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GST

How e-invoicing can help your business

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Electronic invoicing (E-invoicing or online invoicing)is a system in which B2B invoices are authenticated electronically by GSTN (Goods and Services Tax Network) for further use on the common GST portal between suppliers and buyers. A true method of e-invoicing should be entirely electronic in such a way that supplier data can be directly integrated into the buyer’s system, GST portal and e-way bill portal in real time. A digital invoice is usually confused with an electronic invoice or an e-invoice. Both can be processed electronically from creation to payment, but there is a considerable difference between these two. An e-invoice is basically created in the invoicing system of the seller, online bank or in a web-based form. The e-invoice file can be downloaded from here or sent dir...

Tax compliance and enterprise digital transformation: Why your DX strategy should include cloud

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With the Government directive of e-invoicing under GST compliance for businesses in India, automated solutions on cloud are becoming top priorities under every CXO’s digital transformation (DX) strategy. This paper discusses the crucial need to include tax compliance as part of that transformation, regardless of a company’s volume or format of transactions. As DX gains momentum, it is bound to become ubiquitous, moving beyond information technology and modernizing operations on a holistic level. Making the transition from on-premises to cloud can be challenging and although companies are eager to make the transition, they’re taking it slow. In a 2018 study by IDG (International Data Group) on the future of digital business, it was found that of the 89 percent of organizations that planned ...

Precautions for GST Audit while finalizing balance sheet

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Every business organization is engaged in finalizing books of accounts and preparation of Balance Sheet for each financial year. After 2017, the financial year is divided into two indirect taxes provisions namely, pre-GST (Excise, Service Tax and VAT) and post-GST. It becomes important to understand the legal provisions under GST law while finalizing books of accounts and preparation of Balance Sheet. In order to safeguard the interest of the business organizations and provide some ideas regarding GST audit preparation, we have outlined the following significant GST points that must be kept in mind before finalizing a balance sheet. Reconciliation of sales / other income as per books of accounts with GSTR-1 / GSTR-3B outward liabilityDuring any audit, any officer / auditor is going to rely...

GSTN issues clarifications on e-invoicing under GST

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In January 2020, the GST Network has come up with Frequently Asked Questions (FAQs) on e-invoicing under the GST system, reaffirming the government’s intent to implement ‘e-invoicing’ under the GST. Here are some key aspects of the clarifications: 1. Foreign service provider can integrate with Invoice Registration Portal (IRP) from India only. 2. On uploading of the relevant details on IRP, it will validate the existence of GST Identification Number (GSTIN) of supplier and buyer along with duplication check of invoice. If non-existent GSTIN and/or a duplicate invoice are found, the invoice will be returned with relevant error codes, without registering it. 3. Post validation on IRP, a signed Invoice Reference Number (IRN) will be provided to the supplier. IRP will also return a QR code, wi...

Official Notification on GST Due Date Extended for Taxpayers Relief

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In this pandemic and challenging time, everyone including taxpayers is facing a lot of trouble. To make things easy for them, the Government has extended dates for GST filings. On 07th April 2020, latest notification under GST has been rolled out in two parts Here we are providing the complete details of the same GST Dates Extended for Providing Relief to Taxpayers in COVID-19 In the same issue, Notifications 30/2020 to 36/2020 dated 03.04.2020, Circular No. 136/06/2020-GST dated 3rd April 2020 has been issued. Which states that 1. Normal Taxpayers filing Form GSTR-3B For taxpayers having aggregate turnover above INR 5 Cr. in previous FY return filing of the month Feb, March, April 2020 the due date is extended till 24th June 2020. Whereas, for May 2020, the extended due date for filing is...

Full ITC on goods and services not available if consideration is netted off against receivables

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Under the GST law, different units of the same entity functioning in different States are treated as ‘distinct persons,’ and as per Schedule I of the CGST Act, the supply of goods or services or both between such distinct persons, even if made without consideration are treated as supply. This deeming fiction was created so that the Input Tax Credit (ITC) chain is maintained intact. The recipient is required to make payment to the supplier within 180 days to claim ITC. Recently, the Appellate AAR, in the case of Sanghvi Movers Ltd.i (‘the taxpayer’), has held that full ITC is eligible to the taxpayer. However, the consideration is netted off in the books of accounts. In the instant case, the taxpayer is engaged in the business of providing cranes on lease/hire to its clients. The Head Offic...

AAR has jurisdiction to determine Place of Supply

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As per Section 97(2) of the CGST Act, an advance ruling can be sought in respect of: a. Classification of any goods or services or both; b. Applicability of a notification issued under provisions of the GST Act(s); c. Determination of time and value of supply of goods or services or both; d. Admissibility of input tax credit of tax paid or deemed to have been paid; e. Determination of the liability to pay tax on any goods or services under the Act; f. Whether the applicant is required to be registered under the Act; g. Whether any particular thing done by the applicant with respect to any goods or services amounts to or results in a supply of goods or services, within the meaning of that term. In the past, in many taxpayer cases , the AAR has rejected the applications for Advance Ruling in...

IGST levied on ocean freight transportation held unconstitutional

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In 2017, the Ministry of Finance had imposed service tax on a reverse charge basis on ocean freight incurred by an importer. This tax was payable even if the importer did not directly pay the ocean freight charges to the shipping company/freight forwarder. This proposition has been continued into the GST regime as well. The GST law specifically provides that the importers are required to discharge IGST at 5% on ocean freight charges under the reverse charge mechanism. However, at the same time, customs duty on the CIF value (which includes the freight component as well) of the goods imported into India is also paid by the importer. As a result, there is double taxation on the ocean freight under GST law, which is an impediment and has bloated the cost of imports. Recently, in a landmark ru...

Exporters to follow Standard Operating Procedure (SOP) issued by CBIC

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The Central Board of Indirect Taxes and Customs (CBIC), vide Circular No.131/1/2020 GST dated January 23, 2020, has issued Standard Operating Procedure (SOP) for exporters to follow. Here is a brief summary of the Circular below: CBIC, on verification, has found that many exporters were non-existent, and it is noticed that ITC was taken by the exporters based on fake invoices to pay IGST on exports; The CBIC has taken measures using rigorous data analytics and Artificial Intelligence tools to mitigate the risk. Based on these analytics, individual exporters will be taken up for further verification. The refund scrolls in such cases will be kept in abeyance till the verification is received from the field formations. Moreover, the export consignments or shipments of concerned exporters will...

Provisions of Insolvency and Bankruptcy Code override GST provisions

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The Insolvency and Bankruptcy Code 2016 (IBC) was introduced to promote the ease of doing business in India, to address the issue of liquidity in cases relating to insolvency/bankruptcy in India. It consolidates all existing insolvency-related laws like the Sick Industrial Companies, Special Provisions Act 1985, and many more. The IBC also specifies that it will override any other legislation in cases of conflict. The companies going through a resolution mechanism under the IBC, the revenue authorities are insisting on having a priority in the collection of past tax dues. In December 2019, the National Company Law Tribunal (NCLT), Chennai, in the case of T. R. Ravichandran – Resolution Professional (RP) for Kiran Global Chem Limited1. (Corporate Debtor), has directed the revenue auth...