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.
This has also been aided by the fact that at various occasions, Council decided to waive late fee allowing people to file old returns and come up-to-date in filing of returns. With more and more taxpayers filing the returns every month, the percentage of returns of old period filed in any month has been increasing continuously. Chart 3 shows the share of returns of the current period filed in every month out of the total returns filed, clearly indicating that the number of returns of the current month has increased considerably. 1.5 crore returns were filed in the month of July 2021 as taxpayers filed returns of past months taking benefit of the relaxation given due to Covid.With improvement of return filing, the focus of GST Council has been on timely filing of GSTR-1, the statement containing details of invoices. This statement is critical to ensure discipline in taking input tax credit. Various steps have been taken to ensure timely filing of GSTR-1. Chart 4 displaying GSTR-1 filing by the end of the month shows that these steps have brought in the desired result as the percentage of GSTR-1 filed by the end of the month is clearly showing an upward trend.Overall, the impact of these efforts has ensured increased compliance and higher revenues. As a part of overall efforts to plug evasion, more steps to restrict fake ITC are under consideration of the GST Council. Chart 5 below shows the trend in monthly GST revenues during the year and the table shows the state-wise breakup of GST revenues (excluding GST on import of goods). There is a small difference between the monthly figures shown in the chart below for the months of May and Jun and those included in the respective press notes as the figures published then were till 5 of the next month as the taxpayers were given relief in filing of returns till 5 of the next month due to the pandemic.
Resumption of Blocking of E-Way Bill (EWB) generation facility.
1. The blocking of E way bill generation facility had been temporarily suspended by Government on account of Covid pandemic. In terms of Rule 138 E (a) and (b) of the CGST Rules, 2017, the E Way Bill generation facility of a person is liable to be restricted, in case the person fails to file their return in Form GSTR-3B / statement in CMP-08, for consecutive two tax periods or more, whether Monthly or Quarterly.
2. The blocking of EWB generation facility has now resumed on the EWB portal for all the taxpayers. Going forward, from the tax period August, 2021 onwards, the System will periodically check the status of returns filed in Form GSTR-3B or the statements filed in Form GST CMP-08 as per the regular procedure followed before pandemic, and block the generation of EWBs as per rule.
3. To avail EWB generation facility on EWB Portal on continuous basis, you are, therefore, advised to file your pending GSTR 3B returns/ CMP-08 Statement on regular basis.
4. For details of blocking and unblocking EWB, Click on below link:
User experience is the key and keeping in this in mind, new features have been added to the GST portal constantly and some of the new Functionalities were made available for Taxpayers on GST Portal in June, 2021. They are
Moving the records saved in IFF, to later months of same Quarter, by taxpayers under QRMP Scheme
There can be cases where the QRMP Taxpayers have entered the data in the IFF but not submitted. In such cases the records which are saved and not submitted/filed can be moved from one period to another period as well as moved from various periods of the Quarter to GSTR – 1 while filing the return.
• Taxpayers can now MOVE the records saved in their IFF of first month of a quarter (if the time for filing it has expired) to IFF of second month of the quarter. • Taxpayers can also MOVE the records saved in IFF of first month & second month of the quarter (if the time for filing it has expired) to their quarterly Form GSTR-1 (of the same quarter). Please note that the records can be moved only within a quarter. • While preparing IFF/GSTR-1 (of later months of same quarter) online, in case of saved records, taxpayers will get a pop-up prompting them to either MOVE the records by selecting YES or delete them by selecting NO.
2. Auto population of GSTR-3B liability, for taxpayers under QRMP Scheme, from their IFF and GSTR 1
The tax liability in the case of QRMP taxpayer, it will be auto populated from IFF filed during the months to GSTR – 3B. This will ensure that there are not data entry errors and correct liability gets reported.
3. Filing for refund of accumulated ITC by taxpayers making exempt/ nil-rated supplies, by selecting an option of not having an LUT number in the refund application
Exports are Zero rated supplies under GST and the exporters have an option to invoice with payment of taxes or without payment of taxes. In cases where the invoice is issued without payment of taxes, the taxpayer has to file a refund application separately to claim the accumulated input tax credit in the electronic credit ledger.
To claim refund, in the Form RFD – 01, the taxpayer has to enter the Letter of Under Taking Number currently. From this month onwards the taxpayers now an option to select any one of the following
• I have a valid LUT number. • I don’t have a valid LUT number, since I am making only exempt/ nil rated supplies
The above mentioned are the new features added for the taxpayers on the GST portal to provide better user experience. Since auto population is machine driven, it is recommended to cross check the values auto populated before filing for the accuracy. In case of any differences, the values can be over written and correct values should be entered.
Important changes related to QRMP Scheme implemented on the GST Portal for the taxpayers
The changes announced are really a welcome move as it reduces the burden of QRMP Taxpayers for consolidating the data and the filing the returns.
Few important changes related to QRMP Scheme implemented on the GST Portal for the taxpayers are as given below:
A.Auto population of GSTR-3B liability from IFF and Form GSTR 1 : A taxpayer under QRMP Scheme can declare their liability through optional IFF for Month 1 and Month 2 of a quarter & Form GSTR-1 for Month 3 of that quarter. Declaration of liability in these forms would now be auto-populated in their Form GSTR-3B (Quarterly) for that quarter, based on their filed Form GSTR-1 and IFF. These fields are editable and in case their values are revised upwards or downwards, the edited field(s) would be highlighted in red colour and a warning message will be displayed to the taxpayer. However, the system would not prevent taxpayer from filing of Form GSTR-3B with edited values.
B.Nil filing of Form GSTR-1 (Quarterly) through SMS : Nil filing of Form GSTR-1 (Qtrly) through SMS has been enabled for taxpayers under QRMP Scheme. They can now file it by sending a message in specified format to 14409. The format of the message is < NIL > space < Return Type (R1) > space< GSTIN > space < Return Period (mmyyyy) > . Example: NIL R1 07XXXXX1234H8Z6 062020 (where return period must be last month of the quarter)
However, NIL filing through SMS can’t be done in following scenarios: •If IFF for Month 1 or 2 of a quarter is in Submitted stage, but not Filed. •If invoices are Saved in IFF for Month 1 or 2 of a quarter, which was not submitted or filed by due date.
C.Impact of cancellation of registration on liability to file Form GSTR-1 : In case registration of a taxpayer under QRMP Scheme is cancelled, with effective date of cancellation being any date after 1st day of Month 1 of a quarter, they would be required to file Form GSTR-1 for the complete quarter, as the last applicable return. For example if the taxpayer’s registration is cancelled w.e.f. 1st of April, he/she is not required to file Form GSTR-1 for Apr-June quarter and Form GSTR-1 for Jan-Mar Quarter shall become the last applicable return. However, if the registration is cancelled on a later date during the quarter, the taxpayer would be required to file Form GSTR-1 for Apr-June quarter. In such cases the filing will become open on 1st of month following the month with cancellation date i.e. if cancellation has taken place on 20th May, Form GSTR-1 for Quarter Apr-June can be filed anytime on or after 1st of June.
We would like to advise a word of caution, please cross check the numbers auto populated as it help to identify any issues in auto population.
The 43 GST Council met under the Chairmanship of Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman through video conferencing here today. The meeting was also attended by Union Minister of State for Finance & Corporate Affairs Shri Anurag Thakur besides Finance Ministers of States & UTs and senior officers of the Ministry of Finance & States/ UTs. The GST Council has made the following recommendations relating to changes in GST rates on supply of goods and services and changes related to GST law and procedure: COVID-19 RELIEF As a COVID-19 relief measure, a number of specified COVID-19 related goods such as medical oxygen, oxygen concentrators and other oxygen storage and transportation equipment, certain diagnostic markers test kits and COVID-19 vaccines, etc., have been recommended for full exemption from IGST, even if imported on payment basis, for donating to the government or on recommendation of state authority to any relief agency. This exemption shall be valid upto 31.08.2021. Hitherto, IGST exemption was applicable only when these goods were imported “free of cost” for free distribution. The same will also be extended till 31.8.2021. It may be mentioned that these goods are already exempted from Basic Customs duty. Further in view of rising Black Fungus cases, the above exemption from IGST has been extended to Amphotericin B. Further relief in individual item of COVID-19 after Group of Ministers (GoM) submits report on 8 June 2021
As regards individual items, it was decided to constitute a Group of Ministers (GoM) to go into the need for further relief to COVID-19 related individual items immediately. The GOM shall give its report by 08.06.2021.
OTHER RELIEFS ON GOODS To support the LympahticFilarisis (an endemic) elimination programme being conducted in collaboration with WHO, the GST rate on Diethylcarbamazine (DEC) tablets has been recommended for reduction to 5% (from 12%). Certain clarifications/clarificatory amendments have been recommended in relation to GST rates. Major ones are, – Leviability of IGST on repair value of goods re-imported after repairs GST rate of 12% to apply on parts of sprinklers/ drip irrigation systems falling under tariff heading 8424 (nozzle/laterals) to apply even if these goods are sold separately.
