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Chapter 1
Basics of GST
2 | GST – The Businessman’s Guide
After implementation of GST, all the indirect taxes will be subsumed in it. The
taxes which are subsumed by GST are:
VAT/Sales Tax
Entertainment Tax
Central Sales Tax
Octroi and Entry Tax
Purchase Tax
Luxury Tax
Tax on Lottery
State Cesses and Surcharges
Basics of GST| 3
GST is a consumption based tax; it means that the state in which the final sale
to consumer is made is entitled to get the tax. GST would apply to all goods
other than alcohol, crude petroleum, motor spirit, diesel, aviation turbine fuel
and natural gas.
Chapter 2
When learning about the GST, the first question comes to almost every person
is: What is IGST, CGST, UTGST and SGST. On one hand it is said that
almost all indirect taxes are merged into a single tax called Goods and Service
Tax and on other hand it is stated that there will be four taxes as IGST, CGST,
UTGST and SGST.
Since GST subsumed both indirect taxes of central government (excise duty,
service tax, custom duty etc) and state governments (VAT, Luxury tax
etc), both of the government now depends on GST for their indirect tax
revenue. Therefore the GST rate is composed of two rates, one of CGST and
one of SGST. Therefore while making intra state sale (i.e. within same state),
CGST collected will go to the central government and SGST collected will go
the respective state government in which sale is made.
For e.g.:- A dealer in Maharashtra sold goods to the consumer worth Rs.
10,000. The GST rate is 18% comprising of CGST rate of 9% and SGST rate
of 9%, in such case the dealer collects Rs. 1800 and Rs. 900 will go to the
central government and Rs. 900 will go to the Maharashtra government.
What is IGST?
GST is a consumption based tax i.e. the tax should be received by the state in
which the goods or service are consumed, not by the state in which such goods
are manufactured.
IGST is designed to ensure seamless flow of input tax credit from one state to
another. It is designed so that a state doesn’t have to deal with every other
Understanding IGST, CGST, SGST & UTGST| 7
state to settle the tax amounts and a state has to deal with only centre
government.
Therefore if inter-state sales (i.e. from one state to another state) are made then
seller will charge IGST in place of CGST + SGST.
For ex: A dealer in Maharashtra sold goods to its dealer in Rajasthan worth
Rs. 1,00,000. The GST rate is 18% comprising of CGST rate of 9% and SGST
rate of 9%, in such case the dealer has to charge Rs. 18,000 as IGST.
The exporting State will transfer to the Centre the credit of SGST used in
payment of IGST. This way the exporting state will not get any revenue from
tax.
The Centre will transfer to the importing State the credit of IGST used in
payment of SGST. This way the importer’s state will get the full amount of
SGST.
This way any tax earned by exporting state in such goods in transferred to the
importing state. And the net result is that the Centre government got his share
and importer’s state gets his.
8 | GST – The Businessman’s Guide
For ex:
Goods sold by a manufacturer (A) to a trader (B) in same state i.e. Rajasthan
for Rs. 100. Now the goods are sold by B to a trader in Gujarat i.e. C for Rs.
175 and finally sold by C to the consumer D. Assuming CGST @ 9% and
SGST @ 9%.
Understanding IGST, CGST, SGST & UTGST| 9
* Any credit standing for IGST should be first utilized for payment of CGST
and then for payment of SGST.
This will complete the procedure on behalf of the tax payers but as you can see
from the above example the Rajasthan Government gets Rs. 9 as tax when he
was not eligible to receive it. Because the goods finally consumes in Gujarat
and GST is a consumption based tax. And also Gujarat and Central
government should receiveRs. 27 (300*9%) as tax each while they have
received only Rs. 22.5 each. Therefore following transaction takes place as
defined above.
The exporting State (Rajasthan) will transfer to the Centre the credit of SGST
used in payment of IGST which is Rs. 9. (Transaction B to C).
10 | GST – The Businessman’s Guide
The Centre will transfer to the importing State (Gujarat) the credit of IGST
used in payment of SGST which is Rs. 4.5 (Transaction C to D).
Chapter 3
Registration
12 | GST – The Businessman’s Guide
may be, shall be liable to be registered with effect from the date of such
transfer or succession.
q. In case of amalgamation or demerger of two or more companies by order
of High Court or Tribunal, the transferee shall be liable to be registered,
where required, with effect from the date on which the Registrar of
Companies issues a certificate of incorporation.
Other Points-
A farmer shall not be considered as a taxable person and shall not be liable
to take registration.
The supplier shall not be liable to registration if his aggregate turnover
consists of only goods and/or services which are not liable to tax or wholly
exempt under this Act.
Provided that if the person, other than an Input Service Distributor, is
registered under an earlier law, it shall not be necessary for him to apply
for fresh registration under this section and he shall follow the procedure as
may be prescribed in this behalf.
A person doing more than one business in a state may obtain separate
registration for each business. However, he is not compulsorily required to
do so. If he makes separate registration then all his firms are taken as
separate firms for all purpose. And they have to pay tax and issue invoice
for supply of goods/service between themselves.
If a person operates in more than one states than such person is required to
register separately in every such state. Every such establishment will be
treated as distinct person.
There is no option for centralized registration, registration needs to be done
state wise
Where a person who is liable to be registered under this Act fails to obtain
registration, the proper officer may proceed to register such person in the
manner as may be prescribed.
Aggregate Turnover is the total value of following amounts of a person
having same PAN on all India basis
(i) the value of supplies on which tax is levied on reverse charge basis
(ii) supply of goods by job worker to the principal
(iii) the value of inward supplies
(iv) IGST, CGST, SGST
Therefore if an individual does two different business and its total turnover
exceeds the threshold limit then such person has to compulsorily require to
register. And a person who is working in two states and his total turnover
exceed the threshold limit also required to register in both such states.
The liability to pay tax, however, will start only when the registered person
reaches a threshold limit of turnover (Excluding cases where the threshold is
not applicable).
Voluntarily Registration
A person has to apply for registration within 30 days from the date on which
he becomes liable to registration. A casual taxable person or a non-resident
taxable person shall apply for registration at least five days prior to the
commencement of business.
Where the application for registration has been submitted within thirty days
from the date on which the person becomes liable to registration, the effective
Registration| 15
Where an application for registration has been submitted by the applicant after
thirty days from the date of his becoming liable to registration, the effective
date of registration shall be the date of grant of registration. In case of
suomoto registration, i.e. taking registration voluntarily while being within the
threshold exemption limit for paying tax, the effective date of registration shall
be the date of the order of registration.
TAN number is sufficient for persons who are required to deduct TDS under
Section 51, they are not required compulsorily to have PAN.
A valid passport is required for registration by Non resident persons.
