YENNES
Providing tally solutions since 1994

Saset aplicabo nerafaes lasertyus
ersvitae ertyasnemo.

Read more

When Can your GST Registration be Cancelled

We know that registration under GST is perpetual and does not require any renewal. However, there are scenarios when a person’s registration can be cancelled by an assessing officer. Let us understand the scenarios of GST registration cancellation.

Scenarios of GST registration cancellation by an officer
The business has been discontinued or transferred fully, or amalgamated with another entity, demerged or disposed of
There is a change in the constitution of the business
A registered person has failed to comply with the GST provisions
A composition tax payer has not furnished returns for 3 consecutive quarters
A regular dealer has not furnished returns for a continuous period of 6 months
A person who has taken voluntary registration has not commenced business within 6 months from the date of registration
A person does not conduct business from the declared place of business
A person issues an invoice or bill of supply without actually supplying goods or services
Registration has been obtained by fraud, wilful misstatement or suppression of facts
The benefit of input tax credit or reduction in rate of tax has not been passed on to consumers in the form of reduction in prices

Liability when registration is cancelled

A person whose registration is cancelled should either reverse the input tax credit availed on inputs in stock or pay tax equal to the input tax credit availed.

Return to be filed in case of GST registration cancellation

Return Due Date Details to be furnished
Form GSTR-10 Within 3 months after date of order of cancellation Furnish details of inputs and capital goods held, tax paid and payable.

Cancellation of registration by an officer due to non-compliance with the GST provisions is a serious and damaging event for any business. Registered persons should avoid these scenarios where their registration is forcefully cancelled.

How and When to Issue Credit Note under GST?

We have learnt about the scenarios in which a supplier should issue a Debit note in our previous blog. Debit Notes and Credit notes are instruments used to record the cancellation or modification of a supply for which Tax Invoice or Bill of Supply has already been issued. In this blog, let us understand the scenarios in which a supplier should issue a credit note under GST.

When to issue Credit Note under GST

A person supplying goods or services should issue a credit note in the following scenarios:

a. Supplies are returned or found to be deficient by the recipient

When goods supplied are returned by the recipient or goods/services supplied are found to be deficient by the recipient, the supplier should issue a Credit Note. The credit note serves the purpose of reducing the value of the original supply.

For example: Mohan Apparels in Delhi supplies 100 shirts @ Rs. 1,000 each to Rakesh Garments in Delhi. CGST @ 6% (Rs. 6,000) and SGST @ 6% (Rs. 6,000) are charged. 10 shirts are returned by Rakesh Garments due to the shirts getting damaged during transit.

Here, Mohan Apparels should issue Rakesh Garments a credit note for the return of 10 shirts. On the value of shirts returned, i.e. Rs. 10,000 (10 units @ Rs. 1,000 each), CGST @ 6% (Rs. 600) and SGST @ 6% (Rs. 600) is to be reversed.

This will result in reduction in the original value of supply, resulting in reduction in the tax applicable on the supply.

b.Decrease in taxable value

When a supplier requires to decrease the taxable value of a supply, he/she has to issue a credit note to the recipient.

For example: Mohan Apparels in Delhi supplies 100 shirts @ Rs. 1,000 each to Rakesh Garments in Delhi. CGST @ 6% (Rs. 6,000) and SGST @ 6% (Rs. 6,000) are charged. On a later date, Mohan Apparels informs Rakesh Garments that if they make the payment for the supply in cash, they will give them a discount of 1% on the value of the shirts. Accordingly, Rakesh Garments makes the payment in cash.

Here, to record the discount given to Rakesh Garments after the supply, Mohan Apparels will issue a credit note. The credit note will be for the discount of Rs. 1,000 (1% on total value of Rs. 1,00,000). On Rs. 1,000, CGST @ 6% (Rs. 60) and SGST @ 6% (Rs. 60) will be reversed.

c. Decrease in GST charged in invoice

When a supplier requires to decrease the rate or value of GST charged in an invoice, he/she has to issue a credit note to the recipient.

