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GST3B Filing Due Date Extended to 24th August for July 2018 As expected GST3B Filing Due Date Extended to 24th August for July 2018. Official Notification is yet to Come in this regards. As of now Information has been updated on GST Portal https://www.gst.gov.in/, Last date of filing GSTR-3B for the month of July, 2018 has been extended to 24th Aug, 2018.
E-Way Bill under GST E-way bill compulsory from February 01, 2018: GST council 24TH GST COUNCIL MEETING HELD ON 16-12-2017 THROUGH VIDEO CONFERENCING DECIDED THAT INTER-STATE E-WAY BILL TO BE MADE COMPULSORY FROM 1-2-2018 PIB PRESS RELEASE DATED 16-12-2017 The 24th Meeting of the GST Council held today through video conference under the Chairmanship of the Union Minister of Finance and Corporate Affairs, Shri Arun Jaitley. It discussed about the implementation of e-way Bill system in the country. Till such time as the National e-way Bill is ready, the States were authorized to continue their own separate e-way Bill systems. However, it was represented by the trade and transporters that this is causing undue hardship in the Inter-State movement of goods and therefore, bringing in an early all India system of e-way Bill has become a necessity. The GST Council today reviewed the progress of readiness of hardware and software required for the introduction of nationwide e-way Bill System. After discussions with all the States, the following decisions were taken :- i. The nationwide e-way Bill system will be ready to be rolled out on a trial basis latest by 16th January, 2018. Trade and transporters can start using this system on a voluntary basis from 16th January, 2018. ii. The Rules for implementation of nationwide e-way Bill system for Inter-State movement of goods on a compulsory basis will be notified with effect from 1st February, 2018. This will bring uniformity across the States for seamless inter-State movement of goods. iii. While the System for both inter-State and intra-State e-way Bill generation will be ready by 16th January, 2018, the States may choose their own timings for implementation of e-way Bill for intra- State movement of goods on any date before 1st June, 2018. There are certain States which are already having system of e-way Bill for intra-State as well as inter-State movement and some of those States can be early adopters of national e-way Bill system for intra-State movement also. But in any case, the Uniform System of e-way Bill for inter-State as well as intra-State movement will be implemented across the country by 1st June, 2018. Why E-Way Bill ? On introduction of GST w.e.f. 1-7-2017, many States have removed the physical barriers at State border for transport of goods by road. This has speeded up movement of goods to some extent. In absence of physical restrictions on movement of goods, some control is essential to ensure that goods are not clandestinely removed and sold. Hence, a system of e-way bill is proposed to be introduced. Provisions relating to E-way Bill have been made by amending rule 138 and inserting rules 138A to 138B in CGST Rules, 2017. These rules have been inserted vide Notification No. 27/2017 - Central Tax, dated 30-8-2017. The provisions are very difficult to comply with and harassment on roads is possible. We can only hope and pray that provisions of e-way bill are made effective only after GSTN system is ready and tested. It is also doubtful whether transporters are equipped to follow these procedures. States like Kerala, West Bengal, Bihar, Odisha, Andhra Pradesh and Karnataka already had E-Way Bill System. The GST Council has allowed states to follow their existing E-Way Bill frameworks until the E-Way Bill Rules under GST are implemented. Information to be furnished prior to commencement of movement of goods and generation of e-way bill The consignor is required to furnish specified details before movement of goods commences, if value exceeds Rs 50, 000 electronically in Part A of form GST EWB-01. If the consignor is unregistered, the consignee is required to furnish the information. Every registered person who causes movement of goods of consignment value exceeding fifty thousand rupees— (i) in relation to a supply; or (ii) for reasons other than supply; or (iii) due to inward supply from an unregistered person, shall, before commencement of such movement, furnish information relating to the said goods in Part A of form GST EWB-01, electronically, on the common portal [rule 138(1) of CGST Rules]. Observation- The expression "for reasons other than supply" will include job work, removal for testing purpose, send on approval basis, etc. E-way bill even if value of consignment is below Rs 50, 000 In following cases, e-way bill should be generated irrespective of value of consignment i.e. even if value of consignment is below Rs 50, 000 – (a) Sending material inter-State for job work (b) handicraft goods transported inter-State under exemption if turnover of person below Rs. 20/10 lakhs and enjoying exemption under Notification No. 32/2017-CT, dated 15-9-2017 - first and second proviso to rule 138(1) of CGST Rules inserted w.e.f. 15-9-2017. It is really too much for such small persons selling handicrafts inter- State, to know, understand and follow these procedures. Movement deemed to be caused by consignee if goods supplier is unregistered person If the goods are supplied by an unregistered supplier to a recipient who is registered, the movement shall