DOC-20240918-WA0017..pdf

Unit 3: Basic Procedures in GST By: Dr. Sandesh D. Tari Assistant Professor- Commerce Goa Business School- Goa University What is GST Registration Under Goods And Services Tax (GST), businesses whose turnover exceeds the threshold limit o...

Unit 3: Basic Procedures in GST By: Dr. Sandesh D. Tari Assistant Professor- Commerce Goa Business School- Goa University What is GST Registration Under Goods And Services Tax (GST), businesses whose turnover exceeds the threshold limit of Rs.40 lakh or Rs.20 lakh as the case may be, must register as a normal taxable person. It is called GST registration. For certain businesses, registration under GST is mandatory. If the organization carries on business without registering under GST, it is an offence under GST and heavy penalties will apply. GST registration usually takes between 2-6 working days. What is GST Registration What is GST Registration Kerala can now charge ‘calamity cess’ up to 1% on all intra-state supply of goods and services to cope up with natural calamities faced by the state last year. Who Should Register for GST? Individuals registered under the Pre-GST law (i.e., Excise, VAT, Service Tax etc.) Businesses with turnover above the threshold limit of Rs. 40 Lakhs (Rs. 20 Lakhs for North-Eastern States, J&K, Himachal Pradesh and Uttarakhand) Casual taxable person / Non-Resident taxable person Agents of a supplier & Input service distributor Those paying tax under the reverse charge mechanism Person who supplies via e-commerce aggregator Every e-commerce aggregator Person supplying online information and database access or retrieval services from a place outside India to a person in India, other than a registered taxable person Documents Required for GST Registration PAN of the Applicant Aadhaar card Proof of business registration or Incorporation certificate Identity and Address proof of Promoters/Director with Photographs Address proof of the place of business Bank Account statement/Cancelled cheque Digital Signature Letter of Authorization/Board Resolution for Authorized Signatory Penalty for not registering under GST An offender not paying tax or making short payments (genuine errors) has to pay a penalty of 10% of the tax amount due subject to a minimum of Rs.10,000. The penalty will at 100% of the tax amount due when the offender has deliberately evaded paying taxes How to Register for GST India Online  Step 9 – Part B has 10 sections. Fill in all the details and submit appropriate documents. The Aadhaar authentication section was added and the bank account section was made non-mandatory in 2020. Documents: Photographs Constitution of the taxpayer Proof for the place of business Bank account details* Verification and aadhaar authentication, if chosen * Bank account details are non-mandatory at the time of GST registration since 27th December 2018. Step 10 – Once all the details are filled in go to the Verification page. Tick on the declaration and submit the application using any of the following ways – Companies must submit application using Digital Signature Certificate Using e-Sign – OTP will be sent to Aadhaar registered number Using Electronic Verification Code – OTP will be sent to the registered mobile Step 11 – A success message is displayed and Application Reference Number(ARN) is sent to registered email and mobile Tax Invoice An invoice is a commercial instrument issued by a seller to a buyer. It identifies both the trading parties, and lists, describes, and quantifies the items sold, shows the date of shipment and mode of transport, prices and discounts, if any, and the delivery and payment terms. An invoice serves as a demand for payment and becomes a document of title when paid in full. Invoice under GST Under the GST regime, an “invoice” or “tax invoice” means the tax invoice referred to in section 31 of the CGST Act, 2017. Section 31 mandates the issuance of an invoice or a bill of supply for every supply of goods or services. It is not necessary that only a person supplying goods or services needs to issue an invoice. The GST law mandates that any registered person buying goods or services from an unregistered person needs to issue a payment voucher as well as a tax invoice.  The type of invoice to be issued depends upon the category of registered person making the supply. For example, if a registered person is making or receiving supplies (from unregistered persons), then a tax invoice needs to be issued by such registered person. However, if a registered person is dealing only in exempted supplies or is availing of composition scheme (composition dealer), then such a registered person needs to issue a bill of supply in lieu of invoice. The invoice should contain description, quantity and value & such other prescribed particulars (in case of supply of goods) and the description and value & such other prescribed particulars (in case of supply of services). Importance of tax invoice under GST It not only evidences supply of goods or services, but is also an essential document for the recipient to avail Input Tax Credit (ITC) A registered person cannot avail input tax credit unless he is in possession of a tax invoice or a debit note. GST is chargeable at the time of supply. Invoice is an important indicator of the time of supply. The time of supply of goods or services is the date of issuance of invoice or receipt of payment whichever is earlier. However, a special procedure for payment of tax has been prescribed for