GST and Exports
The Goods and Services Tax(GST) is the most revolutionary tax reforms in the annals of Indian Tax history. The subsuming of major Central and State taxes in GST, doing away of cascading effect of taxes complete and comprehensive set-off of input goods and services and phasing out of Central Sales Tax (CST) would reduce the cost of locally manufactured goods and services. This will increase the competitiveness of Indian goods and services and give boost to Indian exports. The uniformity in tax rates and procedures across the country coupled with single common portal to meet the compliance requirement will go a long way in reducing the compliance cost and making India a single market. GST is also likely to reduce the logistics cost in India which is one of the highest in the world. The logistics cost in India is about 14% of GDP whereas in advance economies it is about 8to9% of the GDP. The E way bill, which will be introduced from 1st of February, 2018, on a pilot basis, on Inter State Movement will allow seamless movement of cargo across the country. The efficiency of road transport is expected to go up significantly. The multiple-point warehousing by manufacturers to save on CST will be eliminated. With IGST set off facility on inter-state movement, manufacturers can set up warehouses for distribution at select strategic location without looking at the tax planning options resulting in reduced cost of operations.
Any bold and radical reform like GST has some flip side also .Most of the opposition to GST is not on the concept but on implementation flaws .The technical glitches in the GSTN portal has added to compliance burden particularly on small supplier. These are initial hiccups which will settle with the passage of time. This is new concept in which tax authorities are also going through a learning curve. To a large extent, the problem of small supplier has been temporarily resolved by withdrawing tax burden on RCM while taking supply from unregistered supplier (u/s 9(4) of GST) , shifting frequency from monthly returns to quarterly returns for all those with aggregate turnover upto Rs 1.5 Cr and rationalizing the composition scheme for those with turnover upto Rs 1.5 Cr with lax liability at a flat rate of 1%. We expect these concession to be extended further.
High and multiple rates of GST have also compounded the problem .At present (with few exceptions) we have four slabs: 5,12,18 and 28%. Slowly but surely we are withdrawing items from 28% category to make it redundant. 12% and 18% slabs may merge into 15% rate in months to come and finally we may have only 2 rates of 5% and15%. While it will be ideal to have a single GST of 10% or12%, we feel that it will take few years to move to a single GST rate.
GST is an exceptional initiative in the context of a Centre State relations and federal structure envisaged in the Constitution. Both Central and States have to work together for its success. States with 2/3rd voting share, as against 1/3rdwith Centre, are in dominant position. However, every decision requires approval by ¾ th of members. Therefore, both have to be dependent on each other for taking through any proposal. It is extremely satisfying that despite having different political parties representing States, all decision of the GST Council have hitherto been through consensus . This augur very well for Indian democracy and shows that political parties are willing to work on a national agenda compromising on their political interest.
Once fully implemented, GST is expected to add to 1.5% to 2% to GDP which is already growing at over 7% on year on year basis. Thus it will take India to a double digit growth story besides a huge boost to transition from informal to formal economy. GST holds the key to Make in India, Ease of Doing Business and above all competitiveness to trade & Industry thereby reducing the prices of goods and services and ultimately benefitting the consumer.
FAQs
1. We get order from a foreign agent abroad to whom we pay commission. Will it be taxable under GST?
The foreign agent, who facilitates the supply of goods, is included within the definition of intermediary. The place of supply of service for services provided by intermediary would be the location of service provider, i.e. the place where he is registered. Since a foreign agent is located outside India and not registered in India, the commission paid to him will not be taxable.
2. How GST will be paid on the conversion of foreign currency? Will it be on full value after conversion or some other formula will be applied?
For a currency when exchanged to Indian Rupee, the value of taxable purpose shall be equal to the difference in the buying rate /selling rate, as the case may be, and the RBI reference rate for the currency at that time multiplied by the total value of unit. In case RBI reference rate is not available for the currency, the value will be gross amount of Indian Rupee provided or received by the person changing the money.
