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GST key information simplified

June 24, 2017
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You must be aware that a comprehensive indirect tax reform in the form of GST is going to be implemented very shortly i.e 1st July 2017. The said reform is a fundamental change in the framework of indirect taxes and impacts not only the rates of tax but also various business processes and associated documentation.

An important aspect of transition into the new regime is heavy emphasis on online matching of credits. This will require us to include vendor GST Registration Numbers into our system so that we can upload the information into the returns to be filed by us.

All invoices have to be uploaded online, according to the GST Model Law. The process of deduction, payment, and refund of indirect taxes under GST would be carried out electronically.

Every business should have a fully computerized office for ease of compliance under GST.

Format of Invoice

Based on GST Invoice Rules (Rule 5), 2016 issued by the Central Government, two kinds of invoices can be issued under GST namely tax invoice and bill of supply.

Number of copies to be issued, their specific uses etc.

  1. Tax invoice  2.Bill of Supply-

Tax invoice is generally issued to charge the tax and pass on the credit. In GST there are some instances where the supplier is not allowed to charge any tax and hence a Tax invoice can’t be issued instead another document called Bill of Supply is issued.

Invoicing under GST

In the GST regime, two types of invoices will be issued:
 1. Tax invoice      2. Bill of supply

2. Bill of Supply

Tax invoice is generally issued to charge the tax and pass on the credit. In GST there are some instances where the supplier is not allowed to charge any tax and hence a Tax invoice can’t be issued instead another document called Bill of Supply is issued.

Cases where a registered supplier needs to issue bill of supply:

  • Supply of exempted goods or services
  • Supplier is paying tax under composition scheme

  • How many copies of Tax Invoices are to be issued?

    When goods are supplied, the supplier is required to issue three copies of the invoice– Original, Duplicate, and Triplicate.

    Original invoice: When a buyer makes the purchase he gets the first copy of invoice, marked as ‘Original for recipient’.

    Duplicate copy:  The duplicate copy is issued to the transporter ( carrier of goods) to present as evidence as and when required, and is marked as ‘Duplicate for transporter’. The transporter doesn’t need to carry the invoice if the supplier has obtained an invoice reference number.

    Note:  How to generate “Invoice Reference Number”?

    The supplier can obtain an Invoice reference number from the common portal (GSTN) by uploading a tax invoice issued by him. The invoice reference number will be valid for 30 days from the date of uploading.

    Triplicate copy: This copy is retained by the supplier for his own record.

    • Conditions of availing credits

    First, all taxes will be collected at the point of consumption. It means that if a shirt is taxed at 5%

    ( Below Rs 1000), it will include both central government’s taxes and state government’s taxes. Transparency in taxation should deter governments from indiscriminately increasing taxes .we as consumers will not end up paying “tax on tax” which is what happens when goods move across state borders.

    The Goods and Services Tax (GST) has been finalised for almost all items by the GST Council led by Finance Minister Arun Jaitley. The council concluded its 16th meeting on June 11 where rates for 66 items were revised.

    Most of the goods and services have been listed under the four broad tax slabs- 5 per cent, 12 per cent, 18 per cent and 28 per cent. However, some items like G and rough diamonds have exclusive tax rates. Also, some items have been exempted from taxation.

    5% tax-  Goods
    An array of food items such as fish fillet, packaged food items, cream, skimmed milk powder, branded paneer, frozen vegetables, coffee, tea, spices, pizza bread, rusk, sabudana, cashew nut, cashew nut in shell, raisin, ice and snow will be priced at 5 per cent tax.
    Apparel below Rs 1000 and footwear below Rs 500 are also in this category.
    Services
    Transport services like railways and air travel fall under this category.
    Small restaurants will be under the 5% category because their main input is petroleum, which is outside GST.

    GST Council Extends Limit to 90 days for Claiming Credit on Transition Stock

  • Traders and retailers all over the country were worried about the input credit for the stock in hand and its treatment once GST rolls out on July 1st. Now, the GST Council has increased the time limit for claiming input credit to 90 days from the 60 days earlier mentioned in the draft rules. Also, when such goods are sold and IGST is paid on the transaction, the deemed credit will be available at the rate of 30 percent if the IGST rate is above 18 percent. In any other case, only 20 percent of the deemed credit will be available.With GST now in place, it is time for you to ensure you catch up to speed and seamlessly adapt it in your business as other taxes such as VAT, Excise, service tax, etc. will disappear giving way to one single Tax. GST would bring in significant changes to business processes. Depending on the operating size, geographies, and sector, the changes would be substantial and may require proactive planning with a time-bound action plan.Transition of credit towards GST
  • With GST now in place, it is time for you to ensure you catch up to speed and seamlessly adapt it in your business as other taxes such as VAT, Excise, service tax, etc. will disappear giving way to one single Tax. GST would bring in significant changes to business processes. Depending on the operating size, geographies, and sector, the changes would be substantial and may require proactive planning with a time-bound action plan.

    GST Guide on Filing GSTR-1 on GST Portal

    According to the GST law, every registered taxable person is required to submit the details of outward supplies in the GSTR-1. This return is required to be filed within 10 days from the end of the tax period, or the transaction month (in simple words).

