WIRC of Institute of Chartered Accountants of India [PDF]

Mar 31, 2017 - WIRC of Institute of Chartered Accountants of India. CA Shraddha Mehta. 1. May 25, 2017. Event. : GST Cou

0 downloads 5 Views 1013KB Size

Recommend Stories


the institute of chartered accountants of ontario
Keep your face always toward the sunshine - and shadows will fall behind you. Walt Whitman

institute of chartered accountants of nigeria act
You're not going to master the rest of your life in one day. Just relax. Master the day. Than just keep

institute of chartered accountants of the eastern caribbean
If you feel beautiful, then you are. Even if you don't, you still are. Terri Guillemets

The Institute of Chartered Financial Analysts of India
Ego says, "Once everything falls into place, I'll feel peace." Spirit says "Find your peace, and then

Chartered Accountants Ireland
Be who you needed when you were younger. Anonymous

2013 Annual Report - Chartered Accountants of Prince Edward Island [PDF]
Sep 13, 2013 - of Prince Edward Island, which comprise the statement of financial position as at March 31, 2013, and the Statements of operations and .... The Institute of Chartered Accountants of Prince Edward Island (ICAPEI) is a self-governing pro

Institute of Cost & Management Accountants of Pakistan
In every community, there is work to be done. In every nation, there are wounds to heal. In every heart,

the zimbabwe chartered accountants
You miss 100% of the shots you don’t take. Wayne Gretzky

Batchelor Coop Chartered Accountants
Kindness, like a boomerang, always returns. Unknown

Idea Transcript


WIRC of Institute of Chartered Accountants of India Event

:

GST Course for CA Students

Subject

:

- Input tax credit including Input Tax Credit Rules

Date & Day

:

25th May, 2017 (Thursday)

- Provisions related to job-work

- Related transitional provisions Venue

:

Presented by

:

May 25, 2017

- Refund

ICAI Tower, Plot No. C-40, ‘G-Block’,

Bandra Kurla Complex, Bandra (East), Mumbai – 400 051 CA Shraddha Mehta

CA Shraddha Mehta

1

Determination of Tax liability Exempt or non-taxable

Supply

Taxable Determine tax liability

No Tax

Transaction Value Tax Payable

Tax paid on purchases

May 25, 2017

Rate of Tax

INPUT TAX CREDIT

CA Shraddha Mehta

Cash Payment

2

Relevance & Purpose of ITC mechanism in indirect taxes

May 25, 2017

CA Shraddha Mehta

3

Input Tax Credit Mechanism – Relevance 

Basic principles/objectives of Indirect taxes such as VAT, Excise, Service Tax and GST:

• • • • •



It is a value added tax wherein every player in transaction chain pays tax on value added by him in the transaction Business entities in transaction chain are pass through entities and should not bear indirect tax incidence It is a destination based consumption tax

Tax on goods and services to be borne by ultimate customer

Ultimate consumer to bear tax on final value of goods / services excluding tax incidences in intermediate stages in distribution chain

Two alternative mechanism for achieving above objectives:

• •

No tax at intermediate stages and levy of tax only at last stage of transaction chain i.e. at stage when goods are sold to end consumer

Levy tax on value of goods / service on vendors at each stage of transaction chain with set off input tax paid by such vendors on procurement of goods/service for business/profession

May 25, 2017

CA Shraddha Mehta

4

Transaction Chain

Manufacturer

Price Rs.1,000 GST Rs. 180__ Total Rs. 1,180 ITC = Rs. 0 Tax paid = Rs. 180

Wholesaler

Cost Rs.1,000 Profit Rs. 100 Total Rs. 1,100 GST Rs. 198__ Total Rs. 1,298

Distributer

ITC = Rs. 180 Tax paid = Rs. 18 [198 – 180]

Cost Rs.1,100 Profit Rs. 100 Total Rs. 1,200 GST Rs. 216__ Total Rs. 1,416

Consumer

ITC = Rs. 198 Tax paid = Rs. 18 [216 – 198]

