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TechTalks by ResellerClub Episode 2: GST and your Web Design/Development & Hosting Business

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Find out how GST impacts your Web design & web development business.

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TechTalks by ResellerClub Episode 2: GST and your Web Design/Development & Hosting Business

  1. 1. ▪ —- 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”
  2. 2. ▪ Indirect Tax : A Quick Comparison International Perspective on all suppliessingle tax with restricted credits automated process Indian Scenario Prior to GST multiple taxes on specifically defined services with breakages in credits chain manual / isolated process Scenario In GST Regime dual tax on all supplies with unrestricted but fragmented credit automated process
  3. 3. IGST instead of CGST and SGST for inter-state transactions (destination-based) Important Taxes Subsumed CGST Countervail ing Duties Additional Excise Duties Service Tax Central Excise Duty Cesses SGST Luxury Tax Purchase Tax Octroi and Entry Tax Entertainm ent Duty Value Added Tax /CST UT-GST
  4. 4. 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
  5. 5. 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
  6. 6. Single Location Service Establishment Service Tax Regime Dual GST Regime Service Provider (India) Service Provider (India) Mumbai Mumbai Delhi Chennai
  7. 7. Multi Locational Service Establishment Service Tax Regime Dual GST Regime Service Provider (India) Service Provider (India) Delhi Mumbai Delhi Chennai Mumbai Chennai
  8. 8. 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)
  9. 9. 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
  10. 10. 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
  11. 11. 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
  12. 12. 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
  13. 13. 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
  14. 14. ▪ 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
  15. 15. 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
  16. 16. Thank You!

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