Overview of GST & 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
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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
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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
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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)
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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:
(a) Alcohol for human consumption
(b) 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.
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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. 20 lakhs as specified by Schedule V
(Limit being Rs. 10 lakhs in case business is conducted in any of the north east states including Sikkim.)
The law covers entire India, excluding Jammu & Kashmir
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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. 20 Lakhs in a FY (in
case of NE States the limit
is Rs. 10 lakhs)
* As per earlier laws value of non-taxable & exempt supplies were not considered while calculating aggregate turnover for
exemption limit.
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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) ]
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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 to be allowed in
certain situations
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
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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
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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
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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
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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
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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:-
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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.
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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.
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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.
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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
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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
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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
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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
)
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