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How to Manage Unutilised Input Tax Credit?


Let us consider goods which were rated at 28% at the time of purchase by the trader, but which dropped to 18% at the time of sales i.e. post the date on which the GST rate changes took effect. For a moment if we assume that the buying and selling prices are consistent, it effectively means that the trader is using 28% worth of GST input tax credit to offset a GST tax liability worth 18%, and thus is left with an effective unutilised ITC worth 10%.

Likewise, the following are the levels of potential unutilised ITC, GST rate changes being the cause:

GST Rate Changes Potential Unutilised ITC Levels
28% to 18% 10%
28% to 12% 16%
28% to 5% 23%
18% to 12% 6%
18% to 5% 13%
12% to 5% 7%
5% to 0% 5%
3% to 0% 3%

Now, the question which arises is – what happens to this unutilised ITC. Will it continue to lie unutilised in the credit ledger, leading to blocked capital? Or, is there a way in which this can be utilised to offset tax liabilities? The good news is – yes, it can be managed, and here’s sharing 2 options you have as a trader to ensure that your unutilised ITC doesn’t go waste.

Option 1: Offsetting the Input Tax Credit with Tax Liability arising from sales of goods for which rates have not changed

Considering that a sizeable number of goods have been rated down from 28% to 18%, let’s take an example from the same. Let us assume that a trader has purchased Stock A, which belongs to this category of goods, worth INR 1000 before the rate change, and is planning to sell it after the rate change has happened, at an average margin of 10%.

  • Cost to the Trader = INR 1000
  • GST Paid = INR 280 = ITC availed
  • Selling Price = INR 1100 (Assuming a margin of 10%)
  • GST Collected = INR 198 = Tax Liability
  • ITC Unutilised = INR 280 – INR 198 = INR 82

Now, realistically speaking, the same trader must also be dealing with other goods, for whom rates have not changed at all. Let us assume that the trader has also purchased Stock B worth INR 1000, which belongs to this category of goods, rated at 18%, and sells it, again at the same average margin of 10%.

  • Cost to the Trader = INR 1000
  • GST Paid = INR 180 = ITC availed
  • Selling Price = INR 1100 (Assuming a margin of 10%)
  • GST Collected = INR 198 = Tax Liability
  • ITC Unutilised = INR 180 – INR 198 = – INR 18 = Pending Tax Liability

Thus, one key observation from here is, that in the scenario where the GST rates have not changed, the trader will always be collecting more GST from his customer, compared to GST which he is paying to his supplier – the simple reason being that his selling price will always be higher than his cost price, because he will always be adding value to the product and thus selling his goods at some margin.

When he files the returns for the month, the unutilised ITC resulting from sales of Stock A i.e. INR 82 can be used to offset the pending tax liability resulting from sales of Stock B i.e. INR 18. It is also obvious, that more the value of Stock B, more will be the tax liability, and a point is bound to come where the unutilised ITC resulting from sales of Stock A can be fully utilised over a period of time.

Option 2: Refund of Unutilised Input Tax Credit resulting from Inverted Duty Structure

As per the GST law, a taxpayer can claim refund of unutilised ITC at the end of the relevant tax period, thus on a monthly basis. Reversal of input tax credit will be granted where the input tax credit accumulation has taken place on account of inverted duty structure – wherein the rate of tax on inputs are higher than the rate of tax on output supplies. However, there are certain notified supplies, where refund of ITC will not be allowed, even if credit has got accumulated due to inverted duty structure. Time lines have been set for processing of refund claims and ITC claims not settled within 60 days will be paid with interest @6%. Moreover, 90% of the claim would be paid within 7 days of acknowledgement of claim on provisional basis. Claims are to be filed with minimum documentation and the refund amount will be credited directly to the claimant’s bank account. The process is online and hassle free and with minimum interface with tax authorities.

In conclusion, it can be said that traders need not be concerned about their unutilised ITC entitlement due to the recent GST rate changes. Even if the needful is not achieved by offsetting the input tax credit under GST against the tax liability resulting from sales of other goods, there is still a neat provision wherein the refund of such ITC can be claimed, in the background of the inverted duty structure.


