The threshold limit for the issue of e-invoices has been reduced from ₹ 50 crores to ₹ 20 crores. Taxpayers who are having turnover above ₹ 20 crores have to issue e-invoices from 1st April 2022 and the recipient can take input tax credit only if the supplier has issued an e-invoice if required else they cannot avail input tax credit.
The taxpayers can verify from here for the eligibility for the issue of e-invoice.
GST collection for October 2021 registered the second-highest since the implementation of GST.
The gross GST revenue collected in the month of October 2021 is ₹ 1,30,127 crore of which CGST is ₹ 23,861 crore, SGST is ₹ 30,421 crore, IGST is ₹ 67,361 crore (including ₹ 32,998 crores collected on import of goods) and Cess is ₹ 8,484 crore (including ₹ 699 crores collected on import of goods).
The government has settled ₹27,310 crores to CGST and ₹ 22,394 crores to SGST from IGST as regular settlement. The total revenue of the Centre and the States after regular settlements in the month of October 2021 is ₹ 51171 crore for CGST and ₹ 52,815 crores for the SGST.
The revenues for the month of October 2021 are 24% higher than the GST revenues in the same month last year and 36% over 2019-20. During the month, revenues from import of goods were 39% higher and the revenues from the domestic transactions (including import of services) are 19% higher than the revenues from these sources during the same month last year.
The GST revenues for October have been the second-highest ever since the introduction of GST, second only to that in April 2021, which is related to year-end revenues. This is very much in line with the trend in economic recovery. This is also evident from the trend in the e-way bills generated every month since the second wave. The revenues would have still been higher if the sales of cars and other products had not been affected on account of disruption in the supply of semiconductors. Chart 1 shows the upward trend in the number of e-way bills generated during the month and the amount of taxable value clearly indicating the recovery in economic activity.
The revenues have also been aided due to the efforts of the State and Central tax administration resulting in increased compliance over previous months. In addition to action against individual tax evaders, this has been a result of the multipronged approach followed by the GST Council. On one hand, various measures have been taken to ease compliance like nil filing through SMS, enabling Quarterly Return Monthly Payment (QRMP) system and autopopulation of return. During past one year, GSTN has augmented the system capacity considerably to improve user experience. On the other hand, the Council has also taken various steps to discourage non-compliant behaviour, like blocking of e-way bills for non-filing of returns, system-based suspension of registration of taxpayers who have failed to file six returns in a row and blocking of credit for return defaulters. Number of returns (GSTR-3B) of every month/quarter by the end of next month is a good parameter indicating timely payment of returns and filing of returns. After last date of filing of returns, special efforts are undertaken to ensure compliance by the end of the month in form of messaging by GSTN and close follow up by the Centre and State tax administration. Chart 2 showing the upward trend in percentage of returns filed till the end of next month clearly indicates that timely payment of taxes has been increasing over a period of time due to policy measures and administrative efforts.
NIC is happy to release the application/tool, known as GePP-On, for entering invoices and generation of IRN. This is a browser-desktop based application which can also be used on the mobile devices, without having web application/portal. The application will internally talk to the e-Invoice APIs for all the functionalities.
This will be helpful for the taxpayers who have few invoices so that they can generate e-invoices without going for any API integration. The application is designed with simple forms for entering the invoice details. The application has all the features like : Generation of IRN, Cancellation of IRN, Generation of EWB by IRN, Printing of e-Invoice with QR Code, creation of Recipient master and HSN master, backup and restoration of his data etc. The application can also run in offline mode ie, when no internet is available, the taxpayer can enter all the details of invoice and keep it ready. As and when the internet is resumed, the invoice details can be submitted to the e-Invoice portal and IRNs can be generated. Another important point is that all the data entered by the taxpayers such as invoice data, master data are stored locally on the taxpayer’s system. The taxpayer can also backup and restore data on to another system, if required.
Additionally, mobile apps are released for Android and iOS on the same lines as given above. The taxpayer can download these on his mobile and use them accordingly.
