Product wise GST Rates

 GST @ 28% OF FOOD PRODUCTS UNDER GST

(1) Sugar, lactose and glucose syrups

(2) Churan for pan

(3) Aerated waters containing added sugar or other sweeting matter

(4) Coca chocolates

(5) Waffles and wafers coated with or containing chocolate

(6) Chewing gum/bubble gum and white chocolate

(7) Malt extract (other than for infant use and mixes and doughs of bakers

(8) Custard powder

(9) Extract, essences and concentrates of coffee

(10) Coca butter, fat and oil

(11) Mustard flour and sauces thereof

(12)  Coca powder

(13) Food flavoring material

(14) Molasses

GST @ 18% OF FOOD PRODUCTS

UNDER GST

GST Input Tax Credit Rules

1. Documents and accountable of inputs and input services

(1) The input tax credit shall be availed by a registered person, including the Input Services Distributor, on the basis of any of the following documents, namely:

(b) an invoice issued by the supplier of goods or services or both in accordance with the provisions of section 31.

(b) a debit note issued by a supplier in accordance with the provisions of section 34.

(c) a bill of entry.

(d) an invoice issued in accordance with the provisions of clause (f) of sub-section (3) of section 31.

(e) a document issued by an Input Services Distributor in accordance with the provisions of sub-rule (1) of rule invoice. 5

(f) a document issued by an Input Service Distributor, as prescribed in clause (g) of sub-rule (1) of rule (4)

(2)  No input tax credit shall be availed by a registered person unless all the applicable particulars as prescribed in Chapter ----- (Invoice Rules) are contained in the said document, and the relevant information, as contained in the said document, is furnished in FORM GST -2 by such person. 

(3) No input tax credit shall be availed by a registered person in respect of any tax that has been paid in pursuance of any order where any demand has been raised on account of any fraud, willful misstatement of suppression of facts. 

(2a) Reversal of input tax credit in case of non-payment of consideration

(a) A registered person, who has availed of input tax credit on any inward supply of goods or services or both, but fail to pay to the supplier thereof the value of such supply along with the tax payable thereon within the time limit specified in the second provision to sub-section (2) of section 16, shall furnish the details of such supply and the amount of input tax credit availed of in FORM GST-2 for the month immediately following the period of one hundred and eighty days from the date of issue of invoice

(2b) The amount of impute tax credit referred to in sub-rule (I) shall be added to the output tax liability of the registered person for the month in which the details are furnished.

(2c) The registered person shall be liable to pay interest at the rate notified under sub-section (1) of section 50 for the period starting from the date of availing credit on such supplies till the date when the amount a added to liability, as mentioned in sub- rule (2), is paid.

(2d) Manner of claiming of credit in special circumstances

(a) Input tax credit claimed in accordance with the provisions of sub-section (1) of section 18 on the inputs lying in stock or inputs contained in semi-finished or finished goods lying in stock, or the credit claimed on capital goods in accordance with the provisions of clauses (c) and (d) of the said sub-section, shall be subject to the following conditions - 

(a1) The input tax credit on capital goods, in terms of clauses (c) and (d) of sub-section (1) of section 18, shall be claimed after reducing the tax paid on such capital goods by five percentage points per quarter of a year or part thereof from the date of invoice or such other documents on which the capital goods were received by the taxable person.

(a2) The registered person shall within thirty days from the date of his becoming eligible to avail of input tax credit under sub-section (1) of section 18 shall make a declaration, electronically, on the common portal in FORM GST ITC ---- to the effect that he is eligible to avail of input tax credit as aforesaid.

(a3) The declaration in FORM GST ITC ---- under clause (b) shall clearly specify the details relating to the inputs lying in stock or inputs contained in semi-finished or finished goods lying in stock, or as the case may be, capital goods-

(I) On the day immediately preceding the date from which he becomes liable to pay tax under the provisions of this Act, in the case of a claim under clause (a) of sub-section (1) of Section 18,

(II) On the day immediately preceding the date of grant of registration, in the case of a claim under clause (b) of sub-section (I) of Section 18,

(III) On the day immediately preceding the date from which he becomes liable to pay tax under section 10, in the case of a claim under clause (c) of sub-section 1 of Section 18,

 (IV) On the day immediately preceding the date from which supplies made by the registered person becomes taxable, in the case of a claim under clause (d) of sub-section (1) of Section 18

(a4) The details furnished in the declaration under clause (c) shall be duly certified by a practicing-chartered account or cost accountant if the aggregate value of claim on account of central tax, State tax and integrated tax exceeds two lakh rupees.

(a5) The input tax credit claimed in accordance with clauses (c) and (d) of sub-section (1) of section 18 shall be verified with the corresponding details furnished by the corresponding supplier in FORM GSTR -1 or as the case may be, in FORM GSTR-4 on the Common portal

Claim of credit by a banking company or a financial institution

(1) A banking company or a financial institution, including a non- banking financial company engaged in supply of services by way of accepting deposits or extending loan or advances that chooses not to comply with the provisions of sub-section (2) of section 17, in accordance with the option permitted under sub-section (4) of section 17, shall follow the procedure specified below-

(a) the said company or institution shall not avail the credit of tax paid on inputs and input services that are used for non-business purposes and the credit attributable to supplies specified in sub- section (5) of section 17, in FORM GSTR - 2.

(b) fifty percent of the remaining input tax shall be the input tax credit admissible to the company or the institution and shall be furnished in FORM GSTR -2;

(c) the amount referred to in clause (b) shall be credited to the electronic credit ledger of the said person.

Procedure for distribution of input tax credit by Input Service Distributor

(1) An Input Service Distributor shall distributors input tax credit in the manner and subject to the conditions specified below-

(a) the input tax credit available for distribution in a month shall be distributed in the same month and the details thereof shall be furnished in FORM GSTR -6 in accordance with the provisions of Chapter ------ (Return Rules).