3. Can you suggest the same with an example for better clarity?
For example, if a person converts USD 1000 at Rs 63 and RBI reference rate is Rs 64, then the taxable value will be (Rs 64-63 x 1000) Rs 1000 on which applicable GST will be charged. If a person converts 1000 Turkish Lira at Rs 18.50 assuming there is no RBI reference rate, taxable value will be 1% of Rs 18500 = Rs 185 on which applicable GST will be charged.
4. Whether factory stuffing facility under excise supervision continues under GST?
Under the GST, it has been decided to do away with the sealing of containers with export goods by CBEC officials. Instead, self-sealing procedure is allowed, with effect from 15th December 2017, subject to the following:
a) The exporter shall be under an obligation to inform the details of the premises whether a factory or warehouse or any other place where container stuffing is to be carried out, to the jurisdictional customs officer.
b) The exporter should be registered under the GST and should be filing GSTRI and GSTR2. Where exporter is not a GST registrant, he shall bring the export goods to a Container Freight Station/Inland Container Depot for stuffing and sealing of container.
However, in certain situations, an exporter may follow the self-sealing procedure even if he is not required to be registered under GST Laws. Such an exception is available to the Status Holders (One, Two, Three, Four and Five Star Export Houses) recognized by DGFT under a valid status holder certificate issued in this regard.
5. What will be the exact procedure of obtaining permission from Customs?
The exporter shall inform the jurisdictional Custom Officer of the rank of Superintendent or Appraiser of Customs, at least 15 days before the first planned movement of a consignment from his factory/premises, about the intention to follow self-sealing procedure to export goods from the factory premises or warehouse. The jurisdictional Superintendent or an Appraiser or an Inspector of Customs shall visit the premises from where the export goods will be stuffed and sealed for export. The jurisdictional Superintendent or Inspector of Customs shall inspect the premises with regard to viability of stuffing of container in the premises and submit a report to the jurisdictional Deputy Commissioner of Customs or as the case may be the Assistant Commissioner of Customs within 48 hours. The jurisdictional Deputy Commissioner of Customs or as the case may be the Assistant Commissioner of Customs shall forward the proposal, in this regard to the Principal Commissioner/Commissioner of Customs who would grant permission for self-sealing at the approved premises. Once the permission is granted, the exporter shall furnish only intimation to the jurisdictional Superintendent or Customs each time self-sealing is carried out at approved premises. The intimation, in this regard shall clearly mention the place and address of the approved premises, description of export goods and whether or not any incentive is being claimed.
6. How soon will refund of ITC in respect of export of goods or services be granted during the GST regime?
In case of refund of tax on inputs used in exports:
Acknowledgement will be issued within 15 days from the date of application for refund
Refund of 90% will be granted provisionally within seven days of acknowledgement of refund application.
Remaining 10% will be paid within a maximum period of 60 days from the date of receipt of application complete in all respects.
Interest at 6% is payable if full refund is not granted within 60 days.
7. What is the procedure for IGST refund on exports?
No application for refund is to be made for IGST as the Shipping Bill itself is a claim for refund. In the case of refund of IGST paid on exports: Upon receipt of information regarding furnishing of valid return in Form GSTR-3 by the exporter from the common portal, the Customs shall process the claim for refund and an amount equal to the IGST paid in respect of each shipping bill shall be credited to the bank account of the exporter.
8. Will the principle of unjust enrichment apply to exporters or not?
The principle of unjust enrichment is not applicable in case of exports of goods or services as the recipient is located outside the taxable territory.
9. We are merchant exporters with principal place of Business as Chennai. We are outsourcing the material for exports from Andhra Pradesh (AP) and are exporting from port at Krishnapattinam, Krishnapatnam in AP. We have no registered branch office in AP. Are we required to register at AP for additional place of business? Where to mention Code of Chennai and AP in the shipping bill?
Please bear in mind that the principal place of business and additional place of business are confined to a State only. If you are outsourcing the material for exports from AP, you need not register in AP as only the supplier is required to be registered in the State from which goods are being supplied. In the shipping bill, State code of the exporter is required to be quoted at master level which is the first two digit of the GSTIN of the exporter, where you will give code of Tamil Nadu. At the item level, you can give the State of Origin which should be the State from which goods were procured for exports, where you will mention AP.
