Extension of due date to 30th June of filling Form GST ITC -04 for the period of Jul 17 to Mar-19 - Notification 15/2019 CT

GST ITC - 04 Due date extended.

CBEC has vide notification number 15/2019, extended the due date of filing form GST ITC 04 for the period of Jul 2017 to Mar 2019. The new due date will be 30th June 2019.

What is Form GST ITC 04:

If any manufacturer Sends goods or capital asset for job work for which he has taken input tax credit he has to file GST ITC 04 for sending and receiving back such goods.

As per rule 45 (3) of the said rules, the principal manufacturer is required to file FORM GST ITC-04 mentioning therein details of challans in respect of goods dispatched to a job worker or received from a job worker or sent from one job worker to another job worker. As per rule 45 (3), the detail in FORM GST ITC-04 needs to be filed one quarterly basis on or before the 25th day of the month succeeding the said quarter.

New return filling system under GST - The way forward.

The GSTN has placed a document on new GST Return filling system on 8^th March 2019 on the GST portal. It has been proposed that the new return system shall be operational on a trial basis from 1st April 2019 and on a compulsory basis from 1st Jul 2019.

Here in this article, we have explained the requirements and applicability of all the three returns namely Sahaj, Sugam and Normal. The taxpayer can opt to file ANY ONE of the three returns depending upon the applicability and business requirement. Each return has different features.

This article in later part also discusses the flow of Input tax credit in the new return formats.

A. POINT OF DIFFERENCES BETWEEN THE THREE TYPES OF RETURNS

Particulars	Normal	Sahaj	Sugam
Forms	GST Ret 1	GST Ret 2	GST Ret 3
Annexures	-GST Anx –1 Outward supplies -GST Anx 1 A  Amendment to Outward supplies -GST Anx – 2 - Inward supplies -GST Ans 2A  Amendment to Inward supplies	-GST Anx –1 Outward supplies -GST Anx 1 A  Amendment to Outward supplies -GST Anx – 2 - Inward supplies -GST Ans 2A Amendment to Inward supplies	-GST Anx –1 Outward supplies -GST Anx 1 A  Amendment to Outward supplies -GST Anx – 2 - Inward supplies -GST Ans 2A Amendment to Inward supplies
Periodicity	Return: Quarterly or Monthly Payment: Monthly	Return: Quarterly Payment: Monthly	Return: Quarterly Payment: Monthly
Applicability	For Turnover less than 5 Cr. – Option quarterly For Turnover of more than 5 Cr. – Monthly	Turnover less than 5 Cr.	Turnover less than 5 Cr.
Features	1. All outward supplies 2. The credit of all eligible Inward supplies including missing Invoices (Not uploaded by Supplier) can be taken.	1. Only B2C outward supplies can be shown. 2. Inward supplies attracting tax under RCM can be shown. 3. Cannot make supplies through e-commerce operators. 4. The credit of Missing invoice (Not uploaded by Supplier) not allowed. 5. Not be allowed to make any other type of inward or outward supplies 6. Such taxpayers may make Nil rated, exempted or Non-GST supplies which need not be declared in said return.	The only difference from Sahaj return is that here B2B outward supplies can also be shown. Everything else is same as Sahaj returns.
Particulars	Normal	Sahaj	Sugam
When can the data can be uploaded	Same as Sahaj For Monthly Returns, no documents upload will be possible during 18th to 20th of the following month.	a. Any time during Quarter to which it pertains b. Upto September of the following year or date of filing of annual return whichever is earlier c. No document upload will be possible during 23rd to 25th of the month following end of quarter	Same as Sahaj
Switch	Can be switched to Sugam or Sahaj only ONCE during a year	Can be switched to Sugam or Quarterly Normal MULTIPLE Times during a year	Can be swited to Sugam only ONCE Can be switched to Quarterly Normal MULTIPLE times.
Suitable for	a.    A taxpayer who is also importing and exporting goods/ services (Including Sez Supplies) b.     A taxpayer who is supplying goods/services through E-commerce supplier c.Who wants to avail provisional credit of Invoices not uploaded by Supplier d. More suitable for bigger businesses	a. A taxpayer whose turnover is less than Rs. 5 Crore. b. Who is supplying goods/services only to consumer and not to business c. Who is dealing in only domestic business d. Who does not want to avail Provisional credit of invoices not uploaded by the supplier e. Maybe suitable for a shop keeper selling goods to consumers only	If a taxpayer is supplying goods/services to business, Sugam can be used. Rest all features are same as Sahaj. More suitable for taxpayer who supplies goods to both businesses and consumer or only Businesses.

