Comparative study of changes for Manufacturing industry in GST with existing tax laws related to Registration, Branch Transfer and Input Credit are explained below :-
REGISTRATION
Existing Law
As per existing Central Excise Act, separate registration is required in respect of separate premises (Factory, godown, depot, etc) even within a same state.
In GST
As per Section 25(2) of CGST Act, a person seeking registration under this Act shall be granted a single registration in a State or Union territory.
However, a person having multiple business verticals in a State or Union territory may be granted a separate registration for each business vertical.
BRANCH TRANSFER
Existing Law
If goods are transferred to the branch of the same business entity in the same state or from one state to another state, then Central Excise duty is charged on that transfer of goods. Further, in case of inter-state transfer, “F” form is requried.
In GST (Inter-State)
If any goods are transferred from one state to another state of the same business entity, then it would be considered as Supply under section 7 of CGST Act & hence IGST will be levied in such type of transaction of Section 5 under IGST Act.
In GST (Intra-State)
If goods are transferred from one unit to another unit in the same state of same business entity having same registration number, then it would not be considered as Supply under section 7 of CGST Act.Hence no GST will be levied on such transactions under section 9 of CGST Act.
JOB WORK
Existing Law
The inputs/capital goods can be removed as such or after partial processing to a job worker for further processing, testing, repairs, reconditioning, or for manufacture of intermediate goods necessary for manufacture of final products or any other purpose without payment of duty.
In GST
As per Section 143 of the CGST Act, subject to intimation, goods can be supplied by the principal to the job worker without payment of central tax.
Existing Law
Goods can removed from factory for Job work only through a Job work Challan. The challan would be in triplicate with two copies of the same accompanying the goods to the job worker who would return one copy with the goods being sent back to the principal after completion of the process.
In GST
As per Section 143 of the CGST Act, conditions shall be prescribed for supply of goods by the principal to the Job worker. These conditions must be fulfilled by the principal / job worker, as the case may be, so as to get the benefit of Section 143.
Existing Law
Inputs removed as such or after partial processing to job worker for further processing, testing, repairs, reconditioning, or for manufacture of intermediate goods necessary for manufacture of final products should be returned to the factory or premises of supplier within 180 days.
In GST
As per Section 143 of the CGST Act, Inputs sent for job work should be returned to principal, after carrying out the operation/test/repair etc, within 1 year.
Existing Law
Capital goods, removed as such or after partial processing to job worker for further processing, testing, repairs, reconditioning, or for manufacture of intermediate goods necessary for manufacture of final products should be returned to the factory or premises of supplier within 2 years.
In GST
As per Section 143 of CGST Act, Capital goods, removed as such or after partial processing to job worker for further processing, testing, repairs, reconditioning, or for manufacture of intermediate goods necessary for manufacture of final products should be returned to the factory or premises of supplier within 3 years.
Existing Law
If Input sent for Job work are not returned within 180 days, then the cenvat credit is to be reversed or an amount equal to cenvat taken is to be paid through PLA.
Further, credit can be taken again when the goods are returned back by job worker.
In GST
As per Section 18 of CGST Act, If Input /Capital goods are not returned within prescribed time, i.e., 1 year & 3 year respectively, it is deemed that goods had been supplied by the principal to the job worker on the day when said goods were sent for Job work & central tax should be paid from that date with Interest. No ITC will be available even if the goods have been received after the prescribed period.
Existing Law
Moulds and dies, jigs and fixtures are not required to be received in 2years – the requirement that the capital goods/ input must come back within 2 years is not applicable to moulds and dies.
In GST
As per Section 143 of CGST ACT, Manufacturer/ Raw material Supplier may send inputs / capital goods directly from their place of business to the premises of the Job worker on the direction of the principal.
Existing Law
As per Rule 4(6) of the Cenvat Credit Rules, 2004 a principal Manufacture can transfer the goods directly from the place of Job worker only after taking permission from the Deputy/Assistant Commissioner.
In GST
As per Section 143(1) of CGST Act, Principal can not supply the goods directly from the place of business of a job worker except by fulfilling either of the two conditions –
The principal declares the premises of the job worker as his additional place of business.
OR
Job worker is registered under GST
Existing Law
The principal manufacturer is responsible for the duty payment on the scrap generated at the job worker’s premises. The job worker may also remove such scrap on payment of appropriate duty of excise or sent back to principal manufacturer with finished good.
In GST
As per Section 143 of CGST Act, Scrap generated in Job work may be sold by Job worker directly by payment of duty if they are registered under GST. If Job worker is not registered, then it need to send the scrap / waste to principal with finished goods.
INPUT TAX CREDIT
Existing Law
Input tax credit is available when goods & Invoice received by the principal from supplier.
In GST
As per Section 16 Input tax credit is available when tax Invoice & goods both are received by the principal from Supplier.
Existing Law
Input tax credit on input service is available when payment of such input service along with serivce tax has been made within 90 days from the date of invoice.
In GST
As per Section 16 (2), Input tax credit is available only when payment of goods or services along with tax has been made by the recipient to the supplier within 180 days from the date of issue of invoice.
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