The best time to invest in accounting software is when you have a business. A good online accounting software will help you manage a variety of things.

A few of them are expense tracking, invoicing, and even inventory management and if you are a business owner who runs a big operation, some accounting software also has a payroll feature.

As an Australian business owner, you have surely heard about Xero and reckon. Two famous software in the accounting industry.

Now, this blog will try to answer the age-old question of which accounting software is better, but first, let’s understand the need for accounting software.

Reckon compared to Xero popularity chart

Why use accounting software?

Accounting is a very important aspect of any business, for most sole traders or small business owners, it might sound easy to do it manually or with the help of Excel sheets.

A business’s accounting is more the just profit and loss. Once your small business takes off, accounting also becomes more complex maintaining invoices and inventory can be very tedious.

This is the stage where you will feel the need for a helping hand, but not all sole traders or small business owners can’t afford to have accountants. For such business owners accounting software providers like QuickBooks Online, Xero, Reckon, or even lesser-known software providers like ProfitBooks is a blessing.

Once you outsource your accounting tasks using software you can focus on the more important things which are helping your business grow.

In this blog, we will take a deep dive and look at two of the leading Accounting software providers, Xero and Reckon.

Use XERO with zero doubt

Xero is a comparatively new accounting Platform. It was launched in 2006 in New Zealand and soon after became popular in Australia for its unique and user-friendly features. which we will be talking about a little further in the blog.

Due to its unique features, XERO has around 1.12 million users in Australia alone, and the number along with XERO’s popularity is growing by the day. let’s see some pros and cons of the software.

Xero home screen

Pros

1) Beautiful and Intuitive Interface:

We all hate when the software you are working with is complicated and boring, but with XERO’s user-friendly and fancy interface you will not only be able to work with the software with ease but the software will look good while you do.

This is also the reason why, we here at profitbooks are so passionate about making Our unlimited invoices feature not just beautiful, but also user-friendly.

2) Cloud-based Platform:

In 2023, if it’s not online does it even exist? In today’s world everything is online and cloud-based, and so should your accounting software.

Because of cloud integration, you can conduct business anywhere in the world as well as you can integrate other business tools into your software as well.

3) Bank Reconciliation Made Easy:

We all love when some aspects of our work are easy and simple, and Xero understands that.

Hence they automatically categorize all your transactions, which makes it easy to reconcile bank transactions of all your business-related money exchanges.

4) Automated Invoicing and Receivable Management:

The most professional way to make sure that you are getting proper payment for your work is by creating an invoice for all the account receivables your clients and customers need to be aware of.

Sometimes it might be very tedious work to keep reminding them about these account receivables.

Xero makes managing these account receivables easy with auto-reminders and features which let you manage them.

5) Multi-Currency Support:

Internet has made it easy to work around the world, with different customers and clients. A lot of software is not always capable of handling these business transitions in multiple currencies.

With XERO you will not face such a problem as it offers muti-currency invoices as well as tracking. This along with its updated exchange rates will help you with easy worldwide transactions.

6) Extensive Integrations:

This the by far the best feature the software has to provide. The software providers understand that a business owner’s business-related needs are not linear or straightforward.

Hence, the software provides dynamic third-party interactions to make a business owner’s life easy.

7) Collaborative Environment:

The most important plus the software has is its efficient collaboration. with this software, you will be able to give access to your employees, or even a guest accountant for review.

Not just making your work easy, but also transparent to ensure trust and confidence.

Pricing

The pricing for the software is anywhere between $15/mo- $215/mo. The price of the software mostly depends on the customizations you make as well as how many people will be using it.

They also provide a 30-day free trial, for you to get a hang of the software.

Xero pricing plan

 Cons

1) Cost:

The cost of the software is high. A lot of sole traders or small business owners may find it difficult to constantly review such a steep cost for accounting software.

2) Learning Curve:

The software is very user-friendly and has an interactive interface but there is still a learning curve to get used to it.
especially if you are migrating from other accounting software to this one.

 

3) Limited Customization:

Now, this might sound ironic, but software that is known for this customization has limited customization. This problem is just for the invoices. With the software, you might have a problem making or creating dynamic invoices.

 

4) Support and Documentation:

While the software provides support resources and a knowledge base, some users have reported challenges in finding specific information or receiving timely support when encountering issues. Depending on your reliance on customer support, this aspect may impact your experience.

 

5) Add-On Costs:

While the software integrates with various third-party apps, it’s important to note that some of these integrations may come at an additional cost. Depending on the specific functionality you require, there might be extra expenses associated with integrating XERO with certain tools or services.

 

6) Industry-Specific Limitations:

Software may have certain limitations for businesses operating in specific industries or with specialized requirements. It’s crucial to ensure that the software can adequately support your industry-specific needs before committing to the platform.

Who should use Xero?

The software is best suited for micro and small business owners and sole traders. The software has great customizations which will make your work very easy.

The software also features short-term cash flow management which is very useful for small projects.

Reckon home screen

Pros

1) Accounting and Bookkeeping:

The biggest plus for any accounting software is its ability to conduct accounting tasks and expert bookkeeping. As these two come in handy when it’s time for tax season which is upon us right now. And this accounting software is extremely capable of these two activities.

2) Payroll Management:

Payroll management is a task that a lot of companies struggle with. The software makes managing payroll with the Australian tax and labor guidelines easy.
This is important for both big and small businesses.

3) Business Reporting and Analytics:

The software includes reporting and analytics tools that enable business owners to gain insights into their financial performance. It provides customizable reports, key performance indicators (KPIs), and graphical representations of data to assist in decision-making and financial analysis.

4) Online and Cloud Solutions:

Reckon is an online solution, that allows business owners to access their financial data from anywhere with an internet connection. This flexibility enables collaboration with accountants or team members and ensures data security through regular backups.

5) Inventory Management:

The software provides inventory management features, allowing businesses to track stock levels, manage purchases and sales, and generate reports on inventory valuation. This helps optimize stock control, streamline supply chain processes, and improve overall efficiency.

6) Integration and Customization:

the software integrates with other business applications, such as point-of-sale (POS) systems, e-commerce platforms, and CRM software. This integration capability allows for seamless data flow between different systems, reducing manual data entry and improving workflow efficiency.

7) Support and Training:

The software offers customer support and training resources to assist business owners in using their software effectively. They provide documentation, online tutorials, and user forums to address common queries and help users make the most of the software’s features.

Pricing

The pricing for the software ranges from $6-$36 per year depending on the plan.

Reckon pricing plan.

Cons

1) User Interface and Learning Curve:

Some users have found The software user interface less intuitive than other accounting software options. Navigating through the software and finding specific features may require a learning curve, especially for users who are less experienced with accounting software.

 

2) Limited Automation:

The software’s automation capabilities may not be as extensive as some other accounting software options. Users may find certain processes, such as bank reconciliation or invoicing, to be more manual and time-consuming, requiring additional effort and potentially impacting overall efficiency.

 

3) Scalability:

Some users have reported limitations in terms of scalability with the software. As businesses grow and their financial needs evolve, they may find that the software’s features may not scale as seamlessly or comprehensively as desired, necessitating a potential transition to a more scalable solution.

4) Customer Support:

While the software provides customer support services, there have been occasional reports of longer response times or difficulties in accessing timely assistance. Depending on a business’s reliance on customer support, this aspect may impact the overall experience and resolution of any issues encountered.

 

5) Limited Integrations:

Although software offers integration options with select third-party applications, the range of available integrations may be more limited compared to other accounting software platforms. Businesses with specific integration requirements may find that Reckon’s options do not fully align with their needs.

Who should use Reckon one?

The software is best suited for people who have small and medium size businesses. Features like payroll and bookkeeping are very beneficial for people who have more than a few employees.

which One To Choose

Investing in accounting software is a must, for any business owner. Finding an accounting software that suits your business needs.

Both the above-mentioned software is good for the target audiences, but both software also comes with a steep cost.

If you are looking for cheap software, but still have to take care of all your accounting needs. Check out profitbooks.

With deals like a “lifetime deal” and “forever free plan” Profitbooks will be your accounting software forever. The software provides advanced features like invoicing, Inventory management, payroll and so much more.

Visit the Profitbooks website and register your business today!

Profitbooks homescreen

FAQs

Is the accounting software compliant with Australian tax regulations and reporting requirements?

Australian businesses must comply with specific tax regulations and reporting obligations set by the Australian Taxation Office (ATO). Business owners frequently inquire whether the accounting software they are considering meets these requirements, such as Goods and Services Tax (GST) reporting, Business Activity Statements (BAS), and Single Touch Payroll (STP) for payroll management.

 

Can the accounting software handle multiple currencies and international transactions?

It’s essential to ensure that the accounting software can handle these requirements for businesses involved in international trade or dealing with multiple currencies. Business owners often ask if the software supports foreign currency transactions, exchange rate conversions, and international taxation rules.

 

Does the accounting software integrate with other business applications and systems?

Many businesses use multiple software solutions to manage different aspects of their operations. Integration with other applications, such as point-of-sale systems, customer relationship management (CRM) software, or e-commerce platforms, is crucial for streamlining workflows and ensuring data consistency. Business owners often inquire about the compatibility and integration capabilities of accounting software.

 

Is the accounting software scalable to accommodate business growth?

Business owners want accounting software that can scale alongside their company’s growth. They often ask whether the software can handle an increasing number of transactions, support additional users, or adapt to changing business needs without significant disruptions or data migration challenges.

What level of customer support and training is provided?

Customer support and training resources are essential considerations when selecting accounting software. Business owners frequently ask about the availability and responsiveness of customer support channels, such as phone, email, or live chat. They also inquire about training materials, documentation, and online resources to ensure they can effectively use and troubleshoot the software.

Also, read

What is Cloud Accounting, And How it Will Help Your Business
Tips To Migrate From QuickBooks To Another Accounting Software
How To Select A Perfect Accounting Software- 8 Tips
Free accounting software for small businesses
Top 8 Alternatives to Zoho Books Accounting Software

The post Which Is Better Xero or Reckon in 2023 appeared first on ProfitBooks.net.

GSTR 1 return is used to upload your sales data to the GSTN portal. Every tax payer needs to report following things:

• Invoice summary (Types of invoices, Credit Notes, Advance Receipts, etc)
• Summary of documents issued (Documents such as invoices, credit notes and their serial numbers)
• Summary of HSN/SAC
• Turnover Details (This is an one time activity)

ProfitBooks automatically prepares this data for you so you don’t have to worry about it.

Follow these steps to file GSTR 1 from your ProfitBooks account:

1. Enable API Access On GSTN

In order to let ProfitBooks application communicate with GSTN, first you’ll need to enable API access on GSTN portal.

To enable API access:

1. Login to www.gst.gov.in.
2. Go to Dashboard –> My profile –> Manage API Access.
3. Select ‘Yes’ corresponding to ‘Enable API Request’.
4. Select the ‘Duration’ as 30 days, and click Confirm.



 

2. Start Working On GSTR 1

Login to your ProfitBooks account and go to GST –> GST Returns.