(b) the Input Services Distributor shall, in accordance with the provisions of clause (d), separately distribute the amount in- eligible as input tax credit under the provisions of sub-section (5) of section 17 and the amount eligible as input tax credit,

(c)  the input tax credit on account of central tax, State tax, Union territory tax and integrated tax shall be distributed separately in accordance with the provisions of clause (d);

(d) the input tax credit that is required to be distributed in accordance with the provisions of clause (d) and (e) of sub-section (2) of section 20 shall be distributed on pro-rata basis to one of the recipients 'R1', whether registered or not, from amongst the total of all the recipients to whom input tax credit is attributable, including the recipient (s) who are engaged in making exempt, supply, or are otherwise not registered for any reason, shall be the amount, "C1" to be calculated by applying the following formula:-

                                                           C1= (t1\T) * C

where

"C" is the amount of credit to be distributed

"t1" is the turnover of person R1 during the relevant period, and

"T" is the aggregate of the turnover of all recipients during the relevant period.

(e) the input tax credit on account of integrated tax shall be distributed as input tax credit of integrated tax to every recipient.

(f) the input tax credit on account of central tax and State tax shall,

----- in respect of a recipient located in the same State in which the Input Service Distributor is located, be distributed as input tax credit of central tax and State tax respectively.

------- in respect of a recipient located in a State other than that of the Input Service Distributor, be distributed as integrated tax and the amount to be so distributed shall be equal to the aggregate of the amount of input tax credit of Central tax and state tax that qualifies for distribution to such recipient in accordance with clause (d). 

----- The input Service Distributor shall issue an ISD invoice as prescribed in sub-rule (1) of rule invoice - 5 clearly indicating in such invoice that it is issued only for distribution of input tax credit.

------- Any additional amount of input tax credit on account of issuance of a debit note to an Input Service Distributor by the supplier shall be distributed in the manner and subject to the conditions specified in the clauses (a) to (f) and the amount attributed to any recipient shall be calculated in the manner provided  in clause (d) above and such credit shall  be distributed in the month in which the debit note has been included in the return in  FORM GSTR -6

Manner of determination of input tax credit in respect of capital goods 

(1) Subject to the provision of sub-section (3) of section 16, the input tax credit in respect of capital goods, which attract the provisions of sub-section (1) and (2) of section 17, being partly used for the purposes of business and partly for other purposes, or partly used for effecting taxable supplies including zero rated supplies and partly for effecting exempt supplies, shall be attributed to the purposes of business or for effecting taxable supplies in the following manner, namely.-

(a) the amount of input tax in respect of capital goods used or intended to be used exclusively for non-business purposes or used or intended to be used exclusively for effecting exempt supplies shall be indicated in FORM GSTR -2 and shall not be credited to his electronic credit ledger.

(b) the amount of input tax in respect of capital goods used or intended to be used exclusively for effecting taxable supplies including zero-rated supplies shall be indicated in FORM GSTR -2 and shall be credited to the electronic credit ledger,

(c) the amount of input tax in respect of capital goods not covered under clauses (a) and (b), denoted as 'A' shall be credited to the electronic credit ledger and the useful life of such goods shall be taken as five years.

Provided that where any capital goods earlier covered under Claus (a) is subsequently covered under this clause, the value of 'A' shall be arrived at by reducing the input tax at the rate of five percentage points for every quarter or part thereof and the amount 'A' shall be credited to the electronic credit ledger.

(d) the aggregate of the amounts of 'A' credited to the electronic credit ledger under clause (c), to be denoted as 'Tc' shall be the common credit in respect of capital goods for a tax period:

Provided that where any capital goods earlier covered under clause (b) is subsequently covered under this clause, the value of 'A' arrived at by reducing the input tax at the rate of five percentage points for every quarter or part Theroff shall be added to the aggregate value 'Tc',

(e) the amount of input tax credit, at the beginning of a tax period, on all common capital goods whose residual life remains during the tax period, be denoted as 'Tm', and calculated as: - 

                                                        Tm=Tc/60

(f) the amount of input tax credit, at the beginning of a tax period, on all common capital goods whose residual life remains during the tax period, be denoted as 'T', and shall be the aggregate of 'Tm' for all such capital goods.

(g) the amount of common credit attributable towards exempted supplies, be denoted as 'Tc', and calculated as:

                                                    Tc=(E/F) x Tr

where,

'E' is the aggregate value of exempt supplies, that is, all supplies other than taxable and zero-rated supplies, during the tax period, and

'F' is the total turnover of the registered person during the tax period:

Provided that where the registered arson does not have any turnover during the said tax period or the aforesaid information is not available, the value of 'E/F' calculated by taking values of 'E' and 'F' of the last tax period for which details of such turnover are available, previous to the month during which the said value of 'E/F' is to be calculated:

Explanation: For the purposes of this clause, the aggregate value of exempt supplies and total turnover shall exclude the amount of any duty or tax levied under entry 84 of List of the seventh Schedule to the Constitution and entry 51 and 54 of List II of the said Schedule.

The amount Te along with applicable interest shall, during every tax period of the residual life of the concerned capital goods, be added to the output tax liability of the person making such claim of credit.

(2)  The amount Te shall be computed separately for cental tax, state tax, Union territory tax and integrated tax.

Manner of reversal of credit under special circumstances

(1) The amount of input tax credit, relating to inputs ling in stock, inputs contained in semi-finished and finished goods lying in stock, and capital goods 9ing in stock, for the purposes of sub- section (4) of section 18 or sub-section (5) of 29, shall be determined in the following manner namely, -

(a) For inputs lying in stock, and inputs contained in semi-finished and finished goods lying in stock, the input tax credit shall be calculated proportionately on the basis of corresponding invoices on which credit had been availed by the registered taxable person on such input.

(b) For capital goods lying in stock the input tax credit involved in the remaining residual life in mints shall be computed on pro-rata basis, taking the residual life as five years.

Illustration

Capital goods have been in use for 4-year, 6 month and 15 days. The residual remaining life in months = 5 months ignoring a part of the month Input tax credit taken on such capital goods=C. Input tax credit attributable to remaining residual life = c multiplied by 5/60

The amount, as prescribe in sub- rule (I) shall be determined separately for input tax credit of IGST and CGST.

Where the tax invoices related to the inputs lying in stock are not available, the registered person shall estimate the amount under sub- rule(I) based on the prevailing market price of goods on the effective date of occurrence of any of the events specified in sub section (4) of section 18 or as the case may be, sub-section (5) of section 29

The amount determined under sub-rule (I) shall form part of the output tax liability of the registered person and the details of the amount shall be furnished in FORM GST ITC -where such amount relates to any event specified in sub-section (4) of section 18 and in FORM GSTR -10, where such amount relates to cancellation of registration.

10: Conditions and restriction in respect of inputs and capital goods sent to the job worker

(a) The inputs or capital goods shall be sent to the job worker under the cover of a challan issued by the principal, including where the inputs or capital goods are sent directly to job worker.

(b) The challan issued by the principal to the job worker shall contain the details specified in rule----- Invoice. 8 Rules:

(c) The details of challans in respect of goods dispatched to a job worker or received from a job worker during a tax period shall be included in FORM GSTR -1 furnished for that period.

GST on Property

 GST on Real Estate 

When it comes to meeting tax obligations, homebuyers along with property taxes, also have to pay the applicable GST on their property purchase. Over the last few years, several changes have been made to the GST regime directed towards the real estate sector.

Potential investors and homebuyers must scrutinize the implications of GST on real estate to make an informed decision when it comes to investing in this sector.

What is GST on Property in India

GST on property in India refers to the Goods and Services Tax (GST) applied to real estate transactions. Which was introduced by the Indian government in 2017 to harmonies global Taxation frameworks. Before GST on flat purchase, multiple taxes like value-added tax (VAT) services Tax. and central excise were levied on property purchase, making the process complex and less transparent.

Impact of GST on Rent: GST on House Rent and Commercial Property Rent

Are you wondering if you must charge and collect Goods and Services Tax (GST) on the rent received by you? the treatment of GST differs between residential and commercial renting. On the other hand, if you run a business, then rent payment is one of those prominent expenses and you may want to know your eligibility for claiming Input Tax Credit (ITC) on GST paid on the rental expense. Let's understand all these in detail.

GST Taxation on Real Estate:

Particulars

 Ready to Move Properties 

 Under construction properties (house bought under credit linked subsidy scheme)

Under construction properties (excluding the other)

Resale properties

Land purchase and sale

Works contract

Composite Supply of works

Composit supply of works to Govt Authority

Composit supply of use for the general public

Composit supply of works contract for affordable housing

Tax on Rental Inco me in the pre-GST era

During the per-GST era, the landlord had to obtain a service tax registration if their

total taxable services (including the rental income from all properties) exceed Rs 10 lakh per year. As long as the rental income (from all the properties that have been rented out) does not exceed Rs. 10 lakh per year, the landlord would not be attracted to service tax

Under the previous tax regime, commercial properties alone, that were let out would attract service tax. This applies even if a residential property is used for commercial purposes. Service tax was levied at 15% of the rent, for commercial properties. Moreover, the rental income from residential properties did not attract service tax.

GST on New Flats

The GST on new flats is set at 5% directly influencing the ultimate purchase cost. Developers are eligible to receive the input tax credit (ITC) advantage for the supplies and Labour used in constructing the apartment. However, developers don't need to pass this ITC benefit on to the byer. Therefore, the final cost of a new apartment may vary depending on whether or not the developer chooses to transfer the ITC benefit to the buyer. This can affect the overall expense and should be considered when budgeting for a new flat.

GST Calculation on Real Estate

By factoring in the cost of property and the applicable GST rate and other charges, one can easily estimate the GST on property. To break it down, GST liability is computed by adding the State GST and Central GST.

For instance,

Total GST = SGCT + CGST

Notably, this GST regime extends an abatement of 33% of the contract amount as land value.

Example of GST Calculation

This simple example emphasizes how GST is computed on under-construction property.

Suppose an under-construction property is worth Rs. 1000 and is sold to a buyer. The GST on the property in question is computed after factoring in the standard abatement on under-construction property.

So, after deducing the 33% Rs. will be considered as the land value. Subsequently. GST on the property will be computed on the remaining Rs. 770 by implementing the applicable.

Does renting out a property attract GST

According to the GST Act, renting out an immovable property would be treated as a supply of services. GST, however, will be applicable only to certain types of rent such as:

(a) Ehen a property is given out on lease, rent, easement, or licensed to occupy

(b) When any property is leased out (or let out including a commercial industrial, or residential property for business (either or wholly) this type of renting is considered a supply of services and would thus attract tax. When you rent out a residential property for residential purposes, it is exempt from GST. Any other type of lease of renting out of the immovable property for doing business would attract GST at 18%, as it would be treated as a supply of service.

GST Exemptions on Real Estate

Under schedule III of GST Act, 2017, ready-to-move-in properties do not come under the category of goods or services. It is more like an activity of purchase or sale of a property. This is why GST is not applied to ready-to-move Propeties with a legitimate Completion Certificate.

Similarly, individuals will not be required to pay GST on resale properties and purchase and sale of land.

