GST has two pillars outward supply and input Tax credit and other compliances, Important compliances in GST for the closure of FY 2022-23 must be gone through as they impact day in and day out in our business.
In GST every Registered person is filing GSTR-1 and GSTR-3B pertaining to outward supply and reconciling it with books of accounts and later files GSTR 9 and GSTR 9C as required till 31st December 2023 for the financial year 2022-23. compliances to be checked for FY 2022-23 so that GSTR9 and GSTR9C can be filed smoothly and correctly on 31st December2023. To start with Outward supply
Outward supply of 2022-23; we can classify them into three categories :-
Ist category, the outward supply of 2022-23 is shown in the books of account of FY 2022-23. No outward supply entries relating to FY2021-22 in FY 2022-23 and no entries of FY 2022-23 to be shown in FY 2023-24. Reconciliation becomes easier.
2ndcategory,outward supply of 2021-22, if not included in FY 2021-22, shown in April 2022 and October 2022 of FY2022-23, we have to identify them to fill GSTR9.
3rd category, outward supply of 2022-23, is not shown in FY 2022-23(not shown in GSTR1 and GSTR 3B). Now it has to be shown from April 2023 to November 2023 and has to be identified to fill GSTR 9. ( Table10 and Table11 of GSTR9).
Reconcile outward supply with Books of Accounts, GSTR1, GSTR3B. While doing so, whether credit notes, debit notes and E-way bill being raised? If yes, reconcile them with the invoice raised. Check whether debit notes or credit notes are reflected in GSTR1 and GSTR 3B.
Any registered person who causes the movement of goods greater than Rs50,000/-pertaining to the supply or Job work has to raise an E-way bill. E-way bill is not required for the movement of exempted goods even if the amount exceeds Rs50,000/-.
If turnover in any preceding year since 2017-18 is ten crores, then from 1st October 2022, mandatory to raise E-invoice. It must be matched with books of accounts, GSTR1 and GSTR3B.If a tax invoice is generated where E-invoice is mandatory( turnover in a preceding year exceeds ten crores), in that case the penalty is leviable for non-compliance. The recipient will not get credit on goods purchased. E-invoice is not mandatory for exempted supply. But mandatory for B2B, debit notes, credit notes and export invoices, B2G ( Business to Government invoices) but not for G2B(Government to Business invoices).
E invoice provision not applicable for :-
SEZ units, Insurance & banking financial company, GTA, Passenger transportation services, Multiplex cinemas admission.
If supposed to generate E – invoice but not generated for 15 days or two months, can one raise it after two months? As per section 31 of the CGST Act must generate at the time of removal of goods still, if not generated, can do by generating IRN No in the IRP portal as there is no inbuilt provision to check whether E invoice was generated earlier or in time. Must generate E invoice on a daily basis where ever the provision is applicable.
Proper digits must be mentioned on the HSN and SAC codes; if aggregate turnover in the preceding financial year is less than five crores, then mandatory to mention a four-digit HSN or SAC code in B2B Invoice for the B2C invoice is optional. If aggregate turnover in the preceding financial year is more than five crores, then six-digit HSN and SAC codes for B2B and B2C invoices. For the export or import of goods eight-digit HSN code is mandatory. Ensure classification and GST rates must be correct.
Debit note and Credit note plays essential role, Credit note is issued in the following cases by Supplier:-
a) Excess taxable value is charged, b)Excess tax rate is charged, c) Goods returned to the supplier, d)Deficiency in goods and services.
The last date of issuance of a credit note for FY 2022-23 is 30th Nov 2023, or the date of furnishing the Annual return(GSTR 9), whichever is earlier; in the case of monthly furnishers, it should be latest by 11th November 2023 and quarterly furnishers 13th November 2023 so that it will auto-populate in GSTR2B.
A financial credit note differs from a GST credit note, with no time limit to issue and no GST implication. No time limit for the issuance of debit notes in GST. Just to let you know, the provision of debit notes changed from 1st Jan 2021 according to section 16(4) if the invoice is raised in Jan2018 and a debit note has to be raised against that invoice on 28th March 2023, then 23rd March will be considered as the effective date.
Donating Fixed Asset to an NGO without any consideration after three years of usage, whether GST leviable, Yes, as must have availed input, considered as deemed supply, and it is permanent disposable of Asset, at what rate?? It will be higher of two will be reversed from input availed on Asset:-
a)GST on transaction value, section 18(6) of the CGST Act.
b)5% per quarter or part there off
Cross charge and ISD( Input service Distributor)
There can be non-compliance relating to cross charge or ISD, as clarity needs to be there. In ISD, there is procurement and distribution to respective units of the input available; there is no supply aspect involved
Supply of goods and services between the distinct person ( e.g. four registration under one PAN No) or related persons in the of furtherance of business, even without consideration, is Cross charge.
GST Input Tax Credit
Keeping in mind the preparation of GSTR 9 and GSTR9C in December 2023, input availed in books during the financial year is to be categorised into three categories and reconciled with GSTR 2B, GSTR 3B, should be further bifurcated into the input on goods, input on services, input on capital goods.( Refer Table 6A of GSTR9)
a) Input credit of FY 2022-23 identified.
b) Input credit of FY2021-22 availed in FY 2022-23 identified.
c) Input credit of FY2022-23 availed between April 2023 to November 2023 to be identified.
Please look at Table 8, Tables 12,13,6 and 7 of GSTR 9.
