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The concluding part of our four-part series(read posts 1, 2 and 3) aims to make the concept of GST returns perfectly clear in the minds of our valuable readers.

There are many special features of the returns mechanism in GST like mandatory electronic filing of returns, compliance rating score, uploading of invoice level information(in case of B2B suppliers), auto-population of information, matching of invoices and auto reversal of Input Tax Credit in case of mismatch which makes it all the more important to file the GSTR with due diligence.

What is a GSTR?

Like a tax return which contains details of a taxpayer’s income, GST returns (GSTR) is a document which will have details of Purchases, Sales, Output GST (on sales made by the registered taxpayer), and Input Tax Credit (GST Paid on inputs or purchases). The GSTR have to be filed online on the common portal provided by the GSTN. Taxpayers are required to file one return each month with other components getting auto populated and one annual return. By making the entire process online, with auto-population, GST is likely to ease the burden of tax compliances and return filing.

Returns can be filed using any of the following methods:
1. GSTN portal (www.gst.gov.in)
2. Offline utilities provided by GSTN (which can automatically convert into return on uploading)
3. GST Suvidha Providers (GSPs)

Types of GSTR

There are separate returns for a taxpayer registered under the composition scheme, taxpayer registered as an Input Service Distributor, a person liable to deduct or collect the tax (TDS/TCS) and so on. The taxpayers are required to file returns depending on the activities they undertake. The following table explains the different type of GST returns:

Return Description Who Files? Date for filing
GSTR-1 Monthly Statement of Outward supplies of Goods or Services Registered Person 10th of the next month
GSTR-2 Monthly Statement of Inward supplies of Goods or Services Registered Person 15th of the next month
GSTR-3 Monthly Return for a normal taxpayer Registered Person 20th of the next month
GSTR-4 Quarterly Return Taxable Person opting for Composition Levy 18th of the month succeeding the quarter
GSTR-5 Monthly Return for a non-resident taxpayer Non Resident Taxpayer 20th of the month succeeding the tax period & within 7 days after expiry of registration
GSTR-6 Monthly Return for an Input Service Distributor (ISD) Input Service Distributor 13th of the next month
GSTR-7 Monthly Return for authorities deducting tax at source Tax Deductor 10th of the next month
GSTR-8 Monthly Statement for E-Commerce Operator depicting supplies affecting through it E-Commerce Operator 10th of the next month
GSTR-9 Annual Return Registered Person other than an ISD, TDS/TCS Taxpayer, Casual Taxable Person and Non-resident Taxpayer 31st December of next Financial Year
GSTR-10 Final Return Taxable Person whose registration has been surrendered or canceled Within three months of the date of cancellation or date of order of cancellation whichever is later.

Source: www.cbec.gov.in

Revision of Returns:

The rectification of errors/omissions is allowed in the subsequent returns. However, no
rectification is allowed after furnishing the return for the month of September following the end of the financial year to which, such details pertain, or furnishing of the relevant annual return,
whichever is earlier.

Penal Provisions:

Any registered person who fails to furnish form GSTR-1, GSTR-2, GSTR-3 or Final Return within the due dates, shall be liable to pay a late fee of Rs. 100 per day, subject to a maximum of Rs. 5,000.

However, for the first two months of transition, the government has provided a simplified FORM GSTR-3B, for all classes of taxpayers containing only summary details and also permitted them to file late returns as per the following schedule so that they can easily adapt to a new online filing system.

Return for the month of GSTR-1 GSTR-2 GSTR-3B
July 2017 5th September instead of 10th August 10th September instead of 15th August 20th August
August 2017 20th September instead of 10th September 25th September instead of 15th September 20th September


Hope you have enjoyed reading our four part series.
What are your views on the return filing provisions under the GST regime?
Do share your thoughts on the same in the comments below!!

The post GST Fundamentals #4: How To Successfully File Returns? appeared first on Bizongo Hive.

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Via this part three of our four part series, we aim to elucidate the key issues addressed in the transition provisions under the GST regime:

The Transition of Registration:

All taxpayers registered under existing tax laws such as State VAT, Central Excise, Service Tax etc. need to migrate into the GST regime. Each such taxpayer shall get a certificate of registration on a provisional basis in FORM GST REG-25. This certificate will be valid for a period of 3 months within which a registered taxpayer shall either submit prescribed documents for final registration in FORM GST REG–26 or if such person is not liable to be registered under GST then can cancel his provisional registration within 30 days electronically in FORM GST REG-29 at the GSTN portal.