be said to be caused by such recipient if the recipient is known at the time of commencement of the movement of goods [Explanation 1 to rule 138(3) of CGST Rules] Generation of e-way bill if transport in own vehicle or hired vehicle or by rail, vessel or air If the goods are transported by the registered person as a consignor or the recipient of supply as the consignee, whether in his own conveyance or a hired one or by railways or by air or by vessel, the said person or the recipient may generate the e-way bill in form GST EWB-01 electronically on the common portal after furnishing information in Part B of form GST EWB-01 [rule 138(2) of CGST Rules] Though the word used is 'may', really he must generate such e-way bill. The information in Part A of from GST EWB-01 shall be furnished by the consignor or the recipient of the supply as consignee where the goods are transported by railways or by air or by vessel [Explanation 2 to rule 138(3) of CGST Rules] [Really, even otherwise, this is obvious]. 10 Generation of e-way bill by transporter if transport is by road If the e-way bill is not generated under rule 138(2) and the goods are handed over to a transporter for transportation by road, the registered person shall furnish the information relating to the transporter in Part B of form GST EWB-01 on the common portal. The e-way bill shall be generated by the transporter on the common portal on the basis of the information furnished by the registered person in Part A of form GST EWB-01 [rule 138(3) of CGST Rules] Generation of e-way bill by transporter if not generated by consignor - If the consignor or the consignee has not generated form GST EWB-01 in accordance with the provisions of rule 138(1) and the value of goods carried in the conveyance is more than fifty thousand rupees, the transporter shall generate form GST EWB-01 on the basis of invoice or bill of supply or delivery challan, as the case may be, and may also generate a consolidated e-way bill in FORM GST EWB-02 on the common portal prior to the movement of goods [rule 138(7) of CGST Rules] Option to generate e-way bill even if value less than Rs 50, 000 - The registered person or the transporter may, at his option, generate and carry the e-way bill even if the value of the consignment is less than fifty thousand rupees [first proviso to rule 138(3) of CGST Rules] Unregistered person can also generate e-way bill - If the movement is caused by an unregistered person either in his own conveyance or a hired one or through a transporter, he or the transporter may, at their option, generate the e-way bill in form GST EWB-01 on the common portal in the manner specified in this rule [second proviso to rule 138(3) of CGST Rules]. E-way Bill generated is valid all over India - The e-way bill generated under this rule or under rule 138 of the Goods and Services Tax Rules of any State shall be valid in every State and Union territory [rule 138(13) of CGST Rules] 1 Relaxation if goods transported from place of consignor to transporter and distance less than 10 Km If the goods are transported for a distance of less than ten kilometres within the State or Union territory from the place of business of the consignor to the place of business of the transporter for further transportation, the supplier or the transporter may not furnish the details of conveyance in Part B of form GST EWB-01 [third proviso to rule 138(3) of CGST Rules] Ten Kilometers relaxation not sufficient in many cases - Ten Kilometers relaxation is really not sufficient in many cases. In many cases, the railway yard or port or airport or godown of transporter may be much beyond 10 Kms. In big cities, much more allowance is required. Generation and cancellation of e-way Bill through SMS The facility of generation and cancellation of e-way bill may also be made available through SMS - Explanation to rule 138(14) of CGST Rules. Generation of e-way bill number (EBN) by GSTN Upon generation of the e-way bill on the common portal, a unique e- way bill number (EBN) will be generated by GSTN. This number shall be made available to the supplier, the recipient and the transporter on the common portal [rule 138(4) of CGST Rules]. 14 Procedure by transporter after generation of e-way bill The procedure to be followed by transporter is as follows - Transhipment of goods to another conveyance - Any transporter transferring goods from one conveyance to another in the course of transit shall, before such transfer and further movement of goods, update the details of conveyance in the e-way bill on the common portal in form GST EWB-01 [rule 138(5) of CGST Rules] Details of conveyance not required for final delivery to consignee - If the goods are transported for a distance of less than ten kilometres within the State or Union territory from the place of business of the transporter finally to the place of business of the consignee, the details of conveyance may not be updated in the e-way bill [proviso to rule 138(5) of CGST Rules] Ten Kilometers relaxation is really not sufficient in metropolitan cities. In big cities, more allowance is required. Multiple consignments in one conveyance - After e-way bill has been generated in accordance with the provisions of rule 138(1), where multiple consignments are intended to be transported in one conveyance, the transporter may indicate the serial number of e-way bills generated in respect of each such consignment electronically on the common portal and a consolidated e-way