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First-look of Model Goods & Service Tax
Law (GST)
&
Transitional Provisions from Old Law to
GST
Prepared By –
Indirect Tax Vertical
Asija & Associates LLP | Chartered Accountants
|Lucknow | Gurgaon| www.asija.in
M/s Asija & Associates LLP, Chartered Accountants1
Table of Content
Present Tax Structure of Indirect Tax in India
Proposed Tax Structure under Model GST Law
Features & Provisions of Model GST Law
 Applicability of Model GST Law to a Taxable Person (Threshold Exemption)
 Utilization of Input Tax Credit under Model GST Law
Transitional Provisions (Explained) – Transition from Old Indirect
Tax Laws to GST
M/s Asija & Associates LLP, Chartered Accountants2
Present Tax Structure in India
Presenttaxstructure
Central Excise Duty
(Centre tax)
Taxable event is
manufacturing
Service Tax
(Centre tax)
Taxable event is
Provision of Service
VAT/CST/Sales Tax
(State Tax)
Taxable event is sale
Custom Duty +
Counter- veiling duty
(CVD) (Centre tax)
Taxable event is
Import & Export
Entry Tax/
Entertainment Tax
(State tax)
Taxable event is entry
of goods/
entertainment
M/s Asija & Associates LLP, Chartered Accountants3
Proposed Tax Structure
Intra State
Taxable
Supply
In place of center
taxes like Service
Tax & Excise
Duty, CGST will
be charged
In place of VAT
& other state
taxes SGST will
be charged
Inter State
Taxable
Supply
IGST to be
charged in place
of earlier taxes
like CST
Will be further
apportioned in
between the
centre & states
Import from
Outside
India
Custom Duty +
Counter-veiling
duty (CVD) as
per earlier laws
In place of CVD
IGST will be
charged
GST
Centre GST
(CGST)
State GST
(SGST)
Integrated GST
(IGST)
M/s Asija & Associates LLP, Chartered Accountants4
Features of the Proposed GST Model
It is a destination based tax on consumption of goods and services, where only value addition will be taxed and
burden of tax is finally borne by the final consumer.
All goods or services are likely to be covered under GST except:
Alcohol for human consumption
Petroleum Products – (to be brought under GST from the date to be notified by the GST Council)
Tobacco products are to be taxed under GST. In addition, Centre could levy additional Cess over and above
GST Rate on the same.
Exports to be treated as Zero rated supply.
Imports treated as inter-state supply & IGST will be charged.
M/s Asija & Associates LLP, Chartered Accountants5
Features of the Proposed GST Model
A single PAN based threshold exemption limit would apply to both CGST and SGST. Taxpayers with a
turnover below it would be exempt from GST.
The two streams of input tax credit (ITC) cannot be cross utilised, except in specified circumstances of
inter-State supplies, for payment of IGST.
Liability for registration arises on crossing the threshold limit of Rs. 9 lakhs as specified by Schedule III
(Limit being Rs. 4 lakhs in case business is conducted in any of the north east states including Sikkim.)
The law covers entire India, including Jammu & Kashmir
M/s Asija & Associates LLP, Chartered Accountants6
Threshold limit for Exemption from
GST
A single PAN based
threshold limit will be
allowed to a taxable
person
Aggregate Turnover* for the relevant F.Y.
shall include value of :
1. All taxable Supplies
2 non-taxable supplies
3. Exempt supplies &
4. Export supply
No tax to paid if the
aggregate turnover is upto
Rs. 10 Lakhs in a FY (in
case of NE States the limit
is Rs. 5 lakhs)
* As per earlier laws value of non-taxable & exempt supplies were not considered while calculating aggregate turnover for
exemption limit.
M/s Asija & Associates LLP, Chartered Accountants7
Utilization of Input Tax Credit
Input CGST
i) Output
CGST
ii) Output
IGST
Input SGST
i) Output
SGST
ii) Output
IGST
Input IGST
i) Output
IGST
ii) Output
CGST
iii) Output
SGST
*The ITC on account of CGST can’t be utilized towards payment of Output SGST.
*The ITC on account of SGST can’t be utilized towards payment of Output CGST.
*The Input credit shall be utilized for setting off the output tax liability in the order of preference [ i),ii) &
iii) ]
M/s Asija & Associates LLP, Chartered Accountants8
Transitional Provision under GST
Migration of existing Taxpayer to GST
Transfer of CENVAT Credit in electronic credit ledger
Unavailed CENVAT Credit on capital goods, not carried forward in a return
Credit of eligible duties to be allowed in case a person was not liable to be registered under
earlier law or was manufacturing exempted goods
Credit of eligible duties to be allowed to a taxable person switching over from composition
scheme
Pending refund claims to be disposed of under earlier law. (Refund from VAT Department)
Claim of CENVAT credit to be disposed of under earlier law.
