1. What is GST in India?

GST is known as the Goods and Services Tax. It is an indirect tax which has replaced many indirect taxes in India such as the excise duty, VAT, services tax, etc. The Goods and Service Tax Act was passed in the Parliament on 29th March 2017 and came into effect on 1st July 2017.

In other words ,Goods and Service Tax (GST) is levied on the supply of goods and services. Goods and Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that is levied on every value addition. GST is a single domestic indirect tax law for the entire country.

Before the Goods and Services Tax could be introduced, the structure of indirect tax levy in India was as follows:

Under the GST regime, the tax is levied at every point of sale. In the case of intra-state sales, Central GST and State GST are charged. All the inter-state sales are chargeable to the Integrated GST.

2. Objectives Of GST

1.      To achieve the ideology of ‘One Nation, One Tax’   
 

1.      To subsume a majority of the indirect taxes in India   

1.      To eliminate the cascading effect of taxes   
 

1.      To curb tax evasion   
 

1.      To increase the taxpayer base   
 

1.      Online procedures for ease of doing business   
 

1.      An improved logistics and distribution system   
 

1.      To promote competitive pricing and increase consumption   
 

3. What are the components of GST?

There are three taxes applicable under this system: CGST, SGST & IGST.

·         CGST: It is the tax collected by the Central Government on an intra-state sale (e.g., a transaction happening within Maharashtra)

·         SGST: It is the tax collected by the state government on an intra-state sale (e.g., a transaction happening within Maharashtra)

·         IGST: It is a tax collected by the Central Government for an inter-state sale (e.g., Maharashtra to Tamil Nadu)

4. Tax Laws before GST

In the earlier indirect tax regime, there were many indirect taxes levied by both the state and the centre. States mainly collected taxes in the form of Value Added Tax (VAT). Every state had a different set of rules and regulations.

Inter-state sale of goods was taxed by the centre. CST (Central State Tax) was applicable in case of inter-state sale of goods. The indirect taxes such as the entertainment tax, octroi and local tax were levied together by state and centre. These led to a lot of overlapping of taxes levied by both the state and the centre.

For example, when goods were manufactured and sold, excise duty was charged by the centre. Over and above the excise duty, VAT was also charged by the state. It led to a tax on tax effect, also known as the cascading effect of taxes.

The following is the list of indirect taxes in the pre-GST regime:

·         Central Excise Duty

·         Duties of Excise

·         Additional Duties of Excise

·         Additional Duties of Customs

·         Special Additional Duty of Customs

·         Cess

·         State VAT

·         Central Sales Tax

·         Purchase Tax

·         Luxury Tax

·         Entertainment Tax

·         Entry Tax

·         Taxes on advertisements

·         Taxes on lotteries, betting, and gambling

CGST, SGST, and IGST have replaced all the above taxes.

However, certain taxes such as the GST levied for the inter-state purchase at a concessional rate of 2% by the issue and utilisation of ‘Form C’ is still prevalent.

It applies to certain non-GST goods such as:

1.      Petroleum crude;

2.      High-speed diesel

3.      Motor spirit (commonly known as petrol);

4.      Natural gas;

5.      Aviation turbine fuel; and

6.      Alcoholic liquor for human consumption.

It applies to the following transactions only:

·         Resale

·         Use in manufacturing or processing

·         Use in certain sectors such as the telecommunication network, mining, the generation or distribution of electricity or any other power sector 

5. What are the New Compliances Under GST?

e-Way Bills

GST introduced a centralized system of waybills by the introduction of “E-way bills”. This system was launched on 1st April 2018 for inter-state movement of goods and on 15th April 2018 for intra-state movement of goods in a staggered manner.

Under the e-way bill system, manufacturers, traders and transporters can generate e-way bills for the goods transported from the place of its origin to its destination on a common portal with ease. Tax authorities are also benefited as this system has reduced time at check -posts and helps reduce tax evasion.

E-invoicing

The e-invoicing system was made applicable from 1st October 2020 for businesses with an annual aggregate turnover of more than Rs.500 crore in any preceding financial years (from 2017-18). Further, from 1st January 2021, this system was extended to those with an annual aggregate turnover of more than Rs.100 crore.

These businesses must obtain a unique invoice reference number for every business-to-business invoice by uploading on the GSTN’s invoice registration portal. The portal verifies the correctness and genuineness of the invoice. Thereafter, it authorises using the digital signature along with a QR code.

e-Invoicing allows interoperability of invoices and helps reduce data entry errors. It is designed to pass the invoice information directly from the IRP to the GST portal and the e-way bill portal. It will, therefore, eliminate the requirement for manual data entry while filing GSTR-1 and helps in the generation of e-way bills too.

GST Suvidha Provider (GSP) – An Overview

GST Suvidha Provider (GSP) is considered as an enabler or authorized intermediary for businesses to access GST portal services. It helps comply with the provisions of GST law through their GST Software applications and APIs, just like Cygnet GSP!

Who is a GST Suvidha Provider (GSP)?

GSP stands for GST Suvidha Provider. A GSP enables a GST taxpayer to comply with all the procedural provisions of the GST law through its web platform. Cygnet GSP, an online tax filing platform has been granted the status of GSP. A GSP provides innovative methods or means of an effective interactive platform for taxpayers to access GST portal services ranging from registration and invoicing to completion of GST return filing.

GSP – A Brainchild of Goods and Services Tax Network

GSP is a term coined by GSTN (Goods and Service Tax Network), the private non-government entity that owns and maintains the GST portal. It is in-line with the ‘Digital India’ initiative that advocates a paperless tax compliance regime that enables transparency and reliability in doing business across India.  

Areas addressed by GST Suvidha Providers

1.      Upload invoice data (B2B and large value B2C).

2.      Upload GSTR-1 (return containing supply data), which will be created based on invoice data and some other data provided by the taxpayer.

3.      GSTR-2A download and reconciliation with purchase data accounted on ERP.

4.      File GSTR-3B based on the GSTR-1 filed, purchase data on record and GSTR-2A information available.

5.      Similarly, there are other returns for other categories of taxpayers like casual taxpayer or composition taxpayers.

Meaning of GST Rates

GST rates refer to the percentage rates of tax imposed on the sale of goods or services under the CGST, SGST and IGST Acts. A business registered under the GST law must issue invoices with GST amounts charged on the value of supply.

The GST rates in CGST and SGST (For intra-state transactions) are approximately the same. Whereas, the GST rate in the case of IGST (For inter-state transactions) is approximately the sum total of CGST and SGST rate.

Types of GST Rates and GST Rate structure in India

The primary GST slabs for any regular taxpayers are presently pegged at 0% (nil-rated), 5%, 12%, 18% & 28%. There are a few lesser-used GST rates such as 3% and 0.25%.

Also, the composition taxable persons must pay GST at lower or nominal rates such as 1.5% or 5% or 6% on their turnover. There is a concept of TDS and TCS under GST as well, whose rates are 2% and 1% respectively.

These are the total GST rate of IGST for interstate supply or the addition of both CGST and SGST for intrastate supply. The GST rates shall be multiplied by the assessable value of the supply to arrive at the GST amounts in a tax invoice.

Further, the GST law levies cess in addition to the above GST rates on the sale of some items such as cigarettes, tobacco, aerated water, petrol, and motor vehicles, rates widely varying from 1% to 204%.

What are the GST rates in India 2023?

The year 2023 has begun with key changes in GST rates passed during the last week of December 2022. During its meetings, the GST Council also revised the GST rates of some key items across 2022. Some were done to correct the prevailing inverted tax structure, whereas a few were revised for revenue augmentation. The following sections cover the summarised details of changes to GST rates in India with the new GST rates 2023.

Goods under GST Slabs

5% Tax Slab

18% Tax slab

Services under GST Slabs

·         for restaurants serving alcohol, the tax bracket will be 18 per cent

·         education, healthcare are going to be exempted from GST

·         services on Non-AC restaurants will be 12%.

What are the GST rates applicable on goods and services?