The Transition of credit of input taxes paid on goods in stock:
  • A manufacturer/dealer having an existing registration can carry forward his Cenvat credit/ VAT credit as CGST/SGST credit in respect of input held in stock, semi-finished or finished goods held in stock if the following conditions are satisfied-:
      • The Taxpayer has filed his last return under applicable law (VAT, Services Tax, Excise) and has declared the complete stock lying along with input credit.
      • Such goods which are shown as stock in VAT return must be taxable under GST regime, in case such goods or services are exempt or non-taxable, the taxpayer will not be eligible to carry forward the credit under GST.
      • Filed GST TRAN 1 within 90 days from 01/07/2017
  • A dealer who was not registered earlier or engaged in the manufacture of exempted goods/provision of exempted services, or provided works contract service or a composition taxpayer, a first/second stage dealer or a registered importer can also enjoy ITC of inputs in stock held on 1st July if the following conditions are satisfied:
      • Filed GST TRAN 1 within 90 days from 01/07/2017
      • Kept invoice(invoice age up to 12 months) or any other document like Credit Transfer Document showing tax payment(else you will  get  60–40{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b} of GST rate as input credit)
      • Filed GST TRAN 2 for every 6 tax period (stock movement details)
      • Such inputs and/or goods are used or intended to be used for making taxable supplies under GST
      • The said taxable person passes on the benefit of such credit by way of reduced prices to the recipient
  • If any person does not register under GST (even though he is liable to), then he will not be eligible to claim the input tax credit of excise & VAT paid on stock and will also be liable to a penalty.
  • The Credit of both Central and State taxes paid on goods in transit on the day of transition i.e 01-07-2017 is available on the basis of duty paying documents.
  • Transition provisions under GST illuminate that any balance of input tax credit on capital goods purchased in the previous tax regime, against which partial input credit has been availed, will be allowed to be availed in the new regime as well.
Miscellaneous points:
  • No tax is payable on the supply of goods and services under GST to the extent the tax was paid on such supply under the earlier law.
  • No tax is required to be paid on return of goods within six months where taxes were paid and goods removed prior to 01-07-2017.
  • No tax shall be payable on return of goods from job worker to the principal within six months, where the goods were sent for job work before 01-07-2017.
Our Take:

Transition under GST requires an extensive due diligence at taxpayers’ end.

    • One is ought to file the last return under the old regime with assiduity and make sure that the complete stock is accounted in his return.
    • One should also document all the invoices with respect to purchases under the previous regime with utmost care. This will help in claiming 60{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b}/40{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b} of credit in case he misses to report such stock while filing the last return.
  • One should carry forward the credit on such inputs held in stock as explained above even if he is presently ineligible to take such credit.

What is your stance regarding the transition provisions under the GST regime?

Do share in the comments below!

The post GST Fundamentals #3: How To Easily Transition From The Old Tax Laws? appeared first on Bizongo Hive.

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Here is our second part of the series seeking to give you some insights on the various records to be kept under the GST regime.

GST has subsumed a plethora of state and central indirect tax levies unifying India’s complex taxation structure. Under the former tax regime, traders were required to keep different books for filing return for various taxes like VAT, Excise etc. who will now be required to maintain records under the singular tax regime. It is a sigh of relief for the composition dealers as they are not required to maintain detailed records as in the case of a normal taxpayer.

Section 35 of the GST Act explains the record-keeping requirements. In addition, in April 2017  the central government has released draft rules for GST accounts and records (draft record rules), which listed additional GST accounting and record-keeping requirements.

Each registered taxpayer is required to maintain a true and correct account of the following at each place of its business:

  • The details of manufacture or production of goods.
  • The details of the inward and outward supply of services or goods or both.
  • The stock of goods.
  • The input tax credit availed.
  • The output tax payable and paid.
  • And any other particulars as may be agreed.

In addition, the rules also provide that the registered person shall keep and maintain records
of :

  • A separate account of advances received and paid, along with any adjustments
  • A true and correct account of:
    • Goods or services imported or exported
    • Supplies attracting payment of tax on reverse charge
  • Other relevant documents, including invoices, bills of supply, delivery challans, credit notes, debit notes, receipt vouchers, payment vouchers, and refund vouchers.
  • The details of suppliers with information including names and complete addresses of suppliers from whom he has received the goods or services chargeable to tax under GST
  • The details of customers with information including names and complete addresses of the persons to whom he has supplied goods or services, where required under GST
  • Complete address of the premises where goods are stored by the taxpayer, including goods stored during transit along with the particulars of the stock stored therein.

Apart from the above requirements, manufacturers, agents, brokers, work contractor, owner or operator of a go down or warehouse and a transporter have to adhere to some additional record keeping rules.

Records and accounts under the GST can be maintained in both electronic or the book format. Each of the volumes of books of account with GST records maintained manually should be serially numbered. While maintaining GST accounts manually, if any entry in any of the registers or accounts or documents is erased, effaced or overwritten, then it should be scored out under attestation and thereafter correct entry should be recorded.

If  accounts are maintained in electronic form, the following points must be borne in mind:

  • The records should be authenticated by a digital signature.
  • A  log of every entry edited or deleted shall be maintained.
  • Backup of records should be available such that even if they are destroyed due to accidents or natural causes, they can be restored within a reasonable period of time.
  • The records or documents should be produced on demand, authenticated by the person, in hard copy or in an electronically readable format. The person should also provide on demand, the details of the files, passwords of the files and explanation for codes used (where necessary) for access to the files, along with a sample copy in print form of the information stored in the files.

Period for preservation of accounts: All accounts maintained together with all invoices, bills of
supply, credit and debit notes and delivery challans relating to stocks, deliveries, inward supply and outward supply shall be preserved for seventy-two months (six years) from the due date of
furnishing of annual return for the year pertaining to such accounts and records and shall be kept at every related place of business mentioned in the certificate of registration.

