GST Snapshot Compliance and Business Impact · 2017-05-04 · The GST bill restricted the ambit of...

GSTSnapshotCompliance andBusiness Impact

Page 2Goods and Services TaxDraft for Discussion only

GST- What it is?

Key Objectives of GST

One Nation, One Tax - Singlecommon National Market

Eliminating cascading effect ofIndirect taxes

Uniformity in complianceframework - registration,

payments and creditsEase in doing business

GST Framework

► Tax on “Supply” of goods and services► Destination Based Tax► Local Supply

► CGST plus SGST (rates may vary)► Interstate Supply

► IGST (single rate)► Imports

► Basic customs duty (unchanged)► IGST (single rate)

► Stock transfers i.e. on self supplies► Self supply of goods and services

taxable► GST Valuation Rules to apply on such

supplies

GST snapshot

► Concept of Place of Supply becomes relevant for domestic supplies► Myriad Compliances and hence role of technology significant► Process and control based compliances► Service companies would need substantial change in the existing IT

systems

► The GST bill restricted the ambit of GST law to the whole of India except

Jammu and Kashmir.

► Supply by unregistered person to a registered person would now be liable

to GST under Reverse Charge Mechanism (RCM) and the same shall be

available to the registered person as Input Tax Credit.

Points for Consideration – Key Take Away

GST – A Bird’s eye viewGST is :

►A destination based Tax

►Levied on valueaddition – at each stage

►Local Supply – CGSTplus SGST (rates mayvary)

►Interstate Supply –IGST (single rate)

What it excludes :►Petroleum and Real

Estate Property areexcluded

GST

Excise Duties includingthe additional excise

duties

Additional duties ofcustoms (ie CVD and

SAD)

CST (to be phased out)

Service tax

Cesses and surchargeslevied by Union

VAT/ Sales tax

Entry tax not in lieu ofoctroi

Entertainment tax (unlesslevied by the local

bodies)

Luxury tax

Taxes on lottery, bettingand gambling

Cesses and surchargeslevied by States

• Municipal levies - likely to continue• Stamp duty - likely to continue

Central Levies State Levies

Taxessubsumed

CGST

Purchase tax tobe subsumed

Taxes to be subsumed

SGST

Taxes applicable today

►Service Tax (both output andinput service)

►Excise Duty (on procurementof inputs)

►VAT/CST (on procurement ofgoods)

►Entry Tax (on entry of goodsin specified State)

►Basic Customs Duty (onimport of goods)

►Additional Duty of Customsand Special AdditionalDuty (on import of goods)

Taxes applicable post GST►CGST►SGST►IGST

GST – Present vs. Proposed

Centre Taxes State Taxes

GST design ushers in a “dual levy”, and stakeholdershipfrom States to tax supplies

Alignment of powers of taxation on supply of goods and services

Dual GST:

► CGST and SGST onlocal intra statesupplies

► IGST on inter statesupplies

Exclusions/ Exceptions:► Stamp duty and real

property excluded► Alcohol for human

consumption excluded► Impose excise duty and

VAT:► Petroleum (for a

moratorium period)► Tobacco

Other features:► State level compliance:

► Place of supply► Larger pool of credits► Matching concept

GST Compensation cess:

► Rate of cess to be notified► Cess will be levied on transaction value with

availability of credit► Not applicable for dealers opting for

composition scheme► Cess can be utilized against payment of

such cess only

Rates discussed by GST Council

Rates 0% 5% 12% 18% 28%Goods and servicescovered

Essential Food,medicines,services

Precious metals,Common use items

Standard Rate forservices and goods

Standard Rate forservices and goods

Demerit goods.Additional cess to beimposed on luxury goods

Incidence of tax

Supply ofGoods/

ServicesDeemed Supply

of Goods/Services

In the course orfurtherance of

business

Place of SupplyIndia Outside India

Intra-State Inter-State► Requirement of registration in relevant

State► Liable to CGST + respective State’s SGST

► Requirement of registration in the originState

► Liable to IGST

If export thenzero ratedsupply, elseIGST

Charge of GST

by taxableperson

Liability to pay TaxSupply of

Goods/ Services

INTEGRATEDGST

LOCAL STATEGSTLocation

of ServiceProvider

(L1)

Place ofSupply

(L2)

CGSTSGST

IGST(State)

Intra-State Sale

Inter-State Sale

L1 and L2 are in sameState

L1 and L2 are in differentStates

Supply made by a taxable person to a recipient comprising two ormore supplies of goods or services, or any combination thereof, whichare naturally blended and supplied in conjunction with each other inthe ordinary course of business, one of which is a principal supply

Illustration: Where goods are packed and transported with insurance,the supply of goods, packing material, transport and insurance is acomposite supply and supply of goods is the principal supply

Composite supply,consisting of two ormore supplies, one ofwhich is a principalsupply, shall betreated as supply ofsuch principal supply

Composite Supply (Naturally Bundled)

Two or more individual supplies of goods or services, or anycombination thereof, made in conjunction with each other by ataxable person for a single price where such supply does notconstitute a composite supply

Illustration: A supply of a package consisting of canned foods,sweets, chocolates and juices when supplied for a single price isa mixed supply. Each of the items can be supplied separately andis not dependent on any other.