Revised GST Rates to Watch Out For


One of the significant changes brought about was – the pruning of the tariff heads under the 28% GST tax slab, from 224 to just 50. One of the key reasons for the same was a renewed understanding by the GST Council of what exactly can be called a luxury good or sin good or demerit good, much of which was fueled by public opinion and the viewpoints of businesses across the country. In addition, revised GST rates have been specified for goods across other GST slabs as well.

Please find below a list of the major rate changes that you need to watch out for:

GST Tax Rate Changes for Goods

28% to 18%

Food Items Cocoa butter, fat, oil powder, cocoa butter, fat, oil powder, coffee extracts, essence and concentrates, chocolates, chewing gums, bubble gums, flour food preparations, groats, starch or malt extracts, waffles and wafers containing chocolate
Electrical Equipment Wires, cables, conductors, insulators, plugs, switches, sockets, fuses, relays, connectors, boards, panels, consoles
Construction Materials Particle and fibre boards, plywood, wooden boards, paving blocks, sanitary wares, floor covering, baths, showers, sinks, washbasins, seats, marble & granite slabs and tiles, ceramics, doors, windows, aluminium frames, plaster boards & sheets, articles of cement / concrete / stone / asphalt / slate / mica, ceramic flooring blocks, pipes, conduits, pipe fittings, mirrors, safety glasses, glass sheets, glass wares, rubber tubes and miscellaneous articles of rubber
Construction Equipment Fork lifts, lifting and handling equipment, bull dozers, excavators, loaders, road rollers, earth moving and levelling machinery
Chemicals Solvent, thinners, hydraulic fluids, anti-freezing preparation, explosives, anti-knocking preparations, fireworks
Household Materials Furniture, mattresses, beddings, wallpapers, wall coverings, artificial flowers, foliage and artificial fruits
Travel Equipment Trunks, suitcases, vanity cases, brief cases, travelling bags, hand bags
General Hygiene Detergents, washing & cleaning preparations, room deodorisers
Personal Hygiene Liquids or Creams for washing skin, shampoos, hair creams, hair dyes, henna powder or paste, pre-shave, shaving or after-shave preparations, deodorants, bath preparations, razors and razor blades
Cosmetics Perfumery, cosmetic or toilet preparations, perfumes and toilet waters, beauty or make-up preparations
Electrical & Electronic Machinery Fans, pumps, compressors, lamp and light fittings, electrical apparatus for radio and television broadcasting, electrical and electronic weighing machinery, sound recording or reproducing apparatus, traffic control equipment for transports, escalators
Domestic Appliances Cutlery, stoves, cookers, non-electric appliances
Office Equipment Multi-functional printers, cartridges, office & desk equipment
Daily Utilities Primary cell and batteries, vacuum flasks, lighters
Safety Equipment Fire extinguishers and fire extinguishing charge
Health & Wellness Equipment Physical exercise equipment, festival and carnival equipment, swings, shooting galleries, roundabouts, gymnastic and athletic equipment
Musical Instruments Including parts
Optical Devices Goggles, binoculars, telescope, cinematographic cameras, projectors
Scientific Equipment Cooling towers, pressure vessels, reactors, microscopes, specified laboratory equipment, specified scientific equipment for meteorology, hydrology, oceanography, geology
Sewing Equipment Crankshaft for sewing machine, tailor’s dummies, bearing housings, gears and gearing, ball or roller screws, gaskets
Accessories Wrist watches, clocks, watch parts, article of apparel & clothing accessories of leather, guts, fur skin, artificial fur, saddlery and harness

28% to 12%

Wet Grinders equipped with stone as the grinding material
Tanks and other armoured fighting vehicles

28% to 5%

Aircraft Components Engines, tyres and seats

18% to 12%

Food Items Condensed milk, refined sugar and sugar cubes, pasta, curry paste, mayonnaise and salad dressings, mixed condiments and mixed seasoning, diabetic food
Medicinal Items Medicinal grade oxygen
Stationery Printing ink
Accessories Hand bags and shopping bags of jute and cotton, hats (knitted or crocheted), spectacles frames
Machinery & Machine Parts Specified parts of agricultural, horticultural, forestry, harvesting or threshing and sewing machines
Furniture Wholly made of bamboo or cane

