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GST for Beauty parlours, Salon and Fitness Services

GST Registration

Beauty parlours, fitness centres and gyms having more than Rs.20 lakhs of aggregate turnover in a year (In Special Category States, Rs.10 lakhs aggregate turnover in a year) would have to obtain GST registration. Since, the supply provided by beauty parlour and gyms would fall under intra-state supply, GST registration would be required only on crossing the threshold. Also, beauty parlours, fitness centres and gyms having service tax registration would mandatorily have to complete GST migration.

In case a fitness centre is involved in supply of services and goods like selling of cosmetics, protein powders, etc., then GST registration would be mandatory, if e-commerce is used for supply of goods or goods are sold to persons in other states.

SAC CODES

Beauty Parlours

SAC Code 999721 -hairdressing and barbers . For cosmetic treatment (including cosmetic/plastic surgery), manicuring and pedicuring services, SAC Code 999722 is applicable. All other beauty treatment services are classified under SAC Code 999729.

Fitness Centres

SAC Code 999723 is applicable for physical well-being services including health club & fitness centre.

HealthCare Services

SAC Code 999311 – Inpatient services
SAC Code 999312 – Medical and dental services
SAC Code 999313 – Childbirth and related services
SAC Code 999314 – Nursing and Physiotherapeutic services
SAC Code 999315 – Ambulance services
SAC Code 999316 – Medical Laboratory and Diagnostic-imaging services
SAC Code 999317 – Blood, sperm and organ bank services
SAC Code 999319 – Other human health services including homeopathy, unani, Ayurveda, naturopathy, acupuncture etc.

GST Rates:

  • The GST rate applicable for Hairdressing services and Beauty parlour services is 18%
  • The GST rate applicable for Fitness centres and Gym services is 28%.
  • The GST rate applicable for HealthCare Services Is 18%

 

Exceptions:

Health care services by a clinical establishment, an authorized medical practitioner or Para-medics are exempt from GST.

Services by a veterinary clinic in relation to health care of animals or birds is also exempt from GST

 

 

GST impact on Iron & Steel:

GST rates on iron and steel which are commonly used articles:

GST @ 12%

  • Mathematical boxes, geometry boxes, colour boxes, pencil sharpeners
  • Animal shoe nails
  • Utensils
  • Kerosene burners or stoves, wood burning stove made of iron or steel
  • Table or kitchen or other household articles of iron or steel
  • Sewing needles

GST @ 18% (all items made up of iron/steel)

  • Any kind of sheet
  • Railway & Tram way tracks
  • Tube & Pipes
  • Reservoir, tanks, casks, drums, cans
  • Bridges, lock gates, roofing, window frame works, pillars
  • Compressed liquefied gas
  • Barbed wires (fencing, cables, ropes)
  • Sewing needles, knitting needles,

GST @ 28%

  • Rangers, grates, cookers, barbecues, brazier, gas rings
  • Radiators used in a central heating system
  • Sanitary ware & Parts

Impact of GST Rate on Iron and Steel

Kitchen utensils like stainless steel cooker, pan etc are likely to get a little cheaper as they are charged at the rate of 12% under GST from the current tax rate of 19.5%.

The steel industry is likely to enjoy the benefit of lower tax rate of 5% on the major inputs used by them like coal and iron ore under GST. Transportation services used for transporting steel is kept under 5% bracket which will help in reducing logistics cost