Click on ‘GSTR-1’.



 

3. Upload Invoices To GSTN

Review the invoices and click on ‘Upload Data’ button.



 

4. Verify The Uploaded Invoices

Click on ‘GSTR-1 Summary’ to verify the data. You can login to GSTN portal and verify if all the invoices are uploaded correctly.

 

5. Submit GSTR-1

Once you review the uploaded invoices, you can proceed to finally submitting the GSTR-1. Please note that its a final step and you won’t be able to make changes once the return is filed.

Please follow these steps to submit the return:

1) Login to www.gst.gov.in.

2) Go to ‘Services’ –> ‘Returns’  and then click on ‘Returns Dashboard’.

3) Select the return filing period.

4) Choose ‘Prepare Online’ mode


5) Select the checkbox, submit and choose a signing method and file GSTR-1


That’s it. Your GSTR-1 return is filed.

The post Filing GSTR-1 From ProfitBooks appeared first on ProfitBooks.net.

Goods and Services Tax (GST) is considered the biggest reforms in India. However, one thing that has become the talking point is – the mechanism of input credit under GST.

In simple words, Input Credit means at the time of paying tax on sales, you can reduce the tax you have already paid on purchases.

In this article, we’ll cover all you need to know about Input Tax Credit (ITC) under GST, the time limit to avail ITC, how to calculate Input Tax Credit, how to claim ITC, the situation where you can not avail ITC and much more.

What is Input Tax Credit (ITC)?

Input Tax Credit means reducing the taxes paid on inputs from taxes to be paid on output. When any supply of services or goods is supplied to a taxable person, the GST charged is known as Input Tax.

The concept is not entirely new as it already existed under the pre-GST indirect taxes regime (service tax, VAT and excise duty). Now its scope has been widened under GST.

Earlier, it was not possible to claim input tax credit for Central Sales Tax, Entry Tax, Luxury Tax and other taxes. In addition, manufacturers and service providers could not claim the Central Excise duty.

During the pre-GST era, cross-credit of VAT against service tax/excise or vice versa was not allowed. But under GST, since these taxes will be subsumed into one tax, there will not be the restriction of setting off this input tax credit.

The conditions to claim Input Tax Credit under GST is a very critical activity for every business to settle the tax liability.

Input Tax Credit can’t be applied to all type of inputs, each state or a country can have different rules and regulations. Input Tax Credit is also viable to a dealer who has purchased good to resale.

Tax Credit is the backbone of GST and for registered persons is a major matter of concern. This is majorly in line with the pre-GST regime. These rules are quite stringent and particular in their approach.

Say for instance that you are a manufacturer. The tax to be paid on the final product is INR 450. The purchase tax paid is INR 300. The input credit you claim is INR 300, and the final taxes you will pay is INR 150.

What is the time limit to avail GST ITC?

ITC can be availed by a registered taxable person in a specific manner and within a specified time frame. The table below shows the different situations wherein the inputs can be claimed for semi-finished goods or stock or finished goods.

Input tax credit for the above-mentioned situations can be claimed only if it does not exceed one year from the tax invoice date of issue related to supply.

For any other cases, ITC must be claimed earlier of the following-

a) Furnishing of annual return or

b) Due date of filing the monthly return (GSTR-3) for the next financial year’s September month.

Example- For the invoice dated 10/11/2017, ITC must be availed earlier of the following dates –
The due date for September 2018 return – 20th October 2018
Annual return filed (assumed) – 10th November 2018
Thus till 20th October 2018, ITC must be availed.

How to calculate Input Tax Credit?

Let’s consider an example on how to calculate Input Tax Credit:

Suppose you have a business. The service or product you sell attracts a tax of 18%. You use input services or goods during your business. The tax due from you (of 18%) can be adjusted to the taxes paid already by you on the purchase of such inputs. The manufacturers add taxes only for the value addition done and not on the total product value.

Let’s consider an example of a steel utensils manufacturer who manufactures utensils like spoons, plates, etc. Assume that the manufacturer had bought an INR 500 worth of raw steel to make a pressure cooker and INR 100 worth other raw materials. Let’s assume that the GST for steel is 18%. Also, assume that the GST he paid is 28% of other raw materials.

Hence, the manufacturer has paid Rs. 28 on other raw materials and Rs. 90 on raw steel which he used as inputs.

So, the total input tax paid was INR 118 by the manufacturer.

Now, after considering the cost of manufacturing steel pressure cooker using the raw materials and including a decent profit, he decided to sell the pressure cooker to a distributor at INR 800 + GST.

Assume that the steel utensil attracts a GST of 18%.

Now the tax on it will be INR 144. So the manufacturer will invoice the pressure cooker for INR 944.

Hence, the manufacturer is collecting INR 144 as GST on sale from the distributor. The manufacturer had paid INR 118 towards GST during the purchase of his input raw materials. Hence, out of INR 144 of GST, the manufacturer can now claim a credit of INR 118 which he already paid towards GST for inputs and deposit the difference of INR 26 with the government.

This tax credit is available at all succeeding stages, retailers and distributors charge GST and can claim the Input Tax Credit.

How to claim Input Tax Credit (ITC)?

The following conditions have to be met to be entitled to Input Tax Credit under the GST scheme:

1. One must be a registered taxable person.
2. One can claim Input Tax Credit only if the goods and services received is used for business purposes.
3. Input Tax Credit can be claimed on exports/zero-rated supplies and are taxable.
4. For a registered taxable person, if the constitution changes due to merger, sale or transfer of business, then the Input Tax Credit which is unused shall be transferred to the merged, sold or transferred business.
5. One can credit the Input Tax Credit in his Electronic Credit Ledger in a provisional manner on the common portal as prescribed in model GST law.
6. Supporting documents – debit note, tax invoice, supplementary invoice, are needed to claim the Input Tax Credit.
7. If there is an actual receipt of goods and services, an Input Tax Credit can be claimed.
8. The Input Tax should be paid through Electronic Credit/Cash ledger.
9. All GST returns such as GST-1, 2,3, 6, and 7 needs to be filed

How Input Tax Works Under GST

Suppose Mr. A is a seller. He sells goods to Mr. B. The buyer Mr. B is now eligible to claim the purchase credit using his purchase invoices.

This is how it works:

1. A uploads all his tax invoices details as issued in GSTR-1.
2. The details uploaded by Mr. A is automatically populated or reflected in GSTR-2A. This same data will get reflected when Mr. B files the GSTR-2 returns which are nothing but the details of his purchase.
3. The details of thesale are then accepted and acknowledged for by Mr. B, and subsequently, the purchase tax is credited to Mr. B’s ‘Electronic Credit ‘ He can use this to adjust it later for future output tax liability and receive a refund.

How to utilize the Input tax credit?

In GST we have three types of taxes CGST, IGST, and SGST/UTGST.
For the inter-state supply of goods/ services, IGST is charged.
and for the intra-state supply of goods/services CGST and SGST/UTGST are charged.

While making payment for the above taxes, input tax credit will be allowed in the following manner-

What is the manner of availing ITC On Capital goods?

Unlike earlier Laws,100% of the credit is allowed in the 1st year of purchases.
If the depreciation is charged on the GST portion(i.e. credit) of capital goods, ITC will not be allowed.

Example:

Cost    GST   Total cost    Deprecation charged on     ITC available
500      50       550                  550                                     nil
500      25       525                  500                                     25

Under what situations one CAN NOT claim Input Tax Credit (ITC)?

What are the documents and forms required to claim Input Tax Credit?

Each applicant will require the following documents to claim Input Tax Credit under GST:

1. Supplier issued invoice for supplying the services and goods or both according to GST law.
2. A debit note issued by the supplier to the recipient in case of tax payable or taxable value as specified in the invoice is less than the tax payable or taxable value on such supplies.
3. Bill of entry.
4. A credit note or invoice which is to be issued by the ISD (Input Service Distributor) according to the GST invoice rules.
5. An invoice issued like the bill of supply under certain situations instead of the tax invoice. If the amount is lesser than INR 200 or in conditions where the reverse charges are applicable according to the GST law.
6. A supplier issued a bill of supply for goods and services or both as per the GST invoice rules.

The above documents prepared as per the GST invoice rules should be furnished while filing the GSTR-2 form. Failure to present these forms can lead to either rejection or resubmission of the request.

For taxes paid on goods and services or both due to any fraud or due to order for the demand raised, suppression of facts or wilful misstatement, Input Tax Credit cannot be claimed.

Since input credit will be available to the seller at each stage, the input tax credit is expected to bring down the overall taxes charged on the product at present. So, if input credit mechanism works efficiently, final consumers may see the cost reduction.

10 Important points regarding ITC

1. For advance payment, the supplier is required to pay tax on such advance receipt but in case of the recipient, he can avail the ITC only when tax invoice is issued and goods/services are received.
2. ITC cannot be availed on the basis of a photocopy of the valid document.
3. SGST paid in one state cannot be utilized as credit for payment of SGST of another state.
4. For payment of interest and penalty Input tax credit cannot be utilized in other words it should be paid using electronic cash ledger.
5. For claiming  ITC goods/ services must be actually received. Hence the goods or services received by the agent or the job worker will be assumed to be received by the recipient.
6. On receipt of invoice by the recipient, invoice amount must be paid within 180 days from the date of invoice. If the recipient fails to pay so, the amount taken as credit will be reversed and output tax will be payable on such amount. Yet on the later date, if the recipient pays the invoice amount, he can again claim the credit.
7. On filing the form GSTR-2 (inward supplies details) by the recipient, the credit claimed in the return will be credited to electronic credit ledger on the provisional basis. The recipient can file Form GSTR-3 and pay self-assessed tax by taking credit of input available in electronic credit ledger. After filling of form GSTR-3 by both supplier and recipient system carries out the matching process. If the supplier has paid the tax on the goods/services, ITC will be allowed to the recipient. In case during the matching process, any mismatch is found due to-
   a) duplication of claim or
   b) If the input claimed by the recipient is in excess of output declared by the supplier,
   then, the excess amount will be added to the output tax liability of the recipient and the tax amount will be required to be paid along with the interest.
8. In case if goods (inputs and Capital goods both) has been received in installment or lot against a single invoice then input can be availed on the receipt of last installment or lot.
9. GST paid under reverse charge can also be utilized as ITC.
10. If goods or services purchased/received are used for both business and non-business purpose, then only part of ITC relating to goods/service used for business purpose will be allowed as a credit.Even in case of taxable and exempted goods/services, only the part relating to taxable goods/service will be allowed as a credit.

Manage Input Tax Credit With ProfitBooks

A full featured GST software like ProfitBooks can help you comply with GST rules. With ProfitBooks, you can create GST invoices, do automatic reconciliation of sales & purchases and even file GST returns.

Getting started with ProfitBooks is easy, you don’t need any accounting knowledge to use it. Its easy to use and affordable.

Also Read
30 Common questions about Input Tax Credit
How to create GST Invoice
Refunds under GST
Tax payments under GST
GST return filing process
20 Tax saving tips for business owners

The post Input Tax Credit (ITC) appeared first on ProfitBooks.net.

