Goods and Services Tax

Para 10 – Draft-Bills-Reports – Business Processes for GST on Registration Processes in GST Regime – Report on – Business Processes for GST on Registration Processes in GST Regime [July 2015] – Para 10 – 10.0 Cancellation/Surrender of registration 10.1 In the following cases, the registration can be either surrendered by the registrant or cancelled by the tax authorities: (1) Closure of business of tax payer; (2) Gross Annual Turnover including exports and exempted supplies (to be calculated on all-India basis) falling below threshold for registration; (3) Transfer of business for any reason including due to death of the proprietor of a proprietorship firm; (4) Amalgamation of taxable person with other legal entities or de-merger; (5) Non

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ues and compliance verification pertaining to past periods. 10.4 The cancellation of registration may be done by tax authorities in the following situations: (1) In case signed copy of the summary extract of submitted application form is not received even after a reminder; (2) In case a tax payer contravenes specified provision of the GST law; (3) In case a taxpayer has not filed any return at all during a predetermined period (say six months). In case a taxpayer has filed a nil return continuously for this period, then the provisions of cancellation will not be applicable.(GST Law drafting committee should provide for the time period for which if there is a continuous failure by a taxpayer to file returns, the registration shall be cancell

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Para 9 – Draft-Bills-Reports – Business Processes for GST on Registration Processes in GST Regime – Report on – Business Processes for GST on Registration Processes in GST Regime [July 2015] – Para 9 – 9.0 Amendments in the Registration Form 9.1 Capturing registration information is not a one-time activity and any change in critical information should be entered at the common portal within a stipulated time period. Except the fields mentioned in Para 7.2 (7) above, changes to other registration

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Para 8 – Draft-Bills-Reports – Business Processes for GST on Registration Processes in GST Regime – Report on – Business Processes for GST on Registration Processes in GST Regime [July 2015] – Para 8 – 8.0 Registration of Compounding Dealers 8.1 Dealers below the Compounding ceiling will be provided with an option of availing the Compounding scheme i.e. they can pay the tax at Compounding rate (to be specified) without entering the credit chain. 8.2 Although the Compounding scheme is only a tem

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Para 7 – Draft-Bills-Reports – Business Processes for GST on Registration Processes in GST Regime – Report on – Business Processes for GST on Registration Processes in GST Regime [July 2015] – Para 7 – 7.0 Migration of existing registrants 7.1Existing registrants are those who are either registered with States or with the Centre or with both. 7.2 In case of such registrants, the system shall be designed to migrate cleaned and verified data from the existing database to the GST Common Portal and a GSTIN shall be generated. With regard to the migration of data of the existing registrants, following steps are necessary: (1) The process of migration of data must be started sufficiently in advance so that the business of existing registrants does not suffer and transition from the present system to GST is smooth. (2) At present, tax payers are separately registered with State and/ or with Central tax administrations or with both based on their business activity. In the GST regime, a taxpay

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to wrong or incomplete results on query. c) The data from States also shows that they do not have scanned copies of supporting documents for mandatory fields like principle place of business, photos of MD or Karta etc. in their database. This again will have to be collected from them. Since, lots of reports will be using registration database, purity of registration data will be of paramount importance. Migrating half-complete and incorrect data from existing registration databases to GST database will adversely impact the reports and intelligence derived out of it. Thus data will have to be collected afresh from the existing taxpayers. GSTIN can be issued based on State and validated PAN. In case of taxpayers under Excise and VAT, source of data for issuing GSTIN should be VAT data as in most cases Excise assesse will also be registered under VAT. For taxpayers under Service Tax the source of data for issuing GSTIN should be Service Tax. Out of six mandatory data fields in the GST Re

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onal. iii. The data so collected by GSTN/NSDL will be provided to States so that they can undertake the verification exercise as per their convenience after 1/4/2016 in a staggered manner spread over a period of one to two quarters so that it does affect the working of the tax authorities. This is being suggested as the dealer is already registered with VAT department. iv. In case, PAN has been validated but the email or mobile numbers of dealers are not available, such dealers may be advised through newspaper advertisement to visit the GST portal and use the following data for user authentication: 1. VAT-TIN 2. PAN 3. Date of Birth/Date of Incorporation in DDMMYYYY format. (This data is available with PAN Database) i. Date of birth of proprietor in case of Proprietorship firm. ii. Date of incorporation in case of all other types of dealers. v. In those cases where PAN has not been validated, State VAT department will have to collect the taxpayers. (5) In case of Service Tax, the taxpa

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Para 6 – Draft-Bills-Reports – Business Processes for GST on Registration Processes in GST Regime – Report on – Business Processes for GST on Registration Processes in GST Regime [July 2015] – Para 6 – 6.0 New Applicants 6.1 The process highlighted in the paragraphs below is applicable for new applicants for registration, both mandatory and voluntary. 6.2 New applicant can apply for registration: (1) at the GST Common Portal directly3; or (2) at the GST Common Portal through the Facilitation Center (FC) Multiple applications can be filed at one go where a taxable person seeks registration in more than one State or for more than one business vertical located in a single / multiple State(s). 6.3Following scanned documents are required to be filed along with the application for Registration – Relevant Box No. in the Registration Form Document required to be uploaded Reason for requirement 2. Constitution of Business Partnership Deed in case of Partnership Firm ; Registration Certificate