10. We are a Merchant Export House. Our Principal place of Business is Mumbai, with a Branch in Rajkot. Our Activity in Rajkot is Inspection, Packaging and Painting of various goods purchased from Gujarat. In the Pre-GST regime, we used to buy Goods from various suppliers in Rajkot and send them to our Branch Office for inspection, painting and packaging, and export out of our Rajkot Office through Mundra Port. What will be the procedure in GST regime?
Since you have business interest in Mumbai and Rajkot, I am sure, you are having two separate GSTIN for Maharashtra and Gujarat. Your Gujarat unit will raise an invoice on Maharashtra by paying the applicable IGST. When you export to Mundra under LUT, you are not required to pay IGST. The IGST paid by you for supply from Unit in Gujarat will be available as Input Tax Credit (ITC) which in case of export would be refunded through the formula prescribed for such refund.
11. Whether commission received by Indian Buying Agent from foreign customer in foreign currency is exempted from GST? Does Buying Agent need to register for GST?
The commission received by buying agent in India will be taxable. The buying agent should register so that he/she can claim ITC to lessen his/her liability by using ITC.
12. We have been given LUT acceptance valid till 31.3.2018 whereas I am given to understand that the LUT would be valid for 1 year from the date of acceptance. Would appreciate knowing which is the correct date?
Legal Undertaking (LUT) is valid for a Financial Year (2017-18 for this year). Thus all LUTs executed from 1st July onwards will be valid till 31st March, 2018. There is, however, no validity of a bond which is a running account as debiting /crediting is allowed in a bond.
13. Whether goods sent by an exporter to a job worker will be liable to GST?
No, the goods sent by an exporter to a job worker is not a supply, as there is no transfer of title and no consideration for the goods is involved. In terms of section 143 of the CGST Act, 2017 a registered taxable person (the principal) may send any inputs or capital goods, without payment of GST, to a job worker for job work and the principal shall either
bring back such inputs or capital goods after completion of job work or otherwise within the prescribed period, i.e. 1 year in case of inputs and 3 years in case of capital goods, or
supply such inputs or capital goods within such prescribed period on payment of tax within India, or with or without payment of tax for export, as the case may be.
If the goods or, capital goods, as the case may be, are not returned to the principal within the time specified above, the same shall be deemed to have been supplied by the principal to the job worker on the date the goods were sent out to the job worker and the principal shall be required to pay tax accordingly on such supplies.
14. We are textile manufacturer and have stocks carried forward on 1st July. Will I get benefit of GST on such stocks?
Full credit of the tax paid on the stocks would be available if the documents evidencing tax payment are available. However, if only documents relating to procurement are available with no documents evidencing tax payment, deemed credit would be admissible in respect of textiles only if the goods were taxable under the Central Excise Act. Such credit would be available after the tax has been paid on supply of these goods. This facility is available for 6 months period only or till the date of sale of such stock whichever is earlier and is limited to 40% of the central tax paid by you.
15. We get orders from NCR exporters for supply of goods for which material is supplied by exporters. Do we charge GST when we return the goods and at what rates?
The services provided by you fall under the category of job work by virtue of the definition of job work provided under Section 2 (68) of the CGST Act, 2017.
16. What is reverse charge in GST Law?
As per Section 2 (98) of the CGST Act, 2017, “reverse charge” means the liability to pay tax by the recipient of supply of goods or services or both instead of the supplier of such goods or services or both under subsection (3) or subsection (4) of section 9 of the CGST Act, 2017, or under subsection (3) or subsection (4) of section 5 of the IGST Act, 2017.
