Jun 262023
 

Revised Slab from April 1, 2023

(I)

In the case of men, whose monthly salaries, or wages,

A)
Less than ₹ 7500.
No professional tax.
B)
₹7500 – ₹ 10,000.
₹ 175/- Per Month.
C)
₹ 10,000 and above.
₹ 200/- Per Month (In February, ₹ 300).

(II)

in the case of women, whose monthly salaries, or wages,

A)
Less than ₹ 25,000.
No Profession Tax.
B)
₹ 25,000 and above.
200 Per Month (In February, ₹ 300).

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Sensys Technologies Pvt. Ltd.

HO: 904, 905 & 906, Corporate Annexe, Sonawala Road, Goregaon East, Mumbai- 400 063.
Tel.: 022-6820 6100| Call: 09769468105 / 09867307971
Email: sales@sensysindia.com | Website: http://www.sensystechnologies.com
Branches: Delhi & NCR | Pune | Bangalore | Hyderabad | Ahmedabad | Chennai | Kolkata


Jul 302019
 

Applicability of GST to Mutual Society

Meaning and purpose of Mutual Society:

The term mutual society has not been defined in the GST Act. In common parlance a mutual society implies  that  the contributors and  the recipients are one and the same. Such societies are not normally subjected to tax on the principle that a person cannot make a profit from himself.

Concept and Mechanism:

The important aspects to understand in this regard are:

Mutuality is a principle and it can be found in any organisation, it simply implies that a group of persons contribute for their own purposes.

The Supreme Court clearly provides that there must be  no  scope of profiteering by the contributors from a fund made by them which could only be expended or returned to themselves.

A licensed club where there are both membership fees and, where prices charged for club services are greater than their cost, additional contributions. It is these kinds of prices and/or additional contributions which constitute mutual income.

Services of a mutual society to its member which are subject to GST:

GST is levied on the event of a ‘supply’, the issue is whether an association can be supplying services to its own members. Under Section. 7(1) for the purposes of GST, the expression “supply” includes–

(a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal  made or agreed to be made for a consideration by  a person in  the course or furtherance of business.

(c) the activities specified in Schedule  I,  made  or  agreed  to  be  made without a consideration’

Therefore the following conditions must be fulfilled:

  • There must be supply of goods or services or both for a
  • And such supply must be in the course or furtherance of  business

The term ‘business’ is defined u/s 2(17)(e) and which is relevant in this regard reads as under:

‘(17) “business” includes––

(e) provision by a club, association, society, or any such body (for a subscription or any other consideration) of the  facilities or  benefits to  its members’

From the above definition it is clear that the term “business” includes services by a mutual society of facilities or benefits to its members. Hence if the transaction between an association and its members satisfies the other condition that it  is  a supply of goods or services for a consideration, then the same will be taxed.

Collection of Fees/subscription from the members against which there are no direct facility/benefit to the members can be subject to GST:

The term ‘Business’ is defined under section 2(17)(e) and it includes provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to    its members. However, the Maharashtra Advance Ruling Authority in   the case of Lions Club of Kothrud Pune Charitable Trust, vide its order No.GST-ARA-15/2018-19/B-71, Mumbai 25/07/2018 has  held  that there is no GST liability for the amount collected by  individual Lions club and Lions District as these collections are for the convenience of Lion members and pooled together only for paying Meeting expenses and communication expenses.

In other words any services provided by the mutual society in  the  normal course to all the members is not treated as facility or benefit for the purposes of section 2(17)(e).

In the light of the above we need to distinguish supply  between  a mutual society and its members into two categories;

  • services which are available to the members in the normal course, for example security services in housing society,
  • services which are in the nature of benefit or facility which may or may not be availed by the members, for example restaurant or accommodation facility offered by a club to its member which may not be uniformly availed by all the members
Jul 082019
 

Sale for Audit under GST

Q 1. What is the turnover that should be reckoned to determine the applicability of audit under GST?

Ans. Section 35(5) commences with the expression “every registered person whose turnover during a financial year exceeds the prescribed limit” whereas

the relevant Rule 80(3) uses the expression “every registered person whose aggregate turnover during a financial year exceeds two crore rupees”.

