Loss Assessment & GST implications

Lucknow, IIISLA Training Programme, 29th & 30th April, 2023

CMA Shiba Prasad Padhi

Surveyor & Loss Assessor & Practicing Cost Accountant
Bhubaneswar, Odisha
e. shibappadhi2@gmail.com, m. 99384 59525, WhatsApp. 87634 13213

Disclaimer –
Discussion made is based on my understanding of the law.
Related provisions, exceptions, Notifications are to be referred by an SLA where ever required.
Basic understanding
• GST - Tax cost to be indemnified
• Tax Invoice, BoS, Debit Note, DC, e-Waybill, Credit Note
• Registration
• Regular & Composite Taxpayer, QRMP
• GSTR 3B, 1, 2A, 2B, 9, 9C, CMP-08, 4
• Checking Status of a Taxpayer
• ITC
➢ Availing & Utilizing
➢ Conditions to satisfy
➢ Blocked Credit
➢ Not available e.g. Hotel
➢ Reversal – Procedure & Due Date
➢ Bill to Ship to
➢ Works Contract – If not capitalised
➢ Banking and Insurance Industry
➢ P&M
Ram is engaged in trading of Computer
He has a Shop at Lucknow
He purchases computers and peripherals
He is registered as a Regular Tax Payer
GST rate on Computer is 18%
For the month of March, 2023
Taxable Value CGST SGST IGST Total GST Invoice Value
Purchases made - Inward supply
a. Computer-5 nos. purchased from Lucknow 2,00,000 18,000 18,000 36,000 2,36,000 Eligible ITC
b. Peipherals like Key Board, Mouse etc. purchased from Delhi 80,000 14,400 14,400 94,400 Eligible ITC
c. Rent paid for Shop 20,000 1,800 1,800 3,600 23,600 Eligible ITC
d. Food ordered for an Office Party 5,000 125 125 250 5,250 Not eligible for ITC
e. Purchased a Car for Office use 8,00,000 1,12,000 1,12,000 2,24,000 10,24,000 Not eligible for ITC
Total 11,05,000 1,31,925 1,31,925 14,400 2,78,250 13,83,250

Taxable Value CGST SGST IGST Total GST Invoice Value

Sales made - Outward supply
a. Computer-8 nos. 4,50,000 40,500 40,500 81,000 5,31,000
b. Peipherals like Key Board, Mouse etc. 50,000 4,500 4,500 9,000 59,000
Total 5,00,000 45,000 45,000 - 90,000 5,90,000

Outward Tax Liability for Ram 45,000 45,000 - 90,000

Ram is also eligible to set off ITC 19,800 19,800 14,400 54,000
Conditions to satisfy
• GST paid by a recipient registered taxpayer on inward supply of goods or services
or both made to him by another registered taxpayer.
• Such goods or services are used by the recipient in the course or furtherance of
his business.
• The recipient is in possession of GST compliant tax Invoice or a Debit Note as
issued by the Supplier against such supply of goods or services.
• The recipient has received the goods or services so supplied to him
• The supplier has paid GST and filed GST Return for such outward supply made by
him.
• The supplier has not opted for the Composition levy scheme.
• The recipient has cleared the payment of the supplier within one hundred eighty
days from the date of the Invoice.
• Matching with GSTR 2B
• If it is not blocked otherwise
Conditions to satisfy
• In case goods are received in lots or installments, ITC available after receiving the
last lot
• If depreciation is claimed on tax component of CGs for IT purpose, then no ITC
• No ITC after 30th November of next year or filing AR, whichever is earlier
• Proportionate ITC if inward supply of G/S used partly for business purpose
• Proportionate ITC in case of both Zero-rated and exempt supplies
• Banking Co./FI/NBFC engaged in accepting deposits, extending loans/advance –
either proportionate ITC or 50% of eligible ITC on inputs, CGs and input services
Blocked Credits
a. motor vehicles for transportation of persons having approved seating capacity of not more than thirteen persons (including
the Driver) except when they are used for –
- Further supply of Motor Vehicles;
- Transportation of passengers
- Imparting training on driving
Servicing, R&M relating to motor vehicle is also blocked.
b. food and beverages, outdoor catering.
c. membership of a club, health and fitness centre.
d. rent-a-cab, life insurance and health insurance.
e. travel benefits extended to employees on vacation such as leave or home travel concession.

