Category: GST

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Frequently Asked Questions (FAQs) with answers on GST

Question 1. What is GST? How does it work?

Answer: GST is one indirect tax for the whole nation, which will make India one unified common market. GST is a single tax on the supply of goods and services, right from the manufacturer to the consumer. Credits of input taxes paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.

Question 2. What are the benefits of GST?

Answer: The benefits of GST can be summarized as under:

For business and industry – 

  • Easy compliance: A robust and comprehensive IT system would be the foundation of the GST regime in India. Therefore, all tax payer services such as registrations, returns, payments, etc. would be available to the taxpayers online, which would make compliance easy and transparent.
  • Uniformity of tax rates and structures: GST will ensurethat indirect tax rates and structures are commonacross the country, thereby increasing certainty and ease of doing business. In other words, GST would make doing business in the country tax neutral, irrespective of the choice of place of doing business.
  • Removal of cascading: A system of seamless tax-credits throughout the value-chain, and across boundaries of States, would ensure that there is minimal cascading of taxes. This would reduce hidden costs of doing business.
  •  Improved competitiveness: Reduction in transaction costs of doing business would eventually lead to an improved competitiveness for the trade and industry.
  • Gain to manufacturers and exporters: The subsuming of major Central and State taxes in GST, complete and comprehensive set-off of input goods and services and phasing out of Central Sales Tax (CST) would reduce the cost of locally manufactured goods and services. This will increase the competitiveness of Indian goods and services in the international market and give boost to Indian exports. The uniformity in tax rates and procedures across the country will also go a long way in reducing the compliance cost.

For Central and State Governments –

  • Simple and easy to administer: Multiple indirect taxes at the Central and State levels are being replaced by GST. Backed with a robust end-to-end IT system, GST would be simpler and easier to administer than all other indirect taxes of the Centre and State levied so far.
  • Better controls on leakage: GST will result in better tax compliance due to a robust IT infrastructure. Due to the seamless transfer of input tax credit from one stage to another in the chain of value addition, there is an inbuilt mechanism in the design of GST that would incentivize tax compliance by traders.
  • Higher revenue efficiency: GST is expected to decrease the cost of collection of tax revenues of the  Government, and will therefore, lead to higher revenue efficiency.

For the consumers – 

  • Single and transparent tax proportionate to the value of goods and services: Due to multiple indirect taxes beinglevied by the Centre and State, with incomplete or no input tax credits available at progressive stages of value addition, the cost of most goods and services in the country today are laden with many hidden taxes. Under GST, there would be only one tax from the manufacturer to the consumer, leading to transparency of taxes paid to the final consumer.
  • Relief in overall tax burden: Because of efficiency gains and prevention of leakages, the overall tax burden on most commodities will come down, which will benefit consumers.

Question 3. Which taxes at the Centre and State level are being subsumed into GST?

Answer:   At the Central level, the following taxes are being subsumed:
a. Central Excise Duty,
b. Additional Excise Duty,
c. Service Tax,
d. Additional Customs Duty commonly known as Countervailing Duty, and
e. Special Additional Duty of Customs.
At the State level, the following taxes are being subsumed:
a. Subsuming of State Value Added Tax/Sales Tax,
b. Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax (levied by the Centre and collected by the States),
c. Octroi and Entry tax,
d. Purchase Tax,
e. Luxury tax, and
f. Taxes on lottery, betting and gambling.

Question 4. What are the major chronological events that have led to the introduction of GST?