bill in form GST EWB-02 may be generated by him on the common portal prior to the movement of goods [rule 138(6) of CGST Rules] 16 Supplier can use the information to furnish details in GSTR-1 return The information furnished in Part A of form GST EWB-01 shall be made available to the registered supplier on the common portal who may utilize the same for furnishing details in form GSTR-1 [rule 138(8) of CGST Rules] Information to unregistered supplier - If the information has been furnished by an unregistered supplier in form GST EWB-01, he shall be informed electronically, if the mobile number or the email is available [proviso to rule 138(8) of CGST Rules] 17 Cancellation of e-way bill If an e-way bill has been generated under this rule 138 of CGST Rules, but goods are either not transported or are not transported as per the details furnished in the e-way bill, the e-way bill may be cancelled electronically on the common portal, within 24 hours of generation of the e-way bill. Thus, if there is accident to truck, the driver should first rush to cancel e-way bill before sending injured persons to hospital and even before informing police and owner of vehicle about accident ! An e-way bill cannot be cancelled if it has been verified in transit in accordance with the provisions of rule 138B [rule 138(9) of CGST Rules] 1 Validity of e-way bill generated An e-way bill or a consolidated e-way bill generated under this rule shall be valid as follows – (1) Upto 100 Km - one day [really only 24 hours] (2) One day for every 100 Km or part after first 100 Km [each day of 24 hours] [rule 138(10) of CGST Rules] The Commissioner may, by notification, extend the validity period of e-way bill for certain categories of goods as may be specified therein: Meaning of 'relevant date' for purposes of rule 138(1) - The "relevant date" shall mean the date on which the e-way bill has been generated and the period of validity shall be counted from the time at which the e-way bill has been generated and each day shall be counted as twenty-four hours - Explanation to rule 138(1) of CGST Rules. Fresh generation of e-way bill if validity expired - Under circumstances of an exceptional nature, if the goods cannot be transported within the validity period of the e-way bill, the transporter may generate another e-way bill after updating the details in Part B of form GST EWB-01 [second proviso to rule 138(10) of CGST Rules]. 19 Intimation of acceptance of details by recipient The details of e-way bill generated under rule 138(1) shall be made available to the recipient on the common portal, if he is registered, He shall communicate his acceptance or rejection of the consignment covered by the e-way bill [rule 138(11) of CGST Rules]. Where the recipient referred to in rule 138(11) does not communicate his acceptance or rejection within seventy two hours of the details being made available to him on the common portal, it shall be deemed that he has accepted the said details. Note that the communication is not of receipt of goods by recipient (consignee) but only acceptance of details as contained in the e-way bill. What it really means that his acceptance as the goods are meant for him only and his name, as recipient, is not false or incorrect. 20 Transport of goods for which e- way bill is not required No e-way bill is required to be generated in following cases [rule 138(14) of CGST Rules]. 21 Goods for which e-way bill not required as per Annexure to rule 138(1) Following items are included in Annexure to rule 138(10). For transport of these goods, e-way bill is not required. All items exempted under Notification Nos. 2/2017-CT (Rate) and 2/2017-IT (Rate) both dated 28-6-2017 The major among them are as follows –  Fresh Meat, Fish Chicken, Eggs, Milk, Butter Milk, Curd, Natural Honey, Fresh Fruits and Vegetables, coffee beans, wheat, rye, rice, Flour, Besan, Bread, Prasad, Salt, Bindi, Sindoor, Stamps, Judicial Papers, Printed Books, Newspapers, Bangles, Handloom, Pooja equipment, jute, khadi, national flag, raw silk.  Passenger baggage (9803)  Specified Puja samagri 22  Liquefied petroleum gas (LPG) for supply to household and non domestic exempted category (NDEC) customers  Kerosene oil sold under PDS  Postal baggage transported by Department of Posts  Natural or cultured pearls and precious or semi-precious stones; precious metals and metals clad with precious metal (Chapter 71)  Jewellery, goldsmiths' and silversmiths' wares and other articles (Chapter 71)  Currency  Used personal and household effects  Coral, unworked (0508) and worked coral (9601). Some more exemptions are required - The relaxations are good but not sufficient. Relaxations are required in following cases – (a) transporting goods from port, airport or railway yard to factory or godown of taxable person (b) Sending material for job work or repairs within the city (c) Sending cranes, bull dozers, cement mixers to site (d) Sending construction material to and from site. 23 Documents and devices to be carried by a person-in-charge of a conveyance The person-in-charge of a conveyance shall carry— (a) the invoice or bill of supply or delivery challan, as the case may be; and (b) a copy of the e-way bill or the e-way bill number, either physically or mapped to a Radio Frequency Identification Device embedded on to the conveyance in such manner as may be notified by the Commissioner [rule 138A(1) of CGST Rules] 2 Invoice Reference Number (IRN) can be obtained by supplier electronically A registered person (supplier) may obtain an Invoice Reference Number (IRN) from the common portal by uploading on the portal, a tax invoice issued by him in form GST INV-1 and produce the same for verification by the proper officer in lieu of the tax invoice and such number shall be valid for a period of thirty days from the date of uploading [rule 138A(2) of CGST Rules]. If such IRN is obtained, it is not necessary for transporter to carry physical copy of tax invoice, unless specifically ordered. 