There are around 9600 taxpayers who are already using NIC GePP-Tool for generation of IRN. The difference between Gepp-Tool and GePP-On is that in the former, taxpayer enters the invoice details, generates JSON file and uploads in the e-Invoice portal. Where as in the latter, the taxpayer can enter all the details and on click of a button, IRN is generated. This will facilitate a large of number of small taxpayers in the coming days when the no. of taxpayers is increased for e-invoicing.
Beta version of GePP-On is launched on the sandbox system for testing by the tax payers who are enabled for e-invoice generation.
Circular Number 156/12/2021-GST dated 21st June 2021
Notification No. 14/2020-Central Tax, dated 21st March 2020 had been issued which requires Dynamic QR Code on B2C invoice issued by taxpayers having aggregate turnover more than 500 crore rupees, w.e.f. 01.12.2020. Further, vide notification No. 06/2021-Central Tax, dated 30th March 2021, penalty has been waived for non-compliance of the provisions of notification No.14/2020 – Central Tax for the period from 01st December, 2020 to 30th June, 2021, subject to the condition that the said person complies with the provisions of the said notification from 1st July, 2021. Further, various issues on Dynamic QR Code have been clarified vide Circular No. 146/2/2021-GST, dated 23.02.2021.
2. Various references have been received from trade and industry seeking clarification on applicability of Dynamic Quick Response (QR) Code on B2C (Registered person to Customer) invoices and compliance of notification 14/2020-Central Tax, dated 21st March, 2020 as amended. The issues have been examined and in order to ensure uniformity in the implementation of the provisions of the law across the field formations, the Board, in exercise of its powers conferred under section 168(1) of the CGST Act, 2017, hereby clarifies the issues
Question 1 . Whether Dynamic QR Code is to be provided on an invoice, issued to a person, who has obtained a Unique Identity Number as per the provisions of Sub-Section 9 of Section 25 of CGST Act 2017?
Answer : Any person, who has obtained a Unique Identity Number (UIN) as per the provisions of Sub-Section 9 of Section 25 of CGST Act 2017, is not a “registered person” as per the definition of registered person provided in section 2(94) of the CGST Act 2017. Therefore, any invoice, issued to such person having a UIN, shall be considered as invoice issued for a B2C supply and shall be required to comply with the requirement of Dynamic QR Code.
Question 2: UPI ID is linked to the bank account of the payee/ person collecting money. Whether bank account and IFSC details also need to be provided separately in the Dynamic QR Code along with UPI ID?
Answer : Given that UPI ID is linked to a specific bank account of the payee/ person collecting money, separate details of bank account and IFSC may not be provided in the Dynamic QR Code.
Question 3: In cases where the payment is collected by some person other than the supplier (ECO or any other person authorized by the supplier on his/ her behalf), whether in such cases, in place of UPI ID of the supplier, the UPI ID of such person, who is authorized to collect the payment on behalf of the supplier, may be provided?
Answer : Yes. In such cases where the payment is collected by some person, authorized by the supplier on his/ her behalf, the UPI ID of such person may be provided in the Dynamic QR Code, instead of UPI ID of the supplier.
Question 4: In cases, where receiver of services is located outside India, and payment is being received by the supplier of services in foreign exchange, through RBI approved modes of payment, but as per provisions of the IGST Act 2017, the place of supply of such services is in India, then such supply of services is not considered as export of services as per the IGST Act 2017; whether in such cases, the Dynamic QR Code is required on the invoice issued, for such supply of services, to such recipient located outside India?
Answer : No. Wherever an invoice is issued to a recipient located outside India, for supply of services, for which the place of supply is in India, as per the provisions of IGST Act 2017, and the payment is received by the supplier in foreign currency, through RBI approved mediums, such invoice may be issued without having a Dynamic QR Code, as such dynamic QR code cannot be used by the recipient located outside India for making payment to the supplier.
Question 5 : In some instances of retail sales over the counter, the payment from the customer in received on the payment counter by displaying dynamic QR code on digital display, whereas the invoice, along with invoice number, is generated on the processing system being used by supplier/ merchant after receiving the payment. In such cases, it may not be possible for the merchant/ supplier to provide details of invoice number in the dynamic QR code displayed to the customer on payment counter. However, each transaction i.e. receipt of payment from a customer is having a unique Order ID/ sales reference number, which is linked with the invoice for the said transaction. Whether in such cases, the order ID/reference number of such transaction can be provided in the dynamic QR code displayed digitally, instead of invoice number.