B. HIGH-LEVEL PROCESS FLOW OF INPUT TAX CREDIT IN SUGAM AND SAHAJ RETURNS

1. For Any document, no action is taken (Accepted, Rejected or Kept pending) shall be deemed to be accepted on the filing of the respective return.

2. The documents uploaded for month ‘M’ by a supplier who did not file his return for the previous two consecutive tax periods (M-1 and M-2 months) shall be made available to the recipient in FORM GST ANX-2 with an indication that the credit shall not be available on such documents. In other words, such documents will be visible to the recipient but the recipient cannot claim ITC on such inward supplies. However, the recipient can reject or keep such documents pending until filing of return by the supplier. For suppliers filing returns on a quarterly basis, this period will be one quarter i.e. if the return of one quarter has not been filed, then recipient will not be able to claim the credit on the invoices uploaded during next quarter.

3.  The return system provides for all editing or amendments from the supplier’s side only. The recipient will have the option to reset / un-lock or reject a document but editing of or amendment to the same shall be made by the supplier only.

C. HIGH-LEVEL PROCESS FLOW OF INPUT TAX CREDIT IN NORMAL RETURNS

Important Notes about the above process 

1. Initially the total of provisional credit to be availed in the return. However later (after Two months in case of monthly return or one quarter in case of quarterly Returns) or if the supplier does not upload the invoices in his return, the recipient shall have to upload the invoice wise details.

e.g. If 3 invoice of April is not uploaded by the supplier, the recipient will have to avail credit in total during the April month. However, if such invoices are not uploaded even up to June, Recipient will have to upload the invoice wise details of all three invoices.

2. In case of supplier later uploads the Invoices, Credit taken provisionally shall have to be reversed.

You may visit our website www.camtc.in or write us at camayur2@gmail.com for feedback.

Transition Provision for Reduced rate of GST on Housing projects: GST Council 34th Meeting

GST council principally agreed on transitional provisions for a reduced rate of GST for Housing projects. The legal notification shall be issued in due course.

GST Council met for the 34th time today and the following decisions were taken with respect GST On housing during the meet:

1. The ongoing projects (Started before 1st April 2019) shall have an option either to opt for the new rates (1% for affordable housing or 5% other than affordable housing) without ITC or continue to pay tax at the current rate (8% and 12% respectively) with ITC.

If the ongoing projects want to continue with the old scheme, they will have to opt for the same within the prescribed timeline.

Further, if the ongoing projects opt for the new scheme, For already booked houses, the new rate shall be applicable for the outstanding Installments. That's a massive relief for the Homebuyers if the builder opts for the new scheme which is also very unlikely.

