GST Cess – Rate, Applicability and Calculation

GST cess is a compensation cess levied under section 8 of The Goods and Services Tax (Compensation to State) Act, 2017. GST cess is levied on intra-state supply of goods or services and inter-state supply of goods or services to provide compensation to the States for loss of revenue due to implementation of GST in India. In this article, we look at the applicability of GST Cess, rate of GST cess and methodology for calculation.

Why GST Cess is Levied?

As GST is a consumption based tax, the state in which the consumption of goods and supply happen would be eligible for the indirect tax revenue. Hence, after GST coming into effect, some states that are net exporter of goods and/or services are expected to experience a decrease in indirect tax revenue.

To compensate the States for the loss in tax revenue, the GST Compensation Cess has been declared by the Central Government. As per the Goods and Services Tax (Compensation to State) Act, 2017, GST compensation cess would be levied for a period of 5 years from GST implementation.

Usage of GST Cess

All the proceeds received from the GST compensation cess would be credited to a non-lapsable fund known as the Goods and Services Tax Compensation Fund. The funds would then be used for compensating tax revenue loss to States on account of GST implementation. If any funds are unutilised, then at the end of the transition period, it would be shared in half by the Central Government and all State Government. State government’s share would be distributed in the ratio of their total revenues from the State tax or the Union territory goods and services tax, in the last year of the transition period.

Applicability of GST Cess

GST Cess would be applicable on both supply of goods or services that have been notified by the Central Government. Also, both intra-state supplies of goods or services and inter-state supplies of goods or services would attract GST cess. All taxable person under GST, except taxpayers registered under GST composition scheme are expected to collect and remit GST cess. The following goods will attract GST Cess :

• Pan Masala
• Tobacco and manufactured tobacco substitutes, including tobacco products
• Coal, briquettes, ovoids and similar solid fuels manufactured from coal, lignite, whether or not agglomerated, excluding jet, peat (including peat litter), whether or not agglomerated
• Aerated waters
• Motor cars and other motor vehicles principally designed for the transport of persons (other than motor vehicles for the transport of ten or more persons, including the driver), including station wagons and racing cars.
• Any other supplies as notified from time to time.

Calculating GST Cess

In case the goods or service attracts GST cess, cess must be calculated on the basis of the taxable value of the supply and as provided in the GST cess rate schedule. In case GST cess is applicable on goods imported into India, then cess must be levied and collected along with the IGST and customs duty.

For example, if the assessable value of  goods imported into India is Rs. 100/-, GST rate is 18% and customs duty is 10%.

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 attract GST Compensation Cess, then GST Compensation Cess would be levied on Rs. 110/-, as Compensation Cess is not levied IGST.

GST Cess Rate

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Documents Required for GST Registration

GST registration is set to begin in India from 1st July, 2017. All persons classified as taxable person under GST are required to obtain GST registration and begin filing GST monthly returns from the month of September, 2017. In this article, we look at the list of documents required for GST registration in India.

Who Should Obtain GST Registration?

Any persons or entity providing taxable supply of goods or services to persons in India with an annual aggregate turnover of more than Rs.20 lakhs is required to obtain GST registration. In some special category states like Assam, Nagaland, Manipur and other, the aggregate turnover criteria has been reduced to Rs.10 lakhs. Other than the aggregate turnover criteria, a person could be required to obtain GST registration, if they undertake inter-state supply of goods or services or have an existing VAT or service tax or central excise registration.

List of all criteria for obtaining GST registration is available here.

GST Registration – Documents Required for Regular Taxpayers

The following documents must be submitted by regular taxpayers applying for GST registration.

PAN Card of the Business or Applicant

GST registration is linked to the PAN of the business. Hence, PAN must be obtained for the legal entity before applying for GST Registration.

Identity and Address Proof along with Photographs

The following persons are required to submit their identity proof and address proof along with photographs. For identity proof, documents like PAN, passport, driving license, aadhaar card or voters identity card can be submitted. For address proof, documents like passport, driving license, aadhaar card, voters identity card and ration card can be submitted.

• Proprietary Concern – Proprietor
• Partnership Firm / LLP – Managing/Authorized/Designated Partners (personal details of all partners are to be submitted but photos of only ten partners including that of Managing Partner are to be submitted)
• Hindu Undivided Family – Karta
• Company – Managing Director, Directors and the Authorised Person
• Trust – Managing Trustee, Trustees and Authorised Person
• Association of Persons or Body of Individuals –Members of Managing Committee (personal details of all members are to be submitted but photos of only ten members including that of Chairman are to be submitted)
• Local Authority – CEO or his equivalent
• Statutory Body – CEO or his equivalent
• Others – Person(s) in Charge

Business Registration Document

Proof of business registration must be submitted for all types of entities. For proprietorships there is no requirement for submitting this document, as the proprietor and proprietorship are considered the same legal entity.

In case of partnership firm the partnership deed must be submitted. In case of LLP or Company, the incorporation certificate from MCA must be submitted. For other types of entities like society, trust, club, government department or body of individuals, registration certificate can be provided.

Address Proof for Place of Business

For all places of business mentioned in the GST registration application, address proof must be submitted. The following documents are acceptable as address proof for GST registration.

For Own premises

Any document in support of the ownership of the premises like latest Property Tax Receipt or Municipal Khata copy or copy of Electricity Bill.

For Rented or Leased Premises

A copy of the valid rental agreement with any document in support of the ownership of the premises of the Lessor like Latest Property Tax Receipt or Municipal Khata copy or copy of Electricity Bill. If rental agreement or lease deed is not available, then an affidavit to that effect along with any document in support of the possession of the premises like copy of electricity bill is acceptable.

SEZ Premises

If the principal place of business is located in an SEZ or the applicant is an SEZ developer, necessary documents/certificates issued by Government of India are required to be uploaded.

All Other Cases

For all other cases, a copy of the consent letter of the owner of the premises with any document in support of the ownership of the premises of the Consenter like Municipal Khata copy or Electricity Bill copy. For shared properties also, the same documents can be uploaded.

Bank Account Proof

Scanned copy of the first page of bank passbook or the relevant page of bank statement or scanned copy of a cancelled cheque containing name of the Proprietor or Business entity, Bank Account No., MICR, IFSC and Branch details including code.

Digital Signature

All application for GST registration must be digitally signed with a Class 2 Digital Signature. Hence, its important that digital signature be obtained for the following person who is authorsised to sign the GST registration application before beginning the application process. (Know more about Digital Signature Requirement for GST)

A valid Class 2 Digital Signature is required for the following person as per the illustration below:

Click here to know more about GST in India.

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GST Electronic Credit Ledger

GST utilises three ledgers, namely electronic cash ledger, electronic liability register and electronic credit ledger for levying, calculating and tracking GST payments, liability and credits. All the three ledgers for maintained for each of the taxpayers in the GST Common Portal and is accessible to the taxpayer. In this article, we look at the electronic credit ledger in detail.

Credit for Input Tax Credit

All persons registered under GST, not being a persons registered under composition scheme are entitled to take input tax credit on any goods or services used as input by the taxpayer for the furtherance of business. The credit for input tax credit is credited to the electronic credit ledger of the taxpayer.