GST Rates & HSN Codes on Iron Tubes, Piles, Sheets & Hollow profiles

HSN CODE DESCRIPTION RATE
7301 Sheet piling of iron or steel, whether or not drilled, punched or made from assembled elements; welded angles, shapes and sections, of iron or steel 18%
7302 Railway or tramway track, , check-rails and rack rails, switch blades, crossing frogs, point rods and other crossing pieces, sleepers (crossties), fishplates, chairs, chair wedges, sole plates (base plates), rail clips bedplates, ties and other material specialized for jointing or fixing rails 18%
7303 Tubes, pipes and hollow profiles, of cast iron 18%
7304 Tubes, pipes and hollow profiles, seamless, of iron (other than cast iron) or steel 18%
7305 Other tubes and pipes (for example, welded, riveted or similarly closed), having circular cross-sections, the external diameter of which exceeds 406.4 mm, of iron or steel 18%
7306 Other tubes, pipes and hollow profiles (for example, open seam or welded, riveted or similarly closed), of iron or steel 18%
7307 Tube or pipe fittings (for example, couplings, elbows, sleeves), of iron or steel 18%
7308 Bridges and bridge-sections, lock-gates, towers, lattice masts, roofs, roofing frame-works, doors and windows and their frames and thresholds for doors, and shutters, balustrades, pillars, and columns,  plates, rods, angles, shapes, section, tubes and the like,  Excluding : prefabricated buildings of heading ,transmission towers 18%
7309 Reservoirs, tanks, vats (other than compressed or liquefied gas), of a capacity exceeding 300 l, whether or not lined or heat-insulated, but not fitted with mechanical or thermal equipment 18%
7310 or 7326 Mathematical boxes, geometry boxes and colour boxes, pencil sharpeners 12%
7310 Tanks, casks, drums, cans, boxes and similar containers, for any material (other than compressed or liquefied gas), of iron or steel, of a capacity not exceeding 300 l, whether or not lined or heat-insulated, but not fitted with mechanical or thermal equipment 18%
7311 Containers for compressed or liquefied gas, of iron or steel 18%
7312 Stranded wire, ropes, cables, plaited bands, slings and the like, of iron or steel, not electrically insulated 18%
7313 Barbed wire of iron or steel; twisted hoop or single flat wire, barbed or not, and loosely twisted double wire, of a kind used for fencing, of iron or steel 18%
7314 Cloth (including endless bands), grill, netting and fencing, of iron or steel wire; expanded metal of iron or steel 18%
7315 Chain and parts thereof, of iron or steel falling under 7315 20, 7315 81, 7315, 82, 7315 89, 7315 90 18%
7316 Anchors, grapnels and parts thereof, of iron or steel 18%
7317 Animal shoe nails 12%
7317 Nails, tacks, drawing pins, corrugated nails, staples (other than those of heading 8305) and similar articles, of iron or steel, whether or not with heads of other material, but excluding such articles with heads of copper 18%
7318 Screws, bolts, nuts, coach screws, screw hooks, rivets, cotters, cotterpins, washers (including spring washers) and similar articles, of iron or steel 18%
7319 Sewing needles 12%
7319 Sewing needles, knitting needles, bodkins, crochet hooks, embroidery stilettos and similar articles, for use in the hand, of iron or steel; safety pins and other pins of iron or steel, not elsewhere specified or included 18%
7320 Springs and leaves for springs, of iron and steel 18%
7321 Kerosene burners, kerosene stoves and wood burning stoves of iron or steel 12%
7321 LPG stoves,:ranges, grates, cookers (including those with subsidiary boilers for central heating), barbecues, braziers, gas-rings, plate warmers and similar non-electric domestic appliances, and parts thereof, of iron or steel [other than Kerosene burners, kerosene stoves and wood burning stoves of iron or steel] 18%
7321 Stoves [other than kerosene stove and LPG stoves], ranges, grates, cookers (including those with subsidiary boilers for central heating), barbecues, braziers, gas-rings, plate warmers and similar non-electric domestic appliances, and parts thereof, of iron or steel 18%
7322 Radiators for central heating, not electrically heated, and parts thereof, of iron or steel; air heaters and hot air distributors (including distributors which can also distribute fresh or conditioned air), not electrically heated, incorporating a motor-driven fan or blower, and parts thereof, of iron or steel 18%
7323 Table, kitchen or other household articles of iron & steel; Utensils 12%
7323 iron or steel wool; pot scourers and scouring or polishing pads, gloves and the like, of iron or steel 18%
7324 Sanitary ware and parts thereof of iron and steel 18%
7325 Other cast articles of iron or steel; such as Grinding balls and similar articles for mills, Rudders for ships or boats, Drain covers, Plates and frames for sewage water or similar system 18%
7326 other articles of iron and steel, forged or stamped, but not further worked; such as Grinding balls and similar articles for mills, articles for automobiles and Earth moving implements, articles of iron or steel Wire, Tyre bead wire rings intended for use in the manufacture of tyres for cycles and cycle-rickshaws, Belt lacing of steel, Belt fasteners for machinery belts, Brain covers, plates, and frames for sewages, water or similar system, Enamelled iron ware (excluding utensil & sign board), Manufactures of stainless steel (excluding utensils), Articles of clad metal 18%

 

 

 

Impact of GST on Restaurants

Introduction

  • There is lot of confusion on rate of GST Applicable to Restaurants under Composition Scheme,
  • Restaurant with no air-conditioning in any part thereof and not serving liquor,
  • Restaurant with partial or full air-conditioning or serving liquor,
  • Rate of tax on food parcel cooked as per order,
  • Rate of tax on parcel of pre- packed and pre- cooked namkeens sold from restaurants and
  • Is there any restaurant where the rate of tax is 28%.