Persons who are not registered under GST are not allowed to collect GST and
are not allowed to take Input Tax Credit (ITC) of GST paid by him. Therefore
if an unregistered person purchases goods from a registered dealer and pays
GST then he cannot claim GST as well as cannot pass on the GST to another
dealer to which he sells goods/services.
Casual taxable person and non-taxable person has to make an advance deposit
of tax at the time of submitting an application for registration of an amount
equivalent to estimated tax liability. If extension of time is sought then
additional amount of estimated tax for such extended time is to be deposited.
Amendment of Registration
Every registered taxable person shall inform the proper officer of any changes
in the information previously furnished by him. The proper officer may accept
or reject the amendments. The proper officer shall not reject the request for
amendment in the registration particulars without giving a notice to show
cause and without giving the person a reasonable opportunity of being heard.
No separate information is required to be furnished for the SGST or CGST or
IGST as there is only single registration for all three.
Cancellation of Registration
a person under composition scheme has not furnished returns for three
continuous quarters
a person not under composition scheme has not furnished returns for six
continuous months
any person who has taken voluntary registration and not commenced
business within six months from the date of registration
a person who has contravened such provisions of the Act or the rules made
there under as may be prescribed
registration has been obtained by means of fraud, wilful misstatement or
suppression of facts
The proper officer shall not cancel the registration without giving a notice to
show cause and without giving the person a reasonable opportunity of being
heard.
Provided that in case of capital goods, the taxable person shall pay an amount
equal to the input tax credit taken on the said capital goods reduced by the
percentage points as may be prescribed in this behalf or the tax on the
transaction value of such capital goods under sub-section (1) of section 15,
whichever is higher.
Registration| 19
(2) The proper officer may, in the manner and within such period as may be
prescribed in this behalf, by way of an order, either revoke cancellation of the
registration or reject the application for revocation for good and sufficient
reasons.
(3) The proper officer shall not reject the application for revocation of
cancellation of registration without giving a notice to show cause and without
giving the person a reasonable opportunity of being heard.
(4) Revocation of cancellation of registration under the CGST Act / SGST Act
shall be deemed to be a revocation of cancellation of registration under the
SGST Act / CGST Act.
UN Bodies
All UN bodies Consulate or Embassy of foreign countries and any other class
of persons so notified would be required to obtain a unique identification
number (UIN) from the GST portal. The structure of the said ID would be
uniform across the States in conformity with GSTIN structure and the same
20 | GST – The Businessman’s Guide
will be common for the Centre and the States. This UIN will be needed for
claiming refund of taxes paid by them and for any other purpose as may be
prescribed in the GST Rules. The taxable supplier supplying to these
organizations is expected to mention the UIN on the invoices and treat such
supplies as supplies to another registered person (B2B) and the invoices of the
same will be uploaded by the supplier.
Government Organisations
A unique identification number (ID) would be given by the respective state tax
authorities through GST portal to Government authorities / PSUs not making
outwards supplies of GST goods (and thus not liable to obtain GST
registration) but are making inter-state purchases.
GST Rates| 21
Chapter 4
GST Rates
22 | GST – The Businessman’s Guide
GST Rates
No tax
No tax will be imposed on items like fresh meat, fish chicken, eggs, milk,
butter milk, curd, natural honey, fresh fruits and vegetables, flour, besan,
bread, prasad, salt, bindi. Sindoor, stamps, judicial papers, printed books,
newspapers, bangles, handloom etc.
5%
Items such as fish fillet, cream, skimmed milk powder, branded paneer, frozen
vegetables, coffee, tea, spices, pizza bread, rusk, sabudana, kerosene, coal,
medicines, stent, lifeboats will attract tax of 5 %.
12%
Frozen meat products , butter, cheese, ghee, dry fruits in packaged form,
animal fat, sausage, fruit juices, Bhutia, namkeen, Ayurvedic medicines, tooth
powder, agarbatti, colouring books, picture books, umbrella, sewing machine,
and cellphones will be under 12 % tax slab.
18%
Most items are under this tax slab which include flavoured refined sugar,
pasta, cornflakes, pastries and cakes, preserved vegetables, jams, sauces,
soups, ice cream, instant food mixes, mineral water, tissues, envelopes,
tampons, note books, steel products, printed circuits, camera, speakers and
monitors.
28%
Chewing gum, molasses, chocolate not containing cocoa, waffles and wafers
coated with choclate, pan masala, aerated water, paint, deodorants, shaving
creams, after shave, hair shampoo, dye, sunscreen, wallpaper, ceramic tiles,
water heater, dishwasher, weighing machine, washing machine, ATM,
vending machines, vacuum cleaner, shavers, hair clippers, automobiles,
motorcycles, aircraft for personal use, and yachts will attract 28 % tax.
GST Rates| 23
Sr.
DESCRIPTION OF SERVICES GST RATE
No.
Services which are exempted under current Service Tax will continue to remain
exempted under GST as decided by GST Council.
Composition Scheme| 29
Chapter 5
Composition Scheme
30 | GST – The Businessman’s Guide
Goods and Services Tax is the largest indirect tax reform since independence.
The Government claims to make the flow of goods and legal compliance
easier. However monthly returns are required to be filed under GST which
will only increase the legal compliance as under the current vat system mostly
quarterly returns are required to be filed.
Only persons who deal in goods can opt for such scheme. Manufacturers
can also opt for composition scheme. Manufacturers of certain goods may
be kept outside this scheme by the council. Service providers are kept
outside the scope of the scheme. Although restaurants who does not serve
alcohol can opt for the composition scheme.
Persons whose Aggregate Turnover in the preceding financial year doesn’t
exceeds Rs. 50 lakh are only eligible under this scheme. Aggregate
turnover means aggregate value of all taxable and non taxable supplies,
exempt supplies and export of goods and/or services of a person having
same PAN. GST is not included in the aggregate turnover. So if an
individual open two firms and combined turnover is more than Rs. 50 lakh
then he cannot take composition scheme.
If a person wants to opt for the composition scheme then all of his firms
should opt for composition scheme. It is not allowed that some of his firms
are in composition scheme and some are not. If one of the firm becomes
ineligible for composition scheme then all other firms also becomes
ineligible.
Person should not make interstate sales of goods. Such person is only
allowed to make intra-state sales i.e. in the same state or union territory in
which firm is registered.
Person should not make sales through any e commerce portal like Amazon
or Flipkart.
Casual taxable person and non-resident taxable person cannot register
under composition scheme.
Composition Scheme| 31
The goods held in stock by person on 1st July 2017 have not been
purchased in the course of inter-State trade or commerce or imported from
a place outside India or received from his branch situated outside the State
or from his agent or principal outside the State.
Such limit of Rs. 50 lakh may be increased up to Rs. 1 crore by the GST
council.
The person ceases to be in composition scheme with effect from the day on
which his aggregate turnover during a financial year exceeds the specified
limit. If the person continues to pay tax under this scheme then he will be
liable for penalty as mentioned below.
