MODEL GST LAW Decoding T he Regulation Khandhar Mehta & Shah 1 - PowerPoint PPT Presentation

MODEL GST LAW Decoding T he Regulation… Khandhar Mehta & Shah 1

CONTENTS BASICS OF GST LEVY IN GST REGIME TIME AND PLACE OF SUPPLY GST VALUATION RULES INPUT TAX CREDIT (ITC) TAX ADMINISTRATION SECTOR-SPECIFIC IMPACT 2

BASICS OF GST 3

GST - MEANING • GST is stage wise destination based consumption tax. • Broad based and a single comprehensive tax levied on goods and services consumed in an economy. • Levied and collected on value addition at each stage of sale or purchase of goods or supply of services based on input credit method but without state boundaries. • Uniform single tax across the supply chain. • Improvement in international cost competitiveness of indigenous goods and services. • Enhancement in efficiency in manufacture and distribution due to economies of scale. • GST encourages an unbiased tax structure that is neutral to business processes, business models, organization structure, product substitutes and geographical locations. • The prices of commodities are expected to come down in the long run as dealers pass on the benefits of reduced tax incidence to consumers by slashing the prices of goods. 4

DUAL GST : BASIC PROPOSED STRUCTURE Excise Duty – Manufacturing of Goods VAT / CST – Sale of Goods Service Tax – Provision of Services Intra-state Supply Inter-state Supply Imports Exports of Goods and of Goods and • Basic Customs Duty • Zero Rated Services Services • IGST (in place of CVD and SAD) • Central GST • IGST • State GST • 1% Additional Tax on Supply of Goods 5

PROBABLE RATE STRUCTURE IN GST SGST (+) CGST Goods and Services Total Rate % Goods and Services of National Importance viz. Defense etc. Zero Rated Basic Education, Healthcare, Agriculture related, Public Transport etc. Export of Goods and Services, Goods and Services provided to SEZ, UN and Foreign Diplomatic Mission 1% to 2% Gold and Silver ornaments, precious and semi-precious stones 18% Normal GST on all goods and services (distributed in CGST and SGST) Rates without Tobacco, Cigarettes, Lottery tickets, betting and gambling restrictions [SIN Goods and SIN Services] Will be brought in GST Petroleum and Petroleum products at a later Stage Out of GST Alcoholic Liquor for Human Consumption 6

ROAD MAP TO GST Report of Joint • April 1, 2017 - Winter Session 2015 – Monsoon Committee on Draft Model GST Anticipated CGST Law was to be Session July ‘16 GST Registration, law published Date of passed in Upper House – GST Law to be Refund & for public of Parliament and State introduced and Implementation Payment process comment in GST was to be passed Model State GST of GST was issued in June’16 in States Law October 2015 Time available for Industry for GST preparation July 2016 to March 2017 7

CHALLENGES IN CURRENT INDIRECT TAX STRUCTURE Multiple levies & Compliances at State and Centre Levels Disputes of Overlapping of Classification, tax in various Valuation & transactions Credit Eligibility CHALLENGES Complex Laws on Ineligibility of ITC movement of for SPs & CENVAT Goods – for Traders Form C,F… Cascading of Taxes 8

CENTRAL LEVIES STATE LEVIES Excise Duty State VAT Entry/ Service Tax Purchase Tax GST GST CVD / SAD Octroi / LBT Luxury/ Central Sales Entertainment Tax Tax Customs Customs Lottery, Betting Lottery, Betting Duty Duty & Gambling Tax & Gambling Tax 9

GST NETWORK – GSTN SPV FORMATION ROLES & RESPONSIBILITY • • Special Purpose Vehicle (GSTN-SPV) has been Provide common PAN-based registration set up to create enabling environment for • Enable returns filing and payments smooth introduction of GST processing for all States on a shared • GSTN-SPV will provide IT infrastructure and platform services to various stakeholders including the • Ensure integration of the common GST Centre and the States Portal with the existing tax administration • Strategic control over GSTN-SPV has been systems of the Central / State Governments ensured with the Government due to and other stake holders sensitivity of role of GSTN-SPV and the • Build efficient and convenient interfaces information which would be available with it with tax payers to increase tax compliance • GSTN-SPV has been incorporated as a not-for- • Carry out research, study best practices and profit, non-Government, private limited provide training to the stakeholders company with 49% equity held by the Government and 51% equity held by the non- Government institutions 10

STAKEHOLDERS OF GSTN STAKEHOLDERS WORKFLOW State Tax Registration Authorities Central Tax Banks Appeals Returns Authorities GSTN GSTN GST Facilitation SME Audits Agencies Taxpayers Payment Corporate Refunds Taxpayers 11

LEGISLATIONS TO BE REPEALED The Medicinal Entertainment and Tax Act Toiletries Act Chapter V of The Luxury Finance Tax Act Act The Entry Tax Act GST 12

LEVY IN GST REGIME 13

MEANING AND SCOPE OF SUPPLY Supply includes For consideration & Whether or not for Supply without for business consideration or business consideration • Sale • Importation of service • Permanent transfer/disposal of • Barter business assets • Transfer • Temporary application of • Exchange business assets to a • License private or non-business use • Rental • Services put to a private • Lease or non-business use • Disposal • Assets retained after deregistration • Supply of goods and/ or services by a taxable person to another taxable or non-taxable person in course of business 14

GIST OF SCHEDULE – II – GOODS VS. SERVICE • Transfer of goods without transfer in title thereof • Transfer of business assets for private use with or without consideration • Lease, tenancy, license to occupy land • Lease or letting out of commercial or residential building Service • Treatment or process which is applied to another person’s goods • Declared list of service • Transfer in title in goods • Supply of goods by unincorporated association of body to their members for consideration Goods • Transfer of business assets except transfer made for the private use with or without consideration Where a person, acting as an agent, for an agreed commission or brokerage, either supplies or receives any goods and/or services on behalf of any principal, the transaction between such principal and agent shall be deemed to be a supply. 15

GST SUPPLY CHAIN – LAY OUT Outside India India Gujarat OGS Sale Distributor Overseas Supplier Distributor CGST + SGST CGST + SGST Sale Warehouse Trf in Gujarat Transfer Supplier No Tax IGST Warehouse Purchase CGST + SGST Import Purchase BCD - Cost Supplier IGST - Credit IGST Factory Overseas Customer Export (Zero Rated) 16

TIME & PLACE OF SUPPLY OF GOODS & SERVICES 17

TIME OF SUPPLY OF GOODS Earliest of : • Date of removal of goods Normal • Date on which goods made available to recipient Supply • Date of issue of invoice /receipt of payment • Date on which receipt is shown by recipient in his books • Date of expiry of successive payment / statement Continuous • If no successive account then earliest of : supply • Date of issue of invoice • Date of receipt of payment Earliest of : • Date of receipt of goods Reverse • Date of payment charge • Date of receipt of invoice • Date of debit in books of accounts Earliest of : Goods sent • Time of supply when it is known on approval • 6 months from date of removal 18

TIME OF SUPPLY OF SERVICES  Invoice within time – Earlier of issue of invoice or receipt of payment Normal  Invoice not within time – Earlier of completion of service or Supply receipt of payment  Other than above – Date of receipt in books of recipient  Due date of payment is ascertainable - Date on which payment is Continuous liable to made irrespective of invoice or payment  Due date is not ascertainable- Earlier of payment or invoice supply  Payment linked to completion of event - Time of completion Earliest of :  Date of receipt of service Reverse  Date of payment charge  Date of receipt of invoice  Date of debit in books of accounts  Date of filing of return; or Others  Date on which CGST / SGST is paid 19

PLACE OF SUPPLY OF GOODS Supply on Supply on Board direction of Agent Conveyance • Place where • Location of • As per law of • Location at movement of goods at time Parliament • Location of which goods goods of delivery to based on such agent are taken on terminate recipient Council’s board suggestion Movement of Supply without Others goods movement 20