On demand fetching of Bill of Entry details from ICEGATE Portal

On demand fetching of Bill of Entry details from ICEGATE Portal

One of the common issued faced by the importer of goods, is Bill of Entry not being reflected in Form GSTR – 2B.

To address this, the portal has provided with a new functionality wherein the taxpayers/importers can fetch the records from the ICEGATE portal. In this context new feature has been released and an advisory is also issued by the GSTN for the ease of understanding of the taxpayers.

1. To help importers of goods, and recipients of supplies from SEZ, search Bill of Entry details, which did not auto-populate in GSTR-2A, a self-service functionality has been made available on the GST Portal that can be used to search such records in GST System, and fetch the missing records from ICEGATE.
2. Please note that it usually takes 2 days (after reference date) for BE details to get updated on GST Portal from ICEGATE. This functionality should, therefore, be used if data is not available after this period.
   Note: The reference date would be either Out of charge date, Duty payment date, or amendment date – whichever is later.
3. Taxpayers can follow the below steps to fetch the requisite details:
   1. Login to GST Portal
   2. Navigate to Services > User Services > Search BoE
   3. Enter the Port Code, Bill of Entry Number, Bill of Entry Date and Reference Date and click the SEARCH button.
      Note: The reference date would be either Out of charge date, Duty payment date, or amendment date – whichever is later.
   4. If the BoE details do not appear in the Search results, click on the QUERY ICEGATE button, at the bottom of the screen, to trigger a query to ICEGATE.
   5. History of fetched BoE details from ICEGATE along with status of query are displayed after 30 minutes from the time of triggering the query.
4. For records of type IMPG (Import of Goods), details of: Period for Form GSTR-2A (system generated Statement of Inward Supplies); Reference Date; Bill of Entry Details like Port Code, BoE Number, BoE Date & Taxable Value; and Amount of Tax would be displayed.
   For records of type IMPGSEZ (Import of Goods from SEZ), details of: Period for Form GSTR-2A; Reference Date; GSTIN of Supplier; Trade Name of Supplier; Bill of Entry Details like Port Code, BoE Number, BoE Date & Taxable Value; and Amount of Tax would be displayed.
5. Taxpayers are advised to confirm correct details either from BE documents, or using ICEGATE portal
6. For more details, click on: https://tutorial.gst.gov.in/userguide/taxpayersdashboard/index.htm#t=Manual_boe.htm
7. In case of any problem, please create a ticket at the GST Helpdesk or GST Self-service portal by including following details:
   1. complete details of BE records
      1. GSTIN
      2. BE Number
      3. BE Date
      4. Port Code
      5. Reference Number
   2. Screenshot of ICEGATE portal with BE record
   3. Any error that they may have encountered while using the “Search BoE” functionality on GST Portal

Annual Aggregate Turnover Computation Methodology

For Normal Taxpayers who have filed all GSTR-3Bs:

Turnover reported in GSTR-3B Column 2 of Table 3.1 { (a),(b),(c) & (e)} during the Financial Year 2020-21 have been taken into consideration (in case all the returns have been filed for the same).

1. Outwardtaxable supplies(other than zerorated, nil rated and exempted).
2. Outwardtaxable supplies(zero rated).
3. Other outward supplies (nil rated, exempted).
4. Non-GST outward supplies.

For Normal Taxpayers who have not filed all GSTR-3Bs:

The following formula is used for extrapolation of turnover:

(Sum of taxable value) X (*No.of GSTR-3B liable to be filed)/(No. of GSTR-3B filed)

*Categorisation of taxpayers to derive the number of GSTR-3B liable to be filed

I. GSTINs who are active as on date and were NOT IN composition during FY 2020-21,number of GSTR-3B liable to be filed have been arrived at as follows:

1. If the taxpayer is migrated, then No.of GSTR-3B liable to be filed is 12
2. If the taxpayer is new and registered on or before 31^st March,2021, the No.of GSTR-3Bs liable to be filed shall be derived on the basis of GSTIN approval/grant date i.e. if approval/grant date is on or before April, 2020, then 12, else based on month of approval/grant of GSTIN (e.g. If the month of grant of GSTIN is May 2020, then number of GSTR-3B liable to be filed is 11,if it is June 2020, then it is 10 and so on).

II. GSTINs who are cancelled as on date and were NOT IN composition during 2020-21, number of GSTR-3B liable to be filed have been arrived at as follows:

1. GSTINs registered on or before 31^st March 2021.
2. Months between cancellation date and approval/grant date of GSTIN decides the number of GSTR-3B liable to be filed.
3. If cancellation date is beyond March 2021, then month between March 2021 and approval/grant Month of GSTIN is derived.
4. If approval/Grant of GSTIN month is before April 2020, then month between cancellation date and April 2020 is derived.

III. GSTINs who are active as on date and were in composition BUT WITHDRAWN during 2020-21,number of GSTR-3B liable to be filed have been arrived at as follows:

1. GSTINs registered on or before 31^st March 2021.
2. Months between Withdrawal date and 31^st March 2021 is defined as number of GSTR-3B liable to file.

IV. GSTINs who are cancelled as on date and were in composition BUT WITHDRAWN during 2020-21, number of GSTR-3B liable to be filed have been arrived at as follows:

1. GSTINs registered on or before 31^st March 2021.
2. Months between Withdrawal date and 31^st March 2021 and cancellation date decides the number of GSTR-3B liable to be filed.
3. If cancellation date is beyond March 2021, then month between March 2021 and Withdrawal Month of GSTIN is derived.

For Composition Taxpayers opted-in throughout the FY: Since the Annual Aggregate Turnover limit for opting in as Composition Taxpayer is up to Rs. 1.5 crore, and will use the following extrapolation formula:

(Sum of taxable value) X (*No. of CMP-08 liable to be filed)/ (No. of CMP-08 filed)

Advisory on Annual Aggregate Turnover Functionality

Aggerate Annual Turnover for the Financial Year is being displayed on the GST portal when the user clicks on Navigate to Returns Dashboard at the time of login.

The values for AATO displayed is based on return filing data filed by taxpayers and computation done as on 26/06/2021. Turnover value is updated dynamically as per filing of Returns. Aggregate Turnover is updated dynamically based upon the filings done by all GSTINs under the PAN. Final Turnover & Aggregate Turnover will be made available post tax-officer’s verification 11/10/2021.

On the page user can see the values based on the returns filed and if there not filled up to date, the AATO  is estimated and shown. In case if the returns are filed, then the actual AATO based on the returns is displayed.

If the value for AATO is wrong, the taxpayers can file a ticket  https://selfservice.gstsystem.in. and get the same rectified.

An Advisory has been issued in this context and it is highly recommended for all the professional to go through the same.

• This facility shows to the taxpayer AATO (Annual Aggregate Turnover) based on the returns filed by him/her in the last financial year.
• The facility of turnover update has also been provided to the taxpayer in this functionality, if the said taxpayer feels that the system calculated turnover varies from the turnover as per his/her records.
• As stated, the calculation is based on the returns filed in the last financial year. For details of the calculation see Turnover calculation logic.
• This facility of turnover update shall be provided to all the GSTINs registered on a common PAN. All the changes by any of the GSTINs in his turnover shall be summed up for computation of Annual Aggregate Turnover for each of the GSTINs.
• The taxpayer can amend the turnover twice within a period of one month from the date of roll out of this functionality.
• Thereafter, the updated value shall be frozen with no further attempts provided to the taxpayers to amend their turnover(s) and this turnover figure will be sent to the Jurisdictional Tax Officer for review.
• In case the jurisdictional Officer finds any discrepancy in the updated/amended values furnished by the taxpayer, the said officer can amend the turnover.
• Tax officers are expected to consult and/or communicate with the taxpayer before amending the turnover declared by the taxpayer.
• The turnover finalized by the tax officer after such consultation shall be considered final.
• In case no action is taken by the officer within 30 days on the turnover reported by the taxpayer, the same shall then be considered final (which will be displayed to the taxpayer accordingly) and will be considered as such for the entire previous financial year.
• In case of any grievances pertaining to the said functionality, the aggrieved taxpayer can raise a ticket at https://selfservice.gstsystem.in.
• All such tickets shall be investigated by the technical team and shall be resolved on a case by case basis and when needed they shall be forwarded to the jurisdictional officer.

