Impact of GST on Customs Brokers: Insights from NACIN Mumbai
Explore the significant impacts of GST on customs brokers as discussed by Deepak Mata, Assistant Director at the National Academy of Customs, Indirect Taxes, and Narcotics in Mumbai. The presentation covers key concepts of GST, the role of customs in supply chains, and the effects on imports and exports, including IGST models. Gain insights into how GST functions, who pays it, and its implications on various aspects of the tax structure.
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Impact of GST on Customs Brokers Deepak Mata, Assistant Director Nation Academy of Customs, Indirect Taxes and Narcotics (NACIN). Mumbai 1 National Academy of Customs, Indirect Taxes and Narcotics (NACIN) 04-10-2024
Presentation plan Concept(s) of and in GST oHow is it different? Role of Customs in Supply Chain/ GST Impact on Imports oCredit of IGST / Cess Impact on Exports oRefund of IGST Duty Drawback Scheme Export Promotion Schemes SEZs
Assumption Participants aware of the structure and form of the existing tax structure-VAT/CE/ST Participants aware of the basics of GST CGST/SGST/UTGST/IGST? Who will pay GST? When? How? Where?
IGST MODEL : HOW IT WILL WORK Maharashtra Rajasthan Inter State Trader B C Manufacturer INVOICE B INVOICE C Value Rs. 10000/- IGST payable = Rs. 2000/- Paid Cr. of CGST Rs. 500/- Paid Cr. of SGST Rs. 500/- Paid in Cash Rs. 1000/- Value Rs. 13000/- CGST payable = Rs. 1300/- SGST payable = Rs. 1300/- CGST paid through IGST Cr. = Rs. 1300/- SGST paid through IGST Cr. = Rs. 700/- Paid in Cash Rs. 600/- Intra State Intra State D Raw material supplier A Consumer INVOICE A Value Rs. 5000/- CGST @ 10% Rs. 500/- SGST @ 10% Rs. 500/- IGST 1000 CGST 500 SGST-M 500 SGST- R 600 700 4 1300
Credits Next one slide taken from PPT of Shri Venugopal Gella and Shri Rafeq, CA
Ratna Steels GSTR- 1A In.No Amt Ratna Steels Portal Super Cars Ltd Portal GST Ratna Steels Outward Supplies Register Qt y 10 0 50 50,000 6 1,00,000 18,000 No Amt GST 6 1,00,00 18,000 0 Aug 10 11 15 16 21 20 7 9,000 Aug Aug Aug Aug Aug 8 25 25,000 4,500 Super Cars Ltd GSTR-1 10 50 50,000 9,000 Ratna Steels GSTR-1 To t. 22 5 2,25,00 40,500 0 6 1,00,000 18,000 Payment Payment Rev Ratna steels Super Cars Ltd Automobiles Inward Supplies Register No Qt y 6 10 0 0 7 50 50,000 Outward Supplies Register No Qt y 1 80 88,000 1 80 88,000 Books of Super Cars Ltd for July Amt GST Amt GST 15,840 15,840 6 6 10 0 0 1,00,00 1,00,00 1,00,00 18,000 18,000 18,000 10 0 0 2 2 3 60 60 30 66,000 66,000 33,000 11,880 11,880 5,940 9,000 3 30 33,000 5,940 8 25 50 25,000 50,000 4,500 9,000 4 4 45 45 49,500 49,500 8,910 8,910 10 To t. 22 5 2,25,00 40,500 To t. 21 5 2,36,50 42,570 6 1,00,000 18,00 0 0 0
Destination Based Consumption Tax & its impact Accrual of tax to the State which has jurisdiction over the place of consumption which is also termed as place of supply. Levied at all stages right from manufacture/ import up to final consumption with credit of taxes paid at previous stages available as set off. Whole Supply Chain to be taxed and tracked Imports will be the beginning of the whole supply chain Credit of IGST and Compensation Cess down the line in the Supply chain Refund of IGST at the time of export 7
Export Promotion? Duty Drawback oMinistry of Finance oLargely Presumptive ; Drawback Schedule oIGST will be Definitive oComments invited by CBEC from Trade Associations/ Promotion Councils on 23.02.2017 oDuty Drawback Schedule revision in line with the new GST rates, exemptions oConsumption principle oBCD oRefund of IGST- Rebate vs Drawback
Drawback u/s Section 74 Section 74 of the Duty Drawback Scheme oBCD and IGST oState Component of IGST would have gone to the respective State by the time the goods are re-exported oWould need some settlement of the taxes between Centre and States
Drawback shipping bill DBK001 - "I declare that no input tax credit of the central goods and services tax or of the integrated goods and services tax has been availed on the export product or on any of the inputs or input services used in the manufacture of the export product;." DBK002 - "I declare that no refund of integrated goods and services tax paid on export product shall be claimed; DBK003 - "I declare that CENVAT credit on the export product or on inputs or input services used in the manufacture of the export product has not been carried forward in terms of the Central Goods and Services Tax Act, 2017..
