GST GUIDANCE & CLARIFICATION MEET

 

 

 

 

PONCEA Engineers attended program on GST Guidance and Clarification meet at Hotel Anandha Inn on 10.10.2017.

 

 

 

                                                                                  Tmt.J.Jayabharathi,IRS

                                        Deputy Commissioner,Central Excise and GST -Govt of Puducherry

 

 

 

 She has explained about GST in detailed manner and also answered lot of questions and doubts raised by the Engineers.

 

 

 

Q1
I am a builder promoting individual house. Say i am selling a house for 50 lacs What is GST in this case?
A-1
There can be two situations. (i) payments received at various stages of construction and (ii) full payment received only after issuance of completion of certificate by the competent authority or after its first occupation, whichever is earlier.

 

In the first situation,  (if the land is also transferred) your liability of GST will be 18% on 2/3 of 50 Lakh.

 

In the second situation no GST is applicable.

 

 

Q-2
I am a Contractor taking construction of buildings for clients. What is GST? If my estimate for a work is say 75 lacs then whether I must add GST extra from the arrived estimate?

 

A-2
 

You are entitled to take Input Tax Credit (ITC) on materials and services utilised in the construction service.  This ITC has to factored in while arriving at the estimate and your tax liability of 18%. Availability of ITC should be passed on to consumer. Otherwise it will be deemed to be profiteering under Section 171 of CGST Act, 2017.

 

 

Q-3
I am receiving an advance payment say 10L. But due to some reason work was delayed or stopped. In such case how to get my GST paid for the amount I received?

 

A-3
Liability of GST arises on the advances received in a tax period which has to be discharged by 20th of the succeeding month. In case GST is paid on advances received but no supply was made or supply delayed then the payment can be adjusted subsequently – provided the advance received is refunded. Details of advances received/adjusted can be submitted in Table 11 of GSTR-1 for every month.

 

 

Q-4
Is it possible to pay GST proportionate to the amount spend rather than I receive?

 

A-4
No. The liability is on the amount charged in an invoice or the amount received during a taxable period but not on how much of amount is spent. [Sec.13(2)(a)&(b) of CGST Act, 2017]

 

Q-5
How to get GST suppose I  return the goods purchased ?

 

A-5
If the goods are returned without availing Input Tax Credit, it will be under the cover of a challan. The supplier will issue a credit note to you(towards the value and GST) and you can adjust the same for future purchase or get it refunded by the supplier. In case the goods are returned after availing ITC., then it shall be under the cover of an invoice or challan. The supplier will issue a credit note again and refund the value & GST to the extent of return.

 

 

Q-6
In a contracting work (FULL CONTRACT) labour component is around 40%. Whatever amount I receive includes material and labour. Labour amount is exempted from GST?

 

A-6
N o exemption is available for labour portion.

 

 

Q-7
Give a demo of filling GST and getting input credit.

 

A-7
Yes. However, you can approach the jurisdictional Range Superintendent for a detailed/live demo.

 

 

Q-8
While doing consultancy what is GST?

 

A-8
Consultancy service is classified under Heading 9983 as Other professional, technical and business services and attracts 18% GST.

 

 

Q-9
What GST for flat promoters?

 

Refer answers 1 & 2

 

 

Q-10
Outline of price hike various construction materials due to GST?

 

A-10
Cement- 31% to 28% – Cheaper
TMT Bars-18%-18% – Neutral
In respect of other major inputs, there is not much change in rate of tax

 

 

Q-11
Is composition scheme available for work contracts? If so what is the yearly  turnover limit ?

 

 

A-11
No. Composition scheme is available for traders, manufacturers and restaurants.

 

 

Q-12
As per sec 17 sub sec 5 clause C and D input credit of works contract is not available. Is it true? Input credit is available for further works contract service, explain.

 

It should be understood that the ITC on works contract or goods/services used for a civil work is not available to the owner of the building (except for plant & Machinery). For eg. If a manufacturer constructs a factory building availing work contract service, or procuring goods and labour separately, ITC of GST paid on such works contract or goods/service procured is not available to the manufacturer who got it constructed. However, if a contractor constructs that building he is eligible for ITC on the goods/services used. If the contractor who constructs the building sub-contracts part of the work, then GST paid by the subcontractor is available to the main contractor as ITC.

 

 

Q-13
Service Provided before application of GST and payment received after application of GST, is GST applies in such condition?

 

No. Only Service Tax is payable on such amounts.

 

 

Q-14
Contract made before GST but service provided after GST. Is GST applies here?

 

A-14
Once service is provided in the GST era, GST only is payable and not Service Tax.

 

 

Q-15
The liability to pay CGST/SGST shall arise at the time of supply as per sec 13 sub sec 2. If so then proportionate GST can be paid on amount spend rather than amount received?

 

A-15
As per explanation (i) to the Section 13 of CGST, the supply shall be deemed to have been made to the extent it is covered by the invoice or as the case may be, the payment. Therefore whatever is the payment received it is liable to GST irrespective of the amount spent. Suppose if the amount spent is more than the amount received then also GST is payable only on the amount received or the amount mentioned in the invoice whichever is more. [Sec.13(2)(a)&(b) of CGST Act, 2017]

 

 

Q-16
Place of work contract other than from the registered office, how to register for GST?

 

 Location of supplier and place of supply are two different things. When inter-state, location of supplier can be the registered premises. But all invoices to be raised from such registered premises and supplies sourced at place of supply should be from registered persons charging CGST/SGST. Where period of supply is <90 days, casual taxable person registration can be taken to ease sourcing local supplies at place of supply. Where period is >90 days but local sourcing is required, fresh registration within 30 days of supply should be obtained.

 

 

Q-17
Who is casual taxable person? Is it necessary for works contacts?

 

A-17
“Casual taxable person” means a person who occasionally undertakes transactions involving supply of goods or services or both in the course or furtherance of business, whether as principal, agent or in any other capacity, in the taxable territory where he has no fixed place of business. For execution of works contract in a state/UT other than the state/UT of registration, then Casual Taxable person registration is not necessary unless service is intended to be provided further from a new location a different state.

 

 

Q-18
Miscellaneous bills purchase of oil, stationeries for office use which has no GST  how to filling in GST return  please clarify.

 

A-18
Generally all supplies are under GST except exempted, nil-rated and non-GST goods. If they are sourced from registered persons, ITC can be availed and they are accountable in GSTR-2. If purchased from unregistered persons, payment of GST under RCM is applicable if the purchase exceeds Rs.5,000/- in a day. This RCM payment is to be suspended till 31.03.2018.

 

 

Q-19
Hotel stay and hotel bills when staff goes for inspection as well business work.

 

A-19
Credit of GST paid can be available by declaring such details in GSTR-2 subject to Sec.17(5) of the CGST Act, 2017.

 

 

Q-20
Purchase of vehicle, AC, mobile phone etc, for office use with GST no, can we fill it for input credit

 

A-20
No ITC on Vehicle purchase except if such vehicle is used for transportation of goods. For AC and mobile phone ITC can be claimed by declaring such details in GSTR-2

 

 

Q-21
Advance amount received for works contract how to fill when bill is not raised.

 

A-21
Against receipt of every advance, a receipt voucher has to be issued under rule 54 of the CGSTR, 2017 and GST to be paid @18% treating the value as cum-tax value. The details of such advances received are to be declared in Table 11 of GSTR-1 and details of refund in case the advance is returned to the service recipient can be declared in Table 9 of the GSTR-1.

 

 

Q-22
What do we do for the following transaction? Amount paid for loading & unloading Transport charge.

 

A-22
If transportation charges paid through GTA, then 5% GST payable under RCM. Payment of GST for loading & unloading charges if received from unregistered persons under RCM is to be suspended till 31.03.2018.

 

 

Q-23
a)
In flat promotion(say 8 flats)-if builder & seller is the same and if he sells 6 flats and retains 2 for his own use, what is the GST for 6 flats sold and 2 flats retained.

 

A-23 a)
GST @18% on the sale value of 6 flats to be paid. Towards UDS if not separately charged 1/3 of the value can be abated. No GST on 2 flats retained for own use.

 

 

Q-23
b)
Whether ITC is eligible for builder(since 2 flats retained for own purpose)

 

A-23 b)
ITC is eligible to the extent of goods & services used in respect of 6 flats. Common credit to the extent of 2 flats to be reversed in GSTR-2.

 

 

Q-24
In flat promotion (say 8 flats)- if joint venture 50:50 builder –owner (i) what is GST for builder selling 4 flats and what is GST for owner selling 4 flats?

 

A-24
@18% on the sale value minus 1/3 value toward land cost with ITC.

 

Whether ITC is eligible for builder since 4 flats for own purpose)

 

No, if retained for own occupation. Yes, proportionate to the 4 flats if sold.

 

 

Q-25
In flat promotion- only construction for builder. What is GST for builder? If the owner settles account with one flat to builder instead of cash?

