GST: What happens if person files return but doesn’t make payment of taxes?

Under the GST law, the filing of return without payment of taxes shall not be considered as a valid return.

GST FAQs :

I understand that the applicability of GST on reverse charge basis has been suspended. In this scenario, I want to know if the notification is also applicable on import of services for which we are paying GST on reverse charge basis?

• In case of import of services, the integrated tax is payable under Section 5(3) of the Integrated Goods and Service Tax Act, 2017 (IGST Act). The liability to pay GST under reverse charge has only been deferred in respect of transactions falling under Section 5(4) of the IGST Act, which only covers procurements made from suppliers not registered under GST law. Accordingly, import of services shall continue to be liable to Integrated Tax under reverse charge mechanism.

Who can opt for the composition scheme? Is liability to pay taxes under reverse charge mechanism covered under the composite scheme?

• The GST law provides an option to a supplier of goods, having an annual aggregate turnover not exceeding Rs 10 million, to opt for payment of GST under Composition Scheme. A similar option has also been provided to a person engaged in the supply of food/beverages (other than alcohol). However, this option is not available for other service providers. This option is also not available if the supplier is engaged in undertaking inter-state supplies.
• The GST payable under reverse charge mechanism is not covered under the composition scheme. If a person registered under composition scheme procures any goods/services on which GST is payable under reverse charge mechanism, the person shall be required to pay GST at applicable rate and not based on rates prescribed under composition scheme.

What happens if the taxable person files the return under the GST law but does not make payment of taxes?

• Under the GST law, the filing of return without payment of taxes shall not be considered as a valid return. Section 2(117) defines a valid return. It means, a return furnished under sub-section (1) of Section 39 on which self-assessed tax has been paid in full. It is only the valid return that would be used for allowing input tax credit (ITC) to the recipient. In other words, unless the supplier has paid the entire self-assessed tax and filed his return and the recipient has filed his return, the ITC of the recipient would not be confirmed.

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GST: What is an e-way bill and why is it important? All you need to know

A trader opting to discharge GST liability under the composition scheme will not be eligible to claim input tax credit of GST paid on inward supplies.

Business News : What is an e-way bill ?

• An e-way bill is a document that a person in charge of a conveyance carrying any consignment of goods of value exceeding Rs 50,000 is required to carry. It is a mandatory document that is generated from the GST Common Portal by registered persons or transporters who undertake movement of goods. A transporter needs to generate the e-way bill before the movement of goods commences.

Is there any scheme under GST for payment of taxes by small traders?

• Composition levy is an alternative method of levying tax that is designed for small taxpayers whose turnover is up to Rs 10 million. This scheme is optional and is meant mainly for small traders, manufacturers and restaurant owners. However, it is not available to a trader engaged in inter-state supplies. Further, a trader opting to discharge GST liability under the composition scheme will not be eligible to claim input tax credit of GST paid on inward supplies.

In the pre-GST regime, a special economic zone (SEZ) customer was required to provide Form A-2 to claim exemption from payment of service tax. Will a service provider be required to obtain a similar form from his customers for not charging GST?

• Under the pre-GST regime, a service provider was not required to charge service tax on his invoice for services rendered to an SEZ customer if the latter provided Form A-2 wherein he was authorised to receive specified services from such service providers.
• However, under GST law, there has been a change of procedure.
• Under this law, supplies to SEZs have been treated as zero rated subject to execution of Letter of Undertaking/Bond by the service provider. GST law doesn’t require the SEZ customer to provide any specific form (such as Form A-2 under the service tax law).

If the GST rate on outward supply is less than the GST rate on inputs, what will be the treatment of input tax credit that gets accumulated? If refund is available, then at what time can one apply and within what time will one get it?

• GST law contains a specific provision wherein the supplier of goods or services can apply for refund of input tax credit accumulated on account of inverted duty structure, except for a few categories.
• The refund can be applied for before the expiry of two years from the date on which the claim for refund arises. Further, the supplier would be granted provisional refund within seven days from the receipt of acknowledgment from the tax department.

Click to Read More → GST Eway Bill

GST now set for July 1 roll-out, dual control hurdle finally over

States to assess 90% entities with annual turnover of up to Rs 1.5 crore

Latest News - The Goods and Services Tax (GST) Council on Monday broke a deadlock over issues of administrative control over assessees and broadly agreed to roll out the dual control GST from July 1, instead of the earlier deadline of April 1.

Whether a state or the Centre will assess an entity would be decided by a computer programme. The Council also resolved a logjam over the right to tax economic activities within 12 nautical miles from India’s coasts.

Against the earlier proposals of reserving administration of assessees up to Rs 1.5 crore in annual turnover for states, or of allowing both the Centre and states to jointly administer these, the Council decided to blend the two suggestions. 

However, if there is a dispute between states over the place of supply, the Centre will have the power to administer those assessees. In all situations, the Centre will retain the power to collect this tax.

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