Saturday, June 29, 2019

Clarification on various doubts related to treatment of secondary or post-sales discounts under GST.

CBIC has issued circular no. 105/2019 for Clarification on various doubts related to the treatment of secondary or post-sales discounts under GST.

In most of the cases of supplier and distributor channel, there are post sales discounts which are passed through the Credit notes. Taxability of discounts has always been under scanner. CBIC has grilled further in the issue and clarified following:

1. The post-sale discount has been bifurcated into two categories.
    
a. Post sales discount without any activity on the part of dealer: Not taxable

b. Post sales discount for activities such as Special Sales drive, AD Campaign, Exhibition - Taxable in the hands of the dealer.

It is further clarified that in case of discount being non taxable, The dealer would not be required to reverse the credit.

Clarification Regarding GST on Penal Interest for delayed payment on EMIs.

GST on Penal Interest of EMIs

CBIC has issued Circular No. 102/2019 to clarify the taxability of Penal Interest on delayed EMIs.

Generally, following two transaction options involving EMI are prevalent in the trade:-

Case – 1: Where the Seller himself extends the benefits of EMI to the buyer: 

Seller ---> EMI ---> Buyer

X sells a mobile phone to Y. The cost of a mobile phone is Rs 40,000/-. However, X gives Y an option to pay in installments, Rs 11,000/- every month before the 10th day of the following month, over next four months (Rs 11,000/- *4 = Rs. 44,000/- ). Further, as per the contract, if there is any delay in payment by Y beyond the scheduled date, Y would be liable to pay additional/penal interest amounting to Rs. 500/- per month for the delay. In some instances, X is charging Y Rs. 40,000/- for the mobile and is separately issuing another invoice for providing the services of extending loans to Y, the consideration for which is the interest of 2.5% per month and an additional/penal interest amounting to Rs. 500/- per month for each delay in payment.



Case – 2: Where the third party (Such as Bajaj Finserve) extends the benefits of EMI to the buyer:

Seller ---> Sale ---> Buyer,  Third Party ---> EMI ---> Buyer

X sells a mobile phone to Y. The cost of a mobile phone is Rs 40,000/-. Y has the option to avail a loan at interest of 2.5% per month for purchasing the mobile from M/s ABC Ltd. The terms of the loan from M/s ABC Ltd. allows Y a period of four months to repay the loan and an additional/penal interest @ 1.25% per month for any delay in payment.

In case 1: Penal Interest will be part of Taxable value for GST.

In case 2: Penal Interest will not be part of Taxable value for GST.

Note: Any Service fees or service charge by the Third Party (Such as Bajaj Finserve) shall not be exempt from GST.

Friday, June 28, 2019

Notifications issued to give effect to Decisions taken in 35th GST Council Meeting.



To give effect to the GST 35th Council Meeting following notifications have been issued:


The due date for Filling GSTR 7 (To be filed by TDS Deductor) for Oct-18 to Jul-19 has been extended to 31st August 2019.


The due date for filling GSTR 1 for the person having a turnover of up to Rs. 1.5 crore for the period of Jul 2019 to Sep 2019 has been prescribed to be as follows:

Quarterly Jul 2019 - Sep 2019: 31st October 2019.


The due date for filling GSTR 1 for the person having a turnover of more than Rs. 1.5 crore for the period of Jul 2019 to Sep 2019 has been prescribed to be as follows:

Monthly Jul 2019 - Sep 2019: 11th of the following Month.


The due date for filling GSTR 3B for the period of Jul 2019 to Sep 2019 has been prescribed to be as follows:

Monthly Jul 2019 - Sep 2019: 20th of the following Month.


The notification provides an exemption to the supplier of Online Information Database Access and Retrieval Services(“OIDAR services”) from filling Annual Return (GSTR 9)/ Reconciliation Statement (GSTR 9C)


The notification seeks to carry out changes in CGST Rules,2017.


The notification seeks to Extend the due date of filling GST ITC-04 (to be filed for goods sent for job work) for the period of Jul-2017 to Jun-2019 till 31st August 2019.


The Due date for filing Annual Return and Reconciliation Statement has been extended from 30th Jun 2019 to 31st August 2019 for FY 2017-18.

Sunday, June 23, 2019

Format For GST Audit Appointment Letter

To,

CA Firm Name
Chartered Accountants
Address

Sub: Appointment of GST Auditors under section 35(5) and section 44(2) of the CGST Act read with Rule 80(3) of the CGST Rules [read with the corresponding provisions of the State / Union Territory Goods and Services Tax Acts] for the Financial year ending on 31st March 2018.