registered persons (other than composition dealers) supplying goods. Such category of persons (suppliers of goods other than composition dealers) need to pay GST only at the time of issue of invoice irrespective of when they receive payment. GOODS When a tax invoice or a bill of supply should be issued by a registered person? The time for issuing invoice would depend on the nature of supply viz whether it is a supply of goods or services. A registered person supplying taxable goods shall, before or at the time of removal of goods (where supply involves movement of goods) or delivery or making available thereof to the recipient, issue a tax invoice showing the description, quantity and value of goods, the tax charged thereon and such other particulars has been prescribed in the Invoice Rules Contents of invoice 1.Invoice number quantity (number), unit (meter, kg 2.Invoice date etc.) 3.Customer name 9.Total value 4.Shipping and billing address 10.Taxable value and discounts 5.Customer and taxpayer’s GSTIN 11.GST rate and amount of taxes (if registered)** i.e. CGST/ SGST/ IGST 6.Place of supply 12.Whether GST is payable on reverse charge basis 7.HSN code/ SAC code 13.Signature of the supplier 8.Item details i.e. description, Contents of invoice *If the recipient is not registered AND the value is more than Rs. 50,000 then the invoice should carry: Name and address of the recipient Address of delivery State name and state code Bill of Supply A dealer opting for composition scheme has to deposit tax on their receipts themselves, they are not allowed to collect any tax from their buyers. The GST has to be paid out of pocket by the composition dealer. They cannot charge GST in the invoice. Thus a composition dealer has to raise a Bill of Supply instead of a Tax Invoice. Contents of Bills of Supply 1.Name, address, and GSTIN of the supplier 2.Bill of Supply number 3.Date of issue 4.If the recipient is registered then the name, address, and GSTIN of the recipient 5.HSN Code of goods or Accounting Code for services. The number of digits that are required to be mentioned based on turnover in the preceeding financial year, is as follows: 6. Description of goods/services 7. Value of the goods/services after adjusting any discount or abatement 8. Signature or Digital Signature of the supplier Services A registered person supplying taxable services shall, before or after the provision of service but within a prescribed period, issue a tax invoice, showing the description, value, tax charged thereon and such other particulars as has been prescribed in the Invoice Rules. The Government may, on the recommendations of the Council, by notification and subject to such conditions as may be mentioned therein, specify the categories of services in respect of which–– (a) any other document issued in relation to the supply shall be deemed to be a tax invoice; or (b) tax invoice may not be issued Thus it can be seen that in case of goods, an invoice has to be issued before or at the time of supply. In case of services, however, invoice has to be issued before or after provision of services. If the invoice is issued after provision of service, it has to be done within the specified period of 30 days from the date of supply of service, as per invoice rules. Revised Invoice While conducting business, it is common that an invoice under Goods and Services Tax (GST) may have been issued by mistake, or a few invoices may require modifications. In such cases, the invoices need to be rectified and reported in the monthly returns. This process is called the rectification of invoices. Rectification of tax invoices can occur in several ways, and it can result either in a revised invoice or a supplementary invoice. For example, there can be an upward or downward revision in the prices of goods or services or a change in the GST rate. A downward revision can be done using a credit note (buyer returns to supplier), while one can make an upward revision with a supplementary invoice or debit note (Customer to seller). However, when a registered person has to issue an invoice for the supplies made before obtaining registration, it is called a ‘revised invoice’. Revised Invoice A registered person may, within one month from the date of issuance of certificate of registration and in such manner as has been prescribed in the Invoice Rules, issue a revised invoice against the invoice already issued during the period beginning with the effective date of registration till the date of issuance of certificate of registration to him. This provision is necessary as a person who becomes liable for registration has to apply for registration within 30 days of becoming liable for registration.  