Taxes subsumed under GST –

Taxes levied by Central – Central Excise Duty, Service Tax, Additional Excise Duty, (CVD & SAD), Surcharge & Cess
Taxes levied by State – VAT, CST, Purchase Tax, Entry Tax, Octroi, Luxury Tax, Taxes on Lottery/Betting

Input Tax Credit Mechanism under GST –
The Input Tax Credit of Central GST can be set off against Central GST liability on the output at each stage. Likewise, the credit of SGST shelled out on inputs can be used to offset payment of SGST on output. However, the mechanism does not facilitate cross utilisation of credit; that is, credit for SGST cannot be set off against CGST and vice-versa.
In case of inter-state transactions, the central government would be responsible for collecting the Integrated Goods and Services Tax (IGST), which will be the sum of CGST and SGST. The purpose of this system is to facilitate smooth flow of Input Tax Credit between states. Input taxes paid in the form of IGST can be set-off against output tax liability of IGST/CGST/SGST.


Anti-Profiteering Law
As per Section 171 of the CGST/SGST Act-

We have been training and giving presentations to industries of different sectors. Our team keeps a close watch on all the updates related to GST and its impact on various business sectors.


Dual Tax Structure

ParticularsIntra StateInter State
Cost100000100000
Add:
CGST @ 9%9000-
SGST @ 9%9000-
IGST @ 18%-18000
Total118000118000

Seamless Credit Mechanism

ParticularsUtilization Matrix  
Credit InIGSTCGSTSGST
IGST1st2nd3rd
CGST2nd1stNot Allowed
SGST2ndNot Allowed1st

Apportionment Mechanism of ITC

ParticularsState AState BState C
ManufacturerWholesalerManufacturer
Value200200300
CGST @ 9%--27
IGST @ 18%3636-
SGST @ 9%--27
Total236295354

Taxable Event

What is a taxable event?

“Any event or transaction that results in a tax consequence for the party who executes the event. In other words an occurrence which affects the liability of a person to tax.”

Taxable Event Under Previous Laws

Taxable Event under Goods & Services Tax
The taxable event under GST is SUPPLY of goods and services made for consideration (except schedule I) in the course or furtherance of business.


Concept of Supply

Section 2(92)


How to Determine Supply of Goods vs. Supply of Services in GST


Deemed Supply of Goods & Services Goods

GOODSSERVICES
a. Sale of Goodsa. Lease, tenancy, easement, license to occupy land
b. Transfer of right to use in goodsb. Renting of immovable property for commercial purpose
c. Sale of goods on hire purchase agreementc. Treatment or process applied to other person’s goods
d. Transfer or Disposal of business assets with or without considerationd. Under construction sale any civil structure
e. If person ceases to be taxable person, all business assets if business is transferrede. Temporary transfer or Permitting use of IPR
f. Business assets sold by any third party to recover any debtf. Development, designing, upgradation of IT Software
g. Agreeing to refrain from act or tolerate or to do an act
Composite supplies: i) Works Contract i.e. contract for construction of immovable property ii) Supply of food in restaurant
h. Goods held for business put into private use with or without consideration

Composite Supply


Tax Liability of Composite Supply


Mixed Supply


Tax Liability on Mixed Supply

To calculate the tax liability on mixed supply, the tax rate applicable on the goods or services attracting the highest rate of tax, in the combination of goods & services, will be considered.


Time, Place & Value of Supply

There are three important concepts under Supply

TIME OF SUPPLY :
To determine rate of tax, value & due dates for tax payments


PLACE OF SUPPLY :
To determine whether it is Intra-State or Inter-State


VALUE OF SUPPLY :
To determine the value of supply on which tax is to be levied


Value of Taxable Supply section 15(1)


Transaction Value

Transaction Value comprises of following:


Valuation of Taxable Supply

Discounts will be treated differently under GST. Discounts given before or at the time of supply will be allowed as deduction from transaction value. Discounts given after supply will be allowed only if certain conditions are satisfied.

The various aspects of product pricing, valuation of goods and services, and others will experience significant transformation as the tax system is simplified.


Place of Supply of Goods


Place of Supply = Place where movement of goods terminates


Place of Supply of Services

If other than specified services – Thumb Rule



Supply between related persons/distinct persons

Section 25(4) & 25(5)

Gifts exceeding Rs. 50,000/- in value by employer to employee to be considered as supply


Reverse Charge Mechanism



When to pay tax under RCM

GOODS – EARLIEST OF THE FOLLOWING

Date of Receipt of GoodsThe date on which the goods are received by the recipient.
Date of PaymentThe date on which payment is made. The earliest of the date on which the payment is accounted for in the BOA of the recipient or the date on which payment is debited from his bank account.
30 days from Date of issue InvoiceThe date immediately following 30 days from the date of issue of invoice by the supplier.

However, where it is not possible to determine the time of supply as above, the time of supply shall be the date of entry in the books of account of the recipient of supply.

SERVICES – EARLIEST OF THE FOLLOWING

Date of PaymentThe date of payment shall be earlier of- a. The date on which the recipient entered the payment in his books OR b. The date on which the payment is debited from his bank account
60 days from Date of issue InvoiceThe date immediately following 60 days from the date of issue of invoice by the supplier.


FAQ Related to RCM

Q. Whether ITC allowed of tax paid under RCM?
Tax paid under RCM will be available as ITC to the registered recipient person.

Q. How to pay tax under RCM?
ITC can be utilized only for payment of Output Tax thus, ITC cannot be utilized for payment of tax under RCM. This means it can be paid through cash mode only.


Transitional Rules

Section 139 to 142

Section 140
A registered person shall be entitled to take the credit of CENVAT c/f in the last return furnished under existing law.

Section 140(3)
A registered person who was not registered under other law (Excise, Service Tax or CST) shall be entitled to claim credit of CENVAT of goods held in stock.

Section 140(5)
A registered taxable person shall be entitled to take, in his Electronic Credit Ledger, credit of eligible duties and taxes in respect of inputs or input services received on or after the appointed day but the duty or tax in respect of which has been paid before the appointed day, provided that document of same was recorded in the books of account within 30 days from the appointed day.


Input TAX Credit

Section 2(62) – Input Tax
“input tax” in relation to a registered person, means the

charged on any supply of goods or services or both but does not include the tax paid under the composition levy.


Manner in which ITC to be claimed



Types of Returns to be filed and their Due Dates