GST (Goods & Services Tax)
The goods and services tax (GST) is a tax on goods and services sold domestically for consumption. The tax is included in the final price and paid by consumers at point of sale and passed to the government by the seller.
Every business or corporation that is involved in the buying and selling and good of services has to register for GST. It is mandatory for companies whose turnover is more than Rs.20 lakhs (for the supply of services) and Rs. 40 lakhs ( for the supply of goods) yearly to register for a GST.
All businesses making interstate outward supplies of goods have to register for a GST too. The same applies to businesses making taxable supplies on behalf of other taxable persons, for example, Agents, and Brokers.
Also, as per the recent notification, e-commerce sellers/aggregators need not register if total sales are less than Rs.20 lakhs.
Types of GST Registration
Details of the outward supplies of the taxable goods and or services
(If opted under the QRMP scheme)
Simple returns in which a summary of the outward supplies along with the input tax credit that is declared and the payment of the tax is affected by the taxpayer.
Statement cum challan to make a tax payment by a taxpayer registered under the composition scheme under Section 10 of the CGST Act.
Returns to be filed by the taxpayer that is registered under the composition scheme under Section 10 of the CGST Act
Returns to be filed by a Non-resident taxable person
To be filed by the input service distributor to distribute the eligible input tax credit
Is filed by the government authorities
Details of supplies that are affected through the e-commerce operators and the amount of tax that is collected at the source by them.
Annual return for a normal taxpayer
Certified reconciliation statement
Is filed by the taxpayer whose GST registration is canceled
Once the GST registration is canceled or surrendered
Details of the inward supplies are furnished by a person who has UIN and also claims a refund.
Mandatory documents for Online GST registration
The list of documents required for the registration of GST for various business are as follows:
● PAN Card and address proof of proprietor
● PAN Card of LLP
● LLP Agreement
● Partners’ names and address proof
Private Limited Company
● Certificate of Incorporation
● PAN Card of Company
● Articles of Association, AOA
● Memorandum of Association, MOA
● Resolution signed by board members
● Identity and address proof of directors
● Digital Signature
The following can be shown as proof of address of a director:-
● Voter Identity Card
● Aadhar Card
● Ration Card
● Telephone or Electricity Bill
● Driving License
● Bank Account Statement
Add what works as identity proof, One can use a PAN Card, Aadhar Card as identity proof. For address proof, any of the director’s can show their voters ID, passport, telephone bill, electricity bill and telephone bill.
GST Return Filing
Businesses that are registered under GST have to file the GST returns monthly, quarterly, and annually based on the business. Here it is necessary to provide the details of the sales or purchases of the goods and services along with the tax that is collected and paid.
An individual taxpayer filing the GST returns has to file 4 forms for filing the GST returns such as the returns for the supplies, returns for the purchases made, monthly returns, and the annual returns.
GST return is a document that contains the details of all the income or the expenses that a taxpayer is required to file with the tax administrative authorities.
Due dates for filing the GST returns
GSTR 1: The 11th of Subsequent of that month
GSTR 3B: The 20th of that subsequent month
CMP 08: 18th of the month succeeding the quarter of the specific fiscal year.
GSTR 4: 18th of the month succeeding the quarter.
GSTR 5: 20th of the subsequent month
GSTR 6: 13th of the subsequent month
GSTR 7: 10th of the subsequent month
GSTR 8: 10th of the subsequent month
GSTR 9: 31st December of the Fiscal year
GSTR 10: Within 3 months of the date of cancellation or the date of cancellation order whichever is earlier
GSTR 11: 28th of the month that is following the month for which the statement was filed
If there are any offenses committed then a penalty has to be paid under GST
Late filing of the GST returns can attract a penalty called a late fee. And according to the Goods and Service Tax can attract a penalty which is Rs. 100 under CGST and Rs.100 under SGST that accounts for Rs.200 a day.
With the late fee, an interest of 18% has to be paid per annum. It is calculated on the tax to be paid.
In case if the taxpayer is not filing the GST returns then the subsequent returns cannot be filed. Hence, to avoid heavy fines and penalties it is better to file the GST returns on time as it will lead to a cascading effect.
For 21 offenses with no intention of fraud or tax evasion
An offender who is not paying taxes or is making short payments must pay a penalty of 10% of the amount of tax due subject to a minimum of Rs.10,000.
For 21 offenses with the intention of fraud or tax evasion
An offender is subject to a penalty amount of tax evasion or short deducted.
Even in case if there is no business the taxpayer is required to file the Nil GST returns.
GST LUT Filing
GST LUT is to be submitted by all GST registered goods and service exporters. The exporters who have been prosecuted for any offense and the tax evasions exceeding Rs 250 lakhs under CGST Act or the Integrated Goods and Service Act, 2017 or any existing laws are not eligible to file the GST LUT.
Documents Required for LUT under GST
An LUT can be submitted by any individual who is registered under GST provided he has not been executed in case of tax evasion exceeding Rs.250 lakh or any other offense.
- LUT cover letter – request for acceptance – duly signed by an authorized person
- Copy of GST registration
- PAN card of the entity
- KYC of the authorized person/signatory
- GST RFD11 form
- Copy of the IEC code
- Canceled Cheque
- Authorized letter
GST Annual Return Filing
GST annual return filing is mandatory for all entities with a turnover of more than two crores required to obtain GST registration, irrespective of the business activity or sales or profitability during the return filing period. Hence, even a dormant business that gets GST registration must file GST returns.
