Understanding the Indian Goods and Services Tax (GST) Regime: Filing Returns and Rates, Study Guides, Projects, Research of Law

Download Understanding the Indian Goods and Services Tax (GST) Regime: Filing Returns and Rates and more Study Guides, Projects, Research Law in PDF only on Docsity! Awareness Campaign & GST UPDATE Dr Mangesh Gondavale Dy Commissioner of Sales Tax 1 2 Problems in Existing Tax System • Multiplicity of Central and State indirect taxes, • No comprehensive input tax system, • Cascading of tax by levy of VAT on Excise Duty, Service Tax, • No integration between goods and services tax, • Narrow tax base, 3. Different Points of Taxation Central Excise (On Manufacturing) Service Tax (On provision of Service) VAT ( On sale of Goods) Limitations of current Tax regime : Limitations of current Tax regime : No Entry Tax Entry Tax Value Added Tax e.g. on Sugar @ 4% @ NIL % 4. Lack of Uniformity Limitations of current Tax regime : 5. Goods Vs. Services dilemma ? Sale Manufacturing License Software in CD Services Sale of Food In Restaurant Limitations of current Tax regime : Benefits of GST (2/2) • Simplified Tax Regime • Reduction in Multiplicity of Taxes • Consumption Based Tax • Abolition of CST • Exports to be Zero Rated • Protection of Domestic Industry - IGST 10 More informed consumer Poorer States to Gain Make in India 11 Changes under GST • Additional power to levy on services for the State, • Additional power to levy tax on value addition on goods for the Centre • Subsuming of several taxes levied by State and Centre • System of comprehensive set-off relief of CENVAT, VAT and service tax • Removal of burden of CST and rationalization of rates • Introduction of destination based inter-State GST 12 Central Taxes to be subsumed under GST •Central Excise Duty •Additional Excise Duties •Excise Duty levied under the Medicinal and Toiletries Preparation Act •Service Tax •Additional Customs Duty, commonly known as Countervailing Duty (CVD) •Special Additional Duty of Customs - 4% (SAD) •Surcharges, and •Cesses. Salient features of GST • The GST would be applicable on the supply of goods or services. – other than alcoholic liquor for human consumption and five petroleum products. • Destination based consumption tax • Exports would be tax-free and imports taxed at the same rate as integrated tax (IGST) 15 Salient features of GST... (contd.) • Tax payers with an aggregate turnover in a financial year up to Rs.20 lakhs would be exempt from tax.  For special category states specified in Article 279A, the threshold exemption shall be Rs. 10 lakhs. Tax payers making inter-State supplies or paying tax on reverse charge basis shall not be eligible for threshold exemption. • Small taxpayers with an aggregate turnover in a financial year up to Rs. 50 lakhs shall be eligible for composition levy. 16 Salient features of GST... (contd.) • An Integrated GST (IGST) would be levied and collected by the Centre on inter-State supply of goods and services. • HSN code shall be used for classifying the goods under the GST regime. • Taxpayers whose turnover is above Rs. 1.5 crores but below Rs. 5 crores shall use 2-digit code and the taxpayers whose turnover is Rs. 5 crores and above shall use 4-digit code. • For Services, Service Accounting Codes (SAC) shall be used 17 Mandatory Registration (irrespective of threshold)  Persons making inter-State taxable supply  Persons required to pay tax under reverse charge  Casual and non-resident taxable persons  E-Commerce operator /Those required to collect TDS  Persons supplying goods through e-commerce operator  Persons making supplies on behalf of a registered taxable person  Input Service Distributer  Every person supplying online information and data base access or retrieval services from a place outside India to a person in India, other than a registered person 20 Registration… (contd.) • Registration ( GSTIN)to be granted State-wise. • PAN mandatory for GSTIN (except for NRTP- here Passport) • Separate registration permitted for multiple business verticals in a State. Registration deemed to be granted if objection by way of Notice is not communicated within the time of 3 working days. Transitional Provisions • Existing taxpayers to be issued Provisional