SUPPLY, LEVY AND COLLECTION - Prime AcademyLevy and Collection.pdfSUPPLY, LEVY AND COLLECTION. 2...

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GST -SUPPLY, LEVY AND COLLECTION

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Agenda for Today

Levy and Collection

Supply

Basic Concept

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• Central Excise Duty

• Additional Excise Duty

• Excise under M&TP Act

• Countervailing Duty

• Special Additional Duty

• Service Tax

• VAT/Sales Tax & CST

• Purchase tax

• Entertainment Tax

• Luxury Tax

• Taxes on lottery, betting and gambling

• Entry tax

• Octroi• Local Body tax

(‘LBT’)

Central Taxes

State Taxes Local Body Taxes

Major Taxes Subsumed

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• Central Exciseon:o Tobacco

productso Petroleum

Products• Basic Custom

Duty

• State Excise onAlcohol liquor

• State VAT on:o Alcohol liquoro Petroleum

Products• Stamp Duty• Electricity Duty

• Profession tax

• Road tax

• Taxes on MineralRights

• Property Tax• Entertainment

Duty• Gram Panchayat

Tax

Central Taxes

State TaxesLocal Body

Taxes

Major Taxes Retained

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Present Taxation System – Complexities &Issues

Indirect Taxes

Multiple taxes at

state and centre level Overlapping

of taxation

Multiple compliances

Non fungibility

of tax creditsCascading

effect of tax

Inflation

Non uniform state tax

laws

Valuation / classification

disputes

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Outline

CGST Act - 174 Sections, 21 Chapters

and 3 Schedules

IGST Act – 25 Sections, 9 Schedules

GST Compensation Act – 14 Sections, 1

Schedule

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Advantages

Uniform taxation across the country.

No more cascading of taxes.

Reduction in overall tax burden - ITC

Transparency.

Easy compliance.

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Salient Features of GST

Taxable Event - No more Manufacture,Service and Sale. Its all about Supply.

No major discrimination between goods &services.

No various basic exemptions.

Paperless taxation.

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Salient Features of GST

Seamless credit

Business Reform

Sales Tax Dept – SGST,

C. Excise and Service Tax Dept– CGST

Empowerment:<1.5 Crores - 90% States & 10% Centre.>1.5 Crores – 50% States & 50% Centre.

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Particulars Value TaxManufacture of Goods 1,00,000

Add: Excise Duty (12.5% of 1,00,000) 12,500 12,500

Ex-factory value 1,12,500

Add: Vat (13.5% of 1,12,500) 15,188 15,188

Taxable Amount before Octroi is charged 1,27,688

Add: Octroi / Entry Tax (5.5% of 1,27,688) 7,023 7,023

Total Transaction Cost 1,34,711 34,711

Percentage of tax to transaction value = 34,711/100,000 * 100 = 34.71% (Rs.34,711)

Aggregate of all taxes = 12.5% + 13.5% + 5.5% = 31.50% (Rs.31,500)

Cascading effect of tax i.e. tax on tax = 3.21% (Rs.3,211)

Capital Goods

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Rates Particulars

0%

Food Grains, Milk, Fresh Fruits andVegetables, Eggs, Bread, Salt, Sindoor,Newspapers, handloom (Daily Necessities)

5%

Medicines, Frozen vegetables, Cotton,,Transport of goods by Rail/Road, GTA,Transport of passengers by Rail or Air-Economy Class, Advertisement in print media,Hotel rent below Rs. 1,000

New Rates – Goods and Services

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Rates Particulars

12%

Mobile Phone, Non AC Restaurants, Ghee,Cheese, Fruit Juices, Works Contract, Hotelrooms tariff- Rs-1,000 to 2,499, Temporarytransfer of IPR

18%

Beverages, Basic Cosmetics, Telecom Services,AC Restaurants, Software, Refined Sugar,Dairy products, Hotel with Tariff- Rs. 2,500 to4,999(Predominant Slab)


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Rates Particulars

28% (Cess in

addition)

Automobiles and its parts andaccessories, Perfumes and high endcosmetics, Air Conditioners, Furniture ,Electronics, Cement, Health Careproducts, Tobacco, 5 Star Restaurants orabove rated, Admission toEntertainment events, Hotel with tariffabove Rs. 5000


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Who are liable to Tax?

