GST

GST (Goods and Services Tax) : A New Era for Professionals : by CS Anand Raghuwanshi

GST- A NEW AREA FOR PROFESSIONALS

What is CGST?

CGST mean “Central GST” it is the component of GST that will be levied by the central government on all items, both goods and services. It only applies to intra-state trade.

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What is SGST?

State GST is the component of GST that will be levied by the state government on all items, both goods and services. It only applies to intra-state trade.

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What is SGST?

Integrated GST is the component of GST that will be levied by the central government in case of inter-state trade. It is applicable on all items, both goods and services. A dealer can use input tax credit of IGST against SGST, CGST or IGST.

What is the Exemption Limit?

GST is applicable to all dealers with a turnover of over Rs. 20 lakh (Rs. 10 lakh in North Eastern states) in case they are involved exclusively in intra-state trade (i.e. their supplies and sales are within a single state). In case of any inter-state activity, GST is applicable regardless of turnover.

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What is Composition Scheme?

The GST Composition Scheme is applicable only on traders operating in a single state with a supply turnover of less than Rs. 50 lakh. Supply turnover includes any freebies, discounts and even goods and services not liable to be taxed.

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What is Input Tax Credit under GST?

Input Tax Credit under GST is a credit which is available to supplier to set off the tax he has paid on purchase of goods from output tax on sale of such goods. Hence, the tax will levy on the value added which results in avoiding double taxation.

Under GST Regime, the tax has been divided into 3 main parts – Integrated Goods and Services Tax (IGST)Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST). This bifurcation of taxes might lead to confusion as to how the input and output taxes are to be adjusted.

1.      Utilization of CGST’s Input Tax Credit under GST

            The Input Tax Credit of CGST shall be

  • first utilized towards the payment of output CGST
  • and then towards the payment of output IGST

However, Input Tax Credit under GST of CGST can’t be used to adjust SGST.

Also Read : GST for Beginners-A Free E-Book

2.      Utilization of SGST’s Input Tax Credit under GST

The Input Tax Credit under GST of SGST shall be

  • first utilized towards the payment of output SGST;
  • and then towards the payment of output IGST

However, Input Tax Credit under GST of CGST can’t be used to adjust CGST.

3.      Utilization of IGST’s Input Tax Credit under GST

The Input Tax Credit under GST of IGST shall be

  • first utilized towards payment of IGST;
  • then towards the payment of output CGST;
  • and then towards the payment of output SGST

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When GST will come into picture?

GST will attract if there is SUPPLY i.e.- sale, transfer, barter, lease, import of services etc of goods and/ or services made for a consideration it may be CGST (to be levied by Centre) and SGST (to be levied by State). Further, certain supplies, even if made without consideration, such as permanent transfer of business assets, self-supply of goods or services, assets retained after deregistration etc will attract GST. Interestingly, even a „barter of goods transaction which were hitherto un-taxed in VAT regime, will attract GST.

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What is Supply under GST?

Section 7 “supply” includes––

(a) all forms of supply of goods and/or services such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business,

(b) Import of services, for a consideration whether or not in the course or furtherance of business, and

(c) Activities specified in Schedule I, made or agreed to be made without a consideration.

(d) Activities specified in Schedule II, to be treated as supply of goods and services.

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What is not a Supply under GST?

  1. activities or transactions specified in Schedule III; or
  1. such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services.

Also Read : The Insolvency and Bankruptcy Code, 2016 – Procedure and Key Highlights

When GST is Payable?

The liability to pay CGST / SGST will arise at the time of supply as determined for goods and services. In this regard, separate provisions prescribe what will time of supply for goods and services.

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What is Time of Supply?           

To determine time of supply of Goods & Services, Four categories are provided as below:

  1. Time of Supply of Goods & Services under Forward Charge.
  2. Time of Supply of Goods & Services under Reverse Charge.
  3. Time of Supply in case of Supply of Vouchers.
  4. Residuary Clause.
  1. TIME OF SUPPLY OF GOODS & SERVICES UNDER FORWARD CHARGE

What should be the Time of Issue of Invoice for Goods:

  1. If movement of goods involved in supply than before or at the time of removal of goods.
  2. If no movement of goods involved in supply than before or at the time of delivery of goods or making available to the recipient.
  3. If continuous supply of goods For Example. Supply of Oil etc. than earliest of the following: –
  4. Time when each statement is issued. –
  5. Time when each payment is received.
  6. If goods sent for approval than earliest of the following: –
  7. Time when it becomes known that supply is taken place. –
  8. Six month from the date of removal.

               

  1. 2. Time of Issue of Invoice for Services:
  2. Before or after the provision of service but within a period prescribed:
  3. 30 days in all cases except for banking and financial institutions from the date of supply of services.
  4. 45 days in case of banking and financial institutions from the date of supply of services
  1. TIME OF SUPPLY OF GOODS & SERVICES UNDER REVERSE CHARGE:

 

3. TIME OF SUPPLY OF VOUCHERS FOR GOODS & SERVICES:

  1. RESIDUARY CLAUSE

 

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What are the Payments to be made in GST regime?