Refund of igst No separate application for refund of IGST needed Shipping Bill Deemed to be an application for refund, when EGM filed Valid Return filed in GSTR-3 GSTR-1 ( Export Invoices) Customs Confirmation of Valid return- IGST refund credited to Bank A/C Refund to be processed only after 20th of next month
Export Promotion SEZs? Registration? oBusiness Verticals? oRule 1 of the GST Registration Rules: Provided that a Special Economic Zone unit or Special Economic Zone developer shall make a separate registration as a business vertical distinct from its other units located outside the Special Economic Zone. application for
Export Promotion SEZs oSupplies from & to SEZs :units as well as developers treated as interstate supplies oSupplies to SEZ shall be treated as zero-rated supplies. The exporter shall have an option to either pay output tax and claim its refund or export under bond without tax and claim refund of Input Tax Credit.
SEZ Act and rules SEZ Act and Rules oAmendment in line with the IGST Provisions oSEZ Act/ Rules reference to CE/ST /VAT at different places . Being amended by Ministry of Commerce before 30th June ( By Ordinance route? ) oAll supplies from & to SEZs- Deemed Inter-state supplies No relevance of determination of POS oSupplies to J&K?
Export Promotion Scrips oMEIS & SEIS Scrips To be used only for payment of BCD IGST to be paid in cash oTaxability of these scrips in GST? Not mentioned in the GST rate Schedule Presently taxed in VAT at 6% in some States
EOU Exemption under 52/2003-Customs oEOUs to get the same treatment as a DTA unit oEOU have to pay IGST; No exemption oITC / Refund of the same can be taken when the goods are exported
Advance Authorisation oAdvance Authorisation BCD Exemption IGST to be paid; To be refunded on making exports
Deemed Exports Section 2 (39) of the CGST Act defines deemed exports as means such supplies of goods as may be notified under section 147 Section 147. The Government may, on the recommendations of the Council, notify certain supplies of goods as deemed exports, where goods supplied do not leave India, and payment for such supplies is received either in Indian rupees or in convertible foreign exchange, if such goods are manufactured in India. Pay and take refund principle: In respect of deemed exports, the supplier will have to pay the applicable tax in GST and the recipient will be entitled to take the export benefits.
Refund of IGST to tourists at Airports Exports by Tourists: Section 15 of the IGST Act reads as The integrated tax paid by tourist leaving India on any supply of goods taken out of India by him shall be refunded in such manner and subject to such conditions and safeguards as may be prescribed Explanation For the purposes of this section, the term tourist means a person not normally resident in India, who enters India for a stay of not more than six months for legitimate non-immigrant purposes. Infrastructure at International Airports
Change in Procedures relating to Exports Invoice Rules prescribe 16 fields which shall have to be incorporated in every tax invoice issued under section 31. Rule 1(e) prescribes the following: name and address of the recipient and the address of delivery, along with the name of State and its code, if such recipient is un- registered and where the value of taxable supply is fifty thousand rupees or more The proviso to rule 1 prescribes that in lieu of above clause (e), following shall be specified in invoice: oname and address of the recipient; oaddress of delivery; oname of the country of destination; and onumber and date of application for removal of goods for export
Contd. The proviso further prescribes in case of exports of goods or services; the invoice shall carry an endorsement SUPPLY MEANT FOR EXPORT ON PAYMENT OF INTEGRATED TAX or SUPPLY MEANT FOR EXPORT UNDER BOND OR LETTER OF UNDERTAKING WITHOUT PAYMENT OF INTEGRATED TAX
BE and SB Format BE and SB Formats being changed to incorporate GST identification Number (GSTIN) and IGST details Format of Courier BE, Bill of Import, Post BE also being changed
Shipping Bill GSTIN Type and Number; State code; Type of GSTIN/ normal Mandatory G/GSN - GSTIN of Normal Persons Individual IEC O/GSG GSTIN of Govt. Entities D/GSD - GSTIN of Diplomats Others : I/PAN PAN Number (AAAPL1234C) T/TAN TAN Number (AAAP12345C) P/PSP - Passport Number ( Max 9 Characters - AN) A/ADH Aadhaar Number ( 12 Numeric) Single Window Changes Re-export
