BBA511

Monday, November 11, 2019

Unit 3 and 5 payment of GST-TDS-TCS-GSTN-GSPs etc.

Payment of GST:

Q1. Who should pay tax under GST?
Ans. The liability to pay tax has been cast on :
(i) Normal registered dealer on outward supplies
(ii) Normal registered dealer for tax payable under reverse charge mechanism
(iii) Persons made liable to deduct tax for tax deducted
(iv) Persons made liable to collect tax for tax collected

Q2. When should be tax paid?
Ans Tax should be paid by the time GSTR-3 or GSTR-3B is filed i.e. 20th of next month.

Q3. How is GST paid under GST regime?
Ans. Tax can be paid through amount standing to the credit of either
(a) Electronic Credit Ledger
(b) Electronic Cash Ledger

Amount in Electronic Credit Ledger is reflected i.e. credited after submission of monthly detail of ITC claim under form GSTR-3B. The eligible ITC is self populated in Electronic Credit Ledger

Amount is Electronic Cash Ledger is reflected when registered dealer deposits funds through challan generated at common portal i.e. GSTN

Amount standing to the credit of Electronic Cash Ledger can be used to pay (i) output tax, (ii) Interest (iii) Fees (iv) Penalty (v) any other amount

Amount standing to the credit of Electronic Credit Ledger can only be used to pay output tax i.e. IGST, CGST, SGST/UTGST and CESS i.e. It cannot be used to pay interest, fees, penalties and even tax payable under reverse charge.

Q4. How is payment of tax made?
Ans. A payment is made by logging into GSTN through user id and password. Under payment tab, generate challan option is selected. Required fields like IGST, CGST, SGST, UTGST, Interest, Penalty, other amount is specified/selected and amount filled. After this payment is made through available options i.e. mode of payments. Upon successful payment and depending upon the mode of payment, amount so deposited is reflected in the Electronic Cash Ledger under appropriate headings.

Q5. What if GST is not paid with in due time?
Ans: (i) Interest at the rate of either 18% : normal late deposit
OR
Interest at the rate of 24% in case of undue or excess claim of ITC or
undue reduction of output tax liability

(ii) Penalty: higher of Rs.10,000/- or 10% of interest unpaid or short paid

Moreover, non-payment of tax will render any return filed relating to such tax dues as invalid. This, in turn, will also fail ITC claim of recipient.

Q6. How is payment of tax to electronic cash ledger is made?
Ans. A payment to electronic cash ledger is made by logging into GSTN through user id and password. Under payment tab, generate challan option is selected. Required fields like IGST, CGST, SGST, UTGST, Interest, Penalty, other amount is specified/selected and amount filled. After this payment is made through available options. Upon successful payment and depending upon the mode of payment, amount so deposited is reflected in the Electronic Cash Ledger under appropriate headings.

Q.7 Specify the challan used for payment of tax and the duration for which the challan is valid?
Ans. GST-PMT-06 which is valid for 15 days from the date of generation.

Q.8 Give Full form of :
(i) CPIN (ii) CIN (iii) BRN (iv) E-FPB

Ans: CPIN: Common Portal Identification Number
CIN: Challan Identification Number
BRN: Bank Reference Number
E-FPB: Electronic Focal Point Branch

CPIN is created for every Challan successfully generated by the taxpayer. It is a 14-digit unique number to identify the challan. CPIN remains valid for a period of 15 days.

CIN is generated by banks upon successful deposit of amount in government account. CIN is communicated by the authorized bank to taxpayer as well as to GSTN.

BRN or Bank Reference Number is the transaction number given by the bank for a payment against a Challan

E-FPB stands for Electronic Focal Point Branch. These are branches of authorized banks which are authorized to collect payment of GST. The E-FPB will have to open accounts under each major head for all governments. Any amount received by such E-FPB towards GST will be credited to the appropriate account held by such E-FPB. For NEFT/RTGS Transactions, RBI will act as E-FPB.

Q.9 Can challan be generated manually? What are various modes of payment of tax?
Ans. Challan can only be generated electronically at common portal i.e. GSTN. Various modes for payment of tax are:
(i) internet banking
(ii) Debit/Credit Cards
(iii)NEFT/RTGS
(iv) UPI/E-wallets
(v) Over the bank counter (after taking the print of challan, restricted to payments upto Rs.10,000/-)

Q10. What are the 'major' heads and 'minor' heads for the purpose of tax payment or electronic cash ledger?
Ans: Major Heads are: IGST, CGST, SGST/UTGST, CESS
Minor Heads are: Tax, interest, penalty, fee and others

Q11. Can amount standing to the credit of one head in electronic cash ledger be used for payment of another head?
Ans. No. Amount standing to the credit of say IGST can only be used to pay IGST and no other dues, as such a taxpayer has to be very accurate in mentioning the head towards which payment is intended while generating the challan for payment of tax.

Q12. An amount of Rs.1,000 is available under minor head ‘tax’ of major head ‘SGST/UTGST’ and the taxpayer has a liability of Rs.200 for minor head ‘interest’ under the same major head ‘SGST/UTGST’. Can Rs.1000 as above be used to pay Rs.200 interest.
Ans.Since, there is no amount available under minor head ‘interest’ under major head “SGST/UTGST”, therefore, interest payment cannot be made from the amount available under ‘tax’ of the same major head

Q.13 Over the counter mode of payment is restricted to only Rs.10,000/- per challan, are there any exceptions to this rule?
Ans: Following persons/situations can deposit amount in excess of Rs.10,000 over the bank counter:
(i) Government Departments
(ii) Persons authorized by GST commissioner
(iii) Proper officer (iv) challan created against GST recovery demands including attachment of property or under any investigation/enforcement proceedings

Q.14 What are various E-ledgers/registers under GST?

Ans. E-Ledgers and registers are electronic statements of transactions with respect to GST dues, payments of GST and resultant balances. These are auto populated based on the information provided to GSTN i.e. common portal through periodic returns and payment of tax, again through GSTN. Thus every registered person on portal is able to view three e-ledgers:

(a) Electronic Cash Ledger

(b) Input Tax Credit ledger and

These are automatically opened and displayed on his dash board at all times.

Q.15 What purpose does Electronic Cash Ledger serve?

Ans: A Electronic Cash Ledger is like an e-wallet. Any amount deposited by a tax payer towards payment of GST, interest, penalty or any other charge is credited into Electronic Cash Ledger. Likewise when any liability towards tax, interest, penalty or any other charge is settled it is done by spending amount standing to the credit of Electronic Cash Ledger i.e. such payment is debited to the Electronic Cash Ledger and its balance is accordingly reduced.

Q16. In which format Electronic cash ledger is maintained?

Ans: GST-PMT-05

Q.17 What recourse is open if

(a)payment is made but challan is not generated or generated but not communicated to the GSTN

(b) any discrepancy is noted in the electronic cash ledger.

Ans: (a) the said person may represent electronically in FORM GST PMT-07 through the common portal to the bank or electronic gateway through which the deposit was initiated with identification details such as CPIN, CIN, BRN etc.

(b) A registered person shall, upon noticing any discrepancy in his electronic cash ledger, communicate the same to the officer exercising jurisdiction in the matter, through the common portal

in FORM GST PMT-04.

Q18. What is the chronological order of payment of GST dues?

Ans.:

Chronological order in which the liability of a taxable person has to be discharged:

(a) self -assessed tax and other dues for the previous tax periods

(b) self -assessed tax and other dues for the current period

(c) Once these two steps are exhausted, thereafter any other amount payable i.e. interest, penalty, fee or any other amount payable under the Act or the rules made thereunder including demand determined under section 73 or section 74 to be discharged.

Above order is fixed and cannot be altered.

Tax Deduction at Source:

Q1. Applicable section

A. Section 51

Q2. To whom provisions with respect of TDS is applicable?

Ans.

(a) A department or an establishment of the Central Government or State

Government; or

(b) Local authority; or

(d) Such persons or category of persons as may be notified by the Government.

The Central Government vide Notification No. 33/ 2017-Central Tax, dated 15th September, 2017 notified the persons under clause (d) of section 51(1) namely: - (i) an authority or a board or any other body, - (a) set up by an Act of Parliament or a State Legislature; or (b) established by any Government, with 51% or more participation by way of equity or control, to carry out any function; (ii) society established by the Central Government or the State Government or a Local Authority under the Societies Registration Act, 1860 (21 of 1860); (iii) public sector undertakings;

Q3. What is the threshold limit for transactions for attracting TDS provisions?

Ans. For transactions below Rs.2,50,000/- there is no requirement of TDS i.e. TDS provisions are applicable only for transactions with value exceeding Rs.2,50,0000/-

Q4. What is the rate of TDS?

Ans: 1% CGST + 1% SGST in case of intra-state supplies

2% IGST in case of Inter-state supplies

Note: Value for the purpose of determining the value of supply for applying rates of TDS and attracting provisions of TDS, shall be value of supplies excluding CGST/ SGST/ UTGST/ IGST and cess

Q5. When TDS is required to be deducted?

TDS is to be deducted by all of the aforementioned persons from 01/10/2018 onwards whenever payment is:

(a) Made to the supplier;

(b) Credited to the supplier.

Q6.. Explain the bearing of 'place of supply' under TDS provisions.

Ans. This can be explained through following table:

	Case 1	Case 2	Case 3	Case 4	Case 5
State of Supplier	A	A	A	A	A
Place of Supply	A	A	B	B	B
State of Recipient	A	B	B	A	C
Type of Supply	Intra-state	Intra-state	Inter-state	Inter-state	Inter-state
	1% +1%	No TDS	2% IGST	2% IGST	No TDS

Example 1:

A of Agra supplying goods worth Rs.10 Lakh to to B of Bareilly and the place of supply is Bareilly. Rate of GST 12%. B is a notified person liable to deduct tax under the provisions of GST.

This is a case of interstate supply as the place of supply is Bareilly. A will add CGST and SGST @ 6% and the Invoice value shall be 10.00 Lakh + CGST Rs.60,000/- + SGST Rs.60,000/- i.e. Rs.11,20,000/-

TDS: B will deduct TDS as CGST @ 1% of Rs10,00,000/- i.e. Rs.10,000/- and SGST @ 1% of Rs.of Rs10,00,000/- i.e. Rs.10,000/-

2. A of Agra supplying goods worth Rs.10 Lakh to to B of Bareilly and the place of supply is Bareilly. Rate of GST 12%. B is a notified person liable to deduct tax under the provisions of GST.