It must be noted that the word turnover has not been defined whereas the expressions “aggregate turnover” has been defined. One may note that the expression “turnover in State or turnover in Union territory” is also defined. In this backdrop the following understanding is relevant:

  1. Aggregate turnover is PAN based while turnover in a State/ UT is similarly worded except to the extent that turnover in a State/ UT is limited to a State;
  2. It is therefore, reasonable to interpret that the word turnover used in section 35(5) ought to be understood as aggregate turnover (PAN level).

For the financial year 2017-18, the GST period comprises of 9 months whereas the relevant section 35(5) uses the expression financial year; Therefore, in the absence of clarification from Government and to avoid any cases of default, it is reasonable to reckon the turnover limit prescribed for audit i.e., Rs. 2 crores for the whole of the financial year which would also include the first quarter of the financial year 2017-18.

Please also note that where the expression aggregate turnover (PAN level) is considered, please consider the taxable value under section 15 and not the amount as accounted in the books of accounts. E.g. do not ignore taxable value of stock transfers while examining this threshold limit.

Q 2. Should the supply of alcohol for human consumption be included in determining the threshold limit of Rs. 2 crore by a person registered under GST?

Ans. The definition of aggregate turnover includes exempt turnover.

Exempt turnover is defined under CGST Act to mean supply of any goods or services or both which attracts nil rate of tax or which may be wholly exempt from tax under section 11, or under section 6 of the Integrated Goods and Services Tax Act and includes non-taxable supply.

Non-taxable supply is defined under section 2(78) of CGST Act to mean a supply of goods or services or both which is not leviable to tax under this Act or under the Integrated Goods and Services Tax Act.

Section 9(1) of CGST/ SGST Act and section 7(1) and 5(1) of UTGST and IGST Act respectively exclude alcoholic liquor for human consumption from the levy/ charge of GST. Hence, it becomes clear that alcoholic liquor for human consumption forms part of exempt turnover. Since aggregate turnover includes exempt turnover, value of alcoholic liquor for human consumption is to be included while computing threshold limit of Rs. 2 crore.

Q 3. Will the term ‘aggregate turnover’ includes stock transfers/ cross charges effected between branches located in two different States?

Ans. Section 2(6) of CGST/ SGST Act defines aggregate turnover to include ‘inter-State supplies of person having same PAN’. Thus, stock transfers/ cross charges of services provided from a branch located in one State to a branch located in another State will be included in the aggregate turnover of the branch supplying the goods/ services.

Q 4. Will the term ‘aggregate turnover’ includes stock transfers effected within the State having same GSTIN for determining the threshold limit?

Ans. The term ‘aggregate turnover’ shall not include stock transfers effected within the same State having single GSTIN for the purpose of determining the threshold limit. However, where more than one GSTINs has been taken for branches located in the same State, then such branch transfers shall be included for computing threshold limit of Rs.2 crore to identify applicability of this audit requirement.

Jul 032019
 

Supply under GST in light of latest amendment

Introduction:

Goods and service tax as defined under Article 366(12A) of constitution is any tax on supply of goods or services or both except taxes on the supply of the alcoholic liquor for human consumption. The terms “Supply” supply being critical for levy of GST is defined under section of CGST act and made applicable to IGST, SGST and UTGST also. This section 7 is amended by CGST amendment act 2018 retrospectively from 01.07.2017.

Amendment 1:

Prior to amendment After amendment Effect
“Section 7. (1) For the purposes of this Act, the expression “supply” includes––

…….

(d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II. ”

New sub-section (1A) is inserted under Section 7 of the CGST Act, which provides that,

 

Where certain activities or transactions constitute a supply in accordance with the provisions of sub-section (1), they shall be treated either as supply of goods or supply of services as referred to in Schedule-II.

Activities/ transactions listed in Schedule II  shall be taxed only when they constitute ‘supply’ in accordance with provisions of Section 7(1)(a), (b) and (c) of the CGST Act

Amendment 2:

Prior to amendment After amendment Effect
Para 4 of Schedule I to the CGST Act covered import of services –

 

By a taxable person from a related person or from any other establishment outside India in the course or furtherance of business,

to be treated as supply for applicability of GST even if no consideration is involved.

The words ‘taxable person’ in Para 4 of Schedule I is replaced by ‘person’ vide the CGST Amendment Act, 2018, effective from February 1, 2019 Import of services  by entities

ü  which are not registered under GST (say, they are only making exempted supplies)

ü  but are otherwise engaged  in business activities

shall be liable to tax when received from a related person or from any of their establishments outside India

Amendment 3:

Prior to amendment After amendment Effect
NIL Inclusion of following three types of transactions in Schedule III to the CGST Act (i.e. activities or transactions which shall be treated neither as a supply of goods nor a supply of services):

ü  Merchant trading i.e. supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into the taxable territory.

ü  High seas sales i.e. sale carried out by the actual consignee shown in the Bill of Lading to another buyer while the goods are yet on high seas or after their dispatch from the port of loading and before entering the customs frontier of India.

ü  In-bond sale i.e. sale of imported goods from customs bonded warehouses.

 

The above-mentioned transactions viz. merchant trading, high seas sales, in-bond sales shall not be regarded as exempt supply for reversal of input tax credit.

Jul 012019
 

GST on real estate sector

GST Update

GST Council in the 34 meeting held on 19 March, 2019 at New Delhi discussed the operational details for implementation of the recommendations made by the council in its 33 meeting for lower effective GST rate of 1% in case of affordable houses and 5% on construction of houses other than affordable house. The council decided the modalities of the transition as follows.

Transitional provision: Option in respect of ongoing projects:

The promoters shall be given a one -time option as mentioned below on ongoing projects that is on buildings where construction and actual booking have both started before 01.04.2019 and which have not been completed by 31.03.2019:

  • To continue to pay tax at the old rates -> effective rate of 8% or 12% with ITC.

The option shall be exercised once within a prescribed time frame and where the option is not exercised within the prescribed time limit new rates shall apply.

New tax rates:

The new tax rates which shall be applicable to new projects or on-going projects which have exercised the above option to pay tax in the new regime are as follows.

New rate of 1% without input tax credit (ITC) on construction of affordable houses shall be available for:

All houses which meet the definition of affordable houses as decided by GSTC (area 60 sqm in metros / 90 sqm in non- metros and value upto RS. 45 lakhs), and

  • affordable houses being constructed in on-going projects under the existing central and state housing schemes presently eligible for concessional rate of 8% GST (after 1/3 land abatement).

New rate of 5% without input tax credit shall be applicable on construction of

All houses other than affordable houses in on-going projects whether booked prior to or after 01.04.2019.

In case of houses booked prior to 01.04.2019, new rate shall be available on instalments payable on or after 01.04.2019.

Conditions for the new tax rates:

The new tax rates of 1% (on construction of affordable) and 5% (on other than affordable houses) shall be available subject to following conditions,-

  1. Input tax credit shall not be available,
  2. 80% of inputs and input services (other than capital goods, TDR/ JDA, FSI, long term lease (premiums)) shall be purchased from registered persons.
  3. On shortfall of purchases from 80%, tax shall be paid by the builder @ 18% on RCM However, Tax on cement purchased from unregistered person shall be paid @ 28% under RCM, and on capital goods under RCM at applicable rates.

Treatment of TDR/ FSI and Long term lease for projects commencing after 01.04.2019:

The following treatment shall apply to TDR/ FSI and Long term lease for projects commencing after 01.04.2019.

  • Supply of TDR, FSI, long term lease (premium) of land by a land owner to a developer shall be exempted subject to the condition that the
    • Constructed flats are sold before issuance of completion certificate and tax is paid on them.

Exemption of TDR, FSI, long term lease (premium) shall be withdrawn in case of flats sold after issue of completion certificate, but such withdrawal shall be limited to 1% of value in case of affordable houses and 5% of value in case of other than affordable houses. This will achieve a fair degree of taxation parity between under construction and ready to move property.