To put it briefly, the game changer indirect tax regime calls for detailed records to be kept not only by suppliers of goods or services but also by intermediaries such as warehouse owners, transporters, and agents. In addition, they also have to track stocks given as free samples or gifts thus bringing in more transparency.

Other than adhering to the legal requirements record keeping can help you to:

  • Keep a track of your business’ health and make sound business decisions
  • Prepare your tax return more easily
  • Manage  your cash flow
  • Demonstrate your financial position to banks or other lenders

Initially, the businesses may find it difficult to adjust to the new tax regime, more so for the smaller players, but it can be reasonably expected that tax leakages within the GST chain will be effectively plugged in and it will contribute to better tax compliance mechanism.

Do share your views on the same in the comments below!

The post GST Fundamentals #2: Why Records Need To Be Maintained Accurately? appeared first on Bizongo Hive.

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From a series of advertisements in major dailies on the nitty-gritty of GST to the bilingual master classes headed by our honorable Revenue Secretary, Dr. Hasmukh Adhia, the government is leaving no stone unturned to make GST a success.

It has been over two weeks since the much-awaited launch of the most significant tax reform on July 1, 2017. Though there have been reports of protests in various parts of the country — the film industry in Tamilnadu, textile traders in Gujarat, cloth merchants in Ludhiana, and so on. But these have been mostly in the nature of minor hiccups, and it can be said that GST implementation has been smooth so far.

With this, we have decided to bring to you a four part series throwing light on various fundamentals of GST like invoice, record keeping, transition provisions and return filing.

PART 1: GST INVOICE

The GST Act has specified different types of invoices like Tax invoice, Bill of Supply, debit/Credit note, Receipt voucher etc. to be prepared as per the nature of the transaction. Through our this article, we singularly aim to acquaint you with the essence of the invoices to be issued under the ambitious tax regime.

First things first, invoice is a basic document for recording the sale/purchase in the books of account. All GST taxpayers are free to design their own invoice format, law only requires that certain fields must mandatorily be on the invoice such as:

  • Invoice number and date
  • Customer name
  • Shipping and billing address
  • Customer and taxpayer’s GSTIN
  • Place of supply
  • HSN code
  • Taxable value and discounts
  • Rate and amount of taxes i.e. CGST/ SGST/ IGST
  • Whether tax is payable on reverse charge basis
  • Item details i.e. description, unit price, quantity
  • Signature or digital signature of the supplier or his authorized representative.
Types of invoice
  • Tax invoice: When a registered taxable person supplies taxable goods or services, a tax invoice is issued. CBEC on its official website has mentioned certain particulars that must be disclosed in a tax invoice. Some of the special points to be noted in the case of a tax invoice are as follows:
  1. Every registered taxpayer has to issue an invoice at any time before the delivery of goods and/or within 30 days/ 45 days* from the date of supply of services.
  2. Small dealers doing a large number of transactions for up to a value of Rs. 200 per transaction to unregistered customers need not issue the invoice for every such transaction, instead, they can issue one consolidated invoice at the end of each day for all the transactions done during the day.
  3. The taxpayer shall prepare three copies of invoice: one for the buyer, second for the transporter and third for self. Similarly, person rendering services shall prepare the invoice in duplicate: one for service receiver and second for self.
  4. Alternatively, a supplier may generate an invoice reference number from the GSTN portal and provide the same to the transporter. In such a case, his goods need not be accompanied by paper invoice during transportation.
  5. In case of a reverse charge, the recipient is under no obligation to issue a tax invoice instead the supplier shall mention in the invoice that reverse charge is applicable.

*45 days in case of a supplier being an insurer, a banking company or a financial institution, including a non-banking financial company.

  • Bill of supply: Under GST there are some instances where the supplier is not permitted to charge any tax. Therefore, a Tax Invoice can’t be issued and alternatively, another document called Bill of Supply is issued. For example, a registered supplier may issue bill of supply when exempted goods or services are supplied or when supplier is paying tax under the composition scheme; bill of supply may also be issued by unregistered persons who are not required to pay GST.
  • Credit note/ Debit note: A taxpayer cannot make changes in a tax invoice after it is uploaded on GSTN. Any revision, modifications, settlement of taxable value or tax charged will be carried out through credit notes and debit notes.
    Time limit:
    a) Credit note needs to be issued not later than September month of the succeeding year in which supply was aggravated or date of filing annual return, whichever is earlier.
    b)There is no time limit for the issuance of debit note but since credit is not eligible after a specified time, debit note should be issued approximately within the same time frame as of a credit note. Examples:  A credit note may be issued by the supplier when the taxable value/tax charged in the original invoice exceeds actual taxable value/actual tax to be paid. Similarly, a debit note may be issued by the supplier when the taxable value/tax charged in the original invoice is less than the actual taxable value/actual tax to be paid.
  • Receipt voucher: It shall be issued in case of advance receipt for supply of goods and services. GST paid at the time of issuance of receipt voucher shall be adjusted while raising of tax invoice. Receipt voucher, not being a tax invoice, will not be considered as an eligible document for availing of credit in the hands of the recipient.
Invoice matching concept

Invoice matching is a mechanism under which all the taxable supplies made under GST will be matched against all the taxable supplies received by the buyer. Every purchase for ‘x’ must be a sale for someone ‘y’. This invoice matching is possible only when both the buyer and the supplier are tightly integrated through an information system. Thus, if ‘x’ claims an invoice from ‘y’, the system will automatically check the sales of “y” to verify and input tax credit will be available only if ‘y’ pays the tax. The system thus eliminates any possibility of generating credit without paying the tax.

