GST Compliances

Key aspects of compliances in the GST regime

Goods and Services Tax (GST) is one the most important tax reforms of modern India, and is scheduled come into effect from 1 July 2017. The reform is expected to have a far-reaching impact on all businesses, including trading, manufacturing and services.

GST requires greater integration of tax domain knowledge, expertise and technology, as compliance has become vast, paperless and data-intensive, with sector-specific nuances. The digitalization has also created a new paradigm in tax administration and compliances.

The Goods and Services Tax (GST) is a single and destination based tax levied on goods & services consumed in an economy. GST as envisaged by the Central Government is a single uniform indirect tax which will treat India as one nation one market. With start of its inception from 1st July 2017, compliance with GST Law has always been challenging issue for business organizations.

GST requires greater integration of tax domain knowledge, expertise and technology, as compliance has become vast, paperless and data-intensive, with sector-specific nuances. The digitalization has also created a new paradigm in tax administration and compliances.

The second most important compliance is to availing Input Tax credit on timely basis. A businessman is not aware of GST regulations. The followings are covered under Input Tax Credit compliances under GST:

• To check whether ITC is eligible or not. There is concept of blocked ITC under GST also where credit of GST shall not be available to taxpayer.

• To check whether ITC of invoice is availed within the time limit specified under GST.As per section 16(4) of CGST Act, credit of invoice of particular month can be availed only till due date of furnishing GSTR-3B for September of next financial year or date of filing of annual return, whichever is earlier.

• To check the manner of utilization of ITC

• To match ITC claimed in GSTR-3B with GSTR-2B

Timely refund mechanism is essential in tax administration, as it facilitates trade through release of blocked funds for working capital, expansion and modernization of existing business.

In GST, refund of taxes is allowed in certain circumstances which are as follows:

• Export of Goods or services

• Supplies to SEZs units and developers

• Refund of accumulated Input Tax Credit on account of inverted duty structure i.e. Tax paid on input is higher than tax liability on output

• Excess payment of tax by mistake

• Tax paid on advances received but later on goods or services were not supplied

• Refund of CGST & SGST paid by treating the supply as intra-State supply which is subsequently held as inter-State supply and vice versa.

• Deemed Export supplies

• Refund of taxes on purchase made by UN or embassies etc.

• Refund arising on account of judgment, decree, order or direction of the Appellate Authority, Appellate Tribunal or any court

• Finalization of provisional assessment

• Refund of pre-deposit

• Refunds to International tourists of GST paid on goods in India and carried abroad at the time of their departure from India

GST Annual Return

The GST Annual return i.e. GSTR 9 is a return to be filed by the every taxpayer once a year which is summary of all monthly/quarterly returns (GSTR 1, GSTR 2B, GSTR-3B) filed for that year. It consists of details regarding the outward and inward supplies made/received during the relevant year, ITC availed and utilised, Refund claimed under different tax heads i.e. CGST, SGST & IGST.

GST Audit

GST is a trust-based taxation regime wherein a taxpayer is required to self-assess his tax liability, pay taxes and file returns. Thus, to ensure whether the taxpayer has correctly self -assessed his tax liability a robust audit mechanism is a must. Various measures are taken by the government for proper implementation of GST and audit is one amongst them.

Audit under GST involves examination of records, returns and other documents maintained by a registered person. It ensures correctness of turnover declared, taxes paid, refund claimed, input tax credit availed and compliance with provisions of law. This audit has to be conducted either by CA or CMA.