Proceedings related to output duty liability
M/s Asija & Associates LLP, Chartered Accountants9
Amount payable in the event of a taxable person switching over to composition scheme
Case where Exempted goods returned to the place of business after GST Implementation
Case where Duty paid goods returned to the place of business after GST Implementation
Inputs returned from Job Work after GST Implementation
Semi-finished goods returned from Job Work after GST Implementation
Finished goods returned from Job Work after GST Implementation
Other Relevant Transitions under Model GST Law :-
Transitional Provision under GST
M/s Asija & Associates LLP, Chartered Accountants10
Migration of Existing Taxpayer
• GST REG
21
• Provisional registration shall be granted to the person registered under Old Law.
• It will be valid for Six months.
• It will contain Provisional GST Identification Number.
• GST REG
20
• The person has to apply in the said form for getting Final Registration under GST along with the
specified information & documents.
• If the said information & documents are found to be correct Registration Certificate in FORM GST
REG-06 will be issued.
GST REG
22, 23, 24
• Form GST REG- 22 will be issued cancelling the registration if the information & documents so provided are
incorrect or incomplete.
• FORM GST REG-23 shall specify the discrepancies in the allotment application.
• FORM GST REG 24 will be issued when the provisional registration needs to be cancelled on account of the
person not being liable to be registered under GST.
A person other than an ISD, registered under earlier law shall not be required to get fresh registration under
GST
M/s Asija & Associates LLP, Chartered Accountants11
FORM GST REG-20
Information Documents
a) Provisional ID & Password; a) Proof of constitution of Business;
b) Valid email address; b) Photograph of Promoters/Partners/Karta of HUF;
c) Valid Mobile Number; c) Proof of appointment of Authorized Signatory;
d) Bank a/c number; d) Photograph of Authorized Signatory;
e) Bank IFSC. e) Opening page of Bank Pass Book/ Statement containing Bank
A/c No., Address of Branch, Address of A/c holder & a few
transaction details.
f) Proof of Principal/Additional place of business.
Information & documents required to be submitted under FORM GST REG-20
M/s Asija & Associates LLP, Chartered Accountants12
CENVAT Credit to be allowed as ITC
The amount of credit :
• Unavailed Credit in respect of capital goods (Sec. 144); or
• Carried forward in the last return. (Sec. 143)
Will be reflected in the electronic credit ledger :
• As ITC under GST.
In case of any recovery, under any proceedings instituted :
• Will be recovered as arrear of tax
M/s Asija & Associates LLP, Chartered Accountants13
Credit of inputs in stock & inputs contained in semi-
finished or finished goods in stock shall be reflected in the
electronic credit ledger subject to the conditions mentioned
below
A person, who:
1. a) was not liable to be registered under the earlier law;
OR
b)was engaged in the manufacture/sale of exempted goods
OR
2. Switches over from composition scheme.
Credit of eligible duties & taxes
a) Goods/inputs must be used for making
taxable supplies under GST.
b) Goods/inputs were eligible for
CENVAT Credit but remaining exempt
under earlier law.
c) Must be in possession of invoice &/or
documents, issued not earlier than 12
months from the date of GST
implementation showing payment of tax
.
d) A person not opting for composition
scheme
Conditions being:-
M/s Asija & Associates LLP, Chartered Accountants14
Pending Refund claims
i) Every claim for refund of any duty/tax & interest, if any, filed by any person on or before GST
implementation
ii) Shall be disposed of in accordance with the provisions of earlier law.
Any amount eventually accruing to him shall be:
a) paid in cash (as per CGST)
b) refunded to him in accordance with the provisions of earlier law (as per SGST).
iii) Where any claim for refund is partially or fully rejected, the amount so rejected will lapse.
M/s Asija & Associates LLP, Chartered Accountants15
Proceedings relating to Output Duty/
CENVAT
Everyproceedingrelatingto:
Output Duty Liability
or
Claim for CENVAT Credit
Amount becomes
recoverable
Shall be recovered as an arrear of
tax
Amount found to be
admissible to the
claimant
CGST
Shall be refunded in cash
SGST
Shall be refunded in acc. with the
provisions of previous law
*The amount so recovered or refunded will not be admissible as input tax credit under GST.
M/s Asija & Associates LLP, Chartered Accountants16
Person switching Over TO Composition Scheme
In case of a person switching over to composition scheme:
• The amount of credit of input/goods held in stock immediately preceding such switch over shall be
debited from his electronic credit ledger.