Registration valid for 6 months (extendible) Upon furnishing of prescribed information, final RC to be granted • Cenvat credit/VAT carried forward in return allowed as ITC under GST • Un-availed Cenvat/VAT credit on capital goods, not carried forward in return, shall also be allowed as ITC under GST • Eligible duties and taxes in respect of inputs held in stock permissible as credit to registered persons Job Work • Where the inputs or capital goods sent for job work are not received back or are not supplied from the place of business of the job worker it shall be deemed they have been supplied by the principal to the job-worker on the day when they were sent out. • Input tax credit allowed on inputs and capital goods sent to a job-worker for job-work. • If inputs or capital goods are sent directly to a job worker, the period of one year shall be counted from the date of receipt of inputs by the job worker. 25 Resource Material • CGST /IGST/ UTGST Bills • Nine Rules on Valuation, Compensation, Returns, Registration, Composition, Invoice, Payment, Refund, Transition • Various Formats of returns/ registration • FAQs on GST • Migration – GSTN FAQs on migration – FAQs on Migration to GST by CBEC – Step by Step guide to taxpayers – Migration PPT 26 Resource Material- Links • http://www.cbec.gov.in/htdocs-cbec/gst/gst • http://www.cbec.gov.in/htdocs- cbec/migration-to-gst/migration-to-gst .....for migration related information • https://www.gst.gov.in/ • http://www.gstn.org/ • http://tutorial.gst.gov.in Why Returns? • Means of compliance verification • Mode for transfer of information to tax administration • To declare tax liability for a given period • Providing necessary inputs for taking policy decision 30 Features of Tax Returns in GST  Based on transactions – Invoice based Designed for system based matching of Input Tax Credit and other details (import, export etc.)  Auto-population from details of outward supplies  Auto-reversal of ITC in case of mismatch  Concepts of ledgers – cash, ITC and liability  No revised returns – changes through rectifications and reported in the return for the month in which error detected 31 Returns for Taxpayers Overview of GST Returns GSTR 1 Statement of Outward Supplies GSTR 2 Statement of Inward Supplies GSTR 3 Monthly GST Return GSTR 5 Non-resident taxable persons GSTR 6 Input Service Distributor (ISD) Return GSTR 7 Tax Deduction at Source (TDS) return GSTR 8 Tax Collection at Source (TCS) Return GSTR 11 Inward Supplies for Government Bodies Monthly GSTR 4 Compounding taxpayer Quarterly GSTR 10 Final return after cancellation, within three month of cancellation Unscheduled GSTR 9 Annual GST Return GSTR 9A Annual return for Compounding Taxpayer GSTR 9B Reconciliation Statement Annual Returns for Taxpayers GSTR 7, GSTR 8, & GSTR 9: Due Date for Filing GSTR 7 10th of every month GSTR 8 10th of every month GSTR 9* 31st December Please note: The tax period for the monthly deadlines is the previous calendar month *For previous financial year Returns for Taxpayers GSTR 1: Statement for Outward Supplies  A Supplier Taxpayer is required to prepare GSTR 1 wherein they will report invoice level information  GSTIN of recipient , Invoice, Number, date, HSN/SAC, ….Value, Taxable value…. POS , Tax – IGST, CGST, SGST/UTGST – Rate and Tax amount  GSTR 1 needs to be filed even if there is no business activity (i.e. Nil Return) during the period of return.  Supplier Taxpayer will file return in electronic form only.  Invoices for IGST, CGST/SGST will be issued separately (in other words, one invoice can’t have IGST as well as SGST/CGST).  An invoice can’t have two different places of supply. POS should be a mandatory field in the inter-state invoice.  Bulk upload facilities are available for suppliers who have above specified entries per month. Returns for Taxpayers GSTR 2A: Draft of GSTR 2  GSTR 2A contains an auto populated list of all invoices received from all Suppliers Taxpayers’ corresponding returns for the given tax period; these invoices can be acted upon directly in the GSTR 2 before filing.  Before filing the GSTR 2, Receiver Taxpayer shall take action on all the invoices received in the GSTR 2A.  