About GSTR 9
GSTR 9 is the annual return that is to be to be filed yearly by the taxpayers registered under GST.
Before filing GSTR 9, the taxpayer must file all GSTR-1, GSTR-3B, or GSTR 4 returns. In case of over dues, the GSTR registration holder will not be allowed to file an annual GST annual return.
Who should file GSTR 9?
All taxpayers/taxable persons registered under GST must file their GSTR 9. However, the following are NOT required to file GSTR 9:
- Taxpayers opting composition scheme (They must file GSTR-9A)
- Casual Taxable Person
- Input service distributors
- Non-resident taxable persons
- Persons paying TDS under section 51 of CGST Act.
What details are required to be filled in the GSTR-9?
The GSTR-9 is broadly divided into six parts and 19 sections. Each part asks for the details that are readily available from previously filed returns and books of accounts.
This form asks for disclosure of annual sales, bifurcating between the cases subjected to tax and those not subjected to Tax.
The annual value of the inward supplies and ITC availed thereon is to be revealed.
Further, these purchases have to be classified as inputs, input services, and capital goods. Details of ITC that need to be reversed due to ineligibility are to be entered.
As per Section 47(2) of the Central Goods and Service Tax Act (2017), a person will be fined a penalty of INR 100 per day (CGST) + INR 100 per day (SGST), amounting to a total of INR 200 per day if he/she fails to file GSTR-9 before the due date. However, the maximum amount of penalty a person can be fined is 0.25% of the total turnover.
GST refund is a process in which registered taxpayers can claim an excess amount if they paid more than the GST liability. They can claim after submitting a refund application with the necessary details in the GST portal.
Situations that can lead to Refund Claims
A proper refund mechanism is necessary for effective tax administration, as trade is facilitated via the release of blocked finances for modernization, expansion, and working capital requirements of a business. The situations that could lead to refund claims include the following:
- Exports of commodities or services
- Deemed exports
- Refund of taxes when embassies make purchases
- Supplies to developers and units in special economic zones
- Refund of accrued input tax credit on account of inverted duty structure
- Refund of pre-deposit
- Refund arising from order, judgment, direction or decree of the Appellate Tribunal, Appellate Authority or any court of law
- Refund of taxes when embassies make purchases
- Finalisation of provisional assessment
- Excess payment because of an error
- Refund due to issuance of refund vouchers for taxes paid on advances against which commodities or services haven’t been supplied
- Refunds to overseas tourists of GST paid on commodities within the country and carried to an international location when they depart India
- Refund of SGST and CGST paid by considering the supply in the course of inter-state commerce or trade
Document Required for GST Refund
If the applicant applies a refund claim on account of exports or supply to SEZ, the individual shall submit relevant invoice pertaining to the transaction. Along with the invoice, a statement containing the number and date of shipping bills or bills of export and the number and the date of the relevant export invoices, in a case where the refund is on account of export of goods must also be provided.
In case of GST refund on account of export of services, along with the tax invoices, the relevant bank realization certificates evidencing receipt of payment in foreign currency is also required to be submitted.
GST Registration Cancellation
GST registration can be cancelled voluntarily if the business is dormant or does not have the necessary business turnover. Further, a GST registration can also be cancelled by a GST officer if the business is non-compliant under GST. Once GST registration is cancelled, the person or entity is no longer required to file GST returns and is not required to pay or collect GST.
Voluntary GST Cancellation
If a person or entity with GST registration wishes to cancel their GST registration, a cancellation request must be submitted to the GST Department in Form GST REG-16. After reviewing the application, if the GST Officer is satisfied, he or she will issue an order to terminate GST registration in Form GST REG-19.
The following are some of the top reasons for voluntary GST registration cancellation:
- Discontinuance or closure of a business.
- Transfer of business, amalgamation, merger, de-merger, lease, or other pertinent reasons.
- Change in the constitution of business which results in a change of PAN.
- Turnover reduces below the threshold limit of GST registration.
- Death of the sole proprietor.
Voluntarily cancelling a GST registration can save the business owner from unnecessary hassles of filing GST returns each month and payment of penalty or late-filing fee.
Cancellation by GST Officer
An officer can initiate the cancellation of a GST registration under GST if the Officer has justification to cancel the GST registration. The proceedings for GST Cancellation by Officer will begin by issuing a show-cause notice in Form GST REG-17
A GST officer can start the cancellation process if any of the following events occur.
- If a taxpayer has failed to file GST returns continuously.
- An assessee registered for GST voluntarily but did not start a business within six months.
- The registered taxpayer has broken one or more sections of the GST Act or its Rules.
- The GST registration is obtained through deception or malicious misrepresentation.
- To dodge tax or improperly claim the input tax credit, a taxpayer supplies goods or services without an invoice or produces an invoice without a provision of goods or services.
Information Required to Fill the Cancellation Form
- Address, email ID, and registered mobile number
- Reason for cancellation of GST registration and the most desired date to effect cancellation
- Details of the last return filed by the taxpayer
- When the existing unit is merged/de-merged/transferred, etc., the GST registration details of the new entity
- Particulars on which tax is payable: namely
- The stock of input and capital
- Input available on semi-finished and finished goods