• Balance of ITC, if any shall lapse.
Conditions for being a composition taxpayer :
• Aggregate turnover shall not exceed Rs 50 lakhs.
• Person shall not enter into any inter-state supply.
• Tax payable at a rate not less than 1%.
• Such person can’t issue a tax invoice.
M/s Asija & Associates LLP, Chartered Accountants17
Goods returned to the place of business
Tax payable by person returning such goods
If returned later than 6 months Goods are liable for tax under GST
No tax payable
If returned within 6 months. Are identifiable by the Proper Officer
Goods removed/sold not earlier than 6 months
Duty paid goods Exempted goods
Credit of
the duty
paid shall
be
available
M/s Asija & Associates LLP, Chartered Accountants18
Goods / Inputs removed for Job Work
• No tax to be paid on inputs returned within 6 months
• Details of inputs held by the job worker to be declared
• Tax to be paid if inputs are liable for tax under GST & not
returned within the said time frame
Inputs removed & returned
• Same as above
• Additionally, the manufacturer may transfer such goods for
supply within 6 months or extended period as the case may
be
Semi-finished goods
removed & returned
• Same as above
• Additionally, the goods must not be removed for a process
amounting to manufacturing
Finished goods removed &
returned
M/s Asija & Associates LLP, Chartered Accountants19
• This presentation has been prepared by our firm to provide a gist of the applicable
law pertaining to Model GST Law notified by the Government of India for
upcoming GST Act 2016, pending for ratification in Parliament for applicability on
or after 01/04/2017.
• For detailed insight and for better understanding of the various provision of the
said law, the said presentation should be read along with related provision of
Model GST Law 2016.
• Neither our firm nor any partner or employee or article of our firm shall
responsible for any decision taken on the basis of the said presentation and
without obtaining any professional guidance or consultation on the matter for
which reliance was made on this presentation.
Disclaimer
M/s Asija & Associates LLP, Chartered Accountants20
Thank You
For any queries kindly contact our GST Team :
Asija & Associates LLP
Chartered Accountants
H.O. : 34/5 , Gokhale Marg,
Lucknow
Ph. No. : 0522-4004652,2205072
CA Pradumn Pandey
Executive Partner
(pradumn.pandey@asija.in)
CA Rahul Mishra
Partner in Charge
(rahul.mishra@asija.i
n)
CA Amber Agrawal
Associate Director
(amber.agrawal@asija.in
)
M/s Asija & Associates LLP, Chartered Accountants21

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GST and transition provisions

  • 1. First-look of Model Goods & Service Tax Law (GST) & Transitional Provisions from Old Law to GST Prepared By – Indirect Tax Vertical Asija & Associates LLP | Chartered Accountants |Lucknow | Gurgaon| www.asija.in M/s Asija & Associates LLP, Chartered Accountants1
  • 2. Table of Content Present Tax Structure of Indirect Tax in India Proposed Tax Structure under Model GST Law Features & Provisions of Model GST Law  Applicability of Model GST Law to a Taxable Person (Threshold Exemption)  Utilization of Input Tax Credit under Model GST Law Transitional Provisions (Explained) – Transition from Old Indirect Tax Laws to GST M/s Asija & Associates LLP, Chartered Accountants2
  • 3. Present Tax Structure in India Presenttaxstructure Central Excise Duty (Centre tax) Taxable event is manufacturing Service Tax (Centre tax) Taxable event is Provision of Service VAT/CST/Sales Tax (State Tax) Taxable event is sale Custom Duty + Counter- veiling duty (CVD) (Centre tax) Taxable event is Import & Export Entry Tax/ Entertainment Tax (State tax) Taxable event is entry of goods/ entertainment M/s Asija & Associates LLP, Chartered Accountants3
  • 4. Proposed Tax Structure Intra State Taxable Supply In place of center taxes like Service Tax & Excise Duty, CGST will be charged In place of VAT & other state taxes SGST will be charged Inter State Taxable Supply IGST to be charged in place of earlier taxes like CST Will be further apportioned in between the centre & states Import from Outside India Custom Duty + Counter-veiling duty (CVD) as per earlier laws In place of CVD IGST will be charged GST Centre GST (CGST) State GST (SGST) Integrated GST (IGST) M/s Asija & Associates LLP, Chartered Accountants4
  • 5. Features of the Proposed GST Model It is a destination based tax on consumption of goods and services, where only value addition will be taxed and burden of tax is finally borne by the final consumer. All goods or services are likely to be covered under GST except: Alcohol for human consumption Petroleum Products – (to be brought under GST from the date to be notified by the GST Council) Tobacco products are to be taxed under GST. In addition, Centre could levy additional Cess over and above GST Rate on the same. Exports to be treated as Zero rated supply. Imports treated as inter-state supply & IGST will be charged. M/s Asija & Associates LLP, Chartered Accountants5
