FAQs On GST

FAQs On GST 1.     What is GST? 2.       GST is a comprehensive tax that will be levied on manufacture, sale and consumption of go...

FAQs On GST

1.    What is GST?

2.     

GST is a comprehensive tax that will be levied on manufacture, sale and consumption of goods

and services at a national level under which no distinction is made between goods and services for

levying of taxes. If you were paying VAT on the goods being sold, then that tax will be replaced

by GST.

It would be a dual GST with the Center and States simultaneously levying it on a common tax

base. Thus, every supply of goods/services will attract:

a) Central GST (to be imposed by the Central Government) and State GST (to be imposed by

the State Government) in case of an intrastate sale; and

b) Integrated GST (imposed by the Central Government) being payable by the seller/ supplier

on inter-state supply.

2. Does GST apply to me?

Yes. Any individual registered under any of the following acts will be affected by GST:

a. Service Tax

b. State Sales Tax or VAT (except exclusive liquor dealers if registered under VAT)

c. Entry Tax

d. Luxury Tax

e. Entertainment Tax (except levied by the local bodies)

3. What are the taxes being subsumed under GST?

GST is expected to simplify and rationalize the current indirect tax regime and accordingly taxes

such as Central Excise duty, Additional Excise duty, Service tax, Additional Customs duty,

Special Additional duty, Central Sales tax, Value Added tax, Entry tax, Purchase tax, Luxury tax,

Local Body Tax and Octroi will be subsumed in GST.

4. What are benefits to a trader under GST?

Several indirect taxes will be subsumed under GST regime. In other words, instead of all such

taxes, the seller/ supplier shall be required to pay GST on the supplies/sales effected by them.

Additionally, the following taxes which are currently accounted as costs by the sellers/ suppliers

would be eligible as credit under GST regime:

a) CST paid on procurement of goods,

b) Excise duty / CVD paid on procurement of goods,

c) Additional Customs duty, special additional duty on import of goods,

d) Service tax paid on input services.

Accordingly, the service tax which is charged by Voonik on the commission paid by the sellers/

suppliers is presently not eligible as credit in the hands of sellers/ suppliers for set off against

VAT/CST liability. However, under GST regime the GST charged by Voonik on the commission

charged to the sellers/ suppliers would be eligible as credit for set off against output GST liability.

5. What documents do I need for GST enrollment?

You need the following documents/information for GST enrolment.

a) Provisional ID received from state or central authorities (used for VAT).

b) Password received from the state or central commercial tax authorities.

c) Valid e-mail address and mobile number.

d) Bank account number.

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e) IFSC documents.

f) Proof of business (can be partnership deed, certificate of incorporation, registration

certificate of the business entity) in PDF or JPEG format.

g) Photograph of the promoters or partners of ‘karta’ in the case of HUF.

h) Proof of appointment and photograph of the authorized signatories.

i) Opening page of the bank passbook or a statement which shows bank account number,

including bank name, branch name, address, and few transaction details.

6. If I have multiple business verticals in a state, can I obtain different registrations?

Yes, if you have multiple business verticals in a state, you may acquire a separate registration for

each business vertical, subject to conditions as prescribed in sub-section (2) of Section 19.

7. Migration of registration of existing taxpayers under GST

Existing registered sellers/ suppliers (under VAT/CST) need not apply afresh for GST

registration. Such sellers/ suppliers would be migrated into GST and given provisional

registration. Such persons would be required to submit all requisite documents and

information for obtaining the final registration certificate within six months of granting of

provisional registration. Failure to do so will result in cancellation of GSTIN.

Accordingly, all existing tax payers are required to enroll on the GST system portal i.e.,

www.gstn.org for validating the data pertaining to such tax payer under GST regime.

Enrolment process under the GST would be common for all the Center / State / UT

registered taxpayers. Additionally, enrolment under GST to be common for both Central

GST and State GST.

VAT/Central Excise registered taxable persons should refer to VAT registration certificate or

Central excise registration certificate for state and central jurisdiction respectively.

Person who are not registered centrally in the current regime should refer to www.cbec.gov.in

for central jurisdiction based on their Principal place of business.

Please note that following documents are mandatory to enroll on to the GST Portal:

a) Provisional ID received from State / Central Authorities (generated while registering at GST

portal.

b) Password received from State/ Central Authorities.

c) Valid e-mail address

d) Bank account number and Bank IFSC number.

