Goods and Services Tax (‘GST’) SCI- Technical and offshore division

Goods and Services Tax (‘GST’) SCI- Technical and offshore division
22 May 2017

Contents Taxes to be subsumed in GST Duties / Taxes to Remain
GST framework in India Taxes to be subsumed in GST Duties / Taxes to Remain Dimensions of the proposed GST Time of supply of goods Place of supply of goods for T&OS Input Tax Credit Relevant case studies for T&OS Areas for Considerations Questions & Answers

GST Framework in India

GST Framework in India Taxes to be subsumed in GST
Taxes on lottery, betting, gambling Entry Tax & Octroi Entertainment Tax (except by local bodies) Purchase Tax & Luxury Tax Central Sales Tax VAT State cesses & surcharges on goods & services SGST Central Excise* Duty + Additional Excise duties Service tax Central cesses & surcharges on goods & services Additional & Special Additional Duty of Customs CGST Areas of consideration for oil & gas industry Five petroleum products namely, Crude, Natural Gas, Aviation Turbine Fuel, Motor Spirits and High Speed Diesel proposed to be kept outside ambit of GST GST on these petroleum products proposed to be levied from a notified date recommended by the GST Council

Property tax and profession tax State Electricity Duty
GST Framework in India Duties / Taxes to Remain Basic Customs Duty Taxes on liquors and petroleum products Stamp duty Excise duty on tobacco products Toll tax Property tax and profession tax Export duty Environment tax State Electricity Duty 7

Concepts under GST law Understanding the term ‘Supply’
Supply is the taxable event under GST law Supply includes all forms of supply of goods and / or services Includes transaction such as sale, transfer, barter, exchange Includes specific activities to be treated as supply without consideration (Schedule I) Supply converges multiple existing taxable events Composite supply is combination of: two or more goods, two or more services, goods and services Schedule II specifies the matters to be treated as Supply of Goods or Services

GST Framework in India Dimensions of the proposed GST
GST is destination based consumption tax Taxable event of ‘supply’ of goods / services or both Dual GST: Central GST (CGST) and State GST (SGST) / Union Territory GST (UTGST) IGST on inter-State transactions Imports would be subjected to IGST in addition to BCD and Customs Cess (as duty of customs) GST is not applicable on ‘zero rated supplies’ Special Industrial Area Schemes to be converted into investment based through their validity period CGST and IGST does not extend to Jammu & Kashmir Dimensions of GST framework? Tax credit mechanism GST Intra-State CGST SGST/UTGST Inter-State IGST (CGST+SGST / UTGST) CGST SGST / UTGST IGST Input CGST against: CGST IGST Input SGST against: SGST / UTGST IGST Input IGST against: IGST CGST SGST / UTGST

GST Framework in India Category Goods Services Forward charge
Time of supply of goods Category Goods Services Forward charge Date of Issuance of Invoice The last date on which he is required to issue the invoice Date of making payment Date of issuance of invoice Date on receipt of payment Date of provision of services (date of receipt or credit in the books of account whichever is earlier) Reverse charge Date of receipt of goods Date immediately following thirty days from the date of issue of invoice by the supplier Date immediately following sixty days from the date of issue of invoice by the supplier Advances for supply of goods / services is trigger point (time of supply) for GST; Receipt Voucher to be issued for customer advances

GST Framework in India Place of supply relevant for T&OS division transaction Transactions of T&OS division General Rule Exceptional case (O&M of vessel) Location of Recipient (Address on invoice) Foreign customer Unregistered/registered Indian customer Location of service recipient Location of first scheduled point of departure

GST Framework in India CGST SGST IGST
Claimant must be a registered taxable person Claimant is in possession of a tax invoice or debit note for Goods and services received / to be received GST charged in respect of such supplies has been actually paid to appropriate government Statutory return has been filed by the registered taxable person Goods and services acquired are subject to input tax restriction such as: Works Contracts resulting in immovable property other than plant and machinery Goods disposed of by way of gift or free samples. Goods and services used for private / personal consumption of employees such as food & beverages, outdoor catering, beauty treatment, health services, club membership, life and health insurance, travel benefits Input Tax Credit: Conditions, Prerequisites & Mechanism Claimant has received good/ services CGST SGST IGST Utilization of Input Credit against output liability: Input CGST against – CGST IGST Input SGST against - SGST IGST Input IGST against – IGST CGST SGST