  • The liability to pay tax on TDR, FSI, long term lease (premium) shall be shifted from land owner to builder under the reverse charge mechanism (RCM).
  • The date on which builder shall be liable to pay tax on TDR, FSI, long term lease (premium) of land under RCM in respect of flats sold after completion certificate is being shifted to date of issue of completion
  • The liability of builder to pay tax on construction of houses given to land owner in a JDA is also being shifted to the date of

The decisions of the GST Council have been presented in this note in simple language for easy understanding. The same would be given effect to through Gazette notifications/ circulars which alone shall have force of law.

Jun 242019
 

Treatment of sales promotion scheme under GST

The Central Government vide Circular No. 92/11/2019-GST dated 07th March, 2019 clarified the following issues raised with respect to tax treatment of sales promotion schemes under GST :-

Modes of sales promotion prominent in India are:

  1. Free samples and gifts
  2. Buy one get one free offer
  3. Buy more save more option
  4. Secondary Discount

The treatment of each of above promotional schemes is given below:

Free samples and gifts                                              -> Non GST item

Since the consideration is an important element of the definition supply, therefore the samples which are supplied free of cost, without any consideration, do not qualify as “supply” under GST, except where the activity falls within the ambit of Schedule I of the said Act.

Further, section 17(5)(h) of the said Act clarified that input tax credit shall not be available to the supplier on the inputs, input services and capital goods to the extent they are used in relation to the gifts or free samples.

However, where the activity of distribution of gifts or free samples falls within the scope of “supply” as per Schedule I of the said Act, the supplier would be eligible to avail of the ITC.

Buy one get one free offer                                        -> GST item

Offers like “Buy One, Get One Free”, one item is being “supplied free of cost” without any consideration. In fact, it is not an individual supply of free goods but a case of two or more individual supplies where a single price is being charged for the entire supply.

Taxability of such supply will be dependent upon:

  1. Whether the supply is a composite supply or
  2. Whether the supply is a mixed supply and

The rate of tax shall be determined as per section 8 of the said Act. And, ITC shall be available to the supplier in relation to such supply.

Discounts including ‘Buy more, save more’ offers                          -> Non GST

Discounts offered by the suppliers to customers including staggered discount under „Buy more, save more” scheme and post supply / volume discounts established before or at the time of supply) shall be excluded to determine the value of supply provided they satisfy the parameters laid down in section 15(3) of the said Act, including the reversal of ITC by the recipient of the supply as is attributable to the discount. Further, the supplier shall be entitled to avail the  ITC for such inputs, input services and capital goods used in relation to the supply.

Secondary Discounts                                                            -> Non GST

Value of supply shall not include any discount by way of issuance of credit note(s), except in cases where the provisions contained in section 15(3)(b) of the said Act are satisfied. There is no impact on availability or otherwise of ITC in the hands of supplier.

Conclusion:

Financial / commercial credit notes are now well understood and permitted except that output tax adjustment is clearly barred if the conditions of section 15(3) are not satisfied.

Although credit to Supplier is not restricted, there seems to be no mention of effect under rule 37 to Recipient when such financial / commercial credit notes are issued.

Where consideration takes ‘non-monetary form’ whether those samples would be free from tax – Care must be taken to the expression ‘except when liable under schedule I’. Please consider which para might cover disposal of samples and gifts under schedule I. Here, even permanent transfer or disposal of business assets is also covered.

And where credit is reversed on gifts given, very subtly a mention is made that credit reversal required includes capital goods credit also, this is a new one as complexity in computing rule 43 in relation to gifts may be a challenge.