Note: Value for the purpose of determining the value of supply for attracting provisions of TDS shall be value of supplies excluding CGST/ SGST/ UTGST/ IGST and cess

Case	Implication
Contract Value: Rs. 2,20,000/- (including GST of Rs. 20,000/-)	No TDS is required to be deducted as the value of contract is less than Rs. 2,50,000/-
Contract value: Rs. 2,95,000/- (including GST of Rs. 45,000/-)	No TDS is required to be deducted as the value of contract is equal to Rs.2,50,000/- (Rs. 2,95,000 - Rs. 45,000/-)
Contract value: Rs. 3,50,000/- (including GST of Rs. 60,000/-)	TDS is required to be deducted as the value of contract exceeds Rs. 2,50,000/- (Rs. 3,50,000 - Rs. 60,000/-)
Contract Value: Rs.3,54,000/- (including GST of Rs. 54,000/-) but individual Bill value is Rs. 1,50,000/- (including GST of Rs. 27,000/-)	TDS is required to be deducted as the value of whole contract exceeds Rs. 2,50,000/- (Rs. 3,54,000 - Rs. 54,000/-) even though the value of individual bills is less than Rs. 2,50,000/-

Q7. What are registration requirements of a TDS deductor?

Registrations requirements of a Tax Deductor u/s 51:

As per section 24(vi) of the CGST Act, 2017 read with rule 12 of the CGST Rules, 2017, every person who is required to deduct tax at source under section 51 is required to mandatorily obtain a registration whether already registered or not.

An important premise to be noted here is that this registration as a tax deductor would be over and above the regular GST registration already obtained by the entity.

GST registration as a tax deductor has to be applied in FORM GST REG-07. Certificate for registration shall be granted in FORM GST REG-06.

Q8. TDS deducted is part of Cash Ledger or Credit Ledger of deductee?

Ans. In terms of section 51(5) of the CGST Act, the tax deducted by the deductor would be claimed by the deductee as a credit in their electronic cash ledger.

Q9. What are the formalities to be done by a Tax Deductor with regards to (i) return (ii) TDS certificate?

Ans:

(i) Every tax deductor is required to file return in FORM GSTR-07 by the 10th of the succeeding month in which such tax deduction is made.

(ii) After depositing the TDS to Government by filing FORM GSTR-07 on or before 10th of every month, a deductor is required to issue a TDS certificate in FORM GSTR-7A giving details of the GSTIN of the supplier (deductee), invoice details, value of supply made and tax deducted thereon within five days of date of remittance of TDS to the Government.

The amount of TDS deducted shall appear as a credit in the electronic cash ledger of the supplier (deductee) and would be available to him as cash equivalent at the time of filing his monthly FORM GSTR-3B for payment of tax.

COLLECTION OF TAX AT SOURCE (sec 52) & E-Com Operators

Q1.What is TCS under GST?
Ans.: TCS stands for Tax Collected at Source. TCS is deducted by E-Com operators from the proceeds of supplies from sale of goods/services displayed on their portal, before making payment to dealers collected by them from buyers/recipients. .

Q2. Who is covered under provisions of TCS?
Ans. Only one type of person: E-Com Operator

Q3. Give examples of Electronic Commerce Operators in India.
Ans: Amazon, Flipkart, Ola, Trivago, Snapdeal, Urbanclap etc.

Q4. What is the rate of TCS?
Ans: 1% IGST or 0.5% CGST + 0.5% SGST

Q5.Who is liable to collect TCS ?
Ans.Every Electronic Commerce Operator (ECO), not being an agent, has been
mandated to collect tax at source (TCS) from the net value of taxable supplies made through it by other suppliers, whenever the ECO collects the consideration on behalf of the supplier.

Q6. How net value of supplies is calculated?
Ans. Net value of taxable supplies is equal to aggregate value of goods or services supplied through the portal of E-Com operator minus sales returns i.e. taxable supplies returned to suppliers.

Q7. What is the time limit to deposit the tax so collected with the government?
Ans: The TCS amount collected by the ECO has to be remitted to the Government Treasury within 10 days after the end of the month in which the collection was made.

Q8. Mr. X is a supplier selling his own products through a web site hosted by him. Does he fall under the definition of an “electronic commerce operator”?

Ans: No, as the provisions of TCS are attracted only when supply of goods or services displayed by other suppliers on the portal run by E-com operator are made and payment is collected by E-com operator from buyers on behalf of sellers. Here both the goods and web site belongs to X.

Q9. What are the formalities required by an E-com Operator with respect to return filing?

Ans.

(i) Monthly return
        Format :GSTR-8 through electronic format available on GSTN
        Time Limit: By 10th of succeeding month in which supplies made.
         Frequency: Monthly
         Major Details: Amount of supplies, Supplies returned, Tax collected

(ii) Annual return: file an Annual Statement on or before 31st day of December following the end of the financial year.

Q10. How is credit of TCS is available to the deductee i.e. supplier of goods or services?
Ans: Supplier can claim credit of the TCS amount in his electronic cash ledger. This amount should reflect in the monthly statement filed by the e-commerce operator.

Other points wrt to ECOM OPERATORS:

Q.1A. Who is an E-com operator?
Ans. An Electronic Commerce Operator means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce. Where electronic commerce means supply of goods or services including digital products over digital or electronic network. [Sec 2(44) and 2 (45)].

Various examples of e-commerce operators include Amajon, Flipkart, Snapdeal, Myntra, AJIO, Jabong, GoIbibo, Makemytrip, PayTm mall etc.

Q.What are the main features of an E-com operator?

The above definition (given under CGST Act) requires (i) supply of goods and/or services (ii) An electronic network or platform (iii) Three parties i.e. (a) operator (b) suppllier/seller (c) recipient/ buyer.
The supply of goods and services takes place between sellers and buyers using the electronic network / platform i.e. e-com operator is not the supplier but only the provider of the electronic platform while other people i.e. sellers supply goods and services.

Q. Point out two exceptions when use of electronic or digital platform does not constitute the person owning that platform an E-com operator.

Ans.The cases are:

(i) A supplier who supplies through his own website or electronic platform is not an e-com operator as he is selling his own products and those of others. For e.g. Titan selling watches and jewellery through its own website can not be treated as an e-com operator.

(ii) Directory websites which only list the names and address of suppliers of goods and services and prospective buyers after getting their address etc. personally contact them are also not e-commerce operator. Prospective buyers i.e. recipient do not buy and make payment for any goods or service to such websites or platform owners.

Q. What are the requirements as to registration for an e-commerce operator?
Ans. An e-com operator has to compulsorily get registration u/s 24(x). This means that a person who is an e-commerce operator has to get registration under GST whatever his turnover may be i.e. even if it is zero.

Q. What are the registration requirements for a person supplying goods or services through e-commerce operator?
Ans. Here there are two types of suppliers:

Category 1 : those who are supplying services notified u/s 9(5)	Registration is optional. However if turnover crosses prescribed threshold limit of 20 lac etc. Then registration is required u/s 22
Category 2 : Those who are supplying services except above	Compulsory registration is required.

Category 3 : thoser who are supplying goods

Compulsory registration is required in case of supply of goods.

Q. Which are the supplies prescribed under section 9(5)? why they are relevant?

Ans.
(i) Services by way of transportation of passengers by radio taxi, maxicab, motorcab, motorcycle etc. E-com sites example: OLA, UBER etc. In this case ola, uber etc are deemed as supplier and have to pay GST and taxi owner is absolved of his liability by virtue of notification u/s 9(5)

(ii) Services by way of providing accomodation in hotels, inns, guest-houses etc. meant for residential or lodging purposes. E-com sites example: Makemytrip, GoIbibo, Trivago etc. In these cases registration of hotel etc. is required if their turnover exceeds the threshold limit.

(iii) Services by way of house-keeping such as services of an electrician, plumber, mason, carpenter etc. In these cases registration of service provider etc. is required if their turnover exceeds the threshold limit.

(iv) Service by way of providing delivery of food. E-com sites example:Zomato, Swiggy etc. In these cases registration of service provider i.e. restaurant, food-joint etc. is required if their turnover exceeds the threshold limit.

Q.1 What is aggregate turnover under GST?

Ans: As per section 2(6) “aggregate turnover” means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both and inter-State supplies of persons having the same Permanent Account Number, to be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated tax and cess.

Thus by above definition:

aggregate turnover =sum total of

(a) aggregate value of all taxable supplies

(b) exempt supplies

(d) inter-state supplies on all India basis

Following shall be excluded:

(a) inward supplies on which tax is payable under RCM

(b) all taxes under GST laws

Q.2. What does GSP stands for?

Q.3 Give four examples of GSP?

Q.4 Qualifications for getting recognition as GSP :

Ans. financial criteria- paid up/raised capital of at least 5 crores and average turnover of at least 10 crores during the last 3 financial years.

Technical criteria: creating a software for filing GSTR 1, 2 & 3 along with reconciliation. The software was graded and anyone getting less than 60% marks wasn’t given the approval.

Q.5 Point out various constituents of GST eco-system?

Ans: (i) Registered Dealers, Consumers, Government, GST Council, CBIC, GST departments and offices, GSTN, registered GSPs, GST Suvidha Kendras (GST Facilitation Centres), Banks, GST professionals like GST Practitioners, Lawers, Chartered Accountants etc.

Q.6 Describe GST as an eco-system?

An Eco-system refers to a continuous process where in different constituents viz. Taxpayers, Government, Consumers, banks, GST practitioners etc. carry out their distinct roles and which are mutually beneficial to all.

Business entities engage in economic activity and have to pay tax to government on supply of goods and services to government.

Tax amount should be fair so that consumers are not unnecessarily burdened.

Business community is supported by GSTN, GSPs, GST Suvidha Kendras, GST Practitioners, GSTN portal etc. in meeting their obligations and carrying out relevant formalities smoothly, timely and economically.

With mutual support and benefit for all constituents, this eco-system continues to function.

Q.7 What is GSTN? Briefly highlight its role in GST regime.

Goods and Services Tax Network (GSTN) is a a trusted National Information Utility (NIU) or a Special Purpose Vehicle (SPV) which provides reliable, efficient and robust IT Backbone (information technology infrastructure) for carrying out different formalities and functions by all stakeholders including taxpayer and GST authorities electronically. It has been formed as a non-Government, private limited company under Section 8 of Companies Act, 2013 (not for profit company under new companies Act). It was incorporated on March 28, 2013.