Answer: GST is being introduced in the country after a 13 year long journey since it was first discussed in the report of the Kelkar Task Force on indirect taxes. A brief chronology outlining the major milestones on the proposal for introduction of GST in India is as follows:
a. In 2003, the Kelkar Task Force on indirect tax had suggested a comprehensive Goods and Services Tax (GST) based on VAT principle.
b. A proposal to introduce a National level Goods and Services Tax (GST) by April 1, 2010 was first mooted in the Budget Speech for the financial year 2006-07.
c. Since the proposal involved reform/ restructuring of not only indirect taxes levied by the Centre but also the States, the responsibility of preparing a Design and Road Map for the implementation of GST was assigned to the Empowered Committee of State Finance Ministers (EC).
d. Based on inputs from Govt of India and States, the EC released its First Discussion Paper on Goods and Services Tax in India in November, 2009.
e. In order to take the GST related work further, a Joint Working Group consisting of officers from Central as well as State Government was constituted in September, 2009.
f. In order to amend the Constitution to enable introduction of GST, the Constitution (115th Amendment) Bill was introduced in the Lok Sabha in March 2011. As per the prescribed procedure, the Bill was referred to the Standing Committee on Finance of the Parliament for examination and report.
g. Meanwhile, in pursuance of the decision taken in a meeting between the Union Finance Minister and the Empowered Committee of State Finance Ministers on 8th November, 2012, a ‘Committee on GST Design’, consisting of the officials of the  Government of India, State Governments and the Empowered Committee was constituted.
h. This Committee did a detailed discussion on GST design including the Constitution (115th) Amendment Bill and submitted its report in January, 2013. Based on this Report, the EC recommended certain changes in the Constitution Amendment Bill in their meeting at Bhubaneswar in January 2013.
i. The Empowered Committee in the Bhubaneswar meeting also decided to constitute three committees of officers to discuss and report on various aspects of GST as follows:-
(a) Committee on Place of Supply Rules and Revenue Neutral Rates;
(b) Committee on dual control, threshold and exemptions;
(c) Committee on IGST and GST on imports.
j. The Parliamentary Standing Committee submitted its Report in August, 2013 to the Lok Sabha. The recommendations of the Empowered Committee and the recommendations of the Parliamentary Standing Committee were examined in the Ministry in consultation with the Legislative Department. Most of the recommendations made by the Empowered Committee and the Parliamentary Standing Committee were accepted and the draft Amendment Bill was suitably revised.
k. The final draft Constitutional Amendment Bill incorporating the above stated changes were sent to the Empowered Committee for consideration in September 2013.
l. The EC once again made certain recommendations on the Bill after its meeting in Shillong in November 2013. Certain recommendations of the Empowered Committee were incorporated in the draft Constitution (115th Amendment) Bill. The revised draft was sent for consideration of the Empowered Committee in March, 2014.
m. The 115th Constitutional (Amendment) Bill, 2011, for the introduction of GST introduced in the Lok Sabha in March 2011 lapsed with the dissolution of the 15th Lok Sabha.
n. In June 2014, the draft Constitution Amendment Bill was sent to the Empowered Committee after approval of the new Government.
o. Based on a broad consensus reached with the Empowered Committee on the contours of the Bill, the Cabinet on 17.12.2014 approved the proposal for introduction of a Bill in the Parliament for amending the Constitution of India to facilitate the introduction of Goods and Services Tax (GST) in the country. The Bill was introduced in the Lok Sabha on 19.12.2014, and was passed by the Lok Sabha on 06.05.2015. It was then referred to the Select Committee of Rajya Sabha, which submitted its report on 22.07.2015.

Question 5. How would GST be administered in India?

Answer: Keeping in mind the federal structure of India, there will be two components of GST – Central GST (CGST) and State GST (SGST). Both Centre and States will simultaneously levy GST across the value chain. Tax will be levied on every supply of goods and services. Centre would levy and collect Central Goods and Services Tax (CGST), and States would levy and collect the State Goods and Services Tax (SGST) on all transactions within a State. The input tax credit of CGST would be available for discharging the CGST liability on the output at each stage. Similarly, the credit of SGST paid on inputs would be allowed for paying the SGST on output. No cross utilization of credit would be permitted.

Question 6. How would a particular transaction of goods and services be taxed simultaneously under Central GST (CGST) and State GST (SGST)?

Answer : The Central GST and the State GST would be levied simultaneously on every transaction of supply of goods and services except on exempted goods and services, goods which are outside the purview of GST and the transactions which are below the prescribed threshold limits. Further, both would be levied on the same price or value unlike State VAT which is levied on the value of the goods inclusive of Central Excise.

A diagrammatic representation of the working of the Dual GST model within a State is shown.

Question 7. Will cross utilization of credits between goods and services be allowed under GST regime?

Answer : Cross utilization of credit of CGST between goods and services would be allowed. Similarly, the facility of cross utilization of credit will be available in case of SGST. However, the cross utilization of CGST and SGST would not be allowed except in the case of inter-State supply of goods and services under the IGST model which is explained in answer to the next question.

Question 8. How will be Inter-State Transactions of Goods and Services be taxed under GST in terms of IGST method?

Answer: In case of inter-State transactions, the Centre would levy and collect the Integrated Goods and Services Tax (IGST) on all inter-State supplies of goods and services under Article 269A (1) of the Constitution. The IGST would roughly be equal to CGST plus SGST. The IGST mechanism has been designed to ensure seamless. flow of input tax credit from one State to another. The inter-State seller would pay IGST on the sale of his goods to the Central Government after adjusting credit of IGST, CGST and SGST on his purchases (in that order). The exporting State will transfer to the Centre the credit of SGST used in payment of IGST. The importing dealer will claim credit of IGST while discharging his output tax liability (both CGST and SGST) in his own State. The Centre will transfer to the importing State the credit of IGST used in payment of SGST. Since GST is a destination-based tax, all SGST on the final product will ordinarily accrue to the consuming State. A diagrammatic representation of the working of the IGST model for inter-State transactions is shown.