It shall not be a mixed supply if these items are supplied separately

Mixed supply,comprising two ormore supplies shallbe treated as supplyof that particularsupply which attractsthe highest rate oftax

Mixed Supply (Not Naturally Bundled)

Input tax credit - key definitionsProvision Definition

Input Services • means any service used or intended to be used by a supplier in the course orfurtherance of business

Inputs • means any goods other than capital goods used or intended to be used by asupplier in the course or furtherance of business

Capital Goods • means goods, the value of which is capitalised in the books of accounts of theperson claiming the credit and which are used or intended to be used in thecourse or furtherance of business

Plant and Machinery • Apparatus, equipment, machinery fixed to earth by foundation or structuralsupport that are used for making outward supply and includes such foundationand structural support but excludes —(i) land, building or any other civil structures;(ii) telecommunication towers; and(iii) pipelines laid outside the factory premises

GSTNElectronic Registers for Credits - CGST/ SGST/ IGST

(qua each registration held)

Vendor populates sales totaxable person

Reverse charge taxpayment

Allocation through ISDmechanism

Reconciliation Limitation Period Vendor Blacklisting

CGST Output SGST Output IGST Output

CGST Input

IGST Input

SGST Input

IGST Input CGST Input

SGST Input

IGST Input

Order for utilisation of credits and payment of taxes

Set off from output liabilitiesInput tax credits widened

TDS provisions

Returns

Current indirect taxes Proposed under GST (CGST, SGST & IGST)Law Returns Returns

Servicetax

Centrally ST-3(Half-yearly) returnis filed

• Invoice level reporting is required in returns under GST regime

• Following returns would be required to be filed for all registrations (Common returnsfor CGST, SGST, IGST) separately:

• A reconciliation statement of GST returns vis-à-vis audited annual financialstatement (to be filed with annual return)

VAT/CST/ ET/

LBT

Returns are filed asper respectiveprovisions of states– mostly monthlyreturns

Excise ER-1 (Monthly)

Returns

Report Name Purpose Due Date

GSTR-1 (Monthly) Outward supplies 10th of next month

GSTR-1A (Monthly) Details supplied by recipient Auto Populated

GSTR-2 (Monthly) Inward supplies 15th of next month

GSTR-2A (Monthly) Details supplied by the supplier Auto Populated

GSTR-3 (Monthly) Monthly Return 20th of next month

GSTR-6 (Monthly) ISD Return 13th of next month

GSTR-6A (Monthly) Details furnished by the supplier to ISD recipient Auto Populated

GSTR-7 (Monthly) TDS return 10th of next month

GSTR-9 (Annually) Annual return 31st Dec of FY

GSTR-9B Reconciliation Statement Auto Populated

ITC-1 Final acceptance of ITC available to recipient Auto Generated

Returns - ProcedureGSTR 1 (Upto 10th ofMonth)Outward details ofSupplies to befiled by supplier

GSTR 2 (Upto 15th ofGSTR 2 (Upto 15th ofMonth)

Inward details of Supplies tobe filed by recipient taking

into account outward supplydetails of supplier available in

FORM GSTR 2A

Upto 17th of MonthSupplier needs to accept orreject the changes made byrecipient available in FORM

GSTR 1A

FORM GSTR 1filed by supplier standamended to the extentchanges accept by the

Supplier

Upto 17th of MonthUpto 17th of MonthSupplier needs to accept orreject the changes made byrecipient available in FORM

GSTR 1A

GSTR 3 (Upto 20th ofGSTR 3 (Upto 20th ofMonth)

Every registered taxableperson shall file a monthly

return

Annual Return- GSTR 9Annual Return- GSTR 9taxable person (other than ISD,

NR, TDS or TCS) shall file annualreturn upto 31st December

following the end of financial year

Option of dailyuploading of

supply details

Invoice/ debit note/credit note

Invoice - ParticularsSl. No Particulars Requirement

1 Name and registered address of relevant entity Mandatory2 GSTIN of relevant Company office Mandatory3 Name of Customer Mandatory

4 Address of Customer (Bill to and Ship to both), along with name of theState and its code, if unregistered Mandatory

5 GSTIN of Customer, if registered Mandatory6 Date of issue of invoice Mandatory

7Invoice number - consecutive (in one or multiple series), alphabetic ornumeric or having special character or any combination thereof butunique for a financial year

Mandatory

8 Place of Supply including relevant GSTIN no. of customer registeredat such location Mandatory

9 HSN code in case of goods or Service Accounting Code in case ofservice Mandatory

Invoice - ParticularsSl. No Particulars Requirement

10 Description on nature of supply of goods / service Mandatory11 Quantity in case of goods and unit or Unique Quantity Code Mandatory12 Type of Tax (CGST, SGST/UTGST and IGST), Cess (if any) Mandatory13 Rate of Tax as applicable Mandatory14 Discount (if any) Mandatory

15 Value of service / goods taking into account discount or abatement, ifany Mandatory

16 Amount of Tax should be separately mentioned Mandatory17 Total value of invoice (i.e. including taxes) (in figure and words) Mandatory18 Amount of tax subject to reverse charges Mandatory

20 In case invoice has more than one tax rates, each type of rate of taxand amount for each supply should be mentioned separately Mandatory

21 Signature or digital signature of Authorised signatory Mandatory

Credit and debit notesRegistered taxable person to issue

Credit or debit note in the following situations

Credit note Debit note

•Credit note to be issued when:• Taxable value/tax charged in the invoice exceeds

the taxable value/tax payable in respect of suchsupply

• Goods supplied are returned by the recipient• Deficient services supplied• Particulars of credit note -as may be prescribed

•Debit note to be issued when:• Taxable value/tax charged in the invoice is less

than the taxable value/tax payable in respect ofsuch supply

•Debit note includes a supplementary invoice•Particulars of debit note -as may be prescribed

Discount - summary

Is discountestablishedin terms ofcontract?

