UNIT III
Registration and Computation of GST
PERSONS LIABLE FOR REGISTRATION [SEC 22]
1. Every supplier liable to be registered if aggregate turnover in financial year exceeds Rs.40 lakhs / 20 lakhs in Special Category States [SEC 22(1)]:
Every supplier shall be liable to be registered under this Act in the state or Union territory, other than special category states, from where he makes a taxable supply of goods or goods and services both, if his aggregate turnover in a financial year exceeds Rs. 40 lakhs.
Where such person’s makes taxable supplies of goods or services or both from any of the special category states, he shall be liable to be registered if his aggregate turnover in a financial year exceeds Rs. 20 lakhs.
Meaning of Aggregate turnover [SEC 2(6)]: “Aggregate turnover” means the aggregate value of:
- All taxable supplies. (Excluding the value of inward supplies on which tax is payable by a person on reverse charge basis.)
- Exempt supplies.
- Exports of goods or services or both.
- Inter – state supplies.
of persons having the same PAN number, to be computed on all India basis, but excludes :
a) Central tax
b) State tax
c) Union territory tax
d) Integrated tax and
e) Cess.
2. Every supplier liable for registration will have to take a separate registration in every state even though such supplier may be supplying goods or services or both from more than one state as a single entity.
3. Registrants under existing law required to obtain registration under GST [SEC 22(2)]:
Every person who, on the day immediately preceding the appointed day, is registered or holds a license under an existing law, shall be liable to be registered under this Act with effect from the appointed day.
Appointed day [sec 2(10)]
“Appointed day” means the date on which the provision of this act shall come into force i.e. 1.7.2017.
4. Transfer of Business – Transferee to obtain fresh registration [sec 22(3)]:
Where a business carried on by a taxable person registered under this Act is transferred, whether on account of succession or otherwise, to another person as a going concern, the transferee or the successor, as the case may be, shall be liable to be registered with effect from the date of such transfer or succession.
5. Transfer pursuant to scheme for amalgamation/demerger – transferee liable to be registered from date of incorporation [sec 22(4)]:
Notwithstanding anything contained in sub-section (1)&(3), in a case of transfer pursuant to sanction of a sanction of a scheme or an arrangement for amalgamation or, as the case may be, demerger of two or more companies pursuant to an order of a High Court, Tribunal or otherwise, the transferee shall be liable to be registered, with effect from the date on which the registrar of Companies issues a certificate of incorporation giving effect to such order of the high court or tribunal.
6. Supply of goods by Job- worker to be included in supplies of principal
The supply of goods, after completion of Job-worker by a registered job-worker shall be treated as the supply of goods by the principal referred to in sec 143 and the value of such goods shall not be included in the aggregate turnover of the registered job-worker.
7. Special category States
“Special category States” shall mean the states as specified in article 279 A (4)(g) of the Constitution. They are states which opted for new limit of Rs.20lakhs for sale of goods.
- Arunachal Pradesh
- Meghalaya
- Manipur
- Mizoram
- Pondicherry
- Telangana (10 lakhs)
- Nagaland
- Sikkim
- Tripura
- Uttarakhand
PERSONS NOT LIABLE FOR REGISTRATION [SEC 23]
Persons not liable for registration [sec 23(1)] :
- Persons engaged exclusively in supplying goods /services/both not liable to tax
- Persons engaged exclusively in supplying goods /services/both wholly exempt
- Agriculturist limited to supply of produce out of cultivation of land
Specified category of persons notified by the Government
PROCEDURE FOR REGISTRATION
Procedure for registration is governed by section 25 of the CGST Act read with relevant CGST Rules, 2017. Relevant provisions of CGST Rules, 2017 have been incorporated at the relevant places. Further, special provisions have been provided for registration of casual taxable person and non-resident taxable person under section 27. Concept of deemed registration has been elaborated under section 26.
Under GST, the application for registration has to be submitted electronically at the GST Common Portal –www.gst.gov.in, duly signed or verified through Electronic Verification Code (EVC)
Around 30 forms/formats have been prescribed in the CGST Rules, 2017. For every process in the registration chain such as application for registration, acknowledgment, query, rejection, registration certificate, show cause notice for cancellation, reply, cancellation, amendment, field visit report etc., there are standard formats10. This makes the process uniform all over the country. The decision-making process has also been expedited. Strict time lines have been stipulated for completion of different stages of registration process.
- Where and by when to apply for registration? [Section25(1)]
PARTICULARS | WHERE | WHEN |
Person who is liable to be registered under section 22 or section 24 | in every such State/UT in which he is soliable | within 30 days from the date on which he becomes liable to registration |
A casual taxable person or a non-resident taxable person | at least 5 days prior to commencement of business |
2. State-wise registration [Section 25(2) read with rule11]
- One registration per State
- Registration needs to be taken State-wise, i.e. there are no centralized registrations under GST. A business entity having its branches in multiple States will have to take separate State-wise registration for the branches in different States.
- Further, within a State, an entity with different branches shall be granted single registration wherein it can declare one place as principal place of business (PPoB) and other branches as additional place of business(APoB).
b. Separate registration for different places of business within a State/UT may be granted
- Although a taxpayer having multiple places of business in one State is not mandatorily required to obtain separate registration for each such place of business in the State, he has an option to obtain independent registrations with respect to each such separate place of business.
- However, separate registration for each place of business shall be granted provided all separately registered places of business of such person pay tax on supply of goods/services/both made to another registered place of business, of such person and issue a tax invoice/bill of supply for such supply. Separate registration application needs to be filed for each place of business
- A registered person opting to obtain separate registration for a place of business shall submit a separate application in FormGSTREG01inrespectofsuchplaceofbusiness.
- The provisions of rules 9 and 10 [Discussed in subsequent paras] relating to verification and grant of registration shall mutatis mutandis apply to an application submitted under this rule.