0%, 5%, 12%, 18% or 28% are the GST rates that can be applicable to goods and services. 3% or 0.25% may be charged for certain supplies such as gold, diamond and precious stones.

What are the correct GST slabs on goods and services

The GST law defines and classifies goods and services under 5%, 12%, 18% and 28%. However, a few items attract a lower GST rate of 0.25% and 3%. These include gold, diamond, and precious stones.

What are the 3 types of GST?

Presently, there are types of GST – Central Goods and Services Tax (CGST), State Goods and Services Tax (SGST), and Integrated Goods and Services Tax (IGST). While a taxpayer must deposit CGST and SGST for all intrastate transactions, IGST is deposited for imports and interstate transactions.

Who must pay the GST rate?

The supplier of taxable goods and services should charge and collect GST at the specified GST rate from their buyer or customer. Such GST collected must be deposited with the government after availing of the eligible input tax credit on their purchases. It is referred to as the forward charge. In some cases, the GST is paid directly to the government by the buyer or customer on a reverse charge basis.

Is GST payable at the GST rate on all products and services?

No. GST need not be paid on certain items that are exempted from GST. Exempted products include nil-rated, Non-GST and exempted by notification. Further, there are zero-rated products when sold, GST paid, if any, is eligible for a refund.

Taxable Person under GST

A ‘taxable person’ under GST, is a person who carries on any business at any place in India and who is registered or required to be registered under the GST Act. Any person who engages in economic activity including trade and commerce is treated as a taxable person.

‘Person’ here includes individuals, HUF, company, firm, LLP, an AOP/ BOI, any corporation or Government company, body corporate incorporated under laws of foreign country, co-operative society, local authority, government, trust, artificial juridical person.

Who is Liable to get Registered under GST? 

GST registration is mandatory for-

·         Any business involved in the supply of goods whose turnover in a financial year exceeds Rs.40 lakhs for Normal Category states (Rs.20 lakhs for Special Category states)*

·         Any business involved in the supply of services whose turnover in a financial year exceeds Rs.20 lakhs for Normal Category states (Rs.10 lakhs for Special Category states)

·         Every person who is registered under an earlier law (i.e., Excise, VAT, Service Tax etc.)  needs to register under GST, too.

·         When a business which is registered has been transferred to someone/demerged, the transferee shall take registration with effect from the date of transfer.

·         A person making inter-state supplies

·         Casual taxable person (see below)

·         Non-Resident taxable person (see below)

·         Agents of a supplier

·         Those paying tax under the reverse charge mechanism

·         Input service distributor (see below)

·         e-Commerce operator or aggregator*

·         Person who supplies via e-commerce aggregator

·         Person supplying online information and database access or retrieval (OIDAR) services from a place outside India to a person in India, other than a registered taxable person

*Some Normal Category states have chosen to continue with the existing limit of Rs.20 lakh, and some Special Category states have opted for an increased limit of Rs.40 lakh.

**e-commerce sellers/aggregators need not register if total sales is less than Rs. 20 lakh. Notification No. 65/2017 – Central Tax dated 15th November 2017
 

Who is a Casual Taxable Person under GST?

A person who occasionally supplies goods and/or services in a territory where GST is applicable but he does not have a fixed place of business. Such a person will be treated as a casual taxable person as per GST. 

Example: A person who has a place of business in Bangalore supplies taxable consulting services in Pune where he has no place of business would be treated as a casual taxable person in Pune.

Who is an Input Service Distributor?

‘Input Service Distributor’ means an office of the supplier of goods/services which receives tax invoices on receipt of input services and issues tax invoices for the purpose of distributing the credit of CGST/SGST/IGST paid on the said services to your branch with the same PAN. (It must be a supplier of taxable goods /services having the same PAN as that of the office referred to above). 

Thus, only credit on ‘input services’ can be distributed and not on input goods or capital goods. This will be a new concept for assessees who are currently not registered as input service distributors. However, this facility is optional in nature.

Who is a composition taxpayer?

A composition taxpayer refers to those registered under the composition scheme who need not collect GST from his customers at normal rates. Instead, he can pay tax at a nominal rate or lower rates to the government on the basis of turnover or receipts on a quarterly basis while filing CMP-08.

There are certain conditions defined for such taxpayers. At the inception of GST, only suppliers of goods could opt into the composition scheme governed by Section 10 of the CGST Act with annual turnover upto Rs.1.5 crore. From 1st April 2019, service providers are also given an option to join a similar scheme. The annual aggregate turnover limit must be up to Rs.50 lakh.

Who is a QRMP taxpayer?

A registered person who is required to furnish a return in GSTR-3B, and who has an aggregate turnover of up to Rs.5 crore rupees in the preceding financial year, is eligible for the QRMP Scheme. Under the scheme, one can file GSTR-1 and GSTR-3B once in a quarter whereas make tax payment every month in form PMT-06. Further, if B2B sales invoices need to be uploaded on the GST portal monthly, then Invoice Furnishing Facility (IFF) can be used.

Types of GST Returns and Due dates

GSTR-1

GSTR-1 is the return to be furnished for reporting details of all outward supplies of goods and services made. In other words, it contains the invoices and debit-credit notes raised on the sales transactions for a tax period. GSTR-1 is to be filed by all normal taxpayers who are registered under GST, including casual taxable persons. 

Any amendments to sales invoices made, even pertaining to previous tax periods, must be reported in the GSTR-1 return by all the suppliers or sellers registered under GST. 

The filing frequency of GSTR-1 is currently as follows:
(a) Monthly, by 11th* of every month- If the business either has an annual aggregate turnover of more than Rs.5 crore or has not opted into the QRMP scheme.
(b) Quarterly, by 13th** of the month following every quarter- If the business has opted into the QRMP scheme.

*Till September 2018, the due date was the 10th of every month. 
**Till December 2020, was the end of the month succeeding the quarter.

GSTR-2A

GSTR-2A is a view-only dynamic GST return relevant for the recipient or buyer of goods and services. It contains the details of all inward supplies of goods and services i.e., purchases made from GST registered suppliers during a tax period. 

The data is auto-populated based on data filed by the corresponding suppliers in their GSTR-1 returns. Further, data filed in the Invoice Furnishing Facility (IFF) by the QRMP taxpayer, also get auto-filled. 

Since GSTR-2A is a read-only return, no action can be taken in it. However, it is referred by the buyers to claim an accurate Input Tax Credit (ITC) for every financial year, across multiple tax periods. In case any invoice is missing, the buyer can communicate with the seller to upload it in their GSTR-1 on a timely basis.

It was used frequently for claiming ITC for every tax period until August 2020. Thereafter, the buyers are required to refer to the GSTR-2B, a static return, to claim the input tax credit for every tax period. However, some taxpayers still find referring to the GSTR-2A beneficial at the time of filing the annual GST return.

GSTR-2B

The GSTR-2B is again a view-only static GST return important for the recipient or buyer of goods and services. It is available every month, starting in August 2020 and contains constant ITC data for a period whenever checked back. 

ITC details will be covered from the date of filing GSTR-1 for the preceding month (M-1) up to the date of filing GSTR-1 for the current month (M). The return is made available on the 12th of every month, giving sufficient time before filing GSTR-3B, where the ITC is declared.

The GSTR-2B provides the action to be taken against every invoice reported, such as to be reversed, ineligible, subject to reverse charge, references to the table numbers in GSTR-3B.

GSTR-3B

GSTR-3B is a monthly self-declaration to be filed, for furnishing summarised details of all outward supplies made, input tax credit claimed, tax liability ascertained and taxes paid. 

GSTR-3B is to be filed by all normal taxpayers registered under GST. The sales and input tax credit details must be reconciled with GSTR-1 and GSTR-2B every tax period before filing GSTR-3B. GST reconciliation is crucial to identify mismatches in data, that may lead to GST notices in future or suspension of GST registration as well. 

