UltraTech Cement Limited

CERTAIN FAQS ON GST

March 2017

1|P a g e
1. General Questions

1.1. What is GST and why a new tax?

GST stands for Goods and Services Tax, and is proposed to be a comprehensive indirect tax
levy on manufacture, sale and consumption of goods as well as services at the national level.
Its main objective is to consolidate various indirect tax levies into a single tax replacing multiple
tax levies, overcoming the limitations of existing indirect tax structure, and creating efficiencies
in tax administration.

One of the reasons to go the GST way is to facilitate seamless credit across the entire supply
chain and across all States under a common tax base. The current framework allows limited
inter-levy credits between CENVAT (tax on manufacture) and service tax. However, no cross
credits are available across these taxes and the sales tax/VAT paid (on input) or payable (on
output). Introduction of GST would thus rationalize the tax content in product price, enhance
the ability of business entities to compete globally, and to benefit the ultimate consumer.

1.2. How GST works?

GST is levied at every stage of supply (including the production and distribution chain) with set
offs in respect of the tax remitted at previous stages. It is basically a tax on final consumption.
Simply put, GST may be defined as a tax on goods and services, which is leviable on every
supply of goods and / or services, in which at the time of supply of goods or services the supplier
may claim eligible input credit of tax which he has paid while purchasing the goods or procuring
the service subject to certain restrictions.

1.3. What are key features of GST?

Following are the key features of GST:

GST is a comprehensive value added tax on goods and services

GST is collected on value added at each stage of the supply chain
GST is applicable on both, goods and services
Seamless input tax credit throughout the supply chain subject to certain restrictions.
At all stages of production and distribution, taxes are a pass through and tax is borne by
the final consumer
All sectors subject to taxes with very few exceptions / exemptions
In principle, GST does not distinguish between goods and services

1.4. Why dual GST and what's IGST, CGST and SGST?

India is a federal country where under the Constitution, both the Centre and the States have
been assigned the powers to levy and collect taxes through appropriate legislation. Both the
levels of Government have distinct responsibilities to perform according to the division of
powers prescribed in the Constitution for which they need to raise resources. A dual GST will,
therefore, be in keeping with the Constitutional requirement of fiscal federalism.

Dual GST would have two concurrent components - Central GST (CGST) levied and collected
by the Centre and State GST (SGST) levied and collected by the States. CGST and SGST
would be applicable on intra-state supplies of goods or services in India. Integrated GST (IGST)
which would be CGST plus SGST, would be applicable on all inter-state supplies of goods and
services (including imports) and would be levied and collected by the Centre.

2|P a g e
 1.5. What are potential advantages of GST?

Following would be potential advantages of GST:

There would be a common base for levy of GST (as against cascading). For example: at
present, VAT is payable on transaction value plus Excise duty.
There would be reduced cascading effect due to possible availability of better tax credit
mechanism
Non creditable CST would be done away with, thereby reducing costs.
GST is expected to enable ease of administration (common administration) with updated
and enhanced technical framework.
There would be increased tax collections due to wider tax base and better compliance.

1.6. What goods and services would be exempt from GST?

All goods and services, except alcoholic liquor for human consumption and Electricity are
proposed to be brought under the purview of GST. This also includes certain supplies which
are declared as either goods or as services under the GST Laws. However Petroleum products
(Crude, Natural Gas, Motor spirit, High Speed Diesel, Aviation Turbine Fuel) could be subject
to GST at a later date ( depending upon the decision of the GST Council).

1.7. What are inter-state supplies and intra-state supplies?

Inter-state and intra-state supplies have specifically been defined in Section 3 & 4 of IGST Act
respectively. Broadly, where the location of the supplier and the place of supply are in same
state it will be intra-state and where it is in different states it will be inter-state supplies.

