GST – Sectoral FAQs – MSME
GST
Dated:- 21-7-2017
Question 1: What is GST?
Answer: GST stands for Goods and Services Tax, which is levied on supply of goods or services. “Supply” is a legal term which has very broad sweep and various types of economic activities are covered by it. For example, sale of goods is a type of supply.
Question 2: On what supply is GST levied?
Answer: GST is levied on all types of supplies which are – (i) made for a consideration and (ii) are for the purpose of furtherance of business. There are some exceptions when these conditions are not met, yet supply is considered to have been made, for example, interstate stock transfer of goods even without consideration or importation of services even if not in the furtherance of business.
Question 3: Will GST be levied on all goods or services or both?
Answer: No, GST will not be levied on alcohol for human consumption. GST on Crude, Motor Spirit (Petrol), High Speed Diesel, Aviation Turbine Fuel
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e as well as State for various permissions, audit etc. under the Act?
Answer: No, a registered person will have to approach only one tax authority for all practical purposes. Each registered person would have one tax administration office, either of the Centre or of the State. Legal provisions (called crossempowerment) have been made to ensure that one officer can discharge all functions under CGST, SGST and IGST Act. The registered person would be informed of the tax administration concerned with him. A single registration is granted for the purposes of CGST, SGST/UTGST and IGST.
Question 6: What is destination based consumption tax?
Answer: When a supply originates in one State and is consumed in another State, tax can accrue to either of the two States. In a destination based consumption tax, taxes accrue to the State where the supply is consumed. In origin based tax, the tax accrues to the State where the supply originates. GST is basically a destination based consumption tax. F
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x due from him on further supply made by him). This is known as input tax credit for the recipient.
Question 9: Is GST going to increase compliance burden on the trade?
Answer: No. On the contrary GST will result in streamlining of processes and reduction of compliance burden. GST is a simple tax which uniformly applies across the country. GST has been designed to have minimal human interface and would be implemented through strong IT platform run by GSTN. Also, in the earlier regime there were multiple compliances required for taxes such as Central Excise, Service tax, VAT etc. with Centre and State. GST makes it single and uniform compliance for indirect taxes across the country. Under GST, there is just one interface with no face-to-face meeting between taxpayers and tax authorities and practically every activity will be done online.
Question 10: What is the threshold for registration in GST?
Answer: A person having business which has aggregate turnover of more than ₹ 20 l
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pt from GST. Am I liable for registration?
Answer: No.
Question 14: How do I make supply, if I have not applied for registration?
Answer: You should apply for registration at the earliest on the GST common portal and obtain application reference number (ARN). You need not disrupt your business and may continue to make supplies on invoices without GSTIN. The application for registration must be made within 30 days of the turnover crossing ₹ 20 lakhs or attracting any of the conditions mentioned in section 24 of the CGST Act, 2017. After registration, you can issue revised invoices as permitted under section 31(3)(a) of the said Act. These supplies should be shown in the return and taxes paid on them.
Question 15: How can an application for fresh registration be made under GST? Within what time will registration be granted?
Answer: Application for fresh registration is to be made electronically on the GST common portal (www.gst.gov.in) in FORM GST REG-01. If the details and do
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am a SME selling printed books after printing and have a turnover of twenty-five lakhs rupees per annum. I print only Children's picture, drawing or colouring books which are exempt from GST. Do I need to register?
Answer: No. A person dealing with only exempted supplies is not liable to registration irrespective of his turnover. Section 23(1)(a) of the CGST Act, 2017 refers.
Question 19: If I register voluntarily though my turnover is less than ₹ 20 lakhs, am I required to pay tax on supplies made post registration?
Answer: Yes. If you obtain voluntary registration despite the turnover being below ₹ 20 lakhs, you would be treated as a normal taxable person and would need to pay tax on supplies even if they are below the threshold for registration. You will also be entitled to take input tax credit.
Question 20: How will taxpayer get the certificate of registration?
Answer: The taxpayer can himself download the certificate of registration online from the GST common por
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uired to be obtained.
Question 23: Are all manufacturers necessarily required to be registered under GST?
Answer: No, there is no provision requiring that a manufacturer irrespective of threshold or nature of supply to register himself under GST. For example, a manufacturer dealing only in exempted goods or where his turnover is only intra-State and below ₹ 20 lakhs, is not required to be registered.
Question 24: Who is liable to issue a 'tax invoice' and how many copies are required to be issued?
Answer: Every registered person (other than a registered person availing the benefit of composition or a registered person supplying exempted goods or services) supplying goods or services or both is required to issue 'tax invoice'. Invoice should be issued in triplicate in case of supply of goods. The original copy is meant for buyer, duplicate for transporter and triplicate copy for record of the seller. A registered person under composition scheme or supplying exempted goods or s
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day in respect of all such supplies.
Question 27: When should a tax invoice be issued for goods?
Answer: Tax invoice for goods shall be issued on or before the time of removal/delivery of goods. In case of continuous supply of goods, it shall be issued on or before the time of issue of statement of accounts /receipt of payment.
Question 28: In case of supply of exempt goods or when tax is paid under Composition Scheme, is the registered person required to issue a tax invoice? How a bill of supply is different from a tax invoice?
Answer: No. In such cases, the registered person shall issue a Bill of Supply and not a tax invoice. The bill of supply is different from a tax invoice both in name and details contained. While most of the details to be provided in a bill of supply are similar to tax invoice, the bill of supply does not contain the rate of tax and the amount of tax charged as the same cannot be collected.
Question 29: If goods are transported in semi-knocked down conditio
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limit for Composition Levy for CGST and SGST purpose shall be ₹ 50 lakhs?