Question 9. How will IT be used for the implementation of GST?

Answer: For the implementation of GST in the country, the Central and State Governments have jointly registered Goods and Services Tax Network (GSTN) as a not-for-profit, non-Government Company to provide shared IT infrastructure and services to Central and State Governments, tax payers and other stakeholders. The key objectives of GSTN are to provide a standard and uniform interface to the taxpayers, and shared infrastructure and services to Central and State/UT governments. GSTN is working on developing a state-of-the-art comprehensive IT infrastructure including the common GST portal providing frontend services of registration, returns and payments to all taxpayers, as well as the backend IT modules for certain States that include processing of returns, registrations, audits, assessments, appeals, etc. All States, accounting authorities, RBI and banks, are also preparing their IT infrastructure for the
administration of GST. There would no manual filing of returns. All taxes can also be paid online. All mis-matched returns would be autogenerated, and there would be no need for manual interventions. Most returns would be self-assessed.

Question 10. How will imports be taxed under GST?

Answer : The Additional Duty of Excise or CVD and the Special Additional Duty or SAD presently being levied on imports will be subsumed under GST. As per explanation to clause (1) of article 269A of the Constitution, IGST will be levied on all imports into the territory of India. Unlike in the present regime, the States where imported goods are consumed will now gain their share from this IGST paid on imported goods.

Question 11. What are the major features of the Constitution (122nd Amendment) Bill, 2014?

Answer : The salient features of the Bill are as follows:

  • Conferring simultaneous power upon Parliament and the State Legislatures to make laws governing goods and services tax;
  •  Subsuming of various Central indirect taxes and levies such as Central Excise Duty, Additional Excise Duties, Service Tax, Additional Customs Duty commonly known as Countervailing Duty, and Special Additional Duty of Customs;
  • Subsuming of State Value Added Tax/Sales Tax, Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax (levied by the Centre and collected by the States), Octroi and Entry tax, Purchase Tax, Luxury tax, and Taxes on lottery, betting and gambling;
  •  Dispensing with the concept of ‘declared goods of special importance’ under the Constitution;
  • Levy of Integrated Goods and Services Tax on inter-State transactions of goods and services;
  • GST to be levied on all goods and services, except alcoholic liquor for human consumption. Petroleum and petroleum products shall be subject to the levy of GST on a later date notified on the recommendation of the Goods and Services Tax Council;
  • Compensation to the States for loss of revenue arising on account of implementation of the Goods and Services Tax for a period of five years;
  • Creation of Goods and Services Tax Council to examine issues relating to goods and services tax and make recommendations to the Union and the States on parameters like rates, taxes, cesses and surcharges to be subsumed, exemption list and threshold limits, Model GST laws, etc. The Council shall function under the Chairmanship of the Union Finance Minister and will have all the State Governments as Members.

Question 12. What are the major features of the proposed registration procedures under GST?

Answer: The major features of the proposed registration procedures under GST are as follows:
i. Existing dealers: Existing VAT/Central excise/Service Tax payers will not have to apply afresh for registration under GST.
ii. New dealers: Single application to be filed online for registration under GST.
iii. The registration number will be PAN based and will serve the purpose for Centre and State.
iv. Unified application to both tax authorities.
v. Each dealer to be given unique ID GSTIN.
vi. Deemed approval within three days.
vii. Post registration verification in risk based cases only.

Question 13. What are the major features of the proposed returns filing procedures under GST?

Answer: The major features of the proposed returns filing procedures under GST are as follows:
a. Common return would serve the purpose of both Centre and State Government.
b. There are eight forms provided for in the GST business processes for filing for returns. Most of the average tax payers would be using only four forms for filing their returns. These are return for supplies, return for purchases, monthly returns and annual return.
c. Small taxpayers: Small taxpayers who have opted composition scheme shall have to file return on quarterly basis.
d. Filing of returns shall be completely online. All taxes can also be paid onine.

Question 14. What are the major features of the proposed payment procedures under GST?

Answer: The major features of the proposed payments procedures under GST are as follows:
i. Electronic payment process- no generation of paper at any stage
ii. Single point interface for challan generation- GSTN
iii. Ease of payment – payment can be made through online banking, Credit Card/Debit Card, NEFT/RTGS and through cheque/cash at the bank
iv. Common challan form with auto-population features
v. Use of single challan and single payment instrument
vi. Common set of authorized banks
vii. Common Accounting Codes

(Complied from the Data available on PIB)

 

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Understanding the GST E-Way Bill – How Will It Work?