1) The common GST Portal developed by GSTN will function as the front-end of the overall GST IT eco-system. The IT systems of CBEC and State Tax Departments will function as back-ends that would handle tax administration functions such as registration approval, assessment, audit, adjudication etc.

2) Funding of GSTN: Central Government has approved a grant of Rs.315 Crore, out of which 144 Crore has been released. Moreover, Central Government has allowed GSTN to raise a term loan Rs.550 crore term loan from commercial banks on its guarantee for meeting pre-incorporation expenses and capital expenditure in setting out necessary infrastructure.

3) Revenue model: GSTN is planned to be a self sustaining body. Its revenue shall come from usage charges to be paid by Central Government and state governments in ratio approved by empowered committee of finance ministers. Through this revenue from usage charges it shall meet its routine expenses.

4) Ownership and Control: Though it is formed as a company, its control is ensured to lie with government by giving Central Government and State Governments 51% share holding. (It is also settled that this shareholding shall rise to 100% in near future). Remaining 49% is held with government owned financial institutions.

5) Accounts and Audit: GSTN has been provided with its own accounting model based on which revenue and expenses shall be recorded. Annual accounts shall be laid before parliament of India and shall be subject to regular audit by CAG of India.

6) Functions of GSTN:

The functions of GSTN is based on the idea to do every formality and function on electronic platform instead of paper. Every person who wishes to enter GST-ecosystem or to whom GST applies has to do all tasks through GSTN.

The functions or tasks may be seen as those relating to (i) Front End and those relating to (ii) Back-end. Front end will mostly be used by taxpayers, banks, GST professionals, etc while back-end shall be used by GST authorities like CBIC, Indirect Tax departments, officers including Central and State Governments.

As a result of continuous input of information in the form of returns, applications, challans, orders, notices etc., a huge data base will evolve, which shall be maintained and used by all with necessary access to data records.

(I) Front-end functions include:

(i) Core services covering- registration, returns, payments etc.

(ii) Cross Credit settlements

(iii) IGST settlements

(iv) Uploading and matching of Invoices

(v) Generation of E-way Bill

(vi) Help desk and support

(vii) Awareness and training

(II) Back-end functions include:

(i) Approval of registrations

(ii) Assessments

(iii) Issue of notices

(iv) Refungs

(v) Audits and enforcements

(vi) Internal workflows

(vi) Analytics

To carry out all above functions at such a huge level, GSTN

(a) ensures harmony of business processes and formats,

(b) provide an ever ready common and shared IT structure,

(d) provides a common Interface i.e. www.gst.gov.in to all stakeholders.

(e) allows role-based access to various constituents.

Q.8 How much is the authorized capital of GSTN? State its stake holding pattern.

The Authorised Capital of the company is Rs. 10,00,00,000 (Rupees ten crore only)The Government of India holds 24.5% equity in GSTN and all States of the Indian Union, including NCT of Delhi and Puducherry, and the Empowered Committee of State Finance Ministers (EC), together hold another 24.5%. Balance 51% equity is with non-Government financial institutions.

Central Government	24.5%
State Governments & EC	24.5%
HDFC	10%
HDFC Bank	10%
ICICI Bank	10%
NSE Strategic Investment Co	10%
LIC Housing Finance Ltd	11%

Statistics to showcase what GSTN has been doing since launching of GST in India

1) 1.23 Crore registrations

2) 35.36 Crore filings of returns

3) 11.26 Crore of payment transactions

4) 698 Crore invoices uploaded

5) 19.50 Lakh Crore GST collected through GSTN

6) 92.70 Crore E-way bills generated

Vision-Mission-Values of GSTN (optional and not part of formal syllabus)

Vision

To become a trusted National Information Utility (NIU) which provides reliable, efficient and robust IT Backbone for the smooth functioning of the Goods & Services Tax regimen enabling economic agents to leverage the entire nation as One Market with minimal Indirect Tax compliance cost.

Mission

Provide common and shared IT infrastructure and services to the Central and State Governments, Tax Payers and other stakeholders for implementation of the Goods & Services Tax (GST).
Provide common Registration, Return and Payment services to the Tax payers.
Partner with other agencies for creating an efficient and user-friendly GST Eco-system.
Encourage and collaborate with GST Suvidha Providers (GSPs) to roll out GST Applications for providing simplified services to the stakeholders.
Carry out research, study best practises and provide Training and Consultancy to the Tax authorities and other stakeholders.
Provide efficient Backend Services to the Tax Departments of the Central and State Governments on request.
Develop Tax Payer Profiling Utility (TPU) for Central and State Tax Administration.
Assist Tax authorities in improving Tax compliance and transparency of Tax Administration system.
Deliver any other services of relevance to the Central and State Governments and other stakeholders on request.

Values

Inclusiveness
Efficiency
Transparency
Commitment
Collaboration
Excellence
Innovation
Accountability

Thursday, October 10, 2019

Assignment - III

Questions for assignment III

(i) What is Input Tax Credit? Enumerate various conditions and restrictions with respect to Input Tax Credit under the provisions of GST laws.

(ii) Briefly describe the procedure for availing Input Tax Credit

(iii) With the help of provided information you are required to calculate the GST payable by the supplier at each level of supply chain:

Supply chain constituting manufacturer M to wholesaler W then wholesaler W selling to retailer R and lastly retailer R selling to consumer C
All supplies taking place in state of Uttar Pradesh
Value addition at each level of supply chain is 20%
Overall incidence of GST is 18%
Sale Value excluding GST by manufacturer M to wholesaler W is Rs.20,000/-
It is assumed that A is the original producer and is not bringing forward any eligible ITC

(iv) Which persons under GST laws cannot avail ITC?

(ivA) Mention various supplies where ITC is blocked under the provisions of GST.

(v) ABC Co. Ltd. is engaged in the manufacture of heavy machinery. It procured the following items during the month of September:

S.No. Items                      GST paid (Rs.)
(i)         Electrical transformers to be used in
            the manufacturing process    5,20,000
(ii)        Trucks used for the transport of raw
             material                                                                   1,00,000
(iii)     Raw material                                                              2,00,000
(iv) Confectionery items for consumption
               of employees working in the factory.
               These items were supplied free of cost
               to the employees in lieu of services
               rendered by them to the manufacturer
   in the course of employment                                      25,000

Determine the amount of ITC available with ABC Co. Ltd., for the month of September by giving necessary explanations for treatment of various items.

(v) A is a trader who places an order on B for a consignment of soda ash. A receives a buying order from C for the same quantity of soda ash. A instructs B to deliver the goods to C, and in turn he raises an invoice on C. Whether A is eligible for ITC?

Though the goods are not physically received at the premises of A, section 16(2)(b) allows ITC of the goods to A.

(vi) XYZ enters in to a contract with ABC for supply of 10 MT of a chemical for Rs. 1,18,000 (inclusive of GST of Rs.18,000) in August, 2019. The chemical is to be delivered in lots over a period of three months. ABC raises the invoice for the entire amount in August but the supply is completed in September. When is XYZ eligible to claim ITC?

Ans: Though XYZ paid the full tax as early as August, it can take the ITC of the same only on receipt of last instalment of the chemical in the month of September.

(vii) Out of 10 containers purchased by a registered person engaged in taxable supply of goods, 5 are used for storing non-taxable goods (exempt supply) such as petroleum (petroleum is out of GST gamuttill the time the GST Council takes a decision in this regard). How much ITC can be claimed in this case?

hint: ITC on 5 containers used for non-taxable goods cannot be availed.

(viii) A registered person (partnership firm) purchases 5 laptops but one of the laptop is being used by the son of one of the partners of the firm. How much ITC can be claimed in this case?

hint: ITC will not be available on such laptop as it is used for personal purposes.

(ix) Who is an Input Service Distributor? Can an organisation have multiple ISDs?

(x) What are the formalities an ISD has to follow in order to distribute the ITC?

(xi) Whether normal registration under GST provisions is sufficient or a separate registration is required for an Input Service Distributor?

Ans. A separate registration is required. Registration has to be done in Form GST REG - 1

(xii)Which return an ISD has to file and what is its frequency?

Ans. An ISD will have to file monthly returns in GSTR-6 within thirteen days after the end of the month and will have to furnish information of all ISD invoices issued.

(xiii) Name the document an ISD has to issue in order to transfer the ITC on common services.

Ans. An ISD has to issue an ISD invoice, as prescribed in rule 54(1) of the CGST Rules, 2017 in order to transfer the ITC. It has to be clearly mentioned in such invoice that it is issued only for distribution of input tax credit.

(xiv) Under following situations, point out the method you would suggest in order to distribute the input tax credit to various distinct persons of a Input Service Distributor:
(a) Entire services are used by a particular unit
(b) Services are used by all as a common pool.

(xv). What is Job work under GST? Is ITC available under GST laws on goods sent to a job worker? If yes, then state various situations and conditions for availing ITC on goods sent for job work.

Saturday, September 21, 2019

ITC-ISD-Job work-Returns

Unit 4: Input Tax Credit
Introduction, Job Worker, Concept of Input Service Distributor, Legal Formalities for an ISD, Distribution of Credit, Matching of Input Tax Credit, Returns, GSTR-2, Other Taxable Persons, Annual Return.

Input Tax Credit:

Introduction: ITC or Input Tax credit is the most critical issue upon which the whole concept and application of GST revolves or rests. The concept has been borrowed from VAT, though, yet it is sought to be done in an automated manner with the help of technology.

'Input Tax Credit' comprises of three words.

(i) Input: Input means goods and services received and used in the course of or furtherance of business. It does not include capital goods.

(ii) Tax: Tax here is in fact 'Input Tax' and means any tax charged under GST laws on the supply of goods or services or both made to a registered person i.e. CGST, STST, IGST and UTGST but tax paid under composition scheme is specifically excluded.

(iii) Credit : Credit here means Output Tax minus Input Tax. [Output tax means tax chargeable under GST laws on taxable supply of goods or services or both by a taxable person, [excluding tax payable by him under reverse charge mechanism]

To understand this let us see a few examples:

I
(i) Cut trees and wooden logs are input for timber manufacturers
(ii) Timber is input for furniture manufacturers
(iii) Furniture is input for wholesalers
(iv) Furniture purchased from wholesalers is input for furniture retailers

II
(i) Cotton plantation is input for cotton yarn manufacturers
(ii) Yarn is input for textile manufacturers
(iii) Textile is input for garments manufacturers

III
(i) Miscellaneous spare parts like battery, spark-plug, carburetor, horn, head-light lamp, tyres etc are input for scooter manufacturer

At the end of this supply chain is the consumer who ultimately consumes the goods or services i.e. he does not resell them further.

