ITC + Recent PDF

ITC and Latest
Updates on GST
FAQ : It is a destination based tax on consumption of goods and

services. It is proposed to be levied at all stages right from
manufacture up to final consumption with credit of taxes paid at
previous stages available as setoff. In a nutshell, only value addition
will be taxed and burden of tax is to be borne by the final consumer.
23/06/2018 CA Manish Gadia R 2
1
Previous ITC
INPUT TAX CREDIT
Nature of Tax Levy on Credit available to
Excise Duty Manufacture of Manufacturer/ Service
Goods Provider
Additional / Special Import of Goods Manufacturer
Custom duties
Service Tax Provision of Services Service Provider/
Manufacturer
VAT/Entry Tax Sale of Goods Manufacturer/ Traders
CST/Entertainment/ Goods/Entertainme Not Available to any

Luxury/LBT/Octroi nt/Luxury person
23/06/2018 CA Manish Gadia R 3 23/06/2018 CA Manish Gadia R 4
2
CREDIT UNDER PROPOSED GST MODEL Matching Concept
IGST IGST CGST SGST UT-GST ABC & Co.
Not against Not against
CGST CGST IGST
SGST UT-GST
Furnishes GSTR –
Not against Not against Furnishes GSTR – 2 inward Supply
SGST SGST IGST
CGST UT-GST 1 Outward Supply by modifying the
auto populated
Not against Not against
UT-GST UT-GST IGST
CGST SGST information
SGST Such details available to

Provisional
supplier in GSTR-1A. He
ITC
CGST may accept or reject the
UT-GST changes
23/06/2018 5 23/06/2018 CA Manish Gadia R 6
CA Manish Gadia R
3
Matching Concept Cont.. Capital Goods Sec 2(19)
Electronic
Payment by Credit • means
Register  goods, the value of which
is capitalised
 in the books of accounts of
the person claiming the
credit and
Furnishes GSTR-3 by 20th
 which are used or intended
to be used
 in the course or
Final ITC
furtherance of business
available
ABC & Co. Services Capitalised
Software?
4
Input service
Input means
means Input Tax & Input Tax Credit
 Input tax" in relation to a registered person,
any goods other  means the IGST including that on import of
any service
than capital goods goods
 CGST, SGST and UT-GST
used or intended used or intended
to be used by a to be used by a
 charged on any supply of goods or services to
supplier supplier him and
 includes the tax payable under RCM but does
in the course or in the course or not include tax paid under composition
furtherance of furtherance of
business business  Input tax credit” means credit of ‘input tax’
5
Eligibility and Condition for ITC – 16(1) In the course or furtherance of business
The Hon. Supreme Court in the case of Eastern Investments Ltd
• Every registered taxable person v. CIT (1951) 20 ITR 1, 4 (SC) laid down following principles –
 though the question must be decided on the facts of each
• subject to such conditions and restrictions case the final conclusion is one of law.
• entitled to take credit of input tax charged on  It is not necessary to show that the expenditure was a
any supply of goods or services to him profitable one or that in fact any profit was earned
 It is enough to show that the money was expended ‘not
• which are used or intended to be used in the necessity and with a view to a direct and immediate benefit
course or furtherance of his business and to the trade, but voluntarily and on the ground of
commercial end in order indirectly to facilitate the carrying
• the said amount shall be credited to the on of the business
electronic credit ledger of such person  Beyond that no hard and fast rule can be laid down to explain
what is meant by the word ‘solely’ occurring in the pre-1939
law.
6
In the course or furtherance of business In the course or furtherance of business
An expenditure to which one The test is not what a prudent To arrive at the conclusion that
cannot apply an empirical or man would do in similar Expenditure incurred by the the expenditure was dictated
subjective standard is to be circumstances. Though an assessee as incidental to his solely by business
judged from the point of view of assessee may be an imprudent trade for the purpose of consideration one has to
a businessman and it is relevant businessman, yet if he incurs keeping the trade going and of consider the nature of the
to consider how the an expenditure voluntarily for making it pay and not in any
businessman himself treats a business being adversely
the purposes of his own other capacity than that of a affected or its interest being
particular item of expenditure, business, it would be allowable
whether as revenue trade. CIT v. Delhi Safe promoted by the refusal or the
as a proper deduction. [J K
expenditure or as a capital Deposit Co Ltd (1982) 133 incurring of the expenditure, as
Commercial Corporation Ltd v.
expenditure [Ford & CIT , (1969) 72 ITR 296 (All) ITR. the case may be. [Andrew Yule
Macdonald Ltd v. CIT, (1964) 54 & Co Ltd v. CIT (1963) 49 ITR
ITR 133, 143 (All.] 57, 65 (Cal)
7
Sec 49 (2) & (4) – Availment and
Electronic credit ledger Utilization CGST/SGST/IGST
Credit to the
GSTR - 1 ITC electronic credit
• The input tax credit ledger
• as self-assessed in
the return of a Utilization
Availment
CGST/SGST/IGST
taxable person
Debit to the
• shall be credited to electronic credit
his electronic credit

