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Revised Model GST Law

Revised Model GST Law
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Dr.JakeFinlay,Germany,Teacher
Published Date:22-07-2017
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Revised Model GST Law (Nov 2016)Components of GST Central GST (CGST) - Levy on supply of ALL goods and/ or services within a particular State, by the Central Government State GST (SGST) - Levy on supply of ALL goods and/ or services within a particular State, by the respective State Government Integrated GST (IGST) – Levy on ALL inter-State supplies of goods and/ or services, by the Central Government www.ThesisScientist.comConcept of CGST, SGST and IGST  Leviable on Supply of Goods and Services  Levy on transaction value with set-off of input tax  Backed by Goods and Services Tax Network (GSTN) www.ThesisScientist.comConcept of CGST, SGST and IGST Possible rate structure Exempt Supplies: Nil-rate, zero percent supplies Zero-Rated Supplies: Exports and supplies to SEZ Supplies taxable at 5% Supplies taxable at 12% Supplies taxable at 18% Supplies taxable at 28% www.ThesisScientist.comConcept of Supply – Sec. 3 GST Model Law Section 3 - Meaning and scope of supply Other matters Section 3(1)(a) Section 3(1)(b) Section 3(1)(c) All forms of supply of Importation of Supplies specified• Composite goods and/ or services, service, - To be treated as supplies made without a Supply - for a consideration - for a consideration consideration• Mixed Supply - in the course or - whether or not furtherance of business in the course or Schedule I: such as: furtherance of 1. Permanent transfer/ disposal of business - sale, business assets for which ITC availed - transfer, 2. Supplies between related persons/ distinct - barter, persons in the course or furtherance of business - exchange, 3. Supply of goods by principal (or agent) to - license, agent (or principal) - rental, 4. Importation of service from a related - lease or person or from any of his other establishments - disposal outside India, in the course or furtherance of business. www.ThesisScientist.comMeaning and Scope of Supply  Supply comprises: Cases to consider: • Included supplies• Purpose of supply – business or not • Implied supplies (Sch I)• Same forms of supply apply to • Excluded supplies (Sch III & IV) services • Supply by casual taxable person  Chargeability to tax: • ISD or inter-branch service transfer  Forward charge on supplier • Intra-State stock transfer  Reverse charge on imports • Free samples and warranty are  Lateral charge (e-commerce) supplies for consideration  Supply characterization: • Material supplied for job-work  Composite supply or • Sch II not exhaustive but specific  Mixed supply • No supply, no tax but no credit too www.ThesisScientist.comPrinciples Determining Supply as inter-State or intra-State www.ThesisScientist.comSection 3 of IGST Act, 2016 – Principles to determine a supply as an inter-State Supply Determination of supply of goods and/ or services as Inter-State supply  CRITICAL factors: Where the below 2 are in DIFFERENT STATES a) Location of the supplier and b) Place of supply determined u/s 7,8, 9 or 10 of IGST Act  Specific INCLUSIONS: • Supply of goods in the course of import, till they cross the customs frontiers of India • Supply of services in the course of import • Supply when place of supply is outside India but supplier is in India • Supply to or by a SEZ developer or an SEZ unit • Residuary supply: Any supply in the taxable territory and which is not an intra-State supply (E.g.: Supply of goods from within a Union Territory(“UT”) without Legislature) www.ThesisScientist.comGST on Goods Intra-State Supply Inter-State Supply CGST-SGST ‘From’ location ‘To’ location ‘To’ location IGST  Dual tax – CGST-SGST One tax – IGST (higher rate)  Registered office not relevant; location of goods is  Movement for „delivery‟ relevant; even stock- relevant transfer taxable  Intra-State supply, if „from‟ and „to‟ in one State Imports – basic customs + IGST www.ThesisScientist.comGST on Services Intra-State Supply Inter-State Supply CGST-SGST Place of usage of service or Supplier’s address of Place of usage of recipient’s address of GST GST