1.8. What are types of GST applicable on different types of transactions?

A comparative chart has been provided below, outlining the current indirect taxes typically
applicable on various types of transactions and the GST taxes proposed to be levied on the
same transactions:

BCD, SAD
Service Entry
Activity Excise VAT CVD and CST IGST SGST CGST BCD
Tax Tax
cesses
Present System GST System

Import of goods
Manufacture No duty
Inter-state sale /
purchase (supply)
of goods
Intra-state sale /
purchase (supply)
of goods
Import of Service
Inter-state sale /
purchase (supply)
of service
Intra-state sale /
purchase (supply)
of service
Inter-state stock
transfer of

3|P a g e
manufactured
goods

Within-state stock
transfer of
manufactured No tax
goods within the
same registration
Inter-state supply
of services from
one Unit to
another Unit of No tax
same Legal entity
( different GST
registrations)
Within -state
supply of services
from one Unit to
another Unit of No tax No tax
same Legal entity
within the same
registration
Inter-state stock
transfer of traded Nil
goods
Exports Zero rated Zero rated

1.9. What is the manner of credit utilization of IGST, CGST and SGST credit available in
electronic credit register?

The manner of utilization shall be as under:

The amount of input tax credit on account of IGST available in the electronic credit ledger
shall first be utilized towards payment of IGST, CGST and SGST in the said order.
The amount of input tax credit on account of CGST available in the electronic credit
ledger shall be utilized towards payment of CGST and IGST in the said order.
The amount of input tax credit on account of SGST available in the electronic credit
ledger shall be utilized towards payment of SGST and IGST in the said order.
Credit of CGST cannot be used for payment of SGST and vice-versa.
SGST credit of one State cannot be used to pay SGST liability of any other State.

1.10. Would GST be applicable on stock transfers?

Inter-state self-supplies such as stock transfers will be taxable as a taxable person has to take
state wise registration. Such transactions have been made taxable even if there is no
consideration. However, intra-state self-supplies within same registration should not be taxable.

However, as per provisions mentioned under section 55 of the Revised Model GST law (MGL),
supply to job worker should not be subject to GST on fulfillment of certain conditions.

1.11. What processes and activities a company would need to change to be GST complaint?

From a GST compliance perspective, the following key activities and processes would need to
be changed to be GST compliant:

a. Migration of existing indirect tax registrations to GST

b. Invoice formats to be aligned with the GST law requirements

4|P a g e
 c. Sales and purchase register formats in the systems to capture the mandatory fields in
order to follow the GST monthly compliances of uploading the sales register/ details of
outward supplies and details of inward supplies, payment of GST, filing of GST returns,
etc.
d. Matching the input tax credit computed by the GSTN (based on outward supply register
uploaded by vendors) with the input tax credit as per the books
e. Computation of GST liability on a monthly basis and payment of GST
f. Timely payment of CGST, SGST and IGST to the respective Central/State Govts.
g. Filing of monthly GST returns
h. Filing of annual GST returns

The above stated compliances are broad level. There could be additional compliances /
processes / activities to be undertaken to be GST compliant as may be prescribed under the
GST law. This would need to be revisited once the final GST law is published.

Company would also need to explore the requirement of GSP (GST Suvidha Provider) to enable
filing of returns with the GSTN.

1.12. What is the proposed model for GSTN taxation?

GSTN would be a common online portal for registrations, payment of taxes, returns, refunds,
etc. Every person engaged in supply of goods or services above basic threshold limit would
need to be registered with the GSTN and would be allotted a login name and password on the
GSTN portal.

After the end of the relevant month, every person would be required to upload its outward supply
details on the GSTN portal in a prescribed format. Based on the outward details uploaded, the
GSTN would auto populate the input tax credit for every customer / buyer.

The buyer would then need to reconcile the input tax credit as per GSTN vis--vis the input tax
credit as per his books of accounts. In case of any mismatch in input tax credit which is not
rectified by the supplier the input tax credit would be reversed/ denied.

The GST registered dealer would need to pay the GST liability after reducing the input tax credit
and then file prescribed GST returns on the GSTN portal in a prescribed format.

The GST registered dealer would also be required to file an annual return.

1.13. Whether MRP valuation would be applicable under GST?

As per section 15 of the MGL, the value of taxable supply is said to be the transaction value
that is the price actually paid or payable for the said supply of goods and/or services where the
supplier and the recipient of the supply are not related and the price is the sole consideration
for the supply.

MRP based valuation for the purpose of payment of GST should not continue under the GST
regime and supplies should be taxable at transaction value.