Answer : In such cases, where the invoice number is not available at the time of digital display of dynamic QR code in case of over the counter sales and the invoice number and invoices are generated after receipt of payment, the unique order ID/unique sales reference number, which is uniquely linked to the invoice issued for the said transaction, may be provided in the Dynamic QR Code for digital display, as long as the details of such unique order ID/ sales reference number linkage with the invoice are available on the processing system of the merchant/ supplier and the cross reference of such payment along with unique order ID/ sales reference number are also provided on the invoice.
Question 6 : When part-payment has already been received by the merchant/ supplier, either in advance or by adjustment (e.g. using a voucher, discount coupon etc), before the dynamic QR Code is generated, what amount should be provided in the Dynamic QR Code for “invoice value”?
Answer : The purpose of dynamic QR Code is to enable the recipient/ customer to scan and pay the amount to be paid to the merchant/supplier in respect of the said supply. When the part-payment for any supply has already been received from the customer/ recipient, in form of either advance or adjustment through voucher/discount coupon etc., then the dynamic QR code may provide only the remaining amount payable by the customer/recipient against “invoice value”. The details of total invoice value, along with details/ cross reference of the part payment/ advance/ adjustment done, and the remaining amount to be paid, should be provided on the invoice.
3. Circular No. 146/2/2021-GST, dated 23.02.2021 stands modified to this extent.
The e-invoicing system is also available for the E-Commerce Operators (ECO) to report the invoices to the Invoice Registration portal, generated by them on behalf of the suppliers. The e-invoicing system identifies the e-Commerce operators based on the taxpayer type in the GST registration details. The taxpayer having the type as ‘TCS’ will be enabled for reporting invoices on the e-invoicing system as eCommerce Operator. However, it is important to note that E-commerce transactions can be reported by the E-commerce operators with “EcmGstin” attribute as their GSTINs. This means to say, that apart from specifying the Seller GSTIN in the payload, it is mandatory to specify the e-Commerce operator GSTIN in the “EcmGstin” attribute of the schema by e-Commerce Operator when he logs in using his user credentials.
e-Invoice APIs available for e-Commerce Operators • Generate IRN (for self or on behalf of suppliers) • Cancel IRN (applicable to only for those IRNs, generated by e-Commerce operator) • Generate E-Waybill • Cancel E-waybill (applicable to only for those IRNs generated by e-Commerce operator) • Get IRN (applicable to only for those IRNs, generated by e-Commerce operator)
Scope of Access to IRNs generated by e-Commerce operator and Supplier
Process for integrating on the Sandbox system The following procedure has to be followed by the e-Commerce operators to integrate their ERP systems to the sandbox system of IRP. • The Registration module in the sandbox system has an option ‘E-Commerce Operator’ • The e-Commerce Operator may select this option and enter the GSTIN of type ‘TCS’ and get registered in the sandbox portal, by authenticating with OTP sent to the GSTIN registered mobile. • API credentials such as Client-Id, Client-Secret, User-name and Password may be generated. • On logging into the sandbox tool, there is no need to add the GSTINs. • The payload to generate the IRN may be prepared and tested in the sandbox tool. • As already mentioned, the payload shall contain the Seller GSTIN, Buyer GSTIN and also the e-Commerce GSTIN along-with other details. • All other validations and schema and procedure mentioned in the sandbox portal may be followed. • While using the ‘Cancel IRN’,’ Generate EWB by IRN’, Cancel EWB’, ‘Get IRN’, send the ‘Supplier GSTIN’ in addition to other parameters
Process for integrating on the Production system The following procedure may be followed by the e-Commerce operators to integrate their ERP systems to the production system of IRP. • The TCS registered taxpayer will need to do login registration in the Invoice registration portal (https://einvoice1.gst.gov.in). If already registered, the taxpayer can login to the Invoice registration portal. • Select the API registration. • Submit the application for whitelisting the IPs along with summary test report. Up to 4 Indian Static IPs are allowed. • On submission of the application, the network team will scrutinize and whitelist the IPs. • API credentials such as Client-Id, Client-Secret, User-name and Password may be generated. • Create the username and password for the other PAN related GSTINs by selecting the above GSTIN. • Use above credentials, the payload to generate the IRN, may be prepared and IRN may be generated. • As already mentioned, the payload will contain the Seller GSTIN, Buyer GSTIN and also the e-Commerce GSTIN along with other details
