REGISTRATION & RETURN PROCESS UNDER GOODS AND SERVICES TAX (GST) By CA Sandip Agrawal Sandip Satyanarayan & Co Chartered Accountants

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1 REGISTRATION & RETURN PROCESS UNDER GOODS AND SERVICES TAX (GST) By

2 BRIEF INTRODUCTION TO GST GST is a Tax on Goods and services and it is proposed to be a comprehensive indirect tax levy on manufacture, sale and consumption of goods as well as services at the national level. Its main objective is to consolidate all indirect tax levies into a single tax, except Basic Customs Duty replacing multiple tax levies, overcoming the limitations of existing indirect tax structure, and creating efficiencies in the administration.

3 BRIEF INTRODUCTION TO GST It will replace Indirect Taxes Levied by Centre such as : Central Excise duty, Duties of Excise (medicinal and Toilet preparations), Additional Duties of Excise, Additional Duties of Customs (CVD), Special Additional Duty of Customs (SAD), Service Tax, Cesses and surcharges etc. It will also replace Indirect Taxes Levied by States such as: State VAT, Central Sales Tax, Purchase Tax, Luxury Tax, Entry Tax, Entertainment Tax, State cesses and surcharges

4 BRIEF INTRODUCTION TO GST CONTD. The Central Taxes would be known as CGST. The State Taxes would be known as SGST. In case of Inter-state supply and import from outside India the Taxes would be known as IGST which will be approx sum total of CGST & SGST. In GST, it is anticipated that virtually all goods and services will be taxable, with minimum exemptions.

5 BRIEF INTRODUCTION TO GST CONTD. GST will have major impact on Indian economy by way of development of common Indian market and reduction of cascading effect of tax on the cost of goods and services. It will impact the Tax Structure, Tax Incidence, Tax Computation, Tax Payment, Compliance, Credit Utilization and Reporting leading to a complete overhaul of the current indirect tax system. GST will have a far reaching impact on almost all the aspects of the business operations in India, i.e. on pricing of products and services; supply chain optimization; IT, accounting and tax compliance system.

6 REGISTRATION PROCESS UNDER GST INTRODUCTION Registration is the first interaction point between assessee and the tax department. Registration of a business with the tax authorities implies obtaining a unique identification from the concerned tax authority by the taxable person. Under GST, the registration will link all GST related transactions of every person, enable proper accounting of taxes paid on input goods and services, enable passing of tax credit on supply of goods and services and ease the compliance verification.

7 BENEFIT OF REGISTRATION UNDER GST UNIQUE IDENTIFICATION LINK ALL TRANSACTIONS PROPER ACCOUNTING PASSING OF TAX CREDIT EASE OF COMPLIANCE

8 REGISTRATION REQUIREMENT UNDER PRESENT LAW Law Threshold Limit Section Central Excise Act 1944 Finance Act 1994 ` 150 Lakhs Section-6 ` 9 Lakhs Section 69 State VAT Acts ` 5 to 10 Lakhs Different states have different provisions

9 PROPOSED REQUIREMENT UNDER GST Chapter-VI of the Model GST Law deals with Registration under GST. Section 19 deals with normal registration covered under Schedule III, voluntary registrations etc. Section 19A deals with Special Provisions for Registration of Casual Taxable Person and Non-Resident Taxable Person. Following Taxable persons are required to be registered under GST: Every supplier in the state from where he makes taxable supply if his all India aggregate turnover exceeds threshold limit. (Presently proposed aggregate turnover is 9 Lakhs in a year except North Eastern States including Sikkim where is it proposed at 4 Lakhs)

10 PROPOSED REQUIREMENT UNDER GST Contd. Person making interstate supply irrespective of threshold limit Person already registered under existing law to pay indirect taxes Casual and Non-Resident Suppliers Voluntary Registration below threshold Specific Class of Persons

11 PROPOSED REQUIREMENT UNDER GST Threshold limit for registration is not applicable to following class of persons. Persons making any inter-state taxable supply. Casual & Non-resident taxable persons. Persons who are required to pay tax under reverse charge. Persons who are required to deduct tax under section 37. Persons who supply goods and/or services on behalf of other registered taxable persons whether as an agent or otherwise.