Dear Sir,
We are pleased to inform you that vide Resolution of the Board of Directors dated ….. * your firm has been appointed as GST Auditors of our The company carrying the business under the name and style as (Name of the client and address and GSTIN) for conducting the audit under section 35(5) and section 44(2) of the CGST Act read with Rule 80(3) of the CGST Rules [read with the corresponding provisions of the State / Union Territory Goods and Services Tax Acts] for the previous year ending on 31st March 2018
The remuneration for conducting the said audit is fixed at Rs .......... inclusive of all applicable taxes, out of pocket expenses such as traveling, conveyance, etc.,
Kindly confirm your acceptance for the above appointment.

For ……………………
Authorised Signatory
Name and Signature

Saturday, June 8, 2019

GST Portal to implement the new ITC set off rule from 11th Jun 2019.

Background

CBIC has amended sec. 88A to alter the mechanism of ITC setoff. i.e. IGST credit has to be completely utilized before utilizing the CGST and SGST Credit. However the same was not implemented on the GST Portal due to some technical reasons.

Update

Now GSTN shall enable the utilization of ITC as per the newly inserted rule 88A of CGST Rules from 11th June 2019 which is likely to be used for payment of taxes of May 2019 GSTR 3B return.

So at the time of setoff of liability, the portal first utilize IGST ITC for payment of IGST liability. then IGST ITC for payment of SGST or CGST liability in any order. 


Set off
ParticularLiabCreditIGST ITCCGST ITCSGST ITC
IGST100200100
CGST100605050
SGST100605050
Carry forward SGST ITC 10 and CGST ITC 10.

Note: It IGST Credit could have been used as 60 against CGST and 40 against SGST as well.

Sunday, May 5, 2019

No GST on Seed Certification Tags : Circular 100/19/2019

No GST on Seed Certification Tagging: GST Circular

The process of seed testing and certification followed in the state of Tamil Nadu, as prescribed in the Seeds Act, 1966 and elaborated in the Manual on Seed Production and Certification, published by Centre for Indian Knowledge Systems, Chennai, involves the following steps: 

a. Application for seed production
b. Registration of sowing report
c. Field inspection 
d. Seed processing
e. Seed sample and seed analysis
f. Tagging and sealing

At the end of the process, approved seed lots are tagged with certification tag. The entire process is carried out by statutory bodies for some consideration. e.g. Rs. 30 to 100 for each stage. There was a dilemma about GST Applicability on tagging charges.

Circular 100/19/2019 clarifies that All the above charges, including those for issue of seed certificates/tags by the Seed Certification Agency of Tamil Nadu and Uttarakhand to the seed producing organization/ companies are collected for the composite supply of seed testing and certification, which is exempt under Notification No. 12/2017-Central Tax (Rate) Sl. No. 47 (services by Central/State Governments by way of testing/certification relating to the safety of consumers and public at large, required under any law). This clarification would apply to the supply of seed tags by seed testing and certification agencies of other states also following similar seed testing and certification procedure.



Tuesday, April 30, 2019

Sharing of Data by Income tax Department with GST Department: CBDT Order

CBDT collaboration with CBIC or E-filing Income tax collaboration with GSTN

"Control on Tax Evasion is all about Reconciliation and matching."

Earlier GST department has asked the taxpayers to reconcile the GSTR 1 Vis-a-Vis GSTR 3b and GSTR2A Vis-a-Vis GSTR 3B data.

Now CBDT has issued an order that the Income-tax department shall share the ITR data with the GST Department in order to facilitate the GST department to compare the various parameters such as Turnover, Gross total Income, Turnover Ratio, Turnover Range, etc.

The order specifies three types of data to be shared:

1. Request Based:
In such case the following data shall be shared by CBDT with GST Department on the basis of a specific request from GST Department:

a. Status of filling ITR
b. Turnover
c. Gross Total Income (GTI)
d. Turnover Ratio
c. GTI Range
d. Turnover range
e. Any other field as decided by concerned authorities

2. Spontaneous Exchange of Data:
Modalities of which is yet to be decided by concerned authorities.

3. Automatic Exchange of Data:
In such a case, Certain data will be shared on auto mode basis. Modalities of which is yet to be decided by concerned authorities.

Some years ago when the Direct tax department went online for most of the transactions, very few would have imagined that department will leverage the benefits of going online to such extent. Whereas the GST has born on an online platform (GSTN) only is bound to take all the advantages of its era.

