GST FAQs

Introduction to GST

With the launch of goods and services tax (GST) around the corner, India Inc. is preparing for a brand new indirect tax regime. GST will require strict, timely and online compliance by every section of the business value chain. Once GST is implemented, buyers of raw materials; services or products, up the value chain, will not be able to take input tax credit till their vendors have deposited GST as well as done the requisite online filings. This will include the vendors having to upload each invoice detail at a fairly granular level as well as do three filings every month in every state where they are selling goods or services.

Frequently asked questions (FAQ) on Goods and Services Tax

A. REGISTRATION

1. In case you are registered under existing Indirect Tax Law (Excise, VAT, Service Tax), then are you required to submit any documents for GST registration or you will be automatically migrated to GST?

There is no automatic migration to the GST regime. For migration, you must use the Provisional ID and Password issued by the Commercial Tax Department / CBEC. This provisional ID can be obtained in the following manner:

a) Logon to ACES portal or CBEC website or relevant state department site (based on your registration site (based on your registration)

b) Here you will see a flash message stating ‘Please Click Here to view your Provisional ID and Password to access GSTN Common Portal

c) Make a note of the Provisional ID and Password provided

d) Logon to the GST Common Portal (www.gst.gov.in ) and click the ‘New User Login’ button

e) The Declaration page is displayed. Select the checkbox and click ‘Continue’ button

f) Fill in the Provisional ID and Password along with the captcha provided and log in

g) Follow the steps as displayed on the website

h) Fill in the necessary details like details as required of place of business, additional place of business, details of Directors, Karta, Bank details etc.

i) Sign using E-sign or DSC (mandatory for corporates), and generate provisional registration certificate.

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2. What will happen to the small enterprises if their turnover dips below Rs.20 lakh for GST? Will they remain covered under GST or do they come out?

Every supplier should mandatorily get registered under GST if the value of aggregate turnover exceeds Rs.20 lakhs (Rs. 10 lakhs in case of North Eastern States). If the aggregate turnover falls below Rs.20 Lakh, then you can opt for cancellation of registration in Form GST REG- 16. However, this is advisable only when such fall is permanent in nature.

3. You have business in West Bengal. You have more than one Vat Registrations in WB. Can you opt for separate GST registrations for different VAT registrations in the same state?

A person having multiple business verticals in a state may obtain a separate registration for each business vertical as defined under section 2(18), subject to conditions as follow:

  • Such person has more than one business vertical in a state
  • No business vertical of said person shall be granted registration to pay tax u/s 10 (Composition Scheme), if any one of the other business vertical of same person is paying tax u/s 9 (Normal Rates)
  • All separately registered business verticals of such person shall pay tax under this Act on supply of goods or services or both made to another registered business vertical of such person and issue a tax invoice for such supply

B. PRE-GST IMPLEMENTATION

4. Suppose on 30th June, you hold Inventory of Rs.50 lakh. Then will you be eligible to carry forward Excise and other taxes paid under the existing law into GST Regime. If yes is there any specific condition that is required to be satisfied?

The amount of Cenvat credit carried forward, in the last return furnished under the existing law shall be allowed to be carried forward as credit in the electronic credit ledger under GST by a registered person, other than the person opting to pay tax u/s 10 (i.e. under Composition Scheme), provided that the registered person shall not be allowed to take the credit in the following circumstances:-

  • Where the said credit is not admissible as credit under this act.
  • Where all the returns required under the existing law has not furnished for the period of six months immediately preceding the appointed day.
  • Where the said amount of credit relates to the exempted goods manufactured and cleared.

5. You are a trader (other than a First stage dealer or a second stage dealer). So whether you can claim the Cenvat Credit on the stock held on 30th June,2017 ( Assuming GST is applicable from 1st July,2017)

Yes, a trader who is not a first stage dealer or second stage dealer can claim Cenvat Credit as per section 140(3) subject to fulfillment of following conditions:

  • such inputs are used or intended to be used for making taxable supplies under this Act;
  • the said taxable person is eligible for input tax credit on such inputs under the GST Law;
  • the said taxable person is in possession of invoice and/or other prescribed documents evidencing payment of duty under the earlier law;
  • such invoices and /or other prescribed documents were issued not earlier than twelve months immediately preceding the appointed day;

6. Is the provisional registration certificate received at the time of migration final?

No, it is not final. Within three months from the appointed date, apply for final registration in Form GST REG-26. Necessary documents are required to be submitted in this respect. On furnishing the information and documents the final registration will be issued.