If the officer founds that the person is not eligible to pay tax under this scheme
and continuing to pay tax under this scheme then the person is liable to pay tax
at normal GST rate and also a penalty equivalent to the tax payable. Proper
officer should issue notice in Form GST CMP-05 to such defaulting person
to show cause within fifteen days of the receipt of such notice as to why
option to pay tax under composition scheme should not be denied. The person
has to reply in Form GST CMP-06 and the proper officer has to issue order
under Form GST CMP-07 within 30 days of such reply.
Such persons shall not be entitled to input tax credit. Net tax payable =
Turnover multiplied by Composition Rate
Such person also breaks the input credit chain so it also cannot pass the
input tax credit. In other words if another dealer purchases goods/services
from composition dealer then such dealer also cannot take input tax credit.
So composition scheme is not suitable for wholesalers and B2B businesses.
Such person cannot charge composition tax separately in the invoice
issued.
It is not stated in GST Act that person under composition scheme cannot
buy goods or services from outside state. In present scenario a person under
32 | GST – The Businessman’s Guide
composition scheme cannot purchase goods from another state. This point
needs more clarification.
Such person cannot make sales through any e commerce portal like
Amazon or flipkart.
Such person is liable to pay tax on purchases of goods or services from un-
registered persons.
Such person should mention the words “composition taxable person, not
eligible to collect tax on supplies” at the top of the bill of supply issued by
him.
Such person shall mention the words “composition taxable person” on
every notice or signboard displayed at a prominent place at his principal
place of business and at every additional place or places of business.
Manufacturers 1%
Restaurants 2.5%
Due date for return filing and also for GST payment is 18 days from the end of
the quarter. Such quarterly return is to be filed in Form GSTR-4 and the
details of input supplies will be made available in Form GSTR-4A.
Purchase Price 50 50
Cost 50 59
Margin 50 50
GST @ 18% 18
4. In the above example both dealers are enjoying a margin of Rs. 50 but the
final cost to customer is 9.33% less in case of sale by composite dealer.
34 | GST – The Businessman’s Guide
4. Heavy penalty
If the person is not eligible to register under composition scheme but
continue to do so then the officer may ask to deposit tax at standard rates
and penalty equal to tax. If person makes a mistake in following the
eligibility criteria then he may be liable for a very hefty penalty.
Persons who wants to pay tax under composition scheme has to file an
intimation in Form GST CMP-01 before 1st July 2017 although such form can
be also filed till 30th July 2017. If the form is filed after 1st July 2017 even
then the person should not collect tax and should issue bill of supply rather
than tax invoice.
And he also has to file Form GST CMP-03 within sixty days of the date from
which the option for composition levy is exercised. This form contains details
about details of stock, including the inward supply of goods received from
unregistered persons, held by him on the day preceding the date from which he
opts to pay tax under composition scheme.
Composition Scheme| 35
Procedure to opt
Any person who is registering directly under GST and wants to opt for
composition scheme has to opt such option given in Part B of Form GST
REG-01.
Any person who wants to opt composition scheme after registration has to file
Form GST CMP-02 before the commencement of the financial year for which
person wants to opt. And he also has to file Form GST ITC-03 within sixty
days from the commencement of the relevant financial year. Such intimations
should be filed only once at time of opting and not in all financial years.
The goods held in stock by him on start of financial year should not be
purchased from an unregistered person and if such purchases was made then
tax is to be paid on such stock.
The effective date for composition levy will be the beginning of the financial
year for which intimation is filed in Form GST CMP-02. In case person opts
for composition scheme at time of registration only the effective date will be
the date of registration. Such person should also take due care that if his
registration is not accepted under composition scheme then he may be liable to
pay tax at full rate for the sales already made.
The person who doesn’t satisfy any condition for eligibility under this scheme
has to pay tax at normal rates and issue tax invoice from the day such
condition ceases to be satisfied. He is also required to file an intimation for
withdrawal from the scheme in Form GST CMP-04 within seven days of such
date.
36 | GST – The Businessman’s Guide
The person who wants to withdraw from such scheme voluntarily has to file
Form GST CMP-04 before the date of such withdrawal.
Every person who has filed GST CMP-04 or has been issued order for
withdrawal of scheme under GST CMP-07 has to furnish GST ITC-
01 containing details of the stock of inputs and inputs contained in semi-
finished or finished goods held in stock by him on the date on which the
option is withdrawn or denied, within 30 days, from the date from which the
option is withdrawn or from the date of order passed in FORM GST CMP-07,
as the case may be.
Where the GST officer has reasons to believe that the registered person was
not eligible to pay tax under section 10 or has contravened the provisions of
the Act or these rules, he may issue a notice to such person in FORM GST
CMP-05 to show cause within fifteen days of the receipt of such notice as to
why option to pay tax under composition scheme should not be denied.
The person have to reply to the notice in Form GST CMP-06. The proper
officer has to issue an order in FORM GST CMP-07 within thirty days of
receipt of such reply, either accepting the reply, or denying the option to pay
tax under section 10 from the date of option or from the date of the event
concerning such contravention, as the case may be.
Composition Scheme| 37
GST Forms
Form No. Description
GST CMP-
Intimation/Application for withdrawal from composition Levy
04
GST CMP-
Notice for denial of option to pay tax under section 10
05
GST CMP-
Reply to the notice to show cause
06
GST CMP-
Order for acceptance / rejection of reply to show cause notice
07
Invoicing| 39
Chapter 6
Invoicing
40 | GST – The Businessman’s Guide
In a case where the supply of services ceases under a contract before the
completion of the supply, the invoice shall be issued at the time when the
supply ceases and such invoice shall be issued to the extent of the supply made
before such cessation.
(a) the original copy being marked as ORIGINAL FOR RECIPIENT; and
(b) the duplicate copy being marked as DUPLICATE FOR SUPPLIER.
(3) The serial number of invoices issued during a tax period shall be furnished
electronically through the Common Portal in FORM GSTR-1.
42 | GST – The Businessman’s Guide
In case of inter-State supplies, where the value of a supply does not exceed Rs.
2,50,000, a consolidated revised invoice may be issued separately in respect of
all recipients located in a State, who are not registered under the Act.
Such person also has to issue a consolidated tax invoice for such supplies at
the close of each day in respect of all such supplies.
(i) the rate of tax is not determinable, the tax shall be paid at the rate of
eighteen per cent.;
(ii) the nature of supply is not determinable, the same shall be treated as inter-
State supply
Refund Voucher
If after receiving of advance payment no supply is made and no tax invoice is
issued then the said registered
person may issue to the person who had made the payment, a refund voucher
against such payment.
A refund voucher shall contain the following particulars:
44 | GST – The Businessman’s Guide
Payment Voucher
A registered person who is liable to pay tax under sub-section (3) or
subsection (4) of section 9 shall issue a payment voucher at the time of making
payment to the supplier.
(a) where the due date of payment is ascertainable from the contract, the
invoice shall be issued on or before the due date of payment.
(b) where the due date of payment is not ascertainable from the contract, the
invoice shall be issued before or at the time when the supplier of service
receives the payment.
(c) where the payment is linked to the completion of an event, the invoice
shall be issued on or before the date of completion of that event.
46 | GST – The Businessman’s Guide
(a) supply of liquid gas where the quantity at the time of removal from the
place of business of the supplier is not known
(b) transportation of goods for job work
(c) transportation of goods for reasons other than by ay of supply
(d) such other supplies as may be notified by the Board
the consigner may issue a delivery challan, serially numbered not exceeding
sixteen characters, in one or multiple series, in lieu of invoice at the time of
removal of goods for transportation, containing the following details:
(5) Where the goods are being transported in a semi knocked down or
completely knocked down condition,
(a) the supplier shall issue the complete invoice before dispatch of the first
consignment
(b) the supplier shall issue a delivery challan for each of the subsequent
consignments, giving reference of the invoice
(c) each consignment shall be accompanied by copies of the corresponding
delivery challan along with a duly certified copy of the invoice
(d) the original copy of the invoice shall be sent along with the last
consignment
Gross weight
Name of consignor and consignee
Registration number of vehicle
Details of goods
Place of origin and destination
GSTIN of person liable for paying tax
Payment| 49
Chapter 7
Payment
50 | GST – The Businessman’s Guide
The payment made towards tax, interest, penalty, fee or any other amount by
internet banking, credit card, NEFT, RTGS or any other mode shall be
credited to electronic cash ledger of the person. The amount standing in a
person’s electronic cash ledger may be used for the payment of tax, interest,
penalty, fee or any other amount payable under this act.
Over the Counter payment (OTC) payment can be made through authorized
banks for deposits up to ten thousand rupees per challan per tax period, by
cash, cheque or demand draft. For payment above that amount the payment
should be made through digital mode only.
The restriction for deposit up to ten thousand rupees per challan in case of an
Over the Counter (OTC) payment shall not apply to deposit to be made by –
The amount Input Tax Credit (ITC) as filed by the person in his return shall be
credited to electronic credit ledger. The amount standing in electronic credit
ledger may be used for payment of tax only. A person upon noticing any
Payment| 51
self-assessed tax, and other dues related to returns of previous tax periods
self-assessed tax, and other dues related to return of current tax period
any other amount payable under the Act or the rules made there under
including the demand determined under section 73 or 74.
In case a person makes an undue or excess claim of input tax credit or undue
or excess reduction in output tax liability, he shall be liable to pay interest on
such excess claim or excess reduction at the rate which is 24% or less (Yet to
be decided)
GST PMT-
Electronic Tax liability register is maintained in this form
01
GST PMT-
Electronic credit ledger is maintained in this form
02
52 | GST – The Businessman’s Guide
GST PMT-
Order by proper officer to re-credit amount on rejection of refund
03
GST PMT-
Electronic cash ledger is maintained in this form
05
GST PMT-
Challan for payment of GST
06
GST PMT- Application when CIN is not generated or not communicated to common
07 Portal
Chapter 8
For e.g.- A trader purchases good worth Rs. 100 and pay tax of 10% on it.
And now this trader sold such goods at Rs. 150 and collect tax of Rs. 15 from
buyer. Now the trader has to pay Rs. 15 to government but he had already paid
Rs. 10, so this Rs. 10 is ITC of the trader and will be allowed as deduction
from tax payable and he has to pay net Rs. 5 as tax. Although availment of
ITC is subject to certain conditions as covered in this article.
Amount of Input Tax Credit on account of CGST shall first be utilized for the
payment of CGST then for payment of IGST. Such amount cannot be used for
payment of SGST or UTGST.
Amount of Input Tax Credit on account of SGST or UTGST shall first be
utilized for the payment of SGST or UTGST then for payment of IGST. Such
amount cannot be used for payment of CGST.
Input tax credit cannot be used for payment of interest, penalty, fees or any
amount payable under the act other than the GST in manner mentioned above.
Input Tax Credit| 55
Example
IGST CGST SGST
4. A person who has ceased to pay tax under composition scheme is entitled
to take credit of input tax in respect of inputs held in stock, inputs
contained in semi-finished or finished goods held in stock and on capital
goods on the day immediately preceding the date from which he ceases to
pay tax under composition scheme.
Under the points 2, 3 and 4 above, the input tax credit is allowed only for the
stock which is purchased in last one year from the aforementioned date. Such
person needs to file Form GST ITC-01 within 30 days of his becoming
eligible for availing input tax credit. Details furnished in the form is to be
certified by a practicing chartered accountant or cost accountant if the input
tax credit claimed is more than Rs. 2 lakhs.
2. annual return filed for relevant year (Filing date, not due date)
The person who obtains voluntary registration is entitled to take the input
tax credit of input tax on inputs in stock, inputs in semi finished goods and
finished goods in stock, held on the day immediately preceding the date of
registration.
Input tax credit is allowed only on purchases made for selling taxable or
zero rated goods or services. ITC is not allowed for purchases made for
exempted supplies.
The input tax credit of goods and / or service attributable to only
taxable supplies can be taken by registered taxable person. The
amount of eligible credit would be calculated in a manner to be
prescribed in terms of section 16(7) of the MGL read with GST ITC
Rules (yet to be issued). It is important to note that credit on capital
goods also would now be permitted on proportionate basis.
Where the goods against an invoice are received in lots or instalments, the
registered taxable person shall be entitled to take credit upon receipt of the
last lot or instalment.
Input tax credit of GST component of capital goods is not allowed if the
person has claimed depreciation in income tax act for GST component. In
other words, a person can either take input tax credit of GST on capital
goods or claim depreciation on tax component.
(a) motor vehicles and other conveyances except when they are used
(i) food and beverages, outdoor catering, beauty treatment, health services,
cosmetic and plastic surgery except where such inward supply of goods or
58 | GST – The Businessman’s Guide
Explanation 1.- For the purpose of this clause, the word “construction”
includes re-construction, renovation, additions or alterations or repairs, to the
extent of capitalization, to the said immovable property.
(e) goods and/or services on which tax has been paid under composition
scheme;
(f) goods and/or services used for personal consumption;
(g) goods lost, stolen, destroyed, written off or disposed of by way of gift or
free samples; and
stock and inputs contained in semi-finished or finished goods held in stock and
on capital goods, reduced by such percentage points as may be prescribed, on
the day immediately preceding the date of exercising of such option or, as the
case may be, the date of such exemption. After payment of such amount, the
balance of input tax credit, if any, lying in his electronic credit ledger shall
lapse.