 

To clear this confusion following clarification is issued:-

Different circumstances of supplies by restaurants   Rate of tax (CGST + SGST)

  1. Restaurant under Composition Scheme (up to aggregate turnover of Rs. 75 lakh*) ==   5%
  2. Restaurant with no air-conditioning in any part thereof and not serving liquor ==   12%
  3. Restaurant with partial or full air-conditioning or serving liquor ==18%
  4. Is there any restaurant where the rate of tax is 28% == No
  5. Rate of tax on food parcel cooked as per order ==   As applicable to service of food in that restaurant
  6. Rate of tax on parcel of pre-packed and pre-cooked namkeens sold from restaurants == 12%

Note:  The table above indicates GST rates applicable to supplies made by restaurants in different circumstances. However, the actual GST incidence wilt be lesser due to increased availability of input tax credit.

* This limit is Rs. 50 lakh for Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Tripura, Sikkim and Himachal Pradesh.

 Service Charge: According to Ministry of Consumer Affairs, Food and Public Distribution, service charge levied by the restaurants, is the voluntary amount paid by the customers, at their discretion. 

Key changes in 23rd GST Council Meeting:

The Council recommended the following changes in terms of tax rate:

  • uniform rateof 5% tax is levied on all the Restaurants without distinction of Air Conditioned or Non-Air Conditioned without the benefit of claiming Input Tax Credit (ITC).
  • Takeaway’sfrom Restaurants and E-Commerce operators will attracts  5% without the benefit of claiming Input Tax Credit (ITC).
  • Restaurant in Starred hotels charging less than Rs.7500 per day roomtariff will charge  5%  GST but will not get any Input Tax Credit.
  • Restaurant in Starred hotels charging 7500 or more per day roomtariff will charge  18%  GST and Input Tax Credit is allowed for them.
  • Outdoor catering will continues to attract  18%  GST and Input Tax Credit is allowed for same.
  • The most important thing is GST rate not depends now onwards whether restaurant is Air Conditioned or Non – Air Conditioned, Serving Alcohol or not.

 

Impact of GST on Railways, Airways passengers:

Railway-Fare

• GST rates on rail transport are capped at 5%
• Passengers travelling for business purposes can now claim ITC on rail ticket prices thus helping businesses to reduce their expenses
• End consumers will find that ticket prices will increase slightly under GST. However, business travellers can now claim the Input tax credit against the output GST liability.
Transport for Goods
• Transport of goods and passengers by rail will attract 5% tax under GST.
• No ITC available on transportation through Goods Transport Agencies (such as trucks).
• GST rate is also 5% on road transport thus making the rail freight more competitive.
Exemptions under railways
• Travelling in metro;
• Local trains; and
• Religious travel including Haj yatra
No GST on Transportation of Certain Goods
(a) Relief material for disaster struck areas (food for flood victims etc.)
(b) Defence or military equipment
(c) Newspaper or magazines registered with the Registrar of Newspapers
(d) Railway equipment or materials
(e) Agricultural produce
(f) Milk, salt and food grain including flours, pulses and rice
(g) Organic manure

SERVICES  AND GST RATES
1 Transport of goods by rail = 5% with ITC of input services
2 Transport of passengers by rail (other than sleeper class) =  5% with ITC of input services
3 Services of goods transport agency (GTA) in relation to transportation of goods [other than used household goods for personal use] = 5% No ITC
4 Transport of goods in containers by rail by any person other than Indian Railways =  12% With Full ITC

Registered Taxable Persons Transporting Goods via Rail
Business to Business (B2B) supplies will stand to gain with GST as input tax credit will be available.
The invoice matching concept will be applicable here as well in order to claim ITC. The IRTC will capture the GSTIN of all the business sending goods for transportation for which it will require changes to the IRTC software.
B2C Supplies- Unregistered Persons
GST will be collected by Indian Railways and deposited with the government. IRTC will maintain a consolidated summary of invoices for the freight of unregistered persons each day with details of all B2C supplies.