The filing frequency of GSTR-3B is currently as follows:
(a) Monthly, 20th* of the succeeding month- For taxpayers with an aggregate turnover in the previous financial year of more than Rs.5 crore or have been otherwise eligible but still opted out of the QRMP scheme.
(b) Quarterly, 22nd of the month following the quarter for ‘X’** category of States and 24th of the month following the quarter for ‘Y’** category of States- For the taxpayers with aggregate turnover equal to or below Rs.5 crore, eligible and remain opted into the QRMP scheme.

* Effective from January 2021 tax period onwards.

** ‘X’ category States/UT – Chhattisgarh, Madhya Pradesh, Gujarat, Maharashtra, Karnataka, Goa, Kerala, Tamil Nadu, Telangana or Andhra Pradesh or the Union territories of Daman and Diu and Dadra and Nagar Haveli, Puducherry, Andaman and Nicobar Islands and Lakshadweep.
‘Y’ category States/UT- Himachal Pradesh, Punjab, Uttarakhand, Haryana, Rajasthan, Uttar Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal, Jharkhand or Odisha or the Union Territories of Jammu and Kashmir, Ladakh, Chandigarh and New Delhi.

GSTR-4

GSTR-4 is the annual return that was to be filed by the composition taxable persons under GST, by 30th April of the year following the relevant financial year. It has replaced the erstwhile GSTR-9A (annual return) from FY 2019-20 onwards.

Prior to FY 2019-20, this return had to be filed on a quarterly basis. Thereafter, a simple challan in form CMP-08 filed by 18th of the month succeeding every quarter replaced it. 

The composition scheme is a system in which taxpayers dealing with goods and having a turnover up to Rs.1.5 crores can opt into and pay taxes at a fixed rate on the turnover declared. Further, the service providers can avail a similar scheme as per CGST (Rate) Notification 2/2019 dated 7th March 2019 if their turnover is up to Rs.50 lakh.

GSTR-5

GSTR-5 is the return to be filed by non-resident foreign taxpayers, who are registered under GST and carry out business transactions in India. The return contains details of all outward supplies made, inward supplies received, credit/debit notes, tax liability and taxes paid. 

The GSTR-5 return is to be filed monthly by the 20th of each month under GSTIN that the taxpayer is registered in India.

GSTR-6

GSTR-6 is a monthly return to be filed by an Input Service Distributor (ISD). It contains details of input tax credit received and distributed by the ISD. It will further contain details of all documents issued for the distribution of input credit and the manner of distribution.

The due date to file GSTR-6 is the 13th of every month.

GSTR-7

GSTR-7 is a monthly return to be filed by persons required to deduct TDS (Tax deducted at source) under GST. This return will contain details of TDS deducted, the TDS liability payable and paid and TDS refund claimed if any. 

The due date to file GSTR-7 is the 10th of every month.

GSTR-8

GSTR-8 is a monthly return to be filed by e-commerce operators registered under the GST who are required to collect tax at source (TCS). It contains details of all supplies made through the e-commerce platform, and the TCS collected on the same. 

The GSTR-8 return is to be filed on a monthly basis by the 10th of every month.

GSTR-9

GSTR-9 is the annual return to be filed by taxpayers registered under GST. It is due by 31st December of the year following the relevant financial year, as per the GST law. It contains the details of all outward supplies made, inward supplies received during the relevant financial year under different tax heads i.e. CGST, SGST & IGST and a summary value of supplies reported under every HSN code, along with details of taxes payable and paid. 

It is a consolidation of all the monthly or quarterly returns (GSTR-1, GSTR-2A, GSTR-3B) filed during that financial year. GSTR-9 is required to be filed by all taxpayers registered under GST. 

However, there are few exceptions such as taxpayers who have opted for the composition scheme, casual taxable persons, input service distributors, non-resident taxable persons and persons paying TDS under section 51 of the CGST Act. 

Note: As per the CGST notification no. 47/2019, later amended, the annual return under GST for taxpayers having an aggregate turnover that does not exceed Rs.2 crore has been made optional for FY 2017-18, FY 2018-19 and FY 2019-20.

GSTR-9C

GSTR-9C is a self-certified reconciliation statement between the books of accounts and the GSTR-9 that is to be filed by every registered person under GST whose turnover during a financial year exceeds the prescribed limit of Rs.5 crore. The deadline to file this statement is the same as the due date prescribed for GSTR-9, i.e., 31st December of the year following the relevant financial year.

GSTR-9C is to be filed for every GSTIN, hence, one PAN can have multiple GSTR-9C forms being filed. 

Late filing of GST Returns

Return filing is mandatory under GST. Even if there is no transaction, you must file a Nil return.

There are few points to note:

·         You cannot file a return if you do not file the previous month/quarter’s return.

·         Hence, late filing of GST return will have a cascading effect leading to heavy fines and penalty.

·         The late filing fee of the GSTR-1 is populated in the liability ledger of GSTR-3B filed immediately after such delay.

Interest and Late fee to be paid

·         Interest is 18% per annum. It has to be calculated by the taxpayer on the amount of outstanding tax to be paid. It shall be calculated on the net tax liability identified in the ledger at the time of payment. The time period will be from the next day of filing due date till the actual date of payment.

·         As per the CGST Act, the late fee is Rs.100 per day per Act. So it is Rs.100 under CGST & Rs.100 under SGST. The total shall be Rs.200/day. However, there is a maximum levy of Rs.5,000 per Act. There is no late fee separately prescribed under the IGST Act. For GSTR-9/9C, the maximum late fee per Act is capped at 0.25% of turnover in the state or Union Territory. Please note that the amount of late fees can be reduced due to relief schemes provided by the government. Please check the individual return pages to stay up to date on the latest late fees.

·         To learn more about late fees charged across the GST Return periods, read our article on late fees under GST.

GSTR-1 – Return Filing, Format, Eligibility & Rules

GSTR-1 is a monthly/quarterly return that summarises all sales (outward supplies) of a taxpayer. You must make sure that a valid GSTIN is filled while entering sales invoice details. Try our GST search tool to be 100% accurate. 

What is GSTR-1?

GSTR-1 is a monthly or quarterly return that should be filed by every registered GST taxpayer, except a few as given in further sections. It contains details of all outward supplies i.e sales. The return has a total of 13 sections, listed down as follows:
 

·         Tables 1, 2 & 3: GSTIN, legal and trade names, and aggregate turnover in the previous year

·         Table 4: Taxable outward supplies to registered persons (including UIN-holders) excluding zero-rated supplies and deemed exports

·         Table 5: Taxable outward inter-state supplies to unregistered persons where the invoice value is more than Rs.2.5 lakh

·         Table 6: Zero-rated supplies as well as deemed exports

·         Table 7: Taxable supplies to unregistered persons other than the supplies covered in table 5 (net of debit notes and credit notes)

·         Table 8: Outward supplies that are nil rated, exempted and non-GST in nature

·         Table 9: Amendments to outward supplies that are taxable and reported in table 4,5 & 6 of the earlier tax periods’ GSTR-1 return (including debit notes, credit notes, refund vouchers issued during the current period)

·         Table 10: Debit note and credit note issued to unregistered person

·         Table 11: Details of advances received or adjusted in the current tax period or amendments of the information reported in the earlier tax period.

·         Table 12: Outward supplies summary based on HSN codes

·         Table 13: Documents issued during the period.

·         Table 14: For suppliers - Reporting ECO operators' GSTIN-wise sales through e-commerce operators on which e-commerce operators are liable to collect TCS u/s 52 or liable to pay tax u/s 9(5) of the CGST Act

·         Table 14A: For suppliers - Amendments to Table 14

·         Table 15: For e-commerce operators - Reporting both B2B and B2C, suppliers' GSTIN-wise sales through e-commerce operators on which e-commerce operator must deposit TCS u/s 9(5) of the CGST Act

·         Table 15A: For e-commerce operators -
Table 15A I - Amendments to Table 15 for sales to GST registered persons (B2B)
Table 15A II - Amendments to Table 15 for sales to unregistered persons (B2C)

When is GSTR-1 due?