18% to 5%

Food Items Puffed rice chikki, peanut chikki, sesame chikki, revdi, til revdi, khaza, kazuali, groundnut sweets, gatta, kuliya, flour of potatoes put up in unit container bearing a brand name, chutney powder
Chemicals Fly ash, sulphur recovered in refining of crude, fly ash aggregate with 90% or more fly ash content

12% to 5%

Food Items Desiccated coconut, idli and dosa batter
Textiles Narrow woven fabric including cotton newar, coir cordage and ropes, jute twine, coir products, worn clothing
Leather Goods Finished leather, chamois and composition leather
Fishing Equipment Net and hooks
Construction Materials Fly ash brick

5% to NIL

Food Items Guar meal, hop cones (other than grounded, powdered or in pellet form), dried vegetables, unworked coconut shell, fish frozen or dried (not put up in unit container bearing a brand name), khandsari sugar

3% to NIL

Accessories Bangles of lac and shellac

GST Tax Rate Changes for Services

The following are the revised GST rates for specified services, which have been introduced:


Earlier, the GST tax rate in India for various types of restaurants were different – rates for AC restaurants was 18%, rates for non-AC restaurants was 12%, and for small eateries which were expected to come under composition scheme, the rate was 5%. However, the point to be noted is, earlier AC as well as non-AC restaurants, who were registered as regular dealers were eligible to claim ITC; post the GST Council meet, the following is how the GST slab rates for restaurants have panned out:

Category GST Rate ITC Eligibility
All stand-alone restaurants irrespective of air-conditioned or otherwise 5% Without ITC
Food parcels or takeaways 5% Without ITC
Restaurants in hotel premises having room tariff of less than INR 7500 / day 5% Without ITC
Restaurants in hotel premises having room tariff of INR 7500 / day and above 18% With Full ITC
Outdoor Catering 18% With Full ITC

Protected Monuments

  • Admission to protected monuments – Exempted.

Job Work for Handicrafts

  • Job work services in relation to manufacture of handicraft goods – in respect of which the casual taxable person has been exempted from obtaining registration – 5% with full ITC

GST Forms & Compliance for E-Commerce


Not just this, but e-commerce operators will need to report the HSN / SAC code of the supplies being made, and the applicable rates at an item level, individually. This will require them to map every sale done by the e-commerce seller and ensure that TCS is collected at the right value. Thankfully, TCS has been deferred till March 2018, till further notification, but that does not nullify the fact that for a seller dealing in e-commerce, GST compliance in general and its implementation in specific is a tad cumbersome,

What is also bound to increase the challenges and costs for compliance in the e-commerce scheme of things, is the fact that e-commerce operators will need to register in each State and file the reports separately on a monthly basis – and in case an e-commerce operator does not have an establishment in a State, any person representing the e-commerce operator will be liable to pay tax.

In such circumstances, if you are a seller on an online platform, you need to be on top of your compliance needs, and be conversant about the various GST forms you need to deal with, in order to file GST compliant returns.

GST Forms for E-Commerce

The following are the various GST forms, and the various actionable which you need to be aware of, if you are involved in e-commerce:

GST Form Due Date E-Commerce Entity Actionable
GSTR 8 10th of the next month Operator Furnish gross value of supplies made through the platform and value of supplies returned, by each e-commerce supplier. The difference between the supplies made and supplies returned will be the net amount liable for TCS. For registered taxable persons, provide invoice-wise details in Table 3A and for unregistered persons, provide aggregate value of supplies in Table 3B.
GSTR 1 10th of the next month Supplier

Furnish all outward supplies attracting TCS, operator wise and rate wise for the following:·        Registered persons in Table 4C.

·        Inter-State supplies to unregistered persons, where the invoice value is more than INR 2.5 Lakhs, in Table 5B.

·        Intra-State supplies to unregistered persons in Table 7A (2).

·        Inter-State supplies to unregistered persons, where the invoice value does not exceed INR 2.5 Lakhs, in Table 7B (2).

Amendments to furnished details of outward supplies made to unregistered persons in previous tax periods, if any, need to be made in Table 10A (1) for Intra-State supplies and Table 10B (1) for Inter-State, operator wise and rate wise.

