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 GST effect

You need be a tax expert to know basics of GST. In fact you are duty bound as business owners, executives, accountants etc. to know the basics of GST because GST affect you on a day to day basis. Some highlights of those basic things.

GST effect No 1. You must pay off your creditors within one hundred and eighty days from the date of issue of invoice. Failure to do so would result in the debtor being liable to pay the of input tax credit availed along with the interest. You will be eligible to reclaim the input credit when you actually pay off the creditor.

GST effect No 2. GST Act is meant to encourage free flow of credit and hence unless the credit is specifically blocked by law or is for personal consumption purposes you can claim the input credit subject to the satisfaction of the prescribed conditions.

GST effect No 3. You will be eligible for input credit only if you have valid duty paying documents, your GSTIN is mapped on the document, you have actually received the taxable supply and the other party has filed a valid return.

GST effect No 4. If you supply but taxable including zero rated goods and services and exempt services than you are eligible to claim only proportionate input credit in respect of common expenses.

GST effect No 5. In case of supply of goods invoice has to be issued prior to or at the time of supply while in case of supply of service invoice can be issued within 30 days of the supply of service.


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GST effect No 6. In case of continuous supply of goods or services it is permitted to issue periodical invoice based on the agreed settlement date.

GST effect No 7. For invoices of Rs 50,000 and above to unregistered customers it is mandatory to give complete address of delivery with state code.

GST effect No 8. For transactions below Rs 200 it is permitted to issue a consolidated invoice unless the customer insists on the copy of the invoice. For example if you sale 100 items to 100 customers each valued at Rs 150 you can issue a consolidated invoice of Rs 15,000 at the end of the day.

GST effect No 9. Composition dealer has to issue a bill of supply instead of an invoice.

GST effect No 10. You must regularly check for GSTR 2A online on the GST website to verify which of the suppliers have name are reflected there and the amount of credit. At present you are not required to file GSTR 2 and 3 and there is no corresponding matching being done as envisaged in the law. But there might be a problem later during department audits and you might be liable to reverse the input credit claimed along with the interest and penalty.

GST effect No 11. E Waybill has 2 parts. Part A and Part B. Part A contains basic details of the goods being moved from one place to another while Part B contains details of the vehicle in which goods are transported. It may be noted even though Part B might not be required to be generated for distance upto 50 kilometres within the same state or union territory but Part A is to be compulsorily generated if the value of goods being transported exceeds Rs 50,000 with certain exceptions.

GST effect No 12. Waybill can be cancelled only within 24 hours of generation.
GST effect No 13. The validity of waybill is determined by the distance between source and destination. For normal cargo the waybill valid for 1 day for every 100 kilometres while the validity in case of over dimensional cargo is 1 day for every 20 kilometres.

GST effect No 14. For normal taxpayers tax has to be paid on a monthly basis while for the composition dealers the same has to be paid on a quarterly basis.

GST effect No 15. One has to decide whether to opt for the composition scheme in the subsequent financial year within the 31st March of the current financial year by filing intimation in form GST CMP-02. Further he also has to file form GST ITC 03 within a period of sixty days from the commencement of the relevant financial year and pay the tax to the extent of input lying in stock as at the beginning of the first day of the financial year. Further fresh intimation is not required to be filed every year.

GST effect No 16. Once the threshold limit for the composition scheme is crossed the tax payer is automatically out of the composition scheme and becomes liable to pay tax in the same way as normal tax payers and becomes entitled to collect tax from the customers and claim input tax credit.

GST effect No 17. IGST Liability can be set off first against CGST Input and then SGST Input. Similarly In case of surplus IGST input it can be utilised to first pay CGST liability and then SGST liability. CGST and SGST cannot be set -off against each other.

Written by

Rishabh Kumar Barmecha Associate
Firm of Chartered Accountants

The author is a fellow member of the Institute of Chartered Accountants of India and also a qualified Company Secretary. The author has also done DISA (ICAI), certificate on IFRS (ICAI), Certificate on Forex and Treasury Management (ICAI), Certificate on Forensic Accounting and Fraud Prevention (ICAI). The author practices as a Chartered Accountant under the name and style of Rishabh Kumar Barmecha and Associates and is an expert in auditing, financial investigation, direct and indirect taxation. The author can be reached at rishabhkumarbarmecha@gmail.com or Twitter @CARKBarmecha.CA Rishabh Kumar Barmecha

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