When such an application is made within the time period and registration is granted, the effective date of registration is the date on which the person became liable for registration. Thus there would be a time lag between the date of grant of certificate of registration and the effective date of registration. For supplies made by such person during this intervening period, the law enables issuance of a revised invoice, so that ITC can be availed by the recipient on such supplies Receipt Voucher/ Refund voucher on receipt of advance payment Whenever a registered person receives an advance payment with respect to any supply of goods or services or both, he has to issue a receipt voucher or any other document, containing such particulars as has been prescribed in the Invoice Rules, evidencing receipt of such payment. Where any such receipt voucher is issued, but subsequently no supply is made and no tax invoice issued, the registered person who has received the advance payment can issue a refund voucher against such payment. A receipt voucher contents 1.Name, address, and GSTIN of the8.Amount of tax charged in respect of supplier taxable goods or services (central 2.Serial number tax, State tax, integrated tax, Union territory tax or cess) 3.Date of its issue 9.Place of supply along with the name 4.Name, address and GSTIN or Unique of State and its code, in case of a Identity Number, if registered, of the supply in the course of inter-State recipient trade or commerce 5.Description of goods or services 10.Whether the tax is payable on 6.Amount of advance taken reverse charge basis 7.Rate of tax (central tax, State tax,11.Signature or digital signature of the integrated tax, Union territory tax or supplier or his authorised cess) representative: Receipt Voucher Exception (i) The rate of tax is not determinable; the tax may be paid @18%; (ii) The nature of supply is not determinable, the same shall be treated as inter-State supply. Invoice and payment voucher by a person liable to pay tax under reverse charge A registered person liable to pay tax under reverse charge (both for supplies on which tax is payable under reverse charge mechanism and supplies received from unregistered persons) has to issue an invoice in respect of goods or service or both received by him. Such a registered person in respect of such supplies also has to issue a payment voucher at the time of making payment to the supplier. Invoice in case of continuous supply of goods In case of continuous supply of goods, where successive statements of accounts or successive payments are involved, the invoice shall be issued before or at the time each such statement is issued or, as the case may be, each such payment is received. In case of continuous supply of services, where, (a) the due date of payment is ascertainable from the contract; the invoice shall be issued on or before the due date of payment; (b) the due date of payment is not ascertainable from the contract; the invoice shall be issued before or at the time when the supplier of service receives the payment; (c) the payment is linked to the completion of an event; the invoice shall be issued on or before the date of completion of that event. Issue of invoice in case, where supply of service ceases under a contract before completion of supply In a case where the supply of services ceases under a contract before the completion of the supply, the invoice shall be issued at the time when the supply ceases and such invoice shall be issued to the extent of the supply made before such cessation. Sale on approval basis Where the goods being sent or taken on approval for sale or return are removed before the supply takes place, the invoice shall be issued before or at the time of supply or six months from the date of removal, whichever is earlier. Amount of tax to be indicated in invoice Where any supply is made for a consideration, every person who is liable to pay tax for such supply has to prominently indicate in all documents relating to assessment, tax invoice and other like documents, the amount of tax which shall form part of the price at which such supply is made. Credit Note In cases where tax invoice has been issued for a supply and subsequently it is found that the value or tax charged in that invoice is more than what is actually payable/chargeable or where the recipient has returned the goods, the supplier can issue a credit note to the recipient. A registered person who issues such a credit note has to declare details of such credit note in the return for the month during which such credit note has been issued but not later than September following the end of the financial year in which such supply was made or date of furnishing of the relevant annual return whichever is earlier. The tax liability of the registered person will be adjusted in accordance with the credit note issued, however no reduction in output tax liability of the supplier shall be permitted, if the incidence of tax and interest on such supply has been passed on to any other person. Debit Note In cases where tax invoice has been issued for a supply and subsequently it is found that the value or tax charged in that invoice is less than what is actually payable/chargeable, the supplier can issue a debit note to the recipient. Any registered person who issues a debit note in relation to a supply of goods or services or both shall declare the details of such debit note in the return for the month during which such debit note has been issued and the tax liability shall be adjusted in such manner as may be prescribed. A revised tax invoice and credit or debit note has to contain the following particulars - (a) name, address and GSTIN of the the address of delivery, along with the supplier; name of State and its code, if such (b) nature of the document; recipient is un-registered; (c) a consecutive serial number (h) serial number and date of the containing alphabets or numerals or corresponding tax invoice or, as the case may be, bill of supply; special characters -hyphen or dash and slash symbolised as “-” and (i) value of taxable supply of goods or “/”respectively, and any combination services, rate of tax and the amount thereof, unique for a financial year; of the tax credited or, as the case (d) date of issue of