At every level of supply chain i.e. say when wholesaler supplies the goods to retailer, he i.e. seller collects applicable tax from retailer i.e. buyer and deposit the tax with government but after availing credit for any GST paid by him i.e. input tax.

This can be seen more clearly with the help of following example

I. Sale by A to B (both with in same state and applicable rate of GST 18%)

   Value of Sale           (a)                   : Rs.10,000/-
    CGST @9%            (b)                : Rs.900/-
    SGST @ 9%            (c)           : Rs.900/-
    Total Tax                (d)=(b)+(c) : Rs.1,800/-
Total amount :          (e) = (a)+(d)   : Rs.11,800/-

II. Sale by B to C (both with in same state and applicable rate of GST 18%)

Input:                                  (a)                : Rs.10,000/-
   Value addition say 20%    (b)              : Rs. 2,000/-

Sale Value           (c)=(a)+(b)             : Rs.12,000/-
    CGST @9% of Value       (d)      : Rs.1,080/-
    SGST @ 9% of Value      (e)        : Rs.1,080/-
Total Tax :           (f) = (d)+(e)            : Rs.2,160/-

Total amount :                  (g) = (c)+(f) : Rs.14,160/-

III. Sale by C to D (both with in same state and applicable rate of GST 18%)

Input:                                  (a)                : Rs.12,000/-
   Value addition say 20%    (b)              : Rs. 2,400/-

Sale Value           (c)=(a)+(b)             : Rs.14,400/-
    CGST @9% of Value       (d)      : Rs.1,296/-
    SGST @ 9% of Value      (e)        : Rs.1,296/-
Total Tax :           (f) = (d)+(e)            : Rs.2,592/-

Total amount :                  (g) = (c)+(f) : Rs.16,992/-

Now answer following questions:

(i) If D is the ultimate consumer, how much is his effective cash outflow in order to acquire and consume the goods above?

(ii) How much B and C have gained respectively from above transactions?

(iii) What is the revenue from SGST to concerned state?

(iv) What is the revenue from CGST to the Government?

Answers:

(i) Rs.16,992/-
(ii) Outflows of B: (i) Value of Goods: Rs.10,000/-
(ii) GST paid to A    : Rs.1,800/-
(iii) GST collected from C and paid to Govt. : Rs.2,160/-
   Total Rs.13,960/-

Inflows of B: Rs.14,160/-

      Net inflow: 14160-13960 = Rs.200

      Again,
      Outflows of C: (i) Value of Goods: Rs.12,000/-
(ii) GST paid to B    : Rs.2,160/-
(iii) GST collected from D and paid to Govt. : Rs.2,592/-
   Total Rs.16,752/-

Inflows of B: Rs.16,992/-

      Net inflow: 16992-16752 = Rs.240

(iii) Revenue from SGST to relevant state: 900+1080+1296 = Rs.3,276/-
(iv) Revenue from CGST to GOI: 900+1080+1296 = Rs.3,276/-

Up till now, you must be wondering that something is wrong. The answer is yes something has been seriously wrong. If you start thinking from the side of B, he has gained nothing i.e. Rs.200/- only, even when he made a value addition of Rs.2,000. So his earnings should be in the range of Rs.2,000/- or so. The catch lies in the fact that he should have taken the credit of Input GST of Rs.1,800/-(which he paid to A while purchasing the input) and should have paid only the balance i.e. 2,160 minus 1,800 i.e. Rs.360 only.

Now his cash flows would be redrafted as:
Outflows of B: (i) Value of Goods: Rs.10,000/-
(ii) GST paid to A    : Rs.1,800/-
    (iii) Tax paid to Govt. after taking credit : 360 (i.e. 2160-1800)
   Total Rs.12,160/-

Inflows of B: Rs.14,160/-

      Net inflow: 14160-12160 = Rs.2,000/-

Same goes with C, his net cash flows should be Rs.2,400/- and not Rs.240/-

In view of ITC, revenue to state would be 900 + (1080-900) + (1296-1080) i.e. 900+180+216 = 1296

Similarly revenue to CG will also be 900+180+216 = Rs.1296/-

Total incidence of tax shall be 1296+1296 = Rs.2512/-

It is interesting to note that goods under question attracted a GST rate of 18%, accordingly revenue from GST to government shall be 18% of {10000 + 2000 + 2400} which is 18% of 14400 i.e. Rs2,592/- which is what government actually gets after all the tax incidences at various stages of supply chain.

In this way GST laws provide for a mechanism of (i) preventing cascading effect i.e. tax on tax and (ii) preventing input tax from becoming part of cost

Provisions of Input Tax Credit:

1. Applicable terms, sections and statutes:
(a) Input sec 2(59) :        any goods other than capital goods used/intended to be used in the furtherance of business :

(b) Input services sec 2(60): any services used/intended to be used in the furtherance of business
(b) Input tax                 sec 2(62)
(c) Input tax credit       sec 2 (63)
(d) Inward Supplies     sec 2 (67)
(e) Outward Supplies   sec 2(83)

(f) Eligibility and conditions for claiming ITC: sec16 read with rule 36 and 37
(g) Apportionment of credit and 'Blocked Credit' : sec 17, rule 38, 42 and 43
(h) Availability of ITC in special circumstances : sec 19
(i) Distribution of credit by Input Service Distributor

Important points:
(1) Input tax can be on (i) goods (ii)services and (iii) capital goods used in business i.e. inputs used for personal or non-business uses does not qualify for ITC.

(2) Input tax can comprise of (i) tax under forward charge (ii) tax under reverse charge (iii) IGST on imports [composition tax is specifically excluded]

(3) ITC can only be used against tax payable on taxable supplies i.e. if all the supplies of a registered person are exempt for whatever reason, he can not claim ITC and any such ITC shall lapse.

(4) Composition dealer can neither pass on ITC nor can avail benefits of ITC.

2. Conditions for availing of ITC: Section 16 and Rule 36, 37

(i) Only registered person allowed to take ITC (a composition dealer is expressly disallowed)
(ii) Goods/services used or intended to be used in the course or furtherance of business
(iii)Tax invoice or debit note or prescribed tax paying document is in possession
(iv)Goods and services are received
(v) Tax on goods or services supplied have been paid in cash or by utilisation of ITC by the supplier.
(vi)Registered person has furnished return u/s 39
(vii) Goods delivered to third person on the direction of the registered person deemed to be received by the registered person
(vi) If depreciation claimed on tax component, ITC is disallowed.
(vii) In case goods are received in lots, ITC can be claimed upon receipts of last installment.
(viii) ITC of a FY to be availed by 20th October of next FY or filing of Annual return, whichever is earlier.
(ix) Payment of goods/services to be made within 180 days from the date of the tax invoice, otherwise amount equal to ITC credited to Electronic Cash Ledger shall be added to output tax liability along with 18% interest. However ITC can be re-availed upon subsequent payment.

3. Further restrictions: Section 17 Rule 38, 42 and 43. These restrictions are with respect to apportionment of credit and blocked credits

(i) ITC is available only to the extent to which it relates to use of inputs for business purposes.

(ii) ITC is again available only to the extent to which it relates to use of inputs for taxable supplies including zero rated supplies.

(iii) Exempt supplies shall be such as may be prescribed and include sale of land, building, securities transactions and supplies on which recipient is liable to pay tax under RCM

(iv) A banking company has the option either to avail 50% of ITC on input supplies or avail proportionate ITC on input supplies used in taxable supplies. Any option once chosen cannot be changed during the FY.

4. Blocking of ITC/ Blocked ITC or Prohibitions

ITC on few activities/transactions/input supplies cannot be claimed even if all conditions for ITC are fulfilled. These are mainly capital goods items i.e. transport vehicles, building premises, ITC gathered through fraud etc. These instances when ITC benefit or flow is blocked are mentioned under section 17 as:
(i) Motor Vehicles and other conveyances having seating capacity of less than thirteen persons except when used for further sale or transportation of passengers, imparting training on driving.

(ii) Foods and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery

(iii)Membership of a club, health and fitness centre

(iv) Rent-a-cab, life and health insurance

(v) Travel benefits to employees on vacations

(vi) Works contract services for construction of an immovable property.

(vii) Inward supplies received by a taxable person for construction of an immovable property

(viii) Inward supplies on which tax has been paid under composition scheme

(ix) Inward supplies received by a NRTP except goods imported by him

(x) Goods and or services used or received entirely for personal benefit

(xi) Goods that are lost, stolen, destroyed, written off or disposed off by way of free samples or gifts.

(xii) Tax paid as a result of evasion of tax as penalty i.e. upon detention of goods, or towards redemption of confiscated goods/conveyance

Q. How ITC is utilized?

ITC is credited to a registered person’s electronic credit ledger. The person may use this to pay his output tax liability.

In terms of section 49(5),
1. ITC of IGST can be used to pay IGST, CGST and SGST/UTGST in that order.
2. ITC of CGST can be used to pay CGST and IGST in that order.
3. ITC of SGST/UTGST can be used to pay SGST/UTGST and IGST in that order.
4. ITC of CGST cannot be utilized towards payment of SGST/UTGST and viceversa.
Hence cross-utilization of credit is available only between CGST and IGST and SGST/UTGST and IGST. The main restriction is that the CGST credit cannot be utilized for payment of SGST/UTGST and SGST/UTGST credit cannot be utilized for payment of CGST.

Remember that SGST of one state can not be used to pay SGST of another state.

5. Distribution of credit by an Input Service Distributor ISD [Section 20 and 21]

Input service distributor means:

--An office of the supplier of goods or services or both
--which receives tax invoices issued under section 31
--towards the receipt of input services
--and issues a prescribed document for the purposes of distributing the credit of central tax, State tax, integrated tax or Union territory tax paid on the said services
--to a supplier of taxable goods or services or both having the same Permanent Account Number as that of the said office [Section 2(61)]

This is in fact a facilitating provision or scheme in GST to help large business entities having two or more branches within or outside a state. In such a situation, it is quite common to have a centralized purchase department procuring supply of services as a whole on behalf of various branches. Obviously, this will result in issue of a common tax invoice generally in favour of Head office but services are used by different branches. In principle also this poses a problem, head office can not take input tax credit because it has not received the services and branches cannot take ITC because they are not in possession of tax invoice.

This situation is taken care of under GST by mechanism of ISD i.e. Input Service Distributor.

Normally, head office gets registered as ISD and distributes the credit (through mechanism available in GST for this purpose) amongst various branches. In this way they are able to get the ITC for which they are rightfully eligible.

Conditions for ISD:

(i) All entities to have same PAN is a must

(ii) Separate registration by one of the place of business as Input Service Distributor i.e. ISD

(iii) This facility is available only for input services (and not for goods or capital goods)

(iv) Input Service Distributor has to issue a ISD Invoice/Credit note mentioning the amount of ITC transferred to the concerned branch(es). This is the basis of claim for ITC by receiving branches.

(v) ITC of a particular month has to be distributed in the same month

(vi) ISD to file a monthly return in form GSTR-6 by 13th of following month while branch receiving credit has to claim the same while filing its GSTR-2 return.

(vii) Credit distributed can not exceed Input Tax paid to the supplier of services.

(viii) In case whole ITC is attributable to a particular branch, ITC is transferred to that branch.

(ix) In case more than one branch has used the services, ITC is apportioned in the ratio of turnover of each of the branch to their combined turnover during previous FY or of last quarter.

(x) Any excess ITC transferred is recoverable from receiving branch as arrears of tax along with interest.

Examples of Input Service Distributor:

(1) Consultancy services from a legal firm billed to head office but all branches and other places of business are using them including those having same PAN.

(ii) A Customized software or IRP programme purchased by head office and used through out at various places of business of the organisation having same PAN.

Q1. Whether normal registration under GST provisions is sufficient or a separate registration is required for an Input Service Distributor?

A. A separate registration is required. Registration has to be done in Form GST REG - 1

Q.2 Which return an ISD has to file and what is its frequency?

A. An ISD will have to file monthly returns in GSTR-6 within thirteen days after the end of the month and will have to furnish information of all ISD invoices issued.

Q.3 Name the document an ISD has to issue in order to transfer the ITC on common services.

A. An ISD has to issue an ISD invoice, as prescribed in rule 54(1) of the CGST Rules, 2017 in order to transfer the ITC. It has to be clearly mentioned in such invoice that it is issued only for distribution of input tax credit.

Q.4 Under following situations, point out the method you would suggest in order to distribute the input tax credit to various distinct persons of a Input Service Distributor:
(a) Entire services are used by a particular unit
(b) Services are used by all as a common pool.

5. Job Work provisions and ITC [Section 19]

In a Job Work situation, there are two parties i.e. (i) principal supplier or manufacturer and (ii) Job worker

Job work refers to work done or services provided by job worker on the goods provided by principal.

As per sec Section 2(68) of the CGST Act, 2017 ‘any treatment or process undertaken by a person on goods belonging to another registered person’.

Examples: Painting, packing, fitting, etc.
1. The one who does the said job would be termed as ‘job worker’ and the owner of goods shall be termed as principal manufacturer.

2. The job worker is expected to work on the goods sent by the principal and the ownership of the goods does not transfer to the job worker, but it remains with the principal.

Remember that:
(i) Principal manufacturer has to be a registered person.
(ii) These provisions are not obligatory.

Relevant sections:
(i) Job Work Procedures: Section 143 of CGST Act, 2017 and Rule 45 of CGST Rules, 2017
(ii) Input Tax Credit w.r.t. goods sent to a Job worker: Section 19 of CGST Act, 2017

Major provisions with respect to movement of goods:

A. Goods moving to premise of job worker from the premises of principal manufacturer

A Principal can send goods to a job worker (and even to another job workers afterwards or simultaneously) without payment of tax.
The procedure for sending the goods for job work (rule 45 read with Circular No. 38/12/2018 dated 26.03.2018)

1. The inputs and/or capital goods are required to be sent to the job worker under the cover of a challan issued by the principal containing date & number of delivery challan, name, address & GSTIN of consignor & consignee, HSN code & description of goods, quantity, taxable value, tax rate and tax amount, place of supply and signature.

2. The challan shall be send in triplicate. Job worker will retain two copies and will use one copy while returning the goods back after completion of job work.

3.The principal manufacture will fill a quarterly return in GST-ITC-04 by 25 of the month following the quarter containing details of all challans used during the quarter.

4. Where principal and job worker are from different states, an e-way bill shall be generated by either of them. In case job worker is unregistered, e-way bill shall be generated by principal manufacturer.

B. Goods moving from premise of job worker to the premises of principal manufacturer

The goods have to be returned back with in 1 year in case of goods and 3 years in case of capital goods. The job worker will send the processed goods back to principal along with one copy of the challan issued by the principal at the time of sending the goods for job work.

C. Where goods are sent from one job worker to another job worker

The first job worker will endorse one copy of challan out of two originally received while sending the goods to next or another job worker.

D. Where the goods are sent directly by the supplier to the job worker

This happens when principal, instead of receiving goods first at his premises and then transporting them to the premises of job worker, asks the supplier to ship the goods directly to the premises of job worker. Here nothing will change and it will be treated as goods have been supplied by the principal to the job worker and he will send three copies of challan to job worker as in case A. The tax invoice should however clearly mention the principal as the recipient and shipping destination as the premises of job worker.

E. Where goods are supplied or Exported directly from the premises of job worker.

It may so happen that principal may not bring the goods back to his premises and sell i.e. supply the goods from the premises of job worker. In case goods are supplied in India, usual GST shall be payable by the principal as per the provisions. In case they are directly exported, no GST is payable as Exports are exempt from GST.

F. Where goods are not returned back with in stipulated period

If the prescribed returning time limit of processed goods is violated i.e. goods are not returned back in 1 year in case of goods or 3 years in case of capital goods from the date of supply, such goods shall attract GST as supply of goods by principal to job worker and principal shall be liable to pay the applicable GST along with interest.

Goods after completion of job work can be transferred back to premise of principal manufacturer with out payment of tax.
The time limit of goods remaining with job worker is 1 year in case of goods and 3 years in case of capital goods.

G. Tax implications:

The central questions in this arrangement is:
(i) Whether to charge tax, when the goods are sent from the premise(s) of principal manufacturer to the premises of Job worker
(ii) Whether principal manufacturer will be required to reverse the ITC claimed on the goods sent to job worker
(iii) What shall be the tax implications after completion of job work?

The answer to above questions is :
(i) No GST if required conditions are fulfilled for sending goods for job work.
(ii) Again, principal can enjoy the benefits of ITC on goods send for job work provided the procedures as prescribed are duly followed.
(iii) Goods can be supplied further upon payment of applicable GST or they can be exported under exemption.

6. Returns under GST regime

Return under any taxation law is not what a common man understands when he hears the word 'return' i.e. it is not going back etc. Under any taxation statute it means formal communication in writing by the prospective tax payer to the government or taxation authority about the transactions undertaken relevant to computation of applicable tax during the period covered under the return.

Thus return is formal and periodic reporting of prescribed information by a taxpayer to taxation authorities so as to:
(i) Provide required information
(ii) Intimate compliance of conditions and formalities
(iii) Computation of tax liabilities
(iv) Providing source for building necessary statistics in support of policy
(v) Providing inputs for audits and anti evasions programs

Sec2(97) of CGST Act, 2017 defines return as any return prescribed or otherwise required to be furnished by or under this Act or the rules made thereunder

Features of Return Filing under GST:

(i) All forms are filled and submitted electronically without any involvement of paper.

(ii) Forms are submitted online at www.gst.gov.in by logging in through GSTIN, user id and password.

(iii) One should have registered mobile number also for authenticating transactions via otp’s etc.

(iv)While filing of return purposes one has to chose correct form based on (a) purpose and (b) type of person

(v) Various persons under GST are:

(a) Registered Normal Dealer
(b) Taxpayer opted for Composition scheme
(c) Non-Resident taxable person
(c) Tax deductor at source
(d) Tax Collector at source
(e) OIDAR taxpayer

(vi) In most of the cases, even if there is no activity or supply etc., a 'NIL' return has to be submitted.

(vii) Return have to be signed either through (i) digital signatures (ii) aadhaar based verification (iii) verification through OTP received on registered mobile

(viii) GST returns comprises of two types of return - periodic and annual returns. Periodic returns are monthly or quarterly returns for reporting transactions during the month or quarter, while annual return is for reporting the summary of the periodic returns filed during a financial year.

Q. Various types of taxable persons under GST and returns they are required to submit:

S.No.	Type of Taxable person	Return
1	Normal Registered Dealer, CTP	GSTR1, GSTR2A, GSTR3B
2	Composite Dealer	GSTR4, GSTR4A
3	NRTP	GSTR5
4	OIDAR	GSTR5A
5	ISD	GSTR6
6	TDS persons	GSTR7
7	TCS persons	GSTR8
8	UIN holders	GSTR11
9	Normal Registered Dealer, CTP	GSTR9,9A,9C,10

Q Why filing of returns under GST is even more critical then other taxation regimes?

Ans. This statement is true because of two reasons:
(i) Tax under GST administration is deposited in SELF-ASSESSMENT mode. Proper returns filing provides a suitable basis for ascertaining and assessing the tax amount by GST authorities. This SELF-ASSESSMENT approach is dependent upon timely and accurate returns filed by the tax payers.

(ii) The information provided by the tax-payer in the returns equally affects the tax amount of persons from whom supplies have been received or from whom supplies have been made by the tax payer. This is reflected in the credit balance as shown in Electronic Credit Ledger through Input Tax Credit mechanism as supplies (sales) of one trader is receipt (purchase) of another and so on.

Q. Highlight the present scenario or status with respect to filing of GST returns by tax payers in India.

Ans. GST was implemented on 01st July, 2017 and more than two years have elapsed since then. The return fililng structure of GST is still evolving. This is clear from the fact that GSTR-2 (Detail of inward supplies or goods and services) and GSTR -3 ( consolidated monthly return) have been suspended under 28th GST council meeting communicated by CBIC vide press release dated 21st July, 2018 till further notice. These forms have not been revived since then and now GST council has proposed new returns RET-01, RET-2 and RET-3 to be effective from April 2020

Reasons for present state of return filing:

(i) India is a vast country with 28 states and
(i) All the returns and allied work has to be filed in electronic format through GSTN network or common portal.

(ii) Common and small tax-payers are not tech-savvy enough to understand the new system.

(iii) Taxpayers for the first time have to upload invoices (major details) both inward and outward.

(iv) Introduction of seamless calculation and allowance of Input Tax Credit based on system of matching of invoices uploaded by seller and buyer.