17. Whether goods sent by a person to a job worker should be treated as supply and will they be liable to GST?
No, the goods sent by a registered person to a job worker is not a supply, as there is no transfer of title and no consideration for the goods is involved. In terms of section 143 of the CGST Act, 2017, a registered taxable person (the principal), after following the prescribed procedure, may send any inputs or capital goods, without payment of GST, to a job worker for job work and the principal shall either (i) bring back such inputs or capital goods after completion of job work or otherwise within the prescribed period, i.e. 1 year in case of inputs and 3 years in case of capital goods, or (ii) supply such inputs or capital goods, within such prescribed period, on payment of tax within India, or with or without payment of tax for export, as the case may be. If the goods or, capital goods, as the case may be, are not returned to the principal within the time specified above, the same shall be deemed to have been supplied by the principal to the job worker on the date the goods were sent out to the job worker and the principal shall be required to pay tax accordingly on such supplies.
18. When we are selling Gold, Diamond or Silver Jewellery to the end consumer (Customer) like a Gold Chain weighing 10gm at a total value of Rs. 30,000/- (gold value is Rs. 28000/- and making charges on that gold chain is Rs 2000/-), can we charge GST at 3% on the total value or at 3% on the gold value and at 5% on making charges?
GST is payable at the rate of 3% of the total transaction value of jewellery, whether the making charge is shown separately or not.
19. Whether the deductee can claim the input tax credit on the deduction of tax at source amount?
No, the tax deducted at source is not input tax credit. However, the amount deducted shall be credited to the electronic cash ledger (upon being accepted by the deductee in his Form GSTR-2A) of the deductee and can be utilized for payment of output tax.
20. The suppliers of branded basmati rice are asking that they will charge 5% IGST and we must get registered to avail the ITC. Is it correct?
As rice put up in a unit container and bearing a registered brand name is taxable at 5%, the suppliers of branded basmati rice located in other States would be charging IGST at 5%, whose credit can be availed only when the recipient is registered under the CGST Act, 2017. Therefore, if you want to avail of Input Tax Credit (ITC), you must get yourself registered.
21. Whether aggregate value of supply up to Rs 20 lakh is for each GSTIN?
The aggregate value of threshold limit of Rs 20 lakh (Rs 10 lakh for specified States) is computed on an all-India basis during the financial year. It is not linked with GSTIN which is related to a State and you can have many GSTIN, based on business verticals in a State.
22. Why Merchant exporters are proposed to being charged GST at 0.1 per cent on supplies from manufacturers as it can be exempted as well against some Bond or Form?
The levy of 0.1 per cent for such supply is a well-considered decision which strikes a balance between exporters’ liquidity problem and monitoring of such consignment by the Government. Even 0.1 per cent paid as GST is available as refund. On a consignment of Rs 10,00,000, its impact is Rs 1,000. Assuming this is refunded after 3 months and cost of the fund to pay is at 12 per cent, the net burden comes to Rs 30. If the supply is to make free against bond or LUT, compliance burden will be much more.
23. What is the new change in LUT eligibility for exporters?
The facility of export under LUT has been now extended to all registered persons who supply goods or services for export without payment of integrated tax except those who have been prosecuted for any offence under the CGST Act or the Integrated Goods and Services Tax Act, 2017 or any of the existing laws and the amount of tax evaded in such cases exceeds two hundred and fifty lakh rupees.
24. Is commission received by Buying Agent in India from a foreign customer in foreign currency exempted from GST? Whether Buying Agent needs to register for GST?
The commission received by buying agent in India will be taxable under GST. Therefore, the buying agent should register so that he/she can claim ITC to lessen his/her liability by using ITC.
25. Will export of goods to Nepal and Bhutan treated as zero rated and thereby qualify for all the benefits available to zero rated supplies under the GST regime?
Export of goods to Nepal or Bhutan fulfils the condition of GST Law regarding taking goods out of India. Hence, export of goods to Nepal and Bhutan will be treated as zero rated and consequently will also qualify for all the benefits available to zero rated supplies under the GST regime. However, the definition of ‘export of services’ in the GST Law requires that the payment for such services should have been received by the supplier of services in convertible foreign exchange.
26. Whether fabrics sent by an apparel exporter to a job worker will be liable for GST?
No, the fabrics or any goods sent by a exporter to a job worker is not a supply, as there is no transfer of title and no consideration for the goods is involved. In terms of section 143 of the CGST Act, 2017 a registered taxable person (the principal) may send any inputs or capital goods, without payment of GST, to a job worker for job work and the principal shall either:
bring back such inputs or capital goods after completion of job work or otherwise within the prescribed period i.e. 1 year in case of inputs and 3 years in case of capital goods, or
supply such inputs or capital goods, within such prescribed period, on payment of tax within India, or with or without payment of tax for export, as the case may be.
If the goods or, capital goods, as the case may be, are not returned to the principal within the time specified above, the same shall be deemed to have been supplied by the principal to the job worker on the date the goods were sent out to the job worker and the principal shall be required to pay tax accordingly on such supplies. However, on job work charges, for all goods falling in Chapter 50-63, GST at 5 per cent will apply.
27. What value we should show in Table 6A and 6B of GSTR for exports or supply to SEZ against Bond/LUT?
Export transactions effected without payment of IGST (under Bond/ Letter of Undertaking (LUT)) needs to be reported under “0” tax amount heading in Table 6A and 6B.
28. Can a person who has opted to pay tax under the composition scheme avail Input Tax Credit on his inward supplies?
As on date a taxable person opting to pay tax under the composition scheme is out of the credit chain. He cannot take credit on his input supplies. When he switches over from composition scheme to normal scheme, eligible credit on the date of transition would be allowed. However, a Group of Ministers is examining the issue of allowing ITC to those availing composition schemes and allowing Inter-State Supply under composition schemes.
29. What will be the tax liability of a person under Composition Scheme receiving supply from unregistered supplier? Whether such person has to pay tax on RCM basis?
Tax will have to be paid on such supplies by the composition taxpayer under reverse charge mechanism. The tax can be paid by the 18th day of the month succeeding the quarter in which such supplies were received. The information relating to such supplies should be shown by the composition taxpayer in Table 4 of return in FORM GSTR -4.
30. How soon will refund in respect of export of goods or services be granted during the GST regime?
In case of refund of tax on inputs used in exports:
Refund of 90 per cent will be granted provisionally within seven days of acknowledgement of refund application.
Remaining 10 per cent will be paid within a maximum period of 60 days from the date of receipt of application complete in all respects.
Interest at 6 per cent is payable if full refund is not granted within 60 days.
In the case of refund of IGST paid on exports: Upon receipt of information regarding furnishing of valid return by the exporter from the common portal, the Customs shall process the claim for refund and an amount equal to the IGST paid in respect of each shipping bill shall be credited to the bank account of the exporter.
31. Can a person paying tax under composition scheme make exports or supply goods to SEZ?
No, because exports and supplies to SEZ from Domestic Tariff Area are treated as inter-State supply. A person paying tax under composition scheme cannot make inter-State outward supply of goods.
32. We are a small women-owned merchant exporter. We would like to know if we bring the goods to our registered office for final labeling before dispatch, will it be permitted or such labeling has to be done in the registered warehouse only?
The registered warehouse would include the principal place of business and additional place of business as registered under GSTIN. This has been clarified by CBEC through a Circular.
33. We are procuring a water treatment plant from Ion exchange of India, which is 100 per cent EOU. They are selling the material to us after applying IGST at 18 per cent. Export is being done by us under duty drawback shipping bill. As per our consultant we would not get duty drawback on such export, please clarify?
The Duty Drawback Rules do not allow duty drawback in respect of goods manufactured by a 100 per cent EOU. We have already asked for amendment of this condition in the Drawback Rules but it has not been done so far. Therefore, you will not be able to get Duty Drawback till the said condition is modified.
34. We need your clarification that levy of GST at 0.10 per cent applicable even when the supply for exports is “intrastate” as Notification no. 41/2017 reads “Central Government exempts the interstate supply of taxable goods”?