- Composition levy in case of separate registration for multiple places of business within a state/UT
- If a person is paying tax for one of his places of business under normal scheme, he shall not pay tax under composition levy for any other place of business.
- If one of the places of business [separately registered] of a registered person becomes ineligible to pay tax under composition levy, all other registered places of business of said person would also become ineligible to pay tax under composition levy.
- The provisions of rules 9 and 10 [Discussed in subsequent paras] relating to verification and grant of registration shall mutatis mutandis apply to an application submitted under this rule.
- Voluntary registration [Section25(3)]
A person who is not liable to be registered under section 22 or section 24 may get himself registered voluntarily. In case of voluntary registration, all provisions of this Act, as are applicable to a registered person, shall apply to voluntarily registered person. However, once a person obtains voluntary registration, he has to pay tax even though his aggregate turnover does not exceed 20 lakhs/10 lakhs.
Voluntary registration is usually obtained by the business for ensuring seamless flow of credit to their customers.
4. Distinct Persons/ establishments of distinct persons [Section 25(4) & (5)]
A person who has obtained/ is required to obtain more than one registration, whether in one State/ Union territory or more than one State/Union territory shall, in respect of each such registration, be treated as distinct persons.
Further, where a person who has obtained or is required to obtain registration in a State or Union territory in respect of an establishment, has an establishment in another State or Union territory, then such establishments shall be treated as establishments of distinct persons.
5. PAN must for obtaining registration [Section 25(6) &(7)]
Permanent Account Number is mandatory to be eligible for grant of registration.
6. UniqueIdentityNumber(UIN)[Section25(9)&(10)readwithrule17]
Any specialized agency of the United Nations Organization or any Multilateral Financial institution and organization as notified under the United Nations (Privileges and Immunities)
Act,1947,consulateorembassyofforeigncountriesandanother person notified by the Commissioner, is required to obtain a UIN from the GSTN portal.
This UIN is needed for claiming refund of taxes paid on notified supplies of goods and/or services received by them, and for such other purpose as may be notified. UIN granted is a centralized UIN i.e. it shall be applicable to the territory of India. A person having UIN is not registered person and thus, is not a taxable person.
The proper officer may, upon submission of an application in prescribed form or after filling up the said form or after receiving a recommendation from the Ministry of External Affairs, Government of India, assign a UIN to the said person and issue registration certificate within 3 working days from the date of submission of application.
7. Suo-motu registration by the proper officer [Section 25(8) read with rule16]
Where, pursuant to any survey, enquiry, inspection, search or any other proceedings under the Act, the proper officer finds that a person liable to registration under the Act** has failed to apply for such registration, such officer may register the said person on a temporary basis and issue an order in prescribed form.
**Such person shall either:
- submit an application for registration in prescribed form within 90 days from the date of grant of temporary registration, or
- file an appeal against such temporary registration.
In case (ii), if the Appellate Authority upholds the liability to registration, application for registration shall be submitted within 30 days from the date of issuance of such order of the Appellate Tribunal.
Provisions relating to verification and issue of registration certificate [as contained in rules 9 and 10] [discussed in subsequent paras] shall, mutatis mutandis, apply to such application submitted by the person granted temporary registration. GSTIN thereafter granted shall be effective from the date of order of proper officer granting temporary registration.
8. Procedure for registration [Section 25 read with rules 8, 9 &10]
Provisions relating to procedure for application for registration, verification of the application and approval &issue of registration certificate are contained in the rules 8, 9 and 10 of the CGST Rules, 2017 respectively. The same have to be read in conjunction with section 25 provisions. However, procedure so laid down will not apply to:
Non-resident taxable person
Apersonrequiredtodeducttaxatsourceundersection51
Apersonrequiredtocollecttaxatsourceundersection52
A person supplying OIDAR services from a place outside India to a non-taxableonlinerecipientreferredtoinsection14ofIGSTAct.
Thus, procedure for registration prescribed under rules 8, 9 and 10 are also applicable to a person paying tax under composition levy, every person seeking voluntary registration as well as a casual taxable person.
Such persons shall apply for registration in Form GST REG 01. The application for registration in GST Form REG 01 is divided into two parts – Part A and Part B.
In order to cater to the needs of tax payers who are not IT savvy, Facilitation centres have been established which help the taxpayer in submitting the application for registration, amending the registration certificate, submitting application for cancellation of registration, revocation of cancellation of registration, etc. Facilitation Centre shall be responsible for the digitization and/or uploading of the forms and documents.
Application for registration by Special Economic Zone (SEZ) [Second provision to section 25(1):A person having unit in SEZ/an SEZ developer will have to make a separate application for registration as distinct from his place of business located outside SEZ in the same State/UT. Thus, there may be a case where two units of a tax payer are located in same State/UT - one in SEZ and another outside SEZ. In that case, separate registrations have to be obtained for each of the two units as separate places of business.
9. Effective date of registration [Rule10]
Where an applicant submits application for registration | effective date of registration is |
within 30 days from the date he becomes liable to registration | the date on which he becomes liable to registration |
after 30 days from the date he becomes liable to registration | date of grant of registration |
DEEMED REGISTRATION [Section26]
Registration under GST is not tax specific, which means that there is single registration for all the taxes i.e. CGST, SGST/UTGST, IGST and cesses.
Grant of registration/UIN under any SGST Act/ UTGST Act is deemed to be registration/UIN granted under CGST Act provided application for registration has not been rejected under CGSTAct.
Further, rejection of application for registration/UIN under SGST Act/UTGST Act is deemed to be rejection of application for registration under CGST Act.