8. What types of taxes do I have to pay under GST?

For intrastate supply of goods and services, you would have to pay Central GST (CGST) and

State GST (SGST). For inter-state supply of goods and services, you would pay Integrated GST

(IGST). In addition, certain categories of registered persons will be required to pay tax deducted

at source (TDS) and tax collected at source (TCS) to the government account.

9. When does a taxable person pay GST?

At the time of supply of goods and services during one of the three events – on receiving payment,

issuance of invoice or completion of supply.

10. Where is GST required to be paid on supply /sale of goods?

GST on supply/sale of goods has to be paid to the State where the registration has been sought by

the seller. For instance, if a seller sells the goods from his registered warehouse in Maharashtra to

customer located in Madhya Pradesh, then such a seller is required to pay GST (IGST) given that the

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instant transaction is an inter-state transaction in the State of Maharashtra, where the seller is registered.

Every taxable person shall have an electronic tax liability ledger, electronic credit ledger and electronic

cash ledger tagged to each of his registration.

11. What is HSN code?

HSN code is widely used in many countries for the classification of goods for taxation, claiming

benefits, etc. HSN code for each commodity is identical in most countries. In some countries, it

may vary slightly based on the nature of classification of goods.

12. How is HSN code relevant to GST?

Under the GST regime, all goods will be classified on the basis of the HSN code. Currently, HSN

code is primarily used for classifying goods to compute value added tax (VAT) in India. Hence,

when preparing tax invoice for GST, you will be required to mention HSN code on the GST

invoice.

13. What is the format of HSN code?

HSN code can be a two-digit, four-digit, six-digit or eight-digit numeral. There are around 21

classifications of HSN codes, which are further sub-classified into 99 chapters of HSN codes.

14. Will I be able to select the HSN code while listing a product and/or change the mapping of

existing products?

Seller has to update HSN, uploading of category wise HSN is mandatory. Based on which your

listed product's TCS will be calculated. Remember, it is sellers’ liability to fill accurate HSNs.

15. How will goods and services be classified under GST regime?

 HSN code shall be used for classifying goods under GST regime. Taxpayers whose turnover is

between Rs.1.5 crores and Rs.5 crores shall use a two-digit HSN code, while taxpayers whose

turnover is Rs.5 crores and above shall use a four-digit code. Taxpayers with turnover below

Rs.1.5 crores will not be required to mention HSN code on their GST invoices. Services shall be

defined as per the services accounting code (SAC).

16. With each seller’s turnover being different, will the HSN code vary from seller to seller for

same product listing on Voonik?

No. Voonik will use the standard HSN codes across sellers for the same product type without any

exception for seller’s turnover.

17. What is SAC?

The SAC has not been declared in the Model GST Law, but it will remain the same as the current

code system used for service tax.

18. What is input tax credit?

As you know, GST is a dual-concept system. On every transaction within a state, there will be

components of Central GST (CGST) and State GST (SGST). For inter-state transactions,

Integrated GST (IGST) will be applicable. Therefore, you should know how to offset input credit

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against each of these components as prescribed by the Model GST Law. Here, input tax credit

refers to goods and services tax paid or payable by a registered user on the purchases or expenses

incurred for business activities. Tax liability refers to the amount a user legally owes a taxing

authority.

19. Requirement of invoicing under GST

Every sale of goods under GST shall have a valid invoice with the relevant details as mentioned

below:

a) Name, address and GSTIN of the seller/ supplier.

b) Date of issue.

c) Consecutive serial number of invoices.

d) HSN code of the goods sold.

e) Place where the goods are sold along with the name of state (in case of inter-state sale of goods).

As mentioned above, taxes under GST flow to the destination state where the movement of goods

terminate, the invoices raised by the sellers/ suppliers should have a mention of the details of the state

where the goods are delivered. For instance, as mentioned in the above illustration, the seller at the

time of raising invoice for supply of goods should mention the name of state where such goods are sold

from ie, Madhya Pradesh

Additionally, it is pertinent to note that the goods when stock transferred from one warehouse of a

particular state to warehouse of another state shall be regarded as supply under GST attracting IGST.

Accordingly, the detailed invoice should be raised for such stock transfers.