1.14. What are the key requirements for availing input tax credit under GST?

The key requirements for availing input tax credit in respect of any supply of goods and/or
services are as under

The assessee is in possession of a tax invoice or debit note issued by a registered

supplier or such other prescribed taxpaying document
The assessee has received the goods and/or services
the tax charged in respect of such supply has been actually paid to the account of the
appropriate Government, either in cash or through utilization of input tax credit admissible
in respect of the said supply; and

5|P a g e
 The prescribed returns have been furnished
The said transaction is properly reflected in the Return filed by the Supplier as well as
the Receiver.
In relation to input services, the recipient should pay the vendor (value of supply of
service along with tax thereon) within three months from date of invoice.

1.15. How vendors would be evaluated from GST compliance perspective?

MGL law includes a provision relating to GST compliance rating. Under this provision, every
taxable person would be assigned a compliance rating score based on his record of compliance
with the provisions of the GST Act. The GST compliance rating score shall be updated at
periodic intervals and intimated to the taxable person and also placed in the public domain in
the manner prescribed

It would be critical to ensure that the tax invoice issued by the vendor contains all the relevant
details as would be required under the GST law and such details that would be essential to
avail input tax credit on the basis of the tax invoice so issued.

1.16. What if the invoices do not match? Whether ITC given or denied? If denied, what action
is taken against supplier?

If invoices in GSTR-2 do not match with invoices in counter-party GSTR-1, the ITC will be
reversed if the mismatch continues even after it is made known to both and still it is not rectified.
Mismatch can be because of two reasons:.

First, it could be due to mistake at the side of the recipient, and in such a case, no further action
is required.

Secondly, it could be possible that the said invoice was issued by supplier but he did not upload
it and pay tax on it. In such a case, recovery action shall be taken against the supplier. In short,
all mismatches will lead to proceedings if the supplier has made a supply but not paid tax on it.

In case of mismatch due to error on the vendors side, Company could explore taking up the
matter with vendor for immediate rectification or recovery of tax amount from the vendor.

1.17. When is payment of taxes to be made by the supplier?

Payment of taxes by the normal taxpayer is to be done on monthly basis by the 20th of the
succeeding month. Cash payments will be first deposited in the Cash Ledger and the taxpayer
shall debit the ledger while making payment in the monthly returns and shall reflect the relevant
debit entry number in his return. As mentioned earlier, payment can also be debited from the
Credit Ledger. Payment of taxes for the month of March shall be paid by the 20th of April.
Composition tax payers will need to pay tax on quarterly basis. Timing of payment will be from
0000 Hrs to 2000 Hrs.

1.18. Which date is considered as date of deposit of the tax dues- Date of presentation of
cheque or Date of payment or Date of credit of amount in the account of government
account?

It is the date of credit to the Government account.

1.19. What type of outward supply details are to be filed in the return?

A normal registered taxpayer has to file the outward supply details in GSTR-1 in relation to
various types of supplies made in a month, namely outward supplies to registered persons,
outward supplies to unregistered persons (consumers), details of Credit/Debit Notes, zero
rated, exempted and non-GST supplies, exports, and advances received in relation to future
supply.

6|P a g e
1.20. What are the implications of Purchase from Unregistered / Composite Dealers?

If the purchases are done from unregistered or Composite dealer, input tax credit will not be
available to the recipient.

1.21. Whether amendment to the GST Registration Certificate is permissible, if yes, then what
is the process?

Yes , In terms of Section 25 of MGL, the proper officer may on the basis of such information
furnished either by the Registrant or as ascertained by him, approve or reject amendment in
the registration particulars in the manner , and within such period as may be prescribed . It is
to be noted that permission of proper officer for making amendment may not be required in
respect of amendment of such particulars as may be prescribed.

1.22. Is there any system to facilitate Small dealers or dealers having No or inadequate
Infotech infrastructure? Who are Tax Return Preparer (TRP)? What is the need of GST
Suvidha Provider (GSP)?

In order to cater to the needs of tax payers including those above, following facilities are
proposed by the Govt. :
(a) Tax Return Preparer (TRP) A Taxable person may prepare his registration
application/returns himself or can approach the TRP for assistance. TRP will prepare the
said registration document/return in prescribed format on the basis of the information
furnished to him by the taxable person. The legal responsibility of the correctness of the
information contained in the form prepared by the TRP will rest with taxable person only
and TRP shall not be liable for any errors or incorrect information.