The due dates for GSTR-1 are based on your aggregate turnover. Businesses with sales of up to Rs.5 crore have an option to file quarterly returns under the QRMP scheme and are due by the 13th of the month following the relevant quarter. 
 

Whereas, those taxpayers who do not opt for the QRMP scheme or have a total turnover above Rs.5 crore must file the return every month on or before the 11th of the next month.

Who should file GSTR-1?

Every registered person is required to file GSTR-1 irrespective of whether there are any transactions during the period or not. For nil GSTR-1 filers, there is a facility to file through an SMS that began from the 1st week of July 2020. The following registered persons are not required to file GSTR-1:
 

·         Input Service Distributors

·         Composition Dealers

·         Suppliers of online information and database access or retrieval services (OIDAR), who have to pay tax themselves (as per Section 14 of the IGST Act)

·         Non-resident taxable person

·         Taxpayer liable to collect TCS

·         Taxpayer liable to deduct TDS

How to revise GSTR-1?

A return once filed cannot be revised under GST. Any mistake made in the return can be rectified in the GSTR-1 filed for the next period (month/quarter). It means that if a mistake is made in GSTR-1 of December 2022, rectification for the same can be made in the GSTR-1 of January 2023 or subsequent months.

Frequently Asked Questions on GSTR-1

Should I file GSTR-1 even if there are no sales in a month?

Yes, filing GSTR 1 is mandatory even if there were no sales during a month/quarter. In this case, you have to file Nil GSTR-1.

Can I upload an invoice only while filing the return?

You can upload invoices anytime. It is highly advised that you upload invoices at regular intervals during the month to avoid bulk upload at the time of filing a return. This is because bulk upload takes a lot of time.
 

Can I change a bill/ invoice uploaded on the GST portal?

After uploading bills you can make changes multiple times. There is no restriction on changing invoices after uploading them. But you can change an invoice only before submitting a return. Once submitted, the numbers are frozen.
 

Can I file GSTR-1 after the due date?

Yes, you can file the GSTR-1 even after the due date. However, you have to pay a late fee based on the delayed number of days.

What is the difference between GSTR-1 & GSTR-3B?

You have to report all the sales detail in GSTR-1, whereas you have to report summarised figures of sales, ITC claimed, and net tax payable in GSTR-3B return.

Can I file GSTR-1 even after filing GSTR-3B?

No, with effect from 1st January 2022, you have to file GSTR-1 before filing the GSTR-3B return.
 

Reporting of credit note/debit note under the existing return filing system

The reporting of credit/debit notes on the GST portal was made in GSTR-1. It can be classified as follows:

·         Credit note/debit note issued to unregistered persons (B2C supplies): It must be declared in Table ‘9B – Credit/Debit Notes (Unregistered)’. The details required are as follows:

·         Debit/credit note number 

·         Original invoice number 

·         Original invoice date 

·         Type (whether debit note, credit note or refund voucher), 

·         Value and also whether the supply is eligible to be taxed at a differential percentage of the existing rate of tax, as notified by the government.

·         Credit note/debit note issued to registered persons (B2B supplies): This must be reported in Table ‘9B – Credit/debit notes (Registered)’. The details required are as follows: 

·         GSTIN of receiver 

·         Debit/credit Note No. 

·         Date 

·         Original invoice number (in respect of which credit/debit note is being issued) 

·         Original invoice date

·         Type (whether debit note, credit note or refund voucher) 

·         Value 

·         Supply type (whether interstate or intrastate) and also if the supply is eligible to be taxed at a differential percentage of the existing rate of tax, as notified by the government.

Credit note/debit note issued to unregistered persons (B2C supplies):

The taxpayer must report these in Table ‘3A: Supplies made to consumers and unregistered persons (net of debit/credit notes)’. It is evidently mentioned in the table that supplies are to be declared net of debit/credit notes. 

Since it relates to B2C supplies, the declaration is not required to be made at the invoice level. The particulars to be furnished in this table are the place of supply, tax rate, taxable value and tax amount under each head -IGST/CGST/SGST/UTGST/Cess.

Credit note/debit note issued to registered persons (B2B supplies):

These details must be furnished in Table ‘3B: Supplies made to registered persons (other than those attracting reverse charge) (including edit/amendment)’. The supplies are not to be declared on a net basis since the declaration is made at the invoice level. 

The particulars to be furnished in this table are GSTIN/UIN, place of supply, document details like type, CDN number, date and value, HSN Code, tax rate, taxable value, tax amount under each head -IGST/CGST/SGST/ UTGST/Cess. In order to furnish a credit/debit note, the same has to be selected from the ‘Document Type’ drop-down list. 

In the existing return filing system, there is a separate table for declaration of credit/debit notes to registered persons but under the new proposed new system, such details can be declared within the same table used to declare outward supplies.

Supplies to unregistered persons (B2C supplies):

The details of outward supply provided in Table 3A need to be net of credit/debit notes. There is no invoice level declaration in this table, hence individual credit notes need not be declared separately. The annexure allows negative figures in case the value of credit notes exceeds the value of outward supply made, in the given tax period. 

The existing system of filing requires the credit/debit notes to be linked against the original invoices that need to be rectified. However, the proposed new system does not require such linking of original invoices to be made within the return.  

Supplies to registered persons (B2B supplies):

The details of outward supply provided in Table 3B are at the invoice level and hence each credit/debit note would also have to be provided individually, with all the requisite details. Even here, there is no requirement of linking the credit/debit notes to the original invoices. 

Illustration for reporting credit notes and debit notes

Mr A supplied certain goods to Mr B (intra-state supply) on 1st May 2019 with a taxable value of Rs.10,000 and GST charged at 18% (9% CGST and 9% SGST) thereon.  

An extract of the invoice is produced below: 

However, on 1st August 2019, Mr B finds out that goods worth Rs.2,000 (excluding GST) were defective and requests Mr A to issue a credit note in respect to the defective goods. Mr A immediately verifies the same and issues a credit note for Rs.2,000 (CGST @ 9% = Rs.180 and SGST @9% = Rs.180). 

Assuming that both Mr A and Mr B are registered, Mr A will make the following declaration in ‘Table 3B’ of Form GST ANX-1 for the month of September: 

3B: Supplies made to registered persons (other than those attracting reverse charge) (including edit/amendment)

What is GSTR-2A?

When a seller files his GSTR-1, the information is captured in GSTR-2A. GSTR-2A is a purchase-related tax return that is automatically generated for each business by the GST portal. It takes information from every seller’s GSTR-1 for a particular buyer registered under GST. The return is dynamic in nature and can vary with changes or revisions done by sellers in later tax periods. So, GSTR-2B return was introduced.

 What is GSTR-2B? 

GSTR-2B is a new static auto-drafted statement for regular taxpayers. It is available month wise and was introduced on the GST portal from the August 2020 tax period onwards. The details of ITC in this return does not get altered for a particular tax period, even if the seller makes revisions. Hence, the taxpayers can refer to the ITC appearing in this return for eligible ITC claims in GSTR-3B for a tax period.

Contents of the form GSTR-2

There are 13 headings in GSTR-2 format prescribed by the government.  Each heading is explained here along with the details required to be reported under GSTR-2. 
 1.GSTIN – Each taxpayer will be allotted a state-wise PAN-based 15-digit Goods and Services Taxpayer Identification Number (GSTIN). A format of proposed GSTIN has been shown in the image below. GSTIN of the taxpayer will be auto-populated at the time of return filing.

2.Name of the Taxpayer – Name of the taxpayer including legal and trade name (will be auto-populated)Month, Year – Mention the relevant month and year for which GSTR-2 is being filed.

3.Inward Supplies from Registered Taxable Person – Most of the purchases from a registered person will be auto-populated here from GSTR-1 filed by the seller. It will have all details of type, rate and amount of GST, whether ITC is eligible, amount of ITC. However, it will not contain purchases under reverse charge

Certain transactions may not be auto-populated because-

·         Seller did not file GSTR-1

·         Seller filed GSTR-1 but he missed the transaction

In either case, the buyer can manually add these transactions. The seller will get a notification to accept this addition/modification in his GSTR-1A return. If the supply is received in more than one lot, the invoice must be reported in the return of the month in which the last lot is received and recorded in books of accounts.
 