the document; may be, debited to the recipient; and (f) name, address and GSTIN or UIN, if (j) signature or digital signature of the registered, of the recipient; supplier or his authorized representative. (g) name and address of the recipient and Manner of issuing invoice The invoice shall be prepared in triplicate, in case of supply of goods, in the following manner:– (a) the original copy being marked as ORIGINAL FOR RECIPIENT; (b) the duplicate copy being marked as DUPLICATE FOR TRANSPORTER; and (c) the triplicate copy being marked as TRIPLICATE FOR SUPPLIER The invoice shall be prepared in duplicate, in case of supply of services, in the following manner: - (a) the original copy being marked as ORIGINAL FOR RECIPIENT; and (b) the duplicate copy being marked as DUPLICATE FOR SUPPLIER. The serial number of invoices issued during a tax period shall be furnished electronically through the Common Portal in FORM GSTR-1. Tax invoice in Special Cases An ISD invoice or, as the case may be, an ISD credit note issued by an Input Service Distributor shall contain the following details: (a) name, address and GSTIN of the Input Service Distributor; (b) a consecutive serial number containing alphabets or numerals or special characters hyphen or dash and slash symbolised as , “-”, “/”, respectively, and any combination thereof, unique for a financial year; (c) date of its issue; (d) name, address and GSTIN of the recipient to whom the credit is distributed; (e) amount of the credit distributed; and (f) signature or digital signature of the Input Service Distributor or his authorized representative. Tax Invoice in special cases Where the Input Service Distributor is an office of a banking company or a financial institution, including a non-banking financial company Where the supplier of taxable service is an insurer or a banking company or a financial institution, including a non-banking financial company Where the supplier of taxable service is a goods transport agency supplying services in relation to transportation of goods by road in a goods carriage Where the supplier of taxable service is supplying passenger transportation service, a tax invoice shall include ticket in any form. Transportation of goods without an invoice In the following cases it is permissible for the consignor to issue a delivery challan in lieu of invoice at the time of removal of goods: (a) supply of liquid gas where the quantity at the time of removal from the place of business of the supplier is not known, (b) transportation of goods for job work, (c) transportation of goods for reasons other than by way of supply, or (d) such other supplies as may be notified by the Board. The delivery challan, serially numbered not exceeding 16 characters, in one or multiple series, shall contain the following details: (i) date and number of the delivery challan, (ii) name, address and GSTIN of the consigner, if registered, (iii) name, address and GSTIN or UIN of the consignee, if registered, (iv) HSN code and description of goods, (v) quantity (provisional, where the exact quantity being supplied is not known), (vi) taxable value, (vii) tax rate and tax amount – central tax, State tax, integrated tax, Union territory tax or cess, where the transportation is for supply to the consignee, (viii) place of supply, in case of inter-State movement, and (ix) signature. The delivery challan shall be prepared in triplicate, in case of supply of goods, in the following manner:– (a) the original copy being marked as ORIGINAL FOR CONSIGNEE; (b) the duplicate copy being marked as DUPLICATE FOR TRANSPORTER; and (c) the triplicate copy being marked as TRIPLICATE FOR CONSIGNER. Where goods are being transported on a delivery challan in lieu of invoice, the same shall be declared in FORM [WAYBILL].  Where the goods being transported are for the purpose of supply to the recipient but the tax invoice could not be issued at the time of removal of goods for the purpose of supply, the supplier shall issue a tax invoice after delivery of goods Where the goods are being transported in a semi knocked down or completely knocked down condition, (a) the supplier shall issue the complete invoice before dispatch of the first consignment; (b) the supplier shall issue a delivery challan for each of the subsequent consignments, giving reference of the invoice; (c) each consignment shall be accompanied by copies of the corresponding delivery challan along with a duly certified copy of the invoice; and (d) the original copy of the invoice shall be sent along with the last consignment. E-WAY BILL FOR TRANSPORTING GOODS EWay Bill is an Electronic Way bill for movement of goods to be generated on the eWay Bill Portal. A GST registered person cannot transport goods in a vehicle whose value exceeds Rs. 50,000 (Single Invoice/bill/delivery challan) without an e-way bill that is generated on ewaybillgst.gov.in. Alternatively, Eway bill can also be generated or cancelled through SMS, Android App and by site-to-site integration through API entering the correct GSTIN of parties. Validate the GSTIN with the help of the GST search tool before using it. When an eway bill is generated, a unique Eway Bill Number (EBN) is allocated and is available to the supplier, recipient, and the transporter. When Should eWay Bill be issued? In relation to a ‘supply’ For reasons other than a ‘supply’ ( say a return) Due to inward ‘supply’ from an unregistered person For this purpose, a supply may be either of the following: A