2. For all the projects starting on or after 1st April 2019 following rates shall be applicable with the following condition:

i. The new rate of 1% without input tax credit (ITC) on construction of affordable houses shall be available for,

(a) all houses which meet the definition of affordable houses as decided by GSTC (area 60 sqm in non- metros / 90 sqm in metros and value up to RS. 45 lakhs), and

(b)  affordable houses being constructed in ongoing projects under the existing central and state housing schemes presently eligible for concessional rate of 8% GST (after 1/3rd land abatement).

ii. The new rate of 5% without input tax credit shall be applicable on the construction of,-

1. all houses other than affordable houses in ongoing projects whether booked prior to or after 01.04.2019.
2. all houses other than affordable houses in new projects.
3. commercial apartments such as shops, offices etc. in a residential real estate project (RREP) in which the carpet area of commercial apartments is  not more than 15% of total carpet area of all apartments

iii. The input tax credit shall not be available,

iv. 80% of inputs and input services (other than capital goods, TDR/ JDA, FSI, long term lease (premiums)) shall be purchased from registered persons. On shortfall of purchases from 80%, tax shall be paid by the builder @ 18% on RCM basis. However, Tax on cement purchased from unregistered person shall be paid @ 28% under RCM, and on capital goods under RCM at applicable rates.

3. Proportionate ITC reversal for Ongoing projects who opts for New rates:

a. Ongoing projects (buildings where construction and booking both had started before 01.04.2019) and have not been completed by 31.03.2019 opting for new tax rates shall transition the ITC as per the prescribed method.

b. The transition formula approved by the GST Council, for residential projects extrapolates ITC taken for percentage completion of construction as on 01.04.2019 to arrive at ITC for the entire project. Then based on percentage booking of flats and percentage invoicing, ITC eligibility is determined. Thus, the transition would thus be on pro-rata basis based on a simple formula such that credit in proportion to the booking of the flat and invoicing done for the booked flat is available subject to a few safeguards.

c. For a mixed project, transition shall also allow ITC on pro-rata basis in proportion to the carpet area of the commercial portion in the ongoing projects (on which tax will be payable @ 12% with ITC even after 1.4.2019) to the total carpet area of the project.

4. Treatment of TDR/ FSI and Long term lease for projects commencing after 01.04.2019

The following treatment shall apply to TDR/ FSI and Long term lease for projects commencing after 01.04.2019.

a. Supply of TDR, FSI, long term lease (premium) of land by a landowner to a developer shall be exempted subject to the condition that the constructed flats are sold before issuance of completion certificate and tax is paid on them. Exemption of TDR, FSI, long term lease (premium) shall be withdrawn in case of flats sold after issue of completion certificate, but such withdrawal shall be limited to 1% of value in case of affordable houses and 5% of value in case of other than affordable houses. This will achieve a fair degree of taxation parity between under construction and ready to move property.

b. The liability to pay tax on TDR, FSI, long term lease (premium) shall be shifted from land owner to builder under the reverse charge mechanism (RCM).

c. The date on which builder shall be liable to pay tax on TDR, FSI, long term lease (premium) of land under RCM in respect of flats sold after completion certificate is being shifted to date of issue of completion certificate.

d. The liability of builder to pay tax on construction of houses given to land owner in a JDA is also being shifted to the date of completion.

ITC is not available on ambulance purchased for employees prior to 01/02/2019 even if obligatory under Factories Act,1948: AAR West Bengal

ITC is not available on ambulance purchased for employees prior to 1st Feb 2019 even if obligatory under Factories Act, 1948.

Back Ground:

Aassessee, a manufacturer of agriculture machine bought ambulance on 22/11/2018 for employees as it was obligatory for him under Factories Act, 1948. Before 1st Feb 2019.  

As per Section 17(5), the Input tax credit was not allowed on the above, however amendment Act, exception carved out under Section 17(5)(b)(iii)(A) of the GST Act for services which are obligatory for an employer to provide to its employees under any law for the time being in force is limited only to rent-a-cab, life insurance and health insurance. 

Assessee wants to avail the credit of the ambulance as mentioned above.

Held:

Eligibility for claiming the input tax credit under section 16(1) is subject to the provisions of law at the time of occurrence of the taxable event, irrespective of when the claim is made. The second proviso to section 17(5)(b) of the GST Act, as it stands post-amendment effective from 01/02/2019, is not applicable to a transaction made in November 2018.

