GST Presentation on Benefits, Structure and Compliance

PRESENTATION PLAN
Central Excise & Service Tax Commissionerate, Surat
 EXISTING INDIRECT TAX STRUCTURE
 WHY GST : BENEFITS
 MAIN FEATURES OF GST LAW
 SPECIFIC ISSUES WITH TEXTILE TRADERS

Present Indirect Tax Structure
Central Taxes State Taxes
Central Excise Duty - On Manufactured Goods
Value Added tax or VAT - on sale of goods
within the state
Duties of Excise - Medicinal and Toilet
Preparations
Central Sales Tax or CST - on sale of goods in
interstate
Additional Excise Duty - Goods of Special
Importance
Luxury Tax
Additional Duties of Excise - Textile and Textile
Products
Entry Tax
Additional Duties of Customs - CVD on
Imports
Entertainment Tax
Special Additional Duty of Customs - SAD Taxes on lottery, betting and gambling
Service Tax Purchase Tax
All Cess - Swach Bharat, Krishi Kalyan etc Taxes on advertisements

Coverage
Trader
Manufacturer
Service Provider

Point of Levy
For Goods Manufacturers
at the time of removal of goods
For Traders
at the time of sale of goods
For Service Providers
at the time of provision of service

WHY GST : BENEFITS
To Trade
 Reduction in multiplicity of
taxes
 Mitigation of cascading/ double
taxation
 More efficient neutralization of
taxes especially for exports
 Development of common
national market
 Simpler tax regime
 Fewer rates and exemptions
 Distinction between Goods &
Services no longer required
 To Consumers
 Simpler Tax system
 Reduction in prices of
goods & services due
to elimination of
cascading
 Uniform prices
throughout the
country
 Transparency in
taxation system
 Increase in
employment
opportunities

What is GST?
GST stands for “Goods and Services Tax”, and is a
destination based indirect tax levy on supply of goods
as well as services.
The main benefit of the GST is to facilitate a uniform
tax levied on goods and services across the country.
Seamless Input Tax Credit is the defining feature of
GST Central Excise & Service Tax Commissionerate, Surat

Structure of GST
A dual GST is proposed where both Central and State
Government will administer GST
CGST
Central GST
SGST/UT
GST
IGST
Integrated GST
Will be levied by the Centre on Supply of
Goods/Service with in the state(Revenue from CGST
will go to the Centre)
Will be levied by the State/UT on Intra State Supply
of Goods/Service (Revenue from SGST will go to the
State )
Will be levied by the Centre on inter State Supply of
Goods/Service (Revenue from ISGST will go to the State
where the goods are consumed)

Central Taxes
Additional Duties
of Excise
Additional Duties
of Customs
Central Excise
Duty
Special
Additional Duty
of Customs
Service Tax
Additional
Excise Duty
Duties of
Excise
All Cess
CGST

State Taxes
Value Added tax
or VAT
Taxes on lottery,
betting and
gambling
Luxury Tax
Entry Tax
Entertainment
Tax
Taxes on
advertisements
Purchase
Tax
SGST

Central Sales Tax
Central Sales Tax
or CST - on sale
of goods in
interstate
IGST

Point of Levy/Taxable Event
Supply of goods and/or Services will be the taxable event.
Paradigm
change in
point of levy
• Stock Transfer from one branch to
another of same entity was tax free
under VAT, now taxable.
• Consignment Transfer attracts GST
• Barter, lease, rental or disposal
• Exchange of goods
• Certain supplies without consideration
Implications

Who is liable for GST?
• A person who supplies goods and/or services with a
turnover in excess of Rs. 20 Lakhs.
• For North-eastern and other smaller States - A
person who supplies goods and/or services with a
turnover in excess of Rs. 10 Lakhs.
• Persons having turnover up to Rs. 75 lakhs, can opt
for Composition levy.