Who are liable to pay Tax ?

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Registration Structure

3 Acts

•CGST, SGST & IGST applicable on every person.

•Simultaneous registration

Multiple

•Single GSTIN; Separate Regn for each state

•Total possible registrations for one PAN

•Possible separate registrations for each business vertical within a State.Business

Vertical

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CA Sumit Kedia

A.K.Lunawath & Associates

GST Verification

Registration status of any supplier can be verified by clicking on the link below:

https://services.gst.gov.in/services/check-registration-status

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CA Sumit Kedia


Snapshot of Status Verification

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GSTIN Format

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SUPPLY

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Taxable Event

Supply of goods & services

Inter State Supply

IGST

Intra State Supply

SGST & CGST

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Taxable event in GST Regime vs. Existing regime

Tax Taxable Event in Existing laws Taxable Event in GST Regime

Service Tax Provision of Service

Supply of goods/services

Excise Duty Manufacture of excisable goods

VAT/Sales Tax Transfer of title in goods within state

CST Transfer of title in goods outside state

Purchase Tax Purchase of specified goods

Entry Tax/ LBT Entry of specified goods in the State forsale, use or consumption

Entertainmenttax

Provision of entertainment

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Essential Elements of Supply

Supply of goods and /or services;

Supply is for a consideration;

Supply is made in the course or furtherance ofbusiness;

Supply is made in the taxable territory;

Supply is a taxable supply;

Supply is made by a taxable person.

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Supply

Various forms of Supply of Goods or

Services - Sale, Transfer, Barter, Exchange,

License, Rental, Lease or Disposal.

Import of Services for a consideration whether

or not in the course or furtherance of Business

Supply without consideration (Schedule 1)

Activities to be treated as Supply of Goods or Service(Schedule – II)

Activities which are neither treated as Goods or Service(Schedule – III)

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Schedule -I Supply without Consideration

Permanent Transfer of BA - ITC

Supply Between Related or Distinct Person in the course or furtherance of business.

Supply by Principal to Agent or

Receipt of Goods by Agent on behalf of Principal

Import of Service – Related Person - FoB

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Schedule II Supply of Goods or Services

Transfer of title in Goods - SoG

Right in Goods W/O Title Transfer – SoS

Transfer of title in Goods - Future Date – HP/EMI -SoG

Right in Immovable Property W/O Title Transfer - SoS

Treatment or Process – Another Person Goods - SoS

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Schedule II Supply of Goods or Services

Supply of Services:

Renting

Construction

Development, design, .. Of IT Software.

Agreeing to obligation to refrain from an act or tolerate an act

Works contract, Service of Food

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Schedule III – Neither SoG or SoS

Service - Employee to Employer – In Relation or Course

Any Court or Tribunal, Functions – MP, MLA, etc.

Post Recognized by CoI

Funeral, Burial, Cremation, or Mortuary

Sale of Land (except Construction of Complex)

Actionable Claims (except Lottery, Betting, Gambling)

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Questions:

A dealer of air-conditioners transfers an air conditioner from his stock in trade, for personal use at his residence. Will the transaction constitute a supply?

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Whether Works contracts and Catering services will be treated as supply of goods or supply of services?

Questions:

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Mixed & Composite Supplies

Basis Mixed Supply Composite Supply

Meaning Two or more supplies together, which is NOT a Composite Supply

Two or More supplies with 1 Principal Supply & Naturally Bundled

Treatment As supply of that supply w/ higher tax rate

As supply of that principal supply

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Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply.

Supply of remote with television. Where supply of television is a principal supply.

Case Study : Composite Supply

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Provision of free WiFi services during stay in hotel or provision of a package with free breakfast facility. Supply of hotel rooms is a principal supply.

Construction of residential complex service along with Electrification and Water System Development Services where construction of residential complex service is a principal supply as provision of construction service without these basic amenities will not be attractive to the customers

Case Study : Composite Supply

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A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drinks and fruit juices when supplied for a single price is a mixed supply.

Supply of tooth brush with tooth paste or Supply of bucket with washing powder.

Supply of hair conditioner with hair shampoo.