registration service registration IGST  Dual tax – CGST-SGST One tax – IGST (higher rate)  Place of usage relevant Imports – receiver to pay IGST  „Test‟ of such place listed for various services When „place of usage‟ not fixed, use recipient‟s address www.ThesisScientist.comSection 4 of IGST Act, 2016 – Principles to determine a supply as an intra-State Supply Determination of supply of goods and/ or services as Intra-State supply  CRITICAL factors: Where the below 2 are in the SAME STATE a) Location of the supplier and b) Place of supply determined u/s 7,8, 9 or 10 of IGST Act  Specific EXCLUSIONS: • Supplies to or by a SEZ developer/ SEZ unit; • Importation of goods till they cross the customs frontiers of India. www.ThesisScientist.comIllustrations Supply Supplier Place of Supply Result Goods Karnataka Tamil Nadu Inter-State (IGST) Services Pondicherry Kerala Inter-State (IGST) Goods Chandigarh Chandigarh Inter-State (IGST) Services Chandigarh Punjab Inter-State (IGST) Goods Punjab Chandigarh Inter-State (IGST) Goods Delhi Delhi Intra-State (CGST/SGST) Services Rajasthan Rajasthan Intra-State (CGST/SGST) Note: Chandigarh is a UT without Legislature; Explanation to Section 2(2) provides that the term “State” includes a UT with Legislature (Of the 7 UTs, Delhi and Pondicherry are the only 2 UTs with Legislature). In case of a Union Territory if it adopts the legislature of a particular State say Punjab, then it will be intra-State supply. www.ThesisScientist.comChapter – III of CGST Act www.ThesisScientist.comLevy & Collection  Goods means every kind of movable property and: • Includes actionable claim • Excludes money and securities o NO specific exclusion for intangible property  Services means anything other than goods : • Includes transactions in money – in relation to use / conversion • Excludes money and securities www.ThesisScientist.comLevy & Collection • Services 1: Subject • Goods • Goods as services 2: Supply • Included • Implied • Excluded 3: Place • Inter-State • Intra-State 4: Time • Specified for goods • Specified for services www.ThesisScientist.comLevy & Collection Description Composite Supply Mixed Supply Naturally bundled Yes No Supplied together Yes Yes Can be supplied separately No Yes One is predominant supply for recipient Yes No Other supply is not „aim in itself‟ of recipient Yes No Each supply priced separately No No All supplies are goods Yes Yes All supplies are services Yes Yes One supply is goods and other supply is services Yes Yes While, the above tests could be guiding principles in determining as to whether a supply is composite or mixed supply the end user test could be adopted as one of the criteria; Every supply will have to be independently analysed. www.ThesisScientist.comComposition Levy www.ThesisScientist.comComposition Levy– Sec. 9 of Model GST Law Availed Allowed Available COT IGST (2X) Compliance Eligible 2.5% Manufacturers 1% - Others www.ThesisScientist.comComposition Levy– Sec. 9 of Model GST Law  Optional Scheme  Pay an amount in lieu of tax; minimum rate to be:  2.5% of the turnover in case of manufacturers;  1% of the turnover in other cases  No tax to be collected; No Input Tax Credit available  Conditions for Composition: • Permission of Proper Officer required • Registered persons • Aggregate Turnover Rs. 50 Lakhs (all-India basis for taxable persons having same PAN – who shall also opt for composition) but excludes Sch III & IV • Aggregate turnover = Value of all supplies (taxable + non-taxable + exempt + exports) – Value of (RCM supplies + inward supplies) – taxes under GST RCM supplies refers to value of supplies on which tax is levied on reverse charge basis www.ThesisScientist.comComposition Levy– Sec. 9 of Model GST Law  No composition option in the following specific cases: • Services supplied: o Any/ all services (includes goods treated as supply of services by Sch II) • Goods supplied: o Non-taxable goods o Inter-State outward supplies o Through e-commerce operators o Notified goods manufactured by the supplier  If aggregate turnover (all India basis) of preceding FY exceeds 50 Lakhs (If during the FY, the aggregate turnover exceeds 50 Lakhs, no composition from the following day.) www.ThesisScientist.com