Composition Scheme -
• whose aggregate turnover in the preceding financial year did not
exceed seventy five lakh rupees.
• (a) Two per cent of turnover - manufacturer,
• (b) Fiveper cent of turnover- restaurant
• (c) One per cent of turnover - in case of other suppliers,
Subject to conditions & restrictions,

Contd.-
•(a) he is not engaged in the supply of services other
than supplies referred to in clause (b) of paragraph 6
of Schedule II;
•(b) he is not engaged in making any supply of goods
which are not leviable to tax under this Act;
•(c) he is not engaged in making any inter-State
outward supplies of goods;
•(d) he is not engaged in making any supply of goods
through an electronic commerce operator who is
required to collect tax at source under section 52

Commodities not covered by GST
Alcohol for human consumption
Five Petroleum Products
Electricity

Valuation
The value of taxable goods/supply will normally be the
‘transaction value’ which is the actual price paid or
payable.
It will be the same for CGST, SGST and IGST

GST Impact – An example on cascading effect of taxes
Particulars Current
Scenario
GST
Base Price of Goods (Manufacturer) 1,00,000 1,00,000
Add: Excise (12.5%) / CGST 12,500 9,000
Add: VAT (15%)/ SGST 16,875 9,000
Total Sale Value 1,29,375 1,18,000
Less : Input Tax Credit 16,875 18,000
Landed Cost (Distributor / Dealer) 1,12,500 1,00,000
Value Addition (Distributor / Dealer) 10,000 10,000
Basic Sale Value 1,22,500 1,10,000
Add: VAT / SGST 18,375 19,800
Cost to end Consumer 1,40,875 1,29,800
Differential Savings due to Tax 11,075
Percentile saving on manufacturer’s price 11.07%

REGISTRATION
•Liability to be registered ( Section 22 of CGST ACT)
Every person who is registered or who holds a license under an earlier
law
Every person whose turnover in a year exceeds Rs. 20 lakhs.
•Liability to be registered irrespective of threshold (Section 24)
Persons making inter-State taxable supply
Persons required to pay tax under reverse charge
E-Commerce operator including Aggregator
Persons who supply goods through e-commerce operator
Persons who supply goods and/or services on behalf of a registered
taxable person.
Input Service Distributor
Persons required to deduct tax at source

REGISTRATION.. Contd.
•A person, though not liable to be registered, may take registration
voluntarily.
•Registration is to be granted State-wise. A person having multiple
business verticals in a State may obtain separate registration .
•UN agencies, Multilateral Organizations, Embassies etc. shall be
granted a Unique Identity Number instead of registration.
•Registration shall be deemed to have been granted if no deficiency is
communicated to the applicant within the prescribed period.
•Cancellation of registration under CGST Act means a cancellation of
registration under SGST Act and vice-versa.

ITC or Input Tax Credit
What is ITC?
Provision to take credit of taxes paid on inputs (on
purchase/receipt of goods/services) and utilising the
same for payment of output tax (on sale/supply of
goods/service)

Pre-requisite for taking credit
 Registered under GST
 Possession of Invoice
 Receipt of Goods / Services
 Tax charged on the supply should have been paid
to the Government
 Return should be furnished
 Time limit for taking ITC – Can’t be taken
beyond september of the following F.Y.

Negative List
 Motor Vehicles (except in certain cases)
 Goods and services such as insurance, outdoor
catering, etc. primarily used for personal
consumption of employees
 Goods and services in relation to the execution of
works contract when such contract results in creation
of immovable property
 Goods and services on which Composition Levy
is charged

Set-off of ITC
Tax payable to the
government
CGST SGST IGST
Credit permitted
(in the following order)
CGST SGST IGST
CGST
IGST IGST SGST

ITC Matching concept
 Matching of details of Inward supply with the
corresponding outward supply (of the taxpayer’s
supplier) is ITC Matching concept.
 This is done based on the GST returns filed.
Reverse Charge Mechanism
 Provision where the recipient of the goods/service has
to pay the GST is called Reverse Charge Mechanism.
 List of Goods/Services will be notified.

Invoice under GST
Tax
Invoice
To be issued by a regular
GST Dealer
Bill of
Supply
To be issued by a Composition
Dealer

Types of Tax Invoice:
 Regular
 Revised
 Supplementary/Debit Note/Credit Note
 Tax Invoice Special Cases - ISD

Time limit for Tax Invoice
In case of Goods :-
A registered person supplying taxable goods shall, before or at the time
of,—
(a) removal of goods for supply to the recipient, where the supply
involves movement of goods; or
(b) delivery of goods or making available thereof to the recipient, in any
other case,
In case of Services :- before or after the provision of service but within 30
days of provision of service.