Where a recipient fails to pay to the supplier of services, the amount towards
the value of supply of services along with tax payable thereon within a period
of 180 days from the date of issue of invoice by the supplier, an amount equal
to the input tax credit availed by the recipient shall be added to his output tax
liability, along with interest thereon. This rule doesn’t apply where the
recipient is liable to pay tax on reverse charge basis. Such person has to
furnish such details in From GSTR-2 for the month in which such period of
180 days lapse.
Input tax credit of tax component of capital goods is not allowed if the person
has claimed depreciation in income tax act for GST component. In other
words, a person can either take input tax credit of GST on capital goods or
claim depreciation on tax component.
If the taxable person sells such capital goods on which ITC had been taken
then such person is liable to pay GST of higher amount from the following
ITC taken on such capital goods less 5 percentage points per quarter of a year
or part thereof from the date of invoice
Sale price of capital goods multiplied by GST rate
Where refractory bricks, moulds and dies, jigs and fixtures are supplied as
scrap, the taxable person may pay tax on the transaction value of such goods
determined.
60 | GST – The Businessman’s Guide
If such goods are not received back by principal or supplied from place of job
worker within one year from the date of sending goods to job worker, then it
shall be deemed that such inputs had been supplied by the principal to the job-
worker on the day when the said inputs were sent out. This limit of one year is
increased to three years in case of capital goods.
Where the inputs are sent directly to a job worker, the period of one year or
three year shall be counted from the date of receipt of inputs by the job
worker.
This rule of deemed supply shall not apply to moulds and dies, jigs and
fixtures, or tools sent out to a job-worker for job-work.
(2) The Input Service Distributor may distribute the credit subject to the
following conditions, namely:––
(a) the credit can be distributed to the recipients of credit against a document
containing such details as may be prescribed;
(b) the amount of the credit distributed shall not exceed the amount of credit
available for distribution;
(c) the credit of tax paid on input services attributable to a recipient of credit
shall be distributed only to that recipient;
(d) the credit of tax paid on input services attributable to more than one
recipient of credit shall be distributed amongst such recipients to whom the
input service is attributable and such distribution shall be pro rata on the basis
of the turnover in a State or turnover in a Union territory of such recipient,
during the relevant period, to the aggregate of the turnover of all such
recipients to whom such input service is attributable and which are operational
Input Tax Credit| 61
(i) if the recipients of credit have turnover in their States or Union territories in
the financial year preceding the year during which credit is to be distributed,
the said financial year; or
(ii) if some or all recipients of the credit do not have any turnover in their
States or Union territories in the financial year preceding the year during
which the credit is to be distributed, the last quarter for which details of such
turnover of all the recipients are available, previous to the month during which
credit is to be distributed;
(b) the expression “recipient of credit” means the supplier of goods or services
or both having the same Permanent Account Number as that of the Input
Service Distributor;
(c) the term ‘turnover’, in relation to any registered person engaged in the
supply of taxable goods as well as goods not taxable under this Act, means the
value of turnover, reduced by the amount of any duty or tax levied under entry
84 of List I of the Seventh Schedule to the Constitution and entry 51 and 54 of
List II of the said Schedule.
Option once exercised cannot be changes during the financial year. Also
restriction of 50% doesn’t apply where the tax is paid on supply from one
registered person to another registered person having the same Permanent
Account Number.
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(a) one-third of the total input tax in the financial year in which the said goods
are received,
(b) two-third of the total input tax, including the credit availed in the first
financial year, in the financial year immediately succeeding the year referred
to in clause (a) in which the said goods are received, and
(c) the balance of the amount of credit in any subsequent financial year.
Returns| 63
Chapter 9
Returns
64 | GST – The Businessman’s Guide
First Return
Every registered taxable person who has made sales in the period between the
dates on which he became liable to registration till the date on which
registration has been granted shall declare the same in the first return filed by
him after grant of registration.
Annual Return
All registered taxable person other than input service distributor, a person
paying tax under section 51 or section 52, a casual taxable person and a non-
resident taxable person has to file annual return on or before 31st December of
the following financial year. Such annual return is to be filed in Form GSTR-
9. For persons under composition scheme the form for annual return in Form
GSTR-9A.
Person who is required to get his accounts audited under section 35(5) has to
furnish electronically, audited copy of the annual accounts and a reconciliation
statement in form GSTR-9B, reconciling the value of supplies declared in the
return furnished for the year with the audited annual financial statement along
with annual return.
The last date of payment of tax is also the same dates as mentioned above.
Taxable person shall validate, modify, delete the details furnished by the
supplier in his details of outward supplies. The taxable person can also add the
details if not provided by any supplier. Such details of inward supplies is to be
furnished from 11th day to 15th day from the end of month/quarter in Form
GSTR – 2.
The return
The return is to be filed by or 20th of the next month. For composition dealers
the last date is 18th of the month after the quarter.
Revised Return
If the taxable person finds any omission or incorrect particulars he can rectify
it in the month/quarter’s return in which such error is noticed. The rectification
cannot be done in following cases
Error is found as a result of scrutiny, audit, inspection or enforcement activity
by the tax authorities.
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The dealer has to furnish the following details relevant to the month in Form
GSTR-1.
(a) invoice wise details of all –
(i) inter-State and intra-State supplies made to registered persons;
(ii) inter-State supplies with invoice value more than two and a half lakh
rupees made to unregistered persons;
(b) consolidated details of all –
(i) intra-State supplies made to unregistered persons for each rate of tax; and
(ii) State wise inter-State supplies with invoice value less than two and a half
lakh rupees made to unregistered persons for each rate of tax; and
(c) debit and credit notes, if any issued during the month for invoices issued
previously.
Such details will be available to the purchaser of goods/services in Part A of
Form GSTR – 2A from 11th day of the next month. Such details may be
added, corrected or deleted by purchaser.
Returns| 67
Details in Form GSTR-2A will be available from 11th day of month. (as
discussed above)
On basis of such details the dealer can accepts, reject, modify or add the
details of inward supplied to him. The last date for such changes is 15th from
the end of month.
The dealer has also to specify the inward supplies in respect of which he is not
eligible to take input tax credit either fully or partially.
He also has to declare the amount of ineligible input tax credit on inward
supplies which is related to non-taxable supplies or for purposes other than
business.
Similarly the details of TDS deducted under section 51 and Furnished in Form
GSTR- 7 shall be made available to deductee in Part C of Form GSTR-2A and
the deductee may include such details in his Form GSTR-2 to claim input tax
credit of such amount.
Similarly the details of TCS collected under section 52 by E commerce
operator and Furnished in Form GSTR- 8 shall be made available to deductee
in Part D of Form GSTR-2A and the deductee may include such details in his
Form GSTR-2.
