GST Basics, Compliance and Impacts on Business Process

Ashutosh Thaker
Ashutosh.thaker@verita.co.in
Speaker Profile – CA Ashutosh Thaker
ASHUTOSH THAKER
Partner
T : +91-22-26851030
M : +91 9833846976
Email: ashutosh.thaker@verita.co.in
Areas of Expertise
• Indirect Tax
• Client Relationship Management
Industry Expertise
• Banking & Financial Services
• Asset Management & Insurance
• Real Estate & Hospitality
• Creative & Advertisement
Qualifications & Certifications
Fellow Chartered Accountant (FCA)
B.Com
Country Experience
India
Professional Experience
A Fellow Chartered Accountant, with 20 years of professional experience in understanding client needs and providing service in the field of Indirect
Taxes. Today he leads the all India Tax practice, an Institutional service provider founded by him and other partners from large institutions.
He has worked on a multitude of Indirect Tax assignments across various industries and sectors. His roles and responsibilities include identifying
growth opportunities for the group and designing service delivery models.
With a varied experience of more 18 year in his professional capacity in the field of Indirect Taxation, Corporate Finance as well as Attestation
Services, Ashutosh has identified and spearheaded innovative processes bring value for clients. Focus is to bring benefits to clients by assessing their
transactions, systems, processes, documentation & people. Also he has worked on a variety of projects such as audits, valuation assignments as well
as due diligence for foreign investment companies and venture capital firms, he brings an unusual mix of bean counting and consulting to the table.
He was instrumental in setting up & running the All India Indirect Tax practice at Haribhakti & Co, Chartered Accountants (Member Firm of BDO
International, 5th Largest Consulting & Accounting Network).
Sector Experience
Banking & Financial Services, Asset Management, Creative & Advertisement, Securities Broking, Leasing business, Hospitality & Leisure, Real Estate &
Insurance .
Major Projects
• Conceptualized the need of a niche indirect tax services in a large Indian advisory firm and instrumental in setting up the practice
• Set up of All India Practices in indirect tax
• Comprehensive Reviews & Retainer Advisory large corporate companies
• Indirect Tax implications on Tower business in India & Indirect tax planning & Advise on major contracts
Professional Affiliations & Memberships
The Institute of Chartered Accountants of India
Presentations & Publications
ASSOCHAM & Other privately organized public program
Our Firm

40 Team Combined
Partner Driven members:- Leadership Team
Dedicated Experience of
Started in 2012 7 Partners
Indirect Tax more than 100
16 Qualified
Practice years
Trainees

CSR
Retainers for Laptops –NGO
Working across advisory and
more than 15 compliance for Adoption of
sectors more than 100 Anganwadi at
companies Vasai with 72
Children
Our Major Clients
Contents

01 GST Laws and Updates

02 Business Process
challenges

Various Compliances
03
Goods & Services Tax (GST) Update
Central Govt. & State Govt. Taxes
Power to Tax –
Centre & State
Tax
Reforms

Goods & Services Tax

Power to Tax -State

2017
in India All India VAT

Power to Tax -Centre 2005

Service Tax

Reforms in Customs 1994

1990-91
Reforms in Excise

1986

Civilisation & Taxes Need for Structural Reform

Short Comings of Existing Indirect Taxes

Input Credit
Verifications

Sale Vs
Services

Excise duty not

beyond MFG

Cascading
Effect
GST Constitutional Bill & Objective

Statement of Objects & Reasons

Conferring concurrent taxing powers on the Union as well as the states

including Union territory

Remove cascading effect of taxes

Common national market for goods and services

The proposed Central and State goods and services tax will be levied on all
transactions involving supply of goods and services, except those which are kept
out of the purview of the goods and services tax.
GST Update

Constitutional
Amendment Bill was
enacted after GST Bill passed by Date of
Presidential Assent Central Government implementation
8th September 2016 12th April 2017 1st July 2017