ledger GSTR – 3B /
ledger GSTR - 3
For making payment towards output tax
8
Sec 53 - Adjustment of CGST against When is ITC available 16(2)
IGST Possession of a tax invoice, etc.,
issued by a supplier registered Time of Supply
Government Books
under GST
CGST IGST
Bill to
Rs . 1,00,000/- Rs . 50,000/-
- 5,000/-
CG shall transfer the + 5,000/- Received the goods and/or services Shipped
amount from CGST a/c to
to IGST a/c The tax charged in respect of such
supply has been actually paid to the
credit of the appropriate
Government,
Mr. A. BOA
CGST ITC available 5,000 Furnished the return under section
IGST liability 5,000 39
9
Provided that Dies and Mould provided by OEM
• Where the goods against an invoice are received in lots
or instalments, the registered taxable person shall be Contract for Supply of Moulds and Dies by Component Manufacturer
entitled to the credit upon receipt of the last lot or
instalment
Free Free
• Payment not made to supplier of goods/service/both
within 180 days from the date of issue of invoice: Reverse
Original equipment Component
the credit along with interest (Interest Shall be Applicable Moulds
manufacturer (OEM) Manufacturer
from the Date of Invoice)
Circular No. 47/21/2018-GST
- If Part payment is made and part not made beyond 180
days only the proportionate credit in respect of The moulds are not provided
As per Notn No. 26/18 – CT
For section 15(2)(b) of CGST
payment not made has to be reversed in theshall
course of furtherance
be deemed to have of Act 2017, the amortized cost
- In Case of Supplies without Consideration as specified business,
been hence
paid for ITC is required
the purposes of such moulds/dies shall be
to beofreversed
the secondavailed
provisoon such
to sub- added to the value of the
in Schedule I - Payment to Supplier is deemed to be section (2) of section 16
moulds components.
made
10
Time Limit for claiming ITC Documents Required for
Claiming ITC – Rule 36
• Invoice issued as per Section 31
ITC of any invoice pertaining to a • In case of reverse charge only after the
F. Y. (17-18) cannot be taken after payment of Tax
• Debit Note
Due date of return for the month • Bill of Entry or any other document as
of September, 18 specified under Customs Act, 1962
Earlie
st of
• ISD Invoice or ISD Credit Note or any other
document by an ISD.
Filing of the relevant
No Time Limit
annual return of 17-18 • ITC is availed only if all particulars is furnished
for Re-Credit in FORM GSTR-2 by such person
11
When should RCM ITC be availed Eligibility and Condition for ITC
Sec 16(3)
As per Law After payment is made and return is filed No ITC on tax
component of capital
As per Twitter
clarification
After payment is made goods for which
depreciation claimed
However, technically GSTR 2A mandatorily requires RCM credit to under the IT
be(a)taken
he is in
inpossession
the sameofmonth.
a tax invoice or debit note issued by a supplier
registered under this Act, or such other tax paying documents as may be Particulars Amount
prescribed;
(b) he has received the goods or services or both. Cost of M/C 1,00,000/-
(c) subject to the provisions of section 41, the tax charged in respect of Tax @ 18% 18,000/-
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 Total 1,18,000/-
supply; and
(d) he has furnished the return under section 39 If ITC is taken of 18,000/-, Depreciation shall be allowed only on 1,00,000/- under
Income Tax
23/06/2018
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Capital Goods -18(6) Reversal of ITC [17(1)(2)(3)&(4)]
In case of supply of capital goods on which ITC used for
input tax credit has been taken, payment is ITC Partly used for Partly used for
Business shall
Business other purpose
required to be made, higher of only be eligible
Partly used ITC used for
• for an amount equal to ITC reduced by 5% per ITC Partly used for
for Non Taxable
Taxable Supply
quarter or; including Zero rated
Taxable/ including zero
exempted rated Supply
• tax on the transaction value of such capital supply
Supply only be eligible
goods
ITC in case of Bank, FI Or avail 50%
• Refractory, bricks, moulds and dies, jigs and Either as per
or NBFC of eligible of
Sec 17(2)
fixtures supplied as scrap, tax on transaction ITC
value
• Exempted supplies include recipient liable pay under RCM,
23/06/2018
transaction in securities, land, building
23/06/2018
CA Manish Gadia R 25 CA Manish Gadia R 26
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Credit not allowed 17(5)(a) Credit not allowed 17(5)(b)
In relation Allowed only for outward supply of same category or as element
 ITC shall not be available in respect of of composite/mixed supply
food and beverages, outdoor catering, beauty treatment, health
 motor vehicles and other conveyances services, cosmetic and plastic surgery
 except when they are used for making

Membership of
the following taxable supplies, namely
club, health and fitness centre
 further supply of such vehicles or
conveyances Allowed only if mandatory as per law /Allowed only for outward supply of same
 transportation of passengers/goods category or as element of composite/mixed supply
rent-a-cab, life insurance, health insurance
 imparting training on driving, flying,
navigating such vehicles or
conveyances Travel benefits
travel benefits extended to employees on vacation such as leave or
• For transportation of Goods 23/06/2018
home travel concession
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Credit not allowed 17(5)(c) & (d) Credit not allowed 17(5)(e)(f)(g) and
 Works contract services when supplied for construction of (h)
immovable property,
 other than plant and machinery, • Tax paid under Composition
 except where it is an input service for further supply of works • Received by Non-resident taxable person except on
contract service; goods imported by him
 goods or services received by a taxable person for construction of • Used for personal consumption
an immovable property other than plant and machinery, on his
own account incl. when used for furtherance of business • Goods lost, stolen, destroyed, written off or
 Construction includes re-construction, renovation, addition, alter,
disposed of by way of gift or free samples
repair - to the extent of capitalization to said immovable property • ITC wrongly availed or utilised by reason of fraud
 ‘Plant and Machinery’ means apparatus, equipment, machinery etc.
fixed to earth by foundation or structural support that are used for • Detention, seizure and release of goods and
making outward supply and includes such foundation and conveyances in transit
structural supports but excludes land, building or any other civil
structures, telecom tower, pipeline outside factory premises • Confiscation of goods and/or conveyances
15
Reversal of credit Rule 42
Particulars Treatment Exempt Supply shall exclude
Add: Total Input Tax Credit Invoice level at T
GSTR 2
Less: Exclusive for other than business T1 Fully reverse • Supply of Service to Nepal or Bhutan against
Less: Exclusive for exempt supplies T2 Fully reverse
payment in INR.
Less: ITC not eligible u/s 17(5) T3 Fully reverse
Less: Other than Exempted Supply T4 Fully avail • Interest other than Interest earned by Bank,
Net Common Credit C Refer below NBFC, FI.
Less: Credit attributable to exempt supplies – D1 Fully reverse • Transportation of Goods in vessel for export
reverse in t/o ratio of respective state
Less: Credit attributable to non-business – D2 Fully reverse • Aggregate value of Exempt supplies and total
reverse 5% of ‘C’ turnover shall exclude Excise, VAT etc. Alcohol,
Net eligible common credit (C-D1-D2) Fully avail
Petroleum products etc.
Final working by September: Pay differential with interest / claim differential
without interest
16
Reversal of Inputs and Input Services Rule 42
Invoice level segregation Particulars Notation Action Amount
Total Credit T 1,00,000
ITC for non business purpose T1 Reversal 10,000
Inputs for ITC for exempt supply T2 Reversal 7,500
taxable purpose
= XXX ITC ineligible [17(5)] T3 Reversal 5,000
ITC for table supply used for business purpose T4 Allowed 70,000
Inputs for
Exempt Purpose Balance ITC – Common Credit C2 7,500
Registered supplier = XXX Registered Receiver
ITC partly used for non business out of D2 Reversal 375
common credit (5%of C2)
ITC partly used for exempt supply out of D1 Reversal 1,500
Included in T4 Included in T2 common credit (c2*ES/TT)
Exempt Supplies: Common Credit available [C2 – (D1 + D2)] C3 Allowed 5,625
• ATF, HSD, Petroleum Crude, Petrol, Natural Gas? Total available credit for Off Set liability Allowed 75,625
• Alcoholic liquor for human consumption? (C2+C3)
• ENA? Total turnover in the state TT 1,00,00,000
Exempt supply ES 20,00,000
17
Final settlement of ITC in September
Month Taxable supplies Exempt supplies
C3 shall be again calculated for the entire year on or before 20th
July 100,000 50,000
October of the succeeding year.
August 0 100,000
Purchases In 75,000 25000 In case C3 calculated every month is greater than Final C3 for
August towards that year
Here even if there are no taxable supplies in August, ITC Added to the output liability not later than 20th October of
of 75,000 can be taken succeeding year along with interest from April of the
succeeding year
Interest shall be
In case C3 calculated every month is less than final C3 forforthat
recovered
In case 75000 is common credit, the same can be year additional payment
however no interest
availed by applying ratio of July shall beth
Added to electronic credit ledger not later 20 receivable
thancase October
of refund
in
of succeeding year
18
ITC relating to common use month July August Sept Total
Reversal of credit of Capital Goods Rule Computer Pur 60 10,000 10,000
Furniture Pur 60 20,000 20,000
43 Add : ITC on change of use Added 30 2,500 2,500
Particulars Treatment
Total of ITC of CG relating to 10,000 20,000 5,000 32,500
Add: Total Input Tax Credit on CG T common use
Less: Exclusive for other than No credit in elec. ITC for the Tax Period
business/exempt supplies credit ledger Computer Tr 167 167 167 500
Less: Exclusive for taxable supplies Full credit in elec. Furniture Tr 333 333 667
credit ledger Add : ITC on change of use Tr 83 83
Net Common Credit of CG Tc Avail equally every Total of ITC of CG relating to Tm 167 500 583 1,250
common use for a tax period
month for 60 months
Total Turnover F 10,00,000 11,00,000 12,10,000
Less: Credit attributable to exempt Te Reverse every month Exempt Supplies E 1,00,000 95,000 90,250
supplies – reverse in t/o ratio for 60 months
From the date of Total of ITC of CG relating to Te 17 43 44 103
• Change of use of CG from exempt/non-business/taxableInvoice
supplies exempt supplies
to common use or vice versa, reduce ITC of CG by 5% / quarter Interest on (Te) - 3 10 13
Total Amount to be added to 17 46 54 116
23/06/2018 CA Manish Gadia R 37 output liability
19
Example Final settlement of ITC
Particulars Amount
Cost of Machinery 1,00,000/-
Tax @ 18% 18,000/-
• The amount Te along with
Total 1,18,000/- the applicable interest
However, if ITC is taken of 18,000/-, Depreciation shall be allowed only on 1,00,000/- under shall, during every tax
Income Tax
period of the useful life of
Suppose this machinery is used for providing taxable as well as exempt supply, the concerned capital
proportion of credit shall be reversed as per rule 43.
goods, be added to the
Reversal ratio 10%
output tax liability of the
Reversal amount 1,800
Available credit 16,200
person making such claim
of credit.
Hence in the above case, person has lost ITC of Rs 1,800/- and also
depreciation on Rs 1,800/- since he claimed the entire credit.
20
ITC on Registration Manner of Claiming Credit in special
ITC of Inputs held in Stock, semi-finished, circumstances Rule 40
finished goods • Within 30 days to becoming eligible for ITC, file Form GST ITC-01
Where exempt specifying inputs in stock, semi/finishes goods, CG
supply by RTP
Applied for Applied for Switched from
becomes taxable
– Held on day preceding the date from which liable to pay GST
registration Voluntary Composition to – Held on day preceding the date of grant of registration (for
supply, ITC of stock
within 30 days of Registration, Normal Levy, ITC of
held and Capital voluntary registration)
becoming liable, ITC of stock stock held and
goods exclusively
ITC of stock held held Capital goods
used for such – Held on day preceding the date from which liable to pay under
immediately immediately immediately normal levy instead of composition
exempted supply
preceding the preceding the preceding the date
date from liable date of from liable to pay
immediately – Held on day preceding the date from which exempt supplies
preceding the date become taxable
to pay tax registration tax
from which supply
becomes taxable • Form ITC-01 to be certified by practicing CA/Cost Accountant if
No Credit after the expiry of 1 year from the date of issue of invoice claim of CGST, SGST.IGST exceeds 2 lakhs
for such supply • ITC claimed shall be verified with GSTR-1 of supplier
21
Switch to Composition / Exemption
Composition Levy Normal Levy
Semi stock
finished/F
inished
ITC on CG reduced by 5% per After payment Goods
of such amount The amount

