Preamble:- GSTDestination based Taxation unlike in earlier cases where it was Transaction based,
Details of Availment and Utilisation of Input Tax Credit, Parameters for valuation of taxable supply, place of supply of service/goods, point of taxation to ascertain the trigger for payment of GST and transitional provisions.
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Why GST?:-India's very low tax ratio at 10 per cent of GDP.To introduce more Indirect Tax payers.
At the same time to remove difficulties of Existing Tax payers who are paying Multiple Taxes may be More than 10
"GST would find Non Compliant Traders & Service Providers through Input Invoices Loaded in Portal.
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Supply:- It would include Supply made without a Consideration.In GST Supply between HO & Branch of the same Company is a Service.
To define Supply details are provided under Section 3 Alongwith Schedule I to Schedule IV.
Sec3 is equivalent to Sec 2f of Present Central Excise Act.
Schedule I:- Supply without Consideration like Branch Transfers & Captive Consumptions.
Theft,Pilferage & Free Supply.
Schedule II:- Determination of Works Contract/Lease.
Schedule III & Schedule IV: Mostly Supplies of Goods/Services from Govt.
GST applicable on all Supplies like Barter, Exchange, Licenses & Returned Goods. In case of Barter both the items would be treated as sold accordingly GST would be applicable.
Section 1
Invoice Loading Procedures:-Two Important Provisions of GST having long term effect:-
Loading of Invoices both by Supplier & Purchaser on GST Portal is must: Thereafter One to One Matching of Invoices would be Carried out by the System.
This is a effective method Therefore Inflating of Both Purchases & Sales is completely ruled out.
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4.GST Payments:Section-16 read with Section 2(57) CGST/SGST Law: GST paid on Goods & Services used for Business would be allowed.
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5.Requirement of Additional Returns and Ledgers:-
GSTR1:-Monthly Return by the Supplier
GSTR2:- Receipient of Goods to File: Large part of the Return would be auto populated from GSTR-1
GSTR4:-Composition Scheme Quarterly Return.
GSTR6:- Return for ISD.Credit received from Service
provider & Credit provided to Subsidaries.
GSTR7:- Return for Tax Deducted at Source
ITC Ledger of Taxpayer
Cash Ledger of Taxpayer
Tax Ledger of Taxpayer
Three Returns per Month.
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Advances, Deposits & Part Payments would all attract GST: Therefore Agreement Terms & Conditions must be prepared in such a Manner that everything is Crystal Clear in the Agreement itself as follows:-
Whether Advance/Deposit is Refundable?
Whether Advance/Deposit is Carrying Interest?
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Rates:- Proposed Slabs%:5-12-18-28:
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Cess on:-
Enviornment Sensitive:Coal
AND
SIN-Aerated Drinks,Tobacco,Pan Masala,Luxury Cars, Watches
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Pharma:-
Pharma Retailer would hv. Opening Stock of Inventory as on 1.7.2017:
a.Currently Medicines are sold @6% Excise Duty and almost equivalent VAT.
b.From Jul2017 onwards this Stock would be sold at after including New GST Rate:Whether Distributor, Stockiest & Chemist would ask for reimbursement of Additional burden?
c.Pharma Goods Expiry & Breakages as on 31st March 2017 would be Reimbursed by Manufacturer thereafter would their be any Additional GST Burden?
d.Hopefully balance of State VAT as on 1st April 2017 would form part of State GST. Similarly balance of Central Excise would form part of Central GST! Please confirm on above Lines?
e.At present Retailer are getting benefit of State Vat only. The GST is a consumption based Tax.Therefore what ever you have purchased or sold(including Capital Goods & excluding GST exempted) during Normal course of Pharma Business would be subject to GST. Retailer need to keep Statement of all Input GST?
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Reverse Charge Mechanism:Pay GST:For Goods Purchases/ Service Receipts from Unregistered Dealer
Section 2
GST Net Work: Structure & Constitution of GSTN ensures that its Every decision must be supported by Government.
Total Fourteen.
Details of Availment and Utilisation of Input Tax Credit, Parameters for valuation of taxable supply, place of supply of service/goods, point of taxation to ascertain the trigger for payment of GST and transitional provisions.
__________________________________________
Why GST?:-India's very low tax ratio at 10 per cent of GDP.To introduce more Indirect Tax payers.
At the same time to remove difficulties of Existing Tax payers who are paying Multiple Taxes may be More than 10
"GST would find Non Compliant Traders & Service Providers through Input Invoices Loaded in Portal.