 

A-25
GST@18% has to be paid on the value of one Flat (to be arrived from the most similar transaction to third party) which was received as consideration towards construction.

 

 

Q-26
What is GST for building alone? How to calculate GST for Land and building?

 

A-26
No GST is payable on supply of Land. If building is sold and consideration is received in full only after completion of construction/or its first occupation, no GST is payable. However, if any part of consideration is received (including advance) before completion of construction then GST@18% is payable on 2/3rd value of the entire amount and the liability shall be on the consideration as and when received.

 

 

Q-27
GST for works contract with ITC for full contract-i.e turn key project?
(a)
How to calculate GST for consultancy project?

 

A-27(a)
@18%

 

 

(b)
Construction of shell of building along 40-50% of total project cost. Here ITC is available for cement and steel alone. For sand 40/20mm metal, bricks, crusher powder no ITC, so builder has to bear for construction of shell alone-builder pays more for GST in this case?

 

A-27(b)
ITC shall be available only to the extent of GST paid invoices. If GST on input/input service is lesser, more will be amount to be paid in cash and vice-versa. This situation is applicable for other services also.

 

 

(c)
Construction of finishing part of building 60-50% of total project cost. Here ITC is available for almost all item and GST % is more. For construction of finishing alone builder pays less for GST?

 

A-27(c)
Based on the assessment of availability of ITC to construction sector, it is Government’s opinion that if all purchases are made from registered tax payers and accounted properly, credit will overflow outward liability. Only the first few projects may have more liability in cash. But such ITC benefit should be passed on to consumer by lesser pricing.

 

 

Q-28
For Flooring work alone1000 SQM
For 1 SQM
Cost of Tiles                Rs1000(92-93/Sq.ft)
Labour                          Rs 150
Cement                         Rs 100(12.42/Kg 1:4)
Sand                              Rs 125
C.P.                                Rs145
Total                              Rs1,600
For 1000SQM               Rs16,00,000/-
CASE-1 GST for payment received after completion 18%   = Rs 2,88,000/-
CASE- GST  for advance payment received
ITC for 1000 SQM tile               Rs 2,80,000/-(@28% on 10 Lakh)
ITC on Cement                          Rs 28,000       (@28% on Rs 1 Lakh)
Total                                           Rs 3,08,000/-
Whether this 20000 can be refunded?

 

A-28
Yes. Claim to be filed in form RFD-1 under Rule 89(2)(h) and 89(5) read with section 54 of the CGST Act, 2017

 

 

Q-29
Upto 1.5 Crore in composition scheme GST to be paid for advance received. Whether builder can pay GST according to proportionate execution of works executed instead of for the total received payments please clarify.

 

Composition scheme is not applicable for services other than restaurant services. GST shall be paid on the total payment received. Waiver of payment of GST on advances received is proposed (in the GST Council meeting dated 06.10.2017) for traders and manufacturers only and not for service providers.

 

 

Q-30
Advance for construction received on 25.09.2017 is Rs 20 Lakh. GST to be paid in October@18%= 3.6 Lakh. Nearly one fifth of Capital is blocked and only balance is available.
CASE-1: Whether ITC can be claimed?

 

A-30
No ITC is available. GST collected shall not form part of the capital. If GST is not charged over 20 lakh advance and collected from recipient, then the value of 20 lakh is cum-tax value ie TV+18%=20 lakh. Accordingly GST needs to be determined and paid. Blocking of capital will be experienced till credit balance gets built and after there is credit balance, this blockage will vanish.

 

 

Q-31
CASE-2: If work is under dispute after execution for Rs 10 Lakh & stopped. GST already paid is Rs 3.6 lakh. Balance to be returned is only 6.4 Lakh by the builder to the owner. GST to be paid for 10 Lakh is Rs 1.8 Lakh. GST paid for work not executed if the owner himself continues, ITC cannot be claimed by the owner. What will happen to GST of Rs 1.8 Lakh paid?

 

A-31
The calculation is not correct. Since only Rs 20 Lakh has been collected as advance, it should be treated as cum-tax value and it shall be apportioned as 16,94,915 /- as Taxable value and Rs  3,05,085/- as GST. Therefore GST payable is only 3,05,085/- and not Rs 3.6 Lakh. While returning the amount (by issuing a refund voucher linking it to the Advance Receipt Voucher) towards non-executed portion of service, the amount should again be inclusive of Tax which in this case would be Rs 10 Lakh and not 6.4 Lakh. The proportionate amount of GST paid on the amount of Rs.10 lakh to be returned i.e Rs.1,52,543/- can be adjusted towards subsequent liability or claimed as refund.