Value of taxable supply
GST Framework in India Valuation of taxable supply Value of taxable supply = Transaction Value if: Transaction is between unrelated parties Price is sole consideration for supply Transaction value Inclusions Taxes and duties other than GST Incidental costs/ expenses (such as commission, packing, royalties etc.) Subsidies linked to the supplies Discount or incentive allowed after the supply Exclusions Subsidies received from Government Discount known before supply and linked to invoices Any discount allowed before or at the time of supply as recorded in invoice Expenses incurred as a pure agent (reimbursements) Draft GST Valuation Rules 2017 are put up for industry feedback on 1 April 2017; These rules provide for valuation of transactions between related parties / distinct persons

Relevant case studies for T&OS

Customer (Gujarat)location)
Relevant case studies for T&OS Time charter, consultancy service, Mobilisation/Demobilisation, Facilitating floating of tender Indian customer SCI (Mumbai location) Customer (Gujarat)location) Place of Supply Indian customer (Registered) : Gujarat (Location of registered customer) Indian customer (Unregistered) : Gujarat (Location of address of recipient ) Maharashtra (Location of SCI when address of recipient is not available) Levy of Tax Indian customer (Registered) : IGST (location of supplier and place of supply is in different state) Indian customer (Unregistered) : IGST Foreign customer SCI (Mumbai location) Customer (Singapore location) Place of Supply Singapore (Location of customer) Maharashtra (Location of SCI if address of customer Is not available) Levy of Tax Not applicable if it qualifies as export of service

(Maharashtra Location)
Relevant case studies for T&OS Operation and Managing vessel of ONGC, DG Shipping, DRDO Indian customer First schedule point of departure is Gujarat SCI (Mumbai location) Service receiver (Maharashtra Location) Place of Supply Indian customer (Registered) : Gujarat (First scheduled point of departure of the vessel) Indian customer (Unregistered) :Gujarat Levy of Tax Indian customer (Registered) : IGST (location of supplier and place of supply is in different state) Indian customer (Unregistered) : IGST In case where O&M services are provided wherein the first scheduled point of departure of conveyance is outside India, it will be regarded as IGST trade or commence, since the place of supply will be outside India and the supplier and recipient is located in India. The said transaction does not qualify as export of service

(Maharashtra Location)
Relevant case studies for T&OS Victualling service Indian customer First schedule point of departure is Gujarat SCI (Mumbai location) Service receiver (Maharashtra Location) Place of Supply Indian customer (Registered) : Gujarat (First scheduled point of departure of the vessel) Indian customer (Unregistered) :Gujarat Levy of Tax Indian customer (Registered) : IGST (location of supplier and place of supply is in different state) Indian customer (Unregistered) : IGST In case where O&M services are provided wherein the first scheduled point of departure of conveyance is outside India, it will be regarded as IGST trade or commence, since the place of supply will be outside India and the supplier and recipient is located in India. The said transaction does not qualify as export of service Foreign customer SCI (Mumbai location) Customer (Singapore location) Place of Supply Singapore (Location of customer) Maharashtra (Location of SCI if address of customer Is not available) Levy of Tax Not applicable if it qualifies as export of service

Sale of vessel and Lubricant oil and MGO (Present in the vessel) Indian customer Delivery terminates at Gujarat SCI (Mumbai location) Customer (Gujarat Location) Place of Supply Indian customer: Location where the goods terminates for delivery to recipient Levy of Tax Indian customer: IGST (location of supplier and place of supply is in different state) Foreign customer Delivery terminates at Singapore SCI (Mumbai location) Customer (Singapore Location) Place of Supply Foreign customer: Location outside India Levy of Tax Indian customer: Not applicable if it qualifies as export of goods

Sale of HFHSD(Present in the vessel) 5 petroleum products are kept outside the purview of levy of GST. HSD is one such product. Thus, on supply of such goods, VAT / CST shall continue. Interest income on delayed payment Place of Supply The treatment as applicable to the principal supplies would apply squarely Levy of Tax The treatment as applicable to the principal supplies would apply squarely Delivery/Re-delivery of bunker It is to be noted that position for Delivery/Re-delivery is yet to be finalized Manning Service- Input transaction With respect to manning services, it has been agreed that the said transaction is in nature of supply of man power service. Therefore, the place of supply for the said provision of service would be governed by residual rule.

Areas for Consideration

Action Points Particulars Description Input tax credit GST charged on supply of goods and services would be eligible as credit to SCI. SCI would be eligible to take credit in the states where SCI has opted to migrate under GST registration i.e. Maharashtra, Tamil Nadu, West Bengal, Delhi, Andaman & Nicobar. Further on certain services, GST would be payable under reverse charge mechanism as may be notified In case of non-payment of value of the goods & tax thereon to the supplier towards goods / services within period 180 from the date of invoice, then credit taken on such invoice needs to be reported in the return of the month immediately following the period of 180 days. The amount of reversal will be added in the output tax liability of the assessee. In addition to output liability, interest from the date of availment of credit till date of addition in the output tax liability. Input tax credit in respect to services would be available only in proportion to taxable and zero rated supplies.. As per Rule of reversal, identification of credit of taxes paid on Input and Input services pertaining to taxable, exempt supplies, zero rated supplies, non business purpose is identified. The tax credit will be reversed provisionally every month. The mannerism with respect to reversal and formula in detail would be explained in report. In case where goods are imported, BCD credit shall not be eligible and IGST credit shall be eligible

Action Points Particulars Description Tax Invoice SCl shall issue tax invoice, For supply of service within a period of 30 days from the date of supply of service In case of inward supplies received from unregistered persons liable for reverse charge, invoice shall be issued by SCI on the date of receipt of goods or services from an unregistered vendor. Payment voucher is required to be issued by SCI at the time of making payment to the unregistered supplier. Manner of issuing tax invoices: For Supply of Services Bill of Supply Bill of supply should be issued in case of exempted supply of goods or services or both or where the supplier chooses to pay tax under composition method. Details of such exempted supplies should be disclosed in GST return in the prescribed manner. Supplier may not issue a bill of supply if the value of the goods or services or both supplied is less than INR 200 and subject to the following conditions namely, The recipient is not a registered person and The recipient does not require such invoice However, supplier shall be required to issue a consolidated bill of supply for such supplies at the close of each day in respect of all such supplies Original Copy- for Recipient Duplicate Copy- for Supplier

Action Points Particulars Description Credit or Debit note Credit Note shall be issued by supplier when in the invoice issued by vendor, tax charged and taxable value is more than the taxable value and tax payable of the goods and/ services or where goods supplied are returned by SCI to vendor or goods and/ service received are deficient Debit note shall be issued by supplier when in the invoice issued by vendor, tax charged and taxable value is less than the taxable value and tax payable or price is revised upward Credit or debit note should be issued on or before Filing return for the month of September following the end of the F.Y. to which such invoice relating to debit note pertains or Furnishing of the relevant annual return; whichever is earlier. in order to make necessary rectification in returns.

Action Points Particulars Description Price Adjustment For upward revision, raise a debit note / suppl. invoice, charging GST For a downward revision, raise a credit note – either with GST or only on basic price All adjustments need to be reported during the month of transaction or before filing of annual return Debit / credit notes should not be aggregated for multiple invoices (each debit / credit note should refer to a single invoice) Discounts All upfront discounts should be provided on basic price and GST should be applied on price after discount Other post supply adjustment All post supply discounts should be in the form of a credit note – with GST or only on basic price. No supply of additional quantities of items in lieu of discounts, as the same may attract GST.

Particulars to be furnished Sr.No. Particulars Tax invoice Bill of supply Receipt voucher Debit or credit note Delivery challan Rule 1 Rule 4 Rule 5 Rule 6 Rule 8 1 Name, address and GSTIN of the supplier/Consigner;  2 Consecutive serial number containing only alphabets or numerals or special characters unique for a financial year 3 Date of its issue; 4 Name, address and GSTIN/ Unique ID Number, if registered, of the recipient/consignee; 5 Name and address of the recipient and the address of delivery, along with the name of State and its code, if such recipient is unregistered and where value of supply is fifty thousand rupees or more 6 HSN code of goods or Accounting Code of services 7 Description of goods or services; 8 Quantity in case of goods and unit or Unique Quantity Code thereof; 9 Total value of goods or services; 10 Taxable value of goods or services taking into account discount or abatement, if any 11 Rate of tax (central tax, state tax, integrated tax, union territory tax) 12 Amount of tax charged in respect of taxable goods or services (central tax, state tax, integrated tax, union territory tax)

Particulars to be furnished Sr.No. Particulars Tax invoice Bill of supply Receipt voucher Debit or credit note Delivery challan Rule 1 Rule 4 Rule 5 Rule 6 Rule 8 13 Place of supply along with the name of State, in case of a supply in the course of inter-State trade or commerce;  14 address of delivery where the same is different from the place of supply; 15 Whether the tax is payable on reverse charge; 16 Amount of advance taken 17 Signature or digital signature of the supplier or his authorized representative 18 Nature of document 19 Serial number and date of the corresponding tax invoice /bill of supply 20 Taxable value of goods or services, rate of tax and the amount of the tax credited / debited to the recipient

Key statutory filings and returns Return Details Timelines Form GSTR – 1 Details of outward supplies of goods and/or Services By 10th of the following month Form GSTR – 2 Details of inward supplies of goods and/or services By 15th of the following month Form GSTR - 3 Monthly return on the basis of finalisation of details mentioned above with payment of tax and other details Within 20 days of the following month Form GSTR - 4 Registered person paying tax under Composition Method furnish quarterly return of turnover, inward supplies with payment of tax and other details. Within 18 days after end of such quarter Form GSTR – 5 Return for Non-Resident foreign taxable person Within 20 days after end of the month or within 7 days after the last day of the period of registration, whichever is earlier. Form GSTR – 6 ISD return Within 13 days of the end of the month Form GSTR – 7 Returns for tax deducted at source Within 10 days after end of the month in which deduction is made Form GSTR – 8 Details of supplies effected through e-commerce operator and the amount of tax collected as required under sub-section (1) of section 43C Within 10 days after end of the month Form GSTR – 9 Annual return By 31 Dec of the following the end of such FY Form GSTR - 9B Reconciliation statement

GSTR-1 Outward supply includes
Supplies Supplies made to registered dealers during the month Inter state supplies made to unregistered dealers during the month (for invoice more than 2.5 lacs) Supplies made to unregistered dealers – intrastate and interstate less than 2.5 lacs Amendments to any of the above for supplies made in the earlier months Debit / Credit Note Debit / Credit notes issued during the month including reverse charge Amendments to any of the earlier periods debit / credit notes Exports Supplies exported including deemed exports made by payment of GST or without payment of GST during the month Amendments to any of the supplies exported including deemed exports of earlier months Exempted supplies, Nil rated supplies and non GST supplies Summary of all the interstate / intrastate supplies to registered and unregistered person during the month Advances Tax liability arising in the current tax period where invoice is not issued in the current tax period Invoices issued in the current tax period for which tax was already paid earlier Amendments in the tax liability arising on account of non issuance of invoice in earlier period Invoices issued Invoices issued during the month including inward supplies received from unregistered person liable for reverse charge