Goods And Services Tax, whether you like it or not, is a structured approach in detailing the transactions that happen in India and further, reporting them on a line item basis. There are supposedly 8.4 million assessees registered with GST, 6.2 million are already registered in the GST portal. These assessees are expected to file roughly 8 billion transactions in a month.

This calls for a much robust Information Technology architecture. Apart from this, the transactions have to be reported properly, so that information keeps flowing smoothly and input tax credits are availed whenever required.

The journey of a free flow of credit and uploading transaction wise information starts from Form GSTR-1. It has the details of all outward supplies made by the suppliers. Similarly, details of all inward supplies of goods or services received during a month have to be filed in a Form GSTR-2.

The end result is that all inputs and outputs for a particular dealer are kept handy in the Electronic Cash Ledger. Although the above forms have to be verified and accepted by the counter party, i.e. the transactions have to be approved by both supplier and recipient. Once all transactions are approved, then electronic cash ledger is generated, and the amount payable or available as credit is displayed.

Learn more about invoice matching in GST.

What Is GSTR-2 ?

Once the suppliers have filled up their information of sales made during a tax month in Form GSTR-1, it is now the task of recipients to file their receipts of goods or services in Form GSTR-2. This form is a culmination of all the details made by all the suppliers and is available for validation for the recipients.

It has to be filed by the 15th of the next month, i.e. 5 days after the filing of GSTR-1.

Since the details of the suppliers’ data are already available, this form is auto-populated from such details. The dealers will have to approve or amend the transactions one by one to get input tax credit eligibility.

There will be a penalty if GSTR-2 in not filed on time. Read about GST Penalties.

Who needs to file GSTR-2?

GSTR-2 has to be filed by all the dealers who are registered under the GST Act. Those who had filed GSTR-1 shall be required to file GSTR-2 as well. Likewise, input service distributors and dealers registered under the compounding scheme shall not be required to file GSTR-2.

Even E-Commerce Operators, Tax deductors, and Non-resident dealers need not file GSTR-2. They have a separate, respective forms to file.

What needs to be filed in GSTR-2?

This is a much-detailed form when compared to GSTR-1. Let’s have a look at the contents of the form.

• Name and address of the dealer – this field shall be auto-populated after logging in to the GSTN portal.
• 15-digit GSTIN of the dealer – this field shall be auto-populated after logging in to the GSTN portal.
• The return filing period – the month and the year for which the return is being filed.
• Details of all the incoming materials and services received by the dealer – this field is auto-populated with the details of GSTR-1. This is a key part of the form that displays the purchases of the dealer made during the tax month. There can be differences in the list of invoices, which can be corrected by the dealer filing the return. Such dealer can fill in the extra or additional details manually. The corresponding supplier will have a notification to that effect, and the same will be reflected in GSTR-1A, which the supplier has to accept accordingly.
• Changes made to details of incoming materials from previous periods – similar to the above, where there are changes made to the details of incoming supplies relating to previous periods. Dealers have to fill this manually. Moreover, the suppliers have to accept such changes in the relevant GSTR-1A.
• Details of all imports made of capital goods or goods – since imports are considered as an inter-state movement of goods, accordingly IGST will be charged in this case.
• Changes made to the details of imports made during the previous periods – any changes thereof relating to the previous periods have to be reported in this field.
• Details of services received from persons resident outside India – This field relates to import of services. GST has to be paid on a reverse charge basis.
• Changes made to the details of services received from persons resident outside India of previous periods – any changes with respect to imports of services made during a previous period has to be updated here.
• Details of debit notes or credit notes raised during the tax period – the details mentioned herein shall be available for validation in respective counter party forms.
• Details of changes made to the debit or credit notes of previous periods – the changes made to the debit or credit notes of the previous months are to be mentioned here. Any such change will directly impact the reverse charge taxes.
• Details of materials received from unregistered persons during the tax month – this is a common field for mentioning all kinds of supplies that have been received from unregistered persons, both intra-state and inter-state. The supplies that are received shall include materials received from an unregistered person, composition dealer and remaining non-GST, exempted or zero-rated supplies.
• Details of input tax credit received from an Input Service Distributor – Input service distributor is required to file GSTR-5, the details of which shall be auto populated in this heading. This type of credit arises when head office disburses credits to its branch offices. As a result, the branch office can claim credit related to the same.
• Details of credits arising out of tax deducted at source – where the dealer transacts in specified contracts, resulting in tax being deducted at source, the details of the same has to be mentioned here. The field is auto-populated from GSTR-7 filed by the person deducting tax.
• Details of credits arising out of tax credited at source – under the GST law, E-Commerce operators are required to collect tax at source while making payment to its merchants. Further, these E-Commerce operators are required to file GSTR-8, the details of which are auto populated in this field.
• Details of input tax credit received against an invoice – an invoice against which input tax credit was claimed, but the supplier, due to certain reasons did not file the same, can be filled up in this field.
• Details of output tax liability arising due to reverse charge, even though no invoice was received – as per the GST provisions, even though an invoice is not received but due to the provisions of time of supply, the GST implication comes earlier, then such details of tax liability arising out of such transactions have to be mentioned here.
• Any amendments made to the above fields
• Details of tax paid – this heading includes tax paid for the reporting period, tax paid on account of reverse charge and tax paid for the previous periods as well.
• Details of input tax credit reversals – in the event of credit being reversed due to any reasons, this field will be filled in. The reasons are available as a drop down to choose from.
• Amendments to the details of input tax credit reversals – any changes made with respect to above field has to be mentioned here.

Format of GSTR-2

This is the official format of GSTR-2 announced by GSTN.

Common errors in filing purchase transactions

Even after carefully filing the forms, there are certain errors or omissions that might creep up while filing the final returns. These can be inadvertently made while filling up the form. Some common errors that can come up can result due to an omission of invoices both by the purchaser or the receiver.

The purchaser might record an invoice that is missing in the purchase ledger of the recipient. As such, the supplier shall ask the recipient to accept the additional invoice after proving its validity. The recipient has to accept the same in GSTR-2A. Until such acceptance, provisional credit shall be granted to the supplier.

The supplier might mention wrong, incorrect details such as incorrect GSTIN of the purchaser. The purchaser shall have the option to modify the invoice to such extent or even delete the same. The supplier in GSTR-1A will then accept such changes.

Other common mismatch events are incorrect amounts filed by both the parties. The option to modify or delete such mismatched invoices are available with both the supplier and purchaser in their respective forms.

Where a purchaser finds an invoice that is not available in accounts, i.e. goods are in transit, and the invoice for the same has not been received, the purchaser will have the option to keep the same pending for the tax month. There can also be a mismatch of HSN/SAC codes for the goods or services mentioned by both the parties. In both cases, the counter party can modify the invoice information.

GSTR-2 Filing in ProfitBooks

How To File GSTR-2 Online?

Apart from filing GSTR-2 directly on GSTN portal, you can use third party softwares which are simpler to use. Most of these software accept data from your existing accounting software and help you upload it to GSTN portal. Almost all the GSPs have come up with their return filing solution.

However, matching purchase records and doing reconciliation manually will be extremely time consuming and prone to errors.

If you want to avoid multiple steps and hassle of using lot of softwares, try ProfitBooks today. Its an easy to use accounting software with 1-click GST return filing. Its designed for business owners who do not have any accounting background.

Also Read:
Types Of GST Returns
How To File GSTR-1 Online
Debit Notes & Credit Notes Under GST
12 Inventory Management Techniques To Cut Losses

The post Understanding GSTR-2 appeared first on ProfitBooks.net.

GST has rolled out and paved the way for a uniform and systematic reporting system that is seldom found anywhere else. This transaction-wise, destination-based reporting system provides for a much effective credit flow, removes chances of corruption and illegal transactions.

To achieve this, the government has come up with an effective form-based reporting system that needs to be filed either monthly, quarterly or yearly, as the case may be, by the dealers and manufacturers. The aggregation of information uploaded by all the dealers will lead to a common reservoir of data, which can be accessed by either. Moreover, dealers can view their credit statement or payables with respect to GST easily in a common internet portal.

What Is GSTR-1 ?

It all starts with GSTR-1. It is where the suppliers will report their outward supplies during the reporting month. As such, all registered taxable persons are required to file GSTR-1 by the 10th of the following month. It is the first or the starting point for passing input tax credits to the dealers.

Who needs to file GSTR-1?

GSTR-1 has to be filed by “all” taxable registered persons under GST. However, there are certain dealers who are not required to file GSTR-1, instead, are required to file other different GST returns as the case may be. These dealers are E-Commerce Operators, Input Service Distributors, dealers registered under the Composition Scheme, Non-Resident dealers and Tax deductors. It has to be filed even in cases where there is no business conducted during the reporting month.

How to file GSTR-1 In few steps.

What needs to be filled in GSTR-1?

GSTR-1 has 13 different heads that need to be filled in. The major ones are enlisted here:

• GSTIN of the taxable person filing the return – Auto-populated result
• Name of the taxable person – Auto-populated field
• Total Turnover in Last Financial Year – This is a one-time action and has to be filled once. This field will be auto-populated with the closing balance of the last year
• The Period for which the return is being filed – Month & Year is available as a drop down for selection
• Details of Taxable outward supplies made to registered persons – CGST and SGST shall be filled in case of intra-state movement whereas IGST shall be filled only in the case of inter-state movement. Details of exempted sales or sales at nil rate of tax shall also be mentioned here
• Details of Outward Supplies made to end customer, where the value exceeds Rs. 2.5 lakhs – Other than mentioned, all such supplies are optional in nature
• The total of all outward supplies made to end consumers, where the value does not exceed Rs. 2.5 lakhs.
• Details of Debit Notes or Credit Notes
• Amendments to outward supplies of previous periods – Apart from these two, any changes made to a GST invoice has to be mentioned in this section
• Exempted, Nil-Rated and Non-GST Supplies – If nothing was mentioned in the above sections, then complete details of such supplies have to be declared.
• Details of Export Sales made – In addition to the sales figures, HSN codes of the goods supplied have to be mentioned as well.
• Tax Liability arising out of advance receipts
• Tax Paid during the reporting period – it can also include taxes paid for earlier periods.

The form has to be digitally signed in case of a Company or an LLP, whereas in the case of a proprietorship concern, the same can be signed physically.

Format of GSTR-1

This is the official format of GSTR-1 announced by GSTN.

Common Mistakes while filing GSTR-1

The mistakes can be as puny as mentioning incorrect HSN codes, Service Accounting Codes and can extend up to mentioning incorrect GSTIN, charging incorrect rates of tax, treating a sale as an intra-state sale instead of inter-state sale or vice versa, mentioning a tax invoice twice and the like. The supplier while filing the GSTR-1 can make these common mistakes. Apart from the above, situations may arise that ship to address of the customer can change. This common change can be witnessed while filing GSTR-1.

How to amend GSTR-1?