25 Commissioner can require that physical copy of tax invoice of delivery challan should be carried - Even if rule 138A(1)(b) of CGST Rules enable dispensing with carrying physical copy of tax invoice, the Commissioner may, by notification, require the person-in-charge of the conveyance to carry the following documents instead of the e-way bill- (a) tax invoice or bill of supply or bill of entry; or (b) a delivery challan, where the goods are transported for reasons other than by way of supply [rule 138A(5) of CGST Rules] Auto population of information in part A if IRN obtained - If the registered person uploads the invoice under rule 138A(2), the information in Part A of form GST EWB-01 shall be auto-populated by the common portal on the basis of the information furnished in form GST INV-1 [rule 138A(3) of CGST Rules]. 26 Radio Frequency Identification Device (RFID) by specified transporters The Commissioner may, by notification, require a class of transporters to obtain a unique Radio Frequency Identification Device and get the said device embedded on to the conveyance and map the e-way bill to the Radio Frequency Identification Device (RFID) prior to the movement of goods [rule 138A(4) of CGST Rules]. 27 Road checks and Verification of documents and conveyances The Commissioner or an officer empowered by him in this behalf may authorise the proper officer to intercept any conveyance to verify the e-way bill or the e-way bill number in physical form for all inter-State and intra- State movement of goods [rule 138B(1) of CGST Rules] The Commissioner shall get Radio Frequency Identification Device readers (RFIDR) installed at places where the verification of movement of goods is required to be carried out and verification of movement of vehicles shall be done through such device readers where the e-way bill has been mapped with the said device [rule 138B(2) of CGST Rules] The physical verification of conveyances shall be carried out by the proper officer as authorised by the Commissioner or an officer empowered by him in this behalf: Physical verification on basis of specific intelligence - On receipt of specific information on evasion of tax, physical verification of a specific conveyance can also be carried out by any officer after obtaining necessary approval of the Commissioner or an officer authorised by him in this behalf [rule 138B(3) of CGST Rules] 28 Inspection and verification of goods during road checks A summary report of every inspection of goods in transit shall be recorded online by the proper officer in Part A of FORM GST EWB-03 within twenty four hours of inspection and the final report in Part B of FORM GST EWB-03 shall be recorded within three days of such inspection [rule 138C(1) of CGST Rules] No further verification in same State if once verification done - The physical verification of goods being transported on any conveyance has been done during transit at one place within the State or in any other State, no further physical verification of the said conveyance shall be carried out again in the State, unless a specific information relating to evasion of tax is made available subsequently [rule 138C(1) of CGST Rules]. 29 Transporter can upload details if vehicle detained for more than 30 minutes If a vehicle has been intercepted and detained for a period exceeding thirty minutes, the transporter may upload the said information in FORM GST EWB-04 on the common portal [rule 138D of CGST Rules] It is not clear what action will be taken and by whom. In fact, the officer may get annoyed, and his 'rate' and 'charges' will increase! 30 Challenges for E-Way Bill 31 Consignment Value: As per the Rules, every registered person who causes movement of goods of consignment value exceeding fifty thousand rupees must generate the E-way bill before the commencement of such movement. However, the term 'consignment value' has not been defined anywhere in the Rules. This could lead to different interpretation and issues. For Example, where the multiple invoices are issued to same customer in single consignment - Whether E-way bill would have to be generated, even if value of each invoice individually is less than the threshold? Given the fact that whole GST Network is operated based on invoice, whether the system would allow to enter multiple invoice nos. against one E-way bill? Whether, the E-way bill must be generated qua HSN code? These are some of the issues which needs to be addressed. 