Category GST

Clause 44 It was added w.e.f 20th August 2018 but Reporting under this clause was deferred till 31st March 2019 vide Circular No. 6/2018 dated 17th August 2018, So reporting in clause 44 is started from AY 2019-20.

The Objective for insertion of this Clause 44:

The main objective is to co-relate GST Data with Income Tax Data.

FAQ’s on CLAUSE 44

Q.1. Is reporting in this clause applicable only for Assessee who are GST registered?

Ans: No, Reporting is to be made by all assesses who are registered under GST or not.

Q.2. Interpretation of wordings “Breakup of total expenditure”? What expenditures are not Included?

Q.3. Tabular format for disclosure:

Sl. No.	Total amount of Expenditure incurred during the year	Relating to Goods or services Exempt from GST	Relating to entities Falling under Composition Scheme	Relating to Other Registered Entities	Total Payment to Registered Entities	Expenditure relating to entities not registered under GST
(1)	(2)	(3)	(4)	(5)	(6)	(7)

Q.4. Colum 2 says “Total amount of Expenditure incurred during the year” so shall we report head-wise / nature wise expenditure?

Q.5. What are the Expenditure relating to other registered entities (column 5)?

Ans: The value of all inward supplies from registered dealers, other than supplies from composition dealers and exempt supply from registered dealers, are to be mentioned in this column.

Q.6.  What is the meaning of “Total payment to registered entities (column 6)”?

Ans: The language used in sub-heading of column 6 is total’ payment’ to registered entities. The word ‘payment’ should harmoniously be interpreted as ‘expenditure’ as the combined heading of columns (3), (4), (5) is ‘Expenditure in respect of entities registered under GST’. Hence, the total expenditure in respect of registered entities i.e., sum total of values reported in columns (3), (4) and (5) should be reported in Column 6.

Q.7. Checks and Control while reporting?

APPLICABILITY

E-invoicing has been made compulsory by the Government of India for the taxpayers whose annual turnover is above Rs.10 crores with effect from 1st October, 2022 vide Notification No.17/2022. The taxpayers must comply with the provisions of e-invoicing in F.Y. 2022-23 and onwards if their aggregate turnover exceeds the specified limit in any of the financial years from 2017-18 to 2021-22. E-invoicing is applicable only for the B2B invoices.

PROCESS FOR REGISTRATION UNDER E-INVOICING

Step 1: Go to the website https://einvoice1.gst.gov.in/

Step 1: Go to the website https://einvoice1.gst.gov.in/.

Step 2: Click on “e-invoice enablement” under ‘Registration’ tab.

Step 3: Under the enablement form, provide the GST number, enter the captcha, and click on “GO”.

Step 4: Details regarding the Name, Mobile Number, Email Address, etc will appear automatically using the GSTIN. Click on “send OTP” and verify it by providing the OTP sent to the mobile number.

Step 5: After filling out the e-invoice enablement form, go to “e-portal login” under the registration tab.

Step 6: A similar box will appear asking for the GSTIN.

Step 7: After providing the GSTIN and entering the captcha, the following details would be shown.

Step 8: If all the details are not correct, you can click on “Update from GST Portal”, and the details would appear as in the GST Portal. Click on “Send OTP” when all the details are correct. OTP will be sent on the mobile number of the registered party. Verify the same.
Step 9: After verifying the same, the system asks you to set up the log in ID and Password. And after that, you can log in to the e-invoice portal by using the same credentials.

Step 10: As soon as we log in, a dialog box will appear asking for the details (like name, email id, address, designation) of the authorized person.

Step 11: Fill in the details and you are ready. Your registration process is complete, and the screen shown below shall appear after logging in. You can create e-invoices and e-way bills here.

HOW TO GENERATE AN E-INVOICE

Step 1: On the Home page, Go to Help<Tools<Bulk Generation Tools.

E-Invoice JSON Preparation Utility Template can be seen on the site like above. Format (A,B,C,D) can be chosen according to your requirements.

Step 2: The template would be downloaded in Excel Format. Fill in the required details in the Profile tab and the einvoice tab.

In case the file does not open and shows an error for doubtful source, select the file<right click and go to properties<you will get an option to “Unblock” the source under the Security section.

Step 3: After filling all the details in the template, click on “Validate” and then “Prepare JSON”.

Step 4: In case any error occurs, the file will be created as below.

An html file will be created<Open the file using Google to view the error<Make the correction as required<“Validate and Prepare JSON” file again.

Step 5: Upload the Template file on the einvoice1 portal.

Step 6: Browse the JSON File and upload here. You can view and download the e-invoice thereafter. E-invoice will be downloaded in the format of “zip” file. Unzip the file and E-invoice will be generated in the pdf format.

FAQs

Q1. What is the time limit to generate E-invoice?

Ans. No time limit has been prescribed for the authentication of E-Invoice. However, according to the Rule 48(5), any supplier on whom e-invoicing is applicable, shall issue e-invoice every time. Normal invoice shall not be issued.

Q2. Does the E-invoice need to be signed again?

Ans. According to the proviso to Rule 46 of the CGST Rules, 2017 along with the provisions of Information Technology Act 2000, in case of electronic invoice, a supplier will not be required to sign or digitally sign the invoice.

Q3. Can an e-invoice be modified or cancelled?

Ans. E-invoice cannot be corrected or modified once uploaded. However, the option is provided to cancel the invoice and generate a new e-invoice.