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port of the ownership of the premises of the Consenter like Municipal Khata copy or Electricity Bill copy Customer ID or account ID of the owner of the property in the record of electricity providing company, wherever available should be sought for address verification. This is required as an evidence to show possession of business premises. If the documentary evidence in Rent Agreement or Consent letter shows that the Lessor is different from that shown in the document produced in support of the ownership of the property, then the case must be flagged as a Risk Case , warranting a post registration visit for verification. GST Law Drafting Committee may add penalty provision for providing wrong lease details. 12. Details of Bank Account (s) Opening page of the Bank Passbook held in the name of the Proprietor / Business Concern – containing the Account No., Name of the Account Holder, MICR and IFS Codes and Branch details This is required for all the bank accounts through which the taxp

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/ all partners / Karta / Managing Director and whole-time Director / Members of the Managing Committee of Association of Persons / Board of Trustees etc.) and Field No 17 (i.e. Details of the Authorized Signatory), verification of PAN with CBDT database and GSTN database will be carried out online before the submitted application is sent to the State/ Centre. In case of mismatch the applicant will be given an opportunity to correct the same. 6.4A registration form has been designed and is annexed as Annexure-III. This form should be developed by GSTN as per the standard practices / protocols on IT notified by the Govt. of India e.g. for digitally capturing a postal address, name etc. In case there is no standard practice for any of the field, the same should be developed by the GSTN and form designed accordingly. Fields marked by asterisk in the form are mandatory fields and must be filled by the applicant. Separate application forms are to be designed for: (1) Multiple registration f

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ired to obtain registration under GST. Under GST regime, registration will not be allowed without a valid PAN. 6.6 If applicant files application through the Facilitation Center, then the above procedure shall be followed by him through the FC by making available the requisite documents to the FC. The User ID and Password of taxable person will however be forwarded by portal to the e-mail furnished by the taxable person (that of primary authorized signatory) and by SMS to the mobile number furnished by taxable person or by post, if the taxable person so desires. It will not be sent to FC. 6.7 The GST common portal shall carry out preliminary verification / validation, including real-time PAN validation with CBDT portal, Adhaar No validation with UIDAI, CIN (Company Identification) with MCA and other numbers issued by other Departments through inter-portal connectivity before submission of the application form. Taxpayers would have the option to sign the submitted application using vali

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ospective effect i.e. from the date of cancellation. GST portal would acknowledge the receipt of application for registration and issue an Acknowledgement Number which could be used by the applicant for tracking his application. Such Acknowledgement Number would not contain the details of jurisdictional officers. 6.8The application form will be passed on by GST portal to the IT system of the concerned State/ Central tax authorities for onward submission to appropriate jurisdictional officer (based on the location of the principal place of business) along with the following information – (1) Uploaded scanned documents; (2) State specific data and documents; (3) Details if the business entity is already having registration in other States. This should also include GST compliance rating4; (4) Details of the PAN(s) of individuals mentioned in the application which are part of the other GST registrations; (5) Acknowledgment number stated in para 6.7 above; (6) Details of any record of black

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would be optional. 6.9 After verification, the following situations are possible: (1) If the information and the uploaded documents are found in order, the State and the Central authorities shall approve the application and communicate the approval to the common portal within 3 common working days. The portal will then automatically generate the Registration Certificate. (2) If during the process of verification, one of the authorities raises some query or notices some error, the same shall be communicated to the applicant either by the Tax Authority directly or through the GST Common Portal and also simultaneously to the other authority and to the GST Common Portal within 3 common working days. The applicant will reply to the query / rectify the error / answer the query within a period informed by the concerned tax authorities (Normally this period would be seven days). A separate sub-process and interactive form for this purpose will have to be designed. On receipt of additional doc

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d to the application, either conveying approval or raising a query. In case any of the authority neither reject the application nor raise a query within 3 common working days, then the registration would be deemed to have been approved by both the authorities and the GST Common Portal will automatically generate the registration certificate. In case either authority raises a query within 3 common working days, applicant will have to respond to the same within next 7 common working days failing which the application will be rejected. After the applicant has responded to the query raised by any authority, a period of another 7 common working days will be given to the authorities to respond to the application. In case any of the authority neither rejects the application nor raises a query during this period, then the registration would be deemed to have been approved by both the authorities and the GST Common Portal will automatically generate the registration certificate. ( GST law to ha

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Para 5 – Draft-Bills-Reports – Business Processes for GST on Registration Processes in GST Regime – Report on – Business Processes for GST on Registration Processes in GST Regime [July 2015] – Para 5 – 5.0 Facilitation Center and Tax Return Preparer Scheme 5.1 In order to cater to the needs of taxpayers who are not IT savvy, following facilities shall be made available:- 5.2 Tax Return Preparer (TRP): A taxable person may prepare his registration application / returns himself or can approach the TRP for assistance. TRP will prepare the said registration document / return in prescribed format on the basis of the information furnished to him by the taxable person. The legal responsibility of the correctness of information contained in the fo

