GST- An Overview

By FCA Shweta Bagaria Sarawgee
Partner- Bharat D Sarawgee & Co
Bharat D Sarawgee & Co.

What is GST?... brief Overview
Why to implement GST?...the purpose
How to implement GST?...the methodology of implementation
What will be the design of GST?...the detailed law
How will it impact Businesses?.....

...brief overview

Goods and Services Tax" is a comprehensive indirect tax on
manufacture, sale and consumption of goods and services throughout
India, to replace several indirect taxes levied by the Central and State
governments.
GST is a consumption based tax that the tax will be paid in the state
where goods are finally consumed
GST will be implemented in dual mode Central GST (CGST) to be
collected by Centre replacing Excise Duty & Service Tax and State GST
(SGST) to be collected by State replacing VAT , Entry Tax and other state
taxes
Interstate transactions to attract Integrated GST(IGST) which is proposed
to be the double rate of CGST i.e. addition of CGST and SGST Bharat D Sarawgee & Co.

CGST
SGST
IGST
Service
Tax
Excise
Duty
VAT
Entry Tax
Luxury
Tax
Purchase
Tax
Octroi
CST
CVD
SAD

Expected Rate of GST (SGST+CGST) as proposed by the
Empowering Committee is 15-15.5%
State Panels proposed approx. 27%
The Rate of GST is not yet finalized, likely to be close to 18% as
indicated

Why? …. the Purpose

Amalgamating several Central and State taxes into a single tax would
mitigate cascading or double taxation, facilitating a common national
market.
The simplicity of the tax should lead to easier administration and
enforcement
Tax Evasion is reduced
Self Policing Mechanism
Transparency- Invoice will show the total value of tax paid on the product
Uniformity Bharat D Sarawgee & Co.

How?... the methodology of implementation

Constitution Amendment Bill passed by Lok Sabha in May, 2015
Bill passed by Rajya Sabha on 03/08/16 with modification
Bill resent to Lok Sabha for approval of modifications and approved
on 12/08/16
Bill to be ratified by half of the State Legislatures
CGST/IGST Bill to be placed in two houses and to be approved
States to pass State specific GST Acts

What will be the design?...the detailed law

GST LAW
By Empowered Committee
CGST Act
Sections
1 to 162E
4
Schedules
GST
Valuation
Rule
IGST
Act
Sections
1 to 33

Preliminary
• Coverage
• Definition
Taxable Event
• Supply
Time of Supply
• Of Goods
• Of Services
Place of Supply
• Inter State
• Intra State
Valuation
Input Tax Credit
Input Service
Distributor
Payment of Tax
• Normal
Payment
• TDS
Procedures
• Registration
• Returns
Transitional
Provisions
Miscellaneous
Provisions

Coverage
Central GST Act extended to entire India including Jammu &
Kashmir
Coverage to include territorial waters, continental shelf,
exclusive economic zone or any other maritime zone
Petroleum Products and Alcoholic Liquor for human consumption
is out of scope of GST currently
Tobacco products will be subject to excise duty plus GST

Key Definition
Business means any
(a)trade, commerce, manufacture, profession, vocation or any other similar activity,
whether or not it is for a pecuniary benefit;
(b) any transaction in connection with or incidental or ancillary to (a) above;
(c) any transaction in the nature of (a) above, whether or not there is volume, frequency,
continuity or regularity of such transaction;
(d) supply or acquisition of goods including capital assets and services in connection
with commencement or closure of business
(e) provision by a club, association, society, or any such body (for a subscription or any
other consideration) of the facilities or benefits to its members, as the case may be;
(f) admission, for a consideration, of persons to any premises; and
(g) services supplied by a person as the holder of an office which has been accepted
by him in the course or furtherance of his trade, profession or vocation;

Consideration includes
(a) any payment made or to be made, whether in money or otherwise, in respect
of, in response to, or for the inducement of, the supply of goods and/or services,
whether by the said person or by any other person;
(b) the monetary value of any act or forbearance, whether or not voluntary, in
respect of, in response to, or for the inducement of, the supply of goods and/or
services, whether by the said person or by any other person- Pre deposit is not a
consideration till it is not so applied against the provision of services
Capital Goods- Adopted from Cenvat Credit Rules 2004 with changes to replace
sale with supply and factory with place of business
Aggregate Turnover means the aggregate value of all taxable and non-taxable
supplies, exempt supplies and exports of goods and/or services of a person having
the same PAN, to be computed on all India basis and excludes taxes, if any,
charged under the CGST Act, SGST Act and the IGST Act, as the case may be
Key Definition….Contd