e-invoicing is implemented in India from 1st Oct 2020 for taxpayers having turnover above ₹ 500 crores and now the threshold has been reduced to ₹ 50 crores from 1st April 2021. The pace at which the Indian businesses have adopted is remarkable and all the credits to NIC for putting in place robust infrastructure which as ensured seamless experience to the taxpayers without any major glitches. The e-invoicing system is also undergoing constant changes from time to time based on the dynamic requirements of the taxpayers and their feedback. Some of the changes are announced and architectural changes have been made and they are
a) The existing Authentication API ver 1.03 is replaced with ver 1.04 from 10th April 2021
b) Two new attributes have been added to the response JSON for “Get GSTIN Details” & “Sync GSTIN Details” and the newly added attributes are
i) Date of Registration
ii) Date of De-registration
c) IRNs cannot be generated if the Supplier or Recipient GSTINs are in “Suspended”, “Provisional” or “Inactive” or “Cancelled” status. This validation will ensure that IRNs are not generated for such recipients and will minimize the taxpayers exposure to that extent.
d) If the Registration status of the Supplier or Recipient is in “Cancelled” status, the document date should be between the Date of Registration and Date of De-registration. This validation will ensure that business is not impacted and the supplier will know the status of the recipient at the time of issue of invoice only and enable him to take commercial decisions accordingly.
e) If the recipient is an SEZ Unit or SEZ developer, supply types “SEZWP” or SEZWOP” are only enabled and rest of the supply types are disabled to provide better user experience with proper and meaningful validations.
f) The validation for the number of digits for the HSN code is also enhanced to meet the latest regulatory changes. The minimum number of HSN codes has been increased to 6 digits for taxpayers above ₹ 5 crores.
g) While generating E Way Bill, Vehicle Type (‘VehType’) can be set to ‘O’ (Over Dimension Vehicle) if the Transportation mode (‘TransMode’) is set as ‘4’ (Ship).
Even though the above validations are few but they are really taxpayer friendly by way of providing better user experience and also minimizing the exposure towards the errant taxpayers thereby safeguarding the genuine taxpayers. The increase in validation for HSN codes for taxpayers having turnover above ₹ 5 crores to 6 digits means that e-invoicing sooner or later will be applicable to taxpayers who are having turnover above ₹ 5 crores.
We are in the world of New Normal due to the ongoing pandemic globally. Pandemic has resulted in disruptions and business strategy changes based on consumer preferences and budget allocations. The organizations have started the new financial years on 1st April 2020 in the lockdown period. None of the organizations have prepared or able to scale to the dynamic & ever-changing business environment. Time Never Stops, and History Repeats are the two common phrases we hear in our discussions in business circles. Come whatever may happen, organizations have to close their books of accounts for 31st March year. Closure of books in time and properly helps the organization mitigate the risks and take timely actions for the coming year to improve the top line and bottom line. What is required for increasing the top line and bottom line is a strategy on how to achieve it, and compliance is one of the strategies meant to achieve the same. As we all know, GST is a Business Reform, not tax reform; changing few business processes in the organization here and there can ensure productivity while safeguarding the organization from hefty penalties and late fees. Following a structured process will ensure to minimize the same and at the same time be in good books of the tax authority and the suppliers. Professionals and taxpayers are required to complete the following before filing the GSTR – 1 and GSTR – 3B for March 2021 by 11th of April 2021 and 20th of April 2021 ( for few taxpayers, it will be 22nd of April or 24th of April if their turnover is less than ₹ 5 cores based on the state they are located).
Reconciliation of Outward Supplies
Reconciliation of Inward Supplies
Reconciliation of Related Party Transactions
Issue of Pending Debit/Credit Notes
Reversal of ITC arising out of pandemic
Reconciliation of Outward Supplies
A series of reconciliations have to be done while filing the returns for March 2021 if the reconciliations have not been done while filing monthly and quarterly returns.