Form GSTR-2 shall also include
(a) invoice wise details of all inter-State and intra-State supplies received from
registered persons or unregistered persons.
(b) import of goods and services made.
(c) debit and credit notes, if any, received from supplier.
Main Return
Where the time limit for furnishing of FORM GSTR-1 and in FORM GSTR-2
has been extended, return in FORM GSTR-3B, in lieu of FORM GSTR-3,
may be furnished.
For filing a return for a period it is necessary that valid returns for all previous
period has been already filed.
Also a person cannot file returns unless all the payment regarding GST had
been made.
Returns| 69
70 | GST – The Businessman’s Guide
Form
9 Return for Non-Resident foreign taxable person
GSTR-5
Form
10 ISD return
GSTR-6
Details of inward supplies made available to the ISD
Form
11 recipient on the basis of FORM GSTR-1 furnished by the
GSTR-6A
supplier
Form
12 Return for authorities deducting tax at source
GSTR-7
Form
13 TDS Certificate
GSTR-7A
Form
Communication of acceptance, discrepancy or duplication
14 GST-ITC-
of input tax credit claim
1
Details of supplies effected through e-commerce operator
Form
15 and the amount of tax collected as required under section
GSTR-8
52
Form
16 Annual return
GSTR-9
Form
19 Final return
GSTR-10
Final Return
Every registered taxable person who applies for cancellation of registration
shall furnish a final return within three months of the date of cancellation or
date of cancellation order, whichever is later, in such form and in such manner
as may be prescribed. Such return is to be filed in Form GSTR-10.
Chapter 10
Audit
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Audit of Accounts
Every registered person whose turnover exceeds Rs. 1 crore during a financial
year has to get his accounts audited under GST. Accounts is to be audited by a
Chartered Accountant or Cost Accountant only.
He shall furnish a copy of audited annual accounts and a reconciliation
statement, duly certified, in FORM GSTR-9B along with annual return.
Special audit
(1) If at any stage of scrutiny, inquiry, investigation or any other proceedings
before him, any officer not below the rank of Assistant Commissioner, having
regard to the nature and complexity of the case and the interest of revenue, is
of the opinion that the value has not been correctly declared or the credit
availed is not within the normal limits, he may, with the prior approval of the
Commissioner, direct such registered person by a communication in writing to
get his records including books of account examined and audited by a
chartered accountant or a cost accountant as may be nominated by the
Commissioner.
(2) The chartered accountant or cost accountant so nominated shall, within the
period of ninety days, submit a report of such audit duly signed and certified
by him to the said Assistant Commissioner mentioning therein such other
particulars as may be specified:
Provided that the Assistant Commissioner may, on an application made to him
in this behalf by the registered person or the chartered accountant or cost
accountant or for any material and sufficient reason, extend the said period by
a further period of ninety days.
(3) The provisions of sub-section (1) shall have effect notwithstanding that the
accounts of the registered person have been audited under any other provisions
of this Act or any other law for the time being in force.
(4) The registered person shall be given an opportunity of being heard in
respect of any material gathered on the basis of special audit under sub-section
(1) which is proposed to be used in any proceedings against him under this Act
or the rules made there under.
(5) The expenses of the examination and audit of records under sub-section
(1), including the remuneration of such chartered accountant or cost
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Chapter 11
E-way Bill
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If the consignor of goods has not generated e-way bill then the transporter has
to generate Form GST INS-01 on the basis of invoice or bill of supply or
delivery challan, if the value of goods is exceeding Rs. 50,000.
The Commissioner may, by notification, require a class of transporters to
obtain a unique Radio Frequency Identification Device (RFID) and get the
said device embedded on to the conveyance and map the e-way bill to the
RFID prior to the movement of goods.
Relevant date shall mean the date on which the e-way bill has been generated
and the period of validity shall be counted from the time at which the e-way
bill has been generated.
Commissioner may extend the validity period for certain categories of goods.
for transfer of such goods to another vehicle then such e-way billycan not be
cancelled.
Other Points
The information provided in Form GST INS-01 by a person will be made
available to him on the portal so that he may utilize such information to file
his Details of Outward Supplies for filing GST Returns.
Valuation of Goods/Services | 81
Chapter 12
Valuation of Goods/Services
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Where goods are transferred from one place of business to another place of the
same business or from the principal to an agent or from an agent to the
principal whether or not situated in the same State, the value of such supply
shall be the transaction value.
Inclusions
The value of goods/services also include the following:-
1. any taxes, duties, cesses or fee charged separately by the supplier other
than GST itself.
2. other incidental expenses such as commission or packing charged
separately by the supplier.
3. amount charged for anything done by the supplier at the time of, or before
delivery of the goods/services. For e.g. gift packing or special packing
4. interest, late fee or penalty charged for delayed payment
5. subsidies directly linked to the price excluding subsidies provided by the
Central and State governments
Exclusions
The value of the supply shall not include any discount that is given:
(a) before or at the time of the supply provided such discount has been
mentioned in the invoice
If the discount is given after supply, and Cannot be claimed as deduction from
not known at the time of supply transaction value
1. Where a new phone is supplied for Rs.20000 along with the exchange of an
old phone and if the price of the new phone without exchange is Rs.24000,
the open market value of the new phone is Rs 24000.
2. Where a laptop is supplied for Rs.40000 along with a barter of printer that
is manufactured by the recipient and the value of the printer known at the
time of supply is Rs.4000 but the open market value of the laptop is not
known, the value of the supply of laptop is Rs.44000.
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(a) be the open market value of the goods being supplied, or at the option of
the supplier, be ninety percent of the price charged for the supply of goods of
like kind and quality by the recipient to his customer not being a related
person, where the goods are intended for further supply by the said recipient.
Illustration: Where a principal supplies groundnut to his agent and the agent is
supplying groundnuts of like kind and quality in subsequent supplies at a price
of Rs.5000 per quintal on the day of supply. Another independent supplier is
supplying groundnuts of like kind and quality to the said agent at the price of
Rs.4550 per quintal. The value of the supply made by the principal shall be
Rs.4550 per quintal or where he exercises the option the value shall be 90% of
the Rs.5000 i.e. is Rs.4500 per quintal.
(b) where the value of a supply is not determinable under clause (a), the same
shall be determined by application of rule 4 or rule 5 in that order.
Provided that in case of supply of services, the supplier may opt for this rule,
disregarding rule 4.
If reference rate for any currency is not available then value = 1% of Indian
rupees provided or received by such money changer.
(i) one per cent. of the gross amount of currency exchanged for an amount up
to one lakh rupees, subject to a minimum amount of two hundred and fifty
rupees.
(ii) one thousand rupees and half of a per cent of the gross amount of currency
exchanged for an amount exceeding one lakh rupees and up to ten lakh rupees;
and
86 | GST – The Businessman’s Guide
(iii) five thousand rupees and one tenth of a per cent. of the gross amount of
currency exchanged for an amount exceeding ten lakh rupees, subject to
maximum amount of sixty thousand rupees.