f. works contract services when supplied for construction of an immovable property (other than plant and machinery) except
where it is an input service for further supply of works contract service.
g. goods or services or both received by a taxable person for construction of an immovable property (other than plant or
machinery) on his own account including when such goods or services or both are used in the course or furtherance of
business.
Construction includes re-construction, renovation, additions, alterations, repairs, to the extent of capitalization, to the said
immovable property.
h. goods or services or both on which tax has been paid under Composition Scheme.
i. goods or services or both received by a non-resident taxable person except on goods imported by him.
j. goods or services or both used for personal consumption.

k. goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples ; and
l. Fraud, willful mis-statement.
Issues relating to loss assessment
• Should an insured be allowed to take double benefit?
i.e. availing ITC as well as getting indemnified from Insurer for the GST amount?

• Should GST be a part of Gross Loss Amount?

• What if the Insured declare that he has not availed ITC?
i.e. GST amount capitalized in case of P&M

• When should an insured be indemnified for the GST paid by him?

• Impact of ‘No Reversal’
• How to ensure reversal of ITC in case of goods lost, stolen or damaged?
- GSTR 3B with a Certificate by CA/CMA with UDIN, if not wait till filing of Sept. return

• What in case of Under insurance and Double Insurance?

• P&M – 60 months
• Stock at Risk at Invoice Value
• Input GST in case of loss of FG/WIP
• E-Way Bill
• Process Loss/Loss during manufacturing
• Repairing of Building by Insured
• Sale of scrap/Salvage
• Registration Certificate – Place of Business
 Loss Amount considered before deduction for Credit Note for Discounts, Incentives & Schemes
Description Taxable Value GST Total
Mobile Phone 19,62,846 3,53,312 23,16,158
Home Appliances 6,99,482 1,82,818 8,82,301
Total 26,62,328 5,36,131 31,98,459

Summary of Stock at Risk

Description of item Amount GST @ 18% Value
Mobile 23,03,642 4,14,656 27,18,297
Home Appliances 59,84,803 13,41,410 73,26,212
Total 82,88,444 17,56,065 1,00,44,510
 With GST - ITC availed but to be reversed
Stock of Stock of
Mobile Home Total
Phones Appliances
Loss Amount (as derived separatley) 23,16,158 8,82,301 31,98,459
Less: Deduciton for Credit Note for discounts, Incentives and
98,205 37,410 1,35,615
Schemes @ 4.24%
Gross Loss Amount considered for Assessment 22,17,953 8,44,891 30,62,844
Less: Depreciation (NIL being burglary of Saleable stock) - - -
Loss amount after deduction Depreciation 22,17,953 8,44,891 30,62,844
Less: Salvage - - -
Loss amount after deduction Salvage & Depn. 22,17,953 8,44,891 30,62,844
Sum Insured for Stock of Mobile Phones & Home Appliances 15,00,000 60,00,000 75,00,000
Stock At Risk 27,18,297 73,26,212 1,00,44,510
Underinsurance 12,18,297 13,26,212 25,44,510
% of Underinsurance 44.82 18.10 25.33
Less: Deduction due to Underinsurance 9,94,051 1,52,945 11,46,996
Loss Amount after deduction Underinsurance 12,23,902 6,91,946 19,15,848
Less: Policy Excess (NIL for Burglary as per Policy) -
Net Loss Amount Assessed (including GST) 19,15,848

Less: GST Amount for the stolen stock not allowed as the Insured is eligible to take
ITC on the same. The same may be paid to him upon reversal of the same and
3,21,137
submission of GST Returns and other documentary evidence by him subsequently
(Calculation given as under)

Net Loss Amount Assessed (excluding GST) 15,94,711

Proportionate GST ITC to be indemnified

Amount Taxable Value GST

Loss Amount derived 31,98,459 26,62,328 5,36,131
Less: Deduciton for Credit Note for discounts, Incentives and Schemes @ 4.24% 1,35,615 1,12,883 22,732
Gross Loss Amount considered for Assessment 30,62,844 25,49,445 5,13,399
Less: Deduction of Underinsurance 11,46,996 9,54,734 1,92,261
Loss Amount after deduction of Under insurance 19,15,848 15,94,711 3,21,137
 Without considering GST
Stock of Stock of
Mobile Home Total
Phones Appliances
19,62,846 6,99,482 26,62,328
83,225 29,658
1,12,883
18,79,621 6,69,824 25,49,445

