Queries relating to GST received from various sectors have been scrutinised and developed into short FAQs
GST
Dated:- 30-8-2017
Queries relating to GST received from various sectors have been scrutinised and developed into short FAQs
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Document 1
FREQUENTLY
ASKED
QUESTIONS
GOODS AND SERVICES TAX
NATION
TAX
MARKET
Queries relating to GST received from various sectors
have been scrutinised and developed into short FAQS.
The fourth part, containing 50 questions and their answers, is given below.
COMPOSITION
PART-4
Q.1 Whether a person can avail the composition scheme on Small Retail Trading of goods if he is holding both incomes like Sale
of business: Rs. 25 lakh (Small Retail Trader) and Rental income: Rs. 12 lakh, whereas the person was registered earlier in
VAT Composition Scheme and was paying Service Tax on rental income?
Ans Renting is a service and supplier of service, except restaurant service, cannot opt for composition scheme. Sinc
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h Bond LUT even if the same was issued on or before
30.06.2017 and is still live Le. not one year old.
Ans Circular No. 4/4/2017-GST dated 07.07.2017 clarifies this. Old LUT/bond is valid till 31.07.2017, after which fresh
LUT/Bond in the new format is required to be submitted
Q.4 Some assessees had multiple central excise registrations under the earlier regime and were having different LUT/Bond for
each premises. In GST, there will be single registration for such assesses. Do they require furnishing fresh Bond/LUT for
their principal place of business or the existing Bond/LUT issued to them prior to 30.06.2017 shall be applicable for the
export purpose.
Q.27
Ans
In case of unregistered dealer, recipient will pay tax on reverse charge basis. He can get the ITC provided he fulfills other
conditions as mentioned in section 16 of the CGST Act, 2017. In case of purchase from composition taxable person, the
composition person cannot charge any tax and hence the question of avail
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supplier.
Ans
2.29
How should importers take credit of clean energy cess paid on goods lying as stock 30.06.20177
No credit for
clean energy cess can be taken
Ans
Q.5 With reference to clause 5 of Rule 96 Aof CGST Rules, 2017 as inserted vides Nf No. 15/2017-Central Tax dated 01st July
may be fumished in place of a bond.” It may be clarified as to whether any conditions and safeguard has been notified by the
Board as on date, as certain parties have filed LUT for export in this office
Ans Yes, conditions and safeguards have been specified by Notification No. 16/2017-Central Tax dated 07.07.2017 and clarified
in detail in Circular No. 4/4/2017-GST dated 07.07.2017. The sum and substance of these documents is that the facility of
Letter of Undertaking in place of a bond is available to a registered person who is either (a) a status holder as specified in the
Foreign Trade Policy 2015-2020, or (b) who has received the due foreign inward remittances amounting to a minimum of
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merchant-exporter even though the goods are being sealed in container for export from the premises of manufacturer
exporter? Does the merchant-exporter have the option either to avail option of Bond/LUT or to pay IGST for export of such
goods?
Ans Yes. The manufacturer would be liable to pay CGST and SGST. The merchant-exporter has the option either to avail option
of Bond/LUT or to pay IGST for export of such goods. There is no provision on the lines of Form H under the CST Act in the
Q.30
Ans
Q.31
Ans
Since our products are under 0% and we are using various services like telephone, professional charges for which we will
be paying GST to our registered service providers and this amount will not be utilized towards any payment of outward
goods. Are we eligible for refund on the services obtained and GSTN paid for the same? If yes what is the procedure? If no
what is the accounting effect?
You are not eligible for refund of unutilized Input Tax Credit as there is no tax on
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in providing GTA services which are under RCM and are treated as exempted supplies
in the hand of GTA. However, if GTA is also liable to pay tax under forward charge as supplier, he is not permitted to avail ITC
If he is claiming the concessional rate of 5%. If ITC is claimed, the GST rate for GTAin forward charge will be 18%.
What will be the Input Credit of newly launched project of building construction after 01.07.20177
ITC is permitted to pay output tax of construction/work contract services. Please see Section 17(5)(c) and (d) of CGST Act,
As per Rule 96A of CGST Rules, 2017, the LUT is to be accepted by the Jurisdictional Commissioner. Udaipur whereas in Q.34 What are the provisions under CGST Act as to the eligiblity of CENVAT credit of service tax on invoices which are received
Tera the same was accepted by the jurisdictional Deputy Assistant Commissioner Kota. The Commissioner of Kota
Commissioner as compared to previous procedure.
has
after the appointed date for th
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Board has not notified so far, therefore, this office is of the view that Bond is to be fumished in all cases as of now. Please clarify
The Board has, vide Notification 16/2017-Central Tax dated 07.072017, specified the conditions and safeguards under
which an exporter may file a LUT instead of a bond.