Electronic Credit Ledger Format

Electronic credit ledger is maintained in the GST portal in the above format. All the approved claims for input tax credit are credited to the electronic credit ledger under the appropriate head of CGST, SGST or IGST, UTGST and GST Cess.  Further, after any debits for liability, the available balance credit for CGST, SGST, UTGST, IGST and GST Cess is also provided in the electronic credit ledger.

Also, for reference, unique identification number is generated at the Common Portal for each credit in the electronic liability register for reasons other than those cov

Incorrect Information in GST Electronic Credit Ledger

In case any incorrect information is noticed in the electronic credit ledger, the taxpayer can raise a request in the GST Common Portal using FORM GST PMT-04. Details to be provided in GST PMT-04 include,

• GSTIN
• Legal Name
• Ledger where discrepancy is noted
• Type of tax in which discrepancy is noticed
• Type of discrepancy
• Amount of discrepancy
• Reasons, if any for the discrepancy

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GST Return Due in July, August and September

GST is set to be implemented in India from 1st of July, 2017. GST Portal has opened GST registration and GST migration for existing taxpayers registered under service tax, VAT or central excise would continue for another 3 months. To ease the transition to GST for all taxpayers, the GST Council has decided to relax the GST filing requirement for the first three months after GST implementation.

GSTR-1 Return Filing Due in September

GSTR-1 or the statement of outward supplies must be filed on or before the 10th of every month. GSTR-1 is used to file details of all supplies made by a taxpayer in the previous month and record the tax liability of the supplier. The first GSTR-1 filing is now due only on 5th September 2017. The GSTR-1 return filed in 5th September, 2017 would be the GSTR-1 return due in July.

After filing of GSTR-1 on 5th September, 2017, the taxpayer must file GSTR-1 on 20th September, 2017. The GSTR-1 return filed on 20th September, 2017 would be the GST return due in August.

GSTR-2 Return Filing Due in September

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 is usually due on the 15th of each month.

The first GSTR-2 filing is now due only on 10th September 2017. The GSTR-2 return filed in 10th September, 2017 would be the GSTR-2 return due in July.

After filing of GSTR-2 on 10th September, 2017, the taxpayer must file GSTR-2 on 25th September, 2017. The GSTR-1 return filed on 25th September, 2017 would be the GST return due in August.

GSTR-3B Return Due in July and August

GSTR-3B return must be filed by all taxpayers registered under GST in 20th August and 20th September, 2017. GSTR-3B is expected to be a simplified and consolidated return with consolidated details of inward and outward supply details.

No GST Penalty for Two Months

The Government has stated that no GST penalty will be levied for wrong or late filing of GST returns in the first two months of GST implementation. Further, the government would consider a review of the situation after three months to see if there is a need for course-correction.

Know more about GST Penalty and Fines.

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GST TDS Rate – Applicability and Procedure for Deduction

Tax Deduction at Source or TDS is a tax collection system wherein the tax liability is paid in part by the recipient of the goods or service at the time of making payment to the supplier. TDS ensures that the responsibility for payment of GST is shared by both the supplier and recipient for certain transactions. Hence, TDS ensures regular cash flow to the Government, introduces checks and balances, prevents tax evasion and increases tax base. GST also has provisions for TDS similar to the provisions for TDS under Income Tax Act. In this article, we look at TDS under GST and the applicable GST TDS rate.

GST TDS Applicability in India

Regular taxpayers under GST are not required to deduct tax at source while making GST payments. Only the following types of taxpayers are required to comply with GST TDS provisions:

• Department or an establishment of the Central Government or State Government;
• Local authority;
• Governmental Agencies;
• Any other persons or category of persons as notified by the Government on the recommendations of the GST Council.

Currently, GST TDS is not applicable for regular taxpayers or e-commerce operators or foreign non-resident taxable persons and casual taxable persons.

GST TDS Rate

GST TDS should be deducted at 1% of the payment made to the supplier of taxable goods or services or both. GST TDS should be deducted only if the taxable value of supply under a contract exceeds Rs.2,50,000. While calculating the taxable value of supply, the applicable amount of IGST, CGST, SGST and GST Cess is not taken into consideration.

Also, while considering the applicability of GST TDS, its important to consider the contract value rather than the value of individual bills. If the total contract value is more than Rs.2.5 lakhs, then GST TDS would be applicable, irrespective of value of individual tax invoices.

Finally, GST would be applicable only if the supplier and the place of supply are in the same State or Union Territory. If the location of the supplier and the place of supply is in a State or Union Territory which is different, then GST TDS should not be deducted.

Find GST rate for all goods and services in India.

GST TDS Certificate

GST TDS should be deposited to the Government account by the deductor by 10th of every month. If GST TDS is not deposited, penalty would be levied as interest on the amount of tax deducted and not deposited.

Further, all GST TDS Deductors are required to issue a GST TDS certificate in Form GSTR-71 to the supplier, within 5 days of crediting the amount to the Government. If GST TDS certificate is issued within 5 days of crediting the amount to the Government, then the GST TDS deductor would be liable for payment of late fee of Rs. 100/- per day from the expiry of the 5th day till the certificate is issued. This GST TDS certificate late fee penalty is capped at Rs. 5000/-.

GST Registration for TDS Deductors

GST registration is mandatory for those required to deduct GST. GST registration for TDS deductors can be obtained by filing GST REG-07.

GST registration for GST TDS Deductors can be obtained using TAN or PAN. The Drawing and Disbursing Officer of the Government Agency or Department can make the application along with his or her Digital Signature. The following documents must be submitted for obtaining GST registration for TDS Deductors.

Own Premises

Document in support of the ownership of the premises like latest Property Tax Receipt or Municipal Khata copy or copy of Electricity Bill.

For Rented or Leased Premises

Copy of the valid Rent / Lease Agreement with any document in support of the ownership of the premises of the Lessor like Latest Property Tax Receipt or Municipal Khata copy or copy of Electricity Bill.

Other Cases

A copy of the Consent Letter with any document in support of the ownership of the premises of the Consenter like Municipal Khata copy or Electricity Bill copy.

GSTR-7 Filing

GSTR-7 must be filed by all persons registered to deduct GST at source. GSTR-7 is due every month on the 10th. If the supplier is unregistered, name of the supplier rather than GSTIN should be mentioned in the GSTR-7 return. Once GSTR-7 is filed, the details of the GST TDS would be made available to the supplier in Part C of GSTR-2A to take input tax credit. Hence, GST TDS would be made available as credit in the electronic cash register and the supplier can use the same for payment of tax or any other liability.

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GST TCS For E-Commerce Operators

GST TCS or GST Tax Collection at Source is very similar to GST TDS or Tax Deduction at Source. GST TCS is applicable for e-commerce operators, while GST TDS is applicable for government departments, local authorities and government agencies. Though, normal taxpayers are not required to comply with TCS provisions, we look at GST TDS in detail, so that suppliers making supply through ecommerce operators are aware of the relevant regulations.

Applicability of GST TCS

Under GST, “electronic commerce operator” means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce. Hence, e-commerce operators like Amazon, Flipkart, PayTM, etc., operating in India would be required to comply with the GST TCS provisions.

GST Registration for Tax Collection at Source (TCS)

GST registration is mandatory for both e-commerce operators and persons supplying goods or services through an e-commerce operator. The aggregate turnover criteria for determining a taxable person under GST, does not apply for both e-commerce operators or persons supplying goods or services through an e-commerce operator. Hence, both types of taxable persons are required to obtain GST registration prior to commencing business.

GST TCS Rate

GST TCS is applicable at the rate of 1% of taxable value. Hence, if product is sold at Rs. 1000/- through an e-commerce operator like Amazon, Amazon would deduct tax @ 1% of the net value of Rs. 1000/- i.e. Rs. 10/- and remit the same to the Governments account. Thus GST TCS will be calculated on the net value of the goods/services supplied through the e-commerce operator.

Find GST rate for all goods and services.

Credit for TCS

Once tax is collected at source (TCS), the e-commerce operator is required to deposit the amount in the Governments account and file GSTR-8 by the 10th of the following month. Once GSTR-8 is filed, the details are processed by the GST Portal and credit is provided to the supplier in the electronic cash ledger.

Supplier can be liable for incorrect GSTR-8 filing

The details of the supplies, including the value of supplies, submitted by the e-commerce operator in GSTR-8 is matched with the GSTR-1 filing made by the supplier. In case of discrepancy, the GST Portal would highlight the issue to both the e-commerce operator and supplier. If the discrepancy is not rectified within the given time, then the amount would be added to the output tax liability of the supplier. The supplier will have to pay the differential amount of output tax along with interest. Hence, its important for all suppliers to ensure that TCS statements are correctly filed by the e-commerce operator.

Filing GSTR-8 – TCS Statement

GSTR-8 or TCS Statement must be filed by all e-commerce operators by the 10th of the following month, during which the TCS collection is made. In case of any error in GSTR-8 filing, rectification can be filed by the e-commerce operator before 30th September. In addition to monthly GSTR-8 filings, all e-commerce operators are also required to file an Annual TCS Statement by the 31st December of every financial year.

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Deposit for GST Registration

GST Registration is required for persons, businesses and not-for-profits involved in the supply of goods and services to persons or entities in India. GST registration can be broadly be classified into three different types, namely GST registration for regular taxpayers, GST registration for casual taxable persons and GST registration for non-resident taxable persons. Under GST Act, casual taxable persons and non-resident taxable persons are mandatorily required to obtain GST registration irrespective of aggregate annual turnover. In this article, we look at the deposit requirement for those registering for GST as a casual taxable person or non-resident taxable person.

Amount of Deposit for GST Registration

All casual taxable persons and non-resident taxable persons applying for GST registration are required to make an advance deposit of tax equal to the estimated tax liability of the taxpayer for the period for which the registration is sought. Once GST payment is deposited in advance, credit would be provided for the taxpayer in the electronic cash ledger for use against payment of GST liability, fee, penalty or other charges. Further, temporary GST registration for casual taxable person would be issued showing details of expiry date of registration. In case the taxpayer needs an extension of temporary GST registration, then additional tax must be deposited as per the amount of tax liability expected to get an extension of the GST registration.

For example, if a casual taxable person estimates a GST liability of Rs.18 lakhs for a period of 2 months during the Diwali season, then Rs.18 lakhs must be deposited in advance while applying for GST registration.

Its important to note that GST registration for casual taxable persons and non-resident taxable persons are provided for a period of less than 90 days or the period requested in the GST registration application. GST registration of casual taxable persons and non-residents taxable persons can be extended for a period of 90 days, by an Officer.

Casual Taxable Persons under GST

Casual taxable person under GST means 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. Good examples of a casual taxable person under GST would be fireworks shops setup during Diwali times or shops being setup in temporary exhibitions.

Non-Resident Taxable Persons under GST

Non-resident taxable person means 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.

Regular Taxpayers

Regular taxpayers applying for GST registration are not required to deposit any advance tax. However, after obtaining GST registration, all regular taxpayers would be required to file monthly GST returns regularly or pay penalty as per the GST Act. Penalty for late filing of GST returns is Rs.100 per day, with a maximum penalty of Rs.5000, per each instance of default.

Procedure for Paying Deposit for GST Registration

If a GST registration application for casual taxable person or non-resident taxable person is filed, then a temporary reference number would be generated for making advance deposit of tax into the electronic cash ledger. Once the advance tax payment is completed and the acknowledgement for payment is generated, the GST registration would be issued.

IndiaFilings can help you obtain GST Registration, talk to an IndiaFilings Business Advisor today.

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Job Work under GST – Comprehensive Guide

A significant group of MSME businesses in India are involved in the job work sector, providing outsourced manufacturing services. Job work is a type of outsourced service, wherein goods are manufactured or processed using goods supplied by the principal. Thus, under a job work, the principal manufacturer sends inputs or semifinished goods to a job worker for further processing. In this article, we look at the treatment and definition of job work under GST.

GST Definition for Job Work

Section 2(68) of the CGST Act, 2017 defines job work as ‘any treatment or process undertaken by a person on goods belonging to another registered person’. The one who does the said job would be termed as ‘job worker’. The ownership of the goods does not transfer to the job-worker but it rests with the principal. The job worker is required to carry out the process specified by the principal on the goods.

GST on Job Work

Job work provisions already existed under Central Excise, VAT and Service Tax regulations. Under these regulations, concession was given to the job workers (often times a micro, small or medium business) and the principal was made responsible for tax compliance on behalf of the job worker.

Under GST as well, special provisions have been provided for removal of goods for job-work and receiving back the goods after processing from the job-worker without the payment of GST. The benefit of these provisions shall be available both to the principal and the job worker.

GST Registration for Job Work

Job contract can be initiated by a principal with a third-party job work service provider by declaring the premises of the job worker as additional place of business in the GST registration. In case the job worker is already registered under GST, then declaring the premises of the job worker under additional place of business is not required.

Conditions for Job Worker under GST

Once the GST registration aspect is complete, the principal must submit to the Jurisdictional Officer, details of the description of inputs intended to be sent by the principal and the nature of processing to be carried out by the job-worker. Then, the principal can send goods for further processing or capital goods to the job worker under the cover of challan issued by the principal. Challan must be issued by the principal even for inputs and capital goods directly send to the job-worker. Job work challan must conform to the GST invoice rules and the responsibility for keeping proper accounts as per GST requirements would lie with the principal.

All inputs must be returned to the principal within one year and capital goods must be returned with three years after processing by the job worker. However, the condition of return of goods for job work is not applicable in case of moulds and dies, jigs and fixtures or tools supplied by the principal to job worker.

GST on Job Work

Job work contract satisfying the above conditions enjoy special concessions as under:

• Principal can send inputs/ capital goods without payment of tax to a job worker.
• The job worker after completing the job work can send the principal’s goods from there to another job worker for additional processing and after completion of job work bring back such goods without payment of tax.
• Principal is not required to reverse the input tax credit availed on inputs or capital goods dispatched to job-worker.
• Principal can send inputs or capital goods directly to the job worker without bringing them to his premises and can still avail the credit of tax paid on such inputs or capital goods.

If the job work does not satisfy the conditions and intimation requirement for job work, then GST rate as applicable for job work must be paid by the job worker.

Input Tax Credit for Job Work

Under GST, the principal is allowed to take input tax credit on goods supplied to the job worker. Also, the principal can take input tax credit on inputs / capital goods directly supplied to the job worker even without the goods being brought into the premise of the principal.

