GST Suvidha Provider (GSP)

The GST Regime in India is backed by the Goods and Services Tax Network (GSTN), a centralised IT infrastructure to handle all aspects of GST administration in India. Goods and Services Tax Network (GSTN) has been setup as a not for profit, Section 8 company that was incorporated on March 28, 2013. In the GSTN, the Government of India holds 24.5% equity 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. GSTN has been primarily tasked with providing IT infrastructure and services to the Central and State Governments, tax payers and other stakeholders. To enable easy adoption of GST, GSTN has created a framework for providing GST Suvidha Provider (GSP) Licenses. In this article, we look at GST Suvidha Providers or GSPs in detail.

GST Suvidha Providers (GSPs)

To access the GSTN or GST System, GSTN provides GST Suvidha Provider License or GSP License to third parties who satisfy the eligibility criteria. GSPs would be able to create third-party applications and allow application service providers (ASPs) to create application in any interface, i.e., desktop, mobile, etc., with the ability to interact with the GST system. All third party applications must be designed to connect with GST system via secure GST System APIs. Thus the GSPs together with the ASPs are envisaged to provide innovative and convenient methods to taxpayers and other stakeholders in interacting with the GST Systems from registration of entity to uploading of invoice details to filing of returns.

As shown in the illustration above, GSP providers are allowed to create GST application themselves or allow third-party application developers to access the GSTN through them. Also, taxpayers are free to choose an Application Providers or GSP of his/her choice, irrespective and independent to the other. Thus a taxpayer , can choose a set of services from one GSP and the rest from other GSPs. For example, a tax payer can obtain GST registration through one GSP or ASP, while filing GST return through another GSP or ASP.

GST Suvidha Provider (GSP) License – Eligibility Criteria

Companies registered in India in the Information Technology, Information Technology Enabled Services, Banking, Financial Services and Insurance sector are eligible for a GSP license. All GST Suvidha Provider applicants must meet strict eligibility criteria. GSP applicants meeting the eligibility will be required to sign a contract with GSTN to become an authorised GSP. On signing the contract, the GST Suvidha Provider is allocated an unique license key for accessing the GST system.

GSP License: Batch 1 – Eligibility Criteria

The first set of GST Suvidha Providers were required to meet the following standards for obtaining GSP license:

Financial Strength

• Paid up / Raised capital of at least Rs. 5 crores and
• Average turnover of at least 10 Crores during last 3 financial years

Demonstration of Capabilities

• Invoice upload by tax payers
• GST Return #1 and #2 preparation and filing
• Reconciliation of downloaded GSTR2 with Purchase Register
• Multiple GSTIN Ids mapped to a single user account
• Multiple roles mapped to single GSTIN
• E-sign / DSC integration for signing of returns
• UI / UX
• Mobile interface
• Alert generation to tax payers
• Security design

Technical Capabilities

• Backend infrastructure, such as servers, databases etc., required specifically for the purpose of GSP work shall be based in the territory of India, and
• IT Infrastructure owned or outsourced to carry out minimum of 1 Lakh GST transaction per month, and
• Data Privacy policy to protect beneficiary privacy, and
• Data security measures as per the IT Act.

GSP License: Batch 2 – Eligibility Criteria

Following the onboarding of the first Batch of GST Suvidha Providers, the GSTN relaxed the eligibility criteria and invited the second batch. The revised eligibility criteria is as under:

Financial Strength

• Paid up / Raised capital of at least Rs. 2 crores and
• Average turnover of at least 5 Crores during last 3 financial years (2014-15, 2015-16, 2016-17)
  • For FY 2016-17, unaudited results, duly authenticated by the Company Secretary only, may be quoted, to be followed up by the audited and signed balance sheets. For earlier years copy of relevant page of audited balance sheet needs to be shared.

Demonstration of Capabilities

• Invoice upload by tax payers
• GST Return #1 and #2 preparation and filing
• Reconciliation of downloaded GSTR2 with Purchase Register
• Multiple GSTIN Ids mapped to a single user account
• Multiple roles mapped to single GSTIN
• E-sign / DSC integration for signing of returns
• UI / UX
• Mobile interface
• Alert generation to tax payers
• Security design
• Technical Capability of GSP (Handling Large Load, Experience in handling large application, Managing Sizable Application Infrastructure, Experience in developing complex application etc.)

Technical Capabilities

• Backend infrastructure, such as servers, databases etc., required specifically for the purpose of GSP work shall be based in the territory of India, and
• IT Infrastructure owned or outsourced to carry out minimum of 1 Lakh GST transaction per month, and
• Data Privacy policy to protect beneficiary privacy, and
• Data security measures as per the IT Act.

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GST Practitioner – Enrolment Procedure

Goods and Services Tax (GST) is set to overhaul the entire indirect tax regime in India and make doing business easy in India. With the implementation of GST, over 1 crore registered enterprises will be registered under GST as a taxable person and be required to comply with various GST compliance requirements. To make compliance easy for businesses the Government has introduced various initiatives like GST Practitioners and GST Facilitation Centres. In this article, we look at GST Practitioners and the procedure for becoming a GST practitioner.

Role of GST Practitioner

To help taxpayers with their GST compliance, Goods and Services Tax Practitioners can undertake any or all of the following activities on behalf of a GST taxpayer

• File GST return GSTR-1 and GSTR-2 with details of outward and inward supplies;
• File monthly, quarterly, annual or final GST return;
• Make GST payment on behalf of taxpayer for credit into the electronic cash ledger;
• File a claim for GST refund;
• File an application for amendment or cancellation of GST registration.

After authorisation of a GST Practitioner on the GST Common Portal, the  Practitioner can complete various services. However, if an application for GST refund or an application for amendment or cancellation of GST registration is submitted, a confirmation must be provided by the registered person. Hence, for major changes, the registered persons consent must be filed along with the application on the GST common portal. Routine return filing will not require this special confirmation.

GST Practitioner – Eligibility Criteria

Any person who is a citizen of India having necessary qualification, of sound mind and not convicted or adjudicated as insolvent can become a GST Practitioner. To be qualified as a GST Practitioner, the person must be:

• A retired officer of the Commercial Tax Department of any State Government or of the Central Board of Excise and Customs, Department of Revenue, Government of India, who, during his service under the Government, had worked in a post not lower in rank than that of a Group-B gazetted officer for a period of not less than two years; or
• Has been enrolled as a sales tax practitioner or tax return preparer under the existing law for a period of not less than five years;
• Has the following degree or qualification:
  • A graduate or postgraduate degree or its equivalent examination having a degree in Commerce, Law, Banking including Higher Auditing, or Business Administration or Business Management from any Indian University established by any law for the time being in force; or
  • A degree examination of any Foreign University recognized by any Indian University as equivalent to the degree examination having a degree in Commerce, Law, Banking including Higher Auditing, or Business Administration or Business Management; or
  • Any other examination notified by the Government, on the recommendation of the Council, for this purpose; or
  • Has passed any of the following examinations, namely:
    • Final examination of the Institute of Chartered Accountants of India;
    • Final examination of the Institute of Cost Accountants of India;
    • Final examination of the Institute of Company Secretaries of India.

GST Practitioner – Application Procedure

Any person who is eligible to become a GST Practitioner as per the criteria above can apply using FORM GST PCT-01 through the GST Common Portal or through a GST Facilitation Centre notified by the Commissioner for GST Practitioner enrolment. The application form for GST Practitioner is attached below:

GST Practitioner Application Form

On receiving the application, the GST officer would process the application and make enquires as considered necessary for enrolment. If the Officer is satisfied, a GST Practitioner certificate would be issued.

Validity of License

GST Practitioner license would valid until its cancelled by the relevant authority. However, any person holding a GST Practitioner license would be required to pass examinations held by the GST Authority and notified by the Commissioner from time to time. Further, all persons applying to become a GST Practitioner through the sales tax practitioner or tax return preparer route are required to pass an exam conducted by the GST Authority within one year from the implementation of GST.

Further, a goods and services tax practitioner enrolled in any State or Union Territory shall be treated as enrolled in the State/Union territory for the purposes.

Filing GST Returns as GST Practitioner

Once a person is enrolled as a GST Practitioner, his/her client can authorise the Practitioner to file GST returns on the taxpayers behalf by filing Form GST PCT-05 on the GST Common Portal. The GST Practitioner can then prepare GST return on behalf of taxpayer with diligence and affix his/her digital signature on the GST return prepared by him/her or electronically verify the credentials.

When a GST return is prepared by a GST Practitioner, the GST return will be held for filing and the filing must be approved by the registered person. Confirmation for filing the return prepared by the GST Practitioner will be requested from the registered person through email and SMS. If the registered person fails to respond to the request for confirmation till the last date of furnishing of such statement, then the return prepared by the GST practitioner will be automatically filed.

In case a GST taxpayer is not satisfied with the services of a GST Practitioner, the taxpayer can withdraw a Practitioner’s authorisation at anytime through the GST Common Portal. If any GST Practitioner is is found guilty of misconduct, then a GST Officer can provide a reasonable opportunity for being heard and then if required, disqualify him/her from practising as a GST Practitioner.