For example: Mohan Apparels in Delhi supplies 100 shirts @ Rs. 1,000 each to Rakesh Garments in Delhi. Due to a mistake in data entry, Mohan Apparels charges CGST @ 9% (Rs. 9,000) and SGST @ 9% (Rs. 9,000) on the supply. They later realise that tax has been charged in excess in the invoice and CGST & SGST @ 6% each was applicable on the supply.

Here, Mohan Apparels will issue a credit note to Rakesh Garments. The credit note will be for the amount of tax charged in excess, i.e. CGST of Rs. 3,000 and SGST of Rs. 3,000.

Time limit for issuing Credit Note

A supplier can issue a credit note against a Tax Invoice on or before 30th September of the next financial year or the date of filing of annual return pertaining to the Tax Invoice, whichever is earlier.

You can understand this time limit for issuing a credit note in detail in our blog ‘All you need to know about invoicing under GST’.

How to issue Credit Note under GST

A credit note format sample under GST is shown below:

credit note
Furnishing details of Credit Note

The details of credit notes issued in a month should be furnished by suppliers in Form GSTR-1 in Table 9 as shown below:
Form GSTR-1
Form GSTR-1
The recipient of the supply will receive these details in Form GSTR-2A as shown below:
Form GSTR-2A
Form GSTR-2A
The recipient has to accept the details and submit in Form GSTR-2. A point to note here is that a supplier will be allowed to reduce his tax liability via a credit note only if the recipient of the supply accepts the credit note details in Form GSTR-2. Once this is done, the recipient’s input tax credit (ITC) will be reversed to the extent of the credit note and the supplier’s tax liability will also be correspondingly reduced.

A credit note can also be issued by the recipient of a supply in cases such as when the taxable value shown in an invoice for an inward supply is less than the actual or tax charged for an inward supply is less than the actual. However, in these cases, revision in the values of an invoice will only be considered when a supplier issues a corresponding debit note for the supply. The details of debit note issued have to be furnished by the supplier and the same have to be accepted by the recipient. Subsequently, the tax liability of the supplier and input tax credit of the recipient will be modified accordingly.

Recent Changes in GST Rates

– Tax rates on over 200 items, including beauty products, chewing gums, chocolates, coffee, and custard powder, among others, were slashed from 28% to 18%.

– Taxpayers with an annual aggregate turnover up to Rs. 1.5 crore need to file return using form GSTR-1 on a quarterly basis.

– Taxpayers with a turnover of above Rs. 1.5 crore need to file it on monthly basis.

– List of goods in the top 28% slab brought down to just 50 from current 228.

– All restaurants will be levied  GST at 5 %  without input tax credit (ITC) benefits.

However five-star restaurants within starred-hotels with room rent above Rs. 7,500 will attract 18 %t and can still avail ITC benefits. Outdoor catering will attract 18 per cent GST with input tax credit benefits.

Few items on 28%  slab are pan masala, aerated water and beverages, cigars and cigarettes, tobacco products, cement, paints, perfumes, ACs, dish washing machine, washing machine, refrigerators, vacuum cleaners, cars and two-wheelers, aircraft and yachts.

How GST will Reduce Tax Evasion

 

It has been 4 months since GST has been introduced in India. Since its introduction on the 1st of July 2017, GST has subsumed various taxes like Service Tax, VAT, and Excise Duty etc. This has not only helped in simplifying the taxation system in India due to removal of multiple taxes but has also removed the cases of double taxation wherein first excise duty was being levied and then VAT was being levied on the same item.

Apart from the above mentioned benefits, another major benefit which will accrue to the Government, which has been less talked about, is the Invoice Matching Concept. This will ensure that there are no revenue leakages and the businesses deposit the rightful tax with the government.

The benefit and methodology of this concept has been explained in this article. However, before we proceed with the benefit of invoice matching, it is important to understand how people were evading taxes in the previous tax regime and how they would not be able to repeat the same in the GST regime.

Tax Evasion during the Previous Tax Regime

In the previous tax regime, let us assume Mr. A has availed services worth Rs. 10 Lakhs from Mr. B. Service Tax @ 15% i.e. Rs. 1.5 Lakhs was required to be paid by Mr. A to Mr. B, post which Mr. B was required to deposit this Rs. 1.5 Lakhs with the Government. As a result, Mr. A was able to take the benefit of Input Tax Credit worth Rs. 1.5 Lakhs.