GST Transition for Job Work Contract

On 1st July, 2017, GST was implemented in India. Transitional provision has been provided for input or goods transferred under job work contract prior to the implementation of GST in India. All principal who have sent goods to job worker before 1st July, 2017 are required to file GST TRAN-1 within 90 days of 1st July 2017 with details of such goods sent/received for job-work.

Under the GST transitional provision for job work, inputs which are sent to a job-worker prior to introduction of GST would not attract GST, if the goods are returned to the principal by the job worker before 31st, December 2017.

If goods sent to a job worker are not returned to the principal before 31st December 2017, then input tax credit availed on the goods will be liable to be recovered.

Read more about GST in India at the GST Portal. You can file your GST returns using LEDGERS GST Accounting Software.

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IGST on Imports – Calculation Methodology

The formalities for import and export would change once GST is implemented in India on 1st July, 2017. Under GST, certain types of duties and taxes like Basic Customs duty, Education Cess, Anti-dumping duty, Safeguard duty and the like would continue. On the other hand, Countervailing Duty (CVD) and Special Additional Duty of Customs (SAD), would be replaced by Integrated Goods and Services Tax(IGST). In this article, we look at the levy of IGST on imports along with the procedure for calculation of IGST on imports in to India.

Duties Levied on Imports under GST

From 1st July, 2017, the duties and taxed levied on imports into India would change significantly. Before implementation of GST, the following types of duties and taxes are levied on imports into India based on the HSN code of the item.

• Basic Customs Duty
• Countervailing Duty (CVD)
• Special Additional Duty of Customs (SAD)
• Education Cess
• Anti-dumping duty
• Safeguard duty

Once GST is implemented, the following duties and taxes would be applicable for a majority of the products :

• Basic Customs Duty
• Integrated Goods and Services Tax (IGST) – Know more about IGST, CGST and SGST
• GST Compensation Cess
• Education Cess
• Anti-dumping duty
• Safeguard duty

Cutoff Date for GST Implementation Purposes

According to a notification issued by the Central Board of Excise and Customs, IGST and GST Compensation Cess would be levied on all cargo that arrives into India on or after 1st July, 2017. Further, IGST and GST Compensation Cess would be applicable on all goods that arrived into India after 30th June, 2017 for which Bill of Entry is filed on or after 1st July, 2017.

In case of goods arriving into India after 1st July, 2017 for which advance bill of entry was filed, the bill of entry can be recalled and the Customs Officer could reassess for levy of IGST and GST Compensation Cess.

Calculating GST on Imports

GST is applicable on all imports into India in the form of levy of IGST. IGST is levied on the value of imported goods + any customs duty chargeable on the goods. Hence, IGST must be calculated after adding the applicable customs duty to the value of imported goods. Find GST rate along with GST Compensation Cess.

If for any imported articles, in addition to basic customs duty, other duty of customs is chargeable, then it must be included along with the basic customs duty to arrive at the value on which GST cess or IGST is calculated. Hence, education cess or higher education cess as well as anti-dumping and safeguard duties must be added along with basic customs duty to arrive at the rate for levying IGST or GST Compensation Cess.

Input Tax Credit for Imports under GST

Under GST, input tax credit would be provided for IGST paid and GST Compensation Cess paid. However, input tax credit is not applicable for basics customs duty paid during imports. To avail input tax credit, the importer would have to obtain GST registration and quote the GSTIN on Bill of Entry. During the transitional period, provisional GSTIN can also be quoted instead of GSTIN.

Know more about GST at the IndiaFilings GST Portal

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Arrest, Inspection and Seizure under GST – Know Your Rights

Goods and Services Tax or GST has been implemented in India from the 1st of July, 2017. The new indirect system completely overhauls various taxes like VAT, service tax, central excise, etc., and introduces one tax that will be applicable for most businesses. Over 1 crore businesses are expected to be registered under GST and the increase in taxpayer base and improvement in ease of doing business is expected to help the Indian economy grow at a faster pace. In this article, we look at the rules and powers provided to Officers for arrest, inspection or seizure under GST.

Reasons for Arrest, Inspection and Seizure

For any law to be regulated, maintained and followed, there must be powers provided to certain persons to conduct inspection, search, seizure and arrests to protect the interest of genuine taxpayers. These provisions are used by Officers only under exceptional circumstances and as a last resort, to protect the Government Revenue. Further, to ensure that these provisions are carried out properly, the authorisation of various Officers in the ranks of Joint Commissioner or above are often required. Hence, its important for all taxable persons under GST to know their rights and duties under GST while doing business.

Inspection under GST

An inspection is a common procedure which enables GST officers to access any place of business or godown or warehouse or transport. Inspection are softer and have lesser consequences when compared to a search. An inspection can be carried out by an officer of the Central Goods and Service Tax department or State Goods and Services Tax department with the written authorization of an officer of the rank of Joint Commissioner or above.

Joint Commissioner or an officer higher in rank can give such authorization only if he has reasons to believe that the person concerned has done one of the following actions:

• Suppression of any transaction relating to supply of goods or services or stock in hand
• Claimed excess input tax credit
• Contravention of any provisions of the Act or the Rules to evade tax
• Transporting or keeping goods which escaped payment of tax or manipulating accounts or stocks which may cause evasion of tax Inspection can also be done of the conveyance, carrying a consignment of value exceeding specified limit. The person in charge of the conveyance has to produce documents/devices for verification and allow inspection. Inspection during transit can be done even without authorisation of Joint Commissioner.

Inspection During Transit

Inspection of goods or transport carriers can be conducted by an Officer of GST without the authorisation of Joint Commissioner. Any consignment, with a value of over Rs.50,000 can be stopped and inspected at any place for verification of documents. If during the verification the Officer finds that goods are not being transported or supplied as per the GST Act, then the goods can be seized.

Know more about GST registration for transporters and GST Eway Bill.

Search and Seizure under GST

Search and seizure is a more stringent procedure when compared to an inspection. A search and seizure operation must be authorised by an officer not below the rank of Joint Commissioner. Further, the Joint Commissioner can authorise a search and seizure only if he/she has reasons to believe the person being searched has goods liable to confiscation or any documents/ books/record/things, which may be useful for or relevant to any proceedings.

All search and seizure operation under GST must be conducted in accordance with the provisions of Criminal Procedure Code, 1973 which requires the presence of two or more independent witnesses and a record of entire proceedings.

During the search and seizure operation, any or all goods, documents, books, records or other things which would have value to the proceedings can be searched or seized. If it is not practical to seize a goods or object, then the goods or object can be detained. During the proceedings, the person being searched is allowed to take copies/extracts of seized records. Finally, an inventory of the seized goods and documents must be prepared by the Officer and provided to the person from whom the goods or documents were seized.

All documents or objects taken during a search and seizure operation must be returned unless it is required for examination/enquiry/proceedings. If the document or object is not required, then it should be returned within 30 days from the issuance of show cause notice. Also, seized goods can be provisionally released by GST Officers on execution of bond and furnishing a security or on payment of applicable tax, interest and penalty. If no notice is issued within a period of six months then all such goods are to be returned to the owner of the goods or documents. In some cases, the period of six months can be extended by Commissioner for another six months on sufficient cause.