 

Air-Fare
The GST Council has lowered the tax rate for economy class flight tickets to 5%. However, the business class tickets will attract a higher tax at 12% after GST implementation from 1 July.
ITC ON Air Lines:
Moreover, airlines can only claim input tax credit (ITC) on input services for the economy class, while in case of business class they can claim ITC for spare parts, food items and other inputs excluding cost on aviation fuel turbine (ATF) as it falls under purview of GST

SERVICES AND GST RATE 1 Transport of passengers by air in other than economy class = 12% With Full ITC
2 Transport of passengers, with or without accompanied belongings, by air, embarking from or terminating in a Regional Connectivity Scheme Airport.  = 5% with ITC of input

GST on Rent

According to the Schedule 2 of the GST Act, renting out of an immovable property would be treated as a supply of services.

GST, however, will be applicable only on certain types of rent such as:

  • When a property is given out on lease, rent, easement, or licensed to occupy
  • When any property is leased out (or let out) including a commercial, industrial, or residential property for business (either partly or wholly)

This type of renting are considered as a supply of services.

Under GST regime

When you rent out a residential property for residential purpose, it is exempt from GST. Any other type of lease or renting out of immovable property for business would attract GST at 18%, as it would be treated as a supply of service.

Example:

Manish resides in Bangalore and has a property in Hyderabad. For the Hyderabad property, he is getting a rent of Rs. 30,000 monthly, or Rs.3,60,000 per annum.

Under GST, the place of supply shall be the address of the immovable property. Therefore, even though the person resides in Bangalore, the place of supply will always be where the property is situated, which is Hyderabad.

Also, because the rental amount is lesser than Rs. 20 lakh a year, it is exempted.

Eligible for GST

  • A taxpayer earning more than the exempted threshold will have to register under GST and pay taxes.
  • So, if you have given your unit to businesses, then it is taxable if you are getting more than Rs 20 lakh as rent.

 GST calculation on rent out a property for commercial purposes

GST council has laid out GST rates on renting out the property for commercial use. For all other commercial spaces that are on rent, GST will be applicable at  18%  on the taxable value and rent would be treated as a taxable supply of service.

If a registered charitable trust or a religious trust owns and manages a religious place meant for the public, it is exempt from GST. This can happen only if:

  • The renting rooms are charged Rs 1,000 or less per day
  • The renting shops and other spaces for business are charged Rs 10,000 or less per month
  • The renting community halls or an open area are charged Rs 10,000 or less per day

Provision for a tax deduction on income tax for the rented property

The registered landlord or the owner of the property has to collect the GST from the lessee on the rent charged. The lessee has to deduct income tax at source at 10% if the rent for the property exceeds Rs.1.80 lakh per year. The TDS is applicable both on residential and commercial properties. It will be deducted by all lessees except individuals & HUFs (unless the individual or HUF required to get his accounts audited under Section 44AB of the Income Tax Act.)

For an individual or a Hindu Undivided Family (HUF), who are not required to get their accounts audited, the Budget 2017 has introduced a special provision —These individuals and HUF will have to deduct tax at source @ 5 %  at the end of the year or the end of the tenancy period if the monthly rent exceeds Rs. 50,000.

Impact of GST and TDS on rental income

For a rental income from a real estate investment, it is taxed under the ‘income from house property. This is a form of direct tax. Properties that are let-out are subject to indirect taxation (in the form of GST).

When the property is leased-out, the lessee of the property is required to deduct TDS (tax deducted at source). Under GST, there will no GST component on TDS.

Let us explain in detail. Tax is deducted at  5%  (for an individual and HUF), and at  10%  for commercial properties. Now, an individual or HUF, or even companies will deduct tax (at the respective rates) and pay the rent. Hence, there is no GST on TDS to avoid tax cascading effect.

Higher Penalties in – GST Regime

Under the Goods and Services tax Act, there are cases where small procedural lapse which is generally ignored and which is easily rectifiable may lead to big penalties. In this write up, I tried to list out all small lapses which may lead to big penalties which I observed are generally ignored even today in many business places. The Tax officers are levying penalties for these lapses already. Quantum of penalties is really alarming. Penalty for the non-compliance is costlier than cost for complying the same. As a matter of awareness, I tried to brief on those lapses which may be rectified easily to avoid paying penalties.

