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

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

3. 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.

4. 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.’’.

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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)

11. 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

12. 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.

13. 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

14. 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

15. 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

16. 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

17. 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

18. 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

19. 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

20. 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

21. 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

22. 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
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

23. 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