quarter/part thereof if any balance in
Capital
goods of credit shall
electronic credit be computed
Exempt Supply Taxable Supply register it will as may be
lapse prescribed
Debit electronic cash / credit ledger amount equivalent to credit of

input tax in respect of inputs held in
22
Rule 44 Change in the Constitution 18(3)
Inputs, semi finished on account of
Capital Goods
goods and finished goods
Proportionately on the
basis of corresponding ITC on remaining
invoices on which credit useful life sale, merger, demerger, amalgamation, lease or
had been availed computed on pro transfer of the business
rata basis taking
Prevailing Market Price useful life 5 years
With the specific provision for transfer of liabilities
Shall be determined separately for CT, ST, UT, IT,
File form GST ITC – 04 for Composition / Taxation & GSTR 10 for cancellation of
Reg allowed to transfer the unutilised ITC in the
Details of prevailing Mkt Price shall be certified by a CA or Cost accountant manner prescribed
23
Rule 41 ITC in case of Job Work Sec 19
• Registered Transferor shall file Form GST ITC-02 with ITC available to principal in respect of Inputs/ capital
request to transfer unutilized ITC lying in electronic goods sent for Job Work
credit ledger to transferee Entitlement Conditions Period of
• In case of de-merger, ITC to be apportioned in ratio of Return
value of assets of new units specified in demerger Inputs Sent by Principal or directly sent 1 year
scheme without bringing first to Place of
• Transferor to submit certificate from practicing CA/CS
Capital Goods Business of principal, returned 3 years
that sale/merger/de-merger, etc. done with specific
after completion of Job work
provision for transfer of liabilities
• If not returned within prescribed period then deemed to
• Transferee shall accept ITC-02 on common portal
be supply on the day when such inputs/ capital goods
• Inputs and CG transferred to be accounted for by the
were sent to jobworker.
transferee in his BOA
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CA Manish Gadia R 47 CA Manish Gadia R 48
24
Transfer of Inputs - Supply Input Service Distributor – ISD 2(61)
• Means an office
Inputs sent on 01/01/2018
• of the supplier of goods/services
Value Rs. 10,000/-
Received on 31/01/2019
• which receives tax invoices towards receipt of
input service and
Principal
Job worker
• issue prescribed document for the purpose of
GST shall be leviable on first leg of
transaction i.e. Rs. 10,000/- as the goods Value Rs. Sale on distributing of credit of CGST/SGST/UT-GST/IGST
12,000/- + 31/01/2019
are received by the principal or supplied to
the customer after 1 year
GST • paid on said services
• to supplier of taxable goods/services having
Hence Principal will have to pay GST on same PAN.
Rs. 10,000/- + interest from 20/02/2018 • Manner of Distribution
Customer (Indian or
23/06/2018 CA Manish Gadia R Foreigner) 49 23/06/2018 CA Manish Gadia R 50
25
Conditions for distribution Manner of distribution-Rule 39
•Distribution of the input service credit
 Against an ISD invoice issued to each of the recipient
containing such details as prescribed
 Credit distributed shall not exceed the amount of credit
Situation Under Service Tax Under GST
available for distribution