Under the newly introduced GST regime, the transporters are required to carry an electronic or e-way bill at the time of moving the goods from one location to another. It is a mandatory requirement and the transporters, consignors, and consignees must comply with it. This is an online version of the earlier accepted Way Bill that they had to obtain from the VAT authorities. In this case, e-way bill is required for the movement of goods above Rs. 50,000 in value. The government is planning to allow generating or canceling this bill through SMS as well. At the time of generating an e-way bill, a unique EBN or E-way Bill Number will be allocated to the supplier, recipient, and transporter.

When Should An E-Way Bill Be Generated?

Whenever there is a movement of goods in relation to a supply, for reasons other than a supply, or an inward supply from an unregistered person, it needs an e-way bill under the CGST Act.

What Constitutes Supply For the Purpose of E-Way Bill?

The supply for the purpose of generating an e-way bill includes the following:

  • If a supply is made for a payment or any other consideration during the course of business.
  • If the supply is made for a payment or any other form of consideration even if not in the course of business.
  • If a supply is made without any consideration or payment.

The Central Board of Excise and Customs has proposed that an e-way bill should be generated for the supply of goods above INR 50000. It will need an online registration of the consignment and authorities can inspect the same anytime if they suspect a tax evasion. The bills generated on the GSTN portal will be valid for a period of 1-15 days depending on the distance of travel. It may be increased to 20 days for a distance of more than 1000 km.

Who is Liable to Generate E-Way Bills?

This type of bill should be generated for the movement of goods above Rs. 50, 000 from or to a registered person. A registered transporter of supplier can also opt to carry an e-way bill for the goods costing below Rs. 50, 000. Unregistered persons and transporters can also apply for this bill. However, if the receiver is a registered person, it is important to ensure the compliance with the provisions of law in this case.

How to Generate an E-Way Bill:

The e-way bill under GST is generated after a well-defined process. In this regard, the person initializing the movement of goods is required to provide the details of goods to be transported on the GSTN portal. The taxpayers have to log into their GST account and generate Form GST EWB-01 by providing the following details:

  • GSTIN of the recipient of goods
  • Challan or invoice number
  • Challan or invoice date
  • Location of delivery
  • Worth of goods in INR
  • Reason for movement
  • HSN code
  • TDN or Transport Document Number

You should provide the PIN code of the place of delivery and Goods Receipt Number/ Airway Bill Number/Railway Receipt Number/ Bill of Lading Number for TDN.

After this step, you should provide the complete details of transport in part B of GST EWB-01. When the goods are moved by the customer or supplier in an owned vehicle, the information can be updated by the same person. When goods are handed over to a transporter by the supplier, the supplier needs to provide details for generation of an e-way bill under Part A of this form. Then, the transporter will generate the bill according to the information given by the transporter in Part B. In this scenario, goods can be moved only by providing information in Part A.

In the cases where goods need to travel less than 10 km within the Union or state territory from a supplier’s business location to a transporter, no details of transport are required to be provided by the supplier on the common portal of GST. And, if goods are moved for a distance of fewer than 10 km, the supplier need not provide the details of transport on the portal for generating the e-bill.

These are the details related to GST e-way bill that you should know.

 

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What is the Impact of GST on the Export of Services and Goods?

Previously, the export of services and goods was subject to a bevy of indirect taxes. Excise tax, customs duty, VAT, service tax, etc. was standard taxes charged from an exporter. Under the GST regime, all these taxes are subsumed into one. However, customs duty is an exemption and still levied on importers as usual.

Currently, there is no duty charged on exporters of services and goods. Above that, an exporter can claim any inputs that are received for purchasing of their raw materials. The government of India is aiming to increase the export of services and goods. To boost their ‘Make in India’ program, the government has offered various perks including zero duty on the exports. However, there is still some ambiguity in this arrangement and traders are looking for more clarification on the subject matter.

How Will It Be Levied?

Since the export of goods and services is considered a zero-rated supply, there is no GST levied on the same. Under the previous laws, a duty drawback was given for the taxes paid on inputs, provided these inputs were meant for export of goods exempted from taxes. It was truly daunting to claim this drawback. GST will mitigate these issues. Under this new system, duty drawback will be available only for the payment of customs duty on imported goods. Also, it will be allowed on some tobacco and petroleum products that are used as fuel or inputs for captive power generation in India.

Meaning of Export of Services under IGST Act 2017:

Services are treated as an export under below-mentioned circumstances when:

  • Service supplier is located in India
  • Service recipient is located outside India
  • Place of service supplied is located outside India
  • Supplier receives payment for such services in convertible foreign exchange

Here, supplier and recipient should be distinct person. For example- ABD consultancy firm in Delhi, India is providing services to XYZ firm in Dubai. Here, the location of supplier is in India, recipient location is Dubai, payment is made in Dirham (convertible foreign exchange) and supplier and recipient are different persons.

