GST – Issues & Enhancements!!

Grievance Redressal Committee comprising of Chief Commissioner, CGST, IAS, Commissioner, SGST and other senior Departmental Officers discussed the following points –

1. Interest should be calculated on on cash component only u/s 50(1) of CGST / SGST Act, 2017 and liability should also be generated accordingly. Provision should be made effective from the date of implementation of the Act.

2. Unblocking of ITC immediately in case figures are reconciled.                                                                              Further, blocking if required should be made after giving notice to the dealer.

3. Problems and Issues in GST Annual Return for the year 2018 – 19 should be simplified from Approach and design perspective.

4. GST returns in new format can also look to be deferred to a date ahead for smoother transition.

5. Reconciliation statement in form 9C may kindly be merged with form 9.

However, no final decision is taken on the same as we look to hear more from the GST Council in next few days.

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Refund under Inverted Duty Structure (IDS)

Refund under Inverted Duty  Structure (IDS)

Introduction:-Goods and Services Tax (GST) is tax regime focused on destinations where taxes are discharged by credit and cash at multiple phases. Tax is paid to the manufacturer on the purchase of goods and/or services available as payment to the retailer and when the dealer purchases those items, after using the credit available on the purchase of goods, the seller pays tax on the sale. Tax is therefore issued in two forms at the time of purchase and at the time of sale.

About GST Refund: GST refund can be of two types –

Type 1: Refund of excessive GST paid in cash Type 2: Refund of unused GST credit While Type 1 Refund is available under all conditions but Type 2 Refund is only available in the following scenarios-

Scenario 1- On zero-rated goods, made without payment of tax (considering that the products are not subject to export duty and that no tariff downside is claimed)

Scenario 2- Because the tax rate on input suppliers is higher than the tax rate on production products (Input supplies are inputs, input services, and capital goods).

Using an example, let’s consider scenario no. where the rate of on-input supplies is higher than the rate of on-output supplies. To obtain lime, raw materials such as coal, limestone, petro coke, and other packaging material must be obtained. Petro coke and packaging material can now be taxed at 18%, while finished product duty is 5%.In such situations, each month the credit is carried forward leading to constant working capital blockage.

Who is not entitled under IDS to Claim Refund?

While this may seem like refunding accrued tax credit, this may not always be the case. For example, a super stockist with an excessive credit balance at all times is not eligible to claim compensation under IDS just because of excessive credit. In this case, therefore, the dealers involved in merely trading goods are not eligible to claim the refund. This is the case with the parallel duty structure (PDS), and not the reversed obligation structure (IDS), where the input rate is equal to the production tax rate.

Legal provision: The reimbursement of unused ITC under IDS shall be governed by Section 54(3) of the CGST Act, read in accordance with Rule 89 of the CGST Rules. Further Rule 89(5) of the CGST Rules stipulates the Refund formula, which states:

Maximum Refund Amount = Turnover of Inverted Supply/ Adjusted Total Turnover* Net ITC – Tax payable on such Inverted Supply

“Net ITC” means input tax credit availed on inputs and input services during the relevant period. (This is up till 17th April
2018)

However, ITC on Input Services was specifically excluded from Net ITC after Notification No. 21/2018 dated April 18, 2018, while determining Refund under IDS. This exclusion of ITC on input services leaves one point open for discussion that whether ITC on input services, which are ancillary and secondary to the main transaction, is also covered by the scope of the above notification, the refund of which is intended to be prohibited. To explain this in detail, let us take an example to illustrate how ITC can be affected on Input Services, which is a part of the main transaction.

Say Mr. A of Delhi directed Mr. B of Mumbai to order goods.Mr. A would naturally like to collect the product at his place of business. To order to carry out this commercial transaction, goods must be reached to Mr. A’s location. Thus, Mr. B receives shipping costs and freight above and beyond the standard product value and retains tax on the whole amount, i.e. purchase value u / s 15 of the CGST as the value on which tax is payable.

The question to be discussed, however, is whether ITC on Input Services, which is being sought to be excluded by Notification No. 21/2018 of 18 April 2018, even includes certain input services that are merely a part of the dominant activity.

Latest Updates

  • Essential Strategies for Monthly GST Compliance and Finalizing Your Books
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  • Income Tax Filing (ITR) for AY 2024-25: Essential Documents Checklist
    Income Tax Filing (ITR) for AY 2024-25: Essential Documents Checklist ITR filing deadline: Unless the government grants an extension, people have until July 31, 2024, to file their Income Tax Returns (ITR). In order to prepare for filing, it is crucial to gather and arrange relevant papers, such as bank statements, prior tax […]
  • Tips for Smooth and Hassle-Free Income Tax Return Filing
    Tips for Smooth and Hassle-Free Income Tax Return Filing Filing your income tax return is a vital part of managing your finances and requires careful attention. Follow these structured steps and guidelines to ensure a seamless and accurate process. Gather All Income and Investment Documents Collect all relevant information on your […]
  • Understanding Tax Deduction at Source (TDS)
    Understanding Tax Deduction at Source (TDS) Tax Deduction at Source (TDS) is a mechanism where income tax is automatically deducted from payments made to a person during specified transactions. This process ensures timely tax collection by the government by collecting the tax upfront. TDS is typically deducted on incomes such as […]
  • Filing your income tax return early this year? Understanding these 5 essential points is crucial.
    Filing your income tax return early this year? Understanding these 5 essential points is crucial. It is precisely 45 days since the end of the 2023–24 fiscal year, and there are 75 days remaining before the July 31 deadline for filing income tax returns (ITRs). This is a great moment for an individual […]

How GST to be connected with PAN card?

Significance of Pan Card in GST Registration

The Income Tax Department of India makes it necessary for people and business entities to outfit the PAN card details for every one of those individuals who need to pay central excise duty and service tax. It is one of the docs that is required while paying goods and services tax or GST.

The GST arrangement of tax collection likewise replaces the various taxes that the central and the state governments force. With regards to the new systems, a unified approach is the thing that the government needs to build up. The various taxes, for example, food, VAT, luxury, corruption, buy, advertisement tax go under the top of GST or the goods and services tax.

Starting GST utilizing PAN

The PAN card is required for the GST enrollment process.

  • Most importantly, a temporary registration number which is known as the GSTIN or the Goods and Services Tax Identification Number is just to be given to the individuals who hold the PAN card and the details will be actually same to what is referred in that.
  • In the new tax structure, the candidates will get an unique registration against the PAN alongside a temporary ID of the state where the business exists.
  • As indicated by the new ruling of the government that the organizations with different business portions can enroll a few times with the system of GST with one PAN in particular. But, every single one of these sections will be considered as a different business structure the extent that the tax calculations are concerned.

Category of individuals

The accompanying category of individuals must give a copy of the PAN card during GST enrollment. Hence, they should comprehend the mechanism of NSDL PAN apply and get the card as sooner as feasible for the procedure of GST enrollment.

  • Individual or sole owner
  • HUF
  • Indian and foreign organizations whether public or private.
  • Association firm including the Limited Liability Company.

Different Types of GST Enrollment

The business elements need to give a few docs and need to submit them on the portal of GST for the enrollment. Take a fast look at the sorts of GST enrollment and the reason. regardless the type of enrollment, it is important to outfit the PAN details to achieve the procedure.

  • With regards to common enrollment of the taxpayers and for the supply of those goods and services that are taxable, the PAN card of the organization and the approved signatory is required. Moreover, it is important to give the PAN details of tall the directors of the organization.
  • For TDS enrollment that related with the tax that is deducted at source, the PAN number of the individual who is enlisted is required.
  • With regards to TCS enrollment, the PAN number of the candidate being enlisted is additionally to be given as one of the documents.

The Goods and Services Tax Identification Number or the GSTIN that is a major part of the new number that is explicit to each state, which relies upon PAN. Consequently, the fifteen-digit registration number involves the state code, PAN, the check digit, and the entity code. All the GST enrollments are executed dependent on PAN.

Searching GSTIN by PAN

The Goods and Service Tax Identification is one of the key parts of the GST system. In the event that you are searching for the number, the PAN card comes to help as you have to look by the details referenced in the card. Check the accompanying details.

  • The initial step is to visit the portal of GST.
  • When you are in the site, you need to click on the tab “Search Taxpayer”
  • You need to choose the option”Search by PAN”
  • Mention the PAN number in the field and the captcha code that is given underneath.
  • At last, you need to clock on “Search” and the site will show the details you have referred against the PAN details you give.

It is very evident that the PAN number is the premise or the system of GST enrollment method. Regardless of whether it is to launch the procedure of enrollment or to search for the GSTIN or the unique code that plans to improve the tax structure of your business, utilizing the PAN card is necessary. In case you need to finish the enrollment now, you need to apply for the PAN card now and complete the process.

Enquire with Certicom Consulting in case of any queries.