Therefore the taxpayers should take utmost care while raising invoices as the same information will be uploaded in the returns and will ensure seamless flow of credit in the hands of the recipient.

Do share your views in the comments below!

The post GST Fundamentals #1: How To Avoid Making Mistakes With Your Invoices? appeared first on Bizongo Hive.

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In order to minimize errors while filing GST returns, it’s important to know the right HSN code for the product or service you are selling.

Well, wondering what are HSN codes or if you are supposed to follow any HSN obligations, then we are here to your rescue. Via this article, we seek to explain the concept of HSN codes whilst answering the basic questions like what is HSN, who all have to follow it, what are its benefits and where will it be required.

Do read: Ultimate Guide to GST Terminology

What is HSN?

Harmonized System of Nomenclature(HSN) is an internationally recognized system of codifying and classifying the products traded around the world. It came into effect in 1988 and has since been developed and maintained by the World Customs Organization (WCO). These set of defined rules are used for taxation purposes in identifying the tax rate applicable to a product in a country.

HSN standardizes the classification of merchandise under sections further rolled down into chapters, which are further classified into headings and subheadings. This results in a six-digit code for a commodity (two digits each representing the chapter, heading, and subheading). India, a member of WCO, has been using HSN codes since 1986 to classify commodities for Customs and Central Excise by adding two more digits to make it more precise, resulting in an eight-digit classification.

Under the new indirect tax regime which has engulfed a plethora of indirect taxes, the GST Council has classified goods and services into 5-tier rate structure (nil, 5{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b}, 12{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b}, 18{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b}, 28{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b}) based upon Harmonized System of Nomenclature (HSN) codes. Traders are not likely to face hardship in classifying the goods under the HSN as the goods emanate either from manufacture or from imports. Traders usually don’t change the nature of goods. The classification, in general, will be in continuity from the HSN declared by the manufacturer or importer both of whom have been using the system in the past also.

Who should follow HSN?

The Central Board of Excise and Customs, on the recommendations of the Council, has notified that a registered person having annual turnover in the preceding financial year as specified in the Table below shall mention the digits of Harmonised System of Nomenclature (HSN) Codes in a tax invoice issued by him under the Central Goods and Services Tax (CGST) Rules, 2017:

Annual turnover in preceding financial year Number of digits of HSN codes
Up to rupees one crore fifty lakhs NIL
More than rupees one crore fifty lakhs and up to rupees five crores 2
More than rupees five crores 4

Notes to the table:

  • Turnover during the first year will be taken on self-declaration basis and in the subsequent year, the turnover of the preceding year will be used.
  • Incase of imports/exports, HSN codes of eight digits shall be compulsory.

The following dealers are exempt from the use of HSN Code in the Invoices:-
a) In order to keep the compliance burden low for small taxpayers, dealers with a turnover of less than ₹1.50 Crore are kept outside the mandatory use of even 2 Digit HSN Code.
b) Small Dealers opting for Composition Scheme are not required to mention the HSN Code in their Invoices.

Why is HSN required?

Following are some of the benefits of using HSN codes:

  • HSN reinforces international trade and commerce by providing a common understanding of the goods being traded irrespective of the national boundaries.  
  • The taxpayers are not required to submit a description of goods while filing the return as the same will be obtained from invoices which are made on the basis of HSN codes.
  • A  systematic and logical way of classification will reduce the chances of any misinterpretation.
Where is HSN applicable?

The HSN Code will be required at the following levels:-

  • At the time of Migration/ Registration to GST, the dealer will be required to carefully mention/ select the HSN Code of the commodity.
  • At the time of generation of Invoices under the GST Regime, the dealer will be required to mention the HSN Code of his commodity. For all B2B transactions (Interstate and Intrastate) invoice level specified details will be uploaded i.e. every invoice issued by the taxpayers will form part of GST return. For all B2C transactions, it will be mandatory to upload invoice wise information if it exceeds ₹2,50,000/-.
  • At the time of filing GST returns, HSN Codes shall be automatically picked up from the registration details of the dealer and will reduce the efforts thereon.

To put it briefly, it is of utmost importance for a dealer to carefully select the HSN Code of his commodity at the time of migration and/or fresh registration under GST. This will directly affect the tax rate applicable for his product. To help businesses find the HSN code applicable for various commodities under the GST regime, CBEC has launched on its website a search option by which they can find out the code by just typing the name of the product.

You can also check Harmonized System of Nomenclature (HSN) Codes here for GST enrolment/registration purposes.

What are your views on the HSN coding being adopted in GST? Do share in the comments below!

The post Your Complete Guide To HSN or Harmonized System Nomenclature Under GST! appeared first on Bizongo Hive.

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India’s tryst with its most comprehensive indirect tax reform, the Goods and Services Tax (GST), has begun at the midnight launch event on June 30. India woke up to a new era of economic resurgence on July 1. GST aims to make India a common market with common tax rates and procedures and remove the economic barriers thus paving the way for an integrated economy at the national level.

