Goods & Services Tax in India (GST) – 24 Questions Answered by Government on Twitter
by Paras Mehra 3.37K
Introduction
Under this article, we have compiled some of the most important queries that were asked by various people on twitter directly to the government. Further, the government was also very sharp and to the point. Therefore, with this article, we thought of sharing these queries and reason behind the queries so that we could unlock the greatest mystery of GST.
Let us read the GST queries one by one and understand the legal provision behind them.
Q.1 GST Registration starting from 1st Jun, it is also opening for people who had no registration before like No VAT registration/ST registration and want to register fresh under GST?
Answer: 15 days window will be opened for migration of existing registrants only
Reason: GST registration and migration are two different things altogether. GST registration can only be done once GST act are notified which are scheduled to be notified on 1st July, 2017.
On the other hand, GST migration is done for people who are registered under existing laws and which shall be continued to be taxpayers under GST as well. Hence, if you want to get enrolled under GST apply now and if you are looking for fresh GST registration then drop your query with us, we shall contact you once GST is applicable.
Q.2 Can one invoice contain both taxable as well as exempted supplies?
Answer: No, as for exempted items, bill of supply is required to be issued.
Reason: The tax invoice rules under GST clearly states that bill of supply shall be issued in case of exempted supply. Further tax invoice shall be issued only in case of taxable supplies that too by registered taxable person.
Q.3 How job worker will avail ITC on inputs received from supplier and adjust against supply because ITC reflect in GSTR2 of principal?
ITC is on inward supply received on a duty paying document. Inputs supplied for job work belongs to principal and so is the credit thereof. If principal makes supply to the job worker, such supply gets reflected in GSTR2 and job worker gets ITC.
Reason: One must read the Input Tax Credit (ITC) rules in relation to job work to have a clear picture on this. Further, the principle should claim the ITC on the input send to the job worker because supply from principle to job worker is actually a job work and not a commercial supply.
Q.4 Can input credit of SGST of one state be used to pay output SGST of another state? Can it be used to pay IGST of another state?
Answer: One state SGST to another state SGST - NO, One state SGST to another state IGST – YES.
Reason: This is one of the most controversial concepts that have been answered by the government. Various professionals, industry experts looks divided on this issue. Let us understand it by an example:
Mr.A (registered in Delhi) went to Mumbai to provide auditing services. He stayed there in hotel and as per GST rules, hotel charges CGST plus SGST. Now, the question arises whether Mr.A is eligible to claim the ITC of SGST with another state SGST or against another state IGST?
Even if you look at it logically you will find that SGST set off against IGST is inevitable because if it is denied then the whole purpose of GST stands defeated.
Q.5 Are Cessses additive or multiplicative ?
If tax rate is 28% and cess is 15% in total - 43% or 1.28*1.1.5%=>47.2%
Answer: The cess is additive.
Reason: It was a very straight forward reply which is very logical and to the point.
Q.6 In respect of exports, will GST be directly credited to account or rebate papers have to be filed?
Answer: Refund/ Rebate application to be filed after processing of which eligible amount would be directly credited to bank account.
Q.7 Implication on manufacturing under excise notification no 49 and 50 (area based exemption) of year 2003 will them also paying CGST?
Answer: Yes, in GST regime, there is no provision for area based exemptions and thus CGST would be payable which can be recovered from customer.
Reason: It was imperative that area based exemption will not continue under the GST regime because exemption hinders the process of free flow of credit.
Q.8 what is the rate on textile readymade garment?
Answer: Textiles GST rate, including that for readymade garments, yet to be considered and recommended by GST council.
Q.9 Whether Electricity Company can avail ITC on dry fly ash/ other taxable goods/services whereas electricity is out of GST?
Answer: ITC is allowed only if it is engaged in taxable supplies.
Reason: It is but obvious that ITC shall not be available in case supplier is dealing in exempt supply.
Q.10 Unbranded flour (chapter 11 -1101) is under Nil category but couldn’t locate branded flour?
Answer: GST rate for Cereals chapter 10 and 11(Put up in unit contained and bearing a brand name) yet to be considered by GST council.
Q.11 Whether invoice to be raised by head office to branches on salary charges incurred by head office?
Answer: No, services by employee to employer shall be treated neither as supply of goods nor of services
Reason: One may refer schedule III which list down the cases where some activities are treated neither supply of goods nor services.
Q.12 When to expect the final GST return formats and corresponding APIs for the same?