(A) Meaning of casual taxable person and non-resident taxable person
Before going into nuances of the registration provisions of CTP and NRTP, let us first understand the meaning of casual taxable person and non-resident taxable person:
There may be case where a person has a registered business in some State in India, but wants to effect supplies from some other State in which he does not have any fixed place of business. Such person needs to register in the State from where he seeks to supply as a ‘casual taxable person’.
CGST Act defines a casual person as a person who occasionally undertakes transactions involving supply of goods or services or both in the course or furtherance of business, whether as principal, agent or in any other capacity, in a State/UT where he has no fixed place of business [Section 2(20)]. He cannot exercise the option to pay tax under composition levy.
A person who is a foreigner and occasionally wants to effect taxable supplies from any State in India needs GST registration for the same. Such person needs to register in the State from where he seeks to supply as a non-resident taxable person. CGST Act defines non-resident taxable person as any person who occasionally undertakes transactions involving supply of goods or services or both, whether as principal or agent or in any other capacity, but who has no fixed place of business or residence in India [Section 2(77)]. He cannot exercise the option to pay tax under composition levy.
Based on the aforesaid definitions, following points merit consideration:
A CTP does not have a fixed place of business in the State/UT where he undertakes supply though he might be registered with regard to his fixed place of business in some other State/UT, while a NRTP does not have fixed place of business/residence in India at all.
A CTP has to undertake transactions in the course or furtherance of business whereas the business test is absent in the definition of NRTP.
(B) Special registration provisions of casual taxable person and non- resident taxable person
GST law prescribes special procedure for registration, as also for extension of the operation period of such casual or non-resident taxable persons. They have to apply for registration at least 5 days in advance before making any supply. Also, registration is granted to them or period of operation is extended,only after they make advance deposit of the estimated tax liability. The special registration procedure pertaining to CTP and NRTP are as follows:
Both CTP and NRTP have to compulsorily get registered under GST irrespective of the threshold limit, at least 5 days prior to commencement of business.
As per section 25(6), every person must have a PAN to be eligible for registration. Since NRTP will generally not have a PAN of India, he may be granted registration on the basis of other prescribed documents.
He has to submit a self-attested copy of his valid passport along with the application signed by his authorized signatory who is an Indian Resident having valid PAN. However, in case of a business entity incorporated or established outside India, the application for registration shall be submitted along with its tax identification number or unique number on the basis of which the entity is identified by the Government of that country or its PAN, if available.
Application will be submitted by NRTP in a different prescribed form whereas CTP will submit the application for registration in the normal form for application for registration i.e. Form GST REG 01 and his registration of CTP will be a PAN based registration.
(C) Period of validity of registration certificate granted to CTP/NRTP
Registration Certificate granted to CTP/NRTP will be valid for:
(i) Period specified in the registration application, or
(ii) 90 days from the effective date of registration [can be extended further by a period not exceeding 90 days by making an application before the end of the validity of registration granted to him**]
whichever is earlier.
Provisions relating to verification of application and grant of registration [under rules 9 and 10] will apply mutatis mutandis, to an application for registration filed by NRTP.
At the time of submitting the registration application, CTP/NRTP are required to make an advance deposit of tax in an amount equivalent to the estimated tax liability of such person for the period for which the registration is sought.
Such person will get a TRN for making an advance deposit of tax which shall be credited to his electronic cash ledger. An acknowledgement of receipt of application for registration is issued only after said deposit.
AMENDMENT OF REGISTRATION [SECTION28]
A registered person may need to make some changes/amendments in the registration application. There are two categories of details in registration application – core and non-core fields.
Core fields are name of the business, (legal name) if there is no change in pan, addition / deletion of stakeholders, principal place of business (other than change in State) or additional place of business (other than change in State).
All other fields are non-core fields like name of day to day functionaries, e-mail Ids, mobile numbers etc.
In case the changes is in core information in the registration application, the taxable person will apply for amendment within 15 days of the event necessitating the change. The proper officer, then, will approve the amendment within next 15days.
For other changes – non-core information, no approval of the proper officer is required, and the amendment can be affected by the taxable person on his own on the common portal.
The provisions relating to amendment of registration are contained in section 28 read with rule 19 of CGST Rules, 2017.
The significant aspects of the same are discussed hereunder:
- Where there is any change in the particulars furnished in registration application/UIN application, registered person shall submit an application in prescribed manner, either at the time of obtaining registration or Unique Identity Number or as amended from time to time, within 15 days of such change, along with documents relating to such change at the Common Portal.
- In case of amendment of core fields of information, the proper officer may, on the basis of information furnished or as ascertained by him, approve or reject amendments in the registration particulars in the prescribed manner. Such amendment shall take effect from the date of occurrence of event warranting such amendment.
- However, where change relates to non-core fields of information, registration certificate shall stand amended upon submission of the application for amendment on the Common Portal.
- The proper officer shall not reject the application for amendment in the registration particulars without giving the person an opportunity of being heard.
- Any rejection or approval of amendments under the SGST/UTGST Act shall be deemed to be a rejection or approval under this Act.
- Any particular of the application for registration shall not stand amended with effect from a date earlier than date of submission of application for amendment on common portal except with order of Commissioner for reasons to be recorded in writing and subject to conditions specified by Commissioner in the said order
- Application for amendment of registration cannot be filed for change in PAN because GST registration is PAN-based. One needs to make fresh application for registration in case there is change in PAN. Thus. where a change in the constitution of any business results in change of PAN of a registered person, the said person shall apply for fresh registration.
- Similarly, application for amendment of registration form cannot be filled if there is change in place of business from one State to the other because GST registrations are State-specific. If one wishes to relocate his business to another State, he must voluntarily cancel his current registration and apply for a fresh registration in the State he is relocating his business.