GSTR 2A 11th of the next month Supplier Go through the auto-generated form, which will include the auto-populated details of TCS credit accrued in Table 7B, based on the TCS collected by the operator in the previous month via the GSTR 8 form.
GSTR 2 15th of the next month Supplier Furnish the details of TCS collected by the operator in Table 9B.
GST MIS 3 On or before the last date of the month in which matching has been carried out Supplier Check the electronically generated form containing any discrepancy in the details furnished by operator and declared by you, and make suitable rectifications in the statement of outward supplies.
GST MIS 4 On or before the last date of the month in which matching has been carried out Operator Check the electronically generated form containing any discrepancy in the details furnished by you and declared by supplier, and make suitable rectifications.
GSTR 3 20th of the next month Supplier Where the discrepancy is not rectified, an amount to the extent of discrepancy shall be added to the output tax liability of the supplier in this form, for the month succeeding the month in which the details of discrepancy are made available.
GSTR 9B 31st December of next Financial Year Operator Annual Return

Given, that TCS has been deferred for the time being till March 2018, e-commerce operators as well as suppliers are expected to breathe easy for a few months. However, it is always advisable to be prepared for the impending compliance activity, rather than struggle later, to ensure that the business continues to flow smoothly.


How to File GST Return(Form GSTR-1)using Tally.ERP 9 Release 6


We are happy to announce that GST-ready Tally.ERP 9 Release 6.1 is available now. Using this release, you will be able to generate Form GSTR-1 as per the requirements of GST Department. To upgrade to the new release click here.

Topics covered

  1. Introduction to Form GSTR-1
  2. GST Practitioner files our returns, what should we do?
  3. We take care of filing our own returns, how should we proceed?
  4. We are GST Practitioners (CA, STP or accountants), how do we go about GSTR 1 filing?
  5. From where can we get the offline utility for filing GSTR-1?

Introduction to Form GSTR-1

Form GSTR-1 is a form in which the business needs to provide the details of its outward supplies. Outward Supplies means all supplies consisting of sales to other businesses, sales to consumers, exports, advance receipts from customers, and so on.
There are multiple tables in the form, and in each table businesses have to furnish details in different styles, for example,
a) It is required for businesses to present “Sales done to other registered business (B2B Invoices)” bill-by-bill with details of the buyer.
b) Present “Sales done to consumers of small amounts (B2CS Invoices)” as a summary and not bill-by-bill.
c) Present “Sales done to consumers of large amounts (B2CL Invoices)” bill-by-bill with details of consumer.


GST Practitioner will file our GST returns, what should we do?

We have observed that most businesses in India rely on their GST Practitioners to help them with their Tax Returns. Expectation is that it will continue to be the same for a while.

In such cases, your business will surely require help from both the GST Practitioners and the software you use, to provide you with all the relevant information, which will help you to file GST Returns and remain compliant.

You can do one of the following based on your style of working:
a) You can take a backup of your company data and share it with your GST Practitioner.
b) You can go to Form GSTR-1 report, make corrections/changes to vouchers that appear in Incomplete/Mismatch of information and export the same to Microsoft Excel Template, which can then be shared with your GST Practitioner. 

We take care of filing our own GST returns. How should we proceed?

There will be businesses that will want to file their GSTR-1, at the request of their GST Practitioners on their own. For such businesses, the GST-ready software that they are using, should allow them to generate GSTR-1.

GST-ready Tally.ERP 9 allows generate GSTR-1 from within the product itself. You may go to Form GSTR-1 report, apply corrections to vouchers that appear in Incomplete/Mismatch of information and export the same to MS Excel Template, which can then be validated using GSTN offline tool and uploaded to the GSTN portal. Watch this space for more details about generating Form GSTR-1 from Tally.ERP 9.

We are GST Practitioners (CA, STP or accountants). How do we go about GSTR-1 filing?

If you are a GST Practitioner. You may be digitising books for your clients using GST-ready Tally.ERP 9 and will file GST returns using that data itself. GST-ready Tally.ERP 9 allows generate GSTR-1 from within the product itself. You may go to Form GSTR-1 report, apply corrections to vouchers that appear in Incomplete/Mismatch of information and export the same to MS Excel Template, which can then validated using GSTN offline tool and uploaded to the GSTN portal.