Q4. What is Invoice Reference Number (IRN)?

Ans. IRN is a registration number provided by the government. It is a unique number generated by GSTN which proves the authenticity of the e-invoice after being uploaded.

Q5. Is E-Invoicing applicable for supplies having Reverse Charge?

Ans. Yes, e-invoicing is applicable for the supplies under reverse charge if the turnover exceeds the specified limit.

Q6. Does SEZ Developers also issue e-invoice?

Ans. Yes, even SEZ Developers have to issue e-invoices if the turnover exceeds the specified limit. But SEZ Units are exempt from issuing e-invoices under Notification (Central Tax) 61/2020.

DID YOU ALSO RECEIVE ANY NOTICE FROM THE GST DEPARTMENT REGARDING INTEREST ON LATE FILING OF GSTR 3B?
Well if yes, you have your solution right here.

GST Department has been scrutinizing GST returns of preceding years. Any informality or mismatch In GST returns would result in issuing of Show-Cause Notice by the department. Earlier, Late Fee was charged as a penalty for filing late GST returns. But now, GST Department has also started charging Interest for late filing of the returns. Annual Interest of 18% is being charged by the department for late filing. Form DRC can be filed in response to the show-cause notice.

DRC-01 – SUMMARY OF SCN

GST Officer may serve SCN to a registered person due to following reasons:

• Tax not paid/ short paid
• Tax erroneously refunded
• Input tax credit wrongly availed/ utilized.

In case of Bona-fide defaulter: 2 years+ 9 months from due date of filing of Annual return of relevant FY. While in case of Mala-fide defaulter like fraud, suspension, etc. : 4 years+ 6 returns of relevant FY.

DRC- 02 – SUMMARY OF STATEMENT

If GST Officer wants to issue SCN on the same ground as specified in DRC-01, for additional period, than as specified, he may do so by serving the statement under DRC-02.

DRC-03 – PAYMENT MADE VOLUTARILY OR MADE AGAINST SCN

DRC-03 is a form under the GST law that is required to be filed for voluntary tax payments towards demand or tax shortfall noticed later on after the time limit to file returns of a financial year expires. DRC-03 is a voluntary tax payment form in which a taxpayer can pay the tax by raising its liability voluntarily or in response to the show-cause notice (SCN) raised by the GST department.

Form DRC-03 is used for making a voluntary payment of tax. Voluntary payment can be made either:

• Before the issuance of show cause notice
• Within 30 days of issue of SCN, in case the show cause notice is already issued

WHEN SHOULD AN ASSESSEE MAKE PAYMENT THROUGH DRC-03?

The following are the causes for making payment under DRC-03:

1. Audit/Reconciliation Statement: Where the auditor has discovered any case of short payment of tax, interest or penalties or excess claim of the input tax credit, and the time limit is expired to report the same in their GST returns, the taxpayer shall make voluntary payment in DRC-03 and report it in GSTR-9. GST Auditor should report the same in GSTR-9C too.

2. Investigation: If during any investigation, it is revealed that the taxpayer had defaulted incorrect payment of taxes, he can voluntarily make payment in DRC-03.

3. Annual Return: Reconciliation of GST for the entire year shall be conducted before proceeding to prepare and file annual returns. Taxpayers are given an option to pay any differences in cash and report it by filing DRC-03.

4. Demand or in response to show cause notice: The taxpayer has an option to pay the tax demanded along with interest using DRC-03 in response to a show-cause notice, but within 30 days of the date of the issue mentioned in the show-cause notice.

Form DRC-03 is filed for making a voluntary payment of outstanding liabilities under Sections 73 and 74 of the CGST Act. A taxpayer can self-ascertain the tax before issuance of SCN or within 30 days of SCN determination to avoid the hassles of demand and recovery provisions.

1. Section 73 – deals with cases where there is non-payment/under-payment of tax without any intention or invocation of fraud.
2. Section 74 – deals with cases where there is non-payment/under-payment of tax with intention or invocation of fraud

5. Liability Mismatch – GSTR-1 to GSTR-3B: This option was added in the GST portal in February 2021 while selecting the reason for using the DRC-03 form. If the tax authorities have sent notice for differences, being shortfall of tax liability in GSTR-3B when compared to GSTR-1, then the taxpayer must make the payment in DRC-03 or reply by justifying the reasons.

6. ITC Mismatch – GSTR-2A/2B to GSTR-3B: The GST portal also added this as an option in February 2021 for selecting the reason while paying tax in DRC-03. The department can send a notice for claiming excess Input Tax Credit (ITC) in GSTR-3B when compared to GSTR-2B. The taxpayer must use this form while depositing the excess claims of ITC.

Point to note: All the payments need to be made either from input tax credit available in electronic credit ledger or cash balance available in the electronic cash ledger. But, in case of interest and penalties ITC utilization is not available. It has to be compulsorily paid in cash. There is no way to make partial payments against SCN liability.

STEPS TO FILE DRC-03

Step 1: Login to GST portal and click on “My Applications” under User Services.

Either of the two circumstances can occur under which a taxpayer makes payment:

1. A taxpayer has not made any payment and does not have a Payment Reference Number (PRN)
2. A taxpayer has generated PRN but is unutilized and comes for payment.

In Case I where a taxpayer has not made any payment, the following steps are required to be performed.

Step 2: Select the Application Type as ‘Intimation of Voluntary Payment – DRC-03’ and then click ‘New Application.’

Step 3: A taxpayer will have two options whether payment is made voluntary or against show-cause notice (SCN):

• Voluntary payment: The payment date will be auto-populated without an option to edit.
• Payment against SCN: A taxpayer has to manually enter the SCN Number and select the issue date which must be within 30 days of making payment.

Application for intimation of voluntary payment can be saved at any stage of completion for a maximum time period of 15 days. If the same is not filed within 15 days, the saved draft will be purged from the GST database.

Step 4: Put the SCN Reference Number as the Reference Number generated on the Notice.

• Notice can be viewed under Services> User Services> View Additional Notices/Orders. Rest of the details will be auto-generated by the Reference Number.
• The payment shall be done within 30 days from the date of issue of notice.

Step 5: When all the details are filled, Click on “Proceed to Pay”.

Step 6: A page will appear to generate the Challan specifying the amounts in Electronic Credit Ledger, Electronic Cash ledger and Electronic Liability Ledger.

Step 7:   Select the name of the ‘Authorized Signatory’ and the Place. Click on “Create Challan” and make the payment.

Step 8: To view your saved application, navigate to Services > User Services > My Saved Applications option.

Click on “File” option. Two options will be available – either to File with EVC or File with DSC.

In Case II where the taxpayer has generated Payment Reference Number (PRN) but is unutilized and comes for payment within the time frame –

Step 1: Follow the steps as mentioned in Case 1 till the taxpayer reaches on Intimation of payment made voluntarily or against the SCN page.

Step 2: Select ‘Yes’ for the option – Have you made payment? and enter the PRN.
If PRN is not available, it can be extracted from the ‘Electronic Liability Register’ under Services>Ledgers>Electronic Liability Register.

Step 3: A link, known as ‘Get payment details’ will be displayed. Once the taxpayer clicks on it, details will be auto-populated on the basis of the respective payment that was made.

Step 4: Click on ‘File’ to view draft DRC-03 and then follow the same steps to file the application as mentioned in Case 1.

WHAT HAPPENS AFTER FILING DRC-03?

After submitting Form DRC-03, Status will be shown as “Pending for Action by Tax Officer”.

DRC -04 – ACKNOWLEDGEMENT

The taxpayer gets an acknowledgement as issued by the tax officer in the form GST DRC-04 (Acknowledgement of Acceptance of voluntary payment). There is no restriction on making another payment on a voluntary basis by a taxpayer, where the acknowledgement by the tax officer is still pending. However, you cannot make a new application while one application is still in the draft.

DRC- 05 – CONCLUSION OF PROCEEDINGS

Once payment has been made, then officer shall use an order in Form DRC-05 specifying about the conclusion of proceedings in respect of such notice.

GST ON RENTING OF IMMOVABLE PROPERTY FOR COMMERCIAL PURPOSE

Renting of any immovable property for a business or commercial purpose would attract GST @ 18% on the taxable value. In case of Commercial purpose, GST would be collected by the Owner/ Landlord and would be payable to the GST Department under forward charge mechanism. 

OWNER/LESSOR	TENANT/LESSEE	GST PAYABLE	INPUT TAX CREDIT
UNREGISTERED	UNREGISTERED	NO GST	NOT APPLICABLE
UNREGISTERED	REGISTERED	NO GST	NOT APPLICABLE
REGISTERED	UNREGISTERED	GST UNDER FORWARD CHARGE PAYABLE BY OWNER	ITC CAN BE CLAIMED BY THE OWNER
REGISTERED	REGISTERED	GST UNDER FORWARD CHARGE PAYABLE BY OWNER	ITC CAN BE CLAIMED BY THE OWNER

GST ON RENT OF IMMOVABLE PROPERTY FOR RESIDENTIAL PURPOSE

GST had been exempted on renting of residential property to any person up to 17^th July, 2022 but according to the recent amendment under GST Act, GST is applicable on Residential Property with effect from 18^th July, 2022 Renting an immovable property is considered as a supply of service and it attracts GST @ 18%.

• If any residential property is rented out to a registered person now, Tenant (i.e., the recipient) will be liable to pay tax at the rate of 18% under the reverse charge mechanism.
• However, GST is not attracted if the residential property is rented out to any unregistered person and therefore no liability would arise under GST.
• So, if the Tenant is registered under GST, then only GST would be liable to be paid.
• In case of residential property, it does not matter if the Landlord is registered/unregistered under GST.

OWNER/LESSOR	TENANT/LESSEE	GST PAYABLE	INPUT TAX CREDIT
UNREGISTERED	UNREGISTERED	NO GST	NOT APPLICABLE
UNREGISTERED	REGISTERED	GST UNDER RCM PAYABLE BY TENANT	ITC CAN BE CLAIMED BY THE TENANT
REGISTERED	UNREGISTERED	NO GST	NOT APPLICABLE
REGISTERED	REGISTERED	GST UNDER RCM PAYABLE BY TENANT	ITC CAN BE CLAIMED BY THE TENANT

REGISTRATION

It is the choice of the landlord or the owner whether he/she wants to take registration in the same state in which the property is situated or in different state. It is left to the option of the landlord. They must identify the place of supply to decide if CGST and SGST is charged or IGST applies.

Any business whose aggregate turnover exceeds Rs.20 lakhs in a financial year has to mandatorily register under Goods and Services Tax (GST). This limit is set at Rs 10 lakhs for North Eastern and hilly states flagged as special category states.

