Mahindra Logistics

Key features of the GST Law

In view of the ground-breaking nature of GST, it is expected to have a revolutionary impact on business.Here are a few key points:

  • Cascading impact of Taxes like VAT, and Service Tax will be removed and credit mechanism will be streamlined.
  • GST be levied on Inter-State Stock Transfer transactions and will be Vatable. Current Non- vatable CST (2%) on procurement from inter-State will be removed. As a result, the logistics business may improve.
  • As far as Goods Transport Agency (GTA) is concerned, existing reverse charge mechanism applying abatement on Goods Transport Agency (GTA) is likely to continue and customers are expected to get the GST credit paid for outward transportation also.
  • In case of Storage & Warehousing, credit entitlement on equipment will be increased as current applicability of VAT is not available as credit to service industries as their output tax liability is service tax. Under GST regime since VAT will be replaced by GST and credit of input GST will be available against the output GST

Carry-forward provisions

For existing credit:

GST is also expected to have an impact on transitional provisions for carry-forwarding existing credit. For example, the existing service provider will be allowed to carry forward the credit shown in the returns furnished under service tax as on 30 th June 2017, provided all credit shown in the books of account is reflected in the return.

For Debit Notes / Credit Notes for old supplies:

GST will not be payable for supplies after 1st July 2017 if the consideration is received and tax is paid on such date. No GST is payable on taxable services where tax became due under old law. For e.g. Advance received prior to 1-07- 2017. With effect from 1st July 2017, if a debit note or a supplementary invoice is issued for increase in price of goods or services supplied earlier, then GST is to be levied.

Impact on Valuation

Value for levy of GST is transaction value and GST will be levied as last item on invoice and thus, the Concept of Pure Agent is to continue with certain conditions. Also, GST not applicable for Discounts offered on the Invoices. However, discounts extended after supply of the goods are allowed only if they are established in terms of the agreement existing at the time of supply. It must be remembered in this context that computation of the discount is to be specifically linked to the relevant purchase invoice. A few more key points are:

  • GST credit to the extent of discount received is required to be reversed by recipient.
  • Mandatory Credit note to be uploaded by the vendor / Customer and MLL in their respective GST returns for reduction in Taxes.

Impact on GST Credit

How will the provisions of the law impact the GST credit? Here are a few salient points:

  • Invoice-wise details for transaction between GST-registered persons are to be uploaded on the GST Portal.
  • The law also has a provision to deny the credit if the BA does not pay the tax to the Government and also if the BA does not file a GST return.

Debit note/credit note

Debit Note and Credit note is to be mandatorily issued as per the GST Law. Credit note is to be issued when the taxable value or tax is charged in excess or goods return or where services supplied are found to be deficient. No credit note will be issued for renegotiation of the service value but debit note is to be raised for increase in value of service and tax. Moreover,

  • Debit Note and Credit note is to be uploaded in the return.
  • There will be a reduction in liability only if credit note is uploaded in the return by the recipient and the input tax credit is also reversed by the customer.

Tax invoice

The following are some of the important aspects related to tax invoice / debit note and credit:

If the customer is Business (B2B), then he is required to:

  • Obtain GSTIN no. And mention on every tax invoice.
  • Submit in return, the invoice-wise details.
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Disclaimer: The information on this website is provided for general informational purposes only. None of the information on this website is offered, nor should it be construed, as legal advice in any way on any matter.