GST Compliances

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GST Compliances

It is an indirect tax levied on the supply of goods and services across India which was introduced in the Budget Speech presented on 28th February 2006, implemented on 1st July 2017 as the “Goods and Services Act”. GST has subsumed multiple types of indirect tax like Service tax, VAT, excise etc. The motto of GST is “One Nation-One Tax”.

Under GST framework, tax is applied through each stage of supply chain from start to end. The main reason to implement GST is to follow a simple as well as a single unified tax mechanism rather than to follow a series of tax structures along with different types of compliance such as Service tax, VAT, Central Excise etc. Also, through implementing GST, it was an objective to eliminate the effect of Double Taxation (Cascading Effect), thus, the tax was imposed on each stages of supply chain starting from procuring raw material to selling of finished goods to ultimate consumer.

By subsumed all different types of taxes in India, GST has reduced the burden of cumulative tax on goods and services and enhanced transparency and uniformity in tax system.

Current System (Cascading taxes)

GST (Avoidance of Double taxation)

Machine manufactured in Mumbai and sold in Pune @Rs.10,000/-

Machine manufactured in Mumbai and sold in Pune @Rs.10,000/-

VAT 10% = ₹1000

CGST 5%=₹500

SGST5%=₹500

Same Machine sold from Pune to Delhi @Rs.25000/-

Same Machine sold from Pune to Delhi @Rs.25000/-

Central Sales Tax @10%=₹2500

IGST=10% = ₹1500(2500-1000)

 

GST Structure

  1. CGST (Central GST): Collected by the Central Government on intra-state sales.
  2. SGST (State GST): Collected by the State Government on intra-state sales.
  3. IGST (Integrated GST): Collected by the Central Government on inter-state sales.
  4. UTGST (Union Territory GST): Collected in Union Territories without legislatures.

GST Rates

Currently, the commonly applicable rates for Goods in India are 0% or Nil-Rated, 5%, 12%, 18% and 28%. However, in case of services, the applicable GST rates is 18%.

Features of GST

Through this article, we will cover the following topics briefly so as to gain insight of the GST Law:

  1. GST Registration
  2. Invoice
  3. E-way Bill
  4. Input Tax Credit
  5. GST Return Compliance
  6. GST Return
  7. Types of Return
  8. Due Date

GST Registration

  • Mandatory Registration:Businesses having Annual turnover more than ₹20 lakh (₹10 lakh for Special Category States) are required to be register for GST. However, specialized sectors like E-commerce operator, inter-state service provider are required to be register for GST regardless of the annual turnover.
  • Voluntary Registration:A person can apply for GST registration on voluntary basis so as to avail input tax credit benefits. Even small business can take GST Registration on a voluntary basis so as to avail input tax credits.

Steps for obtaining GST Registration:

  • Step 1: Visit GST Portal and click “Register Now” under “Services” Tab.
  • Step 2: Select “New Registration” and fill mandatory details mentioned in Part-A
  • Step 3: After the generation of TRN (Temporary Reference Number), use this TRN to log in to the GST Portal.
  • Step 4: Login again with the help of TRN and fill additional details about your business including Business Name, Business address, Authorization form and details of promoter, partner and taxpayer details.
  • Step 5: Upload Required documents.
  • Step 6: Verification and Submission
  • Step 7: Generation of ARN (Application Reference Number)
  • Step 8: Once the processed application is verified by GST Authorities, taxpayer will get the GSTIN Number.

GST Invoice

A registered person has to issue GST invoice to its customer which will eventually help its customer in availing the Input Tax Credit benefit. A GST invoice should have the following fields:

  • Date of Invoice & Number
  • Customer Name
  • Billing and Shipping Address of Customer
  • Place of Supply
  • Reverse Charge Mechanism applied or not
  • GSTIN of Taxpayer & Customer
  • Description of Invoice Item
  • Taxable Value
  • GST Rate
  • HSN Code
  • Discount applied
  • Signature of Supplier

E-Invoice

“E-Invoice” or “Electronic invoicing” is a system for GST registered person for uploading all the B2B invoices to the Invoice Registration Portal(“IRP”). The IRP generates and returns a unique Invoice Reference Number (IRN), digitally signed e-invoice and QR code to the user.

Once the invoice is registered, then, all the details of such invoice would go real-time on the e-way bill portal as well on the GST portal. It saves the time and it becomes more efficient with reduced possibilities of error.

The question arises that who all are required to generate e-invoices? As per the GST Law, all the registered tax payer with a total turnover exceeding INR 5 Crores are required to generate e-invoicing.

E-way Bill

E-way bill is another vital document under the GST law. It is a document which contains the details regards movement of goods from one place to another. Such document needs to be carried by the transporter of consignment exceeding the value of INR 50,000.

Under the said mechanism, sender of goods is required to upload the relevant details of the shipment on the e-way bill portal before dispatch. In fact, according to Rule 138 of the CGST Rules, 2017, it has been provided that a registered transporter must generate an e-way bill while shipping any goods worth over ₹50,000. It supports the GST, and it also helps in checking and control measures related to tax evasion issued by the government. Further, the ceiling limit of value of consignment may differ state to state.