However, for whatever reason, Mr. B didn’t deposit this amount of Service Tax with the Government – either fully or in part. Let us assume, that in his Service Tax return, he mentions that he has paid Service Tax of Rs. 50,000 to Mr. C and Service Tax of Rs. 50,000 to Mr. D and claims the benefit of input tax credit of such amount paid. The balance Rs. 50,000 was deposited with the Government. In reality however, the amount paid to Mr. C was an actual claim whereas the amount paid to Mr. D was a fake claim.

How GST will reduce Tax Evasion_Illustration 1

Since, in the service tax return, the invoice wise detail was not required to be mentioned and only the consolidated details were required to be mentioned – the government in most cases was not able to track this. Moreover, sending a service tax notice to everyone was not possible – notices were being sent only to a small number of people and the rest of the taxpayers were able to avoid depositing service tax with the government. This system was widely prevalent, especially among small businesses who neither used to receive any service tax notice nor were they liable to do a Service Tax audit.

How the Govt has been able to remove such Leakages in GST Regime

Under the GST Regime, details of all invoices are required to be mentioned in the GST Return. One major reason why invoice wise details are required to be mentioned is that by doing so, the government will be able to track, whether proper taxes have been paid and as a result, ensure that the benefit of input tax credit has not been misused.

Continuing with the above example, if the same transaction happens in the GST Regime i.e. if Mr. A avails services worth Rs. 10 Lakhs from Mr. B, GST @ 18% i.e. Rs. 1,80,000 would be liable to be paid to Mr. B. Mr. B would be required to deposit this with the Government.

In the previous regime – Mr. B used to make fake claims and take the benefit of Input Tax Credit for payments made to Mr. C & Mr. D. Moreover, as the service tax return was a consolidated return – it was difficult to track such fake claims.  However, in the GST Regime – invoice wise details are required to be mentioned. In the GST Regime, these invoices would be matched with the GST Returns of Mr. C & Mr. D, so as to ensure that these are actual claims and not fake claims. This has been explained below:
How GST will reduce Tax Evasion_Illustration 2

In the GST Regime – these transactions would be checked in detail at the GST portal. The GST Return of Mr. B would be matched with the GST Return of Mr. D so as to ensure that the tax has actually been paid. If there are any fake claims – the portal will not pass on the benefit of Input Tax Credit. Thus, till the time Mr. D does not deposit the GST collected from Mr. B – the benefit of Input Tax Credit would not be allowed to Mr. B.

As a result of this – the government’s tax collection would increase massively as the business would not be able to fake claims and evade taxes.

To ensure that the system of invoice matching works perfectly fine – the government has mandated that all invoice-wise details are to be mentioned in the GST Returns. This will certainly increase the compliance burden for the businesses but will help the government ensure that proper taxes are being paid and that there are no revenue leakages.

 

How and When to Issue Credit Note under GST?

 

When to issue Credit Note under GST

A person supplying goods or services should issue a credit note in the following scenarios:

a. Supplies are returned or found to be deficient by the recipient

When goods supplied are returned by the recipient or goods/services supplied are found to be deficient by the recipient, the supplier should issue a Credit Note. The credit note serves the purpose of reducing the value of the original supply.

For example: Mohan Apparels in Delhi supplies 100 shirts @ Rs. 1,000 each to Rakesh Garments in Delhi. CGST @ 6% (Rs. 6,000) and SGST @ 6% (Rs. 6,000) are charged. 10 shirts are returned by Rakesh Garments due to the shirts getting damaged during transit.

Here, Mohan Apparels should issue Rakesh Garments a credit note for the return of 10 shirts. On the value of shirts returned, i.e. Rs. 10,000 (10 units @ Rs. 1,000 each), CGST @ 6% (Rs. 600) and SGST @ 6% (Rs. 600) is to be reversed.

