GST Primer: Basic GST guide for new startup or entrepreneurs

Registration

Person not liable for registration

1. Aggregate turnover below threshold limit in a financial year

Exclusive Goods	Rs. 40 Lacs	Rest of India [w.e.f 01/04/2019]
Goods & Service	Rs. 20 Lacs	Rest of India
All Supply	Rs. 10 Lacs	For states like Arunachal Pradesh, Assam, Jammu & Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh

2. if he is exclusively making supply goods and/or services that are not taxable or wholly exempt
3. An agriculturist, to the extent of supplying produce out of cultivation of land

 

Compulsory Registration– irrespective of any turnover limit

Turnover exceed the threshold limit	If turnover exceeds Rs. 40 / 20 Lacs [Exclusive Goods/Services] and Rs. 10 Lacs from respective states
Present tax payer	All person registered with earlier laws [excise, service tax, VAT] have to mandatorily migrate to GST.
Inter-state taxable supply	Businesses making sales to parties in other states.
Casual taxable person	A person who occasionally undertakes transactions involving supply of goods and/or services in a state where he has no fixed place of business
Person covered under Reverse Charge mechanism [RCM]	In RCM, the tax is not charged in the invoice but it has to calculated by the re­ceiver of goods/services and is supposed to be paid to the government directly
Non-resident taxable person	A person who occasionally undertakes transactions involving supply of goods and/or services in India but he has no fixed place of business.
Person who is required to deduct tax (TDS)	TDS provision in GST may require Government Departments, Local Author­ity, Government Agencies,etc to deduct tax at source
E-Commerce Operator	E-Com Operators who collect payment on behalf of dealers have to collect tax at source. It is mandatory for such E-com­merce Operators to get registered under GST. For eg., Flipkart, Snapdeal, etc
E-Commerce Aggregators	The e-commerce operator is merely the person who person who owns, operates or manages digital or electronic facility or platform for e-commerce purposes. For eg., OLA, Uber, OYO
Input Service Distributor (ISD)	ISD is a unit which distributes the credit of input tax on services to its other units having different GSTINs

 

Voluntarily Registration

A person, though not liable, may get himself registered voluntarily and all the provision of GST Act, as applicable to registered person, will be applicable to him

Points to be consider

1. Registration is to taken within 30 days. 5 days before making taxable supply for casual taxable and non-resident person
2. Registration is required for every state where he fulfils above criteria.
3. Other place of within a state is added as additional place of business in that state. No need for separate registration
4. Place of business in another state is considered as distinct persons
5. If person has different business verticals in same states, then he can opt to take separate GST registration for that business vertical
6. Display of Registration Certificate & GSTIN on the name board in a prominent location at principal place of business and at every additional place of business.
7. Enhanced exemption threshold limit of Rs. 40 Lakhs will apply if the person is exclusively engaged in supply of “goods”. This ‘enhanced exemption threshold’ will NOT apply if “goods and services” both are supplied by such person.

 

TAXABLE EVENT- SUPPLY AND SCOPE

Every supply will be liable to tax. Supply of goods or service is the taxable event in GST. The nature of tax would depend upon the nature of supply, viz., inter-State supplies will be liable to IGST and intra-State supplies will be liable to CGST and SGST (UTGST)

Supply includes all forms of supply of goods or service, for a consideration, in the course or furtherance of business [for e.g. sale, transfer, barter, exchange, licence, rental, lease or disposal] and import of services for a consideration whether or not in the course or furtherance of business

Points to be considers

1. Advance of money against supply is taxable event
2. Branch transfer is taxable event, GST will be applicable

Following transaction are taxable supplies even if without consideration

1. Permanent transfer or disposal of business assets where ITC has been availed.
2. Supply of goods or services between related persons or between distinct persons [separate GSTIN of one person]. It means branches need to be treated as a different entity and any stock transfer or branch transfers are taxable.
3. Supply of goods by a Principal to Agent or vise versa.
4. Import of services from a related person or from any of his other establishments outside India, in the course or furtherance of business

Not included in supply

1. Services by an employee to the employer for employment
2. Service by court, tribunals, MPs, MLAs, foreign diplomats and other Constitution position
3. Services of funeral, burial, crematorium or mortuary including transportation of the deceased
4. Sale of land except when sold as a part of construction
5. Gifts not exceeding Rs. 50,000 in value in a financial year by an employer to an employee
6. Actionable claims, other than lottery, betting and gambling

