GST – PRACTICAL ISSUES

2 Reverse Charge Mechanism

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 Provisions relating to reverse charge
3

 Section 9(3) – Notified goods and services

 Section 9(4) – Procurement of taxable supplies from
unregistered dealers
 Section 9(5) – Notified Services through E Commerce Operator

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Goods Transport Agency

4

Service Provider Service Receiver Rate of Tax

Goods Transport Agency Notified Persons 5%

 Not liable to Tax

 Services by road other than GTA and courier
 Consideration does not exceed Rs 750 / Rs 1500
 Who pays the tax

Sender GTA Receiver

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 Goods Transport Agency
5

Transacting Case 1 CGST SGST

Entities
Sender NP NP Not – NP
Receiver Not – NP Not – NP Not – NP
GTA Not Relevant Not Relevant Not Relevant
Person who Sender Receiver Sender /
pays freight Receiver
Tax Payable Sender GTA GTA
by

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Goods Transport Agency

6

Service Provider Service Receiver Rate of Tax

Goods Transport Agency Notified Persons 5%

 Rate of Tax
GTA 2.5% x 2 = No Credit Availed
5%
or
6% x 2 = 12% Provided that the GTA opting to pay
central tax @ 6% under this entry shall,
henceforth, be liable to pay central tax
@ 6% on all the services of GTA
supplied by it
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 Goods Transport Agency
7

Category of service Supplier of Recipient of

Service Service
Supply of Services by a GTA Notified Person
goods transport agency (GTA)
in respect of transportation of
goods by road to Notified
person

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Goods Transport Agency

8

Category of service Supplier of Recipient of

Service Service
Supply of Services by a GTA Notified Person
goods transport agency (GTA)
“who has not paid central tax
at the rate of 6%” in respect
of transportation of goods by
road to Notified person

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 Legal Services
9

Service Provider Service Receiver Rate of Tax

Individual advocate or firm of Business Entity 18%
advocates or arbitral tribunal

 Not liable to Tax

 To any person other than business entity
 To business entity having aggregate turnover < Rs 20 Lakhs in the
preceding Financial year

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Sponsorship Services
10

Service Provider Service Receiver Rate of Tax

Sponsorship services Body Corporates and 18%
Partnership Firms

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 Price Support
11

iPhone Available
Rs 70,000 now Rs 50,000

Ships Goods

Vendor Customer

Pays Rs
Orders and
50,000
Pays Rs
50,000
E com Operator
Credit Note
Rs 20,000
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Government Services
12

Service Provider Service Receiver Rate of Tax

Government or local authority Business Entity 18%
 Not liable to Tax
 Business entities having aggregate turnover < Rs 20 Lakhs in the
preceding financial year
 Value of services does not exceed Rs 5000
 Continuous Supply of Services – Rs 5000 per year
 Registration required under any law for the time being in force
 Issuance of Passport, Visa, Driving License, Birth Certificate or Death
Certificate
 Services of tolerating Act for which fine / liquidated damages are
payable

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 Director Fee
13

Service Provider Service Receiver Rate of Tax

Director Company / Body Corporate 18%

 Not liable to Tax

 Employer Employee Relationship

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Import of Services
14

Service Provider Service Receiver Rate of Tax

Import of Services Any person located in 18%
taxable territory

 Not liable to Tax

 Import of Services by SEZ

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 Import of Services
15

Import of Services
Consideration No Consideration

Business Personal Related Not

Related

OIDAR Not
OIDAR
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Import of Services
16

Service Provider Service Receiver Rate of Tax

Transport of goods by vessel Importer 18%
from outside India upto
Custom Station

 Will this exemption be available to SEZ?