The Treatment on Zero-Rated Exports:

The government has issued a guidance note for clearing the doubts related to claims of input tax credits on the zero-rated products. Such exporters can claim refunds for zero-rated goods under two main options, viz.

  1. They should supply the goods or services, or even both under a Letter or Undertaking or Bond subject to the prescribed safeguards, procedures, and conditions. It can be provided without paying integrated taxes. Then, the exporter can claim a refund of the input tax credit that is unutilized. It requires filing an application for the refund either directly on the common portal or through a notified facilitation centre. Also, an export report must be filed under the Customs Act before filing this application for claiming refunds.
  2. Refunds can also be claimed by an exporter, Embassy, United Nations, agencies other than those specified in section 55 if they are paying IGST after fulfilling the prescribed conditions, procedures, and safeguards. This refund can be claimed on the tax paid on the goods and services supplied or both. Here, the applicant should follow the rules specified in Section 54 of CGST Act. In this context, the exporter has to submit the shipping bill for the goods exported. The person in charge of the shipment should also provide a complete report with the number and dates of all shipping bills mentioned clearly. The forms are available on the official website of the department.

How Are the Exports of Zero-Rated Services Treated Under GST?

Before claiming a refund of input tax credit, it is essential to determine if as service is covered under the definition given in the law. Any new conditions are not added to the existing definition of Export of Services. The rules for place of supply will vary on a case to case basis for determining their taxability. The location of service recipient is the default place of supply for export of services. The address mentioned in the records of the recipient must exist with the exporter in this case. This rule applies to IT/ITES services including intermediary services, software support, and maintenance.

There are separate implications of GST on software transactions including cloud computing. This is the packaged software that should be treated as ‘Goods’. It should be taxed as per the rates and place of supply applicable to export of goods. The customized software is charged as ‘Services’. Also, the software supplied electronically is charged as ‘Services’ because the definition of goods does not include intangible products. Same goes for the transfer of cloud computing services.

Refund of Input Tax Credit in Export of Goods:

The rules are clearly specified in this regard. They state:

  • If the supply of zero-rated goods is made without paying taxes, refund of input tax credit can be claimed under section 54(2) of CGST Act.
  • Unutilized input tax credit is not liable to refund in cases other than the zero-rated exports. Also, it states that refund will be available if credit is accumulating due to rate of tax on inputs being higher than the tax on output supplies. Also, this rule exempts nil rated and fully exempted products.
  • If the goods exported are subject to export duty, no refund will be allowed on an unutilized tax credit.
  • If exporter avails duty drawbacks of SGST/CGST/UTGST or claims refunds on IGST already paid on such exports, no refund will be allowed in these circumstances.

Deemed Exports:

Global tenders are invited for the prestigious projects in India financed by the foreign aid from Asia development bank, World Bank, etc. Indian suppliers face tough competition to win such projects from foreign suppliers. Since services are invited for a project funded with free foreign exchange, there is no customs duty involved in the bids. Supplies to such project where goods and services do not leave the country and payments are received by a supplier under Para 7.02 of Foreign Trade Policy (2015-2020) are termed as Deemed Export.

Following Transactions are treated as Deemed Exports under Foreign Trade Policy (2015-2020):

  • Export supplies for UN Agencies
  • Export against EPCG
  • Export against DFIA/ Advance Authorisation
  • Supplying for international competitive bidding project
  • Exporting marine freight containers
  • Supplying for EOU/ BTP/ EHTP/ STP
  • Supplying goods and services for project with zero customs duty
  • Supplying services and goods through competitive bidding to a nuclear project
  • Supplying services and goods to mega power projects

 

How Is the Government Looking for Export Promotion under GST?

Export is a priority but WTO recommends free and fair global trade. This rule binds on India as well. Hence, giving incentives to the exporters is against the norms of fair trade. However, these exporters are equally compensated by making their goods and services free from domestic taxes.

Following Are The Benefits Enjoyed By An Exporter Under GST:

  • GST exempted from final product
  • Refund of ITC on GST paid

Also, the government has planned few schemes for the exporters. These include:

  • SEZ allowed importing inputs without paying duty and export finished goods
  • Schemes of Advance Authorisation, DEPB, and DFIA
  • Duty Drawback Scheme
  • Scheme for Export Oriented Undertakings

With this comprehensive knowledge about GST implication on Export of Goods and Services, you can run your business smoothly and contribute to the cause of nation building.

