GST on Poultry Sector

Presentation by CA.Mukul Sringeri on request of KPFBA

1. Goods and service tax IMPACT OF GST ON POULTRY SECTOR

2. What is poultry? The domesticated fowl collectively, especially those valued for their meat and eggs, as chickens, turkeys, ducks, geese and guinea fowl, etc are collectively known as poultry Business verticals The Poultry industry consists of the following business verticals: Feed Mill Breeder Farm Hatchery Contract Farming Meat Processing

3. IS POULTRY A PART OF AGRICULTURE ? KVAT Act,2003 - Agriculture with its grammatical variations include horticulture, the raising of crops, grass or garden produce and grazing but does not include dairy farming, poultry farming , stock breeding and mere cutting of wood Service Tax (Finance Act, 1994) - Agriculture means the cultivation of plants and rearing of all life-forms of animals , except the rearing of horses, for food, fibre, fuel, raw material or other similar products . As per Service tax - Agriculture produce means any produce of agriculture on which either no further processing is done or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market As per CGST Act,2017 - Agriculturist means an individual or a HUF who undertakes cultivation of land by own labour, or by labour of family, or by servants under personal supervision or supervision of any family member

4. GST REGISTRATION FOR POULTRY INDUSTRY Section 23(1) of CGST Act,2017 states that if any person is engaged exclusively in the business of supplying goods or services or both which are either wholly exempt or not liable for GST or an agriculturist to the extent of cultivation of land is not liable to take registration irrespective of his aggregate turnover. Sec 2(47) - Exempt Supply means supply of any goods or services or both which attracts nil rate of tax or which may be wholly exempt from tax under section 11, or under section 6 of the Integrated Goods and Services Tax Act, and includes non-taxable supply

5. OUTWARD SUPPLY

6. MAJOR POULTRY PRODUCTS Product Description HSN Chapter Pre GST Post GST Live Animals Chapter 1 - 0105 Exempt Nil Frozen Meat Chapter 2 – 0207 5.5% 12% Non Frozen Meat Chapter 2 – 0207 Exempt Nil Eggs Chapter 4 – 0407 Exempt Nil Poultry Feed and Supplements Chapter 23 – 2302/04/05/06/09 Exempt Nil Vaccines Chapter 30 – 3006 5.5% 5% Machinery for preparation of poultry Chapter 84 - 8438 12.5%+5.5% 18% Maize Chapter 10 - 1005 Exempt Nil Soya (Not seed quality) Chapter 12 - 1202 5.5% 5% Rape seed extract Chapter 15 - 1514 5.5% 5%

7. INPUT AND INPUT SERVICES

8. Input and input services

9. Input and input services

10. INPUT AND INPUT SERVICES

11. INPUT AND INPUT SERVICES Under the earlier regime, a trader registered under KVAT Act, 2003 was liable to pay URD tax on purchases made from unregistered dealer – Sec 3(2). Under Services tax only certain services were under the purview of RCM. However under GST, any registered person receiving inward supply of services or goods from a person who does not possess registration under GST and such supply is a taxable supply then the receiver of such supply becomes liable to discharge GST under RCM. For eg : Rent on Office space, Security services for office, purchase of office supplies, sales promotion, commission etc.

12. COMPOSITION SCHEME U/S 10

13. Time and value of supply of goods Value of Supply shall be the transaction value, which is the price actually paid or payable for the said supply of goods where the supplier and recipient are not related and the price is the sole consideration. In case of related parties, value of supply of goods shall be the open market value of such goods, however if the market value is not available, value shall be the value of supply of goods of like kind and quality. However if the recipient is intending to further supply such goods, then the value shall be 90% of the price charged by him on such goods to his unrelated customer

14. Time and value of supply of service Value of Supply shall be the transaction value, which is the price actually paid or payable for the said supply of service where the supplier and recipient are not related and the price is the sole consideration. In case related parties, value of supply of service shall be the open market value of such supply, however if the market value is not available, value shall be the value of supply of service of like kind and quality.

15. Input tax credit

16. Miscellaneous provision – JOB WORK

17. Miscellaneous provision – tax invoice

18. Miscellaneous provision – Books of Accounts Accounts of Manufacturing or production, Inward and Outward Supply of Goods/Services, Stock of Goods, Input tax credit availed, Output tax payable to be maintained. Should be kept at the principal place of business, Accounts of Branch office should be kept at the branch office. Books of Accounts can be maintained in Electronic Form If the Turnover exceeds Rs . 1 Crore – BOA to be audited by a CA/ CMA and submitted. BOA to be retained for 72 months from the due date of filing of annual return. Penalty for non maintenance of BOA – Rs.10,000 or the tax evaded, whichever is higher.

19. Miscellaneous provision – Penal Provisions

20. Queries raised Q.1: What are the HSN Codes applicable to Poultry and Food processing industry? A.1: The HSN applicable for Poultry sector is 0105 , 0207, 0407 etc.(Discussed in slide 6 of this presentation) Q.2: Whether GST is applicable on Branded Frozen Products, if yes what is rate of GST ? A.2: Yes, GST is applicable on Frozen Meat, the rate is 12%. Q.3: Whether GST is applicable on Stock Transfers/ Consignments of Goods within the State and outside the State? Is there any Statutory Forms Applicable ? A.3: GST is not applicable on stock transfer between branches within states having single GST Registration, In case of Stock transfer between branches of various states, IGST is applicable. There are no statutory forms like Form F under GST. Q.4: Can we have one GST Registration Number for Entire Country operations ? A.4: No, Since GST is a destination based tax, separate registration at each state is required. Q.5: Transition Provision is case of Goods & Services Supplied and issued invoice before 30-06-2017 and payment made after 1-07-2017, will GST apply in this case ? A.5: In cases where the supply of goods/services and issuing of invoices has taken place prior to the appointed date and payment is received after the appointed date, Taxes under earlier regime shall be charged and not GST.

21. Queries raised Q.6: Customized product Manufacturing. Does that attract GST ? Currently there's no service tax ? A.6: GST is applicable on supply of Goods. Q.7: Does poultry come under “Animals? A.7: Yes, Poultry comes within the definition of Animals(Note: Animal has not been defined under CGST Act,2017). Q.8: How to deal with the books of Accounts, Control Ledger Accounts? A.8: Section 35 mandates that every registered person maintain certain Books of Accounts as stated in that section. Section 36 mandates the registered person to preserve the books of accounts for a period of 72 months from the due date of filing of Annual Return for the Financial Year. Q.9: Do we have to reformat & reprint invoice & bills? If so what is the format for Poultry? A.9: Section 7 of CGST Act,2017 read with Invoice rules provides the details to be compulsorily mentioned in the Invoice. There is no defined format provided in the Law, the registered person is free to follow any format as long as it is in compliance with the requirements given in Section 7 and Invoice Rules. Q.10: Can you explain Input and output of IGST and CGST, SGST in simple words? A.10: Local outward supply attracts SGST + CGST and Interstate outward supply attracts IGST. Similarly on local inward supply recipient pays SGST + CGST to the supplier and in case of Interstate inward supply, we pay IGST.

22. Queries raised Q.11:If the seller does not file his Outward supply ,can the purchaser be eligible to claim the Input tax credit? A.11: The recipient of supply can claim the input tax paid as credit on a provisional basis, however u/s 42 of CGST Act,2017, if the Supplier does not disclose in his Outward Supply return then the Input tax allowed shall be added to the Output tax of the recipient. Q.12: What is the impact of GST on Renewable Energy sources projects like, Solar Power projects and Biogas power plants? A.12: Renewable energy devices and spare parts are classified under Chapter 84 and shall attract GST @5%. Q.13:Can you explain even after implementation of GST upto which date https://vat.kar.nic.in works. if yes up to which date the same can work? A.13: Clarification is yet to be provided by the Commercial Tax Department.

23. Queries to be clarified by the department Q1. Is Poultry included in the term Animal? Q2. Is poultry farming part of agriculture? Q3. Is nil and zero rate same or is nil and exempt goods same? Q4. Can exemption be claimed with respect to intermediary job work being undertaken as contract farming as such exemption is available for rearing of all life forms of animals? Q5. Contract labour being used in poultry farms also be exempted as supply of farm labour is exempt? Q5. Do poultry products a part of agricultural produce?

24. THANK YOU Contact Details – CA.Mukul Sringeri 📞: 9945397780 📧: [email protected] “It is well known that a doctor treats the diseases but few people know that a CA looks after the health of the society” – PM.Narendra Modi *participants are requested to approach their GST Consultant before taking any action on the basis of this presentation.