Case Study : Mixed Supply

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LEVY &

COLLECTION

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3

5

Goods means every kind of movable property and:

Excludes money and securities

Services means anything other than goods:

Includes transactions in money relating to use /conversion

Excludes money and securities

Definition

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Levy

Rate not exceeding 20% each under

CGST & SGST

On Intra state supplies of Goods or

Services

By a taxable person

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Levy

Taxable person?

Aggregate Turnover?

Compulsory Registration?

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Levy – Envisaged for future GST

Petroleum crude, high speed diesel,

motor spirit (commonly known as petrol),

natural gas and aviation turbine fuel

shall be levied with effect from such date

as may be notified

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Reverse Charge – GST Scenario

Unregistered dealer selling to a registered dealer

Services through an e-commerce operator

Specified Services

– Non resident service provider

– GTA

– Legal Service

– Sponsorship

– Services provided by government

– Director

– Insurance

– Rent a cab

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Levy – Steps

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•Services•Goods

1: Subject

•Included•Implied•Excluded

2: Supply

•Specified for goods

•Specified for services

4: Time

•Inter-State•Intra-State

3: Place

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Composition Levy - Eligibility

PY Aggregate Turnover ≤ Rs.75

Lakhs

Engage in Supply of Services of Supply

of Foods

Engage in making Supply of goods

which are liveable to tax under this

Act;

NOT Engaged

Inter-State Outward supplies of Goods;

NOT Engaged

Supply of goods through E Com

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Composition Levy - Eligibility

NOT Manufacturer of goods Notified*

If same PAN for more than 1 RP, eligible only

if both or all opt for Composition Levy

NOT collect any tax from Recipient & NOT

entitled to ITC

Not entitled to availinput tax credit

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Composition Levy – Rate of Tax

Manufacturer2% of State or UT

Turnover

Supply of Food

5% of State/UT Turnover

Other Suppliers1% of State/UT

Turnover

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Composition dealer cannot charge GST onsupplies made by him

Composition dealer buying goods/ services fromunregistered supplier will have to discharge GSTunder RCM and such tax will not be available asITC.

So buying goods from a composition dealermight turnout to be expensive

Composition Levy - Conditions

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MISCELLANOUS

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GST Compliance Rating (Sec 149)

(a) Every registered person may be assigned a GST Compliance rating score by the Government

(b) Basis parameters which may be prescribed

(c) Frequency of updation may be prescribed.

(d) Will be placed in the public domain.

(e) One person non compliance might effect assesseesat large.

(f) Tenders, etc

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Impact:

(a) Lot of benefits might be denied.

(b) Obligation to keep the rating at par.

(c) Minimum mismatch reports and payments.

(d) Customers might purchase goods only with proper rating compliance vendors.

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Criteria:

(a) Mismatch reports.

(b) Non payment of taxes.

(c) Delay in filing of returns.

(d) Other non compliances – Claim of correct ITC, .

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Anti-profiteering measure (Sec 171)

• Came in Nov 2016 Model Law.

• Many of the countries like Australia had witnessedhigh inflation & increase in prices due toimplementation of GST.

• Malaysia it as called price control & Anti profiteeringregulation (PCAPR). Net Profit marging was put on thegoods.

• Australia – authority to check whether benefit passed.

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Why Anti-profiteering measure?

• To protect consumers from businesses “profiteering” by way of commensurate reduction in prices and

• To ensure inflation does not exceed expectations.

Benefit of Input tax

credit

Reduction inthe tax rate

Reduction in Price

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Estimation of Benefits

• ‘Benefit’ shall means advantage or profit

• Need additional clarification from government.

Input Tax Credit

Reduction in Tax rate

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Commensurate reduction – uncertainty

vague• Commensurate

not defined

Valuation

• DiverseValuationin Pre/PostGST

ITC

• Cumbersome inMulti productcases or Bundledservices

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Example I

Tax rate reduced, from 30% to 25%

Pre-GST price 50lacs

Pass 1.9lacs to Customer

Post-GST pricemust be 48.1lacs

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Example II

Post-GST, AvailsRs.20 ITC on Input.

Nostalgic Ltd

Pass Rs. 20; Rs.5

Saves Rs.5 byOperationeffectiveness

FMCG

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In a Short…

Should benefit be immediately passed on to the customers.

Complete new law. No judicial precedents. How to ascertain the benefit immediately.