Credit
 Credit of tax paid on inputs service attributable to a pertaining to 1
Distribute to Distribute to
recipient to be distributed to that recipient that unit only that unit only
unit
 Credit of tax paid on input services attributable to more
than one recipient/ all recipients to be distributed only Credit Distribute to 2 Distribute to 2
amongst such recipient to whom the input service is pertaining to 2 units in ratio of units in ratio of
attributable pro rata on the basis of turnover in State of units out of 3 those 2 units those 2 units
such recipient during relevant period to the aggregate of
the turnover of all such recipients to whom such Input Credit
Distribute to Distribute to
Service is attributable and which are operational in the pertaining to all units all units
current year, during the said relevant period all units
26
Relevant Period Procedure for distribution of ISD
• the input tax credit available for distribution in a month shall
be distributed in the same month. The details of same shall be
Recipient has t/o provided in FORM GSTR- 6.
in P.Y. • ISD shall separately distribute the amount of ineligible input
tax credit and the amount of eligible input tax credit;
• Central tax, State tax, Union territory tax and integrated tax
shall be distributed separately
• C1 = (t1÷T) × C
Yes No
“C” = credit to be distributed,
“t1” = the turnover of person a recipient (R1) during the
relevant period,
“T” is the aggregate of the turnover, during the relevant
Ratio of T/o in Ratio of T/o in period, of all recipients to whom the input service is
P.Y. Previous quarter attributable
27
Eligible and
Example
Ineligible
IGST credit
will also be
Eligible credit CGST
and SGST
=1L
ISD invoice
transferred
in the
Ineligible credit CGST • Name, address and GSTIN of the Input Service
and SGST = 0.5L
same Maharashtra Distributor;
manner Not eligible
for Credit
• Serial Number of Invoices Max 16 Characters (can
contain ‘–’ or ‘/’)
• Date of its issue;
• Name, address and GSTIN of the recipient to
whom the credit is distributed;
Gujarat Rajasthan Maharashtra
T/o = 10 L T/o = 20 L T/o = 40 L • Amount of the credit distributed; and
Eligible
IGST=10*1/30= IGST=20*1/30= • Signature or digital signature of the Input Service
0.33L 0.67L
Distributor or his authorized representative:
IGST=10*0.5/30= IGST=20*0.5/30=
Ineligible 0.167L 0.33L
28
ISD debit and Credit notes ISD debit and Credit notes
Maharashtra Maharashtra
Eligible credit Eligible credit

=1L =1L
Gujarat Gujarat Based on ISD

Based on ISD Rajasthan Rajasthan
T/o = 10 L T/o = 10 L credit note
invoice issued T/o = 20 L T/o = 20 L
IGST=10*1/30= IGST=10*1/30= issued
IGST=20*1/30= IGST=20*1/30=
0.33L 0.67L 0.33L 0.67L
IGST=10*0.5/30= IGST=20*0.5/30= IGST=10*0.5/30= - IGST=20*0.5/30=

0.167L 0.33L 0.167L -0.33L
29
Recovery of excess distribution Recent Updates
ISD (Rs. 100 available)
Rs. 10
Distributable 50:50 to Unit A and short
Unit B distribute
d??
Distributed:
Unit A Rs. 60 & Unit B Rs.40
Rs 10 recoverable from Unit A

with interest
30
Enrolment as a GST Practitioner
Who Can File GST Returns?
• Registered Taxpayer (RT) Himself A person who has enrolled as a sales tax practitioner
• Chartered Accountant Appointed by the RT or tax return preparer under the existing law for a
• Cost and Works Accountant Appointed by the RT
Other than those mentioned above even a GST period of not less than five years;
Practitioner Can File GST Returns.
However, to be a GST Practitioner various Conditions

have to be fulfilled and in addition to those condition
one has to Clear the Examinations. Has to pass the examination within a period of
The NATIONAL ACADEMY OF CUSTOMS, One Year eighteen months
INDIRECT TAXES AND NARCOTICS has been
notified as the authority to conduct the exam for
enrolment as GST Practitioner
31
Priority Sector Lending Certificate
Waiver of Late Fee
under RCM
The Central Government has waived off Target of Lending
the late fee payable under section 47 150Crs. To
for failure to furnish GSTR 3B from Priority Sectors
October 2017 to April 2018, for such
person who had submitted the TRAN 1
but not filed the same up to 27th
December, 2017 provided the following
conditions are met: Will Buy a PSLC worth
1. Such person has filed Form TRAN 1 Rs.50Crs to Meet the
Lent 100 Target and Avoid Default Lent 200
latest by 10th May, 2018.
AND Crs Crs
2. GSTR 3B for October 2017 to April GST on Priority Sector Lending
2018 has been furnished by 31st Certificate will now be payable
May, 2018. by Yes Bank (i.e. the recipient
of such certificate)
32
GST rate for REC and PSLC • GST rate of 18 % under the residual entry at S.No. 453 of
SEIS Schedule III of notification No. 01/2017-Central Tax
Classified
(Rate) applies only to those goods which are not
Nil rate of GST under Heading
covered under any other entries of Schedule I, II, IV, V,
4907
or VI of the notification.
PSLC
POS?
12% GST EWB? • in modification of S.No. 3 of Circular No. 34/8/2018-
As per Circular No. 34/8/2018 - GST dated 01.03.2018 (S.No.3) GST dated 01.03.2018, it is hereby clarified that
Renewable Energy Certificates (RECs) and Priority Sector
PSLC are taxed @ 18% under the residual entry S. No. 453 Lending Certificates (PSLCs) and other similar
of Schedule III of notification No. 01/2017-Central Tax (Rate). documents are classifiable under heading 4907 and
attract 12% GST. The duty credit scrips, however, attract
PSLC is taxable @ 12% or 18%? Nil GST
33
No contract for supply of Moulds/Dies to be supplied by
Dies and Mould provided by OEM Component manufacturer
Contract for Supply of Moulds and Dies by Component Manufacturer
Free Free
Free Free Original equipment Component

Moulds
manufacturer (OEM) Manufacturer
Original equipment Component Supply Reverse
Moulds
manufacturer (OEM) Manufacturer ITC