Intrastate supply from a registered supplier to a registered recipient (Merchant exporter) for exports has been allowed at 0.05 per cent through Notification no. 40/2017-CGST (Rate) for CGST. Please check with your State for corresponding SGST Notification. CGST and SGST put together come to 0.1 per cent. If it is interstate supply, the IGST rate is 0.1 per cent as per Notification no. 41/2017 –Integrated Tax (Rate).
35. We are a merchant exporter regularly exporting Ethyl alcohol 96 per cent v/v from India. HS code is 22071090. We have made an advance payment during September to a factory for supplying goods during November. Since the advance was paid during September, the factory claims that they have deposited GST at 18 per cent on advance payment to the Government. Now very recently the GST council has issued a notification stating Merchant Exporters needs to pay only 0.1 per cent GST on their procurements. The goods Ethyl alcohol 96 per cent v/v (un-denatured) is not covered under GST schedule, so are we even liable to pay any GST amount (of even 0.1 per cent)?
The Notification no. 41/2017 Integrated Tax (Rate) relating to Merchant Exporter only applies to taxable goods and since your product is not covered under GST, you should not avail 41/2017 as in any case you can get the supply with nil GST.
36. What would be the GST rate if the product procured by merchant exporter at 0.1 per cent is further exported on payment of IGST?
The facility of 0.1 per cent GST rate is only on supplies from a registered supplier to a registered recipient for exports. Therefore, if such goods are exported on payment of IGST on exports, the applicable GST rate would be applicable and not the exemption GST rate of 0.1 per cent. The merchant exporter should avail LUT facility while exporting such goods so that there is no tax liability at the time of export.
37. Can we export under normal procedure without availing the benefit of 0.1 per cent while procuring goods for exports?
The facility of procuring goods at 0.1 per cent is an optional facility which is available subject to adhering to the conditions mentioned in Notification no. 41/2017 dated 23rd October, 2017. In case, an exporter wants to procure the goods for exports on payment of applicable GST and subsequent exports either on LUT or on payment of IGST, the exporter can do it and claim back ITC or IGST, as the case may be.
38. We are a manufacturer exporter but would like to procure some goods to be supplied along with our own exports goods. Can such goods be procured at 0.1 per cent?
The Notification relating to merchant exporter only referred to a registered supplier and registered recipient. Therefore, a registered recipient, who may be a manufacturer, can procure goods from a registered supplier at 0.1 per cent to be supplied along with goods manufactured by you.
39. Whether a foreign tourist carrying Indian goods would be eligible for GST refund when leaving the country?
An enabling mechanism has been introduced in Section 15 of the IGST Act, 2017 whereby international tourists procuring goods in India, while leaving the country can seek refund of integrated tax paid by them. The term, “tourist” has been defined and refers to any person who is not normally a resident of India and who enters India for a stay of not more than 6 months for legitimate non-immigrant purposes.
40. Whether advertising material provided free of cost to distributors would be treated as supply in the course of business by the company thereby not requiring any reversal of ITC.
Where the material is provided free of cost the same would not amount to a supply and hence no tax is payable on such transaction and in such a case credit availed by the company would need to be reversed in accordance with section 17 (5) of the CGST Act, 2017. However, if the advertising material is supplied on chargeable basis, it would be construed as supply which would be subject to GST.
41. How can IGST liability on imports or on inter-state supply be settled?
IGST on imports has to be paid in cash only as it is charged on reverse charge. The inter-state IGST can be paid by utilizing ITC to the extent available and balance by cash. The use of ITC for payment of IGST will be done in the following order: Firstly ITC of IGST shall be used for payment of IGST. Once ITC of IGST is exhausted, the ITC of CGST shall be used. If ITC of both IGST and CGST are exhausted, ITC of SGST shall be used. Remaining IGST liability shall be discharged in cash.
42. Jewellery is sold to the end consumer at a total value of Rs 50,000/- (gold value is Rs 45000/- and making charges Rs 5000/-). Should we charge GST at 3 per cent on the total value or at 3 per cent separately on the gold value and at 5 per cent on making charges?