14th June 2016 25th November 2016 31st May 2017

Model GST Law Revised Draft Model GST Bill passed by
introduced GST Law along with 21 State
Draft IGST Law and Governments as on
Draft GST including
Compensation Law Maharashtra. GST
was issued on Rates are also
released
Who is an Assessee under GST

• GST applicable to persons having PAN India Annual GST Rate 18%
Turnover > INR 20 Lakhs

• Voluntary Registration for Turnover < INR 20 Lacs

available

• No threshold exemption for inter-state supplies

• Annual Turnover to include GST + Non GST Supplies % Rate Bands

for the purpose of registration
0 Essential Goods

• Option to pay GST at composite rate of 1%/2% for PAN 5 Common Use Items
India Annual Turnover < INR 75 Lakhs - Not 12 Standard Rate
Applicable to Service Provider other than
Restaurant and Caterer 18 Standard Rate
28 Luxury Goods
28 + Cess SIN + Luxury Goods
Integration of Indirect Taxes
• Central Excise Duty
• Additional Excise Duties
• Excise Duty under
Medicinal and Toilet
preparations (Excise
Duties) Act, 1955,
• Service Tax
• Additional Customs Duty
(CVD)
• Special Additional Duty
of Customs (SAD); and
• Central Surcharges, and
• Cesses
CGST
• Profession Tax
• Property Tax
• State Value Added Tax/
Sales Tax
• Entertainment Tax
(other than those levied
by local bodies)
• Octroi and Entry Tax • Central Sales Tax
• Purchase Tax
• Luxury Tax, taxes on
lottery, betting and
gambling; and
• State Cesses and
Surcharges
S/UTGST IGST
• Stamp Duty • Petroleum Sector
• Entertainment tax levied by • State Excise on Liquor for
local bodies Human consumption
Taxes Not Subsumed
Key Challenges

Location of Supplier
Branch v. HO Model ? 1
Valuation
4 Consideration Vs Non
Location of Receiver Consideration
Contracting Person Vs Beneficiary 2
of supply

Human Resources & IT

5 IT re configuration
Place of Supply User level training
Identification 3
Goods & Services Tax (GST) Law
Key Components of GST

Adjudic
ation Valuation
Time of Supply

Complia
nce

Supply

Place of Supply
Input Tax Credit
Supply u/s 7(1) of CGST Act

All forms of supply of Goods or Services or both

Sec. 7(1)(a) Sec. 7(1)(b) Sec. 7(1)(c) Sec. 7(1)(d)

Sale, transfer,
barter, exchange, Importation of services Activities specified in Activities to be
license, rental, Schedule - I treated as supply
lease, disposal of Goods or
made or agreed services as
to be made referred in
Schedule - II

For consideration For consideration Without consideration

Excludes Supply u/s 7(2):

In the course of Whether or not in the  Activities specified in Schedule – III
furtherance of course of furtherance of  Notified supplies made by CG / SG / Local
business business Authority as public authority
Mixed Supply

Maharashtra Maharashtra
Person 1 – Person 2 –
Goods
Supplier Receiver

SUPPLY
Composite Supply

Maharashtra Maharashtra
Person 1 – Person 2 –
Services
Supplier Receiver

SUPPLY
Place of Supply – Intrastate Supply
GST is a Destination based tax on Consumption

Maharashtra Maharashtra
Person 1 – Person 2 –
Location of Supplier Place of Supply
Goods and Services
Taxing Authority
Jurisdiction
GST Scenario
Intrastate

“fixed establishment” means a Transaction Value 10,000

place, other than the place of
business, which is characterised by CGST 9% 900
a sufficient degree of permanence
Place of Consumption :
and suitable structure in terms of also termed as - SGST 9% 900
human and technical resources to Place of Supply
supply services, or to receive and
use services for its own needs Total Value 11,800
Total Tax 1,800
Place of Supply – Interstate Supply
GST is a Destination based tax on Consumption