SERVICES To clarify those services supplied to an educational institution including anganwadi(which provide pre-school education also), by way of serving of food including mid- day meals under any midday meals scheme, sponsored by Government is exempt from levy of GST irrespective of funding of such supplies from government grants or corporate donations. To clarify these services provided by way of examination including entrance examination, where fee is charged for such examinations, by National Board of Examination (NBE), or similar Central or StateEducational Boards, and input services relating thereto are exempt from GST. To make appropriate changes in the relevant notification for an explicit provision to make it clear that land owner promoters could utilize credit of GST charged to them by developer promoters in respect of suchapartments that are subsequently sold by the land promotor and on which GST is paid. The developer promotor shall be allowed to pay GST relating to such apartments any time before or at the time of issuance of completion certificate. To extend the same dispensation as provided to MRO units of aviation sector to MRO units of ships/vessels so as to provide level playing field to domestic shipping MROs vis a vis foreign MROs and accordingly, – GST on MRO services in respect of ships/vessels shall be reduced to 5% (from 18%). PoS of B2B supply of MRO Services in respect of ships/ vessels would be location of recipient of service To clarify that supply of service by way of milling of wheat/paddy into flour (fortified with minerals etc. by millers or otherwise )/rice to Government/ local authority etc.for distribution of such flour or rice under PDS is exempt from GST if the value of goods in such composite supply does not exceed 25%. Otherwise, such services would attract GST at the rate of 5% if supplied to any person registered in GST, including a person registered for payment of TDS. To clarify that GST is payable on annuity payments received as deferred payment for construction of road. Benefit of the exemption is for such annuities which are paid for the service by way of access to a road or a bridge.
To clarify those services supplied to a Government Entity by way of construction of a rope-way attract GST at the rate of 18%. To clarify that services supplied by Govt. to its undertaking/PSU by way of guaranteeing loans taken by such entity from banks and financial institutions is exempt from GST.
MEASURES FOR TRADE FACILITATION:
Amnesty Scheme to provide relief to taxpayers regarding late fee for pending returns: To provide relief to the taxpayers, late fee for non-furnishing FORM GSTR-3B for the tax periods from July, 2017 to April, 2021 has been reduced / waived as under: – i. late fee capped to a maximum of Rs 500/- (Rs. 250/- each for CGST & SGST) per return for taxpayers, who did not have any tax liability for the said tax periods; ii. late fee capped to a maximum of Rs 1000/- (Rs. 500/- each for CGST & SGST) per return for other taxpayers; The reduced rate of late fee would apply if GSTR-3B returns for these tax periods are furnished between 01.06.2021 to 31.08.2021.
2. Rationalization of late fee imposed under section 47 of the CGST Act:
To reduce burden of late fee on smaller taxpayers, the upper cap of late fee is being rationalized to align late fee with tax liability/ turnover of the taxpayers, as follows
A. The late fee for delay in furnishing of FORM GSTR-3B and FORM GSTR-1 to be capped, per return, as below: (i) For taxpayers having nil tax liability in GSTR-3B or nil outward supplies in GSTR-1, the late fee to be capped at Rs 500 (Rs 250 CGST + Rs 250 SGST) (ii) For other taxpayers: a. For taxpayers having Annual Aggregate Turnover (AATO) in preceding year upto Rs 1.5 crore, late fee to be capped to a maximum of Rs 2000 (1000 CGST+1000 SGST); b. For taxpayers having AATO in preceding year between Rs 1.5 crore to Rs 5 crore, late fee to be capped to a maximum of Rs 5000 (2500 CGST+2500 SGST); c. For taxpayers having AATO in preceding year above Rs 5 crores, late fee to be capped to a maximum of Rs 10000 (5000 CGST+5000 SGST).
B. The late fee for delay in furnishing of FORM GSTR-4 by composition taxpayers to be capped to Rs 500 (Rs 250 CGST + Rs 250 SGST) per return, if tax liability is nil in the return, and Rs 2000 (Rs 1000 CGST + Rs 1000 SGST) per return for others.
C. Late fee payable for delayed furnishing of FORM GSTR-7 to be reduced to Rs.50/- per day (Rs. 25 CGST + Rs 25 SGST) and to be capped to a maximum of Rs 2000/- (Rs. 1,000 CGST + Rs 1,000 SGST) per return. All the above proposals to be made applicable for prospective tax periods.