The Input tax credit is not admissible on the ambulance purchased in November 2018.

Clarification on GST applicability on trading of Priority Sector Lending Certificate by banks on e-Kuber portal of RBI.

GST Applicability on Priority Sector Lending Certificates

1. What is the Priority Sector Lending Certificate (PSLC)?

Ans. Lending by a commercial bank for certain sectors such as Agriculture, MSME, Education, Housing etc. which are identified as “priority sector” by the central bank (Reserve Bank of India) is called as priority sector lending.

It is mandated in India that Priority sector lending (PSL) should constitute 40 percent of Adjusted Net Bank Credit or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher. Sub-targets are specified for certain sectors like 18% to agriculture with 8% to small and marginal farmers, 7.5% to micro units etc.

Priority Sector Lending Certificates (PSLCs) are tradable certificates issued against priority Sector loans of banks so as to enable banks to achieve their specified target and sub-targets for priority sector lending through the purchase of these instruments in the event of a shortfall and at the same time incentivizing the surplus banks to lend more to these sectors.

2. Applicability of GST on trading of such PSLC.

Ans. CBIC had issued clarification vide circular 62/36/2018 clarifying that GST 

a. GST For 01/07/2017 to 28/05/2018 - on Forward Charge basis by the seller banks - At 12%

b. GST for a period on or 29/05/2018 - On Reverse Charge basis by Purchaser Bank - At 12%

3. Whether trading of PSLC considered as Intrastate or Interstate?

Ans. It is further clarified that the nature of the supply of PSLC between banks may be treated as a supply of goods in the course of inter-State trade or commerce. Accordingly, IGST shall be payable on the supply of PSLC traded over the e-Kuber portal of RBI for both periods i.e 01.07.2017 to 27.05.2018 and from 28.05.2018 onwards. However, where the bank liable to pay GST has already paid CGST/SGST or CGST/UTGST as the case may be, such banks for payment already made, shall not be required to pay IGST towards such supply.

Clarification by CBIC in respect of GST on Free Samples, Disocunts, "Buy one Get one free" offer.

1. CBIC vide circular 92/11/2019 clarified following with respect to the various sales promotion schemes adopted by the businesses.

a. Free Samples: 

Since the definition of supply under section 7 makes it clear that consideration must be part of the transaction, free samples are not taxable under GST except specifically specified under Schedule 1). At the ITC used for such free samples shall not be available.

b. Buy one Get one Free:

In fact, it is not an individual supply of free goods but a case of two or more individual supplies where a single price is being charged for the entire supply. It can at best be treated as supplying two goods for the price of one. 

So it may be considered as either Composite supply or Mixed supply depending on the case and taxed accordingly. ITC of all the product under such case shall be available fully.

c. Discounts including ‘Buy more, save more’ offers

It is clarified that discounts offered by the suppliers to customers (including staggered discount under Buy more, save more‟ scheme and post supply / volume discounts established before or at the time of supply) shall be excluded to determine the value of supply provided they satisfy the parameters laid down in sub-section (3) of section 15 of the said Act, including the reversal of ITC by the recipient of the supply as is attributable to the discount on the basis of document (s) issued by the supplier.  

It is further clarified that the supplier shall be entitled to avail the ITC for such inputs, input services and capital goods used in relation to the supply of goods or services or both on such discounts.

d. Secondary Discounts (Periodical Quantity Discount):

A commercial credit note can be issued in respect of such discount, such discount cannot be reduced from the value of supply. No Impact on ITC.

2. TCS is not part of Value of Supply

Further revising the circular no. 76/50/2018, a revised ciruclar (Corrigendum) has been issued which has clarified that TCS shall not be part of the value of supply.

Notification No. 2/2019 CT(R) : Composition Scheme for Small Service Provider

Composition Scheme for small Service Providers

CBIC has issued notification 2/2019 CT(R) which provides a composition scheme for the Service provider in a more of a twisted mode.