CANCELLATION OR SUSPENSION OF REGISTRATION AND REVOCATION OF CANCELLATION [SECTIONS 29 &30]
Cancellation of Registration [Section29]:
1.Cancellation of Registration Either suo motu or on Application by Registered Person Section 29(1)]:
The proper officer may:
a) either on his own motion, or
b) on an application field
i) by the registered person, or
ii) by his legal heirs, in case of death of such person,
cancel the registration, in such manner and within such period as may be prescribed.
Circumstances in Which Registration is Cancelled:
The registration can be cancelled having regard to the following circumstances where:
a) the business has been:
i) discounted
ii) transferred fully for any reason including death of the proprietor,
iii) amalgamated with other legal entity,
iv) demerged, or
v) otherwise disposed of; or
b) there is any change in the constitution of the business; or
c) the taxable person, other than the person registered under Section 25(3) i.e. voluntary registration, is no longer liable to be registered under Section 22 or Section 24.
2. Cancellation of Registration by Proper Officer[Section 29(2)]:
The proper officer may cancel the registration of a person from such date, including any retrospective date, as he may deem fit, where:
a) a registered person has contravened such provisions of the Act or the rules made there under as may be prescribed; or
b) a person paying tax under Section 10 i.e. composite levy has not furnished returns for 3 consecutive tax periods; or
c) any registered person, other than a person specified in Section 29(1)(b), has not furnished returns for a continuous period of 6 months; or
d) any person who has taken voluntary registration under Section 25(3) has not commenced business within 6 months from the date of registration; or
e) registration has been obtained by means of fraud, willful misstatement or suppression of facts.
Opportunity of Being Heard:
The proper officer shall not cancel the registration without giving the person an opportunity of being heard.
3. Cancellation of Registration not to Affect Tax Liability [Section 29(3)]:
The cancellation of registration under this section shall not affect the liability of the person to pay tax and other dues under this Act or to discharge any obligation under this Act or the rules made there under for any period prior to the date of cancellation whether or not such tax and other dues are determined before or after the date of cancellation.
4. Cancellation Under SGST/ UTGST Act Deemed Cancellation CGST Act [Section 29(4)]:
The cancellation of registration under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, as the case may be, shall be deemed to be a cancellation of registration under this act.
5. Pay ITC Availed on Goods in Stock or Output Tax Whichever is Higher [Section 29(5)]:
Every registered person whose registration is cancelled shall pay an amount calculated in such manner as may be prescribed, by way of debit in the electronic credit ledger or electronic cash ledger:
a) equivalent to the credit of input tax in respect of:
i) inputs held in stock, or
ii) inputs contained in semi – finished goods held in stock, or
iii) inputs contained in finished goods held in stock, or
iv) capital goods or plant and machinery
on the day immediately preceding the date of such cancellation, or
b) the output tax payable on such goods,
whichever is higher.
Payment in Case of Capital Goods:
In case of capital goods or plant and machinery, the taxable person shall pay:
a) an amount equal to the input tax credit taken on the said capital goods or plant and machinery, reduced by such percentage points as may be prescribed; or
b) the tax on the transaction value of such capital goods or plant and machinery under Section 15,
whichever is higher.
6. Computation of Amount Payable in Prescribed Manner [Section 29(6)]:
The amount payable under Section 29(5) shall be calculated in such manner as may be prescribed.
7. Procedure for cancellation of registration [Rules 20 and22]
(a) Voluntary cancellation by registered person Application
- A registered person seeking cancellation of registration shall electronically submit the application for cancellation of registration in prescribed form within 30 days of occurrence of the event warranting cancellation.
- He is required to furnish in the application the details of inputs held in stock or inputs contained in semi-finished/finished goods held in stock and of capital goods held in stock on the date from which cancellation of registration is sought, liability thereon, details of the payment, if any, made against such liability and may furnish relevant documents thereof.
- Where a person who has submitted an application for cancellation of his registration is no longer liable to be registered, proper officer shall issue the order of cancellation of registration within 30 days from the date of submission of application for cancellation.
(b) Suo-motu cancellation by the Department
- Where the proper officer cancels the registration suo-motu, he shall not cancel the same without giving a show cause notice and without giving a reasonable opportunity of being heard, to the registered person. The reply to such show cause notice (SCN) has to be submitted within 7 days of service of notice.
- If reply to SCN is satisfactory, proper officer shall drop the proceedings and pass an order in prescribed form. However, where the person instead of replying to the SCN served for failure to furnish returns for a continuous period of 6 months (3 months in case of composition scheme supplier)14furnishes all the pending returns and makes full payment of the tax dues along with applicable interest and late fee, the proper officer shall drop the proceedings and pass an order.
Where registration of a person is liable to be cancelled, proper officer shall issue the order of cancellation of registration within 30 days from the date of reply to SCN.
(c) Effective date of cancellation
The cancellation of registration shall be effective from a date to be determined by the proper officer and mentioned in the cancellation order. He will direct the taxable person to pay arrears of any tax, interest or penalty including the amount liable to be paid under section29(5).
Revocation of cancellation of registration [Section 30 read with rule23]
(a) Procedure for revocation of cancellation
Where the registration of a person is cancelled suo-motu by the proper officer, such registered person may apply for revocation of the cancellation to such proper officer, within 30 days from the date of service of the order of cancellation of registration.
If the proper officer is satisfied that there are sufficient grounds for revocation of cancellation, he may revoke the cancellation of registration, by an order within 30 days of receipt of application and communicate the same to applicant.
Otherwise, he may reject the revocation application. However, before rejecting the application, he has to first issue SCN to the applicant who shall furnish the clarification within 7 working days of service of SCN. The proper officer shall depose the application (accept/reject the same) within 30 days of receipt of clarification.
(b) Where registration was cancelled for failure of registered person to furnish returns
Where registration was cancelled for failure of registered person to furnish returns, before applying for revocation, the person has to make good the defaults, i.e. the person needs to file such returns. However, the registration may have been cancelled by the proper officer either from the date of order of cancellation of registration or from a retrospective date.