20. Are there any criteria to claim input tax credit?

Yes. They are listed below:

a) You must be a registered user on GST.

b) The goods or services must be acquired in the course of or furtherance of business; ITC is

claimable on acquisition of capital assets used in the business (such as equipment, furniture,

etc.)

c) Goods or services are acquired for making taxable supplies; GST is charged with a standard

rate or zero-rated supplies.

d) It must not be subject to any restriction such as blocked input tax items.

e) You must hold valid tax invoice or valid customs importation documents.

f) Tax invoices must be in the name of the registered person unless simplified tax invoices are

used

21. How will SGST and IGST be settled?

Accounts will be settled periodically between the center and the state to ensure that the SGST

used for payment of IGST is transferred by the center to the destination state where the goods and

services are eventually consumed. Similarly, the IGST used for the payment of SGST would be

transferred by the originating state to the center.

22. When will a taxpayer have to pay taxes under the GST regime?

A regular taxpayer will be liable to pay taxes by the 20th of the following month for sales

generated in the current month. Hence, it will be a monthly activity.

23. How will the taxpayer make the payment of taxes?

A taxpayer will be able to pay taxes by using one (or both) of the methods mentioned below:

Method 1: Making cash payments – The tax amount would be first deposited in the electronic

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cash ledger and the taxpayer shall debit the ledger while making monthly tax payment (net of ITC)

and shall show the relevant debit entry number in his monthly return.

Method 2: Using Input Tax Credit (ITC) – ITC gets credited in the electronic credit ledger and

the tax payer will have to debit the ledger to make monthly tax payment (to the extent ITC is

available). He/she would have to show the relevant debit entry number in his/her monthly return.

24. Tax collection at source

GST provisions requires an e-commerce operator like Voonik to collect tax at source (‘TCS’) at

the rate of two percent (1% CGST+ 1% SGST – in case of intrastate supplies, 2% IGST – in case

of inter-state supplies) on the net value of goods sold through Voonik.

Note: Net Value of supplies shall mean aggregate value of taxable sale of goods made during the

month by all registered taxable persons through the e-commerce operator minus the value of

taxable supplies returned to the suppliers during the said month.

Such TCS shall be collected and remitted by Voonik to the credit of the appropriate government.

Seller / supplier shall be eligible to claim the credit in his electronic cash ledger of the tax

collected by Voonik.

Voonik would be responsible to file an electronic statement (within the prescribed time) giving

the details of outward supplies made by such sellers along with amount of TCS collected on the

consideration received by such sellers.

25. How will tax mapping change under GST?

Tax mapping will be done basis product category, subcategory and product types. All the

applicable HSN codes will be shown against the above classification.

26. What actions would a seller have to take if a product is returned by the buyer after

generation of tax invoice?

As per section 34(1) of GST Bill, if a tax invoice has been issued for the supply of goods and the

goods are returned by the recipient thereafter, the taxable entity (i.e., the supplier of goods) is

required to issue a credit note with relevant details. The details of this credit note should be

declared by the taxable entity to adjust tax liability. Besides draft return format (GSTR1)

separately requires details of credit note issued by the supplier.

27. Under which scenarios would a seller be required to issue credit note for returned products?

You would need to issue credit note under the following scenarios:

a) When a customer cancels a product before product shipment.

b) When a customer cancels a product after shipment but before delivery of the product.

c) When a customer cancels a product after the delivery of product (i.e., reverse pick-up).

d) When the product order is cancelled by default (i.e., return to origin (RTO)).

e) When a customer cancels a product fifteen days after product delivery; if you do not accept

the returned product after the time-line of fifteen days, then you are not required to issue

credit note.

28. How would issuing a credit note bridge the gap in invoice record when a product is

returned?

As per GST Rules, tax invoices must be in consecutive series of numbers. In case of a returned

product, if an invoice is simply cancelled without issuing a corresponding credit note for the

return, the missing invoice would attract inspection.

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29. Should a supplier of goods issue credit note for both business-to-customer (B2C) and

business-to-business (B2B) transactions to adjust tax liability in case of return?

Yes, in case of both B2C and B2B transactions, tax liability for sale returns will be adjusted if the

supplier of goods has generated credit note with pertinent details and declared it.

30. What is tax collection at source (‘TCS’)?

Voonik as an e-commerce operator shall collect tax at source (‘TCS’) at the following rates on the

net taxable value of goods sold on the Voonik marketplace by sellers

1% CGST + 1% SGST – In case of intrastate supplies

2% IGST – In case of inter-state supplies

Note: Net taxable value of goods shall mean the aggregate value of taxable supplies of goods

made during any month by all registered taxable persons through the operator minus the aggregate

value of taxable supplies returned to the suppliers during said month.

31. How can you avail the TCS credit?

TCS deposited by Voonik into government account will be reflected in the cash ledger of the

registered seller. The TCS in the cash ledger shall be eligible for utilization against tax liability in

respect of the supplies made by the seller.