SECTION 194I – TDS ON RENT

While talking about renting of immovable property, liability under Section 194I also attracts. Section 194I requires to deduct TDS on payment of rent to any resident (Landlord). It imposes an obligation for TDS deduction @10% on persons (other than individual/HUF) making rental payments to resident Indians above a specified limit, i.e., Rs.2,40,000 in a year. However, in case of Individuals/HUF, if the total sales/gross receipts/turnover exceeds limit as per section 44AB during the preceding financial year in which such income is credited or paid by way of rent, shall be obligated to deduct TDS @10% under this section.

The TDS is applicable both to residential and commercial properties and it shall be paid on the Gross Amount excluding GST.

TDS must be deposited by the 7th of the subsequent month except for the month of March. However, for the month of March, TDS needs to be deposited by 30th April.

FAQs

Q.1. If any Company/LLP/Firm/AOP/BOI takes a residential property for the purpose of residence to rent its employees, would it attract GST?

Residence provided to its employees will be considered as business expenditure. Therefore, GST will be paid under RCM and the ITC of the GST can be claimed by the Tenant.

Q.2. Can a composition dealer who is registered under GST claim ITC if it takes a residential dwelling for the purpose of residence on rent?

A composition dealer who is registered under GST if takes a residential dwelling for the purpose of residence on rent, it will be considered as an item of business expenditure. GST will be paid under RCM but as per section 10(4), ITC of the GST paid cannot be claimed as they pay tax at prescribed lower rates.

Q.3. What will be the treatment of GST if a proprietorship concern takes a residential property on rent for himself or his family?

When an individual who is registered under GST as a proprietorship concern takes a residential dwelling on rent for himself or his family, then it will be considered as personal expenditure and not a business expenditure. So, personal expenditure would also attract GST under reverse charge mechanism but it cannot claim ITC against the GST paid.

Q.4. When a residential dwelling is taken by a registered person on rent for commercial purpose, who will pay GST?

When a residential dwelling is taken on rent for commercial purpose by a registered person, it will be treated at par with the commercial unit. If the landlord is unregistered, then GST shall not be levied either to the landlord or the tenant. If the landlord is registered, GST will be charged on forward charge basis and the recipient can take the ITC of the same.

With the completion of five years of India’s GST law, the GST Council has conducted its 47^th Council Meeting with the presence of Finance Minister Nirmala Sitharaman. GST Council has allowed Amendments in GSTR-3B (Monthly GST return for taxpayers). Further, it permitted Auto-Population of most details in Form GSTR-3B and in Form GSTR-9 for better and easy compliance.

RELIEF TO INTRASTATE E-COMMERCE SUPPLIERS

GST Council have agreed to ease compliance bottlenecks for e-commerce suppliers. It allowed the e-commerce suppliers to register under the composition scheme for intrastate supplies easing their registration hassles and for reducing tax outgo. The new composition scheme for e-commerce suppliers for intrastate online sales will be implemented on 1st Jan 2023, once the IT system is set up. It means that such intrastate e-commerce suppliers will no longer need to obtain mandatory GST registration if their turnover does not exceed the limit of Rs.40 lakh (goods) or Rs.20 lakh (services) or such lower limits defined for some states/UTs. However, Interstate suppliers on e-commerce platforms shall have to obtain registration irrespective of turnover, compulsorily.

DEADLINE EXTENSIONS TO COMPOSITION TAXPAYERS

• GSTR-4 for FY 2021-22 to get a waiver of late fee for filing up to 28th July 2022 as against earlier extension of up to 30th June 2022.
• CMP-08 deadline for Apr-Jun 2022 (Q1 of FY 2022-23) to get an extension up to 30th July 2022 from 18th July 2022.

CORRECTION OF INVERTED TAX STRUCTURE

DESCRIPTION OF GOODS & SERVICES	OLD RATE	NEW RATE
Solar water heaters and systems	5%	12%
Prepared or finished leather or chamois leather or composition leathers	5%	12%
Job work for processing of hides, skins, leather, making of leather products including footwear, and clay brick manufacturing	5%	12%
Earthwork works contracts and sub-contracts to the Central and state governments, Union Territories and local authorities	5%	12%
Pawan Chakki being air-based atta chakki, wet grinder, cleaning, sorting or grading machines for seeds and grain pulses, and milling machines or cereal making machines, etc;	5%	18%
Ink for drawing, printing, and writing	12%	18%
Knives with paper knives, cutting blades, pencil sharpeners and its blades, skimmers, cake-servers, spoons, forks, ladles, etc	12%	18%
Centrifugal pumps, submersible pumps deep tube-well turbine pumps, bicycle pumps that are power-driven mainly for handling water	12%	18%
Milking machines and dairy machinery, cleaning, sorting or grading machines and its parts for eggs, fruit or other agri produce	12%	18%
Lights and fixture, LED lamps, their metal printed circuits board	12%	18%
Marking out and drawing instruments	12%	18%
Services by foreman to chit fund	12%	18%
Works contract for railways, metro, roads, bridges, effluent treatment plant, crematorium, etc.	12%	18%
Works contract and sub-contract to the Central and state governments, local authorities for canals, dams, pipelines, plants for water supply, historical monuments, educational institutions, hospitals, etc	12%	18%

GST RATE HIKES

DESCRIPTION OF GOODS & SERVICES	OLD RATE	NEW RATE
What’s costlier
Cut and Polished diamonds	0.25%	1.50%
Tetra Pack (Aseptic Packaging Paper)	12%	18%
Tar (From coal, or coal gasification plants, or producer gas plants and coke oven plants)	5%/18%	18%