Receiver Taxpayer can accept, reject, & modify any pending invoices received in the GSTR 2A. Also, receivers can park items for next tax period & such items will roll over to next month’s GSTR 2.  Accepted & Modified Invoices will flow to GSTR 2 & in case of Rejection only an intimation will be sent to Taxpayer & Tax Officer.  GSTR 2A is a read-only document & will be available for view even after the tax period is over. Returns for Taxpayers Monthly Returns: Data Flow GSTR 1 GSTR 1A GSTR 2/2A ACCEPT MODIFY or ADD REJECT MISMATCH FILE GSTR 2 REJECT GSTR 5 (NRTP) GSTR 6 (ISD) GSTR 7 (TDS) GSTR 8 (TCS) ACCEPT or MODIFY MODIFY ADDED INVOICE GSTR 2/2A OF SUBSEQUENT TAX PERIOD GSTR 3 • Auto-populated based on GSTR-1 and GSTR-2 • Outward Supplies – All B2B inter and intra state supplies – All B2C inter-State supplies above the value of Rs. 2.5 lacs – Exports – Revision of tax of previous periods • Inward Supplies – Inter and intra state supplies received – Imports – Amendment to tax of previous periods – Credit to ITC Ledger 41 GST Returns: Correction in returns • No Revision of returns As per the return taxes have already been paid and fund transfers already settled No significance as the basis now is individual transaction • All changes through rectifications reported in subsequent returns • If an invoice has been left out in GSTR-1 or GSTR-2 : can be uploaded in subsequent returns but to pay interest for any tax not paid on this account • If any invoice has been wrongly entered but remains unmatched – can be amended in subsequent returns 42 GST Returns: First and Final Returns • First Return Required when the liability to register and pay tax arose before grant of registration • Final Return On closure of business Reversal of credit on goods in stock 45 GST Returns: Returns for Taxpayers Filing GSTR 1: Demonstration Using Application Returns for Taxpayers Filing GSTR 1: Demonstration Using Application In the Services Menu, click on Returns > Returns Dashboard Returns for Taxpayers Filing GSTR 1: Demonstration Using Application 3. Select GSTR 1 – Outward supplies made by the taxpayer by clicking on PREPARE ONLINE Returns for Taxpayers Filing GSTR 1: Demonstration Using Application 4. Click on B2B Invoices & you will be directed to the Add Invoice Page Returns for Taxpayers Filing GSTR 1: Demonstration Using Application 5. Click on ADD INVOICE Returns for Taxpayers Filing GSTR 1: Demonstration Using Application 10. Once all line items are added for a particular invoice, click SAVE to add the invoice Returns for Taxpayers Filing GSTR 2: Demonstration Using Application 4. The Summary wise details for the data uploaded will be available in this screen where the taxpayer will be able to view the summary of all data uploaded & processed. Returns for Taxpayers Filing GSTR 2: Demonstration Using Application 9. When you click on supplier name, you will see the above screen 10. There are 3 categories – uploaded by Supplier, uploaded by Taxpayer (Receiver), & modified by Supplier 11. Select one or multiple invoices to Accept & then to Reject (if any) 12. Use the action button against each invoice to edit the invoice if necessary Returns for Taxpayers Filing GSTR 2: Demonstration Using Application 19. Once user clicks on Confirm button, the Acknowledgment Reference Number will be generated & the pop-up message will appear as shown in screenshot. Returns for Taxpayers Filing GSTR 3: Demonstration Using Application 1. From the landing page of returns, select return filing period (Financial Year + Month) 2. Click on GENERATE under GSTR 3 Returns for Taxpayers Filing GSTR 3: Demonstration Using Application 1. On clicking GENERATE, Taxpayer will be directed to GSTR 3 Dashboard where a summary of GSTR 3 will be displayed if the GSTR 1 and GSTR 2 for the tax period have been filed by the taxpayer. This summary will be generated based on the details filed in GSTR 1 and GSTR 2 Returns for Taxpayers Filing GSTR 3: Demonstration Using Application – Business Rules 1. Post generation of GSTR-3, the liability (tax/interest/late fees/penalty) of the Taxpayer & ITC will be computed & updated in then Tax liability Register & Electronic Credit Ledger. 