Answer: Composition scheme is a scheme for payment of GST available to small taxpayers whose aggregate turnover in the preceding financial year did not cross ₹ 75 Lakhs. In the case of 9 special category States, the limit of turnover is ₹ 50 Lakhs in the preceding financial year, namely – Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and Himachal Pradesh. However, if you are a manufacturer of ice-cream, pan masala or tobacco or tobacco products or if you are a service provider other than a restaurant, you are not eligible for composition scheme.
Question 32: What is the form in which an intimation to pay tax under the composition scheme needs to be made by the taxable person?
Answer: Composition scheme is optional and intimation that option has been availed should be made electronically in FORM GST CMP-01 by the migrating taxable person. A person who has alr
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3
24
Tobacco and manufactured tobacco substitutes
Question 35: When will a registered person have to pay tax?
Answer: A registered person will have to pay GST on monthly basis on or before 20th of the succeeding month and if he has opted for composition levy he will have to pay GST on a quarterly basis on or before the 18th day of the month after the end of the quarter.
Question 36: A person availing composition scheme during a financial year crosses the turnover of ₹ 75 Lakhs / ₹ 50 Lakhs during the course of the year i.e. say, he crosses the turnover of ₹ 75 Lakhs/Rs. 50 Lakhs in December? Will he be allowed to pay tax under composition scheme for the remainder of the year i.e. till 31st March?
Answer: No. The option to pay tax under composition scheme shall lapse from the day on which his aggregate turnover during the financial year exceeds ₹ 75 Lakhs/ 50 Lakhs. Once he crosses the threshold, he shall file an intimation for withdrawal from the scheme in
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it on his inward supplies?
Answer: No, a taxable person opting to pay tax under the composition scheme is out of the credit chain. He cannot take input tax credit on the supplies received.
Question 39: How is a manufacturer under the composition scheme required to bill his supply? Can a registered person, who purchases goods from a composition manufacturer take input tax credit?
Answer: A manufacturer opting to pay tax under the composition scheme cannot issue a tax invoice to his buyer but would issue a Bill of Supply. He cannot collect any tax supplies made by him on his Bill of Supply and is required to show only the price charged for the supply. Consequently, the registered person buying goods from a composition manufacturer cannot take input tax credit.
Question 40: How would a manufacturer under the composition scheme who receives inputs or input services from an unregistered person pay GST? What will be the tax rate if the purchase is from a person availing composition?
Ans
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with respective effective dates as shown below:
Situation
Effective date of composition levy
Persons who have been granted provisional registration and who opt for composition levy (Intimation is filed under Rule 3(1) in FORM GST CMP-01)
1st July, 2017.
Persons opting for composition levy at the time of making application for new registration in the same registration application itself (The intimation under Rule 3(2) in FORM GST REG-01)
Effective date of registration; Intimation shall be considered only after the grant of registration and his option to pay tax under composition scheme shall be effective from the effective date of registration.
Persons opting for composition levy after obtaining registration (The intimation is filed under Rule 3(3) in FORM GST CMP-02
The beginning of the next financial year.
Question 43: What is the validity of composition levy?
Answer: The option exercised by a registered person to pay tax under the composition scheme shall remain valid so l
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n levy, withdraw voluntarily from the scheme?
Answer: Yes, the registered person who intends to withdraw from the composition scheme can file a duly signed or verified application in FORM GST CMP-04. In case he wants to claim input tax credit on the stock of inputs and inputs contained in semi-finished or finished goods held in stock by him on the date of withdrawal, he is required to furnish a statement in FORM GST ITC-01 containing the details of such stock within a period of thirty days of withdrawal.
Question 46: Will withdrawal intimation in any one place be applicable to all places of business?
Answer: Yes. Any intimation or application for withdrawal in respect of any place of business in any State or Union territory, shall be deemed to be an intimation for withdrawal in respect of all other places of business registered on the same Permanent Account Number.
Question 47: Can a person paying tax under composition scheme make exports or supply goods to SEZ?
Answer: No, becaus
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ard, over the counter of banks, RTGS or NEFT.
Question 50: Does a registered person under the composition scheme pay his taxes every month?
Answer: No, registered person under the composition scheme will not pay taxes every month. He would file return and pay taxes on a quarterly basis i.e. for each quarter of the financial year. Due date for payment of tax for them would be on or before the 18th day after the end of such quarter.
Question 51: What are the accounts a manufacturer under the composition scheme needs to maintain?
Answer: Rules on Accounts and Records provide details of the accounts to be maintained. They are maintained under normal course of business by any small manufacturer. The details to be maintained in accounts inter-alia consists of goods supplied, inward supplies attracting reverse charge, invoices, bills of supply, delivery challans, credit notes, debit notes, receipt vouchers, payment vouchers, refund vouchers etc.
Question 52: Does a manufacturer under the
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s, a manufacturer under the composition scheme can maintain his accounts in registers serially numbered and also issue bill of supply manually following the conditions specified in rules in this regard.
Question 55: Whether a registered person under the FAQ: MSME composition scheme needs to learn HSN code of any input purchases and output supplies?
Answer: No, a registered person under the composition scheme would not need to specify HSN code of their products in bill of supply or return.
Question 56:. What return a registered person under the composition scheme needs to file and at what frequency?
Answer: A registered person under the composition scheme of GST is required to furnish quarterly return called GSTR-4 between the 11th day and 18th day of the month succeeding the quarter.
Question 57: What details are required to be furnished in the return to be filed by the registered person under the composition scheme?
Answer: GSTR-4 may be referred for details required to be fille
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