Nature of Default Penalty Remarks
GST Identification Number (GSTIN) to be mentioned on the name board Upto Rs. 25,000 If you are regular GST dealer, GSTIN needs to be mentioned on the name board. If you opted for Composition levy, you need to mention ‘Composite Taxable person’ on the name board. This rule is to make the buyer to choose the supplier on seeing the details on the name board.
GST Registration Certificate (GST REG – 06) to be displayed at prominent place of business at all places of business Upto Rs. 25,000 Any registered person needs to display his GST registration certificate at prominent place of business and at all additional places of businesses also. This is to ensure that the person is registered on seeing the certificate itself.
Not issuing Proper Invoice Rs. 25,000 Invoice is the document which contains all details of supply and also an important document based on which ITC is availed. Hence, Invoice is given utmost importance in GST, rather any indirect tax law. So, all details as mentioned in rules need to be mentioned on the Invoice.
Not maintaining proper Stock record Upto Rs. 25,000 Stock record is one of the mandatory records to be maintained as per Rule 56(2) of CGST Rules, 2017. From that record, the whole operations can be known.
Availing Input Tax Credit based on wrong Invoice Rs. 10,000 or 100% of ITC wrongly availed, whichever is higher + 24% Interest from date of availment to date of reversal Input Tax Credit (ITC) is backbone of GST structure. To avail ITC, proper Invoice is must.
Paying CGST instead of IGST/SGST

Paying SGST instead of CGST/IGST

Paying IGST instead of CGST/SGST

Pay Tax under correct head with no interest and claim refund of tax paid under wrong head. CGST & SGST is payable for intra-state supplies and IGST for inter-state supplies. Taxes paid under respective heads are transferred to respective governments. For Example, taxes paid under SGST head is transferred to respective state government determined based on place of supply. So, Tax paid under wrong heads leads to transfer of tax to that respective government which leads to wrong accounting. Hence, under GST, paying tax under correct heads is important and hence, the penalty. However, GST portal is now generating challan automatically after entering data in GSTR 3B. Chance of making this mistake is reduced to great extent.
Not filing GSTR 3B on or before 20th of next month Rs. 20 (Rs. 10 SGST + Rs. 10 CGST) per day of delay in case of NIL returns.

In other cases, Rs. 50 (Rs. 25 CGST + Rs. 25 SGST) per day of delay

Timely Compliance is key to success of GST return process and matching. Hence, to encourage timely compliance, this penalty
Not filing GSTR 1 on or before due date
Not obtaining registration within 30 days of date on which he is liable to get registered Rs. 10,000 + ITC during the period of delay is lost Section 22 of CGST Act 2017 mandates every person to register if the aggregate turnover exceeds Rs. 20 Lakhs. Every registered person needs to pay tax and file returns. Hence, registration is an important aspect in GST. Non-registration even though he is liable or takes registration late are both wrong doings.
Invoice without supply (Accommodation Bills) Rs. 10,000 or 100% of tax evaded , whichever is higher This situation may lead to availment of higher ITC without actually selling goods.
Supply without Invoice (Non- Issuance of Invoice) Rs. 10,000 or 100% of tax evaded, whichever is higher This situation may lead to supply without recording it and also the buyer may lose ITC since he doesn’t possess proper invoice.
Collects GST but doesn’t pay to Government within 3 months from due date Rs. 10,000 or 100% of tax evaded, whichever is higher In indirect taxes, the tax is collected from the consumer and paid to Government. It is not an expense to the supplier. So, whenever tax is collected from a third party on behalf of Government and the same is not paid leads to mis-appropriation of public money.
General Penalty Upto Rs. 25,000 If any of the provisions are defaulted and nowhere penalty is specified, this general penalty provision may be resorted to.

All the above mentioned defaults are easily rectifiable with minimal time and minimum effort. Hence, all are requested to see that the simple provisions are being complied and avoid big penalties.