  • 6. Features of the Proposed GST Model A single PAN based threshold exemption limit would apply to both CGST and SGST. Taxpayers with a turnover below it would be exempt from GST. The two streams of input tax credit (ITC) cannot be cross utilised, except in specified circumstances of inter-State supplies, for payment of IGST. Liability for registration arises on crossing the threshold limit of Rs. 9 lakhs as specified by Schedule III (Limit being Rs. 4 lakhs in case business is conducted in any of the north east states including Sikkim.) The law covers entire India, including Jammu & Kashmir M/s Asija & Associates LLP, Chartered Accountants6
  • 7. Threshold limit for Exemption from GST A single PAN based threshold limit will be allowed to a taxable person Aggregate Turnover* for the relevant F.Y. shall include value of : 1. All taxable Supplies 2 non-taxable supplies 3. Exempt supplies & 4. Export supply No tax to paid if the aggregate turnover is upto Rs. 10 Lakhs in a FY (in case of NE States the limit is Rs. 5 lakhs) * As per earlier laws value of non-taxable & exempt supplies were not considered while calculating aggregate turnover for exemption limit. M/s Asija & Associates LLP, Chartered Accountants7
  • 8. Utilization of Input Tax Credit Input CGST i) Output CGST ii) Output IGST Input SGST i) Output SGST ii) Output IGST Input IGST i) Output IGST ii) Output CGST iii) Output SGST *The ITC on account of CGST can’t be utilized towards payment of Output SGST. *The ITC on account of SGST can’t be utilized towards payment of Output CGST. *The Input credit shall be utilized for setting off the output tax liability in the order of preference [ i),ii) & iii) ] M/s Asija & Associates LLP, Chartered Accountants8
  • 9. Transitional Provision under GST Migration of existing Taxpayer to GST Transfer of CENVAT Credit in electronic credit ledger Unavailed CENVAT Credit on capital goods, not carried forward in a return Credit of eligible duties to be allowed in case a person was not liable to be registered under earlier law or was manufacturing exempted goods Credit of eligible duties to be allowed to a taxable person switching over from composition scheme Pending refund claims to be disposed of under earlier law. (Refund from VAT Department) Claim of CENVAT credit to be disposed of under earlier law. Proceedings related to output duty liability M/s Asija & Associates LLP, Chartered Accountants9
  • 10. Amount payable in the event of a taxable person switching over to composition scheme Case where Exempted goods returned to the place of business after GST Implementation Case where Duty paid goods returned to the place of business after GST Implementation Inputs returned from Job Work after GST Implementation Semi-finished goods returned from Job Work after GST Implementation Finished goods returned from Job Work after GST Implementation Other Relevant Transitions under Model GST Law :- Transitional Provision under GST M/s Asija & Associates LLP, Chartered Accountants10
  • 11. Migration of Existing Taxpayer • GST REG 21 • Provisional registration shall be granted to the person registered under Old Law. • It will be valid for Six months. • It will contain Provisional GST Identification Number. • GST REG 20 • The person has to apply in the said form for getting Final Registration under GST along with the specified information & documents. • If the said information & documents are found to be correct Registration Certificate in FORM GST REG-06 will be issued. GST REG 22, 23, 24 • Form GST REG- 22 will be issued cancelling the registration if the information & documents so provided are incorrect or incomplete. • FORM GST REG-23 shall specify the discrepancies in the allotment application. • FORM GST REG 24 will be issued when the provisional registration needs to be cancelled on account of the person not being liable to be registered under GST. A person other than an ISD, registered under earlier law shall not be required to get fresh registration under GST M/s Asija & Associates LLP, Chartered Accountants11
  • 12. FORM GST REG-20 Information Documents a) Provisional ID & Password; a) Proof of constitution of Business; b) Valid email address; b) Photograph of Promoters/Partners/Karta of HUF; c) Valid Mobile Number; c) Proof of appointment of Authorized Signatory; d) Bank a/c number; d) Photograph of Authorized Signatory; e) Bank IFSC. e) Opening page of Bank Pass Book/ Statement containing Bank A/c No., Address of Branch, Address of A/c holder & a few transaction details. f) Proof of Principal/Additional place of business. Information & documents required to be submitted under FORM GST REG-20 M/s Asija & Associates LLP, Chartered Accountants12