Inward supply covered under Reverse Charge

In reverse charge, GST is not charged by the provider in his invoice. Over here, the recipient will have to himself calculate the amount to be payable as GST and pay to the government directly. Government will be bringing out a list of services and goods on which reverse charge mechanism is to be applicable

Composite supply and Mixed supply

When supply involves multiple (more than one) goods or services, or a combination of goods and service

Composite supply

The Supply of two or more goods or services, which are naturally bundled and one of which is principal supply. It shall be deemed to be a supply of that principal supply.

Where goods are packed, and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is the principal supply. This implies that the supply will be taxed wholly as supply of goods.

Mixed supply

The supply of two or more individual goods or services, which are not naturally bundled, is called mixed supply. It shall be deemed to be a supply goods or services therein, which are attracting highest rate of GST

A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drink and fruit juices when supplied for a single price is a mixed supply. This implies that the supply will be taxed at the rate applicable on goods attracting the highest GST

Place of Supply

Intra-state supply

Both location of supplier and place of supply is in same state

Inter-state supply

Both location of supplier and place of supply is different state

Place of supply of goods

2. Supply involves movement of goods=> the place where movement terminates for delivery
3. Delivery of goods at the instruction of a third party=> the principal place of business of such third party and not of the actual recipient

Place of supply of service

1. Services supplied to a registered person=> the location of such person
2. If not made to a registered person

• • Address on record of the recipient, if address exist
  • In other case, Location of supplier of service

3. If supply of service related to any type of Immovable property or actual performance of service=> such immovable property or place at which actual performance happened.

 

Value of Supply

General provision state value of supply shall be transaction value if following conditions are satisfied

1. Transaction value having a price [paid or payable]
2. Between persons not related
3. And that price being the sole consideration

Value includes

1. Taxes levied under any other then GST
2. Any amounts paid by recipient that are obligation of supplier to pay

• Incidental expenses

1. Interest, late fee or penalty for delayed payment
2. Subsidy realized by supplier on the supply other then subsidies received from Central Government or State Government

Apart from above, there other rules and method specifically defined in the GST

 

INVOICE & VOUCHERS

GST requires that an invoice, tax invoice or bill of supply, is to be issued on the occurrence of certain event or within a prescribed time. Invoice is a document which records the terms of an underlying arrangement between parties

Invoice Preparation

Supply involves movement of goods	Before or at the time of removal of goods
Supply not involve movement of goods	before or at the time of delivery of goods
Goods sent on approval	Earlier of  goods approved or 6 month from the date of removal of goods
Continuous supply of goods	Earlier of issue of transaction statement or payment
Supply of service	Before or after provision of service but not after 30 days from provision of supply of service [45 day for NBFC, Banks & FIs]
Continuous supply of services	On or before due date of payment/ payment/ completion of event. Whichever is earlier

No invoice if supply is up to Rs. 200/-

1. if recipient is non registered person
2. and recipient does not require such invoice

However supplier has to make Consolidate Tax Invoice at the end of each day

Bill of supply is be issued by following persons

1. Supplying of exempted goods and/or services
2. Person registered under composite levy

Invoice issued for goods must be in triplicate copy

1. Original to recipient,
2. Duplicate to transporter and
3. Triplicate for supplier

Invoice issued for service must be in two copies

1. Original to recipient
2. Duplicate for supplier

Receipts Voucher is to be issued for advance receipt of advance with respect to supply of goods and/or services. Refund voucher is for subsequent to the advance when no supply of goods and/or services is made. Format is prescribed for both vouchers.

