1. Service Tax and GST J V Niranjan Niranjan & Associates1

2. Index Service Tax Procedures – Registration – Invoicing – Payment of tax – Returns Works Contract Valuation of Services GST – the way ahead Niranjan & Associates 2

3. Service Tax Procedures Tax law lays down the substantive conditions Rules govern the collection of tax Main procedures to be followed are – Registration – Invoicing – Payment of tax – Returns Niranjan & Associates 3

4. Registration Who should register – Person providing services – Person receiving services – Non assesse Niranjan & Associates 4

5. Registration Per Section 65(1) of the Act read with Rule 4 of the Service Tax Rules – Every person liable to pay tax has to register – With Superintendent of Central Excise Single registration even if more than one service is provided Registration does not mean that tax is payable Registration determines the location of the service provider and receiver Cenvat available dehors registration Aggregator is required to register – To nominate a person in India to pay tax Registration is deemed to be granted if not issued within 7 days Electronic Registration through ACES System Change in details will require amendment to registration No fee payable for registration Registration number is 15 digit PAN based number ( STC) Niranjan & Associates 5

6. Registration – contd... Centralized registration is granted for multiple premises Granted by Principal Commissioner/ Commissioner Possible when – Has centralized billing – Centralized accounting system – Located in one or more premises Niranjan & Associates 6

7. Invoicing Invoice to be issued within 30 days from – The date of completion of service – Receipt of payment towards any service – Banking Company can issue invoice within 45 days – Not required to be issued for receipt of excess payment up to Rs. 1000/- Invoice to contain – Name, Address and STC of the provider of service – Name and address of the receiver – Description and value of the service – Service tax payable – CESS to be shown separately – To be signed or digitally signed – Date of the Invoice – Rule does not mention the same, however Niranjan & Associates 7

8. Payment of tax Service provider to pay tax except in case of reverse charge Service tax is payable on accrual basis – Individuals and firms having billing of less than 50 Lacs can pay on cash basis – Duty paid through debit under the scrip shall be available as Cenvat Credit Niranjan & Associates 8

9. Reverse Charge Niranjan & Associates 9

10. Reverse Charge Niranjan & Associates 10

11. Reverse Charge Niranjan & Associates 11

12. Reverse Charge Niranjan & Associates 12

13. Reverse Charge Niranjan & Associates 13

14. Payment of Service Tax through G.A.R. 7 Quarterly Payment Other than Individual/FirmIndividual/Firm Monthly Payment Quarter Ending on 31 st March Other QuartersMonth of MarchOther Months Upto 31 st March 5 th of the Month following Quarter Upto 31 st March 5 th of the Next Month E – Payment of Service Tax

15. Returns Return of Service Tax to be filed Half Yearly – ST-3 – For 1st April to 30th September – Due Date - 25th October – For 1st October to 31st March – Due Date - 25th April Input Service Distributor – For 1st April to 30th September – Due Date - 30th October – For 1st October to 31st March – Due Date - 30th April Niranjan & Associates 15

16. Works Contract Service What is works Contract – Covers contracts involving transfer of property in goods and provision of services – Indivisible/ composite contracts – Contracts treated as works contracts under VAT/ CST laws to be considered as works contracts under Service tax laws also’ – Departmental circular dated 22 May 2007 Specifically excludes works contracts in relation to roads, bridges, dams, tunnels, airports, transport terminals and railways Single residential unit otherwise than as part of residential complex Post harvest storage infrastructure Mechanized food grain handling system and equipment for processing agricultural produce as food stuff Niranjan & Associates 16

17. Works Contract Service - Contd... Value to be arrived at by deducting the value of the goods used If the above is not possible – In case of original works – 40% – Maintenance or repair of goods – 7% – Other works contract – 60% – Duplicate works – 70% Niranjan & Associates 17 New constructions, Repairs to abandoned or damaged ones to make them fit to use EPC of Plant and machinery

18. Valuation of Services Value of Service is – Gross amount charged by the service provider, if consideration is in money – The aggregate of money and value of non monetary consideration – the gross amount charged by a service provider, for the service provided or to be provided is inclusive of service tax payable, the value of such taxable service shall be such amount as, with the addition of tax payable, is equal to the gross amount charged. If the value charged is inclusive of tax, then tax can be grossed up Valuation Rules notified Gross amount to include any amount received towards the taxable service before, during or after provision of such service. Niranjan & Associates 18

19. Valuation Consideration” includes– – Any amount that is payable for the taxable services provided or to be provided; – Any reimbursable expenditure or cost incurred by the service provider and charged – Credit Notes, debit notes and book adjustments in case of associated enterprise Niranjan & Associates 19

20. Valuation Works contract value is – Gross amount charged – less value of goods transferred – Does not include VAT Niranjan & Associates 20

21. Valuation value of works contract service shall include,- – labour charges for execution of the works; – amount paid to a sub-contractor for labour and services; – charges for planning, designing and architect's fees; – charges for obtaining on hire or otherwise, machinery and tools used for the execution of the works contract; – cost of consumables such as water, electricity, fuel, used in the execution of the works contract; – cost of establishment of the contractor relatable to supply of labour and services; – other similar expenses relatable to supply of labour and services; and – profit earned by the service provider relatable to supply of labour and services Niranjan & Associates 21

22. Valuation Indoor catering : 40% of the amount Outdoor catering : 60% of the amount Niranjan & Associates 22

23. Valuation When value is not known then – It shall be the gross amount charged for similar service in normal course – If no such service exists, then equivalent money value not less than the cost of provision of the service Niranjan & Associates 23

24. Ongoing regular meetings between the Centre and States Constitutional Amendment likely to be passed if impasse is over Point of Taxation Rules in place Draft GST Law / Rules expected Compensation formula sweetened Introduction of GST in April 2016 appears uncertain GST – Current State of Play

25. Features of GST

26. Proposed GST – Transactions within a State  GST (Center + State) on goods -Y1 : 20% - 10% CGST+ 10% SGST -Y2 : 18% - 9% CGST+ 9% SGST -Y3 : 16% - 8% CGST+ 8% SGST  Reduced rate of 12% GST also proposed for specified goods  GST (Center + State) on services -Y1 to Y3 : 16% - 8% CGST + 8% SGST Cross-utilization of credits between Central and State GST not permitted Both taxes to operate in parallel and to apply on every transaction Goods/ Services - Central GST - State GST Company ‘A’ Company ‘B’

27. Proposed GST – Transactions between States  Integrated GST (IGST) mechanism – aggregate of Central and State GST  All Inter State supplies of goods and services to be charged to IGST  Full offsets of input IGST, CGST and SGST available  Output IGST available as offset in State 2 Goods/ Services - IGST Company ‘A’ Company ‘B’ State 1 State 2

28. Taxes to be subsumed CST will be phased out GST Central Excise Additional duty of customs Service Tax VAT Purchase tax Entertainment tax Luxury tax Lottery taxes State cesses and surcharges Entry tax not in lieu of Octroi Central Taxes CGST State Taxes SGST

29. Thank you Niranjan & Associates 29