 Corrigendum – Where value is not available, tax to be paid
on 10% of CIF value of imported goods

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 Unregistered Dealer Purchases
17

Service Provider Service Rate of Tax

Receiver
Purchases from unregistered Registered Applicable Rate
dealers – Goods and Services Person
 Rent a Cab, Manpower, Security Agency Services and Works
Contract Services are not notified services. No RCM unless received
from unregistered dealers
 Not liable to Tax
 Supplies under Section 9(4) received by registered person from any or all
suppliers does not exceed Rs 5000 in a day
 Exemption not available in IGST
 Transportation of passengers by metered cabs or auto rickshaws
 Raising of monthly consolidated invoice
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Rent A Cab Services

18

Service Provider Service Rate of Tax

Receiver
Unregistered Rent A Cab Registered Applicable Rate
Operator Person
Rent a Cab 2.5% x No Credit Availed
2 = 5%
or
6% x 2 No Condition
= 12%

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 Rent a Cab v GTA
19

POD Rent a Cab Services Goods Transport Agency

Section 9(4) 9(3)
RCM Provider is unregistered Provider is Unregistered or Provider
Applicable is registered and not charging GST
RCM not Provider is registered Provider is registered and charging
applicable 12%
RCM Rate 5% 5%
Credit Generally not eligible Eligible (unless used for transport of
Eligibility Eligible to person in similar line exempt goods)
of business and opting to pay
tax at 12%. Not eligible to
person in similar line of business
and opting to pay tax at 5%
Additional Does not cover Radio Caband Transport of Goods where consignor
Points Contract Carriage and consignee is same person or
31-08-2017note is not issued
where consignment

E – Commerce Operator
20

 Transportation of passengers by a radio-taxi, motorcab,

maxicab and motor cycle
 Accommodation in hotels or other commercial places except
where such person is liable to get registered under Section 22
 Services by way of house-keeping, such as plumbing,
carpentering etc except where such person is liable to get
registered under Section 22

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 Identification of Invoice
21

GSTIN Mentioned Tax Mentioned Type of Invoice

 
Registered Supplier

 Composition Supplier

Unregistered Supplier

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Analysis of Purchases
22

Category of Document Action Required Credit

Supplier received Available**
Registered Tax Invoice No Action Yes

Registered – RCM Tax Invoice Pay tax under Yes

RCM
Composition / Bill of Supply No Action No
Exempt Supplies
Unregistered No Document Generate a Self Yes
Invoice*
*Tax payable by recipient on reverse charge.
Time of Supply - Date of payment if made within prescribed time (30 days for goods and 60
days for services). If payment not made then the day immediately following the prescribed
time
**Credit available on eligible procurements

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 23 Input Tax Credit

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Sec 16 - Conditions for availing credit

24

 Possession of a tax paying document

 Invoice for supply of goods /services
 Self Generated Invoice - reverse charge
 Bill of Entry in case of import of goods
 Debit Note
 Value of supply is less than the agreed price
 Lower tax rate is charged
 Invoice by ISD
 Receipt of goods and services - Bill to Ship to, Job Work
 Tax has to be paid on such supplies by the supplier
 Recipient has filed the return
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 Sec 16 - Conditions for availing credit
25

 Goods received in lots – credit on receipt of last lot

 Payment not made within 6 months from date of invoice
 Reverse credit with interest
 Re-avail credit on payment of the amount
 Details of payment to be submitted in GSTR 2
 Supplies under Sch I – No requirement of payment
 CG – No credit if depreciation claimed on tax
 Time Limit - Return for September following the end of the
year or filing of annual return WEE
 No time limit for re-credit of originally reversed credit

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Sec 17 - Ineligible Credits

26

 Motor Vehicles and other conveyances

 For outward supplies – Dealers
 For outward supplies - Transport of Passengers
 For outward supplies - Training - Driving, Flying, Navigating
 For transport of goods
 Rent a Cab, Life insurance, health insurance
 Obligation of employer to provide to employees
 Used for making outward supply – same or composite supply
Decide on purchase of car v hire of car

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 Sec 17 - Ineligible Credits
27

 Food and beverages, outdoor catering, beauty treatment,

health services, cosmetic and plastic surgery
 Used for making outward supply – same or composite supply
 Software Companies, Hotels and Event Management Companies
 Travel benefits extended to employees on vacation
 Business Travel will be allowed
 Travel benefits to directors
 Membership of a club, health and fitness centre
 Club membership for the director

