GST Premise: You are a Tax Thief

#GST is built on a single, simple premise: You, yes you, are a tax thief.

You will steal taxes in the blink of an eye. So, you must report all your activities to the Govt before you undertake anything.

Before you purchase or sale any goods, file a form online uploading the invoice details.

Then, file another form uploading the transporter's details. Now, you can generate an e-waybill: Your licence to move those goods once.

There is of course, no difference between intra-state or inter-state: we are One Nation, One Tax. Generate e-waybills for local supplies

Of course, your e-waybill lapses. Within 1 day if you are transporting upto a 100 Kms.

And if you need to change the vehicle, well, a new e-waybill each time.

Buying from a small trader not required to be registered under #GST? The registered recipient will comply all the e-waybill requirements.

Thought you will go under the Composition Scheme for small businesses and escape compliance? Nope, e-waybill required for all inwards and outwards.

There is a small penalty of Rs. 10,000/- for every consignment where you fail to generate e-waybill.

Composition Scheme: Detailed Rules and Procedure under GST

Composition Scheme has attracted much attention in GST. Small traders (Turnover upto Rs. 50 Lakhs annually) have been attracted to the scheme as the taxpayer will have to file one return every 3 months instead of 3 returns per month. 

The attraction increased further when the final GST bills provided a favourable rate of tax. However, suppliers under Composition Scheme have not been exempted from paying tax on supplies received from unregistered persons. 

The GST Council in its meeting on 31st March 2017 finalised the draft Composition Rules. The same were released in public domain on 1st April 2017. It is thus now possible to judge the Pros and Cons of the scheme, as well as the procedure.

Pros:

1. Only one return every 3 months, instead of 3 returns every month. 

2. No need for credit documentation. 

Cons:

1. No input credit for the trader under the scheme as well as the recipient. 

2. Cannot deal in non-taxable goods. 

3. Cannot supply interstate. 

4. Cannot supply through e-commerce operator. 

5. Cannot recover tax from recipient. 

6. Has to pay tax on OPENING to the extent purchased from unregistered persons. 

7. Opening stock should not include any inter-state purchases. 

Common Compliances

1. Pay tax (CGST +SGST) on reverse charge basis on all INWARD supplies of goods and services from Unregistered persons .

2. Upload Invoice-wise details of all inward supplies, including that from Unregistered suppliers.

3. Submit 2 forms to generate e-way bill for every supply above Rs. 50,000/= within the state. 

Tax Rates

2% on Manufacturers (1% CGST, 1% SGST)

5% for Restaurants (2.5% CGST, 2.5% SGST)

1% for Traders (0.5% CGST, 0.5% SGST)

Service providers other than restaurants are not eligible under the Scheme. 

Procedure:

1. File Form GST CMP-01 within 30 days intimating intent of opting for Composition Scheme. 

2. File Form GST CMP-03 within 60 days detailing opening stock, including inward supply from unregistered persons. PAY TAX on OPENING stock purchased from unregistered person. 

3. In Quarterly Return GSTR-4A, file invoice-wise all inward supplies of goods and services, including unregistered supplies. Pay tax on inwards from unregistered persons.

4. If Turnover crosses the limit (Rs. 50 Lakhs), file Form GST CMP-04 within 7 days. If withdrawing from Scheme by choice, file Form GST CMP-04 before withdrawing. 

5. File Form GST ITC-01 within 30 days for credit on stock on date of exit from Composition scheme.

Also Note:

1. If the taxpayer has multiple registrations under the same PAN, either all or none will fall under Composition Scheme. Intimation for one registration is deemed to be intimation for all registrations.  

2. For the limit of Rs. 50 lakhs, total turnover against a single PAN is considered. 

3. Supplier under Composition Scheme will issue 'Bill of Supply' instead of "Tax Invoice'. 

Transition Rules under GST

Finally, the detailed rules for #GST are out, as indicated by Revenue Secretary Hasmukh Adhia 2 days ago.

Time to plan your transition in detail now.

For traders, the suspense on opening CGST credit is now over. Credit will be granted at 40% of CGST rate on opening stock. Of course, if your invoice shows excise element specifically, credit will be for such excise. This credit has to be claimed within 6 months.

C-forms, etc need to be submitted within 60 days for smooth transition of closing VAT credit to opening SGST credit.

Hasmukh Adhia interview

Important interview by Revenue Secretary Hasmukh Adhia today on GST
https://t.co/ubtb8y5yzy

Key takeaways:
1. GST set to be deferred to Sept

2. Final tax rates at last moment.

3. Border Check-posts not required, but will continue.

4. E-permit mandatory for transport,  except for small parcels.

5. Entertainment taxes to continue but collection to remain with Municipality.

6. Zero-rating (as distinct from exemption) for food products in GST.

Composition Levy: Changes in New Draft

Finally, Govt has laid the GST Bills in Lok Sabha. Bills have several changes from earlier drafts.

Drastic change for Composition levy in #GST.

Instead of Minimum composition levy of 2.5% for manufacturers, now Maximum 1%.

For traders, rate changed from Minimum 1% to Maximum 0.5%

This makes Composition Levy favourable for large number of businesses.