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Debit & Credit Notes under GST – Revising an Invoice

A key reasons why GST in India would help increase tax compliance and reduce black money circulation is the standardisation and matching of invoices. Under GST, all B2B invoices must be uploaded on the GST common portal during the filing of GST return. Based on the invoice details filed, the data is auto-populated on the buyer or recipient side during the filing of return of inward supplies or GSTR-2, thereby eliminating any chances of foul play in B2B invoices. However, in some cases, businesses might have to make genuine changes to an issued invoice. For such instances, a debit or credit note can be issued for revising an invoice. In this article, we look at debit and credit notes in detail.

What is a Debit Note?

A debit note is a document sent to the seller, informing the seller that a debit has been made in the sellers account. Debit notes are usually sent by a purchase to the seller, if good are to be returned or found unsatisfactory.

A debit note can also be sent by the seller to the buyer, informing the buyer that a debit has been made in the buyers account. Debit note can be issued to a buyer, if the seller had erroneously undercharged the buyer or additional items are supplied on the same invoice.

Under GST, a debit note can be issued if the following conditions are satisfied:

• There has been a supply of goods and/or services.
• Tax invoice has been issued for the supply.
• Taxable value and/or tax charged in the tax invoice is less than the taxable value or tax payable  for the supply.
• Tax liability is required to be adjusted.

What is a Credit Note?

A credit note is a document, usually issued by a seller to a buyer, informing the buyer that a credit has been provided in the buyers account. For example, if a seller sells 10,000 units of a product and the buyer finds 1000 units to be defective, the seller can issue a credit note to the buyer, making the buyer liable for payment of only 9000 units.

Similarly, a buyer can also issue a credit note to the seller, if he/she determines that the buyer has undercharged them or sent them more items that billed.

Under GST, a credit note can be issued if the following conditions are satisfied:

• There has been a supply of goods and/or services.
• Tax invoice has been issued for such a supply.
• Taxable value or tax charged in that tax invoice exceeds the taxable value or tax payment for such supply OR the goods supplied are returned by the recipient or the services provided were found to be deficient.

Revised Invoice – B2B Transaction

Issue of a debit or credit note would impact an invoice that was already issued by the business and would require revision. In case of a transaction between two parties, both having GSTIN or invoice value of more than Rs.2.5 lakhs, the revised invoice must contain the following details with the word “Revised Invoice” prominently displayed:

• The word “Revised Invoice”, wherever applicable, indicated prominently;
• Name, address and GSTIN of the supplier;
• Nature of the document;
• A consecutive serial number not exceeding sixteen characters, in one or multiple series, containing alphabets or numerals or special characters -hyphen or dash and slash symbolised as “-” and “/”respectively,, and any combination thereof, unique for a financial year;
• Date of issue of the document;
• Name, address and GSTIN or UIN, if registered, of the recipient;
• Name and address of the recipient and the address of delivery, along with the name of State and its code, if such recipient is un-registered;
• Serial number and date of the corresponding tax invoice or, as the case may be, bill of supply;
• Value of taxable supply of goods or services, rate of tax and the amount of the tax credited or, as the case may be, debited to the recipient; and
• Signature or digital signature of the supplier or his authorized representative:

Revised Invoice – B2C Transactions

In case a debit or credit note pertains to a B2C transaction or transaction with a person not having GSTIN and value of less than Rs.2.5 lakhs, then a consolidated revised tax invoice in respect of all taxable supplies made to a recipient can be provided. In case of inter-state supplies, where the value of a supply does not exceed Rs.5 lakhs, a consolidated revised invoice can be issued separately in respect of all recipients located in a State.

For more information, read the IndiaFilings Guide on Issuing a Tax Invoice or revising a tax invoice.

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Transferring Existing Input Tax Credit to GST

Nearly 80 lakhs businesses have migrated to the new GST Platform, in anticipation of a July 1st, 2017 rollout of the GST regime. All existing taxpayers having service tax or VAT or central excise registration are mandatorily required to obtain GST registration and complete GST migration. In this article, we look at how taxpayers can transfer the input tax credit they have on account of service tax or VAT or central excise to GST.

Transferring Input Tax Credit to GST

The procedure for transferring existing input tax credit to GST has been provided for in the Transitional Provisions rules of GST. As per the GST Transitional Provisions, all persons registered under GST and entitled to take input tax credit are required to filed GST TRAN-1 within 90 days of GST implementation date on the GST Common Portal. To ease the pains GST migration, the rules allow for the Commissioner, on the recommendations of the Council, to extend the period for transferring existing input tax credit of 90 days by another 90 days.

Form GST TRAN-1 for Transferring Input Tax Credit

Form GST TRAN-1 as shown below must be filed on the GST Common Portal for transferring any existing input tax credit to GST input tax credit. After filing of the application and verification, the amount of credit specified in the application in FORM GST TRAN-1 would be credited to the electronic credit ledger of the taxpayer maintained in FORM GST PMT-2 on the GST Common Portal.

GST TRAN-1 Filing Procedure

GST TRAN-1 can be filed on the GST Common Platform. GST TRAN-1 must contain the following information:

• For item of capital goods
  • The amount of tax or duty availed or utilized by way of input tax credit under each of the existing laws till the appointed day, and
  • The amount of tax or duty yet to be availed or utilized by way of input tax credit under each of the existing laws till the appointed day;
• For stock held
  • The name of the supplier, serial number and date of issue of the invoice by the supplier or any document on the basis of which credit of input tax was admissible under the existing law;
  • The description and value of the goods or services;
  • The quantity in case of goods and the unit or unit quantity code;
  • The amount of eligible taxes and duties or, as the case may be, the value added tax [or entry tax] charged by the supplier in respect of the goods or services, and
  • The date on which the receipt of goods or services is entered in the books of account of the recipient.

Filing Declaration

All taxpayers who are migrating their existing input tax credit to GST will be required to submit a declaration in Form GST TRAN-1, furnishing the proportion of supply on which VAT or service tax has been paid before the GST implementation date but the supply is made after the implementation date and input tax credit is admissible.

Know more about Input Tax Credit under GST

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GST Input Tax Credit Scheme – For Existing Stock

A new GST input tax credit scheme has been announced in the Transitional Provisions rules to provide GST Input Tax Credit for unregistered persons who have unaccounted goods or stock on hand during the GST rollout. In this article, we look at the GST Input Tax Credit Scheme for unregistered taxpayers and existing stock in detail.

GST Input Tax Credit – For Central Excise

The GST input tax credit scheme for Central Excise mentioned in the Transitional Provisions rules targets unregistered persons who do not have any existing registration like central excise registration or evidence for payment of central excise duty while having stock on the GST implementation date.

Such persons would be allowed to claim GST input tax credit on goods held in stock on which central excise or additional duties of customs would be applicable on the date of GST implementation after payment of central tax. GST input tax credit would be allowed at the rate of 60% on goods which attract central tax at the rate of 9% or more. For all other goods on which central excise tax is applicable at the rate of 9% or less, GST input tax credit would be allowed at 40%. If integrated tax is paid on such goods, the amount of input tax credit allowed would be at the rate of 30% and 20%, respectively. The GST input tax credit would be credited to the electronic credit ledger of the taxpayer after central tax payable on such supply has been paid.

Further, to be eligible for input tax credit under this scheme, the following conditions must  be satisfied:

1. Such goods were not unconditionally exempt from the whole of the duty of excise specified in the First Schedule to the Central Excise Tariff Act, 1985 or were not nil rated in the said Schedule.
2. The document for procurement of such goods is available with the registered person.
3. The registered person availing of this scheme and having furnished the details of stock held by him, submits a statement in FORM GST TRAN 2 at the end of each of the six tax periods during which the scheme is in operation indicating therein the details of supplies of such goods effected during the tax period.
4. The amount of credit allowed shall be credited to the electronic credit ledger of the applicant maintained in FORM GST PMT-2 on the Common Portal.
5. The stock of goods on which the credit is availed is so stored that it can be easily identified by the registered person.

The scheme for claiming GST input tax credit against central excise would be available for 6 months from the date of GST implementation.

GST Input Tax Credit – For VAT

Any taxpayer having VAT registration and holding stock of goods on the GST implementation date for which VAT payment has been at the first point of sale in the State and the subsequent sales of which are not subject to tax in the State availing credit – would be allowed to avail GST input tax credit even if there is no document evidencing payment of value added tax.

GST input tax credit would be allowed for such goods at the rate of 60% for goods which attract state tax at the rate of 9% or more. For goods having state tax at the rate of 9% or less, input tax credit at the rate of 40% would be provided. If integrated tax is paid on such goods, the amount of credit shall be allowed at the rate of 30% and 20%. respectively. GST input tax credit would be credited to the electronic credit ledger of the taxpayer after the State tax payable on such supply has been paid.