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Para 4 – Draft-Bills-Reports – Business Processes for GST on Registration Processes in GST Regime – Report on – Business Processes for GST on Registration Processes in GST Regime [July 2015] – Para 4 – 4.0 Procedure for obtaining Registration 4.1 For obtaining registration, all the taxable persons shall interact with tax authorities through a common portal called GST Common Portal2 that would be set up by Goods and Services Tax Network (GSTN). The portal will have backend integration with the respective IT systems of the Centre and States. 4.2 The procedure prescribed in para 6.0 below is meant for new applicants. The procedure for migration of existing registrants either with the Centre or State or both is dealt in para 7.0 below. 4.3 A n

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Para 3 – Draft-Bills-Reports – Business Processes for GST on Registration Processes in GST Regime – Report on – Business Processes for GST on Registration Processes in GST Regime [July 2015] – Para 3 – 3.0 Structure of registration number 3.1Each taxpayer will be allotted a State wise PAN-based 15-digit Goods and Services Taxpayer Identification Number (GSTIN). 3.2 Various digits in GSTIN will denote the following: State Code PAN Entity Code BLANK Check Digit 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 3.3 In the GSTIN, the State Code as defined under the Indian Census 2011 would be adopted. In terms of the Indian Census 2011, each State has been allotted a unique two digit code e.g. 09‟ for the State of Uttar Pradesh and 27‟ for the S

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be allowed. This provision should be subject to following specific stipulations – (1) Input Tax Credit across the business verticals of such taxable persons shall not be allowed unless the goods or services are actually supplied across the verticals. (2) For the purpose of recovery of dues, all business verticals, though separately registered, will be considered as a single legal entity. (Final view needs to be taken by the GST Law drafting committee) 3.7 Switching over from Compounding scheme to Normal scheme and vice-versa would be dealt in the manner described below – (1) Any existing taxpayer not under Compounding scheme may opt for Compounding scheme, if eligible, only from the beginning of the next Financial Year. The application wil

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Para 2 – Draft-Bills-Reports – Business Processes for GST on Registration Processes in GST Regime – Report on – Business Processes for GST on Registration Processes in GST Regime [July 2015] – Para 2 – 2.0 Assumptions 2.1The business process proposed in this document is based on the following assumptions: (1) A legal person without GST registration can neither collect GST from his customers nor claim any input tax credit of GST paid by him. (2) There will be a threshold of Gross Annual Turnover including exports and exempted supplies (to be calculated on all-India basis1) below which any person engaged in supply of Goods or Services or both will not be required to take registration. Once a dealer crosses the required threshold or he starts a new business, registration application must be filed within 30 days from the date of the dealer‟s liability for obtaining such registration. Effective date of registration would be the date of application in all cases i.e. whether the applic

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ver would be allowed to take registration, if he wants to. By taking such voluntary registration he can enter the credit chain even prior to crossing the threshold limit, provided he does not opt for the Compounding scheme (as defined below). (4) There will be another relatively higher threshold of Gross Annual Turnover (to be calculated on all-India basis) to be called Compounding turnover up to which the registered person can opt to pay tax at a specified percentage of the turnover, without entering the credit chain. Such registered person will neither be allowed to collect tax from his customers nor claim any input tax credit. Compounding dealers shall remain under compounding scheme till their turnover crosses threshold or they opt for out of the scheme. Such dealers don‟t have to apply every year to remain under the compounding scheme. However, if the compounding dealer opts out of compounding in a financial year, for any reason, but eligible and wish to avail compounding in

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porting services for personal consumption will not be liable to pay GST under reverse charge or register under GST if the GST law so provides. (8) All UN bodies seeking to claim refund of taxes paid by them would be required to obtain a unique identification number (ID) from the GST portal. The structure of the said ID would be uniform across the States in uniformity with GSTIN structure and the same will be common for the Centre and the States. The supplier supplying to these organizations is expected to mention the UID on the invoices and treat such supplies as B2B supplies and the invoices of the same will be uploaded by the supplier. (9) A unique identification number (ID) would be given by the respective state tax authorities through GST portal to Government authorities / PSUs not making outwards supplies of GST goods (and thus not liable to obtain GST registration) but are making inter-state purchases. The structure of the said ID would be uniform across the States in uniformity

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istinct from the location where goods are received. Therefore, drafting Committee may look into this issue.] (11) All existing registered persons, whether with the Centre or State under any of the tax statues being subsumed in GST, would be allotted a GST registration number called Goods and Services Tax Identification Number (GSTIN) on voluntary basis. Dealers who are below the GST threshold will have option to remain in GST chain. GST Law Drafting Committee to make appropriate provision. (12) Tax authorities, in case of enforcement cases, may grant suo-moto registration. If such person does not have PAN, the registration would be initially temporary and later converted into a PAN based registration. [GSTN to develop temporary registration numbering system] 2.2 For each State the taxable person will have to take a separate registration, even though the taxable person may be supplying goods or services or both from more than one State as a single legal entity. 2.3 Multiple registration