32 Downloaded from www.gstindia.com Responsibility of the transporter: According to the Rules, where the consignor or the consignee has not generated the E-way bill and the value of goods carried in the conveyance is more than fifty thousand rupees, the transporter is required to generate one. Further, if the transporter moves goods from one mode of conveyance to another during the transit, the transporter would have to update the details of the conveyance in the E-way bill on the common portal. In such situations, the small transporters may struggle due to lack of facilities, awareness, etc. 33 Reconciliation between transport document and E-way bill: It may happen that information furnished by the registered person in the E-way bill may not match with information furnished in the transport document such as lorry receipt, goods receipt, etc. by the transporter. In such case, the officer inspecting the consignment may argue on the correctness of the information provided. This type of situations may lead to delay in the transportation of goods. Some sort of clarity should be given in this aspect, to avoid future disputes. 34 Generation of E-way bill by unregistered person: As per the Rules, the unregistered person or its transporters have an option to generate an e-way bill. This means that an e-way bill can be generated by both registered and unregistered persons. In any case, the ultimate responsibility of E-way bill compliance is on the registered recipient. Therefore, the option given to the unregistered person seems to be irrelevant, as many of them would try to shy away from this responsibility. Further, there is no clarity on the requirement of E-way bill for movement of goods between two unregistered persons. Also, the way the unregistered person would login into the GST Network and generate the E-way bill is not prescribed. This would lead to additional burden on the registered person and the transporter. 35 Validity period and generation of new E-way bill in 'exceptional nature': The validity of E-way bills depends on the distance travelled and a new E-way bill can be generated by the transporter in exceptional cases. However, the term 'exceptional nature' is neither defined or explained in the Rules. Whether, truck breakdown or change in route by the driver - would fall in the ambit of 'exceptional nature'. Such ambiguity will leave the transporter, at the mercy of the proper officers. Also, whether the time allowed on validity of the E-way bill is sufficient, considering the transport infrastructure available, specially, in the rural parts of India. There could also be challenges with the validity period, where consignments are transported on part load basis by different suppliers. 36 Cancellation of E-way bill: In cases, where goods are not transported after generation of the E- way bill or are not transported as per the details furnished in the E- way bill, the E–way bill generated can be cancelled within the 24 hours from its generation. However, no such cancellation would be permitted, if the E-way bill is verified by the proper officer in transit before 24 hours. This leads us to a question on the process for correction of the E- way bill post 24 hours of its generation. The Rules are silent on such remedy. In absence of any further clarity, the business would have to set-up a robust system, to ensure that the details incorporated in the E- way bills are correct and verified at the earliest. 37 Information relating to the transport document no. in PART-1 of E-way bill form: The Part-A of the E-way bill form, requires incorporating the details of the transport document such as goods receipt number or railway receipt number or airway bill number or bill of lading number. However, in practice, these could be provided by the transporter after the material is loaded in the vehicle for delivery. Does it mean that the consignor would not be able to furnish the details in Part-A before actual loading of material on the vehicle. If so, the whole exercise would have to be done on real-time basis and the access to the GST Network would have to be given to the logistics people working at the route level. 38 State exemptions: As per the Rules, the states are empowered to notify the area within which, the E-way bill would not be required. Hope this would not lead to different rules adopted by states for movement of goods within such area. As of now the Karnataka Government has introduced the E-way bill on its site with the similar features as mentioned in Central Rules. Several other states have also initiated such digital process where details of the consignment can be shared electronically, eliminating the use of physical bills. It may be possible that different state comes up with the different Rules. This would create trouble for industries and may defeat the purpose of having uniform process across the country. 39 Technology reliance: There is too much reliance on the technology in the new system. The transporters, especially, in smaller towns, who are not tech-savvy may fail to comply with the process. Also, given the cost involved in installing RFID devices to the vehicle, not many transporters may opt for it. Further, the logistics and transportation is still managed by the unorganized sector. Hence, the E-way bill system could come as a compliance burden on them. 40 Physical verification of the conveyance: The generally accepted belief is that the new system of E-way bill would lead to elimination of delays and long queues at check posts at state borders. But, will all the states be ready to adopt it seamlessly? Any modification in this regard by the states could lead to complete failure of the system. 41 The objective of the Government here is multi-fold i.e. to reduce the number of check-posts across the country, eliminate state-wise documentation to ensure smooth movement of goods, establish measures to avoid tax evasions and reduce corruption. While the intent of the Government is clear, the proper implementation of E- way bill system is important. For this, proper dissemination of information, training and awareness of people including developing of good eco-system should be on high priority list of the Government as well businesses. Also, sufficient time should be given to stakeholders for trying and testing the new system, so to minimize the initial hiccups. Efforts should be channelized towards reorientation of the attitude and approach of the tax administration, to achieve fundamental change in the mindset. Thank You !