32. Matching of TCS statement uploaded by E-commerce operator with the sales of sellers?

Details of the supplies and the TCS amount collected during a calendar month is furnished by

Voonik in its statement. Such details will be matched with the corresponding details of outward

supplies furnished by the concerned seller in his valid return filed for the same calendar month or

any preceding calendar month.

If the detail of the outward supply, on which the tax has been collected, as declared by Voonik in

its statement does not match with the seller furnished details, the discrepancy shall be

communicated to both Voonik and the seller.

If the discrepancy communicated is not rectified by the seller in his valid return for the month in

which discrepancy is communicated, the value of such supply shall be added to the output liability

of the seller for the calendar month succeeding the calendar month in which the discrepancy is

communicated.

The sellers shall be liable to pay the tax in respect of such supply along with interest, at the rate

specified on the amount so added from the date such tax was due till the date of its payment.

33. What is the difference between TDS and TCS?

TDS would be applicable only on certain categories of taxpayers. In case of transactions between

Voonik and Sellers or Sellers and Customers on Voonik, the provisions of TDS would apply only

if notified by the government.

TCS provisions would apply to Voonik. It would mean that for every sale Voonik would collect a

percentage as notified on the sale proceeds and deposit with the government. This amount would

be credited to the Cash ledger of the seller and can be used for paying tax liabilities.

For details on TDS and TCS, please refer to Sections 51 and 52 of the CGST Act.

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34. When will the taxpayer pay charges under GST for the services he delivers?

Taxpayer will pay charges under GST (for the services he supplies) based on the invoice of

services.

If the invoice is issued within the prescribed period (i.e., within 30 days from the date of supply),

the seller will have to pay all charges either by date of issue of invoice or by the date of receipt of

payment (whichever is earlier).

If, however, the invoice is not issued within the prescribed period, seller will pay all charges

either by the date on which service provision was completed or by the date of receipt of payment

(whichever is earlier).

35. What is the default presumption for place of supply with respect to B2B supply of services?

The terms used in the IGST Act are registered taxpayers and non-registered taxpayers. The

presumption in case of supplies to registered person is the location of such a person. Since the

recipient of services is a registered entity; hence, address of the recipient is always considered as

the place of supply.

36. What is the time-line for a seller to issue invoice of goods/services supplied?

As per the GST Bill, a supplier is required to issue tax invoice on or before the removal of goods

for supply, i.e., date of shipment. Since a seller has the option to issue invoice before the date of

dispatch to the buyer, he/she can issue tax invoice upon confirmation of order.

37. What are the parameters to ascertain intrastate supply/sale as against inter-state

supply/sale of goods and services?

A supply of goods/services shall be deemed to be:

a) an inter-State supply if the location of the supplier(seller) and the place of supply are in

different States. Sellers/ suppliers are required to charge and collect IGST on all inter-state

transactions (i.e., if the location of the supplier and the destination of the goods or services

supplied to the customer are in different State)

b) an interstate supply where the location of the supplier(seller) and the place of supply are in

the same State. Sellers/ suppliers are required to charge and collect CGST + SGST on all

interstate transactions (i.e., if the location of the supplier and the destination of the goods or

services supplied to the customer are in the same State)

Thus, the place of supply of goods by the supplier/seller shall be the place where the movement

terminates and received by the recipient. For instance, if the customer is in Kolkata, West Bengal

and the goods move from Surat, Gujarat, then the place of supply of goods shall be Kolkata, West

Bengal. The place of supply of services when made to an un-registered person shall be the

location of such person, where the address exists on record, else the location of the supplier of

services in other cases.

38. What will be the TCS amount deducted by Voonik?

Voonik shall be liable to collect TCS at the rate of One percent of SGST and One percent of

CGST (in case of intrastate supplies) or two percent of IGST (in case of inter-state supplies) from

the net taxable value of goods sold by the seller where the consideration with respect to such sales

are collected by Voonik.

Voonik would collect TCS on the consideration amount (exclusive of taxes) to be paid to the

seller.

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39. Is remission allowed for goods lost or destroyed before supply?

Remission of tax will apply only when tax is payables per law i.e. taxable event should have

happened and tax is required to be paid as per law. Under GST Law, levy is applicable upon

supply of goods. Where goods are lost, or destroyed before supply, taxable event does not occur

in order to pay tax. Accordingly, question of remission of tax does not rise.