There may be cases wherein details mentioned by the supplier are incorrect. In these cases, there is a possibility for the dealers to amend the errors or omissions after filing GSTR-1. In a normal scenario, the details filed by the supplier is rejected by the recipient of the goods or services, then the supplier will receive an intimation to that effect, wherein he can amend the same. Where the recipient inadvertently accepts the invoice, oblivious of the error, then the supplier has to report the same to the Jurisdictional Authority citing such error and its rectification. The Jurisdictional Authority will have to option to make good such error, after ascertaining the facts of the case.

Where an inter-state sale is treated as an intra-state sale and subsequently, IGST is charged instead of CGST and SGST, then the supplier has to pay the amount of IGST separately to the Ministry and claim for a refund of the excess CGST or SGST. Again, he also has the option to claim input tax credit on the CGST / SGST amount inadvertently paid by him against CGST, SGST or IGST output liability, as per the prescribed rules.

In some cases, the supplier may be required to change information in a tax invoice, which is already uploaded in GSTR-1. It has to be noted that if the recipient accepts the details of the supplier as mentioned in the GSTR-1, then the supplier will have no option to amend or make any changes whatsoever in the invoice document. The supplier has to issue a supplementary invoice or a credit note against the invoice in which he wants to make any changes.

To negate the effects of the double claim of input tax credits, suppliers shall install a system, which derives a unique combination of financial year, invoice number, and the GSTIN. The system will automatically display the error in case there is a duplicate invoice being punched in.

There can be chances that Point of Supply in an invoice is changed over a reasonable period of time. This new point of supply can happen to be in a different state. In that case, SGST part charged will be reversed and passed on to the new state.

Common Questions Regarding GSTR-1

1) What is the checklist before filing Form GSTR-1?

The first and foremost requirement is having a valid Goods and Services Tax Identification Number (GSTIN). The supplier will be notified with a User ID and Password that will enable the user to file returns. Next, the supplier will be required to have a valid digital signature certificate (DSC). This DSC is obligatory for companies, LLPs (Limited Liability Partnerships) and FLLPs (Foreign Limited Liability Partnerships). Other suppliers, i.e. Proprietors, partnership concerns, HUF, etc. have the option to “E-sign” the form. In that case, a valid Aadhar Card Number is required. An OTP for verification shall be sent across on the registered mobile number as mentioned in the Aadhar Card.

2) How shall I file GSTR-1?

After going through the checklist, suppliers need to log in to the GSTN portal with the given User ID and password, follow these steps to file their returns successfully.

• Search for “Services” and then click on Returns, followed by Returns Dashboard.
• In the dashboard, the dealer has to enter the financial year and the month for which the return needs to be filed. Click on Search after that.
• All returns relating to this period will be displayed on the screen in a tiled manner.
• Dealer has to select the tile containing GSTR-1
• After this, he will have the option either to prepare online or to upload the return.
• The dealer will now Add invoices or upload all invoices directly
• Once the entire form is filled up, the dealer shall then click on Submit and validate the data filled up
• With the data validated, dealer will now click on FILE GSTR-1 and proceed to either E-Sign or digitally sign the form
• Another confirmation pop-up will be displayed on the screen with a yes or no option to file the return.
• Once yes is selected, an Acknowledgement Reference Number (ARN) is generated.

3) What is the due date of filing GSTR-1? What if I don’t file my returns within the due date?

The due date for filing GSTR-1 is 10th of the following month. If the dealer does not file GSTR-1 where it is mandatory to do so, then a late fee will be charged to the dealer.

The late fee is an amount of Rs. 100 / act / day, i.e. Rs. 300 shall be charged on account of IGST, CGST and SGST per day. Moreover, this late fee is calculated automatically after filing of GSTR-1.

Read about penalties under GST.

4) Can you upload invoices any time before filing the return?

Yes. Invoices can be updated on a regular basis before filing GSTR-1. Technically, dealers have a time slot of 40 days to upload their invoices, i.e. from 1st of the reporting month till the 10th of the next month. There can be several changes made to the list of invoices during this period.

5) The field “turnover” is a mandatory field in GSTR-1. How shall I fill it up?

This field is a one-time field and has to be filled up manually during the first return. It will be automatically populated every month based on the details furnished in the return.

How To File GSTR-1 Online?

Apart from filing GSTR-1 directly on GSTN portal, you can use third party softwares which are simpler to use. Most of these software accept data from your existing accounting software and help you upload it to GSTN portal. Almost all the GSPs have come up with their return filing solution.

If you want to avoid multiple steps and hassle of using lot of softwares, try ProfitBooks today. Its an easy to use accounting software with super fast GST return filing. Its designed for business owners who do not have any accounting background.

Also Read:
How to file GSTR-1 In 5 Simple Steps
Types Of GST Returns
How to File GSTR-2 Return Online
How To Create GST Invoice
Credit Notes & Debit Notes Under GST
Refunds Under GST
Reverse Charge Under GST

The post Understanding GSTR-1 appeared first on ProfitBooks.net.

GST is all about a smooth flow of funds and compliances till the end. To facilitate such a smooth flow, it is imperative for the Government to provide for a hassle-free refund process. The current tax structure is cumbersome, and it takes months and sometimes years to get refunds from the Government’s kitty.

GST provides for a clearer and efficient invoice based tracking system, verifying the transactions on an individual basis, thus, allowing systematic checking of the same. It comes as a huge relief for manufacturers or exporters, especially those in a 100% EOU or Special Economic Zone, whose working capital gets tied up in this cumbersome refund process.

In this article, we’ve covered the GST refund process in detail to make your life easy.

There are certain events where refund arises. Let us check out the transactions in details.

• In case of exports (including deemed exports), where there is a cumulative balance of input credit arising out of such exports or under a claim of rebate.
• Where there is an excessive payment of tax due to an inadvertent mistake.
• When there is an accumulation of credit resulting due to the output tax being nil or exempted from tax.
• A refund may arise after a provisional assessment.
• Where an appeal is for a respondent, then the amount made as a deposit towards holding such appeal shall be refunded to the appellant
• Refund after investigation or findings by an adjudicating officer.
• Refund can be provided to foreign embassies or bodies of United Nations when the purchases are made by them.
• When there is an accumulation of credit resulting due to the output tax being of a lesser rate than the input.
• Suppliers receiving discounts or credits through the issuance of credit notes.
• GST paid by foreign or international tourists are subjected to refund.

The Government will not just give away the pending amount as a refund. The taxpayers have to make an application and follow the correct procedure for fetching the refund amounts in their bank accounts.

Refund Application Process Under GST

The refund application has to be made in Form RFD-01 (to be certified by a Chartered Accountant or a cost accountant) within a period of 2 years from the

“relevant date.” This relevant date is different for different scenarios.

1. When the goods are exported through air or sea, then relevant date shall be the date on which such ship or aircraft leaves India.
2. When the goods are carried by a land vehicle, then relevant date shall be the date when the goods cross the land frontier of the country
3. When goods are sent through post, then relevant date shall be the date of despatch of goods from the Post Office.
4. When the supply includes services, and when the same is completed before receipt of payment, then relevant date shall be the payment receipt date.
5. Similarly, when the services are performed after receipt of an advance, then relevant date shall be the invoice date.
6. Where refund claim is made for excess input tax credit left unutilised, then relevant date shall be the end of the financial year for which such refund claim is being made.
7. Where the goods are supplied for deemed exports, i.e. supply to SEZ or 100% EOU, the relevant date shall be the return filing date related to such deemed exports was filed.
8. Where refund arises due to an order passed in favour of the appellant, then relevant date shall be the date of such order.
9. Where tax was paid following a provisional assessment and refund now arises, then relevant date shall be date at which such tax was adjusted.
10. When the person claiming refund is not the supplier, then relevant date shall be the date at which the goods are received by such person.
11. For all other cases, relevant date shall be the date of payment of tax.

It is mandatory to keep in mind these relevant dates as failure to file refund applications within mentioned time can lead to blockage of credit.

Once the application made, an acknowledgement in Form RFD-02 will be auto-generated for future references and sent across through an email and an SMS. In case the system finds some deficiencies in the refund application, then Form RFD-03 shall be sent to the taxpayer to correct his application.

Moreover, there are certain documents that must be enclosed along with the electronic refund application. Where the refund application is below Rs. 5 lakhs, then a declaration shall be made by the taxpayer indicating that the amount of refund has not been utilised by or transferred to any other person. Where such application exceeds Rs. 5 lakhs, then apart from the declaration above, a document evidencing that the amount was paid by the taxpayer shall also be attached.

When the person filing refund claim is a United Nations’ body, Consulate or a foreign embassy, then the application for refund has to be filed within 90 days from the end of the quarter for which the goods or services were procured. The application should be made in Form RFD-10.

Note: There shall be no refunds where the amount of refund is less than Rs. 1,000/-.

Scrutiny of the refund application

As per norms, it would take about 30 days to process a refund application. Where the refund claim exceeds a prescribed amount, then the same shall be subjected to an audit process. If the same qualifies for a refund, then an order shall be passed to that extent, or if it meets the criterion for being “unjustly enriching” the taxpayer, then the amount shall be transferred to the Consumer Welfare Fund. The above declaration may be required to be certified by a Chartered Accountant.

Refund Order

When the taxpayer claims refund of monies arising out of exports of goods or services, then an authorised officer can issue a provisional refund order in Form RFD-04 of an amount of 90% of the refund claim. Such a provisional refund can be made when the taxpayer:

• Has not been prosecuted for evading taxes for an amount exceeding Rs. 250 lakhs over a period of 5 years.
• Has a GST compliance rating of more than 5 out of 10.
• Has no appeal or review pending with respect to refunds.

Where the authorised officer feels that documents are in consonance with law, then he may pass a final order to that effect.

The Government shall maintain a cash ledger for the taxpayer. It will be constantly updated with the figures as mentioned or declared in the returns. The credit must match with the ledger or else the credit cannot be availed. It is similar in lines of Form 26AS in case of Income Tax, where the amount of TDS and TCS matches with the Form.

In all other cases, the refund application shall be processed within 60 days from the application date. Once the authorised officer adjudges the refund to be true, then he will issue a final order in Form RFD-05 within a period of 60 days from the application date. If the officer fails to pass an order within the said 60 days, then the taxpayer shall receive an interest @ 6% p.a. for the period exceeding the expiry of 60 days until the receipt of refund.

When the refund has to be adjusted against the taxable amount, then Form RFD-06 shall be passed.

Other forms that are important for refund claims:

• RFD-07: this is a show cause notice for complete rejection of a refund application
• RFD-08: Payment advice
• RFD-09: In case of delayed payments, this is an order for interest on late payments.

Refund of Input Tax Credit

There are 3 cases against which a refund claim can be made with respect to input tax credit. All the above scenarios covered refund emanating from certain specified transactions.

1. Input tax credit left unutilized when the goods or services being supplied are zero rated or exempted from GST.
2. When input goods or services have a higher rate of tax and the same goods or services have a lesser output tax, then the accumulated input tax credit can be claimed as refund.
3. In case of a partial reverse charge, where the input tax credit cannot be used completely against the output tax.