Whether to reconcile books with GSTR2B or GSTR 2A is a question of dispute and depends on different situations; keep watch on both( GSTR 2B and 2A), as sometimes, due to wrong quoting of GST number, treating B2B invoice as B2C interstate supply shown as intrastate supply, did not file GSTR1. However, paid taxes in GSTR3B invoices will not reflect in GSTR 2A and 2B. If filed GSTR1 after the 14th of the month, the invoice will reflect in GSTR2A but not in GSTR2B.
If the supplier created an invoice on 28th March of the financial year and filed GSTR1 on time, now the invoice will reflect in GSTR2B, but goods were received in April, so irrespective of the invoice being reflected in GSTR ,cannot claim input benefit in March but can do so in April. We must prioritise reconciling books of accounts with GSTR2B and GSTR3B but keep watch on GSTR2A. Check the missing invoices, if any, and speak to the supplier for the missing invoice or any invoice not showing in GSTR2B.
Reversal of ITC
It is a vital factor of GST, and due consideration should be given to avoid penalties and interest during GST audits. Reversal exercise must be done during the financial year only. No interest will be levied if reversal is done by 31st March of the financial year.
Section 16(2), read with Rule 37, mentions that if the recipient fails to pay the supplier within 180 days and must reverse the input claimed along with interest, interest will be levied @ 18%. If a part payment is made or the supplier retains any money, then no interest will be charged on the part payment and retained amount.
Rule 42 and 43
ITC should be classified into three categories,
a) Related to taxable supplies, you can claim 100% ITC.
b) Related to exempt supplies, cannot claim any ITC, reversal to be done if claimed.
c) Related to common ITC ( taxable and exempt supplies), ITC can be claimed on a pro-rata basis. Rule 42 applies to the reversal of input and input services and Rule 43 applies to the reversal of input on capital good.
Credit Ledger
Must check whether availed eligible credit or availed ineligible credit also, i.e. blocked credit as per Section 17(5) of CGST Act. if ineligible credit is claimed so must reverse it. Examples are gifts purchased, purchases for CSR activities, purchased for personal consumption, goods lost, goods destroyed, written off, goods disposed off, input claimed on the construction of immovable property other than plant and machinery.
If the reversal is done before utilisation, no interest is applicable. If after utilisation, then 18% interest is applicable. According to section 16(4), the time limit for using credit is the earliest of 30th Nov or furnishing Annual Return. A monthly supplier must file any amendment for the previous financial year on or before November 11th so that it will be auto-populated in GSTR2B on 14th November, in the case of a quarterly supplier, it must be on or before 13th November to be auto populated in GSTR 2B. Suppliers must be tax compliant. Know your supplier a must in todays condition.
Reverse Charge Mechanism
The recipient must pay the RCM liability on specified goods as per section 12(3) and on services as per section 13(3). If the recipient has not paid GTA for the financial year 2018-19,2019-20,2020-21,2021-22 but wants to settle in the financial year 2022-23 ,in case of registered GTA even after payment by recipient, cannot avail credit but if GTA is unregistered then can avail credit after generating self invoice has to pay interest as prescribed. GTA can opt for forward charge by applying in Annexure-A by 15th March, GST rate will be 12%, if fails to do so by 15th March must write a letter to jurisdictional officer mentioning the reasons why was not able to apply before 15th March.
GTA can opt for a reverse charge, GST rate will be 5%and forward charge of 12% and 5%.
In forward charge there are two rates, one 12% where input benefit available to the GTA,second is 5% where will not be able to claim input benefit. RCM and interest there on must be paid in cash.
Goods in lot and installment
If goods are supplied in lots recipient can avail of credit after receiving the last lot. If the supplier delivered goods in April 2022 and filed GSTR1, the invoice is auto-populated in GSTR2B, but the supplier has to pay the taxes thru GSTR3B can the recipient claim the input tax credit? According to the rules, the 37A recipient can claim provisional credit if the supplier pays the taxes by 30th September 2023. If the supplier doesn’t pay, then the recipient must reverse the credit availed by 30 thNovember2023 showing it in GSTR3B and can reclaim it whenever the supplier pays the taxes. Interest has to be paid if reversal is done after 30th November 2023, if done before, no interest is to be paid.
Letter of undertaking for export ( LUT) Rule 89 deals with it, the last date to apply for LUT is 31st March—only barred for tax payers who are prosecuted for offences exceeding 2.5 crores.
Quarterly Return Monthly Payment ( QRMP), the last date to opt for QRMP is 30th April.
Total expenditure both capital and Revenue must be captured to fill Form 3CD for FY 2022-23.
Total expenditure will be classified as purchases from Registered suppliers, further bifurcated into exempt goods and services( nil-rated , non-taxable, exempted )purchases from composition dealers, other registered purchases, and purchases from unregistered.
TDS and TCS must be reconciled. TDS and TCS deducted must be credited to the e-cash ledger, can be used to set off liabilities and can be claimed as a refund if accumulated. GST TDS is in the case of government contracts, and GST TCS is in the case of dealing with e-commerce operators. E-cash ledger balance can be transferred thru PMT 09 to a distinct entity, but e- credit ledger balance cannot be transferred. The E-cash ledger, E credit ledger, and E liability ledger must be individually reconciled. Similarly, CGST, SGST and IGST ledgers must be reconciled. Knowing your supplier is very important to protect yourself from Fake Invoices.
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