To be eligible for claiming GST input tax credit under this scheme, the following conditions must also be satisfied:

1. The goods were not wholly exempt from tax under the Value Added Tax Act of the concerned state.
2. The document for procurement of such goods is available with the registered person.
3. The registered person availing of this scheme and having furnished the details of stock held by him, submits a statement in FORM GST TRAN 2 at the end of each of the six tax periods during which the scheme is in operation indicating therein the details of supplies of such goods effected during the tax period.
4. The amount of credit allowed shall be credited to the electronic credit ledger of the applicant maintained in FORM GST PMT-2 on the Common Portal.
5. The stock of goods on which the credit is availed is so stored that it can be easily identified by the registered person.

The scheme for claiming GST input tax credit against VAT would be available for 6 months from the date of GST implementation.

GST Transitional Rules

The scheme for availing GST input tax credit has been provided for in the GST Transitional Rules, which can be accessed below:

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What is GST Council?

With the GST rollout getting closer and closer, the media is filled with mentions of GST Council. In this article, we look into the GST Council and understand one of the key councils that regulate all aspects of GST in India.

When GST Council was Created?

The process for creating GST Council was started in India when The Constitution (One Hundred and Twenty-second Amendment) Bill, 2016, for introduction of Goods and Services Tax (GST) was accorded assent by the President on 8th September, 2016. As per Article 279A (1) of the amended Constitution, the GST Council had to be constituted by the President within 60 days of the commencement of Article 279A. The notification for bringing into force Article 279A with effect from 12th September, 2016 was issued on 10th September, 2016.

Following the assent of GST Bill, The Union Cabinet in a meeting held on 12th September, 2016 approved setting-up of GST Council and setting-up of its Secretariat. Further, Finance Minister Shri Arun Jaitley also decided to call the First Meeting of the GST Council on 22nd and 23rd September 2016 in New Delhi.

The press release below by the Ministry of Finance, shows the announcement for creation of GST Council:

Members of GST Council

The GST Council consists of the following members:

1. The Union Finance Minister (as Chairman).
2. The Union Minister of State in-charge of Revenue or Finance.
3. The Minister in charge of Finance or Taxation or any other Minister, nominated by each State Government to the GST Council.

In the Union Cabinet meeting held on 12th September, 2016, it was also decided to appoint:

1. The Secretary (Revenue) as the Ex-officio Secretary to GST Council.
2. The Chairperson, Central Board of Excise and Custom (CBEC), as a permanent invitee (non voting) to all proceedings of the Council.
3. One post of Additional Secretary to the Council in the GST Council Secretariat (at the level of Additional Secretary to the Government of India).
4. Four posts of Commissioner in the GST Secretariat (at the level of Joint Secretary to the Government of India).

Decision Making by GST Council

The GST Council will make recommendations on:

• Taxes, cesses, and surcharges to be included under the GST;
• Goods and services which possibly will be subject to, or exempt from GST;
  The threshold maximum value of turnover for function of GST;
• Rates of GST;
• GST laws, principles of levy, apportionment of IGST and principles associated with place of supply;
• Special provisions with respect to the eight north eastern states, Himachal Pradesh, Jammu and Kashmir, and Uttarakhand; and other associated matters.
• Other matters pertaining to the implementation and regulation of GST in India.

GST Council Secretariat

The GST Council is managed by the GST Council Secretariat. The GST Council Secretariat is manned by officers taken on deputation from both the Central and State Governments. In the first meeting for creation of the Council, the Cabinet provided for adequate funds for meeting the recurring and non recurring expenses of the GST Council Secretariat. The entire cost for managing the GST Council Secretariat is borne by the Central Government.

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GST Registration For Foreign Companies

Goods and Services Tax or GST is an indirect tax in India that is levied on consumption of goods and services. The liability for payment of GST is generally with the manufacturer or service provider in the value chain. However, the the tax is usually borne by the consumer and paid to the supplier supplier along with the price charged. In India, GST rollout is expected to happen from July 1st, 2017 replacing the existing tax structures like VAT, Service Tax, Central Excise, Luxury Tax, etc., In this article, we look at all aspects of GST registration and filing for foreign companies doing business in India.

Do Foreign Companies Require Indian GST Registration?

Yes, any foreign company that supplies goods and/or services to recipients in India, but who has no fixed place of business or residence in India are mandatorily required to obtain GST registration.

In the CGST Act, a “non-resident taxable person” has been defined any person who occasionally undertakes transactions involving supply of goods or services or both, whether as principal or agent or in any other capacity, but who has no fixed place of business or residence in India. And Section 24 of the CGST Act, has mandated that non-resident taxable persons making taxable supply mandatorily obtain GST registration.

Hence, all foreign companies that are supplying goods and/or services to recipients in India are required to obtain GST registration.

Read the guide to obtaining GST Registration in India.

GST Filing for Foreign Companies

All foreign companies that have obtained GST registration are required to file Form GSTR-5 through the GST Common Portal or a GSP. Like other taxpayers registered under GST, the GST return filed by foreign companies must include details of outward supplies and inward supplies. GST filing and payment of GST liability for foreign companies is due on the 20th of each month or within 7 after the last day of the validity of GST registration, whichever is earlier.

Many foreign companies are involved in the supply or providing of Online Information and Database Access or Retrieval (OIDAR) services. Such foreign companies providing OIDAR services to persons in India are also required to obtain GST registration and file monthly GST filing using Form FORM GSTR-5A on or before the 20th of each month.

Instruction for Filing GSTR-5

Form GSTR-5 must be submitted online through the GST Common Portal. 

1. Terms used:
   1. GSTIN: Goods and Services Tax Identification Number
   2. UIN: Unique Identity Number
   3. UQC: Unit Quantity Code
   4. HSN: Harmonized System of Nomenclature
   5. POS: Place of Supply (Respective State)
   6. B to B: From one registered person to another registered person
   7. B to C: From registered person to unregistered person
2. GSTR-5 is applicable to non-resident taxable person and it is a monthly return.
3. The details in GSTR-5 should be furnished by 20thof the month succeeding the relevant tax period or within 7 days from the last date of the registration whichever is earlier.
4. Table 3 consists of details of import of goods, bill of entry wise and taxpayer has to specify the amount of ITC eligible on such import of goods.
5. Recipient to provide for Bill of Entry information including six digits port code and seven digits bill of entry number.
6. Table 4 consists of amendment of import of goods which are declared in the returns of earlier tax period.
7. Invoice-level information, rate-wise, pertaining to the tax period separately for goods and services should be reported as under:
   1. For all B to B supplies (whether inter-State or intra-State), invoice level details should be uploaded in Table 5;
   2. For all inter-state B to C supplies, where invoice value is more than Rs. 2,50,000/- (B to C Large) invoice level detail to be provided in Table 6; and
   3. For all B to C supplies (whether inter-State or intra-State) where invoice value is up to Rs. 2,50,000/- State-wise summary of supplies shall be filed in Table 7.
   4. Table 8 consists of amendments in respect of –
      1. B2B outward supplies declared in the previous tax period;
      2. “B2C inter-State invoices where invoice value is more than 2.5 lakhs” reported in the previous tax period; and
      3. Original Debit and credit note details and its amendments.
8. Table 9 covers the Amendments in respect of B2C outward supplies other than inter-State supplies where invoice value is more than Rs 250000/-.
9. Table 10 consists of tax liability on account of outward supplies declared in the current tax period and negative ITC on account of amendment to import of goods in the current tax period. On submission of GSTR-5, System shall compute the tax liability and ITC will be posted to the respective ledgers.

If you are a foreign company requiring GST registration or GST filing services, get in touch with an IndiaFilings Expert.

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GST Credit Transfer Document

The concept of Credit Transfer Document (CTD) has been recently introduced in GST to transfer CENVAT credit paid on specified goods available with a trader on GST implementation date. In this article, we look at GST Credit Transfer Document in detail.

Who can issue GST Credit Transfer Document?

A manufacturer who was registered under Central Excise can issue Credit Transfer Document to evidence payment of central excise duty for goods manufactured and cleared by him before the date of GST implementation. CTD should be issued under the cover of an invoice issued to a person who was not registered under Central Excise, but is registered under GST.

Criteria for Issuing Credit Transfer Document

The following limitations, conditions and procedures must be followed while issuing GST Credit Transfer Document:

1. The value of such goods in higher than rupees twenty five thousand per piece, bears the brand name of the manufacturer or the principal manufacturer and are identifiable as a distinct number such as chassis / engine no. of a car.
2. Verifiable records of clearance and duty payment relatable to each piece of such goods is maintained by the manufacturer and are made available for verification on demand by a Central Excise officer.
3. The Credit Transfer Document should be serially numbered and should contain the Central Excise registration number, address of the concerned Central Excise Division, name, address and GSTIN number of the person to whom it is issued, description, classification, invoice number with date of removal, mode of transport and vehicle registration number, rate of duty, quantity, value and duty of central excise and amount paid.
4. The manufacturer is satisfied that the dealer to whom CTD is issued is in possession of such manufactured goods in the form in which it was cleared by him.
5. Credit Transfer Document shall be issued within 30 days of the GST implementation date and copy of the corresponding invoices should be enclosed with the CTD.
6. Copies of all invoices relating to buying and selling from manufacturer to the dealer, through intermediate dealers, is maintained by the dealer availing credit using CTD.
7. Credit Transfer Document should not be issued in favour of a dealer to whom invoice was issued for the same goods before the appointed date.
8. A dealer availing credit using Credit Transfer Document on manufactured goods would not be eligible to avail credit under GST Transition Rules made under CGST Act, 2017 on identical goods manufactured by the same manufacturer available in the stock of the dealer.
9. The dealer availing credit on the basis of CTD should , at the time of making supply of such goods, mention the corresponding CTD number in the invoice issued by him.