12 PROPOSED REQUIREMENT UNDER GST Threshold limit for registration is not applicable to following class of persons Contd. Input service distributor Persons who supply goods and/or services, other than branded services, through electronic commerce operator. Every electronic commerce operator. An aggregator who supplies services under his brand name or his trade name. Such other person or class of persons as may be notified by the Central or a State Government on the recommendations of the Council

13 REGISTRATION PROCESS UNDER GST Features of Registration Process PAN based registration. PAN will be mandatory except for Nonresident taxable person. Application to filled within 30 days from the date the person is liable to registration. Unified application to both State and Central Tax Authorities. State-wise registration for person having presence in more than one State. Approval for registration within 3 days of filing application. Within a PAN, separate registration for separate business verticals within a state is possible subject to certain conditions. Grant/ Rejection of application for Registration under CGST/SGST shall be deemed to be a Grant/ Rejection of application for Registration under SGST/CGST Act. Application shall not be rejected without giving a notice to show cause and without giving the person a reasonable opportunity of being heard.

14 REGISTRATION PROCESS UNDER GST Registration under GST A person can obtain registration either of the following two ways: 1. Obtaining New Registration through Common Portal (GSTN) 2. Migration of existing tax payers to the GSTN database

15 REGISTRATION PROCESS UNDER GST Process for Obtaining New Registration Application to be filed online through GST common portal set by GSTN. Application can also be filed through FCs and TRPs. Application for registration in more than one state can be filed at one go. Documents to be filed for: Constitution of Business Principal Place of Business Bank Accounts Authorised Signatory Photograph

16 REGISTRATION PROCESS UNDER GST Process for Obtaining New Registration Application may be submitted using DSC or without DSC. If DSC not used, then signed copy of the application to be submitted to a CPC to be operated by GSTN. Processing of application and grant of registration even before signed copy is received. Cancellation of registration to be initiated if no signed copy received within stipulated time. and SMS for Grant or rejection of application. Casual suppliers have to pay advance tax before application.

17 REGISTRATION PROCESS UNDER GST Approval Process. Online verification of certain details like PAN, CIN, Adhaar & other numbers issued by other department. Online transmission of application to jurisdictional authority by the backend modules. 3 common working days for both tax authorities to respond. Deemed approval after 3 days. Single opportunity to tax authorities to raise query, if any 7 days for response and 7 days for action. Mostly post registration visits based on risk profile. Downloadable Registration Certificate to be provided by GSTN. Communication of reason for refusal of registration.

18 REGISTRATION PROCESS UNDER GST Migration of Exiting Tax Payers All existing registered persons, whether with the Centre or State under or both, would be allotted a GST registration number called GSTIN on voluntary basis. State VAT/ Excise registration data to be used for migration of dealers in goods. Service Tax registration data to be used for migration of service providers. Validation of existing registration information by NSDL / GSTN. Verification / updation of migrated data by existing registrants within a specified period. Issuance of GSTIN by GSTN. If verification / updation not done within stipulated period, GSTIN will be suspended till taxable person does the needful. Verification by Centre/State Authorities after issuance of GSTIN.

19 REGISTRATION PROCESS UNDER GST Suppliers under Composition Scheme Suppliers with turnover below a particular threshold (proposed limit is Rs.50 Lakhs) eligible for composition scheme basis. To pay tax on turnover with no input tax credit. To opt at the beginning of the year applicable till eligibility or opting out. Switch from composition to regular scheme voluntarily or on crossing threshold. Suppliers making interstate supplies not eligible for composition scheme.