You must have seen the various informative advertisements especially in the print media or the awareness programs and debates on news channels and might have also come across jargon like GSTN, GSP, GSTIN, CGST, SGST, IGST, UTGST since it has become almost impossible to ignore the revolutionary tax reform.

This article is a small effort from our side to acquaint you with the following key terms related to GST:

  • GST COUNCIL
    The GST Council is a constitutional body headed by the Union finance minister ( Mr. Arun Jaitley) as its chairman and the Minister in charge of Finance or Taxation or any other Minister, nominated by each state government as its member. As per Article 279A (4), the Council is ought to make recommendations to the Union and the States on important issues like taxes, cesses, and surcharges to be subsumed under the GST, goods and services which may be subject to, or exempt from GST, rates of GST, model GST laws and other related matters.
  • GSTN
    Goods and Services Tax Network (GSTN) is a not for profit, private limited company governed under section 8 of the companies act 2013. The Government of India holds 24.5{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b}( Source: The ET) equity in GSTN, all States and the Empowered Committee of State Finance Ministers, together hold another 24.5{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b} and balance 51{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b} equity is with non-Government financial institutions. The GSTN is responsible for providing the IT infrastructure to introduce GST and connect the databases of states and the center. The information technology system will allow taxpayers to register themselves and file tax returns online. A ₹1,380 crore (Source: Business Standard) contract has been given by GSTN to Infosys to build and maintain technology network for the new indirect tax system.
  • GST Suvidha Provider(GSP) & Application Service Provider(ASP)
    Taxpayers have an option, either to directly access the G2B portal provided by GSTN or use third-party applications, which can provide varied interfaces on desktops, laptops, and mobiles to connect with the GSTN portal via secure GST system application program interface.GSPs and ASPs will provide much-needed support to taxpayers in the IT ecosystem for GST. ASPs will act as a link between the taxpayers and the GSPs.They will focus on taking taxpayers’ raw data on sales and purchases and converting it into the GST returns. The GST returns, or GSTRs will then be filed on behalf of the filer with GSTN via the GSP.But, while the extent of support provided by a GSP may be limited to providing enriched access to the G2B portal, the support provided by ASPs will extend much further and will address most of the taxpayer compliance difficulties.
  • GST Identification Number (GSTIN)
    It is a unique state-wise PAN-based 15-digit alphanumeric code allotted to every business registered under GSTN. Those who have not applied for GSTIN yet can do so now. The GSTN window is reopened for registrations and will remain open for three months. New applicants will get provisional certificates. Once they fill in the required details, their GSTIN will be confirmed.
  • CGST
    Central Goods and Services Tax will come in place of central taxes like central excise duty, central sales tax, service tax, excise duty, additional customs duty or countervailing duty and special additional duty of customs. The revenue collected under CGST is for the Central Government. However, Input Tax Credit of CGST will be utilized against the payment of both CGST and IGST.
  • SGST
    State Goods and Services Tax will be levied on the Intrastate movement of goods and/or services. The revenue collected under State Goods and Services Tax is for the State Government. However, Input Tax Credit will be utilized against the payment of both SGST and IGST.
  • IGST
    Integrated GST will be levied on the supply of any goods and/or services in the course of interstate trade across India. Any supply of goods and/or services in the course of import into India and export of goods and/or services from India will also come under the purview of IGST.
  • UTGST
    Union Territories GST provide benefits same as that of SGST in Intra-Union Territory supply of goods and/or services. Currently, UTGST is applied to union territories of India namely Chandigarh, Lakshadweep, Daman and Diu, Dadra and Nagar Haveli, Andaman and Nicobar Islands. The definition of ‘states’ in the constitution includes union territories with their own legislature, namely Delhi and Puducherry. Therefore, they will still enjoy the SGST provisions. This means that on supplies within the union territories of Delhi and Puducherry, the taxes levied will be CGST +SGST, and on supplies from Delhi/Puducherry to another state/union territory, the tax levied will be IGST.
  • Input Tax Credit (ITC)
    The ITC forms the backbone of the GST regime in India. The GST is essentially a tax on value addition at each stage of the supply chain; every person, who is supplying goods or rendering services or an agent acting as such on behalf of such a person, can claim credits (over input taxes paid at each stage of supply chain) in the subsequent stage of value addition. The end consumer will, therefore, bear only the GST charged by the last supplier in the supply chain. An important point to note here is that the credit of CGST paid on inputs may be used only for paying CGST on the output, while the credit of SGST on inputs may be used only for paying SGST, except in the case of inter-state supply of goods.
  • Output Tax
    It means the CGST/SGST on the taxable supply of goods and/or services made by a taxable person or by his agent. It excludes the tax payable on a reverse charge basis.
  • Reverse Charge Mechanism(RCM)
    The GST has to be typically paid by the supplier of goods and services. But in some cases, the liability to pay the tax falls on the buyer known as Reverse Charge Mechanism. Following are some of the cases where RCM is applicable:
    – When a business buys goods or services from a supplier who is not registered to pay GST. It should be ensured that all the entities who supply you goods and services are registered for GST. If they aren’t, you will have to pay the GST on their behalf under the reverse charge.
    – Government departments making payments to vendors above a specified limit are required to deduct tax (Tax Deducted at Source, TDS) and e-commerce operators are required to collect tax (Tax Collected at Source, TCS) on the net value goods or services supplied through them.
    – In the case of import of goods, an importer is liable to pay the GST under the reverse charge mechanism.
  • Anti-Profiteering Clause
    Clause 171 has been inserted in the GST bill which provides that it is mandatory to pass on the benefit due to a reduction in the rate of tax or from input tax credit to the consumer by way of commensurate reduction in prices. This clause further provides for the establishment of an authority against anti-profiteering in order to ensure its compliance. This is to prevent any inflationary impact on the price of commodities following the GST implementation.While the end consumer may have some reason to cheer, the industry is still doubtful of its implementation.