The taxpayer will have to be very cautious while filling the returns to make sure the synchronization between the GST and Income tax data in order to avoid any notice from either of the department. More than the taxpayer I would say, It is the tax practitioner's Task to make sure that everything is reconciled.

“...but in this world, nothing can be said to be certain, except death and taxes.” 

― Benjamin Franklin

Thursday, April 25, 2019

Only ONE Return for Composition Scheme tax payer, Tax Payment quarterly.

To give effect to the decisions taken during the GST Council meeting, Notification No. 20/2019 Central Tax has been issued by CBIC to give effect to the following:

Only one return for composition Scheme taxpayer, Tax payment quarterly:

Rule 62 has been amended to give an effect that Composition taxpayer (Either registered u/s 10 or availing benefit of notification no. 2/2019 (Central tax Rate)) will have to file GSTR 4 only on annual basis on 30th April following the end of the Financial year e.g. For FY 2019-20 GSTR 4 has to be filed by 30th April 2020. 

However, tax is required to be paid in Form GST CMP-08 on a quarterly basis on 18th of the month following the end of the quarter.

If any person opts out of Composition Scheme, he has to pay tax for the relevant quarter on 18th of the following month.

e.g. If any taxpayer opts out of composition Scheme w.e.f. 31st August 2019, he has to pay tax for Jul and Aug 2019 in GST CMP-08 by 18th Oct 2019.



GST CMP 08

Note:

1. Even if No tax liability is there, NIL statement GST CMP - 08 has to be filed.

2. Negative values have to be reported as such. If the total tax payable becomes negative, the same has to be carried forward to the next period. This is in case of adjustment on account of a Debit/Credit note.

3. Since GST CMP - 08 is just a statement & not return and nothing expressly specified related to late fees of GST CMP - 08, in our opinion late submission of the same will attract only interest and not late fees.

4. GST CMP - 08 is a basic statement containing Outward supplies, Inward supplies with tax liabilities as can be seen from above.

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For more details, you may also visit our website www.camtc.in

Return filing requirement in case of Revocation of cancellation of Registration.

CBIC has issued Circular 99/18/2019 - GST providing clarification on the return filling requirements in case of revocation of cancellation of registration.

If any taxpayer's registration has been cancelled on account of non-filling of returns, there are two possibilities of such cancellation:

Case 1. The registration is cancelled as of current date.
Case 2. The registration is cancelled as of the date of filing of last return.

Case 1: In the first case where the registration is cancelled with effect from the current date, the taxpayer has to file the GST returns upto the date of cancellation before applying revocation of cancellation of registration. and the remaining returns (up to date) should be filed within 30 days of revocation of cancellation of Registration.

e.g. If any tax payer has filed Returns upto Jul 2018. His registration has been cancelled with effect from Dec 2018. He has applied for revocation of cancellation in April 2019.
In such -

Case 2.: He has to file his all returns till Dec. 2019 before applying for revocation of cancellation.
He has to submit all returns from Jan 2019 to Apr 2019 within 30 days of order for revocation of cancellation of registration.

In the Second case where the registration has been cancelled retrospectively from the date of filing last return, the tax payer has to file all the remaining returns within 30 days of revocation of cancellation of registration.

If any tax payer has filed Returns upto Jul 2018. His registration has been cancelled with effect from Jul 2018. He has applied for revocation of cancellation in April 2019.
In such -

He has to submit all returns from Aug 2018 to Apr 2019 within 30 days of order for revocation of cancellation of registration.

Clarification Regarding Confusion on Utilization of IGST Credit (Sec. 49A Vis a Vis Rule 88A Vis a Vis GST Portal).

Background

Initially when the GST Amendment Act 2018 was implemented w.e.f. 1st Feb 2019, one of the highlighted issue was newly inserted Sec. 49A. Which had changed the order of utilization of the IGST credit.

Later on, Rule 88A was inserted to nullify the adverse effect of Additional Cash Blockage of Section 49A which allowed to the utilization of IGST credit first against IGST liability and then in any order against CGST liability or SGST liability.

The Circular 98/17/2019 clarifies the following two things:

1. IGST credit, after utilization against IGST Liability, may be utilized in any order, even in part, against CGST liability and SGST liability.

2. The portal currently supports the pre-amendment order of IGST Credit utilization, i.e. credit utilization before Section 49A and 49B. The taxpayer may continue to utilize the Input tax credit in accordance with the functionality available on Portal.

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