GST RATE CUTS

Description of goods or services	Old Rate	New Rate
Import of tablets called Diethylcarbamazine (DEC) free of cost for National Filariasis Elimination Programme (IGST)	5%	Nil
Import of particular defence items by private businesses or suppliers for end-consumption of Defence (IGST)	Applicable rates	Nil
Ostomy Appliances	12%	5%
Orthopedic appliances such as intraocular lens, artificial parts of the body, splints and other fracture appliances, other appliances which are worn or carried, or body implants, to compensate for a defect or disability	12%	5%
Transport of goods and passengers by ropeways (with ITC of services)	18%	5%
Renting of truck or goods carriage including the fuel cost	18%	12%

SNIPPING OF GST EXEMPTIONS

DESCRIPTION OF GOODS & SERVICES	OLD RATE	NEW RATE
Earlier fully exempted, now withdrawn
Maps and hydrographic or similar charts of all kinds, including atlases, wall maps, topographical plans and globes, printed	Nil	12%
Cheques, lose or in book form	Nil	18%
Parts of goods of heading 8801	Nil	18%
Air transportation of passengers to and from north-eastern states and Bagdogra now restricted to economy class	Nil	Condition added
Transportation by rail or a vessel of railway equipment and material, storage or warehousing of commodities attracting tax such as copra, nuts, spices, jaggery, cotton, etc, fumigation in a warehouse of agri produce, services by RBI, IRDA, SEBI, FSSAI, and GSTN, renting of residential dwelling to GST-registered businesses, and services by the cord blood banks for preserving stem cells	Nil	Applicable rate
Room rent (excluding ICU) exceeding Rs.5,000 per patient day taxed without ITC	Nil	5%
Common bio-medical waste treatment facilities for treating or disposing biomedical waste shall be taxed with availability of ITC, like CETPs	Nil	12%
Hotel accommodation priced up to Rs.1,000 per day	Nil	12%
Training or coaching in recreational activities on arts or culture, or sports other than by individuals	Nil	Applicable rate
Earlier partially exempted, now withdrawn
Petroleum/ Coal bed methane	5%	12%
e-Waste	5%	18%
Scientific and technical instruments to public funded research institutes	5%	Applicable rate

E-Invoicing is a system for authentication of B2B invoices electronically by the GSTN. Under the electronic invoicing framework, a unique Invoice Reference Number (IRN) is issued against each invoice digitally using Invoice Registration Portal (IRP) managed the GSTN. Maximum 100 items can be incorporated in a single invoice.

E-Invoicing eliminates the need to enter data manually in different portals, i.e., we are not required to enter the same data again and again into GST Portal, E-Way Bill Portal and in the E-Invoice Portal.

E-Invoicing also helps to track the invoices in real-time. It helps in resolving a large gap in data reconciliation under GST to reduce the mismatch of errors. It provides a framework to quickly access the complete invoice related details.

APPLICABILITY

An assessee shall comply with the provisions of e-invoicing if their aggregate turnover exceeds the specified limit in any financial year after the implementation of GST, i.e., 2017-18 onwards. The calculation of aggregate turnover shall include the turnover of all the GSTINs issued under a single PAN across India.

PHASE	APPLICABLE IF	APPLICABILITY DATE
I	TURNOVER > 500 CRORES	01.10.2020
II	TURNOVER > 100 CRORES	01.01.2021
III	TURNOVER > 50 CRORES	01.04.2021
IV	TURNOVER > 20 CRORES	01.04.2022

Example: Suppose PQR Ltd had aggregate turnover as follows:

YEAR	TURNOVER
FY 2017-18	Rs.12 crore
FY 2018-19	Rs.16 crore
FY 2019-20	Rs.23 crore
FY 2020-21	Rs.18 crore
FY 2021-22	Rs.14 crore

PQR Ltd shall mandatorily generate e-invoices from 01.04.2022 irrespective of the current year’s aggregate turnover as it has crossed the threshold limit of Rs.20 crore turnover limit in FY 2019-20.

Following class of taxpayers are currently covered under e-invoicing:

• Supplies to the registered persons (B2B)
• Supplies to SEZs
• Exports
• Deemed exports

WHO DOESN’T REQUIRE E-INVOICING?

Following category of a person exempted under e-invoice

• A banking company
• A non-banking financial company
• A financial institution
• An insurer
• A person engaged in supplying passenger transportation service
• A goods transport agency (GTA) supplying services
• A person engaged in supplying services in terms of admission of the exhibition of cinematograph films in the multiplex screen
• Persons registered in terms of Rule 14 of CGST Rules (OIDAR)
• Special Economic Zone units (although e-invoicing is required for SEZ Developers)

HOW TO REGISTER FOR E-INVOICING

• Go to the website https://einvoice1.gst.gov.in/

• Click on Registration < e-Invoice Establishment.
• Fill your GSTIN, enter the captcha and click on GO.
•  After clicking on GO, the details would be shown as below:

• Then, click on SEND OTP. OTP will be sent on your registered mobile number. Verify the OTP.
• Now, select the respective financial year and specify the turnover of that period.
• Click on SUBMIT.

• After submitting the required details, login credentials would be generated. He/she would be registered for preparing e-invoices.

