Proposed GST 20…
Thinking ahead –
Implementation
Issues
Dept of Central Excise and IMC
Joint Workshop
23 February 2015
Presenter: Bhavna Doshi
Today’s Agenda
Place of Supply of Goods & Services –
Implication Issues
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2
Place of Supply

Act to be enacted by Parliament – Article 269A of the Constitution
Amendment Bill, 2014

Inter-state trade and import – GST - Exclusive domain of Centre –
Article 246A(2)

Revenue Sharing with States – GST Council
Current – Origin(Inter-state)/destination ( intra-state) based
New – Destination / consumption based
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3
Place of Supply - Significance
Which tax to pay
– CGST +
SGST or IGST?
Where to pay?
Where to take
ITC?
How much?
Which Tax?
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4
Determination of Place of Supply - Complexities
 Several permutations and combinations:

One supplier location and one customer location – both in
same State or different States

One supplier location and several customer locations – within
and outside State

Several supplier locations and one customer location, and,
other combinations based on location of consumption

Import and Export
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5
Terms – “Supply”, “Goods”, “Services”

Meaning of “Supply” – Not defined in Bill

What are goods and what are services and what are neither “service” defined in the Bill

Separate rules for goods and services ?
Fundamental Principle : Where it is consumed ?
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6
Place of Supply - Goods

Same as Sections 3, 4 & 5 of Central Sales Tax Act, 1956?

Section 3 – Inter-state:

Sale occasions movement from one state to another

Transfer of documents of title – during movement

Goods passing through territory of other States but origin &
destination in same State
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Place of Supply - Goods
 Section 4 – Intra-state:

Essentially, where origin and delivery is within the State

Specific goods – contract for sale –location within the State

Unascertained / Future Goods – location at the time of
appropriation to the contract

Single contract – goods at different locations
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8
Place of Supply - Goods

Section 5 – Import /Export:

Occasions Export /transfer of documents after crossing
customs frontier

Occasions Import / transfer of documents before crossing
customs frontier

Penultimate sale – export ?
Article 269A – Import – equivalent to Inter-State
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member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights
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9
Place of Supply – Goods

Stock Transfers

Sale or Return –Approval basis

Job work

Works contract

Goods sourced from one country and delivered/supplied to
another country – both outside India or foreign co sourcing and
delivering goods in India
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member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights
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10
Place of Supply of Services


Current Service Tax Place of Supply of Services as a base –
General/Specific Rules ?

Location of Immovable property

Place of Performance

Location of Service Provider

Location of Service Recipient
General Principle – destination – effective use and enjoyment OECD Draft Paper – February, 2013
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Place of Supply of Services
Rule 3 – General Recipient
Rule 4 – Performance Make available goods
Rule 5 - Immovable
Property
Rule 6 - Events
Rule 7 – More than one
location - maximum
proportion
Rule 8 – Both in taxable
category
Rule 9 – Specified
services – Provider:
1. Banking / Finance
2. Online Info / Database
3. Intermediary
4. Hiring of transport –
Upto one month
Rule 10 – Goods
transportation Destination
Rule 11Passenger
Transportation Embarkation
Rule 12 – On
board a
conveyance – First
point of departure
Order of application: More than one - later
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12
Place of Supply of Services – Issues ?

How to determine inter-state ?

Location of recipient vs place of consumption
 Telecommunication
 Banking & Financial Services
 Works contract
 Sporting/recreational event
 Repairs / Jobwork
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member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights
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13
GST –
Is it coming soon ?
Where are we today ?
1
Constitutional Amendment – Bill introduced
2
Empowered Committee – working on several aspects
3
Compensation – Loss of revenue
4
Model - firmed up – C-GST, S-GST and I-GST
5
CST akin tax – phase out / no phase out ?
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member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights
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15
Impact Areas for Businesses

Pricing, Costing, Margins

Supply-chain management

Change in IT Systems

Treatment of tax incentives – package scheme of incentives

Treatment of excluded sectors

Transition issues

Compliance
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member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights
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16
Professionals
Perform
Impact
Analysis
Track
GST
develop
ment
Assist
industry in
issue
identification/
advocacy
Pre and
post Implementat
ion
assistance
Review
draft
legislations
– identify
likely
issues –
suggest
solutions
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member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights
reserved.
17
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