A Guide to Traders for Shifting from MVAT to GST Regime – All Provisions

A Guide to Traders for Shifting from MVAT to GST Regime – All Provisions. GST will be applicable from 1st July 2017 so here we provide The Significant differences between M-VAT Provisions & GST Explained in very easy to understand way. Check How to Shift from M-VAT to GST For Traders. 

Particulars Provision under GST Provision under M-VAT
Applicability GST will be made Applicable on Manufacturers, Traders and Service Providers M-VAT was liable to be paid by Traders (Buyers & Sellers of Taxable Goods) only.
Taxability of Intra-State and Inter-State Transactions Refer Annexure-I Refer Annexure-I
Credit of Capital Goods Will be Fully Available except for following few items:

  • Motor Vehicles
  • Goods/Service      for     Personal Consumption
  • ITC For Exempted Supplies
  • Goods Lost/Stolen or distributed as free samples
Available full for Certain Items and for Certain Items 3% was retained
Credit of Taxes paid on Services Credit of CGST/SGST/IGST Paid on Services Received will be made Available Credit of Service Tax Paid on Services Received was not admissible and therefore it was a cost for Traders
Taxability of Stock Transfers to Inter-State Branches Taxable since different Registration for each state will be there but full ITC will be made Available to Transferee branch Was not liable for CST and F Form was supposed to be submitted by Transferee which was later to be submitted in Department by Transferor
Returns & Payment Dates Periodicity: Monthly

  • GSTR-1 – Details of outward supplies of taxable goods (10th of Subsequent Month)
  • GSTR-2 – Details of inward supplies of taxable goods and/or services claiming input tax credit (15th of the subsequent month)
  • GSTR-3 – Monthly return on the basis of finalization of details of outward supplies and inward supplies along with the Payment of Tax (20th of the next month)
  • GSTR-9 – Annual Return (31st D
Periodicity: Quarterly

Form 231/232/233/III-E: Quarterly VAT/CST Return along with Payment of Tax (21st of Month Succeeding Quarter)

Audit Applicable: Dealers crossing Turnover of Rs. 1 crore

Due Date: 31st December of next Financial Year

Applicable: Dealers crossing Turnover of Rs. 1 crore

Due Date: 15th January of next Financial Year

Conditions for Claiming The two major shifts of claiming Input Tax Credit are:

1. Payment to Supplier must be made within 180 days

2. Every single Purchase Invoice must be matched with Invoice of Supplier while uploading return for the month and Supplier must make payment of Tax

No such conditions were existed under M-VAT initially at time of Return Filing.

However, filing of Annexures J1 & J2 was to be made and mismatch in J1 & J2 in subsequent yearsled to payment of Credit Amount.

Payment of Tax Under RCM for Purchases from Unregistered Suppliers For Every Purchases made or Services received from Unregistered Suppliers for an amount exceeding Rs. 5,000 per day, GST has to be paid by Registered Recipient under Reverse Charge Mechanism and a Payment voucher should be issued to such supplier. No Such Provisions were present under M-VAT
Point of Taxation GST will be charged at the Time of Raising Invoice or at the Time of Receiving Money from Recipient whichever is earlier (Advances from Customers will be liable for GST) VAT has to be charged at the time of Raising Invoice
Threshold Limit for Non – Registration Rs. 20 Lakhs Rs. 10 Lakhs
Penalty for Late Filing of Returns Rs. 100 for per day of Late Filing (Maximum Penalty – Rs. 5,000)

Penalty @ 0.25% of Annual Turnover will be levied for Late Filing of Annual Return

Varied from Rs. 1,000 to Rs. 5,000
Interest on Late Payment of Tax 18% p.a. Interest on day wise basis will be levied
  • Interest @ 1.25% for 30 days of delay,
  • Interest @ 1.5% for next 60 days of delay,
  • Interest @ 2% for further delay was charged
Treatment of Discount Discount initially reflected in invoice will not be subject to GST. Discounts allowed subsequently will also not amount to GST subject to the conditions for giving discount were pre-defined among Supplier & Recipient and a Credit is needed to be issued in this regard. Similar Provisions existed under VAT Regime except that there was no condition for Pre-Defining Discount Terms
Invoicing Requirements Few Important things which are must required to be mentioned in invoice are:

  • Name, Address, GST TIN of Supplier
  • Name, address, GST TIN of Recipient (If recipient is registered Person under GST)
  • Product Details such as HSN Code, Rate of GST applicable on it, Quantity Sold, Rate and Amount
  • CGST/SGST/IGST must be reflected separately
Similar things were required to be presented under VAT except for mentioning of HSN Code and Quantity of Goods Sold
Time Limit for Retention of Books of Accounts & Records 60 Months (5 Years) from end of September of Next Financial Year i.e. 5 Years 6 Months from end of Financial Year 5 Years from end of Financial Year
GST Compliance Rating A Rating System will prevail under GST. Every Registered Dealer will be rewarded Rating by Department based on Compliance of GST Provisions.

Please Note that such Rating of every dealer will be made reflected on GST Portal. So, it is advisable to maintain your rating good to avoid loss of Business Reputation

No such provisions were existed previously
Mandatory Receipt of Goods for Claiming Input Tax Credit Input Tax Credit will be made available after Receipt of both Invoice and Goods Only Receipt of Invoice was sufficient to Claim Input Tax Credit
Set-Off of Taxes Credit of CGST: Can be Set-Off Against: CGST

SGST – SGST

IGST ⇒       IGST – CGST – SGST

Note: CGST & SGST Cannot be Set-Off against each other

Credit of mvat: Can be Set-Off Against: MVAT -CST

CST ⇒ CST

Treatment of Sales Return Reversal of Tax on Goods Returned by Recipient will be allowed provided goods are received within 30th September of Subsequent Financial Year Reversal of Tax on Goods Returned by Recipient was allowed provided goods were received within 6 months from Sale Date
Mode of Payment for Interest & Penalties Interest and Penalty levied must be paid in Cash or through Banking means only i.e. it cannot be Set-Off against Input Credit Available Earlier, dealers were able to Set-Off Interest and Penalty through balances in M-VAT & CST available also
Issue of Debit / Credit Notes Revision of Sales & Purchases Details Uploaded is not possible under GST, so Dealers need to Issue Debit & Credit Notes in order to rectify there Uploaded Data Revised Returns could have been uploaded before / after audit

Example 1: Supplier A of Maharashtra sold Goods to Buyer B of Maharashtra worth Rs. 100 (Applicable Tax Rate on Goods was 18%)

Example 2: Supplier A of Maharashtra sold Goods to Buyer B of Gujarat worth Rs. 100 (Applicable Tax Rate on Goods was 18%)

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