Circular No. 90/09/2019-GST

This was the point i am discussing with my friends and during my sessions of GST Audit that if the provisions of Rule 46 are not followed then penal provisions can be levied under Section 122 and Section 125. Rule 46 clearly states that on a tax invoice, the bare minimum details have to be shown and if any of the same are missing then 1st proviso of Section 122 can be enforced on the taxpayer which clearly states that penalty of Rs 10,000 per invoice. Refer to Section 122(1) (ii) talks about per invoice, so imagine if the department wants to issue notice for levy of penalty they can issue it per document which is not meeting the said provisions.

Now the same is officially clarified in the Circular #90/09/2019-GST

GST Audit report being prepared should cover this point also, so you can imagine the complexity, quantum of work involved and also the depth of knowledge required to execute it.

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Rules for Anti-profiteering, Advance Ruling etc

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Advance Ruling – Formats

Anti-Profiteering – Rules

Appeals & Revision – Rules 

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e-waybills – Rules 

 

Demystifying Tax Deduction at Source under the Model GST Law

In the current tax regime under VAT we have Tax Deducted at Source, and the same is being continued under GST also. Section 37 of the Model GST Law talks about the Tax Deduction at Source. From the Model GST Law, it is clear that it is not applicable for all transaction and to be recovered by all tax payers.

The tax has to be deducted by a specific set of persons as given in the sub-section 1 of section 37 of the Model GST Law. The list of persons who have to deduct tax will be decided by the State or the Central Government. The list of person as per Model GST Law

(a) a department or establishment of the Central or State Government, or

(b) Local authority, or

(c) Governmental agencies, or

(d) such persons or category of persons as may be notified, by the Central or a State Government on the recommendations of the Council,

Now we need to see who all will be included in the last point. It looks like the government wants to deduct tax on contracts gives for execution of roads, dams, power plants etc. This is to ensure that the contractor pays tax on the income and does not escape from the tax net, thereby minimizing revenue leakage.

The tax has to be deducted only in case if the supply of goods or service exceeds Rs 10 Lacs on the list of goods / services notified by the GST Council. The tax base for deduction of tax for TDS under GST is excluding the taxes mentioned on the invoice, this is something different to the valuation for determination of taxes under Section 15. The rate of tax to be deducted is 1%. This is surprising to note that the tax rate has been prescribed in the Act. We need to wait for the final GST Bill and see if the same will be included in the Act or will be announced through notification. If the rate is mentioned in the Act, the Act has to be amended every time government wants to change the tax rate.

The tax so deducted has to be deposited by the deductor by 10th of next month based on the format and other information to be reported. This will be made available only once the GST Council if formed.

The deductor has to issue a certificate to the deductee, the contractor from whom the tax is deducted with the details like the amount of contract, the  rate of tax deducted, the amount of tax deducted and the amount of tax deposited by the deductor.

The deductor has to issue a certificate within 5 days from the date on which the amount is credited, a  late fee of Rs 100 will be levied per day for delay in issue of a certificate. The amount of late fee will not exceed Rs 5000.

The deductee can take the credit of the tax based on GSTR – 2 filed by the Deductor under Section 27, sub-section 5 of the Model GST Law. The amount will be credited to the electronic cash ledger of the deductee and he can utilize the same for payment of GST taxes.

In case if the deductor fails to deposit the tax to the respective government, he is liable to pay interest on the defaulted amount as per provisions of Section 36 of the Model GST Law.

The deductor can claim for refund as per Section 38 of the Model GST Law provided that the amount is not credited to the electronic cash ledger of the deductee.

The person who has to deduct tax has to obtain registration number by filing of Form GST REG – 07.

GSTR – 7 has to be filed by the deductor on monthly basis using the services of GSP or directly on GSTN servers.

GSTR – 7A is the deduction certificate to be issued on monthly basis to the deductee.

From the provision of this section, it is clear that the government does not want to lose any tax revenue from the small contractors also. One silver lining is that, unlike in tax collected at source there is no matching of records to avail the credit. If the contractor wants to avail in the credit, then he has to be registered with GST. In a  way the government is ensuring that there is no revenue leakage from any transactions at any given point of time.