Q.11 Whether in case of assesses exporting goods under LUT in Central Excise Act 1944, can export goods after 01.07.2017
under GST on the basis of the said LUT filed under Central Excise Act, 1944 until that LUT expires.
Ans In terms o
7 exports are allowed under existing LUTs/Bonds till 31st July
2017.
Q.12 There is lack of clarity in the trade regarding the eligibility conditions for the LUT/Bond as per the Notification No. 16/2017.
Central Tax. Parai (b) of the said notification requires the exporter to receive the due foreign inward remittances amounting
GSTR-1 (Point 9)-As banks are eligible to claim only 50% of Input credit consider excluding banks from reporting of
ex
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east 10% of his/her export
turnover as foreign inward remittance in the preceding financial year and the foreign inward remittance in the preceding
financial year should not be less than one crore rupees. E.g. if a registered person has an export turnover in FY 2016-17 of
Rs. 5 crore and has received foreign inward remittance of Rs. 5 crore in the same FY, then he shall satisfy Condition (b), and
shall be eligible for execution of LUT.
INVOICE & RETURNS
Q.39 Whether the job worker (who converts barley into Malt) has to charge GST from the Principal only on the Job Work charges
or full value of goods, ie (Value of Raw Material Job Work Charges)?
Ans
The job worker has to pay GST on job work charges only.
Q.40 In case of job workers not operating under Notification 214/86-CE (.e. registered under excise at present), whether they can
carry forward the credit availed on RM/PM supplied to them by the principal manufacturer? Also is there any restriction on
carry forward of the c
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a simpler return called GSTR-38 has also been devised due to the demands Q.42 Would tax be payable on sale of business assets on which no credit was claimed?
from the trade and industry for extension of time limit for filing of normal returns.
Q.15 Would head offices providing centralized HR, Finance and IT functions also need to raise invoices to its branches?
Ans Yes, if the head office and branches are distinct persons as specified in Section 25(4) of CGST Act, 2017 invoice is required
to be issued and GST should also be paid.
Q.16 Kindly clarify the accounting treatment of Credit Note while raising Invoice after implementation of GST?
Ans For the purpose of GST law, credit note can be issued to reduce the taxable value or to reduce tax payable or to claim goods
return, where the relevant invoice had already been issued and taxable value or tax charged in that tax invoice is in excess.
Section 34 of CGST Act, 2017 may be referred to for further details.
Q.17 Whether any tr
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employer to employee would be liable to GST? For instance, whether club membership
provided will be considered as “service”?
Ans. The compensation to employees in the form of money is not a supply. However, fringe benefits are supply of goods or
services and are liable to tax if not exempted. These are transactions in furtherance of business and even if supplied without
consideration, the same are deemed supply.
Q.44 An USA based company provides services to its account holders spread worldwide. Whether services given by it would be
covered under Section 13(8) of IGST Act?
Ans If the place of supply is in India, the registered recipient will have to pay tax under reverse charge and if the recipient is
unregistered, company will pay GST in accordance with section 14 of IGST Act
Q.45 Whether 5% GST applicable to the Transport service provider is to be charged on the total freight amount bil?
Ans It will be on the invoice value of GTA services determined in terms of Section 15
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GST except where benefit of Pure agent as provided in Rule 33 of CGST Rules, 2017 is
availed.
Ans
Invoice value would include value of all goods including those supplied free. In such cases, ITC is not required to be
reversed
Q.21 Under GST, how to send demonstration equipment and instruments to customers or branch offices with in India on
returnable basis?-No sale is involved
Ans As the goods are sent on returnable basis and no transfer of title is involved, it is not a supply of goods. If some element of
service is involved, the same will be a taxable supply. The goods may be sent on delivery challan without invoice as it is not a
supply of goods
Q.22 How to send equipment and instruments to manufacturers' factory for repairs and calibration with in India on returnable
basis?-No sale is involved.
Q.48
Ans
Provisions of Notification no. 7/2017 Central Tax are applicable under CGST only. Kindly clarify whether provisions of
notification no. 7/2017 will be applicable for
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