4.Inward supplies on which tax is to be paid on reverse charge –

Certain goods and services attract reverse charge, i.e., the buyer is liable to pay GST. A registered dealer purchasing more than Rs. 5,000 per day from an unregistered dealer is liable to pay reverse charge. All purchases on which reverse charge applies, will be reported in this part. 
 

4A.  Under this head, all purchases on which reverse charge specifically applies by law must be mentioned. For example, purchasing cashew nuts from an agriculturist. 4B. This head will list the purchases from unregistered dealers which exceed Rs. 5,000 per day from an unregistered dealer 4C. Under this head, reverse charge GST paid on import of service will be reported.

5.Inputs/Capital goods received from Overseas or from SEZ units on a Bill of Entry –

Any kind of import of inputs (items used to manufacture finished goods) or capital goods received against a Bill of Entry must be reported under this head. Goods received from SEZ are also reported here.

·         5A. Imports: Any kind of import of inputs (items used to manufacture finished goods) or capital goods received against a Bill of Entry will be reported here. Details of bills of entry, along with 6-digit port codes and 7-digit bill numbers must be mentioned.

·         5B. Received from SEZ: Inputs or capital goods received from sellers in a SEZ will be reported here. 

6.Amendments to details of inward supplies furnished in returns for earlier tax periods in Tables 3, 4 and 5 [including debit notes/credit notes issued and their subsequent amendments] –

A taxpayer cannot revise any GST return once it is filed. Revision is possible only in the next month’s return under this heading. The taxpayer can amend any detail of purchases of goods/services in earlier months. This information can be filled manually. Subsequently, the seller will also get a notification regarding this modification. The seller needs to accept this change in his GSTR-1A return. 
 

6A. This head will contain all revisions of input goods/services (except imports) 
 

6B. Any change in amount/tax calculated on imported goods and goods from SEZ can be made under this heading. Here, the taxpayer must mention the changes made in the bill of Entry / Import Report. 
 

6C. The taxpayer must report all debit and credit notes issued with respect to purchases. Any debit/credit note issued under reverse charge mechanism will get auto-populated here from counter-party GSTR-1 and other applicable returns (eg. GSTR-5 filed by NR). 

6D. Any changes in debit /credit note of previous months will be reported under this heading.

7.Supplies received from composition taxable person and other exempt/Nil rated/Non-GST supplies received –

This head will include purchases from composition dealers and other exempt/nil/non-GST supplies. Non-GST supplies include items like petrol, diesel which are not covered under GST. Also, both inter-state and intra-state supplies need to be reported here.

8.ISD credit received –

Details of the input tax credit received from a registered Input Service Distributor (ISD) (usually a head office which has transferred its ITC to all its branches). This data will be auto-populated from GSTR-6 filed by ISD.

9.TDS and TCS Credit received –

TDS Credit Received – This section will only be applicable in case you engage in specified contracts with specified persons (usually government bodies). The receiver (government) will deduct a certain percentage of transaction value as Tax Deduction at Source. All information will get auto-populated here from GSTR-7 filed by the deductor. 
 

TCS Credit Received – This heading is applicable for only online sellers registered with e-commerce operator. E-commerce operator is required to collect tax at source at the time of making payment to such sellers. This information will again be auto-populated from GSTR-8 of e-commerce operators. Please read our Impact Analysis on E-commerce marketplace sellers for more information.
 

10.Consolidated Statement of Advances paid/Advance adjusted on account of receipt of supply –

Any advance payment made during the month will appear here. If you paid advance tax on goods or services received during an earlier tax period, but only received the invoices this month, declare the details here. Advance receipts issued under reverse charge are also covered here. 

Normally the seller issues an advance receipt when he receives any advance payment. In case of purchases attracting reverse charge, the buyer must issue the advance receipt if he pays in advance. 
 

11.Input Tax Credit Reversal / Reclaim –

ITC can be availed only on goods and services for business purposes. If they are used for non-business (personal) purposes, or for making exempt supplies ITC cannot be claimed. In this heading, the taxpayer must fill in details of ITC that cannot be claimed during the month due to various ITC rules.  
 

11A. This head will cover all input tax reversal for the current month. It will also include ITC reversal on account of exempt and personal supplies. 

a. Amount in terms of rule 37(2)– ITC will be reversed for invoices which were not paid within 180 days of issue.

b. Amount in terms of rule 39(1)(j)(ii)– This is for ISDs. If a credit note was issued by the seller to the HO then the ITC subsequently reduced will be reversed.

c. Amount in terms of rule 42(1)(m)– This is for businesses which use inputs for both business and non-business (personal) purposes. ITC used in the portion of input goods/services used for personal purpose must be reversed proportionately.

d. Amount in terms of rule 43(1)(h)– This is similar to above except that it concerns capital goods.

e. Amount in terms of rule 42 (2)(a)– This is calculated after the annual return is furnished. If total ITC on inputs of exempted/non-business purpose is more than the ITC actually reversed during the year then the difference amount will be added to output liability. Interest will be applicable.

f. Amount in terms of rule 42(2)(b)– This is the opposite of the above. If total ITC on inputs of exempted/non-business purpose is less than the ITC actually reversed during the year then the difference amount can be reclaimed as ITC.

11B. The taxpayer can manually amend any details of ITC under 11A of earlier months. He will select the appropriate information from a drop-down menu.

12.Addition and reduction of amount of output tax for mismatch and other reasons –

This section will capture any additional tax liability that can arise due to the corrections made to the GSTR-3 of the previous month.

a) ITC claimed on mismatched/duplication of invoices/debit notes: In case mismatch of invoices, there may be double claiming of ITC. The excess ITC claimed from duplicate purchase invoices will be reversed and added to the tax liability.

b) Tax liability on mismatched credit notes: Incorrect credit notes issued by the taxpayer will also result in incorrect ITC. Extra ITC claimed due to mismatch will now be added to your tax liability.

c) Reclaim on account of rectification of mismatched invoices/debit notes: This is the opposite of point (a). In this case, the mismatch has led to claiming lower ITC. You are entitled to more ITC and so the additional amount will be reduced from the output tax liability.

d) Reclaim on account of rectification of mismatched credit note (Reduce): This is opposite to (b), i.e., lower ITC has been claimed and will work in the same way as (c).

e) Negative tax liability from previous tax periods:This is due to excess tax paid during the previous months and will be reduced from output tax liability of this month.

f) Tax paid in advance in earlier tax periods and adjusted with tax on supplies made in the current tax period (Reduce): This refers to tax paid along with advance payments in earlier months for supplies received during this month.

13.HSN summary of inward supplies – This section requires a registered dealer to provide HSN wise summary of goods purchased. It will be entered by the taxpayer.Finally, sign off with a declaration that all information has been declared and is correct.
 

What is GSTR 2A?

GSTR 2A is a purchase-related dynamic tax return that is automatically generated for each business by the GST portal. When a seller files his GSTR-1, the information is captured in GSTR 2A. It takes the information of goods and/or services that have been purchased in a given month from the seller’s GSTR-1. As a GST registered buyer, you may refer to the GSTR-2A for input tax credit details while filing GSTR-3B and GSTR-9. However, for GSTR-3B preparation since August 2020, taxpayers must refer to GSTR-2B which is a static version of GSTR-2A.

GSTR 2A will be auto-populated from the following returns of the sellers/counterparty:

How is GSTR 2A different from GSTR-2B?

GSTR 2A is an auto-generated read-only document that is for information purposes only. The following table explains the points of differences between GSTR-2B and GSTR-2A:

How to file GSTR-2A?

You don’t have to file GSTR-2A. GSTR-2A is a read-only document with a list of all of the invoices from the various sellers during the month. You can view and also download a copy of it.

Details of GSTR-2A

There are 7 headings in GSTR-2A format prescribed by the government.   

We have explained each heading along with the details required to be reported under GSTR-2A.