Goods means every kind of movable property other than actionable claim and
money but includes securities, growing crops, grass and things attached to or forming part of the
land which are agreed to be severed before supply or under the contract of supply;
Explanation.– For the purpose of this clause, the term ‘moveable property’ shall not include any
intangible property.
Location of Recipient of service
(i) where a supply is received at a place of business for which registration has been obtained, the
location of such place of business;
(ii) where a supply is received at a place other than the place of business for which registration
has been obtained, that is to say, a fixed establishment elsewhere, the location of such fixed
establishment;
(iii) where a supply is received at more than one establishment, whether the place of business or
fixed establishment, the location of the establishment most directly concerned with the receipt of
the supply; and
(iv) in absence of such places, the location of the usual place of residence of the recipient;

Location of Supplier of service
(i) where a supply is made from a place of business for which registration has been obtained, the
location of such place of business ;
(ii) where a supply is made from a place other than the place of business for which registration has
been obtained, that is to say, a fixed establishment elsewhere, the location of such fixed
establishment;
(iii) where a supply is made from more than one establishment, whether the place of business or
fixed establishment, the location of the establishment most directly concerned with the provision
of the supply; and
(iv) in absence of such places, the location of the usual place of residence of the supplier;
Recipient where a consideration is payable for the supply of goods and/or services, the person
who is liable to pay that consideration, (b) where no consideration is payable for the supply of
goods, the person to whom the goods are delivered or made available, or to whom possession or
use of the goods is given or made available, and (c) where no consideration is payable for the
supply of a service, the person to whom the service is rendered, and any reference to a person to
whom a supply is made shall be construed as a reference to the recipient of the supply;
Explanation.- The expression “recipient” shall also include an agent acting as such on behalf of
the recipient in relation to the goods and/or services supplied.

Services means anything other than goods
Explanation: Services include intangible property and actionable claim
but does not include money.
Works Contract means an agreement for carrying out for cash,
deferred payment or other valuable consideration, building,
construction, fabrication, erection, installation, fitting out, improvement,
modification, repair, renovation or commissioning of any moveable or
immovable property;

Key Definition …Contd
Taxable Person is a person whose aggregate turnover exceeds Rs 10 lacs or Rs 5 lacs
in case of North East States including Sikkim and includes
Central Govt or State Govt or any local authority in respect of activities when they are
engaged as public authorities
An unincorporated association or a club
Excludes
Public Authorities as mentioned in Schedule IV
Services provided in an employee – employer relationship
Persons receiving services liable to tax on reverse charge used for personal use up to
an amount to be specified
Any person engaged in business of goods or service which are excluded from the
scope of the Act
An Agriculturist

Taxable Event- Supply of Goods/Services
Includes
Sale,
Transfer
Lease
Barter,
Exchange
Agency
License
Rental
Furtheran
ce of
Business
With
Conside
ration
Even Stock Transfer will be covered under Supply Bharat D Sarawgee & Co.

Deemed Supply without Consideration- Schedule 1
Permanent transfer/disposal of business assets.
Temporary application of business assets to a private or non-business
use.
Services put to a private or non-business use.
Assets retained after deregistration.
Supply of goods and / or services by a taxable person to another
taxable or nontaxable person in the course of furtherance of business
provided that the supply of goods by a registered taxable person to
a job-worker in terms of section 43A shall not be treated as supply of
goods.

Deemed Supply of Goods- Schedule 2
Any Transfer of title in goods
Transfer of title in goods under an agreement that the title will pass at a future date
on payment of consideration
Transfer/Disposal of goods forming part of business assets by the person carrying
business
Transfer/Disposal of Goods forming part of business of taxable person by any person
having right to so to realise the debts is supply of goods by the taxable person
Where any person ceases to be a Taxable person , the business assets will be
deemed to be supplied by him before he ceases to be a taxable person unless he
has transferred the business as a going concern or his representative is running the
business and deemed as taxable person

Deemed Supply of Services- Schedule 2
Transfer of goods or right in goods or any share in goods without transfer of title
Lease, Tenancy, license to occupy land
Lease or letting out of building for industrial, commercial or residential either wholly or partly
Any treatment or process which is being applied on other persons goods
Where business assets are put to any use other than business use
Renting of Immovable Property
Construction of a complex, building, civil structure intended for sale to a buyer except
where the entire consideration has been received after issuance of CC or occupation
whichever is earlier Bharat D Sarawgee & Co.