(v) New systems of HSN/SAC, e-way bill, reverse charge etc. have increased the formalities though it is believed that these will bring greater transparency and automation in the working leading to higher efficiencies.

New / Proposed return filing routine for a normal tax payer/dealer:

Particulars	Threshold Limit	Periodicity of payment	Periodicity of returns
Normal (RET 1)	Above Rs.5 crore (mandatory) Below Rs.5 cr. (optional)	Monthly	Monthly (above Rs.5 crores turnover) Quarterly (below Rs.5 crores turnover)
SAHAJ (RET 2) B TO C ONLY	Below Rs.5 crore (optional)	Monthly	Quarterly
SUGAM (RET 3) B TO B & B TO C	Below Rs.5 crore (optional)	Monthly	Quarterly

1. Relevant sections :
Chapter IX, sections 37 to 48 of CGST Act, 2017 and Rules 59 to 84 of CGST Rules, 2017

2. Types of Returns:

Name of Return	Description	Who files	Date of filing
GSTR-1	Monthly Statement of Outward supplies of Goods or Services	Registered Person with annual aggregate turnover greater than Rs. 1.5 crore	10th of the next month
	Quarterly Statement of Outward supplies of Goods or Services	Registered Person with annual aggregate turnover up to Rs.1.5 crore	10th of the next quarter
GSTR-3B	Monthly Return for a normal taxpayer	Registered Person	20th of the next month
GSTR-4	Quarterly Return	Taxable Person opting for Composition Levy	18th of the month succeeding the quarter
GSTR-5	Monthly Return for a non-resident taxpayer	Non-resident Taxpayer	20th of the month succeeding the tax period or within 7 days after expiry of registration, whichever is earlier
GSTR-5A	Monthly return for a person supplying OIDAR services from a place outside India to a non-taxable online recipient	Supplier of OIDAR Services	20th of the next month
GSTR-6	Monthly return for an Input Service Distributor (ISD)	Input Service Distributor	13th of the next month
GSTR-7	Monthly return for authorities deducting tax at source	Tax Deductor	10th of the next month
GSTR-8	Monthly statement for E-Commerce Operator depicting supplies effecting through it.	E-Commerce Operator	10th of the next month
GSTR-9	Annual Return	Registered Person other than an ISD, TDS/TCS Taxpayer, Casual Taxable Person and Non-resident Taxpayer	31st December of next Financial Year
GSTR-9A	Simplified Annual Return under Composition scheme	Taxable Person opting for Composition Levy	31st December of next Financial Year
GSTR-10	Final Return	Taxable Person whose registration has been surrendered or cancelled	Within three months of the date of cancellation or date of order of cancellation, whichever is later.
GSTR-11	Details of inward supplies to be furnished by a person having UIN	Persons who have been issued a Unique Identity Number(UIN)	28th of the next month

Points to be remembered:

1. All returns are supposed to be filed electronically through GST portal provided by GSTN by visiting www.gst.gov.in

2. Three types of information are needed by GSTN: (a) detail of inward supply (b) detail of outward supply and (c) Input Tax credit. For all these three aspects earlier three separate forms were proposed under GST laws with monthly frequency. This led to 36 forms on yearly basis plus one annual return making a total of 37 forms yearly. This was a hardship for taxpayers. Now the GST system is proposing one return containing information about all the three aspects and that too in an automated manner.

3. In all cases, a person has to file NIL return if there is no activity during the relevant period

Formats:
1. GSTR 1
2. GSTR 2
3. GSTR 3
4. GSTR 4

Brief description of main Forms:

I. GSTR-1 :

This is a form which captures information about outward supplies as prescribed by section 37 read with rule 59

Q1. Who is required to file GSTR-1?

Ans: Every person other than (i) NRTP (ii) ISD (iii) Tax deductor or Tax collector (iv) OIDAR (v) E-com (vi) Composite dealer

Q.2 What is the frequency of GSTR-1?
Ans: Monthly for persons having turnover > Rs.1.5 Crore (Quarterly for persons having turnover= < Rs.1.5 crore). Due date is 10th of succeeding month

Q2A. A Taxpayer cannot file GSTR-1 before the end of Tax period for which GSTR-1 is being filed. What are the exceptions to this rule?
Ans: A taxpayer cannot file GSTR-1 before the end of the current tax period. However, following are the exceptions to this rule:
a. Casual taxpayers, after the closure of their business
b. Cancellation of GSTIN of a normal taxpayer A taxpayer who has applied for cancellation of registration will be allowed to file GSTR-1 after confirming receipt of the application

Q.3 What are the inputs to be provided in GSTR -1?
Ans: The registered person is required to furnish details of invoices and revised invoices issued in relation to supplies made by him to registered and unregistered persons during a month and debit notes and credit notes in GSTR-1 in the following manner

Invoice wise detail : Inter-State and Intra-State supplies made to registered persons plus (for supplies to unregistered person with invoice value exceeding Rs.2,50,000/-

Consolidated details of ALL: Intra-State supplies made to unregistered persons for each rate of tax and Interstate supply to unregistered person for invoices up to Rs.2,50,000/- separately for each state.

Q.4 What are the requirements as to mentioning of HSN or SAC codes in GSTR-1?
Ans: For TO up to Rs.1,50,00,000/- : NA
For TO > Rs.1,50,00,000/- but less than Rs.5,00,00,000/- : minimum Two digits
For TO > Rs.5,00,00,000/- : min four digits

Q.5 What are the details to be provided in Form GSTR -1?
Ans:
Basic Details: •GSTIN •Legal name and Trade name •Aggregate turnover in previous year
•Tax period •HSN-wise summary of outward supplies •Details of documents issued
•Advances received/advances

Details with respect to outward supplies: •B2B •B2C •Zerorated and Deemed exports •Debit/ Credit notes issued •Nil rated/ Exempted/ Non GST •Amendments for prior period

Note: In almost all forms and fields therein 'place of supply' i.e. place of recipient is captured because GSTN is a destination based tax i.e. tax revenue is transferred to the state of consumption.

II GSTR-3 or (GSTR-3B)

Q. Who is required to file GSTR-3B? What is its frequency?
Section 39 Rule 61(5) prescribe for all taxpayers except (i) NRTP (ii) ISD (iii) Tax deductor or Tax collector (iv) OIDAR (v) E-com (vi) Composite dealer to file a monthy return by 20th of next month succeeding the relevant calendar month. However due to technical reasons presently GSTR-3 is suspended and an alternative form GSTR-3B is in use.

Q. How is GSTR-3B submitted?
GSTR-3B can be submitted electronically through the common portal, either directly or through a notified Facilitation Centre.

Q.What is the purpose of GSTR-3B
GSTR-3B is a simple return containing summary of outward supplies, inward supplies liable to reverse charge, eligible ITC, payment of tax etc. Thus, GSTR-3B does not require invoice-wise data of outward supplies.

Q. Briefly mention the contents of GSTR-3B?

1. Basic Details: (i)GSTIN (ii)Legal name of the registered person (iii)Tax period

2. Other details relating to transactions/supply activities:
(i)Summarised details of outward supplies andinward supplies liable to reversecharge
(ii) Summarised details of inter-State supplies made to unregistered persons, composition taxable persons and UIN holders
(iii) Eligible ITC
(iv) Values of exempt, nil-rated and non-GST inward supplies
(v) Payment of tax
(vi) TDS/TCS credit

New Return structure (presently under trial and proposed to be effective from 01/04/2020)

As per the recommendations of 31st GST Council meeting return process has been further streamlined and simplified by (i) reducing the number of returns (ii) introducing simpler returns i.e. Sahaj and Sugam for dealers with turnover less than 5 Crore.

Now only one monthly return GST RT-1 need to be filed by 20th of next month for dealers with turnover exceeding 5 crores. While dealers with turnover lesser than Rs.5 Crore, can opt for quarterly return i.e. Sahaj in case supplies are only of B2C nature or Sugam in case there are supplies constitute of both B2B and B2C nature.

Two annexures GST ANX-1 and ANX-2 are proposed in GST RT-1. GST

For outward supplies:-
ANX-1will capture the details of outward supplies. Invoice can be added either online or through offline tool specifically provided by GSTN to taxpayers.

For inward supplies:-
ANX-2 shall be auto populated based on ANX-1 of suppliers from whom goods or services have been received by the taxpayer during the period of return (who shall be similarly uploading their own ANX1 in GST RT-1). This is based on the concept that sale of dealer A to dealer B, is purchase of dealer B from dealer A.

Matching of Invoices:
Users of new returns shall also be provided with a facility to generate their own purchase register by entering the inward supplies either manually or through importing csv or excel files.

Automated facility of matching purchase register (own data) and ANX-2 auto-populated entries is provided. All matched invoices are separately filtered and shall be deemed as accepted if nothing done till the date of filing of return. Once an entry is accepted it is locked and cannot be altered by supplier. Extra or unmatched entries are clearly reflected.

Unmatched invoices or entries are filtered either as 'rejected' or 'pending'. Rejected invoices either do not relate to dealer or where basic data i.e. GSTIN is wrong. ITC on rejected invoices cannot be claimed.

Invoices can be kept pending for next two months after which they either have to be accepted or rejected.During this extended period, amendments can be made at the suppliers end and corrected invoices then can be accepted.

Invoices which are not either marked up to the date of filing of this return shall automatically be deemed as 'accepted'.

There can be instances where invoices have not been uploaded by the supplier and as such are not populated in ANX-2 need to be reported. Dealer can ask the supplier to upload such invoices which can be done up to next two months, failure to do so will result in denial of ITC.

Note that uploading of invoice does not mean uploading of scanned copy of invoice, instead it means capturing of 7 basic fields i.e.
(1)GSTIN,
(2)Type of Invoice,
(3)Invoice number,
(4)Invoice Date,
(5) Total Taxable Value
(6)Total tax amount (sum of all GST components)
(7) Tax amount head wise

ANNUAL RETURN:

Who is required to file an annual return
Generally, all taxpayers are required to file the return with certain exceptions such as taxpayers who have obtained registration as:

'Casual Taxable Persons' or 'Non-resident taxable persons' like exhibitors
'Input service distributors' to distribute the input tax credit of services that are invoiced in one location however, are to be used in different States (for instance- distribution of input tax credit pertaining to advertisement services invoiced in one State, however, is used in other States)

Person liable for deduction of tax at source. The Government has not implemented the deduction of tax at source related provisions.