Scenarios where you cannot Avail Input Tax Credit we will discuss the scenarios where you cannot avail Input Tax Credit. 1. Registration not applied for within 30 days from the date on which you become liable to register If you have not applied for registration within 30 days from the date on which you become liable to register, you will lose the eligible ITC on inputs and inputs contained in semi-finished or finished goods in stock, on the day before the date on which you become liable to pay tax. 2. After the time limit for availing Input Tax Credit is crossed ITC must be availed within the earliest of the following dates- • 1 year of date of the invoice OR • The date of filing of the return for September of the next financial year OR • The date of filing of the annual return (due date is 31st December of the next financial year) Let us understand this with an illustration. Example: Rajesh Apparel Pvt Ltd is a dealer in men’s apparel. It purchases apparel for Rs.1, 00, 000 from the manufacturer on 15th July, 2017. GST paid on the purchase is Rs.18, 000 (18%). They have filed their annual return for the year ‘17-’18 on 31st July 2018, and the return for September 2018 is filed on 20th October 2018. Here, the three dates to be checked are- 1 year from date of invoice 14th July 2018 Date of filing of return for September of the next financial year 20th October 2018 Date of filing of annual return 31st July 2018 As 1 year from the date of invoice, i.e. 14th July 2018 is the earliest among the three dates above, ITC on the invoice must be availed before 14th July 2018. 3. On goods and/or services used as inputs by a composition tax payer A composition tax payer cannot avail ITC on goods and/or services used as inputs. Example: Laxmi Kirana Stores is registered as a composition tax payer under GST. It purchases grocery items from the manufacturer for Rs.20, 000 and GST is charged @ 12% amounting to Rs.2, 400. As Laxmi Kirana Stores is registered as a composition tax payer, it cannot avail ITC of Rs.2, 400 on the purchase. This GST paid will become part of their material cost. 4. On goods and/or services used for personal consumption Example: Rajesh Apparel Pvt Ltd purchased apparel for Rs.50, 000 from the manufacturer. GST paid on the purchase is Rs.9, 000. Out of the apparel purchased, apparel worth Rs.2, 000 is taken by the owner for his personal use. The remaining apparel are sold to customers. Here, the ITC to be availed on the purchase is Rs.8, 640 (48, 000 *18%). 5. On goods and/or services used for making exempt supplies ITC cannot be availed on goods and/or services used for making exempt supplies and supplies where the receiver pays tax on reverse charge basis. Example: You manufacture an exempt good. You purchase the following inputs (used to manufacture the exempt good) on 4th September 2017- Inward supplies- 4.9.2017 Inputs Value (Rs.) GST paid on inputs @ 18% (Rs.) Raw material A 3, 00, 000 54, 000 Raw material B 30, 000 5, 400 Total 3, 30, 000 59, 400 Here, you cannot avail the ITC of Rs.59, 400 as these inputs have been used for manufacturing an exempt good. 6. On services received for which payment has not been made within 3 months from the date of invoice If the recipient of a service has not made payment for the receipt of the service along with the tax payable within 3 months from the date of invoice, the ITC availed will be added to the recipient’s liability, along with interest due. Example: You have taken auditing and consultancy services from a Chartered Accountant. The value of the service is Rs.50, 000 and the GST charged is Rs.9, 000 (@18%). If you do not make the payment of Rs.59, 000 within 3 months of the invoice date, the ITC of Rs.9, 000 availed by you will be added to your liability, along with the interest due. 7. On goods lost, stolen, destroyed, written off or disposed as gift or free samples Example: You are an electronic goods dealer. On 1st Nov, 2017, you purchase 20 computers @ Rs. 25, 000 each from the manufacturer. GST charged is Rs.90, 000 (@18%). On 2nd Nov, 2017, 1 of the computers gets destroyed completely and cannot be used any more. You cannot avail the ITC on that computer, i.e., Rs. 4, 500. 8. On motor vehicles and other conveyance ITC is not allowed on motor vehicles and other conveyance unless they are: • Further supplied OR • Used for transporting passengers or goods OR • Used for imparting training on driving, flying, or navigating such vehicles or conveyances Example: Super Cars Pvt Ltd, a car manufacturer, purchased a Tempo Traveler for the transport of employees within the factory premises. Super Cars Pvt Ltd cannot avail ITC on the Tempo Traveler as it has not been used for the above activities. Let us look at another scenario. Mukesh Travels, a tour operator, purchased a Tempo Traveler for the purpose of transporting tourists during their package tours. Here, Mukesh Travels can avail ITC on the Tempo Traveler, as it is used for transporting passengers – a business activity for Mukesh Travels. 