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also be different. Such taxpayers would be required to self-assess their likely liability and deposit the same as an Advance Tax. Such amount would be deposited by way of two Demand Drafts (one for Centre and other for State) which would be returned to the taxpayer after he has discharged his final liability. The GST Law Drafting Committee may provide for conditions for registration and tax payment. 2.5 A Non-resident Supplier is a person who, in the course of business, makes an intra-state supply of goods or services or both, but is not a resident in the state in which he has applied for registration, but is already registered in any other state. Since the Non-Resident Supplier is already registered in another State, there would be an easy way of registering such entities in the State in which registration is applied as Non-Resident Supplier. The provisions applicable on casual dealers (as detailed in para 2.4 above) may apply to them except that no security deposit or advance tax col

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Para 1 – Draft-Bills-Reports – Business Processes for GST on Registration Processes in GST Regime – Report on – Business Processes for GST on Registration Processes in GST Regime [July 2015] – Para 1 – 1.0 Introduction During the Empowered Committee meeting held on 10th March, 2014, it was decided that a Joint Committee under the co-convenership of the Additional Secretary (Revenue), Government of India and the Member Secretary, Empowered Committee should be constituted to look into the Report of the Sub-Group-I on Business Processes for GST and make suitable recommendations for Registration and Return to the Empowered Committee. It was also decided that the Joint Committee should also keep in view the Registration and Return requirements

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ses held on 22nd and 23rd July, 2015. The report of the Joint Committee on Business Processes on Registration was accordingly finalized. The list of the participants of the meeting of the Joint Committee on Business Processes held on 22nd and 23rd July, 2015 is appended at Annexure-II. 1.2. Registration of a business with the tax authorities implies obtaining a unique identification code from the concerned tax authorities so that all the operations of and data relating to the business can be agglomerated and correlated. In any tax system this is the most fundamental requirement for identification of the business for tax purposes or for having any compliance verification program. Registration under Goods and Service Tax (GST) regime will con

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Annexure-III – Draft-Bills-Reports – Business Processes for GST – Payment – Report on – Business Processes for GST – Payment – [April 2015] – Annexure-III – Annexure-III LIST OF PARTICIPANTS OF THE MEETING HELD ON 16TH AND 17TH APRIL, 2015 Government of India 1. Smt. Rashmi Verma, Additional Secretary (Revenue), Government of India 2. Shri Manish Saxena, Additional Director, Director General of Systems, CBEC, Government of India 3. Shri M.K. Sinha, Director (Central Excise), Government of India 4. Shri Rajeev Yadav, Director (Service Tax), CBEC, Government of India 5. Shri Shashank Priya, Commissioner, GST, CBEC, Government of India 6. Shri Ravneet Singh Khurana, Deputy Commissioner, CBEC, Government of India 7. Shri Upender Gupta, Additio

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. Shri Ritvik Ranjanam Pandey, Commissioner, Commercial Tax, Karnataka 12. Dr. M.P.Ravi Prasad, Joint Commissioner, Commercial Tax, Karnataka 13. Shri M. Girees Kumar, Commissioner, Commercial Tax, Kerala 14. Shri M.I. Mansur, Assistant Commissioner, Commercial Tax, Kerala 15. Shri Sudip Gupta, Deputy Commissioner, Commercial Tax, Madhya Pradesh 16. Shri Rajiv Jalota, Commissioner, Sales Tax, Maharashtra 17. Shri P. Velrasu, Special Commissioner, Sales Tax, Maharashtra 18. Shri Manoj Ahuja, Commissioner, Commercial Tax, Odisha 19. Shri Sahadev Sahoo, Joint Commissioner, Commercial Tax, Odisha 20. Shri Vaibhav Galriya, Commissioner, Commercial Tax, Rajasthan 21. Shri K. Rajaraman, Principal Secretary/Commissioner, Commercial Taxes, Tamil Nad

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Annexure-II – Draft-Bills-Reports – Business Processes for GST – Payment – Report on – Business Processes for GST – Payment – [April 2015] – Annexure-II – Annexure-II EMPOWERED COMMITTEE OF STATE FINANCE MINISTERS DELHI SECRETARIAT, IP ESTATE, NEW DELHI – 110002 Tel. No. 2339 2431, Fax: 2339 2432 e-mail: vatcouncil@yahoo.com, vatcouncil@gmail.com No.15/45/EC/GST/2015/20 Date: 3rd February, 2015 SUB-COMMITTEE ON PAYMENT PROCESSES UNDER GST During the meeting of the Joint Committee on Business Processes for GST held on 2nd February, 2015, it was decided that a Sub-Committee should be constituted to consider the Report of the Committee for Finalizing Payment Processes under GST and to give its recommendations for the consideration of the Join

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etwork 1. Shri Prakash Kumar, Chief Executive Officer, GSTN Member Special Invitee 1. Shri Ajay Seth, former Commissioner, Commercial Tax, Karnataka Member 2. It was also decided to request RBI, Principal Chief Controller of Accounts, CBEC and Controller General of Accounts to nominate senior officers to attend the meetings of the Sub-Committee/Committee. 3. It was further decided that the first meeting of the Sub-Committee will be held at 10.00 am on 14th February, 2015 at Hotel Le Meridien, Bangalore. All the members of the Sub-Committee are requested to kindly make it convenient to attend the meeting of the Sub-Committee. They are also requested to intimate their travel programme to Shri Ritvik Ranjanam Pandey, Commissioner Commercial Ta

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Annexure-I – Draft-Bills-Reports – Business Processes for GST – Payment – Report on – Business Processes for GST – Payment – [April 2015] – Annexure-I – Annexure-I EMPOWERED COMMITTEE OF STATE FINANCE MINISTERS DELHI SECRETARIAT, IP ESTATE, NEW DELHI – 110002 Tel. No. 2339 2431, Fax: 2339 2432 e-mail: vatcouncil@yahoo.com No.15/45/EC/GST/2014/32 Date: 7th April, 2014 JOINT COMMITTEE ON BUSINESS PROCESSES FOR GST During the last Empowered Committee meeting held on 10th March, 2014, it was decided that a Joint Committee under the co-convenership of the Additional Secretary (Revenue), Government of India and the Member Secretary, Empowered Committee should be constituted to look into the Report of the Sub-Group-I on Business Processes for GST

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, Trade & Taxes, Delhi (3) Shri H.V. Patel, Commissioner, Commercial Tax, Gujarat (4) Shri Sudhir Rajpal, Commissioner, Excise & Taxation, Haryana (5) Shri Kifayat Hussain Rizvi, Commissioner, Commercial Tax, J&K (6) Shri Ajay Seth, Commissioner, Commercial Tax, Karnataka (7) Shri Shyam Jagannathan, Commissioner, Commercial Tax, Kerala (8) Shri Amit Rathore, Commissioner, Commercial Tax, Madhya Pradesh (9) Dr. Nitin Kareer, Commissioner, Sales Tax, Maharashtra (10) Shri Abhishek Bhagotia, Commissioner, Commercial Tax, Meghalaya (11) Shri Manoj Ahuja, Commissioner, Commercial Tax, Odisha (12) Shri Sanjay Malhotra, Commissioner, Commercial Tax, Rajasthan (13) Shri K. Rajaraman, Commissioner, Commercial Tax, Tamil Nadu (14) Shri M.

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Para 16 – Draft-Bills-Reports – Business Processes for GST – Payment – Report on – Business Processes for GST – Payment – [April 2015] – Para 16 – CHALLAN FORMAT: 125. e-Challan will remain the source document for the purpose of accounting and reconciliation by the accounting authorities of the Centre/States/UTs. The Office of C & AG has stressed upon the need for ensuring the availability of e-Challan for accounting and reconciliation purposes. A proper Challan format (Annexure -IV) that covers all the details required for accounting and reconciliation is essential to be prescribed, that will be treated as proof of payment to the government. 126. In the GST regime, the existing practice of entry of challan data at the bank branch leve

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Para 15 – Draft-Bills-Reports – Business Processes for GST – Payment – Report on – Business Processes for GST – Payment – [April 2015] – Para 15 – Challan Correction Mechanism: 123. In view of the presumptions listed above, the requirement of providing for a challan correction mechanism would be minimal though not completely ruled out. The Committee recommends for providing the correction mechanism in following situations:- a) ERROR IN GSTIN: This may happen in situations where the payment of tax is being made by either authorized representative such as CA or any other person on behalf of the taxpayer. Such kind of error will have no impact on the transfer of the funds to the account of the concerned governments as the money will be correc

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sible to the principal for any error committed while performing authorized acts and tax administration should have no role to play in this matter. b) ERROR IN MAJOR HEAD: In such a scenario, the bank though has collected the correct amount but has credited the wrong head of tax account. This would impact the transfer of funds to the account of the respective governments as bank has transferred the funds on the basis of the data not detailed in CPIN. Thus bank would be required to withdraw funds from one account and credit the other account(s). It is proposed to permit banks to rectify such error before the end of the day during which the amount has been received by the bank as at the end of the day, the amount would have been credited in re

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Para 14 – Draft-Bills-Reports – Business Processes for GST – Payment – Report on – Business Processes for GST – Payment – [April 2015] – Para 14 – Recording by Tax Authorities: 122. After reconciliation and successful accounting of each payment, the transaction level data with unique accounting number, if required by a State Government (some governments have that practice) should be communicated by the Accounting Authorities to the Tax Department s system for updating the records, which would f

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Para 13 – Draft-Bills-Reports – Business Processes for GST – Payment – Report on – Business Processes for GST – Payment – [April 2015] – Para 13 – Resolution of Reconciliation Outcomes (discrepancies noted during the reconciliation process): 104. There would be to and fro data transmission between GSTN, e-FPB of Authorized Banks, banks other than authorized Banks, RBI, Accounting Authorities and Tax Authorities. There is a scope of error occurring at each leg of communication. The process for reconciliation of such errors in each leg of communication is discussed in succeeding paras. First leg of communication of data (CPIN linked to a GSTIN) starts from GSTN to Authorized banks: 105. If the data forwarded by GSTN (CPIN linked to a GSTIN) itself has an error then this error will be reflected in all the later transactions. So significance of accuracy of this data cannot be overemphasized. It would be important for GSTN to maintain a robust system for maintaining data integrity and keep

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n a bank s response, the discrepancy will get noticed in the real time validation of the response by the GSTN. The response sent by e-FPB of authorized bank (in Mode I & II) / RBI (in Mode III) should be validated with the data sent earlier by GSTN to Authorized bank / RBI. Key elements are CPIN, GSTIN, CIN & Challan amount in case of authorized banks and CPIN, GSTIN, CIN, NEFT/RTGS UTR and Challan amount in case of RBI. This validation between CPIN available with GSTN and CIN received from e-FPB of authorized banks / RBI should be done on real time basis and the discrepancies, if found should be communicated to the concerned banks immediately by GSTN s IT system so as to enable time to the banks for correction, if possible, before communicating the receipts to RBI on T+1 basis. 108. The validation by GSTN may throw up following discrepancies in the transaction being reported (with CIN added by the bank) by e-FPB of authorized bank / RBI: a) without CPIN; b) with incorrect CPIN

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data is crucial. RBI collates daily luggage files ( thirty nine) received from all the authorized banks, includes payments received directly by it in Mode III, adds RBI Transaction Id for all modes, prepares and sends daily e-scroll (one for each major head for Centre and each State) to GSTN and Accounting Authorities. Reconciliation by GSTN and Accounting Authorities (of the Centre and the States) will be initiated after they receive their respective files (Government of India authorities will receive three files while State Authorities will receive a file each). Errors in this leg of communication would be detected at this stage. Various situations that can be envisaged in this leg are as follows: a) Transaction reported to GSTN by authorized banks but not to RBI (CIN reported to GSTN but not included in luggage file): 111. To prevent/minimize this type of error, the bank s IT system should have a validation that all credits to the Tax accounts for the date value being the previous

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acity. The steps involved in the correction mechanism in the aforesaid situation are as follows: i) GSTN to report the error to the relevant Accounting Authority (and Tax Authority, if GOI or concerned State so wants) and RBI, if the discrepancy is detected by GSTN; ii) The relevant Accounting Authority to generate a MOE with a UIN and communicate the same to RBI with a copy to concerned authorized bank for resolution (Accounting Authorities of the Centre and States will have to initiate MOE in respect of their respective taxes) (This may be on the basis of discrepancy detected and communicated by GSTN or by the Accounting Authorities themselves); iii) RBI to ascertain from e-FPB of the concerned authorized bank / RBI and get the discrepancy corrected. E-FPB of the concerned Authorized bank / RBI must rectify this discrepancy within a period of two days from the date of receipt of MOE from the Accounting Authority; iv) Rectification by the concerned e- FPB / RBI will be by way of ident

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In case of payment through internet banking (Mode I), this seems to be an unlikely scenario, as all payments will be processed at the Core Banking Solution (CBS) of the concerned e-FPB of authorized bank and therefore the compiled data that it reports to RBI on T+1 basis will be nothing but the compilation of data (CIN) already reported by e-FPB of authorized bank on real time basis to GSTN. This discrepancy may however arise due to communication failure even after the prescribed rounds of pinging. 113. This discrepancy can arise in other modes of payment (Mode II and III), because the payment cycle is not a single workflow, is spread over a longer period of minimum two days and requires participation of various banking officials even though the entire cycle is supposed to be done on the IT system customized for GST payments. Such a discrepancy will be detected by GSTN when it undertakes a reconciliation of the challan details (CIN) of a day available with it with the e-scroll of the

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of error, the bank s IT system should have validations/controls mentioned in para 85 above; iii) Only if the CPIN and associated data in the scroll does not match with GSTN s data there will be a need for MOE. That will be type c) error, discussed in the paragraph below. In those cases, the Accounting Authority should create MOE with a UIN and communicate it to RBI with a copy to e-FPB of the concerned authorized bank. (The Accounting Authorities will identify the concerned bank on the basis of bank code contained in the CIN reported against the successful CPIN in the e-scroll received from RBI). c) Transaction reported to RBI but with incorrect details of CIN (CIN level mismatch): 114. This kind of error can be minimized through suitable validations in the bank s IT system. If the error still occurs, it will be noted when the scroll data is processed by GSTN / Accounting Authorities. Even if the error gets noticed earlier as mentioned in para 109 above but remains unresolved till the

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o wrong government accounts though CIN matches with data in e-scroll received from RBI (major head level): 115. It may so happen that while sending the luggage file to RBI, the e-FPB of the authorized bank / RBI reflects the amount received in a tax head different from the one specified in the challan (major head level) (CPIN). 116. In such a situation, Accounting Authorities will play a crucial role as they are statutorily responsible not only for proper accounting of money but also for its credit into the correct government account. This discrepancy will be ascertained by the Accounting Authorities while carrying out reconciliation between the challan data obtained from GSTN on T+1 basis (detailing major heads) and e-scroll (for each major head separately) received from RBI. Steps involved in the correction mechanism are as follows: i) The relevant Accounting authority would generate MOE with UIN and communicate the same to RBI. Accounting Authorities of the Centre and States will ha

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and report correction of MOE to GSTN and relevant Tax authority thereby completing the transaction cycle; vii) RBI to take steps to penalize e-FPB. e) CIN neither transmitted to GSTN nor conveyed in luggage file from authorized bank to RBI and therefore not included in e-scroll received from RBI: 117. This scenario will reflect the failure of the system at two ends. In this scenario the taxpayer has properly paid taxes into the government account through authorized / non-authorized banks but the same has neither been reported to GSTN nor to RBI thereby in effect eliminating the transaction from the system itself. So it is crucial that suitable protocol should be developed for dealing with this kind of errors. It has to be kept in mind here that CPIN generated at GSTN has a validity period of only 7 days within which the payment is to be tendered. This error cannot be ascertained on the basis of any reconciliation as there will not be any flow of information from authorized banks / RBI

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ayment through authorized banks by instruments drawn on another bank in the same city, the process of giving acknowledgement would be in two steps. In case CIN is not reported to GSTN by the e-FPB of the authorized bank, the taxpayer may follow the procedure detailed in sub-para i) above. E-FPB of the authorized bank is now expected to include this receipt in the luggage file for the day for transmission to RBI. iii) In case of OTC payment through banks via NEFT/RTGS, upon successful completion of the transfer at the end of the bank, the taxpayer will get a receipt detailing Unique Transaction Reference (UTR). Taxpayer can thereafter login into GSTN and update the details of UTR provided by the bank for NEFT/RTGS transaction in the challan. GSTN is expected to communicate the UTR to RBI. In case the CIN is not communicated by RBI, GSTN will now take up the matter with RBI (instead of with authorized bank) in the manner detailed in sub para i) above. RBI is now expected to include this

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with a copy to the concerned bank as detailed in para 116 above for getting the shortfall amount. 119. In case the amount in the scroll is more than the challan amount for any tax, the bank will have to raise the MOE with the concerned Accounting Authority for the refund. Without approval of the Accounting Authority, the banks should not be allowed to adjust the excess amount against future receipts. Fourth leg of communication of data is between RBI and GSTN & Accounting Authorities: 120. RBI is collating luggage files from e-FPBs of various authorized banks, including amount received by it in Mode III and thereafter generating and transmitting e-scrolls Major head wise to Government of India and SGST (state wise). During collation of the data, an error can creep into e-scroll resulting in missing / additional transaction. Since there is simultaneous flow of information to two different agencies i.e. GSTN and Accounting Authorities, following situations may arise: a) Transaction

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Para 12 – Draft-Bills-Reports – Business Processes for GST – Payment – Report on – Business Processes for GST – Payment – [April 2015] – Para 12 – Reconciliation by Accounting Authorities: 103. The Accounting Authorities through their IT systems are expected to carry out the reconciliation at their level de novo based on communication by GSTN of challan data for successful transaction received on T+1 basis (State AG authorities to be assisted for setting up accounting interface with GSTN) or th

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Para 11 – Draft-Bills-Reports – Business Processes for GST – Payment – Report on – Business Processes for GST – Payment – [April 2015] – Para 11 – Reconciliation by GSTN: 101. GSTN through its IT system should carry out reconciliation in following two stages: a) When the banks report each successful transaction on real time basis, the IT system should validate the bank s message with reference to CPIN and total amount of the challan, and communicate the discrepancy, if any, immediately. This validation and real time response by GSTN is particularly relevant for Mode II and III for which the entire payment is not in a single workflow. b) When consolidated e-scrolls are received from RBI on T+1 basis, GSTN should carry out the reconciliation

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Para 10 – Draft-Bills-Reports – Business Processes for GST – Payment – Report on – Business Processes for GST – Payment – [April 2015] – Para 10 – RECONCILIATION OF RECEIPTS: 97. Well-developed and stabilized IT systems without manual process discontinuities in banks, RBI and common portal should eliminate/reduce possibilities of errors. However, there may still be reconciliation challenges arising due to errors encountered during the stabilization phase of the IT systems of the stakeholders and their mutual functional integration. Even in the post stabilization phase, some errors may be seen due to problems external to the IT systems, e.g., in the public network used for sharing the data. A process and standard operating procedure for han

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ic challan, and therefore that challan data can be trusted for its correctness for its contents, as filled in by the taxpayer. b) The challan thus generated on GSTN portal will provide a unique Id (CPIN) which would be used uptill the time payment has been received by the bank and CIN (CPIN plus Bank Code) has been generated. The said CIN would be used thereafter for accounting, reconciliation, etc. c) All modes of payment will use the system generated electronic challan and there would not be re-digitization of the challan data, as recorded by the taxpayer, by any agency in their part of the workflow. d) Any agency handling the payment process will merely add its unique Id and parameter to the basic data received by it from another agency

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Para 9 – Draft-Bills-Reports – Business Processes for GST – Payment – Report on – Business Processes for GST – Payment – [April 2015] – Para 9 – PROPOSED ACCOUNTING SYSTEM UNDER GST: 89. Four different Major Heads of accounts would be required to be opened for classifying CGST, IGST, Additional Tax and SGST along with underlying minor heads and sub-heads, wherever required, to account for various taxes. 90. There is a need to standardize these accounting codes for all items covered under GST regime among all the States and UTs, since settlement of IGST would be based on centralized reporting. SGST will be accounted for by the States and credited to individual State Treasuries, through the existing system followed in each State. SGST will n

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nging to two governments. 92. The CGA has suggested the following in this regard: a) Codal provisions of the DDO & PAO should be complied with for discharge of PAO s role. The automation as proposed should conform to this basic requirement. b) PAO is the sole authority for receipt, payment and reconciliation of accounts book with Bank Reconciliation statement (BRS). c) Any compromise on this fundamental work flow may lead to legal complications in preparation of Finance Accounts / Appropriation Accounts which is constitutional mandate. d) Each challan detail must be linked with one DDO and PAO and bank account. e) As part of standard operating process, accounts classification should be done by the PAO in his books and no one else. Bank

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s 00020004 10 IGST – Other 00020005 11 SGST- Tax 00030001 12 SGST – Interest 00030002 13 SGST – Penalty 00030003 14 SGST – Fees 00030004 15 SGST – Other 00030005 16 Additional Tax – Tax 00040001 17 Additional Tax – Interest 00040002 18 Additional Tax – Penalty 00040003 19 Additional Tax – Fees 00040004 20 Additional Tax – Others 00040005 The actual accounting codes have to be finalized by CGA in consultation with CAG on the basis of proposals from Tax Authorities. 94. CGST, IGST and Additional Tax components will be accounted for under Consolidated Fund of India (CFI). Transfers of due IGST amount and Additional Tax to the States can thereafter be made there from as per the existing procedure. 95. The interest, penalty, fees or other charge

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Para 8 – Draft-Bills-Reports – Business Processes for GST – Payment – Report on – Business Processes for GST – Payment – [April 2015] – Para 8 – ACCOUNTING SYSTEMS UNDER GST: 87. State governments/UTs accounting system also follows, to a large extent, the general principles and procedures of Central government accounting, with minor variations in respect of classification of tax heads of accounts. While the List of Major and Minor Heads of accounts are common to both Central and State/UT Govern

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Para 7 – Draft-Bills-Reports – Business Processes for GST – Payment – Report on – Business Processes for GST – Payment – [April 2015] – Para 7 – BANKING ARRANGEMENTS UNDER GST: 80. At present Central Government and each State Finance Department prescribes banking arrangements for collection of government taxes. At present, Central and State governments utilize the services of Public Sector Banks/ Other Public Sector Banks (IDBI)/ Private Sector Banks (ICICI Bank, Axis Bank, HDFC Bank) for tax collection. The committee was informed that Non-Scheduled and Cooperative banks operating in State(s) are not permitted to collect taxes. 81. The list of all authorized banks participating in the GSTN should be common across all states. This can be a super set consisting of existing authorized banks of the Central Government and all State Governments and Union Territories. A list of banks that have been presently authorized either by the Centre or State Tax Authorities has been provided by RBI an

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business, it is recommended that the participating banks can also be allowed to accept GST receipts through OTC mode envisaged in this report. 84. Out of the superset of existing authorized banks and participating banks only those banks should be authorized to accept GST receipts who meet the minimum requirements suggested below. The objective of these minimum requirements is to ensure that a bank has the capability to handle GST receipts in a seamless manner in a consistent and error free manner underpinned by a robust IT system with no process flow discontinuities. 85. Minimum requirements to be met by a bank for being authorized for GST remittances are recommended to be as follows: a) A centralized application for handling GST receipts for both modes (internet banking and OTC) in an end-to-end manner should be established. b) There should not be any process flow discontinuities for any mode of the receipt. c) The system should not require any post-event data entry at any stage. d)

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ities. k) One branch of the concerned authorized bank in the entire country should be established / designated as the e-FPB (Electronic Focal Point Branches) to handle all backend operations of GST receipts including operation of 39 tax accounts, data collation, reporting and reconciliation with RBI / GSTN / Accounting Authorities. l) In addition, one or more branch of the concerned authorized bank in each State Capital should serve as GST helpdesk (Refer Para 27 above). m) Three separate tax accounts for Government of India (one each for CGST, IGST and Additional Tax) and one tax account for each State/UT Government (36 in total) (for SGST) should be set up and operated by e-FPB alone. n) The credit to respective tax accounts should be simultaneous with debit to the tax-payer s account in case of internet banking mode, realization of a cheque or submission of DD/cash in case of OTC mode and receipt of NEFT / RTGS remittances from remitter banks into RBI s pool account and then its tra

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Para 6 – Draft-Bills-Reports – Business Processes for GST – Payment – Report on – Business Processes for GST – Payment – [April 2015] – Para 6 – PENALTY MECHANISM FOR ERRING BANKS: 79. At present, banks are subjected to penalty for delayed fund remittances only. Current system of remuneration to banks for collection of Central Excise, Service Tax and Customs duties is determined on the basis of challans. New parameters of bank performance could be developed, based on timely remittance and reporting of error- free data to all stakeholders. A system of incentives / penalties to be administered by the respective Accounting Authority (i.e. if defaults arise in remission of CGST/IGST/Additional Tax, by Accounting Authority of Centre and if defa

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Para 5 – Draft-Bills-Reports – Business Processes for GST – Payment – Report on – Business Processes for GST – Payment – [April 2015] – Para 5 – PAYMENT ACROSS DEPARTMENTAL COUNTER: 78. The issue was discussed in the Joint Committee on Business Process and it was decided that since the emphasis in GST regime is towards automation and least human interface between the tax administration and the taxpayer, therefore there is no need to provide for this mode i.e. payment across departmental counters. It was also stated that taxpayers have been provided various other modes to facilitate anytime, anywhere payment and this mode would be retrograde especially when e-payment is being declared as the preferred mode of payment. However, the departmen

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