(1) Where the registration has been cancelled with effect from the date of order of cancellation of registration
As we have already seen that the common portal does not allow furnishing of returns after the effective date of cancellation, but returns for the earlier period (i.e. for the period before date of cancellation mentioned in the cancellation order) can be furnished after cancellation.
Where the registration is cancelled with effect from the date of order of cancellation of registration, person applying for revocation of cancellation has to furnish all returns due till the date of such cancellation before the application for revocation can be filed and has to pay any amount due as tax, in terms of such returns along with any amount payable towards interest, penalties or late fee payable in respect of the said returns. However, since the portal does not allow to furnish returns after the date of cancellation of registration, all returns due for the period from the date of order of cancellation till the date of order of revocation of cancellation of registration have to be furnished within a period of 30 days from the date of the order of revocation.
(2) Where the registration has been cancelled with retrospective effect
Where the registration has been cancelled with retrospective effect, it is not possible to furnish the returns before filing the application for revocation of cancellation of registration. In that case, the application for revocation of cancellation of registration is allowed to be filed, subject to the condition that all returns relating to the period from the effective date of cancellation of registration till the date of order of revocation of cancellation of registration shall be filed within a period of 30 days from the date of order of such revocation of cancellation of registration.
Key Takeaways:
- Every supplier shall be liable to be registered under this Act in the state or Union territory, other than special category states, from where he makes a taxable supply of goods or goods and services both, if his aggregate turnover in a financial year exceeds Rs. 40 lakhs.
- Registration under GST is not tax specific, which means that there is single registration for all the taxes i.e. CGST, SGST/UTGST, IGST and cesses.
GST Interstate: According to GST, when the supply of goods and services takes place across the borders of two states or union territories, it is called the interstate supply of GST. Under the interstate supply, one has to pay only the IGST, and not CGST or SGST. The GST interstate also includes the supplies made by the SEZ (Special Economic Zone).
GST Intrastate: The intrastate supply in GST is when the supply of goods and services takes place within the state. Under this, the individual has to pay both CGST and SGST. This does not mean that there is an increase in the tax. Rather, it is equal to IGST and is just divided equally in the name of CGST and SGST. In the intrastate supply in GST, both the supplier and buyer belong to the same state.
Under the new tax structure, taxpayers can learn about different GST rates applicable at different categories. These are 0%, 5%, 12%, 18% and 28%, these are necessary while calculating GST.
Different tax heads under GST:
GST can be categorized in four different heads such as
State Goods and Services Tax (SGST): State Government collects this tax
Central Goods and Services Tax (CGST): Central Government collects this tax
Union Territory Goods and Services Tax (UTGST): Union Territory Government collects this tax
Integrated Goods and Services Tax (IGST). It is collected by the Central Government for inter-state transactions and imports.
IGST is applied to interstate products where the supplier of the product is in different state and the product is supplied in a different state. In such a case, an equal rate of CGST and SGST is levied for interstate supplies.
GST Calculation Formula:
For calculating GST, following mentioned formula can be used by the taxpayer. Following formula helps to calculate net price of the product after application of GST and removing GST as well.
The formula for GST calculation:
1. Add GST:
GST Amount = (Original Cost x GST%)/100
Net Price = Original Cost + GST Amount
2. Remove GST:
GST Amount = Original Cost – [Original Cost x {100/(100+GST%)}]
Net Price = Original Cost – GST Amount.
How to calculate GST?
GST can be calculated simply by multiplying the Taxable amount by GST rate. If CGST & SGST/UTGST is to be applied then CGST and SGST both amounts are half of the total GST amount.
GST = Taxable Amount x GST Rate
If you have the amount which is already including the GST then you can calculate the GST excluding amount by below formula
GST excluding amount = GST including amount/(1+ GST rate/100)
For example, GST including amount is Rs. 525 and GST rate is 5%.
GST excluding amount = 525/(1+5/100) = 525/1.05 = 500
GST is calculated on the transaction amount and not on the MRP.
Calculation of GST Amount payable to Government
A registered person needs to pay the difference of GST on sales and GST on purchases made in a month. The purchase may be of goods, services or capital goods.
Capital goods are those goods which you had NOT purchased for the purpose of reselling. For example – Furniture in your shop, machine for production etc.
For example, A person made intra-state sales of Rs. 1 lakh in January and collected CGST of Rs. 2,500 and SGST of Rs. 2,500 at the rate of 5%. In the same month, he had made purchases of Rs. 80,000 and paid CGST and SGST of Rs. 2,000 each at a rate of 5%. He had also paid a bill of internet of Rs. 1,000 plus GST of Rs. 180.
Rs. 4,180 is allowed as a deduction from the Gross tax payable of Rs. 5,000. And therefore a net of Rs. 820 is payable to the government.
Section 49 of the Central Goods and Services Tax Act, along with rules published by the Central Board of Excise and Customs (CBEC), govern the new payment procedures. This provide, an overview of what they entail and looks at the following:.
1.] Electronic Ledgers.
2.] Manner of Utilization and Cross – Utilization of Input Tax Credit (ITC).
3.] Interest on Delayed Payments.
4.] Electronic Payment Forms.
5.] Unique Identification Number for Each Transaction.
electronic ledgers
In the GST portal, a taxable person can track his tax liabilities across three ledgers, each maintained in real – time.
1.] Electronic Liability Ledger (also known as electronic tax liability register):
Accounts for a taxpayer's gross tax liability – form GST PMT – 01 on the GST portal (Section 49(7) read along with Rule 85).
2.] Electronic Credit Ledger(also known as electronic input tax credit ledger):
Records the tax payments already made during the supply chain & every claim of ITC is recorded here – form GST PMT – 02.