Other than the said exemption, real estate developers are entire to claim the Input Tax Credit on construction material under the GST system. Notably, to claim such benefits, developers need to meet a few specific conditions. for example, to proceed with the claim developers need to 

(a) submit invoices/receipts of construction material

(b) The developer must receive goods and services

(c) Claims on personal use of goods and services will not be entertained

(d) All pending dues must be cleared

(e) GST must be filed accurately

Who is required to register when the property is rented out to business?

A taxpayer earning more than the exempted threshold will have to register under GST and pay taxes So, if you have given your property to a business, then it is taxable. If you are earning income from business including rent and any other exempted income of more than Rs. 20 lakh per annum. You will have to register yourself under GST.

The threshold limit for applicability of GST for those providing only services is Rs. 20 lakhs, more than the Service Tax limit of Rs. 10 lakhs. this makes many landlords - who were covered under the Services Tax regime be at ease now up to another Ts. 10 lakhs earned.

(Please note that the threshold limit of Rs. 20 lakh excludes special category states, where the limit remains at Rs. 10 lakhs.)

Let us look at an example - Mohan resides in Delhi and has a property in Bangalore that is rented out to Goel Furniture Co. for use as a show room for the Bangalore Property. he is getting a rental income of Rs 50000 monthly or Rs. 6,00,000 per annum alone. under GST, the place of supply shall be the location of the immovable property.

Therefore, even though the person resides in Delhi, the place of supply will always be where the property is situated, which is Bangalore in this example. Here, the total income is below Rs. 20 lakh a year, thus Mohan is excluded from GST applicability

It needs to be noted that, though this property is used for residential purposes, it cannot be said that the rent that is received is that from the residential property as this property is given to a company for their use. How they use the said property is not the deciding factor.

No GST on residential property rented in personal capacity for use as a residence

In the 48th GST Council meeting, the Council clarified that no. GST is payable where a residential dwelling is rented to a registered person if the same is rented it in their personal capacity and for use as their own residence

This means that where a registered person is proprietor of a proprietorship firm, and they have rented out a residential property in their personal/own capacity (and not that of the proprietorship) and the property is for use as their own residence then no GST will be applicable

GST

 

 Role and functions of the GST Council

(1) As per Article 279A (4) of the Constitution of India, the GST Council shall make recommendations to the Union and the states on- 

(I) the taxes, cesses and surcharges levied by the Centre, the State and the local bodies which may be subsumed under GST.

(ii) The goods and services that may be subjected to or exempted from the GST.

(iii) the date on which the GST shall be levied on petroleum crude, high speed diesel, motor sprit (commonly known as petrol), natural gas and aviation turbine fuel.

(iv) mode GST laws, principles of levy, apportionment of IGST and the principles that govern the place of supply.

(v) the threshold limit of turnover below which the goods and services may be exempted from GST.

(vi) the rate including floor rates with bands of GST;

(vii) any special rate or rates for a specified period to raise additional resources during any natural calamity or disaster.

(viii) special provision with respect to the Northeast States, J&K, Himachal Pradesh and Uttarakhand; and 

(ix) any other matter relating to the GST, as the Council may decide.

(2) The GST Council shall establish a mechanism to adjudicate any dispute--

(a) between the Government of India and one or more states; or

(b) between the Government of India and any state or states on one side and one or more other states on the other side; or

(c) between two or more states, arising out of the recommendations of the Council or implementation thereof.

Observations---

As per Art. 279A of the Constitution of India, the GST Council shall make recommendations to the Union and the State. It means that the Union Government and the State Government will have option either to accept or reject any or all the recommendation. The recommendations made by the GST Council will act merely as guidance to the Union as well as to State Government. The Parliament as well as the State Legislatures will be free to exercise their powers since the GST would be levied through separate Central and State Legislations.

Therefore, the decisions of the GST Council should have been binding upon the governments to avoid any contingencies in future.

                                                        Thanks

Customs under GST

 Indian Customs gears up for GST roll-out

(1) Introduction:

The purpose of this guidance note is to bring clarity about the impact of GST, which would come into force with effect from 01.07.2017, for importers and exporters.

On the imports side there would be no impact on levy of Basic Customs duty, Education Cess, Anti-dumping duty, Safeguard duty and the lie. However, the Additional duties of Customs, which are in common parlance referred to as Countervailing Duty (CVD) and Special Additional duty of Customs (SAD), would be replaced with the levy of Intergrated Goods and Services Tax (IGST), barring a few exceptions, On the exports side, export would be treated as zero-rated supply. Under zero supply IGST paid on export goods, or the input tax credit proportionate to the goods and services consumed in goods exported under bond / LUT would be refunded.

A brief summary of the changes that would impact importers and exporters upon roll out of GST are encapsulated below.

IMPORTS UNDER GST

(II) Duties at the time of import.  In the GST regime, IGST Compensation cess will be levied on imports by virtue of sub-sections (7) & (9) of Section 3 of the Customs Tariff Act, 1975. Barring a few commodities such as pan masala, certain petroleum products which attract levy of CVD, majority of imports would attract levy of IGST. Further, a few products such as aerated waters, tobacco products, motor vehicles etc.; would also attract levy of GST Compensation Cess, over and above IGST, IGST AND GST Compensation cess, wherever applicable, would be levied on cargo that would arrive on or after 1st July 2017. It may also be noted that IGST would also be levied on cargo which has arrived prior to 1st July but a bill of entry is filed on or after 1st July 2017. Similarly ex-bond bill of entry filed on or after 1st July 2017 would attract IGST and GST Compensation cess, as applicable. In the case where cargo arrival is after 1st July and an advance bill of entry was filed before 1st July along with the payment of duty, the bill of entry may be recalled and reassessed by the proper officer for levy of IGST and GST compensation Cess, as applicable