Verify the following for the correctness of the data in return filing
Taxable Supplies, Exempted Supplies are reported correctly
Non-GST supplies are reported correctly
Supplies to deemed exporters are reported correctly at lower tax rates
Supplies to notified agencies at a lower rate are reported correctly
All outward supplies transactions are reported correctly in the Sales Register
Ensure that e-invoices are issued wherever required if applicable
Ensure and validate that the GSTINs of the customers are entered correctly and reported
Ensure and validate that no GST is charged for transactions within the state having the same GSTINs
Ensure that all the debit and credit notes are issued as per the provisions of GST
Ensure and verify that all the liability entries are passed in the books of accounts
Complete the following reconciliations before the filing of the March GST Returns
Reconcile between the GSTR – 1 data and the Sales Register
Reconcile between GSTR – 1 and GSTR – 3B
Reconcile between GSTR -3B and Sales Register
Reconcile the data for the HSN summary being reported in monthly GSTR – 1
Reconcile e-waybill data with GSTR – 1 data, and if there are any differences, it is worth making a reconciliation statement and preserve it for future references.
Reconcile the e-invoices reported in the GSTR – 1 with the e-invoices generated
Reconcile between the Liability Ledgers on GST portal with the
The beginning of the year started with lockdown, and it has resulted in a lot of delays and cancellations of orders. Wherever there is a commercial element missing and open, try to close all such cases by the issue of debit and credit notes. Credit Notes have to be issued before the due date of filing of GSTR returns for the month of September or filing of Annual Return, whichever is earlier.
Section 37 (3), First Proviso
Provided that no rectification of error or omission in respect of the details furnished under sub-section (1) shall be allowed after furnishing of the return under section 39 for the month of September following the end of the financial year to which such details pertain, or furnishing of the relevant annual return, whichever is earlier.
If any excess tax is paid for the said period through GSTR – 3B, then the same should be reduced from the GST liability in March 2021, reducing the cash outflows. Also, please maintain a reconciliation statement for the same for future reference.
2.Reconciliation of Inward Supplies
One of the major features and business-friendly measures in GST is the availability of seamless input tax credit. Though it is a piece of soothing music to the business’s ears, it comes with a set of stringent measures like if input tax credit has been availed wrongly or excess amounts or claiming it if the supplier has not filed returns. Given all these, availing of the input tax credit process and claiming correctly becomes crucial for the business.
One of GST rollout’s major benefits for the trade and industry is the availability of input tax credit seamlessly across the supply chain cycle. Though input tax credit is available, certain restrictions are available, and they are given in Section 16, Section 17(5), and in the corresponding rules.
Section 16(4) A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier.
Before doing the reconciliation, ensure to complete the following tasks
Update the purchase register for the entire year and ensure all the transactions are updated in it.
Verify that e-invoices are received from all the suppliers to whom it is applicable; else, it will not be considered a tax invoice and not eligible to claim the input tax credit.
Verify and ensure that all the original copies of the tax invoice are available
Verify and ensure that the goods and services are received before availing of the input tax credit
Verify and ensure that all the credit and debit notes are updated in the system and accounted
Verify and ensure that if any debit or credit notes are required to be issued by the supplier are issued, filed by the supplier in his returns and also accounted in the books
Verify and ensure that RCM applicability on inward supplies is identified and accounted for, and paid.
Verify and ensure that input tax credit is availed only on eligible inward supplies only
Verify and ensure that input tax utilization entries passed in the books of accounts
(b) the following supply of goods or services or both—
food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, leasing, renting or hiring of motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa) except when used for the purposes specified therein, life insurance and health insurance:
membership of a club, health and fitness centre; and
(c) works contract services when supplied for construction of an immovable property(other than plant and machinery) except where it is an input service for further supply of works contract service;
(d) goods or services or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business.