Dec 292018
 

Annual return under GST

Legal provisions:

Section 44(1) of CGST Act read with Rule 80(1) of CGST Rules:

Every Registered person other than –

  1. An Input Service Distributor,
  2. A person paying tax under section 51 (TDS) or section 52 (TCS),
  • A casual taxable person and
  1. A non-resident taxable person,

Shall furnish an annual return for every financial year electronically in Form GSTR9 through the common portal (www.gst.gov.in) either directly or through facilitation center on or before the thirty-first day of December following the end of such financial year

Section 35(5) of CGST Act:

Every registered person whose turnover during a financial year exceeds the prescribed limit (Rs. 2 cr.) shall get his accounts audited by a chartered accountant or a cost accountant and shall submit:

  • A copy of the audited annual accounts,
  • The reconciliation statement (GSTR-9C) under sub-section (2) of section 44 and
  • Such other documents in such form and manner as may be prescribed.

Reconciliation statement – GSTR-9C is reconciliation of data as per books of accounts and data as reported in
GSTR-9.

Analysis of provision:

Who shall file annual return (GSTR 9) Who shall file GSTR 9A Who shall file GSTR 9B Who shall not file GSTR 9
–  Every registered person –  By a supplier who was under composition scheme at any time during the relevant financial year – A person paying tax under section 52 (TCS) [GSTR 9B required to be file in this case from 2018-19 and same is not applicable for 2017-18] –  An Input Service Distributor,

–  A person paying tax under section 51 (TDS) or

–  A person paying tax under section 52 (TCS) [GSTR 9B required to be file in this case from 2018-19 and same is not applicable for 2017-18]  or

–  A casual taxable person and

–  A non-resident taxable person.

Case study:

Case 1: A registered dealer was earlier registered as composition taxpayer but later he switched over from composition scheme.

He shall be required to file both the Annual Return GSTR-9A and GSTR-9.

Case 2: What is the effect of cancellation of registration under GST on filing of GSTR -9?

 GSTR 9 is required to be filed for the period for which registration is effective.

Case 3: How much annual return is required to be filed in case more than one GST registration is taken by same person?

Annual return for each GST registration is required to be filed separately.

Dec 272018
 

How to avoid penalty under GST

Section 122 of CGST act read as follows:

Section 122. (1) Where a taxable person who––

  • Supplies any goods or services or both without issue of any invoice or issues an incorrect or false invoice with regard to any such supply;
  • Issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act or the rules made thereunder;
  • Collects any amount as tax but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due;
  • Collects any tax in contravention of the provisions of this Act but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due;
  • Fails to deduct the tax in accordance with the provisions of section 51(1), or deducts an amount which is less than the amount required to be deducted under the said sub-section, or where he fails to pay to the Government under sub-section (2) thereof, the amount deducted as tax;
  • Fails to collect tax in accordance with the provisions of of section 52(1), or collects an amount which is less than the amount required to be collected under the said sub-section or where he fails to pay to the Government the amount collected as tax under sub-section (3) of section 52;
  • Takes or utilises ITC without actual receipt of goods or services or both either fully or partially, in contravention of the provisions of this Act or the rules made thereunder;
  • Fraudulently obtains refund of tax under this Act;
  • Takes or distributes ITC in contravention of section 20, or the rules made thereunder;
  • Falsifies or substitutes financial records or produces fake accounts or documents or furnishes any false information or return with an intention to evade payment of tax due under this Act;
  • Is liable to be registered under this Act but fails to obtain registration;
  • Furnishes any false information with regard to registration particulars, either at the time of applying for registration, or subsequently;
  • Obstructs or prevents any officer in discharge of his duties under this Act;
  • Transports any taxable goods without the cover of documents as may be specified in this behalf;
  • Suppresses his turnover leading to evasion of tax under this Act;
  • Fails to keep, maintain or retain books of account and other documents in accordance with the provisions of this Act or the rules made thereunder;
  • Fails to furnish information or documents called for by an officer in accordance with the provisions of this Act or the rules made thereunder or furnishes false information or documents during any proceedings under this Act;
  • Supplies, transports or stores any goods which he has reasons to believe are liable to confiscation under this Act;
  • Issues any invoice or document by using the registration number of another registered person;
  • Tampers with, or destroys any material evidence or document;
  • Disposes off or tampers with any goods that have been detained, seized, or attached under this Act,

he shall be liable to pay a penalty of:

  • Ten thousand rupees or
  • An amount equivalent to the tax evaded or the tax not deducted under section 51 or short deducted or deducted but not paid to the Government or tax not collected under section 52 or short collected or collected but not paid to the Government or input tax credit availed of or passed on or distributed irregularly, or the refund claimed fraudulently,

whichever is higher.