Answer: Returns will be finalized in 15th GST council meeting scheduled to be held on 3rd June 2017.
Q.13 What will be the position of SSI exemption limits on excise duty now CGST. SSI units are back bone of our economy?
Answer: No separate Limit for Excise duty exemption in GST. Anybody having aggregate turnover up to 20Lakh (10Lakh in special Category) is exempt except in cases listed in Sec 24 of CGST Act, 2017.
Reason: We understand that currently small manufacturers enjoy the basic exemption limit, however GST is all about the free flow of credit, larger tax base and few exemptions. Hence, manufacturers enjoying the SSI exemption shall have to accept the GST and pay tax accordingly.
Q.14 what is the rate on purchase of flat?
Answer: Rate of GST on purchase of flat before completion is 12% of value including value of land.
Point: If flat is purchased after completion, then GST is not applicable and only stamp duty needs to be paid.
Q.15 Whether GST paid on advance payment is available as input credit?
Answer: No, please check sec 16(2) of CGST Act, 2017
Reason: ITC can be claimed only when you have received the goods or services or both. Hence, not eligible to take ITC paid on advance.
Q.16 On formulations GST will be on MRP or Sale price?
Answer: No concept of payment of GST on MRP basis.
Reason: Yes, there is no concept of MRP based valuation. GST is payable on transaction value if buyer and seller are not related and price of the sole consideration.
Q.17 Restaurants with annual turnover up to 20lakhs are exempted under GST?
Answer: Anybody with aggregate turnover up to 20Lakh (10Lakhs in special Category) is exempt, except in cases listed in Sec 24 of CGST Act, 2017.
Reason: The exemption under section 24 is not business specific. It talks about each supplier except for the cases mentioned in section 24 of CGST Act.
Q.18 Do registered dealers have to upload sale details of URD also in GSTR1?
Answer: No, but required in case of interstate supplies having invoice value more than 2.50 Lakh.
Q.19 What is the status of international export freight under GST as the same was exempt under POS rules. It is Zero rated is most countries?
Answer: There is no change in GST. Existing dispensation continues on so far as POS is concerned.
Q.20 If GST would be charged on export of services to Nepal as Nepal invoicing is done in INR for Nepal?
Answer: Present procedures will continue.
Q.21 If goods laying at branches supplied from area based exemption unit, whether ITC on appointment day will be available or not?
Answer: Refer section 140(3). As per section 140(3), A registered person, who was not liable to be registered under the existing law, or who was engaged in the manufacture of exempted goods or provision of exempted services, or who was providing works contract service and was availing of the benefit of notification No. 26/2012—Service Tax, dated the 20th June, 2012 or a first stage dealer or a second stage dealer or a registered importer or a depot of a manufacturer, shall be entitled to take, in his electronic credit ledger, credit of eligible duties in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day subject to the following conditions, namely:
- such inputs or goods are used or intended to be used for making taxable supplies under this Act;
- the said registered person is eligible for input tax credit on such inputs under this Act;
- the said registered person is in possession of invoice or other prescribed documents evidencing payment of duty under the existing law in respect of such inputs;
- such invoices or other prescribed documents were issued not earlier than twelve months immediately preceding the appointed day; and
- the supplier of services is not eligible for any abatement under this Act.
Q.22 what will be impact of Closing Stock which has been already paid Vat on 1st July when GST becomes effective?
Answer: The supplier would be eligible to carry forward the ITC on such stock and would be liable to pay GST when supplied in new regime.
Q.23 What will be impact of coal? Will the clean energy cess on coal go or stay?
Answer: Clean environment cess on coal will continue in form of GST compensation Cess.
Q.24 Should we have to raise an self invoice for GST Liability on RCM or GST can be discharged through expenses booking voucher?
Answer: Kindly refer section 31(3) f and g of CGST act 2017 - Self invoice is required only in case of Unregistered Dealers (URD). Not by default on all RCM cases.
As per section 31(3) f and g, a registered person who is liable to pay tax under sub-section (3) or sub-section (4) of section 9 shall issue an invoice in respect of goods or services or both received by him from the supplier who is not registered on the date of receipt of goods or services or both;
And a registered person who is liable to pay tax under sub-section (3) or sub-section (4) of section 9 shall issue a payment voucher at the time of making payment to the supplier.
Conclusion
We have tried to resolve a lot of queries through our article but if you have any query left, then you can ask the same by emailing us at info@hubco.in.
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