Maharashtra Gujarat
Person 1 – Person 2 –
Location of Supplier Place of Supply

Goods and Services Taxing Authority

Jurisdiction
GST Scenario
Interstate
Transaction Value 10,000

IGST 18% 1,800

Place of Consumption :
also termed as - Value 11,800
Place of Supply
Total Value 12,000
Total Tax 1,800
Place of Supply - Export
GST is a Destination based tax on Consumption

Maharashtra United Kingdom

Person 1 – Person 2 –
Location of Supplier Place of Supply

Goods and Services Taxing Authority

Jurisdiction
GST Scenario
Export
Transaction Value 10,000

Zero Rated

Value 10,000

Place of Supply Total Value 10,000

Total Tax Zero rated
Time of Supply
Forward Charge
Events Remarks
If invoice is issued in a Prescribed time then, • Invoice Timing (within 30 Days)
• Continuous Supply
Time of Supply will be earliest of- • Time Based
• Date of Invoice or • Event Based
• Date of Payment
Delay in Invoicing then,

Time of Supply will be earliest of-

• Date of Payment or
• Date of Completion of Service
Time of Supply
Reverse Charge
Events- Earliest of Remarks
The date on which the payment is made • Old Concept
61st day from the date of issuance of invoice by • Deemed Due date
service provider

Where it is not possible to determine the time of supply under above clauses then the time of supply
shall be -
Date of entry in the books of accounts of the recipient.

Same provision is applicable in case of import of service where the service provider is an associate
enterprise.
Valuation
Business Transaction

Undertaken by-
Wherein the
a pure agent, the supplier and the
consideration,
money changer,
insurer,
whether paid or recipient of the In Any Other Case
payable, is not supply are related
air travel agent and
money, wholly or
Such Other Supplies as may be
partly;
notified

Specific Valuation
Whether the
Methodology relationship
influence
the price ?

No
Yes

The following
steps are to be Open Market Comparable Transaction
Cost + 10%
followed, in order Value Value Value
of priority:
Input Tax Credit Mechanism

Type of Set off Against Can not be set

tax availability which Tax off against & IGST
& IGST
CGST Yes CGST X-SGST
IGST
X-SGST Yes X-SGST CGST
IGST
IGST Yes IGST -
CGST
X-SGST IGST IGST
CGST
X-used a proxy for State of registration
SGST
Blocked Credits
Employee Related
Rent a cab, Motor Food and beverages & Health services Membership of a club,
Vehicles and other outdoor catering health and fitness centre
conveyances

Beauty treatment & Life insurance and health Travel benefits extended Goods or services or
cosmetic and plastic insurance to employees on both used for personal
surgery vacation such as leave or consumption
home travel concession

Other Disallowances

Goods or services for Works contract services Composition Goods lost

Stolen
construction of an in relation to Destroyed
immovable property construction of an Written off
immovable property Disposed of by way of gift
Free samples
Business Process Challenges
GST Ecosystem

Tax Authority
Process
& Law

IT Systems
Vendor External Internal

Client People
Key Processes

Order to Cash Procure to Pay Record to Report Hire to Retire

O2C P2P R2R H2R
Key Impact Areas
• Transactions
• Change in Tax Points
• Change in processes
• Business Models for Supply Chain to be analyzed Vendor
Management
(Principal to Principal vs Principal to Agent)

• Customer Management
• Customer Contract
Customer
• Invoicing Process Management
• Valuation and Charges
• Debit Note/Credit Note
Transactions

• Vendor Management
• Vendor Agreements KYC to Invoice
• Volume Discount transactions to be analysed
• Procurement Centralized or Decentralized
• Engage with GST compliant vendors
Key Impact Areas
• Changes in IT
• Front end
• Data Fields
• Data Check Points IT

• Reporting formats

• Change in Compliance from Centralized to State level

• State level Invoicing
• State Level Compliance Training Compliance

• Compliance related to sale of goods

• Dealing in Goods
• Procurement to utilization
• Transfer of goods/Assets between branches Goods

