GST Draft Law, 2016 Simplified Part I

MODEL GST LAW Goods & Service Tax Act, 2016 GST Act, 2016 25 Chapters162 Sections4 SchedulesRules as to Valuation under GST Model GST Law, 2016 CA MILIND KALE 2 | P a g e CHAPTER I PRELIMINERY Section 1: Short title, extent and commencement 1. Central/State GST Act, 2016 2. Extends to whole India/States 3. Come into force from ______________(date appointed by Central/State Govt) Section 2: Definitions DEFINATIONS Section 3: Meaning & scope of supply 1. 2. Schedule II shall apply for determining what is or is to be treated as SUPPLY 2A. Transactions with Agent SUPPLY 3. CG may specify transactions that are a. A supply of goods and NOT a supply of services b. A supply of services and NOT a supply of goods c. Neither supply of goods nor supply of service 4. Supply of branded Service Deemed Supply o f Brand Owner Supply includes All forms of supply of goods and/or services for a consideration by a person in the course or furtherance of business Importation of Service whether or not for consideration AND whether or not in the course or furtherance of business Supply specified in Schedule I made or agreed to made without consideration Model GST Law, 2016 CA MILIND KALE 3 | P a g e CHAPTER II ADMINISTRATION Section 4: Classification of Officers under CGST Ac t Principal Chief Commissioners of CGST or Principal Directors General of CGST Chief Commissioners of CGST or Directors General of CGST Principal Commissioners of CGST or Principal Additional Directors General of CGST Commissioners of CGST or Additional Directors General of CGST First Appellate Authority Additional Commissioners of CGST or Additional Directors of CGST Joint Commissioners of CGST or Joint Directors of CGST Deputy Commissioners of CGST or Deputy Directors of CGST Assistant Commissioners of CGST or Assistant Directors of CGST such other class of officers Model GST Law, 2016 CA MILIND KALE 4 | P a g e Section 4: Classification of Officers under SGST Act Commissioner of SGST Special Commissioners of SGST Additional Commissioners of SGST Joint Commissioners of SGST Deputy Commissioners of SGST Assistant Commissioners of SGST such other class of officers Section 5: Appointment of officers under CGST Act Person Authorized to appoint The Board Officers specified in Section 4 Section 6: Powers of Officers under CGST Act 1. The powers & duties conferred or imposed on him und er this Act 2. The powers & duties conferred or imposed on his sub ordinate under this Act 3. The Board/Commissioner may delegate his power to an y of his subordinate 4. First Appellate Authority shall not exercise the po wers & discharge duties conferred or imposed on officer under this Act except those spec ified in Section 79 Model GST Law, 2016 CA MILIND KALE 5 | P a g e CHAPTER III LEVY OF, AND EXEMPTION FROM, TAX Section 7: Levy & Collection of Central/State GST Intra State Supplies of Goods &/or Services Taxable to CGST & SGST. Central or state Government may specify categories of supply on which tax is payable under RCM. Section 8: Composition Levy 1. Aggregate Turnover <= Rs.50 Lakhs 2. Tax Rate >= 1% 3. A taxable person who affects interstate supplies of goods & services is not eligible for composition levy 4. All registered taxable persons having the same PAN should opt for composition levy 5. A taxable person who opt for composition levy shall not charge tax on his invoice/shall not collect tax from the recipient 6. A taxable person who opt for composition levy shall not entitled to credit of input tax Section 9: Taxable Person 1. Business Entity in India T/O More than Agricul turist Rs.10 Lakhs (Rs.5 Lakhs for NE States) NOT Taxable Perso n 2. Central/State Govt. or Local Authority For Activities or transactions in which Excl. Activities of they are engaged as public authorities Schedule IV 3. NOT TAXABLE Persons a. Employee b. Person exclusively supplying nontaxable goods and/o r services c. Person receiving services for personal use on which tax is payable under RCM up to specified limit. Model GST Law, 2016 CA MILIND KALE 6 | P a g e Section 10: Power to Grant Exemption 1. Power to Grant Exemption: Central or State Government on recommendation of co uncil 2. Modes of granting exemption: Notification Special Order under circumstances Explanation to Notification or Special Order of an exceptional nature (to be is sued within 1 year from the date of original Notification or Special Order) Section 11: Remission of tax on supplies found defi cient in quantity 1. Rules for remission to be made by Central/State Gov t. 2. Limit for remission / percentage of remission shall be fixed Model GST Law, 2016 CA MILIND KALE 7 | P a g e CHAPTER IV TIME & VALUE OF SUPPLY Section 12: Time of Supply of Goods 1. Liability to pay CGST/SGST At the time of supply 2. Time of Supply * Date of credit in bank account or date of record of payment in books of accounts whichever is earlier. Time of Supply Goods Required to be removedNot required to be removed Supplier issues InvoiceSupplier receives the paymentthe recipient shows the receipt of the goods Date of Removal Date on which goods made available to recipient Date of Invoice Date of receipt of payment* Date of receipt Whichever is earlier Model GST Law, 2016 CA MILIND KALE 8 | P a g e 3. Continuous Supply of Goods 4. Supplies in respect of which tax is paid or liable to be paid on reverse charge basis * Date of debit from bank account or date of record o f payment in books of accounts whichever is earlier. Continuous Supply of Goods successive statements of accounts or successive payments are involved the date of expiry of the period no successive statements of account date of issue of the invoice or the date of receipt of payment, whichever is earlier When tax is payble under RCM date of receipt of goodsdate on which payment is made*date of receipt of invoicedate of debit in books of A/C Whichever is earlier Model GST Law, 2016 CA MILIND KALE 9 | P a g e 5. When goods are removed for (being sent or taken on approval or sale or return or similar terms 6. Not possible to determine time of supply by aforeme ntioned provisions then, Remove without knowing supply will take place the time when it becomes known that the supply has taken place six months from the date of removal Whichever is earlier Not possible to determine time of supply a periodical return has to be filed the date on which such return in filed in any other case the date on which the CGST/SGST is paid Model GST Law, 2016 CA MILIND KALE 10 | P a g e Section 13: Time of supply of services 1. The Liability to pay CGST/SGST At the time of su pply 2. Time of Supply of Service 3. Continuous Supply of Service Time of Supply of Service invoice is issued within the prescribed period date of issue of invoice or the date of receipt of payment, whichever is earlier the invoice is not issued within the prescribed period date of completion of the provision of service or the date of receipt of payment, whichever is earlier Other Cases recipient shows the receipt of services in his books of account Continuous Supply of Service the due date of payment is ascertainable from the contract date on which the payment is liable to be made by the recipient the due date of payment is not ascertainable from the contract the supplier of service receives the payment, or issues an invoice, whichever is earlier the payment is linked to the completion of an event time of completion of that event Model GST Law, 2016 CA MILIND KALE 11 | P a g e 4. Supplies in respect of which tax is paid or liable to be paid on reverse charge basis 5. When the supply of services ceases under a contract before completion of the supply as per contract At the time when supply ceases 6. Not possible to determine time of supply by aforeme ntioned provisions then When tax is payble under RCM date of receipt of servicedate on which payment is made*date of receipt of invoicedate of debit in books of A/C Whichever is earlier Not possible to determine time of supply a periodical return has to be filed the date on which such return in filed in any other case the date on which the CGST/SGST is paid Model GST Law, 2016 CA MILIND KALE 12 | P a g e Section 14: Change in rate of tax in respect of supply of services Date of Service Date of Invoice (DOI) Date of Payment (DOP) Time of Supply Before After After DOI or DOP Before Before After DOI Before After Before DOP After Before After DOP After Before Before DOI or DOP After After Before DOI Section 15: Value of taxable supply 1. Value of Supply = Transaction Value (Paid or Payabl e) where supplier & recipient are not re lated parties 2. Transaction Value includeD a. Amount paid by recipient w.r.t. supply on behalf of supplier b. Value of goods and/or services supplied by recipien t for use in connection with supply c. Royalties & license fees related to supply which r ecipient must pay d. Any taxes, duties, fees and charges levied under an y other statue other than CGST Act, SGST Act & IGST Act e. Incidental Expenses f. Value of subsidies linked to supply g. Expenses incurred by supplier w.r.t. supplies which are reimbursable h. Any discount or incentive allowed after supply Transaction Value shall not include any discount al lowed before or at the time of supply 3. In the following cases value of supply shall be con sider according to valuation rules a. The consideration paid is party or fully in kind (n ot money) b. When parties are related c. There is reason to doubt on transaction value decla red d. Business transactions undertaken by a pure agent, m oney changer, insurer, air travel agent and distributor or selling agent of lo ttery e. Other to be specified Model GST Law, 2016 CA MILIND KALE 13 | P a g e CHAPTER V INPUT TAX CREDIT Section 16: Manner of taking input tax credit 1. Input Tax Credit is available to registered taxable person subject to conditions & restriction 2. Input tax credit admissible to registered taxable p erson shall be credited to his electronic credit ledger 3. A person applied for register can avail input tax c redit after registration is granted on raw material, WIP & finished goods held in stock on the immediate preceding day from which his T/O exceeds Rs.10Lakhs. 4. A person applied voluntarily registration can also take input tax credit 5. A taxable person earlier registered in composition scheme can avail input tax credit from the date when he crosses T/O Rs.50Lakhs, also he can avail input tax credit on raw material, WIP & finished goods held in stock on the immediate preceding day from which his T/O exceeds Rs.50 Lakhs 6. Input tax credit is not allowed after one year from date of invoice. 7. Input tax credit is allowed only that part of suppl y which is used in business. 8. Input Tax Crdit w.r.t. Taxable Supply ITC Allowed w.r.t. Non Taxable Supply (Incl exempt supply) ITC not Allowed Model GST Law, 2016 CA MILIND KALE 14 | P a g e 9. Input tax credit shall not available w.r.t a. Motor vehicles except when used in providing follow ing taxable service i. Transportation of passengers ii. Transportation of goods iii. Imparting training on motor driving skills b. Goods and/or services used for personal use or cons umption of any employee. E.g. food and beverages, outdoor catering , beauty treatment, health services etc. c. Goods and/or services acquired in execution of work s contract of immovable property except plant & machinery. d. Goods and/or services on which tax is paid under co mposition levy 10. ITC not allowed on that part of tax component on w hich depreciation is claimed under IT, Act. 11. Conditions for availing ITC: a. He is in possession of tax paying document (Invoice , Debit Note etc.) b. He has actually received the goods and/or service c. Tax is actually paid to appropriate government d. He has furnished return under section 27 Notes: