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.
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