20 STRUCTURE OF GSTIN State Code PAN Entity Blank Check Taxpayer will be allotted 15 digit alphanumeric code GSTIN. State wise allocation First Two Digit will be State Code. PAN Based next 10 digit would be PAN of the taxpayer. 13th Digit for Business Verticals of entities with same PAN in same State. 14th digit left blank for future use. 15th digit Checksum

21 AMENDMENT IN REGISTRATION Section 20 deals with Amendment of Registration Capturing registration information is not a one-time activity and any change in critical information should be entered at the common portal within a stipulated time period. Changes to other registration data can be done on self-service basis Change to compounding scheme will require submission of reasons and prescribed relevant documents The same change is required to be approved / rejected by the Tax Authorities within time limit to be prescribed. Tax authorities can not reject the amendment request without giving show cause notice and giving reasonable opportunity of being heard.

22 SURRENDER & CANCELLATION Section 21 deals Cancellation of Registration Registration can be surrendered or can be cancelled on Closure of business of Tax Payer Gross Annual Turnover falling below threshold for registration Change to compounding scheme will require submission of reasons and prescribed relevant documents Transfer of business for any reason Amalgamation of taxable person with other legal entities or demerger Non commencement of business by the voluntary tax payer within the stipulated time period (6 months) prescribed under the GST laws.

23 SURRENDER & CANCELLATION Cancellation of registration by tax authorities: Signed copy of summery extract of submitted application form not received even after reminder In case a tax payer contravenes specified provision of the GST law. Non-furnishing of Returns for three consecutive tax period by a Compounding Taxable supplier. Non-furnishing of Returns for continuous period of 6 months by a Taxable Supplier other than Compounding Taxable Supplier. The cancellation of registration may be preceded by system generated notice giving 7 days time for furnishing reply by the taxpayer. Principle of natural justice to be followed before cancellation, i.e., giving an opportunity to taxpayer to be heard and passing of order Cancellation of registration to be prospective. A person, whose registration was cancelled by tax authority on his own motion, may apply for revocation of cancellation.

24 RETURNS UNDER PRESENT LAWS Laws Central Excise Service Tax VAT Customs Other laws Return Frequency Monthly Return SSI- quarterly return One Annual Return One return every six months One AnnualReturn (applicable w.e.f ) Monthly/quarterly-different provisions for different states No Return Depending upon nature and state provisions

25 RETURN PROCESS UNDER GST Chapter-VIII of the Model GST Law deals with the Returns under GST. Commone-returnforCGST,SGST&IGST. Prescribed returns under GST: Return for Outward Supplies (GSTR-1). Return for Inward Supplies (GSTR-2). Monthly Return (GSTR-3). Quarterly Return for Composite Tax Payer (GSTR-4). Return for Foreign Non-resident Taxpayer (GSTR-5) ISD Return (GSTR-6) TDS Return (GSTR-7) Annual Return (GSTR-8).

26 INTRODUCTION / FEATURES OF GST RETURN Separate returns for different categories of taxpayers Normal / Regular & Casual Taxpayer (GSTR-1, 2,3 & 8) Compounding Taxpayer (GSTR- 4 & 8) Foreign Non-resident Taxpayer (GSTR-5) Input Service Distributor (GSTR- 6) Tax Deductor (GSTR-7)

27 INTRODUCTION / FEATURES OF GST RETURN Payment of due tax is must for filing valid return Returns can be submitted with non or short payment but shall be treated as invalid not taken into account for invoice matching & inter-government fund settlement Provision for filing revised information Differential Tax liability to be captured through Debit Note / Credit Note/ Supplementary invoices / correction mechanism Maintenance of electronic Cash Ledger Maintenance of electronic ITC Ledger Maintenance of electronic Tax liability Ledger

28 WHO NEEDS TO FILE RETURN? Every registered person is required to file a return for the prescribed tax period No business Nil return Persons exclusively dealing in exempted / Nil rated / non-gst goods or services No registration & no return. Government departments - supplier need to quote Department ID inter state purchases considered as B2C supplies.