Deemed Supply of Services- Schedule 2
Temporary Transfer of any intellectual property right
Development design, programming, customization etc. of any IT Software
Agreeing to the obligation to refrain from an act or do an act
Works contract including transfer of property in goods
Right to use any goods
Supply of food or any other article for human consumption other than alcoholic liquor

Certain Typical examples of supply of goods/services
basis past precedents
Goods- Standing Trees are not goods but severed ones are goods
Master Copies of Films, Songs and music are goods
Technical designs and drawings are goods
Unit of Mutual Funds are goods
Software in physical form is goods otherwise a service
Electricity is goods
Any transaction in money is excluded from service thus interest,
dividend, loans, profit distribution, sale purchase of securities etc. are not
services nor goods
Compensation received from Government is not a service

Certain Typical examples of supply of goods/services
basis past precedents
Supply of SIM is service
Development of Software is a service
Sale of Copyright, trademark, Royalty, Carbon Credit etc. are service
Actionable Claims are service
Hiring, Leasing is service
Demurrage Charges, Cancellation Charges, LD Charges etc. are service
Plant and Machinery assembled at Site is not supply of goods but service
Notice Pay recovered from the employee is a service

POT-Time of Supply of Goods
Earlier of
Date of
Removal of
Goods
Date of
availability of
goods to
recipient
Date of Invoice
Date of
Payment
Date of receipt
in books of
recipient

Supplier
Invoice is
raised within
specified
days of
completion
of service
Date of
Payment
Payment
Received
before
Completion of
service
Date of
Invoice
Y
Y
N
N
N
Payment
Received
before date
of Invoice
Date of
Completio
n of
service
Y
POT- Time of Supply of Service

Service
Provider
Goods
Supplier
Date of
Payment
If payment
made before
raising Invoice
Y
N
N
Date up to
which
payment or
statement is
made
Date of
Invoice
Y
Y
N
If payment is
made
before
invoice
Date of
payment
Y
N
Date of
Invoice
Due date of
Payment
mentioned
in contract
Due
Date of
Payment
In case of
successive
payments/
statements
If payment is linked to a completion of event then the date of completion of event
Time of Supply-
Continuous Supply

POT-Time of Supply of Goods
Earlier of
Date of
Receipt of
Invoice
Receipt of
Goods/Service
Date of
Payment
Date of debit
in books of
Account

POT-Residual Clause
If not determinable as per any of given provisions
The due date of periodical return, if return is to be filed
or
The date of payment of CGST/SGST

Place of Supply- relevance
When the location of supplier and place of supply are in different states
then the supply is Interstate
Interstate supplies of Goods and Service and will attract IGST
A supply of goods or service in the course of import or export will be
treated as deemed Interstate supplies and will attract IGST

Place of Supply - Goods
◦ If the supply involves movement then the place where the movement of
goods terminates
◦ If the goods are delivered to a place on instruction of the third person
before or during the movement of goods either by way of transfer of
documents of title then the place of supply will be the business place of
the third person
◦ Where the supply does not involve movement of goods then the place
where the goods are delivered to recipient
◦ Where goods are assembled at site, then the place of assembly
◦ Where goods are supplied on board of a conveyance then the location
at which such goods are taken on board

Place of Supply- Services
Location of Recipient of Service will be place of supply of service except for
◦ Services relating to immovable property- place where the immoveable
property is situated
◦ Performance based services like restaurant, beauty parlors, health services
etc.- place where the services are performed
◦ Training and performance appraisal to a person other than registered-
place of performance
◦ Admission to events- the pace where the events take place
◦ Goods transportation to a person other than registered person- place
where such goods are handed over for transportation
◦ Passenger transportation service to a person other than registered person-
the place from where the passenger embarks on continuous journey

Place of Supply- Services…contd
◦ Service on board a conveyance- the place of the first scheduled point of
departure
◦ Telecommunication service, data transfer, broadcasting- in case of fixed
lines, installations, circuits- the place where they are installed for services
◦ In case of post paid mobiles and internet connections, the billing address
of recipient of service
◦ Prepaid mobile connections- place from where the vouchers are sold or
where the payment is received, in case of online purchase the location of
the recipient of service in record of the supplier
◦ Banking and other financial service including stock broking-location of
recipient of services on record of the supplier
◦ Insurance services to a person other than registered person, the place of
the recipient in records of the supplier Bharat D Sarawgee & Co.