NO

Discount not allowable asdeduction from value

Issue credit note linking the sameto all the invoices that it pertainsto. Reflect value and GST portionseparately

Is reversal done bythe recipient of thetax portion asattributable todiscount shown incredit note?

NO

YES

YES

Discount allowable as deductionfrom value

Is discountgiven tobuyer aftersupplyeffected?

YES

No

Discount to be recorded in theinvoice issued in respect of suchsupply

Recommendations- Check agreements to see if all types of discounts form part of agreement or not- If not, amend agreements to provide for the discount types- Ensure reversal are done by recipient of goods/services- Contractually bind recipients to reverse input tax credit attributable to discount

Credit Mechanism andMatching Concept

Input tax credit- Key pointsRelevant/ Key Provisions Impact on Company

• ITC available to registered taxable person subject to prescribedconditions

• ITC to be credited to the electronic credit ledger of the taxable person• Electronic credit register to be maintained on GSTN for every taxable

person

• Electronic credit ledger generated by GSTN to bereconciled with the credit records of Company

• Company to upload the details of outward suppliescorrectly on GSTN to ensure that vendors gets thecorrect credit

• Simultaneously, vendors to upload details ofoutward supplies (commission/ incentive invoices)correctly to ensure that Company gets the correctcredit

Conditions for availing ITC by Company• Possession of tax invoice, debit note, supplementary invoice• Receipt of the goods/ services• Tax charged in respect of supply has been actually paid by vendor• Company has furnished the monthly return

• Condition of actual receipt of goods/ services andpayment of tax by vendor to the Government foravailment of credit by Company is introduced in theGST regime

Input tax credit- Key pointsRelevant / Key Provisions Impact on Company

• Tax paid under composite levy is an ineligible credit • No credit eligible on commission/ incentive invoices raisedby vendors registered under the composition scheme

Documents for availing input tax credit:

• Tax Invoice• Debit note• Bill of entry• Invoice issued to self in case of reverse charge payments• ISD invoice

The above documents must contain all the applicable particularsprescribed in Invoice Rules

• Company to ensure that a tax compliant invoice is raisedat the time of supply of vouchers/ c-topup to vendors

• Similarly, vendors to ensure that a tax compliant invoice isissued for charging commission/ incentive from Company

• Debit note/ credit note mandatorily to be issued in case ofany upward or downward revision in the value of supply

Input Tax CreditUnder the GST Regime, input credit on commission would be based on “correct loading of data byvendors” in the GST Portal along with payment of due taxes to Government.

► Default in the payment of taxes to the Government by vendor or incorrect upload of data by supplier,would result in credit not being allowed to Company

► Vendors has to ensure his compliance so that the credit chain works seamlessly

• Vendorsprovide theirservices toCompany

1

• Tax Invoice israised andissued toCompany

2• Vendors

uploads hiscorrect Supplydetails onGSTN Portal

3

• Vendors havepaid taxes toGovernmentand filed return

4

Credit efficiency under GST

• Under the current regime, vendors registered as traders are not eligible to getthe CENVAT Credit of Excise duty on goods and Service Tax paid on inputservices

• Under GST regime, vendor would be eligible to get the credit of GST applicableon both goods purchased and services received subject to prescribed terms andconditions

Excise duty / Service tax credit

• Under current regime, vendor is not eligible to get the credit of CST charged oninter-state sale of goods

• Under GST regime, vendor would be eligible to get the credit of GST charged onsuch sale subject to prescribed terms and conditions

CST Credit

New Concept - Blacklisting of Dealers► A system of “GST Compliance Rating” is proposed to be introduced.

► Any dealer having a rating below a prescribed level would be counted as a blacklisted dealer

► A continuous rating system for dealers would be maintained and profiles of all dealers would be posted in public

domain

► Purchases made from a blacklisted dealer would not be eligible for ITC

Triggers for blacklisting

1

2

3

Action points

Continuousmonitoring ofvendor ratings

Contractrestructuring

including indemnityclause- with key

vendors

Educatevendors on how

to remaincompliant

Continuous default for a period of 3 months in paying reversedITC

Continuous default of 3 months or any 3 month-period overduration of 12 months in uploading sales details

Continuous short reporting of sales beyond a prescribed limitof 5% (of total sales) for a period of 6 months

Reverse chargemechanism

Reverse charge mechanism

Purchases fromunregistered dealer

Purchases from unregistered dealer

Impact on BusinessProcesses andCompliance

GST will transform the way we do business

Advocacy

Supply Chain Re-design

Process Re-design incl. tax

Accounting

TechnologyRefreshPricing

Compliance

ChangeManagement

► Rate of Tax► Time & place of supply► Treatment of current incentives► Valuation

► Sourcing strategy► Distribution strategy► Outsourcing decisions► Working capital► management

► Procure to pay► Order to cash► Tax credits, payments and

accounting► Risks & controls

► System Changes► Compliance► Auditability► Automation

► Costing / Pricing► Forecasting/ scenario

building► Margin Management

► To be GST organisationstructure design

► GST registrations► Tax credit transitions► Return reporting► Shared/ Manage

services

► Program Management► GST awareness training► GST communication► Organization structure

Business ImpactAssessment

Key Impact Areas – ProcurementArea Points

Need to educate the vendors tobring them on-board

► Companies may explore the need to educate, guide and handhold the vendors to ensure thatthey are on-board GST – Need to educate them about raising GST compliant invoices and filingif timely returns or else Companies may lose out on input tax credit

Synergies to accrue to vendors tobe passed on

► Companies to negotiate with the vendors to ensure that the synergies by way of unlocking ofcredits are passed on by way of reduction in prices

Vendor Rationalization ► Purchases of goods/services from unregistered vendors to attract payment of GST under reversecharge mechanism. Companies may choose to lessen the purchases from such vendors to avoidadditional compliances

► Further, currently Companies who are not in a position to avail input tax credit currently mayhave chosen to procure goods on payment of CST in order to save cost – Need to re-strategize?