Demystifying Goods and Service Tax – Draft Payment Rules

Under the Central Excise, the concept of maintaining the mandatory registers have been done any over a decade back still we are maintaining them in the same formats like RG 23 A /C – Part I / II expect for RG 1 (Production Register and RG 23 D (trading).  When these records are replaced it did not mean that they are totally scrapped but private records can be maintained as long as the required information is present in the report any format but still the range officials even today insist for the reports in old formats only. Hopefully, this practice will go way once the GST is implemented.

In GST it is stated that the key record / reports maintained by the common portal as the taxpayer is expected to upload each and every transaction data on the common portal. The returns / reports to be maintained under GST on the common portal are

  • Electronic Tax Liability Register
  • Electronic Credit Ledger
  • Electronic Cash Ledger

Rule 1 – Electronic Tax Liability Register

An Electronic Tax Liability register will be maintained on the common portal as per Sub-Section 7 and section 35 of the Model GST Law in the FORM GST PMT-1 and it will contain all the amounts payable by the taxable person.

The Electronic Tax Liability Register will be debited with the following

  • amount of tax payable,
  • interest, late fee or
  • amount of tax payable along with interest on account of mismatch of credit based on provisions of Section 29 or Section 29A or section 43C.
  • any other amount payable by the tax payer or directed by the board on account of any proceeding’s carried out under the GST Act

The Electronic Tax Liability Register will be credited with the following

  • Amount deducted under Section 37 (Tax Deduction at Source)
  • Amount collected under Section 43 C (Tax Collection at Source)
  • Amount payable under Sub-section3 of Section 7 (tax payable under reverse charge)
  • Amount payable by the department against any interest, refund, penalty, late fee or any other amount determined under the proceedings under this Act

Rule 2- Electronic Credit Register

An Electronic Credit Ledger will be maintained on the common portal in FORM GST PMT-2 for the tax payer for the amount being claimed as input tax credit, will be credited to this ledger.

The Electronic Credit Register will be credited with the total amount of tax payable on account of liability, interest, late fee etc as determined under Section 35 of the Model GST Law.

The Electronic Credit Register will be debited with any amount of refund under provisional basis under Sub-Section 4A of section 38 of Model GST Law received or transfer of input tax credit under Section 37 of the Model GST Law.

In case if the refund is rejected, the amount debited under provisional basis under Sub-Section 4A of section 38 of Model GST Law will be debited through FORM GST PMT-2A.

Rule 3 – Electronic Cash Ledger

An Electronic Cash Ledger will be maintained on the common portal for every tax payer based on the provisions of Sub-Section 1of section 35 of Model GST Law in FORM GST PMT-3 towards the amount deposited by the tax payer towards discharge of his tax liability or interest or late fee or penalty any other amounts.

The payment will be done by the tax payer using the FORM GST PMT-4 on the common portal for the amount being paid for tax liability or interest or late fee or penalty any other amounts. The FORM GST PMT-4 generated on the common portal will be valid for a period of fifteen days.

The payment of tax liability or interest or late fee or penalty any other amounts under GST can be done using any of the following methods

  • Internet banking – authorized by the board
  • Through credit card or debit card
  • National Electronic Fund Transfer (NEFT) or Regal Time Gross Settlement (RTGS)
  • Over the counter (OTC) for amounts less than Rs 10,000 in cash or through cheque or demand draft

Usage of debit / credit card for payment of tax is a new feature added which is not existing under any of the acts currently in India.

If any payment is required to be made by non-taxable person, a temporary identification number will be generated by the concerned tax offer and payment has to be done in FORM GST PMT-5.

Where the payment is made by way of NeFT or RTGS mode from any bank, the mandate form shall be generated along with the challan and the same shall be submitted to the bank from where the payment is to be made.

A Challan Identification Number (CIN) will be generated when the amount is credited to the concerned tax account by the bank and the same will be mentioned in the Challan.