GST is payable at the rate of 3 per cent on the total transaction value of jewellery, irrespective of the fact that the making charge is shown separately or not.
43. Does GST be payable on goods not intended to be sold, taken out for participation in overseas exhibitions and trade fairs and brought back into India after exhibition?
GST is not payable in such cases. Exporters will need exhibition participation letter and no foreign exchange involved letter from the concerned bank for the purpose of exchange control requirements. At the time of re-import, identity of goods imported with export goods needs to be established to seek exemption from import duty in accordance with Customs provisions. IGST will be exempted at the time of re-import in view of exemptions granted under Customs.
44. How loan and licensee units who are working primarily in drugs and pharmaceutical sector can carry out their operations in GST regime?
GST law does not have any special provision for loan and licensee units. Where the contracts are in the nature of job-works, these units can opt to follow the procedure laid down in section 143 of the CGST Act wherein the principal can send any inputs, etc. to such units without payment of tax. The principal can clear the goods from the premises of such units if the principal declares these units as his additional place of business or where such units are located themselves.
45. We have received an order from a SEZ Unit. How clearances will be effected to Special Economic Zones in the GST regime?
The clearances effected to the SEZ are zero rated supplies in terms of Section 16 of the IGST Act, 2017. Accordingly, the supplier can claim refund of IGST paid on such supplies or clear the same under bond/letter of undertaking and claim refund of the unutilised ITC.
46. What is the GST rate on supply of scrips from an exporter to an importer? Can duty credit scrips received as incentive by exporters such as MEIS, SEIS, etc be used for payment of all duties at the time of import?
The GST rate on sale/transfer of scrip (supply) is Nil. However, these scrips can be utilised only for payment of Basic Customs duty. IGST cannot be paid by utilising these scrips nor can such scrips can be used for settling CGST or SGST liability.
47. Whether separate series numbers can be maintained for invoices issued by the Registered Person in respect of exports made under GST?
In terms of Rule 46(b) of the CGST Rules, 2017, single or multiple series of invoices can be raised by the Registered Person for the supplies made under GST as long as such invoice numbers are unique for a financial year.
48. When we receive returned goods from the buyer, can we reduce the tax paid against goods returned to him?
Yes, you are eligible to reduce the tax liability by issuing credit notes to your buyer for such returned goods subject to the condition that the buyer reduces the claim of ITC to that extent if ITC was availed by him. In such transactions, Credit Note must bear reference of original invoice number.
49. Does a Registered Person get ITC on CGST and SGST paid on packing materials and computer purchased and lying with him as stock as business assets on the date preceding the date from which he becomes liable to pay tax under GST?
A person who takes voluntary registration is entitled to take credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date of grant of registration. However, goods in stock must qualify as “input” and that the tax paid at the time of its purchase must qualify as “input tax” under GST. Any goods which have been capitalised in the books of account will not be treated as an input. Hence credit on computers will not be available if the value of the same has been capitalized in the books of accounts. Credit shall be available on CGST/SGST paid on packing materials, etc. subject to conditions and restrictions spelt out in sections 16 to 18 of CGST Act, 2017.
50. I have a unit outside SEZ and another in the SEZ. Can I take a common GST registration?
A person having unit(s) in a Special Economic Zone as well as outside the SEZ even if in the same State, is required to make a separate application for registration for SEZ unit(s) as a business vertical distinct from his other units located outside the Special Economic Zone in that State .
51. Whether exports of software will attract GST?
Exports and supplies to SEZ units and SEZ developers are zero-rated in GST. Zero-rating means that no tax is payable on exports but the exporter/supplier to SEZ is entitled to the input tax credit on inputs/input services used in relation to exports. The exporters have two options for zero rating: (1) To pay integrated tax on supplies meant to be exported and get refund of tax so paid after the supply is exported. (2) To make export supplies under a bond or letter of undertaking and claim refund of taxes suffered on inputs and input services in relation to such exports.
