1. INDIAN GST SERVICE SECTOR
Rakesh Garg, LLB, FCA
(Author & Consultant)

2. Impact in General
Abbreviation used : Appointed Day - AD

3. Registration & Compliances
(1)
Multiple registrations in lieu of single registration
(2)
No threshold limit for inter-State supply
(3)
Complexity with the place of supply
(4)
Monthly compliances in lieu of quarterly/half yearly
(5)
Returns Numerous information – Supply & Receipts, Bill wise

4. Inter-State Supply of Goods/Services
PLACE OF SUPPLY
Goods
Services
Other than Import & Export - Sec 10
Import & Export of goods -Sec 11
Both Parties in India – Sec 12
One Party Outside India - Sec 13 4

5. Section 12(2) – General Rule (other than (12(3) to (14))
Place of Supply of Service (Location of Recipient & Supplier is in India)
Section 12(2) – General Rule (other than (12(3) to (14))
Supply Made To
Other Person
Address on record exists
Location of Recipient
Other Cases
Location of Supplier
Registered Person

6. Place of Supply of Service (Location of Recipient & Supplier is in India)
(a) Regd. person - Location of such person
(b) Other person- Location of event or supplier or as specified
Hybrid basis
(9) Passenger Transport – If to an unregistered person - POS where passenger embarks on the conveyance for a continuous journey
Training (5) Banking, Stock broking (12) Insurnce (13) – Address of Recipient on the records – Otherwise, location of supplier.
(7) Organization of a cultural, artistic, sporting, scientific, educational or entertainment event including a conference, fair, exhibition, celebration etc., or assigning of sponsorship of any of the above events- If to URD, POS shall be location of event. If event is held outside India, then location of recipient.
(8) Transport of Goods – If to an unregistered person - POS where goods are handed over for their transportation
(11) Telecommunication
In case service is provided to URD, generally it would be taxable at the place of performance. If that URD takes reimbursement from employer, later would not net credit; and GST would be his cost 6

7. Section 12(2) to (14) – A Summary Origin/Location/ Performance
Place of Supply of Service (Location of Recipient & Supplier is in India)
Section 12(2) to (14) – A Summary
Manner of POS
Hybrid System
Origin/Location/ Performance
Location of recipient
(2)-General
(5)-Training
(9)-Tpt Person
(13)-Insurance
(3)-Immv. Prop
(7)-Org. of Event
(11)-Telecom
(4)-Performanc
(14)- Adve rtisement
(8)-Tpt Goods
(12)-Banking
(10)- Serv. on Board
(6)-Adm to event

8. Section 13(3) to (14) – A Summary Origin/Location/ Performance
Place of Supply of Service (Location of Recipient or Supplier is outside India)
Section 13(3) to (14) – A Summary
Manner of POS
Origin/Location/ Performance
Location of Supplier
Location of Recipient
(3)-Perfor mance
(10)-Tpt person- Embark
(8)-Bank/ NBFC
(2)-General
(4)-Immo prop.
(11)-Board a conveyance
(8)-Interm. Goods/Ser.
(9)-Tpt of Goods
(5)- Adm/ org - event
(8)-Hiring of Tpt
(12)-Online

9. Place of Supply of Service – Sec 12 vs. 13
Nature
Both in India-S.12
One outside India-S.13
Passenger Transport
(9) Hybrid
(10) Passenger Embarks
Organisation of event
(7) Hybrid
(5) Location of event
Banking, etc
(12) Hybrid
(8) Place of supplier
Transport of goods
(8) Hybrid [URD- Originates]
(9) Place of destination of goods
Intermediary; Hiring of transport (other than aircraft, vessel) up to one month
(2) – General – Location of Recipient
(8) Location of supplier
Performance based- Goods are made available to supplier of service
(3) Location where service is performed
Imm. property (being boats/ vessels) located outside India
(3) Location of recipient
(2) Location of recipient
Imm. prop (other than boats/ vessels) located outside India
(4) Location of property 9

10. Inter-State supply of Services
HARDSHIP
If the manufacturer gives the material for out-station job worker, job-worker would charge IGST
If a service center repair the mobile phone during warranty, and charges the repair charges to the phone company located outside his state, it will raise the invoice of IGST
If a person comes from other State for job work or repair charges in other state, then in such another state he would wither make inter-state supply or be a casual taxable person.