1.      GSTIN – GSTIN of the dealer will reflect here.

2.      Name of the Taxpayer – Name of the taxpayer including legal and trade name

Month, Year – The relevant month and year for which GSTR 2A is being filed will be mentioned here.

GSTR-3B : Return Filing, Format, Eligibility, Rules, Due Dates

GSTR-3B is a self-declared summary GST return filed every month (quarterly for the QRMP scheme). Taxpayers need to report the summary figures of sales, ITC claimed, and net tax payable in GSTR-3B.

·         A separate GSTR-3B must be filed for every GSTIN

·         The GST liability must be paid on or before the date of filing GSTR-3B, earlier of its due date

·         The GSTR-3B once filed cannot be revised

·         Even in case of a zero liability, GSTR-3B must be compulsorily filed

File GSTR-3B Now

Who should file GSTR 3B?

Every person who is registered under GST must file GSTR-3B.

However, the following registrants do not have to file GSTR-3B

·         Taxpayers registered under the Composition Scheme

·         Input service distributors

·         Non-resident suppliers of OIDAR service

·         Non-resident taxable persons

Late Fee & Penalty

A late fee is charged for filing GSTR-3B of a tax period after the due date. It is levied as follows:

·         Rs. 50 per day of delay

·         Rs. 20 per day of delay for taxpayers having nil tax liability for the month

In case the GST dues are not paid within the due date, interest at 18% per annum is payable on the amount of outstanding tax to be paid.

Due Dates for GSTR-3B Filing

·         Up to December 2019: The due date is 20th of the subsequent month

·         January 2020 onwards: The due dates have been staggered (as provided in the image)*

·         Taxpayers opting for the QRMP scheme from 1st January 2021: The due date is 22nd or 24th of the month following every quarter, as per the State/UT of the principal place of business (list of States/UT given in the image).

*To know about any due date extensions for GSTR-3B, visit our page on GST Calendar

The following are essential points to note:

·         Taxpayers must ensure to pay taxes and file GSTR-3B within the deadline.

·         The late filing of GSTR-3B attracts a late fee and interest at 18% per annum.

·         In case the tax was paid within the due date but the GSTR-3B was filed after the deadline, both late fees and interest will apply.

·         Taxpayers (including those not opting for the QRMP Scheme) filing quarterly GSTR-1 returns must still pay tax and file GSTR-3B every month.

GSTR-3B vs GSTR-2A & GSTR-2B: Comparison

Reconciliation of GSTR-2A (real-time update of ITC) and GSTR-2B (ITC statement for the month) with GSTR-3B is needed to:

·         Avoid notices due to excess input tax credit claims in GSTR-3B

·         Be informed if any genuine input tax credit is missed out on

·         Nudge the supplier to upload the invoice details in the GSTR-1, if not uploaded

·         Stay GST compliant and improve the GST compliance rating!

GSTR-3B vs GSTR-1: Comparison

Reconciliation of GSTR-1 with GSTR-3B is needed to:

·         Avoid interest & penalties due to the short payment of tax

·         Know if any invoice is missed out on or duplicated

·         Allow the recipient to claim an accurate input tax credit based on his GSTR-2A & GSTR-2B

·         Stay GST compliant and improve the GST compliance rating!

FAQs on GSTR-3B

I have no sales or purchase in a month. Should I still file GSTR-3B?

Yes, GSTR-3B has to be filed by every registered person even if there are no transactions in a month.

Should I provide invoice-wise details on the return?

Only consolidated numbers are required in GSTR-3B. Invoice-wise breakup is not required.

What is the difference between GSTR-1 & GSTR-3B?

You have to report all the sales detail in GSTR-1, whereas you have to report summarised figures of sales, ITC claimed, and net tax payable in GSTR-3B return.

What is the difference between GSTR-3 & GSTR-3B?

Initially, the government planned to implement the GSTR-3 return as an auto-populated return based on GSTR-1 & GSTR-2 data. However, the government kept GSTR-3 on hold due to implementation issues and replaced it with GSTR-3B, a self-declared summary return.

I have 2 GST Identification numbers. One in Delhi and the other in Assam. Can I file 1 GSTR-3B for both registrations?

No. GSTR-3B has to be filed for every GSTIN separately. The returns cannot be clubbed.

Can I file the GSTR-3B return using the Cygnet GSP GST Software?

You can prepare and file GSTR-3B with EVC and DSC on the Cygnet GSP GST Software, without going to any other portal. If you are a Tally user, you can import data from Tally into Cygnet GSP with a single click through Tally Connector, to prepare and file GSTR-3B easily.

Will there be any invoice matching in GSTR-3B?

Invoice matching is not done in GSTR-3B. This is a summarised self-declaration return.

Exemptions Under GST – Goods

Understanding the taxability also involves knowing whether the item is exempt or not under GST. Due to the scope of taxable supplies being widened under GST, exemptions under GST have clearly been defined. Not just knowing the exemption list, but also understanding the implication of an item being exempt is important as certain conditions are attached to it like reversing the ITC.

Also, what can be nil-rated today may become charged a higher tax rate in the future. Hence, clearly demarking the various terms such as Nil Rated, Exempt, Zero-rated and Non-GST supplies under GST is important. Read through and get the complete list of all the GST exemptions notified on Goods at a click of a button!.

Also, click here to view the complete list of exempted services under GST.

What is Exempt Supply

Exempt supplies comprise the following three types of supplies:

·         Supplies taxable at a ‘NIL’ rate of tax* (0% tax);

·         Supplies that are wholly or partially exempted from CGST or IGST, by way of a notification amending Section 11 of CGST Act or Section 6 of IGST Act;

·         Non-taxable supplies as defined under Section 2(78) – supplies that are not taxable under the Act (For Example Alcoholic liquor for human consumption.

Tax need not be paid on these supplies. Input tax credit attributable to exempt supplies will not be available for utilization/setoff. 

*Zero-rated supplies such as exports would not be treated as supplies taxable at ‘NIL’ rate of tax;

Central or the State Governments are empowered to grant exemptions from GST. The conditions for granting an exemption are:

·         The exemption should be in the public interest

·         By way of issue of notification

·         Must be recommended by the GST Council

·         Absolute exemption or conditional exemption may be for any goods and/or services of any specified description.

·         Exemption by way of a special order (not notification) may be granted under exceptional circumstances.

·         The registered person supplying the goods and/or services is not entitled to collect tax higher than the effective rate, where the supply enjoys an absolute exemption.

What is a non-taxable supply?

“Non-taxable supply” means a supply of goods or services or both which is not leviable to tax under the CGST Act or under the IGST Act. A transaction must be a ‘supply’ as defined under the GST law to qualify as a non-taxable supply under the GST.

Note: Only those supplies that are excluded from the scope of taxation under GST are covered by this definition – i.e., alcoholic liquor for human consumption, articles listed in section 9(2) or in schedule III.

It must also be noted that the following items are not out of the scope of GST. However, the GST rate has not yet been announced or notified to them.

·         petroleum crude

·         high-speed diesel

·         motor spirit (commonly known as petrol)

·         natural gas and

·         aviation turbine fuel

Difference between Exempt, Nil Rated, Zero Rated and Non-GST supplies

All about Reverse Charge Mechanism (RCM) under GST

Reverse charge is a mechanism where the recipient of the goods or services is liable to pay Goods and Services Tax (GST) instead of the supplier.

What is Reverse Charge Mechanism?

Typically, the supplier of goods or services pays the tax on supply. Under the reverse charge mechanism, the recipient of goods or services becomes liable to pay the tax, i.e., the chargeability gets reversed.

The objective of shifting the burden of GST payments to the recipient is to widen the scope of levy of tax on various unorganized sectors, to exempt specific classes of suppliers, and to tax the import of services (since the supplier is based outside India).

Only certain types of business entities are subject to the reverse charge mechanism. Find out the business constitution of any GST number using the GST search tool.

Frequently Asked Questions

What happens if the receiver of goods or services is required to pay tax under reverse charge but is not a registered dealer?

