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Common Errors to Correct Common Errors to Correct

Common Errors to Correct - PowerPoint Presentation

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Common Errors to Correct - PPT Presentation

Goods and Services Tax IDTCICAI Webcast Mar 11 2017 General Errors Review relevance of current litigation Recover predeposit into transition credit Goods are wrongly classified Expect change in ID: 546257

goods credit gst credits credit goods credits gst cenvat services capital manufacturers service payment availment invoices contracts availed impact providers registration claiming

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Slide1

Common Errors to Correct

Goods and Services Tax

IDTC-ICAI

Webcast Mar 11, 2017Slide2

General Errors

Review relevance of current litigation

Recover pre-deposit into transition

credit

Goods are wrongly classified

Expect

change in

exemptions

enjoyed

Limited use of IT-systems no longer feasible

Centralized accounts no longer feasible

Method of billings would have to be

changed

Physical stocks to match with booksSlide3

Transition

Principle of ‘closing credits’ in last returns

Non-creditable taxes embedded in stocks

Overlapping contracts – choice of tax-to-pay

Restore reversed credits u/r 6(3)

Reallocation of credit if centrally registered

SCN under earlier law can be issued later

Capital goods sent to job worker not covered by Transitional provisionsSlide4

Traders

Complete partial rebating for branch transfers

Watch transfer of stocks which remain unsold

Be conservative about realization of ‘forms’

Do not delay registration under Central Excise

Do not miss option to pay VAT but deliver later

The credit will be carried forward only if the proper invoice is available

VAT credits to be captured properly in the returnSlide5

Manufacturers

ED on FG

no longer payable????

Missed out Cenvat credits to be identified and availed

Examine whether to avail doubtful

Cenvat

credits

Credit reversed on the instruction of department officers – Can it be

re-availed

with intimation if eligible.

Credits availed on ineligible inputs/services to be reversed

Look for Capital

goods credit not

claimed.Slide6

Manufacturers

Wrong classification of capital goods as inputs and availing 100% credit taken instead of 50% - recovery provisions may be invoked

Ensure that balance credit on capital goods is availed in April 2017.

Not claiming the Cenvat credit when goods procured from registered

dealer.

Not demanding the excise invoice when goods procured from

dealer.Slide7

Manufacturers

Invoices lying at stores for clarifications on which no credits availed.

Reconciliation of invoices with the receipts.

Closing out supplementary invoices to be raised / received and avail credits

Credit not claimed on the courier bill of

entry

Ensure

credits are availed within one year from the date of

invoice

Credits on invoices raised on agents in case of CHA services Slide8

Manufacturers

Reconciliation of stocks with job work.

Ensuring compliance as to 180 days and reverse credits before appointed date – examine whether it can treated as removal of input as such and give credit to Job worker.

Be prepared for stock declaration.

Scrap accounting and disposal before/after cut off date.Slide9

Manufacturers

Not collecting / submitting

the exemption forms

.

Improper

availment

of exemptions.

Not

claiming Cenvat credit on sale return

Not claiming the Cenvat credit on branch expenses such as rent, commission, Telephone etc.

Cenvat

credit claimed on inputs/capital goods when assesse opted for 2% concessional rate

Credits

claimed on goods which are covered under 2% concessional rateSlide10

Manufacturers

Examining the option of 6% or formula based

credit reversal u/r 6 of CCR

Check the computation of Rule 6 (3) of CCR credits –

Trading

turnover 100% instead of considering 10% of COGS or profit which is more

.

Non-segregation of inputs/input

servcies

used exclusively for taxable goods/services.

Applying ratio on total credit including capital goods credit.Slide11

Manufacturers

Improper or omission to amortise tools cost.

Improper method of valuation for captive consumption.

Non-payment of duty on captive consumption

Non-availment of credit on inputs and input services consumed at job-workers

premises.

Proper

availment

of credit of receipts from EOU.

Treatment of goods lying at different location gone for exhibition/testingSlide12

Manufacturers

Checking the appropriate status of credit balance and claiming refund/rebate.