Note: Taxpayers are expected to use this functionality only if there is a discrepancy observed by them in the system calculated turnover as per the calculation logic mentioned above.

E-invoicing system for e-Commerce Operators

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.

1. 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)

2. Scope of Access to IRNs generated by e-Commerce operator and Supplier

3. 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

4. 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

Major Changes in GST Portal

For providing better user experience and new features are being added on the GST portal from time to time by the GSTN. Some of the important feature added on the GSTN portal are listed below

1. Same Jurisdictional Authority in case of an applicant files a new application where it is canceled previously.

Applicants who are applying for registration again, in the previous cases where their registration is canceled by the applicant himself or suo-moto, the new GST registration application filed will be assigned to the same jurisdictional officer who has canceled it.

2. Aadhar Authentication enabled on SPICe -AGILE Form on MCA Portal.

As part of ease of doing business, SPICe -AGILE Form is introduced where multiple registrations can be obtained in a single form by the MCA for the newly established companies. Now Aadhar Authentication is also enabled on the SPICe -AGILE Form.

3. RESET button enabled on GST Portal for Form GSTR-1/ IFF (Invoice Furnishing Facility.

Normal taxpayers, irrespective of their filing profile (quarterly or monthly), have now been provided with a RESET button on the GST Portal, in Form GSTR-1/IFF. This will enable them to delete the entire saved data for the specific return period but not yet submitted or filed their Form GSTR-1/IFF.

4. Reporting and payment of taxes in GSTR-5A

Now taxpayers registered under OIDAR Category can declare and pay interest and other amounts in GSTR-5A.

5. Filing of the refund application by the exporter of services for exports with payment of taxes on account of foreign exchange fluctuations.

The system earlier validated the refund amount claimed by the exporter of services (with payment of tax) against the proceeds realized (against exports, as submitted by the claimant in the Form of FIRC). If the value realized in the BRC/FIRC column was less than the refund amount claimed, such taxpayers could not file their refund application on GST Portal. This validation has now been removed, and the taxpayer will be able to file a refund application now in such cases (As the value realized in BRC/FIRC may fluctuate due to foreign exchange fluctuations, and net realization may be less than the refund amount).

6. Enabling Audit Functionalities on GST portal

Now taxpayers can view and see the department’s notices and reports related to audit under the tab “Additional Notices and Orders.”

Taxpayers can reply to the notices

Taxpayers can apply for an adjournment of or for extension of the audit date to the jurisdictional officer or Audit officer.

The taxpayer can accept/reject/pay the liabilities, discrepancy-wise, as outlined in the Notice for Discrepancies or Addl. Notice for Discrepancies (if any) or in Audit Report (Form GST ADT-02).

7. Changes in Search Tax Payer functionality

In the search taxpayer functionality, now the users can see the status of the Aadhar Authentication or e-KYC status of the searched GSTIN

Frequently Asked Question on e-invoicing

Q: Purpose of the API

Ans: To get invoices uploaded in IRP and their status of auto population in GSTTR1. Even if you change any value in GSTR1 for auto populated invoice, this API will always return data uploaded in IRP.

Q: If GET E Invoice API is used to pull the data from e Invoice (IRP portal) whether it will auto populated into GSTR 1 or ASP should get the data into system and do another action with Save GSTR 1

Ans: GST System is fetching this data and also auto populating it in GSTR1. This API is returning data fetched by GST System from IRP. So all auto populated invoices will be also available in getB2B/getCDN… APIs of GSTR1.

Q: If the data is auto populated from IRP via push then we don’t see any data auto populated in GSTR 1 till now?

Ans: It has not yet gone to production yet.

Q: If the data is auto populated from IRP did user required to push again the same data via save GSTR 1?

Ans: Not required.

Q: Please confirm that IRN generated date will be the KEY for Return period determination.

Ans: No return period will be determined from invoice date as per current design.

Q: What is the purpose of those new field Auto Draft status, Auto Drafted Date, Error Code and Error Message in get Einvoice API. Can you throw some light on what these fields are?

Ans: It is for, whether Invoice got auto drafted in GSTR1 or not, date of auto drafting, if there is any error in auto drafting then error code and message.

Q: What will be the filing flow of GSTR-1 after implementation of this new API?