3.] Electronic Cash Ledger:
All amounts paid by the taxpayer are reflected here – form GST PMT – 05.
electronic cash ledger [rule 87]
1.] Maintenance of Electronic Cash ledger [Rule 87(1)]:
The electronic cash ledger under section 49(I) shall be maintained in FORM GST PMT – 05 for each person, liable to pay tax, interest, penalty, late fee or any other amount, on the common portal for crediting the amount deposited and debiting the payment there from towards tax, interest, penalty, fee or any other amount.
2.] Generation of Challan [Rule 87(2)]:
Any person, or a person on his behalf, shall generate a challan in FORM GST PMT – 06 on the common portal and enter the details of the amount to be deposited by him towards tax interest, penalty, fees or any other amount.
3.] Modes of Deposited of Amount in Electronic Cash Ledger [Rule 87(3)]:
The deposit under rule 87(2) shall be made through any of the following modes, namely:
a) Internet Banking Authorised Banks.
b) Credit Card or Debit Through the Authorised Bank.
c) National Electronic Fund Transfer or Real Time Gross Settlement from Any Bank.
d) Over the Counter Payment Through Authorised Banks for Deposits up to 
10,000 Per challan per tax period, by cash, cheque or demand draft.
OTC Payment Restrictions Upto
10,000 Not Applicable in Following Cases:
The restriction for deposit up to Z 10,000 per challan in case of an Over the Counter payment not apply to deposit to be made by:
a) Government Departments or any other deposit to be made by person as may be notified by the Commissioner in this behalf.
b) Proper officer or any other officer authorised to recover outstanding dues from any person, whether registered or not, including recovery made through attachment or sale of movable or immovable properties.
c) Proper officer or any other officer authorised for the amounts collected by way of cash, cheque or demand draft during any investigation or enforcement activity or any ad hoc deposit.
Validity of Challan – 15 days:
The challan in FORM GST PVT–06 generated at the common portal shall be valid for a period of 15 days.
Commission to be Borne by Bayer [Explanation]:
For making payment of any amount indicated in the challan, the commission, if any, payable in respect of such payment shall be borne by the person making such payment.
4.] Temporary Identification Number for Payment by Unregistered Persons [Rule 87(4)]:
Any payment required to be made by a person who is not registered under the Act, shall be made on the basis of a temporary identification number generated through the common portal.
5.] Mandate Form for NEFT or RTGS Payments [Rule 87(5)]:
Where the payment is made by way of National electronic Fund transfer or Real Time Gross Settlement mode from any bank, the mandate form shall be generated along with the challan on the common portal and the same shall be submitted to the bank from where the payment is to be made.
Validity of Mandate Form – 15 days:
The mandate form shall be valid for a period of 15 days from the date of generation of challan.
6.] Challan Identification Number [Rule 87(6)]:
On successful credit of the amount to the concerned government account maintained in the authorised bank, a Challan Identification Number (CIN) shall be generated by the collecting bank and the same shall be indicated in the challan.
7.] Credit in Electronic Cash Ledger on Receipt of CIN [Rule 87(7)]:
On receipt of the CIN from the collecting bank, the said amount shall be credited to the electronic cash ledger of the person on whose behalf the deposit has been and the common portal shall make available a receipt to this effect.
8.] Representation on Non Generation of CIN [Rule 87(8)]:
Where the bank account of the person concerned, or the person making the deposit on his behalf, is debited but no CIN is generated or generated but not communicated to the common portal, the said person may represent electronically in FORM GST PMT-07 through the common portal to the bank or electronic gateway through which the deposit was initiated.
9.] Credit of TDS/TCS [Rule 87(9)]:
Any amount deducted under section 51 or collected under section 52 and claimed in FORM GSTR – 02 by the registered taxable person from whom he said amount was deducted or, as the case may be, collected shall be credited to his electronic cash ledger in accordance with the provisions of Rule 87.
10.] Refund Amount to be Debited [Rule 87(I0)]:
Where a person has claimed refund of any amount form the electronic cash ledger, the said amount shall be debited to the electronic cash ledger.
11.] Credit on Account of Rejection of Refunds [Rule 87(11)]:
If the refund so claimed is rejected, either fully or partly, the amount debited under rule 87(l0), to the extent of rejection, shall be credited to the electronic cash ledger by the proper officer by an order made in FORM GST PCT – 03.
12.] Communication of Discrepancy to Jurisdictional Officer [Rule 87(12)]:
A registered person shall, upon noticing any discrepancy in his electronic cash ledger, communicate the same to the officer exercising jurisdiction in the matter, through the common portal in FORM GST PMT – 04
electronic credit ledger [rule 86]
1.] Maintenance of Electronic Credit Ledger by Person Eligible for ITC [Rule 86(1)]:
The electronic credit ledger shall be maintained in FORM GST PMT – 02 for each registered person eligible for input tax credit under the Act on the common portal and every claim of input tax credit under the Act shall be credited to the said ledger.
2.] Debits in Ledger [Rule 86(2)]:
The electronic credit ledger shall be debited to the extent discharge of any liability in accordance with the provision of Section 49.
3.] Refunds of ITC to be Debited in Ledger [Rule 86(3)]:
Where a registered person has claimed refund of any unutilized amount from the electronic credit ledger in accordance the provisions of Section 54, the amount to the extent of the claim shall be debited in the said ledger.
4.] Rejection of Refund of ITC Claim – Re – Credit in Ledger [Rule 86(4)]:
If the refund so filed is rejected, either fully or partly, the amount debited under rule 86(3), to the extent a rejection, shall be re – credited to the electronic credit ledger by the proper officer by an order made in FORM GST PMT – 03.