Some notifications issued by the Department to providing relief in current Pandemic Situation (Covid-19) in the country to the taxpayers on 1^st May, 2021

Notification No. 08/2021- Central Tax- Relaxation in Interest for the month of March -2021 & April -2021:

Notification No. 09/2021- Central Tax-Waiver of Late Fees for specified taxpayers and specified tax periods:

Notification No. 10/2021- Central Tax-Extension in due date of filling of GSTR-4  (Composition Scheme) for Financial year 20-21 to 31^st May, 2021   

Notification No. 12/2021- Central Tax-Extension in due date of filling of GSTR-4  (Composition Scheme) for Financial year 20-21 to 31^st May, 2021   

Taxpayers having Turnover Exceeding 5 Crore in Preceding Financial Year

(Big Taxpayers required to file GSTR-3B and GSTR-1 on monthly basis)

Period	Return Type	Due Date	Return Filing Date	Interest	Late Fee
March-21	GSTR-3B	20-04-2021	Till 05-05-2021	9 % for first 15 days	Nil
			After 05-05-2021	9 % for first 15 days than 18% thereafter	Rs. 20/50 per day
April-21	GSTR-3B	20-05-2021	Till 04-06-2021	9 % for first 15 days	Nil
			After 04-06-2021	9 % for first 15 days than 18% thereafter	Rs. 20/50 per day
April-21	GSTR-1	11-05-2021	Till 26-05-2021	Not Applicable	Nil
			After 26-05-2021	Not Applicable	Rs. 20/50 per day

Taxpayers having Turnover Upto 5 Crore in Preceding Financial Year

(Small Taxpayers required to file GSTR-3B and GSTR-1 on quarterly basis)

Period	Return Type	Due Date	Return Filing Date	Interest	Late Fee
Jan 21-March-21	GSTR-3B	22-04-2021	Till 07-05-2021	Nil for first 15 days	Nil
			Between 08-05-2021 to 22-05-2021	9 % for first 16th day to 30th day	Nil
			After 22-05-2021	9 % for first 16th day to 30th day than 18% thereafter	Rs. 20/50 per day
April-21	IFF	13-05-2021	Till 28-05-2021	Not Applicable	Nil

Composition Taxpayers

Period	Return Type	Due Date	Return Filing Date	Interest
Jan 21-March-21	CMP-08	18-04-2021	Till 03-05-2021	Nil for first 15 Days
			Between 03-05-2021	9 % for first 16th day to 30th day
			After 18-05-2021	9 % for first 16th day to 30th day than 18% thereafter
Jan 21-March-21	GSTR-4	30-04-2021	31-05-2021	Not Applicable

Notification No. 11/2021- Central Tax-Extension in due date of filling of ITC-04  for Financial year 20-21 to 31^st May, 2021   

ITC-04 is a declaration furnishing by the principal manufacturer in respect of the goods dispatched to Job workers for Job Work with certain conditions.

ITC-04 is a quarterly form. It must be furnished on or before 25th day of the month succeeding the quarter. According to the provision for Jan-21 to Mar-21 quarter, the due date is 25th April-21. But in the above notification, this due date of 25th April-21 is extended to 31st May-21.

Notification No. 13/2021- Central Tax-Compliance of Rule36(4) for the month of April-21 deferred till May-21 & IFF for April shall be available till 28^th May,21   

The CGST Rule-36(4)restrict taxpayer to claim ITC of 5% of the eligible credit available in respect of invoices or debit notes as per details uploaded by the suppliers.

Now as per this notification ITC claims to 5% of GSTR-2B (Auto populated) in GSTR-3B is relaxed for April 2021. The taxpayer can apply this rule cumulatively for both April-2021 and May -2021 while GSTR-3B for May 2021.

Further this notification extended due date to file IFF for the month of April-2021 by taxpayer opted QRMP scheme open to file originally from 1^st May -2021 to 13^th May-2021 now extended to 1^st May -2021 to 28^th May-2021.

Notification No. 14/2021- Central Tax-Extension of dates of various compliances till 31^st May-2021

Notification under section 168A of CGST Act due date of compliance which falls during the period from the 15th April 2021 to 30th May 2021  extended to 31st May 2021.

Exception of above:

1. On section 39 but except Sub Section(3)- TDS Return u/s 51 (GSTR-7), Sub Section (4)- Return by Input service distributor (GSTR-6) and Sub Section (5)- Non- resident Taxpayer (GSTR-5)

It means the extension is allowed in all three sub sections as mentioned above.

• Section 68 as far as E-way bill is concerned
• Section 10 (3) – Composition Scheme shall lapse if turnover exceeds the prescribed limit.

Section 25- Procedure for registration.

Section 27- Provisions related to Casual taxable Person and Non- Resident taxable person

Section 31- Tax Invoice

Section 37- Furnishing details of outwards supplies

Section 47- Levy of Late Fee

Section 50- Interest on delayed payment of Tax

Section 69- Power to Arrest

Section 90- Liability of Partners of the firm to pay tax

Section 122- Penalty for certain offenses

Section 129- Detention, seizure, and release of goods and conveyance in transit.

Section to be discussed with relevant Rules under Chapter VI Input Tax Credit of CGST Act, 2017

17

Apportionment of credit and blocked credits

38,42 & 43

Section 17(1) the registered person used goods or services or both “partly for the purpose of business and partly for other purposes”, the amount of input tax credit available shall be restricted to so much of the amount as is attributable to the purpose of his business.