18,79,621 6,69,824 25,49,445

18,79,621 6,69,824 25,49,445

15,00,000 60,00,000 75,00,000
23,03,642 59,84,803 82,88,444
8,03,642 - 8,03,642
34.89 - 9.70
6,55,719 6,55,719
12,23,902 6,69,824 18,93,726

18,93,726
 With GST - ITC availed but to be reversed Without considering GST
Stock of Stock of Stock of Stock of
Mobile Home Total Mobile Home Total Difference
Phones Appliances Phones Appliances
Loss Amount (as derived separatley) 23,16,158 8,82,301 31,98,459 19,62,846 6,99,482 26,62,328 5,36,131
Less: Deduciton for Credit Note for discounts, Incentives and
98,205 37,410 1,35,615 83,225 29,658
Schemes @ 4.24% 1,12,883 22,732
Gross Loss Amount considered for Assessment 22,17,953 8,44,891 30,62,844 18,79,621 6,69,824 25,49,445 5,13,399
Less: Depreciation (NIL being burglary of Saleable stock) - - - -
Loss amount after deduction Depreciation 22,17,953 8,44,891 30,62,844 18,79,621 6,69,824 25,49,445 5,13,399
Less: Salvage - - - -
Loss amount after deduction Salvage & Depn. 22,17,953 8,44,891 30,62,844 18,79,621 6,69,824 25,49,445 5,13,399
Sum Insured for Stock of Mobile Phones & Home Appliances 15,00,000 60,00,000 75,00,000 15,00,000 60,00,000 75,00,000 -
Stock At Risk 27,18,297 73,26,212 1,00,44,510 23,03,642 59,84,803 82,88,444 17,56,065
Underinsurance 12,18,297 13,26,212 25,44,510 8,03,642 - 8,03,642 17,40,868
% of Underinsurance 44.82 18.10 25.33 34.89 - 9.70 15.64
Less: Deduction due to Underinsurance 9,94,051 1,52,945 11,46,996 6,55,719 6,55,719 4,91,276
Loss Amount after deduction Underinsurance 12,23,902 6,91,946 19,15,848 12,23,902 6,69,824 18,93,726 22,122
Less: Policy Excess (NIL for Burglary as per Policy) - -
Net Loss Amount Assessed (including GST) 19,15,848 18,93,726 22,122

Less: GST Amount for the stolen stock not allowed as the Insured is eligible to take
ITC on the same. The same may be paid to him upon reversal of the same and
submission of GST Returns and other documentary evidence by him subsequently
3,21,137 Survey Fees-Fire Claim
(Calculation given as under)
31,98,459 26,62,328 Difference
Net Loss Amount Assessed (excluding GST) 15,94,711 65,278 57,773 7,506
Template – Certificate by a CA/CMA

This is to Certify that I have gone through and verified monthly return GSTR 3B as
filed by Mr. Ashok Kumar, Proprietor of Smart Motors, having GSTIN
21XXXXB6006N1Z9 for the period January, 2021 to September, 2021 and found
that Mr. Ashok Kumar has not availed Input Tax Credit in respect to inward supply
made to him vide Repair Invoice No. IEXIJA2021003409, Dated 09.01.2021 for
Vehicle No. OD 07 AC 2621, having Taxable Value of Rs……………….., CGST Amount of
Rs…………. and SGST Amount of Rs………………….., even though he is eligible to avail
the ITC as per provisions of GST law as Vehicle No. OD 07 AC 2621 is used for
transportation purpose.

Mr. Ashok Kumar is no more eligible to avail ITC for inward supply made to him
vide Repair Invoice No. IEXIJA2021003409, Dated 09.01.2021 against Vehicle No.
OD 07 AC 2621, after filing GSTR 3B for the month of September, 2021 which was
filed by him on dtd. ……………… Certified copy of all GSTR 3B is attached herewith.

CA/CMA …………………
UDIN