Ans: GSTR-1 flow is to be same as present.

Q: Is it always necessary to fetch E-invoice data before filing or can we upload imported data?

Ans: No it is not necessary but it is a good practice to do reconciliation, so that over writing of auto populated data can be avoided. Also successfully auto populated data will be available through getB2B/getCDN ….APIs of GSTR1 also.

Q: What will be the change in SAVE API? IS there any increase in save Parameters like- IRN no. and/or IRN date etc?

Ans: There will be no new addition.

Q: It is mentioned in Excel attribute that ctin wise data can also be fetched however the same parameter is not available in request URL

Ans: for getEinvoice api it is not available for attribute sheet or url

Q: In b2b section, Invoice type-CWB (Custom Bonded Warehouse) is also available, how we are deriving this parameter because no such information is going in IRN generation?

Ans: It will not come from IRP. As save and get APIs are for GSTR1 and in GSTR1 this field exist, so it will remain in APIs but will not be available in data auto populated through IRP data.

Q: In request payload for get Einvoice API, there is afrom_date field, which date will be considered for this from_time. E.g. an invoice for which IRN is generated has following dates Document date is 10/10/2020, IRN generation date is 12/10/2020 and Auto Populate date is 13/10/2020. What from_time we need to send in request payload in order to get this invoice?

Ans: It can be used to get data after a particular date-time. It will be based on auto population date (GST System receipt date)

Eg: consider that Document date is 15-10-2020 and it is added into GST system on 19-10-2020. If from_time is specified as 16-10-2020, as it was inserted on 19-10-2020 that document will be part of response.

Q: The field Ack no., Ack. date, signed QR are not added in any of the APIs. (Even not in GET Einvoices API) Will these be included at a later stage?

Ans: There is no plan to include it. IRN will be the key for all auto populated data.

Q: If IRN auto populated data is edited then will that flag also be available in Get B2B/CDN/EXP/CDNUR?

Ans: Source, IRN no and date  will be removed once auto populated data will be edited through GSTR1 Online/Offline/API save.

Q: If we send any delete request from API for an invoice which is already auto populated in these sections, then will it be deleted from this section or retained with a flag marked as Deleted?

Ans: Record will be deleted from only GSTR1. It will be available in get einvoice API.

Q: If someone deletes the full auto populated data from these sections and then save all invoices again (all data may be same or edited in some invoices and not edited in some) through API or added from UI or offline tool, then will it be compared with the “Get Einvoice” data and will the IRN nos and date be brought back to this collection for respective invoices? 

Ans: Data coming from E-invoice (IRP) will be kept separate and it will not change. User can edit anything in GSTR1 and GSTR1 will reflect changed data. This change will be tracked for analysis purpose.

Q: If there are some invoices in “Get Einvoice (New API)” and the status of IRN is Cancelled then these will not be auto populated in “Get B2B/EXP/CDNUR/CDNURA” collections. Let us know if our understanding is correct.

Ans: There are many scenarios around it:

• If cancelation happen on the same day. Data will be available in getEinvoice API but not be auto populated in GSTR1.
• If cancelation happens next day than it will be first auto populated in GSTR1 and on cancelation it will be deleted from GSTR1 if user has not edited that invoice,
• If user has edited GSTR1 data then nothing will change in GSTR1.

Q: Earlier we had asked this question but at that time it was still under discussion, is it now decided? Which date will be considered for auto population: Document Date or IRN generation date? Let us know if our understanding below is correct in the example: 

If Document date is 28.10.2020 but IRN is generated on 05.12.2020 

(a) if Oct 2020 return is not yet filed, then this document will be populated in Oct 2020 month

(b) If Oct 2020 return is already filed then this document will be populated in Nov 2020 month

(c) If Nov 2020 return is also already filed then this document will be populated in Dec 2020 month (i.e. open month)

Ans: As per current implementation if return is filed than records coming for that period in future will only available in getEinvoice API of October month only. It will not be auto populated in any other period.

Q: While saving invoice data through APIs, if we are sending all invoices that are already auto populated by GSTN, again for save, without changing any data, then will it also be flagged that it is edited? Additionally, in such cases or any cases where any edit is done through API, the fields like IRN, source type and IRN generation date will still be retained or removed? 

Ans: Please refer ansers above

Q: When are the APIs expected to be released to us on sandbox for testing? 

Ans: It will be by mid of next week. Provide time. I think we are only releasing getEinvoice API. Not autopopualtion to GSPs.

Q: Currently there are no common GSTINs on sandbox for einvocing and GSTN. So how will we do the testing for the same? Will we be allowed to add GSTN sandbox GSTINs on einvocing portal? or will the einvocing/NIC test GSTINs will be automatically added in GSTN portal?

Ans: We will provide you some GSTIN for testing.

All About Input Tax Credit Restriction

Self-Assessment of the liability and input tax credit are the two business-friendly measures rolled out in GST, and it is being misused by a section of the taxpayers. As a result of it, to curb the tax evasion on the supply side, e-way bills were introduced, and now it is completely operational. On the input tax credit side, the provisions of the act were clear that the buyer/recipient can avail input tax credit only on matching ( seller will file his return, and the same will be reflected in the buyers return, and there he was supposed to accept or reject or modify the same) and this was kept on hold based on the feedback received from the trade and industry. But off late, lots of cases of input tax credit frauds and tax evasion are being detected. To put an end to all these, the Government has decided to simplify the return filing process and also start implementing the same from the 1^st of Oct 2019, but the same is deferred till the 1^st of April 2020 basis of the decisions taken in the 37^th GST Council Meeting.

Like a bolt from the blue, on 9th Oct 2019, Notification No 49/2019 – Central Tax, dated 9th Oct 2019, was issued stating that matching is mandatory. There were a lot of interpretation issues on the effective date and amount of restricted input tax credit to be derived. To address the same, CBIC has issued a clarification on  Circular No. 123/42/2019– GST dated 11th Nov 2019.  As on date, most of the queries/interpretation issues have been cleared, baring a few. What is the restricted input tax credit, how it works etc., are explained in simple FAQs for the users to understand and comply with the latest GST Provisions.

FAQ’s on the restricted input tax credit

1. What is the effective date for matching?

The effective date of the matching and availing of the 20% restricted input tax credit is 9^th Oct 2019, which means it is applicable for filing of the returns for Sep 2019 also.

The wordings used in the “Notification No 49/2019 – Central Tax, dated 9th Oct 2019 “Save as otherwise provided in these rules, they shall come into force on the date of their publication in the Official Gazette.” The same is published in the Official Gazette on 9^th Oct 2019, only wide Gazette No REGD. NO. D. L.-33004/99. It is also confirmed wide Circular No. 123/42/2019– GST dated 11th Nov 2019.

2. What should I do as I have availed input tax credit without matching while filing the returns for Sep 2019?

At the time of filing GSTR – 3B for Oct 2019, you have to do the matching for both the months. For the unmatched invoices for the GSTR – 2A of Sep 2019, you have to reverse the same along with interest for the differential days @ 24% as per the provisions of Section 51 of CGST Act 2017.

3. On what basis GSTR – 2A and my purchase register should be matched?

As per the provisions of Rule 69 of the CGST Rules 2017, matching has between the purchase register and GSTR – 2A has to be carried out for the following

1. GSTIN of the Supplier
2. GSTIN of the Recipient / Buyer
3. Invoice or Debit Note Number
4. Invoice or Debit Note Date
5. Tax Amount

For every document, if any of the above fields do not match, then input tax credit cannot be availed.

4. What could be the reasons for the differences between GSTR – 2A and my purchase register?

1. The supplier must not have filed the return
2. The supplier has not uploaded the tax invoice
3. GSTIN wrongly entered by the Supplier
4. GSTIN wrongly entered in the accounting / ERP Package
5. Tax invoice number wrongly entered by the Supplier
6. Tax invoice number wrongly entered in the accounting / ERP Package
7. Tax invoice date wrongly entered by the Supplier
8. Tax invoice date wrongly entered in the accounting / ERP Package
9. The supplier ships goods but they are in transit
10. Goods received but not accounted – in QC/ Bills to reach the Accounts department
11. The supplier has not entered the invoice amount correctly
12. Invoice amount wrongly entered in the accounting / ERP Package
13. The invoice amount is manually overwritten for shortages/breakages or any other reason
14. The supplier has issued the invoice but not shipped the goods
15. Invoice issued by the supplier but not received by the recipient