    GSTR-1 has a total of 13 headings. However, the taxable person need not worry as most of these will be prefilled. Before we dive deep into the various sections of this return, we need to understand certain terms. These are:

    1. GSTIN – Goods and Services Taxpayer Identification Number
    2. UID – Unique Identity Number for Embassies
    3. HSN – Harmonized System of Nomenclature for goods
    4. SAC – Services Accounting Code
    5. GDI – Government Dept. Unique ID where department does not have a GSTIN
    6. POS – Place of Supply of Goods or Services – State Code to be mentioned.

    Below are the various section headings under GSTR-1:

    1. GSTIN: Each taxpayer will be allotted a state-wise PAN-based 15-digit Goods and Services Taxpayer Identification Number (GSTIN). The format of proposed GSTIN has been shown in the image below. The GSTIN of the taxpayer will be auto-populated at the time of return filing.
    • Name of the taxpayer: Name of the taxpayer will also be auto-populated at the time of logging into the common GST Portal.
    • Gross turnover of the taxpayer in the previous FY: This information is required to be filed only in the first year of GST implementation. Next year onwards it will be auto-populated as carried forward balance of the previous year.
    • Taxable outward supplies made to registered persons (including UIN-holders) other than supplies covered by Table 6: This head will hold the information about the details of all taxable supplies made by the registered taxable person. This head will cover complete details of Normal Taxable Supplies,  Supplies under Reverse Charge, and Supplies by way of an E-Commerce operator.
    • Taxable outward inter-state supplies to unregistered persons where the invoice value is more than Rs 2.5 lakh: This head will cover the details of all taxable supplies made to an unregistered person in the different state. However, details are needed to be furnished only when the turnover exceeds Rs. 2.5 lakh.
    • Taxable supplies (net of debit notes and credit notes) to unregistered persons other than the supplies covered in Table 5: All the taxable supply which are made to an unregistered taxable person and are not covered needs to be furnished under this head. This will mainly cover taxable supplies to the unregistered person in the same state and below Rs. 2.5 lakh in other states.
    • Nil-rated, exempt and non-GST outward supplies: All the other supplies whether nil rated, exempt or non-GST which has not been reported under any of the above needs to be reported under this head.
    • Amendments to taxable outward supply details furnished in returns for earlier tax periods in Table 4, 5 and 6 [including debit notes, credit notes, refund vouchers issued during the current period and amendments thereof: Details of any kind of amendment in outward supply from previous tax period needs to be reported under this head. Any amendment in debit or credit notes also needs to be provided under this head.
    • Amendments to taxable outward supplies to unregistered persons: Any amendment in details of taxable outward supplies to unregistered persons from previous tax periods needs to be made under this head.
    • Consolidated statement of advances received/advance: This head will include all the details of advances received and adjusted under the current period. This will result in increase/decrease of GST liability. Any kind of amendment in advances from earlier tax period also needs to be reported here.
    • HSN-wise summary of outward supplies: Here the taxable person will consolidate all his supplies across HSN codes. This section will also reflect high-level information on supplies made and IGST, CGST and SGST collected against it.
    • Documents issued during the tax period: This head will include details of all invoices issues in a tax period, any kind of revised invoice, debit notes, credit notes etc.

    GST Returns Applicable on Your Business

    All business are not required to file all the returns   but only  relevant  returns are  required.

    There are various returns that are required to be filed under GST law. Presently GST council has specified a list of eleven returns along with their timeline for submission. Not every business is required to file all the returns and here we are elaborating on which all returns are required to be filed by different business assesses.

    Regular Businesses

    A business registered as a regular taxpayer under Goods and Services Tax law is required to file three returns on monthly basis viz. GSRT-1, GSTR-2 and GSTR-3. Many businesses are alarmed with this provision. As of now, these businesses are required to file a single return under VAT or half-yearly return under services tax. However, the fact which most of us are not aware is that GSTR 2 and GSTR 3 is merely auto-populated data from counter-party GSTR-1.

    As soon as GSTR-1 is filed which contains the details of supplies made by a taxpayer, it will get auto populate into GSTR-2A of the buyer which he needs to confirm. Once confirmed this will become an entry in GSTR 2. The taxpayer needs to file only those transactions which their supplier has missed to file or in case of Import transactions.

    Similarly, once all the transaction of sales and purchases are incorporated in GSTR-1 and GSTR-2 respectively, this information will flow into GSTR-3. Basis these entries, final tax liability will be defined.

    A normal business is also required to file one annual return, which is consolidation of all the monthly GSTR-3. Below are the timeline of these returns.

    Return Form What to file? By Whom? By When?
    GSTR-1 Details of outward supplies of taxable goods and/or services effected Registered Taxable Supplier 10th of the next month
    GSTR-2 Details of inward supplies of taxable goods and/or services effected claiming input tax credit. Registered Taxable Recipient 15th of the next month
    GSTR-3 Monthly return on the basis of finalization of details of outward supplies and inward supplies along with the payment of amount of tax. Registered Taxable Person 20th of the next month
    GSTR-9 Annual Return Registered Taxable Person 31st December of next financial year