5.] No Direct Entry in Ledger [Rule 86(5)]:
Save as provided in the provisions of this chapter, no entry shall be made directly in the electronic credit ledger under any circumstance.
electronic liability register [rule 85]
1.] Maintenance of Electronic Liability Register [Rule 85(1)]:
The electronic liability register specified under section 49(7) shall be maintained in FORM GST PMT-0i for each person liable to a tax, interest, penalty , late fee or any other amount on the common portal and all amounts payable by him shall be debited to the said register.
2.] Debits in Register [Rule 85(2)]:
The electronic liability register of the person shall be debited by:
a) the amount payable towards tax, interest, late fee or any other amount payable as per the return furnished by the said person.
b) the amount of tax, interest, penalty or any other amount payable as determined by a proper officer in pursuance of any proceedings under the Act or as ascertained by the said person.
c) the amount of tax and interest payable as a result of mismatch U/S 42 or Section 50 or.
d) any amount of interest that may accrue from time to time.
3.] Liability to be Paid by Debiting Electronic Cash / Credit Ledger & Corresponding Credit in Electronic Liability Register [Rule 85(3)]:
Subject to the provision of Section 49, payment of every liability by a registered person as per his return shall be made by debiting the electronic credit ledger maintained as per Rule 86 or the electronic cash ledger maintained as per Rule 87 and the electronic liability register shall be credited accordingly.
4.] Payments From Electronic Cash Ledger [85(4)]:
The amount deducted Under Section 51, or the amount collected Under Section 52, or the amount payable on reverse charge basis, or the amount payable Under Section 10, any amount payable towards interest, penalty, fee or any other amount under the act shall be paid by debiting the electronic cash ledger maintained as per Rule 87 and the electronic liability register shall be credited accordingly.
5.] Adjustments of Tax Reliefs by Appellate Authority in Register [Rule 85(5)]:
Any amount of demand debited in the electronic liability register shall stand reduced to the extent of relief given by the appellate authority or Appellate Tribunal or Court and the electronic tax liability register shall be credited accordingly.
6.] Adjustments of Reduction in Penalty in Register [Rule 85(b)]:
The amount of penalty imposed or liable to be imposed shall stand reduced partly or fully, as the case may be, if the taxable person makes the payment of tax, interest and penalty specified in the show cause may be, if the taxable person makes the payment of tax, interest and penalty specified in the show cause notice or demand order and the electronic liability register shall be credited accordingly.
7.] Discrepancy in Electronic Liability Register to be communicated [Rule 85(7))]:
A registered person shall, upon noticing any discrepancy in his electronic liability ledger, communicate the same to the officer exercising jurisdiction in the matter, through the common portal in FORM GST PMT – 04.
INTEREST ON DELAYED PAYMENT OF TAX [SECTION 50]
When interest is payable?
Interest is payable in following 3 circumstances:-
- Delay in payment of tax, in full or in part within the prescribed period
- Undue or excess claim of input tax credit under section42(10)
- Undue or excess reduction in output tax liability under section43(10)
section 42 (10) of CGST Act deals with contravention of provisions for matching of claims for input tax credit by a recipient and
section 43 (10) of CGSTAct deals with contravention of provisions for matching of claims for reduction in output tax liability by a supplier
Rate of interest
The rate of interest shall be notified by the Government on the basis of recommendation of the Council. However, such rate to be notified shall not exceed-
- 18% in case of late payment of tax i.e. on failure to pay tax (or part of tax) to the Government’s account.
- 24% on undue or excess claim of ITC or on such undue or excess reduction in output tax liability.
Computation of period for calculation of interest
The period of interest will be from the date following the due date of payment to the actual date of payment of tax.
Other relevant points relating to interest
The term “tax” here means the tax payable under the Act or Rules made there under.
The payment of interest in case of belated payment of tax should be made voluntarily i.e. even without a demand.
The interest payable under this section shall be debited to the Electronic Liability Register.
The liability for interest can be settled by adjustment with balance in Electronic Cash Ledger but not with balance in electronic credit ledger.
TDS (SECTION 51 OF THE ACT)
Payment of TDS to Government under GST Law
TDS shall be paid within 10 days from the end of the month in which tax is deducted. The payment shall be made to the appropriate government which means:
The Central Government in case of the IGST and the CGST
The State government in case of the SGST
Mode of Payment : The deductor has to generate challan in the portal at www.gst.gov.in and deposit the tax so deducted through e-payment mode [Net Banking/Debit-Credit card/NEFT-RTGS] or OTC Mode [Cash/Cheque/DD]
TDS Returns : Deductor is required to file return electronically to Government. The return is to be filed in prescribed form and manner within ten days after end of each month – section 39(3) of CGST Act.
The prescribed form of return is GSTR-7. Offline tool is available to submit GSTR-7 return.
If there is no transaction in a particular month, the deductor is not required to file return for that month – ratio of section 39(8) of CGST Act.
Time limit for filing return can be extended by Commissioner by issuing notification – section 39(6) of CGST Act.
Extension of time limit for filing GSTR-7 return for March 20 – May 20 – Due to Covid -19 GSTR-7 return for March 20 – May 20 has been extended upto 30.06.2020 – Notification No. 35/20 -CT dated 03.04.2020
Late fee for not filing GSTR-7 return within due date– Late fee payable is Rs. 100 per day under CGST Act and Rs. 100 per day under SGST/UTGST Act (Maximum Rs. 5,000 under CGST Act and Rs. 5,000 under SGST/UTGST Act i.e. total Rs. 10,000 per return) separately – (Section 47(1) of CGST and SGST Act).
TDS Certificates : TDS certificate in form GSTR-7A to the concerned person within 5 days of depositing the tax to the government. Failure to do so will make the person liable to pay a late fee of Rs. 100 per day up to a maximum of Rs. 5000.