This will result in reduction in the original value of supply, resulting in reduction in the tax applicable on the supply.

b.Decrease in taxable value

When a supplier requires to decrease the taxable value of a supply, he/she has to issue a credit note to the recipient.

For example: Mohan Apparels in Delhi supplies 100 shirts @ Rs. 1,000 each to Rakesh Garments in Delhi. CGST @ 6% (Rs. 6,000) and SGST @ 6% (Rs. 6,000) are charged. On a later date, Mohan Apparels informs Rakesh Garments that if they make the payment for the supply in cash, they will give them a discount of 1% on the value of the shirts. Accordingly, Rakesh Garments makes the payment in cash.

Here, to record the discount given to Rakesh Garments after the supply, Mohan Apparels will issue a credit note. The credit note will be for the discount of Rs. 1,000 (1% on total value of Rs. 1,00,000). On Rs. 1,000, CGST @ 6% (Rs. 60) and SGST @ 6% (Rs. 60) will be reversed.

c. Decrease in GST charged in invoice

When a supplier requires to decrease the rate or value of GST charged in an invoice, he/she has to issue a credit note to the recipient.

For example: Mohan Apparels in Delhi supplies 100 shirts @ Rs. 1,000 each to Rakesh Garments in Delhi. Due to a mistake in data entry, Mohan Apparels charges CGST @ 9% (Rs. 9,000) and SGST @ 9% (Rs. 9,000) on the supply. They later realise that tax has been charged in excess in the invoice and CGST & SGST @ 6% each was applicable on the supply.

Here, Mohan Apparels will issue a credit note to Rakesh Garments. The credit note will be for the amount of tax charged in excess, i.e. CGST of Rs. 3,000 and SGST of Rs. 3,000.

Time limit for issuing Credit Note

A supplier can issue a credit note against a Tax Invoice on or before 30th September of the next financial year or the date of filing of annual return pertaining to the Tax Invoice, whichever is earlier.

How to issue Credit Note under GST

A credit note format sample under GST is shown below:

credit note
Furnishing details of Credit Note

The details of credit notes issued in a month should be furnished by suppliers in Form GSTR-1 in Table 9 as shown below:
Form GSTR-1
Form GSTR-1
The recipient of the supply will receive these details in Form GSTR-2A as shown below:
Form GSTR-2A
Form GSTR-2A
The recipient has to accept the details and submit in Form GSTR-2. A point to note here is that a supplier will be allowed to reduce his tax liability via a credit note only if the recipient of the supply accepts the credit note details in Form GSTR-2. Once this is done, the recipient’s input tax credit (ITC) will be reversed to the extent of the credit note and the supplier’s tax liability will also be correspondingly reduced.

A credit note can also be issued by the recipient of a supply in cases such as when the taxable value shown in an invoice for an inward supply is less than the actual or tax charged for an inward supply is less than the actual. However, in these cases, revision in the values of an invoice will only be considered when a supplier issues a corresponding debit note for the supply. The details of debit note issued have to be furnished by the supplier and the same have to be accepted by the recipient. Subsequently, the tax liability of the supplier and input tax credit of the recipient will be modified accordingly.

 

When Can your GST Registration be Cancelled

 
Scenarios of GST registration cancellation by an officer
The business has been discontinued or transferred fully, or amalgamated with another entity, demerged or disposed of
There is a change in the constitution of the business
A registered person has failed to comply with the GST provisions
A composition tax payer has not furnished returns for 3 consecutive quarters
A regular dealer has not furnished returns for a continuous period of 6 months
A person who has taken voluntary registration has not commenced business within 6 months from the date of registration
A person does not conduct business from the declared place of business
A person issues an invoice or bill of supply without actually supplying goods or services
Registration has been obtained by fraud, wilful misstatement or suppression of facts
The benefit of input tax credit or reduction in rate of tax has not been passed on to consumers in the form of reduction in prices

Liability when registration is cancelled

A person whose registration is cancelled should either reverse the input tax credit availed on inputs in stock or pay tax equal to the input tax credit availed.

Return to be filed in case of GST registration cancellation

Return Due Date Details to be furnished
Form GSTR-10 Within 3 months after date of order of cancellation Furnish details of inputs and capital goods held, tax paid and payable.