Misuse of Credit Transfer Document

If a manufacturer issues a Credit Transfer Document and the credit of central tax is availed twice on the same goods, then the manufacturer would be jointly and severally responsible for excess credit availed by the dealer and provisions for recovery of credit, interest and penalty under the CENVAT Credit Rules would apply on the manufacturer.

Procedure for Issuing Credit Transfer Document

A manufacturer issuing a Credit Transfer Document should submit details in TRANS 3 on GST common portal within sixty days of the appointed date.

A dealer availing credit on Credit Transfer Document should submit details in TRANS 3 on common portal within sixty days of the appointed date.

All manufacturers issuing CTD are required to maintain record in the form TRANS 3A and the records should be made available to the Central Excise officer for verification on demand.

Dealers availing credit on Credit Transfer Document should maintain record in the form TRANS 3B and the record should be made available to the Central Excise officer for verification on demand.

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Value of Supply – Related Party Transactions under GST

The value of supply in a free market transactions where the two parties (i.e. Buyer and Seller) involved in a transaction are not related would be at arms-length or fair market value. However, when a commercial transaction happens between two related parties under GST, the value of supply could be distorted leading to lower GST payable to the Government. To prevent under invoicing or distortion of value of supply amongst related party, the Value of Supply rules provide guidelines for valuation of goods or services.

Related Party under GST

Under GST, related parties are:

1. Such persons are officers or directors of one another’s businesses;
2. Such persons are legally recognised partners in business;
3. Such persons are employer and employee;
4. Any person directly or indirectly owns, controls or holds twenty-five per cent. or more of the outstanding voting stock or shares of both of them;
5. One of them directly or indirectly controls the other;
6. Both of them are directly or indirectly controlled by a third person; (vii) together they directly or indirectly control a third person; or
7. They are members of the same family;

Under GST, the term “related parties” also includes legal persons and persons who are associated in the business of one another in that one is the sole agent or sole distributor or sole concessionaire, of the other. Further, related parties is also referred to as related persons or distinct persons under GST.

Read about related parties transaction as per Companies Act, 2013.

Related Party Transaction – Value of Supply

Its important to consider two rules defined in the rules for Determination of Value of Supply, while calculating the value of supply between related parties.

Value of Supply – Consideration is not Wholly in Money

In a lot of related party transaction, the consideration for the value of supply of goods and/or services might not be paid wholly in money. Hence, its important to ensure that in all related party transactions, the rules concerning value of supply where the consideration is not wholly in money, is followed:

When the supply of goods or services is for a consideration not wholly in money, then value of the supply should be calculated as:

• The open market value of such supply;
• If open market value is not available, be the sum total of consideration in money and any such further amount in money as is equivalent to the consideration not in money if such amount is known at the time of supply;
• If the value of supply is not determinable as per the above two conditions, then the value of supply of goods or services should be based on like kind and quality;
• If the value of supply is not determinable as per the above three conditions, then the sum total of consideration in money and such further amount in money that is equivalent to consideration not in money as determined by the cost method or residual method.

Cost Method for Determining Value of Supply under GST

Where the value of a supply of goods or services or both is not determinable by any of rules prescribed in the procedure for determining value of supply under GST, the value should be taken as 110% of the cost of production or manufacture or cost of acquisition of such goods or cost of provision of such services.

Value of Supply – Related Party Transaction or Distinct Persons

The value of the supply of goods or services or both between distinct persons or related parties, other than where the supply is made through an agent, should be calculated as:

The open market value of such supply;

If open market value is not available, be the value of supply of goods or services of like kind and quality;

If value is not determinable under the above two methods, then the value as determined by cost method or residual method.

Also, if goods are intended for further supply as such by the recipient, then the value of supply an amount equivalent to 90% 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. Finally, if the recipient is eligible for full input tax credit, then the value declared in the invoice should be deemed to be the open market value of goods or service.

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Benefit to Farmers from GST

India is among the top farming countries in the world, producing a wide array of produce for consumption by the people of India and exports. India is the second largest producer of rice and wheat in the world after China. With the GST set to change the indirect tax system of India, farmers will be impacted by GST rollout. In this article, we look at the benefits to farmers from GST implementation in India.

Farmers Do Not Need GST Registration

According to the GST Act, agriculturists have been exempted from GST registration or compliance requirements. The term agriculturists has been defined in the GST Act as:

“Agriculturist” means an individual or a Hindu Undivided Family (HUF) who undertakes cultivation of land

• By own labour, or
• By the labour of family, or
• By servants on wages payable in cash or kind or by hired labour under personal supervision or the personal supervision of any member of the family.

Hence, based on the above definition it must be inferred that only farmers involved in the cultivation of land who are individuals or a HUF are eligible for GST exemption. Further, the farmer must also cultivate the land by his own labour, by the labour of his/her family or through hired labour under personal supervision. Thus, any company or LLP or Corporation involved in farming or agricultural activities would not be exempted from GST compliance requirement.

Farmers Need Not Collect GST

Since GST can be collected by only taxable persons having GST registration and most farmers would not have GST registration, they would not be liable for collecting and remitting GST to the Government.

Farmers Do Not Need GST Filing

Compliance under GST and GST filing is necessary only for taxable persons under GST, having GST registration. Since, most farmers in India would be classifiable as an agriculturist under the GST Act, GST filing would not be necessary.

No GST for Seeds

Farming would require the purchase of seeds for planting and cultivation. Under GST, seeds required for cultivation by agriculturists in India have been placed in the NIL category. Hence, GST would not be applicable on seed purchase by farmers.

GST Rate for Fertilisers

The GST rate is NIL for organic manure which is not put up in unit containers and bearing a brand name. Other fertilisers are taxed at 12% under GST.

GST Rate for Agricultural Tools

The following types of agricultural tools have been kept in the NIL GST rate category:

• Agricultural implements manually operated or animal driven
• Hand tools, such as spades, shovels, mattocks, picks, hoes, forks and rakes; axes, bill hooks and similar hewing tools; secateurs and pruners of any kind; scythes, sickles, hay knives, hedge shears, timber wedges and other tools of a kind used in agriculture, horticulture or forestry.

The following types of agricultural tools have been kept in the 5% GST rate category:

• Hand pumps and parts
• Solar water heater and system
• Waste to energy plants/devices
• Solar lantern/solar lamp

The following types of agricultural tools have been kept in the 12% GST rate category:

• Power driven pumps primarily designed for handling water, namely, centrifugal pumps (horizontal and vertical), deep tube-well turbine pumps, submersible pumps, axial flow and mixed flow vertical pumps.
• Agricultural, horticultural or forestry machinery for soil preparation or cultivation; lawn or sports-ground rollers.
• Milking machines and dairy machinery.
• Composting Machines.
• Self-loading or self unloading trailers for agricultural purposes.
• Other agricultural, horticultural, forestry, poultry-keeping or beekeeping machinery, including germination plant fitted with mechanical or thermal equipment; poultry incubators and brooders.
• Harvesting or threshing machinery, including straw or fodder balers; grass or hay mowers; machines for cleaning, sorting or grading eggs, fruit or other agricultural produce.

The following types of agricultural tools have been place in the 28% GST rate category:

Ceramic wares for laboratory, chemical or other technical uses; ceramic troughs, tubs and similar receptacles of a kind used in agriculture; ceramic pots, jars and similar articles of a kind used for the conveyance or packing of goods.

Find GST Rate and HSN Code for agricultural products.

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GST EWay Bill

GST EWay Bill is a new methodology for tracking of goods in transit introduced under the Goods and Services Tax. Any taxable person registered under GST and causing movement of goods of consignment with a value of over Rs.50,000 is required to generate a GST EWay Bill from the GST Common Portal. In this article we look at all aspects of a GST EWay Bill in India.

What is GST EWay Bill?

GST EWay Bill is a document issued under the GST Act for any transfer of goods of consignment with a value of over Rs.50,000. Any person having a GST registration and causing movement of goods of consignment for any of the following reasons is required to generate a GST EWay Bill:

• In relation to a supply; or
  • If a taxable person under GST supplies any goods and the value of the consignment is over Rs.50,000, a GST EWay Bill would have to be generated.
• Reasons other than supply;
  • If a taxable person under GST transfers goods located in one godown to another and the value of the consignment is over Rs.50,000, a GST EWay Bill need to be generated.
• Due to inward supply from an unregistered person.
  • If a taxable person under GST purchases any goods from an unregistered person under GST and the value of the consignment is over Rs.50,000 a GST EWay Bill should be generated.