If registered person receives goods and/or service from which are covered under Reverse charge mechanism. The recipient will issue invoice and payment voucher

Sr. No	Descriptions	Tax Invoice	Bill of Supply
1	Name, address and GSTIN of the supplier	Yes	Yes
2	A consecutive serial number	Yes	Yes
3	Date of Issue	Yes	Yes
4	Name, address and GSTIN or UIN of the recipient	Yes	Yes
5	Name and address of the recipient and the address of delivery, along with the State name and its code, if such recipient is un-registered and where the value of taxable supply is Rs. 50,000/- or more	Yes	NA
6	HSN code or SACs	Yes	Yes
7	Description of goods or services	Yes	Yes
8	Quantity and unit or Unique Quantity Code thereof	Yes	Yes
9	Total value of supply	Yes	Yes
10	Taxable value of supply considering discount or abatement, if any	Yes	NA
11	Rate of tax (CGST,SGST,IGST)	Yes	NA
12	Amount of tax charged in respect of taxable goods or services	Yes	NA
13	Place of supply along with the name of State, in case of a supply in the course of inter-State trade or commerce	Yes	NA
14	Address of delivery where the same is different from the place of supply	Yes	NA
15	Whether the tax is payable on reverse charge basis	Yes	NA
16	Signature or digital signature of the supplier or his authorized representative	Yes	Yes

Content of Tax Invoice and Bill of Supply

 Where a registered person is supplying taxable as well as exempted goods or services or both to an unregistered person, a single “invoice-cum-bill of supply” may be issued for all such supplies

HSN Code/ Services Accounting Codes [SAC]

Any taxpayer, irrespective of his turnover, may use HSN code at 6- digit or 8-digit level if he so desires. For exporters, 8 digits HSN is mandatory 

Aggregate Turnover	HSN/SAC Applicability
Up to Rs. 5 crores	4-digit HSN code
More than Rs. 5 crores	6-digit HSN code
All exports included above categories	8-digit HSN code

 

INPUT TAX CREDIT

Input Tax Credit is the backbone of the GST regime. Every registered person shall be entitled to take credit of input tax charged on any supply of goods and/or services to him which are used or intended to be used in the course or furtherance of his business. The input tax credit is credited to the electronic credit ledger.

Conditions for taking of input tax credit by registered person

All condition must be satisfied

Pre-Condition	Post Condition
Possession of valid tax Invoice	Payment to supplier within 180 days
Delivery of goods or services (complete and effective)	Blocked Credit [17(5)]
Goods and/or services are used or intended to be used his business	Actual end-use in taxable outward supplies
Payment of tax by supplier	Not ineligible (special category)
Credit show in return filed by supplier	Time limit to claim credit

Goods received in instalments

If goods are received in instalments against a single invoice, credit can be taken upon receipt of last instalment of goods

Failure to pay to supplier, the value of supply and tax thereon

If recipient has not paid the supplier within 180 days from date of invoice, the amount equal to input tax credit availed will be reversed along with the interest.

Input tax credit on capital goods

If you claim depreciation on the tax component of the cost of capital goods under the provisions of the Income Tax Act, 1961, the input tax credit will not be allowed

Time limit for taking input tax credit

It is earlier of

1. September GST Return of the next financial year
2. Furnishing Annual Return [due date 31^st Dec]

Apportionment of Credit

Input Tax Credit is available only for goods/services used for business and for supply of taxable goods/services. If that is not the case then only proportionate credit will be available.

On Usage basis

When inputs are used for business as well as non business purposes input tax credit of only those inputs are available which are used for business purposes.

On Outward supplies basis

Similarly, input tax credit is not available when inputs are used for non-taxable supplies, exempt supplies or nil rated supplies

Blocked ITC [No ITC Available]

1. Motor Vehicles for transportation of person having approved seating capacity of 13 person or less including driver, except when used for further supply, transportation of passenger or training.[earlier disallowance was in respect of all motor vehicles. Now, the disallowance is only in respect of motor vehicles with seating capacity upto 13 persons]
2. Vessels and aircrafts, except when used for further supply, transportation of passenger or training, transportation of goods.

ITC on leasing, renting or hire is also not available for point (1)(2), except when used for making outward supply of same category of goods or services or as element of mixed/ composite supply

3. General insurance, servicing, repairs and maintenance of motor vehicles, vessels and aircrafts which are not eligible for ITC except when used for making outward supply of same category of goods or services or as element of mixed/ composite supply [Earlier, there was no specific exclusion in this regard]
4. Specified Supplies

• Food & Beverages, Outdoor Catering, Beauty Treatment, Health Services, Cosmetics & Plastic Surgery – ITC Allowed only if the receiver is in the same business
• Membership of a club, health and fitness centre
• Rent-a-cab, life insurance, health insurance

ITC allowed only if

• It is obligatory upon employer to provide to its employees
• The receiver is in the same business
• Travel benefits to employees on vacation

5. Works contract services when supplied for construction of immovable property, other than plant and machinery
6. Goods or services received by a taxable person for construction of an immovable property on his own account, other than plant and machinery, even though it is used in course or furtherance of his business;

[“Construction” includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalization, to the said immovable property.]