► Once in the GST regime – GST Compliance rating may be used for selection of vendors

Change in purchaseorders/contracts

► Need to change the contracts to include GST specific terms and conditions like holding up thetax amount, clause for making good any loss that the Company might suffer on account of non-compliance by the vendor

Advances paid to suppliers ► In case of payment of advances to suppliers, companies would have to pay GST to vendors, butwould be able to avail credit only once the goods/services are received – Need to negotiate andchange payment terms?

Key Impact Areas – Sales and Supply ChainArea Points

Need to educatedealers/distributors

► GST knowledge to percolate through out the supply chain to ensure minimum disruption in saleson and after the GST go-live date

Consolidation / Expansion ofwarehouses and CFA premises

► All inter-state stock transfers to be taxable and the recipient location to avail credit thereof –Companies may take a decision of consolidating existing warehouses / expand – Tax neutral

Dealers may come back andnegotiate

► Dealers may ask for a reduction in price on account of synergies that may arise on account GST.Companies to effectively manage such negotiations

Sales return ► Returns wherein tax is required to be adjusted to be routed through debit/credit notes linked withoriginal invoice – need to track every return

Advances received from customers ► Need to pay GST on advances received from customers – major change from current process

Anti-profiteering clause ► Any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit tobe passed on to consumers by way of reduction in prices – Impact of the same to be examinedas and when the government prescribes the mechanism

Impact of transition provisions ► The impact of transition provisions to be explained to the dealers and distributors to ensure thatthe benefit is passed on to the consumers

IT impact areas to watch out forArea Points

Vendor Master ► Vendor master to be updated to contain the GSTIN of the vendor. Further, master also to beupdated to identify the vendors who are not registered under GST/ availing the benefit ofcomposition scheme

Material Master / Services Master ► HSN for the goods sold and SAC for services provided to be fed into the system

► On the procurement front, bifurcation to be made between inputs and capital goods to determinethe eligibility of credit

Customer Master ► Customer master to be updated to contain the GSTIN of the customers. Company to take carethat state-wise GSTIN of the customers is updated in the system

Invoices to be raised ► Invoice format to be updated in the system to include details as provided in the draft invoicerules. The invoice to be serially numbered and to include additional details such as GSTIN of thecustomer, place of supply and whether tax to be paid on reverse charge basis by the customer.

► Further, invoices also to be raised for inter-state stock transfers.

Debit and Credit notes to be raised ► Adjustment of tax on account of raising debit/credit notes to be allowed only if such notes containreference of the original invoice number.

Area Points

Tax Codes ► Different tax codes to be framed for CGST, SGST and IGST. Further, state-wise codes for CGSTand SGST would also be required

► Separate tax codes for exports made under bond and exports made under rebate also to becreated

Creation of new GLs ► Need to create state-wise General Ledgers for CGST, SGST and IGST?

Raising of Purchase Order ► Purchase Orders to contain the address as well as the GSTIN of the premises wherein thegoods/services are to be procured to ensure the vendor raises invoice with the mentioned GSTINand thus enable smooth credit.

Treatment of advances ► Tax codes to be configured so as to provide for payment of GST on advances received for supplyof goods/services. Further, system to enable set-off of such advance amount at the time ofraising of invoices.

Filing of returns ► IT systems need to be configured in a manner that all the data required for filing the returns areavailable in an easy and time-efficient manner

► Wait for ERP vendors to release patches/notes

IT impact areas to watch out for

Area Points

Timing of accounting for tax ► The timing for recognition of the input tax credit may undergo change

► Incidence of tax may be at time of payment / receipt of advances

► Every Stock transfer will now have tax outflow and accounting implication thereby

Transition provisions ► Extent and category in which the balances in input credit / refunds receivable accounts will betransferred, especially CENVAT in LLM units

► Time window available to account for unaccounted purchases and the Purchase / Sales returnsafter the date of transition.

► Tax component in closing inventory on date of transition

► Export benefits receivable (Licenses in hand / applied)

Others ► Sales to be reported net off GST, as compared to gross of excise duty under Ind AS

► PO level changes to be made for defining tax codes to exclude GST from the inventory value.