Total Tax Paid = 180 + 18 + 18 = Rs. 216 May 25, 2017

CA Shraddha Mehta

5

GST Input Tax Credit Mechanism – Objectives  To ensure fungibility of tax credit  To ensure levy of tax on value addition by respective assesse in transaction chain  To ensure efficient system of value added tax is in place  To eliminate or minimize possibilities of levy of tax on tax  To eliminate or minimize cascading effect of indirect taxes  To minimize tax incidence on ultimate consumer of goods / services

May 25, 2017

CA Shraddha Mehta

6

ITC under GST - Basic Concepts

May 25, 2017

CA Shraddha Mehta

7

Meaning of Input Tax Credit (‘ITC’) and Input tax  Input Tax Credit means credit of ‘input tax’ [Section 2(63)]  Input Tax in relation to a registered person: [Sec 2(62)]: Means

• Central tax;

• State tax/ Union territory tax;

• Integrated tax;

Includes

• IGST charged on import of goods

• Tax payable under Reverse charge by recipient: 

Central tax/ State tax u/s 9(3) of CGST/SGST Act;



Union territory tax payable u/s 7(3) of UTGST Act



Excludes

Tax paid under

composition levy

Integrated tax u/s 5(3) of IGST Act;

• Tax payable under Reverse Charge by registered person on supply made by unregistered person: Charged on any supply of  Central tax/ State tax u/s 9(4) of CGST/SGST Act; goods or services or both made to him May 25, 2017

 

Integrated tax u/s 5(4) of IGST Act;

Union territory tax payable u/s 7(4) of UTGST Act CA Shraddha Mehta

8

Availability of ITC ITC of tax paid on Capital goods

Inputs

Means

Goods, the value of which is capitalized in the books of accounts of the person claiming the credit

May 25, 2017

Means Any goods other than capital goods

used or intended to be used by a supplier in the course or furtherance of business CA Shraddha Mehta

Input Services Means

Any Service

9

Exclusion from ITC [Section 17(5)] Particulars

Motor vehicles and other conveyance [Section 17(5)(a)]

Credit restricted on

All Motor Vehicle and other conveyance except when they are used for: •

• May 25, 2017

Making the following taxable supplies: 

Further supply of such vehicles or conveyances; or



Transportation of passengers ; or



Imparting training on driving, flying, navigating such vehicles or conveyances

Transportation of goods CA Shraddha Mehta

10

Exclusion from ITC [Section 17(5)] Particulars

Specified supply of goods or services

[Section 17(5)(a)]

Credit restricted on

• Food and beverages

Except where said category of inward supply

• Outdoor catering

of goods or services or both are used for

making an outward taxable supply of same

• Beauty treatment

category of goods or services or both or as a

• Health services

• Cosmetic and plastic surgery

part of taxable composite or mixed supply

• Membership of a club, Health and fitness center

• Travel benefits extended to employees on vacation such as leave or home travel concession

May 25, 2017

CA Shraddha Mehta

11

Exclusion from ITC [Section 17(4)] Particulars

Credit restricted on

Specified supply

• Rent-a-cab, Life insurance and Health insurance except where:

of goods or services

[Section 17(5)(b)]

May 25, 2017



Government notifies the services which are obligatory for an employer to provide to its



such inward supply of goods or services or both is used by a registered person for

employees under any law time being in force

making an outward taxable supply of same category of goods or services or both or as a part of taxable composite or mixed supply

CA Shraddha Mehta

12

Exclusion from ITC [Section 17(5)] Particulars

Works contract services [Section 17(5)(c)]

Goods or services or both [Section 17(5)(d)]

Credit restricted on

When supplied for construction of immovable property (other than plant and

machinery) except where it is an input service for further supply of works contract service

When it is received by a taxable person for construction of an immovable property (other than plant and machinery) on his own account including when used in course or furtherance of business



Whether ITC on works contract for completion & finishing services, repairs, maintenance, renovation or



ITC of Works contract resulting into ‘plant and machinery’ is admissible

restoration in respect of immovable property are also excluded from ITC? May 25, 2017