2. Air Travel Agent
Value of services provided by air travel agent is calculated at rate of 5% of the
basic fare in the case of domestic bookings and at the rate of 10% of the basic
fare in the case of international bookings.
Basic fare means that part of the air fare on which commission is normally
paid to the air travel agent by the airline.
This provision is applicable only when the used goods is sold in same
condition or after minor processing and nature of the goods is not changed
after purchasing. Also such person should not avail input tax credit if paid on
such transaction.
For example – A person deals in second hand cars. He buys a car for Rs.
5,00,000. No GST is paid on it. Now he make an expense of Rs. 20,000 for its
servicing and repairs and then sold it for Rs. 6,00,000. The amount on which
GST is payable is Rs. 1,00,000.
5. Pure Agent
Notwithstanding anything contained in these rules, the expenditure or costs
incurred by a supplier as a pure agent of the recipient of supply shall be
Valuation of Goods/Services | 87
excluded from the value of supply, if all the following conditions are satisfied,
namely:-
(i) the supplier acts as a pure agent of the recipient of the supply, when he
makes payment to the third party on authorization by such recipient.
(ii) the payment made by the pure agent on behalf of the recipient of supply
has been separately indicated in the invoice issued by the pure agent to the
recipient of service; and
(iii) the supplies procured by the pure agent from the third party as a pure
agent of the recipient of supply are in addition to the services he supplies on
his own account.
Explanation . – For the purposes of this rule, “pure agent” means a person
who:
(a) enters into a contractual agreement with the recipient of supply to act as his
pure agent to incur expenditure or costs in the course of supply of goods or
services or both.
(b) neither intends to hold nor holds any title to the goods or services or both
so procured or supplied as pure agent of the recipient of supply.
(c) does not use for his own interest such goods or services so procured.
(d) receives only the actual amount incurred to procure such goods or services
in addition to the amount received for supply he provides on his own account .
Illustration. Corporate services firm A is engaged to handle the legal work
pertaining to the incorporation of Company B. Other than its service fees, A
also recovers from B, registration fee and approval fee for the name of the
company paid to Registrar of the Companies. The fees charged by the
Registrar of the companies registration and approval of the name are
compulsorily levied on B. A is merely acting as a pure agent in the payment of
those fees. Therefore, A’s recovery of such expenses is a disbursement and not
part of the value of supply made by A to B.
Distinct Persons
As per section 25(5) of CGST Act
territory tax and the cess payable by a person in a transaction, where the
supplier and the recipient of the supply are not related and price is the sole
consideration, to obtain such supply at the same time when the supply being
valued is made.
Supply of goods or services or both of like kind and quality means any
other supply of goods or services or both made under similar circumstances
that, in respect of the characteristics, quality, quantity, functional components,
materials, and reputation of the goods or services or both first mentioned, is
the same as, or closely or substantially resembles, that supply of goods or
services or both.
Time of Taxation| 91
Chapter 13
Time of Taxation
92 | GST – The Businessman’s Guide
1. Date of invoice
2. Last date on which invoice is required to issue under section 31(1).
3. The date on which seller receives the payment
The date on which the supplier receives the payment shall be the date on
which the payment is entered in his books of account or the date on which the
payment is credited to his bank account, whichever is earlier.
In case tax is payable on reverse charge basis the time of supply shall be
earliest of the following dates
The date on which the supplier receives the payment shall be the date on
which the payment is entered in his books of account or the date on which the
payment is credited to his bank account, whichever is earlier.
If the seller receives excess payment of Rs. 1,000 or less as compared to tax
invoice then seller has option to consider time of supply of such excess
amount from any two dates mentioned below
In case tax is payable on reverse charge basis the time of supply shall be
earliest of the following dates:
1. the date of payment as entered in the books of account of the recipient or
the date on which the payment is debited in his bank account, whichever is
earlier.
2. the date immediately following sixty days from the date of issue of invoice
or any other document, by whatever name called, in lieu thereof by the
supplier.
In case where date of supply cannot be determined by above method, the time
of supply shall be the date of entry in the books of account of the recipient of
supply.
(b) in case the goods or services or both have been supplied after the change in
rate of tax-(i) where the payment is received after the change in rate of tax but
the invoice has been issued prior to the change in rate of tax, the time of
supply shall be the date of receipt of payment; or
(ii) where the invoice has been issued and payment is received before the
change in rate of tax, the time of supply shall be the date of receipt of payment
or date of issue of invoice, whichever is earlier; or
(iii) where the invoice has been issued after the change in rate of tax but the
payment is received before the change in rate of tax, the time of supply shall
be the date of issue of invoice:
Provided that the date of receipt of payment shall be the date of credit in the
bank account if such credit in the bank account is after four working days from
the date of change in the rate of tax.
Chapter 14
Place of Supply
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Where the supply does not involve movement of goods, whether by the
supplier or the recipient, the place of supply shall be the location of such
goods at the time of the delivery to the recipient.
Where the goods are assembled or installed at site, the place of supply shall be
the place of such installation or assembly.
The place of supply of goods imported into India shall be the location of the
importer.
The place of supply of goods exported from India shall be the location
outside India.
Provided that where the address of the recipient as per the records of the
supplier of services is not available, the place of supply shall be location of the
supplier of services.
Provided further that if such pre-paid service is availed or the recharge is made
through internet banking or other electronic mode of payment, the location of
the recipient of services on the record of the supplier of services shall be the
place of supply of such services.
Place of supply of the following services shall be the location of the supplier
of services-
Chapter 15
Accounting Records
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(a) the names and addresses of the persons on whose behalf the works contract
is executed;
(b) description, value and quantity (wherever applicable) of goods or services
received for the execution of works contract;
(c) description, value and quantity (wherever applicable) of goods or services
utilized in the execution of each works contract;
(d) the details of payment received in respect of each works contract; and
(e) the names and addresses of suppliers from whom he has received goods or
services.
that they can be identified item wise and owner wise and shall facilitate any
physical verification or inspection by the proper officer.
Such person has to maintain records even if he is not registered under GST. If
he is not registered then he shall submit the details regarding his business in
Form GST ENR-01. Upon validation of the details furnished, a unique
enrolment number shall be generated and communicated to the said person. A
person is not required to enrol for each state or union territory separately.
Where the Commissioner considers that any class of taxable persons is not in a
position to keep and maintain accounts in accordance with the provisions of
this section, he may, for reasons to be recorded in writing, permit such class of
taxable persons to maintain accounts in such manner as may be prescribed.
Audit of Accounts
Every registered person whose turnover exceeds Rs. 1 crore during a financial
year has to get his accounts audited under GST. Accounts is to be audited by a
Chartered Accountant or Cost Accountant only.