In the GST regime, for any intra-state supply, taxes to be paid are the Central GST (CGST, going into the account of the Central Government) and the State GST (SGST, going into the account of the concerned State Government). For any inter-state supply, tax to be paid is Integrated GST (IGST) which will have components of both CGST and SGST.

In addition, certain categories of registered persons will be required to pay to the government account Tax Deducted at Source (TDS) and Tax Collected at Source (TCS). In addition, wherever applicable, Interest, Penalty, Fees and any other payment will also be required to be made.


Also Read : All About Shareholder’s Agreement; Do’s and Dont’s

Who is liable to pay GST?

In general the supplier of goods or service is liable to pay GST. However in specified cases like imports and other notified supplies, the liability may be cast on the recipient under the reverse charge mechanism. Further, in some cases, the liability to pay is on the third person (say in the case of e-commerce operator responsible for TCS or Government Department responsible for TDS).

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When is GST payment to be done by the taxable person?

At the time of supply of Goods as explained in Section 12 and at the time of supply of services as explained in Section 13. The time is generally the earliest of one of the three events, namely receiving payment, issuance of invoice or completion of supply. Different situations envisaged and different tax points have been explained in the aforesaid sections.

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How can payment be done?

GST Payment can be done by the following methods:

(i) Through debit of Credit Ledger of the taxpayer maintained on the Common Portal- ONLY Tax can be paid. Interest, Penalty and Fees cannot be paid by debit in the credit ledger.  Tax payers shall be allowed to take credit of taxes paid on inputs (input tax credit) and utilize the same for payment of output tax. However, no input tax credit on account of CGST shall be utilized towards payment of SGST and vice versa. The credit of IGST would be permitted to be utilized for payment of IGST, CGST and SGST in that order.

(ii) In cash by debit in the Cash Ledger of the taxpayer maintained on the Common Portal. Money can be deposited in the Cash Ledger by different modes, namely, E-Payment (Internet Banking, Credit Card, Debit Card); Real Time Gross Settlement (RTGS)/ National Electronic Fund Transfer (NEFT); Over the Counter Payment in branches of Banks Authorized to accept deposit of GST.

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When is payment of taxes to be made by the Supplier?

Payment of taxes by the normal taxpayer is to be done on monthly basis by the 20th of the succeeding month. Cash payments will be first deposited in the Cash Ledger and the taxpayer shall debit the ledger while making payment in the monthly returns and shall reflect the relevant debit entry number in his return. As mentioned earlier, payment can also be debited from the Credit Ledger. Payment of taxes for the month of March shall be paid by the 20th of April. Composition tax payers will need to pay tax on quarterly basis. Timing of payment will be from 0000 Hrs to 2000 Hrs.

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What happens if the taxable person files the return but does not make payment of tax?

In such cases, the return is not considered as a valid return. Section 27 (3) of the MGL provides that the return furnished by a taxable person shall not be treated as valid return unless the full tax due as per the said return has been paid. It is only the valid return that would be used for allowing input tax credit (ITC) to the recipient. In other words, unless the supplier has paid the entire self-assessed tax and filed his return and the recipient has filed his return, the ITC of the recipient would not be confirmed.

As per section 28, a taxable person who has not furnished a valid return shall not be allowed to utilize such credit till he discharges his self-assessed tax liability.

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GST RETURNS

 

Return Form What to file? By Whom? By When?
GSTR-1 Details of outward supplies of taxable goods and/or services effected Registered Taxable Supplier 10th  of the next month
GSTR-2 Details of inward supplies of taxable goods and/or services effected claiming input tax credit. Registered Taxable Recipient 15th  of the next month
GSTR-3 Monthly return on the basis of finalization of details of outward supplies and inward supplies along with the payment of amount of tax. Registered Taxable Person 20th  of the next month
GSTR-4 Quarterly return for compounding taxable person. Composition Supplier 18th of the month succeeding quarter
GSTR-5 Return for Non-Resident foreign taxable person Non-Resident Taxable Person 20th of the next month
GSTR-6 Return for Input Service Distributor Input Service Distributor 13th of the next month
GSTR-7 Return for authorities deducting tax at source. Tax Deductor 10th  of the next month
GSTR-8 Details of supplies effected through e-commerce operator and the amount of tax collected E-commerce Operator/Tax Collector 10th of the next month
GSTR-9 Annual Return Registered Taxable Person 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 cancellation order, whichever is later.
GSTR-11 Details of inward supplies to be furnished by a person having UIN Person having UIN and claiming refund 28th of the month following the month for which statement is filed

 

Author : CS Anand Raghuwanshi, Partner at Anand Nimesh & Associates, Company Secretaries.

Mr. Anand is a Practicing Company Secretary, based on Delhi and practicing in the area of Corporate Law Compliance & Advisory.

In case you are confused about GST or have any query as a business owner, feel free to consult the GST Professional Mr. Anand Kumar Singh. You can get comprehensive assistance on GST Registration and GST Return Filing. You can also write us  at ancorporate2@gmail.com  and call us on 9868782243/ 011-42730004 or visit our website at www.anandnimesh.com

 

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