Common Errors in Indirect Taxation Corrected Before GST Implementation
This content highlights common errors in indirect taxation that need to be rectified before the implementation of GST. The errors include issues in central excise, service tax, VAT/CST, and more, with insights from Hiregange & Associates.
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Presentation Transcript
COMMON ERRORS IN IDT TO BE CORRECTED BEFORE GST Hiregange -CA Madhukar N Hiregange 1
COVERAGE TODAY COMMON ERRORS In General In Central Excise In Service Tax In VAT/ CST In returns In Credit Deduction/ Availment In Imports In Claiming Exemptions SEZ/ EOU Q/A 2 Hiregange & Associates
GENERAL Credit Others Litigation pre deposit Forms o/s Export benefits Job work material return Goods which maybe returned Withdrawal of cases Books & Returns- reco Supplementary Inv. Missed credits Reversed Credits Refund withdrawal? Reallocation of credits Partial Rebating reversal Inputs/ CG with JW Hiregange & Associates 3
EXCISE RELATED Improper Classification lower/ higher rate Excise paid on closing stock on opting for Payment Improper or omission to amortise tools cost. Transfer of Credit in case of shifting or transfer of factory Capital goods sent to job worker not covered by Transitional provisions Payment of Excise on exempted goods 2% payment conversion to 6%? Dealer Purchase- credit No ISD registration 4 Hiregange & Associates
SERVICE TAX Non Payment of service tax on advances received from customers Bifurcation of value of goods and services- WCT Wrongly charged ST on exempted services Issue of credit notes for post-service discounts, amount adjustments etc. Claim of wrong abatements / adjustment for ST payment Wrong utilization of credits SAD / SBC Non Availment of ED / CVD credit on capital goods 5 Hiregange & Associates
SERVICE TAX (CONTD.) Claiming IT depreciation even on credit amount in case of capital goods Not Availing re-credits of earlier reversed credit due to non-payment in 3 months Non Payment of RCM due to service exports FOC Goods inclusion ST on Immovable Property part No ISD Reg. Rule 6 improper calculation 6 Hiregange & Associates
VAT/STATE LAWS Complete partial rebating for branch transfers Optimise the stock transfers Obtaining the various Forms under the existing law Do not delay registration under Excise- dealer or mfrer Do not miss option to pay VAT but deliver later. Excise Credits on inventory Excise invoices Revised return to correct all errors. 7 Hiregange & Associates
WORKS CONTRACT Examine exit from COT in order to avail credits Current deduction of labour charges and sub contractor charges- may not be available in GST Educate sub contractors and suppliers to be ready with the transitional plans for GST: Do not accumulate WIP at site If any manufacture is done inside the Site, review its impact in GST (Example preparation of concrete in site) Capital goods atsite not covered by job-work GST impact on unadjusted advance received 8 Hiregange & Associates
TAX RETURNS Do a 1 year IDT review to ensure no c/f of risk/ exposure Ensure filing of all the returns relating to the period 6 months prior to the appointed day Pay attention to the last return Filing of the statutory returns with proper disclosures 9 Hiregange & Associates
CREDIT AVAILMENT Un-availed credit of CG (50%) to be claimed. Purchases from registered dealer Credits be availed with respect to invoices lying at stores for clarification Reconciliation of receipt of goods vis-a-vis invoices Claiming Cenvat credit on the sales return Claiming Cenvat credit on branch expenses such as rent, commission, telephone etc Non availment of credit on Inputs and Input services consumed at job worker s premises Proper availment of credits for receipts from EOU 10 Hiregange & Associates
CREDIT AVAILMENT (CONTD.) 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 services used exclusively for taxable goods/services. Applying ratio on total credit including capital goods credit Closing out supplementary invoice to be raised/ received and avail credit CENVAT credit reversed under the intimation to department earlier can now be availed if eligible Doubtful credits better to avail (not utilise) Ensure credits availed within 1 year from date of invoice Avail credits relating to courier bill of entry Credits on invoices raised by CHA 11 Hiregange
CREDIT REVERSALS Ineligible credits to be reversed Reversal of credits where assessee clearing goods on payment of 2% excise. Also analyse option of paying @ 6%. Wrong classification of capital goods as inputs. 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 12 Hiregange & Associates
IMPORTS Imports arriving on implementation date what tax to be paid Clearance of Goods in bonded warehouse Continue SAD refund under current law Verify inventory on LIFO-basis with BE Returnable exports and incidence of GST Document transactions in coastal goods 13 Hiregange & Associates
EXEMPTION Ensure compliance with all conditions with respect to availment of exemptions Ensure collection of all forms/certificates with respect to exemptions claimed under the existing law Very few exemptions expected in GST for goods- services may continue for 1 year 14 Hiregange & Associates
EXPORT/FTP BENEFITS Collecting and submitting proof of shipment in case of export of goods Ensure realization of export proceeds: -Cenvat effect u/r 6(8) Continue export-refund under current law Receipt of forex to ensure no recovery of drawback and other benefits are denied Returnable imports and incidence of GST 15 Hiregange & Associates
EOU/SEZ Import before GST is introduced Optimisation by separate registration Ensure export obligations are fulfilled Ensure that closing balance of stock consists of very less percentage of duty free goods The exemption forms under the current tax laws may not be carried forwarded in the GST regime. 16 Hiregange & Associates
madhukar@hiregange.com 17 Hiregange & Associates
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