Furthermore, no refund against unutilized input tax credit can be given when:

• Input arises out of GST paid against goods exported out of India, that were taxable to excise duty
• The supplier has already availed the benefit of duty drawback paid with respect to excise duty.

The process is very thorough in itself and once followed properly, then availing refund can become very smooth and hassle free. It will change the face of the long drawn refund process and give a boost to the manufacturing or export industry. Those refunds, which usually took years to pass can now be taken in just 60 days. The strong IT system and forward thinking of the GSTN have enabled this initiative.

Way Forward..

Does this whole thing sounds too complicated? Complying with GST norms may feel like a burden to small businesses. This is where ProfitBooks can help. With ProfitBooks, you can not only create GST invoices, you can file GST returns online and do automatic reconciliation.

Just sign up for a free trial and test drive ProfitBooks.

Also Read
How to create GST Invoices
GST Returns and Due Dates
Penalties and Appeals Under GST
Input Tax Credit Under GST

The post GST Refunds appeared first on ProfitBooks.net.

Being a destination-based, transaction-wise tax, Goods and Services Tax or GST, ropes in strict compliance procedures for all taxpayers. Since every transaction is recorded and tracked between the source and destination, the taxpayers must maintain and declare information with utmost accuracy.

To have a crystal clear movement of goods intra-state or locally, reduce corruption, and efficient tax collection system, GST defines strict penalty rules and offenses guidelines, which the taxpayers have to follow.

In this article, we’ve explained Offenses, Penalties, And Appeals In GST which every business owner should be aware of.

21 set offenses have been identified under the GST regime. There is one more offense that can be penalized that of availing composition scheme, even if the person is not liable for doing so.

The 21 set offenses

1. A supplier supplies goods or services without any proper invoice or has issued a false invoice.
2. He affects the issuance of an invoice without supplying the goods or services as per provisions of GST.
3. He uses the GSTIN of any other person instead of his own.
4. He submits false information during registration.
5. He gives wrong information while filing returns or files false returns.
6. He gives wrong information or false information during assessment proceedings.
7. He fails to submit GST with the Government that was deducted by him, within 3 months from the date of such deduction.
8. If TDS is deducted in contravention of provisions of GST, he is still liable to pay the same within three months from the date of such deduction. If such falsely deducted TDS is not submitted within the prescribed time, then it is an offense.
9. He claims and obtains a refund of CGST or SGST by fraud.
10. He claims an Input Tax Credit without the actual receipt of goods or services.
11. He understates his sales during the period to evade tax.
12. He transports or affects the movement of goods without proper documentation.
13. He supplies goods that will be confiscated by law.
14. He destroys or tampers with, the goods that have been confiscated.
15. He does not register himself even though he is liable to do so.
16. He does not deduct TDS wherever applicable or deducts lesser than the prescribed amount.
17. He does not collect TCS wherever applicable or collects lesser than the prescribed amount.
18. He does not distribute credit properly or distribute against the provisions of law being an Input Service Distributor.
19. He obstructs the officer in the performance of his duties.
20. He does not maintain proper books of accounts as required mandatorily by law.
21. He intentionally destroys any evidence.

As seen from the above, the Government has spelled out the offenses that are covered under GST. When a company commits any of the above offenses, the officer-in-charge, as well as the company will be held liable for such an offense. When the offense is committed by a HUF, LLP, or a Trust, then the Karta, partners, and managing trustee will be held responsible for such offense.

GST penalties, appeals, and offense

Penalties Under GST In Case Of Fraud

For those who have committed fraudulent activities intentionally w.r.t. the provisions of GST, then he/she shall be liable to pay a 100% penalty, i.e. an amount equivalent to the amount of tax evaded or short deducted, subject to a minimum of Rs. 10,000/-. Where there is no fraudulent intent, i.e. the tax evasion is unintentional, then the penalty shall be 10% in this case, subject to a minimum of Rs. 10,000/-.

Where a person, not being a taxable person:

• Abates in committing fraud
• Acquires goods or services knowingly that these are against the provisions of GST
• Fails to issue a genuine invoice
• Fails to maintain or vouch for the books of accounts
• Fails to appear before the relevant authority upon a summon issued to his name,

Then he shall also be liable to pay a penalty of Rs. 25,000/-.

If fraud is ascertained, then apart from the above amounts, the following shall also apply:

1. When the amount of tax involved is up to 50 lakhs, the person has to serve a jail term of 1 year along with paying the penalty.
2. When the amount ranges between 50 lakhs to 100 lakhs, then the jail term shall be three years plus a penalty
3. When the amount exceeds 100 lakhs, then jail term shall be up to 5 years plus penalty.

The respective authority shall issue a Show Cause Notice to the taxable person and offer him a reasonable time for being heard. The authority shall have to justify the imposition of such penalty as well as the nature of the offense committed. Where a taxable person intentionally discloses an offense committed by him, it is within the powers of the respective authority to reduce the amount of penalty to be imposed.

More Information Read this PDF

There is a huge fine for disobeying GST penalties

Prosecution Under GST

Where a person commits the following offenses with a deliberate intention to cause fraud, then criminal proceedings shall be held against him.

• Claiming refund of CGST/SGST by fraud
• Submission of fake documents or returns
• Issuing any invoice without making a supply of goods or services
• Abetting in fraud under GST

Inspection, Search/Seizure under GST

Where the Joint Commissioner CGST/SGST has sufficient reason to believe that a taxable person is deliberately suppressing transactions to evade taxes or has claimed excessive Input Tax Credit, then he can order an officer of GST to inspect the locations of such person.

Similarly, the Joint Commissioner can order for search and seizure within the premises of a taxable person when he has sufficient reason to believe that there are goods, which should be confiscated or some important documents that are being hidden somewhere.

Appeals In GST

A taxable person, who is unhappy with the order passed by an adjudicating officer, can appeal against such order to the First Appellate Authority. A competent authority that has the power to pass a decision or an order under the Act is known as the “adjudicating officer.”

Having a four-level appeal structure, the GST provides all unhappy taxpayers to reach out to the Government. The second level after the First Appellate Authority is the Appellate Tribunal. After the Appellate Tribunal, the taxpayer can reach out to the High Court. The last resort left with the taxpayer is the Supreme Court.

All appeals shall only be entertained provided the same is filed as per prescribed forms, and minimum fees are paid. The fee for an appeal shall be:

1. 100% of the tax amount, interest, fee, and penalty, arising from such challenged order

AND

1. 10% of the disputed amount.

The above amount of 10% can increase up to 25% of the disputed amount, where the disputed tax amount is above INR 25 Crores.

On the other hand, where the Commissioner of GST or an officer is the appealing person, then no such prepayment of fees is required.

5 Frequently Asked Questions AboutPenalties And Appeals In GST

1) Can an authorized representative appear for a taxable person in court?

A:    Yes. A person required to appear before the Court, unless he has to appear personally as per law, can appoint an authorized representative. An authorized representative can be an employee, a lawyer practicing in India, a Chartered Accountant, a Company Secretary, and Cost Accountant with an active Certificate of Practice, a relative of the person, a B-Grade and above Gazetted Officer, or any Tax Return Preparer.

2) What are the cases against which appeals cannot be filed?

A:    Certain decisions of a GST officer cannot be appealed against. They are as follows:

• Where the matter is transferred from one officer to another
• A Prosecution Order
• Payment of taxes or other amounts order
• Seizure or retention of books of accounts order

3) Whether a Commissioner of CGST revise an order passed by himself?

A:    No. A GST officer subordinate to him can make the required appeal against the First Appellate Authority. The appeal shall set out the points that are concerning his decisions, and the Appellate Authority shall treat it as a proper appeal.

4) What is the maximum time limit for filing appeals with the First Appellate Authority?

A:    It is three months from the date of order. The same time limit applies to departmental appeals.

5) What are the powers entrusted with the First Appellate Authority?

A:    The FAA can condone the delay in filing an appeal up to 1 month from the date of expiry of the period, i.e. three months. He can also allow some additional grounds to be included in the appeal.

Making sure you are avoiding all GST penalties

Be Safeguarded Of Penalties And Appeals In GST: The Way Forward To A Happier GST

The GST regime has brought in a tougher and stricter compliance diaphragm, which every person has to follow religiously. Any sort of non-compliance can have a severe effect on the daily business of the taxpayer and can attract huge amounts of interest and penalties.

If the offenses are grievous, it can lead to holding criminal proceedings against the offenders. Under the GST Act, no reservation has been given for first-time offenders. Therefore, even if you are unintentionally avoiding paying taxes or short deducting taxes wherever applicable, you will still be served a notice from the relevant authority.

Moreover, the right to appeal is only invoked when a specific sum of money is deposited beforehand with the repository, which will block your working capital until the appeal is completed.

Hence, it is always better to have a proper accounting system that can enable you to reconcile and file returns within due dates and also make payments of taxes, wherever applicable. Any slippage in the above process might lead to inspection from the relevant authorities.

ProfitBooks is a GST-compliant accounting software that lets you create GST invoices, file GST returns and do automatic reconciliation of purchases. It’s simple to use and designed for non-accountants.

FAQs

What are some common penalties imposed under GST?

Common penalties under GST include late filing penalties, non-compliance penalties, tax evasion penalties, incorrect refund claim penalties, and penalties for inadequate invoicing or record-keeping.

Late filing penalties are levied for not submitting GST returns on time. Non-compliance penalties are imposed for failing to meet specific requirements, such as registration or bookkeeping. Tax evasion penalties apply to intentional evasion or fraudulent activities. Incorrect refund claim penalties occur when inaccurate information or documents are used for claiming refunds. Penalties for inadequate invoicing or record-keeping are applied when proper invoices are not issued or accurate records are not maintained as per GST regulations.

How can a taxpayer appeal against a GST penalty?

To appeal a GST penalty, a taxpayer should file an appeal within the specified time limit, usually within 30 days of receiving the penalty order. They need to prepare a written application stating the grounds for appeal and include supporting documents. The appeal is then submitted to the appropriate appellate authority, such as the Commissioner (Appeals) or the Appellate Tribunal, as per the GST laws of the jurisdiction.

What grounds can a taxpayer use to appeal a GST penalty?

Taxpayers can appeal a GST penalty based on various grounds. These may include incorrect application or interpretation of the law by the tax authority, discrepancies in facts or evidence relied upon, violations of natural justice during penalty proceedings, or errors/irregularities in the penalty order.

Can a taxpayer request a stay on the penalty during the appeal?

Yes, a taxpayer can request a stay on the penalty during the appeal process. They need to make a separate application explaining the reasons and provide supporting documents. The appellate authority considers factors like financial hardship or the merits of the case when deciding whether to grant a stay. If a stay is granted, it temporarily suspends the enforcement of the penalty until the appeal is concluded.

What are the possible outcomes of a GST penalty appeal?

Possible outcomes of a GST penalty appeal include upholding the penalty (requiring payment), partial reduction of the penalty, setting aside the penalty entirely (waiving the amount), or providing additional instructions to the tax authority. The specific outcome depends on the merits of the case and the GST laws and regulations of the jurisdiction.

Also, Read
How to create GST Invoices
Importance of place of supply in GST
Levy and exemptions under GST
GST Composition Scheme

The post Penalties And Appeals In GST And How To Avoide Them appeared first on ProfitBooks.net.

Goods and Service Tax is a game changer because, with its implementation, there is a tremendous outflow of benefits.
Earlier in India, there were numerous taxes such as Service Tax, VAT, Excise and many others that were ultimately borne by consumers leading to double taxation or having cascading effect. Post GST, around 17 taxes are subsumed under one tax
regime.

GST applies to almost every assessee in business, thereby it has boosted the revenues for the government. While purchasing goods or services both CGST and SGST i.e. both central and state taxes are levied thereby eliminating all confusion.
With the introduction of GST, a new regime of business compliance are established.

Big organizations in India have the required resources and expertise that can facilitate the compliance procedures.
On the other hand, small and medium enterprises (SMEs) and start-ups will have difficulty in complying with these provisions
. Thus, to lower the burden of compliance for small businesses, a composition scheme has been introduced under
GST law where the assessees have to pay tax at a minimum rate based on their turnover. This is mostly similar to the provisions
in VAT law.

In this article, we’ve explained what is GST composition scheme, who can apply, eligibility criteria, it’s
limitations and how it can benefit small businesses.

Eligibility For GST Composition Scheme

Getting registered under composition scheme is optional and voluntary. Any business which has a turnover of less than Rs. One crore or 75 lakhs for the specified states can opt for this scheme but on any given day, if turnover crosses the above-mentioned limit, then he becomes ineligible and has to take registration under the regular scheme. There are certain conditions that need to be fulfilled before opting for composition levy.

They are as follows:

• Any assessee who only deals in supply of goods can opt for this scheme that means this provision is not applicable for service providers. However, restaurant service providers are excluded.
• There should not be any interstate supply of goods that means businesses having only intra-state supply of goods are eligible.
• Any dealer who is supplying goods through electronic commerce operator will be barred from being registered under composition scheme. For example: If M/s ABC sells its products through Flipkart or Amazon (Electronic Commerce Operator), then M/s. ABC cannot opt for composition scheme.
• Composition scheme is levied for all business verticals with the same PAN. A taxable person will not have the option to select composition scheme for one, opt to pay taxes for other. For example, A taxable person has the following Business verticals separately registered – Sale of footwear, the sale of mobiles, Franchisee of McDonald’s. Here the composition scheme will be available to all 3 business verticals.
• Dealers are not allowed to collect composition tax from the recipient of supplies, and neither are they allowed to take Input Tax Credit.
• If the person is not eligible under composition scheme, tax liability shall be TAX + Interest and penalty which shall be equal to the amount of tax.

Persons who cannot opt for the composition scheme

• Supplier of service other than restaurant owners(Serving foods and non-alcoholic drinks)
• Supplier of non-taxable goods
• If the person in engage in the inter-state supply of goods
• Supplier supplying goods through E-commerce operator, who is eligible to collect TCS
• Supplier of tobacco, pan masala, and ice cream
  

  Bill of supply

  As the composition scheme dealer cannot pass on the credit of the tax, he is required to issue the bill of supply. Details to be mentioned in the bill of supply are as follows –

• Name, address, and GSTIN of the supplier
• A consecutive serial number which is a unique number for every financial year
• Date of issue
• If the recipient is registered then the name, address, and GSTIN of the recipient
• HSN Code of goods or Accounting Code for services
• Description of goods/services
• Value of the goods/services after adjusting any discount or abatement
• Signature or digital signature of the supplier or his authorized representative

Benefits Under GST Composition Scheme

Less Compliance
Under the normal scenario, a taxpayer under GST has to file minimum 3 returns monthly and one annual return. To be precise, he is compelled to file 37 returns in a year or penalty will be levied for non-compliance. For small suppliers and manufacturers, it is quite difficult to maintain so detailed books of accounts on a daily basis and record every transaction with supporting documents.

Whereas, in composition scheme, only a quarterly return will be uploaded under GSTR-4 by:

18th July – 1st quarter

18th October – 2nd quarter

18th January – 3rd quarter

18th April – 4th quarter

This will ease the compliance burden for SMEs, and they can focus more on their business rather than getting occupied in compliance procedures.

Reduced tax liability
Another advantage of being registered with composition scheme is the rate structure.

For Manufacturer = 0.50%(CGST) + 0.50(SGST) = 1% of turnover of State/ Union Territory

For supplier supplying food other than alcoholic liquor for human consumption =

2.5% (CGST)+ 2.5% (SGST) = 5% of turnover of State/ Union Territory

For other supplier = 0.50% (CGST) + 0.50% (SGST) = 1% of taxable turnover of State/ Union Territory

*In composition scheme, a supplier is ineligible to collect tax separately from the buyer in an invoice. The above illustration is for the basic understanding of the composite scheme.

High Liquidity
For normal taxpayers, most of his working capital will be blocked as Input Tax credit because he can avail the input only if his supplier has filed the return. The supplier has to pay tax at standard rate and credit of the input will only be availed when his supplier files the return. In composition levy, dealer need not worry about his supplier filing return as he cannot take credit and will pay tax at a nominal rate.

For Example: In the above case, a Normal taxpayer will have to pay a higher tax of Rs. 6300/- compared to Rs.2314/- and Input Tax credit of Rs. 11700/- will also be blocked till his supplier files the return. Whereas, the composition scheme taxpayer, will only pay Rs. 2314.

Procedure for taking registration

Transitional Provisions

If the person is already registered under the earlier law and has been granted registration on the provisional basis under GST Law, he can opt to pay under composition scheme by filing form GST CMP-01.

He is also required to file form GST CMP-03 within 60days of an exercise of the option. The form must contain the details about stock and inward supplies of goods received from the unregistered person which are held by him on the date preceding the day of the exercise of an option.

If a taxpayer who is in Composite Scheme under earlier regime and transits to Regular Taxation under GST will be allowed to take the credit of Input, semi-finished goods, and finished goods on the day immediately preceding the date from which they opt to be taxed as a regular taxpayer.

The inputs can only be availed subject to few conditions such as;

1. Those inputs or goods are meant for making taxable outward supplies under GST provisions
2. The dealer taking the Input Credit was eligible under the previous regime but could not claim due to registered under Composition Scheme
3. The taxpayer claiming Input credit on goods, those goods should be eligible for such credit under GST regime.
4. The taxpayer must have a valid legal document of input tax credit i.e. he must possess an invoice evidencing taxes or duties have been paid.

Those invoices or documents should not be older than 12 months before the appointed date.

Taking fresh registration
If the person is taking fresh registration under GST Law and wants to opt for composition scheme, he must fill Part B of form GST REG-01.

Switching from Normal scheme to Composition Scheme
If the person is already registered under normal scheme and later on he opts to pay under composition scheme, then he must file an intimation in form GST CMP-2 and form  ITC-03(form should be filed within a period of 60days from the commencements of the relevant financial year)containing the details about ITC related to inputs,  semi-finished and finished goods held in stock.

Withdrawal from the scheme of composition
If the registered person wants to withdraw from the composition scheme, he should file an application in form GST CMP-04 before the date of such withdrawal.

The procedure of filling the form GSTR-4 and its auto population

Form GSTR-4A is auto-populated from form GSTR-1(filed by the supplier), Form GSTR-5(filed by the non- resident taxable person) and Form GSTR-7(Deductor of tax).
Form GSTR-4 contains the details regarding purchases(which is incorporated from form GSTR-4A) and sales made by the dealer during the quarter.
On filing the form GSTR-4, the sales details will get auto-populated in form GSTR-2A for the recipient.

Limitations of GST Composition Scheme

There are some of the limitations that every business owner must be aware of:

No Credit of Input Tax
Any dealer registered under Composition Scheme will not be eligible to take credit of Input Tax credit on purchases. Also, the buyer of those goods will not get the credit of taxes paid.

No Inter-state business
The major drawback of this scheme is that the assessee cannot deal in interstate transactions or affect import-export of goods and services. He is barred from performing such actions which limit his territory for expansion and can only conduct local or intrastate transactions.

Pay tax from own pocket
Since the dealer is not allowed to charge tax from his buyer, despite the rate being very low, he has to pay out of his own pocket. He is not even allowed to issue a tax invoice, resulting in the burden on the assessee to pay tax.

Strict Penal provisions
Utmost care is required while taking benefit of composition levy under GST regime as the penal provisions are quite severe. If by any chance, it is proved that the assessee is wrongly registered under this scheme, not fulfilling the required criteria and thereby avoiding taxes will face bad consequences. He will be then be asked to pay taxes along with penalty, which is equal to 100% of taxes put on him.

GST has the potential to boost revenue for the government, lower the budget deficit, which means more funds will be generated to spend on the welfare of the society and people. There will be always a section of traders, dealers or taxpayers who find it difficult to maintain books of accounts or fulfill the compliance requirements of tax laws. This may happen due to the small size of their business or due to the nature of their business. To give benefit to these businesses, composition scheme was launched for such small taxpayers.

The composition scheme is quite beneficial to small suppliers, intra-state local suppliers and restaurant sector as it prevents them from various procedural compliances and gives a hassle free working environment. Today, to make compliances better for small businesses, states have provisions in their VAT law about the composition scheme. Similarly, even in GST, composition scheme is introduced to safeguard the interests of small businesses. GST, composition scheme is introduced to safeguard the interests of small businesses.

Make Your Business GST-Ready

A full-featured accounting software like ProfitBooks can help you comply with GST rules. With ProfitBooks, you can create GST invoices, do automatic reconciliation of sales & purchases and even file GST returns.

Getting started with ProfitBooks is easy, you don’t need any accounting knowledge to use it.

Also Read
How to create GST invoices
Types of GST Returns
20 Tax saving tips for your business

The post GST Composition Scheme appeared first on ProfitBooks.net.

India is heading towards its biggest tax reforms ever. The whole World is watching this roll out, as the World 3^rd largest economy is moving towards a destination based tax-reporting structure. Every transaction has to be reported through the last mile with a common invoice, identifiable to the seller and recipient of goods and services.

The GST Council and the Ministry of Finance have come up with a great solution to record all such invoices in one place and collate data for the taxpayer. The processes have been simplified, and many taxes have been removed. The whole nation shall report using the same structure irrespective of where and how you carry your business.

A widespread IT system has been deployed by the Ministry to cope up with such a huge influx of data. It is called the GSTN (Goods and Service Tax Network) that will house all the information of sellers and buyers together, collaborate the details submitted and even maintain 3 registers for you for future reference and anytime reconciliation.

In this article, we’ve explained various types of GST Returns, who should file GST returns online, the format of GST return, the process of filing GST return and much more..

UPDATE: 28th GST council meet held on 21st of July 2018 has introduced a simple GST return filing system for the taxpayers.

The government has introduced Sahaj and Sugam forms for filing GST returns.

Understanding the GST Returns

For properly updating the invoices, Indian taxpayers and businesses have to file certain returns with the Government. These returns have to be mandatorily filed as any non-compliance towards the same may lead to disallowance of input tax credit, apart from attracting penalties and interests, etc. Proper filing of information and passing the same in the returns is a mandatory process for smooth flow of credit to the last recipient.

The returns have been designed so that all transactions are in sync with each other and that no transaction is left unattended between the buyer and the seller. The tale starts from GSTR-1. All the data is stored in GSTN, which can be accessed by the users/taxpayers anytime online.

Types of GST Returns to be filed by normal taxpayers

GSTR-1

The taxpayer records all his outward supplies of goods and services in details in this form. This has to be mandatorily done by the 10^th of the next month (GSTN is frequently changing the due date of filing GSTR1. So, keep checking announcements).

This will form the basis for all future flow and match for credit reconciliations. GSTR-1 is a detailed form containing 13 different heads. The critical headings are:

• GSTIN of the Taxable Person – Auto-populated result
• Name – Auto-populated result
• Gross Turnover in Last Financial Year – This has to be filed only once. From next year onwards, this field will be auto-populated
• The Period for which the return is being filed – Month & Year shall be available as a drop-down for selection
• Taxable outward supplies – Here, IGST shall be filled only in the case of inter-state movement whereas CGST and SGST shall be filled in case of intra-state movement. Moreover, details of any exempted sales or sale at nil rate of tax shall also be mentioned here
• Outward Supplies to end customer, where the value exceeds Rs. 2.5 lakhs – Other than mentioned, all such supplies are optional in nature
• Any other supplies not covered in above 2 sections
• Debit Notes or Credit Notes Details
• Amendments to the details of any outward supplies of previous periods – This does not cover any changes by way of debit/credit notes
• Exempted, Nil-Rated and Non-GST Supplies – This is a Non-GST section. When the details of exempted sales or nil-rated sales have already been mentioned anywhere above, then only Non-GST shall be filled up here
• Export Sales
• Tax Liability arising out of advance receipts
• Tax Paid

Learn how to file GSTR-1

GSTR-2A

It is available on the 11^th of the next month for the recipients to see and validate the information therein. Recipients have time between 11^th – 15^th of the next month to change any information, delete or add, based on their books of accounts.

Update as on April 2018: GSTR-2A has been kept on hold by GSTN.

GSTR-2

This form is the culmination of all inward supplies of goods and services as approved by the recipient of the services. The due date is 15^th of the next month. It is auto-populated with the details of GSTR-2A. GSTR-2 shall include the following heads:

• GSTIN of the Taxable Person – Auto populated result
• Name – Auto populated result
• The Period for which the return is being filed – Month & Year shall be available as a drop-down for selection
• Details of all inward supplies – Auto populated with the details of GSTR-1. The taxable person can make any further addition or changes to the invoice here
• Changes to the inward supplies made for any previous period
• Import of Goods – Imports are treated as Inter-state supply and IGST shall be applicable on the same
• Import of Goods in earlier periods
• Services received from a person outside India (Import of Services)
• Import of Services in earlier periods
• Debit notes or Credit notes Details
• Amendments made to Debit or Credit notes of previous periods
• Inward supplies emanating from Unregistered persons
• Credits received from an Input Service Distributor – Auto populated from details of GSTR-6
• TDS credit from specified persons – Auto populated from details of GSTR-7
• TCS credit from E-Commerce operators – Auto populated from details of GSTR-8
• Input Tax Credit remaining to be taken against an invoice, from which initially a partial invoice was taken
• Reverse Charge tax liability
• Amendment to such reverse charge tax liability
• Tax Paid
• Input Tax Credit Reversals – A dropdown containing reasons for such reversals shall be made available
• Amendments to such Input Tax Credit Reversals

Learn more about GSTR-2 Return Filing

Update as on April 2018: GSTR-2 has been kept on hold by GSTN.

GSTR-1A

The form shall be auto-populated after filing of GSTR-2 on the 15^th of the next month, having all the correct or changed information. The supplier shall have the choice to accept or reject the changes made by the recipient. Following such acceptance, the GSTR-1 shall be revised to such extent.

GSTR-3

This form is auto prepared by 20^th of the next month. It will have the details of all outward as well as inward supplies of goods and services as furnished in GSTR-1 and GSTR-2. After considering both the details, GSTN will determine your input tax credit availability or the amount of tax payable.

It will have the following details:

• GSTIN of the Taxable Person – Auto-populated result
• Name – Auto-populated result
• Address of the person – Auto-populated result
• The Period for which the return is being filed – Month & Year shall be available as a drop-down for selection
• Total turnover

1. Export Turnover
2. Taxable Turnover
3. Non-GST Turnover
4. Nil Rated or Exempted Turnover
5. Total Turnover (Sum of 1-4)

• Details of outward supplies

1. Inter-state supply to end customers
2. Intra-state supply to end customers
3. Inter-state supply to registered persons
4. Intra-state supply to registered persons
5. Exports
6. Amendments to Sales Invoices, Debit Notes and Credit Notes
7. Tax liability on such outward supplies

• Details of inward supplies

1. Inter-State received
2. Intra-State received
3. Imports
4. Amendments to Purchase invoices, Debit Notes and Credit Notes
5. Tax liability on such inward supplies
6. Reversals of Input Tax Credit

• Total tax liability for the period
• TDS received for the period
• TCS received for the period
• ITC for the period

Apart from the above details, a Part B has to be filed containing the details of,

• Any taxes, interests, penalties or fees paid during the period
• Any refunds claimed during the period w.r.t. cash ledger

GSTR-9

This is the annual return, which the taxpayer has to file by 31^st December of the coming financial year. It is nothing but the accumulation of all 12 monthly GSTR-3 of the taxpayer. It would also include the amount of tax paid during the year, including details of exports or imports.

Apart from the above forms, the Government shall serve those taxpayers who fail to furnish the returns on time, notice in Form GSTR-3A.

After the GSTR-3 is fully accepted for the month, then final input tax credit shall be communicated through form GST ITC-1. The details of ITC-1 has to be confirmed in due time to get the credit for that month. If the same is not done in due time, then it will disallow the credit for the month and will be computed as a tax liability for the month instead.

Returns to be filed by Composition Tax Payers

GSTR-4A

Similar to the GSTR-2A above, GSTR-4A is generated quarterly for composition scheme taxpayers. It has the details of the inward supplies as reported by suppliers in GSTR-1.

GSTR-4

With the auto-populated details of GSTR-4A, the taxpayer can furnish all his outward supplies here. The due date is 18^th of the following month and has to be filed quarterly. It also contains the details of tax payable and payment of tax.

GSTR-9A

This is the annual return for all composition taxpayers. It has to be filed by 31^st December of the coming financial year and includes all the quarterly returns filed by the composition taxpayer.

Returns to be filed by Foreign Non-Resident Taxpayer

GSTR-5

This is a detailed form containing the particulars of outward supplies, imports, tax paid, input tax availed and remaining stock. This has to be filed monthly within 20^th of the next month or if the registration is given up, then within 7 days of such surrender or expiry of registration.

Returns to be filed by an Input Service Distributor

GSTR-6A

This form will be generated by 11^th of next month after the suppliers have filed their GSTR-1 on 10^th of the next month. It will be auto-populated with the details of inward supplier made to them. It has to be filed on a monthly basis by the ISD.

GSTR-6

Once the details are confirmed or corrected by the ISD, then GSTR-6 will be generated. It has to be filed by the ISD by 13^th of the next month. This is also a monthly filing.

Returns to be filed by a Tax Deductor

GSTR-7

Details of the tax deductions made during the month have to be furnished here. The due date is 10^th of the next month.

GSTR-7A

This is a TDS certificate, which is auto-generated upon filing the GSTR-7 by the tax Deductor. It will be available for the assessees to download and keep a record of. It will contain details of the tax deducted and the total amount of payment made.

Return to be filed by an E-Commerce Portal

GSTR-8

This return shall contain all the supplies made by the E-Commerce seller and the amount of tax collected as well. It has to be filed by 10^th of the next month.

For those assessees whose annual turnover exceeds INR 1 Crore, then a reconciliation statement in Form GSTR-9B has to be filed by 31^st December of the next fiscal year. It has to be filed annually and is basically an audited annual account, duly certified by competent authority.

Where the assessee is a Government body or a United Nations Body, then a monthly Form GSTR-11 has to be filed by 28^th of the next month. These bodies have a UIN (Unique Identification Number) and hence will be required to furnish the details of inward supplies.

Where a taxable person’s registration has been surrendered or cancelled, then a final return in Form GSTR-10 has to be filed within 3 months of such cancellation or registration. It will declare the input tax credit and capital goods held by the taxpayer, tax payable and paid at such time.

The Government has automated all the forms together by bringing the same details on a real-time basis in front of the taxpayers. The step, which is of paramount importance, is Step No. 1, i.e. FORM GSTR-1. It will form the basis of all further activities.

Any shortcomings or short filings of information in the details provided by the suppliers can be rectified, changed or deleted by the recipients in ample period of time. It is a seamless process that matches all information together to get the final credit figures and tax payable if any.

The payment challans are also a very crucial part of all the filing process. Without them, it is not possible to clear tax payments and dues in due course of time and also claim credit.

1. PMT-1: An online tax liability register arising out of return or non-return related liabilities of the taxpayer.
2. PMT-2: Credit balance online as in GSTN
3. PMT-2A: Re-credit addition to the GSTN balance of a taxpayer
4. PMT-3: Online cash ledger

Note: The above forms are maintained free of cost by the GSTN for each taxpayer. It can be accessed anytime through a User ID and Password, 24X7.

5. PMT-4: Challan for payment of GST
6. PMT-5: Payment register for unregistered taxpayers
7. PMT-6: Application for claiming missing credit

Where it is found that there is an excess credit available in the account of a taxpayer, then the taxpayer has an option to claim a refund of such excess credit within the prescribed time. The refund application forms are different for the State and Central Governments.

There are 10 forms prescribed for the Central Government, out of which only 5 are applicable to the State application. The main form is RFD-01 where the application for refund is made.

GSTR 3B Return

In order to ease the burden on taxpayers, tax authorities have introduced a simple return form called as GSTR 3B. This has to be used only for the month of July and August. Every registered taxpayer (Except for composition scheme) needs to file a separate GSTR 3B for each GSTIN they have.

This is more like a self-declaration return and the taxpayer is not required to provide invoice level information in this form. Only total values for each field have to be provided.

The due date for filing GSTR 3B return for July was 20th August – It has been extended to 25th August now.

As of April 2018, Government has made it mandatory to file GSTR 3B every month until further notice.

Learn more about GSTR 3B format and how to file it online.

How To File GST Returns Online?

No matter whether you are a trader or a manufacturer, you will have to file returns mandatorily. It is a matter of perception when it comes to defining the whole return filing process, as some may treat it as cumbersome or some may feel happy with the level of automation available. Draft GST return format provided by government can easily confuse a small business owner who doesn’t have any accounting knowledge.

ProfitBooks is a popular GST compliant accounting software which can help you to easily file GST returns online. It does auto-reconciliation of mismatches and gives you a real time report of the differences between you and your customer/vendor. You can even create GST invoice in correct format.

Do you need personal assistance in filing GST Returns?
ProfitBooks has a team of experienced CAs who can help you with filing GST returns every month. Check out our affordable GST Return Filing service.

Also Read
How to create GST invoice
20 Expert tips for saving taxes this year
How to select a right accounting software

The post Types Of GST Returns appeared first on ProfitBooks.net.

At ProfitBooks, we are committed to make taxation simple for small business owners in India. Since GST is set to replace various indirect taxes, we have started this series on frequently asked questions on GST. This article is next in this series.

Earlier, we had covered Levy and Exceptions under GST and Tax payments under GST. In this article, we have covered common questions regarding input tax credit under GST regime.

1) What is input tax?

“Input tax” has been defined under GST Law. Input tax in relation to a taxable person, means the (IGST and CGST) in respect of CGST Act and (IGST and SGST) in respect of SGST Act, charged on any supply of goods and/or services to him which are used, or are intended to be used, in the course or furtherance of his business and includes the tax payable under sub-section (3) of section 7.

Under the IGST Act, input tax is defined as IGST, CGST or SGST charged on any supply of goods and/or services.

In simple words, Input Tax Credit means reducing the taxes paid on inputs from taxes to be paid on output.

2) What is the implication of different definition of “input tax” in three acts like CGST, SGST and IGST Acts?

It implies that input tax consists of IGST & CGST in CGST Act and IGST & SGST in SGST Act. In the IGST Act, input tax consists of all three taxes namely, IGST, CGST, and SGST. Input Credit Can be set off against:
IGST, CGST, and SGST
IGST
IGST & CGST
CGST
IGST & SGST
SGST

It further implies that credit of all three can be used for discharging IGST liability, whereas only credit of IGST & CGST can be taken in CGST Act and that of IGST & SGST can be taken under SGST Act. Further, the credit of CGST & SGST cannot be cross-utilized.

3) Can GST paid on reverse charge be considered as input tax?

Yes. The definition of input tax includes the tax payable under reverse charge. The credit can be availed if such goods and/or services are used, or are intended to be used, in the course or furtherance of his business.

4) Does input tax include tax (CGST/ IGST/SGST) paid on input goods, input services and/ or capital goods?

Yes, it may be noted that credit of tax paid on capital goods also is permitted to be availed in one installment.

5) What is the ITC entitlement of a person who has applied for registration under the Act within thirty days from the date on which he becomes liable to registration and has been granted such registration?

He shall be entitled to take credit of input tax 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 from which he becomes liable to pay tax under the provisions of this Act. It may be noted that the credit on pre-registration stock would not be admissible if the registration has not been obtained within a period of 30 days from the date on which he becomes liable to registration.

A person becomes liable to pay tax on 1st August, 2017 and has obtained registration on 15th August, 2017. Such person is eligible for input tax credit on inputs held in stock as on 31st July, 2017.

6) What is the eligibility of input tax credit on inputs in stock for a person who obtains voluntary registration?

The person who obtains voluntary registration is entitled to take the input tax credit of input tax on inputs in stock, inputs in semi-finished goods and finished goods in stock, held on the day immediately preceding the date of registration.

7) Where goods and/or services received by a taxable person are used for effecting both taxable and non-taxable supplies, whether the input tax credit is available to the registered taxable person?

The input tax credit of goods and /  service attributable to only taxable supplies can be taken by the registered taxable person. The amount of eligible credit would be calculated in a manner to be prescribed under GST law and rules. It is important to note that credit on capital goods also would now be permitted on a proportionate basis.

8) Where goods and/or services received by a taxable person are used for the purpose of business and non-business supplies, whether the input tax credit is available to the registered taxable person?

The input tax credit for goods and / service attributable to only supplies effected for business purpose can be taken by the registered taxable person. The amount of eligible credit would be calculated in a manner to be prescribed under GST Law and rules. It is important to note that credit on capital goods also would now be permitted on a proportionate basis.

9) What would be input tax eligibility in cases where there is a change in the constitution of a registered taxable person?

The transferor shall be allowed to transfer the input tax credit that remains unutilized in its books of accounts to the transferee provided that there is a specific provision for transfer of liabilities.

10) What would be input tax eligibility in a case where the goods and/or services supplied by a registered taxable person become absolutely exempt?

The registered taxable person who supplies goods and / services which become absolutely exempt has to pay an amount equivalent 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 such exemption.

It has also been provided that after payment of the amount on such goods, the balance if any available in electronic credit ledger would lapse.

11) What would be input tax eligibility in cases where the taxable person paying tax under section 7 opts to pay tax under Compounding Scheme under Section 10?

The registered taxable person, who was paying tax under section 7 opts to pay tax under Compounding Scheme under Section 10, has to pay an amount equivalent 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 such switch over.

It has also been provided that after payment of the amount on such goods, the balance if any available in electronic credit ledger would lapse.

12) A dealer paying tax on compounding basis crosses the compounding threshold and becomes a regular taxable person. Can he avail ITC and if so from what date?

The dealer can avail ITC 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 from which he becomes liable to pay tax under section 7.

13) Mr. B, a registered taxable person was paying tax under composition rate up to 30th July, 2017. However, w.e.f 31st July, 2017. Mr. B becomes liable to pay tax under the regular scheme. Is he eligible for ITC?

Mr. B is eligible for input tax credit on inputs held in stock and inputs contained in semi-finished or finished goods held in stock as on 30th July,2017.

14) Mr. A applies for voluntary registration on 5th June, 2017 and obtained registration on 22nd June, 2017. As on which date Mr. A is eligible for input tax credit on inputs in stock?

Mr. A is eligible for input tax credit on inputs held in stock and inputs contained in semi-finished or finished goods held in stock as on 21st June, 2017.

15) Whether the principal is eligible to avail input tax credit of inputs sent to job worker for job work?

Yes, the principal is eligible to avail the input tax credit on inputs sent to job worker for job work.

16) What is the time period within which the inputs sent for job work has to be received back by the principal?

The time period for this is 180 days. The principal has to reverse the credit along with interest on inputs which have not been received back from job worker within 180 days but he can reclaim the credit on receipt of inputs.

17) Which type of supplies is included for computation of taxable supplies for the purpose of availing credit? Zero-rated supplies, Exempt supplies or both?

In this case, Zero-rated supplies are included for the calculation.

18) What is the time period within which the capital goods sent for job work has to be received back by the principal?

The time period for this is two years.

19) What documents are needed for claiming ITC?

Tax invoice
Debit note
Bill of entry
Invoice issued under reverse charge mechanism
Document issued by the ISD

20) What is the liability of the principal if the capital goods sent to job worker have not been received within 2 years from the date of being sent?

The principal has to pay an amount equal to credit taken on such capital goods along with interest. But he can reclaim the credit on receipt of inputs.

21) A Taxable person is in the business of information technology. He buys a motor vehicle for use of his Executive Directors. Can he avail the ITC in respect of GST paid on purchase of such motor vehicle?

ITC on motor vehicles can be availed only if the taxable person is in the business of transport of passengers or goods or is providing the services of imparting training on motor vehicles.

22) Where the registered taxable person has claimed depreciation on the tax component of the cost of capital goods under the provisions of the Income Tax Act, 1961, will ITC be allowed in such cases?

The input tax credit shall not be allowed on the said tax component which is depreciated.

23) What are the conditions necessary for obtaining ITC?

As per GST Law, following four conditions are stipulated:
(a) The registered taxable person should be in possession of tax paying document issued by a supplier;
(b) The taxable person must have received the goods and / services;
(c) The tax charged on such supply has been actually paid to the government either in cash or through utilization of input tax credit; and
(d) The taxable person should have furnished the return

24) Where the goods against an invoice are received in lots or installments, how will a registered taxable person be entitled to ITC?

The registered taxable person shall be entitled to the credit upon receipt of the last lot or installment.

25) Who will get the ITC where goods have been delivered to a person other than the taxable person (‘bill to’- ‘ship to’ scenarios)?

For this purpose of receiving the goods, it would be deemed that the taxable person has received the goods when the goods have been delivered to a third party in the direction of such taxable person. So ITC will be available to the person on whose order the goods are delivered to the third person.

26) What is the time limit for taking ITC?

ITC cannot be taken beyond the month of September of the following FY to which invoice pertains or date of filing of an annual return, whichever is earlier.

The underlying reasoning for this restriction is that no change in return is permitted after September of next FY. If annual return is filed before the month of September then no change can be made after filing of an annual return.

27) Is there any negative list on which ITC is not permitted?

It has been provided that the ITC on following items cannot be availed:
(a) motor vehicles, except when they are supplied in the usual course of business or are used for providing the following taxable services—
(i) transportation of passengers, or
(ii) transportation of goods, or
(iii) imparting training on motor driving skills;

(b) goods and / or services provided in relation to food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness center, life insurance, health insurance and travel benefits extended to employees on vacation such as leave or home travel concession, when such goods and/ or services are used primarily for personal use or consumption of any employee;

(c) goods and/or services acquired by the principal in the execution of works contract when such contract results in construction of immovable property, other than plant and machinery;

(d) goods acquired by a principal, the property in which is not transferred (whether as goods or in some other form) to any other person, which are used in the construction of immovable property, other than plant and machinery;

(e) goods and/or services on which tax has been paid under section 8; and

(f) goods and/or services used for private or personal consumption, to the extent they are so consumed.

28) GST Law provides that the ITC would be confirmed only if the inward details filed by the recipient are matched with the outward details furnished by the supplier in his valid return. What happens if there is a mismatch?

In case of the mismatch between the inward and outward details, the supplier would be required to rectify the mismatch within a period of two months and if the mismatch continues, the ITC would have to be reversed by the recipient.

29) What will be the tax impact when capital goods on which ITC has been taken are supplied by the taxable person?

In case of supply of capital goods on which input tax credit has been taken, the registered taxable person shall pay an amount equal to the input tax credit taken on the said capital goods reduced by the percentage points as may be specified in this behalf or the tax on the transaction value of such capital goods, whichever is higher.

30) What is the recovery mechanism for wrongly availed credit?

The wrongly availed credit would be recovered from the registered taxable person under section 73 and 74 of CGST Act.

Is Your Business Ready For GST?

If you are running your business in India, its important for your to become GST compliant. At ProfitBooks, our aim is to simplify GST for business owners. That’s why we’ve built a super simple accounting software to create GST compliant invoices, record expenses, track inventory and finally automatically prepare GST-ready tax returns.

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I hope you find this article helpful. Please feel free to ask questions or share your thoughts in the comments section below.

Also Read:
All about Goods and Service Tax (GST) In India
20 Tax saving tips for business owners
How to separate personal & business expenses
Tips for maintaining positive cashflow

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