11. No such condi-tion for export of goods
Export of Services
2(6)/IGST - Supply of any service shall be treated as “Export of Service” when -
(a) the supplier of service is located in India,
(b) the recipient of service is located outside India,
(c) the place of supply of service is outside India,
(d) payment is received in convertible foreign exchange, &
(e) Supplier of service & recipient of service are not merely establish. of a distinct person as per expln. to Sec. 5. Establish. of a person in India/ State and outside India/ State to be treated as establish. of distinct persons ????
What happens if export denied-Subject to IGST – Then who will claim tax credit – Recipient located out of India
Export of service is Zero rated – Subject to LUT/Bond
No such condi-tion for export of goods

12. Input Tax Credit
The service providers could get ITC on goods, which was not available in VAT regime
However, under GST, ITC would be available to the Recipient only if the counterparty supplier has paid tax to the appropriate govt. and has filed its valid returns.
These provisions require chasing by the recipients of the suppliers to deposit tax liability on or before due date.
Therefore, efforts should be started right now to identify such dealers who are generally tax defaulters.
Taxpayers might have to change their business model by keeping security deposit or indemnity bond from such suppliers till these suppliers file their valid return. 12

13. Other Aspects
Abbreviation used : Appointed Day - AD

14. Existing Long Term Contracts
All acts envisage levy of taxes as per the provisions prevailing at the time of event.
The contracts, which have been entered before the appointed day and to be partly/wholly executed after that day, might relate to -
Works contract activities,
Leasing activities,
Recurrent supplies under a master agreement
In case of “exclusive of tax” contracts, the contractor must ascertain that he should be in a position (contractually) to transfer the additional burden of tax, if any, upon the contractee. If there is no such clause in the contract, suitable amendments must be carried out before the appointed day. 14

15. Existing Long Term Contracts
All the existing contracts, which have been executed “inclusive of all taxes”, must be renegotiated to safeguard their interest.
It should also be ensured that invoices for the work done are raised before the appointed day.
For this purpose, it is necessary, that provisions in respect of “time of supply” and Transition provisions are properly understood. 15

16. Existing Long Term Contracts
Special care is to be taken in WORKS CONTRACTS.
Many contractors are claiming deduction for sub- contractors under the VAT as per the L&T / State VAT provisions – However, not possible under the GST
No more exemption for sale in the course of import (first limb of S.5(1)/CST). If the contractor has certain stock in his hand, which has not been billed before the AD, it would be taxed under the GST.
Presently iron & steel, incorporated in WCT, is 5%. However, under GST, irrespective of rate of tax on iron & steel, it would ultimately be taxed at the rate applicable to the services, might be 18%. 16

17. Existing Long Term Contracts
Special care is to be taken in WORKS CONTRACTS.
It has to be looked into whether present exemption under the Service Tax is continued in GST. If No, then impact is to be evaluated . Where Service is exempt, the contractor is unable to claim Cenvat credit, and becomes its cost.
Presently works contracts are taxable under service tax plus VAT. Under GST, it would be taxable as service. No abatement, similar to in service tax and VAT
Where the contractors (with turnover of more than INR 50 lakhs) are paying tax under the composition scheme, they must evaluate the impact since there might not be such scheme under the GST. 17

18. Impact of Exemptions in GST
Presently Mega Exemption is available to services only
Generally VAT does not allow any exemptions. Thus the supplier is eligible for credit on goods
Under GST, where entire contract is exempt, the supplier could not recover any output tax, and would not avail any ITC. Needless to mention, that inputs would be taxable at higher rate of tax. 18

19. Exemption and Rates under GST
Rates of tax on goods –
(i) 2.5 per cent. in respect of goods specified in Schedule I, (ii) 6 per cent. in respect of goods specified in Schedule II, (iii) 9 per cent. in respect of goods specified in Schedule III, (iv) 14 per cent. in respect of goods specified in Sch. IV, (v) 1.5 per cent. in respect of goods specified in Sch. V, and (vi) per cent. in respect of goods specified in Schedule VI
Same HSN may fall under two different tax rates
Decide the HSN for goods supplied, and apply the correct rate of tax. 19

20. Exemption and Rates under GST
Rates of tax on goods –
In chapter 50 to 56, 60 86, in many HSN - no refund of unutilised ITC shall be allowed, where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on the output supplies of such goods
Chapter 61, 62 and 63 – Article of clothing and made ups- sale value exceeding/does not exceed Rs per piece 12% 5% 20

21. Exemption and Rates under GST
Rates of tax on Services–
0, 12, 18, 28 are based upon List specified
Restriction for claiming ITC has also been specified in the GST Rates- These restrictions are qua supplier and not qua recipient. Thus, the rate list does not restrict in claiming of ITC by the recipient
In complex of construction, no refund for inflow of ITC.
Certain services, such as transfer of right to use goods are taxable at the rate applicable to that on goods. 21

22. THANK YOU RAKESH GARG, LLB, FCA S S A R & ASSOCIATES, N. DELHI
(Author of Central Sales Tax,
Delhi VAT, Service Tax & GST)
S S A R & ASSOCIATES, N. DELHI
Ph: (011) ,