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GST Statistics for the Period till 25th December 2017

Gross collection of GST for the month of December 2017 has been Rs. 80,808 crores till 25th December 2017
Total Revenue Collection under GST:

The total collection under GST for the month of December 2017 has been Rs. 80,808 crores till 25thDecember 2017. 99.01 lakh taxpayers have been registered under GST so far till 25th December, of which 16.60 lakh are composition dealers which are required to file returns every quarter. 53.06 lakh returns have been filed for the month of November till 25th December.

Revenue of State Governments –

Out Of the Rs. 80,808 crores collected under GST for the month of December, 2017 (upto 25th December), Rs. 13,089 crores have been collected as CGST, Rs. 18,650 crores has been collected as SGST, Rs. 41,270 crores has been collected as IGST and Rs. 7,798 crores has been collected as Compensation cess. Further, Rs. 10,348 crores is being transferred from IGST to CGST account and Rs. 14,488 crores is being transferred from IGST to SGST account by way of settlement of funds on account of cross utilization of IGST credit for payment of CGST and SGST respectively or due to inter State B2C transactions. Thus, a total amount of Rs. 24,836 crores is being transferred from IGST to CGST/SGST account by way of settlement. Thus, the total collection of CGST and SGST for the month of December, 2017 (upto 25th December) is Rs. 23,437 crores and Rs. 33,138 crores respectively, including transfers by way of settlement.

(Compiled from the data available on PIB)

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Leasing of vehicles purchased and leased prior to 1st July, 2017 would attract GST at a rate equal to 65% of the applicable GST rate (including Compensation Cess)

In order to provide relief to old/existing leases of motor vehicles, GST Council in its 22nd Meeting held on the 6th October, 2017 in the national capital took several decisions in respect of motor vehicles purchased and leased prior to 1st July, 2017. These decisions are as given below:-

  1. a)     Leasing of vehicles purchased and leased prior to 1st July, 2017 would attract GST at a rate equal to 65% of the applicable GST rate (including Compensation Cess).
  2. b)    Such vehicles when sold shall attract GST of 65% of the applicable GST rate (including Compensation Cess).
  3. c)     Sale of vehicles by a registered person who had procured the vehicle prior to 1st July, 2017 and has not availed any Input Tax Credits of Central Excise duty, VAT or any other taxes paid on such motor vehicles, would also be subject to 65% of applicable GST rate (including Compensation Cess).

These rates would apply for a period of three years with effect from 1st July, 2017. Notifications to give effect to the above would be issued shortly.

Also Check – GST registration and GST Return Filing Process

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Penalty for Non-Filing of GSTR 3B

GSTKENDRA

What is GSTR 3B – For the first two months of GST implementation, Every GST registered person have to file form GSTR 3B within the due date for each GSTN. If you have more than one GSTN, it would be required to file separate GSTR3B  for each GSTN. However this form is temporary in nature, still non-filing may attract interest @18% per annum. Even, if there is no transactions or NIL tax, still every registered person have to file GSTR3B. GSTR3B contains information about summary of outward and inward supply, its tax liability.

Last date to file GSTR 3B was 25th August 2017 – The Goods and Services Tax (GST) tax was introduced on 1st of July 2017.  The last date for payment of GST for the month of July 2017 was 25th August 2017.  Before filing GSTR3B, first taxpayer have to deposit the GST amount through challan, which will reflect in electronic cash ledger on GST common portal. Payment of GST is complete only when amount of tax payable is debited from electronic cash / credit ledger.

Late Fee waived not Interest on late payment – Now late fee for all taxpayers who could not file GSTR 3B for the month of July 2017 has been waived, but not the interest on late payment of Tax liability.

GSTR 1 is to be filed by all taxpayers by 5th of September 2017 and GSTR 2 and GSTR 3 to be filed by all taxpayers by 10th and 15th of September 2017 respectively.

 Correction in GSTR3B  – Taxpayers who have committed errors in GSTR 3B will be able to put the correct details in GSTR 1-2-3. However, interest will be leviable from all taxpayers who have not discharged their complete Tax liability for July 2017 by 25-08-2017.

Circular issued by Ministry of Finance in this regard  – Click here for reading circular dated 01-09-2017

 

To,
The Principal Chief Commissioners/Chief Commissioners/Principal Commissioners/ Commissioners of Central Tax (All) The Principal Director Generals/ Director Generals (All)

Subject: System based reconciliation of information furnished in FORM GSTR-1 and FORM GSTR-2 with FORM GSTR-3B – regarding

1. Sections 37, 38 and section 39 of the CGST Act, 2017(hereinafter referred to as ‘the Act’) read with rules 59, 60 and 61 of the CGST Rules, 2017(hereinafter referred to as ‘the Rules’) require every registered person to furnish details of outward supplies made in a month in FORM GSTR-1, details of inward supplies received in a month in FORM GSTR-2 and a return in FORM GSTR-3 by the 10th, 15th and 20thof the next month respectively. Keeping in view that taxpayers may face certain issues in the initial days after the introduction of GST, the GST Council extended the date for filing of FORM GSTR-1 and FORM GSTR-2 for the months of July and August, 2017 and approved the filing of a simplified return in FORM GSTR-3Bfor these two months by the notified due dates after making the due payment of tax.