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Entitlement/Obligations - Present laws & GST

Particulars VAT ED ST GST

TDS in respect of works contract Yes NA No Yes

Matching of Invoices of purchasers and suppliers Yes No No Yes

Revision of returns Yes Yes Yes No

Recovering tax from purchasers in case of mismatch Yes No No Yes

Reverse charge mechanism for goods in prescribed cases No No NA Yes

Reverse charge mechanism for services NA NA Yes Yes

Tax on advance receipts No No Yes Yes

Centralised registration No No Yes No

Levy of tax on late fees, interest and penalty No No No Yes

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Entitlement/Obligations - Present laws and GST

Particulars VAT ED ST GST

Allowance of Input tax credit when supplierdoes not discharge his liability

Yes/No

Yes Yes No

Allowance of Input tax credit of tax paid oninter-state transactions

No NA NA Yes

Provisional refund of 90% of total refund claimfor exporters

No No No Yes

Mandatory Audit by CA/ Cost Accountant forassesse having prescribed turnover

Yes No No Yes

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CA Sumit Kedia


Decode GST & its impact on business

Get your IT Systems in place

Human Resource Training

Align your business strategy (Pricing,sales organization, billing practice,Logistics planning)

Get Set GO – GST

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Why? - Place of Supply (PoS)

CGST & SGST?Or

IGST?

To determine whether intra state or

inter state

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Intra State Vs. Inter State

Location of supplier and place

of supply

In same State

Intra State

In different State

Inter State

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Summary of sections covered

Section 10 – Supply of goods within India

Section 11 – International supply of goods

Section 12 – Supply of service within India

Section 13 – International supply of service

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Section 10Supply of goods other than import &

Export

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Movement of Goods

•Whether by buyer or receiver or any other person

•PosG is place where movement of goods terminates for delivery to recipient

Supply involves

movement of goods

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At the instruction of 3rd person

•Goods delivered to a person on the instruction of another

•PosG shall be the Principal Place of 3rd

person

Delivery on direction of 3rd person

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Case Study

Mr. XDelhi

Mr. YKolkatta

Bill to Mr. Y

Place of Supply ?

Mr. ZGoa

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No Movement of Goods

•PosG – location of the goods at the time of transfer of delivery to recipient

Supply does not involve movement

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Case Study

Mr. XDelhi

Mr. YKolkatta

Rents Machine to Mr. Y to be used in a site in Delhi

No Movement of Machine

After 2 months sells the machine to Mr. Y

Place of Supply ?

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Goods assembled at site

•PosG – place of installation / assembly

Goods assembled/ installed @

site

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Case Study

Mr. XDelhi

Supplier

Mr. YDelhi

Recipient

Place of Supply ?

Mr. X installs generator at the new factory of Mr. Y in Chennai

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Supply on board a conveyance

•PosG – shall be the place where the goods are loaded

Supply on board a

Conveyance

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Case Study

Place of Supply ?

Biscuits are loaded in the aircraft inSingapore. The aircraft flies towardsJaipur. While it is above Indian territory,it sells biscuits to passengers.

What if the biscuits are loaded in Jaipur?

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Place of Supply of Goods – Sec 10

IGST

Illustrations

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© Indirect Taxes Committee, ICAI

Section 10(1)(e): Supply of goods supplied on board a conveyance

ParticularsLocation of

supplier

Loading of

goods

Passenger

boards at

Place of

supplyTax Payable

Supply of canned

aerated drinks on a flightPunjab Punjab Delhi Punjab

CGST + Pun

GST payable

at Punjab

Sale of Haldirams

mixtures by their sales

person during the

journey

Pune Goa Hyderabad Goa

IGST

payable at

Pune

Sale of sun-glasses on a

shipBangalore Chennai Cochin Chennai

IGST

payable at

Bangalore

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Residual Category

•PosG – manner prescribed by the Central govt on recommendation of GST council

Supply other than above

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Section 11Supply of goods (import & Export)

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Import & Export

•PosG – location of importer

Goods imported

•PosG – location outside India

Goods exported

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PLACE OF SUPPLY OF SERVICES(Location of supplier & location of

recipient is within India)

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Location of supplier of services