For the rest of your clients, you may receive data in following manner:
1) Data backup from GST-ready Tally.ERP 9.
2) GSTR-1 Excel Template as required by GSTN.
3) Data from any other software (not covered in this blog).

If you have received data backup from GST-ready Tally.ERP 9, then you can restore the backup and generate the GSTR-1 as discussed earlier. 

With GST-Ready Tally.ERP 9, you can generate GSTR-1 from within the product. You can go to Form GSTR-1 report, apply corrections to vouchers that appear in Incomplete/ Mismatch of information and export the same to MS Excel Template. This can then be validated using the GSTN offline tool, and uploaded to the GSTN portal.

Filing GSTR-1 using Tally.ERP 9 Release 6.1

If you have received GSTR-1 MS Excel Template as required by GSTN, then you need to import that in the offline tool, generate the JSON file and upload the JSON file to GSTN portal.

From where can we get the Offline Utility for filing GSTR-1?

You can download the offline tool here.

Note: Refer to the “System Requirements” section on the GST Department page and ensure that your system matches the system requirements prescribed. In addition, read the instructions provided to install the offline tool.

Managing GSTR 3B in GST-Ready Tally.ERP 9 Release 6


Topics covered

Introduction to Form GSTR 3B
GSTR-3B filing made simple with GST software Tally.ERP 9
Form GSTR-3B in Tally.ERP 9 ()

Introduction to Form GSTR-3B

The 23rd GST Council Meeting was held in Guwahati on the 10th of November 2017. As per the latest announcements, the time period for filing GSTR-2 and GSTR-3 for the months of July 2017 to March 2018, will be determined by a Committee of Officers.

However, filing of GSTR-1 will be continued for the entire period without having to file GSTR-2 and GSTR-3 for the previous months. This does not mean that collection and payment of GST is also deferred until the time mentioned. Regular registered taxpayers are expected to file the details of their outward and inward supplies, for the months of December 2017 to March 2018. This can be done through the simple form GSTR-3B.

GSTR-3B filing made simple with GST software Tally.ERP 9

A specific feature has been built-in to make it simple for you to file GSTR-3B in Tally.ERP 9 Release 6. You can print the form in a Word document which will contain the same fields as required in the GSTN portal. Fill in the details, review and take a printout. While filing in the GSTN portal, you can fill in the same values in appropriate fields on the portal by looking at the printed GSTR-3B. You can be confident that you have filed your GSTR-3B with the right values.

What is more important, is that outward supplies that you declared in GSTR-3B filed for the aforementioned months, matches with values in GSTR-1 of the same month which you will be filing later.
Also, once the government resumes GSTR-2 and GSTR-3, it will be easier to reconcile and prepare the returns since the source of the data is common for both GSTR-1 and GSTR-3B, which you might have filed by then.

To know more about GSTR-3B in Tally.ERP 9 Release 6, 

Download or click on the latest version in the Updates section available in the Information Panel of your Tally.ERP 9 to upgrade.

Form GSTR-3B in Tally.ERP 9

How to generate Form GSTR-3B in Tally.ERP Release 6.0.3 to file GST returns for July and August ‘2017. Please Click this video

Download or click on the latest version in the Updates section available in the Information Panel of your Tally.ERP 9 to upgrade.


We are dedicated to walking the GST journey with you and ensure that our product Tally.ERP 9 meets all your GST compliance requirements in a simple and easier manner at every step. We will keep you posted on all the latest enhancements which we continue to build in to our products, to stay on par with statutory updates as announced by the Government.

GST Composition Scheme Changes


GST Composition Scheme Changes – For better or for worse?

Ever since GST was launched on 1st July, the implementation of the law has undergone a multitude of changes. On various fronts, the government has softened its stand and has brought in significant changes to the original law – for instance, GST composition scheme changes, rate changes etc. – to make life easier for the small business, thus allowing for better adaption of GST across the country. The 22nd and 23rd GST Council meetings on the 6th of October and 10th of November, 2017 are testimony to this fact.