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Sec 17 - Ineligible Credits

28

 Works Contract Services - construction of immovable property

 Other than plant and machinery
 Unless output is a works contract service
 Goods and Services – construction of immovable property
 Own account
 Other than plant and machinery
 Even if used in course or furtherance of business
 Construction includes renovation, re-construction, repair etc to
the extent capitalized
 Plant and Machinery excludes
 Land, Building or other civil structure
 Telecommunication towers, Pipelines outside factory
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 Sec 17 - Ineligible Credits
29

 Composition Tax
 Goods or services used for personal consumption
 Goods or services received by Non Resident taxable person
 Credit only on goods imported by him
 Goods lost, stolen, destroyed, written off or disposed off by
way of gift or free samples
 Taxes paid under
 Sec 74 – Tax not paid or short paid
 Sec 129 – Detention and seizure of goods / conveyance
 Sec 130 – Confiscation of goods / conveyance

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Sec 41 – Provisional Credit

30

 Every registered person shall, subject to such conditions and

restrictions as may be prescribed, be entitled to take the credit
of eligible input tax, as assessed, in his return and such amount
shall be credited on provisional basis to his electronic credit
ledger
 Credit Matching
 With the details filed by the outward supplier
 Duplication of claim

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 31 Filing of Returns

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Important Terms
32

 2(97) Returns means any return prescribed or otherwise

required to be furnished by or under this Act or the rules made
thereunder
 2(117) Valid return means a return furnished under Section
39(1) on which self assessed tax has been paid in full
 29(2) Cancellation of registration if
 Composition dealers has not furnished returns for 3 consecutive tax
periods (9 months)
 Other dealers – not furnished returns for last 6 months

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 Tax Invoice v Bill of Sale
33

 Tax invoice to be issued on supply of taxable goods / services

 Bill of sale in case of supply of exempt goods / services or supply by
dealer under composition scheme
 Supplies to SEZ – Tax Invoice
 HSN Code for supply of goods
Turnover HSN Code
From 1.5 Crores to 5 Crores 2 Digits
Above 5 Crores 4 Digits
Imports and Exports 8 Digits

 SAC concept no longer relevant

 No tax invoice / bill of sale if sale value < Rs 200
 Consolidated invoice at the end of the day
 Tax to be indicated on tax invoice (cannot use cum tax computation)
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Tax is payable on
34

 Value of Goods / services being supplied

 Transaction should be between unrelated persons
 Price should be the sole consideration
Includes Excludes
Taxes other than GST taxes Pre Sale Discount reflected on Invoice
Amount incurred by recipient on behalf Post Sale Discount
of supplier
Incidental expenses – Before or at time 1. To be offered based on pre-existing
of delivery of goods / services agreement entered before supply of
goods
Interest / Late fee / Penalty for delayed 2. Recipient reduces proportionate
payment of consideration input tax credit
Price Subsidy – except those provided
by Central / State Government
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 Documents under GST
35

Transaction Document to Time of generation of

be issued document
Supply of taxable service (including export of service) Tax Invoice Within 30 days from
date of supply of
Documents to be serially numbered

Supply of exempted service Bill of Supply

service
Payment to an unregistered supplier for purchase of Payment At the time of making
goods/services received Voucher such payment
Receipt of advance towards supply of service Receipt At the time of receiving
Voucher such advance
Refund of advance when neither service is supplied nor Refund Voucher At the time of refund
tax invoice is raised
Excess charge of taxable value/tax on the supply of Credit Note At the time such excess
taxable service charge is identified
Supply of service found deficient by the recipient Credit Note At the time such
deficiency is identified
Short charge of taxable value/tax on the supply of Debit Note At the time such short
taxable service charge is identified
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Distribution of Credit ISD Invoice Monthly

Credit Matching
36

10 Outward Supply
15 Accept Delete Modify Insert

17
No Accept / Reject / No Action
Action
18/01/2017
 Credit Mismatch
37

Supplier Tax Uploaded Credit Action

Charged Claimed
1 100,000 100,000 100,000 No Action
2 200,000 NIL 200,000 Change to be accepted by the
supplier
3 150,000 95,000 150,000 Change to be accepted by the
supplier
4 50,000 50,000 75,000 To be modified by the recipient
5 300,000 300,000 150,000 No issues – Recipient has 50%
exempt turnover