Accounting impact areas to watch out for

Returns under GST

Returns : Current v/s GST regime

Present regimeReturn For To be filed by

GSTR 1 Outward supplies(sale, stocktransfer, export)

10 of nextmonth

GSTR 2 Inward supplies(purchases, import)

15th of nextmonth

GSTR 3 Monthly return 20th of nextmonth

GSTR 6 ISD return 13th of nextmonth

GSTR 7 Tax deducted atsource

10th of nextmonth

GSTR 8 Annual return 31st Decemberof next FY

ITC ledger Continuous

Cash ledger Continuous

Tax ledger Continuous

Return Time period To be filed by

Excise

ER 1 Monthly return 10th of next month

ER 4 Annual return 30th November ofnext FY

VAT return in each state

Monthly / Quarterly return As prescribed

Annual return As prescribed

Audit reports As prescribed

Service Tax

ST 3 (Half yearly) 25 days from halfyear end

Annual return 30th November ofnext FY

Additional in GST regime

Reporting requirements - returns

SUPPLIER(Outward Supplies)

RECIPIENT(Inward supplies)

Furnish details in Form GSTR-1 on or before duedate in manner as prescribed

The above details shall be available to recipient through common portal in below parts of FORM GSTR-2A- details of outward supplies furnished by the supplier in Part A of FORM GSTR-2A- Details of ISD invoices shall be made available in part B- Details of TDS deducted by the deductor under section 37 furnished in FORM GSTR-7 shall be made available in Part C- Details of tax collected at source by an e-commerce operator furnished in FORM GSTR-8 i shall be made available inPart D

Furnish details in Form GSTR-2 on or before due date in manner as prescribed. The following to also bespecified in the said form- Inward supplies wherein recipient is not eligible, fully/ partially, for input tax credit (where eligibility can be

determined at the invoice level) and- quantum of ineligible input tax credit on inward supplies which is relatable to non-taxable supplies or forpurposes other than business and cannot be determined at the invoice level.

The above details shall be available to supplier through common portal in FORM GSTR-1A

Supplier shall accept/reject these modifications made and Form GSTR-1 shall stand amended**subject to the above modifications.

** Rectification of error or omission in respect of the details furnished shall not be allowed after filing of the return for the month of September following the endof the financial year to which such details pertain, or filing of the relevant annual return, whichever is earlier.

Reporting requirements – returns – monthly return

FORM GSTR-3

Part A of the monthly return to be generated based on information furnishedthrough returns in FORM GSTR-1, FORM GSTR-2, electronic credit ledger,electronic cash ledger and electronic tax liability register of the taxable person.

FORM GSTR-3

Tax, interest, penalty, fees or any other amount payable under GST act orrules to be paid. The same may be discharged by debiting the electronic cashledger and/or electronic credit ledger as per the details contained in Part B ofthe return in FORM GSTR-3.

Return furnished without payment of full tax due as per such return shallnot be treated as a valid return for allowing input tax credit in respect ofsupplies made by such person

Reporting requirements – returns - Matching of claim of input taxcredit, final acceptance and communication

Taxable Person shall be entitled to take credit of Input tax as self assessed in his return subject to conditions andrestrictions

such amount shall be credited, on a provisional basis, to his electronic credit ledger

The prescribed details relating to the claim of input tax provisionally allowed shall be matched after due date of filingreturn in from GSTR-3.

The final acceptance of claim of input tax credit in respect of any tax period shall be made available electronically to theregistered taxable person making such claim in FORM GST ITC-1 through the Common Portal. If any such discrepancy isnot rectified than the same shall be added to the output tax liability of recipient in the month following the month ofcommunication of discrepancy

The claim of input tax satisfies theprescribed conditions (including caseswherein amount of Input tax credit claimedis equal to or less than the output tax paidby supplier) - MATCH

The claim of input tax does not satisfy theprescribed conditions- MISMATCH

Action taken for rectification and mismatch does not existpost rectification

The mismatch shall be communication and actions shallbe taken to rectify

Need for ASP – GSP

ASP GSP Functionality

ASP-GSPImplementation Framework

MPLS

GSP

Export Supply-Purchaseregister/data in XML,CSV, Excel etc. formats

Upload / downloadformatted GSTRsand other data API

ASP Solution(Process transactionlevel data, Reconcileauto-drafted GSTR2against PurchaseRegister etc.)

GSP Solution(Integrate seamlesslywith GSTN Systemthrough APIs)

GSPServer

GSTNServer(GST CoreEngine)

Taxpayer System(ERP, Transaction Processing System,Custom Applications etc.)

GSTN

Role and function of Application Service Providers (ASP) and GSTSuvidha Provider (GSP)

ASP►ASP to provide value added services for collating the data, data

validation, reconciliation of data uploaded by vendors withpurchase data as per the Company’s ERP

►Verifying the claim of Input Tax Credit (ITC) is one of thefundamental pillars of GST, for which data of Business to Business(B2B) invoices would be uploaded by taxpayers and matched byGSTN.

►A high level of synchronization is required between the taxpayer’ssystem and the GSTN system, which will be very difficult toachieve without automation.

►ASPs would focus on taking taxpayers’ raw data on sales andpurchases and converting it into the GST returns. These GSTreturns, or GSTRs, will then be filed on behalf of the taxpayer withGSTN via the GSP.

►ASPs would act as a link between the taxpayers and the GSPs. TheGSTN client ID and GSTN client secret for ASP will be generatedby GSP from the portal, which will be provided by GSTN. It’s a kindof sub-license generation. ASPs would create output in JSONformat confirming to the APIs published by GSTN so that the samecan be uploaded to GSTN through GSPs

GSP►There is a restriction on the size of data that can be uploaded

on and downloaded from GSTN at one time - GSP would act as agateway for companies with large quantum of transactions toupload and / or download data on GSTN

►The taxpayer would need to maintain data confidentiality andprivacy – GSPs would allow taxpayers to have control, securityand privacy, while interacting with GSTN through a securedleased-line using License Key provided by the GSTN

►Data would be uploaded / downloaded by GSPs in JavaScriptObject Notation (JSON) format using APIs

►GSP will not store data or process data►As on date, there are 34 GSPs who have been approved by the

GSTN►A GSP may also offer the services of an ASP to meet a client’s

particular data processing requirements, and providecustomized solutions to a large number of organizations. Thisprovides combined GSP and ASP support.