__________________________________________
Supply:- It would include Supply made without a Consideration.In GST Supply between HO & Branch of the same Company is a Service.
To define Supply details are provided under Section 3 Alongwith Schedule I to Schedule IV.
Sec3 is equivalent to Sec 2f of Present Central Excise Act.
Schedule I:- Supply without Consideration like Branch Transfers & Captive Consumptions.
Theft,Pilferage & Free Supply.
Schedule II:- Determination of Works Contract/Lease.
Schedule III & Schedule IV: Mostly Supplies of Goods/Services from Govt.
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Trashholds:-Entity in North Eastern and Hilly State: upto Rs.10Lacs.In other States:upto Rs.20Lacs.
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Valuation:- Working on risk models across all the slabs keeping in mind the state and the type of product. discrepancies are also expected on the type of the product. particular slab under which it falls in different states will be different. In earlier Central Excise decision Vicks is treated as Medication.
Kitkat is treated as Biscuit.
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Exemptions From GST as any tax levied on the supply of goods, or services, except taxes on:-
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Ensure GST Compliance & earn Input Tax Credit: Non Compliance may bring you Tax,Interest & Penalty.______________________________________
Valuation:- Working on risk models across all the slabs keeping in mind the state and the type of product. discrepancies are also expected on the type of the product. particular slab under which it falls in different states will be different. In earlier Central Excise decision Vicks is treated as Medication.
Kitkat is treated as Biscuit.
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Exemptions From GST as any tax levied on the supply of goods, or services, except taxes on:-
a. Alcohol for human consumption- Sales tax/VAT
and State excise would continue.
b. Real Estate – Stamp duty plus property taxes
would continue to be imposed.
c. Electricity – Electricity Duty would continue to be
imposed.
d. Petroleum Products. (to be bought under GST
from date to be notified on recommendation of GST
council)
e.Note- Tax on Tobacco products- Tobacco products
would be subjected to GST with Input Tax Credit.
Section 1
This is the Text:Requirement of Additional Returns and Ledgers
Invoice Loading Procedures:-Two Important Provisions of GST having long term effect:-
Loading of Invoices both by Supplier & Purchaser on GST Portal is must: Thereafter One to One Matching of Invoices would be Carried out by the System.
This is a effective method Therefore Inflating of Both Purchases & Sales is completely ruled out.
__________________________________________
4.GST Payments:Section-16 read with Section 2(57) CGST/SGST Law: GST paid on Goods & Services used for Business would be allowed.
__________________________________________
5.Requirement of Additional Returns and Ledgers:-
GSTR1:-Monthly Return by the Supplier
GSTR2:- Receipient of Goods to File: Large part of the Return would be auto populated from GSTR-1
GSTR4:-Composition Scheme Quarterly Return.
GSTR6:- Return for ISD.Credit received from Service
provider & Credit provided to Subsidaries.
GSTR7:- Return for Tax Deducted at Source
ITC Ledger of Taxpayer
Cash Ledger of Taxpayer
Tax Ledger of Taxpayer
Three Returns per Month.
Advances, Deposits & Part Payments would all attract GST: Therefore Agreement Terms & Conditions must be prepared in such a Manner that everything is Crystal Clear in the Agreement itself as follows:-
Whether Advance/Deposit is Refundable?
Whether Advance/Deposit is Carrying Interest?
_________________________________________
Rates:- Proposed Slabs%:5-12-18-28:
Cess on:-
Enviornment Sensitive:Coal
AND
SIN-Aerated Drinks,Tobacco,Pan Masala,Luxury Cars, Watches
__________________________________________
Pharma:-
Pharma Retailer would hv. Opening Stock of Inventory as on 1.7.2017:
a.Currently Medicines are sold @6% Excise Duty and almost equivalent VAT.
b.From Jul2017 onwards this Stock would be sold at after including New GST Rate:Whether Distributor, Stockiest & Chemist would ask for reimbursement of Additional burden?
c.Pharma Goods Expiry & Breakages as on 31st March 2017 would be Reimbursed by Manufacturer thereafter would their be any Additional GST Burden?
d.Hopefully balance of State VAT as on 1st April 2017 would form part of State GST. Similarly balance of Central Excise would form part of Central GST! Please confirm on above Lines?
e.At present Retailer are getting benefit of State Vat only. The GST is a consumption based Tax.Therefore what ever you have purchased or sold(including Capital Goods & excluding GST exempted) during Normal course of Pharma Business would be subject to GST. Retailer need to keep Statement of all Input GST?