38 Transition Issues

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 Carry Forward of Credits
39

 Credit carried forward under the existing law unless

 Amount inadmissible as credit under GST Law
 Not furnished the last 6 returns
 Credit relates to goods manufactured and cleared under notified exemption
notifications
 Pending Statutory Forms
 Credits not availed on capital goods
 Should be eligible as credit under existing and GST Law
 ITC on services availed and reversed
 No payment within 3 months time
 Payment to be made within 3 months from GST implementation

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Carry Forward of Credits

40

 Credit carried forward under the existing law unless

 Credits in case of Centralized registration
 Transfer to any location
 Credit as per original return or reduced credit as per revised return

 C/f of cess
 Credit of food and outdoor catering services
 Service invoice received between April and June – Will reversal attract?

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 Credits not claimed in original return
41

 Accounted within 30 days of GST implementation

 Goods / Services in Transit
 KK Cess cannot be claimed
 Credits claimed in the revised returns
 Cash Refund to be claimed
 Credits not claimed in the revised returns
 Credit is lost
 ISD Credits

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Special Credits
42

 Credit of taxes on stock (RM, WIP and FG) lying with person
 Not liable to be registered under existing law
 Engaged in manufacture of exempt goods or services
 Providing Works Contract Service + Notification 26/2012
 FSD, SSD and Importer or depot of manufacturer
 Stock to be used for taxable supply
 Credit eligible under GST Law
 In possession of CENVAT document (else 60% or 40% credit + Anti
Profiteering + 6 months + other than Manufacturer and Service Provider)
 Document should not be more than 12 months old
 Supplier of service not eligible for abatement
 Similar provision for person paying tax at fixed rate / fixed
amount
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 Job Work
43

• Extension of 2 months available

Dispatch • No Tax • Similar provisions for semi –

Pre GST finished and finished goods

• Processed goods can be supplied to

end customer (Export / Local) from
Returns < • No
job worker premises
6 months implications

• Declaration to be filed by job

worker and principal in prescribed
Returns > • ITC to be
paid by
form
6 months Manufacturer

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Sales Returns post GST

44

Sales pre • No Tax

Sales pre • Taxable
GST GST
Outward supply for
customer
• Registered
Returns < • No Returns < • Not
6 months implications 6 months Registered
Outward
Refund ofsupply for
tax paid
Customer to pay tax customer
• Registered • Registered
Returns > • Non
Returns > • Not
6 months Registered 6 months Registered
No Tax by customer Tax is a cost

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 Price Revision
45

Revision in
Prices

Upward Downward Service not

Revision Revision rendered

Raise Debit Buyer can Raise Credit Buyer to

Note in 30 avail the Note in 30 reverse Refund
days credit days credit

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Refund Claims
46

Pending Refund claims

Refund can Similar
Eligible Refund be filed CENVAT provision for
amount to which is before or Balance refund of
be paid in rejected – after claimed as tax paid on
cash Lapse appointed refund – No export of
date C/f goods /
services

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 Overlapping Contracts
47

 Supplies post GST implementation

 GST will apply
 Tax leviable under the VAT Laws
 Tax leviable under the service tax law
 Treatment of advances received pre GST for supplies post GST

 Sale of goods on approval

 Returned within 6 months from the appointed date – No tax
 Returned after 6 months
 Supplier to pay tax on lapse of 6 months
 Customer to pay tax on return of goods

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48 Registration

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 One registration under GST
49

Delhi Chandni Chowk

Excise – 6 Registrations
GST follows VAT model
VAT – 3 Registrations
ST – 1 Registration Lucknow
Kanpur
Uttar
Pradesh
Varanasi

Amritsar
Punjab
Jallandhar

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22. Person liable to register