One of the major aspects of GST which seems to be under the state of constant change is the composition scheme. We have now seen the threshold limit for composition change from INR 50 Lakhs to INR 75 Lakhs, then from INR 75 Lakhs to INR 1 Crore, and as one reads this, the Council is already deliberating the possibility of increasing this limit to INR 1.5 Crore, and is looking to alter the GST Law accordingly.

On paper, this surely does come across as a huge relief. According to the Finance Minister Mr. Arun Jaitley, this change will bring about 15.5 lakh companies with a turnover of less than INR 1 Crore, into the composition fold. The reduced tax rates and reduced periodicity of filing returns indeed is tempting, but how beneficial are the GST composition scheme changes, really? Let’s explore.

Major GST Composition Scheme Changes

Before we get into the pros and cons, let us summarise the major GST Composition Scheme changes:

  • Increase in Threshold Limit – Currently INR 1 Crore, proposed to be increased to INR 1.5 Crore
  • Service Providers allowed to avail the scheme – Now, not just restaurants, but all types of service providers can avail composition scheme. They can supply services up to INR 5 Lakhs per annum, which will be exempted from tax.
  • Suppliers of exempt supplies allowed to avail the scheme – Earlier, a supplier of exempt supplies was considered ineligible to avail the composition scheme, but now, a taxable person who is engaged in supply of exempt supplies, and meets all other eligibility conditions, will be allowed to opt for the composition scheme.
  • Rate of Tax – While the 5% specified for small restaurants continue, the rate for all traders and manufacturers has now been unified at 1%.
  • Only taxable supplies to be considered to calculate turnover – For traders, the rate of tax under composition scheme will be levied on the aggregate turnover, which only includes taxable supplies, and not exempt supplies.
  • Option to avail the scheme open till this Financial Year – Both migrated and new tax payers, will have the option to avail composition scheme till the 31st of March, 2018.

Four Major Concerns of Composition Scheme

  • Negative Impact on Profitability and Competitiveness – Under the composition scheme, a dealer does not have to collect GST on his outwards supplies, and conversely, he is not eligible to claim ITC on all his inward supplies. This basically means, that while he is liable to pay tax at a flat rate to the government, there is no way he can collect the tax from his customers. As a result, the tax amount gets added to his cost – which he can manage, either by absorbing it, or by passing on the cost to his customers. If he absorbs it, his profitability takes a hit; if he passes it on, his competitiveness takes a hit in comparison to regular dealers.
  • No Reduction in Compliance Efforts – A quarterly return instead of a monthly return may sound like a boon, but the reality is starkly different. The return, whether monthly or quarterly, is an invoice-based return and not a turnover based return. This basically means that on the date of return filing, a regular dealer, with an annual turnover of more than INR 1.5 Crores, will typically deal with the transactions of a month, while a composition dealer (along with a regular dealer with an annual turnover of less than INR 1.5 Crores) will typically deal with the transactions of 3 months – and the latter scenario is definitely more cumbersome. In short, this doesn’t really mean reduction in compliance efforts, but rather an increase. SMEs should be careful, not to interpret this as “no need to maintain proper accounts for three months”, but should be cognizant of the fact that even a quarterly return will require them to maintain compliant books of accounts.
  • Restrictions on Trade Mode remain – While a slew of initiatives have been declared for the composition scheme, it continues to remain out of reach for e-commerce players and inter-state suppliers. The increase in the limit, is bound to see more traders opting for the composition scheme, but it would also result in their wings being clipped, if they ever want to expand the scope of their business. This is counter-productive towards the original intention of GST to encourage “one nation, one tax, one market”.
  • Dilemma for Restaurants – It will be interesting to observe the behaviour of those restaurants, who have now become eligible to avail the composition scheme. While a regular dealer operating a restaurant, will be collecting GST at 5% and passing on the same to the government, a composition dealer operating a restaurant will also be paying 5% tax to the Government, and recovering the same from the customers. Either case, if the public ignores the tax invoice, the effective expenditure from the restaurant goer’s pocket will be the same. Over a period of time, the public would obviously prefer to go to an AC restaurant, which is serving food at almost the same price as a small eatery next door; and this is only bound to hit the businesses of small eateries across the country. The only way out of this dilemma is that small restaurants will need to scale up their infrastructure to have a level playing ground with AC restaurants, which of course will have an impact on their working capital and cash flows.