Refund of TDS under GST? [ Section 51(8) ] If any excess amount is deducted and paid to the government, a refund can be claimed as this is not the tax amount that the government has a right on.
However, if the deducted amount is already added to the electronic cash ledger of the supplier, the amount so added cannot be got back as a refund by the deductor. Deductee can claim a refund of tax subject to refund provisions of the act. ( Proviso to Section 51(8)
Deductee can claim credit of TDS in electronic cash register – The deductee shall claim credit, in his electronic cash ledger, of the tax deducted and reflected in the return of the deductor – section 51(5) of CGST Act.
Thus, deductee can take credit in electronic cash register only when deductor files return and not on the basis of TDS certificate.
TCS (SECTION 52 OF THE ACT)
Objective behind introduction of TCS: – refers to the Tax which is collected by the Electronic Commerce Operator when a supplier supplies some goods or services through its portal and the payment for that supply is collected by the Electronic Commerce Operator (ECO).
Section 52 provides for collection of tax at source in certain circumstances. The section specifically lists out the tax collecting persons who are mandated by the Central Govt to collect tax at source, the rate of collection of tax and the procedure for remittance of tax collected.
Every Electronic Commerce Operator (ECO), not being an agent, has been mandated to collect tax at source (TCS) from the net value of taxable supplies made through it by other suppliers, whenever the ECO collects the consideration on behalf of the supplier.
Rate of TCS under GST:-
Every electronic commerce operator, not being an agent, shall collect an amount calculated @ 0.5% of the net value of intra-State taxable supplies made through it by other suppliers where the consideration with respect to such supplies is to be collected by the said operator.
Note: – Sec.20 of the IGST Act provides that in case of Tax Collection at source, the operator shall collect tax at such rate not exceeding 2% as may be notified on the recommendations of the council of the net value of taxable supplies.
But at present this rate has been notified @ 1%.
Eg: – Suppose a product is sold at Rs.1000/- through an ECO by a supplier. The operator would collect tax @1% of the net value of Rs.1000/- i.e. Rs.10/- (Inter State Supply)
Deposit of TCS under GST by ECO to Government: –
The TCS amount collected by the ECO has to be remitted to the Government Treasury within 10 days after the end of the month in which the collection was made.
Eg: – If the TCS has been collected in the month of May, the amount has to be remitted into the Government Treasury on or before 10th June.
Filing of Monthly & Annual Statements by ECO: –
An electronic statement has to be filed by the ECO containing details of the outward supplies of goods and/ or services effected through it, including the supplies returned through it and the amount collected by it as TCS during the month within 10 days after the end of each month in which supplies are made. [Sub-section (4)]
Additionally, the ECO is also mandated to file an Annual Statement on or before 31st day of December following the end of the financial year. [Subsection (5)]
Rectification in Monthly Statement by ECO: –
If the ECO discovers any discrepancy on his own not being the result of any scrutiny, inspection or enforcement proceedings, he has to rectify the statement. However, the limit for rectification is earlier of the two: –
(i) Due date for filing statement for the month of September following the end of the financial year.
OR
(ii) Actual date of furnishing of relevant annual statement. Interest provisions are [Sub-section (6)]
Claim of Credit by Supplier: –
Supplier can claim credit of the TCS amount in his electronic cash ledger. This amount should reflect in the monthly statement filed by the e-commerce operator. [Sub-section (7)].
Matching of details of supplies: –
The details of the supplies, including the value of supplies, submitted by every operator in the statements will be matched with the details of supplies submitted by all such suppliers in their returns. [Sub-section (8)]
If there is any discrepancy in the value of supplies, the same would be communicated to both of them. If such discrepancy in value is not rectified within the given time, then such amount would be added to the output tax liability of such supplier succeeding the calendar month in which the discrepancy is communicated, where outward supplies furnished by operator is more than the value as shown by supplier.
The supplier will have to pay the differential amount of output tax along with interest from the date such tax was due till the date of its payment. [Subsections 9 To 11].
Notice to the Operator: –
An officer not below the rank of Deputy Commissioner can issue notice to an operator, asking him to furnish details relating to volume of the goods/services supplied, stock of goods lying in warehouses/godowns etc. [Sub-section (12)]
The operator is required to furnish such details within 15 working days. [Subsection (13)]
In case an operator fails to furnish the information, besides being liable for penal action under section 122, it shall also be liable for penalty up to 25,000. [Sub-section (14)]
Concepts relating to TCS Registration under GST: –
Section 24(x) of the CGST Act, 2017 makes it mandatory for every e-commerce operator to get registered under GST.
Similarly, section 24(ix) of the CGST Act, 2017 makes it mandatory for every person who supplies goods/services through an operator to get registered under GST.
TCS Statement under GST: –
The amount of tax collected by the operator is required to be deposited by the 10th of the following month, during which such collection is made.
The operator is also required to furnish a monthly statement in Form GSTR-8 by the 10th of the following month.
The operator is also required to file an Annual statement in prescribed form by the 31st of December following the end of every financial year.
The operator can rectify errors in the statements filed, if any, latest by the return to be filed for the month of September, following the end of every financial year.
The details furnished by the operator in GSTR-8 shall be made available electronically to each of the suppliers in Part C of FORM GSTR-2A on the common portal after the due date of filing of FORM GSTR-8.
Key Takeaways:
- Section 49 of the Central Goods and Services Tax Act, along with rules published by the Central Board of Excise and Customs (CBEC), govern the new payment procedures.
- TDS shall be paid within 10 days from the end of the month in which tax is deducted.
- TCS refers to the Tax which is collected by the Electronic Commerce Operator when a supplier supplies some goods or services through its portal and the payment for that supply is collected by the Electronic Commerce Operator (ECO).
References:
- www.taxguru.in
- Taxmann’s Indirect Taxes Law and Practice, V.S. Datey