 

GST on Gold / Silver jewelry

  • The rate of GST applicable on gold bullion and gold jewelry is the same – 3%.
  • However, when the bullion is purchased, GST will be applied once @3% and when the bullion is converted to jewelry, there will be another GST on the outward supply of such jewelry @3%.
  • For imports, the 3% rate of levy equivalent to IGST
  • All job work in relation to cut and polished diamonds; precious and semi-precious stones, or plain and studded jewelry of gold and other precious metals is taxable @ 5% (with full ITC)
  • If the artisan is engaged on a principal to principal or business to business level, it is taxable
  • If they are directly employed by the principal, the services will not be taxable under GST, as services by employee to employer are not liable to GST

Levying tax on supplies involving two or more goods/ services or both?

  • If the supplies are independent for independent consideration, then the rate as applicable for such supplies will apply.
  • If the transaction is a ’composite supply’ or a ‘mixed supply’, then the treatment will be as set out below.

Composite supply:

Composite supply means a supply consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other

Ex:  If gold ornaments of 100 gms (with packing) is sold for Rs. 2,80,000/- and labour charges totaling to Rs. 40,000/- is also charged on the same transaction, total value of transaction being Rs. 3,20,000/-

ANSWER The gold will be taxed at 3% and the labour at 5%.

Mixed supply:

Mixed supply means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply (e.g. services of re-making along with supply of additional gold and stones)

Ex: How will the exchange of old jewelry worth Rs. 10,000 plus cash of Rs. 5,000 for new jewelry priced at Rs. 15,000 be treated under GST?

ANSWER GST is to be paid on the “open market value” (i.e. retail price) of the new item of jewelry, i.e. Rs. 15,000.

If the “open market value” is not known, GST will be paid on the amount of money paid by customer plus the value of old gold jewelry given by customer (i.e. Rs. 5,000 plus Rs. 10,000).

Job work:

Job work treated as “supply of service” and subject to 5% of GST

If job worker is “Not registered” GST will be payable by the principal under the reverse charge mechanism.

GST on job worker

  • Inputs and capital goods may be sent to a job worker without payment of tax, it must be return within 1 to 3 years (Depends)
  • If it is not return then it can be treated as supply, and job worker need to pay GST along with Interest
  • If job work is not good and re-do the job no extra GST charged, unless job worker intimate extra cost on work
  • If the wastage in job work impact the amount of making charge then wastages should be calculated on GST, or else not required

Documents

Old jewelry for repairs or making new:  No

Return of goods by the job worker: No

Invoicing requirements under the GST

  • Invoice pertaining to supply of goods must be issued at the time of removal or delivery of goods
  • Invoice pertaining to supply of service must be raised within 30 days from the date of supply of service Invoice shall contain all the particulars specified under the Invoice Rules
  • Goods must be classified as per HSN (Harmonized System of Nomenclature) and services as per SAC (Services Accounting Code) QUERY 4 How will the goods be classified

Essential or must’ compliances under GST:

Registration once the threshold is crossed or if registration is compulsory – Issuance of invoices or other prescribed documents – Filing of details, returns on monthly basis, annual return – Payment of tax by the due date – Maintaining the prescribed accounts and records – Implementing any pricing changes which may be required by the anti-profiteering clause

Conclusion:

The Goods and Services Tax (GST) for gold was fixed at 3% and an additional, the tax on making charge at 5%.

The spike in the rate of gold can due to the import duty which has been retained. Currently, gold attracts an import duty of 10%, in addition to 3% GST, and 5% making charges (GST).

 

 

 

 

 

Impact of GST on NGOs & Charitable Trusts

Charities will come be subject to pay Goods and Services Tax. This means that GST will be applicable on some of the services and goods supplied by a charitable trust or an NGO. Let us explain this in detail.

Criteria for a charitable trust to be exempted from GST

The charitable trust or NGO must be registered under Section 12AA of the Income Tax Act, and the services provided by the charitable trust or the NGO must be for a charitable cause.

 

Charitable activities under GST are:

  • Public health services, such as:
  1. Counselling of terminally ill persons or counselling for physically disabled
  2. Counselling for people affected with HIV or AIDS
  3. Counselling for alcohol-dependent persons
  • Promoting of religion, spirituality, or yoga
  • Spreading public awareness on health, family planning
  • Promoting educational programs or skill development relating to:
  1. Physically or mentally abused persons
  2. Prisoners
  3. Orphaned, homeless, or abandoned children
  4. Rural area residents over the age of 65
  • Charitable services to preserve the environment (watershed areas, forests, and wildlife)

If any charitable trust or an NGO does not meet at least two of the criteria, then GST will be applicable and the entity must register under GST.