CA Shraddha Mehta

13

Exclusion from ITC [Section 17(5)]  Construction includes : Re-Construction

Renovation

Additions

Alterations

To the extent of capitalization to the said immovable property  Plant and Machinery means : Apparatus

Equipment

Repairs

Machinery

fixed to earth by foundation or structural support that are used for making outward supply and includes such foundation and structural supports but excludes: •

land, building or any other civil structures

• Telecommunication towers; and

• Pipelines laid outside the factory premises May 25, 2017

CA Shraddha Mehta

14

Exclusion from ITC [Section 17(5)] Particulars Credit restricted on

Goods or

services or both

 Tax paid under Section 10 [Composition levy] - [Section 17(5)(e)]

 Received by a non-resident taxable person except on goods imported by him [Section 17(5)(f)]  Used for personal consumption - [Section 17(5)(g)]

 Goods which are lost, stolen, destroyed, written off or disposed of by way of gift or free samples[Section 17(5)(h)]

 Any tax paid in terms of the following : [Section 17(5)(i)]

• Tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or

utilized by reason of fraud or any wilful – misstatement or suppression of facts [Section 74]

• Detention or seizure and release of goods and conveyances in transit [Section 129] May 25, 2017

• Confiscation of goods or conveyance and levy of penalty [Section 130] CA Shraddha Mehta

15

Exclusion from ITC [Section 17(5)]  Whether services like car insurance, repairs and maintenance of cars, etc. availed for motor vehicles eligible for ITC?

 Whether assesse would be entitled to ITC of following :    

Pick up and drop facility for employees – section 17(5)(b)(iii) Food provided to employees - section 17(5)(b)(i)

Medical or health kit for employees - section 17(5)(b)(i) Group insurance for employees - section 17(5)(b)(iii)

May 25, 2017

CA Shraddha Mehta

16

Manner of availment [sec 16(1)] - Every registered

person

- subject to such conditions and

restrictions as may be prescribed; and

- in the manner

specified in section

Entitled to take ITC charged on

used or intended

Said amount to be

course or

electronic credit

business

person

to be used in

any supply of

supply of goods

furtherance of

and/or services

credited to the ledger of such

49

May 25, 2017

CA Shraddha Mehta

17

Persons Eligible for ITC 

Person Eligible to take ITC:

Registered Taxable person [Section 16(1) of CGST Act]



Person making zero rated supplies [Section 16(2) of IGST Act]

• 

Person Not Eligible to take ITC: •

Non-registered taxable person



Supplier under Composition Scheme

• • •

Person having aggregate turnover below threshold limit Supplier exclusively engaged in making exempt or non-taxable supplies Agriculturist

May 25, 2017

CA Shraddha Mehta

18

Conditions for availing ITC [Section 16(2)]  Registered person shall not be entitled to take credit of any input tax in respect of any supply of goods and/or services to him unless: He is possession of: •

Tax invoice



Bill of entry

• • •

Debit note

Receipt of goods and / or services

Invoice by receiver paying under RCM

-

Document issued by ISD

Issued by supplier registered under the Act

ITC cannot be claimed on tax paid on advance

Payment of tax charged in respect of such supply to credit of appropriate government in: • •

Cash; or

Utilization of ITC admissible in respect of said supply

Furnished return u/s 39 - Return to be filed by both:  Vendor ; and  Assesse

 Where goods against an invoice are received in instalments / lots – ITC will be available only after receipt of last lot / instalment [1st proviso to Section 16(2)] May 25, 2017

CA Shraddha Mehta

19

Conditions for availing ITC [Section 16(2)]  Explanation as to term receipt of goods [Explanation to sec 16(2)(b)]: •

For the purpose of receiving goods 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

 Q 9 of Chapter 10 of FAQs released by CBEC on 31.03.2017 clarifies that: •

In ‘Bill to – ship to’ scenario, ITC on goods will be available to person on whose order the goods are delivered to third person

May 25, 2017

CA Shraddha Mehta

20

Conditions for availing ITC [Section 16(2)]  Where recipient fails to pay the supplier of goods and/or services within 180 days from the date of

issuance of invoice by the supplier, following consequences follows [2nd proviso to Section 16(2)] r.w. Rule 2 of ITC Rules: •