What are your thoughts on these key terms? Do share in the comments below!

The post A Complete List Of Terms Related To GST Explained In Detail! appeared first on Bizongo Hive.

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With Dual GST implemented in India, the Government of India is set to change the course of the Indian economy. GST is a boon for businesses or bane, only time will tell but during our research, we uncovered some really interesting, lesser-known GST facts.

Here, we compiled a list of the top 17 GST facts that would help you get an in-depth understanding of GST and its effects on your everyday life!

Fact #1

[clickToTweet tweet=”GST or Goods and Service Tax is a comprehensive indirect tax on manufacture, sale & consumption of goods and service throughout India.” quote=”GST or Goods and Service Tax is a comprehensive indirect tax on manufacture, sale & consumption of goods and service throughout India.” theme=”style4″]

Fact #2

[clickToTweet tweet=”With GST, import value will rise between $3.6 billion and $6.9 billion.” quote=”With GST, import value will rise between $3.6 billion and $6.9 billion.” theme=”style4″]

Fact #3

[clickToTweet tweet=”India stands to gain Rs. 79,500 Cr annually after introducing GST.” quote=”India stands to gain Rs. 79,500 Cr annually after introducing GST.” theme=”style4″]

Fact #4

[clickToTweet tweet=”Export gains are expected to vary between $5.4 billion to $10.7 billion.” quote=”Export gains are expected to vary between $5.4 billion to $10.7 billion.” theme=”style4″]

Fact #5

[clickToTweet tweet=”GST on financial services will be 18{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b}, an increase of 3{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b} from the previous rates. However, the availability of input credit will partially neutralize this impact.” quote=”GST on financial services will be 18{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b}, an increase of 3{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b} from the previous rates. However, the availability of input credit will partially neutralize this impact.” theme=”style4″]

Fact #6

[clickToTweet tweet=”Traveling will be anti-inflationary with GST levied only 5{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b}” quote=”Traveling will be anti-inflationary with GST levied only 5{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b}” theme=”style4″]

Fact #7

[clickToTweet tweet=”Soft drinks and flavored water have been placed under the highest tax slab of 28{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b} with an additional cess.” quote=”Soft drinks and flavored water have been placed under the highest tax slab of 28{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b} with an additional cess.” theme=”style4″]

Fact #8

[clickToTweet tweet=”Televisions, refrigerators, & air-conditioners are set to go up by 4-5{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b}; proposed at 28{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b} GST on the consumer electronics.” quote=”Televisions, refrigerators, & air-conditioners are set to go up by 4-5{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b}; proposed at 28{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b} GST on the consumer electronics.” theme=”style4″]

Fact #9

[clickToTweet tweet=”GST rates for the entertainment tickets is 28{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b}. This is at par with casinos and five-star hotels.” quote=”GST rates for the entertainment tickets is 28{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b}. This is at par with casinos and five-star hotels.” theme=”style4″]

Fact #10

[clickToTweet tweet=”Under the current tax laws, Karnataka has a 5{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b} tax rate on mobile phones, while Maharashtra has a 13.5{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b}. With GST, a uniformity across the country will be established.” quote=”Under the current tax laws, Karnataka has a 5{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b} tax rate on mobile phones, while Maharashtra has a 13.5{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b}. With GST, a uniformity across the country will be established.” theme=”style4″]

Fact #11

[clickToTweet tweet=”Currently, invoices need a description of goods at every point of transaction. With GST, the invoices will include only an HSN (Harmonized System Nomenclature), a simple number to distinguish sale of different goods.” quote=”Currently, invoices need a description of goods at every point of transaction. With GST, the invoices will include only an HSN (Harmonized System Nomenclature), a simple number to distinguish sale of different goods.” theme=”style4″]

Fact #12

[clickToTweet tweet=”Online marketplaces heavily invest in acquiring new buyers to generate profitable business for sellers on their platform.” quote=”Online marketplaces heavily invest in acquiring new buyers to generate profitable business for sellers on their platform.” theme=”style4″]

Fact #13

[clickToTweet tweet=”GST is a destination based tax. The states that supply will have to pay less tax.” quote=”GST is a destination based tax. The states that supply will have to pay less tax.” theme=”style4″]

Fact #14

[clickToTweet tweet=”Businesses with a turnover of less than Rs. 20 Lakhs (Rs. 10 Lakh for North East states) need not register under the GST regime.” quote=”Businesses with a turnover of less than Rs. 20 Lakhs (Rs. 10 Lakh for North East states) need not register under the GST regime.” theme=”style4″]