In case if the amount is not credited to the electronic cash ledger of the tax payer but the amount got debited from the taxpayer’s account FORM GST PMT-6 has to be filed with the bank or the payment gateway for the amount to be updated in his electronic cash ledger.

 Electronic Cash Ledger will be credited under the following cases also

  • Amount deducted under Section 37 (Tax Deduction at Source)
  • Amount collected under Section 43 C (Tax Collection at Source)
  • Amount payable under Sub-section3 of Section 7 (tax payable under reverse charge
  • Amount payable by the department against any interest, refund, penalty, late fee or any other amount determined under the proceedings under this Act

 Electronic Cash Ledger will be debited when a refund is rejected.

Rule 4 – Identification number for each transaction

A unique identification number will be generated by the common portal for every debit or credit to the Electronic Cash Ledger or Electronic Credit Register.

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 owner may or may not be associated with in 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.

Demystifying Goods and Service Tax – Draft Registration Rules

For the first time under any act, rules have been framed for registration along with other rules for the  invoice, payment, refund and returns. These rules are in public domain and feedback or comments can be given by 28th of Sep 2017.

The Draft Goods and Service Tax Registration Rules is similar to the provisions given in the Model GST law in various sections including the transactional provisions. Here it additionally provides the forms under which the applicant has to file for registration or providing further information or form to be used by the department for communicating to the applicant.

There are 17 Rules for Registration under GST based on the Draft Rules

Rule 1 – Application for registration

Rule 2 – Verification of the application

Rule 3 – Issue of registration certificate

Rule 4 – Separate Registrations for multiple business verticals within a State

Rule 5 – Grant of Registration to persons required to deduct tax at source or collect tax at source

Rule 6 – Assignment of unique identity number to certain special entities

Rule 7 – Display of registration certificate and GSTIN in name board

Rule 8 – Grant of registration to non-resident taxable person

Rule 9 – Amendment to Registration

Rule 10 – Suo moto registration

Rule 11 – Application for cancellation of registration

Rule 12 – Cancellation of registration

Rule 13 – Revocation of cancellation of registration

Rule 14 – Migration of persons registered under Earlier Law

Rule 15 – Method of authentication

Rule 16 – Extension in period of operation by casual taxable person and non-resident taxable person

Rule 17 – Physical verification of business premises in certain cases

Rule 1 – Application for registration

This rule lays down provisions for a person applying for registration for the first time directly under GST. The rule defines an applicant under Sub-Rule 1 as a “Every person, other than a non-resident taxable person, a person required to deduct tax at source under section 37 and a person required to collect tax at source under section 43C, who is liable to be registered under sub-section (1) of section 19 and every person seeking registration under sub-section (3) of section 19”.

The applicant has to provide PAN Number, Mobile Number and email id. All these three will be authenticated by one-time password (OTP) and all the further communication with the department will be through email and mobile through SMS.

Once all the three are authenticated, the applicant has to submit / enter data online for registration and also submit a self-attested copy of Part B of FORM GST REG-01.

Once the documents are received, an acknowledgement is issued in FORM GST REG-02 electronically.

A person applying for registration as a casual tax person will be given a temporary identification number by the common portal for depositing tax under Section 19 (A) of Model GST Law. The amount of tax to be deposited is based on estimated tax liability for the business intended to be carried under this registration for the given period.

Rule 2 – Verification of the application

Once the application is filed, it is forwarded to the concerned officer and if he is satisfied with the information provided, the registration will be accepted and issued within a period of 3 working days from the date of submission of the application.

In case if there is any discrepancy observed by the concerned officer, the applicant will be intimated about the same in FORM GST REG-03 and the applicant is required to provide the feedback within 7 working days from the receipt of the intimation in FORM GST REG-04. The clarification to be provided can also include modification of PAN, Mobile or Email id.

If the concerned office is satisfied with the information provided by the applicant, the registration may be granted within 7 working days’ receipt of intimation. In case if the office is not satisfied, the application may be rejected and same will be informed to the applicant in writing in FORM GST REG-05 electronically.

The application is deemed to be accepted and registration is deemed to be granted in case if the concerned officer does not raise any question

  • Within 3 working days from filing of the application
  • Within 7 working days from the date of filing / providing additional information.

Rule 3 – Issue of registration certificate

Based on the provision of sub-section 11 of Section 19 of the Model GST Law, if the application is accepted and registration is granted under Rule 2, certificate of registration is issued in FORM GST REG-06 for the principal place of business and for the additional place of business based on the information provided in the common portal.

The registration shall be effective from the date on which the person becomes liable to registration where the application for registration has been submitted within thirty days from such date.

Where an application for registration has been submitted by the applicant after thirty days from the date of his becoming liable to registration, the effective date of registration shall be the date of grant of registration under sub-rules (1), (4) or (6) of rule 2.

Rule 4 – Separate Registrations for multiple business verticals within a State

Any person willing or desiring to take registration based on their business verticals can obtain the same based on the provisions provided in Sub-Section 2 of Section 19 of Model GST Law.

The registration will be issued for each business vertical and the taxes have to be paid for each vertical for the supplies made in the respective verticals.

In case if the person is willing to have registration based on business vertical a separate application has to be filed in FORM GST REG-01 for each business vertical.

The provisions of Rule 1, 2 and 3 will also apply for the registrations under each business vertical.

Rule 5 – Grant of Registration to persons required to deduct tax at source or collect tax at source

GST Registration is required to be obtained if the person is required to deduct tax under GST based on the provisions of sub-section 1 of section 37 or required to recover tax under the provision of Section 43C. The applicant has to file FORM GST REG-07 for obtaining registration either on the common portal or facilitation centers.

The concerned officer may grant registration after due verification within 3 working days in FORM GST REG-06 on submission of application.

The certificate of registration issued can be cancelled subsequently if the concerned officer or any other officer feels that the applicant is no longer required to recover tax under section 37 (tax deducted at source) or section 43 C (tax collection at source) intimating it in FORM GST REG-08. The concerned officer has to provide an opportunity for the applicant to be heard before cancelling the registration.

Rule 6 – Assignment of unique identity number to certain special entities

 Entities falling under Sub-Section 6 of Section 19 of the Model GST Law, as given below are required to take

  • any specialized agency of the United Nations Organization or
  • any Multilateral Financial Institution and Organization notified under the United Nations (Privileges and Immunities) Act, 1947 (46 of 1947),
  • Consulate or Embassy of foreign countries and any other person or class of persons as
  • may be notified by the Board / Commissioner

to take registration under GST by filing of FORM GST REG-06, the concerned officer on receipt of the same, if satisfied will issue the unique identification number within 3 working days from the date of receipt of application.

Rule 7 – Display of registration certificate and GSTIN in name board

 For every taxable person to whom registration certificate is issued under GST is required to display the registration certificate in a prominent location at the principal place of business and additional place of business’s registered under GST.

GSTIN is also required to be displayed on the name board exhibited at the entry of the principal place of business and additional place of business.

Rule 8 – Grant of registration to non-resident taxable person

 Every person carrying on business in India is required to have a registration under GST based on the provisions specified in Section 19 of the Model GST Law, the same is applicable in the case of non-resident person also. A non-resident tax payer is also required to be registered under GST by filing in FORM GST REG-10. The FORM GST REG-10, has to be filed by the non-resident tax payers at least before 5 days of commencement of business.

 The non-resident person will be given a temporary identification number and based on that the tax has to be deposited by him, the amount of tax to be deposited is based on the estimated turnover of his business during the said period in India.

The issue of registration certificate process under GST for the non-resident tax payer is also same as specified in Rule 1 and Rule 2

Rule 9 – Amendment to Registration

 This rule provides provisions for amendment to registration obtained under GST. The amendment to registration can be for one of the following reasons

  • Where the change relates to
  • the Name of Business,
  • Principal Place of Business,
  • and details of partners or directors, karta, Managing Committee, Board of Trustees, Chief Executive Officer or equivalent, responsible for day to day
  • for any other reasons not mentioned above

in all such cases, the tax payer has to file in FORM GST REG-11 within fifteen days from the change.