7. You are a manufacturer registered under the existing law. You have ordered goods which are in transit on the date of GST Implementation. So, will you be allowed to carry forward the input tax credit in respect of CENVAT and VAT paid on goods under the present law.

Yes, credit can be claimed subject to the following prerequisites –

The registered taxable person should record the invoice or any other duty or tax paying document of the same in his books of accounts within 30 days or such extended time not more than 30 days and a statement should be furnished in prescribed form furnishing the following details:-

(i) the name of the supplier, serial number and date of issue of the invoice by the supplier or any document on basis of which credit of input tax was admissible under the existing law,

(ii) the description, quantity and value of the goods or services,

(iii) the amount of eligible taxes and duties or, as the case may be, the value added tax or entry tax charged by the supplier in respect of the goods or services,

(iv) the date on which the receipt of goods or services is entered in the books of account of the recipient.

8. You have been invoiced for services prior to the date of GST Implementation. The same services were received by you after GST Implementation. Will the amount of Service Tax paid on such services will be available as Input Credit?

Yes, credit of input services is received on or after the appointed day, but the duty or tax in respect of which it has been paid by the supplier under the existing law. It is subject to the condition that the invoice or any other duty or tax paying document of the same was recorded in the books of account of such person within a period of thirty days from the appointed day.f the recipient.

9. You are claiming abatement under service tax Notification No. 26/2012 and paying service tax at an effective rate lower than 15%. Will you be termed as ‘composition tax payers’ for purpose of section 140(3) of the CGST law?

The services covered under abatement notifications (such as 26/2012-ST) will not be covered under the said provisions. The abatement notifications are for the purpose of determination of the taxable value on which service tax is assessable and cannot be considered as composition rates. Such services may qualify as ‘exempted services’ under the Cenvat Credit rules and cannot be termed as services subject to composite tax rates.

Composition Tax Payers means tax payers who have opted to pay tax at specified rates. These tax payers are not eligible to utilize input tax credit to settle the tax liability. They cannot pass on the credit of tax paid to the subsequent buyers.

Sec 140(3) of the CGST Act refers to persons who were registered as composition tax payers in the existing Excise and Service Tax Laws and not when you are paying tax at subsidized rates with respect to a notification/ amendment.nt.

10. You are a Composition dealer under the Current regime. If you opt for Composition Scheme under the GST Regime as well, then will you get any credit under the GST Law. Suppose subsequently if you opt out of Composition Scheme then will you get any credit?

No, the dealer will not get any credit when he changes over to composition scheme under GST. The position would be same, even if he switches out of composition scheme subsequently under GST, except in respect of goods held in stock as on the date of switch over, which is entitled to credit, subject to the conditions specified in section 140(5).

11. You are a principal manufacturer that sends goods for Job Work. Suppose you have sent some goods for Job Work on 1st June, 2017. If those goods are returned after a period of Six months from the date of GST Implementation, then will there be any implication on credit?

In case the goods are returned within 6 months from the appointed date, no tax shall be payable by the original supplier, provided that the period of six months may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding two months:

In case the goods are returned after 6 months or extended period (if any) from the appointed date, the input tax credit claimed by the original supplier shall be, unless recovered under the existing law, be recovered as an arrear of tax. In either case, both the principal manufacturer and job worker shall declare the details of goods held in stock by the job worker as on the appointed date in the prescribed form.

12. You are an export manufacturer. If you have removed certain goods for export on 29th June,2017. These are lying on Customs port on date of GST Implementation. So will you be eligible to claim refund for Cenvat Credit or duty paid on such goods?

Sub-section (4) of Section 142 permits refund of Cenvat credit or duty paid under earlier law even if the goods are exported after the appointed date.

Sec 142(4) states that every claim for refund filed after the appointed day for refund of any duty or tax paid under existing law in respect of the goods or services exported before or after the appointed day, shall be disposed of in accordance with the provisions of the existing law, provided where any claim for refund of CENVAT credit is fully or partially rejected, the amount so rejected shall lapse or no refund shall be allowed of any amount of CENVAT credit where the balance of the said amount as on the appointed day has been carried forward under this Act.

13. You are a trader under existing law. There are some pending tax appeals/revisions, review or reference relating to claim of Input Credit and are pending with the relevant authorities on the date of GST Implementation. What will happen to those cases?