All taxpayers required to pay tax under reverse charge have to register for GST, and the threshold of Rs.20 lakh or Rs.40 lakh, as the case may be, does not apply to them.   
 

Is Input Tax Credit (ITC) allowed under reverse charge?

Tax paid on a reverse charge basis will be available for ITC if such goods or services are used, or will be used, for business. The recipient, i.e., who pays reverse tax, can avail it as ITC.   
 

What if an Input Service Distributor (ISD) receives supplies liable to reverse charge?

An ISD cannot make purchases liable to reverse charge. If the ISD wants to procure such supplies and take the reverse charge paid as ITC, the ISD should register as a regular taxpayer.   
 

When can one claim ITC of tax paid under RCM?

The person who paid tax under RCM in a month can claim it as ITC in the subsequent month.   

Input Tax Credit (ITC) under GST

One of the fundamental features of GST is the seamless flow of input credit across the chain (from the manufacture of goods till it is consumed) and across the country.

What is input tax credit?

Input credit means at the time of paying tax on output, you can reduce the tax you have already paid on inputs and pay the balance amount.

Here’s how:

When you buy a product/service from a registered dealer you pay taxes on the purchase. On selling, you collect the tax. You adjust the taxes paid at the time of purchase with the amount of output tax (tax on sales) and balance liability of tax (tax on sales minus tax on purchase) has to be paid to the government. This mechanism is called utilization of input tax credit.

For example- you are a manufacturer: a. Tax payable on output (FINAL PRODUCT) is Rs 450 b. Tax paid on input (PURCHASES) is Rs 300 c. You can claim INPUT CREDIT of Rs 300 and you only need to deposit Rs 150 in taxes.

Who can claim ITC?

ITC can be claimed by a person registered under GST only if he fulfils ALL the conditions as prescribed.

a. The dealer should be in possession of tax invoice

b. The said goods/services have been received

c. Returns have been filed.

d. The tax charged has been paid to the government by the supplier.

e. When goods are received in installments ITC can be claimed only when the last lot is received.

f. No ITC will be allowed if depreciation has been claimed on tax component of a capital good

A person registered under composition scheme in GST cannot claim ITC.

What can be claimed as ITC?

ITC can be claimed only for business purposes. ITC will not be available for goods or services exclusively used for: a. Personal use b. Exempt supplies c. Supplies for which ITC is specifically not available

How to claim ITC?

All regular taxpayers must report the amount of input tax credit(ITC) in their monthly GST returns of Form GSTR-3B. The table 4 requires the summary figure of eligible ITC, Ineligible ITC and ITC reversed during the tax period. The format of the Table 4 is given below: A taxpayer can claim ITC on a provisional basis in the GSTR-3B to an extent of 20% of the eligible ITC reported by suppliers in the auto-generated GSTR-2A return. Hence, a taxpayer should cross-check the GSTR-2A figure before proceeding to file GSTR-3B. A taxpayer could have claimed any amount of provisional ITC until 9 October 2019. But, the CBIC has notified that from 9 October 2019, a taxpayer can only claim not more than 20% of the eligible ITC available in the GSTR-2A as provisional ITC. This means taht the amount of ITC reported in the GSTR-3B from 9 October 2019 will be the total of the actual ITC in GSTR-2A and the provisional ITC being 20% of the actual eligible ITC in the GSTR-2A. Hence, matching of the purchase register or expense ledger with the GSTR-2A becomes crucial.

Reconciliation of ITC

ITC claimed by the person has to match with the details specified by his supplier in his GST return. In case of any mismatch, the supplier and recipient would be communicated regarding discrepancies after the filling of GSTR-3B. Learn how to go about reconciliation through our article on GSTR-2A Reconciliation. Please read our article on the detailed explanation of the reasons for mismatch of ITC and procedure to be followed to apply for re-claim of ITC.

e-invoicing under GST – What is e-Invoicing? Applicability & Implementation Date

e-Invoicing under GST denotes electronic invoicing defined by the GST law. Just like how a GST-registered business uses an e-way bill while transporting goods from one place to another. Similarly, certain notified GST-registered businesses must generate e invoice for Business-to-Business (B2B) transactions.

Clear is officially GSTN-approved IRP. More than 3,000 large enterprises trust the Clear e-Invoicing solution for unified e-invoicing and e-way bill compliance journey. We provide the best-in-class e-invoicing solution for businesses of any scale and industry. Do not miss exploring the Clear e-Invoicing solution!

What is e-invoicing under GST?

‘e-Invoicing’ or ‘electronic invoicing’ is a system in which B2B invoices and a few other documents are authenticated electronically by GSTN for further use on the common GST portal.

In its 35th meeting, the GST Council decided to implement a system of e-Invoicing, covering specific categories of persons, mostly large enterprises. Later on, it has been expanded to cover mid-sized businesses and small businesses as well.

e-Invoicing does not imply the generation of invoices on the GST portal but it means submitting an already generated standard invoice on a common e invoice portal. Thus, it automates multi-purpose reporting with a one-time input of invoice details. The CBIC notified a set of common portals to prepare e invoice via Notification No.69/2019 – Central Tax.

Under the electronic invoicing system, an identification number will be issued against every invoice by the Invoice Registration Portal (IRP), managed by the GST Network (GSTN). The National Informatics Centre launched the first IRP at einvoice1.gst.gov.in.

All invoice information gets transferred from this portal to both the GST portal and the e-way bill portal in real-time. Therefore, it eliminates the need for manual data entry while filing GSTR-1 returns and generation of part-A of the e-way bills, as the information is passed directly by the IRP to the GST portal.

Who must generate e invoice and its Applicability?

The e invoice applicability can be explained as follows-

Turnover criteria or e Invoice limit

The taxpayers must comply with e-invoicing in FY 2022-23 and onwards if their e invoice limit or turnover exceeds the specified limit in any financial year from 2017-18 to 2021-22. Also, the aggregate turnover will include the turnover of all GSTINs under a single PAN across India.

If the turnover in the last FY was below the threshold limit but it increased beyond the threshold limit in the current year, then e-Invoicing would apply from the beginning of the next financial year i.e. FY 2023-24.

Suppose, ABC ltd aggregate turnover was as follows-
FY 2017-18: Rs 15 crore
FY 2018-19: Rs 17 crore
FY 2019-20: Rs 24 crore
FY 2020-21: Rs 19 crore
FY 2021-22: Rs 18 crore

Suppose, QPR ltd started business in FY 2019-20 and earned aggregate turnover as follows-
FY 2019-20: Rs 4 crore
FY 2020-21: Rs 7 crore
FY 2021-22: Rs 11 crore 

The ABC Ltd shall mandatorily generate e invoices from 01.04.2022 irrespective of the current year’s aggregate turnover as it has crossed the Rs 20 crore turnover limit in FY 2019-20.

On the other hand, QPR ltd should comply with e-Invoicing from 1st October 2022 since its previous year’s annual turnover exceeds Rs.10 crore.

The fifth phase of e-Invoicing works similar to the fourth phase. Watch the below video to learn easily.

Transactions and documents criteria

The following transactions and documents listed below fall under 
e invoicing applicability –

Time limit to generate e-Invoice

Until 30th April 2023, there has been no time limit fixed by the GST systems or the GST law to generate e-invoices. From 1st May 2023* onwards, taxpayers with Annual Aggregate Turnover (AATO) equal to or more than INR 100 crore must generate e-invoices for tax invoices and credit-debit notes within 7 days of invoice date, failing which such invoices and CDNs will be considered non-compliant.

Further, there is no defined time limit or period within which e invoice must be generated for the rest of the applicable taxpayers. Therefore, such taxpayers are advised to create e invoice on or after the invoice/CDN date preferably a week before the filing of GSTR-1 returns since it takes T+3 days for details of e-invoices to get auto-populated into GSTR-1.

*However, on 6th May 2023, the department has deferred the time limit of 7 days to report the old e-invoices on the IRP portals by three months. Also, the department is yet to announce the new implementation date.