Fact #15

[clickToTweet tweet=”Traders, manufacturers and restaurant owners with turnover below Rs. 75 lakhs can opt for the composition scheme and pay taxes at 1,2 and 5 percent rates, respectively.” quote=”Traders, manufacturers and restaurant owners with turnover below Rs. 75 lakhs can opt for the composition scheme and pay taxes at 1,2 and 5 percent rates, respectively.” theme=”style4″]

Fact #16

[clickToTweet tweet=”Octroi and entry tax will be replaced by GST.” quote=”Octroi and entry tax will be replaced by GST.” theme=”style4″]

Fact #17

[clickToTweet tweet=”The process of tax payment, tax credit, and refund of GST would be carried out electronically.” quote=”The process of tax payment, tax credit, and refund of GST would be carried out electronically.” theme=”style4″]

Did you find these facts related to GST interesting? Or are you still confused about various GST terminologies? Then do check out our Ultimate Guide on GST Terminology.

Do you know any more interesting facts about GST? Tell us in the comments below!

The post GST Facts – 17 Intriguing Facts About Goods and Service Tax You Must Know appeared first on Bizongo Hive.

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Small businesses are an important growth engine for the Indian economy. Across India, there are around 5 crore small and medium-sized businesses providing employment to 11 crore people contributing a third to India’s GDP (according to the 2016-17 annual report of the Ministry of Small and Medium Enterprises). Also, many small businesses are concerned about the sweeping nature of reforms that the ambitious tax regime seeks to bring in.

Therefore, it was worthwhile to bring to you a brief analysis of the impact of GST on small businesses.

The Pros
  • Businesses with a turnover of less than ₹20 lakh/₹10 lakh for North East states are kept outside the purview of GST, i.e., they need not register under the GST regime (other than those businesses making inter-state supplies or supplying via e-commerce).
  • The GST Council addressed the concerns of small businesses by increasing the threshold of turnover for entities that can opt for the composition scheme to ₹75 lakh from ₹50 lakh proposed earlier. Now traders, manufacturers and restaurant owners with turnover below Rs. 75 lakh can opt for the composition scheme and pay taxes at 1, 2, and 5 percent rates, respectively. The composition scheme seeks to relieve small businesses from the complexity of GST. Instead of GST, they pay a percentage of their turnover as the tax.
  • GST could propel the growth of Indian SME’s by promoting government led “Make in India” initiative. The multiple Central and State taxes like Excise Duty, Service Tax, VAT, CST will get subsumed under the GST  regime, making it easier to do business in India.
  • GST does not discriminate between goods and services and would tax both at a single flat rate, thereby making compliance easier. This will be a respite for businesses like restaurants, which fall under both sales and service taxation.
  • The GST will be collected at each stage and computed using the input tax credit method, according to which taxes paid on the purchase of goods and services in other states could be claimed. This would allow GST-registered enterprises to cut costs as they would be able to claim their inter-state expenditure during the usual course of business.
  • There will be an undisrupted interstate transfer of goods as the GST regime is all set to absorb octroi and entry tax in different states.
  • Under the current tax scenario, inter-state or intra-state stock transfers are subject to levying of Excise Duty on the removal of goods and the same is not subject to VAT/ CST. This leaves the small businesses at a disadvantage as they lack the infrastructure to open branches in different states and rely on inter-state sales and purchases (rather than stock transfers) paying central sales tax. GST will create a level playing field between the small businesses and the big corporate enterprises by levying taxes on stock transfers as well.
The Cons
  • The exemption for small businesses with a turnover of less than ₹20 lakh is not all rosy. Registering under GST allows one to claim input tax credit, i.e, at the time of paying the GST collected on sales, one can offset the GST paid on inputs used for business. If a small business is unregistered, the businesses it supplies to will have to do compliance on its behalf. Some buyers may eventually switch to vendors who are registered under GST. Thus, it is advised that even the small businesses not exceeding the GST turnover threshold should get themselves registered.
  • Opting for composition scheme will break the chain of seamless input tax credit as a composition dealer cannot levy and collect tax from customers and will not get any input tax credit on the tax paid by him on the inputs.
  • Under the existing tax regime, no excise duty is paid by a manufacturer having a turnover of less than ₹1.50 crore. But post GST implementation, this exemption limit will get significantly lowered to ₹20 lakhs /₹10 lakhs for North East states mandating such earlier exempt manufacturers to come under the tax net.
  • GST mandates technology intensive compliance. GST returns will have to be filed online, details of every B2B invoice will have to be submitted to GSTN, invoices must also be prepared in the format prescribed under GST rules. Additionally, the process of tax payment, tax credit, and refund of GST would be carried out electronically.The main problem here is that most of the small businesses have not invested in software and hardware. They still run the show on mental calculations and small account books. Many of them dread taking the digital leap. Digitizing transactions, connecting with the GSTN database, training employees or hiring an accountant will increase the compliance costs initially.
  • The refund claims under the GST regime will also be processed on a merit basis, i.e, on the GST compliance rating of the registered taxpayer. The compliance score may be used to assess the credibility of a business. This can endanger the small businesses that face cash flow problems and delay payments. Since their problems will now be directly monitored by public, its buyers may play safe and avoid the specific company leading to further payment delays. This will require the small and medium taxpayers to spend a greater chunk of their revenue to deploy a dedicated resource to ensure timely GST compliance.
Conclusion

Small businesses may face some compliance issues initially but over time these problems will get ironed out. There will be more transparency in tax compliance in the times to come. In the long run, GST is expected to increase the efficiency and competitiveness among small businesses.