 

5. How is the 20% restricted input tax credit derived?

20% of the restricted input tax credit is derived basis of the total of the input tax credit available in the GSTR – 2A for the month for which return is being filed. The same is explained in the example given below

Total purchases in a month where ITC is eligible is Rs 10,00,000 & actual purchases on which tax is paid is Rs 12,00,000

Amount Reflected in GSTR – 2A s Rs 7,00,000 and amount eligible for availing input tax credit is Rs 6,00,000

What is the provisional credit which can be claimed?

20% of eligible credit i.e., Rs 6,00,000

20% of Rs 6,00,000 = Rs 1,20,000

Total amount of Credit eligible for the month = Rs 6,00,000 + Rs 1,20,000 = Rs 7,20,000

6. Is the 20% input tax credit restriction available for the sum of all the taxes or tax-wise?

As the same is notified in the Rules and the rules are different for the different taxes, it means the restriction is for each tax, i.e., for CGST, SGST, IGST & Compensation cess.

7. Do I need to consider the input tax credit on account of reverse charge, ISD, import of goods, etc. for computing the restricted input tax credit?

No, It is not required to considered for determining the restricted input tax credit.

8. Can i take the input tax credit if the supplier has not paid the taxes in the subsequent months?

If the supplier has not paid the taxes or filed the return of uploaded your invoice in the subsequent returns, then you have to reverse the input tax credit claimed on those invoices and pay interest on the same.

9. How to take the input tax credit if the supplier has filed and paid the taxes in the subsequent months?

If all the suppliers have filed and paid the taxes, then the differential amount of tax can be claimed in the month during which the supplier has filed or paid the taxes or uploaded the invoice.

10. How much input tax credit I can avail if the sum of the restricted credit and eligible credit is more than the amount showing in GSTR – 2A?

If the 20% restricted or provisional credit is more than the eligible amount, then the taxpayer has to avail on the eligible amount only. The same is explained in the example below

Total purchases in a month where ITC is eligible is Rs 1,00,000 & actual purchases during the month is Rs 15,00,000

Amount Reflected in GSTR – 2A s Rs 12,00,000 and amount eligible for availing input tax credit is Rs 90,000

What is the provisional credit which can be claimed?

20% of eligible credit i.e., Rs 12,00,000 i.e., is Rs 2,40,000

Eligible credit is only Rs 1,00,000, so the taxpayer can avail max of Rs 10,000 ( Rs 1,00,000 – Rs 10,000).

11. Are there any changes required in my accounting practices?

Yes, if the accounting practices are changed, it will give complete control and visibility for tracking the errant suppliers. The general practice is whatever are the amounts available in the ledger are considered for the return filing.  So, it is recommended to change the accounting policy also.

For this, new ledger accounts have to be created at each registration level if multiple registrations exist. The new ledgers to be created are

Sl.No	Ledgers
1	Interim / Suspense / Provisional ITC – SGST
2	Interim / Suspense / Provisional ITC – CGST
3	Interim / Suspense / Provisional ITC – IGST
4	Interim / Suspense / Provisional ITC – GST Cess

The existing accounting entry, which is passed/generated at the time of GRN/MRN creation or booking of the purchase invoice, also has to be changed. The existing accounting entry is

 

Ledgers	Debit / Credit
Inventory / Services / Expenses A/c	Dr
ITC – SGST A/c	Dr
ITC – CGST A/c	Dr
To Suppliers A/c	Cr

The new accounting entry which is to be passed or generated at the time of the creation of GRN / MRN or booking the purchase invoice should be

 

Ledgers	Debit / Credit
Inventory / Services / Expenses A/c	Dr
Interim / Suspense / Provisional ITC – SGST A/c	Dr
Interim / Suspense / Provisional ITC – CGST A/c	Dr
To Suppliers A/c	Cr

The accounting entry to be passed or generated at the time of matching is

Ledgers	Debit / Credit
ITC – SGST A/c	Dr
ITC – CGST A/c	Dr
Interim / Suspense / Provisional ITC – SGST A/c	Cr
Interim / Suspense / Provisional ITC – CGST A/c	Cr

As the revised accounting entries are at the supplier level, it will give complete visibility on the suppliers who have not filed the returns and also helps in follow up with the suppliers more effectively.