What is the format of the return

As per the GST Rules, various forms have been prescribed for the purpose of return, depending upon the categories of the tax payers, which are as follows:

Category	Return (GSTR Form)
Composition Dealer	9A
E-com operator deducting tax	9B
Others (where turnover for all states put together exceeds Rs.2 Crore	9C
Others where turnover<Rs.2 Crore	9

The Government had to suspend filings such as GSTR 2 and GSTR 3 and come up with a simplified summary return GSTR 3B. Efforts are underway to finalize the contents of the annual return with the dual purpose of achieving simplicity and comprehensiveness. The return format was supposed to be taken up during the last Council meeting on 31 July, however, no decision was taken. Once the Council approves the format, it may be placed for the stakeholder consultation.

What is the deadline for filing the return?

Annual return is required to be filed on or before December 31, for the financial year just preceeding. For instance for the financial year 2018-19 (transactions undertaken during July 18 to Mach 19), the last date for filing is December 31, 2019.

Contents of Invoice

All invoices are required to contain information relating to your transaction. These include:

Unique GST identifier or GSTIN of the seller and buyer
A unique code for your product or service — the SAC or HSN code.
Transaction details including its brief description, value, and applicable taxes
Date when the transaction was carried out
The location for the transaction
Invoice number
Name and address of the recipient
Rate and amount of taxes, that is, CGST, SGST or IGST
Whether tax is payable on reverse charge basis
Signature of the supplier

Manner of Issuing Invoice

All businesses registered under the GST act are required to create invoices for every transaction. Mandates related to invoicing differ depending on your business offering.

If business deals in goods, two copies of the invoice are required when you move goods.
If business deals in services, three copies of the invoice are required. These invoices must be issued within 30 days after delivering the service.
the invoice must indicate taxes applicable to the transaction. One or more among the SGST, CGST, and IGST taxes implemented at the state, central, and integrated levels may be mentioned.
Completed invoices are uploaded to the GST network.

Certain business transactions are exempted from raising invoices. These include:

When a reverse charge is involved
When you move your products to different locations for the same business
When your buyer is not registered under GST and does not request an invoice. In such cases, a consolidated invoice suffices.

Uploading and Matching of Invoices

GST is a tax on supply of goods and services. The amount of tax is dependent on value of supply of goods and services. Remember that Value of supply of goods and services is represented by invoices

Thus to calculate, verify and assess tax amount one has to have the invoices. Under GST every information flow has to take place in digital mode, therefore physical invoices are not accepted for information (even their scanned copy is not used) instead required details* like Invoice number, date, GSTIN of seller and buyer, HSN code, Value, Tax rate, Tax amount, and Invoice value are instead uploaded.

Major points with regards to uploading of invoices:

(i) Invoices to be uploaded can either be purchase invoices (inward supply) or sale invoices(outward supply)

(ii) Sale invoices are needed to assess output tax liability while Purchase invoices are needed for input tax credit.

(iii) Uploading of invoice can take place either in

(a) on-line real time environment mode at the website of common portal i.e. www.gst.gov.in or

(b) in off-line mode by uploading required details* in prescribed file formats to common portal

** please note that services of GSP's and various software/utilities for automated uploading invoices in prescribed formats can be availed to meet the challenge of large number of invoices.

(iv) Tax-payer can upload invoices any number of times during the period starting with the first day of tax period and ending on the last date by which the prescribed return is required to be filed.

Matching of Invoices:

Transactions for products or services offered by a business are represented in an invoice and serve as the base document establishing supply of goods or services under the GST law. Amount of tax liability and GST benefits i.e. ITC claims are entirely based on the accuracy of invoices presented by business.

To assess the accuracy of tax liability, taxable supplies made by a business must match with the taxable purchases made by various buyer(s) of such supplies. The opposite of this is also true.

The government included invoice matching as a distinct feature under GST. This was done to ensure a high level of integration between the buyer and the seller. Invoice matching helps smooth flow of information and accuracy in the validation of transactions. Tax compliance is its primary rationale. It also serves as the back-bone to the process of input tax credit claims from the buyer.

Matching Process

1.The matching process starts with the supplier filing form GSTR-1 for the supplies made by him/her. GSTR – 1 is a monthly return of outward supplies. Basically, it is a return showing all the sales transactions of a business.

2.Once the supplier files outward supplies in GSTR – 1, the particulars for inward supplies get auto-populated in GSTR – 2A of the buyer. GSTR – 2A is a read only document that contains all the purchase transactions of business. This is an auto – generated document which is for the information purpose only. All the particulars in GSTR – 2A are same as the ones in GSTR – 2.

3.GSTR – 2 is a monthly return of inward supplies, which the registered person has to file by either
(i) accepting the invoices so auto-populated
(ii) rejecting the invoices so auto-populated
(iii)Adding additional invoices which are not auto-populated but through which supplies have been received. Thus, it shows all the purchase transactions of a business and is the form that can be edited by the buyer in case of any discrepancy in the details filed in GSTR – 1 by the supplier. Hence, through GSTR-2, the buyer furnishes the final details of his inward supplies.

4.Now, based on the Form GSTR-2 of the buyer, the particulars of outward supply as validated by the buyer would be made available for the supplier. Such particulars get auto-populated in GSTR – 1A for the supplier. The supplier may accept such details to update and finalize his Form GSTR-1 submitted earlier.
Finally, the matching of ITC would be done only after both the supplier and recipient file their monthly returns. This monthly return is filed in Form GSTR-3.

5. Un-matched invoices, which both or either of the supplier or the recipient reject need to be reconciled and corrected in later returns. This process goes on.

Note that presently only summary return under Form GSTR-3B is being fled in place of GSTR-3. This arrangement is also proposed to be replaced by new system w.e.f. from 01/04/2020

Some important issues under return filing:

What is the purpose of returns?

Mode for transfer of information to tax administration;
Compliance verification program of tax administration;
Finalization of the tax liabilities of the taxpayer within stipulated period of limitation; to declare tax liability for a given period;
Providing necessary inputs for taking policy decision;
Management of audit and anti-evasion programs of tax administration.

Who needs to file Return in GST regime?

Every person registered under GST will have to file returns in some form or other. A registered person will have to file returns either monthly (normal supplier) or quarterly basis (Supplier opting for composition scheme). An ISD will have to file monthly returns showing details of credit distributed during the particular month. A person required to deduct tax (TDS) and persons required to collect tax (TCS) will also have to file monthly returns showing the amount deducted/collected and other details as may be prescribed. A non-resident taxable person will also have to file returns for the period of activity undertaken.

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.

Is the scanned copy of invoices to be uploaded along with GSTR-1?

No scanned copy of invoices is to be uploaded. Only certain prescribed fields of information from invoices need to be uploaded.

Whether all invoices will have to be uploaded?

No. It depends on whether B2B or B2C plus whether Intra-state or Inter-state supplies.
For B2B supplies, all invoices, whether Intra-state or Inter- state supplies, will have to be uploaded. Why So? Because ITC will be taken by the recipients, invoice matching is required to be done.
In B2C supplies, uploading in general may not be required as the buyer will not be taking ITC. However still in order to implement the destination based principle, invoices of value more than Rs.2.5 lacs in inter-state B2C supplies will have to be uploaded. For inter-state invoices below Rs. 2.5 lacs and all intra-state invoices, state wise summary will be sufficient.

Whether description of each item in the invoice will have to be uploaded?

No. In fact, description will not have to be uploaded. Only HSN code in respect of supply of goods and Accounting code in respect of supply of services will have to be fed. The minimum number of digits that the filer will have to upload would depend on his turnover in the last year.

Whether value for each transaction will have to be fed? What if no consideration?

Yes. Not only value but taxable value will also have to be fed. In some cases, both may be different.
In case there is no consideration, but it is supply by virtue of schedule 1, the taxable value will have to be worked out as prescribed and uploaded.

Can a recipient feed information in his GSTR-2 which has been missed by the supplier?

Yes, the recipient can himself feed the invoices not uploaded by his supplier. The credit on such invoices will also be given provisionally but will be subject to matching. On matching, if the invoice is not uploaded by the supplier, both of them will be intimated. If the mismatch is rectified, provisional credit will be confirmed. But if the mismatch continues, the amount will be added to the output tax liability of the recipient in the returns for the month subsequent to the month in which such discrepancy was communicated.

Does the taxable person have to feed anything in the GSTR-2 or everything is auto- populated from GSTR-1?

While a large part of GSTR-2 will be auto-populated, there are some details that only recipient can fill like details of imports, details of purchases from non-registered or composition suppliers and exempt/non-GST/nil GST supplies etc.

What if the invoices do not match? Whether ITC is to be 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, then such mismatch shall be intimated to the supplier. 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, the ITC availed by the recipient would be added to his output tax liability, in short, all mismatches will lead to proceedings if the supplier has made a supply but not paid tax on it.

What will be the legal position in regard to the reversed input tax credit if the supplier later realizes the mistake and feeds the information?

At any stage, but before September of the next financial year, supplier can upload the invoice and pay duty and interest on such missing invoices in his GSTR-3 of the month in which he had earlier failed to upload the invoice. The recipient shall be eligible to reduce his output tax liability to the extent of the amount in respect of which the supplier has rectified the mis-match. The interest paid by the recipient at the time of reversal will also be refunded to the recipient by crediting the amount in corresponding head of his electronic cash ledger.

What is the special feature of GSTR-2?

The special feature of GSTR-2 is that the details of supplies received by a recipient can be auto populated on the basis of the details furnished by the counterparty supplier in his GSTR-1.

Do tax payers under the composition scheme also need to file GSTR-1 and GSTR-2?

No. Composition tax payers do not need to file any statement of outward or inward supplies. They have to file a quarterly return in Form GSTR-4 by the 18th of the month after the end of the quarter. Since they are not eligible for any input tax credit, there is no relevance of GSTR-2 for them and since the credit of tax paid under Composition Levy is not eligible, there is no relevance of GSTR-1 for them. In their return, they have to declare summary details of their outward supplies along with the details of tax payment. They also have to give details of their purchases in their quarterly return itself, most of which will be auto populated.

Do Input Service Distributors (ISDs) need to file separate statement of outward and inward supplies with their return?

No, the ISDs need to file only a return in Form GSTR- 6 and the return has the details of credit received by them from the service provider and the credit distributed by them to the recipient units. Since their return itself covers these aspects, there is no requirement to file separate statement of inward and outward supplies.

How does a taxpayer get the credit of the tax deducted at source on his behalf? Does he need to produce TDS certificate from the deductee to get the credit?