29 RETURN PROCESS UNDER GST CONTD. Return for Outward Supplies. Section Proposed Form To Be Filed By Due Date Every Taxable Person other than Composition Dealer, 25 GSTR 1 TDS deductor or Input Service Distributor 10th Day of Next Month As per section 2(73) of the Model GST Law Outward supply in relation to a person, shall mean supply of goods and/or services, whether by sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made by such person in the course or furtherance of business except in case of such supplies where the tax is payable on reverse charge basis;

30 RETURN PROCESS UNDER GST CONTD. Return for Inward Supplies. Section Proposed Form To Be Filed By Due Date Every Taxable Person other than Composition Dealer, 26 GSTR 2 TDS deductor or Input Service Distributor 15th Day of Next Month As per section 2(61) of the Model GST Law Inward supply in relation to a person, shall mean receipt of goods and/or services whether by purchase, acquisition or any other means and whether or not for any consideration;

31 RETURN PROCESS UNDER GST CONTD. Monthly Return. Section Proposed Form To Be Filed By Due Date Every Taxable Person other than Composition Dealer, 27 GSTR 3 TDS deductor or Input Service Distributor 20th Day of Next Month Every registered taxable person shall furnish a monthly return for every tax period, whether or not any supplies of goods and/or services have been effected during such tax period. A registered taxable person shall not be allowed to furnish return for a tax period if valid return for any previous tax period has not been furnished by him.

32 RETURN PROCESS UNDER GST CONTD. Quarterly Return. Section Proposed Form To Be Filed By Due Date 27 GSTR 4 Composition Taxable Person 18th of the month next to quarter As per Section 8 of the Model GST Law Composition Levy is permitted to a registered taxable person, whose aggregate turnover in a financial year does not exceed fifty lakh of rupees, to pay, in lieu of the tax payable by him, an amount calculated at such rate as may be prescribed, but not less than one percent of the turnover during the year. No such permission shall be granted to a taxable person who effects any inter-state supplies of goods and/or services.

33 RETURN PROCESS UNDER GST CONTD. Return by Foreign Non Resident Taxable Person. Section Proposed Form To Be Filed By Due Date 27 GSTR 5 Foreign Non-Resident Taxable Person 20th of the next month & within 7 days of expiry of registration As per section 2(73) of the Model GST Law Non-resident taxable person means a taxable person who occasionally undertakes transactions involving supply of goods and/or services whether as principal or agent or in any other capacity but who has no fixed place of business in India.

34 RETURN PROCESS UNDER GST CONTD. Return by Input Service Distributor Section Proposed Form To Be Filed By Due Date 27 GSTR 6 Input Service Distributor 13th Day of Next Month As per Section 2(56) of the Model GST Law "Input Service Distributor" means an office of the supplier of goods and / or services which receives tax invoices issued under section 23 towards receipt of input services and issues tax invoice or such other document as prescribed for the purposes of distributing the credit of CGST (SGST in State Acts) and / or IGST paid on the said services to a supplier of taxable goods and / or services having same PAN as that of the office referred to above.

35 RETURN PROCESS UNDER GST CONTD. TDS Return. Section Proposed Form To Be Filed By Due Date 27 GSTR 7 TDS Deductor 10th Day of Next Month As per Model GST Law the Central or a State Government may mandate, - (a) a department or establishment of the Central or State Government, or (b) Local authority, or (c) Governmental agencies, or (d) such persons or category of persons as may be notified, by the Central or a State Government on the recommendations of the Council, [ the deductor ], to deduct tax at the rate of one percent from the payment made or credited to the supplier of taxable goods and/or services, notified by the Central or a State Government, where the total value of such supply, under a contract, exceeds rupees ten lakh.

36 RETURN PROCESS UNDER GST CONTD. Annual Return. Section Proposed Form 30 GSTR 8 To Be Filed By Every Taxable Person other than TDS deductor, ISD, Casual Taxable Person or NRI Taxable Person Due Date By 31st December of next FY As per Model GST Law every taxable person who is required to get his accounts audited (exceeding prescribed turnover) shall furnish, electronically, the annual return along with the audited copy of the annual accounts and a reconciliation statement, reconciling the value of supplies declared in the return furnished for the year with the audited annual financial statement, and such other particulars as may be prescribed.