Process of getting an e invoice

The following are the stages involved in generating or raising an e-invoice.

1.      The taxpayer has to ensure to use of the reconfigured ERP system as per PEPPOL standards. He could coordinate with the software service provider to incorporate the standard set for e-invoicing, i.e. e invoice schema (standards) and must have the mandatory parameters notified by the CBIC, at least.

2.      Any taxpayer has got primarily two options for IRN generation:

·         The IP address of the computer system can be whitelisted on the e-invoice portal for a direct API integration or integration via GST Suvidha Provider (GSP) such as Cygnet GSP.

·         Download the bulk generation tool to bulk upload invoices. It will generate a JSON file that can be uploaded to the e invoice portal to generate IRNs in bulk.

3.      The taxpayer must thereafter raise a regular invoice on that software. He must give all the necessary details like billing name and address, GSTN of the supplier, transaction value, item rate, GST rate applicable, tax amount, etc.

4.      Once either of the above options is chosen, raise the invoice on the respective ERP software or billing software. Thereafter, upload the details of the invoice, especially mandatory fields, onto the IRP using the JSON file or via an application service provider (app or through GSP) or through direct API. The IRP will act as the central registrar for e-invoicing and its authentication. There are several other modes of interacting with IRP, such as SMS-based and mobile app-based.

5.      IRP will validate the key details of the B2B invoice, check for any duplications and generate an invoice reference number (hash) for reference. There are four parameters based on which IRN is generated: Seller GSTIN, invoice number, FY in YYYY-YY, and document type (INV/DN/CN).

6.      IRP generates the invoice reference number (IRN), digitally signs the invoice and creates a QR code in Output JSON for the supplier. On the other hand, the seller of the supply will get intimated about the e invoice generation through email (if provided in the invoice).

7.      IRP will send the authenticated payload to the GST portal for GST returns. Additionally, details will be forwarded to the e-way bill portal, if applicable. The GSTR-1 of the seller gets auto-filled for the relevant tax period. In turn, it determines the tax liability.

A taxpayer can continue to print his invoice as being done presently with a logo. The e-invoicing system only mandates all taxpayers to report invoices on IRP in electronic format.

Benefits of e-Invoicing to businesses

Businesses will have the following benefits by using e-invoice initiated by GSTN-

·         e-Invoice resolves and plugs a major gap in data reconciliation under GST to reduce mismatch errors.

·         e-Invoices created on one software can be read by another, allowing interoperability and helping reduce data entry errors.

·         Real-time tracking of invoices prepared by the supplier is enabled by e invoice.

·         Backward integration and automation of the GST return filing process – the relevant details of the invoices would be auto-populated in the various returns, especially for generating part-A of e-way bills.

·         Faster availability of genuine input tax credit.

·         Lesser possibility of audits/surveys by the tax authorities since the information they require is available at a transaction level.

·         Faster and easy access to formal credit routes such as invoice discounting or financing, especially for small businesses.

·         Improved customer relations and growth in prospects for small businesses to do business with large enterprises.

What are the mandatory fields of an e-invoice?

The following fields must be compulsorily be declared in an e-invoice:  

Format of sample e-invoice

The e-invoice format notified is as follows:  

FAQs on e-invoicing

To whom will e-invoicing apply

Currently, the e-invoicing system is already implemented for the GST registered persons whose aggregate turnover in any previous financial years (2017-18 to 2021-22) exceeds Rs.20 crore. From 1st August 2023, it shall apply to those with a turnover of more than Rs.5 crore up to Rs.10 crore. There are some exceptions as listed in the above section.

Can an e-invoice be cancelled partially/fully?

An e-invoice cannot be cancelled partially but can be cancelled wholly. On cancellation, it must be reported to the IRN within 24 hours. Any attempt to cancel thereafter cannot be done on the IRN and must be manually cancelled on the GST portal before the returns are filed.

Will the bulk uploading of invoices for the generation of IRN be possible?

No, invoices must be uploaded one at a time into the IRP. The ERP of a business will need to be designed to place the request for the upload of individual invoices.

Will there be a facility for e-invoice generation on the common GST portal?

No, invoices will continue to be generated on the individual ERP software currently in use by businesses. The invoice must adhere to the e-invoicing standard format and include the mandatory parameters. The direct generation of invoices on a common portal is not being planned at the moment.

What are the types of documents that are to be reported to the IRP?

Invoices by the supplier, credit notes and debit notes as per the GST law or any other document as notified under GST law are to be reported as an e-invoice.

All about Invoice Reference Number (IRN)

IRN, known as Invoice Reference Number, is a unique number allotted by Government to tag and identify every valid e-invoice generated in India, first implemented from 1st October 2020. The e-invoicing system has been introduced to create a standard for all e-invoices generated. In this article, we will be dealing with the following aspects about Invoice Reference Number (IRN) in an e-invoice.

What is an Invoice Reference Number (IRN)?

The Invoice Reference Number (IRN) is a unique number (also known as hash) generated by the Invoice Registration Portal (IRP) using a hash generation algorithm, under the e-invoicing system. For every document such as an invoice or debit or credit note to be submitted on the Invoice Registration Portal, a 64 character invoice reference number shall be generated. This number shall be unique for every invoice raised in a financial year by a GSTIN in the entire GST system.

Further, every invoice being issued by supplier to his recipient must contain the IRN. The tax officers can verify the genuineness of the transaction using invoice reference number through the central portal as well as an offline app. It will, in turn, help them check the invoice even where internet may not be accessible.  

What is the hash generation algorithm in IRN?

A hash generation algorithm is a function that converts a message or a string consisting of characters (alphabets + numbers + certain special characters) into a series of numbers such that the resulting numbers cannot indicate the original message. The GSTN will prescribe this algorithm as part of the e-invoicing standard.  

What are the parameters used to generate Invoice Reference Number (IRN)?

IRN is generated by converting characters into numbers (also called ‘hash’) using a hash generation algorithm. This algorithm will be applied to the following three parameters:

·         Supplier GSTIN

·         Supplier’s document number. For example, invoice number

·         The financial year in ‘YYYY-YY’ format. For example 2019-20.

Frequently Asked Questions

Can I regenerate a new IRN for an invoice against which IRN was already generated?

No, it is not possible as only a unique invoice will be accepted on the invoice registration portal. For this purpose, the e-invoice system does a check with the Central Registry of the GST system for any duplication.

How long will the IRN be stored on the government portal?

The IRN which is generated on the e-invoice system shall be made available to the taxpayer for upto 24 hours

What are the prerequisites to generate an IRN?

Following are the prerequisites:

·         The user must be GST registered taxpayer, having login created on GST portal and e-invoice system or e-way bill portal.

·         Invoice or debit note or credit note details must be at hand.

·         Depending upon the mode of generation, such user must have bulk IRN generator offline tool downloaded on the system or must have created API user ID and set the password on the e-invoice system.

Will both invoice number and IRN required be mentioned on the e-invoice?

Yes, both are mandatory fields as per the e-invoice schema notified by the CBIC on 30th July 2020.  

Place of Supply of Imports – Explained

We have already covered place of supply of goods, place of supply of general services, place of supply for specific services in our previous articles. In this article, we will discuss the place of supply in cases of import/ export along with numerous examples.

Basics of GST on Imports

As a basic principle, GST law says that all supplies of goods & services made as imports into India will be treated as an inter-state supply. All inter-state supplies attract IGST. So import of goods and services into India will attract IGST. Basic custom duty and all applicable customs levy will continue to be charged.

·         IGST on import of goods will be levied and collected under the Customs Act, 1962.

·         IGST on import of services will be covered under the IGST Act.

Here the importer has to deposit IGST onreverse charge basis. Except in case of OIDAR (Online Information Data Access and Retrieval) services, the supplier has to seek registration and pay taxes. The IGST paid on imports will be available as input tax credit to the importer. This can be set off against the GST outgo on supplies made by the importer.

Sale to SEZ units

Supply of goods or services or both to a SEZ developer or SEZ unit will be treated as inter-state supply and IGST will be applicable.