2. Registered persons opting to utilize transitional credit available under section 140 of the Act read with the rules made there under for discharging the tax liability for the month of July, 2017 were required to file FORM GST TRAN -1 on or before 28th August,2017. This transitional credit was to be credited to the electronic credit ledger and be available for discharging the tax liability.

3. As per the provisions of sub-rule (5) of rule 61 of the Rules, the return in FORM GSTR-3B was required to be furnished when the due dates for filing of FORM GSTR-1 and FORM GSTR-2 have been extended. After the return in FORM GSTR-3B has been furnished, the process of reconciliation between the information furnished in FORM GSTR3B with that furnished in FORM GSTR-1 and FORM GSTR-2 would be carried out in accordance with the provisions of sub-rule (6) of rule 61 of the Rules.

4. The detailed procedure for reconciliation of information furnished in FORM GSTR-3 and FORM GSTR-3B is detailed in succeeding paras.

Furnishing of information in FORM GSTR- 1 & FORM GSTR-2:

5. It may be noted that after the registered person has filed his return in FORM GSTR3B and the statement of outward supplies in FORM GSTR-1, the inward supplies shall be auto drafted for all registered persons (corresponding recipients of supply) and made available to them in FORM GSTR-2A as per sub-rule (3) of rule 59 of the Rules. FORM GSTR-2A is the exact replica of FORM GSTR-2 containing only those details that are autopopulated from the details furnished in FORM GSTR-1 by the corresponding suppliers. Based on the details communicated in FORM GSTR-2A, the registered person shall prepare the statement of inward supplies in FORM GSTR-2 by:-
a. adding, deleting or modifying the invoice level details communicated in FORM GSTR-2A;
b. adding information pertaining to details that are required to be furnished in GSTR-2 but are not part of FORM GSTR-2A like details of            imports, details of supplies attracting reverse charge that have been received by registered person;
c. providing details of supplies received from composition suppliers and exempt, nil-rated & non GST inward supplies;
d. providing details of advances paid on inward supplies attracting reverse charge, if any, along with adjustments;
e. providing details of reversal of ITC as per the provisions of rules 37, 39, 42 and 43 of the Rules, if any; and
f. providing HSN wise summary details of inward supplies.

Correction of erroneous details furnished in FORM GSTR-3B:

6. In case the registered person intends to amend any details furnished in FORM GSTR3B, it maybe done in the FORM GSTR-1 or FORM GSTR-2, as the case may be. For example, while preparing and furnishing the details in FORM GSTR-1, if the outward supplies have been under reported or excess reported in FORM GSTR-3B, the same maybe correctly reported in the FORM GSTR-1. Similarly, if the details of inward supplies or the eligible ITC have been reported less or more than what they should have been, the same maybe reported correctly in the FORM GSTR-2. This will get reflected in the revised output tax liability or eligible ITC, as the case may be, of the registered person. The details furnished in FORM GSTR-1 and FORM GSTR-2 will be auto-populated and reflected in the return in FORM GSTR-3 for that particular month.

Action on the system-based reconciliation:

7. After the registered person has furnished the statement of inward supplies in FORM GSTR-2 by the extended date, the common portal shall auto-draft Part-A of the return in FORM GSTR-3 for the said month based on the information furnished in FORM GSTR-1 and FORM GSTR-2. Based on the revised figures of output tax liability and eligible input tax credit, Table 12 of Part B of FORM GSTR-3 shall be made available. The common portal would populate the correct figures of tax payable in column (2) of Table 12 of FORM GSTR3, based on the information furnished in FORM GSTR-1 and FORM GSTR-2. The tax paid through the electronic cash ledger and electronic credit ledger in the return in FORM GSTR3B shall be displayed by the system in column (3) to (7) of the Table 12 of Part B of FORM GSTR-3. Where there is no difference between the details of output tax liability and eligible input tax credit furnished in FORM GSTR-3B and the details furnished in FORM GSTR-1 and FORM GSTR-2, the amount of tax payable and tax paid shall be the same in FORM GSTR-3B and FORM GSTR-3. The person can sign and submit FORM GSTR-3 without any additional payment of tax.