Who can Generate GST E-Way Bill?

GST EWay Bill can be generated by a taxable person registered under GST or a transporter or a person not registered under GST using the GST Common Portal.

For GST Registration Holders

If a taxable person is registered under GST wants to transport goods using own vehicle or hired vehicle as a supplier or to be received in the course of business as a recipient, the taxable person can generate a EWay Bill in Form GST INS-1 electronically on the GST Common Portal by providing information requested in Part B of FORM GST INS-01.

For Transfer through Transporters

If a transporter is involved in the transfer of Goods, then the taxable person registered under GST must furnish information about the consignment in Part B of FORM GST INS-01 on the GST Common Portal. Using this information, the transporter would then generate a EWay Bill on the basis of the information provided by the taxable person in Part A of FORM GST INS-01. Transporters are allowed to generate and carry E-Way bill even if the value of the consignment is less than Rs.50,000.

For Transport by Unregistered Persons

Finally, any unregistered person transferring goods to a taxable person under GST can also generate e-way bill in FORM GST INS-01 on the GST Common Portal.

How to Generate GST E-Way Bill or EBN?

GST EWay Bill can be generated on the GST Common Portal by a taxable person registered under GST or an unregistered person or a transporter. On submission of the necessary documents on the GST Common Portal in FORM GST INS-01,  a unique e-way bill number (EBN) would be provided to the supplier, the recipient and the transporter.

Any registered taxable person would be intimated about the issue of a GST E-Way Bill or EBN on the common portal. The registered taxable person would have the option to accept or reject the consignment covered by the e-way bill. If a taxable person registered under GST does not communicate acceptance or rejection within 3 days of the details being made available on the GST Common Portal, then the GST E-Way Bill would be considered as accepted. Finally, all accepted GST EWay Bill would be reconciled automatically on GSTR-1 during the filing of monthly GST Returns.

If an unregistered person generated a GST EWay Bill, then the status of the E-Way Bill would be updated to the registered mobile number or email of the unregistered person.

Validity of GST EWay Bill

The validity of a GST EWay bill is dependent on the distance the goods have to be transporters. For example, a GST e-way bill generated for transportation of goods for less than 100 kilometers are valid for a period of 1 day. The following table shows the validity of GST bills along with the distance mentioned on the GST e-way bill.

Cancelling a GST EWay Bill

Once a GST E-Way Bill is generated but goods were not transported or are not being transported, then the GST e-way bill can be cancelled through the GST portal or through a GST Facilitation Centre within 24 hours of generation of the e-way bill.

Why GST EWay Bill is Required?

The tracking of movement and storage of goods is key to reduce tax revenue leakage for the Government and reducing black-market products. Hence, registration under GST has been made mandatory for all transporters, godowns and warehouses. To track goods in transit, the GST e-way bill mechanism has been introduced by the Government. Thus, any transporter transferring goods is required to generate a new e-way bill on the common portal in FORM GST INS-01 specifying details and mode of transport.

Documents Required for Transport under GST

In addition to the GST E-Way Bill, a person in-charge of conveyance of goods is required to carry the following documents for inspection by authorities at any time:

• Invoice or bill of supply or delivery challan and invoice reference number from the GST common portal, obtained by uploading a copy of the GST tax invoice issued in FORM GST INV-1.
• Copy of the e-way bill or the e-way bill number, either physically or mapped to a Radio Frequency Identification Device (RFID) embedded on to the vehicle.  in such manner as may be notified by the Commissioner.

GST EWay Bill Rules

The Draft GST E-Way Bill Rules has been notified by the Government. However, the final rules have not been notified. The GST E-way Bill and mechanism for generation of e-way bill on the GST common portal is expected to be available shortly.

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How to Calculate GST?

With the GST rollout day getting closer and closer, many Entrepreneurs wonder how to calculate GST payment in a transaction. In this article, we cover all aspects of calculating GST in a business transaction. To calculate GST, the following aspects in a transaction must be considered in a logical, step by step manner.

Step 1: Find the GST Rate Applicable for the Goods or Service

The first step in calculating GST is to find the GST Rate applicable for the Goods or Service under the GST Act. Over the past month, the GST Council has conveyed GST rates for almost all goods and services in India.

Find HSN Code or SAC Code

To find GST Rate, we must first make a distinction between the type of supply supplied, i.e., is it a good or service. If the supply is a good, then its important to interpolate with the HSN Code applicable for the Good. HSN Code is an international system for classifying all types of goods in international transactions.

If the transaction involves supply of a service, then the SAC code must be checked to find the relevant SAC code for the service. SAC Code stands for Service Accounting Codes and is used for classification of all services.

Determine the GST Rate applicable for the HSN or SAC Code

Once the HSN or SAC Code is determined for the supply, then the GST Rate for the HSN Code or SAC code can be easily interpolated. GST is levied under 5 different slab rates at NIL, 5%, 12%, 18% and 28% for both goods and services. Hence, the GST rate applicable for the Goods or Service would be any of the slab rates.

Your can easily find HSN Code and GST Rate using Calculator.

Step 2: Determine the Applicability of IGST or CGST and SGST

Once the GST rate is determined, then the applicability of IGST or CGST and SGST must be determined. To determine if IGST or CGST and SGST would be applicable, you will have to determine the place of supply. In most cases, the place of supply of goods or services would be the address where the goods were delivered or the service was provided. For some types of transactions involving e-commerce or OIDAR services, the determination of place of supply is a more complex issue.

Inter-State Supply

If goods or services are provided between two states, i.e., from one state to another, then IGST or Integrated Goods and Services Tax would be applicable on the transaction. Whenever any supplier is involved in providing inter-state supply, GST registration is mandatory.

Intra-State Supply

If the goods or service are provided within the same state, then CGST or Central Goods and Services Tax and SGST or State Goods and Service Tax would be applicable.

Calculating IGST, CGST and SGST

If IGST is applicable and the supply is inter-state, then the entire GST applicable for the HSN or SAC code must be accounted for under IGST. If CGST and SGST is applicable and the supply is intra-state, then the GST applicable for the HSN or SAC code must be divided between CGST and SGST. The calculation for IGST, CGST or SGST is only for classification purposes for crediting the tax revenue to the state of consumption. The GST tax rate would remain same and there would be no double-taxation.

Know more about IGST, CGST and SGST here. 

Step 3: Determine if GST is Chargeable on Reverse Charge Basis

Normally under GST, the supplier of the goods or service is liable to collect tax from the recipient and remit the same with the Government. However, for some services, notified as reverse charge services, the recipient is made liable for payment of GST. Hence, its important to know whether the transaction involves reverse charge under GST.

Check the list of reverse charges services under GST.

Step 4: Is the Supplier Enrolled under GST Composition Scheme

Typically, GST compliance requires the supplier to maintain extensive accounts, records and file 3 GST filing a month. However, many SMEs in India would find GST compliance tough and would require a simpler mechanism. Such businesses having a turnover of less than Rs.75 lakhs, can enroll under the GST Composition Scheme and pay a flat GST based on their aggregate turnover. Suppliers enrolled under GST composition scheme are required to declare on their invoice that they are composition Suppliers and not eligible to collect tax. Hence, its important to check if the supplier is enrolled under GST Composition Scheme.

Know more about GST Composition Scheme.

Step 5: Determine Type of Transaction

Under GST, transactions can be broadly specified under the following three categories:

• Business to Business
• Business to Consumer – Value of supply more than Rs.2.5 lakhs
• Business to Consumer – Value of supply less than Rs.2.5 lakhs.

For a supply to be termed as a B2B transaction under GST and made available for GST input tax credit, both the supplier and the recipient of the goods or service must have a GSTIN. GSTIN is provided when a business obtains GST registration. Do you need GST Registration? Easily find out using this guide.

In a B2C transaction under GST, the recipient of the goods or service would not be eligible for receiving input tax credit. However, in a B2C transaction the recipient need not provide details of his/her GSTIN or GST registration. However, if the transaction value is more than Rs.2.5 lakhs, the recipient would have to furnish details like name, address and other details to determine the place of supply.

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GSTR-2 Filing Procedure

All taxpayers registered under GST are required to file GSTR-2 or details of inward supplies of goods or services received during a month. GSTR-2 is due on the 15th of each month, after the filing of GSTR-1. In GSTR-2, the information provided by the taxable persons under GST will be auto populated based on the information filed by various taxpayers under GSTR-1.

Due Date for Filing GSTR-2

GSTR-2 is due on the 15th of each month from all taxable persons under GST, except for:

• Taxable persons registered under GST and enrolled under GST Composition Scheme.
• Non-resident taxable persons under GST.
• Input service distributors.