__________________________________________
Reverse Charge Mechanism:Pay GST:For Goods Purchases/ Service Receipts from Unregistered Dealer
Section 2
This is the Text:GSTN
GST Net Work: Structure & Constitution of GSTN ensures that its Every decision must be supported by Government.
- In every GSTN meeting for decision 50% of total Directors must be from Goverment.
- 14 Directors:- Seven from State & Central Govt. Three Independent Directors and Three from Five Pvt Financial Institutions.
Total Fourteen.
- System would have 80Lacs Tax payers across the 29states,Union Terriotries and Central Govt. Hence providing Common & shared IT infrastructure and Services: Study, Research and provide Training & Consultancy: Provide back end Services to GST departments.
- Single GSTN portal ensuring quality in various procedurs from Registration, Payment, Filing Return and Assessment.
Cross Empowerment Model for Tax Adminstration & Assessment :-
Taxpayer paying all Three Taxes St.GST,CGST & IGST:- interaction with Single Tax Authority only.
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Existing 11Lac Service providers would be assessed byCentral Tax Authorities only.
Turnover < Rs.1.5Crores p.a. by State Authorities.
Composition Scheme Applicable Only on Goods:-
Limit fixed at Rs.50Lacs. Traders to pay 1-2% tax through easier computation.
Types of Disputes:-
Dispute between Central & State Government.
Dispute among State Governments
Dispute on One side Central & One or More State Governments and on the other side Few State Governments.
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Difficulties Envisaged:-
In case GST is not deposited by the Seller of the Goods the Buyer would not get benefit of Input Tax Credit.
No Tax Credit benefit on further discounts allowed by the Seller!
Credit of GST on Returned Goods: This problem is more in case of e trade.
Registration in various States in case transaction value exceeds Rs50000/
Tax collection at Source by E-trader(E-Commerce Industry)
17.Important powers provided to GST Council:-
a. Capping of GST Rate
b.To decide about Adjudication Body. Dispute Resolution Mechanism.
c It would comprise of Representatives from all States & Center.
d. Units having turnover upto Rs.1.5 Crore, exemption from compliance norms. To be provided in rules.
Priority:-
18.Order of Utilization of Various Tax Credits:-
CGST CGST
IGST
SGST SGST
IGST
IGST IGST
CGST
SGST
The Supplier State will transfer to the Center the Credit of SGST used on IGST payment
To Continue Seamless Chain of CreditInter-state stock
transfer of goods and services would be covered under GST & would be treated as Services.
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21.Concurrent Audit:-
I.Rates:-
Revenue Neutral Rate:-
The GST rates are to be based on RNR (Revenue
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Goods and Service Tax Identification Number
GSTIN:-:- 15 Digit PAN based.HSN Codes For Goods and Accounting Code for Services to be provided.
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Electronic Payment:- Technology will have to be integrated to ensure that all payments and receipts of any funds are only made through electronic means.Unique 14digit Common Portal Identification Number-CPIN: Challan generated to be valid for 7days for making Payment.
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Common Integrated Information Technology
System.GST Network (GSTN):-The IT backbone of GST shall be formed as Section 25 company to design automation of GST andto facilitate Online Registration, tax payment and
filing of return.
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23.Difficulties Envisaged:- No ITC on Cess is available.
For Tax free Goods & Services Separate Slabs are applicable.
Taxpayer paying all Three Taxes St.GST,CGST & IGST:- interaction with Single Tax Authority only.
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Existing 11Lac Service providers would be assessed byCentral Tax Authorities only.
Turnover < Rs.1.5Crores p.a. by State Authorities.
- Base year for Compensation2015-16.
Composition Scheme Applicable Only on Goods:-
Limit fixed at Rs.50Lacs. Traders to pay 1-2% tax through easier computation.
- Currently, about 70%-Goods/Services taxed @ 27%.
- Life as well as Medical Insurance needs human touch,therefore abatement should be permitted to Tax such policies at current Rate.
- In case or Resturant Services not much significant impact is expected.
- In case of Housing , Abatement for Land & other Commidities used in construction in New GST.
- GST ImpactWhether GST would increase Demand of Qualified Accountant? Every Retailer need to keep an Accountant having Knowledge of Input tax Credits?,
Types of Disputes:-
Dispute between Central & State Government.
Dispute among State Governments
Dispute on One side Central & One or More State Governments and on the other side Few State Governments.
__________________________________________
Difficulties Envisaged:-
In case GST is not deposited by the Seller of the Goods the Buyer would not get benefit of Input Tax Credit.
No Tax Credit benefit on further discounts allowed by the Seller!
Credit of GST on Returned Goods: This problem is more in case of e trade.