He shall furnish a copy of audited annual accounts and a reconciliation
statement, duly certified, in FORM GSTR-9B.
for an offence under Chapter XIX, shall retain the books of account and other
records pertaining to the subject matter of such appeal or revision or
proceedings or investigation for a period of one year after final disposal of
such appeal or revision or proceedings or investigation.
Refunds| 107
Chapter 16
Refunds
108 | GST – The Businessman’s Guide
Application Procedure
The application is to be submitted along with the documents of
Documents to establish that the amount of tax and interest was collected
from or paid by applicant and incidence of tax and interest had not been
passed to any other person.
Where the amount claimed as refund is less than Rs. 2 lakhs, the applicant
may file a declaration rather than the documentary or other
evidence certifying that the incidence of such tax and interest had not been
passed on to any other person.
A Certificate in Annexure 2 of FORM GST RFD-01 issued by a chartered
accountant or a cost accountant certifying that incidence of tax, interest or
any other amount claimed as refund has not been passed on to any other
person, in a case where the amount of refund claimed exceeds two lakh
rupees.
Such declaration or certificate is not required when the amount of refund is
related to
Withholding of Refund
Refund can be withhold by the officer if the applicant is defaulted in
furnishing any return or who is required to pay any tax, interest or penalty,
which has not been stayed by any court, Tribunal or Appellate Authority by
the specified date. On clearing of such default the officer has to issue the
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refund.
Specified means the last date for filing an appeal under this Act.
Advance Tax paid by a casual taxable person or non resident taxable person
shall not be refunded until such person files all the returns for entire period for
which he is granted registration.
Chapter 17
Basics
The central or state government may mandate the following enterprises to
deduct TDS at the rate of 1% from the payment made or credited to supplier
for the taxable supplies of value greater than Rs. 2.5 lakh. The limit of Rs.
2.5 lakh is for single contract and not for aggregate value.
a department or establishment of the Central or State Government
Local authority
Governmental agencies
such persons or category of persons as may be notified, by the Central or a
State Government on the recommendations of the Council
TDS is not required to be deducted if the location of supplier and place of
supply is in different state/union territory from the state/union territory in
which the recipient is registered.
Tax Deduction and Collection Account Number (TAN) issued under Income
Tax Act is required by the persons who are required to deduct TDS under
GST. The value of supplies will be taken as amount excluding taxes.
TDS Certificate
The deductor shall, in the manner prescribed, furnish to the deductee a
certificate in Form GSTR-7A mentioning therein the contract value, rate of
deduction, amount deducted, amount paid to the appropriate Government and
other particulars.
The deductor has to furnish such certificate to deductee within five days of
crediting such amount to the Government. Failure to furnishing such
certificate will make deductor liable for a penalty of Rs. 100 per days,
maximum to Rs. 5,000.
TDS under GST| 113
Return to be filed
Return for the month in which tax is deducted is to filed on or before 10th of
the succeeding month. Only online return can be filed through Form GSTR-7,
no paper return is allowed.
Chapter 18
Electronic commerce operator like amazon, flipkart are required to collect Tax
Collection at Source (TCS) at the rate of one percent of the net sales of goods or
services made through their platform. Tax is to be collected only on the amount
which is collected by the operator itself.
If the details furnished by the e commerce operator and the supplier doesn’t
match then the discrepancies will be communicated to both the parties. If the
discrepancy is not resolved by the supplier in his return or operator in his
TDS under GST by E-Commerce Operator| 117
Notice by Officer
An officer not below the rank of joint commissioner may serve a notice to
operator asking for information related to supplies of goods and services
during any period and the stock of goods held by suppliers in godowns or
warehouses managed by such operator and declared as additional places of
business by such suppliers. The operator has to furnished such information
within 15 days of serve of such notice. If the e commerce operator fails to
furnish such information then such operator is liable to penalty which may
extend to Rs. 25,000.
Conclusion
This provision for e commerce portals may bring many hardships to the new
and upcoming portals operating at small scale. It will bring many small service
providers into the ambit of GST. In cab services like uber and ola, the service
providers are the car drivers who also owns the car. In such scenario they have
to file monthly return to claim the amount of tax collected from them.
GST Compliance Rating| 119
Chapter 19
The person who abide by the rules and regulations and file their taxes and
returns will allotted a good rating while person with defaults and late
submission will be allotted a bad rating.
The rating will be available in public domain and will be evaluated at regular
intervals.
Other use of GST compliance rating will be on the refund claims. As per GST
law the refunds under GST will be processed on merit basis. A person with
high ratings will be refunded the amount of tax immediately. While the
refunds of person with low rating will be given after due verification and thus
causes to delay the refund with a substantial amount of time.
So, every person should try to maintain a high level of ratings to avoid bad
reputation as well as loss of sales.
Chapter 20
Accounting
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Purchase by X from Z who is in same state for Rs. 8,000 and GST rate of 18%
(CGST@9% & SGST@9%)Purchase A/c Dr 8,000
Input CGST A/c Dr 720
Input SGST A/c Dr 720
To Z A/c 9440
Sales by X to Y who is in same state for Rs. 25,000
Y A/c Dr 29,500
To Sales A/c 25,000
To Output CGST A/c 2,250
To Output SGST A/c 2,250
He paid consultation fees to CA of Rs. 5,000
Consultation Fees A/c Dr 5,000
Input CGST A/c Dr 450
Input SGST A/c Dr 450
To CA A/c 5,900
Purchased furniture worth Rs. 3,000
Furniture A/c Dr 3,000
Input CGST A/c Dr 270
Input SGST A/c Dr 270
To Cash A/c 3,540
Purchase by X from Z who is in different state for Rs. 8,000 and GST rate of
18% (CGST@9% & SGST@9%)
Purchase A/c Dr 8,000
Input IGST A/c Dr 1,440
To Z A/c 9,440
Sales by X to Y who is in different state for Rs. 25,000
Y A/c Dr 29,500
To Sales A/c 25,000
To Output IGST A/c 4,500
He paid consultation fees to CA of Rs. 5,000
Consultation Fees A/c Dr 5,000
Input CGST A/c Dr 450
Input SGST A/c Dr 450
To CA A/c 5,900
Sales by X to B who is in same state for Rs. 30,000
Y A/c Dr 35,400
To Sales A/c 30,000
To Output CGST A/c 2,700
To Output SGST A/c 2,700
All tax accounts are not in the nature of direct/indirect incomes or expenses,
therefore there will be no impact on the Profit and Loss account. However if
there is any GST paid for which input tax credit is not allowed then it should
be booked as expense and thus reducing the profit. (In case payment is for an
expense)
The tax liability or positive input tax credit is to be shown as liability or asset
in the balance sheet. Fixed assets on which input tax credit is allowed and
taken are to be shown as cost excluding gst.