Every proceeding of appeal, review or reference relating to a claim for CENVAT credit initiated whether before, on or after the appointed day under the existing law shall be disposed of in accordance with the provisions of existing law, and any amount of credit found to be admissible to the claimant shall be refunded to him in cash, notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of sub-section (2) of section 11B of the Central Excise Act, 1944 and the amount rejected, if any, shall not be admissible as input tax credit under this Act:

Provided that no refund shall be allowed of any amount of CENVAT credit where the balance of the said amount as on the appointed day has been carried forward under this Act; every proceeding of appeal, review or reference relating to recovery of CENVAT credit initiated whether before, on or after the appointed day under the existing law shall be disposed of in accordance with the provisions of existing law and if any amount of credit becomes recoverable as a result of such appeal, review or reference, the same shall, unless recovered under the existing law, be recovered as an arrear of tax under this Act and the amount so recovered shall not be admissible as input tax credit under this Act. You are a trader. You sent some goods on approval basis prior to GST Implementation date.ie on 25th June,2017

14. You are a trader. You sent some goods on approval basis prior to GST Implementation date.ie on 25th June,2017. Suppose these goods are returned on 8th September,2017. Will return of such goods will be liable to tax under GST Regime?

The implications of taxes under the GST regime in case of goods sent on approval basis and returned after the appointed date shall be as follows:

No tax shall be payable if goods are sent for approval within 6 months prior to the appointed date and received within 6 months from the appointed date;

Provided further that the tax shall be payable by the person returning the goods if such goods are liable to tax under this Act, and are returned after a period of 6 months from the appointed date.

Also, that tax shall be payable by the person who has sent the goods on approval basis if such goods are liable to tax under this Act, and are not returned within a period 6 months from the appointed date.

In the current scenario, the target appointed date is July 1, 2017 and hence, goods were sent for approval before the appointed date and were returned within a period of 6 months from the appointed date. Hence, there is no GST liability.

C. POST GST IMPLEMENTATION

15. You are a Principal Manufacturer who has sent some Input goods for Job Work. Can the Inputs, Semi-Finished Goods and Finished Goods be directly removed from the Job Worker premises.

The provision only permits semi-finished goods and finished goods to be directly sent to other registered premises and need not be returned to the principal manufacturer’s premises. In case of inputs, the goods necessarily have to be returned to the principal manufacturer’s premises after completion of the job work.

16. You are a principal manufacture under GST Regime. You send certain goods for Job Work. Can such goods be sent by you to job worker without payment of taxes.

Yes. Section 143 of the CGST Act, 2017 provides that the registered taxable person (principal) can send the taxable goods to a job-worker for job-work without payment of tax. He can further send the goods from one job-worker to another job-worker and so on subject to certain condition.

It may be noted that provisions of Section 143 are not applicable if non-taxable or exempted goods are proposed to be sent for job-work

17. When will supply of goods be considered as supply in the course of intra-State trade or commerce?

Supply of goods will be considered as intra-State supply if the location of the supplier and place of supply are in the same State or same Union territory. This is subject to provisions contained in Section 10 of the IGST Act, 2017.

18. You are a Service Provider located in Mumbai. You supply certain services to a Unit in Nagpur in a SEZ Unit. What is the Place of Supply and what will be tax charged by you on Invoice?

Supply of goods or services or both to or by a Special Economic Zone developer or a Special Economic Zone unit will be treated as a supply in the course of inter-State trade or commerce irrespective of where the supplier and recipient is located in India.

In the given case, though supplier and recipient are in the same State (i.e. Maharashtra), the place of supply of service to a SEZ unit will be treated as inter-State supply. Consequently, the tax charged will be Integrated Tax.

19. You are a Constructor having Office in Delhi. You were appointed by Mr. B to provide architectural services with regard proposed construction of Mr. B’s house in Mumbai. What will be place of Supply and what tax will be charged on Invoice?

As per Sec 12(3) of the IGST Act, the place of supply of services directly in relation to an immovable property, including services provided by architects, interior decorators, surveyors, engineers and other related experts or estate agents, any service provided by way of grant of rights to use immovable property or for carrying out or co-ordination of construction work shall be the location at which the immovable property or boat or vessel, as the case may be, is located or intended to be located.

Place of supply of such architectural services shall be Mumbai. Tax charged will be IGST (Integrated Tax).