7. Goods or services or both on which tax has been paid under Composition Scheme [Section 10]
8. Goods or services or both received by a non-resident taxable person except on goods imported by him;
9. Goods or services or both used for personal consumption
10. Goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples
11. Any tax paid in accordance with the provisions of sections 74 [tax paid after allegation of fraud, wilful misstatement or suppression of facts], 129 [tax paid after detention of goods in transit for violations of provision of e-way bill], and 130 [ penalty paid after confiscation of goods]

 

GST RETURNS

FORM	PARTICULARS	DUE DATE	FREQUENCY
GSTR-1	Monthly – Details of outward supplies [Sales]	11th	Monthly
GSTR-1	Quarterly – Details of outward supplies [Sales]	13th	Quarterly
GSTR-2	Details of inward supplies [Purchase] [Deferred]	–	Monthly
GSTR-3B	Monthly return on the basis of finalization of details of sales and purchases along with details of tax payments made	20th	Monthly
GSTR-3B	Monthly return on the basis of finalization of details of sales and purchases along with details of tax payments made	22th / 24th	Quarterly
GSTR-4	Quarterly Return for compounding taxable persons – CMP-08 by 18th of the month succeeding the quarter.	30th April	Annually
GSTR-5	Return for non-resident foreign taxable person	20th	Monthly
GSTR-5A	Monthly Return by OIDAR services (supply to a person other than a registered person i.e., online non-taxable recipient)	20th	Monthly
GSTR-6	Input service distributor return	13th	Monthly
GSTR-7	Return for authorities deducting tax at source	10th	Monthly
GSTR-8	Details of supplies effected through e-commerce operator and the amount of tax collected	10th	Monthly
GSTR-9	Annual Return (For Composition Scheme – GSTR 9A) and (For Au­dited Return – GSTR 9B)	31st December	Yearly

 

Point to be considered

1. Return filling is mandatory even when there is no transaction effected by them in any tax period
2. Not be allowed to file a return for a tax period if the previous returns have not been filled by him
3. GSTN will facilitate offline preparation of FORM GSTR-1
4. Matching of Invoice for Credit w.r.t [GSTIN, Invoice No., transaction value, tax amount between Supplier & Recipient]
5. GST Returns cannot be revised, any change is to be affected through Amendment in future returns

Late filling of GST Returns

GST Return	Late filling fess
GSTR 1 (Outward Supplies) GSTR 3B (Monthly returns) GSTR 4 (Composition) GSTR 5 (Non Resident) GSTR 6 (ISD) GSTR 7 (TDS) GSTR 8 (TCS- E-commerce Plat­forms)	·     Rs. 50 per day of delay Maximum of Rs. 5000/-   ·     Rs. 20 per of delay for nil return Maximum of Rs. 5000/-
GSTR 9/9A/9B (Annual Return)	Rs. 100 per day of delay Maximum = 0.25% of turnover in his state/UT

Payment of GST

Payment of GST is made before filling of GST Return for said tax period. Over the counter [OTC] payment of tax is limited to Rs. 10,000/- and payment above Rs. 10,000/- is to be made through Net banking, RTGS/NEFT.

Late Payment of Tax

Particulars	Rate of Interest
For delayed payment	Maximum rate is 18%
For excess claim of ITC/excess reduction in output tax liability	Maximum rate is 24%

 

ACCOUNTS AND OTHER RECORDS

Books & records required to be keep & maintain at principal place of business as mentioned in the certificate of registration	·     production or manufacture of goods ·     inward and outward supply of goods and/or services ·     stock of goods ·     input tax credit availed ·     output tax payable and paid ·     such other particulars as may be prescribed
Time Period	72 months from the due date of furnishing of annual return
Owner or Operator of storage places & Transporters	Every owner or operator of any storage place and transporters, whether registered or not, shall maintain records of consignor, consignee and other relevant details

• You can keep records in electronic form
• You have to keep back up at regularly interval so that in the event of accident and natural causes retrieval can happen within reasonable time.
• Failure to maintain records or accounts may entail payment of tax as determined by a proper officer in respect of unaccounted transactions.

e-invoice

QR Code

 

ELECTRONIC WAY BILL

E-way bill is an electronic way bill for movement of goods which can be generated on the eway bill portal [www.ewaybillgst.gov.in]. A “movement of goods” of more than Rs 50,000/- in value cannot be made by a registered person without an e-way bill.