(h) goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples; and
Apart from ensuring the steps mentioned above are completed and the do the reconciliation
Complete the following reconciliations
Reconcile between GSTR – 2A / 2B with Purchase Register
Reconcile between GSTR -2A /2B with GSTR – 3B
Reconcile between GSTR-3B with Purchase Register
Reconcile the ITC Ledger on GST portal with the various ledger accounts
Rule 69 – Matching
The following details relating to the claim of input tax credit on inward supplies including imports, provisionally allowed under section 41, shall be matched under section 42 after the due date for furnishing the return in FORM GSTR-3-
Goods and Services Tax Identification Number of the supplier;
Goods and Services Tax Identification Number of the recipient;
invoice or debit note number;
invoice or debit note date; and
3. Reconciliation of Related Party Transactions
In multiple instances, related parties are not accounted for properly, or returns are filed incorrectly. This results in a lot of tax litigation or reversal of input tax credits through discharge of liability. Though there is no loss to the exchequer, it is not as per the law’s provisions, and the taxpayer cannot amend the returns if they have claimed wrongly.
It is recommended to verify all such transactions if there are any related party transactions and rectify the same in the March months returns. This process will ensure no loss of input tax credit, excess payment of taxes, which impacts the organization’s bottom line. This will also eliminate litigation and save time and effort.
The above process is not required if the taxpayers reconcile their data before filing their monthly returns
4. Issue of Pending Debit/Credit Notes
In a going business concern, there will always be issues and challenges in the supply chain. The supply chain challenges could be damages or breakages in transit or delay in shipments or receipt of goods, or receipt of inferior quality or different ones from the ordered—all these results in some price negotiations or others. In GST, only the supplier of goods or services can issue a debit note, and the recipient cannot unilaterally issue a debit note or credit note on the supplier.
As the above case results in price negotiation, there will always be a delay in the process, and as it is the year-end, it is recommended to clear all such pending issues. A rigorous follow-up with the vendors is required, backed by documentation.
Another case could be on account of reconciliation, there could be some suppliers who must have missed filing their returns, or their registrations have been canceled; in all such cases where the supplier has not filed the returns, a credit note should be requested to be issued to compensate the loss of input tax credit. If the supplier does not issue a credit note and the payment is already made, then the taxpayer cannot do anything but reverse the input tax credit with interest at the rate of 24%; payment of interest will be an additional loss to the taxpayers. To avoid such cases, before the payment release, it is recommended to complete the reconciliation process or withhold the tax amount until the supplier files the GST returns. This process will ensure that there is an impact on the bottom line.
Similar could be the case in the case of outward supplies. Also, it is recommended to issue debit or credit notes before the 31st of March 2021.
Section 34(2) – Any registered person who issues a credit note in relation to a supply of goods or services or both shall declare the details of such credit note in the return for the month during which such credit note has been issued but not later than September following the end of the financial year in which such supply was made, or the date of furnishing of the relevant annual return, whichever is earlier, and the tax liability shall be adjusted in such manner as may be prescribed:
Though there is no time limit for the issue of Debit Note but is advised to issue the same as the same will minimize the pending issues, the issue of debit notes brings is additional cash into the system, which has become scarce due to the business disruptions on account of the pandemic.
5.Covid Impact on GST
The pandemic has impacted every business directly or indirectly. The impact is on the sales front, profits front as well on the operations and employee front. As the lockdowns have been announced to curtail the spread of the deadly virus, many manufacturers and service providers have impacted their businesses.
If any spoilage/wastage of raw materials or work in progress, the same is being debited to the Profit and loss account simultaneously. If any input tax credit has been availed, the same has to be reversed and observed in the profit and loss account.
If any goods have been expired due to the lockdown, the same is being written off to the profit and loss account. Similarly, the input tax credit has to be reversed if any availed.
If the customers have returned the goods and the same could not be used, were scrapped or destroyed for not being used, the input tax credit has to be reversed on such goods.
If the scrapped goods are sold at a nominal rate, then input tax credit need not be reversed as it is sold as scrap, and GST is paid on it as per one school of thought.
The pandemic has also resulted in a delay in payments. Identify if the suppliers are paid within 180 days; if not, the input tax credit must be reversed on the amounts due from one hundred and eighty-first day onwards.
If any return of the goods by the customers or dealers or distributors, issue the credit notes immediately without further delay. It will be a challenge in financial reporting if issued after 1st April 2021.
