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GST Q&A Series – III

Q: Ram is a readymade garments trader and registered in GST as a regular tax payer. The opening stock as at 1-7-2017 will be supplied @ 5%...

Q: Ram is a readymade garments trader and registered in GST as a regular tax payer. The opening stock as at 1-7-2017 will be supplied @ 5% or 12%, and the tax collected shall be deposited with the authorities.
Another trader, Shyam is registered under the composition scheme. What will be the rate of tax levied on his opening stock as at 1-7-2017?
A: In my opinion, Shyam shall treat the supply of the goods in his stock as at 01-07-2017 as any other regular supply under composition levy provisions, and shall pay 1% GST (0.5% CGST + 0.5% SGST) of his turnover in the state/UT where he is so registered. He shall not collect any tax from the recipient of these supplies. Also, the goods held in stock by him on 01-07-2017 should have not been
  • purchased in any inter-state transaction or
  • imported or
  • received from his branch situated outside the state or
  • received from his agent/principal outside the state
Q: What is the maximum limit of amount of cash sale allowed?
A: There is no capping limit on the amount of supply in the GST laws, whether for cash consideration or otherwise. However, please do consider the provisions of Income Tax Act, 1961 while making taxable supplies for cash.
Q: Can input tax credit be claimed on purchase of plant and machinery?
A: Yes, the recipient can claim the credit of input tax charged from him on purchase of plant and machinery. However, where the registered person has claimed depreciation on the tax component of the cost of plant and machinery under the provisions of the Income Tax Act, 1961, the input tax credit on the said tax component shall not be allowed.
Q: Can a person issue the invoices required to be issued by the recipient of goods/services supplied under RCM, under a different set of invoices other than the ones issued by him on his taxable supplies?
A: Yes, as long as the serial numbers don’t coincide, two separate sets of invoices can be used, since Rule 46(b) of CGST Rules, 2017 allows the usage of multiple series of serial numbers in the tax invoice.
Q: The invoices under RCM need to be generated when it exceeds ₹5,000 per day. If the aggregate supplies received from different un-registered dealers is say ₹6,000, the invoice be generated will be for ₹1,000 or ₹6,000?
A: According to proviso to Rule 46 of CGST Rules, 2017, a registered person may issue a CONSOLIDATED invoice at the end of a month for supplies received from unregistered PERSONS where the aggregate value of such supplies exceeds ₹5,000 in a day from ANY OR ALL THE SUPPLIERS.
Hence, the invoice shall be generated for the entire amount of ₹6,000.
Q: Can a transporter provide inter-state services without registration.
A: Yes, since by the application of Section 5(3) of the IGSTA, 2017, all the provisions of the Act (including registration) shall apply on the recipient of such goods or services or both on which tax is payable on reverse charge basis. Please note that the recipient should belong to an organized sector, thereby, making the service chargeable under reverse charge provisions.
Q: What is GSTR-3B?
A: Considering the widespread lack of preparedness for GST, the Government provided a slight relaxation for the returns of the months of July and August, 2017. Form GSTR-3B has been prescribed by the Government for this cause. It is a summarized declaration of the output tax liability and input tax credit claimed by the registered person in these 2 months. This declaration needs to be filed by 20th of next month, i.e. August and September, 2017 respectively. Later on, this declaration will be compared with the normal return form [FORM GSTR-3] and any discrepancy found will accordingly be taken care of.
Q: How will sales return be treated in the GST regime?
A: In case the goods supplied are returned by the recipient, the registered supplier may issue a credit note to him containing the prescribed particulars. The details of such credit note shall be declared in the return for the month during which such credit note has been issued and the tax liability shall be adjusted accordingly. However, if the tax incidence and interest of such supply has been passed on to any other person, no such adjustment shall be allowed.
Q: Will GST be applicable on Incentives Credit Note?
There is no separate provision for Incentive Credit Notes in the GST laws. However, since it will form a part of the consideration being paid for the supply, further becoming a part of the value of supply, GST shall be applicable on the same.
Q: GST on freight is payable at 5% in RCM only when goods are transported through consignment note. If we hire a truck directly from the truck owner he will not issue any bilty, then will such freight get covered under RCM?
A: The nature of service changes in this case. From “Transportation of goods by road through a GTA”, this service now becomes that of “Renting of motor vehicle”. Hence, it won’t be covered under the reverse charge mechanism.
Q: I am a manufacturer registered in VAT & CST but not in Excise. What all credits of input tax am I eligible to receive under the transitional provisions?
A: As a manufacturer, you shall get the credit of VAT and Entry Tax that you have carried forward in your return for the period ending June, 2017, under the SGST, provided you fulfil the following conditions:
  1. The said credit shall be admissible as ITC under GST laws as well.
  2. All the returns for the period January, 2017 – June, 2017 have been duly furnished.
  3. The said amount of credit should not relate to goods manufactured and cleared under any exemption notification notified by the Government.]
Despite the fact that you were not eligible for registration under the Excise laws, you may still get the credit for the inputs in your stock and the inputs contained in the semi finished and finished goods lying in your stock as at 30 June, 2017, provided you fulfil the following conditions:
  1. These inputs or goods should be used for making taxable supplies.
  2. You must be eligible for taking ITC under the GST laws
  3. You must possess the invoice or other document evidencing the payment of duty in respect of these inputs, which must not be older than 01 July, 2016.
As far as ITC for CST is concerned, the SGST law does not allow the same. However, if these credits are related to Form C, D, E-I, E-II, F and such like, an amount equivalent to these credits shall be refunded under the existing law when these claims are substantiated by submitting these forms to The Department.

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