(b) Facilitation Centre (FC) shall be responsible for the digitization and/or uploading of the
forms and documents including summary sheet duly signed by the authorised signatory
and given to it by the taxable person, after uploading the data on common portal using the
ID and password of FC, a print out of acknowledgement will be taken and signed by the FC
and handed over to the taxable person for his records. The FC will scan and upload the
summary sheet signed by the authorised signatory.

(c) GST Suvidha Provider (GSP) - The GST System will have a G2B portal for taxpayers to
access the GST Systems, however, that would not be the only way for interacting with the
GST system as the taxpayer via his choice of third party applications, which will provide all
user interfaces and convenience via desktop, mobile, other interfaces, will be able to
interact with the GST system. The third party applications will connect with GST system via
secure GST system APIs. All such applications are expected to be developed by third party
service providers who have been given a generic name, GST Suvidha Provider or GSP.

The assessee will have to pay the above Facilitators for their services

Taxpayers will interface with GST System via GST system portal or via GSP ecosystem
provided by way of applications for activities such as Tax payments, Returns filing and other
information exchange with GST core system (GSTN). The GSPs will become the user agencies
of the GST system APIs and build applications and web portals as alternate interface for the
taxpayers.

7|P a g e
1.23. Whether Transfer of right to use goods will be treated as Supply of Goods or Supply of
Services and why?

Transfer of right to use goods shall be treated as supply of service because there is no transfer
of title in such supplies. Such transactions are specifically treated as supply of service in
Schedule-II of MGL.

1.24. What is Time of Supply of Goods and Service? When Invoice is to be raised in case of
Supply of Goods or Services?

The time of supply fixes the point when the liability to charge GST arises. It also indicates when
a supply is deemed to have been made. The MGL provides separate time of supply for goods
and services.

Section 12 & Section 13 of the MGL provides for time of supply of goods and time of supply of
services respectively. The time of supply of goods /services shall typically be the earliest of the
following namely,

(a) the date of issue of invoice by the supplier or the last date on which he is required, to issue
the invoice with respect to the supply; or
(b) the date on which the supplier receives the payment with respect to the supply:

In case of supplies in respect of which tax is paid or liable to be paid on reverse charge basis,
the time of supply shall be the earlier of the following dates, -

(a) the date on which the payment is made, or

(b) the date immediately following sixty days from the date of issue of invoice by the supplier

Where it is not possible to determine the time of supply under clause (a) or (b), the time of
supply shall be the date of entry in the books of account of the recipient of supply

1.25. Is there a need to update the Accounting Software to comply the GST?

As per existing law there is no requirement of uploading line item wise data and matching it
with the recipient in all states. Some Upgradation of existing software will be required for
generating the soft data the way its required to be uploaded on GST portal.

1.26. What is the need of HSN and SAC? How it will impact, if a wrong HSN /SAC is mentioned
on the Tax Invoice?

HSN and SAC codes are mandatory to be mentioned in the Invoice and also in the specified
returns to be filed under GST . The HSN and SAC codes are likely to have a bearing on the tax
rates as well as input tax credit eligibility. Hence it is important to ensure correct HSN and SAC
codes as applicable.

1.27. What are the formalities required for obtaining GST Registration Number after taking
ARN? Will it be collected physically or can be downloaded?

8|P a g e
 Application Reference Number (ARN) will be generated after the successful submission of the
enrolment application at the GST System Portal. You can use this ARN to track the status of
your application. Further, ARN shall be communicated to applicant on the registered mobile
number and e-mail address. The provisional registration certificate should be available on your
dashboard on the GST appointed date if enrolment application has been filled successfully.
The final GST registration certificate would be provided after verification of documents (within
6 months) by proper/ concerned officer after appointed date.

1.28 Is there an option to take one Centralized registration across India for services under
GST?

Under GST, there is no such provision. Registrations would have to be taken in each respective
State from where a Supply is being made.

1.29 Whether ISD registration would be required separate from the normal GST registration?

For ISD, separate registration would be required. The modalities and other details are awaited.

1.30 Whether GST is leviable on service rendered between two offices of same entity but in
different States?

The offices in different States would be having different GST registration numbers and hence
would be treated as different taxable person. Hence GST would be leviable in such cases.

Note: Please note that the aforesaid comments are based on the limited information available in public
domain and Model GST law. The same needs to be validated as and when final GST law is made
available for reference and notified.

9|P a g e