How to File Form GSTR-2

GST returns can be filed through the GSTN or an easy upload tools provided by GSTN/GSPs or IndiaLedgers. Also, GSTR-2 can be filed on the GST Common Portal or through a GST Facilitation Centre.

The main details furnished by a GST payer on Form GSTR-2 relating to inward supplies of goods or services would include:

• Invoice wise details of all inter-State and intra-State supplies received from registered persons or unregistered persons;
• Import of goods and services made; and
• Debit and credit notes, if any, received from supplier.

Since GSTR-2 data is auto-populated from GSTR-1 filed by a taxpayer containing details of outward suppliers, GSTR-2 can be prepared or changed only between the 10th and 15th of each month. Once, the auto-populated data is verified and any additional information is provided, GSTR-2 must be filed by 15th of every month.

Details auto-populated in GSTR-2

• Details of tax collected at source furnished by an e-commerce operator
• Invoice wise details of all supplies received from registered persons
• Details of invoices furnished by an non-resident taxable person in his return in FORM GSTR-5
• Details of invoices furnished by an Input Service Distributor in his return in FORM GSTR-6
• Details of tax deducted at source furnished by the deductor in FORM GSTR-7

Details to be Provided in Form GSTR-2

GSTR-2 is a return of inward supplies that is auto-populated from the data filed for GSTR-1 by all taxpayers on the system. Hence, invoice wise details of inter-state supplies would be autopoulated based on the GSTIN of the taxpayer.

The following data can be additionally provided in Form GSTR-2

The taxpayer can provide details of the inward supplies in respect of which he is not eligible, either fully or partially, for input tax credit in FORM GSTR-2 where such eligibility can be determined at the invoice level.

Details of quantum of ineligible input tax credit on inward supplies which is relatable to non-taxable supplies or for purposes other than business and cannot be determined at the invoice level.

Obtain GST Registration or GST Filing services in India through IndiaFilings.

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GST Return Due Date

Most businesses in India will need to file 37 GST returns each year to maintain GST compliance. In this article, we look at the list of returns to be filed by various types of businesses under GST along with GST return due dates.

How to File GST Returns?

GST Returns can be filed online through the GST Common Portal or an online GST accounting software. The proposed GST regime is backed by a technology platform maintained by the GSTN. GSTN has provided GSP Licenses for enabling businesses to file GST returns through various types of accounting software and ERP systems. Hence, GST return can be filed directly on the GST Common Portal or through a GST accounting software with the requisite features.

When to File GST Returns?

Under GST, a regular taxpayers needs to furnish three monthly returns and one annual return. If a taxpayer is registered under the composition scheme or is a non-resident taxpayer or is a taxpayer registered as an Input Service Distributor, or a person liable to collect TDS or TCS or was granted UIN, then they would have to file other forms.

What is the penalty for late filing of GST Returns?

Any taxable person under GST who fails to file form GSTR-1, GSTR-2, GSTR-3 or Final Return within the due dates, will be fined a late fee of Rs. 100 per day, subject to a maximum of Rs. 5,000.

GST Return Due Date for Regular Taxpayers

Most taxable persons registered under GST would be termed as regular taxpayers. Regular taxpayers must file 3 returns each month as follows:

GSTR-1 – Statement of Outward Supplies

GSTR-1 or the statement of outward supplies is used to file details of all supplies made by a taxpayer in the previous month and record the tax liability of the supplier. GSTR-1 must be filed on or before the 10th of every month with details of all supplies effected during the previous month.

GSTR-2 -Statement of Inward Supplies

GSTR-2 or the statement of inward supplies is used to file and verify details of input tax credit accrual received during the previous month. GSTR-2 details are auto-populated from the information filed in GSTR-1. Hence, in the statement of inward supplies, the taxpayer must only provide minimal additional information like imports, and purchases from unregistered suppliers. GSTR-2 must be filed on or before the 15th of every month with details of all supplies received during the previous month.

GSTR-3 – Consolidated Return

GSTR-3 is a consolidated return that must be filed by all taxpayers on the 20th of every month. GSTR-3 consolidates the following information already provided by the taxpayer to arrive at final tax payable:

• Outward Supplies (Auto-Populated from GSTR-1)
• Inward Supplies (Auto-Populated from GSTR-2)
• Input Tax Credit availed
• Tax Payable
• Tax Paid (Using both Cash and ITC)

GSTR-9 – GST Annual Return

GSTR-9 or Annual GST return must be filed by 31st December of the next financial year by all taxable persons registered under GST. Information provided in GSTR-4 would include details of expenditure and details of income for the entire financial year.

The GST Annual Return must be audited by a practising Chartered Accountant, if the aggregate turnover of the registered person exceeded Rs. 2 crores during a financial year. Further, along with the GST annual return, a copy of audited annual accounts and a reconciliation statement, duly certified by a Chartered Accountant, in FORM GSTR-9C, must be filed electronically through the GST Common Portal.

GST Return Due Date for Composition Scheme Taxpayers

The GST Composition Scheme is designed to reduce the tax compliance burden for small businesses having an annual turnover of less than Rs.75 lakhs and doing sales only within the state. Taxable person registered under the GST Composition Scheme are required to file quarterly GST returns and GST annual return.

GSTR-4 – GST Return for Composition Scheme Suppliers

GSTR-4 must be filed every quarter on the 18th of the month, succeeding the quarter. Hence, GSTR-4 would be due on the 18th of July, 18th of October, 18th of January and 18th of April.

GSTR-4 – GST Annual Return for Composition Suppliers

A composition supplier is also required to to file GST annual return on or before the 31st December of the next financial year. Annual return filed by a Composition Scheme supplier would not have to be audited, as the turnover would not be over Rs.75 lakhs.

GST Return Due Date for Foreign Companies

Foreign companies or non-resident taxable under GST are also required to obtain GST registration and file GST returns, if they supply goods or services to person located in India. All foreign companies or non-resident taxable persons are required to file GSTR-5 on the 20th of every month and within 7 days of expiry of GST registration.

GSTR-5 – GST Return for Non-Resident Taxable Persons

Non-resident taxable persons are required to file GSTR-5 with details of all outward supplies and inward supplies through the GST Common Portal. Based on the filing, the taxpayer is required to pay the tax, interest, penalty, fees or any other amount payable under the GST Act before 20th of every month or with 7 days of expiry of GST registration, whichever is earlier.

GSTR-5A – GST Return for Non-Resident Taxable Persons providing OIDAR Services

If the non-resident taxable person is involved in providing online information and data base access or retrieval (OIDAR) services from a place outside India to a person in India, then GSTR-5A form must be filed before the 20th of every month instead of GSTR-5.

Non-resident taxable person under GST are not required file GSTR-9 which is the GST annual return.

GST Return Due Date for E-Commerce Operators

E-commerce operators are taxable person under GST who own, operate or manage digital or electronic facility or platform for electronic commerce. Electronic commerce operators are required to collect tax at source and file FORM GSTR-8 before the 10th of the next month. Hence, even if an electronic commerce operator is acting only as a marketplace, they must provide details of all supplies effected through them and the amount of tax collected. The details provided by electronic commerce operators would be made available electronically to all suppliers while filing Form GSTR-2 on the GST Common Portal, after the due date of filing of FORM GSTR-8.

If an electronic commerce operator is involved in supply of any taxable goods or services, the electronic commerce provider would be required to file regular month GST returns like GSTR-1, GSTR-2, GSTR-3.

GST Return Due Date for Input Service Distributors

All person classified as an Input Service Distributor under GST is required to file FORM GSTR-6 on or before the 13th of each month. Details of tax invoices on which credit has been received would be made available to Input Service Distributors on FORM GSTR-6A and the input service distributor can if required, after adding, correcting or deleting the details, file the GST return electronically.

GST Return Due Date for Authorities Deducting Tax at Source

Any authority deducting tax at source is required to file Form GSTR-7, on or before the 10th of every month. On the basis of the GSTR-7 return filed by authorities required to deduct tax at source, details of the transaction would be made available electronically to suppliers in FORM GSTR-2A and FORM-GSTR-4A.

Due Date for Filing GST Final Return

GST Final Return must be filed by all taxable persons who were registered under GST and their registration was surrendered or cancelled. GST Final Return or GSTR-10 must be filed eithin three months of the date of cancellation or date of order of cancellation, whichever is later.

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Is GST Applicable on Imported Goods?

Under the GST regime, both the import of goods and or services  into the territory of India would be treated as supply of goods or services in the course of inter-state trade attracting the levy of IGST. So import of goods or services will be treated as deemed inter-state supplies and would be subject to GST. In this article, we look at the applicability of GST on goods imported into India.

GST on Import of Goods

The GST Act has defined import of goods as bringing goods into India from abroad. Accordingly, all imports into India will be deemed as inter-state attracting IGST. In addition to the IGST, the import would also be subject to Customs Duties. Thus, when goods are imported into India, IGST would be applied on the value of the goods and collected along with Customs Duty. The Customs Tariff Act, 1975 has already been amended to provide for levy of integrated tax and the compensation cess on imported goods, in anticipation of the GST rollout.