Arrests under GST

GST rules and regulations do provide for the harshest punishment of arrest in some exceptional cases. An arrest can be made under GST if a person has committed specified offences (not any offence) and the tax amount is exceeding Rs.200 lakhs. For an arrest to be made, an authorisation from the Commissioner is required.

Even though a person can be arrested for specified offences involving tax amount exceeding Rs. 200 lakhs, if the tax involved is less than Rs. 500 lakhs, the offences are classified as non-cognizable and bailable. In such cases, the arrested persons can be released on Bail by Deputy/ ssistant Commissioner. But in case of arrests for specified offences where the tax amount involved is more than Rs. 500 lakhs, the offence is classified as cognizable and non-bailable and in such cases the bail can be considered only by a Judicial Magistrate.

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GST Software – Getting Started with LEDGERS

LEDGERS is a free cloud-based GST software from IndiaFilings for helping Indian businesses easily manage GST compliance. Ledgers GST software is easy to use and intuitive. Hence, even small businesses and first-time Entrepreneurs can easily use the software to manage sales, track expenses and file GST returns. In this article, we look at some of the features and functionalities of LEDGERS GST software in detail.

Creating a LEDGER

Your can easily create a LEDGER by signing up from the IndiaFilings GST Software page. Once the information is provided, an email is sent to the registered email id for verification. On verifying the email ID, you will be transferred to the LEDGERS platform for setting up your password. Once the password is setup, you can login to LEDGERS Dashboard.

In case you already have an iCFO account username and password, you can sign-on to the LEDGERS platform using the iCFO account.

From the LEDGERS dashboard page you can setup a business by clicking on the Add Business button. To setup a business, you will have to provide the business name, GSTIN, GST information and complete a OTP mobile verification. On completing the OTP verification, you will be at the LEDGERS dashboard.

Customer Management

One of the first things you should do after creating a LEDGER is to setup your customer list. You can click on Contacts -> Add Customer to add a Customer. Customer can be easily added by providing a name and email. While adding a customer, you also have the ability to add more information about the customer like GSTIN, PAN, TAN, address and more.

In case you need the customer to verify or provide information about his/her business, you can enable the customer portal. If the Customer Portal feature is enabled, then the customer would receive an email for verification of email and GSTIN information.

Similar to customer management, extensive features have been provided on LEDGERS for Supplier Management and Onboarding.

Adding Goods and Services

Before creating invoices or track expenses, you can add goods and services to your business. To add a Goods, click on Goods & Services -> Add Goods. In the page, you can add the Goods Name, HSN Code, GST Rate to be Applied and Selling Price. You can use the HSN Code Finder to find HSN or SAC code and suggested GST rates for all goods and services. Further, you can also toggle between prices inclusive or GST and prices exclusive of GST to verify the GST tax component.

Creating GST Tax Invoices

A major feature used extensively in any GST software is the creation of invoices and estimates. Using LEDGERS, you can create beautiful invoices. Once the customer and goods information is updated, you can easily create an invoice in less than a minute. Just click on Create Invoice, select the customer and the goods or services to be sold. The system will automatically calculate CGST, SGST and IGST based on the taxable value of the goods, discount (if any) and quantity. On clicking create invoice, a beautiful invoice as shown below will be created. You can then send the invoice to your customer through email easily.

There is more to LEDGERS. Signup today and experience for yourself. 

LEDGERS GST SOFTWARE

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GST Registration for Branches & Business Verticals

According to the CGST Act, suppliers of taxable goods and services are required to be registered under GST in the State or Union territory, from where the taxable supply of goods or services is made. Further, provisions have been provided in the GST Registration Rules for obtaining GST registration for branches. In this article, we look at GST registration for branched in detail.

GST Registration for Branches in Different States

GST registration should be obtained by a taxable person under GST in each of the State or Union Territory, from where taxable supply of goods or services is made. For example, if a restaurant operates in the States of Maharashtra and Delhi, then separate GSTIN would have to be obtained for Maharashtra and Delhi.

As shown in the GSTIN format above, the first two numbers in a GST registration number are tied to the state of registration. Hence, if a business is operating in two different states, then the first two numbers of the GSTIN would change, while the PAN of the entity would remain the same. Also, in case of more than 1 GST registration within a state, then the entity code would also change.

GST Registration for Branches within a State

Separate GST registration can also be obtained for branches within a state for businesses having multiple business verticals. For GST registration to be issued for branches within a State, the following conditions must be satisfied:

• Have more than one business vertical. Business vertical means a distinguishable component of an enterprise that is engaged in the supply of individual goods or services or a group of related goods or services which are subject to risks and returns that are different from those of the other business verticals.
• The business must not be registered to pay tax under the GST Composition Scheme.
• All separately registered business verticals must pay tax on supply of goods or services to another registered business vertical of the same business and issue a tax invoice for such supply.

Obtaining GST Registration for Branches

GST registration for branches or separate business verticals within the same state can be made in FORM GST REG-01. FORM GST REG-01 is the form used by all businesses for applying for GST registration. Hence, the normal procedure for GST registration application and documents required can be submitted by the business for obtaining GST registration.

After submission of GST registration application, it would be forwarded to an Officer for verification and GST registration certificate would be granted usually within 7 working days. The GST registration certificate would show the principal place of business and additional place or places of business.

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Export Bond for GST & Letter of Undertaking

Entities involved in export of goods having GST registration are allowed to export goods without payment of IGST by furnishing an export bond or Letter of Undertaking (LUT) in Form GST RFD-11. In this article, we look at this procedure in detail.

Letter of Undertaking (LUT) for Exports under GST

According to the Central Goods and Services Tax Rules, 2017 any registered person exporting goods without payment of integrated tax is required to furnish a bond or a Letter of Undertaking (LUT) in FORM GST RFD-11. The following types of persons registered under GST will be allowed to submit a letter of undertaking and undertake export transactions.

• Status holder as specified in the Foreign Trade Policy; or
• Entities that have received the due foreign inward remittances amounting to a minimum of 10% of the export turnover, which should not be less than one crore rupees, in the preceding financial year, and he has not been prosecuted for any offence under the Central Goods and Services Tax Act, 2017 (12 of 2017) or under any of the existing laws in case where the amount of tax evaded exceeds two hundred and fifty lakh rupees.

Letter of Undertaking will be valid for a period of twelve months from the date of submission. If the exporter fails to comply with the conditions of the Letter of Undertaking, the privileges could be revoked and the exporter would be required to furnish a bond. All exporters are required to submit letter of undertaking or export bond under the new format specified under GST on or before 31st July 2017.

GST Letter of Undertaking Format

The following letter of undertaking format can be adopted by exporters under GST:

Export Bond for GST

Entities not eligible to submit Letter of Undertaking as per the conditions mentioned above would have to furnish an export bond along with bank guarantee. The bond should cover the amount of tax involved in the export based on estimated tax liability as assessed by the exporter himself. Export bond should be furnished on non-judicial stamp paper of the value as applicable in the State in which the bond is being furnished.

Also, exporters can furnish a running bond, so that export bond need not be executed for each and every export transaction. However, if the outstanding tax liability on exports exceeds the bond amount at any time, then the exporter must furnish a fresh bond to cover the additional liability.