Shipping Bill Changes IGST Payment 40. IGST Payment Status NA : Not Applicable LUT : Export under Bond Not Paid P : Export Against Payment P- Export against Payment Taxable Value (41) IGST Amount (42)
Shipping Bill change Taxable Value Taxable Value is the value of the item actually being exported on which IGST has been paid Will be matched with the export invoice particulars declared in the GST return IGST to be validated from GSTR-3
BE Format GSTIN Integrated Tax (IGST) will be declared in GSTR-2 by 15th of next month in order to avail ITC Online validation with GST Portal 8 digit CTH necessary Exemption Notification
Importer exporter code? GSTIN oCredit flow of Integrated Tax on imports of goods oRefund or rebate of IGST related to exports oPAN Based ( IEC also PAN Based) GSTIN required at the time of import; No IEC required Individuals / Below threshold limits- IEC IEC = PAN
IEC? Application to DGFT for IEC required? PAN to be authorised as IEC IEC Holders to use PAN for correspondence
Import of Goods The constitution itself provides that all imports shall be deemed inter-state supply. In this regard, the explanation clause to Article 269A of the 101st Constitution Amendment Act provides: For the purposes of this clause, supply of goods, or of services, or both in the course of import into the territory of India shall be deemed to be supply of goods, or of services, or both in the course of inter-State trade or commerce Thus, All imports-Deemed Inter-state Supplies and so leviable to Integrated Tax
Contd.. Proviso to Section 5(1) on Levy of IGST Act provides that the integrated tax on goods imported into India shall be levied and collected in accordance with the provisions of section 3 of the Customs Tariff Act, 1975 on the value as determined under the said Act at the point when duties of customs are levied on the said goods under section 12 of the Customs Act, 1962.
Import of Goods Enabling provisions introduced in Customs Act, 1962 to levy IGST and GST compensation cess on import of goods into India IGST and GST compensation cess to be calculated on values determined as per Customs Act, 1962, including the basic customs duty. Other provisions provided under Customs law, such as drawback, refunds, exemptions etc. to apply to IGST and GST compensation cess Customs area amended to include a warehouse; importer not required to pay IGST at the time of removal of goods from customs station to a custom bonded warehouse
Calculation of duties on imports Duty ( BCD-10%; CESS-3%; IGST @ 28%; Compensation cess-15%) Amt (in Rs.) 100 Particulars (A) Assessable Value (B) BCD @ 10% 10 (C ) Ed & H Ed CESS( 3% OF BCD) 0.30 (D) A/Value for IGST 100+10+0.30= 110.30 ( E) IGST @28% 30.884 (F) Value for Compensation Cess 110.30 (G) Compensation Cess @ 15% 16.545 (H) Total Duty 57.729 32 04-10-2024
ADD/ Safeguard Impact of ADD/ SG on IGST Regarding Imports which are hit by Anti Dumping and safeguard duty they will also be included for determination of value as per sub section 8b and 10 b of section 3 as per above amendment. further other any sum chargeable under any law is also be included for determination of value as per sub section 8b and 10 b of section 3 as per above amendment ,except the exclusions made in the said sub sections.
Imp of Goods (Contd.) The place of supply of goods, imported into India shall be the location of the importer Thus, if an importer say is located in Rajasthan, the SGST component of the IGST paid at the time of import shall accrue to Rajasthan Impact on B2B / B2C Supplies
India? Definition of India for the purpose of IGST is 200 nautical miles and for the purpose of Customs Act, it is 12 nautical miles plus specified structures up to 200 nautical miles. Taxation of High Seas Sales between 12 nautical miles and 200 nautical miles
High Seas Sale The Advisory Opinion 14.1 of the GATT Valuation Code stipulates that such transaction would constitute an international transfer of goods. The later transaction which led to the import would be the relevant transaction for assessment under Section 14 read with the Rule 4 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. CBEC Circular No. 32 of 2004 In the GST regime too, the situation remains the same. In view of the Advisory Opinion 14.1 of the GATT Valuation Code high seas sales may have to be considered as international transfer of goods and as such shall not be taxed.