While, GST would be applied to imports in addition to the Basic Customs Duty, GST Compensation Cess can also be levied on certain luxury and demerit goods under the Goods and Services Tax (Compensation to States) Cess Act, 2017.

Know the difference between IGST, CGST and SGST.

Amount of GST on Imported Goods

HSN (Harmonised System of Nomenclature) code has been used for the purpose of classification of goods under the GST regime. Hence, the classification of the item for Customs Duty purpose and IGST calculation purpose would be harmonised.

The amount of GST payable on imported goods would be dependent on the assessable value plus customs duty levied under the Customs Act, and any other duty chargeable on the goods. The value of the imported article for the purpose of levying GST Compensation cess would be, assessable value plus Basic Customs Duty levied under the Act, and any sum chargeable on the goods in the same manner as a duty of customs. Thus, the IGST paid would not be added to the value for the purpose of calculating GST Compensation cess.

Calculating GST on Imports

• If the assessable value of  goods imported into India is Rs. 100/-.
• Basic Customs Duty is 10% ad-valorem.
• Integrated tax rate is 18%.

Then IGST tax payable would be calculated as:

Assessable Value= Rs. 100/-
Basic Customs Duty (BCD) = Rs. 10/-
Value for the purpose of levying IGST = Rs. 110/-
GST – Integrated Tax = 18% of Rs.110/- = Rs. 19.80
Total Taxes = Rs. 29.80

If the goods are luxury products and GST Compensation Cess is also applicable, then GST Compensation Cess would be levied on Rs. 110/-, as Compensation Cess is not levied IGST.

Paying GST for Imports

Under The Customs Act, 1962, removal of goods from a customs station can be done only after payment of Customs Duty and the Integrated GST tax payable. Thus, the importer would be required to pay the Integrated tax at the time of removal of goods from a customs station to a warehouse.

Input Tax Credit for Imports

Input tax credit is available under the GST regime to set off the cascading effect of indirect tax and ensure that the consumer bears GST. Input tax credit is also available for integrated tax charged on import of goods. Input tax credit of the IGST paid at the time of import would be credited to the importer and the same can be utilized by the taxpayer as Input Tax credit for payment of IGST liability on outward supplies.

Though input tax credit is available for the IGST paid, input tax credit cannot be claimed for The Basic Customs Duty (BCD) paid by the importer.

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OIDAR Services under GST

OIDAR Services or Online Information and Database Access or Retrieval (OIDAR) Services are services whose delivery is made through information technology over internet or electronic network and the supply is automated with minimal human intervention. With the tremendous growth in cloud technology and SAAS based products in India over the last decade, more and more services are being introduced by Indian and Non-Resident Taxable Persons, which would fall under the classification of OIDAR services. In this article, we look at OIDAR services and its impact under GST.

What is OIDAR Services?

OIDAR Services has been defined in the IGST Act as services whose delivery is mediated by information technology over the internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention, and impossible to ensure in the absence of information technology. Some examples of OIDAR services include:

• Online advertising service providers
• Cloud service providers
• Providing e-book, movie, music, software and other intangibles via telecommunication networks or the internet
• Providing data or information, retrievable or otherwise, to any person, in electronic form through a computer network
• Digital data storage services
• Online gaming services
• Online supplies of digital content like movies, television shows, music, etc.

GST Registration for OIDAR Service Providers

Any entity providing OIDAR services is required to mandatorily obtain GST registration in India, irrespective of the aggregate turnover criteria. The following types of taxable person are required to obtain GST Registration mandatorily and OIDAR service providers is one of them:

1. Persons making any inter-State taxable supply;
2. Casual taxable persons;
3. Persons who are required to pay tax under reverse charge;
4. Electronic commerce operators;
5. Non-resident taxable persons;
6. Persons who are required to deduct tax;
7. Persons who supply goods and/or services on behalf of other registered taxable persons whether as an agent or otherwise;
8. Input service distributor (whether or not separately registered under the Act)
9. Persons who are required to collect tax;
10. Electronic commerce operator
11. Every person supplying online information and data base retrieval services from a place outside India to a person in India, other than a registered person;

Hence, most OIDAR service providers even outside India providing services to residents in India would be required to mandatorily obtain GST registration by virtue of being classified under one or more of the above categories.

GST Registration for OIDAR Service Providers – Located in India

OIDAR service providers with a place of business in India can obtain GST Registration through the normal method by applying as through the GST common portal. (Know more about obtaining GST registration in India.)

GST Registration for OIDAR Service Providers – Located Outside India

All OIDAR service providers supplying services to residents in India and not located in India are also required to comply with GST regulations. Any OIDAR service provider supplying online information and data base access or retrieval services from a place outside India to a non-taxable online recipient is required to obtain GST registration by filing GST REG-10.

The application for GST Registration for OIDAR service providers can be submitted electronically with a self-attested copy of valid passport of the promoters and tax identification number or unique identification number issued by the foreign Government or PAN. The application for GST registration must be submitted atleast 5 days prior to the commencement of business in India.

Foreign companies can appoint a representative in India for obtaining GST registration, filing GST returns and paying GST payments on behalf of the foreign entity.

GST Filing for OIDAR Service Providers

Based on the place of business of the OIDAR service provider, the due date for GST Return Filing and the form to be filed would vary.

For OIDAR Service Providers Located in India

OIDAR service providers located in India would have to file GSTR-1, GSTR-2, GSTR-3 and annual GST return like a regular taxpayer. (Know the GST return due dates)

For OIDAR Service Providers Located Outside India

OIDAR service providers located outside India are required to file Form GSTR-5A on or before the 20th of each month. Similar to the requirement for registration, all OIDAR service providers located outside India are required to appoint a representative in India for filing of GST returns and ensuring compliance under GST.

Form GSTR-5A is a simplified form and the details to be provided in Form GSTR-5A include:

• Details of taxable outward supplies made to consumers in India with details like place of supply (State/UT), rate of tax, taxable value, IGST and Cess.
• Calculation of interest, penalty or any other amount
• Tax, interest, late fee and any other amount payable and paid

Reverse Charge for OIDAR Services

Under GST, the supplier of goods and services is normally made liable for the collection and payment of IGST or CGST and SGST to the Government. However, OIDAR services has been placed under the list of Reverse Charge Services under GST, making the recipient of the service liable for payment of GST. Hence, all business entities receiving OIDAR services in India are required to pay GST on behalf of the supplier.

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Imports and Exports under GST

Foreign trade is an important determinant of the economic growth and development of the nation. It is imperative that imports to and exports  from the country register a significant year on year growth along with the manufacturing sector to promote a healthy economy. This growth would lead to an increase in domestic demand and strengthening of the currency. 

Current Taxation System on Imports- Exports

As per the current system, an individual/ business owner who imports goods has to pay a countervailing duty (CVD), customs duty and special additional duty (SAD). (Know more about the different types of customs duty). The rate of the countervailing duty is equivalent to the rate of excise in the country as if the goods had been manufactured domestically. In case the individual uses the imported goods as raw products to manufacture goods domestically, he is provided with tax credits on the CVD paid. The special additional duty is equivalent to the value added tax on sale of goods domestically. The customs duty paid on goods is not subject to refunds/ credits and is considered to be a major cost for the importer. These duties are imposed in order to bring out the true price of the imported goods in the market. Import of services would entail payment of service tax by the individual/ business that avails the service. Tax credit can be claimed by the importer who imports these services.

However, unlike imports, exports of goods and services are not subject to taxation, i.e., the rate of tax on exports is 0%. Also, the exporter can claim refund on the tax paid on imported goods that were used to manufacture the goods that were eventually exported.

Imports under GST

The introduction of GST ushers in a new tax regime wherein the loss of tax credit can be prevented and compliance can be maintained at various levels. Salient features of the Model GST Law pertaining to are mentioned below.

• An individual who imports goods/ services has to pay Basic Customs Duty (BCD) and Integrated Goods and Services Tax (IGST) as imports to the country will be considered as Inter- State supply as per the Model Law. IGST in this case would subsume both countervailing duty (CVD)  and special additional duty (SAD).
• There will be no change in the current rates charged for Basic Customs Duty (BCD) on the imported goods.
• In case of services, if the service provider is a permanent resident of a foreign country, the liability to pay the tax rests on the receiver of the service. This is in tune with the concept of reverse charge wherein the receiver of the goods is supposed to collect the tax from the provider and remit it with the government.
• CVD is currently charged based on the MRP of the goods. However under the new model law, IGST will be applicable on the transaction value and not the MRP. This would reveal the margin of the service provider which was not the case earlier hence capital restructuring might be required to mitigate the effects.
• Introduction of the ‘Import and Sale’ model- Credit will be provided equivalent to the tax which is paid during the import of the goods under this model.

Know more about imports under GST.

Exports under GST

• The GST will result in eventual elimination of barriers between the various states and hence make exports more competitive in the market due to integration of value chains.
• As under the current system, exports would be relieved of the burden of GST due to zero rating i.e. an exporter will be allowed to export the goods/ services without charging any tax and can benefit from IGST credits paid on imported goods and services as per section 38 of the Central GST Act, 2016.
• The exporter can also claim a refund of the tax paid on inputs used to purchase/ manufacture goods from the exported commodities.