Export bonds and letter of undertaking can be submitted to the jurisdictional Deputy Commissioner or Assistant Commissioner of the concerned jurisdiction. However, once FORM RFD-11 is made live on the GST Portal, the document can be submitted online.

GST Export Bond Format

Bank Guarantee for Export Bond

A bank guarantee can be mandated along with export bond. The value of bank guarantee should normally not exceed 15% of the bond amount. However, based on the track record of the exporter, the bank guarantee required to be submitted with export bond can be waived off by the jurisdictional GST Commissioner.

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GST Audit & Certifications – By Chartered Accountants

GST audit would have to be periodically conducted on entities registered under GST by a Practising Chartered Accountant or GST officer to ensure that proper compliance is maintained. In this article, we look at the different types of GST audit and certifications that would have to be conducted or provided by a practising Chartered Accountant from time to time.

GST Annual Return

All entities required to file monthly GST returns are required to file GST annual return before 31st December of each financial year. Only Input Service Distributors, Casual Taxable Persons and Non-Resident Taxable persons are exempt from filing GST annual return.

Entities required to file GST annual return having an aggregate turnover of over Rs.2 crores in a financial year must get the annual GST accounts audited and certified by a practising Chartered Accountant.

Know more about GST Return Due Dates.

GST Input Tax Credit Claim under Special Circumstances

Chartered Accountant certificate would be required in case of input tax credit claim under special circumstances on the inputs held in stock or inputs contained in semi-finished or finished goods held in stock, or the credit claimed on capital goods.

For instance, a registered person is required to file FORM GST ITC-01 within 30 days of becoming eligible to avail input tax credit on existing stocks. In the details furnished in the declaration for the claim of input tax credit under special circumstances, Chartered Accountant certification would be required if the aggregate value of the claim on account of central tax, State tax, Union territory tax and integrated tax exceeds Rs. 2 lakhs.

In an input tax credit claim under special circumstances, where the tax invoices related to the inputs held in stock are not available, the registered person can estimate the amount based on the prevailing market price of the goods on the effective date. Such details provided by the taxpayer should be duly certified by a practising chartered accountant or cost accountant.

Know more about input tax credit under GST.

Special Audit Ordered by GST Officer

A special audit can be ordered by a GST Officer, not below the rank of Assistant Commissioner if at any stage of scrutiny, inquiry, investigation or any other proceedings believes that the value has not been correctly declared or the credit availed is not within the normal limits. In such cases, the GST Officer with the prior approval of the Commissioner can direct the taxpayer in writing to get his records including books of account examined and audited by a Chartered Accountant or Cost Accountant.

Once a special audit has been ordered and directions are issued in FORM GST ADT-03 to the registered person, the nominated Chartered Accountant is required to submit the audit report duly signed and certified by him to the Assistant Commissioner within a period of 90 days. In case of difficulty in completing the audit within the provided time period, the registered person or the chartered accountant for any material and sufficient reason, request for an extension of the period by an additional 90 days.

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GST Invoice – Comprehensive Guide with Invoice Formats & Examples

GST invoice or tax invoice is a commercial document that must be issued by a seller to a buyer. Entities registered under GST must issue GST invoice for every taxable supply of goods and services supplied. Invoices also serve as legal documents, demanding payment for a goods or services. Once payment is made on an invoice by the buyer, the invoice would serve as a legal document showing title to the property purchased. In this article, we look at invoicing under GST in detail along with GST invoice formats and examples.

Details to Be Mentioned on GST Invoice

Detailed rules and guidelines for issue of invoice and GST invoice format has been provided for in the GST Tax Invoice, Credit and Debit Notes rules. As per the GST invoice rules, all GST invoices issued in India must have the following details mandatorily:

1. Name, address and GSTIN of the supplier of goods or services.
2. Invoice number unique for each financial year which is 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.
3. Invoice date
4. Name, address and GSTIN of the recipient of goods or services. In case the recipient is not registered under GST, then name and address of the recipient and the address of delivery must be mentioned on the invoice if the value of the taxable supply is more than Rs.50,000.
5. If an invoice value is less than Rs.50,000 then name and address of the recipient and the address of delivery can be mentioned, if required or requested by the recipient of goods and service.
6. HSN Code or SAC Code for the Goods or Service. The requirement for mentioning HSN code or SAC code on tax invoice has been relaxed for taxpayers whose turnover is below Rs. 1.5 crores.
7. Description of the goods or services.
8. Quantity and unit of measurement.
9. Total value of supply of goods or services.
10. Taxable value of the supply of goods or services taking into account discount or abatement, if any.
11. GST rate applicable along with the amount of CGST, SGST, IGST and GST Compensation Cess payable by the recipient.
12. Place of supply along with the name of the State, in the case of a supply in the course of inter-State trade or commerce.
13. Address for delivery of goods and services, if it is different from the place of supply.
14. Whether tax is payable on reverse charge basis.
15. Signature or digital signature of the supplier or authorised representative.

Sample GST Tax Invoice Format

The following is a sample GST tax invoice prepared using LEDGERS GST software:

When Should Invoice be Issued?

Time of supply for goods or service is when GST becomes payable. Issuance of tax invoice is an important element in determining time of supply. In most scenarios, time of supply of goods or service is the date of issuance of an invoice or receipt of payment, whichever is earlier. If goods or services have been supplied, then invoice must be issued within a period of 30 days. Hence, GST invoice should ideally be issued when payment for goods or services is reasonably assured or if the goods or services have been supplied to the recipient.

It’s very important to note that the supplier becomes liable for remittance of GST to the government on the issuance of tax invoice, even if payment has not been received from the customer. Hence, if payment is not reasonably assured and goods or services have not been delivered, an estimate can be issued by the supplier.

Procedure for Issuing GST Invoice

All GST invoices must be prepared in triplicate in case of supply of goods. The original copy should be marked as ORIGINAL FOR RECIPIENT. The duplicate copy should be marked as DUPLICATE FOR TRANSPORTER and the triplicate copy should be marked as TRIPLICATE FOR SUPPLIER. The invoice shall be prepared in duplicate, in the case of the supply of services, in the following manner, namely,- (a) the original copy being marked as ORIGINAL FOR

In case of supply of services, the invoice should be prepared in duplicate. The original copy should be marked as ORIGINAL FOR RECIPIENT  and the duplicate copy should be marked as DUPLICATE FOR SUPPLIER.

Filing GST Invoice on GST Portal

The serial number of all invoices issued during a tax period should be filed every month in FORM GSTR-1. Also, GSTIN of all recipients registered under GST must be mentioned on GSTR-1 filing for B2B transactions. In case of recipients not registered under GST or B2C transactions, name, address and place of supply should be mentioned for high value transactions. GSTR-1 filing made by the supplier will automatically be auto-populated in the GSTR-2 filing to be submitted by the recipient of goods or service. Hence, GST invoicing plays an important role in input tax credit claims.

Creating a GST Invoice using LEDGERS GST Software

The video below shows GST invoice creation using LEDGERS GST software:

The post GST Invoice – Comprehensive Guide with Invoice Formats & Examples appeared first on IndiaFilings.com | Learning Center.