Export/Import of Services
Export
◦ Supplier in India
◦ Recipient is outside India
◦ Place of Supply is outside India
◦ Payment in convertible Forex
◦ Supplier and recipient are not mere entities of same person
Import
◦ Supplier is outside India
◦ Recipient is in India
◦ Place of supply is in India
◦ Supplier and recipient are not mere entities of same person Bharat D Sarawgee & Co.

Valuation- Supply
Transaction Value Method
-Price payable/Consideration for goods or services
-supplier and recipient are not related
Includes
Any amount paid by the receiver on suppliers behalf and not included
in Price
Appropriate cost of any counter supply by recipient in connection with
the original supply at reduced rates or free
Any taxes and duties other than under CGST,SGST,IGST
Royalties and License fees

Valuation- Supply
Packing charges paid by the recipient not included in Price payable
Subsidies of any manner connected with supply
Any discounts provided after the supply, which is not certain at the
time of supply is included, although trade discounts are excluded if
provided on invoice
Any reimbursable expenditure paid by recipient on behalf of supplier

Valuation Rules- in specific cases
◦ Where Consideration is not monetary
◦ Where supplier and recipient are related
◦ Where there is a reason to believe that the transaction value declared is
incorrect
◦ In case of Pure Agent, Money Changer Insurer, Air Travel Agent,
Distributor of Lottery

Valuation- Methods for specific cases
Comparison
Method
• Value of like
quality of
goods/services
supplied
• At same time
• Adjusted by
factors like design,
place etc.
Computed value
Method
• Cost of Production
of goods/
provision of
service
• Charges for
brand/design
• Profit or other
general
Residual Method
• Reasonable basis
in consistent with
general provisions
Above methods to be followed sequentially

Valuation- Miscellaneous
Pure Agent Services value is Nil on satisfaction of certain conditions as mentioned in
valuation rules
Proper Officer may deny the correctness of Transaction value as declared by the supplier
In case of taxable and non taxable supplies, the value shall be deemed to be such part of
consideration as attributable thereto
Transaction value is also applicable for Stock transfers
Transaction value is accepted even if the supplier and recipient are related provided the
price is not influenced by the relationship

Input Tax Credit
Input Tax means GST charged on any supply of goods and/or
services which are used or are intended to be used in the
course or furtherance of his business and includes tax paid on
reverse charge basis
Credit of Input Tax at the time of Registration- GST contained in
the input held in stocks and inputs contained in semi finished,
finished stocks in hand

ITC mechanism assuming GST to be 6%

Requirements of availing Input Tax Credit
Tax Invoice/Debit Note/Supplementary Invoice
Goods or service has been received
Tax has already been paid thru cash or thru credit ledger
Return has been filed by the taxable person

Negative list of Input Tax Credit
Motor vehicles except when the business is dealing in Motor Cars or
when they are used for transportation of goods or passengers, motor
training
Goods and Services used for personal consumption of employees
Goods and services used by a principal in works contract with regard to
immovable property
GST paid under composition scheme
Goods and Services used for personal consumption Bharat D Sarawgee & Co.

Ineligibility of Input Tax Credit
Input Invoice not older than one year
Input tax on any invoice pertaining to any year is cannot be claimed after
expiry of September of the subsequent financial year or after filing of annual
return whichever is earlier
No Input tax Credit with respect to input used in exempt supplies
Proportionate utilization of Input Tax Credit in case of usage in taxable and
exempt supplies
Input Tax Credit is not allowed if depreciation is claimed

Order of Input Credit Availment
IGST
IGST
CGST
SGST
CGST
CGST
IGST
SGST
SGST
IGST
SGST-CGST or vice versa set of not allowed

Temporary Denial of Credit
Non filing of Valid Return
Non payment of self assessed tax
Non matching of Inward Supply return by a recipient with the corresponding output
supply return by the provider
Non Matching of the Credit Note details issued by the Supplier with the Inward
supplies of recipient
Non matching of Customs return with the Inward Supply return by recipient in case of
Import
Interest will be refunded if paid by the recipient up to the amount paid by the supplier
on late payment
If supplier/receiver provides the detail in sufficient time, the output liability will be
adjusted

