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TMI BlogGEMS & JEWELLERY INDUSTRY UNDER GST REGIME (PART-2)X X X X Extracts X X X X X X X X Extracts X X X X ..... GEMS & JEWELLERY INDUSTRY UNDER GST REGIME (PART-2) - By: - Dr. Sanjiv Agarwal - Goods and Services Tax - GST - Dated:- 23-1-2017 - - Place of Registration In the present indirect tax regime, there is a concept of Centralized registration under Central tax laws. Under GST regime, registration may be required in each State from where supplies are being made. Hence, manufacture/dealer may need to obtain registration in each State where there is a premises (including site office) from where services are being provided. Centralized registration will no longer be available. Returns Under existing indirect tax laws, assessee has to submit 2 half yearly returns under Service Tax, monthly /quarterly return under Central Excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and quarterly returns under VAT laws in a year. Model GST Act provides following returns which are required to be submitted by the registered person : S.no. Return Periodic return to be filed for To Be Filed By 1. GSTR-1 Outward supplies made by taxpayer 10 th day of succeeding month 2. GSTR-2 Inward supplies received by a taxpayer 15 th day of succeeding month 3. GSTR-3 Monthly return 20 th day of succeeding month 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GSTR-4 Quarterly return for compounding Taxpayer 18 th of the month next to quarter 5. GSTR-5 Periodic return by Non-Resident Foreign Taxpayer last day of registration 6. GSTR-6 Return for Input Service Distributor(ISD) 15 th of the next month 7. GSTR-7 Return for Tax Deducted at Source(TDS) (not applicable) 10 th of the next month 8. GSTR-8 Annual Return By 31 st December of next FY Reconciliation of Inward and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Outward Supplies If there is a mismatch between the details of outward supplies uploaded on the GST Network by vendors and the inward supplies uploaded by the recipient, such mismatches will be communicated to the recipient. If the mismatch is not rectified by the vendor in the month of communication, the recipient will be liable to pay the differential GST along with interest in the subsequent month. This provision places the liability for non-compliance on the recipients, i.e., the companies, as against their vendors. Similar provisions have been prescribed wherein details of credit notes issued by a supplier have to match with the corresponding reduction of input tax credit claimed by the recipient. Accordingly, if the recip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ient does not adjust the input tax credit, the tax and interest would be recovered from the supplier. This provision places liability on companies for non-compliance by vendors. Rate of GST While rates of GST on are likely to be in the range of 5-28 percent, what rate of GST shall be applicable to gems and jewellery is not yet decided. The lowest rate as per slabs agreed upon in GST Council is 5 percent. However, lower rate is not ruled out. The industry is demanding for a tax slab of 1-2 percent. Payment Any tax, interest, penalty, fee, etc., shall be paid via internet banking or by using credit/debit cards or NEFT or RTGS. This amount shall be credited to the electronic cash ledger of the dealer. No cash payments ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e allowed. Input Tax Credit Under present Excise law, Cenvat Credit of inputs, input services and capital goods is allowed to a person who is paying excise duty @12.5% and Cenvat Credit of input services only to a person who is paying excise duty @1%. Under GST regime, certain conditions are prescribed for availment of credit, i.e., the person should have taxpaying documents and should have received services and tax charged by the supplier, on which the recipient is entitled to credit should be paid to the appropriate Government. This shall bring onerous compliance requirements upon the recipient to verify whether the supplier has discharged its tax liability. While the GSTN system will enable fulfillment of this requiremen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t based on the matching principle, inserting this as a condition may require discharge of responsibility on the recipient of supplies. As per Model GST law, 'Capital goods' has been liberally defined for being eligible to claim input tax credit in respect of capital goods. Capital goods means goods, the value of which is capitalized in the books of accounts of the person claiming the credit and which are used or intended to be used in the course or furtherance of business. Accordingly, input tax credit will be eligible for capital goods only on those goods, the value of which is capitalized in the books of accounts. This will enable many taxable persons to claim cenvat credit. A taxable person (exporter) may claim refund of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any unutilized input tax credit at the end of any tax period. In other words, exporter of services shall be eligible to get refund on eligible inputs, capital goods and input services. Input Service Distributor Concept (ISD) As in the present Cenvat Credit Rules, ISD concept is proposed for transfer of credit of input services between two or more locations. ISD can transfer credit of all types of GST (CSGT, SGST or IGST). Considering the possibility of multiple registrations State-wise, ISD could be used as a tool to ensure optimal utilization of head office-related credit, hence resulting in actual reduction in cost. Refund Time limit for making application for refund is two years from the relevant date in prescribed f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orm and manner. In some cases, the refundable amount shall, instead of being credited to the Fund, be paid to the applicant such as in case of export of services etc. It would be important to note that the persons would need to deal with both, the Centre and State Governments, and therefore, there may be duplication of the refund procedures. However, refund provisions specifically provide for sanction of 90% of refund to exporter of services. This will be a major relief for the industries or sectors, given that refund claims are often not processed for long periods. For balance 10%, prescribed procedure need to be followed. Refund application has to be disposed by way of a proper order within 60 days from the date of receipt of applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation (which is complete in all respects), else the authorities would be required to pay interest on delay beyond 60 days. Issues could arise as to when the application can be considered as complete in all respects, and therefore show-cause notices for rejection of refund claims may still be issued in order to obtain further details, thereby extending this time limit. In respect of all pending refunds under earlier law those would be processed and disposed as per the provisions of earlier law. Any refund found eligible would be paid in cash. However, where any refund is fully or partially rejected, the provision mentions that such amount shall lapse, i.e., partial refunds are not permissible. In case of Gems and Jewellery sector, refu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd will be applicable in case of exports and SEZ cases. (To be continued .......) - - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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