FAQ on GST

The FAQ is based on Draft GST law, and could change after the implementation of Final GST Act.

1.             What is Goods and Service Tax (GST)?

It is a destination based tax on consumption of goods and services. It is proposed to be levied at all stages right from manufacture up to final consumption with credit of taxes paid at previous stages available as setoff. In a nutshell, only value addition will be taxed and burden of tax is to be borne by the final consumer.   

2.             Who are the persons liable to take a Registration under the Model GST Law?

            Any supplier who carries on any business at any place in India and whose aggregate turnover exceeds prescribed threshold limit in a year is liable to get himself registered. Threshold limit is Rs. 20 Lakhs, Rs. 10 Lakhs for North-Eastern states. Aggregate turnover includes the aggregate value of, excluding taxes charged under GST law:

                                 i.            All taxable and non-taxable supplies,

                               ii.            Exempt supplies, and

                              iii.            Exports of goods and/or service of a person having the same PAN.

Aggregate turnover does not include value of supplies on which tax is levied on reverse charge basis, and value of inward supplies. However, following certain categories of persons are liable to be registered irrespective of this threshold:

a)    Persons making any inter-State taxable supply;

b)    Casual taxable persons;

c)    Persons who are required to pay tax under reverse charge;

d)    Non-resident taxable persons;

e)    Persons who are required to deduct tax under section 37;

f)     Persons who supply goods and/or services on behalf of other registered taxable persons whether as an agent or otherwise;

g)    Input service distributor;

h)    Persons who supply goods and/or services, other than branded services, through electronic commerce operator;

i)     Every electronic commerce operator;

j)     An aggregator who supplies services under his brand name or his trade name; and

k)    Such other person or class of persons as may be notified by the Central Government or a State Government on the recommendations of the Council.

An agriculturist shall not be considered as a taxable person and shall not be liable to take registration.

3.             What is advantage of taking registration in GST?

Registration under Goods and Service Tax (GST) regime will confer following advantages to the business:

§  Legally recognized as supplier of goods or services.

§  Proper accounting of taxes paid on the input goods or services which can be utilized for payment of GST due on supply of goods or services or both by the business.

§  Legally authorized to collect tax from his purchasers and pass on the credit of the taxes paid on the goods or services supplied to purchasers or recipients.

A person without GST registration can neither collect GST from his customers nor claim any input tax credit of GST paid by him.

4.             What are inter-state supplies and intra-state supplies?

Inter-state and intra-state supplies have specifically been defined in Section 3 & 3A of IGST Act respectively. Broadly, where the location of the supplier and the place of supply are in same state it will be intra-state and where it is in different states it will be inter-state supplies.

5.             What are the Payments to be made in GST regime?

In the GST regime, for any intra-state supply, taxes to be paid are the Central GST (CGST, going into the account of the Central Government) and the State GST (SGST, going into the account of the concerned State Government). For any inter-state supply, tax to be paid is Integrated GST (IGST) which will have components of both CGST and SGST. In addition, certain categories of registered persons will be required to pay to the government account Tax Deducted at Source (TDS) and Tax Collected at Source (TCS). In addition, wherever applicable, Interest, Penalty, Fees and any other payment will also be required to be made.

6.             What is input tax?

            Input tax in relation to a taxable person, means the {IGST and CGST} in respect of CGST Act and {IGST and SGST} in respect of SGST Act, charged on any supply of goods and/or services to him which are used, or are intended to be used, in the course or furtherance of his business and includes the tax payable. Under sub-section (3) of section 7. credit of all three can be used for discharging IGST liability, whereas only credit of IGST & CGST can be taken in CGST Act and that of IGST & SGST can be taken under SGST Act. Further the credit of CGST & SGST cannot be cross-utilized.

7.             What         are         the         conditions          necessary            for obtaining ITC?

Following four conditions are stipulated:

§  The registered taxable person should be in possession of tax paying document issued by a supplier;

§  The taxable person must have received the goods and / or services;

§  The tax charged on such supply has been actually paid to the government either in cash or through utilization of input tax credit; and

§  The taxable person should have furnished the return under section 27.

Statue provides that the ITC would be confirmed only if the inward details filed by the recipient are matched with the outward details furnished by the supplier in his valid return. In case of mismatch between the inward and outward details, the supplier would be required to rectify the mis-match within a period of tw months and if the mis-match continues, the ITC would have to be reversed by the recipient.

8.             Who needs to file Return in GST regime?

Every registered taxable person - who crosses the threshold limit for payment of taxes. A supplier needs to be registered when the aggregate turnover crosses Rs. nine lacs but he become taxable person ONLY when he crosses Rs. ten lacs. So he will be required to file returns when he crosses the threshold limit of Rs. ten lacs. There are some other class of persons who need to be registered and therefore will have to file returns like interstate suppliers, TDS deductors, e-commerce operators, suppliers supplying goods through e-commerce operators etc

9.       What are the types of GST returns and their due date?

Return Form	What to file?	By Whom?	By When?
GSTR-1	Details of outward supplies of taxable goods and/or services effected	Registered Taxable Supplier	10th of the next month
GSTR-2	Details of inward supplies of taxable goods and/or services effected claiming input tax credit.	Registered Taxable Recipient	15th of the next month
GSTR-3	Monthly return on the basis of finalization of details of outward supplies and inward supplies along with the payment of amount of tax.	Registered Taxable Person	20th of the next month
GSTR-4	Quarterly return for compounding taxable person.	Composition Supplier	18th of the month succeeding quarter
GSTR-5	Return for Non-Resident foreign taxable person	Non-Resident Taxable Person	20th of the next month
GSTR-6	Return for Input Service Distributor	Input Service Distributor	13th of the next month
GSTR-7	Return for authorities deducting tax at source.	Tax Deductor	10th of the next month
GSTR-8	Details of supplies effected through e-commerce operator and the amount of tax collected	E-commerce Operator/Tax Collector	10th of the next month
GSTR-9	Annual Return	Registered Taxable Person	31st December of next financial year
GSTR-10	Final Return	Taxable person whose registration has been surrendered or cancelled.	Within three months of the date of cancellation or date of cancellation order, whichever is later.
GSTR-11	Details of inward supplies to be furnished by a person having UIN	Person having UIN and claiming refund	28th of the month following the month for which statement is filed

10.         Can a recipient feed information in his GSTR-2 which has been missed by the supplier?

Yes, the recipient can himself feed the invoices not uploaded by his supplier. The credit on such invoices will also be given provisionally but will be subject to matching. On matching, if the invoice is not uploaded by the supplier, both of them will be intimated. If the mismatch is rectified, provisional credit will be confirmed. But if mismatch continues even after intimation, the credit provisionally allowed will be reversed.

11.         What if the invoices do not match? Whether ITC given or denied? If denied, what action is taken against supplier?

If invoices in GSTR-2 do not match with invoices in counter-party GSTR-1, the ITC will be reversed if the mismatch continues even after it is made known to both and still it is not rectified. Mismatch can be because of two reasons. First, it could be due to mistake at the side of the recipient, and in such a case, no further action is required. Secondly, it could be possible that the said invoice was issued by supplier but he did not upload it and pay tax on it. In such a case, recovery action shall be taken against the supplier. In short, all mismatches will lead to proceedings if the supplier has made a supply but not paid tax on it.

12.         What will be the legal position in regard to the reversed input tax credit if the supplier later realises the mistake and feeds the information?

At any stage, but before September of the next financial year, supplier can upload the invoice and pay duty and interest on such missing invoices in his GSTR-3 of the month in which he uploaded the invoice. The recipient will then automatically get ITC on that invoice. The interest paid by the recipient at the time of reversal will also be returned to the recipient through an automated system on the GSTN.

13.         If a return has been filed, how can it be revised if some changes are required to be made?

In GST since the returns are built from details of individual transactions, there is no requirement for having a revised return. Any need to revise a return may arise due to the need to change a set of invoices or debit/ credit notes. Instead of revising the return already submitted, the system will allow changing the details of those transactions (invoices or debit/credit notes) that are required to be amended. They can be amended in any of the future GSTR-1/2 in the tables specifically provided for the purposes of amending previously declared details.

14.         What all should a diligent taxpayer ensure for a hassle free compliance under GST?

One of the most important things under GST will be timely uploading of the details of outward supplies in Form GSTR-1 by 10th of next month. How best this can be ensured will depend on the number of B2B invoices that the taxpayer issues. If the number is small, the taxpayer can upload all the information in one go. However, if the number of invoices is large, theinvoices (ordebit/ creditnotes) shoul beuploaded on a regular basis. GSTN will allow regular uploading of invoices even on a real time basis. Till the statement is actually submitted, the system will also allow the taxpayer to modify the uploaded invoices. Therefore, it would always be beneficial for the taxpayers to regularly upload the invoices. Last minute rush will make uploading difficult and will come with higher risk of possible failure and default. The second thing would be to ensure that taxpayers follow up on uploading the invoices of their inward supplies by their suppliers. Thiswouldbehelpfulinensuringthattheinputtax credit is available without any hassle and delay. Recipients canalsoencouragetheirsupplierstouploadtheirinvoiceson a regular basis instead of doing it on or close to the due date. Thesystemwouldallowrecipientstoseeiftheirsuppliershave uploaded invoices pertaining to them. The GSTN system will also provide the track record about the compliance level of a tax payer, especially about his track record in respect of timely uploading of his supply invoices giving details about the auto reversalsthathavehappenedforinvoicesissuedbyasupplier.

15.         How will imports/exports be taxed under GST?

All imports/exports will be deemed as inter-state supplies for the purposes of levy of GST (IGST). The incidence of tax will follow the destination principle and the tax revenue in case of SGST will accrue to the State where the imported goods and services are consumed. Full and complete set-off will be available as ITC of the IGST paid on import on goods and services.

16.         What is GSTN?

Goods and Services Tax Network (GSTN) is a non-profit non-government company, which will provide shared IT infrastructure and service to both central and state governments including tax payers and other stakeholders. The Frontend services of registration, Returns and payments to all taxpayers will be provided by GSTN. It will be the interface between the government and the taxpayers.

17.         What is GST Compliance Rating?

Taxpayers registered under GST will be assigned a rating, based on how promptly they upload invoices, pay taxes and file returns. The ratings will be made public on GSTN website as tax authorities seek to build peer pressure among companies to ensure compliance.