3.11PLACE OF SUPPLY

Last week we have gone-through overview of Place of Supply under GST. Read Part 9 of Place of Supply under GST, Please go through. Part Link:

https://wordpress.com/read/blogs/170704436/posts/744

DETERMINATION OF PLACE OF SUPPLY OF SERVICES

Let’s proceed with the provisions to determine the place of supply of services where the location of the supplier or that of the recipient is outside India.

c) Admission to/ Organising  an event:-

  1. Services provided by way of admission to, or organization of a cultural, artistic, sporting, scientific, educational or entertainment event
  2. A celebration, conference, fair, exhibition or similar events
  3. Services ancillary to such admission or organization

Determination of Place of supply:

  • The place of supply of such services shall be the place where the event is actually held.
  • If the services are supplied in more than one location which includes taxable and non-taxable territory, then the place of supply in all such situations shall be the location in the taxable territory.
  • If any services are supplied in more than one State or Union territory, then the place of supply of such services shall be proportionately taken in each States or Union territories. And the value of such supplies specific to each State or Union territory shall be taken proportionately according to the terms of the contract. In case, there is no such contract, then the value of such services are determined as per the rules set.

Example:

  1. Ms. Anna from Pitsburg comes to Mumbai to watch IPL Match. The place of supply for admission services is Mumbai which is location of the event.
  2. Zinger Ltd from India organised a national medical conference at Singapore. The place of supply for organising the event is Singapore which is the location of the event.
  3. A musical tour is organised Mumbai and Washington. The place of supply will be Mumbai. Since, immovable properties are located in more than one location including a location in taxable territory, the place of supply will be the location in taxable territory, Mumbai.

d)   Financial Services:

(a) services supplied by a banking company, or a financial institution, or a non-banking financial company, to account holders;

(b) intermediary services;

(c) services consisting of hiring of means of transport, including yachts but excluding aircrafts and vessels, up to a period of one month.

Determination of Place of Supply:

            The place of supply of such services shall be the location of the supplier of services.

Example:

1) ICICI Bank of Mumbai (Maharashtra) provides services to the customers of New York for operating the NRE and NRO account and charges annual account maintenance charges, the place of supply shall be Maharashtra.

2) Mr. Jey hires a yacht service at Japan for his family on vacation. The place of supply shall be Japan.

E)   Transport of Goods:-

The supply of services transportation of goods, other than by way of mail or courier.

Determination of Place of Supply:

            The place of supply of such services shall be the location of the destination of services.

Example:

Zed ltd of Kolkatta, WestBengal transports goods from West Bengal to Cambodia through a shipping transport company. The place of supply is Cambodia which is the destination of goods

f) Passenger travel Services:

The place of supply in respect of passenger transportation services shall be the place where the passenger embarks on the conveyance for a continuous journey.

Example:

Mrs. Divya travels from Canada to India to visit her family in India. The place of supply shall be Canada since it is where she starts her journey.

g) On board a Conveyance:-

The services provided on board a conveyance during the course of a passenger transport services. This includes those services that are intended to be wholly or substantially consumed while on board. 

Determination of Place of supply:

The place of supply of such service shall be the first scheduled point of departure of that conveyance for the journey

Example:

Mr. Ajay Consumes food and beverage onboard his flight journey from Delhi, India to London. The place of supply shall be Delhi.

h) OIDAR Services:

The supply of online information and database access or retrieval services.

The person receiving such services shall be deemed to be located in the taxable territory, if any two of the following non-contradictory conditions are satisfied,

Conditions:

a) The location of address presented by the recipient of services through internet is in the taxable territory;

b) The credit card or debit card or store value card or charge card or smart card or any other card by which the recipient of services settles payment has been issued in the taxable territory;

c) The billing address of the recipient of services is in the taxable territory;

d) The internet protocol address of the device used by the recipient of services is in the taxable territory; (e) the bank of the recipient of services in which the account used for payment is maintained is in the taxable territory;

f) The country code of the subscriber identity module card used by the recipient of services is of taxable territory;

g) The location of the fixed land line through which the service is received by the recipient is in the taxable territory.

Determination of place of supply:

The place of supply of online information and database access or retrieval services shall be the location of the recipient of services.

Example:

  1. Miss. Prashitha purchases and downloads story books to her tablet from Goodreads ltd which provides e-book services by way of online applications. The Place of supply shall be the location of the recipient which is Coimbatore (Tamilnadu).
  2. Mr. Harsha from Pune (Maharashtra) utilises data digital starage services from Giga Pvt Ltd, Italy. The place of supply of such service is Maharashtra.

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MANIMARAN KATHIRESAN ( ON BEHALF OF GST INDIA DAILY TEAM)

2.11 SCOPE OF SUPPLY

SCOPE OF SUPPLY SERIES – PART 11

Last week we have gone-through the several topic SCHEDULE II services under GST. Read Part 10 of Scope of Supply under GST, in the following link:

https://wordpress.com/read/blogs/170704436/posts/739

In this article we shall see the following entries which are to be treated as supply of service in detail:

  1. agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act;
  1. transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration
  1. Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act:

 Under this scope, following activities are included:

  • Demurrage charges for not clearing goods within prescribed period.
  • Cancellation charges charged by Hotel and airlines.
  • Liquidated damages recovered by Builders and Contractors.
  • Non-Compete fees payable for agreeing not to compete for particular period.
  • Forfeiture of deposit or advance as penalty ( Like quality, late delivery, violation of any terms of contract)
  • Penalty for breach of contract.

For example Refundable security deposit is not taxable, however if deposit is forfeited then it would be taxable.

Non-competent fee under Income tax act has been specifically included as business income. The same is also liable to GST.

If an employee leave job without giving required notice, Notice pay is recovered from employee. On such amount GST has to be charged and paid by the employer. This is actually supply of services of tolerating an act or a situation provided by employer to employee.

  • Transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration

Transfer of Right to use goods for cash, deferred payment or valuable consideration is considered supply of services under Schedule II.

There are two case laws involved under this entry

  1. M/s. Abbott Healthcare Pvt. Ltd. (GST AAR Kerala)

The issue involved in this case is whether the placement of specified medical instruments to un-related customers like hospitals, labs etc, for their use without any consideration, for a specific period constitute supply.

The Hon’ble AAR of Kerala vides Advance Ruling Order No. KER/ 15 /2018 dated September 26, 2018 stated that the supply of instrument and reagent is naturally bundled and becomes a composite supply. As supply of instrument is a onetime activity and supply of reagent is a continuous activity, till the termination of the agreement. This transaction being a composite supply, the applicable tax rate is the tax rate of instrument, which is the principal supply.

The placement of specified medical instruments to unrelated customers like hospitals, labs etc, for their use without any consideration, against an agreement containing minimum purchase obligation of products like reagents, calibrators, disposals etc for a specific period constitute composite supply.

  1. M/S Ishan resins & Paints Limited (GST ARR WEST BENGAL)

The Applicant intends to lease trucks or tankers without operator to goods transport agencies (hereinafter called “GTA”) or any other persons. The Applicant seeks a ruling whether supply of services by way of leasing of goods transport vehicles without operators to GTA would be exempt 

The Applicant intends to lease out vehicles like trucks, tankers etc. that are designed to transport goods. The control and possession of the vehicle will be transferred to the lessee, who will engage operator and bear the cost of repair, insurance etc. It is, therefore, not classifiable under SAC 9966, which is restricted to rental services of transport vehicles with operator

The service is classifiable under SAC 997311 as leasing or rental services concerning transport equipment without operator. It amounts to the transfer of the right to use the goods

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MANIMARAN KATHIRESAN ( ON BEHALF OF GST INDIA DAILY TEAM)

1.11 INPUT TAX CREDIT UNDER GST

INPUT TAX CREDIT SERIES – PART 10

Last week we have gone through manner of claiming GST. Read the Part 10 of ITC under GST. Please go through the link below

https://gstindiadaily.wordpress.com/wp-admin/post.php?post=736&action=edit

Notifications pertaining to Input Tax Credit under GST

In this week, we will see some matters that are mentioned in the notifications related to ITC of GST.

Notification No.49/2019 – Central Tax

What is this about?

Input tax credit to be availed by a registered person in respect of invoices or debit notes, the details of which have not been uploaded by the suppliers, shall not exceed 20 per cent. of the eligible credit available in respect of invoices or debit notes, the details of which have been uploaded by the suppliers in GSTR 1.

What is the problem with it?

Till date we used to calculate the input tax credit as the sum of total taxes paid on the purchase of the goods and services after excluding the blocked credit irrespective of the fact that the said invoices have been uploaded by the supplier or not.

With effect from the date of this notification, the government has put a maximum cap of 20% on the credit in respect of the invoices which are not uploaded by the suppliers.

Input Tax Credit to be availed cannot be more than

  • 100% of eligible ITC appearing in GSTR 2A and;
  • 20% of eligible ITC appearing in GSTR 2A in respect of invoices or debit notes not reflecting in GSTR 2A

Total of the above two should not exceed total of ITC available as per actual invoices received during the period.

This can be understood clearly with the help of an example below

Example – 1

Total credit on the purchase of the goods and services ₹1,000/-

Suppliers have uploaded the invoices in respect of credit of ₹800/-

Suppliers have not uploaded the invoices in respect of credit of ₹200/-

Before this notification we can utilise the total input credit of 100 whereas the same will be restricted to ₹960 ( 800 + 20% of 800) after the amendment.

Example – 2

Total credit on the purchase of the goods and services ₹1,000/-

Suppliers have uploaded the invoices in respect of credit of ₹200/-

Suppliers have not uploaded the invoices in respect of credit of ₹800/-

In this example, we used to utilise total 1,000 as ITC before the amendment and it will be restricted to ₹240 (200 + 20% of 200) after the amendment.

CBIC has further notified on 1st January 2020 that the provisional input tax credit shall be reduced from 20% to 10% due to which total ITC that can be claimed in GSTR 3B is 110% of the eligible ITC appearing in the GSTR 2A of the particular period. Restriction of 20% was applicable from 9 October 2019 to 31 December 2019.

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5.10. RECENT CHALLENGES IN GST REGISTRATION

GST REGISTRATION SERIES – PART 10

RECENT CHALLENGES IN GST REGISTRATION

AADHAR AUTHENTICATION PROCESS:

The Government has introduced AAdhar Authentication for GST Registration. This is new requirements under GST Act and which is mandatory to submission of GST registration application.

Here the following challenges and that should be sought out before while doing GST Registration:

  • Mobile Number has to be linked with Aadhar Number
  • Email Id has to be linked with Aadhar Number
  • The Name of the Person should be matched with PAN Card and Aadhar Number.

The Aadhar Authentication process fails, If any of the above conditions are not meet. Moreover, the ARN number will not generate. Moreover, The Application may be accept by the Department officials after due verification of Aadhar Card and PAN card.

PHYSICAL VERIFICATION:

The Assessee may avail option of Physical verification before submission of GST Registration. Yes, the Assessee may select the application form without Aadhar authentication. ARN Number will generate once the Application number submit.

The Department officials will issue GST Registration certificate within 30 days from the date of application after due verification of Place of business.

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4.10. NOTIFICATION NO. 69, 70, 71/ 2020 – CENTRAL TAX DT: 30.09.2020

DUE DATE EXTENSION FOR FILING OF GSTR 9 AND 9C

The commissioner, on the recommendation of the council, hereby makes the following amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No.41/2020 – Central Tax, dated 5th May 2020, published in the Official Gazette of India.

In the said notification, for the figures, letters and words “30th September, 2020, the figures, letter and words “31st October, 2020” shall be substituted.

Under this Notification, the Government of India, extends the due date for filing of GSTR 9 and GSTR 9C [ GST Annual Returns and GST Audit ] from 30th September to 31st October 2020.

CLARIFICATION FOR FINANCIAL YEAR FOR THE PREVIOUS NOTIFICATION NO.13 AND 14 /2020.

E-INVOICE AND QR CODE

The commissioner, on the recommendation of the council, hereby makes the following further amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No.13/2020 – Central Tax and No.14/2020 , dated 21st March 2020, published in the Official Gazette of India.

In the Said Notification, in the first Paragraph

  • for the words a “financial year” , the words and figures ” any preceding financial year from 2017 – 2018 onwards” shall be substituted
  • after the words, “goods or services or both to a registered person” , the words “ or for exports” shall be inserted.

Under this notification, Government has clarified that the Turnover shall be consider only on or after GST implementation and not from previous one.

And also that the Turnover has included Export of supply and not only Domestic Supply.

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3.10 PLACE OF SUPPLY

Last week we have gone-through overview of Place of Supply under GST. Read Part 9 of Place of Supply under GST, Please go through. Part Link:

https://wordpress.com/read/blogs/170704436/posts/696

DETERMINATION OF PLACE OF SUPPLY OF SERVICES

We have seen the provisions on how to determine the place of supply of services where location of supplier and the recipient of services is in India.

From this article, let us understand the provisions to determine the place of supply of services where the location of the supplier or that of the recipient is outside India. Transactions in which both the recipient as well as provider are outside India are not covered here.

General provision:

The general principles concerning the place of supply of services except the services specified shall be

  • The location of the recipient of services if the details are available.
  • If not, the place of supply shall be the location of the supplier of services.

Specified Services:

  1. Supply of services in respect of goods:

Services supplied in respect of goods which are required to be made physically available by the recipient to the supplier or to a person acting on behalf of the supplier. The service includes which are provided from a remote location by way of electronic means.

The supply of services requires the physical presence of the recipient or the person acting on his behalf with the supplier, the place of supply of such services shall be the location where the services are actually performed.

Determination of place of supply:

The place of supply of such service shall be the location where goods are situated at the time of supply of services.

Exemption:- It shall not apply in the cases where services are supplied in respect of goods that are temporarily imported into India for repairs. If after repairs, such goods are exported without being put to any other use in India.

Example-

  1. Ms. Brindha of New Delhi upgraded her ERP computer software through internet. The place ofsupply will be where the system is located which is in NewDelhi.
  • Yellow Ltd of Ahmedabad (Gujarat) imports machinery from Germany to be installed in its factory at Gujarat. The service engineer also arrives for installation of machinery as per the contract. Since, the machinery is getting installed at Gujarat, the place of supply of installation services will be Gujarat.
  • Chimes Ltd exported goods to Yahoo Inc of Newyork. The goods were imported into India for free repairs for one year as per the contract. The goods were exported after the repairs. In this case place of supply is the location of recipient, Newyork as they are imported to India only temperarily.
  • Ms.Natasha who is an actress from Mumbai(Maharashtra) hired a hair stylist from Newyork for a fashion show. The stylist  came to India for providing services. The place of supply for such service is the place where the service was provided which is Mumbai.
  • Services in relation to immovable Property:

Services which are performed in respect to the immovable property.

  1. Services supplied in this regard by experts and estate agents
  2. Supply of accommodation by a hotel, inn, guest house, club or campsite
  3. Grant of rights to use immovable property
  4. Services for carrying out or co-ordination of construction work including that of architects or interior decorators

Determination of place of supply:

The place of supply of such service shall be the location where the immovable property is situated at the time of supply of services or intended to be placed.

Example:

1) Mr Daniel,an architect from Mysore, karnataka, provides services to a construction project in Canada. The place of supply will be Canada.

2) Mr. Arun, a carpenter enters into a contract with Mr. Francis of London for manufacturing of equipment in the construction projects at Mumbai and Berlin. The place of supply will be Mumbai. Since, immovable properties are located in more than one location including a location in taxable territory, the place of supply will be the location in taxable territory, Mumbai.

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MANIMARAN KATHIRESAN ( ON BEHALF OF GST INDIA DAILY TEAM)

2.10 SCOPE OF SUPPLY

SCOPE OF SUPPLY SERIES – PART 10

Last week we have gone-through the several topic SCHEDULE II services under GST. Read Part 9 of Scope of Supply under GST, in the following link:

https://wordpress.com/read/blogs/170704436/posts/688

In this article we shall see the following entries which are to be treated as supply of service in detail:

  1. temporary transfer or permitting the use or enjoyment of any intellectual property right;
  1. development, design, programming, customisation, adaptation, upgradation, enhancement, implementation of information technology software
  1. Temporary transfer or permitting the use or enjoyment of any intellectual property right:

 The term ‘Intellectual Property Right’ (IPR) has not been defined in GST Act.

The creator of IPR temporary transfers the right to use of any Intellectual Property Right (IPR) is a supply of services. He may permit the use or enjoyment of IPR to others for consideration.

Intellectual Property Right is a property of a creator and if the creator permanent transfers the right on property, it is considered as a supply of Goods.   

For Example: If Mr A transfers the copyright of his book temporarily it will be considered as supply of service. However he makes the same as permanent transfer, then the same will be treated as supply of goods.

To conclude, both the permanent transfer of IPR and temporary transfer are subject to GST. Temporary transfer includes permitting use or enjoyment of IPR.

  • development, design, programming, customisation, adaptation, upgradation, enhancement, implementation of information technology software:

Similar to the above entry, this entry also  can be classified as supply of goods or service depending upon the nature of transfer.

Software is a set of instructions that allows hardware to function and perform computations in a particular manner. In GST, the development, design, programming, customisation, adaptation, upgradation, enhancement, implementation of information technology software is termed as supply of service, attracting 18% GST rate.

Though the CGST Act defines the development of software as ‘service’, software in physical form (branded as well as tailor-made), ‘Information Technology Software’ is ‘goods’ in Customs Tariff Act under heading 8523 80 20

The above stand on software has been clarified and confirmed by various Courts. In the case of Tata Consultancy Services v. State of Andhra Pradesh, it has been held that canned software which is sold in packages or CDs or DVDs or USB Drivers will be classified as goods. Though the copyright of the program would remain with the development company, the moment copies are made and marketed; it would be termed as goods.

In the latest advance ruling to Solize India Technologies Private Limited (GST AAR Karnataka), the company re-sells pre-developed or pre-designed software which are made through the use of encryption of keys. However these are not customize.

The authority of advance ruling has concluded that, the supply of software supplied by the applicant which is not designed and developed specific to any customer and sold without any customisation, qualifies as “supply of goods” and “supply of computer software as goods”

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MANIMARAN KATHIRESAN ( ON BEHALF OF GST INDIA DAILY TEAM)

1.10 INPUT TAX CREDIT UNDER GST

INPUT TAX CREDIT SERIES – PART 10

Last week we have gone through manner of claiming GST. Read the Part 9 of ITC under GST. Please go through the link below

https://wordpress.com/read/blogs/170704436/posts/684

Actual Receipt of Goods:

A registered person shall be entitled to the credit of input tax only if

  1. He is in possession of tax invoice issued by the supplier
  2. He has received goods or services or both

Say, Mr. Raju has purchased goods in the on 20.09.2020 whereas he has received the goods in the month of October. He cannot avail ITC on the above purchase in the month of September as he has not received goods and the same can be availed in October month.

 Deemed Receipt of Goods or Services (Bill to Ship to Model)

  1. Where the goods are delivered by the supplier to the recipient or any other person on the direction of the recipient, whether acting as agent or otherwise, before or during the movement of goods
  2. Where the services are provided by supplier to any person on the direction of and on account of such registered person

Mr. Raju is a trader who places an order on Mr. Sampath for consignment of Apples. In the meantime, Mr. Raju receives a buying order from Johny for the same quantity of apples. Raju instructs Sampath to deliver the goods to Johny and he delivers accordingly. In this case, though the goods are not physically received at the premises of Raju, he will be entitled to ITC on the consignment as per the above explanation.

Can a person take ITC without payment of consideration for the supply?

The recipient can take ITC on receipt of taxable supply of goods. However, he is required to pay the consideration along with the tax within 180 days from the date of issue of invoice.

Where a recipient fail to pay to the supplier within 180 days from the date of invoice, then the amount equal to input tax credit availed by recipient shall be added towards its output tax liability along with interest in the month immediately after expiry of 180 days.

Mr. Balu a registered supplier made a supply of goods worth ₹1,68,000 inclusive of IGST ₹18,000 to Mr. Charan on 14.12.2017. Mr. Charan has failed to make the payment within 180 days i.e. before 12.06.2018 but he has availed ITC on 15.01.2018. Therefore, input tax credit of ₹18,000 shall be added towards output tax liability along with interest for the month of June 2018.

Interest shall be calculated from the date of taking credit i.e. 15.01.2018 till the date of payment of reversal of credit.

Time Limit for Availing ITC

ITC on invoices pertaining to a financial year can be availed anytime till the due date of filing of the return for the month of September of the succeeding financial year or the date of filing of the relevant annual return, whichever is earlier.

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MANIMARAN KATHIRESAN ( ON BEHALF OF GST INDIA DAILY )

5.9. GST REGISTRATIONS UNDER GST ACT

GST REGISTRATION SERIES – PART 9

Last week we have gone-;through overview of registration under GST. Read the Part 8 of registration under GST, Link as follows:

https://gstindiadaily.wordpress.com/2020/09/20/5-8-registration-under-gst-act/(opens in a new tab)

REGISTRATION UNDER COMPOSITION SCHEME:

INTRODUCTIONS:

As per the GST law, generally a tax payer pays tax under normal rates i.e 5%, 12%, 18%, 28% and avails cenvat credit on inputs, input services and capital goods. The balance tax payable after claiming the cenvat is paid in cash to the government. Using this method all the procedural compliances have to be adhered to.

To decrease the burden of compliance and legal formalities, there is a provision under GST to register under composition scheme. This composition scheme is almost similar to the composition schemes prevalent in previous vat regime in almost all states. It gives the tax payer to pay tax  at a flat rate without claiming input credit and makes the procedural compliance very easy.

PERSONS ELIGIBLE TO REGISTER UNDER COMPOSTION SCHEME:

Only persons who deals in goods can opt for such scheme.  Manufacturers can also opt for composition scheme, although manufacturers of ice-cream, pan masala and tobacco are not eligible for this scheme..  Service providers are kept outside the scope of the scheme, although restaurants who does not serve alcohol can opt for the composition scheme.

Persons whose Aggregate Turnover in the preceding financial year doesn’t exceeds Rs. 1.5 crore are only eligible under this scheme. For persons in state of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and Himachal Pradesh this limit will be Rs. 75 lakhs. Aggregate turnover means aggregate value of all taxable and non-taxable supplies, exempt supplies and export of goods and/or services of a person having same PAN. GST is not included in the aggregate turnover. So if an individual open two firms and combined turnover is more than above mentioned limit then he can not take composition scheme.


If a person’s turnover exceeds the above mentioned limits in a financial year then from such day the person ceases to be in composition scheme and needs to pay tax under normal scheme from such day.

If a person wants to opt for the composition scheme, then all of his firms should opt for composition scheme. It is not allowed that some of his firms are in composition scheme and some are not. If one of the firms becomes ineligible for composition scheme, then all other firms also become ineligible.

Person should not make inter state sales of goods. Such person is only allowed to make intra-state sales, i.e., in the same state or union territory in which firm is registered.

PERSONS NOT ELIGIBLE TO REGISTER UNDER COMPOSITION SCHEME:

  • Person should not make sales through any e-commerce portal like Amazon or Flipkart.
  • Casual taxable person and non-resident taxable person can not register under composition scheme.

RESTRICTIONS ON PERSONS REGISTERED UNDER COMPOSTION SCHEME:

  • Such person can not make inter state sales.
  • Such person can not make sales of exempted goods.
  • Such persons shall not be entitle to input tax credit. Net tax payable =  Turnover multiplied by Composition Rate
  • Such person also breaks the input credit chain so it also cannot pass the input tax credit. In other words if another dealer purchases goods/services from composition dealer then such dealer also can not take input tax credit. So composition scheme is not suitable for wholesalers and B2B businesses.
  • Such person can not charge composition tax separately in the invoice issued.
  • Such person can not make sales through any e-commerce portal like Amazon or Flipkart.
  • Such person is liable to pay tax on purchases of goods or services from un-registered persons and on import of services under reverse charge, Such tax is be calculated using the normal GST rates and CGST and SGST will apply even if purchase is from outside state.
  • Such person should mention the words “composition taxable person, not eligible to collect tax on supplies” at the top of the bill of supply issued by him.
  • Such person shall mention the words “composition taxable person” on every notice or signboard displayed at a prominent place at his principal place of business and at every additional place or places of business.

GST RATE UNDER COMPOSITION SCHEME:

ParticularsCGSTSGSTTotal
Manufacturers0.5%0.5%1%
Restaurants not serving alcohol2.5%2.5%5%
All other traders0.5%0.5%1%
GST INDIA DAILY

GST RETURN AND PAYMENT:

Persons in composition scheme are required to file quarterly returns and also pay GST on quarterly basis. All other normal dealers are required to file monthly returns and also make monthly payment.