9. On food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery ITC cannot be availed on food and beverages, outdoor catering, beauty treatment, health services and cosmetic and plastic surgery, except where they have been used for making outward supply of the same category of goods or services. Example 1: Super Cars Pvt Ltd take the services of a caterer, Rakesh Caterers, for Diwali Celebration event for its employees. Super Cars Pvt Ltd cannot avail ITC on the catering service, as their business activity is not catering service. Example 2: Rakesh Caterers take the services of a Shamiana provider while providing the catering service to Super Cars Pvt Ltd. Here, Rakesh Caterers can avail ITC on the Shamiana services, as they have been used for making outward supplies of the same category of services. 10. On membership of clubs and health & fitness centres, rent-a-cab services and life & health insurance taken for employees, except notified services which are obligatory to be provided to employees Example: Mukesh Travels, a tour operator, takes an annual membership of a fitness centre, Pratham Fitness Centre, for the use of its employees. Here, Mukesh Travels cannot avail ITC on the GST paid on membership charges. 11. On travel benefits to employees on vacation, such as leave or home travel concession Example: Super Cars Pvt Ltd reimburses its senior employees on travel expenses as part of LTA (Leave Travel Allowance). Super Cars Pvt Ltd cannot avail ITC on the GST component of the travel fare reimbursed. 12. On tax component of cost of capital goods, if depreciation has been claimed on the tax component ITC cannot be availed on the tax component of cost of capital goods, if depreciation has been claimed on the tax component in Income Tax return. Example: Super Cars Pvt Ltd purchases machinery for Rs.50, 00, 000 to be used for the manufacture of cars. The GST paid on the machinery is Rs.9, 00, 000. Super Cars Pvt Ltd claims depreciation of Rs.59, 00, 000 on the machinery under Income Tax, which is including the GST component. In this case, Super Cars Pvt Ltd cannot avail the ITC of Rs.9, 00, 000 on the machinery. Treatment of Input Tax Credit already availed in exceptional scenarios When a regular dealer who has availed ITC switches to the composition scheme When a regular dealer who has availed ITC switches to the composition scheme, the person must pay back the ITC availed on inputs in stock, inputs in semi-finished state, finished goods in stock and capital goods (reduced by the prescribed percentage points) on the day before the date of switching to the composition scheme. Example: You are registered as a regular dealer. You switch to the composition scheme on 1st September 2017 as your turnover does not exceed Rs.50 Lakhs. On 31st August 2017, you have the following inputs in stock on which ITC has already been availed- Closing stock- 31.8.2017 Inputs Value (Rs.) GST paid on inputs @ 18% (Rs.) Raw material A 1, 50, 000 27, 000 Raw material B 20, 000 3, 600 Total 1, 70, 000 30, 600 On switching to the composition scheme, you have to pay back the ITC of Rs.30, 600 availed on the inputs in stock. When taxable goods and/or services become exempt When taxable goods and/or services supplied by a person are notified as exempt, the person must pay back the ITC availed on inputs in stock, inputs in semi-finished or finished goods in stock and capital goods (reduced by the prescribed percentage points) on the day before the date of exemption. Example: You manufacture a taxable good, which is notified to be exempt from GST with effect from 15th September 2017. On 14th September 2017, you have the following inputs in stock on which GST has already been availed- Closing stock- 14.9.2017 Inputs Value (Rs.) GST paid on inputs @ 18% (Rs.) Raw materials 1, 00, 000 18, 000 Inputs in semi-finished goods 50, 000 9, 000 Total 1, 50, 000 27, 000 The ITC availed on the inputs in stock, ie. Rs.27, 000 will have to be paid back. Note: GST rates are not finalised yet and the rates mentioned in the examples are for illustration purpose only.
GST Network extends deadline till April 30 2017, for existing firms to register MUMBAI: with only 54 lakh businesses, out of the estimated 80 lakh, enrolling with the GST Network (GSTN), the infrastructure provider has decided to extend the deadline to register with it till April 30 from March 31. There are about 65 lakh registered value-added tax (VAT) assessees, 26 lakh service tax assessees and another five lakh central excise assessees, who are expected to register under the unified GSTN, which provides IT infrastructure and services for implementation of GST. It’s a private limited company with the central and state governments holding 49 per cent stake, while the remaining 51 per cent is with non-government financial institutions. “The voluntary enrollment process started six months ago and 73 per cent of the businesses have registered. We will be extending time till April 30, for the others to enroll, ” Prakash Kumar, CEO, Goods and Services Tax Network told Express. He added that starting April, the central and respective state government tax departments will kick-start training campaigns to familiarise assesses on filing returns, which starts from August. However, small and medium enterprises, the backbone of the country’s industrial activity, await clarity on key aspects such as input tax credit. According to GST