The notification is applicable to First supplies of goods or services upto Rs. 50 Lakhs made after 1st April of the Financial year shall be taxed at 6% without any ITC.

Further One of the condition to opt for the above scheme is that the person should not be eligible to pay tax under 10(1) of the Act. So this notification covers predominantly the person engaged in providing service wants to opt for Composition Scheme. The issue is, if such a person supplies any goods, he shall be liable to pay tax 6% on such goods as well.

The registered person shall mention the following words at the top of the bill of supply, namely: - 

"Taxable person paying tax in terms of notification No. 2/2019-Central Tax (Rate) dated 07.03.2019, not eligible to collect tax on supplies’

Further for the first time Section 9(4) shall be operational after 13th October 2017. Any purchase from an unregistered person by the person notified under this notification shall be taxable under section 9(4). Provisions of Section 9(3) shall also be applicable to such person.

Further  In computing aggregate turnover in order to determine eligibility of a registered person to pay central tax at the rate of three percent under this notification, value of supply of exempt services by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount, shall not be taken into account.

Current system of GST Return filling to be continued atleast for 1st Quarter of 2019-20 - CBIC issued notification for due date of GSTR 3B and GSTR 1 for Apr-Jun 2019.

The CBIC had issued a status note on GST Implementation on 1st Feb 2019 which in para 9.2 - Point - P (Page no. 22) specified following:

"The new return filing system shall be introduced on a trial basis from 01.04.2019 and on mandatory basis from 01.07.2019."

So accordingly the new return filing system should be in place for a trial period from 1st April 2019 however to the contrary the CBIC has issued notifications specifying the due date of GSTR 3B and GSTR 1 for Apr-Jun 2019 which shall be as follows:

a. GSTR 3B: 20th of the following month Notification 13/2019 CT
b. GSTR 1 ( T/o above 1.5 Crore) : 11th of the following month Notification 12/2019 CT
c. GSTR 1 (T/o below 1.5 Crore): 31st July 2019 Notification 11/2019 CT

We may see a trial period of the new return system from 1st July onwards.

Notification 10/2019 - CT - Increase in Thresh hold limit to Rs. 40 Lakhs for supply of goods in some cases.

A. As decided in GST Council meeting the CBIC has issued notification 10/2019 which increases the thresh hold limit to obtain a registration to Rs. 40 Lakhs only in case of EXCLUSIVE SUPPLY OF GOODS EXCEPT following category of person from 1st April 2019:

1. Person required to get compulsory registration as specified in section 24 of the Act which is following:

a. Person making Inter state supply

b. Casual taxable person

c. Person required to pay tax under RCM

d. Person required to pay tax under section 9(5) (Specified e-commerce supplier)

e. Non resident taxable person making any taxable supplies

f. TDS Deductor

g. Input service distributor

h. Person supplying taxable goods on behalf of other taxable person as agent

i. E commerce operator

g. Online information and database access retrieval service provider

2. Person engaged in supplying following goods:

a. Ice cream and other edible ice, whether or not containing cocoa - 2105 00 00

b. Pan masala - 2106 90 20

c. All goods, i.e. Tobacco and manufactured tobacco substitutes - 24

3. Persons engaged in making intra-State supplies in the States of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura, Uttarakhand

4. Person who have got themselves voluntary registration and intend to continue the same.

NOTE: THE THRESH HOLD LIMIT FOR REGISTRATION IN CASE OF SERVICE SUPPLIER SHALL REMAIN RS. 20 LAKHS.

B. Further by notification no. 14/2019 CT CBIC has increased the limit of turnover for composition scheme to Rs. 1.50 Crore for all states except special category states where  the limit has increased to Rs. 75 Lakhs. The notification specifies that if turnover of a person does not exceed Rs. 1.50 Crore/75 Lakhs in preceding financial year, he may opt for Composition Scheme in 2019-20