Valuation

Value of taxable supply

► Taxes, duties, cesses,fees and charges leviedunder any statute otherthan GST, if chargedseparately

► amount paid byrecipient instead ofsupplier

► incidental expenses(such as commission,packing etc.) chargedby the supplier from therecipient

► Interest or late fee orpenalty for delayedpayment

► Subsidies directly linkedto the price

► Discounts before or at the time ofthe supply except when

► duly recorded in the invoiceissued

► Post supply discounts exceptwhen

► agreed as per the agreement

► known before or the time ofsupply

► specifically linked to relevantinvoices and

► Input tax credit pertaining tothe discount has beenreversed by the recipient

► Subsidies provided by the Centraland State governments

Inclusions in TV Exclusions from TV

► Valuation Rules havebeen prescribed

► MRP based valuationsystem abolished

In other cases onwhat value of supply

will GST be paid?

Supplier andrecipient are not

related

Price is the soleconsideration

TransactionValue

Place of Supply

Goods imported into India - Location of importer

Goods exported from India - Location outside India

Place of Supply of Goods (Import/ Export)

POS of goodsimported into or

exported from India

Place of Supply of Goods (other thanImport/Export)

Supply with movement

Place of delivery

3rd party directing a transferof title

3rd party’s registeredaddress

Supply without movement

Location of goods

Installation or assemblyat site

Installation/ assemblysite

On board a conveyance

Location where goodstaken on board

Other cases

To be determined

When provided to registered person – location ofsuch person.

When service provided to unregistered person – addressof recipient on record of provider (if such record exist)

Location of service provider in all other cases

GeneralRule

Place of Supply of Services(Location of supplier and recipient in India)

Particulars Place of Supply

Telecommunication services, including datatransfer, broadcasting, DTH Ø Specific Rules prescribed

In relation of immovable propertyØ Location of such property.Ø If the location of immovable property is located outside India,

the POS shall be location of recipient

Training and performance appraisal servicesØ Where supplied to a registered person, location of such

personØ Any other person, location where services are performed

Transportation of goods, including mail & courier

Ø Where supplied to a registered person, location of suchperson

Ø Any other person, location at which goods are handed overfor transportation

Passenger transportation ServicesØ Supplied to a registered person, location of recipientØ Any other person, location from where the passenger

embarks on the conveyance

Place of Supply of Services(Location of supplier and recipient in India)

E-Way Bill RulesApril 2017

Applicability

Every registered person causing movement of goods of consignment value exceeding 50,000 rupees(i) In relation to supply or(ii) For reasons other than supply or(iii) Due to inward supply from unregistered person

Where the goods are supplied by an unregistered supplier to a registered recipient, the movement shall be said to becaused by such recipient if the recipient is known at the time of commencement of movement of goods.

Transported as consignor/ consignee by own / hiredconveyance

Registered person shall before commencement of movement,furnish information relating to the said goods in Part A ofForm GST INS–01 electronically, on common portal

Registered person shall furnish information in Part B of FormGST INS–01

Registered person may generate the E-way bill in Form GSTINS-1

E–way bill rules

Handed over to transporter without generation of E-waybillRegistered person shall before commencement of movement,furnish information relating to the said goods in Part A ofForm GST INS–01 electronically, on common portal

Registered person shall furnish information related to thetransporter in Part B of Form GST INS-01

Transporter shall generate E-way bill in Form GST INS-1

OR

Unique E-wayBill number

Ø Post generation of E-way bill, a unique E-way bill number shall be made available to the supplier, recipient andtransporter on the common portal

Transportertransporting

goods from oneconveyance to

another

Ø Transporter transferring goods from one conveyance to another in the course of transit shall before thetransfer and further movement of goods, generate a new E-way bill on the portal in FORM GST INS–01specifying the mode of transport

Multipleconsignments

Ø In case of multiple consignments to be transported in one conveyance, the transporter shall indicate the serialnumber of E–way bills generated for each consignment on the portal and shall generate a consolidated E-waybill in FORM GST INS–02 before movement of goods

Ø In case, FORM GST INS–01 is not generated by consignor and the value of consignment exceeds Rs. 50,000,the transporter shall generate FORM GST INS–01 on the basis of invoice or bill of supply or delivery challanand also generate a consolidated E-way bill in FORM GST INS–02 before movement of goods

E–way bill rules

Cancellation ofE-way bill

Ø E-way bill shall be cancelled on the common portal directly or through a Facilitation Centre within 24 hours ofgeneration of the e-way bill if:Ø Goods are not being transportedØ Goods are not being transported as per the details furnished in the e-way bill

Ø An E-way bill cannot be cancelled if it has been verified in transitØ E-way bill cancellation may also be made by way of SMS

Validity

Ø <100 km – One day from date of generation of e-way billØ >=100 km < 300 km – Three days from date of generation of e-way billØ >=300 km < 500 km – Five days from date of generation of e-way billØ >=500 km < 1000 km – Ten days from date of generation of e-way billØ >=1000 km – Fifteen days from date of generation of e-way bill

Acceptance ofE-way bill

Ø The details of e-way bill shall be made available to registered recipient. Only registered recipient is liable toaccept E-way bill.