supply made for a consideration (payment) in the course of business A supply made for a consideration (payment) which may not be in the course of business A supply without consideration (without payment)In simpler terms, the term ‘supply’ usually means a: 1.Transfer – branch transfers for instance/ gifts 2.Barter/Exchange – where the payment is by goods instead of in money 3.Transfer of business asset where ITC was claimed When Should eWay Bill be issued? For certain specified Goods, the eway bill needs to be generated mandatorily even if the value of the consignment of Goods is less than Rs. 50,000: 1.Inter-State movement of Goods by the Principal to the Job-worker by Principal/ registered Job-worker 2.Inter-State Transport of Handicraft goods by a dealer exempted from GST registration Who should Generate an eWay Bill? Registered Person – Eway bill must be generated when there is a movement of goods of more than Rs 50,000 in value to or from a registered person. A Registered person or the transporter may choose to generate and carry eway bill even if the value of goods is less than Rs 50,000. Unregistered Persons – Unregistered persons are also required to generate e-Way Bill. However, where a supply is made by an unregistered person to a registered person, the receiver will have to ensure all the compliances are met as if they were the supplier. Transporter – Transporters carrying goods by road, air, rail, etc. also need to generate e-Way Bill if the supplier has not generated an e-Way Bill. Who should Generate an eWay Bill? The transporters need not generate the Eway bill (as Form EWB-01 or EWB-02) where all the consignments in the conveyance : Individually(single Document**) is less than or equal to Rs 50,000 BUT In Aggregate (all documents** put together) exceeds Rs 50,000 **Document means Tax Invoice/Delivery challan/Bill of supply Unregistered Transporters will be issued Transporter ID on enrolling on the e-way bill portal after which Eway bills can be generated. Transporter ID or TRANSIN is a 15-digit unique identification number allotted to an unregistered transporter enabling generation of e-Way Bills. It is generated based on the State code, PAN and check sum digit. Even the unregistered transporters under GST have to note that e-way bills are required to be generated by them under the above circumstances. Since unregistered transporters will not have a GSTIN, the concept of transporter ID has been introduced. Cases when eWay bill is Not Required 1. The mode of transport is non-motor vehicle 9. Goods being transported by rail where the Consignor of goods is the Central 2. Goods transported from Customs port, airport, Government, State Governments or a local air cargo complex or land customs station to authority. Inland Container Depot (ICD) or Container Freight Station (CFS) for clearance by Customs. 10.Goods specifed as exempt from E-Way 3. Goods transported under Customs supervision bill requirements in the respective State/Union territory GST Rules. or under customs seal 11.Transport of certain specified goods- Includes 4. Goods transported under Customs Bond from the list of exempt supply of goods, Annexure ICD to Customs port or from one custom to Rule 138(14), goods treated as no supply as station to another. per Schedule III, Certain schedule to Central tax 5. Transit cargo transported to or from Nepal or Rate notifications. Bhutan Note: Part B of e-Way Bill is not required to be 6. Movement of goods caused by defence filled where the distance between the consigner formation under Ministry of defence as a or consignee and the transporter is less than 50 consignor or consignee Kms and transport is within the same state. 7. Empty Cargo containers are being transported 8. Consignor transporting goods to or from between place of business and a weighbridge for weighment at a distance of 20 kms, accompanied by a Delivery challan. Validity of eWay Bill (Before 24th June 2024) Validity of eWay Bill (After 24th June 2024) General Rule (Other Than ODC): For every 100 kilometers or part thereof, the e-way bill is valid for one day. Example: If the distance is 350 kilometers, the e-way bill will be valid for 4 days. Important Points: The validity period starts from the date of generation of the e-way bill. The e-way bill must be carried by the transporter during the entire journey. Failure to carry a valid e-way bill can lead to penalties. Documents or Details required to generate eWay Bill Invoice/ Bill of Supply/ Challan related to the consignment of goods Transport by road – Transporter ID or Vehicle number Transport by rail, air, or ship – Transporter ID, Transport document number, and date on the document Payment of taxes by cash and through input tax credit When the supply of goods or services happens within a state, also called intra-state transactions, then both the CGST and SGST will be collected. Whereas, if the supply of goods or services happens between the states, also called inter-state transactions, then only IGST will be collected. Tax Deducted at Source (TDS) – a mechanism under GST where certain specified entities (deductors) are required to deduct a portion of the payment made to suppliers of goods or services (deductees) and deposit it with the government. The provision pertaining to TDS under GST is given under Section 51 of the CGST Act. TDS is to be deducted at the rate of 2% (1% CGST+1% SGST or 2% IGST) on payments made to the supplier of taxable goods and/or services, where the total value