Collecting and submitting

proof shipment in case of export of goods

Receipt of forex to ensure no recovery of drawback and other benefits are denied.

Cenvat

credit not claimed on closing stock when the assesse opted out of SSI exemptionSlide13

Manufacturers

Follow up with the department of any credits to be permitted for transfer in case of shifting/transfer of factory

Not filing the statutory return with proper

disclosureSlide14

Service Providers

Not surrendering registration of non-operational premises

Missing out any premise for enrollment to GST

Not collecting service tax on advance amounts from customers

Non bifurcation of value of goods and services wherever possible on advance amounts on continuing contracts

Non identification as deposits or advance

amounts

in contracts – separate treatment in GSTSlide15

Service providers

Wrongly

charged

ST on exempted services –

Suo-motu

adjustment not possible. Customers may deny payment.

Non issue of credit notes for post-service discounts, amount adjustments. Rule 6(3) adjustment could be denied.

Claim of wrong abatements / adjustment for ST

payment may lead to demand which would cost as no credit.Slide16

Service providers

Wrong utilization of credits – SAD / SBC

Non availment of ED / CVD credit on capital goods for carry forward to GST

Claiming

IT depreciation even on credit amount in case of capital

goods

Non

availment

of credits reversed under protest, if any with intimation to departmentSlide17

Service providers

Not

availing

re-credits of earlier reversed credit due

to non-payment in 3 months

Non availment of Cenvat credit – RCM tax payments

Non payment of ST on amounts credited to accounts of associated enterprises – RCM

Non payment of ST under RCM – Payment in GST regime may result in losing

credits

Non claim of deductions towards R&D

cess

paid towards ST

liabilitySlide18

Service providers

Not ascertaining impact of long term procurement contracts entered – Pricing, taxes

Not intimating the impact of possible higher GST rate to customers

Not communicating impact of change in POS in GST regime compared to present ST provisions

Not amending the contracts which are inclusive of taxesSlide19

Service providers

Not issuing invoices for taxable services provided

Not demanding invoices from vendors for advance amounts paid

Not planning for negotiating the prices of goods / services with vendors in GST regimeSlide20

Importers

Imports arriving on implementation date

Goods in bonded warehouse:

Ex-bond sales liable to BCD+IGST

Impact on imports against ‘firm price’ contracts

Continue SAD refund under current law

Verify inventory on LIFO-basis with BE

Returnable exports and incidence of GST

Document transactions in coastal goodsSlide21

Exporters

Ensure realization of export proceeds:

Cenvat

effect u/r 6(8)

Error in carried over credit balance

Continue export-refund under current law

Returnable imports and incidence of GST

Effect of drawback revision due to GST

Do not continue exempt and taxable supply in same StateSlide22

EOU-SEZ

Ab initio

exemptions to go; optimize imports

Discontinue use of

ab initio

exemption forms

Minimize duty-free equipment carried over

Review ‘centralized’ activity; branches distinct

Pros of separate business vertical registration

Completion of Export Obligation

Usage of materials within bonding periodSlide23

Works contractors

No deduction of sub-con and

labour

charges

Examine ‘right’ time to exit from COT

Suppliers /sub-con to

allign

with transition plan

Capital goods ‘at site’ not covered by job-work

Review ‘in situ’ manufacture impact

Do not accumulate ‘WIP’ at site

GST impact on unadjusted advance receivedSlide24

General Errors

GST enrolment / registration:

Plan requirement of registration

Optimize number of States to be registered

Do not enter GST being ‘unregistered’

Do not delay GST enrolment

Closure of non-operational/non-economical

locations

PoS

not the same as

situs

under current law

Non-availing of various refunds/benefits which are eligible under earlier law

Non-checking of the status of the cases as future action can be decided

Non reconciliation of books of account with

returns to

match credits,

liabilitiesSlide25

Thank You

For any Clarification, Please Contact

Indirect Taxes Committee of ICAI

Email:

idtc@icai.in

, Website:

www.idtc.icai.org