Under GST, the deductor will be submitting the deductee wise details of all the deductions made by him in his return in Form GSTR-7 to be filed by 10th of the month next to the month in which deductions were made. The details of the deductions as uploaded by the deductor shall be auto populated in the GSTR-2 of the deductee. The taxpayer shall be required to confirm these details in his GSTR-2 to avail the credit for deductions made on his behalf. To avail this credit, he does not require to produce any certificate in physical or electronic form. The certificate will only be for record keeping of the tax payer and can be downloaded from the Common Portal.

Which type of taxpayers need to file Annual Return?

All taxpayers filing return in GSTR-1 to GSTR-3, other than ISD’s, casual/non-resident taxpayers, taxpayers under composition scheme, TDS/TCS deductors, are required to file an annual return. Casual taxpayers, non- resident taxpayers, ISDs and persons authorized to deduct/collect tax at source are not required to file annual return.

Is an Annual Return and a Final Return one and the same?

Annual Return has to be filed by every registered person paying tax as a normal taxpayer. Final Return has to be filed only by those registered persons who have applied for cancellation of registration. The Final return has to be filed within three months of the date of cancellation or the date of cancellation order.

If a return has been filed, how can it be revised if some changes are required to be made?

In GST since the returns are built from details of individual transactions, there is no requirement for having a revised return. Any need to revise a return may arise due to the need to change a set of invoices or debit/ credit notes. Instead of revising the return already submitted, the system will allow changing the details of those transactions (invoices or debit/credit notes) that are required to be amended. They can be amended in any of the future GSTR- 1/2 in the tables specifically provided for the purposes of amending previously declared details.

How can taxpayers file their returns?

Taxpayers will have various modes to file the statements and returns. Firstly, they can file their statement and returns directly on the Common Portal online. However, this may be tedious and time consuming for taxpayers with large number of invoices. For such taxpayers, an offline utility will be provided that can be used for preparing the statements offline after downloading the auto populated details and uploading them on the Common Portal. GSTN has also developed an ecosystem of GST Suvidha Providers (GSP) that will integrate with the Common Portal.

What precautions, a taxpayer is required to take for a hassle free compliance under GST?

One of the most important things under GST will be timely uploading of the details of outward supplies in Form GSTR-1 by 10th of next month. How best this can be ensured will depend on the number of B2B invoices that the taxpayer issues. If the number is small, the taxpayer can upload all the information in one go. However, if the number of invoices is large, the invoices (or debit/ credit notes) should be uploaded on a regular basis. GSTN will allow regular uploading of invoices even on a real time basis. Till the statement is actually submitted, the system will also allow the taxpayer to modify the uploaded invoices. Therefore, it would always be beneficial for the taxpayers to regularly upload the invoices. Last minute rush will make uploading difficult and will come with higher risk of possible failure and default. The second thing would be to ensure that taxpayers follow up on uploading the invoices of their inward supplies by their suppliers. This would be helpful in ensuring that the input tax credit is available without any hassle and delay. Recipients can also encourage their suppliers to upload their invoices on a regular basis instead of doing it on or close to the due date. The system would allow recipients to see if their suppliers have uploaded invoices pertaining to them. The GSTN system will also provide the track record about the compliance level of a tax payer, especially about his track record in respect of timely uploading of his supply invoices giving details about the auto reversals that have happened for invoices issued by a supplier. The Common Portal of GST would have pan India data at one place which will enable valuable services to the taxpayers. Efforts are being made to make regular uploading of invoices as easy as possible and it is expected that an enabling eco- system will be developed to achieve this objective. Taxpayers should make efficient use of this ecosystem for easy and hassle free compliance under GST.

Is it compulsory for a taxpayer to file return by himself?

A registered taxpayer can also get his return filed through a Tax Return Preparer, duly approved by the Central or the State tax administration.

What is the consequence of not filing the return within the prescribed date?

A registered person who files return beyond the prescribed date will have to pay late fees of rupees one hundred for every day of delay subject to a maximum of rupees five thousand. For failure to furnish Annual returns by due date, late fee of Rs. One hundred for every day during which such failure continues subject to a maximum of an amount calculated at a quarter percent [0.25%] of his turnover in a state, will be levied.

What happens if ITC is taken on the basis of a document more than once?

In case the system detects ITC being taken on the same document more than once (duplication of claim), the amount of such credit would be added to the output tax liability of the recipient in the return. [section 42(6)]

Whether the amount of credit detected by the system on account of mis-match between GSTR-1 and GSTR-2 and recovered as output tax can be reclaimed?

Yes, once the mismatch is rectified by the supplier by declaring the details of the invoices or debit notes, as the case may be, in his valid return for the month/quarter in which the error had been detected. The said amount can be reclaimed by way of reducing the output tax liability during the subsequent tax period. [section 42(7)]. Similar provisions have also been made in Section 43 of the Act in respect of the credit notes issued by the supplier.

Goods and Services Tax (GST), has been implemented by most countries in the world. But

the form of tax varies from country to country. GST in India differs from other countries in two

important aspects; firstly, the levy of Integrated GST on interstate supply of goods or services or both, secondly, the requirement for matching the claim of ITC. The matching of ITC procedure would not only ensure that due revenue is transferred to importing state but, would also ensure that the importing taxable person can claim the ITC that he would be entitled to. The procedure thus sits of the heart of Indian GST. The matching of ITC under GST is an extended version of the current structure being followed for value added tax by some of the states in India.

This concept is likely stimulate the integration between suppliers and their vendors in the industry to ensure that there are minimal discrepancies (inter alia goods in transit, difference in invoice booking), with respect to the claim of ITC. Also, since impact of incorrect details filed by the vendor will be faced by the recipient; there would be a need for effective vendor management. Implementation of GST inevitably may create an interdependent ecosystem

for businesses and in the long run ensure better compliance. It is likely to substantially reduce work of audit by the tax authorities.

Every purchase invoice in GST regime must reconcile with sale invoice of the supplier on GST common portal for availing input tax credit. For many businesses, this will also mean a complete overhaul of IT systems and major re-engineering work. Many small and medium businesses will, for the first time, use technological tools for bookkeeping and tax

compliance purpose. We can easily call this as one of the biggest change that businesses are going to witness. It also calls for patience and change management from the business community for smooth transition.

What Is Invoice Matching?

Matching all supplies taxable & Nontaxable, bought by a buyer and supplied by a supplier is known as Invoice Matching. According to finance minister, “It is through the invoice matching and automated return mechanism that the government can ensure eligible input tax credit is accurately transferred between the states”. GSTN is working towards the GST web application which is hosted on the common portal to make invoice matching easy.

How does Invoice Matching work?

Invoicing Matching is very important because, under the GST law, the input tax credit of purchased services and goods will be available only when the inward supply details filed in buyer’s GSTR-2 return matches the outward supplies details filed in supplier’s GSTR-1.This interlink has been created by auto-population of the data filed in supplier’s GSTR -1 and buyer’s GSTR -2. Hence, if these two fields do not match then the buyer will be unable to claim the input tax credit of paid taxes of the purchased goods or services or both. Compliance rating is an incentive for businesses to file returns on time and the related compliance. Basically, how invoice matching work is by matching all the taxable GST supplies with all the taxable supplies received by the buyer. When the supplier files form GSTR1, the recipient can identify the purchase with the help of auto populated form GSTR2A. After necessary modifications are done, the recipient’s electronic credit ledger will be credited with the input credit on a provisional basis. If any modifications or additions are done to the GSTR-2 form, it will be reflected on the GSTR-1A Form for the supplier. When the Form GSTR-3 (Monthly Returns Form) is filled by the supplier the input credit becomes available; payment tax should also be considered while filling the monthly returns form.

Why do We Need an IT System under GST?

The government is on a spree of economic reforms and we have witnessed in recent times how various initiatives have been carried out; demonetization being one such reform. Continuing the reforms agenda, they have now come up with the concept of invoice matching under Goods and Services. This invoice matching is possible only when both the buyer and the supplier are tightly integrated through an information system, which will enable a seamless flow of information and fool-proof validations. Thus it becomes highly critical for businesses to be highly compliant on a real-time basis and thus needs to have a proper system in

place to support it.

Matching Process:

Form of Return	Person required to furnish	Details required to be furnished
GSTR- 1	Supplier	Prescribed particulars in respect of outward supply
GSTR- 2A	Autopopulated for the recipient	Basis the Form GSTR-1 of supplier, the particulars of inward supply would be auto populated
GSTR- 2	Recipient	Recipient shall modify,delete or include the details of inward supply basis the auto-populated from GSTR-2A and furnish the final details of his inward supply
GSTR- 1A	Auto populated for the supplier	Basis the form GSTR-2 of recipient, the particulars of outward supply as validated by the recipient would be made available for the supplier ,which he may accept to update and finalize his earlier submitted Form GSTR-1
GSTR- 3 (presently GSTR 3B)	Supplier and recipient	Matching of ITC would be done only after the due date for furnishing the monthly return

The claim of ITC would be treated as matched

(a) In respect of the invoices and debit note in FORM GSTR-2 that were acknowledged by the recipient on the premise of the FORM GSTR-2A, without amendment and the corresponding supplier furnishing a valid return.

(b) Where the amount of ITC claimed by the recipient is equal to or less than the output tax

paid on such tax invoice or debit note by the corresponding supplier.

With a specific end goal to check for duplication of claim of ITC, the details of every inward supply furnished by the taxable person (i.e. the “recipient” of goods and/or services) in form GSTR-2 shall be matched:

a) With the relating points details of outward supply furnished by the corresponding taxable

person (i.e. the “supplier” of goods and/ or services) in his valid return for the same taxperiod or any preceding tax period and

b) With the additional duty of customs i.e. IGST paid by the recipient in respect of goodsimported.

Therefore, the most important requirement for carrying out matching of ITC is that the suppliermust have filed his valid returns for the corresponding or preceding tax period and/or the IGST has been paid by the recipient if there would arise an occurrence of import of product.

Mismatching of ITC

In terms of the provisions of Model GST law; the reversal of ITC arises when:

(a) There is excess claim of ITC by the recipient as against the tax pronounced by the supplier,

b) The outward supply is not declared by the Supplier, or

This mechanism of matching mismatching seems to be highly motorized and thus all the returns of selling brokers as well as buying dealer will be connected with each other, so that any change on one side will be correspondingly reflected on the other side. Therefore, both the seller as well as purchaser is required to be very careful in filing the returns and in uploading sale/purchase details. Even a slight mismatch in the details will lead to unnecessary demands and may also lead to litigation for recovery of tax.