HSS Original section: Sec, 7 (2) IGST Act: Supply of goods imported into the territory of India, till they cross the customs frontiers of India, shall be treated to be a supply of goods in the course of inter-State trade or commerce. Suggested section: Sec, 7 (2) IGST Act: Supply of goods imported into the territory of India, at the time they cross the customs frontiers of India, shall be treated to be a supply of goods in the course of inter-State trade or commerce.
HSS Sec. 5(1) proviso of IGST Act is as follows:: Provided that the integrated tax on goods imported into India shall be levied and collected in accordance with the provisions of section 3 of the Customs Tariff Act, 1975 on the value as determined under the said Act at the point when duties of customs are levied on the said goods under section 12 of the Customs Act, 1962. It seems that sec. 5(1) Proviso suggests that on import transactions, IGST shall be levied only once because of the words, "at the point when duties of customs are levied on the said goods" since customs is levied only once. BOND to BOND Transfer??
Section 3 of Customs Tariff Act, 1975 Subsection (7) oAny article which is imported into India shall, in addition, be liable to integrated tax at such rate, not exceeding forty per cent as is leviable under section 5 of Integrated Goods and Services Tax Act, 2017 on a like article on its supply in India, on the value of the imported article as determined under sub- section (8). Subsection (8) oValue= Assessable Value under section 14 of CA, 62 plus Basic Customs Duty
Present Section 3 of Customs tariff act Section 3. (1) Any article which is imported into India shall, in addition, be liable to a duty (hereafter in this section referred to as the additional duty) equal to the excise duty for the time being leviable on a like article if produced or manufactured in India .
Compensation Cess Compensation Cess: Section 3(9) provides that any article which is imported into India shall, in addition, be liable to goods and services tax compensation cess at such rate, as is leviable under section 8 of the Goods and Services Tax (Compensation to States) Cess Act, 2017 on a like article on its supply in India, on the value of the imported article as determined under sub-section 10 Value= ?? Assessable Value under section 14 of CA, 62 plus Basic Customs Duty
Exemptions GST Council has approved 30 + Notification of Customs continuation of exemptions from IGST
Inter-state movement of vehicles Inter-state movement of any mode of conveyance between distinct persons as defined under section 25(4) of the Central Goods and Services Tax Act, 217, including i. Trains ii. Buses iii. Trucks iv. Tankers v. Trailers vi. Vessels vii. Containers a) Carrying goods or passengers or both; or b) For repairs and maintenance, [except in cases where such movement is for further supply of the same conveyance] shall be treated neither as a supply of goods or supply of service and therefore, not be leviable to IGST. However, applicable CGST/SGST/IGST, as the case may be, shall be leviable on repairs and maintenance done.
MRP Based Levy GST on the complete supply chain with tax being collected at every stage of supply No place for MRP Based Levy
Valuation Information on whole supply chain Reduction in Under- valuation of goods Incentive to undervalue will reduce Information flow on subsequent sales will increase Section 108A of Customs Act Amended
Classification groupings Supporting services in transport (9967) Container Handling Services CHA Services Clearing and Forwarding Services Other cargo and baggage handling services Other storage and warehousing services Other supporting services for air transport Goods transport agency services for road transport and other modes
Posers- Registration A CB may have branches all over the country, however his accounting and billing is centralized at Mumbai. In such a case, does the CB have to register and file returns at all the locations. YES, One needs to register in every state From Where supplies are made.
Can two different rates of GST (5% and 18%) be levied in the same invoice or a separate invoice needs to be made. Yes, Why not? Same CTH . Different Rates?
What is the TIME LIMIT to raise Bill under GST after the completion of Service? Pl see Section 31 with Invoice Rules
Invoice ( Section 31) When to issue a invoice? In case of supply of Goods Before or at the time of removal/ delivery/ making goods available In case of supply of Services Before or after the provision of service But before 30 days from date of supply 45 days for insurers/ BOFS OR for telecom/ BOFS/ insurers between distinct persons- before or at the time such supplier records the same in his books of account or before the expiry of the quarter during which the supply was made 50