Input Service Distributor (ISD)
Input Credit of services received and paid for at Administrative Office
may be used against the payment of output liability generated at the
manufacturing or the selling units
Input Service Distribution is required to be taken by the administrative
offices
Tax Invoices to be issued by the ISD
CGST, SGST and IGST are distributed as IGST when the distributor and
recipient of credit are located in different states
CGST, SGST and IGST are distributed as CGST, SGST and CGST/SGST/IGST
respectively when the distributor and recipient of credit are located in
different states

Tax Payment
Electronic Cash Register- used for payment of taxes, Interest and
Penalties
Electronic Credit Register- used for payments of taxes, interest and
penalties
Due date not fixed
Interest Rate not fixed

Tax Deduction at Source
Government may empower certain categories of persons to deduct
tax @1% from supply if the value of supply exceeds 10 lacs of rupees
To be deposited within 10th of next month
If tax deduction certificate is not provided within 5 days of depositing
the amount with government then the deductor will be paying Rs 100
per day of default up to Rs 5000
The credit of tax deducted will have to be claimed in Electronic Cash
register

Composition Levy
Aggregate Turnover not exceeding Rs 50 lacs
Tax rate not lower than 1%
No Input Credit available
No Levy of tax from recipient of supply- cannot be shown on
invoice
All the Registration under one PAN will have to adopt
Composition scheme
With the approval of proper officer on satisfaction of
specified conditions

Registration
Persons liable for Registration
Supplier with Aggregate Turnover of specified Limit
Persons registered under earlier law
Transferee of the business
Merger/Amalgamation
Casual Taxable person
Persons making Interstate taxable supply
Persons required to make reverse charge tax
Non Resident Taxable person
Persons required to deduct tax
Input Service Distributor
Electronic Commerce Operator
An Aggregator who supplies under his brand name

Registration Process
Application in specified format to proper officer to be made within 30
days from when he is liable for Registration
PAN based Unique ID Generation
Registration is to be granted within a specified period as prescribed if
no objection is observed
Any rejection of application under CGST/SGST will be deemed to be
rejection of application under SGST/CGST

Registration Cancellation
Registration may be cancelled if applied for in the prescribed manner in
following cases
Business transferred
Death of proprietor
Merger
Disposal of Business
Change in Constitution
No longer liable to be registered

Registration Cancellation
Registration may be cancelled by the proper officer suo moto in
following cases
On contravention of any provisions of Act or Rules
A person paying tax under composition scheme not furnishing returns
for three consecutive tax periods
A person paying tax other than under composition scheme on not
furnishing returns for consecutive six months
Non commencement of business within six months of voluntary
Registration

Registration
Cancellation of registration under CGST Act/SGST Act will be
deemed to cancellation of SGST/CGST registration
Revocation of cancellation request is to be given within 30
days of the receipt of cancellation notice, and proper officer
cannot reject the request without a Show cause Notice

Returns
Outward Supplies-
10th of next month
Inward Supplies-
15th of next month
Tax Deducted at Source-
10th of next month
ISD Return-
13th of next month
Consolidated Return-
20th of next month

Penalties for Non filing
Monthly Return- Rs 100 for every day of default up to Rs 5000
Annual Return- Rs 100 for every day of default up to Rs .25%
of the aggregate turnover

Returns
If previous returns are not filed, no new return allowed
Return without payment of due tax will be an invalid return
Nil Return Mandatory if no transactions
Any rectification in the return of a period is allowed up to
the end of Sept subsequent to the FY it pertains
Annual return to be filed by 31st Dec after the end of FY

Transition Provision
Registration
All the persons registered under Acts being subsumed will be granted
provisional registration on one appointed day
The provisional Registration will be valid for six months
Required information is to be submitted within six months for issue of
final registration
If the person fails to submit the required information, the earlier
registration may be cancelled

Transition Provision…. contd
Input Tax Credit
◦ Will be carried forward in the electronic ledger to the extent it
was declared in the earlier return up to the day prior to the
appointed day in the prescribed manner of VAT and service tax,
excise if it is admissible in the new Law
◦ Credit on capital goods will also be allowed to be taken in credit
ledger to the tune it is available but unavailed in the Return

Other Provisions
Revenue Neutral rate to be calculated
Centre to compensate states for the losses for five years
Central Clearing Arrangement to be in Place for settlement of Credits
between centre and states and distribution of IGST

A Long Way Ahead !!!!!

Thank You Bharat D Sarawgee & Co.

GST- An Overview

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