GST Registration for Agents & Taxability of Pure Agent

In GST, special provisions have been provided for agents. To begin, GST registration is mandatory for agents, irrespective of annual aggregate turnover in a financial year. In this article, we look at GST registration for agents and related provisions.

Agents Definition under GST Act

The GST Act defines an Agent as a person including a factor, broker, commission agent, agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of supply or receipt of goods or services or both on behalf of another.

GST Registration

GST registration is mandatory for all agents. The GST Act states that any persons who make taxable supply of goods or services or both on behalf of other taxable persons whether as an agent or otherwise must be registered under GST.

Is GST applicable for Agents and Brokers?

Yes, GST is applicable for agents and brokers. However, to understand the applicability and supply on which GST is applicable, we first understand the nature of work of a pure agent. A pure agent is someone who while making a supply to the recipient, also receives and incurs expenditure on some other supply on behalf of the recipient and claims reimbursement (as actual, without adding it to the value of his own supply) for such supplies from the recipient of the main supply.

For example, a business approaches a Custom Broker. The business requires customs clearance for an import consignment. To complete the task, the Customs Broker engages the services of a transporter for delivery of goods to the business. The customs broker pays the transporter and claims reimbursement from the business.

In this scenario, the main service provided is that of customs clearance, while an ancillary service was provided to complete the main task for which reimbursement was claimed. In such a case, the part of value delivered should only be that of the customs clearance and should not include the transportation.

Pure Agent under GST

The following conditions must be present to classify someone as a pure agent:

• Enters into a contractual agreement with the recipient of supply to act as his pure agent to incur expenditure or costs in the course of supply of goods or services or both.
• Neither intends to hold nor holds any title to the goods or services or both so procured or provided as pure agent of the recipient of supply.
• Does not use for his own interest such goods or services so procured.
• Receives only the actual amount incurred to procure such goods or services in addition to the amount received for the supply he provides on his own account.

Taxability of Pure Agent

While calculating value of taxable supply made by a pure agent, the expenditure incurred on behalf of the recipient of services should not be taken into account. Further, the valuation rules provide that expenditure incurred as pure agent, will be excluded from the value of supply, and thus also from aggregate turnover. However, such exclusion of expenditure incurred as

To exclude value of expenditure incurred from taxable supply, the following conditions must be present:

• The supplier acts as a pure agent of the recipient of the supply when he makes payment to the third party on authorization by such recipient.
• The payment made by the pure agent on behalf of the recipient of supply has been separately indicated in the invoice issued by the pure agent to the recipient of service.
• The supplies procured by the pure agent from the third party as a pure agent of the recipient of supply are in addition to the services he supplies on his own account.

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When to Issue Invoice under GST? – Time of Supply

The issuance of a GST invoice is closely related to the concept of time of supply under GST. In this article, we look at the both the time to issue an invoice under GST and time of supply in detail

When should GST invoice be issued?

GST invoice must be issued for all supply with a taxable value of more than Rs.200. Also, persons registered under GST are mandatorily required to issue an invoice irrespective of taxable value, when it’s demanded by a customer.

The time for issuing GST invoice differs based on the type of supply, i.e., goods or services.

For goods, a tax invoice must be issued before the goods are removed from the premises of the supplier for transport to the recipient. In some cases, however, a tax invoice can be issued at the time of delivery of goods or while making the goods available to the recipient. In such cases, a delivery challan can be issued by the supplier to generate GST eway bill and transport the goods to the recipient without a tax invoice.

For services, a tax invoice must be issued before or after providing the service, but no later than thirty days from the date of providing of service.

When should GST estimate be issued?

On issuing an invoice, the supplier becomes liable for the remittance of GST tax amount mentioned on the invoice. Hence, an invoice should be issued only if the supply has started or if payment has been received. If neither supply or payment has started, then it’s best to issue an estimate to the recipient with a breakup of the pricing, GST tax payable and GST rates applicable.

Know how to issue a GST estimate.

Should an invoice be issued for advance payment received?

GST receipt voucher can be issued in case of an advance payment is received for goods or services. If the services or goods are not provided and the amount is refunded, a GST refund voucher can be issued.

Even if a receipt voucher is issued, tax is payable on the advance received for supply of goods or services.

Time of Supply under GST

Time of supply under GST is the date on which the tax liability arises on the person registered under GST. Various provisions in GST law dealing with the procedure for determining the time of supply for different types of transactions.

Time of Supply for Goods

For goods, time of supply is the earliest of the following dates:

• Date of issue of an invoice by the supplier. If an invoice is not issued, then the last date on which the supplier is required to issue an invoice.
• Date on which the supplier received the payment.

For services, time of supply is the earliest of the following dates:

• Date of issue of an invoice by the supplier. All service invoices must be issued within 30 days of provisioning of services.
• Date of receipt of payment.

In case it is not possible to determine the time of supply based on the above-mentioned methods, then the time of supply would be the earlier of date of filing of GST return or date of payment of GST.

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GSTR-8 Filing for E-Commerce Companies

GSTR-8 filing must be filed every month on or before the 10th by e-commerce companies. Under GST, e-commerce companies have been defined as any person who owns, operates or manages a digital or electronic facility or platform for electronic commerce. E-commerce companies are required to obtain GST registration mandatorily and also be registered for tax collection at source (TCS). In this article, we look at the GSTR-8 monthly filing to be done by e-commerce companies in detail.

Tax Collection at Source (TCS) for E-Commerce Companies

Tax Collection at Source (TCS) is a tax collection mechanism similar to TDS, wherein a e-commerce operator collects and remits tax on-behalf of the Government when a supplier supplies goods or services through its portal. For example, if a product is sold for Rs.10,000 on an e-commerce platform, the e-commerce platform would be required to deduct and remit Rs.100 as TCS to the Government.

When TCS under GST is applicable?

TCS provisions are applicable for e-commerce operators. So, any person who owns, operates or manages a digital or electronic facility or platform for electronic commerce is required to register for TCS and file monthly GSTR-8 filings. GST TCS provisions are not applicable for e-commerce sellers.

For example, a seller on Amazon [hereafter referred as “seller”] displays his/her goods on Amazon.in [hereafter referred as “E-Commerce Operator]. On receiving an order for the product, the seller supplies the goods and raises an invoice. Money is collected by the E-Commerce Operator from the customer and passed on to the seller after deduction of commissions.

In such transactions, E-Commerce Operators will now be liable to deduct TCS at the rate of 1% from the supplier on the net value of goods/services sold through the E-Commerce operator.

Are E-Commerce Sellers liable to pay TCS?

Yes, E-commerce sellers will be liable to pay TCS at the rate of 1% of net value of goods or services sold through the e-commerce operator. However, the onus for collection, remittance and compliance with TCS provisions rests solely with the e-commerce operator. Hence, all e-commerce operators must make provisions on their systems to comply with TCS provisions.

What is GSTR-8 return?

GSTR-8 is a type of GST return that must be filed by all e-commerce operators registered under GST for collection of TCS. GSTR-8 filing will comprise of details like amount of tax collected at source from e-commerce sellers and their GSTIN. The information provided by e-commerce companies on GSTR-8 is made available to e-commerce sellers on their GSTR-2 filing.

Hence, on 15th of each month, while filing GSTR-2, all e-commerce sellers must verify the transaction and TCS information supplied by the e-commerce company on the GST platform.