Additional payment of taxes:

8. Where the tax payable by a registered person as per FORM GSTR-3is more than what has been paid as per FORM GSTR-3B, the common portal would show another instance of Table 12 for making additional payment of taxes, in accordance with the mandate of clause (b) of sub-rule (6) of rule 61. As the tax payable in column (2) of Table 12 of FORM GSTR-3 is more than what was shown in FORM GSTR-3B, the additional amount of tax payable can be paid by debiting the electronic cash or credit ledger as per the provisions contained in section 49 of the Act along with applicable interest on delayed payment of tax starting from 26th day of August, 2017 till the date of debit in the electronic cash or credit ledger. If the eligible ITC claimed by the person in FORM GSTR-2 is less than the ITC claimed and utilised by the registered person in FORM GSTR-3B, the same would be added to his output tax liability and shall have to be paid by him along with interest by debiting the electronic cash or credit ledger as per the provisions contained in section 49 of the Act before submitting the return in FORM GSTR-3 to complete the process. It may be noted that where the transitional credit as declared in FORM GST TRAN-1 is credited to the electronic credit ledger, the same can be utilised for the payment of the said additional tax liability.

Additional claim of eligible ITC:

9. Where the eligible ITC claimed by the taxpayer in FORM GSTR-3B is less that the ITC eligible as per the details furnished in FORM GSTR-2, the additional amount of ITC shall be credited to the electronic credit ledger of the registered person when he submits the return in FORM GSTR-3 (in accordance with clause (c) of sub-rule (6) of rule 61). However, simultaneously, if there is an increase in the output tax liability, the registered person can utilise this additional amount of ITC eligible as per the details furnished in FORM GSTR-2 along with the balance in the electronic cash ledger, if required, for the payment of the increased output tax liability and submit his return in FORM GSTR-3.

Reduction in output tax liability:

10. Where the output tax liability of the registered person as per the details furnished in FORM GSTR-1 and FORM GSTR-2 is less than the output tax liability as per the details furnished in the FORM GSTR-3B and the same is not offset by a corresponding reduction in the input tax credit to which he is entitled, the excess shall be carried forward to the next month’s return to be offset against the output liability of the next month by the taxpayer when he signs and submits the return in FORM GSTR-3. However, simultaneously, if there is a decrease in the eligible input tax credit, the same will be adjusted against the above mentioned reduction in output tax liability and the balance, if any, of the reduction in output tax liability shall be carried forward to the next month’s return to be offset against the output liability of the next month.

Submission of GSTR-3B without payment of taxes:

11. Where, for some reasons, the registered person has only submitted the return in FORM GSTR-3B and has not made the payment of taxes by debiting the same from his electronic cash or credit ledger, the return shall still be subjected to the reconciliation process as detailed above. Such registered person should furnish the details in FORM GSTR-1, FORM GSTR-2 and sign and submit the return in FORM GSTR-3 along with the payment of the due taxes as per the provisions of section 49 of the Act. However, since the payment was not made on or before the due date, the registered person shall be liable for payment of interest on delayed payment of tax starting from 26th day of August, 2017 till the date of debit in the electronic cash and / or credit ledger but will not be liable to pay any late fee provided the requisite return in FORM GSTR-3B was submitted on or before the due date.

12. Where the registered person has not submitted the return in FORM GSTR-3B, he is required to furnish the details in FORM GSTR-1 and FORM GSTR-2 and sign and submit the return in FORM GSTR-3 along with the payment of the due taxes as per the provisions of section 49 of the Act. However, since the payment was not made on or before the due date, the registered person shall be liable for payment of interest on delayed payment of tax starting from 26th day of August, 2017 till the date of debit in the electronic cash and / or credit ledger. No late fee, however, would be levied for late filing of return in terms of section 47 of the Act, in accordance with the recommendation of the GST Council, as notified vide Notification No. 28/2017-Central tax dated 01.09.2017.

Processing of information furnished:
13. After submission of the information in FORM GSTR-1 and FORM GSTR-2, the process of matching as per section 41, 42 and 43 of the Act read with rules 69 to 76 of the Rules shall be carried out as if these details were submitted in the regular course. Any amendment in the details furnished in FORM GSTR-1 and GSTR-2 shall be done following the procedure laid down under sub-section (3) of section 37 and sub-section (5) of section 38 of the Act respectively. The return shall be considered to be a valid return when the tax payable as per FORM GSTR-3 has been paid in full after which the return shall be taken up for matching.
14. It is requested that suitable trade notices may be issued to publicize the contents of this circular.
15. Difficulty, if any, in implementation of the above instructions may please be brought to the notice of the Board. Hindi version would follow.

(Upender Gupta)

Commissioner (GST)