of such supply, under an individual contract, exceeds Rs.2,50,000. (TDS is for intrastate supplies, IGST is for interstate supplies) Tax Deducted at Source (TDS) – A government department contracts a construction company to build a new office building. The total contract value is Rs. 3,00,000 (excluding GST). The GST rate applicable is 18%. Contract value = Rs. 3,00,000 GST (18%) = Rs. 54,000 Total amount = Rs. 3,54,000 TDS = Rs. 6,000 Net payment to contractor = Rs. 3,54,000 - Rs. 6,000 = Rs. 3,48,000  Tax Collected at Source (TCS) –The tax which is collected by the electronic commerce operator when a seller supplies some goods or services through its website and the payment for that supply is collected by the electronic commerce operator. The provision of TCS under GST is dealt under Section 52 of the CGST Act. The dealers or traders supplying goods and/or services through e- commerce operators will receive payment after deduction of TCS @ 0.5% via CGST Notification 15/2024 dated 10th July 2024. (earlier it was 1% up to 9th July 2024 implemented as notified by the CBIC in Notification no. 52/2018 under CGST Act and 02/2018 under IGST Act). This means for an intra-state supply TCS at 0.5% will be collected, i.e 0.25 % under CGST and 0.25% under SGST. Similarly, for a transaction between the states, the TCS rate will be 0.5%, i.e under the IGST Act.  Tax Collected at Source (TCS) – For example, Mr Vinay Dua is a trader who sells his ready-made clothes online on Amazon India. He receives an order for Rs 10,000, inclusive of tax and commission. Amazon charges a commission of Rs 200. Further, there is a return worth Rs 1,000. Amazon would, therefore, need to deduct 0.5% tax (TCS) on the amount, excluding sales returns (Rs 1,000), but including the money paid as a commission (Rs 200) and GST. Amazon would thus be deducting TCS in GST at Rs 46 (0.5% of Rs 9,200) on net sales value. How to calculate the GST payment to be made? Usually, the Input Tax Credit should be reduced from Outward Tax Liability to calculate the total GST payment to be made. TDS/TCS will be reduced from the total GST to arrive at the net payable figure. Interest & late fees (if any) will be added to arrive at the final amount. Also, ITC cannot be claimed on interest and late fees. As both Interest and late fees are required to be paid in cash. How to calculate the GST payment to be made? GST rate: 18% Input GST: Total sales for the month: Rs. 5,00,000 Rs. 3,00,000 * 18% = Rs. 54,000 Total purchases for the month: Rs. 3,00,000 ITC eligible on all purchases Net GST Liability: TDS deducted: Rs. 5,000 Rs. 90,000 (Output GST) - Rs. 54,000 (Input No TCS or late fees GST) = Rs. 36,000 S/- Adjust for TDS: Output GST: Rs. 36,000 (Net GST Liability) - Rs. 5,000 (TDS) = Rs. 31,000 Rs. 5,00,000 * 18% = Rs. 90,000 Therefore, the net GST payable to the government is Rs. 31,000. The way the calculation is to be done is different for different types of dealers – Regular Dealer A regular dealer is liable to pay GST on the outward supplies made and can also claim Input Tax Credit (ITC) on the purchases made by him. The GST payable by a regular dealer is the difference between the outward tax liability and the ITC. Composition Dealer The GST payment for a composition dealer is comparatively simpler. A dealer who has opted for composition scheme has to pay a fixed percentage of GST on the total outward supplies made. GST is to be paid based on the type of business of a composition dealer. Who should make the payment? These dealers are required to make GST payment – A Registered dealer is required to make GST payment if GST liability exists. Registered dealer required to pay tax under Reverse Charge Mechanism(RCM). E-commerce operator is required to collect and pay TCS Dealers required deducting TDS When should GST payment be made? Generally, the due date for GST payment is the 20th of the following month. This means that for the month of July, the GST for July should be paid by August 20th. How to make GST payment? GST payment can be made in 2 ways – ❑Payment through Credit Ledger – The credit of ITC can be taken by dealers for GST payment. The credit can be taken only for payment of Tax. Interest, penalty and late fees cannot be paid by utilizing ITC. ❑Payment through Cash Ledger – GST payment can be made online or offline. The challan has to be generated on GST Portal for both online and offline GST payment. Where tax liability is more than Rs 10,000, it is mandatory to pay taxes Online. What is GST refund? Usually when the GST paid is more than the GST liability a situation of claiming GST refund arises. Under GST the process of claiming a refund is standardized to avoid confusion. The process is online and time limits have also been set for the same. Generally, the time limit to claim a GST refund is two years from the "relevant date" as defined in the CGST/SGST Act. When can the refund be claimed? There are many cases where refund can be claimed. Here are some of them – ✓Excess payment of tax is made due to mistake or omission. ✓Dealer Exports (including deemed export) goods/services under claim of rebate or Refund ✓ITC accumulation due to output being tax exempt or nil-rated ✓Refund of tax paid on purchases made by Embassies or UN bodies ✓Tax Refund for International Tourists ✓Finalization of provisional assessment How to calculate GST refund? Let’s take a simple case of excess tax payment made. Mr. B’s GST liability for the month of September is Rs 50,000. But due