3. COVID-19 related relief measures for taxpayers:
In addition to the relief measures already provided to the taxpayers vide the notifications issued on 01.05.2021, the following further relaxations are being provided to the taxpayers:
A. For small taxpayers (aggregate turnover upto Rs. 5 crore)
a. March & April 2021 tax periods: i. NIL rate of interest for first 15 days from the due date of furnishing the return in FORM GSTR-3B or filing of PMT-06 Challan, reduced rate of 9% thereafter for further 45 days and 30 days for March,2021 and April, 2021 respectively. ii. Waiver of late fee for delay in furnishing return in FORM GSTR-3B for the tax periods March / QE March, 2021 and April 2021 for 60 days and 45 days respectively, from the due date of furnishing FORM GSTR-3B. iii. NIL rate of interest for first 15 days from the due date of furnishing the statement in CMP-08 by composition dealers for QE March 2021, and reduced rate of 9% thereafter for further 45 days.
b. For May 2021 tax period: i. NIL rate of interest for first 15 days from the due date of furnishing the return in FORM GSTR-3B or filing of PMT-06 Challan, and reduced rate of 9% thereafter for further 15 days. ii. Waiver of late fee for delay in furnishing returns in FORM GSTR-3B for taxpayers filing monthly returns for 30 days from the due date of furnishing FORM GSTR-3B
B. For large taxpayers (aggregate turnover more than Rs. 5 crore)
A lower rate of interest @ 9% for first 15 days after the due date of filing return in FORM GSTR-3B for the tax period May, 2021. ii. Waiver of late fee for delay in furnishing returns in FORM GSTR-3B for the tax period May, 2021 for 15 days from the due date of furnishing FORM GSTR-3B.
C. Certain other COVID-19 related relaxations to be provided, such as
Extension of due date of filing GSTR-1/ IFF for the month of May 2021 by 15 days.
Extension of due date of filing GSTR-4 for FY 2020-21 to 31.07.2021.
Extension of due date of filing ITC-04 for QE March 2021 to 30.06.2021.
Cumulative application of rule 36(4) for availing ITC for tax periods April, May and June, 2021 in the return for the period June, 2021.
Allowing filing of returns by companies using Electronic Verification Code (EVC), instead of Digital Signature Certificate (DSC) till 31.08.2021.
D. Relaxations under section 168A of the CGST Act: Time limit for completion of various actions, by any authority or by any person, under the GST Act, which falls during the period from 15 April, 2021 to 29 June, 2021, to be extended upto 30 June, 2021, subject to some exceptions. [Wherever the timelines for actions have been extended by the Hon’ble Supreme Court, the same would apply]
4. Simplification of Annual Return for Financial Year 2020-21:
i. Amendments in section 35 and 44 of CGST Act made through Finance Act, 2021 to be notified. This would ease the compliance requirement in furnishing reconciliation statement in FORM GSTR-9C, as taxpayers would be able to self-certify the reconciliation statement, instead of getting it certified by chartered accountants. This change will apply for Annual Return for FY 2020-21. ii. The filing of annual return in FORM GSTR-9 / 9A for FY 2020-21 to be optional for taxpayers having aggregate annual turnover upto Rs 2 Crore; iii. The reconciliation statement in FORM GSTR-9C for the FY 2020-21 will be required to be filed by taxpayers with annual aggregate turnover above Rs 5 Crore.
Retrospective amendment in section 50 of the CGST Act with effect from 01.07.2017, providing for payment of interest on net cash basis, to be notified at the earliest.
OTHER MEASURES i. GST Council recommended amendments in certain provisions of the Act so as to make the present system of GSTR-1/3B return filing as the default return filing system in GST.
Note: The recommendations of the GST Council have been presented in this release in simple language for information of all stakeholders. The same would be given effect through relevant Circulars/Notifications which alone shall have the force of la
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
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
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
Section 17(5)
(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
tax amount:
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.
Manufacturers
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.
Service Providers
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.
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
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.
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?
Taxpayers having turnover above Rs 500 crores are required to issues e-invoices from 1st Oct 2020.
As part of Digitization, e-invoices issued by the taxpayers will be auto-populated to GSTR – 1. This was supposed to happen from 13th Nov 2020. Due to some unforeseen technical issues, the same is not happening as planned.
Taxpayers who are waiting for the auto-population are advised to file the returns for the month of November 2020 and not to wait for the same.
e-invoice data will be auto-populated into GSTR – 1 from the tax periods October and November will start from 13th December 2020 and it is expected to take couple of weeks.
e-invoice data for the month of December is expected to be auto-populated from the first week of December in T+2 days.
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