Vanesh Nadar & Co.

Chartered Accountants

Goods & Services Tax ("GST")


Goods and Services Tax (GST) is an indirect tax (or consumption tax) used in India on the supply of goods and services. It is a comprehensive, multistage, destination-based tax: comprehensive because it has subsumed almost all the indirect taxes except a few state taxes. Multi-staged as it is, the GST is imposed at every step in the production process, but is meant to be refunded (Input Tax Credit) to all parties in the various stages of production other than the final consumer and as a destination-based tax, it is collected from point of consumption and not point of origin like previous taxes.


Goods and services are divided into five different tax slabs for collection of tax - 0%, 5%, 12%, 18% and 28%. However, petroleum products, alcoholic drinks, and electricity are not taxed under GST and instead are taxed separately by the individual state governments, as per the previous tax system. There is a special rate of 0.25% on rough precious and semi-precious stones and 3% on gold. In addition a cess of 22% or other rates on top of 28% GST applies on few items like aerated drinks, luxury cars and tobacco products. Pre-GST, the statutory tax rate for most goods was about 26.5%, Post-GST, most goods are expected to be in the 18% tax range.


The tax came into effect from 1 July 2017 through the implementation of the One Hundred and First Amendment of the Constitution of India by the Government of India.

Applicability


In case of supply of Goods: In case of Supply of Goods, GST Registration is mandatory if annual turnover exceeds Rs. 40 Lakhs in a Financial Year. (Rs. 10 Lakhs in few North Eastern States)

 

In case of Service Provider: In case of Service Provider, GST Registration is mandatory if annual turnover exceeds Rs.20 Lakhs in a Financial Year. (Rs 10 lakhs for NE and hill states)

 

GST Registration compulsory, even if turn over is less than specified limit for below person;

 

v  Person Making the Interstate (outside the state) supply of goods or services.

v  Every E-Commerce Operator

v  Supplier of Online Information

v  Businesses with turnover above the threshold limit of Rs. 40 Lakhs

v  Entities registered under Pre GST Law (Excise/ Service Tax/Vat)

v  Casual Taxable Person

v  Person who required to pay tax under reverse charge

v  Non Resident Taxable Person

v  Input Service Distributor

 

Benefits for registering under GST

 

For Regular Registered Business

v  Take Input Tax Credit

v  Make Interstate Sales without Restriction

v  Better Compliance

 

For Voluntary Registration

v  Legal Recognition of Business

v  Avail Input Tax Credit

v  Make interstate Sales

v  Register on e-commerce website

v  Competitive Advantage over other Business

v  Build’s Trust among Stakeholders

 

Penalty

 

v  Non Payment of Tax: Penalty 10% of Tax Amount Subject to Minimum Rs. 10,000/- (Genuine Error)

v  Wilful Defaulter: Penalty 100% of Tax Amount (Wilful defaulter)

Pending to be updated

  • Turnover-based Audit under Section 35(5) of CGST Act:

If the annual turnover of a registered taxpayer is more than Rs. 2 crores in a financial year , he is required to get his accounts audited by a Chartered Accountant or Cost Accountant every year.

A financial year covers the 12-month period beginning from April of a calendar year to March of the next calendar year.

Aggregate turnover is calculated as follows:

Aggregate turnover = Value of all taxable (inter-state and intra-state) supplies + exempt supplies + export supplies of all goods and services

The total turnover calculation must be PAN-based, which means that once the turnover under the PAN is more than Rs. 2 crores all business entities registered under GST for that PAN will be liable for GST audit for a financial year.

 

Items included while calculating turnover:

 

v  All taxable (inter-state and intra-state) supplies other than supplies on which reverse charge is applicable

v  Supplies between separate business verticals.

v  Goods supplied to/received from job worker on principal to principal basis.

v  Value of all export/zero-rated supplies.

v  Supplies of agents/ job worker on behalf of the principal.

v  All exempt supplies. E.g. Agricultural produce supplied along with branded ready-to-eat food.

v  All taxes other than those covered under GST Eg: Entertainment Tax paid on the sale of movie tickets.

 

Items excluded while calculating turnover:

 

v  Inward supplies on which tax is paid under reverse charge.

v  All taxes and cess charged under Goods and Service Tax like CGST, SGST or IGST, Compensation Cess.

v  Goods supplied to or received back from a Job Worker.

v  Activities which are neither supply of goods nor service under schedule III of CGST Act.

 

Forms for Annual return and GST Audit: 

Type of taxpayer

Form to be filed

Whether or not applicable to GST Audit

A Regular taxpayer filing GSTR 1 and GSTR 3B

GSTR-9

A Taxpayer under Composition Scheme

GSTR-9A

E-commerce operator

GSTR-9B

Applicable for GST Audit

Taxpayers whose turnover exceeds Rs. 5 crores in FY

GSTR-9C

 

Submission of GST Audit report & Annual return:

 

The finalized GSTR-9C can be certified by the same CA who conducted the GST audit or it can also be certified by any other CA who did not conduct the GST Audit for that particular GSTIN.

 

The following must be reported and certified by the GST Auditor or the certifier:

 

v  Whether or not all the requisite accounts or records are maintained.

v  Whether or not the Financial Statements are prepared as per the books of accounts maintained at the principal place of business or additional place of business of the taxpayer.

v  Certify the accuracy of information in GSTR-9C.

v  To list down the audit observations or reservations or comments, if any.

 

Due dates for submission of GST Audit report:

 

GSTR-9 and GSTR-9C are due on or before 31st December of the subsequent fiscal year.

 

 

(For FY 2018-19 the due date has been extended till 30th June 2020)

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