to mistake, Mr. B made a GST payment of Rs 5 lakh. Now Mr. B has made an excess GST payment of Rs 4.5 lakh which can be claimed as a refund by him. The time limit for claiming the refund is 2 years from the date of payment. What is the time limit for claiming the refund? The time limit for claiming a refund is 2 years from relevant date. The relevant date is different in every case. Here are the relevant dates for some cases – Reason for claiming GST Refund Relevant Date Excess payment of GST Date of payment Export or deemed export of goods or Date of despatch/loading/passing the services frontier ITC accumulates as output is tax exempt Last date of financial year to which the or nil-rated credit belongs Finalisation of provisional assessment Date on which tax is adjusted GST Refund for Exports If a refund claim is made on account of exports or supply to SEZ, the relevant invoice pertaining to the transaction must be submitted. Along with the invoice, a statement containing the number and date of shipping bills or bills of export and the number and the date of the relevant export invoices, in a case where the refund is on account of export of goods must also be provided. In case of GST refund on account of export of services, along with the tax invoices, the relevant bank realisation certificates evidencing receipt of payment in foreign currency is also required to be submitted GST Refund for Supply to SEZ If a GST refund claim is made by the supplier to an SEZ unit, an endorsement from the Proper Officer evidencing receipt of such goods/ services in the SEZ should be submitted along with the tax invoice. Further, a declaration is also required from the SEZ unit to the effect that they have not availed input tax credit of the tax paid by the supplier. GST Refund for Accumulated Input Tax Credit If the GST refund claim is for accumulated input tax credit, only a statement containing invoice details as prescribed in the GST refund rules must be submitted. Its important to note that no refund of unutilised input tax credit will be allowed on CGST and IGST paid, in case of supply of services for construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly. Also, no refund of unutilised input tax credit will be allowed for CGST and IGST, where the credit has accumulated on account of GST rate of tax on inputs being higher than the rate of tax on output supplies. GST Refund on Account of Order In case of claim of GST refund on account of any order or judgment of appellate authority or court, the reference number of the order giving rise to refund should be given along with the relevant tax invoices. Returns under GST A return is a document that a taxpayer is required to file as per the law with the tax administrative authorities. Under the GST law, a normal taxpayer will be required to furnish three returns monthly and one annual return. Similarly, there are separate returns for a taxpayer registered under the composition scheme, taxpayer registered as an Input Service Distributor, a person liable to deduct or collect the tax (TDS/TCS) Assessment under GST Under GST, the term “assessment” means determination of tax liability under this Act and includes self-assessment, re-assessment, provisional assessment, summary assessment and best judgment assessment. Normally, persons having GST registration file GST returns and pay GST every month based on self-assessment of GST liability. However, the Government at all times has the rights to re-assess or perform an assessment by itself and determine if there is a short payment of GST. Types of Assessment under GST Self-assessment Provisional assessment Scrutiny assessment Best judgment assessment Assessment of non-filers of returns Assessment of unregistered persons Summary assessment Section 59 – Self Assessment The taxable person is required to pay tax on the basis of self- assessment done by himself. Hence, all GST return filings are based on self-assessment by the taxpayer. Section 60 – Provisional Assessment Provisional assessment can be conducted for a taxable person when the taxpayer is unable to determine the value of goods or service or both or determine the rate of tax applicable thereto. This is particularly useful for new businesses or those undergoing significant business changes. Procedure for Provisional Assessment Step 1: The taxable person has to give, the concerned GST officer, a request for provisional assessment in writing. Step 2: The GST officer on reviewing the application, will pass an order, within a period not later than ninety days from the date of receipt of the request, allowing payment of tax on provisional basis or at a GST rate or on such value as specified by him. Step 3: The taxable person, who is making payment on provisional basis, has to issue a bond with a security promising to pay the difference between provisionally assessed tax and final assessed tax. Step 4: The GST officer will pass final assessment, with a period not exceeding six months from the date of communication of order of provisional payment. Interest Payable for Provisional Assessment In case, after final assessment, the tax is held payable i.e. taxable person is held liable to pay more tax than tax paid at the time of provisional assessment, in such case, the taxable person will be liable to pay interest on such tax payment. Interest would be calculated from the actual due date of tax (please note original due date should be considered and not provisional tax payment date) till