Not related No need to add the
The moulds are not provided For section 15(2)(b) of CGST value of such
Not a supply since moulds/dies as per
in the course of furtherance of Act 2017, the amortized cost
not related or distinct No need to reverse ITC section 15(2)(b) as the
business, hence ITC is required of such moulds/dies shall be persons as it is provided in the cost was not to be
to be reversed availed on such added to the value of the
course of furtherance incurred by the
moulds components. component
of business
23/06/2018 CA Manish Gadia R 67 23/06/2018 CA Manish Gadia R
manufacturer 68
34
Servicing of Cars High Sea Sales
Whether supply of goods/services?
What is the
If principal
the value supply – Supply
of supply ofofgoods
Goods / Services?
Circular No. and services are separately
47/21/2018- Single price
shown charged
in the in the
invoice, Invoice
GST shall 'High Sea Sales‘ (HSS) is a common trade practice whereby
GST
be levied at the rates applicable the original importer sells the goods to a third person before
Supply ofto
Goods
goods and services separately
Supply of Service
the goods are entered for customs clearance
35
Bond to Bond Sales as per Customs
Sales before
custom
Importer clearance for Person Transfer of
Sales for RS. Goods to Sale before
10,00,000 RS. 12,00,000 Person A Warehouse of clearance from
Value 10 L CBW for Rs. 12 L Person B
• The importer (last buyer in the
chain) would be required to furnish As per Circular
no
the entire chain of documents, to
473/10/2017-LC
establish a link between the first
Liable to pay IGST at dated 24th
contracted price of the goods and November 2017 IGST shall be payable on 12
the last transaction. Rs. 12,00,000 at the BCD and IGST shall be
time of filing BOE as L to A
• the department may reject the payable on 10L
declared transaction value in case per Circular No. 33 B shall also pay BCD and
of a doubt regarding the truth or /2017-Cus Hence B shall Pay IGST effectively IGST on 10 L
on 22 L (10L +12L)
accuracy
23/06/2018
of the same. CA Manish Gadia R 71 23/06/2018 CA Manish Gadia R 72
36
Bond to Bond sales as per IGST Issues
1. Circulars are not binding on assessees. They are only
Transfer of clarifications binding on officers.
Goods to Sale before
Warehouse of clearance from 2. There are contradictory circulars under two laws Customs
Value 10 L CBW for Rs.
Person A 12 L and GST.
Person B
3. Circulars provide clarifications on Acts or Rules as
Transaction value or the value at the time of filing the
into-bond bill of entry, whichever is higher. amended on the date of issue of circulars. However, there
As per
has been no amendment in Acts or Rules before or after
Hence IGST shall be on 12L and IGST on the supply of
Circular no.
goods before their clearance from the warehouse would
issuance of Circular.
3/1/2018-
not be subject to the levy of integrated tax and the same 4. The transaction between A to B exempt, ITC 42?
IGST dated
would be levied and collected only when the warehoused
25/05/2018
goods are cleared for home consumption from the
customs bonded warehouse
37
Issues w.r.t Short term accommodation, Advance ruling no. AAR KAR ADRG 2/2018
conferencing services etc. to SEZ Facts of the case
Supply to employees
Whether Intra
state or Inter M/s Gogte Infrasturcture Development Corporation Ltd, is engaged in hotel
state? accommodation and restaurant services. They are providing services to the
employees & guests of some of the units in SEZ, Belgavi, in addition to the regular
Hotel - Mumbai Company in SEZ customers. They are charging SGST & CGST at the applicable rates. The SEZ units
contended that the services are being supplied / rendered to SEZ units only and
Location of Supplier Inter state as per hence rate of GST is NIL as per provisions of section 16(1) of IGST Act’2017.
section 7 (5)(b) Therefore the applicant filed an application seeking advance ruling on : “Whether
POS u/s 12 the Hotel Accommodation & Restaurant services provided by them, within the
premises of the Hotel, to the employees & guests of SEZ units, be treated as
Intra state supply of goods & services to SEZ units in Karnataka or not ?”
38
Ruling However the following issues still persists after AAR
1. On reading section 16(1)(b) with rule 46 of CGST Rules 2017, it is As per section 7(5)
clearly evident that the supplies of goods or services or both (b) Supply of goods or services or both to or by a Special Economic Zone
towards the authorised operations only shall be treated as developer or a Special Economic Zone unit; or by a Special Economic Zone
Supplies to SEZ Developer / SEZ Unit. developer or a Special Economic Zone unit; or
2. For Hotel accommodation and restaurant services POS is location (‘c) in the taxable territory, not being an intra-State supply and not covered
of Hotel and place where there is Performance of services elsewhere in this section
respectively. Section 7 and 8 of
Inter state supply IGST does not
3. Therefore the services rendered by the applicant are neither the
Further as per section 8(1)(i), Supply of services consider POS and
part of authorised operations nor consumed inside the SEZ and
hence cannot be said to have been ‘imported or procured’ into
to or by a SEZ or a SEZ developer LOS. However there
SEZ Unit/Developer. Shall not be is no reference of
these sections in
4. Hence in the instant case, the supply is intra state supply. Intra state supply AAR
39
Applicability of GST on Tenancy Rights
It is an established principle of interpretation of statutes that in
case of an apparent conflict between two provisions, the
specific provision shall prevail over the general provision. Transfer of Tenancy Rights
Section 7(5)(b) of the IGST Act is a specific provision relating to

