▪ —-

What is GST

F

• The Goods and Services Tax (GST) is a landmark indirect tax reform which will change the

way the businesses operate

• The Goods & Services Tax is a comprehensive, multi-stage, destination-based tax that will

be levied on every value addition

• This means that only value additions will be taxed and the burden of tax is to be borne by

the final consumer

• The design of the GST is fairly complex, with a dual administration arrangement that

involves the tax authorities of both the Central and the State Governments separately taxing

a single transaction

• The levy of tax in the GST regime is being shifted to the word “Supply”

▪

Indirect Tax : A Quick Comparison

International

Perspectiveon all suppliessingle tax

with restricted

credits

automated

process

Indian Scenario

Prior to GSTmultiple taxes

on specifically

defined services

with breakages

in credits chain

manual /

isolated

process

Scenario In GST

Regimedual tax on all supplies

with unrestricted

but fragmented

credit

automated

process

IGST instead of CGST and SGST for inter-state transactions (destination-based)

Important Taxes Subsumed

CGST

Countervail

ing Duties

Additional

Excise

DutiesService

Tax

Central

Excise

Duty

Cesses

SGSTLuxury Tax

Purchase

Tax

Octroi and

Entry Tax

Entertainm

ent

Duty

Value Added

Tax /CST

UT-GST

Dual GST : Basics

Situation Supply Tax

Location of Supplier and Place of Supply in

same State

Intra-State CGST + SGST

Location of Supplier and Place of Supply in

same State

Inter-State IGST

Import of Goods or Services (different

countries)

Inter-State IGST

Export of Goods or Services (different

countries)

Inter-State Zero-Rated

Dual GST : Features

Two Important Determinants

• Place from Where the Supply is made [Service Provider / Warehouse Centric] –no convergence

• Place to which the Supply is made [Service Recipient / Buyer Centric] – convergence

Single Locational Establishments vs. Multi Locational Establishments

Single Location Service Establishment

Service Tax Regime Dual GST Regime

Service

Provider

(India)

Service

Provider

(India)

Mumbai

Mumbai

Delhi

Chennai

Multi Locational Service Establishment

Service Tax Regime Dual GST Regime

Service

Provider

(India)

Service

Provider

(India)

Delhi

Mumbai

Delhi

Chennai

Mumbai

Chennai

Important Concepts

GST applicable on all supplies including deemed supplies:

• Free Supplies to related persons

• Inter-state branch transfers

• Supplies of goods by Principal to Agents

Reverse Charge Mechanism to be applicable on:

• Import of Services (include free / personal imports)

• Notified Goods or Services

• All Procurement from unregistered vendors

Value is generally the transaction value:

• Arms’ Length Pricing in case of Related Parties

• Invoice Value accepted if recipient eligible for full input tax credit

• Pre-Supply Discounts can be reduced from value, Post-Supply Discounts can be reduced only if

the same relate to agreement prior to supply

Exemptions:

• Most exemptions to be phased out

• Threshold of Rs. 20 lakhs

• Optional Composition Scheme up to Rs. 50 lakhs (not for service providers)

Important Concepts

Rate of Tax

• 0 – 5 – 12 – 18 – 28 + CESS

• Time of Supply to be earliest of multiple ‘touch points’

• Advances for Goods also becomes liable for tax

Domestic & International Place of Supply Rule

POS Rule for Services

General Rule - Destinational Principal –

Classification as B2B vs.B2C Important

Exception – Source and Hybrid Principle

Impact on Claim of credit in B2B cases

Domestic Place of Supply Rules

▪ Destination Principle (Subject to Various

Exception)

▪ Import – Liable under RCM

▪ Export – Zero Rated subject to Various

Conditions

International Place of Supply Rules

Input Credit-Essential Conditions

You Should Receive Vendor Should Credit should Not be

Services

Tax invoice

Pay the Vendor within

180 days

Have paid the Tax

Have uploaded the Tax to

the customers account

Blocked

Subject to apportionment

Import of Services Under GST

▪ The term “Import of Services” has been defined under section 2(11) of Integrated Goods and

Services Tax (IGST) Act, 2017, which means:

▪ the supply of any service, where –

• The supplier of service is located outside India

• The recipient of service is located in India and

• The place of supply of service is in India

Import of Services Under GST

Import of Services

B2C Transactions

* Service Provided to a “non-taxable online recipient" in taxable territory in India.

Supplier is required to registered in

India and pay GST

Other Cases (for commerce, industry or any other business or profession)

No implication.

B2B Transactions

Service recipient will pay GST under RCM

▪ services provided by ResellerClub will fall under “Online information and database access or retrieval services

(OIDAR)”. The definition of OIDAR is defined under section 2(17) of IGST Act:

▪ “online information and database access or retrieval services” means services whose delivery is mediated by

information technology over internet or an electronic network and the nature of which renders their supply

essentially automated and involving minimal human intervention and impossible to ensure in absence of

information technology and includes services such as, -

▪ Advertising on the Internet;

▪ Providing cloud service;

▪ Provision of e-books, movies, music, software and other intangibles through telecommunication networks or

internet;

▪ Providing data or information, retrieval or otherwise, to any person in electronic form through a computer network;

▪ Online supplies of digital content (movies, television shows, music and the like);

▪ Digital data storage; and

▪ Online gaming.

▪ Therefore, the said OIDAR services will fall under Section 13(12) of the IGST Act which reads as follows:

▪ The place of supply of online information and database access or retrieval services shall be the location of the

recipient of services.

online information and database access or retrieval services

f

Compliances – a Quick Snapshot

Registration Invoices Returns On behalf

• Multiple Registration

as supplier

• All activities through

common portal

• Definition of

Authorized signatory

• Mentioning of

Registration Details

• Documents to be

submitted

• Transition Strategy

• Numbering Format

• Generation and

cancellation related

issues

• Digital Signature

• SAC Mentioning

• Documents to be

submitted

• Debit/Credit note-

Scope and linkage

• Multiple uploading

• Distinction between

B2B and B2Cl

• No Revision

permissible

• Annual Return with

Reconciliation and

Audit Report

• Cross linkage of Data

and Audit Trail

• Tax Deduction at

Source

• Tax collection at

Source

• Aggregator

• Reverse charge

Mechanism

• Agent dealing on

behalf of Principal

Thank You!