information provided in this presentation are subject to the provisions contained under different acts and members are advised to refer to those relevant provision also. For clarifications write to us at idtc@icai.in © The Institute of Chartered Accountants of India This standardised PPT may be used by any person with due acknowledgement to the Indirect Taxes Committee of ICAI. © Indirect Taxes Committee, ICAI

Levy & Collection (Sec 7-9) © Indirect Taxes Committee, ICAI

Scope of Supply – Section 7 of CGST Act Section 7 - Meaning and scope of supply Section 7(1)(a) Section 7(1)(b) Section 7(1)(c) Section 7(1)(d) All forms of supply of goods and / or services, made or agreed to be made, - for a consideration - in the course or furtherance of business such as: - sale, - transfer, - barter, - exchange, - license, - rental, - lease or - disposal Importation of service, - whether or not in the course or furtherance of business Supplies specified* - To be treated as supplies made or agreed to be made without a consideration *Schedule I: 1. Permanent transfer / disposal of business assets for which ITC has been availed 2. Supplies between related persons/ distinct persons in the course or furtherance of business (gifts of less than Rs. 50,000 in value in a FY by employer to employee not to be treated as supply) 3. Supply of goods by / to principal to / by agent where agent undertakes to supply / receive such goods on behalf of principal 4. Importation of service from a related person or from any of his other establishments outside India, in the course or furtherance of business. Activities to be treated as supply of goods or supply of services – Sch II Section 7(2) Activities not to be considered as supply (Sch-III) Activities/ Transactions undertaken by CG/SG/ Local Authority as may be notified Section 7(3) By Notification on recommendation of GST Council treat activity as Supply of goods and not service Supply of service and not goods © Indirect Taxes Committee, ICAI

Scope of Supply – Section 7 of CGST Act Section 7(1)(d) – Activities to be treated as supply of goods or supply of services – Schedule II Sl No Matters Supply of 1 Transfer (a) Any transfer of title in goods Goods (b) Any transfer of right in goods or undivided share in goods without the transfer of title thereof Services (c) Any transfer of title in goods wherein the property in goods will pass at a future date upon payment of full consideration as agreed 2 Land and Building Any lease, tenancy, easement, licence to occupy land Any lease or letting out of the building including a commercial, industrial or residential complex for business or commerce, either wholly or partly,(renting of residential dwelling for use as residence is exempt vide Notification No.12/2017 – CT (Rate) dated 28.06.2017) 3 Any treatment or process applied to another person’s goods © Indirect Taxes Committee, ICAI

Scope of Supply – Section 7 of CGST Act Section 7(1)(d) – Activities to be treated as supply of goods or supply of services – Schedule II Sl No Matters Supply of 4 Transfer of business assets (a) Transfer / Disposal of goods so as to no longer to form part of business assets, whether or not for a consideration Goods (b) Goods are put to any private use or are used, or made available to any person for use, for any purpose other than a purpose of the business, whether or not for a consideration (Transfer of a going concern, as a whole or an independent part thereof, is an exempted service vide Notification 12/2017-CT (Rate) dated 28.06.2017 ) Services (c) Any person ceases to be a taxable person, any goods forming part of assets of any business carried on by him – shall be deemed to be supply in the course or furtherance of his business immediately before he ceases to be a taxable person, except – Business is transferred as a going concern to another person; or Business is carried on by a personal representative who is deemed to be a taxable person © Indirect Taxes Committee, ICAI

Scope of Supply – Section 7 of CGST Act Section 7(1)(d) – Activities to be treated as supply of goods or supply of services – Schedule II Sl No Matters 5 Following to be treated as Supply of Services (a) Renting of immovable property (unless the supply is otherwise exempted (such as renting of residential dwelling for the purpose of residence) (b) Construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or before its first occupation, whichever is earlier. Construction includes additions, alterations, replacements or remodeling of any existing civil structure (c) Temporary transfer or permitting the use or enjoyment of any intellectual property right (d) Development, design, programming, customization, adaptation, upgradation, enhancement, implementation of information technology software (e) Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act (f) Transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration © Indirect Taxes Committee, ICAI