“location of supplier of service” means:

where a supply is made from a place of business (PoB)for which registration has been obtained, the location ofPoB

where a supply is made from a place other than the PoB(above), a fixed establishment (FE) elsewhere, thelocation of such FE

where a supply is made from more than oneestablishment, whether the PoB or FE, the location ofthe establishment most directly concerned and

in absence of such places, the location of the usual placeof residence of the supplier;

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Location of recipient of services

“location of recipient of service” means:

where a supply is received at a PoB for whichregistration has been obtained, the location of PoB

where a supply is received at a place other than thePoB (above), a FE elsewhere, the location of such FE

where a supply is received at more than oneestablishment, whether the PoB or FE, the location ofthe establishment most directly concerned and

in absence of such places, the location of the usualplace of residence of the recipient;

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General Rule

• the location of registeredrecipient

Supply to

a registered person

• the location of recipient (ifaddress on record exists)

• location of supplier of servicesin all other cases

Supply to

a unregistered person

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Location of Supplier of Service

“Casual Taxable Person” means:

a person who occasionally undertakestransactions

involving supply of goods or services or bothin the course or furtherance of business,whether as principal, agent or in any othercapacity,

in a State or a Union territory

where he has no fixed place of business

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Services in relation to Immovable Property

•PosS is where the immovable property/vessel/ boat is located or intended to be located

Supply of services in

relation to an immovable

property/boat/ vessel

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Immovable property is in more than 1 location

Architects, interior

decorators, surveyors,

engineers and other related

experts

Lodging Accomodation,

Hotel, Guest house, Inn.

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Immovable Property located outside India

Immovable property/boat/vessel located outside India,

PosS – location of recipient

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Case Study

Mr. A located in Chennai engages Mr. Blocated in Chennai for supply of engineerdesign services for a branch to be set up inBangalore. Place of supply?

Ram located in Pune engages Laxman, abuilder located in Pune, for service ofconstruction of his immovable property locatedin Africa. Place of supply?

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© Indirect Taxes Committee, ICAI

Section 10(1)(d): Supply of goods assembles/ installed at site

ParticularsLocation of

supplier Registered

office of

recipient

Installation/

Assembly

Site

Place of supply

Tax Payable

Installation of weigh

bridgeDelhi Bhopal Bhopal Bhopal

IGST

payable at

Delhi

Servers supplied and

installed at the office of

a marketing firm

Karnataka Goa Karnataka Karnataka

CGST +

Kar GST

payable at

Karnataka

Supply of work-stations Gujarat Gujarat Kerala Kerala

IGST

payable at

Gujarat

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Restaurant & Performance based services

Services provided by restaurant, caterer,grooming, health services (cosmetic &plastic surgery), beauty treatment andfitness.

PosS shall be the place where the services are actually performed.

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Case Study

Ms. Marie located in Kolkata visits beautyparlour located in Kerala for Parlour servicesduring her trip to Kerala. Place of supply?

A hotel is in Mumbai Central. Many passengersfrom different parts of India from the railwayeat food in the restaurant. Place of supply?

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Training & Performance Appraisal

• location of such personTo a registered

person

•Place of performanceTo a unregistered

person

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Case Study

Mr. X, an industrial trainer located in Delhiprovides training service to the employees of Ycompany located in Chennai. The training isprovided in a Resort located in Kerala. Place ofsupply?

Smart Academy located in Goa provides openhouse training programs to various corporate atDelhi. Place of supply?

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Service by way of admission to any event

Place where the event is actually held or park or such other places is located

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Case Study

IPL Cricket match ticket is sold online. Theticket is purchased by you sitting inChennai and the match is held in Mumbai.Place of supply?

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Services in relation to Organisation of an Event

• location of such personTo a registered person

•Place of performanceUnregistered person

• location of the recipient If event is held outside India

•Proportion as per the contract

Event in more than one State

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Case Study

Company X located in Delhi provides eventmanagement service for a sales promotion eventof Company Z located in Delhi. Event is held inBangalore Place of supply?

Miss Rita located in Mumbai (Unregisteredperson) avails event management service inrelation to her marriage held in Jaipur Palace.Place of supply?

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Transportation of goods

• location of such personTo a registered

person

• location at which such goods are handed over for their Transportation.