(III) Duty Calculation:  IGST rate: IGST rate have been notified through notification 01/2017 - Integrated Tax (Rate), dated 28-06-2017. IGST rate on any product can be ascertained by selecting the correct SL No. as per description of goods and tariff headings in the relevant schedules of the notification. Importers are advised to familiarize themselves with IGST and GST Compensation cess rates, schedule and exemptions which are available on CBEC website. The Customs duty calculator would be made available on CBEC and ICEGATE website. There are seven rates prescribed for IGST - Nil,0.25%, 3%, 5%, 12%,18% and 28%. The actual rate applicable to an item would depend on its classification and would be specified in Schedules notified under section 5 of the IGST Act, 2017. The rates applicable to goods of Chapter 98 are as under:

(#) 9801 - Project Imports - 18%

(#) 9802 - Laboratory chemicals - 18%

(#) 9803 - Passenger baggage - Nuk /Rate

(#) 9804 - Specified Drugs and medicines for personal use -5%

(#) 9804 - Other drugs and medicines for personal use - 12%

(#) 9804 - All other dutiable goods for personal use -28%

Likewise different rates of tax have been notified for goods attracting Compensation Cess which is leviable on 55 item descriptions (of supply). These rates are mostly ad valorem. But some also attract either specific rates (e.g. coal) or mixed rates (ad valorem + specific) as for cigarettes, The coverage of the goods under GST compensation cess is available on CBEC website along with their HSN codes and applicable cess rates. The IGST Rates of Goods, Chapter wise IGST rate, GST Compensation Cess rates, IGST Exemption/Concession are available on CBEC website for trade and departmental officer as well.

VALUATIN AND METHOD OF CALCULATION: IGST is leviable on the value of imported goods and for calculating integrated tax on any imported article, the value of such imported goods would be the aggregate of -  

(i) the value of imported article determined under sub- section (1) of section 14 of the Customs Act, 1962 or the tariff value fixed under sub-section (2) of the that section and

(ii) any duty of Customs chargeable on that article under section 12 of the Customs Act, 1962 and any sum chargeable on that article under any law for the time being in force as an addition to, or as duty of Customs but does not include to the tax referred in the sub-section 7 (IGST) and sub-section 9 (Compensation Ccess)

The value of the imported article for the purpose of levying GST Compensation cess shall be, assessable value plus Basic customs Duty levied under the Act, and any sum chargeable on the goods under any law for the time being in force, as an addition to, and in the same manner as, a duty of customs. These would include education cess or higher education cess as well as anti-dumping and safeguard duties. The inclusion of anti-dumping duties and safeguard duty in the value for levy of IGST and Compensation Cess is an important change. These were not hitherto included in the value for the levy of additional duty of customs (CVD) or Special additional Duty (SAD). The IGST paid shall not be added to the value for the purpose of calculating Compensation Cess.

Although BCD, Education Cesses and IGST would be applicable in majority of cases, however, for some products CVD, SAD OR IGSI Compensation cess may also be applicable. For different scenarios the duty calculation process has been illustrated in Annexure -1 of this document.

(IV) Changes in import procedures:

Importer Exporter Code (IEC): In GST regime, GSTIN would be use for credit flow of IGST paid on import of goods. Therefore. GSTIN would be the key identifier. GSTN is not applicable, UN or PAN would be accepted as IEC. It is advised that all importers need to quote GSTIN in their Bills of Entry in addition in IEC. In due course of time IEC would be replaced by PAN/ GSTIN.

Bill of Entry Regulations and Format: To capture additional details in the Bill of entry such as GSTIN, IGST rate and amount, GST Compensation Cess and amount, the electronic as well as manual formats of Bill of entry including Courier Bill of entry are being amended. For the benefit of the trade, modified Forms have been hosted on the departmental website, www.cbec.gov.in. Further, suitable notifications shall be issued to amend the relevant regulations and introduce modified Forms. 

(V) Import under Export Promotion Schemes and duty payment through EXM scrips:

Under the GST regime, Customs duties will be exempted on imports made under export promotion schemes namely EPCG, DEEC (Advance License) and DFIA, IGST and COMPENSATION cess will have to be paid on such imports.

The EXIM scrips under the export incentive schemes of chapter 3 of FTP (for example MEIS and SEIS) can be utilized only for payment of Customs duties or additional duties of Customs, on items not covered by GST at the time of import. The scrips cannot be utilized for payment of integrated Tax and compensation Cess. Similarly, scrips cannot be used for payment of CGST, SGST or IGST for domestic procurements.

(VI) Baggage: Full exemption from IGST has been provided on passenger baggage. However, basic customs duty shall be leviable at the rate of 35% and education cess as applicable on the value which is in excess of the duty free allow acnes provided under the Baggage Rules, 2016

(VII) EOUs and SEZ.: EOUs/ EHTPs/STPs will be allowed to import goods without payment of basic customs duty (BCD) as well additional duties leviable under Section 3 (1) and 3(5) of the customs Tariff Act. GST would be leviable on the import of input goods or services, or both used in the manufacture by EOUs which can be taken as input tax credit (ITC). This ITC can be utilized for payment of GST taxes payable on the goods cleared in the DTA or refund of unutilized ITC can be claimed under Section 54 (3) of CGST Act. In the GST regime, clearance of goods in DTA will attract GST besides payment of amount equal to BCD exemption availed on inputs used in such finished goods. DTA clearances of goods, which are not under GST, would attract Central Excise duties as before

(VIII) Refunds of SAD paid on imports: 