Scope of Supply – Section 7 of CGST Act Section 7(1)(d) – Activities to be treated as supply of goods or supply of services – Schedule II Sl No Matters 6 Following Composite Supplies to be treated as Supply of Services (a) Works Contract as per Sec. 2(119) of CGST Act “works contract” means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract; (b) supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration. Illustration: Restaurant Services or Catering Services 7 Supply of goods by any unincorporated AOP or BOP to a member thereof for cash, deferred payment or other valuable consideration shall be treated as supply of goods © Indirect Taxes Committee, ICAI

Scope of Supply – Section 7 of CGST Act Section 7(2) – Activities not to be treated as supply Section 7(2)(a) Section 7(2)(b) Activities or transactions specified* * Schedule III Services by employee to employer in course of or in relation to his employment Services by court or Tribunal established under any law for the time being in force (a) functions performed by the M.Ps, Members of State Legislature, Members of Panchayats, Members of Municipalities and Members of other local authorities (b) duties performed by any person who holds any post in pursuance of the provisions of the Constitution in that capacity (c) The duties performed by any person as a Chairperson or a Member or a Director in a body established by the Central Government or a State Government or local authority and who is not deemed as an employee before the commencement of this clause Services of funeral, burial, crematorium or mortuary including transportation of the deceased. Sale of land and, subject to Construction Activity of Schedule II, sale of building Actionable claims, other than lottery, betting and gambling Activities or transactions undertaken by Central Govt, or State Govt, or Local authority in which they are engaged as public authorities as may be notified by the Government on the recommendations of the GST Council (Activity in relation to function entrusted to Panchayat under Article 243G of the Constitution notified vide Notification No. 14/2017- CT(Rate) dt. 28.06.2017) © Indirect Taxes Committee, ICAI

Tax liability on composite and mixed supplies– Section 8 of CGST Act Section 8 – Tax Liability on Composite or Mixed Supply A supply consisting of 2 or more supplies Treated as Supply of Composite supply of 2 or more supplies and one of which is a principal supply Principal Supply Mixed supply of 2 or more supplies That particular supply which attracts highest rate of tax © Indirect Taxes Committee, ICAI

Tax liability on composite and mixed supplies– Sec 8 of CGST Act Composite Supply [Sec 2(30)]: means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply. Illustration: Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply Principal Supply [Sec 2(90)]: means the supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary Mixed Supply [Sec 2(74)]: means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply: Illustration : A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drinks and fruit juices when supplied for a single price is a mixed supply. Each of these items can be supplied separately and is not dependent on any other. It shall not be a mixed supply if these items are supplied separately © Indirect Taxes Committee, ICAI

Certain Clarifications vide Circulars- Tax liability on composite and mixed supplies Para 5(3) of Circular No.32/06/2018-GST dated 12.02.2018: Food supplied to the in- patients as advised by the doctor/nutritionists is a part of composite supply of health care. Circular No.11/11/2017-GST dated 20.10.2017: In case of printing of books, pamphlets, brochures, annual reports, and the like, where only content is supplied by the publisher or the person who owns the usage rights to the intangible inputs while the physical inputs including paper used for printing belong to the printer, supply of printing of the content supplied by the recipient of supply is the principal supply. In case of supply of printed envelopes, letter cards, printed boxes, tissues, napkins, wall paper etc. falling under Chapter 48 or 49, printed with design, logo etc. supplied by the recipient of goods but made using physical inputs including paper belonging to the printer, the predominant supply is that of goods and the supply of printing of the content supplied by the recipient of supply is ancillary to the principal supply of goods and therefore such supplies would constitute supply of goods. © Indirect Taxes Committee, ICAI

Certain Clarifications vide Circulars- Tax liability on composite and mixed supplies Circular No. 34/8/2018-GST dated 01.03.2018: The activity of bus body building is a composite supply. As regards which of the components is the principal supply, the Circular directs that it be determined on the basis of facts and circumstances of each case. Re-treading of tyres– In re-treading of tyres, which is a composite supply, the pre- dominant element is the process of re-treading which is a supply of service, and the rubber used for re-treading is an ancillary supply. The Circular also specifies that “Value may be one of the guiding factors in this determination, but not the sole factor. The primary question that should be asked is what is the essential nature of the composite supply and which element of the supply imparts that essential nature to the composite supply” © Indirect Taxes Committee, ICAI

Tax liability on composite and mixed supplies– Section 8 of CGST Act Description Composite Supply Mixed Supply Naturally bundled Yes No Each supply available for supply individually Yes/No One is predominant supply for recipient Other supply(ies) are ancillary or they are received because of predominant supply Each supply priced separately Supplied together All supplies can be goods All supplies can be services A combination of one / more goods and one / more services While, the above tests could be guiding principles in determining as to whether a supply is composite or mixed supply the end user test could be adopted as one of the criteria. Every supply should be indpendently analysed While, the above tests could be guiding principles in determining as to whether a supply is composite or mixed supply the end user test could be adopted as one of the criteria; Every supply will have to be independently analysed. © Indirect Taxes Committee, ICAI

Meaning and Scope of Supply Supply comprises: Included supplies Implied supplies (Sch. I) Excluded supplies (Sch. III) Chargeability to tax: Forward charge on supplier Reverse charge on imports Lateral charge (e-commerce) Supply characterization: Composite supply or Mixed supply Cases to consider: Purpose of supply – business or not Same forms of supply apply to services Supply by casual taxable person ISD or inter-branch service transfer Intra-State stock transfer Free samples and warranty are supplies for consideration Material supplied for job-work Sch II not exhaustive but specific No supply, no tax but no credit too © Indirect Taxes Committee, ICAI

Levy and Collection 1: Subject 2: Supply 3: Place 4: Time Services Goods Goods and services 2: Supply Included Implied Excluded 3: Place Inter-State Intra-State 4: Time Specified for goods Specified for services © Indirect Taxes Committee, ICAI

Levy and Collection of CGST – Sec 9 To be levied on all intra-State supplies of goods and / or services, except on alcoholic liquor for human consumption; Value determined u/s 15 of CGST Act (Value of taxable supply); At the rates notified by Central Government; To be paid by every taxable person; CGST shall be levied on supply of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel with effect from such date as may be notified by the Government on the recommendations of the GST Council; Central Government has the power to specify the categories of supply of goods and/ or services on which Reverse Charge shall apply; Any supply received by the registered person from an unregistered person the CGST on such supply will be paid by recipient of such supply and all the provisions of this Act shall apply to such recipient as if he is the person liable to pay tax; Central Government has power to specify categories of services on which tax will be paid by e-commerce operators as if such services are supplied by such operators. © Indirect Taxes Committee, ICAI

Composition Levy © Indirect Taxes Committee, ICAI

Composition Levy – Section 10 of CGST Act Manufacturer – 0.5% Supplier covered under Sch. II, Para 6(b) – 2.50% Others – 0.50% Eligible Available Availed Allowed Compliance © Indirect Taxes Committee, ICAI

Not economically viable for Business to Business Transactions Composition Levy – Section 10 of CGST Act Option to pay an amount in lieu of tax; minimum rate to be: 0.50% of the turnover in case of manufacturers ( other than specified); 2.50% of the turnover in case of suppliers covered under Sch. II, Para 6(b) such as Restaurants or Caterers 0.50% of the turnover in other cases Note: State GST rate in addition expected to be equal. No tax to be collected; No Input Tax Credit available Aggregate Turnover < Rs. 1 Crore* in the preceding FY (all-India basis for taxable persons having same PAN – who shall also opt for composition) * Turnover Limit is Rs. 75 lakhs for Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh Not economically viable for Business to Business Transactions © Indirect Taxes Committee, ICAI

Composition Levy – Section 10 of CGST Act No composition option in the following specific cases: Services supplied: Any / all services (includes goods treated as supply of services by Schedule II), other than services covered under Schedule II, Paragraph 6(b) such as Restaurants Goods supplied: Non-taxable goods Inter-State outward supplies Through e-commerce operators required to collect tax at source under section 52 Notified goods manufactured by the supplier Manufacture Of: Ice cream and other edible ice, whether or not containing cocoa Pan masala All goods, i.e. Tobacco and manufactured tobacco substitutes If aggregate turnover (all India basis) of preceding FY exceeds 1 Crore (If during the FY, the aggregate turnover exceeds 75 Lakhs, no composition from the following day.) © Indirect Taxes Committee, ICAI

Composition Levy – Rule 3 of CGST Rules Intimation for Composition Levy: File intimation electronically in Form GST CMP-01 prior to appointed day or within 30 days after the said day or further period as may be extended by the Commissioner; If intimation filed after the appointed day then no tax to be collected and issue bill of supply; Any person applying for registration, if he opts to pay tax under Composition in the Form GST REG- 01 then it shall be considered as an intimation; Composition Supplier shall intimate in Form GST CMP-02 prior to commencement of financial year and also furnish Form GST ITC-3 giving details of ITC within 60 days from the commencement of relevant financial year; Composition Supplier shall furnish in GST CMP-03, details of: Stock Inward supply of goods received from unregistered person held as on the preceding day from which he opts for composition, within 60 days from the date from which option is exercised or such further period as may be extended by the Commissioner; Any intimations as above for any place of business in any State or Union Territory shall be deemed to be intimation of all other place of business registered on the same PAN. © Indirect Taxes Committee, ICAI

Composition Levy – Rule 4 of CGST Rules Effective date for Composition Levy: If Composition scheme is opted from the appointed date then effective date would be the appointed date. If Composition scheme is opted by already registered person then effective date would be from the beginning of the financial year If the registered person has applied for Composition then the intimation shall be considered only after the grant of registration to the applicant © Indirect Taxes Committee, ICAI

Conditions and Restrictions for Composition Levy – Rule 5 of CGST Rules Conditions and Restrictions for Composition Levy: Person opting for Composition shall comply with the following - Neither a casual taxable person nor a non-resident taxable person The goods held in stock by him on the appointed day have not been purchased in the course of inter-State trade or commerce, or imported into India, or received from his branch situated outside the State or from his agent or principal outside the State Goods held in stock have not been purchased from an unregistered person and where purchased tax has been paid under reverse charge He shall pay tax under reverse charge on inward supplies received from unregistered persons He was not engaged in the manufacture of notified goods during the preceding financial year He shall mention words “composition taxable person, not eligible to collect tax on supplies” at the top of the bill of supply issued by him He shall mention the words “composition taxable person” on every notice or signboard displayed at a prominent place at his place of business and at every additional place or places of business Registered person who has opted for Composition may not file fresh intimation every year and may continue to pay tax under composition © Indirect Taxes Committee, ICAI

Composition Levy – Rule 6 of CGST Rules Validity of Composition Levy: Option once exercised shall remain valid so long as he satisfies all the conditions prescribed The person shall be liable to pay tax under normal levy if he ceases to satisfy the conditions prescribed and has also filed an intimation for withdrawal from the scheme in Form GST CMP-04 within 7 days of occurrence of such event A registered person who wants to opt out of Composition Scheme can also intimate in Form GST CMP-04 If proper officer has reasons to believe that a person is not eligible for Composition or contravened any of the provisions then he may issue notice and a reply has to be filed by such person and based on such reply the proper officer may either accept the reply or deny the option to pay tax under Composition Upon an option to pay under Composition becoming invalid the person shall furnish details of the stock of inputs and inputs contained in semi-finished or finished goods held in stock Any intimation of withdrawal of option or denial of the option in respect of any place of business in any State or Union territory shall be deemed to be an intimation in respect of all other places of business registered on the same PAN © Indirect Taxes Committee, ICAI

Exemptions © Indirect Taxes Committee, ICAI

Exempt supplies, non-taxable supplies and zero-rated supplies Section 2(47) – “exempt supply” means supply of any goods and/ or services which attract nil rate of tax; or which may be exempt from tax under Section 11 or Section 6 of IGST Act and includes non-taxable supply Section 2(78) – “non-taxable supply” means a supply of goods and/or services which is not leviable to tax under this Act or IGST Act Section 16(1) of IGST Act – “zero-rated supply” means any of the following supplies of goods and/or services, namely - Export of goods and/or services Supply of goods and/or services to a SEZ developer or an SEZ unit © Indirect Taxes Committee, ICAI

Power to grant exemption from tax – Section 11 of CGST Act Central or State Government, based on the recommendation of the Council S.11 (3) On taxable goods and/ or services of any specified description Considers it necessary Is satisfied that it is necessary, in the public interest For the purpose of clarifying the scope or applicability of A or B S.11 (1) S.11 (2) By Notification By Notification - A By Special Order – B Exempt Generally Exempt Insert an explanation in A or B, as the case may be, within 1 year (such clarification to have retrospective effect) Absolutely (not optional); or Subject to conditions Under exceptional circumstances, explicitly specified in such Order Whole Tax; or Part tax Whole Tax © Indirect Taxes Committee, ICAI

Thank You For any Clarification, Please Contact Indirect Taxes Committee of ICAI Email: idtc@icai.in, Website: www.idtc.icai.org © Indirect Taxes Committee, ICAI