Ø The recipient shall accept or reject the consignment covered by e-way billØ In case of no response by way of acceptance/ rejection within 72 hours of details being made available to

recipient, acceptance shall be deemed

E–way bill rules

Documents or device to be carried by a person in-charge of the conveyance

Ø The person in charge of conveyance shall carry-Ø invoice or bill of supply or delivery challan , andØ a copy of the E-way bill or the E-way bill number, either physically or mapped with Radio Frequency

Identification Device (RFID) embedded on to the conveyance .

Documents to be carried during transportation

Documents tobe carried

InvoiceReferenceNumber

Ø A registered person may obtain an Invoice reference number from the common portal by uploading, a taxinvoice issued by him in FORM GST INV-1, and produce the same for the verification in lieu of the tax invoiceand such number shall be valid for a thirty from the date of uploading.

Verification ofDocuments and

Conveyance

Ø The commissioner or an officer empowered by him may authorise the officer to intercept any conveyance toverify the E-way bill or E-way bill number physically in intra and inter state movement of goods.

Ø The commission shall get RFID reader installed at the place where the verification of movements vehicle onwhich goods to be carried out in case where the e-waybill is mapped with RFID.

Ø Physical verification shall be carried out by office as authorized by the commissioner or an officeempowered by him.

PhysicalVerificationonly once

Ø Where physical verification of goods being transported on conveyance has been done during transit at a placewithin a state or in any other state, no further physical verification shall be carried out again in the state.

Verification of goods during transportation

Facility foruploading

informationregarding

detention ofvehicle

Ø Where a vehicle has been intercepted and detained for a period exceeding thirty minutes, the transporter mayupload the said information in FORM GST INS-04 on the portal.

Impact on Companies

Ø E–way bill shall be applicable on inter state/ intra state movement of goods within branches of Companies subject to a monetary limitof Rs. 50,000. In other words, only consignments of value exceeding Rs. 50,000 shall be liable for E-way bill.

Ø E- way bill shall be required in cases other than supply. Thus, movement of goods under AMC contracts shall be covered. E-way shallbe required in the following cases:Ø Movement of goods from customer to CWH/ SWHØ Movement of goods from CWH to SWH/ SWH to CWHØ Movement of goods from CWH/ SWH to customersØ Movement of goods from SWH to SWH

Ø E–way bill shall be required in case of sale transactions made by Companies to its customers.

Ø E-way bill shall be required in case of purchase transaction made by Companies from unregistered suppliers.

E – Way bill rules

Impact onCompanies –Inter branch

Ø E–way bill shall be applicable on inter state/ intra state movement of goods within different branches ofCompanies whether for consideration or not subject to a consignment value of Rs. 50,000.

Ø Part A and B of FORM GST INS-01 shall be filled by supplying branch of CompaniesØ E–way bill shall be generated by the transporter on the basis of above detailsØ Unique E-way bill number shall be made available to Companies’s branches and transporterØ The receiving branch of Companies shall communicate its acceptance of consignment (within 72 hours) on

the portal


Impact onCompanies –

AMC contracts

Ø E–way bill shall be applicable on inter state/ intra state movement of goods under AMC contracts subject toa consignment value of Rs. 50,000.

Ø Part A and B of FORM GST INS 01 shall be filled by CompaniesØ E–way bill shall be generated by the transporter on the basis of above detailsØ Unique E-way bill number shall be made available to Companies (SWH/CWH) / customer and transporterØ The receiver (Customer/ Companies) shall communicate its acceptance of consignment (within 72 hours) on

the portal

Impact onCompanies –Procurement

Ø E–way bill shall be applicable on inter state/ intra state purchase of goods by Companies subject to aconsignment value of Rs. 50,000.

Ø Part A and B of FORM GST INS 01 shall be filled by vendor in cases where movement of goods is caused bythe vendor.

Ø In other cases, Part A and B of FORM GST INS 01 shall be filled by Companies (Ex-factory sales by vendor)Ø E –way bill shall be generated by the transporter on the basis of above detailsØ Unique E-way bill number shall be made available to vendor, Companies and transporterØ Companies shall communicate its acceptance of consignment (within 72 hours) on the portalØ In case of purchase from unregistered dealer, the movement of goods shall be deemed to be caused by

Companies. In such case, Companies shall be liable to fill Part A and B of Form GST INS 01


Impact onCompanies – Sale

Ø E – way bill shall be applicable on inter state/ intra state supply of goods subject to a consignment value ofRs. 50,000.

Ø In case of sales made from Chennai SEZ, customer shall fill Part A and B of FORM GST INS 01 as themovement of goods is caused by the customer (We understand that sales made from Chennai are Ex-factory sales)

Ø In case of sales made from other than Chennai SEZ, Part A and B of FORM GST INS 01 shall be filled byCompanies

Ø E –way bill shall be generated by the transporter on the basis of above detailsØ Unique E-way bill number shall be made available to Companies, customer and transporterØ The customer shall communicate its acceptance of consignment(within 72 hours) on the portal

Free supplies

Free supply of goods/ services

► The Revised GST Law proposes to tax all forms of supply including goods/services supplied without consideration to related and distinct persons as specified inschedule I in the course or furtherance of business.

► Free supplies/ gifts not exceeding INR 50,000 in a financial year by an employer to an employee shall not be treated as supply of goods or services or both.