supplies of goods or services or both made to a SEZ developer For Residential For other than
Purpose Residential purpose
or a SEZ unit, which states that such supplies shall be treated
as inter-State supplies.
Taxable under GST as per Schedule II.
This cannot be treated as sale of land
clarified that services of short term accommodation, Exempt from GST as per Notification No. i.e. neither a supply of goods nor a
12/2017- Central Tax (Rate) supply of services as mentioned in
conferencing, banqueting etc., provided to a SEZ developer Schedule III
or a SEZ unit shall be treated as an inter-State supply
40
Refund of IGST IGST Refund where there is no Short-Payment of Tax in
GSTR – 3B
• Custom Policy wing will prepare a list of exporters whose IGST
Circular 12/2018- amount paid as per GSTR 3B is ≥ amount indicated in GSTR 1
for July 2017 to March 2018.
Customs, has been
issued for
sanctioning IGST • A confirmatory email shall be sent to such exporters
refund claims where

the records have not
• Above mentioned exporters shall submit a certificate from CA
been transmitted before 31st October, 2018 to custom office at port of export.
• A copy of such certificate shall be submitted to Jurisdictional
from the GSTN to DG GST Officer
Systems Non submission of CA Certificate

shall affect future IGST Refunds
23/06/2018 CA Manish Gadia R 81 23/06/2018 CA Manish Gadia R of Exporter 82
41
IGST Refund where there is Short-Payment of Tax in
GSTR – 3B Compared to GSTR - 1
Custom Policy wing will Exporters will have Clarifications on
Refund related
prepare a list of exporters An E-mail shall be sent to make Payment of
whose IGST amount paid as to such exporters for Such Shortfall in
per GSTR 3B is < amount Short-Payment of GST Subsequent GSTR 3-
Issues vide
indicated in GSTR 1 for July B
2017 to March 2018.
Circular No.
If the Aggregate Amount If the Aggregate Amount Proof of Payment
of Refund Claimed is > Rs. of Refund Claimed is ≤ (i.e. Challan + Filed
10 Lacs then Proof of Rs. 10 Lacs the Proof of GSTR 3-B) to be
45/19/2018- GST
Payment will have to be Payments have to be submitted to the
Certified by a CA that Self-Certified relevant Customs
payment has been made Officer
dated 30th May,

2018
An Undertaking that if Wrong A CA Certificate stating
Refund is claimed we shall that Refund has been
pay the same will have to be claimed only to the
furnished extent of IGST Paid.
42
Refund in case of incorrect disclosures
IGST Refund to ISD, Composition Tax Payer in GSTR 3B
and Non Resident Taxable Person
Initially Input Service Distributors (ISD), Composition Tax
payer and Non- Resident Taxable person were required
to file GSTR 3B and GSTR 1 as per Circular 24/24/2017-
GST dated 21st December, 2017. Since these taxpayers
have specific returns namely
• GSTR 4- Composition Tax Payer Refund of IGST can
still be claimed for
• GSTR 5- Non Resident Taxable Person Sales to SEZ disclosed
the period 1/7/2017
in 3.1(a) of GSTR 3B
• GSTR 6- ISD rather than 3.1(b) to 31/3/2018
it has been clarified vide Notification No. 45/19/2018- GST, Refund of wrongly disclosed SEZ Sales can be claimed if the
GST that filing of such returns shall be sufficient for amount of IGST/cess refund claimed is upto the aggregate amount
claiming refund of IGST. of IGST/cess mentioned in Table under columns 3.1(a) + 3.1(b) +
3.1(c) of Form GSTR 3B filed for the corresponding Tax period.
43
Refund of Compensation Cess LUT/ Bond for zero rated supply of
exempted/ Non- GST goods
Can refund of such

INPUT- Cess Applicable OUTPUT – Cess not Applicable
unutilized cess be
claimed?
Refund of compensation can be claimed in case of
exports made without payment of IGST. However, Refund of IGST/ Cess shall be allowed to suppliers
refund of compensation cess shall not be admissible involved in making zero rated supply of exempted/
in case of Exports made with Payment of IGST. Non- GST Goods without furnishing a bond/ LUT
44
Scope of Restriction imposed by rule 96(10)
Inverted rate refund
Inward tax rate = 18% Outward tax rate = 5%
Directly Supplied goods to Exporter
Government provides for refund of Excess ITC of 13% getting

such ITC as per the following formula accumulated every month
Supplier who has availed

benefit of various
Such exporter is restricted
notifications such as
from exporting goods
As per Section 54(3)(ii) of CGST Act 2017, Refund of
Merchant Exporter/ accumulated ITC is available subject to the rules prescribed
with payment of IGST to
deemed export in this behalf
avoid utilizing ITC of other
23/06/2018 CA Manish Gadia R
domestic supplies. 89 23/06/2018 CA Manish Gadia R 90
45
Inverted rate refund Example
As per Rule 89 of CGST Rules 2017 Suppose there is an outward supply taxable @ 5% but inputs
services are taxed @ 18%.
Notification No.
26/2018 – Central Tax
Particulars Amount
Inverted rate T/O 10,00,000
Turnover of inverted rated supply tax payable on
of Goods and Services such inverted Total T/O 15,00,000
Net
rated supply of Net ITC availed 2,35,000
Adjusted Total Turnover ITC
Goods Tax paid on Inverted rate 50,000
and Services
Excludes: The value of exempt supplies Input tax credit availed on inputs during Refund as per 10,00,000
the relevant period other than the input Formula 2,35,000 50,000 1,06,667
other than zero-rated supplies and 15,00,000
What about
The turnover of supplies in respect of
refund ofavailed
tax credit ITC for which refund is
on sub
which refund is claimed under supply
rules of claimed
services?under sub-rules (4A) or (4B) or Separate Calculation shall be required for CGST, SGST and
(4A) or (4B) or both both IGST
46
Inverted rate refund
Input @ 18% Output @ 5%

