Basic Principles under GST AGARWAL JAY & CO. CA Jay Agarwal – agarwaljay@vsnl.net

Understanding GST Implications Any Transaction Check for Charging Section [Ref: Sec 8 of CGST Act (for local supply) / Sec 5 of IGST Act (for Interstate supply) NO GST No Check for Supply [Ref: Sec 3, Sch1, 2 & 3 of CGST Act] No Is it supply of Goods and / or Services [Ref Def n : Sec 2(49) Goods & 2(92) Services] Yes Check for EXEMPTIONS (if any) [Ref: Sec 11 / 6 of CGST / IGST Act) ] No Taxable under GST AGARWAL JAY & CO. CA Jay Agarwal – agarwaljay@vsnl.net

CA Jay Agarwal – agarwaljay@vsnl.net Taxable ON WHAT VALUE ? Ref: Sec 15 of CGST Act & the Valuation Rules. AT WHAT RATE ? Ref: Sec 8(1) / 5(1) of CGST / IGST Act & Govt. Notifications. Note: INPUT TAX CREDITS available u/s. 16 of CGST Act. TIME OF PAYMENT Ref: Sec 12 & 13 of CGST Act & govt notifications. WHO SHALL PAY TAX TO GOVT? Normally– Supplier Some Cases under RCM – As Notified and Ref : Sec 8(3) / 5(2) of CGST / IGST Act. CA Jay Agarwal – agarwaljay@vsnl.net

Taxes Subsumed under GST CA Jay Agarwal – agarwaljay@vsnl.net

Transitional Provisions AGARWAL JAY & CO. CA Jay Agarwal – agarwaljay@vsnl.net

Transitional Provisions Categorisation 01.Registration and migration to the new law 02.Transfer of Credits 03.Refunds pending to be filed or finalised under existing law 04.Adjudications or appeal under the existing law 05.Miscellaneous other issues AGARWAL JAY & CO. CA Jay Agarwal – agarwaljay@vsnl.net

Registration – Why Required ? to get legally recognized as a supplier of goods and services Collect tax on the outward supplies and pass on the credit to the recipients To claim the rebate of input tax credit AGARWAL JAY & CO. CA Jay Agarwal – agarwaljay@vsnl.net

Migration of Existing Taxpayers AGARWAL JAY & CO. CA Jay Agarwal – agarwaljay@vsnl.net

CA Jay Agarwal – agarwaljay@vsnl.net Transfer of Credit Amount of credit carried forward in the return The amount of any input credit carried forward in a return, which is unutilized under the existing tax regime may be carried forward into the GST regime except in the case of a person who opts to pay tax under composition scheme in a GST regime. The said credit will be allowed to be carried forward to the GST regime, if the following conditions are satisfied: (1) The said amount of credit is admissible as input tax credit under this Act (2) The registered person has furnished all the returns required under the existing law for the period of six months immediately preceding the appointed date. (3) Input tax credit does not relate to goods manufactured and cleared under exemption notifications as are notified by the Government. (How do we match credit to inputs?) AGARWAL JAY & CO. CA Jay Agarwal – agarwaljay@vsnl.net

Transfer of Credit rules in respect of CGST/SGST File GST Trans -1 within 90 Days from appointed date. Specify the following – The value of claims under section 3, sub-section (3) of section 5, sections 6 and 6A and sub-section (8) of section 8 of the Central Sales Tax Act, 1956 made by the applicant and The serial number and value of declarations in Forms C and/or F and Certificates in Forms E and/or H or Form I specified in rule 12 of the Central Sales Tax (Registration and Turnover) Rules, 1957 submitted by the applicant in support of the claims referred to in sub-clause (i) above; AGARWAL JAY & CO. CA Jay Agarwal – agarwaljay@vsnl.net

Availment of Capital Goods Credit Admissible in existing law as well as under the provisions of the GST Act “Unavailed CENVAT credit” means the amount that remains after subtracting the amount of Cenvat credit already availed in respect of capital goods by the taxable person under the existing law from the aggregate amount of Cenvat credit to which the said person was entitled to, in respect of the said capital goods under the existing law. Under the present regime in the case of capital goods only 50% of the eligible credit is allowed to be taken in the same financial year and balance in subsequent period. Note : The issue of credit availability on capital goods in transit is still unaddressed. AGARWAL JAY & CO. CA Jay Agarwal – agarwaljay@vsnl.net

CA Jay Agarwal – agarwaljay@vsnl.net Inputs held in stock Every person shall be entitled to take credit of eligible duties and taxes who in the present tax regime : was not liable to be registered, or was engaged in the manufacture of exempted goods or provision of exempted services ,or was providing works contract service and was availing the benefit of notification No. 26/2012-Service Tax, dated 20.06.2012, or a first stage dealer or a second stage dealer or a registered importer or a depot of a manufacturer. AGARWAL JAY & CO. CA Jay Agarwal – agarwaljay@vsnl.net

Conditions for availing credit such inputs or goods are used or intended to be used for making taxable supplies under this Act the said registered person is eligible for input tax credit on such inputs under this Act the said registered person is in possession of invoice or other prescribed documents evidencing payment of duty under the existing law in respect of such inputs such invoices or other prescribed documents were issued not earlier than twelve months immediately preceding the appointed day; and the supplier of services is not eligible for any abatement under this Act: AGARWAL JAY & CO. CA Jay Agarwal – agarwaljay@vsnl.net

Special credit under CGST What will happen to tax embedded in stock not reflected in Purchase invoice ? A registered taxable person, other than a manufacturer or a supplier of services, is not in possession of an invoice or any other documents evidencing payment of duty in respect of inputs, then such registered taxable person shall take credit in the manner prescribed. Tax Type Rate of Tax % Eligible CGST 9% or above 9% 60% of CGST Other Rates 40% of CGST IGST 18% or above 18% 30% of IGST 20% of IGST AGARWAL JAY & CO. CA Jay Agarwal – agarwaljay@vsnl.net

Mechanism for availing Special credit such goods were not unconditionally exempt from the whole of the duty of excise specified in the First Schedule to the Central Excise Tariff Act, 1985 or were not nil rated in the said Schedule. the document for procurement of such goods is available with the registered person. the registered person availing of this scheme and having furnished the details of stock held by him in accordance with the provisions of clause (b) of sub-rule (2) of rule 1, submits a statement in FORM GST TRAN 2 at the end of each of the six tax periods during which the scheme is in operation indicating therein the details of supplies of such goods effected during the tax period. the amount of credit allowed shall be credited to the electronic credit ledger of the applicant maintained in FORM GST PMT-2 on the Common Portal. The scheme is available for six tax period. the stock of goods on which the credit is availed is so stored that it can be easily identified by the registered person. AGARWAL JAY & CO. CA Jay Agarwal – agarwaljay@vsnl.net

Special credit under SGST What will happen to tax embedded in stock which have suffered tax at the first point of their sale in the State and the subsequent sales of which are not subject to tax ? ( MRP taxation Concept ) A registered taxable person, other than a manufacturer or a supplier of services, is not in possession of an invoice or any other documents evidencing payment of duty in respect of inputs, then such registered taxable person shall take credit in the manner prescribed. Tax Type Rate of Tax % Eligible SGST 9% or above 9% 60% of SGST Other Rates 40% of SGST IGST 18% or above 18% 30% of IGST 20% of IGST AGARWAL JAY & CO. CA Jay Agarwal – agarwaljay@vsnl.net

Mechanism for availing Special credit such goods were not wholly exempt from tax under the State Value Added Tax Act the document for procurement of such goods is available with the registered person. the registered person availing of this scheme and having furnished the details of stock held by him in accordance with the provisions of clause (b) of sub-rule (2) of rule 1, submits a statement in FORM GST TRAN 2 at the end of each of the six tax periods during which the scheme is in operation indicating therein the details of supplies of such goods effected during the tax period. the amount of credit allowed shall be credited to the electronic credit ledger of the applicant maintained in FORM GST PMT-2 on the Common Portal. The scheme is available for six tax period. the stock of goods on which the credit is availed is so stored that it can be easily identified by the registered person. AGARWAL JAY & CO. CA Jay Agarwal – agarwaljay@vsnl.net

Sections 140(4)- person having taxable as well as exempted activities Manufacturer – manufacturing both dutiable as well as exempted Service provider- providing both taxable as well as exempted services Credit relating to taxable service/ dutiable goods- based on the final return [Section 140(1)] Credit relating to exempted activities : to the extent of credit relating to stock [Section 140(3)] Where they are liable to pay tax under GST. AGARWAL JAY & CO. CA Jay Agarwal – agarwaljay@vsnl.net

CA Jay Agarwal – agarwaljay@vsnl.net Sections 140(5)- Inputs/ input services received on or after appointed day Credit available if he document is received or accounted in books within 30 days of appointed date or such period as extended by the competent authority. Statement is duly filed in time containing following details :- (i) the name of the supplier, serial number and date of issue of the invoice by the supplier or any document on the basis of which credit of input tax was admissible under the existing law, (ii) the description and value of the goods or services, (iii) the quantity in case of goods and the unit or unit quantity code thereof, (iv) the amount of eligible taxes and duties or, as the case may be, the value added tax [or entry tax] charged by the supplier in respect of the goods or services, and (v) the date on which the receipt of goods or services is entered in the books of account of the recipient. AGARWAL JAY & CO. CA Jay Agarwal – agarwaljay@vsnl.net

CA Jay Agarwal – agarwaljay@vsnl.net Sections 140(6)- Person paying tax under composition scheme / standard rate under present scheme A Person under composition scheme / similar schemes under current tax laws could take credit under GST scheme of taxes on inputs, semi finished goods and Finished goods in stock. The conditions are as below: such inputs or goods are used or intended to be used for making taxable supplies under this Act; the said registered person is not paying tax under section 10; (iii) the said registered person is eligible for input tax credit on such inputs under this Act; (iv) the said registered person is in possession of invoice or other prescribed documents evidencing payment of duty under the existing law in respect of inputs; and (v) such invoices or other prescribed documents were issued not earlier than twelve months immediately preceding the appointed day AGARWAL JAY & CO. CA Jay Agarwal – agarwaljay@vsnl.net

CA Jay Agarwal – agarwaljay@vsnl.net Section 140(7)- ISD The input tax credit on account of any services received prior to the appointed day by an Input Service Distributor shall be eligible for distribution as credit under GST Act even if the invoice(s) relating to such services is received on or after the appointed day. AGARWAL JAY & CO. CA Jay Agarwal – agarwaljay@vsnl.net

Section 140(8)- Credit in respect of Centralized registration Such credit may be transferred to any of the registered taxable persons having the same PAN for which the centralized registration was obtained under the earlier law. Return is filed within 3 Months from appointed date . Credit carried forward in return is admissible in this act Where revised return is filed then reduced credit is eligible to be c/f. In case of increase ( Transitional refund provisions to apply ) AGARWAL JAY & CO. CA Jay Agarwal – agarwaljay@vsnl.net

CA Jay Agarwal – agarwaljay@vsnl.net Reclaiming of credit Reclaiming of credit reversed due to non-payment of consideration Where any credit availed for the input services provided under the existing law has been reversed due to non-payment of the consideration within a period of three months, such credit can be reclaimed subject to the condition that the registered person has made the payment of the consideration for that supply of services within a period of 3 months from the appointed day. AGARWAL JAY & CO. CA Jay Agarwal – agarwaljay@vsnl.net

CA Jay Agarwal – agarwaljay@vsnl.net Job work Goods sent to Job Worker prior to appointed date Received back within 6 Months from appointed date or extended by 2 months on sufficient cause Check for Receipt date No tax is Payable Input Tax to be recovered as arrear tax Not received back within extended allowed time frame Note: Every Principal and the Job Worker shall within 90 days from the appointed day file an application in Form GST TRAN-1 specifying the stock/capital goods held by him in the Job Worker’s premises agent wise/branch wise. AGARWAL JAY & CO. CA Jay Agarwal – agarwaljay@vsnl.net

Duty Paid Goods Returned after appointed date Duty Paid Goods Not earlier than 6 Months from appointed date are returned Yes Deemed as taxable supply and tax to be charged Returned by Registered Person No No Yes Received within 6 Months from Appointed Date Reverse Charge u/s 9(4) Payable Refund of taxes paid AGARWAL JAY & CO. CA Jay Agarwal – agarwaljay@vsnl.net

Price Revision after appointed date Revised upwards Contract Entered prior to appointed date Issue Supplementary Invoice / Debit Note within 30 Days of revision Prices revised after appointed date Revised downwards Issue Credit Note within 30 Days Yes Recipient to reduce input tax credit by tax amount in credit note AGARWAL JAY & CO. CA Jay Agarwal – agarwaljay@vsnl.net

Refund pending after appointed date The section provides that every claim for refund of any duty or tax paid under existing law, filed after the appointed day, for the goods or services exported before or after the appointed day, shall be disposed of in accordance with the provisions of the existing law. It also provides the following: (i) The refund, if rejected, fully or partially would lapse. (ii) No refund claim shall be allowed of any amount of Cenvat credit / input tax credit where the balance of the said amount as on the appointed day has been carried forward under this Act. AGARWAL JAY & CO. CA Jay Agarwal – agarwaljay@vsnl.net

Refund relating to taxes deposited but service not Provided The section provides that every claim for refund of any tax deposited under the existing law in respect of services not provided, filed after the appointed day, shall be disposed of in accordance with the provisions of the existing law and any amount eventually accruing to him shall be paid in cash. AGARWAL JAY & CO. CA Jay Agarwal – agarwaljay@vsnl.net

Adjudication & Appeals AGARWAL JAY & CO. CA Jay Agarwal – agarwaljay@vsnl.net

Claim of CENVAT credit to be disposed of under the existing law Found Admissible Claim of Cenvat Credit / ITC Every proceeding of appeal, review or reference relating to Cenvat Credit Paid in Cash Found Recoverable Found not Admissible To be recovered as arrears of Tax Notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of sub-section (2) of section 11B of the Central Excise Act, 1944 and amount so rejected shall not be eligible as ITC AGARWAL JAY & CO. CA Jay Agarwal – agarwaljay@vsnl.net

Finalization of proceedings relating to tax liability Found Refundable Output duty or tax liability Every proceeding of appeal, review or reference relating to any output duty or tax liability Paid in Cash Found Recoverable To be recovered as arrears of Tax ITC not available on such amount AGARWAL JAY & CO. CA Jay Agarwal – agarwaljay@vsnl.net

Revision of Returns under existing law Found Refundable Return is Revised Any amount Paid in Cash Found Recoverable To be recovered as arrears of Tax ITC not available on such amount AGARWAL JAY & CO. CA Jay Agarwal – agarwaljay@vsnl.net

Treatment of long term contracts It provides that in respect of a contract entered: prior to GST regime, the goods or services or both which are supplied on or after the introduction of GST liable to tax under the GST Act to the extent the supply takes place after introduction of GST. AGARWAL JAY & CO. CA Jay Agarwal – agarwaljay@vsnl.net

Progressive or periodic supply of goods or services Notwithstanding anything contained in section 13, no tax shall be payable on services under this Act to the extent the tax was leviable on the said services under Chapter V of the Finance Act, 1994; Eg: Advance of Rs. 1,00,000/- was received on 10th June, 2017 for service to be rendered in July, 2017. The invoice for the service was raised for Rs. 1,50,000/- on 31st July, 2017. Assuming appointed day as 1st July, 2017, GST shall be levied only on Rs. 50,000/-. AGARWAL JAY & CO. CA Jay Agarwal – agarwaljay@vsnl.net

Progressive or periodic supply of goods or services However, where supply has suffered both VAT and Service tax in earlier law but supply made post GST Date : Tax shall be leviable under this Act and the taxable person shall be entitled to take credit of value added tax or service tax paid under the existing law to the extent of supplies made after the appointed day. Credit of tax already paid must not be understood as ‘input tax credit’ as defined u/s 2(63). This is an apparent conflict but not so u/s 140(5) of the CGST Act which needs to be reconciled. Eg: Contract entered in March, 2017 for Rs. 1,00,00,000/-. Advance received till 30th June, 2017 amounts to Rs. 10,00,000/-. Value Added Tax of Rs. 40,000/- and Service Tax of Rs. 60,000/- have been paid on the said advance. Assuming appointed day as 1st July, 2017 GST shall be levied on Rs. 1,00,00,000/- as per Sec 13 of the CGST Act. The value added tax and service tax paid shall be allowed as credit under the existing law in the manner as may be prescribed. AGARWAL JAY & CO. CA Jay Agarwal – agarwaljay@vsnl.net

Goods Sent on Approval Basis It has been provided for in the relevant provision that no tax shall be levied on goods sent on approval basis, returning to the supplier due to rejection or non approval by the buyer within a period of 6 months or the extended period of 2 months but if returned afterwards but if not returned within extended time allowed then tax shall be payable by both persons sending the goods and the person returning the goods. In case of sale of approval prior to appointed date, GST TRAN -1 to be filed within 90 days as per Rule 3 of the GST Transitional Provision Rules. AGARWAL JAY & CO. CA Jay Agarwal – agarwaljay@vsnl.net

CA Jay Agarwal – agarwaljay@vsnl.net Tax Deducted at Source Where a supplier has made any sale of goods in respect of which tax was required to be deducted at source under the earlier law and has also issued an invoice for the same before the appointed day, no deduction of tax at source under GST law [under section 51 ]shall be made by the deductor under the said section where payment to the said supplier is made on or after the appointed day. AGARWAL JAY & CO. CA Jay Agarwal – agarwaljay@vsnl.net

CA Jay Agarwal – agarwaljay@vsnl.net Transitional provisions under IGST law [21 of IGST law] Notwithstanding the provisions relating to time of supply [section 12 and 13 of the CGST Act, 2016] import of services made after the appointed day shall be liable to tax under the provisions of IGST law regardless of whether the transactions for such import of services had been initiated before the appointed day. If however tax is paid under earlier law, balance amount of tax is payable under this act. AGARWAL JAY & CO. CA Jay Agarwal – agarwaljay@vsnl.net

CA JAY AGARWAL – MEM NO. 305352 AGARWAL JAY & CO 125 COTTON STREET, 1ST FLOOR, KOLKATA – 700 007 MOBILE +91 9836270911 Email : agarwaljay@vsnl.net