If the advance is received from the customers and service is not being provided due to the lockdowns, advance received treatment becomes crucial in GST. The possible scenarios and treatment under GST
If the advance is returned in the same month, then no need to account for GST on receipt of the advance. Verify and validate all such advance receipts, and if GST is not paid, please pay interest on it if the invoice is issued in the subsequent months.
If the invoice is not issued till 31st March and service is not provided, validate and verify if GST is paid on the advance receipt along with the interest
If an amount is partially returned in the subsequent months and service is not provided, validate and verify if GST is paid on advance receipt if not account it and pay along with interest
The pandemic has also resulted in a delay in payments. Identify if the suppliers are paid within 180 days. If not, the input tax credit must be reversed on the amounts due from one hundred and eighty-first day onwards.
If any credit notes are required to be issued for the delay in service, complete the activity before filing GST Returns for March; else, reconciliation statements have to be prepared to explain to various stakeholders.
If any debit notes have to be issued for price variations, the activity must be completed before the GST Returns filing for March 2021; else, reconciliation statements must be prepared to explain to various stakeholders.
The points mentioned above are indicative and may vary from taxpayer to taxpayer. It is also recommended to address the following points before the filing of the March return
Inputs sent on job work if not returned within the stipulated period; tax invoice has to be issued
Avail of the input tax credits if any is missed out
There is an exemption for reporting input tax credit by classification for the first two years only; the taxpayers must classify and claim input tax credit accordingly. If not done, prepare a reconciliation statement and validate that the same match the input tax credit claimed in GSTR – 3B.
Verify If any employee gifts above Rs 50,000 on which tax liability has to be paid
Verify if any input tax credit has to be reversed for the goods given without any consideration
Verify if any shortages or damage to stock on which input tax credit has been claimed? If any such items are there, reverse the input tax credit
Validate the input tax credit reversed on common inputs for taxable and exempted supplies being reversed
Verify input tax credit has been reversed on a pro-rata basis on capital goods from one state to another state
Verify the financial credit notes and debit notes issued according to the l provisions; else, issue GST Credit / Debit Notes.
File all the relevant returns as per applicability and complete the reconciliations
Verify if all the customers who have to file GSTR – 7 & 8 have filed their returns and accepted the same, this will save on the cash outflows.
Wherever possible, if any ITC has to be reversed or tax has to be paid, account for it and discharge it through GSTR – 3B.
Verification of the above tasks is a time-consuming process, and it is recommended to start the process ASAP and ensure that no input tax credit benefit lapses. No removal of difficulties order has been issued for availing input tax credit for an extra period on account of a pandemic-like situation.
During the first three years after the rollout of GST, there was an option for corrections using the GSTR – 9 for liability. The same is being withdrawn based on the Finance Bill 2021, yet to be notified; if this is the case, there is no room left for the taxpayers for rectification. The wrongdoings can be seen only during the audit or scrutiny by the department officers over a period of time. By that time, the penalty amount along with interest also is going to be increased multi-fold. To avoid such challenges, it is highly recommended to follow the above steps before filing the returns for March 2021.
To avoid all the challenges, the return filing data should be captured in the accounting or ERP system accordingly. Wherever possible, automation should be introduced to minimize human efforts and automate the process of data entry and reconciliations. Let’s not forget that GST is a business reform and not tax reform.
Any views or opinions represented above are personal and belong solely to the author and do not represent those of people, institutions, or organizations that the author may or may not be associated with within a professional or personal capacity unless explicitly stated. Any views or opinions are not intended to malign any religion, ethnic group, club, organization, company, or individual.
The new financial year starts tomorrow, and there are many activities to be done as per year ending for the organization. Apart from those year-ending activities, some changes must be done from 1st April 2021 with respective compliances from GST, Income Tax & MCA purposes. These changes are statutory for some and for some in improving the ease of doing business. Key changes required to be carried out from 1st April in are listed below
New document series
As per provisions of Goods and Service Tax, the taxpayers must maintain unique number series for the documents being issued by them for every financial year. The document sequence has to be re-set for some accounting packages. It is automatic in some accounting packages, cases where it has to be done manually; the taxpayers have to be careful and complete this step before creating any new transactions for the new financial year. Document Sequence/numbering has to be changed for the following documents in GST
Bill of Supply
Tax Invoice Cum Bill of Supply
2. HSN Code
There is also a change in the HSN code requirement under GST to be printed on the Tax Invoice. The following are the changes
For taxpayers how are having turnover above ₹, five crores are required to show six digits
For taxpayers whose turnover is below ₹, five crores are required to show four digits in business-to-business transactions. In the case of Business to Customer Transactions, it is optional.
The taxpayers have to make necessary changes for the Item master if not updated with the latest provisions.
It is recommended to make changes for the item master with eight digits as it will be applicable in the near future, and changing master data frequently is not advised. Moreover, it is time-consuming and unproductive work.
e-invoice is required to be issued by taxpayers whose aggregate turnover is above ₹ 50 crores during the last three years from 1st April 2021.
It is recommended to make changes to the accounting or ERP system to address the above change.
If the taxpayer does not issue an e-invoice, is it not considered a tax invoice, and the recipient cannot take input tax credit at all.
It can be implemented using any of the four methods
Application Program Interface (API)
Secure File Transfer Protocol (SFTP)
For adopting any of the above methods, the taxpayers can approach any of the GST Suvidha Providers (GSPs or Application Service Providers (ASPs).
Even though the taxpayers will be using the Bulk or Single JSON upload for the generation of e-invoice from the department portal or ASP/GSP solution, the same will not be integrated with the Accounting/ERP system; this may pose a challenge in the future. It is strongly recommended to update the Accounting/ERP system with e-invoice details for future references.
Letter of Undertaking is required to be taken by taxpayers who are making Zero Rated Supplies, and a new one has to be obtained before 1st April 2021.
It is recommended to take the same at the earliest, or it may impact your outward supplies accordingly.
5. Accounting package with audit trail and edit log
As per the latest notification from the Ministry of Corporate Affairs, all companies using accounting packages have to ensure that there is an audit log in the accounting package with the edit log.
Companies have to ensure that they are enabling the same if they maintain the same or request their accountant or CA to do the same.
There is a difference between the audit trail and edit log, in case of audit trail only Who is Who information is captured and in case of Edit log the date elements changed is also captured for future reference.
6. Change in Income Tax Rates – TDS & TCS
Due to the pandemic and lockdowns, the Government has announced a reduction in tax rates up to 31st March 2021 for some sections, and now from 1st April, the new rates or actual rates will be applicable.
It is recommended to verify and enter the new TDS / TCS rates in the masters with the effective date to maintain the audit trail as per MCA notification. In case of shot, deductions of TDS or recovery of TCS penal provisions are applicable.
The above listed are major changes required to be carried out and same may vary from each taxpayer based on his nature of business and turnover. The taxpayers should always remember one thing, cost of non-compliance is a costly affair compared to the cost of compliance. Wherever required the taxpayers should take professional advice and not relay in information available in public domain to their best interests.
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From 1st April 2021, some changes are being made in Goods and Service Tax which taxpayers have to follow and implement the same.
e-invoice is required to be issued by all registered taxpayers having turnover above rupees fifty crores for all B2B transactions.
Display of HSN codes on Tax Invoice
Taxpayers having turnover above rupees five crores are required to show six HSN code digits on all tax invoices.
Taxpayers who are having turnover below rupees five crores are required to show four digits of the HSN code in case of B2B (Business to Business) and B2C (Business to Customers) optional to show HSN codes.
Changes in HSN Summary while filing GSTR – 1
While filing GSTR – 1 on a monthly or quarterly basis, the taxpayers have to report the HSN codes as discussed in Point Number 2 in the HSN Summary that is in Table 12 of GSTR – 1.
Cost of Non-Compliance
The cost of non-compliance is always higher than than the cost of compliance. In case if the taxpayers are not adhering to the above changes, then the department can levy a penalty under Section 125 of CGST Act 2017, residuary penal provision of rupees twenty-five thousand for Central Goods and Service Tax and another twenty-five thousand rupees for the State Goods and Service Tax thereby making the penalty amount to rupees fifty thousand.
Taxpayers are requested to make necessary changes in their business process and accounting or billing software or return filing solutions accordingly else the penalties will be levied.