To a unregistered

person

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Case Study

Mr. Shyam transporter located in Delhi was

hired by Mr. Narayanan (GST registered) located

in Ahmedabad for transporting goods located in

Delhi to Chennai. Place of supply?

If Mr. Narayanan is unregistered then Place of

supply?

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Banking & Financial Services, stock broker

Location of recipient on

records of the supplier

If no address on records, then

location of the supplier

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Case Study

Mr. Vijay Mallya who doesn’t have an accountin Chennai branch of SBI, visits to obtain a DD.Place of supply?

99

Insurance Services

•the location ofregistered person

Supply to a

registered

person

•the location of SR inSP records

Supply to a unregistered

person

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INPUT TAX CREDIT

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Understanding the definition of capital goods, inputservices and inputs

Understanding Input Tax Credit under GST

Understanding the matching concept

Understanding the system of Job work

Understanding the concept of E-commerce under

GST.

AGENDA FOR TODAY

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DEFINITIONS

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Which are used or

intended to be used

Value of which is

capitalised in the

books of account

In the course or

furtheranceof business

“Capital goods” means goods

Earlier definition was based on tariff classification, now it is based on the accounting treatmentAlso 100% Input available

Wider Scope

Capital Goods - Section 2 (19)

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Used or intended to be used by a

supplier

Any goods other than

capital goods

In the course or


“Input” means

Need not be directly or indirectly related tomanufacture or service.Need not be received in factory

Wider Scope

Input - Section 2 (59)

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Used or intended to be used by a supplier

Any service

In the course or


“Input service” means

Need not be directly or indirectly related tomanufacture or service.

Wider Scope

Input Service- Section 2 (60)

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Electronic Cash Ledger Electronic Credit

Ledger

New Concepts

107

Concept of ITC

108

“Input tax" means IGST (including that on

import of goods), CGST and SGST;

Charged on any supply of goods or services to

him and;

Includes the tax payable under sub-section (3) &

(4) of section 9 (reverse charge basis),

Meaning of Input Tax Credit

109

System for a seamless flow of credit

Extends to inter-State supplies

Credit utilization would be as follows:

Credit of:Allowed for Payment of

IGST CGST SGSTIGST (1) (2) (3)CGST (2) (1)SGST (2) (1)

Principles on Input Tax Credit

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Illustration - Concept of Dual GST

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Illustration - Concept of Dual GST

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Eligibility

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Conditions – Section 16

Tax Invoice or other documents

Receipt of goods or services

Registered Person

While the supplier is liable to pay tax on

advance , the recipient cannot take input until

goods are received

Receipt by any other person is receipt by the

recipient

Eg. X may direct goods to be delivered to his job worker, yet avail credit

ITC

114

Conditions – Section 16

Tax has been paidHas furnished return

U/s. 39

Goods received in instalment

On last receipt

Payment to supplier

Within 180 days

Else pay as output tax with

interest

115

Illustration

Supplier Receiver

On 28st

Aug10 Kg

On 31st

Aug10 Kg

On 3rd

Sep10 Kg

Input can be taken only on 3rd Sep. No proportionate credit

is allowed

116

Conditions – Rule 2 of ITC Rules

What if Payment to supplier is not made in 180days?

Added to the output tax liability in the monthimmediately following the month following theperiod of 180 days from the date of issue of invoice

Interest for the period starting from the date ofavailing credit till the date when the amount isadded to the output tax liability & is paid.

Re credit if paid after 180 days

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Claimed Depreciation

on tax component?

No input allowed

Time Limit

Earlier of • Due date of return for

the month of September of following year

(or)• Furnishing Annual

Return

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Due date for monthly return for the month of September 2018 =

20th October 2018

Annual Return for 2017 – 2018 filed on 1st

October 2018

Invoice dated 28th

March 2018 Input not taken upto 1st Oct

2018. Whether input can be taken?

119

Invoice Date – 01.01.2018Date of Payment

– 31.08.2018

Credit taken on 01.01.2018 to be reversed and added to tax

liability of July 2018 along with interest

What if payment made

on – 31.12.2018 ?