Supply
In the present case, the output

supply is the supply of Job Can refund of Inverted
work services and not of goods rate duty be taken
(fabrics). considering Notification
The notification specifies No. 5/2017-Central Tax
supply of Fabrics. Hence (Rate) dated 28.06.2017?
refund in the present case shall
be applicable
47
Multiple consignment
Will notify from future With in 50 Kms in same state
date – Press release
< 50 Kms
Person - 1 Sending Goods from/or to

Person - 2
Warehouse/Place of business of
Consignor/Consignee to/from
Since all the the transporter for further
Consignments taken transportation within the state
together are above On generation of
Rs.50,000/-. EWB he may also However details have to be No need to furnish the
Transporter shall generate a details of conveyance in
generate EWB-01 furnished in Part A of EWB-01
consolidated EWB
by the registered Person and Part B of Form EWB-01
He may generate this on the basis details in Part – B may be Explanation 2 to Section
Except in case of
Railways, air and vessel of Invoice/Bill of supply/Deliver filled by the Transporter. 138(3)
23/06/2018 Challan as Gadia
CA Manish the Rcase maybe 95 23/06/2018 CA Manish Gadia R 96
48
Transportation of goods other
Goods along with
EWB Generation
passenger for than Road Whether EWB is required
calibration in
Railway / Air line
to be generated?
Generation of EWB is
Railway Air
In place of vehicle number
dependent on whether
1. Railway – Railway the movement of
Will deliver the Receipt
2. Airway – Air Goods is inter state or
goods only on
production of
Consignment Note not.
3. Waterway – Bill of
Eway bill Vessel Landing Since Goods cross
DELHI in the present
Registered supplier or recipient shall generate Eway bill before or case, EWB is required
after the commencement of movements furnish the information in
part B
23/06/2018 CA Manish Gadia R 97 23/06/2018 CA Manish Gadia R
to be generated 98
49
Movement to or from SEZ Exemption to issue EWB
moved for reasons other

Is EWB generation than supply
Seepz, Mumbai
required?
Circular No. Empty LPG Cylinder
47/21/2018-GST
The supply is inter-state but the No need to Issue EWB as
movement of Goods is intrastate per Notification No.
as SEZ and DTA are located in the 26/2018 – Central Tax
same state - Maharashtra
23/06/2018 CA Manish Gadia R
Bhiwandi, Thane
99 23/06/2018 CA Manish Gadia R 100
50
Maintenance of Books of Accounts incase
Place of business incase of auction of of tea, coffee, rubber etc.
tea, coffee, rubber etc. • The Principal and Auctioneer required to maintain the
books of accounts relating to each and every place of
Principal and Auctioneer may declare the business in that place itself (i.e. The warehouse).
warehouse, where the goods are stored, as • in case difficulties are faced in maintaining the books of
their additional place of business accounts they may maintain the books of accounts
relating to the additional place(s) of business at their
principal place of business instead of such additional
The buyer is also required to disclose such place(s).
warehouse as his additional place of business if • They shall intimate their jurisdictional officer in writing
he wants to store the goods purchased through about the maintenance of books of accounts relating to
the additional place(s) of business at their principal place
auction in such warehouses
of business
51
Input Tax Credit incase of auction of tea,
Opinions or views
coffee, rubber etc. are like wrist
watches.
• the principal and the auctioneer shall be
Every watch shows
eligible to avail input tax credit subject to the
different time from
fulfillment of other provisions of the CGST Act
others.
read with the rules made thereunder.
But every one
believes that their
time is right!
52
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53
Manner of Distribution Manner of Distribution
State A State B State A
ISD Business Verticals
ISD Units
Cr. Of Distributed as Distributed as
Cr. Of SGST / UTGST SGST / UTGST
IGST IGST
CGST IGST IGST
SGST / Cr. Of CGST CGST

UTGST IGST
54

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FAQ : It is a destination based tax on consumption of goods and

CST/Entertainment/ Goods/Entertainme Not Available to any

23/06/2018 CA Manish Gadia R 3 23/06/2018 CA Manish Gadia R 4

SGST Such details available to

23/06/2018 CA Manish Gadia R 13 23/06/2018 CA Manish Gadia R 14

his electronic credit

 except when they are used for making

of such amount The amount

Debit electronic cash / credit ledger amount equivalent to credit of

available for distribution

Eligible credit Eligible credit

Gujarat Gujarat Based on ISD

IGST=10*0.5/30= IGST=20*0.5/30= IGST=10*0.5/30= - IGST=20*0.5/30=

Rs 10 recoverable from Unit A

However, to be a GST Practitioner various Conditions

Free Free Original equipment Component

Circular No. 47/21/2018-GST

Whether supply of goods/services?

Section 7(5)(b) of the IGST Act is a specific provision relating to

refund claims where

Systems Non submission of CA Certificate

dated 30th May,

Can refund of such

Government provides for refund of Excess ITC of 13% getting

Supplier who has availed

Input @ 18% Output @ 5%

In the present case, the output

23/06/2018 CA Manish Gadia R 93 23/06/2018 CA Manish Gadia R 94

Person - 1 Sending Goods from/or to

moved for reasons other

23/06/2018 CA Manish Gadia R 103 23/06/2018 CA Manish Gadia R 104

23/06/2018 CA Manish Gadia R 105 23/06/2018 CA Manish Gadia R 106

CGST IGST IGST

SGST / Cr. Of CGST CGST

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IGST=100.5/30= IGST=200.5/30= IGST=100.5/30= - IGST=200.5/30=