• Part-A contains description of goods and Part-B contains description of mode of transport
• When an e-way bill is generated a unique e-way bill number (EBN) is allocated and is available to supplier, recipient and the transporter.

Who can generate e-way bill?

• Consignor, unregistered persons and transporter
• However, where a supply is made by an unregistered person to a registered person, the receiver will have to do all the E-way compliances as if he is the supplier.

The information in FORM GST EWB-01 will be made available to the registered supplier on the portal who can utilize such information for filing his return in FORM GSTR-1.

E-way bill generation barred while if the supplier or recipient of the cargo has not furnished returns for two consequent period

Validity of E-Way bill

Type of conveyance	Distance	Valid for
Other than over dimensional cargo	Less than 100 km	1 day
	For every additional 100 Kms or part thereof	Additional 1 Day
Over dimensional cargo	Less Than 20 Kms	1 days
	For every additional 20 Kms or part thereof	Additional 1 Day

No requirement of e-way bill

• The mode of transport is non-motor vehicle.
• Goods transported from Customs port, airport, air cargo complex or land customs station to Inland Container Depot (ICD) or Container Freight Station (CFS) for clearance by Customs.
• Goods transported under Customs supervision or under customs seal.
• Goods transported under Customs Bond from ICD to Customs port or from one custom station to another.
• Transit cargo transported to or from Nepal or Bhutan.
• Movement of goods caused by defence formation under Ministry of Defence as a consignor or consignee.
• Empty Cargo containers are being transported.
• Consignor transporting goods to or from between place of business and a weighbridge for weighment at a distance of 20 Kms, accompanied by a delivery challan.
• Goods being transported by rail where the Consignor of goods is the Central Government, State Governments or a local authority.
• Goods specified as exempt from E-Way bill requirements in the respective State/Union territory GST Rules.
• Transport of certain specified goods- Includes the list of exempt supply of goods; Annexure to Rule 138(14), goods treated as no supply as per Schedule III, Certain schedule to Central tax Rate notifications.

 

OFFENCE & PENALTY

Offences under GST Law

• Supply without invoice or with false/incorrect invoice.
• Issue of invoice without supply of goods.
• Tax Collected but not paid for a period exceeding 3 Months.
• Not Paying tax collected in contravention of CGST /SGST/UGST/IGST Act for the period exceeding 3 months.
• Non deduction or lower deduction of TDS or Non deposition of TDS.
• Non collection or lower collection of TCS or Non deposition of TCS.
• Availing/utilizing ITC without actual receipts of goods/services.
• Fraudulently obtaining any refund.
• Availing/distributing ITC by Input service distributor in violation of Sec. 20.
• Furnishing wrong information to evade payment of tax.
• Failure to register despite being liable to pay tax.
• Furnishing wrong information for registration.
• Obstructing or preventing any official in discharge of his duty.
• Transportation of goods without proper documents.
• Suppressing turnover leading to tax evasion.
• Failure to maintain or retain books of accounts.
• Failure to furnishing wrong or improper information to an officer during proceeding.
• Supplying /transporting/storing any goods liable to confiscation.
• Issue of invoice using GSTIN of another person.
• Tampering destroying any material evidence.
• Tempering /disposing of goods detained/seized/attached under the Ac

Penalty

Quantum of penalty

1. 10,000/- or
2. Amount of tax evaded, fraudulently obtained as refund, availed as credit, or not deducted or collected or short deducted or collected

Whichever is higher

Any registered person who has not paid tax or makes a short payment of tax on supplies shall be liable to penalty which will be the higher of the following amounts

1. 10% of the tax not paid or
2. 10,000/-

Whichever is higher