120

Purchase of Machine – Rs. 2,50,000/- Tax Component – Rs. 25,000/- Total – 2,75,000/-

If asset capitalised – Rs. 2, 75,000/-

If asset capitalised – Rs. 2,50,000/-

Input Tax Credit = NIL

Input Tax Credit = 25,000

121

Apportionment – Section 17 (1)

Where goods or services are used

partly for the purpose of business and partly

for other purposes

Credit is restricted to so

much of input as is used for the

purpose of business

122

No Input – Section 17 (5)

Motor Vehicle or

other conveyance

Except when used for Further supply of such vehicles

or conveyances or Transportation of passengers Imparting driving, training, of

such vehicles or conveyance For transportation of goods

“ Other Conveyance” not in current regimeWhat about repairs & parts of motor vehicle?

123


Food, beverage, outdoor catering,

health service, beauty treatment, health services,

cosmetic surgery

Except when used for providing taxable supplies of

similar nature or as an element of a taxable

composite or mixed supply;

124


Rent-a-cab, life

insurance, health

insurance

Except when Govt notifies

When used for providing taxablesupplies of similar nature or as partof a composite or mixed supply.

Disputable under current regime even >>if obligatory by government

>>Even if used for composite service

125

Illustration

Employees working at night shifts in a callcentre.

As per Govt transportation facility to beprovided.

Whether Input Tax Credit on such cab servicesis allowed?

126

Illustration

Event management company

Uses the service of rent a cab for the pick up anddrop of guests, performers at the event

Whether input is allowed?

127


Works Contractservice forimmovableproperty

Except when used for plant &machinery

When used for providing taxable supplies of similar of works contract

Input of works contract in plant & machinery resulting in immovable property is allowed unlike in

current law

No input allowed for construction of factory, hotel, hostel, office

128


Goods orservices forconstruction ofimmovableproperty

Except when used for plant &machinery

When used for providing taxable supplies of similar nature

Input of works contract in plant & machinery resulting in immovable property is allowed unlike in

current law

No input allowed for construction of factory, hotel, hostel, office

129


Membership ofa club, health &fitness centre

Travel benefitsextended toemployees onvacation

Goods orServices onwhich tax hasbeen paid undercomposition levy

130


Goods or services or both used for

personal consumption

Goods lost, stolen, destroyed, written off or disposed of by way of gift or

free samples

131

Illustration

Raw Material purchased for Rs. 1,00,000/-

Input Tax Credit of Rs. 20,000/-

Goods get burnt in the event of fire in the factory

Whether input is allowed?

132

Credit in special circumstances – Section 18(1)(a) & (b)

New registrations applied in 30

days of becoming liable

Eligible to avail credit of input tax in respect of stock preceding the date he becomes liable

However no credit allowed after the expiry of one year from

the date of issue of invoice

133

Credit in special circumstances – Section 18(1)(a) & (b)

Voluntary Registration

Eligible to avail credit of input tax in respect of

stock preceding the date of grant of registration

134

Credit in special circumstances – Section 18(1)(c)

Cessation to pay under

composition levy

Eligible to avail credit of input tax in respect of stock & capital goods

preceding the date he is liable to pay U/s. 9

Provided that the credit on capital goods shall bereduced by five percentage points per quarter of ayear or part thereof from the date of invoice

135

Credit in special circumstances- Section 18(1)(d)

Exempt supply

becomes taxable supply

Eligible to avail credit of ITC in stock relatable to such exempt supplies & capital goods exclusively used for

such exempt supplies preceding the date when exempt supply becomes

taxable supply

Credit on capital goods shall be reduced by five percentagepoints per quarter/ part from the date of invoice

136

Additional Conditions

Make a declaration in form GST ITC -01 within30 days of becoming eligible to claim the credit.

The declaration shall contain all the details ofinput stock, semi finished goods, finished goodsand capital goods on the date immediatelypreceding the prescribed date.

137

Additional Conditions

If aggregate credit exceeds Rs. 2 Lakhs , then thedeclaration shall be certified by a CA

The details furnished shall be verified with theGSTR -1 or GSTR – 4 of the supplier

138

Sale of capital goods - Section 18(5)

Sale of capital goods or plant and machinery on which ITC

has been taken

Pay an amount equal to the ITC taken on the capital

goods or plant and machinery reduced by 5

percentage points per quarter or part or the tax on

the transaction value whichever is higher

139

Page 15

For discussion purpose only

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