  • 13. CENVAT Credit to be allowed as ITC The amount of credit : • Unavailed Credit in respect of capital goods (Sec. 144); or • Carried forward in the last return. (Sec. 143) Will be reflected in the electronic credit ledger : • As ITC under GST. In case of any recovery, under any proceedings instituted : • Will be recovered as arrear of tax M/s Asija & Associates LLP, Chartered Accountants13
  • 14. Credit of inputs in stock & inputs contained in semi- finished or finished goods in stock shall be reflected in the electronic credit ledger subject to the conditions mentioned below A person, who: 1. a) was not liable to be registered under the earlier law; OR b)was engaged in the manufacture/sale of exempted goods OR 2. Switches over from composition scheme. Credit of eligible duties & taxes a) Goods/inputs must be used for making taxable supplies under GST. b) Goods/inputs were eligible for CENVAT Credit but remaining exempt under earlier law. c) Must be in possession of invoice &/or documents, issued not earlier than 12 months from the date of GST implementation showing payment of tax . d) A person not opting for composition scheme Conditions being:- M/s Asija & Associates LLP, Chartered Accountants14
  • 15. Pending Refund claims i) Every claim for refund of any duty/tax & interest, if any, filed by any person on or before GST implementation ii) Shall be disposed of in accordance with the provisions of earlier law. Any amount eventually accruing to him shall be: a) paid in cash (as per CGST) b) refunded to him in accordance with the provisions of earlier law (as per SGST). iii) Where any claim for refund is partially or fully rejected, the amount so rejected will lapse. M/s Asija & Associates LLP, Chartered Accountants15
  • 16. Proceedings relating to Output Duty/ CENVAT Everyproceedingrelatingto: Output Duty Liability or Claim for CENVAT Credit Amount becomes recoverable Shall be recovered as an arrear of tax Amount found to be admissible to the claimant CGST Shall be refunded in cash SGST Shall be refunded in acc. with the provisions of previous law *The amount so recovered or refunded will not be admissible as input tax credit under GST. M/s Asija & Associates LLP, Chartered Accountants16
  • 17. Person switching Over TO Composition Scheme In case of a person switching over to composition scheme: • The amount of credit of input/goods held in stock immediately preceding such switch over shall be debited from his electronic credit ledger. • Balance of ITC, if any shall lapse. Conditions for being a composition taxpayer : • Aggregate turnover shall not exceed Rs 50 lakhs. • Person shall not enter into any inter-state supply. • Tax payable at a rate not less than 1%. • Such person can’t issue a tax invoice. M/s Asija & Associates LLP, Chartered Accountants17
  • 18. Goods returned to the place of business Tax payable by person returning such goods If returned later than 6 months Goods are liable for tax under GST No tax payable If returned within 6 months. Are identifiable by the Proper Officer Goods removed/sold not earlier than 6 months Duty paid goods Exempted goods Credit of the duty paid shall be available M/s Asija & Associates LLP, Chartered Accountants18
  • 19. Goods / Inputs removed for Job Work • No tax to be paid on inputs returned within 6 months • Details of inputs held by the job worker to be declared • Tax to be paid if inputs are liable for tax under GST & not returned within the said time frame Inputs removed & returned • Same as above • Additionally, the manufacturer may transfer such goods for supply within 6 months or extended period as the case may be Semi-finished goods removed & returned • Same as above • Additionally, the goods must not be removed for a process amounting to manufacturing Finished goods removed & returned M/s Asija & Associates LLP, Chartered Accountants19
  • 20. • This presentation has been prepared by our firm to provide a gist of the applicable law pertaining to Model GST Law notified by the Government of India for upcoming GST Act 2016, pending for ratification in Parliament for applicability on or after 01/04/2017. • For detailed insight and for better understanding of the various provision of the said law, the said presentation should be read along with related provision of Model GST Law 2016. • Neither our firm nor any partner or employee or article of our firm shall responsible for any decision taken on the basis of the said presentation and without obtaining any professional guidance or consultation on the matter for which reliance was made on this presentation. Disclaimer M/s Asija & Associates LLP, Chartered Accountants20
  • 21. Thank You For any queries kindly contact our GST Team : Asija & Associates LLP Chartered Accountants H.O. : 34/5 , Gokhale Marg, Lucknow Ph. No. : 0522-4004652,2205072 CA Pradumn Pandey Executive Partner (pradumn.pandey@asija.in) CA Rahul Mishra Partner in Charge (rahul.mishra@asija.i n) CA Amber Agrawal Associate Director (amber.agrawal@asija.in ) M/s Asija & Associates LLP, Chartered Accountants21