Free supply of goods (eg-samples) byCompany is not taxable under VAT currently,excise duty is leviable.

Free supply of services is not liable to Servicetax in the absence of any consideration

Legal provision

Free supply of goods/services to related, distinct persons (this includes employees of Company) is asupply wherein the value in a FY exceeds INR 50,000. Eg. – free talk time to employees beyond INR50,000 is taxable

Free supplies to unrelated parties (such as vendors) not considered as supplies. Accordingly,GST should not be applicable

Input tax credit in respect of free supplies would not be eligible to the supplier if GST is notpayable on output

Current scenario GST scenario

Transitional provisions

Credit carried forward in the last return filed under the existing law

Transitional Provisions

Amount of CENVAT/ ITC to be carried forward in a return [Section 140(1) CGST & 18(1) UTGST]

Credit of CENVAT Credit/ ITC/ ET on Inputs, Capital Goods & CENVAT Credit on input services

Eligible Credit

Conditions1. Such credit should also be admissible under the GST2. Returns for last 6 months (immediately before the appointed day) under the current law should be filed3. Credit attributable to sale against declaration Forms shall not be allowed if Form are not received in prescribed period

Compliances Submit Form GST TRAN-1 within 60 days specifying details of tax or duty entitlement (for Input tax only)


Unavailed input tax credit on capital goods, not carried forward in a return [Section 140(2) CGST & 18(2) UTGST]

Credit of CENVAT Credit/ ITC on Capital Goods

Eligible Credit Unavailed CENVAT Credit/ ITC not carried forward in the last return filed under the existing law

Conditions Such CENVAT credit/ ITC should be admissible under Earlier Law as well as under GST

Compliances Submit Form GST TRAN-1 in a prescribed manner


Credit of eligible duties and taxes in respect of inputs held in stock [Section 140(3) CGST]

Credit of 1. Excise duty 2. Countervailing duty (CVD) 3. Additional duty (SAD) 4.NCCD

Eligible Credit Credit of eligible duties on goods held in stock (other than capital goods) by person not required to register underexisting law and other prescribed person

Conditions

1. Goods should be used for making taxable supply under GST

2. Credit on such inputs is admissible in GST

3. Such person should possession of Invoice or other prescribed documents evidencing payment of tax or duty

4. Trader is not in possession of such document, credit of 40% of central levies (ie CGST or IGST) will be available

subject to other conditions including the requirement to pass on the benefit of such credit to customer by way of

reduced prices

5. Such document issued within 12 months before appointed date

6. Supplier of service should not be eligible for abatement in GST

7. This Scheme shall be available for six tax periods from the appointed date


Credit of eligible duties and taxes in respect of inputs held in stock [Section 140(3) CGST]

Compliances

1. Submit Form GST TRAN-1 in prescribed manner

2. Where the invoice or other duty paying document is not available, a statement in Form GST TRAN <<number to be

prescribed>> needs to be submitted at the end of each of the six periods during which the scheme is in operation

3. The stock of goods on which the credit is availed is so stored that it can be easily identified


Credit of eligible duties and taxes in respect of inputs/ input services in transit [Section 140(5) CGST & 18(5) UTGST]

Credit of CENVAT Credit/ Input Tax Credit on inputs in transit or input services to be received on or after the appointed day

Eligible Credit CENVAT Credit/ Input Tax Credit charged by supplier on such inputs or input services under existing law

Conditions Recipient shall record invoice or tax paying document within period of 30 days from the appointed day

Compliances

Recipient shall furnish following details:

1. Name of supplier 2. Invoice Number 3. Invoice date 4. Description, quantity and value of goods

5. Amount credit 6. Date on which supply entered into books 6. Submit Form GST TRAN-1


CENVAT Credit balance available in Centralized Registration [Section 140(8) CGST]

Credit of CENVAT Credit on inputs, input services and capital goods

Eligible Credit CENVAT Credit to be carried forward in a last return under existing law

Conditions

1. Return to be furnished within 3 months from the appointed day

2. The Return should be original return or revised return with reduced credit

3. Credit is admissible under GST

4. Credit may be transferred to any person having same PAN

Compliances Submit Form GST TRAN-1 specifying prescribed details


Re availment of CENVAT reversed due to non payment of consideration [Section 140(9) CGST]

Credit of CENVAT Credit on input services

Eligible Credit CENVAT Credit reversed due to non payment of consideration to service provider within 3 months

Conditions Payment of consideration to be made to supplier of service within a period of 3 months from the appointed day

Compliances Submit Form GST TRAN-1 specifying prescribed details


Refund of tax paid on goods sold under existing law and returned after appointed day [Section 20(1) UTGST]

Refund of Tax paid under earlier law ie VAT/ CST

Eligible Returns Goods returned by unregistered person

Conditions1. Goods should have been sold within period of 6 months prior to the appointed day

2. The goods are returned within period of 6 months from the appointed day

3. Goods are identifiable to satisfaction of proper officer


Debit/ Credit Note issued post appointed day for supply made before appointed day [Section 142 (2) CGST & 20(1) UTGST]

Tax to be adjusted CGST and SGST/ UTGST or IGST

Cases covered Supplies made before appointed date and DN/CN issued after appointed date

Conditions

1. Price revision should be in pursuance of contract entered into prior to the appointed day

2. DN or supplementary invoice/ CN should contain particulars as may be prescribed and should be issued within 30

days from the price revision

3. In case of issuance of CN output tax liability would be allowed to be reduce only if recipient reduces his ITC

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