GST has completed its first financial year (July 17 - Mar 18) and there are certain critical issues to be considered by the taxpayers on or before 30 September 2018. Certain critical areas requiring urgent attention is captured below:
In terms of Section 34(2) of CGST Act 2017, the Company is entitled to adjust the output liability in respect of credit note(s) issued for the outward supply of goods or services or both pertaining to the period of July to Mar 2018 till the end of 30 September 2018, beyond which the adjustment of output liability will not be allowed. Further, please note invoice(s)/debit note(s) which are not declared in the respective month’s returns will attract interest at the rate of 18%
In terms of Section 16(4) of CGST Act, 2017, the Company is entitled to claim ITC in respect of invoice(s) or debit note(s) for supply of goods or services or both after the due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice(s) or invoice(s) relating to such debit note(s) pertains Accordingly, credit can be availed for the period of July 2017 to Mar 2018 till the end of 30 September 2018 only, beyond which the unclaimed ITC will be lapsed
Requirement for reconciliation of inward supply with Form GSTR – 2A:
ITC on an inward supply of goods or services or both received from the supplier is available on a provisional basis to the Company for two months subject to the conditions that the supplier should file respective GST return and discharge appropriate GST liability on such outward supply made by them.
In the case where the supplier fails to file the return or pay the appropriate GST on his outward supply then the Company is not entitled to retain such ITC availed on a provisional basis and the same is required to be reversed. Accordingly considering this it is very important to reconcile the inward supply received by the taxable person with GSTR 2A / GSTR 6A (ISD) returns downloaded from the GSTN portal. Further such reconciliation between the inward supply recorded in the purchase register of the Company with the inward supply recorded in GSTR 2A to identify inward supply not uploaded by the suppliers in their GSTR 1 return or identify inward supply uploaded by the supplier but not recorded by the Company. This becomes all the more critical since In terms of Section 16(4) of CGST Act, 2017, the Company is entitled to claim ITC in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains Accordingly, credit can be availed for the period of July 2017 to Mar 2018 till the end of 30 September 2018 only, beyond which the unclaimed ITC will have lapsed.
Reversal of ITC on common inward supply used for taxable as well as exempted supply:
Where the taxpayer has availed any common input services which are used for providing taxable as well as exempt supply the taxpayer is required to calculate and reverse every month the portion of such common credit attributable to exempt supply provided by them. Further, the taxpayers is also required to calculate the aggregate amount of reversal for the entire financial year by end of September of the succeeding Financial year and in case where such monthly reversal falls short of the annual reversal the said difference is required to be paid along with interest.
However, where the aggregate of the amount for the period July 17 to March 18 is less than the actual amount reversed in respective months then re-credit of such excess ITC can be claimed by the taxpayers in his return not later than the month of September 2018
Discharge of reverse charge liability on certain services received by the Company such as Ocean freight etc., and availment of ITC on the same:
In terms of Notification 13/2017 Central Tax (Rate) and Notification 10/2017 Integrated Tax (Rate)Taxpayers are required to discharge tax under reverse charge mechanism on certain Notified supplies such as Ocean freight, Import of service, GTA, Legal Consultancy received from Advocates, Sponsorship services, Services provided by Director of a Company etc. received by them. In such cases in view of provisions of Section 16(4) of the CGST Act, 2017 We believe tax on such supplies received during the preceding financial year needs to be discharged on or before September 2018 so as to enable the Company to avail ITC on or before September 2018.
DISCLAIMER: The views expressed are strictly of the Optitax’s Consulting LLP. The contents of this article are solely for informational purpose. It does not constitute professional advice or recommendation of firm. firm and its affiliates shall not accept any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon.