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

* Supplier of services other than supplier of Restaurant service

* Neither a Casual Taxable person nor a non-Resident Taxable person.

* An Inter State supplier of Goods

* Persons supplying Goods through e-commerce operator

* Manufacturers of certain notified goods

Composition Rates

* For manufacturers, SGST 1% + CGST 1%

* For hotels other than Liquor SGST 2.5% + 2.5%

* For other 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 GSTER -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

* With respect to migrated dealer, the Goods in stock should not have been purchased on Inter-state basis/imports/stock Transfer.

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

* Composition dealers have to issue Bill of supply instead of Invoice.

* In the Bill of supply, such dealer should mention" Composition Taxable person not eligible to collect tax on supplies"

* 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.

A dealer availing ITC under the earlier law but decided to become a composition dealer under section 10 of the GST law, shall have to pay an amount equivalent to the credit of input tax.

TIME OF SUPPLY OF GOODS

Under GST, the point of taxation, 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: - 1. The date of issue of invoice by the supplier (or the last date on which he is required to issue the invoice) or 2. 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: -

1. The date of receipt of goods, or 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: -

* The date of issue of voucher; or

* The date of redemption 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

TIME OF SUPPLY OF SERVICES

The time of supply of services shall be the earliest of the following dates, namely: -

1. The date of issue of invoice or 2. The date of receipt of payment.

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

(a) The date of receipt of payment or (b) 60 days immediate from the date of invoice. If it is not possible to determine under (i) or (ii), the date of entry

PLACE OF SUPPLY OF GOODS

PLACE OF SUPPLY OF SERVICES

(The place of supply of services would be the location of recipient)

Service provided to

1. Registered person --B2B

2. Person other than a Registered person-B2C

Place of Supply

1. Location of Recipient

2. The location of the recipient where the address on record exists; and (" address on record" means the address of the recipient as available in the records of the supplier) the location of the supplier of services in other cases,

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 avoid 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 levied by state Governments, 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 stage.

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 to gather under a single levy

GST comprises of the following levies:

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

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

3. 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 replaced by IGST)

Input Tax Credit

 Sec - 16- Eligibility and conditions for taking input tax credit

16.(I) Every registered person shall, subject to such conditions and restrictions as may be prescribed and, in the manner, specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person.

(2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless, -

(a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed.

(b) he has received the goods or services or both. Explanation, - For the purposes of this clause, it shall be deemed that the registered person has received the goods where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise.

(c) Subject to the provision of section 41, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilization of input tax credit admissible in respect of the said supply; and

(d) he has furnished the return under section 39: Provided that where the goods against an invoice are received in lots or instalments, the registered person shall be entitled to take credit upon receipt of the last lot or instalment:

Provided further that where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in such manner as may be prescribed:

Provided also that the recipient shall be entitled to avail of the credit of input tax on payment made by him of the amount towards the value of supply of goods or services or both along with tax payable thereon

(3) Where the registered person has claimed depreciation on the tax component of the cost of capital goods and plant and machinery under the provisions of the Income -tax Act, 1961, the input tax credit on the said tax component shall not be allowed

(4) A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier.

Apportionment of credit and blocked credits

17(I) - Where the goods or services or both are used by the registered person partly for the purpose of any business and partly for other purposes, the amount of credit shall be restricted to so much of the input tax as is attributable to the purposes of his business

(2) Where the goods or services or both are used by the registered person partly for effecting taxable supplies including zero-rated supplies under this Act or under the Integrated Goods and services Tax Act and partly for effecting exempt supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies including zero-rated supplies.

(3) The value of exempt supply under sub-section (2) shall be such as may be prescribed and shall include supplies on which the recipient is liable to pay tax on reverse charge basis, transactions in securities, sale of land and, subject to cluse (b) of paragraph 5 of schedule II, sale of building.

(4) A banking company or a financial institution including a non-banking financial company, engaged in supplying services by way of accepting deposits, extending loans or advances shall have the option to either comply with the provisions or sub-section (2), or avail of, every month, an amount equal to fifty per cent. of the eligible input tax credit on inputs, capital goods and input services in that month and the rest shall lapse:

Provided that the option once exercised shall not be withdrawn during the remaining part of the financial year:

Provided further that the restriction of fifty percent. shall not apply to the tax paid on supplies made by one registered person to another registered person having the same permanent account Number.

(5) Notwithstanding anything contained in sub-section (1) of section 16 and sub-section (!) of section 18, input tax credit shall not be available in respect of the following, namely: -

(a) Motor vehicles and other conveyances except when they are used- (i) for making the following taxable supplies, namely: -

(A) further supply of such vehicles or conveyances; or (B) transpiration of passengers; or

(C) imparting training on driving, flying, navigating such vehicles or conveyances.

(ii) for Transporation of goods.

(b) The following supply of goods or services or both -

(I) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery except where an inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply; - 

(ii) membership of a club, health and fitness center.

(iii) rent-a-cab, life insurance and health insurance except were

(A) The Government notifies the services which are obligatory for an employer to provide to its employees under any law for the time being in force; or  

(B) such inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as part of a taxable composite or mixed supply: and

(iv) travel benefits extended to employees on vacation such as leave or home travel concession.

(c) works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service.

(d) goods or services or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account including when such goods or services or Bothe are used in the course or furtherance of business

Explanation - For the purposes of clause (c) and (d), the expression "construction" includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalization, to the said immovable property:

(e) goods or services or both on which tax has been paid under section 10.

(f) goods or services or both used for personal consumption.

(g) goods or services or both received by a nonresident taxable person except on goods imported by him

(h) goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples; and any tax paid in accordance with the provisions of section 74,129 and 130

(6) The Government may prescribe the manner in which the credit referred to in sub- sections (1) and (2) may be attributed

Explanation. - For the purposes of this Chapter and Chapter VIJ, the expression " plant and machinery" means apparatus, equipment, and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both and includes such foundation and structural supports but excludes-

(i) land, building or any other civil structures:

(ii) telecommunication towers: and

(iii) pipelines laid outside the factory premises.

Sec 18- Availability of credit in special circumstances.

18(I) Subject of such conditions and restrictions as may be prescribed ------------------

(a) a person who has applied for registration under this Act within thirty days from the date on which he becomes liable to registration and has been granted such registration shall be entitled to take credit of input tax in respect of input held in stock and inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date from which he becomes liable to pay tax under the provisions of this Act;

(b) a person who takes registration under sub- section (3) of section 25 shall be entitled to take credit of input tax in respect of input held in stock and inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date of grant of registration.

(c) Where any registered person ceases to pay tax under section 10, he shall be entitled to take credit or input tax in respect of inputs held in stock, inputs contained in semi-finished or finished goods held in stock and on capital goods on the day immediately preceding the date from which he becomes liable to pay tax under section -9

Provided that the credit on capital goods shall be reduced by such percentage points as may be prescribed

(d)Where an exempt supply of goods or services or both by a registered person become a taxable supply, such person shall be entitled to take credit of input tax in respect of input held in stock and inputs contained in semi-finished goods held in stock relatable to such exempt supply and on capital goods exclusively used for such exempt supply on the day immediately preceding the date from which such supply becomes taxable: