BOARD OF STUDIES THE INSTITUTE OF CHARTERED ACCOUNTANTS OF ...estv.in/icai/26052017/Input Credit...
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Transcript of BOARD OF STUDIES THE INSTITUTE OF CHARTERED ACCOUNTANTS OF ...estv.in/icai/26052017/Input Credit...
BOARD OF STUDIES
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
Goods & Services Tax
Input Tax Credit
CA Sushil Kr Goyal
What does GST mean
2
What does GST Mean ……
3
Taxation on
Value Addition…
Tax on Value Addition
4
A= Manufacturer
(Rs)
S P 1000GST 120Total 1120Payment=80 ITC
40 Cash
Rate of GST 12%
B= Wholesaler
(Rs)
Cost 1120 (Tax120)SP 1500GST 180Payment=120 ITC
60 Cash
C= Retailer
(Rs)
Cost 1680 (Tax180)
SP 2000GST 240Payment= 180 ITC
60 Cash
D= Consumer
(Rs)
Cost 2000GST 240 Total cost=2240
Tax on Value Addition
5
Under the system, every body will pay tax on value addition
All person in chain is liable to pay tax through cash or credit in the chain
Tax in the form of credit get passed to the next person in chain
Consumer is ultimately bearing the full tax liability
Input Tax Credit
6
Section 16:
• Eligibility and conditions for taking input tax credit.
Section 17:
• Apportionment of credit and blocked credits
Section 18:
• Availability of credit in special circumstances
Section 19:
• Credit of inputs and capital goods sent for job work
Section 20:
• Manner of distribution of credit by ISD
Section 21:
• Manner of recovery of excess credit distributed
Input Tax means
7
Input tax means the Central tax (CGST), State tax (SGST), Integrated tax (IGST) or Union territory tax (UTGST) charged on supply of goods or services or both made to a registered person.
It also includes tax paid on reverse charge basis and integrated goods and services tax charged on import of goods.
It does not include tax paid under composition levy.
WEST BENGALOUT OF INDIA REST OF INDIA
FACTORY
GODOWN
CUSTOMERVENDOR
CUSTOMER
WAREHOUSE
VENDOR
EXPORT
IMPORTIGST IGST
CUSTOM DUTY
NO GST IGST
NO
GST
Levy of CGST+SGST / IGST
Input Credit Adjustment
9
Input
Tax
CGST
CGSTIGST
12
CGST1Input
Tax
CGST
Input
Tax
SGST
SGSTIGST
12
SGST1Input
Tax
SGST
Input
Tax
IGST
IGSTCGST
12
SGST
3
IGST
IGSTCGST
Input
Tax
IGST
SGST
Definitions:
10
“Capital Goods” means. - goods, the value of which is capitalised in the
books of account of the person claiming the input tax credit and which are
used or intended to be used in the course or furtherance of business.[Sec
2(19)]
“Input” means any goods other than capital goods used or intended to be used
by a supplier in the course or furtherance of business.[Sec 2(59)]
“Input Service” means any service used or intended to be used by a supplier
in the course or furtherance of business .[Sec 2(60)]
Comparative review:
11
Aspect Credit under present system Input tax credit under GST
Definition of “capital goods”
Defined in Cenvat Credit Rules
Comparatively wider definition.
Definition of “inputs” Defined in Cenvat credit Rules
which has inclusion and exclusion limb.
Exhaustive definition and does
not contain inclusion or exclusion limb.
Definition of “inputs services”
Defined in Cenvat credit Rules
which has inclusion and exclusion limb.
Exhaustive definition and does
not contain inclusion or exclusion limb.
Electronic credit ledger No such concept Electronic credit ledger
required to be maintained for
crediting and utilising input tax credit
12
Input Tax Credit
Conditions for obtaining ITC
13
Eligibility and
Condition
must be used “by him”
Possession of documents
contain all the prescribed particulars
upload the details of such documents
received goods or services
last installment of goods
payment to the supplier within
180 days
No depreciation
Not pursuant to an order
Sept month / Annual Return
Documents
14
Documents to be relied upon for availment of input tax credit:
Invoice issued under
section 31
Debit note
issued under
section 34
Bill of entry
Invoice for
reverse charge
Document issued by
ISD
15
Apportionment or Block Credit
Apportionment of Credit
16
17
Apportionment of Credit
18
Apportionment of Credit
The value of exempt supply shall be such as may be prescribed, and shall
include
supplies on which the recipient is liable to pay tax on reverse charge basis,
transactions in securities,
sale of land and,
sale of building. (subject to clause (b) of paragraph 5 of Schedule II)
19
Apportionment of Credit
100,000
Amount
10,000
10,000
5,000
20
Apportionment of Credit
75,000
Amount
50,000
25,000
21
Apportionment of Credit
25,00,000
Amount
1,00,00,000
67,500
1,250
17,500
6,250
22
Apportionment of Credit
Note 1:
T1, T2, T3 and T4 shall be determined as above and declared in
Form GSTR-2
Note 2:
No turnover in a period take earlier period figure
Note 3:
Aggregate value excluding taxes
23
Apportionment of Credit Banking and Finance
Procedure of availing Input tax credit for banking company or financial
institution
It will avail of, every month, an amount calculated as above
It will avail of, every month, an amount equal to fifty per cent of the
eligible input tax credit on inputs, capital goods and input services in that
month and the rest shall lapse.
The option once exercised shall not be withdrawn during the remaining
part of the financial year.
Restriction of 50% will not apply on supply from other unit having same
PAN
24
Apportionment or Block Credit
Blocked Credit
motor vehicles and other conveyance
Supply of goods and or services provided in relation to food and beverages, membership of a club, rent a cab, insurance etc,
works contract services and Goods or services
goods or services or both received by a non-resident taxable expect imported by him
25
Blocked Credit
goods and/or services on which tax has been paid under section 10 i.e composition levy
goods and/or services used for private or personal consumption.
Goods lost or stolen, destroyed, written off or disposed by way of gift or sample
proceeding of demand and recovery and seizer of goods in transit
26
27
Matching Concept
Ratna Steels Portal Super Cars Ltd Portal
Ratna Steels GSTR-1
Ratna SteelsOutward Supplies
Register
Super Cars Ltd Ratna steels Rev Automobiles
Books of Super Cars Ltd for JulyInward Supplies Register Outward Supplies Register No Qt
y
Amt GST
Tot.
225 2,25,000 40,500
No Qt
y
Amt GST
Tot.
215 2,36,500 42,570
No Qt
y
Amt GST
Tot.
225 2,25,000 40,500
6 100 1,00,000 18,000
6 100 1,00,000 18,000
7 50 50,000 9,000
7 50 50,000 9,000
8 25 25,000 4,500
8 25 25,000 4,500
10 50 50,000 9,000
10 50 50,000 9,000
1 80 88,000 15,840
4 45 49,500 8,910
2 60 66,000 11,880
3 30 33,000 5,940
Aug
10Super Cars Ltd GSTR-1
1 80 88,000 15,840
4 45 49,500 8,910
2 60 66,000 11,880
3 30 33,000 5,940
Aug
11
6 100 1,00,000 18,000
6 1,00,000 18,000
Aug
15
Ratna Steels GSTR-1A
6 1,00,000 18,000
In.No Amt GST
6 1,00,000 18,000
Aug
16
Aug
21
6 100 1,00,000 18,000
PaymentPayment
Aug
20
28
Matching Concept
TAX
GST ReturnSeller
Buyer gets input credit if seller pays GST
Seller pays tax to the government Buyer gets input credit
Availing ITC in GST Regime
29
30
Special Circumstances
Newly registered person
31
The person was liable to take registration and he has applied for registration
within 30 days from the date on which he became liable to registration, then
input tax credit of inputs held in stock and inputs contained in semi finished
or finished goods held in stock on the day immediately preceding the date on
which he became liable to pay tax can be taken.
Newly registered person
32
Illustration:
ABC Ltd. (a manufacturer company of Rajasthan state) has crossed the proposed
threshold limit of turnover of Rs.20 lacs on 20/11/2016 and has obtained
registration on 04/12/2016 (i.e. within the limit of 30 days). Hence the company is
eligible for ITC on inputs held in stock as on 19/11/2016 (i.e. immediately
preceding date of attracting the provision to pay the tax).
Voluntary registration
33
The person who obtains voluntary registration is entitled to take the input
tax credit of input tax on inputs in stock, inputs in semi- finished goods and
finished goods in stock, held on the day immediately preceding the date of
registration.