37 SEC 28 - CLAIM OF INPUT TAX CREDIT & PROVISIONAL ACCEPTANCE THEREOF o EverypersoncantakeITCasselfassessed. o Once GSTR-2 submitted- credit shall be credited in electronic credit ledger on provisional basis. o SuchcreditmaybeutilisedforpaymentofGSTliability. o Ifaperson has notsubmitted valid return, then suchperson shall not be allowed to utilize such credit unless self assessed taxpaidincash. o Mismatch to be communicated and rectified

38 SEC29 MATCHING, REVERSAL& RECLAIMOFITC o Thedetailsinareturnofinwardsuppliesofarecipientshouldbematched in prescribed time and manner with: Outward supplies furnished by other party(supplier) Additional customs duty paid on goods imported Anyduplicateclaimsofinputtaxcredit o If details of inward supply match with the outward supply or additional duty of customs, credit shall be finally accepted and communicated to recipient. o Duplication communicated to recipient & added in output liability of recipient in the month succeeding to the month in which discrepancy is communicated. Interest also required to be paid (From date of availing credit till corresponding additions)

39 SEC29 MATCHING, REVERSAL& RECLAIMOFITC Credit claimed excess Outward supply not declared by supplier, or From tax declared by supplier for same supply Discrepancy communicated to both. If not rectified by supplier, will be added to output liability of recipient in return (in month succeeding the month in which discrepancy was communicated) Liable to pay interest (From date of availing credit till corresponding additions) Recipient allowed to reduce output liab if supplier declares invoice/debit note in his valid return. Accepted rejected Interest will be added back in electronic cash ledger. Amt reversed shall be added back. Also, interest to be paid on such amt at rate specified u/s 36(3)

40 SEC 29A MATCHING, REVERSAL & RECLAIM OF REDUCTION IN OUTPUT TAX LIABILITY o Output tax is reduced by outward supplier by issuing CN, details of every such CN issued should be matched with: Corresponding reduction in the credit by recipient in the credit note for the current or subsequent tax period Any duplicate claims for reduction of output tax liability. o If claim of reduction matches with reduction in ITC by recipient, such shall be finally accepted & communicated o Duplication communicated to supplier & added in output liability of supplier in the month in which discrepancy is communicated. Interest also required to be paid (From date of availing credit till corresponding additions)

41 SEC 29A MATCHING, REVERSAL & RECLAIM OF REDUCTION IN OUTPUT TAX LIABILITY Output liability reversed excess From ITC reversed by recipient, or Credit note not declared by recipient Discrepancy communicated to both. If not rectified by recipient, will be added to output liability of supplier in return (of month succeeding the month in which discrepancy was communicated) Liable to pay interest (From date of availing credit till corresponding additions) Supplier allowed to reduce output liab if recipient declares credit note in his valid return. Accepted rejected Interest will be added back in electronic cash ledger. Amt reversed shall be added back. Also, interest to be paid on such amt at rate specified u/s 36(3)

42 MISC PROVISIONS o Sec 27A First return Outward supplies from date on which he became liable to registration till end of month in which registration is granted Inward supplies from effective date of registration till end of month in which registration is granted. Under composition scheme from date on which he becomes registered taxable person till end of quarter in which registration is granted. o Sec 31 Final return At time of cancellation. To be filed within 3 months of date of cancellation or date of cancellation order

43 MISC PROVISIONS o Sec 32 Notice to return defaulters: Registered person fails to furnish return u/s 27 & 31, a notice shall be issued requiring him to furnish return within such time & manner as maybe prescribed. o Sec 33 Levy of late fee: Return u/s 25, 26, 27, 31 not filed liable to late Rs 100 per day, max to Rs Return u/s 30 not filed liable to late Rs 100 per day, max to amt calculated at a quarter % of his turnover o Sec 34 Tax return preparers: Appropriate Govt. may prescribe manner of approval, eligibility conditions, duties & obligations etc. Registered person may authorize such person to prepare details for returns.

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