Do share your viewpoint in the comments below!

The post Repercussions of GST on Small Businesses After Implementation appeared first on Bizongo Hive.

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With GST implementation date inching closer, we can now clearly see the singular focus of unifying the economy into a common market under this new regime. Post the GST Council Meeting held on 18th and 19th May 2017, the contours of the GST regime have become much clear.

The Council has largely worked out the details of the fixation of the goods and services to a four-tier tax structure: 5{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b}, 12{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b}, 18{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b} and 28{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b}. While the GST rate schedule indicates that nearly 81{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b} of all the items are in the 18{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b} tax bracket or below, the remaining 19{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b} fall in the 28{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b} tax slab, the GST Council has tried to keep the tax rates lower to keep a lid on inflation and nurture economic growth.

With this news, we have decided to bring to you a brief analysis of the Impact of GST rates on different goods and services.

Positive Impact
    • Categorisation of several consumer products like soaps, toothpaste, and hair oil, under 18{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b} is good news for consumers. Similarly, several food items such as edible oil, tea, coffee, sugar, etc. have been kept at 5{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b} (with an exemption for fresh milk and food grains) brings about a great for the industry.
    • Reduction in the tax rate on domestic coal from 12{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b} to 5{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b}  will provide a relief in the cost of power generation despite witnessing an increase in capital cost with higher tax rates levied on the boiler,  turbine, and generator segment. The steel and power companies that depend heavily on coal will benefit as well. The lower prices of domestic coal may also detract power producers from procuring imported coal.
    • For cement, GST slab rate is increased to 28{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b}, as opposed to the existing indirect tax incidence of around 24-25{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b}. However, since metal-ore has been cut to 5{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b}, this comes as an additional benefit.
    • Cars will attract GST at the top rate of 28{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b} with a cess in the range of 1{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b}-15{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b} on top of it. No major impact on four-wheeler automobiles is expected as GST plus cess for most auto segments is closer to the existing indirect tax rates. While for two-wheeler automobiles, the rate is slightly below the indirect tax rate which may help to support volume growth for companies like Hero Moto and TVS Motors.
    • GST on financial services will be 18{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b}, an increase by 3{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b} from the previous rates. However, the availability of input credit will partially neutralize this impact.
    • The transport service of GST at 5{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b} will be anti-inflationary. GST will be just 5{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b} on economy flying, which will help airline companies like SpiceJet and Indigo give a bigger push to program Udaan.
    • Also, healthcare and education will continue to remain exempt under the GST regime to maintain the affordability of these basic services.
Negative Impact
    • The GST Council decided that telecom services will attract a tax rate of 18{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b}, i.e., 3{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b} higher than the current 15{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b} of service tax. This will augment the existing burden of the industry further. The voice and data services will become more expensive for the consumer and in turn, may disturb the demand levels and telco earnings.
    • The GST rate decided for entertainment tickets is 28{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b}. This is at par with gambling and five-star hotels. The proposed GST rate is more than the present effective average tax rate of 8-10{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b} on tickets. Also in some states, the local bodies will be empowered to further tax theaters, increasing the tax burden on the consumer. Watching movies in a theater is being considered as a luxury under the GST tax regime proving to be a major setback for the Indian film industry.
    • Soft drinks and flavored water have been placed in the highest tax slab of 28{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b} combined with an additional cess of 12{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b}*. This increase will have a negative ripple effect disturbing the chain of manufacturers, distributors, and retailers, thus limiting the growth of the Indian beverage industry.
    • Prices of televisions, refrigerators & air-conditioners are set to go up by 4-5{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b} from July onwards; proposed at 28{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b} GST on consumer electronics and durables as compared to the current tax rate which is around 23{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b}. No doubt, the additional tax burden will be passed onto the consumers leading to a temporary negative impact on sales in the beginning.
    • The high rate of GST on hotels may have an adverse impact on the tourism industry as well. The hotels that charge over 5000 rupees a night have come under the highest tax bracket of 28{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b}. For India, charging 28{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b} tax will not be globally competitive when other nations like France charge 5.5{920dbb35a018f53c98098c37c77fa438a4980d0fa4f74e0bbb0e7b335d4b004b}.

What are your thoughts on GST rates? Will the rates have a positive or a negative impact on different goods and services? Share your opinion in the comments below!

The post How are the new GST rates going to affect different industrial sectors? appeared first on Bizongo Hive.

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With the implementation of GST just months away, there is still a chaotic understanding about the contrasting features between GST and the current tax structure.  GST has been described as “transformative” by the honorable Finance Minister.

With more than 160 countries implementing GST, India will only be the second country in the world, after Canada, to introduce the Dual GST system. The infographic below explains in detail, if and, how the current tax structure will be reconstructed.

Do you agree with GST changing India into one market? Let us know in the comments below!

The post Infographic: How transformative is the new GST bill? appeared first on Bizongo Hive.

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