Dec 202018
 

Procedural aspects of E way bills

Basic procedure:

The following is the basic procedure to generate an e-Way bill

  1. Furnish information in Form GST EWB-01 (PART A and PART B) before the commencement of movement of goods (on ewaybillgst.gov.in)
  2. PART A contains the consignment details which cannot be changed later are as under.
GSTIN GSTIN of supplier and recipient of goods. (If unregistered, “URP” shall be entered)
Place of Dispatch / Delivery It shall indicate the PIN Code of the places of Dispatch / Delivery. Option available to enter the addresses of these places (not mandatory)
Document Number It shall contain reference of Invoice No., Bill of supply No., Delivery Challan No.
Document Date Date shall be based on the date of document, as specified above.
Value of Goods Value shall be determined in accordance with Section 15 and shall include CGST, SGST or UTGST, IGST and Cess, if any
HSN Code If Annual Turnover (in preceding FY) is less than Rs. 5 Cr. – 2 Digits

If Annual Turnover (in preceding FY) is more than Rs. 5 Cr. – 4 Digits

Reason for Transport Following are the available options:

(i) Supply (ii) Export / Import (iii) Job Work

(iv) SKD / CKD – i.e., Semi Knocked Down / Completely Knocked Down (v) Recipient not known (vi) Line Sales (vii) Sales Returns (viii) Exhibition or fairs (ix) For own use (x) Others

  1. PART-B contains the details of the conveyance to be entered.
  2. A unique e-Way number (EBN) will be generated on the portal after the details as mentioned above are filled.
  3. Obtain a print of the details along with the unique (EBN) generated after the details are uploaded
  4. Move the goods under the cover of the e-Way bill and the ‘tax invoice’ or such other document
  5. Acceptance / rejection of the e-Way bill to be made within 72 hours of details being available on portal (OR time of delivery of goods if earlier than 72 hours) – Else it results in deemed acceptance
  6. PART A slip is a temporary number generated after entering all the details in PART-A. This can be shared or used by the transporter or the client who can later enter the details in PART B and generate the e-Way bill. This is useful when you have prepared the invoice and when transporter details are not available. This is temporarily stored on the portal and once the transporter details are entered in PART B the e-Way bill can be generated.
  7. The details of conveyance are not required to be declared if the distance between the place of consignor and the place of transporter is less than 50 Kms. It is not required even where the distance between the place of transporter and the place of consignee is less than 50 Kms.
  8. Where the goods are transported by railways or by air or vessel, the e-Way bill shall be generated on the common portal in Part B of Form GST EWB-01. Where the goods are transported by railways, the railways shall not deliver the goods unless the e-Way bill is produced at the time of delivery. The time period for filling details in Part B shall be furnished within fifteen days of furnishing details in Part A.
  9. Where the goods are transported by the registered person using his own conveyance or public conveyance by road then Part B of Form GST EWB-01 must also be filled in addition to part A of Form GST EWB 01.
  10. Transporters not registered under GST who wish to cause the movement of goods shall enroll on the portal to get a 15-digit unique Transporter ID or TRANSIN. This can be shared by them to their clients who may enter this number while generating e-Way bills.
  11. The particulars of PART A cannot be changed even in case of entering the wrong information. The only option left to the person is to cancel the e-Way bill. However, PART-B can be updated any number of times within the overall validity of E way bills.
  12. If E way bill has been verified by a proper officer during its transit it can not be cancelled.

Practical issues:

If a person has more than one place of registered supply Create sub users for a particular place of business and generate the e-Way bill with that business location.

A maximum of 3 sub users can be created for each additional place of business.

Multiple invoice for same customer EWB have to be generated for each invoices separately
Goods are transported from one conveyance to another Details of conveyance in  the  E-Way bill in Part B should be updated