Registration in various States in case transaction value exceeds Rs50000/
Tax collection at Source by E-trader(E-Commerce Industry)
1% TCS to be made from payment to E-Supplier.Tax collection at Source that means any payment made to a Supplier would be subjected to provisions of Tax at a Notified Rate. Few Important queries need to be replied: What would be the fate of Goods Returned?
The Companies like Quicker & OLx would be covered & need to obtain GST Registration. They are facilitating "Purchase & Sell" of old goods & would be definitely covered.
Difficulties Envisaged
The Companies like Quicker & OLx would be covered & need to obtain GST Registration. They are facilitating "Purchase & Sell" of old goods & would be definitely covered.
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- Tax structure on inter-state services including transportation and communication, rate of tax on essential commodities, including food products, and system of mechanism to collect tax.
Difficulties Envisaged
- Requirement of maintenance of Bulk documents(Types?) as per requirement of Individual State and verification at various Check Posts.
- Separate Taxation of Freebies?
- GST would be levied on News Papers and Advertisements.
17.Important powers provided to GST Council:-
a. Capping of GST Rate
b.To decide about Adjudication Body. Dispute Resolution Mechanism.
c It would comprise of Representatives from all States & Center.
d. Units having turnover upto Rs.1.5 Crore, exemption from compliance norms. To be provided in rules.
Priority:-
18.Order of Utilization of Various Tax Credits:-
CGST CGST
IGST
SGST SGST
IGST
IGST IGST
CGST
SGST
1. In case of intra-State supplies, credit of CGST can
be
utilised only for paying CGST, and credit of SGST
can be utilised only for
paying SGST.
2. In case of inter-State supplies, the IGST model
permits the utilisation of credit of IGST, CGST, and
SGST for payment of IGST.
3. IGST credit can be utilised for payment of IGST,
CGST
and SGST in sequence by importing dealer for
supplies made by him.
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19.Applicability of IGST:-
IGST Levied by Center & will be transferred by the
Center to the State where Goods are Supplied.
Center to the State where Goods are Supplied.
The Supplier State will transfer to the Center the Credit of SGST used on IGST payment
IGST shall also be applicable to-
1.
Import of goods and services (currently, in
addition to Basic
customs Duty, CVD and SAD are
levied under Customs Act imports. After
introduction
of GST,IGST will be imposed against CVD and
SAD)
SAD)
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21.Concurrent Audit:-
Companies with annual turnover of more than Rs
1.5crore, there will be
concurrent audits by both the state government and the Centre."The
government is still discussing a mechanism of a risk-based selection so that the checks
by Centre and states do not overlap," said the
official.
GST Rate Structure
I.Rates:-
Revenue Neutral Rate:-
The GST rates are to be based on RNR (Revenue
Neutral
Rate).It is a rate that would be levied
so that the tax revenue of the government will at least remain same as the present tax system.
so that the tax revenue of the government will at least remain same as the present tax system.
__________________________________________
Goods and Service Tax Identification Number
GSTIN:-:- 15 Digit PAN based.HSN Codes For Goods and Accounting Code for Services to be provided.
__________________________________________
Electronic Payment:- Technology will have to be integrated to ensure that all payments and receipts of any funds are only made through electronic means.Unique 14digit Common Portal Identification Number-CPIN: Challan generated to be valid for 7days for making Payment.
__________________________________________
Common Integrated Information Technology
System.GST Network (GSTN):-The IT backbone of GST shall be formed as Section 25 company to design automation of GST andto facilitate Online Registration, tax payment and
filing of return.
Implementation of Rating System for Companies and Traders. This system would be regularly reviewed.
__________________________________________
22.Preparation for implementation of GST:-
22.Preparation for implementation of GST:-
- Must Develope Standard Operating Procedure(SOP) for GST.
- GST would be applicable on Product dispatch & wouldbe carried forward till it reaches to Final Consumer .
- Create GST Masters having GST numbers of Suppliers & Customers.
- Determine in detail Cost of Logistic.GST would completely change logistic Scenario!How?
- Maintenance of State wise Distributor is essential:Because of separate Registration requirement for Each State.
- Maximum Input Tax Credit.
- Reshape Invoice Format with New GST number.
- Keep Separate Accounts for 3 Months & 9Months.
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23.Difficulties Envisaged:- No ITC on Cess is available.
For Tax free Goods & Services Separate Slabs are applicable.
Centre government would be allowed to levy
Exciseduty over and above GST without Input Tax Credit.
Exciseduty over and above GST without Input Tax Credit.