Goods sold by a charitable trust

Goods that are sold by a charitable trust are taxable. The charitable trust must pay the GST rate applicable while purchasing the supply.

GST applicable on training programs, camps, and events conducted by a charitable trust

If a charitable trust is conducting training programs, yoga camps, or other programs that are not free for participants, it will be considered as a commercial activity and hence will be liable for GST. Even the donation received for such an activity will be liable for taxation under GST.

Services provided by way of training or coaching in recreational activities relating to arts and culture, or sports by a charitable entity will be exempt from GST.

Events organized by charitable trusts exempt from GST

If trusts are running schools, colleges or any other educational institutions specifically for abandoned, orphans, homeless children, physically or mentally abused persons, prisoners or persons over age of 65 years or above residing in a rural area, such activities will be considered as charitable activities and income from such supplies will be wholly exempt from GST.

Charitable trust rents out a religious place:

GST law has chalked out GST exemptions, when a charitable trust rents out religious meant for general public (owned and managed by a registered charitable trust under 12AA of the Income Tax Act, 1961). GST will be exempted when:

  • Rent out rooms are charged lesser than Rs.1,000 a day
  • Kalyanamandapam or an open area is charged lesser than Rs.10,000 a day
  • Rent out shops and other spaces for business are charged less than Rs.10,000 a month

 

 

 

 

 

 

 

GST ON JOB WORK

Job Work

As per GST Act, job work means any treatment or process undertaken by a person on goods belonging to another registered person. The person doing the job work is called job worker.

ITC on goods sent for job work

The principal manufacturer will be allowed to take credit of tax paid on the purchase of goods sent on job work.

However, there are certain conditions.

A.Goods can be sent to job worker:

From principal’s place of business,

Directly from the place of supply of the supplier of such goods

ITC will be allowed in both the cases.

B.Effective date for goods sent depends on place of business:

Sent from principal’s place of business- Date of goods sent out

Send directly from the place of supply of the supplier of such goods- Date of receipt by job worker

Effective date is important because it will help to determine the point of taxation if the goods are not returned back within the specified time (see point C below)

C.The goods sent must be received back by the principal manufacture within the following period:

Capital Goods- 3 years & Input Goods- 1 year

D.In case goods are not received back within the period mentioned above,

Such goods will be treated as supply from the effective date and tax will be payable by the principal.

Accompanying documents

Accounts & records

The responsibility for keeping proper accounts for the inputs or capital goods shall lie with the principal.

Challan

Challan is must for the inputs or capital goods sent directly to the job-worker.

The details of challans must be shown in FORM GSTR-1 & also be filed through Form GST ITC – 04.

The challan issued includes-

Date and number of the delivery challan

Name, address and GSTIN of the consigner and consignee

HSN code, description and quantity of goods

Taxable value, tax rate, tax amount- CGST, SGST, IGST, UTGST separately

Place of supply and signature

Form ITC-04

FORM GST ITC-04 must be submitted by the principal every quarter. He must include the details of challans in respect of the following-

Goods dispatched to a job worker or

Received from a job worker or

Sent from one job worker to another

It must be furnished on or before 25th day of the month succeeding the quarter. For example, for Oct-Dec quarter, the due date is 25th Jan.

For more information on ITC-04 please refer our article.

Transitional provisions

This applies for items removed for job work before GST and returned on or after GST implementation.

No tax will be payable if the following conditions are satisfied:

The goods are returned to the factory within 6 months from 1st July (i.e. by 31st Dec 2017) (extendable for a maximum period of 2 months).

Goods held by job worker is declared in Form TRAN-1

The principal manufacturer can sell off the items under job work only after paying required taxes (Excise & VAT if before GST. If he sells after 1st July 2017, then GST applies). This rule does not apply to goods exported out of India within 6 months from the appointed date (extendable by not more than 2 months).

If the goods are not returned within the time period then ITC will be recovered from the principal manufacturer.

FORM GST TRAN-1

Both the job worker and the principal manufacturer must submit FORM GST TRAN-1 and mention the details of stock held by job worker for principal/ with job worker/by job

Due date is 30th November 2017

They must specify the stock of the inputs, semi-finished goods or finished goods held by them on 1stJuly 2017.