• Training
• Awareness and Education at all levels
• Training on implementation plan
Various Compliances
Compliances
Registration
• Migration from Service tax to
GST
• Obtain Fresh Registration
• Display GST Registration
certificate in the place of
business
• Property can be inspected by
tax authorities
Payment
• Every month per state
• Mode of Payment
• Input Tax Credit
• Internet Banking through
authorized banks;
• Credit card or Debit card
through the authorised bank;
• NeFT or RTGS from any bank;
• Up to INR 10,000/- per
challan per tax period, by
cash, cheque or demand draft
Records
• Invoice level records to be
maintained
• State level records to be
maintained
• Records may be maintained in
electronic format in each state
• Any entry in registers,
accounts and documents shall
not be erased, effaced or
overwritten, a log of every
entry edited or deleted shall be
maintained
Invoice
Tax Invoice
• Details are required to be mentioned on the tax invoice issued by the supplier like;
1. Name of Receiver/Provider,
2. Address of Receiver/Provider
3. GSTIN of the supplier
4. Additionally UID/GSTIN number of registered recipient,
5. HSN code of goods and/or Accounting Code of Services,
6. Description of goods and quantity with rate etc..
In case of Export
7. Supply meant for export on payment of IGST
8. Supply meant for export under bond without payment of IGST

• Time period within which the tax invoice needs to be raised is as under:

Sn Event Time Period

1 Taxable supply of services 30 Days from Supply of Service
2 Continuous supply of services 30 Days on completion of each milestone.
3 Supply of service by a banking company or FI 45 Days from Supply of Service
including NBFC
Manner of issuing invoice
 In case of supply of services the invoice shall be prepared in duplicate as under
 Original copy for recipient
 Duplicate copy for supplier

• In case of supply of goods, the invoice shall be prepared in triplicate as under:

 Original copy for recipient

 Duplicate copy for transporter
 Triplicate copy for supplier
OR
 Issue Invoice in Duplicate for Recipient & Supplier.
 For Transporter generate an INVOICE REFERENCE NUMBER by uploading the Tax Invoice in common portal.
 Invoice reference number will be Valid for 30 days.
Bill of Supply
• The rule 3 provides for the details to be mentioned on the invoice called as “Bill of
supply”, issued for supplying
 Non-taxable goods/services by a registered dealer
 All supplies by a Composition Dealer (u/s Section 8)

• Bill of supply may not be issued if the value of goods or services supplied is less than
one hundred rupees except in case where recipient requires the bill

• In such cases, a consolidated bill of supply shall be prepared by the registered

taxable person at close of each day in respect of all such supplies where the same has
not been issued to the recipient.
Supplementary Tax Invoice and Credit or Debit Notes
• Details need to be mentioned on supplementary tax invoice and credit or debit notes.

• Revised tax invoices may be issued in respect of taxable supplies effected during
the period starting from the effective date of registration till the date of issuance
of certificate of registration.

• Debit note/Credit note can only be issued by taxable person supplying goods/services

• Credit Note/Debit Note can not be issued post last day of September at the end of FY

• Credit note will not be given in case of refund of money

Return
Types of Returns & Due Dates:

10th 13th 15th 20th 18th 31.12

ISD Monthly return Annual Return

Return & (GSTR-9)
(GSTR-6) discharge of tax
Liability (GSTR-
3)
Outward Supplies Inward Supplies Quarterly
Return (GSTR-1) Return (GSTR-2) composition
(GSTR-4)

Monthly Filings Quarterly Annual

Filings Filings
Return Process
If accepted the GSTR-1 shall stand
amended to that extent

GSTR – 1 GSTR – 2A GSTR – 2 GSTR – 1A

On 10 of the month
th Between 10th to 15th of Between 10th to 15th of Between 15th to 17th of
the month the month the month
Details of Outward
supply furnished by Details of Outward Recipient to add, delete, Changes made by the
supplier supply furnished by modify detail in GSTR-2. recipient communicated
supplier made available ITC declared in GSTR-2 to supplier and he can
to recipient to be provisionally accept or reject the
accepted change