Input Tax Credit

Input tax credit (“ITC”) is a mechanism to avoid cascading effects of the tax. It is a heart and soul of GST which helps in achieving the goals of GST system. Under such mechanism, credit of the tax paid by a taxable person on the purchase of goods or services used for furtherance of the business can be availed which reduces the burden of the consumers.

For Example: If You are a Seller,

  • You have paid Rs.36,000 input tax on product purchases (Assuming Purchase Invoice amount is Rs. 2,00,000 and GST Rate is 18%) AND
  • You have collected Rs.72,000 output tax on Sales (Assuming Sales Invoice amount is Rs.4,00,000 and GST rate is 18%)
  • Consequently, your net tax payable will be Rs.36,000 calculated as Output tax Liability minus Input Tax Credit)

Output GST Liability

INR 72,000

Less: GST on Purchases (ITC)

INR 36,000

Net GST Liability

INR 36,000

Only registered businesses under GST can avail of the ITC, and unregistered persons as well as persons opting for composition schemes cannot claim ITC.

Documentary requirement for Input Tax Credit

  1. Tax invoice isissued by the supplier of goods or services.
  2. A debit note issued by the supplier
  3. An invoice issued under certain circumstances like the bill of supply issued instead of tax invoice if the amount is less than Rs.200 or in situations where the reverse charge is applicable as per the GST law.
  4. A bill of entry
  5. An invoice or credit noteissued by an Input Service Distributor.

Time limit to avail ITC

Registered person is entitled to avail input tax credit on or before the following dates:

  • 30th November following the end of the relevant Financial Year; or
  • Due date of furnishing the relevant annual return.

GST Return Compliance

GST Compliance of business required to be file on a periodical basis whether yearly, monthly or quarterly. The occurrence of returns of business depends on the nature of activity of business.

Here are the frequency of returns to be filed by the Taxpayer:

  • GSTR-1: It is a type of form in which taxpayer needs to furnish all the information relating to Sales.
  • GSTR 2: It is a monthly return summary of all the details relating to inward purchases of taxable goods/services.
  • GSTR-3B: It is a form contains summary of return to be filed every month including Sales, claimed ITC and tax liability.
  • GSTR-9 Taxpayer needs to file Annual return to the Department only applicable if the annual turnover of the business is Rs.2 Crore or more.

Types of GST Return

  1. GSTR-1: It is to be filed by all registered business to report all types of outward supplies during the tax period.
  2. GSTR 2: It is a monthly return summary all the details relating to inward purchases of taxable goods/services.
  3. GSTR-3B: It is monthly summary of return contain details of sales, purchases and tax to be paid.
  4. GSTR-4:This is an annual return specially designed for taxpayers opted for Composition Scheme.
  5. GSTR-5:It is to be filed by Non-Resident (NRI) taxpayers who are engaged in making taxable supplies.
  6. GSTR-6: It is a monthly return to be filed by Input Service Distributor which contains details of ITC received.
  7. GSTR-7: Individuals engaged in deducting Tax Deducted at Source (TDS) under GST System. It consists of TDS deducted, TDS payable, TDS refund etc.
  8. GSTR-8: This return is specially designed for E-Commerce Operators registered in GST.
  9. GSTR-9:This is an annual return to be filed by registered business consolidate and reconcile all transactions on which GST applies in a whole financial year.
  10. GSTR-10: It is a type of final return to be filed by taxable person who want to cancel or surrender their GST registration.
  11. GSTR-11: It is to be filed by the respective persons who have been issued a Unique Identity Number for the purpose of claiming refund of taxes paid on inward supplies.

Due Dates for GST Return

Types of Return

Due Date

GSTR-1

By 11th of every month for the previous month, or the 13th of the month following a quarter

GSTR-3B

By 20th of the next month for the previous month

GSTR-4

By 30th April when the financial year for which the returns are being filed.

GSTR-5

By 20th of the next month for the previous month

GSTR-6

By 13th of the next month for the previous month

GSTR-7

By 10th of the next month for the previous month

GSTR-8

By 10th of the next month for the previous month

GSTR-9

31st December of the next financial year for the previous financial year

GSTR-10

Within 3 months from the date of cancellation or the date of cancellation order whichever is later

GSTR-11

By 28th of given month, following the month in which statement is filed.

How SKMC can help you?

We are specialized GST Advisors in Delhi NCR with more than 15+ years of experience in GST, Litigation Services and planning for large corporates PAN India. We provide all types of services relating to GST, Business set up services starts from Registration and licensing required to conduct business in India.

  • Expert GST Guidance: Our professional GST support services shall ease out the complexity associated with the GST framework, thus help in ensuring compliance against all eventualities, both accurately and on time.
  • GSTR-3B and GSTR-1 Filing Support: Our professionals will provide total support in formulating and filing GSTR-3B and GSTR-1 returns that would ensure reporting of outward and inward supplies, tax payments, and submitting the returns.
  • GSTR-9 Annual Filing: The global expert hands prepare and file the GSTR-9 annual return that gives a comprehensive detailing of all the financial activity done in a particular year.
  • Maximization of ITC: We ensure that businesses claim the maximum ITC for eligible input taxes while reducing their tax liability altogether.
  • Timely Compliance: We ensure our clients get all their GST-related filings done well in time and, thus, avoid more significant penalties and legal issues.
  • Building Trust Through Transparency: Timely and accurate compliance builds financial transparency that develops stakeholders' trust and credibility with investors and clients.

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