8 things to be done under GST before March 31, 2019

  • Contributed by  CA Bimal Jain

    1. Last chance to avail any pending ITC of FY 2017-18

    In terms of sec 16(4) of the CGST Act, 2017 (“the CGST Act”) a registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both, after the due date of furnishing of the return under sec 39 for the month of September following the end of financial year to which such invoice or invoice relating to debit note pertains or furnishing of the relevant annual return, whichever is earlier.

    Let us understand this provision with the help of example:

    Due date of filing of return for the September month of next FY Date of filing annual return for the FY (2018-19) Maximum period by which input tax credit for the FY (2017-18) can be availed
    October 20 December 31 20.10.2018 i.e. Due date of filing GSTR-3B for the month of September
    October 20 September 27 27.09.2018

    Considering the first year of implementation of GST, major challenges faced by the Industry Inc was in availing GST input tax credit for the financial year 2017-18 after implementation of GST (i.e. July 2017 to March 2018) and lot of divergent views were floating with respect to the last date till which such input tax credit can be availed.

    Extension of time period to avail ITC for FY 2017-18 till March 2019

    In exercise of the powers conferred by sec 172 of the CGST Act, the Central Government vide
    order no. 02/2018 – central tax dated 31.12.2018, has inserted following proviso in sec 16(4) of the CGST Act:

    “Provided that the registered person shall be entitled to take input tax credit after the due date of furnishing of the return under section 39 for the month of September, 2018 till the due date of furnishing of the return under the said section for the month of March, 2019 in respect of any invoice or invoice relating to such debit note for supply of goods or services or both made during the financial year 2017-18, the details of which have been uploaded by the supplier under sub-section (1) of section 37 till the due date for furnishing the details under sub-section (1) of said section for the month of March, 2019.”

    Thus, the date of availing credit for FY 2017-18 is extended till March 2019. This is one of the key recommendations made by the GST Council in its 31st meeting held on 22.12.2018, giving major relief to Industry Inc. Let us also understand the background under which this order was issued.

    1. Amendments / Rectification pertaining to details furnished in GSTR-1 and GSTR-3B of FY 2017-18

    Citing the reasons supra, the Government has allowed, on the common portal, to make any short of amendment/ rectification to be made in detail furnished in GSTR-1 of July 2017 to March 2018 till the GSTR-1 of March 2019 is filled. Following are certain inclusive list of amendments that can still be made in GSTR-1 of March 2019:

    • If you have made mistake in reporting export with payment of Taxes and as a result of which, IGST refund has not been received, then you might need to amend your export details in Table 9A of GSTR-1
    • If recipient of goods or services is not able to find details of sales invoice by his supplier in his GSTR-2A , then, there might be chances that supplier have filed GSTR-1 wherein he has shown sales in B2C but it was actually B2B sales, in such cases amendment of B2Cis required and also you have to upload the bill in B2B afresh.
    • If mistakenly Nil or wrong or incomplete GSTR-1 is uploaded where invoices pertaining to some months not uploaded or uploaded to wrong GSTIN of buyer or any clerical error, then amendments are required in GSTR-1
    1. Application of Letter of Undertaking (LUT) for export of goods or services without payment of IGST for the FY 2019-20

    In terms of rule 96A of CGST Rules, 2017 (“the CGST Rules”), any registered person availing the option to supply goods or services for export without payment of IGST shall furnish, prior to export, a bond or a LUT in Form GST RFD-11. The facility of export under LUT has been now extended to all registered persons who intend to supply goods or services for export without payment of integrated tax except those who have been prosecuted for any offence under the CGST Act or the Integrated Goods and Services Tax Act, 2017 or any of the existing laws and the amount of tax evaded in such cases exceeds two hundred and fifty lakh rupees.

    Such LUT shall be valid for the whole financial year. For the Financial Year 2019-20 facility to upload the same has been enabled on GSTN portal as well.

    1. Return in Form ITC-04 in relation to Job work

    Rule 45(3) of the CGST Rules mandates the principal to furnish details of challans in respect of goods dispatched to a job worker or received from a job worker during a quarter shall be included in Form GST ITC-04. This Form need to be furnished quarterly on or before the twenty-fifth day of the month succeeding the said quarter or within such further period as may be extended by the Commissioner by a notification in this behalf.

    In this regard various notifications were issued in the past to extend the date of filing Form ITC-04. Lately, notification no. 78/2018-Central Tax dated December 31, 2018 has been issued to extend and notify March 31, 2019 as the last date up to which ITC-04 for all the quarters from July 2017 to December, 2018 can be filed.

    1. Opting for Composition Scheme for FY 2019-20

    In terms of rule 3(3) of CGST Rules any normal registered taxpayer who is opting to pay tax under sec 10 of CGST Act shall electronically file intimation in Form GST CMP-02, duly signed or verified through electronic verification code, on the common portal, either directly or through a Facilitation Centre notified by the Commissioner, prior to the commencement of the financial year.

    In terms of sec 18(4) of the CGST Act, the registered person opting to pay tax under composition scheme is required to pay an amount equal to the input tax credit in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date of exercise of option.

    The input tax credit on inputs shall be calculated proportionately on the basis of corresponding invoices on which credit had been availed by the registered taxable person on such inputs. In respect of capital goods held in stock on the day immediately preceding the date of exercise of option, the input tax credit involved in the remaining useful life in months shall be computed on pro-rata basis, taking the useful life as 5 years (rule 44 of the CGST Rules).

    The input tax credit amount shall be determined separately for integrated tax, central tax and state tax/union territory tax. The payment can be made by debiting electronic credit ledger, if there is sufficient balance in the said ledger, or by debiting electronic cash ledger. The balance, if any in the electronic credit ledger would lapse.

    In terms of rule 3(3) of the CGST Rules, such persons also have to furnish the statement in Form GST ITC-03 which is a declaration for intimation of input tax credit reversal/payment of tax on inputs held in stock, inputs contained in semi-finished and finished goods held in stock and capital goods under sec 18(4) of the CGST Act read with rule 44(4) of the CGST Rules within a period of sixty days from the commencement of the relevant financial year.

    1. Banking company to opt for 50% straight forward credit

    As per section 17(4) of the CGST Act, banking companies or financial institutions including a non-banking financial companies, engaged in supplying services by way of accepting deposits, extending loans or advances shall have the option to either:

    • comply with the provisions of section 17(2) i.e. amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies including zero-rated supplies; or
    • avail of, every month, an amount equal to fifty per cent. of the eligible input tax credit on inputs, capital goods and input services in that month and the rest shall lapse

    However, this option is to be availed at the beginning of the financial year and once either of the option is exercised, it shall not be withdrawn during the remaining part of the financial year.

    1. Option to a supplier of service in relation to the purchase or sale of foreign currency, including money changing

    For the purpose of valuation, a supplier of services in relation to the purchase or sale of foreign currency, including money changing, has two options of valuation of their services and it needs to be taken at the beginning of the financial year

    As per rule 32(2) of the CGST Rules, the value of supply of services in relation to the purchase or sale of foreign currency, including money changing, shall be determined by the supplier of services in the following manner, namely:

    Option I: Rule 32(2)(a)

    Particulars Value of supply
    If RBI reference rate for a currency, is available for a currency when exchanged from, or to, Indian Rupees {[Buying rate/Selling Rate] – [RBI reference rate for that currency at that time]} X Total units of currency exchanged.

    Example:

    US$1000 are sold by a customer at the rate of INR 60 per US$.

    RBI reference rate for US$ is INR 60.50 for that day.

    The taxable value shall be INR 500 [(60.50 – 60)*1000].

    If RBI reference rate for a currency is not available

     

    1% of gross amount of Indian rupees provided or received by the person changing the money.

    Example:

    US$1000 are sold by a customer at the rate of INR 60 per US$.

    The taxable value shall be INR 600 [(60*1000)*1%].

    Where neither of the currencies exchanged is Indian rupees 1% of the lesser of the two amounts receivable if the two currencies are converted into Indian Rupee on that day at the reference rate provided by the Reserve Bank of India.

    Example:

    US$1000 is exchanged for 1250 Euro.

    RBI reference rate for US$ is INR 60.50 and for Euro is INR 72 for that day.

    The taxable value shall be lower of the following:

    (a)        INR 605 [(US$1000*60.50)*1%]

    (b)        INR 900 [(Euro1250*72)*1%]

    Thus, the taxable value is INR 605/-.


    Option II: Rule 32(2)(b)

    Particulars Value of supply
    For an amount upto INR 1,00,000 1% of the gross amount of currency exchanged, subject to minimum of INR 250
    > INR1,00,000 upto INR 10,00,000 INR 1,000 and 0.50% of the gross amount of currency exchanged.
    > INR 10,00,000 INR 5,500 and 1/10th of a percent of the gross amount of currency exchanged, subject to a maximum INR 60,000
    1. No late fees to specified taxpayers to file returns in Form GSTR-3B/ GSTR-1/ GSTR-4 (July 17 to Sept 18)

    As per section 47(1) of the CGST Act, late fees shall be payable on per day basis, where a registered person doesn’t furnish outward or inward supplies details required under section 37 (GSTR-1) or section 38 (GSTR-2) or returns required under section 39 (GSTR-3/ 3B) or section 45 (Final Return) within stipulated time. Such late fees have been exempted vide various notifications subject to certain conditions for specific period, the summary of which is as under:

    FORM Period Notification Condition
    GSTR-1 (For Regular Taxpayers) July 2017 to September 2018 Notification No. 75/2018 dated Dec 31,2018 Furnishes the said return between the period from December 22, 2018 to March 31, 2019
    GSTR-3B (For Regular Taxpayers) July 2017 to September 2018 Notification No. 76/2018 dated Dec 31,2018 Furnishes the said return between the period from December 22, 2018 to March 31, 2019
    GSTR-4

    (For Composition Dealer)

    July 2017 to September 2018 Notification No. 77/2018 dated Dec 31,2018 Furnishes the said return between the period from December 22, 2018 to March 31, 2019

    DISCLAIMER: The contents of this document are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the authors nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this document nor for any actions taken in reliance thereon.