GSTR-2 Inward supply includes
Supplies Received Supplies received from registered dealers during the month Supplies received from unregistered dealers during the month including receipts under reverse charge Amendments to any of the above for supplies made in the earlier months Debit / Credit Note Debit / Credit notes received during the month including reverse charge Amendments to any of the earlier periods debit / credit notes Imports Goods/Capital goods and Services imported during the month Amendments to any of the supplies imported of earlier months Exempted supplies, Nil rated supplies and non GST supplies & supplies received from composition person This will include summary of all supplies received from composition taxable person other exempt / Nil / non GST supplies during the month Credit received ISD credit, TDS credit, TCS credit and ITC received during the month will be reflected in separate tables on GSTR-2 Advances Tax liability arising under reverse charge arising on account of time of supply where invoice is not issued in the current tax period and amendments made for earlier tax period Invoices issued in the current tax period for which tax under reverse charge has already been paid ITC Reversal Any ITC reversal during the month and any amendment in the ITC claimed in the earlier period will be reported under this head.

GSTR-9 Annual return Details of Expenditure
Purchase of goods and services on inter-state basis, intra-state basis and imports on which ITC is availed Purchase of goods and services where no ITC is availed Sales returns of goods Details of expenditure other than purchases Details of Income Supply of goods and services on inter-state basis, intra-state basis and export on which GST is paid Supply of goods and services on export where no GST is paid Other Supply of goods and services where no GST is paid (Exempted, Nil rated, Non GST supplies) Purchase return of goods and services Details of Income other than from supplies Return reconciliation statement Reconciliation of tax paid and tax payable as per audited accounts Other amount Details of orders containing arrears of tax payable arising from audit/assessments along with current status of the order Details of refund claims along with current status of claim Profit as per profit and loss statement Gross profit, Profit after tax and Net profit as per profit and loss account Notes If the turnover of the registered taxable person exceed INR 1 crore shall get his annual accounts audited by a chartered accountant or cost accountant and he shall furnish a copy of audited annual accounts and a reconciliation statement, duly certified in FORM GSTR-9B

Interdependence pertaining to return filing steps
GSTR1 GSTR2A GSTR2 By 10th Auto populated 15th to 17th GSTR3 Amended GSTR1 GSTR1A 20th - Auto populated 17th to 20th Auto populated Accept (Provisional) Modify including rejection Add

Area for Consideration
Impact of Anti-profiteering clause 1 1 Section 171 Anti Profiteering Measure has been incorporated under GST law 2 Anti Profiteering Measure has been inserted to examine whether reduction in the price on account of any reduction in rate have actually resulted in a commensurate reduction in the price of the said goods/services supplied by them 3 Authorities shall have power to impose penalty in cases where it finds that the price being charged has not been reduced as aforesaid

Action Points GST Compliance rating Every taxable person shall be assigned a GST compliance rating score based on his record of compliance. Such scores would be determined on the basis of certain parameters. SCI should use this periodic ratings should be used for selection of vendors in order to avoid any business agreements with GST non-compliant vendor. Key Transitional Aspects Amount of unutilized credit under current law shall be carried forward under GST regime subject to the condition that the same shall be eligible as per GST law. In relation to above, following action points are suggested for SCI: To undertake the review of transactions (of at least prior to one year) for ascertaining the missed out credits. All RCM payments should be made prior to GST regime so that credit can be carried forward. Payments to the vendors outstanding for more that 3 months should be made before GST regime so that credit of the same will not be required to be reversed and credit in relation to the same can be carried forward. Any credit note/debit note should be settled prior to GST regime so that correct credit balance shall be carried forward.

Action Points Key Transitional Aspects (cont..) Vendors should be requested to issue invoices pertaining to pre GST regime at least 15 days before the appointed date for GST regime. For the same, letters may be issued to the said vendors. All the service invoices should be booked at earliest in order to take CENVAT credit and carry forward as opening balance under GST regime. Any price revision post GST regime should be supported by credit note or debit note and applicable GST therein. In case of procurement of services, if the advance has already been paid then vendor shall be required to discharge service tax on the same (as per transitional provisions). As a consequence, no GST shall be collected on the said amount.

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Goods and Services Tax (‘GST’) SCI- Technical and offshore division

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Goods and Services Tax (‘GST’) SCI- Technical and offshore division

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