ITC Entitlement on voluntary registration
34
Illustration:
ABC Ltd. (a manufacturer company of Rajasthan state) is not liable to getregistration under GST as it hasn't crossed the proposed threshold limit of Rs.20lacs and but voluntary obtained registration 20/11/2016. Hence the company iseligible for ITC on inputs held in stock as on 19/11/2016.
Crosses the compounding threshold
35
He can avail ITC in respect of inputs held in stock and inputs contained in
semi-finished or finished goods held in stock and on capital goods (reduced
by prescribed percentage points i.e. 5% per quarter of an year or part
thereof from the invoice date received by the taxable person) on the day
immediately preceding the date from which he ceases to be eligible for
composition scheme.
Crosses the compounding threshold
36
Illustration:
Mr. A, a registered person was paying tax under composition scheme up to 30th July,2017. However, w.e.f 31st July, 2017, Mr. A becomes liable to pay tax under regularscheme. Is he eligible for ITC?
Mr. A is eligible for input tax credit on inputs held in stock and inputs contained insemi-finished or finished goods held in stock and capital goods (reduced by suchpercentage points as may be prescribed i.e. 5% per quarter per of a year or partthereof from the date of invoice received by taxable person) as on 30th July, 2017.
Exempted Goods became taxable
37
He can avail ITC in respect of inputs held in stock and inputs contained in
semi-finished or finished goods held in stock and on capital goods (reduced by
prescribed percentage points i.e. 5% per quarter of an year or part thereof from the
invoice date received by the taxable person) on the day immediately preceding the
date from such supply become taxable…
Sale of capital goods
38
In case of supply of capital goods or plant and machinery on which input tax credit has been taken,
the registered person shall pay an amount equal to the input tax credit taken on the said capital goods or plant and machinery
reduced by the percentage points as may be specified in this behalf ( i.e. 5% per quarter in an year or part thereof from the date of invoice as received by the taxable person) or
the tax on the transaction value of such capital goods, whichever is higher.
39
Provided that where refractory bricks, moulds, and dies, jigs and
fixtures are supplied as scrap, the taxable person may pay tax on
the transaction value of such goods determined u/s 15 ( i.e value
of taxable supply)
Sale of capital goods
40
Job Worker
Job work
41
Job work means undertaking any treatment or process by a person on
goods belonging to another registered taxable person. The person
who is treating or processing the goods belonging to other person is
called ‘job worker’ and the person to whom the goods belongs is
called ‘principal’.
Job work
42
The “principal” shall, subject to such conditions and
restrictions as may be prescribed, be allowed input tax
credit on inputs sent to a job-worker for job-work.
43
The "principal" shall be entitled to take credit of input tax on
inputs/capital goods even if the inputs are directly sent to a job
worker for job-work without their being first brought to his place of
business subject to certain conditions
Job work
Conditions
44
The principal shall be given input credit on goods sent for Job Work
provided such goods are received back by the principal within 1 year of
their being sent out.
Received Back means :
after completion of job-work or otherwise or
are not supplied from the place of business of the job worker
Conditions
45
For transfer of inputs to the job-worker under the cover of a challan
including where they are sent directly (to maintain paper trail of
transaction)
Challan is to contain all details as required in respect of an invoice in
Rule 8 (of Invoice Rules).
Reference may be made to Chapter VII relating to Tax Invoice, credit &
debit notes for the particulars to be included in the document & for
detailed description.
Conditions
46
All challans issued in respect of inputs sent to job-worker and those
received back are to be reported in GSTR-1
In case of non-receipt of the inputs within the time prescribed, the
challan issued will be deemed to be invoice for the implied supply of
inputs
Conditions
47
The period of 1 year shall be reckoned from the date the job worker
receives such inputs.
The credit of inputs can be taken even if inputs are sent directly to job-
worker’s premises without bringing it to principal’s place of business.
If the inputs are not received back within 1 year, it shall be deemed that
such inputs have been supplied by principal to the job worker on the
day when the said inputs were sent out.
Conditions
48
The principal shall be given input credit on capital goods sent for Job
Work provided such capital goods are received back by the principal
within 3 year of their being sent out.
Conditions
49
If Goods are not received within specified time limit
it would be deemed that such inputs or capital goods had been supplied bythe principal to the job worker on the day when the said inputs or capitalgoods were sent out by the principal or
on the date of receipt by the job worker where the inputs or capital goodswere sent directly to the place of business of job worker
Thus the principal would be liable to pay tax accordingly.