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GST Q&A Series – I

Q: Every individual buying goods or services for personal use above ₹5,000 in a day, from an un-registered dealer will have to pay GST und...

Q: Every individual buying goods or services for personal use above ₹5,000 in a day, from an un-registered dealer will have to pay GST under RCM. Hence, they should either get themselves registered, or refrain from buying any goods/services above ₹5,000 even for personal purposes. Is my understanding correct?
A: Kindly note that Section 9(4) of the CGSTA, clearly mentions that the supply should flow from an unregistered supplier to A REGISTERED PERSON for RCM to come into play in such cases.
On the other hand, the part of Section 24, which asks for compulsory registration of the person “required to pay” tax under RCM, shall be read with Section 9(3) ONLY, from where the RCM gets its legal backing and only the word “recipient” is mentioned without clarifying the registration status of such recipients. Reading it with Section 9(4) will lead to absurdity [compulsory registration of a registered person makes no sense].
For the purposes of Section 24 and further Section 9(3), the lists of recipients “required to pay” tax under RCM, has been made available vide Notfn. No. 04/2017 and 13/2017.
Hence, any individual or person is free to buy goods above ₹5,000 in a day for personal consumption without getting himself registered.

Q: What is the difference between VAT and GST?
A: Following are the basic differences between VAT and GST:
  1. VAT was leviable only by the respective State Governments, while GST is leviable by Central and State Governments simultaneously.
  2. VAT was applicable only on goods, while GST is levied both on goods as well as services.
  3. VAT was levied on SALE of goods while GST is levied on SUPPLY of goods or services or both. (Sale is only A FORM OF supply. The definition of supply includes other forms as well, such as transfer, disposal, rent, lease, license, barter, exchange)
  4. The excise duty or service tax paid on inputs could not be set off against the output VAT, while GST ensures seamless flow of credit with prescribed conditions.
This being said, nature-wise both VAT and GST are quite similar, since both are the taxes levied on additional value created.

Q: What would be the impact of GST in case of an intra-state purchase from an un-registered dealer?
A: In case a registered person purchases goods or procures services or both from an un-registered person, he shall be liable to pay the tax in respect of such supplies on reverse charge basis. However, such liability of the recipient shall arise only when the aggregate value of such supplies received from one or more un-registered suppliers exceeds ₹5,000 in a day.
He shall issue an invoice in respect of such goods/services on the date of receipt and shall issue a payment voucher at the time of making payment to the supplier.

Q: I pay an annual rent of ₹6 lakhs for my showroom. What will be the impact of GST on this rent?
A: The impact of GST will depend upon the status of the supplier of this service. If his aggregate turnover on pan-India basis is over and above the exemption limit of ₹20 lakhs, thereby making him eligible for registration, then he shall charge GST @ 18%. In case he is not registered, but you as a recipient are, then such GST shall be paid on reverse charge basis. In either of the cases, the input for the same can be claimed by the recipient.

Q: What is the chargeability of GST on schemes like “Buy 3, get 1 free” between two registered dealer?
A: GST is not chargeable on such free supplies, since they are not covered in Schedule I of the GST Acts, which provides the list of activities to be treated as supply even if made without consideration.

Q: What are the regulations for an invoice being issued by a registered dealer to an un-registered dealer?
A: Apart from the regular details that need to be included in the tax invoices issued by a registered dealer, following points should be taken care of in case the recipient is un-registered:
  1. where the value of the taxable supply is ₹50,000 or more – name and address of the recipient and the address of delivery, along with the name of the State and its code.
  2. where the value of the taxable supply is less than ₹50,000 – name and address of the recipient and the address of delivery, along with the name of the State and its code, if the recipient requests that such details be recorded in the tax invoice.

Q: How will a medicine dealer of Jharkhand claim input VAT credit on his closing stock as at 30 June, 2017, since the VAT was being paid on MRP at the time of purchase but no input credit could be recorded as the output VAT was zero?
A: Under Section 140(3) of Jharkhand GST Act, 2017, the registered medicine dealer shall be eligible for input tax credit on such stock of medicines, if
  1. they are used or intended to be used for making taxable supplies,
  2. the said registered dealer is eligible for input tax credit on such inputs under the Act,
  3. the said registered dealer possesses the invoices or other prescribed documents evidencing payment of tax under VAT law in respect of such goods, and such documents are not older than 12 months

Q: A dealer is registered under the composition levy provisions. Will he be charged with GST at the time of purchases?
A: Yes, there is no provision in the GST law that exempts a person availing composition levy benefits from paying GST on inputs purchased/procured by him. In fact, he shall also be liable to pay tax on reverse charge basis as and when applicable. However, he shall not be eligible to claim input tax credit of these taxes.

Q: How can I claim the ITC of Clean Energy Cess?
A: With the abolishment of Clean Energy Cess through Taxation Laws Amendment Act, 2017, unfortunately no input tax credit can be claimed of the cess already paid.

Q: Which is the applicable form for availing CENVAT credit on goods which were in transit as at 1 July?
⁠⁠⁠A: No form has been prescribed for such cases. However, the registered person is still eligible for availing the input tax credit. For this, he must record the invoices of such goods in his books before 31 July, 2017 and furnish a statement of such invoices to The Department.

Q: How to amend the registration in case a GST registered firm adds new products in business?
A: Please furnish FORM GST REG-14 on the common portal.

Q: Can we raise a single invoice for goods with different HSN codes and different GST rates?
A: Yes, you need not issue separate invoices for differently-rated goods or goods with different HSN codes, as long as the value and taxes applicable on them can be clearly demarcated in the same invoice.

Q: Can we generate a single e-way bill for goods with different tax rates?
A: Since, as of now, the e-way bill system under GST is still being developed pending the notification of e-Way Rules, the existing mechanism shall prevail.

Q: If a person owns 2 residential properties and 2 commercial properties in 4 different states, earning rental income of ₹6 lakhs from each property, is he required to register in GST. If yes, is he required to register separately in all the 4 states?
A: The exemption limit of ₹20 lakhs for general category and ₹10 lakhs for special category states, is to be seen on an ALL-INDIA basis for the same PAN bearing person. Hence, since on all-India basis the turnover is ₹24 lakhs, i.e., exceeding the exemption limit, the person becomes liable for registration. Further,
  1. In case you are issuing invoice from a central location to all the 4 properties, registration is compulsory, since it will be considered as an “inter-state supply”. However, in such a case, the registration need to be taken only in the state from where you are issuing the invoice.
  2. If you have places of business in these 4 states who can raise invoices locally and hence charge CGST and SGST, then you need to get yourself registered in the 2 states with commercial properties only. No registration is required if the supply is not taxable.

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GST India Gst.Gov.in: GST Q&A Series – I
GST Q&A Series – I
GST India Gst.Gov.in
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