12. How should I do the reconciliation?

Reconciliation has to be carried out for each invoice and every month. The challenge is if the supplier files the GSTR Returns in the subsequent tax periods, then the same will be updated in the GSTR – 2A for the period in which the invoice is generated. The taxpayers have to check the GSTR – 2A of the previous months till the supplier files the returns or till filing of the September months return or filing of the annual return whichever is earlier. The reconciliation statement has to be maintained for each month, along with a consolidated statement.

13. Can I adopt technology to address the same?

Yes, there are a lot of tools available for the reconciliation, and also most of the ERP’s support the availing of the input tax credit on a provisional basis and availing the same only at the time of matching. If the existing accounting software or ERP provides the same, it should be implemented immediately as it will save a lot of time and effort.

14. Is it mandatory to avail the restricted input tax credit?

No, it is not mandatory to avail the restricted input tax credit; the option is given to the taxpayers to avail or not.

15. What are the other alternatives I have if I do not like to avail the restricted or provisional credit?

There are other options like while awarding the contract or purchase order to the suppliers, who are filing the GST Returns in time. The supplier’s tax filing compliance also has to be verified along with the price, quality, after supply service, along with the previous track record.

Now it clear that the matching is mandatory and also the process on how to derive the restricted 20% input tax credit. Now the taxpayers have to follow the same from the 9^th of Oct 2019, but due to interpretation issues, many of the tax professionals have concluded that it is effective for the filing of Oct 2019 returns. The taxpayers have to take a clear decision on to avail the 20% of the restricted credit along with the eligible input tax credit or avail only the eligible input tax credit after considering the following points

1. Borrowing cost for the restricted 20%
2. Cost of time and efforts required for deriving the 20% restricted credit
3. Training the respective stakeholders
4. Cost of automation – if the same is provided in their existing accounting or ERP or separate software is required.

Unless and the taxpayers do a cost-benefit analysis for availing the 20% restricted credit or not based on the above-discussed points, it would be difficult to ascertain the same. It is typically required for large corporates where they have 1000’s of purchase invoices monthly. Whatever is the decision, it will be applicable from the next month’s transactions and for filing of the returns for Oct 2019, they have to do reconciliation if the decision is not taken.

Source – https://icmai.in/upload/Taxation/TaxBulletin/Tax-Bulletin-52.pdf

Disclaimer

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 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 the reasons for mismatch between Supplier’s GSTR – 1 and Recipients GSTR – 2

It is almost 120 days after the rollout of GST and we are yet to file the first month returns, i.e., for the month of July 2017. Is technology the main culprit for this delay? The answer is “Yes” and “No.” Yes, in case of taxpayers who have a large number of invoices and becomes really tough to match the data entered and filed by the supplier and match it with the inward supplies. This is applicable in cases where the inward supplies are more than 500+ transactions per month. The answer in case of “No” is lack of understanding of the GST Law and implementation of the same. In either case, we do not have a choice but to file a valid return.

