TEN BASIC PROVISIONS OF THE GOODS AND SERVICES TAX ACT, 2017 EVERYONE MUST KNOW

1)    REGISTRATION: Businesses whose Aggregate Turnover in a financial year exceeds Rs. 20 Lakhs are required to get the registration. However, the limit is Rs. 40 Lakhs per annum in the case of businesses that are into purely trading activity.

 

2)    E-WAY BILL: E-way bill is a document to be generated electronically in the E-way bill Portal for the movement of goods in vehicles from one place to another. A registered person who supplies the goods without generating an e-way bill may have to suffer a penalty of Rs. 100% of the value of supply and the goods in question would also be confiscated. The E-way bill has to be generated where the value of supply is more than Rs. 50,000 (including the taxes) per consignment.

3)    COMPOSITE SCHEME: Under this scheme, a registered person shall pay a prescribed percentage of sales as GST to the government. Businesses with an aggregated turnover of less than Rs. 1.50 Crores in the previous financial year can opt to pay taxes under the composite scheme. Such businesses neither collect GST on their sales nor claim GST credit on their purchases. The scheme is also extended to service providers, whose Total Turnover in the preceding financial year is up to 50 Lakhs.

GST Rates for Composite Scheme

Type of business	CGST	SGST	Total
Manufacturer and Traders of Goods	0.5%	0.5%	1.00%
Restaurants where alcohol is not serviced	2.5%	2.5%	5.00%
Service Providers	3.00%	3.00%	6.00%

 

4)    HSN CODES: HSN stands for Harmonized System of Nomenclature. It is the system of classification of goods numerically by assigning numbers to a particular class or classes of goods. It generally consists of 8 digits. Businesses whose turnover in the preceding financial year is up to Rs. 5 Crores are required to mention the 4-digit HSN Codes in their tax invoice and the businesses whose turnover exceeds Rs. 5 Crores are required to mention the HSN code at the 6-digit level.

 

5)    RESTRICTION TO CLAIM ITC TO THE EXTENT OF 99% OF THE TAX LIABILITY: ITC- Input Tax Credit is the GST paid by the registered persons on the purchase of goods or services used for his business. Taxpayers are allowed to reduce the GST paid on their purchases before remitting the GST to the government.  However, In the case of businesses whose taxable supply pre month is 50 Lakhs or more, the ITC is restricted to the extent of 99% of their tax liability even though sufficient ITC is available.

 

6)    QRMP SCHEME: QRMP stands for Quarterly Return filing and Monthly Payment of taxes. It is an option given to taxpayers where they can make the tax payment on a monthly basis and file the returns in Form GSTR3B on a quarterly basis. Businesses with turnover up to Rs.5 Crores in the preceding financial year can opt to pay tax under this scheme.

 

 

7)    REFUND: Taxpayers can file an application for a refund of excess GST paid in the Electronic Cash ledger. The applications can also be filed when the taxpayer is supplying the Zero-rated supply or when the supply comes under an inverted duty structure (Where the rate of GST on purchase/inputs is more than the rate of GST on sales). Where the amount of refund is less than Rs. 2 Lakhs, the application for refund needs not be accompanied by any documentary evidence. Further, no refund shall be issued if the amount of refund applied for is less than Rs. 1,000/-

 

8)    TDS: Where payment for taxable supply of goods or services or both under an individual contract exceeds Rs. 2.50 Lakhs, then TDS @ 2% has to be deducted. The amount so deducted shall be reflected in the Electronic Credit Ledgers of the deductees and the same can be utilized to discharge his tax liability. Following are the class of persons liable to deduct the TDS.

a)    Departmental establishment of the Central Government or State Government.

b)    Local authority

c)    Government agencies

 

9)    E-INVOICE: Electronic Invoice is a facility whereby the taxpayers are required to furnish the details of their supply in the E-invoice Portal. The IRP-Invoice Reference Number will be generated for each invoice uploaded to E-invoice Portal. The details uploaded in the E-invoice portal are automatically imported to Form GSTR1 as well as the E-way bill on a real-time basis without any manual intervention. The Businesses whose aggregate turnover is more than Rs. 20 Crores in any financial year are required to comply with the requirement of E-invoice.

10)  RETURNS TO BE FILED: A registered person has to furnish the details of sales, ITC, TDS, etc. the below table summarises the list of key returns to be filed.

Return Form	Nature of Returns	Due date
GSTR1	Details of outward supply – Sales	11th of every succeeding month
GSTR-3B	Summary of Sales, taxes collected, ITC claimed, and payment of Tax	20th of every succeeding month
GSTR7	Return for deducting the TDS	10th of every succeeding month
CMP08	Return cum tax payment under QRMP Scheme	18th of every succeeding month
GSTR9	Annual Return	31st December of the succeeding financial year
GSTR9C	Reconciliation Statement	31st December of the succeeding financial year
GSTR10	Final Return to be filed whose registration has been cancelled	Within 3 months of cancellation of registration

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CA Ramakrishna Sanjay