Section 17(2) read with Rule 42 & 43 Where the purchased goods or supply used by the registered person partly for taxable supply including zero rated and party for exempt supply, than the amount of credit shall be restricted to the amount attributable to the said taxable supplies including zero-rated supplies.

Section 17(3) – Inclusions in the Value of Exempt supply:

1. Outward Supplies on which recipient is liable to pay tax under reverse charge,
2. Transaction in securities (value shall be 1% of sale value),
3. Sale of land (value shall be the same as adopted for the purpose of paying stamp duty)
4. Sale of building subject to para 5(b) of schedule II (value shall be the same as adopted for the purpose of paying stamp duty)

Definition of Exempt Supply:

“Exempt supply” means supply of any goods or services or both which attracts nil rate of tax or which may be wholly exempt from tax under section 11, or under section 6 of the Integrated Goods and Services Tax Act, and includes non-taxable supply;

Section 17(4) – Apportionment of Input Tax Credit in case of Banking Company (including NBFC).

OPTION 1: Comply with the provisions of Section 17(2) read with Rule 42 & 43.

OPTION 2: Avail an amount equal to fifty per cent of the eligible input tax credit on inputs, capital goods and input services in that month.

The option once exercised shall not be withdrawn during the remaining part of the financial year. (1^st Proviso)

It may be noted that the restriction of fifty per cent (50%) shall not apply to the tax paid on supplies made by one registered person to another registered person having the same Permanent Account Number. (2^nd Proviso)

Section 17(5) – Blocked Credit

Input tax credit shall not be available in respect of the following:

a) Motor Vehicles for transportation of persons having seating capacity up to 13 persons (including drivers), Except Making the following taxable supplies:

1. Further supply of such motor vehicles,
2. Transportation of passengers, or
3. Imparting Training on driving such motor vehicles.

aa) Vessels and aircraft except when they are used for making the following taxable supplies, namely:—

                                   &

For transportation of Goods.

ab) Services of general insurance, servicing, repair & maintenance so far as they relate to clause (a) & (aa)

Provided the ITC shall be available for the following:

Where the motor vehicle, vessel or aircraft are used for the purposes specified in above clauses.

• Manufacture of such vessel, vehicle or aircraft, or
• Supply of general insurance in respect of such vehicle, vessel or aircraft insured by him.

b) i) Supply of  goods and services being:

Allowed ONLY if goods / services of a particular category are used towards making taxable outward supplies of the same category, or as an element of composite & mixed supply.

*except when used for the purposes specified in clause (a) & (aa) above.

ii) Membership of a club, health & fitness center and

iii) Travel benefits extended to employees on vacation such as leave or home travel concession.

Allowed ONLY where the services are notified as obligatory for an employer to provide to an employee.

c) Works contract services, except where it is an input service for further supply of works contract service.

d) Goods or services received by a taxable person for construction of an (Immovable property on his own account even when used in course or furtherance of business.)

e) Taxes on supply of goods or services paid u/s 10

f) Goods or services or both received by a non-resident taxable person except on goods imported by him, shall not be allowed

g) Goods or services or both used for personal consumption

h) Goods lost, stolen, destroyed, written off or disposed of by way of gift or free supplies and

i) Any tax paid in accordance with the provisions of sections 74, 129 and 130

Rule- 42 Determination of Input Tax Credit in respect of Inputs or Input Services and Reversal thereof:

	Total Credit	T
Less:	Non Business	T1
Less:	Exclusively for Exempt	T2
Less:	Blocked Credit u/s. 17(5)	T3
	Credited to Electronic-Credit ledger	C1
Less:	Exclusively for taxable	T4
	Common	C2
Less:	Proportional to exempt (C2*E/F)	D1
Less:	Non business (5% of C2 if C2 contains Non business)	D2
	Credit to be taken	C3

Key points for Rule 42:

1.     Credit calculated on provisional basis shall be computed finally before due date of filing returns for the month of September following the end of the FY to which credit relates;

2.     In case amount calculated exceeds the provisional calculation the differential amount shall be added to the output tax liability

3.     Interest from the month of April of next FY till the date of payment to be paid

4.     In case amount finally calculated is short of the provisional calculation, the differential amount shall be taken as credit in the month of September

5.     It is to be noted that the reversal to be done at the end of the financial year is only applicable for Rule 42.

Introduction:

• GST is a comprehensive value added tax system that allows uninterrupted flow of credit among different sectors.
• Tax is levied at each stage of value addition. The tax charged at previous stage is passed on to next stage in form of Input tax credit.
• A registered person can take the credit of input tax subject to conditions and restrictions as prescribed and elaborated in next section of the presentation.

Section to be discussed with relevant Rules under Chapter VI Input Tax Credit of CGST Act, 2017

Sections	Section Heading	Rules
16	Eligibility and conditions for taking input tax credit	36 & 37

As per Section 16(1) Goods or services or both, whose credit is to be availed are used or intended to be used in the course or furtherance of business by every registered person, subject to conditions and restrictions as specified under section 49 (Payment of tax, interest, penalty and other amounts) of CGST Act.

As per Section 16(2) registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both as mention above have to fulfill below mention conditions:

• Such registered person have in possession of a tax invoice or debit note issued by a supplier or such other tax paying documents as may be prescribed.

Explanation:

Rule 36(1) issued for Documentary Requirements for claiming ITC says.

• Such registered person has received the goods or services or both.