Contents of a Tax Invoice
 Name, Address and GSTIN of the supplier
 A consecutive serial number containing only alphabets and/or
numerals, unique for a financial year
 Date of its issue
 Name, Address and GSTIN/ Unique ID Number, if registered, of
the recipient
 Name and address of the recipient and the address of delivery,
along with the name of State and its code, if such recipient is
unregistered and where the taxable value of supply is fifty
thousand rupees or more
 HSN code of goods or Accounting Code of services
 Description of goods or services

 Quantity in case of goods and unit or Unique Quantity Code
thereof
 Total value of goods or services
 Taxable value of goods or services taking into account discount
or abatement, if any
 Rate of tax (CGST, SGST or IGST)
 Amount of tax charged in respect of taxable goods or services
(CGST, SGST or IGST);
 Place of supply along with the name of State, in case of a supply
in the course of inter-State trade or commerce
 Place of delivery where the same is different from the
place of supply
Cont..

 Whether the tax is payable on reverse charge
 The word “Revised Invoice” or “Supplementary Invoice”, as the
case may be, indicated prominently, where applicable along with
the date and invoice number of the original invoice
 Signature or digital signature of the supplier or his authorized
representative
Cont..

Supplementary tax invoice &
Credit or debit notes
 Name, address and GSTIN of the supplier
 Nature of the document
 Date of issue of the document
 Name, address and GSTIN/ Unique ID Number, if registered, of
the recipient
A supplementary tax invoice and a credit or debit note
shall contain the following details

Supplementary tax invoice &
Credit or debit notes
 Name and address of the recipient and the address of delivery,
along with the name of State and its code, if such recipient is
unregistered
 Serial number and date of the corresponding tax invoice or, as
the case may be, bill of supply
 Taxable value of goods or services, rate of tax and the amount of
the tax credited or, as the case may be, debited to the recipient
representative
Cont..

Bill of Supply
 Name, address and GSTIN of the supplier
 Date of its issue
 Name, address and GSTIN/ Unique ID Number, if registered, of
the recipient
 HSN Code of goods or Accounting Code for services
 Description of goods or services
To be issued by a Composition Dealer
Contents

Bill of Supply
 Value of goods or services taking into account discount or
abatement, if any
representative
Cont..

E-Way Bill :-
• Every registered person who causes movement of goods of consignment
value exceeding fifty thousand rupees —
(i) in relation to a supply; or
(ii) for reasons other than supply; or
(iii) due to inward supply from an unregistered person, shall, before
commencement of movement,
furnish information relating to the said goods electronically, on the
common portal.
It can be generated by the consignor, consignee or transporter

Payment of Tax
 Payment of Tax is after set off ITC
 Payment to be made online
 Online challans will be generated having specific no
Return filed isn’t valid unless due tax is paid.

Returns under GST
Sl.no Return Nature Periodicity Remarks
1 GSTR 1 Details of outward supplies Monthly by 10th Full Data from user
2 GSTR 2 Details of inward supplies Monthly by 15th
Major Data will be
auto-populated
3 GST 3 Monthly return Monthly by 20th
Major Data will be
auto-populated
4 GSTR 4
Quarterly Return for
compounding Taxable
persons
18th of the month
succeeding
Quarter
Many data will be
auto-populated

Returns under GST
Sl.no Return Nature Periodicity
5 GSTR 5
Return for Non-Resident
foreign taxable person
20th of the Month succeeding the tax
period and 7 days from expiry of
registration
6 GSTR 6 ISD return
13th of the Month succeeding the tax
period
7 GSTR 9 Annual Return
8 GSTR 9A
Simplified Annual Return for
Compounding Persons
9 GSTR 11
Details of Inward supply be a
person having UIN
28th of the month following the month
for which statement is filed
Cont..

TDS under GST
This provision is meant for Government and Government
undertakings and other notified entities making contractual
payments in excess of Rs. 2.5 Lakhs to suppliers.
While making such payment, the concerned
Government/authority shall deduct 1% of the total payable
amount and remit it into the appropriate GST account.

TCS under GST
This provision is applicable only for E-Commerce Operator .
Every E-Commerce Operator needs to withhold a
percentage (to be notified later on the recommendation of
the GST Council) of the amount which is due from him to
the supplier at the time of making actual payment to the
supplier.
Such withheld amount is to be deposited by such E-
Commerce Operator to the appropriate GST account by the
10th of the next month.
The amount deposited as TCS will be reflected in the
electronic cash ledger of the supplier.