the date of actual payment of tax. The interest calculation position will remain same, even if the payment of tax is done before or after final assessment. In case of refund, interest will be paid on such refund as provided under section 56. Section 61 – Scrutiny Assessment GST Officers can scrutinize a GST return and related particulars furnished by the registered person to verify the correctness of the return. This is called a scrutiny assessment. In case there is any discrepancies noticed by the officer, he/she would inform the same to the registered person and seek his explanation on the same. On the basis of the explanation received from the registered person, the officer can take following action: If the explanation provided is satisfactory, the officer will inform about the same to the registered person and no further action will be taken in this regard. If the explanation provided is not satisfactory or the registered person has failed to take corrective measures after accepting the discrepancies, the proper officer will initiate appropriate action like conducting audit of registered person, conducting special audit, inspect and search the place of business of registered person, or initiate demand and recovery provisions. Section 62 – Failure to File GST Return – Best Judgement Assessment When a registered person fails to furnish the required returns, even after service of notice under Section 46 an assessment would be conduced by the GST Officer. In such cases, the GST officer would proceed to assess the tax liability of the taxpayer to the best of his judgement taking into account all the relevant material which is available or which he has gathered and issue an assessment order within a period of five years from the date for furnishing of the annual return for the financial year to which the tax not paid relates. On receipt of the said assessment order, if the registered person furnishes a valid return within a period of 30 days from the date of issuance of assessment order, then in such case, the assessment order would deemed to have withdrawn. However, the registered person will be liable to pay interest under Section 50 (1) and/or liable to pay late fee under Section 47. Section 63 – Assessment of Unregistered Person – Best Judgement When a taxable person fails to obtain GST registration even though liable to do so or whose registration has been cancelled under section 29 (2) but who was liable to pay tax, the GST officer can proceed to assess the tax liability of such taxable person to the best of his judgment for the relevant tax periods and issue an assessment order within a period of five years from the date specified under section 44 for furnishing of the annual return for the financial year to which the tax not paid relates Section 64 – Summary Assessment A GST Officer can on any evidence showing a tax liability of a person coming to his notice, proceed to assess the tax liability of such person to protect the interest of revenue and issue an assessment order, if he has sufficient grounds to believe that any delay in doing so may adversely affect the interest of revenue. In order to undertake assessment under section 64, the proper officer is required to obtain previous permission of additional commissioner or joint commissioner. Such an assessment is called summary assessment. Demands and Recovery The Goods and Service Tax is payable on a self-assessment basis. If the assessee pays the tax on self-assessment correctly then there will not be any problem. If there is any short payment or wrong utilisation of input credit, then the GST authorities will initiate demand and recovery provisions against the assessee. Demand and recovery provisions are applicable when a registered dealer has paid tax incorrectly or not paid tax at all. It is also applicable when an incorrect refund or ITC is claimed by the dealer. The proper officer will issue a show cause notice along with a demand for payment of tax and penalty in case of fraud. Demands can arise in the following cases: 1. Unpaid or short paid tax or wrong refund 2. Tax collected but not deposited with the Central or a State Government 3. CGST/SGST paid when IGST was payable and vice versa If demand is not paid, the IT department starts recovery proceedings. Recovery Recovery by Deduction from Any Money Owed: If the government owes money to the taxpayer, the outstanding GST dues can be deducted from it. Recovery by Sale of Goods Under the Control of Proper Officer: If the tax authorities have possession of any goods belonging to the taxpayer, they can be sold to recover the dues. Recovery from a Third Person: If a third party holds money on behalf of the taxpayer, the authorities can recover the dues from that party. Recovery by Sale of Movable or Immovable Property: As a last resort, the tax authorities can seize and sell the taxpayer's movable or immovable property to recover the dues. Recovery Recovery Through Court: In cases where other methods fail, the tax authorities can initiate legal proceedings to recover the dues. Recovery From Surety: If the taxpayer has provided a surety, the authorities can recover the dues from the surety. Recovery from a Company in Liquidation When a company undergoes liquidation, the recovery of GST dues becomes complex. The GST authorities are considered as operational creditors and have a certain priority in claiming the dues. However, the actual recovery depends on the availability of funds in the liquidation process.