Cancellation of registration by an officer due to non-compliance with the GST provisions is a serious and damaging event for any business. Registered persons should avoid these scenarios where their registration is forcefully cancelled.

 

Time of Issue of Invoice in Continuous Supply under GST

time of issue of invoice in continuous supply under gst

For example: A contract for supply of mineral water to a company for 6 months, supply of housekeeping services to a company for a financial year, supply of broadband services, etc. Let us understand the meaning of continuous supply under GST and the time of issue of invoice in continuous supply of goods or services.

Continuous supply of goods

Continuous supply of goods is a supply of goods provided or agreed to be provided continuously or on recurring basis, under a contract, and for which the supplier invoices the recipient on a regular or periodic basis.

Continuous supply of services

Continuous supply of services is a supply of services which is provided or agreed to be provided continuously or on recurring basis, under a contract, for a period exceeding 3 months with periodic payment obligations.

Time of issue of invoice in continuous supply

Continuous supply of goods

In case of continuous supply of goods, invoice should be issued at the time when each payment is received by the supplier or statement of accounts is issued.

Continuous supply of services

In case of continuous supply of services, invoice should be issued:

  1. Where the due date of payment is known in the contract- The invoice should be issued on or before the due date of payment.
  2. Where the due date of payment is not known in the contract- The invoice should be issued before or at the time when the supplier receives the payment.
  3. Where the payment is linked to the completion of an event- The invoice should be issued on or before the date of completion of the event. For example: A works contract for construction of a building, where payment will be made on completion of each stage of construction. In this case, the invoice should be issued on or before each stage of construction is completed.

Hence, specific guidelines have been laid down under GST on the time of issue of invoice in continuous supply of goods and services.

 

How GST will Reduce Tax Evasion

 

 

It has been 4 months since GST has been introduced in India. Since its introduction on the 1st of July 2017, GST has subsumed various taxes like Service Tax, VAT, and Excise Duty etc. This has not only helped in simplifying the taxation system in India due to removal of multiple taxes but has also removed the cases of double taxation wherein first excise duty was being levied and then VAT was being levied on the same item.

Apart from the above mentioned benefits, another major benefit which will accrue to the Government, which has been less talked about, is the Invoice Matching Concept. This will ensure that there are no revenue leakages and the businesses deposit the rightful tax with the government.

The benefit and methodology of this concept has been explained in this article. However, before we proceed with the benefit of invoice matching, it is important to understand how people were evading taxes in the previous tax regime and how they would not be able to repeat the same in the GST regime.

Tax Evasion during the Previous Tax Regime

In the previous tax regime, let us assume Mr. A has availed services worth Rs. 10 Lakhs from Mr. B. Service Tax @ 15% i.e. Rs. 1.5 Lakhs was required to be paid by Mr. A to Mr. B, post which Mr. B was required to deposit this Rs. 1.5 Lakhs with the Government. As a result, Mr. A was able to take the benefit of Input Tax Credit worth Rs. 1.5 Lakhs.

However, for whatever reason, Mr. B didn’t deposit this amount of Service Tax with the Government – either fully or in part. Let us assume, that in his Service Tax return, he mentions that he has paid Service Tax of Rs. 50,000 to Mr. C and Service Tax of Rs. 50,000 to Mr. D and claims the benefit of input tax credit of such amount paid. The balance Rs. 50,000 was deposited with the Government. In reality however, the amount paid to Mr. C was an actual claim whereas the amount paid to Mr. D was a fake claim.

How GST will reduce Tax Evasion_Illustration 1

Since, in the service tax return, the invoice wise detail was not required to be mentioned and only the consolidated details were required to be mentioned – the government in most cases was not able to track this. Moreover, sending a service tax notice to everyone was not possible – notices were being sent only to a small number of people and the rest of the taxpayers were able to avoid depositing service tax with the government. This system was widely prevalent, especially among small businesses who neither used to receive any service tax notice nor were they liable to do a Service Tax audit.