2. If GSTR 3 is filed with Short/No Payment of liability, it will be treated as an Invalid Return & mismatch of recipients will be generated as if GSTR 3 for that tax period has not been filed. Returns for Taxpayers Mismatch Reports  The purpose of this report is to capture the mismatch reported by the Supplier Taxpayer & Receiver Taxpayer.  The Mismatch Report will capture the details of all such line items of the invoices & will be available as a Report for the supplier and receiver Taxpayer’s information & convenience.  This system generated report will only be available for viewing & will not be liable for any manipulations by the viewer. The jurisdictional Tax Authorities will also be eligible to view the Mismatch Report.  Mismatch Report will be generated for every tax period on filing of valid GSTR 3 by the Taxpayer or 21st day of (M+1) whichever is later.  Communication will be sent to both the parties (Supplier & Receiver) on generation of Mismatch Report. a. 70 to 80 Lakhs taxpayers; b. 260 to 300 Crores B2B invoice data per month c. More than 120,000 tax officials to work d. Monthly filing of returns e. Credit of ITC f. Creation of Business Intelligence reports and Analytics g. Both Central and States Tax Departments Role of GSTN: The IT Backbone of GST • Strong IT Infrastructure • Independent • Flexibility of Pvt Sector • Strategic Control of Govt 67 Returns for Taxpayers Where can I file my GST Returns? GST Portal www.gst.gov.in Through a GSP GST Suvidha Provider GST Offline Utility Software Slide 71 Returns for Taxpayers What is a GSP?  GST Suvidha Provider (GSP) is an additional mechanism available for taxpayers to facilitate uploading invoices as well as filing returns & act as a single stop shop for GST related services.  Currently there are 34 approved GSPs (including companies like Tally, TCS, Deloitte)  Taxpayers can choose services of one or multiple GSP based on their requirement & offerings of the GSP.  GSP can create their own unique products like Mobile apps, User interface, ERP solutions to help their clients be GST compliant.  GSPs will communicate data directly to GST Core system (& not through GST website available for all taxpayers). Page 71 Tax Payer Registration Challan Generation Invoice Uploading Return Filling * Ledger GSP Ecosystem GSP-GST GST Server Server GSP Eco System 72 Create Challan Screenshot fications & Teles Acts & Rules + nloads + ‘Create Challan Saved Challan Challan History Challan Details Tax ( %) Interest ( a} Penalty ( 2) Fees ( %) Other ( 2) Total ( %) cGsT(0001) | 0 IGsT(0002) 0 Cess(0003) 0 SGsT(0004) 0 Total Challan Amount: to Total Challan Amount (In Words): Rupees Payment Modes i EPayment © Over The Counter | Major Heads ee | Minor Heads Returns for Taxpayers Utilising Cash & ITC: Business Rules Payment through ITC 1. Provisional/Final ITC can be utilised for payment of tax only. 2. Provisional/Final ITC cannot be utilised for payment of reverse charge liabilities. 3. Provisional/Final ITC cannot be utilised for payment of TDS, TCS, interest, penalty, fee etc. 4. Provisional ITC availed for the current tax period can be utilised only for return related liability of the current tax period only. Once taxpayer files Valid GSTR 3/5, the said ITC would be available for payment of other liabilities. 5. The amount allowed to be entered for utilisation of credit can’t be more than the amount of balance available. Returns for Taxpayers Utilising Cash & ITC: Business Rules Payment through CASH 1. The amount of Cash deposited for CGST/SGST/IGST/Cess can be used only for payment of CGST/SGST/IGST/Cess liabilities respectively. No inter-head adjustment is allowed for major-minor heads. 2. Cash deposited under the minor head i.e., Tax/Interest/Fee/Penalty/Others can only be utilised for payment of Tax/Interest/Fee/Penalty/Others respectively. It implies that no inter-head adjustment is allowed. 3. The amount allowed to be entered for utilization of cash can’t be more than the amount of balance available under the respective major/minor head of tax. 4. Amount under Cash Ledger will be used in the following priority order: a. Self-assessed tax, & other dues related to returns of previous tax periods; b. Self-assessed tax, & other dues related to return of current tax period; c. Any other amount payable under the Act or the rules made thereunder including the demand determined under section 66 or 67.