The concerned officer within 15 days of the receipt of FORM GST REG-11, if satisfied will issue the FORM GST REG-12 electronically for change of details. The date for change of the details will be from the date requested in the form.

If there is a requirement to change the mobile number or email id, then the process given in Rule 1 will be followed.

In the case of change of the constitution of the business, which results in the change of PAN Number, then a fresh application for registration has to be filed in FORM GST REG-01.

The concerned officer on receipt of FORM GST REG-11 is not satisfied for the request for change within 15 working days shall issue Form GST REG-03 asking for further information for change of the details.

The taxable person within 7 working days on receipt of the Form GST REG-03 has to file FORM GST REG-04 submit his reply.

The certificate of registration is deemed to be amended in the following conditions

  • If the concerned officer does not take any action within 15 working days from the receipt of the FORM GST REG-11
  • If the concerned officer does not take any action within 7 working days from the receipt of the GST REG-04

Rule 10 – Suo moto registration

 If an officer during the course of any survey, inspection, search, inquiry or any other proceedings under the act finds that a person is liable for registration but has not obtained registration under GST shall issue a temporary registration number based on the order in FORM GST REG 13.

The date of registration is valid from the day on which the order is issued.

Every person to whom temporary registration issued under Sub-Rule 1 of Rule 10 shall file for registration under Rule 1 within 30 days from the date of issue of temporary registration. Alternatively, the person can also file an appeal against the temporary registration number within 30 days.

The provisions of Rule 2 and 3 will be applicable for issue of certificate.

Rule 11 – Application for cancellation of registration

There is a provision for cancellation of registration under GST in Model law vide sub-section 1 of section 21. In case if a taxable person wants to apply for cancellation of registration, he has to file FORM GST REG-14 including the details of the closing stock along with liability on it along with other required documents.

The application for cancellation will be considered only after one year of issue of registration under GST on a voluntarily basis and the same condition is not applicable in the case of migration of registration from VAT / Excise / Service Tax.

Every taxable person, other than a person paying tax under section 8, seeking cancellation of registration under sub-rule (1) shall furnish a final return under rule Return.19.

 Rule 12 – Cancellation of registration

The concerned officer on receipt of FORM GST REG-14 for cancellation of registration can issue a notice calling for why the registration has to be cancelled within a 15 days on receipt of the   FORM GST REG-14.

The taxable person within 7 days of receipt of FORM GST REG-15 has to file a reply and if the officer is satisfied, will issue an order for cancellation of registration FORM GST REG-16 within 30 days. The officer will also direct the taxpayer to pay all the arrears of tax, penalty, interest if any liable to paid to the department.

Rule 13 – Revocation of cancellation of registration

A taxable person who has voluntarily cancelled his registration can apply for revocation of cancellation of registration by filing FORM GST REG-17 within 30 days of the issue of the cancellation order by the concerned officer.

The officer if satisfied with the reasons for revocation of cancellation of registration within 30 days of receipt of FORM GST REG-17, shall revoke the cancellation of registration by issue of an  order in FORM GST REG-18 and communicate the same to the applicant.

The officer can also reject the FORM GST REG-17 for revocation of cancellation of registration if he is not satisfied with reasons given by the tax payer will be communicated in FORM GST REG- 05.

In case if the officer wants additional information from the tax payer then FORM GST REG–03 will be issued and the tax payer has to file his reply in within 7 working days in FORM GST REG-04.

The officer on receipt of FORM GST REG-04 will dispose of the same based on provisions of Rule 2.

Provided that the application shall not be rejected without affording the applicant an opportunity of being heard by issue of a notice in FORM GST REG-19 within thirty days from the date of receipt of such application.

