2. Basic Principles under GST
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3. 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
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4. 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.
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5. Taxes Subsumed under GST
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6. Transitional Provisions
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7. 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
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8. 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
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9. Migration of Existing Taxpayers
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10. 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?)
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11. 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;
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12. 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.
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13. 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 , or
a first stage dealer or a second stage dealer or a registered importer or a depot of a manufacturer.
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14. 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:
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15. 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
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16. 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.
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17. 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
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18. 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.
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19. 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.
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20. 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.
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21. 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
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22. 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.
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23. 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 )
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24. 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.
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25. 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.
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26. 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
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27. 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
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28. 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.
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29. 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.
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30. Adjudication & Appeals
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31. 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
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32. 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
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33. 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
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34. 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.
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35. 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, The invoice for the service was raised for Rs. 1,50,000/- on 31st July, Assuming appointed day as 1st July, 2017, GST shall be levied only on Rs. 50,000/-.
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36. 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.
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37. 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.
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38. 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.
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39. 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.
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40. CA JAY AGARWAL – MEM NO
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