What is the due date for GSTR-8 filing?

GSTR-8 filing is due on the 10th of each month for e-commerce operators registered for tax collection at source. GSTR-8 filing can be done online through the GST Common Portal. In addition to the monthly GSTR-8 filing, e-commerce operators will also be required to file an Annual Statement of Tax Collected at Source on or before 31st December following the end of every financial year.

What is the due date for remitting TCS payment under GST?

The amount of tax collected by an e-commerce operator as TCS must be deposited by the 10th of the following month. Hence, if total TCS of Rs.1 lakh was collected in the month of December, it must be remitted on or before 10th January.

Will input tax credit be provided for TCS payment?

Yes, input tax credit is provided for TCS payment deducted by an e-commerce operator. After the filing of GSTR-8 filing, the tax collected by the e-commerce operator is credited to the cash ledger of the e-commerce seller who supplied the goods/services. The supplier can then claim credit for the tax collected at source by the e-commerce operator.

What is the penalty for late filing fo GSTR-8 filing?

A penalty of Rs.25000 can be levied on an e-commerce operator for each GSTR-8 filing not filed on-time by an e-commerce operator.  In addition to the penalty for late filing of GSTR-8, interest penalty or fine could also be levied for late payment of TCS deducted and not remitted on-time.

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GSTR-4 Filing – Quarterly Return For Composition Scheme

GSTR-4 is a quarterly return that must be filed by those registered under the GST Composition Scheme. Businesses registered under the GST Composition Scheme, are required to file one return every quarter instead of 3 returns every month and pay a flat GST tax based on the sales turnover. Not all businesses can be registered under the GST composition scheme. Only entities with an annual turnover of less than Rs.75 lakhs and satisfying other criteria’s can be enrolled under the Composition Scheme.

GST Composition Scheme

The GST composition scheme is designed to help small taxpayers having a turnover of up to Rs.75 lakhs per annum ( Rs. 50 lakhs in case of few States) with a simpler GST compliance mechanism. Entities registered under the GST composition scheme will be able to pay tax at prescribed rates and file quarterly GST returns.

Service providers are not eligible to be enrolled under the GST composition scheme, expect for restaurant service providers.

What is GSTR-4 filing?

GSTR-4 filing is a quarterly return due for persons registered under the GST composition scheme. Normal taxpayers would file GSTR-1, GSTR-2 and GSTR-3 on the 10th, 15th and 20th of each month respectively. Hence, GSTR-4 is required only for persons composition dealers.

What is the Due Date for Filing GSTR-4?

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

What details must be filed in GSTR-4 return?

GSTR-4 return would consist of invoice wise inter-state and intra-state inward supplies received from registered and unregistered persons. In addition to invoice wise details of inward supplies, the taxpayer must furnish consolidated details of outward supplies.

The information pertaining to outward supplies furnished by regular taxpayers on the 10th of every month would be matched with the GSTIN of the composition scheme supplier. Hence, the composition taxpayer would only have to add, correct or delete the GSTIN matched details shown on the GSTR-4 filing and file the return.

When can a Business be enrolled under GST Composition Scheme?

A business can be registered under the composition scheme at the time of apply for new GST registration. All other persons opting for the composition scheme must file FORM GST CMP-02, before the commencement of the relevant financial year.

The existing businesses, the period to opt composition scheme in FORM GST CMP-01 has been extended upto 16th August, 2017.

What are other filings required for entities registered composition scheme?

In addition to quarterly GST returns in FORM GSTR-4, persons enrolling under the composition scheme will have to file details of stock, including the inward supply of goods received from unregistered persons, on the day preceding the date from when composition scheme is applicable for the business. This filing has to be furnished using FORM GST CMP-03, on the common portal or a GST Facilitation Centre, within a period of sixty days from when composition scheme is applicable.

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GST Compliance Rating – Comprehensive Guide

GST compliance rating or GST rating is a score determined by the GST tax department for every person registered under GST. GST compliance rating would be based on the compliance record of the business with respect to GST. Hence, GST compliance rating would be similar to the CIBIL score used for rating an individual’s credit worthiness.

What is GST Compliance Rating?

GST compliance rating is a score determined by the GST Department for all GST taxpayers, based on their record of compliance. GST compliance rating score would be updated for all taxpayers periodically and the score would be published in the public domain.

What factors affect GST rating?

GST rating score is calculated purely based on the taxpayer’s compliance under GST rules and regulations. Hence, the following aspects relating to GST compliance would have an impact on the GST rating.

• Timely filing of GST Returns.
• Timely payment of GST tax, penalty and other dues.
• Cooperation with requests of GST Authorities.
• Filing of other documents as required under GST rules and regulations.
• History of promoters in maintaining compliance for related entities.

In addition to timely GST compliance, GST audit or inspection could be ordered by GST authorities from time to time to check various aspects of compliance under GST. Thus, ensuring that the business issues proper tax invoice, makes correct determination of taxes payable, reconciliation of return and various other factors could impact GST compliance rating.

What are the uses for GST rating?

Transparency with respect to tax compliance will immensely benefit the business, its employees, customer, creditors, other stakeholders and the Government. Further, by disclosing the compliance history of a person registered under GST in a simple to understand score, trade creditors and financial institutions will be able to quickly determine the creditworthiness of a company.

The GST rating mechanism will also serve as a feedback to the stakeholders of the company like promoters, investors and directors on steps to be taken to improve compliance.

What details will be published in GST compliance rating?

GST compliance rating is expected to be a simple score. According to the GST Act, no information of any individual return or its part can be published in a matter that identifies a particular person without previous written consent of the particular person. Further, the Act also probit third-parties from accessing any information or any individual GST return. Hence, GST compliance rating would not have details like:

1. Name of suppliers
2. Name of customers
3. Amount of turnover
4. Products or services supplied
5. Address of supply

How will GST rating impact my business?

GST compliance rating is a game-changer and would have a pervasive effect on the company ability to operate successfully, raise credit, hire employees and win-over customer. Currently, CIBIL score for all individuals and entities can be accessed only by Banks and Financial Institutions for the purposes of lending credit. CIBIL scores are not published in the public domain.

However, GST compliance ratings would be published in public domain. As the rating would be readily available in the public domain, more persons including customer, employees, creditors, vendors and investors would access GST rating before or during the course of doing business. Hence, a low GST rating could signification impact a business in various areas like hiring, sales, raising credit and more.

Thus, it is most important for all businesses to be aware of the factors impacting GST rating, check GST compliance rating for their business periodically and ensure that steps are taken to promptly comply with all GST rules and regulations.

How to improve GST rating?

GST rating is tied to GST compliance history of the taxpayer. Hence, if your GST rating is low, you would be able to improve your GST rating by beginning to file your GST returns on time and making timely GST payments.

You can use a GST Accounting software like LEDGERS with return filing features, compliance alerts and auto-reconciliation facilities to improve GST rating.

Where can I find GST compliance rating?

GST compliance ratings for all persons registered under GST would be placed in the public domain. Hence, registered and unregistered person under GST would be able to readily access this information.

The complete rules for GST compliance rating and procedure for accessing GST ratings have not yet been notified by the GST Department. However, GST ratings are expected to be live before end of 2017 and available at gst.gov.in website.

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