Explanation: It shall be deemed that the registered person has received the goods or Services in below cases. (Or called exceptions)

1. Goods are delivered by the supplier to a recipient or “any other person” on the direction of such registered person- (Bill to – Shipped to concept) as agent or otherwise.
2. Services are provided by the supplier to any person on the direction of and on account of such registered person.

• Tax charged on goods and services or both have been actually paid to the government, either through cash or input tax credit, subject to condition of section 41 (Tax charged on goods and services have been actually paid to the government)

• Such registered person furnished the return under section 39.

Key Points from Proviso:

1. In the case of goods which are “Sold in lots or in Installments”, starting lots are send to the receiver under the cover of delivery challan. Invoice is being sent along with the last lot or installment. Therefore, ITC on such goods can be availed only when last lot or installment has been received
2. In the case the Invoice has been issued by the vendor and ITC has been claimed correspondingly for such invoice but the “Material is still in transit” then such claimed credit need to be reversed until the delivery not completed. Interest Liability on such credit depends upon the utilization of the Credit.
3. If the recipient “Fails to pay the amount” towards the value and tax thereon to the supplier of goods or services within 180 days, the amount of credit availed to the non-payment by the recipient will be added to its output tax liability along with interest thereon in the manner as prescribed. The said period of 180 days is to be calculated from the date of invoice.

The credit reversed earlier can be re- claimed once the payment has been made to the supplier. No time limit has been prescribed to re-claim the credit.

As per Section 16(3) if the registered person (Recipient) has claimed depreciation on the tax component of the cost of capital goods and plant and machinery, then input tax credit on the said tax component shall not be allowed.

As per Section 16(4) Time limit to avail Input tax credit.

Explanation Rule 36(4):

ITC to be availed by a registered person in respect of Invoices or Debit Notes, the details of which have not been uploaded by the supplier under GSTR-1, shall not exceed 5% of the eligible credit available in respect of Invoices or Debit Notes the details of which have been uploaded by the supplier in GSTR-1

What is Input Service Distributor under GST Law?

A supplier of goods /services may have various offices such as head office (registered office), regional office, branch office, sales depot etc., Such units having large share of common expenditure (input services) but get invoiced on centralized location may obtain registration as an Input Service Distributor for availment of credit on such input services and distribution of credit to other units and strengthen the seamless flow of credit under GST.

Key points from Definition of ISD under section 2(61) of CGST Act:

1. ISD mechanism is meant only for distribution of the credit on common invoices pertaining to input “only for services and not goods” (inputs or capital goods).
2. The ISD distributes credit of to a supplier of goods/services having office in different locations but registered under same PAN.
3. An ISD will have to take a separate registration as such ISD compulsorily.
4. No threshold limit for registration for an ISD.
5. ISD issues tax invoice or other prescribed documents for distribution of credit.
6. The concept of ISD under GST is carried over from the Service Tax Regime.

Example:

The head office of M/s XYZ Limited is located in Mumbai having branches in Chennai, Bangalore and Kolkata. The head office incurred Business promotion expense (service) for beneficial for company as a whole and received the invoice for the same. Since the advantage of promotion is benefiter to all its branches, the input tax credit of entire services cannot be claimed in Mumbai. The same has to be distributed to all the locations. In this case the head office at Mumbai is the Input Service Distributor (ISD).

How to credit distributed by ISD?

As per Section 20 (1)of CGST Act 2017, states that the Input Tax Service Distributor (ISD) shall distribute the credit (ITC) of CGST as CGST or IGST and IGST as IGST, by issue of a document containing the amount of Input Tax Credit (ITC) being distributed in such manner as may be prescribed in rule 54(1) of the CGST Rules, 2017, and it is clearly mentioned that such invoice that it is issued only for distribution of input tax credit.

Credit of	Distributed As (if Recipient  in same State)	Distributed As (if Recipient  in different State)
CGST	CGST	IGST
IGST	CGST or SGST	IGST
SGST	SGST	IGST

The credit has to be distributed only to the branch/unit to which the supply is directly attributable. If input services are attributable to more than one recipient of credit, the distribution shall be in the “Pro-rata basis of turnover” during the Relevant Period.

Aggregate of the turnover of all such recipients to whom such input service is attributable and which are operational in the current year.

Meaning of “Relevant Period”

(a) If the recipients of the credit have turnover in their State in the preceding financial year during which credit is to be distributed, the said financial year, or

(b) If some or all recipients of the credit do not have any turnover in their State in the preceding financial year during which the credit is to be distributed, the last quarter for which details of such turnover of all the recipients are available, previous to the month during which credit is to be distributed.

Key points from Distribution process:

1. For the purposes of distributing the input tax credit, an ISD has to issue an invoice/relevant document, as prescribed in rule 54(1) of the CGST Rules, 2017, clearly indicating in such invoice that it is issued only for distribution of input tax credit.
2. The input tax credit available for distribution in a month shall be distributed in the same month and details for the same should be furnished in FORM GSTR-6 (Monthly Return)
3. An ISD shall separately distribute both the amount of eligible and ineligible input tax credit.
4. An ISD cannot accept any invoices on which tax is to be discharged under reverse charge mechanism. If ISD wants to take reverse charge supplies, then in that case ISD has to separately register as Normal taxpayer.
5. The amount of the credit distributed shall not exceed the amount of credit available.
6. Excess credit distributed can be recovered along with interest only from the recipient and not from ISD. The provisions of section 73 or 74 would be applicable for the recovery of credit.