GST Rates on Job work

Job Work (0%)

  • Agriculture, forestry, fishing, animal husbandry, Intermediary services related to cultivation and animal rearing

Job Work (5%)

  • Printing of newspapers, Textile and textile products, Jewelry, Printing of books (including Braille books), journals and periodicals, Processing of hides, skins and leather, clay & bricks
  • Goods falling under Chapter 48 or 49 [Heading 9988] which attracts 5%

Job Work (12%)

  • Job work in relation to manufacture of umbrella 12%
  • Goods falling under Chapter 48 or 49 [Heading 9988] which attracts 12%
  • printing of all goods falling under Chapter 48 or 49, which attract GST @ 5% or Nil, where only content is supplied by the publisher and the physical inputs including paper used for printing belong to the printer [(Heading 9989)] 12%
  • Printing of all goods falling under Chapter 48 or 49 which attract GST @12%, where only content is supplied by the publisher and the physical inputs including paper used for printing belong to the printer 12%

Job Work (18%)

  • Goods falling under Chapter 48 or 49, other than those covered by (6) and (7) above, [Heading 9988] 18%
  • Printing of all goods falling under Chapter 48 or 49 which attract GST @18% or above, where only content is supplied by the publisher and the physical inputs including paper used for printing belong to the printer 18%

 

Impact of GST on E-Commerce (Online Businesses)

Impact of GST on E-Commerce Marketplace Sellers (Online Businesses)

 

  • Marketplace is an e-commerce platform owned by the E-commerce Operator such as Flip kart, Snap deal and Amazon. Some of the features of a marketplace model are:
  • The supply of goods or service or both including digital products over digital or electronic network.
  • Any person, who directly or indirectly owns, operates or manages digital or electronic facility or platform for e-commerce.

 

GST Registration for the person selling through e-commerce operator:

For the person who undertakes supplies through e-commerce websites, it is mandatory to obtain GST registration irrespective of the value of supply made by them. The application for registration must be applied irrespective the ownership of the websites or portal through which supplies are made.

No Benefit under Composition Scheme:

This composition scheme is introduced to reduce the Tax burden for small, medium scale businesses, Under this scheme, businesses are required to file returns quarterly instead of monthly and pay taxes at nominal rates up to 2%.

However GST excluded composition scheme for E-Commerce

Tax Collection at Source: 

It is mandatory to deduct a percentage amount as the GST liability of seller and deposit it with government. This mechanism is being termed as “Tax Collection at Source (TCS)” under the GST law. Eventually the marketplace seller will have to file monthly return under GST to claim the credit of TCS collected by the marketplace operator.

TCS is calculated and deducted at the rate of 1% of the net value of the goods or services supplied through the ecommerce operator.

For example, if the net value of goods sold through an ecommerce operator is Rs.1 lakh, then the ecommerce operator would be required to deduct and remit Rs.1000 on behalf of the supplier as Tax Collected at Source or TCS.

The amount of TCS deducted by an ecommerce operator and remitted to the Government will be provided as credit while filing GSTR-2 return. While filing GSTR3 or GSTR3B return, TCS remitted by an ecommerce operator can be used to setoff GST liability.

GST Return Filing for E-Commerce

GSTR – 8 returns is to be filed by E-commerce operator every month within 10 days after the end of such month. Under GSTR-8 return details of outward supplies of goods and service made by sellers through the platform and amount of TCS collected is to be reflected.

E-commerce operator is also required to file an annual statement by 31st day December following the end of the financial year in which the tax collected.

The amount of TCS paid by the e-commerce operator to the government will be reflected in the GSTR-2 of the actual registered supplier (on whose account such collection has been made) on the basis of the statement filed by the e-commerce operator.

The following details of supplies made through an e-commerce operator, as declared in FORM GSTR-8, shall be matched with the corresponding details declared by the supplier in FORM GSTR-1:—

  • GSTIN of the supplier;
  • GSTIN or UIN of the recipient, if the recipient is a registered person;
  • State of place of supply;
  • GST Invoice number of the supplier;
  • Date of invoice of the supplier;
  • Taxable value; and
  • Tax amount

Some of the key points that should be kept in mind are:

  • Get your GST enrolmentdone on time,
  • Plan your logistics and warehousing requirement carefully.
  • Adopt such knowledge-consult a chartered accountant get all updates and enable your business with GST compliance