Rule 14 – Migration of persons registered under Earlier Law

All the tax payers registered under the earlier law and are having a valid PAN number issued under Income Tax Act, 1961 (Act 43 of 1961) shall be issued a provisional registration for GST and issued GSTIN wide FORM GST REG- 21.

 As per the transition provisions provided under Model GST Act under section 142, all the required additional information has to be submitted by the tax payer within 6 months from the date of issue of provisional registration number or if the officer is satisfied for some reason can grant an extension of additional two months for submission of additional information.

The additional information has to be filed in FORM GST REG–20 and submitted duly signed by the tax payer.

If the information provided by the tax payer is correct, the concerned officer may issue final registration certificate of registration under FORM GST REG-06.

 The provisional certificate issued can be cancelled if the tax payer has not provided additional information or the tax payer has not provided correct information. The same will be communicated in FORM GST REG-23.

 The provisional certificate will be cancelled if the information provided is not correct or incomplete and the same will be communicated wide FORM GST REG-22.

 In case if a tax payer who is migrated from the existing tax registration can have an option to cancel the provisional registration under GST by filing GST REG-24. The concerned officer if satisfied on the hearing can issue the order for cancellation of provisional registration issued to him.

Rule 15 – Method of authentication

All applications, replies, additional information, notices, appeals submitted online have to be authenticated by the tax payer or his authorized representative. The authentication can be done through a digital signature or through e-signature as specified under Information Technology Act, 2000 (21 of 2000) or through any other mode of signature notified by the Board/Commissioner in this behalf.

The documents filed online will also have to be signed manually and submitted by the tax payer or by his representative.

(a) in the case of an individual, by the individual himself or by some person duly authorized by him in this behalf and where the individual is mentally incapacitated from attending to his affairs, by his guardian or by any other person competent to act on his behalf;

(b) in the case of a Hindu Undivided Family, by a Karta and where the Karta is absent from India or is mentally incapacitated from attending to his affairs, by any other adult member of such family or by the authorized signatory of such Karta;

(c) in the case of a company, by the chief executive officer or authorized signatory thereof;

(d) in the case of a Government or any Governmental agency or local authority, by an officer authorized in this behalf;

(e) in the case of a firm, by any partner thereof, not being a minor or authorized signatory;

(f) in the case of any other association, by any member of the association or persons or authorized signatory;

(g) in the case of a trust, by the trustee or any trustee or authorized signatory; and

(h) in the case of any other person, by some person competent to act on his behalf.

All the orders / notices issued by the officers electronically will be digitally signed.

Rule 16 – Extension in period of operation by casual taxable person and non-resident taxable person

 A non-resident taxable person who has taken registration under Rule 8 can seek for extension of validation of the registration period by filing of Form GST REG-25. It will be filed before the end of the registration period granted to him.

 The application under sub-rule (1) shall be acknowledged only on payment of the amount specified in sub-section (2) of section 19A.

Rule 17 – Physical verification of business premises in certain cases

 Physical verification of the place of business can be carried on by the concerned officer only after the issue of the registration certificate. If the concerned officer who is satisfied on the verification of the place of business of the tax payer will upload Form GST REG-26 along with the date of verification and other documents if any.

Items which need clarification

  1. It is a known rule that for a tax payer there will be one registration number per state. As per the rules, it is clear that all places of business should be registered at the time of registration. In case if the tax payer does not register one place of his business and does transfer of material to that place of business, will tax invoice has to be issued for such transactions?
  2. In Form GST REG-24, Provisional ID is mentioned, does it mean it is a temporary registration number till the GSTIN is issued? If yes, there is no mention of the same in the GSTR Return Formats, there it talks about only GSTIN. What is the usage of this provisional ID, does it needs to be printed as GSTIN on the tax invoice and other documents till GSTIN is issued?
  3. Only 3 working days is provided in case of queries raised for fresh application but in the case of cancellation, revocation of cancellation or updating any other information 7 working days is provided. What is the rationale for such a differentiation ?

Registration Forms under GST

registration-forms-1

registration-forms-2

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 owner may or may not be associated with in 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.