GST Important Questions with there Solutions and Impact Analysis : The first hour of the July month has witnessed the greatest tax reform of the country in the form of GST. We are sure, the new GST law will give our country a new identity. As I always says, it is responsibility of our fraternity to aid easy rollout of GST in our country. It will give tremendous professional opportunity to our fraternity but there is also equally big responsibility on ours. It is the time to showcase our strength and ability as true partner in nation building.
1. What if the dealer migrated with wrong PAN as the status of firm was changed from proprietorship to partnership?
Ans. GST New registration would be required as partnership firm would have new PAN.
IMPACT: In such scenario there will be loss of closing balance on tax credit. To avoid that one must argue for migration with correct PAN by submitting proof of intimation of change given in the existing regime. This must be done at the earliest so that correct GST number can be communicated to vendors for claiming credit in GST regime.
2. Not liable to tax as mentioned u/s 23 of CGST means nil rated supply or abated value of supply?
Ans – Not liable to tax means supplies which is not leviable to tax under the CGST/SGST/IGST Act. Please refer to definition under Section 2(78) of the CGST Act
Impact: This is a welcome clarification. As per above reply ‘not liable to tax’ means non-taxable supply defined u/s 2(78). Non-taxable supply means a supply of goods or services which is not leviable to tax under GST Act. As per Sec. 2(47) exempt supply includes ‘nil’ rated, wholly exempt as well as non-taxable supply. Hence non-taxable supply is different from ‘nil’ rated and exempt supply. Not taxable supply shall include only supply of such goods (e.g. alcoholic liquor for human consumption, petrol, diesel, etc.) which are not leviable to tax under GST Act.
One of the condition for claiming composition benefit is that the person should not be engaged in making any supply of goods which are ‘not leviable to tax’ under the GST Act. As per the above clarification the words ‘not leviable to tax’ shall cover only nontaxable supply and not exempt or ‘nil’ rated supply. Hence a kirana store dealing in ‘exempt’ or ‘nil’ rated goods shall be eligible for composition benefit.
3. Is an advocate providing interstate supply chargeable under Reverse Charge liable for registration?
Ans: Exemption from registration has been provided to such suppliers who are making only those supplies on which recipient is liable to discharge GST under RCM
Impact : Given an exemption, even transporters are not liable to be registered if they are only providing goods transportation services which are under reverse charge. However, if GTA sells used tyres the same shall be or furtherance of business and is taxable under forward charge. In such eventuality if aggregate turnover which includes turnover where a recipient is liable to pay tax (i.e. transport income) as well as sale of tyres exceed INR 20 lakhs registration shall be compulsory. On the above analysis it is very difficult to see any benefit of this concession.
4. Please tell if rental income up to 20 lacs attracts GST or attracts any other charge?
Ans. GST is leviable only if aggregate turnover is more than 20 lacs. (Rs. 10 lacs in 11 special category States). For computing aggregate supplies turnover of all supplies made by you would be added.
Impact: Suppose a doctor is having medical practice of INR 25 lacs and also having rental income from commercial property of INR 2 lacs, he shall require registration as his aggregate turnover shall exceed INR 20 lacs as aggregate turnover includes ‘exempt’ turnover (i.e. turnover of medical practice).
5. What If I am not liable to register under GST but I was registered under Service tax ?
Ans. You can apply for cancellation of Provisional ID on or before July 31, 2017
Impact : One will have to apply for cancellation of the provisional ID if he wants to enjoy INR 20 lakhs benefit. In such case we suggest to make application with effective date of 01.07.2017 so that GST is not payable on supplies made on or after 01.07.2017.
6. If I register voluntarily though turnover is less than 20 Lakhs, am I required to pay tax from 1st supply I make post registration?
Ans. Yes, you would be treated as a normal taxable person
Impact: One cannot keep registration and still claim INR 20 lakhs benefit. One has to surrender the provisional number as discussed above if he wants to enjoy INR 20 lakhs benefit
7. I am registered in TN and getting the service from unregistered dealer of AP, should I take registration in AP to discharge GST under RCM?
Ans. Any person who makes make interstate taxable supply is required to take registration. Therefore, in this case AP dealer shall take registration and pay tax.
8. How to comply with 9(4) of CGST Act if POS is in another state of the unregistered supplier?
Ans. Any person making inter-state supply has to compulsorily obtain registration and therefore in such cases, section 9(4) will not come into play.
Impact: No direct answer has been provided on the issue. However, comment that ‘Sec. 9(4) will not come into play’ is striking as law as on date does not provide for such interpretation.
9. What duties will be levied on import of goods? Customs duty and cess as applicable + IGST+ GST compensation cess.
Ans. IGST and GST compensation cess shall be paid after adding all customs duty and customs cess to the value of imports
Impact: Customs cess of 2% & 1% shall continue. Said shall remain the cost to the importer.
10. Present procedures have Service Tax on Nepal, But no Goods Tax on Nepal. But, With GST, what tax will apply?
Ans. The export procedure for Nepal would be same as that to other countries
Impact: Export of service shall be treated at par with export to other countries. But one of the condition for export of service is that consideration should be received in foreign currency. Same needs to be fulfilled even for export of service to Nepal. Only then it shall be zero-rated and no GST shall be payable.
