In respect of imports the landed cost is expected to reduce significantly under GST. Hence traders will gain significantly in terms of input tax credit on their operating expenses thereby decreasing their operating costs. Here are some frequently asked questions about the new tax regime and its implications for traders:
Will all traders have to register under GST?
A trader dealing only in exempted goods or where his turnover is below Rs 20 lakh in the financial year (but not engaged in inter-state supplies) is not required to register under GST.
When will a trader have to pay tax?
A trader, if registered under GST, will have to pay tax on monthly basis on or before 20th of the succeeding month.
A person who has opted for composition levy will have to pay tax on quarterly basis on or before 18th of the month succeeding the quarter relating to supplies.
What is the basic information that needs to be furnished in Form GSTR-1
The details to be entered in the return of outward supplies Form GSTR-1, made by the trader depend up on the nature of supplies made. The provisions are as follows:
Intra-State supplies to consumers(B2C supplies) – tax-rate wise summary.
Inter-State supplies to consumers (B2C supplies) of value up to Rs 2.5 lakh – State-wise and tax-rate wise summary.
Inter-State supplies to consumers (B2C supplies) of value above Rs 2.5 lakh – specified invoice detail wise details.
Supplies to resellers (B2B) – specified invoice-wise details.
Can traders get the credit of IGST paid at the time of imports for discharging their domestic liabilities under GST? If yes, how?
Yes. Under GST, traders will be on par with manufacturers. IGST paid at the time of import will be available as credit which can be used for payment of taxes on further supplies. GSTIN would be used for the purpose of credit flow of IGST on import of goods and refund of IGST paid in case of export.
Can a trader having duty paying documents (including a first stage dealer or a second stage dealer) claim the Cenvat credit on the stock held on the appointed date viz 1st July, 2017?
Yes, a trader having duty paying documents including a first stage dealer or second stage dealer can claim Cenvat Credit as per section 140(3) of the CGST Act, 2017 subject to fulfilment of following conditions:-
Such inputs are used or intended to be used for making taxable supplies;
The said taxable person is eligible for input tax credit on such inputs;
The said taxable person is in possession of invoice and/or other prescribed documents evidencing payment of duty under the earlier law;
Such invoices and/or other prescribed documents were issued not earlier than twelve months immediately preceding the appointed day;
The supplier of services is not eligible for any abatement.
What is a credit transfer document? How can it help the traders?
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 (CTD in brief) to the dealer subject to the following conditions:-
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.
Verifiable records of clearance and duty payment relatable to each piece of such goods is maintained by the manufacturer and are made available for verification on demand by a Central Excise officer.
CTD shall be serially numbered and shall contain the Central Excise registration number, address of the concerned Central Excise Division. name, address and GSTIN number of the person to whom it is issued, description, classification, invoice number with date of removal, mode of transport and vehicle registration number, rate of duty, quantity, value and duty of excise specified in the First Schedule to the Central Excise Tariff Act, 1985 paid thereon.
The manufacturer is satisfied that the dealer to whom CTD is issued is in possession of such manufactured goods in the form in which it was cleared by him(on 1st July 2017).
CTD shall be issued upto 30th July 2017 and copy of the corresponding invoices shall be enclosed with the CTD.
Copies of all invoices relating to buying and selling from manufacturer to the dealer, through intermediate dealers, is maintained by the dealer availing credit using CTDs.
CTD shall not be issued in favour of a dealer to whom invoice was issued for the same goods before the appointed date.
A dealer availing credit using CTD 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.
The dealer availing credit on the basis of CTD shall, at the time of making supply of such goods, mention the corresponding CTD number in the invoice issued by him under section 31 of the CGSTAct, 2017.
Stock transfers have been made taxable in GST. Will it impact adversely?
The objective of taxing 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 the supply is finally consumed. If the stock transfers are not taxed, the ITC would not flow to the other state along with the supply and the trader will not be able to utilize the credit in another state. Therefore taxing of stock transfers is in the interest of traders and is perfectly revenue neutral for the trader.