Major central and state taxes are subsumed in GST, which will lead to an increase in the competitiveness of the Indian goods and services in the international market along with giving a boost to exports from India. Overall, the ensuing uniformity in taxation across the country are expected to reduce the costs of imports and exports and result in easier compliance.

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GSTN – Role and Functions

The launch of GST in India is a landmark event which intends to change the entire taxation system in the country. However, the launch of this system requires mega infrastructural support including IT facilities, administrative backup and institutional setup. Hence the government launched the GSTN.

GSTN stands for Goods and Services Tax Network. It is a not for profit section 8 company, established primarily to assist the rollout and implementation of GST and to act as the nodal agency to provide assistance in terms of IT infrastructure and services to the Central, State Governments, tax payers and general public. In essence, it will act as a common interface between the government, tax payers, accounting authorities and bank.

Management and Shareholding

The administrative and strategic control of the GSTN will lie with the government as the central and the state governments together have seven members in the 14-member GSTN board. Three members will be private shareholders. The rest will be independent members; The CEO will be responsible for its overall functioning and he/she will be appointed by the board.

The majority stake in the GSTN (24.5%) will be held by the central government whereas all state governments together will hold another 24.5% of the stake. Private financial institutions like ICICI, HDFC etc. will collectively hold rest of the 51% of the stake in the company.

Know more about the GST Council.

Functions of GSTN

• Facilitate registration
• Computation of IGST and settlement
• File tax returns and submit to central and state authorities
• Integrate banking network with tax payment details
• Analyse tax payer’s profile
• Manage computation engine of input tax credit
• Submit MIS reports to governments

GSTN is expected to assist in the 4 phases mentioned below:

• Phase 1– GST Registration/ Returns/ Payments
• Phase 2 – Review of Pilot & Project development of NSDL
• Phase 3 – GST planning and implementation
• Phase 4 – GST solution development

IT Infrastructure

The primary role of GSTN as a back office infrastructural support system is to provide a strong IT infrastructure to the state and central governments, stakeholders, taxpayers etc. for the execution of GST. Integration of the new portal with the existing IT systems is of primary importance.

A common GST portal is being developed by the GSTN for applications for registrations, payment of taxes, MIS reports, settlement of dues etc. Currently, the state and central tax administration systems are working as separate modules, hence it is imperative that they are integrated to ensure seamless functioning. The common GST portal will be integrated with the existing administration systems and help build interfaces for taxpayers. This common portal will function as the front-end of the overall GST IT system.

Back end modules like registration approval, assessment, audit, refund, appeal, adjudication etc. for 19 states (Model 2 states) will be developed by GSTN. The Central Board of Excise and Customs and State Tax Departments of 15 states (Model 1 states) will develop their own GST back end systems. The integration of the front and back end systems will be completed and tested well in advance to ensure smooth transition

Know more about the process for becoming a GST Suvidha Provider and accessing the GSTN.

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Casual Taxable Persons – GST Registration

Casual taxable persons have been provided special treatment under GST. The GST Act defines as casual taxable person as a person who occasionally undertakes transactions involving supply of goods or services or both in the course or furtherance of business, whether as principal, agent or in any other capacity, in a State or a Union territory where he has no fixed place of business. Hence, persons running temporary businesses in fairs or exhibitions or seasonal businesses would fall under casual taxable persons under GST. In this article, we look at GST registration for casual taxable persons.

Regular Taxable Persons vs Casual Taxable Persons

A regular taxable person would be someone who is required to be registered under GST and not classifiable as a casual taxable person or non-resident taxable person. Hence, regular taxable persons would be someone with a fixed place of business located within India.

Unless a regular tax payer is enrolled under the GST composition scheme, the taxpayer would be required to file monthly GST returns, maintain accounts as per GST Act, maintain a fixed place of business and comply with GST regulations.

Casual taxable persons would find it hard to maintain a fixed place of business or file monthly GST returns continuously, as their business would be seasonal in nature with no fixed place of business. To accommodate the unique requirements of such taxpayers, special provisions have been provided under the GST Act for registration of casual taxable persons.

GST Registration for Casual Taxable Persons

All persons who are classified as casual taxable persons are mandatorily required to obtain GST registration, irrespective of the annual aggregate turnover. Further, the application for GST registration for a casual taxable person must be made atleast 5 days prior to the commencement of business. GST registration application for casual taxable persons can be made using FORM GST REG-01.

Deposit for GST Registration

Unlike regular taxpayers, casual taxable persons are required to deposit tax in advance for GST registration. The amount of tax to be deposited would be equal to the expected tax liability during the validity period of GST registration. Hence on applying for GST registration, a temporary reference number is generated for payment of GST deposit. On paying the GST deposit, the electronic cash ledger of the taxpayer is credited and GST registration certificate is released. (Know more about amount of deposit required for GST registration)

Validity of GST Registration for Casual Taxable Persons

The validity of GST registration for a casual taxable persons is the validity period specified in the GST registration application or 90 days from the date of registration, whichever is earlier. The sample GST registration certificate below shows validity period being specified only for casual taxable persons and non-resident taxable persons under GST.

Extension of GST Registration for Casual Taxable Persons

In case a casual taxable person needs extension of the validity period mentioned in the GST registration certificate, then FORM GST REG-11 must be submitted. Along with the request for extension of validity period, advance GST deposit must also be made by the taxpayer based on the expected tax liability. If the officer verifying the application is satisfied and advance GST deposit is made, the GST registration can be extended by upto another 90 days.

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GST Impact – Real Estate Sector

The rollout of the Goods and Services Tax is expected to bring substantial benefit across sectors as it would promote transparency and accountability. This will be especially beneficial for the real estate sector and its allied industries like cement, steel manufacturing industries which grow at a phenomenal rate year after year and contribute about 7.8% to India’s GDP . The new tax regime would benefit the entire economy as a whole as it is expected to add about 2% to the GDP of the nation. This would boost demand for properties in the market which would in turn benefit the real estate sector.

Impact on Developers

Prior to GST, a developer had to pay multiple duties and taxes for materials procurement such as customs duty, entry tax, sales tax etc. These were eventually billed to the home buyers by way of increasing the prices of housing units. As these taxes would be subsumed into one, the final construction cost and hence the housing units price would come down. This would boost home sales by bringing in more liquidity in the market. Developers would also be able to enjoy higher margins on their sales.

Moreover, the increase in tax is not substantial for major inputs like steel and cement. The indirect taxes on steel were around 17 per cent and that has now come to 18 per cent under GST, similarly for cement, the taxes totalled to nearly 24 per cent which now has been standardised at 28 per cent under GST. Reinforcements and iron bars will be taxed at the rate of 18% which is marginally lesser than the current rate of over 19%. However, the tax rate on bricks used for construction will be 28% whereas currently, a rate of around 25% is levied inclusive of all indirect charges.

Transportation and logistics of raw materials like steel, iron and cement are going to cost much lesser due to the streamlining of existing taxes. Currently logistics companies try to avoid multi tax scenario by creating stock transfer between inventory stocking points within states. The overall cost of logistics goes up due to the presence of many small warehouses at different locations. This reduces the efficiency while increasing the cost. This need to have multi point warehouses will reduce due to a single point of taxation and thus the overall tax burden would decrease. Moreover, input tax credit on raw materials would immensely help the developers. The GST rate for work contracts has also been fixed at 12 per cent. The current GST rates mentioned above indicate that the overall gross cost of construction would remain the same across the sector.

Know more about GST registration for real estate developers.

Impact on Home Buyers

As per the Model Law, the entire gamut of indirect taxes would be subsumed under the GST and home buyers would be required to pay a uniform tax rate of 12 percent on acquiring real estate apart from stamp duty. This is a slight difference from the 11 percent that the buyers were paying earlier through several indirect taxes including value-added tax, service tax and excise duty. However, this is applicable only for properties under construction and not on existing/ completed projects. Ready possession properties will be exempt from paying GST to avoid double taxation. Input credit will also be provided unlike earlier. Hence, the overall tax liability on the buyers will largely remain unaffected by the new taxation system. The composite supply of work contracts related to construction will be charged 18% with full input tax credit (ITC).

Ideally, the GST collected from the home buyers would be offset against the GST paid by the developer during construction and this benefit would be passed on to the buyers by means of reduced sale prices. However, only time will tell if the benefit that developers will enjoy from streamlining of the taxes would be passed on to the home buyers as that would depend on the real estate market forces.

On the whole, the GST is expected to bring positive changes in the real estate sector as a single indirect tax which will moderate taxation levels and make it easier for developers, retailers and manufacturers to comply by streamlining the entire process. Inflated property prices due to double taxation leading to a cascading effect would be reined in due to the presence of a single point of taxation. It would also reduce instances of unprincipled transactions which has plagued the sector since long.

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