20. You are a Professional based in Bangalore providing training Sessions to Corporate Clients. S Ltd, a company based out of Bangalore, hires you for providing training to his employees. The training was conducted in Goa Resort. What will be the place of supply of training service in the following two

Case 1. If S Ltd is registered under GST

Case 2. If S Ltd is not registered under GST

Section 12(5) of the IGST Act, 2017 provides that when a training service is provided to a registered person, the location of such registered person shall be the place of supply of training services. In case the service is provided to a person other than a registered person, then the place of supply shall be the location where the services are actually performed.
In this reference, the place of supply will be:
Case 1: If S Ltd is registered under GST- Place of supply will be Bangalore
Case 2: If S Ltd is not registered under GST- Place of supply will be Goa

21. What are the returns that are required to be filed by a normal taxpayer under GST Regime?

For a normal taxpayer 3 returns (GSTR-1, GSTR-2 and GSTR-3) are required to be filed on monthly basis with one Annual Return (GSTR-9). This is applicable for each registration.

Return to furnish the below detailsReturnDue date for filing
Outward suppliesGSTR 110th of next month
Inward SuppliesGSTR 215th of next month
Monthly ReturnGSTR 320th of next month
Annual ReturnGSTR 931st December of the next Financial Year

22. You have purchase goods from B Ltd on 7th August.  You made the payment on 31st August, 2017. B Ltd. has not shown such Sales in his GSTR 1 return on 10th September, 2017. Will you get the Input Tax Credit for such purchases?

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 the mismatch continues for more than 60 days, the amount will be added to the output tax liability of the recipient in the returns for the month subsequent to the month in which such discrepancy was communicated.

23. What if in the above case, Sale to you has been shown in GSTR 1 by B Ltd. You claim the credit for the same. You didn’t made payment to B Ltd, till 7th March, 2017. Will there be any implication for non- payment of dues to B Ltd on your ITC.

Buyer needs to make payment to the supplier within 180 days from the date of invoice, otherwise the Input Tax Credit taken by the buyer will be reversed after 180 days. In this case the Input tax credit taken by you will be reversed due to non-payment to B Ltd.

24. You are a trader having business in West Bengal. You have no other branches/Units. Now suppose you go for participation in a Sales exhibition in Maharashtra. Are you required to take a separate registration in GST for selling goods in the exhibition in Maharashtra? Also whether you will charge Central Tax and State Tax or Integrated Tax on such Invoices.

In order to sale any goods in the Sale Exhibition in Maharashtra, you must obtain registration in the State of Maharashtra.
As you don’t have any fixed place of business in Maharashtra, you need to obtain registration as a Casual Taxable Person in the state of Maharashtra.
Casual Taxable Person means a person who occasionally undertakes transactions involving supply of goods or services or both in the course or furtherance of business, whether as principal, agent or
in any other capacity, in a State or a Union territory where he has no fixed place of business.

Accordingly taxes will be calculated and deposited in advance. The taxes paid will be in the nature of Central and State Tax.
The certificate of registration issued to a casual taxable person shall be valid for a period specified in the application for registration or for a period of 90 days from the effective date of registration, whichever is earlier. However, the proper officer, at the request of the said taxable person, may extend the validity of the aforesaid period by a further period not exceeding ninety days.

At the time of obtaining registration, make an advance deposit of tax in an amount equivalent to the estimated tax liability of such person for the period for which the registration is sought.

25. Do you know the parameters basis of which your GST Compliance Score will be determined?

The compliance rating score would be determined on the basis of ‘parameters’, as may be prescribed. The prescription has not yet been given by the government. However GST compliance rating score may take into consideration the following parameters amongst others:

1. Payment of GST within due date
2. Collection of GST but non-remittance of the same within the due date
3. Filing GST outward supply returns within due date, ratifying the inward returns within due date and uploading the final returns within due date
4. Filing of first return, final return and annual returns
5. Filing of audit report
6. Availability and utilization of credit in accordance with provisions of the Act
7. Transfer of credit in accordance with provisions of the Act
8. Remittance of TDS within due date by persons prescribed u/s 51
9. Remittance of TCS within due date by persons prescribed u/s 52
10. Pending disputes with the department
11. Arrears of GST revenue
12. Seizure of goods, due to contravention of the provisions of the Act
13. Maintenance of accounts and records in accordance with provisions of the Act