How the Govt has been able to remove such Leakages in GST Regime

Under the GST Regime, details of all invoices are required to be mentioned in the GST Return. One major reason why invoice wise details are required to be mentioned is that by doing so, the government will be able to track, whether proper taxes have been paid and as a result, ensure that the benefit of input tax credit has not been misused.

Continuing with the above example, if the same transaction happens in the GST Regime i.e. if Mr. A avails services worth Rs. 10 Lakhs from Mr. B, GST @ 18% i.e. Rs. 1,80,000 would be liable to be paid to Mr. B. Mr. B would be required to deposit this with the Government.

In the previous regime – Mr. B used to make fake claims and take the benefit of Input Tax Credit for payments made to Mr. C & Mr. D. Moreover, as the service tax return was a consolidated return – it was difficult to track such fake claims.  However, in the GST Regime – invoice wise details are required to be mentioned. In the GST Regime, these invoices would be matched with the GST Returns of Mr. C & Mr. D, so as to ensure that these are actual claims and not fake claims. This has been explained below:
How GST will reduce Tax Evasion_Illustration 2

In the GST Regime – these transactions would be checked in detail at the GST portal. The GST Return of Mr. B would be matched with the GST Return of Mr. D so as to ensure that the tax has actually been paid. If there are any fake claims – the portal will not pass on the benefit of Input Tax Credit. Thus, till the time Mr. D does not deposit the GST collected from Mr. B – the benefit of Input Tax Credit would not be allowed to Mr. B.

As a result of this – the government’s tax collection would increase massively as the business would not be able to fake claims and evade taxes.

To ensure that the system of invoice matching works perfectly fine – the government has mandated that all invoice-wise details are to be mentioned in the GST Returns. This will certainly increase the compliance burden for the businesses but will help the government ensure that proper taxes are being paid and that there are no revenue leakages.

GST Council’s Recommendations -23rd Meeting

 

Return filing

1.GSTR-3B filing to be done till March ‘18

GSTR-3B, a summarised monthly return, should now be filed till March ’18. Earlier, Form GSTR-3B was applicable only till December ’17. Filing of GSTR-3B and payment of tax should be done by 20th of the succeeding month.

2.Quarterly filing of GSTR-1 for persons with aggregate turnover less than Rs. 1.5 Crores

Persons whose annual aggregate turnover is less than Rs. 1.5 Crores can file GSTR-1 on quarterly basis, as per the calendar below:

Return Period GSTR-1 filing date
July-Sep ‘17 31st Dec ‘17
Oct-Dec ‘17 15th Feb ‘18
Jan-Mar ‘17 30th April ‘18

3.Relaxation in GSTR-1 filing date for persons whose aggregate turnover exceeds Rs. 1.5 Crores

Persons whose annual aggregate turnover exceeds Rs. 1.5 Crores have to file GSTR-1 on monthly basis. However, the due dates have been relaxed as given below:

Return Period GSTR-1 filing date
July-Oct ‘17 31st Dec ‘17
Nov ‘17 10th Jan ‘18
Dec ‘17 10th Feb ‘18
Jan ‘17 10th Mar ‘18
Feb ‘17 10th April ‘18
Mar ‘18 10th May ‘18

4.Revised due dates for other GST forms

The due dates for certain forms has been revised as given below:

Form Due Date
GST ITC-04 (Details of inputs/capital goods sent/received from job worker) 31st Dec ‘17
GSTR-4 (Return for composition tax payers) for July-Sept ‘17 24th Dec ‘17
GSTR-5 (Return for non-resident tax payers) for July ‘17 11th Dec ‘17
GSTR-5A (Return for online information and database access/retreival service providers) for July ‘17 15th Dec ‘17
GSTR-6 (Return for Input Service Distributors) for July ‘17 31st Dec ‘17
TRAN-1 (Application for claim of transitional input tax credit) 31st Dec ‘17

5.Credit of late fee paid for late filing of GSTR-3B for July, August & September ‘17

The late fee applicable for late filing of GSTR-3B for July, August and September ’17 had earlier been waived by the Government. Tax payers who have already paid the late fee for these months will receive a credit of the same in their Electronic Cash Ledger. This can be utilized for paying future tax liabilities.

