Facilitating MIGRATION to GST and TRANSITIONAL Issues

GST fever is on. The whole nation is waiting for the most revolutionary change since the independence of our country. The Central Government and State Governments are making every effort to introduce the Goods and Service Tax Law with effect from 1-7-2017. Many States also have already passed their respective States’ Goods and Service Tax Acts. The day is not far when Indian economy would witness the impact of the biggest indirect tax reform to happen in the coming Goods and Service Tax (GST) regime.

The whole nation is now in a transition phase for stepping into the GST regime. This book aims at diffusing the confusion prevailing in the area of the process and procedure of the transition. An attempt is made herein to solve issues and the problems likely to come by. Migration being an inherent part of transition, is also dealt to begin with. Registration being omnipresent in the whole process is also touched upon to the extent relevant.

This book has been thoughtfully divided into Six Parts comprising all the statutory provisions related to Registration for and Migration and Transition into the GST regime, alongwith the related procedural aspects, in terms of the relevant Rules and Forms.

Part I of the book deals with the importance and process of Migration. It also develops the basic understanding of the GSTN together with the registration process in the transition phase as also when already into the GST phase.

Part II is devoted to the special provisions concerning Input Tax Credit which is the basic object of the GST aiming at ensuring free flow of the input tax credit. The attempt herein is to cover almost all kinds of fact situations and the mechanisms to handle them for the purpose of successful availment of the input tax credit flowing from the pre-GST regime into the post-GST regime.

Part III is concerned with the specific transition provisions related to refund applied for, refund to be applied for, goods sent on approval, appeal, review or reference, adjudication proceedings and return of goods, etc., with the help of some graphical (flow chart) representations so as to attain the basic understanding of the issue in point.

Part IV of the book incorporates as many as Twenty Six Case Studies and practical problems to cover practically all kinds of fact situations. The authors have tried to cover varied situations and different aspects in the Case Studies with a view to explaining the actual happenings in the process of availment of input tax credits in cases with different factual contexts.

Part V reproduces the FAQs released by CBEC on 31-3-2017 immediately after passing of the CGST Act 2017 so as to explain the statutory provisions and the rules relevant thereto.

The concluding Part VI reproduces all the statutory provisions concern-ing the transitional processes and procedures with the reproduction of even the related Rules and the Forms, apart from the Sections.

While everyone, the Authors not excluded, are not fully confident about the uncertainties emerging and confronting in the initial phase of implementation of the GST, it is certain that the present work will, at the least, ease the first phase, being migration into and handling of the transition phase which are going to be the first and immediate happenings.

I am pleased to introduce my co-author Akash Phophalia who is a welcome addition to our Creative Cell (now in its 37th Year). He is a young man who is in practice in indirect taxes since 2010. He is a fellow member of the Institute of Chartered Accountants of India. He has a strong tendency towards learning and also making it known through his various diplomas and certificate courses apart from M.Com. FCA, Company Secretary Course, and what not. Currently he is one of the faculties on GST as recognized by the Institute of Chartered Accountants of India. His enthusiasm is certainly appealing to me.

I would feel obliged on receiving any constructive suggestions, even criticisms.

1. Finalize your books of accounts for 31st March 2017.

2. Prepare detailed working of the Closing stock for the date 31st March 2017 and for the period April 2017 to June 2017.

3. Allocate stock into inputs, semi-finished goods and finished goods in terms of quantity and value.

4. Correct pending mismatch reports.

5. If necessary, revise returns filed for correcting the mismatch data.

6. Ensure filing of all the returns for the period Jan 2017 to June 2017.

7. Return for the period ending with 30th June 2017 should not be revised.

8. Ensure collection of all the C Forms/F Forms/H Forms and I Forms.

9. Obtain GSTN of your suppliers and buyers. Also inform your GSTN to the suppliers and buyers.

10. Make chart of HSN codes and GST rates applicable on supply of goods and services.

11. If GST rate is higher than the present tax rate then old stock should be disposed off immediately.

12. If GST rate is lower that the present tax rate then maintain proper details of the stock in hand.

13. Credit of State tax (VAT or Entry Tax) will be carry forward as SGST and credit of Central tax (Excise or Service Tax) will be carry forward as CGST.

14. Declaration for claiming input tax credit needs to be submitted within 90 days of the appointed day i.e., till 28th September 2017.

15. Provisional ID number is GSTIN (Goods and Service Tax Identification Number)

Special points to ponder for traders availing of credit of Excise duty

16. Prepare detailed calculation of stock with identification of the same with the relevant invoices.

17. In case of availability of Excise duty paying document, identify the stock to the relevant excise invoices.

18. In the absence of Excise duty paying document either obtain Credit transfer document form the manufacturer or avail of 60%/40% credit of central tax paid thereon.

19. Stock older than one year (purchased before 1st July 2016) from the appointed date should be separately identified.

20. Stock older than one year (purchased before 1st July 2016) should be disposed off immediately.

21. Stock should be cleared within six months from the appointed day to avail of credit i.e. till 31st December 2017.

GST Implementation and post GST preparation

1. Train the staff and take assistance of your consultant in GST implementation and preparation of details.

2. Maintenance of separate details for Tax Invoice, Debit Note, Credit Note, Receipt Voucher, Refund Voucher and Bill of Supply is required for GST purpose. These documents can be different from the invoices, challan and debit/credit notes maintained for accounting purpose.

3. On every intra-state transaction CGST and SGST shall be charged together. On every inter-state transaction IGST shall be charged.

4. Ensure timely receipt of stock and invoices related to it and timely compilation of all the buying and selling.

5. Timely filing of returns --

Return Form
Details
Due date
GSTR-1
Monthly Outward Supply details/Details of sale of goods/Details of service provided
By 10th of the next month
GSTR-2
Monthly Inward Supply details/Details of purchases/Details of services received
By 15th of the next month
GSTR-3
Monthly return
By 20th of the next month
GSTR-4
Quarterly Return to be filed by the composition dealers
By 18th of the next month.
6. Delay in filing of return calls for late filing fees of Rs. 100 per day in CGST Act and Rs. 100 per day in SGST Act till the filing of return subject to a maximum of Rs. 5000.

7. Filing of return is mandatorily required payment of tax.

8. Avoid dealing with buyers or suppliers who may not be complying with the provisions of GST.

9. Advances received will also be chargeable to tax.

10. Manner of utilization of credit.

Input Tax Credit
Order of Utilization of Credit
CGST
-- First towards CGST
-- Balance towards IGST
SGST
-- First towards SGST
-- Balance towards IGST
IGST
-- First towards IGST
-- Then towards CGST
-- Balance towards SGST
11. CGST stands for Central Goods and service Tax, SGST Stands for state Goods and Service Tax and IGST stands for Integrated Goods and Service Tax.