GSTR -3 Matching of invoice as If matched, ITC to be finally accepted

To be filed on or before per Section 42 and 43 If unmatched added to output liability
20th of the month of recipient
Form GSTR -1 Outward Supplies - New Details
 Place of Supply
 GSTIN of E-Commerce Operator and Merchant ID, if sold through Ecommerce
 Interstate transaction to be classified as:
• Nil to 2,50,000 and
• 2,50,000 & above

 Debit Note /Credit Note details to be maintained as:

• Liable to Reverse Charge and
• Not Liable to Reverse Charge
 Details of NIL Rated, Exempted and Non GST:-
1. Interstate B2B and B2C
2. Intrastate B2B and B2C

 Bill of Export

 Amount of advance received or Value of Supply provided -

without raising a bill – (details required on a monthly basis)
&
 Document Number identifying this transaction
Form GSTR -2 Inward Supplies – New Details
 Bifurcation of :
• Total Tax available as ITC
• ITC available this month

 ITC Claim shall be auto populated as per vendors outward supply return.
Option to manually claim ITC is also available
 Debit Note /Credit Note details to be maintained as:
• Liable to Reverse Charge and
• Not Liable to Reverse Charge

 Supplies received from composition taxable person , unregistered person , other exempt, nil, Non – GST
Supplies
 ISD Credit Received – Auto populated and can be manually claimed

 TDS Credit Received – Auto populated only

 TCS Credit Received – Manual filing only

 Tax liability under Reverse Charge arising on account of time of Supply without receipt of Invoice
Returns - Revisions
“Provided that no rectification of error or omission in respect of the details furnished under sub-
section (1) shall be allowed after filing of the return under section 27 for the month of September
following the end of the financial year to which such details pertain, or filing of the relevant annual
return, whichever is earlier.”

 Currently, Model GST Law does not provide for a concept of “Revised Return”

 However, each return gives an opportunity to amend the details submitted in an earlier period
Penalty
Penalty extending upto Rs. 25,000
In addition to the penalty, the following Not only the taxable person but any
Fraud are details of prosecution person who
• Helps to commit fraud under GST
Tax amount 100-200 200-500 Above 500 • Receives any supply with full
100% penalty, knowledge that it is in violation of
subject to a minimum involved lakhs lakhs lakhs
GST rules
of Rs. 10,000 • Fails to appear before the tax
Jail term Upto 1 Upto 3 Upto 5
year years year authority on receiving a summons
• Fails to issue an invoice as per GST
rules
• Fails to account any invoice
appearing in the books

10% of tax amount due as Penalty extending to Rs.

Other than Fraud
Penalty subject to a minimum
of Rs.10,000 for an offender
not paying tax or making
short-payments
General Penalty
25,000 for any offense under
GST for which penalty is not
specifically mentioned
Implementation Approach
Implementation Approach

• GST- Implementation Approach

– Area I – As is Study, Gap Analysis and Action Plan (Business Mapping)
• Initial requirement list
• Analysing all cash and non cash flows.
• Collection of documentation.
• Identifying actionable points.

– Area II – As is Study, Gap Analysis and Action Plan (IT Gap Analysis)
• Identifying changes required in the system

– Area III – Implementation of Action and Reviews

• Implementing actionable points as identified in area I with respect to transactions, documentation
and IT.
• Co-ordinating with IT vendors
• Reviewing the UAT sign-offs done by client.
• Finalizing formats and IT output required.

– Area IV – Transition Phase

• Helping in smooth transit to new GST regime.

– Area V – Training
• Training to staff
Queries?
 Thank You

Ashutosh Thaker- Partner

Mob: 98338 46976
Email: ashutosh.thaker@verita.co.in
511, Corporate Annexe, Next to Udyog Bhavan,
Sonawala Road, Goregaon East, Mumbai 400063