6.Reduction in late fee for late filing of GSTR-3B for persons with Nil tax liability

Persons who have Nil tax liability in GSTR-3B from October ’17 onwards have to pay late fee of Rs. 20 per day for late filing of GSTR-3B. Earlier, this was Rs. 200 per day.

7. Due dates for filing GSTR-2 and GSTR-3 for July ’17- March ‘18 will be decided

The due dates for filing GSTR-2 and GSTR-3 will be decided by a Committee of officers. However, filing of GSTR-1 and GSTR-3B has to be done as per the due dates. For the period of July ’17 to March ‘18, filing of GSTR-1 will be allowed to be done without filing GSTR-2 and GSTR-3 for the previous month.

 Registration

1.Exemption from mandatory registration for persons providing services through e-commerce operators

Persons making supplies through e-commerce operators were earlier required to mandatorily register, irrespective of their turnover. Now, persons providing services through e-commerce operators have been exempted from mandatory registration. This means that persons providing services through e-commerce operators now need to register only when their turnover crosses the threshold limit of Rs. 10 Lakhs (for special category States, i.e. Arunachal Pradesh, Assam,  Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand) and Rs. 20 Lakhs (for rest of India).

Composition scheme

1.Rate of tax to be 1% for manufacturers

Earlier, manufacturers were required to pay tax @2% of their turnover. This has now been changed to 1%.

2.For traders, turnover to include only taxable supplies

Under the composition scheme, tax is to be paid as a percentage of turnover. Earlier, even exempted supplies were included in the calculation of turnover. Now, for traders, it has been decided that only value of taxable supplies will be included for calculation of aggregate turnover.

3.Composition tax payers can supply services upto Rs. 5 Lakhs per annum, which will be exempted from tax

Previously, except restaurants, service providers were not allowed to register as composition tax payers. Now, persons registered as composition tax payers can supply services upto Rs. 5 Lakhs per annum. This supply will also be exempted from tax.

4.Threshold limit to register under the composition scheme increased to Rs. 1.5 Crores

Recently, the threshold limit for a person to register under the composition scheme was increased to Rs. 1 Crore in all States except special category States. This has now been further increased to Rs. 1.5 Crores. This means that persons whose turnover does not exceed Rs. 1.5 Crores are eligible to register as composition tax payers.

GST rates

1.Only 50 items will now attract 28% GST

The list of items falling in the 28% GST rate list has been pruned and only 50 items will now attract 28% GST. Items in the 28% GST category whose rate has been reduced include detergents, furniture, shampoos, wrist watches and chocolates. Goods like washing machines, refrigerators, majority of construction materials, cement, automobiles have been retained at 28%.

2.Restaurants

  • All stand-alone restaurants, whether air conditioned or not, will attract 5% GST, without Input tax credit (ITC). Food parcels or takeaways will also attract 5% GST, without ITC.
  • Restaurants in hotel premises where room tariff is less than Rs. 7,500 per unit per day will attract 5% GST, without ITC
  • Restaurants in hotel premises where room tariff is Rs. 7,500 and above per unit per day will attract 18% GST, with full ITC

3.Reduction in GST rates for other items

13 items have been moved from 18% to 12%, 6 items from 18% to 5%, 8 items from 12% to 5% and 6 items from 5% to nil.

Hence, the GST Council’s recommendations in this meeting are helpful for small businesses.  Composition scheme has been made more attractive with the recent measures. GST rate reduction for various items has been focused on consumers and reducing their household expenses. The extension of return filing dates is a positive measure which will give businesses sufficient time to effectively comply under GST. Overall, these measures will ease the compliance burden for taxpayers as well as bring greater savings for consumers.

 

GSTR-2 Filing using Tally.ERP 9 Release 6.2

GSTR2 filing using Tally ERP9- update tally data with only changed invoices

An inconvenient situation awaits business owners and tax consultants after filing GSTR-2 returns. The number of invoices that get reconciled in the invoice matching process can vary from single digit to any number of digits depending on the nature and size of business. Some purchase invoices might have been added, some rejected, some modified or some kept pending for reconciling in the next round of filing.