The need for SAD refunds arose mainly on account of the fact that traders or dealers of imported goods were unable to take credit of this duty (which was a Central Tax) while discharging their VAT or Sales tax liability (which was State levy) on subsequent sale of the goods. Unless corrected through a mechanism such as refund (of one of the taxes) this would have resulted in "double" payment of tax. with the introduction of GST on 01.07.2017, credit of "eligible duties " in respect of input held in stock and inputs contained in semi-finished or finished goods held in stock, is permissible to registered persons not liable to be registered under the existing law (for instance, VAT dealers) under transitional provision (Section 140(3) of the CGST Act). Further, eligible duties as defined in sub-section (10) include SAD. In other words, dealers / traders can take ITC of SAD paid on goods imported prior to 1st July 2017. Sub-section (5) of section 140 also allows a registered person to take credit of eligible duties in respect of inputs received on or after 1st July 2017 but the duty on which has been paid under the existing law. These provisions taken together ensure that SAD paid by dealers/ traders can be set-off against their GST liability as and when imported goods are supplied by them in the domestic market. However, certain items which are out of the GST net would be eligible for SAD refunds as earlier.

(XI) Imports and Input Tax Credit (ITC) In GST regime, input tax credit of the integrated tax (IGST) and GST Compensation Cess shall be available to the importer and later to the recipients in the supply chain, however the credit of basic customs duty (BCD) would not be available. In order to avail ITC of IGST and GST Compensation Cess, an importer has to mandatorily declare GST Registration number (GSTIN) in the Bill of Entry. Provisional IDs issued by GSTN can be declared during the transition period. However, importers are advised to complete their registration process for GSTIN as ITC of IGST would be available based on GSTIN declared in the Bill of Entry. Input tax credit shall be availed by a registered person only it all the applicable particulars as prescribed in the Invoice Rules are contained in the said document, and the relevant information, as contained in the said document, is furnished in FORM GSTR -2 by such person.

Customs EDI system would be interconnected with GSTN for validation of ITC. Furter. Bill of Entry data in non- EDI locations would be digitized and used for validation of input tax credit provided by GSTIN.

                                               

GST Provision In India

 GST Provision in India 

GST stands for Goods and Services Tax, GST law is an indirect tax which has come into force on July 1, 2017, across India. GST has replaced many indirect taxes in one law i.e. GST Law in India is comprehensive, multi-stage, destination-based tax.

Though, GST is a tax levied in India. However, there are various transactions, when it may be applicable on Non-Residents also (including NRIs, OCLs, foreign citizens). Hereunder are certain relevant terms and provisions in relation to Non-Resident:

Non-Resident Taxable Person (NRTP)

Under GST Law ' non-resident taxable person' is defined as any person who occasionally undertakes transactions involving the supply of goods or services, or both, whether as principal or agent or in any other capacity, but who has no fixed place of business or residence in India.

Registration Requirement of NRTP

Section 24 of the GST law specifies a mandatory requirement for registration for a non-resident taxable person without any threshold limit of Rs 20 lakh/10 lakh is not available to Non-Resident Taxable person. Hence, any Non-resident, who is falling in the definition of Non-Resident Taxable person, is required to obtain GST Registration irrespective of whether the business is involved in a one-time. transaction or frequent taxable transactions.

Registration Procedure for a Non-Resident Taxable person

(a) Every person, who falls within the definition of Non-Resident Taxable person, has to apply for GST registration at least 5 days prior to the commencement of business.

(b) For GST registration, NRTP shall have to provide its Tax ID or Unique number of its own country.

(c) Application for registration need not be like normal applicants. Application can be submitted in simplified form ie REG-09

(d) NRTP need not to have a PAN of India and it can use its valid passport instead.

(e) Further in the case of a high sea sale as per the GST Law provisions every person who supplies from the territorial waters of India shall have to obtain registration in the coastal state or Union territory nearest to appropriate baseline.

(f) Egg if any high -sea sale occurs near the shore of Haldia, the GST registration shall be taken in the state of West Bengal.

(g) In relation to NRTP GST registration initially a temporary reference number gets generated electronically by the common portal. The purpose of the temporary number is to advance deposit of tax in his electronic cash ledger and an acknowledgment will be issued thereafter.

GST Advance Tax payment by Non-Resident Taxable Person

(a) GST Provision provide that non-resident taxable person is required to make and advance deposit of GST. This advance payment of tax shall be of an amount equivalent to the estimated tax liability of such person for the period for which registration is being sought.

(b) At the end of GST registration period on submission of final returns, any tax, which is excess paid, shall be refunded to the NRTP.

(c) GST registration period, which is initially applied by the NRTP, can be extended by the non-resident taxable person. For the same, an application using the form GST REG -11 should be furnished electronically on GST Common portal.

Above information can be helpful on doubts of NRIs, Expatriates and other Non-Residents in relation to GST Provisions in India such as:

(a) What are the GST provisions in relation to NRIs, OCLs, Foreign companies, Foreign Citizen?

(b) Whether GST is applicable on Non-Residents also such as NRIs, OCLs, Foreign Companies?

(c) I am working with world organization based outside India. Ido services to that organization on consultant basis. Whether GST is applicable on same and what are the provisions?

OTHER TRANSACTIONS

Other than NRTP, GST provisions are also applicable on various other transactions incurred by Non-Residents, such as:

(a) Renting of Immovable Property in India eg if an NRI is holding an immovable property in India and the same is being used for commercial/ business purposes then GST provisions shall be applicable on that transaction. 

(b) Consulting services provided by Non-residents to Indian residents. On such transactions under the import rules, GST may be applicable as per the transactions.

(c) Also, on fact-to-fact basis, GST provisions may be applicable on various other transactions, where NRIs, OCLs, PIOs, Expatriates, Foreign Companies, Other Non-residents are involved.

GST Registration for Foreigners

Following the implementation of the GST framework, the Government of India mandated that all foreign non-resident taxpayers obtain GST registration when supplying goods or services to residents within the country. If you are planning to supply goods or services to India, securing a GST registration is not just a compliance measure but a key step in establishing your business presence is one of the world's most vibrant markets.

Recognizing the Importance of this registration. India filings offer specialized services to facilitate the GST registration process for foreigners. With expert guidance and streamlined procedures, we simplify the complexities of tax compliance, making it easier for international businesses to thrive in India.

Contact our expert team today to easily get your GST registration. we'll guide you smoothly through each step for a worry- free process.

Non- Resident Taxable Person

A "Non-Resident Taxable Person" under the Goods and Services Tax (GST) framework in India refers to any individual or business entity that conducts transactions involving the supply of goods or services, or both, within India but does not have a fixed place of business or residence in the country. This includes entities operating in India occasionally, in any capacity such as principal, agent, or any other manner, but with their base of operations or residence outside of India. The GST law mandates that this non-resident volume or frequency of their transactions in India. 

GST Registration for Foreigners 

GST Registration in India is a compulsory process for foreign individuals or entities that supply goods or services in India without a permanent establishment or residence in the country. This registration category is specifically designed for those who may not regularly operate in India but engage in economic activities or transactions under the GST regime.

The process involves obtaining a unique GSTIN (Goods and services Tax identification Number), Which allows these non-resident businesses to comply with GST laws, including filling GST Tax returns and paying applicable taxes on their transactions within India.

GST Registration Requirements for Non-resident Taxable Persons

For nonresident taxable persons engaging in taxable transactions within India, the GST registration requirements are as follows:

(a) Documentation for Business entities: Business entries based outside India must include their tax identification number (TIN) or a unique identification number recognized by their home country's government in their GST registration application. Alternatively, if available, they can provide their Indian Permanent Account Number (PAN)

(b) Mandatory Registration: Regardless of transaction volume, registration under GST is compulsory for non-resident taxable parsons. There's no minimum threshold for registration.

(c) Ineligibility for Composition Levy: Non-resident taxable persons are not eligible to opt for the composition levy scheme under GSt, which allows for a simplified tax payment process and compliance for small taxpayers.

(d) Advance Registration Requirement: Registration for GST must be completed at least five days before beginning business operations in India.

(e) Passport Required for Registration: A valid passport is required for GST registration and serves as the primary documentary evidence.

Validity of NRI GST Registration 

The NRI GST registration is valid for the period specified in the App application or ninety days from the effective date of registration, whichever is earlier.

Procedure for GST Registration for NRIs

The GST registration has two main phases: Provisional Registration and final Registration. each phase entails specific steps to ensure compliance with the GST regulations in India 

Provisional GST registration for NRI

Provisional registration under GST for non-resident taxable persons is a temporary GST registration granted before obtaining the final GST registration. This provisional status allows non-resident individuals or business entities to start their business activities in India in compliance with the GST laws without having to wait for the completion of the full registration process.

Final GST registration

Final registration under GST for non-resident taxable persons solidifies their tax obligations and compliance status within India, transitioning from a provisional to a permanent GST registration. This process ensures that non-residents engaging in taxable transactions within India are fully integrated into the GST system.

Application for Final Registration: To convert the provisional registration into a final one, the NRI must submit an application electronically using FORM GST REG-26. This step is similar to the procedure followed by resident taxpayers.

Information Furnishing: Required information must be furnished within three months of applying for final registration. This is critical for validating the provisional registration.

Discrepancies and Show-Cause Notice: In cases where the information provided is found to be incorrect or incomplete, a show-cause notice using FORM GST REG-27 may be issued. The applicant will then be given a reasonable opportunity to be neared.

Conversely, if the applicant's response satisfactorily addresses the concerns, the show-cause notice can be nullified with an order issued via FORM GST REG-20, leading to final registration.

Authorized Signatory: All applications made by NRIs must be signed by an authorized signatory who is a resident of India and possesses a valid PAN. This individual acts on behalf of the NRI for GST compliance purposes.

India Filings experts can guide you through obtaining GST registration for NRIs.

Suppose the NRI wishes to extend the registration beyond the initially approved period (up to ninety days or the period specified in the application). In that case, they must file an extension application using Form GST REG-11 before the current registration expires.

(a) This extension also requires an additional advance tax deposit for the extended period.

(b) This detailed procedure ensures that NRIs are well-informed and prepared to meet all regulatory requirements for conducting taxable transactions in India under the GST regime.

Input Tax Credit

A non-resident taxable person is not eligible to claim input tax credit for any goods or services, except for those directly imported foods. However, the taxes paid by a non-resident taxable person can be utilized as a credit by the respective recipients.

GST Returns Filings for Foreigners

A non-resident taxable person must electronically submit a GST return using FORM GSTR-5. This return, which includes outward and inward supply details, must be filed. Any due tax, interest, penalty, fees, or other charges under the Act of regulations must be paid withing thirteen days following the end of a calendar month or seven days after the registration validity period expires, whichever comes first.

Refund of Advance Tax

The advance tax paid by a non-resident taxable person will be eligible for a refund only after submitting all necessary returns for the duration their registration certificate was valid. The application for a refund can be made in section 13 of FORM GSTR -5.

                                                                           

GST

 COMPOSITION LEVY

Small taxpayers can opt to pay tax at a flat rate and opt for composition of tax if their annual aggregate turnover is within 75 lakhs. This option is available for certain special category of manufacturers and service providers also. No input tax credit is available for a compounding dealer. Compounding dealer cannot issue a tax invoice but only a bill of supply. Compounding dealers are not permitted to collect tax

Persons not eligible for Composition

(a) Supplier of services other than Supplier of Restaurant service

(b) Neither a casual Taxable person nor a Non-Resident Taxable person.

(c) An Inter State supplier of Goods

(d) Persons supplying Goods through e-commerce operator

(e) Manufacturers of certain notified goods

Composition Rates

(a) For manufacturers, SGST 1% + CGST 1%

(b) For hotels other than Liquor SGST 2.5% + CGST 2.5%

(c) For others SGST 0.5% + CGST 0.5%

Return of a composition dealer: A composition dealer instead of filing monthly return, has to file return for each quarter in GSTR-4 within 18 days after the end of such quarter. In GSTR -4, invoice wise details of inter-state and intra-state supplies received from registered persons as well as unregistered persons, imports of goods and services, consolidated details of outward supplies, consolidated statement of advances paid/advances adjusted on account of receipt of supplies, debit note, and credit note received and issued have to be reported

Conditions for Composition

(a) With respect to migrated dealers, the Goods in stock should not have been purchased on Inter-State basis/imports/stock Transfer.

(b) The Goods in stock must not have been purchased from Un-registered Dealers, and if purchased tax has to be paid under Reverse charge mechanism.

(c) Composition dealers have to issue Bill of supply instead of invoice

(d) In the bill of supply, such dealer should mention "Composition Taxable person not eligible to collect tax on supplies"

(e) In sign boards at prominent place of business he shall mention the words "Composition Taxable person."

Cancellation of registration:  Failure to file returns for 3 consecutive tax periods will lead to cancellation of registration.

Transitional Provisions: Dealer paying tax in the composition scheme under the earlier law but decided to pay tax under section 9 of the GST law (i.e. Regular dealer), shall be eligible for ITC in GST on the closing stock of goods purchased locally.

INPUT TAX CREDIT

Uninterrupted and seamless chain of input tax credit (hereinafter referred to as,"ITC") is one of the key features of Goods and services Tax. ITC is a mechanism to avoids cascading of taxes. Cascading of taxes, in simple language, is 'tax on tax; Under the present system of taxation, credit of taxes being levied by Central Government is not available as set-off for payment of taxes being levied by Central Government is not available as set- off for payment of taxes levied by State Government, and vice versa.

One of the most important features of the GST system is that the entire supply chain would be subject to GST to be levied by Central and state Government Concurrently. As the tax charged by the Central or the state Governments would be part of the same tax regime, the credit of tax paid at every stage would be available as set- off for payment of tax at every subsequent state.

Under this new system, most of the indirect taxes levied by Central and the State Government on supply of goods or services or both, would be combined together under a single levy.

GST comprises of the following levies:

(a) Central Goods and services Tax (CGST) on intra-state supply of goods or services or both

(b) State Goods and Services Tax (SGST) on intra-state supply of goods or services or both

(c) Integrated goods and services Tax (IGST) on inter-state supply of goods or services or both. In case of import of goods also, the present levy of Countervailing Duty (CVD)and Special Additional duty (SAD) would be available as set- off for payment of tax at every subsequent stage.

Conditions for claiming ITC

(I) Taxpayer should possess tax invoice or debit note or any other tax paying documents issued by supplier registered under the GST Act.

(ii) He should have received the goods or services or both.

(iii) Supplier should have reported the supply in the returns and should have paid tax.

ITC not allowed in the following circumstances

(i) ITC not allowed for a composition dealer.

(ii) ITC not allowed for goods or services received by a nonresident taxable person except on goods imported by him.

(iii) ITC not allowed for goods or services used for personal consumption

(iv) ITC not allowed for Goods lost/stolen/destroyed/returned or disposed of by way of gift/free samples.

Time limit for claiming ITC

ITC for a supply received in a financial year has to be claimed any time before the filing of returns for the month of September (of the following financial year) or the relevant annual return whichever is earlier.

TIME OF SUPPLY OF GOODS 

Under GST, the point of taxation, i.e. the liability to pay CGST/SGST will arise at the time of supply as determined for Goods & Services

The time of supply of Goods shall be the earlier of the following dates, namely: -

(a) The date of issue of invoice by the supplier (or the last date on which he is required to issue the invoice)

or 

(b) The date on which the supplier receives the payment with respect to the supply.

The time of supply of goods where tax is to be paid on reverse charge shall be the earlier of the following dates, namely: -

(i) The date of receipt of goods or (ii) The date of payment or 30 days from the date of issue of invoice by the supplier (If it is not possible to determine under i), ii) or iii), the date of entry of supply in the books of the recipient)

The time of supply of goods in case of vouchers shall be the earlier of the following dates, namely: -

(a) The date of issue of voucher (If the date could not be determined then the date of periodical return filed or the date on which the CGST/SGST is paid

JOB WORK

Job-work means 'any treatment or process undertaken by person on goods belonging to another registered person. The one who does the said job would be termed as 'job worker'. The ownership of the goods does not transfer to the job-worker, but it rests with the principal. The job worker is required to carry out the process specified by the principal on the goods.

Registration of a job worker

Job work is a service. Job worker is required to obtain registration if his aggregate turnover exceeds Rs. 20 lakhs.

Procedural aspects for job work

(a) A registered person under intimation can send/receive inputs or capital goods without payment of tax, provided the input or capital goods are brought back within one year (for input) and three years (for capital goods) of their being sent out.

(b) The principal is allowed to do so. The tax paid on input or capital goods (ITC) can be claimed by the principal provided the inputs or capital goods are received back within one year and three years respectively.

        (Provided the principal had declared the unregistered job worker's premises as his additional place of business or if the job worker is a registered person or if supply of such goods are notified by the commissioner.)

If the inputs or capital goods are not received back or are not supplied from the place of business of the job worker within the prescribed time limit, it would be treated as supply and the principal would be liable to pay tax.