Amount of ITC credit taken proportionate to amount not paid to supplier shall be added to

recipient’s output tax liability for the month immediately following the period of 180 days from date of issue of invoice ; and

Interest thereon will have to be discharged for the period starting from date of availing credit on such supplies till date when such added output tax liability is paid

 Recipient will be entitled to avail ITC on payment made by him towards value of supply along with tax payable thereon [3rd proviso to Section 16(2)]

 Value of supplies made without consideration as specified in Schedule I shall be deemed to have been paid for the purpose of second proviso to section 16(2)

May 25, 2017

CA Shraddha Mehta

21

Denial of ITC and Time limit [Section 16(3) & 16(4)]  Input tax credit will not be allowed to the registered person on the tax component who has already claimed depreciation on the tax component of the cost of capital goods and plant and machinery under the provisions of Income Tax Act, 1961 (43 of 1961)

 A taxable person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods and/or services after: •

Due date of filing of the return u/s 39 for the month of September following the end of financial year to



Furnishing of the relevant annual return

which such invoice or invoice relating to such debit note pertains; or Whichever is earlier

May 25, 2017

CA Shraddha Mehta

22

Time limit for availing ITC [Section 16(4)] Oct-18 Dec-18 Return filing of Sep-18 due date of filing X-X-XF.Y ending --------------- -X-X-X-X-------Invoice date 1st Jan-------------31st March 2018 Due date Annual return 2018 th 20 Oct 2018 291 Days

June-18 Oct-18 Invoice date 1st -------------F.Y ending 31st --------------Annual return filed on -X-X-X--------Return filing of -X-X-X---X-X Sep-18 March 2018 th March 2018 25 June 2018 Due date 20th Oct 2018

117 Days

Dec-18 Oct-18 Return filing of Sep-18 -X-X-X-----X-X due date of filing --X-X Invoice date 1st Apr-------------F.Y ending 31st --------------Annual return Due date 2017 March 2018 20th Oct 2018 --X-X – ITC cannot be claimed for this period

May 25, 2017

CA Shraddha Mehta

567 Days

23

Apportionment of ITC and blocked credits

May 25, 2017

CA Shraddha Mehta

24

ITC – Business and other purposes [Section 17(1)] Goods or Services or both Used for

Business purpose

Input tax attributable to business purpose allowable

May 25, 2017

Other purpose

Input tax attributable to other purpose NOT allowable

CA Shraddha Mehta

25

ITC – Exempt Supplies [section 17(2) and 17(3)] Goods or services or both Used for

For -Taxable supplies - Zero Rated Supplies

 Value of following exempt

• For Exempt supplies

It shall include following supplies:

May 25, 2017



 Where recipient is liable to pay tax under RCM  Transactions in securities  Sale of land

Input tax attributable to above allowable

supply shall be:

 Sale of building [subject to clause 5(b) of schedule II]

land and building :

same as adopted for

the purposes of paying •

stamp duty

security :1% of sale

value of such security

ITC attributable to above not allowable CA Shraddha Mehta

26

Manner of determination of ITC and reversal of Inputs and Input services - Rule 7 of ITC Rules Total Input tax credit involved on inputs and inputs services (T)

1,00,000

Less:

Input tax attributable to Input and input services used exclusively for

Less:

Input tax attributable to Input and input services used exclusively for

20,000

Input tax attributable to Input and input services on which credit not

10,000

Less:

Less:

purposes other than business (T 1) effecting exempt supplies (T 2) available u/s 17(5) (T3)

Input tax credited to electronic credit ledger (C 1))

Input tax attributable to Input and input services used exclusively for effecting taxable and zero rated supplies (T 4)

10,000

60,000 40,000

Common credit (C 2 20,000 Registered person will have to declare T1, T 2, T3 and T 4 at invoice level in form GSTR-2