How does the business owner ensure that his books reflect the same data as exactly as it appears in the updated GSTR-2 which is filed in the GSTN portal?
Let us understand this problem from its context clearly. There are three versions of the same data involved in the GSTR-2 filing process, from three different places.

a.Version 1: If you are a Business owner

If you are a business owner, you typically share your books with your tax consultant to help him file your GSTR-2 returns. These books will contain transactional details of all inward supplies which you have entered. Your tax consultant will engage in reconciling this with the data in GSTR-2 which is downloaded from the GSTN portal.While your tax consultant is busy reconciling data, you will not stop your routine activities. You will continue to key in details of new transactions in the very books you shared with your consultant.

b. Version 2: If you are a tax consultant

If you are a tax consultant filing GSTR-2 returns for your clients, then it is quite likely that you are handling the books of several clients in your office. This could be either from a single computer or multiple computers used by your staff.While your client is busy with his day-to-day business affairs, you will be making updates in his books at the same time. As part of the invoice matching process, you might add missing invoices, reject a few invoices or modify some invoices. A few other invoices might be kept pending for the next round of returns, in consultation with the client.

The order in which invoices appear in the client’s books is not how invoices necessarily appear in the GSTR-2 which contains entries made by the suppliers of your client. The order is different and thereby invoice matching has to be done meticulously. At the end of this activity, you will file the updated GSTR-2 in the GSTN portal.
Now that you have made updates in your client’s books, how will you communicate these changes back to your client?

c. Version 3: Updated GSTR-2 filed on the GSTN portal

The updated GSTR-2 is filed on the GSTN portal by the tax consultant. This is the final version of purchase invoices as reconciled between suppliers and buying dealers.

As a tax consultant, how will you know that the status of reconciliation will be retained exactly as updated by you when your client shares the books again for the next round of GSTR-2 filing?

As a business owner, if your books don’t reflect the same GSTR-2 as filed in the GSTN portal, then you will have trouble filing the next round of GST returns.

Surely, nobody wants to end up having three different versions of the same GSTR-2 data!

Updating Books with Data used for Filing GSTR-2 Return

Can a business owner simply copy and paste the updated GSTR-2 data on his books, for a particular month?
This will result in errors. The order in which invoices are entered in the books is not how they necessarily appear in the GSTR-2 filed in the portal. It seems as if this task will have to be done manually by cross-checking each invoice in GSTR-2 with books. Imagine how cumbersome and time consuming this could get?

Can the tax consultant update his clients with the list of all only those invoices which have been changed with confidence?
This is where Tally.ERP 9 Release 6.2 comes to the rescue.

Tally.ERP 9 Release 6.2 marks all invoices in which changes are made

If you are a tax consultant:

Before starting the invoice matching process, select Yes to Mark changed vouchers in F11 > Accounting Features. Tally.ERP 9 will start marking all invoices in which you make changes. It will also mark invoices whose status you update as – Accepted, Modified, Rejected, or Pending.

After the completion of invoice matching, you can export an XML file containing only the marked invoices to your client.

What’s more, each customer’s exported file will have a unique name, so you can finish filing all their GSTR-2 returns at one go and then share the updated lists of changed invoices with respective clients.

In the next round of filing, you can use the filters based on the different Statuses for invoices as updated by you previously. Drill down to Pending Invoices to restart  the activity of reconciliation for the subsequent month.

If you are a Business Owner:

While your tax consultant is busy reconciling invoices in your GSTR-2, you can continue with your business activities as usual. In case, your consultant makes changes (add, reject, modify, pending) to any invoices, he will be able to share with you the list of only those invoices in which changes have been made. He will export the list as an XML file to you.

Import the file from Gateway of Tally > Import Data > Vouchers and update your books with confidence! No worries about overwriting or appended transactions getting erased.
You get to update your books with the same data as it reflects in the GSTR-2 submitted in the GSTN portal.
At any point in time, you will always have authentic data, and you can easily identify transactions which have been changed for your own record and reference.

Sign up with your email address to receive news and updates

We respect your privacy