GST: Frequently Asked Questions(FAQs) for Traders
GST
Dated:- 17-8-2017
Q 1. How will GST benefit the Trading Community?
Ans. Under GST, a trader would be entitled to avail input tax credit paid on their domestic procurements of goods and services unlike the present indirect tax regime. Presently, a significant portion of indirect taxes namely Central Excise and Service Tax form part of the cost component for a trader. This will not be the case under GST. He will now be able to take credit of all taxes paid by him.
In respect of imports, the landed cost is expected to reduce significantly under GST. Hence, the traders will gain significantly in terms of input tax credit on their operating expenses thereby decreasing their operating costs.
CST which was non-creditable has been subsumed in GST. This will be a huge benefit for the traders. Entry tax has also been subsumed in GST. Removal of CST and entry tax shall immensely benefit the traders. Traders will be able to
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de by the trader depends upon the nature of supplies made. The provisions are as follows:
i) intra-State supplies to consumers (B2C supplies) – tax-rate wise summary;
ii) inter-State supplies to consumers (B2C supplies) of value up to ₹ 2.5 lakhs – State-wise and tax-rate wise summary;
iii) inter-State supplies to consumers (B2C supplies) of value above ₹ 2.5 lakhs – specified invoice wise details;
iv) supplies to resellers (B2B) – specified invoice wise details.
Q 5. Under GST, will traders be required to declare their IEC at the time of imports and exports?
Ans. For the time being both GSTIN and IEC have to be declared. But over a period of time, traders need to declare only their GSTIN instead of IEC at the time of imports and exports.
Q 6. Can traders get the credit of IGST paid at the time of imports for discharging their domestic liabilities under GST? If yes, how?
Ans. Yes. Under GST, traders will be on par with manufacturers. IGST paid at the time of
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ding financial year did not cross ₹ 75 Lakhs. In the case of following 9 states, the limit of turnover is ₹ 50 Lakhs in the preceding financial year:-
a) Arunachal Pradesh
b) Assam
c) Manipur
d) Meghalaya
e) Mizoram
f) Nagaland
g) Sikkim
h) Tripura and
i) Himachal Pradesh
Q 9. What is the rate of tax under Composition levy?
Ans. The rate for traders shall be 1% (0.5% CGST plus 0.5% SGST) of the turnover in the state.
Q 10. Who are the persons(traders) not eligible for composition scheme?
Ans. Following persons will not be allowed to opt for composition scheme:
a) supplier of services (except restaurants)
b) a person engaged in making any supply of goods which are not leviable to tax under this Act;
c) a person engaged in making any inter-State outward supplies of goods;
d) a supplier making any supply of goods through an electronic commerce operator who is required to collect tax at source under section 52; and
Thus from tra
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e 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?
Ans. No. The option availed 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 FORM GST CMP-04 within seven days of the occurrence of such event.
Every person who has furnished such an intimation, may electronically furnish at the common portal, a statement in FORM GST ITC-01 containing details of the stock of inputs and inputs contained in semi-finished or finished goods held in stock as well as the capital goods held by him on the date on which the option is withdrawn, within a period of thirty days from the date from which the option is withdrawn.
Q 13. How will aggregate turnover be computed for the purpose of composition?
Ans. It will be computed on the ba
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he credit chain. He can neither take credit on his input supplies, nor issue taxable invoice to his buyer. He is required to issue a bill of supply and cannot charge tax from the recipient. Therefore the person purchasing from him cannot take any credit.
Q 16. Are monthly returns required to be filed by the person opting to pay tax under the composition scheme?
Ans. No. Such persons need to file a simplified quarterly returns in Form GSTR-4. The GSTR-4 needs to be filed electronically on the GSTN common portal by the 18th day of the month succeeding the quarter relating to the supplies.
Q 17. What is the basic information that need to be furnished in Form GSTR 4?
Ans. It should contain details of turnover in the State or Union territory, inward supplies of goods or services or both, tax payable on reverse charge basis in case of purchases made from unregistered persons and tax payable.
Q 18. A person opting to pay tax under the composition scheme receives inputs/input service
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intimation electronically in Form GST CMP-02. Persons filing fresh registration application can also give the option in Part B of Form GST REG 01, and this will be treated as an intimation.
Q 20. In case a person has registration in multiple states? Can he opt for payment of tax under composition levy only in one state and not in other state?
Ans. No. Any intimation under sub-rule (1) or sub-rule (3) of Rule 3 of the CGST Rules, 2017 in respect of any place of business in any State or Union territory shall be deemed to be an intimation in respect of all other places of business registered on the same Permanent Account Number.
Q 21. What is the effective date of composition levy?
Ans. There can be three situations which are as follows:
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)
The appointed date i.e. 22nd June, 2017
Persons
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trade or commerce or imported from a place outside India or received from his branch situated outside the State or from his agent or principal outside the State;
(c) the goods held in stock by him have not been purchased from an unregistered supplier and where purchased, he pays the tax under reverse charge mechanism;
(d) he shall pay tax under reverse charge mechanism where he purchases goods or services from an unregistered person;
(e) he was not engaged in the manufacture of notified goods namely icecream and other edible ice, pan masala and tobacco and manufactured tobacco products;
(f) he shall mention the words “composition taxable person, not eligible to collect tax on supplies” at the top of the bill of supply issued by him; and
(g) he shall mention the words “composition taxable person” on every notice or signboard displayed at a prominent place at his principal place of business and at every additional place or places of business.
Q 23. What is the validity o
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other prescribed documents were issued not earlier than twelve months immediately preceding the appointed day;
(e) the supplier of services is not eligible for any abatement.
Q 25. What is a credit transfer document? How can it help the traders?
Ans. A manufacturer may have cleared some goods to a dealer prior to the GST, and in case a dealer who was not registered under the Central Excise Act, however is registered under CGST Act, 2017. A special provision has been made in the CENVAT Credit Rules, 2004 to take care of such cases. In such a situation, the manufacturer may issue a credit transfer document to the dealer subject to the following conditions:
(a) The value of such goods is higher than rupees twenty-five thousand per piece, bears the brand name of the manufacturer or the principal manufacturer and are identifiable as a distinct number such as chassis / engine no. of a car.
(b) Verifiable records of clearance and duty payment relatable to each piece of such good
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ating to buying and selling from manufacturer to the dealer, through intermediate dealers, is maintained by the dealer availing credit using CTDs.
(g) CTD shall not be issued in favour of a dealer to whom invoice was issued for the same goods before the appointed date.
(h) A dealer availing credit using Credit Transfer Document on manufactured goods shall not be eligible to avail credit under provision of rule 117 (4) of the CGST Rules, 2017 on identical goods manufactured by the same manufacturer available in the stock of the dealer.
(i) The dealer availing credit on the basis of Credit Transfer Document shall, at the time of making supply of such goods, mention the corresponding Credit Transfer Document number in the invoice issued by him under section 31 of the CGST Act, 2017.
Q 26. Traders are presently not entitled to take cenvat credit. They will be having duty paid stock as on 1st July, 2017. However, it is possible that the traders may not have duty paid documents in
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s/ semi-finished / finished goods) to be used for making taxable supplies where duty paying documents are not available with the trader
In case of intra-State supplies
* 60% of the Central Tax paid (in case rate of total tax is 18% or 28%)
* 40% of the Central tax paid (in case rate of total tax is 5% or 12%)
In case of inter-State supplies, 30% or 20% of integrated tax paid will be allowed.
Q 27. Will the compliance process under GST be complicated for traders under GST? What measures have been put in place to ease burden of compliance on small traders?
Ans. No. The compliance process will be automated and easy for traders. The following steps have been taken by the Government in this regard.
a) Small traders with a turnover below ₹ 20 Lakhs need not register under GST.
b) An easy to understand and comply composition scheme for traders having turnover upto ₹ 75 lakhs where tax can be paid quarterly as a percentage of turnover.
c) GST seva kendras hav
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shall be deemed to be granted.
i) Application for refund will be completely online with minimal interface with the tax officer. Acknowledgment of refund claim will be given in 15 days and the claim will be processed in 60 days failing which interest will be paid. For Exports, provisional refund up to 90% of the claim will be sanctioned upfront without any verification. The amount of refund will be directly credited to beneficiary's bank account.
Q 28. Stock transfers have been made taxable in GST. Will it impact adversely?
Ans. The objective of taxing the stock transfers is just to ensure that the ITC moves along with the supply of goods to the place where a supply is finally consumed. This is to ensure that the taxes accrue to the State where a supply is consumed. If the stock transfers are not taxed, the ITC would not flow to other State along with the supply and trader will not be able to utilise the credit in another State. Therefore, taxing of stock transfers in in the int
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