May 25, 2017

CA Shraddha Mehta

27

Manner of determination of ITC and reversal of Inputs and Input services - Rule 7 of ITC Rules  Amount of common credit (C2) attributable to exempt supplies to calculated as per formula = E/F X C2 Aggregate value of exempt supplies during tax period (E) Total turnover in the State during tax period (F)

Amount to be reversed [ 3,00,000 / 5,00,000 X 20,000]

Rs. 3,00,000

Rs. 5,00,000

[D1] Rs. 12,000

 Amount of C2 attributable to non-business purpose shall be 5% of C2 = Rs. 1,000 [D2]  Eligible ITC [C3]= C2 – D1 – D2 Rs. 7,000

May 25, 2017

= 20,000 – 12,000 – 1,000

CA Shraddha Mehta

28

Manner of determination of ITC and reversal of Inputs and Input services - Rule 7 of ITC Rules  Final reversal for a financial year to be done before due date for furnishing return for month of September following the end of financial year to which such credit relates •

If final amount of D1 and D2 exceeds amount of D1 and D2 determined earlier it shall be added to

output tax liability in the month of September following the end of FY to which such credit relates. Also liable to pay interest on such amount



If final amount of D1 and D2 is lesser than amount of D1 and D2 determined earlier, it shall be claimed as credit in the month of September following the end of FY to which such credit relates

May 25, 2017

CA Shraddha Mehta

29

Manner of determination of ITC and reversal of Capital Goods - Rule 8 of ITC Rules  Useful life of common capital goods to be taken as 5 years Year 1

6,00,000

Year 2

3,00,000

Calculation for month of April in Year 5:

Year 3

1,80,000

Year 4

4,80,000

Month of April in Year 5

72,000

Total credit

72,000

Exclusively for taxable supplies and zero rated supplies shall be credited to electronic credit ledger and indicated in Form GSTR-2

12,000

Exclusively for non-business purposes and exempt supplies shall not to be credited to electronic credit ledger and be indicated in Form GSTR-2 Balance Common credit to be first credited to electronic credit ledger

Amount of ITC attributable to tax period [month of April] [Tm = Tc / 60]

Amount of Common ITC on all common capital goods whose useful life remains during a tax period [month of April] [10,000 + 5,000 + 3,000 + 8,000] Total common credit May 25, 2017

CA Shraddha Mehta

[Tc]

6,000

54,000 900

26,000 [Tr]

26,900 30

Manner of determination of ITC and reversal of Capital Goods - Rule 8 of ITC Rules Amount of common credit attributable to exempted supplies [Tr X E/F]: Aggregate value of exempt supplies made during tax period

30,000

Total turnover during tax period

50,000

Amount attributable to exempted supplies [26,900 X 30,000 / 50,000]

Amount of Te [Rs. 16,140] along with applicable interest will be added to output tax liability

May 25, 2017

CA Shraddha Mehta

[Te]

16,140

31

ITC – Banking company, Financial institution and NBFC [Section 17(4)]  Banking company or a financial institution including a non banking financial company engaged in supplying services by way of accepting deposits, extending loans or advance shall have the following options : • •

Avail ITC in accordance with provisions of Section 17(2) i.e. under normal provisions; or Avail an amount equal to 50% of the eligible input tax credit in that month relating to : 

Inputs;



Input services



Capital goods; and

 Once option is exercised, it cannot be withdrawn during the remaining part of financial year [1st proviso to section 17(4)]

 Restriction of 50% shall not apply to the tax paid on supplies made by a registered person to another registered person having same PAN [2nd proviso to section 17(4)]

May 25, 2017

CA Shraddha Mehta

32

ITC – Banking company, Financial institution and NBFC  Banking company or a financial institution opting to follow the option of 50% reversal has to follow following procedure (Rule 3 of ITC Rules):

(a) It 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 section 17(5) in Form GSTR-2

(b) It shall avail full credit of tax paid on inputs and input services in respect of its transactions between

different branches having same PAN and which are not for non-business purposes or not covered u/s 17(5)

(c ) 50% of the remaining input tax shall be the input tax credit admissible to the company/institution and shall be furnished in Form GSTR-2

 The amount referred to in clauses (b) and (c ) shall be credited to electronic credit ledger