In short, the composition scheme has more than what meets the eye. SMEs across the nation, will need to think thoroughly before opting for the composition scheme, and take an informed decision.


How to Cancel Provisional Registration under GST

Filing GST ITC-04 in GST Portal

Filing GST ITC-04

What is GST ITC-04?

GST ITC-04 has to be furnished by registered manufacturers, showing details of inputs or capital goods dispatched or received from a job worker in a quarter.

The details of the following 4 types of transactions need to be furnished in GST ITC-04:

  1. Inputs or capital goods dispatched to job workers in the quarter
  2. Inputs or capital goods received from job workers in the quarter
  3. Inputs or capital goods sent from one job worker to another in the quarter
  4. Inputs or capital goods supplied from the premises of job workers in the quarter

GST ITC-04 due date

The regular deadline for filing GST ITC-04 will be the 25th of the month succeeding a quarter. Note that last date for filing Form ITC-04 for the quarter July- September ’17 has been extended from 25th October ’17 to 31st December ’17.

How to file GST ITC-04 in GST portal

To file GST ITC-04 in the GST portal, follow the steps given below:

1.Download GST ITC-04 offline tool

For this, visit the GST Portal. Click Downloads> Offline Tools> ITC04 offline tool.

2.Fill the details and validate

The ITC04 offline tool is Excel-based. Internet connection is not required for filling the details in the tool. This tool also has the capability to perform most data entry and business validations, which will help to reduce errors at the time of uploading GST ITC-04 in the portal.

Let us now see the steps to use the ITC04 offline tool:

  1. A .zip file will be downloaded in your computer. Extract the contents. Open the Excel file.
  2. You will find 3 worksheets in the file:
  • Worksheet 1: Import Export file– Use this sheet to import the data file already uploaded in GST portal or error file generated after upload of data in the portal. This can be used to modify the details uploaded in the GST portal before filing of GST ITC-04.
  • Worksheet 2: Mfg to JW– The details of inputs or capital goods sent to job worker should be entered in this sheet.
  • Worksheet 3: JW to Mfg– The details of inputs or capital goods received back from job workers or sent from one job worker to another or supplied from the job worker’s premises should be entered in this sheet.

After the details are entered in a sheet, click ‘Validate Sheet’. If any errors are found, the same will be shown along with the details in the column ‘Errors’. You can make the required corrections and ensure to validate the data again. Each row entered in the sheet should show ‘This row is validated’ in the column ‘Errors’.

For example: For wrong GSTIN entered, the error details are shown in the column ‘Errors’ as shown below:

Once the error is corrected, the ‘Errors’ column appears as shown below:

3.Generate file to upload

Once the data entered in ‘Mfg to JW’ and ‘JW to Mfg’ sheets are successfully validated, in the ‘Import Export file’ sheet, click ‘Generate file to upload’. The file will be generated in JSON format. Save the file in the computer.

4.Upload the JSON file

Login to the GST portal using your username and password. Click Services>Returns>ITC Forms. GST ITC-04 will be shown. Click ‘Prepare offline’.

Select the Financial Year, Return filing period and click Search.

Click Choose file and select the JSON file. Once the file is uploaded, it will be validated by the portal. If any errors are found, an error file will be generated. Download the same from the portal. Open the ITC-04 offline tool and in the ‘Import Export file’ sheet, click ‘Import data from File’ to import the error file and make the necessary modifications.

Note: The JSON file uploaded can be edited or new additions can be made, until GST ITC-04 is filed.

5.Authenticate and file GST ITC-04

To authenticate and file GST ITC-04, click ‘Initiate filing’.

Select the Financial Year and Return filing period. Click ‘File Return’. Authenticate the file using DSC (Digital Signature Certificate) or EVC (Electronic Verification Code) and submit the return.

Hence, all Principal manufacturers should ensure to furnish details of inputs or capital goods sent or received during a quarter using the ITC04 offline upload tool. For the quarter of July-September ’17, GST ITC-04 has to be furnished by 31st December ’17.


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.

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