52. How to determine that IT services provided by me constitute export of service?
The supply of any service is considered an export of service, when the following conditions are satisfied (1) the supplier of service is located in India; (2) the recipient of service is located outside India; (3) the place of supply of service is outside India; (4) the payment for such service has been received by the supplier of service in convertible foreign exchange; and (5) the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with explanation 1 of section 8 of the IGST Act, 2017.
53. What is the GST liability when supplies are made from multiple places in different States of the supplier to a buyer under a single contract?
Generally, the contract or agreement with the buyer is entered into by the Main Branch of the supplier. Therefore, in such cases of supply of service from multiple locations of the supplier to the buyer would be treated as two distinct supplies. First - the different branches of the supplier located across different States are making the supply to the main branch which entered into a contact or an agreement with the recipient for the supply of such service. Second - main branch is making a supply to the buyer. GST is to be levied accordingly. In such a scenario, the main branch would get input tax credit of GST paid by the other branches on supplies made by them to the main branch.
54. As an agent of a foreign IT/ITES provider located outside India), I bill the principal in convertible foreign exchange for the agency services. Whether I am required to pay GST?
You are an intermediary and the place of supply of the service provided by you to the principal is in India irrespective of the mode of payment. Hence, GST is payable on the services provided by you as an intermediary to the principal. The Advisory Group on GST has recommended to treat such services as Exports of services. Finance Ministry may take a view in the matter.
55. Can payment of IGST on reverse charge basis on import of services be done through book entry or ITC?
No. GST payable on reverse charge basis is to be discharged through cash only. Rule 85(4) of the CGST Rules, 2017 is clear on the subject.
56. I am dealing in textile fabrics, which was exempted under the State VAT Act. If I get registered under the GST Act, will I be eligible to avail of input tax credit on my stock of goods lying on 30thJune, 2017?
Since the product, you are dealing with were exempted from tax under the State Act, you will not be eligible to avail input tax credit as SGST on your stock of goods lying on the appointed day. But, you will be eligible to claim CENVAT credit as Central Tax on your stock if you have invoices or other prescribed documents evidencing payment of excise duty under the existing law and such invoices/prescribed documents were issued not earlier than twelve months immediately preceding the appointed day.
57. When a SEZ unit or SEZ developer procures any goods or services from an unregistered supplier, whether the SEZ unit or SEZ developer needs to pay IGST under reverse charge or these will be zero rated supplies?
Supplies to SEZ unit or SEZ developer have been accorded the status of inter-State supplies under the IGST Act. Under the GST Law, any supplier making inter-State supplies has to compulsorily get registered under GST. Thus anyone making a supply to a SEZ unit or SEZ developer has to necessarily obtain GST registration.
58. Is there also a change under the GST regime in respect of filing of application for fixation of brand rate of Drawback for supplies to SEZ units?
Prior to 1st July 2017, applications for fixation of brand rate for supplies to SEZ units used to be filed with the jurisdictional Commissioner of Central Excise. With effect from 1st July 2017, applications for fixation of brand rate will be required to be filed with the Commissioner of Customs having jurisdiction over the principal place of business of the DTA supplier.
59. We are manufacture of exempted goods for export. We have input stage credit used in the manufacture of exported goods. How would our refund be dealt under GST law if our supply remains an exempt supply?
Under IGST law a person engaged in export of goods which is an exempt supply is eligible to avail input stage credit for zero rated supplies. Once goods are exported, refund of unutilized credit can be availed under Section 16(3)(a) of IGST Act, 2017 and Section 54 of the CGST Act, 2017 and the rules made there under exports made prior to 1st July 2017 for which application for fixation of brand rate is yet to be filed.
60. What happens to GST if recipient does not pay to supplier in respect of a taxable supply under GST?
If the recipient fails to pay to the supplier the amount towards the value of supply along with tax payable thereon within a period of 180 days from the date of issue of invoice by the supplier, the amount of input tax credit availed proportionate to the amount not paid would be added to his output tax liability along with interest thereon. The ITC so reversed can be reclaimed by the recipient after payment of consideration along with tax payable there on subsequently.