50

 Aggregate turnover > Rs 20 Lakhs

 Special Category States, Aggregate turnover > Rs 10 Lakhs
 What is Aggregate turnover?
 Taxable Supplies + Exempt Supplies + Exports + Inter State Supplies
 Taxable supplies does not include Alcoholic Liquor for human consumption
 Cocktails
 Will it include turnover on which tax needs to be paid under reverse charge?
 Specific exclusion of inward supplies liable under reverse charge basis
 How to compute the turnover in Financial year for the 1st year 2017-18

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 22. Person liable to register
51

 Person registered / licensed under existing law on day

immediately preceding the appointed date

 Taxable under existing law but exempt under the GST Law
 Composition Scheme under existing law but regular scheme under GST Law
 Regular Scheme under existing law but composition scheme under GST Law
 Treatment of security deposit paid under the existing law
 Registration in State where immovable property is located outside Home State

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22. Person liable to register

52

 Transfer of Business – Transferee to obtain registration in case

of

 Sale
 Succession
 Amalgamation or De-merger

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 23. Person not liable to register
53

 Person exclusively engaged in Goods / Service

 Not liable to tax
 Wholly exempt from tax under CGST
 Wholly exempt from tax under IGST

 What about a person exclusively engaged in supply of goods which attracts NIL
rate of tax?
 “Exempt Supplies” distinguish “NIL rate” from “wholly exempt”

 Agriculturist
 Only Individual / HUF
 Person dealing in agricultural products?

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24. Compulsory Registration

54

 Notwithstanding Section 22
 Inter State Taxable Supplies
 Is Purchases from outside the State covered under inter state taxable supplies?
 Section 10 - Composition Levy differentiates Inter State supplies from inter state outward
supplies

 Casual Taxable Person making taxable supply

 Participation in an exhibition?
 Service provider performing services outside the home state
 Non Resident taxable person making taxable supply
 Authorized Person – Resident in India with PAN

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 24. Compulsory Registration
55

 Persons required to pay service tax under reverse charge

 Purchases from unregistered dealer
 Who will register in case of purchase of goods by one URD to another
 Purchase of goods from unregistered dealer outside the State
 Inter State Supplies - compulsory registration but RCM provision in IGST Act – Section 5(4)
 Employee reimbursements
 Employee reimbursements not carrying Company Name

 Notified Goods and Services

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Electronic
Commerce
Operator (ECO) Section 24(x)

Goods Services

Price collected Price not

by ECO collected by Notified Not Notified
ECO

TDS u/s 52 RCM u/s 9(5) Price not

Tax Payable by collected by Price collected
Tax payable by Supplier Supplier not to by ECO
supplier pay tax ECO

ECO – Section 52 ECO – Section

Supplies – Section 24(ix) 24(iv) TDS u/s 52
Supplier – No Tax Payable by
56 supplier
31-08-2017 Tax payable by
registration triggers supplier
other clause
 Rendering of Services
57

Head Office,
Bangalore
IGST IGST

Accounting Services

Branch, Branch,
Chennai Cochin

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Apportionment of Credit
58

Third Party,
Bangalore

Accounting Services
CGST
SGST

Head Office,
Bangalore
ISD ISD

Branch, Branch,
Chennai Cochin

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 Business Vertical Registration
59

 Two or more business verticals in same state

 Distinguishable component
 Treated as distinct persons
 Movement of Men, Machine and Stock will be taxable, Input available
 Multiple compliances and assessment

 Relevance
 SEZ operations – Mandatory separate registration
 Business where credit is available v credit is not available
 Construction of apartments for sale and construction of commercial complex for rent
 Dealing in goods which are exempt and goods which are taxable

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Location of ISD
60

 Concept of ISD
 Can there be regular registration and ISD registration in same State?
 Head Office, Marketing office or Experience Centres
 Registration in Delhi and Uttar Pradesh. Services availed by Delhi unit in Uttar
Pradesh for which CGST +UPGST was levied. Can UP avail credit of the same?
 Input tax credit on supply of goods “to him” for use “in his” business
 Classification of expenses
 First Level – Taxable or Exempt
 Second Level – Taxable to be bifurcated into
 Home State Expenses
 Outside the State Expenses
 Common Expenses

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61 Questions??

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