May 25, 2017

CA Shraddha Mehta

33

ITC availability - Summary Nature of Supply made by taxable person Wholly taxable supplies

Yes

Wholly zero-rated supplies

Yes

Wholly non-taxable or exempt supply

No

Both taxable and zero-rated supplies

Wholly for non-business purpose

Both business and non-business purpose Both taxable and non-taxable supply

May 25, 2017

Credit Admissible

CA Shraddha Mehta

Yes

No

Proportionate credit

Proportionate credit 34

Job Work - ITC availment

May 25, 2017

CA Shraddha Mehta

35

Job work Registered person (Principal)

Customer

Send inputs/ capital goods* without payment of tax Bring back inputs (within 1 year) or capital goods* (within 3 years) without payment of tax and charging GST on job-work charges • •

Job worker 1

Export – No Tax Other than export – Payment of Tax by Principal in 1 year/ 3 years

* Capital goods other than moulds, dies, jigs and fixtures

May 25, 2017

CA Shraddha Mehta

• •

Send inputs/ capital goods* without payment of tax Bring back inputs (within 1 year) or capital goods* (within 3 years) without payment of tax and charging GST on jobwork charges

Job worker 2

Export – No Tax/with tax by principal Other than export – Payment of Tax by principal in 1 year/ 3 years Customer

36

Job work  Principal can avail ITC on inputs/ capital goods to the job worker on receipt of inputs/ capital goods by him or directly by job worker

 Where the inputs/Capital goods (other than mould, dies, jigs, fixtures or tools) are not received by principal within stipulated time period from job worker or are not supplied from the place of business of job worker within stipulated time period : Particulars

Inputs

Capital goods

May 25, 2017

Time Period

1 year from the date when it is sent out

3 years from the date when it is sent out

CA Shraddha Mehta

Consequences

It shall be considered to be deemed supply by principal to job worker

37

Job work  Any waste or scrap generated during job-work may be supplied on payment of tax: • •

by job-worker if he is registered

By principal if job-worker is not registered

May 25, 2017

CA Shraddha Mehta

38

Job work  Principal can directly supply inputs and capital goods (other than mould, dies, jigs and fixtures) from the place of business of a job worker on payment of tax within India or without payment of tax for exports where : • •

Premises of job worker is declared as his additional place of business

Premises of job worker is not declared as his additional place of business where :  

Job worker is registered u/s 25 of the Act; or

Principal is engaged in the supply of goods as may be notified by the commissioner in this behalf

 Principal is responsible for accountability of inputs / capital goods

May 25, 2017

CA Shraddha Mehta

39

Input Service Distributor

May 25, 2017

CA Shraddha Mehta

40

Meaning of Input Service Distributor [Section 20] Office of the supplier of goods and/or services Receives invoice u/s 31 for receipt of input services & Paid Central state, central tax, integrated tax and union territory tax indicated on the invoice

May 25, 2017

Issues document for distributing credit of Central state, central tax, integrated tax and union territory tax





Having same PAN

CA Shraddha Mehta

Other offices/units of supplier of goods and / or services in different states

Different business verticals in same state

41

Manner of distribution of credit by ISD – Section 20 (1) Nature of Input tax Central tax or

Integrated tax or

Credit may be

distributed as under

Integrated tax

State tax or

Union territory tax Central tax

Central tax

State tax

State tax

Union territory tax or Union territory tax May 25, 2017

Situation Where the distributor and the recipient are located in different states

Where the distributor and recipient of credit, being a business vertical, are located in the same state

CA Shraddha Mehta

42

Conditions/Restrictions For Distribution of ITC –Section 20(2) Credit should be

distributed through

prescribed document

containing prescribed details

Amount of credit

Credit of input services

attributable to more than one

recipient to be

distributed on Pro rata basis i.e.

that recipient

Aggregate T/O of all units

distributed

Smile Life

When life gives you a hundred reasons to cry, show life that you have a thousand reasons to smile

Get in touch

© Copyright 2015 - 2024 PDFFOX.COM - All rights reserved.