Some of the common reasons for the data mismatch are

1. Invoicing Date – the goods or services might have been billed or shipped at the fag end of the month. This could have resulted in the tax invoices not reaching the finance/accounts department.
2. Goods not yet received – this also could be one the reasons, the supplier must have shipped the goods, but the same is not yet received by the recipient on account of distance, longer travel time or breakdown of the vehicle or some reasons beyond the control of both the parties.
3. Wrong GSTIN – there could be cases where the supplier must have entered the GSTIN of the recipient wrongly. In such cases, the data will not be reflected in the actual recipient’s GST return. The date entry issues are caused as there might not be a proper accounting or ERP software with interfaces for the filing of returns, and manually data has to be entered. Manual data entry sometime lead to errors.
4. Material received but not accounted – This is one of the most common cases, in many manufacturing organizations, there is a time lag between the receipt entry or creation and accounting in finance. Personal experience shows that it will take about 20 – 45 days minimum for the Material Receipt Note (MRN) or Goods Receipt Note (GRN) to reach finance/accounts department. If this time lag is reduced, it will definitely ease the pressure on working capital requirements of the organization. It also helps the recipient to process the payments to suppliers as most of the recipients pay from the date of accounting in the books of accounts for the purchases / inward supplies.
5. Improper accounting of invoices/debit notes/credit notes – this is another major reason for the mismatch between the supplier’s and recipient’s records. Normally in our country, we account for the net amount payable to the supplier and thereby causing the mismatch. Under GST the provisions are very clear that supplier of goods or services only issues the debit note or credit note. Under GST, the recipient has to account for the full amount of the invoice issued by the supplier and then take it up for the differential amount on account of shortages/breakages / quality issues or price differential.
6. GSTR – 1 of the supplier, is not submitted – it is also observed that many of the suppliers are not aware of the process of filing of the GSTR – 1 or in some cases the erstwhile tax regime returns have not be filed, as a result they were not able to carry forward the closing balances, or C forms are pending from the customers. Some of the taxpayers are not filing the same as they have to pay the differential amount for the non-receipt of C forms or other forms. This is also causing the hardships in the GST return filing process.
7. GSTR – 1 of the supplier is not filed – as GST is a new system many of the vendors or suppliers in the MSME sector are not fully aware of the GST and process of filing of returns. As a result of this, it is observed that in some case, the supplier of goods or services has only submitted the return but not filed, this will lead to a mismatch between the records. In some cases, it is observed that the GSTR – 1 has been only submitted not filed.
8. Accounted as imprest or in IOU – it is a normal business process to have inward supplies of goods or services through imprest basis at factories or at sites. Normally they are submitted at periodic intervals to the head office or any other office, for reimbursement. Purchases from a registered taxpayer are made in one month, and the statement is submitted in the subsequent month, this also causes the mismatch between the records.
9. Software upgradation – As GST is a new tax regime and most of the accounting or ERP’s are not upgraded to carter the requirements of GST. This has also caused some issues in the initial days of data capturing and updates. In some cases, it is also observed that the upgrades have been done, but the solutions are not developed. As a result, some gaps are there.
10. Knowledge of GST – As it is a new system many of the suppliers and recipients in the MSME segment are not fully aware of the GST and its implications. There is also a lack of trained manpower on GST, and some organizations have implemented on their own with understanding issues. This also has resulted in some wrong filing and mismatch of records. Frequent changes in the new law is also causing some understanding issues, to avoid this, professional should be engaged.
11. Frequent Changes – as it is a new law and everyone is in the learning process and based on the feedback of the trade and industry there are some changes. The changes are in tax rates or process of GST or on reverse charge front etc.,
12. Not fully operations GSTN Software – the GSTN software is not operational fully and few bugs are also observed, this is also causing some issues in the filing of the GST returns.
13. Wrong data entry – as the return filing process is at the transactional level, there are understanding issues, and data is being entered wrongly in the returns, this has also resulted in a mismatch of the records. Like invoice amount being entered in the taxable amount columns or tax amounts entered wrongly at the time of filing of returns.

The above are some of the major reasons for the mismatch between the supplier’s returns and recipient’s returns. In view of the above challenges, the government is also responding and extending the due dates of filing of returns from time to time. One thing we all should keep in mind is that the for matching of the returns there is a window period of two months and not required to be matched in the same month/period of return filing.  As it is a new system, it takes time to stabilize and also for the taxpayers to understand the same. No new system is stable, and change is also difficult to adopt either for the taxpayers or for the consumers or for the tax officials. The recent experience in Malaysia where GST was rolled out on 1^st April 2015, took one year for the same to stabilize and for us, only four months have passed after the rollout. One good thing in our country is all the stakeholders are responding positively to the changes and striving for the successful implementation.

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.

GST Tip – 303

As per Rule 10 of the CGST Rules, if the application for registration is accepted by the GSTN, certificate of registration is issued in FORM GST REG-06 containing the principal place of business. The GSTIN issued will be of 15 digits to the applicant.

GST Tip – 131

In Annexe 1 of GSTR – 9B, the effective turnover per state has to be furnished and it is derived like this
Total Turnover as per Financial Statements
Less : Turnover of other states
Add : Inward Stock Transfer
This is to be computed for each GSTIN and filed along with the annual return GSTR – 9.