E Ledgers
Once a taxpayer is registered on Common Portal (GSTN), 2 e-
ledgers (Cash & Input Tax Credit) and an electronic tax liability
register will be automatically opened and displayed on his
dashboard at all times.
Cash Ledger
The cash ledger will reflect all deposits made in cash, and TDS/TCS
made on account of the taxpayer.
The information will be reflected on real time basis.
This ledger can be used for making any payment on account of
GST.

E Ledgers
Liability Ledger
Tax Liability Register will reflect the total tax liability of a taxpayer
(after netting) for the particular month.
Cont..
ITC Ledger
Input Tax Credit as self-assessed in monthly returns will be
reflected in the ITC Ledger.
The credit in this ledger can be used to make payment of TAX
ONLY and not other amounts such as interest, penalty, fees etc.

Key Issues relating to Textile Traders
•Job Work
•Transportation
•Treatment of Discounts
•Commission
•Goods Return
•Delayed Payment.

Job Work under GST
•“job work” means undertaking any treatment or
process by a person on goods belonging to
another registered taxable person and the
expression “job worker” shall be construed
accordingly”
•It means the provision of job work shall be
applicable if the goods are received from
Registered Taxable Person only. Otherwise these
provisions are not applicable.

Key Provisions
• Taking input tax credit in respect of inputs and capital goods sent
for job work (sec 19).
The principal shall, subject to such conditions and restrictions as may
be prescribed, be allowed input tax credit on inputs/capital goods
sent to a job worker for job work.
Even if the inputs are directly sent to a job worker for job work
without being first brought to his place of business.
Where the inputs/capital goods sent for job work are not received
back by the principal after completion of job work within one year
/three years of being sent out, it shall be deemed that such inputs had
been supplied by the principal to the job worker on the day when the
said inputs were sent out:

•Transitional provisions relating to job work-
Where any inputs received at a place of business had been
removed to a job worker in accordance with the provisions of
existing law
prior to the appointed day and such inputs are returned to the
said place within six months from the appointed day, no tax
shall be payable

Job work procedure (sec 143).
A registered person send any inputs or capital goods, without
payment of tax, to a job worker for job work and from there
subsequently send to another job worker shall
bring back inputs, after completion of job work or otherwise, or
capital goods, within one year and three years, respectively, of their
being sent out, to any of his place of business, without payment of
tax;
 the supply of goods, after completion of job work, by a registered
job worker shall be treated as the supply of goods by the principal
referred to in section 143, and the value of such goods shall not be
included in the aggregate turnover of the registered job worker

.
Goods transport agency (Service provider) (Service Recipient)
Casual Taxable person,
body corporate,
partnership firm, any
society, factory, any
person registered under
CGST, SGST, IGST Act
Issue of transport on RCM basis
NIL Rate
Services by way of transportation of goods-
(a) by road except the services of—
(i) a goods transportation agency;
(ii) a courier agency;
(b) by inland waterways.
(Also up to 750/- per consignee or 1500/- per single carriage in
GTA)

Intra-State supplies received by a registered person from any supplier, who is
not registered, from the whole of the central tax leviable thereon up to
RSs5000/- a day is exempted.
Provided that the said exemption shall not be applicable where the aggregate
value of such supplies of goods or service or both received by a registered
person from any or all the suppliers, who is or are not registered, exceeds
5000/- rupees in a day.
Small supply received from unregistered supplier up to Rs 5000/-

Treatment of Discounts-
a) All discounts are allowed other than given to related
party. Must be mentioned on invoice.
b) Increase of decrease in discount can be adjusted
through Dr./Cr. Notes, GST will be adjusted accordingly.
Commission-
a) GST has to be paid on commission. If commission agent
isn’t registered, it is to be paid on RCM basis.
Goods Return-
a) Cr. Note can be issued & tax liability can be adjusted in
the buyer has reversed the ITC taken on such supply.
Delayed Payment-
a) If payment to the supplier has not been made with in
180 days from date of invoice, credit taken will be
disallowed & interest has to be paid.

HSN Code Requirement
Upto Rs 1.5 Cr Turnover -
No HSN Code Required
For those having Turnover of Rs 1.5 to 5 Cr –
First 2 digits of the HSN Code Required
 For those having Turnover above Rs 5 Cr-
To mention 4 digits of the HSN Code

Thank you

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