laws, input credit against taxes paid by the purchaser can be availed only if the seller deposits the said tax with the government treasury. In the event of non-compliance, the purchaser will be denied input credit. “There’s a need to de-link payment with the availability of input credit, which GST is capable of providing as it brings transparency and protection against tax evasion, ” said Tejas Goenka, executive director, Tally Solutions. Meanwhile, small and medium businesses also want relaxation of audit considering the shortage of chartered accountants. “There are only 2.3 lakh CAs in the country, of which 40 per cent are not practicing and those who are serving cannot cope up with the increased demand. We requested the government to exempt MSMEs up to Rs 5 crore revenue for audit and also allow cost accountants, tax consultants and income tax assessors to audit financials for ease of use, ” said Avinash K Dalal, national president and founder, All India MSME Association. Source: http://www.newindianexpress.com/business/2017/mar/30/gst-network-extends-deadline-till-april-30-for-firms-to-register-1587528.html
What is Union Territory GST (UTGST)? In our previous blogs, we have discussed about the taxes that will be levied on supply under GST. On intrastate supplies, the taxes levied are Central GST (CGST) and State GST (SGST). On interstate supplies, the tax levied is IGST. Another component of GST is now being talked about – UTGST. UTGST stands for Union Territory Goods and Services Tax. Let us understand UTGST, the circumstances in which it is levied, and the manner of its levy. Union Territory GST (UTGST) A union territory is directly under the governance of the Central Government. This differentiates them from the states, which have their own elected governments. Currently, there are 7 union territories in India: Chandigarh Lakshadweep Daman and Diu Dadra and Nagar Haveli Andaman and Nicobar Islands Delhi Puducherry Among these, Delhi and Puducherry have their own legislature, with elected members and a Chief Minister. Hence, they function as semi-states. Under GST, the SGST Act applies to all the states in India. The definition of ‘States’ in the Indian Constitution includes union territories with their own legislature. Hence, the SGST Act also applies to the union territories of Delhi and Puducherry. This means that on supplies within the union territories of Delhi and Puducherry, the taxes levied will be CGST +SGST, and on supplies from Delhi/Puducherry to another state/union territory, the tax levied will be IGST. As the SGST Act cannot be applied on a union territory without its own legislature, the GST Council has introduced the UTGST Act, to levy a tax, called UTGST, in the union territories of Chandigarh, Lakshadweep, Daman and Diu, Dadra and Nagar Haveli and Andaman and Nicobar Islands. UTGST will be levied in place of SGST in these union territories. UTGST is applicable in the union territories of Chandigarh, Lakshadweep, Daman and Diu, Dadra and Nagar Haveli and Andaman and Nicobar Islands. CLICK TO TWEET Levy of Tax Supply within the Union Territory On supplies within a union territory, CGST + UTGST will be levied. For example: Furniture Centre in Chandigarh supplies 50 sofa sets for Rs. 10, 00, 000 to Veena Furnitures in Chandigarh. This is a supply within the union territory of Chandigarh. Assuming a GST rate of 12% on sofa sets, the tax calculation in this case will be as follows: Particulars Amount (Rs.) Sofa sets 10, 00, 000 CGST @ 6% 60, 000 UTGST @ 6% 60, 000 Total 11, 20, 000 Hence, the only difference here, is that on supplies within union territories, UTGST will be levied in place of SGST. On supplies within a union territory, CGST and UTGST will be levied. CLICK TO TWEET Supply outside the Union Territory On supplies from a union territory to another state or union territory, IGST will be levied. For example: Furniture Centre in Chandigarh supplies 50 sofa sets for Rs. 10, 00, 000 to Ramesh Furniture Town in Delhi. This is a supply outside the union territory of Chandigarh. Assuming a GST rate of 12% on sofa sets, the tax calculation in this case will be as follows: Particulars Amount (Rs.) Sofa sets 10, 00, 000 IGST @ 12% 1, 20, 000 Total 11, 20, 000 Hence, similar to the levy of tax on supplies outside a state, IGST will be applicable on supplies outside a union territory. IGST will be applicable on supplies outside a union territory. CLICK TO TWEET Order of utilization UTGST credit can be utilised to set-off the tax payable in a manner similar to utilization of SGST credit, i.e.: Input Tax Credit Set-off against liability UTGST UTGST and IGST (in this order) Also, UTGST credit cannot be utilized to set-off CGST liability. Example: At the end of August ’17, Furniture Centre in Chandigarh has input tax credit and tax liability as shown below: Input tax credit (Rs.) Tax liability (Rs.) CGST 1, 00, 000 CGST 80, 000 UTGST 1, 00, 000 UTGST 80, 000 IGST 2, 00, 000 IGST 2, 50, 000 Here, Furniture Centre can utilise the UTGST credit of Rs. 1, 00, 000 as follows: Particulars Amount (Rs.) UTGST credit 1, 00, 000 (-) Set-off against UTGST liability (-) 80, 000 Balance 20, 000 (-) Set-off against IGST liability (-) 20, 000 Balance Nil UTGST will be levied in place of SGST in union territories without their own legislatures. The UTGST bill, along with CGST and IGST bills, which will be administered by the Central Government, has been passed
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