Due date for return filing and also for GST payment is 18 days from the end of the quarter. Such quarterly return is to be filed in Form GSTR-4 (Now CMP-08) . An annual return is also to be filed in Form GSTR-4 on or before 31st December after the end of the financial year.

BENEFITS OF REGISTERING UNDER COMPOSITION SCHEME:

LESS COMPLIANCE: Composite dealer has to file quarterly returns and make quarterly payment while normal dealers has to file monthly returns and make monthly payments. Record keeping work also decreases to a substantial level.

LESS COST TO CUSTOMER:If the person has a high margin, then the cost to the final customer also decreases if he opts for composition scheme.

Normal DealerComposite Dealer
Purchase Price5050
GST @ 18% on purchase99
Cost5059
Margin50 50
Sale Price (Without GST)100109
GST @ 18%18
Composition Tax 1.10 (109*1%/.99)
Cost to customer118 110.10
GST INDIA DAILY

DRAWBACKS OF REGISTERING IN COMPOSITION SCHEME:

SUCH PERSON CANNOT MAKE SALES THROUGH E-COMMERCE OPERATOR As discussed above the person registered in this scheme can not make sales through an e-commerce operator like Flipkart, Amazon etc. So composition scheme is not for those who are making online sales or planning in near future.

NOT SUITABLE FOR WHOLESALERS Such persons can not pass the input tax credit and any other dealer would not like to purchase from such person. If any dealer wants to purchase goods from such person, then it would amount to double taxation and will increase costs.

CANNOT MAKE SALES OUTSIDE STATE Such person can not make sales outside the state or union territory in which he is registered. This decreases the scope for the business.

HEAVY PENALTY If the person is not eligible to register under composition scheme but continue to do so then the officer may ask to deposit tax at standard rates and penalty equal to tax. If person makes a mistake in following the eligibility criteria then he may be liable for a very hefty penalty.

STAY TUNED TO THE RIDE OF GST WAVE

FEEDBACK /QUERIES:

Watch out this space / follow this blog for more latest updates on GST in India. Write back to mani@gstindiadaily.com for customized solutions and services.

THANKS

MANIMARAN KATHIRESAN ( ON BEHALF OF GST INDIA DAILY TEAM)

4.9. NOTIFICATION NO.66, 67 AND 68 DT: 21.09.2020 OF CGST ACT

AMENDMENT – PART SERIES – 9

NOTIFICATION NO: 66/ 2020 – DT: 21.09.2020

This notification extended the date of issue of Tax Invoice for sale of goods on approval basis. What is meant by sale of goods on approval basis.

Section 31(7) of CGST Act, apparently states that, where goods are transferred to recipient before supply on sale on approval basis, the Tax Invoice for such supply must be issued earlier of Supply or 6 months from the date when goods were transferred to recipient.

the supplier who has sent the goods to outside India for sale on approval basis and  was / is required to issue invoice from period 20th march 2020 to 30th October 2020,can issue the tax invoice within 31st October 2020.

NOTIFICATION NO: 67/2020 – DT: 21.09.2020

Section 47 of CGST Act deals with the late fee for delay in filing of return. As per section 47, the late fee is 100 per day but maximum is 5000/-. However the central government vide Notification No. 73/2017 DT: 29th December 2017 reduced the late fee  to rs 10/day ( Nill return ) and Rs 25 / day( other than Nil return)  for delay in filing FORM GSTR –  4 .

Now the central government vide Notification No:67/2020 says that , if any person failed to file FORM GSTR 4 -return for the period July 2017 to March 2019 can file the return within 31st October 2020 without any late fee ( for NIL return) or with a late fee of only 25/ day subject to maximum Rs 250/-. So for both CGST Rs.250 and SGST Rs.250.

NOTIFICATION NO: 68/2020 – DT: 21.09.2020

GSTR 10 is the return which is filed by the person whose registration has been cancelled. This is also called as the final return. The central government has waived the late fee for non filing of GSTR-10 within the due date in excess of Rs 250. That is the maximum late fee that to be paid is Rs 250/-. So for both CGST Rs.250 and SGST Rs.250.

STAY TUNED TO THE RIDE OF GST WAVE

FEEDBACK / QUERIES:

Watch out this space / follow this blog for more latest updates on GST in India. Write back to mani@gstindiadaily.com for customized solutions and services.

THANKS

MANIMARAN KATHIRESAN