11. Who will pay IGST when goods are procured from SEZ?
Ans. Today importer is paying both BCD and CVD. Such supply is treated as import and present procedure of payment continues with the variation that IGST is levied in place of CVD.
Impact: It may be noted that IGST on supply from SEZ is levied under IGST Act and not under SEZ Act. Hence as per law the supplier (i.e. SEZ unit) will have to pay GST. Even SEZ unit has to obtain a separate GST number. Hence in our opinion IGST cannot be paid by importer.
12. Can one State CGST be used to pay another state CGST?
Ans. The CGST and SGST Credit for a State can be utilized for payment of their respective CGST/SGST liabilities within that State for the same GSTIN only.
Impact: In case of GST (i.e. SGST + CGST) paid on stay in Hotel in a State where supplier is not registered even CGST shall become cost as credit of the same cannot be utilized against CGST payable in another State
13. Company is engaged in manufacturing of cement and power. Which rule to be referred for reversal of credit related to power business?
Ans. Detailed rules for reversal of ITC when the supplier is providing exempted and nonexempted supplies have been provided in ITC Rules.
Impact: In our opinion, reversal is to be done only if manufactured power is sold by the company. Captive consumption shall not require reversal.
14. How will the credit/debit note from unregistered supplier be reported to GSTN and ITC claimed in the same?
Ans. Like invoice, credit/debit notes on behalf of unregistered person will be given by registered person only. Further, GSTR2 provides for reporting of same by the recipient
Impact : Not just invoice but even debit/credit note is to be prepared by registered recipient in respect of supplies from unregistered person. In case of debit note (issued on behalf of supplier), recipient will have to pay GST under reverse charge and claim credit subject to fulfilment of general conditions. In case of credit note for value difference we suggest to make the same without GST so that credit of GST paid earlier is not disturbed. As per Question No. 54 monthly consolidated invoice is required where such tax under RCM is to be paid. Hence monthly debit note should suffice.
15. Do registered dealers have to record Aadhaar/PAN while selling goods to unregistered dealers?
Ans. There is no requirement to take Aadhaar / PAN details of the customer under the GST Act.
Impact: Aadhar/PAN not required in case of B2C transactions. Only details (i.e. name and address) required in case of inter-State supplies having invoice value of more than INR 2.50 lakh.
16. Should we discharge GST liability for all reverse charge having small amounts of Transaction or any amount limit is there?
Ans. It has been decided that Rs 5,000 per day exemption will be given in respect of supplies received from unregistered person
Impact: It is not clear whether the limit shall be qua supplier per day or aggregate for all the unregistered suppliers put together per day. One will have to wait for notification.
17. Employer provides bus service, meal coupon, telephone at residence, gives vehicle for official and personal use, uniform and shoes, any GST?
Ans. Where the value of such supplies is in the nature of gifts, no GST will apply till value of such gifts exceeds Rs 50,000 in a financial year.
Impact: In our opinion, if perquisite value as per Income Tax has been offerred for tax the same shall be regarded as salary in kind and the same should be covered under Schedule – III Entry No. 1 and hence shall not be liable to tax.
18. If in VAT return refund claimed in June 17 and no balance credit in GST. Then what’s the position of submission of Form C Refund claimed under existing law will be handled as per the provisions of the existing law.
Ans. Form C to be submitted in terms of provision of Rule 1(1) of Transition Rules.
Impact: In our opinion pending forms are to be submitted in terms of Rule 1(1) only if any VAT credit is to be carry forwarded. Even in this respect only the amount of credit which is commensurate to pending claim is to be deducted and not full liability on all the claims pending till date.
19. Some service was provided on June 28, 2017 but invoice will be raised on July 5, 2017. Whether we have to charge Service Tax or GST?
Ans. If Point of Tax arises after appointed date, then GST will be chargeable on such supply
Impact : Same shall also apply for payment of tax under RCM. If invoice is raised in July by transporter for services provided in June GST is to be paid under RCM and not service tax. Similarly, in case of services hitherto covered under RCM (e.g. manpower supply by individual) but now covered under forward charge in GST regime, service provider shall have to charge GST if invoice is raised in July and RCM is not to be paid for services provided in June.
20. Would we be eligible for credit on Capital Goods in transit and received post GST?
Ans. No provision for such credit is there in GST law.
Impact : Avoid taking such deliveries.
21. Who will bear tax difference on closing stocks as on June 30, 2017? Whether the manufacturer/dealer or government?
Ans. Closing ITC in VAT return will be allowed to be carry forward in GST
Impact : They have not answered the question. Loss shall be borne by trade & industry.
22. Can ITC of Swachh Bharat Cess or Krishi Kalyan Cess be carried forward under GST?
Ans. No.
Impact : Balance of SBC & KKC shall be cost
23. Whether IGST would be levied twice on high seas sales? First on high seas sales and second on custom clearance. IGST paid on 1 available as ITC?
Ans. IGST shall be levied only once on imports.
Impact : In line with our interpretation, in case of high sea sales, GST shall be payable by eventual importer who shall clear the goods.
24. Is E-Way Bill applicable from July 1, 2017?
Ans. The present system for E-way Bill in states will continue till the E-Way Bill procedures are finalised.
Impact : States will have to amend the format inline with GST and shall have to notify such forms under GST.
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